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The Madura, Etc., Devasthanams, Through Its Executive Officer, R.S. Nayudu Vs. R. Doraiswami Nayudu and anr. - Court Judgment

LegalCrystal Citation
SubjectTrusts and Societies
CourtChennai
Decided On
Reported inAIR1943Mad153; (1943)1MLJ144
AppellantThe Madura, Etc., Devasthanams, Through Its Executive Officer, R.S. Nayudu
RespondentR. Doraiswami Nayudu and anr.
Cases ReferredBrier. Brier v. Evison
Excerpt:
.....appeal to the confusion in the devasthanam books in regard to arrears and we are not satisfied that the arrears of kist for faslis 1337 and 1338 were really due by the tenants. 20-7-0 the first defendant must be held liable as he, on his own showing, received the money on behalf of the temple and failed to remit it to the devasthanam treasury......that he has allowed to be barred by limitation.4. to contend that the first defendant must be held liable for the amounts for which the suits were not instituted by him without any proof on the record that if such suits had been instituted these sums would have been recovered and that by the non-institution of these suits, the plaintiff devasthanam has lost in fact (not in getting the decrees, but in not realising the amounts which it would otherwise have), would be tantamount to saying that there was no distinction between the securing of decrees and recovering the amounts for which decrees would have been passed although we know, and as observed by their lordships of the privy council in the general manager of the raj durbhunga v. maharajah coomar ramput singh (1872) 14 m.i.a. 605.....
Judgment:

Abdur Rahman, J.

1. This appeal arises out of a suit brought by the Madura Meenakshi Devasthanam for a sum of Rs. 7,673-12-10 by way of damages against two persons, the first of whom is the ex-trustee and the other an execution clerk of the Devasthanam. The claim against the first defendant, with whom we are concerned in the present appeal, was made on account of gross negligence alleged to have been committed by him between the 12th November, 1930, and the nth November, 1935, when he held the office of a trustee. The negligence is said to have consisted

(a) in allowing certain rents to become barred by limitation without instituting suits for their recovery;

(b) in permitting the second defendant (the execution clerk) to withdraw certain amounts for the expenses of suits or executions which were never spent and some of which were drawn twice over; and

(c) in tendering no explanation with reference to certain items when called upon so to do.

The first defendant who was a Tahsildar in Government service and whose services were lent by the Government to the Devasthanam commented in his written statement the absence of any averment in the plaint as to any wilful default or conscious omission of his in collecting and recovering amounts due to the Devasthanam. He pleaded that he had 'discharged his duties to the best of his abilities in furtherance of the interests of the Devasthanam' and urged that in a big institution like the Madura 'Meenakshi Devasthanam which possessed extensive properties in several villages and towns and derived an income of about two lakhs of rupees annually it was ''impossible for any trustee to be conversant with each and every detail of he working of the several departments and branches.' It was pointed out by him in his written statement that the margin of non-collection and arrears that had to be writen off was too low and 'would compare favourably with such percentage in other similar institutions and even in Government departments. In short he denied that he had been guilty of any negligence for winch he could be held responsble or that the Devasthanam had suffered any damages in consequence of [Conduct In view of the various pleas raised by the defendants several issues were framed but we are mainly concerned with the second issue which reads as follows:

Whether all or any of the amounts mentioned in schedules A and B of the plaint were lost to the Devasthanamandlow and when; if so, who is response for the same.

Finding that the plaintiff Devasthanam was governed by a scheme as framed by the District Court of Madura in O.S. No. 4 of 1922 and modified by this Court in A.S. Nos 209 and 210 of 1925 (Ex. R) and that the trustee was being governed by the rules framed thereunder, the trial Court was of the view that inasmuch as 'the entire administration of the Devasthanam was vested in the trustee' and as 'he was in full and exclusive control over all the servants and officials of the Devasthanam' it was his (the first defendant's) duty to keep regular accounts of all receipts and disbursements and his contentions that he had relied on his subordinates performing their duties properly and was immune as long as his attention was not invited to any particular irregularity could not be accepted. The same conclusion was drawn by the learned Subordinate Judge from Section 48 of the Hindu Religious Endowments Act and from Section 15 of the Indian Trusts Act. Holding that 'a trustee is bound to Conduct the business of the trust with the same care which an ordinary prudent man of business would take having regard to the interests of those for whom he feels bond to provide and that it was his duty to 'realise all the debts due to the endowment as soon as possible' except when he considered an action to be fruitless or inexpedient, he proceeded to consider the various items claimed by the Devasthanam from the point of view whether the first defendant had used that degree of diligence and care which was expected of an ordinary prudent man of business and coming to the conclusion that the first defendant did not so act in regard to some of the items, the learned Subordinate Judge found the first defendant to be liable for Rs. 2,069-7-6. The rest of the claim was negatived. The plaintiff has appealed and wants the first defendant to be made liable for the entire amount claimed against him by way of damages. The first defendant has, on the other hand, filed cross-objections asking for the suit against him to be dismissed entirely.

2. In proceeding to decide this case, on correct legal principles, it must not be overlooked that this is a suit for damages and the plaintiff came to the Court with the allegation that it had-suffered damages as a result of gross negligence of the first defendant. Whatever might have been the case if this were a suit for accounts and the defendant had been called upon to render accounts in respect of monies which had come into his hands or which might have come into his hands but for his 'wilful default' of which there is no allegation in this case not to say of its proof-on the record the position is substantially different when a defendant is attempted to be made liable for damages alleged to have been suffered by a plaintiff as a result of the former's negligence. In that case, the mere proof of negligence (if negligence is fond established and as to which we say nothing at present) is not sufficient to make the defendant liable. It should be definitely proved that the plaintiff had suffered damages in fact as a result of the defendant's negligence That is why the second issue was framed, we take it, in the form which it bears. And in spite of a definite issue no evidence was led on behalf of the Devasthanam to show whether the monies due from the tenants would have been recovered if suits had been instituted against them within the period of limitation prescribed by law.

3. Learned Counsel for the appellant however contends that the onus of proving that no money would have been recovered even if suits had been instituted against the tenants was not on the plaintiff Devasthanam but on the first defendant who was admittedly a trustee, who must be taken to have committed a breach of duty in not instituting suits and who had allowed the rents due from the tenants to be barred by time. Reliance was placed in support of this contention on the decision in re Brogden: Billing v. Brogden (1888) 38 Ch.D. 546 . It is admitted on behalf of the appellant that the trustee had ample discretion not to institute suits if he were shown to have considered the matter and to have decided against their institution. But in the absence of any allegation or proof of the fact that he had deliberately refrained from filing the suits, the first defendant must be, it is contended, mulcted in damages and field liable for the amounts that he has allowed to be barred by limitation.

4. To contend that the first defendant must be held liable for the amounts for which the suits were not instituted by him without any proof on the record that if such suits had been instituted these sums would have been recovered and that by the non-institution of these suits, the plaintiff Devasthanam has lost in fact (not in getting the decrees, but in not realising the amounts which it would otherwise have), would be tantamount to saying that there was no distinction between the securing of decrees and recovering the amounts for which decrees would have been passed although we know, and as observed by their Lordships of the Privy Council in The General Manager of the Raj Durbhunga v. Maharajah Coomar Ramput Singh (1872) 14 M.I.A. 605 that ' the difficulties of a litigant in India begin when he has obtained a decree.' A great gulf exists between obtaining decrees and their realisation and, unless it is shown that the decrees would have been realised if passed, it cannot be found that the Devasthanam had really lost any money or suffered any damage in consequence. In fact, if the tenants happen to be paupers, as a majority of them in this country unfortunately are, the non-institution of suits might have saved some good money from being thrown after bad and the Devasthanam would, in that case, be a gainer and not a loser. In giving his decision in In re Brogden: Billing v. Brogden (1888) 38 Ch.D. 546 cited by learned Counsel for the appellant, North, J., observed as follows:

But the second and equally important question remains for consideration whether, if the defendant Budgett had used due diligence in attempting to recover the trust funds, any good would have resulted therefrom. It is clear that the Court will not punish a trustee pecuniarily for his breach of trust except so far as loss has resulted therefrom to the trust estate. In other words, if no loss has been incurred, . . . there is nothing remaining for the trustee to make good.

And this proof of loss must be adduced by the plaintiff who asks for a decree for damages against the defendant. There is moreover no allegation in this case that there had been any wilful default on the part of the trustee. It is in evidence in this case that the Devasthanam owned 54 villages and possessed considerable wet and dry lands in several villages lying in the Districts of Madura, Ramnad, Trichinopoly and Tinnevelly. There were about 10,000 pattadars in these villages, and it is not surprising that with an annual income of two to three lakhs, the work of the office was being carried on by four sections (a) Revenue, (b) Law, (c) Treasury, and (d) General. The fact whether any rents or decrees were getting barred by time would, ' in the ordinary course have to be reported by the law section.' There is nothing to suggest that any report was made by that section to the defendant. How was the first defendant to know that the department was not doing its work properly? Relying on the observation in the judgment of the Court of Appeal in In re National Bank of Wales, Ltd (1899) 2 Ch. 629 . to the effect that

Business cannot be carried on upon principles of distrust. Men in responsible positions must he trusted by those above them, as well as by those below them, until there is reason to distrust them. We agree that care and prudence do not involve distrust; but for a director acting honestly himself to be held legally liable for negligence, in trusting the officers under him not to conceal from him what they ought to report to him, appears to us to be laying too heavy a burden on honest businessmen.

which was confirmed by the House of Lords in the case reported under the name of Dovey v. Cory (1901) A.C. 477 Romer, J., laid down in In re City Equitable Fire Insurance Co. (1925) 1 Ch. 407 as follows:

In respect of all duties that, having regard to the exigencies of business, and the articles of association, may properly be left to some other official, a director is, in the absence of grounds for suspicion, justified in trusting that official to perform such duties honestly.

5. There is nothing in the rules framed under the scheme which may lead us to infer that the first defendant was not to allow the work to be carried on by the law department or was not to repose confidence in the working of its officers. To hold the first defendant liable merely because he failed to devise ' some method or device by which the first defendant as the controlling officer could have detected acts of delay on the part of his staff,' as stated by the lower Court, is, in our opinion, to extend the scope of the rules to an extent that they were never intended to have and to place a burden on the first defendant which he could not possibly be allowed to shoulder.

6. Moreover there is no allegation in this case, as we said before, of any wilful, that is to say, intentional default by the first defendant. In order to be wilful it must have been shown that the first defendant knew that certain claims or applications for execution of decrees were going to be barred by limitation and that he had intentionally allowed them to be so barred. Learned Counsel for the appellant contended that even independently of the rules framed under the scheme, it was the first defendant's duty to keep himself informed as to whether rent or execution applications were going to be barred and that he should be held liable for his ignorance which should be, in the circumstances, regarded as culpable. This is virtually the same argument although put in different words as had found favour with the lower Court. But we did not and do not agree with its soundness. It is almost impossible to conceive that a person in the position of the first defendant could have kept himself personally acquainted with the working of the minute details in every department when the institution was of the magnitude as the plaintiff Devasthanam happens to be and he could not but have reasonably acted on the assumption that the law department would do its duty and bring such matters to his notice. After all the law department was not acting in the capacity of an agent for the first defendant. But even if it were, it would be plaintiff's duty to show some wilful default of his before he could be held liable. In overruling the decision by Chitty, J., in In re Brier. Brier v. Evison (1884) a6 Ch.D. 238 the Lord Chancellor observed:

Now it appears to me here, that the person on whom the onus probandi lies has failed to inform the Court of the circumstances which it was absolutely necessary for the Court to know, before it could come to the conclusion that the loss by the agent's insolvency was due to some wilful default on the part of the executors.

7. For the above reasons we are of opinion that the onus probandi of proving actual loss and circumstances which would have rendered the first defendant liable was on the plaintiff Devasthanam and in the absence of any evidence on the record that the Devasthanam had suffered any loss and that the first defendant had been guilty of wilful default, no decree should have been passed against him merely because certain items or execution applications had become barred by limitation.

8. This is not however all. We are not satisfied in this case that the sums of money which are alleged to have been barred were really due from the tenants. It seems that new survey rates were introduced but they were decided by the Courts to be unlawful. But when the previous trustee, one Ramalinga Mudaliar,, attempted to set right the accounts, he was not allowed so to do with the result that they (i.e., the accounts) were thrown into confusion. It was not easy in the circumstances to ascertain whether the monies shown to be due by the tenants in the Devasthanam books were really due.

9. The second ground on which the first defendant was attempted to be made liable, was that the second defendant was permitted to withdraw certain amounts for the expenses of suits or executions which were not shown to have been spent by him and in some cases monies are stated to have been drawn twice over for the same purpose. Mr. Rajah Aiyar, learned Counsel for the appellant, contended that the first defendant should be held liable for lack of his supervision; but the contention cannot be accepted when we find that the vouchers had been scrutinised by the various clerks in the law department which was under the control of a Law graduate and brought to the first defendant in the ordinary routine. There was nothing to excite his suspicion that the second defendant (who was not the first defendant's agent or servant) was trying to embezzle money by preparing false vouchers. As soon as the second defendant came under suspicion he was first of ail transferred and then suspended and eventually prosecuted but before any further steps could be taken to remove him, the first defendant's period of office came to an end . The first defendant could not be held liable, in these circumstances, even if the test that a trustee is expected to devote the same care and attention to the business of the trust as an ordinary man would use in dealing with the interests of those which he is bound to protect is applied to the present case.

10. As to the items for which the first defendant was stated to have given no explanation in spite of the denials made on bahalf of the Devasthanam, our decision must be the same as there is nothing on the record to show that the items in regard to which explanations were asked for were due in fact. For the above reasons the plaintiff's appeal is dismissed with costs.

11. As for the cross-objections filed on behalf of the respondent, the first item to which exception had been taken is item 10 for a sum of Rs. 1,862-14-5. We have already referred towards the close of our judgment in the main appeal to the confusion in the Devasthanam books in regard to arrears and we are not satisfied that the arrears of kist for faslis 1337 and 1338 were really due by the tenants. The Sower Court's reasoning that the explanation given by the first defendant in Ex. Q was ' on the footing that the said sum of Rs. 1,862-14-5 was a real arrear,' is based on a misapprehension. It was not admitted in the document that this money was due in fact. The objections in Ex. Qwere apparently advanced on the assumption that if the arrears were found to be really due, the first defendant could not be, even in that case, held liable for the reasons given by him. It is clear from what has been stated in the last three lines of the first paragraph of Ex. Q,. In the absence of proof that these sums of money were really due from the tenants, the question of their capacity to pay does not arise. We would therefore hold that the first defendant is not liable for this amount. As for item 9 which is for a sum of Rs. 20-7-0 the first defendant must be held liable as he, on his own showing, received the money on behalf of the temple and failed to remit it to the Devasthanam treasury. It may be that he had paid this money to the second defendant for being credited to the treasury; but inasmuch as it was not a portion of the second defendant's duties take any money from the first defendant and to deposit it into the treasury on his behalf, we are of opinion that this item was rightly allowed against the first defendant. As for the two applications for execution for Rs. 31-7-6 and Rs. 13-7-0 which form part of item 3 and in regard to the other seven cases which form part; of the 5th item of B schedule we are, for the reasons given in our judgment in the anneal, of opinion that the first defendant could not be held liable in the absence of any proof of his wilful default and of the fact that the monies would have been recovered from the judgment-debtors if decrees were executed against them The cross-objections in regard to all the items except item 9 should therefore be accepted. The plaintiff will, in the circumstances, pay the costs of the first defendant both in (his and in the lower Courts.


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