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Vrandavan Bhaichand Shah Vs. Parshottam Motichand Shah - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtMumbai
Decided On
Case NumberSecond Appeal No. 555 of 1925
Judge
Reported in(1926)28BOMLR1481
AppellantVrandavan Bhaichand Shah
RespondentParshottam Motichand Shah
DispositionAppeal allowed
Excerpt:
indian trusts act (ii of 1882), section 26(b), 46, 88, 94-trustee-liability for co-trustees' default-renunciation of trust.;where on the death of a person his two surviving brothers undertake to collect his outstanding both of them may be liable to make good a loss to the estate although only one of them actually gets in the outstandings and benefits by the realizations. ;sections 26(b), 83 and 94 of the indian trusts act, 1882, considered.;a renunciation of a trust is not valid except as laid down in section 46 of the indian trusts act, 1882. - - and you shall not keep at all any difference in mind, god shall at once make him of full age and he shall stand by our side like our brother. 1 is also liable, though it is perfectly true, as found by both the courts, that he has personally..........of the indian trusts act would apply, that is, where a trustee allows his co-trustee to receive trust property and fails to make due enquiry as to the co-trustee's dealings therewith, or allows him to retain it longer than the circumstances of the case reasonably require, he may be liable.9. in the present case it seems to me that both the defendants were bound, in consequence of the fiduciary relationship which was created by the position which they took up soon after the death of bhaichand, to protect the interests of the minor, and that, if by availing themselves of that character they gained pecuniary advantage, it is no answer to say that all the pecuniary advantage is gained by one of them and that the other has got no such advantage this pecuniary advantage became possible in.....
Judgment:

Shah, J.

1. This second appeal arises out of a suit filed by the plaintiff to recover from his two uncles, the defendants, certain sums said to have been realized by them soon after the death of his father. His case was that his father Bhaichand died in 1903, and that before his death Bhaichand and his other brothers Keshavji, parshottam and Mohanlal, had separated. We are not concerned with Keshavji who died about the same time. When Bhaichand died, the plaintiff was not born. The mother of the plaintiff was at her father's house at Tulaja, while Bhaichand's house was at Rojka in the Dhandhuka Taluka. Parshottam and Mohanlal helped to recover the outstandings of the deceased after his death. The plaintiff was born a month or two after Bhaichand's death, and the present suit was filed by him in 1922 soon after he attained majority to recover the amount of the realizations made by defendants Nos. 1 and 2.

2. Defendant No. 1 pleaded that he was really serving during the material time at Uma in the Junaghad State, that he used to visit Rojka occasionally, that he was there about a month in a year, that all the debts were collected by defendant No. 2, that defendant No. 2 mostly managed the plaintiff's property, and that the suit should be dismissed as against him.

3. Defendant No. 2 admitted that he managed the estate of the deceased for some time after the death of Bhaichand, that the mother of the plaintiff had taken charge of the management shortly after that, that he was not in possession of any property of the deceased Bhaichand, and that the suit should be dismissed as against him.

4. The trial Court found in effect that property worth Rs, 1,300 came into the hands of the defendants. It found, however, that the property really was retained by defendant No. 2, and defendant No. 1 had no benefit of that property. The learned Subordinate Judge, however, passed a decree against both the defendants in the view which he took of the position of the two defendants with reference to the property, which was found to have come into the hands of defendant No. 2.

5. Defendant No. 1 appealed to the District Court. Defendant No. 2 acquiesced in the decree which was passed against him. The learned Assistant Judge who heard the appeal came to the conclusion that, though defendant No, 1 had control over defendant. No. 2's management until the mother of the plaintiff Bai Santok came on the scene, he received no benefit of the realizations made by defendant No. 2, and that even if he was at one time in a fiduciary position with reference to the plaintiff, he had renounced the trust in favour of Bai Santok, as evidenced by the conduct of Bai Santok and defendant No. 2. He, therefore, came to the conclusion that defendant No. 1 was not liable for the amount which was lost to the estate in consequence of the action of defendant No. 2.

6. The plaintiff has now appealed to this Court, and it is urged on his behalf that really both the defendants were in a fiduciary position with reference to the estate of the plaintiff during his minority, and that the question is not so much whether defendant No, 2 had kept the realizations with him, but whether in effecting those realizations both the defendants were acting together, and whether, under the circumstances, defendant No. 1 would be liable or not; and particular reliance is placed upon the letter of defendant No. 1 which is Exhibit 36 in the case.

7. The case is not entirely free from difficulty ; but, on a fair consideration of the admitted facts in the case, the contentions of the appellant appear to be justified. When Bhaichand died, his wife was at her father's place at Talaja, The present plaintiff was born a month or two after the death of Bhaichand, and it would be seen that the two uncles of the plaintiff really decided to help the estate of the deceased by effecting realizations on behalf of the minor plaintiff and his mother. It appears that when Bai Santok, the mother of the plaintiff, returned about a year after with her minor son to Rojka from Talaja, she apparently intervened and Bought to make the realizations herself. It appears from one of the replies received from the debtors of the deceased Bhaichand, which is Exhibit 28 in the case, that it was stated to her that that particular debtor had paid the money to the two persons, namely, Parshottam and Mohanlal, who had passed a receipt to him. It is not dear as to what happened thereafter for some time. But in 1905 defendant No. 1 wrote the following letter, Exhibit 36, to Vrajlal Kalidas, father of Bai Santok, at Talaja, as follows :-

It is eight or ten days since I have come here. I wrote from Una two or three postcards to yon when you wrote one post card. Shethji, yon will keep on us the same favour as you have been keeping. Do you call long-lived Garbad and amuse him on my behalf. I have a mind to amuse him but I have not more days of leave to come there. If it will be possible and if I shall go via Bhavnagar I shall pay a visit. Shethji, to us that long-lived Garbad is equal to our brother and we here even give up our work and do his (work). To us a single pie of his is equal to forbidden food. It has given us great pain that you did not come on the ceremonies in honour of our mother. Long-lived Garbad may have learnt to walk and also to appear. If so, you shall continue writing letters of delight for that. And you shall not keep at all any difference in mind, God shall at once make him of full age and he shall stand by our side like our brother. You shall write a letter again.

8. This letter shows unequivocally that both the brothers were really acting in the interests of the then minor plaintiff. They were the nearest male relations of the minor in the family, and by assuming the duty of realizing the outstandings of the deceased Bhaichand, they pat themselves in a position of trust with reference to the minor plaintiff. It is found that out of the realizations then made property worth Rs. 1,300 has been lost to the plaintiff. It is lost, no doubt, as found by the trial Court, because defendant No. 2 incurred losses in the year 1905, and it is true that the benefit of those realizations went to defendant No, 2, But, having regard to the position in which both the defendants placed themselves with reference to the estate of the minor, the question is, whether defendant No. 1 also is liable or not. It seems to me, on a fair view, that, in consequence of what was done by defendant No. 2 really under the control and advice of defendant No. 1, a situation arose which gave rise to certain obligations in the nature of trust under Section 88 of the Indian Trusts Act. By necessary implication they bound themselves in a fiduciary character to protect the interests of the minor, and defendant No. 2 was able to make those realizations because both of them in effect took up that responsibility. It in not enough for defendant No, 1 to say at this distance of time that in fact the realizations were made by defendant No. 2, and that he had nothing to do with the actual management. Having regard to the letter, which he wrote in 1905 to the maternal grandfather of the plaintiff, it seems to me clear that defendant No, 2 was really acting under the advice of defendant No. 1, and that he, defendant No, 1, was in a position to control him. It is not likely, in my opinion, under the circumstances, that, if defendant No. 1 had assumed a position of neutrality at the time, defendant No. 2 could have acted as he did. It is not likely that the maternal relations of the plaintiff would have allowed defendant No. 2 to go on making realizations without any effective check from their side, if the defendant No. 1 did not hold out assurances to them. In fact the position was that they trusted both the defendants and as a result defendant No. 2 is found to have made realizations which are lost to the estate. The principle of Section 26 (b) of the Indian Trusts Act would apply, that is, where a trustee allows his co-trustee to receive trust property and fails to make due enquiry as to the co-trustee's dealings therewith, or allows him to retain it longer than the circumstances of the case reasonably require, he may be liable.

9. In the present case it seems to me that both the defendants were bound, in consequence of the fiduciary relationship which was created by the position which they took up soon after the death of Bhaichand, to protect the interests of the minor, and that, if by availing themselves of that character they gained pecuniary advantage, it is no answer to say that all the pecuniary advantage is gained by one of them and that the other has got no such advantage This pecuniary advantage became possible in consequence of the joint position of both the defendants with reference to their minor nephew, and as defendant No. 1 did not take up any position of aloofness from defendant No. 2, he cannot now say that he is not in any way responsible. He allowed defendant No. 2 to make realizations and to get the advantage at the cost of the minor's estate.

10. The learned Judge has stated in his judgment that there was a renunciation of the trust even if, as a result of the letter Exhibit 36, defendant No. 1 can be said to have assumed a certain position of trust with reference to the minor. I am unable, however, to agree with the learned Judge in his view that if once defendant No. I is found to occupy a position of obligation in the nature of a trust, there was any renunciation on the part of defendant No. 1 such as is contemplated by Section 46 of the Indian Trusts Act. None of the conditions laid down in Section 43 exists in the present case; and there can be no renunciation as required by law. The mere fact that the mother came on the scene nearly a year after her husband's death, and that there were other maternal relations of the plaintiff who could have taken action against defendant No. 1 or defendant No. 2 or both, if there was any mismanagement by either of those defendants, and that they did not take any such action, does not afford any answer to the liability of the defendants to the plaintiff.

11. Further, the question of renunciation by defendant No. 1 has not any practical importance in this case, as the realizations in question were made apparently before the so-called renunciation and they were lost to the estate in 1905, the year in which defendant No. 1 wrote the latter Exhibit 36.

12. The plaintiff has filed his present suit within the time allowed by law on his attaining majority, and just as defendant No. 2 is liable, it seems to me that, under the circumstances, defendant No. 1 is also liable, though it is perfectly true, as found by both the Courts, that he has personally received no pecuniary advantage. But the advantage which defendant No. 2 has received is, under the circumstances, the pecuniary advantage gained by the two persons in virtue of the position of trust which they came to occupy with reference to the minor plaintiff after the death of Bhaichand. I am satisfied that the view taken by the learned Assistant) Judge as to the liability of defendant No. I is not right.

13. I would, therefore, allow this appeal and restore the decree of the trial court with costs in this Court and in the lower appellate Court on defendant No. 1. It is hardly necessary to mention that if any amount has been realized from defendant No, 2, that will have to be given credit for at the time of execution of this decree against defendant No, 1.

Fawcett, J.

1. I concur that the appeal should be allowed. We are, no doubt, bound by the findings of fact of the lower appellate Court that defendant No. 1 did not himself obtain any gain from the realizations on account of the estate of the deceased Bhaichand, and that the bulk of the outstandings were recovered by defendant No. 1's brother, defendant No. 2, who kept the accounts, and who misappropriated the monies realized. On the other hand, the Assistant Judge has found that defendant No. 1 had control over defendant No. 2's management until the mother Bai Santok came on the scene. The letter, Exhibit 36, however, plainly shows that, even after she had come on the scene, control was exercised by defendant No. 1 himself, who represented it as trustworthy and effective to the father of Bai Santok. The further finding of the Assistant Judge that defendant No. 1 subsequently made a renunciation of any trust that he had assumed, is clearly opposed to law, because the general principle laid down in England, and adopt ed in the Indian Trusts Act, Section 46, is that a person who has once undertaken the office of co-trustee either of a direct or of a constructive trust, cannot escape liability by a mere subsequent renunciation. The law in India allows renunciation only under certain conditions, which are mentioned in Section 46. None of those apply in the present case, Therefore, accepting the finding of the lower appellate Court that defendant No, 1 had control over defendant No. 2's management, but that he never went beyond giving general directions and did not personally recover amounts or gain by any breach of trust, the question of law remains whether the Assistant Judge was right in holding that defendant No. 1 is not liable. Plainly, if Section 26 (b) of the Indian Trusts Act applies to the case, it would cover the conduct of defendant No. 1 in not exercising proper control over his younger brother, defendant No. 2, and not seeing that there was no misapplication of the funds realized by defendant No. 2. That is an old principle which has been followed by this Court in several cases, of which two are Bai Jadav v. Tribhuvndas Jagjivandas (1872) 9 B.H.C. 333 and Mahmood Ahmed v. Rodrigues (1905) 7 Bom. L.R. 691.

2. The only question of doubt or difficulty is, whether the circumstances are sufficient to hold that the case falls under Section 88 or Section 94 of the Indian Trusts Act. Primarily, no doubt, these sections apply only to the person who actually gains the pecuniary advantage mentioned in Section 88, or has in his possession property, as mentioned in Section 94, of the Indian Trusts Act. But, as is shown by illustration (b) to Section 94, a person may even by mistake assume the character of a trustee for another; and certainly defendant No. 1 by the letter, Exhibit 36, assumed such a character. The case seems to me to resolve itself into the question whether defendant No. 1 and defendant No. 2 acted jointly in accepting the character of trustees, and became constructive co-trustees so as to be jointly liable to the plaintiff. The close relationship of the two defendants must be borne in mind, and . the control that could be exercised by defendant No. 1 as the elder brother was essentially an important factor in giving rise to confidence in the minds of Bai Santok and other maternal relations of the plaintiff.

3. An analogous principle, which can, I think, be applied to a case of this kind is that laid down as to joint tort-feasors, where you may have one person who actually commits tort and another person who does not himself directly commit that tort, but who joins in, or, to put it briefly, abets the commission of the tort. It is a general rule, as given in Halsbury's Laws of England, Vol. XXVII, Article 955, at p. 488, that-

The fact that two or more persons have concurred or assisted in or contributed to an act which has caused damage is not of itself sufficient to make such persona jointly liable, unless by reason of a joint duty being owed to the person who has suffered damage, or on some other ground, relief may be claimed against) such persons jointly.

4. Here clearly there was a joint duty owed by the two brothers to the plaintiff, the person who has suffered the damage, and in. my. opinion, that principle applies to the case of defendant No. 1. Or, it may be put on another ground, which was approved by the House of Lords in Home v. Pringle (1841) 8 C & F. 264 viz where trustees appoint one of their number to act as receiver and manager of the trust property and to collect the rents, the appointment does not per as make the other trustees responsible for his acts, but it makes the trustee so appointed agent of the other trustees for the purposes for which he is appointed, and they are responsible for his acts so far as they would have been responsible for the acts of a stranger appointed by them.

5. In this case we have also the provisions of Section 26(b) of the Indian Trusts Act, which directly cover the case of defendant No. 1 as a constructive co-trustee, I think equity obviously supports the view which my learned brother has taken, and that the lower appellate Court's decision is wrong in law. I agree, therefore, in the order proposed by my learned brother.


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