R. Sathyamurthy and Another vs R. Rukmani and Others

K.M. Natarajan, J.—This petition is filed to review the earlier order passed in C.R.P. 334 of 1987 on 28-11-1988. The learned counsel

appearing for the petitioner mainly submitted that the decision referred to in the said C.R.P. namely, Official Trustee, West Bengal and Others Vs.

Sachindra Nath Chatterjee and Another, , is not applicable to the facts of this case. According to the learned counsel, in the above quoted

decisions, diversion of the object of the trust was asked for and in the circumstances, the Supreme Court held ""The stipulation in the trust deed that

the variation can only be made by will and not otherwise is a binding condition. Being a material condition the settlor had no power to vary it

therefore had no power to execute the second trust deed"". Further, even in the above quoted decision, it was held that in view of S.34 of the Trust

Act which is analogous to S. 43 of the Trustees and Mortgagees Powers Act 1866 a Judge of a High Court could have only given his opinion,

advice or direction on any question respecting the management or administration of the trust property and therefore, the order on the originating

summons could not be justified on the basis of the section. The learned counsel for the petitioners also relied on the decisions reported in In re D.

V. Gundappa AIR 1951 Mys. 6 : 1950 2-DLR. Mys. 90, and Sahebzadi Amina Marzia Vs. Syed Mohd. Hussain and Others, with regard to

powers of Court in permitting sale in certain circumstances. He would submit that in the instant case, the building in question belonging to the trust

is in a dilapidated condition. The landed properties are not fetching proper income. The tenants are in possession of the lands for a long time.

According to the learned counsel in view of the present market price, the interest secured on the sale price would be more beneficial to the trust.

The petitioners are not interested to take away the sale price. They want to reserve the same by depositing in any Bank and realise the income for

meeting the expenses incurred for implementing the objects of the Trust and also various performances. S. 34 of the Indian Trusts Act 1882 reads

as follows-

Any trustee may, without instituting a suit apply by petition to a Principal Civil Court of original jurisdiction for its opinion, advice or direction on

any present question respecting the management or administration of the trust property other than questions of detail, difficulty or importance, not

proper in the opinion of the Court for summary disposal.

In re D. V. Gundappa 1950 5-DLR. Mys. 90, is an authority for the proposition that if there arises an emergency or a state of circumstances

which rendered it desirable in the interests of beneficiaries that trust property should be sold, the court may direct the trustees to sell the property

even though there is no provision in the trust deed expressly authorising the trustees to sell the property. Such power should however be exercised

with the greatest caution. In the said decision it was pointed out that in that case the trust was for the benefit of the poor students and the

beneficiaries were not particular individuals whose objection could be ascertained. The trust property was in a dilapidated condition. Hence the

trustees were directed by the court to sell the property even though the trust deed did not provide for a power of sale. In the above quoted case, it

was also pointed out that the observations in In re Shiribai v. Merwaanji ILR 43 Bom. 519, have been reaffirmed in Paulo David De Souza Vs.

K.R. Daphtary, and they are as follows-

That the High Court of Bombay has this jurisdiction (to sanction a sale of the trust property by trustees where no power of sale is given by the trust

deed) is beyond all doubt. This jurisdiction was recognised in In re Manila v. Hargovan 25 Bom. 353, where Sir Lawrence Jenkins sanctioned the

sale of a minor''s interest in Hindu joint family property. It was also recognised.

In re Shirabai v. Merwaanji 43 Bom. 519 , is a case in which the trustees applied for permission to sell some immovable properties and it was

observed in it-

That the present facts however, was one of emergency not foreseen or anticipated by the author of the trust, and the sale though not provided for

by the trust instrument ought, in the interests of all the beneficiaries concerned, to be sanctioned by the Court in the exercise of its extraordinary

jurisdiction; that the extraordinary jurisdiction of the court to sanction a sale of immovable property in the absence of a power of sale in that behalf

is the trust instrument is of an extremely delicate character and should be exercised with the greatest caution.

Ultimately in In re D.V. Gundappa case 1950 5 DLR. Mys. 90, the trustees were directed to sell the property and the purchaser was directed to

deposit the amount in Government treasury in the name of the trust for its use and the trustees were allowed to draw interest only.

In S.36, Indian Trusts Act 1882 it is provided-

In addition to the powers expressly conferred by this Act and by the instrument of trust, and subject to the restrictions, if any contained in such

instrument and to the provisions of S.17, a trustee may do all acts which are reasonable and proper for the realisation, protection or benefit or

support of a beneficiary who is not competent to contract.

Except with the permission of a Principal Civil Court of original jurisdiction, no trustee shall lease trust property for a term exceeding twenty-one

years from the date of executing the lease, nor without reserving the best yearly rent that can be reasonably obtained.

In S 17 it was provided-

Where there are more beneficiaries than one, the trustee is bound to be impartial, and must not execute the trust for the advantage of one at the

expense of another.

Where the trustee has a discretionary power nothing in this section shall be deemed to authories the court to control the exercise reasonably and in

good faith of such discretion.

In Sahebzadi Amina Marzia Vs. Syed Mohd. Hussain and Others, trustees were unable to sell the jewels because of the prohibition contained in

the trust deed. Hence, they sought the advice of the City Civil Court under S.34 of the Trust Act. The Court was of the view that the selling of

entire items of jewellery would amount to defeating the trust itself. On a revision, the High Court opined that to carry out the real object of the trust,

the proper course to be adopted is the interests of the beneficiaries was to direct the sale of the entire jewellery. It was no use to keep the

jewellery (the unproductive asset) in the Bank idle when the trustee clearly stated that after meeting the present tax liability there would be sufficient

balance which could be invested in fixed deposit to meet the recurring tax demand. Therefore, the entire jewellery and ornaments were directed to

be sold.

The learned counsel for the revision petitioners submitted that ail these facts were not brought to the notice of this Court at the time when the

revision was disposed of on 28-11-1988. As such, it was submitted that if this Court fails to give necessary direction to the petitioners to sell the

property and invest the same property the Trust would be put to very great hardship and the other properties cannot be preserved. According to

the learned counsel, the proposed sale is highly beneficial to the beneficiaries of the trust. It is further submitted that there is no deviation with

regard to the object of the trust and this Court can put any condition to safeguard the interest of the trust in the matter of selling the lands where the

tenants have been squatting for a long time, and paying a very paltry rent. I find much force in the contentions of the learned counsel for the

petitioners. After going through the ratio laid down in the above quoted decisions and considering the circumstances of the case, I am of the

opinion that this is a case where the proposed sale is for the benefit of the trust and also to preserve the other properties. I feel that the trustees can

be permitted to sell the properties. Further, the objectors and the tenants in possession appeared through counsel before this Court and they

expressed no objection for sale in the property and withdrew their objections. It is brought to my notice that the tenants who are in possession, are

willing to purchase the property for Rs.9.25 lakhs. They have got a right of preemption by virtue of the agreement in their favour. It is submitted

that the price offered by the tenants is fair and reasonable in the circumstances of the case. It is to be noted that when the trustees have no right to

alienate the properties, the alleged preemption in favour of the tenants without permission of the court is not valid and the agreement cannot prevail.

The mere fact that tenants are in possession of the properties is not a ground that the properties should be sold to them. It can only be said that

they are also entitled to take part in the public auction by tendering their offer. Further, no materials were placed before the court below in respect

of the fair and reasonable price of the properties. In the circumstances, the trustees are directed to keep the offer made by the tenants at Rs.9.25

lakhs as upset price, and invite offers from intending purchasers, by publication, through lower court and sell the properties to the highest bidder.

The entire sale proceeds should be deposited by the purchaser to the credit of O.P. No 201 of 1985 on the file of the District Court, Erode, and

the District Court is directed to deposit the amount in fixed deposit for a period of three years in the State Bank of India, Erode, in the name of the

Trust for its use. The petitioners are permitted to withdraw interest accrued thereon once in six months. The sale proceeds should not be

withdrawn on any account except for investing the same in any better security and that too with the approval of the court. The review is ordered

accordingly. No costs.