SANKARANARAYANA BHATTA Vs. KRISHNA BHATTA

JUDGEMENT

(1.) THE appellant is the 13th defendant and the respondents are defendants 3, 4 and 11 in a suit for administration of a kuri. THE decree is for enforcement of the dues of the several non-prized subscribers against the foreman and the assets of the kuri in his hands. THE appellant herein is the foreman of the kuri. THE plaintiff and several of the defendants being non-prized subscribers have been given decrees against the appellant and the assets of the kuri in his hands. THE respondents, having moved execution against the foreman, the latter claimed benefit of the Kerala Agriculturists debt Relief Act, 1958, in the discharge of his liabilities, which plea has been repelled by the court below. Hence this appeal.

(2.) SUPPORTING the order of the court below, counsel for the non-prized subscribers contended that the debt in question comes within exception (iii) to the definition of a debt in Clause. 2 (c) of the Debt Relief act. That exception relates to "any liability arising out of a breach of trust. " Reliance was placed on Kudkanjee Timmarsa Pai v. Kanjarpane Subba rao (AIR. 1928 Mad. 256) & Kumaraswamy Goundan v. Palanisami Goundan (1938 madras Weekly Notes 523) for the contention that the foreman, in respect of his liability to subscribers in a kuri, is in the position of a trustee. Those two rulings relate to the foreman's status in regard to securities executed in his name by prized subscribers. As such securities form part of the kuri assets in which all the non-prized subscribers are interested, the foreman who holds them is held to be a trustee for the non-prized subscribers. The assets of the chitty in the hands of the foreman do not become his property; they remain a separate category for the benefit of the non-prized subscribers who are entitled to relief out of them in enforcement of their claims. It is held in 1938 M. W. N. case that when the foreman becomes insolvent, the assets of the kuri in his hands would not be included in the common pool for the benefit of the generality of his creditors but would be kept apart as a security for the discharge of his liabilities to the subscribers of the kuri as if it was a trust fund in his hands. In my view that proposition has nothing to do in this case where the question relates to the real character of the liability of the foreman to the non-prized subscribers. That liability does not arise out of the securities held by him in trust for the non-prized subscribers, but out of his primary obligations to them arising out of his contract of kuri with them. In order to claim the exemption under clause (iii) of S. 2 (c) of the Debt Relief act, the debt must itself be a liability arising out of a breach of trust.