Unexpended funds held in trust for a specific purpose result in a trust in favor of the contributors, and the unexpended balance belongs to the subscribers rateably.

Venkatasubba Rao, J.

1. This is a somewhat unusual kind of case and arises out of a combination of some thirty persons, owners of saltpans, who associated for the purpose of devising means of easy transport facilities, in respect of their salt from Arasady salt factory to Tuticorin. In 1909 they convened a meeting and passed a resolution that they were to subscribe Rs. 6 per saltpan (there were about 3,000 saltpans) and with the sum of about Rs. 18,000 raised to construct a metalled road from Tuticorin to the salt factory. It was further resolved that in the first instance Re. 1 per saltpan was to be subscribed, that the defendants father Raman Chetty, one of the licensees, was to act as the treasurer and that the plaintiff and another were to look after and conduct the operations. It was further resolved that Raman Chetty was to be liable for interest, on the sums with him, at nine annas per cent, per mensem. It is unnecessary to follow the history of this venture, for, it is sufficient to say that after prolonged negotiations with various public or semi-official bodies, it was found that nothing could be achieved and the money raised remained more or less unspent. It may be maintained that the plaintiff and Raman Chetty had a predominant interest, the former owning 1,400 and the latter 1,100, out of the total of 3,000 odd saltpans. There was a third person, one B. Venkataramanjulu Naidu, who also had some substantial interest, owning as he did 700 pans - the interest of the remaining twenty-seven persons being thus small. The plaintiff has filed this suit in a representative character, having obtained the Courts leave under Order 1, Rule 8, Civil Procedure Code. The defendants are the sons of Raman Chetty, who died in 1929. The lower Court has curiously (it is unnecessary to discuss the grounds of its judgment) passed a decree in favour of the plaintiff for the entire amount held by Raman Chetty, including his own share therein, with interest at the stipulated rate.

2. The principle applicable to actions of this sort may be shortly stated : where funds are held in trust for a particular purpose, which fails or comes to an end, there arises a resulting trust of such funds as remain, in favour of the contributors or, if they are dead, their personal representatives 28 Hals., Section 101; Godefroi on Trusts, 5th Ed., p. 49; In re The Trusts of the Abbott Fund : Smith v. Abbott (1900) 2 Ch. 326 and In re British Red Cross Balkan Fund: British Red Cross Society v. Johnson (1914) 2 Ch. 419. The unexpended balance belongs to the subscribers rateably, in proportion to their subscriptions (see the last mentioned case).

3. The defendants are the appellants. That the plaintiff can recover his own shares on the principle mentioned above, is not now disputed. Nor does Mr. Sitarama Rao for the respondents contend that there should be a decree for the entire amount, including even Raman Chettys share, as the lower Court has decided.

4. The only question that remains then is one of limitation. The first contention of Mr. Ramaswami Aiyar for the appellants does not require serious notice. He contends that the case is not one of trust but must be viewed in the light of a deposit. For this, he relies upon the fact that under the resolutions of 1909, the amounts with Raman Chetty were to carry interest--which circumstance, it is suggested, shows that it was contemplated that his position was to be that of a banker with whom a deposit is made. It is difficult to follow how the liability to pay interest on the part of Raman Chetty is inconsistent with the transaction being in the nature of a trust. Instead of the moneys being invested with a third party, it was understood that Raman Chetty, being a member of the Nattukottai Chetty banking community, should retain them with himself and be liable for interest.

5. The transaction then amounting as it does, to a trust, it is argued by Mr. Sitarama Rao that granting that Section 10 of the Limitatio