Saturday, 26 January 2019

Whether court has jurisdiction to control discretion to be exercised by trustees?

The learned Judge has also overlooked the well settled law
laid down in the judgments of various Court relied upon by the
Appellant where it has been expressly held that once the
discretionary power is not exercised by the trustee reasonably and
in good faith, such power could be controlled by a Court. These
judgments have been passed in the following cases viz. Klug
(Supra) a judgement of the Chancery Division, M.V.
Ramasubbier (Supra), judgment of the Supreme Court and in
Re. H.E.H., The Nizam's Jewellery Trust (Supra), again a
judgment of the Supreme Court. The Supreme Court in Re.
H.E.H., The Nizam's Jewellery Trust (Supra) at paragraph 52
has held as under:-

52. The power conferred on the Board of
Trustees is no doubt discretionary, but on the
principle embodied in S.49 viz., that when such
discretionary power is not exercised
reasonably and in good faith, such power may
be controlled by a Court. There was no warrant
for the suggestion made by the Board of
Trustees before the High Court that the power
is absolute. The law on the subject is
succinctly stated in Underhill's Law of Trusts
and Trustees,12th Edn.,p.472;
….it would seem that, even where trustees
claim to exercise their discretion as to
investments, the court will, in a proper case,
direct an inquiry whether it is for the interest of
the beneficiaries that a particular investment
should be continued or called in. So, too,
where absolute discretion has been given to
trustees to do a particular act (e.g. to sell the
trust property), the court cannot compel them
to exercise the power, but if they do exercise
it, the court will see that they do not exercise it
improperly or unreasonably.
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
APPEAL NO. 551 OF 2004
IN
SUIT NO. 3578 OF 2000
Kamleshsingh Harnamsingh Chowhan Vs Gangasingh Motisingh Chowhan

CORAM: B.R. GAVAI &
RIYAZ I. CHAGLA, JJ.

Dated: 11TH JANUARY, 2019.

J U D G M E N T :- (Per Riyaz I. Chagla J.)
1. This Appeal challenges an order and judgment of the
learned Single Judge of this Court dated 22nd July, 2004 (“the
impugned judgment”) by which the Suit filed by the Appellant /
Plaintiff was dismissed on the ground that no case was made out
by the Plaintiff.

2. An Appeal had been preferred by the Appellant challenging
the impugned judgment which was disposed of by a judgment of
this Court dated 18th December, 2013. The Division Bench of this
Court set aside the impugned judgment and remanded the matter
for a fresh trial on the ground that it would be unfair on the parties
to proceed with the Appeal on record as it stands. The judgment of
the Division Bench was challenged by the Respondent before the
Supreme Court and the Supreme Court passed an order dated
27th April, 2015 setting aside the judgment of the Division Bench
and held that
“the clear finding recorded by the learned trial court
that the parties are agreed that no oral evidence was
necessary in the suit and that the only document that
was required to be interpreted is the deed dated 29th
March, 1949, we are of the view that the High Court
ought not to have remanded the matter for a de novo
trial and ought to have considered all the issues on
the basis of the aforesaid position agreed to by and
between the parties”.
3. As a result thereof, this Appeal is required to be determined
in light of the remand by the Supreme Court for consideration of
all the issues on the basis of the position agreed to by and
between the parties. Accordingly, we are determining this Appeal
on the agreed position recorded by the learned Trial Court that no
oral evidence is necessary and that the only document required to

be interpreted is the Deed (Indenture of Trust) dated 29th March,
1949.
4. At the outset, it would be necessary to mention that after
substantially hearing the matter a suggestion was made to the
parties that the parties may explore the possibility of amicable
settlement since the disputes involved were amongst close
relatives. The parties agreed to refer the dispute to mediation and
agreed on the name of Hon'ble Justice J.P. Devadhar, Retired as
mediator. This is recorded in the order dated 6th December, 2018
passed by this Court. Pursuant thereto mediation was held and a
mediation report was prepared which is dated 14th December,
2018. It was recorded therein that mediation had failed as the
offer of Rs.5 lakhs made by Respondent Nos. 2 to 4 to the
Appellant in full and final settlement of his claim was considered
by the Appellant to be unreasonable and unacceptable to the
Appellant.
A brief background of facts is necessary.
5. An Indenture of Trust was executed on 31st March, 1949
between one Parvatibai Chowhan (“the Settler”) and Rai Bahadur
Kunwar Motisingh Lalsingh and Kunwar Gagasingh Motisingh
(hereinafter referred to as the said Motisingh and the said

Grangasingh) as original trustees which settled the trust property
being a plot of land with building constructed thereon and income
arising therefrom. The said Indenture of Trust was duly registered.
6. The said Parvatibai died on 24th January, 1963. She was
survived by her son Motisingh who had two sons viz.
Harmansingh and the original trustee, the said Gangasingh. The
said Gangasingh had four sons (Respondent Nos. 2 to 4) who
were born prior to the execution of the Indenture of Trust. The
Appellant was adopted by the said Harmansingh on 10th July,
1964 i.e. after the Indenture of Trust was executed, by a
registered Deed of Adoption. Upon the demise of the said
Motisingh, the said Gangasingh was the only surviving trustee.
On 22nd September, 1965, the said Gangasingh appointed two of
his four sons viz. Digvijaysingh and Kishorsingh (Respondent Nos.
2 and 3) as trustees on 22nd September, 1965. Being aggrieved
by the appointment of the said Gangasingh's two sons as trustees,
the said Harmansingh filed Suit No.267 of 1968 for removal of the
said Gangasingh's sons as trustees and for appointment of
Harmansingh as trustee in accordance with the Indenture of Trust.
A consent decree came to be passed in the said Suit on 31st July,
1970 removing Respondent Nos. 2 and 3 and thereby appointing
Harmansingh as trustee. On 10th November, 1984, the said

Harmansingh expired leaving his window and adopted son as his
only legal heirs and representatives. The Appellant applied for
Letter of Administration which was obtained on 21st November,
1986 in respect of the property and credits of the said
Harmansingh in Petition No. 641 of 1985.
7. There were disputes which had arisen between the
Respondents and the Appellant. It is the case of the Appellant that
after the death of his father, the said Harmansingh, the said
Gangasingh had defamed him by circulating among tenants of
Lalsingh Mansingh Building a letter dated 5th February, 1985
calling the Appellant an outsider and usurper of properties and
labelling his intentions as malafide which led to a criminal case
being filed by the Appellant against the said Gangasingh for
defamation which was thereafter compromised and consent terms
filed on 8th April, 1991. It is the case of the Appellant that despite
the Appellant having a bonafide interest in the trust, the original
Defendant No.1, the said Gangasingh once again appointed as
trustees vide Deed of Appointment dated 28th February, 1992, the
Respondent Nos. 2 and 3 who were domiciled in the US since
1974. By the very same Deed of Appointment also referred to as
Deed of New Appointment the said Gangasingh appointed from
and after his death Respondent Nos. 2 to 4 as the beneficiaries of

the trust property and income thereof in equal shares subject to
the terms and conditions of the Indenture of Trust. Further, by a
Will executed as last Will and testament of Gangasingh on 7th
March, 1992, the said Gangasingh reiterated his having exercised
power vested in him by the Indenture of Trust and appointing from
and after his death the trust property and income therefrom and
cash or securities, if any, representing the same to be held in trust
for his sons Digvijaysingh, Kishoresingh and Ishwarsingh, i.e.
Respondent Nos. 2, 3 and 4 herein in equal share subject to the
terms and conditions of the said Indenture of Trust. On 13th
October, 1997, the original Defendant No.1 and Respondent Nos.
2 and 3 herein appointed Respondent No.4 as trustee vide Deed
of appointment. Further, the original Defendant No.1 by a
registered Declaration Deed dated 17th March, 1998, declared
that the appointment made by him of his sons as beneficiaries of
the trust property and income thereof exercising power under
clause 5(f) of the Indenture of Trust in the registered deed dated
28th February, 1992 is final and irrevocable.
8. It is claimed by the Appellant that the Respondents had
committed several breaches of the Indenture of Trust as well as
mismanaged the affairs of the trust. The Appellant has referred to
a letter of the Municipal Corporation alleging breaches of the lease

arrangement in respect of the Trust property as well as the
erection by the original Defendant No.1 of three unauthorised
advertisement hoardings as amongst breaches of the lease
arrangement. These breaches were committed in the year 2000
and despite the land records in that year showing the names of
Respondent Nos. 2 and 3 as trustees, the original Defendant
No.1, Gangasingh was acting as sole trustee. The Appellant has
further claimed that he learnt of a current account in Bank of India
opened in the name of Harganga Mahal Estate being operated by
not only the original Defendant No.1 but also by his sons
Respondent Nos. 2 and 3 who had at the relevant time been
removed as Trustees and by his other son, Respondent No.4 who
had no concern with the administration and / or management of
the Trust property. The Bank account could only be operated by
Trustees duly appointed under the Indenture of Trust. It appears
that in view of these breaches and mismanagement of the affairs
of the trust by the Respondents, the present Suit was filed by the
Appellant bearing Suit No. 3578 of 2000.
9. After the filing of the present Suit, the original Defendant
No.1, the said Gangasingh executed a codicil on 1st July, 2003 to
his last Will and testament and by which the said Gangasingh
once again exercised the power of appointment and appointed

Respondent Nos.2 to 4 as final beneficiaries to the corpus of trust
in equal shares. The said Gangasingh died on 4th July, 2003.
10. The Respondent Nos. 2 to 4 herein filed a Written
Statement dated 14th August, 2003 in the Suit filed by the
Appellant. Issues were originally framed by the Single Judge of
this Court (Bobde, J, as his Lordship then was). These issues
read as under :-
(1) Whether the Plaintiff is a beneficiary under the
Trust Deed dated 31st March, 1949?
(2) Whether the Plaintiff proves that the affairs of
the Trust have been mismanaged by the Defendants
individually or jointly?
(3) Whether the Defendant No.1 is fit to continue as
a Trustee?
(4) Whether the Plaintiff is entitled to maintain the
Suit?
(5) Whether the Plaintiff is entitled to a decree for
removal of the Trustee?
11. It appears that after these issues were framed by the then
learned Judge of this Court, the original Defendant No.1, the said
Gangasingh expired on 4th July, 2003 and the issues were reframed
by the then learned Single Judge who has passed the
impugned judgment and by which the matter proceeded in an
entirely different manner. The manner in which the matter

proceeded is indicated in paragraph nos. 1 and 3 of the impugned
judgment which read as under:-
“1. By consent of parties this Suit itself is
taken up for final disposal. It was agreed
between the parties that no oral evidence is
necessary to be led by either of the parties
for deciding the suit. It was also agreed
between the parties that for deciding this
suit only document that needs to be
considered by the Court is the deed dated
29-3-1949. Parties are also agreed that
though in the suit various reliefs are
claimed, only relief that the Plaintiff is now
pressing is the appointment of the
Defendants Nos.2 & 3 made by the original
Defendant No.1 Gangasingh as a person on
whom the property devolve in terms of the
above referred deed should be cancelled.
3. I have heard the learned counsel for both
sides and from the submissions made
before me, in my opinion, following issues
arise for consideration:
i. Whether the appointment of Gangasingh
made by the deed executed by Parvatibai for
nominating the person on whom the
property would devolve amounts to creation
of Trust?
ii. If yes, whether that power is to be
exercised in consonance with the principle
of equity and good faith?
iii. Whether the power conferred by the deed
on Gangasingh of making appointment is a
power of the testator delegated to
Gangasingh and therefore, it is subject to
only to those obligations which are imposed
by law on the testator?

The above issues come to be answered against the
Appellant/Plaintiff and the Suit was accordingly dismissed by the
impugned judgement. Hence, the present Appeal is filed.
12. Mr. Vivek Kantawala, the learned counsel on behalf of the
Appellant has submitted that the learned Single Judge in the
impugned judgment has erroneously held that the original
Defendant No.1, the said Gangasingh had been delegated an
exclusive power by the settlor of the Indenture of Trust viz. the
said Parvatibai by which the said Gangasingh would get the same
power possessed by Parvatibai and by which there could be no
restrictions in the exercise of the said power. He has submitted
that the then learned Single Judge failed to appreciate that the
said Parvatibai as settlor had vested the property in the trustees
for the benefit of the grandsons and great grandsons of the settlor.
The powers conferred by the settlor upon the trustees were
merely the machinery and / or means for achieving the ultimate
object i.e. benefit of the grandsons and great grandsons of the
settlor.
13. He has submitted that the then learned Single Judge has
erroneously found in the impugned judgment that even assuming
that the power in the hands of the said Gangasingh was a

discretionary power, there was no material on record placed by
the Appellant which could lead to the conclusion that the power
has been abused by the said Gangasingh in excluding the
Appellant herein. He has submitted that it is further erroneously
held that as the exercise of discretion is of subjective satisfaction,
it is possible that there could have been good and valid reasons
for the said Gangasingh to exclude the Appellant. He has
submitted that the said Gangasingh has in an Affidavit dated 14th
September, 2001 filed in reply to the Notice of Motion No.273 of
2001 taken out in Suit No. 3578 of 2000 stated that he does not
admit that the Appellant is the son of Harnamsingh or that he was
adopted as the son of Harnamsingh by a Registered Deed of
adoption dated 10th July, 1964. He has further submitted that this
statement of the original Defendant No.1, the said Gangasingh
only goes to show that the said Gangasingh as trustee had let his
personal feelings about the beneficiary i.e. the Appellant come into
consideration whilst exercising his alleged discretionary power to
exclude the Appellant to the benefits of the trust property. He has
relied upon a passage from the Law of Trust by Simon Gardner in
that context.
14. He has submitted that the then learned Single Judge has in
the impugned judgment not appreciated in proper perspective the

powers conferred by clause 5(f) of the Indenture of Trust which
placed a specific restriction upon the surviving trustee viz. that the
trust property was to be distributed equally between sons of the
said Harmansingh and the said Gangasingh such that they
receive an equal share. He has submitted that the original
Defendant No.1 has failed and / or neglected to exercise the
powers conferred upon him under the Indenture of Trust in good
faith and for the objects and purposes of the trust. He has
submitted that the exercise of power by the original Defendant
No.1 is an abuse of power and that the apparent intention being
for avenging the prior losses in litigations between, the original
Defendant No.1 and the Appellant's father Harmansingh as well
as the Appellant. He has submitted that the intention to exclude
the Appellant from the benefits of the trust is also as a result of the
Appellant having made complaints regarding the breaches
committed by the Respondents of the terms and conditions of the
lease of the trust property and which had prejudiced the interest of
the Appellant as beneficiaries of the trust. He has submitted that
the Indenture of Trust having been created for the benefit of all
grandsons and great grandsons of the settlor, the benefit of which
could not be taken away by the Deed of new appointment, Will
and codicil.

15. The learned counsel has relied upon certain provisions of
the Indian Trusts Act, 1882 viz. Sections 11, 17, 49, 60 and 73.
Sections 17 and 49 of the Indian Trusts Act enjoin a Trustee to be
impartial in exercise of his powers / duties as a trustee and where
a discretionary power is conferred, the power is to be exercised by
the Trustee reasonably and in good faith. Section 11 is also to the
similar effect and provides that the trustee is bound to fulfil the
purpose of the trust. Section 60 of the Act provides the right to
have proper persons as trustees and that persons domiciled
abroad are not proper persons within the meaning of this Section.
Thus the beneficiaries right to have the trust property properly
protected and held and administered by proper persons cannot be
jeopardised by vesting the trust property in the hands of persons
domiciled abroad as done in the present case i.e. in the hands of
the Respondent Nos. 2 and 3, residing in the USA. Section 73 of
the Act provides for the appointment of new trustee in place of the
trustees who have left India for the purpose of residing abroad. In
the present case, the Respondent Nos. 2 and 3 who had left India
and were residing in USA should have been substituted by a new
trustee in their place.
16. The learned counsel has submitted that the Indenture of
Trust had provided for appointment of the Appellant's father the

said Harnamsingh, in the event of the original trustee, the said
Motisingh resigning / expiring. It further provided for at least two
trustees to manage the trust. These clauses have been breached
by the said Gangasingh. It was upon the said Harnamsingh filing
the Suit, that the said Gangasingh by a consent decree agreed to
remove his two sons and substituted them with the said
Harnamsingh. After the death of said Harnamsingh, original
Defendant No.1 acted on his own for several years and thereafter
once again appointed Respondent Nos. 2 and 3 as trustees. He
has submitted that the learned Single Judge has failed to
appreciate that the said Gangasingh has misused his power of
appointment of trustees by the Deed of Appointment of Trust
dated 28th February, 1992.
17. He has in support of his submissions relied upon the
following cases viz. Klug V. Klug1, Cecil Libovitz V. Official
Trustee of West Bengal2, M.V. Ramasubbier & Ors. V. Manicka
Narasimachari & Ors.3, M/s. Shanti Vijay & Co. V. Princess
Fatima Fouzia,4, Turner & Ors. Vs. Turner & Ors.5, and
1 (1918) 2 Ch.67
2 (1965) 69 C.W.N. 1010.
3 AIR 1979 SC 671.
4 AIR 1980 SC 17.
5 (1983) 3 W.L.R. 896.

Krishna Mohan Kul & Anr. V. Pratima Maity & Ors.6. The
judgments in these cases expressly stipulate that where property
is vested in Trust, the Trustee can only exercise power delegated
unto him by the settlor for the purposes of the Trust and expressly
state that this Court will interfere wherever it notices that the
powers delegated are abused and / or misused for purposes other
than the objects of the Trust. He has submitted that the learned
Single Judge has erroneously placed reliance upon the judgment
of this Court in Bapuji Karawala V. Haji Esmail Haji Ahmed7. He
has submitted that this judgment does not deal with a situation as
in the present case where the property is vested in the trustee for
a particular object and is really a precedent on the rule against
perpetuities since the property was bequeathed in that case by
way of Will and Testament. He has accordingly submitted that the
impugned judgment ought to be set aside and the suit decreed in
favour of the Appellant.
18. Mr. Devitre, the learned Senior Counsel appearing on behalf
of the Respondent Nos. 2 to 4 has submitted that the original Suit
had been filed by the Appellant for removal of Respondent Nos. 2
to 4 as trustees of the trust property and for accounts of the said
6 (2004) 9 SCC 468.
7 (1921) Bom.L.R. 1259.

trust. He has submitted that upon the demise of the original
Defendant No.1 who was the original trustee of the said trust, the
issues were re-framed by the learned Judge in the impugned
Judgment and which confined itself to the nature of the power
exercised by the said Gangasingh making appointment of
Respondent Nos. 2 to 4 herein as beneficiaries of the trust
property and whether that power has been exercised in
consonance with the principles of equity and good faith. The
plaint filed in the said Suit was accordingly amended and now
challenged the codicil dated 1st July, 2003 executed by the said
Gangasingh appointing Respondent Nos. 2 to 4 as beneficiaries of
the trust property and for declaration that the codicil is illegal and
not binding or enforceable against the Appellant or any one
claiming through the Appellant. He has submitted that by virtue of
the order passed by the Hon'ble Supreme Court, the parties have
agreed that what is required to be interpreted is only the Indenture
of Trust dated 29th March, 1949 and that no evidence was
necessary.
19. He has submitted that the Indenture of Trust makes it clear
that the Appellant was never entitled to any income under the
Trust. This is clear from clauses 5(a), 5(b), 5(c) and 5(d). In fact
clause 5(e) of the Indenture of Trust provides that on the death of

the said Gangasingh his five annas share of net income will be
given to his four sons and clause 5(d) provides that on the death
of Harnamsingh his five annas share of net income will be given to
the four sons of the said Gangasingh. Clause 5 (f) of the Indenture
of Trust provides for the date of distribution and the manner in
which the estate is to be distributed once the trust come to an end.
In that context, it is submitted that the settlor, the said Parvatibai,
in clause 5(f) of the Indenture of Trust had given an absolute and
unfettered power to the said Gangasingh to choose the final
beneficiaries with the only limitation imposed on him that he must
exercise the power of appointment and decide the beneficiaries
from amongst the sons and or grandsons of Harnamsingh and
Gangasingh. The said Gangasingh could also determine the
shares that each beneficiary would be given on appointment. He
has submitted that such power could have been exercised by the
said Parvatibai herself but she chose to delegate the power to
Gangasingh. He has submitted that the said Gangasingh was
given the opportunity to exercise the power of appointment by
executing a deed or will or codicil or any other testamentary
writing.
20. The learned senior counsel has further submitted that from
the said clause in the Indenture of Trust it is clear that the settlor

had immense faith in the said Gangasingh and hence he was
given exclusive power and benefits in his individual capacity apart
from being made managing trustee. He has submitted that from
the Deed of Appointment, the Will and codicil as well as the Deed
of declaration, it is clear that the said Gangasingh has exercised
the power as well as time and again confirmed the appointment of
Respondent Nos. 2 to 4 as final beneficiaries of the corpus of the
trust. He has submitted that the Deed of appointment executed by
the said Gangasingh with Respondent Nos.2 and 3 as new
trustees on 28th February, 1992 was for both appointment of new
trustees as well as a Deed of new appointment i.e. for executing
the power vested in the said Gangasingh by appointing as the
beneficiaries of the corpus of the trust in favour of his sons
(Respondent Nos. 2 to 4).
21. He has submitted that the Appellant was neither a trustee
nor entitled to any income during the subsistence of the trust. He
has submitted that the Appellant is not a beneficiary of the corpus
of the trust and thus had no locus standi to have filed the present
Suit being neither a trustee nor a beneficiary. He has submitted
that prior to the date of distribution i.e. 4th July, 2003 when the
trust came to an end the said Gangasingh had validly exercised
the said power of appointment. He has submitted that the portion

of clause 5(f) which provides that the corpus will be distributed to
all the sons of Harnamsingh and Gangasingh in equal share
would come into operation only if Gangasingh had failed to
exercise the power of appointment. Since Gangasingh had during
his lifetime exercised the power of appointment / distribution, this
portion of clause 5(f) does not come into operation. He has
submitted that the said Gangasingh in exercising the power of
appointment has excluded his own eldest son, the 5th
Respondent apart from the Appellant. He has submitted that it is
not open to any party or even the Court to look into the reasons or
motive for the action of the said Gangasingh in exercising the said
power. He has submitted that under the Indenture of Trust, the
said Gangasingh has stepped into the shoes of the settlor,
Parvatibai and exercised the power without requiring to give any
reasons or his motives being questioned.
22. The learned Senior Counsel has relied upon the judgment
of this Court in Bapuji Karawalla (Supra). He has further relied
upon the judgment of this Court in Mahadeo Ramchandra Vs.
Damodar Vishwanath & Anr.8 and the judgment of the Calcutta
High Court in Basanti Seal and Ors. Vs. Hiralal Seal and Ors.9.
8 AIR 1957 Bombay 218 (V44 C 76 Oct.)
9 2007 (1) CHN 35 (Equivalent Citation)

In the case of Basanti Seal (Supra) it was held that where the
Trustees of a private trust had the absolute power to appoint
beneficiaries of the corpus and exercised the same in favour of
two of the sons while excluding the third son, he had committed
no wrong and rightly exercised a validly given power. He has
submitted that the default clause has also been dealt with in the
judgment of Basanti Seal (Supra) and it has been held that the
default clause would arise only when there is no appointment by
the joint trustees or surviving trustee. He has submitted that
similarly in the present case, the power of appointment of
beneficiaries was exercised by the surviving trustee, the said
Gangasingh and hence the default clause would not apply.
23. He has submitted that the learned Judge in the impugned
Judgment has correctly observed that the Appellant has not made
out any case of the said Gangasingh having made the
appointment of beneficiaries in a malafide manner. He has
accordingly, submitted that the appointment of Respondent Nos. 2
to 4 as beneficiaries of the trust property is valid and that the
Appellant has no right, title and interest in the trust property.
Accordingly, he has submitted that the Appeal be dismissed.

24. Before considering the submissions made on behalf of the
Appellant and Respondents, it is necessary to refer to the relevant
clauses of the Indenture of Trust which, as agreed between the
parties is the only document which needs to be considered.
Clause 1 of the Indenture of Trust provides that the settler has
assigned upon the trustees the said property. Clause 5 provides
that after defraying the expenses mentioned therein, the trustees
shall hold the remainder of the gross income in trust to apply and
pay the same in the manner stated therein. A 5/16th share of the
remainder was to be paid to the said Harnamsingh during his life.
A further 5/16th share was to be paid to Gangasingh during his
life. The remaining 6/16th share was to be applied inter alia as
follows:-
“(c) The trustees shall apply and utilize the
remaining 6 (six ) annas share of the net income
(ii) From and after the construction work
referred to in the forgoing sub clause (c) (i) is
completed the trustees shall pay the remaining
six annas share of the net income to the said
Kunwar Gangasingh Motisingh for the
maintenance, education, advancement and the
benefit of the said four great grand sons of the
Settlor being the sons of Kunwar Gangasingh
and the survivors or the survivor of them until
each of them shall attain the age of 18 years or
until the date of distribution which ever may be
earlier and from time to time as and when each
of the said four great grandsons of the settler
shall attain the age of 18 years the trustees shall

divide the said six annas share of the net
income into as many as equal parts as there
shall be great grandsons of the Settlor then
living and – pay one such equal part absolutely
to each one of the said four great grandsons of
the Settlor who shall have attained the age of 18
years,-- until the death or upto the date of
distribution hereinafter mentioned – whichever
may be the earlier and pay the balance of the
said six annas share of the net income to the
said Kunwar Gangasingh for the maintenance,
education, advancement and benefit of such of
the said four great grand-sons of the Settlor as
shall not have then attained the age of eighteen
years and in the event of only one of the said
four great grandsons attaining the age of
eighteen years the Trustees shall pay the whole
of the said six annas share to him absolutely
until his death or upto the date of distribution
hereinafter mentioned whichever may be earlier.
PROVIDED HOWEVER that the said
Kunwar Gangasingh shall be at liberty at his
discretion instead of spending away the whole
of the said six annas share of the net income for
the maintenance and benefit of the said great
grand sons of the Settlor, to set apart and
accumulate not more than two-third of the said
six annas share in the net income or such part
of the said six annas share as shall be payable
to him for the time being and from time to time
for the maintenance, education, advancement
and benefit of the said four great grand sons
who shall not have attained the age of eighteen
years as and by way of provision for marriage
expenses and higher education of such great
grand sons of the Settlor and to use such
accumulations or such portion thereof as he
may in his absolute discretion deem fit on the
occasion of the marriage of each of such great
grandsons for the purposes of such marriage or
for higher education of each of such great
grandsons;

PROVIDED FURTHER that the said
Kunwar Gangasingh shall not be liable to render
accounts either to the Trustees or to such great
grand sons of the Settlor or any one else in
respect of the said six annas share in the net
income or any portion thereof which shall be
paid to him by the Trustee for the purposes
aforesaid or as to the disposal thereof or in
respect of the application and disposal of the
accumulations, if any, that may be made by the
said Gangasingh of two-third of the said six
annas share in the net income for providing
marriage expenses and higher education for
such great grandsons.
25. The other relevant clauses are clauses (d) and (f) of Clause
5 which read as under:-
(d) In the event of the said Kunwar
Harnamsingh Motisingh predeceasing the
said Kunwar Gangasingh Motisingh the
Trustees shall pay the said five annas share
of the net income which would have had
been payable to the said Kunwar
Harnamsingh Motisingh if he had been alive
to all the said four great grand sons of the
Settlor being the sons of Kunwar
Gangasingh in equal shares for and during
their respective lives and in the event of the
death of any one or more of them to the
survivors or survivor of them equally for and
during the respective lives or life of such
survivors or survivor or upto the date of
distribution – Hereinafter mentioned
whichever may be earlier so as to increase
and augment their share in the net income
as aforesaid but so that during the minority
of each of the said four great grand sons of
the Settlor his share of the said five annas
share of the net income shall be paid to the
said Kunwar Gangasingh Motisingh for the
maintenance, education, advancement and

benefit of such minor with the same powers
and subject to the same conditions as are
mentioned in Clause (5) sub – clause (c) (ii).
(f) On the death of the survivor of them
the said Kunwar Harnamsingh Motisingh
and the Kunwar Gangasingh Motisingh
which point of time is herein referred to as
the date of distribution, the trustees shall
hold the trust premises and the income
thereof and the cash or securities, if any,
then standing to the credit of the repair fund
in trust, for such one or more sons or
grandsons of the said Kunwar Harnamsingh
and Kunwar Gangasingh in such shares, at
such time or times for such interest or
interests and in all respects whatsoever in
such manner as the said Kunwar
Gangasingh shall by deed with or without
power of revocation and new appointment or
by will or codicil or other testamentary
writing without transgressing the rule
against perpetuities or any other rule of law
appoint and in default of any and subject to
any and every such appointment in trust for
all the sons of the said Kunwar
Harnamsingh and the Kunwar Gangasingh –
in equal share but so never the less that if
any son of the said Kunwar Harnamsingh or
the Kunwar Gangasingh shall have died
before the date of distribution leaving son or
sons him surviving and existing at the date
of distribution then the last mentioned son
or sons shall take and if more than one, face
- equally between them the share which his
or their deceased father would have taken in
the trust premises and the income thereof
and in the cash or securities representing
the repair fund had he been alive at the date
of distribution.

26. The appointment of new trustees is provided in clause 9 of
Indenture of Trust which reads as under:-
“9 The power of appointing new trustees
conferred by statute shall for the purposes of
these presents be vested in the Continuing
Trustees or Trustee. After the death of either of
them the said Rai Bahadur Kunwar Motisingh or
Kunwar Gangasingh or retirement of the former /
Kunwar Harnamsingh shall be appointed trustee
and thereafter if and when any new trustee is to
be appointed any of the sons of Kunwar
Gangasingh who shall be major, shall be
appointed trustee. Upon any appointment of new
trustee the number of trustees may be altered
provided that it be not reduced below two and if
at any time the number of trustees shall by death
or otherwise be reduced to one a new trustee or
new trustees shall be appointed as soon as
conveniently can be but in the meantime and
until such appointment all acts of the sole –
trustee shall be valid and effectual”.
27. We shall now proceed to consider the rival submissions.
The document which falls for consideration viz. the Indenture of
Trust was executed by the settlor viz. the said Parvatibai for
vesting the trust property in the hands of the original trustees, the
said Motisingh and the said Gangasingh. The beneficiaries being
her grandsons and great grandsons. On the date of the Indenture
of Trust, i.e. 31st March, 1949, the said Harnamsingh had no son
and it was only in 1964 that he had adopted the Appellant. The
recital clause (at internal page 3) of the Indenture of Trust also

makes it clear that the trust property was being held upon trust for
the benefit of the settlor's grandsons and great grandsons. This is
provided in the recital clause (internal page 3) which reads as
under:-
Recital Clause (at Internal Page 3):
… AND WHEREAS the Settlor has two grandsons,
Kunwar Harnamsingh and the said Kunwar
Gangasingh being the sons of her son the said Rai
Bahadur Kunwar Motisingh AND WHEREAS the
said Kunwar Harnamsingh is married but has at
present no issue (Appellant was adopted in 1964)
and the said Kunwar Gangasingh is also married
and has at present four minor sons namely (1)
Bhupendrasingh Gangasingh born on 7th July,
1941, (2) Digvijaysingh Gangasingh born on 18th
November, 1942, (3) Kishoresingh Gangasingh
born on 13th January, 1944 and (4) Ishwarsingh
Gangasingh born on 19th February, 1946 AND
WHEREAS the Settlor has decided to settle her
said leasehold land heriditaments and premises
upon trust for the benefit of her said grandsons
and great grandsons.
(emphasis supplied)
28. The other clauses of the said Indenture of Trust which have
been extracted aforesaid also make it clear that the trust property
was vested in the trustees by the settlor for the intended
beneficiaries and which included the grandsons and great
grandsons of the settlor. The trustees were to hold the remainder
of the gross income (called the net income) in trust and were to
apply the same as provided in clause 5(a), 5(b) and 5(c) of the

Indenture of Trust. Clause 5(f) of the Indenture of Trust has been
relied upon by the Respondents to claim that there was an
independent power vested in the said Gangasingh to distribute the
shares in the trust property in whomsoever he deemed fit by Deed
of new appointment, Will or codicil provided it was distributed
amongst the sons and / or grandsons of the said Harnamsingh
and the said Gangasingh as beneficiaries. We cannot accept the
Respondent's interpretation of Clause 5(f) of the Indenture of
Trust. This clause refers to the date of distribution and from a
reading of this clause it is clear that the settlor of the Indenture of
Trust had not intended to exclude any of her great grandsons i.e.
sons of the said Harnamsingh and the said Gangasingh. In the
last part of this clause, which the Respondents have interpreted
as applying in the eventuality of a default on the part of the said
Gangasingh to appoint the beneficiaries on the date of distribution,
provides that “subject to any and every such appointment in Trust
for all the sons of the said Kunwar Harnamsingh and Kunwar
Gangasingh in equal shares...” Presuming, that the Respondents
are correct in their interpretation that sons of the said Kunwar
Harnamsingh and Kunwar Gangasingh would be appointed as
beneficiaries in equal shares only in the eventuality of the default
on the part of the said Kunwar Gangasingh to appoint the

beneficiaries and determine their respective shares in the trust
property, it is clear that the settlor had no intention to exclude any
of her great grandsons, either existing on the date of Indenture of
Trust or born or adopted thereafter. This is apparent from the
Indenture of Trust which mentions the beneficiary of the trust
property to include the sons of the said Harnamsingh, although at
the date of execution of the Indenture of Trust, the said
Harnamsingh had no son, the Appellant having been adopted in
1964.
29. We are accordingly of the considered view that the
discretionary power which had been conferred on the said
Gangasingh as original trustee was required to be exercised
reasonably and in good faith and for the benefit of the sons of the
said Harnamsingh and Gangasingh by determining their
respective shares and as such the discretionary power can be
controlled by this Court. This is expressly provided for under
Section 49 of the Indian Trust Act, which reads as under:-
49. Control of discretionary power.—Where a
discretionary power conferred on a trustee is not
exercised reasonably and in good faith, such
power may be controlled by a principal Civil Court
of original jurisdiction.

30. From the facts emerging in the present case, the said
Gangasingh who was appointed as original trustee has taken
various measures to favour his sons and exclude the said
Harnamsingh and his adopted son, which measures were never
intended to be taken by the settlor of the trust who vested the trust
property in the hands of the original trustees. This is evident from
steps taken by the said Gangasingh in appointing his own sons
i.e. Respondent Nos. 2 to 4 as trustees, after the resignation of
the original trustee, the said Motisingh. This was effected on 22nd
September, 1965, when the said Gangasingh appointed his two
sons as trustees, although under clause 9 of the Indenture of
Trust, it was provided that upon the expiry / retirement of the said
Motisingh, the said Harnamsingh was to be appointed as trustee.
It was only thereafter that when a new trustee is to be appointed,
any of the sons of the said Gangasingh who was a major shall be
appointed as trustee. As a result thereof, the said Harnamsingh
was compelled to file a Suit for removal of Respondent Nos. 2 and
3 as well as the said Gangasingh as trustees and for appointment
of himself as trustee. This resulted in the consent decree being
passed removing Respondent Nos. 2 and 3 as trustees and
appointing the said Harnamsingh as trustee. Upon the death of
the said Harnamsingh on 10th November, 1984, the said

Gangasingh acted as sole trustee for several years till 28th
February, 1992, despite clause 9 of the Indenture of Trust
providing that the trust property should be vested in the hands of
at least two trustees and in the event the number of trustees are
reduced to one, a new trustee or new trustees shall be appointed
as soon as conveniently can be so appointed and in the meantime
until such appointment all acts of the sole trustees shall be valid
and effectual. It further appears that on 28th February, 1992 the
said Gangasingh once again appointed vide Deed of Appointment,
Respondent Nos. 2 and 3 who had been domiciled in US since
1974. This was clearly in violation of Section 60 of the Indian
Trusts Act which provides that persons domiciled abroad are not
proper persons to administer the trust property and hence such
appointment was contrary to law. Further, the appointment was
only in name, as the said Gangasingh for all practical purposes
continued as sole trustee contrary to the Indenture of Trust.
31. We find from the Deed of Appointment executed by the said
Gangasingh appointing Respondent Nos. 2 and 3 as trustees on
28th February, 1992, the said Gangasingh went one step further
by exercising the power vested in him under the Indenture of Trust
and appointing from and after his death the trust property and
income thereof to be held in trust for his sons Digvijaysingh,

Kishoresingh and Ishwarsingh (Respondent Nos. 2,3 and 4) in
equal shares. This exercise of power was done in the very same
Deed of appointment although the Deed was executed by the said
Gangasingh together with his sons contrary to clause 5(f) of the
Indenture of Trust. The said clause provided that such
appointment could be made only by the said Gangasingh. We do
not accept the argument of the learned Senior Counsel for the
Respondents that in effect there are two separate Deeds i.e. one
for Deed of Appointment of new trustees and the other a Deed for
new Appointment of beneficiaries of the corpus of the trust. This
appointment of Respondent Nos. 2 to 4 as the beneficiaries of the
trust property from the date of distribution was apart from being
contrary to the said clause in the Indenture of Trust was also to
the detriment of the Appellant, being a beneficiary under the
Indenture of Trust and for whose benefit the trust property was
held. Such act on the part of the said Gangasingh as trustee is in
violation of Section 17 of the Indian Trusts Act, which provides as
under:-
17. Trustee to be impartial.—Where there are
more beneficiaries than one, the trustee is bound
to be impartial, and must not execute the trust for
the advantage of one at the expense of another....

32. The Appellant has claimed that from time to time the said
Gangasingh committed breaches as trustees in respect of the
trust property, particularly with regard to the lease arrangement
with the Municipal Corporation. Further the said Gangasingh
together with Respondent Nos. 2 and 3 were operating a current
account in the name of Harganga Mahal Estate in Bank of India to
the detriment of the Appellant. As a result whereof the present Suit
came to be filed by the Appellant. It appears that after the filing of
the Suit, the said Gangasingh executed codicil on 1st July, 2003.
The said Gangasingh had reiterated the appointment of his sons
(Respondent Nos. 2 to 4) as beneficiaries of the corpus of the
trust on the date of distribution in the codicil by going to the extent
of stating therein that it is his wish to have this appointment in the
event that the Deed of Appointment dated 28th February, 1992 is
set aside by this Court in the Suit filed by the Appellant. Upon the
death of the said Gangasingh on 4th July, 2003, the Respondent
Nos. 2 to 4 claimed to be the beneficiaries of the trust property to
the exclusion of the Appellant by virtue of the Deed of
Appointment as well as the Will and codicil executed by their
father, the said Gangasingh. As a result thereof, the issues were
re-framed by the learned Judge in the impugned judgement and
the plaint was accordingly amended. It appears that the learned

Judge in the impugned judgement has confined his findings to the
nature of the power conferred by clause 5(f) of the Indenture of
Trust on the deceased, the said Gangasingh by the settlor, the
said Parvatibai.
33. The learned Judge has in the impugned judgment arrived at
a finding that the said Gangasingh will get same power which
were possessed by the said Parvatibai and that no restrictions got
attached to that power. He has further held that presuming that the
power in the hands of the said Gangasingh was a discretionary
power then that power will have to be exercised by him on his
subjective satisfaction. With great respect to learned Judge, we
are unable to accept such findings as it is clear from clause 5(f) of
the Indenture of Trust that the trust property was to be held by the
said Gangasingh as the original surviving trustee on the date of
distribution i.e. his death for the benefit of the son of the said
Harnamsingh as well as his own sons. It is nowhere mentioned in
the Indenture of Trust that the son of the said Harnamsingh would
be excluded on the date of distribution. We find that the learned
Judge has failed to consider the other clauses of the Indenture of
Trust including the recital thereof which makes it clear that the
trust property was held for the benefit of the settlor's grandsons
and great grandsons which would include the Appellant.

34. The learned Judge has further incorrectly found that there
was no material placed by the Appellant which would indicate that
in 1992, the said Gangasingh made the appointment of his sons
as beneficiaries actuated by any malice or was enimical towards
the Appellant. This finding overlooks the defamatory statement
made against the Appellant by the said Gangasingh by claiming
that the Appellant was not the adopted son of the said
Harnamsingh. This is reiterated by him in the Affidavit in Reply to
the Notice of Motion filed in the present Suit.
35. The learned Judge has also overlooked the well settled law
laid down in the judgments of various Court relied upon by the
Appellant where it has been expressly held that once the
discretionary power is not exercised by the trustee reasonably and
in good faith, such power could be controlled by a Court. These
judgments have been passed in the following cases viz. Klug
(Supra) a judgement of the Chancery Division, M.V.
Ramasubbier (Supra), judgment of the Supreme Court and in
Re. H.E.H., The Nizam's Jewellery Trust (Supra), again a
judgment of the Supreme Court. The Supreme Court in Re.
H.E.H., The Nizam's Jewellery Trust (Supra) at paragraph 52
has held as under:-

52. The power conferred on the Board of
Trustees is no doubt discretionary, but on the
principle embodied in S.49 viz., that when such
discretionary power is not exercised
reasonably and in good faith, such power may
be controlled by a Court. There was no warrant
for the suggestion made by the Board of
Trustees before the High Court that the power
is absolute. The law on the subject is
succinctly stated in Underhill's Law of Trusts
and Trustees,12th Edn.,p.472;
….it would seem that, even where trustees
claim to exercise their discretion as to
investments, the court will, in a proper case,
direct an inquiry whether it is for the interest of
the beneficiaries that a particular investment
should be continued or called in. So, too,
where absolute discretion has been given to
trustees to do a particular act (e.g. to sell the
trust property), the court cannot compel them
to exercise the power, but if they do exercise
it, the court will see that they do not exercise it
improperly or unreasonably.”
36. We are of the view that the learned Judge has erroneously
placed reliance upon the judgment of this Court in Bapuji
Karawalla (Supra) wherein the facts are in no way related to the
facts in the present case. In that case there was a life interest
vested by the testator in his nephew (the Plaintiff) to hold for his
lifetime one house situated in Popani Gully at Chandanwadi in
Bombay. It was provided that the Plaintiff may by his Will or any
Deed of Appointment, appoint such person after his demise to
receive the house and that if he does not make any Will or Deed

or writing the said house will be given after his demise to his
children in equal share. It was held by this Court that the Plaintiff
having by a Deed appointed himself to all the interest in the said
house, and by which the house belongs to the Plaintiff having
taken an absolute estate, he could sell the house as there was no
restraint on alienation of the said house. In the present case, there
is no such power in the hands of the said Gangasingh to appoint
himself as beneficiary of the trust property and thereafter deal with
the trust property in any manner he deems fit. The said
Gangasingh in the present case has been vested with the power
to distribute the trust property to the beneficiaries so appointed but
such power is to be exercised reasonably and for fulfilment of the
objects provided under the Indenture of Trust.
37. We do not accept the submissions on behalf of the
Respondents that the Appellant was never entitled to the trust
property and or income arising there from. We find from the
Indenture of Trust that the Trustees were to apply the net income
in Trust and pay the same to those persons who were in existence
on the date of Indenture of Trust. However on the date of
distribution of the trust property the sons of the said Harnamsingh
and Gangasingh were to benefit. We further do not accept the
submissions on behalf of the Respondent that the said

Gangasingh could choose any of the beneficiaries by excluding
the son of Harnamsingh. We do not find that the settlor, the said
Parvatibai had vested any such power in the said Gangasingh and
merely because the said Gangasingh did not appoint his own
elder son, the 5th Respondent as beneficiary to the trust property,
this does not give him the power to exclude the Appellant. We do
not accept the finding of the learned Judge in the impugned
judgment that the said Gangasingh had exercised the same power
which the said Parvatibai would have exercised by choosing his
three sons (Respondent Nos. 2 to 4) in exclusion to the son of the
said Harnamsingh.
38. The cases relied upon by the learned Senior Counsel on
behalf of the Respondents are distinguishable on facts. In
Mahadeo (Supra), the power was conferred upon the executor of
the Will of the testator who was to dispose of all the other estate
and money of the testator according to his discretion by giving the
same to an institution or institutions of utility as he may deem fit. It
is in this context that this Court has distinguished trusts from
powers and held that in case of power there can be no question of
the testator's direction being defective for uncertainty. The power
may even be a purely arbitrary power of disposition according to a
discretion which no Court could either direct or control. In the

present case, the power conferred upon the said Gangasingh was
in his capacity as a trustee for the distribution of the trust property
to the beneficiaries under the Indenture of Trust and by excluding
a beneficiary under the Indenture of Trust, such discretionary
power was unreasonably exercised and hence could always be
controlled by the Court.
39. In the judgment of Basanti Seal (Supra), the Calcutta High
Court has considered a case where the original trustee as settlor
executed a deed of trust providing that he and his wife would act
as joint trustees in respect of the trust properties. The joint
trustees thereafter exercised their power conferred by the said
Deed of Trust by executing a Deed of appointment appointing as
beneficiaries of two of the trust properties, his two sons and
excluding his third son, the Plaintiff in that case. This power was
further exercised by the wife upon the demise of her husband, as
the surviving original trustee in the same manner as the original
trustees had exercised the power and in respect of the other trust
property. The Suit instituted by the joint trustees for eviction of the
licensee i.e. the son who was excluded as beneficiary, from a
portion of the Calcutta property had originally been dismissed by
the Court but was upheld in Appeal and the SLP preferred against
the order in Appeal was dismissed. The Calcutta High Court had

also considered the default clause in this context and held that
only if there was no appointment by the joint trustees or surviving
trustee then in that case all the sons would get the trust property
in equal shares. It was held that since the two deeds of
appointment were legal and valid, the excluded son i.e. the
Plaintiff was neither a beneficiary nor had acquired any right, title
and interest in any of the trust properties. This case can also be
distinguished as in the present case the settlor of the trust has not
exercised the power of appointment and this has been exercised
by the original trustee, the said Gangasingh later in favour of his
sons as beneficiaries by excluding the Appellant. It is clear from
the Indenture of Trust that the settlor, the said Parvatibai never
intended any such exclusion and hence such power could never
have been exercised in the manner exercised by the original
trustee, the said Gangasingh. The above cases relied upon by the
learned Senior Counsel for the Respondents are accordingly not
applicable in the facts and circumstances of the present case.
40. We are of the considered view that the learned Judge has
erroneously arrived at a finding that the Appellant herein has not
made out a case for getting a decree in the Suit, thereby
dismissing the Suit. Hence, the following order:-

(a) The impugned judgment is hereby quashed and set
aside;
(b) The Appellant is declared as co-owner of the trust
property viz. Lease Hold Plot No.45 (South) Dadar
Matunga Estate F Ward.6785 to 6789 St. No.352 to
356, 356A C.S. No.134/D 10 admeasuring about
3351.20 Sq.mtrs. together with building standing
thereon and known as Harganga Mahal, having 1/5th
share in it;
(c) The Respondents are jointly and severally directed to
render to the Appellant the true and correct accounts /
dealings including income / profit /rent / compensation
/ benefit received in respect of the trust properties
within a period of four weeks from the date of
uploading of this judgment and order;
(d) The Respondents are directed to determine the
Appellant's 1/5th share in the said Harganga Mahal
and the said Plot No.45 which shall be determined
within a period of eight weeks from the date of
uploading of this judgment and order;

(e) The Respondents are directed that upon
determination of the Appellant's 1/5th share in the
said Harganga Mahal and the said Plot No.45, the
same be handed over to the Appellant either by way
of partition or sale of the said trust properties within a
period of eight weeks therefrom;
(f) It is declared that the Respondents or any one
claiming through the Respondents have no right
under the Deed of new appointment dated 28th
February, 1992, registered Declaration Deed dated
17th March, 1998 and the last Will and codicil dated
1st July, 2003 executed by the original Defendant
No.1 in so far as it relates to the appointment of the
Respondent Nos.2 to 4 as beneficiaries of the trust
property and so far as that part of the said Deeds,
Will and Codicil is concerned, the same is declared
as illegal and not binding or enforceable against the
Appellant.
(g) The Appeal is accordingly allowed and Suit decreed
in the above terms with no order as to costs.
(RIYAZ I. CHAGLA J.) ( B.R. GAVAI, J.)

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