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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 ..... ers of the executive management staff of the Company. Clause (3) of the said deed reads as under: "These presents shall constitute a trust upon and subject to the Rules and to the law for the time being in force in India relating to Pension Funds which trust irrevocable and no moneys belonging to the Fund in hand of the trustees shall be recoverable by the Company or shall the Company have any lien or charge of any description on the same." 4. Part I of the said deed provides for the 'Rules of Dunlop Executive Staff Pension Fund.' 5. "Member" has been defined in rule 2(k) to mean : "'Member' shall mean a member of the executive staff or of the management staff of the employers who has been admitted as a member of the Fund in accordance with the Rules but shall not include an employee who having been admitted as a member has subsequently retired or whose service has otherwise been terminated by reason of dismissal, resignation, retrenchment or otherwise." 6. Part-II of the said deed provides for administration of the Trust. Whereas part III provides for membership, part IV provides for contributions. Rule 11(a) of the said deed reads as under : "The employers may at their abso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ative Executive Staff Pension Fund', (ii) 'Dunlop Sahagunj Executive Staff Pension Fund', and (iii) 'Dunlop Ambattur Executive Staff Pension Fund'. The details whereof or the purpose for which the same were constituted is not known. Proceedings : 11. An application was filed by the trustees of the said trust before the High Court of Calcutta purported to be under section 34 of the Act, alleging, inter alia, that the purpose of the trust has been completely fulfilled and/or trust has been completely executed without exhaustion of the trust property to the extent of Rs. 3,99,55,682. In the said application, inter alia, the following prayer was made : "(a)Appropriate direction and/or advise and/or opinion be given by this Hon'ble Court with regard to the sum of Rs. 20,83,95,690 and accrued interest lying in Special Deposit Account No. 3/76." In the said proceeding, only Respondent No. 1 herein was made a party in a representative capacity. It was contended that out of 186 employees who were eligible to receive pension fund, 140 employees consented that the surplus amount be refunded to the Company. In the said proceeding, an application seeking leave was filed under Order 1 Rule 8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... valid until the last surviving employees receive its benefits out of the said trust fund. We do not have any hesitation also to express our opinion as His Lordship expressed in His Lordship's decision that the trust exists and we also have to accept the contention of Learned counsel appearing on behalf of the respondent in the instant case that the instance case is squarely covered under the Illustration (b) of section 56 of the Indian Trust Act and the trustees are bound to fulfil the purpose of the trust and to obey the directors of the author of the trust, except if any modification is made by consent of all the beneficiaries, being competent to contact. It appears to us that in the guise of getting an opinion from the court, the company thought it fit to extinguish the trust in question and the amount lying in the hands of the trustees in respect of the said fund to have a lien over the same to utilize the same which is totally barred under Clause 3 of the said Trust Deed..." Submissions : 13. Mr. R.F. Nariman, the learned Senior Counsel appearing on behalf of the appellants, principally raised the following contentions in support of this appeal : (i)The power of the princip ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to obey the directions of the author of the trust given at the time of its creation, except as modified by the consent of all the beneficiaries being competent to contract. Where the beneficiary is incompetent to contract, his consent may, for the purposes of this section, be given by a principal civil court of original jurisdiction. Nothing in this section shall be deemed to require a trustee to obey any direction when to do so would be impracticable, illegal or manifestly injurious to the beneficiaries. Explanation.-Unless a contrary intention be expressed, the purpose of a trust for the payment of debts shall be deemed to be; (a) to pay only the debts of the author of the trust existing and recoverable at the date of the instrument of trust, or, when such instrument is a Will, at the date of his death; and (b) in the case of debts not bearing interest, to make such payment without interest." "56. Right to specific execution.-The beneficiary is entitled to have the intention of the author of the trust specifically executed to the extent of the beneficiary's interests. Right to transfer of possession.-And, where there is only one beneficiary and he is competent to contract, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies are available. 19. We may proceed on the basis that the jurisdiction of the court is not only confined to opinion or advice but also extends to issuance of direction, but such opinion rendered, or advice given or direction issued only to a trustee. Consequence of issuance of such a direction is also stated in paragraph 3 of section 34 in terms whereof a legal fiction is created by reason whereof the trustee would be deemed to have discharged his obligation in regard to his own responsibility in the subject-matter of the application. It does not envisage an adjudication. It does not ordinarily envisage determination of the right, title or interest of a member of the trust or a beneficiary in relation to the trust property, although such a question may have to be incidentally dealt with. 20. The provisions of section 34 of the Act must be given its literal meaning. The court cannot exercise a jurisdiction which is not vested in it. A court can exercise jurisdiction, provided it is vested therewith. An order without jurisdiction over the subject-matter would render the decision a nullity. 21. Construction of the aforementioned provision which is in pari materia with section 10( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtgagees Powers Act, 1866. In fact in this country we have codified the very powers that were exercised by the Chancery Courts in England under their equitable jurisdiction. The Court of Appeal in Chapman's case, 1953-1 Ch 218 Evershed M.R. and Romer LJJ., Denning L.J. dissenting stated the law on the point thus : The inherent jurisdiction of the Court of Chancery is of a limited character. It is a jurisdiction to confer upon the trustee, quoad items of trust property vested in them, administrative powers to be exercised by them where a situation has arisen in regard to the property creating what may be fairly called an 'emergency'. The inherent jurisdiction does not extend to sanctioning generally the modification or remoulding of the beneficial trusts of a settlement. ****** 27. From whatever angle we may examine the validity of the order made by Ramfry, J., it appears clear to us, that the said order was outside the jurisdiction of the learned Judge. It was not merely a wrong order, or an illegal order, it was an order which he had no competence to make. It is not merely an order that he should have not passed but it is an order that he could not have passed and therefore a v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... one. It may or may not be correct; but the question posed admittedly is a difficult one and if for the said purpose it had refused to exercise its discretionary jurisdiction, in our opinion, no fault can be found therewith. 29. We have also some difficulty in appreciating the submissions of Mr. Nariman that all the members of the trust must be deemed to have consented to the extinction of the trust on the ground that the purpose of the trust had been fulfilled. 30. Admittedly, three suits are pending. It is, thus, not correct to contend that all the beneficiaries of the trust have been paid off. The power of the Company to make rectification of the terms and conditions of the trust vis-a-vis the power of the trustees to revoke the same with retrospective effect is a matter which is pending consideration in a court of law. No final opinion can be rendered in that behalf. 31. If the terms and conditions of the trust are to remain in operation in view of clause 3 of the Deed of Trust, it is really difficult for us to comprehend as to why three more trusts were created. The purpose for which the same had been created and the trustees had been asked by the Company to pay back the ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nteresting to note that in Para 15, it was noticed : "15. At page 514 of Underhill's Law of Trusts Trustee, Twelfth Edition, Article 68 runs as follows :- 'If there is only one beneficiary, or if there are several (whether entitled concurrently or successively) and they are all of one mind, and he or they are not under any disability, (a) the specific performance of the trust may be arrested, and the rust modified or extinguished by him or them without reference to the wishes of the settler or the trustee.' We think that approval and arrangement is a matter of judicial discretion depending upon the facts of each case. The Court must be satisfied that each beneficiary is getting a substantial advantage. We do not think that there can be any objection for an arrangement when its object is to avoid fiscal burden." (p. 72) 34. The Andhra Pradesh High Court categorically opined that whether approval and arrangement should be granted or not is a matter of judicial discretion depending upon the facts of each case and the court must be satisfied that each beneficiary is getting a substantial advantage. Unfortunately, attention of the High Court was not drawn to this Court's decision in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Lal AIR 1979 J&K 13, it was held : "5. From a bare perusal of the petition it becomes obvious that the petitioner is not in possession of the trust property but is desirous of getting himself declared a trustee in opposition to respondent No. 1 who according to him, has usurped his functions to which he was entitled to under the Guru Jeer's alleged Will. Obviously the petition was not for seeking any advice, opinion or direction from the Court. It raised questions of difficulty detail and of importance which could not be disposed of in summary proceedings as one at hand. Mr. Gupta has vehemently argued that he was entitled to seek the direction from the Court which would according to him include even a declaration to the effect that it was in fact the petitioner who was the trustee and not respondent No. 1. He has cited some authorities such as AIR 1953 Nag. 89 (FB), AIR 1965 SC 342, and AIR 1966 SC 81 in support of his contention that the expression direction means and includes an order of the court and does not merely mean an advice or opinion. On a perusal of these judgments I am however, of the view that the expression 'direction' as used in the Trusts Act has entirely a diffe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also the beneficiary thereof and not for preservation of the property, in our opinion, the same test cannot be applied for the purpose of obtaining in truth and substance an order of extinction of the trust. The two reliefs are absolutely different. 40. We, therefore, are of the opinion that no case has been made out for our interference with the impugned judgment. We need not make our comments with regard to the maintainability of the Letters Patent appeal, as Mr. Dwivedi conceded that such an appeal would be maintainable. 41. It is well-settled that if the jurisdiction of a court in relation to the subject-matter thereof is limited, any decision rendered by it would be a nullity. In such an event, even the principle of res judicata will have no application [See Official Trustee of West Bengal v. Stephen Court Ltd. 2006 (14) SCALE 285 and Harshad Chiman Lal Modi v. DLF Universal Ltd. [2005] 7 SCC 791]. 42. It is interesting to note that in Sachinda Nath Chatterjee's case (supra), Hegde, J. was clearly of the opinion that where the relief cannot be granted keeping in view the limited jurisdiction of the court, in relation thereto the court will have no jurisdiction. But it is o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 88,55,682, which amount after one time payment has been transferred to the Life Insurance Corporation of India (hereinafter referred to as 'LIC'). Consequently, the Trust has now no further liability/responsibility towards any of its beneficiaries. The balance sum remaining with the Trust fund being Rs. 20,83,95,690 has, in my opinion, therefore, to be returned to the Company in view of section 83 of the Indian Trust Act (hereinafter referred to as the 'Act'). After all, the entire money donated to the Trust fund was donated by the Company and hence it has to be returned to the Company. 52. Section 34 of the Act may not be strictly applicable in the present case because that provision enables the principal Civil Court of original jurisdi-ction to give an opinion, advice or direction on any present questions respecting the management or administration of the trust property. The words 'management or administration of the trust property' would not apply when the object of the Trust itself has been fulfilled and now the only question remains is as to what has to be done about the remaining fund with the Trust. In such a case, in my opinion, a direction should be issued under Article 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 3,88,55,682 to the LIC and took out policies in favour of the present members and/or beneficiaries of the Fund with effect from 1-4-2001. As a result, full provision has been made for the payment required to be made under the Rules of the Fund to its present members and/or beneficiaries, upon superannuation, and it is again undisputed that as and when the respective members become eligible for the pension, the same will be paid by the LIC to the members/pensioner directly and the Fund/Trust in no way will be responsible or accountable for the same. 58. After transfer of the said sum of Rs. 3,88,55,692, which completely protects the beneficiaries, a further sum of Rs. 22,83,95,690 with accrued interest as on 12-9-2001, remained in the Special Deposit Account No. 3/1976 to the credit of the Fund/Trust. 59. In view of the aforesaid, the purpose of the Fund/Trust stood completely fulfilled and executed, without exhaustion of the Fund/Trust property, except to the extent of Rs. 3,88,55,682 referred to above, which amount, being a one-time payment, has been transferred to the LIC, pursuant whereafter the Trust has got no further liability/responsibility towards any of its beneficia ..... X X X X Extracts X X X X X X X X Extracts X X X X
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