C.V. Krishnamoorthy and Another vs Chettypunyam Devanadhaswami Devasthanam and Others

Ramaswami Gounder, J.—This appeal arises out of an order of the learned District Judge who allowed the appeal and dismissed the petition for scaling down of a usufructuary mortgage under Sections9-A and 19-A of Act IV of 1938. That mortgage was Exhibit A-1 of the-year 1931 executed by the deceased father of the petitioners (Appellants) to the trustees of a Devasthanam for a sum of Rs. 500. That was not an amount advanced in cash, but the mortgage was a renewal of an earlier mortgage Exhibit A-2 of the year 1925 executed by the petitioner''s father to the same Devasthanam, at a time when he was not a trustee. But by the time the mortgage in question came to be executed, the petitioner''s father was himself one of the trustees. It is also true that the liability under the earlier mortgage Exhibit A-2 itself was in discharge of a liability owing by one Srinivasachari to the Devasthanam. The learned District Judge thought that the mortgage in question was a breach of trust and therefore it was excluded from the provisions of the Madras Act IV of 1938 by reason of Section 4, Clause (f), namely, any liability arising out of breach of trust. The question is whether the liability under the mortgage in question was one arising out of a breach of trust. By Section 54 of the Trusts Act, there is a prohibition against a trustee or co-trustee whose duty it is to invest trust money on mortgage or personal security investing it on mortgage by, or on the personal security of himself or one of his co-trustees. It must be remembered that the mortgage in question was executed by one of the trustees, as the petitioners'' father Lad by that time become a trustee, though he was not a trustee at the time when he executed the earlier mortgage. The contention of the learned Counsel for the appellants was that in the execution of Exhibit A-1 by way of renewal there was no breach of trust because the investment of the trust money had already taken place under the earlier mortgage and that the renewal could by no means be regarded as a fresh investment. But then, at the time of the renewal, there was money owing on the earlier mortgage, and that certainly was trust money due to the Devasthanam. Though the money was not realised under that mortgage and repaid, still the money due under that mortgage must be deemed to have been reinvested when the mortgage in question was taken by way of renewal. It seems to be clear that the mortgage in question was a re-investment of the trust money on a different form of security namely possessory mortgage, whereas the earlier mortgage was a simple mortgage. I therefore, consider, in agreement with the learned District Judge, that the liability on the mortgage in question was one arising out of a breach of trust u/s 54 of the Trusts Act, and as such it is taken out of the provisions of Act IV of 1938.

The appeal is dismissed with costs; but leave is granted.