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Nurul Hasan Vs. Amir Hasan and ors. - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtKolkata High Court
Decided On
Case NumberSuit No. 507 of 1945
Judge
Reported inAIR1962Cal569
ActsPartnership Act, 1932 - Section 4; ;Trusts Act, 1882 - Section 88
AppellantNurul Hasan
RespondentAmir Hasan and ors.
Appellant AdvocateI.P. Mukherjee, ;Sankar Ghose and ;D.P. Mukherji, Advs.
Respondent AdvocateSachin Chaudhuary, ;B.K. Ghose and ;Ajit Sarkar, Advs. for Defendant No. 1, ;A.C. Sircar and ;J.K. Nag, Advs. for Defendant Nos. 2 and 4; ;Gautam Chakrabarty and ;N.N. Dutt, Advs. for Defendant No. 7,
Cases ReferredGriffiths v. Wilcox
Excerpt:
- p.c. mllick, j. 1. this is a suit for partition of the estate let by shaik md. ibrahim who died intestate in or about september 1942. he left him surviving his widow khodajia bibi, four sons nurul hasan, amir hasan, manir hasan and zahir hasan and two daughters badru'nnessa and kamirunnessa as his heirs and legal representatives under the sunni school of muhammadan law by which he was governed. this suit has been instituted by the eldest son nurul hasan who is the sole plaintiff. the other heirs have been impleaded as defendants. md. ibrahim died possessed of considerable properties. one of such properties consists of eight annas share in a very valuable property at calcutta known as 'palace court' situate at premises no. 1, kyd street. the two other co-sharers of md. ibrahim in the said.....
Judgment:

P.C. Mllick, J.

1. This is a suit for partition of the estate let by Shaik Md. Ibrahim who died intestate in or about September 1942. He left him surviving his widow Khodajia Bibi, four sons Nurul Hasan, Amir Hasan, Manir Hasan and Zahir Hasan and two daughters Badru'nnessa and Kamirunnessa as his heirs and legal representatives under the Sunni School of Muhammadan Law by which he was governed. This suit has been instituted by the eldest son Nurul Hasan who is the sole plaintiff. The other heirs have been impleaded as defendants. Md. Ibrahim died possessed of considerable properties. One of such properties consists of eight annas share in a very valuable property at Calcutta known as 'Palace Court' situate at premises No. 1, Kyd Street. The two other co-sharers of Md. Ibrahim in the said property are Shamsul Hasan and E. Jacob. They also have been impleaded as defendants. It is pleaded that Ibrahim held certain properties jointly with his relatives Md. Sulaiman, Md. Siddique and Shamsul Hasan. Four blocks of shares in the Sasemuse Sugar Works Ltd., 2400, 960, 1750 and 1750 in number appearing in the name of Amir Hasan and Sugra Begum are claimed to belong to the estate of Md. Ibrahim. The allegations are that the shares were held by Md. Ibrahim in the benami of Amir Hasan and/or the shares were purchased with monies belonging to the estate of Md. Ibrahim. The estate of Md. Ibrahim is alleged to be the beneficial owner of all these snares.The properties sought to be partitioned are set out in the schedule properly classified.

2. In respect to the four blocks of shares it is claim ed that these shares along with all profits and benefits derived therefrom belong to the estate of Md. Ibrahim and a declaration is claimed that the transfer of 333 shares out of the above shares by Amir Hasan in favour of his wife Sugra Begum is a benami transfer.

3. In the written statement filed by Amir Hasan the four blocks of shares in the Sasamusa Sugar Works Ltd., appearing in the name of himself as also the shares appearing in the name of his wife Sugra Begum are contended not to be included in the estate of Md. Ibrahim. The shares are claimed to be the personal property of the defendant Amir Hasan and the defendant Sugra Begum. This is the real dispute in this case. It is admitted in the written statement of the defendant Amir Hasan that Md. Ibrahim his father made a gift of Rs. 2,40,000/- to him. This sum was invested by him in acquiring a share in the partnership firm of Sasamusa Sugar Works which was ultimately incorporated into a Company in 1933. The pleadings of the parties on this point have got to be examined in greater detail later.

4. In the Written statement filed by Zahir Hahan, it ispleaded that over and above the properties set out in theschedule to the plaint, Md. Ibrahim left other propertiesas well. In particular it is alleged that 1168 shares inMessrs. Mousell and Co., Ltd., appearing in the name ofNurul Hasan belonged to the estate of Md. Ibrahim. Aclaim for discovery of what other properties are included in the estate of Md. Ibrahim has also been made in the written statement.

5. Kamirunnessa Bibi in her written statement supports the plaintiff's case. She also pleads that the shares in Messrs. Mouseli and Co. Ltd. appearing in the name of Nurul Hasan belong to the estate of Md. Ibrahim. So also she claims that two other businesses, namely, A Hasan Bros, and Haji Kadar Bux Md. Ibrahim belonged to Md. Ibrahim and as such should be included within the purview of this suit.

6. In the written statement filed by Sugra Begum, the 333 shares in Sasamusa Sugar Works Ltd., of which she is the registered holder are claimed to be her personal property. She contends that she purchased these shares from her husband Amir Hasan and is a bona fide transferee of those shares for valuable consideration and as such she is the sole and absolute owner, thereof even if there was any defect in the title of Amir Hasan to transfer the property.

7. The defendants Manir Hasan, Khodija Bibi and Badrunnessa Bibi filed a joint written statement. They made the same allegation as made by the defendant Zahir Hasan in his written statement. All the shares both in Sasamusa Sugar Works Ltd. and in Mousell and Co., Ltd., are claimed to belong to the estate of Md. Ibrahim.

8. Shamsul Hasan in his written statement contends that his share in 'Palace Court' and other properties has been admitted in the plaint. He is not interested in the disputes between the heirs of Md. Ibrahim. He prays that his share in the different properties be declared and allotment made to him. The other defendants do not appear to have filed any written statement.

9. It appears that during the pendency of this suit there was a transfer and assignment of the share of thedefendant Kamarunnessa Bibi in the estate of Md. Ibranim to the defendant Sugra Begum and by an order dated March 8, 1948 the defendant Sugra Begum as such transferee was substituted in place and stead of the defendant Kamirunnessa Bibi.

10. At the trial, the plaintiff and the defendant Amir Hasan gave evidence in support of their respective cases The only other witness called is one Brijnandan Prasad Ambasta by the defendant Amir Hasan to prove certain entries in the account books of Sasamusa Sugar Works Ltd. Certain statements of account from the bank are proved toy the bank clerk: The bank clerk in his evidence stated that the original accounts have been destroyed. The statement of account duly certified according to the Bankers' Book Evidence Act has been tendered in evidence in this suit A good deal of documentary evidence has been tendered. Many of such documents include entries in the account books that have been disclosed during the trial. Many documents disclosed including entries in the accounts are included in different briefs of documents which briefs have been marked exhibits by consent, the parties having dispensed with format proof. Certain Court proceedings also have been tendered, the records consist of depositions of the two contestants, the plaintiff Nurul Hasan and the defendant Amir Hasan and also of the. accountant and alarge mass of other documentary evidence. Each one of the contestants were asked more than 1000 questions in the witness box.

11. The substantial controversy in this case relates to the title in 'four blocks of shares in Sasamusa Sugar Works ltd. Of these four blocks, the first block of 2400shares were allotted to the defendant Amir Hasan in March 1933. Subsequently in January 1934 another-block of 960 shares were allotted to Amir Hasan. This 960 shares camel out of 2500 shares originally allotted to Abdul Wahed and his two brothers. This block of 2500 shares was subsequently purchased back by the Company and redistributed proportionately to the other shareholders. Amir Hasan was allotted 960 shares out of this lot Long after the death of his father in February 1945 the defendant Amir Hasan purchased two blocks of shares--1750 shares, from Shamsul Hasan and 1750 from Messrs. Mousell and Co. Ltd., originally allotted, to them in 1933. Out of his holding, the defendant Amir Hasan purported to transfer 333 shares to his wife, the defendant Sugra Begum. The plaintiff's case is that the defendant Amir Hasan had no beneficial interest in the first two blocks of shares, namely, 2400 and 960. The beneficial owner of these two blocks of shares was Md. Ibrahim, the father, and Amir. Hasan was merely his benamidar. The other two blocks of shares have been purchased by Amir Hasan out of the dividend and profit of the other shares and as Such in law the estate of the father Md. Ibrahim has title to them, the defendant Amir Hasan had only a nominal title in those shares, the beneficial title being in the estate of Md. Ibrahim. The transfer of 333 shares by the defendant Amir Hasan to his wife Sugra Begum is contended to be a benami transaction. This is the plaintiffs case and it is to be decided whether on the evidence tendered this claim made by the plaintiff is substantiated in law.

12. The father of Md. Ibrahim, Haji Kader Bux and Hazir Bux were two brothers who carried on business in hides under the name of Haji Kadir Bux Hajir Bux. In 1931 Md. Ibrahim was the senior partner and also the senior member of the family. The membership in thepartnership was restricted to some of the descendants of the original two partners, Haji Kadir Bux and Hajir Bux. Md. Ibrahim conceived the idea of starting a sugar mill at Sasamusa and made his brother Sulaiman and his cousins, the four grandsons of Hazir Bux, interested in the venture. Hazir Bux had two sons, Mahomed Jan and Abdul Sattar. Both of them were dead in 1931. Mahomed Jan died leaving three sons. Abdul Waheb, Abdul Razaq and Abdul Jabbar. Abdul Sattar had an only son, Shamsul Hasan. All these people were made interested in the venture. At the material year when the idea was conceived and given effect to, the partners of the firm of Haji Kadir Bux Hazir Bux were the two sons of Kadir Bux, namely, iMd. Ibrahim and mahomed Sulaiman and Shamsul Hasan, son of Abdul Sattar. Mahomed Jan transferred his shares in the firm to Md. Ibrahim in 1919. It is clear from the evidence tendered in this case that the new business was intended to be owned and carried on by a private company. The parties interested in the venture who were intended to own the company were the sons of Haji Kadir Bux and Hazir Bux and Moused and Co. Ltd. Mousell and Company Limited was a company in which Md. Ibrahim was interested for some years past. He invested a substantial sum in purchasing a block of shares in the said company it is alleged in the benami of his eldest son Nurul Hasan. Mou'sell and Company paid on November 19, 1932 the sum of Rs. 1,25,000/- by cheque as its capital contribution and acquired 1/7th share in the venture. In fact the private company of Sasamusa Sugar Works Ltd. was incorporated in March 1933. The return of allotment of shares dated March 21, 1933 (Ex. VW) being the date of which the Company was incorporated, indicates the following holders of shares in the company:

Md. Ibrahim100Abdul Wahab834Amir Hasan2400Abdul Razaque833Md. Sulaiman1250Abdul Jabbar833

Shamsul Hasan1250 2500Mousell and Co., Ltd. 1250.

13. Mousell and Company Limited was the managing agent of the company. Even before the incorporation of the company, lands were being purchased in Sasamusa where the factory would be constructed, machineries purchased and factory constructed. Money amounting to several lakhs were being paid out of the till of Haji Kadir Bux Hazir Bux and debited against the respective parties. So also Moused and Company, Limited, and Abdul Wahab and his brothers paid on account of their contribution. Abdul Wahab and brothers though belonging to the same 'family had no interest in the business of Haji Kadir Bux Hazir Bux at the material time. Lands were acquired and conveyances obtained not in the name of the company, which was not yet incorporated, but in the names of different members of the families of Haji Kadir Bux and Hajir Bux. It is to be noted that the lands were not acquired in the name of any partnership concern of the name of Sasamusa Sugar Works. Nor does it appear that the orders for machineries were placed in the name of Sasamusa Sugar Works, nor payment made to the suppliers by the said partnership firm if it existed at all. There is no evidence from what date the business of manufacturing sugar started, though it is apparent that it began sometime after the incorporation of the company. If there was a partnership business of Sasamusa Sugar Works, it is never proved to have functioned as a commercial venture manufacturing and selling su'gar prior to its conversion into a company in March 1933. It is interesting to note that the book of account of the company tendered containedentries from prior to the date of incorporation i.e., from early January 1932, and there is a continuity of entries in the books covering both the periods, namely, before and after the incorporation. The only difference is that the word 'limited' has been struck out in respect to the entries prior to the date of incorporation. It appears that Abdul Wahab and his two brothers were not willing to continue to be members of the company. In January 1934 an agreement was arrived at at Gopalgunj whereby 2500 shares allotted to Abdul Waheb and brothers were to be distributed amongst the remaining members in proportion to their respective holdings. Md. Ibrahim represented the company and Abdul Waheb represented himself and his two brothers who were minors. The procedure adopted was that the 2500 shares of Abdul Waheb and brothers would foe purchased by the company on payment of Rs. 3,35,000/-and then allotted as under:

Md. Ibrahim 40Amir Hasan960Md. Sulaiman500Shamsul Hasan500Mousell and Co., Ltd.500

2500

Md. Ibrahim borrowed the money on the security of hisown property and lent the same to the company, and outof the money borrowed Abdul Waheb and brothers werepaid off. The allottees of the shares were not requiredto pay for these shares, nor yet the full purchase pricewas paid by the different allottees. It was arranged thatthe dividends payable in respect to the shares will notbe paid to the shareholders so long as this debt remainedoutstanding but will be utilised to liquidate the liabilityon account of the purchase money of these shares. Theterms of this Gopalgunj agreement will appear from theletters of Messrs. Pal and Roy, solicitors of Abdul Wahabto N.C. Bural and Pyne, solicitors for the company datedFebruary 26, 1934 (Ex. FFFF). Under the agreement AbdulWahab on behalf of himself and his two minor brotherswas required to execute certain documents whereby thetitle of the company may be perfected in the lands atSasaMusa acquired in the name of Abdul Wahab and hisbrothers for the business prior to the incorporation of thecompany. The various resolutions of the Board of Directorson February 23, 1934 (Ex. BBBB 3) and of March 28, 1934(Ex. BBBB 1) evidence the transaction whereby Abdul Wahaband Brothers ceased to become members and their shareswere to be allotted to the remaining shareholders. Thedocuments referred to in the letter of Messrs. Pal and Roywere executed on August 30, 1934. They are Ex. I,Ex. WWW, Ex. XXX and Ex. NN. The agreement recordingthe obligation of the remaining shareholders to pay thepurchase money of the shares out of the dividends to bedeclared is evidenced by Ex. IIII.

14. In 1940 Samsul Hasan instituted a suit in this Court against Md. Ibrahim, being suit No. 2285 of 1940, In respect to the firm of Hazi Kadirbux Hazirbux which was being wound up by Md. Ibrahim in terms of the agreement arrived at between the parties sometime in December 1939. In the said suit Samsul Hasan contended that the shares in Mousell and Co., Ltd. and Sasamusa Sugar Works belonged to the estate of Md. Ibrahim and that Nurul Hasan and Amir Hasan were mere benamdars. This suit was compromised and the firm of Hazi Kadirbux Hazirbux was declared dissolved by consent. Certain pleadingsand affidavits filed in the said Suit No. 2285 of 1940 and the terms of settlement in that suit have been tendered in evidence in this suit (Ex. QQQ 4, Ex. QQQ 2, Ex. L and Ex. H). After the institution of Suit No. 2285 of 1940, inter alia, for dissolution of the partnership firm of Hazi Kadirbux Hazirbux, a partnership firm was started by the sons of Md. Ibrahim under the name of Hazi Kadir Bux Md. Ibrahim on December 9, 1940. It appears from the betters exhibited in these proceedings that Sasamusa Sugar Works was doing well in business at that time and was in a prosperous condition. In early 1942 there was a proposal by Amir Hasan to transfer out of his total holding of 3360 shares 840 shares to each of his three brothers Nurul Hasan, Munir Hasan and Zahir Hasan. This, however, did not materialise. Other shareholders also attempted to divide the shares which would have led to a great increase in the number of sharenolders, if such a proposal materialised. Under the Articles each shareholder had one vote regardless of the number of his holding. It seems that this fact stood in the way of such transfer. In the same year Md. Ibrahim died on September 21, 1942. The death of Md. Ibrahim is followed by a number of litigations. Badrunnessa, daughter of Md. Ibrahim instituted Suit No. 472 of 1942 against the other co-sharers. In for suit she contended that the large block of 3360 shares of Sasamusa Sugar Works Ltd. belonged to the estate of Md. Ibrahim and that Amir Hasan was a benamdar. The next suit was started on August 31, 1944 by Abdus Samad, brother of Md. Ibrahim, against all the heirs of Md. Ibrahim, being Suit No. 1400 of 1944, in which it was contended that Nurul Hasan and Amir Hasan were only benamidars in respect to the shares in Mousell and Company Limited and Sasamusa Sugar Works Limited appearing in their respective names. On February 15, 1945 Amir Hasan gave notice of dissolution of the partnership firm of Hazi Kadirbux Md. Ibrahim, on the ground that Nurul Hasan, who was in control and management of the Calcutta branch and Munir Hasan, who was in control and management of the Kanpur branch, were guilty of misappropriation of partnership fund. On the following day Amir Hasan instituted Suit No. 260 of 1945 for dissolution of partnership, Receiver, accounts etc. On the same day a Notice of Motion was taken out for the appointment of Receiver. In February 1945 Amir Hasan purchased the two blocks of 1750 shares from Samsul Hasan and Mousell and Co., Ltd. On March 29, 1945 the present suit was instituted by Nurul Hasan.

15. Before I discuss the evidence tendered, it will be necessary to note the case made by the parties in the pleadings as to 3360 shares appearing in the name of the' defendant Amir Hasan. The plaintiffs case is that Sasamusa Sugar Works was started originally as a partnership which was subsequently converted into a Private Limited Company. There were five partners--Md. Ibrahim, Abdul Wahab, Md. Sulaiman, Samsul Hasan and Mousell and Co. Md. Ibrahim and Abdul Wahab had each 2/7th share and the remaining three partners had 1/7th share each. The capital contribution was according to the shares. Abdul Wahab and Mousell and Company paid their shares of capital, while the contributions of others were made out of the funds taken from Hazi Kadirbux Hazirbux, of which they were partners. When the partnership was converted into a private company, 2500 shares of Md. Ibrahim were taken partly in his own name and partly in the benami of his son Amir Hasan; that is, 100 shares in hisown name and 2400 in the benami of Amir Hasan. Subsequently when 2500 shares of Abdul Wahab and Brothers were allotted to the remaining shareholders, 960 shares were allotted to Amir Hasan. The ostensible allottee Amir Hasan had no beneficial interest therein; the beneficial interest was all along in the father Md. Ibrahim. The case made in the written statement of Amir Hasan is that in 1931 he was taken in as a partner of Sasamusa Sugar works and he paid the sum of Rs. 2,40,000/- to the partnership till as his capital contribution. This sum of Rs. 2,40,000/- is admitted to have been received by him from his father Md. Ibrahim as and by way of absolute gift and/or his advancement in life. Md. Ibrahim's contribution to the partnership was only Rs. 10,000/-. It is pleaded in paragraph 5 that Amir Hasan and Md. Ibrahim were, at all material times, jointly entitled to 2/7th share in the said partnership concern. When, therefore, the partnership was converted into a private company, the shares allotted to him were his own shares. In respect of the shares allotted he was not his father's benamdar. The further allotment of 960 shares was also his own and he was not the benamdar of his father in respect of these shares as well. He was all along in possession of these shares and Md. Ibrahim in his life time never claimed these shares to be his own.

16. The dispute raised in the pleadings of the respective parties is narrowed down to a very small compass. Both parties agreed that there was a partnership which was subsequently converted into a private company. It is the common case that share in the partnership was according to the capital contribution made by the respective partners. So also when the partnership was converted into a privatecompany, the shares were allotted according to the capital contribution. It is not also disputed that Rs. 2,40,000/-contributed by Amir Hasan for obtaining the shares in the company was paid to him by his father Md. Ibrahim. Then comes the point of dispute. The case of defendant Amir Hasan is that this sum was paid to him by Md. Ibrahim by way of absolute gift and/or by way of advancement in life and on payment of this sum of Rs. 2,40,000/-, he was taken in as a partner in the partnership firm of Sasamusa Sugar Works. This case of absolute gift of Rs. 2,40,000/-by way of advancement in life is disputed by the plaintiff and the other parties. It is also disputed that the defendant Amir Hasan was ever a partner. It is to be noted that the case made by the defendant Amir Hasan is that he with his father Md. Ibrahim was, at all material times, jointly entitled to 2/7th share. He does not claim to havea defined share in the partnership separately. He does notmake a case that his share was separate from that of his father and what that separate share was.

17. An interesting point of law has been raised by Mr. Sachin Chaudhury, learned counsel for Amir Hasan, which it is convenient at this stage to consider. Mr. Chaudhuri contended that there cannot be a benami of movables, nor is it possible to carry on business in benami. In any event, it is not possible to carry on business in copartnership with his own benamdar. In the instant case, both Md. Ibrahim and Amir Hasan were partners of Sasamusa Sugar Works, so that this fact alone rules out the plaintiffs contention that Amir Hasan was the benamdar of his father Md. Ibrahim.

18. The practice of acquiring and holding property in benami is very old and common both amongst theHindus and Mahomedans in India. Mayne in his treatise on Hindu Law, 11th Edition, makes the following observationat page 953:

'A benami transaction is one where one buys property in the name of another or gratuitously transfers his property to another, without indicating an intention to benefit the other. The benamidar, therefore, has no beneficial Interest in the property of business that stands in his name; he represents in fact the real owner and so far as their relative legal position is concerned, he is a mere trustee for him. In other words, a benami purchase or conveyance reads to a resulting trust in India, just as a purchase or transfer under similar circumstances leads to a resulting trust in England, The general rule and principle of the Indian law as to resulting trusts differs but little if at all, from the general rule of English law uponthe same subject.'

Venkatarama Ayyar, J. in delivering the judgment of theSupreme Court in the case of Sree Meenakshi Mills Ltd.v. Income-tax Commissioner, reported in 0044/1956 : [1956]1SCR691 , makes the following observation atpp. 722, 723 (of SCR): (at p. 66 of AIR):

'In this connection, it is necessary to note that theword 'benami' is used to denote two classes of transactionswhich differ from each other in their legal character andincidents. In one sense, it signifies a transaction which isreal, as for example when A sells properties to B butthe sale deed mentions X as, the purchaser. Here the saleitself is genuine, but the real purchaser is B, X being hisbenamdar. This is the class of transactions which is usually termed as benami. But the word 'benami' is alsooccasionally used, perhaps not quite accurately, to refer toa sham transaction, as for example, when A purports tosell his property to B without intending that his titleshould cease or pass to B. The fundamental differencebetween these two classes of transactions is that whereasin the former there is an operative transfer resulting inthe vesting of title in the transferee, in the latter there isbone such, the transferor continuing to retain the titlenotwithstanding the execution of the transfer deed. It isonly in the former class of cases that it would be necessary, when a dispute arises as to whether the person namedin the deed is the real transferee or B, to enquire intothe question as to who paid the consideration for thetransfer, X or B.'

Mr. Chaudhury's contention is that apart from the two above classes indicated by the Supreme Court there cannot be any other kind of benami transactions. The transactions called benami must be evidenced by a sale deed which ostensibly operates to transfer title to immovable property. For transferring title in movable property no saledeed is necessary and hence no question of benami arises in respect to moveables. It is true that the question of benami mostly arises in respect to transactions affecting immovable property. Historically, the earliest cases that came up to the highest Court for determination of the question of benami were cases affecting title to immovible property. See Dhurm Das Pandey v. Mst. Shama Soondery Debiah, 3 Moo Ind App 229 (PC), Gopeekrist Gossain v. Gungapersaud Gossain, 6 Moo Ind App 53 (PC), Nawab Azimul Ali Khan v. Hurdawaree Mull, 13 Moo lod App 395 (PC). In the first case reported in 3 Moo Ind App 229 (PC), the question involved was whether a particular zamindary property was a coparcenary property or the property of a co-parcener in whose, name the property was purchased and stood. In the second case reported in 6 Moo Ind App 53 (PC), the question involved was whether an immovable property purchased by amember of a Hindu coparcenary in the name of his son was a benami purchase for the joint family. In the third case reported in 13 Moo Ind App 395 (PC), the question involved was whether an immovable property purchased by a Mahomedan Nawab in the name of his son belonged to the Nawab or his son, the ostensible owner and whether the property was liable to be proceeded against in execution of a decree, obtained by the creditors of the son against the son in each case the subject matter of litigation was immovable property. Indeed, the properties litigated, upon in those days were immovable properties. Subsequent cases also mostly related to immovable properties. With the passage of time other kinds of property assumed importance more and more and disputes came to Court for adjudication in respect to properties other than zemindary or immovable properties as well, Inevitably some of these cases in which title was in dispute related to such kinds of movables as, money in bank, stocks and shares in Companies, In the Supreme Court cases referred to above Venkatarama Ayyar, I had in view the earlier decisions relating to immovable property. In those earlier decisions the principles of benami transactions have already been defined and formulated by the higest Courts. In the case of immovable property the question whether a transaction is a benami transaction arises when a conveyance is taken of an immovable property by a purchaser who pays the price, not in his own name but in the name of another or when a conveyance is given in favour of a purchaser without the receipt of any consideration. But the observation of the Supreme Court cannot be read as laying down a rule of law that there cannot be a benami transaction in respect to anything other than immovable property, because in such transactions no conveyance is imperative in law. Indeed the case itself considered by the Supreme Court did not relate to immovable property. The Supreme Court held that the transactions by intermediaries and subsidiaries of the company are benami transactions of the second category of the company assessed and as such the profits made on those transactions by the subsidiary companies must be treated as profits of the assessee company and as such liable to tax. The Supreme Court applies the rule of benami in the instant case which does not relate to immovable properties. This fact clearly negatives the contention of Mr. Chaudhuri that according to the Supreme Court in the cited case there cannot be any benami in respect to properties other than immovable properties. In the case of Guran Ditta; v. Ram Ditta, reported in 55 Ind App 235: (AIR 1928 PC 172), the dispute was in respect to certain deposit of his own money by a Hindu in a bank in the joint names of himself and his wife on the terms that the same was. payable to either or the survivor. The Judicial Committee applied the rule of benami transaction in determining the title to the money which is a movable property. The principles laid down in Kerwick v. Kerwick 47 Ind App, 275: (AIR 1921 PC 56), for determining whether the transaction was benami was applied in this case 47 lad App 275: (AIR 1921 PC 56) related to immovable property. The observation of Lord Atkinson made in 47 Ind App 275: (AIR 1921 IPC 56) is quoted by Lord Parmoor at p. 240 of the Report 55 IA (at p. 173 of AIR) and reads as follows:--

'The general principle of equity, applicable both in this country and in India, is that in the case of a voluntary conveyance of property by a grantor, without any declaration of trust, there is a resulting trust in favour of the grantor, unless it can be proved that an actual gift was intended. An exception has however, been made in English law, and a gift to a wife is presumed where money belonging to the husband is deposited at a bank in the frame of a wife, or where a deposit is made, in the joint names of both husband and wife.

This exception has not been admitted in Indian lawunder the different conditions which attach to family life, Where the social relationships are of an essentially different character. The principle to be applied has been stated in 47 Ind App 275: (AIR 1921 PC 56): The general rule and principle of the Indian law as to the resulting trusts differs, but little, if at all, from the general rule of English law upon the same subject, but in their Lordships' view it has been established by the decisions in the case of 6 Moo Ind App 53 (PC), and Uzbur Ali v. Bebee Ultaf Fatima, 13 Moo Ind App 232 (PC), that owing to the widespread and persistent practice which prevails amongst the natives of India, whether Mohamadan or Hindu, for owners of property, to make grants and transfers of it benami for no obvious reason or apparent purpose, without the slightest intention of vesting in the donee any beneficial interest in the property granted or transferred, as well as the usages which these natives have adopted and which have been protected by statute, no exception has ever been engrafted on the general law of India negativing the presumption of the resulting trust in favour of the person, providing the purchase-money, such as has, by the Courts of Chancery in the exercise of their equitable jurisdiction, been engrafted on the corresponding law in England in those cases where a husband or father pays the money and the purchase is taker in the name of a wife or child. In such a case there is, under the general law in India no presumption of an intended advancement as there is in England.'

In the case of Gur Narayan v. Sheolal Singh; reported in46 Ind App 1: (AIR 1918 PC 140) Ameer Ali, J. made thefollowing observation at p. 9 of the report (46 Ind App):(at p. 143 of AIR).

'The system of holding and acquiring property and even of carrying on business in names other than those of the real owners, usually called the benami system, is and has been a common practice in this country.'

The observation though obiter, shows that according to the learned Judge there can be benami of properties other than immovables. Even business can be carried on in benami.

19. The case of Dharwar Bank Ltd. v. Md. Hayat, reported in : AIR1931Bom269 was a case in which the title to ten shares of the plaintiff Bank was in controversy. The shares were purchased by the father in the name of his son. In this case also the principle of benami transaction was applied, though shares were recognised to be movable properties.

20. I, therefore, do not find any authority in support of the proposition that the law of benami is restricted in its application to immovable property only. In my judgment it is applicable generally to all kinds of properties including movable property. Nor is there either reason or authority in support of the contention that business cannot be carried on in benami with a third party. The share in the partnership is a property and the ostensible partner may very well be not the real partner but only a benamidar of the real partner. The question becomes a bit complicated and perhaps confusing, if in the partnership both the ostensible and real partners are partners carrying on business in co-partnership with there. Section 4 of thePartnership Act has been relied on by Mr. Chaudhuri in support of his argument that there cannot be a partnership of a person with his own benamidar. If in law the 'benamidar' has no independent existence, how can there be a partnership between a person and his own benamidar i.e., himself. It is therefore argued by Mr. Chaudhuri that Section 4 of the Partnership Act runs counter to such a partnership betweeh a man and his benamidar. This argument has some plausibility but nothing more than plausibility. It is not correct to say that the benamidar has no existence apart from the person whose benamidarhe is. Though the relationship cannot be equated to that of a trustee and cestul que trust, the law recognises the existence of the benamdar apart from the person whose benamdar he is. Vis-a-vis all the people except the owner, the benamdar has the legal title to the property, of which he is the ostensible owner. Benamdar has all the rights of the ostensible owner and he can institute suit in his own name and the defendant is not entitled to non-suit him on proof that he is nothing more than a benamdar. When two persons enter into a partnership, agreement, there is an agreement between two real persons even though one is the benamdar of the other. It satisfies all the conditions laid down in Section 4 of the Indian Partnership Act. It would be a good partnership in the eye of law. It is not necessapy to consider whether a third party having transaction with such a partnership can question the existence of such a partnership. Having regard to the accepted law that a benamdar can sue and be sued against. I am apt to think that the third, party cannot question the existence of partnership. Whether one of the partners holds the share, for the benefit of the other partners, is no concern of anybody else. In determining the relationship between the partners one of which is the benamdar of the other, and in adjusting their rights inter se, I do not find any reason why the rules regarding benami transaction cannot be made applicable, in my judgment there is nothing inconsistent in this. If law recognises that a person is entitled to carry on business not for his own benefit but for the benefit of somebody else or in other words as benamdar of others, I do not see why he cannot be the benamdar of his co-partner, i.e., bold his share not for himself but for his co-partner. In the instant case the defendant Amir Hasan makes a case in his pleading that he and his father, Md. Ibrahim were jointly entitled to a 2/7th share. It suggests that the father and son constituted a single entity having 2/7th share jointly. This makes it easier to apply the rule of benami in the instant case. In my judgment there is nothing in the law of partnership to prevent the plaintiff from making a case that apart from having a share in his own name Md. Ibrahim was holding a further share in the partnership in the benami of his son, Amir Hasan. I shouldhowever note that it was never the intention of the partners right from its inception to carry on the business in co-partnership. It was the intention of the partners that the business would be carried on by them as members of a private company.

(Here his Lordship discussed the evidence (rest of para 20 and paras 21 to 42) and proceeded:)

I have considered the evidence as a whole and I am unable to accept the case of Amir Hasan that Md. Ibrahim made a gift of Rs. 2,40,000/- to Amir Hasan to enable him to acquire a share in the partnership firm of Sasamusa Sugar Works.

43. On the evidence tendered can I record a finding that Md. Ibrahim held the shares in Sasamusa Sugar Works Ltd. in the benami of his son Amir Hasan? A benami transaction is one when one buys property in the name of another, or gratuitously transfers his property to another without indicating an intention to benefit the person in whose name the property is purchased or to whom the property is transferred. When the person in whose name the property is purchased is an outsider, this intention not to benefit is presumed in law. When, however, property is purchased in the name of a near relation, as or example, wife or son, the position is not so clear. In England in such cases there is a presumption of advancement and it is presumed that the nominal owner was intended to have beneficial interest in the property as well. But there is no such presumption in India and a Hindu or a Mahomedan purchasing property in the name of wife or son is never presumed to intend that the wife or the son would have beneficial interest in the property. In India he is held to be a mere benamdar having no beneficial interest in the property. A large number of cases has been cited as to the benami but I do not think it necessaryto deal with them.

44. Though there is no such presumption that the person in whose name property is purchased would be intended to have beneficial interest in the property, evidence nevertheless can be adduced to prove that the intention was otherwise. Evidence may be adduced that theperson advancing the money to purchase a property in the name of the wife or son intended the wife or son not merely to be the nominal owner but the beneficial owner as well. So also, evidence may be adduced that the transfer to the wife or son though without monetary consideration was intended to be a real transfer whereby the transferee was intended to be the beneficial owner of theproperty transferred. Before, however, examining the evidence tendered to find out whether such intention on thepart of Md. Ibrahim is discernible from the facts of the instant case, it is necessary to consider a case on which very great reliance was placed by learned counsel appearing for Amir Hasan. In the case of Protimarani v. Patitpaban, decided recently by a Division Bench of this Court and reported in 60 Cal WN 886 the question involved was whether a property appearing in the name of the wife was the property purchased by the husband in the benami of his wife. The Court held that the burden of proof of benami lies on the person setting up a case of benami and on the evidence tendered benami was not established. Then came the observation at p. 891 of the report on which reliance is placed:--

'In view of the conclusion reached by us it is not necessary for us at this stage to consider whether the presumption as to advancement by a husband in favour of the wife or of the parents in favour of a child as applicable to Indian conditions requires further consideration. I have had an occasion in the past to indicate that when the question comes up before the highest tribunal in india the raising of a presumption in favour of benami when a property stands in the name of a wife require reconsideration and re-statement. In my view there is no reason why the rule of advancement as in vogue in England should not be applied to Indian conditions particularly in the changed and changing circumstances of the Indian society.'

The change their Lordships had in mind is not stated. I imagine, however, that the change referred to is the shift in social habit and outlook to that of English society. The law of presumption as to advancement by a husband in favour of the wife or of the parents in favour of the children has not been reconsidered by the Supreme Court and the expression of the opinion quoted above should be taken as nothing more than an expression of opinion on the part of a learned Judge that the present position of law is unsatisfactory and should be altered. The law as now applied by the courts in India is that there is no presumption of advancement in favour of the wife and son and if it is proved that the purchase money is paid by one different from the person whose name appears as purchaser in the conveyance, the person paying the purchase money is considered in faw to be the beneficial owner, unless the contrary is proved. This is the law laid down in a long string of decisions of the various High Courts, the Judicial Committee and the Supreme Court. This is the law which must be applied by the courts in India. In the instant case the consideration money for the purchase of shares has been proved to have been paid by Md. Ibrahim. Indeed this is admitted by Amir Hasan. That being so, unless the contrary is proved, Md. Ibrahim must be held to be the beneficial owner of the shares and Amir Hasan to be nothing more than the benamidar. The quantum of evidence necessary to prove that the father or husband intended to benefit the wife or son in whose name the property is purchased, would depend on the facts of each case. It is useless to look to other cases in which the Courts have held either in favour of or against benami on the facts of the respective cases. In my judgment, no useful purpose would be served by considering in detail the various cases cited, some of which have been noticed before. The evidence tendered in the instant case has been examined before. The evidence tendered does not indicate that Md. Ibrahim intended that the beneficial interest in the shares should be in the registered holder Amir Hasan. Md. Ibrahim retained full control of his shares and pursuant to the desire or Md. Ibrahim, Amir Hasan expressed his intention to transfer the shares to his brothers, so that Amir Hasan, would not be the exclusive holder of the entire lot of shares. The evidence tendered, far from indicating the intention of Md. Ibrahim to the contrary, indicates that he was the beneficial owner of the shares appearing in the name of his son Amir Hasan. His position in the company and his conduct vis-a-vis the company and other share-holders is consistent with the case that he was not a mere nominal holder ot 100 shares, but the biggest shareholder and as such his position in the company was unequalled. This fact cannot be ignored. On the evidence, I hold that the lot of 2400 and 960 shares originally appearing in the name of Amir Hasan belonged to Md. Ibrahim and Amir Hasan was nothing more than a benamdar of Md. Ibrahim in respect to those shares. After Md. Ibrahim's death, these shares are divisible amongst the heirs of Md. Ibrahim according to the law of inheritance. The estate of Md. Ibrahim is beneficially entitled to the shares and also all dividends paid and payable in respect to these shares.

45. The plaintiff has claimed that not only the large block of 3360 shares along with all dividends paid thereon belongs to the estate of Md. Ibrahim, but the remuneration paid to Amir Hasan as working Director is also to be so included in the estate of Md. Ibrahim and as such Is divisible amongst the heirs of Md. Ibrahim in this partitionproceedings. Amir Hasan has been a Director right from the beginning, though initially he was not getting remuneration for his services. On March 28, 1934 the Board of Directors by a resolution unanimously passed sanctioned the sum of Rs. 3500/- as compensation in settlement of his claim for services rendered from 1932 upto date. There is no clear evidence as to what remuneration he was getting thereafter, ft appears, however, that subsequently he was functioning as a working Director, though it is not clear from the evidence from what exact date he was functioning as such and what remuneration he was getting as such working Director. Article 90 provides only for the remuneration of Md. Ibrahim, Abdul Wahab, Md. Sulaiman and Samsul Hasan so long as they functioned as working Directors. What remuneration any other working Director would get has not been provided for in the Articles. It appears, however, from the minutes of the meeting of the Board of Directors held on January 18, 1944 that the remuneration or salaries of working Directors and Managing Agents was increased as under:

With effect from 1st November 1941 to 31st October 1942. . .Amir Hasan. . .3000/- Samsul Hasan. . .1500/- Md. Sulaiman. . .1500/- Mousell & Co., Managing Agents. . .1500/- (Rs. 18,000/- per annum)With effect from 1st November 1942 onwards:. . .Amir Hasan. . .4000/- Others. . .2000/-

This resolution was passed in 1944 and the remuneration has been increased retrospectively. Amir Hasan's remuneration has been determined on the basis that he was a Working Director on 1st November 1941. The resolution suggests that he was a Working Director from before. In November 1941 Md. Ibrahim was alive. The letter dated January 20, 1942 also indicates that Amir Hasan was a Working Director already and he was anxious that his position as Working Director may not be jeopardised by reason of the transfer of 75 per cent of his holding to his three brothers. There is clear evidence that Amir Hasan was getting a substantial remuneration of Rs. 3000/- per month from 1st November, 1941 raised to Rs. 4000/- from 1st November, 1942. This remuneration was free from income-tax. There is no clear evidence as to whether prior to November, 1941 Amir Hasan was a Working Director and if so what remuneration he was getting. Be that as it may, it is contended on behalf of the plaintiff that in law the remuneration he was getting from the company as a Working Director is also included in the estate of Md. Ibrahim and as such liable to be partitioned amongst the heirs of Md. Ibrahim.

46. The argument in support of this contention is that the benamdar is in the position of a trustee in English law. The Judicial Committee has pointed out in the case of Mr. Bilash Kunwar v. Desraj, reported in 42 Ind App 202 : (AIR 1915 PC 98), that there is a great resemblance between a benami transaction and a resulting trust. See also the observation of the Judicial Committee in Gopi Kristo Gossain's case reported in 6 Moo Ind App 53 (PC), noticed before. That the principle laid down by the Court of Equity applicable to trust will also apply to benami transactions has been laid down by the Judicial Committee in such early cases as noticed above. In Gopi Kristo's case reported in 6 Moo Ind App 53 (PC), the Judicial Committee concludes with the following observation at p. 86:

'Their Lordships will declare that the purchase was a benami purchase and will also declare the party in whose name it was made was a trustee for the father and that the property in question was part of the father's estate at the time of his death.'

In the speech of Herschell in Bray v. Ford, (1896) AC 44 at page 55, we find the following passage :

'It is an inflexible rule of the Court of Equity that a person in a fiduciary position is not, unless otherwise expressly provided, entitled to make a profit; he is not entitled to put himself in a position where his interest and duty conflict.'

The same rule has been laid down in Section 88 of the Indian Trusts Act which reads as follows:

'Where a trustee, executor, partner, agent, director of a company, legal adviser or other person bound in a fiduciary character to protect the interests of another person, by availing himself of his character, gains for himself any pecuniary advantage, or where any person so bound enters into any dealings under circumstances in which his own interests are, or may be, adverse to those of such other persons and thereby gains for himself a pecuniary advantage, he must hold for the benefit of such other person the advantage so gained,'

The following two passages from Halsbury's Laws of 'England, 3rd Edition, Vol. 14 at pages 627 and 628 may 'also be quoted :

1161. 'From the rule that a person shall not be allowed to put himself in a position where his interest and duty conflict, it follows that a person in a fiduciary position is not allowed, unless otherwise expressly provided, to make a profit out of his trust This rule obliges him to account for any advantages which he has obtained by reason of his ownership of the trust property. Benefits acquired by him as the owner of the property cannot be retained, but must be surrendered for the advantage of those, beneficially interested; and so, if the trustee retains trust money in his own hands, he is charged with interest; and if he mixes it with his own money, and employs it in his business, the cestui que trust is entitled to take a proportionate share of the profits of the business instead of interest.

1162. The rule has also been inflexibly established that, in the absence of a remuneration clause, a trustee shall have no allowance for his time and care; though he is entitled to his expenses, and has a first charge for these on the trust estate.'

Reliance was placed on the case of Aberdeen Town Council v. Aberdeen University, reported in (1877) 2 AC 544, where it is laid down that a trustee acquiring a benefit as ostensible owner of the trust property cannot retain the benefit but must surrender the benefits to the beneficiaries of the trust. Mr. Mukherjee strongly relied on two recent English decisions to be considered now. The first case cited is in Re Macadam, Dallow v. Codd, reported in (1946) Ch. 73. In this case the trustee in exercise of the discretion under the trust deed became a director of a company and the question raised was whether the trustee was entitled to retain the director's fees received from the company. It was contended on behalf of the trustee that the trustee not having a majority of the shares could not have fixed the remuneration against the wishes of the other shareholdersconstituting the majority and that the remuneration received as director was not profit received from the trust estate. Both the contentions of the trustee Directors were overruled, and it was held that although the remuneration was for services as Director of the company, the opportunity to obtain that remuneration was gained as a result of discretion vested in the trustee and that the trustee was therefore, liable to account to the trust estate of remuneration received by them as Directors remuneration. The case of in re Dover Coalfield Extension, Ltd., reoorted in (1907) 2 Ch 76, was considered in Macadam's case, 1946 Ch 73. In Dover Coalfield case Warrington, J. held that the Director was entitled to retain his remuneration and not surrender it to the beneficiaries of the trust. In appeal the decision of Warrington, J. was affirmed. The learned Judge in Macadam's case, 1946 Ch 73, considered the judgment of Warrington, J. and that of Farwell, L J. in Dover Company's case, (1907) 2 Ch 76 and distinguished the same at pp. 78 and 79 of the report (1946) Ch 73:

'Warrington, J. held (and his decision was affirmed by the Court of Appeal) that the remuneration was received by Mr. Cousins for work done by him as director of the Kent Corporation and was not profit received by him for the use of the Dover Company's shares in the Kent Corporation and that he was, therefore, under no liability to account for the remuneration to the liquidator of the Dover Company. In that case, in re Francis was not cited. Perhaps it is not surprising as the facts were readily distinguishable. In that case Warrington, J. said: Does a director of one company who becomes a director of another company, and as such is required to hold a qualification, obtain his remuneration as a director by the use of the shares which qualify him as a director? ! do not think he does. I think it may be taken to be settled, at any rate so far as I am concerned, by Re New British Iron Co., ex parte Beckwith, (1898) 1 Ch 324, that the right to the director's remuneration does not arise from the possession of the qualification shares. A director is entitled to his remuneration by reason of the contract of service between him and the company for which he is acting as director'. Then later on he continues: 'It is perfectly true that he became a director in the interests of his company, and took these shares, in order to qualify him as director, but it seems to me that he obtained his remuneration not by the use of the shares but by acting as a director of the corporation.' Then he says later: 'It seems to me, therefore, that if I were to direct any account at all I must direct it on the footing that Cousins was entitled to fair remuneration for the amount of work which he did and would be entitled to be allowed against his director's remuneration such remuneration.' Finally he said: 'It seems to me, therefore, first, that the remuneration received is not profit which is derived by the use at qualification shares that is to say, that, assuming it to be profit, it is not derived by the use of the shares; and, secondly, that it is not profit within the principle because Cousins has given for it that which he and the corporation have determined to be a fair quid pro quo, and it would be impossible for the court to go behind that and say a fair remuneration would be some other sum.' It seems to me that that decision does depend on the fact that, in the view of the learned Judge, first, the remuneration was remuneration for services to the Kent corporation, and, secondly, it was a fair inference from the circum-stances that the Dover company had agreed to his receiving it because they had agreed to his becoming, and requested him to become, a director of the Kent corporation. That was, I think, clearly the view of the Court of Appeal. I do not propose to read the judgment in full I think it will be sufficient if I read the judgment of Farwell, L J.: The claim is that because these respondents. hold their qualification shares as trustees for the Dover company, of which company they happen to be also directors, they are accountable to that company for money paid for work done and services rendered by them as directors of the Kent company. They did not work: they are entitled to the money. The answer to the suggestion that they could not have earned the money unless they had been qualified to act as directors by shares belonging to the Dover company is that they became directors at the request of that company.' It seems to me that that case was very different from the present case, where they exercised a discretion and became directors at nobody's request, so far as there is any evidence that I have seen, other than their own. I am not at ail saying that I accept the view that they may not have been the most suitable persons but they were the only persons concerned in making the appointment'

The point of distinction seems to be that in Dover's case, (1907) 2 Ch 76, the trustee became a Director at the request of the beneficiary, whereas in the Macadam's case, 1946 Ch 73, the trustee became a Director not at the request of the beneficiary but in exercise of his own discretion.

47. The next case cited and relied on by Mr. Mukherjl is the case of In re: Gee, Wood v. Staples, reported in 1948, Ch 284. After dealing with all the case laws on the subject, Harman, J. in delivering the judgment makes the following observation at p. 295 of the Report:

'I conclude from this review that a trustee who either uses a power vested in him as such to obtain a benefit (as in 1946 Ch 73) or who (as in Williams v. Barton (1927) 2 Ch 9) procures his co-trustees to give him, or those associated with him, remunerative employment must account for the benefit obtained. Further, it appears to me that a trustee who has the power, by the use of trust votes, to control his own appointment to a remunerative position, and refrains from using them with the result that he is elected to the position of profit, would also be accountable. On the other hand, it appears not to be the law that every man who becomes a trustee holding as such shares in a limited company is made ipso facto accountable for remuneration received from that company independently of any use by him of the trust holding, whether by voting or refraining from so doing. For instance, A who holds the majority of the shares in a limited company becomes the trustee of the estate of B, a holder of a minority interest; this cannot. I think, disentitle A to use his own shares to procure his appointment as an officer of the company, nor compel him to disgorge the remuneration he so receives, for he cannot be disentitled to the use of his own voting powers, nor could the use of the trust votes in a contrary sense present the majority prevailing.

Many other instances could be given of a similar Kind. Of these, (1907) 2 Ch 76, is really one. There the trusteesdid not earn their fees by virtue of the trust shares, though no doubt the holding of those shares was a qualification necessary for the continued earning of the fees. In iso far as Warrington, J. goes further than this, as he seems to do by suggesting that remuneration paid by a company could not be a 'profit', it being a mere wage equivalent in value to the work done for it, I feel he goes too far. Certainly this view was not taken in 1946 Ch 73. It would gravely encroach upon the principle which Cohen, J. in that case and Russell, J. in Williams v. Barton felt to be so important.'

Shortly thereafter, the point again came up for consideration in the case, In re: Llewellin's Will Trusts, Griffiths v. Wilcox, reported in 1949 Ch 225. It was held that the trustee Director was entitled to retain the Director's remuneration. In this case the judgment in In re: Macadam's case 1946 Ch. 73 as also in 1948 Ch. 284 were considered. At p. 227 Jenkins J. makes the following observation :

'The general principle of equity is plain. It is that a trustee may not profit from his trust. Thus, if a trustee of shares in a company, by virtue of the control over the company which those shares give him, gets himself appointed to the post of director or managing director, then, although his remuneration is not paid to him in respect of the trust holding but in respect of the work he does as director or managing director, yet, because he gains that emolument by virtue of the trust holding he is not entitled to retain the remuneration for his own benefit. That principle is well-settled, and I have been referred to two recent cases in which it has been discussed, namely, 1946 Ch 73 and 1948 Ch 284.

Now far be it from me to say anything purporting to trench upon that well-established and on the whole salutary rule. For the purposes of this judgment I wholly accept the position that, unless there is anything in the testator's will entitling the trustees to retain any remuneration which they may receive as director or managing director of this Company, the rule must apply; but there is no rule of equity which says that a testator, if so minded, may not provide that his trustees can hold salaried office in companies which the testator's estate controls and receive the emoluments attached to those offices without liability to account. A testator is perfectly at liberty to include such a provision in his will if he thinks fit, and, indeed, as a matter of business it is often a very sensible provision to make.'

On a construction of the provisions of the will and the Articles of the company the learned Judge held that the trustees, notwithstanding that they were trustees shall have power to make suth arrangement as they think fit for their appointment as director or managing director, and those being under the terms of the Articles, remunerated or potentially remunerated offices, the arrangements which they are empowered to make include arrangement as to the remuneration which they are entitled to receive.

48. There is no inflexible rule of law in my judgment that a director of a company is not entitled to retain his remuneration as director for services rendered to the company as such director merely because he had no beneficial interest in the holding--he was only holding the shares as the trustee of a trust. Receiving remuneration as director of the company, cannot properly be considered as making a profit out of trust. I prefer the view expressed by Warrington J. in Dover's case, (1907) 2 Ch 76 that fees paid to the director is not profit. The contrary view expressed by Harman J. in the case of In re: Gee, 1948 Ch. 284 is not acceptable to me. I do not subscribe to the view that the remuneration of the director or managing Director if not paid would have swelled the dividend and as such should be treated as profit. With equal plausibility it can be argued that wages paid to the workers, should be considered as profit inasmuch as it not paid it would have increased the dividend. The remuneration paid to the director or managing director must be treated as cost of management, different from wages, interest and profit. To mix them up would be against a. accepted principles. I do not find any conflict of interest and duty if the trustee of shares offers his services to the company for remuneration. The rule that the director cannot retain his remuneration as director is founded on theunwarranted assumption that there is a conflict of interest between a shareholder and the director. In my judgment the interest of the shareholder and the director of the company is identical and is expected to be identical. The Directors are the elected representative of the shareholders to look to their interest and manage the affairs of the company efficiently. Where then is the scope for conflict between the directors and shareholders? The fact that the directors are paid a remuneration by the company does not necessarily mean a conflict of interest between the director and shareholders of the company. In my judgment there is no such conflict of interest which would make applicable the equitable rule laid down by Herschell L C, in 1896 A.C. 44 quoted above in cases when the trustee of shares accepts a directorship of the company for remuneration.

49. The law as set out in 1896 AC 44 and in Sec. 88 of the Indian Trusts Act is that a person in fiduciary position is not entitled to make a profit--'unless otherwise expressly provided.' In the case of express trust one has to look to the Deed of Trust to find out whether it has been expressly provided or not. In other cases where there is no document creating a trust, as in the caseof resulting trust, one has to look to the surrounding circumstances to find out whether there is such a provision What are the facts in the instant case? There is a provision for working director in the Articles and though the remuneration of the working director other than the working directors named in the Articles has not been determined yet, it is clear that the subsequent working directorswere intended to be remunerated and the amount was to be fixed in the usual way by the company. Md. Ibrahim took Amir Hasan as a director right from the beginning. In 1934 Amir Hasan was allowed a remuneration for his past services from 1932. It is, however, suggested by Mr. Mukherji that this remuneration was sanctioned to cover the small gap in share capital account. This evidence is equivocal and can be left out of account. Amir Hasan appears to have been a working director from November, 1941 as the 1944 resolution is apt to suggest. The letter of January 20, 1942 written by Mousell and Co. Ltd., to all the directors about the transference of shares by Amir Hasan to his brothers, expressly provides that the position of Amir Hasan as working director must not be leopardised by reason of the transfer of shares by Amir Hasan to his brothers, I have not the least doubt that it was the view of Md. Ibrahim as well. Considering all the evidence on record, I have no doubt in my mind that even though Md. Ibrahim purchased the 2400 shares in the benami of his son Amir Hasan, he intended that Amir Hasan and not his other sons would step in his shoes and act as a working director of the company. As a working director he would be entitled to a remuneration to be determined in a meeting of the Board of Directors and/or the shareholders. Even if it is proved that Amir Hasan procured his own appointment as a working director, Md. Ibrahim's intention was that Amir Hasan would be a Working director to be appointed in a potentially remunerated office in the company. There is thus the clear intention of the settlor-cum-beneficiary that Amir Rasan would be a working director in a potentially remunerative office. In my judgment, the rule laid down in 1896 AC 44 and embodied in S. 88 of the Indian Trusts Act does not stand in the way of Amir Hasan retaining the director's fee for his own benefit. The instant case is a stronger case than the case of 'Re Llewelyn Will' (1949) 1 All ER 487 in which the director was allowed to retain his remuneration.

50. It should not also be forgotten that on thedeath of Mohammed Ibrahim, Amir Hasan as Ibrahim'sheir became entitled to a portion of the shares, on hisown right. So far as these shares he was both the nominal and beneficial owner. By virtue of these shares and on his right as the owner of these shares, he would be en titled to be elected a working director and determine the remuneration of the working director. The resolution including the remuneration was passed in 1944 long after the death of Md. Ibrahim. On this ground also the rule laid down by Herschell L. C. is therefore not applicable in any event in respect of all acts done by Amir Hasan after the death of his father Md. Ibrahim. For reasons set out above, I am unable to hold that the remuneration received by Amir Hasan as working director cannot be retained by him. In my judgment, the remuneration paid or to be paid to Amir Hasan as working director cannot be treatedas part of the estate of Md. Ibrahim to be divisibleamongst the heirs of Md. Ibrahim in this partition proceedings.

51. Coming now to the two lots of 1750 shares of Shamsul Hasan and Mousell and Co. Ltd. purchased by Amir Hasan in February 1945, these two lots of shares were admittedly purchased by Amir Hasan in his own name and he paid Rs. 250000/- to each of the vendors. The plaintiff's case is that the consideration money was paid by Amir Hasan out of the money belonging to the estate of Md. Ibrahim. The burden of proof of this fact Is on the plaintiff. No positive evidence has been adduced in support of the case that the money paid as consideration for the purchase of these shares belonged to the estate of Md. Ibrahim. Mr. I. P. Mukherjee's argument on this part of his case is this; Amir Hasan has admitted that apart from working as Sasamusa Sugar Works, he has done no other job and that he did not make any earning otherwise. The consideration money therefore must have been paid out of the incbme of Sasamusa Sugar Works either as dividends on shares or as directors remuneration. This income, viz., the dividends and director's remuneration in law belonged to the estate of Mohammed Ibrahim and Amir Hasan had no beneficial interest therein even though he had control over it. The inevitable conclusion is that these two lots of shares must have been purchased with the money belonging to the estate of Md. Ibrahim. This is the plaintiff's case in respect to the two lots of 1750 shares.

52. I have held that though dividends on the shares numbering 3360 belonged to the estate of Md. Ibrahim, the remuneration paid to Amir Hasan as working director did not belong to the estate of Md. Ibrahim but belonged to Amir Hasan personally. It is therefore proved that in any event from November 1941 Amir Hasan had substantial income of his own at the rate of Rs. 3000/- raised to Rs. 4000/- per month after a year. This income was free of income-tax. It is therefore not correct to say that in February 1945 when the shares were purchased, Amir Hasan had no money of his own. Amir Hasan's further case isthat part of the consideration money be paid by borrowing. In support of this case of borrowing, the Pass Book of Central Bank of India, Gorakhpur Branch, has been tendered. It shows in December 1944, an account was opened with an opening overdraft balance of Rs. 2,00,000/-in cross-examination, it was suggested that this overdraft has been taken on the security of 3360 shares held by Amir Hasan as Benamdar of Md. Ibrahim. Amir Hasan denied the suggestion and stated that the overdraft was granted without any security initially. The evidence is not very satisfactory but then the plaintiff could have proved by calling the bank to prove what security was furnished by Amir Hasan. It must not be forgotten that the onus of proving that the title in the shares was in the estate of Md. Ibrahim was on the plaintiff. On the evidence it is impossible to record a finding that at the date of purchase of the 2 lots of shares in February 1945, Amir Hasan had no money of his own. Nor is it possible for me to reject the evidence of Amir Hasan that shortly before the purchase he borrowed money from the bank on overdraft Which money was partly utilised in purchasing shares in 1945. It must, therefore, be held that the plaintiff has tailed to prove that Amir Hasan, who purchased two lots of 1750 shares each in February 1945, was only the ostensible owner, the beneficial ownership being in the estate of his father Md. Ibrahim.

53. The next question left for consideration is the transfer of 333 shares by Amir Hasan to his wife, Sugra Begum. The case of Amir Hasan and Sugra Begum is that Sugra Begum was transferee for value without notice. Sugra Begum has not tendered evidence denying knowledge of benami. Even if the transfer is for value paid by her to her husband, the title of the real owner is not displaced unless it is proved that Sugra Begum had no notice of benami. Amir Hasan has stated that he received consideration for the transfer. Even if this evidence is accepted, very weak as the evidence is, Sugra Begum has not been able to establish that she had no knowledge that her husband held the share in the benami. Sugra Begum's case has not been established. On the facts proved, the probability is that Sugra Begum must have known that her husband was only a Benamdar and in the absence of her evidence denying knowledge, I am unable to record a finding that she was a bona fide transferee for value without knowledge of the defect of Amir Hasan's title in the shares. Sugra Begum's case has not been established. Having regard to my finding that the two lots of 1750 shares belonged to Amir Hasan and the fact that Amir Hasan has admitted that she received consideration from Sugra Begum, 333 shares may be allotted to Sugra Begum out of the shares in which title of Amir Hasan has been declared.

54. The parties are Mohamedans in faith. But they constituted that group of Mohamedans Khojas and Kubabi Memon who in matters of inheritance and succession were governed by the customs of their own and not by the rule of Mohamedan law. According to such custom, the devolution of property by way of inheritance was governed by Hindu Law. In 1937, the Shariat Act was passed whereby Muslim personal law has been made applicable inter alia to the above group of Mohamedans, superseding the customary law by which they were governed previously. Mahomedan law will, therefore, determine the share to which the parties are entitled to as heirs of Mohamsd Ibrahim and there would be declaration accordingly. During the pendency of this suit, Mssammat Kamarunnessa Bibi has transferred her share to Mussammat Sugra Begumand Mussammat Sugra Begum has already been substituted in place and stead of Kamarunnessa Begum. Share of Mussamat Kamarunnessa Begum is to be allotted to Mussa-mat Sugra Begum. The share of the parties in the estate of Md. Ibrahim are set out hereunder:--

Plaintiff Nurul Hasan. . . .14/80Defendant Amir Hasan. . . .14/80Defendant Munir Hasan. . . .14/80Defendant Zahir Hasan. . . .14/80Mussammat Khadija. . . .10/80Sugra Begum. . . .7/80Badrunnessa Bibi. . . .7/80

55. There is no dispute that the shares of the parties In the Palace Court property set out in part II of the Schedule, i.e., Mohammed Ibrahim had eight annas share and Samsul Hasan and E. Jacob each having four annas share. Mohamed Ibrahim's shares in the Palace Court is to be divided amongst his heirs in shares indicated above. Properties set out in part 3 are properties in which Mohamed Ibrahim is stated in the plaint to have an undivided share jointly with Mohamed Sulaiman, Mohamed Siddique and Samsul Hasan. What is the quantu'm of share to which Md. Ibrahim and/or his estate is entitled has not been stated. Shamsul Hasan in his written statement has pleaded that he is entitled to one fourth share in the properties set out in Part IIIA. There is nothing else in the pleadings fifed as of record. Except one item in Part III(A) being premises No. 34 Harinbari Lane all other properties set out in Part III(A), (B) and (C) of the schedule all are situate outside this state and outside the jurisdiction of this Court. There is not sufficient evidence to enable me to declare the shares in these properties. Nor in my judgment is it convenient to effect a partition of these mostly outside properties in this partition proceeding. I direct therefore that all these properties set out in III(A) (B) (C) and (D) of the schedule be left out of this partition proceedings and there will be an order accordingly.

56. In respect of the properties set out in part IV, viz. the shares in Sasamusa, Md. Ibrahim is declared to have 3360 shares appearing in the name of Amir Hasan. The remaining shares amounting to 1750 and 1750 must be declared to belong to Amir Hasan out of which 333 will have to be allotted to Sugra Begum.

57. For reasons given above, there would be a decree In terms of prayer (a) but limited to 3360 shares with ell dividends but excluding the remuneration received by Amir Hasan as' working director. There would be a decree fn terms of prayer (b), (c) and (d). I appoint Mr. M. Masud Barrister-at-law as Commissioner of Partition and Special Referee to work out this decree, i.e. make necessary enquiries, take necessary accounts and make allotments in severally. He is directed to keep the proceedings for partition of the Palace Court at 1 Kyd Street separate from the partition of the remaining estate of Mohamed Ibrahim. We is also directed to exclude and not to partition properties set out in Part IIIA, B, C, and D of the schedule. In other words, there would be two partition proceedings: (1) one in respect to the properties belonging exclusively to Mohamed Ibrahim, (2) the second with respect to the partition of Palace Court. Return and/or Report is directed to be filed within a year from date.

58. The parties will bear their own costs upto date.Subsequent costs as in a partition proceedings. Certifiedfor 2 Counsel.


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