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N.P.R.M.V.R.M. Alagappa Chettiar Vs. N.P.R.M.L.S.T. Lakshmanan Chettiar and ors. - Court Judgment

LegalCrystal Citation
SubjectTrusts and Societies
CourtChennai
Decided On
Judge
Reported in51Ind.Cas.253
AppellantN.P.R.M.V.R.M. Alagappa Chettiar; Alagappa Chettiar and anr.
RespondentN.P.R.M.L.S.T. Lakshmanan Chettiar and ors.;The Official Receiver and anr.
Cases ReferredMulraj Khatau v. Vishwanath Frabhuram Vaidya
Excerpt:
trusts act (ii of 1882), sections 5, 6 - trust--trustees empowered to sell moveables and-immoveables and collect outstanding--words of transfer, absence of, effect of--security, whether created in respect of moveables--transfer of properly act (iv of 1882), section 130. - - i think, therefore, it is perfectly clear that we cannot regard exhibit i as validly creating a deed of trust in favour of the creditors......the assets rateably among the creditors. the document, as already mentioned, is described as a trust deed and it was duly registered. but the appellant has not been able to point out any expression in the document which could possibly be construed as creating a transfer or assignment of the properties words or acts (a) an intention on his part to creat thereby a trust, (b) the purpose of the trust, (c) the beneficiary and, (d) the trust property, and (unless the trust is declared by will or the author of the trust is himself to be the trustee) transfers the trust property to the trustee.' mr. ananthakrishna aiyar has argued that if we can possibly hold that the executant of the deed intended to create a trust, then that would be sufficient although words of transfer were wanting. but.....
Judgment:

Abdur Rahim, J.

1. The common question in all these appeals relates to the interpretation of Exhibit I, which is described as a deed of trust. The contest is between the Official Receiver appointed in the insolvency of Pachaperuma Chetty, and some of his creditors who are said to have been appointed trustees of the property of the insolvent for the benefit of all the creditors. The lower Court has held that the Official Receiver is entitled to possession of the assets of the insolvent as they had vested in him, and not the person described as trustees in Exhibit I. Exhibit I was executed on the 25th October 1913, and Pachaperamal Chetty was adjudicated an insolvent on his own application in April 1915. So, if there was a valid trust for the benefit of his creditors created by Exhibit I, the claim of the trustees will prevail against that of the Official Receiver.

2. It is necessary for the creation of a trust that the property should be transferred to the trustee. But reading Exhibit I, it is quite dear that there are no words of transfer to be found in it, either with respect to the immoveable property or the outstandings or movables. What Exhibit I does is to give power to the person named therein to sell all the properties belonging to the insolvent and to recover the outstandings, and to distribute the assets rateably among the creditors. The document, as already mentioned, is described as a trust deed and it was duly registered. But the appellant has not been able to point out any expression in the document which could possibly be construed as creating a transfer or assignment of the properties words or acts (a) an intention on his part to creat thereby a trust, (b) the purpose of the trust, (c) the beneficiary and, (d) the trust property, and (unless the trust is declared by Will or the author of the trust is himself to be the trustee) transfers the trust property to the trustee.' Mr. Ananthakrishna Aiyar has argued that if we can possibly hold that the executant of the deed intended to create a trust, then that would be sufficient although words of transfer were wanting. But the question of intention is dealt with in the section with reference to whether a trust was intended to be created, and not as doing away with the necessity for a transfer of the properties to the trustees. If the intention to create a trust is existent, then the Act requires that there must be a transfer of the property to give effect to it, bat merely an intention to create a trust is not sufficient except in (he two cases mentioned. It would be going against wall established law regarding transfer of property to say that mere intention to transfer is sufficient without compliance with the requirements for a valid transfer. I think, therefore, it is perfectly clear that we cannot regard Exhibit I as validly creating a deed of trust in favour of the creditors.

3. Mr. Ananthakrishna Aiyar sought to distingnish the case of outstanding and moveable property. But the document deals with both properties and the same language is used with respect to all the properties; and there is nothing, as already pointed out, in that language which could possibly be construed as transferring the rights of the insolvent in his properties, either moveable or immoveable, to the persons mentioned in the deed.

4. His next argument upon this document was that we must hold it to have the effect of creating a security in his client's favour. Here again there are no words of transfer. The mere handing over of certain documents, books of accounts and so on would not create any security; at any rate outside the Presidency towns.

5. We have not dealt with the question whether Mr. Ananthakrishna Aiyar's client has any rights to sell the property of the insolvent under Exhibit I, apart from the question whether the property has vested in his client as trustee. That question does not arise in these appeals.

6. In the result, all the appeals are dismissed with costs. There will be two sets of costs in Appeal No. 62 of 1917 and there will be costs for the Official Receiver alone in the two miscellaneous appeals.

Seshagiri Aiyar, J.

7. I agree. I am inclined to think that the intention of the parties was to create a deed of trust. It is engrossed on a stamp paper for Rs. 15 which is the usual stamp for executing a trust deed, and the document is styled a 'trust deed'. Apparently the parties intended that there should be a trust deed. But that is not enough under Section 5 of the Trusts Act to create a deed of trust. The intention to declare a trust may be spelled out of the document. But there must be words of conveyance before the property itself vests in the trustee as legal owner. In the document Exhibit 1 those words of conveyance are not to be found; and, therefore, it is incapable of vesting the property in the trustee and of defeating the rights of the trustee in bankruptcy. As pointed out by my learned brother, if Chandavarkar, J., intended to by down that no words of conveyance are necessary to effectuate a transfer, I am respectfully unable to agree with the learned Judge. If what he meant to say was that no particular forms of words are necessary to connote a conveyance, I entirely agree. But if the judgment in Kondu Kanhuji Dhavde v. Vishnu Moreshwar Bhat 17 Ind. Cas. 176 goes further, I respectfully dissent from it.

8. As regards the contention of Mr. Ananthakrishna Aiyar that Exhibit I is capable of conferring rights of trusteeship in regard to moveable property, one answer is this, that the document is one and indivisible and it was never the intention of the parties that moveable property should be taken without the immoveable property. That to my mind is conclusive upon this question, because if there are no words conveying immoveable property, you cannot say that there is anything in the document which would convey moveable property.

9. As regards the argument that the document created a security or charge in respect of moveable property in favour of the trustees, I would draw attention to the case in Mulraj Khatau v. Vishwanath Frabhuram Vaidya 17 Ind. Cas. 652; (1912) M.W.N. 1247 ; 17 C.W.N. 209 where the Judicial Committee point out that, where a policy of insurance was deposited, that would not be enough under Section 130 of the Transfer of Property Act to confer on the person with whom the deposit was made the rights of and assignee of a chose in action. The same reasoning applies to the precsent case. The mere fact that he has been given the document of title would not, under Section 130, enable him to be the legal owner of the property.

10. For all these reasons, I agree with my learned colleague that the appeals must be dismissed.


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