JUDGMENT
Scott, J.
1. In this case the property of the minor is estimated to be of the value of upwards of 14 lacs of rupees, more than 4 lacs of which is invested in Bombay in immoveable property, 2 1/4 lacs on mortgage in immoveable property and the balance for the most part in authorised trustee securities.
2. The sanction of the Court is now asked for the investment by the guardians of Rs. 6,50,000 by sale of that amount of the trustee securities and re-investment in the purchase of certain house property situate at the junction of Church Gate Street and Esplanade Road.
3. In the case of trustees in whom property is vested the Court could not apart from any special investment clause in the instrument of trust sanction a change of investment into any securities other than those mentioned or referred to in Section 20 of the Indian Trusts Act: see Section 40.
4. Guardians are in a fiduciary position and I think the Court should ordinarily be guided by the rules embodied in the Trusts Act in sanctioning changes in the investment of the minor’s property.
5. The question here is whether there is anything in the circumstances of this case which should induce the Court to favour a further investment in house property which is not a trustee security.
6. The minor has a large income from his money most of which is well invested already but his guardians and their valuer say that a higher rate of interest can be obtained from the desired purchase and that the property proposed for acquisition could be still further developed. Both these results may be reasonably expected, although as pointed out by Lord Romilly in Ingle v. Partridge (1865) 34 Beav. 411 nothing is more uncertain than a valuation.
7. The property which it desired to purchase is land deriving its value from buildings erected on it which at present are in a favourite locality for trade purposes. House property is of a wasting character and trade is not always constant in particular localities.
8. The following observations of Lord Watson in Learoyd v. Whiteley (1887) 12 App. Cas. 727 at p.733 are in point.
A trustee is not allowed the same discretion in investing the moneys of the trust as if he were a person sui juris dealing with his own estate. Business men of ordinary prudence may and frequently do select investments which are more or less of a speculative character but it is the duty of a trustee to confine himself to the class of investments which are permitted by the trust and avoid all investments which are attended with hazard. In the case of property which derives its value from buildings erected on the land or its use for trade purposes the margin demanded of a trustee advancing money on mortgage ought not to be less than one half. This is not a hard or fast limit up to which trustees will be invariably safe. In cases where the subject of the security are exclusively or mainly used for the purposes of trade no prudent investor can be in a position to judge of the margin necessary to make a loan for a term of years reasonably secure until he has ascertained not only their present market price but their intrinsic value apart from those wasting considerations which give them a speculative and may be temporary value.
9. If the proposed change of investment were sanctioned upwards of 12 out of the minors 14 lacs would be invested directly or indirectly in house property, the greater part of it without any margin for contingencies. I do not think there is any necessity for this. The duty of guardians is primarily to preserve, not to add to the property of the minor.
10. The application is therefore rejected.
