Bombay High Court
Kavas Khurshad Nariman vs Cyrus Behram Irani & Ors on 16 January, 2012
Author: A.V.Nirgude
Bench: A.V.Nirgude
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY.
CIVIL APPELLATE JURISDICTION
FIRST APPEAL NO. 1480 OF 2011
WITH
CIVIL APPLICATION NO.4202 OF 2011
Kavas Khurshad Nariman -- Appellant
V/s.
Cyrus Behram Irani & Ors.
ig - Respondents.
Mr. J. Reis Sr. Advocate with Mr. M. Gawade,
Advs. I/b. M/s. Wadia Ghandy & Co. for Appellant.
Mr. A.Y. Sakhare, Sr. Advoate with Mr. Roop M.
Vasudeo for Respondent Nos. 1 & 2.
Mr. Zubin Behramkadim Advocate for Res. No.3 and
Applicant in CAF No.4202 of 2011.
CORAM: A.V.NIRGUDE, J.
DATED : 16th January 2012.
PROUNOUNCED ON: 13th February, 2012 Judgment
1. Although this proceeding is registered as First Appeal it has to be decided as if it is a Second Appeal. Before deciding this Appeal, therefore, the Court must examine the case to find out as to whether there is any substantial questions of law involved in this Appeal.
2. The facts leading to the litigation, in ::: Downloaded on - 09/06/2013 18:05:10 :::
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short can be stated as under.-
3. One Shri Jehangir Bomanji Boman Behram (henceforth be referred to as the testator) was a rich Solicitor of this City, who had made a Will and a codicil for bequeathing his properties to various people. He died on 29th December, 1949, as a childless widower. Both the Will and Codicil were produced before this Court for obtaining a Probate and on 14th August, 1950 it was granted.
4. The testator had made a wish in the will to establish a Residuary Trust Fund , which would be created by sale of all his properties, which were not bequeathed to any one in particular.
It is common ground that at least two properties were not specifically bequeathed to any of the relatives and they were: one at Mazgaon known as Boman Behram Buildings and the other was Bungalow at Bhagur, near Devlali in Dist.
Nashik. Besides the two properties mentioned above there was also a bank account having some ::: Downloaded on - 09/06/2013 18:05:10 :::
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balance. It is common ground that these three properties thus became source for forming the residuary trust fund. But, before the executors could consolidate the residuary trust fund they died one by one till 1986.
5. For quite some time no one came forward to get himself/herself ig appointed as administrator of the probate. Out of the three properties mentioned above the property known as Boman Behram Buildings I am told is quite a prominent one situated at Mazgaon consisting of two multi storing buildings with residential flats and shops. All these buildings are occupied by various tenants.
6. One Smt. Banoo came forward in the month March 1998 and made an application to this court for getting herself appointed as the administrator of the probate. During the pendency of such application Smt. Banoo executed a Deed of Settlement of a public trust on 1 st December, 1998 in which she said that since she ::: Downloaded on - 09/06/2013 18:05:10 :::
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was the widow of one of the executors of Will of the testator, she was entitled to execute the Deed of Settlement. In this Deed of Settlement she mentioned specifically the above mentioned properties as the trust properties. This Deed of Settlement was registered at office of Sub Registrar, Mumbai on 5th December, 1998. After the registration ig of the trust Deed mentioned above, Smt. Banoo made application to the Asst.Charity Commissioner for registration of the Public Trust under S.18 of the Bombay Public Trust Act.
7. The Assistant Charity Commissioner after following due procedure by giving public notice etc. ordered registration of public trust on 6th April, 1999.
8. Within few months there from on 3rd August, 1999 the Appellants here moved a Revision Application U/s.70 A of Bombay Public Trust Act before Joint Charity Commissioner challenging the correctness of the order directing ::: Downloaded on - 09/06/2013 18:05:10 :::
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registration of public trust etc.
9. On the other hand one Manek K. Nariman a relative of the testator moved a caveat on 17th February, 2000 in Smt. Banoo s application which was pending before the High Court for getting herself appointed as administrator of the Will.
In view of this contest to Banoo s application the same was converted into a suit and remain pending till Banoo s death on 2nd November, 2000. Due to Banoo s death the said suit/her application came to be abated.
10. On 9th August, 2001, Avabai and Kavas the intervener here, who are also relatives of the testator moved an application for joining the revision application, which was pending before the Joint Charity Commissioner. They were supporting the Revision Application. On 26th April, 2002 their application was allowed.
However, the learned Joint Charity Commissioner dismissed the Revision application and refused to interfere in the impugned order directing the ::: Downloaded on - 09/06/2013 18:05:10 :::
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registration of Public Trust etc.
11. Aggrieved by this the Appellants filed a Charity Application U/s.72 of B.P.T. Act in the City Civil Court. However, at this stage above mentioned Smt.Avabai & Shri Kavas did not appear before the learned Judge of the City Civil Court. Theig learned judge decided the Charity Application on 12th November, 2008 dismissing it.
12. This Appeal is filed against the judgment and order passed by learned Judge City Civil Court dismissing the Charity Application No.17 of 2006.
13. Thereafter Kawasji made an application to this court vide Petition No.63 of 2005 for grant of Letters of Administration of De Bonis Non(for getting himself appointed as the administrator of the probate and the same was allowed on 3rd March, 2005. On perusal of the record and after hearing the counsel for the parties following ::: Downloaded on - 09/06/2013 18:05:10 :::
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substantial questions of law arise in this First Appeal:
1. Whether Smt Banoo's had right to execute the Deed of Settlement on the basis of which Public Trust was registered ?
2.What care was required to be taken by the Ld.Asst.Charity Commissioner before registration of the public trust?
3.Whether Smt Banoo had locus to file Application under section 18 of the Bombay Public Trust Act for registration of the public trust ?
4. Whether the Appellants at this stage are entitled to raise the pleas quoted above.
Question No.1
14. Smt Banoo had indeed no right to execute the Trust Deed which she executed on 1.12.1998 and which was registered on 6.4.1999.
Admittedly she was not appointed an Administrator to the probate that day or even any time thereafter. The only connection Smt Banoo had to the probate was that her late husband was appointed as executor of the will.
After his death his status as a Executor had come an end and since rights of the Executor were not inheritable the legal heir of an executor would not get them. In other words, ::: Downloaded on - 09/06/2013 18:05:10 :::
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after death of the husband of Smt Banoo she was practically a stranger to the will, probate and the property about which Smt Banoo executed the deed and even got it registered at the office of the Sub-Registrar. Probably there is/was no mechanism available with the office of the Sub Registrar to verify whether a party who executed the Deed of transfer of immovable property is its owner etc or not? The Sub-Registrar was therefore unable to stop the registration of the deed. It is common knowledge that once a document is registered it gains some credibility and so because of registration of the deed it took some colour of authority. In view of this, though Smt Banoo had no right to execute the deed she apparently bulldozed such a deed through the Sub-Registrar's office. The answer to question no.1 is answered accordingly.
Question No.2
15. These questions are required to be answered in the light of the facts of the case and provisions of the Bombay Public Trust Act. while narrating the facts, it is mentioned that the ::: Downloaded on - 09/06/2013 18:05:10 :::
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probate of the will and codicil directed the executors to register a public trust in respect of residuary fund which they were supposed to create by sale of un-bequeathed properties of the testator. It is common ground that properties mentioned above namely property at Mazgaon Mumbai and one at Bhagur Devlali District Nasik belonging to the testator and he had not bequeathed them to anyone in his will.
These properties and probably some more properties were available to the executors for creation of residuary fund. The testator had clearly directed that residuary properties should be sold away for creation of residuary fund. Such fund would be liquidated sum of money and same was to become corpus of a public trust and then it would be utilised by the public trust for achieving particular objects that are enumerated in the will.
16. The Asst.Charity commissioner who decided such an application was under obligation to examine the application in the light of ::: Downloaded on - 09/06/2013 18:05:10 :::
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provisions of sections, 18, 19 and Rules 6 and 7 of Bombay Public Trust Act, 1951. These provisions reads as under :
18. Registration of Public trusts:
(1) It shall be the duty of the trustees of a public trust to which this Act has been applied to make an application for the registration of the public trust.
(2) Such application shall be made to the Deputy or Assistant Charity Commissioner of the region or sub-region within the limits of which the trustee has an office for the administration of the trust or the trust property or substantial portion of the trust property is situated as the case may be, (3) Such application shall be in writing shall be in such form and accompanied by such fee as maybe prescribed.
(4) Such application shall:
(a) in the case of a public trust created before this Act was applied to it be made, within three months from the date of the application of this Act and
(b) in the case of a public trust created after this Act comes into force within three months of its creation.
(5) Such application shall inter alia contain the following particulars:
(ai) the designation by which the public trust is or shall be known (hereinafter referred to as the name of the public trust).
(i) the names and addresses of the trustees and the manager
(ii)the mode of succession of the office of the trustee;
(iii)the list of the movable and immovable trust property and such descriptions and particulars as maybe sufficient for the identification thereof;
(iv)the approximate value of movable and immovable property.
(v) The gross average annual income of the trust property estimated on the income of three years immediately preceding the date on which the application is made or of the period which has elapsed ::: Downloaded on - 09/06/2013 18:05:10 :::
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since the creation of the trust, whichever is shorter;
(vi) the amount of the average annual expenditure in connection with such public trust estimated on the expenditure incurred within the period to which the particulars under clause (v) related;
(vii)the address to which any communication to the trustee or manager in connection with the public trust may be sent;
(viii) such other particulars which may be prescribed.
Provided that the rules may provide that in the case of any oral public trusts as shall not be necessary to give the particulars of the trust property of such value and such kind as may be specified therein.
(6) Every application made under sub section (1) shall be signed and verified in the prescribed manner by the trustee or his agents especially authorized by him in this behalf. It shall be accompanied by a copy of an instrument of trust, if such instrument had been executed and is in existence.
(6A) Wherein on receipt of such application, it is noticed that the application is incomplete in any particulars or does not disclose full particulars of the public trust, the Deputy or Assistant Charity Commissioner may return the application to the trustee and direct the trustee to complete the application in all particulars or disclose therein the full particulars of the trust, and resubmit it within the period specified in such direction; and it shall be the duty of the trustee to comply with the direction.
(7) It shall also be the duty of the trustee of the public trust to send a memorandum in the prescribed form containing the particulars including the name and description of the public trust, relating to the immovable property of such public trust (to the Sub Registrar or the sub district appointed order the Indian Registration Act, 1908 (XVI of 1908) in which such immovable property is situate (for the purpose of filing in Book NO.1 under section 89 of that Act.) Such memorandum shall be sent within three months from the date of creation of the public trust and shall be signed and verified in the prescribed manner by the trustee or his agent specially authorized by him in this behalf.
19. Inquiry for Registration:
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On the receipt of an application under section 18 or upon an application made by any person having interest in a public trust or in his own motion, the Deputy or Assistant Charity Commissioner shall make an inquiry in the prescribed manner for the purpose of ascertaining -
(i)whether a trust exists and whether such trust is a public trustee
(ii) whether any property is the property of such trust.
(iii)Whether the whole or any substantial portion of the subject matter of the trust is situate within his jurisdiction
(iv) the names and addresses of the trustees and manager of such trust.
(v) The mode of succession to the office of the trustee of such trust.
(vi)The origin, nature and object of such trust.
(vii)The amount of gross average annual income and expenditure of such trust and
(viii)and other particulars as may be prescribed under sub section (5) of section 18.
Rules 6: Application for registration of a public trust under section 18.
(1) The application for registration of a public trust in addition to the particulars specified in clauses (i) to (vii) of sub section (c) of section 18 shall contain the following particulars:
a) Particulars of documents creating the trust
b) Particulars other than documents about the creation or origin of the trust.
c) objects of the trust
d) Sources of income of the trustee
e) Particulars of encumberances if any on trust property.
f) Particulars of the scheme if any relating to the trustee
g) Particulars of title deeds pertaining to trust property and names of trustees in possession thereof.
The Charity Commissioner may, however direct that in the case of any or all public trusts it shall not be necessary to give the particulars of the trust property of such value and such kind as may be specified by him.
2) The application shall be in the form of schedule II hereto.
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3) The application in addition to a copy of the instrument of trust shall be accompanied by a copy of the scheme if any, in operation in regard to the public trust.
4) Every person signing the application shall subscribe on solemn affirmation before the Deputy or Assistant Charity Commissioner Justice of the Peace (or an Executive Magistrate or a Notary appointed under the Notaries Act,1952 for the State of Maharashtra) that the facts mentioned in the said application are true to the best of my knowledge and belief.
7. Manner of inquiries:
Except as otherwise provided in the Act and these rules, inquiries under or for purposes of sections 19,22,22A, 28,29,36,29,41D, 41E, (3), 43 (2) (a), 47, 50A, 51, 54 (3) and 79AA (2) or any other inquiry which the Charity Commissioner may direct to be held for the purpose of the Act shall be held as far as possible in the Greater Bombay Region in accordance with the procedure prescribed for the trial of suits under the Presidency Small Cause Courts Act, 1882 and elsewhere under the provisional Small Cause Courts Act, 1887 in any inquiry a party may appear in person or by his recognised agent or by a pleader duly appointed to act on his behalf.
Provided that any such appearance shall, if the Deputy or Assistant Charity Commissioner so directs may by the party in person.
17. The Assistant Charity Commissioner was under obligation to see the origin, nature and object of such trust by perusing the documents which had created the trust. He was certainly shown the probate, the will and the codicil.
These documents were certainly of immense importance and the learned Assistant Charity Commissioner ought to have perused them very ::: Downloaded on - 09/06/2013 18:05:10 :::
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carefully.
18. On perusal of these documents one finds that the testator initially made a will on 28.3.1919 and thereafter later added a codicil to the will on 14.1.1944. A combined reading of these two documents reveals that the testator was a rich Solicitor and had no child of his own but had relatives, friends, servants etc to whom he bequeathed his properties. He mentioned in the will very carefully as to how much cash amount should be given after his death to his relatives friends and servants. In the will he provided that the property movable and immovable not specifically disposed of 'would stand transferred to his executors and they shall sell calling and converting such estate into money' which was to become corpus of residuary trust fund. He further expressed that he his executors should use the residuary fund and interest income thereof towards charitable object as such giving education to poor parsi zorastrians, giving assistance to poor ::: Downloaded on - 09/06/2013 18:05:10 :::
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zorastrians students or scholars by means scholarship etc, by providing free fees to absolutely poor zorastrians. He further mentioned that they might frame scheme of the trust for achieving objects mentioned above.
The relevant portion of the will is quite important so far as the question of registration of public trust was/is concerned and I quote this part of the will as under:
"I devise and bequeath all my property estate and effect movable and immovable not hereby specifically disposed of unto my executors upon trust that they sale call and in and convert into money the same or such part thereof as shall not consist of money with liberty nevertheless or, my executors to postpone the same calling in conversion for such time and in such manner as they may think fit or independently or any portion of my estate and effects without incurring any liability or responsibility by reason thereof or for any depreciation or deterioration that my executors shall with an d out of such part of my movable properties as shall consist of money pay my funeral and testamentary expenses and my debts (if any) and the legacies bequeath by him this my will or any codicil and shall at their absolutely discretion invest the residue of the said money in the manner thereby authorized with power for them at such discretion as aforesaid to vary the saidinvest4ement and shall stand possessed of the said residuary and the investment all the time being representing the same as also of the unsold or unconverted portion for the time being of my estate and effects (all their and after called " the residue trustee funds upon the trust following that is to say.
6. My Executors shall subject nevertheless to the provisions following use and employ the residuary trust funds and the net interest and income thereof in and towards any one or more of the following charitable objects viz.
(a) in giving education either primary secondary or higher or technical industrial or instructions to poor parsi zoroastrians.::: Downloaded on - 09/06/2013 18:05:10 :::
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(b) In giving assistance to poor parsis zoroastrians students or scholars by means of scholarship of monthly allowance or by the free supply of books instruments or other material necessary for their training in any branch of learning, science and industry art or handicraft
(c) In providing cheap or free residences for absolutely poor parsis zorastrians of cheap for the lower middle class of parsis zorastrians provided always that my executors shall be at liberty to frame such scheme or schemes for the execution and effection of any one or more. Of them aforesaid charitable objects with such rules regulations conditions restrictions and subject to such powers for themselves and provisions or they may in their absolute discretion fit be liberty to my executors induct in the training of any scheme or schemes to provide for the purchase of necessary lands and the erection of the requisite buildings thereon or for the purchase of properties ready constructing as also to provide for the due appoint of new trustee and for the allocation and distribution of different sums towards the different charitable objects in such properties and in such manner as to they may seem most property.
(c) Provided also that not withstanding anything to the contrary therein before contained my executors shall be at liberty in their absolutely discretion they shall have having regard to the prevailing circumstances exigencies of the time think fits so to do do to devote any part of the residuary trust funds not executed however inky case a fourth of the whole and towards establishment or maintainance of any catholic charity or charities having for its or their objects the reliefs and execution of the power generally without restriction of caste cre3e or colour PROVIDED FURTHER and I hereby express declare that if reasons by non compliance with the provisions of section of the Indian Succession Act or for any other reason whatever be the cost to charity herein before contained or any of them or any part thereof shall and then in that case my executors shall stand possessed of the residuary trust funds in trust absolutely and unconditionally for the said any Rustomjee.
19. There was thus no bequest of immovable property of the testator to any particular person. The codicil did not disturb the above ::: Downloaded on - 09/06/2013 18:05:10 :::
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quoted para no.6 of the will. It becomes clear that the testator wished to establish a trust which would have certain charitable objects. It is clear that all his immovable properties stood transferred to his executors that they would sell the same and convert into money and form residuary fund.
20. When Smt Banoo made an application in 1999 for registration of the trust the Asst. Charity Commissioner was under obligation to understand the intention of the testator for creating residuary fund -corpus- for public trust. The will and the codicil had expressed intention for creation of a public trust. The Asst.Charity Commissioner was thus aware that there were at least two immovable properties which were not disposed of by them and were available for creation of residuary fund. He ought to have realised that the immovable properties referred to above were transferred initially to the executors and since by then there was no living executor he ought to have directed Smt Banoo to ::: Downloaded on - 09/06/2013 18:05:10 :::
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get herself appointed as Administrator of the trust because such administrator/s alone were empowered to sell the immovable properties and convert them into money. Smt.Banoo was not administrator and therefore the Asst. Charity Commissioner ought to have referred this case to the Prothonotary and Sr.Master of the High Court pointing that ig there was urgent need for appointment of administrator of the probate. Had he made such a move the high court would have certainly passed necessary orders for appointment of some suitable persons as administrator of the probate. At that time Smt.Banoo's application for appointment of administrator was also pending. In the application Smt.Banoo had mentioned names of several relatives of the testator who were then living. A suitable order in such circumstances would have been certainly passed by the high court so that with the help of administrator appointed by the high court the Asst.Charity Commmissioner would have proceeded further for registration of the public trust.
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21. Let us assume due inadvertence the Asst Charity Commissioner could not undertake these steps. Nonetheless he ought to have perused the will and codicil to cull out the objects of the proposed trust. The Asst. Charity Commissioner then ought to have inquired as to who could be appointed ig as trustees of the trust and what scheme was required for the trust having regard to its objects. The learned Assistant Charity Commissioner was also under obligation to examine as to whether Smt.Banoo had right to execute the Deed of Settlement and that whether she had any locus to file application before him seeking registration of the trust. This obviously was not done at all and so the entire exercise of the powers given to the Assistant Charity Commissioner under section 18 got misdirected. Since such due care was not taken the impugned order directing registration of the trust and other ancillary directions stood vitiated.
Question No.3 ::: Downloaded on - 09/06/2013 18:05:10 :::
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22. The next question is whether Smt Banoo had locus to file application under section 18? In view of the discussion above, she apparently did not have any locus to file this application.
She was not concerned with the will/probate at that time. She was neither appointed as Administrator of the probate at that time.
Despite this, Smt. Banoo in blatant violation of law and in blatant violations of the provisions made in the will/probate got the Deed of Settlement of trust registered. This according to me disqualified Smt.Banoo from making application under section 18 of the B.P.T. Act for registration of the public trust. She was almost trying to circumvent the obstacles in her way to get herself appointed as Administrator of the will. The registration of the Deed of Settlement of the trust thus was an fraudulent act on her part. The learned Assistant Charity Commissioner did not realise this gross illegality and fraud. Had he realised that he would have certainly refused to entertain her application. In fact he ought to have rejected ::: Downloaded on - 09/06/2013 18:05:10 :::
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her application on this ground alone. However, the learned Assistant Charity Commissioner could not have been powerless when it came to registration of public trust. He on his own after conducting inquiry through his Inspectors suo motu could have initiated action under section 18 for registration of the public trust.
But, my answer to point No.2 is very clear that Smt. Banoo had no locus to file application.
Question No.4
23. The Appellants are certainly be entitled to raise please quoted in the application. They raised this plea since beginning. I have narrated the facts above mentioned that soon after registration of the trust, the appellant raised objections against registration of the trust by filing Revision application under section 70A of the Bombay Public Trust Act before the Joint Commissioner and had challenged the correctness of the order passed and the manner in which the trust was registered and the scheme was framed. Within four months from the date of the impugned order of registration ::: Downloaded on - 09/06/2013 18:05:10 :::
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passed by the Assistant Charity Commissioner, the Appellant raised these pleas. But unfortunately even the learned Joint Commissioner did not realise the illegality committed first by Smt.Banoo and then by the Assistant Charity Commissioner.
24. In the result, Appeal should succeed. The impugned order dated 6.4.1999 directing registration of the public trust is set aside.
The Assistant Charity Commissioner is directed to conduct fresh inquiry and pass such orders as may be necessary. Civil Application also stands disposed of accordingly.
25. At the request of learned counsel for respondent nos.1 and 2, effect of the Judgment shall remain stayed for 8 weeks from today.
A.V.NIRGUDE,J ::: Downloaded on - 09/06/2013 18:05:10 :::
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