The judgment establishes that properties designated in a Compromise Decree as trust properties cannot be claimed as absolute ownership by trustees, emphasizing fiduciary duties.

JUDGMENT :

AUGUSTINE GEORGE MASIH, J.

1. The challenge in this Appeal pertains to the Judgment dated 26.10.2017 passed by the Division Bench of the High Court of Judicature at Madras (hereinafter referred to as the “Madras High Court”) in Original Side Appeal No. 272 of 2011, whereby the appeal preferred by the Appellant-Defendant was dismissed.

2. The relevant facts for the purpose of adjudication of the present challenge are succinctly enumerated as follows. The subject matter in question comprises of an immovable property located adjacent to the Respondent-Plaintiff-Temple, namely, Kamakala Kameshwarar Temple (hereinafter referred to as the “suit property” or “Schedule ‘A’ property”). The suit property and the Respondent-Plaintiff-Temple were owned by one late Rai Raja Eswardoss Diawanth Bahadur. On his death, the properties dwelled upon his son Mr. T. Lakshmidoss and his grandson Mr. T. Venkataprasad. They were declared as insolvents vide Order dated 27.04.1914 passed by the Madras High Court. In pursuance thereto, the Official Assignee became the possessor of the properties in the said authority.

3. Thereupon, Mr. T. Lakshmidoss and Mr. T. Venkataprasad arrived at an arrangement with the creditors and with the intent of annulling the declaration of their insolvency obtained a Decree dated 31.12.1915. According to the said decree, the Official Assignee was required to divide the estate between the said two insolvents in the proportion of three-fourth and one-fourth respectively, subject to clearance of the amounts due to the creditors. For the purposes of making payments of such outstanding dues, Mr. T. Lakshmidoss and Mr. T. Venkataprasad agreed to sell some of their properties, including the suit property. The said sale was made in favour of one Mr. W. Ramakrishna Lala for an amount of INR 1,10,000/- (Rupees One Lakh Ten Thousand only). Consequently, two Conveyance-cum-Sale Deeds dated 23.03.1917 were executed in favour of Mr. W. Ramakrishna Lala, who executed a Trust Deed dated 12.12.1917 appointing three trustees by name, Mr. M.S. Anantha Ram Lala, Mr. A.S. Subba Rao and Mr. C. Ranganadhan Nayudu (proprietor of creditor-company, namely, M/s Dowden and Company). As stipulated under the said Trust Deed, these trustees were empowered to sell all the properties except for the family house which is the suit property. Also, the income derived from the properties was required to be distributed between Mr. T. Lakshmidoss and Mr. T. Venkataprasad in a ratio of 3:1.

4. On 07.02.1924, Mr. T. Lakshmidoss and Mr. T. Venkataprasad were adjudged as insolvents for the second time resulting in vesting of the possession of the properties again in the Official Assignee. An Agreement dated 15.09.1925 came to be entered into with the creditors where the three trustees were also associated. The suit seeking specific performance of the said Agreement dated 15.09.1925 was preferred by the creditors namely, M/s Devakinandan Dubey and Sons where apart from the debtors, the aforementioned three trustees were impleaded as defendants. The said suit was decreed in favour of the creditors vide Compromise Decree dated 26.11.1929. To the said decree were appended three separate schedules which were marked as Schedule ‘A’ which comprised of the suit property, Schedule ‘B’ encompassed the properties which stood excluded from the Trust dated 12.12.1917, and Schedule ‘C’ relating to the Respondent-Plaintiff-Temple. It is this Decree dated 26.11.1929 which holds the key with regard to the nature of the property which is a subject matter of the present lis.

5. Pursuant to the terms of the said decree, the Official Assignee along with the two insolvents, and Mr. W. Ramakrishna Lala executed a Conveyance Deed bearing No. 1113 of 1931 for the transfer of the suit property enumerated in Schedule ‘A’ subject to certain cogent conditions and another Conveyance Deed bearing No. 1114 of 1931 comprising of the Respondent-Plaintiff-Temple stipulated in the Schedule ‘C’ in