TMI Blog1970 (12) TMI 97X X X X Extracts X X X X X X X X Extracts X X X X ..... alance left, if any, was to be divided between the mortgagors and the mortgagees in equal shares. After the lapse of nearly a quarter of a century, the mortgagee has entered into an agreement for sale of the properties which the successors-in-interest of the mortgagors have challenged in this suit as an agreement for an improvident sale. On 29th August, 1919 one Sundarmull Rajgarhia and Ram Kumar Rajgarhia obtained a lease in perpetuity of certain lands, hereinafter referred to as the Bhukailash properties, situate at Kidderpore outside the original jurisdiction of this Court, consisting of a number of plots measuring in the aggregate 144 bighas more or less. On March 28, 1922 the lessees created a mortgage of certain immovable properties including the Bhukailash properties in favour of the Central Bank of India Ltd. to secure due repayment of loans and advances made or to be made by the bank. The mortgagors having made default in payment of the mortgage debt, the bank instituted a mortgage suit, being Suit No. 295 of 1924 in this Court. On April 21, 1926 a final decree for sale was passed by consent for Rs. 3,67,000/- with interest at 6% per annum. Under the terms of settlement th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the mortgagees simultaneously with the execution of this agreement and will also personally or through their servants and agents render all reasonable facilities to mortgagees in connection with the management or disposal or dealing of the said property, the out of pocket expenses in connection with the same being paid by the mortgagees and debited in the account hereinbefore mentioned. (iv) Pending transfer of the property by sale or otherwise an account should be kept in the name of the mortgagors and the same will remain open until sale of the said property by the bank in accordance with this agreement; all costs, charges and expenses in regard to the said property until sale, namely, payment of the municipal taxes both arrears and current, putting the title to the property in order, ejecting tenants, developing the property and those of incidental to the sub-division of the property into lots or of the sale thereof, being debited to such account provided always that the mortgagees will not be liable to render any account or explanation to the mortgagors in regard to debits made in this account and that the mortgagors will not be entitled to ask for any account or to questio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he rent reserved in the sub-lease will release the mortgagees or their assignee from all liability in respect of such portion of the rent. 6. The terms agreed to between the parties were consented to by the superior landlords and were recorded in the tent suit and a consent decree was passed in terms of the said agreement. Sanction was also obtained to the said terms by an order of Court dated December 24, 1930 in the Title Suit filed at Alipore Court being Suit No. 73 of 1926. 7. Thereafter as recited in the Deed of Assignment, in pursuance of the said agreement dated December 13, 1930 and in consideration of the mortgagee bank having agreed to realise its dues under the mortgage and the order made on 13th December, 1927 in the mortgage suit from the Bhukailash estate alone in accordance with the terms of the said agreement and without leave to proceed against the mortgagors personally or otherwise for the deficit if any, which might occur after the mortgaged properties were sold and or disposed of by the mortgagees, the mortgagors transferred and assigned to the mortgagee bank all their right, title and interest under the lease of 1919 in the said Bhukailash estate subject ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue delay. In their reply of March 15, 1944 Messrs Sandersons Morgans stated that the bank had been trying to sell the property, although not bound to do so, but as the property consisted of bustee lands in an insanitary condition with a large number of tanks and low tracts of lands without proper roads and occupied by people who were unwilling to vacate their huts, the bank had not been able to find any purchaser of the property either as a whole or in lots. They indicated that their clients were willing to dispose of the property provided reasonable offers were received and their dues were realised in full out of the proceeds of sale; if there was any surplus left after the bank's dues had been realised, both parties were to share the benefit of the sale. In conclusion they said that although the bank was under no obligation to furnish interim accounts, as a matter of courtesy the bank had informed their Solicitors that after crediting the income of the property to the expenditure incurred by the bank there was a debit balance of Rs. 11,68,370-12 as - 6 ps. as on December 31, 1943. By a letter dated March 23, 1944 Messrs Sandersons Morgans reiterated that the bank was not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ttahs 1 chittak was sold, may be at the initiative of the purchaser. In any case, there is no evidence that the plot was sold at the bank's initiative. In the same year another plot of 1 bigha 6 cottahs and 2 chittaks was acquired by the Improvement Trust under the Land Acquisition Act. Thereafter all activities ceased for 10 years. In 1956 Messrs Bharat Trading Company, a firm which described itself as merchants and commission agents, an advocate, a solicitor and an indifferent broker appear to have made casual enquiries and were heard of no more. In the latter half of 1956 Gopal Collieries Ltd. made an offer to purchase the property at Rs. 675/- per cottah, that is to say, for a total sum of nearly Rs. 20 lacs. They were willing to pay Rs. 50,000/- in cash and a further sum of Rs. 2 lacs by mortgage of a colliery, by way of earnest and pay the balance from recoveries of rent to be made by the bank. They also proposed that the entire proceeds of sale of plots might be paid to the bank to expedite payment of the purchase money. The mode of payment was not acceptable to the bank as that would not only involve considerable delay in realisation of the price but also require the ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Messrs Okayti Tea Co. Ltd. The said advance will carry interest at the rate of 1% per annum over the Reserve Bank rate with a minimum of 5% per annum payable with half yearly rests. (v) The assignee shall repay the said sum of Rs. 12,50,000/- to be advanced by the assignor by yearly instalments of Rs. 1,25,000/- each besides interest as and when due. The first of such instalments to be paid at the end of 12 months from the date of such assignment. (vi) Over and above the said yearly instalment of Rs. 1,25,000/- with interest the assignee shall pay an additional sum of Rs. 50,000/- by the end of December, 1961. (vii) Notwithstanding anything contained therein, the assignor shall have the right to demand at any time payment of the entire amount then remaining due and outstanding together with interest and the assignee shall pay the sum on demand. (viii) Subsequent to the assignment and so long as the money or any portion thereof advanced by the assignor remains due the assignee shall maintain an account with the assignor and shall deposit all income arising out of the property to be assigned in the said account and all disbursement relating to the said property shall b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entered with the defendant No. 2. 16. On July 23, 1961 the plaintiffs instituted this suit against the Central Bank of India Ltd., for construction of the deed dated December 13, 1930, ascertainment of the rights of the parties, administration of the trust created in respect of the Bhukailash properties in terms of the said deed, for accounts and for an injunction restraining the defendant bank from dealing with or disposing of the said estate. Subsequently, by an amendment of the plaint they added Martins Process Industries Private Ltd., as the second defendant and inserted a prayer for a declaration that the agreement for sale dated July 15, 1961 is void and not binding on the plaintiffs and the same be delivered up for cancellation. They also added a prayer for enquiry and for damages found payable to the plaintiffs on such enquiry. 17. Thereafter, on the plaintiffs' application an order of injunction was made on July 25, 1961 by G. K. Mitter J. restraining the defendant No. 1 from dealing with or disposing of the said properties in any way. 18. Paragraphs 1, 2, 3, 4, 5 and 6 of the plaint relate to the history of the Bhukailash estate. In paragraph 1 Sundarmull Raj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e said deed. (viii) It is guilty of laches. It has not accounted for large sums of money being the income of the said properties. (ix) It has failed to discharge its duties as trustee for sale within a reasonable time. In paragraphs 25 and 26 it is said that the defendant bank failed to render accounts of their dealings with the said property in terms of the deed dated the 13th December 1930 and are denying the plaintiffs' right to enforce the said terms. In paragraph 27 it is stated that if an account is taken between the parties, nothing will be found due and payable to the defendant bank. On the other hand, large sums of money will be found due and payable by the defendant bank as the trustee to the plaintiffs. In paragraph 28 it is said that although the dues of the defendant bank and of the landlord have been or ought to have been realised, the defendant bank is threatening to alienate the said estate at a gross undervalue in breach of the terms of the said deed of December 13, 1930. In paragraph 31 the plaintiffs claim that they are entitled to administration of the trust for sale. In paragraph 32 it is said that unless the defendant bank is restraine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt No. 1 as the assignee of the right, title and interest of the mortgagors in the said estate, had the right to enter into the said agreement for sale dated June 15, 1961 and has done so for a reasonable and adequate consideration. It disputed that the said agreement is collusive and supported the defendant No. 1 in its contention that the defendant No. 1 is not a trustee for sale and the assignment in favour of the defendant No. 1 was an absolute transfer. The defendant No. 2 further contended that after the execution of the deed of assignment dated February 12, 1931, the deed of December 13, 1930 ceased to be in force. The plaintiffs, it was contended, have no cause of ration against the defendant No. 2. 21. The following issues were raised at the trial : 1. Are the plaintiffs Nos. 1 to 18 the legal representatives of Sundarmull Rajgarhia and are plaintiffs Nos. 19 to 24 the legal representatives of Ramkumar Rajgarhia as stated in paragraph 12 of the plaint ? Did the first defendant by virtue of the deeds dated 13th December, 1930 and 12th February, 1931 become the trustee for sale of the properties in suit ? 2. Does the agreement dated 13th December, 1930 remain alive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is not legitimate to import the provisions of an antecedent document and limit the amplitude of the Deed of Assignment by which the assignee became the full and absolute owner of the property, so as to annex obligations to the assignee's ownership. The deed speaks for itself and ought to have full effect. Mr. Das relied on the decision of the Judicial Committee in (1) Wadia v. Secretary of State 56 I.A. 51. In that case a Deed of Grant after reciting that the grantee had prayed that a Government grant which he enjoyed might be exchanged for a grant of certain villages declared that the villages are hereby assigned to you and your heirs in perpetuity . The Judicial Committee held that the trial Judge had been in error in construing the deed in the light of the antecedent correspondence between the parties, it being well settled that a formal antecedent contract cannot be looked at to control the terms of a conveyance. In course of the judgment, Viscount Dunedin said : The only reference to the correspondence is in the narrative in the preamble of the deed, that there had been such a correspondence, but it is a vital mistake to suppose that that introduces the corresponde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ier deed and that it did not belong to the estate which he had transferred to Lee by the Deed of Disposition. He also sought to refer to previous correspondence which showed what the contract was. Lord Watson, in his speech said: I do not think, there is any ambiguity in the language of the disposition of December, 1879 which can justify a reference for the purpose of controlling that language to an antecedent agreement between the appellant and the respondent. Nor do I think that such a reference is warranted, either by the fact that the subjects conveyed are described in general terms in the dispositive clause of the deed, or by the fact that, in the narrative of the deed, the parties are represented as having agreed upon certain points which were presumably matter of stipulation in any written agreement which preceded its execution. In the present case, the deed narrates that the appellant and respondent had previously arranged certain terms and conditions, but it makes no mention of any document in which those are to be found. Even if the narrative had borne that these terms and conditions, inter alia had been agreed to by missive letters of the 13th October, 1879, that w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... therefore, of necessity, attracted to the transfer. 31. I have emphasised the effect of the use of the words 'in pursuance of the Agreement' in the Deed of Assignment of February 12, 1931. In my opinion, the absence of these words should not have made any difference. Sometimes a transaction is contained in more than one document. It is not even necessary that one of these documents should refer to the other or others so long as the parties intend that the document or documents should be given effect to in the context of and in consonance with the other. It is abundantly clear that by executing the Deed of Assignment the assignors did not intend to forego the Agreement of 1930. The assignment was contemplated in the Deed of December 13, 1930 for the purposes and objects set out therein. The Deed of Assignment, therefore, must be treated as having been executed to implement the terms of the Agreement set out in the Deed of December 13, 1930. In the present case there had to be, of necessity, two deeds. The Deed of December, 13, 1930 contemplates a subsequent act of transfer by the mortgagors to the mortgagee in terms of the Agreement but that could not be done unless prior ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been put. It is, therefore, desirable (although none of the Acts makes it compulsory) that the former custom should be followed, and two deeds used in all settlements inter vivos on trust for sale. In this connection, counsel also relied on Halsbury's Statutes of England, 2nd Edition, Vol. 23 pp. 23-24, item No. 4 and annotations under the head 'General Notes' and Prideaux's Forms and Precedents, 21st Edition, Vol. 1, pp. 8, 62 and 481. That the two deeds need not be executed simultaneously but may be executed at different times is supported by Norton on Deeds, 2nd Edition pages 86 to 87. 34. An instance of a trust created by two deeds is provided by the case of (4) Uma Nath v. Jang Bahadur A.I.R. 1938 P.C. 245. A Hindu Taluqdar executed two instruments. One was a deed of relinquishment by which he relinquished all his rights in the properties to his son. The second instrument, an Ikrarnama, was executed by the son alone. That deed, while providing for maintenance and debts of his father and mother, arranged to pay a certain sum and a village to a son of his father's concubine on his attaining majority, provided he remained obedient. It was held by the J ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he actual intention which determines whether a trust has been created. It may be readily conceded that if the intention to create a trust does not express itself in words or in acts no trust can come into existence. That is so, because in that case, evidence of any intention to create a trust will be lacking. Moreover, such a situation will not be covered by section 6 of the Trusts Act. 37. A trust may arise and often does arise out of a contract. If any authority is needed for so obvious a proposition, reference may be made to (7) Indian Iron and Steel Company and others v. Dalhousie Holdings Ltd. and ors. A.I.R. 1957 Cal 293 where Bachawat, J. observed : Trust in its origin was a form of contract distinctively enforced in equity. A contract creates a trust where it has brought into existence an obligation annexed to the ownership of property for the benefit of a person other than the owner. No technical words are required to create a trust. The question is fundamentally a question of the parties to the contract. Counsel on behalf of the defendants referred to Halsbury's Laws of England, 3rd Edition, Vol. 30 at page 210 Article 370. There it is said : the distinction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the intention been indicated ? and if so, what is the purpose of the trust ? 39. Counsel on behalf of the plaintiffs contended that even if it be held that the intention to create a trust has not been sufficiently indicated in the deed of Assignment by which the property was transferred to the defendant bank, the intention has been clearly expressed in the Agreement of December 13, 1930. The intention can also be gathered from the surrounding circumstances. Counsel relied on (8) Rochefoucauld v. Boustead (1897) 1 Ch. 196. The plaintiff was the owner of an estate subject to a mortgage. The mortgagee wished to call in the mortgage. The plaintiff not being able to find the money entered into an arrangement with the defendant, who was anxious to help her, to take a transfer of the mortgage. It was proposed that the mortgagee should sell the estate by auction and the defendant should enter into an agreement with the mortgagee to purchase the estate, if no higher bidder intervened, at a price sufficient to cover the mortgage debt. An agreement to this effect was signed. The estates were sold to the defendant and were conveyed to him as the absolute owner. After the sale, the defen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case the intention to create a trust was gathered from the correspondence and surrounding circumstances of which oral evident was given. The property was transferred to the trustee by a deed of sale in which there was no reference to trust. Moreover, the court took into consideration the conduct of the parties in deciding whether a trust was intended or not. 44. In this connection counsel relied on some Supreme Court decisions. In (9) Abinash Chandra Banerjee v. Uttarpara Hitakari Sabha 1962 (2) S.C.R. 28 at 33 the Court found that although the testator had not used the word 'trust' or 'charge' in the will, his intention to create a trust could be gathered from the circumstances existing at the time of the will and the recitals found therein. In (10) Bhaskar v. Shrinarayan A.I.R. 1960 S.C. 301 where the question arose whether a transaction which was ostensibly one of sale should be regarded as a mortgage Shah, J. observed : the question in each case is one of determination of the real character of the transaction to be ascertained from the provisions of the deed viewed in the light of the surrounding circumstances. If the words are plain and unambiguous they mu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erties in the mortgagees as full and absolute owners thereof. This provision, he argued, militates against a limited ownership or ownership subject to obligations. Moreover, the Deed of Assignment provides that the assignees will hereinafter enjoy the said lands hereditaments and premises hereby assigned respectively and deal with the same in any way they think fit and receive rents, issues and profits thereof. Moreover, no obligation has been cast on the mortgagors to sell the estate but only a power or a liberty has been conferred on the mortgagees to sell the property at their sole discretion. They have also been given liberty at their discretion to decide on the manner in which the property is to be sold. Liberty has also been given to the assignee to maintain, develop and let out the property for the purpose of sale. These are liberties, Mr. Roy argued, which the assignee may or may not exercise. No obligation has been imposed on the assignee to do any of these things. 47. Moreover, clause 2 of the Agreement provides that the mortgagees will not be liable to render any account or explanation to the mortgagors in regard to the debits made in the account and the mortgagors ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... usiness and if any of his sons decided to carry on the same, such one should be entitled to purchase it at 500 (sic) less than the market price. It was also provided that until all the property was sold the trustees were to apply the income of the part unsold in a particular manner. It was held that the will created not a mere power but a trust to sell with a discretion in the trustees as to the manner and time of sale. 51. In construing the will the Court took into consideration the real intention of the testator and in giving effect to the intention the document was construed as a whole in the context of surrounding circumstances. The consequences of accepting the literal interpretation were also considered. The Court found that on a proper construction of the will, no effect was to be given to a parenthesis. 52. In (17) Glynn v. Margetson Co. and others (H.L.) 1893 A.C. 351 some oranges were shipped on board under a Bill of Lading which stated that the ship was lying at the port of Malaga and bound for Liverpool, with liberty to proceed to and stay in any port or ports in the Mediterranean, Levant, Black Sea, or Adriatic, etc. etc. for the purpose of delivering coals, c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ision in the Agreement which is contrary to the provisions of the Trusts Act or the law of trusts in general, must be held to be void and struck down. In this connection I may refer to (18) Surendra Nath v. Jannavi A.I.R. 1929 Cal. 484 at page 490, where it was held, in the facts of that case, that a provision exempting a person from liability to render accounts is of no consequence. 55. The objects of the Agreement as also of the Assignment have been expressly stated to be to pay off all arrears of rent due to the superior landlords and to liquidate the debts of the mortgagors payable on the mortgage decree. To carry out these objects liberty is given to the assignees to sell the property at their sole discretion. The liberty is ample. But if it has to be exercised only in a particular manner to achieve the purpose and object of the Agreement and the Assignment, namely, liquidation of debts, the liberty has to be exercised in that manner and that manner alone. Liberty has been conferred on the bank to develop, maintain or let out the property but the liberty has again to be exercised as is made clear, for the purpose of sale. The bank has maintained and developed the estate in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt will never be adjusted and Clause 4 will become wholly nugatory. 59. Clause 5 provides that as to the current rent the mortgagees shall pay Rs. 10,000/- every year until the said property is fully disposed of by sale or sub-lease, the balance of rent being payable in December, 1934 without any interest. Taken literally, the clause means that current rents for the period up to 1934 will be paid at the rate of Rs. 10,000/- every year and the balance of Rs. 8,000/- of the yearly rent will be paid, in any event, by December, 1930. But as regards current rents for the period after 1934 the provision taken literally, will mean that the mortgagees shall pay at the rate of Rs. 10,000/- only every year until the property is fully disposed of by sale or sub-lease. If the property is never sold how is the balance of rent in respect of the period after 1934 to be paid ? The deed does not make any provision for such a contingency. It is, therefore, possible to argue that Clause 5, taken by itself, contemplated that the property would be sold by the end of December, 1934. In any event, the clause certainly contemplates sale of the property at some point of time or other. 60. The Deed of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assignment, as well as the provisions of the Agreement support the construction that it became incumbent on the bank to sell the property. By virtue of the deeds of 1930 and 1931 the defendant bank came under the obligation to open and maintain an account in a particular manner, to pay arrears of rent, to sell the property, liquidate the decretal claim and divide the surplus left of the proceeds of sale, if any, between the mortgagors and the mortgagees in equal shares. These obligations fastened themselves on the defendant bank's ownership of the property, the moment the Deed of Assignment was executed and possession of the properties was made over to the defendant bank. The Deed of Agreement and the Deed of Assignment supplement each other. The latter was executed to implement the former. Together they constitute one indivisible transaction. 65. Mr. Das relied on section 3 of the Trusts Act which defines a trust to mean an obligation annexed to ownership of property and arising out of a confidence reposed in and accepted by the owner or declared and accepted by him for the benefit of another or of another and the owner. He argued that no trust could have been created ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is a trustee for sale in respect of the Bhukailash properties and I answer issue No. 2 in the affirmative. 70. A question of jurisdiction has been raised by the defendants. It is contended that in its essence the suit is a suit for land situate outside the local limits of the original jurisdiction of the Court and the Court is, therefore, incompetent to entertain the suit. To decide the question of jurisdiction the plaint has to be regarded as a whole. No doubt, the reliefs which the plaintiffs claim have also to be examined for determination of the question but that by itself does not conclude the mutter. 71. In (19) Moolji Jaitha Co. v. Khandesh Spinning and Weaving Mills Co. A.I.R. 1950 F.C. 83 Kania, C.J remarked : The nature of the suit and its purpose have to be determined by reading the plaint as a whole. It is not proper to dissect the prayer and consider whether the Court has jurisdiction on the limited point. 72. I have given a synopsis of the plaint elsewhere. It has to be examined whether on the basis of the averments and submissions made in the plaint and the reliefs claimed in the suit, the suit, hi substance is a suit for land. 73. Counsel on behalf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d, was a suit for land within the meaning of clause 12. Garth, C.J. remarked that one of the main points which the plaintiff sought to establish is the title of the trustees to L's share. 76. In my opinion, this case is of no assistance to the plaintiffs. There, the creation of trust was not in dispute. What was in dispute was whether the title to a part of the land had vested in the trustee. In the present case, there is no dispute as to the title of the bank to the land. What is in dispute is whether a trust was created in respect of the land or not. 77. Counsel then relied on the decision in (22) Sewdayal Ramjeedas v. Official Trustee A.I.R. 1931 Cal. 651. There it was held that where the plaintiffs want to have it established that on the death of a life tenant the immovable property reverts to the estate of the settlor and becomes available to satisfy the claims of the creditor, such suit is a suit for land because suits for land mean suits in which having regard to the issues raised in the pleadings, the decree or order will affect proprietary or possessory title to land. 78. Whether a property has reverted to the estate of the settlor is mainly, if not entirely ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decision was that the plaintiff by claiming that the lease was subsisting, was claiming an interest in land and by claiming rents, issues and profits, was virtually asking for possession of land. The case is, therefore, not of any assistance to the plaintiff. Here, the plaintiffs are not asking for possession nor are they disputing the right, title and interest of the defendant bank in the property. They are only contending that an obligation has been imposed on the defendant bank by the deed of 1930, an obligation which is annexed to the defendant's title. 82. Counsel relied on the case of (26) Sudamdih Coal Company Ltd. v. Empire Coal Company Ltd. I.L.R. 42 Cal. 942. In that case, the boundary between the plaintiffs and the defendant's collieries was in dispute. The question was whether the defendant had encroached on the plaintiff's land and had removed coal of which the plaintiff was the owner. The defendant contended that as the suit had been brought for the purpose of getting control of and establishing title to land, it was a suit for land. Jenkins, C.J. held that the expression 'suit for land' in clause 12 of Letters Patent cannot be construed as bein ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mely, that a suit for land in clause 12 means a suit in which having regard to the issues raised in the pleadings, the decree or order will affect directly the proprietary or possessory title to land or other immovable property, has not been disputed. 86. Learned Counsel for the bank relied on (30) Premsukh v. Mangal Chand 41 C.W.N. 854, (31) Haralal Banerjee v. Nistarini Debee 29 Cal. 315, (32) Padampat Singhania v. Narayandas Jhunjhunwalla 59 Cal. 357 and (33) Maharaja Probirendra Mohan Tagore v. State of Bihar A.I.R. 1959 Cal. 767. The first of these cases was a suit for enforcement of a mortgage of immovable properties. No one disputed, as it could not be, that it was a suit for land. What was in dispute was whether by reason of inclusion of a property situate within jurisdiction which was only of notional value in the mortgage security, the Court had jurisdiction to try the suit. In the second case, the plaintiff brought a suit for a declaration that he was entitled to possession of properties movable and immovable for the construction of his grandfather's will under which he claimed, for an account by the executrix of the will, for administration of the testator's ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it was the administration of the estate of a deceased person resident within the jurisdiction, the principal executor being also resident there and actual administration going on there, the High Court of Calcutta in its ordinary jurisdiction had right to order administration of this estate and as ancillary to such an order, to set aside deeds obtained by fraud of the executor. Nor does the circumstance that a decree had been granted by the Court of 24-Parganas making a fraudulent award, an order of the Court, protect that decree from the jurisdiction of the Calcutta High Court when redressing that fraud. In like manner, their Lordships consider the Calcutta Court entitled, for the due administration of the estate to set aside leases of land outside the territorial limits of their jurisdiction, those leases having been made as an incident of the same fraud. (35) Benode Behari Bose v. Nistarini Dassi 32 I.A. 193. 89. I may now refer to the case of (36) Goculdas v. Chaganlal I.L.R. 54 Cal. 655. There it was held that the expression 'suit for land' in clause 12 of Letters Patent means a suit in which having regard to the issues raised in the pleadings, the decree or order w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al Trustee I.L.R. 62 Cal. 1062, a testator died, leaving a will by which the official trustee was appointed executor and the plaintiff, one of his daughters as the first shebait; and the testator directed his estate, with a certain exception, to be vested in trust Some of the trusts, in respect of land, were questioned by the plaintiff as void for uncertainty. It was contended that inasmuch as the plaintiff questioned the validity of the trusts or in other words, that those trusts were non est in the eye of law the suit was a suit for land. Ameer Ali J. on an elaborate review of decided cases, held that the High Court has jurisdiction to entertain suits for administration of trusts declared by will or deed, for construction and for the determination of the validity and effect of such trusts, notwithstanding that, as a result of the decision, title will vest in certain persons to the exclusion of others and or that those persons will be entitled to possession. 92. In my opinion, if an adjudication on the validity of a trust in respect of land does not make a suit a suit for land, an adjudication on the question whether on a construction of a document a trust came into existence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eller's title. In rejecting the contention that the suit was one for land, Law J. observed: Where in the suit the question raised is directly and substantially a question of adjudication of title to land or for possession of land or where as a result of the decision in the suit, the title or possession or control of land is to be directly affected or interfered with, the suit must be held to be a suit for land......If the question of title arises in the suit incidentally or collaterally for the purpose of granting a relief other than obtaining possession or declaration of title, the suit cannot be held to be a suit for land. 96. The learned Judge relied on the observation of Kania C.J. in Moolji Jaitha's case that it is sufficient to say that taking the suit as a whole one has to consider whether it is for the purpose of obtaining a direction for possession or a declaration of title to land or the object of the suit is something different but involves the consideration of the question of title to land incidentally. 97. In the case before Law J. no relief was asked for adjudication of title or possession of the property except an incidental finding that the seller ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nion between the learned Judges who decided the case as to the tests which have to be applied for determination of the question whether a suit is a suit for land. Kania, C.J. observed : it is sufficient to say that taking the suit as a whole one has to consider whether it is for the purpose of obtaining a direction for possession or a decision of title to land or the object of the suit is something different but involves the consideration of the question of title to land indirectly. Mahajan J. said : where incidentally in a suit the main purpose of which or the primary object of which is quite different, some relief is to be given about land the title to which not being in dispute in the real sense of the term, then such a suit cannot fall within the four corners of this expression. In each case the Court has to determine the true nature of the suit. B. K. Mukherjea J. held : the words 'suit for land' mean a suit for establishing title to land or any interest in the same or for possession or control thereof and the decree sought for must be intended propria vigore to be enforceable against and binding on the land itself. Patanjali Sastri J. said : the words ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... em. He said : I am further of the opinion that the character of a suit cannot change by reason of the relationship between the parties being fiduciary. A suit for land would still be a suit for land even if the parties stand on fiduciary relationship to each other. If a plaintiff sues a defendant trustee for possession and declaration of title as to land alleged to belong to trust to which a trustee has set up a hostile title in breach of the trust, the suit is a suit for land irrespective of the circumstances of the fiduciary relationship. In the present case, the plaintiffs are not asking expressly or impliedly for a declaration of title to the land adversely to the trustees nor are they asking for possession of the land. They are merely claiming that the defendant bank in whom the land has vested is under a liability to discharge the obligations on the basis of which the land has vested in them. The following observations of B. K. Mukherjea J. are of relevance in the context of the present case: I do not dispute as a proposition of law that if without raising any question of title or even admitting that the title is with the defendant, the plaintiff seeks to compel the defe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the suit is not a suit for land and the Court has jurisdiction to try the suit. I therefore, answer issue No. 9 in the affirmative. 102. One of the main enquiries to be made in this suit is the enquiry as to the adequacy or reasonableness of the price at which the defendant bank proposes to sell the Bhukailash estate to the defendant No. 2 under the agreement of June 15. 1961. The estate consists of 141 bighas 7 cottahs of land at present. The general picture of the locality where the estate is situate is clear. It is situate at a short distance from the junction of Judges Court Road and Diamond Harbour Road, an important communication centre lying at the outskirts of the residential area of Alipore. Nevertheless, it lies in the vicinity of the Kidderpore docks. The area is well served by roads some of which are arterial roads. The major roads are all motorable, as for example, Bhukailash Road, Braunfeld Road, Mayurbhanj Road, Hossain Shah Road, Ekbalpore Road, Ekbalpore Lane and Ibrahim Road and a few more. Tram cars and buses are available. There is a market. There are missionary schools and private schools. There is a hospital run by the Port Commissioners, a charitable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been ascribed to the low level of the sites. In answer it was suggested that high plinths are required under the Corporation rules. There is no satisfactory evidence that the land level of the Bhukailash estate is lower than that of the streets. 103. The Bhukailash estate although consisting of 141 bighas falls into several natural divisions. The estate does not consist of one compact and contiguous plot of land. It consists of a number of pockets or groups and single plots each capable of being dealt with separately. Most of the plots have access from municipal roads or from passages leading to municipal roads. Almost all of them have road frontages. Quite a number of the plots have access from more than one street. They can he divided conveniently for the purpose of sale without opening up passages for egress and ingress. The municipal roads as well as the bustee passages are electrified. Mr. Banerjee, deposed that about a quarter of the huts in the Bhukailash estate has electric connection. Electric connection is, however, available for all. 104. I may now describe the plots in greater detail. Plots A, B, C, D, E, F, G, H, I, J and K are all on Bhukailash Road, a major mo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s also through a passage. Plots Y and Z consisting of 1 bigha 5 cottahs, and 2 bighas 5 cottahs are on Ibrahim Road. Apart from direct access to Ibrahim Road they have access to other municipal roads through passages. Ibrahim Road is a 60' ft. wide street which has been recently opened up. Plot A/1 is a plot of 11 cottahs. Access can be had from Ibrahim Road and also from a passage on the south. It may be sold as a residential plot or it may be conveniently sub-divided. Plot A/2 is a plot of 2 bighas 15 cottahs on Dent Mission Road, a road 30' ft. wide. Access can be had from Dent Mission Road and Kaila Sarak Road. This plot may again be conveniently sub-divided having regard to its situation. Plots A/3, A/7, A/8 and A/7 are of 2 bighas 18 cottahs, 11 bighas 10 cottahs, 3 bighas and 4 bighas 10 cottahs respectively. Together they cover an area of nearly 22 bighas or 15% of the Bhukailash estate. Out of these, the school and the market are situated on 2 bighas of land. They are masonry structures. They yield good rents. Mr. Hossain, the bank manager, himself deposed that the school and the market can be sold separately at good prices. These plots have direct acce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the basis of those materials assessed the value of the Bhukailash estate. From the Corporation records he found that a plot of land situate at 9/1B. Ekbalpore Lane consisting of 1 cottah 14 chittaks and 39 sq. ft. was sold for Rs. 7331/-. He was not, however, sure whether it was bustee land or bastu land i.e. homestead land. He also found that premises No. 35, Mominpore Road, a plot of homestead land of 2 cottahs 10 chittaks with a brick built structure was sold for Rs. 15,000/-. He calculated the value of the structure at Rs. 10,200/-, deducted 50% for depreciation and arrived at the figure of Rs. 5100/- as the net value of the structure. Deducting Rs. 5100/- from Rs. 15000/- he calculated the value of the land at Rs. 9,900/-. From Rs. 9,900/- he deducted the cost of litigation for evicting the tenant which he thought should be Rs. 150/-. He also thought that normally it should take 5 years to evict a tenant. For those 5 years he calculated interest at 6% per annum on the purchase price which comes to Rs. 2970/-. This was a deduction to be made from the value of the tend. He also deducted a sum of Rs. 26.76 paise as costs of mutation payable under the lease of 1919. Moreover, h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Calcutta Improvement Trust acquired some bustee land in Manicktolla for Rs. 1800/- to Rs. 2200/- per cottah. In his evidence, he stated that as the property is large, a deduction of 35% should be made for sale in one lot. Moreover, for the forfeiture and re-entry clauses in the lease of 1919 a further deduction of 5% should be made. This again is a mere hypothesis. It is common knowledge that the larger the plot, the less will it fetch per unit. But then the Bhukailash estate, as I have said, is not a single unit. It consists of disparate plots or groups of plots. Some are more valuable than others by reason of their situation, their access and their frontage. Mr. Pal takes a transaction of sale, makes deductions for the cost of the building and arrives at the value of the land. Then he imagines the land to be occupied by thika tenants, never mind, by how many. He imagines that there is one thika tenant in each plot, imagines the cost of litigation to be Rs. 125/- or Rs. 150/- and imagines the time required for eviction to be 5 years. He is of opinion that the value of land in 1961 should have been Rs. 2160/- per cottah for bustee land and the price of a small plot hi Bhukailash es ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... does not take into consideration the fact that the rents paid by the thika tenants may not be fair rents. It is not in dispute that the tenants are mostly very old tenants. It is common knowledge that because of Rent Restriction laws old tenants pay rents which are considerably less than the present market rents. Mr. Sarkar, in my opinion, should have also taken into consideration the fact that the Bhukailash estate is situated in a developing area. Moreover, he did not care to enquire whether the bank was or was not spending a disproportionately large sum of money for collection of rents, or in other words, whether the net income as it appears from the bank's records, is fair and legitimate. 112. In the evidence given by the valuers and also in course of the argument, reference was made to a work on valuation by John Parks, namely, the Principles and Practice of Valuations. Mr. Parks was the Chief Valuer of the Calcutta Improvement Trust for a long time. He had an intimate knowledge of the characteristics and values of different types of lands and buildings in Calcutta. His work is of considerable assistance on principles of valuation. I may cite some of the passages in Par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vary from 2% to 5% of the gross rental in accordance with the special circumstances of each case. It is, therefore, open to question whether the bank is not spending a disproportionately large sum of money in establishment charges and cost of collection thereby reducing the net income of the estate. 114. To arrive at a reasonable estimate of the value of the property in 1961 it will be helpful, in my opinion, to examine the particulars of sales of land in the Bhukailash estate and its neighbourhood in the year 1961 as also in the preceding and following years. In 1943 the bank sold land measuring 1 bigha 2 cottahs and 3 chittaks. The bank has not disclosed at what price the land was sold and no reason has been given for non-disclosure. In April 1946 the bank sold a plot of land, a portion of 3/1, Bhukailash Road, comprising an area of 16 cottahs 1 chittak and 35 sq. ft. at Rs. 2000/-per cottah. The plot had direct access from Bhukailash Road, where the bulk of the Bhukailash estate is situate. It is not clear whether the property was unoccupied or occupied by tenants though it is more likely than not, having regard to the recitals in the lease of 1919 and the Memorandum of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t Rs. 5750/- per cottah (Ext. HH) and on July 21, 1965 another plot of 10 cottahs 11 chittaks with access through a 50' ft. common passage from Mayurbhanj Road was sold at Rs. 2354/- per cottah. These plots were occupied by thika tenants at the time of sale (Exts. HH, Ext. R-S). 115. In the petition which the defendant bank filed on 28th February, 1947 by way of objection to the rate of compensation proposed to be paid for the land acquired for the Calcuta Improvement Trust it was claimed that the market price was Rs. 3000/- per cottah (Ext. Y). It was stated in the petition that it is valuable property because it abuts on Bhukailash Road. In this connection it is good to remember that a very substantial portion of the Bhukailash estate abuts on Bhukailash Road. In a letter of 25th September, 1947 the bank stated that the highest offer it had received was Rs. 2750/- per cottah. 116. In 1922 the Rajgarhias mortgaged throe sets of properties in favour of the bank i.e. Calcutta properties, Hooghly properties and the Bhukailash estate. In the mortgage deed it is recited that the value of the mortgaged properties is rupees 28 lacs. It is at least arguable that the bank had a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9, 1919 are onerous; that the lessee is required to pay all rates, taxes, assessments, impositions and outgoings in respect of the premises; that all arrears of rent reserved are to remain a charge on the demised premises; that in case of assignment, under lease or sub-lease of a portion of the demised premises, a sum of Rs. 10/- per cottah shall be payable to the superior landlords as selami, that in the event of default in payment of rent the landlords shall be entitled to re-enter the premises and take possession and that if the demised land or any portion thereof is acquired for public purpose, the lessors shall be entitled to a share of the compensation money at the rate of Rs. 200/- per cottah. 120. The lease is a lease in perpetuity. That itself confers a benefit; unlike a Cease for a fixed period, the lease is not a wasting asset. There is no diminishing unexpired residue. That the lessees have to pay rates and taxes in respect of the property of which they are for all practical purposes, the owners, is only to be expected. Reentry clause in a tease is usual. The mutation fee of Rs. 10/- per cottah is not much, specially in these times of inflation. The share of compensa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1946 a plot of 16 cottahs was sold by the bank to Shew Prasad Shaw, may be, as I have said, at the purchaser's initiative. In 1946-47 a plot of land was acquired for the Calcutta Improvement Trust. That was a case of compulsory acquisition, not of sale. 125. Under section 9 of the Banking Companies Act, the bank came under a statutory obligation to sell the property within a period of seven years. It is clear from the records that no effort was made by the bank to sell the property during that period. Between 1956 and 1961 seven offers were received by the bank to purchase the property, but there is no evidence that any of those offers came as a result of the bank's efforts. 126. It is difficult to see how the offer made by the defendant No. 2 is better than the one made by Gopal Collieries. By that offer, the bank was to collect the rents, issues and profits of the estate and apply them in satisfaction of its dues on account of the purchase money. Moreover, a property worth rupees 2 lacs was to be mortgaged in favour of the bank by way of earnest. The reasons given for turning down the offer of Gopal Collieries was that the offer involved considerable delay in reali ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nded that Talbot Co., the leading estate agents might be contacted through whom the bank should have been able to find purchasers for the school building, the market and other suitable portions at favourable rates. Nothing in that direction was done. The head office did not even reply to his letter which only means that those who were in control of affairs did not even apply their minds to the eminently reasonable suggestions made by the bank manager. 130. By another letter dated June 26, 1956 Mr. Hossain intimated to the head office that the Government had a slum clearance project in view. The Government wanted to build tenements after clearing the slums to provide the displaced people with accommodation. Land price in Calcutta, it was said, was Rs. 2000/- per cottah minimum. Even if we are to offer this land to the Government, I am sure they will gladly pay at least Rs. 15001/- per cottah and at this rate the price will come up to near about Rs. 42 lacs. He suggested that the Vice-Chairman should write to the Chief Minister Dr. B. C. Roy in the matter. Nothing was done to follow up the suggestion. Mr. Hossain's letter was not even answered. In the face of all this evid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id, that the property should be sold in separate portions. There is no evidence oral or documentary, that any difficulty, legal or practical, was experienced by the bank in trying to sell a portion of the property. 134. In the face of all this evidence, it is impossible to hold that sale in portions was or is not feasible and that the property has to be sold in one lot, if at all. The nature of the property, as we have seen, makes it easy and even desirable to sell the property in separate lots. 135. The argument that the offer made by the defendant No. 2 is the best that the bank has been able to secure and therefore, the value offered is not grossly inadequate, breaks down. As I have said no effort was made by the bank on its own to sell the property; the bank merely dealt with chance offers when they came. No house agent was engaged; no advertisements were published. No attempt was made to sell the property in separate lots or in its natural divisions; the eminently reasonable suggestions made by the local Agent of the bank for sale of the property were not even considered by the Head Office, resulting in failure to exercise the discretion vested in the trustee. 136. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at which the bank itself sold some plots in 1946, the statements made on behalf of the bank itself in its objection petition filed in connection with acquisition of land in 1946 and in its correspondence with the Head Office at Bombay to which I have alluded. Even if Rs. 2000/- is accepted as the value of vacant land per cottah, which I think, is on the low side, and that is a figure which is accepted by the bank in its correspondence, I do not think it will be reasonable to knock off 75 percent, of the value on the ground of occupation of the land by thika tenants. 140. In these circumstances, I am of opinion that the price offered by the defendant No. 2 accepted by the bank is grossly inadequate. The bank is about to make an improvident sale and the plaintiffs are justified in asking for an injunction to restrain it. This is a case where illustration (b) to section 61 of the Trusts Act applies propria vigore. 141. It is alleged that the defendant bank as trustees have committed and are still committing breaches of trust, particulars whereof have been given in paragraph 24 of the plaint. 142. In this connection, reference may be made to Halsbury's Laws of England, 3r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the provisions of section 19 of the Trusts Act. In these circumstances, I must hold that by refusing to render accounts the defendant bank has committed breach of trust. Items (c) and (k) relate to the failure of the defendant bank to sell the property in the course of 30 years. A trustee for sale has the power to postpone sale at its discretion even for an indefinite period unless by the terms of the trust he is required to sell the trust property within a specified period. That does not mean that a trustee for sale can adopt an attitude of indifference and pursue a course of inactivity for decades. If the sale is postponed for sufficient reason, surely no complaint can be legitimately made. In the present case, it appears that the defendant bank was under a duty to sell the property not only under the terms of the agreement of December 18, 1930 but also under the provisions of the Banking Companies Act, Once the Banking Companies Act came into operation it became incumbent on the bonk to sell the property by 1956. Even apart from the statute, it was the duty of the bank to proceed in the matter of sale with reasonable diligence. On the evidence on record, I have found that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laintiffs have plenty of cause of action and answer issue No. 12 in the negative. There is a prayer for a declaration that the agreement dated June 15, 1961 be declared void, delivered up and cancelled. 147. The plaintiffs are entitled to certain benefits under the agreement of December 13, 1980 viz., liquidation of their debt on the decree by sale of the properties, and a moiety of the surplus left of the proceeds of sale. The benefit of a contract is a property. Subject to certain exceptions, it is assignable as an actionable claim. 148. As I have held that under the Agreement of June 15, 1961 the defendant bank is seeking to sell the estate for a grossly inadequate price to the detriment of the plaintiffs' interest, I must also hold that in the circumstances of the case the consideration or object of the agreement is not lawful because it involves or implies injury to the property of the plaintiffs within the meaning of section 23 of the Contract Act. The agreement is, therefore, void under section 24 of the Contract Act. 149. I am further of opinion that the plaintiffs' apprehension that the instrument of June 15, 1961 which is void against the plaintiffs, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... outgoings out of the proceeds of the said property, any balance is left, the same will be divided between the mortgagees and the mortgagors or their nominees in equal shares provided, however, the account so to be made up by the mortgagees shall be conclusive and final. In my opinion, the 'proceeds' of the said property do not mean merely the proceeds of sale. This construction is justified by the fact that under the decree the bank is entitled to charge interest on judgment at the rate of 6% per annum. There is also some evidence that in the account maintained by the bank under the agreement, the bank has been crediting the account with the rents, issues and profits of the property. It is true that the Deed of Assignment of February 12, 1931 provides that the assignees will hereafter receive the rents, issues and profits of the said estate. It is also true that it provides that the right, title and interest of the mortgagors in the estate transferred to the defendant bank include the right to rents and profits of the said properties. As the estate vests in the trustee under the deed of assignment, so the right to rent, issues and profits also vest. The right is, however, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... licable. 156. Reference was made to the case of (48) Cunningham v. Foote 3 A.C. 974. There, on construction of a will, it was held that the will did not create a trust with regard to certain lands for payment of annuities and the claim for arrears of annuity was therefore not saved from the bar of limitation. 157. Here, the trust is an express trust. In Underhill on Trust, page 19, Article 7 para 1 it is said that no technical expressions are needed for the creation of an express trust. It is sufficient if the settlor indicates an intention to create a trust, and points out with reasonable certainty : (a) the trust property, (b) the beneficiaries and (c) the purpose of the trust. In paragraph 2 it is said that whether an intention to create a trust is sufficiently indicated is, in each case, a question of interpretation and may even be inferred from the context. At page 21 it is said that the latitude of expression allowed to the creator of a trust is an instance of the maxim that equity regards the intention rather than the form. Whenever intent is apparent, it will (other matters being in order) be carried into effect, however, crudely or elliptically it may have been exp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... discretionary power conferred on the trustee. I, therefore, propose to give necessary directions to the defendant No. 1 for sale of the property I do so, the more readily, in view of the submission made by counsel for the plaintiffs that all that his clients desire is that the defendant bank should sell the property in a proper manner. 161. Before I conclude, I desire to say that the transcript of the arguments made available to me, was of considerable assistance. The case was ably argued though a great deal of evidence, inconsequential and amorphous, might have been eliminated without any loss to any one. After a number of adjournments, hearing was concluded in January, 1969. 162. It now remains for me to pronounce the order. There will be a declaration that the Agreement dated 15th June 1961 between the defendant No. 1 and the defendant No. 2 is not binding on the plaintiffs. The said instrument is adjudged void and is directed to be delivered up and cancelled. The defendant No. 1 is directed to refund to the defendant No. 2 the sum of Rs. 2,50,000/- paid under the said Agreement. 163. There will be an injunction restraining the defendant No. 1 from transferring under th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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