TMI Blog1961 (10) TMI 84X X X X Extracts X X X X X X X X Extracts X X X X ..... as Kalakkad Pannayar family in Tirunelveli District. The family was doing Commission agency business in petrol, kerosene and crude oil. It had secured agency rights from the Burmah-Shell Company. The members of the family became heavily indebted by about June, 1936, and as a result there was a pressure from their creditors. In order to meet the said pressure a deed of composition was executed (EX. B. 2) on July 8, 1936. As a result of this composition 56 out of the creditors of the family agreed to a scheme for settlement of their debts. Under this deed defendant 7 was constituted as a trustee and as such was empowered to take over the assets of the debtors, sell them to the best advantage and distribute the proceeds rateably amongst all credit. . It appears that before the scheme under the competition could be successfully or effectively worked out one of the creditors, Ayyah Ayyar, filed an insolvency petition, No. 26 of 1936, in the Sub-Court at Tirunelveli on July 30, 1936. By this petition the creditor wanted defendants 1 to 6 to be r adjudged insolvent. During the pendency of these a proceedings, on August 26, 1936 defendants 1 to ff executed a deed of trust, (Ex.B.7); by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in (Civil Appeal No. 62 of 1959. Defendant 7 who was one of the trustees, was a creditor of the trustees to the extent of ₹ 6,000. His daughter-in-law was a creditor to the extent of ₹ 2,000\-. In satisfaction of 50% of the debt due to these two persons the trustees conveyed schedule III properties to defendants 8, 9 and 10 who are the undivided sons of defendant 7 (Ex. B. 8). This document executed on December 16, 1936, for ₹ 4,000. The purchasers in their turn sold the properties to defendant ]7 on May 30, 1947. Defendant 12 is the step-brother of the trustee Veerabahu Pillai and he purchased schedule V properties on November 7, 1941, for ₹ 2,000 (Ex. B-90). Defendant 13 who is the brother of defendant 12 purchased schedule II properties for ₹ 15,000 on August 29, 1937, (Ex. B. 37). B. 37). This document was executed only by two out of the three trustees. Another sale deed was passed in favour of defendant 13 in respect of schedule properties (Ex. B. 79) on February, 1942, for ₹ 2,000. Defendant 16 who is the son-in-law of defendant 13 purchased two sets of properties schedule VII and schedule VII-A on May 7, 1943, and June 4, 1943, (E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n December 12, 1947, with the result that the suit filed by defendants 1 to 6 O.S. No. 30 of 1943, was dismissed with costs throughout. Whilst the proceedings in the said three appeals were pending in the High Court and before defendants 1 to 6 were allowed to withdraw the litigation the present suit was filed on October 29, 1947, by the three plaintiff who are the creditors of defendants 1 to 6 and who purported to act on behalf of the general body of creditors. Leave was granted to the plaintiff under o. 1, r. 8 and the suit has, therefore, been conducted as a representative suit. In the suit the plaintiffs ask for an account from defendant 7 and defendants 11 to 13 who are the legal representatives of Veerabahu Pillai on the allegation that the trustee have been guilty of wilful default. They also claim a declaration that the properties described in schedules I to VII-A and VIII are still impressed with the trust and they ask for an order for the administration of the trust by removing defendant 7 and appointing an administrator to realise the amount due from the trustees on such account and to recover possession of the properties mentioned in the said schedule, re-call them ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... defendants 18 to 24. Appeal A. . No. 731 of 1949 was filed by defendants 12, 13 and 16; and Appeal A. S. No. '21 of 1950 by defendants 8, 9, 10 and 17. Ill substance the High Court has confirmed the decree passed by the trial court and dismissed all the three appeals. The High Court has, however, modified the trial court`s decree in regard to the interest which the decree had ordered to be paid to the alienees. The High Court took the view that in adjusting equities between the alienees, the alienations in whose favour were found to be invalid, and the trust, the contract rate of interest need not be awarded. Subject to the modifications made in regard to the payment of interest the rest of the decree has been confirmed. Defendants X, 9 and 10 and the legal representative of defendant 17 who died pending the proceedings before the High Court have not challenged the decree passed by the High Court in their Appeal A. S. No. 21 of 1950. Defendants 14 and 18 to 24 as well as defendants 12,13 and 16 have, however, challenged the decision of the High Court and have obtained a Certificate from the said High Court in that behalf It would thus be seen that in the two appeals before thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paragraph 35 it prays, inter aha, that schedules I to VII-A and should be adjudged as still impressed as trust imposed on them by the deed of August 26, 1936, and direct their re-sale. That is cl.(c) of paragraph 35. By cl.(d) it is prayed that the Court should order the administration of the trust by removing defendant 7 if need be and appointing an administrator or officer of court (1) to realise the amounts mentioned in cl. (a), (b) to recover possession. and re-sell the properties referred to in paragraph (c), (3) to distribute the proceeds rateably amongst the unsecured creditors and perform such other acts and functions as may be necessary to 6 effectuate the trust in question. The learned Attorney General contends that cl. (c) asks for adjudication or declaration that the properties in question are impressed with the trust and that is no mere than a declaration, and according to him cl.(d) prays for the appointment of an administrator to realise the amounts and to recover possession of the properties and re-sell them. He suggests that on a fair construction of cl. (d) all that the plaintiff pray for is the removal of defendant 7 and the appointment of an administrator with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laint in which a declaration is no doubt claimed but based on the said declaration or adjudication a further claim for possession to the administrator is also made. The result, therefore, is that the argument that the prayer made in the plaint attracts Art. 120 must be rejected. The next continuation urged is that the plaintiffs cannot sue for possession but must Confine themselves only to a claim for declaration. It is not disputed by the learned Attorney-General that in regard to public charitable trusts the beneficiaries are entitled to sue for setting aside alienations of the trust properties improperly effected by the trustees, and to ask for the restoration of possession of the said trust properties to the trustees newly appointed. Indeed, there is ample judicial authority in support of this position. In A. Subramania Iyer v. P Nagarathna Naicker (1910) 20 Mad. L, J, 151, it was held by the Madras High Court that in a suit by the worshippers of a temple to have the alienation of the trust property by some of the defendants, trustees. to the other defendants declared invalid and for possession to the trustees, the proper decree to be made if the Court be of the opinion that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pplicable only to a possessory suit by the owner of the property claimed against a person holding adversely to him without title, and the plea made by the respondent that he was the owner on several grounds was rejected; but in the course of its judgment the Privy Council assumed that by reason of the contract pleaded by the respondent the properties were impressed with the continuing trust in favour of the respondent, and observed that even so their Lordships were unable to hold that this would entitle him to sue for possession as owner . Sir George Lowndes, who delivered the judgment of the Board, referred to the fact that the Indian law does not recognise legal and equitable estates. By that law, there can be but one owner, and where the property is vested in a trustee, the owner must, their Lordships think, the trustee, and so the right of a beneficiary is, in proper case, to call upon the trustee to Convey to him . It is in that connection that Sir George Lowndes further observed that the enforcement of this right would, their Lordships think, be barred after six years under Art. 120 of the Limitation Act, and if the beneficiary has allowed this period to expire without suin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order 8 to the delivery of the said property to the Dew trustee. If that be so, the provisions of s. 10 would suggest that the remedies prescribed by 8. 63 are not exhaustive. Besides, it would be relevant to observe that if s. 63 is held to be exhaustive as to the remedies available to beneficiary it would lead to very anomalous results. If a trustee improperly alienates the trust property the only remedy which would on that view be available to the beneficiary is to obtain a declaration. How would this declaration be effective to bring back to the trust the property improperly alienated? Strictly and literally construed s. 63 dose not refer to the remedy for the appointment of a new trustee either, so that on a literal construction of s. 63 even that remedy may be outside its purview but assuming that a beneficiary can ask for a declaration that the property alienated is impressed in the trust and also add a prayer for the appointment of a new trustee that only means that after the new trustee is appointed he will have to sue the alienee for possession and very often this suit would be defeated by the alienee's plea of adverse possession. It is hardly necessary to empha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thus inapplicable it would not be permissible to rely upon the general doctrine of res judicata. We are dealing with a suit and the only ground on which res judicata can be urged against such a suit can be the provisions of s. 11 and no other. In our opinion therefore, there is no substance in the ground that the present suit is barred by res judicata. The next question which falls to be considered is the most important question in these appeals. We have already seen that three trustees were appointed under the trust deed executed by defendants 1 to 6 and two of the impugned sale deeds have been executed by only two out of the said three trustees. The Courts below have held that two out of the three trustees could not convey a valid title and so on that ground alone the two transfers are invalid. It is urged before us that this conclusion is not justified on a fair and reasonable construction of cl. 23 of the trust deed. Be. fore considering this point it is necessary to state the legal position in the matter under the Trusts Act. Section 48 of the Trusts Act provides that when there are more trustees than one, all must join in the execution of the trust, except where the ins ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his estate, you three, either unanimously or according to the decision of the majority, shall act . In the earlier litigation stated by defendants 1 to 6 this clause was thus translated: All the steps to be taken in connection with this estate should be according to the unanimous opinion of all the three of you or as decide(1) by the majority . The learned trial judge has made this translation of the clause in the present proceedings: In all the proceedings to be taken in connection with the estate all the three should act either unanimously or according to the decision of the majority . The learned Attorney- General has supplied us with the literal translation of the clause which reads thus: In connection with this estate, in all proceedings to be taken you three unanimously or according to the decision of the majority shall act . We have carefully compared all the translations, and we feel no difficulty in holding that the translation supplied in the earlier litigation is somewhat inaccurate, whereas all the three translations made in the present proceedings substantially agree. Taking the translation supplied by the learned Attorney-General it is clear that what this claus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ienees on the ground that only two out of the three trustees have executed them [Vide: Lala Man Mohan Das v. Janki Prasad [1944] L. R. 72 T. A. 39]. In support of the validity of these transfers an alternative argument has been urged before US. It is pointed out that according to Lewin on Trusts, if the act to the two trustees has been done with the sanction and approval of the third trustee then it may be regarded as an act of the three trustees, and it is urged that in the present case the third trustee had consented and shown his approval to the transactions in question. The two sale deeds have been executed by defendant 7 and Veerabahu Pillai, and they do not bear the signature of Narayana Pillai but this. alternative contention proceeds. on the assumption that though Narayana Pillai did not sign the document (Ex. B-94) he had in fact consented to it and had shown his approval to the transaction. This argument, however, cannot be accepted having regard to the concurrent finding recorded by the Courts. below on this point. Dealing with this question the trial court has referred to the discrepant versions given for Narayana Pillai not joining in the execution of the sale deed. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Courts below that Narayana Pillai was not a consenting party to the transfer in question. 'that being so, the alternative ground made in support of Ex. B-94 fails. If the transfers in favour of defendant 14 (Ex. B-94) as well as Ex;. B-37 in favour of defendant 13 fail on this ground it is really not necessary to consider the further question as to whether both the said transfers were effected for grossly inadequate consideration. The next question which has been raised on behalf of defendant 14 is in regard to the amendment made by the High Court in its decretal order. It is urged that this amendment was made after the appeals to this court had been admitted and so it is without jurisdiction. It appears that the certificate was granted by the High Court to the respective defendants who have come to this Court as appellants on November 26, 1954, and the appeals were admitted on December 4, 1955, whereas the amendment has been made after the appeals were admitted. The application for the amendment in question was made under s. 151 and 152 of the Code; and it became necessary because the decretal order drawn in the High Court referred to the profits of which accounts were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... date of correction. But apart from this technical argument about the jurisdiction of the High Court to make the correction the point in question has been raised on the merits before us; and it is urged that the plaintiffs are not entitled to anything more than three years' profits from the respective defendants. The argument is that Art. 109 of the Limitation Act applies to such a claim and the claim is confined to three years under that article. Article 109 deals with claims for profits of immovable property belonging to the plaintiffs which have been wrongfully received by the defendants and it prescribes there years' period of limitation commencing from the time when the profits were received. Normally there is no doubt that a successful plaintiff would be entitled to mesne profits for three years and not more; but in the present case we are dealing with a claim made by the plaintiffs on behalf of the trust and the decision in their favour has rendered it necessary to adjust equities between the trust and the respective alienees alienations in whose favour have been set aside as invalid. We have already seen that having set aside the alienations in favour of defendant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... osure or sale under O. XXXIV, rr. 2, 4 of the Code, a mortgagee is entitled to interest at the rate and with the . rests stipulated in the mortgage, down to this date filed for redemption by the decree. This position 6 cannot be disputed; but the answer to the plea is that the present decree is not passed in an action instituted by defendant 14 as a mortgagee. The present decree is passed while adjusting equities between defendant 14 the alienation in whose favour is set aside; his rights as mortgagee are equitably recognised and thereby further litigation is avoided. Since the decree by which defendant 14 is allowed to recover his mortgage dues has been passed for giving him equitable relief it was open to the High Court to consider whether compound interest should be paid to him or not. As the High Court has pointed out, while adjusting equities between the parties the mortgage does not become revived as such but the relief granted to the 14th defendant is based on equity and justice, and so the High Court thought that the interests of justice would be met if he is paid out of the sale proceeds the principal amount of the mortgage with simple interest at 10 1/2%. We have carefull ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uggesting that he would pay a sum of ₹ 10,000 for the entire amount payable to the bank by the debtors and he requested the Bank to have the debt discharged in that manner. Then he added that as the price of the lands have gone down very much owing to conditions at the present time he requested that the sum of ₹ 10,000 may be received and that the entire debt should thus be discharged. It, would be noticed that at this date defendant 12 was not a creditor of the estate and he had, therefore, no business to write to the Bank. This letter, like the earlier one which we have already seen, clearly indicates that defendant 12 had taken it upon himself to administer the trust. To the same effect is another letter written by him to the official Liquidator of the said Bank on January 9, 1939. In this letter defendant 12 says that the trustees are arranging for several settlements in deference to the wishes of Mr. Ayyah Sastri, but owing to the nature of time the matter stands unsettled even though both are agreed willingly . Then he refers to the proposal to settle all the debts and promises that the matter will be finally settled if the trustees meet you personally . I, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itigation in which he had stated that he, defendant 13 and Veerabahu Pillai were members of an undivided family. In the present proceedings defendant 12 has gone back upon his admission that he and his brothers constituted an undivided family. The trial court has accepted this latter plea and the High Court has not differed from it; but that apart, the several statements made by defendant 12 in the said evidence clearly show that he was taking as much active part in the affairs of the trust as his brother Veerabahu. There is yet another fact to which reference may be made. As the High Court has pointed out, the sale in favour of defendant 12 was executed on November 7, 1941, and yet the properties covered by the said document appear to have been put in his possession as early as 1937. In other words, defendant 12 entered into possession of the properties nearly four years before the sale was executed in his favour. It is in the light of these facts that the Courts below have held that defendant 12 is a trustee de son tort. As is observed is Williams on Executors and Administrator(1) a very slight act of intermeddling with the goods of the deceased will make a person executor de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the highest price recoverable and to distribute the sale proceeds amongst the creditors of the authors of the trust. The documents in favour of defendants 13 and 16 seem to leave it to the respective purchasers to pay the debts and that map be another infirmity in the transaction. Going back to Ex.B-79 which is a transfer in favour of defendant 13 it is evident that this transaction is inevitably connected with another transaction Ex. B-25. Ex. B-79 has been executed for a consideration of ₹ 2,000 and odd and it relates to 3 acres and 14 cents of schedule VIII property. It appears that defendant 13 had obtained another sale deed Ex. B-25 on April 19, 1937 This sale deed consisted of 51 items of property belonging to the trust which had spread over five villages. These items consisted of house-sites and lands. The sale deed was for ₹ 5,000. Defendant 13 in his turn proceeded to sell the said property by different lots to respective buyers. Amongst the creditors of the estate was Lakshmi (1) Lewin on Trusts, 15th ed, p. 797. Ammal to whom ₹ 800 was payable on the basis of 50% of return of debt. Defendant sold to I. Lakshmi Ammal 64 cents out of the lands pur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de sale because the property consists of odd assortment of punja lands and house sites in Pathi, Padmaneri and Sivalpuri villages . Therefore, we have no difficulty whatever in agreeing with the conclusion of the Courts below that Ex. B-25 was invalid; if that be so Ex. B-79 must be held to be invalid for that reason alone. Incidentally, we may refer to the fact that defendant 13 admitted in the earlier suit that he had not refunded the purchase money to Lakshmi Ammal and that substantially destroys the basis of Ex. B-79 because defendant 13 not having paid anything to Lakshmi Ammal had no right to retain the property conveyed to him. The last transactions which have yet to be examined are those in favour of defendant 16. In regard to these transactions the trial court has found that evidence adduced by the plaintiffs shows that the consideration for which properties were sold were grossly inadequate. The vendee, defendant 16, did not care to examine himself. Besides, as we have already pointed out he is a close relation of defendants 12 and 13. The High Court has concurred with the trial court's conclusion. The only point which was attempted to be made by Mr. Pattabhiraman ..... X X X X Extracts X X X X X X X X Extracts X X X X
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