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2011 Supreme(Mad) 4625

High Court of Judicature at Madras
THE HONOURABLE MR. JUSTICE VINOD K. SHARMA
First
Versus
Second
A.Nos. 3274 & 3275 of 2010 in C.S.No. 455 of 2009
Decided On :Decided on : 30-11-2011

All trustees of a Trust must be made party in a suit against the Trust, unless there is a stipulation in the Trust Deed to the contrary, as per Order 31 Rule 2 of the CPC. Additionally, Section 151 of CPC can be invoked to set aside a compromise decree if it is not valid under the Indian Contract Act.

Headnote:

Trust - Civil Suit - The Indian Trusts Act, 1882 - Section 151 of the Code of Civil Procedure - Order 31 Rule 2 of the CPC - [SUMMARY] The court allowed the application to set aside the consent decree as the Trust, as a legal entity, was not properly represented in the suit, and all the trustees were not made party to the compromise, which violated Order 31 Rule 2 of the CPC. The court referred to legal provisions and judgments to support the requirement of impleading all trustees in a suit against a Trust, and also invoked Section 151 of CPC to set aside the consent decree.

Fact of the Case:

The plaintiff filed a suit for declaration and relief against the defendants regarding the use of a property. During the pendency of the suit, the parties entered into a compromise, and a consent decree was passed by the court.

Finding of the Court:

The court found that the compromise decree was not valid as all the trustees of the Trust were not made party to the suit, violating the provisions of Order 31 Rule 2 of the CPC. The court allowed the application to set aside the consent decree and restored the civil suit for further proceedings.

Issues: The main issue was the validity of the compromise decree and whether the Trust, as a legal entity, was properly represented in the suit.

Ratio Decidendi: The court held that for suing a Trust, all the trustees must be made party unless there is a stipulation in the Trust Deed to the contrary, as per the provisions of Order 31 Rule 2 of the CPC. The court also invoked Section 151 of CPC to set aside the consent decree.

Final Decision: The court allowed the application, set aside the consent decree, and restored the civil suit for further proceedings.

Judgement Key Points

Key Points: - The court held that all trustees must be impleaded in a suit against a trust unless the trust deed provides otherwise. (!) - The compromise decree can be set aside if the trust was not properly represented and not all trustees were parties, violating Order 31 Rule 2 CPC. (!) (!) - Section 151 CPC can be invoked to set aside a consent decree if it is not valid under the Indian Contract Act. (!) - The suit was restored and the consent decree set aside due to improper representation of the trust. (!) - The civil suit was restored to proceed on merits following the setting aside of the consent decree. (!) - The applicant/trust contended that the decree was not binding on trustees not party to the suit; the court agreed given improper impleadment. (!) (!) - The trust was sued through its Managing Trustee, which raised issues about proper representation under Order 3 Rule 2 CPC. (!) (!) - The court found that in absence of proper impleadment, the suit framed was not maintainable against the trust. (!) - The application to challenge the decree was allowed; the consent decree was set aside; the suit was restored. (!)

How to challenge a consent decree on the ground that all trustees were not properly represented in a suit against a trust?

What is required under Order 31 Rule 2 CPC regarding impleading trustees in a suit against a trust?

What is the effect of Section 151 CPC on setting aside a compromise/decree when the trust is not properly represented?


Judgment :

VINOD K.SHARMA.J.,

1. A.No.3274 of 2010, under Section 151 of the Code of Civil Procedure, has been moved by the applicant / 2nd defendant, i.e. one of the trustees to set aside "Compromise Memorandum Judgment" and decree dated 13.07.2009, passed in C.S.No.455 of 2009 and to restore the civil suit No.455 of 2009, on record for decision on merit.

2. The plaintiff / non applicant filed a suit for declaration that the plaint A schedule property is exclusively for residential purpose of the members of the plaintiff association, and that the defendants have no right to use it for commercial or any other purpose.

3. Consequential relief prayed for is to grant permanent injunction, restraining defendant nos.1 to 3 from continuing, functioning, Vedagurukulam inside the colony, conducting monthly meetings, discourses of Vathikasri, performing religioius ceremonies Avaniavattam and Ganapathy and Sudarsana Homam on commercial basis and publishing spiritual magazines such as Vathikasri or any other magazines in any other name on behalf of its customers or doing any other commercial activities in the premises bearing New No.488, Old No.176, TTK Salai, Alwarpet, Chennai.

4. Relief of mandatory injunction is prayed, for directing defendant nos. 1 to 3 to remove the unauthorized constructions listed in the schedule B of the plaint in the premises bearing New No.175, 176 and 488 Old No.176, TTK Salai, Chennai.

5. The Trust was sued through its Managing Trustee, Rajagopal Ganapadigal, whereas third defendant was represented by the Managing Trustee Tr.Rajagopal Ganapadigal.

6. During the pendency of the suit, parties entered into a compromise, which was filed in this Court. In view of the compromise entered into between the parties, this Court passed a consent decree, which reads as under:

"Today, when the matter is listed, the counsel for the plaintiff and defendants 1 and 2 filed a Joint Memo of Compromise. Paragraph No.9 of the compromise memo also prayed for deletion of dismissal of the suit as against 3rd defendant. Accordingly, the suit is dismissed as against the third defendant.

2. Since in the suit only there are plaintiff and two defendants and both the parties prayed that a decree may be passed in terms of Joint Memo of Compromise, the Suit is decreed in terms of the Joint Memo of Compromise dated 13.07.2009. The said Joint Memo of Compromise shall form part of the decree in the Suit. In the light of the Suit being disposed of in terms of the Joint Compromise Memo, the connected O.A.No.558 of 2009 has become infructuous and dismissed as unnecessary. No costs."

7. These applications have been filed by S.Subramanian, S/o.K.S.Srinivasan, claiming to be the trustee and acting on behalf of the Trust under the resolution dated 05.06.2010, authorizing him to file the present applications, on behalf of the applicant / 2nd defendant, i.e. Sri Seetharama Gurukkulam Trust.

8. In the affidavit, it pleaded that the applicant in this Court is a Trust, founded on 11.04.2008, and registered under the provisions of The Indian Trusts Act, 1882. This leaves no manner of doubt that this is the application on behalf of defendant no.2, in the original suit.

9. Learned counsel for the applicant contends that irrespective of the facts that these applications have been moved on behalf of the applicant / Trust, but reason to challenge the decree is, all the trustees were not made party, which is in violation of Order 31 Rule 2 of the CPC, therefore, having not impleaded all the trustees, compromise decree cannot be binding on the trustees, who were not party to the suit.

10. It is also the contention of the learned counsel for the applicant that Trust was wrongly represented by one trustee and that the Trust was not represented by an authorized person. The plaintiff, with collusion and for extraneous consideration, sued the applicant through its Managing Trustee, who could not have represented the Trust in view of Order 3 Rule 2 of the CPC.


















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