Full Judgment Text
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PETITIONER:
L. JANAKIRAMA IYER AND OTHERS
Vs.
RESPONDENT:
P. M. NILAKANTA IYER AND OTHERS
DATE OF JUDGMENT:
26/10/1961
BENCH:
GAJENDRAGADKAR, P.B.
BENCH:
GAJENDRAGADKAR, P.B.
SINHA, BHUVNESHWAR P.(CJ)
DAYAL, RAGHUBAR
CITATION:
1962 AIR 633 1962 SCR Supl. (1) 206
CITATOR INFO :
R 1965 SC1153 (50,30,48)
R 1967 SC1440 (11)
RF 1977 SC1680 (7)
R 1980 SC 17 (27,29,30)
ACT:
Trust-Debtors conveying property to three
trustee for repayment of Debts-Administration suit
by debtors dismissed on withdrawal subsequent
suit on behalf of general body of creditors if
barred by res judicata Limitation claim for
possession- Mainteinability sale deed executed by
two of the three trustees validity Amendment of
decree by High Court after admission of appeal by
Supreme Court-Award of net profit to trust estate
and internal to alienation in favour of person
intermeddling with trust estate Trustee de son
tort Indian Trusts Act 1882(2 of 1882) ss 48,63-
Code of Civil Procedure, 1908 (Act V of 1908) ss.
11, 151 and 152 Indian Limitation Act, 1908 (IX
of 1908) Arts 134, 120.
HEADNOTE:
These appeals arose out of a representative
suit filed on behalf of the creditors of
defendants I to 6 who hat executed a trust deed on
August 26, 1936, conveying their properties to
three trustees with authority to dispose of the
one and distribute the ale proceeds ratably
amongst the creditors. The trust deed required
"the three trustees to act according to the
decision arrived at either unanimously or by
majority." The trustees accepted the trust and
conveyed all the properties except the family
house in administration of the trust. Two of the
sale deeds in favour of two of the creditors,
defendants 13 and 14, a mortgagee creditor, in the
suit were executed by only two or the trustees .
In a suit brought by the said defendants 1 to 6
for administration of trust the trial court passed
a preliminary decree. The High Court on appeal
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remanded the matter to the trial court for a
finding as to the market value of the lands sold.
The trial court submitted its finding. At this
stage defendants 1 to 6 withdrew the suit which we
dismissed. The present suit under O. I, r. 8 of
the Code of Civil Procedure we filed on October
29, 1947, before such withdrawal. The claimed made
therein, inter alia, were for a declaration that
the properties in question were still impressed
with the trust, for the removal the surviving
trustee and appointment of an a administrator to
realise the amount, recover position of the
properties and re-sell them. The trial Judge
passed a decree infavour of the plaintiffs . The
High Court in substance confirmed that decree but
modified it by awarding simple interest
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instead of compound Interest decreed in favour of
defendant 14. The two sale deeds, executed by only
two of the trustees, were declared invalid and it
was found that the third trustee did not give his
consent to it. The sale deed in favour of
defendant 12 was declared invalid on the ground
that he had intermeddled with the trust estate and
had thus become a trustee de sou tort. The courts
below also rejected the pleas of limitation and
res judicata raised on behalf of the defendants.
Some of the creditor detendants appealed. After
the appeals had been admitted by this Court the
High Court amended the decretal order by
substituting the words ’mesne profits’ by ’net
profits’ under ss. 151 and 152 of the Code of
Civil Procedure.
^
Held, that the question whether Art. 120 or
Art. 134 of Indian Limitation Act applied to a
case had to be decided on the case made in the
plaint, read as whole and properly construed.
Since the present suit was not one for a mere
declaration but for possession of property, having
been valued and framed as such, deliverable to the
administrator, it was governed by Art. 134 and not
by Art. 120 of the Act and was thus within time.
It was not correct to say that s. 63 of the
Indian Trust Act was exhaustive as to the remedies
available to a beneficiary under a private trust
or that claim for constructive possession, such as
was made in the present suit, was prohibited under
that section.
Rani Chhatra Kumari Devi v. Prince Mohan
Bikram Shah, (1931) I. L. R. 10 Pat. 851,
distinguished.
Subbaiya Pandaram v. Mohammad Mustapha
merachayar , (1923) L. R. 50 IE A. 295, A
Subramania Iyer v. P. Nagarathna Naicker ,
(1910)20 Mad. L. J. 151 and Masjid shahid Ganj v.
Shiromani Gurdwara Prabandhak Committee Amritsar
(1940) L. R. 67 I. A. 251, referred to.
Nor could the suit be said to be barred by
res judicata since it did not fall within the
scope of s. II of the Code of civil Procedure. The
suit being one under o. 1, r. 8 of the Code, it
could not be said that defendants I to 6,
plaintiff in the earlier suit, and the creditors,
plaintiffs in the present suit, where the same
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party or parties claiming through each other.
Clause 23 of the trust deed, properly
construed, conformed to the provision of s. 48 of
the Trusts Act that where there are more trustees
than one, they must all join in the execution of
the trust, and did not provide for an exception to
that rule, even though it provided that decisions
by the trustees need not a ways be unanimous but
could be by majority as well. Such sale deeds as
had been executed by
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two of the trustees only must therefore fail. The
alternative. case of consent given by the third
trustee to the transaction could be of no avail
since it could not be substantiated by evidence
Lala man Mohan Das v. Janaki Man Prasad,
(1944) L. R. 72 I. A. 39, referred to.
The High Court had jurisdiction under ss. 151
and 152 of the Code of Civil Procedure to correct
the obvious error in the decretal order even
though the appeals from the said decree had
already been admitted by this Court. Nor could the
amendment be challenged on merits. Although a
successful plaintiff would not normally be
entitled to mesne profits for more than three
years in view of Art. 109 of the Limitation Act,
the court had jurisdiction in the case of a trust
to make appropriate direction in the decree, while
awarding net profiles to the trust and interest to
the mortgagee, in adjustment of the equities
between them.
Salgur Prasad V Har Narain Das (1932) L.R.
59 I. A. 147, Bhagwat Dayal Singh v. Debi Dayal
Sahu, (1908) L. R. 35 I. A. 48 and Jagannath
Prasad Singh Chowdhury v. Surajmal Jalal , (1926)
L. R. 54 I. A. 1, referred to.
Even slight intermeddling with the trust
estate is sufficient to make a person trustee de
son tort. Since in the instant case, the acts of
intermeddling by one of the defendant covered a
fairly long period, the courts below were right in
holding that the sale in his favour must be set
aside as one in favour, of a trustee de son tort.
JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeals
Nos. 62 and 77 of 1959.
Appeals from the judgment and decree dated
March 25, 1953, of the Madras High Court in A. S.
Nos. 731 and 720 of 1950.
M. C. Setalvad, Attorney general for India
and M.S.K. Sastri for the appellants Nos. 2 to 8
and also for legal Representatives of appellant
No. 1 in C. A. No. 62 of 1959.
A. V. Viswanatha Sastri, M. K. Ramamurthi and
S. T. Venkataraman, for respondents Nos. 2 and 10
(in C. A. No. 62 of 69) and respondents Nos. 2 and
16 (In C. A. No. 77/59).
209
R. Ganapathy Iyer and G. Gopalakrishnan for
appellant No. 2 and also for legal Representative
of appellant No. 1 (in C. A. No. 77 of 1961)
C. R. Pattabhi Raman and G. Gopalakrishnan,
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for appellant No. 3 in (C. A. No. 77/59).
1961. October 26. The Judgment of the Court
was delivered by
GAJENDRAGADKAR, J.-These two appeals have
been brought to this Court by two sets of
defendants with a certificate of the Madras High
Court and they arise out of a suit instituted
under o. 1, r. 8 on behalf of the general body of
creditors for administration against the trustees
and alienees of the properties which belonged to
their debtors. Defendant 14 and his sons
defendants 18 to 24 are the appellants in Civil
Appeal No. 62 of 1959 while defendants 12, 13 and
16 are the appellants in Civil Appeal No. 77 of
1959. Defendants 1 to 6 are the debtors. They were
members of an undivided Hindu family known as
Kalakkad Pannayar family in Tirunelveli District.
The family was doing Commission agency business in
petrol, kerosene and crude oil. It had secured
agency rights from the Burmah-Shell Company. The
members of the family became heavily indebted by
about June, 1936, and as a result there was a
pressure from their creditors. In order to meet
the said pressure a deed of composition was
executed (EX. B. 2) on July 8, 1936. As a result
of this composition 56 out of the creditors of the
family agreed to a scheme for settlement of their
debts. Under this deed defendant 7 was constituted
as a trustee and as such was empowered to take
over the assets of the debtors, sell them to the
best advantage and distribute the proceeds
rateably amongst all credit. . It appears that
before the scheme under the competition could be
successfully or effectively worked out one of the
creditors, Ayyah Ayyar, filed an insolvency
petition, No. 26 of 1936, in the Sub-Court at
Tirunelveli on July 30, 1936. By this
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petition the creditor wanted defendants 1 to 6 to
be r adjudged insolvent. During the pendency of
these a proceedings, on August 26, 1936 defendants
1 to ff executed a deed of trust, (Ex.B.7); by
this document they conveyed all their movable and
immovable properties including (J the outstanding
due to them to three trustees. These were
defendant 7 Subbarayalu Reddiar, Veerabahu Pillai
and Narayana Pillai. Tho trustees were authorised
to dispose of the assets of (defendants 1 to 6 and
distribute the proceeds rateably amongst the
creditors. Narayana Pillai died in February, 1938.
Veerabahu Pillai died some time before the present
suit was instituted. Defendants 9 and 10 are the
undivided sons of defendants 7, whereas defendant
11 is the widow and defendants 12 and 13 are the
step-brothers of Veerabahu Pillai. The trustees
accerted the trust and entered upon their duties.
They took possession of the immovable properties
covered by the trust. They paid off the secured
creditors, and in regard to unsecured creditors
they arranged to pay 50% of their dues by selling
the immovable properties either to the creditors
themselves or to third parties directing them to
discharge the secured debts, and the unsecured
debts to the extent of 50% of their value. It is
common ground that except their family house in
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which defendants 1 to 6 resided all other
immovable properties belonging to them were
conveyed under the trust deed.
Defendant 14 was a secured creditor in whose
favour a mortgage of the first schedule properties
had been excelled for a sum of Rs. 30,000 on June
3, 1935 (Ex. B- 95). This mortgage carried 10%,
compound interest. It appears that he had also
lent a sum of Rs. 3,000 on a promissory note on
July 17, 1935 [Ex. B- 95(a)]. This note carried
interest at 12%. The promissory note was
supported by the pledge of the mortgage deed. In
order to pay off the debts thus due to defendant
14 the trustees conveyed to him schedule I
mortgaged properties for Rs. 42,000 on May 22,
1937 (EX. B 94)
211
Out of the said consideration the amount due under
the mortgage as well as the amount due under the
promissory note were satisfied leaving a balance
of Rs. 3,030 in the hands of the purchaser. He was
directed to utilise this balance for repaying 50%
of the dues of purchaser and 3 who have brought
the present suit. The sale deed in favour of
defendant 14 was executed by only two out of the
three trustees,, defendant i and Veerabahu Pillai.
Defendants 18 to 24 are the son of defendant 14.
As we have already seen defendant 14 and his sons
are the appellants in (Civil Appeal No. 62 of
1959.
Defendant 7 who was one of the trustees, was
a creditor of the trustees to the extent of Rs.
6,000. His daughter-in-law was a creditor to the
extent of Rs. 2,000\-. In satisfaction of 50% of
the debt due to these two persons the trustees
conveyed schedule III properties to defendants 8,
9 and 10 who are the undivided sons of defendant 7
(Ex. B. 8). This document executed on December
16, 1936, for Rs. 4,000. The purchasers in their
turn sold the properties to defendant ]7 on May
30, 1947.
Defendant 12 is the step-brother of the
trustee Veerabahu Pillai and he purchased schedule
V properties on November 7, 1941, for Rs. 2,000
(Ex. B-90). Defendant 13 who is the brother of
defendant 12 purchased schedule II properties for
Rs. 15,000 on August 29, 1937, (Ex. B. 37). B.
37). This document was executed only by two out of
the three trustees. Another sale deed was passed
in favour of defendant 13 in respect of schedule
properties (Ex. B. 79) on February , 1942, for
Rs. 2,000. Defendant 16 who is the son-in-law of
defendant 13 purchased two sets of properties
schedule VII and schedule VII-A on May 7, 1943,
and June 4, 1943, (Exs. B-104 and B-105) for Rs.
8,000 and Rs. 600 respectively The properties thus
conveyed to the respective purchasers were put
into their possession. It is with the sale deeds
executed in favour of defendant 14 and those
executed in favour of
212
defendant 12, 13 and 16 that we are concerned in a
the present appeals. Defendants 12, 13 and 16 are
the appellants in Civil Appeal No. 77 of 1959.
In 1943 defendants 1 to 6 brought a suit, o.
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s. . No. 30 of 1943 in the Sub Court at
Tirunelveli for the administration of the trust
created by them, for account from the trustees and
for recovery of the trust properties. To this suit
they impleaded the surviving trustees and the
alienees as defendants. In this suit a preliminary
decree for account was passed by this Sub Court.
Their claim, however, for the recovery of
immovable properties was not Granted. This decree
gave rise to three appeals before the Madras High
court, one by defendants 1 to 6 and the others by
the trustees and the alienees respectively. These
appeals were appeals A. S. No. 473, 510 and 544 of
1944. The three appeals were heard together and on
December 20, 1944, a common judgment was
delivered. The High Court confirmed the ending of
the trial court that the trustee were liable to
render account for the management of the trust,
and it remanded the suit for a finding as to the
market value of the lands covered by the
respective sale deeds which had been challenged by
defendants 1 to 6 The High Court thought that in
determining the validity of the claim made by
defendants 1 to 6 it was necessary to find out the
proper value of the properties at the relevant
time for that alone would enable the Court to
decide whether the alienations had been effected
by the trustees for grossly inadequate price as
alleged by defendants 1 to 6. In the course of its
judgment the High Court observed that it was not
open to the authors of the trust to challenge the
validity of the transaction which was permitted by
them by the instrument of trust, for it was clear
that under the said trust deed the trustee were
empowered to convey properties to the creditors in
the discharge of their duties. After remand the
Subordinate Judge took
213
evidence, made his findings and submitted them to
the High Court. It was at that stage that
defendants 1 to 6 filed a petition for withdrawal
of the litigation. This petition was allowed on
December 12, 1947, with the result that the suit
filed by defendants 1 to 6 O.S. No. 30 of 1943,
was dismissed with costs throughout.
Whilst the proceedings in the said three
appeals were pending in the High Court and before
defendants 1 to 6 were allowed to withdraw the
litigation the present suit was filed on October
29, 1947, by the three plaintiff who are the
creditors of defendants 1 to 6 and who purported
to act on behalf of the general body of creditors.
Leave was granted to the plaintiff under o. 1, r.
8 and the suit has, therefore, been conducted as a
representative suit. In the suit the plaintiffs
ask for an account from defendant 7 and defendants
11 to 13 who are the legal representatives of
Veerabahu Pillai on the allegation that the
trustee have been guilty of wilful default. They
also claim a declaration that the properties
described in schedules I to VII-A and VIII are
still impressed with the trust and they ask for
an order for the administration of the trust by
removing defendant 7 and appointing an
administrator to realise the amount due from the
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trustees on such account and to recover possession
of the properties mentioned in the said schedule,
re-call them and distribute the sale proceeds
rateably amongst the unsecured creditors.
Several defences were raised to this suit by
the several defendants. It was denied that the
trustees were negligent in the matter of
collecting the outstandings and that the
alienations effected by them were for inadequate
considerations and otherwise improper and
unjustified. It was urged that the present suit
was barred by res judicata as a result of the
withdrawal of 0. S. No. 30 of 1943. It was further
alleged that the suit was not maintainable, that
it was bad for non-joinder of
214
parties and was barred time. The respective by
alienees pleaded that the transfers in their
favour were valid and binding. Defendant 7
Defendant specifically urged that he was not
guilty of any breach of trust; J and a plea was
also raised that the creditors who . had filed the
present suit had acquiesced in some of the
dealings . Defendant 12 resisted the plaintiffs’
case that he had intermeddled in the management of
the trust estate and was therefore liable as a
trustee de son tort. An objection was raised about
the proper valuation of the suit and it was urged
that the proper court fee had not been paid. It
was denied that sale deeds executed by only two
out of the three trustees were invalid. On these
pleadings twenty nine issues were framed by the
learned trial judge.
In substance the trial judge rejected the
plaintiffs’ claim for account, but he passed a
decree declaring that the properties described ill
schedules I to III, V, VII, I to and VIII
continued to be impressed with the trust imposed
upon them by the trustees. The decree directed the
removal of defendant 7 and the appointment of the
advocates instead as administration. It further
directed defendants is, 13,14, 16 and 17 to
deliver possession of the properties in their
respective possession and asked the administrators
to re-sell the said properties and distribute the
proceeds amongst the creditors and to pay the
surplus, if any, to defendants 1 to 6. Under the
decree defendants 12, 13, 14 and 16 were held
entitled to receive the respective consideration
of the sales and mortgages together with interest
and they were also liable to render account for
profits of the properties in their possession.
This decree gave rise to three appeals before
the High Court. Appeal A. S. No. 720 of 1949 was
filed by defendant 14 and his sons defendants 18
to 24. Appeal A. . No. 731 of 1949 was filed by
defendants 12, 13 and 16; and Appeal A. S. No. ’21
215
of 1950 by defendants 8, 9, 10 and 17. Ill
substance the High Court has confirmed the decree
passed by the trial court and dismissed all the
three appeals. The High Court has, however,
modified the trial court‘s decree in regard to the
interest which the decree had ordered to be paid
to the alienees. The High Court took the view that
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in adjusting equities between the alienees, the
alienations in whose favour were found to be
invalid, and the trust, the contract rate of
interest need not be awarded. Subject to the
modifications made in regard to the payment of
interest the rest of the decree has been
confirmed. Defendants X, 9 and 10 and the legal
representative of defendant 17 who died pending
the proceedings before the High Court have not
challenged the decree passed by the High Court in
their Appeal A. S. No. 21 of 1950. Defendants 14
and 18 to 24 as well as defendants 12,13 and 16
have, however, challenged the decision of the High
Court and have obtained a Certificate from the
said High Court in that behalf
It would thus be seen that in the two appeals
before this Court we are concerned with six
transactional. B - 94 which is executed in favour
of defendant 14, Ex. 13-90 which is executed in
defendant 12, Exs. B. 37 and B. 79 which are
executed in favour of defendant 13 and Exs. B-104
and R-105 which are executed in favour of
defendant 16. Broadly stated both the Courts below
have found that all these alienations were
effected for inadequate consideration. It has also
been found that Exs. B-94 and B-37 are invalid for
the reason that they have bee executed by only two
out of the three trustees, whereas the transfers
under EXS. B-12, B-13 and be 16 held to be invalid
as they are transfers in favour of the relations
of one of the trustees Veerabahu. It has further
been found that defendant 12 intermeddled with the
estate of the trust and must therefore be regarded
as trustee de son tort and therefore the transfer
made to him is
216
invalid as a matter of law. Both the Courts have
rejected the plea of res judicata and limitation
raised by the defendants. There are some of the
points of law which are common to both the appeals
and it would be convenient to deal with them in a
the order in which they have been raised before .
The First point argued before US by the
learned Attorney-General on behalf of the
appellants in Civil Appeal No. 62 of 1959
(defendants 14 and 18 to 24) is one of limitation.
He contends that on a fair and reasonable
construction the present suit attracts the
application of Art. 120 and is therefore barred.
On the other hand, Mr. viswanatha Sastri, for The
plaintiffs, contends that the plaint clearly
showed that the plaintiffs are not asking merely
for a declaration but they are also claiming that
a new administrator should be appointed and a
direction should be issued that the property in
question should be delivered to him. Such a claim,
according to him, obviously attracts Art. 131. It
is common-ground that if Art. 120 applies the suit
is beyond time, whereas if Art. 134 is applicable
the suit is within time.
The decision of this question would naturally
depend upon the construction of the plaint. Is the
claim made in the plaint one of declaration, or is
it a claim for possession of immovable properties?
The plaint sets out all the material facts which
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constitute the background to the present
litigation, marks material allegations in respect
of all the alienation impeached in the plaint, and
by paragraph 35 it prays, inter aha, that
schedules I to VII-A and should be adjudged as
still impressed as trust imposed on them by the
deed of August 26, 1936, and direct their re-sale.
That is cl.(c) of paragraph 35. By cl.(d) it is
prayed that the Court should order the
administration of the trust by removing defendant
7 if need be and appointing an administrator or
officer of court (1) to realise the
217
amounts mentioned in cl. (a), (b) to recover
possession. and re-sell the properties referred
to in paragraph (c), (3) to distribute the
proceeds rateably amongst the unsecured creditors
and perform such other acts and functions as may
be necessary to 6 effectuate the trust in
question. The learned Attorney General contends
that cl. (c) asks for adjudication or declaration
that the properties in question are impressed with
the trust and that is no mere than a declaration,
and according to him cl.(d) prays for the
appointment of an administrator to realise the
amounts and to recover possession of the
properties and re-sell them. He suggests that on a
fair construction of cl. (d) all that the
plaintiff pray for is the removal of defendant 7
and the appointment of an administrator with power
to realise the amounts specified and to recover
possession of the properties indicated and to re-
sell them. This is not a claim that possession
should be delivered to the administrator in the
present suit. It may be conceded that if read by
itself alone cl.(d) may be capable of the
construction which the learned Attorney-General
seeks to put on it; but in construing the plaint
we must have regard to all the relevant
allegations made in the plaint and must look at
the substance of the matter and not its form. It
is significant that the plaintiffs have valued the
suit for the purpose of court fee and jurisdiction
at Rs. 23,745 and this valuation includes several
items ill respect of different properties valued
under s, 7(5) of the Court Fees Act. The valuation
made in respect of the different items of
properties under s.7(5) is obviously and clearly
valuation made on the footing that a claim for
possession is made. In fact the Plaint
specifically avers that the plaintiff valued the
suit for possession covered by covered and D-2
under . 7(5) as indicated in the plaint. Thus
there can be no doubt that the plaint has been
valued on the basic that a claim for possession of
the properties covered by the schedules Is
intended to be made. Besides,
218
it is also significant that in regard to the claim
made be the plaintiff in respect of the transfer
in favour of defendant 14 his sons defendant 18 to
24 have been joined specifically on the ground
that since the plaintiffs claim possession of
the said property the said defendants are
necessary parties as it is found that they are in
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possession of the said properties. In other words,
the joinder of defendants 18 to 24 to the present
suit is based solely on the ground that a claim
for possession is made in the plaint and
defendants 18 to 24 being in possession are
necessary parties to the suit. Therefore, in our
opinion, reading the plaint as a whole it would be
unreasonable to construe cl. (d) in paragraph 35
in the manner suggested by the learned Attorney-
General. The prayer which the clause really
purports to make is that as administrator should
be appointed and that an order should be passed
against the respective defendants asking them to
deliver possession of the properties to the said
administrator. If that we so the plaint cannot be
construed as one in which a mere claim for
declaration is made. It is a plaint in which a
declaration is no doubt claimed but based on the
said declaration or adjudication a further claim
for possession to the administrator is also made.
The result, therefore, is that the argument that
the prayer made in the plaint attracts Art. 120
must be rejected.
The next continuation urged is that the
plaintiffs cannot sue for possession but must
Confine themselves only to a claim for
declaration. It is not disputed by the learned
Attorney-General that in regard to public
charitable trusts the beneficiaries are entitled
to sue for setting aside alienations of the trust
properties improperly effected by the trustees,
and to ask for the restoration of possession of
the said trust properties to the trustees newly
appointed. Indeed, there is ample judicial
219
authority in support of this position. In A.
Subramania Iyer v. P Nagarathna Naicker (1), it
was held by the Madras High Court that in a suit
by the worshippers of a temple to have the
alienation of the trust property by some of the
defendants, trustees. to the other defendants
declared invalid and for possession to the
trustees, the proper decree to be made if the
Court be of the opinion that the alienation is
invalid is to decree possession to those
defendants who are trustee. It was further held
that the trustees need not be referred to a
separate suit for the purpose. In masjid Shahid
Ganj v. Shiromani, gurdwara Parbandhak Committee,
Amritsar (2) the Privy Council has recognised this
right in these words: ’The right of a Muslim
worshipper may be regarded as an individual right,
but what is the nature of the right It is not a
sort of easement in gross, but an element in the
general right of a beneficiary to have the waqf
property recovered by its proper custodians and
applied to its proper purpose. Such an individual
may, if he sues in time, procure the ejectment of
a trespasser and have the property delivered into
the possession of the Mutawali or of some other
person for the purposes of the waqf ".
The argument, however, is that in regard to
private trustee which are governed by the Indian
Trusts Act such a course is not open to the
beneficiary because of the provisions of s.63 of
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the Trustee Act. Section 63 provides that where
trust property comes into the hands of a third
person inconsistently with the trust, the
beneficiary may require him to admit formally, or
may institute a suit for a declaration, that the
property is comprised in the trust. The learned
Attorney-General contends that the only remedy
available to a beneficiary under a private trust
is that prescribed by 863 and no other. He can
either require the alienee to admit that the
property is comprised in the trust, or if the
alienee refuses to make the admission the
(1) (1910) 20 Mad. L, J, 151. (2) (1940) L. R.
671. A. 251, 267,
220
beneficiary may bring a suit for a declaration in
that behalf In support of this contention strong
reliance has been placed on the decision of the
Privy Council in Rani (Chhatra Kumari Devi v.
Prince Mohan Bikram Shah (1). In that case the
respondent had claimed title to the properties as
owner in various ways and had sued as the
proprietor of the properties covered by the
action. All these grounds were rejected and it was
held that the respondent could claim no title as a
proprietor at all. Even so, while dealing with the
question of limitation the Privy Council made
certain observations and it is those observations
which are pressed into service by the learned
Attorney General. Article 144 on which the
respondent relied in that case, it has been held,
is applicable only to a possessory suit by the
owner of the property claimed against a person
holding adversely to him without title, and the
plea made by the respondent that he was the owner
on several grounds was rejected; but in the course
of its judgment the Privy Council assumed that by
reason of the contract pleaded by the respondent
the properties were impressed with the continuing
trust in favour of the respondent, and observed
that even so their Lordships were unable to hold
that "this would entitle him to sue for possession
as owner". Sir George Lowndes, who delivered the
judgment of the Board, referred to the fact that
"the Indian law does not recognise legal and
equitable estates. By that law, there can be but
one owner, and where the property is vested in a
trustee, the owner must, their Lordships think,
the trustee, and so the right of a beneficiary is,
in proper case, to call upon the trustee to
Convey to him". It is in that connection that Sir
George Lowndes further observed that the
enforcement of this right would, their Lordships
think, be barred after six years under Art. 120 of
the Limitation Act, and if the beneficiary has
allowed this period
(1) (1931) I.L.R. 10 PAT. 851
221
to expire without suing he cannot afterwards file
a possessory suit, until conveyance he is not the
owner. It is clear that such a trust as is relied
upon in the present case would not fall within
s.10 of the Limitation Act as it would be
impossible to hold that the properties which
vested in the appellant under the terms of the
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wills which have been proved were so vested for
the specific purpose of making them over to the
respondent". It would thus be seen that these
observations mean no more than this that the
beneficiary under a private trust cannot claim to
recover possession of the property from the
trustee so as to attract the application of Art.
144 of the Limitation Act. He can make the claim
for a declaration which would be governed by Art.
120. It is quite clear that the question as to
whether in a proper case the beneficiary can. not
apply for the removal of the trustee, for the
appointment of a new trustee, and for the delivery
to the new trustee of the property improperly
alienated by the previous trustee did not fall to
be considered in that case. All that the Privy
Council was called upon to consider was whether a
beneficiary can bring a suit for possession
against a trustee and whether such a suit can be
governed by art. 144; and in holding that such a
suit cannot be brought by the beneficiary the
Privy Council pointed out that Art. 144 postulates
a suit by the owner and a beneficiary is not an
owner under the Indian Law of Trusts. We are,
therefore, satisfied that the observations on
which reliance is placed by the learned Attorney
General cannot be said to amount to a decision
that in no case can a beneficiary claim that the
trustee appointed under the trust should be
removed and new trustee should be appointed and
the trust properties improperly alienated by the
previous trustee should be ordered to be delivered
into the possession of the new trustee. Section 63
no doubt provides for the two remedies which are
available to the beneficiary, but in our opinion
222
s. 63 cannot be treated as exhaustive on the
subject and so it cannot be urged that a claim for
constructive possession like the one made in the
present suit is prohibited by 8. 63. Prima facie
s. 10 of the Limitation Act seems to contemplate
an action by a beneficiary under a trust to which
8. 10 applies and provides that in such an action
the beneficiary may follow the property and ask
for a proper order &8 to the delivery of the said
property to the Dew trustee. If that be so, the
provisions of s. 10 would suggest that the
remedies prescribed by 8. 63 are not exhaustive.
Besides, it would be relevant to observe that
if s. 63 is held to be exhaustive as to the
remedies available to & beneficiary it would lead
to very anomalous results. If a trustee improperly
alienates the trust property the only remedy which
would on that view be available to the beneficiary
is to obtain a declaration. How would this
declaration be effective to bring back to the
trust the property improperly alienated? Strictly
and literally construed s. 63 dose not refer to
the remedy for the appointment of a new trustee
either, so that on a literal construction of s. 63
even that remedy may be outside its purview but
assuming that a beneficiary can ask for a
declaration that the property alienated is
impressed in the trust and also add a prayer for
the appointment of a new trustee that only means
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that after the new trustee is appointed he will
have to sue the alienee for possession and very
often this suit would be defeated by the alienee’s
plea of adverse possession. It is hardly necessary
to emphasis that when the beneficiary sues for a
declaration as required by s. 63 and the alienee
resists the said suit the adverse possession of
the alienee is emphatically brought out and the
pendency of the beneficiary’s suit would not
affect that position so that on the view that a.
63 is exhaustive more often than not the
beneficiary’s claim would in substance be defeated
by the adverse possession of the alienee.
223
In Subbaiya Pandaram v. Mahamad Mustapha Maracayar
(1), this is exactly what happened. In, the
presence of the purchaser it was declared that the
trust have been validly created and that the
property was in fact a trust property. Their
Lordships pointed out that "at the moment when the
said decree was passed the possession of the
property was adverse and the declaration that the
property had been properly made subject to the
trust disposition, and therefore ought not to have
been seized, did not disturb or affect the quality
of his possession ; it merely emphasised the fact
that it was adverse. No further step was taken in
consequence of that declaration until the present
proceedings were instituted when it was too late."
We would like to add that if for bringing back to
the trust the properties improperly alienated by
the trustees two suits are required to be filed we
apprehend that the second suit by the newly
appointed trustee for obtaining possession of the
properties would almost always be too late, and so
s. 63 cannot be read as exhaustively dealing with
all the remedies available to the beneficiary. We
must, therefore, reject the argument that the suit
for possession in the form in which the prayer has
been made by the plaintiffs is incompetent.
That takes US to the question of res
judicata. The argument is that on general grounds
of res judicata the dismissal of the suit (O. S.
No. 30 of 1943) filed by defendants 1 to 6 should
preclude the trial of the present suit. It has
been fairly conceded that in terms s. 11 of the
Code cannot apply because the present suit is
filed by the creditors defendants 1 to 6 in their
representative character and it conducted as a
representative suit under o. 1, r. 8; and it
cannot be said that defendants 1 to 6 who were
plaintiffs in the earlier suit and the creditors
who have brought the present suit are the same
parties or parties who claim
(1) [1923] L.R 50 I.A. 295.
224
through each other. Where s. 11 is the thus
inapplicable it would not be permissible to rely
upon the general doctrine of res judicata. We are
dealing with a suit and the only ground on which
res judicata can be urged against such a suit can
be the provisions of s. 11 and no other. In our
opinion therefore, there is no substance in the
ground that the present suit is barred by res
judicata.
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The next question which falls to be
considered is the most important question in these
appeals. We have already seen that three trustees
were appointed under the trust deed executed by
defendants 1 to 6 and two of the impugned sale
deeds have been executed by only two out of the
said three trustees. The Courts below have held
that two out of the three trustees could not
convey a valid title and so on that ground alone
the two transfers are invalid. It is urged before
us that this conclusion is not justified on a fair
and reasonable construction of cl. 23 of the trust
deed. Be. fore considering this point it is
necessary to state the legal position in the
matter under the Trusts Act.
Section 48 of the Trusts Act provides that
when there are more trustees than one, all must
join in the execution of the trust, except where
the instrument of trust otherwise provides. It is
thus clear that all acts which the trustees intend
to take for executing the trust must be taken by
all of them acting together. Therefore, there can
be no doubt that if the validity of the
alienations effected by the trustees falls to be
considered only in the light of s. 48 the fact
that out of the three trustees only two have
executed the sale deeds would by itself make the
transactions invalid and would not convey title to
the alienees. This position is not in doubt.
Lewin on "Trusts" has observed that "in the
case of co-trustees the office is a joint one.
Where the administration of the trust is vested in
225
Co-trustees they all form as it were but one
collective trustee, and therefore must execute the
duties of the office in their joint capacity. it
is not uncommon to hear one of several trustees
spoken of as the acting trustee but the Court
knows no such distinctions, all who accept the
office are in the eyes of the law acting trustees.
If anyone refuses or be incapable to join it is
not competent for the others to proceed without
him, but the administration of the trust must in
that case devolve upon the Court. However, the act
of one trustee done with the sanction and approval
of a co-trustee any be regarded as the act of
both. But such sanction or approval must be
strictly proved (1) If one of the trustees refuses
to join in the execution of the trust, under the
Indian law s. 34 of the Trusts Act provides for
the remedy. The other trustees can apply to the
Court as contemplated by 8. 34 and the trust may
accordingly be executed.
As we have seen s. 48 contemplates that its
provisions will not apply where the instrument of
trust otherwise provides. In other words, if a
trust deed under which more trustees than one are
appointed expressly provides that the execution of
the trust may be carried out not by all but by one
or more then of course the matter world be
governed by the special provision of the trust
deed. The argument urged by the learned Attorney
General is that cl. 23 of the trust deed in suit
makes such a provision. Both the Courts below have
rejected this plea but it is urged that the said
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conclusion is based on a misconstruction of the
relevant clause.
Clause 23 has been thus translated by the
High Court: "In all the proceedings to be taken in
connection with this estate, you three, either
unanimously or according to the decision of the
majority, shall act". In the earlier litigation
stated by defendants 1 to 6 this clause was thus
translated:
(1) Lewin on trusts, 15th ed., p. 190.
226
"All the steps to be taken in connection with this
estate should be according to the unanimous
opinion of all the three of you or as decide(1) by
the majority". The learned trial judge has made
this translation of the clause in the present
proceedings: "In all the proceedings to be taken
in connection with the estate all the three should
act either unanimously or according to the
decision of the majority". The learned Attorney-
General has supplied us with the literal
translation of the clause which reads thus: "In
connection with this estate, in all proceedings to
be taken you three unanimously or according to the
decision of the majority shall act". We have
carefully compared all the translations, and we
feel no difficulty in holding that the translation
supplied in the earlier litigation is somewhat
inaccurate, whereas all the three translations
made in the present proceedings substantially
agree. Taking the translation supplied by the
learned Attorney-General it is clear that what
this clause requires is that the three trustees
shall act, and it provides that they shall act
according to the decision which may be reached
either unanimously or by majority. "You three,"
that is to say the three trustees, is the subject
of the predicate shall act"; and the words between
the subject and the predicate indicate how the
decision has been reached. Reading the clause as a
whole it is difficult to accept the argument that
this clause allows two of the three trustees to
act without joining the third trustee in the
actual action to be taken in the execution of the
trust. It is not necessary under the clause that
in the matter of executing the trust every
decision must he unanimous. The clause recognises
that in some matters decision may be by majority;
but nevertheless it requires that once a decision
is reached either unanimously or by majority, in
giving effect to the decision and in taking any
given action in the execution of the trust all the
three must act. Thus read this clause conforms to
the statutory provision
227
contained in 8. 48 of the Indian Trusts Act and is
not intended to provide for an exception to the
said provisions at all. It is urged that if no
departure was intended to be made from the
principles laid down in s. 48 the clause need not
have been added at all. This argument is wholly
inconclusive. There are General other clauses in
the trust deed which also bring out provisions
corresponding to the relevant provisions of the
Trusts Act and this argument may apply to the said
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clauses as well. The authors of the trust, while
creating the trust, have made elaborate provisions
in respect of the trust, while creating the trust,
leave made elaborate provisions in respect of the
several matters concerning the execution of the
trust, and the whole scheme of the trust deed is
consistent with the operative cl. 23 in that it
seems to require all the trustees to act together
even though the decisions which they seek to give
effect to may have been majority decisions and not
unanimous decisions. Therefore, in our opinion,
the Courts below were right in holding that cl.
23, like the main provision of s. 48, requires
that all the trustees should have joined in the
execution of the sale deeds in question. That
being so, Exs. :B-91 and B-37 which are
respectively executed in favour of defendant 14
and defendant 13 are invalid and can pass no title
to the alienees on the ground that only two out of
the three trustees have executed them [Vide: Lala
Man Mohan Das v. Janki Prasad (1)].
In support of the validity of these transfers
an alternative argument has been urged before US.
It is pointed out that according to Lewin on
Trusts, if the act to the two trustees has been
done with the sanction and approval of the third
trustee then it may be regarded as an act of the
three trustees, and it is urged that in the
present case the third trustee had consented and
shown his approval to the transactions in
question. The two sale deeds have been executed by
defendant 7 and Veerabahu
(6) [1944] L. R. 72 T. A. 39.
228
Pillai, and they do not bear the signature of
Narayana Pillai but this. alternative contention
proceeds. on the assumption that though Narayana
Pillai did not sign the document (Ex. B-94) he had
in fact consented to it and had shown his approval
to the transaction. This argument, however, cannot
be accepted having regard to the concurrent
finding recorded by the Courts. below on this
point. Dealing with this question the trial court
has referred to the discrepant versions given for
Narayana Pillai not joining in the execution of
the sale deed. He points out that no mention is.
made in the sale deed as regards. the
circumstances under which the third trustee did
not join. Then he examines the evidence given by
defendant 7 and points out the infirmities in the
said evidence. He compares. the evidence given by
defendant 13 in the previous. suit and observes
that the explanations. given are inconsistent. One
of the explanations was that Narayana Pillai
declined to come to the Sub-Registrar’s office as
he was. heavily involved and that people would
think that he was selling his. property. The other
explanation was that Narayana Pillai wanted come
accommodation, and when his co-trustees refused to
agree he declined to join the execution of the
document. The trial court has observed that there
was nothing to show that Narayana Pillai was
financially involved at the relevant time, and he
points. Out that in fact Narayana Pillai had gone
to the sub-Registrar’s. Office near about that
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time in connection with another transaction. That
is how the trial court has rejected the argument
that Narayana Pillai was a consenting party to the
transaction in question. The High Court has
concurred with this conclusion. In dealing with
this question the High Court has preferred to
believe the evidence of the first defendant that
Narayana Pillai considered the prices fixed for
Ex. B-94 as very low and for that reason refused
to be a party to it. It has contrasted this reason
with the other reasons given on behalf of the
alienees, and it has recorded its conclusions in
these words:
229
"Whatever may be the reason it is certain that
Narayana Pillai was not a consenting party to the
transaction and there being no other evidence by
way of minutes of any meeting of the trustees had
decided with the knowledge of Narayana Pillai,
though he had dissented, we are unable to hold
that there has been such a decision of the
majority as would bind the dissenting trustee". It
does appear the original draft of Ex. B-94 was
made on the assumption that all the trustees would
join in the execution of the document but the hope
and anticipation formed by the two trustees was
believed and so the document was ultimately
executed by two of them without Narayana Pillai
joining. We have considered the evidence to which
our attention was invited in this connection, and
we see no reason to interfere with the concurrent
conclusion recorded by the Courts below that
Narayana Pillai was not a consenting party to the
transfer in question. ’that being so, the
alternative ground made in support of Ex. B-94
fails. If the transfers in favour of defendant 14
(Ex. B-94) as well as Ex;. B-37 in favour of
defendant 13 fail on this ground it is really not
necessary to consider the further question as to
whether both the said transfers were effected for
grossly inadequate consideration.
The next question which has been raised on
behalf of defendant 14 is in regard to the
amendment made by the High Court in its decretal
order. It is urged that this amendment was made
after the appeals to this court had been admitted
and so it is without jurisdiction. It appears that
the certificate was granted by the High Court to
the respective defendants who have come to this
Court as appellants on November 26, 1954, and the
appeals were admitted on December 4, 1955, whereas
the amendment has been made after the appeals were
admitted. The application for the amendment in
question was made under s. 151 and 152 of the
Code; and it became necessary because the decretal
order drawn in the High Court referred to the
profits
230
of which accounts were directed as mesne profits.
The use of the words "mesne profits" would have
inevitably brought ill the period of three years
beyond which accounts could not be claimed. By r J
their application the plaintiffs alleged that the
use of "mesne profits" in the decretal order was
inconsistent with the judgment which had directed
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accounts of the net profits as so they claimed
that the decretal order should be corrected in cl.
III, sub-cl.(3). According to the prayer thus made
it was suggested that the clause should read as
follows "that the defendants 12, 13 and 14 are
liable for the net profits of the properties
purchased by them under schedule V, schedule II
and schedule I respectively" The word "net profit"
was used in the place of "mesne profits"
originally introduced ill the order. When this
application for amendment was argued before the
High Court the defendants pleaded that the use of
the words "mesne profits" was proper and should
not be changed. It was urged on their behalf that
in its judgment the High Court had introduced the
words "mesne profits" deliberately and so the
decretal order was perfectly correct. This
contention has been negatived by the High Court,
and in our opinion rightly. It appears that in the
earlier portion if his judgment Krishnaswami
Naidu, J., summarised ill one paragraph the effect
of the decree passed by the trial court; and in
giving this summary he observed that under the
decree defendants 12, 13, 14 and 16 were held
entitled to be paid the respective considerations
of the sales and mortgages together with interest
they being liable to account for mesne profits as
per the terms of the decree. Two things are clear.
Th s part of the judgment does not contain the
decision of the High Court at all. It is really
concerned with the narration of the relevant facts
and it purports to summarise the effect of the
decree and nothing more. Besides, the use of the
words "mesne profits" in the context is obviously
the result of inadvertence because the decree of
the
231
trial court had in the relevant clause used the
words "net profits" and not "mesne profits". Thus,
there can be no doubt that the decretal order
drawn in the High Court through error introduced
the words "mesne profits" and such an error could
be corrected by the High Court under ss. 151 and
152 of the Code even though the appeals may have
been admitted in this Court before the date of
correction.
But apart from this technical argument about
the jurisdiction of the High Court to make the
correction the point in question has been raised
on the merits before us; and it is urged that the
plaintiffs are not entitled to anything more than
three years’ profits from the respective
defendants. The argument is that Art. 109 of the
Limitation Act applies to such a claim and the
claim is confined to three years under that
article. Article 109 deals with claims for profits
of immovable property belonging to the plaintiffs
which have been wrongfully received by the
defendants and it prescribes there years’ period
of limitation commencing from the time when the
profits were received. Normally there is no doubt
that a successful plaintiff would be entitled to
mesne profits for three years and not more; but in
the present case we are dealing with a claim made
by the plaintiffs on behalf of the trust and the
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decision in their favour has rendered it necessary
to adjust equities between the trust and the
respective alienees alienations in whose favour
have been set aside as invalid. We have already
seen that having set aside the alienations in
favour of defendant 14 and others the Courts below
have directed that the alienees should get the
amounts due to them from the trust. It has also
been directed that interest at the rate awarded by
the decree should be paid to them on the said
amounts. This clearly is an equitable relief
granted to the alienees. Having held that the
alienees should get interest on the amounts due to
them from the dates of their respective mortgages
or
232
sales the Courts in fairness have directed that
the alienees in turn should give an account of
the net profits of the properties which were
wrongfully in their possession commencing with the
date when 7 they got possession. If the technical
argument based on Art. 109 is upheld as a matter
of law there would be no scope for giving
equitable relief to the alienees as all and they
may be driven to file fresh actions to recover
their claims and such actions would have to face
the possible plea of limitation. That is why the
High Court has observed that the question about
the net profits awardable to the trust and
interest awardable to the alienees involves
considerations of equitable adjustment, and it is
by way of an equitable adjustment that the
relevant directions have been issued by the
decree. It is not disputed that the Court had
jurisdiction to make such an equitable adjustment.
Indeed, in many cases of this type Courts have
made equitable adjustments between rival parties
Vide: Satgur Prasad v. Har Narain Das (1); Bhagwat
Dayal Singh v. Debi Dayal Sahu (2). The principal
and interest ordered to be paid to defendant 14
and the profits ordered to be paid by him are thus
integral parts of on equitable adjustment between
the plaintiffs and defendant 14.
It is also urged on behalf of defendant 14
that the High Court was in error in modifying the
decree passed by the trial Court by changing 10
1/2% interest at compound rate to 10 1/2% simple
interest in favour of defendant 14. The contention
if that under the mortgage executed in favour of
defendant 14 (Erg. B-95) the contract rate was 101
compound interest and as mortgagee defendant 14
was entitled to that rate. In support of this
argument reliance is placed on the decision of the
Privy Council in Jagnnath Prasad Singh Chowdhury
v. Surajmal Jalal (a). In that case the Privy
Council has held
(1) (1932) L. R. 59 1. A.A. 147. (2) (1908)
L. R. 35 I. A. 48, 59.
(3) (1926) L.R. 54 I. A. 1.
233
that on a preliminary decree for foreclosure or
sale under O. XXXIV ,rr. 2, 4 of the Code, a
mortgagee is entitled to interest at the rate and
with the . rests stipulated in the mortgage, down
to this date filed for redemption by the decree.
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This position 6 cannot be disputed; but the answer
to the plea is that the present decree is not
passed in an action instituted by defendant 14 as
a mortgagee. The present decree is passed while
adjusting equities between defendant 14 the
alienation in whose favour is set aside; his
rights as mortgagee are equitably recognised and
thereby further litigation is avoided. Since the
decree by which defendant 14 is allowed to recover
his mortgage dues has been passed for giving him
equitable relief it was open to the High Court to
consider whether compound interest should be paid
to him or not. As the High Court has pointed out,
while adjusting equities between the parties the
mortgage does not become revived as such but the
relief granted to the 14th defendant is based on
equity and justice, and so the High Court thought
that the interests of justice would be met if he
is paid out of the sale proceeds the principal
amount of the mortgage with simple interest at 10
1/2%. We have carefully considered the contention’
raised by the learned Attorney-General in this
behalf but we do not think that we would be
justified in interfering with the modification
made by the High Court in the decree passed by the
trial court. In the result Civil Appeal No. 62 of
1959 files by defendants 14 and 18 to 24 fails and
is dismissed with costs.
We now turn to Civil Appeal No. 77 of 1959
filed by defendants 12, 13 and 16. We will take
the case of defendant 12 first. We have already
seen that in favour of defendant 12 a sale deed
has been executed on November 7, 1941 (Ex. B-90).
This sale deed has been set aside on two grounds-
one that it is executed in favour of a person who
by intermeddling with the estate of the trust has
234
become trustee de son tort, and second that the
properties covered by the document have been sold
for inadequate consideration. It is conceded by
Mr. Ganapathy Iyer that if we confirm the J
finding recorded by the Courts below against
defendant 12 on the first point that it self would
invalidate the transfer in his favour. He has,
however, argued that the said finding is
erroneous. Having carefully considered the
relevant material we see no reason to interfere
with the finding in question. In this connection
it would be enough if we briefly refer to the
relevant evidence bearing on this point. Defendant
12 wrote to Pichu Ayyar Avergal, defendant 15, who
was a clerk of the trust estate on August 20,
1936, in these words: request you that Pathai
properties may be checked, that Piramanayakam
Pillai coming (there) may be consulted with regard
to all matters and settlement made and that you
may also come here on Monday morning and render
necessary assistance". The tone of the
communication and its contents are significant. It
is not the language of a person who is merely
assisting the trustee. He is issuing directions to
the clerk of the trust. Defendant 12 was a
creditor of defendants 1 to 6. It is, however,
common-ground that when sale deed (Ex. B.12) was
executed in favour of defendant 13 on December 19,
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1936, defendant 13 who is no other than the
brother of defendant 12 had undertaken to satisfy
defendant 12s debt and so as from that date
defendant 12 had ceased to be a creditor of the
estate. Even so, he was intermeddling with the
estate throughout. On October 14,1938, he wrote to
the Agent of the Travancore National and Quilon
Bank suggesting that he would pay a sum of Rs.
10,000 for the entire amount payable to the bank
by the debtors and he requested the Bank to have
the debt discharged in that manner. Then he added
that "as the price of the lands have gone down
very much owing to conditions at the present time"
he requested that the sum of Rs. 10,000 may
235
be received and that the entire debt should thus
be discharged. It, would be noticed that at this
date defendant 12 was not a creditor of the estate
and he had, therefore, no business to write to the
Bank. This letter, like the earlier one which we
have already seen, clearly indicates that
defendant 12 had taken it upon himself to
administer the trust. To the same effect is
another letter written by him to the official
Liquidator of the said Bank on January 9, 1939. In
this letter defendant 12 says that "the trustees
are arranging for several settlements in deference
to the wishes of Mr. Ayyah Sastri, but owing to
the nature of time the matter stands unsettled
even though both are agreed willingly ". Then he
refers to the proposal to settle all the debts and
promises that "the matter will be finally settled
if the trustees meet you personally". "I,
therefore, request you ’, says defendant 12, to
kindly excuse the little delay and pray to fulfill
the great task", and he adds " I am also coming
there". Then followed a suit by the Bank, No. 12
of 1939 to which defendants 12 and 13 were
impleaded and in this suit defendants 12 and 13
entered into a compromise with the plaintiff Bank
and obtained a compromise decree. It is
unnecessary to refer to the terms of the
compromise decree. What is material is the conduct
of defendant 12 in entering into compromise with
the Bank. Defendant 13 may have been justified in
entering into the compromise but defendant 12
could have done to only as an intermeddler. This
decree was passed on February 14, 1941. Ex. P-7 is
also relevant on this point. This is a notice
issued to defendant 12 by one of the creditors of
the estate. It appears that this creditor had
given to defendant 12 a receipt signed by him in
order to enable defendant 12 to draw the amount
from defendant 14 to be paid to the said creditor.
The notice further recites that "it now transpires
that about the middle of July, 1937, you drew the
said amount of Rs.455 from the said Janakirama
Iyer and have
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failed till now to account for the same to my
client". In other words, this notice shows that
defendant 12 had promised to pay to the creditor
Rs. 425 due to him from the estate and had failed
to do so. The result was the suit by the creditor
(Small Cause Suit No. 58 of 1940). This suit again
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was compromised by defendant 12.
There is yet another document Ex-121 which
shows how defendant 12 was intermeddling with the
estate. This is a receipt passed by the clerk of
the estate to one Subbayyar Avergal on March 9,
1937. It reads thus: "According to the order
directed by defendant 12 I have received from you
on this date Rs. 400 from the sale of the current
Pisanam paddy produce from the estate of M. R. Ry.
P.S. Krishnaswami Ayyar Avergal vagaira, Kalakkadu
Pannai". It is clear that the clerk of the estate
Pichandi Ayyar who passed the receipt had been
directed by defendant 12 to receive Rs.400 from
Subbayyar Avergal. The had accordingly received
that amount and passed a receipt in that behalf.
Now, is. defendant 12 directed the clerk of the
estate to receive a certain amount for and on
behalf of the estate it clearly amounts to
intermedding with the estate and it makes him
trustee de son tort. Defendant 12 had given
evidence in the earlier litigation in which he had
stated that he, defendant 13 and Veerabahu Pillai
were members of an undivided family. In the
present proceedings defendant 12 has gone back
upon his admission that he and his brothers
constituted an undivided family. The trial court
has accepted this latter plea and the High Court
has not differed from it; but that apart, the
several statements made by defendant 12 in the
said evidence clearly show that he was taking as
much active part in the affairs of the trust as
his brother Veerabahu.
There is yet another fact to which reference
may be made. As the High Court has pointed out,
the sale in favour of defendant 12 was executed on
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November 7, 1941, and yet the properties covered
by the said document appear to have been put in
his possession as early as 1937. In other words,
defendant 12 entered into possession of the
properties nearly four years before the sale was
executed in his favour. It is in the light of
these facts that the Courts below have held that
defendant 12 is a trustee de son tort. As is
observed is Williams on Executors and
Administrator(1) "a very slight act of
intermeddling with the goods of the deceased will
make a person executor de son tort". In the
present case the acts of intermeddling by
defendant 12 spread over a fairly long period and
cannot in any sense he regarded as minor and
insignificant. We would accordingly hold that
defendant 12 is in the position of trustee de son
tort and to the sale deed executed in his favour
(Ex.B-90) is bad on that account alone.
In regard to defendant 13 there are two
transactions in his favour, Ex. B-37 and Ex.B-79.
Ex. 37, as we have already seen, is invalid for
the reason that it has been executed by two out of
the three trustees. That leaves Ex. B-79; but
before we deal with that transaction it would be
relevant to refer to a general consideration which
applies to all the transfers in favour of
defendants 12, 13 and 16. Defendants 12 and 13 are
the step brothers of Veerabahu and defendant 16 is
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the son-in-law of defendant 13. It is quite clear
that under s. 52 of the Trusts Act "no trustee
whose duty it is to sell trust-property, and no
agent employed by such trustee for the purpose of
the sale, may, directly or indirectly, buy the
same or any interest therein, on his own account
or as agent for a third person". This position is
thus stated by Lewin on Trust: "A trustee is
absolutely and entirely disabled from purchasing
the trust property whether it be real estate or a
chattel personal, land, or a ground rent, in
reversion or possession, whether the purchase be
made in the trustee’s own name or
(1) Williams of Executors and Administrators,
14th ed., Vol. 1, p. 28,
238
in the name of a trustee for him, directly or
indirectly, as to a purchaser upon a contract or
understanding (amounting to more than mere
expectation) that the purchaser shall re-sell to
the trustee, by private contract or public
auction, from himself as the single trustee, or
with the sanction of his co-trustees(1). Thus, the
alienations by the trustees in favour of the near-
relatives of one of the trustees would be bad for
this reason. Besides, under s. 47 of the Indian
Trusts Act a trustee cannot delegate his office or
any of his duties either to a co. trustee or to a
stranger, unless the instrument of trust so
provides, or the delegation is in the regular
course of business, or the delegation is
necessary, or the beneficiary, being competent to
contract, contents to the delegation. The trust
did impose upon the trustees the obligation to
sell the properties of the trust at the highest
price recoverable and to distribute the sale
proceeds amongst the creditors of the authors of
the trust. The documents in favour of defendants
13 and 16 seem to leave it to the respective
purchasers to pay the debts and that map be
another infirmity in the transaction.
Going back to Ex.B-79 which is a transfer in
favour of defendant 13 it is evident that this
transaction is inevitably connected with another
transaction Ex. B-25. Ex. B-79 has been executed
for a consideration of Rs.2,000 and odd and it
relates to 3 acres and 14 cents of schedule VIII
property. It appears that defendant 13 had
obtained another sale deed Ex. B-25 on April 19,
1937 This sale deed consisted of 51 items of
property belonging to the trust which had spread
over five villages. These items consisted of
house-sites and lands. The sale deed was for Rs.
5,000. Defendant 13 in his turn proceeded to sell
the said property by different lots to respective
buyers. Amongst the creditors of the estate was
Lakshmi
(1) Lewin on Trusts, 15th ed, p. 797.
239
Ammal to whom Rs. 800 was payable on the basis of
50% of return of debt. Defendant sold to I..
Lakshmi Ammal 64 cents out of the lands purchased
by him under Ex. B-25. It, however, appears that
in respect of the 3 acres and 14 cents which ,7
was the subject-matter of Ex. B-25. Original Suit
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No. 32 of 1941 was instituted by persons who
claimed title to the said property. To that suit
Lakshmi Ammal was impleaded as to defendant and so
was defendant 13. Ultimately the said suit was
decreed and the property in question was held to
belong to the plaintiffs in that suit and not to
the estate of defendants 1 to s. It was as a
result of this decree that Ex. B-79 came to be
passed in favour of defendant 13. This document
purports to convey 3 acres and 14 cents of another
property to make good the lose to him by reason of
the decree in Suit No. 32 of 1941. Thus, it would
be seen that the transaction evidenced by Ex. B-70
can stand only if the transaction by evidenced by
Ex. B-26 is valid and not otherwise. The Courts
below have held that this latter transaction is
obviously and patently invalid. In our opinion,
this conclusion is right. It is true that Ex. B-25
is not directly challenged in the present suit
because the properties covered by it have been
sold to different purchasers by defendant 13 and
they have not been impleaded. Even so, since Ex.
B-25 is the very foundation of Ex. B-79 it is open
to the plaintiffs to contend that the validity of
Ex 26 should be considered for determining the
validity of Ex. B-79, and that is what the Courts
below have done. Now, one has merely to look at
the broad features of Ex. B-25 to be satisfied
that it is an invalid transaction. It is patent
that no attempt was made to value the properties
individually. The properties numbering 51 and
spread over five villages were all grouped
together and sold for Rs. 5,000 without making any
serious efforts to determine the value
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of the lot. The purchaser was told to sell the
properties to the respective creditors of the
estate and thus satisfy them. The in substance is
delegation of the functions of the trustees which
they could not J delegate to defendant 13. The
stamp paper for the sale deed Ex. B.25 stands in
the name of Veerabahu Pillai and defendant 13 was
unable to explain how the stamp paper came to be
in that name. Defendant 13 admitted that he did
not inspect the property before its purchase and
that he had no idea about its value. As the trial
court had observed, the transaction cannot be
regarded was a bona fide sale because the property
consists of odd assortment of punja lands and
house sites in Pathi, Padmaneri and Sivalpuri
villages". Therefore, we have no difficulty
whatever in agreeing with the conclusion of the
Courts below that Ex. B-25 was invalid; if that be
so Ex. B-79 must be held to be invalid for that
reason alone. Incidentally, we may refer to the
fact that defendant 13 admitted in the earlier
suit that he had not refunded the purchase money
to Lakshmi Ammal and that substantially destroys
the basis of Ex. B-79 because defendant 13 not
having paid anything to Lakshmi Ammal had no right
to retain the property conveyed to him.
The last transactions which have yet to be
examined are those in favour of defendant 16. In
regard to these transactions the trial court has
found that evidence adduced by the plaintiffs
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shows that the consideration for which properties
were sold were grossly inadequate. The vendee,
defendant 16, did not care to examine himself.
Besides, as we have already pointed out he is a
close relation of defendants 12 and 13. The High
Court has concurred with the trial court’s
conclusion. The only point which was attempted to
be made by Mr. Pattabhiraman in challenging the
correctness of this concurrent conclusion is that
the Courts appear to have assumed that the
agricultural lands conveyed to defendant 16 were
all double crop lands. On this assumption he
suggested that .
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the calculation made about the true value of the
said properties errs on the side of overstatement.
It is not disputed that of the lands conveyed 3
1/2 acres and 24 cents are single crop while
approximately 3 acres are double crop. On looking
at the judgments of both the Courts below,
however, we are satisfied that the argument is
misconceived because neither judgment proceeds on
the assumption that the whole of the agricultural
property is double crop land. In fact the
discussion in the judgment of the trial court on
Issue No. 27 quite clearly negative the assumption
made by Mr. Pattabhiraman. that being so as the
Courts below have observed, evidence led by the
plaintiffs in support of their case that the
transfers were effected for grossly inadequate
price has remained unrebutted. The question about
the value of the property has been determined on
the evidence, documentary and oral, led in the
case, and both the Courts have found in favour of
the plaintiffs and against the alienees.
Incidentally, we may point out that Mr. Viswanatha
Sastri appears to be right when he suggests that
schedule VII refers to the properties both at
Thirukurunkudi as well as Padmaneri though the
heading of the schedule refers only to
Thirukurunkudi. In the result Civil Appeal No. 77
of 1959 preferred by defendants 12, 13 and 16
fails and is dismissed with costs.
Appeals dismissed.
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