1970 (12) TMI 97 - HC - Indian Laws

Summary

Issues Involved:
1. Legal representatives of mortgagors.
2. Trustee for sale.
3. Agreement's validity post-assignment.
4. Mortgagee in possession.
5. Breaches of trust.
6. Sale at inadequate price.
7. Loss or damage to plaintiffs.
8. Court's jurisdiction.
9. Limitation.
10. Suit's prematurity.
11. Cause of action.
12. Reliefs entitled.

Issue-Wise Detailed Analysis:

1. Legal Representatives of Mortgagors:
The court confirmed that the plaintiffs are the legal representatives of Sundarmull Rajgarhia and Ramkumar Rajgarhia, based on the evidence provided by Jainath Sahay, an old employee of the plaintiffs. There was no contrary evidence from the defendants.

2. Trustee for Sale:
The court examined whether the defendant bank became a trustee for sale of the Bhukailash properties by the combined operation of the deeds of December 13, 1930, and February 12, 1931. The court held that the Memorandum of Agreement of December 13, 1930, and the Deed of Assignment of February 12, 1931, together created a trust for sale, as the terms of the Agreement were imported into the conveyance by express statements in the Deed of Assignment.

3. Agreement's Validity Post-Assignment:
The court held that the Agreement of December 13, 1930, remained operative after the execution of the assignment of the lease on February 12, 1931, as the assignment was intended to implement the terms of the Agreement.

4. Mortgagee in Possession:
This issue was dropped due to an amendment of the plaint, and therefore, it did not arise for consideration.

5. Breaches of Trust:
The court found that the defendant bank committed breaches of trust by:
- Failing to render accounts.
- Failing to exercise due diligence in selling the property.
- Denying the plaintiffs' status as beneficiaries.
- Entering into an agreement for an improvident sale at a grossly inadequate price.

6. Sale at Inadequate Price:
The court held that the price offered by the defendant No. 2 was grossly inadequate. The bank had not made any serious effort to sell the property at a higher price and had acted capriciously in entering into the agreement with the defendant No. 2.

7. Loss or Damage to Plaintiffs:
There was no evidence that the plaintiffs suffered any loss or damage by reason of any act of the defendants.

8. Court's Jurisdiction:
The court held that the suit was not a suit for land and that it had jurisdiction to try the suit. The primary object of the suit was to prevent the trustee from committing a breach of trust and to administer the trust.

9. Limitation:
The court held that the suit was not barred by limitation, as it involved an express trust created by the intention of the parties, and section 10 of the Limitation Act was applicable.

10. Suit's Prematurity:
The court held that the suit was not premature, as the defendant bank had denied the existence of the trust and had entered into an agreement for an improvident sale.

11. Cause of Action:
The court held that the plaintiffs had a valid cause of action, as the defendant bank had committed breaches of trust and was about to make an improvident sale.

12. Reliefs Entitled:
The court granted the following reliefs:
- Declaration that the Agreement dated June 15, 1961, was void and directed it to be delivered up and cancelled.
- Injunction restraining the defendant bank from transferring the Bhukailash properties under the said Agreement.
- Direction to the defendant bank to render true accounts in respect of the said properties.
- Direction to the defendant bank to sell the Bhukailash properties by public auction or private treaty with due expedition.
- Costs of the suit to be paid by the defendant No. 1 to the plaintiffs.

Conclusion:
The court found in favor of the plaintiffs on most issues, holding that the defendant bank was a trustee for sale and had committed breaches of trust. The Agreement for sale with the defendant No. 2 was declared void, and the bank was directed to sell the property with due diligence and render accounts.