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TMI Blog2007 (3) TMI 378X X X X Extracts X X X X X X X X Extracts X X X X ..... left who is entitled to get any pension out of the Trust in issue, which material fact has been ignored by the courts below. - CIVIL APPEAL NO. 1320 OF 2007 - - - Dated:- 13-3-2007 - S.B. SINHA AND MARKANDEY KATJU, JJ. R.F. Nariman, U.U. Lalit, C. Kukund, Ashok Jain, Pankaj Jain and Bijoy Kumar Jain for the Appellant. Ranjit Kumar, Rakesh Dwivedi Senthil Jagadeesan, Ms. Swati Sinha, Ms. Jayasree Singh, Shashank Sharma, Dr. Kailash Chand and Ms. Anu Gupta for the Respondent. JUDGMENT S.B. Sinha, J. - Leave granted. Introduction : 2. Interpretation of section 34 of the Indian Trusts Act, 1882 (for short, the Act ) is involved in this appeal which arises out of a judgment and order dated 6-2-2006 passed by a Division Bench of the Calcutta High Court in APOT No. 584 of 2005, affirming a judgment and order of a learned Single Judge of the said Court. Background Facts : 3. M/s. Dunlop India Ltd. (for short, the Company ) is an existing company within the meaning of section 3(1)( ii ) of the Companies Act, 1956. The Company floated a Fund known as Dunlop Executive Staff Pension Fund for providing pension and annuities to the members of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... may be granted at the sole discretion of the Company calculated at such rate as may be decided by the Company." Provided further in the event of such employee leaving the service of the Company after completion of two years of service with mutual consent and does not have any adverse records of his performance shall be paid a monthly pension which shall be not less than 50 per cent of his last drawn salary nor shall it exceed 100 per cent of such salary." The said amendment was made with retrospective effect. However, it was sought to be deleted by a deed of variation dated 25-9-2000 from 1-4-1997, which again in terms of another deed of variation dated 28-3-2001 was sought to be given a retrospective effect from 1-4-1995. 8. Respondent No. 3 herein was the Managing Director of the Company. Admittedly, he has filed a suit for realization of an amount of pension quantified at Rs. 45 lakhs. Two other suits by two other members of the Fund are also admittedly pending. 9. The Company became sick. It was declared as such by the Board of Industrial Financial Reconstruction on or about 22-1-1988. 10. Allegedly, three other funds were created by the Company in the year 200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se clauses in our opinion, the trust shall be irrevocable one and no moneys belonging to the funds in the hands of the trustees shall be recoverable by the company nor shall the company have any lien or charge of any description to the same. Therefore, we are sure that the purpose of the trust exists and/or remain valid until the last surviving employees receive its benefit out of the trust fund and furthermore, under Clause 3 of the said Trust Deed funds lying in the hands of the said trustees are not coverable by the company nor the company shall have any lien or charge of any description on the said trust fund. Therefore, we do not have any hesitation to hold that no opinion can be expressed by the Court that the amount so lying in the hands of the trustees can be recoverable by the company or may be transferred in any manner to the company. Therefore, we are not in a position to accept the contention of Mr. Sarkar that during the financial stringency they shall have the right to utilize the said fund and the amount lying in the said trust-fund can be transferred to the company for meeting its liabilities. After scrutinizing the Clauses of the said Trust Deed we have come to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or Counsel appearing on behalf of Respondent No. 3, on the other hand, would submit : ( i )Operation of section 34 being related to the management or administration of the trust property; matters which come within the purview of extinction of the trust as contained in Chapter VIII of the Act, would not come with the purview thereof. ( ii )Section 34 has a limited application keeping in view the exclusionary clause contained in the expression "other than questions of detail, difficulty or importance, not proper in the opinion of the court for summary disposal" and, thus, the courts below rightly refused to exercise their jurisdiction in the matter. ( iii )The learned Single Judge as also the Division Bench of the High Court having found difficulties in the matter as also in view of the importance of the question having refused to exercise the discretionary jurisdiction, this Court should not interfere therewith. ( iv )The term opinion, advice or direction would not confer a jurisdiction to finally decide the rights of the persons interested in the trust. Relevant statutory provisions : 15. Sections 11, 56, 77 and 83, which are relevant for the purpose of this a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on to the contrary, must hold the trust-property, or so much thereof as is unexhausted, for the benefit of the author of the trust or his legal representative." Application of Law : 16. The jurisdiction of the court under section 34 admittedly is confined to opinion, advice or direction. An application would be maintainable on any present questions. Such questions must arise "respecting the management or administration of the trust property". The questions should not be of any detail, difficulty or importance or otherwise not proper in the opinion of the court for summary disposal . 17. Copy of the application must be served upon the persons interested in the application. If an opinion is rendered, or advice is given, or a direction is issued, the same shall be deemed, so far the trustee is concerned, in regard to his own responsibility to have discharged his duty as such trustee in the subject-matter of the application. 18. It may be that such an application may be filed without instituting a suit but maintainability of such an application would mainly depend upon the nature and purport thereof. Merely an option has been conferred on a trustee to file either a sui ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eal question is had he that inherent jurisdiction? Chapter XIII of the Calcutta High Court Rules prescribes what orders can be obtained in an originating summons proceedings. The jurisdiction of the Judge acting under that Chapter is a summary jurisdiction. Rule 1 of that Chapter empowers the Judge to entertain an application in respect of matters enumerated in clauses ( a ), to ( g ) of that rule. Admittedly clauses ( a ), ( b ), ( f ) and ( g ) are not relevant for our present purpose. Under clause ( c ) the Court could only decide about furnishing of any particular accounts by trustees and vouching (where necessary) of such accounts. Under clause ( c ) it could direct the trustees to pay into Court any monies in his hands and under clause ( e ) direct him to file an account and vouch the same to do or abstain from doing any particular act in his character as a trustee. The orders under Chapter XIII are made in chambers. As mentioned earlier the proceedings under that Chapter are summary proceedings. No rule in that Chapter was brought to our notice under which the order in question could have been made. ****** 25. It will be noticed that the powers given under those four he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a right on the part of the trustee to put an end his right to get himself discharged from his obligation. If for some reason or the other, it is contended by the trustee that the trust stand extinguished, any remedy in respect thereof must be found within Chapter VIII of the Act and not otherwise. 25. Similar provisions exist in the Official Trustees Act, 1930, section 302 of the Indian Succession Act, 1925 and section 7 of the Charitable and Religious Trusts Act, 1920. 26. The courts of India have all along held that their jurisdiction, in this behalf, is limited. In any event, it is for the court concerned to arrive at an opinion as to whether the questions posed are matters of detail, difficulty or importance. Summary jurisdiction would not be exercised in the event the exclusionary clause comes into operation. 27. We will assume for the time being that the application under section 34 of the Act was maintainable. The court, however, keeping in view the number of persons who would be entitled to oppose the prayer of extinction of trust, would decline to exercise its jurisdiction. Interpretation of the trust deed furthermore is a question of importance. It is also a m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that matter AIFR intended to proceed the matter is one which falls within the jurisdiction of the authorities created under the SICA. The Civil Court will have no say in the matter. 32. Submission of the learned counsel that in this case section 83 is squarely attracted cannot be appreciated for more than one reason. Firstly, because it is a seriously disputed question of fact. Secondly, the court exercising its summary jurisdiction for the purpose of giving advice, opinion or direction cannot finally determine the rights and obligations of the trustees vis-a-vis the State on the one hand and the beneficiary thereof on the other. Thirdly, even if a few persons opposed extinction of the trust, the same itself should be treated to be sufficient for the court to refuse to exercise its summary jurisdiction under section 34 of the Act. 33. Strong reliance has been placed by Mr. Nariman on Prince Muffakham Jah Bahadur v. H.E.H. Nawab Mir Barkat Ali Khan Bahadur Prince Mukarram Jah AIR 1989 AP 68. Therein, a Division Bench of the Andhra Pradesh High Court categorically held that there was no opposition. It was found as of fact that the First Respondent would stand to gain if ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, who is alleged to be an insane person and give the opinion on the basis of her statement. Though Ex. R-1, certificate, alleged to have been given by a psychiatrist, was marked, the Court made no effort to examine the said doctor. Obviously, this could not have been done because the matter has to be disposed of in a summary manner. Thus, it is evident that the advice that was sought for by the trustee required a determination on contentious facts and the jurisdiction of the Court under section 34 being only in the nature of giving guidelines or directions without entering into the merits, the application ought not to have been entertained by the Court. The trustee might have got a valid and satisfactory opinion had he approached a qualified medical man or the Court in a properly instituted suit. 23. In Avoch Thevar case ( supra ) following the decision in Armugan Chetty v. Raja Jagaveera ILR 28 Mad. 444, it was clearly held that while providing the trustees a right to apply to the Court for opinion to the Management and the Members section 34 embodied at the same time, a limitation governing the questions to be asked viz., that there should not be hypothetical and any q ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... : The words "opinion, advice or direction" in section 34 Trusts Act, must be read together as meaning nothing more than guidance. Under section 34 the Court exercised what may be called its consultative jurisdiction, giving guidance to a trustee who presumably asks for it, because he wants it and intends to follow it, section 34 is intended to enable a trustee to obtain the Court s guidance in suitable matters for his protection. The advice, opinion or direction given under section 34 is not an order binding on parties and disobedience to it does not involve committal for contempt. . ." (p. 16) 38. Strong reliance has been place on Smt. Nilima Ghosh v. Prakriti Bhusan Mitter AIR 1982 Cal. 14, wherein it was categorically held that when an application was filed under section 90 of the Code of Civil Procedure, the court would be justified in refusing to answer the question as the matter should have been referred to court specified in section 34 of the Act, stating the said decision was rendered, inter alia, on the premise that the court of principal Civil Court is a court of superior jurisdiction to that of a Subordinate Judge. We need not pronounce on the correctness o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... jurisdiction, in my opinion, it is not a case where jurisdiction under Article 142 of the Constitution of India should be invoked particularly in view of the fact that the appellant is not remediless. It can file a suit. It can take recourse to other remedies which are available in law. 45. The appeal, therefore, being devoid of any merit is dismissed. In the facts and circumstances, however, there shall be no order as to costs. Markandey Katju, J : 46. I have perused the judgment of my learned brother S.B. Sinha, J. in this case and am in respectful disagreement with the same. Hence, I am preparing my own judgment. 47. Leave granted. 48. This appeal is directed against the judgment and order dated 6-2-2006 of the High Court of Calcutta in APOT No. 584 of 2005 in APO No. 508 of 2005. 49. The facts of the case are mentioned in the judgment of my learned brother Sinha, J. and hence I am not repeating the same except where necessary. 50. Admittedly, the object of the Trust in question was to pay pension and annuities to the members of the Trust or dependents, including their widows and children (upto the age of 21 years), in accordance with the rules of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are returned to the Company as it may help revive the Company. 54. I am, therefore, of the opinion that the learned Division Bench as well as the Single Bench which passed the impugned judgment erred in holding that the purpose of the Trust still exists and remains valid. Consent letters have been given by 140 employees of the Company and the others concerned have also been paid off. The only one remaining is Shri M.D. Shukla, who was the Managing Director for 38 months and who claims pensionary benefits of over Rs. 45 lakhs after having changed the Trust rules just before his retirement in order to become a beneficiary. His claim is disputed by the company. In my opinion, even if there is a genuine dispute about the claim of Shri M.D. Shukla of about Rs. 45 lakhs, this amount could have been set aside for adjudication in a suit and the balance amount of the Trust fund should have been ordered to be returned to the Company. 55. Admittedly the Company had a total number of 186 Executives and/or Management staff, who were members and/or beneficiaries of the said Fund. 56. Under the Rules of the Fund, the aforesaid 186 members and/or beneficiaries would be entitled to rece ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to say, does no justice or equity to any of the parties. 62. Section 83 of the Indian Trust Act states: " Trust incapable of execution or executed without exhausting trust property. Where a trust is incapable of being executed, or where the trust is completely executed without exhausting the trust property, the trustee, in the absence of a direction to the contrary, must hold the trust property, or so much thereof as is unexhausted, for the benefit of the author of the trust or his legal representative." 63. Hence, in view of section 83, the money lying with the Trust/fund should be returned to the Company. 64. Three persons who filed Suit No. 551/2001 retired between 1994 97 and as on date are getting their pension from the LIC. Thus, the interest of every beneficiary under the Trust has been taken care of and annuities have been purchased by the Trust in the names of the beneficiaries as per the valuation carried out by the LIC and in terms of the pensionery benefits to be received by the concerned beneficiary. Therefore, there is no employee/beneficiary left who is entitled to get any pension out of the Trust in issue, which material fact has been ignored by th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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