1965 Supreme(SC) 13

SUPREME COURT OF INDIA
22nd January 1965
K. SUBBA RAO, ACTG. C.J.I., RAGHUBAR DAYAL, R.S. BACHAWAT AND V. RAMASWAMI, JJ.
Shah Chhotalal Lallubhai and others, Appellants
Versus
The Charity Commissioner, Bombay and others, Respondents.
Civil Appeal No. 634 of 1964.
Advocates appeared
M/s. Gumanmal Lodha, J. S. Rastogi, Advocate and Mr. J. B. Dadachanji, Advocate of M/s. J. B. Dadachanji and Company, for Appellants; Mr. P. K. Chatterjee, Advocate and Mr. B. R. G. K. Achar, Advocate, for Mr. R. H. Dhebar, Advocate, for Respondent No. 1.

The Court has the power to give directions for the utilisation of the accumulations of unexpended income of a public trust under Section 56 read with Section 55(1)(b) of the Bombay Public Trusts Act, 1950, even if the trust is a religious trust, provided that the accumulations are not held for religious purposes and it is expedient, practicable, desirable, necessary, or proper in the public interest to give effect to the original intention of the author of the trust or the object for which the trust was created.

Headnote:

PUBLIC TRUST - BOMBAY PUBLIC TRUST ACT, 1950 - SECTIONS 55(1)(B), 55(1)(C), 56 - APPLICATION FOR DIRECTIONS FOR UTILISATION OF ACCUMULATIONS OF UNEXPENDED INCOME OF TRUST - COURT'S POWER TO DEVIATE FROM DIRECTIONS OF SETTLER - CONDITIONS - RELIGIOUS TRUST - DIVERSION OF FUNDS FOR OTHER PURPOSES - LEGALITY.

Fact of the Case:

A testator created a trust for various religious and charitable purposes, including the giving of an annual Swamivatsal feast to members of his caste. After the death of the testator's niece, the trust was registered as a public trust under the Bombay Public Trusts Act, 1950. The trustees invested a portion of the trust funds and used the income to meet the annual expenses of the charities and the feast. However, due to rationing restrictions during World War II and subsequent economic difficulties, the trustees were unable to give the feast for several years and accumulated a surplus of unexpended income. The Charity Commissioner filed an application under Sections 55(1)(b) and 56 of the Act for directions for the utilisation of the accumulations for some educational purpose. The District Judge held that the provisions of Section 56 did not apply to the funds of a public religious trust and that the accumulations were not held for religious purposes and were subject to the directions of the Court under Section 56 read with Section 55(1)(b) of the Act. He directed the trustees to distribute the accumulations to two institutions for educational and medical purposes. The trustees and some members of the testator's caste appealed to the Bombay High Court, which upheld the District Judge's decision. The appellants then appealed to the Supreme Court.

Finding of the Court:

The Supreme Court held that the Bombay Public Trusts Act, 1950, as amended by Bombay Act 59 of 1954, excluded religious trusts from the operation of Section 55(1)(c), which permitted the Court to divert trust funds for other purposes even if the original objects of the trust could still be carried out. However, Sections 55(1)(a) and 55(1)(b) applied to all public trusts, including religious trusts, and the Court could give directions in respect of such trusts under Section 55(1)(a) or Section 55(1)(b) read with Section 56(2). The Court further held that under Section 56(1), the Court was required to give effect to the original intention of the author of the trust or the object for which the trust was created, so far as it was expedient, practicable, desirable, necessary, or proper in the public interest. The Court found that the giving of the Swamivatsal feast was a meritorious act prescribed by the scriptures of the testator's religious sect and that it was expedient, practicable, desirable, and proper to give effect to this charity. The Court also held that the accumulations of unexpended income should be applied to increase the amounts spendable for the surviving objects of the trust, including the feast.

Issues: 1. Whether the provisions of Section 56 of the Bombay Public Trusts Act, 1950, applied to the funds of a public religious trust. 2. Whether the accumulations of unexpended income were held for religious purposes. 3. Whether the Court could give directions for the utilisation of the accumulations under Section 56 read with Section 55(1)(b) of the Act. 4. Whether the giving of the Swamivatsal feast was a religious or charitable purpose. 5. Whether it was expedient, practicable, desirable, necessary, or proper in the public interest to give effect to the original intention of the testator and continue the feast.

Ratio Decidendi: 1. Section 55(1)(c) of the Bombay Public Trusts Act, 1950, as amended by Bombay Act 59 of 1954, excluded religious trusts from its operation. 2. The accumulations of unexpended income were not held for religious purposes, as the giving of the Swamivatsal feast was a meritorious act prescribed by the scriptures of the testator's religious sect and not a religious act. 3. The Court could give directions for the utilisation of the accumulations under Section 56 read with Section 55(1)(b) of the Act, as the trust was a public trust and the accumulations were not held for religious purposes. 4. The giving of the Swamivatsal feast was a charitable purpose, as it conferred religious benefits and was prescribed by the scriptures of the testator's religious sect. 5. It was expedient, practicable, desirable, necessary, and proper in the public interest to give effect to the original intention of the testator and continue the feast, as it was a meritorious act prescribed by the scriptures of the testator's religious sect and it was in the interest of the testator's caste.

Final Decision: The Supreme Court allowed the appeal, set aside the judgments and decrees of the Courts below, and gave directions for the utilisation of the accumulations of unexpended income. The trustees were directed to set apart a reasonable sum as a working fund and invest the balance amount. They were to spend half of the annual income from the investments on the charities mentioned in the testator's will and the other half on the annual Swamivatsal feast. The trustees were also directed to continue making the annual payments to the charities from the income of the original corpus of the trust funds and to spend the balance income on the feast. The Court directed that the parties would bear their own costs throughout, except that the trustees would pay certain costs as originally directed by the District Judge.