Appeals Nos 926 and 927 of 1965
Appeals from the judgment and decree dated November 25 1962 of the Madhya Pradesh High Court Indore Bench at Indore in First Appeals Nos 19 and 23 of 1957 respectively
166 section V Gupte Solicitor General Rameshwar Nath section N Andley P L Vohra and Mahinder Narain for the appellant
section P Sinha Ganapat Rai E C Agarwala and P C Agarwala for the respondent
The Judgment of the Court was delivered by Ramaswami J
These appeals are brought by certificate on behalf of the defendant from the judgment of the High Court of Madhya Pradesh Indore Bench dated November 20 1962 in First Appeals Nos 19 and 23 of 1957
The plaintiffs Rup Chand and Hukam Chand instituted Civil Suit No 8 of section 1999 in the Court of District Judge Ujjain against the defendant Vithal Das and three others for partition of houses and for rendition of accounts
Two of the defendants Bheronlal and Indermal died in the course of the suit and the suit was continued against Vithal Das
The plaintiffs alleged that the immovable property constituting Blocks Nos 206 and 207 in Freeganj Ujjain was purchased with the capital of the partnership firm in which the plaintiffs and the defendant were at one time partners and by two documents dated July 2 1937 and July 16 1937 the properties continued to remain in the ownership of the partnership firm though the firm had been dissolved in the year 1937
The plaintiffs claimed that the properties were managed by the defendant on behalf of the plaintiffs and the defendant realised rents from the tenants on their behalf and plaintiffs were therefore entitled to receive half the amount realised as rent and the defendant was liable to render accounts thereof
The plaintiffs also claimed parti tion of the joint properties or in the alternative the sale of the property by auction and after deducting the cost of auction half of the sale proceeds
The defendant contested the suit on the ground that at the time of the execution of the document dated July 2 1937 there were only three blocks in partnership which were at that time open land
The defendant claimed that Block No 206 and the building constructed thereon was not a partnership property
It was further alleged that the defendant had invested Rs 10000 in the three blocks of land which were held in partnership for constructing a building
The trial court accepted the plaintiffs  case and granted a decree for partition of the blocks and for an account of income realised in respect of the property situated on block No 207
As regards block No 206 and the property standing thereon the trial court directed the defendant either to remove the construction or accept his share of money spent by the defendant over it and created a charge over the property in respect of the amount so held payable
Both the parties preferred appeals in the High Court of Madhya Pradesh against the judgment of the trial court which partially allowed the appeals and remanded the case to the trial Court
The High Court held that the plaintiffs were entitled to claim half share in both the properties built on blocks Nos 206 and 207 and the defendant was liable to account 167 for the income of the properties on block No 207 from the date of dissolution ie from July 2 1937 and of block No 206 from the year 1939
The High Court also held that the plaintiffs were liable to pay half the costs spent by the defendant in constructing the building on block No 206
After the order of remand the trial Court appointed a Commissioner for examining accounts of rent realised by the defendant
After considering the report of the Commissioner the trial Court determined the total amount of rent of both the blocks Nos 206 and 207 at Rs 4182937 and the half share of the plaintiffs was determined at Rs 2091449
The trial Court also awarded interest to the plaintiffs on the half share of the income to the extent of Rs 667673 calculated upto April 11 1957
The total amount thus due to the plaintiffs was determined at Rs 27591 1 
Out of this amount the trial court allowed sum of Rs 975573 on account of the half costs of  construction and interest thereon and expenses incurred for house tax water tax legal expenses and repairs
The net amount thus awarded to the plaintiffs was Rs 1767099
As regards the partition of blocks Nos 206 and 207 the trial court held that in view of the method of construction of the blocks it was not possible to make partition in equal shares and therefore the trial court directed that the two blocks should be auctioned in separate lots and the parties should be at liberty to bid at the auction and the parties would have equal rights to the amount of the auction
Aggrieved by the judgment of the trial court both the parties preferred appeals to the High Court of Madhya pradesh namely First Appeals Nors
19 and 23 of 1957
The defendant s appeal was registered as Civil First Appeal No 19 of 1957 and the plaintiffs  appeal was registered as Civil First Appeal No 23 of 1957
Both the appeals were heard and disposed of by a common judgment by the High Court which modified the trial court s finding as to the income of blocks 206 and 207 to the extent of Rs 803 53 by reducing the income of the two blocks by that figure The total income was thus reduced from Rs 4182937 to Rs 41 015144 with the correspondingreduction in the amount of interest
The High Court affirm the finding of the trial court that tile defendant was liable to pity interest on the half share of the rental income on the ground that the relationship between the parties was in the nature of a truest under section 90 of the Trusts Act Act 11 of 1882
The plaintiffs  appeal No 23 of 1957 was allowed to the extent of Rs 49429after adjustment the plaintiffs  claim was decreed for Rs 22103 
The first question for consideration in these appeals is whether the High Court was right in granted interest to the plaintiffs on their share of rental income to the extent of Rs 6676  7  3 for the period prior to the institution of the suit
It was argued by the Solicitor Geiieral on behalf of the appellant that the High Court was in error in appellant that the relationship between the prince was governed by section 90 of the Trusts Act and the plaintiffs were therefore entitled to interest on their share of rent under the provi LIS5SCI 13 168 sions of section 23 of that Act
In our opinion the contention put forward by the Solicitor General is well founded and must be accepted as correct
It is well established that interest may be awarded for the period prior to the date of the institution of the suit if there is an agreement for the payment of interest at fixed rate or if interest is payable by the usage of trade having the force of law or under the provisions of any substantive law as for instance section 80 of Negotiable Instruments Act or section 23 of the Trusts Act
It is admitted in the present case that the two agreements between the parties dated July 2 1937 and July 16 1937 did not provide for payment of interest on the rental realised by the defendant on the joint properties
Nor is interest payable by virtue of any provision of the law governing the case
Under the Interest Act 1839 the Court may allow interest to the plaintiff if the amount claimed is a sum certain which is payable at a certain time by virtue of a written instrument
But it is conceded that the position in the present case is different
It was suggested by Mr section P Sinha on behalf of the respondents that interest may be awarded under the Interest Act which contains a provision that interest shall be payable in all cases in which it is now payable by law
But this provision only applies to cases in which the Court of Equity exercises jurisdiction to allow interest
The legal position has been explained by the Judicial Committee in Bengal Nagpur Rly
Co Ltd vs Ruttanji Ramji1 at p 72 as follows As observed by Lord Tomlin in Maine and New Brunswick Electrical Power Co vs Hart  at p 640 AIR 1939 PC 185 at p 188 In order to invoke a rule of equity It is necessary in the first instance to establish the existence of a state of circumstances which attracts the equitable jurisdiction as for example the non performance of a contract of which equity can give specific performance 
 The decision of the Judicial Committee in Bengal Nagpur Rly
Co Ltd vs Ruttanji Ramji1 was relied upon by this Court in Thawardas Pherumal vs Union of India1 in rejecting a claim for interest
In that case a contractor entered into a contract with the Dominion of India for the supply of bricks
A clause in the contract required all disputes arising out of or relating to the contract to be referred to arbitration
The dispute having arisen the matter was referred to arbitration and the arbitrator gave an award in the contractor s favour
The Union of India which has succeeded to the rights and obligations of the Dominion contested the award on various grounds one of which was the liability to pay interest on the amount awarded
It was held by this Court that the interest awarded to the contractor could not in law be awarded and the arbitrator is not a Court within the meaning of the Interest Act 1839 and
in any event interest could only be awarded if there was 1 65 IA 66
2 169 a debt or a sum certain payable at a certain time or otherwise by virtue of some written contract and there must have been a demand in writing stating that interest will be demanded from the date of the demand
The same view has been expressed by this Court in two later cases Union of India vs Rallia Ram1 and Union of India vs Watkins Mayor and Co2
It was however pointed out for the respondents that the defendant was in possession of the entire properties as co owner after the dissolution of the partnership by the document dated July 16 1937
It was argued that the defendant was realising rents of all the properties and he was in the position of a constructive trustee under section 95 of the Trust Act and was liable therefore to pay interest on the plaintiffs  share of rent under section 23 read with section 95 of the Act
We do not consider there is any justification for this argument
Section 90 of the Act states Where a tenant for life co owner mortgagee or other qualified owner of any property by availing himself of his position as such gains an advantage in derogation of the rights of the other persons interested in the property or where any such owner as representing all persons interested in such property gains any advantage he must hold for the benefit of all persons so interested the advantage so gained but subject to payment by such persons of their due shares of the expenses properly incurred and to an indemnity by the same persons against liabilities properly contracted in gaining such advantage Section 95 provides as follows  The person holding property in accordance with any of the preceding sections of this Chapter must so far as may be perform the same duties and is subject so far as may be to the same liabilities and disabilities as if he were a trustee of the property for the person for whose benefit he holds it Provided that a where he rightfully cultivates the property or employs it in trade or business he is entitled to reasonable remuneration for his trouble skill and loss of time in such cultivation or employment  and b where he holds the property by virtue of a contract with a person for whose benefit he holds it or with any one through whom such person claims he may without the permission of the Court buy or become lessee or mortgagee of the property or any part there of
 Section 23 reads as follows Where the trustee commits a breach of trust he is liable to make good the loss which the trust property or the beneficiary has thereby sustained unless the beneficiary has by 1 AIR 1963 SC 1636
2 AIR 1966 SC 275
170 fraud induced the trustee to commit the breach or the beneficiary being competent to contract has himself without coercion or undue influence having been brought to bear on him concurred in the breach or subsequently acquiesced therein with full knowledge of the facts of the case and of his rights as against the trustee
A trustee committing a breach of trust is not liable to pay interest except in the following cases a where he has actually received interest b where the breach consists in unreasonable delay in paying trust money to the beneficiary c where the trustee ought to have received interest but has not done so d where he may be fairly presumed to have received interest
He is liable in case a to account for the interest actually received and in cases b c and d to account for simple interest at the rate of six per cent
per annum unless the Court otherwise directs    We do not agree with the contention of the respondents that section 90 of the Trusts Act applies to this case
A co owner in possession of all the joint properties does not become a trustee by the mere fact of his collection of the full amount of rent from the tenants
If the co owner is to be clothed with the status of a trustee it must be shown that he has gained some advantage in derogation of the other co owners interested in the property and that he gained such an advantage by availing himself of his position as co owner
In the present case there is no allegation made by the plaintiffs that the defendant has gained any advantage in derogation of the rights of the plaintiffs nor is there any finding of the lower courts that the defendant gained any advantage by availing himself of his position as co owner
We shall however assume in favour of the respondents that the defendant is in the position of a constructive trustee in view of the provisions of section 90 of the Trusts Act
Even upon that assumption we are of opinion that the defendant is not liable to pay interest to the plaintiffs for their share of the rent of the properties
The reason is that the trustee is liable to pay interest only if he commits a breach of trust under section 23 of the Trusts Act
There is also the restriction contained in section 23 of the Trusts Act namely that a trustee committing a breach of trust is not liable to
pay interest except in the cases mentioned in that section
It was argued by Mr section P Sinha for the respondents that the defendant was liable to pay interest under section 23b of the Trusts Act because there was unreasonable delay in paying the trust money to the beneficiary
We are unable to accept this argument as correct
In 171 our opinion section 23b contemplates cases where there is an obligation on the part of the trustee to pay the trust money to the beneficiary at fixed intervals or on demand
In our opinion there is no question of breach of trust on the part of the defendant in the present case and the provisions of section 23b of the Trusts Act are not attracted
The view that we have expressed is borne out by several authorities
In Blogg vs Johnson1 Lord Chelmsford LC stated that the Court will not charge an executor who has been guilty of delay in accounting with interest on arrears of income unpaid by him
In that case X was entitled to a life income from the estate of her husband and died in 1861
A bill was filed by her executor in 1862 against the executor of her husband s will who had been his partner in business for an account of income due to her estate in 1863 accounts were directed
In 1866 a certificate was made finding that a large sum was due from the husband s executor
It was held by Lord Chelmsford LC that he was not chargeable with interest before the date of the certificate
Again in Silkstone and Haigh Moor Coal Co vs Edey2 it was held by the Chancery Court that upon the setting aside of a sale by a trustee of trust property to himself and the reconveyable of the property to the beneficiaries it is not the practice of the Court to charge the trustee with interest on the rents and profits received by him since the date of the sale
Interest was however charged on arrears in some cases as in Malland vs Gray1 and Guildrey vs Stevens1 but these cases fall within the range of another principle of equity that where an executor or a trustee unnecessarily detains money in his hand which he ought either to have invested or to have paid over to the person entitled to it he will have to pay interest for it
As Lord Chelmsford LC observed in Blogg vs Johnson1 at p 228 Where money is thus improperly retained it appears to me to be immaterial how the sum has arisen whether from a legacy or a distributive share or a residue or the arrears of income
In the latter case the claim for interest is not made on account of the arrears but for the improper keeping back or a sum of money from whatever source derived which the executor or trustee ought to have paid over
 We have already given reasons for holding that the provisions of section 23b of the Trusts Act do not apply to the present case and the plaintiffs are not entitled to claim any interest on arrears of rent and the High Court has fallen into an error in granting such interest
The next contention raised on behalf of the appellant is that the Commissioner examined the accounts and submitted his report from July 2 1937 to December 31 1954 and the High Court was not justified in granting a decree to the plaintiffs for the subsequent 1 1867 2 Ch
A 225
3 ER 744
2 4 172 period from January 1 1955 to April 11 1957 on the basis of the figures found from the Commissioner s report
It was argued that the High Court had no basis for assuming that the same rental income was received by the defendant for the period from January 1 1955 to April 11 1957 as for the prior period
In our opinion there is great force in this argument and we should in the normal course remand the case to the High Court for a finding as to the accounts of the subsequent period
Mr Sinha however pointed out that the litigation commenced in 1942 and has already been pro tracted too on 
We do not therefore wish to remand the case to the High Court for further inquiry
Having examined the evidence on the record of this case we consider that in the circumstances a sum of Rs 2400 instead of Rs 3100  for the period from January 1 1955 to April 11 1957 should be granted to the plaintiffs as their share of profits
We direct that the interest may be granted to the plaintiffs at the rate of 6 per cent pa from November 20 1962 which is the date of the final decree on the amount found due to the plaintiffs
Two other points were raised by the Solicitor General in the course of argument
It was pointed out in the first place that First Appeal No 23 of 1957 filed by the plaintiffs in the High Court was barred by limitation and the High Court should have dismissed the appeal on that ground
It was argued that the trial courts judgment was delivered on April 11 1957 and the appeal to the High Court was filed on July 22 1957
A certified copy of the judgment was delivered to the plaintiffs on May 4 1957 but the endorsement on the certified copy with regard to the date was fraudulently made
An application was made by the defendant to the High Court on November 20 1961 drawing the attention of the High Court with regard to the endorsement on the certified copy of the judgment
There is however no reference in the judgment of the High Court on the question of limitation and it should therefore be taken that the point was not pressed on behalf of the defendant at the time of the hearing of the appeal by the High Court
It is therefore not possible for us to entertain the argument of the appellant at the present stage in the absence of any finding of the High Court
The other objection put forward by the Solidtor General is that the High Court has not taken into account vacancies in the computation of the rental income due to the plaintiffs
It was said that the High Court was wrong in holding that the defendant was liable as a trustee for the rents he ought to have realised even though there was no letting of the building
The Solicitor General may be right in his argument that the defendant cannot be held liable as a constructive trustee for the rent he has not realised from the tenants and for the premises which were not let out to tenants and which had been lying vacant but the ground upon which the High Court has made the defendant liable is different
The High Court has taken the view that the defendant has 173 not kept proper accounts of the income of the rents realised from the shops
In the absence of proper accounts it is not possible to accept the case of the defendant regarding the vacancies
In our opinion the finding of the High Court on this point is not vitiated by any error of law and the argument of the Solicitor General must be rejected on this aspect of the case
For the reasons already expressed we hold that these appeals should be partly allowed with proportionate costs and the decree of the High Court dated November 20 1962 should be modified to the extent indicated in this judgment
Appeals allowed in part


Summary:
The plaintiffs instituted a suit for partition of immovable property constituting two blocks and for rendition of accounts
They claimed that the property was purchased with the capital of the partnership firm in which the plaintiffs and the defendant were Partners and that by two documents dated July 2 1937 and July 16 1937 the properties continued to remain in the ownership of the partnership firm though the firm was dissolved in 1937
The defendant contested the suit on various grounds and also alleged that he had invested Rs 10000 for constructing a building on the land in one of the blocks
The trial Court granted the plaintiffs a decree for most of the reliefs sought
The High Court in appeal held that the plaintiffs were entitled to claim half share in the properties and that the defendant was liable to account for the income from the date of dissolution ie July 2 1937 in the case of one block and from 1939 in the case of the other block and furthermore that the plaintiffs were liable to pay half the amount spent by the defendant in constructing the building on one of the blocks
Upon a remand of the case to the trial Court a Commissioner was appointed to examine the accounts of rent realized by the defendant and on the basis of his report the trial court granted the plaintiffs a decree for the amount payable to them as their half share together with interest upto April 1957 and after deducting the plaintiffs  share of the expenditure incurred by the defendant on the building
In further appeals to the High Court by both the parties the decision of the trial court was substantially confirmed
In the appeal to this Court by the defendant it was contended inter alia on his behalf that the trial court and the High Court had erroneously decided that the defendant was liable to pay interest for the period prior to the institution of the suit on the half share of the rental income on the ground that the relationship between the par ties was in the nature of a trust under Section 90 of the Trusts Act 1882
On the other hand the contentions for the respondents were that interest prior to the date of institution of the suit could be paid to them under the Interest Act 1839 that the defendant was in possession of the entire properties as as Owner after the dissolution of the partnership by the document dated July 16 1937 and that as he 165 was realizing rents of the properties he was in the position
of a constructive trustee under section 95 of the Trusts Act and was liable therefore to pay interest on the plaintiffs  share of rent under section 23 read with section 95 of the Act and that he was in any event liable to pay interest under section 23b of the Trusts Act because there was unreason able delay in paying the trust money to the beneficiary
HELD Interest was only payable to the plaintiffs at the rate of 6 per annum from the date of the final decree on the amount found due to the plaintiffs
It is well established that interest may be awarded for the period prior to the date of the institution of the suit if there is an agreement for the payment of interest at fixed rate or if interest is payable by the usage of trade having the force of law or under the provisions of any substantive law as for instance under section 80 of Negotiable Instruments Act or section 23 of the Trusts Act
It was admitted in the present case that the two agreements between the parties dated July 21937 and July 161937 did not provide for payment of interest on the rental reilised by the defendant on the joint properties
Nor was interest payable under any provision of law governing the case
Under the Interest Act 1839 the court may allow interest if the amount claimed is a sum certain which is payable at a certain time by virtue of a written instrument but it was conceded that was not the position in the present case
The provision in section 1 of the Interest Act that interest shall be payable in all cases in which it is now payable by law applied only to cases in which the Court of Equity exercised jurisdiction to allow interest
168 B D
Bengal Nagpur Railway Co Ltd vs Ruttanji Ramji 65 IA 66 Thawardas Pharumal vs Union of India Union of India vs Rallia Ram  and Union of India vs Watkins Mayor  Co AIR 1966 section C 275 referred to
There was no force in the contention that section 90 of the Trusts Act applied to this case
A co owner in possession of all the joint properties does not become a trustee by the mere fact of his collection of the full amount of rent from the tenants
If the co owner is to be clothed with the status of a trustee itmust be shown that he has gained some advance in derogation ofthe other co owners interested in the property and that he gained such advantage by availing himself of his position as co owner
In the present case there was no allegation or finding by the trial court that the defendant had gained any such advantage
17O E Even assuming that the defendant was in the position of a constructive trustee he would be liable to pay interest under section 23 only if he committed a breach of trust and in the present case there was no question of any such breach on his part
Furthermore he was not liable to pay interest under section 23b as that provision contemplates cases where there is an obligation on the part of the trustee to pay the trust money to the beneficiary at fixed intervals or on demand
170 F
Blogg vs Johnson 1867 2 Ch
A 225 Silkstone and Haigh Moor Coal Co vs Edey  Malland V Gray and Guildrey vs Stevens  referred to