P. Rajagopala Gramani vs Baggiammal

Ramesam, J.—This is an appeal from the decree of our brother Stone, J., dated the 8th August, 1932, in Application No. 1879 of 1932 in

C. S. No. 137 of 1932. The defendant is the appellant before us. The facts out of which this appeal arises may be briefly stated. One Raju

Gramani executed a deed of trust on 1st September, 1919, under which he settled his properties upon trust appointing the defendant, who is his

son-in-law by his second wife, as trustee. At the time of his death, he had three houses and had a fixed deposit for a sum of Rs. 50,000 in the

Imperial Bank. He provided that one of the houses shall be utilised for the residence of the members of his family, that is, his wife and his

daughters, until their marriage. The income of the other houses which is said to be Rs. 80 per month was to be utilised by the trustee for paying

taxes in respect of the estate, for repairs and for the expenses of his first wife Baggiammal, who is the plaintiff in this suit. After her death, the net

income was to be paid over to his son Gnanasundaram and after the death of Gnanasundaram, it was to be distributed equally between his

children. But if he dies issueless, it was to be distributed equally between the daughters. The interest accruing on the Fixed Deposit in the Imperial

Bank was to be spent similarly. Misunderstandings have arisen between the first wife Baggiammal and the trustee and this suit was filed by

Baggiammal against the defendant for the purpose of removing him from trusteeship. A. judge''s summons was taken in this suit by a notice of

motion for the purpose of obtaining an interlocutory order from the Court directing the defendant to pay (1) Rs. 1,500 required for the nuptial

ceremonies of the plaintiff''s grand-daughter, that is, the daughter of Gnanasundaram, including the amount required for the earlier ceremony when

she attained age; (2) a sum of Rs. 2,000 required for paying off certain creditors from whom she borrowed for the expenses of her suits 268 and

269 of 1931; (3) a sum of Rs. 1,000 required for paying off the decree-holder in S. C. S. No. 2480 of 1931, the plaintiff having borrowed that

amount for the marriage expenses of her granddaughter from one Ratna Bai; and (4) certain miscellaneous items, such as maintenance, etc.,

amounting to Rs. 1,0.00. Altogether she applied for the payment of Rs. 6,500.

The duties of the trustee are defined in the deed of trust already mentioned. No provision was made by the settlor for expenses of suits between

his wife and the trustee, nor has he provided for the expenses of the marriage and nuptials and other ceremonies connected with his grand-

daughter. It is very difficult to say what exactly he intended. Perhaps he intended that the expenses of the marriage and other ceremonies of the

grand-daughter were to be defrayed by the wife out of the net income which was to be paid to her, or perhaps it was an oversight on his part. The

duties of the trustee are governed by Section 11 of the Trusts Act which runs as follows:

The trustee is bound to fulfil the purpose of the trust, and to obey the directions of the author of the trust given at the time of its creation, except as

modified by the consent of all the beneficiaries being competent to contract. Where the beneficiary is incompetent to contract, his consent may, for

the purposes of this section, be given by a Principal Civil Court of Original Jurisdiction.

In this case Gnanasundaram''s children are both minors and other children may be born who are entitled to take under the trust deed, The

Court''s consent is therefore necessary. Section 11 is based on the well-recognised principles of English law. In In re Walker, Walker v.

Duncombe (1901) 1 Ch. 879 Farwell, J., observed:

The question that I have to consider is whether I can on the true construction of this will authorize the trustees to make any expenditure larger than

the sum mentioned in the will. I decline to accept any suggestion that the Court has an inherent jurisdiction to alter a man''s will because it thinks it

beneficial. It seems to me that is quite impossible. But in considering what is the true construction of the will, it is open to the Court to ascertain if

there be a paramount intention expressed in the will, and if so, to consider whether particular directions are properly to be read as subordinate to

such paramount intention, or are to be treated as independent positive provisions.

Here there being a paramount intention to benefit the grand-daughter, the question is whether the Court cannot sanction expenses for her

marriage and other ceremonies as subordinate to that intention. In New''s case (1901) 2 Ch. 534 it was held:

Where .... there arises an emergency or a state of circumstances which it may reasonably be supposed was not foreseen or anticipated by the

author of the trust and is unprovided for by the trust instrument, and which renders it desirable and perhaps even essential, in the interests of the

beneficiaries, that certain acts should be done by the trustees which they themselves have no power to do, and to which the consent of all the

beneficiaries . cannot be obtained by reason of some not being sui juris or not yet in existence, the Court will exercise its general administrative

jurisdiction by sanctioning, on behalf of all parties interested, those acts being done by the trustees.

and it is said that this principle particularly applies where the estate consists of a business or of shares in a mercantile company. In In re Tollemache

(1903) 1 Ch. 955 on appeal from the judgment of Kekewich, J., on page 457 of the same volume, the Court on appeal affirmed the judgment of

Kekewich, J. and dismissed the appeal. Romer, L.J., said:

New''s case (1901) 2 Ch. 534 shews how far the Court will go, and beyond what point it will not go.

Cozens-Hardy, L. J., observed:

In my opinion, New''s case (1901) 2 Ch. 534 constitutes the high-water mark of the exercise by the Court of its extraordinary jurisdiction in

relation to trusts.

In Kekewich, J.''s judgment at page 457 he enumerated various sub-headings of this extraordinary jurisdiction. The first sub-heading is where an

advance was sought out of the capital of the estate for the benefit of a minor who is a beneficiary with a vested or contingent interest. The present

case must if at all fall under this heading. The second subheading is where a business has got to be continued. The third is where a business is to be

sold to a joint-stock company. The fourth is where re-construction of a company is contemplated. The fifth is where mortgages have got to be

dealt with. As I already said, the further headings do not help the petitioner in this case--vide also Lewin on Trusts, pages 319 and 398. Having

regard to the principles laid down in the above cited English cases and the provisions of Section 11 of the Trusts Act, we think we may sanction a

reasonable amount for the expenses of the consummation ceremony of the grand-daughter. But we think the amount sanctioned by the learned

Judge is rather too high. We think it is enough to allow Rs. 750 for the coming of age ceremony and for the consummation ceremony, the amount

to be distributed according to the discretion of the grandmother. This amount may be raised by a loan in the Imperial Bank or any other Bank on

the security of the Fixed Deposit receipt at a reasonable rate of interest and the interest and the principal of the loan should be paid off in monthly

instalments of Rs. 50 to be deducted out of the monthly payment to the plaintiff from the net income. If before the loan is discharged the plaintiff

and Gnanasundaram die, the balance should be debited against the interest of the grand-daughter Chandrambal. But as to the second, third and

other items, we are unable to see how these expenses fall within the principles mentioned above.

It is said by the learned Advocate for the respondent that the trustee practically consented to the order of the learned Judge. Mr. Brooke Elliot,

who appeared before us for the appellant, denies that he ever consented, but, on the other hand, opposed the petition. He however stated his

willingness to obey the directions of the Court. The trustee is of coarse bound to obey the directions of the Court and a statement to that effect

cannot amount to a consent that the plaintiff''s application in respect of the various items should be allowed. Even Mr. Krishnaswami Aiyangar

does not say that there was any consent that a particular amount should be awarded. Under these circumstances we think that the matter is really

left to the Court to decide u/s 11 of the Trusts Act. The consent of the other beneficiaries will not be necessary.

We allow the appeal to the extent indicated above. The plaintiff will pay 2/3rd of the costs of the trustee to be debited against her monthly

allowance in instalments. The trustee will re-imburse himself in respect of his own costs from the interest on the trust estate. The direction to pay

the amount to the Advocate will remain.

Mockett, J.

I agree. I must however add that I am satisfied that, whether there was or was not a consent decree in the strict sense, there was no serious

opposition to the course adopted by the learned Judge. Previous orders in this trusteeship had been made by several Judges of this Court, all

apparently by consent. Now the trustee takes up the correct attitude that the terms of the trust deed must be strictly applied and on that basis

informs us that he argued before the learned Trial Judge and has now in this appeal through his counsel addressed learned arguments to us based

on the provisions of the Indian Trusts Act and certain decisions of the English Chancery Courts. We must of course accept this assurance. I cannot

help thinking that the argument before us was at least a little more emphatic than that addressed to the learned Judge. I do not find in the learned

Judge''s judgment which has not been printed and'' which is very brief any indication that the question of importance which is now raised was

argued before him. I mention this as I was at one time during the course of this appeal of opinion that we ought to send the matter back to the

learned Trial Judge for decision after argument, but after what Mr. Brooke Elliot has said, I concur with my learned brother that as the matter has

now been fully argued before us it is better to deal with it here in the interests of saving judicial time.

The facts have been stated by my learned brother and I do not propose to repeat them. It is sufficient to say that in the estate of Kaju Gramani,

deceased, his widow the plaintiff is given a life-interest, with remainder over to the settlor''s son for life and after his death to his children. The

widow Baggiammal is now suing to remove the trustee with whom she is quarrelling. In fact she asks for Rs. 1,500 for the nuptial ceremonies of

her grand-daughter, Rs. 2,000 for paying off creditors from whom she borrowed for the expenses of litigation in 1931 and Rs. 1,000 for paying off

a decree-holder. This debt was in respect of money borrowed for the marriage expenses of her grand-daughter and miscellaneous items to the

extent of Rs. 1,000. She asks that this money should be advanced out of the capital of the trust property. We are told that this widow is an elderly

lady. It must be borne in mind that she has a life-interest only. There is no specific provision for maintenance or for raising loans in the trust deed.

But Section 41 of the Trusts Act would appear to give power to the trustee to do this when necessary. That surely must apply to the case of

persons having reversionary interest in the capital. Section 11 of the Act deals with the duties of trustees. It will be seen that they are bound to

carry out the purpose of the trust except as modified by the consent of all the beneficiaries being-competent to contract or where the beneficiary

being incompetent to contract, the consent of a principal Civil Court of Original Jurisdiction has been obtained. There is a proviso that nothing in

the section requires the trustee to obey any direction when to do so would be impracticable, illegal or manifestly injurious to the beneficiaries. Now

it is clear I think that to raise Rs. 6,500 out of the capital for the purposes for which it is intended in this case to be used is not within the provisions

of the Trusts Act. There has been no consent of the beneficiaries competent to contract and it is not suggested the matter was brought to the

learned Trial Judge on the basis that this was a matter so beneficial or advantageous to the minor beneficiaries that the formal permission of the

Court should be obtained. Section 11 of the Trusts Act would appear to have been founded on the principles which are specifically stated in

New''s case (1901) 2 Ch. 534 and I think that the doctrine therein enunciated applies to this country, namely, that ""where an emergency or a state

of circumstances which, it may reasonably be supposed, was not foreseen or anticipated by the author of the trust and is unprovided for by the

trust instrument arises, the Court would exercise its general administrative jurisdiction on behalf of all the parties interested."" As pointed out, New''s

case (1901) 2 Ch. 534 has been held in England now to ""constitute the high water-mark of the exercise by the Court of its extraordinary

jurisdiction in relation to trusts."" The judgment of Kekewich, J., in Tollemache, In re (1903) 1 Ch. 457 (which is approved by the Court of Appeal

in Tollemache, In re (1903) 1 Ch. 955 and which appears to be the leading case on the subject) sets out the grounds on which the extraordinary

jurisdiction of the Court would be exercised. I agree with my learned brother that the only payment which has been sanctioned in this case and

which can conceivably be brought within that judgment is the amount of the nuptial expenses of the grand-daughter who has a contingent interest in

the trust. My learned brother considers that Rs. 750 is adequate for the purpose named and I of course agree with him in any estimate of this sort.

I also agree with the safeguards which he has named for the protection of the corpus of the trust property against diminution caused by the raising

of Rs. 750. I agree that the appeal should be allowed to the extent which this sole payment involves and also with the order proposed as to costs.