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Andhra Pradesh High Court
Judges : B.P.JEEVAN REDDY, V.MADHAVA RAO
Sahebzadi Amina Marzia - Appellant
Versus
Syed Mohd.Hussain - Respondent
Decided On : 03-25-81
TRUSTS ACT - SECTION 34 - TRUSTEES - SALE OF JEWELLERY - WEALTH TAX - JURISDICTION OF COURT - COURT CAN AUTHORISE SALE OF JEWELLERY TO MEET WEALTH TAX LIABILITY.
Fact of the Case:
The petitioners, trustees of a trust created by His Exalted Highness the Nizam VII of Hyderabad, filed a petition under Section 34 of the Trusts Act, 1882, seeking advice or directions in respect of the management or administration of the trust property in view of the demands made by the Wealth Tax Officer.
Finding of the Court:
The Court held that the only remedy without defeating the object of the trust is to sell as many items of jewellery out of the items specified in Schedules I and II of the deed of trust as would be sufficient to meet the wealth tax demand already assessed and also fetch income by way of interest on investment that can meet the recurring liability of the wealth tax in future.
Issues: Whether the Court has jurisdiction to authorise the sale of jewellery to meet wealth tax liability.
Ratio Decidendi: 1. Where in the administration or management of a trust estate by the trustees there arises an emergency or a state of circumstances which it may reasonably be supposed was not foreseen or anticipated by the author of the trust and is unprovided for by the trust instrument and which renders it desirable and perhaps even essential, in the interests of the beneficiaries, certain acts should be done by the trustees which they themselves have no power to do and to which the consent of all the beneficiaries cannot be obtained by reason of some not being sui juris or in existence, the Court will exercise its general administrative jurisdiction by sanctioning, on behalf of all parties interested, those acts being done by the trustees. 2. The Court has jurisdiction to authorise the sale of jewellery to meet wealth tax liability, where the trust deed does not provide for such a situation and the sale of jewellery is in the best interests of the beneficiaries.
Final Decision: The revision petition was allowed and the order of the learned Chief Judge, City Civil Court was modified to direct that the entire jewellery in Schedules I and II of the Trust Deed must be sold.
( 1 ) THIS revision is placed before us on a reference made by our learned brother, Muktadar, J. , by order dated 29th Jan. , 1981 as an important question of law is involved in the matter.
( 2 ) THE parties are described in this judgment as they were arrayed in the petition. The facts relevant for disposal of this revision are as follows: Sahebzadi Fatima Fouzia and Sahebzadi Amina Marzia, the grand-daughters of His Exalted Highness the Nizam, are respondents 1 and 2 in the petition. The 3rd respondent is the Wealth Tax Officer, Central Circle III, Hyderabad.
( 3 ) HIS Exalted Highness the Nizam VII of Hyderabad executed on 4th Sept. , 1951 an Indenture of Trust known as "wedding Gifts Trust of H. E. H, the Nizams two grand-daughters" whereby he settled jewellery and ornaments specified in the first and second schedules and 3 per cent Government of India securities of the face value of Rs. 50,000, Rs. 1,25,000, Rs. 1,25,000 and Rs. 25,000 specified in the third, fourth, fifth and sixth schedules to the deed of trust respectively for the benefit of his two grand-daughters Sahebzadi Fatima Fouzia and Sahebzadi Amina Marzia, respondents 1 and 2. The petitioners and Prince Muffakham Jah Bahadur and Col. Bashir Hussain Zaidi are the present trustees of the Trust, The petitioners filed O. P. No. 210 of 1979 under Section 34 of the Trusts Act, 1882 for advice or directions in respect of the management or administra- tion of the trust property in view of the demands made by the Wealth Tax Officer, the 3rd respondent. Under the provisions of Sub-clauses (c) and (e) of Clause 3 of the deed of trust the articles of jewellery specified in the First and Second Schedules to the deed of trust are to be held upon trust to allow the 1st and 2nd respondents to wear and use the articles of jewellery respectively for the purpose of any special or festive occasion and after any such ceremony or festive occasion, the trustees are enjoined to take charge of such articles from the said beneficiaries. Under Sub-clauses (g) and (h) of Clause 3 of the deed of trust, the trustees are enjoined not to sell or otherwise dispose of the articles of jewellery specified in schedules I and 2 during the lifetime of respondents 1 and 2 or to deal with the same in any manner except for the purposes of allowing the beneficiaries to wear and use the same. Clauses 4 and 5 of the deed of trust provide that on the death of the respondents 1 and 2, the trustees are to divide the articles of jewellery specified in the first and second schedules respectively among the children of the beneficiaries per stripes in the proportion of two shares for every male child and one share for every female child.
( 4 ) THE securities specified in the 3rd schedule are to be notionally divided into two equal parts and one such equal part is to be held upon trust called "fatima Fouzia pocket Money Trust" and the other upon trust called "amina Marzia Pocket Money Trust", The net income of the respective pocket money funds are to be paid to the respective beneficiaries for and during their lifetime. The securities specified under the 4th and 5th schedules are to be held upon trust for the purchase of a suitable building or land for construction of buildings thereon for the residence of the beneficiaries, respondents 1 and 2.
( 5 ) UNDER the provisions of Clause 3 (h) of the deed of trust, the income of the securities specified in the 6th schedule is to be utilised for payment and discharge of all costs, charges, expenses and outgoings relating to the safe-custody, preservation and upkeep of the trust property and if the income is not sufficient then out of the corpus of the said securities. The 6th schedule consists of the securities and Bonds of the aggregate face value of Rs. 11,091 as per details shown in the Annexure A. It is stated in the petition that the corpus settled under the above trust deed has been the subject matter of levy of wealth tax under the Wealth Tax Act
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