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Gopi NaraIn and ors. Vs. Kunj Behari Lal - Court Judgment

LegalCrystal Citation
CourtAllahabad
Decided On
Judge
Reported in13Ind.Cas.625
AppellantGopi NaraIn and ors.
RespondentKunj Behari Lal
Excerpt:
.....two villages already mentioned. we do not believe that the trustees as a body ever intended that kunj behari should purchase the bond for himself and we are satisfied that they never gave him any such permission. we are satisfied also that after the purchase had been made they would have been glad to take over the purchase from kunj behari. if the defendants-trustees fail to pay such sum the decree of the court below should stand. on failure by the defendant to pay the said amount on or before the date above mentioned the plaintiffs will be entitled to bring to sale mahal gopi narain of mauza pali kalan, pargana bharthana, pistrict etawah, and mahal rani indumati of mauza sadikpur, pargana bharthana, district etawah, and 2/3rds of mauza pali khurd, pargana bharthana, district btawah,..........the representatives of the latter. the certificated auction-purchaser of this mortgage was babu kunj behari lal, the plaintiff in the present suit. this bond has been the subject of a good deal of litigation which, in the view we take of the case, it is not material to refer to. it was made, as already stated, by fateh chand in favour of his pleader, and one of the defences taken in the present suit is the plea that there was no consideration for the bond. the bond, no doubt, was of a very suspicious nature, made as it was in favour of the pleader of fateh chand. fateh chand was a man who managed to dissipate what must originally have been an estate of considerable value and had the suit been one between fateh chand and abdul jalil we might have had great difficulty in holding that.....
Judgment:

1. This appeal arises out of a suit on foot of a mortgage, dated the 19th of June 1887. The mortgagor was one Fateh Chand, and the mortgagee was one Abdul Kafil. The mortgage was for Rs. 50,000 at 14 annas per cent, per mensem interest. It is clear now that Abdul Kafil was not the real mortgagee but was only benamidar for one Adbul Jalil, a Pleader in Cawnpore. This mortgage was subsequently attached and sold in execution of s simple money-decree which Gaya Prasad had obtained against Abdul Jalil and which was being executed against the representatives of the latter. The certificated auction-purchaser of this mortgage was Babu Kunj Behari Lal, the plaintiff in the present suit. This bond has been the subject of a good deal of litigation which, in the view we take of the case, it is not material to refer to. It was made, as already stated, by Fateh Chand in favour of his Pleader, and one of the defences taken in the present suit is the plea that there was no consideration for the bond. The bond, no doubt, was of a very suspicious nature, made as it was in favour of the Pleader of Fateh Chand. Fateh Chand was a man who managed to dissipate what must originally have been an estate of considerable value and had the suit been one between Fateh Chand and Abdul Jalil we might have had great difficulty in holding that anything like the full principal sum of Rs. 50,000 was due. We think, however, for reasons which we shall presently state, that the defendant-appellants in the present appeal cannot be allowed to say that the bond was not for its full face consideration. The villages were mortgaged, one called Pali Khurd, another called Pali Kalan, and a third called Sadikpur. A one-third share in each of these villages has been sold in satisfaction of prior mortgages, but two-thirds of Pali Khurd was purchased by the defendant Abdul Hamid and two thirds of Pali Kalan was purchased by Gaya Prasad, both in execution of simple money-decrees. Sadikpur was purchased by Sheo Dayal. The price paid for Pali Khurd by Abdul Hamid must clearly have been based upon the property being subject to a heavy incumbrance. In a written statement by Abdul Hamid in certain litigation between one Sheo Prasad and himself and others, he expressly admitted that at the sale of this property the mortgage of the 19th of June 1887 was proclaimed and that he purchased the property subject to that mortgage. Pali Kalan was also purchased at a price which would have been an absurdly low value unless the property was subject to a heavy incumbrance. After the death of Gaya Prasad the defendants Gopi Narain and the other trustees, (who are the defendants-appellants and are hereinafter referred to as 'the trustees') in their application for Probate of the Will of Gaya Prasad placed a very small value on the property and expressly stated that it was subject to this mortgage for Rs. 50,000 and interest. Neither the trustees nor Abdul Hamid have given any affirmative evidence of the want of consideration. Under these circumstances we think that the decision of the learned Subordinate Judge that the bond had been given for full consideration must be accepted.

2. It is now necessary to state some farther facts upon which the other peeas taken in the suit are based. Gaya Prasadl was a man possessed of considerable wealth. He made a Will on the 13th of July 1899 and thereby appointed certain persons to be his trustees, and' amongst them the plaintiff in the present suit Kunj Behari Lal. He named as President of the Board of Trustees the defendant-appellant, Gopi Narain, and the respondent, Kunj Behari Lal, was selected by his co-trustees as Vice-President of the Board, Under the Will of Gaya Prasad both Kunj Behari Lal and Gopi Narain took considerable benefits. After some litigation, the Will was duly proved, and it was at the instance of the trustees that the decree already mentioned against Abdul Jalil was being executed against the latter's widows. It must be borne in mind that the trustees were, at the time of the execution of the decree, in possession of the village of Pali Kalan under the Will of Gaya Prasad, and that the mortgage which was attached in execution of the decree against Abdul Jalil affected this village as well as the other two villages already mentioned. The trustees executed a power-of-attorney on the. 30th of January 1900 in favour of Kunj Behari Lal. This document will be found at page 75 of the appellant's book. It sets forth that the trustees other than Kunj Behari Lal have other engagements and have no time to attend Court in a body and look after and contest cases, and they then proceed to appoint Kunj Behari Lal their general attorney to act for them in all Court matters. He was not, however, empowered to purchase or take property in mortgage or borrow money in their names, On the 7th of January 1905 Kunj Behari Lal wrote to Gopi Narain, as President of the Committee, a letter which will be found at page 45 of the respondent's book. In this letter he points out that the mortgage of the 19th of June 1837 would be sold on the 24th of January 1905 and that in his opinion it would be roost advisable for the trustees to purchase this bond. He says in the letter, 'if any stranger purchases this village and is successful in his suit the whole of the share in mauza Pali Kalan will be lost.' He says further that if the trustees do not buy the bond he himself would do so. No one can doubt the soundness of the advice given in this letter. Granted that the bond was a little shady and that some claim was being made to it by the widows of Abdul Jalil, it was still most advisable to purchase it. Kunj Behari lived at Ftawah, the other trustees lived at Cawnpore. In the ordinary course of events the1 letter would reach Gopi Naraia about the 8th of January and on the 10th of January application was made in the execution case that the trustees should be permitted to bid for the bond of the 19th of June 1887 which was to be sold in execution of Gaya Prasad's decree. The Will of Gaya Prasad provided for the holding of meetings of the trustees at stated times, and in the letter of Kunj Behari Lal, to which we have already referred, he suggested that an extraordinary meeting of the Committee should be called to consider the question of purchasing the bond. It appears from the evidence that a notice of a meeting was sent out and that on the agenda the question of the purchase of the bond was expressly mentioned. It also appears that there was no quorum at the meeting which was summoned for the 22nd of January, that is to say, two days before the sale. It, therefore, appears that there was no express resolution on the part of the trustees on the subject of the purchase of the bond. Kunj Behari Lal attended the sale. He never obtained any express leave on his own account to bid at the sale although, undoubtedly, he was one of the decree-holders. It does not appear from the evidence whether any order was made on the application of the trustees for leave to bid, and, strictly speaking, Kunj Behari had no right to bid at the sale either on his own behalf or on behalf of the trustees without leave of the Court, but he nevertheless attended the sale and it appears that he and one Sheo Prasad bid at intervals from the commencement of the sale and that the last bid was made by Sheo Prasad. We may here mention that Sheo Prasad was also a general attorney for the trustees. He was also attorney for Kunj Behari. The bond was knocked down for the sum of Rs. 3,115, Kunj Behari was examined and he states that the purchase was made by Sheo Prasad for him, that he had no money with him and that he borrowed it from Gopi Narain. Gopi Narain lent him the money not out of private monies of his own and the amount was subsequently re-paid to him. He says also that after he had purchased the document, that is to say, the bond in question, Gopi Narain asked him to give the document to the Committee and I said that I would not give it. A number of the notices issued for the subsequent meetings of the trust Committee have been put in evidence and these show that time after time amongst the list of business to be transacted is the question of the purchase of the bond, but no resolution was ever come to on the subject either by the trustees to surrender any rights they might have or for the taking of any steps against Kunj Behari. The matter finds a place in the agenda for the last time in the notice dated the 2nd of July 1905. Kunj Behari did not obtain a sale certificate for some three years after the date of the purchase and in the meantime the bond had been claimed by the widows of Abdul Jalil. In our opinion the inference to be drawn from the evidence is that Kunj Behari bid for the bond in the first instance possibly with the intention of allowing the trustees to have the benefit of it. It is equally possible that when he found that before the sale the trustees had come to no resolution, he bid for the bond on his own behalf intending to keep it for himself. We do not believe that the trustees as a body ever intended that Kunj Behari should purchase the bond for himself and we are satisfied that they never gave him any such permission. The application for leave to bid strongly suggests that the trustees at once saw the soundess of the advice given them by Kunj Behari, namely, that it would be advantageous to purchase the bond. We are satisfied also that after the purchase had been made they would have been glad to take over the purchase from Kunj Behari. This is shown by the fact that time after time the question of the bond is placed upon the agenda of the meetings of the trustees, and also by the fact that Gopi Narain asked Kunj Behari to let the trustees have the bond. We think that it is most probable that Kunj Behari having succeeded in getting the property knocked down to him or to his attorney at a very low price determined to keep it himself arid that the trustees thought they could not compel him to give it up. Kunj Behari was probably supposed to know more of Court matters than his co-trustees and they considered that they were at his mercy.

3. The question then arises, can Kunj Behari under these circumstances retain the benefit of his purchase? We are of opinion that he cannot. Section 88 of the Indian Trusts Act provides: 'Where a trustee, executor, partner, agent, Director of a Company, legal adviser, or other person bound in a fiduciary character to protect the interests of another person, by availing himself of his character, gains for himself any pecuniary advantage, or where any person so bound enters into any dealings under circumstances in which his own interests are, or may be, adverse to those of such other person and thereby gains for himself a pecuniary advantge, he must hold for the benefit of such other person the advantage so gained.' Illustration (h) is as follows: 'A., a goardian, buys up for himself incumbrances on his ward B.'s estate at an under-value. A, holds for the benefit of B. the incumbrances so bought and can only charge him with what he has actually paid.' This Section incorporates and codifies the law which prevails in England on the subject of purchases made by trustees. The authorities will be found collected in Lswin on Trusts, page 300, XI Edition; Williams no Executors, page 488, X Edition, and Coote on Mortgages, Vol. II, page 841. In the present case Kunj Behari purchased for Rs. 3,115 a mortgage for Rs. 50,000 and the value of two-thirds of the village Pali Kalau if unencumbered must have been over Rs. 25,000. He was not only one of the cotrustees and, therefore, bound to do all in his power to protect the interests of the trust estate but he was also the general attorney of the trustees. It seems to us that when he made the purchase of this incumbrance, he must be held to hold it for the benefit of the trust and can only charge the trust with the amount which be actually paid for it. The case seems to us to fall within the second part of Section 88 of the Indian Trusts Act. It is quite clear that his interests as purchaser of this bond were or might be adverse to the interests of the trust estate as owners of the equity of redemption in the village of Pali Kalan. The mortgage, however, affected not only the village of Pali Kalan but also the villages of Pali Khurd and Sadikpur and the plaintiff, therefore, is entitled to a decree against the purchaser of Pali Khurd, that is, Abdul Hamid, and also against the purchaser of Sadikpur but his decree against these villages must only be forrthe proportion which they ought to bear having regard to the value of the villages as compared with that of Pali Kalan. These two villages formed no part of the trust estate. As against the village of Pali Kalan, the suit must be dismissed upon the terms that the trustees do pay to the plaintiff that Portion of the price paid by him for the purchase of the bond which is proportionate to the value of the village Pali Kalan as compared with the value of the two other villages. He should get the said amount of the purchase-money together with interest at the rate of 10 1/2 per cent per annum, the rate fixed in the bond. If the defendants-trustees fail to pay such sum the decree of the Court below should stand. The parties have agreed as to the respective values of the three villages and we are thus enabled to fix the amount for which the decree ought to be made against the villages of Pali Khurd and Sadikpur in the event of the defendants-trustees paying the apportioned amount of the price paid by Kunj Behari and interest, and we are also able to fix the proportionate amount of such price. By agreement, this price with interest up-to-date fixed for payment, namely, the 24th of March 1912 amounts to Rs. 2,260. We accordingly modify the decree of the Court below as follows. In the event of the trustees paying into Court the sum of Rs. 2,260 as aforesaid, the other defendants, viz., Abdul Hamid and the heirs of Pathak Sheo Dayal, shall pay to the plaintiffs on or before the 5th of July 1912, the sum of Rs. 50,327-10-9 (i.e., Rs. 38,272 principal and Rs. 12,055-10-9 interest up to the aforesaid date) together with costs in both Courts and future interest at 6 per cent, per annum, but in the event of the said defendants, Abdul Hamid and the heirs of Sheo Dayal, not paying the said sum of Rs. 50,327-10-9 together with costs and future interest as aforesaid, a 2/3d share of Pali Khurd, Pargana Bharthana, District Btawah, and mahal Rani Indumati of mauzt Sadikpur, Pargana Bharthana, District Etawah, shall be sold. In case the trustees do not pay the said sum of Rs. 2,260, as aforesaid, all the defendants shall pay to the plaintiff on or before the 5th of July 1912, the sum of Rs. 85,475 i.e., Rs. 65,000 principal and Rs. 20,475 interest up to the date above mentioned) together with costs in both Courts and future interest at 6 per cent, per annum. On failure by the defendant to pay the said amount on or before the date above mentioned the plaintiffs will be entitled to bring to sale mahal Gopi Narain of mauza Pali Kalan, Pargana Bharthana, Pistrict Etawah, and mahal Rani Indumati of mauza Sadikpur, Pargana Bharthana, District Etawah, and 2/3rds of mauza Pali Khurd, Pargana Bharthana, District Btawah, In the event of the trustees paying the said sum of Rs. 2,260 they will have their costs in the Court below and in this Court to be paid by the plaintiffs, but in calculating the costs of the trustees in this Court they will only be allowed one-third of the costs of translating and printing. The costs in this Court payable to the respective parties will include fees on the higher scale.


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