Pandhari nath Yeshwant Patil & ors. v. M/s.Bloom Properties Pvt. Ltd.

sold the suit property which act is challenged in these Notices of Motion. 4

9. The property is stated to have been totally developed and constr ucted upon since 2002. The present trustees propose to execute the conveyance in favour of the Responden t who is stated to be the sister concern of M/s.Bhavya Developers for a total consideration of Rs.1 Lakh. The trustees filed the above Trust Petition No.1 of 2007 to obtain the permission of the Court for the said sale.

10. The trustees sought to serve the Trust Petition upon the beneficiaries under the provisions of Order 31 Rule 1 of the Code of Civil Procedure. Order 31 Rule 1 reads thus:- “ ORDER XXXI SUITS BY OR AGAINST TRUSTEES, EXECUTORS AND ADMINISTRATORS

1. Represe n t a t i o n of beneficiaries in suits concerni ng property vest ed in trust ee s , etc. - In all suits concerning property vested in a trustee, executor or administr ator, where the contention is between the persons beneficially interested in such property and a third persons, the trustee, executor or administra tor shall represent the persons so interested, and it shall not ordinarily be necessary to make them parties to the suit. But the Court may, if thinks fit, order them or any of them, to be made parties.” 5 It is contended on behalf of the trustees that in a Petition for obtaining the permission of the Court to sell the Trust property the trustees would represent all the beneficiaries as against third party to whom the property is sought to be sold and all the beneficiaries were not required to be made parties to the Petition unless otherwise directed. It is, therefore, contended that all the beneficiaries were, therefore, served by pasting the copy of the Petition.

11. The trustees of the suit Trust were to use a part of the income for the mainten a n ce of the temple and a part of the income for family festivals. Hence the family members are admittedly beneficiaries of the income which was to be used for family festivals. Some of those family members including the Applicants herein reside next to the temple. Some other family members reside at other places. None of the family members is personally served the Petition on which the order for permission to sell is sought to be obtained.

12. One Notice of Motion has been taken out by one of the beneficiaries who has not been given notice of the sale of the Trust property in which he holds a beneficial interest to the extent of the amoun t which has been settled upon the Trust for family festivals. One of the Applicants is a trustee of the 6 temple in respect of which also a part of the income of the Trust property is required to be used for maintena nce of the temple.

13. The only service sought to be effected is by affixing a copy of the Notice and a copy of the Trust Petition on the Notice Board of this Court and on the temple premises. It is argued on behalf of the trustees that since a part of the income was to be used for the maintena nce of the temple, a devotee may claim to be a beneficiary and hence the Notice by pasting was required to be so made. Such notice would be for the members of the public who would be devotees and who cannot be personally served. The beneficiaries who are family members and for whom also a part of the Trust income is required to be used for family festivals are specific individuals including the Applicant s who lived next to the temple but none of whom has been personally served.

14. It is contended on behalf of the Applicants that the service upon the family members who are the beneficiaries of a part of income of the Trust for performa nce of the festivals is not effectuated as required under Order 5 Rule 9 and Rule 17 of the Code of Civil Procedure. It is further contended that the summo n s was to be served upon them personally by 7 one of the modes mentioned in Rule 9(3) of Order 5 and if they refuse to accept the service or could not be found then alone could they have been served by pasting a notice under Rule 17 of Order 5. In any event, such pasting also would be required to be made on their residential premises and not on the temple premises. Since some of the beneficiaries are not even residing next to the temple, they cannot be said to have the notice of the fact of the filing of the Trust Petition by effectuating the service by affixation of the notice and a copy of the Petition at the temple premises.

15. My attention is drawn to the fact that the service is sought to be effected on Saturd ay and under Rule 454 of the Bombay High Court (Original Side) Rules. No writ of sum mo n s is required to be served or executed on Saturd ay, Sunday or holiday except with the leave of the Court. No leave of the Court for such service is obtained. However, under the said Rule, the Sheriff of Mumbai would be entitled to extra fee for service effected or attempted on any Saturdays, Sundays or holidays.

16. A reading of the entire rule, which is directory and not mandatory, shows that as a matter of course and without extra fee service is required to be effected usually on working days. A reading of the rule does not show that the 8 service would be rendered void, if made on a Saturd ay, because the Sheriff would be entitled to extra fee for such service on a day which is not a working day. The challenge in respect of the date of the service is, therefore, not much material to consider.

17. It is contended on behalf of the trustees that in 1998, the trustees of the temple who were then receiving Rs.625 / - unani mo u sly decided that they have no objection if the private family Trust would not pay them the 5 / 8 th of the income from the mainten a nce of the temple as per the provisions of the Trust Deed, provided they expended the said income only for the purpose of their family festivals. It is argued on behalf of the trustees that by such disclaimer the trustees disclaim forever their interest in the Trust property or Trust income and hence were later not required to be notified of any sale of the Trust property or to partake in any income of the Trust property or to challenge any trans action made by the trustees of the private family Trust.

18. The resolution of the trustees of the temple dated

21.5.1998 showing their no objection to not receiving the paltry amou nt of income from the Trust property is with a proviso. The proviso is that the said amou nt would be expended for other purpose specified in the settlement and 9 for no other purpose. Hence it can be seen that the trustees had decided how to use the amou nt s settled in Trust for the mainten a n ce of the temple precisely. They have not only disclaimed the income but they have specified the enjoyment of the other part of the settlement. Such a decision cannot tanta mo u n t to disclaimer of the entire interest of the Trust property in perpet uity. The temple itself being a beneficiary under the settlement is entitled to contin ue as such despite not receiving the ann u al income for its maintena nce. Hence it would be erroneou s to conclude that the trustees have decided to divest themselves or the temple of the corpus of the Trust.

19. It is contended on behalf of the Applicants that the trustees had only power to lease and not to sell the Trust property. Conseque ntly, under Section 11 of the Indian Trusts Act, 1882, the trustees were bound to obey the directions contained in Clause- 2 of the settlement except as modified by the consent of all the beneficiaries who were competent to contract. The consent of all the beneficiaries is admittedly not obtained in this case.

20. In Para- 8 of the Trust Petition, it is averred that in a meeting which took place on 17.12.2006 they discussed the issue of sale and came to the conclusion that the sale was in 10 the interest of the Trust and the trustees and, therefore, unani mo u sly agreed and confirmed that the Trust land should be sold on “as is where is” basis. In Para- 6 of the Affidavit- in- reply to the Notice of Motion by the trustees, it is further stated that the Applicant was present in the meeting dated 17.12.2006, even though he was not a trustee and hence had knowledge of the decision of the trustees and has not objected to the same. It is further stated that the trustees requested the family member s to give their consent in writing which they did on 4.1.2008. The consent which is obtained on 4.1.2008 is not by all the family members. The Applicant in Notice of Motion No.4034 of 2007, who is one of the family members, has admittedly not given such consent. He has admittedly not even been served person ally with the above Trust Petition. Without the consent of the Applicant as a beneficiary the directions contained in the settlement giving the power to lease are sought to be extended to the power of sale and hence fall within the mischief of Section 11 of the Indian Trusts Act.

21. It is argued on behalf of the Applicants that the act of the trustees would constitute setting up a title adverse to the beneficiaries and which falls within the mischief of Section 14 of the Indian Trusts Act as well. This would depend upon the facts of each case and will have to be seen upon kind of 11 the Trust property that remained with the trustees at the time of taking the decision to sell and file the Trust Petition.

22. The suit land settled upon the Trust was earlier leased on ann u al rent in 1952. The suit land was thereafter leased on a higher rent in 1999. The trans action of 1999 was not a lease simpliciter. It was also for development of the entire Trust land. It allowed constr uction of a building and sale of flats to the flat purch a ser s. The building has thereafter been constr ucted. The Society to be formed of the flat purch aser s would acquire rights under MOFA. The building has been constr ucted since 2002. The transaction of 1999 has never been challenged by any of the beneficiaries including the Applicants in both the Notices of Motion. For what has remained of the Trust property settled upon the Trust since 1950, the trustees have sought to act. The entire land is developed. The temple premises is on the Trust land. The temple premises is well maintained. The trustees of the temple have opted out of the beneficial interest from a part of the income of the Trust settled for the mainten a n ce of the temple. The family festivals alone have to be performed. The sale of the remainder of the right, title and interest of the Trust property has been considered by the trustees. The trustees are enjoined to convey the suit property to the developers or their nominees. The 12 consideration for such conveyance would have to take into account the reversioner of the Trust in the leased land and its valuation considering that the entire plot is encum bered by the constr uction of the building for flat purcha se rs.

23. It is contended on behalf of the Applicants that the transfer by sale has been sought to be effected by the trustees with the consent of some of the beneficiaries to the exclusion of the others. They challenge the amou n t shown in the conveyance as being the total consideration received by the trustees. They further contend that some of the beneficiaries are being excluded from receipt of the consideration which accrues for their benefit.

24. It is contended on behalf of the trustees that the only benefit or interest which the family members of the settlor would derive is for the performa nce of the festivals for which the settled amou nt is to be used. Hence they contend that even the income from the sale- proceeds which is to be invested by the trustees cannot be claimed by any of the beneficiaries. All that they would have is an interest in the performance of the family festivals. Whatever that be, it is a beneficial interest which all the beneficiaries are entitled to.

25. The Applicants contend that under Section 51 of the 13 Indian Trusts Act, the trustee is enjoined not to use the Trust property for his own purpose. They contend that excluding the beneficiaries from the ultimate sale and the receipt of the consideration therefrom would go against the spirit and purpose of Section 51 of the Indian Trusts Act. Prima facie, of course, it cannot be seen that the Trust property has been used for the benefit of the trustees. However, a specific statemen t made in Para- 4 of the Affidavit- in- support of Notice of Motion No.4034 of 2007 is that the Trust property is worth crores of rupees and a large amou nt of money must have been paid in cash to the Petitioners by the purcha se r (Responde nt). The Applicant s further claim that the total consideration of Rs.1 Lakh for reversionery interest in the land in Andheri admeas u ri ng

292.60 sq. meters in 2007 is not acceptable, encum br a n ce by way of the building on the Trust land notwithst a n di ng.

26. The Applicants have prima facie made out a case of recession of the contract of sale. Under Section 27 of the Specific Relief Act, the Applicants would be entitled to have the transfer by way of sale rescinded as being voidable or termina ble at the Applicants' instance.

27. The conveyance has been executed on 21.8.2007. It 14 has been registered on that date. Mr.Narula on behalf of the Responde nt, who is shown as the purcha se r under the conveyance, claims that the conveyance is executed and hence the Applicants' fate is sealed. If the Applicants, as beneficiaries, have not given consent to the modification of the directions of the settlor (as contained in Clause- 2 of the Trust Deed of 1950), a mere execution of the conveyance cannot terminate the rights of the beneficiaries. Of course, such recession may have to be obtained in a separate Suit upon valuing the Trust property as claimed by the Applicant in Para- 4 of his Affidavit- in- support of Notice of Motion No.4034 of 2007. Conseque n tly, under Section 86 of the Indian Contract Act, to which my attention has been drawn by the Advocate for the Applicant in Notice of Motion No.4725 of 2007, the Responde nt, as the transferee therein, on receiving notice of the application which seeks to rescind the contract would be required to hold the property for the benefit of the Trust as the transferor, subject however to repayment by the Trust of the consideration of Rs.1 Lakh actually paid by the Responde nt to it.

28. The Advocate for the Applicant in Notice of Motion No.4725 of 2007 further contended that the trustees of the temple who claim a beneficial interest on behalf of the temple in the income of the Trust property, would not have been 15 able to give consent to the transfer of such interest by modification of the directions in the Trust Deed more specially to grant the power of sale upon the trustee who is absent in the Trust Deed, without obtaining the permission of the Charity Commissioner under Section 36 of the Bombay Public Trusts Act, 1950. That aspect also would have to be decided only if an application under the aforesaid provisions is filed by the trustees claiming to sell the Trust property as the property of the said Charitable Trust.

29. In this Notice of Motion, the Court has only to consider whether the ex- parte order granting permission for the sale dated 9.8.2007 in the above Trust Petition is required to be set aside and the Trust Petition is required to be heard upon considering the claim of the Applicant in each of the Notices of Motion.

30. It is seen that four trustees have applied for sale of the Trust property. The Trust Deed does not give them a power of sale. They have power to lease. They desire to convert that power into a power of sale conseque n t upon the earlier Lease Deed in which they have granted, inter alia, the rights of development of the entire property to M/s.Bh avya Developers in 1999 in consideration for the lease rent of Rs.3,500 / - . This aspect has not been articulated in the 16 Petition aside from stating how the consideration to be received for the sale of the Trust property is adequate consideration and in fact three times more than the lease rent until then received by the Trust and is accordingly for the benefit of the Trust. In fact in the Petition the Petitioners have also made out a case that the receipt of that amount would be for the maintena nce of the temple as per the Deed of Trust. Thus, the obligation of the maintena nce of the Trust is conceded despite claiming that the trustees of the temple had una ni mo u sly disclaimed the paltry income that was received from the lease rent by the Trust for the mainten a n ce of the temple.

31. Mr.Narula, on behalf of the Responde nt, contended that the Responde nt has purcha se d only the reversionery interest of the trustees as the vendors considering the lease granted to M/s.Bhavya Developers on “as is where is basis” and hence the Responde nt would be required to assign the lease or to convey the property ultimately to the Society since his reversionary interest would be subject to the prevailing laws including MOFA.

32. The beneficiaries were the family members. Their addresses were known to the trustees. The trustees were also representing each branc h of the joint family. The 17 beneficiaries had to be notified of the filing of the Trust Petition. They had a right to be represented in the Trust Petition to object or consent to the sale sought by the trustees in view of the modification of the Deed of Settlement. None of the beneficiaries being the heirs of the settlor could have been notified of the Petition by affixing the Petition on the temple premises or in the High Court as the initial mode of service. Even if they had refused service or were not to be found, the affixation of the notice and the Trust Petition was required to be made at their residential premises and not at the temple premises as a mode of service. The Advocate on behalf of the trustees stated that since the Trust was initially created for the maintena nce of the temple and the temple was running the devotees may claim to be beneficiaries and they could be served only by affixation of the Trust Petition on the temple premises. Aside from the fact that this aspect shows the admission of the fact that the mainten a n ce of the temple was indeed required to be made from the income of the sale- proceeds and such beneficial interest was conceded, the service by affixation would be sufficient service only so far as the beneficiaries of the temple are concerned. Even the trustees of the temple having been known to the trustees of the Trust, had to be served, if such service was required and conceded, by personal service. That having not been effectuated, the ex- 18 parte order dated 9.8.2007 is liable to be set aside. The Trust Petition deserves to be heard on merits. Both the Notices of Motion are made absolute in terms of prayer (a). The Trust Petition shall be heard on merits. Order in terms of prayer (b) which can be considered in the Trust Petition itself is not granted at present.

33. The Advocate on behalf of the Applicant s in the Notices of Motion waives service of the Trust Petition. The Applicants shall be entitled to file the Affidavit- in- reply, if any, to the Trust Petition.

34. The Advocate for the trustees applies for time to consider any amend me nt to the Trust Petition, if required.

35. Trust Petition shall be kept on Board on 1 st December

2008. [SMT.ROSHAN DALVI, J.]