1987 (8) TMI 4 - HC - Income Tax

Summary

Issues Involved:
1. Entrustment of Money and Fiduciary Duty
2. Breach of Trust and Constructive Trust
3. Evidence of Payment and Use of Funds
4. Right to Recover Possession
5. Limitation of Suit
6. Entitlement to Mesne Profits

Detailed Analysis:

1. Entrustment of Money and Fiduciary Duty:
The plaintiff contended that he had entrusted money to Narayanan for the specific purpose of purchasing landed property in the plaintiff's name. Narayanan, the defendant in O.S. No. 349 of 1983, agreed to this arrangement. The plaintiff sent money to Narayanan from his earnings in Saudi Arabia, which Narayanan deposited and used to purchase properties. The court found that Narayanan held the money in a fiduciary capacity.

2. Breach of Trust and Constructive Trust:
The plaintiff argued that Narayanan breached the trust by purchasing properties in the names of himself and other brothers, instead of the plaintiff. The court held that Narayanan and the other defendants were constructive trustees of the properties purchased with the plaintiff's funds. The court found that the defendants had no ostensible means to purchase the properties independently, thus supporting the plaintiff's claim of breach of trust.

3. Evidence of Payment and Use of Funds:
The evidence included testimonies from the plaintiff and his cousins (PWs 2 and 3), who corroborated the plaintiff's claim of sending money to Narayanan. Exhibit A-23, a statement of account prepared by Narayanan, showed that Rs. 81,100 was received from the plaintiff. The court found that the defendants' claims of using their own funds were unsupported by credible evidence, and the properties were indeed purchased with the plaintiff's money.

4. Right to Recover Possession:
The court held that the plaintiff was the beneficial owner of the properties, as the purchase price was paid by him. The court cited precedents, including Harihar Prasad Singh v. Maharaja Kesho Prasad Singh and A. Rangaswami Pillai v. A. Subramania Pillai, which establish that when property is acquired in the name of one person but the purchase price is paid by another, a presumption arises that the transaction is for the benefit of the person providing the money. The court concluded that the plaintiff was entitled to recover possession of the properties.

5. Limitation of Suit:
The defendants contended that the suit was barred by limitation. However, the court held that since the defendants held the property for the benefit of the person paying the consideration, section 10 of the Limitation Act applied, and the suit was not barred by limitation.

6. Entitlement to Mesne Profits:
The court awarded the plaintiff mesne profits for three years and future mesne profits from the date of the suit till recovery of possession. The quantum of profits was to be decided in execution proceedings. The plaintiff's cross-objection in A.S. No. 359 of 1985 was allowed to the extent of granting future mesne profits.

Conclusion:
The appeals were dismissed, and the plaintiff was granted recovery of possession and mesne profits. The court found that the properties were purchased with the plaintiff's funds, and the defendants were constructive trustees, thereby entitling the plaintiff to the relief sought. The parties were ordered to bear their respective costs.