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Balmakund Vs. Nanak Chand and ors. - Court Judgment

LegalCrystal Citation
SubjectTrusts and Societies
CourtAllahabad
Decided On
Reported inAIR1929All433; 117Ind.Cas.828
AppellantBalmakund
RespondentNanak Chand and ors.
Cases ReferredLetterstedt v. Broers
Excerpt:
.....that he had been faithfully carrying out his duties as trustee, had maintained the temples and trust property in good condition and had even carried out some improvements and had not embezzled a single rupee of the income of the trust but, on the contrary, had spent large sums of his private money for the purposes of the trust. he found that the defendant had not been keeping proper accounts of the trust and had failed to account for certain items of income and held that the defendant was liable to removal from his office as trustee on the following grounds: he also distinctly states that he does not believe that the defendant ever indulged in drug-taking to any serious extent, as the defendant does not appear to be in any way affected by drug-taking but, on the contrary, seems to be..........embezzled large sums out of the income of the trust. further, he had given about 400 bighas of the trust property to his own son-in-law, p. ant ram, at a nominal rent. it was further alleged that he was deeply in debt and was also morally unfit to hold the post of trustee as he had been accused in a case of murder and was a drunkard and smoked charas and was of bad character.5. the defendant in his written statement traversed the allegations of mismanagement and bad character. he challenged the right of the plaintiffs to institute the suit under section 92. he further alleged that he had been faithfully carrying out his duties as trustee, had maintained the temples and trust property in good condition and had even carried out some improvements and had not embezzled a single rupee of the.....
Judgment:

1. This appeal arises out of a suit under Section 92, Civil P.C, praying for the removal of the defendant Balmakund, from his office as trustee of a public religious and charitable trust, and for certain subsidiary reliefs.

2. The author of the trust was one Mt. Parbati the widow of P. Nand Kishore Deputy Collector. She built a thakurdwara, a shivalaya and a tank for perpetuating the name of her deceased husband and for the public good. By a deed of waqf dated 17th September 1903 Mt. Parbati, with the consent of the next reversioner, P. Gopeshwar Datt, her deceased husband's brother, dedicated about 1/3rd of her zamindari property bringing in an income of about Rs. 3,000 a year for the support of the temple and for feeding faqirs and other poor persons and for celebrating fairs to be held on the Janam Ashthami and Shiv Ratri and for water booths and similar public purposes of a religious or charitable nature. The property was dedicated to Shri Krishnaji. P. Balmakund, the defendant who is Mt. Parbati's brother's son, was appointed manager and trustee of the waqf property. The deed of waqf further provided that the office of trustee should devolve upon P. Balmakund's descendants if qualified to act as trustees. By a will of the same date Mt. Parbati divided the remaining 2/3rds of her property between Balmakund and Gopeshwar Datt, her husband's brother, in equal shares.

3. Balmakund has managed the trust from its foundation in 1903 up to the present day. Mt. Parbati died in 1911.

4. The present suit was instituted in December 1926 by P. Nanak Chand and seven other persons upon the allegation that P. Balmukand has been mismanaging the trust ever since Mt. Parbati's death in 1911. He had failed to complete the buildings left unfinished by the deceased founder and had not properly carried out the daily worship and the repairs of the temples and had not been feeding the faqirs and other poor persons or spending the prescribed amount of money over the annual fairs and had embezzled large sums out of the income of the trust. Further, he had given about 400 bighas of the trust property to his own son-in-law, P. Ant Ram, at a nominal rent. It was further alleged that he was deeply in debt and was also morally unfit to hold the post of trustee as he had been accused in a case of murder and was a drunkard and smoked charas and was of bad character.

5. The defendant in his written statement traversed the allegations of mismanagement and bad character. He challenged the right of the plaintiffs to institute the suit under Section 92. He further alleged that he had been faithfully carrying out his duties as trustee, had maintained the temples and trust property in good condition and had even carried out some improvements and had not embezzled a single rupee of the income of the trust but, on the contrary, had spent large sums of his private money for the purposes of the trust.

6. The learned District Judge found that the plaintiffs had a sufficient interest in the trust to entitle them to bring the suit. He found that the allegations of drunkenness and immorality were not proved. He found that the defendant had not been keeping proper accounts of the trust and had failed to account for certain items of income and held that the defendant was liable to removal from his office as trustee on the following grounds:

(1) That his accounts were unsatisfactory.

(2) That he had given lands to his son-in-law, Ant Ram, on an inadequate rent; and

(3) That he is heavily indebted and that this indebtedness raised an inference that he must be of immoral character and extravagant habits.

7. In the result the Court below passed a decree for

(1) Removing the defendant from his post as trustee;

(2) Ordering the defendant to deposit the sum of Rs. 5,322 in Court within three months; and

(3) Directing the parties to attend the Court on a specified date for drawing up a scheme of management for the temple.

8. The defendant appeals against the decree of the Court below.

9. It has been argued that the learned District Judge was wrong in finding that the plaintiffs had a locus standi for instituting the suit. As regards plaintiffs 1 to 7 we have no hesitation in accepting the finding of the Court below. Plaintiff 1, Nanak Chand, has been a constant visitor to the temple and his father was employed as a servant therein for about six years. Also he is a grand-nephew of Mt. Parbati, the founder of the trust. Plaintiffs 2, 3 and 4 also constantly visit the temple. Plaintiffs 6 and 7 are the widow and daughter respectively of Gopeshwar Datt and thus closely related to Mt. Parbati's husband. We have no doubt that plaintiffs 1 to 7 have an interest in the trust sufficient to entitle them to maintain a suit under Section 92, Civil P.C. The question whether the last plaintiff, B. Gauri Nath Kakaji, has such an interest is more open to argument. He is the Secretary of the U.P. Dharam Rakshani Sabha at Lucknow but does not appear to have any special interest in the trust which forms the subject-matter of this suit. We think it unnecessary to decide whether plaintiff 8 is entitled to maintain a suit since the determination of this question is unnecessary for the purpose of deciding this appeal.

10. We agree also with the Court below that the charges of immorality and drunkenness and drug-taking have not been proved against the defendant. The learned District Judge has not been very consistent in his findings on these points He admits that the plaintiffs' evidence to the effect that the defendant consorts with prostitutes and drinks liquor and takes drugs is most unsatisfactory. He also distinctly states that he does not believe that the defendant ever indulged in drug-taking to any serious extent, as the defendant does not appear to be in any way affected by drug-taking but, on the contrary, seems to be very intelligent. For the same reasons apparently the charge of drunkenness cannot be held to have been proved against the defendant. It is, however, admitted that the defendant is indebted to the extent of about Rs 80,000, although he has private property to the value of about two lakhs of rupees, and the learned District Judge has taken the fact of indebtedness as raising an inference that the defendant must have been wasting his money on prostitutes, drinks and drugs. We are unable to endorse the reasoning of the learned District Judge on this point The defendant has explained the principal causes of his indebtedness. After Mt. Parbati died Gopeshwar Datt sold some of the waqf property and some of the property which had been left to the defendant. The defendant had to spend Rs. 11,000 in recovering this property partly on his own account and partly on account of the trust. The allegation that the defendant did spend about Rs. 11,000 for these purposes has not been rebutted and must be accepted.

11. In the second place the defendant was admittedly involved in a charge of murder in the year 1918. He states that he spent over Rs. 20,000 in securing his acquittal. As the defendant engaged expensive counsel we see no reason to doubt that he did spend these sums in defending himself. Moreover, the mere fact that a man is heavily indebted is quite insufficient in our opinion to raise any inference that he has been wasting his money on prostitutes or drink or drugs. As the learned District Judge frankly admitted that the evidence to the effect that the defendant did spend his money for such purposes was most unsatisfactory we think it quite unjustifiable to infer that he must have spent his money on such purposes merely from the fact that he is heavily indebted.

12. We note that the defendant has been able to produce a number of most respectable and independent witnesses to testify to his good character and good management of the trust property. Among these witnesses are two Tahsildars, two Sub-Inspectors of Police, one Mukhtiar, one Assistant Surgeon and several other respectable residents of the neighbourhood. The Court below has frankly admitted that the plaintiffs' evidence is weak and is outweighed by the evidence produced by the defendant and that the suit has been brought out of enmity and not with any idea of public spirit. We fully agree to the opinion expressed by the Court below. The first plaintiff, P. Nanak Chand, is the son of P. Ram Nath who was employed as a bhandari at the temple for about six years. He was dismissed by the defendant in 1924 and we have no doubt that the present suit is the outcome of his dismissal. The plaintiffs allege that the defendant has been mismanaging the property ever since 1911 and this fact must have been well-known to Ram Nath at least who was himself one of the servants of the temple, and to Gopeshwar Datt, who was entitled to share in the management of the trust in accordance with an agreement entered into with the defendant in 1913, but no one thought of instituting a suit for the removal of the trustee until after Ram Nath's dismissal in 1924. We think that Gopeshwar Datt, who never succeeded in enforcing his right to share in the management would certainly have brought a suit to remove the defendant if the latter had really been of immoral character and had really been flagrantly mismanaging the trust. In our opinion the charges of immorality, drunkenness and drug-taking are disproved and were only made spitefully in order to make the case against the defendant as black as possible.

13. The principal question which has been argued in appeal is whether the defendant has been proved to have acted dishonestly in discharging his duties as a trustee, and has embezzled the income of the trust, or whether he is only proved to have maintained the accounts of the trust in an unsatisfactory manner.

14. It must be admitted at once that the accounts are indeed unsatisfactory. No separate account of the trust income and expenditure was regularly maintained. The defendant kept a daily account book or roznamcha which was written up by his son-in law Ant Ram from the year 1914, but this roznamcha contains items of income and expenditure both of the defendant's private property and of the trust property indiscriminately. This mixing up of private accounts with trust accounts is certainly most objectionable. It is impossible even for Ant Ram who kept the accounts to say with certainty whether certain items relate to the trust property or to Balmukand's private property. (The judgment here discusses evidence and concludes). Upon these findings it is clear that there has been no, substantial embezzlement. The defendant has no doubt been guilty of mixing up his private accounts with the trust accounts and has not credited to the trust certain miscellaneous items which he should have done. But the sum total of such items is very petty in comparison with the total income and expenditure and we do not consider that the defendant is proved to have acted dishonestly or to have intentionally embezzled any of the income of the trust.

15. It has been argued that the defendant is guilty of a breach of trust because he spent more under certain heads than was prescribed in the deed of trust. There are only two items which form the subject of this criticizm. In the trust deed Rs. 100 per annum are laid down as the expenditure on the piyaos while the defendant shows that it has been about Rs. 400 per annum. Similarly Rs. 500 are laid down in the trust deed as the amount to be spent on the two annual melas while according to the defendant he is spending about Rs. 1,900 per annum. We think there is no force in the contention. In the first place, the deed of trust does not mention Rs. 500 as a maximum to be spent on the two fairs. That figure must be taken as only the approximate expenditure which the founder of the trust desired to be spent for that purpose. If the income of the trust increases, we see no reason why the expenditure upon the fairs should not also be increased. The cost of food and of labour has risen greatly since 1903 and we cannot hold that the trustee is guilty of a breach of trust for spending more than he was directed to spend under the deed of trust.

16. As a matter of fact the income of the trust property has about doubled since its foundation in 1903. The net income was then about Rs. 3,000 and it is now about Rs. 6,000. This fact is of itself an indication that the property has not been mismanaged by the trustee and that he has not been converting the property to his own use.

17. Another answer to the contention is that in the deed of trust the trustee is given discretion to spend the balance, over and above the specified sums mentioned, on any dharamshala 'or on any other work of public good.' Evidently the founder of the trust considered the fairs to be for the public good since she herself directed money to be spent upon fairs We find moreover that the legislature is of the same opinion. Under Section 8(1), Clause (1), U.P. Municipalities Act 1916, Municipal Boards are expressly authorized to spend their public funds upon '' holding fairs and exhibitions.' Under Section 91(k), U.P. District Boards Act 1922, District Boards are expressly directed to spend money on similar purposes.

18. The excess expenditure upon piyaos or water booths is obviously within the competence of the trustee as being expenditure upon 'works of public good.'

19. We consider that the defendant has laid himself open to justifiable criticism in giving land at a favourable rent to his son-in-law, Ant Ram. It is true that Ant Ram does service for the trust in that he keeps the accounts. Such services should properly be remunerated by a salary and not by the grant of tenancy holding at nominal rent. A statutory tenant cannot be ejected except for special reasons during his lifetime, so he would be entitled to retain the holding at a nominal rent even if he ceased to do any work on behalf of the trust. Ant Ram was given about 80 bighas of land in the time of Mt. Parbati at a nominal rent and in this land he has now acquired occupancy rights. The plaintiffs have not raised any objection to the management of Balmukand during the lifetime of Mt. Parbati, so we must leave this amount of land out of account. After Parbati's death, however, the defendant gave Ant Ram from time to time more land at a very low rate of rent so that his total holding amounted to 343 bighas. Ant Ram surrendered 133 bighas in January 1927, i.e., after the institution of this suit and now has about 210 bighas in his possession including the 80 bighas of occupancy holding.

20. We consider the defendant's action in this matter objectionable, but it was at least done quite openly and we do not consider that it indicates any dishonesty on the defendant's part. The question now remains what reliefs should be granted to the plaintiffs.

21. It is clear that the Court has jurisdiction to remove the trustee. The main principle on which such jurisdiction should be exercised is the welfare of the beneficiaries and of the trust estate. A hereditary trustee should not, in our opinion, be removed merely for inaccuracy in accounts or petty neglect of duty. We consider that we should be guided in the exercise of our discretion by the following general principles set forth in Storey's Equity and Jurisprudence which have been quoted with approval by their Lordships of the Privy Council in the case of Letterstedt v. Broers [1885] 19 A.C. 371 at p. 365 as follows:

But in cases of positive misconduct, Courts of Equity have no difficulty in interposing to remove trustees who have abused their trust; it is not indeed every mistake or neglect of duty, or inaccuracy of conduct of trustees, which will induce Courts of Equity to adopt such a course. But the acts or omissions must be such as to endanger the trust property or to show a want of honesty, or a want of proper capacity to execute the duties, or a want of reasonable fidelity.

22. In the present case we hold that the defendant has not been positively dishonest. He certainly does not lack capacity for discharging his duties. In fact, he has shown himself an efficient manager by doubling the income of the trust and by collecting so large a percentage of the rental demand. A number of respectable and independent persons deposed that his management of the temple and of the trust generally is perfectly satisfactory. He has no doubt been guilty of neglect of duty in not keeping proper accounts, but we do not consider this to be an adequate cause for removing him from his office.

23. We accordingly allow the appeal in part and vary the decree of the Court below as follows: We set aside the order removing the defendant from his office as trustee, and for drawing up a scheme of management for the temple, but we uphold the order that the defendant shall deposit the sum of Rs. 5,322 in Court. We also direct Balmukand to keep the trust accounts wholly apart from his private accounts. The trust accounts must give true and full particulars of all income and expenditure received or incurred on account of the trust property and entries must be made punctually and regularly. We further direct the defendant to take the necessary steps without delay for getting the rent of Ant Ram's holdings as statutory tenant in the trust property enhanced up to the fair and equitable rent payable by a statutory tenant for land of similar quality. Dr. Katju has stated before us that Ant Ram is willing to agree to such enhancement of rent. When the rent has been thus enhanced, the defendant may pay Ant Ram a reasonable salary for services rendered to the trust. The parties will bear their own costs in this appeal.


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