Full Judgment Text
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CASE NO.:
Appeal (civil) 5042 of 2000
PETITIONER:
Official Trustee of West Bengal \005Appellant
RESPONDENT:
Stephen Court Ltd. \005Responde
nt
DATE OF JUDGMENT: 14/12/2006
BENCH:
S.B. Sinha & Markandey Katju
JUDGMENT:
J U D G M E N T
S.B. SINHA, J :
Interpretation and application of the provisions of Sections 25 and 26
of the Official Trustees Act, 1913 (for short, ’the 1913 Act’) as also Section
302 of the Indian Succession Act, 1925 (for short, ’the Succession Act’) falls
for consideration in this appeal, which arises out of a judgment and order
dated 21.12.1999 passed by a Division Bench of the Calcutta High Court in
APD/T No.16 of 1999 in Appeal No.474 of 1999.
The said judgment was rendered in the following fact situation :
One Peter Charles Earnest Paul also known as ’Peter Paul’ was the
owner of a piece of land, measuring 3 bighas 17 kottahs 8 chittackas 21 sq.
ft. equivalent to 5408.93 sq. metre located on the junction of Park Street and
Midleton Row, Kolkata having wide frontage on both the roads. He
executed a registered deed of lease in favour of one Francis Daniel
Augustus Larmour (for short, ’Larmour’) in respect of the said premises for
a period of 99 years with effect from 01.06.1919 to 31.05.2018. He executed
a Will on 16.06.1920 appointing the Official Trustee as its Executor and
Trustee in respect of the said property. Beneficiaries of the said Will were
his wife and sister. He died on 01.08.1920. A probate was obtained by the
Official Trustee on 07.10.1920. Larmour executed a registered deed of
assignment in favour of one Arathoon Stephen, Stephen Court Limited
(hereinafter referred to as ’the Company’) was constituted and incorporated
under the provisions of the Companies Act, 1913 on or about 04.12.1923.
Arathoon Stephen, who was a shareholder and first Managing Director of
the said Company entered into an agreement for acquiring the leasehold
rights of Arathoon Stephen. Arathoon Stephen and the Company thereafter
agreed to purchase the leasehold rights of the said premises for the balance
unexpired period under the said lease on 10.12.1923. On the same day a
registered Debenture Trust Deed was executed by Arathoon Stephen and the
Company and the three Trustees referred to in the said Deed, stating that the
Company was entitled to the said property for all the residue of the term of
1919 lease. As far back as in 1924, the Company constructed a five-storied
building. It continued to pay the rent to the Official Trustee who had issued
rent receipts to it. Sister of Peter Paul, Mrs. Hemingway, died leaving
behind a Will in terms whereof the public trustee of the Public Trust of
London took over her estate and started receiving her share of income. On
10.10.1965, widow of Peter Paul died, whereafter half share of the income
of the trust property was remitted to the Public Trustee of the Public Trust,
London by the Official Trustee till 18.05.1993. Permission of the Reserve
Bank of India for the later period is said to be awaited.
The Company by a letter dated 09.02.1984 requested the Official
Trustee for extension of the period of lease for a further period of sixty
years to which the Official Trustee by a letter dated 20.03.1984 suggested
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that it should apply to the High Court for obtaining grant of extension of the
said lease. An application was thereafter filed before the Calcutta High
Court by the said Company under Section 302 of the Succession Act read
with Section 26 of the 1913 Act. The said application was entertained. The
Official Trustee filed an affidavit in opposition wherein, inter alia, it was
stated :
"The Official Trustee as such Trustee can neither
consent nor object to grant by any lease or modification
of the terms and condition thereof. The Official Trustee,
however, in the ends of justice is duty bound to produce
all the facts and circumstances relating to the said
property before this Hon’ble Court. The Official Trustee
states and submits that the following proposal would be
beneficial to the Estate :
(a) Upon the lessee agreeing to enhance the
current monthly rent payable for the lease by at least
400% the head lease can be rectified by giving the lease
the option of renewal the lease on such terms and
condition as this Hon’ble Court may deem fit and proper
after expiry of the head lease on May 31, 2018 by efflux
of time.
(b) Competent valuer would be appointed by
this Hon’ble Court at the expenses of the petitioner for
ascertaining the market value of the property. The
probable market value of the property as on June 1, 2018
should be estimated on the basis of the present trend of
increase in the value of land in Calcutta as well as the
rate of inflation and the amount of rent to be paid by the
lessee for the extended period would be determined on
the basis of the said valuation."
Pursuant to or in furtherance of the said suggestions of the Official
Trustee, the Company was directed to pay rent @ Rs.8,000/- per month to
the Official Trustee for the residuary period of the existing lease by the High
Court in terms of an order dated 17.04.1984. A valuer was appointed. The
valuer submitted its report recommending :
"Having regard to the results obtained under the above
two method of calculations, it is perhaps, fair to fix up
the proper monthly ground rent payable for a period of
60 years lease after the expiry of present lease as given
below :
Rs.2,38,056 + Rs.2,21,933 = Rs.2,29,995 per annum
2
= Rs. 19,166 per month
Say Rs. 19,000 per month
Rupees Nineteen thousand Per month"
No objection thereto was field. The court, thus, acting on the basis of
the recommendations of the said valuer, by an order dated 30.05.1984,
opined :
"After reading the original report of Mr. A.K. De,
the valuer and upon hearing the parties it appears to the
Court that the rent of the lease is reasonable and
beneficial to the Trust Estate. There will be an order in
terms of prayer (a). The rent payable under the proposed
lease will be Rs.19,000/- (Rupees nineteen thousand) per
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month. Regarding the current lease the petitioner will
pay rent at the rate of Rs.8,000/- (Rupees eight thousand)
per month w.e.f. 01.06.,1984."
The said order of the Calcutta High Court was accepted and acted
upon by the Official Trustee and it executed a deed of lease in favour of the
Company for a period of sixty years on a monthly rent of Rs.19,000/-. The
monthly enhanced rent paid by the Company in favour of the Official
Trustee @ Rs.8,000/- in terms of the High Court’s order had all along been
accepted wherefor the Official Trustee had been issuing due receipts. An
Originating Summons was, however, taken out by the Official Trustee
before the Calcutta High Court on or about 21.07.1997 for determination of
the following questions :
"a) Determination of the relation between the
Official Trustee and Messers Stephen Court Limited prior
to 31.5.2018 AD, as the relation between them was not
determined.
b) On the basis of such determination of relation,
is M/s Stephen Court Limited entitled to execute any lease
deed with any party in respect of premises No. 18 Park
Street, Calcutta or any part thereof prior to 31.5.2019 AD.
If not then in that event, what will be the fate of such lease,
if any made prior to 31.5.2018 AD?
c) Is the order dated 30th May, 1984 passed in
Matter No. 432 of 1984 null and void?
d) Is the Deed of Lease executed by Official
Trustee on 25th July 1984 valid and binding?
e) Whether any leasehold right in respect of the
premises No. 18, Park Street, Calcutta has legally vested in
Messers Steph Court Limited in the absence of any
registered deed conveying, transferring and/or assigning
the unexpired period of lease by Mr. Aratoon Stephen in
favour of Messers Stephen Court Limited and whether
Messers Stephen Court Limited had any legal right to
make application before this Hon’ble Court in 1986
praying for extension of the period of Head Lease of
13.9.1919.
f) Whether the High Court at Calcutta had
jurisdiction to pass the order 30th May, 1984 in Matter No.
432 of 1984 directing the Official Trustee to execute the
Indenture of lease for renewal/extension of the Head Lease
dated 13.9.1919 in favour of Messrs Stephen Court
Limited, who was not the lessee. Besides that, the Head
Lease did not contain any covenant for extension/renewal."
Inter alia, a prayer was also made that the said deed of renewal of
lease dated 25.07.1984 be directed to be delivered upon cancellation.
A learned Single Judge of the High Court by an order dated
28.06.1999, opined that the order dated 30.05.1984 was passed without
jurisdiction. It also recorded other findings wherewith we are not concerned.
An appeal preferred thereagainst in terms of clause 15 of the Letters Patent
of the said Court was accepted by reason of the impugned Judgment.
A large number of issues fell for consideration before the Division
Bench of the High Court. It, inter alia, opined : (i) the High Court had
jurisdiction to entertain the said application under Section 302 of the
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Succession Act; (ii) The Company had the requisite locus standi to maintain
the application; (iii) The Official Trustee having accepted the said judgment
and the deed of lease having been executed in favour of the Company, it was
estopped and precluded from raising the question of the Court’s jurisdiction
in subsequent proceedings; (iv) The jurisdiction of the High Court was not
excluded by reason of the provisions of City Civil Court; and (v) The
Official Trustee having received rent from the Company, its possession was
protected under Section 53-A of the Transfer of Property Act.
Mr. Tapas Ray, the learned Senior Counsel appearing on behalf of the
appellant, in support of this appeal would contend :
i) The company being not a person beneficially interested in the trust
property, an application under Section 302 of the Succession Act was
not maintainable.
ii) The High Court in its order dated 30.05.1984 having not taken into
consideration the objections filed by the Official Trustee, the Division
Bench of the High Court must be held to have failed/or neglected
to apply its mind in regard thereto and, thus, the same being a nullity
the impugned judgment cannot be sustained.
iii) The Division Bench failed to notice that it was obligatory on the
part of the High Court while entertaining an application under Section
302 of the Succession Act to satisfy itself : (a) as to who had come
with the application for directions; (b) and in what capacity; and (c)
what right or interest is claimed in respect of the direction; and (d)
whether the court would have jurisdiction to entertain the same.
iv) An application for renewal of lease, 34 years prior to the expiry of
the original lease, for a period of sixty years was not bona fide and
no directions, thus, could have been issued by the High Court.
v) The judgment of the High Court being wholly without jurisdiction
and, thus, being a nullity, the principles of estoppel and res judicata
would have no application;
vi) If the judgment dated 30.05.1984 was a nullity and non est in the eye
of law, an appeal thereagainst was not necessary to be filed.
vii) The deed of assignment executed by Larmour in favour of Arathoon
Stephen being not a registered document, the same was wholly
inadmissible in evidence.
Mr. Jaideep Gupta, the learned Senior Counsel appearing on behalf of
the respondent, on the other hand, would submit :
i) The Official Trustee never raised any objection as regards the
purported inherent lack of jurisdiction of the Calcutta High Court
under Section 302 of the Succession Act and, thus, at this distant time
cannot be permitted to turn around and raise the said question.
ii) The judgment of the High Court having been acted upon and the
Official Trustee being bound thereby, it cannot now be permitted to
approbate and reprobate at the same time.
iii) The order dated 30.05.1984 being an appellable one and no appeal
having been preferred therefrom, it attained finality and, thus, a clear
case of estoppel and acquiescence has been made out.
iv) Issues raised in the Originating Summons were barred by the
principle of constructive res judicata.
v) Unregistered deed of assignment having been followed by the
registered Debenture Trust Deed, the title to the lessee passed on to
the company on the basis thereof.
vi) Assuming that the said registered assignment deed was not valid in
law, the Official Trustee having accepted rent from the Company
from 1923-1924 onwards, a fresh monthly tenancy had come into
being and, thus, on that premise, the High Court’s judgment cannot be
said to be a nullity or void, specially when the same was passed in
accordance with law and on the terms and conditions suggested by the
Official Trustee.
vii) The originating summons for the reliefs claimed was not
maintainable in law.
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The principal questions which in view of the rival contentions of the
parties arise for consideration are :
a) Whether the application made by the respondent under the
Official Trustee Act, 1925 to the Calcutta High Court was
maintainable?
b) Whether the defect of unregistered document assigning lease of
immovable property stood cured by registration of subsequent
document i.e. Debenture Trust Deed?
c) Whether the Originating Summons filed by the appellant was
maintainable?
The 1913 Act was enacted to consolidate and amend the law
constituting the office of Official Trustee. An Official Trustee is appointed
by the Government. Rights, powers, duties and liabilities of the Official
Trustee are governed by Part III of the 1913 Act. Under Section 10 of the
said Act, the High Court has power to appoint an Official Trustee to be
trustee of property. In this case, he was, however, appointed by a Will.
The accounts of the Official Trustee is liable to be audited once
annually. It exercises powers under the Code of Civil Procedure.
Section 22 of the Act enables every beneficiary under a trust to make
inspection and take copies of the accounts. Section 23 provides for transfer
to Government of accumulations in the hands of Official Trustee, while any
moneys payable to a beneficiary under a trust have been in the hands of any
Official Trustee for a period of twelve years or upwards. Section 25
empowers the High Court to make such orders as it thinks fit respecting any
trust property vested in the Official Trustee, or the income or produce
therefrom. Section 26 authorizes filing of an application for an order under
the said Act by any person beneficially interested in any trust property or of
any trustee thereof.
Section 302 of the Succession Act empowers the High Court on an
application made to it to give to the executor or administrator any general or
special directions in regard to the administration thereof, where probate or
letters of administration in respect of any estate has or have been granted
thereunder.
Peter Paul owned merely a piece of land. It executed a deed of lease
for a period of 99 years. The lessor, therefore, was entitled to the only rent
payable in terms of the said 1919 deed of lease.
It may be true that a registered deed of assignment was executed in
favour of the said Arathoon Stephen, but the defect in the said agreement of
sale between Arathoon Stephen and the respondents stood cured by reason
of the Supplementary Agreement, namely, Debenture Trust Deed which was
duly registered. In the Debenture Trust Deed Arathoon Stephen was
referred to as ’The Transferor’, Respondent was referred to as ’The
Company’ and the three others referred to as "the Present Trustees". It was
stipulated :
"a) WHEREAS the Company is entitled to the
property set forth and described in the first Schedule
hereto for all the residue of the term of 99 years from the
first day of June 1919 granted by an indenture of lease
dated 13rd day of September, 1919 made between Peter
Charles Ernest Paul of the one part and Francis Daniel
Larmour of the other part and registered at Calcutta in
Book I Vol. III being no.; 4493 for 1919 subject to an
Indenture dated the 15th day of August 1923 made
between the Official Trustee of Bengal of the one part
and as such the sole executor and Trustee of the will of
the said Peter Chales Ernest Paul of the one part and the
Transferor of the other part and registered at Calcutta in
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Book I Vol. 102 being No. 9712 for 1923 being an
Indenture of Rectification of the terms of the said
Indenture of lease regarding payment of the owner’s
share of taxes in respect of the said demised premises
AND WHEREAS the said property is at present vested in
the Transferor and Trustee for and on behalf of the
company and he has agreed at the request of the company
to join in these presents in manner hereinafter appearing
AND WHEREAS the company being duly empowered in
that behalf has determine to raise a sum not exceeding
Rs.7,00,000/- (Rupees Seven Lacs) by the issue of
Debentures for that amount bearing interest of the rate of
5 = per cent per annum and frame in accordance with the
form set forth in the second schedule hereto and has
agreed to secure the principal moneys together with
interest for the time being payable in respect of such
Debentures in manner hereinafter provided AND
WHEREAS the present Trustees have consented to act as
Trustees of this Indenture upon the terms herein
contained.
b) For the purpose of further securing the principal
money and interest and all costs and other moneys
payable under the Debentures or these presents the
Transferor by the direction of the company hereby
transfer and assigns and the company hereby transfers
assigns and confirms unto the Trustees and singular the
hereditaments land and premises specified and referred to
in the first Schedule hereto and all buildings erected on
the land or any part thereof and all easements privileges
and on the tenancies whatsoever to the same and
therewith held used occupied and enjoyed and all the
estate right title interest property claim and demand
whatsoever of the Transferor and the Company and to the
same to have and to hold the same unto the present
Trustees as joint tenants with right of survivorship for all
the residue now to come and unexpired of the term of
ninety nine years granted by the said lease upon and for
the trusts intents and purposes hereinafter expressed of
land concerning the same."
Broadly speaking the Supplementary deed provided for the issuance
of debentures by the appellant in favour of Aratoon Stephen. Until and
unless the appellant had paid off the debentures the scheme of turst was to
continue but :
"Upon proof being given to the reasonable
satisfaction of the Trustees that all the debentures entitled
to the benefit of the trusts herein contained\005have been
paid off or satisfied and upon payment of all costs
charges and expenses incurred by the Trustees in relation
to those presents the Trustees shall at the request and cost
of the Company\005.release the charged premises from this
security."
The effect of such an unregistered deed vis-‘-vis a Supplementary
Deed by way of Debenture Trust Deed came up for consideration before the
Privy Council in Mitchell v. Mathura Dass and Another [12 Indian Appeals
150], wherein it was opined :
"\005The Registration Act was not passed to avoid the
mischief of allowing a man to be in possession of real
property without having a registered deed but as a check
against the production of forged documents, and in order
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that subsequent purchasers, or persons to whom
subsequent conveyances of property were made, should
not be affected by previous conveyances unless those
previous conveyances were registered\005"
In that case William Mitchell was indebted to Mathura Dass. The
latter sought to attach a property on the basis that it belonged to the former.
William’s father Alexander, claimed that the property belonged to him. In
the proceeding, two documents came to be filed, namely : one purporting to
be a deed of conveyance of the property to himself and the other a
confirmation bond executed by the same parties as the conveyance in the
subsequent deed.
The Judicial Committee held that the second deed being registered
was a valid conveyance of the property to Alexander.
A Division Bench of the Bombay High Court followed the said
decision in Jamna Bai and Another v. Dharsey Takersey [1902 (IV) Bombay
Law Reporter 893], stating :
"The settlement between Ruttonbai and Tersey on
the terms on which the plaintiffs base their claim, is dated
the 3rd February 1869. It is a document which was drawn
up in Guzerati but I have not received it in evidence, as it
affected immovable property of the value of more than
Rs.100 but was not registered. Mr. Lowndes for the
plaintiff then rendered two indentures called releases,
dated the 13th and 16th September 1869 respectively, one
executed by Ruttonbai in favour of Tersey and the other
by Tersey in favour of Ruttonbai, in which, after reciting
the terms of the agreement of the 3rd February 1869, the
parties say that their claims against each other in respect
of the agreement are satisfied. These two indentures,
Exs. A and B, are registered. But Mr. Raikes for the
defendant objected to their admissibility on the ground
that they were merely secondary evidence of the contents
of the agreement on which the plaintiffs sue and that, if
the original agreement was inadmissible, these two
indentures could not supply its place. I have, however,
admitted them in evidence on the authority of the ruling
of the Judicial Committee of the Privy Council in
Mitchell v. Mathuradas and another\005"
Even the assignment was required to be made by reason of a
registered document, it is beyond any cavil of doubt that as the Official
Trustee had all along been receiving stipulated monthly rent from the
Company, it was, thus, admitted and acknowledged to be the lessee in
respect of the leasehold. The Official Trustee not only accepted the rent,
but also allowed the Company to raise a huge structure. It, therefore,
accepted the Company as the lessee in respect of the said property.
The Company, therefore, for all intent and purport became a lessee
under the Official Trustee. Although in a case of this nature, applicability of
Section 53-A of the Transfer of Property Act may not be of much
significance, but whether as an assignee of the leasehold or as a monthly
tenant, the Company was entitled to protect its possession. Rightly or
wrongly, the question of renewal of the said lease for a further period of
sixty years came to be mooted. The offer of the Company was that at the
end of the period of lease, the property would vest in the Official Trustee. It
is again beyond any doubt or dispute that the Official Trustee could have
granted a lease. It could have also extended the period of lease. It could
have furthermore entered into a new arrangement with the lessee in
possession. It was, therefore, within the province of the Official Trustee to
deal with the property in any manner, he thought it fit, subject, of course, to
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any direction which could be issued by the High Court in exercise of its
jurisdiction under Section 302 of the Succession Act and Section 13 of the
1913 Act. The Official Trustee being a statutory authority would be
presumed to be aware and understand the provisions of the said Act. It,
therefore, instead of dealing with the matter itself asked the Company to file
an appropriate application, pursuant whereto the application was filed, no
jurisdictional question was could be raised.
The Company’s locus to maintain the application was not questioned.
True an affidavit in opposition had been filed, but it is equally true that
therein certain suggestions were made; one of them being enhancement in
the quantum of rent. The High Court passed an order enhancing the
quantum of rent, which was beneficial to the Officer Trustee. It accepted the
same without any demur. Benefit of the order was, thus, taken. It was only
at its suggestion, a valuer was appointed. The recommendations of the
valuer as regards the quantum of monthly rent which would be payable at
the end of the period of lease was not questioned. The High Court also
accepted the same. The order of the High Court dated 17.04.1984 must be
judged in the aforementioned factual backdrop. The High Court for all
intent and purport accepted the suggestions of the Official Trustee.
Indisputably, again no appeal was preferred therefrom. Mr. Ray made
a faint suggestion that the said order being not a judgment within the
meaning of Clause 15 of the Letters Patent of the Calcutta High Court was
not appealable. Even that be so, an application before this Court under
Article 136 of the Constitution of India would lie. No such application was
also filed. It was, thus, allowed to attain finality. The parties acted
thereupon. The Official Trustee accepted the said judgment and executed a
deed of lease strictly in terms thereof.
In the Originating Summons which was filed after 17 years of passing
of the said order, the Official Trustee sought to raise contentions which had
not been raised before it in the earlier proceeding. A plea of fraud was
raised, but the same was not pressed before us. As indicated hereinbefore,
the only contention, which had been raised therein was that the application
under Section 26 of the 1913 Act being not maintainable, the said order
dated 30.05.1984 was a nullity.
We may immediately notice the judgment of this Court in Committee
of Management of Pachaiyappa’s Trust v. Official Trustee of Madras and
Another [(1994) 1 SCC 475], which is the sheet anchor of the submissions
advanced on behalf of the appellant. Therein, an application was filed by a
stranger to the property. The jurisdiction of the learned Single Judge as also
the Division Bench of the High Court was appealed against before this
Court. The High Court had come to the conclusion that it was beneficial
and in the best interest of the leasehold property; but no attempt was made to
find out as to what would be the best price available therefor. Although the
property vested in the Official Trustee, transparency in the transaction was
not maintained. The norms for distributing the largess of the estate had not
been followed. The fiduciary conduct expected of a trustee was found to
have not been maintained. It was in the aforementioned factual background,
an objection was filed by a person who was a tenant of the ground floor on
the building adjacent to the vacant plot of land. The said objection was
rejected by the learned Single Judge stating that he had no locus standi in the
matter. This Court disagreed therewith. It was noticed that the learned
Single Judge unjustly altered the conditions as suggested by the Official
Trustee in money matters. The Division Bench also took no note of the
infirmities contained in the said order. It was in the aforementioned fact
situation this Court opined :
"40. Notable among the other modifications which have
been permitted are : (i) the period of the lease has been
Raised from 30 years to 50 years with an option to renew
for another 50 years, and (ii) deletion of the prohibition
relating to sub-lease. It would thus appear that on the
pretext of modification Respondent 2 has secured
substantial alteration in the terms and conditions as
contained in the original order dated May 2, 1986 passed
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by the learned Single Judge which had been upheld in
appeal by the Division Bench. In other words under the
guise of modification Respondent 2 have obtained review
of the order which had become final. This was
impermissible in law. The order passed by the Division
Bench does not give any indication as to why it became
necessary to give these concessions to Respondent 2. It
has not been shown that nobody else was prepared to
take the lease on the terms and conditions laid down in
the order dated May 2, 1986 and that without making
those modifications the plot of land could not be given on
lease. On the other hand we find that there was another
offer by Md. Ummer Sheriff offering to take the lease on
the same terms and conditions with a higher rent of Rs.
3000 per month. The order dated October 28, 1987
passed by the Division Bench on the application for
modification (CMP No. 14618/87) cannot, therefore, be
upheld and C.A. 4168 of 1988 filed against the said order
also deserves to be allowed."
It is true, as was submitted by Mr. Ray, that this Court therein
observed that the Official Trustees Act does not envisage any application
moved by a person other than the one who was beneficially interested in any
trust property or any trustee thereof, but no occasion arose therein for
consideration as to what would be the true meaning and purport of the
expression "beneficially interested" in the trust property.
We have noticed hereinbefore that this Court opined that an objector
who was a tenant on the ground floor of the said building adjacent to the
vacant plot of land of appellant trust had locus standi to Raise an objection.
In the 1913 Act two different expressions, namely, "beneficiary under
a trust" and "person beneficially interested in any trust property" have been
used. A distinction has, thus, been made in the statute itself between a
"beneficiary" and a "person beneficially interested.
In ’Advanced Law Lexicon’ \0263rd Edn 2005 - by P. Ramanatha Aiyar,
the two expressions have been defined in the following terms :
"Beneficiary" Beneficiaries are persons for whose
benefit property is held by trustees, executors, etc."
persons named in insurance policies to whom the
insurance is payable upon the happening of the event
insured against (Bouvier).
"Beneficiary" is one who is beneficially entitled to,
or interested in property; that is, entitled to it for his own
benefit, and not merely as trustee or executor holding it
for others. The word is nearly equivalent to the term
cestui que trust. Where property is dedicated to an idol,
it would be a "beneficiary", (Ranjit Singh v. Jaganath
Prosad, 12 Cal 375. But See 16 CWN 798"
"Beneficiary", defined, Indian Trusts Act (2 of
1882), S. 3 as ’the person for whose benefit the
confidence of the author of the trust is accepted by the
trustee."
"Beneficial interest" has been defined to mean :
"Beneficial interest" of the beneficiary is his right
against the trustee as owner of the trust property [Indian
Trust Act (2 of 1882), S. 3] Interest of a beneficial
owner or a beneficiary the interest in an unadministered
estate, of a person who dies before taking possession or
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applying for a grant of administration, is not a ’beneficial
interest’ within the meaning of S. 4 of the Succession and
Probate Duties Act 1892 to 1955 (Queensland)
[Commissioner of Stamp Duties (Queensland) v.
Lingston (1965) AC 694."
In ’Bouvier’s Law Dictionary And Concise Encclopedia’ \026 Third
Revisionby John Bouvier, the expressions "Beneficiary" and "Beneficial
Interest" have been defined as under :
"Beneficiary".- A term suggested by Judge Story as a
substitute for cestui que trust, and adopted to some
extent. I Story, Eq. Jur. ’ 321.
The person named in a policy of insurance to
whom the insurance is payable upon the happening of the
event insured against.
The beneficiary of a contract is not a cestui que
trust; 12 Harv. L. Rev. 564"
"Beneficial Interest".-Profit, benefit, or advantage
resulting from a contract, or the ownership of an estate as
distinct from the legal ownership or control.
A cestui que trust has the beneficial interest in
trust estate while the trustee has the legal estate. If A
makes as contract with B to pay C a sum of money, C has
the beneficial interest in the contract."
In Stroud’s Judicial Dictionary, 4th Edn., the terms "Beneficiary" and
"Beneficially Interested" have been defined in the following terms :
"Beneficiary" .(1) A beneficiary is "one who is
beneficially entitled to, or interested in, property; i.e.
entitled to it for his own benefit, and not merely as
TRUSTEE, or executor, holding it for others. The word
is nearly equivalent to ’CESTUI QUE TRUST’, which,
on account of its cumbersomeness and inexpressiveness,
’beneficiary’ has begun to supersede in modern law’ (2
Ency. 58).
(2) "Beneficiary entitled in possession" is one who
is entitled to the actual receipt of the income under the
terms of a trust (Doody v. Commissioner of Taxes (1941)
N.Z.L.R. 452)."
"Beneficially Interested". - A person having a
contingent interest in real estate (Re Sheppard, 4 D.G.F.
& J. 423) is a person ’beneficially interested’ within
Trustee Act 1850 (c. 60), s. 37; and so is a creditor who
has obtained a decree for administration and sale of real
estate (Re Wragg, I D.G.J. & S. 356); and also it seems, a
purchaser under a decree who has paid his purchase
money into Court (Ayles v. Cox, 17 Bea. 584). The
committee of lunatic cestui que trust is not a person
’beneficially interested’ within this section (Re Bourke, 2
D.G.J. & S. 426)"; Dan. Ch. Pr. 1787."
The decision in Committee of Management of Pachaiyappa’s Trust
(supra) therefore, in our opinion, does not assist the appellant. In that case,
the order of the High Court did not attain finality and had not been accepted.
The principles of estoppel, waiver, acquiescence or res judicata
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provide to procedural matter. The said provisions are applied to put an end
to a subsequent litigation. As would appear from the decisions made
thereafter, if the order of the 1984 order of the High Court was not a nullity,
the same would apply.
A distinction indisputably exists between an order which is wrong or
void on the one hand, and which having been passed by a court lacking
inherent jurisdiction and, thus, being a nullity on the other.
The law in this behalf has succinctly been stated by this Court in
Chief Justice of Andhra Pradesh and Another etc. v. L.V.A. Dilshitulu and
Others etc. [AIR 1979 SC 193], observing :
"\005If the argument holds good, it will make the decision
of the Tribunal as having been given by an authority
suffering from inherent lack of jurisdiction. Such a
decision cannot be sustained merely by the doctrine of
res judicata or estoppel as urged in this case."
Mr. Ray placed strong reliance in Balvant N. Viswamitra and Others
v. Yadav Sadashiv Mule (Dead) Through LRs. [(2004) 8 SCC 706].
Therein, this Court stated the law in the following terms :
"9. The main question which arises for our consideration
is whether the decree passed by the trial court can be said
to be ’null’ and ’void’. In our opinion, the law on the point
is well settled. The distinction between a decree which is
void and a decree which is wrong, incorrect irregular or
not in accordance with law cannot be overlooked or
ignored. Where a court lacks inherent jurisdiction in
passing a decree or making an order, a decree or order
passed by such court would be without jurisdiction, non
est and void ab initio. A defect of jurisdiction of the court
goes to the root of the matter and strikes at the very
authority of the court to pass a decree or make an order.
Such detect has always been treated as basic and
fundamental and a decree or order passed by a court or an
authority having no jurisdiction is nullity. Validity of
such decree or order can be challenged at any stage, even
in execution or collateral proceedings."
This Court referred to its earlier decision in Rafique Bibi v. Sayed
Waliuddin [(2004) 1 SCC 287], wherein it was held :
"\005A decree passed by a court of competent jurisdiction
cannot be denuded of its efficacy by any collateral attack
or in incidental proceedings."
To the said effect is a decision of this Court in Harshad Chiman Lal
Modi v. DLF Universal Ltd. and Another [(2005) 7 SCC 791].
In our opinion, the application under Section 302 of the Succession
Act by the Company was maintainable and, thus, the High Court was
competent to entertain the same.
An Originating Summons is maintainable under certain situations, as
provided for in Chapter XIII of the Calcutta High Court Original Side Rules.
The High Court in exercise of the said jurisdiction could not adjudicate as to
whether an earlier order passed by it was null and void and was, thus, liable
to be set aside. What was questioned by the Official Trustee by taking out
an Originating Summons was in effect and substance not only the order
passed by the High Court itself but also its own act which had attained
finality.
We have noticed hereinbefore that the Official Trustee dealt with the
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property in exercise of its jurisdiction to administer the trust property, in
respect whereof the High Court could issue directions from time to time.
Once it is held that the Official Trustee either on its own or under the
directions of the High Court could grant extension of lease, its action can be
subjected to challenge only in an appropriate proceeding. The Official
Trustee no doubt holds a position of trust but no finding of fact has been
arrived that it had misused its position. The High Court in passing its order
took all precautions, which were required of it. The High Court accepted all
the contentions of the Official Trustee not only by enhancing the quantum of
rent payable by the Company, but also appointing a valuer for the purpose of
arriving at a reasonable quantum of rent, which might become payable on
the expiry of the period of lease.
It has not been suggested that the Official Trustee was not bound by
the said order. It could only take a different stand in the said proceeding. It
could not initiate a fresh proceeding provided it was maintainable. Such
proceedings would have been maintainable, inter alia, if the dealings by and
between the Company and the Official Trustee was founded on or otherwise
vitiated by fraud. Even a suit for setting aside an order passed by a court
having competent jurisdiction would be maintainable on limited grounds.
Only because the order passed by a court is otherwise erroneous or causes a
hardship, the same by itself may not be a ground to set aside an order that
was validly passed by a court of competent jurisdiction.
Even otherwise the Official Trustee could not have altered its
position. It could not have prevaricated its stand from time to time. It was
estopped and precluded from filing a fresh application.
In Cooke v. Rickman [(1911) 2 KB 1125] , it was held that the rule of
estoppel could not be restricted to a matter in issue, stating :
"\005The rule laid down in Hawlett v. Tarte (10 C.B.
(N.S.) 813 \026 was that if the defendant in a second action
attempts to put on the, record a plea which is inconsistent
with any traversable allegation in a former action
between the same parties there is an estoppel\005"
[See also Humphries v. Humphries 1910 (2) KB 531]
In Jai Narain Parasrampura (Dead) and Others v. Pushpa Devi Saraf
and Others [(2006) 7 SCC 756], this Court held :
"While applying the procedural law like principle
of estoppel or acquiescence, the court would be
concerned with the conduct of a party for determination
as to whether he can be permitted to take a different stand
in a subsequent proceeding, unless there exists a statutory
interdict."
It was further held :
"The doctrine of estoppel by acquiescence was not
restricted to cases where the representor was aware both
of what his strict rights were and that the representee was
acting on the belief that those rights would not be
enforced against him. Instead, the court was required to
ascertain whether in the particular circumstances, it
would be unconscionable for a party to be permitted to
deny that which, knowingly or unknowingly, he had
allowed or encouraged another to assume to his
detriment. Accordingly, the principle would apply if at
the time the expectation was encouraged. [See also
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Taylor Fashions Ltd. v. Liverpool Victoria Trustees
Co. Ltd. (1981) 1 All ER 897.]"
Mr. Ray contended that the learned Single Judge did not assign any
reason in support of its order. Even if no reason has been assigned, it could
have been set aside only by an appellate court. When an order attained
finality, it cannot be set aside on the premise that no reason had therefor
been assigned.
It was also not a case where the parties were at issue in strict sense of
the term. The Official Trustee in his affidavit in opposition filed before the
High Court of Calcutta might have raised several contentions. Presumption,
however, would be that those contentions which had been accepted by the
High Court were put forward by it. If that be so, it does not lie in the mouth
of the Official Trustee now to contend that it had raised other contentions
also. If it had raised any other contention, which had not been considered by
the High Court, the remedy of the Official Trustee was to move the said
court itself for appropriate directions.
Not only no such contention was raised, it will bear repetition to state,
that the order has been acted upon. The principles of res judicata and in
particular that of constructive res judicata shall apply in the aforementioned
fact situation.
In Pawan Kumar Gupta v. Rochi Ram Nag Deo [(1999) 4 SCC 243],
it is stated :
"The rule of res judicata incorporated in Section 11
of the Code of Civil Procedure (CPC) prohibits the court
from trying an issue which "has been directly and
substantially in issue in a former suit between the same
parties", and has been heard and finally decided by that
court. It is the decision on an issue, and not a mere
finding on any incidental question to reach such decision,
which operates as res judicata."
[See also Ferro Alloys Corporation Limited and Another v. Union of India
and Others (1999) 4 SCC 149].
It has not been seriously disputed before us that the High Court,
despite City Civil Courts Act, could exercise its jurisdiction under Section
302 of the Succession Act read with Section 25 of the 1913 Act.
For the reasons aforementioned, we do not find any merit in this
appeal. It is dismissed accordingly with costs. Counsel’s fee is quantified at
Rs.25,000/-