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Ashok Kumar Kapur & others Vs. Ashok Khanna And Others [2007] Insc 272 (13 March 2007)

Markandey Katju

J U DG M E N T (Arising out of Special Leave Petition (Civil) No. 8611/2006) MARKANDEY KATJU, J.

I have perused the judgment of my learned brother S.B. Sinha, J. in this case and am in respectful disagreement with the same. Hence, I am preparing my own judgment.

Leave granted.

This appeal is directed against the judgment and order dated 6.2.2006 of the High Court of Calcutta in APOT No. 584 of 2005 in APO No. 508 of 2005.

The facts of the case are mentioned in the judgment of my learned brother Sinha, J. and hence I am not repeating the same except where necessary.

Admittedly, the object of the Trust in question was to pay pension and annuities to the members of the Trust or dependents, including their widows and children (upto the age of 21 years), in accordance with the rules of the Trust.

The entire funds of the Trust were admittedly provided by the Dunlop India Limited (hereinafter referred to as the 'Company'). It is further admitted that all the beneficiaries under the Trust have been paid off and hence the purpose has been completely fulfilled and executed without exhaustion of the funds of the Trust, except to the extent of Rs.

3,88,55,682.00, which amount after one time payment has been transferred to the Life Insurance Corporation of India (hereinafter referred to as 'LIC').

Consequently, the Trust has now no further liability/responsibility towards any of its beneficiaries. The balance sum remaining with the Trust fund being Rs. 20,83,95,690.00 has, in my opinion, therefore, to be returned to the Company in view of Section 83 of the Indian Trust Act (hereinafter referred to as the 'Act'). After all, the entire money donated to the Trust fund was donated by the Company and hence it has to be returned to the Company.

Section 34 of the Act may not be strictly applicable in the present case because that provision enables the principal Civil Court of original jurisdiction to give an opinion, advice or direction on any present questions respecting the management or administration of the trust property. The words 'management or administration of the trust property' would not apply when the object of the Trust itself has been fulfilled and now the only question remains is as to what has to be done about the remaining fund with the Trust. In such a case, in my opinion, a direction should be issued under Article 142 of the Constitution of India to refund the balance money lying with the Trust to the Company which had donated the funds to the Trust. In my opinion, such a direction should be given in view of Section 83 of the Act, and also because the money can now only go back to the Company since all the beneficiaries have been paid off. Any other view would, in my opinion, be unreasonable because the balance amount lying with the Trust cannot obviously remain idle. To direct the Company to file a suit for this purpose would only cause further delay and multiplicity of proceedings.

The Settler (the Company) is admittedly facing severe financial crisis having become sick and proceedings are pending for its revival before the appellate authority for financial reconstruction. Hence, it would be appropriate if the funds are returned to the Company as it may help revive the Company.

I am, therefore, of the opinion that the learned Division Bench as well as the Single Bench which passed the impugned judgment erred in holding that the purpose of the Trust still exists and remains valid. Consent letters have been given by 140 employees of the Company and the others concerned have also been paid off. The only one remaining is Shri M.D.

Shukla, who was the Managing Director for 38 months and who claims pensionary benefits of over Rs. 45 lakhs after having changed the Trust rules just before his retirement in order to become a beneficiary. His claim is disputed by the company. In my opinion, even if there is a genuine dispute about the claim of Shri M.D. Shukla of about Rs. 45 lakhs, this amount could have been set aside for adjudication in a suit and the balance amount of the Trust fund should have been ordered to be returned to the Company.

Admittedly the Company had a total number of 186 Executives and/or Management staff, who were members and/or beneficiaries of the said Fund.

Under the Rules of the Fund, the aforesaid 186 members and/or beneficiaries would be entitled to receive a sum of Rs. 3,88,55,682.00, as calculated by the LIC, applying the mode of 'Actuarial Valuation', and the same is also undisputed by any of the beneficiaries.

In accordance with the valuation carried out by the LIC, the appellants, out of the funds lying in the Special Deposit Account No. 3/1976 with the United Bank of India, Park Street Branch, Kolkata, transferred a sum of Rs. 3,88,55,682.00 to the LIC and took out policies in favour of the present members and/or beneficiaries of the Fund w.e.f. 01.4.2001. As a result, full provision has been made for the payment required to be made under the Rules of the Fund to its present members and /or beneficiaries, upon superannuation, and it is again undisputed that as and when the respective members become eligible for the pension, the same will be paid by the LIC to the members/pensioner directly and the Fund/Trust in no way will be responsible or accountable for the same.

After transfer of the said sum of Rs. 3,88,55,692.00, which completely protects the beneficiaries, a further sum of Rs. 22,83,95,690.00 with accrued interest as on 12.9.2001, remained in the Special Deposit Account No.

3/1976 to the credit of the Fund/Trust.

In view of the aforesaid, the purpose of the Fund/Trust stood completely fulfilled and executed, without exhaustion of the Fund/Trust property, except to the extent of Rs. 3,88,55,682.00 referred to above, which amount, being a one-time payment, has been transferred to the LIC, pursuant whereafter the Trust has got no further liability/responsibility towards any of its beneficiaries. There are no existing beneficiaries of the said Fund nor is there any possibility of any further beneficiaries being created out of the instant Fund/Trust. The sum of Rs. 20,83,95,690.00 with accrued interest is, therefore, being held by the Fund under Section 83 of the Act for the benefit of the Company being the Settler of the Trust/Fund.

It is again a matter of record that out of 186 beneficiaries/members, 140 members have given their express consent and the remaining 46 members have raised no objection to the same which, inter alia, means that there is deemed consent on their behalf.

It is again an admitted position that in the event of appropriate directions not being given, surplus money will lie redundant and cannot be put to use under any circumstances, which needless to say, does no justice or equity to any of the parties.

Section 83 of the Indian Trust Act states:

" Trust incapable of execution or executed without exhausting trust property. - Where a trust is incapable of being executed, or where the trust is completely executed without exhausting the trust property, the trustee, in the absence of a direction to the contrary, must hold the trust property, or so much thereof as is unexhausted, for the benefit of the author of the trust or his legal representative."

Hence, in view of Section 83, the money lying with the Trust fund should be returned to the Company.

Three persons who filed Suit No. 551/2001 retired between 1994-97 and as on date are getting their pension from the LIC. Thus, the interest of every beneficiary under the Trust has been taken care of and annuities have been purchased by the Trust in the names of the beneficiaries as per the valuation carried out by the LIC and in terms of the pensionery benefits to be received by the concerned beneficiary. Therefore, there is no employee/beneficiary left who is entitled to get any pension out of the Trust in issue, which material fact has been ignored by the courts below.

In view of the above, in my opinion, the appeal deserves to be allowed and the money lying with the Trust fund should be directed to be returned to the Company forthwith. The impugned judgments of the courts below are set aside. There shall be no order as to costs.

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