Katta Tholasingam Chetty vs Vedachella Aiyah and Others

John Wallis, Kt., C.J.—In this case a trustee was ordered to be removed by Mr. Justice Bakewell and an account was directed to be taken

against him. That decision was confirmed on appeal and the case went to the learned Official Referee. But the learned Official Referee was of

opinion that certain questions of fact involved should be decided by the Court itself, and the case, therefore, came before Mr. Justice Coutts

Trotter sitting on the Original Side and we have now to deal with an appeal from his decision.

The question argued before us on appeal relates to item 11, certain house property to which the trust became entitled in the time of the former

trustee, some ten years before the accession to the office of trustee of the defendant in this suit so that the defendant had two years in which he

could have taken step for recovery of the property. It is stated by the learned Judge, and the case proceeds upon that basis, that neither the

present defendant nor his predecessor did anything to recover the property and therefore it became lost to the trust by reason of the law of

limitation, There is not much said about limitation in the judgment under appeal, but the learned Judge observed at the close of the judgment that it

would be open to the defendant when the case went back to the Official Referee to show if he could that he was not accountable for the income

but only for the corpus.

Before us it has been argued that on the facts stated and under the present law of limitation the remedy against the trustee is barred both as to

the corpus and income, the suit having been instituted some nine years after the property was finally lost to the trust by the operation of the statute

of limitation.

The question of the interpretation of Section 10 as amended in the Act of 1908 is one of considerable importance and we have had it fully

argued before us. As is well known, the statutes of limitation were not applied in England to claims against trustees. There was a provision in the

Judicature Act (1871) 36 and 37 Vic., Ca. p 66, Section 25(2) which specially excepted from their operation suits for following trust property,

and that section of the Judicature Act was very closely reproduced as Section 10 of the Limitation Act of 1877. It provided:

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 shall be barred by any length of time.

There was some variance of opinion as to the scope of this section, and there were some cases which held that a claim for an account of

property which had actually come into the hands of the trustee was not saved from the bar of limitation unless the property still continued in the

hands of the trustee in one case it was said ''in specie'' whereas a more liberal view was taken in some other cases that the section saved from the

bar of limitation claims to property which had come into the hands of the trustee and for which he had become accountable. But we have not been

referred to any case, and I am not aware of any, in which it was held that the bar of limitation under the old section was saved as regards cases

where it was sought to render a trustee accountable not for property which had come into his hands, but for property which but for his wilful

default or neglect would have come into his hands. Mr. Justice Scott in The New Fleming Spinning and Weaving Company, Limited v. Kessowji

Naik ILR (1885) 9 Bom. 373, expressly ruled that such claims were within the operation of the ordinary law of limitation. The next thing we

observe is that the English legislature in 1888 51 & 52 Vict., Cap. 59, Section 8 departed from the policy till then followed as regards trustees, and

afforded them the benefit of the operation of the statutes of limitation except in two specific cases, that is to say, except where a claim was founded

on fraud or a fraudulent breach o� trust, or--these are the important words--was:

to recover trust property or the proceeds thereof still retained by the trustee or previously received by the trustee and converted to his use.

So that, unless the claim is to recover trust property or the proceeds thereof still retained by the trustee or previously received by the trustee and

converted to his use, the ordinary provisions of the Limitation Act are to apply in England. It is important to observe that the policy of the English

legislature as shown in that provision clearly was to introduce a fresh protection for trustees by relieving them from an indefinite liability to account

except in cases of fraud or fraudulent breach of trust or cases in respect of trust property or the proceeds thereof still retained by the trustees or

previously received by them and converted to their own use.

That brings us now to the recent amendment of the Act of 1877 by Section 10 of the Limitation Act of 1908 which amendment was effected by

inserting in that section, after ''following in his or their hands such property'', the words ''or the proceeds thereof or for an account of such property

or proceeds''.

Now it has been contended by Mr. Kamaswami Ayyar for the respondent that the effect of introducing the words ''or for an account of such

property or proceeds'' has been to make trustees liable for an indefinite time and without bar of limitation for breaches of trust consisting in failure

to get in the trust property.

If this be the true construction, the Indian legislature has gone far beyond the authority of any Indian case in direct opposition to the recent

legislation in England. It is impossible in my mind to attribute to them such an intention unless most clearly expressed. It may be said that the words

''suit for an account'' may cover a suit for an account of the proceeds the trustee had received or might have received but for his wilful default or

neglect, that is to say, an account on the footing of wilful default or neglect. But to give that meaning to the words ''suit for an account'' as

introduced into Section 10 of the Indian Limitation Act, 1908, would be entirely to alter the whole scope of the section and to run counter to the

whole tendency of modern legislation. I cannot therefore accept that contention. It follows that the present claim both for failure to get possession

of the corpus and income of the trust property falls within the operation of the ordinary law of limitation. If that be so, it is not suggested that the

suit is not barred. In the result, on this ground the appeal must be allowed with costs of this appeal and with any extra cost incurred in the

proceeding before the learned Judge which is now under appeal payable out of the temple funds.

Oldfield, J.

I agree.