Shiva Nath Prasad Vs. State of West Bengal & Ors [2006] Insc
62 (3 February 2006)
B.P.
Singh & S.H. Kapadia
[Arising
out of S.L.P.(Crl.)No.3987 of 2005] W I T H Criminal Appeal No. 183 of 2006
[Arising out of S.L.P.(Crl.) No.4655 of 2005] Dr. V. Gauri Shanker .Appellant
Versus State of West Bengal & Ors. Respondents KAPADIA, J.
Leave
granted.
These
appeals are filed by accused nos.2 and 3 against the impugned judgment of the
High Court of Calcutta refusing quashing of the process issued by the Chief Judicial
Magistrate(CJM), Alipore in respect of alleged offences under sections 120-
B/406/417/420 of the Indian Penal Code (IPC).
The
undisputed facts are as follows:
Madhav
Prasad Birla (MPB) and Smt. Priyamvada Devi Birla (PDB) were one of the richest
and the wealthiest couples who had no issues during their lifetime. MPB was one
of the famous industrialists from the Birla family. The couple executed mutual
wills in 1981. In 1982, the couple executed mutual wills revoking the earlier
mutual wills. In 1988, during their lifetime, Smt. Birla formed four trusts and
MPB formed the fifth trust.
These
trusts, 5 in number, covered corporate assets. On 30th July 1990 MPB died. On 10.9.1990, Smt. Birla gave directions in
respect of MP Birla Trust under clause 6(b) and made nominations of
beneficiaries in respect of her four trusts under clause 7(a) of the trust
deeds in favour of three named public charitable institutions, viz., Hindustan
Medical Institution (HMI), East India Education Institution (EIEI) and MP Birla
Foundation. In terms of the said nominations made after the demise of MPB, the
assets of the five trusts estimated at Rs.2400 crores stood settled for the
benefit of HMI, EIEI and MP Birla Foundation.
However,
on 15th April 1999 PDB purported to revoke all the
five trusts (stood dissolved). On 18th April 1999, Smt. Birla executed her will by
which she bequeathed all her properties (including the estate of MPB) to
accused no.1, R.S. Lodha and after him his son, the value of which is around
Rs.2400 crores. Smt. Birla died on 3rd July 2004.
R.S. Lodha
was a trustee of MP Birla Foundation (one of the three public charitable
institutions). He was also a trustee of HMI and EIEI prior to the dissolution
of the five trusts w.e.f. 15.4.1999.
Appellant
herein, Shiva Nath Prasad, accused no.2 was also a trustee in the five trusts.
Accused no.3, Dr. V.Gauri Shanker was a trustee in HMI, EIEI and MP Birla
Foundation. He was also a trustee in three out of five mutual trusts referred
to above.
Respondent
no.2 herein (complainant), a former employee working in MP Birla Group,
claiming to be a close associate of late MPB and his wife, petitioned a
complaint in the court of Chief Judicial Magistrate, Alipore in case no.C/4693
of 2004 alleging offences under the aforestated sections, viz., 120-B read with
406, 420, 467, 417 and 204 of the IPC, inter alia, on the ground that he was a
witness to the intention and the wishes of the couple during their lifetime to
leave their estate to charity which decision was made known to everyone close
to the couple including the other members of the Birla family. According to the
complainant, the couple had accordingly executed mutual wills on two occasions,
first in the year 1981 and subsequently in 1982. According to the complainant,
when the mutual wills were executed in 1981 and 1982, he was consulted and he
had taken part in the discussion with MPB. According to the complaint, the
couple had decided to dispose of their assets to charity after their demise.
Respondent
no.2 herein has further alleged in the complaint that in 1988 the couple
created five mutual and reciprocal trusts under which the estate went to
charity as the remainder beneficiary.
Respondent
no.2 further alleged that he was involved in the discussion relating to formulation
of the terms and conditions to be mentioned in the five trust deeds. He was
consulted in the matter of drafting of the said deeds. He was also a witness to
the mutual and reciprocal agreements between MPB and PDB in regard to the five
trusts. He was also a formal witness to the deeds. He was also a witness to the
instrument of nominations of the beneficiaries of the five trusts. He was also
a witness to the deed of appointment of trustees of the five trusts. According
to respondent no.2, the said five trusts were created by the couple as mutual
and reciprocal trusts by which the couple had mutually agreed to leave their
estate, after their death, to charity and pursuant to that decision they had
nominated the charitable institutions in which the assets held by the five
trusts worth Rs.2400 crores would vest. According to respondent no.2, the said
five trusts were irrevocable and the three public charitable institutions
nominated by the couple as beneficiaries were HMI, EIEI and MP Birla
Foundation. Respondent no.2 was also, in turn, associated as honorary secretary
of HMI, EIEI and MP Birla Foundation. Respondent no.2 herein has alleged in the
complaint that he was stunned when he came to know, on the demise of PDB, that
the first accused R.S. Lodha had claimed that the estate of PDB, which included
the estate of MPB, belonged to him under the above will dated 18th April 1999 made by the deceased PDB. In his
complaint, respondent no.2, has stated that when he came to know that R.S. Lodha
had made a claim to the entire estate of the Birlas, he made enquiries which
revealed to him that R.S. Lodha had criminally conspired with the other accused
in criminally misappropriating assets worth Rs.2400 crores vested by the above
five mutual trusts in the above three charitable institutions and that the
accused had converted the charitable endowment for personal gain. Respondent
no.2, in his complaint, has further stated that the accused had attempted to
create false evidence to show that the five trusts stood revoked and dissolved
on 15th April 1999 which is three days before the alleged will dated 18th April
1999 executed by PDB and thereby the assets which had vested in the charitable
institutions had been criminally misappropriated by fraud and conspiracy in which
the other accused had participated actively. Respondent no.2 herein has further
stated in his complaint that the accused have conspired to create false
evidence in support of their claim that the five trusts stood dissolved during
the lifetime of PDB herself. In his complaint, respondent no.2 has further
stated that R.K. Choudhury, one of the trustees in the three out of five trusts
was not even aware of the alleged revocation/dissolution of the five trusts by Smt.
Birla during her lifetime, as alleged by the accused.
According
to the complaint, there was no revocation of the five trusts, as claimed by the
accused.
Respondent
no.2 is a chartered accountant. In his complaint, he has pointed out the
reasons for the couple deciding to vest the shares of group holding companies
of MPB in the above three public charitable institutions, namely, HMI, EIEI and
MP Birla Foundation. Respondent no.2 has stated that it was tax planning
advised by respondent no.2 and by R.K. Choudhury. The purpose of choosing the
three institutions was to make them a vehicle to promote the charitable
activities of MPB group.
Respondent
no.2, in his complaint, has categorically alleged that R.S. Lodha is a
qualified chartered accountant, who had won the confidence of the couple and who
solely planned his way and eliminated all those who had worked with the couple
so as to make Smt. Birla hopelessly dependent on him. According to the
complaint, R.S. Lodha was the exclusive advisor and consultant of Smt. Birla
personally. He was a director, auditor and the trustee of different companies.
According to the complaint, in the last couple of years prior to 1999, R.S. Lodha
had come to occupy the central place in the scheme of things of MPB group of
companies and charitable endowments. Respondent no.2 has further alleged that
similarly Shiva Nath Prasad was a close confidante of late Smt. Birla, having
completed 50 years of service with MPB group of companies. He dealt with all
the tax matters of Smt. Birla. He filed her tax returns. He entered into
correspondence on her behalf with Income Tax Department. He was given a power
of attorney to sign, on her behalf, the tax returns. He was a trustee of all
the above five mutual trusts. He was a trustee in the three public charitable
institutions. He was also a member of the managing committee of HMI and EIEI.
Respondent
no.2 has further alleged that Dr. Gauri Shanker was a trustee of all the above
three public charitable institutions. He was also a trustee of three of the
five mutual trusts, viz., M.P. Birla Trust, Priyamvada Birla Trust and Priyamvada
Birla Kosh. Similarly, respondent no.2 has stated in his complaint that the
fourth accused, Sushil Kumar Daga, was a long standing employee of the MP Birla
Group. He was a member of the managing committee of HMI and EIEI. He was also a
trustee of MP Birla Foundation. In his complaint, respondent no.2 herein, has
alleged that Shiva Nath Prasad and S.K. Daga are the witnesses to the letter
dated 15.4.2003 addressed by late Smt. Birla to R.S. Lodha which has been
tendered as codicil in the probate proceedings pending before the High Court.
Respondent no.2, in his complaint, has alleged that Shiva Nath Prasad and S.K. Daga
are the witnesses to the said letter which was created in pursuance of the
criminal conspiracy to misappropriate the property of the public charitable
institutions. In his complaint, respondent no.2 herein, has relied upon one
more circumstance in support of his contention that the couple had always
desired to leave their estate, after their demise, to charity. In this
connection, respondent no.2-complainant has placed reliance on the biography of
MPB written by Dr. Gauri Shanker in which a graphic description of the visit by
the couple to Tirupathi has been mentioned. In the said book, Dr. Gauri Shanker
has mentioned how he had taken the draft trust deed of MP Birla Foundation to
His Holiness the Sankaracharya and got it approved by him. In the said book, it
is allegedly stated that in the last years of his life, MP Birla had desired
that his entire estate should go to charity. In the said book, it is further
recited that MP Birla Foundation was the foremost institution formed on 23rd January 1986, its trustees were the three
daughters of K.K. Birla, brother-in-law of MP Birla, two professionals from the
industrialist group etc. and later Smt. Birla also joined its board as the
chairperson and as the trustee. According to the biography, the couple
expressed their desire to give their wealth and properties to God and
accordingly Dr. Gauri Shanker was requested to translate that idea into reality
by drawing a deed of trust. The final draft was prepared. It was taken to Kanchipuram.
It was placed before His Holiness Sankaracharya and accordingly the deed was
sanctified. This book was published in 1993. This circumstance is relied upon
in the complaint to show that Dr. Gauri Shanker was aware of the decision of
MPB and PDB to dedicate their entire wealth to charity and yet he took part in
the conspiracy to divert the endowment worth Rs.2400 crores from charity to the
personal kitty of R.S. Lodha and after him, his son. According to the
complaint, R.S. Lodha, alongwith Shiva Nath Prasad and Dr. Gauri Shanker were
the trustees of the said three public charitable institutions whose property
stands criminally misappropriated by the first accused pursuant to a criminal
conspiracy by the other accused who committed criminal breach of trust. This
was possible by virtue of the power and influence of R.S. Lodha and by reason
of the long familiarity of the other accused with the couple. According to the
complaint, MPB died on 30th
July 1990. Upto the
time of his death, he had done nothing to show the slightest inclination to
change his charitable intentions or to put an end to the mutuality expressed
wills of 1982 and the trust deeds of 1988 and on the contrary in January and
February 1989, the couple had agreed on the final nominations in favour of
three public charitable institutions in the presence of the complainant, Shiva Nath
Prasad and R.K. Choudhury.
Respondent
no.2 has categorically stated that after the demise of MPB on 10th September 1990, Smt. Birla, in fact, executed the
nominations in accordance with the pious wish of her husband and that the said
nominations were mutually agreed nominations of the five trusts duly executed
by her.
The
legal effect of the said nominations were explained by R.K. Choudhury in the
presence of the complainant and in the presence of Shiva Nath Prasad to Smt. Birla.
Respondent no.2 has further stated that Smt. Birla was told by R.K. Choudhury
that the said nominations were irrevocable and that the said Shiva Nath Prasad
was fully aware, along with Smt. Birla, that the five trusts along with the
nominations were mutual and reciprocal and were irrevocable even by Smt. Birla
(survivor) except in terms of clause 19 which provision was common in all the
deeds. Respondent no.2 has alleged that in terms of the nominations agreed
between MPB and PDB, during the lifetime of MPB and made after the demise of
MPB, as explained above, the assets of the five trusts estimated at Rs.2400 crores
stood finally settled in the three public charitable institutions as remainder
beneficiaries. Respondent no.2, in his complaint, has stated that in the second
week of April 1999, R.S. Lodha started misleading Smt. Birla. She was made to
sign documents which had the effect of misappropriating the assets dedicated to
and vested in the three public charitable institutions through the medium of
the five trusts. Pursuant to the said conspiracy, on 18th April 1999 which was a Sunday, R.S. Lodha separately called three
persons to Birla Park, residence of Smt. Birla and persuaded each one of them by
false representations and fraud to attest a document signed by the deceased Smt.
Birla. This document is the impugned will by which all the properties of the
couple under the five trusts stood diverted from charity. They were converted
to become the personal property of R.S. Lodha. The three persons were P.L. Agarwal,
Dr. Madan S. Vaidya and Mahabir Prasad Sharma. Accordingly, respondent no.2 has
complained that the above acts constituted massive fraud on Smt. Birla and on
the five trusts; that, the said fraud constituted a criminal breach of trust on
the three public charitable institutions which are deprived of endowments worth
Rs.2400 crores and accordingly in the complaint respondent no.2 has alleged
that R.S. Lodha had cheated and defrauded Smt. Birla into believing that she
was making a document to leave the property to charity as she and her husband
had desired and declared from time to time since 1981-82. Respondent no.2 has
lastly stated in his complaint that four years after the execution of the will
dated 18th April 1999, a letter dated 15th April 2003 termed as codicil is
brought into existence by R.S. Lodha in conspiracy with Shiva Nath Prasad and
S.K. Daga to fortify the will.
It
contains a direction in respect of four residential properties which are now
directed to R.S. Lodha and after him, his son. Respondent no.2 has alleged that
this letter dated 15.4.2003 is created as a supporting evidence to the will of
1999.
Respondent
no.2, in his complaint, has stated that Shiva Nath Prasad prepared the balance
sheets of the five trusts as on 15.4.1999 in June 2000 only to show that the
five trusts stood dissolved through deeds prior to the making of the alleged
will dated 18.4.1999. Respondent no.2 has pointed out that R.K. Choudhury was a
trustee. He had never resigned from the trusts. He had never ceased to be a
trustee. He is not even aware of the dissolution of the trusts on 15.4.1999. In
the circumstances, in his complaint, respondent no.2 has alleged that there was
no revocation, oral or in writing, on 15.4.1999 or at any time later on.
Respondent no.2 has further pointed out in his complaint that the accused have
communicated about the dissolution of the trusts to the Income Tax Department
only on 27th June 2000 when a letter was addressed by Smt. Birla to the Joint
Commissioner of Income Tax, Calcutta, stating that the five trusts have been
dissolved on 15.4.1999 and that the assets have been transferred to her as the
sole beneficiary. The balance sheets of the five trusts as on 15.4.1999
prepared by second accused in June 2000 only to show that the trusts stood
dissolved w.e.f.
15.4.1999.
Respondent no.2 has alleged that the accused have conspired to create records
by entering into correspondence with Income Tax Department. Respondent no.2 has
accordingly relied upon the aforestated circumstance in support of his
allegation of conspiracy to create ante-dated documents to show retro-active
revocation of the five trusts. Relying upon the aforestated circumstances, the
complainant has alleged in his complaint that the accused had entered into a
criminal conspiracy, the ultimate object of which was to misappropriate
dishonestly the charitable estate and converting the said estate to their own
use. Respondent no.2 has further alleged that the object of the alleged will of
1999 was to destroy the interest of the three public charitable institutions in
which the estate had irrevocably vested; that, the purported dissolution of the
trusts was a step in the execution of criminal conspiracy; that, the modus
operandi of the accused was to attain this illegal object fraudulently by
showing that the five trusts were dissolved during the lifetime of Smt. Birla
who was fraudulently induced and cheated as she had no legal knowledge nor
access to independent legal advice; that, Smt. Birla was a lay housewife who
had no knowledge of legal intricacies; that, she was deceived into executing a
fraudulent will on 18.4.1999. That the three attesting witnesses were also
deceived and finally the accused have even deliberately suppressed the facts
relating to the five trusts from the application for probate made to the High
Court in respect of the alleged will dated 18.4.1999. Respondent no.2 has
stated in his complaint that a trustee becoming a party to the dissolution of
an irrevocable trust is dishonest and guilty of criminal breach of trust; that,
there was nothing to show that Smt. Birla was advised to convert the properties
dedicated to public charities to personal properties and on the contrary by
filing and signing balance sheets of five trusts the accused have sought to
create evidence of the dissolution of the trusts and thereby they have aided
and abetted misappropriation of the properties belonging to public charitable
institutions. The accused have used their dominant position in the five trusts
and in the three public charitable institutions to illegally revoke the five
trusts and thereby dishonestly misappropriated the properties of the three
public charitable institutions which constituted offence punishable under
section 120-B read with section 406 of IPC. In execution of the conspiracy, the
accused, in fact, misappropriated the properties of the public charitable
institutions by illegally showing that the five trusts stood revoked and by
transferring the properties held by five trusts or the three public charitable
institutions to Smt. Birla as her personal properties as is evidenced from the
balance sheets filed on behalf of the five trusts by the second accused. Hence,
respondent no.2 has alleged that the accused were also guilty of substantive
offence of criminal breach of trust under section 406, IPC.
Respondent
no.2 has also alleged in his complaint that R.S. Lodha was liable for offence
punishable under section 420, IPC inasmuch as he was the instrumentality of
procuring the will dated 18.4.1999 by inducing Smt. Birla by false
representation to sign the said will, divesting the properties from charity and
converting it to the assets of the first accused. Lastly, respondent no.2 has
alleged that accused nos.2, 3 and 4, all of whom were trustees and/or members
of managing committee in one or more of the three public charitable
institutions had connived both by positive acts of commission and omission to
aid and abet accused no.1 R.S. Lodha in the offence of criminal breach of trust
for which they are liable to be punished under section 109 read with section
406, IPC. Accordingly, respondent no.2 vide his aforestated complaint prayed
for issuance of process under section 120-B read with sections 406, 420, 467,
417 and 204, IPC and also substantive offences under sections 120-B, 406, 420,
417 and 204 of IPC.
To
complete the chronology of events, suffice it to state that vide order dated
05.10.2004, CJM Alipore held that a prima facie case for offence under sections
120-B/406/417/420 IPC was made out against the accused. Accordingly, cognizance
was taken. Accordingly, accused were summoned on 29.11.2004.
Aggrieved
by the said order dated 05.10.2004 of CJM Alipore, accused no.2-Shiva Nath
Prasad moved the High Court under section 482 of Code of Criminal Procedure (Cr.PC)
for quashing the proceedings vide complaint case no.C4693/04 pending before CJM
Alipore under sections 406/417/420/120-B, IPC. By the impugned judgment, the
High Court has refused to intervene and set aside/quash the criminal
proceedings.
Hence,
the accused have come in appeal to this court. Shri Harish N. Salve, learned
senior counsel appearing on behalf of Shiva Nath Prasad submitted that in 1983
G.D. Birla died. At that time, there was tension within the Birla family over
division of assets. M.P. Birla and Smt. Birla were unhappy and hurt with the
way they were treated during partition. Despite the couple being issueless, the
couple did not take assistance from any member of the Birla family in the
running of their business and in the running of M.P. Birla group of companies.
R.S. Lodha was closely associated with the couple. Over the years, Smt. Birla
came to repose a lot of faith, confidence and affection on R.S. Lodha. She
openly declared that R.S. Lodha would be her successor. In this connection,
learned counsel placed reliance on the minutes of the board meeting of Birla
Corporation Ltd. held in September 2001 in which meeting nominees of financial
institutions and banks were present. In their presence, Smt. Birla declared
that R.S. Lodha was to be her successor. Learned counsel further submitted that
R.S. Lodha was also made chairperson of four holding companies in M.P. Birla
group in 1999 within one week from 18.4.1999. He was also made the co-chairman
of the main manufacturing companies controlled by the group headed by Smt. Birla
and all the key senior executives of the group were aware of her wishes.
Learned
counsel submitted that on the death of Smt. Birla, the other Birlas have come
together to grab control of the M.P. Birla group for free under the facade of
charity. It was pointed out that in August 2004 Birlas filed an application in
the High Court for probate of two alleged wills allegedly made by the couple on
13th July 1982 claiming the same to be mutual
wills. It is the case of the appellant herein that the said 1982 wills were
revoked during the lifetime of M.P. Birla and Smt. Birla. Further, it is urged
that no explanation has been given for not applying for probate of the said
wills of M.P. Birla who died on 30th July 1990 for 14 long years.
Learned
counsel submitted that the Birlas have themselves signed documents showing Smt.
Birla as the sole intestate heir of M.P. Birla which documents are totally
contrary to the present case of mutual wills mentioned in the complaint.
Learned
counsel next contended that the criminal case filed by respondent no.2 herein,
R.P. Pansari, is one such attempt on the part of the Birlas; that, the case has
been instituted only to harass R.S. Lodha and other individuals who were close
to Smt. Birla; that, the complainant has been set up by the Birlas to harass
R.S. Lodha; that, the complainant is a disgruntled ex-employee of M.P. Birla
group; that, the complainant had nothing to do with three charitable
institutions after April 2000; that, he had nothing to do with M.P. Birla group
after December 2001; that, immediately after the filing of the complaint, R.P. Pansari
was rewarded with a job at a basic salary of Rs.1,75,000/- per month by the
grandson of B.K. Birla and accordingly it was submitted that the complaint
constituted an abuse of the process of law.
Learned
counsel submitted that the foundation of the complaint is based on averments
which are false in view of the documents annexed to the complaint. In this
connection, learned counsel submitted that the five trust deeds clearly show on
bare reading that the trusts were set up with a private object to provide
benefit to individual beneficiaries with absolute power of alienation of the
entire trust property and income without any compulsion for charity. It was
urged that on a bare reading of the trust deeds it is clear that they were
expressly made revocable and, therefore, it is not open to the complainant to
claim that the said five private trusts were irrevocable when on the face of
the documents, they are revocable. Learned counsel further submitted that the very
fact that nominations were made on 10th September 1990 by Smt. Birla shows that nothing
prevented her from making further nominations superseding the earlier
nominations dated 10.9.1990. Learned counsel submitted that even the
nominations dated 10.9.1990 were not entirely charitable. In fact, in value
terms it was more in favour of private individual members of Birla family.
Learned counsel submitted that the deceased Smt. Birla was in sound health and
she actively looked after her business and had undertaken busy travel schedules
as recently as February 2003.
Learned
counsel submitted that even if all the allegations in the complaint supported
by documents annexed thereto were believed to be true, the same did not
disclose the ingredients of the offence of criminal breach of trust as there
was no entrustment of property of one in the hands of another. Similarly, the
ingredients of the offence of cheating are also not disclosed in the complaint.
Learned
counsel urged that the issues raised in the complaint are complicated issues of
civil law relating to mutual wills and mutual trusts which cannot be decided by
a criminal court and which issues should be relegated to regular civil
proceedings before a court of competent jurisdiction. Learned counsel urged
that the five trusts were expressly made revocable. In this connection,
reliance was placed on clause 19 of the Trust Deed. Learned counsel urged that
the complainant has relied upon, in the complaint, oral agreements for which
oral evidence cannot be permitted to be adduced as such oral evidence was
contrary to the terms of the written documents and was, therefore, barred under
sections 91 and 92 of the Indian Evidence Act, 1872. Similarly, the allegations
of the trust property having vested in three public charitable institutions,
upon nomination, being made in their favour by Smt. Birla, have no substance
because the properties mentioned in the nominations were only to be transferred
to the nominees on the death of the settlor/sole beneficiary, namely, Smt. Birla
and, therefore, there was no basis for alleging that the assets had vested in
the three charitable institutions upon nominations being made by Smt. Birla. In
this connection, it was further pointed out that the nominations made by Smt. Birla
were in supersession of her nominations made earlier. In the circumstances,
there was no merit in the allegations made in the complaint that the assets
covered by the trusts stood vested in the three public charitable institutions
on issuance of nominations/directions in 1990. According to the learned
counsel, the complaint made by respondent no.2 herein smacks of malafides
particularly when he has been appointed at a salary of Rs.1.75 lacs per month
in one of the rival Birla companies soon after his making the above complaint.
As regards the scope of section 482, Cr.PC, learned counsel submitted that
since the complaint was frivolous, vexatious, oppressive and malicious, the
High Court should have exercised its powers under section 482, Cr.PC because
such powers are required to be exercised ex debito justitiae or for the ends of
justice. Learned counsel relied upon various cases in which criminal
proceedings have been quashed at the initial stage to prevent abuse of process
of court and for the ends of justice. In this connection, reliance was placed
on several decisions of this court, more important being R.P. Kapur v. State of
Punjab [AIR 1960 SC 866]; State of Haryana
& Ors. v. Bhajan Lal & Ors. [1992 Suppl. 1 SCC 335]; Madhu Limaye v. The
State of Maharashtra [1977 (4) SCC 551] and Madhavrao Jiwajirao
Scindia & Ors. v. Sambhajirao Chandrojirao Angre & Ors. [1988 (1) SCC
692]. Learned counsel submitted that the power of the court to grant discharge
under section 245(2), Cr.PC in a warrant case instituted otherwise than on a
complaint did not impinge on the inherent power of the High Court under section
482 of Cr.PC to quash proceedings in appropriate cases.
In
this connection, reliance was placed on the judgment of this Court in the case
of Pepsi Foods Ltd. & Anr. v. Special Judicial Magistrate & Ors. [1998
(5) SCC 749]. Learned counsel submitted that exercise of inherent power to
quash the proceedings is called for in cases where the complaint did not
disclose any offence or that the complaint was frivolous, vexatious or
oppressive.
Learned
counsel submitted that in the present case the complainant has tried to distort
the facts in order to give an impression of an offence. That the said attempt
was grossly frivolous, vexatious and oppressive and, therefore, the High Court
should have quashed the process issued by the CJM, Alipore. On the question of
breach of trust, learned counsel submitted that there was no entrustment of
property which is the main ingredient of the offence under section 405; there
was no valid creation of trust under the five trust deeds; there was no
creation of a beneficial interest in the three public charitable institutions;
that Smt. Birla was the only beneficiary under the trust deeds till she died;
that, there was no vested interest created in any beneficiary other than Smt. Birla
under any of the five trust deeds and lastly the revocation of the four trusts
did not amount to the extinguishment of vested or beneficial interest of any
other person under the trust deed so as to constitute an act of conversion.
Learned counsel submitted that on reading the five trust deeds in the light of
the aforestated proposition of law it would become clear that, in the present
case, there was no trust because the settlor, the trustee and the beneficiary
in all the five trusts was one and the same person, viz., M.P. Birla in M.P. Birla
Trust and Priyamvada Devi Birla in the other four trusts. As sole beneficiary,
both M.P. Birla in M.P. Birla Trust and Priyamvada Devi Birla in other four trusts,
had absolute power of disposition of the trust property and also over the trust
income including the power of bequest by nomination. The beneficial interest of
M.P. Birla in the trust property was the same as the legal ownership which
vested in him as a trustee and if the beneficiary and the trustee were the same
person and if the beneficiary has the same right as the trustee, then there can
be no beneficial interest under section 3 of the Indian Trusts Act, 1882 and,
therefore, it was urged that, in the present case, there was no valid creation
of a trust, as alleged.
Learned
counsel submitted that in any event the said five trusts were private in nature
and a mere contingency in charity would not make such trusts public and thereby
bring them out of the provisions of Indian Trusts Act. In this connection, it
was urged that the sole beneficiaries of the trusts were M.P. Birla and Smt. Birla
and that reference to charity in clause 8 was a mere contingent interest and,
therefore, such provision cannot transform the nature and character of the
private trust into a public or charitable trust. Learned counsel urged that the
primary purpose of the settlor was to benefit the members of his family and,
therefore, the trusts in the present case were private trusts and not public
trusts, as alleged by the complainant. Learned counsel urged that, in the
present case, there was no complete dedication to charity under these five
private trusts even according to the intention of the settlor or in terms of
the trust deed. Further, learned counsel submitted that since there was an
express clause of revocation, one cannot say, as sought to be contended, that a
public trust came into existence for charitable purposes. Learned counsel urged
that there was no vesting on any point of time in three public charitable
institutions as on 10.9.1990 or in any charity under clause 8 of the trust
deed, as submitted by the complainant; that, the proviso to clause 6 (b) in Smt.
Birla's four trust deeds excluded the right of her husband to sell the trust
property and consequently Smt. Birla had a right to sell/alienate the trust
property without any restrictions; that, this provision further indicates that
the trust property was or could be completely extinguished by Smt. Birla by
operation of all or any of her powers as the trustee/settlor. Learned counsel
urged that by clause 5 of the trust deed Smt. Birla was vested with the power
of alienation of the corpus of the trust and the income therefrom.
In
this connection, reliance was placed on clauses 5, 10, 11(iii), 11(iv) and
11(xxi) of the trust deeds.
In the
circumstances, learned counsel submitted that the powers of Smt. Birla under
the trust deeds were similar to the powers of a testator under a will; that,
just as a testator could deal with his property covered in the will during his
lifetime and just as under the will the legatee/beneficiary had no vested
interest in the bequest under the will which is merely contingent upon the acts
of the testator during his lifetime so also Smt. Birla under the five trust
deeds was a testator of a will and she had full authority to deal with the
property covered by the will/trust during her lifetime, the beneficiary having
no vested interest in the bequest. Learned counsel further urged that even as
far as property of M.P. Birla Trust was concerned, the deceased had full
beneficial interest in the corpus during her lifetime; that, there was nothing
in the deed of trust that made her directions given under clause 6(b)
irrevocable; that, Smt. Birla could have nominated a member of the family even
after the nominations/directions of September 1990 without committing breach of
trust; that, even if Smt. Birla had named a charitable trust during her
lifetime, she could have changed the direction and given it to any other trust
whether charitable or non- charitable. In any event, the directions were to
operate only upon her death. In this connection, reliance was placed on the
letter dated 12th
September 1990
addressed by Smt. Birla to East India Investment Company Pvt. Ltd. requesting
that the shares in the trust property may be transmitted to her name as she was
the sole survivor of her late husband. Learned counsel submitted that even the
letter which Smt. Birla wrote to Income Tax Department intimating dissolution
of the private trusts on 15.4.1999 with the enclosed balance sheets showed that
the assets and the income of the trusts was all along included in the personal
Income Tax returns of Smt. Birla. In conclusion, learned counsel urged that
M.P. Birla and Smt. Birla had granted absolute right in the trust property unto
themselves, and the second bequest, if any, under clause 8 was in favour of
charity which had failed and, therefore, there was no entrustment of property
as contemplated by section 405, IPC. The sole beneficiary of all the five
trusts was Smt. Birla who had revoked the trusts in the year 1999 and,
therefore, the appellant cannot be accused of committing breach of trust, as
alleged in the complaint. Any disposal by Smt. Birla in her own favour or to those
claiming under her can never fall within the meaning of section 405, IPC.
The
act of the deceased in revoking the trusts and/or treating the property as her
own and disposing of the same by will cannot constitute breach of trust under
section 405, IPC.
Shri
R.F. Nariman, learned senior counsel appearing on behalf of Dr. Gauri Shanker-accused
no.3 submitted that Dr. Gauri Shanker is 83 years old. He is the senior
advocate of this court. He joined Indian Revenue Service in 1948 and held,
during his tenure, senior positions. He was appointed an advisor to L.K. Jha
Commission. He was personally known to late M.P. Birla and through M.P. Birla,
he came to know Smt. Birla. He was close to the couple. He used to advise them
on personal and corporate matters. He came to know R.S. Lodha through M.P. Birla.
He had seen the couple placing reliance on R.S. Lodha. He had seen the couple
giving responsibility to R.S. Lodha from time to time. He was consulted by the
couple in matters of religion, philosophy, charity, business and taxation.
According to Dr. Gauri Shanker, Smt. Birla was a wise lady, well read and
proficient in several languages. According Dr. Gauri Shanker, on the demise of
G.D. Birla, M.P. Birla had conveyed his dissatisfaction over the division of
management of Birla companies. In the last few years of his life, M.P. Birla
had gradually handed over the charge of M.P. Birla group of companies to Smt. Birla.
After the demise of M.P. Birla, Dr. Gauri Shanker remained close to Smt. Birla.
He advised her on personal and corporate matters. Towards the end of 1990 Smt. Birla
had told Dr. Gauri Shanker that she had decided on R.S. Lodha as her successor
and she was desirous of making a will for this purpose. According to Dr. Gauri Shanker,
Smt. Birla had told him that she would revoke five private trust deeds before
making her will. It was further submitted that even according to Dr. Gauri Shanker
although he was a trustee of three trusts out of five private trusts created in
1988 none of the properties settled in the trusts had been transferred/recorded
in the names of the trustees and that all the five private trusts were
revocable.
Further,
Smt. Birla had asked Dr. Gauri Shanker to prepare a will by which she would
bequeath the right, title and interest of all that she owned to R.S. Lodha whom
she used to treat like her son and in consonance of the detailed instructions
of Smt. Birla, Dr. Gauri Shanker had drawn up a will dated 18.4.1999 which was
duly registered and which is annexed to the criminal complaint. Learned counsel
submitted that in fact Dr. Gauri Shanker was told by Smt. Birla that she had
dissolved the five private trusts before executing the will. After four years Smt.
Birla had expressed her desire to give further directions regarding her
properties and consequently a letter, based on her instructions, was drafted by
Dr. Gauri Shanker which was signed by Smt. Birla on 15.4.2003 in the presence
of Shiva Nath and S.K. Daga. Learned counsel submitted that from the plain
reading of the complaint and the documents appended thereto, it was clear that
there is no allegation at all regarding the offences of cheating under section
417/420, IPC; no allegation is found in the pre-summoning evidence of
respondent no.2 or M.P. Sharma and, therefore, no process could have been
issued under section 417/420, IPC and, therefore, it was submitted that the
impugned order of CJM dated 5.10.2004 suffered from the vice of non-application
of mind. Learned counsel submitted that summoning of the accused in a criminal
case was a serious matter. In the present case, according to learned counsel,
the impugned order of the magistrate summoning the accused does not indicate
application of mind to the facts of the case. That, in the present case, there
is no allegation against Dr. Gauri Shanker regarding creation of letter/codicil
dated 15.4.2003; that, the allegations are directed only against R.S. Lodha,
Shiva Nath Prasad and S.K. Daga. No allegations whatsoever have been made
against Dr. Gauri Shanker even in relation to the revocation of five private
trusts and, therefore, the complaint does not make out a case of any overt act
being committed by Dr. Gauri Shanker in relation to the revocation of the five
private trusts and hence, there is no reason for issuing summons to Dr. Gauri Shanker.
Learned counsel urged that the case against Dr. Gauri Shanker on the point of
conspiracy was at the highest that he was a trustee of three public charitable
institutions and that he was also a trustee of the three out of five private
trusts; that, he remained a silent spectator to the alleged acts of other
accused in criminally misappropriating the properties of three public
charitable institutions pursuant to a criminal conspiracy to commit criminal
breach of trust with the common intention to destroy charitable trusts.
That,
in any event, the allegations of conspiracy against Dr. Gauri Shanker were
vague, general and completely lacking in factual particulars and, therefore,
according to the learned counsel there was no reason for the magistrate to
issue process against Dr. Gauri Shanker.
Learned
counsel lastly submitted that the complaint needs to be quashed for the simple
reason that it suffers from malafides; that, the complaint is harrasive,
attended with malafides and is a tool of oppression adopted by the Birlas to terrorise
Shiva Nath Prasad, S.K. Daga and Dr. Gauri Shanker into succumbing to the
pressure and thereby making difficult for R.S. Lodha to have the last will of Smt.
Birla probated. Learned counsel urged that the entire complaint is brought
about by Birlas who are working behind the scene.
That
the choice of four accused is made on selective basis; that the four accused
were close to Smt. Birla; that, although the position of Dr. Gauri Shanker was
identical with the other trustees, viz., R.K. Choudhury and Kashinath Tapuriah,
the latter have been left out of the complaint which unequivocally demonstrates
that the criminal complaint constitutes a gross abuse of the process of law
attended with malafide and, therefore, the High Court ought to have quashed the
criminal complaint under section 482 of the Cr. PC.
To
understand the basis of the complaint we need to understand the concept of
mutual wills, mutual and reciprocal trusts and secret trusts. A will on its own
terms is inherently revocable during the lifetime of the testator. However,
"mutual wills" and "secret trusts" are doctrines evolved in
equity to overcome the problems of revocability of wills and to prevent frauds.
Mutual wills and secret trusts belong to the same category of cases. The
doctrine of mutual wills is to the effect that where two individuals agree as
to the disposal of their assets and execute mutual wills in pursuance of the
agreement, on the death of the first testator (T1), the property of the
survivor testator (T2), the subject matter of the agreement, is held on an
implied trust for the beneficiary named in the wills.
T2 may
alter his/her will because a will is inherently revocable, but if he/she does
so, his/her representative will take the assets subject to the trust. The
rationale for imposing a "constructive trust" in such circumstances
is that equity will not allow T2 to commit a fraud by going back on her
agreement with T1. Since the assets received by T2, on the death of T1, were
bequeathed to T2 on the basis of the agreement not to revoke the will of T1 it
would be a fraud for T2 to take the benefit, while failing to observe the
agreement and equity intervenes to prevent this fraud. In such cases, the
Instrument itself is the evidence of the agreement and he, that dies first,
does by his act carry the agreement on his part into execution. If T2 then
refuses, he/she is guilty of fraud, can never unbind himself/herself and
becomes a trustee, of course.
For no
man shall deceive another to his prejudice.
Such a
contract to make corresponding wills in many cases get established by the
Instrument itself as the evidence of the agreement [See: Law of Trusts and
Equitable Obligations by Robert Pearce and John Stevens pages 320 and 321]; See
also : Re Dale (Deceased) reported in 1993(4) All.ER page 129]. In the case of
mutual wills generally we have an agreement between the two testators
concerning disposal of their respective properties. Their mutuality and
reciprocity depends on several factors. Mutual wills and trusts are evidenced
by the Deeds themselves (the recitals, terms and conditions mentioned therein)
as also by the surrounding circumstances, namely, the simultaneity and the
similarity of the terms of the wills/trusts, the pattern of successive wills,
the reciprocity of one to the other, the age of the settlors, the value of the
estates, dying of the settlors without any issues, making of the last will
without reference to the revocation of previous wills.
Lastly,
in law we have the concept of accessory liability for having assisted in a
breach of trust. In such a case the accused is not charged for having received
trust income or assets for his own benefit but for having acted as an accessory
to a breach of trust.
We
have referred to the doctrine of mutual and reciprocal wills and trusts only to
understand the basis of the complaint. At this stage we are required to read
the complaint as it is. Suffice it to state at this stage of the matter that
the couple had executed mutual wills in 1981 and 1982; followed by reciprocal
trusts in 1988 which are in almost identical words. The scheme of the mutual
deeds read together is almost identical. It is not disputed that a mere
declaration can create a trust obligation, particularly when the settlor is the
sole trustee under the trust. Before us what is argued by the appellants is
that there is no valid creation of trust; that, there was no
"vesting" of the assets in the three public charitable institutions;
that, the act of Smt. Birla in revoking the trusts and/or treating them as her
own property was within her competence; that, the trusts were revocable; that,
at the highest it is case of failure of the second charity and that
predominantly the dispute is a civil dispute. At this stage, we may point out that
what is complained of in the complaint filed by respondent no.2 herein is
regarding the acts of management including dissolution of the trusts and making
of the will by which trust properties have been allegedly converted dishonestly
into personal properties of R.S. Lodha constituting an offence of criminal
misappropriation under sections 405 and 406 and cheating under section 420,
IPC. Here we may add that question as to whether Smt. Birla had the authority
to revoke is different from the allegation that the acts of setting up personal
title to the trust property constituted criminal breach of trust and that, the
act was performed with the intent of converting trust property into private
property pursuant to a conspiracy by the accused.
In the
complaint, respondent no.2 herein has averred that he was present and consulted
when the couple opted for mutual wills in 1981, 1982 and even in 1988 when
mutual and reciprocal trusts were executed. The complaint is based on the
alleged oral agreement and understanding between the husband and wife regarding
disposal of properties on their demise. Suffice it to say that these facts in
issue are matters of evidence. The question as to whether there existed a valid
trust or that Smt. Birla was entitled to dissolve the trust even during her
lifetime are defences which can be taken at the appropriate time.
As
stated above, in this case we have mutual wills and mutual and reciprocal
trusts in 1981, 1982 and 1988; clauses 7(b) and 8 of the trust deed reflect
charitable intention coupled with nominations of 1990. What we would like to
stress is that the complaint is based on an important aspect of mutual trust.
The allegation is that the beneficial interest (enforceable not against the
assets but against the trustees) is dishonestly misappropriated by the accused.
The complaint is about dishonestly setting up personal title to the trust
property. The complaint is based on mutual and oral agreements imposing secret
trust obligations as evidenced by the trust deeds. In this connection we may
reiterate that "secret trust" is a doctrine evolved to prevent fraud;
that, fraud is not an ingredient for the application of the said doctrine.
However, the substance of the complaint here is that the secret trust has
become the reason for fraud because the legatee under the secret trust is made
to believe by the accused that she was the beneficial owner, free from any
trust [See: Re Cleaver (Deceased) reported in 1981 (2) All.ER 1018]. Lastly, we
may point out that in a matter of this type, oral evidence was admissible to
prove what is called "fraud" [See: Ottaway v. Norman reported in 1971 (3) All.ER 1325].
We
have entered into the above discussion, not to express any opinion, but to
answer the main plank of the argument advanced on behalf of the appellant that
this case basically involves a civil dispute. None of our observations be
treated as expression of our opinion on the rightfulness of the claim made in
the complaint.
In
conclusion, we may quote Law of Crimes by Ratanlal and Dhirajlal page 2069 :
"In
a case under section 406 the question of trust must be fully inquired into. For
this purpose it is essential that the whole prosecution evidence should be
recorded. It is impossible to guess at an interim stage, what will be the
result of the inquiry. Consequently, when only a few of the prosecution
witnesses have been examined, it is too premature to decline to examine any
more witnesses for the prosecution and discharge the accused on the ground that
the case is of a civil nature." Before us, number of judgments have been
cited in support of the case that respondent no.2 (complainant) is the
disgruntled employee of the MP Birla Group of Companies and that he has been
put up by the Birlas, hence, the complaint is based on malafides and should,
therefore, be dismissed. We need not go into the said judgments as the basic
principle settled in the citations is that the question of malafides has to be
decided on the facts of each case. At the outset, we reiterate that credentiality
of the complainant at this stage is not relevant. As stated above, in this
case, what is alleged by the complaint, inter alia, is that he was a privy to
the discussions and consultations and thinking which went into making of the
mutual wills and the mutual trusts; that, he was a formal witness to some of
these deeds and that he was aware that the couple had mutually agreed to the
disposal of the property to charity after their demise. In the facts and
circumstances of this case, at this stage, we are not inclined to accept the
argument that the complaint should be dismissed at the initial stage on the
ground of alleged malafides of the complainant.
We
reiterate that our observations in the judgment should not be read as our
opinion on the merits of the matter. Similarly, the applicability of the
relevant section to the facts of the present case does not arise at this stage.
For
the above reasons, we find no merit in these appeals and the same are
accordingly dismissed.
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