TaxTMI 
TaxTMI 
1934 (10) TMI 12
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.... rest of the funds are supplied by strangers to the Nattukottai Chetty firms and mostly take the shape of hundies. These hundies are given to the Vicharanaidar and sent elsewhere to be cashed. The proceeds of these hundies are supposed in due course to be paid to those who are responsible for the control and management of the chatram. The money claimed in this application was the proceeds of hundies cashed in Madras by. the Madras branch of the insolvent firm. The money so collected was credited to. the Kasi Nagar Chatram, the chatram in question, in the account books of the. Madras firm, interest on the amounts received being also credited. At times the-money was remitted to the Calcutta branch of the insolvent firm by debit and credit entries so far as the Madras firm is concerned. The present claim relates to the principal and the interest-thereon of the cash proceeds of hundies collected for the charity by the Madras, firm. 2. In Calcutta there is an association of persons who are called Nagarathars,. business people in Calcutta, and it is-the Nattukottai Chetty case that these-Nagarathars are all the Nattukottai Chetty firms doing business in Calcutta, though this is disput....
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.... what the agent of Nattukottai Chetty is? A. Yes. Q . What is it? A. To attend to the business of the firm, to-attend to the accounts and to carry on the business of the money dealings. Q. What is your idea? A. That is how it has been going on among: Nattukottai Chetties. Q. Is he same as the firm in your view? A. The firm is different and the agent who-carries on the business is different from the firm; 4. From these answers Stone, J. finds as-a fact that Swaminathan was not a member of the firm or the same as the firm but was an agent of the firm. With this finding of fact which is indeed perfectly obvious I entirely agree. Swaminathan was not a member of the firm nor was he the same as the firm. He was its agent, that is to say, he represented the firm in Calcutta in the same way as every agent of a Nattukottai Chetty firm represents the firm in the place where the firm has branches. There is nothing strange or unusual in this. That is a matter of common knowledge. It is impossible for the principals of Nattukottai Chetty firms to be-in several places at the same time; and the practice is for agents to represent-t....
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....local Calcutta Ar. Ar. Sm. firm occasionally prior to 1915, but continuously since then, was the Vicharanaidar. The term Vicharanaidar does not however involve any idea of trusteeship, but only of a person who looks after the internal management as manager, the Calcutta Nagarathars alone being the trustees thereof. 6. The case now sought to be argued and suggested in the trial Court is that Swaminathan in his personal capacity was the Vicharanaidar and not the firm. This case is put forward in consequence of some answers given by Swaminathan in his evidence on commission, Swaminathan being a witness called on behalf of the Official Assignee. As I have already stated, there are some stray and confused answers to that effect. A very large majority of the answers of this witness clearly negative any such contention. Mr. K. V. Krishnaswami Ayyar now concedes that Stone, J's. finding on this point must be understood to be opposed to the position now taken up by the Official Assignee. In my view it must be so understood. It is in accordance with the case raised by the Official Assignee and it is in accordance with the bulk of the evidence and also with one's knowledge of how N....
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....Swaminathan was acting as Vicharanaidar on behalf of the firm, but when it came to making the investments he did not represent the firm, at all but was a stranger i to it. In my view, such a position as that is wholly impossible. A Vicharanaidar is a Vicharanaidar for all purposes. He cannot be said when exercising some of those functions to be doing so on behalf of his firm and when exercising others of them to be doing so in an entirely different capacity. In my view it is beyond doubt that Swaminathan, when he invested the money, did so on behalf of the A. R. A. R. S. M. Firm, he being the sole representative and agent in Calcutta. The money was not invested in the sense that it was money put in by the Nagarathars, but it was money collected on behalf of the trust and allowed with the approval of the Nagarathars to remain in the A. E. A. E. Section M. Firm to be utilised by them in their business and earning interest. I mention this although as a matter of fact this, in my view, cannot alter the position. This case, therefore, has to be dealt with on the following footing, namely that the A. R. A. R. S. M. Firm was one of the Calcutta Nagarathars which was appointed Vicharanaida....
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....l Assignee Madras v. Krishnaji Bhat 1933 PC 148. In this case the well-known case of In Re Hallett's Estate Knatchbull v. Hallett (1880) 13 Ch D 696 was referred to and applied and also Pennell v. Deffel (1850) 4 DeG M and G 372. No reference is made to this case in the judgment of the trial Court and we must take it that it was not referred to although we are told that Mr. T.R. Venkatarama Sastriar who appeared for the present appellant wished to rely on it, nor is there any reference to Nagappa Chettiar v. Official Assignee, Madras 1931 Mad 251 which does not follow it and is overruled by the Privy Council case. 10. The learned trial Judge being of the opinion that the doctrine of tracing could not apply to the case before him, a reference to that decision could not be made. The learned trial Judge then pronounced judgment. 1 think that it would have proved the shorter course in the end if the learned Judge had decided all the points raised in the case. He has rejected the application upon one point only. Should his view be erroneous, obviously a remand to the trial Court becomes necessary in order that the other points left undecided both on the facts and on the law shoul....
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....udge as he-was clearly of the view that there could be no question of tracing, but these, cases should have been put before him. A reference to Official Assignee of Madras v. Krishna Bhat 1930 Mad 693 will at once make it clear that it is of serious-importance as bearing upon this case. A full examination of the facts of that case and of the judgment of Reilly and-Cornish, JJ., in the appellate Court and of their Lordships of the Privy Council makes that case in my opinion indistinguishable from this. 13. In that case, Messrs. Tawker & Sons-of this City were the defendants. They were a firm of Jewellers and collected certain moneys on behalf of the plaintiff's father. The latter subsequently directed them to hold a portion of that amount on trust, the terms being that Tawker & Sons should invest the same at a certain rate of interest in their own. firm or in any other firm as they might deem fit, the amount itself being payable to the plaintiff on his attaining 21 years. In pursuance of this, Tawker & Sons gave a receipt to the plaintiff's father for the money as fixed deposit in. the name of his minor son. A few years later, the plaintiff instituted a suit against Tawke....
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.... Ch D 696 as follows: There is no distinction therefore between a rightful and a wrongful disposition of the property, so far as regards the right of the beneficial owner to follow the proceeds; and the approval of the person investing of the investment of the money in the insolvent firm does not as the learned trial Judge thought it did, make any difference. The insolvent firm's position therefore was that they collected money on behalf of the chatram of which they were one of the trustees, the money (being regarded as trust money and being allowed with the approval of the Nagarathars, the trustees, to remain with the insolvents in the name of the trust to be utilized by the insolvents in their own business. The whole of the assets of the insolvent firm has come into the, hands of the Official Assignee. Of these assets the money in question is earmarked in the account books as belonging to the trust and the appellant asks that the Official Assignee should be made to give up that sum because by Section 52, Sub-section 1(a), Presidency Towns Insolvency Act, it has to be excluded from the divisible assets vested in the Official Assignee under Section 17 of the s....
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.... that this must obviously be so. In the face of these facts, it is useless for Mr. K.V. Krishnaswami Ayyar to contend that the insolvent firm was not a trustee for the fund and did not as trustee for the fund receive the trust moneys. When received, that money was separately entered in a chatram book kept by the insolvent firm in Calcutta and when collected by the Madras and other branches of the insolvent firm it was entered in the firm's books in those places as money belonging to the trust. As in Assignee, Madras v. Krishnji Bhat 1933 PC 148 the insolvent firm, like Tawker's were trustees and were, like Tawker's allowed to use the trust money in their business and as Tawkers did, they invested the money in their business and, as their Lordships of the Privy Council say on p. 210 (of 60 I.A.), it must be taken to have remained a part of the assets of their business and to have been there at the date of their insolvency and the beneficiary was entitled at all times to a charge upon such assets in the hands of the firm. "Upon the insolvency," their Lordships say "the assets passed to the appellant (i.e., the Official Assignee) but passed subject to the charge." The only....