# J ASH OK KUMAR KAPUR AND ORS v. ASHOK KHANNA AND ORS

- **Citation:** [2007] 3 S.C.R. 957
- **Court:** Supreme Court of India
- **Decided:** 2007-03-13
- **Case number:** Civil Appeal No. 1320 of2007
- **Bench:** S.B. Sinha, Markandey Ka Tju
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/j-ash-ok-kumar-kapur-and-ors-v-ashok-khanna-and-ors-22663
- **Pages:** 28

## Headnote

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>
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Indian Trusts Act, 1882; Ss. 34 and 83:
Trust-Staff Pension Fund-Filing of suits by Managing Director and c
others for realization of pension-Company filing an application under
Section 34 of the Act for appropriate direction as the Trust has been completely
executed without exhaustion of Trust property-Dismissed by Single Judge
of the High Court-Letters Patent Appeal dismissed by Division Bench of the
High Court-On appeal, Held: Per Sinha, J: Jn terms of provision under S.
34 of the Act, jurisdiction of the Court not only confined to opinion or advice D
but also extends to issuance of direction-But the Court could not exercise
- }
jurisdiction which is not vested in it-Advice/opinion/direction could be
made in respect of administration of the Trust-Summary jurisdiction would
not be exercised in the event exclusionary clause comes into operationExtinction of Trust and Interpretation of Trust deed are questions of importance
and matter of detail proceeding as these involve determination of liabilities E
of the Trustees -Since the question posed before the High Court was difficult
one, High Court was right in refusing to exercise its discretion-Since suits
for realization of pension are pending, it cannot be said that all the
beneficiaries of the Trust have been paid of-In the facts and circumstances
-
~-
of the case, bonafide of trustees in moving an application under s. 34 for F
directions in regard to the balance fund available with the Trust is suspectS. 83 of the Act not attracted since the Court in exercise of its discretionary
summary jurisdiction cannot conclusively determine the rights and obligation
of trustees vis-a-vis the State on the one hand and beneficiary thereof on the
other-No case has been made out for interference with the impugned
judgment-Moreover, when a Court refuses to exercise its discretionary G
::.I
jurisdiction, an appellate Court shall not interfere therewith-Article 142 of
the Constitution of India in a case of this nature may not be invoked
particularly when the Court is exercising its appellate jurisdictionConstitution of India, 1950-Article 142-0.fficial Trustees Act, 1930-/ndian
957
H
958
SUPREME COURT REPORTS
[2007] 3 S. C.R.
A Succession Act, 1925-Section 302-Charitable and Religious Trusts Act,
1920-S. 7.
Per Markandey Katju, J.:
All the beneficiaries under the Trust have been paid off-Certain amount
B has been transferred to Life Insurance Corporation, balance amount
remaining with the Trust fund-It is required to be refimded to the company
in terms of Section 83 of the Act-Trust has been executed without exhaustion
of the funds-Section 34 of the Act not attracted as the object of the Trust
...
has been fulfilled and the only question left was about the use of remaining
>-
C fimd with the Trust--Under the circumstances, a direction under Article 142
of the Constitution could be issued to the Trust to refund the balance fund
to the company.
In view of difference of opinion, the matter referred to larger Bench.
D
Mis. Dunlop India Ltd. floated a Fund for providing pension and annuities
to the members of the executive management staff of the Company. The terms
of the deed were amended from time to time. Respondent No. 3, Managing
Director of the Company, has filed a suit for realization of an amount of pension
quantified at Rs.45 lacs and two other suits were filed by other members which
are pending in the Court. An application was filed by the trustees before the
E High Court purported to be under Section 34 of the Indian Trusts Act, alleging,
inter alia, that the purpose of the trust has been completely fulfilled and/or
trust has been completely executed without exhaustion of the trust fund and
praying for an appropriate direction and/or advise and/or opinion with regard
to the balance amount available with the Trust and accrued interest lying in
F
Special Deposit of the Life Insurance Corporation of India. In the said
proceeding, only Respondent No.I was made a party in a represen

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_Characters 0–39,985 of 64,573. This is a partial read: ask again with offset=39985 for what follows._

-J
ASH OK KUMAR KAPUR AND ORS
A
v.
ASHOK KHANNA AND ORS
MARCH 13, 2007
[S.B. SINHA AND MARKANDEY KA TJU, JJ.)
B
>
""'
Indian Trusts Act, 1882; Ss. 34 and 83:
Trust-Staff Pension Fund-Filing of suits by Managing Director and c
others for realization of pension-Company filing an application under
Section 34 of the Act for appropriate direction as the Trust has been completely
executed without exhaustion of Trust property-Dismissed by Single Judge
of the High Court-Letters Patent Appeal dismissed by Division Bench of the
High Court-On appeal, Held: Per Sinha, J: Jn terms of provision under S.
34 of the Act, jurisdiction of the Court not only confined to opinion or advice D
but also extends to issuance of direction-But the Court could not exercise
- }
jurisdiction which is not vested in it-Advice/opinion/direction could be
made in respect of administration of the Trust-Summary jurisdiction would
not be exercised in the event exclusionary clause comes into operationExtinction of Trust and Interpretation of Trust deed are questions of importance
and matter of detail proceeding as these involve determination of liabilities E
of the Trustees -Since the question posed before the High Court was difficult
one, High Court was right in refusing to exercise its discretion-Since suits
for realization of pension are pending, it cannot be said that all the
beneficiaries of the Trust have been paid of-In the facts and circumstances
-
~-
of the case, bonafide of trustees in moving an application under s. 34 for F
directions in regard to the balance fund available with the Trust is suspectS. 83 of the Act not attracted since the Court in exercise of its discretionary
summary jurisdiction cannot conclusively determine the rights and obligation
of trustees vis-a-vis the State on the one hand and beneficiary thereof on the
other-No case has been made out for interference with the impugned
judgment-Moreover, when a Court refuses to exercise its discretionary G
::.I
jurisdiction, an appellate Court shall not interfere therewith-Article 142 of
the Constitution of India in a case of this nature may not be invoked
particularly when the Court is exercising its appellate jurisdictionConstitution of India, 1950-Article 142-0.fficial Trustees Act, 1930-/ndian
957
H
958
SUPREME COURT REPORTS
[2007] 3 S. C.R.
A Succession Act, 1925-Section 302-Charitable and Religious Trusts Act,
1920-S. 7.
Per Markandey Katju, J.:
All the beneficiaries under the Trust have been paid off-Certain amount
B has been transferred to Life Insurance Corporation, balance amount
remaining with the Trust fund-It is required to be refimded to the company
in terms of Section 83 of the Act-Trust has been executed without exhaustion
of the funds-Section 34 of the Act not attracted as the object of the Trust
...
has been fulfilled and the only question left was about the use of remaining
>-
C fimd with the Trust--Under the circumstances, a direction under Article 142
of the Constitution could be issued to the Trust to refund the balance fund
to the company.
In view of difference of opinion, the matter referred to larger Bench.
D
Mis. Dunlop India Ltd. floated a Fund for providing pension and annuities
to the members of the executive management staff of the Company. The terms
of the deed were amended from time to time. Respondent No. 3, Managing
Director of the Company, has filed a suit for realization of an amount of pension
quantified at Rs.45 lacs and two other suits were filed by other members which
are pending in the Court. An application was filed by the trustees before the
E High Court purported to be under Section 34 of the Indian Trusts Act, alleging,
inter alia, that the purpose of the trust has been completely fulfilled and/or
trust has been completely executed without exhaustion of the trust fund and
praying for an appropriate direction and/or advise and/or opinion with regard
to the balance amount available with the Trust and accrued interest lying in
F
Special Deposit of the Life Insurance Corporation of India. In the said
proceeding, only Respondent No.I was made a party in a representative
capacity. It was contended that out of 186 employees who were eligible to
receive pension fund, 140 employees consented that the surplus amount be
refunded to the Company. Single Judge of the High Court while holding that
the application under Section 34 of the Act was not maintainable, opined that
G the payment of pension was to be made not only to the existing members but
also to the widow and dependents in terms of the extant rules; that only because
H
in terms of the advertisement issued in two newspapers, consent of all the
\.:
members could not be held to have been impliedly obtained because numerous
dependents had not appeared. Letters Patent Appeal filed by the Trustee was
dismissed by the Division Bench of the High Court Hence the present appeal.
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ASHOK KUMAR KAPUR v. ASHOK KHANNA
959
Appellants-Trustee contended that the power of the principal Civil Court A
of original jurisdiction being not only limited to opinion or advice, but also to
issue directions. Under the circumstances, the High Court wrongly refused
to exercise its jurisdiction; that the terminology 'detail, difficulty or
importance' contained in Section 34 of the Act refers to the power of the court
for summary disposal and not for exercising its discretionary jurisdiction; B
that the opinion, advice or direction if issued would be a judgment within the
meaning of Clause 15 of the Letters Patent of the Calcutta High Court and,
thus, a Letters Patent appeal would be maintainable; and that Respondent No.3
being not a member of the Fund had no locus standi to file the application
claiming pension from the fund.
Respondent No.3 submitted that Section 34 has a limited application
keeping in view the exclusionary clause contained in the expression "other
than questions of detail, difficulty or importance, not proper in the opinion of
the court for summary disposal" and, thus, the courts below rightly refused
to exercise their jurisdiction in the matter; and that the term 'opinion, advice
c
or direction' would not corifer a jurisdiction to finally decide the rights of the D
persons interested in the trust.
Referring the matter to larger Bench, the Court
HELD: Per S.B. Sinha, J.:
E
I.l. The jurisdiction of the court under Section 34 of the Indian Trust
Act, 1882 is confined to opinion, advice or direction. An application would be
maintainable on any present questions. Such questions must arise "respecting
the management or administration of the trust property". The questions
should not be of any 'detail, difficulty or importance or otherwise not proper
- · r
in the opinion of the court for summary disposal'. [Para 16) [971-D)
F
1.2. If an opinion is rendered, or advice is given, or a direction is issued,
the same shall be deemed, so far the trustee is concerned, in regard to his
own responsibility to have discharged his duty as such trustee in the subjectmatter of the application. (Para 1711971-E)
G
1.3. Such an application may be filed without instituting a suit but
maintainability of such an application would mainly depend upon the nature
and purport thereof. Merely an option has been conferred on a trustee to file
either a suit or to move the court for its opinion, advice or direction in terms
H
960
SUPREME COURT REPORTS
[2007] 3 S.C.R.
A of Section 34 of the Act. Such an option can be exercised only when recourse
\ .
B
to both the remedies are available. [Para 18) (971-G, HJ
1.4. The jurisdiction of the court is not only confined to opinion or advice
but also extends to issuance of direction, but such opinion rendered, or advice
given or direction issued only to a trustee. (Para 19) (972-AJ
1.5. It does not envisage an adjudication. It does not ordinarily envisage
determination of the right, title or interest of a member of the trust or a
beneficiary in relation to the trust property, although such a question may
have to be incidentally dealt with. (Para 19) (972-B]
C
1.6. The provisions of Section 34 of the Act must be given its literal
D
meaning. The court cannot exercise a jurisdiction which is not vested in it.
A court can exercise jurisdiction, provided it is vested therewith. An order
without jurisdiction over the subject-matter would render the decision a nullity.
(Para 20] (972-C]
Official Trustee, West Bengal and Ors. v. Sachindra Nath Chatterjee and
Anr, (1969) 3 SCR 92: AIR (1969) SC 823, relied on.
2.1. The right of a member of a trust to receive pension poses a difficult
question. It may also pose a question of importance, keeping in view the fact
E that by reason thereof, the obligation of the trustee would come to an end. It
is one thing to say that an advice, opinion or direction can be made respecting
the administration of the trust; but what that means would evidently depend
upon the terms of the trust deed. (Para 23] (974-C]
2.2. Part II of the trust deed lays down the mode and manner in which
F the trust properties are to be administered. It does not lay down a right on
the part of the trustee to put an end his right to get himself discharged from
his obligation. If for some reason or the other, it is contended by the trustee
that the trust stands extinguished, any remedy in respect thereof must be
found within Chapter VIII of the Act and nototherwise. [Para 24) [974-01
G
3.1. It is for the Court concerned to arrive at an opinion as to whether
•.
the questions posed are matters of detail, difficulty or importance. Summary
~
jurisdiction would not be exercised in the event the exclusionary clause comes
into operation. (Para 26) (974-Fl
H
3.2. Even if it is assumed that the application under Section 34 of the
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JI
ASHOK KUMAR KAPUR v. ASHOK KHANNA
961
Act was maintainable, the court, however, keeping in view the number of A
persons who would be entitled to oppose the prayer of extinction of trust, would
decline to exercise its jurisdiction. Interpretation of the trust deed
furthermore is a question of importance. It is also a matter of ddail in the
proceeding as to whether the trustees have been able to discharge their entire
liabilities. [Para 2711974-GI
B
3.3. The Division Bench of the High Court opined that the trust is an
'
irrevocable one. It may or may not be correct; but the question posed admittedly
. ""-
is a difficult one and if for the said purpose it had refused to exercise its
discretionary jurisdiction no fault can be found therewith. [Para 281 [975-A)
4.1. Three suits are pending. It is, thus, not correct to contend that all
the beneficiaries of the trust have been paid off. The power of the Company
to make rectification of the terms and conditions of the trust vis-a-vis the
power of the trustees to revoke the same with retrospective effect is a matter
which is pendin·g consideration in a court of law. No finai opinion can be
c
rendered in that behalf. !Para 30) (975-C)
D
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)'
4.2. Bona fide of the trustees in moving such an application is suspect.
The trustees intended to pay a huge sum of Rs.20 crores to the Company for
its revival. Once it is revived, the employees who are existing would continue
and new employees may also be appointed. It is, therefore, difficult to
comprehend the stand of the trustees that as the Company had been declared E
sick by the Board of Industrial & Financial Reconstruction (BIFR), the same
would lead to an irresistible conclusion that no further employee would be
appointed. The contention of the trustees appears to be fallacious.
(Para -311 [975-E, Fl
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Y·
5.1. Submission that Section 83 is squarely attracted cannot be F
appreciated for more than one reason. Firstly, because it is a seriously
disputed question of fact. Secondly, the court exercising its summary
jurisdiction for the purpose of giving advice, opinion or direction cannot finally
determine the rights and obligations of the trustees vis-a-vis the State on the
one hand and the beneficiary thereof on the other. Thirdly, even if a few G
:I
persons opposed extinction of the trust, the same itself should be treated to
be sufficient for the court to refuse to exercise its summary jurisdiction under
Section 34 of the Act. (Para 321 (975-H; 976-A, BJ
Hasan Bin Mubarak v. Chief Judge, City Civil Court, Hyderabad and
H
962
SUPREME COURT REPORTS
[2007] 3 S.C.R.
A Ors., AIR (1999) AP 11 and Krishen Kumar Khosa v. Krishen Lal and Ors.,
AIR (1979) J&K 13, approved.
Prince Muffakham Jah Bahadur and Ors. v. H.E.H. Nawab Mir Barkat
Ali Khan Bahadur Prince Mukarram Jah and Others., AIR (1989) AP 68 and
Sahebzadi Amina Marzia v. Syed Mohd. Hussain and Ors., AIR (1981) AP
B 340, referred to.
Smt. Niiima Ghosh and Anr v. Prakriti Bhusan Mitter, AIR (1982) Cal.
14, distinguished.
5.2. Whereas a direction to sell a portion of the trust property may be
C issued for the benefit of the trust as also the beneficiary thereof and not for
preserva~ion of the property, the same test cannot be applied for the purpose
of obtaining in truth and substance an order of extinction of the trust. The
two reliefs are absolutely different. No case has been made out by the appellant
for interference with the impugned judgment. [Paras 39, 40) [979-D, E)
D
6.1. It is well-settled that if the jurisdiction of a court in relation to the
subject-matter thereof is limited, any decision rendered by it would be a nullity.
' - .
)"
In such an event, even the principle of res judicata will have no application.
1 -
[Para 41 J [979-FJ
E
Official Trustee of West Bengal v. Stephen Court Ltd., (2006) 14 SCALE
285 and Harshad Chiman Lal Modi v. DLF Univesal Ltd. and Anr., [2005) 7
sec 791, referred to.
6.2. It is also well-settled that when a Court refuses to exercise its
discretionary jurisdiction, normally an appellate court shall not interfere
F therewith. [Para 43[ (980-B)
Manjunath Anandappa Ur/ Shivappa Hanasi v. Tammanasa and Ors.,
[2003) JO sec 390, relied on.
6.3Article142 of the Constitution of India in a case of this nature may
G not be invoked, particularly when this Court is exercising its appellate
jurisdiction. If the High Court had no jurisdiction to entertain the application
and in any event having regard to the fact that both the Single Judge as also
the Division Bench of the High Court had not exercised their discretionary
jurisdiction, it is not a case where jurisdiction under Article 142 of the
Constitution of India should be invoked particularly in view of the fact that
H
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ASHOK KUMAR KAPUR v. ASHOK KHANNA
963
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1
the appellant is not remedilcss. It can file a suit. It can take recourse to A
other remedies which are available in law. (Para 44( (980-C(
>
Per Markandey Katju, J. :
I. I. All the beneficiaries under the Trust have been paid off and hence
the purpose has been completely fulfilled and executed without exhaustion of B
the funds of the Trust, except to the extent of Rs. 3,88,55,682.00, which amount
after one time payment has l)een transferred to the Life Insurance Corporation
of India. Consequently, the Trust has no further liability/responsibility
towards any of its beneficiaries. The balance sum remaining with the Trust
fund being Rs. 20,83,95,690.00 has therefore, to be returned to the Company C
in view of Section 83 of the Indian Trust Act. After all, the entire money
donated to the Trust fund was donated by the Company and hence it has to be
returned to the Company. [Para 6( (980-H; 981-A, B, C)
1.2. Section 34 of the Act may not be strictly applicable in the present
case because that provision enables the principal Civil Court of original D
jurisdiction to give an opinion, advice or direction on any present questions
respecting the management or administration of the trust property. The words
'management or administration of the trust property' would not apply when
the object of the Trust itself has been fulfilled and now the only question
remains is as to what has to be done about the remaining fund with the Trust
In such a case, a direction should be issued under Article 142 of the E
Constitution of India to refund the balance money lying with the Trust to the
Company which had donated the funds to the Trust. Such a direction should
be given in view of Section 83 of the Act, and also because the money can now
only go back to the Company since all the beneficiaries have been paid off.
Any other view would be unreasonable because the balance amount lying with F
the Trust cannot obviously remain idle. To direct the Company to file a suit
for this purpose would only cause further delay and multiplicity of
proceedings. (Para 7( (981-D, E, Fl
1.3. The Settler (the Company) is admittedly facing severe financial
crisis having become sick and proceedings are pending for its revival before G
the appellate authority for financial reconstruction. Hence, it would be
appropriate if the funds are returned to the Company as it may help revive
the Company. (Para 8( [981-G(
1.4. Under the Rules of the Fund, 186 members and/or beneficiaries
would be entitled to receive a sum of Rs. 3,88,55,682.00, as calculated by the H
964
SUPREME COURT REPORTS
[2007] 3 S.C.R.
A LIC, applying the mode of 'Actuarial Valuation', and the same is also
undisputed by any of the beneficiaries. (Para 1111982-C]
1.5. In accordance with the valuation carried out by the LIC, the
appellants, out of the funds lying in the Special Deposit Account with the United
B
Bank of India transferred a sum of Rs. 3,88,55,682.00 to the LIC and took
out policies in favour of the present members and/or beneficiaries of the Fund
w.e.f. 01.4.2001. As a result, full provision has been made for the payment
required to be made under the Rules of the Fund to its present members and
/or beneficiaries, upon superannuation, and it is again undisputed that as and
when the respective members become eligible for the pension, the same will
c be paid by the LIC to the members/pensioner directly and the Fundffrust in
no way will be responsible or accountable for the same. [Para 12) [982-D, E)
2. Three persons who filed Suit retired betwee!J 1994-97 and as on date
are getting their pension from the LIC. Thus, the interest of every beneficiary
under the Trust has been taken care of and annuities have been purchased by
D the Trust in the names of the beneficiaries as per the valuation carried out by
the LIC and in terms of the pensionary benefits to be received by the concerned
beneficiary. Therefore, there is no employee/beneficiary left who is entitled
to get any pension out of the Trust in issue, which material fact has been
ignored by the courts below. Therefore, the appeal deserves to be allowed and
E. the money lying with the Trust fund should be directed to be returned to the
Company forthwith. (Para 181 (983-F, GI
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1320 of2007.
From the Judgment and Order dated 06.02.2006 of the High Court at
p Calcutta in APOT No. 584 of 2005 in APO No. 508 of2005.
R.F. Nariman, U.U.Lalit, C. Kukund, Ashok Jain, Pankaj Jain and Bijoy
Kumar Jain for the Appellants.
Ranjit Kumar, Rakesh Dwivedi, Senthil Jagadeesan, Swati Sinha, Jayasree
G Singh (for Fox Manda! & Co.) Shashank Sharma, Dr. Kailash Chand and Anu
Gupta for the Respondents.
The Judgment of the Court was delivered by
S.B. SINHA, J. I. Leave granted.
H
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ASHOK KUMAR KAPUR v. ASHOK KHANNA [S.B. SINHA, J.]
965
INTRODUCTION.
2. Interpretation of Section 34 of the Indian Trusts Act, 1882 (for short,
'the Act') is involved in this appeal which arises out of a judgment and order
dated 06.02.2006 passed by a Division Bench of the Calcutta High Court in
APOT No. 584 of 2005, affirming a judgment and order of a learned Single
A
Judge of the said Court.
B
BACKGROUND FACTS:
3. Mis Dunlop India Ltd. (for short, 'the Company') is an existing
company within the meaning of Section 3(1 )(ii) of the Companies Act, 1956.
The Company floated a Fund known as 'Dunlop Executive Staff Pension Fund' C
for providing pension and annuities to the members of the executive
management staff of the Company. Clause (3) of the said deed reads as
under:
"These presents shall constitute a trust upon and subject to the
Rules and to the law for the time being in force in India relating to D
Pension Funds which trust irrevocable and no moneys belonging to
the Fund in hand of the trustees shall be recoverable by the Company
or shall the Company have any lien or charge of any description on
the same."
4. Part I of the said deed provides for the 'Rules of Dunlop Executive E
Staff Pension Fund.
"Member" has been defined in Rule 2(k) to mean :
"Member" shall mean a member of the executive staff or of the
management staff of the employers who has been admitted as a F
member of the Fund in accordance with the Rules but shall not include
an employee who having been admitted as a member has subsequently
retired or whose service has otherwise been terminated by reason of
dismissal, resignation, retrenchment or otherwise."
5. Part-II of the said deed provides for administration of the Trust.
Whereas part III provides for membership, part IV provides for contributions.
Rule I !(a) of the said deed reads as under :
"The employers may at their absolute discretion pay to the trustees
G
in respect of each member an initial contribution of such sum and in H
966
A
SUPREME COURT REPORTS
(2007) 3 S.C.R.
such instalments as they may think fit in respect of the past services
of a member subject to the provision of Rule 88 of the Income Tax
Rules, 1962 and to any condition that the Central Board of Direct
Taxes may think fit to specify in that regard."
6. The terms of said deed were amended from time to time. Although
B in terms of the original deed a member would have been entitled to pension
on completion often years' of service, Rule 14(b) (iii) was introduced in terms
c
D
whereof the eligibility period was reduced to two years. The said provision
•
reads as under :
)o
"l 4(b) (iii) In case of whole time Directors, Senior Vice Presidents and
Vice Presidents who retire at or after attaining the normal age of
retirement or on completion of the stipulated period of service/contract,
a pension shall be payable calculated as per rules l 4(a). The pension
so calculated shall not however be less than 50% of his last drawn
salary nor shall it exceed 100% of such salary PROVIDED that in the
event of early separation from the services of the Company, a pension
may be granted at the sole discretion of the Company calculated at
such rate as may be decided by the Company."
Provided furth1~r in the event of such employee leaving the service of
the Company after completion of two years of service with mutual
E
consent and does not have any adverse records of his performance
shall be paid a monthly pension which shall be not Jess than 50% of
his last drawn salary nor shall it exceed 100% of such salary."
7. The said amendment was made with retrospective effect. However,
it was sought to be deleted by a deed of variation dated 25.09.2000 from
F 01.04.1997, which again in terms of another deed of variation dated 28.03.2001
·'"(_ -
was sought to be given a retrospective effect from 01.04.1995.
8. Respondent No. 3 herein was the Managing Director of the Company.
Admittedly, he has filed a suit for realization of an amount of pension quantified
at Rs.45 lacs. Two other suits by two other members of the Fund are also
G admittedly pending.
9. The Company became sick. It was declared as such by the Board
of Industrial Financial Reconstruction on or about 22.01.1988.
10. Allegedly, three other funds were created by the Company in the
H year 200 I, known as (i) 'Dunlop Administrative Executive Staff Pension Fund',
ASH OK KUMAR KAPUR v. ASHOK KHANNA [S.B. SINHA, J.]
967
(ii) 'Dunlop Sahagunj Executive Staff Pension Fund', and (iii) Dunlop Ambattur A
Executive Staff Pension Fund'. The details whereof or the purpose for which
the same were constituted is not known.
PROCEEDINGS:
11. An application was filed by the trustees of the said trust before the B
High Court of Calcutta purported to be under Section 34 of the Act, alleging,
inter alia, that the purpose of the trust has been completely fulfilled and/or
trust has been completely executed without exhaustion of the trust property
""
to the extent ofRs.3,99,55,682/-. In the said application, inter alia, the following
-.
--
'r"
prayer was made :
"(a) Appropriate direction and/or advise and/or opinion be given by
this Hon'ble Court with regard to the sum of Rs. 20,83,95,690/-
and accrued interest lying in Special Deposit Account No. 31
76."
c
12. In the said proceeding, only Respondent No. I herein was made a D
party in a representative capacity. It was contended that out of 186 employees
who were eligible to receive pension fund, 140 employees consented that the
surplus amount be refunded to the Company. In the said proceeding, an
application seeking leave was filed under Order I Rule 8 of the Code of Civil
Procedure, which was allowed by an order dated 19. I 0.200 I. Respondent
No.3 herein filed an application for getting himself imp leaded as a party which E
was allowed. By a judgment and order dated 23.12.2004, a learned Single
Judge of the Calcutta High Court while holding that the said application
under Section 34 of the Act was maintainable, opined that the payment of
pension was to be made not only to the existing members but also to the
widow and dependents in terms of the extant rules. It was held that only F
because in terms of the advertisement issued in two newspapers, namely, a
Bengali Daily - 'Aaj Kai' and an English Daily - 'Financial Express', consent
of all the members could not be held to have been impliedly obtained only
because numerous dependents had not appeared.
Inter alia, on the
aforementioned premise, the application was dismissed.
13. On an intra-court appeal, a Division Bench of the said Court by
reason of the impugned judgment although opining that a Letters Patent
appeal was not maintainable, went into the merit of the matter and dismissed
the same, holding :
G
"After analysing those clauses in our opinion, the trust shall be H
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irrevocable one and no moneys belonging to the funds in the hands
of the trustees shall be recoverable by the company nor shall the
company have any lien or charge of any description to the same.
Therefore, we are sure that the purpose of the trust exists and/or
remains valid until the last surviving employees receive its benefit out
of the trust fund and furthermore, under Clause 3 of the said Trust
Deed funds lying in the hands of the said trustees are not coverable
by the company nor the company shall have any lien or charge of any
description on the said trust fund. Therefore, we do not have any
hesitation to hold that no opinion can be expressed by the Court that
the amount so lying in the hands of the trustees can be recoverable
by the company or may be transferred in any manner to the company.
Therefore, we are not in a position to accept the contention of Mr.
Sarkar that during the financial stringency they shall have the right
to utilize the said fund and the amount lying in the said trust fund can
be transferred to the company for meeting its liabilities. After
scrutinizing the Clauses of the said Trust Deed we have come to the
conclusion that the purpose of the trust exists and remains valid until
the last surviving employees receive its benefits out of the said trust
fund.
We do not have any hesitation also to express our opinion as
His Lordship expressed in His Lordship's decision that the trust exists
and we also have to accept the contention of Learned counsel
appearing on behalf of the respondent in the instant case that the
instance case is squarely covered under the Illustration (b) of Section
56 of the Indian Trust Act and the trustees are bound to fulfil the
purpose of the trust and to obey the directors of the author of the
trust, except if any modification is made by consent of all the
beneficiaries, being competent to contact.
It appears to us that in
the guise of getting an opinion from the court, the company thought
it fit to extinguish the trust in question and the amount lying in the
hands of the trustees in respect of the said fund to have a lien over
the same to utilize the same which is totally barred under Clause 3 of
the said Trust Deed ... "
SUBMISSIONS :
14. Mr.R.F. Nariman, the learned Senior Counsel appearing on behalf of
the appellants, principally raised the following contentions in support of this
appeal :
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ASHOK KUMAR KAPUR v. ASHOK KHANNA [S.B. SINHA, J.]
969
(i)
The power of the principal Civil Court of original jurisdiction A
being not only limited to opinion or advice, but also to iss.ue
directions, the High Court wrongly refused to exercise its
jurisdiction, although Section 83 of the Act was squarely
attracted.
(ii)
The expression 'principal Civil Court of original jurisdiction' B
contained in Section 34 would also attract the principles of res
judicata.
(iii) Such direction can be issued, inter alia, in tenns of Section 83
of the Act, as it would come within the purview of the tenn
'administration of trust property';
(iv) The tenninology 'detail, difficulty or importance' contained in
Section 34 of the Act refers to the power of the court for
summary disposal and not for exercising its discretionary
jurisdiction of the court.
c
(v)
Such opinion, advice or direction if issued would be a judgment D
within the meaning of Clause 15 of the Letters Patent of the
Calcutta High Court and, thus, a Letters Patent appeal would be
maintainable.
(vi) Respondent No.3 being not a member of the Fund had no locus
standi to main the application.
E
Mr. Rakesh Dwivedi, the learned Senior Counsel appearing on behalf of
Respondent No.3, on the other hand, would .submit :
(i)
Operation of Section 34 being related to the 'management' or
'administration' of the trust property; matters which come within p
the purview of extinction of the trust as contained in Chapters
VIII of the Act, would not come with the purview thereof.
(ii)
Section 34 has a limited application keeping in view the
exclusionary clause contained in the expression "other than
questions of detail, difficulty or importance, not proper in the G
opinion of the court for summary disposal" and, thus, the courts
below rightly refused to exercise their jurisdiction in the matter.
(iii) The learned Single Judge as also the Division Bench of the High
Court having found difficulties in the matter as also in view of
the importance of the question having refused to exercise the H
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discretionary jurisdiction, this Court should not interfere
therewith.
(iv) The term 'opinion, advice or direction' would not confer a
jurisdiction to finally decide the rights of the persons interested
in the trust.
RELEVANT STATUTORY PROVISIONS
15. Sections 11, 56, 77 and 83, which are relevant for the purpose of this
appeal, read as under :
"I I. Trustee to· execute trust.- The trustees is bound to fulfil the
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purpose of the trust, and to obey the directions of the author of the
trust given at the time of its creation, except as modified by the
consent of all the beneficiaries being competent to contract.
Where the beneficiary is incompetent to contract, his consent may, for
the purposes of this section, be given by a principal civil court of
D
original jurisdiction.
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Nothing in this section shall be deemed to require a trustee to obey
any direction when to do so would be impracticable, illegal or manifestly
injurious to the beneficiaries.
Explanation. - Unless a contrary intention be expressed, the purpose
of a trust for the payment of debts shall be deemed to be (a) to pay
only the debts of the author of the trust existing and recoverable at
the date of the instrument of trust, or, when such instrument is a will,
at the date of his death, and (b) in the case of debts not bearing
interest, to make such payment without interest."
'56. Right to specific execution. - The beneficiary is entitled to have
the intention of the author of the trust specifically executed to the
extent of the beneficiary's interests.
Right to transfer of possession. - And, where there is only one
beneficiary and he is competent to contract, or where there are several
beneficiaries and they are competent to contract and all of one mind,
he or they may require the trustee to transfer the trust-property to him
or them or to such person as he or they may direct.
When property has been transferred to bequeathed for the benefit of
a married woman, so that she shall not have power to deprive herself
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ASHOK KUMAR KAPUR v. ASHOK KHANNA [S.B. SINHA, J.]
971
of her beneficial interest, nothing in the second clause of this section A
applies to such property during her marriage."
"77.-Trust how extinguished - A trust is extinguished -
(a) When its purpose is completely fulfilled; or
(b) When its purpose becomes unlawful; or
(c)
When the fulfillment of its purpose becomes impossible by
destruction of the trust-property or otherwise; or
( d) When the trust, being revocable, is expressly revoked."
83. Trust incapable of execution or executed without exhausting
trust-property. -
Where a trust is incapable of being executed, or
where the trust is completely executed without exhausting the trustproperty, the trustee, in the absence of a direction to the contrary,
must hold the trust-property, or so much thereof as is unexhausted,
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for the benefit of the author of the trust or his legal representative." D
APPLICATION OF LAW:
16. The jurisdiction of the court under Section 34 admittedly is confined
to opinion, advice or direction. An application would be maintainable on any
present questions. Such questions must arise "respecting the management E
or administration of the trust property". The questions should not be of any
'detail, difficulty or importance or otherwise not proper in the opinion of the
court for summary disposal'.
17. Copy of the application must be served upon the persons interested
in the application. If an opinion is rendered, or advice is given, or a direction
is issued, the same shall be deemed, so far the trustee is concerned, in regard
to his own responsibility to have discharged his duty as such trustee in the
subject-matter of the application.
F
18. It may be that such an application may be filed withou! instituting
a suit but maintainability of such an application would mainly depend upon G
the nature and purport thereof. Merely an option has been conferred on a
trustee to file either a suit or to move the court for its opinion, advice or
direction in terms of Section 34 of the Act. Such an option can be exercised
only when recourse to both the remedies are available.
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A
19. We may proceed on the basis that the jurisdiction of the court is
not only confined to opinion or advice but also extends to issuance of
direction, but such opinion rendered, or advice given or direction issued only
to a trustee. Consequence of issuance of such a direction is also stated in
paragraph 3 of Section 34 in terms whereof a legal fiction is created by reason
B whereof the trustee would be deemed to have discharged his obligation in
regard to his own responsibility in the subject-matter of the application. It
does not envisage an adjudication. It does not ordinarily envisage determination
of the right, title or interest of a member of the trust or a beneficiary in relation
to the trust property, although such a question may have to be incidentally
dealt with.
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20. The provisions of Section 34 of the Act must be given its literal
meaning. The court cannot exercise a jurisdiction which is not vested in it.
A court can exercise jurisdiction, provided it is vested therewith. An order
without jurisdiction over the subject-matter would render the decision a
nullity.
21. Construction of the aforementioned provision which is in pari materia
with Section 10(1) of the Official Trustees Act, 1930 came up for consideration
before this Court in Official Trustee, West Bengal and Ors. v. Sachindra Nath
Chatterjee and Anr., [1969] 3 SCR 92: AIR (1969) SC 823. Therein, it was
clearly held that in terms of Section 33 of the Act, the rate of interest cannot
E be directed to be altered, stating :
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"21. It was then said that the order in question could have been made
by Ramfry, J., in the exercise of his inherent powers as a Judge sitting
on the original side of the Calcutta High Court.
It was argued that
a Judge sitting on the original side of the High Court of Judicature
at Calcutta has all the powers of a Chancery Judge in England as that
power has betm conferred on him by the Letters Patent granted to that
High Court. We shall assume it to be so. We may note that the settler
did not invoke the inherent jurisdiction of the High Court nor did the
Judge purport to exercise that power. But, still, that cannot invalidate
the order made if the Court had the inherent jurisdiction to make that
order.
Hence the real question is had he that inherent jurisdiction?
Chapter XIII of the Calcutta High Court Rules prescribes what orders
can be obtained in an originating summons proceedings. The
jurisdiction of the Judge acting under that Chapter is a summary
jurisdiction. Rule I of that Chapter empowers the Judge to entertain
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ASHOK KUMAR KAPUR v. ASHOK KHANNA [S.B. SINHA,.:.]
973
an application in respect of matters enumerated in clauses (a) to (g) A
of that rule. Admittedly clauses (a), (b), (f) and (g) are not relevant
for our present purpose. Under clause (c) the Court could only decide
about furnishing of any particular accounts by trustees and vouching
(where necessary) of such accounts. Under cl. (c) it could direct the
trustees to pay into Court any monies in his hands and under clause B
( e) direct him to file an account and vouch the same to do or abstain
from doing any particular act in his character as a trustee. The orders
under Chapter XIII are made in chambers. As mentioned earlier the
proceedings under that Chapter are summary proceedings. No rule in
that Chapter was brought to our notice under which the order in
question could have been made.
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25.
It will be noticed that the powers given under those four heads
are those relating to management and administration of trust property.
That power is similar to the power conferred in Courts by Sec. 34 of D
the Trusts Act and S. 43 of the Trustees and Mortgagees Powers Act,
1866. In fact in this country we have condified the very powers that
were exercised by the Chancery Courts in England under their equitable
jurisdiction. The Court of Appeal in Chapman's case, 1953-1 Ch 218
Evershed M.R. and Romer. JJ., Denning L. J. dissenting stated the law
on the point thus:
E
The inherent jurisdiction of the Court of Chancery is of a limited
character. It is a jurisdiction to confer upon the trustee, quoad items
of trust property vested in them, administrative powers to be exercised
by them where a situation has arisen in regard to the property creating
what may be fairly called an "emergency". The inherent jurisdiction F
does not extend to sanctioning generally the modification or remoulding
of the beneficial trusts of a settlement.
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27. From whatever angle we may examine the validity of the order G
made by Ramfry, J., it appears clear to us, that the said order was
outside the jurisdiction of the learned Judge. It was not merely a
wrong order, or an illegal order, it was an order which he had no
competence to make. It is not merely an order that he should have not
passed but it is an order that he could not have passed and therefore
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a void order."
22. Section 34 occurs in Chapter IV titled "Of the rights and powers of
trustees" beginning from Section 31 relating to 'right to title deed' to Section
45 relating to "Suspension of trustee's posers by decree'.