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Judgment
The suit in which the appeal arises was instituted u/s 92 of the CPC against the defendant, the Raja of Kalahasti, who is the hereditary trustee of
the Kalahasti temple and its endowed property. By a preliminary decree the Subordinate Judge who tried the suit ordered accounts to be taken
from Faslis 1315-1320 and objections have been taken before us, in the first place, to a number of items in the accounts as finally settled by the
Court of first instance. Then there is the important question whether the order suspending the defendant from the office of trustee until he pays
certain debts due to the temple is right. The contention of the appellant, the defendant in the suit, is that the order of suspension ought to be set
aside altogether, while the plaintiffs contend that the defendant should be removed from his office
We shall first deal with the items of account to which objections have been taken on one side or the other. It is necessary to state that this
temple was founded and endowed by the Raja of Kalahari, and the properties which formed the endowment are mainly the village of Kalahaati,
and half of two other villages. There are also operation Rusums and Meraha which are payable to the temple by the tenants of the Kalahasti
Zemindary. Incorporated with the temple properties are the funds called Ubhayam funds, which have been endowed by various persons with the
object that certain festivals may be held in their honour in the temple with the income of those funds. There are also the collections made in the
temple and the offerings. The entire income may be taken to be about Rs. 10,000 or so a year.
The Zamindary of Kalabasti as well as the trust property in the suit were under the management of the Court of Wards from 1899 till August
1905 on the ground of incapacity of the defendant. It was then handed over to him apparently because the Court of Wards found it a hopeless
task to clear the Zamindary from, debts. Accounts have been taken from 1905 till 1910; when the Court of Wards made over the trust property to
the Rajah, there was a sum of Rs. 37,000 due to the temple from the previous trustees, the predecessors of the defendant, and a sum. of about Rs.
8,000 in the hands of the Court of Wards on account of Ubhayam. This Rs. 8,000 was handed to the defendant, but it appears that he used the
amount for his own personal purposes and executed a mortgage on some of the Zemindary properties for that sum plus Rs. 37,000 which was
already due to the trust. The mortgage is Exhibit C and it was executed on the 22nd August 1905. It may be mentioned at once that the
Subordinate Judge has acquitted the defendant of all charges of dishonest misappropriation of the trust funds, and in fact those charges at the time
of trial were not pressed be-~ fore him. He has found, however, on taking accounts under various beads that altogether a sum of about Rs. 11,000
or thereabouts was due by the defendant to the temple. At the same time the Subordinate Judge found, that the defendant spent something like Rs.
17,800 in performance of ceremonies and festivals in connection with the temple over and above the income of the temple property. He says,
however, that the Raja was not entitled to have credit for this amount as against what has been found due from him. In dealing with the accounts an
important fact to be borne in mind is that the defendant never kept any separate account of the trust property and the ex-penditure in connection
with the temple except as to the offerings and Hundi- collections. So far as the income of the landed property was concerned and especially of
what was received by way of Rusums and Merabs, there was no separate account; what was receivable by the temple was mixed up with the
Zemindar''s private account. There is also the fact that the defendant did not produce all the books of account, such as they ""were, which would
have shown what was the amount under certain heads to which the'' temple was entitled as distinguished from what was received by the Zemindar
on his own personal account from the Zemindary. The learned Vakil for the appellant has emphazized the fact that, if the defendant did not keep
any separate account, he was only following the practice of his predecessors and of the Court of Wards which had the management of the
property for several years. But that is no excuse in law for the defendant not keeping the moneys belonging to the temple entirely separate from his
own moneys and if any difficulties in taking accounts have arisen owing to this fact, every presumption is to be made against the defendant and in
favour of the trust. I shall take the items in the order of the argument before us.
The next objection relates to the interest on the Rs. 8,000 which was borrowed by defendant at the time he received charge of the trust
property from the Court of Wards. Exhibit C provides for six per cent, interest with annual rests, and the contention is that it'' ought to be 9 per
cent, compound interest at half yearly rests or at least six per cent. with half-yearly rests. The question what is the proper interest to be charged
against the defendant was in the discretion of the Subordinate Judge and we are not prepared to say that under the circumstances the defendant
ought to have been charged a higher rate of interest than six per cent.
Our attention has been drawn to Section 23 of the Trusts Act, Clause (e). The section itself applies only to private trusts and a rule of that nature
can only be adapted with such modifications as the circumstances of each case require. The respondent also urged that compound interest ought to
have been allowed instead-of simple interest upon the items dealt with in the judgment of the Subordinate Judge in paragraphs 40 and 41. We are
not prepared to held for reasons already stated that the Subordinate Judge''s conclusion is wrong.
Then there is the question whether the defendant ought to be given credit for any amount which he has spent on religious worship and
ceremonies over, and above the income from the temple property. The Subordinate Judge has held that he is not entitled to any credit on this
account, and we think he is right.
No authority has really been cited by the defendant for the proposition that a trustee of a public charity, who chooses year after year to spend
moneys not required by the terms of the endowment out of his own pocket, should be allowed credit for such expenditure. If such a proposition
were accepted, it would lie in the trustee''s power to put an end to the endowment by extravagant expenditure. The duty of the trustees is to carry
out the directions of the founder and not to encumber the trust property by systematically incurring expenditure beyond the limits of the income of
the trust property. Reference was made to Andrews v. McGuffog (1886) 11 A.C. 313, but we do not find that the case lays down any
proposition to the contrary. As stated by Lord Watson, the money which the trustees there were said to have misapplied had been spent in
executing, according to the specific directions of the testator, one of the main purposes of the trust and the only administrative error which they
committed consisted in their having honestly mistaken the mode in which the testator''s purpose was meant to be attained. It is contended by the
learned Pleader for the appellant that there was, as a matter of fact, a surplus left after meeting the expenditure of the Ubhayams and the defendant
was justified in spending that surplus for the benefit of the temple. But such a case was never sought to be made, and what is found is that the
defendant spent about Rs, 17,000 in excess of the income of the temple during the six years that the accounts have been taken, and not that he
Utilised the surplus of one particular fund for the benefit of the other fund. Further, as it is pointed out on behalf of the respondent, these Ubhayams
are special funds which have nothing whatever to do with the ordinary worship in the temple and the expenditure of the income of those funds mast
be regulated according to the direction of the respective founders of those funds.
The only objection to the scheme of management framed by the Subordinate Judge, which has been taken before us, relates to the question
whether, having regard to the facts disclosed, the defendant should be retained at all in the office of trustee and, if so, whether the order suspending
the defendant from trusteeship until payment of the amounts due under Exhibit C and what he is found liable for in this case should be upheld or
what modification should be made in this conception in the scheme of management. The amount due under Exhibit C is Rs. 45,000, which is
charged upon some of the Zemindary properties belonging to the defendant, and under the decree he is liable for a sum of nearly Rs. 12,000.
Having regard to the fact that the defendant''s Zemindary is heavily encumbered and his financial affairs are extremely embarrassed, it is open to
grave doubt, whether the condition attached by the decree"" to resumption by the defendant of the duties) of Dharma-kartha will ever be satisfied.
The. direction of the Subordinate Judge, therefore, practically amounts to removal of the defendant from the office of trustee, but it cannot be
satisfactory in the interests of the trust that there should be no trustee for an indefinite time.
It is argued on behalf of the appellant that the order of suspension is wrong and the provision made for the appointment of a treasurer and for a
proper system of accounting will be sufficient to protest the interests of the institution. No doubt these provisions provide some check on the action
of the Dharmakartha, but the Dharmakartha has still certain important powers, for instance, the collections are all to be made by him and so also
the expenditure, although expenses are to be regulated by a budget prepared at the beginning of every Fasli year. It is argued on the other hand on
behalf of the plaintiffs that the defendant has shown want of capacity in managing the institution and its properties. Besides, he owes a large sum of
money to the trust and having regard to the facts which have been proved in the case, it will be entirely detrimental to the interests of the trust to
permit the defendant to continue as Dharmakartha.
Much stress was laid on behalf of the appellant on the fact that the temple was founded and, endowed by his own ancestors and that he is the
hereditary trustee according to the terms of the dedication. He is not, however, entitled to any pecuniary benefit from the trust and the law is well
established, and this was conceded before us, that if the continuance of a person who is a hereditary trustee and a descendant of the founder in the
office is likely to endanger the interests of the institution, he is liable to be removed, Vide Fakurudin Sahib v. Ackeni Sahib 4 Ind. Jur 250 and also
Anantanarayona Ayyar v. Kuttalam Pillai 22 M.S 481, and in chintaman Bajaji Dev v. Dhondo Ganesh Dev 15 B.S 612 the trustee was removed
mainly on the ground that he did not keep proper accounts and in Andnta-narapana Ayyar v. Kuttalam Pillai 22 M.S 481 the trustee was removed
because he systematically failed to submit accounts to the committee of management. The grounds which justify a Court in removing trustees are
well expressed in Storey''s Equity Jurisprudence, Section 1289, adopted by the Privy Council in Letterstedt v. Broers (1884) 9 A.C. 371. That
was a case of a private trust but the principle enunciated there is applicable a fortiori to trustees of public trusts: ""But in cases of positive
misconduct, Courts of Equity have no difficulty in interposing to remove trustees who have abused their trust. It is not, indeed, every mistake or
neglect of duty or inaccuracy of conduct of trustees, which will induce Courts of Equity to adopt such a course. But the acts or omissions must *be
such as to endanger the trust property or to show a want of honesty or a want of a proper capacity to. execute the duties or a want of reasonable
fidelity.
There can be no doubt whatever that the defendant''s conduct shows a want of capacity to manage the trust properties He dots not appear to
have realised the elementary duties of a trustee. He started upon his office by appropriating to his own use a sum of Rs. 8,000 belonging to the
trust funds, and no portion of that money has yet been restored. The fact that the previous Rajahs acted in a similar way which resulted in their
owing to the institution a euro of Rs. 37,000 does not justify the conduct of the defendant. It only shows that the duties and responsibilities of a
trustee were not understood even by his predecessors- in office. One of the most important duties of a trustee is to keep separate accounts and to
keep the trust property separate from his own property. Here also the Raja failed in his duty throughout. Than his management of the trust
properties cannot be said to have been at all efficient. A sum of nearly Rs. 12,000 is payable by him to the trust on this account. The defendant''s
own affairs are in a practically insolvent condition. Almost the greater, portion of the ancient and valuable Zemindari of Kalahasti is now. in the
hands of creditors. To what extent this result, has been contributed by the defendant himself has not been investigated in this case, nor was it
necessary to do so. Our duty is to look entirely to the interests of the trust and we feel convinced that, in the circumstances, it will not be for the
benefit of the institution to allow it to remain under the management of the defendant. He admits in his own evidence that he himself never looked
into the accounts'' or the correspondence and was content to leave everything to his Dewan. And that is exactly what one would have inferred
from the history of the trust. In the present impecunious condition of the appellant who still must have considerable position and in fluence in the
locality, it would not be fair either to himself or to the institution that he should continue to hold the office of trustee. The appellant has not been
found guilty of- any dishonest misappropriation and without suggesting any reflection on his honesty we think that the observation of Jessel, Master
of Rolls, in In Re: Barker''s Trusts (1575) 1 Ch. D. 43, affords a proper guidance to the Court in cases of this character: ""A necessitous man is
more likely to be tempted to misappropriate trust funds than one who is wealthy and besides a man who has not shown prudence in managing his
own affairs is not likely to be successful in managing those of other people."" We have also care fully considered whether it would not have been
sufficient to safeguard the interests, of the temple if we appointed a board of control to exercise proper check and supervision over the
management or if a co-trustee was appointed to work conjointly with the appellant. But we have come to the. conclusion that any such provision
would not tend to the smooth working of the institution.
In the result the appeal will be dismissed and the memorandum of objections allowed to this extent, that the decree of the lower Court will be
modified by directing that the defendant be removed from the office of Dharmakartha of the Kala-hasti temple and its endowed properties. It will
also be declared that the Subba Naidu Tope belongs to the temple and in addition to the amount decreed by the Subordinate Judge the defendant
is liable to the temple for Rs. 156-110, which is the difference between the profits of the Subba Naidu Tope not accounted for by the defendant
and the amount wrongly charged against him on account of straw. The lower Court will be directed to appoint a fit and proper person as trustee in
place of the defendant. The appellant will bear the costs of ''this appeal. Each party will bear his own costs of the memorandum of objections. The
costs of the respondents will come out of the trust estate.