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