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Judgment
Venkatasubba Rao, J.—This is a somewhat unusual kind of case and arises out of a combination of some thirty persons, owners of saltpans,
who associated for the purpose of devising means of easy transport facilities, in respect of their salt from Arasady salt factory to Tuticorin. In 1909
they convened a meeting and passed a resolution that they were to subscribe Rs. 6 per saltpan (there were about 3,000 saltpans) and with the sum
of about Rs. 18,000 raised to construct a metalled road from Tuticorin to the salt factory. It was further resolved that in the first instance Re. 1 per
saltpan was to be subscribed, that the defendants'' father Raman Chetty, one of the licensees, was to act as the treasurer and that the plaintiff and
another were to look after and conduct the operations. It was further resolved that Raman Chetty was to be liable for interest, on the sums with
him, at nine annas per cent, per mensem. It is unnecessary to follow the history of this venture, for, it is sufficient to say that after prolonged
negotiations with various public or semi-official bodies, it was found that nothing could be achieved and the money raised remained more or less
unspent. It may be maintained that the plaintiff and Raman Chetty had a predominant interest, the former owning 1,400 and the latter 1,100, out of
the total of 3,000 odd saltpans. There was a third person, one B. Venkataramanjulu Naidu, who also had some substantial interest, owning as he
did 700 pans - the interest of the remaining twenty-seven persons being thus small. The plaintiff has filed this suit in a representative character,
having obtained the Court''s leave under Order 1, Rule 8, Civil Procedure Code. The defendants are the sons of Raman Chetty, who died in 1929.
The lower Court has curiously (it is unnecessary to discuss the grounds of its judgment) passed a decree in favour of the plaintiff for the entire
amount held by Raman Chetty, including his own share therein, with interest at the stipulated rate.
The principle applicable to actions of this sort may be shortly stated : where funds are held in trust for a particular purpose, which fails or comes
to an end, there arises a resulting trust of such funds as remain, in favour of the contributors or, if they are dead, their personal representatives 28
Hals., Section 101; Godefroi on Trusts, 5th Ed., p. 49; In re The Trusts of the Abbott Fund : Smith v. Abbott (1900) 2 Ch. 326 and In re British
Red Cross Balkan Fund: British Red Cross Society v. Johnson (1914) 2 Ch. 419. The unexpended balance belongs to the subscribers rateably, in
proportion to their subscriptions (see the last mentioned case).
The defendants are the appellants. That the plaintiff can recover his own shares on the principle mentioned above, is not now disputed. Nor
does Mr. Sitarama Rao for the respondents contend that there should be a decree for the entire amount, including even Raman Chetty''s share, as
the lower Court has decided.
The only question that remains then is one of limitation. The first contention of Mr. Ramaswami Aiyar for the appellants does not require serious
notice. He contends that the case is not one of trust but must be viewed in the light of a deposit. For this, he relies upon the fact that under the
resolutions of 1909, the amounts with Raman Chetty were to carry interest--which circumstance, it is suggested, shows that it was contemplated
that his position was to be that of a banker with whom a deposit is made. It is difficult to follow how the liability to pay interest on the part of
Raman Chetty is inconsistent with the transaction being in the nature of a trust. Instead of the moneys being invested with a third party, it was
understood that Raman Chetty, being a member of the Nattukottai Chetty banking community, should retain them with himself and be liable for
interest.
The transaction then amounting as it does, to a trust, it is argued by Mr. Sitarama Rao that granting that Section 10 of the Limitation Act which
refers to express trustees does not apply, time runs under Article 120 from the date when there was a failure of the purpose and the resulting trust
thereupon arose. This, in our opinion, is a sound contention and it has therefore to be ascertained when the venture was abandoned or the object
became incapable of fulfilment. In 1910, the plaintiff no doubt demanded from Raman Chetty the return of the amount due to him, on the footing
that the venture came to an end, by reason of its having become impossible to proceed with it. But this represents not the wish of the body of
persons who associated, but of one single individual. Nor was it supposed to be the final and irrevocable act of the plaintiff himself. For, we find
that on the 29th December, 1924, a meeting was convened of the licensees (the members of this body) and one of the resolutions passed was to
the effect, that the construction of a metalled road having become impracticable, steps should be taken to have a trolly line or to obtain a motor
lorry. Among those that attended the meeting were the plaintiff and Raman Chetty and in token of their approval they signed the proceedings. Here
is a definite admission on Raman Chetty''s part that the original purpose had not come to an end or failed; even should it be held that the
abandoning of the metalled road constituted a deviation, it is difficult Lo escape the conclusion, that Raman Chetty by reason of this resolution, held
the moneys in trust. There is correspondence to show that till the 18th January, 1925 (the date of Ex. F), active measures were being adopted for
giving effect to that resolution. That would quite suffice for our purpose, for, the suit was filed within six years from then, that is, on the 17th
January, 1931 - the period prescribed by Article 120 of the Limitation Act. The contention therefore that the suit is barred, fails.
Then the form of the decree that has to be passed, remains to be considered. It is unnecessary to inquire whether in the events that have
happened, the resort at the time of the filing of the suit, to Order 1, Rule 8, Civil Procedure Code, can be justified. For, during the pendency of the
appeal, the plaintiff died and in his place were brought on the record, his personal legal representative (respondent No. 2) and such of the original
licensees as could be traced (respondents No. 3 to 9), the third respondent, being B. Venkataramanjulu Naidu, to whom reference has been
made. There can be no difficulty in passing decrees in their favour severally for the proportionate amounts payable to them. Interest will be allowed
at the stipulated rate, namely, 9 annas per cent, per mensem till this date and thereafter at 6 per cent, on the aggregate amounts. Decrees to that
effect are accordingly passed.
The defendants will file a statement in Court showing the amount payable to each of the respondents in pursuance of this judgment. The
appellants will pay the second respondent (the plaintiff''s personal legal representative) his costs both here and in the lower Court on the amount for
which we have passed a decree in his favour.
Appeal No. 239 of 1932. - It follows from the judgment just delivered in the connected case, that this appeal also fails and it is dismissed with
costs which we fix both for fees and out-fees at Rs. 100.
The statement showing the amount payable to each of the respondents in pursuance of the above judgment having been filed and the appeal
having been set down to be spoken to this day with regard to the above statement the Court made the following
ORDER
By consent, Rs. 674-10-8 mentioned in paragraph 2 of this statement is substituted for Rs. 302-6-0 shown against item 2 in the table. As to
the interest, the provision made in the judgment is modified in the manner set out in paragraph 4 of this statement.
The undertaking of the second respondent by his counsel to indemnify as mentioned in the said paragraph 2 is recorded.