Posted On by &filed under High Court, Madras High Court.

Madras High Court
Packiria Pillai vs K.V. Subbiah Mudaliar on 23 August, 1927
Equivalent citations: AIR 1928 Mad 1059
Bench: . W Recklessly, T D Funds, M I Festival, W E Ample, T T Income, T T Borrowing.


1. The plaintiff is the appellant in the second appeal. He sued recover Rs. 961-3-0, being the principal and interest due on a promissory note dated 31st January 1916 executed by defendant 1 in his capacity as Keevalur temple manager. The allegation in the plaint was that the suit promissory note as executed by defendant 1 as agent and manager of the suit temple for discharging the debt already incurred in connexion with the temple expenses and for benefit of the temple. Defendant 3’s deceased father was the trustee of the temple and it was alleged that defendant 1 was managing the. temple affairs under a power-of-attorney executed by defendant 3. The principal amount of the promissory note now sued upon is Rs. 660 which is said to be made up of R3. 500 alleged to have been borrowed for temple purposes under a promissory note executed by the late manager on 21st March 1912 and Rs. 160 balance of interest due on it. Defendant 2 is the present trustee of the temple. The prayer in the plaint is to have the amount paid by defendants 1 and 3 and also from out of the temple funds.

2. The plea of the contesting defendant (defendant 2) was that under the terms of defendant 3s father’s appointment as trustee he had no right to borrow money on behalf of the temple and that in the muchilika executed by defendant 3’s father to the Davasthanam Committee, it was expressly stated that he should not borrow without the previous express authorization of the committee and that no such authority had been obtained in respect of the suit debt. Defendant 2 also denied defendant 1’s right under the power-of-attorney executed in his favour to execute the promissory note on behalf of the temple. It was also stated that the temple owned extensive landed properties yielding enormous income, that mohini allowances were granted by the Government, that the income of the temple would be more than sufficient to meet the expenses and that there was no necessity to borrow on behalf of the temple. The plaintiff was put to the proof of the truth and binding nature of the plaint debt.

3. The District Munsif gave judgment for plaintiff for the amount sued for, against defendant 1, and dismissed the suit against the temple. The Subordinate Judge having dismissed the plaintiff’s appeal this second appeal has been preferred by the plaintiff.

4. In discussing the question whether the plaint debt was binding on the temple, both the lower Courts have discussed very largely the question whether on the date of the renewed promissory-note Ex. A, 31st January 1916, there was necessity for the renewal of the earlier promissory-note. They came to the conclusion that the renewal was not justified since the plaintiff (who was a lessee of certain temple lands) was himself in arrears to the temple in respect of rent due by him, and that while the income of the temple per year was about Rs. 20,000 the expenses would be only Rs. 16,000. Toe District Munsif remarked:

Where than was the necessity to bind the temple for such sundry liability as the plaint debt unless it be that defendant 1 who was temple manager was indulging in such reckless pastime as spending Rs. 12,000 towards Brahmitsavam out of the temple funds as sworn to by plaintiff’s second witness…defendant 1 seems to have squandered the temple income and has unnecessarily tried to bind the temple…. I find that though the debt was incurred for temple purposes it was not for its benefit.

5. On appeal the learned Subordinate Judge while confirming the learned District Munsif’s decree preferred to base his judgment upon quite a different ground. To quote the words of the learned Subordinate Judge:

…I would rest my conclusion not on the ground that the trustee spent large sums recklessly and thus denuded himself of trust funds and made it necessary for him to borrow. Brahmotsavam is a necessary festival and was. evidently approved of by the Temple Committee. I would rest my conclusion on the ground that the income of the temple was ample and that the scale of expenditure even including the. Brahmotsavam expenditure was below the income and that the mere fact that the daily cash balance was small on any particular day is no justification for borrowing.

6. The lower appellate Court proceeded to say that the Devasthanam had on hand 204 kalams of paddy in the temple granary on 31st January 1916 (the date of Ex. A) and that the plaintiff himself owed 118 kalams of paddy as arrears of rent to the temple and consequently there was no necessity to execute Ex. A in favour of the plaintiff on 31st January 1916.

7. The learned vakil for the appellant contended that the lower Courts were wrong in holding that execution of the promissory-note in favour of the plaintiff on 31st January 1916 was not binding on the temple on the ground that there was some paddy in the temple granary and also because the plaintiff himself was in arrears to the temple and that the two together would have been more than enough to pay off the plaintiff’s debt. The learned vakil argued that if the original debt was binding on the temple, the circumstances that a renewed document’ was executed to the creditor when, as a matter of fact, the temple bad funds to pay him off is no ground for holding the renewed bond not binding; since the creditor could not go and himself take possession of the paddy from the temple granary or take any money from the temple chest if the temple authorities did not care to utilize available funds to pay off the creditor but elected to renew the document, it is no answer to the creditor’s suit on the renewed document. We are of opinion that there is much force in this contention of the appellant. If it is once proved that a debt is binding on the temple, the creditor is entitled to enforce the payment of the same from temple funds, and the circumstance that the temple authorities wrongfully delayed or withheld payment is no ground for not allowing the creditor to enforce his debt against the temple. The real question then is whether the original debt advanced by the plaintiff was advanced by him under circumstances which made it binding on the temple. The burden of proving the existence of such circumstances is, it is not denied, on the plaintiff. As observed by the Privy Council in Prosunno Kumari Dabya v. Golab Chand [1874] 2 I.A 145 at p. 151:

The power of a sebait to incur debts must be measured by an existing necessity for incurring them. No doubt it is the immediate not the remote cause, the causa causans of the borrowing, that has to be considered: Niladri Sahu v. Chathurbuja Das A.I.R. 1926 P.C. 112.

8. We have to examine the evidence adduced in this case in the light of the above principles; and we find that besides examining himself as the first witness the plaintiff examined only one other witness on his side. (Then after examining evidence, their Lordships held that the plain-tiff had not discharged the burden of proving-circumstances which rendered it necessary for the temple to raise the loan and proceeded.) In this view the second -appeal should fail.

9. There is also a further obstacle in the ‘way of the plaintiff obtaining a decree against the temple funds. The promissory note Ex. A, as already remarked, was executed by defendant 1 as “manager,” who had a power-of-attorney from the trustee. Defendant 2 raised the contention that defendant 1 had no right to borrow under the terms of the said power-of-attorney so as to bind the trust. The District Munsif stated as follows in para. 6 of his judgment:

Exhibit 3 is the copy of the power-of-attorney executed by defendant 3’s father to defendant 1 under which defendant, has not been expressly authorized to borrow. 1 he lower appellate Court was also of the some opinion. It remarked that the power-of-attorney executed by defendant 3’s father to defendant 1, Ex. 3, does not confer upon him any authority to borrow.

10. It must be remembered in this connexion that the present is not a case of a power-of-attorney given by a money-lending firm (such as that of a Nattukottai Chetty) to its agent to carry on the money-lending business, in which case, as was decided in Bank of Bengal v. Ramanathan Chettiar A.I.R. 1915 P.C. 121, it may properly be urged that
without any such authority (authority to borrow) it would hardly have been possible to carry on the business of a money-lender and financier.

11. In the case of temples a trustee could hardly claim the right to borrow as a matter of course. His right to borrow would arise only in cases of financial necessity, and he would have to use his discretion whether, even in such circumstances, he should borrow or not. It cannot be assumed, in the absence of words to that effect, that by executing a power-of-attorney to a person to manage the temple affairs by collecting the debts and amounts due to the temple and meeting the necessary expenses, that the trustee authorized the manager to bind the temple by borrowing. As was laid down by the Privy Council in the case reported in Bryant Powis and Bryant v. Quebec Bank [1893] A.C. 170 at 177:

Powers-of-attorney are to be construed strictly, that is to say, where an act purporting to be done under a power-of-attorney is challenged as being in excess of the authority conferred by the power, it is necessary to show that on a fair construction of the whole instrument the authority in question is to be found within the four corners of the instrument, either in express terms or by necessary implication.

12. In this case we have the further fact that the trustee had executed a muchilika to the Temple Committee undertaking not to borrow without the committee’s sanction. We are therefore inclined to agree with the lower Courts that defendant 1 had no authority to bind the temple by executing Ex. A in favour of the plaintiff. We need not consider the argument urged on behalf of the appellant that an agent authorized to pay a debt could execute a renewed document in respect of a debt So as to bind the principal, since we hold that the terms of the power-of-attorney in question do not authorize defendant 1 to discharge any debt.

13. We accordingly hold that the plaintiff had not proved circumstances which would make the debt binding on the temple. We also hold that defendant 1 had no authority to execute the promissory note sued on by the plaintiff, so as to bind the temple. Mr. Muthiah Mudaliar, on behalf of the respondent raised a further contention that it is a matter of discretion with the trustee whether in the particular circumstances he should raise a loan on behalf of the temple, or somehow manage with the existing resources-making retrenchments wherever possible and that such a right to borrow is personal to the trustee and that; the same could not be delegated to any person appointed by him. The decision of the Privy Council in the case reported in Bonerji v. Sitanath Das A.I.R. 1922 P.C. 209 is relied on as authority for the proposition; but having regard to the conclusions arrived at by us as regards the other questions raised in the case, it is unnecessary for us to express any opinion on this point.

14. The second appeal is accordingly dismissed with costs.

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