A co-owner in possession of all the joint properties does not become a trustee by the mere fact of his collection of the full amount of rent from the tenants.

Headnote:
TRUSTS ACT - SECTION 90, 23 - INTEREST ON RENT - CO-OWNER IN POSSESSION - TRUSTEE - BREACH OF TRUST - INTEREST ACT, 1839 - INTEREST ON SUM CERTAIN - WRITTEN INSTRUMENT - DEMAND - LIMITATION ACT - APPEAL - FRAUDULENT ENDORSEMENT - VACANCIES IN COMPUTATION OF RENTAL INCOME.
Fact of the Case:

Plaintiffs and defendant were partners in a firm that owned immovable property. The partnership was dissolved in 1937, but the properties continued to be held in the name of the partnership. The plaintiffs filed a suit for partition of the properties and for an account of the rents received by the defendant after the dissolution of the partnership. The trial court granted a decree for partition and for an account of the rents received from the date of dissolution. The High Court modified the trial court's decree and held that the plaintiffs were entitled to interest on their share of the rents from the date of dissolution. The defendant appealed to the Supreme Court.
Finding of the Court:

The Supreme Court held that the High Court erred in granting interest to the plaintiffs on their share of the rents. The Court held that the defendant was not a trustee for the plaintiffs and was not liable to pay interest under section 23 of the Trusts Act. The Court also held that the plaintiffs were not entitled to interest under the Interest Act, 1839, as there was no written instrument providing for the payment of interest and no demand for payment of interest had been made.
Issues: 1. Whether the defendant was a trustee for the plaintiffs and liable to pay interest under section 23 of the Trusts Act? 2. Whether the plaintiffs were entitled to interest under the Interest Act, 1839?
Ratio Decidendi: 1. A co-owner in possession of all the joint properties does not become a trustee by the mere fact of his collection of the full amount of rent from the tenants. A co-owner is clothed with the status of a trustee only if it is shown that he has gained some advantage in derogation of the other co-owners interested in the property and that he gained such an advantage by availing himself of his position as co-owner. 2. Interest may be awarded for the period prior to the date of the institution of the suit if there is an agreement for the payment of interest at fixed rate or if interest is payable by the usage of trade having the force of law, or under the provisions of any substantive law as for instance section 80 of the Negotiable Instruments Act or section 23 of the Trusts Act.
Final Decision: The Supreme Court partly allowed the appeals and modified the decree of the High Court. The Court held that the plaintiffs were not entitled to interest on their share of the rents and that the defendant was liable to pay interest on the amount found due to the plaintiffs from the date of the final decree.

JUDGMENT

RAMABWAMI J.-These appeals are brought by certificate on behalf of the defendant from the judgment of the High Court of Madhya Pradesh, Indore Bench dated November 20, 1962 in First Appeals Nos. 19 and 23 of 1957.

2. The plaintiffs, Rup Chand and Hukam Chand instituted Civil Suit No.8 of Samvat 1999 in the Court of District Judge, Ujjain against the defendant Vithal Das and three others, for partition of houses and for rendition of accounts. Two of the defendants, Bheronlal and Indermal died in the course of the suit and the suit was continued against Vithal Das. The plaintiffs alleged that the immovable property constituting Blocks Nos. 206 and 207 in Freeganj, Ujjain was purchased with the capital of the partnership firm in which the plaintiffs and the defendant were, at one time, partners and by two documents dated July 2, 1937 and July 16, 1937, the properties continued to remain in the ownership of the partnership firm, though the firm had been dissolved in the year 1937. The plaintiffs claimed that the properties were managed by the defendant on behalf of the plaintiffs and the defendant realised rents from the tenants on their behalf and plaintiffs were therefore entitled to receive half the amount realised as rent and the defendant was liable to render accounts thereof. The plaintiffs also claimed partition of the joint properties, or in the alternative, the sale of the property by auction and after deducting the cost of auction, half of the sale proceeds. The defendant contested the suit on the ground that at the time of the execution of the document dated July 2, 1937 there were only three blocks in partnership which were at that time open land. The defendant claimed that Block No. 206 and the building constructed thereon was not a partnership property. It Wall further alleged that the defendant had invested Rs. 10,000 in the three blocks of land which were held in partnership for constructing a building. The trial Court accepted the plaintiffs case and granted a decree for partition of the blocks and for an account of income realised in respect of the property situated on block No. 207. As regards block No. 206 and the property standing thereon the trial Court directed the defendant either to remove the construction or accept his share of money spent by the defendant over it and created a charge over the property in respect of the amount so held payable. Both the parties preferred appeals in the High Court of Madhya Pradesh against the judgment of the trial Court which partially allowed the appeals and remanded the case to the trial Court. The High Court held that the plaintiffs were entitled to claim half share in both the properties built on blocks Nos. 206 and 207 and the defendant was liable to account for the income of the properties on block No. 207 from the date of dissolution i.e., from July 2, 1937 and of block No. 206 from the year 1939. The High Court also held that the plaintiffs were liable to pay half the costs spent by the defendant in constructing the building on block No. 206. After the order of remand the trial Court appointed a Commissioner for examining the accounts of rent realised by the defendant. After considering the report of the Commissioner, the trial Court determined the total amount of rent of both the blocks Nos. 206 and 207 at Rs. 41,829-3-7 and the half share of the plaintiffs was determined at Rs. 20,914-4-9. The trial Court also awarded interest to the plaintiffs on the half share of the income to the extent of Rs. 6,676-7-3 calculated upto April 11, 1957. The total amount thus due to the plaintiffs was determined at Rs. 27,591-1-0. Out of this amount the trial Court allowed a sum of Rs.9,755-7.3 on account of the half costs of construction and interest thereon and expenses incurred for house tax, water-tax, legal expenses and repairs. The net amount thus awarded to the plaintiffs was Rs. 17,670-9-9. As regards the partition of blocks Nos. 206 and 207, the trial Court held

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