t A

RAM CHARAN DAS

GIRJANANDINI DEVI AND ORS.

B April 20, 1965

(A. K. SARKAR, J. R. MUDHOLKAR AND R. S. BACHAWAT, JJ.J

U.P. Court of Wards Act, 1912 (Act 4 of 1912), s. 37(a)-Fami!y Settlement whether amounts to transfer or creation of interest in 0 property within the mraning of section.

Comprornise in suit-Doc.ument recording compromise 'Whether amounts to family settlement-Monies paid by one of the pa,-ties under the document-Other parties whether estopped from cha!leng ing its validity-Party receiving benefit under document-Whether can challenge its validity.

C's property passed under his will, drawn in 1883, to K and M who were brothers. M died and K entered into possession of his share also. On K's death in 1922 his mother entered into possession of the whole property. She gave over the management of the property to the Court of Wards under s. 10 of the U.P. Court of Wards Act, 1912.

The daughter of M however with the consent of K's mother got her father's share released from the management of the Court of Wards in her favour. In 1932 G, sister's son of K, filed a suit in which he challenged the release of M's share in favour of his daughter. Two other suits were filed in respect of the property by descendants of C's brother who as collaterals claimed to. be next reversioners to the property. The plaintiff in onE: of these suits was the present appellant; in the other suit the plaintiff was his brother. In these suits a declaration was sought that G and M's daughter had no rights in the properties in question. G, M's daughter. K's mother and the Court of Wards were made parties to these suits. Both these suits were compromised. The suit of the present appellant was compromised by a document Ex. Y-13, to which, among others, the appellant, G, and K's mother were parties. G had withdrawn his own suit shortly b€fore.

Acting on the document Ex. Y-13 G paid monies to the Court of Wards to clear his liabilities and get released from its management the propertiesi in question. G, M's daughter, K's mother and the Court of promise. However, subsequently, the appellant filed a suit in which he challenged the validity of Ex. Y-13. Having failed in the trial court as well as in the High Court he appealed to this Court by special leave.

The questions that fell for determination were: (1) whether Ex.

Y-13 was binding !>fl the parties as a family arrangement or settlement, (2) whether certain reservation in the said deed, leaving it open to the parties to challenge its recitals in certain contingencies had the effect that -the deed was not intended to be final, and (3) whether the family settlement fell within the miscl)ief of s. 37(a) of the U.P.

Court of Wards Act.

HELD: (i) The document Ex. Y-13 was in substance a family arrangement and therefore binding on all the parties to it. On the face of it, the document was a compromise of conflicting claims. The

8l"l'H1'; ME <'(ll"HT .HEl'l)ft'l'S [I !l(ifJj ; J ".c:.R.

parties recognised each others' rights to property, which they had A earlier disputed. The suit filed by G was withdrawn shortly before f the document was executed and those filed by the appellant and his brother were compromised on the day of its execution. All these transactions were part of one main transaction which was the settlement by members of the family of all their property disputes once and for all. Further, all those who could be said to be interested in the property were made perties to the transaction. [845H-846A] B

In these circumstances, the appellant who had taken benefit under the transaction was not entitled to turn round and challenge its validity. He was also estopped from doing so because G, acting on the document had paid monies to the Court of Wards to get his property 1 released. [850G l

Ramgouda Annagouda v. Bhausahe b, L. R. 54 I.A. 396, relied on.

(ii) Courts give effect to a family settlement upon the broad and general ground that its object is to settle existing or future disputes regarding property amongst members of a family. The word 'family' in this context is not to be given a narrow meaning. In Ramgouda Annagouda's cRse, of the three parties. to the settlement cf a di9pute concerning the property of a deceased person one was his widow, an- D other her brother, and the third her son-in-law. The two latter were ,- not heirs of the deceased, yet bering in mind their relationship to the widow the settlement of the dispute was regarded as the settlement of a family dispute. The consideration for such a settlement is the expectation that it will result in amity and goodwill amongst persons bearing relationship to one another. That consideration having passed by each of the disputants, the settlement consisting of recognition of the right asserted by each other Cljnnot be permitted to be D impeached thereafter. [850F-H, 851A-B]

(iii) No doubt the parties to Ex. Y-13 recognised each others relationship to K only for the purposes of the deed, and also reserved to themselves the right to challenge the recitals to the deed, in certain contingencies. Thereby it is not established that the document was not intended to be final. Read as a whole th" document left no F doubt that it was intended to be a final settlement. If it were intended otherwise there would have been express mi:ntion to that effect in the deed. [848A-B] Moreover what was permitted was a challenge to the recitals only. What the appellant's suit challenged. however was not the recitals but the terms of the deed which none of the parties wail given liberty to derogate from. f849B-Cl G

(iv) A family settlement is not a transfer or creation of interest in the property within the meaning of s. 37(a) of the U.P. Court oi Wards Act, 1912. It is in no sense an alienation by a limited owner of family property. Apart from that the two suits which were pendin11 were compromised with the full knowledge of the Court of Wards which was also a party to both the suits and the Court of Wards in H fact accepted monies from G which were due to it. In these circumstances the appellant was not entitled to press in his favour the pt"Ovisions of s. 37(a) of the U.P. Court of Wards Act. [S51C-852H]

Mst. Hiran Bibi v. Mst. Sohan Bibi, A.I.R. 1914 (P.C.) 44, Khmmi Lal v. Govind Krishna Narain, I.L.R. 33 All. 35, Man Singh v.

Nowlakhbati, L. R. 46 I.A. 72 and Sureshwar Misser '1. Nach.iappa Gounden, L. R. 46 I.A. 72. and Sureshtvar Misser v. Maheshrani Misrain L. R. 47 I.A. 233,

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. CML' APJ.'ELLATE JURISDICTION: Civil Appeal No. 520 of 1961

 A.ppeal by ; pecql leave from the judgment aaj order dated f>eptem!:>er.23.1958, 9f the Allahabd High Court in first Appeal ·

No. _392 of 1944. ·

S. P. Si[lha, E. C. Agarwalq, S. Shaukat Bussa.in and P. C.

Agalµ, f9r he appellant.

Niren De,. Additional Solicitor-General. Yogeshwar . Prasad and A. N. Goyal, for respondent No .. 1.

Modholkar, J. The substantial question which falls for decision in this• appeal is as to the legal effect of a deed, Ex. Y. 13, .. dated March 31. 1933 described in the paper-book as a deed or partition. A subsidiary question also arises for consideration which is, whether the validity of the transaction. evidenced by the _deed D is affected by reason of the fact that the propertf comprised therein was at the time of its execution, under the management of the Court of Wards. According to the plaintiff the deed was inval'd and did not affect his right to a share in the property in the suit..

His contention failed both in the trial court as well as in the High

Coµrt. .

The property covered by the deed belonged to one Kanhaiyalal who died on June 10, 1922 without leaving a widow or any issue, This property, along with some other property originally belonged to Kanhaiyalal's grandfather Chunnilal. It is said by some of the parties that by a will executed by him in the year 1883 he devised F his property in favour of Kanhaiyalal and his brother Madho Prasad. Madho Prasad died during the life.time of Kanhaiyalal, leaving a daughter Maheshwari Bibi. After Madho Prasad's death Kanhaiyalal entred into possession of the , property which had been bequeathed to 'Madho Prasad by Chunnilal.

After Kanhaiyalal's. death Kadma Kuar,, his mother, entered into possession of the entire property which was in -the possession of Kanh&'yalal till his death. Kadma Kuar died on October 14, 1937 and shortly thereafter the suit out of which this appeal arises was instituted by Ram Charan Das, the appellant. It may be mentioned that Kanhaiyalal and Madho Prasad had a sister by name Mst. Pyari Bibi. She had a son named Gopinath who. died in the year 1934 leaving a widow, Girja Nandini, the first defendant to the suit. The plaintiff is the sixth son of Diwan Madan Gop31. Diwan Madan Gopal was one of the two sons of Brij:aJ and Brijlal was the only son of Deoki Nandan.

Dwki Nandan himself was the elder brother of Chunnilal. The plaintiff who 's the appellant . before us is thus' a collateral of i<:anhaiyalal. It is'not disputed that he and his brothers were the next reversioners entitled to succeed to Kanhaiyalal's, property. ·

L/PiDJ."iCIl5 •

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after'ilie death of his mother .Kadma Kuar. To this suit he joined .d. ' _, Girja Nandini Devi, widow of Gopinath as defendant No. I and .

- it is s, he who is the contesting respondent before us.

Soon after Kadma Kuar entered into possession of the estate of Kanhaiyalal, she applied to the appropriate authority for taking over possession of management of the property which was in the Jl possession of Kanhaiyafal.at the time of his death whereupon the Court of Wards took over its management under s. IO of the U.P.

Court of Wards Act, 1912 (IV of 1912). This property consisted _ not only of the property whi, ch Kanhaiyalal had obtained under the

_ will of Chunnilal but also of the property which had been bequeathd in that will to Madho Prasad and of which Kanhaiya!al had ob- C tained possession during his life time. Maheshwari Bibi, the daughter of Madho Prasad laid a claim to the property which had been bequeathed by Chunnilal on the ground that the two brothers who took these properties under Chunnilal's will took them not as joint tenants but as tenants in common. The claim made by her in this respect was examinf; d by the Couri-of Wards and upon D .

Kadma Kuar agreeing, the Court of Wards released half of the estate under its management, that is, the share in the property which is _said to have ben bequeathed to Madho Prasad.

It is necessary to refer to three su; ts which came to be instituted during the life, time of Kadma Kuar, the first of which is 30 I' of 1932. This was instituted by Gopinath w_ho claimed to be the next reversioner upon the ground that he being the sister's son of Kanhaiyalal, had become art heir preferential to the present appellant and his brotherstT>ecause of the passing of the Hindu_ Law of inheritance (Amendment) Act of 1929. To this suit Maheshwari Bibi al)d K:idma Kuar and the Court of Wards were made defend- F ants. He sought therein a declaration to the effect that the Court of Wards had no right to release half .the property in favour of Maheshwari Bibi. This .suit, however, was eventually withdrawn.

Two other suits, suit No. 53 of 1932 and 54 of 1932, carrie to be filed shortly thereafter. In the first of these the present plaintiff was himself the plaintiff whil(l in the second, his brother Hanuman G Prasad (defendant No. 6 in the. present suit) was the plaintiff. Both of them claimed to be the nearest reversioners upon the ground that the Act of 1929 did not affect their right to the properties. left by Kanhaiyalal. Each of them sought a declaration that Maheshwari Bibi and Gopinath had no right of any kind in respect of these properties. These su; ts were founded on the ground among others II that Maheshwari Bibi had no right because Chunnilal could not by his will devise .the property to her father Madho Prasad and Gopinathhad none because he was not in fact Kanhaiyalal"s sister's son. Gopinath, Mahe3hwari Bibi. Kadrna -Kuar and the Court of Wards, were made parties to these suits. It is common _ • ground that the claims in both these suits were compromised. Under one of the compro; nises the dispute with Maheshwari B; bi was

. ;.

Rill CllA, RAN DAS v. Glll.JANANDINJ DEVI (Mwlhollwr, J.) 8·15

A settled and we are no longer concerned with that matter. Under the other compromise the dispute with Gopinath and Kadma Kuar was settled. Decrees were drawn up in these suits embodying the terms of each of the compromises arrived at amongst the parties. Te latter compromise was entered into in suit No. 53 of 1932 and its date was March 31, 1933. The document, Ex. Y-13 embodies the B terms of the compromise in suit No. 53 of 1932. To that document, amongst other, the appellant, Gopinath and Kadma Kuar were parties.

According to the plaintiff the compromise in question was not in law a surrender nor a family arrangement and that in any case Kadma Kuar was not entitled to make a famHy settlement and that C what she did does not amount in law to a surrender. Also according to him Kadma Kuar was a person under disability being at the relevant time a ward under the Court of Wards and, therefore, the transaction was void.

On behalf of the contesting defendant it was urged in the D courts below that the transaction amounted to surrender of her estate 'by Kadma Kuar and alternatively that it was a family settlement to which the plaintiff was one of the parties and, therefore, he is estopped from challenging the validity of the compromise, particulady so as he has taken benefit thereunder and also because in view of the compromise Gopinath had discharged the debts of E Kanhaiyalal which at law were recoverable from the property in question. Alternatively the defendants contended that the transaction evidenced by the document was an effective surrender by Kadma Kuar in favour of Gopinath who was the presumptive reversioner at that time.

At this stage it is desirab.le to point out that out of the pro- F perties described in List A of the Schedule to the plaint the plaintiff-appellant lays no claim to items 1 and 2 which are respectively described as properties at Hewett Road, Allahabad, and Goshain Tola, Allahabad nor to item 7(i) described as 8 anna share in a Zamindari village. Such a concession was made before this Court by Mr. S. P. Sinha, counsel for the appellant, when the matter was 6 argued before this Court on April 14, 1964, when the hearing was adjourned to enable the parties to arrive at a settlement. No settlement was arrived at and the matter was re-argued before this Court on .March 8 and 9, 1965. Mr. Sinha has not withdrawn the concession made by him on the earlier occasion. We may also B make a mention of the fact that Mr. Niren De, the Additional Solicitor General has not argued that Ex. Y-13 purports to show that Kadma Kuar surrendered the widow's estate. In the circumstances we proposed to confine ourselves to the consideration of only one matter and that is whether the deed (Ex. Y-13) is a family arrangement and as such binding upon the plaintiff.

It seems to us abundantly clear that this document was in substance. a family arrangement and, therefore, was binding on all

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the parties to it. Moreove.r it was acted upon by them. For, under A certain terms thereof one of the parties, Gopinath, paid off certain liabilities to which the property which was allotted to his share was subjected. According to Mr. Sinha, however, the transaction evidenced by the document was not a family settlement but only a surrender by Kadma Kuar though in law it could not opera~ as a. surrender firstly because it was not _of the entire estate of which B she was in possession as a limited owner and secondly because of the two sets of persons between whom she divided the property only one could be said to be her reversioner or reversioners and the other a stranger or strangers. In our opinion the document on its face appears to effect a compromise of the cpnfiicting claims of 0 Gopinath on the one hand and the present plaintiff Ram Charan Das and his brothers on the other to the .estate of Kanhaiyalal. In the document Kadma Kuar is referred to as 'first party'. Gopinath

as 'second party' and Ram Charan Das, the appellant before us and his brothers as the 'third party'. In cl.(l) of the document it is stated "That the first party renounces all her claims to the estate of D her son M. Kanhaya Lal deceased according to the provisions of this deed in favour of the Second and Third party out of which the second party shall be the absolute owner and possessor of the properties detailed in List "A" annexed hereto; and the third party shall be the absolute owner and possessors of the properties detailed in the List "B" annexed hereto". These recitals, taken in con- E j mction with the surrounding circumstances indicate that Kadma

"uar purported to recognise thereby the rights of these parties to her son's properties though earlier she disputed them. Similarly the

recils "that the first party shall remain in de facto management of Arra'll Kalan property for her life without any interference from the second or the third party to whom she shall in no case be liable F to render any accounts and that after her death the second party or his heilrs representatives, assigns or transferees and Babu Sehat Bahadur Advocate Allahabad as representing the third party or their heirs, representatives, assigns or transferees shall manage and enter into possession of the said village Arrah Kalan jointly", indicate that the 2nd and 3rd party were disputing and interfering Q with the right cf Kadma Kuar to the management of one of the properties but ultima!.:!; r, under the document in question, they agreed not to do so. Further, as w,; J.i;:·;~ already pointed out, three suits had been instituted in the year 1932 concerning this very property, one by Gopinath and the other two by the plaintiff and his brother Hanuman Prasad. In his suit Gopinath claimed to be the H next reversioner. The plaintiff appellant Ram Charan.Das claimed that he and his brothers were the next reversioners and not Gopinath. A similar claim was made by Hanuman Prasad In his suit. It is worthy of note Uiat the plaintiff's suit was compromised on the very day on which this document, Ex. Y-13, was executed and that the terms of the settlement were recited in Ex. Y-13. This document further makes express mention of the two suits which were

Rill CHARAN DASS u. GIRJANANDINI Dl:VI (; lfudlwlkar, J.) ~7

A_ companion suits, suit No. 53 of 1932 and suit No. 54 of 1932, and says, categorically that these suits shall b~ eemed to be cpro

mised in terms of this deed. By compromising those two suits the plaintiff and h; s brother Hanumim Prasad withdrew their challenge to the claim put forward by Gopinath to the estate of Kanha1yalal.

Prior to this Gopinath had withdrawn his suit in which he had B claimed to be the next reversioner to the estate of Kanhaiyalal after the death of Kadma Kuar. All these transactions are quite evidently part of one main transaction which is the settlement by the members of the family of all those disputes once and for all. No doubt according to the plaint allegation this was merely a temporary arrangement but no reasons have been given nor any material was It placed before the Court from which it could be inferred that it was

not the intention of the parties that the disputes amongst them. should be finally settled.

Mr. Sinha, however, places reliance upon the following recital in Ex. Y-13 and contends that i)le arrangement was not final. The D recital runs thus:

"That in pursuance of and for the purpose of this deed the First and the Third Party do admit and recognise Babu Gopi Nath, the Second party to be the son of Musammat Peari Bibi the own sister of the late Munshi Kanhaya Lal and the daughter of Musammat Kadma Kuar the First Party; and s'milarly for the purposes of and in pursuance of this deed, the First and the Second party admit and recognise the Third party as the sons of Dewan Madan Gopal a greut-grandson of M. Lalji, the greatgrand father of M-Kanaya Lal as per pedigree set up by them in suits Nos. 53 and 54 of 1932-referred to above.

Provided always that if the rights of the second or the third party to the ownership and possession of their respective properties as detailed in List 'A' items Nos. l to 5 and seven, in List 'B' item Nos. 1, 2, 4, 5 and 8 re5pectively are ever questioned they shall not be precluded from setting up any claim, right or title, propositions of law or fact consistent or inconsistent with the recital of this deed, and if the rights of ownership or possession of the second party to item No. 6 in List •A' annexed hereto or the rights of ownersh; p or possession of the third party to items Nos. 3. 6 and 9 in List 'B' annexed hereto are ever questioned they shall only be entitled to set up claims only consistent with the terms of this deed."

No doubt, the recognition of relationship claimed: by the second party to Kanhaiyalal was admitted by the first and third parties in pursuance an4 for the purposes of the deed. Similarly recognition of the relationship of the third party by the first and the second parties to Kanhaiyalal was admitted by the first and second parties and also in pursuance and for the purposes of the

848 IUPBlllDI

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deed. This, however, doesnot show that the settlement arrived at A and sought to be given effect to by the deed was not intended to be final. As already stated, the document read as a whole leaves no doubt that it was intended to be ii final settlement of the disputes amongst the parties. If it were intended to be otherwise it would have been natural to find an express statement somewhere in the document to show that it was intended to be a temporary settle- B ment only. The proviso to the aforesaid clause was pressed in aid by Mr. Sinha to support his contention that the settlement was only temporary. The document itself was drawn up in English and looking at the 'formal manner in which it is drawn up and bearing illso fa mind the fact that it came into being when litigations were, pending in court in which the parties to the deed also figured as C parties and was intended to compromise those suits, it would be legitimate to infer that it was drawn up or at least approved .by a lawyer. In that proviso at one place the word "recitals" and at another the word "terms" were used. The expression "recitals" <"

curs in the first part of the proviso and it is only with respect to D them that a party is given the liberty Ip set up in a certain circumstance "any claim or right or title, propositions of law or fact consistent or inconsistent with the recitals in the deed". Now the expression "recitals" means, according to the Dictionary of English Law by Jowitt: "Statements in a deed, agreement or other formal instrument, introduced to explain or lead up to the operative part B of the instrument." It is stated further that recitals are generally divided into m1ITative recitals which set forth the faots on which the instrument is based and introductory recitals which explain the motive for the operative part. Where the recitals are clear and. the operative part is ambiguous the. recitals govern the construction. Normally a recital is evidence as ainst the parties to the r instrument and those claiming under them and in an action on the instrument itself the recitals operate as an estoppel, though that would not be so on a collateral matter. It is not clear why this clause was put in. But even if. we assume that the parties did so because they were apprehensive that the rights of the second or the third party to the ownership and possession of the respective a properties-that is items 1 to 5 and 7 in List A allotted to the second party and items I, 2, 4, 5 and 8 in List J3 allotted to the third party were liable to be challenged by persons not bound by the settlement the reservation was only of the right to challenge the explanatory or narrative recitals in the documents but not of the right to challenge the terms thereof. It therefore affords little B assistance to the plaintiff. The expression "terms" used in a document, would, according to webster's New World Dictionary, mean "condltions of a contract, agreement sale etc. that limit or define its scope or action involved." Those parts of Ex-13 which prescribe the conditions upon which the disputes among the parties were settled would be the terms of this document and' so far as these are concerned the proviso shows that none of the parties was

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l\AM CHARAN DAS v. GIRJANANDINI DEVI (Mudholkar, J.) 849

given the liberty to derogate from them. Thus, far from showing that the settlement arrived at was of a temporary character the proviso read as a whole further fortifies the conclusion that the settlement was to be binding upon the parties for all time. We may add that the contentions now raised on behalf of the plaintiff denying the rights of Gopinath and of those who claim through him are not based upon any challenge to the "recitals" in the documents, as that expression is understood in law, but to the terms and conditions contained in that document. It may be that the properties to which the suit relates would: fall under the items allotted to Gopinath as specified in the first part of the proviso but no liberty has been reserved therein to permit any of the parties to derogate from the terms and conditions upon which the settlement was arrived at.

The view that the transaction is a family arrangement is borne out by the decision of the Privy Council in Ramgouda Annagouda v Bhausaheb('). The facts of the case which have been correctly summarised in the head note are briefly these:

"A Hindu died in 1846, leaving a widow who survived until 1912, and a daughter. On the death of the widow A was heir to the estate. In 1868 the widow had alienated nearly the whole property by three deeds executed and registered on the same day. By the first deed she gave a property to her brother, by the second she sold half of another property to A, and by the third: she sold the other half of that property to her son-in-law. The signature of each of the deeds was attested by the two other alienees. A who survived the widow for six years, did not seek to set aside any of the alienations.

After his death.his son and grandsons brought a suit to recover the whole property." Upon these facts the Privy Council held as follows:

"Their Lordships consider that the decision of this case depends upon how far the three documents can be taken as separate and independent, or so connected as to form one transaction.

The long lapse of time between the execution of the deeds and the institution of the suit has rendered it impossible to prove what actually occurred between the parties on that occasion. There is not sufficiently. definite evidence to come to a conclusion as to how far any of those properties were validly encumbered, or what was done with the purchase money alleged to have passed on the two deeds of sale. But the parties to the documents included, or after so great a lapse of time may be presumed in a very real sense to have included, all persons who

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(') L.R. 6~ I.A. 396.

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had any actual or possible interest in the properties- A namely, the widow herself, her brother, who was a natural object of her affection and bounty, her son-inlaw, who was the natural protector of the interests of her daughter and grandson, and the nearest kinsman on the husband's side and the only person from whom any opposition might be apprehended with regard to B dealings by the widow concerning her husband's estate.

Their Lordships conclude that all the circumstances strongly point to the three documents being part and parcel of one transaction by which a disposition was made of Akkagouda's estate, such as was likely to prevent dis- O pules in the future and therefore in the best interests of all the parties. The three deeds appear thus to be inseparably connected together and in that view Annagouda not only consented to the sale of Shivgouda and the gift to Basappa but these dispositions formed Parts of the same transaction by which he himself acquired D a part of the estate."

In our case, however, there is fortunately only one transaction and we. have definite evidence to show that there were disputes amongst the members of the family and it was avowedly for settling them that the transaction was entered into. Further we have material to E show that all the persons who can be said to be interested in the property were joined as parties to the transaction. In that sense this case is stronger than the one which' the Privy Council had to consider. We have therefore no hesitation in holding that the plaintiff who has taken benefit under the transaction is not now entitled to turn round and say that that transaction was of a kind which F Kadma Kuar could not enter into and was therefore invalid.

Moreover acting on the terms of that document Gopinath paid monies to the Court of Wards for obtaining release from its management of the properties which were allotted to him. The rule of estoppel embodied in s. 115 of the Indian Evidenoe Act, 1872 G would, therefore, shut out such pleas of the plaintiff. Courts give effect to a. family settlement upon the broad and general ground that its object is to settle existing or future disputes regarding property amongst members of a family. The word 'family' in the context is not to be understood in a narrow sense of being a group of persons who are recognised in law as having a right of succes- B sion or having a claim to a share in the property in dispute. In Ramgouda Annagouda's(') case, of the three parties to the settlement of a dispute concerning the property of a deceased person one was his widow, other her brother and the third her son-in-law. The two latter could not, under the Hindu Law, ba regarded as the

(') L.R. 64 I.A. 396.

I\AM CHARAN DAS v. GIRJANANDINI DEVI~(Mudholkar, J.) 851

A heirs of the deceased. Yet, bearing in mind their near relationship to the widow the settlement of the dispute was very properly regarded as a settlement of a family dispute. The consideration for such a settlement, If one may put it that way, is the expectation that such a settlement will result in esablishing or ensuring amity and goodwill amongst persons bearing relationship with one another.

B That consideration having been passed by each of the disputants the settlement consisting of recognition of the right asserted by each other cannot be permitted to be impeached thereafter.

The final contention of Mr. Sinha is based upon s. 37(a) of the U.P. Court of Wards Act, 1912. The relevant portion of this c provision runs thus:

"A ward shall not be competent--

(a) to transfer or create any charge on, or interest in, any part of his property which is under the superintendence of the Court of Wards, or to enter into any contract which may involve him in pecuniary liability; ............... ".

Here the transaction in question is a family settlement entered into by the parties bona fide for the purpose of putting an end to the dispute among family members. Could it be sa; d that this amounts to a transfer of or creation of an interest in property? For.

E unless it does, the action of Kadma Kuar would not fall within the purview of the aforesaid clause of s. 37. In Mst. Hiran Bibi v.

Mst. Sohan Bibi(') approving the earlier decision in Khunni Lal v.

Govind Krishna Narain(') the Privy Council held that a compromise by way of family settlement is in no sense an alienation by a limited owner of family property. This case, therefore, would sup- F port the conclusion that the transaction does not amount to a transfer. Mr. Sinha, however, contends that the transaction amounts to creation of an interest by the ward in property which was under the superintendence of the Court of Wards and in support of his contention relies on Man Singh v NowlakhbatiC). In the first place once it is held that the transaction being a family settlement is not G an alienation, it cannot amonnt to the creation of an interest. For, as the Privy Council pointed out in Mst. Hiran Bibi's(') case in a family settlement each party takes a share in the property by virtue of the independent title which is admitted to that extent by the other parties. It is not necessary, as would appear from the decision H in Rangasami Gounden v. Nachiappa Goundcn(') that every party taking benefit under a family settlement must necessarily be shown to have, under the law, a claim to a share in the property. All that is necessary is that the parties must be related to one another in some way and have a possible claim to the property or a claim or

(') A.I.R. 1914 P.C. 44. (') I.L.R. 33. All. 356. (') L.R. 53 I.A. ll.

(') L.R. 46 I.A. 72,

852 1 SUPREME couBT Rlll'ORTB (1965] 3 il.G,:8,

even a semblance of a cl<iim ou. somo other ground as, say, affec- A tion. In the second place, in the case .relied upon by Mr. Sinha

there was no question of the transaction being a family settlement.

It was sought to be supported upon .the ground that it was a surrender. The Privy Council, however, held that it was not a bona fide surrender evidently because the widow was to get a very substantial amount for maintenance from the reversioners in whose B favour she had purported to surrender the estate and also held that there was in fact no necessity for a surrender of interest of the widow. Since it was not a bona fide surrender it was regarded as one creating only an interest in the property which was under the superintendence of the Court of Wards. Had it been a bona fide surrender s. 60 of the Bihar Court of Wards Act Ul'Qn which reJ.i- C ance was placed in that case woud not have been attracted. Indeed, reliance was placed before the Privy Council on the decision in Sureshwar Misser v. µaheshrani Misrain.(') in support of the appellant's contention that the transaction was valid. While distinguishing this case the Privy Council observed:

l> "In that case there were serious disputes in the family as to title, and the next reversioners to the son sues the widow and her daughters to set aside the will of her husband under which .the daughters were entitled to succeed to the immovable property on the death of the son without issue. A family compromise was agreed to, E and in performance of it the widow surrenderod all her rights of succssion to the immovable property, and the plaintiff the next reversioner and her daughters gave her for her life a small portion of the land for her maintenance. The Board held that the compromise was a bona fide surrender of the estate and not a device to 't divide it with the next reversioner, the giving of a small portion of it to the widow for her maintenance not being • objectionable, and consequently thatthe trlµ!Sllction was valid under the principles laid down by the board in Rangasami Gounden v Nachiappa Gounden (L. R. 46

I.A. 72)".

G .

We may further point out that this decision does not refer to tkeir decisions in Mst. Hiran Bibi v Mst. Sc; han Bibi(') and Khunni Lal

v. Govind Krishna Narain(') and it cannot be 11$8Ullled that they

intended to depart from their earlier view.

Apart from that it may be pointed out that the two suits whi~ were then pending were compromised witli the full knowledg• of the Omrt of Wards which was also a party to both the suit11 and

(') L.B. 47 I.A. 233.

(') A.J.R. 191' P.C. ". (') !.L.B. 83 All. 8511.

~ ,,,.

Rill CHARAN DAS v. GIRJANANDINI DEVI (Mudholkar, J.) 853

A the Court of Wards in fact released the estate by accepting from Gopinath monies which were due to it. In these circumstances we hold that the plaintiff is not ent'tled to press in aid the provisions .of s. 37(a) of the U.P. Court of Wards Act.

For all these reasons we uphold the decree of the trial Court B as affirmed by the High Court and dismiss the appeal with 'costs throughout.

Appeal dismissed .

DAS

GIRJANANDINI DEVI AND ORS

April 20, 1965

A. K. SARKAR, J.

R. MUDHOLKAR

R. S. BACHAWAT, JJ

Court of Wards Act, 1912

s. 37(a)

s. 10

Court of Wards Act, 1912

s. 37(a)

Court of Wards Act

L. R. 54 I.A. 396

Ramgouda Annagouda

s. 37(a)

Court oi Wards Act, 1912

s. 37(a)

Court of Wards Act

L. R. 46 I.A. 72

L. R. 46 I.A. 72

L. R. 47 I.A. 233

CHARAN DAS

S. P. Si[lha

E. C. Agarwalq

S. Shaukat Bussa.in

P. C.

Agalµ

Niren De

Yogeshwar . Prasad

A. N. Goyal

Modholkar

Kanhaiyalal

June 10, 1922

Chunnilal

Madho Prasad

Maheshwari Bibi

Kadma Kuar

Kanh&'yalal

October 14, 1937

Ram Charan Das

Pyari Bibi

Gopinath

Girja Nandini

Diwan Madan Gop31

Diwan Madan Gopal

Brijlal

Deoki Nandan

Dwki Nandan

.Kadma Kuar

L/PiDJ."iCIl5 •

,.., '
SH -•f

{ '-~ .SUPRE!i:lE COURT ,'REPORTS

' -.., -, '
(19G5] 3 S.C, R.

after'ilie death of his mother .Kadma Kuar.

Girja Nandini Devi

Kanhaiyafal.at

Court of Wards Act, 1912

Kanhaiya!al

Kadma Kuar

Hanuman G Prasad

Gopinathhad

Kanhaiyalal"s

Mahe3hwari Bibi

Kadrna -Kuar

Maheshwari B

Mwlhollwr

Gopinath

E Kanhaiyalal

Allahabad

S. P. Sinha

April 14, 1964

.March 8 and 9, 1965

Sinha

Niren De

Ram Charan Das

M. Kanhaya Lal

Kadma

Arra'll Kalan

Babu Sehat Bahadur

Arrah Kalan

Hanuman Prasad

Ram Charan.Das

Rill CHARAN DASS

lfudlwlkar

Hanumim Prasad

Babu Gopi Nath

Musammat Peari Bibi

Munshi Kanhaya Lal

Musammat Kadma Kuar

Dewan Madan Gopal

M. Lalji

M-Kanaya Lal

Jowitt

Akkagouda

Annagouda

Shivgouda

Basappa

F Kadma Kuar

s. 115

Indian Evidenoe Act, 1872

L.R. 64 I.A. 396

s. 37(a)

Court of Wards Act, 1912

s. 37

Hiran Bibi

L.R. 46 I.A. 72

s. 60

L. R. 46

I.A. 72

s. 37(a)

Court of Wards Act


SAHOO

STATE OF U.P.

February 16, 1965

[K. SUBBA RAO, J. C. SHAH AND ~. S. BACHAWAT, Jf}

Confession-Accused mutte, ring self-indriminating statement to himself-Whether amounts to confession-Communication to another . ; person whether necessary.

The Sessions Judge in convicting the appellant of murder took into account an extra-judicial confession alleged to have been made by .him when shortly after the murder he was muttering to hi,,, self that he had finished the deceased. The High Court confirmed the conviction. In appeal before this Court it was contended that that the muttering of the accused did not amount to a confession as it \Vas implic:t in the concept Of confession whether judicial or extrajudicial that it should he communicated to another. A man can~ not confess to himself; he can only confess to another.

HELD: (i) Sections 24 to 30 of the Evidence Act deal with the .admissibility of confession"' but the expression 'confession' is not defined. Shortly stated a confession is a statement made by an accus- ed admitting his guilt. (88 E] Pakala Narayana v. R. L. R. 66 I.A 66, referred to.

(ii) It is not a necessary ingredient of the term confession that it shall be communicated to another. The dictionary meaning of the term does not Warrantany such extension, nor the reason of the rule underlying the doctrine of admission or confession demands it. The probative nature of an admission or confession does not depend on its communication to anotMr though just like any other piece of evidence can be admitted in evidence only on proof. The following illustration pertaining to a written confession brings out the idea: A kills B; enters in his diary that he had killed him, puts it in his drawer and absconds. When he places his act on record he does not communicate to another; indeed he does not have any intention of communicating it to a third party. Even so at the trial the said statement of the accused can certainly be proved as a confession made by him. If that be so in the case of a statement in writing, there cannot be any difference in principle in the case of an oral statement.

(88 H~89 C] 8hogilal Chunilal Pandya v. State of Bombay, . r19591 Supp. 1 S.C.R. 310, relied on.

(iii) But there 1s a clear distinction between the admissibility of ; an item of evidence and the weight to be attached to it. A confessional soliloquy is a direct piece of evidence. Generally such soliloquies are mutterings of a confused mind. Before such evidence can be accepted it must be established by cogent evidence what were the exact words used by the accused. Even if so much was established prudence and justice demand that such evidence cannot be made the sole ground of conviction. It may be used only as a corroborative piece of evidence. [90 B, DJ In the present case the confession along with the other evidence of circumstances was sufficient to prove the guilt of the appellant.

CRIMINAL APPELLAT, E JURISDICTION: Criminal Appeal No. 248 of 1964.

SAHoo v. STATE (Subba Rao, J.) 87

A Appeal from the judgment and order dated September 16, 1964 of the Allahabad High Court in Criminal Appeal No. 348 of 1964 and capital sentenoe No. 26 of 1964.

P. C. Khanna, for the appellant.

0. P. Rana, for the respondent.

The Judgment of the Court was delivered by _ .

Sobba_ Rao, J. Sahoo, the appellant, is a resident of Pachperwa m the D1stnct of Gonda. He has two sons, Badri and Kirpa Shanker. He lost his wife years ago. His eldest son, Badri, married one Sunderpatti. Badri was employed in Lucknow, and his wife was residing with his father. It is said that Sunderpatti developed illicit intimacy with Sahoo; but there were incessant quarrels between them. On August 12, 1963, during one of those quarrels, Sunderpatti ran away to the house of one Mohammed Abdullah, a neighbour of theirs. The appellant brought her back, and after some wordy altercation between them they slept in the only room of their house. The only other inmate of the house was the appellant's second son, Kirpa Shanker, a lad of about 8 years. On the morning of August 13, 1963, Sunderpatti was found with serious in juries in the room of the house where she was sleeping and the appellant was not in the house. Sunderpatti was admitted in the Sadar Hospital, Gonda, at 5.25 p.m. on that day and she died on August 26, 1963 at 3 p.m. Sahoo was sent up for trial before the Court of Sessions, Gonda, on a charge under s. 302 of the Indian Penal Code.

The learned Sessions Judge, on a consideration of the entire evidence came to the conclusion that Sahoo killed Sunderpatti. On that finding, he convicted the accused under s. 302 of the Indian Penal Code and sentenced him to death. On appeal, a Division Bench of the High Court at Allahabad confirmed both the conviction and the sentence. Hence the appeal.

Except for an extra-judicial confession, the entire evidence in the case is circumstantial. Before we advert to the arguments advanced in the appeal it will be convenient to narrate the circumstances found by the High Court, which are as follows : (!) The accused had illicit connections with the deceased; (2) the deceased and the accused had some quarrel on the Janmashtami day in the evening and the deceased had to be persuaded through the influence of their neighbours, Mohammed Abdullah and his womenfolk, to go back to the house of the accused; (3) the deceased was seen in the company of the accused for the last time when she was alive; (4) during the fateful night 3 persons, namely, the accused, the deceased and the accused's second son, Kirpa Shanker (P.W.

17), slept in the room inside the house; (5) on the early morning of next day, P.W. 17 was asked by his father to go out to attend to calls of nature and when he came back to the varandah of the house he heard sme gurgling sound, and he saw his father going out of the house murmuring something; and (6) P. Ws. 9, 11, 13

and 15 saw .the ac.cused going out of the house at about 6 a.m. on A

tht day solilo9uymg that he had finished Sunderpatti and thereby finished the dally quarrels.

This Court in a series of decisions has reaffirmed the followmg well-settled rule of "circumstantial evidence". The circumstai:ces from which the conclusion of guilt is to be drawn should B be m the first instance fully established. "All the facts so estab lished should be consistent only with the hypothesis of the guilt of the accused and the circumstances should be of a conclusive nature and tendency that they should be such as to exclude other hypotheses but the one proposed to be proved."

Before we consider whether the circumstances narrated above C would, stand the said rigorous test, we will at the outset deal with the content; on that the soliloquy of the accused admitting his guilt was not an extra-judi.cial confession as the Courts below held it to be. If it was an extra-judicial confession, it would really partake the character of direct evidence rather than that of circumstantial

evlidence. It is argued that it is implicit in the concept of confes- D> sion, whether it is extra-judicial or judicial, that it shall be com municated to another. It is said that one cannot confess to himself: he can only confess to another. This raises an interesting point, which falls to be decided on a consideration of the relevant Provisions of the Evidence Act. Sections 24 to 30 of the Evidence Act deal with the admissib'.lity of confessions by accused persons in criminal cases. But the expression "confession" is not defined. The Judicial Committee in Pakala Narayana v. R.(') has defined the said expression thus : ! "' "A confession is a statement made by an accused: which

must either admit in tenns the offence, or at any rate ub- F stantially all the facts which constitute the offence."

A scrutiny of the provisions of ss. 17 to 30 of the Evidence Act discloses, as one learned author puts it, that statement is a genu1, admission is the species and confession is the sub-species. Shortly stated, a confession is a statement made by an accused admitting his guilt. What does the expression "statement" mean?

G The dictionary meaning of the word "statement" is "the act of stating, reciting or presenting verbally or on paper." The term "statement", therefore, includes both oral and written statements.

Is it also a necessary ingredient of the tenn that it shall be communicated to anoth.er? The dictionary meaning of the term. does not H warrant ariy such extension; nor the reason of the rule underlying the doctrine of admission or confession demands it. Admissions and confessions are exceptions to the hearsay rule. The Evidence Act places them in the category of relevant evidence, presumably on the gro'und that, as they are declarat'ons against the interest of the per- SOD making them, they are probably true. The probative value of

(') J .. F .. 66 !.A. 6:1.

SAHOO v. STATE (8ubb:i Rao, J'.)

A an admission or a confession does not depend upon its communication to another, though, jusl like any other piece of evidence, it can be admitted in ev'dence only on proof. This proof in the cse of oral admission or confession can be offered only by witnesses who heard the admission or confession. as the case may be. The following illustration pertaining to a wr'tten confession brings out B the said idea: A kills B; enters in his diary that he had killed him. puts it in his drawer and absconds. When he places his act on record. he does not communicate to ano!her; indeed, he does not have any intention of communi.cating it to a third party. Even so, at tlie trial the said statement of the accused can certainly be proved as a confession made by him. If t'iat be so 'n the case of a statement in c writing, there cannot be any difference in principle in the case of an oral statement. Both mast stand on the same footing. This aspect of the doctrine of confession received some treatment from wellknown authors on ev'dence. like Taylor, Best and Phipson. In "A Treatise on the Law of Evidence" by Taylor, 11th Edn., Vol. I, the

following statement appears at p. 596:

"What the accused has been overheard muttering to himself, or saying to his wife or to any other person in confidence, will be receivable in evidence." In "The Principles of the Law of Evidence" by W. M. Best, 12th Edn., at p. 454, it is stated much to the same effect thus:

"Words addressed to others, and writing, are no doubt the most usual forms; but words uttered in soliloquy seem equally receivable." We also find the following passage in "Phipson on Evidence", 7th Edn., at p. 262:

.1 "A statement which the prisoner had been overheard muttering to himself, if otherwise than in his sleep, is admissible against him, if independently proved." These passages establish that communication to another is not a necessary ingredient of the concept of "confession". In this context a decision of this Court in Bhogila/ Chunilal Pandya v The State of 'G b Born ay(') may usefully be referred to. There the question was whether a former statement made by a witness within the meaning of s. 157 of the Evidence Act should have been communicated to another before it coUid be used to corroborate the testimony of another witness. This Court, after considering the relevant provisions of the Evidence Act and the case-law on the subject came to the H conclusion that the word "statement" used in s. 157 meant only

"something that is stated" and the element of communication was not necessary before "something that is stated" became a statement under that section. If, as we have said, statement is the genus and confession is only a sub-species of that genus, we do not see any reason why the statement implied in the conression should b~ given

(1) [1959) Supp. I S.C.R. 310.

a different meaning. We, therefore, hold that a statement whether A communicated or not, admitting guilt is a confession of ilt.

. But, there is a cler distinction between the admissibility of an evidence and the weight to be attached to it. A confessional soliloquy is a direct piece of evidence. It may be an expression of conflict of emotion; a conscious effort to stifle the pricked conscience; B an argument to find excuse or justification for his act; or a penitent or remorseful act of exaggeration of his part in the crime. The tone may be soft and low; the words may be confused; they may be capable of conflicting interpretations depending on witnesses, whether they are biased or honest, intelligent or ignorant, imaginative or prosaic, as the case may be. 'Generally they are mutterings of a c confused mind. Before such evidence can be accepted, it must be established by cogent evidence what were the exact words used by the accused. Even if so much was established, prudence and justice demand that such evidence cannot be made the sole ground of conviction. It may be used only as a corroborative piece of evidence.

The circumstances found by the High Court, which we have D stated earlier, lead to the only conclusion that the accused must have committed the murder. No other reasonable hypothesis was or could be suggested.

Further, in this case, as we have noticed earlier, P.W.s II, 13 and 15 deposed that they clearly heard the accused say when he E opened the door of the house and came out at 6 O'clock in the morning of the fateful day that he had "finished Sunderpatti, his daughter-in-law, and thereby finished the daily quarrels". We hold that this extra-judicial confession is relevant evidence:. it certainly corroborates the circumstantial evidence adduced in the case.

I' In the result, we agree with the conclusion arrived at by the High Court both in regard to the conviction and the sentence. The appeal fails and is dismissed.

Appeal dismissed.

SAHOO

STATE OF U

February 16, 1965

K. SUBBA RAO, J.

C. SHAH

S. BACHAWAT

Sections 24 to 30

L. R. 66 I.A 66

Allahabad High Court

P. C. Khanna

P. Rana

Sobba_ Rao

Badri

Kirpa Shanker

Sunderpatti

Lucknow

Sahoo

August 12, 1963

Mohammed Abdullah

August 13, 1963

Sadar Hospital, Gonda

August 26, 1963

Court of Sessions, Gonda

s. 302

Indian Penal Code

s. 302

Indian Penal Code

High Court at Allahabad

Kirpa Shanker

Provisions of the Evidence Act

Sections 24 to 30

ss. 17 to 30

Taylor

Best

Phipson

W. M. Best

s. 157

s. 157


HUKUMCHAND GULABCHAND JAIN

FULCHAND LAKHMICHAND JAIN AND OTHERS

February 16, 1965

!) J.

(K. SUBBA RAO, RAGHUBAR DAYAL AND R. S. BACHAWAT, JJ.] Public Trusts-Trustee-Liability to pay interest on trust funds- Rule of damdupat-Applicability. ·

The respondents who were interested in a public temple filed a suit against the appellant who was looking after the affairs of the temple. They prayed for his removal from possession of the trust properties, for the rendering by him of true and faithful accounts and for the framing of a scheme. The trial court held that the appellant was liable to render accounts. Having ascertained the amount of principal, it determined the interest payable at an amount equal to that of the principal on the basis of the rule of damdupat. The respondents appealed to the High Court and urged that the rule of damdupat should not have been applied and that compound interest should have been charged against the appellant. The High Court held that the appellant had used the trust moneys in his business and therefore agreed with the contention of the respondents and remanded the case to the trial court for ascertaining the amount due to the temple.

In the appeal to the Supreme Court, it was contended that (i} there were no grounds for making the appellant liable to pay dompound interest, and (ii) even if there was liability to pay any interest, it was only for paying simple foterest and that the rule of damdupat should be applied.

HELD: (i) It had not been proved that the trust funds had been used in the appellant's business and therefore the appellant was not liable to pay compound interest on the balance of the trust funds with him. f96 Gl

(ii) In the absence of statutes during the period of suit dealing with public charitable trusts making a trustee liable to pay interest, interest could be charged only on equitable grounds. One such circumstance is, when the Court considers that the trustee ought to have received interest, as when he retains trust money in his hands uninvested. Since the accounts, in the instant case, show that the oppellant had retained the principal amount uninvested for over twenty years he would be liable to pay simple interest at the rate of 4 per cent per annum. Even though the interest calculated at that rate exceeded the principal, that entire interest would have to be paid, because, the rule of damdupat would not apply. The principle of damdupat was evolved both as an inducement to the debtors to pay the entire principal and interest at one and the same time in order to save interest in excess of the principal, and as a warning to the creditor to take effective steps for realising the debt from the borrower within a reasonable time, so that, there may not be accumulation of interest in excess of the principal amount. But that rule applies only to cases where a loan is advanced. Though a trustee Who had custody of trust funds, has a pecuniary liabiliy to make oo? those funds if he has used them and may, on the baSls of such a hab1lity be said to be a debtor of the trust, yet he, as an individual, is not' a borrower of the funds from the trust and cannot be said to have taken a loan from himself as a trustee in charge of the trust funds. [96 H; 97 E-H; 99 D; E; 101 E-F, HJ

Sharp v. Jackson, (1899) A. C. 419 and Lake, in re Dye>r Ex Parte, A (1901)1 K.B. 710, referred to.

OVIL APPELLATE JURISDICTIOl'I: Civil Appeal No. 216 of 1962.

Appeal from the judgment and decree dated September 15, 1959 of the Bombay High Court in First Appeal No. 600 of 1955 B from Original Decree.

A. V. Viswanatha Satri, Rameshwar Nath, S. N. Andley and P. L. Vohra, for the appellant. S. N. Pershad, M. II. Chhatrapati, J. B. Dadachanji, 0. C.

Mathur and Ravinder Narain, for respondents Nos. 1 and 2.

K. L. Hathi and R. H. Dhebar, for respondent No. 3.

The Judgment of the Court was delivered by

Raghubar Dayal, J. There is a temple known as Shri Chandraprabhu Khandelwal Jain Tempie at Dhulia. Gulabchand Hiralal, father of appellant Hukumchand Gulabchand Jain, a leading member of the Khandelwal Jain Community a( Dhulia, looked after D the temple for over 40 years till his death sometime in 1950. The appellant looked after it after his father's death. Two members of the community interested in the temple, held to be a public temple, instituted the suit against the appellant and the Charity Commissioner, Bombay, praying for the removal of the appellant E from possession of the trust properties, for the rendering of true .and faithful accounts of all the assets and income of the trust property and for the framing of the scheme for the administration of the trust. It was alleged in the pla; nt that the appellant's father was maintaining all accounts of income and expenditure concerning the temple. and that the funds of the temple wer~ many times advanced F at interest and that the temple had come to hold large properties, movable and immovable. It was further alleged that the temple had a large income from offerings, house-rent etc., but the appellant and his deceased father had not been ma; ntainingthe accounts properly and that the funds of the temple were being advanced at interest, though no such income was shown as received recently G by the appellant.

The appellant, in his written statement, denied that the amount was so advanced at interest as alleged by the pla; ntilis and stated that his father had been keeping a ledger in the name of the temple in the accounts in which its income and expenditure had been duly entered since over 40 years and that the appellant himself had kept R separate account books for the temple since October 30; 1951. He denied that any income recently received had not been shown in the accounts.

The trial Court held that the appellant had committed minor irregularities in the maintenance of the accounts, that he was liable to render accounts and that the Commissioner was to ascertain the

Hl'KUMCHAND v. FULCHAND (Dayal, J.) D3

A amount due from the appellant on taking the accounts. It definitely held it not established that income, if any, derived by way of interest on loans advanced out of the funds of the temple had not been credited to the account of the temple and !\lat no instance of fraudulent or dishonest misappropriation of temple funds on the part of defendant No. I or his father had been establ; shed. It found B that the meeting of the community had passed a resolution on August 22, 1958, by an overwhelming majority, sanctioning the accounts submitted by the appellant and that only two persons who opposed against the resolution were the two plaintiffs of the suit. c The Commissioner found that on the date of the institution of the suit, i.e. on February 17, 1954, Rs. 10,088-10-3 were due for principal and Rs. 16,853-6·0 were due for interest, from the appellant. The plaintiffs admitted the report to be correct but the appellant contended that under the rule of damdupat interest exceeding the amount of pr!ncipal could not be allowed. The D appellants contention was accepted and the trial Court passed a decree on April 23, 1955, for Rs. 20,177-4-6 against the appellant, with future interest at 6 per cent per annum .. We are not now concerned with the other items of the decree and therefore we make no reference to them.

The appellant deposited the amount d'Ue under the decree on E July 18, 1955. The plaintiffs appealed and claimed a larger amount on var!ous grounds, including the one that the principle of damdupat should not have been applied and that interest on the balarice of the trust fund should have been calculated and compound interest allowed in place of simple interest on the amount of the

F trust fund in the hands of the defendant or his father.

The appellant filed a cross-objection against the allowing of interest on the balance of the tr'llst funds with h; s father and himself.

The High Court agreed with the plaintiffs that the principle of darndupat could not be applied in the circumstances of the case G and that compound interest should have been charged against the appellant. It therefore set aside the decree passed by the trial Court in so fa( as it determined the amount due to the temple and referred the case back to the trial Court for re-assessment of the amount due to the temple having due regard to the observations made in its judgment. On an application by the appellant, certi- H ficate under Art. 133(1) of the Constitution was granted.

The app, ellant has then filed th's appeal and questioned the correctness of the order of the High Court holding him liable to pay compound interest and holding that the principle of damdupat was not applicable in this case.

The High Court said in its judgment that it was the contention of the plaintiffs that the appellant's father and the appellant

L/B(D)2SCI-8

used the funds of the temple in their business and that they were A therefore liable to account on that footing. There was no such allegation in the plaint or in the memorandum of appeal to the High Court. The High Court referred to the khulasa submitted to the Commissioner by the plaintiffs and stated that it was specifically alleged therein that the amount was being used by the defendant and his father. in business. Support for such an allegation B was found in the statement Exhibit 24 of the appellant's father in

1931. Reference was also made to the fact that the appellant had nowhere denied the .fact of the moneys of the temple being used for the purpose of the business and to the non-production of certain books of account by the appellant: His statement that they were not available was not accepted. The High Court recorded the C finding in this form (at p. 43 of the appeal record):

"Under these circumstances it would not be an unreasonable inference to draw that the amounts belonging to the temple were being utilised by Defendant No. 1 (the appellant) and before him by his father in their business." D Having come to this conclusion and to the view that the position of the appellant's father and the appellant vis-a-vis the temple funds was that of a trustee, the High Court Considered whether the plaintiffs could claim interest on equitable grounds and held that they could claim compound interest with yearly rests, as the money had been used in the business or had been so mixed up with their own E funds that it was impossible to say that they had not so used it.

The High Court did not apply the rule of damdupat as .the liability of the appellant was not founded on loans or on any contract.

It is contended for the appellant that there was neither an allegation nor evidence to the effect that the trust funds had been F used in his business by the appellant's father or the appellant and that therefore the appellant was not liable to pay compound interest on the trust funds in his hands or in the hands of his father.

It was further urged that if interest was payable by the appellant's father or the appellant on the balance of trust funds, it should be simple interest and the amount of interest could not be more than G the amount of principal due on the date of the institution of the suit on the principle of damdupat.

It has not been established in this case that the trust funds with the appeliant or his father were used in their. trade or business.

We have already referred to the finding of the High Court in this H respect. It is a very halting finding. The High Court has not definitely held it proved that the funds were used in the business. We say so. as the High Court has said (at p. 46 of the appeal record):

"Since we are of the view that the defendant No. I and his father have used the monies of the temple in their business or have so mixed it up with their own funds that it is impossible to say that they have not so used it .... "

HUKUlllCIUND V. FULCHAND (DJy3/, J.) 95

A Th's is not a clear-cut definite finding that the funds had been used in business or trade. The earlier finding noted at p. 43 of the appeal record and quoted by us earlier, loses its force in view of what has been said later. There is no evidence about such use of the money. There was no such allegation in the plaint.

B It was said in the khu/asa dated December 22, 1954 and included in the Additional Report of the Commissioner of even date:

"Because the amount that was received by the defendant in respect of the temple could be utilised by the defendant in his business he used to pay interest thereon at the rate of annas 8."

This too, is not, as stated by the High Court, a specific allegatien that the amount was being used in business.

The plaint did not even say that the amount had been always D advanced on loan. What it said in para 1 is that the funds of the temple were many times advanced at interest and that no income from interest recently received had been shown in the accoUhts. No evidence has been led about the regular advance of the trust funds as oans. On the other hand, the accounts show only a few entries about the receipt of interest on the trust funtls.

B The statement, Exhibit 24. made by the appellant's father on October 26, 1931, in Regular Suit No. 377 of 1931, was in a suit instituted by the appellant's father for the recovery of money advanced on a mortgage at compound rate of interest. Gulabchand, father of the appellant, stated .in examination-in-chief, that the 1 funds lent were of the temple, the transactions of the temple were in his name and that interest at compound rate had been agreed upon. In cross-examination he stated that he had with him funds of the temple and that he paid for them compound interest at 8 annas. This statement does not necessarily mean that the appellant's father had been crediting the temple accounts with com- G pound interest, at the rate of 8 annas, on the temple funds in his hands.

G_ulabchand made another statement on January 12, 1950. It is exhibit 23. This statement was made in proceedings on Miscellaneous Application No. 110 of 1949. He stated:

B "Suit No. 377 of 1931 had been filed. In the same my deposition has been recorded. I have made a statement that the amount was of the temple. But I gave a statement to that effect as that amount has been set apart for the temple.

I have given a statement that after the mortgage deed was executed and before the suit was filed, I set apart this amount for the temple and that the transaction of the temple was in my name. That statement is correct.

SU!'H, J'1ME

COURT

REPORTS

(! 965) 3 S.C'.R.

If it is the amount of the Mandir, I credit it to the A Kha ta of the Mandir. I rlo not pay interest for the amount of the Mandir. As there was interest in the mortgage deed, I have taken interest at eight annas from Mangilal. I have made a statement that I have with me the amount of the temple and that I pay interest for it at eight annas." These statements. taken togclher, lead to the inference that B Gulabchand was not crediting interest on the temple funds in the accounts except when he received interest on the amounts lent and that this statement made in 1931 was in connection with the amount lent on a mortgage deed. He ch; irged compound interest from the mortgagor and therefore credited that interest in the accounts. Jt is significant to note that the four entries about interest C were for the years J 927 to I 93 I when Suit No. 377 of I 93 I was filed. The fact that no interest appears to have been credited after 193 I bears out the inference we derive from the statementsof Gulabchand.

There is another matter which throws light on this question and D tends to support our conclusion. The report submitted by the Commissioner on November 29, 1954 shows that the balance at the beginning of samvat year 1996, corresponding to 1939-40, was Rs. 7,649-14-3. The amount credited during the year was Rs. 573-12-0 and the amount debited was Rs. 769-3-6. If the opening balance be ignored, there would be a deficit of Rs. 195-7-0 and E the accounts for the samvat year 1997 opened with a debit balance of Rs. 195-7-0. This shows that the opening balance of samvat year 1996, i.e. Rs. 7,649-14-3, had been taken out of the accounts. It appears that this amount was taken over to some Bhandara account and was credited again in the temple accounts for samvat year 2009, i.e., 1952-53, after being brought out from Bhandara P account. Such dealing with this amount does not appear to be consistent with its being used in business. ·

In view of the shaky finding of the High Court about the funds being used in business by the appellant's father or the appellant and in view of what we have said above, we hold that G it has not been proved that these funds had been used in business and that therefore the appellant is not liable to pay compound interest on the balance of the trust funds with his father or himself.

We may now consider whether the appellant is liable to pay simple interest on the balance of trust money with his father or himself.

Two questions arise for consideration and they are whether the trustee is liable to pay simple interest on the trust capital in his hands arid if he is so liable what rate of interest be charged from him in the present case. Interest can be . allowed on equitable grounds only as no statutes in force during the period in suit and dealing with public charitable trusts made the trustee liable to pay

HUKUMCHAND v. FULCHAND (Du, yal, J.) 97

A interest. The Indian Trusts Act does not apply to public or private religious or charitable endowments and therefore the provisions of s. 23 thereof cannot be used for charging interest from the appellant trustee. The Charitable and Religious Trusts Act has no provision which provides for charging the trustee with interest.

Reference may therefore be mad, e in this connection to what is stated in para 1691 of Halsbury's Laws of England, III Edition.

Vol. 38:

"Subject to this, or unless a trustee is expressly otherwise authorised or required under the terms of his trust, he must duly and promptly invest all capital trust money coming to his hands, and all income which cannot be immediately applied for the purposes of the trust; and he is liable for any loss which may result from its being improperly invested or being left uninvested for an unreasonable length of time, and for interest during the period of its being so left." This is so because the trustee has to conduct the affairs of the trust in the same manner as an ordinary prudent man of business would conduct his own affairs. In para 1812 are set out the circumstances in which a trustee, besides being required to account for the principal trust money, can also be charged with interest on it and one of the circumstances is when the Court considers that the trustee ought to have received interest. Such could be the case when the trustee, in breach of his duty, retains the trust money in his own hands uninvested or mixes it with his own money or property.

It appears from the Commissioner's report that the trustee in this case had over Rs. 10,000 in his hands from samvat year 1988 commencing from November 10, 1931, upto February 17, 1954, when this suit was instituted. The trustee kept such a large sum uninvested for a long time extending over 22 years. The accounts show that reasonably he could not have expected to require this amount for any current purpose of the trust during these years. He should have invested the amount. His failure to do so makes him G l'able to pay interest.

It appears from what is said in para 1814 of Halsbury's Volume 38 that where a trustee simply fails to invest trust money which he ought to have invested or there are no other special circumstances in the case, he is in general charged simple interest at the rate of R 4 per cent per annum. We consider it reasonable to charge interest at 4 per cent per annum in this case.

We have now therefore to decide what had been the amount of trust funds in the hands of the appellant's father at different times and what would be the amount due from the appellant on the date of the insfoution of the suit, both for principal amount of trust money and for accumulated interest with him. We do not

cm:isider it desirable that the case be sent back to the trial Court A for these calculations, in the light of our finding, as this litigation has been pending for over 10 years and as the accounting is to be I done for a period commencing from November IO, 1931, from which date the accounts are available to the Court.

The Addit; onal Report of the Commissioner, dated Decem- B ber 22, 1954, shows that the amount of principal on February 17,

1954, the date on which the suit was filed, was Rs. 10,088-10-3 and that the accumulated amount of interest due on that date was Rs. 16,85.3-6-0 at the. rate of 6. per cent per annum. The plaintiffsrespondents admitted this report to be correct. The defendant also admitted the correctness of the principal amount found due by the C Commiss'oner. He, in fact; did not even dispute that the amount of interest at 6 per cent per annum would be what has been found by the Commissioner. What he contended was that he was not liable to pay interest in excess of the amount of principal found due, in view of the rule of damdupat. In these circumstances, these figures can be accepted as correct.

D When the Commissioner had submitted his first report on November 29, 1954, both the parties objected to the accounts prepared by him. The defendant had objected to the Commissioner's including a sum of Rs. 7 ,648-14-3 twice over in his accounts. This sum represents the balance at the clme of samvat year 1995 corresponding to 1938-39. It was not taken over in the accounts for E the samvat year 1996. The Commissioner, in preparing the account, took this amount into consideration without making up the accounts for the samvat year 1996. He found and noted in his accounts that the amount credited to the temple during the samvat year 2009 corresponding to 1952-53 was Rs. 9,978-5-3 and that this amount included a sum of Rs. 7 ,648-14-3 which had been brought 'II from the Bhandara account. He however did not consider this sum to be the sum which had been not included in the accounts of the temple from the samvat year 1996.

The learned District Judge agreed with the objection of the defendant and held that this amount had been included twice in G the Commissioner's accounts.

The respondel)ts did not d; spute the correctness of this finding in the High Court and therefore we do not consider it a sound contention that this sum of Rs. 7,648-14-3 be further added to the balance found due by the Commissioner.

The appellant stated that the statement of the balance in and submitted by him to the meeting on August 22, 1953 was amved at by adding an amount of Rs. 7,000 to the balance shown in the accounts as he had found a suin of Rs. 7 ,000 in a bag marked 'Dharrnadya' inside a safe. The High Court has not considered the statement of the defendant about so finding a sum of Rs. 7 ,000 reliable. It was not urged before the High Court, as has been urged

H8KUMCHAND V. FllLCHf.ND (Dltyal, J.) 99

A before us, that this sum of Rs. 7 ,000 be included in the amount of trust money in the hands of the appellant on the date of the institu tion of the suit. The High Court merely dealt with the complaint for the respondents that the Commissioner had not taken this sum into account for the purpose of computation of interest on funds in possession of the defendant. The High Court considered thia B complaint to be justified. We therefore do not accept the respond

ent's contention that Rs. 7 ,000 be added to the balance found due by the Commissioner and hold that the High Court was in error in ordering interest to be calculated on this amount as well.

According to the report of the Commissioner, the amount of tl interest on the principal amount of trust money in the hands of the trustee worked out to Rs. 16,853-6-0 up to February 17, 1954 at 6 per cent annum. We have held that the interest be calculated at 4 per cent per annum. If follows that at this rate the amount of interest found due by the Commissioner would be requced to Rs. 11,235-9-4. The principal due on that date was Rs. 10,088-10-3.

D The question now arises whether the amount of interest be limited to the amount of principal, on the basis of the principle of Damdupat, or not. The High Court has held that the principle of Damdu•

pat will not apply in this case. We agree with that opinion.

The rule of Damdupat applies to cases where a Joan is advanced. Th's is clear from Colebrooke's Digest on Hindu Law.

Part I, Vol. I, of the Digest deals with Contracts. Book I of this Part deals with Loans and Payment. Section I of Chapter I of Book I deals with Loans in General and describes what may or may not be loaned by whom, to whom and in what form, with the rules for delivery and receipt. These matters are comprised under

the title 'loans deEvered (rinadana)', which means the complete delivery of a loan or debt, by whom, where and to whom made.

Chapter II deals with Interest and states at the commencement of Section I:

"Such interest, as may be taken without a breach of duty on the part of the creditor, is a rule (dherma) for delivery by the creditor. Or ... for it is the nature of a loan, that it should produce to the lender the principal sum advanced, and interest in addition thereto." The various Articles in this Section use the expressions 'creditor', 'fender', 'loan', 'principal', 'lent', 'borrowers' and thus make ii e: amply clear that it deals with interest on the amounts advanced by a cred; tor to a debtor. Section I deals with the rates of interest to be charged. Section II deals with Special Forms of Interest Para graph 53 thereof states:

"Interest on money, received at once, not year by year, month by month, or day by day, as it ought, must never be more than enough to double the debt, that is, more than the amount of the principal paid at the same time."

SUPREME COUR'f

REPORTS [1965] 3 s.c.R.

This is what is known by the rule of Damdupai and has been A rightly construed, as long ago as Ul63, by the Bombay High Court in Dlwndu Jagannath v. Narayan Ramchandra(/). Section III

deals with Interest Specially Authorized and Specially Prohibited.

Article II of th's Section deals with Limits of Interest. Paragraph 59 thereof states:

"The principal can only be doubled by length of time.

B after which interest ceases." The limit of interest is different under other paragraphs for loans advanced in different circumstances .. P; iragraph 61 repeats what has been stated in paragraph 53 of Setion II and adds. a special rule to the effect: "On grain, on fruit, on wool or hair, on beasts of burden, lent to be paid in the same kind of equal value, it must not be more than enough to make the debt quintuple."

It is therefore clear, as stated earlier, that the rule of Damdupat applies in respect of interest due on amounts lent by a creditor to D the borrower, the debtor. The question then is whether the funds in the hands of a trustee can be said to be such loans notionally advanced by the trustee to 1:timself as an individual. If their character can be deemed to be such, there may be a case for applying the rule of Damdupat to the interest on such funds and that if it is not so, this rule of Damdupat will not apply to the interest ordered E . to be paid on such funds.

It has been urged for the appellant that the trustee is a debior with respect to the trust money in his hallqs. Reference has been made to Halsbury's Laws of England, III Edition, Vol. 38, page

1044 where it is stated at para 1801:

"A breach of trust is, in equity, regarded as giving rise to a simple contract debt." In the foot-note is stated :

"Strictly speaking, the relation of debtor and creditor Gioes not subsist between a trustee and his cestui que trust (per Lindley, L. J. in (1886) 18 Q.B.D. 295)." Cl Lewin on 'Trusts', 15th Edition, states at p. 745:

"The debt constituted by a breach of trust is, even after it has been established by a decree, an equitable debt only, and until the Bankruptcy Act, 1869, would not have supported a petition in bankruptcy." It was said by the Earl of Halsbury, L. C., in Sharp v. Jack- H son('):

"It has been suggested that there was a proposition which could be maintained, as to which I confess I entertain grave doubts whether any decision goes to that extent, namely, that the relation between a cestui que trust

(1) [1861] B>m. H.C'. Rep. 47, 49.

('J [1899] A.<'. 419, 426.

...

HUKUMCHAND v. FOLCHAND (Dayal, J.)

and a trustee who has misappropriated the trust fund is hot that of debtor and creditor. That it may be something more than that is true, but that it is that of debtor and creJitor. l can entertain no doubt. As that question has been mooted and brought before your Lordships' House as one question for decision here, I certainly have no hesitation in saying that in my qpinion no such proposition can properly be maintained, and that although there are other and peculiar elements in the relat'.on between a cestui que trust and a trustee, undoubtedly the relation of debtor and creditor can and does exist." No other Lord expressed an opinion on this point.

The correctness of this expression of the Earl of Halsburv has been doubted in Lake, in rt. Dyer, Ex Parte(') by Rigby L. J.,. who remarked at the hearing:

"How is a trustee a debtor? Can he be sued at common law'' I do not see how he can be a 'debtor', for the money he is fraudulently dealing with is, at law, his own money.

No doubt he can be called upon to replace the money, but that must be by a suit in equity, not at law. Notwithstanding the high authority of the statement that has been referred to, I confess I do not understand it."

We are of opinion that though a trustee, who has custody of trust funds, has a pecuniary liability to make good those funds if he has used them and may, on the basis of such a liability, be said to be a debtor of the trust, yet he, as an individual, is nt a borrower of the funds from the trust and cannot be said to have taken a loan from himself as a trustee in charge of the trust funds.

His liability to pay interest, when ordered by the Court on equitable grounds, does not come w; thin the provisions dealing with interest in Hindu Law, as mentioned in Colebrooke's Digest.

There is no fixed rate of interest which a trustee be liable to pay as there is no contract between him as a trustee and as an ind'vidual to pay interest. He simply uses the money in his custody.

It is only when the Court determines his liability to pay interest that interest is to be calculated on the principal amount due from h'm. It is not the case of a creditor letting interest accumulate and thus make the debtor pay interest much more than what he had borrowed as principal.

The principle of Damdupat was evolved both as an inducement to the debtor to pay the entire principal and interest thereon at one and the same time in order to save interest in excess of the principal and as a warning to the creditor to take effective steps for realising the debt from the borrower within reasonable t; me so that there be not such accumulat; on of interest as would be in excess of the principal amount due, as in that case he would have: to forego the excess amount. There may be justification for the:

(') [19Jl] 1K.B.710, 711;.

principle of Damdupat applying in the case of an ordinary creditor A and a debtor, but there seems no justification for extending that pr'nciple to the case of a trustee who has to pay interest on the funds in his hand with respect to which on .certain grounds he is held liable to pay interest. We therefore hold that the rule of Damdupat will not apply with respect to the interest adjudged payable by a trustee on his committing breach of trust w; th respect B to the trust funds in his hands .

The result then is that the appellant is liable to pay Rs. 10,088-10-3 for principal and Rs. I l,235-9-4 as interest, upto the date of the institution of the su't, i.e. upto February 17, 1954.

We therefore allow the appeal, set aside the decree of the C High Court and modify the decree of the trial Court accordingly: The result will be that the suit temple will be entitled to get from defendant No. I a sum of Rs. 21,324-3-7 upto the date of the suit, together with future interest at 4 per cent per annum on Rs. 10,088-10-3 from the date of the suit till the date of payment.

D The 2ppellant will bear his costs throughout. The costs of the respondents will come out of the estate.

A ppea/ allowed.

HUKUMCHAND GULABCHAND JAIN

FULCHAND LAKHMICHAND JAIN AND OTHERS

February 16, 1965

K. SUBBA RAO

RAGHUBAR DAYAL

R. S. BACHAWAT, JJ.

Supreme Court

OVIL APPELLATE JURISDICTIOl'I

A. V. Viswanatha Satri

Rameshwar Nath

S. N. Andley

P. L. Vohra

S. N. Pershad

. Chhatrapati

B. Dadachanji

Ravinder Narain

K. L. Hathi

R. H. Dhebar

Raghubar Dayal

Hukumchand Gulabchand Jain

Bombay

October 30; 1951

August 22, 1958

February 17, 1954

April 23, 1955

July 18, 1955

Art. 133(1)

HUKUlllCIUND V. FULCHAND

December 22, 1954

October 26, 1931

Gulabchand

January 12, 1950

SU!'H

Mangilal

B Gulabchand

November 29, 1954

Indian Trusts Act

s. 23

Charitable and Religious Trusts Act

November 10, 1931

November IO, 1931

Decem- B ber 22, 1954

February 17,

1954

August 22, 1953

Colebrooke

Damdupai

Bombay High Court

England

Lindley

Cl Lewin

Bankruptcy Act, 1869

Halsburv

Dyer

Rigby

Damdupat

C High Court