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Case Number

Second Appeal No. 1105 of 1952, against decree of Civil J. Farrukhabad, D/- 29-1-1951

Attorney(S)

Standing Counsel
K.C. Saxen

Judges

S.S Dhavan, J.

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Smart Summary

Structured Summary of the Opinion

Factual and Procedural Background

In 1945 meetings were held in Farrukhabad, under the District Magistrate's authority, to solicit subscriptions for erecting a women's hospital at Chhibramau. The plaintiff firm (Sham Sunder Lal Ram Charan) donated Rs. 500, paid in cash on 1 June 1945. The firm later learnt that the original scheme had not been implemented and sought a refund on the basis that the donation was given for a specific purpose and was held on trust by the Government.

The District Magistrate replied on 6 April 1946 that the subscription was voluntary and had been credited to "His Excellency's War Purposes Fund" and that Government would not refund the amount. The firm served a Section 80 CPC notice on 18 November 1946 and, after further correspondence (including a letter to the Collector on 29 July 1947 that went unanswered), filed suit on 17 March 1948 for recovery of the donated sum.

The Government admitted receipt of the donation but denied abandonment of the scheme, saying that constitutional and political changes had delayed establishment; a committee resolution of 9 April 1948 proposed adding Rs. 5,000 and using the fund to construct a women's ward attached to the existing District Board Hospital at Chhibramau, and that resolution was sent to Government for approval on 5 May 1948 (the written statement did not state whether approval was given). The trial court held the donation was on trust for a specific purpose and that the scheme had been abandoned; it ordered a refund. The learned Civil Judge in appeal affirmed that decree. The State brought a second appeal to the High Court.

Legal Issues Presented

Whether the Rs. 500 subscription given to the Government for a women's hospital was an outright gift (irrecoverable) or was held on trust for a specific purpose, entitling the donor to a refund if the purpose failed.
Whether the authorities' later decision to construct a women's ward attached to the existing dispensary (rather than a separate women's hospital) amounted to abandonment or failure of the original purpose of the donation.
Whether, on the record at the time of hearing, the plaintiff's suit for refund was premature (i.e., whether the plaintiff should be required to wait to see if the proposed ward is actually constructed and serves the donor's purpose before being entitled to refund).
Whether and to what extent the Government should be liable for costs in the circumstances described.

Arguments of the Parties

Appellant (Government of Uttar Pradesh) — Main Arguments

The State initially argued the donation was an outright gift, implying no right to refund even if the purpose for which it was given failed.
The State further argued that the lower courts wrongly found abandonment of the scheme; it submitted that the scheme had not been given up but was delayed by political and constitutional changes, and that a later resolution proposed constructing a women's ward attached to the existing dispensary (with plans and estimates under preparation), indicating continuance of the project in a modified form.
At the hearing, State counsel stated that an estimate and plan were being prepared for construction of a female ward attached to the existing dispensary at Chhibramau.

Respondent (Plaintiff Firm) — Main Arguments

The plaintiff asserted that the donation was made on the clear understanding it would be used to erect a women's hospital and that the Government was a trustee of the money; when the scheme was abandoned the object of the trust failed and a refund was due.
The plaintiff's counsel explained the firm's motive was to prevent Government from reneging on its undertaking and that the firm sued after receiving the District Magistrate's letter of 6 April 1946 indicating diversion of the funds to the War Purposes Fund and denial of refund.
At the hearing, the plaintiff contended that adding a ward was not equivalent to building a hospital and therefore constituted abandonment of the original scheme.

Table of Precedents Cited

No precedents were cited in the provided opinion.

Court's Reasoning and Analysis

The Court proceeded through a series of legal and factual determinations:

On the character of the donation: The Court rejected the State's contention that the contribution was an outright gift not subject to refund if the purpose failed. The Court relied on the general principle (as stated in the opinion) that authorities soliciting donations for public purposes stand under the same obligations as private citizens and that authorities cannot claim absolute title to funds solicited for a specific charitable purpose. The Court observed that accepting the State's argument would enable misuse of donated funds and would be contrary to English and Indian authorities (not specifically named in the opinion).
On the factual question whether the original scheme had been abandoned: The Court examined the record and concluded the lower courts' finding of abandonment was incorrect. The evidence showed that, rather than abandoning the project, the authorities proposed a modified plan — constructing a female ward attached to the existing dispensary/hospital — and that a committee resolution (9 April 1948) and subsequent communications indicated the matter was under consideration by Government. The trial court's specific finding that even the ward scheme had been abandoned was based on no evidence and was therefore set aside.
On whether the change from a separate women's hospital to a women's ward amounted to failure of the charitable purpose: The Court analyzed the ordinary meanings of "hospital" and "ward" and noted that in many circumstances a ward attached to a hospital can, for all practical purposes, function as a hospital in itself. The Court gave a concrete example (Kamla Nehru Memorial Maternity Hospital at Allahabad) as judicial notice of a situation where a ward/division operates semi-autonomously and effectively serves the purposes of a separate hospital. Accordingly, the Court held that the decision to provide a female ward attached to the general hospital could constitute substantial compliance with the donors' original intent in many cases.
On remedy and timing: Because the proposed ward remained under consideration and there was evidence of plans and estimates being prepared, the Court found the plaintiff's suit for immediate refund premature. The Court concluded the plaintiff should wait until the ward is constructed and then, if the ward proves to be a sham or the scheme is abandoned after a reasonable time, the plaintiff may pursue a refund. The Court declined to fix a strict time-limit, stating only that the purpose should be implemented within a reasonable time.
On costs: Although dismissing the suit as premature, the Court expressed sympathy for the plaintiff's position and criticized the Government's initial, unhelpful and "cynical" reply that the money had been diverted to the War Purposes Fund. The Court treated the Government's conduct as falling short of candour and found the case suitable for some costs to the plaintiff; it directed that the decree for costs in favour of the plaintiff in the two lower courts shall remain, while the costs of this appeal would be borne by the parties.

Holding and Implications

Holding:
APPEAL ALLOWED. The plaintiff's suit for refund is dismissed as premature.

Direct consequences and directions:

The High Court set aside the lower courts' finding that the original scheme had been abandoned; it held that the authorities' plan to construct a women's ward attached to the existing hospital may constitute substantial compliance with the original purpose and that the question cannot be decided as one of total abandonment on the record before the court.
The plaintiff is required to wait until the proposed female ward is constructed (or a reasonable time has elapsed) before seeking legal relief for refund; if the ward is not a genuine implementation of the undertaking or if the scheme is later abandoned, the plaintiff may bring fresh legal proceedings for recovery.
The decree for costs in favour of the plaintiff in the trial court and the first appellate court shall remain; the costs of the present appeal are to be borne by the parties (i.e., each party bears its own costs for the appeal).
The Court declined to impose a fixed time-limit, stating only that the purpose should be implemented within a reasonable time.

Broader implications:
The opinion emphasizes that governmental solicitors of donations are subject to the same obligations as private solicitors of charitable contributions and cannot treat donations solicited for specific charitable objects as absolute gifts if the object fails; however, the Court did not purport to lay down any new binding precedent beyond the application of these principles to the facts of the case.

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State Of U.P Government v. Sham Sundar Ram Charan .

1.This is an appeal by the Government of the State of Uttar Pradesh against the decree of the learned Civil Judge Farrukhabad directing the Government to refund a sum of Rs. 500/- which was donated by the plaintiff respondent Sham Sunder Lal Ram Charan in the year 1945. The facts are these: In March 1945 several meetings were held in Farrukhabad under the authority of the District Magistrate at which an appeal was made to the public to subscribe to a fund for the erection of a women's hospital at Chhibramau.

2. The plaintiff firm contributed a sum of Rs. 500/- towards this fund and paid the amount in cash on 1st June, 1945. It was alleged by the firm that subsequently they came to know that the scheme for the construction of the hospital had been abandoned. Thereupon it wrote to the Government asking for the refund of their money which had been donated according to them on the express understanding that it would be utilised for the purpose of erecting a hospital. On 6th April, 1946, the District Magistrate sent a reply that the plaintiffs subscription was voluntary, that the amount paid by him had been credited to “His Excellency's War Purposes Fund” and that “as the account had been closed, Government was not prepared to make any refund.” This did not satisfy the plaintiff firm and on 18-11-1946 it served a notice under Section 80 of the CPC calling upon the Government to refund the amount. On 29-7-1947 another letter was sent by the plaintiff firm to the Collector inquiring if any steps had been taken for the implementation of the scheme for the construction of the hospital. No reply appears to have been sent to this letter and on 17-3-19481 the firm filed their suit for the recovery of the amount donated by it.

3. It was stated in the plaint that the money had been donated on a clear understanding that it would be utilised and spent for the erection of a women's hospital and that the Government was a trustee of the money. The plaintiff claimed that as the Government had abandoned the scheme for building a hospital the object of the trust had failed and the plaintiff was entitled to a refund of his money which was lying unused with the defendant.

4. The Government of Uttar Pradesh contested the suit and resisted the firm's claim to a refund. It was, however, admitted that in 1945 the Collector of Farrukhabad had held a meeting in which certain sums of money were donated by the public for the purpose of establishing a female dispensary at Chhibramau. The receipt of a donation from the plaintiff firm was admitted and also that District Magistrate wrote to the plaintiff that its money had been diverted to the War Purposes Fund. It was, however, pleaded that, due to constitutional and political changes, the establishment of the dispensary had been delayed but the idea had never been dropped.

5. It was further stated by a resolution of the Committee (presumably the Advisory Committee of the district) dated 9th April 1948, it was decided that a sum of Rs. 5000/- be added to the amount received by the public and the entire fund should be utilized for constructing a women's ward to be attached to the existing District Board Hospital at Chhibramau. This resolution was sent to the Govt. for approval on 5th May 1948. The written statement did not reveal whether the Government had given its approval, but it was categorically denied that the scheme for the construction of a female dispensary at Chhibramau had been abandoned.

6. The trial court held that the donation was paid to the Government on trust for a specific purpose and that the scheme for erecting a hospital had been abandoned. It further held that the purpose of the trust having failed the plaintiff was entitled to a refund of Rs. 500/- donated by him. In appeal the learned Civil Judge upheld the findings and the decree of the trial court. The State has now come to this court in Second Appeal.

7. At the commencement of the hearing of the appeal, Mr. A.C Mukerji learned counsel for the State stated on behalf of the Government that

“an estimate has been already prepared for the construction of a female ward which will be attached to the existing dispensary at Chhibramau and that the plan is under preparation for the construction of this ward.”

8. It was also stated by Mr. K.C Saxena on behalf of the plaintiff-respondent that

“the sole motive of the plaintiff in filing this suit was to prevent the Government from going back on their undertaking to the donors that the money donated by them would be spent in erecting a female hospital at Chhibramau and that he was compelled to file this suit when he received a letter from the District Magistrate, Farrukhabad, dated 6-4-46 that the plaintiff's contribution was voluntary and had been diverted to His Excellency's War Purposes Fund.”

9. This statement as well as that made on behalf of the State were recorded by the Court.

10. I have heard learned counsel for both sides. Counsel for the State contended in the beginning that the amount donated by the firm was an outright gift and it is not entitled to claim a refund even if the purpose for which it was given had failed. This contention cannot be considered seriously as the whole weight of authorities, English and Indian, is against it. If this argument prevails, the gates will be opened wide for all kinds of adventurers and make it easy for them to swindle the public by obtaining donations for charitable schemes which they need not refund even if the scheme is given up. I think the Government is under the same obligations as a private citizen when soliciting and obtaining donations for a public purpose.

11. State counsel then contended that the courts below have erroneously held that the purpose of the trust had failed. It appears from the record that in 1948 some kind of a resolution was passed in favour of a scheme for the construction of a female ward to be attached to the District Board Dispensary at Chhibramau. This resolution was sent to the Government and appears to be still under consideration. State Counsel's statement on behalf of the Government which was recorded by the Court indicates that the scheme for the construction of a female ward is being considered and a plan for the construction of a building is already in preparation.

12. I have carefully scrutinized the judgments of the courts below and I am of the opinion that their finding that the scheme for the construction of a hospital has been abandoned is not correct. The authorities did not give up the scheme but decided to construct a female ward attached to the existing dispensary instead of constructing a separate women's hospital. Neither of the courts below considered the question whether this change in the original scheme amounts to its total abandonment.

13. The trial court did observe that even the scheme for the construction of a women's ward appeared to have been abandoned, but this finding cannot stand as it is based on no evidence — a fact which was conceded by the learned counsel for the plaintiff-respondent. This court has held in several cases that a finding of fact based on no evidence is not binding on this High Court in second appeal and can be set aside.

14. I have, therefore, to consider whether the scheme of the authorities, which is still under consideration, to construct a women's ward attached to the existing general hospital is a substantial compliance with the original purpose for which the donations were subscribed. Mr. Saxena contended that the addition of a ward is not the same thing as building a hospital and therefore, the Government must be deemed to have abandoned the original scheme. I do not agree with this argument as stated in such wide terms. The subscriptions were obtained for the purpose of building a women's hospital at Chhibramau.

15. A hospital has been defined in the New English Dictionary as “an institution or establishment for the care of tile sick or wounded or of those who require medical treatment.” In certain circumstances a ward attached to a hospital may be for all purposes a hospital in itself. Webster's Dictionary defines the word ‘ward’, in its application to hospital, as “a room or a division of a hospital”. It is possible for a hospital to have separate wards or divisions which are more or less autonomous. To take an example.

16. I can take judicial notice of this fact — the Kamla Nehru Memorial Maternity Hospital at Allahabad which has several divisions including a cancer ward which for all purposes is a separate hospital though under the control of the same committee of trustees as the maternity section. It cannot be said that the scheme for constructing a female's hospital must be deemed to have been given up because it has been decided to add a female ward to the existing general hospital. The ward when in use will serve all the purposes of a hospital even though it will be under the same administration as the general hospital. A common administration may be of advantage to the public as it will reduce administrative expenses and thus release more money for medical facilities available for women.

17. It seems to me that the plaintiff's suit is somewhat premature at this stage. He should wait till the proposed female ward has been constructed. If he then finds that the ward is really no ward at all and Government have made a show of implementing their undertaking, or if after waiting for a reasonable time, he again finds that the scheme has been abandoned, he will be at liberty to take legal action for the refund of his money. It was suggested that this Court should fix a time limit for the Government to honour their undertaking. II do not think this Court can impose any time limit, beyond saying that the purpose of the donation should be implemented within a reasonable time.

18. For reasons detailed in the foregoing paragraphs, I allow this appeal and dismiss the plaintiff's suit as premature.

19. Mr. Saxena has contended that his client is entitled to costs in the special circumstances of this case. I have given this matter some consideration and I have heard learned counsel for the State. I think Government's attitude to the plaintiff's grievance has been far from candid and the Court's sympathy is with the plaintiff-firm though it has dismissed its suit as premature. Subscriptions were raised nearly fifteen years ago for the purpose of constructing a female hospital which has not been erected yet.

20. When the firm wrote to the Government reminding them of their obligation he received a cynical reply that the money given by him had been diverted to the War Purposes Fund. If all citizen repudiates his obligations in this cynical fashion, he will probably be prosecuted for cheating and if he is a Government servant he would probably be charged with conduct unbecoming of a Government Officer. But what is dishonest for citizens and unbecoming for officials cannot be honest or becoming for the Government itself.

21. There cannot be two different standards of morality and obligations of honour for the citizens and their Government (which represents them). In 1945 when the firm reminded the Government that they had done nothing to implement their undertaking to construct a hospital for which it had donated money they gave it no assurance that the scheme had not been abandoned. The District Magistrate Farrulchabad coolly replied that the plaintiff's subscription was voluntary and had been credited to the Governor's War Purposes Fund and that he was not entitled to any refund.

22. It is not suprising that in the political atmosphere of 1945 the plaintiff-firm thought that the Government of the day had played what the common man would call a dirty trick on the public in obtaining money on the pretext of building a hospital but diverting it to war purposes which did not have the support of the majority of the people at the time. The suit was filed in March 1948 two years after the receipt of the District Magistrate's letter of April 1948 when it became dear that the change of Government had produced no change in attitude in this matter.

23. Government appear to have realised their mistake only after they were dragged into the law courts, and even before this court, it was claimed that the donation was an outright gift to Government. From the statement of counsel recorded today it appears that the firm's motive in filing the suit was to compel the Government to honour their word, and it was compelled in the public interest to go to the Court, because the conduct of the Government left no other alternative for it.

24. In these circumstances, I think it is a fit case for awarding some costs to the plaintiff though its suit is being dismissed as premature. I direct that the decree for costs in favour of the plaintiff in both the courts below shall stand, and the costs of this appeal will be borne by the parties.

DE/C.

25. Appeal allowed.

State Of U.P Government v. Sham Sundar Ram Charan .

Structured Summary of the Opinion

Factual and Procedural Background

Legal Issues Presented

Arguments of the Parties

Appellant (Government of Uttar Pradesh) — Main Arguments

Respondent (Plaintiff Firm) — Main Arguments

Table of Precedents Cited

Court's Reasoning and Analysis

Holding and Implications

State Of U.P Government v. Sham Sundar Ram Charan .

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