Skip to content


Central Bank Executor and Trustee Co. Ltd. Vs. Hormusji Nusserwanji Madraswalla and ors. - Court Judgment

LegalCrystal Citation
SubjectTrusts and Societies
CourtMumbai High Court
Decided On
Case NumberSuit No. 468 of 1967
Judge
Reported inAIR1969Bom101; (1968)70BOMLR568; 1968MhLJ750
ActsTrusts Act, 1882 - Sections 78
AppellantCentral Bank Executor and Trustee Co. Ltd.
RespondentHormusji Nusserwanji Madraswalla and ors.
Appellant AdvocateM.P. Laud, Adv.
Respondent AdvocateF.S. Nariman and ;J.B. Dubash, Advs.
Excerpt:
it was held that unless the power of the revocation of a trust is reserved to the author in the deed of revocation it self, a new trust declared in the deed of revocation cannot be declared by the virtue of the power of the revocation contained in the original deed of settlement - - laud contended that clause 18, as framed, therefore, showed clearly that a deed of revocation effected pursuant thereto could itself be revoked or varied from time to time. nariman further submitted that, both under section 78 of the indian trusts act as well as under the corresponding provisions of law applicable to public trusts, a document creating a trust cannot be revoked unless it itself provides for a power of revocation therein. public as well as private......the settlor to avail himself of the power of revocation contained in clause 18 of the latter deed. clause 2 of the deed of revocation dated 15th october 1958. in terms, purports to 'declare and direct' the division of the trust fund in to six equal parts, and to apply the same in the manner directed therein. there can be no dispute that the said deed of revocation dated 15th october 1958 does not contain a power of revocation or variation of the new trusts created by it. under the circumstances, i have come to the conclusion that mr. laud's argument on this point cannot be accepted by me.10. in the result, i answer the questions formulated in the originating summons as follows:question no. 1: in the negative, question no. 2: in the negative question no. 3: in the negative......
Judgment:
ORDER

1. This is an Originating summons taken out by the plaintiff-Co. which is the present Trustee of the Deed of Settlement executed by one Maneckji Ratanji Bharucha on 22nd April 1942 for the determination of certain questions that have been framed in it.

2. By clause 2 of the said Deed of Settlement dated 22nd April 1942, the settlor provided that the net income of the trust estate was to be paid by the Trustees to himself for life. By clause 4 thereof, it was provided that from and after the death of the Settlor, the Trustees were to pay the net income to the Settlor's sister Banubai, if she be then living, for the term of her natural life. Clause 5 of the said Deed provided that, from and after the death of the said Banubai, or in ease she predeceased the Settlor then, on the death of the Settlor, the Trustees were to divide the Trust premises into two equal parts and hold them upon certain trusts thereafter specified. Clause 6 provided that one of those parts was to be held in trust for the issue of the said Banubai, but if the said Banubai died without leaving any issue, the Trustees were to hold the same upon trust to pay the net income thereof to her husband for life, and, in default of such husband, to apply the net income for the benefit of the Settlor's brother Ardeshir, if he be then alive, for his life, and, in default of the said Ardeshir, to transfer the said part of the Trust premises to the Parsi Panchayat Board at Surat for the benefit of a certain infirmary situated there. Clause 7 of the said Deed provided that the net income of the other part of the Trust premises was to be paid to the Settlor's brother Ardeshir, if he be then alive, and thereafter for the benefit of the wife and children of the said Ardeshir. Clause 8 of the said Deed provided that, from and after the death of the said Ardeshir and the said Banubai, the Trustees were to hold the said Trust premises upon certain other trusts in favour of the issue of the said Ardeshir, but if the said Ardeshir were to die leaving no issue and no widow, the said part of the Trust premises was to be transferred to the Parsi Panchayat at Surat for the benefit of a certain technical institute situated in that town. Clause 18 of the said Deed is in the following terms:

'l8. The said Manekji Ratanji Bharucha (alias Gadiwala) may from time to time and at any time or times by a Deed or Deeds revocable or irrevocable or by Will or Codicil wholly or partially revoke and make void or vary all or any of the trusts, uses, powers, and provisions herein before created declared and contained and by the same Deed or any other Deed whether revocable or irrevocable or by Will or Codicil declare any new or other trusts uses powers or provisions concerning the premises the trusts, uses, powers, and provisions whereof shall have been so varied or revoked as aforesaid'.

3. It may be mentioned that the Settlor's brother Ardeshir died unmarried on 10th May 1956, and the Settlor's sister Banubai also died unmarried on 22nd October 1957.

4. In exercise of the power conferred by the said clause 18 of the Deed of Settlement dated 22nd April 1942, the Settlor, by a Deed of Revocation dated 15th October 1958, revoked clauses 4, 5, 6, 7, 8 and 9 of the said Deed, and declared and directed that, after his demise, the Trustees were to convert the investments representing the Trust Fund into money and divide the net amount into six equal parts which were to be dealt with in the manner laid down therein. Five of those six equal parts were directed by the said Deed of Revocation to be applied to various charitable institutions, and it is unnecessary for me to refer to the same. The sixth part of the income was directed, by clause 2(f) of the said Deed of Revocation, to be invested, and the net income thereof to be paid to the Settlor's friends, who are the 1st and 2nd defendants to this Originating Summons. for the term of their natural lives and from and after the death of both of them, half of the investments representing the said one-sixth share were to be handed over to the Trustees of the Bandra Parsi Convalescent Home for Women and Children, and the other half to the Trustees of the Shirinbai Cama Convalescent Home for Men and Boys, to be held upon trust to apply the net income thereof for the maintenance of the said institutions. Clause 3 of the said Deed of Revocation was in the following terms:

3. Save as hereinbefore modified the said Indenture of Settlement is hereby confirmed and shall remain in force and effect in every respect.'

5. By another Deed of Revocation dated 11th August 1962, the Settlor in purported exercise of the power of revocation reserved to him by the said Deed of Settlement dated 22nd April 1942, Varied and altered the uses in the said Deed of Revocation and New Appointment dated 15th October 1958 in the manner stated therein, namely, that clause 2(f) of the said Deed of Revocation dated 15th October 1958 was to be deleted, as if it had not appeared at all in the said Deed, and a new clause 2(f) substituted in its place, which provided that the said one-sixth part of the Trust Fund was to be applied to certain charities specified in the said Deed of Revocation dated 11th August 1962. It is unnecessary for me to refer to the directions given by the said Deed for Revocation. beyond pointing out that the effect of those directions was that the provision in clause 2(f) of the Deed of Revocation dated 15th October 1958, under which the income of the said one-sixth part was to be paid to the 1st and 2nd defendants, did not find place. It is the contention of Mr. Nariman on behalf of the 1st and 2nd defendants that the Settlor had not power to revoke the Deed of Revocation dated 15th October 1958, as he purported to do under the power of revocation originally contained in the Deed of Settlement dated 22nd April 1942, it is, on the other hand, submitted by Mr. Laud on behalf of the plaintiffs, and by Mr. Dubash on behalf of the Charity Commissioner (Defendant No.3), that the Settlor did have the power to revoke the said Deed of Revocation dated 15th October 1958.

6. The whole argument of Mr. Laud in support of the above submission comes to this, that what was sought to be done by the said Deed of Revocation dated 15th October 1958 was to revoke clauses 4 to 9 of the original Deed of Settlement dated 22nd April 1942, and to incorporate in that very Deed of Settlement certain new trusts and provisions contained in the said Deed of Revocation dated 15th October 1958. It was argued by Mr. Laud that if his contention to that effect was accepted, the effect would be that the new trusts and provisions so incorporated would continue to be subject to the power of revocation contained in clause 18 of the Deed of Settlement dated 22nd April 1942. in support of that argument. Mr. Laud relied on the fact that clause 18 of the said Deed of Settlement itself provided, in terms, for the revocation being effected 'from time to time' by a 'Deed or Deeds revocable or irrevocable' Mr. Laud contended that clause 18, as framed, therefore, showed clearly that a Deed of Revocation effected pursuant thereto could itself be revoked or varied from time to time.

7. As against that argument of Mr. Laud, Mr. Nariman sought to contend that the said Deed of Revocation dated 15th October 1958, as drafted, did not bear out the contention of Mr. Laud, in so far as it did not provide for the new trusts created therein being incorporated In the original Deed of Settlement. Mr. Nariman also relied on the terms of clause 18 of the Deed of Settlement dated 22nd April 1942, whereby, according to him, the only power of revocation was to revoke the trusts 'hereinbefore created', which would mean the trusts created by the original Deed of Settlement itself, and not the trusts as varied by the subsequent Deed of Revocation dated 15th October 1958. Mr. Nariman further submitted that, both under Section 78 of the Indian Trusts Act as well as under the corresponding provisions of law applicable to public trusts, a document creating a trust cannot be revoked unless it itself provides for a power of revocation therein.

8. The question which I have to decide is, therefore, a very narrow one, but the learned counsel appearing in the matter have stated that the same is not covered by authority, except that. in the ancient English case of Hele v. Bond. (1717) 24 E. R. (Cha) 213 in which, on exactly similar facts as those of the present case, it was held that, in the absence of a power of revocation being reserved in the Deed of Revocation, the new trusts declared in the Deed or Revocation could not be revoked by virtue of the power of revocation contained in the original Deed of Settlement. Mr. Nariman has also referred to statements of law contained in certain standard works to which I will refer later on.

9. The first point which appears to be fairly clear is the one which was argued by Mr. Nariman, namely, that, as laid down in Section 78 of the Indian Trusts Act, a trust created otherwise than by Will, cannot be revoked, except in three cases viz.. (a) where beneficiaries are competent to contract, and consent to its revocation. (b) where a power of revocation is expressly reserved to the author of the trust, and (c) where the trust is for the payment of debts of the Settlor, and has not been communicated to the creditors. The Court is concerned. in the present case, only with clause (b) of that section. The position in regard to public trusts [8 also the same, and the proposition in Section 78 of the Indian Trusts Act. to which I have just referred. finds place in the statement of the law in Halsbury, 3rd edition. Volume 30, p.267, paragraph 507. and in Farwell on Powers, 3rd edition, pp. 306-307, as a general proposition applicable to all trusts. public as well as private. The result of this legal position is that unless Mr. Laud's contention with regard to the incorporation of the new trusts in the original Deed of Settlement is accepted by me, his submission that the Deed of Revocation dated 15th October 1958 could be revoked, cannot stand. I have considered carefully the form of the Deed of Revocation dated 15th October 1958. In support of his argument with regard to the incorporation of the new trusts in the original Deed of Settlement, Mr. Laud has relied strongly on clause 3 of the said Deed of Revocation dated 15th October 1958. which lays down that, save as modified therein, the original Deed of Settlement was confirmed and was to remain in full force and effect in every respect. I am afraid, however, the Deed of Revocation of 15th October 1958, as framed. does not purport to incorporate the new trusts in the original Deed of Settlement, but purports to create new trusts as therein laid down. This is apparent from a comparison of clause 2 of the said Deed of Revocation dated 15th October 1958 with clause 2 of the subsequent Deed of Revocation dated 11th August 1962. the latter of which provides. in clear terms, for the incorporation of the new trusts in the original Deed of Settlement. That is not the way the Deed of Revocation dated 15th October 1958 is drafted, and, under the circumstances, I am afraid, I cannot accept Mr. Laud's contention that the trusts created by the said Deed of Revocation dated 15th October 1958 should be read as if the',' were incorporated in the Deed of Settlement dated 22nd April 1942, so as to en-able the settlor to avail himself of the power of revocation contained in clause 18 of the latter Deed. Clause 2 of the Deed of Revocation dated 15th October 1958. in terms, purports to 'declare and direct' the division of the Trust Fund In to six equal parts, and to apply the same in the manner directed therein. There can be no dispute that the said Deed of Revocation dated 15th October 1958 does not contain a power of revocation or variation of the new trusts created by it. Under the circumstances, I have come to the conclusion that Mr. Laud's argument on this point cannot be accepted by me.

10. In the result, I answer the questions formulated in the Originating Summons as follows:

Question No. 1: In the negative,

Question No. 2: In the negative

Question No. 3: In the negative.

Question No. 4: In the affirmative,

11. As far as costs are concerned. the costs of the plaintiffs and of the Charity Commissioner (Defendant No. 3). in separate sets, between attorney and client. to come out of the trust estate. The costs of Defendants Nos. 1 and 2, also to come out of the trust estate.

12. Order accordingly


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //