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The Official Receiver of South Arcot, Representing Somasundaram Chettiar Vs. V.Rm.K.M.M. Kulandaivelan Chettiar and ors. - Court Judgment

LegalCrystal Citation
SubjectFamily;Property
CourtChennai
Decided On
Reported inAIR1946Mad519; (1946)1MLJ31
AppellantThe Official Receiver of South Arcot, Representing Somasundaram Chettiar
RespondentV.Rm.K.M.M. Kulandaivelan Chettiar and ors.
Cases ReferredM.S.P. (firm) v. Nagappa Chettiar
Excerpt:
- - on ist october, 1937, this court agreed with the district judge that deivanai achi failed to prove her claim and dismissed the appeal without going into the question of limitation. from the case set up by his mother who averred that the trust fund was her own stridhanam, whereas the plaintiff now claimed that the trust fund was constituted for the benefit of the issue of the marriage as well as of the mother. 10. assuming it however to be possible to create such a trust, it is necessary to see whether the custom which is at variance with the hindu law governing women's rights in their stridhanam has been established by clear and unambiguous evidence and has been shown to be so ancient, uniform and well-recognised as to have become part of the consciousness of the community. on.....patanjali sastri, j.1. this appeal raises a question of some general importance to the nattukottai chettiar community of southern india, viz., whether a son is entitled by the custom of the community to a joint interest in his mother's stridhanam during her lifetime.2. the plaintiff's mother deivanai achi was married to muthappa chetty, the second defendant in the suit in 1897. at the time of the marriage, stridhanam was given to her by her brother in the shape of a hundi for rs. 3,062-8-0 which was handed to muthappa's father, muthiah chetty. the proceeds were credited as usual in the name of the second defendant in the oorkadai (head office) accounts at devakottai where muthiah chetti's family was carrying on money-lending and banking business under the vilasam v. rm.k. with branches at.....
Judgment:

Patanjali Sastri, J.

1. This appeal raises a question of some general importance to the Nattukottai Chettiar community of Southern India, viz., whether a son is entitled by the custom of the community to a joint interest in his mother's stridhanam during her lifetime.

2. The plaintiff's mother Deivanai Achi was married to Muthappa Chetty, the second defendant in the suit in 1897. At the time of the marriage, stridhanam was given to her by her brother in the shape of a hundi for Rs. 3,062-8-0 which was handed to Muthappa's father, Muthiah Chetty. The proceeds were credited as usual in the name of the second defendant in the oorkadai (head office) accounts at Devakottai where Muthiah Chetti's family was carrying on money-lending and banking business under the vilasam V. RM.K. with branches at Madura and other places. After the partition between Muthiah Chetty and his brothers in or about 1900 the amount appears to have been held by Muthiah Chetty's branch of the family which continued undivided and assumed the vilasam V. RM.K.M. According to the plaintiff, a sum of Rs. 5,143-6-3 out of the stridhanam fund, which by that time had amounted with accrued interest to Rs. 8,643-6-3, was transferred in October 1908 to the A. PR.S. SM. money-lending firm at Villupuram of Soma-sundaram Chetty, the maternal uncle of the second defendant and was there held in deposit in the individual vilasam of the second defendant. V. RM.K.M.M. Somasundaram Chetty was adjudicated insolvent by the DistrictCourt, South Arcot, in February 1929 and his estate including all the assets of the Villupuram firm vested in the appellant herein, the Official Receiver, South Arcot, who was the third defendant in the suit. Somasundara died in 1932 and soon after his death Deivanai Achi initiated proceedings before the Official Receiver for recovery of Rs. 40,324-5-6 made up of the said sum of Rs. 5,143-6-3 and accrued interest Rs. 35,180-15-3 claiming that ' according to the custom of our community the money payable to me should be deemed as a trust fund for legal purposes ' and should be paid in full. The Official Receiver rejected the claim on the grounds that it was not satisfactorily made out, that there was no trust and that the claim was barred by limitation. Deivanai Achi filed a petition, C.M.P. No. 459 of 1932, by way of appeal to the Insolvency Court. Agreeing with the Official Receiver, the learned District Judge dismissed the petition on 20th November, 1933 and thereupon Deivanai Achi preferred an appeal, A.A.O. No. 90 of 1934, to this Court. During the pendency of that appeal Deivanai died in November 1935 and the present plaintiff as her son applied to this Court in C.M.P. No. 175 of 1936 to implead him as the legal representative of his deceased mother alleging that 'according to the custom prevailing among the Nattukottai Ghetties I am the Sole heir to the stridhanam amounts left by the deceased ' and that he was willing to implead Thenammai Achi his sister as a party respondent ' to avoid any possiblE dispute from the respondent.' The application was ordered and the plaintiff was added as the second appellant and Thenammai Achi as the third respondent in the appeal. On Ist October, 1937, this Court agreed with the District Judge that Deivanai Achi failed to prove her claim and dismissed the appeal without going into the question of limitation.

3. The plaintiff now sues in the Court of the Subordinate Judge, Devakottah, for the recovery of the same amount, viz., Rs. 5,143-6-3 with interest up to date of suit on substantially the same allegations except in regard to two particulars. He now alleges that the trust created in respect of the stridhanam moneys was, according to the custom of the Nattukottai Chettiar community, for ' the benefit of Deivanai Achi and her male children and, in their absence, her female children,' and that after the death of Deivanai Achi in 1935 he became ' the sole beneficiary under the trust.' In other words, he claims that he became entitled to a joint interest in the fund even during the lifetime of his mother under the very terms of the original gift. These terms, admittedly, were never expressed or reduced to writing but are, it is said, to be implied from the custom alleged. He further avers that he discovered only in December 1938 that Somasundaram Chetti, either in collusion with the second defendant and Muthiah Chetti or otherwise, purported to adjust the trust moneys towards debts owed by them to Somasundara's firm by making fraudulent entries in the accounts and thereby committed a breach of trust. The plaintiff claims that his cause of action dates from such discovery.

4. The defendants 1 and 2 did not contest the suit, but the third defendant representing the estate of Somasundaram Chetti filed a written statement pleading, inter alia, that the suit, so far as he was concerned, was not maintainable without the permission of the Insolvency Court which has refused permission, that. the claim was barred by limitation and that it was resjudicata by reason of the decision in the claim proceedings instituted by Deivanai Achi in the Insolvency Court. Issues 6, 7 and 8 were raised on, these pleas and were tried as preliminary issues, the parties being allowed to file such documents as they relied upon in regard to these issues. The Court held that the plaintiff's claim was barred as resjudicata and that the suit was not maintainable in the absence of permission by the Insolvency Court. It accordingly dismissed the suit without considering the other issues arising in the case.

5. The plaintiff thereupon appealed to this Court which by its judgment dated 28th April, 1943, set aside the dismissal and remanded the suit to the trial Court to be decided on the merits. The Court pointed out that the plaintiff's case was different.from the case set up by his mother who averred that the trust fund was her own stridhanam, whereas the plaintiff now claimed that the trust fund was constituted for the benefit of the issue of the marriage as well as of the mother. The plaintiff therefore did not claim the money through his mother and the doctrine of res judicata had no application. The Court further held that no leave of the Insolvency Court was required as the suit had been filed on the basis that there was a trust fund in the hands of Somasundara the insolvent and that the plaintiff was entitled to a charge on the assets of the entire estate now vested in the third defendant. The plaintiff thus claimed to be a ' secured creditor ' as that term was denned in Section 2 (e) of the Provincial Insolvency Act and no leave was therefore necessary under Section 28 of the Act.

6. After the remand both sides filed additional documents and the plaintiff examined four witnesses including himself. No oral evidence was adduced on the side of defendants. The learned trial Judge has now found all the other issues in favour of the plaintiff and decreed the suit as prayed for with sundry directions regarding the Court-fee payble to the Government as the suit was filed in forma pauperis. From this decree, the third defendant has brought this appeal.

7. The main question involved in the appeal relates, as already stated, to the custom alleged by the plaintiff in regard to stridhanam gifts made to a Nattukottai Chetty woman. The custom is stated in para. 3 of the plaint in these terms:

It is customary in the Nattukottai Chetty community to which the parties belong for the parents of a girl to give her money presents (stridhanam) both at the time of her marriage and subsequently whenever there is any event of importance either in her family or her husband's family and it is the custom and usage to hand over such money in the shape of cash or hundies to the senior member of the family of the girl's husband and to vest the same in them to be held in trust and invested for the benefit of issues of the marriage, i.e., male children and in their absence females, with a right of reversion to her parents in the event of her dying without issue. It is also usual for the said moneys to be invested in the vilasam of the husband out of respect and courtesy.

8. Though the trust is stated here to be for the benefit of the children and the mother is not mentioned as a beneficiary, it is admitted that she also has beneficial interest in the fund.

9. It is common ground that no instrument of trust was executed, nor was any trust expressly declared at the time of the gift. The trust has to be inferred from the conduct of the parties and the surrounding circumstances. The law of trusts is codified in this country in the Trusts Act (II of 1882) and under Section 6 of that Act, there can be no trust unless the beneficiary is indicated with ' reasonable certainty.' Who then is beneficiary of this alleged trust? According to the plaintiff, it is not only the bride to whom the presents were made as stridhanam but also others to be ascertained according to an alleged custom of the community. It seems to us that no trust can be said to have been effectually constituted where the beneficiaries are left to be determined by invoking a custom.

10. Assuming it however to be possible to create such a trust, it is necessary to see whether the custom which is at variance with the Hindu Law governing women's rights in their stridhanam has been established by clear and unambiguous evidence and has been shown to be so ancient, uniform and well-recognised as to have become part of the consciousness of the community. The burden of proof rests on the plaintiff who sets up the custom in derogation of Hindu Law. In examining the evidence these principles have to be borne in mind.

11. Two witnesses have been called to prove the custom. Muthukaruppan Ghettiar (P.W. 2) the plaintiff's grandfather's younger brother, says:

The stridhanam amounts are always credited in the husband's name. The wife has no right to spend the money. On failure of issue the money reverts to the bride's family.... A woman who is given stridhanam has no right to spend the stridhanam moneys as she pleased when she has issue. During the woman's life the stridhanam moneys cannot be taken by her sons. The woman has only the right to collect the money, but not to spend tne money if she has heirs. She can spend the money where she has heirs but should duly account to the children for the amount. I am not aware of any Nattukottai Chetti contending that his mother is not entitled to her stridhanam amount.

The other witness Subramaniam Chetti (P.W. 3) says:

Stridhanam is given to girls at the time of their marriage in our community. It is mostly given in the shape of hundies ... The hundies are usually given to be treated as asthi (fund) for the girl and for the children born of the marriage. The husband has no manner of right to the said money. The girl has no right to spend the money as she pleased but, if the condition of the family requires money to be spent and if there is issue for whom it has to be spent, she can do so with the consent of her parent's family ... A wife is entitled to institute a suit herself for recovery of the money. She has no right to make a gift of the money. There is no such custom. If she makes a gift of it that gift would not be valid. Until she has children she or her husband has no right to the amount. If she wanted to dispose of it by gift etc., she would have to obtain the consent of her parents' family. For expenses of the family or for expenses of the marriage of her children she has absolute right to spend the money as she pleased and it is unnecessary for her to obtain the consent of her parents' family.

12. It will be seen that the evidence of these witnesses as to the respective rights of a woman and her children in the stridhanam money is vague, discrepant and contradictory and in some respects also inadmissible as the witnesses have been made to answer what appear to be questions of law. They make no differentiation between the male and female issue of the marriage. While the evidence may indicate a general consciousness in the community that the stridhanam fund should enure also for the benefit of the children born of the marriage, a consciousness evidently due 4o the well-known fact that a Nattukottai Chetti woman rarefy spends her stridhanam money but allows it to accumulate with the accretions of interest as she is usually well looked after in her husband's family, it falls far -short of establishing any specific and uniform custom whereby the male issue born of the marriage become entitled to an interest in the stridhanam of their mother even during her life and that to the exclusion of the female issue. No instance of a son or daughter having claimed and obtained a share in the mother's stridhanam or of having exercised any right thereto as a co-owner of the fund during her life has been proved. And though numerous suits by Nattukottai Chetti women for recovery of their stridhanam moneys have come before the Courts from time to time, in no case has it been shown that the sons or daughters were joined as parties interested in the subject matter as one would expect to find if the alleged custom were so well established and recognised in the community as the plaintiff would have the Court believe. Indeed, the plaintiff's own conduct in relation to his mother's claim proceeding does not support his case.

13. Mr. Gopalaswami Aiyangar drew our attention to several decisions of this Court which he claimed were instances where the custom was judicially recognised and acted upon. It is on the strength of some of these decisions rather than on the evidence adduced in the case that the learned Subordinate Judge appears to have upheld the custom. We find, however, on a close examination of these cases that none of them lends any support to the custom now set up by the plaintiff. In the Official Assignee, Madras v. Muthayee Achi (1937) M.W.N. 493 the mother herself sued for recovery of her stridhanam moneys from the assets of her husband in the hands of his assignees in insolvency. She claimed the amount (principal and interest) in full on the ground that her father-in-law, to whom the sums were originally handed over by her parents and after his death her husband, held the fund as trustees and that it could be traced into and formed a charge on the assets. In-support of the trust put forward she pleaded ' that it is the practice and usage to hand over such moneys to the senior member of the family of the girl's husband and to vest the same in him to be held by him in trust for the girl and her issue by the marriage with a right of reverter to her parents in the event of her dying without issue.' The learned Judges remarked that the finding by the trial Court in favour of the plaintiff as to the custom alleged by her was supported by clear and overwhelming evidence and was indeed not questioned before them. Dealing with the point as to whether the plaintiff's father-in-law became a trustee in respect of the amounts of the hundies handed over to him, they observed ' The evidence shows that moneys in the form of hundies are given at the time of the marriage by the bride's parents' family into the hands of the father-in-law of the bride for investment in business for the benefit of the bride and the children that may be born to her after the marriage.... The amounts are to be allowed to accumulate by lending them out for interest and the aggregate of the principal amounts and interest is payable on demand to the bride for the use of herself and her children' (italics ours). Two things must be observed in relation to this case. In the first place, no question arose as to the rights inter se between the mother and her children in regard to the stridhanam. The dispute was as to whether a trust had been created at all and not as to who were the beneficiaries. The learned Judges stated their conclusion thus : ' In these circumstances we have no doubt that the hundi amount received by the first defendant's father must be viewed as constituting a trust fund in favour of the plaintiff to be held by the first defendant's father as a trustee for her beneW (italics ours). As this passage is somewhat inconsistent with the earlier one quoted above as there is no reference to the children of the marriage, we sent for the records of the case and perused the evidence adduced in regard to the custom put forward. Almost every witness examined on the point made it clear that the stridhanam amount belonged to the bride and was payable to her whenever she made a demand for payment, that it would be taken by her children after her death and that it would revert to her parents' family if she died without issue. Such being the evidence before the learned Judges the statement in general terms in the earlier passages that the stridhanam fund was held for the benefit of the bride and her children cannot reasonably be taken to mean that the children had joint rights in the fund even during the lifetime of their mother. The learned Judges could only be taken to have meant that the fund would in the ordinary course enure to the advantage of the mother as well as her children, the beneficiaries taking not jointly but successively. In the second place, even if the statement were to be taken as indicative of the co-ownership of the mother and her children, it would be of no assistance to the plaintiff in this case as the custom set up by him postulates joint rights in the male issue alone to the exclusion of the female issue. It is true that in some cases it has been held that, according to the custom of the community, the stridhanam passes on the mother's death to her male issue and it is only if she dies leaving no such issue, that it passes to her daughters. But this cannot be regarded as supporting or rendering probable in any way the existence of joint rights in the son to the exclusion of the daughter during the mother's life. As pointed out in Palaniappa Chettiar v. Chockalingam Chettiar : AIR1930Mad109 you cannot establish a custom by evidence of similar or analogous customs or enlarge a proved custom by parity of reasoning. The only proof of custom is the evidence of that custom and no other.

14. The other decisions relied on for the plaintiff viz., Muthuraman Chettiar v. Perian-nan Chettiar (1934) 67 M.L.J. 317 Palaniappa Chettiar v. Nachiappa Chettiar : AIR1941Mad841 and Subramania Iyer v. Sivakami Achi (1944) 1 M.L.J. 38 do not advance the plaintiff's case any further. In none of them did any question arise as to the rights inter se between the mother and her children. General language used as to the stridhanam fund being intended for the benefit of the bride and the children to be born of the union is not inconsistent with the mother taking as the sole beneficiary and her sons or daughters, as the case may be, succeeding her as her heirs.

15. On the other hand, in C.S. No. 242 of 1939 Krishnaswami Ayyangar, J., held, after an elaborate review of the evidence in the case and the decisions referred to above, that no such custom as is now put forward by the plaintiff was established. ' In a loose sense,' observed the learned Judge ' the stridhanam money may be described as a provision in the nature of a family settlement inasmuch as the families both of the bride and the bridegroom join in making presents which enure directly no doubt to the benefit of the bride but indirectly and ultimately for the benefit of her children and even perhaps of her husband. But none of the cases in this or in the Subordinate Courts of the Presidency has so far recognised a custom by which the bride is to have no beneficial interest in her stridhanam money,' (the custom was put forward originally in that case, as here, in that extreme form) ' or if she has she must share it with her own children even during her life.' In A.S. No. 360 of 1942 this Court upheld the right of a Nattukottai Chetti woman to dispose of her stridhanam by will and held that a custom alleged to the contrary was not proved. The learned Judges affirmed the decision of the Subordinate Judge of Sivaganga who, after an exhaustive discussion of the voluminous evidence in that case, recorded his conclusion thus :

Nattukottai Chetti women take their stridhanam same as under the Hindu law; originally invested with suitable bankers who are relations, it carries good rates of interest and is payable to the woman herself on demand, whether she has issue or is issueless; her powers of disposition inter vivos by gifts, presents and endowments for charitable or other objects are unquestionable and have not been shown to have been repudiated; it follows as a necessary and inevitable corollary that she has powers to bequeath, even as Unnamalai Achi has done in the present suit and 'no custom in derogation of any of the above rights has now been established.

16. These decisons are inconsistent with the custom set up by the plaintiff.

17. If then the plaintiff has failed to prove that he was a joint beneficiary in his own right under the trust constituted in respect of his mother's stridhanam, he can only fee regarded as claiming through her and his present suit to recover the same amount which his mother sought to recover in the claim proceedings in the Insolvency Court instituted by her and continued by him unsuccessfully as her legal representative in this Court, must fail. As has been stated, it was held in those proceedings that the plaintiff's mother failed to prove her claim on foot of a deposit made on her behalf in the insolvent's firm. That finding is conclusive and bars the present claim as res judicata.

18. It is however, urged that this result does not follow for two reasons. In the first place, the discovery of the alleged fraudulent adjustment of the stridhanam amount in the accounts of the insolvent's firm towards the amount due to that firm from the plaintiff's father and grandfather is said to have given rise to a fresh cause of action in December, 1938 after the termination of the previous proceedings. This is an obvious fallacy. The decision of the insolvency Court that the plaintiff's mother failed to establish that her stridhanam amount was held by Somasundaram Chetty as a deposit in his firm strikes at the very root of the plaintiff's claim, for if there was no deposit of the stridhanam in that firm, the story of its fraudulent adjustment must fall to the ground and any new cause of action, even if one arose, cannot avail the plaintiff. Secondly, it was contended that the insolvency Court had no jurisdiction to adjudicate on the mother's claim as she would, on the allegations in her petition, by a ' secured creditor ' being entitled in law to a charge on the assets of the firm in the hands of the receiver in insolvency and her rights as such were not affected by the insolvency proceedings. Reliance was placed on Section 28(6) of the Provincial Insolvency Act which provides that the power of a secured creditor ' to realise or otherwise deal with his security ' is not affected by the debtor's adjudication. We see no force in this argument. It is to be noted that the plaintiff's mother was not in the position of an ordinary secured creditor holding a mortgage or charge on any specific asset of the insolvent. If her case that the stridhanam was a t ust fund in the hands of Somasundaram Chetty was true she would in law be entitled to a charge on the total assets of the insolvent out of which she could claim to be paid in full. There was no question of her ' realising ' or ' otherwise dealing ' with her security without recourse to the insolvency Court which had control of all the assets of the insolvent and, in fact, she did seek her remedy in that Court. The receiver could not effectually distribute the assets among the unsecured creditors of the insolvent without settling the claim of the plaintiff's mother who had applied for payment in full of the amount alleged to be due to her. In such circumstances, the matter came peculiarly within the cognizance of the insolvency Court and that Court had complete jurisdiction to decide the question under Sub-section (1) of Section 4 of the Act and its decision is final and binding under Sub-section (2) on the plaintiff as a person claiming through or under her.

19. Though this is sufficient to dispose of the appeal, we proceed as the case may not stop here, to indicate our opinion on the other points argued before us.

20. According to the decisions to which we have already referred, it must be inferred from the conduct of the parties and the surrounding circumstances that a trust was created in favour of the plaintiff's mother in respect of the proceeds of the hundi handed over by her brother to her father-in-law Muthiah Chetty at the, time of her marriage. The evidence shows that the bride and her husband were minors at the time and that the bride's brother executed the hundi and gave it to Muthiah Chetty who was the manager of the family and the natural protector of the girl after the marriage, for the purpose of investment and augmentation with accretions of interest as usual among the community. It is also clear that Muthiah Chetty invested the moneys in his own family money-lending business which was then carried on under he vilasam VR.M.K. at Madura and the amount stood at Rs. 3,120-14-6 as on the 17th Avani, Hevilambi, corresponding to 31st August, 1897. So far, the plaintiff's case on the merits is smooth-sailing. It encounters, however, some rough weather at the next stage when the plaintiff seeks to prove that a sum of Rs. 5,143-6-3 out of the augmented fund was transferred in October 1908 to the A. PR.S.SM. firm belonging to Somastindaram Chetti arid that the latter accepted the amount with knowledge of the trust and subsequently adjusted it towards the debt due to him from the'plaintiff's family. All that clearly appears is that on 25th October, 1908, Muthiah Chetty passed a hundi for Rs, 5,143-6-3 to the A.P.R.S.SM. firm. The hundi, a copy of which is filed as Ex. Bi, recites that the sum was payable ' under the settlement made by our Muthappan ' (i.e., the second defendant) ' so as to be credited in the name of thanathu (self) Somasundaram Chetty cashed the hundi and credited the proceeds in the vilasam of the second defendant (V. RM.K.M.M.) in the accounts of his A. PR.S. SM. firm at Villupuram. On the same date, viz-, 25th October, 1908, another Hundi for Rs. 3,500 was given by Muthiah Chetti to Somasundaram Chetti's brother Chinniah Chetti who was carrying on a money-lending business of his own under the vilasam A. PR.S.C. at Tirukoilur. This hundi has not been produced but it is referred to in Ex. G a letter written by Chinniah. The accounts of the A.PR.S. SM. firm show that the amount credited in the name of the second defendant swelled to Rs. 6,626-7-5 with accumulated interest by October, 1913 and on the 16th of the same month that sum Was debited to the second defendant cancelling the credit and an equivalent sum was credited in the account of the second defendant's family headed VR.M.K.M. (which represents the vilasam of Muthiah Chetti), reducing the debit balance in that account which had been considerably overdrawn. In other words, the amount standing to the credit of the second defendant was adjusted towards the debt due to the firm from the family of the second defendant.

21. Now, three things must be established before the plaintiff's case can succeed : (1) The sum of Rs. 5,143-6-3 handed over by Muthiah Chetti to Somasundara on 25th October, 1908, was part of the stridhanam fund held by him as trustee for the plaintiff's mother. (2) Somasundara received it knowing it to be trust money and (3) the adjustment of 1913 was made by Somasundara with the knowledge that such application of the trust money was unauthorised and constituted a breach of trust. The only documentary evidence on which the plaintiff relies in support of points (1) and (2) is Ex. L, which, if genuine, would clearly establish those points. It is said to be a draft of a hundi proposed to be drawn on 16th October, 1908, by Muthiah Chetti in favour of the second defendant for Rs. 8,643-6-3 ' in respect of the stridhanam amount paid to self by V.T.M. people (i.e., the family of Deivanai Achi's parents) and in respect of the sundry amounts paid in the account,' the latter apparently representing seermurai or small presents made to her after her marriage. It will be seen that the total of the two hundis drawn by Muthiah Chetti on 25th October, 1908, for Rs. 5,143-6-3 and Rs. 3,500 in favour respectively of Somasuhdara and his brother Chinniah is Rs. 8,643-6-3 and this sum is referred to in Ex. L. as the stridhanam moneys paid by the family of Deivanai Achi's parents. That document would thus supply, if it were genuine, the only link connecting the sum paid into the hands of Somasundara in October, 1908, with the stridhanam of the plaintiff's mother, apart from the oral evidence to which we shall presently refer. Furthermore, the document, which is said to be in the handwriting of Somasundara himself, would also prove that he was aware that the sum of Rs. 5,143-6-3 paid to him was part of the stridhanam fund. And yet it was not produced at the inquiry held by the Official Receiver in the claim proceeding instituted by the plaintiff's mother in the insolvency Court. Muthiah Chetti who admittedly conducted that proceeding on her behalf and gave evidence (Ex. VIII) in support of her claim, made no reference to any such document having been brought into existence in the manner now spoken to by the plaintiff's witnesses P.W. 2 and P.W. 4. It was produced for the first time before the insolvency Court when Muthiah Chetti was again examined (his deposition is marked as Ex. IX) in the appeal against the order of the Official Receiver rejecting the claim. It is written on a small scrap of paper and is not signed by any one and admittedly no hundi was executed and delivered in accordance with its terms. There was thus no particular reason for preserving such an inconsequential piece of writing for over a quarter of a century, Muthiah Chetti who produced it at a late stage in the insolvency proceedings, though alive, was not examined. His brother P.W. 2 and the plaintiff's father the second defendant, who was examined as P.W. 4 both say they were present when the draft Ex. 1 was prepared, but while according to the one it was written by Ghinniah Chetti, the other says it was written by Somasundara himself. Chinniah is alive but has not been called. We have carefully compared the writing in Ex. 1 with the admitted handwriting of Somasundara in the postscript added by him in Ex. F written two days later, but we are unable to form any definite opinion one way or the other. In these circumstances, we cannot but regard Ex. 1 with grave suspicion. The learned Judge below apparently regarded Ex. 1 as a hundi executed by Muthiah Ghetti, for he says ' Ex. 1 was then executed by the plaintiff's grandfather V. RM.K.M. for the said sum in the following terms etc.' (para. 8). This is an obvious error and it must necessarily have influenced his conclusion regarding the genuineness of the document. For the reasons indicated we do net, however, consider it safe to act upon it.

22. Putting aside Ex. L. we have, in regard to the three points mentioned above, only the oral evidence of P.W. 2 and the second defendant (P.W.4) and the previous depositions of Muthiah Chetti, Exs. VIII and IX which appear to have been admitted by consent. These witnesses state that the stridhanam of Deivanai Achi had, by October 1908, amounted to Rs. 8,643-6-3, that at the instance of her brothers it was at first proposed to invest the whole of it in Somasundaram Chetti's firm and the draft Ex. 1 for a hundi for that amount was accordingly prepared, but the proposal was then dropped and a portion of the amount, viz., Rs. 5,143-6-3 only, was deposited in Somasundara's firm and the balance of Rs. 3,500 in the firm of his brother Chinniah Chettiar. Ex. B and G no doubt show that these deposits were made, but they do not refer to the amounts as the stridhanam moneys of Deivanai Achi. The explanation of P.W. 2 that this was ' on account of confidence ' cannot be accepted as satisfactory. Ghinniah Chetti is said to have been present at the time when these transactions took place and is thus in a position to give direct evidence on the point, but as already stated he has not been examined, nor has any evidence been produced to show how the sum of Rs. 3,500 deposited with him on the same day was dealt with subsequently. The witnesses examined are near relations of the plaintiff. We are not prepared to hold, on their interested testimony, that the sum of Rs. 5,143-6-3 deposited in the second defendant's vilasam in Somasundaram Ghetti's firm with which the second defendant and his father had admittedly large dealings of their own, was part of Deivanai Achi's stridhanam amount and that Somasundara received it as such.

23. Even assuming that to have been the case, two further questions remain to be answered. Did Somasundara know or have reason to believe that Muthiah Chetti or the second defendant was committing a breach of trust in authorising, as one or both of them must be taken to have done, the adjustment of the stridhanam moneys towards their private debts? If so, would the plaintiff be entitled to payment in priority with a charge on the total assets as claimed by him, or only to rank for a dividend with the other creditors of Somasundara in the insolvency proceedings?

24. As regards the first of these questions, on the assumption made above, the burden of proving that Muthiah Chetti had authority to apply the trust money in payment of his private debts would lie on Somasundara now represented by the third defendant. (Vide 0. RM. 0. M. SP. Firm v. Nagappa Chettiar (1941) 1 M.L.J. 393 : L.R. 67 IndAp 448 : I.L.R. 1941 Mad. 175 . P.W. 2 states that when the stridhanam hundi was given to Muthiah Chetti there was no, agreement as to how it should be invested. He says, however, that it is the usual practice to invest it either in the bride's family firm or the bridegroom's family firm or with third parties. In the present case the money remained invested without; any one concerned raising any objection, in Muthiah Chetti's family firm till October 1908, when it was deposited in the A. PR.S. SM. firm of Somasundaram Chetti. It may therefore be inferred that Muthiah Ghetti had authority to invest the trust money in his own family firm. The adjustment entry dated 16th October, 1913, in the account of Somasundara's firm, Ex. K-(:i) says ' received from V.RM./K. Mi M. after crediting towards letter.' Asked to explain what the letter referred to was, the second defendant denied that there was any such letter. This denial cannot be accepted as true. It was probably the letter whereby Muthiah Ghetti and the second defendant in whose name the amount had been credited authorised the adjustment in reduction of their overdraft. The account also shows and it is admitted by the second defendant, that there was a settlement, of account on 25th April, 1916, the second defendant and his father executing a promissory note for Rs. 20,171 in favour of Somasundara for the balance then found due in respect of the dealings between their firms. While it is thus clear that the adjustment of 1913 was effected with the knowledge and concurrence of the second defendant and his father, there is nothing to show that the money was replaced' in their family firm either by depositing cash or by otherwise augmenting its assets. The second defendant states that the accounts at Devakottah, the headquarters of the family business ' must be with my father'. These accounts may throw light on how the stridhanam was dealt with in the family accounts after the adjustment aforesaid. But they have not been produced. We are asked by the appellant's learned Counsel to infer that if the accounts had been produced they would have disclosed a replacement of the fund, in which case the adjustment would not be open to attack. We are not however prepared to draw any such inference in the circumstances of this ease. It is in evidence that the family fortunes began to decline from 1908 or 1909 when Muthiah Chetti started the construction of a house on an expensive scale, though the actual crash came some time later, the second defendant being adjudicated inslovent in 1923 and his father Muthiah in 1928. In 1916 we find, as stated already, the second defendant and his father executing a promissory note for a large sum in favour of Somasundaram even after the adjustment of 1913. In such circumstances; we are unable to infer from the non-production of the family accounts relating to the period in question that the amount adjusted in Somasundara's accounts must have. been replaced in Muthiah Ghetti's family firm. Nor can we hold that Somasundaram Chetti who was the maternal uncle of the second defendant and presumably knew the financial condition of Muthiah Ghetti's family could have reasonably believed that the amount adjusted was being replaced and there was no breach of trust.

25. What then is the legal position? Proceeding on the same assumption, viz., that the hundi for Rs. 5,143-6-3 was part of the stridhanam fund and that Somasundaram Chetti received it knowing it to be such, it cannot be asid that Somasundara himself became a trustee in respect of the money when he received it in 190&. He was only a banker accepting a deposit with notice of the trust. Mr. Gopalaswami Ayyangar, however, argued on behalf of the plaintiff that the adjustment of 1913 amounted to a transfer of the money to Somasundaram Chetti and that the plaintiff was.entitled to trace and follow it into the general assets of Somasundara now in the hands of the third defendant with a right of lien on, the total assets. We cannot accede to this contention. It is true that the adjustment and set off effected by Somasundara could not, in view of what we have said, bind the plaintiff as the beneficiary of the trust-fund and that Somasundara would be liable to refund the money deposited with him. But we cannot agree that Somasundara would, on that account, be in a worse position than he was in before such adjustment, as regards the quantum of his liability. Prior to the adjustment, the deposit, albeit of trust money as such, created only the relation of creditor and debtor between the trustee, Muthiah Chetti and his banker Somasundara (Foley v. Hill (1848) 2 H.L.C. 28) and there would be no question, on the latter's bankruptcy, of the trustee tracing or following the money in the hands of the assignee in insolvency, as the money was part of Somasundara's estate and vested as such in the assignee. The fact that Somasundara set off his liability as a banker to repay the trust money against a private liability of the trustee to himself knowing or having reason to believe that the trustee was committing a breach of trust cannot improve the position of the beneficiary. If a trustee is not entitled to a tracing order in his banker's insolvency, not because of any difficulty of following money into a debtor and creditor account like a banker's, for such difficulty is got over in equity by declaring a charge (See Sinclair v. Brougham L.R. (1914) A.C. 399), but because the trustee depositor is only entitled to payment pari passu with the other unsecured creditors of the banker who had no notice of any breach of trust when he received the deposit, it is difficult to see on what principle a set off by the banker, in the circumstances supposed, of his liability to repay against a private debt of the trustee could entitle the cestui que trust to payment in full with a charge on the total assets in the hands of the assignee. The set-off would, of course, not bind the cestui que trust who might sue to have the fund replaced if there was no bankruptcy, but against the assignee he would be entitled only to a right of proof. It would be different if instead of a set-off, the banker had actually received trust-money in payment of his debt with notice of the trust.

26. It follows that the plaintiff is not entitled to claim as a secured creditor with a charge on all the assets of Somasundaram Chetti in the hands of the third defendant and the present suit brought on that footing without the leave of the insolvency Court is also not maintainable.

27. There remains only the question of limitation. Assuming, again, as we must for this purpose, that Somasundaram Chetti accepted a deposit of trust-money with knowledge of the trust as an investment in his firm, he did not, as already-observed, become a trustee of that money in the strict sense of that expression and Section 10 of the Limitation Act cannot therefore apply. It has been recently held in Chidambara Vinayagar Levastanam v. Chidambaram Chettiar : AIR1943Mad691 by a Division Bench of which one of us was a member that the word ' trust ' is used in Section 10 in the same sense as in the Trusts Act (II of 1882) and that the expression ' vested in trust' implies that the ownership in the property has been conveyed to the person referred to in the section. The learned Judges reviewed the earlier cases on the subject and expressed their disagreement with the observation (which they regarded as an obiter dictum) in Krishtappa Chetti v. Lakshmi Ammal : AIR1923Mad578 that the expression ' trust for a specific purpose ' in Section 10 was merely a more expanded mode of expressing the same idea as ' express trust ' in English law. In view of this ruling the decision of Gentle, J., in Palaniappa Chettiar v. Nachiappa Chettiar : AIR1941Mad841 which was based on English decisions and the view expressed in Krishtappa Chetti v. Lakshmi Ammal : AIR1923Mad578 cannot be considered to be good law. The learned Judge there held that a deposit made by the father of a girl of moneys given to her as stri-dhanam with his natural born son who had been adopted into a stranger family and was carrying on business as a banker, constituted the depositee as ' express trustee ' of the money and that Section 10 applied to a suit for its recovery.

28. It was next argued that Article 120 of the Limitation Act applied to the case and the fraudulent adjustment of 1913 having been discovered by the plaintiff only in 1938, the suit brought in April 1939 within six years of such discovery was well within time. It is now settled by the decision of the Privy Council in 0. RM. 0. M.S.P. (firm) v. Nagappa Chettiar (1941) 1 M.L.J. 393 : L.R. 67 IndAp 448 : I.L.R. 1941 Mad. 175 (P.C.) that a suit to recover trust property from a person who has taken it with notice of the trust by a transaction with the trustee which was a breach of trust on his part and with notice that it was a breach of trust is governed by Article 120 of the Limitation Act and time begins to run from the date when the plaintiff had knowledge of the transaction. The Court below has apparently accepted the plaintiff's evidence that he became aware of the adjustment in Somasundara's accounts only after the termination of the claim proceeding instituted by his mother in the insolvency Court. This finding was attacked before us. It was pointed out that the plaintiff's grandfather and father, the second defendant, must have been parties to the transaction and the plaintiff must have become aware of it even before his mother instituted the claim proceeding in the insolvency Court in March 1932 and that reference to the transaction must have been deliberately omitted in that proceeding because it would have placed Muthiah Chetti, who conducted it on behalf of the plaintiff's mother and was her principal witness, in a difficult position. Our attention was drawn to the statement in the Official Receiver's order dated 26th Spetember, 1932, reject-ing the mother's claim, wherein he stated that her vakil had the entire accounts examined in his office and stress was laid also in this connection on the non-examination of Muthiah Chetti in the present suit. While appreciating the force of. this argument, we are not prepared to differ from the learned Subordinate Judge on a point which turns largely on the oral testimony of the plaintiff and his father, in the absence of any positive evidence to show that the plaintiff knew of the transaction more than six years before he brought the suit. We accordingly hold that if the plaintiff's claim is otherwise well-founded, it is not barred by limitation.

29. In the result, we allow the appeal and dismiss the suit, so far as the appellant is concerned, with costs here and in the Court below. The respondent will pay the Court fee due to the Government. Provision will also be made for the inclusion of the costs of A.S. No. 294 of 1941.


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