Judgement

Appeal (No. 67 of 1931) from a decree of the High Court in its appellate jurisdiction (December 6, 1929), affirming a decree of the Court in its original jurisdiction (August 18, 1926).

The respondent brought a suit in the High Court against eight defendants, who constituted a joint Hindu family carrying on business as jewellers under the firm name T. R. Tawker & Sons. Before the trial the defendants were adjudicated insolvents under the Presidency Towns Insolvency Act, 1909, and the appellant, the official assignee, was joined as a defendant and filed a written statement; the original defendants did not appear at the trial.

The question arising on the appeal was whether, in the circumstances stated in the judgment of the Judicial Committee, the respondent was entitled to a charge upon assets of the firm in the hands of the appellant, those assets consisting of the proceeds of sale of stock amounting to about Rs. 22,000.

The Appellate Court (Reilly and Cornish JJ.), affirming the decision of the trial judge (Kumaraswami Sastri J.), held that the respondent was entitled to a charge for Rs. 10,000 and certain interest. Reilly J. said that at the trial the existence of a trust was admitted, but no wrongful disposal of the trust fund had been shown, nor any wrongful mixing of the trust property with other property such as would make s. 66 of the Indian Trusts Act apply. That being so could the plaintiff get a charge ? He could do so under s. 63 of that Act if he could trace the trust property into the assets in the hands of the official assignee. Upon a consideration of English cases referred to in the present judgment, the learned judge held that the Rs. 10,000 had been sufficiently traced to the assets and that the plaintiff was entitled to a charge thereon. Cornish J. delivered judgment to the same effect. The appeal is reported at 59 Mad.

L. J. 718.

1933. Jan. 23, 24, 26. De Gruyther K.C. and Sidney Smith for the appellant. Although the original defendants by their written statement appear to admit that there was a trust they do not admit that they were the trustees, and the appellant by his written statement denies that there was a trust. If there was a trust the trustee was Sadasiva Tawker, not the firm, some of the members of which were minors. He was authorized to invest the fund in the business, and upon its insolvency the only right of the appellant was to prove, in the name of the trustee, for the debt.

[Lord Blanesburgh. As the Rs. 10,000 was invested with the firm in the name of the respondent the firm held as trustees for him.]

Even so the fund was to be used in the business, which consisted of buying and selling goods, and at the date of the adjudication the fund could not be traced into the existing assets James Roscoe (Bolton), Ld. v. Winder. ([ 1915] 1 Ch. 62.)

[Sir George Lowndes. It was not shown that the assets of the firm ever fell below Rs. 10,000 in value.]

As the investment was not a disposition contrary to the terms of the trust, or wrongful, neither s. 63 nor s. 66 of the Indian Trusts Act gives the respondent a right to a charge upon the assets. The Appellate Court relied upon observations in Pennell v. Deffell (( 1850) 4 De G. M. & G. 372.) and In re Hallett’s Estate (( 1880) 13 Ch. D. 696.), but in both these cases the disposition of the fund was unauthorized. If the English authorities support the view that there is a right to a charge, although the investment was in accordance with the terms of the trust, they go further than the Indian Trusts Act, and to that extent do not apply. The judgment in the present case was considered in Nagappa Chettiar

v. Official Assignee of Madras (( 1931) 60 Mad. L. J. 355.) and was not followed ; the Court there followed Official Assignee of Madras v. Krishnaswami Naidu (( 1909) I. L. R. 33 M. 154.), which supports the appellant. [Reference was made also to Ex parte Hardcastle (( 1881) 44 L. T. 523.) ; In re Sykes ([ 1902] 2 Ch. 241.) ; Williams on Bankrupt