Abdul Basudeen vs Badrunnisa and 5 others

S.S. Subramani, J.—Defendant in O.S.No.699 of 1981 on the file of the District Munsif Court, Cuddalore is the appellant. Late Ali Hussain

and the appellant are brothers. The plaint schedule property belonged to late Ali Hussain who died in a motor accident. Plaintiffs in this case are his

widow and children. Plaintiffs alleged that after the death of Ali Hussain, they settled down at Nagercoil and the properties were entrusted for

management with the defendant. They fully believed the defendant that he would take proper care of the property and that he will account for the

income. First plaintiff was a paradanishin widow and the children were also minors.

On the above circumstances, they had to rely on a male person to look after the properties of late Ali Hussain. Defendant also volunteered to

look after the properties, but thereafter, a misunderstanding arose between the defendant and the plaintiffs and the plaintiffs thereby demanded for

settlement of accounts regarding the income which the defendant had derived from the properties. Suit notices were issued for which reply were

sent. But. the accounts were not settled and the suit was filed against the defendant for settling of accounts and to realise the amount of such

settlement.

In the written statement filed by the defendant, he admitted the relationship. According to him, on the death of Ali Hussain, the plaintiffs alone

cannot be the legal heirs. Parents also are entitled to a share in the assets of the deceased son. There is no entrustment of any property in his favour

and what he did was only to assist the widowed first plaintiff in her management of the property. First plaintiff alone was managing the property;

she directly dealt with tenants by granting tenancy and by receiving rents. He also admitted that he was receiving some amounts from the income,

but the same was utilised for redeeming a pledge of gold ornaments, incurred by the late Ali Hussain. According to him, the suit is also barred by

limitation and there is no liability to account and there is no relationship for accounting. There is no agency as contended.

The trial Court held that the suit is maintainable even though there is no documentary evidence to prove that he acted as an agent. The trial Court

believed the case of the plaintiffs taking into consideration the circumstances of the case and decreed the suit as prayed for, declaring that the

defendant is liable to account for the period from October, 1971 till December, 1976. The trial Court also came to the conclusion that the suit was

not barred by limitation.

When the matter was taken in appeal A.S.No.75 of 1983 by the appellant, the findings of the trial Court that the defendant was liable to

account, was confirmed. But, it modified the decree for the reason that the plaintiffs are not entitled to get the accounts settled in its entirety, since

the parents of the deceased were also legal heirs. Therefore. plaintiffs were given a decree for accounting in respect of 4/6th share of the income. It

is stated by the plaintiffs that the defendant surrendered possession of the property in December, 1976.

As against the said judgment, the defendant/appellant has preferred this Second Appeal on the following substantial question of law:

Whether the suit filed on 15.12.1978 is in time especially when the demand for accounting made in the year 1973 by the respondents and the

appellant denied the liability under Ex.A5?

Whether the findings of the Courts below that the appellant was in management of the property as the agent of the respondents is right especially

when the Courts accepted that there are no documentary evidence regarding the same?

Whether the findings of the Courts below are vitiated by its failure to consider Exs.A3 and A4 and......

Learned counsel for the appellant relied on the decision in Ridupaman v. Surinder Kumar (A.I.R. 1959 Punjab - 92) wherein theirs Lordships

have held thus:-

''''Remedy by way of account is remedy for the recovery of money, received by one. belonging to another, who has no evidence of such receipt, or

of the amount so received. It is designed to compel one who, by virtue of some privy or trust relation, has received or been entrusted with money

or property belonging to another, or to be applied or discount thereof, and to recover the balance found to be due. The plaintiff in a suit for

account can succeed only if he establishes that the relation between the parties is of such a character as to impose on the defendant the duty to

render an account. The whole basis of a decree for account is a liability on the part of the defendant to account and the first issue to be determined

in every such suit is whether or not the plaintiff is entitled to an account. The mere fact that it would be convenient to have the accounts examined in

the presence of the defendant will not render the defendant liable to account.

(Emphasis supplied)

It was further held in that case thus:-

He must establish the existence of facts entitling him to an accounting namely that the person upon whom such an obligation is sought to be

imposed (the obligor) has received some property not his own. that the person seeking to impose the obligation (the obligee) is the owner of the

property in respect of which the obligation is sought to be imposed, that the obligor did not receive the property as mere bailee, that the obligor

received it into his possession and control, and that there is privity of contract between the obligee and obligor.

... ... ... ...

It is a relationship of a fiduciary character with respect to property, not one involving merely personal duties. It subjects the person by whom

property for the benefit of another person and, in the case of an express trust, arises from the intention of person to create a trust directly or

indirectly.

The Division Bench of Jammu and Kashmir High Court in State v. Tota Ram (A.I.R. 1971 Jammu & Kashmir - 71) have held thus:-

In a Treatise on the Law of Agency by Brindaban Katiar, Second Edition, 1961 at page 571, it is stated that remedy by way of account ""is an

exceptional remedy and can be availed of only where a duty rests upon the defendant to render an account. The plaintiff in a suit for account can

succeed only if he establishes that the relationship between the parties is of such a character as to impose on the defendant the duty to render an

account. He must establish the existence of facts entitling him to an accounting, namely -

(a) that the person upon whom such an obligation is sought to be imposed has received some property not his own.

(b) that the person seeking to impose the obligation is entitled to that in respect of which the obligation is sought to be imposed,

(c) that the person sought to be made liable did not receive the property as a mere bailee.

(d) that such person received it into his possession and control, and

(e) that there is privity of contract between the two.

There are a number of reported cases which support this very thesis AIR 1925 Lah 100 is a case having almost the same facts. In that case the suit

was brought for an adjustment of accounts by the plaintiffs, the sons of a certain contractor, who had some building work for the defendant. A

preliminary decree had been passed for rendition of accounts by the trial Court and the Judgment was upheld on appeal by the District Judge, but

was set aside by the High Court with the following observations:-

The right to claim a statement of accounts is an unusual form of relief only granted in certain specific cases and is only to be claimed when the

relationship between the parties is such that this is the only relief which will enable the claimant to satisfactorily assert his legal rights. Quoting an

earlier judgment 6 Pun LR 1900. the learned Judge further remarked:

In the present case it is clear that there was no duty cast upon the defendant under the law to keep an account, and that the proper relief to claim

for the plaintiffs was to have brought a suit for a specific sum and to have asked the defendant to produce his accounts books as evidence in

support of their case.

In AIR 1925 Sind 173, it was held that an agent cannot maintain a suit against his principal except where he makes out a special case such as that

the account between him and the principal is of a complicated nature, It was further held that the plaintiff has to satisfy the Court that the defendant

is an accounting party,

In AIR 1921 Cal. 516, it was held that a suit for account is not maintainable by an owner against a Tehsildar appointed by a Receiver to his estate.

Such a suit is really on the same basis as a bill of discover and can be discovered in the relationship of the parties. But the Receiver is not a

representative of the owner, he is an officer of the Court.

AIR 1946 Lahore 82, lays down the law on the subject rather lucidly. His Lordship, Teja Singh, J., has discussed a number of authorities and then

held that he did not subscribe to the view that a suit for accounts will lie only by one partner against another partner or by a cestui que trust against

his trustee. His Lordship further went on to say:-

The correct position is that the plaintiff must satisfy the Court that either because of a particular trade, usage or of the peculiar relations between

the parties the defendant is an accounting party or it is not possible for him to get any relief except by calling upon the defendant to render account

to him. and if he does that the suit for accounts would lie

In AIR 1946 Madras 136 it was held that where the suit was to surcharge and falsify the accounts already furnished and to recover specific sums

the suit was not for accounts and the plaintiff could not value his plaint at a notional figure but must value it on the basis of specific sums claimed

and pay ad valorem court fee accordingly.

In Lakshmiji Sugar Mills Co. Ltd., Maholi Vs. Banwari Lal Tandon, , it was held that there is no provision for a suit for accounts by the agent

against his principal either in the Contract Act or in the Limitation Act. Therefore normally such a suit could not lie. But the existence of special

circumstances will justify such a suit for account. For the maintainability of such a suit it should be made clear that the exceptional circumstances of

the agent not being able to claim a specific sum without the principal''s accounts being gone into exist. If this circumstances does not exist a suit for

accounts by the agent would be clearly not maintainable.

The Full Bench of Jammu & Kashmir High Court in Triloknath v. Dharmarth Council (AIR 1975 J & K-76)have held thus:

The scope of suit for accounts is limited to a certain number of cases for instance between one partner against another, between the beneficiary

against the executor or administrator, between mortgagor against the mortgagee, cestui qui trust against a trustee and between principal against an

agent. But no suit for accounts can be maintained by a promisee against a promisor or as between two contracting parties. Where ''A"" undertakes

to execute two works and executes an agreement in favour of ""B"" for the construction of the said works, ''A'' is a mere contractor who had

contracted to execute the work as envisaged in the agreement. ''B'' did not stand in any fiduciary capacity so as to impose upon him a legal

obligation to render accounts to ''A'', the relation being that of a contractor and contractee.

In the above said decision, their Lordships have also referred to the decision in Stale v. Tom Ram (A.I.R. 1971 J & K - 71) cited supra.

In S.S.Nair v. Travancore Devaswom Board (1987 (2) K.L.T, - 182) the Division Bench of Kerala High Court has held thus:

Counsel for the appellant challenges this decree of the lower Court on the basis of the decision of this Court in Kerala State Electricity Board v.

Marshall Sons & Co. (India) Ltd., (1985 K.LJ.-930) and in CRP No.1110 of 1969. The first of these cases was one where the respondent-

plaintiff had filed a suit against the Electricity Board for settlement of accounts in respect of transactions relating to supply of spares to the Board.

One of the contentions in defence was that the suit for settlement of accounts was not maintainable. It has to be noted at this stage that when the

plaintiff pressed for payment of the amounts due by way of price, the defendant had raised counter claims for damages on the ground of delay in

the supply by the plaintiff, and defects in the goods supplied. In fact, the contract between the parties provided that the materials, if they were

supplied after the scheduled delivery period, will be accepted by the defendant Board only on condition that the price of such materials will be

fixed, taking into consideration the market value of such materials on the date of the actual supply, or at the price noted in the order, whichever

was lower. All the supplies in that case were beyond the delivery period and therefore the price payable remained unsettled. The maintainability of

the suit was upheld by the lower Court in the view that so long as the compensation payable to the defendant Board could not be ascertained by

the plaintiff their remedy necessarily was to file a suit for settlement of accounts. This Court held, having regard to the totality of the circumstances

of the case, that it was impossible to proceed on the basis that a specified sum of money by way of price was due for the goods supplied by the

plaintiff, and that a suit for accounts was maintainable.

It is true that the pristine view that a suit for accounts will lie only when certain specified jural relationship existed was not accepted by this Court. It

was held that this old concept has many exemptions carved out. having regard to various situations, which would constitute exceptional

circumstances justifying a suit for accounts. However, it has to be noted that this Court did not hold that a suit for accounts will lie when the plaintiff

was in the know of the amount of damages to which he was entitled in law. The facts of the case dealt with by this Court were peculiar, in that, the

amount due to the plaintiff could not be ascertained by them, to enable a suit being filed for a specific amount. The facts of that case are therefore,

distinguishable from the present where the amount of damages due to the plaintiff was known and ascertained and set forth in the plaint itself.

Nor does the decision of Moidu, J., in C.R.P. No.1110 of 1969 support the contention of the plaintiff. The suit, in which that decision was

rendered, was one for settlement of accounts by a contractor, again, against the Electricity Board. Even before filing the written statement, the

defendant Board moved the trial Court to direct the plaintiff to amend the plaint to convert the suit as one for damages and for recovery of a

specific sum of money. That application was allowed and the plaintiff was directed to convert the suit into one for recovery of a specific sum of

money. This order was challenged in revision. This Court said that ''on the basis of the allegations made in the plaint'', it was established that the

defendant in that suit was an accounting party to the plaintiff and that therefore the suit for settlement of accounts was maintainable.

The plaint had contained an allegation to the effect that the defendant was withholding amounts due to the plaintiff, on account of the plaintiffs

liability to compensate the defendant for an accident that had occurred during the execution of the work. The amount payable as compensation to

the defendant had not been quantified. In this state of affairs, a settlement of accounts was called for before any amount could be decreed to the

plaintiff. Moidu, J., therefore held that the suit, as framed, was maintainable.

Again Kerala High Court had an occasion to consider the question in R. Vasudevan Pillai v. Malathy Amma (A.I.R. 1988 Kerala - 300) and has

held thus:

Even when there was no statutory right for the Principal to sue the agent u/s 213 of the Contract Act, an equitable right arising under special

circumstances enabling the agent to sue the principal was approvingly upheld in that decision. More than a decade prior to that decision, Iyengar,

J., of this Court, had encapsulated the basic principle in his decision in A. V.George & Co. Ltd., v. Peter Kuruvilla, 1956 Kerala LT 466: (AIR

1957 Trav Co. 264). After noting that the general rule is that the agent is not entitled to an account against his principal, the learned Judge

observed:

But this rule is however, subject to exceptions in case in which the relation between the agent and the principal is of a fiduciary character or the

transactions between the parties are so involved and complicated that the right of accounting will alone serve to administer complete justice and

where the accounting sought is ancillary to the main purpose of the action.

It is unfortunate that these decisions and the principles underlying them, had been missed by the Courts below. They have been recently recalled by

a Bench decision of this Court in Kerala State Electricity Board v. Marshall Sons & Co., 1985 Kerala LJ. - 93, to which I was a party. The only

further thing then to find out is whether the factual situation in the present case is such as to bring the case within the exceptional circumstances as

elucidated in the decisions referred to above.

On the above legal position the question that will have to be considered is whether the plaintiffs have proved the fiduciary relationship which

makes the defendant liable to account. If the plaintiffs prove that the defendant is either a trustee or agent of the plaintiffs, then he is liable to

account which cannot be disputed. Defendant being a close relation of the plaintiffs, there need not be a written document to prove an agency or as

a trustee.

First plaintiff is a Muslim widow and a pardanashin lady. She cannot go outside under normal circumstances for the management of the

properties, especially when her children are all kids. That is a big circumstances against the appellant. She has to depend on others for managing

the properties left by her deceased husband.

Reliance was also placed by the that Court and the lower Appellate Court under Ex.A.5 which is a letter written by the appellant to the second

plaintiff. In that he has written about the sale of certain items, how much amount he has received and what is the amount he is liable to pay, etc. in

respect of the property which is not the subject matter of the suit.

The trial Court as well as the lower Appellate Court came to the conclusion that this letter will show that the defendant was managing the

affairs of Ali Hussain''s properties after his death. If in respect of one item of properties, the fiduciary relationship or the relationship of agency is

proved an inference can be drawn that the defendant was an agent.

The case of the defendant will also have to be considered. His contention is that he was only assisting the plaintiffs in managing the affairs in

respect of plaint item also. But, what is the necessity, to assist the plaintiffs, when the first plaintiff was herself looking after the affairs. If Ex.A.5 and

the statement that the defendant was assisting the plaintiffs in management of the properties, the only conclusion, that could be arrived as that the

defendant was an agent or a manager of the properties of the deceased Ali Hussain on behalf of the first plaintiff.

Evidence was adduced by the appellant to show that the first plaintiff herself dealt with the lessees directly. D.W.2 was examined for the said

purpose. He admitted that he was a lessee and in his evidence he has stated that the lease was given both by the first plaintiff and the appellant. His

evidence is also against the case put forward by the defendant. Moreover, the evidence of P.W.1 shows that the appellant was managing the

properties of his late brother.

In my view, the circumstances show that the case put forward by the plaintiffs is more probable, after all, in civil cases, the decision will have to

be arrived only on probabilities. The probabilities in this case are more in favour of the plaintiffs. Legal relationship is created by which the

defendant is liable to account to the plaintiffs and the fiduciary relationship is established in this case.

One more circumstance is relied on by the trial Court and the lower Appellate Court. Before institution of the suit, a suit notice was sent asking

the appellant to account for the income and he has received the same. That would further establish that he was managing the affairs and was

looking after the property and deriving income out of it. The appellant did not sent a reply for such notice. That was the first time when the

appellant could have denied the relationship. This is also a big circumstance against the appellant.

Once the fiduciary relationship is established, then naturally the substantial questions of law will have to be found against the appellant. Merely

because, there is no documentary evidence to prove an agency, that would not debar the plaintiffs to contend and prove that the defendant was an

agent. The Courts below have concurrently held that the defendant was an agent or was a person managing the property of the deceased Ali

Hussain on behalf of the first plaintiff and thus made himself liable to account. For a fiduciary relationship or agency documentary evidence is not a

condition precedent. The substantial question of law No.2 is therefore found against the appellant.

I do not think that the third substantial question of law has any relevance in this case. Exs.A.3 and A.4 are two lease deeds executed by legal

heirs of late Ali Hussain, i.e., the parent of appellant and his sister in favour of the first plaintiff. The lower Appellate Court taken into consideration

these documents and held that upto the date of execution of Exs.A.3 and A.4, the defendant is liable to account only to the extent of 4/6th share

and after execution of the deed, upto December 1976, the appellant is liable to account in its entirety. On behalf of the appellant it was argued that

execution of Ex.A.3 will belie the case of agency. I cannot accept the said contention. Merely because there are other legal heirs to the deceased,

that will not improbablise the case put forward by the plaintiffs. After all the plaintiffs are major share holders and if they give any direction to the

properties and manage the properties, naturally the other legal heirs will also agree for the directions, especially when they are not interested in

taking the share. Exs.A.3 and A.4 can be explained only in that way. I have already stated about the evidence of D.W.2 which goes against the

appellant. Therefore, the third substantial question of law is also to be found against the appellant.

On the question of limitation, the cause of action will arise only if there is refusal to account. The appellant had over refused to settle the

account and even for the suit notice he did not reply. The trial Court as well as the lower Appellate Court considered this question in detail and

have rightly come to the conclusion that the provisions of Article 113 of the Limitation Act will apply when there is three years time from the date

of demand. I do not find any ground to deviate from the reasons adopted by the Courts below. Therefore, the substantial questions of law 1 is also

found against the appellant. Consequently, the second appeal is dismissed. However, there is no order as to costs.