B.

FIDUCIARY RELATIONS
hom property
jduciary Re
Relations.-The
or
term
power is entrusted "fiduciary relates to
for the a
ship of a erson to
another,
person benefit of another. person to
relationsthiz
ws in good faith for where the It is the
g t h t sa n d p o w
the benefit offormer is bound to exercise
ee and beneficiary. the latter,
e.g., as between
The fiduciary relationship
may arise in the
elationship or itit may not. Where
confidence is reposedcontext of a jural
r

latoeads
and that he to
transactio
leads to a transaction in
which there is a by one in another,
in derson in whom such conflict of interest and
confidence is reposed,
nship immediately springs
existence. into
Once it
fiduciary
ce, it is for the person benefiting springs into
by the transaction to show that
Ar narty was at equal advantage, that
ad disinterested advice, andnothing
the oth was concealed, that
other party had
the that the transaction itself
was
fair and without any element of 'unjust enrichment'. Where that burden
is not discharged, the Courts will interfere to restore what has been taken
y to the extent to which it constituted 'unjust enrichment'.
The doctrine of 'Unjust Enrichment' was originally based in English
Law upon the principle of assumpsit or had and received', and was declared
by Lord Mansfield in Moss v. Macfurlan' It underwent certain changes
through judicial interpretation, and came to be based more and more on
the doctrine of restitution. In the United States of America, the same
of quasi or implied
principle evolved though concepts of assumpsit and then
of restitution (American
contract, to the final form of a doctrine
under Sections 66 and
Re-statement).* In India, the principle was developed
that these sections
70 of the Contract Act, and it is generally recognised
than the doctrine as applied
Section 69 and 70) are much wider in scope
in England, and go far beyond it."
inhibit a
The mere existence of fiduciary
relationship' does not
but
deal with the cestui que trust,
ansaction altogether. The trustee may
transaction could be upheld.
i s peril to show that the
relationships)
in In re, Coomber,":
"They (fiduciary
oulton, LJ. said who is bound to bring
to an errand boy,
from the relation of myself relations which
d intimate and
confidential
back Change, up to the
most
where the one is wholly
Can party and another, Courts have
Can possibly exi
exist between one
trust in him."infinite
nt
the of his or
of the other, because particular category,
nds
ef used O cabin and confine the principle within a

Mad. 410.
.(1760) 2 Burr. 1005. & Co. Ltd,
A.LR. 1960 1960 Mad.
470.
2. Mrs Leslie & others, A.L.R.
Nellie share v. Pierce Lid.
Wapshe
Wapshare and
others v.
Pierce Leslie
& Co.

.4. (1911e
(1911) 1 Ch. 723, 728.
 154 INDIAN TRUST ACT, 1882

outward form.
As Sheridan has observed (Fraud in Equity, p. 88):
"The s
character of a person may be the consequence of a commerc
proprietary relation to another, or it may arise out of personal ar
Or
iduciary
considerations. Kerr says (Praud and Mistake, p. 202)
extends in general to all persons who, being employed or The dis
concerned ity
omestic
affairs of another acquire the knowledge of his
property" the
Viswanatha Sastrhi, J. observed in Eswara Gowd
Gowd'
v. Somase
"A transaction of purchase by a
1sekhara
position under circumstances in which his
person occupying a fid
be adverse to those of the
own
interests ars or
person who owns the
property and ay
interests he is bound to protect, is always
the utmost regarded by the courts
jealousy. If such a transaction to is wit
beneficiary whose interests have been adversely affecimpeached hby the
must show that there has been no ected, the purch
taken by him of information
fraud, or concealm chaser
ment or advantag
acquired by him by the virtue of
position...He must also show that the
advice, and every kind of protection in beneticiary had independa
of purchase." connection with the transacti
n
In Fax v.
Mackreth, the defendant Mackreth
plaintiff Fox of certain property, being a trustee of the
sum of agreed to buy such
£39,500 and such argument was property of him for a
being subsequently duly carried out by
executed. Mackreth conveyances
property toPage for £50,500, and immediately afterwards sold the
bill to have
advantage of it. It wastheheldplaintift,
the estate from discovering this, filed his
that Mackreth
his cestui que trust
que trust continued to while the relation of having purchased
communicated to the cestuisubsist between them, and trustee and cestui
him as trustee, he que trust the without having
without having
must be declared as value of the estate acquired
the sum
produced by the sale to Page. constructive trustee for Fox as byto
Express and
or
constructive. An Constructive Trust.-1rusts may be express,
words or by deed or express trust is created implied
trust arising from will. An implied, expressly by the settlor by
presumed or
trust is a trust the presumed intention of the presumptive trust is a
arising by construction of
intention of the owner parties. A constructive
of equity,
confidence for him to hold the property, when it would independently of the
obtains the be
renewal in his name property for his benefit, as where aabuse
a an or

of a lease held
Strahan says that a by him as trustee. trustee
poSsessedas of property constructive trust arises where a (Snel
himself will induce through such an abuse person
of confidence beco
hold it for the benefit the court to
hold that reposeu
arises in cases of of the person injured byintheconscience he is bou
beneficiary, guardianpersons under fiduciary breach of confidene
1. 1956 Andh. W.R.
and relationship, e.g., truse
ward, directors and
2. (1788) 2
Cox 320.
911. sharehoders, etc
 LECE
B. FIDUCIARY RELATIONS
PUNE
legal owner of the property
having
, 1 n p e l st h

another nerson in respect of a some

rsOnal rom
dvantage fror
adva that position, to property and whofiduciary position
has obtained S
for whe hold that some
whom the
fiduciary character isadvantage
person
of thne for the
efit
AbyCich
structive trurust, is a
creature of sustained.
whi the holder of legal title equity, defined as a remedial
is
derue

enefit
another who in good conscience held to be a trustee for
is entitled to the
the
interest," beneficial
.
an inflexible rule of
court of equity that a
a
aless
otherwise expressly
is not, unle person in a fiduciary
i
pasik
protit; h eis not allowed to put himself in a
provided, entitled to make a
and duty conflict.3
position where his interest
fiduciaryest is the estate or interest of a trustee in lands or
opposed
as opposed to the beneficial interest or enjoyment thereof.
ey,
obligations
Obligations in the nature of trusts.-The cases of certain
ions in the nature of trusts have been discussed separately in
hapter. For a study of fiduciary relations it may be stated that
nother cha
an obligation in the nature of a trust is created in certain cases discussed
an
Chapter X of the Indian Trusts Act, 1882. Under Section 81 of the Act
shere the owner of property transfers or bequeaths it and it cannot be
inferred consistently with the attendant circumstances, that he intended
to

dispose of the beneficial

interest therein, the transferee or legatee must
hold such property for the benefit of the owner or legal representative.
his
80 and 82
Benamidar-In the case of a benamidar, under Sections
the
benamidar holds the property for and on behalf of
of the Trusts Act, a
which there would be resulting trust in respect
real owner in consequence of
the real owner. The benamidar is in fiduciary
of the property in favour of
the obligations of a person in
relationship with the real owner and has all
the real owner. A benamidar is no more
such fiduciary position towards benami though his acts
who holds
than an ostensible owner of the property
real owner.
in certain circumstances would be binding upon the
are no doubt
Directors of a company-Directors of a company
shareholders. But they
the but not for the individual director is
trustees for company
sense of the
term. The office of a
full
are not trustees in the only to an equitable obligation
to account to
nat of paid owner, subject and who are
in the relation of a trustee,
SOme persons to whom he
stands the affairs
selected to manage
directors are persons
ce8tui que trust. The office of trust,
of shareholders; it is an
benefit
The company, for the it is their duty to perform fully and entirely.
c h , if they undertake, fiduciary
no one
who has duties of a
is that has or
The general rule of equity engagement in
which he
enter into
allowed to of those whom
aeure to perform is with the interests
conflicting
personal interest as a trustee,
ave a
any property so acquired
Viscount Sankey in Regal
holds
ne is bound to protect. If he
protect. he noia
he und trust
to cestui que
18 bound to account for it
10l5.
Corpus Juris Secundum Vol. 89,
51.
p.

2. Bray v. Ford, (1896) A.C. 44, 491.

Hudson, 16 Bev. 485,
3. Railuway Co.
& North Midland
v.
 INDIAN TRUST ACT, 1882
156

(Hastings) Ltd. v. Gulliver. Lord Russell of Killowe

Ltd. v. Dominion Bank," wen
In E.B.M. Co. remains that the old company (actin.
fact
observed: "The overriding in general meeting
and not by its shareholders
through its directors for the benefit to those directors. In such
purported to apply its property the court will treat the transaction
a case it is
well settled that ag
unenforceable and refuse even to enquire whether the company has derived
and that on the ground that the company has not
any benefit from it;
received the protection to which it
is entitled."
If the directions misuse their powers as directors for their own
transaction is against the company of no effect, and the
advantage, the as
court will not inquire whether the company derived any benefit from the
transaction.
In Cook v. G.S. Deeks," three directors of a company carrying ona
business of railway construction contractors obtained a contract in their
own names to the exclusion of the company. The contract was obtained
under circumstances which amounted to a breach of trust by the directors
and constituted them trustees of the benefits on behalf of the company. By
their votes as holders of three quarter of the issued shares they
subsequently passed a resolution at a general meeting of the shareholders
declaring that the company had no interest in the contract. The action was
commenced by a shareholder of the company on behalf of himself and all
other shareholders against the directors and the company for a declaration
that the directors were trustees for the company of the benefit of a contract
made between them and the railway company and for ancillary relief. Lord
Buckmaster, L.C. held on the facts that, if the contract in question was
entered into in such circumstances that the directors would not retain the
benefit of it for themselves, then it belonged in equity to the company and
ought to have been dealt with as an asset of the company.
Section 88 of the Indian Trusts Act, 1882, however lays down where
a director of a
company, legal adviser or other person bound in a fiduciary
character, gains for himself any pecuniary advantage, or where any person
so bound enters into
any dealings under circumstances in which his own
interests are, or may be, adverse to those of such other
and thereby
gains for himself a pecuniary advantage, he must holdperson for the benetit ot
Such other person the
advantage so gained. The directors of a company
are, however, not
express trustees, and in order to apply Section 88
Trusts Act to a transaction of ot tne
sale of the company's land to
necessary to show that the directors have them,
gained for themselves a
pecuniary advantage by selling the lands of the company to themselves and
their relations at a lower
price."
Secretary and shareholders of a defunct The
plaintiffis, who represented the entire private company ate
1. (1942) 1 All E.R.
body of shareholders of a pmva
378 at 381,
 B. FIDUCIARY RELATIONS

company the O.y 157

Estates Ltd.
undatea,
pitea
for
possessi0n, vesting or(16th defendant) which was
used

d to have been
allege nd undue transferred through
pertiesallege.

epresentatior reconveyance of
the exercise the suit
influence on the of
perce Leslie
& Co. Ltd.).)and
defendants part of defendant 1 fraud,
2 to 14 (M/s.
eendant, who

fidence, in fav
ne
plaintiffs
the O.V.
in a
fiduciary through the first
ndconfidenca
fiden Subordinate
Estates Ltd., the relationship of
15th defendant trust
e Judge of
Nilgiris dismissed (new
to the
anpar
plaintiffs
p a n y )

f i p d i n g s a d v e r s e

upon all the main issues. the suit upon

however, allowed to appeal in part. The High Court,
Madr

The
High Court negatived the contention on behalf of the first
defèndant
that they
company that they were purely secretaries not
ote: that they were given n0 wider managing trustees
Becreta. ng
aries working
responsibilities than those of
under the board of directors, and that, in respect of
the attempted sale of the estate, they were not
agents for sale. It was held
that where confic idence is reposed by one in another, and that leads to a
which there is a conflict of interest and duty in the
action in which
trawhom uch confidence is reposed, fiduciary relationship immediately person
i n t o existence. In the present case, the High Court found that the
o r s of the 'old company who were quasi trustees, did later become
aior shareholders or partners in the 'new company' and that constructive
fraud was perpetrated by the first defendant company, which led to their
The devices of transactions between the old and new
Srmiust enrichment.
were transparent, and could not be
companies, as distinct legal entities,
the fraud.
held to conceal or suppress
held that even during the lifetime of a legal
The High Court further for acts
its shareholders could maintain a suit
person like a corporation, the corporation, the
acts of fraud, etc. After the dissolution of
ultra vires, shareholders as the
to recognise the
Indian Company Law appeared debts due to the
of undistributed or concealed assets,
Tesiduary legatees the liquidator,etc."
corporation not recovered by the
Babu v Official Assignee, Mardas,
Partners of a firm.-In that the partners
of a firm hold
.
Council emphasised representatives as
Lordships of the Privy their deceased partner's Trusts
a fhduciary relationship towards Section 88 of the
partnership property.
properties or
his interest in the this principle. the If
rds recognition to then the suit
to
gives a statutory are known,
Only advantage or gain
the
ass the pecuniary and governed by
for money the
O suit
would be a simple the profits, or
recover the same
me
Act. If,
however,
the
Limitation after taking
relevant of the be
determined
Provisions c a n only r e n d i t i o n of
account
Derum
pecuniary advantage or gain suit for
L i m i t a t i o n Act. By
then the
partnership of the
account rof the
the dissolved relevant
provisions the n a t u r e
of the
the Trusts Act,
applvinSoverned
by Section 88
of the
h e provisions
of
A.I.R. 1960
Suit
Sut does not change." Ltd. and
others,
Leslie & Co.
Pierce
others v.
Wapshare and
MaVelle,
Madras 410. 53.
2. AIR 1934 PC. Allahabad
A.l.R. 1964
3. p t Nath v. Satish Chandra,
 1882
INDIAN
TRUST ACT,
t h ep 7

158 o ft h e
Act enjoins upon the partn.
Trusts ner who
Section
Indian
88 of the assets
uberrima fides a I

possession of the partnership f o r m e r m u s t account a r d

remains in that the
of the other partner,
of the working ofna the laid
immec
the interests as a
result
have been accruing sneship
profits which former partners. Strictly amou
a t t r i b u t a b l e to the
share of the deneng
assets but there is no a
after
other partner,
not trustee of the to anoththe
partner is
a relation one
a fiduciary
fact that the partners standing
in the surviving partner to t and h i s ca
n e v e r permit
in such a case equity will his excluSive personal profit T Or respe

of the other for cours

to utilize the property o w n e r of the property. th"
he
over to the e
makes a profit, it must be paid Use o ft h
Courts in England have always acted acted
of which produced the profit, upon not

the equitable principle. of the

Family.Their Lordships
w i t k

Joint Jud:
Manager of a

Committee observed in Arumilli Perrazu v. Arumilli Subbarayadu,2 t

the warning they have often
Lordships desire once more to repeat
m o r

without qualification in India the

ven
rules
against attempting to apply
a n d

applicable to strict accounts between trustees and cestuis que trusts he the

exist in this country (in England), because in trust there are a number
that su

fiduciary relationships in India to which these rules cannot in their entir

apply. This does not mean that breach of established duty should be lesa
severally dealt with in India than in this country (England), but that there
here
are fiduciary relationships which do not involve all the duties which are W
posed upon what trustees have (in England). The office of the manager
of a joint family estate affords an illustration of this difference. In the
absence of proof of direct misappropriation, or fraudulent and improper
conversion of the moneys to the personal use of the manager, he is liable
account for what he received and not for what he ought to
have received if the moneys had been profitably dealt with.
or might
Guardian.--A guardian holds the property of his ward in a
fiduciary
capacity. His obligations are in the nature of a constructive trustee.
A de facto guardian is
fiduciary position. His relationship is
a

distinguishable from the de jure guardian.

A Mohammedan, who acts as a de
facto guardian of his brother's
property, places himself in a fiduciary position and becomes liable to pay
interests on the liquid assets held
23 read with by him for the minor by virtue of Section
Sections 94 and 95, Trusts Act. If the
would be liable for the interest." guardian dies his estate
Banker and Customer.-In
said: "Money, when Foley v. Hil, Lord Cottenham, LC.
of the paid into a bank, ceases
altogether to be the mone
principal; it is then the
money of the banker, who is
an
equivalent by bound to
he is asked for it. paying a similar sum to that deposited with himre
The money
paid into the banker's, is money wuby
1.
Featherstonhugh v. Fenwick, (1810) 17 Ves. knOW"
Jun. 298; Stevenson
Aktiengeellshajt
Bhan, A.L.R. 1958Fur Cartonnagen Hugh and
Industries, (1918) AC 239; and Mansha >o"
. .
Tei
2. Punjab 5.
1.LR. 44 Mad. (1921) nu
3. 656 P.C.
Syed Abdul Wajid Sahib v. Osman Abdul
4. 2 HL 28.
Rubb, 1943 Madras, 254.
 B. FIDUCIARY RELATIONS

incipal to, placed

there for the 159
is
it is then the banker's
then
purpose of
he
banker;
being under the
money."
the an
earlier ca
Devanynes v.
Nobel, Sir William contract
In
it down, generally, that
nart of his general money Grant, M.R. had
paid
assets and he into a banker's
n
inmediately a
i d

ately in the
the later case of is becomes
loy v. Hill, observedBurdick v. Garrick?merely
and
t; a debtor
for the
iting money is not in Lord
banker who Hatherley, L.C.
after
"A mere
i sc u s t a
any
fiduciary relation whatever to charge of takes
espectto the lar
coins or notes
the particula
deposited, him with
tradeto make
to mak use of them for his own because it is the
YSe of ordinary
he money
d invests the profit. He does make use
ehem,Ceom
not require fror him those very deposited
coins or
with him, and his
customer does
With h i m . "
exchequer bills which he deposited
ordinary relation between a banker and
The ordin:
aid by the latter to the former, is that ofcustomer, in respect of
debtor and creditors,
non
and duciary relationship will be crated in the absence
no fidi of
customer whihich convert the banker into a trustee in directions by
of the
the respect
so Daid. A trust will exist when the banker is to collect and remit,
sum
ot where he is t0 use and repay. Where a customer remits money to
no
but
hanker with directions to receive such money in fixed deposit for a certain
th another sum to be remitted, the banker does not,
period together with
Phon the latter amount is not paid, hold the former sum in trust by virtue
he cannot claim to hold it as a fixed deposit
af such direction, although
after the limited period.3
payable only
observed by Sir George Jessel that where a
it was
In In re Hallett's, with his own
which it was his duty to keep separate,
person mixes money, balance in his hands must be
and afterwards fails, the unspent
of.
which he had the right to dispose
moneys
taken to include the money that on the
was held by the
Court of Appeal in that case
Accordingly, it instructions
a cheque was
sent to a bank with
where
facts in Dale's case, the bank collected but did
not remit
amount, and
to collect and remit the been to allow the
decision would have
the proper out of the
and afterwards failed, proceeds of the cheque
whole
to r e c o v e r the case was wrong.
remitting creditor actual decision in that
that the where a banker was
instructed
general assets and Plitt,' failed, it
Brown Ex parte and the bank
uarly, in In re proceeds on trust
recoverable out of the
and hold the
COllect a cheque
was
amount of
the cheque considering
this case
the full mind in
Sneld that borne in to mix it
however, be is not entitled
assets.
It must,
as a
trustee
accordance
with the
receives money in
that a banker vho that it why
it w a s Hil, Lord
v. Hul,"
Lord
with his own
own s e it,
use
u and
and
and
and that tte
Estate." InIn Foley
Foley v.

wh in In re
Hallelt's
explained
ple
. 1 Mer. 350 at p. 368. I.LR. 32
Mad. 68.
p. 240.
2. (1869-70) 5 Ch. A. 233,
of Madras
v. G. Smith,
Assignee
10jicial
4. (1879-80) 13 Ch. D. 696.
5. (1879-80) 11 Ch. D. 772.
6. 60 LTR 397.
7. (1879-80) 13 Ch. D. 696.
8. 2 HL 28.
 INDIAN TRUST ACT, 1882
160

Brougham pointed out that, if a banker was a trustee he could

the trust money a s his o w n

without trust, and in Thenot use
a breach of
Australian Insurance Compuny v. Randell,' it was held by
by tho
the Judicial
Committee to be an indelible principle of trust property that a tro
South
never make use of it for his own benefit. Mr. Heber Hart in ruste can
his be
Banking'. 2nd edn., p. 485, quotes Cane, J., who decided In re B r k on
parte Plitt, as having observed during the argument "Where th wn Ex
the banker is to collect and remit, there is confidence and trust
st. Where debtor
the debtor is to use and repay on demand there is no trust."
Debtor and Trustee.-A debtor is not a trustee for his
banker is a debtor in relation to the depositor. When money is do
credite A
with a banker, the banker can deal with it as he likes
and make ed
for himself by its use. He can also mix it with his own
so in the case of a trust. If the
banker
money. This i
goes bankrupt, the depositor
only realise dividend from him
along with other creditors. He can
to follow his money or has
property and recover it from the hands no right
persons. A cestui que trusts has, however, a of th
right to follow third
the tma
property in the hands of a third person when it has rust
of the latter into the hand.
come
inconsistently with the trust. ands
Co-sharers.-A co-sharers out of
possession of the co-owner, so long as hepossession cannot complain of
refrains from setting mere
ere
to share in that
possession.
the co-sharer, it must
In order to up any
give rise to a cause of action claim
be proved that his against
Consequently
of more than his
in a case between
co-sharers
act
amounted
mere proof of
to ouster.
share or even to the sole
particular extent of the whole in occupation
parcel land is not enough for
of
a suit for success of another respect of a
compensation,
been established." unless a case on facts co-sharer in
showing actual ouster has
Where lands in India
isentitled to cultivate in are held in common
his by co-shares,
each co-sharer
manner any
part
of the lands interest in a
own
proper and husband like
his
co-sharers, but he is liablewhich is not
being cultivated by another of
respect of such exclusive use of to pay to his co-sharers
in common
by a co-sharer, is lands. Such an exclusive
use of
in compensation
proprietary right not an ouster of his lands, held
A
as
co-shares in the lands. co-sharers from the
co-sharer who is in
(irrespective of
without ouster what his share of separate
possession of
such land would the common land
co-sharers is under noexclusion of, or without objectionbe from
or
upon partition)
to them
in
respect of obligation objection
either to account
the profits
from the other
other
Compensation in such earned by
or to
pay compensation
conscience and is to be cases is a matter of him by his own industry
case. Whether there is moulded according to thejustice, equity and
Circumstances of the caseexclusion or ouster would facts of each particula
1.
(1869-71) 3 P.C.
under
consideration depend on the facts and
2. 60
3.
LTR 397. 101. Separate occupation py oone
4.
Ashutosh v. Amal
Midnopur ZamindryChandra,
Co's
54 Cal.
W.N. 2 D.R.
case, A.I.R. 1924 191.
P.C. 144.
 B. FIDUCIARY RELATIONS
161

is
co-sharer is not necessarily exclusive occupation. It may or may not be,
rding to
the
the circumstances that are proved and each case has to be
i its own facts.
accor

d e c i d e d
on

Continued diversion of elephants (common property) by the defendant

harer after the demand of plaintiffs co-sharers for accounts and
Cssion of the assets will entail compensation for diversion on equitable
pnds in view of the facts than the defendant held the estate in his
harge in a fiduciary capacity and made use of it for personal purposesto
their
th
exclusion without their knowledge or consent, express or implied.
with the
Co-owner-A co-owner has no fiduciary relationship
in posseSion. Co-heirs, are, however, in a fiduciary position
co-Owner of co-owner towards
towards one another. Though the relationship one
deals with
another is not of fiduciary character, still when one co-owner
to it and further
co-owner's share and assumes responsibility in regard
his co-owner on his death,
his
the minor son of the other
acts as guardian of treated as a trustee
creates such fiduciaryrelationships as to be
conduct
co-owner2
for the other of real
between tenants in
common

There is no fiduciary relation

of real estate by leaving
tenant in common
estate as such. Nor
can one
co-tenant impose upon
of the property in the hands of his
the management character.3
of a fiduciary
him an obligation is a person who,
tort.-An executor de son tort
Executor do son with the goods of
intermeddles
administrator,
himself liable to
nor an
neither executor
being acted he renders
has so
When a man
of being sued by
the deceased. administrator and also
executor or none
action by the rightful liabilities, though
He has all the
of the deceased.
legatee account as if hehim
a creditor or
of an executor. The court
will make
of the privileges,
trustee. the trust,
were the rightful
trustee do son tort
is a stranger to
tort.-A does not really
Trustee de s o n trustee when
that character
of a trustee.
the character an express
who a s s u m e s practical purposes
He is for all another but he
on behalf of
belong to him. a d m i n i s t e r s property the m e r e
Agent.An agent An agent is
owner of the property. of agency;
beneficial the subject-matter
is not the with regard to
representative
of the principal
is the sole
owner.
ordinarily plead
trustee cannot
his principal express the
Limitations-An
entitled to claim
Statute of other fiduciaries
are
limitations; but
the statute of
limitation.
of
benefit of the law

F.B.
1954 Assam, 33,
v. Tahir Ali
Laskar, A.I.R. Madras 638.
Arshad Ali Laskar A.I.R. 1934
Rowther v. Asia Bibi and others,
PeerMohideen
Dr. Trafford, 1897 A.C. 180.
John Kennedy v.
 TRUSTS
326

donee was in a position to dominate the old couple. He might have

his undue intluence under the guise of his services.
5. Fiduciary relationship induced by confidential information
exercisedA
relationship is induced by confidential information where one Dere.ar
information to another person for certain purposes of his own interes
relation between the doctors and patients, solicitors and clients, rel.he
advisors and pupils and such other relations where one is under obligat
to divulge confidential information come into this class. A fiduciary wh
information belonging to his beneficiary for his own benefit is accOunt
the beneficiary as regards the gain, if any, made by him. e

Fiduciary Principles:
i. Fiduciary transaction must be faith
good transaction.-A fiduciary
ary is a
person who is under confidential obligation to protect the interest of an
person who has reposed the confidence in him. It does not matter whetha nother
confidential obligation arises from a contract or a gratuitous the
Macnaughten remarked: undertaking, Lord
"Nor do I think it can make any difference whether the
from a contract or is connected with some
duty aris ses
previous request or whether it is
self-imposed and undertaken without any authority whatever" 30
All the transactions between the fiduciaries and
faith transactions otherwise beneficiaries must be good
they are unfair and liable to be set aside. Viscount
Sankey in Regal (Hastings) Ltd. v. Gulliver, laid down, the
follows: fiduciary rule as
"The general rule ofequity is that no one who has the duties of the
fiduciary nature to perform is allowed to enter into engagements in which
he has or can have a
personal interest conflicting with the interests of
those whom he is bound to
protect".
In Nellie Wapshare v. Pieru Leslie &
Co.,32 Anantanarayan, J. observed:
"It is the first expression of a
consciousness ofembarrassment; of a
possible conflict between interest and duty, of a glimmer of awareness of a
person in fiduciary capacity, that he must proceed with care, search he
breast and clear himself before he
is also the last." procures an
advantage, unfortunately t
iduciary transaction embraces cases in which there has been honesty
not
dishonesty. Equity is not concerned to enforce fiduciary relationship but anu
concerned to see that if the ilin
accordance with his confidentialfiduciary acts at all, he acts honestly
a
the interest of the obligation under which he is
bound to Phe
confiding party. In Controller of Estate v. Alok MI
Supreme Court has observed that when
a person purchases the propert
in

another's name even without

his request, the transferee is bound to otecthihis
confidence. Benami transactions
come under this
pn ofof a
The pos1
benamidar is that of a constructive category.
trustee.
29. Regal (Hastings) Ltd. v. Guliver, (1942) 1 All ER 378.
30. Lyell v. Kennedy, (1889) 14 Ann
exercised FIDUCIARY RELATIONS
iest.duciThear
on gives
2.
inequita
Fiduciary
expense of the the
Profiting the
nature.-The at

beneficiary general ruleexpense

is
whose interest that Beneficiary a
of 327

ed byfiduciary
fidu
the
he is fiduciary may notInteresest.-Its
elhoigiusesonotus
tion
reason of his being
afits belong to the
in
a many ways.
fiduciary, must be
bound
Those protect.
handed profits which
retain for his own sake.beneficiaries and it is
prot
profit the
Profits
come
to
may be
him
over to to
at

table to
the
beneficiaries. by
inequitable for the beneficiarySuchto
Eiduciaries
aries must not be
not may
ontrol. Fiduciaries
their control.
purchaser.-The
purchase property the
of general rule is that the
an to them to exercise are not tothe
become beneficiaries held by them in
give
control over it. The owner of the
ary is a has bee summed
up by Vishwanath essence of this property which is
another Gowd," as follows: fiduciary principle
Shastri, J. in Eswara Gowd
her the "A transaction of
v.
Samasekhar
g, Lord under circumstances in purchase by person occupying a
a
which his own fiduciary position
interest
those of the person who the owns
are or
may be adverse to
to protect is always property and whose interests he is bound
arises a transaction is
guarded by the courts with the utmost
jealousy. If such
er it is impeached by the beneficiary whose interests
adversely affected, the purchaser must show that there has beenhave been
no fraud
or concealment or
advantage taken by him of information
good by virtue of his position. He must also show that the acquired
beneficiaryby him
had
scount independent advice and, every kind of protection in connection with the
ule as transaction of purchase.
In this connection, the general rule is that trustees are not to become the
of the owners or lessees of trust-property which they hold for the benefit of the
which beneficiaries. This rule is independent of any question of inadequacy of price or
the
sts of unfairness undue advantage, the sale may have been at auction and
or
well above the reserve price which
trustees may have takern the bidding
and not from his conduct in the particular
ed: derives from his status and position
: of a case.
the property under his control at
s of a Even if the fiduciary has purchasedunfairness or undue advantage, he is
of
without any question and character and not
h his adequate price, from his position
which derives
is such, that he
must
still caught by the rule
ely it transaction. Fiduciary duty
particular on his part.
rom his act in the deemed immoral
at all as it is is that a
the purchase basic principle
not contemplate s e r v i c e s . - T h e
tor
and
n a t u r e of
fiduciary remuneration

4. G r a t u i t o u s is not given any

t it is voluntarily and to accept or
u n d e r t a k e s to act forbids a fiduciary
nduciary v. Ford,35 to do s o by
nd in rule in Bray unless empowered
nis services. The general employment himselt. This rule
of paid beneficiary
h i m s e l f to a position by the
otect
matter
not
PDOnt appointment
or
beneficiaries. It does
3 the original the
of his
considerable

e terms
trustees
but to all have been of a
t y in to the may
not only the fiduciary,
es rendered by to
t his services
has been
applied
the nature. services,
This is s0
o ff a
value or of a professional nature
of fiduciary fiduciaries.

all
of
gratuitous generally
he principle it governs
u n d o u b t e d l y

rectors and
 328 TRUSTS

because no person is entitled to payment simply for the reason that

ufficient
he
has
undertaken to act in the interest of another person, though it is sufficias
make him a fiduciary. But it is rather horrifying to note that fiduciaries
seen taking benefit in one way or the other. are
5. Onerous nature of fiduciary office.-Fiduciary office is onerous on
one.
pertormance of his office a fiduciary must act in the interest of the per
whom he is bound to protect as a matter of confidential obligation he
undertaken to fulfill. He has to gain nothing for his work in absence of
authorisation providing for remuneration to him. His conduct is required to
of a higher integrity and utmost good faith. In the management of the affair
entrusted to him, he has to observe reasonable standard of business airs
If he fails to do so he is
efficienr cy.
subject to onerous personal liability. He is debarred
from
competing in business which may affect the interest or the person whom
he is bound to protect. He is om
deprived of many opportunities which wouldhe
available to him if he were not a fiduciary. The reason for this is
the sense that the business which the obvious in
fiduciary transacts, or the property
which he handles is not his own or for his own benefit but for the
another person as to whom he stands in a relation benefit of
implying and necessitating a
great confidence and a high degree of good faith on his part as
transactions between him and his regards the
beneficiary who rely on him. On this
reasoning in Rajendra Prasad v. R.P. Sao,30 it was held that a tenant for
life.
co-owner, mortgagee or other qualified owner of any
property,
all areunder
fiduciary relationship.
Finally, it may be concluded that the conclusions of the decision in the
English case,/ are important from the point of onerous duty of the
Wilberforce, J., had held in this case that the shares were fiduciary
trust for the beneficiaries and that Broadman was
held for constructive
accountable for the profits
he made, less a sum for his skill and effort.
of Lord did not
However, the members of the House
distinguish between accountability and constructive trust.
It is submitted, that there is a world of difference between
specific property on trust and a duty to account. Each of these duty
a to hold
situations is
related to, but different from the
equitable remedy of tracing.
However, in Sangram Singh P. Gaekwad v. Shanta Devi P.
the Supreme Court has held that Gaekwad,
by reason of Section 88 of Indian Trusts Act
1882, a person bound in
other persons but the
fiduciary character is required to protect the intere
is bound to
heart and soul thereof is that between two persons,
protect the interest of the other, and if the former is
that
relationship makes a pecuniary gain for himself, Section 88availng
woula
attracted. What is
sought to be protected by a
benefit is unjust enrichment or person holding such nau
unjust benefit derived from another, w
against conscience that he should keep. When a makes pecunay gains
by reason of a transaction, the cestui que trust person
created thereunder,
hebe
restored back.