w w w . L a w y e r S e r v i c e s . i n



INSTITUTE OF EDUCATION, SARASWATHIPURAM, MYSORE VERSUS SRI SOWCAR A. SIDDANNA ENDOWMENT, K. H. RAMAIAH MEMORIAL ENDOWMENT TRUST, MYSORE


Company & Directors' Information:- MYSORE EDUCATION PRIVATE LIMITED [Active] CIN = U80200KA2017PTC100396

    R. S. A. 1029 Of 2001

    Decided On, 05 August 2002

    At, High Court of Karnataka

    By, THE HONOURABLE MR. JUSTICE V. GOPALA GOWDA

    For the Appearing Parties: A.N.Venugopal Gowda, C.B.Srinivasan, M.V.Seshachala, Advocates.



Judgment Text

V. GOPALA GOWDA, J.


( 1 ) THESE Regular Second Appeals are filed by the defendant 3 and defendants 1 and 2 respectively, aggrieved of the impugned judgment and decrees passed by the First Additional District Judge, Mysore in R. A. Nos. 45 and 46/1990 in dismissing the appeals and confirming the judgment and decree of the First Additional Civil Judge, Mysore in O. S. No. 100/174 dated 9-12-1982, framing substantial questions of law in both the Memorandum of appeals filed by the defendants urging various contentions. They have prayed to allow the appeals. R. A. Nos. 45 and 46/90 by setting aside the judgment and decree passed by the First Additional Civil Judge, Mysore in O. S. No. 100/74 dated 9-12-1982.


( 2 ) THE rank of the parties is referred to in this judgment as has been referred to in the trial Court for the sake of convenience.


( 3 ) THE plaintiffs filed a suit for declaration to declare that Sr. Sowcar A. Siddanna Endowment and Sr. K. H. Ramaiah Memorial Endowment Trust is the owner of the suit schedule property and further for grant of consequential relief of possession of suit item No. 1 to plaintiff from defendants 3 and 4 and for further enquiry under Order 20, Rule 12, CPC regarding mesne profits in respect of the suit schedule property inter alia contending that the suit properties originally belonged to Sowcar S. Channaiah S/o late Sowcar A. Siddanna who was residing in Mysore City. He died on 20-11-1971. It is the case of the plaintiffs that late Sowcar S. Channaiah had endowed the suit properties and created a trust under the registered deed of declaration of trust dated 1-12-1937 with a view to achieve the objects, which are incorporated in the trust deed. It is stated that he has divested his interest upon the properties in favour of plaintiff Trust by complying with the legal requirements as required under the provisions of Trust Act for creation of a valid Trust, as it was his intention to create a Trust. The beneficiary of the Trust is one of the Trust properties and the property was transferred in favour of the trustee. The Trust is being managed by its trustees on its behalf who are the plaintiffs 1 (a) to (e ). Therefore, it is stated that attachment of the suit schedule property by the Income-tax Department for realisation of the arrears of income-tax due from late Sri Sowcar S. Channaiah who was a defaulter to the department and that the proclamation is not in accordance with the Income-tax Rules and procedure prescribed for recovery of arrears of tax due to it as per Schedule 2 to the Income-tax Act, 1961 (in short "act, 1961" ). The second defendant sold the property suit item No. 2 in public auction held on 6-2-1963 and the fifth defendant purchased it in the sale. The defendants 3 and 4 have taken possession of the suit item No. 1 and fifth defendant has taken possession of suit item No. 2 and further pleaded that the said defendants have not derived any interest and title upon the suit properties. Since the said properties do not belong to late Sr. Sowcar S. Chennaiah, he had no subsisting right upon the properties as he had divested the same in favour of plaintiff Trust. Further pleaded that the plaintiff endowment trust was being managed by 5 trustees whose names are mentioned in the deed of Trust and on account of death of two trustees namely H. C. Dasappa and Gujjegowda, those vacancies were filled up by nominating Tulasi Dasappa and P. M. Chikkaboraiah. It is the case of the plaintiffs that as soon as the authorities of the plaintiff-Trust came to know about the sale of the suit properties by the second defendant, it has passed the resolution dated 29-9-1973 authorising its Secretary to take immediate action to safeguard the interests of its suit properties. Thereupon, notices were issued to the defendants 3 to 5 calling upon them to deliver possession of the same.


( 4 ) THE defendants 1 and 2 have filed a joint written statement denying the creation of Trust and endowment of the suit properties in favour of the above said plaintiff Trust. Further stated that the said Trust was never acted upon and late Sowcar S. Channaiah never transferred his interest in the suit properties in favour of the plaintiff-Trust and the possession was never delivered to it. Despite creation of alleged Trust, late Sowcar S. Channaiah has been in possession and enjoyment of the suit properties and has been utilising the income derived from the suit properties for his personal benefits. Alternatively, it is stated even if the plaintiff-Trust acquired the right or interest upon the suit schedule properties by virtue of the alleged Trust deed, it had lost the same by reason of adverse possession of late Sowcar S. Channaiah, as he was the absolute owner of the properties on the date of the sale made in respect of the suit schedule properties. It is stated that the said defendants attached the suit properties during lifetime of late Sowcar S. Channaiah for recovery of arrears of tax due to the Income-tax Department after following the procedure prescribed in the Rules of Schedule 2 of the Act, 1961. The sale was held in respect of the suit schedule properties on 11-1-1973 and was duly confirmed on 16-2-1973. The plaintiff-Trust and its members never raised any objection either at the time of attachment or proclaimation and at the time of sale was conducted by the Department. Therefore, it is urged by them that the plaintiff-Trust and the trustees are estopped from claiming any interest and title upon suit properties and on these grounds, they have resisted the suit.


( 5 ) THE defendants 3 and 4 have also filed a written statement denying the creation of a Trust by late Sowcar S. Channaiah. Further, it is stated that the properties were not vested in the persons appointed as trustees at any point of time. It is stated that as far back as July, 1957, late Sowcar S. Channaiah leased suit item No. 1 to the third defendant and proceedings were initiated for fixation of fair rent in respect of the suit property, he has been collecting the rent from the third defendant in his personnal capacity from the inception of the lease of the property till the same was purchased by the third defendant in the public auction. It is further stated that after due attachment and proclamation of the suit properties was made by the second defendant as required under the Rules, the sale proclamation was published in the Government of India gazette and also in the local daily newspapers, which have widest circulation. The sale was held on 11-1-1973 and also confirmed the same in favour of the third defendant on 16-2-1973.


( 6 ) INSOFAR as the fifth defendant is concerned, he has also pleaded in his written statement that he had purchased suit item 2 of the suit schedule property in the public auction held on 6-2-1973 by the second defendant and the possession of the property was not taken by him as the same was in enjoyment and possession of B. T. Nagesh Gowda as a tenant and in respect of other plaint averments, he has reiterated the stand taken by other defendants.


( 7 ) ON the basis of pleadings, the trial Court framed 7 issues for its consideration and determination of the rights of the parties. On behalf of the plaintiffs, nine witnesses were examined as PW1 to PW9 and got the documents marked Exs. P1 to P264 and on behalf of the defendants, eight witnesses were examined as DW1 to DW8 and got the documents marked Exs. D1 to D39.


( 8 ) THE trial Court on appreciation of facts and material evidence on record, the issue No. 1 is answered in the affirmative regarding creation of the Trust and endowment of suit properties in favour of the plaintiff-Trust by late Sr. Sowcar S. Channaiah who was owner of the properties. Insofar as issue Nos. 2 to 4, the same have been answered in the negative with regard to the contention urged by the defendants that late Sowcar S. Channaiah has exercised his right of ownership and possession in respect of the suit properties till the same were sold in public auction for recovery of arrears of income-tax amount due to the department; that the rights of the plaintiff-Trust in the suit properties have not become extinguished on account of the alleged adverse possession of late Sr. Sowcar S. Channaiah and that the plaintiff-Trust is not estopped from bringing the suit and claiming the reliefs as indicated above or from questioning the sales of the suit properties. Insofar as the issue No. 5 is concerned, it has held that the defendants 3 and 4 are not entitled to any equities. The issue No. 6 is answered in the affirmative holding that the suit is maintainable in law. The issue No. 7 is answered in favour of the plaintiff holding that the plaintiff-Trust is entitled for the relief sought for in the plaint by recording its findings with valid and cogent reasons in the impugned judgment passed by the trial Court. Aggrieved of the same, the defendants 3, 1 and 2 respectively filed Regular Appeals in R. A. Nos. 45 and 46/1990 before the First Additional District Judge, Mysore questioning the correctness of the findings and reasons recorded by the trial Court in its judgment.


( 9 ) THE First Appellate Court on the basis of the rival contentions urged by the learned counsel on behalf of the parties has formulated 7 points for its consideration to answer the same in exercise of its jurisdiction and power. Points 1 and 3 are answered in the affirmative with regard to that fact that plaintiffs have proved that late Sowcar S. Channaiah created a Trust and they have proved that the plaintiff-Trust is the owner of the suit properties and is entitled for declaration and possession of the suit properties. The remaining points Nos. 2, 4, 5 and 6 are answered in the negative. The point 7 is also answered in the negative for the reasons recorded at para 67 of the impugned judgment.


( 10 ) THE First Appellate Court after considering the rival contentions urged by the learned Counsel on behalf of the parties, has reappreciated the facts and evidence on record and has recorded its findings and reasons on point Nos. 1 and 2 after referring to the provisions of Hindu Religious and Charitable Endowments Books written by V. K. Varadachar (III Edition ). With reference to Ex. P-1, the original trust deed referred to at para 18 of the impugned judgment of the First Appellate Court, the finding of fact recorded by the trial Court is also referred to, as the findings were questioned by the defendants in the Regular Appeals before it. The evidence of PW1 to PW5 is re-appreciated and considered at para 20 of the judgment of the First Appellate Court holding that PW1 and PW2 are the attestors of the Trust deed Ex. P-1 wherein they have admitted in their evidence that they have attested Ex. P-1 and Ex. P-2, which was executed by late Sowcar S. Channaiah in their presence. In the document Ex. P-2, the signature and the thumb impression register of the Sub-Registrar would clearly evidence the fact that late Sowcar S. Channaiah had been to the said Office at Mysore, for getting the original of Ex. P-1 duly registered and in token of such execution and registration, late Sowcar S. Channiah had put his thumb mark and signature is found at Ex. P-2 register for having executed and registered the Trust deed in favour of the plaintiffs Trust. On the basis of the recitals of the Trust deed, a finding of fact is recorded by the First Appellate Court holding that there is divestation of the properties and therefore 5 trustees were appointed to achieve the objects of the trust. The First Appellate Court, on the basis of evidence of PW4 who is one of its trustee members appointed pursuant to execution and registration of Ex. P-1, who is legally wedded wife of Sri H. C. Dasappa who was nominated as President of the Board of Trustees and the mutation entries in respect of the suit schedule properties were entered in the name of the plaintiff-Trust in the Revenue Records is also considered on the basis of original Ex. P-1 and other documents Ex. P-3, P-5 and P-7 wherein it is shown that the Board of Trustees meeting was held often and it has resolved to administer the endowments of the plaintiff-Trust out of the income derived from the said properties by the Trust and it has rightly concurred with the findings recorded by the trial Court on the relevant issue Nos. 1 and 3 after proper appreciation of legal evidence on record in answer to the rival legal contentions urged by the learned Counsel for the parties. The First Appellate Court has recorded its findings with its reasons on the disputed questions of fact and answered the points 1 and 3 accordingly in favour of the plaintiff-Trust. Points 4 and 5 are also answered in the negative. The First Appellate Court has particularly considered the evidence of DW1 and DW2 and the documentary evidence at Ex. D-1, the attachment order on record and it has recorded its findings with valid and cogent reasons. Subsequent to the attachment of the suit schedule property by the Income-tax Department, notice in Form No. ITCB 17 was issued to late Sowcar S. Channaiah calling upon him to produce details of encumbrances to the attached property. Further, the First Appellate Court has recorded its findings and reasons holding that the defendants have failed to prove that the plaintiffs are estoppel from claiming any right and title over the suit properties.


( 11 ) INSOFAR as the maintainability of the original suit filed by the plaintiffs, the provisions of Sections 292 and 293 and Rule 86 of Schedule 2 of the Act, 1961 and Rules are extensively referred to by the First Appellate Court and also the judgment of the Supreme Court reported in AIR 1998 SC 1276 Commissioner of Income-tax, Bhubaneshwar v. Parmeshwari Devi Sultania is considered and also referred to Section 132 (5) and Rule 11 (5) of Schedule II of Income-tax Act. In this regard, it is also referred to the judgment of the Supreme Court reported in AIR 1999 SC 427, Tax Recovery Officer v. Gangadhar Vishwanath Ranade, the other judgments of this Court reported in ILR (1987) Karnataka 1989 AP. M. C. v. M/s. Siddeshwara Industries and (1985) 2 Kant LJ 206 Shivalingaiah v. Anananda Social and Educational Trust, judgment of Delhi High Court reported in AIR 1984 Delhi 145 Duli Chand v. M/s. Mahabir Prashad Trilok Charitable Trust and the judgment of Gujarat High Court and Allahabad High Court with regard to non impleadment of all the trustee members as either the plaintiffs or defendants as required under Order 1 Rule 10 and Order 1 Rule 9 and it has recorded its findings and has answered the said point against the defendants by assigning valid reasons at paras 47 to 53 of the impugned judgment. Insofar as the point No. 6 as to whether third defendant was bona fide purchaser or not, it has answered the same in the negative against the defendants after considering the judgment of the Supreme Court reported in AIR 1982 SC 989 Sardar Govindarao Mahadik v. Devi Saha. The First Appellate Court while answering the point No. 6 has considered the proclamation notice published by the defendants 1 and 2, the evidence of DW 1 to DW3 and it has held on proper appreciation of legal evidence on record holding that in the absence of non-production of encumbrances certificate for the period of 12 years in respect of the suit properties and considering the evidence of DW-6 at paras 7, 19, 21 and 30 it has held that the defendant No. 3 was not the bona fide purchaser. Insofar as point No. 3 is concerned, finding is recorded against the defendants holding that the notice under Section 80 was duly served upon the defendants 1 and 2 as they have admitted in their written statement at paras 9 and 10 with regard o the averments of service of notices upon them as stated in the plaint. PW-5 Sri Chikkaboraiah in para 8 of his evidence has clearly stated that in pursuance of the resolution of the Board of Trustees of the plaintiff to take action in the matter, he had got issued the notice through Advocate as per Ex. P. 253 to all the defendants and that Ex. P. 254 and Ex. 259 are the acknowledgements of the defendants for having received the said notice by them. Further, it has recorded a finding of fact holding that PW5's evidence remained un-controverted and held that notice at Ex. P-253 is in conformity with the requirements of Section 80 CPC. Therefore, it has held that a valid notice is issued under the above said provisions to the defendants 1 and 2. Accordingly, the said point is also answered in the affirmative in favour of the plaintiffs by recording its reasons at paras 63 to 66 of the impugned judgment. The appeals were dismissed by the First Appellate Court holding that the findings recorded by the trial Court on the contentious issues is based on proper appreciation of facts and evidence on record and therefore it had concurred with the same by assigning its reasons on the contentious point referred to supra.


( 12 ) IN the RSA in 1029/2001 filed by third defendant though number of substantial questions are framed for consideration of this Court and to answer the same in its favour to set aside the impugned Judgments and Decrees passed by the Courts below, the substantial questions of law No. 1, 8 and 11 were pressed into service at the time of advancing the arguments by the senior learned counsel for admission which read thus :1. " (1 ). Whether the suit is barred by the provision of Section 293 of the Income-tax Act, 1961 in as much as questions pertaining to the validity of the sale held by the income-tax authorities are raised. 2. (8 ). Whether the principle of estoppel by conduct operates to prevent a person from assailing/impeaching the title of a purchaser of a property in public auction on the basis of absence of conveyance of a valid title when the said person had not chosen to object to or assert his rights at the time of sale of the same by public auction despite being aware of and notified of the sale. 3. (11 ). Whether on finding that the appellant was a lessee of item No. 1 of the suit schedule and that the purchase of it in auction by the lessee is invalid and not binding on the trust, it is impermissible in as the appellant would continue to retain the status of a lessee and the said tenancy has not stood determined by the trust in accordance with law. "


( 13 ) IN the connected appeal filed by defendants 1 and 2 four substantial question of law Nos. 10, 11, 12 and 14 are framed in their memorandums of appeal in support of their case.


( 14 ) REGARDING Substantial Question of Law No. 1 (1) :- insofar as the first substantial question of law is concerned, the reliance placed upon the judgment of Supreme Court reported in AIR 1999 SC 427, AIR 1998 SC 1276 and the provisions of Sections 292 and 293 of the Income-tax Act read with Rule 11 (5) of the Rules framed under the second schedule to the Act, the original suit instituted by the plaintiffs against the defendants is not maintainable, this issue is also answered in favour of the plaintiffs by the Courts below. The contention urged by the defendants counsel that the finding of fact recorded by the Courts below on the contentious issues and the points framed by them would suffer from error in law is also considered by this Court to answer the abovesaid substantial question of law framed by the defendants. This Court has examined the impugned judgments with reference to the legal contentions urged by the learned counsel on behalf of the parties and also the judgments upon which reliance is placed by both the learned counsel in support of their respective submission to find out as to whether the substantial question No. 1 and No. 13 framed by the defendants 3, 1 and 2 respectively in these appeals would arise or not with reference to the findings recorded by the Courts below on the relevant contentious issue and the point regarding the maintainability of the original suit instituted by the plaintiffs against the defendants in respect of the suit schedule property.


( 15 ) IN this regard, this Court after careful reading of the findings and reasons recorded in the impugned judgment and with reference to the judgments referred to supra upon which much reliance is placed by the learned counsel on behalf of the plaintiffs it has to be held that the Trial Court has correctly answered the Issue No. 6 regarding the maintainability of suit by recording its findings with valid and cogent reasons at paragraphs 46 and 47 of its judgment on proper appreciation of facts and legal evidence on record and applying the ratio laid down by the Apex Court Judgments referred to supra it has rightly held that suit is maintainable. The first appellate Court has also concurred with the above finding after re-appreciation of facts evidence on record and applying the ratio laid down by the Apex Court in the cases referred to supra and it has exercised its first appellate power and jurisdiction in answer to the contentious point No. 5 by recording its reasons at paragraph 47 to 50 of its judgment. The said findings recorded by the first appellate Court are based on the law laid down by the judgments of the Supreme Court referred to supra and unreported judgment of this Court in writ Appeal No. 5295/1995 decided on 18-2-1993. Therefore, this Court has to hold that the findings and reasons recorded by the Courts below on the maintainability of the original suit is perfectly legal and valid which do not warrant interference with by this Court as the substantial question of law does not arise in these appeals in this regard and the same is required to be answered against the defendants.


( 16 ) AFTER a careful examination of the findings recorded by the Courts below on the abovesaid contentious issue and the point framed by them with reference to the legal submission made in these Appeals by the learned counsel on behalf of the parties, I am satisfied that the findings and reasons recorded by the Courts below on the contentious issues that arose in the case are on proper appreciation of facts, legal evidence on record and the provisions of the Act and the law laid down on the legal questions raised upon which the reliance is placed by defendants counsel. In my view the findings and reasons are legal and valid and therefore I do not find any good reason to interfere with the said findings as the same do not suffer from either error in law or erroneous in law. Therefore, the substantial question No. 1 (1) is required to be answered against the defendants.


( 17 ) SRI C. B. Srinivasan, the learned Sr. Counsel appearing for the defendant made his submissions on the substantial questions No. 1, 8 and 11 framed by defendant No. 3 in its memorandum of appeal are extracted above in this judgment. He has vehemently contended that the principle of estoppel is applicable to the conduct of the Board of Trustee members of the plaintiffs Trust in not preventing the person from assailing the title of the purchaser of the suit schedule property in public auction in the absence of conveyance of valid title as the said Trustees have not chosen to object or asserted the right of Trust at the time of executing lease deed and leasing the property in favour of the defendant No. 3 and fixation of fair rent to the suit schedule property and also sale of the same in the public auction by the defendants 1 and 2, though they were aware of the public notification of the sale of the suit property for recovery of the Income Tax amount due from Late Sawker Channaiah to the Income-tax Department. In support of his submission he has placed reliance upon the Judgment of the Andhra Pradesh High Court reported in AIR 1934 AP 460 (sic), AIR 1937 Lahore 277, Madras High Court reported in AIR 1931 Madras 357 and AIR 1931 Madras 354 in support of the proposition "if a person having a right, and seeing another person about to commit, or in the course of committing an act infringing upon that right, stands by in such a manner as really to induce the person committing the act, and who might otherwise have abstained from it, to believe that he assents to its being committed, he cannot afterwards be heard to complain of that act". Further he has also placed reliance upon the commentary regarding the acquiescence in Vol. 16 'equity' at para 1473 the relevant portion of the abovesaid paragraph is extracted as hereunder in support of the submission of the learned counsel for defendant No. 3. "the term 'acquiescence' is used where a person refrains from seeking redress when there is brought to his notice a violation of his rights of which he did not know at the time, and in that sense acquiescence is an element in laches. Subject to this, a person whose rights have been infringed without any knowledge or assent on his part has vested in him a right of action which, as a general rule, cannot be divested without accord and satisfaction or release under seal. The term is, however, properly used where a person having a right, and seeing another person about to commit or in the course of committing an act infringing upon that right, stands by ion such a manner as really to induce the person committing the act, and who might otherwise have abstained from it, to believe that he assents to its being committed; a person so standing by cannot afterwards be heard to complain of the act. In that sense the doctrine of acquiescence may be defined as quiescence under such circumstances that assent may be reasonably inferred from it, and is no more than an instance of the law of estoppel by words or conduct, the principle of estoppel by representation applying both at law and in equity, although its application to acquiescence is equitable. The estoppel rests upon the circumstance that the person standing by in effect makes a misrepresentation as to a fact, namely, his own title; a mere statement that he intends to do something, for example to abandon his right, is not enough. Furthermore, equitable estoppel is not applied in favour of a volunteer. The doctrine of acquiescence operating as an estoppel was found on fraud, and for this reason is no less applicable when the person standing by is a minor. As the estoppel is raised immediately by the conduct giving rise to it lapse of time is of no importance, and for this reason the effect of acquiescence is expressly preserved by statute. "


( 18 ) THE learned counsel has also placed reliance on the Judgment reported in 1973 (3) All England Law Reporter 318 on the question of estoppel. The learned counsel Mr. Venugopala Gowda appearing on behalf of the plaintiffs submit that the question regarding either estoppel or acquiescence was not pleaded in the written statement of defendant No. 3 and 4 there was no issue framed on this question before the Courts below. For the first time, the said question is raised in these second appeals and therefore the learned counsel rebutting the said submissions of the learned counsel for the defendant No. 3 made on this substantial question of law submits that, the said question does not arise in the second appeal as the same was not raised and further that question would not arise in this case having regard to the creation of trust by late Sowkar Channaiah by divesting his title and interest upon the property by executing the trust deed as per Ex. P. 1 Therefore the learned counsel submits that, the question of acquiescence does not arise in this case as contended by the learned counsel for defendant No. 3. In support of this submission he has placed reliance upon the Division Bench Judgment of this Court reported in 1968 (1) Mys LJ 583 wherein the provision of Section 3 of the Trusts Act is interpreted by this Court and held that, where the trust deed was executed and registered and thereby the interest upon the property was divested by the donor and the legal estate would be vested in the Trust, the person who has divested his title and interest by creating Trust upon such property, he cannot invoke his right to property and manage the same on behalf of the Trust and he cannot re-divest the interest created upon the Trust in respect of the suit schedule property. Further, in support of the said submission he has placed reliance upon creation of the Trust by executing the Trust Deed stating that, it is not essential that there must be an absolute divestment of rights by the author or that there must be vesting of absolute rights of the property in the Trust. The vesting of the property can be for a limited purpose and the trust deed can be limited to a particular period. He has also placed reliance upon the Test Book written by Sri Suryanarayana Iyer "the Indian Trust Act" 5th Edition 2000 Butterworth's Publication regarding (f) Estoppel by Acceptance which reads thus :" (F ). ESTOPPEL BY ACCEPTANCE : A trustee who has once accepted office is estopped from denying the existence of the trust. Where for instance a person accepts a trust in relation to a specific sum of money and agrees to invest it in his firm and also undertakes the duties of a trustee in respect thereto, it would not be open to him to allege that the transaction in relation to the amount is not a trust, and that the character, in which he holds the property, is different from that of a trustee. In the event of his insolvency the beneficiaries as well as the co-trustees would be entitled to trace the fund in the assets held by the Official Assignee and claim priority. "further, he has placed reliance upon the Judgment of Supreme Court reported in AIR 1957 SC 887 wherein it has laid down the law at Paragraphs 18, 21 and 23 after interpreting Section 3 of the Trust Act and the definition of a Trust the relevant portion of which reads thus :"18. The case of the owner does not require any elaboration. He holds that land on his own behalf and also for his own benefit. He certainly cannot come within the scope of S. 11 (1) of the Act. The position of a trustee is also similar to that of the owner. A trust is thus defined in English Law : "a trust, in the modern and confined sense of the words is a confidence reposed in a person with respect to property of which he has possession or over which he can exercise a power to the intent that he may hold the property or exercise the power for the benefit of some other person or object. " (Vide Halsbury's Laws of England, Hailsham Edition. Vol. 33, p. 87 Article 140 ). "the property affected by the confidence is called the trust property or trust estate. It is usually in the legal ownership or under the legal control of the trustee. The cestui que trust is said to have a beneficial or equitable interest in it. " (Ibid page 89, para 142 ). "21. The passage quoted above makes it abundantly clear that the legal estate is vested in the trustees and they hold it for the benefit of the beneficiaries". "23. These definitions emphasize that the trustee is the owner of the trust property and the beneficiary only has a right against the trustee as owner of the trust property. The trustee is thus the legal owner of the trust property and the property vests in him as such. He no doubt holds the trust property for the benefit of the beneficiaries but he does not hold it on their behalf. The expressions "for the benefit of" and "on behalf of" are not synonymous with each other. They convey different meanings. "


( 19 ) THE learned counsel for the plaintiffs has also placed reliance upon the judgment reported in AIR 1938 PC 73 in the case of Sunder Singh v. Sunder Singh with reference to Section 106 of the Evidence Act in support of the proposition that evidence of divesture may be contemporaneous as in such cases subsequent act and the conduct of the donor is totally irrelevant and he cannot re-divest the property donated in favour of the Trust. In support of same proposition he has placed reliance upon the Judgment of Calcutta High Court reported in AIR 1938 Cal 818 wherein the provision of Section 78 (c) of the Trust Act is interpreted and explained by the said Court and held as hereunder at page 822 in the last unnumbered paragraph which relevant portion of the same is extracted as hereunder :. . . . . . . . Under the Trusts Act, S. 78 (c), a trust created otherwise than by a will can be revoked at the pleasure of the author of the trust where the trust is for the payment of the debts of the author of the trust and has not been communicated to the creditors. By S. 6 (a), Provincial Insolvency Act, a debtor commits an act of insolvency if he makes transfer of all or substantially of his property to a third person for the benefit of his creditors generally. A creditor who is not a party to the trust deed and to whom the trust has not yet been communicated can therefore avail himself of his act of insolvency and get the payment. But, under the law in India, there can be only one owner of the property when the property is vested in a trustee and trustee is the owner : 58. A. 279 at page 297. The interest of a beneficiary of a trust as defined in S. 3, Trusts Act, is his right against the trustee as owner of trust property. Whether such beneficial interest can be sold by the creditor is a matter with which I am not concerned in the present case, as in the present case I am concerned only with the question of the title to the trust property and its possession. The ownership of the property having been vested in the plaintiff by the declaration contained in Ex. 12, the sale at which defendants 1 to 4 purchased this property cannot in any way affect his title or possession. "


( 20 ) FURTHER he has also placed reliance upon the judgment of the Madras High Court reported in AIR 1940 Madras 920 in support of the abovesaid proposition. This Court has examined the abovesaid substantial question of law with deference to the rival legal contentions urged by the learned counsel for the parties keeping in view the law laid down on this question by the Apex Court and various High Courts and answered the same as hereunder : Though the legal submission was not submitted before the Court's below on this question of law they have recorded the finding on the contentious issues regarding the Trust, the Management of Trust property has been looked after by one of the Trustee members Late Sowkar Channaiah on behalf of the Trust either by leasing the property in favour of third defendant or fair rent got fixed from Rent Controller under the repealed provisions of the Karnataka Rent Control Act 1961. The said action of the Trustee member cannot be construed that he re-divested the Trust property merely because he has managed the property of the Trust and acted on its behalf to achieve the object of the Trust. Therefore, it cannot be contended that suit schedule property was divested and he has acted as owner of the same for the reason that he has divested the interest and title of the suit schedule property and other properties in favour of the Trust in his independent capacity as owner of the same. It is urged by the learned counsel for the defendants that his conduct was not questioned by the Board of Trustees of the plaintiffs at any point of time therefore the Trust has acquiesced its right upon the suit schedule property and it is estopped from contending that he has given an impression to the third defendant that he is one of the owners of the property though the Trust was created by him in favour of the Trust.


( 21 ) HAVING regard to the voluminous evidence adduced on record in this case by both the parties particularly having regard to the undisputed fact of execution and registration of Trust Deed in favour of the plaintiff Trust in respect of the suit schedule property and the finding of fact is recorded by the Courts below on proper appreciation of evidence on record and held that the creation of Trust by late Sowkar Channaiah in favour of the plaintiff-Trust in respect of the suit schedule property, there are essential ingredient relevant material aspects recited in the Trust Deed vide document at Ex. P1. to constitute a valid trust and there is compliance of the provision of Section 6 of the Trust Act is the finding recorded by the Courts below. The donor Late Sowkar Channaiah had the intention of creating trust for whose benefit the Trust was created and the trust property and other properties were mentioned in the document. Therefore, the Courts below have rightly held on proper appreciation of legal evidence on record holding there was a valid trust created in favour of the plaintiff-Trust in respect of the properties mentioned in the Trust deed. The Trustees were appointed by the donor. As could be seen from the pleadings referred to in the impugned judgment of the Trial Court, the Trustee members who were appointed in the beginning died and in their place other persons were appointed as Trustee members and further the finding of fact is recorded by the Courts below holding that income derived from the said properties has been utilized for the benefit of beneficiaries of the Trust to whom the trust was created by the donor. Therefore, the Courts below have rightly held that the question of re-divesting the trust properties enjoyment of the same by its donor late Sowkar Channaiah merely because he has executed the lease deed in favour of third defendant and got the fair rent fixed to the property from the Rent Controller cannot be attributed to the Trustee members of the trust and that it is an individual decision of the donor claiming the said property belongs to him. Since he was one of the members of the Trust, he could not have claimed the divesture of the properties from the Trust in his favour from the Trust for his individual benefit. The Courts below have rightly held that, it is not legally permissible for him to re-divest the properties of the Trust as the Trust was validly created in favour of the Trust as he has acted and managed on behalf of the Trust. The reliance placed upon the judgment of Calcutta High Court reported in AIR 1938 Cal 818 by the learned counsel for the plaintiffs that the relevant portion of the judgment which is extracted in the preceding paragraphs of this judgment would clearly go to show that he has not acted against the interest of the Trust therefore, the question of acquiescence and estoppel in respect of the suit schedule property as contended by the learned counsel for the defendants do not arise in this case.


( 22 ) FOR the reasons stated supra in my considered view, the decisions rendered in various judgments of various High Courts and the commentary which are referred to in the earlier paragraph of this Judgment where the submissions are noted upon which the reliance placed by the learned Senior counsel for defendant No. 3 are not applicable to the fact situation of the present case, whereas the reliance placed by the learned counsel for the plaintiffs upon the judgments of the Apex Court, this Court, Privy Council and various High Courts referred to in the earlier paragraphs of this judgment are applicable to the fact situation therefore, this Court has to answer the said substantial question of law against the defendants as the same would not arise for consideration and to answer the same by this Court in exercise of its second Appellate Power and jurisdiction. Accordingly, the submission made by the learned counsel for third defendant in this regard is rejected.


( 23 ) THE last substantial question No. 3 (11) raised by the defendant No. 3 is as to whether finding recorded on the relevant issue that it was a lessee of item No. 1 of the suit schedule property and that the purchase of it in the public auction by the lessee is invalid, and it is not binding on the plaintiffs trust, it is impermissible in law to grant a decree for possession of the suit schedule property to the plaintiff as the defendant No. 3 would continue in possession of the property by retaining the status of a lessee and the said tenancy of the suit schedule property was not determined by the trust in accordance with law, the learned counsel for defendant No. 3 in support of the above submission has placed reliance on the judgment of this Court reported in ILR (1990) Kant 2639 : (AIR 1991 Karnataka 290) in the case of Govindamma v. Murugesh Mudaliar. After careful examination of the law laid down in the said case by the Division Bench of this Court has clearly laid down the law at paragraph 14 on the point in question which portion is extracted as hereunder :"14. In the instant case, the defendant has denied the title of the plaintiff and has claimed title in himself on the ground that there is an Agreement of Sale executed by Sri A. Doreswamy - the vendor of the plaintiff - anterior to the Deed of Sale executed by him in favour of the plaintiff; therefore, the plaintiff cannot claim to be the owner of the suit premises. The Courts below have concurrently held that the plaintiff has acquired title to the suit premises and the defendant was the tenant of the premises at the time when the plaintiff purchased the premises. However, the decree for possession has been passed because the defendant cannot continue to have the benefit of the tenancy as he has lost his status as tenant by denying title of the landlord and setting up title in himself having regard to the provisions contained in Section 111 (g) of the Transfer of Property Act. The Courts below have not taken into consideration the scope and below have not taken into consideration the scope and effect of the definition of the Word 'tenant' as defined in Section 3 (r) of the Act. The word 'tenant' is under Section 3 (r) of the Act as follows : "'tenant' means any person by whom or on whose account rent is payable for a premises and includes the surviving spouse or any son or daughter or father or mother of a deceased tenant who had been living with the tenant in the premises as a member of the tenant's family up to the death of the tenant and a person continuing in possession after the termination of the tenancy in his favour, but does not include a person placed in occupation of a premises by its tenant or fees in a public market, cart stand or slaughter house or of rents for shops has been farmed out or leased by a local authority. "from the aforesaid definition, it is abundantly clear that it also includes a person who continues to be in occupation of the premises even after

Please Login To View The Full Judgment!

the termination of his tenancy. The definition, however, does not include a person placed in occupation of a premises by its tenant or a person to whom the collection of rents or fees in a public market, cart stand or slaughter house or of rents for shops has been farmed out or leased by a local authority. At this stage, we may point out that by a mere denial of title of the landlord by the tenant of the premises and setting up title in himself even in a case where the tenancy is governed by the Transfer of Property Act only, the tenancy does not automatically stand terminated under Section 111 (g) of the Transfer of Property Act. The landlord must choose this conduct of the tenant and forfeit his tenancy right by giving a notice in writing to the lessee of his intention to determine the lease. We will deal with this aspect at a later stage of this judgment. However, at this stage even if it is assumed that on a mere denial of the title of the landlord by the tenant and setting up the title to the premises in himself, a person in possession of a premises as a tenant ceases to be a 'tenant' under the provisions of the Transfer of Property Act; nevertheless in a case where the premises is governed by Parts IV and V of the Act, the relationship of landlord and tenant continues until such person is actually evicted from the premises pursuant to the order of eviction passed as per the provisions contained in Section 21 of the Act. This position is no more res integra. " ( 24 ) WITH reference to the above legal contentions urged on behalf of the defendant No. 3 and law laid down by this Court in the above case is examined and answered the question of law as hereunder by assigning the following reasons : the defendant No. 3 had denied the title of the plaintiff Trust and had claimed title by itself contending that there was a public auction of sale conducted by the defendants No. 1 and 2 and it has purchased the said property and enjoyed the same as owner of the property, in view of the law laid down in Govindamma's case (AIR 1991 Karnataka 290) referred to supra upon which much reliance is placed in support of his submission since the defendant No. 3 has asserted his title and right to the suit schedule property before the Courts below. The Courts below' has framed he issues and points on the basis of the pleadings and rival legal contentions urged on behalf of the parties and on proper appreciation of evidence on record and law on the question it has answered the same in favour of the Trust by recording its reasons and the trial Court has rightly declared the sale as null and void. Therefore the defendant No. 3 will not be restored to his original position as tenant, in view of the law laid down in the abovesaid case and therefore the reliance placed upon the said judgment by the learned counsel for defendant No. 3 does not support his case. In that view of the matter, the substantial question No. 3 (11) is answered against the defendant No. 3 as it does not arise at all for consideration to answer the same in its favour. ( 25 ) FOR the reasons stated supra, there is no merit in these appeals. Accordingly, the appeals are dismissed with costs of Rs. 5000/- payable by both defendants 3, 1 and 2 respectively to the plaintiffs. ( 26 ) AFTER dictating the judgment, the learned counsel for third defendant requested this Court to grant a reasonable time for execution of Judgment and Decree by staying the same for a period of three months contending that it is running educational institution and, if Judgment and Decree is executed, the educational institution will be put to great hardship. ( 27 ) THE prayer made by third defendant is seriously objected to by the plaintiff's counsel contending that suit is of the year 1974, litigation is going on since 28 years therefore, it is not a fit case for grant of stay. ( 28 ) AFTER hearing the learned counsel for the parties, having regard to the fact that defendant No. 3 is running an educational institution, the operation of Judgment and Decree is stayed for a period of 60 days from today subject to the condition that third defendant shall file an undertaking without prejudice to its right to challenge the impugned Judgment and Decree before the Supreme Court, it would vacate and deliver the vacant possession of the suit schedule property to the plaintiff -Trust immediately after expiry of 60 days or the stay orders that may be obtained from the Hon'ble Apex Court. The said undertaking shall be filed within one week from today. The original Trust Deed produced by the plaintiff is ordered to be returned as the appeals are disposed of. Order accordingly.
O R