Court Rules Settlor Can't Modify Trust by Deed; Original Trust Deed Alterations Only Allowed by Will; Appeal Dismissed.

The HC restored the trial court's decree, ruling that the settlor lacked the power to execute a second Trust deed by deed inter vivos, as the original Trust deed allowed alterations only by will. The order by Ramfry, J. permitting such changes was deemed null and void due to lack of jurisdiction. The HC found that none of the cited statutes conferred jurisdiction to authorize the settlor's requested modifications. The appeal was dismissed with modifications: the Official Trustee was to account as a trustee from the suit's institution date, and the plaintiff-respondent was awarded costs from the Trust Estate.

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Issues Involved:
1. Whether the settlor was entitled to execute the second Trust deed in pursuance of the power reserved by him under the original Trust deed.
2. Whether the validity of the second Trust deed is not open to challenge in view of the order made by Ramfry, J. on August 25, 1937.

Issue-Wise Detailed Analysis:

1. Whether the settlor was entitled to execute the second Trust deed in pursuance of the power reserved by him under the original Trust deed:

The settlor executed a Trust deed on December 6, 1930, reserving the power to alter the quantum of interest given to each of the beneficiaries "by his instrument by will alone and in no other way or act." The settlor later sought to alter this clause to allow changes by deed inter vivos. The trial court decreed the suit favoring the plaintiff, holding that the power reserved by the settlor was irrevocable and the order passed by Ramfry, J. was null and void as it was made without jurisdiction. The first appellate court reversed this decision, but the High Court restored the trial court's decree.

The law on the point, as stated by Halsbury and Hanbury, establishes that a settlor is incompetent to vary the terms of a Trust unless explicitly reserved. The stipulation in the Trust deed that the variation could only be made by will and not otherwise was deemed a material condition. Consequently, the settlor had no power to execute the second Trust deed by deed inter vivos.

2. Whether the validity of the second Trust deed is not open to challenge in view of the order made by Ramfry, J. on August 25, 1937:

The order by Ramfry, J. permitted the settlor to revoke the clause in the Trust deed and authorized him to alter the quantum of interest by deed inter vivos. The validity of this order was challenged on the grounds that the judge had no jurisdiction to pass such an order. Jurisdiction, as defined by Mukherjee, Acting C.J., refers to the authority of a court to decide matters that are litigated before it. The court must have the power to hear and decide the specific questions at issue.

The court examined whether Ramfry, J. had jurisdiction under various statutes:
- Section 34 of the Indian Trusts Act, 1882: This section only allows the court to give "opinion, advice or direction on any present questions respecting the management or administration of the trust property." The relief sought by the settlor did not fall within this scope.
- Section 10(1) of the Official Trustees Act, 1913: This provision allows the court to appoint the Official Trustee but does not empower it to grant the reliefs sought by the settlor.
- Section 43 of the Trustees and Mortgagees Powers Act, 1866: Similar to Section 34 of the Indian Trusts Act, this section allows the court to give opinion, advice, or direction on questions respecting the management or administration of the trust property.

The inherent jurisdiction of the Chancery Court in England, as discussed in Chapman v. Chapman, does not extend to sanctioning the modification or remoulding of the beneficial trusts of a settlement. The court concluded that Ramfry, J. had no jurisdiction to pass the order in question, making it null and void.

Modifications in the Decree:

The circumstances of the case required modifications in the decree of the High Court. The Official Trustee was not to be treated as a trustee de-son-tort but should account as if he was a trustee. The accounting should start from the date of the institution of the present suit, not from when the Official Trustee took charge. The plaintiff-respondent is entitled to costs from the Trust Estate.

Conclusion:

Subject to the modifications directed above, the appeal was dismissed, and the decree of the High Court was modified accordingly.

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