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2023 Supreme(Ker) 258
IN THE HIGH COURT OF KERALA AT ERNAKULAM
A. MUHAMED MUSTAQUE, SHOBA ANNAMMA EAPEN, JJ.
Cherunniyoor V. Jayaprakash, S/o. Vamadevan - Petitioner
Versus
Sree Narayana Trust, Represented by its Secretary, K. Natesan Alias Vellappally Nadesan & Ors. - Respondents
SPJC No. 3 of 2020
Decided On : 13-01-2023
For the Petitioner: M. Balagovindan, Sri. S. Shibu Kumar, Sri. A. Anoop.
For the Respondent: Sri. A.N. Rajan Babu, SC, S.N. Trust, V.R. Kesava Kaimal, P.B. Sahasranaman, R. Rajasekharan Pillai, S. Sujin, Jose Pallattukaran, M.G. Karthikeyan, Sri. P. Gopalakrishnan (MVA), Sri. A.R. Easwar Lal, P.J. Anilkumar, T.S. Harikumar.
Fiduciary duty of trustees and potential conflicts between their interests and duties can justify modifications to trust schemes.
Headnote:Modification - Trust Scheme - Clause 34, Clause 34A, Clause 34B - The court discussed the modification of a scheme approved for the S.N. Trust and considered whether an office bearer implicated in criminal charges related to the trust property should continue in office. The court interpreted Clause 34 of the scheme, which permits members to move for modification, and noted previous modifications made by the court. It emphasized the fiduciary duty of trustees and concluded that an office bearer charged with a trust-related offense should abstain from holding office until cleared or acquitted.
Fact of the Case:
The petitioner sought modification of a trust scheme to require office bearers implicated in trust-related criminal offenses to abstain from holding office until cleared or acquitted.Finding of the Court:
The court found that such a modification was necessary to secure the objective and integrity of the Trust.Issues:
Whether an office bearer implicated in criminal charges related to trust property should continue in office.Ratio Decidendi:
The fiduciary duty of trustees and the potential conflict between an implicated trustee's interest and their duties influenced the decision to permit the modification.Final Decision:
Modification permitted as clause 34B requiring implicated office bearers to abstain from holding office until cleared or acquitted was incorporated into the trust scheme.JUDGMENT :
A. Muhamed Mustaque, J.
This matter is related to modification of a scheme approved by this Court in respect of the Sree Narayana Trust (for short, the 'S.N. Trust). The S.N. Trust is a public trust.
2. A scheme for S.N. Trust was framed pursuant to the judgment of this Court in A.S.No.689/1972 and 813 of 1972.
3. Clause 34 of the scheme permits any member of the Board of Trustees to move this Court for appropriate modification of the scheme.
4. The petitioner is one of the Board of Directors of S.N. Trust. In this petition for modification, he seeks the following to be incorporated:
If any office bearer under the trust is charge sheeted for an offence of breach of trust by a Competent Court in a Criminal Proceedings, the office bearer/bearers shall abstain from continuing in the office till the final disposal of the case filed against him/them.
5. This was apparently moved in the wake of implication of the Secretary of the Trust, Shri Vellappally Nadesan for various offences under the Indian Penal Code. It is alleged that he has misused the funds of the Trust. We are not here to decide upon any matter relating to individual trustee, whether a particular individual has committed breach of trust or he is not fit to continue as a trustee, which are all matters to be considered by an appropriate Court in proceedings under Section 92 of the Civil Procedure Code. The point that has arisen for consideration before us is whether any modification is required in the scheme approved by this Court.
6. There cannot be any doubt as to the competency of this Court to modify the scheme in the light of Clause 34 of the Scheme which reads thus:
Any member of the Board of Trustees may move the Hon'ble High Court of Kerala for appropriate modification of the Scheme.
7. It is to be noted that, in the past, this Court had also occasion to modify the scheme after its approval. Accordingly, the original clause 34 was amended by deleting certain portions. Thereafter, in yet another proceedings before this Court, dated 15/12/2016, this Court incorporated clause 34A. Clause 34A permits members of the Board of Trustees to move against office bearers of Trust or the executive committee for violation of Trust scheme or on breach of trust. Clarificatory notes mention that remedy in such a situation is to approach the civil court by filing regular suit invoking Section 92 CPC. In the above order, this Court clearly observed that modification is permissible for the purpose of administration of the Trust.
8. We note that there is no provision in the scheme to keep a trustee or office bearer of the Trust in suspension till such trustee or office bearer is cleared of criminal charges levelled against them for the offences committed in respect of the Trust property. As seen from the Scheme, a provision has been made to make a person ineligible to become a trustee, if such person is convicted by the criminal court for the offence involving moral turpitude. No doubt, a trustee can be removed for breach of trust by a regular suit. However, we are wondering if a person is charge sheeted for committing offence in respect of trust property, can he continue to officiate in Trust till he is cleared of the charges? In a fair trial before the criminal court, it matters; as the witnesses and documents will be in the control and the custody of the office bearers of the Trust. Is it not detrimental to the interest of the Trust, if such office bearer is permitted to continue in the office? We have to answer this pointed question by considering the claim for modification.
9. Shri A.N. Rajan Babu and other counsel, who resisted the modification, argued that it is easy to implicate a trustee into a criminal case and to keep him away from administration and, therefore, if such a modification is allowed, it will result in chaos in administration of the trust. We are afraid to countenance this argument. Merely by incorporating a clause in a scheme, no Trustee can be prevented from f
