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Edward H.M. Bower Vs. Lt.-col. A.M.V. Hesterlow and ors. - Court Judgment

LegalCrystal Citation
SubjectTrusts and Societies
CourtChennai
Decided On
Reported inAIR1939Mad920; (1939)2MLJ714
AppellantEdward H.M. Bower
RespondentLt.-col. A.M.V. Hesterlow and ors.
Cases ReferredGiffen v. Wedd
Excerpt:
- - 4. the learned judge refused to give any direction because he considered that the court should not interfere with the provisions of a trust deed unless there were exceptional circumstances and in his opinion there were no exceptional circumstances here. 197. in that case the testator bequeathed his residuary estate to trustees upon trust to set aside 800 as a 'coal fund' for the benefit of the inhabitants of his native village and to hold the rest of his residuary estate as a 'loans fund' for the purpose of making loans to poor and deserving inhabitants of the village......educational trust. the appellant sought an order of the court permitting a deviation from the trust deed and asked for the appointment of two new trustees. the appellant regarded the trust as a private one and relied on the provisions of section 34 of the indian trusts act. the matter came before gentle, j., who dismissed the summons so far as it related to the prayer for permission to deviate from the trust deed, but granted the prayer for the appointment of additional trustees. the appellant has appealed against the first part of the order as he contends that the learned judge erred in not sanctioning the deviation. the main question however, is whether this trust is to be regarded as being of a public or private nature. if it is a public trust the application did not lie.2. the.....
Judgment:

Alfred Henry Lionel Leach, C.J.

1. This appeal arises out of a decision on an originating summons issued under Order 45 of the rules of the Original Side of this Court. The summons was taken out by the appellant, the sole remaining trustee of a trust known as the Richmond Educational Trust. The appellant sought an order of the Court permitting a deviation from the trust deed and asked for the appointment of two new trustees. The appellant regarded the trust as a private one and relied on the provisions of Section 34 of the Indian Trusts Act. The matter came before Gentle, J., who dismissed the summons so far as it related to the prayer for permission to deviate from the trust deed, but granted the prayer for the appointment of additional trustees. The appellant has appealed against the first part of the order as he contends that the learned Judge erred in not sanctioning the deviation. The main question however, is whether this trust is to be regarded as being of a public or private nature. If it is a public trust the application did not lie.

2. The trust was created by one Thomas Richmond, a member of the English and the Madras Bars, under a deed dated 11th April, 1918. The founder apparently regarded the trust as being of a private character. He was a member of the Anglo-Indian community and he formulated a scheme to help Anglo-Indian youths in their studies. He set aside Government securities of the face value of Rs. 30,000 as an endowment fund. The interest on the capital was to be devoted to making advances to Anglo-Indian youths who wished to qualify for professions or obtain higher education generally. The advances which were to be called 'scholarships' were to be repaid by the recipients out of their earnings on completion of their education. The trust deed which was drawn up and executed provided that each recipient of an advance should take out a life insurance policy for a sum equivalent to double the advance and assign the policy as security to the trustees. The premium and other incidental expenses were to be met by the trustees and added to the amount of the loan. On repayment of the loan with interest at 4 per cent, the policy was to be re-assigned to the insured. In the event of the insured dying before the re-payment of the loan sufficient of the money due on the policy to discharge the debt was to be paid to the trustees and the balance paid to the person nominated by him 'or otherwise according to the terms of the policy taken in the matter.' There were to be certain restrictions and these are embodied in paragraphs 4 and 5 of the deed. These paragraphs read as follows:

(4) The candidate shall not be less than the age of 18 years on the date of the execution of the instrument for re-payment and must have passed either the High School Examination, the School Final Examination or any other Examination or Test qualifying the candidate to appear for the University Examinations or for professional Examinations or Tests in India, Great Britain or elsewhere.

(5) The candidate's father, mother, guardian or himself shall have been a bona fide member of the Anglo-Indian Association, Southern India, for a period of one year before the award of the scholarship or the candidate an orphan brought up in an Orphanage in Southern India for a period of more than two years and who had won a Government-Scholarship while in the Orphanage and has further been a recipient of a Scholarship from the Anglo-Indian Association, Government or other sources after his sixteenth year.

3. Mr. Richmond was one of the original trustees and acted as such until his death in 1930. Since the creation of the trust a large number of advances had been made to Anglo-Indian students. Unfortunately many of them have not fulfilled their obligations to the trust. In fact, we are told that only a very few of them have repaid their advances. The consequence has been that the trustees have had to keep up the payments under the policies in order to safeguard themselves. The payment of premia on the policies on the lives of those who have already benefited by the trust materially restrict the carrying out of the objects of the trust. There is at present outstanding about Rs. 44,000. The main object of the appellant in taking out the originating summons was to obtain an order from the Court permitting the trustees to change the form of security. It was proposed that a beneficiary should provide two sureties for the repayment of the loan made to him and the obligation to take out a life policy should be cancelled. If this were allowed it was anticipated that the trustees would be able to fulfil the objects winch the donor had in mind.

4. The learned Judge refused to give any direction because he considered that the Court should not interfere with the provisions of a trust deed unless there were exceptional circumstances and in his opinion there were no exceptional circumstances here. He held that the donor must have had in mind when he decided on the conditions of the trust that a portion of the income would of necessity have to be devoted to the payments of premia on the lives of beneficiaries and in refusing to give the direction sought relied on the judgment of Romer, L.J., in In re New: In re Leavers: In re Morley (1901) 2 Ch. 534. We are unable to share the view that the facts in this case did not warrant a deviation from the trust deed to the extent of permitting security to be given in another form and we can see nothing in the case cited which runs contrary to this view. If relief were not given in this case it would undoubtedly mean the frustration to a large extent of the objects of the trust. If the matter remained there we should have no hesitation in passing an order which would enable the trustees to take the security in the shape of surety bonds. The matter, however, does not remain there. There is the further question whether this is a public or a private trust? We are of opinion that this is not a private trust, but is a public trust and is therefore governed by the provisions of Section 92 of the Code of Civil Procedure. The trust was created for the benefit of the Anglo-Indian community of this Presidency. The fact that the donor placed restrictions to the extent set out in Clauses 4 and 5 of the deed which I have already quoted does not, we consider, make the trust any the less a public trust.

5. Authority for the proposition that a loan fund of this nature constitutes a charity is to be found in In re Monk: Giffen v. Wedd (1927) 2 Ch. 197. In that case the testator bequeathed his residuary estate to trustees upon trust to set aside 800 as a 'coal fund' for the benefit of the inhabitants of his native village and to hold the rest of his residuary estate as a 'loans fund' for the purpose of making loans to poor and deserving inhabitants of the village. It is true that in that case there was no interest to be charged on the loans and in this case the rules which have been framed in accordance with the trust deed do require interest at the rate of 4 per cent, to be paid by the beneficiaries on the amounts received by them. Considering that it was the intention to grant loans to Anglo-Indian youths without occupation merely on the security of life policies the interest to be charged was very low. A scheme of loans for educational purposes at such low interest must be regarded as a scheme of a charitable nature.

6. Holding as we do that this is a public trust it was not open to the appellant to take out an originating summons. The matter comes within Section 92 of the Civil Procedure Code, and proceedings under that section can only be taken with the sanction of the Advocate-General. It follows that the order dismissing the appellant's application must stand because the application was not competent, but the trustees will be at liberty to take such other steps as they may be advised.

7. The costs of the trustees will come out of the estate.


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