L. JANAKIRAMA AYYAR AND ORS. Vs. P.M. NILAKANTA AYYAR AND ORS.
LAWS(MAD)-1953-3-40
HIGH COURT OF MADRAS
Decided on March 25,1953

L. Janakirama Ayyar And Ors. Appellant
VERSUS
P.M. Nilakanta Ayyar And Ors. Respondents

JUDGEMENT

Mack, J. - (1.) I have had the advantage of perusing my learned brother's judgment and merely wish to add some observations without any unnecessary repetition of anything he has said.
(2.) IN 1936 the joint family of Defendants 1 to 6, a respectable and substantial one in Tirunelveli District, which owned considerable property, got into serious financial difficulties. To avoid the ignominy of adjudication, they entered into a composition with creditors and later executed a trust deed, Exhibit B -7, in 1937 vesting all their property in three trustees for sale and payment of creditors. They avoided approaching a regular lawyer for advice, regarding his service as only required in the event of litigation or court proceedings. They had recourse instead to legal quack advice and obtained the services of one Piramanayakam Pillai, who not only wrote the trust deed, Exhibit B -7, but also all the thirty -eight documents of alienation including the sale deeds now challenged as breaches of trust in this representative suit by creditors. This person, who has kept out of the witness box, and one Pichandi Ayyar, the fifteenth Defendant, described as a clerk in the employ of the family of Defendants 1 to 6, appear to have done most of the clerical and convincing work. In the background was the twelfth Defendant, one S.R. Kootha -nainar Pillai, actually and somehow strangely, a civil Court amin at the time working at Ambasamudram. He was the brother of one of the three trustees, Veerabahu Pillai, a retired Inspector of Police, with substantial monies to invest. There can be no doubt that the twelfth Defendant was a trustee de son tort. No less than thirteen sales of property were effected to the twelfth Defendant, his undivided brother Sivagurunatha Pillai the thirteenth Defendant, and other relations of theirs. A common characteristic of these and several other sale deeds was the absence of any cash consideration, the vendee being merely charged with the responsibility of paying certain specified creditors at eight annals in the rupee. In some cases, where the vendee was himself a secured creditor, after the discharge of his debt, a similar responsibility was placed upon him of paying unsecured creditors at this rate. The active part played by the twelfth Defendant, who said he retired from service as amin three years before he gave his evidence as D.W. 2, is demonstrated by his negotiations with a secured creditor, the Travancore and Quilon National Bank. The discharge of this debt was a duty imposed on his undivided brother, the thirteenth Defendant, by the sale deed Exhibit B -37, dated 29th August 1937, in his favour alienating 20.32 acres of land for Rs. 15,000. The twelfth Defendant embarked on correspondence with the Bank as evidenced by Exhibits A -42, A -69 and A -107 and it was not until the Bank filed a suit, which was compromised, that this debt was finally paid on 6th August 1941. A lawyer's notice, Exhibit B -109, sent on behalf of one creditor to the trustees on 2lst July 1937 was not replied to till 17th January 1938 by an unsigned letter Exhibit A -58 admittedly in Piramanayakam Pillai's writing. Apart from one or two lawyer's notices on behalf of creditors, no regular lawyer was consulted about any of these complicated transactions. The result is that in every conceivable direction, there appear to have been grave irregularities and breaches of trust in flagrant contravention of the Trusts Act. I would like first to make some comments on what appears to me to be not merely a gross irregularity in the execution of this trust, but a grave breach not urged in the course of very elaborate arguments, and that is, the alienations by the trustees with a direction. to the alienees to pay specific creditors at eight annas in the rupee. Clause 7 of the trust deed authorises the trustees to sell the property "with authority to impose conditions and to sell them either by public sale or by private sale for the highest price according to your discretion." Clause 8 authorises the trustees without selling the property to allot or distribute it with the consent of the creditors according to the amount payable to them and to execute sale deeds in favour of creditors. Under Section 47 of the Trusts Act, a trustee cannot delegate his office or any of his duties either to a co -trustee or to a stranger unless (a) the instrument of trust so provides, or (6) the delegation is in the regular course of business, or (c) the delegation is necessary, or (d) the beneficiary being competent to contract, consents to the delegation. There is nothing even in this trust deed, badly drafted by a person without any legal training at all, which makes provision for the trustees delegating the power entrusted to them of paying creditors, to alienees of property. Such a power of delegation cannot be inferred from anything in the trust deed. For purposes of this litigation, it is not disputed that unsecured creditors including the three representative Plaintiffs suing on their behalf have received payment of eight annas in the rupee. If the twelfth Defendant took it upon himself to bargain with a secured creditor, the Travancore and Quilon National Bank, and to defer payment to them for nearly four years, while his brother the thirteenth Defendant continued in enjoyment of the 20.32 acres of land conveyed to the thirteenth Defendant under Exhibit B -37 and charged with this liability, it is reasonable to infer that the simple creditors were subjected to similar approaches and bargaining. A trust deed such as this imposes on the trustees a direct responsibility themselves to sell property and make payments to creditors. The delegation of this latter power to alienees is clearly irregular and in breach of Section 47 and cannot be too strongly deprecated, opening up as it does all kinds of avenues of possible abuse. The reason why the breach of Section 47 has not been stressed in this litigation doubtless arises from the fact that no creditors have complained, probably having given some acquittance that they have received eight annas in the rupee from the alienees under those sale deeds. I have taken the opportunity of emphasizing what in my view is a gross violation of Section 47 of the Trusts Act by these trustees in delegating their duties under these alienations.
(3.) I am in agreement with my learned brother that the two substantial sale deeds, Exhibits B -94 and B -37, executed by only two out of the three trustees are invalid and do not pass to the alienees a proper title in the trust property. Clause 23 of the trust deed, which requires, the administration of the estate to be in accordance with the unanimous opinion of the trustees or of a majority, is relied on to invest them with legality. My learned brother has translated this clause and interpreted it, in agreement with the learned Subordinate Judge, to mean that the majority decision is binding on the trustees, who should all act in accordance with it when the law requires them to do so. I am reluctant myself to be hypercritical in the interpretation of a clause in a document such as this drafted by a legal quack and to undermine settled transactions on the basis of too literal and strict an interpretation of it. There can, I think, be no doubt that Clause 23 of the trust deed was intended to reproduce Section 48 of the Indian Trusts Act which is couched in simple language: When there are more trustees than one, all must join in the execution of the trust, except where the instrument of trust otherwise provides.;


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