1. Since all these appeals arise out of a common order passed by the Court below in A. A. 479 to 481 of 1973 in O. S. 91 of 1941, they are dealt with together.
2. The suit O. S. 91 of 1941 on the file of the court below was filed by the first respondent, who is common in all the three appeals, for partition and separate possession of his half share in the suit properties and for rendition of accounts of the management of his elder brother Nachiappa, who was the first defendant therein. In that suit the court below passed a preliminary decree on 29-12-1943. declaring the plaintiffs right to half share in the suit properties and directing rendition of accounts with reference to the management of the joint family properties by Nachiappa, the first defendant. As against that preliminary decree, three appeals were filed before this court in A. S. Nos. 115, 199 and 499 of 1943 respectively by defendants 1. 2 and 3. During the pendency of these appeals the matter was referred to arbitration at the instance of the parties, The arbitrators passed an award on 6-12-1944. The first defendant Nachiappa filed I. A. 18 of 1945 on the file of the court below to set aside the award on the ground of want of jurisdiction. The said application was allowed by the court below and the award passed by the Arbitrators was set aside, There was an appeal by the plaintiff in C. M. A. 210 of 1946 before this court. This court, however, reversed the order of the trial court and confirmed the award and directed the Subordinate Court, Devakottai, to pass a final decree in terms of the award. Accordingly, in pursuance of the direction of this court, the Court below Passed a final decree on 31-7-52. The first defendant filed an appeal to the Supreme Court against the judgment of this court in C. M. A. 210 of 1945, confirming the award and the Supreme Court however confirmed the judgment of this court by its order dated 13-11-1959.
3. Subsequently the plaintiff filed E. P. 54 of 1960 for the actual division of the suit properties by metes and bounds in pursuance of the final decree passed in the suit and to recover various amounts payable to him under the final decree dated 31-7-1952. We are not concerned now in these appeals as regards the allotment of the properties and we are concerned only with two amounts sought to be recovered by the plaintiff from the first defendant's legal representative, as the first defendant died subsequent to the passing of the final decree. The said two amounts sought to be recovered by the plaintiff are payable under paragraphs 19 and 20 of the final decree. The amount payable under paragraph 19 is a sum of Rupees 2,36,789-11-9 with interest at 6per cent per annum from 6-12-1944. The said sum of Rs. 2,36,789-11-9 payable under paragraph 19 of the final decree, includes the sum of Rs. 1,75,000, payable under paragraph 20 of the final decree.
4. At the stage of execution levied by the plaintiff for the recovery of the said amount of Rs. 2,36,789-11-9 defendants 2, 5 and 6 filed I. A. Nos. 479, 480 and 481 of 1973 respectively on 10-61973 for scaling down the said amount under Tamil Nadu Act 4 of 1938, as amended by Tamil Nadu Act 8 of 1973. During the pendency of the said three applications filed under Sec. 19 of the Tamil Nadu Act 4 of 1938. the applicants prayed for stay of the execution in I. A. 62 Of 1975. The execution court ordered stay of execution of the decree on 8-3-1975. As against the orders of stay of execution pending disposal of the applications for scaling down the decree amount, C. R. P. 1988 and 1989 of 1975 were filed before this court on 27-6-1975. Subsequently the said C. R. Ps. were converted into C. M. A. Nos. 463 and 464 of 1976. In those appeals a joint memo was filed by all the parties on 3-8-1976. requesting this court to direct the execution court to dispose of the scaling down applications expeditiously. The court below took up the applications for scaling down and dismissed the same on 1-9-1977 holding that the amounts payable to the plaintiff under paragraphs 19 and 20 of the decree are not liable to be scaled down. It is as against the said order dated 1-9-1977, the present three appeals have been filed by defendants 2. 5 and 6.
5. The learned Advocate General appearing for the appellants contends that the court below has erred in not scaling down the amounts referred to in paragraphs 19 and 20 of the decree and that the lower court has not properly understood the scope of the provisions of Sec. 3 (iii) of the Act 4 of 1938, defining the debt, and the provisions in See. 4 of the Act exempting certain debts and liabilities from the scope of the Act. According to the learned Advocate General, the definition of 'debt' in S. 3 (iii) will take in any liability in cash or kind, whether secured or unsecured, due from an agriculturist, whether payable under a decree or order of a court. In this case. defendants 2, 5 and 6 having held to be agriculturists, the decree debt payable by them to the plaintiff will squarely fall within the definition of debt and therefore the court below was not justified in refusing to scale down the debt. It is pointed out on behalf of the appellants that part of the sum of Rs. 2,36,789-11-9 due and payable by the defendants to the plaintiff represented owelty amounts for equalisation of the shares allotted to the plaintiff and the first defendant, and the balance of Rs. 1,75,000 represented the amounts payable by the first defendant to the plaintiff in relation to his management of the joint family Properties and that these amounts are clearly debts as defined in the Act which will not come within the exemption provision contained in S. 4 of the Act.
6. The lower Court while dealing with the question as to whether the amount of Rs. 2,36,789-11-9. was a debt, which could be scaled down under the Provisions of Tamil Nadu Act 4 of 1938, as amended, has found that a part of the said sum of Rs. 2,36,789-11-9, represented the owelty amounts payable by the first defendant to the plaintiff and that it cannot be taken to be a debt as defined in the Act and that the balance of Rs. 1,75,000, represented the liability arising out of a breach of trust and therefore it cannot be scaled down as it comes within the exemption provision contained in Sec. 4 of the Act. The learned counsel for the appellants contends that even if the sum of rupees 2,36,789-11-9 represents partly owelty amounts payable by the first defendant to the plaintiff and Partly the amount payable by the first defendant to the plaintiff in relation to the mismanagement of the joint family properties by the first defendant, both these amounts will fall within the definition of debt as defined in the Act and at the same time will not fall within the exclusion clause contained in Sec. 4 of the Act. It is pointed out by the counsel for appellants that the owelty amounts should also be treated as debt and there being no provision for exempting the owelty amount in See. 4 of the Act, the same is also subject to the scaling down. It is also contended that the amounts payable by the first defendant for mismanagement of the joint family properties cannot be treated as liability arising out of the breach of trust as held by the court below, that the first defendant who has been , proceeded against as the manager of the joint family cannot in any sense be a trustee for the plaintiff, and that in law a kartha or a manager of the joint family cannot be treated as a trustee for the other coparcener and therefore any amount payable by the manager or kartha of the family as a result of a decree for accounting cannot be treated as a liabiity arising out of the breach of trust.
7. The learned counsel for the respondents, Mr. Narayana 1yengar, however, would contend that owelty amounts payable by the first defendant to the Plaintiff cannot be taken to be a debt as defined in the Act, that the owelty amounts representing the difference in value of the properties allotted to the sharers should be taken to be integral part of the allotment of properties and therefore there is no question of scaling down that liability. it is pointed out by the learned counsel that if the owelty amount is treated as debt as defined in the Act and scaled down then the plaintiff will be entitled to seek a re-Partition as the scaling down of the owelty amounts will automatically result in the reduction of the value of the properties allotted to the plaintiff and thus unsettle the partition arrangement which has been effected earlier and therefore the owelty amount should not be treated as a debt as defined under the Act and scaled down on that basis. The learned counsel further contends that the sum of Rs. 1,75,000 which is referred to in paragraph 20 of the decree refers to amounts misappropriated by the first defendant from the assets and income from the family properties while he was in management and that therefore as regards those amounts the first defendant who was the manager of the family should be taken to be the trustee in view of S. 90 of the Trusts Act and therefore the amounts misappropriated by the first defendant should be taken to be the liability arising out of the breach of trust which is exempted under S. 4(f) of the Act.
8. Before we consider the tenability of these two rival contentions it is necessary to determine the nature of the liability declared under paragraphs 19 and 20 of the final decree. Paragraph 19 of the final decree dated 31-7-1952, is to the following effect-
'The amount payable to the plaintiff by the defendants in accordance with the decree is Rs. 3,53,481-0-6 as detailed in schedule C and these payable to the defendants by the plaintiff is Rs. 1,19,390 10-9 as detailed in Schedule C herein.
It has been decided that as on the 1st day of Avani Tharuna (15-8-1944) an amount of Rs. 23.400-5-9 is payable by the defendants to the plaintiff, after excluding the sum of Rs. 1,19,380-10-9 payable by the plaintiff to the defendants from the sum of Rs. 3,53,481-0-6 due to the plaintiff from the defendants a sum of Rs. 26,826 is due by way of interest thereon till the 20th Karthigai Tharuna (15-12-1944) from that date at 0-5-0 per mensem in all a sum of Rs. 2,36,782-11-0 is due to the plaintiff. The defendants do pay the same with interest at 6 per cent per anum from the said date till the date of payments and the properties belonging to the defendants shall be a charge for the sum due to the plaintiff.'
Paragraph 20 of the final decree dated 31-7-1952 is as follows-
'It is further ordered and decreed that in respect of the relief of accounting, various allegations of mistakes and mismanagement of the family properties by the first defendant and the charge filed by the plaintiff, the defendants 1 and 2 personally and all the defendants from out of the family properties of the defendants do pay to the plaintiff the sum of Rs. 1,75,000 in full settlement without any future claim thereof.'
9. Schedule C gives the details as to how Rs. 3,53,481-06 has been worked out. Since the said schedule also includes the amount of Rs. 1,75,000, referred to in paragraph 20 of the decree, it is unnecessary to deal separately with the scope of paragraph 20 of the decree in detail. The schedule C consists of 25 items, of which, except item 23, which represents a sum of Rs. 1,75,000 all other items have been referred to in various paragraphs of the decree as amounts payable by the first defendant to the plaintiff as Owelty, to be paid for equalisation of the shares. The amount as payable by the plaintiff to the first defendant for equalisation of the shares under various clauses of the decree has been worked out in the game schedule as Rs. 1.19,380-10-3.
10. After deducting the amounts payable by the plaintiff to the first defendant from Rs. 3,53,481-0-6, the defendants' liability in paragraph 19 of the decree has ultimately been worked out at Rs. 2,36,781-11-0. Thus out of Rs. 2,36,872-11-0 except the sum of Rs. 1,75,000 the balance is payable by the defendants to the plaintiff towards owelty for the equalisation of the shares allotted to the plaintiff and the first defendant. Thus the first question that arises in these appeals is whether the sum which the defendants have been directed to pay to the plaintiff for equalisation of their shares in the moveable and immoveable properties. could be treated as a debt and scaled down under the provisions of the Act.
11. There is much controversy between the parties over the amount of Rs. 1,75,000, which the first defendant has to pay to the plaintiff under paragraphs 19 and 20 of the final decree. While the appellants would contend that the said sum represents the first defendant's liability for mismanagement of the joint family properties, the respondents would contend that the said sum represented the amounts misappropriated by the first defendant while he was in the management of the joint family properties. In view of the said controversy, we have to determine necessarily the nature and character of the amount of Rs. 1,75,000, payable by the first defendent to the plaintiff. For this purpose it is necessary to refer to the pleadings in the suit 0. S. 91 of 1941, as also various proceedings which arose between the parties, which throw some light on the nature and character of the amount of Rs. 1,75,000. The plaintiff in his Plaint has averred in paragraph 13 that the first defendant has not acted fairly and honestly as the family manager, that large moneys appear to have been drawn and secreted by the first defendant, and that the first defendant is guilty of fraud, mismanagement and misappropriation of joint family properties and funds and other improper conduct. In paragraph 17 of the plaint, the plaintiff has further averred that the first defendant has received the family assets in his position of a trustee and that as such he is bound to render an account of the family properties and of his management and to pay and make good whatever is found due from him as a result of his fraud, mismanagement, misfeasance, malfeasance and other improper conduct: In paragraph 22 of the plaint, the plaintiff apart from other reliefs seeks the relief of accounting by calling upon the first defendant to render an account of the family properties and of his management of the same and to make good to the family with interest at 1 per cent per mensem all losses caused to the family by his fraud, misconduct, misfeasance and other improper conduct. These averments in the plaint had been answered by the first defendant in his written statement in paragraphs 8 and 13. In paragraph 8 the first defendent has stated that few sums belonging to the family have been invested for the sake of convenience in the name of one or other member of the family or in combination of so-me of the members of the family, that all such sums taken from the family assets belong to the family and have been treated as family assets in whatsoever name the investment might have been made and that the said investments find place in the family accounts and the plaintiff is fully aware of it. The first defendant in paragraph 13 of his written statement had denied the charge of manipulation of accounts, misappropriation of the family funds, secretion of cash and moveables, mismanagement and fraud levelled against him. The trial court framed issues 6, 7 and 8 to the following effect--
'Whether the first defendant is not liable to render account to the plaintiff as joint family manager and if so for what period ?
Whether the first defendant is a trustee of the family properties and is he liable as such to render accounts to the plaintiff ?
Whether the allegations of fraud, mismanagement, misconduct etc., against the first defendant are true. sufficient and valid in the absence of particulars and whether the said allegations constitute a cause of
action for the plaintiff's claim for such an account?'
12. The trial court, after referring to the position of the first defendant as the manager of the joint family and his liability to render an account of his management, has held that the first defendant is liable to disclose all the family assets and to render an account of his management of the joint family properties but he cannot be held for any item of expenditure unless it amounts to an actual misappropriation: that the first defendant was not a trustee of the family property in the strict sense of the term and that the object of taking accounts is not to call upon the manager to justify his past transactions but to ascertain what is the joint family property actually in his hands at the time of partition. However, when the appeal, against the preliminary decree was pending before this court, the matter was sent to the arbitration-and the arbitrators in their award dated 6-12-1944, directed the first defendant to pay a sum of Rs. 1,75,000 as and for mistake and mismanagement of the Joint family properties by the first defendant. As to how the said sum of Rs. 1,75,000 has been arrived at or as to how much of it represented the liability of the first defendant for mismanagement of the joint family properties and as to how much of it represented the amounts misappropriated by the first defendant out of the joint family income and assets had been mentioned by the arbitrators in the award. That the liability of the first defendant to render accounts for the period of his management was considered by the arbitrators and it is only under that head the sum of Rs. 1,75,000, was determined as his liability, is not in dispute. The dispute is as to, whether the said sum of Rs. 1,75,000 represented any amount said to have been misappropriated by the first defendant. According to the appellants, the entire sum of Rs. 1,75,000, represented only the first defendant's liability for mismanagement but according to the respondents the entire sum of Rs. 1,75,000, represented the misappropriation by the first defendant. As already stated paragraph 50 of the award deals with the said sum of Rs. 1,75,000. The learned counsel for the respondents would however draw our attention to Ex. B. 4, which is the judgment rendered by the Court below in another suit 0. S. 130 of 1952, which also arose between the same parties, as throwing considerable light as to the nature of the amount of Rs. 1,75,000. That was a suit filed by the son of the third defendant in O. S. 91 of 1941, for a declaration that the preliminary decree and the final decree passed in O. S. 91 of 1941 were void and not binding on him and for setting aside the same and to restore O. S. 91 of 1941 to its original number and to dispose of the same afresh. The said suit was naturally resisted by the plaintiff. In paragraph 10 of the judgment in that suit which has been marked as Ex. B. 4. reference has been made to the statement of charges filed before the arbitrator by the plaintiff in O. S. 91 of 1941, which was marked in that suit as Ex. B, 12. After referring to the various charges in Ex. B. 12 the court below held that the sum of Rs. 1,75,000 represented partly purchases of postal cash certificate in the names of the first defendant's children. which has not been brought into family accounts and partly amounts secreted by him from and out of the
joint family income. In paragraph 28 of the judgment in O. S. 130 of 1952, the matter has been dealt with. and the following observation has been made regarding the sum of Rs. 1,75,000-
'The first defendant himself admitted his accountability regarding the concealed assets after the arbitrators found out his misappropriations and secretions of several lakhs of rupees. The arbitrators persuaded the 7th defendant who claimed nearly four lakhs of rupees as being due to his share out of the concealed assets, to accept Rs. 1,75,000. to which extent defendants 1 and 2, admitted liability.'
This passage in the judgment in O. S.130 of 1952 clearly indicates as to how the said sum of Rs. 1,75,000. was arrived at by the arbitrators. Thus the sum of Rs. 1,75,000 is found to represent the assets and cash concealed by the first defendant from and out of the joint family income. As already pointed out though the award of the arbitrators does not throw much light as to the character and the nature of the amount of Rs. 1,75,000, the decree in the earlier suit O. S . 130 of 1952 clearly indicates that the sum of Rs. 1,75,000, which was the amount payable by the first defendant to the plaintiff under paragraphs 19 and 20 of the decree represent the amounts or assets misappropriated by the first defendant. It is in this light we have to determine the second question whether the said sum of Rs. 1,75,000, payable by the first defendant to the
plaintiff, could be scaled down under the provisions of the Act.
13. So far as owelty amounts are concerned, there is a decision of this court in Mohammad Allah Sahib in re (1958) 71 Mad LW 113: AIR 1958 Mad 217 holding that (at P. 218 of AIR)-
'0welty is merely pecuniary compensation given so as to prevent injustices or avoidable inequality and with a view to the more convenient and perfect partition of immovable property. Owelty, equality or compensation can never be a debt contemplated under Act IV of 1938.'
14. We are in entire agreement with the view expressed in that case. The division of properties between the sharers is subject to the obligation to owelty and if such owelty amount which is merely pecuniary compensation paid by one coparcener to another for equalisation of the shares can be treated as a debt as defined under the Act and is scaled down under the Act, that will naturally result in an inequality in the division of the properties which was not obviously intended by- the provision of the Act. Having regard to the objects sought to be achieved under Tamil Nadu Act 4 of 1938, we have to hold that owelty amounts are not liable to be treated as a debt as defined under the Act and as such it is not liable to be scaled down, as has been held in the earlier decision reported in Mohammed Allah Sahib in re (1958) 71 Mad LW 133: AIR 1958 Mad 217 -
15. Coming to the question as to whether the sum of Rs. 1,75,000 is a debt liable to be scaled down under the Act, the learned counsel for the appellants submits that it is not a liability arising out of breach of trust as has been held by the court below, while the learned counsel for the respondents would contend that it is a debt arising out of breach of trust. In support of his contention that the sum of Rs. 1,75,000 is not a debt arising out of breach of trust, the learned Advocate general refers to a decision of the Division Bench of the Andhra Pradesh High Court in Kannappalli Visweswara Dakshinamurthi Somayulu v. Kannepalli Krishnamurthi, AIR 1957 Andh Pra 337 in that case a co-owner obtained a decree for accounts against the other co-owners who were in possession of the entire property. Therein it was held-
'That the liability of the judgment debtors arising under the decree, though a debt within S. 3 (iii) of the Act, was not a liability of a trustee in a fiduciary capacity and therefore could not come under S. 4 (f) of the Act and as such was not exempt from the operation of the Act'.
16. The reasoning given in that case was that where a person bound in a fiduciary character to protect the interests of another person as a trustee, executor, partner agent and guardian, commits a breach of trust, then he would become liable to the beneficiary in his fiduciary capacity and if under such circumstances he commits a breach of trust he will not receive the protection of the Tamil Nadu Act 4 of 1938, But such a protection is not available to one co-owner as against another co-owner, in case one co-owner is not in fiduciary relationship with another co-owner. it was contented there, that the co-owner in possession of the entire property is in the position of trustee under S. 90 of the Trust Act. Dealing with this question the court held that-
'In order to invoke this section, it is essential that it should be proved that the person is placed in fiduciary capacity and secondly, that he gained an advantage by virtue of such position and that it is only in a case where it is established on the facts that the coowner by his dealings derived a benefit or advantage to himself, that S. go' of the Trusts Act would apply and he would be regarded as being in a fiduciary position.'
In the present case the parties were members of a joint family and the question is whether the coparcener in management acts in a fiduciary capacity in relation to other coparceners. Unless S. 90 of the Trusts Act is invoked one coparcener in management cannot be said. to act in a fiduciary capacity in relation to other coparceners. S. 90 of the Trusts Act, as pointed out b-v the decision of the Andhra Pradesh High Court, will apply only if two essential conditions are satisfied, namely, that the person (coparcener) is placed in a fiduciary capacity; and that he gained an advantage by virtue of such position.
17. It has already been found that a sum of Rs. 1,75,000 represented the assets secreted by the first defendant from and out of the joint family assets. S. 90 of the Trusts Act is as follows-
'Where a tenant for life, co-owner mortgage or other qualified owner of any property, by availing himself of his position as such, gains an advantage in derogation of the rights of the other persons interested in the property, or where any such owner, as representing all persons interested in such property gains any advantage, he must hold, for the benefit of all persons so interested, the advantage so gained but subject to repayment of such persons of their due share of the expenses properly incurred, and to an indemnity by the same persons against liabilities properly contracted, in gaining such advantage.
18. In view of the fact that a coparcener in a joint family is in one sense co-owner of the property, the first condition referred to, above is satisfied. The second condition is also sastisfied as it has already been held that the coparcener in management of the properties has gained an advantage to himself. It is therefore clear that S. 90 of the Trusts Act is applicable to the facts of this case.
19. Dealing with the question as to whether the possession of co-owner of the share of the other co-owner can be regarded as derogation of the rights of the co-owner, it was held in Kennedy v. De Trafford, 1897 AC 180 , that a coowner does not stand in a fiduciary position towards the other co-owner is well established. The same view was taken by this court in Ramaswami Aiyar v. Subramania Aiyar, ILR (1923) Mad 47 : AIR 1923 Mad 147. In Peer Moideen Rowther v. Alisabivi, (1934) 67 MLJ 563: AIR 1934 Mad 686, it was held that the co-owner was in the position of a trustee. in Md. Abdul Rahim Baig Saheb v. Mahommed Abdul Hakim Baig Saheb : AIR1931Mad553 the Court came to the conclusion that the co-owner assumed a position much more of a trustee in a fiduciary relationship than that of a mere co-owner. Thus it is only in case where it is established on the facts that the co-owner by his dealings derived benefit and advantage to himself. Sec. go of the Trusts Act would come into operation and he would be regarded as being in a fiduciary position. The question as to whether the liability to pay interest realised by the coowner by investment of the common funds would be exempt from the operation of the Act 4 of 1938 came up for consideration in Mottai Meera v. Abdul Kadir Rowther, (1939) 1 Mad W 528: AIR 1939 Mad 471 and it was held that such a liability could not be regarded as debt within the meaning of the Act. The test, therefore, would be as to whether the co-owner utilising the common funds or common property had derived a personal benefit therefrom and if this is proved, then he should be taken to have acted in fiduciary capacity. In view of the fact that we have already held that a sum of Rs. 1,75,000 represents the amount misappropriated by the first defendant out of the joint family income and assets. the first defendant should be taken to have acted in a fiduciary capacity and any amount due by him in his fiduciary capacity should, be taken to be the liability arising out of a breach of trust. In this view of the matter, the court below appears to be correct in its conclusion that the said liability cannot be scaled down as it is a liability which stands excluded under S. 4 (f) of the Act. in view of the above discussion, all the three appeals fail and they are accordingly dismissed, No costs.
20. Appeals dismissed.