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Mahomed Jaffer Haji Nazaralli Devji Vs. Mahomed Janmahomed - Court Judgment

LegalCrystal Citation
SubjectTrusts and Societies
CourtMumbai
Decided On
Case NumberO.C.J. Suit No. 817 of 1943 (O.S.)
Judge
Reported inAIR1944Bom222; (1944)46BOMLR340
AppellantMahomed Jaffer Haji Nazaralli Devji
RespondentMahomed Janmahomed
Excerpt:
trustee-appointment-new trustee-appointment by all trustees, whether necessary.;where a deed of trust provides for appointment of a new trustee by the continuing trustees, such appointment must be made by all the trustees acting together. it is not competent to some only of the trustees to appoint a new trustee at a meeting at which one or more of their number are absent.;luke v. south kensington hotel company (1879) 11 ch.d. 121, followed. - - 3. on the question whether the appointment made by a majority is good or not, my attention has been drawn first to the judgment of tyabji, j. in that case it was also argued that a notice of the meeting having been given to the trustees, if they remained absent the appointment was good and could not be stated to be an appointment made by the..........is one of the trustees of a public charitable trust known as the jamalbhai hirji charitable trust. defendants nos. 1, 2 and 3 are the remaining trustees. in the indenture of trust it was inter alia provided as follows :.and it is hereby agreed and declared that if and so often as any of the trustees hereby appointed or any future trustees of these presents shall die or renounce the shia asna ashari faith it shall be lawful for the continuing trustees or trustee for the time being of these presents...to appoint some fit person or persons following the khoja shia asna ashari religion to be a trustee or trustees in the place of the trustee or trustees so dying or renouncing the shia asna ashari faith... with liberty upon any such appointment to increase or diminish the original.....
Judgment:

Kania J.

1. This originating summons is taken out to obtain the Court's opinion on the following two questions : (1) whether under the provisions of the indenture of trust, dated August 1, 1908, and in the circumstances set out in the plaint the appointment of a new trustee can be validly made by some of the trustees of the said trust without the consent and concurrence of all the trustees;and (2) whether defendant No. 4 is validly appointed as a trustee of the said trust and whether he can act as such.

2. The plaintiff is one of the trustees of a public charitable trust known as the Jamalbhai Hirji Charitable Trust. Defendants Nos. 1, 2 and 3 are the remaining trustees. In the indenture of trust it was inter alia provided as follows :.And it is hereby agreed and declared that if and so often as any of the trustees hereby appointed or any future trustees of these presents shall die or renounce the Shia Asna Ashari faith it shall be lawful for the continuing trustees or trustee for the time being of these presents...to appoint some fit person or persons following the Khoja Shia Asna Ashari religion to be a trustee or trustees in the place of the trustee or trustees so dying or renouncing the Shia Asna Ashari faith... with liberty upon any such appointment to increase or diminish the original number of trustees which shall never be less than five or more than seven....

The plaintiff and defendants Nos. 1, 2 and 3 were appointed trustees in 1927 by one Nazaralli Devji who was then the sole surviving trustee. Nazaralli died on October 18, 1930. A meeting of the trustees was held on February 14, 1940. Notice of that meeting was given to the plaintiff and defendants Nos. 1, 2 and 3, but defendants 1, 2 and 3 only attended. The third defendant was elected chairman and at that meeting the three defendants purported to appoint the fourth defendant as a trustee of the said trust and further resolved that the necessary document in that behalf be prepared. It is common ground that no deed of appointment has thereafter been made. It is admitted that the plaintiff was not present at the meeting and was not a party to the appointment or the1 said resolution. Although the plaintiff has taken no steps thereafter, there is nothing to show that he consented or agreed to the said appointment. He challenges the appointment on the ground that the power to appoint new trustees was vested in all, and it was not open to a majority of the trustees, even if they alone were present at the meeting, to appoint another trustee. The question for consideration therefore is whether the appointment so made is valid and binding. In their affidavit the defendants allege that after the meeting of February 14, 1940, defendant No. 4 has attended meetings and there is acquiescence on the part of the plaintiff.

3. On the question whether the appointment made by a majority is good or not, my attention has been drawn first to the judgment of Tyabji, J. in Champaklal Labhai Mehta v. Hiralal Mansukhlal Munshi (1934) O.C.J. Suit No. 1122 of 1934, decided by Tyabji J., on August 28, 1937 (Unrep.). In that matter a scheme was framed and the trustees were acting thereunder. Clause 8(a) and (c) of the said scheme ran as under :

8. (a) The number of trustees shall never be less than three and the trustees shall have power to add to their numbers provided that the number shall at no time exceed seven.

(c) If any trustee or trustees either original or substituted or appointed under this scheme shall die or be absent from British India for a period of one year or be adjudicated an insolvent or be convicted of a criminal offence and punished with imprisonment of not less than six months or desiring to be discharged from or refuse or become unfit or incapable to act in the duties and powers in him re- posed under this scheme the surviving trustees or trustee for the time being shall by writing appoint any other person or persons to be a trustee or trustees in place of the trustee or trustees so dying or being absent from British India or becoming insolvent or being convicted or punished as aforesaid or desiring to be discharged or refusing, to act or becoming unfit or incapable to act as aforesaid. If any such contingency arise and no appointment of trustee or trustees as the case may be made within a period of three months from the happening of such contingency it shall be lawful for the Advocate General of Bombay at any time after the expiration of the said period by writing to appoint a fourth trustee or trustees as the circumstances may require.

By Clause 13(a) of the scheme it was provided that every resolution and other question submitted to the meeting shall be decided by a majority of votes of the members present at such meeting and voting on the question. Every member shall have one vote, but in the event of equality of votes, the chairman of such meeting shall have a second or casting vote, whether he has previously voted on the question or not.

4. It was stated in the plaint that it was desirable to appoint at least two more trustees to act along with the plaintiff and the two defendants. The plaint then stated as follows :

In view of doubts that are entertained as to the validity of an appointment of new trustees made by the majority of the votes of the trustees or by such number of trustees as may attend the meeting convened for that purpose, the plaintiffs desire that the relevant clauses of the scheme should be construed by this honourable Court in order that the trustees may be guided thereby in appointing trustees in future...

5. The matter appears to have been argued at some length before Tyabji J. Relying on Clause 8(a) and (c) of the scheme and the following statements in Lewin on Trusts (13th ed.,) at pages 382 and 385, the learned Judge gave his judgment. The passages are as follows :

So a power given to ' trustees' will, as annexed to the estate and office, be exercisable by a single survivor; but it cannot be exercised by one trustee in the lifetime of the other who has not effectually disclaimed.' (p. 382) : ' Powers given to trustees must be exercised by them jointly, but an act by one trustee with the sanction and approval of a co-trustee, will be deemed an act of both.' (p. 385).

The learned Judge held that the power of appointment was capable of being exercised only by all the trustees concurrently, and answered the questions accordingly.

6. In Haji Noormahomed Abdul Satar Patel v. Haji Fatal Ilias Patel (1936) O.C.J. Suit No. 541 of 1936 (O.S.), decided by Blackwell J., on April 6, 1936 (Unrep.) the question again came before Blackwell J., where the clause for the appointment of new trustees was worded as in the last scheme. That scheme also contained a provision for questions being decided by the majority as in the last scheme. In the plaint it was stated that the plaintiff and the two defendants, who were all the trustees, attended the meeting and the appointment of the new trustee was made by the majority of the two defendants as against the vote of the plaintiff. The plaintiff contended that the appointment was invalid in law. It was contended in the plaint that the concurrence of all the continuing trustees was necessary before any trustee or trustees could be appointed in place of the trustee who had resigned. There is no judgment, but the learned Judge held that the majority had not the power to appoint a new trustee.

7. In Ishwardas Vanilal v. Mancharam S. Khandwalla (1937) O.C.J. Suit No. 1330 of 1937, decided by Engineer J., on September 28, 1937 (Unrep.) the point came before Engineer J. The trust deed contained similar provisions for the appointment of a new trustee. In that case it was also argued that a notice of the meeting having been given to the trustees, if they remained absent the appointment was good and could not be stated to be an appointment made by the majority of the trustees. The learned Judge held that the appointment of defendant No. 3 as a trustee by defendants Nos. 1 and 2 alone was not valid. He also held that the fact that notice of the meeting was given to the plaintiff and defendant No. 4, and the fact that they remained absent did not alter the position. That argument was rejected and it was held that all the trustees must join in the execution of the trust, and the appointment of a new trustee cannot be valid and proper unless all the trustees then entitled to act joined in such appointment.

8. In Haji Ebrahim Busheri v. Pravin Mahomed Kazim Nemazie (1940) O.C.J. Suit No. 491 of 1940 (O.S.), decided by Blackwell J., on April 1, 1940 (Unrep.) the point once again came to be considered by Blackwell J. In that case at a meeting of the trustees the objecting trustee was present and dissented from the appointment. The Court held that on the construction of the usual clause giving the trustees power to appoint a new trustee, the majority had no power to appoint a new trustee. It must be the act of all the trustees.

9. All these decisions are unreported. In Lewin on Trusts (14th ed.) I find that the passage quoted above at p. 385 from the previous, edition is omitted. At p. 196 in discussing the position of trustees it is observed as follows :

In the case of co-trustees the office is a joint one. Where the administration of the trust is vested in co-trustees, they all form as it were but one collective trustee, and therefore must execute the duties of the office in their joint capacity.... If any one refuse or be incapable to join, it is not competent for the others to proceed without him, but the administration of the trust must in that case devolve upon the Court....

10. Luke v. South Kensington Hotel Company (1879) 11 Ch.D. 121 is relied upon to support the last statement. In that case one of several mortgagees had filed a suit to foreclose a mortgage and made as co-defendants the other mortgagees who were unwilling to act as plaintiffs. The facts as stated in the judgment of Jessel M.R. show that the mortgagor was unable to pay the principal and interest. A proposition was made that the trustee-mortgagees should accept 12sh. 6d. in the pound, and for that amount accept a new mortgage from a new company to be formed to take over the business of the old one. To that position two trustees agreed but the third did not. When the new company was formed the solicitors of that company were informed that the dissenting trustee did not desire to come into the arrangement. With that knowledge two of the trustees executed the deed of composition and the company also executed the new mortgage deed on different terms. The plaintiff brought the suit to foreclose the first mortgage and contended that the original mortgage remained in effect because he had never agreed to release it. It was held that the act of the co-trustees alone was not sufficient to alter the position of the mortgagees. This decision might be based on the fact of the estate being vested in all the trustees, and there being no extinguishment of title, it may be held that a mere agreement of the two trustees did not alter the position. In Lewin on Trusts (14th edn.) it was further observed (p. 196) :-

Where there are several trustees, and the trust is of a public character, the act of the majority is held be the act of the whole number; as where there were seven trustees and they met for the purpose of electing a schoolmaster, and at the meeting five of the trustees concurred in the appointment, but two dissented, the act of the majority was considered to bind the minority. But the act of the majority does not bind the minority, so far as the act is beyond the proper sphere of the duty of the trustees. Nor can a majority, in the absence of express statutory authority, pass the legal estate which is vested in all. And when a special power is given to trustees, it cannot be exercised by majority only, but' all must join.

For this last proposition In re The Congregational Church, Smethwick [1866] W.N. 196 is-relied upon. The report of that case shows that out of six trustees one had been ascertained to suffer from a softening of the brain and was unable to act. The petitioners, the other trustees, applied to the Court for leave to sell the old meeting house and chapel. It was pointed out that a meeting of the Church had been held when it was resolved that a petition should be presented and it was approved by the Attorney-General. That again was a case where a legal estate was vested in the trustees and the conveyance was to be executed by five out of the six trustees, Apart from these passages no other statement of law in Lewin on Trusts is pointed out as helpful to the present discussion. In Halsbury's Laws of England (2nd edn.), Vol. XXXIII, the question of appointment of new trustees is considered at p. 164. It is there stated as follows :

A new trustee is appointed either (1) under a power for that purpose conferred by the trust disposition; or (2) under the power for the purpose conferred by statute; or (3) by a court of equity....

11. Under the first ground Tempest v. Lord Camoys (1882) 21 Ch.D. 571 is relied upon. In that case the question before the Court was in respect of the discretion given to the trustees. Jessel M.R. in dealing with the question observed as follows (p. 578):

It is very important that the law of the Court on this subject should be understood. It is settled law that when a testator has given a pure discretion to trustees as to the exercise of a power, the Court does not enforce the exercise of the power against the wish of the trustees, but it does prevent them from exercising it improperly. The Court says that the power, if exercised at all, is to be properly exercised. This may be illustrated by the case of the persons having a power of appointing new trustees. Even after a decree in a suit for administering the trusts has been made they may still exercise the power, but the Court will see that they do not appoint improper persons.

The rest of the judgment is not material. In Article 279 of the same Volume it is stated :

An appointment of a new trustee under a power for that purpose contained in the trust disposition must be in accordance in all material respects with the terms of the power.

No other passage is relevant to the present discussion.

12. The first question is whether under the circumstances and in view of the four decisions of this Court there remains any scope for discussion. It has been strongly urged that I should not consider the question open for discussion any longer, and as a Court of coordinate jurisdiction these decisions are binding on me. There is considerable force in the contention that the power to appoint new trustees is the joint act of all the trustees, and if they do not agree, the matter becomes one where the Court's intercession must be called for. If all the trustees do not agree to perform that duty, which is a joint one, it cannot be performed by them and they must obtain an order of the Court. Having regard to the state of law and the practice followed in this Court for the last nine years, I think the first question must be answered in the negative. The answer to the second question will also be in the negative.

13. The attitude adopted by the defendants in this case, as disclosed by their affidavit, is not of trustees who want merely to get the Court's opinion on a doubtful point. In their affidavit they have brought in entirely irrelevant matters of opinion for discussion. They have charged the plaintiff with misappropriation in 1935 and in para. 8 charged him with obstruction in the administration of the trust. It is contended in the affidavit that the plaintiff has all along acquiesced in the appointment of the fourth defendant and his action in presenting this suit was only to harass the defendants. In the usual way the affidavit winds up by stating that the defendants submit to the orders of the Court; but that statement must be read along with the previous ones. In my opinion the plaintiff's suit was justified and the action of the defendants as disclosed by the affidavit is not that of trustees who bona fide want merely the opinion of the Court. I therefore direct that the plaintiff's costs of the suit taxed as between attorney and client be paid out of the estate, while the defendants must bear their own costs of this litigation. On the plaintiffs side only one counsel must be allowed.


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