Delhi District Court
Narinder Nath Nanda vs . Mohinder Nath on 13 July, 2011
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Suit No. 10/11/93
Narinder Nath Nanda Vs. Mohinder Nath
IN THE COURT OF SH N.K. GOEL : ADDL. DISTRICT JUDGE (5) WEST
DELHI
Suit No. 10/11/93
In re.
1. Sh Narindera Nath Nanda
S/o Late Sh Lala Kidar Nath Nanda
R/o D-962, New Friends Colony,
New Delhi.
2. Kidarnath Welfare Centre
41, Golf Links
New Delhi - 110 003.
................Plaintiffs
Vs.
1. Sh Mohinder Nath
(Now deceased) Represented By:-
a) Smt Malti Nanda - Wife
b) Smt Sonia Mehra - Daughter
Both R/o 41, Golf Links,
New Delhi - 110 003.
2. ANZ Grindlays Bank,
H-Block, Connaught Circus,
New Delhi 110 001
3. Mehra Khanna & Co.
Chartered Accountants,
6, M.J. Building,
Bhagirath Palace,
Delhi.
.................Defendants
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Suit No. 10/11/93
Narinder Nath Nanda Vs. Mohinder Nath
Date of Institution: 19-11-1993
Reserved on : 11-07-2011
Date of Decision : 13-07-2011
SUIT FOR RENDITION OF ACCOUNTS
JUDGMENT
1. The case of the plaintiffs is that by and under trust deed of 4-07-1978 Smt Krishna Pyari created a Public Trust upon contributing the first corpus by donating Rs. 10,000/- under cheque no. 628453 dated 4-07-1978 for charitable purposes ; that the purposes of the trust, inter alia, included:
"i) The promotion of education, by establishing schools, colleges, libraries and other institutions for imparting knowledge and/or by granting scholarship and stipends or making donations or subscribing to any existing similar institution with similar objects.
ii) Providing medical relief, by establishing hospitals, dispensaries, nursing homes and/or by making donations or subscription to existing similar institutions with similar objects".
2. The plaint goes on to say that by the said instrument under clause 5 defendant and plaintiff no. 1 were appointed as the first trustees and indeed there is no other trustee so far; that the account of the trust was kept with 3 Suit No. 10/11/93 Narinder Nath Nanda Vs. Mohinder Nath defendant no. 2 and audited by defendant no. 3 ; that plaintiff no. 1 was actively fulfilling his obligations as trustee and used to keep all the relevant papers in his office at Kidarsons Industries Pvt. Ltd., 17, Parliament Street, New Delhi, of which he was the first Director; that his group in the said company represented 30.14% shares but in 1985 he was ousted from the management which led to the filing of a petition for winding up by the plaintiff u/s 433 of the Companies Act against defendant nos. 2 to 4 (there is no defendant no. 4 in the suit) being C.P. 28/1988 titled as N.N. Nanda Vs. Kidarsons Industries Pvt Ltd. on or about April 4, 1988; that ultimately, the above proceedings, and a suit filed, inter alia, by defendant no. 1 on or about 26-05-1988 being suit no. 1310/1988, was resolved and or adjudicated in pursuance to the terms of settlement recorded in the two proceedings on 9-10/6/1988 ; that some parts of the adjustment were final and as such there was a final decree in regard to such matters and some parts remained to be carried out by the Commissioner appointed by the parties; that the Commissioner filed his report; that without taking up the report of the Commissioner, valuers were appointed and valuers filed their report and objections on valuation report were filed; that on 5-02-1993 a Hon'ble Single Judge of the High Court of Delhi disposed off the objections, and purported to assume jurisdiction to distribute assets in specie (instead of the Commissioner 4 Suit No. 10/11/93 Narinder Nath Nanda Vs. Mohinder Nath appointed on June 9/10-6-1988) and, thus, passed another decree ; that on 4-03-1993 appeal being company appeal no. 9/1993 and FAO (OS) 39/1993 were filed and after being adjourned from time to time the two appeals were admitted on 12-05-1993; that on 20-05-1993 at the instance of defendant no. 1 execution petition was filed being EP 103/93 and the order was secured to dispossess plaintiff no. 1 by breaking open locks leading to delivery of possession; that the notes with plaintiff no. 1 indicate that the properties of plaintiff no. 2 included the following:
i) Certificate of Interest of Deposit Receipt No. 1207/488528 from 1.12.1981 to 3.4.1982:
ii) Certificate of Interest on Deposit Receipt No. 1207/362252 from
iii) Certificate of Interest on Deposit Receipt No. 1207/488635 from 24.5.1981 to 23.5.1982.
iv) Advice of Deposit Receipt No. 1207/489460 dated 2.9.82 for Rs. 1,50,000/- (for 12 months)
v) Advice of Deposit Receipt No. 1207/615940 dt. 3.1.1984 for Rs. 1,50,000/- (for 12 months)
vi) Renewal Certificate of F.D.R. No. 1207/489438 dt. 4.1.1984 for Rs. 1,25,000/- (New No. 1207/615943);
vii) Renewal Certificate of FDR No. 1207/489439 for Rs. 1,00,000/- DT. 4.1.1984 (New No. 1207/615944) 5 Suit No. 10/11/93 Narinder Nath Nanda Vs. Mohinder Nath
viii) Renewal Certificate of FDR No. 1207/489460 dt. 4.1.1984 (New No. 1207/615942)
ix) Advice of Certificate No. 1207/634649 dt. 18.5.1985 for Rs. 1,75,000/- ;
x) FDR No. C.No. 906094/74/261 for Rs. 30,000/- on Central Bank of India dt. 30.5.1985.
xi) Certificate No. 1207/636883 dt. 11.10.1985 for Rs. 1,88,957/-.
xii) Renewal Certificate of FDR No. 1207/619989 dt. 23.1.86 for Rs. 87,075/- (New No. 1207/637038).
xiii) Renewal Certificate of FDR No. 1207/619961 dt. 23.1.86 (New No. 1207/637039)
xiv) FDR No. 1207/637039 dt. 23.1.86.
xv) Renewal Certificate of FDR No. 1207/619962 dt. 23.1.86 for Rs. 58,320/- (New No. 1207/637040) xvi) Certificate No. 1207/637040 for Rs. 62,986/-.
3. It is stated that since books and details are with the defendants, accounts have to be taken from them ; that defendant no. 1, banker of plaintiff no. 2, its auditor are not cooperating because the moneys are being spent/diverted to promote business contacts of defendant no. 1 and not for the objects of the Trust; that otherwise there could be no objection either for the Banker or for the Auditor to share information on account with the Trustee i.e. plaintiff no. 1 ; that on 21-09-1988 plaintiff no. 1 addressed a letter to defendant no. 2 informing the Bank about the differences having arisen between the Trustee and the 6 Suit No. 10/11/93 Narinder Nath Nanda Vs. Mohinder Nath instructions that the current account be converted into deposit account in relation to assets of the plaintiff no. 2 with immediate effect ; that this was repeated on 2-03-1992 ; that a request for supply of statement of account was made on 6-03-1992 and photocopy of the statement of account was provided on 10-04-1992 which had certain discrepancies which were brought to the notice of defendant no. 2 on 16-04-92 followed by the reminders sent on 6-06-92 and 9-06-92 ; that some of these letters were sent to defendant no. 1 also and ultimately on 14-07-1992 a detailed communication was sent incorporating the assertion of plaintiff as the Trustee, in particular as follows:-
"Application of funds under joint control of Trustees by authority of Trustees otherwise than joint, would thus be regarded as the other Trustees borrowing the money. Banker having notice of the character of the money lying with it is impressed with the character of charity money, Banker comes in fiduciary role and is dutybound to protect the interest of the charity or Trust money. Withdrawal by one Trustee amount to loans to that Trustee or Trustees and Bankers in such situations are liable to restitute the Trust money as the withdrawals were fraud on the Trust or Charity. As has been held in Trivandrum Chit Fund Limited and Others vs. Official Liquidator, PALAI Central Bank Limited (1963) 33 Comp.7
Suit No. 10/11/93 Narinder Nath Nanda Vs. Mohinder Nath Cases 922 by High Court of Kerala the Bank is a debtor to the Trustees.
"The position after notice given by me on July 14, 1988 requiring you to convert current account into deposit account without permitting withdrawls by any person is clear. Effective countermand merely has to come to the conscious knowledge of the Banker (Curtice V. London City and Midland Bank Ltd., '1908' 1 K.B. 293). If payments are made by the Bank despite countermand or it be by the negligence or default of the Bank, then the Bank will be liable to the customer for any loss incurred thereby action was brought not for negligence, but for money had and (Reade Vs. Royal Bank of Ireland Ltd., '1992' 2 I.R. 22; cf. Westminster Bank Ltd., V. Hilton (1926), 136 L.T., 315; and See Burnett v. Westminster Bank Ltd., '1965' 3 AII E.R. 81; '1965' 3 W.L.R. 863; '1965' 2 Lloyd's Rep 218). Bank continues to remain a debtor to the Trust or beneficiaries of the Trust both as regards the principals and interest there- on. See New Bank of India Limited vs. UOI in (1981) 51 Comp. Cases 375.
"Reference may also be made to New Bank of India Limited Vs. Pearey Lal AIR 1962 SC 1003. Any one Trustee mixing its personal interest with the amounts belonging to Trust does so at his own peril and any Bank, permits that state of 8 Suit No. 10/11/93 Narinder Nath Nanda Vs. Mohinder Nath affair, does so with the implied indemnity to the trust that it will restitute the money belonging to the Beneficiaries of the trust regardless of its own financial deals with third party and/or remaining Trustee or Trustees.
"Moreover, Rule in Clayton's case has since long held the field. In priority to the individual Trustee, the money of the Trust must be brought in first, except when the instruction or the High Court say otherwise of Trust and until High Court appoints new Trustees the named Trustees must act in unison and together."
It is stated that a letter was sent to defendant no. 3 on similar tenor but without any response ; that the said communication was followed with reminders on 14/09, 3/10, 1992 which led to the short cryptic reply of defendant no. 2 on 21-11-1992 and further reminders on 7/1, 10/3 1993 and there is no reply from the defendants. It is pleaded that it has become necessary to protect the interest of plaintiff no. 2 and seek rendition of accounts from the defendants as the plaintiff apprehends that the trust money has been misappropriated and misutilised by defendant no. 1 for his own business or personal advantage and defendant no. 2 is either in collusion or under pressure to withhold information embarrasing to defendant no. 1. Hence, it is prayed that defendants be 9 Suit No. 10/11/93 Narinder Nath Nanda Vs. Mohinder Nath directed and ordered to render accounts pertaining to plaintiff no. 2, an account being taken, a decree for money found due to the plaintiff be passed against the defendants and plaintiff no. 1 be allowed access to the books of accounts for the purposes of ascertaining the actual dues of plaintiff no. 2.
4. In his written statement defendant no. 1 has pleaded that the suit is not maintainable and the plaint is liable to be rejected u/o 7 rule 11 CPC as the suit has been filed by plaintiff no. 1 in respect of a public trust on the ground of an alleged breach of trust committed by defendant no. 1 and the reliefs prayed for in the suit are fully covered under the provisions of section 92 CPC, without however, following the mandatory procedure prescribed under the said provisions of law; that the suit u/s 92 CPC can be filed only by the Advocate General or by two or more persons having an interest in the Trust and after having obtained leave of the court and these essential and mandatory conditions under the provisions of section 92 CPC having not been fulfilled, the suit cannot be instituted; that plaintiff no. 1 has no right or authority to file the suit on behalf of the Trust nor can the plaintiff no. 1 represent the said Trust in any manner and that the plaintiff no. 1 has, therefore, wrongly and illegally impleaded Kidarnath Welfare Centre as plaintiff no. 2 and the suit is 10 Suit No. 10/11/93 Narinder Nath Nanda Vs. Mohinder Nath misconceived and bad for misjoinder of parties. It is stated that on 1-10-1982 a resolution was passed in the meeting of the Trustees thereby resolving to induct Sh Virendra Nath Nanda and Sh Rajindra Nath Nanda as two additional trustees and they were also authorized to operate the bank account and to sign all other documents of the trust and that a due intimation of the said resolution was given to defendant no. 2 ; that w.e.f. July, 1986 plaintiff no. 1 stopped taking any interest in the Trust activities and despite requests he totally abandoned the work of the Trust and did not participate in any manner in the work of the Trust; that since plaintiff no. 1 was not interested any more in the affairs of the Trust and inspite of repeated requests by the Trustees, and by the Settlor herself, she wrote to the defendant no. 1 on 2-06-1988 to remove him as trustee from the said Trust and due intimation of the same was given to the plaintiff no. 1 on 2-06-1988; that subsequently a meeting was held by the trustees wherein the Settlor of the Trust was also present on 9-06-1988 whereby it was resolved that the authority given to plaintiff no. 1 to operate the account of the Trust with defendant no. 2 Bank be withdrawn and cancelled; that the said resolution was duly forwarded to defendant no. 2 Bank and also to plaintiff no. 1 and was acted upon by both of them; that in another meeting held on 10-06-1988 by the Trustees wherein Smt Krishna Pyari, the Settlor of the Trust was also present, a 11 Suit No. 10/11/93 Narinder Nath Nanda Vs. Mohinder Nath resolution was passed whereby plaintiff no. 1 was discharged from his office as a Trustee and in his place Sh Krishan Gopal Abrol was appointed as a Trustee of the Trust and that a copy of the said resolution was also forwarded to plaintiff no. 1 and to defendant no. 2 Bank which was acted upon by them; that the position, therefore, is that on the date of the suit the plaintiff no. 1 had ceased to be a Trustee of the said Trust with effect from 10-06-88 of which he is fully aware of and the said Trust is managed by the Board of Trustees consisting of Sh Mohinder Nath Nanda (Defendant no. 1), Sh Virender Nath Nanda, Sh Rajinder Nath Nanda and Sh KG Abrol and that all the aforesaid persons who are holding the office of the Trustees of the said Trust have not authorized plaintiff no. 1 in any manner to institute the present suit on behalf of the Trust and, therefore, the suit is liable to be dismissed and in any event the name of plaintiff no. 2 is to be deleted from the array of the parties u/o 1 rule 10 CPC. While admitting the filing of the company petition and the suit as a matter of record it is stated as under:
"The Plaintiff No. 1 diverted the main agency business belonging to Kidarsons Industries Pvt. Ltd., which is a private company where the main shareholders were the four brothers including the Plaintiff No. 1 and their mother. After diverting the said agency to Hansa Industries Pvt. Ltd., a Company floated by the 12 Suit No. 10/11/93 Narinder Nath Nanda Vs. Mohinder Nath Plaintiff No. 1, the Plaintiff No. 1 filed a Company Petition being C.P. No. 28 of 1988 for winding up of the Company. The Company filed a suit being Suit No. 1310 of 1988 against the said Plaintiff No. 1 and the Company promoted by him to which the Plaintiff No. 1 diverted the agency business belonging to M/s. Kidarsons Industries Pvt. Ltd. A compromise was arrived at according to which Plaintiff No. 1 was to receive in lieu of his Group shares in Kidarsons Industries Pvt. Ltd. 30.14% of the value of the assets of the Company in specie. There was protracted litigation in implementation of the said compromise. Even after the valuation report came from the Valuer appointed by the Hon'ble Court, the said report was challenged by the Plaintiff No. 1 by different applications and through multifarious proceedings. All the said objections were dismissed by the Hon'ble Court and the Plaintiff No. 1 was obliged to comply with the orders of the Hon'ble Court which in effect made him to leave the premises 41, Golf Links, New Delhi. The Plaintiff No. 1 resisted execution of the said orders through different proceedings before the Execution Court, the suit Court, Division Bench as well as Supreme Court ultimately had to vacate the said premises on 11th October, 1993. It is only with a view to take revenge against the Defendant No. 1 and other Trustees that the present suit has been filed by the Plaintiff No. 1 after the out come of the litigations in the said suit and execution proceedings. In fact because of the said litigation result adverse to the Plaintiff No. 1, the said Plaintiff has even filed a defamation suit 13 Suit No. 10/11/93 Narinder Nath Nanda Vs. Mohinder Nath after the orders were passed by the Hon'ble Court directing the Plaintiff No. 1 to vacate the said premises 41, Golf Links, New Delhi. It is therefore evident that the present suit has been filed for vindication of his private grievance though in the colour of enforcement of public right as a Trustee of the Trust. In the premises, it is submitted that the present suit and the applications are an abuse of the process of the Court and deserves to be dismissed with exemplary costs."
5. The other averments made in the plaint have been denied either for want of knowledge or as wrong and incorrect. It is prayed that the suit be dismissed.
6. In the replication to the written statement of defendant no. 1 it is, inter alia, pleaded that in any event the Settlor had no role at all after instrument of Trust was accepted by the Trustees and that plaintiff no. 1 did not cease to be a trustee at any time or w.e.f. 10-06-1988 and the Board of Trustees does not consist of four persons as mentioned in the written statement. It is denied that plaintiff no. 1 ceased to be a Trustee or has no right, title or interest in the said Trust and he cannot contest the suit in his capacity as trustee himself or on behalf of plaintiff no. 2. The other averments made in the written statement are denied.
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Suit No. 10/11/93 Narinder Nath Nanda Vs. Mohinder Nath
7. In its written statement defendant no. 2 has pleaded that the plaintiff no. 1 has no privity of contract with defendant no. 2 and the plaintiff no. 1 has no right or authority to include the name of plaintiff no. 2 in the array of the plaintiffs ; that plaintiff no. 1 has no cause of action against defendant no. 2. It is admitted that the account of Trust is kept with defendant no. 2. The receipt of the minutes of meeting of the Trust held on 9-06-1988 and 10-06-1988 by the defendant no. 2 Bank is admitted which are stated to be filed with the written statement as Annexures 1 & 2. It is denied that defendant no. 2 is not cooperating or that the moneys from the account are being spent/diverted to promote the business contacts of defendant no. 1 and not for the objects of the Trust. It is stated that the plaintiff no. 1 as per the records of the Bank has no right or authority to operate the bank account or to ask for any information in respect of the same. It is stated that the instructions given by the plaintiff with regard to the operation of the account cannot be acted upon in view of Annexure 1 & 2 and this position was sufficiently explained to the plaintiff from time to time. It is prayed that the suit qua defendant no. 2 be dismissed.
8. The plaintiffs have filed a replication to the written statement of defendant no. 2.
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Suit No. 10/11/93 Narinder Nath Nanda Vs. Mohinder Nath
9. In its written statement the defendant no. 3 has pleaded that the plaint does not disclose any cause of action against defendant no. 3 and the defendant no. 3 does not have the custody and / or possession of the books of account of the Trust which must be with defendant no. 1 and other Trustees. It is admitted that defendant no. 3 is an auditor of the Trust and he has been performing his duties as and when called upon to do so by the said Trust through its trustees including defendant no. 1 and that so far as defendant no. 3 is concerned the plaintiff no. 1 has not been acting in his capacity as a trustee of the said Trust. It is prayed that the suit be dismissed.
10. On the pleadings of the parties, following issues were framed vide order dated 11-08-1995:
1. Whether the suit is barred by Section 92 of the Civil Procedure Code?
2. Whether plaintiff No. 1 has no right to file suit on behalf of plaintiff No. 2?
3. Whether defendant No. 2 is not correctly described? If so, to what effect?
4. Whether additional trustees were inducted in the trust? If so, what is the effect of their not having being impleaded as parties in the suit?
5. Whether plaintiff No. 1 was removed as trustee of the trust? If so, to what effect?
6. Whether the plaint does not disclose any cause of action?16
Suit No. 10/11/93 Narinder Nath Nanda Vs. Mohinder Nath
7. Whether suit against defendant Nos. 2 and 3 is maintainable?
8. Whether the defendants can be directed to render accounts of plaintiff no.
2 to plaintiff no. 1?
9. Relief.
11. Admission/denial of documents filed by defendant no. 1 on 18-09-1997 was carried out and few documents were admitted and exhibited as Ex. PW-1/2 and Ex. PW-1/3. Vide order dated 9-04-2001 the name of defendant no. 2 was permitted to be changed to Standard Chartered Grindlays Bank Ltd.
12. Defendant no. 3 was proceeded ex-parte vide order dated 11-05-2004.
13. Defendant No. 1 Sh Mahinder Nath died during the pendency of the suit and his LRs, namely, Smt Malti Nanda (Wife) and Ms Sonia Mehra (daughter) were impleaded as defendant no. 1 in his place vide order dated 5-08-2008.
14. From a perusal of the suit file it transpires that the plaintiff has examined PW-1 Sh MD Balani, Inspector, Directorate of Exemption who has proved the documents as Ex. PW-1/1, Ex. PW-1/2, Ex. PW-1/3 and Ex. PW-1/4. Sh KL Bhardwaj, Asstt Manager (Customer Relations), ANZ Grindlays Bank, Connaught Place, New Delhi was partly examined as PW-2 on 19-09-97 and his 17 Suit No. 10/11/93 Narinder Nath Nanda Vs. Mohinder Nath further examination-in-chief was deferred but he was never produced for his further statement.
15. Ex. PW-1/1 is the copy of the letter written by the defendant no. 3, the Chartered Accountants of Kidar Welfare Centre to the Commissioner, Income Tax. Ex. PW-1/2 is the trust deed. Ex. PW-1/3 is the copy of the exemption letter u/s 80-G of the Income Tax Act written by the Commissioner of Income Tax to the Trustee, Kidar Welfare Centre. Ex. PW-1/4 is the copy of the recognition u/s 80-G of the Income Tax Act written by the Director of Income Tax to Kidar Welfare Centre. Ex PW-2/1, Ex. PW-2/3 and Ex. PW-2/4 are the copies of the letters written by the plaintiff to ANZ Grindlays Bank.
16. My Ld Predecessor closed PE vide his order dated 3-12-2010. Evidence on behalf of defendant no. 1 has been closed vide statement made on 19-02-2011 and evidence on behalf of defendant no. 2 has been closed vide statement made on 2-04-2011.
17. I have heard the Ld Counsel for the plaintiffs and the Ld Counsel for defendant no. 2. None has appeared to advance arguments on behalf of defendant no. 1. I have also perused the suit file.
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Suit No. 10/11/93 Narinder Nath Nanda Vs. Mohinder Nath
18. The Ld Counsel for the parties have contended that since PW-1 is a formal witness and the incomplete statement of PW-2 which has not crossed the barrier of cross-examination cannot be read into evidence and neither the plaintiffs nor the defendants have adduced any evidence the suit may be disposed off.
19. My findings on the issues are as follows:-
ISSUE NOs. 1, 2 & 3
20. The onus to prove these issues was on the defendants. They have not adduced any evidence. The issues are decided accordingly in favour of the plaintiffs and against the defendants.
ISSUE NO. 4
21. The onus to prove this issue was on the defendants. They have not adduced any evidence. The issue is decided accordingly in favour of the plaintiffs and against the defendants.
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Suit No. 10/11/93 Narinder Nath Nanda Vs. Mohinder Nath ISSUE NO. 5
22. The onus to prove this issue was on the defendants. They have not adduced any evidence. The issue is decided accordingly in favour of the plaintiffs and against the defendants.
ISSUE NO. 6
23. The onus to prove this issue was on the defendants. They have not adduced any evidence. The issue is decided accordingly in favour of the plaintiffs and against the defendants.
ISSUE NO. 7
24. The onus to prove this issue was on the plaintiffs. They have not adduced any evidence. The issue is decided accordingly in favour of the defendants and against the plaintiffs.
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Suit No. 10/11/93 Narinder Nath Nanda Vs. Mohinder Nath ISSUE NO. 8
25. The onus to prove this issue was on the plaintiffs. They have not adduced any evidence. The issue is decided accordingly in favour of the defendants and against the plaintiffs.
ISSUE NO. 9.
26. In view of my findings on issue no. 8 I dismiss the suit with no order as to costs. Decree sheet be prepared accordingly. File be consigned to record room.
(NK Goel) Addl. District Judge-05 (WEST) Tis Hazari Courts (Announced in the open court on 13th July, 2011)