Ramaswami Gounder, J.
1. This appeal has been preferred by the plaintiffs, whose suit against the United India Life Assurance Co., Ltd., as the first defendant and its directors, defendants 2 to 7, and the Official Trustee of Madras, defendant 8, was dismissed by the City Civil Judge. The plaintiffs prayed for two reliefs: (1) declaring that the first defendant-Company and its directors, defendants 2 to 7 are not entitled to invest the funds belonging to the policy-holders' trust-fund in the construction of any building in Mount Road, Madras and (2) restraining defendants 1 to 8 by a permanent injunction from applying, expending or appropriating any monies belonging to the policy-holder's trust-fund for the construction of any such building.
2. The first defendant-Company is a limited liability Company, incorporated about the year 1906, for the purpose of carrying on the business of life insurance. About 1927, the subscribed share capital of the Company was about Rs. 70,000; but most of the shares were then held by Sri M.Ct. Muthiah Chettiar. It therefore appeared that the Company was dominated by that gentleman and was an one man's show. Though the share capital of the Company was comparatively small, the assets and the funds of the Company amounted to about 20 lakhs. Naturally, therefore, an agitation was started by the policy-holders to rescue the Company from the control of that one gentleman and to devise ways and means for protecting their interests and safeguarding the monies of the Company. The Company had to yield to the agitation and the pressure of the shareholders, with the result that with effect from 1st January, 1927, a separate fund called the Policy-holders' Trust-fund was created; and the necessary amendments to the Articles of Association were carried out by incorporating therein Articles no to 125.
3. Article 110 provided that the Company shall with effect from 1st January, 1927, maintain a separate account called the policy-holders' trust-account, and the fund relating to the said account be called Policy-holders' Trust-fund. That fund was to be kept distinct and separate from the other assets of the Company, so as always to constitute and remain the security of the policy-holders of the Company exclusively. Article 111 provided that fund shall not under any circumstances be liable for any contracts or liabilities of the Company other than those expressly mentioned in Article 118. Article 112 provided that the directors of the Company shall control, administer and manage the investments, funds and assets of the Policy-holders' Trust-fund in accordance with the provisions of these articles. It further provided that the directors shall have power to appoint, with the previous sanction of the general meeting of the members, any person as a trustee to hold and administer the said trust-fund, but subject to the regulation of any trust-deed executed by them from time to time for and on behalf of the Company. Articles 113, 114, and 115 prescribed the amounts that shall constitute or go into the trust-fund, in particular, 85 per cent. of all the premia excluding the premia receivable for the first year. Articles 116 and 117 provided for investment of the trust-fund by the directors. For the purpose of this case, it will be necessary to note that the directors had power under Clause (a)(1)(i) of Article 116 by a unanimous resolution to invest the funds 'in the purchase of house-property'. Article 117 provided for certain investments with the sanction of the Court. Article 118 is important for, it enumerated the items of expenditure charged upon the trust-fund. It may be noted that the items of expenditure provided for under Clauses (a), (b) and (c) of that article are solely for the benefit of the policy-holders; Clause (d) is for the benefit of the shareholders, and Clause (e) for the policy-holders and shareholders, and Clauses (f) and (g) for the benefit of the Company. Articles 119 to 123 dealt with ' the general fund ' to be constituted with the balance of the 15 per cent. of the premia. Article 124 authorised the directors to give effect to the provisions of Articles no to 123 with effect from 1st January, 1927 and to execute as early as practicable such document or documents embodying the provisions of the said article. The last article, Article 125, gave power to the directors to make regulations in regard to both the classes of funds.
4. With a view to give effect to those articles, a trust-deed, Exhibit A-1, came to be executed in May, 1928, between the Company, its then directors and the Official Trustee, now represented by defendants 1 to 8. It recited that it was executed in accordance with the said articles, namely, with the special object of protecting and safeguarding the interests of the policy-holders of the Company, and placing such protection and safeguard on a permanent basis, by declaring that the trust-fund created thereunder was to constitute and remain the security of the policy-holders of the Company in accordance with Articles no to 125, which dealt with and defined the objects and purposes and the scope of the trust-fund. On that date, there was a sum of over 25 lakhs available for the fund, and it was declared that sum together with such further sums or assets as may be due or payable to the trust-fund shall form and constitute the policy-holders' trust-fund and remain the security of the policy-holders of the Company in the manner laid down in Articles 111 and 118. It was further declared that the sum or any part thereof shall not be expended or appropriated or applied towards any purpose except such as are specifically provided for and authorised by Articles 116, 117 and 118. The Official Trustee was constituted the trustee of the said policy-holders' trust-fund; and it was agreed that the directors should, immediately on the execution of the document, pay over and deliver to the trustee all the securities, investments and assets of the aggregate value of over 25 lakhs. The trustee was required to open and maintain a current account in the Imperial Bank of India, and the said account was to be operated upon only by the trustee. But the trustee was under no obligation to collect or realise any sum on account of interest, dividend, profits, or other income in respect of the investments of other assets relating to the trust-fund; but the Company was to act as the trustee's agent in respect of all such collections and cause all such monies to be paid forthwith to the trustee to be deposited into the Trust current account. The investment of the monies belonging to the trust-fund was to be made by the directors alone in accordance with the provisions of Articles 116 and 117, with power to realise and vary the investments of the trust-fund. Paragraph 10 of the trust-deed provided that the policy-holders shall have no right to demand from the trustee direct otherwise than through the Company any sums of money payable by virtue of any policy issued by the Company. The trust deed set out in extenso in Schedule A, Articles no to 125.
5. Some years ago, the first defendant-Company acquired a vacant site adjacent to the Law College Police Station and erected a huge building at a cost of several lakhs. It is in that building that the Head Office of the Company is located for the last 18 years. It would appear that the accommodation available in that building is more than what is required by the Company for its own business, and so, they have let out portions of the building to several tenants. While so, in April, 1953, the Board of Directors of the Company decided to acquire a plot in Mount Road and put up a building with 14 storeys at a cost of about 65 lakhs (vide Exhibits B-20 and B-51). It was to restrain the defendants from embarking upon the construction of such a colossal mansion in Mount Road that the plaintiffs, as two of the policy-holders of the Company, brought the present suit in their representative capacity on behalf of all the policy-holders of the Company. The plaintiffs complained that such a vast and costly building was a speculative venture and not a sound business proposition or a safe investment, and that the proposed building was an extravagant and a colossal waste (vide paragraphs 21 and 22 of the plaint).
6. It will be remembered that under Article 116(a)(1)(i), the directors were authorised (by a unanimous resolution) to invest the trust-fund in ' the purchase of house-property '. Apparently, the directors were confronted with the problem whether the acquisition of a site and putting up a building thereon would amount to a purchase of house-property within the meaning of that article; and so, at an extraordinary meeting of the shareholders held even in 1935, that article was amended, and for the words ' house-property ', the following words were substituted, '' acquisition of houses, buildings or tenements or lands suitable for building purpose, and in the construction, erection, improvement, alteration of equipment of houses, buildings, tenements, or other structures of whatsoever description'. To give effect to that alteration, a supplemental trust-deed, Exhibit B-5 was brought into existence, so as to carry out the necessary amendment into the original trust-deed, Exhibit A-1. Under the amended article and trust-deed, there can be no doubt that the directors would have power to purchase a site and put up a construction, and they need not necessarily invest the trust fund in an existing house-property. The directors have been amending the articles from time to time and executing amending trust-deeds in order to carry out those amendments. Exhibit B-16 is the trust-deed which consolidated all the amendments.
7. During the arguments in this appeal, there was no controversy that it was open to the Company to make such amendments as it considered necessary to its Articles of Association. The policy-holders cannot certainly interfere with the right of the Company to amend its Articles of Association. But, clearly, the policy-holders have got a right to say, if they are beneficiaries of the policy-holders' trust-fund, that the terms of the original trust-deed could not be altered without their consent. It is clear from Section 78 of the Trusts Act that a trust created otherwise than by will can be revoked or altered only with the consent of all the beneficiaries. Therefore, the question whether the Company had a right to alter the trust-deed so as to bring it into conformity with the altered Articles of Association would depend upon the question whether the policy-holders are beneficiaries under the trust deed in respect of the trust-fund created under that document. The competency of the Company to amend the terms of the trust-deed in consequence of the amendment of the Articles of Association would also depend upon the question, whether the then Articles 110 to 125, which were set out in Schedule A to the trust-deed, formed an integral part of the trust-deed or were merely set out for the purpose of reference. No doubt, it is stated in the trust-deed that the articles were 'reproduced in Schedule A hereunder written,' and in another place as ' extracted in Schedule A,' and so on. In spite of those expressions, on an examination of the terms of the trust-deed, we feel no doubt that Articles no to 125 of the Articles of Association were incorporated into the document and were intended to form part of it, and it was on the foundation of those articles that the entire edifice of the trust has been constructed. Indeed, the trust-deed will have no life or vitality without those articles, and we feel no doubt that those articles must be construed and understood as forming part of the original trust-deed. That being so, it seems to us that the amendment to the Articles of Association will not mean an automatic amendment of the trust deed in order to enable the Company to execute additional trust-deeds, incorporating such amendments into the original trust-deed. As we said, in case it is held that the policy-holders are beneficiaries of the trust-fund, no amendment to the original trust-deed would be permissible without their concurrence.
8. A great deal of the arguments on both sides in this appeal was therefore directed to the question, whether the policy-holders were constituted the beneficiaries of the trust-fund under the original trust-deed. It was common ground that there was a trust created in respect of that fund. The learned Counsel for the plaintiffs claimed that under the trust created in respect of the fund, the policy-holders were the main beneficiaries. He reminded us of the circumstances which forced the Company to execute the trust-deed. He referred to Exhibit A-3, the extract from the statement of the directors of the Company, and to Exhibit A-4, the speech of Sri Muthiah Chettiar in the general body meeting of April, 1928. He also referred to the prospectuses and statements issued by the Company from time to time wherein the object and the purposes of the trust fund were explained in detail, and the trust-deed hailed as the magna carta of the Company's policy-holders. He also drew our attention to Articles 111 and 118 as showing how this fund was primarily intended for payment of the claims of the policy-holders. He further drew our attention to the various recitals in the trust-deed and the Articles of Association, all tending to show that the trust arrangement was primarily conceived for the benefit and security of the policy-holders. The learned Counsel therefore contended that under the trust-deed, the policy-holders were the primary beneficiaries, and as such, they had a right to interdict any investment which was contrary to the terms of Articles 116 and 117, which alone provided for the investment of the monies belonging to the trust-fund. On the other hand Sri T.M. Krishnaswami Aiyar, appearing for the directors, while conceding that there was a trust created in respect of the trust-fund, contended that the Company was the sole beneficiary thereunder, and that the only benefit or the security intended for the policy holders was the mere transfer of the funds of the trust from the hands of the directors into the hands of a responsible custodian like the Official Trustee, so that the monies belonging to the fund might not be frittered away by the whims or vagaries of the directors. This controversy between the Company on the one hand and the policy holders on the other, as to the exact rights of the latter in the trust-fund, promises to be an eternal problem and has to be resolved some day or other. We have given our anxious thought to this question, and we have decided not to express any final opinion on this occasion, as we consider that it is not necessary for the disposal of this appeal which can be dealt with even on the footing without any decision on that question that the policy-holders are among the beneficiaries under the trust-deed. We have taken the decision not to express any opinion for two reasons: (1)) if we were to hold that the policy-holders are the beneficiaries of the trust-fund and still dismiss the appeal, the Company would be placed in a very unfair and embarrassing situation not being able to challenge that finding in further appeal, and the policy-holders will get an undue advantage and (2) if on the other hand, we hold that the policy-holders are not the beneficiaries, we are afraid that such a decision would seriously affect the reputation and the future business of the Company; and so, in the larger interests of the Company itself, we should refrain from giving expression to our opinion on this question, if we could possibly help it. One thing is clear to us. Here is a solemn arrangement entered into as early as 1928 and defining in meticulous detail the rights and duties of the Company in regard to this Fund as well as the rights of the policy-holders. Though the policy-holders were not eo nomine parties to that arrangement, it was certainly brought about as a result of their agitation and for their security. Possibly it was the original intention that the terms thereof should be unalterable, and not that they should be whittled down to nothing by a process of unilateral amendments in course of time. It is therefore our earnest desire and hope that in the interests of both, the terms of the original trust-deed should be scrupulously adhered to on both sides. Any attempt on the part of the Company to entrench on the rights of policy-holders and exercise their power of amendment of the Articles of Association and thereby take power to incorporate such amendments into the original trust-deed would only tend to create in the minds of the policy-holders, whatever their rights might be, a sense of scare and insecurity, seriously jeopardising the harmonious relationship which ought to exist between the Company and the policy-holders, and also materially affecting the future business of the Company itself. The Company and the share-holders must remember that their contribution of share capital is but a negligible part of the entire life and activity of the Company, and that it is the policy-holders who supply the life-blood of the Company, and nothing should be done to shake their confidence and sense of security. We feel certain that the Company will do nothing in the future suicidal to its own interests. Apart from legal rights and without standing on mere prestige, we would pose the questions, will it not be better in the interests of all concerned that the wishes of the large body of policy-holders are consulted in some form or other in the matter of investment of this Fund which is ear-marked for their security. With these observations, we desist from expressing our opinion on the controversy that is now tearing apart the Company and the policy-holders, as to the extent of the policy-holders' rights in the trust-fund and whether they are beneficiaries in regard to it under the terms of the trust-deed.
9. We therefore propose to examine the policy-holders' rights to interdict the present investment of the trust-fund in the construction of a huge building on the Mount Road site, assuming without deciding it, that they are beneficiaries under the trust as claimed by them. It is conceded that the policies issued embody a mere contract for payment to the insured of the assured amount on maturity, and there is no reference in the policies themselves to Articles 110 to 125 of the Articles of Association or to the trust-deed. It is therefore clear that the present action cannot be sustained on the ground, that the proposed investment contravenes any of the terms of the contract embodied in the policy. Nor can the policy-holders take advantage of the Articles of Association, to which they were not parties. It is now well-established that, though the articles constitute a contract between the Company and a member in respect of his rights as a member, the articles do not constitute a contract between the Company and third persons, and a third person who purports to have rights against the Company would be precluded from relying on the articles as the basis of his claim and must prove a special contract. This question was the subject of an authoritative pronouncement of the House of Lords in Southern Foundries, Ltd. v. Shirlaw L.R. 1940 A.C. 701. Reference may also be made to Browne v. La Trinidad (1887) L.R. 37 Ch. Div. 1, where the proposition was affirmed that the articles are merely a contract between the shareholders inter se, and that, though a person, in whose favour a stipulation is made in the articles, may afterwards have shares allotted to him, he is not, by that means, in the same position as if he had entered into a contract with the Company. Similarly, in Baily v. British Equitable Assurance Co. (1904) 1 Ch. 374, it was pointed out that the rights of a shareholder in respect of his shares, except so far as they may be protected by the memorandum of association or by statute, may be liable to be altered by special resolution. But the case of a contract between an outsider and the Company is entirely different, and even a shareholder must be regarded as an outsider in so far as he contracts with the Company otherwise than in respect of his shares. At the same time, it was pointed out that a Company cannot, by altering its articles, justly a breach of contract. Though that decision was reversed in appeal in British Equitable Insurance Co. v. Baily L.R. (1906) A.C. 35, there was no departure from the principles enunciated. As to the ordinary rights of a policy-holder, this was what was observed in Dalby v. The India and London Life Assurance Co. (1851) 139 E.R. 465 :
The contract commonly called life-assurance, when properly considered, is a mere contract to pay a sum of money on the death of a person, in consideration of the due payment of a certain annuity for his life, the amount of the annuity being calculated, in the first instance, according to the probable duration of the life: and, when once fixed, it is constant and invariable. The stipulated amount of annuity is to be uniformly paid on one side, and the sum to be paid in the event of death is always (except when bonuses have been given by prosperous offices) the same, on the other. This species of insurance in no way resembles a contract of indemnity.
10. We have the following exposition of the rights of policy-holders from the Master of the Rolls in March v. The Attorney-General 59 Revised Reports 550 at 553.
The grantees of the policies contract for a sum of money to be paid on a future event. Whatever may be the liberty possessed by the grantors, the grantees have not, by their contract, any immediate control over it or lien upon it. The grantors or their trustees continue to have the entire control or management over the whole fund; the real estate or chattels real may be sold and converted into pure personality, and the pure personality may be converted into chattels real. This state of things may continue not only during the contingency upon which payment depends, but after the contingency has determined; for the grantee acquires no specific lien after the payment has become due liven in default of payment when due, the grantee cannot, by reason of such default only, resort immediately and at once to land or chattles real, but must resort to legal process which will not affect the land possessed by the office at the time of the contract, although it may, in its final result, affect such laud as the office may have at the time when the process is executed. Ordinarily, the grantee has nothing but a right of action from the date of the contract until actual payment.
11. It follows that neither the contract embodied in the policy nor the Articles of Association can avail the plaintiffs in the present suit.
12. Mr. Raghavachariar, appearing for the second plaintiff contended that even apart from the terms of the trust-deed, the very constitution of the fund implied a constructive fiduciary ownership for the benefit of the policy-holders within the definition of trust in Section 3 of the Specific Relief Act, and so, under Section 54(a) of that Act, the Court can grant an injunction where the defendant threatens to invade the plaintiff's right. But that section which merely defines that a trust includes every species of express, implied or constructive fiduciary ownership, does not take the contentions of the policy-holders any further. There appears to be no authority for the contention that even apart from the trust-deed, the policy holders would be in the position of beneficiaries. On the other hand, the English cases have maintained the contrary view. In Mathew v. Northern Assurance Co. (1878) L.R. 9 Ch. D. 80, there was an action by the assignee of a policy against the defendant, which was a life assurance company. The policy provided that the capital stocks and the funds of the Company shall be subject and liable to pay the assured sum to the assured after his decease. As there was a rival claim for the assured amount, the defendant-Company paid the money into Court under the Trustee Relief Act. The question arose whether the Company, by payment into Court under the Act, was discharged from all liability under the policy. In dealing with the contention, Jessel, M.R., observed at page 83:
Nothing could be more fatal to the interest of this Company than to hold that they are mere trustees who have executed an equitable assignment of their stock in favour of every policy-holder. How they could deal with their assets, or carry on their business, if that was the effect of the policy, 1 am utterly at a loss to understand. I decide that it is meant to be an ordinary policy of insurance, and that it is, in fact, a covenant to pay so far as the capital and stock of the Company will extend.
That being so, what is the position of the Company? Why, the Company is the debtor, and the assignee or legal personal representatives of the assured, is the creditor.
13. At page 87, he again observed:
What trust was created by the Policy? I asked the counsel for the defendant to tell me what the trusts were, if there were any. There is no trust at all. It is simply to pay to the assured his heirs, executors or assigns. It is not within the Act at all. That answers the questions at once, There is no trust declared of it, and what the Act means is very plain; it is constructive trusts. The words are ' trustees, executors, administrators or other persons having any monies belonging to any trust,' and they apply to persons holding monies subject to a trust, and not knowing what to do with them, and there is no question whether they can be called trustees. It does not appeal to me that there is any trust declared of this insurance policy or any trust to which the Act could apply.
14. In Macgillivray's Insurance Law, third Edition, it is stated at page 690 thus:
It may be accepted on the authority of the above case that an insurance company may be deemed to be a trustee of the policy monies even where the form of the policy is a charge upon the funds of the Company without any direct promise to pay. An insurance company is in the position of an ordinary debtor, and must be treated accordingly.
15. It therefore seems to us to be clear on the authorities that apart from the trust-deed, it is not open to the policy-holders to take advantage of anything contained in the Articles of Association of the Company, as giving them any beneficial interest l:o other claim to the trust-fund; nor is it open to them to contend that the Company is in the position of a trustee so far as the fund is concerned.
16. The learned Counsel for the plaintiff further contended that even before their claim matured and became payable, they could obtain an injunction to prevent the funds from being wasted. They relied on the following observation in Halsbury's Laws of England, Volume 18, second edition, page 581, paragraph 944:
Assurance companies registered with unlimited liability generally grant polices and annuities on the condition that the assets of the Company only are to be liable in respect of the same. Such a contract does not give the policy-holder or annuitant a specific charge or lien on the assets, or a preferential right to be paid as against other creditors. A policy-holder may, however, even before his claim has become payable, obtain an injunction to prevent the funds from being misapplied, as, for instance, under an amalgamation and transfer which is contrary to the transferring company's deed of settlement.
17. That proposition has been taken from Kearns v. Leaf (1862) 1 H. & M. 681 : 71 E.R. 299. In that case, the policy provided that the funds or the property of the Company should, according to the provisions of the deed of settlement, be subject and liable to pay on the death of the assured. But the directors of the Company entered into a negotiation for the transfer of their business and funds to another insurance company. Vice-Chancellor Sir W. Page Wood observed at page 310:
Now I apprehend that under these stipulations, the policy-holders have no right to meddle with anything, wise or unwise, which the Company may do in accordance with the deed. For example, if the company invest in a hazardous or even ruinous security, the policy-holders are not entitled to interfere. It would be extremely mischievous to allow such interference. Still the conduct of the Company might reach a point of absolute waste of the assets in contravention of the provisions of the deed, at which the right of the policy-holders to intervene might be considered to arise.
18. And again at page 311, he observed thus:
It is of the utmost importance that the policy-holders should not be allowed to interfere unnecessarily with the management of the Company, and this as such for their own sakes as for that of the share-holders. This seems to me a case of all others where a policy-holder ought to be allowed to come here only to restrain the specific injury which he would suffer from a threatened diversion of the funds from their proper objects, and it would be extremely mischievous to make a prospective order so indefinite as an injunction to restrain any dealings of a similar character.
19. The principle of that decision was applied by the Court of Appeal in Cummins v. Parkins L.R. (1899) 1 Ch. 16, Lindley, M.R., observed thus:
If a plaintiff had a right to be paid out of a particular fund, he could in equity obtain protection to prevent that fund from being dissipated so as to defeat his rights.
20. It may be that the policy-holders have a right to intervene if the Company dissipates or wastes or diverts the funds, out of which they expected to be paid the amounts assured to them on the maturity of their policies. But, on the facts of the present case, we are clearly of opinion that there is no dissipation or wastage of the trust fund. We consider that it would not be correct to characterise the proposed construction of the building as a waste or dissipation. That appears to us to be a very substantial investment. In this connection, we have gone through the evidence of the first plaintiff, and we are not prepared to accept it as proof that this venture is either speculative or unremunerative. It is possible that there are better investments. But, what pattern the investment should take is a matter for the directors to decide, so long as they do not exceed their powers in the matter of investments. There are over eight crores of rupees in the fund, and the proposed expenditure constitutes a small fraction. It is not the case of the plaintiffs that this investment is contrary to any of the provisions of the Insurance Act. The Controller of Insurance has not taken exception to this form of investment. Except these two solitary policy-holders, we have no evidence that the other policy-holders who number about 1 lakhs have raised any objection to the proposed construction in fact, the directors, representing the policy-holders, have given their assent to this venture. Even an investment by purchasing gold and silver and thereby lying down the funds in an unremunerative venture was approved in Wamanlal v. Scindia Steam Navigation Co. : AIR1944Bom131 , on the ground that investment need not necessarily mean conversion of money into something which must yield a return.
21. As we stated above, we are not expressing any opinion on the claim of the policy-holders, that under the terms of the trust deed, they are constituted beneficiaries of the trust-fund. For the purpose of this appeal, we are willing to assume that they are beneficiaries. We have held that apart from the terms of the trust-deed, neither under the Articles of Association, nor the general law, nor even under their policies, have they any right to interference with the administration by the Company of its funds and investments. The Company is not in the position of a trustee for the policy-holders so far as those funds are concerned. Inasmuch as we are not deciding the question whether they are constituted beneficiaries under the trust deed, the further question whether the trust created in respect of the fund in favour of the policy-holders, present and future, would offend the rule against perpetuities, does not arise for consideration. We are also relieved of the necessity of considering the other question whether, if the policy-holders were constituted beneficiaries under the trust deed, such a trust would not be hit by the uncertainties discussed in Allahabad Bank, Ltd. v. Commissioner of Income-tax 21 I.T.R. 169 and the decision of the Supreme Court in appeal against that judgment in Allahabad Bank v. Income-tax Commissioner : 24ITR519(SC) . It was common ground that there was a valid trust, and that was not a question for adjudication.
22. We prefer to rest our decision of this appeal on this narrow ground. On the assumption that policy-holders are beneficiaries under the trust-deed, it would follow that the terms of that document could not be amended by the Company without the consent of the beneficiaries, by merely amending the Articles of Association. The parties will then be governed by the terms of the original trust-deed of 1928. We saw that under Article 116(a)(1)(i), the directors are authorised to invest the trust-fund by an unanimous resolution amongst other investments, 'in the purchase of house-property '. It does not expressly authorise the construction of a house-property on a vacant site. But it was contended by the learned Counsel for the Company that the purchase of house-property in that article would certainly take in the construction of a new building, as is now proposed. He pointed out that with reference to some securities mentioned in Clause (a)(1) and Clause (b)(1) of that Article, the word ' purchase' would be inappropriate, unless it is given the wider meaning of acquisition. We agree that there is much force in that contention. Our attention was also drawn to the fact, that under Section 27-A (n) of the Insurance Act of 1938, one of the approved investments is immovable property situate in the States provided that the property is free of all encumbrances. As regards the true connotation of the word ' purchase ', we find in the Law Lexicon by Ramanatha Ayyar, 1940 Edition, at page 1050, that word means the acquisition of property by a party's own act, as distinguished from acquisition by act of law. According to the learned author, there are two modes only of acquiring a title to land, namely, descent and purchase, purchase including every mode of acquisition known to the law, except that by which a heir, on the death of an ancestor, becomes substituted in his place as owner by the operation of law. We see no adequate reason why in this case we should not give that wider meaning to the word ' purchase '. This question in regard to the interpretation of this very article arose for the consideration of this Court in The United India Life Assurance Co., Ltd. v. Krishna Rao (1933) 67 M.L.J. 336. That was a suit filed by a shareholder and a policy-holder against the present first defendant-Company and its directors for an injunction to restrain them from spending the money of the policy-holders' trust-fund on the construction of a building on a site purchased by the Company at Calcutta from out of the policy-holders' trust-fund. Though the appeal was disposed of on another ground, the learned Judges, Madhavan Nair and Jackson, JJ., expressed their opinion on this question. Madhavan Nair, J., on a comparison of the form of investment contemplated under the article with the one contemplated under the present Article 102(g), thought that those who drew up the Articles of Association wanted to safeguard the money belonging to the policy-holders' trust-fund with greater care than the money belonging to the shareholders. On that, we are inclined to doubt whether these articles would furnish any basis for a construction based upon the principles of construction of a statute, particularly when Article 102 was an old article and the article now in question was framed later at the time when the fund was created. It will be seen that both the learned Judges referred to the English cases decided under the Land Clauses Act, which proceed on the principle that the erection of a building is substantially the same thing as the purchase of a new estate. All the English cases are referred to by both the learned Judges, and we consider it unnecessary to refer to them in detail. It is enough to state that the English cases made no distinction between the two classes of investment. Madhavan Nair, J., distinguished the English cases on the ground that but for the principle of stare decisis, those cases were not prepared to hold on the languages of the Act that purchase of land and building of a house meant substantially the same thing. On the other hand, Jackson, J., held that English authority had consistently proceeded on the general assumption that building and buying a house-property are substantially the same. The learned Judge thought that if the same authorities had been confronted with the terms of the present trust, they would presumably have followed the same line of thought and would have come to the same conclusion. The learned Judge concluded thus:
With that conclusion, I respectfully agree, because I think there is no real difference between commissioning a contractor to build a house, and promising to buy it from him after it is built.
23. We have no hesitation in adopting the opinion of Jackson, J., in preference to that of Madhavan Nair, J. We consider that the word ' purchase ' in Article 116 must be given a wider meaning so as to include the construction of a new building; that is to say, the word ' purchase ' has got the same connotation as ' acquisition'. It seems to us that it would be quite artificial to give it the restricted meaning contended for by the learned Counsel for the appellants. In the case of the purchase of a house-property, the purchaser pays the value of the materials and labour after they are put into shape; whereas, in the construction of a new house, he pays the costs of the materials and labour and puts them into that shape and it can make no difference at what stage or point of time the costs are paid. But Madhavan Nair, J., thought that people conversant with building houses knew that in actual practice, house-building is more speculative than buying houses. On this, opinions may well vary, and some may consider that in building houses, one may use the best materials and exercise one's own effective supervision, so that it would be a more economical and safer investment than buying a house built by somebody else without much certainty or knowledge about the materials used or the defects lying hidden within the construction. Whether building a house is more risky or speculative than buying a house, or vice versa, will have to be judged on the facts of each individual case, and we are not prepared to dogmatise any general proposition applicable to all cases. At the close of the arguments, Sri Raghavachariar brought to our notice three more decisions, which, according to him, would help us in solving this question. They are In re Lord Gerard's Settled Estate 1893 L.R.3 Ch. 252, In re Amos Carrier v. Price L.R. (1891) 3 Ch. 159 and In re V.G.M. Holdings, Ltd. 1942 L.R.1 Ch. 235. The first of the cases arose out of an application under the Settled Land Act, by the tenant for life of a settled estate for the sanction of a scheme for expending part of the capital moneys subject to the trusts of the settlement in certain improvements on the estate. The improvements proposed consisted of certain reconstructions and additional buildings. Section 21, Clause (vii), provided that the capital money arising under the Act shall be invested, amongst other things, 'in purchase of land in fee simple, or of copyhold or customary land, or of leasehold land '. In dealing with that clause, Lindley, L.J., held that he could not construe it as including matters which the Courts had held might be included under the Land Clauses Act, and that the latter Act was not a code addressed to the same subject-matter as the Settled Land Act. The decision in Drake v. Trefusis (1875) L.R. 10 Ch. 364 was a typical decision under the Land Clauses Act. The learned Judge held that although the Courts had seen their way under the Land Clauses Act to allow money paid into Court to be employed in erecting new buildings, it would be inconsistent with the enumeration under Section 25 of the Settled Land Act to incorporate into it the said line of cases. We respectfully agree with the learned Judge when he said at page 258 :
When you look at it as a whole, you must treat it as a whole, and not bring into this Act of Parliament authorities upon other Acts of Parliament which were passed, as I have said, for different purposes altogether.
24. In the present case, we are not endeavoring to do any such thing. It will be seen that the relevant words in the Settled Land Act were ' in purchase of land,'; ' purchase of house property ' is what we have in the Article we are now considering. That being so, we fail to see why we should not follow the line of cases such as Drake v. Trefusis (1875) L.R. 10 Ch. 364, decided under the earlier Land Clauses Consolidation Acts.
25. In the second of the above cases, namely, In re Amos Carrier v. Price 1891 L.R. 3 Ch. 159, the construction of the word ' purchase ' in Section 7 of the Trade Union Act came up for consideration. That section provided that it shall be lawful for any trade union to purchase or take upon lease any land not exceeding one acre. It was contended that Section 7, did not apply to a devise, and that the devise to the union was void as tending to a perpetuity. The question, therefore, was whether the word 'purchase ' in Section 7 was used in its popular meaning of ' buy ' or in the technical sense of taking otherwise than by descent or escheat. At page 165, North, J., said:
It is argued that the society can take three houses in remainder under the will, because it is lawful for them to ' purchase ' land, and it is said that 'purchase ' means ' acquire otherwise than by descent or escheat; ' and therefore, a devise or bequest of property confers on the person to whom it is made an interest by purchase. In my opinion, that is not the meaning of the word ' purchase', as used in this section. No doubt, the word is sometimes used by lawyers in that sense, but that is not its natural ordinary meaning. It is an addition to the ordinary meaning. So to construe the word in this section would strain the language very much.
26. The learned Judge, therefore, only negatived the contention that ' purchase ' meant acquisition otherwise than by descent or escheat, and therefore would take in an acquisition by devise or bequest. In the present case, there is no question of acquisition by bequest or devise, but acquisition only by the payment of money in fact, in the same page of the case cited, the learned Judge observed:
But, in my opinion, by ' purchase or take on lease ' is meant the acquiring by the payment of money of property which they may acquire by purchase out and out, or, if they please, by taking a lease of it.
27. We, therefore, fail to see how this case helps the plaintiffs' contention. Indeed, it only affirms the view we are taking.
28. In the third case referred to above, namely, In re G.M. Holdings Limited 1942 L.R. 1 Ch. 235, the question that arose for decision was whether or not the word ' purchase ' in Section 45, Sub-section (1) of the Companies Act of 1929 would cover a case where the money which the Company provided was used to assist a subscription for the Company's own shares. Lord Greene, M.R., pointed out that throughout the whole of the Companies Act, the language which was used with regard to the issue of shares to subscribers was invariably confined to words like ' issue,' ' subscription', ' application ', ' allotment ', and so forth, and that there was not a single passage in the Act in which the word ' purchase ' was used in relation to the transaction of subscription. The Master of the Rolls remarked at page 240 :
That being so, it seems to me that a very clear context would be required to enable a meaning to be put on the word ' purchase ' in this section, which would extend it so as to cover the acquisition of shares by subscription. Quite apart from those considerations of mere language of the Act, it seems to me that the word ' purchase ' cannot with propriety be applied to the legal transaction under which a person, by the machinery of application and allotment, becomes a share-holder in the company. He does not purchase anything when he does that.
29. That being the decision in that case, it is obvious that it affords very little help in the solution of the question before us.
30. We, therefore, hold that it was within the powers of the Directors to put up the proposed construction even under the terms of the original trust-deed and that the policy-holders have no right to interdict it. The appeal fails and it is dismissed; but in the circumstances, we make no order as to costs of the appeal.