Andhra Pradesh High Court
Judges : CHANDRASEKHARA SASTRI, JAGMOHAN REDDY
Abdul Razack - Appellant
Versus
Mahammad Rahamatullah - Respondent
Decided On : 11-08-63
TRUST - Liability of a person in a fiduciary position - Scope of accountability - Liability to account for profits made from substituted assets purchased with the income derived from trust property - Interpretation of preliminary decree - Transfer of routes.
Fact of the Case:
The first defendant, being in a fiduciary capacity, managed the plaintiffs' properties and bus service on behalf of the plaintiffs, who were minors. The first defendant fraudulently transferred the buses to the second defendant, who in turn transferred them to the third defendant. The plaintiffs filed a suit for a declaration of their title to the properties, possession of the same, and an account from the first defendant in regard to his management of the properties and collections from the bus service.
Finding of the Court:
The court held that the defendants had no title or proprietary rights in the buses, that the buses belonged to the minors, and that the first defendant had come by way of managing the same on behalf of the plaintiffs after the death of their father and paternal uncle. The court also held that the transfer of the buses was not bona fide but fraudulent.
Issues: 1. Whether the defendants are liable to account for the profits made from the substituted assets purchased with the income derived from the trust property? 2. Whether the preliminary decree can be interpreted to include an account of the profits from the substituted assets? 3. Whether the defendants are liable to transfer the routes along with the delivery of the buses?
Ratio Decidendi: 1. A person in a fiduciary position, such as a trustee, executor, or agent, is liable to account for all the profits made by him or her, whether directly or secretly, by availing themselves of their position. 2. The preliminary decree, which directed the defendants to render an account of the profits of the specified buses from the date of the suit, can be interpreted to include an account of the profits from the substituted assets purchased with the income derived from those buses. 3. The court cannot direct the transfer of routes, as that is within the province of the concerned authority.
Final Decision: The appeal was allowed, and the cross-objections were dismissed. The court directed the commissioner to take an account of the profits earned by the specified buses, as well as the profits earned from any buses purchased with the income from those buses.
( 1 ) THIS appeal and the Civil Revision Petition arise out of the same order passed by the Subordinate Judge of Cuddapnh in I. A. No. 55 of 1954 in O. S. No. 2 of 1149 dated 16-9-1954 giving certain directions regarding the mode of taking accounts. The suit was filed by the six plaintiffs for a declaration of their title to and for possession of the plaint schedule properties consisting of two items of land, a house, vacant sites and five buses, and for an account from the first defendant in regard to his management of immovable properties and collections from the bus service from May 1942 upto the date of the suit. The first plaintiff is the son of one Abdul Nabi. The other plaintiffs are first plaintiffs sisters. Abdul Nabi, the 1st defendant and late Ameen Saheb were three brothers. Abdul Nabi died in 1930 when the plaintiffs were minors leaving a house, vacant sites and lands shown in the plaint A schedule and considerable cash to the extent of Rs. 12,000. 00. He had also forest and abkari contracts. It is alleged that he entrusted all his property to his elder brother, Ameen Saheb, with a direction to protect the plain-tiffs and manage the properties and deliver them to the first plaintiff after he attained majority. After the plaintiffs fathers death, both Ameen Saheb and the first defendant took upon the management of the properties on plaintiffs behalf. The first defendant was looking after the lands and contract business on behalf of the plaintiffs, while Ameen Saheb looked to the management of the rest of the properties. In so far as it is relevant, it may be stated that Ameen Saheb purchased five motor buses described in the B schedule of the plaint and conducted bus service from Cuddapah to Nell ore and Proddatur to Nellore under the name of "amin Motor Service". In this motor service, one P. T. Gopalacharlu was also a partner with Ameen Saheb till 5-4- 1942 when he relinquished his interest and executed a receipt. On 15-4-1942 Ameen Saheb executed a will whereby all the properties belonging to the plaintiffs father including the buses in question were delivered to the first plaintiff and he died a few days afterwards. But as the first plaintiff was young and inexperienced to carry on the management of the lands and bus service himself, the first defendant undertook to manage the bus service on a fixed salary of Rs. 50. 00 per month and executed a letter dated 5-5-1942 agreeing to render proper accounts to the first plaintiff. The buses in the B schedule were put in possession of the first defendant, who was also managing the plaintiffs lands by leasing them to tenants and collecting rents thereof. , It was averred that the first defendant had fraudulently got transferred the patta for item I of the plaint A schedule in his name and had not been rendering accounts of the collections in the bus service. It is also stated that in anticipation of the plaintiffs suit, the first defendant was trying to nominally transfer the C certificates and G permits of the buses in question in favour of his friends Khader Mohideen and others. Subsequent to the filing of the suit, the plaintiffs amended the plaint by alleging that they had come to understand that the said buses have been nominally transferred at first in favour of the 2nd defendant and then in favour of the third defendants company of which the second defendants brother was the managing Director. The said alienations were said to be nominal and intended to defeat the plaintiffs claim. Inasmuch as the Interlocutory Application, I. A. No. 56 of 1954 relates only to the question of buses and does not deal with other matters dealt with by the preliminary decree, we will confine ourselves only to the averments in respect of these buses. The first defendant contended that these buses belonged to him, that he is the owner and had title and possession of the same and was running them on his own account, that the sale was not fraudulent or nominal, and t
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