Authored By : William Comer Petheram, Loftus RichardTottenham, Henry Thoby Princep, James Quain Pigot, S.C. Ghose

William Comer Petheram, C.J.

1. My answer to the first question is, that the case ofSecretary of State for India in Council v. Fazal Ali I.L.R. 18 Cal. 234 is notrightly decided.

To the second, that Section 10 does not apply to such acase.

To the third, that Article 120 does apply.

To the fourth, that the suits are not barred by limitation.

2. The terms on which the residue shall remain in the handsof the Collector, and the conditions on which the proprietor or proprietors ofthe estate sold are to be entitled to receive it, are laid down in Section 31of Act XI of 1859, and are as follows: "Holding the residue, if any, indeposit, on account of the late recorded proprietor or proprietors of theestate or share of an estate sold, or their heirs or representatives to be paidto his or their receipt on demand in themanner following : to wit, in sharesproportioned to their recorded interest in the estate or share of an estatesold, if such distinction of shares were recorded, or if not, then as anaggregate sum to the whole body of proprietors upon their joint receipt. And ifbefore payment to the late proprietor or proprietors of any surplus that mayremain of the purchase-money, the same be claimed by any creditor insatisfaction of a debt, such surplus shall not be payable to such claimant, norshall it be withheld from the proprietor, except under precept of a CivilCourt."

3. When these conditions have been fulfilled, if the moneyis not paid over, I think a liability arises, to enforce which the Secretary ofState in Council may be sued, it being in the words of Sir BARNES Peacock inThe Peninsular and Oriental Steam Navigation Company v. The Secretary of Statefor India 5 Bom. H.C. App. 1 , a liability with which the revenue of Indiawould he chargeable, and the only question is, what is the nature of the causeof action which comes into existence in favour of the owner of the residue ofthe money if it is not then paid to him.

4. The meaning of the words "holding the residue indeposit on account of the late recorded proprietor" is, I think, that anyresidue at and from the time of its receipt belongs to the proprietor of theestate sold, who is to have credit in the books of the Collectorate for theamount, and if there were nothing more, 1 think that the cause of action wouldbe what is called an action for money received, which is an action of debt onthe promise which the law implies, whenever money, which in justice belongs toone man, has got into the hands of another, and this, in my opinion, is thecase with the money in question. But the section goes on to direct that thismoney shall be paid out on certain terms and conditions, and there being astatutory provision how and when the money is to be paid, I think that theimplication of a promise to pay, which would arise if the statutory obligationdid not exist, is rebutted, and that the liability to pay out the money is thatcreated by the statute, and that an action to enforce it must be, not on anyimplied promise but upon the statutory obligation, and as by the terms of thestatute that obligation does not arise until a demand has been made by persons,who are in a position to give the required receipts, 1 think that no suit couldbe maintained until a demand had been made by some person who was in a positionto give the necessary receipts.

5. The Limitation Act does not prescribe any period oflimitation for money due under a statutory liability to pay it, so the suit is,I think, within Article 120; in other words, the period of limitation is sixyears, which begin to run from the time when a demand for the money is made by personswho could give the receipts required by the section. As, in my opinion, themoney in the hands of the Government always remains the property of theproprietor of the estate which has been sold, and should always stand to hiscredit in the books of the Collectorate, it never, I think, vests in any onebut himself, and therefore I do think the case can be brought within any of thedefinitions of trusts to be found in the English reports, but even if it could,it is, I think, equally within the ordinary definition of an action for moneyreceived, and 1 do not think it desirable in such a case as the present, wherethere is certainly nothing of the nature of a trust or confidence in fact, toapply the law of trusts unless we are compelled to do so, and for the reasons Ihave mentioned, I do not think we are under any such obligation in the presentcase.

6. In Special Appeals 913 of 1890 and 1161 of 1890, in whichthe defendant is the appellant, the appeals will be dismissed; in SpecialAppeal No. 1001 of 1890, in which the plaintiff is appellant, the appeal willbe decreed; in each case the successful party will get his costs.

Loftus Richard Tottenham, J.

7. I agree in the Chief Justices judgment.

Henry Thoby Princep, J.

8. I agree in the terms of the answers which it is proposedto give. I desire, however, to state the reasons why I have arrived at thatconclusion.

9. The moneys in these suits are surplus sale proceeds afterliquidating the Government dues of the recorded defaulting proprietors of theestate sold, and the law, Section 31, Act XI of 1859, declares that theCollector shall hold them in deposit on the account of these persons to be paidon demand to a proper receipt.

10. It has been said that these moneys are what is termedmoney received on behalf of the defaulting proprietors of the estate sold,which, but for the terms of the Revenue Sale Law, were kept under an impliedpromise to pay them to these persons. The manner in which the payment of thesemoneys has been made and the process by which the residue, termed surplus saleproceeds, has become the property of the defaulting proprietors, seem toprevent our holding that they were received by the Collector on account of thedefaulters. In the first place, the law requires that the purchaser at thepublic sale shall immediately deposit 25 per cent on his bid. That this sumcannot be regarded as money received on account of the defaulting proprietorsis clear from the fact that a re-sale takes place if the full amount of the bidis not paid on the 30th day from the sale, and that, on such default, theamount deposited is forfeited to Government. Moreover, the sale itself may beannulled if the defaulters satisfy the superior Revenue authorities or theGovernment of hardship or injustice thus caused, and the estate will then berestored to the defaulters "on such conditions as may appear equitable andproper." The purchase-money would, in such an event, be paid to those bywhom it had been deposited. In the next place, even when the balance of thepurchase-money has been paid by the purchaser, as just stated, the estate doesnot pass to them. The sale is not confirmed and does not become final until the60th day from the day on which it was held, and not until then is the purchaserentitled to claim a certificate of title. The money realized by the sale,however, remains all along with the Collector, and if the sale is subsequentlyset aside, the entire purchase-money is repaid to the purchaser with interest,which may be payable by Government [Section 32*]. I cannot, therefore, agreethat the money held by the Collector, under such possible conditions, has beenreceived by him on account of the defaulting proprietors.

11. It is only when after the sale has been confirmed and anaccount has been made of the moneys due to Government by the defaultingproprietors, which are rarely represented by the actual default for which thesale took place and a surplus is shown by this account, that any money can besaid to belong to the proprietors. The law [Section 91] than says that anysurplus money shall be held in deposit by the Collector on account of thedefaulting proprietors, and it is only at this stage of the proceedings that itcan be regarded as money belonging to the defaulters and held by the Collector,under an obligation to pay it to these persons, and then only on their demandwith a proper receipt. Even if there were not this condition of demand made andreceipt tendered, I think that Article 62 of the Limitation Act would notapply, for the money was not received by the Collector for the plaintiffsdefaulters use; and next, it would be impossible to apply the provisions ofthat article in so far as they fix the time from which the period of limitationin a suit to recover such money commences to run. Article 62 declares thatlimitation in such a suit commences to run from the time when the money wasreceived for the plaintiffs use. It would be impossible to determine this. Itcan scarcely be said that the money was so received by the Collector, at thetime it was placed in deposit to the credit of the defaulters, when the moneyhas been held by the Collector for some time previously, first, but in partonly, as earnest money after the sale, then as the proceeds of the sale, andafter an interval ultimately as the property of Government;, with a contingencythat there may be a surplus after paying all dues of the defaulting proprietorswhose estate had been sold.

12. I apprehend, too, that the Legislature did not have incontemplation that it should be in the power of one of the parties to a suit todetermine the period from which limitation in a suit against him should run,and that this should be fixed unknown to the plaintiff, that is to say, whenthe Collector may have adjusted the account of Government against thedefaulting proprietors.

13. Lastly, as was pointed out in the course of argument, iflimitation in a suit to recover surplus proceeds be regulated by Article 62, itmay frequently happen that if the defaulting proprietors bring a suit to setaside the sale, the limitation for which is, as in Article 62, three years, andfail, his right to sue to recover the surplus sale proceeds will be barred. Theresult of this would be that if they sue to set aside the Revenue sale and fail,they will lose not only their property but money which undoubtedly belongs tothem, and which they could not take without forfeiting their right to bringthat suit. This, cannot have been intended by the Legislature.

14. All these considerations lead me to conclude that a suitbrought to recover money held in deposit by the Collector, under Section 31 ofthe Revenue Sale Law, is not governed by Schedule II, Article 62 of theLimitation Act of 1877.

15. I am next of opinion that the suits before us are notwithin the terms of Section 10 of the Limitation Act. The position of theCollector is in many respects that of a trustee, but, inasmuch as the money soheld is payable to the particular parties only on their demand with a receipttendered, it seems to me that the obligation to pay would be only when suchdemand coupled with tender of a proper receipt shall have been made. Such acase has not been specially provided for by the Limitation Act, and ittherefore would be governed by Schedule II, Article 120.

16. I agree in the terms of the orders which it is proposedto pass in the second appeals before us.

James Quain Pigot, J.

17. This suit is brought to recover Rs. 907-6-3, the amountof surplus sale proceeds of plaintiffs estate, sold under the provisions ofAct XI of 1859. The estate was sold by the Deputy Commissioner of Sylhet on the11th November 1885. The amount claimable by Government for rent, cesses andtalabana was Rs. 5-11-5, the balance, the sum claimed, being kept in depositaccording to the provisions of Section 31 of the Act.

18. The plaintiffs right to the money, as owner of it, isquite clear.

19. The plaintiff is an owner of some, and assignee of therest, of the shares in the surplus proceeds of his co-proprietors, and they have,as is stated in the plaint, given notice of the assignment under the Transferof Property Act. No question was raised as to this, and the argument proceededupon the footing of his right under Section 31, save as affected by limitation.

20. But the defendant, the Secretary of State, defends thesuit on the ground that the claim is barred by limitation; and, this contentionhaving been rejected by the two lower Courts, has appealed to this Court. TheDivision Bench which heard the appeal referred the case to the Full Bench. HisLordship then referred to the order of reference above set out and proceeded].

21. If the Limitation Act does apply to the case, I agreewith the other members of this Bench that Article 62 of the Act which was heldin the case of Secretary of State for India in Council v. Fazal Ali I.L.R. 18Cal. 234 to govern this question] does not apply; but that Article 120 applies,if the Act applies at all. In this case, the suit was actually brought withinsix years from the sale itself, and within a far less period from the time ofdemand.

22. The second question referred, namely, whether Section 10of the Limitation Act applies to the case, raises the question whether the Actgoverns this case at all. I am of opinion that it does not, and that thatquestion should be answered in the negative. In what I have to say, I shalldeal with this question alone, as to which my opinion differs from that of theother members, of the Bench.

23. There is no doubt whatever that the money which the plaintiffclaims is his money, and that the Government has no right to it, or interest init, of any kind. This is not denied on the part of Government, but it iscontended that there is no trust of the money shown, under Section 10 of theLimitation Act, and that, therefore, it can avail itself of the Act as adefence to the plaintiffs suit; of course if not, there is no defence to thesuit at all.

24. I think the money in this case did, within the meaningof Section 10 of the Act, "become vested" in Government "intrust for a specific purpose," that is, to he handed over to the persondescribed in Section 31 of Act XI of 1859, and that the plaintiffs suit cannotbe barred by time.

25. The first question I shall deal with is as to the effectof the words in Section 31, which are said to create a trust. Assuming thatGovernment can, under the law of this country, be a trustee, are the words ofSection 31 such as to give rise to a trust in respect of the surplus proceeds

26. Section 31 is as follows:

The Collector shall apply the purchase-money, first, to theliquidation of all arrears due upon the latest day of payment from the estateor share of an estate sold; and, secondly, to the liquidation of alloutstanding demands debited to the estate or share of an estate in the publicaccounts of the district, holding the residue, if any, in deposit on account ofthe late recorded proprietor or proprietors of the estate, or share of anestate sold, or their heirs or representatives to be paid to his or their receipton demand in manner following : to wit, in shares proportioned to theirrecorded interest in the estate or share of an estate sold, if such distinctionof shares were recorded, or, if not, then as an aggregate sum to the whole bodyof proprietors upon their joint receipt. And if before payment to the lateproprietor or proprietors of any surplus that may remain of the purchase-money,the same be claimed by any creditor in satisfaction of a debt, such surplusshall not be payable to such claimant, nor shall it be withheld from theproprietor, except under precept of a Civil Court.

27. Now, if the words "holding the residue, if any, indeposit on account of the late recorded proprietor...or their heirs orrepresentatives to be paid..." were contained (substituting"mortgagor" for "proprietor") in a power of sale in amortgage deed empowering the mortgagee to sell, I think they would create anexpress trust of the surplus proceeds after sale under the power, within thedecisions on Section 25 of the English Act--Charles v. Jones I.L.R. 35 Ch. D.544. It is practically the same provision as that which in powers of sale inmortgages has been held to have that effect. The absence of the word"trust" is immaterial.

28. I sea no reason why the intention should not be imputedto the Legislature, when it used those words, of giving to the proprietor whoseestate has been sold the fullest security and protection possible in respect ofthe proceeds of his estate. The Revenue Sale Law is a law of the utmoststringency : the present case is a sufficient illustration of this, for anestate (not encumbered, so far as appears) for which nearly Rs. 1,000 has beenonce realized is sold for arrears, the exact amount of which does not appear,but which, with cesses and talabana, came to less than Rs. 6.

29. I think the words may properly be construed as intendedto impress on the surplus proceeds the character of moneys held in trust forthe late proprietor. I think that when the residue is ascertained, it becomestrust money held for him by the Collector under the Act, the Collector actingin this respect for, and representing, Government.

30. The case of Kinloch v. Secretary of State in CouncilI.L.R. 15 Ch. D. 1 : I.L.R. 7 Ap. Ca. 619 was cited, as showing that theSecretary of State in Council could not be a trustee : that the Government ofIndia could not be a trustee: and that the whole foundation of the claim, asbased on a trust, must entirely fail.

31. I do not think that that case has any bearing whateverupon the present, except as to one dictum of that great Judge, Lord JusticeJAMES, in the course of his judgment, to which I shall presently refer.

32. The decision rested principally on this, that upon theproper construction of the Queens warrants, notwithstanding that theinstrument was so worded as "to give and grant" to the Secretary ofState in Council the booty, the subject-master of the suit, "entrust forthe use of" the persons on whose behalf the suit was brought, the warrantdid not create a trust cognizable in a Court of Equity at all, asVice-Chancellor Hall had held that it did : the intention of the Crown as shownby the terms of the warrant being plain, to exclude anything of the sort: andthe power of the Crown to do so being clear.

33. That case was appealed to the House of Lords. Thejudgments of the House of Lords are reported in I.L.R. 7 Ap. Ca. 619.

34. The judgment of the Lord Chancellor makes it, I think,clear that, so far as the position of the Secretary of State in Council wasdealt with in, that case it was dealt with on grounds wholly inapplicable tothe present question. At page 622 his Lordship says:

With respect to the Secretary of State for India in Council,I entirely agree with what seems to have been the opinion of the Court of Appeal.He is here sued as a Corporation. It is not the individual who now happens tofill that office who is sued, but it is the officer bearing that description; aremarkable and special description, derived evidently from Section 65 of 21 and22 Vict., Chap 106; which simply enacted that suits to establish rights which,if that Act had not been passed, would have belonged to the East India Company,and for which they might have sued; and again suits to establish claims which,if that Act had not been passed, would have been proper to be made in actionsat law or suits in equity against the East India Company, might be brought byor against the Secretary of State for India in Council. The enactment seems toproceed on the same principle on which in Banking Acts public officers areauthorised to sue and be sued as representing the persons really entitled orliable. This is, no doubt, a very high public officer; and the designation inCouncil is added, 1 suppose, in order that all matters arising out of such suitsmay be considered not only by himself individually but by himself in hisCouncil. Whatever the reason for that may have been, the enactment is limitedas I have expressed it; and this is clearly not a suit brought against him asrepresenting the late East India Company, or which can by any possibility bedescribed as a suit which, if the India Government Act had not been passed,might have been brought against the East India Company. Therefore, so far,there seems to be no ground for suing the Secretary of State for India inCouncil in the manner in which he is here sued.

35. "It is said, and I dare say rightly said, that forsome other purposes, under particular Acts of Parliament which define thosepurposes, he may be in like manner sued. But it has not been alleged that anyof those Acts of Parliament extend to the subject-matter of this action."

36. It seems to me that the question whether or no, in aparticular case in which the Secretary of State is defendant, there is anytrust, is to be decided upon the principles laid down by PEACOCK, C.J., in ThePeninsular and Oriental Steam Navigation Company v. The Secretary of State forIndia Bourke A.O.C. 106 : S.C. 5 Bom. H.C. 1, and that the question really iswhether, to use the Lord CHANCELLORs words in the passage just cited, if theIndia Government Act had not been passed, a suit could have been maintainedagainst the East India Company by the plaintiff for these monies as havingbecome vested in the Company in trust for the specific purpose set out inSection 31 of Act XI of 1859, namely, that the monies should be paid to theplaintiff on his demanding them. The right to a receipt, such payment beingmade by the Collector, is expressly given by the section. That right is, ofcourse, an incident of every trust.

37. It need not be discussed whether or not the East IndiaCompany could be a trustee. It is certain that it could be and often was.

38. Lord Justice JAMES says at I.L.R. 15 Ch. Div. 9:

But the Government of India is not, it appears to me, capableof being a trustee," et seq.

39. I do not understand the Lord Justice to decide by thisexpression of opinion that in cases coming within the provisions of theGovernment of India Act the Government of India could not be a trustee, or theSecretary of State could not be liable to be sued as a trustee, as representingit, and I do not think he can have meant so to decide, as he does not refer tothe effect of that Act at all, as the Lord CHANCELLOR did in the House ofLords. In truth it would be difficult to reconcile this opinion, if the LordJustice had expressed it, with the case of the Clive Fund--Walsh v. Secretaryof State in Council 10 H.L. Ca. 367, in which the representatives of Lord Clivewere held entitled to recover from the Secretary of State in Council under theprovisions of the deed, whereby the East India Company was made trustee of thefund handed over to them by Lord Clive in 1770. No doubt it was on theliability created by the covenant entered into by the Company that the Secretaryof State was held bound in that case to repay the money; but it was a liabilitybinding on the Company as trustee, and as such binding on the Government ofIndia in respect of the Indian revenues, and on the Secretary of State, as 1understand, as being bound by the trust as representing the Government.

40. Then it is said that these monies have not become vestedin the Government within the meaning of the section.

41. The Account Code showing the practice of the departmentwith respect to surplus proceeds held under the Act was referred to by bothsides in argument. In Chapter XXV, Sections 11 and 12 are as follows:

11. Deposits not exceeding one rupee unclaimed for one wholeaccount year, balances not exceeding one rupee of deposits partly repaid duringthe last year, and all balances unclaimed for more than three complete accountyears, will, at the close of March in each year, be credited to Government bymeans of transfer entries in the Account Office. Of deposits or balances thuslapsing the treasury officer must submit to the Accountant-General, immediatelyafter 31st March, a list showing date of receipt, number of deposit, andbalance at credit.

12. Deposits credited to Government under this rule cannotbe repaid without the sanction of the Accountant-General, but this sanctionwill be given, as a matter of course, on ascertaining that the item was reallyreceived, was carried to credit as lapsed, and is now claimed by the person whomight have drawn it any time before the lapse. The amount of a lapsed depositrefunded will, however, be charged in the cash-book as a refund, and notdebited to deposits. But the application for refund and the payment of thedeposit should be recorded in the district register of receipts, so as to guardagainst a second repayment.

42. It appears to me that, upon the ascertainment of thesurplus, the money became "vested" in the Government in the hands ofits servant, the Collector (in this case the Deputy Commissioner). I am notaware of any definition of the expression "vested" save that ofMARKBY, J., in Kherodemony v. Doorgamoney I.L.R. 4 Cal. 455 . But I do not seehow it can be contended that these monies have not become vested in theGovernment. They are now, as against all the world but the owner, the propertyof the Government. They were so from the moment they were paid, and even beforethe surplus was ascertained; and this, quite apart from any question which neednot be discussed here, as it was not at the bar, whether or not they ought tohave been when the surplus was ascertained, not merely ear-marked, but heldseparately and not mixed in the general funds of the State, as of course theyhave been. They are in the hands of the Government, and so effectually vestedin its hands, that the owner of them has failed to get them, and has beenrefused them when he demanded them. Possession, with all the indicia ofproperty in respect of them, so far as regards third persons, is had by theGovernment. I think this must be "vesting" of this moveable property,within the meaning of the section.

43. I think this is made more clearly to appear upon lookingat the practice under the rules read to us both by the pleader for theappellant and by the Standing Counsel. For three years, according to thepractice, surplus proceeds of sales remain to the credit of the personsentitled under Section 31 of the Act, after that date they are credited toGovernment by means of transfer entries in the Accounts Office. I do not seehow it can be contended that (at any rate after this last transfer is effected)the monies do not become "vested" in Government.

44. The word "become" seems to cover everypossible manner in which the vesting could take place.

45. I think, too, that the fact that the monies are, up tothat time, quite properly credited to the parson or persons entitled under theAct, bears upon the character in which they are held, when read by theprovisions of the section : they are up to that date avowedly held for him. Imay refer to the well-known decision of Sir R. Couch in Jamsetji Jijibhai v.Sonabai 2 Bom. H.C. 2nd Ed. 133, which has been frequently followed, in whichit was held that even a voluntary trust might be perfectly and completelycreated by entries in the books of the donor of the trust in favour of thecestui que trust.

46. I think, therefore, first, that; the words of Section 31satisfy the expression "trust for a specific purpose" in Section 10of the Limitation Act; secondly, that the monies have "become vested"in Government within the meaning of those two words; and thirdly, they havebecome vested in it in trust for the specific purpose, which in the presentcase is payment to the plaintiff.

47. The effect of the Act is, I think, to place Governmentin the same position as a mortgagee after exercise of his power of sale, inordinary form, in respect of the surplus proceeds. I cannot see that the factthat the sale is in invitum, under a power created for the advantage of theState and not under a power created by him, ought to place him in a worseposition than that held by an ordinary mortgagor. In effect, the Revenue SaleLaw hypothecates land held under the State for the payment of the revenue, andthe sale is the exercise of a power of sale in enforcement of thehypothecation. It is made by the law one of the terms of the contract ortransaction between the Government and its tenant, under which the latter takesand holds his land. In fact, in Regulation X of 1793, Section 19, the relationis actually described as that of mortgagor and mortgagee.

48. I also think that when, in the exercise of its authorityover the Collector, Government causes a transfer of the monies from the creditof the proprietor to its own credit, it must be treated (apart from thequestion of its being a trustee through him before that time) as taking overmonies which then, at any rate, become vested in it, which monies are, whentaken over, impressed with a trust for a specific purpose; and at that time,even if not before it, become vested in Government on that trust.

49. The opinion of the entire Bench, that limitation runsfrom six years from date of demand, renders the answer to the question as toSection 10 of little practical importance in cases like the present; but thegeneral question as to the possible liability of Government as a trustee is oneof considerable importance; none the less so by reason of the high prerogativeview urged on us on behalf of Government, and for which some of the expressionsin Kinlochs case I.L.R. 15 Ch. D. 1; I.L.R. 7 Ap. Ca. 619 were used, not forthe first time. I own that I think it would be very unfortunate if those viewswere well founded in law; any tendency to withdraw the acts of the Governmentand of its servants from the cognizance of the Courts of Justice would be a veryserious thing, and I certainly do not think the Courts should be astute for thepurpose of aiding that object.

50. In this country, the relations of the Government withthe individual subjects of Her Majesty are of almost infinite variety andextent; partly arising from the trading operations to a vast amount necessarilycarried on by it, and partly from the multitude of enactments, the number ofwhich is steadily augmenting, which bring Government in close relations withthe subject in respect of his private rights of property.

51. I am well aware that the opinion which 1 have formed onthis question is one which, during the many years in which the Revenue Sale Lawhas been in operation, is for the first time expressed in a Court of Justice.That is a formidable argument, perhaps, against the soundness of my opinion.Still, I cannot discover that the occasion has ever before arisen. I am awareof no reported case in which limitation has ever been set up by Government asan answer, and the sole answer as in this case it has been in this Court, to aclaim by the owner of surplus proceeds of sale.

S.C. Ghose, J.

52. I agree with the Chief Justice in the answers heproposes to give to the questions that have been referred to the Full Bench.

53. According to the Revenue Sale Law (Act XI of 1859),immediately upon the conclusion of a sale, the party declared to be thepurchaser has to deposit a portion of the purchase-money (25 per cent.), andthe balance before sunset of the thirtieth day; but the sale does not becomefinal and conclusive before the sixtieth day or before the appeal, if any bepreferred to the Commissioner, is dismissed. "Upon the sale becoming finalthe Collector applies the purchase-money, first, to the liquidation of thearrear for which the estate was sold, and then, to the liquidation of alloutstanding demands debited to the estate in the public accounts; and if therebe any surplus left, it is to be paid to the recorded proprietor or his legalrepresentative.

54. It seems to me, therefore, that the purchase-money whenpaid by the purchaser is not money received by the Collector to the use of theowner of the estate; but a portion of it, i.e., the surplus, if there be any,may possibly assume that character some time afterwards. The 62nd Article ofthe second Schedule of the Limitation Act says:

For money payable by the defendant to the plaintiff formoney received by the defendant for the plaintiffs use, three years, when themoney is received.

55. When the law says "when the money is received"it means, I take it, the time when it is actually received, and not the timewhen, after the Collector has applied the purchase-money to different purposes,it is ascertained that there is a surplus due to the proprietor. I do not thinkit could have been the intention of the Legislature to lay it down that thecause of action to the defaulting proprietor would arise on the day that themoney is received by the Collector. The law allows him two distinct remedies :first, he may appeal to the Commissioner; and second, he may bring a suit tocontest the legality of the sale. And the prosecution of these remedies maytake him more than three years. If he is bound to sue for the surplus withinthree years, under Article 62, he may have to give up his suit to contest thesale; for Section 33 of the Revenue Sale Law provides that "no personshall be entitled to contest the legality of a sale after having received anyportion of the purchase-money." In other words, the result may, in somecases, be that the defaulting proprietor must either receive the money withinthree years from the date when the purchaser pays it into the hands of theCollector, or he must give up his right to contest the sale.

56. I do not think that the Legislature could have intendedsuch a result, and to provide Article 62 for such a case as the present. Theclaim of the plaintiff for the surplus is either a claim which arises upon thestatute (Section 31, Act XI of 1859), or it is an equitable claim for the moneyin the hands of the Collector; but in either case, it seems to me, it could notfall within Article 62 (see in this connection the decision of the PrivyCouncil in Gurudas Pyne v. Ram Narain Sahu I.L.R. 10 Cal. 860 : I.L.R. 11 IndAp59.

57. As regards the other question that has been raised inthis case, and which has been discussed at considerable length before us, viz.,whether the suit falls within Section 10 of the Limitation Act, it is, I think,a difficult one. But after giving the matter my best consideration, I aminclined to think that it is not governed by that section -- at any rate, it isnot clear that it is so.

58. Section 10 of the Limitation Act provides that no suitagainst a person in whom property has vested in trust for any specific purpose,for the purpose of following such property in his hands, shall be barred by anylength of time.

59. The question for our consideration is, whether thesurplus sale proceeds has vested in the Collector in trust for the defaultingproprietor.

60. Now, what is it that vests the surplus in the Collectoras a trustee for the defaulting proprietor So far as the defaulting proprietoris concerned, he is not a party to the sale held by the Collector: there is noconfidence reposed by him upon the Collector, and we are not aware that underthe engagement that the plaintiff or his predecessor in title executed for thepayment of the Government revenue fixed upon the estate, he authorised theCollector to sell the estate in the event of a default in payment of the revenueand to receive the surplus for him. There is no fiduciary relation between himand the Collector; and herein, I think, lies the distinction between theposition of the Collector in the present case and that of a mortgagee, who,when he is authorized by the mortgagor to sell, receives on behalf of themortgagor the surplus sale proceeds. It was strongly argued before us upon theauthority of certain cases in England, and more especially upon some of theobservations in the case of Banner v. Berridge I.L.R. 18 Ch. D. 254, that themortgagee is a trustee for the mortgagor in respect of the surplus and that onthe same principle, the Collector should be regarded as a trustee for thespecific purpose of handing over the surplus to the recorded proprietor. But itseems to me that the analogy does not hold good when it does not appear thatthe proprietor, when he entered into an engagement for the Government revenue,authorised the Collector to sell the estate and receive the surplus for him.The power to sell an estate for arrears of revenue is, 1 take it, only given bythe law; and we have simply to determine what was the intention of theLegislature when they passed that law. Was it their intention to make theCollector a trustee for the defaulting proprietor in respect of the surplus Ihardly think that it was so. Section 31 of the Act provides that "theCollector, after applying the purchase-money to the liquidation of all arrearsand demands of Government, shall hold the residue, if any, in deposit on accountof the late recorded proprietor or proprietors of the estate or share of anestate sold or their heirs or representatives, to be paid to his or theirreceipt on demand in manner following," etc., etc. The section here castsupon the Collector a duty which he is bound to perform in the manner prescribedtherein; but nothing more. On turning to Regulation XI of 1822, I find that thewords used in the corresponding Section (22) were "the residue shallbelong to the defaulter or defaulters, and be payable to his or their receiptsupon demand." I hardly think that these words could be construed as thecreation of a trust in the hands of the Collector. There was a slight change inthe wordings in the subsequent Act, XII of 1841, Section 21, they being the sameas we find them in Section 31 of the present Sale Law; but I do not think thatthe Legislature, if they did not intend in 1822 to make the Collector atrustee, intended to make him so by the words that they used in 1841. I thinkwhat the Legislature meant to say was that the surplus shall belong to therecorded proprietor and shall stand to his credit in the Collectors booksuntil a demand is made and receipt is tendered, when the Collector will bebound to hand it over to the recorded proprietor or his representative. Nodoubt, no technical words are necessary to create a trust, but we must besatisfied that the Legislature by enacting Section 31, Act XI of 1859, intendedto constitute the Collector a trustee for the proprietor in respect of thesurplus. I do not think that this was their intention, and I am not aware of asingle case since the passing of the Sale Law in 1822 in which the Governmenthas been regarded as a trustee in similar circumstances.

61. If then Section 10 does not govern the case, there is noother section applicable; and the result, therefore, must be that thelimitation prescribed is that in Article 120. Under that article the right tosue for the surplus does not accrue until, as provided by Section 31, Act XI of1859, the demand is made.

In No. 1001 of 1890.

62. Pigot, J. (Petheram, C.J., Prinsep, Tottenham, andGhosh, JJ., concurring)--The sale took place in January 1883. The suit wasbrought in December 1888. Under divers precepts of the Civil Courts, theproceeds were attached, and the Collector was, of course, entitled to refusepayments until they were disposed of: this has been properly held to be so bythe lower Court, and the plaintiffs have been properly ordered to pay thecosts of the Secretary of State in that Court on that ground, hut as theattaching creditors abandoned their claim at the hearing, the plaintiffobtained a decree, which was set aside by the Lower Appellate Court on appealby the Secretary of State on the ground alone that Article 62 of the LimitationAct governed the case. This being held not to be so, the decree of the LowerAppellate Court will be set aside, and that of the Subordinate Judge restored.Plaintiff will have his costs in this Court and the Lower Appellate Court.

In No. 1161 of 1890.

63. Pigot, J. (Petheram, C.J., Prinsep, Tottenham and Ghose,JJ., concurring).--In this case the Secretary of State appealed from thedecision of the Subordinate Judge, who held that Article 120 of the LimitationAct applied. The appeal on that ground must fail.

64. But the plaintiff brought his suit in respect of hisshare of the surplus proceeds of the mehal. His name is duly registered, buthis lands and the jama are not specified; he therefore could not recover; butthis objection was waived in the written statement filed on behalf ofGovernment provided the other parties interested should appear, and theplaintiffs claim should be established in their presence--a very fair andconsiderate course. The issues raised must be read with reference to this writtenstatement.

65. It has been found that the plaintiffs claim has been soestablished in the presence of the other parties interested, so that in truththe question before the lower Court of appeal was only that of limitation : andthe fourth paragraph of the memorandum of appeal to this Court does not arise.

66. The Secretary of State was properly given his costs inthe original Court.

67. But he appealed on the ground of limitation alone to theLower Appellate Court, and from that Court to this.

68. Article 120 applies, and as the objection under theconcluding portion of the first paragraph of Section 31 was waived in thewritten statement of Government, the case must be treated as though the demandwas duly made on behalf of all the sharers; and if so, it was within time.

69. The appeal must therefore be dismissed with costs.

* Notification of annulment of sale.

[Section 32:-The annulment by a Commissioner or byGovernment of a sale made under this Act shall be publicly notified by theCollector or other officer as aforesaid, in the same manner as the becomingfinal and conclusive of sales is required to be notified by section XXVII ofthis Act; and the amount of deposit and balance of purchase money shall beforthwith returned to the purchaser with interest thereon at the highest rateof the current public securities; which shall be paid by the Government, unlessthe proprietor shall have become liable for the same under the provisions ofsection XXV or section XXVI of this Act.]

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Guru Proshad Dhur and Ors.vs. The Secretary of State for India in Council and Ors. (12.03.1892 - CALHC)