KRISHNA IYER Vs. RAMASWAMI IYER

JUDGEMENT

(1.) The question raised in this second appeal is, whether the defendants, managers of a chit fund, were entitled to refuse certain security offered by the plaintiff in respect of his purchase of a second instalment. The amount for which he was liable to give security was Rs. 2,700. The lower appellate Court has valued the security at Rs. 3,000 and holding that the defendants acted as reasonable men in the position of tfustees in declining to accept the security, dismissed the suil. The suit was to recover from the defendants personally interest on the chit amount at the rate of 3 per cent. per mensem. The amount itself was deposited in Court with the written statement and the security accepted as by that time the liability of the plaintiff had been decreased and the defendants were therefore then prepared to accept the security as sufficient.

(2.) In his able argument before us Mr. T. R. Venkatrama Sastri put the case as one in which under the agreement the only requisite was that the security should be satisfactory. But on our pointing out that under its terms the security had to be to the satisfaction of the agents, he endeavoured to establish that the agents were bound to accept what a Court would think a reasonable man should accept and that the lower appellate Court having applied a wrong test of sufficiency, this Court should itself decide on the propriety of the agent s action. We are not satisfied that the lower appellate Court has applied a wrong test. The Court does not say that the Trusts Act applies to the case although the learned Judge does speak of the defendants as trustees. The language used is, " applying the principle of the Trusts Act " and we are not clear that he was not entitled to do so. This appeal might therefore be dismissed on the ground that his finding on the question of the propriety of the agent s action was a finding of fact with which this Court would not interfere. We have, however, heard the case fully argued on the supposition that we could interfere; and we are satisfied that it is not for the Courts to decide what was in their opinion reasonable in the circumstances, but whether there is evidence that the agents acted capriciously and unreasonably. It was argued that the agents had not an arbitrary power of rejection and that that being so, the Courts could interfere, We accept the first proposition, but that does not carry with it the alternative put forward.

(3.) The leading case on the point is Braunstein v. Accidental Death Insurance Go. (1861) 121 E.R. 904. This authority was relied upon by the appellant in support of his proposition, but in our opinion it does not help him. In that case proof of death had to be given to the satisfaction of the Directors of the Company. The plaintiff pleaded that the Directors acted capriciously in rejecting the proof offered and the defendants demurred to that plea. The Court held the demurrer was bad stating the law to be that if they unreasonably and capriciously required evidence that was not necessary to satisfy them on any reasonable view of the Case that was not justified by the Clause (Vide p. 909)