Calcutta High Court
Ajoy Agarwal vs Vijay Kumar Agarwal & Ors on 16 August, 2010
Author: Sanjib Banerjee
Bench: Sanjib Banerjee
GA NO.1336 OF 2008
GA NO.3234 OF 2008
GA NO.3330 OF 2008
GA NO.3814 OF 2008
GA NO.637 OF 2010
CS No. 83 of 2008
IN THE HIGH COURT AT CALCUTTA
Ordinary Original Civil Jurisdiction
ORIGINAL SIDE
AJOY AGARWAL
Versus
VIJAY KUMAR AGARWAL & ORS.
BEFORE:
The Hon'ble JUSTICE SANJIB BANERJEE
Date : 16th August, 2010.
Appearance :-
Mr.Ranjan Bachawat, Adv., Mr.Reetobroto Mitra, Adv., Mr.Manik Das, Adv., for the plaintiff.
Mr.Ashis Chakraborty, Adv., Mr.Mohit Gupta, Adv., Mr.A.P. Agarwalla, Adv., for the defendant nos.1,2,4 and 5.
Mr.Amar Nath Das, Adv., Mr.S.N. Saha, Adv., for the defendant no.7.
Mr.Ayan Banerjee, Adv., for the defendant no.3.
The Court : The suit is by a beneficiary seeking removal of the trustees of a private trust and for incidental reliefs including the framing of a scheme for the purpose of the future management of the trust. The 2 plaintiff complains of breach on the part of the trustees and of acts of devastation.
GA No.1336 of 2008 is the plaintiff's first application seeking an injunction on the defendant nos.1 to 3, who are the trustees, for restraining them from selling the trust properties. On this petition being received on April 29, 2008 an ex parte order was made restraining the parties from selling or mortgaging any of the trust properties. The order was extended till disposal of the application by a further order of May 12, 2008.
GA No.3234 of 2008 is an application by the defendant nos.12 and 13 for deletion of their names. It is the submission of the defendant nos.12 and 13 that they are not beneficiaries under the trust and that their names have been wrongly included by the plaintiff for the plaintiff to wriggle out of an arbitration agreement that binds the other parties. Prima facie, the defendant nos.12 and 13 appear to be beneficiaries under the first clause of the deed of trust of May 23, 1946 since, admittedly, the defendant nos.12 and 13 are the children of a child of the settlor.
GA No.3814 of 2008 is an application by the first defendant for deleting the name of the defendant no.11. For similar reasons as GA No.3234 of 2008 has been found to be unmeritorious, GA No.3814 of 2008 appears to be without basis since the defendant no.11 is, admittedly, a 3 grandchild of the settlor and is apparently covered by the opening clause of the trust deed of May 23, 1946.
GA No.3330 of 2008 is the plaintiff's second application relating to an Allahabad property. According to the plaintiff, notwithstanding such property belonging to the trust, the first defendant and/or the defendant trustees had purported to deny the trust's ownership of such property. On such second application filed by the plaintiff, an order was made on September 30, 2008 restraining the defendant nos.1, 4 and 5 from creating any personal interest in respect of the Allahabad property at 20, Thornhill Road. The order was of limited duration. Such order was subsequently extended on November 6, 2008 and, on November 12, 2008, in the presence of some of the defendants, the order of September 30, 2008 was modified by restraining the defendants from dealing with or disposing of or alienating or encumbering the Allahabad property at 20, Thornhill Road. The order, however, permitted the transfer of such Allahabad property to be effected, but only in the name of the first defendant as trustee and not in the first defendant's personal name.
GA No.637 of 2010 is the first defendant's vacating application. The first defendant says that the plaintiff has suppressed material facts, that the subsisting orders have given rise to the possibility of conflict of decisions of two Courts and that by reason of the lessor of the said 4 Allahabad property having held several decades ago that the leasehold rights in respect of such property could not have been made the subject matter of the trust without the previous consent of the lessor, the property at 20, Thornhill Road was agreed to be excluded from the trust by a settlement arrived at between all the beneficiaries of the trust.
The deed of trust provided, in its opening clause, that the purpose of the trust would be for providing for the education and maintenance of the settlor's children and the children of the settlor's children. The trust envisaged that the settlor and his wife would be the original trustees. The deed stipulated that the number of trustees would not exceed three and empowered the remaining trustees to induct additional trustees upon such situation arising. There is a specific clause in the deed that restrains the trustees from mortgaging or selling the trust properties. However, with the monies available to the trust, the trustees were empowered to acquire additional properties and such additional properties would thereafter become part of the corpus of the trust.
There appears to have been an application made in the year 1957 in this Court for sale of some of the trust properties. Originally, the immovable properties included in the trust covered several properties in Allahabad other than the property at 20, Thornhill Road (which was then numbered as 18, Thornhill Road). The other properties included one at 1, 5 Minto Park at Calcutt and a property near Wellington Square at Calcutta. It is also the admitted position that the office of the trust was to be at 7, Jatindra Mohan Avenue at Calcutta, which property was subsequently acquired by the trust.
The present disputes primarily relate to the Allahabad property at 20, Thornhill Road. The plaintiff says that on the application made in the year 1957 an order was passed permitting some of the properties to be sold. The plaintiff demonstrates that a subsequent application was made on which an order was passed in the year 1987 for sale of certain other properties. The plaintiff says that a third order was passed by this Court in the year 2001 for sale of further properties.
The settlor and his wife continued to be the trustees till such time that the settlor resigned and/or retired. Thereafter the settlor's wife added one Kali Prasad who was a son of the settlor as the other trustee. The two continued as joint trustees till or about the year 1967 when the settlor's wife expired. Thereafter Kali Prasad inducted the first defendant as a co- trustee. It is the plaintiff's case that the plaintiff is not aware as to the circumstances in which the second defendant and the third defendant were inducted as trustees. It has been averred in the plaint that the second defendant, who is the wife of the first defendant, claims to have been appointed as a trustee by the first defendant and that the third defendant, 6 who is the son of Kali Prasad, also claims to have been anointed as a trustee.
The plaintiff relies on an application made in or about the year 1987 on which an order was made on February 26, 1987. In such application, it was pleaded that it was necessary to sell some of the other immovable properties since the trust did not have the requisite funds to pay a sum of Rs.40,000/- for the renewal of the lease in respect of the property at 20, Thornhill Road to the Government of Uttar Pradesh. Such averment is clear at paragraph 12 of the relevant application (and it appears that pp 58 and 59 of the petition relating to GA No.1336 of 2008). The order dated February 26, 1987 required advertisements to be published and for the relevant properties to not be sold below the reserve price as stated in the valuation report.
The plaintiff refers to a suit filed by the first defendant and others in Allahabad in the year 2004. The plaintiff says that notwithstanding the first defendant being a signatory to the application on which the order dated February 26, 1987 was made, the first defendant had subsequently purported to claim that the property at 20, Thornhill Road, Allahabad, did not belong to the trust. The plaintiff says that such conduct of the first defendant would disentitle the first defendant from continuing as a trustee. In addition, there are allegations in the plaint to the effect that the trustees 7 had not rendered accounts and that the previous properties sold by the trustees may have been sold at an undervalue or the first defendant may have acquired these properties through a name-lender.
The first defendant says that it is the admitted position that the property at 20, Thornhill Road was obtained by way of a lease by the settlor from the Government of Uttar Pradesh. The first defendant suggests that the lease deed provided that the leasehold rights thereunder could not be transferred without the previous leave of the lessor. The first defendant submits that notwithstanding the earlier orders obtained from this Court for sale of the other properties and for the sale proceeds being used for the purpose of making payment for the renewal of the lease relating to 20, Thornhill Road, upon the necessary application in such regard being made with the Government of Uttar Pradesh, the lessor declined to acknowledge the transfer of the leasehold rights in favour of the trust. For such purpose, the first defendant has relied on a letter dated April 3, 1993. A translated version of such letter of April 3, 1993 has been appended to the first defendant's affidavit-in-opposition to GA No.3330 of 2008. There is an averment at paragraph 10 (pp 19 and 20) of the petition relating to the first defendant's vacating application in GA No.637 of 2010 that by such letter of April 3, 1993, the Government of Uttar Pradesh did not accept the application made by the trust for renewal of the lease. However, the letter 8 of April 3, 1993 which has been relied upon in the affidavit filed by the defendant no.1 to GA No.3330 of 2008 provides as follows :-
"Please refer to notice no.D974/najul/92 dt. 16.9.92 of this office in the above matter in which you were given notice to submit an application for renewal by fixing 15 days time. Even after elapsing of sufficient time no application for renewal has been received from you and nor has any reason been given.
You are again being given a chance to submit a renewal application within a week and clarify the reason as to why you have not submitted the application till now."
Nothing in such letter indicates that the Government of Uttar Pradesh had denied the renewal on the ground that the leasehold rights could not have been transferred by the original lessee in favour of any other or that the leasehold rights could not have been made the subject matter of a trust by the lessee as settlor thereof. The first defendant claims that upon the beneficiaries being made aware that the Government of Uttar Pradesh would not renew the lease in respect of the 20, Thornhill Road, Allahabad property in favour of the trust, the beneficiaries entered into a settlement on September 10, 1994. For such purpose, the first defendant 9 relies on a copy of the purported memorandum of understanding which appears at page 36 of the first defendant's affidavit to GA No.3330 of 2008. The plaintiff has, in the affidavit-in-reply used in GA No.3330 of 2008, alleged that all the beneficiaries were not parties to the settlement and the plaintiff says that, in any event, the settlement had not been given effect to.
The first defendant says that it was for the plaintiff to disclose all material facts and that in the plaintiff not having disclosed the memorandum of settlement which the plaintiff had also signed, there was suppression of material fact which would disentitle the plaintiff from seeking the continuation of the subsisting order or praying for any further order on his applications. No other ground has been urged by the first defendant.
The substance of what the first defendant says is that notwithstanding the first defendant being a trustee and despite the previous representation by the first defendant to this Court in the application on which the order dated February 26, 1987 was passed, the subsequent conduct of the beneficiaries would permit the first defendant as trustee from denying the title of the said Allahabad property to the trust or would permit the first defendant to treat the property as one that did not belong to the trust. Prima facie, it appears that such a stand may not be taken by a trustee who holds office under the deed and it is undisputable 10 that a schedule to the deed of trust includes the relevant property, which was then numbered as 18, Thornhill Road and has now been renumbered as 20, Thornhill Road, as part of the trust properties.
As to the second submission made on behalf of the trustee that the principles of comity of court would warrant that no order is made in the present suit, it appears that there is no subsisting order in the Allahabad suit which has been filed in the year 2004. It is true, as the first defendant says, that the plaintiff here had unsuccessfully applied under Order VII Rule 11 of the Code of Civil Procedure for rejection of the Allahabad plaint and that the plaintiff has also filed its written statement to contest such suit. However, as of now, there is no subsisting interim order in the Allahabad suit and, in the event the Allahabad suit is decided prior to the present suit being decided, the issue as to the title of the said Allahabad property may be closed. But there may be one unsurmountable problem in the matter, in that the trust is not a party to the Allahabad suit and it is the trust's title to the leasehold rights which would apparently be decided in such suit.
A further submission has been made by the first defendant to the effect that on a writ petition filed in the Allahabad Court by the seventh defendant herein, a Division Bench of that Court passed an order permitting the appropriate authorities of the Government of Uttar Pradesh 11 to adjudicate upon the objection raised by the seventh defendant herein before such authorities. Whatever may be the effect of the order passed by the Division Bench of the Allahabad Court, the first defendant cannot seriously suggest that the impact of such order would be that some minion of the Government of Uttar Pradesh would decide the title to the said Allahabad property. The title to the said property has to be decided in an appropriate action filed before an appropriate forum authorised to adjudicate upon such question. It does not appear that the trust is a party to the Allahabad suit and it is also evident that the matters relating to this trust have always been carried to this Court from or about the year 1957, including by the first defendant as trustee.
Since it is evident that despite the first defendant being a trustee, he is also the plaintiff in a suit claiming adverse to the interest of trust without making the trust a party to the Allahabad suit, the orders subsisting in this suit should be continued and further orders may be made. Accordingly on GA No. 1336 of 2008, there will be an order in terms of prayer (a) of the Notice of Motion. The order in terms of prayer (a) will also stand extended to all other parties to this suit.
On GA No. 3330 of 2008, the interim order originally passed on September 30, 2008, as subsequently been continued on November 12, 2008, is confirmed.
12
GA No. 3231 of 2008 and GA No. 3814 of 2008 are dismissed on the principal ground that the defendant nos. 11, 12 and 13 appear, on a prima facie reading of the trust deed, to be beneficiaries covered by the trust.
GA No. 637 of 2010 has to fail in the wake of the orders already passed in favour of the plaintiff on the plaintiff's two applications.
There will be no order as to costs.
Urgent certified photocopies of this order, if applied for, be supplied to the parties upon compliance with all requisite formalities.
(SANJIB BANERJEE, J.) SD/RB.