Peari Mohan Mukerji And Bhupendra Nath ... vs Monohar Mukerji on 5 May, 1921
The defendants, preferred the second appeal which was heard by our learned brother Sen J. It does not appear from his judgment that the point was seriously pressed before him because there was no indication given in his judgment. But we are not giving any weight to the fact that the point does not appear in the judgment of our learned brother Sen J. We think that the point ought not to have been allowed to be raised at the appellate stage either before Mr. Roxburgh, as he then was, or before Lodge J. who decided the second appeal. The principles which govern alienations by trustees are applicable to alienations by shebaits. That proposition is now settled beyond doubt by the decision of the Judicial Committee in Kaja Peary Mohan Mukerji v. Monohar Mukerji 9 A.I.R. 1922 P.C. 235. It is therefore necessary to examine those principles. The sale by a trustee for sale to himself or to a benamidar of his is absolutely invalid. The reason being that a man cannot both be the vendor and the purchaser. But in other cases there is no absolute bar to a purchase by a trustee A trustee can buy from the cestui que trust. There is no absolute bar but such a purchase would not be upheld by the Court unless the purchaser trustee shows, and the onus is on him, that he did not take advantage of his position as trustee and made the fullest disclosure at the time of the bargain. A trustee cannot also place himself in such a position where there may be a possibility of conflict between his interest and his duty. Such being the law, questions of fact would necesarily enter into the picture where a purchase by a trustee other than a trustee for sale is challenged. If the case is to be regarded as a case of purchase by a trustee from the cestui que trust the purchaser trustee should have the opportunity to show that he made full disclosure and dealt with the transferor (the managing trustee) at arm's length. Even for the purposes of showing that there was a possibility of conflict of interest and duty it may be necessary to investigate facts. We are accordingly of opinion that this ground on which the judgment of Lodge J. was rested ought not to have been allowed to be raised at the appellate stage, seeing that if the ground had been taken in that specific form in the Court of first instance there might have been an answer by the plaintiff on facts.