1. The plaintiffs have brought this suit against the defendant for an order that the defendant may be directed and ordered to render a true and complete account of his management of the trusts referred to in the plaint and of the trust securities and proceeds thereof and interest of the securities and all other trust monies on the footing that the defendant is guilty of misappropriating the funds belonging to the said trusts. That is prayer (a) of the plaint. Prayers (b), (c) and (d) are ancillary to that prayer. Prayers (e), (f) and (g) refer to interim reliefs. Prayer (h) is in these terms:
That the amount due and payable by the defendant to the plaintiffs as trustees with interest may be ascertained and declared and that the defendant may be ordered to pay to the plaintiffs such sum as may be found due, and to make good to the plaintiffs all sums and the value of securities misapplied or appropriated by him.' Prayer (i) says that the defendant may be removed from his office as a trustee of the said trusts.
2. It appears that one Devkorebai, widow of Thaker Damoder Laxmidas, made a will dated October 14, 1891. Under the provisions of that will, she directed that diverse sums should be set apart for the benefit of the charities mentioned in that will. One of such charities was to be at Mundra in Cutch where a temple was to be built wherein the 'Thakorji' was to be installed, and there are provisions in the will as regards expenses in connection with the worship of the 'Thakorji' and for the outlay in connection with the installation of the 'Thakorji'. Bai Devkorebai by her will also provided for three other trusts; one in respect of a sadavarat at Bet Dwarka, another for a dharmashala at Sidhpur and a third in respect of a sadavarat and dharmashala at Giriraj Hill. Mr. M.P. Amin tells me that Giriraj Hill is near Muttra. Mr. K.K. Desai tells me that it is in the Bharatpur State. The case, however, has been argued before me on the footing that Giriraj Hill is in the Bharatpur State.
3. The plaintiffs and the defendant in course of time became the trustees of the four trusts. It appears that their predecessors-in-title, the retiring trustees, executed four separate deeds of appointment of new trustees in respect of the said four trusts. The four deeds related to securities of the value of Rs. 22,000, Rs. 21,000, Rs. 12,000 and Rs. 21,500 along with different amounts of cash in hand which belonged respectively to the four trusts.
4. It is the plaintiffs' case that they were very greatly under the influence of the defendant in whom they had complete confidence and that they allowed the defendant to be in sole charge and management of the trust properties. The plaintiffs say that it was in or about May 1945 that they for the first time discovered that the defendant had grossly betrayed their trust and committed breaches of trusts in respect of the trust securities and moneys and that he had embezzled the same for his own purpose. The plaintiffs have brought this suit with the sanction of the Advocate General and prayed for the reliefs which I have set out hereinabove.
5. The defendant has filed his written statement. It is admitted in that written statement that there were securities of the total face value of Rs. 77,000 belonging to the four trusts. The defendant says that to the knowledge of the plaintiffs all the said securities which were lying in the safe custody accounts had been withdrawn from time to time by the defendant at the instance of the plaintiffs themselves and either deposited as security in the overdraft account and/or sold for the purpose of payments of the amounts drawn from the overdraft account and/or the debts or purposes of the plaintiffs. The defendant denies that he had operated upon the safe custody accounts or the current accounts or the overdraft account for his own purpose as suggested except for small amounts used for Harnath Mission. He says that all the accounts were operated upon for the purpose of payment of the debts of plaintiff No. 1 and/or for the purpose of the trusts. That, in substance, is the only defence on the merits that the defendant has got to raise.
6. The defences of the defendant are indicated by the issues which were raised at the hearing and which read as follows:-
(1) Whether this Honourable Court has jurisdiction to try this suit ?
(2) Whether the suit is bad for multifariousness ?
(3) Whether the plaintiffs are entitled to maintain the suit?
(4) Whether there were any books of accounts of the four trusts mentioned in the plaint ?
(5) Whether the defendant kept in his possession cheque book, the slip books, the pass book or any books of account of the said trusts as alleged in the plaint ?
(6) Whether the plaintiffs agreed to remunerate N.D. Sankalia as mentioned in paragraph 9 of the written statement ?
(7) Whether the securities of the value of Rs. 21,500 and Rs. 35,000 and Rs. 14,500 and Rs. 8,000 belonging to the said four trusts were withdrawn from the safe custody accounts at the request of the plaintiffs and thereafter dealt with for the purposes of the plaintiffs according to their instructions ?
(8) Whether the plaintiffs agreed to repay and replace the amounts used out of the amount raised by pledge and sale of the said securities ?
(9) Whether the defendant withdrew the said securities and/or dealt with them thereafter for his own purposes ?
(10) Whether the plaintiffs are bound to pay to the defendant the amount that may be necessary to replace the said securities and/or the amount that is ascertained and declared to be due and payable by the defendant to the trusts mentioned in the plaint ?
7. From the very beginning I was of the opinion that practically all the issues commencing from issue No, 4 were irrelevant especially in the view I took of the nature of the suit.
8. I shall now consider the issues in the order in which they were raised. There was no evidence, either oral or documentary, which was led before me. Mr. K.K. Desai has argued his case with conciseness and ability and laid great stress on the fact that the charities with which the plaint deals are all foreign charities to be administered in foreign States. It was practically after the arguments were over that on my inquiring of Mr. Amin he stated that Giriraj Hill was not in a foreign State. In the view that I take of the law on the subject, it does not make a difference whether Giriraj Hill is or is not in British India.
9. Mr. K.K. Desai's argument is that the suit by itself, so far as this particular issue is concerned, is divided into two parts-one relating to the taking of accounts and the other relating to the removal of the defendant from his office as a trustee of the said trusts. It is conceded that the suit is filed by the plaintiffs with the sanction of the Advocate-General and it is a suit under Section 92 of the Civil Procedure Code.
10. As regards the prayer for the removal of the defendant from his office as a trustee, Mr. K.K. Desai informs me that his client tendered his resignation as a trustee before the suit was filed and that he does not wish to claim to be a trustee any longer. On that, the consideration of the prayer for removal-and the consideration of the plaintiffs' right at the date of the suit to claim relief in terms of prayer (i) of the plaint-does not survive for consideration. I asked Mr. K.K. Desai whether, assuming that this Court had no jurisdiction to grant a decree in terms of prayer (i) of the plaint, i.e. for the removal of the defendant as a trustee, his contention was that the suit as a whole failed, I understood him to say that that was not going to be his contention. In any event I hold that that is not the position in law. Even if there had been no resignation on behalf of the defendant and if I came to the conclusion that this Court had no jurisdiction to pass a decree in terms of prayer (i) of the plaint, I would have proceeded to consider the claim for accounts as formulated on behalf of the plaintiffs. Mr. M.P. Amin on behalf of the plaintiffs argues that the Court has jurisdiction to order removal of a trustee of a charity to be administered in a foreign country for misappropriating the trust funds lying within the jurisdiction of this Court. I shall, however, proceed first to consider what is the position in law as regards a suit for the taking of accounts of moneys lying or which were originally'lying within the jurisdiction of this Court and which have been misappropriated and which moneys were to be held for the benefit of a foreign charity.
11. The following text-books were cited before me. Mr. K.K. Desai cited Dicey on the Conflict of Laws, fifth edition, p. 203, Rule 53, Sub-rule (3), and the notes under that sub-rule at p. 205 and Illustration No. 7 appearing at p. 206. At p. 203, Rule 53, Sub-rule (3), is cited which states (what is considered to be the law in British India too):
53. Subject to the Exception hereinafter mentioned, the Court has no jurisdiction to entertain an action for....
(3) the administration of a foreign charity under the supervision of the Court, or the settlement of a scheme for such a charity.
12. Mr. M.P. Amin referred me to Halsbury, 2nd Edn., Vol. IV, p. 212, paragraph 304, which states inter alia that the Court may appoint new trustees for the administration of a foreign charity. He also cited p. 319, paragraphs 528 and 529, as justifying the prayer for removal of the defendant in the present case.
13. In Shivnarayan Sarupchand v. Bilasrai Juharrnal : AIR1942Bom208 our Appeal Court held that the administration of a charity depends upon the law, and is controlled by the Court of the country where the charity is conducted, and that the High Court of Bombay has no jurisdiction to remove trustees of a charity functioning in an Indian State and to appoint new trustees. It is there stated :
Where, however, immoveable property belonging to a charity in an Indian State but situate within the jurisdiction of the High Court is being misapplied, the High Court can interfere to protect that property by granting an injunction restraining misappropriation of the property or by appointing a receiver to hold the property subject to the orders of the Court having jurisdiction to administer the charity.
This case went up to the Privy Council, and their Lordships of the Privy Council by their judgment in Bilasrai Joharmal v. Shivnarayan Sarupchand (1943) 46 Bom. L.R. 518, p.c upheld the decree of the Appeal Court which had reversed the judgment of the trial Judge. Sir George Rankin at page 520 observes as follows :
The learned trial Judge refused to apply the principle that he ought not to interfere in the administration of a charity which is carried on within the borders of an independent State. He appears to have accepted as well settled the rule that if the Court is not in a position to supervise the carrying out of a charity it will not frame a scheme in respect of that charity but will take such steps only as are necessary to safeguard such trust funds as lie within the jurisdiction.
His Lordship says (p. 521):
It does not appear that any objection was taken at the trial to the jurisdiction under Clause 12 of the High Court's Letters Patent, and their Lordships are satisfied that there was no defect of jurisdiction in that sense. As a Court of Equity acts in personam it may and some times does exercise its jurisdiction over trustees and others in respect of foreign land and otherwise in connection with rights to property situated abroad. The question here, however, is as to the principles which the Court will observe In taking upon itself to interfere with the administration of a charity when that charity has to be conducted in a foreign country and the Court is for that reason in no position to supervise its administration effectively. That the Court will protect and preserve the funds of the charity by the exercise of its jurisdiction over the trustees or other persons is very certain. But the proper conduct of the charity and the giving of any necessary directions for that purpose are another matter. In this case the Court was asked to make an order which affected the administration of the charity at every point-namely an order for the removal of the persons who were conducting the management of the hospital.... Once it is admitted that part of the cause of action arose within the jurisdiction so as to satisfy the requirements of Clause 12 of the Letters Patent, no great importance attaches to the place where the trust was created or its money invested, if there is no question of preserving or recovering its property and if the only question is as to the country whose Courts should supervise the conduct of the charity and the application of its funds. The jurisdiction of the Court to remove trustees, as Lord Blackburn said...is merely ancillary to its principal duty, to see that the trusts are properly executed.
14. Now I asked Mr. K.K. Desai and Mr. M.P. Amin whether there was any authority which deals specifically with the question whether a suit against a trustee for accounts of his management of the trust property belonging to a charity to be administered in a foreign State is a suit which this Court could or could not try, and they told me that there was no direct authority on the point. Mr. K.K. Desai admitted that the Court would have jurisdiction if the suit was for the recovery of a specific property existing at the date of the suit. He, however, has maintained and if I may say so strenuously maintained-that the suit for accounts and the payment of moneys due at the foot of the accounts, as also a suit to recover property which was not the original property but was a result of that original property, it having been converted into the shape which it retained at the date of the institution of the suit, was a suit which had to be decided on the same principles which govern suits relating to the administration of foreign charities. He said that in respect of moneys misappropriated this Court had no jurisdiction to order accounts and thereafter payment if the moneys were held by the trustee for the benefit of a foreign charity. I regret I am unable to accept that argument. In my opinion this Court in the exercise of its jurisdiction will compel a trustee who has made defalcations to restore the original trust property as also property which is not the original trust property but is the result of its sale-proceeds. I hold that this Court has jurisdiction to order accounts to be taken and to order payment of moneys due at the foot of that account, so that the moneys belonging to the trusts are recovered and preserved, the Court making not the slightest attempt to determine how that property is to be administered. The administration of that property must on well-established principles of law be left to the foreign Court in whose jurisdiction that property is situate. Mr. K.K. Desai argued that the case is governed by Section 92 of the Civil Procedure Code and not by Clause 12 of the Letters Patent. He cited Mulla's Civil Procedure Code, p. 327, where it is stated that Section 92 overrides Clause 12 of the Letters Patent (see Padampat Singhanya v. Narayandas Jhunjhunwalla I.L.R.(1931) Cal. 357 . Mr. K.K. Desai argued that Section 92 contains the words 'the subject-matter of the trust is situate.' He argued that if the trust property was lost or misappropriated, the Court had no jurisdiction. I do not agree with that proposition.
15. That being my view, I answer the first issue in the affirmative, in so far as it relates to the question of accounts. So far as the removal of the trustees is concerned, the true test seems to be whether such a removal is necessary for the preservation of the trust property. It may be that the appointment of trustees as well as the removal of trustees may be necessary for the purpose of the preservation of the trust property belonging to a foreign charity. If that is the correct principle, it may well be argued that the removal of the defendant in this case was a matter which fell within the jurisdiction of this Court. Looking, however, to the importance of the question involved and the fact that this question might have been argued at greater length before me, I do not propose to give any direct finding on that issue. I will rest myself content with the observation that it is unnecessary for me to pass a decree for the removal of the defendant as a trustee as he does not claim to be a trustee. That disposes of the two questions involved in the first issue which were argued before me.
16. As regards the second issue, Mr. K.K. Desai argues that the suit is bad for multifariousness because there are four charities involved in the suit and the accounts of four different charities will have to be taken. In my opinion this is in substance the Advocate-General's suit, whose duty it is to protect charity moneys, whether belonging to one charity or several charities, and it is against the same defendant. I, therefore, hold that there is no multifariousness, and I answer that issue in the negative.
17. So far as issue No. 3 is concerned, it was argued that on the facts of the case the plaintiffs were as much, if not more, to be blamed for the loss of the trust funds and that the plaintiffs being parties who were themselves liable to account could not call upon the defendant to render an account nor could they call upon the defendant to pay the moneys due at the foot of that account to the plaintiffs, which it was alleged the plaintiffs themselves had misappropriated, and that the plaintiffs in their personal capacity were the last persons who could ask for a decree for the removal of the defendant from his office as a trustee of the trusts. There would be considerable force in this argument if I was of the opinion that this suit was a suit by the plaintiffs in their personal capacity as trustees seeking for an account. It is conceded that a suit for accounts would lie at the instance of one trustee against another where there was misappropriation of trust moneys, irrespective of. Section 92 of the Civil Procedure Code. This, however, is not the nature of the suit. It is a suit, as I have said before, by the plaintiffs as relators brought with the sanction of the Advocate General under Section 92 of the Civil Procedure Code. In such a suit there is no question of a set-off or a counterclaim by the defendant. It is the charity who is suing the defendant as one of the trustees and it says: 'You have misappropriated charity funds or are responsible for such misappropriation or loss of charity moneys. Make them good. I am not concerned with your rights against your co-trustees.'
18. At the very commencement of the hearing of this suit the Adovcate General appeared with Mr. M.P. Amin and I asked him why it was that the plaintiffs instead of being the defendants in the action had been allowed to institute this suit as relators with the sanction given by the Advocate General under Section 92. He told me that there were valid reasons and he had fully considered the question. As I hold the defendant liable for the loss of the charity moneys, I direct him to render accounts and to make good to the trust estate the full amount that has been lost to the trusts. I will not say who is at fault, and nothing that I say shall be construed as absolving the plaintiffs in the slightest degree from any liability, civil or even criminal, that they might have incurred towards the charity or otherwise. I keep only one aspect of the case before my eyes, and it is this. Is it open to a trustee to say: 'No doubt trust moneys are lost. I should have seen to it that they were not lost or were not misappropriated. Instead of that, I stood by and saw them being misappropriated and helped in the making of that misappropriation possible. I am not to be held liable because my co-trustee is more guilty than I am.' I am afraid the position is far too clear in law and that the defendant is clearly liable to the charity, and that is the only point that I am deciding. I leave intact and untouched by anything that I have said before the defendant's rights against the plaintiffs in their personal capacity.
19. This is a shocking case. The plaintiffs, well-to-do people, who accepted responsibilities of a serious nature as trustees, have, by their own plaint, disclosed a total failure to appreciate those responsibilities, and they throw the blame for the substantial if not the total loss of the trust estate on their co-trustee on the allegation that the defendant betrayed the trust and the confidence which they reposed in him not only in the matter of trust securities but their own personal properties. The defendant turns round on his colleagues and makes a very grave charge of misappropriation against the plaintiffs. With the merits or demerits of that controversy I am fortunately not. concerned. I hold that the suit is maintainable and I must decide the issue in favour of the plaintiffs and in the affirmative.
20. I shall now proceed to discuss the other issues. In view of what I have said above, issue No. 4 is irrelevant; so also issues Nos. 5, 6, 7, 8, 9 and 10.
21. In the result I pass a decree in favour of the plaintiffs against the defendant in terms of prayers (a), (b), (c) and (d) of the plaint.
22. As regards prayer (h) of the plaint, whatever amount is found due and payable by the defendant, I direct it to be paid to the plaintiffs as trustees with interest at 6 per cent, till judgment. I pass a decree in terms of prayer (h) with a further direction that the amount is not to be withdrawn by or on behalf of the plaintiffs. The amount should be paid into Court and it should remain in Court or should be invested in such Government securities and in such names as the Advocate General may direct, and should be handed over to such persons as the Advocate General may nominate.
23. As regards prayer (h) of the plaint, I have already held that it is not necessary for me to pass an order for the removal of the defendant from his office as a trustee. The defendant is no longer a trustee and it is not necessary to remove him as a trustee.
24. I order the defendant to pay to the plaintiffs the costs of the suit and interest on judgment at 4 per cent.