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1945 Supreme(SC) 46

Privy Council At Oudh
Sir John Beaumont, Lord Goddardand, Justice Lord Thankerton, JJ.
Ram Dularey -Appellant
Versus
Ram Lal and others -Resopndent
Privy Council Appeal No. 83 of 1939; Oudh Appeal No. 4 of 1938
Decided On : 06-11-1945

Advocates Appeared:
T.L. Wilson and Co., H.J. Umrigar, S.P. Kambatta

In public charitable or religious trusts, the court's primary duty is to act in the best interests of the public. Consequently, courts will uphold schemes designed to prevent mismanagement and waste, even if they depart from prior compromises.

Headnote:(A) Civil Procedure Code - Section 92 - Public charitable or religious trusts - Court's duty to consider the best interests of the public in approving schemes for the administration of trusts.

(B) Appellate Review - Interference with schemes - Courts are reluctant to disturb safeguards provided in a scheme designed to prevent mismanagement and waste, even if there are perceived inconsistencies in the lower court's judgment regarding adherence to a prior compromise.

Facts of the case:
A trust was created for public purposes of a charitable or religious nature. While the trustee was not found to have committed a breach of trust sufficient for removal, findings of mismanagement and extravagance led the trial court to draw up a new scheme to prevent waste. This scheme was subsequently approved by the higher court. The appellant challenged the scheme on the grounds that it departed from the terms of a prior compromise, particularly regarding the vesting of the property of the idol.

Findings of Court:
The court held that the higher court's reference to the prior compromise was intended only to the extent that the terms were for the benefit of the trust. The safeguards in the approved scheme were necessary to prevent the recurrence of mismanagement.

Issues: Whether the approved scheme for the trust was invalid due to its departure from a prior compromise and whether the court should interfere with the safeguards established to prevent mismanagement.

Ratio Decidendi: In cases involving trusts for public purposes, the court has a duty to determine what is in the best interests of the public. A scheme designed to prevent mismanagement and waste will be upheld, and the court will be slow to disturb such safeguards.

Result: Appeal dismissed.

Legal Category Hierarchy

  • trusts
    • public trusts
      • charitable and religious trusts
      • trust schemes
  • practice and procedure
    • civil procedure
      • section 92 civil procedure code

Lord Thankerton. -

In this appeal there has been no appearance for the respondents; but Mr. Khambatta, on behalf of the appellant, has presented the case with the fairness and candour which we have become accustomed to expect from him. He has confined his argument to one point only, because he, naturally, appreciates the difficulty arising from the fact that there were concurrent findings to the effect that the present trust was a trust created for public purposes of a charitable or religious nature within the meaning of S. 92, Civil PC.

The only point made by him, as I understood, was this: that he found in the judgment of the Chief Court an inconsistency in the language, which suggested in one sentence that they were following exactly the terms of the compromise which had been entered into by the parties in a litigation five years or so before the date of the judgment, and that in fact the scheme approved by them materially departs from the terms of the compromise, particularly as regards the vesting of the property of the idol.

It is clear from the judgment of the trial Judge that he, like the Chief Court, found that there was no sufficient fault or breach of trust on the part of the appellant to justify his removal, which was sought in the action; but he did give detailed findings with regard to instances of mismanagement and extravagance on the part of the appellant, which, as he said at p. 99 of the Record, in his finding on issue (5), rendered it entirely necessary to draw up a new scheme, so as to avoid mismanagement and waste, and he did draw up a new scheme which in itself was designed to prevent recurrence of the extravagance and mismanagement which had taken place during the period that the compromise was ruling the matter.

It is true that there is at p. 127 of the Record a passage in the judgment of the Chief Court which does suggest in one sentence, if read in one way, that they thought that it would be just and fair to tie down the parties to the terms of the compromise for the benefit of the trust, and it is possible to read that as meaning that they were going to stick to the terms of the compromise and nothing else; but the succeeding part of the judgment and the terms of the scheme approved by them make it quite clear that it was only the terms of the compromise in so far as they were for the benefit of the trust to which they were alluding in that sentence.

Even if there were an inconsistency in that judgment, their Lordships would be very slow to disturb the safeguards which are provided in that scheme, if their Lordships found it necessary to reconsider the scheme; but in their view the scheme has been definitely approved by the Chief Court and they see no reason for interfering with the judgment. It has to be remembered that in these cases the Court has a duty, once it finds that it is a trust for public purposes, to consider what is best in the interests of the public. That is made abundantly clear by the judgment of this Board, delivered by Mr. Ameer Ali, in ('16) 3 AIR 1916 PC 132 : 43 Cal 1085 : 43 IA 127 : 35 IC 30 (PC), Mahomed Ismail Ariff v. Ahmed Moolla Dawood .

Accordingly, it follows that their Lordships will humbly advise His Majesty that this appeal should be dismissed.

Appeal dismissed

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