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Soonderdas Thakersey Vs. Bai Laxmibai - Court Judgment

LegalCrystal Citation
SubjectLimitation
CourtMumbai
Decided On
Case NumberO.C.J. Suit No. 399 of 1943
Judge
Reported in(1945)47BOMLR934
AppellantSoonderdas Thakersey
RespondentBai Laxmibai
DispositionPetition allowed
Excerpt:
.....limitation act (ix of 1908), section 10 - 'property vested in trust for any specific purpose'-express trustee-constructive trustee-running of limitation against trustee.;section 10 of the indian limitation act, 1908, contemplates trustees who are known in english law as express trustees, although that particular nomenclature is not employed |by the section.;a trust for a specific purpose is one for a purpose that is either actually and specifically defined in the terms of the will or the settlement itself, or a purpose which, from the specified terms, can be certainly affirmed.;khaw sim tek v. chuah hooi gush neoh (1921) l.r. 49 i.a. 37, 43: s.c. 25 bom. l.r. 121, followed.;there are cases known as constructive or resulting trusts, where although no express trust is created, yet a..........with the plaintiffs. in 1932 and 19s3 three dividend warrants were received in respect of those shares. raghavji got the warrants cashed and handed over to plaintiff no. 2 the three cheques which he received. after this, other dividend warrants were received ; but for reasons, which i will consider later, they were not discharged by raghavji. but these dividend warrants went to the plaintiffs and they have been and are still in their possession.2. on october 18, 1984, raghavji and his brother harjiwan filed a suit in this court, being suit no. 1524, against the plaintiffs for the recovery of a sum of about rupees four lakhs alleged to be due by the plaintiffs at the foot of certain accounts. that suit is still pending. raghavji died on april 14, 1941, and the defendants are the.....
Judgment:

Chagla, J.

1. In and prior to the year 1923 plaintiffs Nos. 1 to 3 with one Raghavji Khimji were carrying on business in partnership in the name of Messrs. Jetha Mulji & Co. Plaintiff No. 4, who is the brother of plaintiffs Nos. 1 to 3 and who was then a minor, was admitted to the benefit of the partnership. It is now admitted that this partnership out of its assets and funds Purchased fifty shares of the New Baroda Mills Company, Limited, and twenty-five shares1 of the Petlad Bulakhidas Mills Company, Limited. These shares stood in the name of Raghavji Khimji. In 1923 plaintiffs Nos. 1, 2 and 3 filed a suit in this Court, being Suit No. 4196 of 1923, for the dissolution of that partnership. A decree was passed in that suit on February 6, 1931. The only provision of that decree with which we are concerned is that that decree declared that plaintiffs Nos. 1, 2 and 3 were the owners of the assets, outstandings, claims and books of account of the firm of Jetha Mulji & Co. After the decree was passed, it is clear on the evidence that Raghavji handed over the share certificates to plaintiff No. 2 on behalf of the other plaintiffs, and since then they have continued to remain with the plaintiffs. In 1932 and 19S3 three dividend warrants were received in respect of those shares. Raghavji got the warrants cashed and handed over to plaintiff No. 2 the three cheques which he received. After this, other dividend warrants were received ; but for reasons, which I will consider later, they were not discharged by Raghavji. But these dividend warrants went to the plaintiffs and they have been and are still in their possession.

2. On October 18, 1984, Raghavji and his brother Harjiwan filed a suit in this Court, being Suit No. 1524, against the plaintiffs for the recovery of a sum of about rupees four lakhs alleged to be due by the plaintiffs at the foot of certain accounts. That suit is still pending. Raghavji died on April 14, 1941, and the defendants are the executrix and the executors of his will. On December 23, 1941, the plaintiffs' attorneys wrote to the defendants' attorneys stating that the shares in dispute belonged to the plaintiffs and they should not be shown in the schedule to the petition for probate which the defendants might file. On June 19, 1942, the defendants filed the petition for probate, and in the schedule containing the moveable and immoveable properties of the deceased they showed the shares and the unrecovered dividends thereon as belonging to the estate of the deceased. On that, the plaintiffs filed the suit for a declaration that the shares standing in the name of Raghavji Khimji belonged to the plaintiffs and calling upon the defendants to execute the relative transfer forms and to sign the dividend warrants.

3. Although various contentions were taken up in the written statement, the only one which has survived is that of limitation.

4. It is urged on behalf of the plaintiffs that Raghavji as the legal owner of the shares was, while the partnership of Jetha Mulji & Co. subsisted, a trustee for the other partners to the extent of their interest in these shares, and on the passing of the decree in Suit No. 4196 of 1923 these shares became vested in him in trust for the purpose of handing them over to the plaintiffs to whom they belonged as declared by the decree. It is, therefore, urged that Raghavji was an express trustee and the statute of limitation would not run in his favour.

5. Section 10 of the Indian Limitation Act, 1908, provides that no suit against a person in whom property has become vested in trust for any specific purpose, or against his legal representatives or assigns (not being assigns for valuable consideration), for the purpose of following in his or their hands, such property, or the proceeds thereof, or for an account of such property or proceeds, shall be barred by any length of time. The marginal note to the section describes such suits as suits against express trustees and their representatives, and the decisions of all the High Courts in India have now made it perfectly clear that although the section does mot use that particular nomenclature, the trustees contemplated by it are the same as what is known in English law as express trustees. In Khaw Sim Tek v. Chuah Hooi Gnoh Nedh (1921) L.R. 49 IndAp 37: 25 Bom. L.R. 121 their Lordships of the Privy Council defined a trust for a specific purpose as one for a purpose that is either actually and specifically defined in the terms of the will or the settlement itself, or a purpose which, from the specified terms, can be certainly 'affirmed,

6. There are cases where although no express trust is created, yet a Court of Equity from the conduct of parties or the faith reposed in them or in the circumstances of the case raises a trust and imposes an obligation in the nature of a trust. These are known as constructive or resulting trusts. Under English law they are as much trusts as express trusts. Under our law as found in the Indian Trusts Act the Legislature has made a sharp distinction between trusts created by the act of parties and certain obligations which are not trusts but which are considered to be in the nature of trusts, and Chapter IX of the Indian Trusts Act deals with these obligations. All the obligations considered in that Chapter are those which are imposed by the law in the various circumstances set out in the different sections which form-part of that Chapter. It is clear to my mind that Section 10 of the Indian Limitation Act cannot possibly apply in the case of a person whom the law looks upon as a trustee because he has to discharge certain obligations in the nature of a trust. It only applies to a trustee of a trust in the strict sense of the term.

7. It is impossible to hold that under the decree of February 6, 1931, a trust was created whereby Raghavji was to hold the shares for a specific purpose of handing them over to the plaintiffs. One would ordinarily have expected a provision in the decree after the declaration to which I have already referred that Raghavji should hand over the shares to the plaintiffs and execute the necessary transfer forms, but no such provision finds as place in the decree. But it is clear that the Court did not intend that Raghavji should hold these shares as a trustee for the plaintiffs. The plaintiffs having been declared to be the owners of the shares, the intention undoubtedly was that Raghavji should transfer the legal ownership to them. It is true that after the passing of the decree the beneficial ownership in the shares vested in the plaintiffs, and to that extent Raghavji under Section 94 of the Indian Trusts Act held the property for the benefit of the plaintiffs and thus constituted himself a constructive trustee ; but no trust for a specific purpose was created and Raghavji was not an express trustee.

8. Strong reliance has been placed by Mr. Maneksha on Soar v. Ashwell [1893] 2 Q.B. 390. In that case the trust fund was entrusted by the trustees to a solicitor for being invested, and on the death of the solicitor an action was brought against his personal representative for an account; and the question was whether the statute of limitation was; applicable. The Court held that the solicitor's estate was not protected by the statute. Lord Esher M.R., in delivering the principal judgment, pointed out that in that case although an express trust was created, the solicitor was not at any time nominated as a trustee of that trust. Lord Esher M. Rule further observes (p. 394):

The cases seem to me to decide that, where a person has assumed, either with Or with out consent, to act as a trustee of money or other property, i.e., to act in a fiduciary relation with regard to it, arid has in consequence been in possession of or has exercised' command or control over such money or property, a Court of Equity will impose upon him all the liabilities of an express trustee, and will class him with and will call him an express trustee of an express trust. The principal liability of such a trustee is that he must discharge himself by accounting to his cestui que trusts for all such money or property without regard to lapse of time.

Lord Justice Bowen says (p. 397):

It has been established beyond doubt by authority binding on this Court that a persons

occupying a fiduciary relation, who has property deposited with him on the strength of such relation, is to be dealt with as an express, arid not merely a constructive, trustee of such property. His possession of such property is never in virtue of any right of his own, but is coloured from the first by the trust and confidence in virtue of which he received it. He never can discharge himself except by restoring the property, which he never has held otherwise than upon this confidence. ; and this' confidence or trust imposes on him the liability of an express or direct trustee.

These observations seem to indicate that according to Lord Esher M.R. and Bowen L.J. even in the case of certain kinds of constructive trusts in England, lapse of time would not defeat a claim against a constructive trustee. But it is necessary to point out that Lord Justice Kay came to the same conclusion on the ground that the solicitor though a stranger to the trust had assumed to act and had acted as trustee of a trust which was undoubtedly for a spacific purpose. The observations in every case, even when they emanate from the highest authority, must be read in relation to the facts of that particular case, and I am not prepared to extend the effect of those observations especially when I am conscious of the fact that we have to construe the words of our own statute, whereas in England the Judges proceed on principles of equity. Saar's case has been followed in two Bombay cases Narrondas v. Narrondas I.L.R (1907) Bom. 418: 9 Bom. L.R. 287 and Chintamam Ravji v. Khanderao Pandurang I.L.R (1927) Bom. 184: 30 Bom. L.R. 45. In the former case, with respect to the learned Judge, it is rather difficult to understand what exactly were the facts on which the decision was arrived at. It seems that one Ladhoo Kara and his uncle Ramji Lakhmidas carried on business in partnership.. Ladhoo Kara's share was three-sixteenths and Ramji Lakhmidas' share thirteen-sixteenths. Ladhoo Kara retired from the firm and Ramji Lakhmidas held the three-sixteenths share of Ladhoo Kara in the three-annas share of the commission earned by the partnership in a certain mill and thirty-five shares of the said mill were also appropriated to the share of Ladhoo. The suit was filed by the executor of Ladhoo Kara against the executor of Ramji Lakhmidas in respect of the shares and the commission held by Ramji. The learned Judge held that Ramji was an express trustee for Ladhoo and the case fell under Section 10 of the Indian Limitation Act. Now it has to be remembered that at the time of the dissolution there was an express agreement between Ramji and Ladhoo that Ramji should continue to receive the three-annas share of the commission and hold three-sixteenths of it for Ladhoo Kara. With regard to the thirty-five shares, the learned Judge was not in a position to find as a fact whether they were actually transferred to Ladhoo Kara or whether they remained with Ramji; but he held that Ramji, if the shares remained in his hands, was an express trustee for Ladhoo. I do not wish to disguise the fact that this case has caused some difficulty in my mind and it has also been the source of difficulty to other Judges who have considered it. In Yakub Ebrahim v. Bai Rahimatbai : (1908)10BOMLR346 , Mr. Justice Beaman at p. 349 sought to confine the effect of that decision to what was actually found and decided and considered the rest of the judgment of Mr. Justice Russell in Narrndas v. Narrondas I.L.R (1907) Bom. 418: 9 Bom. L.R. 287 as mere obiter dicta. The same view of that case was taken in Ammalu Amma v. Narayanan Nair I.L.R (1927) Mad. 549 and Mr. Justice Carr and Mr. Justice Brown in Ma Them May v. U P Kin I.L.R (1925) R.A. 206 have gone to the length of considering that the judgment of Mr. Justice Russell is unsound.

9. Sitting as a single Judge, the decision of Mr. Justice Russell is undoubtedly binding on me; but I do not think that the facts before me are in any way comparable to the facts on which that judgment was based.

10. In Chintatmn Ravji v. Khanderao Pandurang Pandurang's widow left a sum of Rs. 2,309 to her brother Ravji for the benefit and education of her minor sons. Ravji spent about Rs. 700 for the benefit of the boys. He then died and his representative was sued for an account of the balance of trust money. On these facts Sir Amberson Marten C. J. and Crump J. held that Ravji was an express trustee. Sir Amberson Marten considered this to be a very simple case, which it undoubtedly is. In the course of the judgment the Chief Justice refers to Soar's case, but that does not in any way detract from the simplicity of the case.

11. I might also point out that in two Madras cases Raja of Ramnad v. Ponnusami Tevar I.L.R (1920) Mad. 277 and Krishna Pattar v. Lakshmi I.L.R (1921) Mad. 415 it has been seriously doubted whether the doctrine of Soar v. Ashwell [1893] 2 Q.B. 390 applies to India. Under these circumstances I am clearly of opinion that Raghavji was not an express trustee, and Section 10 of the Indian Limitation Act does not apply to the facts of this case.

12. The judgment then proceeded to deal with other aspects of the case and ended in a decree in favour of plaintiffs.


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