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1931 Supreme(SC) 27
PRIVY COUNCIL [ON APPEAL FROM THEEAST INDIES]
LORD BLANESBURGH, LORD ATKIN, AND SIR LANCELOT SANDERSON.
GULZARI LAL - Appellant
Versus
COLLECTOR OF ETAH - Respondents
On Appeal from the High Court at Allahabad.
Decided On : March 9. 1931.
Solicitor for appellant: H. S. L. Polak.
Solicitor for respondent: Solicitor, India Office,
Under Section 93 of the Code of Civil Procedure, the Local Government may authorize the Collector or any appointed officer to institute suits for public trusts outside Presidency towns. Additionally, prior meritorious service by a trustee does not excuse subsequent misappropriation of charitable funds.
Headnote:(A) Code of Civil Procedure - Sections 91, 92 and 93 - Suits relating to public charitable or religious trusts - Authority to institute suit - Power of Local Government to appoint Collector or other officer to exercise powers of Advocate-General outside Presidency towns - The powers conferred by Sections 91 and 92 on the Advocate-General may, outside Presidency towns, be exercised by the Collector or any officer appointed by the Local Government with its previous sanction - The fact that another officer is generally invested with these duties does not preclude the Local Government from appointing the Collector to prosecute a particular suit. (Paras 2, 21-23)
(B) Trust for public purposes - Standard of conduct for trustees - High standard of rectitude and accuracy expected - Previous meritorious services of a trustee in recovering trust property do not justify or excuse subsequent conduct amounting to misappropriation of trust funds or conversion of trust property for personal use. (Paras 15-17)
Facts of the case:
A trust for public charitable purposes was established via a family arrangement. After the trust properties were alienated by a life interest holder, one of the trustees recovered the properties through litigation. Subsequently, a suit was filed for the removal of the trustees, the filing of accounts, and the formulation of a scheme for administration, alleging that the trustee had misappropriated funds and claimed fraudulent interest on advances. The lower courts found the trustee guilty of serious breaches of trust and ordered his removal and the repayment of a specific sum.
Findings of Court:
The trust is indubitably a public trust for charitable purposes. The suit instituted by the Collector was maintainable as it was specifically authorized by the Local Government. The trustee's removal was justified due to the high standard of rectitude required for the administration of charitable funds, and the concurrent findings regarding the misappropriation of funds were upheld.
Issues: The main issues were whether the trust was private or public, whether the suit was maintainable by the Collector instead of the officer generally appointed to exercise the Advocate-General's powers under Section 93 of the Code of Civil Procedure, and whether previous services to the trust could excuse subsequent misappropriation.
Ratio Decidendi: Under Section 93 of the Code of Civil Procedure, the Local Government may authorize the Collector or any other appointed officer to exercise the powers of the Advocate-General under Sections 91 and 92 outside Presidency towns; a general appointment of one officer does not bar the specific appointment of another for a particular suit. Furthermore, the safety of property held on public trust requires the highest standard of rectitude, and prior merits cannot excuse the misappropriation of trust funds.
Result: Appeal dismissed with costs.
Appeal (No. 93 of 1929) from a decree of the High Court (December 17, 1926) varying preliminary and final decrees of the District Judge of Aligarh.
The suit was instituted by the respondent Collector against the appellant and another, as trustees under what was concurrently held to be a trust for public purposes of a charitable or religious nature. The plaint alleged breaches of trust and claimed removal of the trustees, accounts and a scheme for administering the trust.
The institution of the suit by the Collector was specifically authorized by the Government of the United Provinces by a letter of December 5, 1921. At some earlier date the said Government had made a general order, appearing in the Manual of Rules and Orders relating to the Legal Remembrancer, whereby that officer was appointed under s. 93 of the Code of Civil Procedure to exercise within the limits of the United Provinces the powers conferred on the Advocate-General by ss. 91 and 92 of the Code, which (by s. 92) include the institution and consent to the institution of suits in relation to trusts for public purposes of a charitable or religious nature.
The High Court (Lindsay and Sulaiman JJ.) held that the trust was one for public purposes of the above nature, and that the Collector had a right to institute the suit. The decree of the District Judge was affirmed so far as it removed the trustees, and formulated a scheme to administer the trust; it was varied as to the sum due from the appellant.
1931. Feb. 11, 12. Wallach for the appellant. E. B. Raikes K.C. and Dube for the respondent were not called upon.
March 9. The judgment of their Lordships was delivered by
LORD BLANESBURGH. This is an appeal from a decree of the High Court of Judicature at Allahabad, dated December 17, 1926, varying preliminary and final decrees of the Court of the District Judge of Aligarh.
These three decrees were passed in a suit for the administration of what was alleged, and what each Court has found to be, a trust for public purposes of a charitable nature. The appellant and his co-defendant, Kesri Chand, were the surviving trustees of the trust, and in the suit a claim was made against the appellant for Rs. 1,33,000 of its funds, said to have been misappropriated by him. The plaintiff also sought to have the appellant removed from his position as trustee and to have a scheme promulgated for the future administration of the trust. The preliminary decree of the District Court directed the appellant to be so removed. It ordered him to account for the trust property which had come into his hands. It propounded a scheme for the future administration of the trust and ordered the appellant to pay the respondents entire costs of suit. The District Court, after accounts had been taken, found Rs.63,573-15-4 to be due from the appellant; and it so decreed.
By the decree of the High Court of December 17, 1926, the decrees of the District Court were affirmed so far as the removal of the appellant from his trust and the promulgation of a scheme were concerned. But the sum of Rs.63,573-15-4 which had been found to be due from him on his accounts was reduced to Rs. 17,766, and the greater part of the costs of the respondent, the plaintiff in the suit, was, in relief of the appellant, charged upon the trust property.
The appellant complains of this decree, relatively trifling although his liability thereunder is, when contrasted with the claim originally made upon him. He says he is free from all liability and he asks that the suit as against him should be dismissed.
The property in question formed part of the estate of one Panni Lal, a self-made man, who died in 1879. In 1877 he had by deed of gift made over the whole of his means to his wife, Musammat Chunni Kuer. On his death two years later there were four claimants to his estate Musammat Chunni Kuer, now his widow, his deceased brothers son Ganga Prasad, his nephew Dwarka Prasad, and the appellant Gulzari Lal, then a minor of ni
