SHINGHAL, J. - (1.) THESE two appeals arise out of the same judgment and decree of the learned District Judge of Udaipur dated January 7, 1958 and will be disposed of together.
(2.) ONE Bhimji had three sons Chotteylal, Brijlal and Jugal Kishore. Chho-teylal pre-deceased Bhimji and was issueless and plaintiff Smt. Diwali is his widow. Jugal Kishore also died but Bhimj's second son Brijlal, the other plaintiff, was alive at the time of the institution of the suit. He along with Smt. Diwali, instituted the present suit against Kanhaiyalal son of Hardeo with the allegation that Bhimji had created a trust in favour of Smt. Diwali, for her maintenance, on Baisakh Badi 4, S. 1968, by depositing Rs. 2,000/- with Hardeo who undertook to pay interest at 6 per centum per annum on that deposit. It was further pleaded that Bhimji clearly specified at the time of making the trust that the interest due on that deposit shall be paid by Hardeo every month to Smt. Diwali, during her lifetime, that the principal sum shall not be payable to her even if she made a demand for it and that after her death that money would be paid by Hardeo to Bhimji's sons Brijlal and Juglal (alias Jugal Kishore ). The document evidencing the alleged trust is Ex. 2. The plaintiffs pleaded that Smt. Diwali assigned her beneficial interest in the trust to Brijlal by document Ex. 1 dated May 30, 1952. It was alleged that the trustee did not pay the interest in accordance with the terms of the trust from Bhadwa S. 1979 so that interest for 29 years and 7 months was payable at the time of institution of the suit. As Hardeo died before the suit was instituted, his son Kanhaiyalal was sued for the recovery of Rs. 3550/- for arrears of the interest. It was also prayed that the sum of Rs. 2,000/- (originally deposited by Bhimji) may be invested in government securities or in some other manner considered suitable by the court. Plaintiff Brijlal died during the pendency of the suit and his son Purshottam was therefore brought on the record as his legal representative. Defendant Kanhaiyalal resisted the suit on various grounds. He admitted the deposit of Rs. 2,000/- but pleaded that it was an ordinary deposit which was to carry interest, and that no valid trust was thereby created in favour of Smt. Diwali. Further, the defendant pleaded that Hardeo re-paid the money to Bhimji's sons Brijlal and Jugal Kishore, and that the suit was barred by limitation as well as by the principle of res judicata. Some other pleas were taken in the written statement, but it is not necessary to refer to them for purposes of the present controversy. The learned trial Judge decreed the suit for Rs. 3,550/- along with pendente lite and future interest at annas 8 per centum per mensem and costs. An appeal was preferred by defendant Kanhaiyalal and was allowed in part by the learned District Judge of Udaipur, who held that the claim in the suit was barred by limitation except for the sum of Rs. 360/- as the arrangement between the parties did not amount to a trust so as to attract the provisions of sec. 10 of the limitation Act. The learned Judge reduced the amount of the decrees to Rs. 360/-, which alone was held to be within limitation, and allowed proportionate costs of the suit with the direction that the decretal amount would be realisable from the estate of deceased Hardeo in the hands of Kanhaiyalal. It is against the judgment and decree that the present two appeals have been filed. Appeal No. 88 of 1958 has been preferred by Purshottam and Smt. Diwali. Smt. Diwali has died since. The other appeal (No. 93 of 1958) has been preferred by defendant Kanhaiyalal on the ground that he is not at all liable for the decretal amount and that the suit should have been dismissed in toto. The main point for decision in this case is whether the plaintiffs could be said to have succeeded in proving that a trust was created by Bhimji in favour of Smt. Diwali by means of document Ex. 2, the execution of which is not denied. The learned counsel for the defendant has strenuously argued that the arrangement between the parties did not amount to the creation of a trust and that sec. 10 of the Limitation Act is not at all applicable. This was the subject-matter of issue No. 3. That issue was found by the learned Civil Judge in favour of the plaintiffs but the learned District Judge decided it against them. In order to appreciate the controversy, it would be advantageous to refer to the relevant portion of document Ex. 2 which reads as follows D;ksafD ;g :i;k Dk C;kt esa ckbz fnokyh Ds rkftunxh clj Djus Ds fy, vkius esjs ikl tek Djk, gsa lks C;kt rks fnokyh th, ftrjs fnokyh us nsrk jgsxka fnokyh Qksr gksok ckn eqy :i;k fcztykyth txykyth us ijk nsowayka fnokyh thos trjs ekxs rks nsok ugha -----a It has been argued by Mr. Trivedi on behalf of the plaintiffs-appellants that the above document created an express trust in favour of Mst. Diwali inasmuch as Bhimji, the author of the trust, did not reserve any right to get the money back, the ownership of which passed to the trustee for the beneficial interest of Smt. Diwali during her life-time and of Bhimji's other two sons Brijlal and Juglal (Jugal Kishore) thereafter. The learned counsel has urged that the author of the trust had clearly specified the purpose of the trust and that the finding of the lower appellate court to the contrary must be set aside. Further, the learned counsel has argued that the mere fact that Hardeo, the trustee, was allowed to utilise the trust property on his giving the assurance that he would pay interest thereon, cannot give rise to the argument that the arrangement resulted in the destruction of the trust property or that it merely created a relationship of creditor and debtor between Bhimji and Hardeo. On the other hand, Mr. Lodha has argued that the arrangement could not be said to amount to a trust as it was no more than a deposit of Rs. 2,000/- by Bhimji with Hardeo which Hardeo, the debtor, was liable to repay with interest at a fixed rate irrespective of the fact whether he earned profits, or incurred losses, in utilising that deposit for purposes of bis own business. According to the learned counsel, it was quite open to Bhimji to file a suit for the recovery of the money whenever he liked, as he retained his proprietary right on the deposit. The learned counsel has placed reliance on Taraknath Saha Vs. Rajani Kanta Saha (1), Rajmal Vs. Lakshm-ammal (2) and S. Ripudaman Vs. Surinder Kumar etc. (3) in Support of this argument. The answer to the controversy is really furnished by document Ex. 2, the execution of which, as has already been pointed out, is admitted at all hands. The document clearly shows that Bhimji reposed a confidence in Hardeo and that Hardeo agreed to be the custodian of that confidence, in pursuance of which Bhimji entrusted a sum of Rs. 2,000/-to him, without reserving any authority in himself to recall that money, and expressly passed its ownership to Hardeo as the trustee. At the same time, an obligation was annexed to that ownership for the benefit of certain persons inasmuch as it was clearly specified by Bhimji that the interest on the money held by Hardeo would be payable to Smt. Diwali during her life-time and thereafter the money would be payable to Bhimji's sons Brijlal and Jugal Kishore. It was also specified that the principal sum would not be payable to Smt. Diwali even is she made a demand for it. It is thus clear that Bhimji, who was the author of the trust, indicated, with all possible certainty, his intention to create a trust, specified the purpose of that trust, named the beneficiary/beneficiaries, earmarked the trust property and transferred that property to the trustee without any reservation. There can therefore be little room for doubt that Bhimji created a trust and that Hardeo agreed to be the trustee. Taraknath Saha's case (1) on which reliance has been placed by Mr. Lodha was quite different inasmuch as the arrangement envisaged in it was one under which the so-called trustee was also expected to make a contribution to the fund and the agreement contained a provision for the division of the property between the parties if the purpose for which the arrangement was made was not carried out by the other party. That case can therefore be of no avail to the defendant. Rajamal's (2) was a case in which the depositor received back out of his deposit sums of money whenever required by him for his own purposes and it was therefore held that there was no trust for any specific purpose, of any specific sum, and that it was only an ordinary case of a customer who had deposited property with a 'sowcar' or a banker and was drawing whatever he wanted for his own use from time to time. Thus the facts of both these cases were quite different. S. Ripudaman's case (3) has been cited by Mr. Lodha to point out the distinction between a trust and a contract. It has been held in that case that a trust always involves an equitable ownership wheieas a contract is a legal obligation based on an undertaking supported by a consideration, which obligation may or may not be fiduciary, and that to constitute a trust there must be distinct fund which the trustee is required to preserve intact and for which he must eventually account. All these requirements have been fulfilled in the present case, for there can be no doubt that Bhimji created an equitable ownership in the trust property and a distinct sum of money (Rs. 2,000/-) was entrusted to Hardeo for which he had to account. As I shall presently show, it would not matter that Hardeo was allowed to utilise the money on his undertaking to pay an agreed rate of interest. Mr. Lodha has, in fact, urged with considerable vehemence that as Hardeo was free to utilise the sum of Rs. 2,000/- against the guarantee to pay interest at 8 annas per centum per mensem, that provision would cut at the root of the plaintiffs' assertion that a trust had been created by Bhimji by ear-marking the trust property. According to the learned counsel, the relationship between the two was no other than that of a debtor and a creditor. The argument is, however, untenable because, for reasons which need not be repeated, the arrangement between the parties fulfils all the requirements of a valid trust and the mere provision for the payment of interest at an agreed rate cannot put an end to Hardeo's liability as a trustee and reduce him to the; position of a mere debtor. A similar point arose for consideration before their Lordships of the Madras High Court in Official Assignee of Madras Vs. T. Krishnaji Bhat (4) and (P. L. N. K. M.) Nagappa Chettiar Vs. Official Assignee of Madras (5) and I am in agreement with the view taken in those cases. In the former case, the trustees were Tawker and Sons and the beneficiary was the plaintiff, who was then a minor. The author of the trust was the minor's father who entrusted a sum of Rs. 10,000/- to the trustees with the request that they should invest it in their firm in the name of the minor and it was stipulated that the trustees would pay him only the interest. It was agreed that the author of the trust would not trouble the trustees any more about the moneys, would not question its investment either in their own firm or anywhere else as they deemed proper, and it was also stipulated that the principal would not be paid until the son attained majority. A few days later, Tawker and Sons gave a receipt to the plaintiff's father for Rs. 10,000/- as a fixed deposit in the name of his minor son stating that the amount was to carry interest at 9 per cent per annum. A dispute arose whether the arrangement amounted to a trust when the sum of Rs. 10,000/- was invested in Tawker and Sons' business. It was contended that the relationship of debtor and creditor arose between the parties and superseded that of trustee and beneficiary. That contention was negatived by Reilly, J. who observed as follows: " We must remember that this is a very exceptional trust, in which the creator of the trust authorised the trustees to use the money, , to invest the money, in their own business. If in exercising their option Tawker & Sons had invested it in some other firm and had collected 9 per cent from those people and handed it over to the plaintiff, there would have been no question that their trusteeship would have continued. Does it make any real difference that by the special authorisation of the settlor they invested the money in their own business? As is well known, if the subject of a trust is a house, the trustee cannot take a lease of that house for himself. But if it were permissible for him to do so, could you say that his position as lessee would in that case entirely supersede and wipe out his position as trustee? That is what is suggested in this case : that a relationship of debtor and creditor has arisen which has superseded, overwhelmed and obliterated Tawker & Sons' trusteeship. For myself I do not see how that in the circumstances can have happened. " It was appreciated by Cornish J. , who was a party to that judgment, that no doubt it is a well established principle that a trustee is to make no profit out of the trust fund, but he further held that is equally a principle that if a trustee trades with the trust money he is accountable to the beneficiary for the profits and that it is open to a settlor when creating a trust to make it advantageous to the person appointed trustee to undertake trusteeship so that there was nothing illegal in a settlor authorising by the instrument of trust the trustee to invest the trust money in a business, whether the trustee's own business or some other business and providing that interest shall be paid for the use of the money so invested. This view came up for consideration before their Lordships of the Madras High Court in (P. L. N. K. M.) Nagappa Chettiar's case (5) and it was held that a provision like the one in controversy, namely, the circumstance that the trustee may use the money for his own business on payment of interest, had the effect of engrafting a contract upon the trust and that both the trusteeship and the relationship of debtor and creditor were there. It could not be said that the effect of such a combination would be different from what it would be when the individuals are separate. In the present case, for reasons already stated, all the requirements of a valid trust have been amply fulfilled and it is futile to argue that the condition under which the trustee undertook to pay interest at a fixed rate on the money which he held as the trust property would demolish the trust and reduce the arrangement to a mere relationship of a debtor and a creditor. It has next been argued that the trust in question is not an express trust so that sec. 10 of the Limitation Act is not applicable, and reliance for this argument has been placed on Official Receiver of South Arcot vs. V. R. M. K. M. M. Kulandai-velan Chettiar (6), Gopaldas Metharam vs. Hemandas Ramrakhiomal (7), Soonderbai Thakersey vs. Bai Laxmibai (8) and Venkamamidi Balakrishnamurthi vs. Goginens Sambayya (9 ). The argument is of no avail because the trust has, in the present case, been created by a direct and positive act of the parties, namely, by the execution of document Ex. 2 evincing an unequivocal intention to create a trust. Such a trust cannot be said to be an implied trust, for an implied trust is one which the court implies from the words of an instrument or the conduct of parties after a consideration of the whole transaction, but no such effort is needed in the present case. In Official Receiver of South Arcot vs. V. R. M. K. M. M. Kulandaivelan Chettiar (6) no instrument of trust was executed, nor was any trust expressly declared at the time of the gift which was made to the daughter and the trust had to be inferred from the conduct of the parties and the surrounding circumstances and the beneficiaries were left to be determined by invoking a custom. So the facts of that case justified the conclusion that it was not an express trust and was not governed by sec. 10 of the Limitation Act. The case of Gopaldas Metharam (7) is also distinguishable on facts, but the essentials of a valid trust, to which sec. 10 of the Limitation Act could be applied, have been brought out in that judgment and it has been held that what is necessary for the application of that section is that the defendant must be a person in whom property had become vested in trust for a specific purpose, the purpose of the suit must be to follow in the hands of the defendant the trust property or the proceeds thereof or to demand from the defendant an account of the trust property or the proceeds, and the plaintiff must be a beneficiary so interested in the trust as to entitle him to institute a suit for such purposes and claiming such reliefs. Since ail these requirements are fulfilled in the present case, for reasons which need not be repeated, the defendant can derive no benefit from the decision in Gopaldas Metharam's case (7) as well. Reliance has been placed by Mr. Lodha on Soonderdas Thakersey's case (8) and Venkamamidi Balaknshnamurthi's case (9) only to show that sec. 10 of the Limitation Act applies to an express trust, but that proposition has never been challenged by Mr. Trivedi and is in fact unexceptionable. For reasons already mentioned, there is no force in the argument that the present is not an express trust and that sec. 10 of the Limitation Act is not applicable to it. The contrary view of the learned District Judge is incorrect and must therefore be set aside. Document Ex. 2 creates an express trust and, by virtue of sec. 10 of the Limitation Act, the suit against the defendant in whom the property had become vested in trust for specific purpose, or his legal representative, for the purpose of following such property in his or their hands or the proceeds thereof, cannot be barred by any length of time, It would follow therefore that the plaintiffs would be entitled to recover the interest for the entire period for which they instituted the suit. It has next been argued by Mr. Lodha that the suit is barred by the principle of res judicata. The point was raised in the courts below as well and was rightly negatived because the earlier suit was instituted by Brijlal and Jugal Kishore for the recovery of a sum of Rs. 2,000/- on the ground that they had paid off Smt. Diwali and she was no longer entitled to any maintenance. It was however held in that case that what Smt. Diwali relinquished was her right of maintenance against the joint family property in the hands of Brijlal and Jugal Kishore but not her right to receive the benefit under the trust created in her favour by her father-in-law Bhimji. The plea of res judicata is therefore wholly untenable and does not deserve any further consideration.
(3.) IT has lastly been argued that Hardeo's widow Smt. Mangi Bai had paid Rs. 2,000/- back to Brijlal and Jugal Kishore and that there was no further liability in respect of that amount under the trust alleged by the plaintiffs. This was the subject-matter of issue No. 5 and it has been held by both the courts below that the defendant has failed to prove it. That finding of fact has not been shown to be vitiated by any error of law or procedure and is therefore final and binding on the parties. No other point has been argued. The result is that the plaintiffs' appeal (No. 88 of 1958) is allowed, the decree of the learned District Judge is set aside and that of the trial court restored with costs throughout. There is no force in the defendants appeal (No. 93 of 1958) and it is dismissed with costs. There is no justification for a declaration that the case is a fit one for further appeal and the prayer for the same is disallowed. .;