HUKUMCHAND GULABCHAND JAIN versus FULCHAND LAKHMICHAND JAIN AND OTHERS

HUKUMCHAND GULABCHAND JAIN versus FULCHAND LAKHMICHAND JAIN AND OTHERS

It was not proved that the appellant used the trust funds in his business; therefore, he is not liable to pay compound interest. The liability to pay interest arises only in equity when the trustee retains trust funds uninvested for a substantial period. The rule of damdupat does not apply to a trustee's equitable liability for interest, as the relationship is not of debtor and creditor due to a loan but arises out of a breach of trust.

Parties
Appellant: Hukumchand Gulabchand Jain; Respondents: Fulchand Lakhmichand Jain and Others
Jurisdiction
India
Judgment Date
16 February 1965
Procedural Posture
Civil Appeal / Appeal From Judgment and Decree of Bombay High Court in First Appeal No. 600 of 1955
Outcome
Appeal allowed; decree of High Court set aside; trial court's decree modified.
Legal Topics
Trustee Liability, Interest on Trust Funds, Rule of Damdupat, Public Charitable Trusts
Trusts and Charities Trustee Liability Interest on Trust Funds Rule of Damdupat Public Charitable Trusts

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Parties

Hukumchand Gulabchand Jain

Appellant

Fulchand Lakhmichand Jain and Others

Respondents

Procedural Posture

Civil Appeal / Appeal From Judgment and Decree of Bombay High Court in First Appeal No. 600 of 1955

Legal Issues

  1. 1 Whether the trustee is liable to pay compound interest on trust funds in his possession
  2. 2 Whether the rule of damdupat applies to a trustee's liability for interest on retained trust funds

Ratio Decidendi

It was not proved that the appellant used the trust funds in his business; therefore, he is not liable to pay compound interest. The liability to pay interest arises only in equity when the trustee retains trust funds uninvested for a substantial period. The rule of damdupat does not apply to a trustee's equitable liability for interest, as the relationship is not of debtor and creditor due to a loan but arises out of a breach of trust.

Court Disposition

Appeal allowed; decree of High Court set aside; trial court's decree modified.

Orders

  • The temple is entitled to recover from the appellant Rs. 21,324-3-7 upto the date of suit, with future interest at 4% per annum on Rs. 10,088-10-3 from the date of the suit till payment.
  • Appellant to bear his own costs throughout; respondents' costs to be borne out of the estate.