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T. Ramaswami Aiyar Vs. T. Subramania Aiyar and ors. - Court Judgment

LegalCrystal Citation
CourtChennai
Decided On
Judge
Reported in74Ind.Cas.804
AppellantT. Ramaswami Aiyar
RespondentT. Subramania Aiyar and ors.
Cases ReferredBlogg v. Johnson
Excerpt:
civil procedure code (act xiv of 1882), section 396 - civil procedure code (act v of 1908), order xx rules 12, 18, order xxvi, rules 13, 14--partition suit--preliminary and final decrees under the old and new codes--profits and mesne profits--interest, whether payable. - - 10. i am of the same opinion, and i should like to state my reasons for holding that the 2nd defendant is not liable for interest. 12. in the first place, i am not satisfied that there is any fiduciary relation between the plaintiff and the and defendant. the delay is not attributable solely to the 2nd defendant, and the plaintiff has failed to show any ground for making the 2nd defendant liable for interest. 2,976-5-2 the amount in respect of which he has succeeded in this court as well as in the lower courts......for it, and, taking this view, we need not consider whether the learned judges in holding him liable for profits, not mesne profits, in the order of remand, intended, as has been argued before us, to deal with the matter.5. of the mortgaged properties, survey no. 233 (item no. 3) was subject to a simple mortgage and was, it has been found, throughout in 2nd defendant's possession, survey no. 228-b and item nos. 4 to 6 were under usufructuary mortgage and returned to his possession only on his redeeming in 1908. the fact that he advanced the monies by which survey no. 233 was retained under order xxi, rule 89 and by which the other items just enumerated were regained for the family, cannot affect his right to profits after the payment. for it is clear from the lower court's.....
Judgment:

Francis Oldfield , J.

1. The first issue remanded relates to the properties in the possession of 2nd defendant. Some attempt has been made to argue that certain properties to be referred to as mortgaged items, have since their delivery to plaintiff, to which reference will be made, been re-gained by 2nd defendant, wholly or in part. But that rests only on references to allegations to that effect in the Subordinate Judge's order on Execution Petition No. 154 of 1919 and Execution Appeal No. 194 of 1920 on which no finding was reached, and is not supported by any evidence taken, on the remand.

2. In fact, there is no indication that this matter was ever submitted to the lower, Court at the remand hearing or had been mentioned to the learned Judges, by whom the remand was ordered. Similarly, as regards the suggestion that some properties were for a time in the possession of the father of plaintiff and 2nd defendant after the institution of the suit. No other objection to the finding on the first issue remanded has been made. We, therefore, accept it.

3. On the second issue remanded, relating to plaintiff's share f the net profits received by 2nd defendant and to be accounted for by him from plaintiff's share of the lands, or rather from the lands assigned to the latter, we have been unable to ascertain and the learned Vakils concerned cannot say how the total found payable to plaintiff has been reached. We, therefore, can only, with the assistance of the materials now available, and accepted by the lower Court, indicate the lines on which the account must be taken. The 2nd defendant was in possession as manager of the family, until on the date of the plaint the joint family became divided and a tenancy-in-common replaced It, 2nd defendant continuing in possession as one of the co-tenants. It is, therefore, possible to say at once that he has from the date of plaint (22nd August 1895) been accountable for plaintiff's share of the produce of all the lands with the exception for the present of Survey Nos. 228-B (representing items Nos. 1 and 2), 233 (item No. 3) and items Nos. 4 to 6, because the special considerations applicable to these require separate treatment.

4. The question is, next whether plaintiff is entitled to interest on his share of the profits for each year from the time when 2nd defendant received it. As a co-owner in possession of the co-ownership property, he was, it may be conceded, a constructive trustee with reference to Section 94 of the Trusts Act and was subject to the same liabilities as a trustee with reference to Section 95. But it does not follow that he is liable for interest on the profits. For it has not been shown how a trustee can ordinarily be so liable in the absence of any breach of trust established against him in the special circumstances enumerated in Section 23. There is no imputation on 2nd defendant's realization of profits as fraudulent or inefficient; and, when the suit might at any moment during the long period of its suspension have been resumed and it might have been necessary for 2nd defendant to produce the funds in his hand, we are not prepared to hold that he was bound by Section 20 to invest them. Authority is, as my learned brother has shown, against the duty of a trustee ordinarily to pay interest on profits. We accordingly cannot hold 2nd defendant liable for it, and, taking this view, we need not consider whether the learned Judges in holding him liable for profits, not mesne profits, in the order of remand, intended, as has been argued before us, to deal with the matter.

5. Of the mortgaged properties, Survey No. 233 (item No. 3) was subject to a simple mortgage and was, it has been found, throughout in 2nd defendant's possession, Survey No. 228-B and item Nos. 4 to 6 were under usufructuary mortgage and returned to his possession only on his redeeming in 1908. The fact that he advanced the monies by which Survey No. 233 was retained under Order XXI, Rule 89 and by which the other items just enumerated were regained for the family, cannot affect his right to profits after the payment. For it is clear from the lower Court's statements Nos. I and II, that the receipt of profits for previous years had placed sufficient family funds in his hands for these purposes and that, no expenditure; of his own money, in virtue of which he can claim any special right over the profits, took place. He must, therefore, account for the profits of these lands also, of Survey No. 233 from the date of plaint and of the others from the date of his regaining possession on redeeming; but on these profits also no interest will be payable.

6. As regards the properties last mentioned as having been subjected to usufructuary mortgage, and it would appear, since the order to be next referred to is not explicit also in respect of others, the matter is complicated by the fact that plaintiff and 7th defendant took delivery of their shares in execution of the 1st decree passed by the Subordinate Court without reimbursing 2nd defendant what he had spent on redemption. In appeal the District Judge held that they should have reimbursed him before doing so and on 20th February 1920, they deposited the amount and retained possession. Later, however; 2nd defendant in Execution Appeal No. 194 of 1920 obtained from the Subordinate Court an order directing payment by them of profits for the properties for the period, during which their possession was eventually held to have been unjustifiable before his reimbursement. It is argued that this order became final and that 2nd defendant must be allowed to retain the amount paid under it without reference to his liability in the general account which is now being taken. This is not sustainable. It is clear that the Subordinate Court was dealing in its order only with the matter immediately before it, the 2nd defendant's right to restitution of profits in connection with the lower Appellate Court's alteration in its decree, not with any general or final account, In fact, the right to such an account had been disallowed by the lower Appellate Court in paragraph 3 of its judgment and this disallowance was the subject of the appeal to this Court. Second defendant must, therefore, refund, to plaintiff and 7th defendant what they paid him by credit in the account to be taken.

7. The remaining question is, whether 2nd defendant is entitled to interest on the amounts paid by him under Order XXI, Rule 89 and for redemption. As the payment must be regarded as made from the family funds in his hands, the decision must be in the negative. His claim to interest at 9 per cent. on Rs. 271-0-6 paid under Order XXI, Rule 89 would in any case be excessive, since the debt was outstanding at 6 per cent. only, having been merged in a decree.

8. The foregoing deals with the objections to the lower Appellate Court's findings so far as they have been pressed. In accordance with it plaintiff (and the same will apply, to 7th defendant, when his claim is put forward) will be entitled to (1) his share of the profits as ascertained is statements, (i), (ii), and (iii) from the date of plaint on all the items assigned to him, except survey No. 228 B, and items Nos. 4, 5, 6 and on them from and including the crop season of October 1908, (2) credit for half the amount paid by him and 7th defendant under the order in Execution Appeal No. 194 of 1920. There will be no interest on (1) for the reasons already given or, on (2) because it represents profits which plaintiff took prematurely and which would not have carried interest, if they had been realised by 2nd defendant. Similarly, the amounts expended by 2nd defendant under Order XXI, Rule 89, and on redemption carry no interest. They and their share of them repaid by plaintiff and 7th defendant can, therefore, be left out of the account, 2nd defendant retaining the amount of that repayment.

9. The appeal is adjourned for 7 days in order that the practitioners concerned may consider the preparation of an account on these lilies.

Venkatasubba Rao, J.

10. I am of the same opinion, and I should like to state my reasons for holding that the 2nd defendant is not liable for interest.

11. On behalf of the plaintiff it is argued that the 2nd defendant stood in a fiduciary relation to him and would, therefore, be liable to pay interest upon the rents received from the lands.

12. In the first place, I am not satisfied that there is any fiduciary relation between the plaintiff and the and defendant. If after the interlocutory order of 1899 it is no doubt conceded that the parties became tenants-in-common with reference to the proper-ties in question. But we have not been referred to any authority in support of the proposition that the 2nd defendant stood in any fiduciary relation to the plaintiff.

13. The decision in Kennedy v. De Trafford (1897) A.C. 180 : 76 L.T. 427 : 45 W.R. 671 is the other way. Action was brought against the mortgagees of some property to set aside a sale made by them under the power of sale contained in their mortgage-deed. The property mortgaged was held by two persons tenants-in-common. They were co-owners, each possessing an undivided motety. The mortgagees gave notice that unless the parties paid off the mortgage the former would be prepared to sell the property at a price which would realise principal, interest and costs, and finally one of the mortgagors became the purchaser. The sale was impeached by the representative of the other mortgagor on the ground that it was made to a person who was incapable of buying the property because he was in a fiduciary relation. Lord Herschell observed: 'But then it is said the mere fact that Kennedy was co-owner with Dodson of this property creates such relationship between them that the one co-owner could not take this property and hold it for himself, but that the other co-owner is entitled on equitable grounds to have it declared that the benefit of one half of that purchase should be his. My Lords, no authority has been cited in support of such a proposition.'

14. In the Court of Appeal See (1896) 1 Ch. 762 [Ed.] Lindley, L.J., made the following observation in regard to this contention by the plaintiff, the co-tenant: 'We are asked to say, and the point is an important one, that one of several tenants-in-common cannot get it for his own benefit an outstanding encumbrance, or an outstanding estate, or cannot be treated as otherwise than as a fiduciary owner standing in some fiduciary relation to his co-tenant. As a general proposition that appears to me not to be the law o England.'

15. Even assuming that there was a fiduciary relation, is the 2nd defendant liable for interest upon the rents of the lands in hi possession? In Blogg v. Johnson (1867) 2 Ch. 225 Lord Chelmsford, L.C. stated that generally interest cannot be recovered upon the arrears of income. Several cases are referred to, in the judgment and the rule is said to be tae established rule of the Court which, however, is only general not inflexible.

16. In Silkstone and Haigh Moore Coal Co v. Edey 48 W.R. 137 it was held that upon the setting aside of a sale by a trustee of a trust property to himself and the reconveyance of the property to the beneficiaries it is not the practice of the Court to charge that trustee with interest on the rents and profits received by him since the date of the sale.

17. Lewin states the law thus relating to the right of the beneficiary to have the property reconveyed to him: 'The cestique trust, if he chooses it, may have the specific estate reconveyed to him by the trustee or where the trustee has sold it with notice by the parties who purchased the cestique trust on the one hand paying the price at which the trustee bought with interest at 4 per cent, and the trustee or purchaser on the other accounting for the profits of the estate but not with interest.

18. Sterling. J., in the case referred to above Silkstone & Haigh Moore Coal Co. v. Edey 48 W.R. 137 approves of the statement of the law in 'Lewin on Trusts.' Macartney v. Blackwood (1795) R L. & Sch 602; which is referred to in the judgment of Stirling, J., is also an authority for the proposition that when the sale is set aside interest on the rents is not allowed.

19. In Halsburry's Laws of England, Vol. 33 at page 191 a statement of law is made to the same effect.

20. Interest was, no doubt, charged on arrears in some cases as Melland v. Gray (1845) 2 Col 295 : 63 E.R. 741 : and Gilroy v. Stephen (1882) 46 L.T. 761 : 39 W.R. 748 but it seems to me that the cases fall, in the words Lord Chelmsford, L.C. in Blogg v. Johnson 16 L.T. 506 : 15 W.R. 626, within the range of another principle of equity that where an executor or a trustee Unnecessarily detains money in his hand which he ought either to have invested or to have paid over to the person entitled to it, he will have to pay interest for it. The Lord Chancellor observes: 'Where money is thus improperly retained, it appears to me to be in immaterial how the sum has arisen, whether from a legacy or a distributive share, or a residue, or the arrears of income. In the latter case the claim for interest is not made on account of arrears, but for the improper keeping back of a sum of money, from whatever source derived, which the executor or the trustee ought to have paid over.'

21. As my learned brother has pointed out, it cannot be said in this case that the, 2nd defendant was bound to invest the profits. The plaintiff had the conduct of the suit and it is quite open to him at any moment to ask for possession of the properties for an account of the profits and for payment to him of the sum ascertained to be due. The delay is not attributable solely to the 2nd defendant, and the plaintiff has failed to show any ground for making the 2nd defendant liable for interest.

22. The account called for at the previous hearing has now been filed by the learned Vakil on behalf of the plaintiff (appellant;)'. One objection made to it is that lie has wrongly included Rs. 107-4-8 as interest at 6 per cent, on Rs. 858-5-2 from 20th February 1920 to 23rd February 1922. This, he concedes, is not justified by anything in our judgment. The item of Rs. 107-4-8 must, therefore, to omitted. The learned Vakils on both sides have now agreed that on the account Rs. 2,976-5-2 should be taken as the amount due. The decree in Second Appeal will, therefore, be drawn up in accordance with the foregoing. Further terms of tie decree, in so far as they involve modification of the decree of the Subordinate Judge as modified by the District Judge will be in accordance with the statement which has been filed by the appellant's Vakil and agreed to in open Court by the Vakils for the respondents, including the 7th defendant.

23. The appellant will have his costs from the 1st respondent on Rs. 2,976-5-2 the amount in respect of which he has succeeded in this Court as well as in the lower Courts.


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