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Gokuldas Karsandas Vs. Valibai - Court Judgment

LegalCrystal Citation
SubjectTrusts and Societies;Civil
CourtMumbai
Decided On
Case NumberO.C.J. Suit No. 819 of 1912
Judge
Reported in(1913)15BOMLR343; 19Ind.Cas.944
AppellantGokuldas Karsandas
RespondentValibai
Excerpt:
.....to the admitted facts here too clearly to allow of any serious argument to the contrary. had the estate purchased it, as it ought to have done, it would have been disencumbered of this continuing hindrance in the very centre of it, which of course prevents the owner dealing with so much of his property as he might wish, and in the present circumstances to his own best advantage. 8. having regard to such considerations, it appears to me altogether indisputable that the manager of an estate like this, in which are to be found these old fazendari tenants, ought to have known, and did know, that it was primarily in the interests of the estate and for the benefit of the estate to buy in whenever possible these old permanent tenancies. it is to be clearly understood that in making this..........-of karsandas's mahim properties (iii which a small plot of land now in dispute is included) to nathu valji, a close friend and relative of the family. in 19033. narotam died, and up to that time the minor, the plaintiff gokuldas, resided with bai premcorebai, widow of the deceased ranchordas. in 1904 the plaintiff went to reside with nathu valji, who was continuing the management of the mahim estate after the death of narotam as before that event. in 1905 nathu valji bought the fazendari tenancy of a tenant of the estate he was managing for the minor gokuldas. it has been the plaintiff's contention that this purchase was made out of the estate money and for the benefit of the estate ; and if that were so, then there could be no question but that the plaintiff would be entitled to.....
Judgment:

Beaman, J.

1. I have stopped the case at this point because I think it useless to waste further time and money in the collection and criticism of evidence upon facts in dispute. I am not going to take the case one inch beyond the admitted facts. On these I do not entertain the least doubt but that the necessary conclusion of law follows.

2. Briefly, the material facts are that one Karsandas Liladhar died in 1902, having executed a will, appointing as his executors his two elder sons Ranchordas; and Narotam and bequeathing his estate to his two minor children Gokuldas and Damodar. The family was attacked by plague and the eldest son Ranchordas predeceased his father by a few hours. Next Karsandas died, and very shortly afterwards his younger son Damodar. Thus there remained one executor Narotam and the present plaintiff, to whom the deceased Karsandas Liladhar had left all his estate. Narotam came to Bombay after having entrusted the management -of Karsandas's Mahim properties (iii which a small plot of land now in dispute is included) to Nathu Valji, a close friend and relative of the family. In 1903

3. Narotam died, and up to that time the minor, the plaintiff Gokuldas, resided with Bai Premcorebai, widow of the deceased Ranchordas. In 1904 the plaintiff went to reside with Nathu Valji, who was continuing the management of the Mahim estate after the death of Narotam as before that event. In 1905 Nathu Valji bought the Fazendari tenancy of a tenant of the estate he was managing for the minor Gokuldas. It has been the plaintiff's contention that this purchase was made out of the estate money and for the benefit of the estate ; and if that were so, then there could be no question but that the plaintiff would be entitled to succeed.

4. It is upon this point that the evidence was led and it was clear that if the case were allowed to proceed on these lines, a very great deal of evidence of a complicated kind would be accumulated. For the purposes of my decision I am quite willing to adopt the defendant's counter-suggestion that Nathu Valji bought the Fazendari tenure, described in these proceedings as house No. 294, out of his own money and for his own use. I still say that in these circumstances falls clearly within the scope and intention of Section 88 of our Trusts Act and if also under the prohibition of Section 53 of the Trusts Act. It is clear from the facts, which I have stated, that after the death of Narotam, Nathu Valji in continuing the management of Karsandas Liladhar's estate was an executor de son tort.

5. I have stopped the narrative at the point when this property was purchased, because what followed in 1906 appears to me to have no effect upon the essential ingredients of the legal question I am considering.

6. In 1905, then, Nathu Valji, an executor de son tort, and, therefore, as held from early times in England, a trustee, or under obligations exactly analogous to those of a trustee (see the case of Mulvany v. Dillon (1810) 1 Ball & Beat. 409, took over a permanent lease for his own benefit and use on the estate with which he was intermeddling. There can, I think, be no question that in such circumstances he is within the principle, if not the letter, of the prohibition contained in Section 53 of our Trusts Act. That section in terms is restricted to a trustee or a person who has just ceased to be a trustee ; and it may be argued that if construed strictly it ought to be confined to express trustees; but f the English Judges have, I think, always taken a more enlarged view of the principle. In the notes to Keech v. Sandford (1726) 2 White & Tudor 409 will be found a case Mulhallen v. Marum (1843) 3 Dr. & W. 317 decided by Sugden, L. C, of which the facts are almost identical with the facts here, and that eminent and learned Judge had no hesitation in setting aside the lease so obtained by the trustee for his own benefit. It appears to me equally plain that this falls under Section 88 of the Trusts Act. Here the argument is not embarrassed by any dispute as to whether a literal or enlarged meaning should be given to the word ' trustee, ' for it is the defendant's own case that Nathu Valji was an agent for all purposes of managing this Mahim portion of the estate, and Section 88 expressly includes agents.

7. Then, it is to be seen whether in purchasing this Fazendari lease for himself, Nathu Valji's interests were in conflict with the interests of the estate he was bound to protect, and, if so, whether preferring his own interests to those of the estate he obtained an inequitable advantage. There can be no question but that he has obtained an advantage. Bating the disputed point whether Rs. 75 of the nominal consideration of Rs. 125 paid for this Fazendari lease was really made up of rents due to the estate, and admitting that Nathu Valji paid the whole consideration of Rs. 125; to the widow of Benjamin De Souza, it is clear from further admitted facts that have been stated in argument here that the property to-day is worth considerably more than Rs. 125. Now the defendant Valibai is about to sell it to a Mahomedan for Rs. 800. There can, therefore, be but one answer to the question whether Nathu Valji obtained an advantage. Did he, then, obtain it in circumstances in which his own interests were in direct conflict with the interests of the estate 1 The first part of the section would only apply were the Court to find facts alleged by the plaintiff, namely, that Nathu was able to bring pressure to bear upon the Fazendari tenant by reason of that tenant having fallen in arrears of rent to the estate ; and I am not making anything of that consideration, but the principle of the second part of the section seems to me to apply to the admitted facts here too clearly to allow of any serious argument to the contrary. The buying in of this permanent lease out of an estate, which is what Nathu Valji did for himself, must in almost every case be of extreme advantage to the estate. It is not as though this lease were upon a property elsewhere. It is upon a small plot of some two hundred and twenty square yards in the very heart of the Mahitn Qart, and it was manifestly desirable if it could be done to buy out the Fazendari tenant and so get rid of this permanent lease which yielded no more than Rs. 12 for the estate. Had the estate purchased it, as it ought to have done, it would have been disencumbered of this continuing hindrance in the very centre of it, which of course prevents the owner dealing with so much of his property as he might wish, and in the present circumstances to his own best advantage. What has actually happened is that owing to the purchase by the agent for himself, his widow is now offering the tenancy for sale at Rs. 800 to a Mahomedan, who will thus, if allowed to purchase, become a permanent tenant and a very disagreeable one from the plaintiff's point of view, in the very heart of his property.

8. Having regard to such considerations, it appears to me altogether indisputable that the manager of an estate like this, in which are to be found these old Fazendari tenants, ought to have known, and did know, that it was primarily in the interests of the estate and for the benefit of the estate to buy in whenever possible these old permanent tenancies. So I that in purchasing one for himself he must be presumed, I think, to have taken advantage of his position and knowledge as temporary manager to put his own interests in direct conflict with the interests of the estate and thereafter to have neglected the interests of the estate and preferred his own. If this view is correct, and I have no doubt that it is, then the principle laid down in Section 88 of the Trusts Act must apply and the purchase by Nathu Valji in 1905 must be taken to have been a purchase on account of, and for the benefit of, the minor. Assuming as I have done for the purposes of this argument that the full purchase-money was paid by Nathu Valji out of his own pocket, the plaintiff would no doubt be liable to pay that sum to the defendant, Nathu Valji's widow. It is not worth-while in these circumstances to take evidence and decide what in fact was paid, and whether that money was paid by Nathu Valji himself or out of the funds of the estate, for the plaintiff, in order to cut the matter short and without any prejudice to his contentions to the contrary, is quite willing to reimburse the defendant Valibai the Rs. 125, which the dell feudant alleges was paid by Nathu Valji out of his own funds as the price of this property. It is to be clearly understood that in making this offer, the plaintiff does not abandon any, of his contentions, and it is only because the sum is so and the matter in my opinion ought to be cut short that I make the repayment of this money a term of the decree.

9. On the other hand the defendant must clearly account to the plaintiff for actual rents of the land received since its purchase in 1905 and not applied to the plaintiff's use. The one sum to be set off against the other. And the plaintiff's claim in all other respects to be decreed with all costs. By agreement the solicitors to take these accounts.


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