There were certain mortgages on the family property dated 12th December 1905 and 19th June, 1907. Sitaram along with his two minor sons was the manager of the joint family estate.
On 4th March, 1908, Sitaram executed a mortgage of Rs. 11,000 in favour of Raja Brij Narain.
In 1912 Raja Brij Narain and Jagdish Narain, the mortgagees brought a suit to relaize their money and obtained a decree ex parte.
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In 1913 the suit was brought by the two minors to have in declared that the mortgage was not binding on them, and the decree granted was so far as they were concerned null and void. The lower courts set aside the decree as far as the sons were concerned.
Then the appeal went to the Privy Council. It was found that the money raised under the mortgage of 1908 was taken to pay off earlier mortgages. The liability under the earlier mortgages was “an antecedent debt” so as to render the mortgage of 1908 binding upon the sons.
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The Privy Council laid down the following propositions:-
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(1) The managing member of a joint undivided estate cannot alienate or burden the estate qua manager except for purposes of necessity.
(2) If he is the father and other members are the sons he by incurring debt, so long as it is not for an immoral purpose may lay the estate open to be taken in execution proceeding upon a decree for payment of that debt.
(3) If he purports to burden the estate by mortgage then unless that mortgage is to discharge an antecedent debt, it would not bind the estate.
(4) Antecedent debt means antecedent in fact as well as in time, that is to say that the debt must be truly independent of and not part of the transaction impeached.
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(5) There is no rule that this result is affected by the question whether the father who contracted the debt or burdened the estate is alive or dead.