TMI Blog2006 (2) TMI 696X X X X Extracts X X X X X X X X Extracts X X X X ..... , Smt. Birla gave directions in respect of MP Birla Trust under clause 6(b) and made nominations of beneficiaries in respect of her four trusts under clause 7(a) of the trust deeds in favour of three named public charitable institutions, viz., Hindustan Medical Institution (HMI), East India Education Institution (EIEI) and MP Birla Foundation. In terms of the said nominations made after the demise of MPB, the assets of the five trusts estimated at ₹ 2400 crores stood settled for the benefit of HMI, EIEI and MP Birla Foundation. However, on 15th April 1999 PDB purported to revoke all the five trusts (stood dissolved). On 18th April 1999, Smt. Birla executed her will by which she bequeathed all her properties (including the estate of MPB) to accused no.1, R.S. Lodha and after him his son, the value of which is around ₹ 2400 crores. Smt. Birla died on 3rd July 2004. R.S. Lodha was a trustee of MP Birla Foundation (one of the three public charitable institutions). He was also a trustee of HMI and EIEI prior to the dissolution of the five trusts w.e.f. 15.4.1999. Appellant herein, Shiva Nath Prasad, accused no.2 was also a trustee in the five trusts. Accused no.3, Dr. V.Gaur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e couple as beneficiaries were HMI, EIEI and MP Birla Foundation. Respondent no.2 was also, in turn, associated as honorary secretary of HMI, EIEI and MP Birla Foundation. Respondent no.2 herein has alleged in the complaint that he was stunned when he came to know, on the demise of PDB, that the first accused R.S. Lodha had claimed that the estate of PDB, which included the estate of MPB, belonged to him under the above will dated 18th April 1999 made by the deceased PDB. In his complaint, respondent no.2, has stated that when he came to know that R.S. Lodha had made a claim to the entire estate of the Birlas, he made enquiries which revealed to him that R.S. Lodha had criminally conspired with the other accused in criminally misappropriating assets worth ₹ 2400 crores vested by the above five mutual trusts in the above three charitable institutions and that the accused had converted the charitable endowment for personal gain. Respondent no.2, in his complaint, has further stated that the accused had attempted to create false evidence to show that the five trusts stood revoked and dissolved on 15th April 1999 which is three days before the alleged will dated 18th April 1999 e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tee in the three public charitable institutions. He was also a member of the managing committee of HMI and EIEI. Respondent no.2 has further alleged that Dr. Gauri Shanker was a trustee of all the above three public charitable institutions. He was also a trustee of three of the five mutual trusts, viz., M.P. Birla Trust, Priyamvada Birla Trust and Priyamvada Birla Kosh. Similarly, respondent no.2 has stated in his complaint that the fourth accused, Sushil Kumar Daga, was a long standing employee of the MP Birla Group. He was a member of the managing committee of HMI and EIEI. He was also a trustee of MP Birla Foundation. In his complaint, respondent no.2 herein, has alleged that Shiva Nath Prasad and S.K. Daga are the witnesses to the letter dated 15.4.2003 addressed by late Smt. Birla to R.S. Lodha which has been tendered as codicil in the probate proceedings pending before the High Court. Respondent no.2, in his complaint, has alleged that Shiva Nath Prasad and S.K. Daga are the witnesses to the said letter which was created in pursuance of the criminal conspiracy to misappropriate the property of the public charitable institutions. In his complaint, respondent no.2 herein, has r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the mutuality expressed wills of 1982 and the trust deeds of 1988 and on the contrary in January and February 1989, the couple had agreed on the final nominations in favour of three public charitable institutions in the presence of the complainant, Shiva Nath Prasad and R.K. Choudhury. Respondent no.2 has categorically stated that after the demise of MPB on 10th September 1990, Smt. Birla, in fact, executed the nominations in accordance with the pious wish of her husband and that the said nominations were mutually agreed nominations of the five trusts duly executed by her. The legal effect of the said nominations were explained by R.K. Choudhury in the presence of the complainant and in the presence of Shiva Nath Prasad to Smt. Birla. Respondent no.2 has further stated that Smt. Birla was told by R.K. Choudhury that the said nominations were irrevocable and that the said Shiva Nath Prasad was fully aware, along with Smt. Birla, that the five trusts along with the nominations were mutual and reciprocal and were irrevocable even by Smt. Birla (survivor) except in terms of clause 19 which provision was common in all the deeds. Respondent no.2 has alleged that in terms of the nomin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the five trusts stood dissolved through deeds prior to the making of the alleged will dated 18.4.1999. Respondent no.2 has pointed out that R.K. Choudhury was a trustee. He had never resigned from the trusts. He had never ceased to be a trustee. He is not even aware of the dissolution of the trusts on 15.4.1999. In the circumstances, in his complaint, respondent no.2 has alleged that there was no revocation, oral or in writing, on 15.4.1999 or at any time later on. Respondent no.2 has further pointed out in his complaint that the accused have communicated about the dissolution of the trusts to the Income Tax Department only on 27th June 2000 when a letter was addressed by Smt. Birla to the Joint Commissioner of Income Tax, Calcutta, stating that the five trusts have been dissolved on 15.4.1999 and that the assets have been transferred to her as the sole beneficiary. The balance sheets of the five trusts as on 15.4.1999 prepared by second accused in June 2000 only to show that the trusts stood dissolved w.e.f. 15.4.1999. Respondent no.2 has alleged that the accused have conspired to create records by entering into correspondence with Income Tax Department. Respondent no.2 has accor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isappropriated the properties of the public charitable institutions by illegally showing that the five trusts stood revoked and by transferring the properties held by five trusts or the three public charitable institutions to Smt. Birla as her personal properties as is evidenced from the balance sheets filed on behalf of the five trusts by the second accused. Hence, respondent no.2 has alleged that the accused were also guilty of substantive offence of criminal breach of trust under section 406, IPC. Respondent no.2 has also alleged in his complaint that R.S. Lodha was liable for offence punishable under section 420, IPC inasmuch as he was the instrumentality of procuring the will dated 18.4.1999 by inducing Smt. Birla by false representation to sign the said will, divesting the properties from charity and converting it to the assets of the first accused. Lastly, respondent no.2 has alleged that accused nos.2, 3 and 4, all of whom were trustees and/or members of managing committee in one or more of the three public charitable institutions had connived both by positive acts of commission and omission to aid and abet accused no.1 R.S. Lodha in the offence of criminal breach of trust ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd all the key senior executives of the group were aware of her wishes. Learned counsel submitted that on the death of Smt. Birla, the other Birlas have come together to grab control of the M.P. Birla group for free under the facade of charity. It was pointed out that in August 2004 Birlas filed an application in the High Court for probate of two alleged wills allegedly made by the couple on 13th July 1982 claiming the same to be mutual wills. It is the case of the appellant herein that the said 1982 wills were revoked during the lifetime of M.P. Birla and Smt. Birla. Further, it is urged that no explanation has been given for not applying for probate of the said wills of M.P. Birla who died on 30th July 1990 for 14 long years. Learned counsel submitted that the Birlas have themselves signed documents showing Smt. Birla as the sole intestate heir of M.P. Birla which documents are totally contrary to the present case of mutual wills mentioned in the complaint. Learned counsel next contended that the criminal case filed by respondent no.2 herein, R.P. Pansari, is one such attempt on the part of the Birlas; that, the case has been instituted only to harass R.S. Lodha and other individ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ised in the complaint are complicated issues of civil law relating to mutual wills and mutual trusts which cannot be decided by a criminal court and which issues should be relegated to regular civil proceedings before a court of competent jurisdiction. Learned counsel urged that the five trusts were expressly made revocable. In this connection, reliance was placed on clause 19 of the Trust Deed. Learned counsel urged that the complainant has relied upon, in the complaint, oral agreements for which oral evidence cannot be permitted to be adduced as such oral evidence was contrary to the terms of the written documents and was, therefore, barred under sections 91 and 92 of the Indian Evidence Act, 1872. Similarly, the allegations of the trust property having vested in three public charitable institutions, upon nomination, being made in their favour by Smt. Birla, have no substance because the properties mentioned in the nominations were only to be transferred to the nominees on the death of the settlor/sole beneficiary, namely, Smt. Birla and, therefore, there was no basis for alleging that the assets had vested in the three charitable institutions upon nominations being made by Smt. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, the High Court should have quashed the process issued by the CJM, Alipore. On the question of breach of trust, learned counsel submitted that there was no entrustment of property which is the main ingredient of the offence under section 405; there was no valid creation of trust under the five trust deeds; there was no creation of a beneficial interest in the three public charitable institutions; that Smt. Birla was the only beneficiary under the trust deeds till she died; that, there was no vested interest created in any beneficiary other than Smt. Birla under any of the five trust deeds and lastly the revocation of the four trusts did not amount to the extinguishment of vested or beneficial interest of any other person under the trust deed so as to constitute an act of conversion. Learned counsel submitted that on reading the five trust deeds in the light of the aforestated proposition of law it would become clear that, in the present case, there was no trust because the settlor, the trustee and the beneficiary in all the five trusts was one and the same person, viz., M.P. Birla in M.P. Birla Trust and Priyamvada Devi Birla in the other four trusts. As sole beneficiary, both M. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owers as the trustee/settlor. Learned counsel urged that by clause 5 of the trust deed Smt. Birla was vested with the power of alienation of the corpus of the trust and the income therefrom. In this connection, reliance was placed on clauses 5, 10, 11(iii), 11(iv) and 11(xxi) of the trust deeds. In the circumstances, learned counsel submitted that the powers of Smt. Birla under the trust deeds were similar to the powers of a testator under a will; that, just as a testator could deal with his property covered in the will during his lifetime and just as under the will the legatee/beneficiary had no vested interest in the bequest under the will which is merely contingent upon the acts of the testator during his lifetime so also Smt. Birla under the five trust deeds was a testator of a will and she had full authority to deal with the property covered by the will/trust during her lifetime, the beneficiary having no vested interest in the bequest. Learned counsel further urged that even as far as property of M.P. Birla Trust was concerned, the deceased had full beneficial interest in the corpus during her lifetime; that, there was nothing in the deed of trust that made her directions giv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .P. Birla. He had seen the couple placing reliance on R.S. Lodha. He had seen the couple giving responsibility to R.S. Lodha from time to time. He was consulted by the couple in matters of religion, philosophy, charity, business and taxation. According to Dr. Gauri Shanker, Smt. Birla was a wise lady, well read and proficient in several languages. According Dr. Gauri Shanker, on the demise of G.D. Birla, M.P. Birla had conveyed his dissatisfaction over the division of management of Birla companies. In the last few years of his life, M.P. Birla had gradually handed over the charge of M.P. Birla group of companies to Smt. Birla. After the demise of M.P. Birla, Dr. Gauri Shanker remained close to Smt. Birla. He advised her on personal and corporate matters. Towards the end of 1990 Smt. Birla had told Dr. Gauri Shanker that she had decided on R.S. Lodha as her successor and she was desirous of making a will for this purpose. According to Dr. Gauri Shanker, Smt. Birla had told him that she would revoke five private trust deeds before making her will. It was further submitted that even according to Dr. Gauri Shanker although he was a trustee of three trusts out of five private trusts cre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e case against Dr. Gauri Shanker on the point of conspiracy was at the highest that he was a trustee of three public charitable institutions and that he was also a trustee of the three out of five private trusts; that, he remained a silent spectator to the alleged acts of other accused in criminally misappropriating the properties of three public charitable institutions pursuant to a criminal conspiracy to commit criminal breach of trust with the common intention to destroy charitable trusts. That, in any event, the allegations of conspiracy against Dr. Gauri Shanker were vague, general and completely lacking in factual particulars and, therefore, according to the learned counsel there was no reason for the magistrate to issue process against Dr. Gauri Shanker. Learned counsel lastly submitted that the complaint needs to be quashed for the simple reason that it suffers from malafides; that, the complaint is harrasive, attended with malafides and is a tool of oppression adopted by the Birlas to terrorise Shiva Nath Prasad, S.K. Daga and Dr. Gauri Shanker into succumbing to the pressure and thereby making difficult for R.S. Lodha to have the last will of Smt. Birla probated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny cases get established by the Instrument itself as the evidence of the agreement [See: Law of Trusts and Equitable Obligations by Robert Pearce and John Stevens pages 320 and 321]; See also : Re Dale (Deceased) reported in 1993(4) All.ER page 129]. In the case of mutual wills generally we have an agreement between the two testators concerning disposal of their respective properties. Their mutuality and reciprocity depends on several factors. Mutual wills and trusts are evidenced by the Deeds themselves (the recitals, terms and conditions mentioned therein) as also by the surrounding circumstances, namely, the simultaneity and the similarity of the terms of the wills/trusts, the pattern of successive wills, the reciprocity of one to the other, the age of the settlors, the value of the estates, dying of the settlors without any issues, making of the last will without reference to the revocation of previous wills. Lastly, in law we have the concept of accessory liability for having assisted in a breach of trust. In such a case the accused is not charged for having received trust income or assets for his own benefit but for having acted as an accessory to a breach of trust. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the appropriate time. As stated above, in this case we have mutual wills and mutual and reciprocal trusts in 1981, 1982 and 1988; clauses 7(b) and 8 of the trust deed reflect charitable intention coupled with nominations of 1990. What we would like to stress is that the complaint is based on an important aspect of mutual trust. The allegation is that the beneficial interest (enforceable not against the assets but against the trustees) is dishonestly misappropriated by the accused. The complaint is about dishonestly setting up personal title to the trust property. The complaint is based on mutual and oral agreements imposing secret trust obligations as evidenced by the trust deeds. In this connection we may reiterate that secret trust is a doctrine evolved to prevent fraud; that, fraud is not an ingredient for the application of the said doctrine. However, the substance of the complaint here is that the secret trust has become the reason for fraud because the legatee under the secret trust is made to believe by the accused that she was the beneficial owner, free from any trust [See: Re Cleaver (Deceased) reported in 1981 (2) All.ER 1018]. Lastly, we may point out that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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