When Inderdown Singh attained majority he challenged the mortgage to the defendant on the ground that his mother was deceived by the defendant.
The defandant denied the allegation. The lower Court dismissed the suit but the lower appellate court decreed the suit against which the defendant appealed to the Privy Council.
They held that the mortgage was, in fact, executed but the mortgagee took the mortgage from a limited owner, so the burden of proof of necessity lay upon him. In the opinion of their Lordships the case of mortgage for something had been made out prima facie.
But they remitted the case for further enquiry with the following general principles to be applied in the decision of the cases:
(1) Under the Hindu Law, the power of a manager of an infant heir to change the estate, is a limited and qualified power which can only be exercised in a case of need or for the benefit of the estate. The actual pressure on the estate, the danger to be averted or the benefit to be conferred upon it, in the particular instance, is thing to be regarded.
(2) Where in the particular instance, the charge is one that a prudent owner will make in order to benefit the estate the bona fide lender is not affected by the precedent mismanagement of the estate, even though it be shown that with better management the estate might have been kept free from debt.
(3) But if the danger to the estate arisen has from any misconduct to which the lender was a party, he cannot take advantage of his own wrong to support a charge, in his own favour grounded on a necessity which is wrong and has helped the cause.
(4) The lender is bound to enquire into the necessities for the loan, and to satisfy himself as well as he can, with reference to the parties with whom he is dealing, that the manager is acting, in the particular instance, for the benefit of the estate.
(5) If the lender makes proper enquiry as to the necessity for the loan, and acts honestly, the real existence of the alleged necessity is not a condition precedent to the validity of his charge.
(6) The lender is not bound to see to the application of the money advanced.
(7) By the Hindu Law, freedom of the son from the obligation to discharge the father’s debt, has respect to the nature of the debt and not to the nature of the estate. Unless the debt is of such a nature that it is not the duly of the son to pay the discharge of it, even though it affects the ancestral estate, it will still be an act of pious duly in the sun.