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Bava C. Gopalaswami Mudaliar Vs. the Annadhana Kattalai of Sri Tyagarajaswami Temple by Trustee, Vaithilinga Pandarasannadhi and anr. - Court Judgment

LegalCrystal Citation
SubjectTrusts and Societies
CourtChennai
Decided On
Reported inAIR1940Mad719; (1940)1MLJ547
AppellantBava C. Gopalaswami Mudaliar
RespondentThe Annadhana Kattalai of Sri Tyagarajaswami Temple by Trustee, Vaithilinga Pandarasannadhi and anr.
Cases ReferredVibhudapriya Thirtha Swamiar v. Lakshmindra Thirtha Swamiar
Excerpt:
- - and the lower appellate court has found very clearly that the first defendant deliberately ignored the scheme. clearly, ex parte chippendale :re german mining co. 497 ,which is to the effect that where it appears to a creditor advancing money to a trust that the money is being used for the trust and not for the trustee's private purposes and where the money is definitely applied, the creditor cannot be defeated by a contention that the duties could have been performed on a less elaborate scale......scheme, which is to this effect:all borrowing from and all lending on interest to the funds of the trust is absolutely prohibited.3. the rest of the section deals with the punishments to be inflicted in case of a disobedience of this injunction. it has to be noticed that the word 'borrowing' is followed by 'from', which shows that the prohibition is against borrowing from the funds of the trust. that was not done here; but the section also prohibits lending on interest to the funds of the trust. if the plaintiff, as the terms of his promissory note suggest, had lent money on interest to the trust - even though it was for necessary purposes - i think such a loan would have fallen within the scope of the prohibition under section 23. but i do not think that section 23 as it stands meant to.....
Judgment:

Horwill, J.

1. The appellant brought a suit on two promissory notes for amounts advanced to the Annadhana kattalai for the necessary performance of the duties imposed on the trust. The first defendant was the trustee of the kattalai and the second defendant was the receiver of the kattalai property, who has since been replaced by the executive officer of the temple. It appears from the plaint that the money was not advanced direct to the kattalai. The plaintiff, who had received a power of attorney from the trustee, was managing the kattalai on the first defendant's behalf, receiving income from the property, and making purchases; and the sum claimed is that admitted by the first defendant to be due to the plaintiff on account of provisions and other necessaries supplied to the kattalai in excess of the income. The defendants contended that some of the alleged items of expenditure were not true; but it was found that the plaintiff had properly accounted for the money mentioned in the promissory notes and that it was properly expended on the temple. The second defendant raised another plea and that was that the first defendant had no power to borrow money, that the plaintiff knew of it, and that he was not therefore entitled to recover any of the money, even though it might have been true that he advanced it. The District Munsif of Tiruvarur found both points against the second defendant. In appeal, the Subordinate Judge of Tiruvarur agreed with the District Munsif that the plaintiff had properly accounted for all the money advanced; but he held that the scheme which had been framed for the temple by the High Court absolutely prohibited such an advance being made. He therefore found himself constrained to allow the appeal and dismissed the suit.

2. The attention of the Courts below seems to have been focussed on Section 23 of the scheme, which is to this effect:

All borrowing from and all lending on interest to the funds of the trust is absolutely prohibited.

3. The rest of the section deals with the punishments to be inflicted in case of a disobedience of this injunction. It has to be noticed that the word 'borrowing' is followed by 'from', which shows that the prohibition is against borrowing from the funds of the trust. That was not done here; but the section also prohibits lending on interest to the funds of the trust. If the plaintiff, as the terms of his promissory note suggest, had lent money on interest to the trust - even though it was for necessary purposes - I think such a loan would have fallen within the scope of the prohibition under Section 23. But I do not think that Section 23 as it stands meant to work a prohibition of the supplying of articles for the carrying on of the services of the kattalai. Nevertheless, from a reading of the scheme as a whole, there can be no doubt that the purpose of the scheme is that the trustees should not be left in possession of any money at all. As soon as they collect money, they have to deposit it with the treasurer of the temple, they have to submit a budget to the Board of Control three months before the beginning of each year, and they can only spend money in accordance with the budget as accepted. They are then allowed to draw on the amount standing to their credit in the accounts kept by the treasurer for each kattalai and they may not exceed the budget allotment. There can also be no doubt, on a general reading of the scheme, that it was directly against the principle of the scheme that the trustee of the kattalai should try to circumvent certain sections of the scheme by taking supplies from a person and contracting some liability on behalf of the trust. That this disobedience of the scheme was not accidental has been proved by the defendant; and the lower appellate Court has found very clearly that the first defendant deliberately ignored the scheme. He says in paragraph 13 of his judgment:

It would appear that notwithstanding the scheme, the first defendant as trustee of Annadana kattalai, was never in the habit of submitting his budget to the treasurer. He himself continued to manage the properties of the Annadhana kattalai as though his powers had not been in any way curtailed or restricted. In consequence of the defiant attitude of the first defendant it became necessary for the board of control to. apply for the appointment of a receiver for the purpose of collecting the income of the properties of the Annadhana kattalai and remitting the same to the treasurer.

4. The plaintiff was also aware of the prohibition and he knew that the first defendant was disobeying the terms of the scheme. He had attended the meetings of the Board of Control and he knew that the temple and the kattalais were being managed under Section 3 of the scheme.

5. Although a trustee may not have power to incur debts, yet if a person supplies articles which are necessary far carrying on the services under the trust, then he is entitled to be reimbursed. Two English cases have been quoted. In Ex parte Chippendale : Re German Mining Co. (1854) 4 De G.M. & G. 19 : 43 E.R. 415, the directors of a coalmining company had no powers of raising money except by certain restricted means. They however during the course of the management of some mines in Germany found that they had no money to pay the wages of the miners. If the wages had not been paid, the mines, under the law of the country, would have been closed down and the property of the company would have been lost. It was held that as they had acted beyond their powers as directors and Agents in borrowing money, the creditors who had advanced money in order that the miners might be paid, would not be able to have recourse against the company under the Companies Act. Nevertheless, the directors were not merely agents but were trustees of the property of which they were in management; and as trustees they were bound to take all reasonable steps to prevent the property of the company from being wasted. They were therefore not only permitted but bound to borrow money to pay the miners' wages and thus save the property of the company which would otherwise have been lost. In Troup's case (1860) 29 Beav. 353 : 54 E.R. 664, a somewhat similar case, where directors had no borrowing powers, it was laid down that:

Where the directors of a company have no power to borrow money the repayment of money borrowed cannot be enforced by the lender against the company. Yet if the money has been bona fide applied to the purposes of the company, the bona fide lender is entitled to payment as against the company.

6. The learned advocate for the appellant has also referred to the principle laid down in the leading case Lawford v. Billericay Rural District Council (1903) 1 K.B. 772, that where a corporation asked a contractor to perform certain works which were necessary for the carrying out of the duties of the corporation, the corporation could not afterwards refuse to pay the contractor for the work he had done, merely because the contract had not been sealed as required by law and so was void. The principle of quantum meruit was applied, and it was held that the corporation were not entitled to rely on this fact, It was found that there was an implied contract to reimburse the contractor for any work done by him which was necessary to be done and was required by the corporation to be done. Clearly, Ex parte Chippendale : Re German Mining Co. (1854) 4 De G.M. & G. 19 : 43 E.R. 415 and Troup's case (1860) 29 Beav. 353 : 54 E.R. 664 would not apply to a case where a trustee, far from acting in the interests of the trust and for the trust, acted expressly against the rules which had been laid down for his conduct. In borrowing this money, the trustee committed a breach of trust and the plaintiff knew it. The plaintiff cannot therefore be heard to say that he was enabling the trustee to perform his duty to the trust and was therefore entitled to be compensated for what he has supplied.

7. With regard to the application of the principle of quantum meruit, it may of course be true that if there was no money left to the credit of this particular kattalai and certain services were absolutely necessary, then the plaintiff would be entitled to receive compensation for such money spent as was absolutely necessary. But we do not know what expenditure would have been absolutely necessary in such an extreme case. The plaintiff did not plead this, and the attention of the courts below and of the parties was not directed to this aspect of the question; and so we have no material on which to come to a decision as to what expenditure by the trustee, if any, was absolutely necessary. The learned District Munsif, whose judgment is generally followed by that of the Subordinate Judge, says in para. 7 of his judgment:

So then there is clear proof in this case that as a matter of fact the, plaintiff advanced several sums of money as found in the accounts, Exs. A and B, for the supply of articles absolutely necessary for the purpose of the trust in connection with the daily puja, abhishekam, naivedyam, etc.

8. He draws this conclusion from certain findings of his. in para. 6 of his judgment which he gives in the words used by the clerk of the receiver:

Until the receiver took charge from plaintiff all the kalapujas Were being done properly, all the functions of the annadhana and abhisheka kattalais having been regularly and properly done.

9. I cannot see how it follows from this that the supply of the articles by the plaintiff was absolutely necessary for the purpose of the trust. A distinction must be drawn between what is necessary for a full and proper conduct of the services, that is, what is desirable, and what is absolutely necessary when there are no funds available to meet the full expenses or where the rules prohibit the spending of money unauthorisedly. All these various duties could have been performed on a less elaborate scale; and if the first defendant had done his duty and had applied to the treasurer for money and the matter had been referred to the Board of Control, the Board would probably have supplied a smaller amount of money which would have permitted the carrying out of these services on a smaller scale. The learned advocate for the appellant has sought to get over this difficulty by quoting the Privy Council decision, Vibhudapriya Thirtha Swamiar v. Lakshmindra Thirtha Swamiar (1927) 53 M.L.J. 196 : L.R. 54 IndAp 228 : I.L.R. 50 Mad. 497 , which is to the effect that where it appears to a creditor advancing money to a trust that the money is being used for the trust and not for the trustee's private purposes and where the money is definitely applied, the creditor cannot be defeated by a contention that the duties could have been performed on a less elaborate scale. That is true only where a trustee acts in the discharge of his duties as trustee. That principle could not be applied where a trustee is acting contrary to the trust or to the rules imposed on him by a scheme. In such a case both the trustee and the creditor know that the money ought not to be spent.

10. It has been pointed out that this contract has to be viewed in the light of the express words used in Section 65 of the Indian Contract Act and not by the principles laid down in certain English cases which are less liberal. But the language used in Section 65 shows that it does not apply to contracts into which, persons deliberately enter, knowing that the contract cannot have any validity and is in express contravention of the rules and restrictions imposed on them. Moreover, it is difficult to see how in this case there ever was a contract - void or otherwise - with the trust. The so-called contract was nothing more than a dishonest device of the plaintiff and the first defendant to defeat the scheme. In making this promise to pay, the first defendant cannot be said to have been acting for the trust; and the plaintiff knew it.

11. It follows from what has been said above that the plaintiff is not entitled to recover from the trust the amount claimed by him on the suit pronotes. There is no equitable principle that can be invoked by him which will enable the Court to grant a decree. If he had raised a plea of quantum meruit and suitable evidence had been let in, it is just possible that he might have succeeded in obtaining a decree for some part of the sum he advanced; but it is not necessary for me to express any opinion on this point.

12. It is contended that a decree should be given against the first defendant; but the first defendant did not execute the pronote in his personal capacity, but only as trustee of the institution. A petition has been put in to amend the plaint so that the plaintiff may be given some relief against the first defendant; but even if the amendment were made, the plaintiff could not, for reasons given, be given a decree against the first defendant.

13. The appeal is dismissed with the costs of, the second respondent


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