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1948 DIGILAW 217 (CAL)

Lalit Mohan Roy v. Kishori Mohan Roy

1948-09-27

body1948
JUDGMENT K.C. Chunder, J. - These are two appeals from a decree of the District Judge of Howrah modifying the decree of the Subordinate Judge, first Court of the same district. Second Appeal No. 276 of 1945 is by the plaintiffs and second Appeal No. 378 of 1945 is by some of the defendants. 2. One Jiban Krishna Roy executed a deed of settlement on 15th August 1908. It is a very big document with only a portion of which we are concerned in the present case. He created a family trust. He dedicated for the purpose of the trust his half share in a putni, which we shall hereafter refer to as 'the putni' and considerable other properties divesting himself completely of ownership of the same and vesting the ownership in the trustees. He was to be the first trustee and after him his widow and his sons (and if any of the sons be dead his heirs) were to be co-trustees in a body. He left five sons. Defendants 1 to 8 who are the principal appellants in Second Appeal No. 378 are the sons of his son Gopi Krishna. The plaintiffs are the sons of his eldest son Raj Krishna. The other defendants are the heirs of his other children and one Bato Krishna Mondal has been made a defendant in the present case as having purchased the putni at a putni sale. It is not necessary to set out ail the objects of the trust in full as in the document. The main objects were that each of his four daughters was to get monthly a sum of Rs. 6 as maintenance, an amount was to be spent every year on the Sradh of his ancestor. Then he provided for the creation of a reserve fund for the marriage of each of his grandson and grand-daughter. Each branch of the family, that is, his sons, or in the absence of any of the sons the heirs of that particular son, would manage the trust in rotation each year and the managing trustee or trustees would get a remuneration of Rs. 10 per month. After meeting all the charges the balance of the income would go to the five sons or their heirs in equal shares. 10 per month. After meeting all the charges the balance of the income would go to the five sons or their heirs in equal shares. In 1924 two of the sons of Jiban Krishna filed a suit which was Title Suit No. 34 of 1924 for accounts by the trustees. The suit was compromised and accounts up to the date of the compromise were taken as correct. Jiban Krishna during his life time had let out in dar putni his half share of the putni to his co-sharer Rakhal Mukherji on 15th March 1905. The dar-putnidar was to pay the head rent, that is the rent payable to the zemindar, the Maharaja of Burdwan, and he was to pay a net profit of Rs. 922 and odd to the putnidar. It is not disputed that Rakhal Mukherji failed to pay the putni rent of 1343 B.S. The Maharaja of Burdwan filed his application for sale of the putni under the Putni Regulations on 14th April 1937, that is, 1st Baisakh 1344 B.S. The entire putni was sold on 15th May 1937 at a putni sale. Bata Krishna Mondal who is defendant 17 purchased the entire putni, that is not only the 8 annas share of Jiban Krishna but also the remaining 8 annas share of Jiban Krishna's co-sharer. On 4th December 1938 defendants 1 to 15 who are the appellants in Second Appeal No. 378 of 1945, in their personal capacities repurchased the entire putni from Bato Krishna. On 30th January 1942, the plaintiffs instituted the present suit against the other trustees making therein also the surviving daughters and the heirs of the deceased daughters parties as beneficially interested in the trust, and Bato Krishna was also added as a party as the purchaser of the putni at the putni sale. The plaintiffs prayed for administration of the trust by the Court, accounts, framing of a scheme, and for a declaration that the trust attached itself to the entire putni as purchased by defendants 1 to 15, from Bato Krishna. 3. The Subordinate Judge decreed the suit in its entirety. The plaintiffs prayed for administration of the trust by the Court, accounts, framing of a scheme, and for a declaration that the trust attached itself to the entire putni as purchased by defendants 1 to 15, from Bato Krishna. 3. The Subordinate Judge decreed the suit in its entirety. The District Judge pointed out that no trust attached to 8 annas share of the putni which used to belong to the cosharer of Jiban Krishna and he therefore modified the decree of the Subordinate Judge that the entire putni was to be declared as held in trust and he gave a declaration that the trust attached itself to the original half share of Jiban Krishna. He further directed that proportionate contribution should be made by others to the defendants purchasers of the share of the purchase money for 8 annas of the putni. With this modification he affirmed the decree of the Subordinate Judge. 4. The plaintiffs tiled second Appeal No. 276 of 1945 which is directed against that portion of the decree of the District Judge which modified the decree of the Subordinate Judge. Mr. Gupta appearing on behalf of the plaintiffs-appellants in that appeal intimated to the Court that he was not prepared to support the appeal as he considered that the District Judge had acted quite legally and rightly. 5. Under the circumstances Second Appeal No. 276 of 1945 is dismissed but without costs. 6. The defendants filed Second Appeal No. 378 of 1945 against the rest of the decree of the District Judge. Dr. Naresh Chandra Sen Gupta appearing on behalf of the appellants in this second appeal has briefly urged that the trust was invalid, at least to a great portion of it, as it offended against the law of perpetuity in connection with the provisions made for the marriage of the grand-children. He, therefore, further argued that defendants 1 to 3 were not trustees at the time of the putni sale but they were merely agents of the other cosharers and had no knowledge that the putni was to be sold. The Subordinate Judge had found that there was negligence on the part of defendants 1 to 3 who were the managing trustees at the time of the sale. The Subordinate Judge had found that there was negligence on the part of defendants 1 to 3 who were the managing trustees at the time of the sale. The District Judge accepted the contention on behalf of defendants 1 to 3 that the plaintiffs were also negligent in not taking steps to see whether the putni rent had been paid by Eakhal Mukherji. He held further that defendants 1 to 3 were "grossly" negligent in allowing the putni to be sold. Dr. Sen Gupta contended that the District Judge was wrong in holding that there was any negligence, with or without a vituperative adjective added to it, on the part of defendants 1 to 3. The Subordinate Judge had found that Bato Krishna, defendant 17 was not a bona fide purchaser. He found collusion and design in which the defendants as also Bato Krishna took part. The District Judge, after a very careful review of the evidence, overruled this finding of the Subordinate Judge and held that Bato Krishna was an innocent purchaser for value without notice. Mr. Gupta appearing on behalf of the respondents in this second appeal conceded that as the District Judge's finding was reasonable he was not going to contest the same but would accept it. Dr. Sen Gupta's further contention was that as Bato Krishna was an innocent transferee subsequent re-purchase from him by defendants 1 to 15 was not in any way bad and that no trust attached itself to the repurchased half share. His contention was that at the time of the purchase defendants 1 to 3 were not managing the properties. Therefore, as they were neither trustees nor agents at the time of repurchase and the only reason for which according to him the sale can be challenged is if it can be shown that as cosharers there was any want of full disclosure or good faith on their part. Obviously Dr. Sen Gupta had in view the decision of the Judicial Committee in the case of Deo Nandan Prasad v. Janki Singh, 44 I.A. 30 : (A.I.R. 16 P.C. 227). 7. Mr. Gupta has urged that as it is incontestible that some of the objects of the trust are valid and as the defendants had accepted the trust and were acting as trustees they are not entitled in the present suit to question the validity of the trust. 7. Mr. Gupta has urged that as it is incontestible that some of the objects of the trust are valid and as the defendants had accepted the trust and were acting as trustees they are not entitled in the present suit to question the validity of the trust. The suit must proceed on the basis that they are trustees and were also such at the time of the putni sale, Mr. Gupta has pointed out that mere failure by Rakhal to pay the rent of 1343 B.S. did not at once expose the putni to the risk of a sale under the Putni Regulations. The Maharaja had two remedies open to him. He could realise the rent by the ordinary procedure of a rent suit. He could avail himself of the special provisions of the Putni Regulations. It was on 1st Baisakh 1344 B.S. the date when defendants 1 to 3 became entrusted with the management, that the Maharaja exercised his option and further the putni was sold at the time defendants 1 to 3 were in charge of management. They did nothing to save the putni and whether this course was "gross" negligence or not there certainly was a breach of duty on their part as trustees. Mr. Gupta further urged that defendants 1 to 15 remained trustees at the time of the re-purchase of the putni from Bato Krishna though they were not managing trustees then. They had not lost their character as trustees, whether they were managing or not. Therefore, he contended that the trust attached itself to Jiban Krishna's portion of the putni after the re-purchase. Dr. Sen Gupta raised the question whether S. 65, Trusts Act, would apply also to cases of sales in invitum or they would apply only to sales by the trustee himself. In view of his line of argument he did not develop this point. Mr. Gupta contended that the trust under S. 65, Trusts Act, would attach not only to repurchase from a bona fide purchaser to whom the trustee had himself sold but also to repurchase from a purchaser at an involuntary sale if there was breach of trust in connection with the sale. 8. Mr. Gupta contended that the trust under S. 65, Trusts Act, would attach not only to repurchase from a bona fide purchaser to whom the trustee had himself sold but also to repurchase from a purchaser at an involuntary sale if there was breach of trust in connection with the sale. 8. It is settled law that if there is a total or partial failure of object of a trust there is a resulting trust to that extent in favour of the settlor or his representatives and in proper proceedings the settlor or his representative's can get back either the whole or part of the property free from the trust. But this must be done in proper proceedings. In the present case the trust still exists. The provisions made for the daughters as also for the sradh were valid objects of the trust. Even if the trust had failed partially because the object of the trust as regards the provisions for the marriage of the grand-children was against the law of perpetuity this did not put an end to the trust itself. In the title suit of 1924, the sons of Jiban Krishna had shown that they had accepted and were acting as trustees in the trust. The annual term of management is solely in accordance with the trust and it is also admitted by these defendants that they had been performing their turns of management which was in accordance with the trust. They had accepted the trust and having accepted the trust and become trustees they cannot now in a suit brought by the plaintiffs based upon the trust for the administration of the trust itself put an end to the trust wholly or partly by questioning its validity as to part of the object. If they want to determine the trust they are perfectly at liberty to file a proper suit for the purpose and have the trust determined partially or wholly and recover back partially or wholly the property, subject to the trust. In the present case they are in the position of trustees. The law is too well established to be questioned. The Court can therefore order them to render accounts and administer the trust and also frame a scheme relating to it. In the present case they are in the position of trustees. The law is too well established to be questioned. The Court can therefore order them to render accounts and administer the trust and also frame a scheme relating to it. That the Court has this power not only in regard to public trusts but to private trusts has been held by this Court in the case of Manohar Mukherjee v. Peary Mohan Mukherjee, 24 C.W.N. 478 : (A.I.R. 1920 Cal. 210) which was affirmed on appeal by the Judicial Committee. The Courts below were therefore right in decreeing administration of the trust by the Court, the framing of a scheme, and accounts. 9. In our opinion it is immaterial to enter into the question who is more to blame for the sale of the putni, the plaintiffs or the defendants, as contended by the two sides. The duty of preserving the estate and saving it from loss is on all the trustees irrespective of the fact whether a particular trustee is managing the properties at the time or not. This is well-settled law. There, fore, for the sale of the half share of the putni, both the defendants and the plaintiffs were responsible. There was a breach of duty as trustees on the part of both parties, i.e., all the trustees. It is, therefore, pure waste of time to calculate the difference in degrees of breach of trust between these trustees who were all guilty of breach of trust as regards the sale of the putni. It is also perfectly clear that as the defendants had neither got themselves discharged, i.e., divested of their trusteeship, or got the trust determined, they remained trustees whether managing or not at the time of the re-purchase of the putni. The question, therefore, arises whether the purchase by the defendants of Jiban Krishna's half share of the putni made the purchase subject to the trust as the purchase was by trustees who had been guilty of breach of trust at the time of the sale. Section 65 says where a trustee wrongfully sells or otherwise transfers trust property and afterwards himself becomes the owner of the property the property becomes subject to the trust notwithstanding any want of notice on the part of intervening transferees in good faith for consideration. Section 65 says where a trustee wrongfully sells or otherwise transfers trust property and afterwards himself becomes the owner of the property the property becomes subject to the trust notwithstanding any want of notice on the part of intervening transferees in good faith for consideration. The only question under this section is whether the words "where the trustee wrong, fully sells or otherwise transfers" would refer to an involuntary sale as well because under S. 65, even if re-purchase is from an innocent intermediate transferee for consideration without notice (as in this case) the property on re-purchase becomes saddled with the trust. It has been always the policy of Courts of equity to prevent trustees from having an interest in conflict with their duty and therefore purchase by trustees have been looked into with jealous scrutiny by the Courts. It may be that in some cases the re-purchase is a perfectly honest one whilst in other cases the re-purchase may be thoroughly dishonest. But as was pointed out by Lord Eldon in Ex parte Bennet, (1805) 10 Ves 381 at page 385 : (8 R.R. 1) that if a trustee were permitted to buy in a honest case, he might buy in a case having that appearance, but which, from the infirmity of human testimony might remain undetected. It was also said in Williams v. Scott, (1900) A.C. 499 at page 503 : (69 L.J. P.C. 77) that the ground of the rule is that though you may see in a particular case that the trustee has not made an advantage, it is impossible to ex-mine sufficiently in ninety-nine cases out of a hundred whether he has made an advantage or not. 10. In our opinion the words "otherwise transfers" in S. 65, would invite the application of the section to cases of involuntary sales through the default of breach of trust of the trustees. The door otherwise would be open to fraud and it will be very difficult for any Court in some cases to be able to detect the fraud perpetrated upon the trust. The present case is a good example. The Subordinate Judge who heard the evidence and examined the witnesses after careful consideration came to the conclusion that it was fraudulent. The door otherwise would be open to fraud and it will be very difficult for any Court in some cases to be able to detect the fraud perpetrated upon the trust. The present case is a good example. The Subordinate Judge who heard the evidence and examined the witnesses after careful consideration came to the conclusion that it was fraudulent. The District Judge after applying equal care, in a very reasonable, cogent and well balanced judgment, came to the opposite conclusion, namely, that the sale to Bato Krishna was not fraudulent. The District Judge referred to a decision of the Judicial Committee in the case of AIR 1923 175 (Privy Council) and held that this was an authority for saying that S. 65 applied to involuntary sales as well, and not merely to voluntary sales. In that case the Judicial Committee was concerned with the question of Arts. 134 and 144 of Sch. 2, Limitation Act, and in that connection their Lordships of the Judicial Committee pointed out that it made no difference whether the sale was involuntary or voluntary. They said this in connection with the question of adverse possession and limitation. That decision is not applicable to the present case, and their Lordships did not proceed to decide upon the question of the applicability of S. 65, Trusts Act, to involuntary sales. 11. For the reasons we have given above as to proper interpretation of S. 65, Trusts Act, we hold that the trust attached itself to the 8 annas of the putni in the present case on re-purchase though the sale to Bato Krishna was an involuntary sale and he was a bona fide purchaser for value without notice. 12. Dr. Sen Gupta faintly raised the question of acquiescence. It is not very clear what he was trying to establish. Acquiescence in what? There was certainly no acquiescence by the plaintiffs to the repurchase of the property from Bato Krishna by the defendants. The plaintiffs as also the other trustees withdrew their shares of the surplus sale proceeds after the putni sale and purchase by Bato Krishna. But that sale was a perfectly legal and valid sale under the Putni Regulations in which the purchase had been made by an innocent third party without notice and so no one was entitled to question it. But that sale was a perfectly legal and valid sale under the Putni Regulations in which the purchase had been made by an innocent third party without notice and so no one was entitled to question it. No question, therefore, of acquiescence as regards the putni sale or the purchase by Bato Krishna could arise, and as regards the subsequent repurchase by the defendants it is nobody's case that this was done with the consent of the plaintiffs or they acquiesced in it later on. On the other hand, they filed the present suit for recovery of the property by the trust. 13. The decree of the learned District Judge was right and is affirmed and second Appeal No. 378 of 1945 is dismissed with costs. Blank, J. 14. I agree.