{"id":91534,"date":"1966-04-07T00:00:00","date_gmt":"1966-04-06T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/vithal-das-vs-rupchand-ors-on-7-april-1966"},"modified":"2016-07-19T20:14:25","modified_gmt":"2016-07-19T14:44:25","slug":"vithal-das-vs-rupchand-ors-on-7-april-1966","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/vithal-das-vs-rupchand-ors-on-7-april-1966","title":{"rendered":"Vithal Das vs Rupchand & Ors on 7 April, 1966"},"content":{"rendered":"
Supreme Court of India<\/div>\n
Vithal Das vs Rupchand & Ors on 7 April, 1966<\/div>\n
Equivalent citations: 1967 AIR 188, \t\t 1966 SCR 164<\/div>\n
Author: V Ramaswami<\/div>\n
Bench: Ramaswami, V.<\/div>\n
           PETITIONER:\nVITHAL DAS\n\n\tVs.\n\nRESPONDENT:\nRUPCHAND & ORS.\n\nDATE OF JUDGMENT:\n07\/04\/1966\n\nBENCH:\nRAMASWAMI, V.\nBENCH:\nRAMASWAMI, V.\nSUBBARAO, K.\n\nCITATION:\n 1967 AIR  188\t\t  1966 SCR  164\n CITATOR INFO :\n RF\t    1972 SC1507\t (28)\n\n\nACT:\nTrusts\tAct 1882, ss. 23, 90 and 95-Appellant in  possession\nof partnership property after dissolution-Collecting  rental\nincome-When  the on partition interest payable by him  under\ns.  23 read with ss. 90 and 95 either as  co-owner  deriving\nadvantage  in derogation of rights of other partners  or  on\nbreach of trust or because of delay in payment of shares  of\nincome of other partners.\nInterest Act, 1839, s. 1--Scope of.\n\n\n\nHEADNOTE:\nThe plaintiffs instituted a suit for partition of  immovable\nproperty  constituting\ttwo  blocks  and  for  rendition  of\naccounts.  They claimed that the property was purchased with\nthe capital of the partnership firm in which the  plaintiffs\nand  the defendant were Partners and that by  two  documents\ndated  July  2,\t 1937  and July\t 16,  1937,  the  properties\ncontinued  to  remain in the ownership\tof  the\t partnership\nfirm, though the firm was dissolved in 1937.  The  defendant\ncontested the suit on various grounds and also alleged\tthat\nhe had invested Rs. 10,000\/- for constructing a building  on\nthe land in one of the blocks.\nThe trial Court granted the plaintiffs a decree for most  of\nthe  reliefs sought.  The High Court, in appeal,  held\tthat\nthe  plaintiffs\t were entitled to claim half  share  in\t the\nproperties and that the defendant was liable to account\t for\nthe income from the date of dissolution i.e. July 2, 1937 in\nthe case of one block and from 1939 in the case of the other\nblock and furthermore that the plaintiffs were liable to pay\nhalf  the amount spent by the defendant in constructing\t the\nbuilding on one of the blocks.\tUpon a remand of the case to\nthe trial Court a Commissioner was appointed to examine\t the\naccounts of rent realized by the defendant and on the  basis\nof  his\t report, the trial court granted  the  plaintiffs  a\ndecree\tfor the amount payable to them as their half  share,\ntogether  with interest upto April 1957 and after  deducting\nthe  plaintiffs'  share of the expenditure incurred  by\t the\ndefendant  on the building.  In further appeals to the\tHigh\nCourt  by both the parties the decision of the\ttrial  court\nwas substantially confirmed.\nIn  the\t appeal\t to  this Court by  the\t defendant,  it\t was\ncontended,  inter alia, on his behalf that the\ttrial  court\nand  the  High\tCourt  had  erroneously\t decided  that\t the\ndefendant was liable to pay interest for the period prior to\nthe institution of the suit on the half share of the  rental\nincome on the ground that the relationship between the\tpar-\nties  was in the nature of a trust under Section 90  of\t the\nTrusts Act, 1882.\nOn  the other hand the contentions for the respondents\twere\nthat  interest prior to the date of institution of the\tsuit\ncould be paid to them under the Interest Act, 1839: that the\ndefendant was in possession of the entire properties as\t as-\nOwner  after  the  dissolution of  the\tpartnership  by\t the\ndocument dated July 16, 1937 and that as he\n165\nwas  realizing\trents  of  the properties,  he\twas  in\t the\nposition.  of  a  constructive trustee under s.\t 95  of\t the\nTrusts\tAct and was liable therefore to pay interest on\t the\nplaintiffs' share of rent under s. 23 read with s. 95 of the\nAct;  and  that he was in any event liable to  pay  interest\nunder s. 23(b) of the Trusts Act because there was unreason-\nable delay in paying the trust money to the beneficiary.\nHELD:\t  Interest was only payable to the plaintiffs at the\nrate  of 6% per annum from the date of the final  decree  on\nthe amount found due to the plaintiffs.\nIt is well-established that interest may be awarded for\t the\nperiod\tprior to the date of the institution of the suit  if\nthere  is an agreement for the payment of interest at  fixed\nrate or if interest is payable by the usage of trade  having\nthe force of law, or under the provisions of any substantive\nlaw  as for instance under s. 80 of  Negotiable\t Instruments\nAct  or\t s. 23 of the Trusts Act.  It was  admitted  in\t the\npresent\t case  that the two agreements between\tthe  parties\ndated  July  2,1937  and July 16,1937 did  not\tprovide\t for\npayment of interest on the rental reilised by the, defendant\non the joint properties.  Nor was interest payable under any\nprovision  of  law governing the case.\tUnder  the  Interest\nAct,  1839,  the  court may allow  interest  if\t the  amount\nclaimed is a sum certain which is payable at a certain\ttime\nby  virtue of a written instrument but it was conceded\tthat\nwas not the position in the present case.  The provision  in\ns. 1 of the Interest Act that \"interest shall be payable  in\nall  cases in which it is now payable by law,\" applied\tonly\nto cases in which the Court of Equity exercised jurisdiction\nto allow interest. [168 B-D].\nBengal Nagpur Railway Co. Ltd. v. Ruttanji Ramji 65 I.A. 66,\nThawardas  Pharumal v. Union of India, [1955] 2\t S.C.R.\t 48.\nUnion  of  India v. Rallia Ram, A.I.R.<\/a> 1963  S.C.  1685\t and\nUnion of India v. Watkins Mayor & Co. A.I.R.<\/a> 1966 S. C. 275,\nreferred to.\nThere  was  no\tforce in the contention that s.\t 90  of\t the\nTrusts\tAct applied to this case.  A co-owner in  possession\nof all the joint properties does not become a trustee by the\nmere fact of his collection of the full amount of rent\tfrom\nthe  tenants.\tIf the co-owner is to be  clothed  with\t the\nstatus of a trustee, itmust  be shown that he has   gained\nsome advance in derogation ofthe other co-owners interested\nin the property and that he gained such advantage by\navailing  himself  of  his position  as\t co-owner.   In\t the\npresent\t case,\tthere was no allegation or  finding  by\t the\ntrial\tcourt  that  the  defendant  had  gained  any\tsuch\nadvantage. [17O E]\nEven  assuming that the defendant was in the position  of  a\nconstructive  trustee,\the would be liable to  pay  interest\nunder  s. 23 only if he committed a breach of trust  and  in\nthe present case there was no question of any such breach on\nhis  part.  Furthermore, he was not liable to  pay  interest\nunder  s. 23(b) as that provision contemplates\tcases  where\nthere is an obligation on the part of the trustee to pay the\ntrust  money  to the beneficiary at fixed  intervals  or  on\ndemand. [170 F].\nBlogg v. Johnson., [1867] 2 Ch.\t A 225, Silkstone and  Haigh\nMoor Coal Co. v. Edey, [1900] 1 Ch. 167; Malland V. Gray  63\nE.R. 744 and Guildrey v. Stevens 46, L.T. 761, referred to.\n\n\n\nJUDGMENT:\n<\/pre>\n
CIVIL APPELLATE JURISDICTION: Civil Appeals Nos. 926 and 927
\nof 1965.\n<\/p>\n
Appeals from the judgment and decree dated November 25, 1962
\nof  the Madhya Pradesh High Court (Indore Bench) at  Indore,
\nin First Appeals Nos. 19 and 23 of 1957 respectively.\n<\/p>\n
166<\/span><\/p>\n
S.   V.\t Gupte,\t Solicitor–General, Rameshwar Nath,  S.  N.
\nAndley,\t  P.   L.  Vohra  and  Mahinder\t  Narain,  for\t the
\nappellant.\n<\/p>\n
S.   P.\t Sinha,\t Ganapat  Rai,\tE. C.  Agarwala\t and  P.  C.
\nAgarwala, for the   respondent.\n<\/p>\n
The Judgment of the Court was delivered by
\nRamaswami,  J. These appeals are brought by  certificate  on
\nbehalf of the defendant from the judgment of the High  Court
\nof Madhya Pradesh, Indore Bench, dated November 20, 1962  in
\nFirst Appeals Nos. 19 and 23 of 1957.\n<\/p>\n
The  plaintiffs, Rup Chand and Hukam Chand instituted  Civil
\nSuit  No.  8  of S. 1999 in the\t Court\tof  District  Judge,
\nUjjain,\t against the defendant Vithal Das and three  others,
\nfor partition of houses and for rendition of accounts.\t Two
\nof the defendants, Bheronlal and Indermal died in the course
\nof  the suit and the suit was continued against Vithal\tDas.
\nThe   plaintiffs   alleged  that  the\timmovable   property
\nconstituting Blocks Nos. 206 and 207 in Freeganj, Ujjain was
\npurchased with the capital of the partnership firm in  which
\nthe plaintiffs and the defendant were, at one time, partners
\nand  by two documents dated July 2, 1937 and July 16,  1937,
\nthe  properties continued to remain in the ownership of\t the
\npartnership firm, though the firm had been dissolved in\t the
\nyear 1937.  The plaintiffs claimed that the properties\twere
\nmanaged by the defendant on behalf of the plaintiffs and the
\ndefendant  realised rents from the tenants on  their  behalf
\nand plaintiffs were, therefore entitled to receive half\t the
\namount\trealised  as rent and the defendant  was  liable  to
\nrender accounts thereof.  The plaintiffs also claimed parti-
\ntion  of  the joint properties, or in the  alternative,\t the
\nsale of the property by auction and after deducting the cost
\nof  auction,  half  of the  sale  proceeds.   The  defendant
\ncontested  the\tsuit on the ground that at the time  of\t the
\nexecution of the document dated July 2, 1937 there were only
\nthree  blocks  in partnership which were at that  time\topen
\nland.\tThe  defendant claimed that Block ‘No. 206  and\t the
\nbuilding constructed thereon was not a partnership property.
\nIt  was further alleged that the defendant had invested\t Rs.
\n10.000\tin  the\t three blocks of land  which  were  held  in
\npartnership  for constructing a building.  The\ttrial  court
\naccepted  the  plaintiffs’  case and granted  a\t decree\t for
\npartition  of  the  blocks  and for  an\t account  of  income
\nrealised  in respect of the property situated on  block\t No.\n<\/p>\n
207.   As  regards block No. 206 and the  property  standing
\nthereon\t the  trial court directed the defendant  either  to
\nremove\tthe construction or accept his share of money  spent
\nby  the\t defendant  over it and created a  charge  over\t the
\nproperty in respect of the amount so held payable.  Both the
\nparties\t preferred  appeals  in the  High  Court  of  Madhya
\nPradesh\t against  the  judgment of  the\t trial\tcourt  which
\npartially allowed the appeals and remanded -the case to\t the
\ntrial  Court.  The High Court held that the plaintiffs\twere
\nentitled to claim half share in both the properties built on
\nblocks\tNos,  206 and 207 and the defendant  was  liable  to
\naccount
\n\t\t\t    167<\/span>
\nfor  the income of the properties on block No. 207 from\t the
\ndate of dissolution i.e., from July 2, 1937 and of block No.
\n206  from the year 1939.  The High Court also held that\t the
\nplaintiffs  were liable to pay half the costs spent  by\t the
\ndefendant  in  constructing the building on block  No.\t206.
\nAfter  the  order  of remand the  trial\t Court\tappointed  a
\nCommissioner for examining accounts of rent realised by\t the
\ndefendant.    After   considering   the\t  report   of\t the
\nCommissioner, the trial Court determined the total amount of
\nrent  of both the blocks Nos. 206 and 207 at Rs.  41,829\/3\/7
\nand  the half share of the plaintiffs was determined at\t Rs.
\n20,914\/4\/9.   The trial Court also awarded interest  to\t the
\nplaintiffs on the half share of the income to the extent  of
\nRs.  6,676\/7\/3\tcalculated upto April 11, 1957.\t  The  total
\namount\tthus  due to the plaintiffs was\t determined  at\t Rs.
\n27,591 \/1\/-.  Out of this amount the trial court allowed sum
\nof   Rs.  9,755\/7\/3  on\t account  of  the  half\t costs\t of’
\nconstruction and interest thereon and expenses incurred\t for
\nhouse-tax,  water tax, legal expenses and repairs.  The\t net
\namount\tthus awarded to the plaintiffs was  Rs.\t 17,670\/9\/9.
\nAs  regards  the partition of blocks Nos. 206 and  207,\t the
\ntrial court held that in view of the method of\tconstruction
\nof the blocks it was not possible to make partition in equal
\nshares\tand therefore the trial court directed that the\t two
\nblocks should be auctioned in separate lots and the  parties
\nshould\tbe at liberty to bid at the auction and the  parties
\nwould  have  equal  rights to the  amount  of  the  auction.
\nAggrieved  by  the  judgment of the  trial  court  both\t the
\nparties\t preferred  appeals  to the  High  Court  of  Madhya
\npradesh, namely, First Appeals Nors. 19 and 23 of 1957.\t The
\ndefendant’s appeal was registered as Civil First Appeal\t No.
\n19  of\t1957 and the plaintiffs’ appeal\t was  registered  as
\nCivil  First Appeal No. 23 of 1957.  Both, the appeals\twere
\nheard and disposed of by a common judgment by the High Court
\nwhich  modified the trial court’s finding, as to the  income
\nof  blocks  206\t and 207 to the extent of  Rs.\t803\/’5\/3  by
\nreducing the income of the two blocks by that figure.\t‘The
\ntotal income was thus reduced from Rs. 41,829\/3\/7 to Rs. 41-
\n015,\/14\/4 with the corresponding,reduction in the amount  of
\ninterest.   The High Court affirm the finding of  the  trial
\ncourt that tile defendant was liable to pity interest on the
\nhalf  share  of\t the rental income on the  ground  that\t the
\nrelationship  between  the parties was in the  nature  of  a
\ntruest under s. 90 of the Trusts Act (Act 11 of 1882).\t The
\nplaintiffs’ appeal No. 23 of 1957 was allowed to the  extent
\nof  Rs. 4,942\/9\/after adjustment, the plaintiffs’ claim\t was
\ndecreed for Rs. 22,103\/-.\n<\/p>\n
The  first  question for consideration in these\t appeals  is
\nwhether the High Court was right in granted interest to\t the
\nplaintiffs on their share of rental income to the extent  of
\nRs. 6,676 \/ 7 \/ 3 for the period prior to the institution of
\nthe suit.  It was argued by the Solicitor-Geiieral on behalf
\nof  the\t appellant  that  the High Court  was  in  error  in
\nappellant  that\t the  relationship between  the\t prince\t was
\ngoverned by s. 90 of the Trusts Act and the plaintiffs\twere
\ntherefore entitled to interest on their share of rent  under
\nthe provi-\n<\/p>\n
LIS5SCI-13
\n168<\/span>
\nsions of s. 23 of that Act.  In our opinion, the  contention
\nput  forward  by the Solicitor-General is  well-founded\t and
\nmust be accepted as correct.\n<\/p>\n
It is well-established that interest may be awarded for\t the
\nperiod\tprior to the date of the institution of the suit  if
\nthere  is an agreement for the payment of interest at  fixed
\nrate or if interest is payable by the usage of trade  having
\nthe force of law, or under the provisions of any substantive
\nlaw  as for instance s. 80 of Negotiable Instruments Act  or
\ns. 23 of the Trusts Act.  It is admitted in the present case
\nthat  the two agreements between the parties dated  July  2,
\n1937  and  July\t 16, 1937 did not  provide  for\t payment  of
\ninterest  on  the rental realised by the  defendant  on\t the
\njoint properties.  Nor is interest payable by virtue of\t any
\nprovision of the law governing the case.  Under the Interest
\nAct, 1839, the Court may allow interest to the plaintiff  if
\nthe  amount claimed is a sum certain which is payable  at  a
\ncertain\t time by virtue of a written instrument.  But it  is
\nconceded that the position in the present case is different.
\nIt  was\t suggested  by\tMr. S. P. Sinha\t on  behalf  of\t the
\nrespondents that interest may be awarded under the  Interest
\nAct  which  contains  a provision that\t“interest  shall  be
\npayable\t in  all cases in which it is now payable  by  law”.
\nBut this provision only applies to cases in which the  Court
\nof  Equity  exercises jurisdiction to allow  interest.\t The
\nlegal position has been explained by the Judicial  Committee
\nin  Bengal Nagpur Rly.\tCo. Ltd. v. Ruttanji Ramji(1) at  p.
\n72 as follows:\n<\/p>\n
\t      “As  observed by Lord Tomlin in Maine and\t New
\n\t      Brunswick Electrical Power Co. v. Hart, (1929)
\n\t      A.C.  631, at p. 640; (AIR 1939 PC 185  at  p.\n<\/p><\/blockquote>\n
\t      188), ‘In order to invoke a rule of equity  It
\n\t      is   necessary  in  the  first   instance\t  to
\n\t      establish\t  the  existence  of  a\t  state\t  of
\n\t      circumstances  which  attracts  the  equitable
\n\t      jurisdiction,   as,  for\texample,  the\tnon-
\n\t      performance of a contract of which equity\t can
\n\t      give specific performance’.”\n<\/p><\/blockquote>\n
The decision of the Judicial Committee in Bengal Nagpur Rly.
\nCo. Ltd. v. Ruttanji Ramji(1) was relied upon by this  Court
\nin  Thawardas Pherumal v. Union of India<\/a>(1) in\trejecting  a
\nclaim for interest.  In that case, a contractor entered into
\na  contract  with the Dominion of India for  the  supply  of
\nbricks.\t  A  clause in the contract  required  all  disputes
\narising out of or relating to the contract to be referred to
\narbitration.   The  dispute having arisen,  the\t matter\t was
\nreferred to arbitration and the arbitrator gave an award  in
\nthe  contractor’s  favour.   The Union of  India  which\t has
\nsucceeded  to  the rights and obligations of  the  Dominion,
\ncontested the award on various grounds one of which was\t the
\nliability  to  pay interest on the amount awarded.   It\t was
\nheld  by  this\tCourt  that  the  interest  awarded  to\t the
\ncontractor could not, in law, be awarded and the  arbitrator
\nis not a Court within the meaning of the Interest Act,\t1839
\nand.  in any event, interest could only be awarded if  there
\nwas
\n(1)  65 I.A. 66.\n<\/p>\n
(2) [1955] 2 S.C.R. 48.\n<\/p>\n
169<\/span><\/p>\n
a  debt\t or  a\tsum certain payable at\ta  certain  time  or
\notherwise by virtue of some written contract and there\tmust
\nhave been a demand in writing stating that interest will  be
\ndemanded  from\tthe date of the demand.\t The same  view\t has
\nbeen  expressed\t by this Court in two later  cases-Union  of
\nIndia  v. Rallia Ram<\/a>(1) and Union of India v. Watkins  Mayor
\nand Co.<\/a>(2).\n<\/p>\n
It  was, however, pointed out for the respondents  that\t the
\ndefendant was in possession of the entire properties as\t co-
\nowner  after  the  dissolution of  the\tpartnership  by\t the
\ndocument  dated\t July  16, 1937.  It  was  argued  that\t the
\ndefendant  was realising rents of all the properties and  he
\nwas in the position of a constructive trustee under s. 95 of
\nthe  Trust Act and was liable therefore to pay\tinterest  on
\nthe plaintiffs’ share of rent under s. 23 read with s. 95 of
\nthe Act.  We do not consider there is any justification\t for
\nthis argument.\tSection 90 of the Act states:\n<\/p>\n
\t      “Where a tenant for life, co-owner,  mortgagee
\n\t      or  other qualified owner of any property,  by
\n\t      availing\thimself\t of his\t position  as  such,
\n\t      gains an advantage in derogation of the rights
\n\t      of   the\tother  persons\tinterested  in\t the
\n\t      property,\t  or  where  any  such\t owner,\t  as
\n\t      representing  all persons interested  in\tsuch
\n\t      property,\t gains any advantage, he must  hold,
\n\t      for the benefit of all persons so\t interested,
\n\t      the  advantage  so  gained,  but\tsubject\t  to
\n\t      payment by such persons of their due shares of
\n\t      the  expenses  properly incurred,\t and  to  an
\n\t      indemnity\t  by   the  same   persons   against
\n\t      liabilities  properly contracted,\t in  gaining
\n\t      such advantage.”\n<\/p><\/blockquote>\n
\t      Section 95 provides as follows:
\n\t      ”\t The person holding property  in  accordance
\n\t      with  any\t of the preceding sections  of\tthis
\n\t      Chapter  must, so far as may be,\tperform\t the
\n\t      same duties and is subject, so far as may\t be,
\n\t      to  the same liabilities and disabilities,  as
\n\t      if  he were a trustee of the property for\t the
\n\t      person for whose benefit he holds it:
\n\t      Provided\t that\t(a)  where   he\t  rightfully
\n\t      cultivates the property or employs it in trade
\n\t      or  business,  he is  entitled  to  reasonable
\n\t      remuneration  for his trouble, skill and\tloss
\n\t      of  time in such cultivation  or\temployment-,
\n\t      and (b) where he holds the property by  virtue
\n\t      of a contract with a person for whose  benefit
\n\t      he holds it, or with any one through whom such
\n\t      person claims, he may, without the  permission
\n\t      of   the\tCourt,\tbuy  or\t become\t lessee\t  or
\n\t      mortgagee\t of the property or any part  there-
\n\t      of.”\n<\/p><\/blockquote>\n
\t      Section 23 reads as follows:\n<\/p><\/blockquote>\n
\t      “Where the trustee commits a breach of  trust,
\n\t      he  is liable to make good the loss which\t the
\n\t      trust property or the beneficiary has  thereby
\n\t      sustained, unless the beneficiary has by
\n\t      (1) A.I.R. 1963 S.C. 1636.\n<\/p><\/blockquote>\n
\t      (2) A.I.R. 1966 S.C. 275.\n<\/p><\/blockquote>\n
\t      170<\/span><\/p>\n
\t      fraud  induced  the  trustee  to\tcommit\t the
\n\t      breach, or the beneficiary, being competent to
\n\t      contract,\t has  himself, without\tcoercion  or
\n\t      undue influence having been brought to bear on
\n\t      him, concurred in the breach, or\tsubsequently
\n\t      acquiesced therein, with full knowledge of the
\n\t      facts of the case and of his rights as against
\n\t      the trustee.\n<\/p><\/blockquote>\n
\t      A trustee committing a breach of trust is\t not
\n\t      liable to pay interest except in the following
\n\t      cases: –\n<\/p><\/blockquote>\n
\t      (a)   where he has actually received interest;\n<\/p><\/blockquote>\n
\t      (b)   where    the    breach    consists\t  in
\n\t      unreasonable  delay in paying trust  money  to
\n\t      the beneficiary;\n<\/p><\/blockquote>\n
\t      (c)   where the trustee ought to have received
\n\t      interest, but has not done so;\n<\/p><\/blockquote>\n
\t      (d)   where he may be fairly presumed to\thave
\n\t      received interest.\n<\/p><\/blockquote>\n
\t       He is liable, in case (a), to account for the
\n\t      interest actually received, and, in cases (b),\n<\/p><\/blockquote>\n
\t      (c) and (d) to account for simple interest  at
\n\t      the  rate of six per cent. per  annum,  unless
\n\t      the Court otherwise directs………………”\n<\/p><\/blockquote>\n
We do not agree with the contention of the respondents\tthat
\ns. 90 of the Trusts Act applies to this case.  A co-owner in
\npossession  of\tall the joint properties does not  become  a
\ntrustee\t by  the  mere fact of his collection  of  the\tfull
\namount\tof rent from the tenants.  If the co-owner is to  be
\nclothed\t with the status of a trustee it must be shown\tthat
\nhe has gained some advantage in derogation of the other\t co-
\nowners interested in the property and that he gained such an
\nadvantage  by availing himself of his position as  co-owner.
\nIn  the\t present case, there is no allegation  made  by\t the
\nplaintiffs  that the defendant has gained any  advantage  in
\nderogation of the rights of the plaintiffs, nor is there any
\nfinding\t of the lower courts that the defendant\t gained\t any
\nadvantage  by availing himself of his position as  co-owner.
\nWe shall, however, assume in favour of the respondents\tthat
\nthe  defendant is in the position of a constructive  trustee
\nin view of the provisions of s. 90 of the Trusts Act.\tEven
\nupon that assumption we are of opinion that the defendant is
\nnot liable to pay interest to the plaintiffs for their share
\nof  the\t rent  of the properties.  The reason  is  that\t the
\ntrustee\t is  liable  to pay interest only if  he  commits  a
\nbreach\tof  trust under s. 23 of the Trusts Act.   There  is
\nalso  the restriction contained in s. 23 of the Trusts\tAct,
\nnamely,\t that a trustee committing a breach of trust is\t not
\nliable\tto.  pay interest except in the cases  mentioned  in
\nthat  section.\t It was argued by Mr. S. P.  Sinha  for\t the
\nrespondents  that the defendant was liable to  pay  interest
\nunder  s.  23(b)  of  the  Trusts  Act\tbecause\t there\t was
\nunreasonable  delay  in\t paying\t the  trust  money  to\t the
\nbeneficiary.   We  are\tunable to accept  this\targument  as
\ncorrect.  In
\n\t\t\t    171<\/span>
\nour  opinion, s. 23(b) contemplates cases where there is  an
\nobligation on the part of the trustee to pay the trust money
\nto the beneficiary at fixed intervals or on demand.  In\t our
\nopinion, there is no question of breach of trust on the part
\nof the, defendant in the present case and the provisions  of
\ns. 23(b) of the Trusts Act are not attracted.  The view that
\nwe  have expressed is borne out by several authorities.\t  In
\nBlogg v. Johnson(1), Lord Chelmsford, L.C. stated that\t“the
\nCourt  will  not charge an executor who has been  guilty  of
\ndelay  in  accounting, with interest on\t arrears  of  income
\nunpaid\tby  him”.  In that, case, X was entitled to  a\tlife
\nincome from the estate of her husband, and died in 1861.   A
\nbill  was  filed  by  her executor,  in\t 1862,\tagainst\t the
\nexecutor of her husband’s will, who had been his partner  in
\nbusiness,  for\tan account of income due to her\t estate;  in
\n1863  accounts\twere directed.\tIn 1866\t a  certificate\t was
\nmade,  finding that a large sum was due from  the  husband’s
\nexecutor.  It was held by Lord Chelmsford, L.C. that he\t was
\nnot  chargeable\t with  interest\t before\t the  date  of\t the
\ncertificate.  Again, in Silkstone and Haigh Moor Coal Co. v.
\nEdey(2),  it  was held by the Chancery Court that  upon\t the
\nsetting\t aside of a sale by a trustee of trust\tproperty  to
\nhimself,  and  the  reconveyable  of  the  property  to\t the
\nbeneficiaries, it is not the practice of the Court to charge
\nthe trustee with interest on the rents and profits  received
\nby  him since the date of the sale.  Interest was,  however,
\ncharged\t on arrears in some cases as in Malland\t v.  Gray(1)
\nand Guildrey v. Stevens(1), but these cases fall within\t the
\nrange of another principle of equity that where an  executor
\nor  a trustee unnecessarily detains money in his hand  which
\nhe ought either to have invested or to have paid over to the
\nperson entitled to it, he will have to pay interest for\t it.
\nAs Lord Chelmsford, L.C. observed in Blogg v. Johnson(1)  at
\np. 228: –\n<\/p>\n
\t      “Where  money is thus improperly retained,  it
\n\t      appears to me to be immaterial how the sum has
\n\t      arisen,\twhether\t  from\ta   legacy,   or   a
\n\t      distributive  share,  or\ta  residue,  or\t the
\n\t      arrears  of income.  In the latter  case,\t the
\n\t      claim  for interest is not made on account  of
\n\t      the arrears, but for the improper keeping back
\n\t      or  a  sum  of  money,  from  whatever  source
\n\t      derived,\twhich the executor or trustee  ought
\n\t      to have paid over.”\n<\/p><\/blockquote>\n
We   have  already  given  reasons  for\t holding  that\t the
\nprovisions of s. 23(b) of the Trusts Act do not apply to the
\npresent\t case and the plaintiffs are not entitled  to  claim
\nany  interest  on  arrears of rent and the  High  Court\t has
\nfallen into an error in granting such interest.
\nThe  next  contention raised on behalf of the  appellant  is
\nthat  the Commissioner examined the accounts  and  submitted
\nhis  report from July 2, 1937 to December 31, 1954  and\t the
\nHigh  Court  was not justified in granting a decree  to\t the
\nplaintiffs for the subsequent
\n(1)  1867 2 Ch.A. 225.\n<\/p>\n
(3) E.R. 744.\n<\/p>\n
(2) [1900] 1 Ch. 167.\n<\/p>\n
(4) 46 L.T. 761.\n<\/p>\n
172<\/span><\/p>\n
period\tfrom January 1, 1955 to April 11, 1957 on the  basis
\nof the figures found from the Commissioner’s report.  It was
\nargued\tthat the High Court had no basis for  assuming\tthat
\nthe same rental income was received by the defendant for the
\nperiod\tfrom  January 1, 1955 to April 11, 1957 as  for\t the
\nprior period.  In our opinion, there is great force in\tthis
\nargument  and  we should, in the normal course,\t remand\t the
\ncase  to the High Court for a finding as to the accounts  of
\nthe subsequent period.\tMr. Sinha, however, pointed out that
\nthe  litigation commenced in 1942 and has already been\tpro-
\ntracted too ]on-.  We do not, therefore, wish to remand\t the
\ncase to the High Court for further inquiry.  Having examined
\nthe  evidence on the record of this case, we consider  that,
\nin  the circumstances, a sum of Rs. 2,400\/- (instead of\t Rs.
\n3,100\/-)  for the period from January 1, 1955 to  April\t 11,
\n1957  should be granted to the plaintiffs as their share  of
\nprofits.\n<\/p>\n
We direct that the interest may be granted to the plaintiffs
\nat the rate of 6 per cent p.a. from November 20, 1962  which
\nis  the date of the final decree on the amount found due  to
\nthe plaintiffs.\n<\/p>\n
Two other points were raised by the Solicitor-General in the
\ncourse of argument.  It was pointed out, in the first place,
\nthat First Appeal No. 23 of 1957 filed by the plaintiffs  in
\nthe  High Court was barred by limitation and the High  Court
\nshould\thave  dismissed the appeal on that ground.   It\t was
\nargued that the trial courts judgment was delivered on April
\n11, 1957 and the appeal to the High Court was filed on\tJuly
\n22, 1957.  A certified copy of the judgment was delivered to
\nthe  plaintiffs\t on May 4, 1957 but the endorsement  on\t the
\ncertified  copy\t with regard to the  date  was\tfraudulently
\nmade.  An application was made by the defendant to the\tHigh
\nCourt on November 20, 1961 drawing the attention of the High
\nCourt  with regard to the endorsement on the certified\tcopy
\nof  the\t judgment.  There is, however, no reference  in\t the
\njudgment of the High Court on the question of limitation and
\nit  should,  therefore,\t be taken that\tthe  point  was\t not
\npressed\t on  behalf  of the defendant at  the  time  of\t the
\nhearing of the appeal by the High Court.  It is,  therefore,
\nnot  possible  for  us\tto entertain  the  argument  of\t the
\nappellant  at  the  present stage, in  the  absence  of\t any
\nfinding of the High Court.  The other objection put  forward
\nby the Solidtor-General is that the High Court has not taken
\ninto  account  vacancies in the computation  of\t the  rental
\nincome\tdue  to the plaintiffs.\t It was said that  the\tHigh
\nCourt was wrong in holding that the defendant was liable  as
\na  trustee  for\t the rents he ought to\thave  realised\teven
\nthough there was no letting of the building.  The Solicitor-
\nGeneral\t may  be right in his argument\tthat  the  defendant
\ncannot be held liable as a constructive trustee for the rent
\nhe  has not realised from the tenants and for  the  premises
\nwhich  were not let out to tenants and which had been  lying
\nvacant,\t but the ground upon which the High Court  has\tmade
\nthe defendant liable is different.  The High Court has taken
\nthe view that the defendant has
\n173<\/span>
\nnot kept proper accounts of the income of the rents realised
\nfrom the shops.\t In the absence of proper accounts it is not
\npossible  to accept the case of the defendant regarding\t the
\nvacancies.  In our opinion, the finding of the High Court on
\nthis  point  is\t not vitiated by any error of  law  and\t the
\nargument  of the Solicitor-General must be rejected on\tthis
\naspect of the case.\n<\/p>\n
For  the  reasons  already expressed,  we  hold\t that  these
\nappeals\t should be partly allowed with\tproportionate  costs
\nand  the  decree of the High Court dated November  20,\t1962
\nshould be modified to the extent indicated in this judgment.
\nAppeals allowed in part.\n<\/p>\n
174<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"
Supreme Court of India Vithal Das vs Rupchand & Ors on 7 April, 1966 Equivalent citations: 1967 AIR 188, 1966 SCR 164 Author: V Ramaswami Bench: Ramaswami, V. PETITIONER: VITHAL DAS Vs. RESPONDENT: RUPCHAND & ORS. DATE OF JUDGMENT: 07\/04\/1966 BENCH: RAMASWAMI, V. BENCH: RAMASWAMI, V. SUBBARAO, K. CITATION: 1967 AIR 188 1966 SCR 164 […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[30],"tags":[],"class_list":["post-91534","post","type-post","status-publish","format-standard","hentry","category-supreme-court-of-india"],"yoast_head":"\nVithal Das vs Rupchand & Ors on 7 April, 1966 - Free Judgements of Supreme Court & High Court | Legal India<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.legalindia.com\/judgments\/vithal-das-vs-rupchand-ors-on-7-april-1966\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Vithal Das vs Rupchand & Ors on 7 April, 1966 - 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