Kathoom Bi vs Abdul Wahab Sahib and Others

The question involved in this appeal is whether respondents 1 to 3 at times material to the suit stood in a fiduciary position with regard to the

appellant. The appellant is the only daughter of one Abdul Rahiman Sahib, who died on the 18th June, 1921, when she was about six years of age.

The appellant''s mother had pre-deceased the appellant''s father, who was a Sunni Mohammadan. Under the Sunni Law, his heirs were: the

appellant, his three brothers, Waheb, Majeeth and Hameed (respondents 1 to 3), his second wife, Sakina Bi (who died during the pendency of the

suit) and his mother Rabia Bi, who died before the suit was instituted. Abdul Rahiman was a dealer in rope, thread, coir, carpets and other articles.

His business was a very successful one and when he died he left a considerable fortune. All the members of his family lived together and the heirs

continued to live together after his death. In the year following his death the third respondent married his widow, Sakina Bi, and by her had four

children, respondents 4 to 7. After his death the appellant lived with respondents 1 to 3 until 1929 when she left the family house and married one

Abdul Aziz. She was then more than 15 years of age. According to the appellant''s uncles, respondents 1 to 3, Abdul Aziz removed the appellant

from their lawful custody. In fact they filed a complaint charging him with kidnapping the appellant. The complaint was dismissed and the appellant

having married Abdul Aziz instituted the suit out of which this appeal arise.

Abdul Rahiman carried on the business in his own name, but the day after he died, respondents 1 to 3 changed the name of the business to

Abdul Rahiman Sahib and Brothers"" and set up a claim that they had throughout been partners in the business, each brother having a quarter

share. In the month of October, 1921, respondents 1 to 3 caused a panchayat to assemble with a view to the Panchayatdars distributing the estate

on the footing that respondents 1 to 3 were each entitled to a fourth share in the business. The proceedings of the Panchayatdars have been

referred to here and below as arbitration proceedings and for the purposes of this appeal this description may be adhered to. The arbitrators

submitted their award on the 10th October, 1921, but as it was unstamped a fresh award was made on the 24th April, 1922. It has not been

suggested in the proceedings before us that the arbitrators acted improperly. They gave an award distributing the assets of the deceased''s estate

on the basis that respondents 1 to 3 were partners. So far as the arbitrators were concerned this was not in issue. Respondents 1 to 3 were not in

fact partners and the arbitration proceeded on an entirely wrong basis. At the trial of the suit an issue was framed on the question whether

respondents 1 to 3 were partners with Abdul Rahiman and the issue was found against them. This finding has not been challenged before us and

the appeal has been argued on the footing that it was a false claim. It is not suggested that the appellant is in any way bound by the award. In fact it

is conceded that she is not. The appellant''s grandmother, Rabia Bi, purported to act as her guardian when the question of the distribution of the

estate was before the arbitrators, but she was not in law the guardian of the minor''s property and so far as the minor was concerned the

proceedings were a nullity.

The appellant filed the suit on the Original Side of this Court on the 7th March, 1930. She claimed that on the death of her father she became

entitled to one-half share of his estate, her grandmother to one-sixth, her stepmother to one-eighth, and respondents 1 to 3 to the remaining 5/24th

share in all the assets left by Abdul Rahiman. It is not disputed that Sunni Law requires the estate to be distributed in these proportions. The

appellant, however, alleges, and again the truth of her allegation is accepted, that after her father''s death her uncles took charge of all his assets,

including the business, which they continued to carry on. The business continued to prosper and out of the profits respondents 1 to 3 purchased the

properties set out in Part 1 of Schedule B in the plaint. The appellant claimed before the trial Court and contends now that she is entitled to a half

share in these properties, and in all the accretions to the estate arising from the business. In law the heirs became tenants in common of the estate

as it stood at the time of his death and the learned trial Judge held that the appellant was entitled to a moiety of the estate distributed by the

arbitrators with profits from the date of her father''s death, but he rejected her claim to a half share in the profit made out of the business after her

father''s death on the ground that a co-owner in management ""does not per se stand in a fiduciary relation"". In accordance with his decision the

learned trial Judge passed a preliminary decree directing the Official Referee to take accounts on the basis that the appellant was entitled to a

moiety of the properties left by her father, but to no share in the acquisitions made by respondents 1 to 3 out of the profits of the business

subsequent to the death of Abdul Rahiman. This meant that the appellant was not to be given any share in the properties set out in Part 1 of

Schedule B. It is this finding which the appellant challenges. She says that the learned trial Judge should have held that respondents 1 to 3 were in

the position of trustees and have given her a half share in all the profits made in the business after the death of her father.

The learned Advocate for the appellant conceded that if there was no fiduciary relationship, the preliminary decree passed by the learned trial

Judge was the correct one. On the other hand it is not disputed that if respondents 1 to 3 are to be regarded as being in a fiduciary position the

appellant is entitled to succeed in the appeal. Therefore, the sole question which the Court is called upon to decide is whether respondents 1 to 3 in

carrying on the business of their deceased brother should be regarded as trustees for the appellant to the extent of one half of the profits. The case

of the appellant is that the respondents 1 to 3 stood in a fiduciary position because she was a minor living with them under their care and control

and that while she was in this position they took charge of her share in the estate. The facts on which the appellant''s case is based do not admit of

dispute, and for eight years, that is, until 1929, respondents 1 to 3 had the appellant under their care and control. Moreover, they claimed to be her

legal guardians as the pleadings in this case show. The second respondent applied for letters of administration to the estate and effects of the

appellant''s father for her use and benefit till she attained majority, and on the 18th December, 1922, obtained a grant of letters, but the business

and all the other assets of her father''s estate remained with respondents 1 to 3.

A trustee is not permitted to make a profit out of his trust and a guardian of a minor is in the position of a trustee when in possession of the

minor''s property. In Morgan v. Morgan (1737) 1 Atk. 489 : 26 E.R. 310 Lord Hardwicke observed that where a person, whether a father or a

stranger, enters upon the estate of an infant and continues the possession the Court will consider such person as a guardian of the infant. In Dormer

v. Fortescue (1744) 3 Atk. 124 : 26 E.R. 875 Lord Hardwicke declared that the Court will decree an account from the time of the infant''s title

accrued, ""for every person who enters on the estate of an infant enters as a guardian or a bailiff"", and in Doe v. Keen (1797) 7 T.R. 386 : 101

E.R. 1034 Lord Kenyon, C.J., said that nothing can be clearer than that an infant may consider whoever enters on his estate as entering for his use.

This principle has many times been affirmed and is now embodied in the Indian Trusts Act.

Section 88 of the Indian Trusts Act provides that where a trustee, executor, partner, agent, director of a company, legal adviser or other person

bound in fiduciary character to protect the interests of another person, by availing himself of his character, gains for himself any pecuniary

advantage, or where any person so bound enters into any dealings under circumstances in which his own interests are, or may be, adverse to those

of such other person and thereby gains for himself a pecuniary advantage, he must hold for the benefit of such other person the advantage so

gained. Section 90 provides that where a tenant for life, co-owner, mortgagee or other qualified owner by availing himself of his position as such,

gains an advantage in derogation of the rights of the other persons interested in the property, or where any such owner, as representing all persons

interested in such property, gains any advantage he must hold for the benefit of all persons so interested the advantage so gained, but subject to

repayment by such persons of their due share of the expenses properly incurred and to an indemnity by the same persons against liabilities properly

contracted in gaining such advantage.

It is not necessary to review the Indian authorities which are in line with the English authorities, but in the course of the arguments our attention

was drawn to the case of Muhammad Abdul Rahim Baig Saheb v. Muhammad Abdul Hakim Baig Saheb (1930) 61 M.L.J. 139 : ILR 1930 54

Mad. 543 where a Bench of this Court (Wallace and Pandalai, JJ.) applied the principle referred to in a case relating to the business of a

Muhammadan family. There a Muhammadan cloth merchant died leaving a widow, two major sons, two minor sons, and three minor daughters.

The plaintiffs'' case was that the major sons on the death of the father continued his business and taking advantage of their position as the eldest

male members of the family used in the business the assets of the other members of the family, including the shares of the widow and the minors.

The Court held that by this assumption of family management - it did not matter whether the position of the major sons was that of trustees de son

tort or executors de son tort - the relationship was essentially a fiduciary one.

We are of opinion that the position of respondents 1 to 3 in this case was essentially a fiduciary one. They took charge of the estate of Abdul

Rahiman in which the appellant had a half interest at a time when she was a child and in their care and control and they have continued in

possession of the estate. Having got possession of the estate they set up a false claim to be partners in the business in order to get a greater share

in the estate than the law allowed and utilised monies belonging to the appellant for themselves. When the appellant eventually escaped from their

control they alleged that she had been kidnapped from their custody as her lawful guardians and they have acknowledged their guardianship in the

pleadings in this suit. On their own showing respondents 1 to 3 were the guardians of the appellant and the minor''s property being in their hands

they must account in full. The fact that they were co-owners of the estate of Abdul Rahiman does not affect their liability as guardians.

We hold that respondents 1 to 3 were in the position of trustees and are liable to account to the appellant for her half share in the profits arising

out of the business. We understand that an account has already been taken on the basis of the preliminary decree. It will now have to be taken on

the basis that the appellant is also entitled to a half share in the profits which have accrued from the business, and the preliminary decree will be

varied accordingly. The appellant having succeeded she will be entitled to her costs, which will be paid by respondents 1 to 3.