Unanimous approval for trust investment must cover the specific property scheme; a materially different building plan cannot be validated by majority.
A trust deed requiring unanimous director approval for investment of policyholders' funds in house property was construed strictly: "purchase of house property" did not extend to constructing a building, especially where the instruments contrasted purchasing property with erecting buildings for shareholders' funds. The resolution authorising construction from the Policyholders' Trust Fund was therefore ultra vires and invalid. A later modified scheme approved only by majority could not cure the defect because unanimity had to cover the specific property or building plan, not merely the spending limit. The core decision whether to acquire or build could not be delegated to a committee; only subsidiary acts were delegable. The restraint on expenditure was upheld.
Issues: (i) Whether the resolution sanctioning the construction of a building out of the Policyholders' Trust Fund was ultra vires the governing trust deed and articles. (ii) Whether the later modified scheme, approved by a majority but not unanimously, could validly authorise the expenditure and construction proposed.
Issue (i): Whether the resolution sanctioning the construction of a building out of the Policyholders' Trust Fund was ultra vires the governing trust deed and articles.
Analysis: The governing provision permitted investment of policyholders' moneys only by unanimous resolution in the purchase of house property. Reading the articles as a whole, the Court distinguished between the power given in respect of shareholders' funds, which expressly allowed erection of houses or buildings, and the narrower language used for the policyholders' fund. The expression 'purchase of house property' was held not to include building a house, especially where the instruments showed a deliberate contrast between buying and erecting. The Court also treated the English authorities relied upon as arising in a different statutory context and not controlling the construction of the trust instrument here.
Conclusion: The resolution was ultra vires and invalid.
Issue (ii): Whether the later modified scheme, approved by a majority but not unanimously, could validly authorise the expenditure and construction proposed.
Analysis: The original unanimous resolution did not authorise the later altered scheme, because the proposed building under the revised plan was materially different from the original scheme and the relevant rule required unanimity of all directors for the purchase of house property. The Court held that unanimity had to extend not merely to the amount to be spent but also to the specific property or building scheme to be adopted. The duty of deciding what property or what building should be acquired could not be delegated to a committee, and Section 47 of the Indian Trusts Act, 1882 was invoked to show that only subsidiary acts could be delegated, not the essential decision itself.
Conclusion: The later majority-approved scheme was invalid.
Final Conclusion: The directors lacked authority under the governing trust provisions to proceed with the building scheme from policyholders' funds, and the decree restraining the expenditure was upheld.
Ratio Decidendi: Where a trust or constitutional instrument requires unanimous director approval for investment in a specified class of property, the unanimity must extend to the specific property or scheme to be acquired, and a materially different plan cannot be validated by a majority or by delegation of the core decision-making function.
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