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Citations: 2025 (4) KLR 102 : 2025 KER 27402
Court: High Court of Kerala
Judges: Sathish Ninan & Shoba Annamma Eapen, JJ.
Case No.: R.F.A. No. 521 of 2019; 1 April 2025

Partition – Trust Property – Indian Trust Act, Sections 63 and 66 – Property Purchased with Mixed Funds – Entitlement of Beneficiary.

In a partition suit, the defendant claimed a half share in a property purchased under Sale Deeds (Exts.A1 and A2) by her parents, alleging it was acquired using sale proceeds (₹82,500) from an earlier property (Exts.B2-B4) inherited by her and her mother, held in trust for her. The plaintiffs (mother and son) sought partition, asserting joint ownership by the parents.

Table of Contents

Held

The property was purchased using the sale proceeds, which included the defendant’s share (₹41,250), held in trust by her parents. However, as the funds were mixed with the parents’ own money, under Section 63 of the Indian Trust Act, the defendant was not entitled to a proprietary share but to a charge of ₹41,250 with 9% interest from 28.01.1992 on the property. The trial court’s decree was modified accordingly, affirming the parents’ joint ownership and the defendant’s liability as a legal heir for her father’s debts. Appeal allowed in part.

Against the Judgment dated 29.07.2019 in O.S. No. 36 of 2016 of III Additional Sub Court, Kozhikode

Appellant: Nirmal S., Veena Hari

Respondents: P. Chandrasekhar, K.K. Mohamed Ravuf, Rani Madhu, Manjari G.B., Satheesh V.T.

Facts

The case involves a partition suit concerning a property (Plaint Schedule II, Item No. 1) purchased under Sale Deeds Exts.A1 and A2 (dated 17.12.1991 and 18.12.1991) in the names of the first plaintiff (mother) and her late husband, Rajan Menon.
The first plaintiff (mother), second plaintiff (son), and defendant (daughter) are the legal heirs of Rajan Menon. The plaintiffs sought partition of the property, claiming it was jointly owned by the parents, with the father’s half share devolving equally among the mother, son, and daughter upon his death.
The defendant contested this, asserting that the property was purchased using funds from the sale of another property (under Exts.B2, B3, and B4 Sale Deeds dated January 1992), which she and her mother had inherited via a prior partition deed (Ext.B1, 22.05.1987). She claimed the purchase under Exts.A1 and A2 was made in trust for her benefit, as the sale proceeds of ₹82,500 from Exts.B2-B4 were used, and her father lacked independent funds.
The trial court rejected the defendant’s claim, holding that she failed to prove the trust arrangement and that the property belonged equally to the parents. It granted the plaintiffs’ partition claim.

Issues

Whether the acquisition of the property under Exts.A1 and A2 was made using the sale proceeds from Exts.B2-B4.
Whether the property under Exts.A1 and A2 was purchased in trust for the defendant.
Whether the defendant is entitled to an in specie partition of half the property, even if the funds from Exts.B2-B4 were used.

Arguments

Plaintiffs: The property was jointly owned by the mother and father under Exts.A1 and A2. The sale proceeds from Exts.B2-B4 (executed in January 1992) could not have funded the earlier purchases (December 1991). The defendant’s share of those proceeds was used for her education, and additional funds were provided to her for an apartment in Bangalore.
Defendant: The property was bought using the ₹82,500 from Exts.B2-B4, which originated from her inherited share under Ext.B1. Her parents, lacking other income, held these funds in trust for her, entitling her to a half share in the property.

Findings

Source of Funds
- The court found that the sale under Exts.B2-B4 was preceded by a six-month agreement, and the first plaintiff admitted possessing the ₹82,500 at the time of the Exts.A1 and A2 purchases. No evidence showed Rajan Menon had independent funds, making it probable that the property was bought with the Exts.B2-B4 proceeds.
- The plaintiffs’ claim that these funds were used for the defendant’s education lacked evidence, as she secured her BDS admission on merit.
Trust Arrangement
- The court held that the parents held the sale proceeds as trustees for the defendant, who was 18 and under their care during the Exts.B2-B4 sales. However, since the property was purchased using both trust funds (₹41,250, defendant’s half share) and the parents’ funds, no full proprietary right accrued to the defendant.
Defendant’s Entitlement
- Under Section 63 of the Indian Trust Act, where trust funds are mixed with a trustee’s own funds to acquire property, the beneficiary (defendant) is entitled to a charge on the property for the trust amount, not ownership. Thus, the defendant has a charge of ₹41,250 (her half share of ₹82,500) plus 9% interest from 28.01.1992, not a half share of the property.
Liabilities
- The court upheld the trial court’s finding that the defendant, as a legal heir, must share Rajan Menon’s liabilities (evidenced by Exts.A30, A31, A33), settled by the plaintiffs.

Decision

Appeal Allowed in Part: The trial court’s decree was modified.
The defendant is entitled to ₹41,250 with 9% interest per annum from 28.01.1992, secured as a charge on the property (Plaint Schedule II, Item No. 1).
The property remains jointly owned by the parents, with the father’s half share devolving equally among the mother, son, and daughter.
The defendant’s claim to a half share of the property was rejected.
The trial court’s decree on partition and liability sharing was otherwise affirmed.

Legal Principle

Section 63, Indian Trust Act: A beneficiary can trace trust funds into converted property. If trust funds are mixed with the trustee’s funds, the beneficiary is entitled to a charge on the property for the trust amount, not ownership.
Section 66, Indian Trust Act: Reinforces the right to a charge on blended property.

Significance

This judgment clarifies the application of trust law in family property disputes, emphasizing the distinction between proprietary rights and a charge when trust funds are mingled with personal funds. It also underscores the evidentiary burden on parties claiming trust arrangements.

Multiple Choice Questions (MCQs)

Who are the plaintiffs in the suit for partition?
a) The mother and her son
b) The mother and her daughter
c) The mother and her son and daughter
d) The father and the mother
Answer: a) The mother and her son
What is the primary issue in the appeal?
a) Ownership of the entire plaint schedule
b) Partition of plaint schedule II item No.1 property
c) Validity of Ext.B1 Partition Deed
d) Educational expenses of the defendant
Answer: b) Partition of plaint schedule II item No.1 property
Under which documents was the property in question purchased?
a) Ext.B1 Partition Deed
b) Exts.A1 and A2 Sale Deeds
c) Exts.B2, B3, and B4 Sale Deeds
d) Ext.A35 Schedule of Studies
Answer: b) Exts.A1 and A2 Sale Deeds
What was the defendant’s claim regarding the property purchased under Exts.A1 and A2?
a) It was purchased solely by her father
b) It was purchased in trust for her using funds from Exts.B2 to B4
c) It was inherited from her grandparents
d) It was gifted to her by her mother
Answer: b) It was purchased in trust for her using funds from Exts.B2 to B4
What was the total sale consideration for the property sold under Exts.B2 to B4?
a) ₹60,000/-
b) ₹82,500/-
c) ₹41,250/-
d) ₹100,000/-
Answer: b) ₹82,500/-
What did the trial court conclude about the defendant’s claim?
a) The defendant was entitled to one-half share of the property
b) The sale consideration was used for the defendant’s education
c) The property was purchased solely by the father
d) The defendant had no right over the property
Answer: b) The sale consideration was used for the defendant’s education
According to the judgment, why was the defendant’s claim that the property was purchased using Exts.B2 to B4 funds initially unsustainable?
a) The defendant was a minor at the time
b) The sale under Exts.B2 to B4 occurred after the purchase under Exts.A1 and A2
c) The father had sufficient income to purchase the property
d) The mother denied receiving any funds
Answer: b) The sale under Exts.B2 to B4 occurred after the purchase under Exts.A1 and A2
What legal principle under the Indian Trust Act was applied to determine the defendant’s rights?
a) Section 60
b) Section 63
c) Section 65
d) Section 68
Answer: b) Section 63
What right was the defendant entitled to over the property purchased under Exts.A1 and A2?
a) Full ownership of the property
b) One-half proprietary right
c) A charge for ₹41,250/- with interest
d) No rights over the property
Answer: c) A charge for ₹41,250/- with interest
What interest rate was granted on the amount charged on the property?
a) 6% per annum
b) 9% per annum
c) 12% per annum
d) No interest was granted
Answer: b) 9% per annum

Frequently Asked Questions (FAQs)

What was the basis of the plaintiffs’ claim for partition of the property?
The plaintiffs claimed that the property (plaint schedule II item No.1) was purchased by the first plaintiff (mother) and her late husband, Rajan Menon, under Exts.A1 and A2 Sale Deeds dated 17.12.1991 and 18.12.1991. After the husband’s death, his one-half share devolved on the plaintiffs and the defendant, and the first plaintiff sought a total of 4/6 shares (her original one-half plus inherited share).
What was the defendant’s counterclaim regarding the property?
The defendant argued that the property was purchased in trust for her using funds from the sale of property she and her mother obtained under Ext.B1 Partition Deed, sold under Exts.B2, B3, and B4 Sale Deeds for ₹82,500/-. She claimed the purchase under Exts.A1 and A2 was made with these funds, as her father had no other income source.
Why did the trial court initially reject the defendant’s claim?
The trial court found that the defendant was a major at the time of Exts.B2 and B3 Sale Deeds and failed to prove that the funds from these sales were used to purchase the property under Exts.A1 and A2. It also found the plaintiffs’ claim that the funds were used for the defendant’s education more probable.
How did the appellate court determine that the property was purchased using the defendant’s funds?
The appellate court relied on the first plaintiff’s admission that she possessed the ₹82,500/- from Exts.B2 to B4 at the time of the Exts.A1 and A2 purchases and that her husband had no other income source. The court found it probable that the purchase was made using these funds, especially since the sales were preceded by an agreement for sale.
Why was the defendant not entitled to one-half ownership of the property?
Under Section 63 of the Indian Trust Act, when trust funds are mixed with the trustee’s own funds to purchase property, the beneficiary (defendant) is entitled only to a charge on the property for the trust money, not proprietary rights. Since the property was purchased with both the defendant’s and her parents’ funds, she was entitled to a charge of ₹41,250/- (her half of the ₹82,500/-) with 9% interest.
What role did the Indian Trust Act play in the judgment?
Section 63 of the Indian Trust Act was pivotal, allowing the defendant to trace her trust funds (from Exts.B2 to B4) into the property purchased under Exts.A1 and A2. The section’s illustrations clarified that when trust funds are mixed with the trustee’s funds, the beneficiary has a charge on the property for the trust money, not ownership.
Why was interest granted on the defendant’s charge?
Since the defendant’s funds were used to purchase the property, the court deemed it fair to grant interest at 9% per annum from the date of the Exts.B2 to B4 Sale Deeds (28.01.1992) to compensate for the use of her funds.
Did the plaintiffs’ claim about using the funds for the defendant’s education hold?
No, the appellate court rejected this claim due to lack of evidence. The defendant secured her BDS admission on merit with 90% marks, and the plaintiffs’ only evidence (Ext.A35) was a schedule of studies, not proof of capitation fees or educational expenses.
What was the outcome regarding the liabilities of the deceased father?
The trial court’s decision to partition the liabilities of the late Rajan Menon, settled by the plaintiffs (evidenced by Exts.A30, A31, and A33), was upheld. The defendant, as a legal heir, was liable to share the proportionate liability despite not receiving a demand notice.
What was the final outcome of the appeal?
The appeal was allowed in part. The defendant was entitled to a charge of ₹41,250/- with 9% interest from 28.01.1992 on the property, forming part of the decree. The trial court’s decree was otherwise affirmed, including the partition of the father’s liabilities.

Mini Vinod Kumar v. K. Vijayalakshmi