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Ardeshir Shapurji Narielwala Vs. Manchershaw Shapurji Narielwala - Court Judgment

LegalCrystal Citation
SubjectTrusts and Societies
Decided On
Case Number Appeal No. 1 of 1909 and Suit No. 839 of 1901
Reported in(1910)12BOMLR53
AppellantArdeshir Shapurji Narielwala
RespondentManchershaw Shapurji Narielwala
DispositionAppeal dismissed
estoppel-indian trusts act (11 of 1882). sections 3, 5, 23-cealui que trust cun-curring in a breach of trust.;s. made an entry in his account books in favour of bib wife v. to show that he had made a lakshis (gift) of ks. 75,000 to her 011 account of his joy at her recovey from an illness, s. informed all his sons and daughters of the fact when he made the entry. the amount was entered into account books as a debt due to v. s. died intestate, and some of his sons took out letters of administration of his estate and with the consent of all sons and daughters they paid rs. 75,000 to their mother v. after seven years, m., a son of s., brought a suit against the administrators questioning the validity of the payment on the ground that it had been made without his knowledge, and claimed that.....chandavarkar, j.1. the learned judge, from whose decree this appeal has been preferred, has found, on his view of the facts and law, that there was neither a gift to nor a trust in favour of virbai by her husband shapurji sorabji narielwala in respect of the amount of ks. 75,000, which is now in dispute. accordingly, the learned judge has allowed the claim made in the plaint, holding the appellants, who were administrators of the estate of the said narielwala, guilt)' of a breach of trust by reason of their having paid the amount to virbai instead of distributing it among the residuary heirs to the estate.2. in supporting the appeal the learned advocate-general has conceded that there was no gift. he has challenged the decree of beaman j. on two grounds. first, that there was a trust in.....

Chandavarkar, J.

1. The learned Judge, from whose decree this appeal has been preferred, has found, on his view of the facts and law, that there was neither a gift to nor a trust in favour of Virbai by her husband Shapurji Sorabji Narielwala in respect of the amount of Ks. 75,000, which is now in dispute. Accordingly, the learned Judge has allowed the claim made in the plaint, holding the appellants, who were administrators of the estate of the said Narielwala, guilt)' of a breach of trust by reason of their having paid the amount to Virbai instead of distributing it among the residuary heirs to the estate.

2. In supporting the appeal the learned Advocate-General has conceded that there was no gift. He has challenged the decree of Beaman J. on two grounds. First, that there was a trust in favour of Virbai; and, secondly, that even if there was no trust, the learned Judge's finding on the evidence that the amount was paid by the appellants to Virbai with the consent of the first respondent (plaintiff) estops the latter from disputing the validity of the payment as a breach of trust on their part.

2. In the view which I take of the case it is unnecessary to decide whether there was a trust created or not by her husband in favour of Virbai. Beaman J. has found upon the evidence that the appellants, acting as legal administrators of the estate of the husband, paid the amount now in dispute to Virbai, with the consent of all the family, including the first respondent (plaintiff) 'in the sincere and very natural belief that they were carrying out Shapurji's wishes.' ' I am also sure,' the learned Judge says, ' that they' (i.e., the appellants) 'acted quite openly and straightforwardly, and that all the family, including the plaintiff, knew what they were doing and cheerfully assented.' That is, the plaintiff, who now complains that the payment was a breach of trust on the part of the appellants, consented cheerfully to the payment being made after he had full knowledge of what he was assenting to.

3. This finding of fact has not been contested before us by the learned counsel for the first respondent (plaintiff), in supporting the decree of the Court below. The evidence on the record fully supports the finding. Without attempting to impugn it, the learned counsel has argued that in law the first respondent's consent is not sufficient to deprive him of the right to call upon the appellants to make good the amount which they paid wrongly and in breach of trust to Virbai. In support of this argument it is contended that a person who takes out letters of administration of the estate of an intestate is a trustee for the beneficiaries of that estate within the meaning of the Indian Trusts Act, under Section 2.5 of which no trustee can escape liability for a breach of trust on the ground of concurrence in it by the beneficiary unless such concurrence was ' with full knowledge of the facts of the case and of his,' i.e., the beneficiary's, ' rights as against the trustee.' In the present case, it is urged, all we have is concurrence by the first respondent with full knowledge of the facts; but there is no evidence, no express finding of the lower Court, no plea even of the appellants that he had knowledge that legally there was no trust and that he was one of the beneficiaries in respect of the amount.

4. I will assume this; and examine the case upon the hypothesis that the first respondent agreed to the payment with full knowledge of the facts but in ignorance of his legal rights But to attract to it the provisions of Section 23 of the Act, we must be first satisfied that the payment by the appellants amounted to ' a breach of trust.' No doubt 'an administrator is considered in a Court of Equity as a trustee'; though he is not an ordinary trustee [per Jessel M.R. in Oceanic Steam Navigation Co. v. Sutherberry (1880) 16 Ch. 236. But he is a trustee for what For the purpose of properly administering the estate as the intestate's legal representative, that is, for the purpose of paying the intestate's funeral charges and his debts, and after these have been paid, he is bound to distribute the residue among the next of kin of the intestate. If he takes it on himself to pay over the residue to other persons, the next of kin are entitled to treat it as a breach of trust and hold the administrator personally liable. If, however, the next of kin, with full knowledge of the facts but under a mistake as to their legal rights, authorize the administrator to pay the amount to a third person, who is not in law entitled to it, and the administrator pays accordingly, he cannot be held to have acted otherwise than in due course of administration. There is no breach of trust in the act of payment, because the law treats it as payment by the administrator to the next of kin themselves. Instead of putting the money into their hands, he has put it into the hands of the third party, because the next of kin authorised him. The next of kin cannot be heard to complain that when they gave their consent or authority, they were not aware of their legal rights. If they knew the facts fully, their mistake as to the law will not entitle them to relief, unless there was some fiduciary relation between the parties so as to raise an equity in favour of the next of kin.

5. It is to be observed that the first respondent's counsel has raised before us, for the first time, the plea that his client gave the consent in ignorance of his rights; no such plea was raised at the trial. His case in the Court below was that he had no knowledge of the facts and had never given any consent to the payment to Virbai. And it was in consequence of that that the seventh issue was raised before Beaman J. It is too late now for the first respondent to raise a new case inconsistent with that on which he rested his right to relief in the Court below. Mahomed Baksh Khan v. Hoftseini Bibi , p. 86; Iyappa v. Ramalahshmappa I.L.R (1890) Mad, 549. As said by the Privy Council in Ganapati Radhika v. Vasudeva , a plaintiff must not be allowed to base his case in appeal on a legal theory never presented to the Court below and rested on a state of facts inconsistent with those on which he had previously rested his case. Having at the trial contended that he had no knowledge of the facts and never consented, he cannot now contend that, even if he had the knowledge and accordingly consented to the payment to Virbai, that consent had been given in ignorance of his legal rights.

6. Let us assume, however, that though the first respondent had full knowledge of the facts, yet, as contended for him by his counsel in appeal, he had given his consent in ignorance of the law as to gifts and trusts and the legal rights of all the parties concerned; still, the payment binds him as one made virtually to himself in due course of administration. Rogers v. Ingham (1876) L.R. 3 C.D. 351 supports this view of the law. There, the executor of a will, acting on the erroneous advice given by counsel as to its construction, divided a certain fund between two legatees with their consent. One of the legatees, a lady, two years after the division, sued the executor and the other legatee to recover the amount paid to the latter. It was held that she could not repudiate the division, having consented to it with full knowledge of the facts and that the mistake, if any, having been one of, law, no relief could be given as there had been no fiduciary relation between the parties at the time the division had been effected as the result of a mutual arrangement. James L. J. in his judgment, said that there was in the case ' no question of trust, trust estate, or trust money to be dealt with ' because :-' When a trustee, by the direction or with the authority of his cestui que trust, pays money to a third person, no matter under what claim of right, or under what circumstances, it is exactly the same as if the cestui que trust had received the money from the trustee, and had herself paid it to that person. It is simply a question of money paid by the lady, or by the lady's direction, out of money of hers which the trustee had in hand to a person who said that he had a claim to the money. That being so, it is reduced, as it appears to me, to a mere action for money had and received, and it is the same as if A through a third person had paid money to B, thinking that P was entitled to it, 1 thinking also that he was entitled to it; there having been, as it is now said, a mistake of law which was common to both parties.' Further on, the same Lord Justice observed in disposing of the argument that in such cases the Court ought to relieve against a mistake of law and ignorance of legal rights. ' If that proposition were true in respect of this case it must be true in respect to every case in the High Court of Justice where money has been paid under a mistake as to legal rights, and it would open a fearful amount of litigation and evil in the cases of distribution of estates, and it would be difficult to say what limit could be placed to this kind of claim, if it could be made after an executor or trustee had distributed the whole estate among the persons supposed to be entitled, every one of them having knowledge of all the facts, and having given a release. The thing has never been done, and it is not a thing which, in my opinion, is to be encouraged.'

7. The only difference between Rogers v. Ingham and the present case is that in the former the executor and the legatees acted on the advice of counsel taken as to the construction of the will; whereas here no legal advice was taken by any of the parties on the question whether there was a trust in law. All honestly and with full knowledge of the facts assumed that there was either a gift or trust and accordingly they concurred in the payment to Virbai, supposing her to be entitled to it. But the absence of counsel's opinion in the present case can make no difference for the purposes of the law governing it. Executors and administrators are not protected in a case of improper administration merely because they acted honestly on the erroneous opinion of counsel. It still remains a breach of trust. But they are protected when, without any mistake of fact, they pay the residue of the estate to a wrong person under the express authority of the rightful person given with full knowledge of the facts. And that is so because such payment amounts to payment to the rightful person himself. In such a case, the executor or administrator, as the case may be, is merely what Lord Justice James calls 'the intermediate hand through whom the money passed and by whom it was actually paid' to the wrong person. All the same, it is a payment to the rightful person in the eye of law.

8. It is to be remarked that Rogers v. Ingham had been decided by Vice-Chancellor Hall before it went up in appeal. He pointed out in his judgment that the distribution complained of was ' a matter of arrangement between the parties and that having taken place more than two years before the bill was filed,' the Court ought not to give assistance for the purpose of recalling the distribution, because it had been acquiesced in and the executor had been ' permitted ' by the plaintiff ' to distribute the fund according!)/.'

9. In the present case the equities and presumptions to be made from the facts, apparent on the record, are even stronger than those which existed in Rogers v. Ingham. Here we have the father of the first respondent making an entry in his account book in favour of his wife (mother of the respondent) to show that he had made a gift of Rs. 75,000 to her on account of his joy at her recovery from a serious illness. The father informs all the members of the family of the fact after he has made the entry, The entry is repeated in the account books as a debt due to the lady. The father dies intestate. Some of his sons take out letters of administration of his estate; and with the consent of all concerned, including the first respondent, they pay the money to the first respondent's mother. The consent was given cheerfully with full knowledge of what they were doing. And for seven years after the payment the first respondent raises no objection, makes no complaint. And it is only when, after seven years, he quarrels with his mother Virbai that he questions the validity of the payment. And he questions it not on the ground of his ignorance of the law and the legal rights of the parties or of his consent given under a mistake of fact, but on the ground that the payment had been made without his knowledge. It is found that he had full knowledge. What is the presumption to be made in such a case on this state of facts, which have hardly been disputed before us As was said by Lord Cottenham in Vigers v. Pike (1840) 8 C. & F. 562, ' a man who, with full knowledge of his case, does not complain but deals with his opponent as if he had no case against him, builds up from day to day a wall of protection for such opponent which will probably defeat any future attack upon him.' The facts here warrant, in my opinion, the inference either that the first respondent knew that there was no valid gift or trust and cheerfully consented to the payment to Virbai out of respect for his father's wishes and his regard for his mother; or that, knowing all the facts, he at the time of payment waived all inquiry as to the law and the rights of the parties, and permitted the payment to be made, because it was a payment to his own mother. Mere delay, it is true, is no bar to legal relief where the right is clearly proved unless the lapse of time bars the remedy under the Statute of Limitations; but delay with other circumstances and the conduct of the party claiming relief is sufficient in law as matter of evidence to give rise to the inference of waiver or acquiescence or consent against him. Dalton v. Angus (1874) L.R. 239; Lindsay Petroleum Co. v. Hurd (1881) 6 A. C. 805. On all these grounds, then, the first respondent must fail in his action.

10. But it is contended for the respondent that, even if he cannot personally claim any relief, the suit should not be dismissed but that there must be a decree for administration, so far at least as defendants 5 to 8 are concerned. These were minors when the payment to Virbai was made and they did not, because they could not in law, give any consent. It is urged that they have a right to question the validity of the payment to Virbai, and to relief in this suit which was brought for administration and accounts, though they were not the parties suing. We are asked, therefore, not to dismiss the suit but to pass an administration decree in favour of the said respondents, who were among the defendants in the Court below. It is no doubt a general principle that any person beneficially entitled to the property of an intestate has the right to sue for a decree for the usual accounts of the estate and for a declaration that the administrator is accountable for that estate and his dealings with it to all parties interested in its due and proper administration, according to their respective rights and interests, with all inquiries, accounts, and directions properly consequential therein. But that rule is subject to the qualification that the person so suing is not ' estopped by some personal exception. ' This is pointed out by the Judicial Committee of the Privy Council in Bening-field v. Baxter W. In the present case, for the reasons. I have given, the plaintiff is estopped by his own conduct and the suit cannot lie at his instance.

11. On these grounds the decree of Beaman J. must, in my opinion, be reversed and the suit, so far as it is not decided by the consent decree, dismissed. Costs of this appeal on the respondent-plaintiff.

Batchelor, J.

12. Having had the advantage of reading my learned colleague's judgment, I am enabled the more briefly to state the reasons why I also think that this appeal should succeed. The purpose of the suit, so far as we are now concerned with it, was to recover for the estate of the plaintiffs father, Shapurji, a sum of Rs. 75,000 which had been paid by some of the defendants, as administrators of Shapurji's estate, to Shapurji's widow, Virbai. Throughout the controversy prior to suit, and during the hearing of the suit, the dispute between the parties was as to whether Shapurji had made a valid gift of the Rs. 75,000 in his lifetime to Virbai, but when the case came to be argued it appears to have been admitted by the appellants that the alleged transfer could not be sustained as a gift. It was, therefore, sought to save the transaction as a trust created by Shapurji in favour of Virbai, and the only question seriously argued before the learned trial Judge was whether or not there was this alleged trust. Mr. Justice Beaman entered into this question exhaustively, and, after reviewing all the principal authorities, English and Indian, came to the conclusion that there was no trust, and that there was only an abortive attempt to make a gift. This conclusion has been attacked by the Advocate-General, but after full consideration of his arguments I agree with the view taken by the learned Judge. No good purpose would be served by my attempting to do over again what has already been elaborately done by Beaman J., who has collated and analysed the leading English decisions; and there is the less reason for undertaking such an inquiry, as it is now admitted on all sides that the question whether there was a trust or not must ultimately be decided by reference to the fairly plain terms of Section 6 of the Indian Trusts Act. That section requires for the creation of a trust that the author of the trust shall have indicated ' with reasonable certainty by any words or acts an intention on his part to create thereby a trust.' I am of opinion that this condition is not satisfied here. I think that all the evidence tends to show there was an intention to make a gift-and, if so, the intention admittedly failed-and that there is no evidence to indicate, with anything approaching reasonable certainty, an intention to create a trust. In the first place, it is fair to observe that the long, elaborate and occasionally far-fetched, argument which the learned Advocate-General has found it necessary to submit in support of the appellants' case suggests that, if Shapurji's intention was indeed to create a trust, there was very little ' reasonable certainty ' about its manifestation. And, apart from that, the case, as it seems to me, stands in this way, that while there is no evidence to support an intention to create a trust, there is ample convincing evidence in favour of an intention to make a gift. In the entries in the account books the transfer is described as bakhshis, probably the plainest and strongest word which Shapurji could have chosen to express an out-and-out gift. That was Shapurji's own description of the thing, and that was the way in which it was understood by all the surviving relatives, who clearly were in the best position to have known Shapurji's mind, throughout the quarrels which led to this litigation and throughout the hearing of the suit. It is said that account must be taken of the fact that Shapurji was not a lawyer but a business-man. I do take account of that fact, but it seems to me to make against the appellant. For, Shapurji, as a man of business, knew perfectly well what was meant by bakhshis, and if there is no reason to suppose that he was even aware of the English legal notion of a trust, there is the less reason for endeavouring to withhold from him the intention which he himself expressed and to attribute to him an intention which he could not even have understood. The circumstance that no interest was paid to Virbai during Shapurji's life and was afterwards paid at an unusually low rate, does not appear to me to possess any decisive influence on either side of the present argument. It is certainly not inconsistent with the theory of an intended gift over which the Parsi husband still desired to retain some control; and it is clear that Virbai could not with any grace have preferred any demand for interest. It should be added that there is evidence of other gifts made by Shapurji to his wife, and the occasion of this particular transaction was evidently one where a gift from husband to wife would naturally be expected. On these grounds, I agree with Beaman J. that there was no trust, but only an unsuccessful attempt to make a gift.

13. Now that is really the only point which was argued before Beaman J. with any seriousness. The point upon which the appeal succeeds is the plaintiff's concurrence in the gift, and that, though put in issue and mentioned in argument, was, it seems, never really pressed upon the learned Judge's attention; so that in allowing the appellants' argument here we are not, I think, differing from any considered opinion of the learned Judge below. Indeed, there is reason to think that, if the matter had been fairly urged, he would have welcomed the conclusion which we have reached, for he does not disguise his opinion that it was a hard case for the administrators. ' I do not,' he says, ' impute the slightest dishonesty to them. I am sure that they acted in the sincere and very natural belief that they were carrying out Shapurji's wishes; and I am also sure that they acted quite openly and straightforwardly, and that all the family, including the plaintiff, knew what they were doing and cheerfully assented. ' This finding of facts is not now challenged : the plaintiff with full knowledge of the facts and with as much knowledge of the relevant law as was possessed by anybody else cheerfully assented to the gift; continued silently to acquiesce in it for over 5 years; and now, in consequence of a family feud, finding it to be legally doubtful, seeks to have this large sum recovered from the administrators. The only ground upon which he claims to be entitled to take this position is the provision of Section 23 of the Trusts Act, which absolves the trustees only where the beneficiary ' concurred in the breach, or subsequently acquiesced therein, with full knowledge of the facts of the case, and of his rights as against the trustee,' and it is argued that the plaintiff cannot be said to have had full knowledge of his rights as against the trustees, inasmuch as that knowledge can be possessed by no one until these judgments are delivered, or, if there be a further appeal, till the judgment of the Privy Council is pronounced. The question thus raised is by no means free from difficulty, and, as it is not necessary for me to decide it now, I refrain from expressing any definite opinion on it, and confine myself to the observation that, upon the facts of the present case, I entertain serious doubt whether the section could be used to assist the plaintiff. It seems to me questionable law that, before a beneficiary can concur in a payment so as to preclude himself from disputing it years afterwards, he must know beforehand what the decision of the ultimate Court of Appeal will be on a difficult point of law. Some light may be obtained on the subject from such cases as Griffith v. Hughes (1892) 3 Ch. 105 and In re Somerset: Somerset v. Earl Poulett (1984) 1 Ch. 231. In this latter case, which raised a question of the construction of Section 6 of the English Trustee Act, 1888, there will be found observations of the Lords Justices to the effect that though the section requires .that the beneficiary should know the facts which constitute the breach of trust in the case of an investment, it is not necessary that he should know the investment to be in law a breach of trust. It is no doubt true that the section of the English Act then under consideration differs in terms from Section 23 of the Indian Trusts Act. And I refer to the cases only as suggesting some of the difficulties which the plaintiff would encounter if he had to make good his argument under this latter section. Whether or not he could overcome those difficulties I do not decide, because, in my opinion, his position is untenable on other grounds. In the first place, Section 23 of the Trusts Act is limited to trustees as defined in Section 3, and, in my opinion, the administrators do not fall within that definition. It may be true to say that administrators are for certain purposes considered as trustees, but they are not trustees within the nmeaning of the Crusts Act. That Act deals only with trusts which arise 'out of a confidence reposed in and accepted by the owner, or declared and accepted by him, for the benefit of another or of another and the owner.' Having regard to the definition as a whole, I do not think that administrators can fairly be said to fall within its scope, and this view seems to derive some support from the circumstance that an administrator's liability for devastation is specially provided for in another enactment: see Section 327 of the Indian Succession Act.

14. Moreover, I am of opinion that in any case it is not now open to the plaintiff to contend that at the time of the gift to Virbai he had no knowledge of his legal rights. That is a point upon which it is quite conceivable that the other side would have wished to bring evidence; but not only was it never taken in the Court below, it was tacitly waived. Throughout the trial the plaintiff's sole case upon this point was that he never consented to the gift, that indeed he never knew of it till long afterwards. To this point the evidence was consequently restricted. The issue raised and accepted was ' whether the said payment was not made with the knowledge and consent of the plaintiff and whether the same is not binding on him'-an issue which, as I read it, plainly invited a finding against the plaintiff if his denial of consent was disproved. It has been disproved and no one now suggests that he did not consent. That being so, and regard being had to the general circumstances of the case, I do not think, he ought now, for the first time in appeal, to be heard to say that though he consented in fact, his consent is not binding on him for a reason which was not suggested at the trial. The plea that he consented in ignorance is not only different from, but is inconsistent with, the only plea which the respondents had an opportunity of meeting. In my opinion, therefore, we are not entitled to go into the question of the plaintiff s knowledge or ignorance of his rights at the time he consented. That is a new point which, if allowed, would take the respondents by surprise. Upon this subject reference may be made to Lala Rupnarain v. Gopal Devi I.L.R (1909) Cal. 780 as illustrating the determination of the Privy Council to refuse to entertain a new question at a late stage of a case.

15. That being so, it appears to me that since the plaintiff with full knowledge of all the facts consented to the gift, he must be held, as against the administrators, to have waived any claim of his own. His consent amounted, in the circumstances, to a representation to the administrators that he had no rights, and an estoppel by conduct was created against him. If he elected to make the representation without further inquiry into his legal position upon a difficult question of private rights, being satisfied of the accuracy of the view which was then accepted by every body, I do not think that his precipitancy, if so it can be called, can adversely affect the administrators who .acted upon his representation. The case, as it seems to me, falls within the definition of estoppel in the Indian Evidence Act, as that definition is explained by their Lordships of the Judicial Committee in Sarat Chunder Dev v. Gopal Chunder Laha I.L.R (1892) Cal. 296, where Lord Shand, after pointing out that the terms of the Indian Evidence Act do not enact as law in India anything different from the law of England on the subject of the estoppel, continues in these words:-' The law of this country gives no countenance to the doctrine that, in order to create an estoppel, the person whose acts or declarations induced another to act in a particular way must have been under no mistake himself, or must have acted with an intention to mislead or deceive. What the law and the Indian statute mainly regard is the position of the person who was induced to act; and the principle on which the law and the statute rest is, that it would be most inequitable and unjust to him that if another by a representation made, or by conduct amounting to a representation, has induced him to act as he would not otherwise have done, the person who made the representation should be allowed to deny or repudiate the effect of his former statement, to the loss and injury of the person who acted on it. If the person who made the statement did so without full knowledge, or under error, sibi imputet. It may in the result be unfortunate for him, but it would be unjust, even though he acted under error, to throw the consequences on the person who believed his statement and acted on it as it was intended he should do.' In my opinion these words are apt to describe the relative positions of the plaintiff and the administrators here, and I therefore agree that the suit should be dismissed in so far as the suit is not decided by the consent decree. Costs of this appeal on the respondent-plaintiff.

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