(Made by Varadachariar, J.).
This is an application for relief under Madras Act IV of 1938, filed by the 1st defendant in a suit for partition in a Mahomedan family.
It was found in the main case that the 1st defendant who was the eldest child of his father and a major at the time of the father's death entered into possession and management of the father's property at his death and that as he had a minor brother and a minor step-brother and step-sister he was found to have held and managed the property on behalf of all the co-owners. In 1925 there were disputes in the family and the 1st defendant left the family house and lived elsewhere. It was also found that during his period of management, the 1st defendant had collected outstandings due to the father's estate and the income due from the common property of the family. In 1929 the plaintiff who is the 1st defendant's step-brother instituted a suit for division and recovery of his 2/7th share. A decree was given in plaintiff's favour and also in favour of the defendants 2 and 3 for their respective shares. With respect to the outstandings and the income realised by the 1st defendant during the period of his management the lower Court found that the other co-sharers were entitled to claim payment of interest thereon as it had been shown that the 1st defendant had been investing all the moneys in his hands and that many of the promissory notes taken by him bore interest at 12 per cent per annum. The lower Court accordingly held that the 1st defendant was liable to pay to the plaintiff and to defendants 2 and 3 a sum of Rs. 14,480 representing amounts collected by him on their account and Rs. 8,700 for interest thereon. It also directed payment of interest on the aggregate amount at 6 per cent per annum from the date of the institution of the suit to the date of payment.
On appeal to this Court, we allowed certain deductions claimed by the 1st defendant in his favour. In other respects we confirmed the decree of the lower Court. The 1st defendant's liability to pay interest was challenged before us but we affirmed the lower Court's decision on this point. It is with reference to this liability for payment of interest that the present application for relief under Madras Act IV of 1938 has been filed.
We are of opinion that the main liability is not covered by Act IV of 1938 as it is not a “debt” within the meaning of the Act. Our judgment itself and the cases dealing with the point proceed on the footing that ordinarily the relation between co-owners when one of them is in possession of common funds, is not that of creditor and debtor but that the liability to pay interest will arise in cases in which it is shown that the person in possession of the common funds has realised interest by their investment. In this class of cases the liability to pay interest seems to us to rest on one of two bases: one, that each co-owner is entitled to claim a share in the common property as it stands at the time of the division and that in the case supposed the common property liable to be divided consists not only of the original realisations but of the interest earned by their investment as well. If this be the true basis, we see no justification for denying the co-sharer his share in the full extent of the property which on this theory will consist of the original amount plus its accretion. Another possible view is that the co-owner who has realised interest by the investment of the common funds is covered by S. 90 of the Trusts Act and that by virtue of S. 95 of that Act he incurs a liability to pay interest under S. 23 of that Act. This is the view taken by Venkatasubba Rao, J. in Peer Mohideen Rowther v. Aisa Bivi(1). If this be the true basis the case will be taken out of the operation of the Madras Act IV of 1938 by Cl. (f) of S. 4 of that Act. We are not prepared to accede to the contention that S. 4 Cl. (f) ought not to be held to apply to obligations declared in Chap. IX of the Trusts Act.
So far however as the liability to pay interest subsequent to the date of the lower Court's decree is concerned, we think there is some justification for the petitioner's contention that is covered by S. 9 of Act IV of 1938. This is a liability imposed upon him by the decree and does not rest on the same basis as the original liability to pay over the interest realised by him. The word ‘incurred’ in the opening sentence of S. 9 no doubt suggests the idea of a liability voluntarily incurred but the terms of Cl. 1 of that section seem to indicate that the section refers not only to contractual liability but even to liabilities arising under law, custom or decree of Court. In this view the decree of the lower Court must be varied by limiting the award of 6 per cent interest up to the date of the lower Court's decree and providing for payment of interest at 5 per cent per annum from 31st March, 1934 up to date of payment.
N.R.ROrder accordingly.