Harihar Prasad Singh and another vs Kesho Prasad Singh

Dawson Miller, C.J.—These two applications arise out of a suit instituted by the Maharaja of Dumraon against the defendants, Rai Bahadur Harihara Prasad Singh and his minor son. The suit was instituted for the recovery of an estate in Burma in the possession of the 1st defendant and for an account of the income and disbursements of the property which, it was contended, was held by the 1st defendant and his father before him in trust for the plaintiff. The defendant''s father, Rai Bahadur Jai Prakash Lal, was deputed by the late Maharaja, the predecessor of the plaintiff, to proceed to Burma in the year 1889 to apply for and secure, if he thought fit, a lease of land for the Raj in pursuance of a scheme promoted by the Government for relieving the congested areas in Bihar by immigration and settlement of raiyats on land in Burma which was offered upon favourable terms Jai Prakash Lal had power to apply for the land if he thought fit in his own name. After inspection he applied in April, 1889, for the lease of 15,000 acres, but it was not until 1896 that a formal settlement was made by the Government of Burma in the name of Jai Prakash Lal. The preliminary expenses and the cost of survey, demarcation, and clearance of the land were paid by the late Maharaja who advanced altogether up to the year 1893 Rs. 25,000 for this purpose. In 1894 the late Maharaja died and was succeeded by his widow and afterwards by the plaintiff. From the date of the late Maharaja''s death no further advances were made in connection with this scheme. The defendant''s father, however, continued to develop the land paying the expenses out of his own pocket, and in 1896 he acquired a lease from the Government in his own name. He died in 1897 from which date his son, Rai Bahadur Harihar Prasad Singh, continued in possession of the property in Burma treating it as his own. The present suit was instituted in 1919 before the District Judge of Shahabad and the plaintiff obtained a decree in his favour for possession of the property and an account of the income and disbursements. An appeal is pending to the High Court from that decision. An application to stay the taking of the account was unsuccessful and a Commissioner has been appointed to take the account. The parties applied to the District Judge for certain directions to the Commissioner as to the method of taking accounts, and on the 30th March last the District Judge passed orders giving certain directions on various points.

The defendants have preferred an application asking us to set aside or modify these orders under our powers of superintendence or revision. The plaintiff opposes the application, but at the same time, in the event of our holding that we have power to interfere, which he denies, he has himself preferred an application asking us to modify the orders of the District Judge in certain other respects.

As the parties will have an appeal from the ultimate decision of the District Judge after the accounts are taken, we should not interfere in revision or superintendence, unless it were proved to our satisfaction that the learned Judge had given improper directions which, unless varied or set aside, would result in irrepairable loss to the parties. It was contended that the learned Judge had no jurisdiction to make the orders, but we are satisfied that this contention cannot prevail.

The main ground urged, for our interference on behalf of the defendants is that the learned District Judge has given wrong directions as to the mode of ascertaining the value of the produce rents paid to the defendant and his father by the tenants on the estate. It appears that the rents received from the tenants were paid largely, if not entirely, in grain and sugarcane. When these were received they were not immediately converted into money but were stored in granaries and warehouses and sales took place as opportunity offered.

The defendant claims that he and his father before him carried on a business in grain and molasses coming not only from the rents of the estate but from other sources. The jamabandi accounts show the amount of grain and sugar-cane received during particular harvests from the tenants with an estimate of the cash value at the date of receipt, whilst the cash books shew the price fetched by the sale of the produce rent and other grain and molasses at later periods. There is apparently nothing in the cash books to identify any particular sale with any particular portion of the produce received.

The defendant contends that the amount recoverable from him in respect of the produce rents was the actual value of the produce at the date it was received and that the best evidence of this was the jamabandis or the Burma Gazettes showing the market value oh the day of receipt. The plaintiff, on the other hand, contended that the actual sales at a later period according to the rate shown in the cash books should be taken as the measure of the defendant''s liability for the value of the produce received.

In ordinary circumstances, I think, there can be little doubt that the value of the produce rents at the time and place of the receipt is the measure of liability and not the price fetched by sales at a later date. The fluctuations of the market are ordinarily matters too remote to be taken into consideration in estimating liability in such cases. If the person liable to account for produce rent to his employer should, without fraud, which is not alleged here, convert it to his own use, his liability cannot be measured by the price at which the produce was sub sequently sold. If the market should fall it would not diminish his liability. If it should rise, there is no reason why his liability should be increased. The rise or fall of the market are circumstances too remote to be taken into consideration.

The learned Judge, however, has ordered that to obtain the cash equivalent of the produce the Commissioner shall take the sales in the cash book beginning with the quantity sold at the lowest price and working upwards until he has accounted for the amount of produce which is shown to have been received from the jamabandi. For the years 1905 up to 1909 for which no cash books are in existence he has ordered that the value shall be taken according to the prices given in the Burma Gazettes at the time of harvest in those years. To this latter method the defendants do not object in so far as the Burma Gazettes show the market value at the date of receipt of the produce, but they contend that for other years too the produce should be valued upon the same basis, that is to say, upon the evidence of actual market value at the date and place of receipt. It is contended that if the account, which is a long one extending over some 20 years, is allowed to be taken, as the learned Judge has directed, for the years other than 1905 to 1909 it will not show the real liability of the defendant but in fact, something very much greater and that if the method of accounting is set aside on appeal, as it ought to be in such a case, then the whole expenses of taking the account will be fruitless and a long delay incurred which will be an irreparable loss to the parties.

The plaintiff, on the other hand, contends that even if, in ordinary circumstances, the liability of the defendant is to be based upon the market value of the produce at the date of its receipt, in the present case there are circumstances to show that the transactions carried on in grain and other produce in connection with the estate by the defendant were merely part and parcel of his duties to his employer under the arrangement between them and that any profit so made was for the benefit of the Raj and not for the benefit of the defendant or his father.

It does not appear from the learned Judge''s order whether he considered this aspect of the case; if he did, he has not mentioned it. We are not in a position to deal with it ourselves, as there is no evidence before us upon which we can come to a decision and we have not been referred to anything in the judgment in the suit upon which the decree is based which determines this question. The learned Judge is of course at liberty, if he sees fit, to modify any instructions he may have given in his order to the Commissioner which, I understand, have not hitherto been carried out, but I am not prepared to say upon the materials before us that his instructions may not have been justified. It has been suggested that in order to save possible future expenses and delay an alternative account should be prepared showing the value of the produce rents assessed in the manner ordered by the learned Judge and according to the actual value on the date of receipt shown by the evidence available for that purpose or that the defendant should, at all events, not be precluded at the hearing before the Commissioner from putting such evidence before him and having it placed on the record for the consideration of the learned Judge, when the matter comes back to him with the Commissioner''s report for final determination.

I am not sure that the learned Judge meant definitely to exclude evidence of this nature and it is still open to the parties to apply to him for instruations upon this point. At the same time, I am not prepared to entertain applications of this nature which are in fact asking us to overrule the orders of the learned District Judge in matters which are at least controversial and must ultimately depend upon the nature of the evidence produced.

If it should turn out that the method of taking the accounts is in some respects questionable, it will be open to either party to appeal from the ultimate decision, and I do not think we should interfere either under our powers of superintendence or revision in such a case, unless it is manifest that a refusal to do so would result in some irreparable loss to the parties which does not appear to me to have been shown in the present case. It is, however, clearly desirable that the extent of the defendant''s liability should be definitely decided before the account is taken. For example, it should be made clear whether the defendant is liable to account for the profits of the business in grain and molasses to the plaintiff; we are unable to decide this point as we have not the materials before us. The same remarks apply to a further point which was raised before us. When the tenants failed to pay the full produce rent at the time it was due they were treated as having paid, but were debited with a loan from the trustee on which interest was payable and each party claims the benefit of the loan account. I gather from the learned District Judge''s order that he treats it as a separate transaction carried on by the trustee on his own account and, that he is not accountable for it to the plaintiff. It may be that he decided rightly but we have no evidence from which we can judge.

The other matters urged on behalf of the defendants were entirely matters which, if the learned Judge''s directions were wrong, could easily be set right in appeal without any further accounts being taken. They related to certain items which one side or the other claimed ought to be increased or reduced, or were matters relating to the payment of interest or the rate thereof, and I need not deal with them further.

I have already indicated the course which may be open to either party who feels aggrieved, but I do not think that at the present stage we should be justified in modifying the orders passed by the learned Dt. Judge, I think both applications should be dismissed, and in the circumstances I would order that each party bear his own costs of the applications.

Mullick, J.-

I agree that these motions should be discharged, but I think it necessary to observe that the learned Dt, Judge must arrive at a clear conclusion as to the scope of the proceeding in which accounts are now being taken. He must find what is the precise liability arising out of the trust. Was it a liability (1) to merely deliver to the cestui que trust the rents in cash and kind; or (2) to deliver the cash and to sell the paddy and the molasses received by way of produce rent, at the cestui que trust''s risk at such time as the trustee should think most prudent or (3) to deliver the cash and to engage in a trading business for the sale of the produce for the cestui que trust''s benefit.

In the first case the measure of the trustee''s liability will be the price of the produce on the date of receipt, in the second case the price on the date of actual sale and in the third case the profits if any arising out of the business. There is no dispute that the jamabandis give the correct quantities of the produce collected, but as to the price of the produce on the date of receipt, the learned Dt. Judge must proceed on the best evidence available.

It is contended that for that purpose the Burma Gazettes will be much more valuable than the entries in the cash book. Prima facie this would seem to be so, and it is not understood why the learned Dt. Judge has preferred the cash books for the years other than 1904 to 1909.

The defendants further contended that still more accurate results will be obtained from the loan accounts of the tenants. There is nothing to show that it was the intention of the Dt. Judge to reject this evidence and I have no doubt that unless good grounds are shown he will not shut out evidence, which is on the record, if such evidence is likely to be relevant to the inquiry.

It is urged by the plaintiff that the learned Dt. Judge was satisfied that any calculation based upon the loan books would indefinitely prolong the inquiry. Of the correctness of this allegation we have again no proof. It is open to the Dt. Judge to modify or add to the instructions already given by him to the Commissioner, and I decline to believe that he will reject material evidence without adequate grounds.

I have also no doubt that if he is satisfied that the sale prices shown in the cash books will be the best evidence for assessing the trustee''s liability, but that an alternative account based upon the prices shown in the Burma Gazette or the loan accounts or other evidence, which is now on the record will be useful for the purpose of avoiding great expense in the event of an appeal being preferred and the Court of appeal taking a different view of the matter, then the Dt. Judge will use his discretion as to directing the Commissioner to place an alternative account upon the record.

But any direction to this effect must be left entirety to his discretion. Possibly the uncertainty with regard to the various matters of which the parties now complain before us might have been avoided if the learned Dt, Judge had adopted in the first instance the procedure of calling upon the defendant to file his accounts. The omission, however, is no longer of any material consequence.