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HIGH COURT OF CALCUTTA
INDIRA BANERJEE, J.
Mohan Lall Seal - Appellant
Versus
Kanak Lall Seal - Respondent
G.A. No. 3095 of 2008 G.A. No. 1782 of 2008 C.S. No. 116 of 2008 A.T.A. No. 2 of 2008
Decided on : Apr 09, 2009
TRUST - Lease of trust property - Principles of Indian Trusts Act, 1882 applicable - Long term lease exceeding 21 years requires Court's sanction - Lease granted without public notice and without obtaining best rent is void - Lease for 99 years with right of demolition and construction at premium of Rs. 20 lakhs is not justified.
Fact of the Case:
A religious and charitable trust, created in 1848, owned two properties in Kolkata. In 2007, the trustees granted a 99-year lease of one of the properties to the defendant No. 7 at a premium of Rs. 20 lakhs and a monthly rent of Rs. 20,000. The plaintiffs, who were some of the trustees and descendants of the trust's founder, filed a suit challenging the lease on the grounds that it was not in the best interest of the trust and that it had been granted without following the proper procedure.
Finding of the Court:
The court held that the principles of the Indian Trusts Act, 1882, applied to the trust, even though it was a religious and charitable trust. The court further held that a long-term lease exceeding 21 years required the sanction of the court and that the lease in question had been granted without obtaining the best rent. The court also held that the lease was not justified as it was for a period of 99 years with the right of demolition and construction at a premium of Rs. 20 lakhs.
Issues: 1. Whether the principles of the Indian Trusts Act, 1882, apply to a religious and charitable trust? 2. Whether a long-term lease exceeding 21 years requires the sanction of the court? 3. Whether the lease in question was granted in the best interest of the trust? 4. Whether the lease was granted without following the proper procedure?
Ratio Decidendi: 1. The principles of the Indian Trusts Act, 1882, apply to public and private religious/charitable trusts. 2. A long-term lease exceeding 21 years requires the sanction of the court as provided in Section 26 of the Indian Trusts Act, 1882. 3. Properties of public and/or private charitable Trust cannot be decimated by the trustees at their own whims and fancies. 4. A property held in trust cannot be alienated save for compelling reasons at rent that is not the best.
Final Decision: The court declared the lease to be void and directed the trustees to issue advertisements for the lease of the property at the best possible price, with leave of the court. The court also directed that the trustees could transfer/lease out the property to the defendant No. 7, the current lessee, with the approval/permission of the court, if no better price was received after the advertisements.
1. ONE Mutty Lall Seal, during his life time executed a deed of trust on 21st February, 1848 dedicating all his properties inter alia for religious, charitable and benevolent activities.
2. The said trust, which was for a period of 99 years expiree on 20th February, 1947 and the trust properties devolved upon their heirs of Mutty Lall Seal. On 20th February, 1947, the heirs of Mutty Lall Seal created a new trust to continue the benevolent activities of the original trust. The properties of the trust estate included amongst others Premises No. 2 Red Cross Place, Kolkata and Premises No, 6 Jawaharlal Nehru Road, Kolkata. The plaintiffs and the defendants in CS No. 116 of 2008 except the plaintiff No. 11 and the Defendant No. 7 are the heirs of Mutty Lall Seal.
3. IN terms of the deed of trust dated 20th February, 1947, the Board of Trustees were to be reconstituted every five years and was to comprise of 3 persons from the line of Panna Lall Seal, 4 persons from the line of Gobinda Lall Seal and 3 persons from the line of Kanai Lall Seal. The constitution of the Board of Trustees underwent a change in February, 2007, upon expiry of the terms of five years.
4. The plaintiffs Nos. 1, 2 and 6 in C.S. No. 116 of 2008 are the descendants of Panna Lall Seal, the plaintiff Nos. 3, 2, 5 and 10 are the descendants of Gobinda Lall Seal and the plaintiff Nos. 7 to 9 are the descendants of Kanai Lall Seal. The aforesaid plaintiffs were appointed trustees on or about 21st February, 2007. On 22nd January, 2007 shortly before the constitution of the new Board of Trustees, the majority of the erstwhile trustees approved the proposal for execution of a deed of lease of Premises No. 2 Red Cross Place, Kolkata, in favour of the defendant No. 7 at a premium of Rs. 20,000,00/- and lease rend of Rs. 20,000/- per month. The deed of lease was executed on 24th January, 2007 in favour of the defendant No. 7.
5. The plaintiff No. 2 in C.S. No. 116 of 2008 filed an application being ATA 1 of 2007 in this Court under Section 34 of the Indian Trusts Act, 1882 for an order of injunction restraining the trustees from dealing with and/or disposing of and/or granting any long term lease in respect of the said two properties of the trust estate referred to above.
6. The Court by its order dated 7th February, 2007 directed that status quo with regard to the said properties be maintained. However, by the time the order of status quo was passed, the deed of lease referred to above, had already been executed. The plaintiff No. 2 had also filed a suit being T.S. No. 331 of 2007 (Mohit Lal Seal v. The Trust Estate of Mutty Lall Seal) in the City Civil Court at Calcutta in February, 2007 inter alia challenging the lease in favour of the Defendant No. 7.
7. The aforesaid suit was, however, withdrawn and the present suit being C.S. No. 116 of 2008 filed in this Court for inter alia a declaration that the deed of lease dated 24th January, 2007 is illegal and void, delivery up and cancellation of the said deed of lease and other consequential reliefs.
8. TWO applications filed in the suit being G.A. 1782 of 2008 and G.A 3095 of 2008 have been assigned to this Bench. The first, that is, G.A. 1782 of 2008 has been filed by the plaintiffs seeking directions for issuance of public advertisements for grant of lease of the said Premises No. 2 Red Cross Place, Kolkata, orders permitting the present trustees to lease out the said premises at the best available terms, injunction restraining the defendant No. 7 from transferring, alienating, parting with possession or changing the nature and character of the said premises or otherwise taking steps on the basis of the deed of lease. The application being G.A. No. 3095 of 2008 has been filed by the defendant No. 7 inter alia for dismissal of the suit and stay of all proceedings including G.A. No. 1782 of 2008.
9. The defendant No. 1 has, along with one Abhiram Lall Seal, filed an application under Section 34 read with Section
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