1996 (5) TMI 421 - SC - Indian Laws

Summary

Issues Involved:
1. Validity and binding nature of the sale deed (Ex. P2).
2. Adequacy of sale consideration.
3. Legal necessity for the sale of joint family property.
4. Enquiry by the purchaser regarding the necessity for the sale.

Summary:

1. Validity and Binding Nature of the Sale Deed (Ex. P2):
The plaintiffs challenged the sale deed executed by their father on the grounds of grossly inadequate consideration, lack of pressing need to alienate the property, and the existence of bogus debts. The trial court found that Rs. 5,750/- out of the Rs. 9,000/- sale consideration was used to discharge genuine antecedent debts and upheld the validity of the sale deed, dismissing the suit. The District Court concurred with the trial court's findings. However, the High Court found that Rs. 1,250/- of the sale consideration was not for antecedent debt and remanded the case on the question of legal necessity.

2. Adequacy of Sale Consideration:
The trial court and the First Appellate Court found the sale consideration of Rs. 9,000/- to be adequate based on the Commissioner's Report and the income derivable from the property. The High Court's judgment did not alter this finding.

3. Legal Necessity for the Sale of Joint Family Property:
The trial court and the First Appellate Court concluded that the sale was justified by legal necessity, as the family was not affluent, and the debts needed to be discharged to avoid mounting interest. The High Court remanded the case on this issue, but the Supreme Court found that the purchasers had made genuine enquiries and that substantial portions of the sale consideration were used to discharge antecedent debts.

4. Enquiry by the Purchaser Regarding the Necessity for the Sale:
The Supreme Court emphasized that if the purchaser acts in good faith and makes reasonable enquiries about the necessity for the sale, he is not obligated to ensure the application of the sale consideration. This principle is supported by precedents from the Privy Council and the Supreme Court, including cases like Sri Krishna Das vs. Nathu Ram and Radhakrishna Das vs. Kaluram.

Conclusion:
The Supreme Court allowed the appeal, set aside the judgment and decree of the High Court, and restored the judgment and decree of the First Appellate Court, dismissing the suit. The Court found that the High Court erred in its judgment and that the purchasers had adequately proved legal necessity and the application of the sale consideration. There was no order as to costs.