TaxTMI 
TaxTMI 
1970 (12) TMI 97
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....penses were agreed to be paid out of the proceeds of the properties and the balance left, if any, was to be divided between the mortgagors and the mortgagees in equal shares. After the lapse of nearly a quarter of a century, the mortgagee has entered into an agreement for sale of the properties which the successors-in-interest of the mortgagors have challenged in this suit as an agreement for an improvident sale. On 29th August, 1919 one Sundarmull Rajgarhia and Ram Kumar Rajgarhia obtained a lease in perpetuity of certain lands, hereinafter referred to as the Bhukailash properties, situate at Kidderpore outside the original jurisdiction of this Court, consisting of a number of plots measuring in the aggregate 144 bighas more or less. On March 28, 1922 the lessees created a mortgage of certain immovable properties including the Bhukailash properties in favour of the Central Bank of India Ltd. to secure due repayment of loans and advances made or to be made by the bank. The mortgagors having made default in payment of the mortgage debt, the bank instituted a mortgage suit, being Suit No. 295 of 1924 in this Court. On April 21, 1926 a final decree for sale was passed by consent for R....
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.... by sale or otherwise the mortgagors will hand over all papers relating to the said property to the mortgagees simultaneously with the execution of this agreement and will also personally or through their servants and agents render all reasonable facilities to mortgagees in connection with the management or disposal or dealing of the said property, the out of pocket expenses in connection with the same being paid by the mortgagees and debited in the account hereinbefore mentioned. (iv) Pending transfer of the property by sale or otherwise an account should be kept in the name of the mortgagors and the same will remain open until sale of the said property by the bank in accordance with this agreement; all costs, charges and expenses in regard to the said property until sale, namely, payment of the municipal taxes both arrears and current, putting the title to the property in order, ejecting tenants, developing the property and those of incidental to the sub-division of the property into lots or of the sale thereof, being debited to such account provided always that the mortgagees will not be liable to render any account or explanation to the mortgagors in regard to debits m....
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....f the lease the Receiver will accept him or her as the case may be as a direct tenant of the landlords and to the extent of the rent reserved in the sub-lease will release the mortgagees or their assignee from all liability in respect of such portion of the rent. 6. The terms agreed to between the parties were consented to by the superior landlords and were recorded in the tent suit and a consent decree was passed in terms of the said agreement. Sanction was also obtained to the said terms by an order of Court dated December 24, 1930 in the Title Suit filed at Alipore Court being Suit No. 73 of 1926. 7. Thereafter as recited in the Deed of Assignment, in pursuance of the said agreement dated December 13, 1930 and in consideration of the mortgagee bank having agreed to realise its dues under the mortgage and the order made on 13th December, 1927 in the mortgage suit from the Bhukailash estate alone in accordance with the terms of the said agreement and without leave to proceed against the mortgagors personally or otherwise for the deficit if any, which might occur after the mortgaged properties were sold and or disposed of by the mortgagees, the mortgagors transferred and assi....
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....ty, there was no bar to their clients asking for accounts in the meantime. They also exhorted the bank to dispose of the properties without undue delay. In their reply of March 15, 1944 Messrs Sandersons & Morgans stated that the bank had been trying to sell the property, although not bound to do so, but as the property consisted of bustee lands in an insanitary condition with a large number of tanks and low tracts of lands without proper roads and occupied by people who were unwilling to vacate their huts, the bank had not been able to find any purchaser of the property either as a whole or in lots. They indicated that their clients were willing to dispose of the property provided reasonable offers were received and their dues were realised in full out of the proceeds of sale; if there was any surplus left after the bank's dues had been realised, both parties were to share the benefit of the sale. In conclusion they said that although the bank was under no obligation to furnish interim accounts, as a matter of courtesy the bank had informed their Solicitors that after crediting the income of the property to the expenditure incurred by the bank there was a debit balance of Rs. ....
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.... 1 bigha 2 cottahs and 3 chittaks of land, not in the normal course to stranger purchasers but in course of litigation. In 1946 a plot of 16 cottahs 1 chittak was sold, may be at the initiative of the purchaser. In any case, there is no evidence that the plot was sold at the bank's initiative. In the same year another plot of 1 bigha 6 cottahs and 2 chittaks was acquired by the Improvement Trust under the Land Acquisition Act. Thereafter all activities ceased for 10 years. In 1956 Messrs Bharat Trading Company, a firm which described itself as merchants and commission agents, an advocate, a solicitor and an indifferent broker appear to have made casual enquiries and were heard of no more. In the latter half of 1956 Gopal Collieries Ltd. made an offer to purchase the property at Rs. 675/- per cottah, that is to say, for a total sum of nearly Rs. 20 lacs. They were willing to pay Rs. 50,000/- in cash and a further sum of Rs. 2 lacs by mortgage of a colliery, by way of earnest and pay the balance from recoveries of rent to be made by the bank. They also proposed that the entire proceeds of sale of plots might be paid to the bank to expedite payment of the purchase money. The mode ....
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....property to be assigned, and upon the joint several and personal guarantee of Ram Chandra Karnani, Indra Prakash Karnani and Tolaram Karnani and also on the guarantee of Messrs Okayti Tea Co. Ltd. The said advance will carry interest at the rate of 1% per annum over the Reserve Bank rate with a minimum of 5% per annum payable with half yearly rests. (v) The assignee shall repay the said sum of Rs. 12,50,000/- to be advanced by the assignor by yearly instalments of Rs. 1,25,000/- each besides interest as and when due. The first of such instalments to be paid at the end of 12 months from the date of such assignment. (vi) Over and above the said yearly instalment of Rs. 1,25,000/- with interest the assignee shall pay an additional sum of Rs. 50,000/- by the end of December, 1961. (vii) Notwithstanding anything contained therein, the assignor shall have the right to demand at any time payment of the entire amount then remaining due and outstanding together with interest and the assignee shall pay the sum on demand. (viii) Subsequent to the assignment and so long as the money or any portion thereof advanced by the assignor remains due the assignee sha....
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....ly and wrongfully and would be held liable for the consequences. It will be remembered that Ram Chandra Karnani was one of the proposed guarantors under the agreement into which the bank had entered with the defendant No. 2. 16. On July 23, 1961 the plaintiffs instituted this suit against the Central Bank of India Ltd., for construction of the deed dated December 13, 1930, ascertainment of the rights of the parties, administration of the trust created in respect of the Bhukailash properties in terms of the said deed, for accounts and for an injunction restraining the defendant bank from dealing with or disposing of the said estate. Subsequently, by an amendment of the plaint they added Martins Process Industries Private Ltd., as the second defendant and inserted a prayer for a declaration that the agreement for sale dated July 15, 1961 is void and not binding on the plaintiffs and the same be delivered up for cancellation. They also added a prayer for enquiry and for damages found payable to the plaintiffs on such enquiry. 17. Thereafter, on the plaintiffs' application an order of injunction was made on July 25, 1961 by G. K. Mitter J. restraining the defendant No. 1 from....
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....v) It has not developed the property to the extent contemplated in the said deed. (vi) It has committed waste and caused loss to the properties. (vii) It is denying that the plaintiffs are the beneficiaries under the said deed. (viii) It is guilty of laches. It has not accounted for large sums of money being the income of the said properties. (ix) It has failed to discharge its duties as trustee for sale within a reasonable time. In paragraphs 25 and 26 it is said that the defendant bank failed to render accounts of their dealings with the said property in terms of the deed dated the 13th December 1930 and are denying the plaintiffs' right to enforce the said terms. In paragraph 27 it is stated that if an account is taken between the parties, nothing will be found due and payable to the defendant bank. On the other hand, large sums of money will be found due and payable by the defendant bank as the trustee to the plaintiffs. In paragraph 28 it is said that although the dues of the defendant bank and of the landlord have been or ought to have been realised, the defendant bank is threatening to alienate the said estate at a gross under....
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....930 or that they intended to transfer the said property at a gross or any undervalue. They denied the plaintiffs' right to claim administration of the said property. 20. The defendant No. 2 in its written statement stated that the defendant No. 1 as the assignee of the right, title and interest of the mortgagors in the said estate, had the right to enter into the said agreement for sale dated June 15, 1961 and has done so for a reasonable and adequate consideration. It disputed that the said agreement is collusive and supported the defendant No. 1 in its contention that the defendant No. 1 is not a trustee for sale and the assignment in favour of the defendant No. 1 was an absolute transfer. The defendant No. 2 further contended that after the execution of the deed of assignment dated February 12, 1931, the deed of December 13, 1930 ceased to be in force. The plaintiffs, it was contended, have no cause of ration against the defendant No. 2. 21. The following issues were raised at the trial : 1. Are the plaintiffs Nos. 1 to 18 the legal representatives of Sundarmull Rajgarhia and are plaintiffs Nos. 19 to 24 the legal representatives of Ramkumar Rajgarhia as state....
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....cts specified in the earlier deed. Mr. Das, on behalf of the defendant No. 1, submitted that the Deed of Assignment does not say so. It effected a full and absolute transfer of title without any condition attached to it. 24. He contended that in construing the Deed of Assignment one must look into the deed alone. It is not legitimate to import the provisions of an antecedent document and limit the amplitude of the Deed of Assignment by which the assignee became the full and absolute owner of the property, so as to annex obligations to the assignee's ownership. The deed speaks for itself and ought to have full effect. Mr. Das relied on the decision of the Judicial Committee in (1) Wadia v. Secretary of State 56 I.A. 51. In that case a Deed of Grant after reciting that the grantee had prayed that a Government grant which he enjoyed might be exchanged for a grant of certain villages declared that the villages "are hereby assigned to you and your heirs in perpetuity". The Judicial Committee held that the trial Judge had been in error in construing the deed in the light of the antecedent correspondence between the parties, it being well settled that a formal antecedent contract c....
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....rity of which was vested in our constituents as before-mentioned, and I the said Claud Alexander, so far as regards the subjects, the superiority of which is vested in me as before-mentioned, do hereby dispose to the said J. B. Lee. 27. Alexander adduced evidence to show that the land in question was mis-described in an earlier deed and that it did not belong to the estate which he had transferred to Lee by the Deed of Disposition. He also sought to refer to previous correspondence which showed what the contract was. Lord Watson, in his speech said: I do not think, there is any ambiguity in the language of the disposition of December, 1879 which can justify a reference for the purpose of controlling that language to an antecedent agreement between the appellant and the respondent. Nor do I think that such a reference is warranted, either by the fact that the subjects conveyed are described in general terms in the dispositive clause of the deed, or by the fact that, in the narrative of the deed, the parties are represented as having agreed upon certain points which were presumably matter of stipulation in any written agreement which preceded its execution. In the pres....
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....d. The case, therefore, in my opinion, is of no assistance to the defendants. Here the Deed of Assignment itself says that the property is being assigned in pursuance of the Agreement and in consideration of the assignee having agreed to realise its dues in accordance with the terms of the Agreement. The Agreement of December 13, 1930 is, therefore, of necessity, attracted to the transfer. 31. I have emphasised the effect of the use of the words 'in pursuance of the Agreement' in the Deed of Assignment of February 12, 1931. In my opinion, the absence of these words should not have made any difference. Sometimes a transaction is contained in more than one document. It is not even necessary that one of these documents should refer to the other or others so long as the parties intend that the document or documents should be given effect to in the context of and in consonance with the other. It is abundantly clear that by executing the Deed of Assignment the assignors did not intend to forego the Agreement of 1930. The assignment was contemplated in the Deed of December 13, 1930 for the purposes and objects set out therein. The Deed of Assignment, therefore, must be treated ....
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.... effected by two deeds, one vesting the land in the trustees upon trust to sell, and the other declaring the trusts of the proceeds of the sale, thus keeping the letter off the title." At page 243 it is said, the great object of the legislation of 1925 was to facilitate sales by keeping trusts off the title, or "behind the curtain", as it has been put. It is, therefore, desirable (although none of the Acts makes it compulsory) that the former custom should be followed, and two deeds used in all settlements inter vivos on trust for sale." In this connection, counsel also relied on Halsbury's Statutes of England, 2nd Edition, Vol. 23 pp. 23-24, item No. 4 and annotations under the head 'General Notes' and Prideaux's Forms and Precedents, 21st Edition, Vol. 1, pp. 8, 62 and 481. That the two deeds need not be executed simultaneously but may be executed at different times is supported by Norton on Deeds, 2nd Edition pages 86 to 87. 34. An instance of a trust created by two deeds is provided by the case of (4) Uma Nath v. Jang Bahadur A.I.R. 1938 P.C. 245. A Hindu Taluqdar executed two instruments. One was a deed of relinquishment by which he relinquished all his righ....
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....a trust and a contract in the context of deposit of moneys repayable with interest. He also relied on (6) 5. RiPudaman v. Surinder Kumar A.I.R. 1959 P&H 92 for the characteristics which distinguish a trust from a contract. In particular he relied on the observation of A. N. Bhandari, C.J. that it is the manifestation of intention and not the actual intention which determines whether a trust has been created. It may be readily conceded that if the intention to create a trust does not express itself in words or in acts no trust can come into existence. That is so, because in that case, evidence of any intention to create a trust will be lacking. Moreover, such a situation will not be covered by section 6 of the Trusts Act. 37. A trust may arise and often does arise out of a contract. If any authority is needed for so obvious a proposition, reference may be made to (7) Indian Iron and Steel Company and others v. Dalhousie Holdings Ltd. and ors. A.I.R. 1957 Cal 293 where Bachawat, J. observed : Trust in its origin was a form of contract distinctively enforced in equity. A contract creates a trust where it has brought into existence an obligation annexed to the ownership of ....
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....sonable certainty by any words or acts (a) an intention on his part to create thereby a trust, (b) the purpose of the trust, (c) the beneficiary and (d) the trust property, and transfers the trust property to the trustee. Is there, in the present case, an intention on the part of the transferors of the property to create a trust ? If so, how has the intention been indicated ? and if so, what is the purpose of the trust ? 39. Counsel on behalf of the plaintiffs contended that even if it be held that the intention to create a trust has not been sufficiently indicated in the deed of Assignment by which the property was transferred to the defendant bank, the intention has been clearly expressed in the Agreement of December 13, 1930. The intention can also be gathered from the surrounding circumstances. Counsel relied on (8) Rochefoucauld v. Boustead (1897) 1 Ch. 196. The plaintiff was the owner of an estate subject to a mortgage. The mortgagee wished to call in the mortgage. The plaintiff not being able to find the money entered into an arrangement with the defendant, who was anxious to help her, to take a transfer of the mortgage. It was proposed that the mortgagee should sell the ....
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....uently, notwithstanding the statute, it is competent for a person claiming land conveyed to another to prove by oral evidence that it is so conveyed upon trust for the claimant, and that the grantee knowing the facts is denying the trust and relying upon the form of conveyance and the statute, in order to keep the land himself. 43. In Rochefoucauld's case the intention to create a trust was gathered from the correspondence and surrounding circumstances of which oral evident was given. The property was transferred to the trustee by a deed of sale in which there was no reference to trust. Moreover, the court took into consideration the conduct of the parties in deciding whether a trust was intended or not. 44. In this connection counsel relied on some Supreme Court decisions. In (9) Abinash Chandra Banerjee v. Uttarpara Hitakari Sabha 1962 (2) S.C.R. 28 at 33 the Court found that although the testator had not used the word 'trust' or 'charge' in the will, his intention to create a trust could be gathered from the circumstances existing at the time of the will and the recitals found therein. In (10) Bhaskar v. Shrinarayan A.I.R. 1960 S.C. 301 where the questi....
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....took to hold it." 46. Mr. Subimal Roy submitted that on a fair and proper construction of the Agreement of 1930 the Court ought to hold that no trust came into existence. He pointed out that clause 1 of the Agreement contemplates transfer by the mortgagors of their right, title and interest in the properties to the mortgagees to effectually vest the properties in the mortgagees as full and absolute owners thereof. This provision, he argued, militates against a limited ownership or ownership subject to obligations. Moreover, the Deed of Assignment provides that "the assignees will hereinafter enjoy the said lands hereditaments and premises hereby assigned respectively and deal with the same in any way they think fit and receive rents, issues and profits thereof." Moreover, no obligation has been cast on the mortgagors to sell the estate but only a power or a liberty has been conferred on the mortgagees to sell the property at their sole discretion. They have also been given liberty at their discretion to decide on the manner in which the property is to be sold. Liberty has also been given to the assignee to maintain, develop and let out the property for the purpose of sale. These....
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....ement. The question is what does 'liberty' mean in the present context ? 50. In (16) Emma Minor v. James Patison and others L.R. 1 A.C. 428 a will provided that the trustees were to sell, at their sole discretion, certain real and personal properties including the proprietorship of a newspaper and further that if they did decide to sell the newspaper business and if any of his sons decided to carry on the same, such one should be entitled to purchase it at 500 (sic) less than the market price. It was also provided that until all the property was sold the trustees were to apply the income of the part unsold in a particular manner. It was held that the will created not a mere power but a trust to sell with a discretion in the trustees as to the manner and time of sale. 51. In construing the will the Court took into consideration the real intention of the testator and in giving effect to the intention the document was construed as a whole in the context of surrounding circumstances. The consequences of accepting the literal interpretation were also considered. The Court found that on a proper construction of the will, no effect was to be given to a parenthesis. 52. In....
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....igned to the defendant bank to give effect to the intention of the parties. 54. The argument that the provision under which the bank was exempted from rendering any account or furnishing any explanation supports the view that no trust was intended, is of some force. At the same time if on a total view of the deeds in question it appears that a trust was intended, any provision in the Agreement which is contrary to the provisions of the Trusts Act or the law of trusts in general, must be held to be void and struck down. In this connection I may refer to (18) Surendra Nath v. Jannavi A.I.R. 1929 Cal. 484 at page 490, where it was held, in the facts of that case, that a provision exempting a person from liability to render accounts is of no consequence. 55. The objects of the Agreement as also of the Assignment have been expressly stated to be to pay off all arrears of rent due to the superior landlords and to liquidate the debts of the mortgagors payable on the mortgage decree. To carry out these objects liberty is given to the assignees to sell the property at their sole discretion. The liberty is ample. But if it has to be exercised only in a particular manner to achieve the ....
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....and if after payment of all their dues and outgoings out of the proceeds of the said property any balance is left the same will be divided between the mortgagors and the mortgagees or their nominees in equal shares. If it is held that the bank has a discretion not to sell the property and the bank does not sell, the bank's dues and outgoings will never be paid, the account will never be adjusted and Clause 4 will become wholly nugatory. 59. Clause 5 provides that as to the current rent the mortgagees shall pay Rs. 10,000/- every year until the said property is fully disposed of by sale or sub-lease, the balance of rent being payable in December, 1934 without any interest. Taken literally, the clause means that current rents for the period up to 1934 will be paid at the rate of Rs. 10,000/- every year and the balance of Rs. 8,000/- of the yearly rent will be paid, in any event, by December, 1930. But as regards current rents for the period after 1934 the provision taken literally, will mean that the mortgagees shall pay at the rate of Rs. 10,000/- only every year until the property is fully disposed of by sale or sub-lease. If the property is never sold how is the balance of ....
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....half of the plaintiffs that assuming the bank has a discretion to sell or not to sell, the bank has exercised its discretion in favour of sale by having developed the property and debited the mortgagors with the expenses of development which could have been done under the Agreement, only for the purpose of sale. 64. In my opinion, the paramount object of the Agreement and the Assignment, as well as the provisions of the Agreement support the construction that it became incumbent on the bank to sell the property. By virtue of the deeds of 1930 and 1931 the defendant bank came under the obligation to open and maintain an account in a particular manner, to pay arrears of rent, to sell the property, liquidate the decretal claim and divide the surplus left of the proceeds of sale, if any, between the mortgagors and the mortgagees in equal shares. These obligations fastened themselves on the defendant bank's ownership of the property, the moment the Deed of Assignment was executed and possession of the properties was made over to the defendant bank. The Deed of Agreement and the Deed of Assignment supplement each other. The latter was executed to implement the former. Together the....
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.... with regard to the debits made, and finally, the provision that after sale the account made up by the bank should be conclusive and final, speak of a confidence one does not expect in commercial bargains. The confidence which inspired these stipulations is to be expected only in the case of a trust. 69. In these circumstances I have no hesitation in holding that the bank is a trustee for sale in respect of the Bhukailash properties and I answer issue No. 2 in the affirmative. 70. A question of jurisdiction has been raised by the defendants. It is contended that in its essence the suit is a suit for land situate outside the local limits of the original jurisdiction of the Court and the Court is, therefore, incompetent to entertain the suit. To decide the question of jurisdiction the plaint has to be regarded as a whole. No doubt, the reliefs which the plaintiffs claim have also to be examined for determination of the question but that by itself does not conclude the mutter. 71. In (19) Moolji Jaitha & Co. v. Khandesh Spinning and Weaving Mills Co. A.I.R. 1950 F.C. 83 Kania, C.J remarked : The nature of the suit and its purpose have to be determined by reading the ....
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....enefit of their creditors. A representative suit was flied by the creditor for removal of the trustees and for carrying the trust into effect. In this suit M and L were made parties. L denied that M had any power to execute the deed on his behalf. It was held that the suit having for its object to compel a sale of the whole of the land including L's share, title to which was disputed, was a suit for land within the meaning of clause 12. Garth, C.J. remarked that "one of the main points which the plaintiff sought to establish is the title of the trustees to L's share." 76. In my opinion, this case is of no assistance to the plaintiffs. There, the creation of trust was not in dispute. What was in dispute was whether the title to a part of the land had vested in the trustee. In the present case, there is no dispute as to the title of the bank to the land. What is in dispute is whether a trust was created in respect of the land or not. 77. Counsel then relied on the decision in (22) Sewdayal Ramjeedas v. Official Trustee A.I.R. 1931 Cal. 651. There it was held that where the plaintiffs want to have it established that on the death of a life tenant the immovable property r....
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....ation that the lease was subsisting and the defendant was a trustee for his benefit, of the profits he had received in respect of the premises. Stephen, J. held that "the suit was a suit for land because the plaintiff was seeking a declaration that the lease was subsisting and that he was entitled to the rents, issues and profits of the premises as the lessee thereof." The ratio of the decision was that the plaintiff by claiming that the lease was subsisting, was claiming an interest in land and by claiming rents, issues and profits, was virtually asking for possession of land. The case is, therefore, not of any assistance to the plaintiff. Here, the plaintiffs are not asking for possession nor are they disputing the right, title and interest of the defendant bank in the property. They are only contending that an obligation has been imposed on the defendant bank by the deed of 1930, an obligation which is annexed to the defendant's title. 82. Counsel relied on the case of (26) Sudamdih Coal Company Ltd. v. Empire Coal Company Ltd. I.L.R. 42 Cal. 942. In that case, the boundary between the plaintiffs and the defendant's collieries was in dispute. The question was whether ....
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.... objects for which the originating summons was taken out and the construction of the will was sought merely in furtherance thereof. In that view of the matter he held that it was a suit for land. The correctness of the decision was doubted by Ameer Ali J. in (29) Vedabala Debee v. The Official Trustee I.L.R. 62 Cal. 1062. Be that as it may, the proposition of law expressed in the judgment, namely, that a suit for land in clause 12 means a suit in which having regard to the issues raised in the pleadings, the decree or order will affect directly the proprietary or possessory title to land or other immovable property, has not been disputed. 86. Learned Counsel for the bank relied on (30) Premsukh v. Mangal Chand 41 C.W.N. 854, (31) Haralal Banerjee v. Nistarini Debee 29 Cal. 315, (32) Padampat Singhania v. Narayandas Jhunjhunwalla 59 Cal. 357 and (33) Maharaja Probirendra Mohan Tagore v. State of Bihar A.I.R. 1959 Cal. 767. The first of these cases was a suit for enforcement of a mortgage of immovable properties. No one disputed, as it could not be, that it was a suit for land. What was in dispute was whether by reason of inclusion of a property situate within jurisdiction which w....
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....dismissing the appeal Mclean C.J. observed : This is not a suit for land. It is a suit for administration and as incidental to that suit, for a declaration that certain leases which the executors of the estate granted to themselves cannot stand as against the plaintiff, the beneficiary. An appeal was preferred to the Judicial Committee. Lord Davey, said : The primary object of the suit was the administration of the estate of a deceased person resident within the jurisdiction, the principal executor being also resident there and actual administration going on there, the High Court of Calcutta in its ordinary jurisdiction had right to order administration of this estate and as ancillary to such an order, to set aside deeds obtained by fraud of the executor. Nor does the circumstance that a decree had been granted by the Court of 24-Parganas making a fraudulent award, an order of the Court, protect that decree from the jurisdiction of the Calcutta High Court when redressing that fraud. In like manner, their Lordships consider the Calcutta Court entitled, for the due administration of the estate to set aside leases of land outside the territorial limits of their ju....
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....e suit is not a suit for land. But if the relief claimed is not confined to an order for the enforcement of the trust, and the applicant claims e.g. a declaration of his rights to the possession of trust properties situate outside the jurisdiction, then, in my opinion, the suit would be a suit for land, and the Court would have no jurisdiction to entertain it." 91. In (37) Vedabala Debee v. The Official Trustee I.L.R. 62 Cal. 1062, a testator died, leaving a will by which the official trustee was appointed executor and the plaintiff, one of his daughters as the first shebait; and the testator directed his estate, with a certain exception, to be vested in trust Some of the trusts, in respect of land, were questioned by the plaintiff as void for uncertainty. It was contended that inasmuch as the plaintiff questioned the validity of the trusts or in other words, that those trusts were non est in the eye of law the suit was a suit for land. Ameer Ali J. on an elaborate review of decided cases, held that "the High Court has jurisdiction to entertain suits for administration of trusts declared by will or deed, for construction and for the determination of the validity and effect of su....
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....s been settled, the court does not know as to on what property its orders are to operate. 95. In (40) Moula Buksh v. Dharamchand Raniwalla & ors. 65 C.W.N. 881 a suit was brought by an auction purchaser for a declaration that an auction sale of a certain immovable property situate outside jurisdiction was null and void on the ground of fraud, misrepresentation and for suppression of material defect in the seller's title. In rejecting the contention that the suit was one for land, Law J. observed: Where in the suit the question raised is directly and substantially a question of adjudication of title to land or for possession of land or where as a result of the decision in the suit, the title or possession or control of land is to be directly affected or interfered with, the suit must be held to be a suit for land......If the question of title arises in the suit incidentally or collaterally for the purpose of granting a relief other than obtaining possession or declaration of title, the suit cannot be held to be a suit for land. 96. The learned Judge relied on the observation of Kania C.J. in Moolji Jaitha's case that "it is sufficient to say that taking the su....
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....ali Sastri J. held that the suit was not a suit for land. Mahajan and B. K. Mukherjea, JJ. held that it was Fazl Ali J. having dismissed the appeal on a preliminary ground, did not decide the question of jurisdiction. Mahajan J. and B. K. Mukherjea J. held the suit to be a suit for land on the ground that a question of proprietary or possessory title was directly involved in the suit. 99. There was no difference of opinion between the learned Judges who decided the case as to the tests which have to be applied for determination of the question whether a suit is a suit for land. Kania, C.J. observed : "it is sufficient to say that taking the suit as a whole one has to consider whether it is for the purpose of obtaining a direction for possession or a decision of title to land or the object of the suit is something different but involves the consideration of the question of title to land indirectly." Mahajan J. said : "where incidentally in a suit the main purpose of which or the primary object of which is quite different, some relief is to be given about land the title to which not being in dispute in the real sense of the term, then such a suit cannot fall within the four cor....
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....ments conveying to them the legal title in those properties, an obligation arising out of the fiduciary relation between the parties and the circumstances relating to the acquisition of properties as alleged in the plaint. Mahajan J. held that the suit was one for land because in his opinion a plain reading of the plaint disclosed that the object of the suit so far as Jalgaon lands were concerned was to establish title to them. He said : "I am further of the opinion that the character of a suit cannot change by reason of the relationship between the parties being fiduciary. A suit for land would still be a suit for land even if the parties stand on fiduciary relationship to each other. If a plaintiff sues a defendant trustee for possession and declaration of title as to land alleged to belong to trust to which a trustee has set up a hostile title in breach of the trust, the suit is a suit for land irrespective of the circumstances of the fiduciary relationship." In the present case, the plaintiffs are not asking expressly or impliedly for a declaration of title to the land adversely to the trustees nor are they asking for possession of the land. They are merely claiming that the....
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.... involved, that will not make the suit a suit for land because in the eye of law, the trustee is the owner of the estate and to say that he is a trustee is not to deny his title or claim a title adversely to him. The fact that the properties have vested in the trustees is not in dispute. Therefore, no adjudication of title to land is involved in the present suit, directly or indirectly. I have, therefore, no hesitation in holding that the suit is not a suit for land and the Court has jurisdiction to try the suit. I therefore, answer issue No. 9 in the affirmative. 102. One of the main enquiries to be made in this suit is the enquiry as to the adequacy or reasonableness of the price at which the defendant bank proposes to sell the Bhukailash estate to the defendant No. 2 under the agreement of June 15. 1961. The estate consists of 141 bighas 7 cottahs of land at present. The general picture of the locality where the estate is situate is clear. It is situate at a short distance from the junction of Judges Court Road and Diamond Harbour Road, an important communication centre lying at the outskirts of the residential area of Alipore. Nevertheless, it lies in the vicinity of the ....
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....as not been produced and one is left to guess how much of the land has been recovered out of tanks. There is evidence that water accumulates and remains for hours or days during the rainy season. Water-logging is unfortunately a general feature of the city and some of the most fashionable parts are not only not immune from it but are the worst sufferers. There is evidence again that the huts have been built on high plinths which have been ascribed to the low level of the sites. In answer it was suggested that high plinths are required under the Corporation rules. There is no satisfactory evidence that the land level of the Bhukailash estate is lower than that of the streets. 103. The Bhukailash estate although consisting of 141 bighas falls into several natural divisions. The estate does not consist of one compact and contiguous plot of land. It consists of a number of pockets or groups and single plots each capable of being dealt with separately. Most of the plots have access from municipal roads or from passages leading to municipal roads. Almost all of them have road frontages. Quite a number of the plots have access from more than one street. They can he divided conveniently....
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....ect access to Ekbalpore Road which varies in width from 30' ft. to 50' ft. Plot S has got an alternative access through a passage. Plot W has access through two passages and plot X through one. They all have good road frontages. Plots T and U are of 4 bighas, and 6 bighas 13 cottahs respectively and are the only plots access to which are not satisfactory. Access to plot T is through plot U and a passage. Access to plot U is also through a passage. Plots Y and Z consisting of 1 bigha 5 cottahs, and 2 bighas 5 cottahs are on Ibrahim Road. Apart from direct access to Ibrahim Road they have access to other municipal roads through passages. Ibrahim Road is a 60' ft. wide street which has been recently opened up. Plot A/1 is a plot of 11 cottahs. Access can be had from Ibrahim Road and also from a passage on the south. It may be sold as a residential plot or it may be conveniently sub-divided. Plot A/2 is a plot of 2 bighas 15 cottahs on Dent Mission Road, a road 30' ft. wide. Access can be had from Dent Mission Road and Kaila Sarak Road. This plot may again be conveniently sub-divided having regard to its situation. Plots A/3, A/7, A/8 and A/7 are of 2 big....
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....t in this suit (Ext. F). He said that he took into consideration the conditions of the lease dated August 29, 1919, the fact that apart from the market and the school the rest of the estate consists of bustees in occupation of thika tenants. He gave oral evidence that he consulted the Corporation records, namely, the Lend and Building Register for the years 1961 to 1965 where particulars of transactions in land have been entered and on the basis of those materials assessed the value of the Bhukailash estate. From the Corporation records he found that a plot of land situate at 9/1B. Ekbalpore Lane consisting of 1 cottah 14 chittaks and 39 sq. ft. was sold for Rs. 7331/-. He was not, however, sure whether it was bustee land or bastu land i.e. homestead land. He also found that premises No. 35, Mominpore Road, a plot of homestead land of 2 cottahs 10 chittaks with a brick built structure was sold for Rs. 15,000/-. He calculated the value of the structure at Rs. 10,200/-, deducted 50% for depreciation and arrived at the figure of Rs. 5100/- as the net value of the structure. Deducting Rs. 5100/- from Rs. 15000/- he calculated the value of the land at Rs. 9,900/-. From Rs. 9,900/- he de....
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....in the district court, others may go up in appeal to the High Court entailing heavier expenses. Depreciated value of the structures do not often represent their market value, specially in times of rising costs. Some structures depreciate more rapidly than others. 107. Mr. Pal said that in 1956 he sold some bustee land on Ultadanga Main Road at the price of Rs. 2000/- to Rs. 2500/- per cottah. He gave another instance. In 1962 the Calcutta Improvement Trust acquired some bustee land in Manicktolla for Rs. 1800/- to Rs. 2200/- per cottah. In his evidence, he stated that as the property is large, a deduction of 35% should be made for sale in one lot. Moreover, for the forfeiture and re-entry clauses in the lease of 1919 a further deduction of 5% should be made. This again is a mere hypothesis. It is common knowledge that the larger the plot, the less will it fetch per unit. But then the Bhukailash estate, as I have said, is not a single unit. It consists of disparate plots or groups of plots. Some are more valuable than others by reason of their situation, their access and their frontage. Mr. Pal takes a transaction of sale, makes deductions for the cost of the building and arrives....
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....e to the plan and gave their opinion on valuation of the property as a whole. No measurements were taken by any of the valuers. Mr. Pal's valuation, in my opinion, is based on fictions and conjectures. Mr. Chatterjee's opinion again does not rest on any evidence. Mr. Sarkar's system of valuation has the merit of simplicity but is far too mechanical to be of any assistance in a case of this kind. For one thing, Mr. Sarkar does not take into consideration the fact that the rents paid by the thika tenants may not be fair rents. It is not in dispute that the tenants are mostly very old tenants. It is common knowledge that because of Rent Restriction laws old tenants pay rents which are considerably less than the present market rents. Mr. Sarkar, in my opinion, should have also taken into consideration the fact that the Bhukailash estate is situated in a developing area. Moreover, he did not care to enquire whether the bank was or was not spending a disproportionately large sum of money for collection of rents, or in other words, whether the net income as it appears from the bank's records, is fair and legitimate. 112. In the evidence given by the valuers and also in ....
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....rjee, the estate manager, has deposed that apart from establishment expenses, cost of collection alone came to Rs. 2000/- per month in 1960-61 i.e. Rs. 24,000/- a year. The gross rental income of the property is a little over rupees 2 lacs which means that nearly 10% to 12% of the income is spent by the bank by way of collection charges. At page 74 of Parks' book (3rd edition) it is said that the cost of collection and management will vary from 2% to 5% of the gross rental in accordance with the special circumstances of each case. It is, therefore, open to question whether the bank is not spending a disproportionately large sum of money in establishment charges and cost of collection thereby reducing the net income of the estate. 114. To arrive at a reasonable estimate of the value of the property in 1961 it will be helpful, in my opinion, to examine the particulars of sales of land in the Bhukailash estate and its neighbourhood in the year 1961 as also in the preceding and following years. In 1943 the bank sold land measuring 1 bigha 2 cottahs and 3 chittaks. The bank has not disclosed at what price the land was sold and no reason has been given for non-disclosure. In....
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....old at Rs. 3500/- per cottah on April 6, 1960 was re-sold on 31st January, 1962 at Rs. 5500/- per cottah (Ext. L). This illustrates the sharp rise in land value between 1960 and 1962. On January 10, 1964 a vacant plot of 4 cottahs 4 chittaks on Sudhir Bose Road formerly known as Pipe Road, was sold at Rs. 800/- per cottah (Ext. O). On May 25, 1965 a plot with access from Ekbalpore Lane, through a 6' ft. common passage, was sold at Rs. 5750/- per cottah (Ext. HH) and on July 21, 1965 another plot of 10 cottahs 11 chittaks with access through a 50' ft. common passage from Mayurbhanj Road was sold at Rs. 2354/- per cottah. These plots were occupied by thika tenants at the time of sale (Exts. HH, Ext. R-S). 115. In the petition which the defendant bank filed on 28th February, 1947 by way of objection to the rate of compensation proposed to be paid for the land acquired for the Calcuta Improvement Trust it was claimed that the market price was Rs. 3000/- per cottah (Ext. Y). It was stated in the petition that "it is valuable property because it abuts on Bhukailash Road." In this connection it is good to remember that a very substantial portion of the Bhukailash estate a....
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....ave gone up sharply but the rent of the properties has remained the same. There has been a steady increase in land values since 1945 as was judicially noticed in (44) Brindaban v. Kalipada A.I.R. 1966 Cal 205 at p. 209. In the context of these developments, and the sharp increase in land values has the land appreciated in value by only 175 percent since 1919 ? 119. It was submitted that some of the terms and conditions of the lease of August 29, 1919 are onerous; that the lessee is required to pay all rates, taxes, assessments, impositions and outgoings in respect of the premises; that all arrears of rent reserved are to remain a charge on the demised premises; that in case of assignment, under lease or sub-lease of a portion of the demised premises, a sum of Rs. 10/- per cottah shall be payable to the superior landlords as selami, that in the event of default in payment of rent the landlords shall be entitled to re-enter the premises and take possession and that if the demised land or any portion thereof is acquired for public purpose, the lessors shall be entitled to a share of the compensation money at the rate of Rs. 200/- per cottah. 120. The lease is a lease in perpetui....
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....31 to 1943 there is no evidence of any attempt having been made to sell. In 1943, 1 bigha 2 cottahs 13 chittaks were sold in course of litigation and not in the usual course. Messrs. Sandersons & Morgans in their letter of March 15, 1944, wrote "there is no one willing to purchase the property either as a whole or in lots." There is not a shred of evidence that any attempt was made by the bank to sell the property which proved abortive. On April, 1946 a plot of 16 cottahs was sold by the bank to Shew Prasad Shaw, may be, as I have said, at the purchaser's initiative. In 1946-47 a plot of land was acquired for the Calcutta Improvement Trust. That was a case of compulsory acquisition, not of sale. 125. Under section 9 of the Banking Companies Act, the bank came under a statutory obligation to sell the property within a period of seven years. It is clear from the records that no effort was made by the bank to sell the property during that period. Between 1956 and 1961 seven offers were received by the bank to purchase the property, but there is no evidence that any of those offers came as a result of the bank's efforts. 126. It is difficult to see how the offer made by t....
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.... obvious thing it should have done. It never engaged any estate agent, or at least any reliable or respectable estate agent of whom there was no lack in the city. By his letter dated June 21, 1958 Mr. Hossain advised the Head Office that in view of the amount involved it would be difficult to find a purchaser for the property in its entirety. He proposed to advertise for sales of portions, which were likely to fetch higher prices. He also recommended that Talbot & Co., the leading estate agents might be contacted through whom the bank should have been able to find purchasers for the school building, the market and other suitable portions at favourable rates. Nothing in that direction was done. The head office did not even reply to his letter which only means that those who were in control of affairs did not even apply their minds to the eminently reasonable suggestions made by the bank manager. 130. By another letter dated June 26, 1956 Mr. Hossain intimated to the head office that the Government had a slum clearance project in view. The Government wanted to build tenements after clearing the slums to provide the displaced people with accommodation. Land price in Calcutta, it wa....
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....nth from Rs. 1500/- per month by abatement of rent. The lease of 1919 contains a provision for assignment, under lease or sub-lease of a part of the demised premises. The Agreement of 1931 also speaks of transfer of the property by sale or sub-lease as a whole or in separate lots. Mr. Hossain, the bank's local agent, himself said that the market and the school building could be sold separately at an advantage. He himself advised, as I have said, that the property should be sold in separate portions. There is no evidence oral or documentary, that any difficulty, legal or practical, was experienced by the bank in trying to sell a portion of the property. 134. In the face of all this evidence, it is impossible to hold that sale in portions was or is not feasible and that the property has to be sold in one lot, if at all. The nature of the property, as we have seen, makes it easy and even desirable to sell the property in separate lots. 135. The argument that the offer made by the defendant No. 2 is the best that the bank has been able to secure and therefore, the value offered is not grossly inadequate, breaks down. As I have said no effort was made by the bank on its own to....
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....tenants are liable to be evicted in law. I also realise that a big plot will fetch less per unit than a small plot will. But even after making all these allowances, I am of opinion that the price of Rs. 500/- per cottah is too much of an undervalue having regard to the prices at which plots of land have been sold in the neighbourhood in the recent past, of which there are records. In coming to the conclusion, I have also been guided by the prices at which the bank itself sold some plots in 1946, the statements made on behalf of the bank itself in its objection petition filed in connection with acquisition of land in 1946 and in its correspondence with the Head Office at Bombay to which I have alluded. Even if Rs. 2000/- is accepted as the value of vacant land per cottah, which I think, is on the low side, and that is a figure which is accepted by the bank in its correspondence, I do not think it will be reasonable to knock off 75 percent, of the value on the ground of occupation of the land by thika tenants. 140. In these circumstances, I am of opinion that the price offered by the defendant No. 2 accepted by the bank is grossly inadequate. The bank is about to make an improvide....
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.... trust estate. Admittedly that is so. Under the agreement of December 13, 1930 the defendant No. 1 has no obligation to render accounts to the plaintiffs but as I have held that the defendant bank is a trustee for sale, the stipulation in the agreement of 1930 under which the mortgagors were precluded from asking for accounts and the bank absolved from liability to render accounts till after sale of the property must be held to be invalid having regard to the provisions of section 19 of the Trusts Act. In these circumstances, I must hold that by refusing to render accounts the defendant bank has committed breach of trust. Items (c) and (k) relate to the failure of the defendant bank to sell the property in the course of 30 years. A trustee for sale has the power to postpone sale at its discretion even for an indefinite period unless by the terms of the trust he is required to sell the trust property within a specified period. That does not mean that a trustee for sale can adopt an attitude of indifference and pursue a course of inactivity for decades. If the sale is postponed for sufficient reason, surely no complaint can be legitimately made. In the present case, it appears that t....
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....and (k) of paragraph 24 of the plaint. 146. As for issue No. 7 there is no evidence that the plaintiffs have suffered any loss or damage by reason of any act of the defendants. I, therefore, answer the issue in the negative. The answer to issue No. 8 depends on the answer to issue No. 6. As I have answered issue No. 6 in the affirmative I answer issue No. 8 in like manner. In view of my answers to issues Nos. 2, 5 and 6, I must hold that the plaintiffs have plenty of cause of action and answer issue No. 12 in the negative. There is a prayer for a declaration that the agreement dated June 15, 1961 be declared void, delivered up and cancelled. 147. The plaintiffs are entitled to certain benefits under the agreement of December 13, 1980 viz., liquidation of their debt on the decree by sale of the properties, and a moiety of the surplus left of the proceeds of sale. The benefit of a contract is a property. Subject to certain exceptions, it is assignable as an actionable claim. 148. As I have held that under the Agreement of June 15, 1961 the defendant bank is seeking to sell the estate for a grossly inadequate price to the detriment of the plaintiffs' interest, I ....
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....y explanation in regard to debits made in the said account. They will be entitled to question the accuracy of the account but not the propriety of receipts and disbursements shown therein. 153. Clause 4 of the agreement provides that after transfer of the property fully by sale or sub-lease, the mortgagees will cause an account of their claim including costs, charges and expenses to be made up and adjusted and if after payment of all their dues and outgoings out of the proceeds of the said property, any balance is left, the same will be divided between the mortgagees and the mortgagors or their nominees in equal shares provided, however, the account so to be made up by the mortgagees shall be conclusive and final. In my opinion, the 'proceeds' of the said property do not mean merely the proceeds of sale. This construction is justified by the fact that under the decree the bank is entitled to charge interest on judgment at the rate of 6% per annum. There is also some evidence that in the account maintained by the bank under the agreement, the bank has been crediting the account with the rents, issues and profits of the property. It is true that the Deed of Assignment of F....
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....hat the mortgage was created in preach of trust and the mortgagee was holding the monies paid to him by the trustee in trust for him. The Court found that it was impossible to hold that the mortgaged property vested in the mortgagee in trust specifically for the beneficiaries of the trust of which the mortgagee was trustee. That was not the intention of either party to the transaction. Section 10 of the Limitation Act was, therefore, held to be not applicable. 156. Reference was made to the case of (48) Cunningham v. Foote 3 A.C. 974. There, on construction of a will, it was held that the will did not create a trust with regard to certain lands for payment of annuities and the claim for arrears of annuity was therefore not saved from the bar of limitation. 157. Here, the trust is an express trust. In Underhill on Trust, page 19, Article 7 para 1 it is said that no technical expressions are needed for the creation of an express trust. It is sufficient if the settlor indicates an intention to create a trust, and points out with reasonable certainty : (a) the trust property, (b) the beneficiaries and (c) the purpose of the trust. In paragraph 2 it is said that whether an intenti....
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....nd, it might have been more alert and active. The bank has been nationalised recently and to-day it is a public institution. In these circumstances. I do not propose to appoint an administrator, at least, not at present, without giving the defendant bank a fair chance to make amends by making an effort to sell the estate at a reasonable price to the best advantage of the parties. The Court can exercise control under section 49 of the Trusts Act on the discretionary power conferred on the trustee. I, therefore, propose to give necessary directions to the defendant No. 1 for sale of the property I do so, the more readily, in view of the submission made by counsel for the plaintiffs that all that his clients desire is that the defendant bank should sell the property in a proper manner. 161. Before I conclude, I desire to say that the transcript of the arguments made available to me, was of considerable assistance. The case was ably argued though a great deal of evidence, inconsequential and amorphous, might have been eliminated without any loss to any one. After a number of adjournments, hearing was concluded in January, 1969. 162. It now remains for me to pronounce the order. T....