1993 (1) TMI 313 - SC - Indian Laws

Supreme Court rules in favor of Official Trustee, absolving personal liability for excess expenditure

Official Trustee of Tamil Nadu Versus Udavumkarankal and Ors.

The Supreme Court allowed the appeal, setting aside the High Court's decision. The court concluded that the Official Trustee acted in good faith and in ... - Issues Involved:1. Whether the Official Trustee acted within his authority in demolishing the existing building and constructing a new one.2. Whether the expenditure incurred by the Official Trustee was reasonable and in the interest of the trust.3. Whether the Official Trustee committed a breach of trust by not obtaining prior court permission for the new construction.4. Whether the Official Trustee should bear personal liability for the excess expenditure.Issue-wise Detailed Analysis:1. Authority of the Official Trustee:The Official Trustee sought permission from the High Court to incur an expenditure of Rs. 6 lakhs for converting the existing tiled-roof of a marriage hall into an RCC-roof. However, after receiving recommendations from architects, including one who suggested demolishing the old structure due to its dilapidated condition, the Official Trustee decided to demolish the building and construct a new one. The courts below held that the Official Trustee acted without specific court orders for demolition and new construction, which was a deviation from the original sanction for roof replacement only.2. Reasonableness of Expenditure:The initial estimate of Rs. 6 lakhs was for replacing the tiled-roof with an RCC slab. Upon further inspection, the new estimate for demolishing the old building and constructing a new one was Rs. 9.60 lakhs. The Supreme Court found this estimate reasonable, noting that the old building was at least 76 years old and likely in a dilapidated condition. The court also observed that the Official Trustee acted bona fide in accepting the new estimate and proceeding with the demolition and construction, as it was in the interest of the trust to augment its income.3. Breach of Trust:The Supreme Court acknowledged that the Official Trustee committed a breach of trust by not obtaining prior court permission for the demolition and new construction, which involved additional expenditure beyond the sanctioned Rs. 6 lakhs. However, the court noted that this error was not actuated by mala fide intentions but was a result of acting in the trust's best interest. The court emphasized that the Trustee's actions were consistent with diligent and responsible conduct aimed at benefiting the trust.4. Personal Liability:Under Section 15 of the Official Trustees Act, 1913, the Government is liable to make good any sums required to discharge liabilities incurred by the Official Trustee, except in cases of gross negligence or misconduct. The Supreme Court held that the appellant-Official Trustee could not be made personally liable for the excess expenditure, as his actions were bona fide and in the interest of the trust. The court found that the lower courts erred in making the appellant personally liable for the additional expenditure.Conclusion:The Supreme Court allowed the appeal, setting aside the High Court's decision. The court concluded that the Official Trustee acted in good faith and in the interest of the trust, and therefore, should not bear personal liability for the excess expenditure. The court also noted that the appellant's actions were reasonable and aimed at enhancing the trust's income. There was no order as to costs.