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Gutha Hariharabrahmam v. Doddapaneni Janakira...
Comprehensive Summary of the Opinion
Factual and Procedural Background
This Second Appeal arises out of O.S. No. 305 of 1947 on the file of the Court of the District Munsif, Eluru. The substantive suit (filed in O.S. No. 24 of 1954) was brought for rendition of accounts in respect of the management of the temples of Sri Janardhanaswamy and Sri Malleswaraswami of Chataparru. The plaintiff in the suit is the present managing trustee of those temples. The suit was directed against ex-trustees — Gutta Pichayya, Gutta Subrahmanyam and Gutta Venkata Subbanna (the 9th defendant) — and also named various sons and relatives of those ex-trustees.
The plaint alleged that from 1901 until 1938 the trustees (in various combinations and at different times) managed the temples, collected large sums from temple debtors and properties and misappropriated those sums; that the trustees were guilty of misfeasance, malfeasance and nonfeasance; and that they were therefore liable to render accounts and to pay the amounts due with interest.
The defendants pleaded, inter alia, denial of misappropriation, that the suit was barred by limitation and that Section 73 of the Madras Hindu Religious Endowments Act was a bar to maintainability. The learned District Munsif held the suit barred by limitation against the 9th defendant but within time as to the other defendants, and held that Section 73 did not bar maintainability. A preliminary decree for accounts was granted directing a Commissioner to take accounts of management from 1901 to 1938. The Subordinate Judge affirmed that view on appeal. The present matter is the second appeal from those decisions.
Legal Issues Presented
- Whether the suit against the legal representatives of the ex-trustees (Gutta Pichayya and Sitaramabrahamam) was barred by limitation.
- Whether Section 10 of the Limitation Act or Article 98 of the Limitation Act governs a suit by present trustees against ex-trustees or their legal representatives for accounts grounded on alleged misappropriation, malfeasance or nonfeasance.
- Whether the court has a discretion, when directing a back-accounting, to limit the period for which an account is to be taken and, if so, whether that discretion should be exercised in favour of the defendants in this case (i.e., what period of back-accounting is appropriate).
- Whether Section 73 of the Madras Hindu Religious Endowments Act is a bar to the maintainability of the suit (raised in pleadings and decided at trial).
Arguments of the Parties
Defendants' Arguments
- The defendants denied allegations of misappropriation and other wrongful conduct.
- They pleaded that the suit was barred by limitation.
- They contended that Section 73 of the Madras Hindu Religious Endowments Act was a bar to the maintainability of the suit.
Other Legal Submissions Recorded in the Opinion
- The opinion records a concession that if Section 10 of the Limitation Act applies, Article 98 cannot be invoked.
- It was argued (in the course of submissions and discussion of authorities) that Section 10 applies only to tracing actions (i.e., suits for following trust property into the hands of a person), whereas Article 98 governs suits to make good a loss out of the general estate of a deceased trustee.
- Contrary submissions, based on a Madras Division Bench decision, were that Section 10 has a wider ambit and is not limited to mere tracing actions but also applies to claims for an account of trust property or proceeds even where the property is not literally traceable in the defendant's hands.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Mst. Sahaudra Bai v. Shri Deo Radha Ballabhji Mandir, I.L.R. 1940 Nagpur 94 | The Nagpur Division Bench held that Section 10 of the Limitation Act is essentially confined to tracing actions; where the defalcated money was not in the hands of the legal representative and not mixed with the estate, Article 98 (three years from trustee's death or date of loss) applies. | The court cited this decision to explain and exemplify the stricter, tracing-focused interpretation of Section 10, and to identify the factual basis on which Article 98 was held applicable in that case (money loaned to a third party and not in the estate). |
| S.C.V. Devasthanam v. Chidambaram (Madras Division Bench) | The Madras Division Bench held that Section 10 is not limited to tracing actions; it applies to (i) following trust property, (ii) following proceeds, and (iii) for an account of such property or proceeds — the three disjunctive purposes being independently available. | The court expressly preferred and followed the Madras view, accepting the wider meaning of Section 10 and using it as a principal foundation for holding Section 10 applicable to suits for accounts against trustees or their legal representatives in the context of temple trusts. |
| Vidya Varuthi Thirtha v. Balusami Ayyar, I.L.R. 44 Mad. 831 | The Judicial Committee held that properties of religious institutions are not vested in the heads of institutions but belong to the idols; therefore, heads could not be treated as trustees for purposes of limitation under Sec. 10 unless a legislative fiction applied. | The court cited this decision to explain the historical reason for the 1929 amendment to Section 10 (Act I of 1929) which statutory-fictionally deems property comprised in Hindu religious endowments to be vested in trust and managers to be trustees, thereby enabling Section 10 to apply to temple properties. |
| The Attorney General v. Mayer etc. of Exeter (quoted; Sir Thomas Plumer, M.R.) | Equity has no fixed limit for ordering accounts against trustees, but courts exercise a discretion to refuse relief or to limit the period of an account where there has been long delay, entangled accounts, hardship to representatives, or where public interests do not require reopening stale claims. | The court relied on these equitable observations as authoritative support for the proposition that a court may, in its discretion, fix a limited period for back-accounting in charity/trust cases and decline to order accounting for an extremely remote period. |
| Saryayyer v. Murthanna, 35 M.L.J. 661 | The Madras Division Bench applied the equitable principle from Attorney General v. Mayer and fixed a limited back-accounting period (in that case, twelve years) where circumstances warranted not reopening stale claims for very remote periods. | The court followed this authority as a domestic precedent for limiting the period of accounting in temple trust cases and, on the facts before it, exercised the discretion to limit the account to six years prior to 1938. |
Court's Reasoning and Analysis
The court's analysis proceeds in two main parts: (A) the question of limitation (i.e., whether Section 10 of the Limitation Act or Article 98 applies), and (B) the exercise of discretion in fixing the period for back-accounting.
A. Choice between Section 10 and Article 98 (Limitation)
- The court extracts and considers the text of Section 3 (general provision on prescription), Section 10 (which, after amendment by Act I of 1929, deems property comprised in Hindu religious endowments to be property vested in trust and managers to be trustees) and Article 98 (three-year period to make good loss out of a deceased trustee's general estate).
- The court examines conflicting authorities: a Nagpur Division Bench decision (Mst. Sahaudra Bai) which treats Section 10 as confined to tracing actions — requiring that the trust property or its conversion be in the hands of the defendant — and a Madras Division Bench decision (S.C.V. Devasthanam v. Chidambaram) which reads Section 10 more widely to include not only tracing but also suits for an account of trust property or proceeds.
- Having reviewed both lines of authority, the court prefers the Madras view as consistent with the broad wording of Section 10. It reads the three disjunctive reliefs in Section 10 — following property, following proceeds, and an account of such property or proceeds — as independent categories, thereby supporting the application of Section 10 to suits for accounts even where the property cannot be literally traced in the defendant's hands.
- The court also explains the legislative background: the 1929 amendment to Section 10 was enacted to meet the effect of the Judicial Committee's decision in Vidya Varuthi Thirtha v. Balusami Ayyar, which had held that temple properties were not vested in heads of institutions. The statutory fiction in 1929 deems Hindu religious endowment property to be vested in trust and the manager to be the trustee, thereby satisfying the necessary condition for Section 10 to apply to temple trusts.
- The court rejects the contention that Section 10 cannot apply to parts of the claim allegedly barred before 1929; it observes that it has not been shown that any part of the claim became time-barred before 1929. It also notes that Section 3 of the Limitation Act makes other provisions subject to the sections that follow and that Article 98 is not rendered nugatory because it continues to govern breach-of-trust recoveries in cases of trusts other than those covered by Section 10.
- On the facts of the present case the court holds that Section 10 governs the suit: the plaintiff is legally entitled to ask for an account of the management of the temples covering the years 1901 to 1938.
B. Discretion to Limit Back-Accounting Period and Its Exercise in This Case
- The court acknowledges the equitable principle (as stated in The Attorney General v. Mayer) that while there is no fixed limit to ordering accounts against trustees of charities, equity sometimes refuses relief or limits the period of accounting where there has been a long delay, entangled or incomplete accounts, great expense of inquiries, or hardship to representatives who have spent the funds treated as their property.
- The court invokes Saryayyer v. Murthanna (which applied the Mayer principle) as a relevant domestic authority where the period of accountability was confined to a more recent period (twelve years in that prior case).
- On the facts before it, the court notes that:
- The temple properties totalled nine acres and 39 cents.
- Accounts for the management had been filed in a connected suit; though there were gaps and accounts were not kept with ideal systematisation, the entire period of management was substantially covered by those accounts.
- From 1901–1915 and 1925–1935 the management dealings are disclosed in the personal accounts of the trustees; from 1915–1925 the dealings appear in the accounts of Kollipara Venkataratnam & Co.; from 1935 onwards separate temple accounts were maintained.
- Local villagers and village committees took accounts in 1918, 1930, 1935 and 1938 and approved them; in 1935 the accounts were audited at the instance of the Madras Hindu Religious Endowment Board.
- It was not uncommon for village trustees before the Hindu Religious Endowments Act to mix temple accounts with private accounts, and sometimes to spend personal funds for temple expenditures; given the village approvals and some auditing, it did not prima facie appear that there was serious misappropriation.
- Given those facts, and applying the equitable discretion described in Mayer and followed in Saryayyer, the court considers that reopening a stale claim for the entire 37-year period would be neither fair to the legal representatives (who may have spent family funds) nor necessary in the public interest. Consequently, the court exercises its discretion and directs that accounts should be taken only for a limited period — specifically, six years prior to 1938 — rather than for the whole period 1901–1938.
Holding and Implications
Holding: Decree modified. The court concluded that Section 10 of the Limitation Act governs the present suit (i.e., suits by present trustees of Hindu religious endowments for accounts against ex-trustees or their legal representatives), but, exercising equitable discretion, it limited the period for which accounts are to be taken to six years prior to 1938 rather than directing an account for the entire period 1901–1938.
Direct consequences and practical implications:
- The plaintiff is entitled in law to seek an account under Section 10; the Limitation Act provision as amended in 1929 is applicable to temple trusts because the statute deems such property to be vested in trust and managers to be trustees.
- Notwithstanding the legal entitlement to wide relief under Section 10, courts retain and may exercise an equitable discretion to limit the retrospective period of accounting where delay, the nature of the accounts, prior local approvals/audits, or hardship to representatives make reopening remote periods unjust or impractical.
- On the facts before this court, the practical effect on the parties is that the accounting will be confined to six years immediately preceding 1938; the decree of the lower appellate court has been modified accordingly and the parties will bear their own costs in the appeal (and no leave was granted).
The opinion does not purport to announce a novel legal principle beyond the application of existing authorities and the exercise of equitable discretion; its immediate effect is the modification of the decree and the limitation of the period for which an account is to be taken in this case.
End of summary. This summary is restricted to the facts, arguments, authorities and reasoning set out in the provided opinion and does not add or infer information beyond what that opinion contains.
1. This Second Appeal arises out of O.S No. 305 of 1947 on the file of the Court of the District Munsif, Eluru, a suit filed by the defendants in O.S No. 24 of 1954 for rendition of accounts in respect of the management of the temples of Sri Janardhanaswamy and Sri Malleswaraswami of Chataparru. The plaintiff is the present managing trustee of the said temples. The suit was filed for rendition of accounts in respect of the management of the temples by the ex-trustees Gutta Pichayya, Gutta Subrah-manyam and Gutta Venkata Subbanna, the 9th defendant. Defendants 1 to 3 are the sons of Gutta Pichayya. Defendants 4 to 7 are the sons of Gutta Sitaramabrahamam. The 8th defendant is Sitaramabrahmam's brother. It was alleged in the plaint that Gutta Pichayya and the 9th defendant as guardians of Sitharamabrahamam, managed the said temples as trustees from 1901, that the 9th defendant acted as a trustee till Sitharamabrahmam attained majority, that Pichayya and Sitharamabrahmam after he attained majority acted as trustees, till the year 1938; that during the period of their management the trustees collected large sums of money from the debtors of the temples and from the temple properties and mis-appropriated the same; that the trustees were guilty of acts of misfeasance, malfeasance and nonfeasance and that, therefore, they were liable to render accounts to the temples for the period of their management and to pay the amount due to the temples, with interest.
2. The defendants, inter alia, pleaded that they were not guilty of any misappropriation, that the suit was barred by limitation and that S. 73 of the Madras Hindu Religious Endowments Act was a bar to the maintainability of the suit.
3. The learned District Munsif held that the suit was barred by limitation against the 9th defendant but was well within time against the other defendants. He also found that S. 73 was not a bar to the maintainability of the suit. In the result, he gave a preliminary decree for accounts with a direction that the Commissioner shall take an account of the management of the temples and the properties by Pichayya and Sitaramabrahmam from 1901 to 1938. On appeal, the learned Subordinate Judge took the same view on the two questions raised and dismissed the appeal. Hence the second appeal.
4. The first question that arises in the second appeal is whether the suit against the legal representatives of the ex-trustees, Gutta Pitchayya and Sitharamabrahmam, was barred by limitation. The relevant provisions of the Limitation Act relied upon, at the Bar may be extracted.
Section 3:
“Subject to the provisions contained in sections 4 to 25 (inclusive) every suit instituted, appeal preferred, and application made after the period of limitation prescribed therefor by the first schedule shall be dismissed, although limitation has not been set up as a defence.”
Section 10:
“Notwithstanding anything herein before contained no suit against a person in whom property has become vested in trust for any specific purpose, or against his legal representatives or assigns (not being assigns for valuable consideration), for the purpose of following in his or their hands such property, or the proceeds thereof, or for an account of such property or proceeds shall be barred by any length of time.
For purposes of this section any property comprised in a Hindu, Mahammodan or Budhist religious or charitable endowment shall be deemed to be property vested in trust for a specific purpose, and the manager of any such property, shall be deemed to be the trustee thereof.”
(Inserted by Act I of 1929.)
Article 98:—
To make good out of the general-estate of a deceased trustee the loss occasioned by a breach of trust. Three years … The date of the trustee's death, or, if the loss has not then resulted, the date of the loss.
5. The question is whether sec. 10 or Article 98 of the Limitation Act would govern a suit filed by the present trustees of a temple against the ex-trustees of a temple or his legal representatives for accounts on the ground of misappropriation, malfeasance and nonfeasance. It was conceded that, if sec. 10 applies, Article 98 cannot be invoked. But it was argued that Sec. 10 applies to what are called tracing actions, whereas Art. 98 governs a suit for an account against an ex-trustees recover the loss from his general estate. The distinction is borne out by the decision of a Division Bench of the Nagpur High Court but it is not accepted by a Division Bench of the Madras High Court. In Mst. Sahaudra Bai v. Shri Deo Radha Ballabhji Mandir I.L.R 1940 Nagpur 94. the facts were: One Jagannatha Prasad constructed the plaintiff-temple and, on 20-11-1911, executed a deed of gift in favour of the temple and, at the same time, constituted a body of trustees, he himself, being one of them. Among the properties gifted was a sum of Rs. 2,000. Soon after the gift, he loaned this money to the 3rd and 4th defendants. The plaintiff's case was that the loan was without the sanction of the trustees and that it constituted a breach of trust. Jagannath Prasad died on 15-1-1927. The first defendant, as his legal representative, was in possession of his entire estate. The present trustees filed a suit for recovery of the amount. The question was whether the suit was governed by sec. 10 or Art. 98 of the Limitation Act. Bose, J. who delivered the Judgment on behalf of the Bench, made the following observations at page 100.
“The next question we have to determine is whether the suit, is within limitation. The cause of action against the 1st defendant is, as we have said, in respect of a breach of trust committed by her father. She herself was not a trustee and she has not committed any wrong act; also the defalcated money is not in her possession; nor is there anything else in her hands which can be said to represent it. Therefore, the suit against her is clearly one to make good the loss occasioned by Jagannatha's breach of trust out of his general estate. To such a suit Art. 98 of the Limitation Act would, in our opinion, apply.”
6. Dealing with Sec. 10, the Learned Judge stated:
“It is in our opinion essential that the actual property, or something into which it has been converted, should be in the hands of the person sued……………Since the money in question has not been converted into any portion of Jagannath's estate or in any way mixed with his own money, it cannot be said to have been in his hands during his life time or in those of his legal representatives after his death.”
7. It is, therefore, clear from the aforesaid decision that sec. 10 can only apply to a suit for the purpose of following property defalcated and it is essential for its application that the said property should be in one form or another in the hands of the defendant and that Art. 98 would govern a case where the amount or property, which is not in the hands of the trustee or his legal representatives and not mixed up with his estate, is sought to be recovered from out of his general estate. It may also be pointed out that, on the facts of that case, the amount was lent out to a third party and, therefore, in no sense of the term could the said amount become part of the general estate of the trustee.
8. In S.C.V Devasthanam v. Chidambaram, a Division Bench of the Madras High Court, consisting of Wadsworth and Horwill, JJ. gave a different interpretation to sec. 10. At page 695, Horwill, J. who delivered the Judgment, observed:
“Another objection to the applicability of sec. 10 suggested by the learned advocate for the respondent is that sec. 10 relates only to tracing actions. We do not however think that the application of sec. 10 can be so limited. Sec. 10 can be used for the purpose of following property in the hands of a trustee or for an account of such property so that the section seems to apply to a case like the present where the trustee or the legal representative is asked to account for money that was in his hands as trustee.”
9. There, a Receiver appointed in a suit between two branches of trustees filed a suit against the legal representatives of a deceased trustee to account for the money that was in the hands of his father. I would prefer to follow the Madras view as it is in accordance with the wide terms of sec. 10. If the property has become vested in trust for a specific purpose—whether it is so vested in this case or not I shall consider at a later stage—sec. 10 applies to three categories of reliefs against a trustee or his legal representatives, (i) for the purpose of following in his hands the trust property, (ii) for the purpose of following in his hands the proceeds of the trust property and (iii) for an account of such property or proceeds. The three purposes must be read disjunctively and, if so read, the three reliefs will be independent of each other. If the relief for an account is ancillary to the main relief of tracing the property in the hands of the defendant, the conjunction “and” would have been used instead of “or”. It can only mean that, if the property cannot be traced to the hands of the trustee, he can be asked to account for it. A relief for an account necessarily implies that the amount found due would be recoverable from the trustees. This is also not without legal basis. What is the justification for the distinction between a case where the trustee or the legal representative who succeeded to his estate is in possession of misappropriated trust property and a case where he parted with it in favour of a third party? In either case, he has the benefit of the property. If, in the former case, he is bound to restore it, what ever the length of time that has elapsed, there is no reason why in the latter case, he should escape his liability and benefit by his misappropriation. Nor can it make any difference if the property is taken by the legal representatives or assigns without consideration and misappropriated by them. I would, therefore, accept the Madras view.
10. Then it may be asked to what class of cases the provisions of Art. 98 would apply. The fact that the said provisions may become unnecessary cannot be a ground for limiting the wide scope of the clear provisions of sec. 10, for sec. 3 of the Limitation Act makes the other provisions of the Act subject to secs. 4 to 25 of the Act. Further, Article 98 does not become nugatory. It will govern suits for recovery of the loss occasioned by a breach of trust in the cases of trusts other than those provided for under sec. 10. In the present case, even if the stricter view accepted by the Nagpur High Court is followed, the defendants would not be in a better position. Admittedly, the legal representatives are in possession of the general estate of their fathers—the ex-trustees. The basis of the suit claims against them is that their fathers misappropriated the amounts and, if so, the amounts misappropriated must have formed part of the general estate of the trustees. As the amounts misappropriated are mixed up with the trustees' other properties, the suit may also be treated as one for tracing the trust property in the hands of the legal representatives of the ex-trustees.
11. There is another obstacle in the way of the application of sec. 10. The necessary condition for its application is that the property should be vested in the trustee for a specific purpose. Sec. 10 was amended by Act I of 1929, whereby the following paragraph was inserted:
“For the purpose of this section any property comprised in a Hindu, Mahammadan or Budhist religious or charitable endowment shall be deemed to be property vested in trust for a specific purpose, and the manager of any such property shall be deemed to be the trustee thereof.”
12. This amendment was occasioned by the decision of the Judicial Committee in Vidya Varuthi Thirtha v. Balusami Ayyar I.L.R 44 Mad. 831. wherein their Lordships held that the properties of religious institutions in India are not vested in the heads of the institutions but belong to the idols and that, therefore, the heads of these institutions could not be trustees. In view of that decision, sec. 10 became inapplicable to suits filed against the trustees of temples and other religious institutions. To overcome this difficulty, the said provision, was inserted in the section and, by reason of the said provision, any property comprised in a Hindu religious endowment shall be deemed to be property vested in trust for a specific purpose. If so, the necessary condition for the application of sec. 10 is satisfied by the fiction introduced. It would not be necessary in each case to establish by independent evidence that the property has become vested in trust for any specific purpose. Apart from that, Wadsworth and Horwill, JJ. in the decision already quoted, held that the conducting of pujas and ceremonies and the upkeep of the temple are sufficiently specific to satisfy the requirements of sec. 10 of the Limitation Act.
13. It is then contended that sec. 10 will not apply to that part of the claim barred before 1929. It is a settled principle of law that, once a debt has been barred by time, it cannot be revived by any subsequent change in the law of limitation, but it has not been shown how any part of the claim had become barred even before 1929. I would, therefore, hold that sec. 10 would govern the present suit and the plaintiff would legally be entitled to ask for an account of the management of the temples from 1901 to 1938 when Pitchayya was removed from the office and when Sitharamabrahmam died.
14. The next question is whether, in the case of back accounting a court has discretion to limit the period of accounting and whether this is a fit case to exercise that discretion in favour of the defendants. Sir Thomas Plumer, Master of the Rolls said in The Attorney General v. Mayer etc. of Exeter as follows:—
“It has, I think been properly stated on both sides that there is no fixed limit of time in directing an account against the trustee of a charity………………It does not however follow that relief will be given after a great length of time, it being the constant course of courts of equity to discharge stale demands, even in cases of fraud, in which, if recent, there would have been no doubt; lapse of time has induced the courts to refuse their interference. In cases of charities this principle has often been acted on. When there has been a long period, during which a party has, under an innocent mistake, mis-applied a fund, from the laches and neglect of others, that is from no one of the public setting him right, and when the accounts have in consequence become entangled, the Court, under its general discretion, considering the enormous expense of the inquiries, the great hardship of calling upon representatives to refund what families have spent, acting on the notion of its being their property has been in the habit, while giving the relief of fixing a period to the account.”
15. These observations were followed by a Division Bench of the Madras High Court consisting of Wallis, C.J and Seshadri Ayyar, J. in Saryayyer v. Murthanna 35 M.L.J 661.. The suit was filed for an account from the year 1884 and the first defendant was asked to account for the management of his father and grand-father. The learned Judges having regard to the aforesaid observations, fixed the period of accounting for a period of 12 years. In the instant case, the account is asked for a period of 37 years. The entire property owned by the temples is 9 acres 39 cents. The accounts were filed in the connected suit. Though there are some gaps, the entire period of management was covered by the accounts. Though the accounts were not kept in a systematic manner, that is expected of a trustee, it cannot be said that no account of the dealings with the trust property was maintained. From 1901 to 1915 and from 1925 to 1935, the management of the properties of the temples is disclosed in the personal accounts of the trustees. From 8-3-1915 to 23-8-1925, the dealings with the properties of the temples are disclosed in the accounts of Kollipara Venkataratnam and Co. From 1935, separate accounts were maintained for the management of the temple properties. All the relevant account books were filed in the other suit. Further, the villagers and the committee of villagers took an account of the management of the trustees in 1918, 1930, 1935 and 1938 and approved of the same. In 1935, the accounts were audited at the instance of the Madras Hindu Religious Endowment Board. Since 1935, on the suggestion made by the auditor, separate accounts were kept for the temples. In the case of village temples before the Hindu Religious Endowments Act was passed, it was not an uncommon thing for the trustees to mix up the temple accounts with their private accounts. Some times, they spent amounts in excess of the temple income from their own personal funds. Particularly when their account was justified by the village headman, as in the present case, it is neither fair to the legal representatives of the ex-trustees, nor necessary in the interests of the public to reopen a stale claim. It does not prima facie appear that there is any serious misappropriation of temple funds in this case. In the circumstances, the interests of justice would be satisfied if accounts are directed to be taken for a period of six years prior to 1938.
16. The decree of the lower appellate court is accordingly modified. The parties will bear their own costs in the appeal. No leave.
B.R.B
17. Decree modified.
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