S.C. Ghose, J.
1. This is an application made by the Trustees of the Birla Jankalyan trust constituted by a deed of settlement dated March 13, 1964, as rectified by the supplementary deed dated January C, 1965, inter alia for an opinion or advice or direction under Section 7 of the Charitable and Religious Trusts Act, 1920, in respect of the holding of the paid Trust in Jiyaieerao Cotton Mills Ltd., and Pilani Investment Corporation Ltd., specially as to what steps should be taken by the Trustees with regard to the said shares in the said two companies.
2. The application has been made under Section 7 of the Charitable and Religious Trusts Act. Notice of this application was directed to be given upon the Income-tax Officer, 'B' Ward, Companies Dist. I, Calcutta, and Commissioner of Income-tax, West Bengal I.
3. The said Trust was established by a deed of settlement dated March 13, 1964, by one J. K. Birla since deceased for public Charitable purposes. The office of the said Trust is situate at 8-A, Chowringhee Place, within the jurisdiction of this Court. The objects and purposes of the said Trust are inter alia advancement of education, learning research and culture by inter alia establishing schools, colleges, libraries, reading rooms, etc., as well as rendering help to poor students giving medical relief to people as well as relief to poor by founding or granting aid to orphanages, poor houses, etc.
4. By and under the said deed of trust a sum of Rupees 1,000/- was conveyed to the trustees as trust fund for carrying out the aforesaid objects of trust. The said deed of settlement was rectified by a supplementary deed dated January 6, 19G5.
5. In or about March, 1964, the trustees by viitue of express power con-ferred upon them by the said deed of Trust received by way of donation shares in various Joint Stock Companies of the face value of Rupees 61,21,670/- from Raia Baldreodas Birla, Santati-Khosh, Subsequently the trustees received Equity Shares in Gwalior Rayon Silk ., by way of bonus in respect of shares received and held by the trustees for the purpose of the trust. The said trust derived considerable income in the form of dividend in respect of the said shares. As a matter of fact between 1964 and 1970 tho trustees received diverse amounts every year varying from Rupees 456,057-75 P. to Rs. 824,497.75 P. as dividend in respect of the said shares The trustees have been applying the said Income for preservation, repairs, renovation of architectural and archaeological works, running dispensaries, giving relief to drought and flood affected people and granting stipends to students as well as professors.
6. The income of the said trust is exempted under Section 11 of the Income-tax Act, 1961 (hereinafter mentioned as the Act) from paying Income-tax, in view of the fact that the said trust was and is wholly for Charitable or religious purposes.
7. By the Finance Act, 1970, the provisions of Section 11 of the said Act were amended and Section 13 of the said Act was substituted by a new section The relevant portions of the said new Section 13 which shall come into effect from 1st April, 1971, are set out here-under:--
13 (1) Nothing contained in Section 11 shall operate so as to exclude from the total income of the previous year of the person in receipt thereof-
(a) ... ...
(b) ... ...
(c) in the case of a trust for charitable or religious purposes or a charitable or religious institution, any income thereof-
(i) ... ...
(ii) if any part of such income or any property of the trust or institution (whenever created or established) is during the previous year used or applied, directly or indirectly for the benefit of any person referred to in Sub-section (3)
(2) Without prejudice to the generality of the provisions of Clause (c) of Sub-section (1), the income or the property of the trust or the iastitution of any part of such income or property, shall for the purposes of that clause, be deemed to have been used or applied for the benefit of a person, referred to in Sub-section (3)-
(a) ... ...
(b) ... ...
(c) ... ...
(d) ... ...
(e) ... ...
(f) ... ... .
(g) ... ...
(h) if any funds of the trust or institution are, or continue to remain invested for any period during the previous year (not being a period before the 1st day of January, 1971) in any concern in which any person referred to in Sub-section (3) has a substantial interest.
(3) The persons referred to in Clause (c) of Sub-section (1) and Sub-section (2) are the following namely :--
(a) ... ...
(b) ... ..
(c) ... ...
(d) Any relative of any such author, founder, person or member as aforesaid.
(4) Notwithstanding anything contained in Clause (c) of Sub-section (1), in a case where the aggregate of the funds of the trust or institution interested in a concern in which any person referred to in Sub-section (3) has a substantial interest, does not exceed five per cent, of the capital of that concern, the exemption under Section 11 shall not be denied in relation to any income other than the income arising to the trust or the institution from, such investment, by reason only that the moneys of the trust or the institution have been invested in a concern in which such person has a substantial interest.
8. It is admitted that the relatives of author or founder of the said trust have substantial interest exceeding five per cent, of the Capital within the meaning of Section 13 of the said Act quoted above in Jiyajeerao Cotton Mills Ltd., and Pilani Investment Corporation Ltd. In the said concerns the said relatives of the author or founder of the said trust own shares other than shares entitled to a fixed rate of dividend carrying more than 20 per cent, of the voting power.
9. Thus if it is held that the said shares are 'funds', of the said Trust the substantial income derived by the trust In the form of dividend of the said shares as mentioned hereinabove will become liable to be assessed to income-tax.
10. So the trustees have applied for the opinion of the Court as to whether the said shares belonging to the trust in the aforesaid companies of Jiyajeerao Cotton Mills Ltd. and Pilani Investment Corporation Ltd., may mean 'fund' in the aforesaid Clause (h) of Sub-section (2) of Section 13 as substituted.
11. Section 7 of the Charitable and Religious Trusts Act, 1920 (Act XIV of 1920) provides as follows:--
Section 7--'(1) Save as hereinafter provided in this Act, any trustee of an express or constructive trust created or existing for a public purpose of a charitable or religious nature may apply by petition to the Court, within the local limits of whose jurisdiction any substantial part of the subject-matter of the trust is situate, for the opinion, advice or direction of the Court on any question affecting the management or administration of the trust property and the Court shall give its opinion, advice or direction, as the case may be, thereon:
Provided that the Court shall not be bound to give such opinion advice or direction on any question which it considers to be a question not proper foe summary disposal.
(2) The Court, on a petition under Sub-section (1), may either give its opinion, advice or direction thereon forthwith, or fix a date for the hearing of the petition and may direct a copy thereof, together with notice of the date so fixed, to be served on such of the persona interested in the trust, or to ba published for information in such manner, as it thinks fit.
(3) On any date fixed under Sub-section (2) or on any subsequent date to which the hearing may be adjourned, the Court, before giving any opinion, advice or direction, shall afford a reasonable opportunity of being heard to all persons appearing in connection with the petition.
(4) A trustee stating in good faith the facts of any matter relating to the trust in a petition under Sub-section (1), and acting upon the opinion, advice or direction of the Court given thereon shall be deemed, as far as his own responsibility is concerned, to have discharged his duty as such trustee in the matter in respect of which the petition was made.'
12. The said Section 7 entitles a trustee to apply for the direction, advice or opinion of the Court with regard to the management or administration of the trust property where the trust is a public charitable or religious trust. Under Sub-section (2) of the said Section 7 directions were obtained for services upon the Income-tax Officer, 'B' Ward, Companies' Dist. I. as well as the Commissioner of Income-tax West Bengal I. The proviso to Sub-section (1) of the said section lays down that the court will refuse to consider the matter if the questions involved in the matter in which its advice or opinion has been sought, are not capable of summary disposal.
13. The Income-tax Officer, 'B' Ward, Companies' Dist. I, or the Commissioner of Income-tax, West Bengal I are in no way connected with the said trust. The persons interested within the meaning of Sub-section (2) must be interested either as a beneficiary or as a trustee or as the representative of the founder or settlor. Sub-section (1) of said Section 7 confers the right upon any one of the trustees to apply under Sub-section (1) of the said section. Thus either of the trustees, if there be more than one, is entitled to apply. The Income-tax Officer who may have a statutory right to impose and levy statutory obligations upon the income of the trust and assess such income to income-tax cannot, in my opinion be in any way interested in the trust. Thus the respondent. Income-tax Officer. 'B' Ward, Companies' Dist. I and Commissioner of Income-tax, West Bengal I, could not be served with notices of this application and they must be dismissed from this application.
14. By this application, the trustees, it appears, have asked for, in fact, the construction of Clause (h) of Subsection (2) of Section 13 as substituted in place of old Section 13 of the Income-tax Act, 1961. Mr. Anil C. Mitter contended that since the trust acquired the said shares in the said Jiyaiecrao Cotton Mills Ltd. and Pllani Investment Corporation Ltd.. by way of gift, no funds of the trust were invested or can be said to continue to be invested in the said shares within the meaning of Clause (h) of Sub-section (2) of Section 13 as substituted. Mr. Mitter relied on the following observations of Lawrence, J. in re: Wragg v. Palmer, (1919) 2 Ch 58 at p. 64:
'Without attempting to give an exhaustive definition of the words 'invest' and 'investment' I think that the verb 'to invest' when used in an investment clause may safely be said to include as one of its meanings 'to apply money in the purchase of some property from which interest or profit is expected and which property is purchased in order to be held for the sake of the income which it will yield'.'
15. According to Mr. Mitter if funds were or are not invested they cannot continue to be invested. The question certainly will depend on the meaning of the word 'fund'. The word 'fund' has several meanings. It may moan money or source of supply or a permanent stock that can be drawn upon. It may also mean pecuniary resource (See Shorter Oxford English Dictionary). I, however, do not propose to consider now the meaning of the said Clause (h) in the instant application. The construction of the said clause after 1st of April 1971 will assume vital importance and will be of far-reaching consequence. The said clause may have to be construed by different courts in India either in proceedings in reference under Income-tax Act or otherwise. The said construction certainly is a complicated question of law.
16. Opinion expressed under said Section 7 of Religious and Charitable Trusts Act or advice or directions given thereunder cannot be challenged in appeal in view of the provisions of Section 12 of the Charitable and Religious Trusts Act. The said opinion, however, shall not operate as res iudicata in subsequent proceedings if and when they arise between the Revenue and the Trustees (See Babu Bhagwandin v. Gir Har Saroop, 67 Ind App 1 = (AIR 1940 PC 7). The provisions of Section 7 of the Charitable and Religious Trusts Act are similar to the provisions of Section 302 of the Indian Succession Act. The said section is to the following effect:--
Section 302 : - Where probate or letters of administration in respect of any estate has or have been granted under this Act, the High Court may on application made to it, give to the executor or administrator any general or special directions in regard to the estate or in regard to the administration thereof.
17. In construing the said Section 302, P. B. Mukharji, J. (as His Lordship then was) observed in re: Akshoy K. Ghose, AIR 1949 Cal 482 at page 466 as follows:
'In my opinion Section 302 should not be read in such a way as to make this section in the statute a substitute for a suit in any and every case relating to the estate or its administration. The legislature uses the word 'directions' which in my judgment should receive a construction consonant to the ordinary meaning of that word. The word 'directions' does not in my view mean adjudication and determination of substantive rights, but they mean in my judgment directions to help the executors in the difficulties in respect of practical management or administration where no disputed question of title or difficult question of construction of will or complicated questions of law are involved.'
18. The aforesaid observations apply with equal force in my opinion to an application made under Section 7 of the Charitable and Religious Trusts Act as well.
19. For the aforesaid reasons I do not think it fit to express any opinion or give any advice or directions in this application. The trustees shall pay the costs of this application to the Income tax Officer, 'B' Ward, Companies' Dist I and the Commissioner of Income-tax, West Bengal I out of the funds of the trust in their hands. The trustees shall retain out of the funds of the trust their costs of and incidental to this application as between Attorney and Clients.