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TMI Blog1942 (5) TMI 2X X X X Extracts X X X X X X X X Extracts X X X X ..... his only child Miss Gladys Meryl Yule. Lady Yule and Miss Yule were interested in perpetuating the memory of the late Sir David by creating a fund called the Sir David Yule Fund for the benefit of persons who had been and are connected with Andrew Yule Co., Ltd., and its subsidiary concerns, and for that purpose they transferred to the Calcutta Discount Company, Limited, a sum of rupees five lacs which was to form the fund. On 18th August, 1937, a trust deed was executed, the settlors being the Calcutta Discount Company, Limited, of the first part, Andrew Yule and Company, Limited, being the parties of the second part and the Mercantile Bank of India (Agency), Limited, called trustees, being the party of the third part. In the recitals of the deed it is stated that it was desired to perpetuate the memory of the late Sir David Yule by the creation of a fund and then the deed goes on : and that the income of the fund should be applied for the benefit of any of the past, present and future officers, members of the staff and other employees of Andrew Yule Co., Ltd., or of any Company within the management of Andrew Yule Co., Ltd., except Calcutta Discount Co., Ltd., ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch manner as the administrators in such discretion as aforesaid think fit and particularly in providing pensions or assistance generally to augment pensions or allowances for or to such persons or making donations or payments (whether annual or otherwise) to them. In Clause (6) there is a provision that Andrew Yule Co., Ltd., may at any time during the period of the trust with the written approval of the trustees or of Lady Yule or Miss Yule alter or modify all or any of the provisions of the deed. There are provisions with regard to the fund in the event of Andrew Yule Co., being wound up. Clause (8) provides: At the expiration of the said period of the trust, the trust constituted by this deed shall be determined, the trustees shall make provision for the continued payment in whole or in part of any pensions or allowances or other benefit or benefits which have been granted by the administrators to such extent as the fund will admit . Then there is a provision for the transfer of the balance of the investments then constituting the fund and any unapplied income thereof to Andrew Yule Co., Ltd., or as they shall direct and such investments and unapplied ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mulated or to be accumulated in accordance with the provisions of clause 5 of the principal deed must eventually be applied in accordance with the provisions of clause 4 or 7 of the principal deed. The fund consists of five thousand 4 per cent, cumulative preference shares of ₹ 100 each fully paid of Andrew Yule and Co., Ltd. The in come from it is ₹ 22,000 per annum. It is contended by the trustees that that income is exempt from the payment of income-tax by reason of the provisions of Section 4(3)(i) of the Income-tax Act which enacts that income falling within the following classes shall not be included in the total income of the person receiving it, i.e., ( i) any income derived from property held under trust or other legal obligation wholly for religious or charitable purposes. There is an explanation to that sub section which provides that in this sub-section charitable purpose includes relief of the poor, education, medical relief, and the advancement of any other object of general public utility,................. The contention put forward by the trustees is that this income is held under trust wholly for charitable purposes according to the provisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd Co., Ltd., etc., whom they think worthy of consideration or help, having regard to the service such persons have rendered to Andrew Yule and Co., Ltd., etc. In the latter event the trust is clearly not a trust which is wholly for charitable purposes. That might be enough to dispose of the question which is asked. But the appellants have argued that not only do the provisions of the second deed compel the administrators to use the fund to relieve persons suffering from indigence, ill-health or other specially necessitous circumstances and no other, but that those circumstances in themselves constitute a trust for charitable purposes. It will be noticed that the explanation to sub-section 4 (3) of the Act provides that charitable purpose includes relief of the poor, education, medical relief, and the advancement of any other object of general public utility. But that definition of charitable purpose is obviously not conclusive. The words charitable purpose must be construed in their ordinary legal meaning. Their ordinary legal meaning was discussed in In re Foveaux: Ctoss v. London Anti-Vivi-section Society [1895] 2 Ch. 501. In that case Chitty, J., said at page 504. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the benefit of the past, present and future officers, members of the staff and other employees of those concerns. Any one from the Secretary or some other highly paid member of the staff down to the lowest menial may be included within the benefit of this fund. Necessitous circumstances might include the case of a superior employee earning some thousands of rupees per month, who owing to some misfortune-say the burning down of his house, or the loss of his property-might find himself suddenly in necessitous circumstances, and in need of money to replace his lost property. I can see no reason why the administrators of the fund should not be in a position to make a grant to such a person to make up his loss. It might be a most desirable thing to do and the administrators might justly think that they had used some of the funds to the best advantage. But such use cannot be said to be for the relief of poverty. In my view even if (as has been argued) the administrators are bound to use this fund solely to relieve persons suffering from indigence, ill-health or other necessitous circumstances, it is impossible to say that the fund is-to use the words of the section- property he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eneral public purposes; it was a trust for private individuals, a fluctuating body of private individuals it is true, but still private individuals, and that being so, it was outside the line of authorities cited in support of the contention, and not being for public purpose it was not charitable. There is also a Privy Council case Verge v. Somerville [1924] AC 496, at p. 499. The question was whether a bequest to the trustees for the benefit of New South Wales soldiers returned from the war was a valid charitable bequest. Lord Wrenbury who delivered the judgment of the Board said: To ascertain whether a gift constitutes a valid charitable trust so as to escape being void on the ground of perpetuity, a first inquiry must be whether it is public-whether it is for the benefit of the community or of an appreciably important class of the community. The inhabitants of a parish or town or any particular class of such inhabitants, may, for instance, be the objects of such a gift, but private individuals, or a fluctuating body of private individuals, cannot. In my view if the words of this trust were to be construed so as to mean the relief of poverty and nothing else, such pove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the administrators are controlled by the provisions of the recital appearing earlier in the deed, even then the administrators were to distribute the income of the fund in their uncontrolled discretion to those who should be deserving of consideration or help especially on account of indigence, ill-health or other necessitous circumstances. The administrators, in my view, were not bound even according to the provisions in the recital to distribute the fund to those who were indigent or suffering from ill-health or were encountering adverse circumstances. They could distribute it to persons they thought deserving of consideration, which might well be because of the length or the value of their past services to the company. It is quite clear that the latter two grounds in no way could amount to charity. Then coming to the supplemental deed of 30th October, 1939, of which the draftsmanship has doubtless been the subject of careful and close consideration, in clause (1) it is provided that without in any way derogating from the powers and discretion vested in the administrators which should continue to be uncontrolled and unfettered, it is hereby declared that, in view of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purpose as charitable unless it is of a public character. Direct support for those words is to be found in two authorities. In In re Foveaux [1895] 2 Ch 501, Chitty, J., at page 504 says this : To be a charity there must be some public purpose-something tending to the benefit of the community. In Verge v. Somerville [1924] AC 496Lord Wrenbury who delivered the opinion of the Board said this at page 499: To ascertain whether a gift constitutes a valid charitable trust so as to escape being void on the ground of perpetuity, a first inquiry must be whether it is public-whether it is for the benefit of the Community or of an appreciably important class of the community. It was held in Foveaux' s case (supra )mentioned above that the fund devoted to the suppression and abolition of vivisection was a public charity. A similar conclusion was arrived at in Verge' s case (supra )in respect of a fund for the benefit of returned Australian soilders from one of the States in the Dominion. In In re Drummond [1914] 2 Ch 90 a holiday fund for the benefit of the employees of a factory was held not to be a charity and a similar conclusion was arrived at in Trustees of W ..... X X X X Extracts X X X X X X X X Extracts X X X X
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