1. The appellant--the State of Orissa--advanced small loans to several agriculturists of Khatiar Circle in Kalahandi district in the year 1944. One Dinabandhu Defendant No. 1--in the suit and not a party to the present appeal--was then the agricultural overseer in Khariar Circle. Without any authority to realise the loans so advanced, he realised Rs. 13,000/- and odd from several loanees and credited in all Rs. 9,000/- and odd from the amounts realised by him, into the State Treasury. There was a balance of Rs. 4095-1-0 in his hand.
He kept the said money, in July 1945, with one Netrananda defendant No. 2, another agricultural overseer under the State of Orissa, then working at Nawapara Circle, the said Netrananda being a close associate and friend of Dinabandhu.
According to Dinabandhu, he kept the said amount with Netrananda for being credited by Netrananda into the State Treasury, whereas, according to Netrananda, Dinabandhu could not credit the amount into the treasury because of certain defects in the chalans and kept the money with him to be later on taken back by Dinabandhu for being credited into treasury.
Incidentally it may be noted here that the trial Court accepted the stand taken by defendant No. 1, whereas the first appellate Court came to no finding on this point, and no finding on this point is actually necessary for the determination of the present appeal, though it may be stated that if a finding would have been necessary, we would have been prepared to accept the stand taken by defendant No. 2 in view of the fact that his evidence is consonant with his plea in the written statement, whereas defendant No. 1's stand in the evidence stage is not supported by his written statement.
In the third week of July 1945, there was a theft committed at the place of Netrananda and it was alleged that the money kept by Dinabandhu together with Netrananda's own money was the subject matter of the said theft. On this background, the State of Orissa sued both Dinabandhu and Netrananda for recovery of Rs. 4117-5-0 (corrected amount according to accounts is Rs. 4095-9-0). The trial Court decreed the plaintiff's suit against both of them. In the first appeal, preferred by Netrananda alone, the suit was dismissed as against him and so the plaintiff has come up in the present second appeal.
2. In the present appeal we are not concerned with the decree passed against Dinabandhu. So far Netrananda is concerned, the trial court was of the view that Netrananda, being a Government servant, should not have kept the money in an unauthorised manner from Dinabandhu, and if. he did so, he should have soon after credited the amount into the treasury, for which purpose the money had been entrusted to him by Dinabandhu and that in keeping the money at his place, which was a broken and unsafe house, and leaving the key of the box, in which the money had been kept, in charge of his wife, Netrananda had acted negligently, and so Netrananda was liable to pay the Government money although there was theft of the said money together with Netrananda's own money.
The first appellate Court took the view that the money paid by the loanees to Dinabandhu, who had no authority to realise them, was the money of loanees and not of the Government, and there was no subsequent ratification by the State of Orissa, expressed or implied of the act of Dinabandhu in discharging the loanees from the liability to the State of Orissa, and so the State of Orissa had no cause of action against either of the defendants. The appellate Court, however, gave no relief to Dinabandhu, presumably because he had not preferred any appeal against the decree.
It may be incidentally noted that according to the finding of the trial court, Dinabandhu had realised the loans from the loanees as the agent of the State though he had no authority for the purpose, whereas, according to the first appellate Court, Dinabandhu had been entrusted with the different amounts realised from different lonees for being credited on their behalf by Dinabandhu into the State treasury, since the loanees were living at a far away place from the head-quarters and were not in a convenient position to credit the amounts into the State Treasury directly.
3. Though in the plaint it is not specifically stated as to on what basis the cause of action has been laid against Netrananda, the learned counsel for the State sought to urge that the same was based on Section 63 of the Indian Trusts Act. According to him, the money had been entrusted by the loanees to Dinabandhu for being paid to the Government, and so Dinabandhu was a trustee and the Government was the beneficiary, and as such since the said trust money had come into the hands of Netrananda inconsistently with the trust, the State could proceed against Netrananda for realisation of the amount.
In the plaint, it is not the plaintiff's case that Dinabandhu had been entrusted by the loanees with their respective amounts for being credited on their accounts by Dinabandhu into the State Treasury. On the contrary, the plaint case is that Dinabandhu realised loans from the loanees on behalf of the State, while he had no authority to do so. That is not only the plaint case, but that is also the case for the plaintiff in the evidence as deposed by P. Ws. 1 to 3 some of the loanees, who have stated that they repaid their loans to Dinabandhu on demand made by him on behalf of the State, after getting Kacha receipts from Dinabandhu towards repayment of loans to be replaced by Pucca receipts subsequently.
It was Dinabandhu's plea before the trial court that he had collected the amounts from the loanees, not towards discharge of their loans, but because the loanees wanted him to credit those amounts on their behalf into the treasury, since they could not personally do so, residing at far away places, and the appellate court accepted this plea of defendant No. I to be correct as against the plaintiff's case that Dinabandhu had demanded and realised loans from the loanees. The appellate Court observes,
'He (Dinabandhii) knew that he had no express or implied authority to collect money from the debtors ........... The circumstance that he made over the collected sum .............. to Netrananda with the intention that either he or Netrananda should deposit it in the sub-treasury, would clearly show that at the time of collection at least he had no intention to embezzle the money realised by him. If it was no part of his duty to make collection, and if he had no intention to make an illegal gain, it is not understood why he should have approached the debtors of the plaintiff to demand satisfaction of the loans taken by them. On the other hand, it is quite reasonable that the agriculturists owing about Rs. 5/-, Rs. 10/-, Rs. 20/- or Rs. 40/- to the State of brissa and living away from a sub-treasury, should have requested this Government employee to help them in making the deposits at the sub-treasury. I am, therefore of opinion that the plea of defence taken by Dinabandhu that he accepted the amounts from the persons named in Schedule E of the plaint on their Own requests is absolutely correct.'
There was no evidence on the defendant's side except the statement of Dinabandhu as to under what circumstances he collected money from the loanees and Dinabandhu's evidence is naturally interested, as he would be anxious to establish that he did not exceed his authority. There was even no suggestion to P. Ws. 1 to 3 in cross-examination that they had entrusted their respective amounts to Dinabandhu for being credited into the State Treasury on their accounts.
Dinabandhu might have motive in earning favour of his superior authorities in collecting certain amounts for which he had no authority, and it is no use speculating what his motive might have been in realising the loans from the loanees, for which he had no authority. So, the case, as emerged in the evidence, was not a case of trust, but was a collection of money by Dinabandhu as an agent without authority. Dinabandhu's statement about the nature of the collection of the money could riot amount to an admission as against the other defendant.
4. Even if the alternate case, that Dinbandhu was entrusted by the loanees with their respective amounts for being credited into the State treasury on their behalf be accepted, there is no ease of trust made out in favour of the plaintiff. Dinabandhu, by his so accepting the money from the loanees, to be credited by him into the State Treasury on their behalf, became an agent of the loanees. As defined in Section 3 of the Trusts Act,
'A 'trust' is an obligation annexed to the ownership of the property, and arising out of a. confidence reposed in and accepted by the owner or declared and accepted by him, for the benefit of another, or of another and the owner.'
On the other hand Section 182 of the Contract Act defines,
'An 'agent' is a person employed to do any act for another or to represent another in dealing with third persons.'
In case of a trust, the legal title in the trust property is vested in the trustee. If Dinabandhu was entrusted by the loanees to pay certain amounts of money taken from them into the State Treasury on their behalf, the ownership of the money did not vest in him, and remained with the loanees until the money was credited on their accounts and accepted by the Government towards discharge of their loans.
Besides, the loanees, who entrusted him with their respective moneys, did so, not for benefiting the State of Orissa but for their own benefit. So here was a case where money had been entrusted to Dinabandhu as an agent for the benefit of the loanees, the legal title in the money remaining with the loanees. There was no trust, as defined by Section 3 of the Trust Act, and the Government was not the beneficiary.
5. Section 63 of the Trusts Act provides,
'Where trust property comes into the hands of a third person inconsistently with the trust, the beneficiary may require him to admit formally, or may institute a suit for a declaration, that the property is comprised, in the trust.'
As said earlier, there was no trust created in the present case, as defined by Section 3 of the Trusts Act, nor was the plaintiff the beneficiary in matter of I entrustment by the loanees of their respective sums of money to Dinabandhu. So, the plaintiff could lay no cause of action against defendant No. 2 under the provisions of Section 63 of the Trusts Act, above referred to. But even assuming that a trust was created, and that in favour of the State of Orissa, by the aforesaid transaction between Dinabandhu and the loanees, what Section 63 of the Trusts Act provides is a right, in rem and not a right, in personam.
It is when a trust property comes into the hands of a third person inconsistently with the trust that the beneficiary may institute a suit for declaration that the property is comprised in the trust. It is the trust property in its original or converted shape which is to be followed and which is to be declared by the Court as the property of the beneficiary. As observed in Nagappa Chettiar v. Official Assignee Madras, AIR 1931 Mad 251:
'Their claim cannot be in Personam and must be in rem, a claim to follow and recover property with which, in equity at all events, they had never really parted. .. ...... That being so they would not succeed unless they were able to trace their money into the hands of the Society or its agents as actually existing assets ............ It is essential to keep in mind the true nature of the right. It is strictly a right in rem, that is, to the thing itself.'
So, it was for the plaintiff to plead and establish that the trust money, which passed into the hands of Netrananda, existed with him in some shape or other, and to get that money declared as the trust property. While there is no such case for the plaintiff, the plaintiff's cause of action against Netrananda is one in personam which is not maintainable under Section 63 of the Trusts Act.
6. In the result, there is no merit in the present appeal which is accordingly dismissed with costs.
7. I agree.