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Civil Appeal No.,44‑D of 1966, decided on 31st May 1968. (On appeal from the judgment and order of the High Court of West Pakistan, Dacca, dated the 6th June 1961, In First Appeal No. 105 of 1957).

(a) Specific Relief Act (I of 1877), S. 42‑Declaratory decree Not susceptible to execution through intervention of Court‑[Decree based on award that K was to remain tenant of until such date as D paid to K a certain sum ‑‑Such sum further directed to be paid within 4 months or at any later date‑Decree held to be decla ratory in nature and so not executable‑Omission on part of D to pay sum awarded to K within 4 months did not affect D's proprietary rights in house occupied by K as tenant].

(b) Transfer of Property Act (IV of 1882), S. 108 (n) read with Trusts Act (11 of 1882), S. 88‑Tenant's duty to inform landlord of any invasion of landlord's proprietary rights by legal proceedings or otherwise‑House, leased out to tenant, sold in lieu of municipal taxes and dues, and purchased by tenant himself without informing the landlord of the impending sale‑Held, sale to tenant ensured for benefit of landlord and that thereby a constructive trust was created in favour of landlord‑[York Building Company v. Mackenzie 3 Paton 378 and Nugent v. Nugent L R (1908) 1 C J D 546 ref., AIcDonnel and Monroe, 7th Edn., p. 195 and Cosens‑Hardy M. R's. observations at p. 549].

(c) Limitation Act (IX of 1908), Art. 142 read with Evidence Act (I of 1872), S. 116‑R purchasing on 1‑9‑1943 house from D owner, house being in occupation of tenant K‑Tenant K setting up a hostile title on 7‑6‑1944‑Suit for possession by R on 30‑1‑1956, held, to be within time.

Asraru fussaln, Kamaluddin Hussain and Ismailuddin Sarkar, .Advocates Supreme Court instructed by Abu Backkar, Attorney for Appellants.

Abdus Sobhan, Senior Advocate Supreme Court (A. T. Sadi, Advocate Supreme Court) with him instructed by Md. Ayazuddin, Attorney for Respondent.

Date of hearing : 9th May 1968.

MUHAMMAD YAQUB ALI, J.‑

This certificated appeal arises out of Title Suit No. 2 of 1956 instituted by Khan Bahadur Khalilur Rahman, respondent, against the appellants, for declaration of title and recovery of possession of a house situated in the town of Chittagong.

The relevant facts may be stated thus : The house belonged to one Monomohan Dastidar, predecessor of the pro forma defen dants 7 to 9 and was taken on lease by Mokshada Ranjan Kanungo, a Pleader of Chittagong, predecessor of the appellants herein, at a monthly rent of Rs. 25 and payment of municipal taxes and dues. In 1928 the said lessor and the lessee hereinafter referred to as Dastidar and Kanungo entered into an agreement

for the conveyance of the house to the latter for a sum of Rs. 5,000. Out of the sale price Rs. 2,500 were paid to Dastidar in October 1928, with the stipulation that the balance of the sale price would be paid within one month. The transaction, however, did not fructify as Kanungo in contravention of the agreement failed to pay the balance of the sale price within the stipulated period. Consequent thereupon Dastidar served a notice on Kanungo that if the balance of the sale price was not paid the advance money shall stand forfeited. The needful was not done whereupon Dastidai served a notice upon Kanungo under section 106 of the Transfer of Property Act terminating the monthly tenancy of the house in his favour and followed it by a suit for ejectment being Other Suit No. 406 of 1929. In reply to the suit Kanungo maintained that as Dastidar could not pro duce a satisfactory document of title he was not required to purchase the house and was entitled to recover the advance of Rs.2,500 paid by him under the agreement of sale. This led to two disputes between the parties; (i) relating to termination of the monthly tenancy ; and (ii) for the refund of the sum of Rs. 2,500. Eventually, both the disputes were referred to the Arbitrators named by the parties who gave two identical awards, one relating to the Other Suit No. 406 of 1929 and the other with regard to the dispute for the refund of Rs. 2,500. Both the awards were filed in Court and made rule of the Court. In accordance with the award the Other Suit No. 406 of 1929 was dismissed and a decree for payment of Rs. 2,500 by Dastidar to Kanungo was passed with the stipula tion that till such time the said sum was paid the latter was not liable to be ejected from the house and that during this period the rent of the premises will be set o8' against the interest on the decretal amount.

After sometime Dastidar died leaving behind him surviving three sons (Mrinal Kanti Dastidar, Mriganga Baran Dastidar and Ranjulal Dastidar) pro forma defendants 7‑9 and their mother. On finding themselves in financial difficulties the heirs of Dastidar on the 1st December 1943, sold the house to Khan Bahadur Khalilur Rahman, respondent, for a sum of Rs. 8,000 out of which Rs. 2,500 were left with him for payment to Kanungo. As successor‑in‑interest of Dastidar the plaintiff on 6‑7‑1944 moved an application under sections 47 and 151, C. P. C. in Other Suit No. 406 of 1929 being Miscellaneous Case No. 18‑A of 1944 for recovery of possession of the house and on the same day deposited the sum of Rs. 2,500 in Court. After protracted trial the application was dismissed and an appeal against the order of the executing Court rejected by the High Court in 1955.

During the pendency of the Miscellaneous Case No. 18‑A of 194.1, Kanungo got the house mutated in favour of his wife, defendant No. 4, Monoroma Kanungo, on the basis of a Court sale in favour of the defendant No. 5, Bhagbati Charan Dasgupta, as her benamdar. The sale was held in execution of an ex parte decree obtained by the Municipality of Chittagong against Dastidar for a sum of Rs. 209‑14‑3. It is the plaintiff's case that in fact the house was purchased by Kanungo fraudulently and surreptitiously in the benami of the defendant No. 5 while it was his liability to pay municipal rates and taxes as provided for in the lease deed. Reliance was also placed on section 108 (n) of the Transfer of Property Act under which it was claimed that Kanungo had a duty towards Dastidar to inform him of the impending sale of the house. In the circumstances if Kanungo did not pay the taxes and in collusion with the Municipal authorities had the house sold and himself purchased it in the benami of the defendant No. 5 he (Kanungo) became a trustee of the house for the benefit of Dastidar. Lastly, it was claimed that under the award of January 1932 a charge for Rs. 2,500 was created on the house in favour of Kanungo which could be redeemed at any time. On these averments the plaintiff asked for a declaration of his maldki rights by purchase and in the alternative for setting aside the benami purchase by Kanungo as being fraudulent. Various other reliefs were also claimed in the suit. By now Kanungo had died and hi3 heirs, namely, the appellants herein, contested the suit on the grounds to the effect t (i) that Dastidar bad failed to sue out execution of the decree passed on the basis of the award and by efflux of time hart lost his right to recover the possession of the house; (ii) that the house was purchased by defendant No. 4 wife of Kanungo at a Court auction and had thereby become its owner; (iii) that tile sale of the house in favour of the plaintiff was illegal as the minor children of Dastidar were not parties to it and no consideration had passed to the executants of the Kabala dated 1st March 1943; and (iv) that the suit was barred by time as it was instituted beyond the period of twelve years from the date on which the property was purchased by the defendant No. 4 at a Court auction in the benami of the defendant No. 5.

On the pleadings of the parties, the Court framed the following issues

(1) Is the suit maintainable as framed

(2) Is the suit barred by limitation 7 ..

(3) Is the suit hit under section 4‑7 of the Civil proce dure Code

(4) Is the plaintiff's purchase bona fide and for consideration Has the plaintiff his alleged right, title and interest in the suit land

(5) Is the suit over‑valued and is be plaint liable to be returned to be filed in proper Court

(6) What relief, if any, is the plaintiff' entitled to Additional issue

(7) Was Mokshada Ranjan Kanungo a trustee of mohan Dastidar in respect of the disputed property "

In view of the oral and documentary evidence brought ok, the record by either party the trial Judge found that the kabcila by which the plaintiff had purchased the still property from the, heirs of Dastidar was a genuine transaction and that consideration had passed; that the sale of the suit property for arrears of municipal rates and taxes was not in respect of the dues of the suit property itself, but in respect of other' properties owned by Kanungo; that defendant No. 5 Bhagabati Charan Dasguptu was benamdar of Kanungo and not his wife, the defendant No. 4.

The plaintiff's contention that Kanungo bad become a construc tive trustee of the suit property for the benefit of Dastidar was rejected and it was further held that the award dated 31st January 1932, was no longer executable and consequent upon it Dastidar had lost the right of ejectment of Kanungo on pa‑n‑,ant of Rs. 2,500. The contention that tile award had created a charge of Rs. 2,500 on the house was repelled and the suit held to be barred by time. In the result the plaintiff was non‑suited, but on appeal a Division Bench of the High Court reversed the findings of the trial Judge and granted him declaration of title and a decree for recovery of possession.

The High Court affirmed the findings of the trial Court that the suit property was purchased by defendant No, 5 Bhagabati Charan Dasgupta, as benamder of Kanungo; that the Kabala by which the plaintiff purchased the house was supported by consideration; that the minor sons of Dastidar were properly represented by their mother in the execution of the kabala who, on having attained majority and being impleaded as defendants, did not contest the sale; that the suit property became a security for the payment of Rs. 2,500 paid as advance by Kanungo to Dastidar and the award created a charge on the suit property in respect of the said sum; that the award dated 31st January 1932, was not capable of being enforced immediately by way of execution; that the Court sale in execution of the decree obtained by the Municipality of Chittagong, for arrears of taxes was fraudulent and obtained surreptitiously and collusively by Kanungo in violation of his statutory obligation to inform Dastidar about the sale which created a constructive trust in favour of Dastidar and that in view of the constructive trust the suit filed by the plaintiff as successor‑in‑interest of Dastidar was not bit by the bar of limitation.

The contentions raised in support of this appeal preferred by the heirs of Kanungo were : (i) that non‑execution of the award of 1932 under which the ejectment Suit No. 406 of 1929 for the ejectment of Kanungo was dismissed, had resulted in extinguishing ‑the latter's title in the suit property; (ii) that by virtue of the Court sale of 1936 Kanungo :had become an owner of the house; and (iii) that the suit instituted by the plaintiff on 30th January 1956, beyond ‑ the period of twelve years from the execution of the kabala in his favour by the pro forma defendants 7 to 9 was barred by time.

A plain reading of the award appearing at pages 7‑8, Part II, Exh. 5 (a) of the record shows that Kanungo was to remain in possession as a tenant till such time the sum of Rs. 2,500 was paid to him by Dastidar. The decree passed on the basis of the award was, therefore, declaratory in nature and not susceptible to execution through the intervention of Court. So long as Dastidar did not pay the said sum, Kanungo was not liable to ejectment, but what is significant in this respect is the nature of Kanungo's possession was that. of a tenant for it was specifically provided that the interest on the sum of Rs. 2,500 would be set off against the rent fixed under the lease of 1928. ,4 This clause in the award further showed that while a period of four months was provided for the refund of Rs. 2,500 it was envisaged that the suns could be paid at any later date. Dastida was therefore not required to sue out execution of the award within a period of three years as contended by the appellant. We, accordingly, concur with the view adopted by the learned Judges in the High Court that the award of 1932 was not executable and the omission on the part of Dastidar to pay the sum of Rs. 2,500 to Kanungo within four months did not affect his proprietary rights in the house.

As to the effect of the sale of the house in S. C. Suit No. 287/245/210 of 1935 the learned Judges of the High Court examined the issue from various angles and came to the conclusion that it was the duty of Kanungo as a lessee to inform Dastidar, his lessor, about the sale of the property in lieu of Municipal taxes and dues and to protect and safeguard his interest in the property under lease with him. According to the evidence on which the learned Judges relied, it was a case of the lessee evicting the lessor by a collusive purchase. Section 108 (n) of the Transfer of Property Act imposes an obligation upon the g lessee to notify to the lessor of any invasion upon his propitiatory rights by legal proceedings or otherwise. Dastidar had thus reposed confidence in Kanungo to fulfil this statutory obligation truly and faithfully and to this extent there was a fiduciary relationship between them which prevented Kanungo from putting himself in a position where his duty and his own interest came in conflict and to obtain an advantage over Dastidar whom he was bound to protect by giving timely information of the threat to his proprietary rights.

A number of decisions by the High Courts in the subconti nent, the Judicial Committee and the dictum of the House of Lords in York Building Company v. Mackenzie (3 Paton 378) were relied upon by the learned Judges in support of the conclusion that there existed a Fiduciary relation between Kanungo and Dastidar which cast a duty on the former to inform his lessor about the impending sale and to protect his interest therein. Reference in this behalf was further made to the following passage by McDonnel and Monroe, 7th edition, page 195

"If the relation between the parties is one of a fiduciary nature, transactions between them are watched by the Court with some more than ordinary jealouqy. The duty of a person who fills a fiduciary position being to protect the interests which are confined to his care, he may not avail himself of the influence which the position gives him for the purposes of his own benefit, and to the prejudice of those interests which he is bound to protect. It is a rule of equity that no man can be permitted to take a benefit where he has a duty to perform which is inconsistent with acceptance of the benefit."

An appeal was also made to section 88 of the Trusts Act which provides as follows "Where a trustee, executor, partner, agent, director of a company, legal adviser, or other person bound in a 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 interest are, or may be, adverse to these 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."

The learned Judges considered that the phrase "or other persons bound in a fiduciary character to protect the interests of another person" indicated that the category of person enumerated in the section was not exhaustive, and any person who enters into any dealings under circumstances in which his own , interests . are, may be, adverse of 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.

This enunciation was found as clearly set out in Nugent v. Nugent (L R 1908 1 C J D 546) where it was held that a Receiver appointed by the Court cannot purchase the property of which he is the Receiver without the leave of the Court, even where the sale is made, not in the action in which he was appointed, but by a mortgage selling with lease outside the action. In answer to the contention that the purchase was fair and above board in the light of the facts and circumstances of the case Cosens Hardy M. R's. observations at page 549 of the Report were quoted. On a final analysis the learned Judges formed the view that whatever may have been the contractual rights and obligations between the parties the law imposed upon Kanungo a duty to inform Dastidar about the impending sale of the property and the latter had the right to expect that his tenant would faithfully discharge this duty as enjoined by section 108 (n) of the Transfer of Property Act. In this connenection the confidence reposed by Dastidar in Kanungo had placed the latter in a position of Trust and responsibility which was not faithfully discharged. Consequent upon it the Court sale in favour of Kanungo was to ensure for the benefit of Dastidar and a resultant constructive trust was created in his favour.

Besides the legal aspect of the case the facts speak for themselves. Firstly, it was unusual that the Municipality instead of resorting to the provisions of section 121 of the Bengal Municipal Act, 1884, which conferred on it the powers to recover arrears of taxes by distress instituted a civil suit for this purpose. Secondly, instead of proceedings against the property in respect of which the taxes had fallen in arrears the property in possession of Dastidar was attached and put to sale. Thirdly there was no reason for Kanungo to purchase the property in the benami of the defendant No. 6 except to avoid liability which fell on him under law to safeguard the interests of his lessor and to inform him about the impending sale. Fourthly, the file pertaining to the arrears in respect of which the Chittagong Municipality had filed the suit and obtained an ex parte decree was not traceable and lastly the property which in 1928 was agreed to be sold for a sum of Rs. 5,000 was sold at the auction for the paltry sum of Rs. 210. No doubt was thus left that the property in dis pute was purchased by Kanungo while in its possession as a lessee surreptitiously and collusively. The contention raised by the appellants that by virtue of the Court sale in favour of their predecessor‑in‑interest Dastidar had no right, title and interest left in the property had, therefore, little force.

The question of limitation does not appear to have been treated properly in the Courts below. The trial Judge found that the suit having been filed beyond the period of twelve years from the date on which the plaintiff had purchased the disputed property was barred under Article 142 of the Limitation Act. The learned Judges in the High Court came to the contrary conclusion on the finding that Kanungo and his heirs held the property in trust for Dastidar. It was, however, overlooked that under the Award of 1932 which was made the rule of the Court Kanungo was to remain in possession as a tenant until the sum of Rs. 2,500 was paid to him by Dastidar. During this period the rent of the demised premises was to be set off against the interest on the said sum. The relationship of landlord and tenant being thus established between the parties Kanungo was under section 116 of the Evidence Act debarred from setting up a Hostile title against Dastidar. Further, the purchase of the suit property by Kanungo at the Court sale having been obtained surreptitiously Dastidar and his successors‑in‑interest did not have notice of it until in reply to the application filed by the plaintiff on 6‑7‑1944 under section 47 and 151, C. P. C. Kanungo for the first time disclosed that the property had been purchased at a Court sale by the defendant No. 6. The pleadings of that case show that even at that stage he did not claim that he himself was the purchaser in the benami of the said defendant. On these facts the cause of action did not accrue to the plaintiff till 7‑6‑1944 when the sum of Rs. 2,500 was deposited by the plaintiff in Court and he asked for recovery of possession. The present suit having been filed on the 30th January 1956, within twelve years of that date was thus clearly within time.

As a result of the above discussion we find no merit in the appeal and hereby dismiss it, but in the circumstances make no order as to costs.

A. H. Appeal dismissed.

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