Madras High Court
T. Ramaswami Aiyar vs T. Subramania Aiyar And Ors. on 16 February, 1922
Equivalent citations: (1922)43MLJ406
JUDGMENT Sadasiva Aiyar, J.
1. The 1st plaintiff is the appellant before us in this second appeal which is called an Appeal against Appellate Order.
2. This litigation has been going on for the last 26 years, the suit having been filed in 1895.
3. It was a suit for partition brought by the plaintiff against his father, brothers and other members of his (family and alienees.)
4. In 18 99 when the old Civil Procedure Code was in force the District Judge on appeal made a decree as follows: "It is ordered that the items Nos. 1, 2, 14 and 15 mentioned in the Schedule C and the moveables in Schedule D (except items 5, 10 and 37) of the plaint be divided into live shares and that the plaintiff be given a one fifth share of the same etc."
5. As pointed out by Bhashyam Iyengar, J. in Mallikarjunadusetti v. Lingamurthi Pantulu (1902) I.L.R. 25 Mad. 244 at page 277. "In the case of a suit for partition there is to be but one decree" (under the old Civil Procedure Code) "but before making that decree the Court may appoint a commissioner to submit a scheme for effecting the partition under Section 396. There is in the section no reference made to a preliminary decree. All that the section enjoins is that the Court "after ascertaining the several parties interested in the property of which a partition is sought and their several rights therein, may issue a commission etc." Thus it was only after the commissioner or commissioners sent the report or reports and after the actual division and allotment of shares to the parties (awarding sums if necessary for equalizing shares) and after hearing objections to the commissioner's report or reports and deciding on those objections (if any) that the Court could pass the decree (and the only decree) in the suit under the old Code. There was no such thing as a preliminary decree under the old Civil Procedure Code in a suit for partition, and, of course, no such thing as a final decree. As a matter of practice, the order ascertaining the several parties interested in the property to be divided and their several rights therein used to be treated as itself a decree subject to appeal and as such an order does contain the adjudication as to rights and shares and persons interested, the description of that order as a decree may not be considered inapt. But, the description of that order as a preliminary decree and the description of the decree passed after the report of the commissioners making the actual division as a final decree are not authorised by the old Civil Procedure Code.
6. The distinction between the old Civil Procedure Code (Section 396) and the new Procedure Code (Order 26 Rs. 13 and I4, and Order 20, Rule 18, which contemplate the passing of a preliminary decree in place of the order, ascertaining the parties and shares and contemplate a final decree after the commissioner's report) has not been kept in mind by the lower Courts during the progress of the present partition suit which as I said was governed by the old Civil Procedure Code for about 13 years after its institution and has been governed by the new Civil Procedure Code during the last 12 or 13 years.
7. The result has been that the order passed in 1899 under the old Code has been (by confusion and mistake) called a preliminary decree in the proceedings after the new Code came into force and what is called a 'final' decree has (after the report of the commissioner appointed in this case in 1915,) been passed in September 1916. Against this 'final' decree of September 1916, an appeal was preferred to the District Court which dismissed the appeal and against that dismissal the present second appeal has been brought. I think for the reasons stated above that the decree passed by the Subordinate Judge in September 1916 is the only decree passed in this case and that the so called decree of 1899 is not a preliminary decree but an interlocutory order ascertaining the rights and shares with a view to pass the partition decree in the case after the lands are divided by (and other steps taken through) commissioners etc.
8. I now turn to the merits of the substantial questions in the suit. The plaintiff in his plaint prayed besides the division of the properties owned jointly, the award to him of the profits of his share of the lands for the three years preceding the date of the plaint and of subsequent profits, (till possession was given of his shares) from defendants 1 and 2. (The 1st defendant died after the suit). The order of 1899 was silent on the question of those profits. Here again, I have to point out that the Tamil word corresponding to 'profits' seems to - have been translated into the technical phrase 'mesne profits' in the Judgments and orders which we have to considor in the disposal of this case. "Mesne profits" according to the definition given in Section 211 of the old Civil Procedure Code and in Section 2, Clause 12 of the new Code mean those profits which "the person in, wrongful possession actually received, etc." The observation of their Lordships of the Privy Council in Pirthi Pal and Uman Parshad v. Jowahir Singh (1887) I.L.R. 14 Cal. 493 at p. 509, may be quoted in this connection. "The District Judge thus proceeded erroneously in their Lordships' opinion to treat the claim for an account of the proceeds of the family estate as a claim for mesne profits, and quoted the provisions of the Code of Civil Procedure as to mesne profits. These provisions are intended for and are applicable to suits for land or other property in which the plaintiff has a specific interest, and not to a suit for partition where he has no specific interest until decree." As pointed out by their Lordships a member of a Hindu family suing for partition and for the profits on his share is really suing for an account of the profits received by the manager or the persons in possession so that the proceeds so received by the latter which are also divisible property may be divided and his share therein also given to him. As stated by their Lordships at page 512, a sharer has a "clear right" to an account of the profits received by the person in possession of the whole, and to be awarded his share thereof, not as mesne profits received by a person in wrongful possession but as appurtenant to the plaintiff's right in his share of the lands.
9. The lower Courts have rejected the plaintiff's claim to his share of the profits received by the defendants from the divisible property for reasons which I shall set out in the words of the Subordinate Judge: "The objection of the first counter-petitioner" (the 2nd defendant) "that the petitioner is not entitled to ask for mesne profits seems to me well founded. In the suit, mesne profits have been prayed for but none appears to have been granted. The preliminary decree does not make any mention of mesne profits nor is any provision made therefor therein". This opinion of the Subordinate Court was pronounced not in what is called the "final judgment" of 13th September 1916 in pursuance of which the Subordinate Judge passed what he called the "final decree" but in an order passed in November 1915 by his predecessor on three interlocutory applications made for appointment of a commissioner and for the taking of other necessary steps in the suit. The District Judge on appeal from the final (or only) decree refused to consider whether an account should be taken of the profits alleged to have been received by the 2nd defendant and the reason is thus shortly stated by him. "It has already been decided that the preliminary decree did not provide for mesne profits, and I cannot go into that in this appeal". The reason so given is rather obscure. It is contended that what the District Judge meant was that as the previous Subordinate Judge had decided in November 1915 that the preliminary decree did not provide for mesne profits and as that opinion of the Subordinate Judge (when deciding interlocutory applications) had become final by not having been appealed against, the plaintiff was not entitled to reopen that matter. If that is the meaning of the District Judge's observation, I think it is erroneous in law. Neither the order appointing the commissioner nor any opinion expressed therein can be the subject of an appeal and under Section 105, Clause (1), C.P.C., a party has a right to appeal from a decree and any error in any order affecting the decision of the case passed in unappealable interlocutory proceedings before the decree may be set forth as a ground of objection in the Memorandum of Appeal. This, of course, means that that ground is open to him when appealing from the decree and should be considered and disposed of in deciding the appeal, if taken.
10. I might also refer to the judgment of Abdul Rahim, J. and Oldfield, J. in A.S. No. 322 of 1919 explaining Ghulsam Bivi v. Ahamadsa Rowther (1919) I.L.R 42 Mad. 296 and to the decision in Ramnath Choturam v. Goturam Radhakishan (1920) I.L.R. Bom. 179, and the other decisions referred to in the latter case in support of the following conclusions: (1) That Order 20 Rule 12, Code of Civil Procedure, relating to technical "mesne profits" does not apply to the claim of a plaintiff suing for partition of lands and the profits which are accruing on the lands which ultimately might fall to his share under the decree, (2) That unless a preliminary decree for partition refused or should be deemed to have refused to grant profits, the Court is not precluded from granting profits in its final decree. In the present case, Order 20, Rule 12, does not apply, there was no such thing as a preliminary decree and there was no expression of opinion against the award of profits before the decree or order of 1899 was passed and no refusal in the decree or order of 1899 to award such profits. On the other hand, the division directed by the order of 1899 impliedly recognised the right in the plaintiff to the award of profits accruing on the plaintiff's share. In all adjudications which are not intended to be final but only to be determinations of some of the questions involved in a suit, there is and ought always to be implied the reservation of leave to all parties to apply for further directions and adjudications necessary for the complete trial and complete disposal of the litigation.
11. If this view (which I hold to be the true legal view) be taken, the lower Courts were wrong in not going into and deciding on the clear right of the plaintiff to have an account taken of the profits of the properties in which he was awarded a share and in not giving him the appropriate relief in respect of such profits in the decree which was intended as the final stage in the disposal of the suit.
12. I now come to the above real question in dispute, namely, whether the plaintiff is entitled to have an account of the profits as claimed in the plaint. As in a partition suit, the plaintiff is not entitled ordinarily to claim past mesne profits, his claim for profits before date of suit must be disallowed. As regards subsequent profits, he is clearly entitled to have an account taken of the profits of the properties proved to have been in the 2nd defendant's possession, such profits being treated as appurtenances and accretions to the properties, the right to a share in which has been declared in the plaintiff's favour in the order of 1899. I would therefore call for findings on the following issues:
(1) What are the properties which have been in the 2nd defendant's possession since the date of the suit up to the date when the plaintiff's share according to the decree was divided off and placed in his possession?
(2) What is the value of the net profits which have been so received by the 2nd defendant from the plaintiff's share of the lands?
13. Time for submission of findings will be three months from the date of the receipt of records by the District Court and ten clays will be allowed for objections.
Napier, J.
14. I agree.
15. In compliance with the order contained in the above judgment the District Judge of Madura submitted findings on the said issues.
JUDGMENT Oldfield, J.
1. The first issue remanded relates to the properties in the possession of 2nd defendant. Some attempt has been made to argue that certain properties, to be referred to as the mortgaged items, have since their delivery to plaintiff, to which reference will be made, been regained by 2nd defendant, wholly or in part. But that rests only on references to allegations to that effect in the Subordinate Judge's order on E.P. No. 154 of 191.9 and E.A. No. 194 of 1920, on which no finding was reached, and is not supported by any evidence taken on the remand.
2. In fact there is no indication that this matter was ever submitted to the lower Court at the remand hearing or had been mentioned to the learned Judges, by whom the remand was ordered. Similarly as regards the suggestion that some properties were for a time in the possession of the father of plaintiff and 2nd defndant after the institution of the suit. No other objection to the finding on the first issue remanded has been made. We therefore accept it.
3. On the second issue remanded, relating to plaintiff's share of the net profits received by 2nd defendant and to be accounted for by him from plaintiff's share of the lands, or rather from the lands assigned to the latter, we have been unable to ascertain and the learned vakils concerned cannot say how the total found payable to plaintiff has been reached. We therefore can only with the assistance of the materials now available and accepted by the Lower Court indicate the lines, on which the account must betaken. The 2nd defendant was in possession as manager of the family, until on the date of the plaint the joint family became divided and a tenancy in common replaced it, 2nd defendant continuing in possession as one of the co-tenants, It is therefore possible to say at once that he has from the date of plaint (22nd August 1895) been accountable for plaintiff's share of the produce of all the lands with the exception for the present of Survey Nos. 228B (representing items 1 and 2), 233 (items 3) and items 4 to 6, because the special considerations applicable to these require separate treatment.
4. The question is next whether plaintiff is entitled to interest on his share of the profits for each year from the time, when 2nd defendant received it. As a co-owner in possession of the co-ownership property, he was, it may be conceded a constructive trustee with reference to Section 94.of the Trusts Act and was subject to the same liabilities as a trustee with reference to Section 95. But it does not follow that he is liable for interest on the profits. For it has not been shown how a trustee can ordinarily be so liable in the absence of any breah of trust established against him in the special circumstances enumerated in Section 23. There is ho imputation on 2nd defendant's realization of profits as fraudulent or inefficient; and, when the suit might at any moment during the long period of its suspension have been resumed and it might have been necessary for 2nd defendant to produce the funds in his hand, we are not prepared to hold that lie was bound by Section 20 to invest them. Authority is, as my learned brother has shown, against the duty of a trustee ordinarily to pay interest on profits. We accordingly cannot hold 2nd defendant liable for it, and, taking this view, we need not consider whether the learned Judges, in holding him liable for profits, not mesne profits, in the order of remand, intended, as has been argued before us, to deal with the matter.
5. Of the mortgaged properties Survey No. 233 (item 3 was subject to a simple mortgage and was, it has been found, throughout in 2nd defendant's possession Survey No. 228 B and items 4 to 6 were under usufructuary mortgage and returned to his possession only on his redeeming in 1908. The fact that he advanced the monies by which Survey No. 233 was retained under Order 21, Rule 89 and by which the other items just enumerated were regained for the family, cannot affect his right to profits after the payments. For it is clear from the Lower Court's statements I and II, that the receipt of profits for previous years had placed sufficient family funds in his hands for these purposes and that no expenditure of his own money, in virtue of which he can claim any special right over the profits, took place. He must therefore account for the profits of these lands also, of Survey No. 233 from the date of plaint and of the others from the date of his regaining possession on redeeming; but on these profits also no interest will be payable.
6. As regards the properties last mentioned as having been subjected to usufructuary mortgage, and it would appear, since the order to be next referred to is not explicit, also in respect of others, the matter is complicated by the fact that plaintiff and 7th defendant took delivery of their shares in execution of the first decree passed by the Subordinate Court without reimbursing 2nd defendant what he had spent on redemption. In appeal the District Judge held that they should have reimbursed him before doing so and on 20th February 1920 they deposited the amount and retained possession. Later however 2nd defendant in E.A. No. 194 of 1920, obtained from the Subordinate Court an order directing payment by them of profits for the properties for the period, during which their possession was eventually held to have been unjustifiable before his reimbursement. It is argued that this order became final and that 2nd defendant must be allowed to retain the amount paid under it without reference to his liability in the general account which is now being taken. This is not sustainable. It is clear that the Sab ordinate Court was dealing in its order only with the matter immediately before it, the 2nd defendant's right to restitution of profits in connection with the lower Appellate Court's alteration in its decree, not with any general or final account. In fact the right to such an account had been disallowed by the lower Appellate Court m paragraph 3 of its judgment and this disallowance was the subject of the appeal to this Court. 2nd defendant must therefore refund to plaintiff and 7th defendant what they paid him by credit in the account to be taken.
7. The remaining question is whether 2nd defendant is entitled to interest, on the amounts paid by him under Order 21, Rule 89 and for redemption. As the payment must be regarded as made from the family funds in his hands, the decision must be in the negative. His claim to interest at 9 per cent, on Rs. 271-0-6 paid under Order 21, Rule 89 would in any case be excessive, since the debt was outstanding at 6 per cent, only, having been merged in a decree.
8. The foregoing deals with the objections to the Lower Apppellate Court's finding, so far as they have been pressed. In accordance with it plaintiff (and the same will apply to 7th defendant, when his claim is put forward) will be entitled to (1) his share of the profits as ascertained in statements i, ii and iii from date of plaint on all the items assigned to him, except survey No. 228B, and items 4, 5, 6 and on them from and including the crop season of October 1908, (2) credit for half the amount paid by him and 7th defendant under the order on E.A. No. 194 of 1920. There will be no interest on (1) for the reasons already given or on (2), because it represents profits which plaintiff took prematurely and which would not have carried interest, if they had been realized by 2nd defendant. Similarly the amounts expended by 2nd\defendant under Order 21 Rule 89 and on redemption carry no interest. They and their share of them repaid by plaintiff and 7th defendant can therefore be left out of the account, 2nd defendant retaining the amount of that repayment.
9. The appeal is adjourned for seven days in order that the practitioners concerned may consider the preparation of an account on these lines.
Venkalasubha Rao, J.
10. I am of the same opinion, and I should like to slate my reasonsifor holding that the 2nd defendant is not liable for interest.
11. On behalf of the plaintiff it is argued that the 2nd defendant stood in a fiduciary relation to him and would therefore be liable to pay interest upon the rents received from the lands.
12. In the first place, I am not satisfied that there is any fiduciary relation between the plaintiff and the 2nd defendant. After the interlocutory order of 1899 it is no doubt conceded that the parties became tenants in common with reference to the properties in question. But we have not been referred to any authorities in support of the proposition that the 2nd defendant stood in any fiduciary relation to the plaintiff. The decision in Kennedy v. De Trafford (1897) A.C. 180, is the other way. Action was brought against the mortgagees of some property to set aside a sale made by them under the power of sale contained in their mortgage deed. The property mortgaged was held by two persons as tenants in common. They were co-owners, each possessing an undivided moiety. The mortgagees, gave notice that unless the parties paid off the mortgage the former would be prepared to sell the property at a price which would realise principal, interest and costs, and finally one of the mortgagors became the purchaser. The sale was impeached by the representative of the other mortgagor on the ground that it was made to a person who was incapable of buying the property because he was in a fiduciary relation. Lord Herschell observes "But then it is said the mere fact that Kennedy was co-owner with Dodson of this property creates such relationship between them that one co-owner could not take this property and hold it for himself, but that the other co-owner is entitled on equitable grounds to have it declared that the benefit of one half of that purchased should be his. My Lords, no authority has been cited in support of such a proposition."
13. In the Court of Appeal Lindley, L.J. made the following observation in regard to this contention by the plaintiff, the co-tenant: "We are asked to say, and the point is an important one, that one of several tenants in common, cannot get in for his own benefit an outstanding encumbrance or an outstanding estate or cannot be treated otherwise than as fiduciary owner standing in some fiduciary relation to his co-tenant. As a general proposition that appears to me not to be the law of England."
14. Even assuming that there was a fiduciary relation is the 2nd defendant liable for interest upon the rents of the lands in his possession?. In Blogg v. Johnson (1867) 2 Ch. App. 225 Lord Chelmsford L.C. stated that generally interest cannot be recovered upon the arrears of income. Several cases are referred to in the judgment and the rule is said to be the established rule of the Court, which however, is only general and not inflexible.
15. In Silkstone and Haighmoor Cole Co. v. Gedey (1900) 1 Ch. 167 it was held that upon the setting aside of a sale by a trustee of a trust property to himself and the reconveyance of the property to the beneficiaries it is not the practice of the Court to charge the trustee with interest on the rents and profits received by him since the date of the sale.
16. Lewin states the law thus relating to the right of the beneficiary to have the property reconveyed to him: "The cestique trust, if he chooses it, may have the specific estate reconveyed to him by the trustee or where the trustee has sold it with notice by the party who purchased, the cestique trust on the one hand paying the price at which the trustee bought with interest at 4 per cent, and the trustee or purchaser on the other accounting for the profits of the estate but not with interest" Stirling, J., in the case referred to above 1900 (1) Ch. 167, approves of the statement of tire law in 'Lewin on Trusts.'
17. Macartney v. Blackwood (1795) Ridge L. and S. 602, which is referred to in the judgment of Stirling, J. is also an authority for the proposition that when the sale is set aside interest on the rents is not allowed.
18. In Halsbury's Laws of England, Vol. 23 at page 191 a statement of law is made to the same effect.
19. Interest was, no doubt, charged on arrears in some cases as Malland v. Gray (1845) 2 Collyer 295 : 63 E.R. 744 and Guildroy v. Steven (1845) 2 Collyer 295 : 63 E.R. 744, but it, seems to me that the cases fall, in the words of Lord Chelmsford, L.C. in Blogg, Johnson 46 L.T. 761 within the range of another principle of equity that where an executor or a trustee unnecessarily detains money in his hand which he ought either to have invested or to have paid over to the person entitled to it, he will have to pay interest for it. The Lord Chancellor observes. "Where money is thus improperly retained, it appears to me to be immaterial how the sum has arisen, whether from a legacy or a distributive share or a residue or the arrears of income; in the latter case the/claim for interest is not made on account of arrears, but for the improper keeping back of a sum of money, from whatever source derived which the executor or the trustee ought to have paid over."
20. As my learned brother has pointed out, it cannot be said in this case that the 2nd defendant was bound to invest the profits. The plaintiff had the conduct of the suit and it was quite open to him at any moment to ask for possession of the properties for an account of the profits and for payment to him of the sum-ascertained to be due. The delay is not attributable solely to the 2nd defendant, and the plaintiff has failed to show any grounds for making the 2nd defendant liable for interest.
21. The appeal coming on for final hearing JUDGMENT
1. The account called for at the previous hearing has now been filed by the learned vakil on behalf of the plaintiff (appellant). One o bjection made to it is that he has wrongly included Rs. 107-4-8 as interest at 6 per cent on Rs. 858-5-2 from 20-2-1920 to 23-2-1922, This he concedes, is not justified by anything in our judgment. The item of Rs. 107-4-8 must therefore be omitted. The learned vakils on both sides have now agreed that on the account Rs. 2,976-5-2 should be taken as the amount due. The decree in Second Appeal will therefore be drawn up in accordance with the foregoing. Further terms of the decree in so far as they involve modification of the decree of the Subordinate Judge as modified by the District Judge will be in accordance with the statement, which has been tiled by the appellant's vakil and agreed to in open Court by the vakils for the respondents, including the 7th defendant.
2. The appellant will have his costs from the 1st respondent on Rs. 2,976-5-2, the amount in respect of which he has succeeded in this Court as well as in the lower Courts.