Trustee of West Bengal Vs. Stephen Court Ltd  Insc 957 (14 December 2006)
Sinha & Markandey Katju S.B. Sinha, J :
and application of the provisions of Sections 25 and 26 of the Official
Trustees Act, 1913 (for short, 'the 1913 Act') as also Section 302 of the
Indian Succession Act, 1925 (for short, 'the Succession Act') falls for
consideration in this appeal, which arises out of a judgment and order dated
21.12.1999 passed by a Division Bench of the Calcutta High Court in APD/T No.16
of 1999 in Appeal No.474 of 1999.
said judgment was rendered in the following fact situation:
Peter Charles Earnest Paul also known as 'Peter Paul' was the owner of a piece
of land, measuring 3 bighas 17 kottahs 8 chittackas 21 sq. ft. equivalent to
5408.93 sq. metre located on the junction of Park Street and Midleton Row, Kolkata
having wide frontage on both the roads. He executed a registered deed of lease
in favour of one Francis Daniel Augustus Larmour (for short, 'Larmour') in respect
of the said premises for a period of 99 years with effect from 01.06.1919 to
31.05.2018. He executed a Will on 16.06.1920 appointing the Official Trustee as
its Executor and Trustee in respect of the said property. Beneficiaries of the
said Will were his wife and sister. He died on 01.08.1920. A probate was
obtained by the Official Trustee on 07.10.1920. Larmour executed a registered
deed of assignment in favour of one Arathoon Stephen, Stephen Court Limited
(hereinafter referred to as 'the Company') was constituted and incorporated
under the provisions of the Companies Act, 1913 on or about 04.12.1923.
Stephen, who was a shareholder and first Managing Director of the said Company
entered into an agreement for acquiring the leasehold rights of Arathoon
Stephen. Arathoon Stephen and the Company thereafter agreed to purchase the
leasehold rights of the said premises for the balance unexpired period under
the said lease on 10.12.1923. On the same day a registered Debenture Trust Deed
was executed by Arathoon Stephen and the Company and the three Trustees
referred to in the said Deed, stating that the Company was entitled to the said
property for all the residue of the term of 1919 lease. As far back as in 1924,
the Company constructed a five-storied building. It continued to pay the rent
to the Official Trustee who had issued rent receipts to it. Sister of Peter
Paul, Mrs. Hemingway, died leaving behind a Will in terms whereof the public
trustee of the Public Trust of London took over her estate and started
receiving her share of income. On 10.10.1965, widow of Peter Paul died, whereafter
half share of the income of the trust property was remitted to the Public
Trustee of the Public Trust, London by the
Official Trustee till 18.05.1993. Permission of the Reserve Bank of India for the later period is said to be
Company by a letter dated 09.02.1984 requested the Official Trustee for
extension of the period of lease for a further period of sixty years to which
the Official Trustee by a letter dated 20.03.1984 suggested that it should
apply to the High Court for obtaining grant of extension of the said lease. An
application was thereafter filed before the Calcutta High Court by the said
Company under Section 302 of the Succession Act read with Section 26 of the
1913 Act. The said application was entertained. The Official Trustee filed an
affidavit in opposition wherein, inter alia, it was stated:
Official Trustee as such Trustee can neither consent nor object to grant by any
lease or modification of the terms and condition thereof. The Official Trustee,
however, in the ends of justice is duty bound to produce all the facts and
circumstances relating to the said property before this Hon'ble Court. The Official Trustee states and
submits that the following proposal would be beneficial to the Estate:
Upon the lessee agreeing to enhance the current monthly rent payable for the
lease by at least 400% the head lease can be rectified by giving the lease the
option of renewal the lease on such terms and condition as this Hon'ble Court
may deem fit and proper after expiry of the head lease on May 31, 2018 by
efflux of time.
Competent valuer would be appointed by this Hon'ble Court at the expenses of the petitioner for ascertaining the market
value of the property. The probable market value of the property as on June 1,
2018 should be estimated on the basis of the present trend of increase in the
value of land in Calcutta as well as the rate of inflation and the amount of
rent to be paid by the lessee for the extended period would be determined on
the basis of the said valuation." Pursuant to or in furtherance of the
said suggestions of the Official Trustee, the Company was directed to pay rent
@ Rs.8,000/- per month to the Official Trustee for the residuary period of the
existing lease by the High Court in terms of an order dated 17.04.1984. A valuer
was appointed. The valuer submitted its report recommending :
regard to the results obtained under the above two method of calculations, it
is perhaps, fair to fix up the proper monthly ground rent payable for a period
of 60 years lease after the expiry of present lease as given below :
+ Rs.2,21,933 = Rs.2,29,995 per annum 2 = Rs. 19,166 per month Say Rs. 19,000
per month Rupees Nineteen thousand Per month" No objection thereto was
field. The court, thus, acting on the basis of the recommendations of the said valuer,
by an order dated 30.05.1984, opined :
reading the original report of Mr. A.K. De, the valuer and upon hearing the
parties it appears to the Court that the rent of the lease is reasonable and
beneficial to the Trust Estate. There will be an order in terms of prayer (a).
The rent payable under the proposed lease will be Rs.19,000/- (Rupees nineteen
thousand) per month. Regarding the current lease the petitioner will pay rent
at the rate of Rs.8,000/- (Rupees eight thousand) per month w.e.f.
01.06.,1984." The said order of the Calcutta High Court was accepted and
acted upon by the Official Trustee and it executed a deed of lease in favour of
the Company for a period of sixty years on a monthly rent of Rs.19,000/-. The
monthly enhanced rent paid by the Company in favour of the Official Trustee @
Rs.8,000/- in terms of the High Court's order had all along been accepted wherefor
the Official Trustee had been issuing due receipts. An Originating Summons was,
however, taken out by the Official Trustee before the Calcutta High Court on or
about 21.07.1997 for determination of the following questions :
Determination of the relation between the Official Trustee and Messers Stephen
Court Limited prior to 31.5.2018 AD, as the relation between them was not
the basis of such determination of relation, is M/s Stephen Court Limited
entitled to execute any lease deed with any party in respect of premises No. 18
Park Street, Calcutta or any part thereof prior to 31.5.2019 AD.
then in that event, what will be the fate of such lease, if any made prior to
the order dated 30th May,
1984 passed in Matter
No. 432 of 1984 null and void?
the Deed of Lease executed by Official Trustee on 25th July 1984 valid and binding?
Whether any leasehold right in respect of the premises No. 18, Park Street,
Calcutta has legally vested in Messers Steph Court Limited in the absence of
any registered deed conveying, transferring and/or assigning the unexpired
period of lease by Mr. Aratoon Stephen in favour of Messers Stephen Court
Limited and whether Messers Stephen Court Limited had any legal right to make
application before this Hon'ble Court in 1986 praying for extension of the
period of Head Lease of 13.9.1919.
Whether the High Court at Calcutta had
jurisdiction to pass the order 30th May, 1984
in Matter No. 432 of 1984 directing the Official Trustee to execute the
Indenture of lease for renewal/extension of the Head Lease dated 13.9.1919 in favour
of Messrs Stephen Court Limited, who was not the lessee. Besides that, the Head
Lease did not contain any covenant for extension/renewal." Inter alia, a
prayer was also made that the said deed of renewal of lease dated 25.07.1984 be
directed to be delivered upon cancellation.
learned Single Judge of the High Court by an order dated 28.06.1999, opined
that the order dated 30.05.1984 was passed without jurisdiction. It also
recorded other findings wherewith we are not concerned.
appeal preferred thereagainst in terms of clause 15 of the Letters Patent of
the said Court was accepted by reason of the impugned Judgment.
large number of issues fell for consideration before the Division Bench of the
High Court. It, inter alia, opined :
High Court had jurisdiction to entertain the said application under Section 302
of the Succession Act;
The Company had the requisite locus standi to maintain the application;
The Official Trustee having accepted the said judgment and the deed of lease
having been executed in favour of the Company, it was estopped and precluded
from raising the question of the Court's jurisdiction in subsequent
The jurisdiction of the High Court was not excluded by reason of the provisions
of City Civil Court; and
The Official Trustee having received rent from the Company, its possession was
protected under Section 53-A of the Transfer of Property Act.
Ray, the learned Senior Counsel appearing on behalf of the appellant, in
support of this appeal would contend :
company being not a person beneficially interested in the trust property, an
application under Section 302 of the Succession Act was not maintainable.
The High Court in its order dated 30.05.1984 having not taken into
consideration the objections filed by the Official Trustee, the Division Bench
of the High Court must be held to have failed/or neglected to apply its mind in
regard thereto and, thus, the same being a nullity the impugned judgment cannot
The Division Bench failed to notice that it was obligatory on the part of the
High Court while entertaining an application under Section 302 of the
Succession Act to satisfy itself :
to who had come with the application for directions;
in what capacity; and
right or interest is claimed in respect of the direction; and
the court would have jurisdiction to entertain the same.
application for renewal of lease, 34 years prior to the expiry of the original
lease, for a period of sixty years was not bona fide and no directions, thus,
could have been issued by the High Court.
judgment of the High Court being wholly without jurisdiction and, thus, being a
nullity, the principles of estoppel and res judicata would have no application;
the judgment dated 30.05.1984 was a nullity and non est in the eye of law, an
appeal thereagainst was not necessary to be filed.
The deed of assignment executed by Larmour in favour of Arathoon Stephen being
not a registered document, the same was wholly inadmissible in evidence.
Gupta, the learned Senior Counsel appearing on behalf of the respondent, on the
other hand, would submit :
Official Trustee never raised any objection as regards the purported inherent
lack of jurisdiction of the Calcutta High Court under Section 302 of the
Succession Act and, thus, at this distant time cannot be permitted to turn
around and raise the said question.
The judgment of the High Court having been acted upon and the Official Trustee
being bound thereby, it cannot now be permitted to approbate and reprobate at
the same time.
The order dated 30.05.1984 being an appellable one and no appeal having been
preferred therefrom, it attained finality and, thus, a clear case of estoppel
and acquiescence has been made out.
Issues raised in the Originating Summons were barred by the principle of
constructive res judicata.
Unregistered deed of assignment having been followed by the registered
Debenture Trust Deed, the title to the lessee passed on to the company on the
Assuming that the said registered assignment deed was not valid in law, the
Official Trustee having accepted rent from the Company from 1923-1924 onwards,
a fresh monthly tenancy had come into being and, thus, on that premise, the
High Court's judgment cannot be said to be a nullity or void, specially when the
same was passed in accordance with law and on the terms and conditions
suggested by the Official Trustee.
The originating summons for the reliefs claimed was not maintainable in law.
principal questions which in view of the rival contentions of the parties arise
for consideration are :
Whether the application made by the respondent under the Official Trustee Act,
1925 to the Calcutta High Court was maintainable?
Whether the defect of unregistered document assigning lease of immovable property
stood cured by registration of subsequent document i.e. Debenture Trust Deed?
Whether the Originating Summons filed by the appellant was maintainable?
1913 Act was enacted to consolidate and amend the law constituting the office
of Official Trustee. An Official Trustee is appointed by the Government.
Rights, powers, duties and liabilities of the Official Trustee are governed by
Part III of the 1913 Act. Under Section 10 of the said Act, the High Court has
power to appoint an Official Trustee to be trustee of property. In this case,
he was, however, appointed by a Will.
of the Official Trustee is liable to be audited once annually. It exercises
powers under the Code of Civil Procedure.
22 of the Act enables every beneficiary under a trust to make inspection and
take copies of the accounts. Section 23 provides for transfer to Government of
accumulations in the hands of Official Trustee, while any moneys payable to a
beneficiary under a trust have been in the hands of any Official Trustee for a
period of twelve years or upwards. Section 25 empowers the High Court to make
such orders as it thinks fit respecting any trust property vested in the
Official Trustee, or the income or produce therefrom. Section 26 authorizes
filing of an application for an order under the said Act by any person
beneficially interested in any trust property or of any trustee thereof.
302 of the Succession Act empowers the High Court on an application made to it
to give to the executor or administrator any general or special directions in
regard to the administration thereof, where probate or letters of
administration in respect of any estate has or have been granted thereunder.
Paul owned merely a piece of land. It executed a deed of lease for a period of
99 years. The lessor, therefore, was entitled to the only rent payable in terms
of the said 1919 deed of lease.
be true that a registered deed of assignment was executed in favour of the said
Arathoon Stephen, but the defect in the said agreement of sale between Arathoon
Stephen and the respondents stood cured by reason of the Supplementary
Agreement, namely, Debenture Trust Deed which was duly registered. In the
Debenture Trust Deed Arathoon Stephen was referred to as 'The Transferor',
Respondent was referred to as 'The Company' and the three others referred to as
"the Present Trustees". It was stipulated :
WHEREAS the Company is entitled to the property set forth and described in the
first Schedule hereto for all the residue of the term of 99 years from the
first day of June 1919 granted by an indenture of lease dated 13rd day of
September, 1919 made between Peter Charles Ernest Paul of the one part and
Francis Daniel Larmour of the other part and registered at Calcutta in Book I
Vol. III being no.; 4493 for 1919 subject to an Indenture dated the 15th day of
August 1923 made between the Official Trustee of Bengal of the one part and as
such the sole executor and Trustee of the will of the said Peter Chales Ernest
Paul of the one part and the Transferor of the other part and registered at
Calcutta in Book I Vol. 102 being No. 9712 for 1923 being an Indenture of
Rectification of the terms of the said Indenture of lease regarding payment of
the owner's share of taxes in respect of the said demised premises AND WHEREAS
the said property is at present vested in the Transferor and Trustee for and on
behalf of the company and he has agreed at the request of the company to join
in these presents in manner hereinafter appearing AND WHEREAS the company being
duly empowered in that behalf has determine to raise a sum not exceeding
Rs.7,00,000/- (Rupees Seven Lacs) by the issue of Debentures for that amount
bearing interest of the rate of 5 = per cent per annum and frame in accordance
with the form set forth in the second schedule hereto and has agreed to secure
the principal moneys together with interest for the time being payable in
respect of such Debentures in manner hereinafter provided AND WHEREAS the
present Trustees have consented to act as Trustees of this Indenture upon the
terms herein contained.
the purpose of further securing the principal money and interest and all costs
and other moneys payable under the Debentures or these presents the Transferor
by the direction of the company hereby transfer and assigns and the company
hereby transfers assigns and confirms unto the Trustees and singular the hereditaments
land and premises specified and referred to in the first Schedule hereto and
all buildings erected on the land or any part thereof and all easements
privileges and on the tenancies whatsoever to the same and therewith held used
occupied and enjoyed and all the estate right title interest property claim and
demand whatsoever of the Transferor and the Company and to the same to have and
to hold the same unto the present Trustees as joint tenants with right of
survivorship for all the residue now to come and unexpired of the term of
ninety nine years granted by the said lease upon and for the trusts intents and
purposes hereinafter expressed of land concerning the same." Broadly
speaking the Supplementary deed provided for the issuance of debentures by the
appellant in favour of Aratoon Stephen. Until and unless the appellant had paid
off the debentures the scheme of turst was to continue but :
proof being given to the reasonable satisfaction of the Trustees that all the
debentures entitled to the benefit of the trusts herein containedhave been paid
off or satisfied and upon payment of all costs charges and expenses incurred by
the Trustees in relation to those presents the Trustees shall at the request
and cost of the Company.release the charged premises from this security."
The effect of such an unregistered deed vis-`-vis a Supplementary Deed by way
of Debenture Trust Deed came up for consideration before the Privy Council in
Mitchell v. Mathura Dass and Another [12 Indian Appeals 150], wherein it was
Registration Act was not passed to avoid the mischief of allowing a man to be
in possession of real property without having a registered deed but as a check
against the production of forged documents, and in order that subsequent
purchasers, or persons to whom subsequent conveyances of property were made,
should not be affected by previous conveyances unless those previous
conveyances were registered" In that case William Mitchell was indebted to
Mathura Dass. The latter sought to attach a property on the basis that it
belonged to the former.
father Alexander, claimed that the property belonged to him. In the proceeding,
two documents came to be filed, namely : one purporting to be a deed of
conveyance of the property to himself and the other a confirmation bond
executed by the same parties as the conveyance in the subsequent deed.
Judicial Committee held that the second deed being registered was a valid
conveyance of the property to Alexander.
Division Bench of the Bombay High Court followed the said decision in Jamna Bai
and Another v. Dharsey Takersey [1902 (IV) Bombay Law Reporter 893], stating :
settlement between Ruttonbai and Tersey on the terms on which the plaintiffs
base their claim, is dated the 3rd February 1869. It is a document which was drawn up in Guzerati but I have not
received it in evidence, as it affected immovable property of the value of more
than Rs.100 but was not registered. Mr. Lowndes for the plaintiff then rendered
two indentures called releases, dated the 13th and 16th September 1869
respectively, one executed by Ruttonbai in favour of Tersey and the other by Tersey
in favour of Ruttonbai, in which, after reciting the terms of the agreement of
the 3rd February 1869, the parties say that their claims against each other in
respect of the agreement are satisfied. These two indentures, Exs. A and B, are
registered. But Mr. Raikes for the defendant objected to their admissibility on
the ground that they were merely secondary evidence of the contents of the
agreement on which the plaintiffs sue and that, if the original agreement was
inadmissible, these two indentures could not supply its place. I have, however,
admitted them in evidence on the authority of the ruling of the Judicial
Committee of the Privy Council in Mitchell v. Mathuradas and another" Even
the assignment was required to be made by reason of a registered document, it
is beyond any cavil of doubt that as the Official Trustee had all along been
receiving stipulated monthly rent from the Company, it was, thus, admitted and
acknowledged to be the lessee in respect of the leasehold. The Official Trustee
not only accepted the rent, but also allowed the Company to raise a huge
structure. It, therefore, accepted the Company as the lessee in respect of the
Company, therefore, for all intent and purport became a lessee under the Official
Trustee. Although in a case of this nature, applicability of Section 53-A of
the Transfer of Property Act may not be of much significance, but whether as an
assignee of the leasehold or as a monthly tenant, the Company was entitled to
protect its possession. Rightly or wrongly, the question of renewal of the said
lease for a further period of sixty years came to be mooted. The offer of the
Company was that at the end of the period of lease, the property would vest in
the Official Trustee. It is again beyond any doubt or dispute that the Official
Trustee could have granted a lease. It could have also extended the period of
lease. It could have furthermore entered into a new arrangement with the lessee
in possession. It was, therefore, within the province of the Official Trustee
to deal with the property in any manner, he thought it fit, subject, of course,
to any direction which could be issued by the High Court in exercise of its
jurisdiction under Section 302 of the Succession Act and Section 13 of the 1913
Act. The Official Trustee being a statutory authority would be presumed to be
aware and understand the provisions of the said Act. It, therefore, instead of
dealing with the matter itself asked the Company to file an appropriate
application, pursuant whereto the application was filed, no jurisdictional
question was could be raised.
Company's locus to maintain the application was not questioned.
an affidavit in opposition had been filed, but it is equally true that therein
certain suggestions were made; one of them being enhancement in the quantum of
rent. The High Court passed an order enhancing the quantum of rent, which was
beneficial to the Officer Trustee. It accepted the same without any demur.
Benefit of the order was, thus, taken. It was only at its suggestion, a valuer
was appointed. The recommendations of the valuer as regards the quantum of
monthly rent which would be payable at the end of the period of lease was not
questioned. The High Court also accepted the same. The order of the High Court
dated 17.04.1984 must be judged in the aforementioned factual backdrop. The
High Court for all intent and purport accepted the suggestions of the Official
again no appeal was preferred therefrom. Mr. Ray made a faint suggestion that
the said order being not a judgment within the meaning of Clause 15 of the
Letters Patent of the Calcutta High Court was not appealable. Even that be so,
an application before this Court under Article 136 of the Constitution of India
would lie. No such application was also filed. It was, thus, allowed to attain
finality. The parties acted thereupon. The Official Trustee accepted the said
judgment and executed a deed of lease strictly in terms thereof.
Originating Summons which was filed after 17 years of passing of the said
order, the Official Trustee sought to raise contentions which had not been
raised before it in the earlier proceeding. A plea of fraud was raised, but the
same was not pressed before us. As indicated hereinbefore, the only contention,
which had been raised therein was that the application under Section 26 of the
1913 Act being not maintainable, the said order dated 30.05.1984 was a nullity.
immediately notice the judgment of this Court in Committee of Management of Pachaiyappa's
Trust v. Official Trustee of Madras and Another [(1994) 1 SCC 475], which is
the sheet anchor of the submissions advanced on behalf of the appellant.
Therein, an application was filed by a stranger to the property. The
jurisdiction of the learned Single Judge as also the Division Bench of the High
Court was appealed against before this Court. The High Court had come to the
conclusion that it was beneficial and in the best interest of the leasehold
property; but no attempt was made to find out as to what would be the best
price available therefor. Although the property vested in the Official Trustee,
transparency in the transaction was not maintained. The norms for distributing
the largess of the estate had not been followed. The fiduciary conduct expected
of a trustee was found to have not been maintained. It was in the
aforementioned factual background, an objection was filed by a person who was a
tenant of the ground floor on the building adjacent to the vacant plot of land.
The said objection was rejected by the learned Single Judge stating that he had
no locus standi in the matter. This Court disagreed therewith. It was noticed
that the learned Single Judge unjustly altered the conditions as suggested by
the Official Trustee in money matters. The Division Bench also took no note of
the infirmities contained in the said order. It was in the aforementioned fact
situation this Court opined :
Notable among the other modifications which have been permitted are :
period of the lease has been Raised from 30 years to 50 years with an option to
renew for another 50 years, and
of the prohibition relating to sub-lease. It would thus appear that on the
pretext of modification Respondent 2 has secured substantial alteration in the
terms and conditions as contained in the original order dated May 2, 1986
passed by the learned Single Judge which had been upheld in appeal by the
Division Bench. In other words under the guise of modification Respondent 2
have obtained review of the order which had become final. This was
impermissible in law. The order passed by the Division Bench does not give any
indication as to why it became necessary to give these concessions to
Respondent 2. It has not been shown that nobody else was prepared to take the
lease on the terms and conditions laid down in the order dated May 2, 1986 and
that without making those modifications the plot of land could not be given on
lease. On the other hand we find that there was another offer by Md. Ummer
Sheriff offering to take the lease on the same terms and conditions with a
higher rent of Rs. 3000 per month. The order dated October 28, 1987 passed by
the Division Bench on the application for modification (CMP No. 14618/87)
cannot, therefore, be upheld and C.A. 4168 of 1988 filed against the said order
also deserves to be allowed." It is true, as was submitted by Mr. Ray,
that this Court therein observed that the Official Trustees Act does not
envisage any application moved by a person other than the one who was beneficially
interested in any trust property or any trustee thereof, but no occasion arose
therein for consideration as to what would be the true meaning and purport of
the expression "beneficially interested" in the trust property.
have noticed hereinbefore that this Court opined that an objector who was a
tenant on the ground floor of the said building adjacent to the vacant plot of
land of appellant trust had locus standi to Raise an objection.
1913 Act two different expressions, namely, "beneficiary under a
trust" and "person beneficially interested in any trust
property" have been used. A distinction has, thus, been made in the
statute itself between a "beneficiary" and a "person
'Advanced Law Lexicon' 3rd Edn 2005 - by P. Ramanatha Aiyar, the two
expressions have been defined in the following terms :
Beneficiaries are persons for whose benefit property is held by trustees,
executors, etc." persons named in insurance policies to whom the insurance
is payable upon the happening of the event insured against (Bouvier).
is one who is beneficially entitled to, or interested in property; that is,
entitled to it for his own benefit, and not merely as trustee or executor
holding it for others. The word is nearly equivalent to the term cestui que
trust. Where property is dedicated to an idol, it would be a
"beneficiary", (Ranjit Singh v. Jaganath Prosad, 12 Cal 375. But See
16 CWN 798" "Beneficiary", defined, Indian Trusts Act (2 of
1882), S. 3 as 'the person for whose benefit the confidence of the author of
the trust is accepted by the trustee." "Beneficial interest" has
been defined to mean:
interest" of the beneficiary is his right against the trustee as owner of
the trust property [Indian Trust Act (2 of 1882), S. 3] Interest of a
beneficial owner or a beneficiary the interest in an unadministered estate, of
a person who dies before taking possession or applying for a grant of
administration, is not a 'beneficial interest' within the meaning of S. 4 of
the Succession and Probate Duties Act 1892 to 1955 (Queensland) [Commissioner
of Stamp Duties (Queensland) v. Lingston (1965) AC 694." In 'Bouvier's Law
Dictionary And Concise Encclopedia' Third Revisionby John Bouvier, the expressions
"Beneficiary" and "Beneficial Interest" have been defined
as under :
A term suggested by Judge Story as a substitute for cestui que trust, and
adopted to some extent. I Story, Eq. Jur. ' 321.
person named in a policy of insurance to whom the insurance is payable upon the
happening of the event insured against.
beneficiary of a contract is not a cestui que trust; 12 Harv. L. Rev. 564"
"Beneficial Interest".-Profit, benefit, or advantage resulting from a
contract, or the ownership of an estate as distinct from the legal ownership or
que trust has the beneficial interest in trust estate while the trustee has the
legal estate. If A makes as contract with B to pay C a sum of money, C has the
beneficial interest in the contract." In Stroud's Judicial Dictionary, 4th
Edn., the terms "Beneficiary" and "Beneficially Interested"
have been defined in the following terms :
beneficiary is "one who is beneficially entitled to, or interested in,
property; i.e. entitled to it for his own benefit, and not merely as TRUSTEE,
or executor, holding it for others. The word is nearly equivalent to 'CESTUI
QUE TRUST', which, on account of its cumbersomeness and inexpressiveness,
'beneficiary' has begun to supersede in modern law' (2 Ency. 58).
"Beneficiary entitled in possession" is one who is entitled to the
actual receipt of the income under the terms of a trust (Doody v. Commissioner
of Taxes (1941) N.Z.L.R. 452)."
Interested". - A person having a contingent interest in real estate (Re
Sheppard, 4 D.G.F. & J. 423) is a person 'beneficially interested' within
Trustee Act 1850 (c. 60), s. 37; and so is a creditor who has obtained a decree
for administration and sale of real estate (Re Wragg, I D.G.J. & S. 356);
and also it seems, a purchaser under a decree who has paid his purchase money
into Court (Ayles v. Cox, 17 Bea. 584). The committee of lunatic cestui que
trust is not a person 'beneficially interested' within this section (Re Bourke,
2 D.G.J. & S. 426)"; Dan. Ch. Pr. 1787." The decision in
Committee of Management of Pachaiyappa's Trust (supra) therefore, in our
opinion, does not assist the appellant. In that case, the order of the High
Court did not attain finality and had not been accepted.
principles of estoppel, waiver, acquiescence or res judicata provide to
procedural matter. The said provisions are applied to put an end to a
subsequent litigation. As would appear from the decisions made thereafter, if
the order of the 1984 order of the High Court was not a nullity, the same would
distinction indisputably exists between an order which is wrong or void on the
one hand, and which having been passed by a court lacking inherent jurisdiction
and, thus, being a nullity on the other.
law in this behalf has succinctly been stated by this Court in Chief Justice of
Andhra Pradesh and Another etc. v. L.V.A. Dilshitulu and Others etc. [AIR 1979
SC 193], observing :
the argument holds good, it will make the decision of the Tribunal as having
been given by an authority suffering from inherent lack of jurisdiction. Such a
decision cannot be sustained merely by the doctrine of res judicata or estoppel
as urged in this case." Mr. Ray placed strong reliance in Balvant N. Viswamitra
and Others v. Yadav Sadashiv Mule (Dead) Through LRs. [(2004) 8 SCC 706].
this Court stated the law in the following terms:
The main question which arises for our consideration is whether the decree
passed by the trial court can be said to be 'null' and 'void'. In our opinion,
the law on the point is well settled. The distinction between a decree which is
void and a decree which is wrong, incorrect irregular or not in accordance with
law cannot be overlooked or ignored. Where a court lacks inherent jurisdiction
in passing a decree or making an order, a decree or order passed by such court
would be without jurisdiction, non est and void ab initio. A defect of
jurisdiction of the court goes to the root of the matter and strikes at the
very authority of the court to pass a decree or make an order.
detect has always been treated as basic and fundamental and a decree or order
passed by a court or an authority having no jurisdiction is nullity. Validity
of such decree or order can be challenged at any stage, even in execution or
collateral proceedings." This Court referred to its earlier decision in Rafique
Bibi v. Sayed Waliuddin [(2004) 1 SCC 287], wherein it was held:
decree passed by a court of competent jurisdiction cannot be denuded of its
efficacy by any collateral attack or in incidental proceedings." To the
said effect is a decision of this Court in Harshad Chiman Lal Modi v. DLF
Universal Ltd. and Another [(2005) 7 SCC 791].
opinion, the application under Section 302 of the Succession Act by the Company
was maintainable and, thus, the High Court was competent to entertain the same.
Originating Summons is maintainable under certain situations, as provided for
in Chapter XIII of the Calcutta High Court Original Side Rules.
High Court in exercise of the said jurisdiction could not adjudicate as to
whether an earlier order passed by it was null and void and was, thus, liable
to be set aside. What was questioned by the Official Trustee by taking out an
Originating Summons was in effect and substance not only the order passed by
the High Court itself but also its own act which had attained finality.
have noticed hereinbefore that the Official Trustee dealt with the property in
exercise of its jurisdiction to administer the trust property, in respect
whereof the High Court could issue directions from time to time.
it is held that the Official Trustee either on its own or under the directions
of the High Court could grant extension of lease, its action can be subjected
to challenge only in an appropriate proceeding. The Official Trustee no doubt
holds a position of trust but no finding of fact has been arrived that it had
misused its position. The High Court in passing its order took all precautions,
which were required of it. The High Court accepted all the contentions of the
Official Trustee not only by enhancing the quantum of rent payable by the
Company, but also appointing a valuer for the purpose of arriving at a
reasonable quantum of rent, which might become payable on the expiry of the
period of lease.
not been suggested that the Official Trustee was not bound by the said order.
It could only take a different stand in the said proceeding. It could not
initiate a fresh proceeding provided it was maintainable. Such proceedings
would have been maintainable, inter alia, if the dealings by and between the
Company and the Official Trustee was founded on or otherwise vitiated by fraud.
Even a suit for setting aside an order passed by a court having competent
jurisdiction would be maintainable on limited grounds.
because the order passed by a court is otherwise erroneous or causes a
hardship, the same by itself may not be a ground to set aside an order that was
validly passed by a court of competent jurisdiction.
otherwise the Official Trustee could not have altered its position. It could
not have prevaricated its stand from time to time. It was estopped and
precluded from filing a fresh application.
Cooke v. Rickman [(1911) 2 KB 1125], it was held that the rule of estoppel
could not be restricted to a matter in issue, stating:
rule laid down in Hawlett v. Tarte (10 C.B. (N.S.) 813 was that if the
defendant in a second action attempts to put on the, record a plea which is
inconsistent with any traversable allegation in a former action between the
same parties there is an estoppel" [See also Humphries v. Humphries 1910
(2) KB 531] In Jai Narain Parasrampura (Dead) and Others v. Pushpa Devi Saraf
and Others [(2006) 7 SCC 756], this Court held:
applying the procedural law like principle of estoppel or acquiescence, the
court would be concerned with the conduct of a party for determination as to
whether he can be permitted to take a different stand in a subsequent
proceeding, unless there exists a statutory interdict." It was further
doctrine of estoppel by acquiescence was not restricted to cases where the representor
was aware both of what his strict rights were and that the representee was
acting on the belief that those rights would not be enforced against him.
Instead, the court was required to ascertain whether in the particular
circumstances, it would be unconscionable for a party to be permitted to deny
that which, knowingly or unknowingly, he had allowed or encouraged another to
assume to his detriment. Accordingly, the principle would apply if at the time
the expectation was encouraged. [See also Taylor Fashions Ltd. v. Liverpool
Victoria Trustees Co. Ltd. (1981) 1 All ER 897.]" Mr. Ray contended that
the learned Single Judge did not assign any reason in support of its order. Even
if no reason has been assigned, it could have been set aside only by an
appellate court. When an order attained finality, it cannot be set aside on the
premise that no reason had therefor been assigned.
also not a case where the parties were at issue in strict sense of the term.
The Official Trustee in his affidavit in opposition filed before the High Court
of Calcutta might have raised several contentions. Presumption, however, would
be that those contentions which had been accepted by the High Court were put
forward by it. If that be so, it does not lie in the mouth of the Official
Trustee now to contend that it had raised other contentions also. If it had
raised any other contention, which had not been considered by the High Court,
the remedy of the Official Trustee was to move the said court itself for
only no such contention was raised, it will bear repetition to state, that the
order has been acted upon. The principles of res judicata and in particular
that of constructive res judicata shall apply in the aforementioned fact
Kumar Gupta v. Rochi Ram Nag Deo [(1999) 4 SCC 243], it is stated :
rule of res judicata incorporated in Section 11 of the Code of Civil Procedure
(CPC) prohibits the court from trying an issue which "has been directly
and substantially in issue in a former suit between the same parties", and
has been heard and finally decided by that court. It is the decision on an
issue, and not a mere finding on any incidental question to reach such
decision, which operates as res judicata." [See also Ferro Alloys
Corporation Limited and Another v. Union of India and Others (1999) 4 SCC 149].
not been seriously disputed before us that the High Court, despite City Civil
Courts Act, could exercise its jurisdiction under Section 302 of the Succession
Act read with Section 25 of the 1913 Act.