2007 Supreme(SC) 337

2007(3) Supreme 320
SUPREME COURT OF INDIA
(From Calcutta High Court)
S.B. Sinha and Markandey Katju, JJ.
Ashok Kumar Kapur & Ors.—Appellants
versus
Ashok Khanna & Ors.—Respondents
Civil Appeal No. 1320 of 2007
(Arising out of Special Leave Petition (Civil) No. 8611/2006)
Decided on 13-3-2007
Counsel for the Parties :
For the Appellants : R.F. Nariman, U.U. Lalit, Sr. Advocate, C. Kukund, Ashok Jain, Pankaj Jain and Bijoy Kumar Jain, Advocates.
For the Respondents : Ranjit Kumar, Rakesh Dwivedi, Sr. Advocates, Senthil Jagadeesan, Ms. Swati Sinha, Ms. Jayasree Singh (for Fox Mandal & Co.) Shashank Sharma, Dr. Kailash Chand and Ms. Anu Gupta, Advocates.

Headnote:Indian Trusts Act, 1882—Sections 34, 11, 56, 77 and 83—Jurisdiction of Court u/s 34 of the Act—A company floated a fund known as ‘Dunlop Executive Staff Pension Fund’ for providing pension and annuities to the members of the executive management staff of the Company—Eligibility period—Respondent 3, Managing Director of the Company and two other members of the Fund filed suits for realization of amount of pension—Company became sick and it was declared as such by the Board of Industrial Financial Construction—Application filed by trustees of the trust before the High Court u/s 34 of the Act alleging that purpose of the trust has been completely fulfilled and/or trust has been completely executed without exhausted of the trust property to the extent of Rs. 3,99,55,682/- —Prayer made for appropriate direction with regard to the sum of Rs. 20,83,95,690/- and accrued interest lying in Special Deposit Account—Out of 186 employees who were eligible to receive pension fund, 140 employees consented that surplus amount be refunded to the Company—Single Judge of the High Court held that payment of pension was to be made not only to the existing members but also to the widow and dependents in terms of the extent rules—Division Bench of the High Court held that the amount lying in trust fund cannot be transferred to the company for meeting its liabilities—Whether judgment of the High Court is sustainable—Difference of Opinion between two Judges—Matter required to be placed before a larger Bench—Constitution of India—Article 142.

       As per S.B. Sinha, J.

       Held : The jurisdiction of the court under Section 34 admittedly is confined to opinion, advice or direction. An application would be maintainable on any present questions. Such questions must arise “respecting the management or administration of the trust property”. The questions should not be of any ‘detail, difficulty or importance or otherwise not proper in the opinion of the court for summary disposal’.(Para 17)

       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.(Para 21)

       The right of a member of a trust to receive pension poses a difficult question. It may also pose a question of importance, keeping in view the fact that by reason thereof, the obligation of the trustee would come to an end. It is one thing to say that an advice, opinion or direction can be made respecting the administration of the trust; but what that means would evidently depend upon the terms of the trust deed.(Para 24)

       Part II of the trust deed lays down the mode and manner in which the trust properties are to be administered. It does not lay down a right on the part of the trustee to put an end his right to get himself discharged from his obligation. If for some reason or the other, it is contended by the trustee that the trust stand extinguished, any remedy in respect thereof must be found within Chapter VIII of the Act and not otherwise.(Para 25)

       We will assume for the time being that the application under Section 34 of the Act was maintainable. The court, however, keeping in view the number of persons who would be entitled to oppose the prayer of extinction of trust, would decline to exercise its jurisdiction. Interpretation of the trust deed furthermore is a question of importance. It is also a matter of detail in the proceeding as to whether the trustees have been able to discharge their entire liabilities.(Para 28)

       The Division Bench of the High Court, as noticed hereinbefore, opined that the trust is an irrevocable 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.(Para 29)

       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. (Para 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 balance amount to the Company for its rehabilitation is a tell tale one. Bona fide of the trustees in moving such an application is suspect. The trustees intended to pay a huge sum of Rs.20 crores to the Company for its revival. Once it is revived, the employees who are existing would continue and new employees may also be appointed. It is, therefore, difficult for us to comprehend the stand of the trustees that as the Company had been declared sick by the BIFR, the same would lead to an irresistible conclusion that no further employee would be appointed. The contention of the trustees appears to be fallacious. Once the Company had taken recourse to the provisions of the Sick Industrial Companies (Special Provisions) Act, 1985, an operating agency must have been appointed and even without aid and assistance of all the trustees scheme(s) might have been framed by the operating agency for revival of the Company. How and in what manner the BIFR or for that matter AIFR intended to proceed the matter is one which falls within the jurisdiction of the authorities created under the SICA. The Civil Court will have no say in the matter.(Para 32)

       Whereas a direction to sell a portion of the trust property may be issued for the benefit of the trust as 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.(Para 40)

       Article 142 of the Constitution of India in a case of this nature may not be invoked, particularly when this Court is exercising its appellate jurisdiction. If the High Court had no jurisdiction to entertain the application and in any event having regard to the fact that both the learned Single Judge as also the Division Bench of the High Court had not exercised their discretionary jurisdiction, in my opinion, it is not a case where jurisdiction under Article 142 of the Constitution of India should be invoked particularly in view of the fact that the appellant is not remediless. It can file a suit. It can take recourse to other remedies which are available in law.(Para 45)

       As per Markandey Katju, J. (Dissenting Opinion)

       Admittedly, the object of the Trust in question was to pay pension and annuities to the members of the Trust or dependents, including their widows and children (upto the age of 21 years), in accordance with the rules of the Trust.(Para 50)

       The entire funds of the Trust were admittedly provided by the Dunlop India Limited (hereinafter referred to as the ‘Company’). It is further admitted that all the beneficiaries under the Trust have been paid off and hence the purpose has been completely fulfilled and executed without exhaustion of the funds of the Trust, except to the extent of Rs. 3,88,55,682.00, 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. 20,83,95,690.00 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.(Para 51)

       Section 34 of the Act may not be strictly applicable in the present case because that provision enables the principal Civil Court of original jurisdiction 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 142 of the Constitution of India to refund the balance money lying with the Trust to the Company which had donated the funds to the Trust. In my opinion, such a direction should be given in view of Section 83 of the Act, and also because the money can now only go back to the Company since all the beneficiaries have been paid off. Any other view would, in my opinion, be unreasonable because the balance amount lying with the Trust cannot obviously remain idle. To direct the Company to file a suit for this purpose would only cause further delay and multiplicity of proceedings. (Para 52)

       The Settler (the Company) is admittedly facing severe financial crisis having become sick and proceedings are pending for its revival before the appellate authority for financial reconstruction. Hence, it would be appropriate if the funds are returned to the Company as it may help revive the Company.(Para 53)