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1916 DIGILAW 83 (SC)

DEONANDAN PRASHAD v. JANKI SINGH

1916-12-07

LORD PARKER OF WADDINGTON, LORD SUMNER, SIR JOHN EDGE, SIR LAWRENCE JENKINS

body1916
Judgement Appeal from a judgment and decree of the High Court (August 18, 1910) reversing a judgment and decree of the Subordinate Judge of Monghyr. The suit was instituted by persons now represented by the respondents against the appellant and another for a declaration that an auction sale which took place on March 25, 1907, under Act XI. of 1859 should be set aside as being fraudulently effected; the plaintiffs further claimed a decree for possession and mesne profits. Alternatively the plaintiffs claimed to recover the value of the property, or that there should be a reconveyance ordered. The circumstances under which the suit was instituted appear from the judgment of their Lordships. The Subordinate Judge found that there had been no fraud on the part of the appellant, that the proper notices were served, and that the sale had been brought about by the negligence of the plaintiffs in not paying the revenue kist. He accordingly dismissed the suit. The High Court (Holmwood and Chatterjee JJ.) allowed the appeal. The learned judges found that there were no laches on the part of the co-sharers, and that the appellant was in default. They held that the appellant was a trustee for the owners of the 3-annas share mortgaged to him, and was bound to reconvey that share to his mortgagors upon payment of a proportionate part of the purchase price. With regard to the other co-sharers, they considered that the matter stood upon a somewhat different footing, but that nevertheless a fiduciary relationship existed. They said " even, therefore, if the first defendant be considered in the light of a co-sharer, he must share the acquisition with his other co-sharers. But he is not a co-sharer; he is a trustee for a co-sharer, and can derive no benefit from himself committing a breach of trust." They found that the purchase was made for Rs.425, and that the value of the property was over Rs.8000, and ordered that on the plaintiffs paying into Court Rs.425, with interest at 6 per cent, per annum from the date of the sale, within three months, a conveyance under one deed of sale should be executed at their cost. It was also ordered that the appellant should account to the co-sharers other than his mortgagors for mesne profits. The decree as drawn up declared that the sale and purchase were invalid. 1916. Nov. 2, 3. It was also ordered that the appellant should account to the co-sharers other than his mortgagors for mesne profits. The decree as drawn up declared that the sale and purchase were invalid. 1916. Nov. 2, 3. De Gruyther, K.C., and Dube, for the appellant. Under the Transfer of Property Act, 1882, s. 76 (c), the appellant was under no obligation to pay the revenue due upon the shares not mortgaged to him. Sect. 53 of that Act provides that a co-sharer may purchase. There was no evidence of fraud. The appellant had overpaid a previous kist and was entitled to assume that the balance would be credited in his favour. The default was brought about by the respondents, not by the appellant. The Subordinate Judge found that there had been no fraud, and that the sale notices had been duly served. In the absence of fraud the appellant is not liable as a person in a fiduciary position Doorga Singh v. Sheo Prashad Singh (I. L. R. 16 Calc. 194.); Ram Lall Mookerjee v. Jodunath Chatterjee. (( 1881) 9 Calc. L. R. 337.) The respondents were not represented. Dec. 7. The judgment of their Lordships was delivered by SIR LAWRENCE JENKINS, This suit relates to a 12-annas share of mauza Tikarampur, pargana Monghyr, being taujih No. 5298. The property was offered for sale in the Collectorate of Monghyr, for the recovery of arrears of revenue, under the provisions of Act XI. of 1859 on March 25, 1907, and was bought for the defendant, Deonandan Prashad, a minor, in the name of Bunwari Lal. Before the sale it belonged as to 9 annas to the plaintiffs 7 to 16, and as to the remaining 3 annas to the plaintiffs 17 to 20, subject to a usufructuary mortgage of these 3 annas for the benefit of Deonandan, and to transfers of parts to the plaintiffs 1 to 6. The suit, which impugns the sale, failed in the Court of first instance, but on appeal the plaintiffs claim was upheld, and a decree was passed on August 18, 1910, that Deonandan, through his certificated guardian, do convey the property to the plaintiffs. From this decree Deonandan has preferred this appeal. The suit, which impugns the sale, failed in the Court of first instance, but on appeal the plaintiffs claim was upheld, and a decree was passed on August 18, 1910, that Deonandan, through his certificated guardian, do convey the property to the plaintiffs. From this decree Deonandan has preferred this appeal. At one time the property was part of a larger estate, but there was a separation of shares under Act XL of 1859, and thereby the 12-annas share now in suit became, subject to Government revenue of Rs.192, payable in four annual instalments. Though the liability to the Government was, and continued to be, joint, yet, as between themselves, it was distributed among the several co-owners in proportion to their respective shares. Thus the amount payable in respect of the 3-annas share was a fourth, that is to say, Rs,9 in June, Rs.12 in September, Rs.12 in January, and Rs.15 in March. The mortgage of the 3-annas share for the benefit of Deonandan was executed on December 23, 1904, and it was thereby stipulated that the mortgagee should, by remaining in possession from 1312 F. up to the repayment to him of the entire debt thereby secured, collect and realize the rent of the mortgaged mauza, estimated as not exceeding Rs.150, and should pay out of it Rs.51 8a. into the Collectorate for revenue and other public demands. In June, 1905, Rs.9 became payable by the mortgagee, but Rs.12 6a. was paid. The reason of this excess payment does not appear. At the end of the four following instalments there were no arrears. But of the instalment payable in September, 1906, only Rs.9 instead of Rs.12 was paid on behalf of the mortgagee. As the other co-owners paid their several aliquot shares and no more, there was, after giving credit for advance payments from previous instalments, a balance still owing of Rs.2 10a. This became in due course an arrear of revenue as defined by the Act, and it was to recover this arrear that the property was sold by the Collector. The arrear, therefore, which occasioned the sale was due to the insufficient payment made in respect of the 3-annas share, and none the less was this the result of the default of those interested in that share, because in June, 1905, an excess payment of Rs.3 6a. had been made. The arrear, therefore, which occasioned the sale was due to the insufficient payment made in respect of the 3-annas share, and none the less was this the result of the default of those interested in that share, because in June, 1905, an excess payment of Rs.3 6a. had been made. This excess had long been absorbed, and had ceased to be an excess credit in the taujih ledger. This, in effect, is the view expressed in the judgment under appeal, and it is made a basis of the High Courts decision in the plaintiffs favour. The learned judges as a further and distinct ground of decision find that there was fraud, and the language used by the High Court, read literally, might be understood to attribute personal fraud to the minor, Deonandan. But, in view of his age, this can hardly have been intended. In any case their Lordships acquit him of any personal misconduct in relation to the default or sale. He was, however, represented by agents, and when the position created by them is regarded as a whole it leads to the conclusion that the Government revenue was intentionally allowed by them to fall into arrear with a view to the property being put up for sale and bought on behalf of the minor. If this be the true view, as their Lordships hold, then, however free from personal blame the minor may have been, he cannot profit by his agents deliberate default committed in breach of the terms of the mortgage. As against his mortgagor, therefore, the mortgagee cannot be allowed to hold for himself the advantage gained by the default for which his agents were responsible. Not, in their Lordships opinion, can he be permitted to hold for himself this advantage to the prejudice of the co-owners. For this purpose the mortgagor and mortgagee may be identified; they together represented the 3-annas share, and theirs was the obligation to pay their quota of the revenue. Equally in relation to the co-owners was the default designed with a view to a subsequent sale and to a purchase on the minors behalf, and the advan tage gained by this scheme must, in like manner, be held for the benefit of the co-owners, who are not shown to have been aware of the default or sale, or to have disentitled themselves to this equitable relief. They had contributed their proper quota to this September instalment, and it cannot be supposed that had they , known of the default or the peril to their interests they would .have allowed a valuable property, worth, it is said, not less than Rs.8000, to be sold away for the failure to pay Rs.2 10a. In estimating the conduct of the parties it is not without significance that, while the co-owners of the other shares paid in full their contribution to the succeeding January instalment, nothing was paid on account of the 3-annas share. Their Lordships have not overlooked the decision in Doorga Singh v. Sheo Prashad Singh (I. L. R. 16 Calc. 194.), which lends support to the appellants contention as against the co-owners; but it is apparent from the judgment under appeal that this decision has not stood unquestioned. And this also appears from the judgment in Faizar Rahman v. Maimuna Khatun. (( 1913) 17 Calc. W. N. 1233.) This case was not cited in the course of the argument, as the respondents were not represented, but their Lordships wish it to be distinctly understood that where an appeal is heard ex parte it is the duty of counsel to bring to the notice of the Board adverse as well as favourable authorities. The decision in Doorga Singhs Case (1) applied too lax a standard of reciprocal conduct in holding that fraud in its strictest sense, such fraud as would support a common law action of deceit, was the test by which to judge these transactions. It failed to pay due regard to the relative position of co-owners in respect of the payment of revenue and to the need of demanding from each such measure of candid dealing and good faith as would ensure that a sharer would not be tempted to make a deliberate default with a view to ousting his co-sharers and appropriating to himself their common property. Here Deonandan, through his representatives, had a duty to perform, which was inconsistent with his becoming a purchaser of the property in the way he did ; therefore his title cannot operate to the exclusion of the co-owners. Here Deonandan, through his representatives, had a duty to perform, which was inconsistent with his becoming a purchaser of the property in the way he did ; therefore his title cannot operate to the exclusion of the co-owners. It is no answer to say that the Act contemplates a purchase by a sharer ; the sale stands, but in the circumstances the transaction is in effect nothing more than payment of an arrear of revenue enuring for the benefit of all. But this gives a right to contribution, so that it must be a term of granting the plaintiffs equitable relief that they contribute to the expenses properly incurred by or for Deonandan in the purchase of the property. The amount to be contributed has been fixed by the High Courts decree at Rs.425 with interest at 6 per cent, per annum within three months. As no exception has been taken to this, either by way of cross-appeal or otherwise, it may be accepted, but the time for payment must be fixed by the Subordinate Judge after notice to the parties. The declaration in the decree that the sale and purchase are invalid is misconceived as a description of the legal position, and in its place should be substituted a declaration that the property purchased must be held for the benefit of the plaintiffs and the first defendant according to their several interests at the date of the sale, subject to the repayment of Rs.425 and interest on that sum at the rate of 6 per cent, per annum from the date of the sale, and there should be a direction for a conveyance as decreed by the High Court on payment of that amount on or before a date to be fixed by the Subordinate Judge. With this variation the decree of the High Court should, in their Lordships opinion, be affirmed with costs, and they will humbly advise His Majesty to this effect.