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Shirinbai Dinshaw Chokshi Vs. Sir Navroji Pestonji Vakil - Court Judgment

LegalCrystal Citation
Decided On
Case Number First Appeal No. 371 of 1928
Reported in(1935)37BOMLR946; 160Ind.Cas.612
AppellantShirinbai Dinshaw Chokshi
RespondentSir Navroji Pestonji Vakil
DispositionAppeal dismissed
.....positive and negative, must be pleaded at the outset unless the trustee has refused to show the trust accounts. if the trustee refuses to-show accounts, the beneficiary has a clear right to sue for an account and to be allowed to formulate his charges of ' wilful default' and breaches of trust after inspection. but, where a beneficiary has had an opportunity of seeing the trust accounts, he must formulate his charges at the outset or at any rate before the issues are framed.;section 10 of the indian limitation act, 1908, does not in terms apply to suits for damages for breach of trust. it certainly does not apply to suits for damages on the footing of wilful default, when ex hypothesi the money claimed has not come into the hands of the trustee, and the reference to an account does..........make good the loss which a beneficiary has sustained. by section 15 he is bound to deal with the trust property as carefully as a man of ordinary prudence would deal with his own, and a breach of trust is any act (or omission) which a man of ordinary prudence would not commit. he is also liable for a breach of any of the duties imposed on him by the act, such as the duty of furnishing accounts and giving information. these are the only rules of substantive law which concern us in this case. if sir navroji employed trust funds for improper purposes, or negligently failed to recover trust funds or to employ trust property to the best advantage, he rendered himself liable to damages. this is all clear from the act, and i do not intend to refer to the english authorities which have been.....

Barlee, J.

1. This is a suit for the administration of the estate of Framji Pestonji Vakil, who died in April, 1897. As shown in the table, at page 229 of the Printed Book, he left surviving him two daughters by a first wife, and a son, Behramji, and five daughters by a second wife, and both his wives had predeceased him. By a will executed on February 18, 1897, just two months before he died, he appointed his brothers Navroji Pestonji Vakil, and Jehangirji Pestonji Vakil and his four sons-in-law, Paymaster, Dalai, Patel and Vakil as the executors and trustees, and he had created a trust of his salt works, named Pestonsagar, for the benefit of his son and five daughters by his second wife. The trustees were directed to carry on the management of the salt works properly and to divide and distribute the income thereof-

whatever may remain over after deducting (thereout) the expenses relating to the Salt works,

in the following proportion, viz., three annas each to the ladies and a one-anna share to Behramji for life with a gift over to their children. He stated also that his Municipal debentures, promissory notes, cash, etc., should be dealt With in accordance with the detailed directions, which make up the greater part of the document. Amongst the legacies were several for charity or religious purposes. Rs. 5,000 were to be given to the trustees of the Parsi Panchayat; Rs. 1,425 to be expended on the purchase of Government Promissory Notes, which were to be held by the trustees, who were to use the interest for ' throwing bread to dogs at Sabarmati and for putting a ' Parab' on the Achar Road'. A ' Parab ' is a platform for feeding birds. The income of his bungalow at Sabarmati, which he had let out to the Post Office, after deducting the necessary expenses, should be taken by any of his daughters, and ' thereout expenses shall be made for 'Baj Rojgar' (ceremonies) of my late respected father and mother, my wife Jaiji, deceased Kharsedji and myself.' There is a further paragraph about the Sagar in the Thana District (which he called the agar). He wrote-

I have spent in all about Rs. 80,000 eighty thousand on it. Therefore if it fetches that much amount or some reasonable amount, then, the said ' Agar' shall be sold and with the amount (realized) Government Promissory Notes shall be purchased and the same shall be held in trust; and the interest thereon shall be paid to my above-mentioned five daughters in proportion to their respective shares.

2. After Framji's death the executors applied to the District Court of Ahmedabad that probate might be given to Bhai Navroji, afterwards Sir Navroji Pestonji Vakil. The probate was granted on November 11, 1897. On June 8, 1899, Navroji filed an account, exhibit 163, p. 291. He included in the schedule of the estate which he had recovered a bungalow at Rutlam valued at Rs. 2,500 ; and he stated that he had written off certain sums claimable under the account mentioned there which were such as could not be recovered. Amongst these irrecoverable amounts were sums debited in the accounts against E. N. Vakil his son-in-law, J. D. Mehta. The former was a trustee under the will.

3. Navroji managed the property up to the date of suit in 1921. In 1916 Behramji died leaving two daughters, Goolbai and Shirinbai, appellants, who were the plaintiffs in the lower Court. They had in the interval been married to F. A. Vakharia and D. B. Choksi. Up to the date of Behramji's death nobody appears to have taken much interest in the administration of the trust. Sir Navroji was the senior member of the family, a gentleman of wealth and distinction, and apparently he was implicitly trusted. But in 1918 the beneficiaries began to discuss the management of the trust, and the correspondence which their learned counsel has read to us shows that some of them expressed dissatisfaction and that there was a general desire to sell the Sagar. The letter, exhibit 244, at p. 606 of the record, was sent to Sir Navroji by the seven beneficiaries, his five nieces and the appellants, who were daughters of his nephew. They wrote-

Our idea is that advantage should be taken of these good times and the salt-works at Ghatkopar known as ' Peston Sagar' which our deceased respected Father Sheth Framji has left by his ' will' should be sold off, so that a good price may be realised and we may be benefited. We do not think you Sir can have any difficulty or objection of any sort whatever to that being done, because in the ' will' of the deceased Sheth Frarnji there is a distinct clause for sale and power is given to you (in that behalf). You will please therefore make the necessary ' Bandobast' (arrangement) in that matter, land you will please invite 'tenders' from the public without keeping anyone as intermediary, and you ' Meherban' (kind Sir) along with two other Trustees should open (the tenders) and after considering the same, you should act according to the opinion of the majority, and sell (the works) to a good (substantial) party at a good price. The Trustees are not bound to accept any highest or lowest ' tender.' All those tenders should be sent in sealed packets to the residence in Bombay of your co-trustee Sheth Ardeshir Burjorji Paymaster, who will receive them and send them over to you Sir for their due disposal. Such sale should be properly advertised in well-known English and Gujarati newspapers. This is the only request. If you Sir will let (us) know your opinion in this matter, Bhai Ardeshir Burjorji Paymaster will make all the arrangements.

This is dated May 27, 1920. On July 3, 1920, Sir Navroji replied and expressed the opinion that it would not be advantageous for the beneficiaries to sell the works, but agreed that if all the sisters came to the conclusion that the works should be sold, they might sell them ; and he gave advice as to the procedure. The sale, however, did not go through, for the present appellants were unwilling to sell except for a very high price. For though on January 15, 1921, E. N. Vakil wrote that he had taken the opinion of all the sisters, and that they were of opinion that he should sell if the salt-works fetched at least two lakhs ; Mrs. Goolbai Vakharia, plaintiff No. 2, in a letter of January 29, 1921, warned the trustees that if they were to sell for less than four or five lakhs, she would take steps through the Courts for improper sale, and her sister sent a lawyer's notice to Sir Navroji to forbid the sale.

4. In the meanwhile at the end of 1920 Mrs. Shirinbai Choksi, plaintiff No. 1, put her case in the hands of Messrs. Crawford Bayley & Co. They called for the accounts of the Sagar for three years. These were furnished. They, then, asked for explanations, and in a letter of March 5, 1921, exhibit 355, p 557, they stated that their client was entitled to the residue of Framji's estate and asked for inspection of the whole account. Shortly after this letter, Messrs. Mansukhlal Mehta & Co., acting for both the plaintiffs sent a notice, to Sir Navroji, and Messrs. Paymaster, Dalai and Vakil, the executors and trustees of the last will and testament of Framji Pestonji Vakil, in which they made definite charges of mal-administration of the estate of Framji.

5. The suit was filed on June 8, 1921. The plaintiffs were the daughters of Behramji. They joined as defendants Sir Navroji Pestonji Vakil, Messrs. Paymaster, Dalai and Vakil, three of the trustees, the six surviving daughters of the deceased Framji, i.e. Jerbai, Gulbai, Pirojbai, Dhanbai, Dinbai and Shirinbai, and Byramji's widow Meherbai, who was the executor of Byramji's will and had a life estate in the whole, of his estate.

6. The plaintiffs pleaded the will of their grandfather Framji and alleged that Sir Navroji who had proved it had concealed some of the deceased's property from the Probate Court, e.g., a valuable business, and had managed it for his own benefit; that the trustees had not accounted for two houses, or the out-standings and cash left by Framji; that they had wrongfully neglected to recover debts due to the estate ; and had wrongfully paid legacies for charity and religious purposes ; and, lastly, that they had mismanaged the deceased's salt pans in respect of which they were express trustees. It was claimed that the plaintiffs were entitled to a one-anna share in the salt pans, and they claimed an account on the footing of wilful default and their share of the salt pans and the residue of the deceased's estate.

7. Sir Navroji denied the charges He died during the course of the suit before the final hearing. At the trial the learned Subordinate. Judge held that the present plaintiffs had a mere life interest in the salt pans and no present interest in the rest of the estate. He found that the charges of breach of trust were not made out and that most of the claims were time-barred. He made a declaration that the plaintiffs were entitled to a sixteenth share in the income and refused an account on the ground that they had not proved wilful default.

8. As I shall show, we do not agree with the view that the plaintiffs have a mere life interest in the Sagar ; and therefore consider that they are entitled to have their one-sixteenth share separated and given them. They must, therefore, have an account in this suit. Further their mother has died since the decree was made and they have now under their father Behramji's will an absolute interest in his estate and can make any claim against Framji's estate, which Behramji could have made unless barred by any rule of limitation or procedure. I shall consider these questions later on. But we cannot agree with learned counsel that they are necessarily entitled at this stage to an account on the footing of wilful default. Their right depends partly on substantive law and partly on rules of procedure. By Section 23 of the Indian Trusts Act a trustee is liable for breach of trust, to make good the loss which a beneficiary has sustained. By Section 15 he is bound to deal with the trust property as carefully as a man of ordinary prudence would deal with his own, and a breach of trust is any act (or omission) which a man of ordinary prudence would not commit. He is also liable for a breach of any of the duties imposed on him by the Act, such as the duty of furnishing accounts and giving information. These are the only rules of substantive law which concern us in this case. If Sir Navroji employed trust funds for improper purposes, or negligently failed to recover trust funds or to employ trust property to the best advantage, he rendered himself liable to damages. This is all clear from the Act, and I do not intend to refer to the English authorities which have been cited. But as a matter of procedure breaches of trust both positive and negative (wilful default) must be pleaded it. the outset unless the trustee has refused to show the trust account. If a trustee refuses to show accounts, a beneficiary has a clear right to sue for an account, and to be allowed to formulate his charges of ' wilful default' [ and breaches of trust after inspection. But, where a beneficiary has had an opportunity of seeing the trust accounts, he must formulate his charges at the outset, or at any rate before the issues are framed. This is clearly laid down in the; Civil Procedure Code, Order VI, Rule 4-

In all cases in which the party pleading relies on... breaches of trust, wilful default.. .particulars shall be stated in the pleadings,

and by Order XIV, the issues can contain nothing which is not pleaded. In the present case accounts were not refused. The solicitors of plaintiff No. 1 asked for three years' accounts and they were furnished. I am referring to the accounts of the sugar with which I am at present concerned. There is no dispute now about the accounts of Framji's residuary estate. There is no evidence that accounts of the sagar were ever refused. In 1922 issues were framed. In 1925 the plaintiffs asked for inspection. That this request came so late: shows either that accounts had not been refused, or that their legal advisers were negligent. In any case the plaintiffs had every opportunity before the trial in 1928 of formulating their charges. Therefore they cannot at this, stage be allowed to rely on breaches of trust, positive or negative, which were not pleaded ; and if an account be ordered it must be a common account, and the plaintiffs, cannot now search the books, to find out further breaches and fresh evidence of the breaches which they alleged at the trial. I make these remarks as learned counsel has contended that at this stage it is not necessary for him to do more than show that he has a right to an account, and that on an account being taken he will be entitled to point out flaws as is done in an account suit. With respect I hold that this is not correct. The proper time for alleging and proving breaches has gone. It would be most unfair to decide otherwise now that the managing trustee is dead.

9. [His; Lordship after stating facts in great detail, proceeded :]

10. The next question in the case is what are the rights of the plaintiffs in the undistributed residuary estate of Framji. This undistributed residue consists now of two bungalows, and a fund left to charity. The Sabarmati bungalow was bequeathed to the trustees for religious purposes, and Rs. 1,425 were bequeathed to them for the purchase of Government Promissory Notes for charitable purposes. Both these trusts failed since Section 118 of the Indian Succession Art forbids any man having a nephew or niece or any nearer relative to bequeath any property to religious or charitable uses except by a will executed not less; than twelve months before his death, and deposited within six months from its execution in some place provided by law for the safe custody of the wills of living persons. Now, the deceased Framji had a son and daughters living and therefore the bequests for religious and charitable purposes were void inasmuch as his will was not made more than twelve months before his death, and' was not deposited in accordance with law. These charitable and religious bequests therefore fail and fall into the residue of the estate, Secondly, the trustee of Sir Navroji took possession of a bungalow at Rutlam which by oversight was. not mentioned in the will. This bungalow the learned Judge has treated as intestate property, and it has been suggested that the trustees took possession of it as trespassers. But they were entitled to take possession of it as executors, by Section 211 of the Indian Succession Act, which provides-

The executor or administrator, as the case may be, of a deceased person is his legal representative for all purposes, and all the property of the deceased person vests in him as such.

Though then the bungalow is not vested in the executors and trustees of the will by a specific clause in the will, nevertheless it vested in them as executors. Behramji, under the Parsi law which is contained in Chapter V, Part III, of the Indian Succession Act, had an interest in the undistributed residue of his father's estate, and that interest, if it still exists, has come to the plaintiffs under his (Behramji's) will.

11. The last question in this appeal is which of the present plaintiffs' claims are barred by limitation.

12. Article 123 governs suits for a legacy or for a share of the residue bequeathed or for a distributive share of the property of an intestate. The period is twelve years, and the terminus a quo, the day on which the legacy or share becomes payable-in this case in 1897.

13. Section 10 applies to trusts. No suit against a person, in whom property has become vested in trust for a specific purpose, for the purpose of following in his hands such property, or the proceeds thereof, or for an account of such property or proceeds, shall be barred by any length of time.

14. This does not in terms apply to suits for damages for breach of trust. It certainly does not apply to suits for damages on the footing of wilful default, when ex hypothesi the money claimed has not come into the hands of trustees ; and the reference to an account does not extend it to such claims. The section read as a whole justifies a decree for any trust funds shown, on an account being taken, to be in the hands of the trustee.

15. Our first conclusion, then, is that the claim to damages for alleged breaches of trust in the management of the sagar, which were committed before June 8, 1915, are barred by Article 120, which is the only Article applicable. Time runs from the breach and not from the date of the consequent loss. [ In re Somerset : Somerset v. Earl Poulett [1894] 1 Ch. 231 Throne v. Heard & Marsh. [1895] A.C. 495.

16. On these points there has been little or no dispute. The question on which the parties have been at issue is what property, if any, is to be included in the category of property vested in trust for a specific purpose. The disputed properties are (1) the house at Rutlam and (2) the properties vested in trust for charity and religious purposes, which trusts have failed. They are the funds invested for dogs and birds and the Sabarmati house left for religious ceremonies.

17. Learned counsel for the plaintiffs-appellants has contended that if the Rutlam house was a part of the residue as such, it was held by the trustees in trust for the next-of-kin, and he would apply the rule in Salter v. Cavenagh (1838) 1 Dr. & W. 668 an Irish case, which has been cited and followed in Indian Courts-see Mojilal v. Gavrishankar : (1910)12BOMLR947 . Its principle, as stated by their Lordships of the Privy Council in Khaw Sim Tek v. Chuah Gndh Neoh (1921) 25 Bom. L.R. 121, is this (p. 124) :-

that if property be set aside by a testator from the general body of his estate and vested in trustees upon certain trusts, which upon the face of them are inadequate to exhaust the whole of the property, there remains as to the balance a trust impressed upon the trustees in favour of the next, of kin or the heir at law, a trust for the purpose of which you have to do no violence whatever to the language of the will, for which it is unnecessary to disregard any intention or desire that the testator has expressed. .. .

18. In our opinion this principle has no application in our case. The Rutlam bungalow is not property set aside by Framji from the general body of his estate. It was not mentioned by him. The authority only covers property set aside for a specific purpose, and not the general body of the estate. The trustees hold this residue for the next-of-kin, but it does not come within Section 10. Were we to hold otherwise, it is difficult to see what meaning we could give to Article 123.

19. Further, the Privy Council ruling shows that the case of Salter v. Cavenagh does not apply to suits by next-of-kin to recover property set apart for charitable and religious trusts which have failed. The rule in such a case is that in Churcker v. Martin (1889) 42 Ch. D. 312. The ratio decidendi is that Section 10 benefits those who sue to enforce express trusts and not those who claim not under express trusts but adversely to them. The passage which I have cited settles this point authoritatively. See also Lallubhai Bapubhai v. Mankuvarbai I.L.R. (1876) 2 Bom. 388, Vundravandas v. Cursondas I.L.R. (1897) 21 Bom. 646 and Kherodemoney Dossee v. Doorgamoney Dossee I.L.R. (1878) Cal. 455.

20. Mr. Thakor has relied on the view expressed by Beaman J. in Cassamally Jairajbhai v. Sir Currimbkoy Ebrahim I.L.R. (1911) 36 Bom. 214 : 13 Bom. L.R. 717. The learned Judge discussed the law at great length and held that the possession of a trustee was for the beneficiary under the trust, or in the alternative, supposing the-trust to fail, for the settlor or his heirs; and that time does not begin to run until the trustee has set up an adverse title. This view was dissented from by Sir Basil Scott and Chandavarkar J. in Mahomed Ibrahim v. Abdul Latif : (1912)14BOMLR987 and has now been definitely overruled by the Privy Council in Khaw Sim Tek v. Chuah Gnoh Neoh.

21. The result of this is that the plaintiffs' claim to the two bungalows and the charitable funds is barred by limitation.

22. In connection with the residue, I should have mentioned the allegation made in the plaint that the trustees had been guilty of wilful default inasmuch as they had neglected to recover for Framji's estate outstandings which they might and should have recovered. I have already pointed out that a claim for damages on the footing of wilful default is not one to follow trust funds, and is not saved by Section 10 of the Indian Limitation Act. But, apart from this, the appellants cannot succeed since there is no evidence that any of the sums mentioned were debts due to the estate. Sir Navroji found in the deceased's books khatas in the names of several of his relations. He made enquiries and was told that these represented amounts paid by Framji for their education ; and that it was not Framji's intention to recover them. So he took no steps. It is difficult to suppose that he could have recovered the money by suit, as there was no evidence available, apart from the irrelevant admission in the deceased's account books.

23. This brings me to the end of the case. The appellants are entitled to an account of the sagar (including the reserve fund), and to a decree for one-sixteenth of its value. The estate of Sir Navroji must refund all sums recovered from the trust estate as interest recovered in excess. But the appellants cannot now claim damages for the investment of the trust funds in unauthorised which the trustees should have earned but for their default, since these profits did not reach their hands. On all other points the appeal fails.

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