# FAZALBHOY CURRIMBHOY ETC v. OFFICIAL TRUSTEE OF MAHARASHTRA & ORS., ETC

- **Citation:** [1979] 2 S.C.R. 699
- **Court:** Supreme Court of India
- **Decided:** 1978-12-12
- **Case number:** Civil Appeal Nos. 722, 1016 and 1221 of 1967
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/fazalbhoy-currimbhoy-etc-v-official-trustee-of-maharashtra-ors-etc-7623
- **Pages:** 18

## Headnote

• •
•
699
FAZALBHOY CURRIMBHOY ETC.
v.
OFFICIAL TRUSTEE OF MAHARASHTRA & ORS., ETC.
December 12, 1978
[S. MURTAZA FAZAL ALI, JASWANT SINGH AND R. S. PATHAK JJ.l
Sir Currimbhoy Ebrahim Baronetcy Act, 1913-Act created a trust of the
properties of the First Baronet-Fourth Baronet migrated to Pakistan and was
declared an evacuee-State Legislature passed the Sir Currimbhoy Ebrahim
BaronNcy (Repealing and Distribution of Trust Properties) Act, 1959-S. 1(4)
.of the Repealing Act-Scope of-Effect of repeal-Official Trustee-If required
Jo transfer and vest in the Cujfodian the trust properlies found to be evacuee
property.
In 1911 King George V conferred the "dignity, status and degree" of a
Baronet on Sir Currimbhoy Ebrahim of Bombay.
To provide for the upkeep
and dignity of the Baronetcy the Sir 0..rrimbhoy Ebrahim Baronetcy Act,
1913 was ptlssed by virtue of which considerable properties belonging to Sir
A
B
c
Currirnbhoy Ebrahim were settled upon the trust.
D
Section 8 of the BarOnetcy Act provided that the residue of income from
the properties settled under the trust was to be paid to the first Baronet and
the heir male of his body, who would, for the time being succeed to the title
of Baronet. Section 27 provided for the vesting of all properties and funds
in the Trust "upon failure and in default of heirs male of the body of the
Iast Baronet." The First Baronet left behind a Will
in
respect of certain
E
other properties.
On the death of the Fir<:t
l\<'!ron~t his eldest son assumed
the title of Second Baronet and on the death of the Second Baronet his eldest
son llussainbhoy became the Third Baronet.
'fhe Third Baronet migrated to Pakistan between the years 1947 and 1949.
He wasi therefore, declared an evacuee. Certain properties belonging to him
were declared vested in the Custodian of
Evacuee
Property. Two
other
F
immovable properties as well as the right, title and interest of the
Third
Baronet in the Sir Currimbhoy Ebrahim Baronetcy Trust were decllared as
evacuee properties and vested in the Custodian of Evacuee Property.
On the
death of the Third Baronet in Pakistan in 1952 his eldest son Mohamedbhoy
1iUCCeeded as the Fourth Baronet. At that time the Fourth Baronet was residing in India, but shortly thereafter he migrated to Pakistan. The
Deputy
-Custodian of Evacuee Property made an order declaring the Fourth Baronet
G
an evacuee and notified his beneficial interest in the Trust as evacuee property
vesting in the Custodian of Evacuee Property.
The Fourth Baronet having migrated to Pakistan along with his son, the
Bombay Legislature passed the Sir Currimbhoy Ebrahim Baronetcy (Repealing
& Distribution of Trust Properties) Act, 1959. The Repealing Act inter alia
revoked and extinguished the trusts, powers, provisions, declaration and purH
poses declared and expressed in the Sir CUrrimbhoy Ebt\lhim Baronetcy Act
and vested the properties and funds in the Official Trustee for the purpose of
700
SUPREME COURT REPORTS
[1979) 2 s.c.R,
A
distributing them amongst the persons rightfully entitled thereto, according
to law.
B
c
D
The Official Tiustee thereupon called upon the persons claiming interest
in the trust properties to submit their claims.
On the Official Trustee's application under s. 7 (2) of the Repealing Act
seeking orders and directions of the High Court as regtaTds distribution of
the trust properties amongst the several claimant11, a single Judge of the High
Court took the view that the Custodian was not entitled to the share of the
Fourth Baronet in the Trust properties because the beneficial interest of the
Fourth Baronet which had vested in the Custodian came to an e:ed on the
extinction of the Trust that the Repealing Act had the effect of giving rise
to a resulting trust in favour of the settler, the first Baronet; that the trust properties reverted to his estate on his death, that they mus.t be deemed to pass by
inheritance, according to the Muslim personal law, an~ that the residuary clause
· in the will execute

## Text

_Characters 0–39,987 of 49,529. This is a partial read: ask again with offset=39987 for what follows._

• •
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699
FAZALBHOY CURRIMBHOY ETC.
v.
OFFICIAL TRUSTEE OF MAHARASHTRA & ORS., ETC.
December 12, 1978
[S. MURTAZA FAZAL ALI, JASWANT SINGH AND R. S. PATHAK JJ.l
Sir Currimbhoy Ebrahim Baronetcy Act, 1913-Act created a trust of the
properties of the First Baronet-Fourth Baronet migrated to Pakistan and was
declared an evacuee-State Legislature passed the Sir Currimbhoy Ebrahim
BaronNcy (Repealing and Distribution of Trust Properties) Act, 1959-S. 1(4)
.of the Repealing Act-Scope of-Effect of repeal-Official Trustee-If required
Jo transfer and vest in the Cujfodian the trust properlies found to be evacuee
property.
In 1911 King George V conferred the "dignity, status and degree" of a
Baronet on Sir Currimbhoy Ebrahim of Bombay.
To provide for the upkeep
and dignity of the Baronetcy the Sir 0..rrimbhoy Ebrahim Baronetcy Act,
1913 was ptlssed by virtue of which considerable properties belonging to Sir
A
B
c
Currirnbhoy Ebrahim were settled upon the trust.
D
Section 8 of the BarOnetcy Act provided that the residue of income from
the properties settled under the trust was to be paid to the first Baronet and
the heir male of his body, who would, for the time being succeed to the title
of Baronet. Section 27 provided for the vesting of all properties and funds
in the Trust "upon failure and in default of heirs male of the body of the
Iast Baronet." The First Baronet left behind a Will
in
respect of certain
E
other properties.
On the death of the Fir<:t
l\<'!ron~t his eldest son assumed
the title of Second Baronet and on the death of the Second Baronet his eldest
son llussainbhoy became the Third Baronet.
'fhe Third Baronet migrated to Pakistan between the years 1947 and 1949.
He wasi therefore, declared an evacuee. Certain properties belonging to him
were declared vested in the Custodian of
Evacuee
Property. Two
other
F
immovable properties as well as the right, title and interest of the
Third
Baronet in the Sir Currimbhoy Ebrahim Baronetcy Trust were decllared as
evacuee properties and vested in the Custodian of Evacuee Property.
On the
death of the Third Baronet in Pakistan in 1952 his eldest son Mohamedbhoy
1iUCCeeded as the Fourth Baronet. At that time the Fourth Baronet was residing in India, but shortly thereafter he migrated to Pakistan. The
Deputy
-Custodian of Evacuee Property made an order declaring the Fourth Baronet
G
an evacuee and notified his beneficial interest in the Trust as evacuee property
vesting in the Custodian of Evacuee Property.
The Fourth Baronet having migrated to Pakistan along with his son, the
Bombay Legislature passed the Sir Currimbhoy Ebrahim Baronetcy (Repealing
& Distribution of Trust Properties) Act, 1959. The Repealing Act inter alia
revoked and extinguished the trusts, powers, provisions, declaration and purH
poses declared and expressed in the Sir CUrrimbhoy Ebt\lhim Baronetcy Act
and vested the properties and funds in the Official Trustee for the purpose of
700
SUPREME COURT REPORTS
[1979) 2 s.c.R,
A
distributing them amongst the persons rightfully entitled thereto, according
to law.
B
c
D
The Official Tiustee thereupon called upon the persons claiming interest
in the trust properties to submit their claims.
On the Official Trustee's application under s. 7 (2) of the Repealing Act
seeking orders and directions of the High Court as regtaTds distribution of
the trust properties amongst the several claimant11, a single Judge of the High
Court took the view that the Custodian was not entitled to the share of the
Fourth Baronet in the Trust properties because the beneficial interest of the
Fourth Baronet which had vested in the Custodian came to an e:ed on the
extinction of the Trust that the Repealing Act had the effect of giving rise
to a resulting trust in favour of the settler, the first Baronet; that the trust properties reverted to his estate on his death, that they mus.t be deemed to pass by
inheritance, according to the Muslim personal law, an~ that the residuary clause
· in the will executed by the First Baronet did not cover the trust properties.
A Division Bench of the High Court on appeal held that on the terms of
the Will a contrary intention had been manifested by the First Jl<rronet that
in the event of the failure of the Trust the trust properties shall, after his life
time, be held for the benefit of the Baronet for the time being and therefore
the Fourth Baronet was entitled to the trust properties absolutely in his own
right. The claim of the Custodian of Evacuee Property to the corpus of the
trust properties \Vas rejected.
HELD : !. Upon the provisions of the Baronetcy Act and of the Will a
direction by the First Bt:l.'l'onet must necessarily be presumed lb.at if the trust
E
created by the Baronetcy Act failed or was revoked the trust properties
~d·
funds must go to the last Baronet. [710 G].
F
G
H
(a) Although the trust was created by statute, it was
created
at the
instance of the First Baronet so as to keep the trust in perpetuity for the
upkeep of the dignity and title of t.1.e Baronetcy nt all times. A trust of this
nature has. been reg(ljrded as a private trust. [707 B].
(b) Section 83 of the Indian Trusts Act provides that where a trust is
incapable of being executed or where the trust is completely executed with·
out exhausting the trust property, the truistee, in the absence of a direction
to the contrary, must hold the trust property for the benefit of the author of
the trust or his legal representatives.
On the terms of this section, which
incorporates in codified form the concept of what is known as a resulting
trust, a resulting trust can arise only in the absence of a direction
to the
contrary. [707 E-F].
(c) In the instant case the various clauses of the will show that substan~
tially large sums of money were gifted by the First Blaironet in equal shares
to each of the sons except the eldest son.
In all these clauses the
eldest
son Mohamedbhoy was not included because he would succeed as
Baronet
to the benefit of the trust constituted under the Act. There is no reason to
suppose that the First Baronet intended to exclude Mohamedbhoy from the
benefit of his bounty. According to the terms of the Act, the benefits of the
trnst created under the Baronetcy Act were to devolve on the male hcMrs of
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FAZALBHOY v. OFFICIAL TRUSTEE
701
the body of the First Baronet who took the name of Currimbhoy Ebmhim,
A
aad when executing the will, the First Baronet had that benefit in mind Ior
Mohamedbhoy.
The First Barone! had the line of Mohamedbhoy in mind
for supplying future Baronets. Therefore the only conclusion that can be drawn
is that the trust properties created under the Act were intended by the First
Baronet to vest in Mohamedbhoy and hls heirs.
Although s. 27 comes into
plta..y only upon the failure and in default of heirs male of the body of the
said Currimbhoy Embrahim, the intention of the First Baronet was that the
B:
trust properties and funds should be confined even ultimately lo the line of
Mohamedbhoy his eldest son. They would go to the heirs of the last Baronet
and not b'e distributed among his own heirs. [709 B-710F].
2. While ordinarily the trust properties and funds would have devolved on
the Fourth Baronet, the ultimate determination of the case must turn on the
validity of the claim made by the Custodian of Evacuee Property under s. 7(4)
of the Repealing Act. [710 HJ.
c
(a) The Repealing Act was passed by the State Legislature under Entry 41
of List m of the Seventh Schedule to the Constitution and
received
tho
assent of the President. In case of any repugnancy between the Repealing
Act and the Administration of Evacuee Property Act, 1950 the former will
prevail by reason of Art. 254(2) of the Constitution. Section 7(4) is not
repugnant to ooy provision of the 19 50 Act. It is in the nature of additional
))'
legislation on the subject. [714 BJ.
(b) Section 7(4) of the Repealing Act was passed because the
Fourth
Baronet had been declared an evacuee and his interest in the trust properties
under the Baronetcy Act had been declared evacuee property under the 1950
Act. With the repeal of the Baronetcy Act and the revocation and extinction of the trust, that interest came to an end and the
declaration
ceased
to have effect. The Legislature presumed that when the Official Trustee took
E
...__---'-
__ . proceedings for the distribution of the trust properties under s. 7
of the
~
__ . Repealing Act, the Fourth Baronet would be found entitled
to
the
trust
properties or part thereof. He had alrrody been declared an evacuee and
consistently with the earlier declaration vesting his
interest
in
the
trust
properties as evacuee property in the Custodian,
the
Legislature
intended
that the trust properties falling in fu11 ownership to the Fourth Baronet on
•
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repeal should likewise be vested in the Custodian. That could not be accomplished by a declaration under the Administration of Evacuee Property
Act,
1950, in view of s. ?A thereof which prohibited such a declaration after May 7,
1954.
The result could be accompliShed under some other law and s. 7(4) of
the Repealing Act was passed to make provision accordingly.
The trust pro~
perties \\'ere evacuee property because they belonged to an evacuee [vide s. 2(f)
Administration of Evacuee Property A.ct, [1950), and by the operative clause in
s. 7 ( 4) of the Repealing Act they were vested in the ·Custodian. The law relating
to evacuee property was applied to the right, title and interest of the evacuee in
the trust properties even as they applied to any other evacuee property
under
that law. The terms in which the law relating to evacuee properties has been ap~
plied to the trust properties fully confirms the conclusion that the trust prope11ies
falling to the Fourth Baronet were to be treated at par with evacuee property
generally. [714 F-HJ.
( c) Section 7 ( 4) of the Repealing Act requires three conditions
to be
satisfied. They are : (i) that a person is entitled to the trust properties or
F
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7 02
SUPREME COURT REP OR TS
[J 979J 2 S.C.R.
A
any part thereof; (ii) that such person has been or is declared as an evacuee
within the meaning of the Administration of Evacuee Property Act, 1950, and
(iii) that his right, title and interest in the trust properties
bias
been
or
is declared to be evacuee property under the
Administration
of
Evacuee
Property Act, 1950. If these conditions are satisfied the official trustee
is
required to transfer and vest in the Custodian the trust properties or so
much thereof as is found to be evacuee property and
the law
relating to
B
evacuee property shall larpply to such right, title and interest in
the
trust
properties as they apply to any other evacuee property under that law.
c
D
[711 G-H].
In the pre:sent case the first condition is
satisfied
because
the Fourth
Baronet had been found to be entitled to all the trust properties and funds
settled , and created under the Baronetcy Act.
The second condition is satisfied because the Fourth Baronet 'Nas
declared an
evacuee. Similarly,
the
third condition is satisfied because the right, title and interest of the Fourth
Baronet in the trust properties was declared to be
evacuee
property.
All
three conditions having been satisfied, s. 7 ( 4) takes effect and the
direction
contained in it must be carried out. The Official Trustee
is
required
to
transfer and vest in the Custodian the trust properties count to be
evacuee
property. [712 B-D].
3. There is no substance in the contention thl.tt on the death of the Third
Baronet before the Repealing Act was passed, the trust properties devolved
on the heirs of the Third Baronet i.e. his widow, son and two daughters.
On
the death of the Third Baronet the benefit of the
trust
created
by
the'
Baronetcy Act p:::issted to the Fourth Baronet. l715 D].
E
CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 722, 1016
and 1221 of 1967.
Appeal from the Judgment and Decree dated
9-8-1966 of
Bombay High Court in Appeal Nos. 31 and 34 of 1963.
,>-
the -
K. D. Mehta and D. N. Mishra for the Appellant In CA 722/67.
S. T. Desai1 R. B. Datar and Girish Chandra for RR 3 and 65 in
CA 722167.
I. N. Shroff and H. S. Parihar for R 48 in CA 722/67.
S. T. Desai, R. B. Datar for the Appellant and Respondent-40 in
.J>-
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1016167.
"
I. N. Shroff and H. S. Parihar for RR 27-28 in CA 1016/67 and
also for the appellant in CA 1221/67.
S. T. Desai and Girish Chandra for Respondent No. 63 in CA 12211
67.
H
The Judgment of the Court was delivered by
PATHAK, J. These appeals, on certificate granted by the High Court
of Judicature at Bombay, are directed against the judgment and order
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FAZALBHOY v. OFFICIAL TRUSTEE (Pathak, J.)
703
dated August 9, 1966 passed by the High Court in its appellaDe jurisdiction against orders and directions issued by a learned Single Judge
of the High Court on a petition filed by the Official Trustee of Maharashtra in regard to the properties of the former Sir Currimbhoy
Ebrahim Baronetcy Trust.
On July 21, 1911, His Majesty King George V issued Letcers Patent
conferring the "dignity, state and degree"of a Baronet of the United
Kingdom of Great Britain and Ireland on Sir Currimbhoy Ebrahim of
Bombay and the heirs male of his body lawfully begotten and to be
begotten. In order to provide for the upkeep and dignity of the Baronetcy, the then Governor General of India in Council enacted the Sir
Currimbhoy Ebrahim Baronetcy Act, 1913 (hereinafter referred
to
simply as
"the Baronetcy Act")
by virtue of which considerable
properties belonging to Sir Currimbhoy Ebrahim were settl<"d upon the
trustee, and for the purposes, declared in the Act. The Trust was creat ..
ed by statute at the instance of Sir Currimbhoy Ebrahim. The Trustees
who included the Baronet for the time being and three officials of th''
Government of Bombay designated by their office, w"re constituted as
a Corporation with perpetual succession and a common seal for the
purpose of executing the trusts, powers and purposes of th~ Act.
By
virtue of section 8 of the Baronetcy Act, the residue of the income.
from tbe properties settled under trust, after payment to the crodit of
a Sinking Fund and a Repairs Fund, and payment of rates, taxes and
cost of ordinary repairs in respect of buildings comprising the trust
properties was to be paid to the First Baronet and the heir male of his
body wbn would for the time being ha'.'e s·1ccecded to the title of
Baronet.
The successive Baronets were also entitled in the circumstances mentioned in s. 10 to the use and benefit of additional hereditaments vesting in the Corporation.
Section c7 provided for the vesting of the trust properties and funds "upon failure and in default of
heirs male of the body of the last Baronet".
The First Baronet, Sir Currimbhoy Ebrahim, died on May 29, 1924
leaving behind a Will dated October 22, 1916 in respecc of certain other
properties.
His oldest son, Mohamedbhoy, assumed the title and became the Second Baronet. Mohamedhoy died on March 31, 1928.
He was succeeded by his son. Hussainbhoy, who became the Third
Baronet.
The third Beronet migrated to Pakistan some time between 1947
nnd September, 1949. On September 29, 1949 he was declared an
evacuee under the Bombay Evacuees (Administration of Property)
Act, 1949, and certain properties belonging to him were declared
vested in the Custodian of Evacuee Property by an order of that date.
A
B
c
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F
G
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A
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704
SUPREME COURT REPORTS
[1979] 2 S.C.R.
On November 15, 1949, a notification was issued under sub.s.(1) of
s.7 of the Administration of Evacuee Properties Ordinance, 1949
notifying two further immovable properties as well as the right, title
and interest of the Third Baronet in the Sir Currimbhoy Ebrahim
Baronetcy Trust as evacuee
property vesting in the Custodian of
Evacuee Property.
An appeal l:Jy the Third Baronet against the
orders dated September 29, 1949 and November 15, 1949
was
dismissed by the Custodian of Evacuee Property on February 13,
1950.
Two years later, on March 4, 1952, the Third Baronet died in
Pakistan. He was succeeded by his
son, Mohamedbhoy, as
the
Fourth Baronet. It seems that Mohamedbhoy was at the time residing in India, but shortly thereafter he left for Pakistan.
On June
10, 1952, the Deputy Custodian of Evacuee Property made an order
declaring the Fourth Baronet an evacuee under the Administration
of Evacuee Property Act, 1950 and directing that his beneficial interest in the Sir Currimbhoy Ebrahim Baronetcy trust be notified
as evacuee property.
Therefore,
on June 16,
1952, a notification was issued under sub-s.(3) of s.7 of the Administration of
Evacuee Property Act, 1950 declaring that the beneficial interest of
the Fourth Baronet in. the Sir Currimbhoy Ebrahim Baronetcy Trust
Vl<1lS evacuee property vesting in the Custodian of Evacuee Property.
The Fourth Baronet preferred an appeal to the Custodian General of
Evacuee Property, Delhi, but the appeal was dismissed on August 26,
1960 on the ground that it was barred by time,
·
Meanwhile,
the Fourth Baronet having migrated to Pakistan
alongwith his son Zoolfikar Ali, the Bombay Legislature passed
an
Act titled the Sir Currimbhoy Ebrahim Baronetcy (Repealing & Distribution of Trust Properties) Act, 1959, which we shall refer to as
"the Repealing Act)" The Act, as its name shows, repealed
the
Baronetcy Act and. inter alia, revoked and extinguished "the trusts,
powers, provisions, declaration and purposes" declared and expressed
in that Act.
It provided for the vesting of the properties and funds
in the Official Trustee, Bombay for the purpose of distributing them
"amongst the persons rightfully entitled thereto according
to law".
Acting under the Repealing Act, the Official Trustee called upon
·persons claiming interest in the "trust properties",
an expression
which includes the properties and funds settled and created under the
Baronetcy Act, to submit their claims. As he found that the claims
were contested and was unable to say which of them were justified,
he applied to the Bombay High Court under sub-s. (2) of s. 7 of the
Repealing Act for orders and directions as regards the distribution of
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FAZALBHOY v. OFFICIAL TRUSTEE (Pathak, J.)
705
the trust properties amongst the several claimants. The properties
A
were valued at Rs. 30 lakhs for the purposes of court fees.
The petition was entertained in the High Court under its general
and inherent jurisdiction and was registered as Trust Petition No. 3
of 1962. It was disposed of by Tarkunde, J. on December 20,
1962. A contention raised by some of the claimants that the ReB
pealing Act was ultra vires was rejected. As regards the claim of
the Custodian of Evacuee Property, the learned Judge took the view
that the beneficial interest of the Fourth Baronet, which had vested
in the Custodian, came to an end on the ex!inction of the trust and
the Custodian was not entitled to the share of the Fourth Baronet in
the trust properties. He ordered, however, that so much of the net
income of the trust properties accruing npto March 15, 1960, as had
remained nnpaid be transferred to the Custodian.
He rejected the
claim to maintenance made by the Third Baronet's widow, the
Dowagar Lady Amine Currimbhoy Ebrahim.
On the material before
him tl!e learned Single Judge held tha.t the Repealing Act had the
effect of giving rise to a resulting trust in favour of tho Settlor, the
First Baronet, that the trust properties reverted to his estate as on his
death on May 29, 1924 and that they must be deemed to pass by
inheritance according to the Muslim personal law as on an intestacy
occurring on the death of the First Baronet. He observed that the
residuary clause in the will dated October 22, 1916 executed by the
First Baronet did not cover the rust properties.
On those findings,
he directed the Official Trustee to distribute the net trust properties
amongst the several claimants according to the shares mentioned in
an agreed statement subscribed to by the claimants.
Against the order of Tarknnde, J., two appeals were filed in the
High Court. Appeal No.31 of 1963 was fil_ed by the Dowagar Lady
Amine Cnrrirnbhoy Ebrahim, the Fourth Baronet, Sir Cnrrimbhoy
Ebrahim, and his son, Zoolfikar Ali Currimbhoy Ebrahim, and Appeal
No. 34 of 1963 was filed by the Cnstodian of Evacuee Property. The
apJleals were heard by a Division Bench
of two learned Judges,
Kotval,
C.J. and Mody,
J. The Division Bench rejected the
challenge to the constitutional validity of the Repealing Act, but on
the point whether
a resnlting trust had come into existence the
learned Judges held that in view of the surrounding circumstances,
particularly the terms of the will executed by the First Baronet on
October 22, 1916, it must be taken that contrary intention had been
manifested by the First Baronet that in the event of the failure of
the trust, the trust properties should after his life time be held for the
benefit of the Baronet for the time being. Accordingly, the learned
c
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706
SUPREME COURT REPORTS
[1979] 2 S.C.R.
Judges laid down that the Fourth Baronet was entitled to the trust
properties absolutely in his own right.
On the claim of the Dowager
Lady Amine Currimbhoy Ebrahim, they pointed out that her son,
the Fourth Baronet, had made a statement through counsel in court
that he would pay the amount to her out of the corpus received by
him.
Appeal No.31 of 1963 was allowe_d in part.
In regard to the
appeai filed by the Custodian of Evacuee Property, the learned Judges
rejected his claim to the corpus of the trust properties, holding him
entitled to a sum of Rs. 1,334.06 only, representing the
unpaid
amount of the net income of the trust properties upto
March 14,
1960.
Appeal No.34 of 1963 was dismissed.
Three
appeals have been
filed in this Court.
Civil
Appeal
No.722 of 1967 has been filed by Sir Fazalbhoy Currimbhoy. Civil
Appeal No. 1016 of 1967 has been filed by the Custodian of Evacuee
Property and Civil Appeal No.1221 of 1967 has been filed by Munira
Fazal Chinoy and Mumtaz Mohamed Rahimtoola, daughters of the
Third Baronet.
The case of Sir Fazalbhoy Currimbhoy, the appellant in Civil
Appeal No.722 of 1967 is that the effect of the Repealing Act on
the tmsts created by the Baronetcy Act is to revoke and extinguish
those trusts and to give rise to a resulting trust in favour of the estate
of the First Baronet as on the date of his death, and that the estate
would devolve as on an intestacy under the Muslim personal law.
The case of Munria Fazal Chinoy and Mumtaz Mohamed Rahimtoola, the appellants in Civil Appeal No.1221 of 1967 is that no
resulting trust comes into existence consequent on the repeal because
a contrary intention must be presumed in the First Baronet that the
tmst properties should go to the Fourth Baronet. It is also contended by these appellants that alternatively the trust must be deemed to have extinguished on the death of the Third Baronet and that
the trust properties devolved on them, their mother the Dowager
Lady Amine Currimbhoy and the Fourth Baronet as the heirs of the
Third Baronet.
The case of the Custodian of Evacuee Property, the
appellant in Civil Appeal No. 101'6 of 1967 is that the trust properties would ordinarily have passed to the
Fourth Baronet but
because of sub-s.(4) of s.7 of the Repealing Act the Official Trustee is
required to transfer and vest the trust properties in the Custodian.
It is contended on behalf of Sir Fazlbhoy Currimbhoy that the
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trust having been created by the Baronetcy Trust Act, a legislative
statute, it must be regarded as a statutory trust and, thereafter, when
the Baronetcy Act was
repealed and the trust was revoked and
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FAZALBHOY v. OFFICIAL TRUSTEE (Pathak, J.)
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extinguished by the Repealing Act, another legislative
enactment,
the necessary and only result was that the trust properties reverted
to the estate of the settler, the First Baronet.
Now, no doubt the
trust was created by ~Mute. But it was created at the instance of
the First Baronet. It had to be a trust in perpetuity in order that
the upkeep of the dignity and title of the Baronetcy should always
be ensured.
A trust such as this has been regarded as a
private
trust(').
Indeed, throughout the trial before
the learned Single
Judge and during the hearing of the appeals before the Division Bench
oI the High Court the case proceeded on the footing that the trust
created by the Baronetcy Act was governed by the law relating to a
private trust.
The parties proceeded as if the trust was
a private
tru>t created directly by the First Baronet himself, and it was assumed
throughout that the repeal by the legislature was a repeal effected by
him.
We must, therefore, proceed in this case as if we are dealing
with a private trust.
The contention on behalf of Sir Fazalbhoy Currimbhoy that
a
resulting trust follows the revocation and extinction of file trust created by the Baronetcy Act rests on the provisions of section 83 of the
Indian Trusts Act. Section 83 provides :-
"83. Where a trust is incapable of being executed, or
where the trust is completely executed without exhausting
the trust-property, the trustee, in the absence of a direction
to the contrary, must hold the trust-property, or so much
thereof as is unexhausted, for the benefit of the author of
the trust or his legal representative."
The section incorporates in codified form the concept of what is
known as a resulting trust.
On the terms of section 83, a resulting
trust can arise only "in the absence of a direction to the contrary''.
It is not disputed thati if there is no direction to the contrary the trust
properties must be held for the benefit
of the estate of the First
Baronet.
Can an intention to the contrary be inferred?
Scott on
Trusts declares (') : -
"If an owner of property transfers it inter vivas upon a
trust which fails either at the outset or subsequently, and
he has not indicated what disposition should be made of
the property in the event of the failure of the trust, the
trustee cannot retain it but will l)e compelled in equity to
(I) 34 HJllsbury's Laws of England, p. 432 para 768.
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(2) Scott on Trusts, Vol. IV, Articles 411 & 412.
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SUPREME COURT REP OR TS
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restore it to the settler.
In such a case the trustee holds
the property upon a resulting trust for the
settler.
Since
the !fustee was not intended to have the beneficial interest,
and since the beneficial interest was not otherwise
disposed 'of, it reverts or results to the settlor. On the failure
of the trust the court will put the parties in status quo by
restoring the property to the settler.
But
if the
settler
properly manifested an intention
that no resulting trust
should arise in the event of the failure of the trust, it will
not arise, but the property will be disposed of in accordance
with his intention, whether ·that intention is expressed in
specific language or not.
No resulting trust arises if
it
appears by evidence properly admissible that in the event
of the failure of the trust the. property should be transferred
by the trustee to a third person, or held upon a different
trust, or that it should be retained by the trustee free of
trust."
,\p.d further it is said:
"The resulting trust is rebutted when it is shown that the
settlor intended that in the event of the failure of the trust
the property should be held in trust for other purposes."
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In Cock v. Hutchinson(') Lord Longdale, M. R. observed :-
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"Upon this deed a question· is made, whether there is
or is not a resulting trust to the grantor as to the surplus,
with respect to which there is no declaration of trust; and
for the purpose of determining that question, it is necessary
to look carefully to the language of the deed, and to the
circumstances of the particular case.
In general, where an
estate or fund is given in trust for a particular purpose, the
remainder, after that purpose is satisfied, will result to the
grantor; but that resulting trust may be rebutted even by
parol evidence, and certainly cannot take effect
where a
contrary intention to be collected from the whole instrument, is indicated by the granter. The distinctions applicable
to cases of this kind are pointed out in the case of King v.
Dinison (1 V. & D. 260) by Lord Eldon, who adopts the
principles laid down by Lord
Hardwicks in Hill v. The
Bishop of London (1 Atk. 618). The conclusion to which
Lord Hardwicks comes is, that the question whether there
(I) 48 English Reports 222 at p, 225
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FAZALBHOY v. OFFICIAL TRUSTEE (Pathak, J.)
709
is or is not a resulting tn1st must depend upon the intention
of the grantor ......... "
Now, it appears clearly from clause 2 of the will dated October
22, 1916 executed by the First Baronet that a snbstantially large
sum of Rs.47,50,000/-
was gifted by the First Baronet in equal
shares to each of his sons excepting the eldest son, Mohamedbhoy.
The gift was made ;n1er vivas in respect of the major sons and under
the will in respect of the minor son, Ismail.
Clause 18 of the will,
which constitutes the general residuary clause, discloses that the
residue of the property was bequeathj!d by the First Baronet to
all his sons, except Mohamedbhoy. Mohamedbhoy was apparently
not included in those dispositions because he
would
succeed
as
Baronet to the benefit of the trusts constitnted under the Baronetcy
Act. He was the eldest son, and there is no reason to suppose that
the First Baronet intended to exclude Mohamedbhoy from
the
benefit of his bounty.
The First Baronet planned to provide for all
his sons. Had
he intended to
exclude Mohamedbhoy for
any
reason, he would not have provided by clause 15 of the will that
each one of his sons, including Mohamedbhoy, would enjoy an equal
share in the mercantile business in Bombay and Calcutta in India,
Hongkong and Shanghai in China
and at Kobe in Japan.
The
benefit of the trusts created under the Baronetcy Act, according to
the terms of that enactment, were to devolve on the male heir of the
body of the First Baronet who took the name "Currimbhoy Ebrahim",
and when executing the Will the First Baronet had that benefit in
mind for Mohamedbhoy as is apparent from clause 21 of the will,
wherein he declared :-
"Lastly it is my special desire that my son Mohamedbhoy on succeeding to the title of Baronet and every succeeding Baronet shall forthwith on such succession adopt
the names of Currimbhoy Ebrahim and continne to do
so as Jong as he holds the title."
The First Baronet had the line of Mohamedbhoy in mind for
supplying the line of future Baronets. He gave a special position to
him, his eldest son. By clause 7 of the Will,
he bequeathed to
Mohamedbhoy all the addresses, testimonials and caskets presented
to him, symbols of the high status and dignity of the family, to be
retained and passed down as heirlooms. It is true that nnder section
4 of the Baronetcy Act the possibility could be envisaged that in the
event of an existing descendant of Mohamedbhoy not using the name
"CurriJnbhoy Ebrahim" the Baronetcy would pass to a descendant of
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the next son of the First Baronet. But that envisions a very remote
possibility. It is difficult to presume in reason that any male
heir
in the line of Mohamedbhoy would refuse to use the name "Currimbhoy Ebrahim" and deprive himself of the very real and substantial
benefits of the Baronetcy. Therefore, the only
conclusior
can be
that the trust properties created under the Baronetcy Act were intended
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by the First Baronet to vest in Mohamedbhoy and
his
heirs. In
that light, section 27 of the Baronetcy Act assumes material importance in relation to the controversies before us. Section 27 reads :--
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"Upon failure and in default of heirs male of the body
of the said Sir Currimbhoy Ebrahim to whom the same
title of Baronet may descend the said Corporation shall stand
possessed of the said hereditaments and premises particularly
described in the first Schedule hereunder written and of any
olher hereditaments of a freehold tenure and of the funds
ihich may then be vested in them by virtue and operation of
this Act upon trust for the heirs of the last Baronet absolutely
and shall also stand possessed of the said hereditaments and
premises particularly described in the Second Schedule hereunder written or such of them as may be still vested in the
said Corporation and any other hereditaments of a leasehold
tenure which may then be vested in the said Corporation by
virtue of this Act upon trust for the heirs of the last Baronet
for all the then residues of the t~rms granted by the lessees
by which the same are demised.'
Althongh s. 27 can come into play only "upon failure and in default
of heirs male of the body of the said Sir Currimbhoy Ebrahim" -and
that condition is absent in the present case-the provision provides
evidence, in the ligbt of what has been said above, of the intention of
the First Baronet that the trust properties and funds should be confined
even ultimately to the line of Mohamedbhoy. They would go to the
heirs of the last Baronet, and not be distributed among his own heirs.
We are of opinion that upon the provisions of the Baronetcy Act
and of the Will, a direction by the first Baronet must be necessarily presumed that if the trust created by the Baronetcy Act fails or is revoked,
the trust properties and funds must go to the last Baronet. The Division Bench of the High Court has found that the Fourth Baronet
is
entitled to the trust properties and funds, and a resulting trust does not
come into existence. For the reasons which have prevailed with us, we
hold that such a conclusion should ordinarily follow.
However, the
ultimate determination must turn on the validity of the claim made by
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FAZALBHOY V. OFFICIAL TRUSTEE (Pathak, J.)
7 11
the Custodian of Evacuee Property that by virtue of sub-s. ( 4) of s. 7
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of the Repealing Act the trust properties and funds to which the Fourth
Baronet would be entitled must vest in the Custodian.
In understanding the import of sub-s. ( 4) s. 7 of the Repealing
Act it is imperative to note that it is a part of the scheme embodied in
s. 7 providing for the distribution of trust properties by the on;cial
Trustee to "the persons rightfully entitled thereto". It comes into play
as a step in the proceedings taken for that purpose.
It is considered
for application when the Official Trustee under sub-s. (1) or the High
Court under sub-s. (2) is determining who are the persons entitled to
lbe !rust properties on distribution. Sub-s. (1) declares that
if the
claims received by the Official Trustee are justified and
uncontested
he must distribute the trust properties in accordance with such claims.
Sub-s. (2) provides that if the Official Trustee is of the opinion that
the claims are not justified, or if they are contested, he may app1' • to
the High Court for order's and directions as regards the disrribution of
the trust properties amongst the several claimants. Sub-s. (3) provi·
des that on obtaining such orders and directions, he must distribute the
trust properties amongst the persons rightfully entitled thereto in accordance with the final decree or order pased in that behalf. Sub-s. (4)
declares :
''If any person entitled to the trust properties, or any part
thereof, has been or is declared an evacuee within the meaning of the Administration of Evacuee Property Act, 1950,
and if any right, title and interest of such person in the trust
properties has been or is declared to be evacuee property
under that Act, then the Official Trustee shall, subject to any
order or direction which the High Court may make or give,
transfer and vest in the Custodian the trust properties, or so
much thereof as is found to be evacuee property, and the provisions of the law relating to evacuee property shall as far as
may apply to such right, title and interest in the trust properties as they apply to any other evacuee property under
that law".
An analysis of the provisions of this sub-section is necessary.
It
applies where :
('a) a person is entitled to the trust properties or any part
thereof;
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( c) his right, title and interest in the trust properties has
been or is declared to be evacuee property under the
Administration of Evacuee Property Act, 1950.
If the three conditions are satisfied, the Official Trustee is required
to transfer and vest in the Custodian the trust properties, or so
much
thereof as is found to be evacuee property.
And the law relating
to
evacuee property, the sub-section says, shall apply to such right, title
and intereSt in the trust properties as they apply to any other evacuee
property under that law.
When the sub-section speaks of "any person
entitled to the trust properties" it refers to the person found entitled to
the trust properties by the Official Trustee under sub-s. (1) of s. 7 or
by the High Court under sub-s. (2) of that section. In the present
case, the Fourth Baronet has been found by us to be entitled to
Repealing Act has been defined by cl. (d) of s. 2 of that Act to mean
all the trust properties and funds settled and created under the Baronetcy
Act.
The second condition is also satisfied because the Fourth Baronet
was declared an evacuee on June 10, 1952 under the Administration of
Evacuee Property Act, 1950. The third condition is similarly fulfilled.
The right, title and interest of the Fourth Baronet in the trust properties,
that is to say, his beneficial interest therein, was declared to be evacuee
property on June 16; 1952 under the, Administration of Evacuee. Property Act 1950. All three conditions being satisfied, sub-s. ( 4) takes
effect and the direction contained in it must be carried out.
The Official Trustee is required to transfer and ve·st in the Custodian the trust
properties found to be evacuee property.
Now, the expression "evacuee property" has not been defined in the
Repealing Act and, therefore, it must take its meaning from the definition in the Administration of Evacuee Property Act, 1950. Clause (f)
of s. 2 defines "evacuee property" to mean "any property of an evacuee".
The definition does not require that for property to be evacuee property,
there must be a declaration under the Administration of Evacuee Property Act that it is evacuee property.
A perusal of the relevant provisions of the Administration of Evacuee Property Act, 1950 indicates that
the Act contemplates the necessity of a declaration that property is an
evacuee property in order that it should vest in the Custodian of Evacuee
Property. Unless that declaration is made the evacuee property, even
though it belongs to an evacuee, cannot vest in the Custodian.
But
there may be another law under which evacuee property may vest in the
Custodian.
sub-s. ( 4) constitutes that law.
It provides for another
kind of case where evacuee property may also vest in the Custodian.
Sub-s. ( 4) of s. 7 of the Repealing Act, in essence, is a law in addition
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FAZALBHOY V. OFFICIAL TRUSTEE (Pathak, J.)
713
to the Administration of Evacuee Property Act, 1950 for vesting evacuee property in the Custodian. The provision in sub-s. (1) that the
Official Trustee shall transfer and vest in the Custodian the trust pr0perties found to be evacuee property has the same statutory consequence
is a declaration made under s. 7 of the Administration of Evacuee Property Act, 1950.
In opposition to the claim of the Custodian, it was
pointed out that a declaration that evacuee property is vested in the
Custodian is barred after May 7, 1954 bys. 7A of the Administration
of Evacuee Property Act, 1950. The provision in sub-s. (4) of s.