ESWARA GOWD Vs. SOMASEKHARA GOWD

JUDGEMENT

(1.) Defendants 1 and 2 are the appellants in this second appeal. The suit wa a filed for recovery of possession of an extent of ac. 32-00 of land and a house from defendants 1 to 3 who claimed title to the properties under three different sale deeds. A conditional decree has been passed by the Courts below directing delivery of possession of the properties by the defendants to the plaintiff subject to the payment of Rs. 2,176/-by the plaintiff to the defendants. One Thippanna Gowd was the original owner of the properties. He died on 28-9-1933 leaving his widow Nanjamma, the 4th defendant and an infant son Somasekhara Gowd, the minor plaintiff,who was then 10 months old. On 13-11-1933 a creditor of Thippanna Gowd by name Erappa instituted O.S.No. 823 of 1933 against the minor plaintiff for recovery of the amount due on promissory notes executed by Thippanna Gowd. The suitennded in a decree against the joint family properties to which the minor plaintiff had succeeded by survivorship on the death of his father. The decree-holder brought the suit properties to sale in execution of his decree, purchased them at the court-sale and took delivery of possession on 29-6-1935. On 13-10-1937 Gangadharappa, the maternal grandfather of the minor plaintiff acting as his next friend instituted O. S. No. 84 of 1938 in forma pauperis for a declaration that the proceedings in O. S. No. 823 of 1933 were void as against the plaintiff and for recovery of possession of the properties sold in execution of the decree therein. The suit O. S. 84 of 1938 ended in a compromise decree on 1-9-1939 by which the minor plaintiff was decreed possession of the properties on depositing Rs. 800/- before 30-6-1940 for payment to Erappa, the decreeholder in O" S. No. 823 of 1933. The Court fee of Rs. 276/- payable on the plaint in the pauper suit was also directed to be paid by the plaintiff's next friend, Gangadharappa within 4 mpnths. The parties were to bear their own costs of the suit. Gangadharappa paid Rs. 800/- due to Erappa and obtained delivery of possession of the properties on 20-4-1940 and paid up the court-fee due to the Government on 27-6-1940. In the mean time on 2-1-1940 he had obtained under Ex. B-4, a sale of the suit properties from his daughter Nanjamma acting as the guardian of her minor son, the plaintiff. The consideration for the sale Ex. B-4 was Rs. 2,000/- recited as having been made up of (1) Rs. 924/- taken by Nanjamma for court expenses in connection with O. S. No. 84 of 1938 filed for recovering possession of the suit properties, (2) Rs. 800/- paid by Gangadharappa to Erappa under the compromise decree in the suit, and (3) Rs. 276/- paid by Gangadharappa for the court-fee on the pauper plaint. On 2-5-1940 Gangadharappa sold item 6 of the plaint schedule properties consisting of ac. 6-74 cents of land to the 2nd defendant for Rs. 500/- under Ex. B-10. On 4-11-1942 he sold items 1 to 3, 5 and 7 of the plaint schedule consisting of ac. 12-87 cents of land and the suit house to the 1st defendant for Rs. 1.300/-under Ex. B-5. The consideration for Ex. B-5 was made up of Rs.800/- paid to the vendor, Gangadharappa and Rs, 500/- reserved with the vendee and paid by him on 5-11-1942 to D. W. 4, another creditor, who had obtained a decree against the estate of Thippanna Gowd in O. S. 294 of 1935 and was proceeding against some of .the suit properties by way of attachment and sale. Item 4 of the plaint schedule consisting of ac. 12-64 cents of land was sold by Gangadharappa to the 3rd defendant but no particulars of this sale are available as the 3rd defendant remained exparte The plaintiff brought the present suit on 17-3-1949 through his next friend for recovery of possession of the suit properties alleging that the sale, Ex. B-4, effected by the plaintiff's mother to her father, Gangadharappa was a nominal and fraudulent transaction and that defendants 1 to 3 were not bona fide purchasers for valuable consideration. There was also an allegation in the plaint that the sale was for a grossly inadequate consideration and was prejudicial to the interests of the minor. According to the plaintiff, the properties sold under Ex. B-4 were worth no less than Rs. 5,000/- on the date of sale. The plaintiff's mother, Nanjamma, who executed the sale deed Ex. B-4 was the 4th defendant in the suit and she gave evidence as P. W. 7. On a consideration of the evidence, the learned Subordinate Judge, who tried the suit, came to the conclusion that the sale, Ex. B-4, was effected for an adequate and proper price but that it was not supported by legal necessity and was binding on the plaintiff only to the extent of Rs. 1,600/. Holding that the consideration for Ex. B-4 to the extent of Rs. 400/-had not been justified by any legal necessity, the learned Judge set aside the alienation subject to the plaintiff paying a sum of Rs. 1,600/- to the alienees. He also awarded mesne profits to the plaintiff as prayed for. On appeal, the learned District Judge did not give any finding on the point whether the sale Ex. B-4 was effected for a proper and adequate price. He found that the plaintiff was liable to pay Rs. 2,176/- to defendants 1 to 3 as a condition of his recovering the properties. The learned District Judge rightly observed that the expenses of O.S.No.84 of 1938 instituted by Gangadharappa and the Court-fee paid on the pauper plaint, should be borne by the minor plaintiff for whose benefit the suit was instituted. Including these sums, the learned District Judge arrived at the figure of Rs. 2,176/- as the total amount of the debt which was binding on the mionr. Nevertheless he set aside the sale Ex. B-4 effected by the plaintiff's mother to Gangadharappa by reason of the fiduciary position Gangadharappa occupied in relation to the plaintiff. In the opinion of the learned District Judge, if the sale, Ex. B-4, had been effected in favour of a stranger, it would have been binding on the minor.

(2.) Gangadharappa was the next friend of the minor plaintiff in O. S. No. 84 of 1938 which was filed for recovery of possession of the suit properties on behalf of the minor. He continued to be the next friend on record till he obtained delivery of possession of the properties through court on 20-4-1940. He took a sale of the entire property sought to be recovered in O. S. No 84 of 1938 under Ex. B-4 dated 2-1-1940 from his own daughter and the minor's mother Nanjamma, the 4th defendant. There is absolutely no basis for the plea that the sale was fraudulent or nominal transaction. When the entire properties of the family had been sold in execution of the decree in O. S. No. 823 of 1933 and the plaintiff and his mother were left with no means even for their livelihood and were living with Gangadharappa, he acted in the interests of the minor and filed O. S. No. 84 of 1938 in forma pauperise for recovery of possession of the properties. He found the money for the expenses of the litigation. He also paid the sum of Rs. 800/- to the decree-holder in O. S. No. 823 of 1933 in order to obtain possession of the properties. He also paid Rs. 276/-, the court-fee due to the Government. In taking these proceedings and in incurring the expenditure on behalf of the minor, Gangadharappa was acting in the interests of the minor. Ganadharappa acted not only as the next friend of the minor plaintiff bound to safeguard his interests but also became creditor. Even before he obtained delivery of possession of the properties decreed to the minor, he took a conveyance of the entire properties from his own daughter acting as the guardian of the minor plaintiff for the purpose of satisfying his claim as a creditor of the minor. In these circumstances, it is difficult to avoid the conclusion that Gangadha rappa took advantage of his position as the next friend of the minor to acquire the minor's properties for himself even before the minor got the properties by satisfying the term of the compromise decree with reference to the payment of Rs. 800/. The relationship between Gangadharappa and the minor was a fiduciary one and the person, who purported to act on behalf of the minor, was no other than his own daughter. There was no independent advice given to the lady who acted as the guardian of the minor plaintiff and it was Gangadharappa himself that was attending to the affairs of the minor. It is difficult to say that in purchasing the property Gangadharappa was not taking advantage of the knowledge which he acquired in respect of it during the period he acted as the next friend of the minor. His position as the next friend of the minor and his claim as a creditor of the minor created a situation where his interest would conflict with his duties. A transaction of purchase by a person occupying a fiduciary position under circumstances in which his own interests are or may be adverse to those of the person who owns the property and whose interests he is bound to protect, is always regarded by courts with the utmost jealousy. If such a transaction is impeached by the beneficiary whose intrests have been adversely affected, the purchaser must show that there has been no fraud or concealment or advantage taken by him of information acquired by him by virtue of his position as a person bound in a fiduciary capacity to protect the intrests of the beneficiary. He must also show that the beneficiary had independent advice and every kind of protection in connection with the transaction of purchase. He must also show that the consideration for the purchase was adequate. This is the principle to which statutory sanction has been given in section 88 of the Trusts Act which applies to all cases where a person standing in a fiduciary relationship with another benefits himself while occupping that position at the. expense of the other. The section would embrace all dealings entered into by a person occupying a fiduciary position under circumstances in which his own interests are or may be adverse to that of the beneficiary and a benefit thereby accrues to that person. Section 88, however, is not exhaustive of all cases of fiduciary relationships, and a trustee, executor, partner, agent, director of a company, legal adviser are all instances of persons occupying a fiduciary character. Judged by this test, it is difficult to uphold the sale, Ex. B-4 as a transaction binding on the minor plaintiff.

(3.) There is also one other circumstance to which I should refer. Though the lower appellate court has not given a finding as regards the value of the property at the time of Ex. B-4, there is the evidence of some of the defendants witnesses, D. W. 2 and D. W. 3, to the effect that the .price of the property at the time of the sale would have been Rs. 100/- to Rs. 120/- per acre. The trial Court referred to certain sale deeds of lands which show that an acre was purchased for about Rs. 50/-. The trial Court did not refer to the evidence of D. W. 2 and D. W. 3 who spoke to the value of the suit lands; It is not known whether the lands conveyed under the sale deeds to which reference has been mane by the trial court were lands of the same quality as the suit lands. The learned District Judge does not refer to the evidence on this point or indicate his conclusion as regards the value of the lands. There is one other circumstance which indicates that the value of the lands sold under Ex. B.-4, might have been appreciably higher than Rs. 2,000/-. As already stated, ac. 6-74 cents of land were sold by Gangadharappa to the 2nd defendant for Rs, 500/-. Another extent of ac. 12-87 cents of land were sold to the 1st defendant for Rs. 1300/-. Yet another extent of ac. 12-64 cents of land-were sold to the 3rd defendant but no particulars of the sale have been furnished. If the lands sold to the 3rd defendant were of the same quality as thote sold to the 1st defendant, a sum of Rs. l,300/-is likely to have been paid though the exact price paid is not available and the 3rd defendant is ex parte. If the prices of the lands sold to defendants 1 to 3 arc tot ailed up, the resulting figure would work out to more than Rs. 2,000/-, the price fot which Ex. B-4 was executed.