Skip to content


Soudagar Muhammad Abdul Rahim Baig Saheb Vs. Soudagar Muhammad Abdul Hakim Baig Saheb and ors. - Court Judgment

LegalCrystal Citation
SubjectFamily
CourtChennai
Decided On
Reported inAIR1931Mad553; (1931)61MLJ139
AppellantSoudagar Muhammad Abdul Rahim Baig Saheb
RespondentSoudagar Muhammad Abdul Hakim Baig Saheb and ors.
Cases Referred and Abdul Samad Khan Khiladar v. Bibijan
Excerpt:
.....family, his lordship held :] 5. all this shows quite clearly that the business was regarded as a family business in which all the members of the family were interested. from what we have already said, we are satisfied that the trade was being continued as a family trade. clearly that is what has happened here. the relationship in which he stood to the plaintiffs was, as we have held, clearly fiduciary. it was really rather a hopeless task owing to the failure of defendants 1 and 2 to close the firm's accounts at the time of their father's death and the resultant figures are only approximate. we are satisfied that after the death of the father the 1st defendant along with the 2nd defendant carried on the father's business as a person bound in a fiduciary capacity to protect the..........later on, is that, on the death of the father, defendants 1 and 2 continued his cloth trade as a family trade for the benefit of the family and made profits thereby, that although an attempt at partition was made in 1915 it did not alter the position of parties, that the family trade was continued from 30th september, 1912, the date of the father's death, till october, 1918, when owing to disputes between 1st and 2nd defendants it came to an end, that these defendants taking advantage of their position as eldest males in the family used in that trade the shares of the other members in their father's assets and thus became executors de son tort liable to account to the plaintiffs for the profits they have made by such use of the plaintiffs' moneys, and that the plaintiffs are therefore.....
Judgment:

Wallace, J.

1. These eight appeals arise from four original suits which were disposed of by the Lower Court in four judgments which are practically one judgment. The suit was filed in the following circumstances. A Mahomedan, Abdul Karim Baig, who was a cloth trader, died on 30th September, 1912, leaving a widow, two major sons, two minor sons and three minor daughters. The widow, the minor sons and the youngest daughter are the plaintiffs in the four suits. The two major sons are the 1st and 2nd defendants in the four suits. The plaintiffs' general assertion, apart from minor differences, which will be dealt with later on, is that, on the death of the father, defendants 1 and 2 continued his cloth trade as a family trade for the benefit of the family and made profits thereby, that although an attempt at partition was made in 1915 it did not alter the position of parties, that the family trade was continued from 30th September, 1912, the date of the father's death, till October, 1918, when owing to disputes between 1st and 2nd defendants it came to an end, that these defendants taking advantage of their position as eldest males in the family used in that trade the shares of the other members in their father's assets and thus became executors de son tort liable to account to the plaintiffs for the profits they have made by such use of the plaintiffs' moneys, and that the plaintiffs are therefore entitled to a decree for an account from 19th December, 1918, and a division of the trade profits in proportion to their family shares. The various plaintiffs sue for various sums which they estimate to be due to them on such accounts.

2. The general defence was that the trade carried on by defendants 1 and 2 after their father's death was entirely for themselves, and, while they admit that in that trade they employed the shares of the other members of the family, these, they say, were treated as mere loans of capital for which interest has been allowed in the firm's books. The Lower Court has awarded the plaintiffs the sums set out as due to each in the alleged partition of 1915, plus interest at 6 per cent, from that date. All the four plaintiffs appeal. Their appeals are Nos. 460 to 463 of. 1924. The 1st defendant has presented an appeal in each of the four suits. His appeals are. Nos. 280 to 283 of 1924, objecting to some points in the Lower Court's decree which will be dealt with later.

3. The main question for decision is what was the nature, both in fact and in law, of the business carried on by 1st and 2nd defendants after the father's death, and what was the relation, in fact and in law, of the plaintiffs in that business. We have no doubt that, from the date of the father's death up to at least the date of the alleged family partition on 7th March, 1915, the business was in fact carried on by defendants 1 and 2 as a family business. Prior to the father's death it was a 'one man show,' 1st and 2nd defendants being mere helpers and not partners with their father, and the business was therefore one of the main assets left by the father to his family. After his death his various heirs took in law their several shares under the Mahomedan Law. But in fact it appears that no attempt was then made to settle and distribute these shares. The trade was not wound up; the accounts, Exs. V and XVII, were not closed; the trade accounts were continued on the same books as before; no change in the constitution of the firm is noted in the books; no list of partners after the father's death was drawn up; the same constituents were dealt with; all the old stock was taken over by, and the debts of the father's firm were collected as owing to, his successors. There is every indication in favour of, and none really contrary to, the view that between 1912 and 1915 the father's trade was continued by 1st and 2nd defendants as a family business for the benefit of all the heirs of their father. It is only necessary to refer in passing to some of the more important documents throwing light on this matter. The original name of the firm was S. M. Abdul Karim Baig. To this after the father's death was added the words 'and Sons' and this is the sole feature in favour of the 1st defendant's contention on this point. But even here there is no indication that 'and Sons' was confined to the two adult sons.

4. [After looking into the evidence to ascertain whether the trade that was carried on was for the benefit of the rest of the family, His Lordship held : ]

5. All this shows quite clearly that the business was regarded as a family business in which all the members of the family were interested. The power of attorney is signed by all. Those regarded formally as members are all the males of the family and the designation 'and Sons' was therefore added. There is no break in the business after the father's death. Its credit and goodwill were taken over and used by the 'and Sons' Firm. The businesses in fact continued just as if the father had not died. Bis assets, separately held in theory though they may be in law by the various heirs, continued as the assets of the business. It is quite clear that the first part of the plaintiffs' case that the business was In fact continued after the father's death as a family trade for the benefit of the family is fully justified.

6. The 1st defendant answers to this that as in law there cannot be a Mahomedan joint family (see Abdul Khader v. Chidambaram Chettiar I.L.R. (1908) M. 276) therefore there cannot be a family trade, and this is the argument which has found favour with the Lower Court. It seems to us irrelevant. The point is not whether this trade was one to which the law will impute all the incidents and legal implications of a Hindu joint family trade, but whether in fact the business was carried on for the benefit of the whole family. There is nothing in law to prevent such a business being carried on by any one of whatever race he may be. From what we have already said, we are satisfied that the trade was being continued as a family trade. The 1st defendant also regarded himself after his father's death as the guardian of the minors and acted as if he really were. This is plain from Exs. A and X already noted. No doubt he could not be guardian de jure, but that is again beside the point. It is plain that he was acting as guardian de facto. Thus he regarded himself as the representative of the minors in the trade and justified as such in using their moneys for it and protecting their interests. He looked upon, himself as to all intents and purposes the eldest member of a Hindu joint family does, namely, as manager of a joint family business, and guardian of the minors, except that as the family was Mahomedan the family trade in this case was carried on by him on. behalf of all the heirs of the deceased founder of the trade and thus on behalf of the females of the family also. It is not an uncommon thing in this Presidency where members of the Mahomedan community' live surrounded by Hindus, that they absorb and adopt Hindu social ideas and tend to look on their own social customs from a Hindu point of view. This tendency has been recognised in various rulings in this Court, in Hussain Saib v. Hassain Saib (1917) 5 L.W. 835 for example, where it has been pointed out that it is common in this Presidency for descendants of Mahomedans to live and trade together, and the property is then held fey the several members of the family in the shares to which they are entitled under Mahometan Law. Clearly that is what has happened here. That the Courts will not apply Hindu Law to Mahomedans is obvious, but that is not the proper way to decide a case of this kind although it may be the way of least resistance. Such cases are not problems of law, nor does their decision depend on the ideas of law which the parties have put into their pleadings, but are concerned with questions of fact and have to be decided on the facts. The correct view in our opinion therefore is that there is nothing contrary to law in Mahomedan adult members of a family carrying on such a family trade for the benefit of all the members of the family including the minors and the females, and the Courts will therefore uphold it and such legal consequences as in law follow from it, although the Court will not import into it all the, legal consequences which would follow from such a family trade when it is conducted by a Hindu joint family or all the legal consequences of a lawful partnership.

7. What, then, are these legal consequences in this case? In the light of the facts which we have set out, it seems to us that the conclusion cannot be resisted that the 1st defendant by his conduct after his father's death put himself in a fiduciary relationship to the widow and the minor members of the family. He assumed the management of their father's business as if he was in law, what he conceived himself to be in fact, the manager of a family business for the benefit of all. He assumed the position of guardian of all the minors, male and female, and acted as such, a position obviously of fiduciary relationship : see Sitha Boi v. Radha Boi (1918) 36 M.L.J. 189. He regarded the minor males as full members of the firm. He and the 2nd defendant in their self-imposed management of the family business retained it intact as it had been at the father's death, and did not wind it up or distribute to each sharer his quota or allow it to be abstracted from the firm. They by virtue of their position as the adult males got possession of the shares of the widow and the minors and retained these in the firm. By this assumption of family management--it does not matter whether we call their position that of trustees de son tort or executors de son tort--the relationship in which the 1st defendant stood to the widow and the minors was essentially a fiduciary one. The present case is similar to that in Vrandavan v. Parsottham : AIR1927Bom75 in which a similar view was taken.

8. The 1st defendant argues, in addition to the argument with which we have already dealt, that what is not legally correct cannot be actually possible, one or two points : first, that the matter of guardianship was never raised in the plaints. That is true; the two leading points in the plaints were family trade and executor de son tort. But the guardianship matter is merely a plank in that platform, and the matter of fiduciary relationship does not rest on that alone or chiefly, but on the general assumption by defendants 1 and 2 of management of their father's trade for the benefit of all his heirs. The matter of guardianship was raised in the Lower Court at the time of trial and is dealt with by the Subordinate Judge, but with the same erroneous notion that one who cannot be a guardian de jure cannot act as guardian de facto and carry on a business as such. The decision in Abdul Khadder v. Chidambaram Chettiar1 relied on by the 1st defendant is not really in point. The question there was whether the act of a guardian de facto of a Mohamedan minor could in law bind the minor adversely to his interests. We think therefore there is no force in this contention by the 1st defendant.

9. The next point was that the 1st defendant cannot be in law styled an executor de son tori because he did not do any act which belongs to the office of executor. It seems to us to matter very little what sort of name we give him in law, or whether the plaintiffs were right in their plaints in describing him as an executor de son tort. The relationship in which he stood to the plaintiffs was, as we have held, clearly fiduciary.

10. Then 1st defendant argues that, as he was legally in the position of co-owners with his co-heirs, he must be conceived to have been in possession of their shares as co-owner, and therefore not in a fiduciary capacity, as the relationship of co-owner is not in law a fiduciary one : See Abdul Khader v. Chidambaram Chettiar I.L.R. (1908) M. 276 and Abdul Samad Khan Khiladar v. Bibijan : AIR1925Mad1149 . Here again it is a question not of law but of fact, and to our minds it is quite clear from the facts we have set out that the 1st defendant was assuming a position much more of trust than of a mere co-owner, and that he came into possession of the assets of the other members not because of his co-ownership but because of the fiduciay relationship he adopted towards them into which he entered on their behalf.

11. Apart from the general question of whether the 1st defendant is liable to account to the plaintiffs for the profits made by him on the ground that he made these profits in a fiduciary capacity, the 1st defendant urges that at least the profits got by foreign trade from 1912 to 1915 shown as Rs. 11,864-10-0 in Ex. II should not be included.

12. [His Lordship considered the evidence relating to foreign trade and proceeded : ]

13. This attempt to isolate a particular branch of the family trade and earmark it for defendants 1 and 2 alone cannot therefore be upheld.

14. A dividing line, however, both in fact and in law, has to be drawn between the period 1912-1915 and the period 1915-1918. In March, 1915, owing to one minor sister having come of age and having demanded her share, the firm's accounts were looked into and an attempt was made to ascertain the assets of the firm not on that date but on the date of the father's death, and to partition these assets among the various heirs. It was really rather a hopeless task owing to the failure of defendants 1 and 2 to close the firm's accounts at the time of their father's death and the resultant figures are only approximate. This partition is evidenced by Ex. II. As it stands, it allotted all the profits between 1912 and 1915 wholly to the 1st and 2nd defendants on the footing that the trade after their father's death was not a family trade but their own exclusive trade. Another minor daughter came of age in 1918 and also was then given her share according to Ex. II. These two daughters gave release deeds, Ex! VI, dated 1st April, 1916, and Ex. VI (a), dated 1st July, 1918. Ex. II and the partition which it represents were forced on defendants 1 and 2 by the demand of one co-heir for her share and it was carried through by these defendants alone. The process by which they came to the result that the profits between 1912 and 1915 were their own private profits and were not divisible as assets among the family can be regarded as barely honest. They had on their case used for themselves exclusively the whole credit and goodwill of their father's firm which had been going on for about 30 years, a very definite asset which ought to have been valued and divided between the co-heirs. Further, having obtained control of the shares of the other members of the family by the simple process of constituting themselves trustees and guardians for them, they used these shares in the business to obtain the profits which they under Ex. II proceeded to divide between themselves alone. We are satisfied that after the death of the father the 1st defendant along with the 2nd defendant carried on the father's business as a person bound in a fiduciary capacity to protect the interests of the plaintiffs. Sections 23(f) and 88 of the Trusts Act will consequently apply. He was therefore bound to hold for the benefit of the plaintiffs any advantage he gained by availing himself of his fiduciary character and by utilising the plaintiffs' shares in their father's assets for his own pecuniary advantage; and the measure of that advantage up till 7th March, 1915, is the figure of profits both on his own trade and on the foreign goods as set out in Ex. II. The plaintiffs are therefore each entitled to the profits between 1912 and 1915 arising to each of them proportionate to their share of the capital employed. The plaintiffs do not now challenge the figures in Ex. II although the figures are merely approximate, but only the method of division. The figures of profits therein given from 1912 to 1915 are Rs. 13,402-13-0 on the local trade and Rs. 11,864-10-0 on the foreign trade.

15. But after this partition of 1915 the position in fact and in law changed radically. From the date of Ex. II separate khatas for each member then remaining in the family were kept and their own individual credits and debits entered therein, Ex. XVII-B. None of the plaintiffs has attacked the fact of this partition. It is true that in their plaints the plaintiffs in Appeals Nos. 280 to 283 speak of 1st and 2nd defendant having 'purported' to partition and of some properties having been omitted. But the first issue in all the suits clearly shows that all the, plaintiffs accepted the partition as a fact, and the only question about it which fell to be decided was, what was the value of each share. Such a position it is obviously difficult to maintain when the family trade has ceased to be family trade because the family members themselves have partitioned. Any combination, actual or theoretical, between the members of the family ceased at such a partition, and the plaintiffs must be regarded as having accepted that position. It is true that none of them categorically pleads that the family trade had then come to an end; all plead that the defendants were even after the partition in the position of executors de son tort in dealing with the respective shares of each plaintiff; but such a contention cannot be upheld in the circumstances. There is no question here of renunciation of a trust to which Section 46 of the Trusts Act would apply. The mother, for example, must be taken, in the absence of evidence to the contrary, which she does not provide as she has not gone into the witness-box, to have known of the partition and accepted it as putting her own separate share at her disposal If she then allowed it to be used for the trade, she was perfectly aware that there was no longer a family trade for her benefit and the continued use of her share could only then be as capital lent to the firm consisting of defendants 1 and 2. She cannot therefore contend that the 1st defendant was any longer dealing with her share in a fiduciary capacity. Similarly the minors who now accept the partition of the various shares cannot plead that the trade by two separated members was any longer being conducted as a family trade for the benefit of the rest. It is true that no independent person represented them at the partition, but they have not complained of that or made it a ground of action. We conceive then that it is not open to them to maintain that after the partition the family trade continued as a family trade for their benefit, and therefore the 1st defendant was any longer engaging in it in a fiduciary relationship towards them. No case was put forward in the plaints that after 1915, when the family trade had ceased, the 1st defendant remained guardian de facto or quasi trustee, and therefore responsible to the minors as guardian de son tort or as trustee de son tort. Any claim that he remained executor de son tort will not avail as it is not shown that he was engaging in any act which belongs to the office of executor. As to ownership, the suit was not on the footing of partnership nor is there any basis for the contention that after 1915 the other members of the family were admitted to the benefits of the partnership within the meaning of Section 247 of the Indian Contract Act. We are therefore of opinion that from 7th March, 1915, the plaintiffs are entitled only to interest on their individual shares in the firm, regarded as loans of capital. That interest has been awarded by the. Lower Court at 6 per cent, and no attack on that rate has been raised in the pleadings or before us.

16. The net result in Appeals Nos. 460 to 463 of 1924 is that the share of each plaintiff will be re-calculated on the figures of Ex. II, including for general distribution the figures of profits on the 'godown' and 'foreign goods'. On each total so ascertained interest will be allowed at 6 per cent. per annum up to the date of payment. The proportion of shares is, to the widow 11/88, to each minor son 7]44 and to the daughter 7|88. We do not see any sufficient reason for allowing any special remuneration under Section 95 of the Trusts Act to the 1st defendant as manager in view of our opinion that his conduct has not been straightforward. From the totals so ascertained payments admitted as directly made to the plaintiffs in Appeals Nos. 460, 461 and 462 by the 2nd defendant, namely, Rs. 12,000 in Appeal No. , 460, Rs. 8,000 in Appeal No. 461 and Rs. 6,000 in Appeal No. 462 must be deducted, and also the amounts shown as drawn out in cash by each plaintiff in his or his separate khata, Ex. XVII, on which counter-interest at 6 per cent, must also be allowed. These latter deductions were left by the trial Judge to be disposed of in a collateral suit between the parties about the partition of immoveable property; but as they were not so disposed of we have now to provide for them here.

17. These deductions are the matters raised in Appeals Nos. 280 to 283 of 1924. The 1st defendant, the appellant in these appeals, further claims that the amount of these deductions should be increased because of an arrangement between himself and the 2nd defendant under Ex. VII lessening to some extent the proportion of his liability in the family trade. Obviously this private arrangement cannot be used to curtail the plaintiffs' rights and this request must be disallowed.

18. The decrees of the Lower Court are therefore set aside and the amount due to each plaintiff will be calculated on the above footing and decreed. The decree calculations will be shown to the counsel on both sides before the final decrees are drawn up. The matter of costs will be spoken to after these calculations are at our disposal to be spoken to 10 days hence.

19. [His Lordship' issued orders as to costs.]


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //