PETITIONER:
FAZALBHOY CURRIMBHOY ETC.
Vs.
RESPONDENT:
OFFICIAL TRUSTEE OF MAHARASHTRA & ORS., ETC.
DATE OF JUDGMENT12/12/1978
BENCH:
PATHAK, R.S.
BENCH:
PATHAK, R.S.
FAZALALI, SYED MURTAZA
SINGH, JASWANT
CITATION:
1979 AIR 687 1979 SCR (2) 699
1979 SCC (3) 189
CITATOR INFO :
R 1980 SC1206 (19)
D 1983 SC 259 (21)
ACT:
Sir Currimbhoy Ebrahim Baronetcy Act, 1913-Act created
a trust of the properties of the First Baronet-Fourth
Baronet migrated to Pakistan and was declared an evacuee-
State Legislature passed the Sir Currimbhoy Ebrahim
Baronetcy (Repealing and Distribution of Trust Properties)
Act, 1959-S.7(4) of the Repealing Act-Scope of-Effect of
repeal-Official Trustee-If required to transfer and vest in
the Custodian the trust properties found to be evacuee
property.
HEADNOTE:
In 1911 King George V conferred the "dignity, status
and degree" of a Baronet on Sir Currimbhoy Ebrahim of
Bombay. To provide for the upkeep and dignity of the
Baronetcy the Sir Currimbhoy Ebrahim Baronetcy Act, 1913 was
passed by virtue of which considerable properties belonging
to Sir Currimbhoy Ebrahim were settled upon the trust.
Section 8 of the Baronetcy Act provided that the
residue of income from the properties settled under the
trust was to be paid to the first Baronet and the heir male
of his body, who would, for the time being succeed to the
title of Baronet. Section 27 provided for the vesting of all
properties and funds in the Trust "upon failure and in
default of heirs male of the body of the last Baronet." The
First Baronet left behind a Will in respect of certain other
properties. On the death of the First Baronet his eldest son
assumed the title of Second Baronet and on the death of the
Second Baronet his eldest son Hussainbhoy became the Third
Baronet.
The Third Baronet migrated to Pakistan between the
years 1947 and 1949. He was, therefore, declared an evacuee.
Certain properties belonging to him were declared vested in
the Custodian of Evacuee Property. Two other immovable
properties as well as the right, title and interest of the
Third Baronet in the Sir Currimbhoy Ebrahim Baronetcy Trust
were declared as evacuee properties and vested in the
Custodian of Evacuee Property. On the death of the Third
Baronet in Pakistan in 1952 his eldest son Mohamedbhoy
succeeded as the Fourth Baronet. At that time the Fourth
Baronet was residing in India, but shortly thereafter he
migrated to Pakistan. The Deputy Custodian of Evacuee
Property made an order declaring the Fourth Baronet an
evacuee and notified his beneficial interest in the Trust as
evacuee property vesting in the Custodian of Evacuee
Property.
The Fourth Baronet having migrated to Pakistan along
with his son, the Bombay Legislature passed the Sir
Currimbhoy Ebrahim Baronetcy (Repealing & Distribution of
Trust Properties) Act, 1959. The Repealing Act inter alia
revoked and extinguished the trusts, powers, provisions,
declaration and purposes declared and expressed in the Sir
Currimbhoy Ebrahim Baronetcy Act and vested the properties
and funds in the Official Trustee for the purpose of
700
distributing them amongst the persons rightfully entitled
thereto, according to law.
The Official Trustee thereupon called upon the persons
claiming interest in the trust properties to submit their
claims.
On the Official Trustee's application under s. 7(2) of
the Repealing Act seeking orders and directions of the High
Court as regards distribution of the trust properties
amongst the several claimants, a single Judge of the High
Court took the view that the Custodian was not entitled to
the share of the Fourth Baronet in the Trust properties
because the beneficial interest of the Fourth Baronet which
had vested in the Custodian came to an end on the extinction
of the Trust that the Repealing Act had the effect of giving
rise to a resulting trust in favour of the settlor, the
first Baronet; that the trust properties reverted to his
estate on his death, that they must be deemed to pass by
inheritance, according to the Muslim personal law, and that
the residuary clause in the will executed by the First
Baronet did not cover the trust properties.
A Division Bench of the High Court on appeal held that
on the terms of the Will a contrary intention had been
manifested by the First Baronet that in the event of the
failure of the Trust the trust properties shall, after his
life time, be held for the benefit of the Baronet for the
time being and therefore the Fourth Baronet was entitled to
the trust properties absolutely in his own right. The claim
of the Custodian of Evacuee Property to the corpus of the
trust properties was rejected.
^
HELD: 1. Upon the provisions of the Baronetcy Act and
of the Will a direction by the First Baronet must
necessarily be presumed that if the trust created by the
Baronetcy Act failed or was revoked the trust properties and
funds must go to the last Baronet. [710 G].
(a) Although the trust was created by statute, it was
created at the instance of the First Baronet so as to keep
the trust in perpetuity for the upkeep of the dignity and
title of the Baronetcy at all times. A trust of this nature
has been regarded as a private trust. [707 B].
(b) Section 83 of the Indian Trusts Act provides that
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 for the benefit of
the author of the trust or his legal representatives. On the
terms of this section, which incorporates in codified form
the concept of what is known as a resulting trust, a
resulting trust can arise only in the absence of a direction
to the contrary. [707 E-F].
(c) In the instant case the various clauses of the will
show that substantially large sums of money were gifted by
the First Baronet in equal shares to each of the sons except
the eldest son. In all these clauses the eldest son
Mohamedbhoy was not included because he would succeed as
Baronet to the benefit of the trust constituted under the
Act. There is no reason to suppose that the First Baronet
intended to exclude Mohamedbhoy from the benefit of his
bounty. According to the terms of the Act, the benefits of
the trust created under the Baronetcy Act were to devolve on
the male heirs of
701
the body of the First Baronet who took the name of
Currimbhoy Ebrahim, and when executing the will, the First
Baronet had that benefit in mind for Mohamedbhoy. The First
Baronet had the line of Mohamedbhoy in mind for supplying
future Baronets. Therefore the only conclusion that can be
drawn is that the trust properties created under the Act
were intended by the First Baronet to vest in Mohamedbhoy
and his heirs. Although s. 27 comes into play only upon the
failure and in default of heirs male of the body of the said
Currimbhoy Embrahim, the intention of the First Baronet was
that the trust properties and funds should be confined even
ultimately to the line of Mohamedbhoy his eldest son. They
would go to the heirs of the last Baronet and not be
distributed among his own heirs. [709 B-710F]
2. While ordinarily the trust properties and funds
would have devolved on the Fourth Baronet, the ultimate
determination of the case must turn on the validity of the
claim made by the Custodian of Evacuee Property under s.
7(4) of the Repealing Act. [710H]
(a) The Repealing Act was passed by the State
Legislature under Entry 41 of List III of the Seventh
Schedule to the Constitution and received the assent of the
President. In case of any repugnancy between the Repealing
Act and the Administration of Evacuee Property Act, 1950 the
former will prevail by reason of Art. 254(2) of the
Constitution. Section 7(4) is not repugnant to any provision
of the 1950 Act. It is in the nature of additional
legislation on the subject. [714 B].
(b) Section 7(4) of the Repealing Act was passed
because the Fourth Baronet had been declared an evacuee and
his interest in the trust properties under the Baronetcy Act
had been declared evacuee property under the 1950 Act. With
the repeal of the Baronetcy Act and the revocation and
extinction of the trust, that interest came to an end and
the declaration ceased to have effect. The Legislature
presumed that when the Official Trustee took proceedings for
the distribution of the trust properties under s. 7 of the
Repealing Act, the Fourth Baronet would be found entitled to
the trust properties or part thereof. He had already been
declared an evacuee and consistently with the earlier
declaration vesting his interest in the trust properties as
evacuee property in the Custodian, the Legislature intended
that the trust properties falling in full ownership to the
Fourth Baronet on repeal should likewise be vested in the
Custodian. That could not be accomplished by a declaration
under the Administration of Evacuee Property Act, 1950, in
view of s. 7A thereof which prohibited such a declaration
after May 7, 1954. The result could be accomplished under
some other law and s. 7(4) of the Repealing Act was passed
to make provision accordingly. The trust properties were
evacuee property because they belonged to an evacuee [vide
s. 2(f) Administration of Evacuee Property Act, [1950], and
by the operative clause in s. 7(4) of the Repealing Act they
were vested in the Custodian. The law relating to evacuee
property was applied to the right, title and interest of the
evacuee in the trust properties even as they applied to any
other evacuee property under that law. The terms in which
the law relating to evacuee properties has been applied to
the trust properties fully confirms the conclusion that the
trust properties falling to the Fourth Baronet were to be
treated at par with evacuee property generally. [714 F-H].
(c) Section 7(4) of the Repealing Act requires three
conditions to be satisfied. They are: (i) that a person is
entitled to the trust properties or
702
any part thereof; (ii) that such person has been or is
declared as an evacuee within the meaning of the
Administration of Evacuee Property Act, 1950, and (iii) that
his right, title and interest in the trust properties has
been or is declared to be evacuee property under the
Administration of Evacuee Property Act, 1950. If these
conditions are satisfied the official trustee is required to
transfer and vest in the Custodian the trust properties or
so much thereof as is found to be evacuee property and the
law relating to evacuee property shall apply to such right,
title and interest in the trust properties as they apply to
any other evacuee property under that law. [711 G-H].
In the present case the first condition is satisfied
because the Fourth Baronet had been found to be entitled to
all the trust properties and funds settled and created under
the Baronetcy Act. The second condition is satisfied because
the Fourth Baronet was declared an evacuee. Similarly, the
third condition is satisfied because the right, title and
interest of the Fourth Baronet in the trust properties was
declared to be evacuee property. All three conditions having
been satisfied, s. 7(4) takes effect and the direction
contained in it must be carried out. The Official Trustee is
required to transfer and vest in the Custodian the trust
properties count to be evacuee property. [712 B-D].
3. There is no substance in the contention that on the
death of the Third Baronet before the Repealing Act was
passed, the trust properties devolved on the heirs of the
Third Baronet i.e. his widow, son and two daughters. On the
death of the Third Baronet the benefit of the trust created
by the Baronetcy Act passed to the Fourth Baronet. [715 D].
JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 722,
1016 and 1221 of 1967.
Appeal from the Judgment and Decree dated 9-8-1966 of
the Bombay High Court in Appeal Nos. 31 and 34 of 1963.
K. D. Mehta and D. N. Mishra for the Appellant In CA
722/67.
S. T. Desai, R. B. Datar and Girish Chandra for RR 3
and 65 in CA 722/67.
I. N. Shroff and H. S. Parihar for R 48 in CA 722/67.
S. T. Desai, R. B. Datar for the Appellant and
Respondent-40 in 1016/67.
I. N. Shroff and H. S. Parihar for RR 27-28 in CA
1016/67 and also for the appellant in CA 1221/67.
S. T. Desai and Girish Chandra for Respondent No. 63 in
CA 1221/67.
The Judgment of the Court was delivered by
PATHAK, J. These appeals, on certificate granted by the
High Court of Judicature at Bombay, are directed against the
judgment and order
703
dated August 9, 1966 passed by the High Court in its
appellate jurisdiction against orders and directions issued
by a learned Single Judge of the High Court on a petition
filed by the Official Trustee of Maharashtra in regard to
the properties of the former Sir Currimbhoy Ebrahim
Baronetcy Trust.
On July 21, 1911, His Majesty King George V issued
Letters Patent conferring the “dignity, state and degree” of
a Baronet of the United Kingdom of Great Britain and Ireland
on Sir Currimbhoy Ebrahim of Bombay and the heirs male of
his body lawfully begotten and to be begotten. In order to
provide for the upkeep and dignity of the Baronetey, the
then Governor General of India in Council enacted the Sir
Currimbhoy Ebrahim Baronetcy Act, 1913 (hereinafter referred
to simply as “the Baronetcy Act”) by virtue of which
considerable properties belonging to Sir Currimbhoy Ebrahim
were settled upon the trustee, and for the purposes,
declared in the Act. The Trust was created by statute at the
instance of Sir Currimbhoy Ebrahim. The Trustees who
included the Baronet for the time being and three officials
of the Government of Bombay designated by their office, were
constituted as a Corporation with perpetual succession and a
common seal for the purpose of executing the trusts, powers
and purposes of the Act. By virtue of section 8 of the
Baronetcy Act, the residue of the income from the properties
settled under trust, after payment to the credit of a
Sinking Fund and a Repairs Fund, and payment of rates, taxes
and cost of ordinary repairs in respect of buildings
comprising the trust properties was to be paid to the First
Baronet and the heir male of his body who would for the time
being have succeeded to the title of Baronet. The successive
Baronets were also entitled in the circumstances mentioned
in s. 10 to the use and benefit of additional hereditaments
vesting in the Corporation. Section 27 provided for the
vesting of the trust properties and funds “upon failure and
in default of heirs male of the body of the last Baronet”.
The First Baronet, Sir Currimbhoy Ebrahim, died on May
29, 1924 leaving behind a Will dated October 22, 1916 in
respect of certain other properties. His oldest son,
Mohamedbhoy, assumed the title and became the Second
Baronet. Mohamedhoy died on March 31, 1928. He was succeeded
by his son, Hussainbhoy, who became the Third Baronet.
The third Beronet migrated to Pakistan some time
between 1947 and September, 1949. On September 29, 1949 he
was declared an evacuee under the Bombay Evacuees
(Administration of Property) Act, 1949, and certain
properties belonging to him were declared vested in the
Custodian of Evacuee Property by an order of that date.
704
On November 15, 1949, a notification was issued under
sub.s.(1) of s.7 of the Administration of Evacuee Properties
Ordinance, 1949 notifying two further immovable properties
as well as the right, title and interest of the Third
Baronet in the Sir Currimbhoy Ebrahim Baronetcy Trust as
evacuee property vesting in the Custodian of Evacuee
Property. An appeal by the Third Baronet against the orders
dated September 29, 1949 and November 15, 1949 was dismissed
by the Custodian of Evacuee Property on February 13, 1950.
Two years later, on March 4, 1952, the Third Baronet
died in Pakistan. He was succeeded by his son, Mohamedbhoy,
as the Fourth Baronet. It seems that Mohamedbhoy was at the
time residing in India, but shortly thereafter he left for
Pakistan. On June 10, 1952, the Deputy Custodian of Evacuee
Property made an order declaring the Fourth Baronet an
evacuee under the Administration of Evacuee Property Act,
1950 and directing that his beneficial interest in the Sir
Currimbhoy Ebrahim Baronetcy trust be notified as evacuee
property. Therefore, on June 16, 1952, a notification was
issued under sub-s.(3) of s.7 of the Administration of
Evacuee Property Act, 1950 declaring that the beneficial
interest of the Fourth Baronet in the Sir Currimbhoy Ebrahim
Baronetcy Trust was evacuee property vesting in the
Custodian of Evacuee Property The Fourth Baronet preferred
an appeal to the Custodian General of Evacuee Property,
Delhi, but the appeal was dismissed on August 26, 1960 on
the ground that it was barred by time.
Meanwhile, the Fourth Baronet having migrated to
Pakistan alongwith his son Zoolfikar Ali, the Bombay
Legislature passed an Act titled the Sir Currimbhoy Ebrahim
Baronetcy (Repealing & Distribution of Trust Properties)
Act, 1959, which we shall refer to as “the Repealing Act)”
The Act, as its name shows, repealed the Baronetcy Act and,
inter alia, revoked and extinguished “the trusts, powers,
provisions, declaration and purposes” declared and expressed
in that Act. It provided for the vesting of the properties
and funds in the Official Trustee, Bombay for the purpose of
distributing them “amongst the persons rightfully entitled
thereto according to law”. Acting under the Repealing Act,
the Official Trustee called upon persons claiming interest
in the “trust properties”, an expression which includes the
properties and funds settled and created under the Baronetcy
Act, to submit their claims. As he found that the claims
were contested and was unable to say which of them were
justified, he applied to the Bombay High Court under sub-s.
(2) of s. 7 of the Repealing Act for orders and directions
as regards the distribution of
705
the trust properties amongst the several claimants. The
properties were valued at Rs. 30 lakhs for the purposes of
court fees.
The petition was entertained in the High Court under
its general and inherent jurisdiction and was registered as
Trust Petition No. 3 of 1962. It was disposed of by
Tarkunde, J. On December 20, 1962. A contention raised by
some of the claimants that the Repealing Act was ultra vires
was rejected. As regards the claim of the Custodian of
Evacuee Property, the learned Judge took the view that the
beneficial interest of the Fourth Baronet, which had vested
in the Custodian, came to an end on the extinction of the
trust and the Custodian was not entitled to the share of the
Fourth Baronet in the trust properties. He ordered, however,
that so much of the net income of the trust properties
accruing upto March 15, 1960, as had remained unpaid be
transferred to the Custodian. He rejected the claim to
maintenance made by the Third Baronet’s widow, the Dowagar
Lady Amine Currimbhoy Ebrahim. On the material before him
the learned Single Judge held that the Repealing Act had the
effect of giving rise to a resulting trust in favour of the
Settlor, the First Baronet, that the trust properties
reverted to his estate as on his death on May 29, 1924 and
that they must be deemed to pass by inheritance according to
the Muslim personal law as on an intestacy occurring on the
death of the First Baronet. He observed that the residuary
clause in the will dated October 22, 1916 executed by the
First Baronet did not cover the rust properties. On those
findings, he directed the Official Trustee to distribute the
net trust properties amongst the several claimants according
to the shares mentioned in an agreed statement subscribed to
by the claimants.
Against the order of Tarkunde, J., two appeals were
filed in he High Court. Appeal No.31 of 1963 was filed by
the Dowagar Lady Amine Currimbhoy Ebrahim, the Fourth
Baronet, Sir Currimbhoy Ebrahim, and his son, Zoolfikar Ali
Currimbhoy Ebrahim, and Appeal No. 34 of 1963 was filed by
the Custodian of Evacuee Property. The appeals were heard by
a Division Bench of two learned Judges, Kotval, C.J. and
Mody, J. The Division Bench rejected the challenge to the
constitutional validity of the Repealing Act, but on the
point whether a resulting trust had come into existence the
learned Judges held that in view of the surrounding
circumstances, particularly the terms of the will executed
by the First Baronet on October 22, 1916, it must be taken
that contrary intention had been manifested by the First
Baronet that in the event of the failure of the trust, the
trust properties should after his life time be held for the
benefit of the Baronet for the time being. Accordingly, the
learned
706
Judges laid down that the Fourth Baronet was entitled to the
trust properties absolutely in his own right. On the claim
of the Dowager Lady Amine Currimbhoy Ebrahim, they pointed
out that her son, the Fourth Baronet, had made a statement
through counsel in court that the would pay the amount to
her out of the corpus received by him. Appeal No.31 of 1963
was allowed in part. In regard to the appeal filed by the
Custodian of Evacuee Property, the learned Judges rejected
his claim to the corpus of the trust properties, holding him
entitled to a sum of Rs. 1,334.06 only, representing the
unpaid amount of the net income of the trust properties upto
March 14, 1960. Appeal No.34 of 1963 was dismissed.
Three appeals have been filed in this Court. Civil
Appeal No.722 of 1967 has been filed by Sir Fazalbhoy
Currimbhoy, Civil Appeal No. 1016 of 1967 has been filed by
the Custodian of Evacuee Property and Civil Appeal No.1221
of 1967 has been filed by Munira Fazal Chinoy and Mumtaz
Mohamed Rahimtoola, daughters of the Third Baronet.
The case of Sir Fazalbhoy Currimbhoy, the appellant in
Civil Appeal No.722 of 1967 is that the effect of the
Repealing Act on the trusts created by the Baronetcy Act is
to revoke and extinguish those trusts and to give rise to a
resulting trust in favour of the estate of the First Baronet
as on the date of his death, and that the estate would
devolve as on an intestacy under the Muslim personal law.
The case of Munria Fazal Chinoy and Mumtaz Mohamed
Rahimtoola, the appellants in Civil Appeal No.1221 of 1967
is that no resulting trust comes into existence consequent
on the repeal because a contrary intention must be presumed
in the First Baronet that the trust properties should go to
the Fourth Baronet. It is also contended by these appellants
that alternatively the trust must be deemed to have
extinguished on the death of the Third Baronet and that the
trust properties devolved on them, their mother the Dowager
Lady Amine Currimbhoy and the Fourth Baronet as the heirs of
the Third Baronet. The case of the Custodian of Evacuee
Property, the appellant in Civil Appeal No. 1016 of 1967 is
that the trust properties would ordinarily have passed to
the Fourth Baronet but because of sub-s.(4) of s.7 of the
Repealing Act the Official Trustee is required to transfer
and vest the trust properties in the Custodian.
It is contended on behalf of Sir Fazlbhoy Currimbhoy
that the trust having been created by the Baronetcy Trust
Act, a legislative statute, it must be regarded as a
statutory trust and, thereafter, when the Baronetcy Act was
repealed and the trust was revoked and
707
extinguished by the Repealing Act, another legislative
enactment, the necessary and only result was that the trust
properties reverted to the estate of the settler, the First
Baronet. Now, no doubt the trust was created by statute. But
it was created at the instance of the First Baronet. It had
to be a trust in perpetuity in order that the upkeep of the
dignity and title of the Baronetcy should always be ensured.
A trust such as this has been regarded as a private trust.
Indeed, throughout the trial before the learned Single Judge
and during the hearing of the appeals before the Division
Bench of the High Court the case proceeded on the footing
that the trust created by the Baronetcy Act was governed by
the law relating to a private trust. The parties proceeded
as if the trust was a private trust created directly by the
First Baronet himself, and it was assumed throughout that
the repeal by the legislature was a repeal effected by him.
We must, therefore, proceed in this case as if we are
dealing with a private trust.
The contention on behalf of Sir Fazalbhoy Currimbhoy
that a resulting trust follows the revocation and extinction
of the trust created by the Baronetcy Act rests on the
provisions of section 83 of the Indian Trusts Act. Section
83 provides:-
“83. 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.”
The section incorporates in codified form the concept
of what is known as a resulting trust. On the terms of
section 83, a resulting trust can arise only “in the absence
of a direction to the contrary”. It is not disputed that if
there is no direction to the contrary the trust properties
must be held for the benefit of the estate of the First
Baronet. Can an intention to the contrary be inferred? Scott
on Trusts declares:-
“If an owner of property transfers it inter vivos
upon a trust which fails either at the outset or
subsequently, and he has not indicated what disposition
should be made of the property in the event of the
failure of the trust, the trustee cannot retain it but
will be compelled in equity to
708
restore it to the settlor. In such a case the trustee
holds the property upon a resulting trust for the
settlor. Since the trustee was not intended to have the
beneficial interest, and since the beneficial interest
was not otherwise disposed of, it reverts or results to
the settlor. On the failure of the trust the court will
put the parties in status quo by restoring the property
to the settlor. But if the settlor properly manifested
an intention that no resulting trust should arise in
the event of the failure of the trust, it will not
arise, but the property will be disposed of in
accordance with his intention, whether that intention
is expressed in specific language or not. No resulting
trust arises if it appears by evidence properly
admissible that in the event of the failure of the
trust the property should be transferred by the trustee
to a third person, or held upon a different trust, or
that it should be retained by the trustee free of
trust.”
And further it is said:
“The resulting trust is rebutted when it is shown
that the settlor intended that in the event of the
failure of the trust the property should be held in
trust for other purposes.”
In Cock v. Hutchinson Lord Longdale, M. R. Observed:-
“Upon this deed a question is made, whether there
is or is not a resulting trust to the grantor as to the
surplus, with respect to which there is no declaration
of trust; and for the purpose of determining that
question, it is necessary to look carefully to the
language of the deed, and to the circumstances of the
particular case. In general, where an estate or fund is
given in trust for a particular purpose, the remainder,
after that purpose is satisfied, will result to the
grantor; but that resulting trust may be rebutted even
by parole evidence, and certainly cannot take effect
where a contrary intention to be collected from the
whole instrument, is indicated by the grantor. The
distinctions applicable to cases of this kind are
pointed out in the case of King v. Dinison (1 V. & D.
260) by Lord Eldon, who adopts the principles laid down
by Lord Hardwicks in Hill v. The Bishop of London (1
Atk. 618). The conclusion to which Lord Hardwicks comes
is, that the question whether there
709
is or is not a resulting trust must depend upon me
intention of the grantor…….. “
Now, it appears clearly from clause 2 of the will dated
October 22, 1916 executed by the First Baronet that a
substantially large sum of Rs.47,50,000/- was gifted by the
First Baronet in equal shares to each of his sons excepting
the eldest son, Mohamedbhoy. The gift was made inter vivos
in respect of the major sons and under the will in respect
of the minor son, Ismail. Clause 18 of the will, which
constitutes the general residuary clause, discloses that the
residue of the property was bequeathed by the First Baronet
to all his sons, except Mohamedbhoy. Mohamedbhoy was
apparently not included in those dispositions because he
would succeed as Baronet to the benefit of the trusts
constituted under the Baronetcy Act. He was the eldest son,
and there is no reason to suppose that the First Baronet
intended to exclude Mohamedbhoy from the benefit of his
bounty. The First Baronet planned to provide for all his
sons. Had he intended to exclude Mohamedbhoy for any reason,
he would not have provided by clause 15 of the will that
each one of his sons, including Mohamedbhoy, would enjoy an
equal share in the mercantile business in Bombay and
Calcutta in India, Hongkong and Shanghai in China and at
Kobe in Japan. The benefit of the trusts created under the
Baronetcy Act, according to the terms of that enactment,
were to devolve on the male heir of the body of the First
Baronet who took the name “Currimbhoy Ebrahim”, and when
executing the Will the First Baronet had that benefit in
mind for Mohamedbhoy as is apparent from clause 21 of the
will, wherein he declared:-
“Lastly it is my special desire that my son
Mohamedbhoy on succeeding to the title of Baronet and
every succeeding Baronet shall forthwith on such
succession adopt the names of Currimbhoy Ebrahim and
continue to do so as long as he holds the title.”
The First Baronet had the line of Mohamedbhoy in mind
for supplying the line of future Baronets. He gave a special
position to him, his eldest son. By clause 7 of the Will, he
bequeathed to Mohamedbhoy all the addresses, testimonials
and caskets presented to him, symbols of the high status and
dignity of the family, to be retained and passed down as
heirlooms. It is true that under section 4 of the Baronetcy
Act the possibility could be envisaged that in the event of
an existing descendant of Mohamedbhoy not using the name
“Currimbhoy Ebrahim” the Baronetcy would pass to a
descendant of
710
the next son of the First Baronet. But that envisions a very
remote possibility. It is difficult to presume in reason
that any male heir in the line of Mohamedbhoy would refuse
to use the name “Currimbhoy Ebrahim” and deprive himself of
the very real and substantial benefits of the Baronetcy.
Therefore, the only conclusion can be that the trust
properties created under the Baronetcy Act were intended by
the First Baronet to vest in Mohamedbhoy and his heirs. In
that light, section 27 of the Baronetcy Act assumes material
importance in relation to the controversies before us.
Section 27 reads:-
“Upon failure and in default of heirs male of the
body of the said Sir Currimbhoy Ebrahim to whom the
same title of Baronet may descend the said Corporation
shall stand possessed of the said hereditaments and
premises particularly described in the first Schedule
hereunder written and of any other hereditaments of a
freehold tenure and of the funds which may then be
vested in them by virtue and operation of this Act upon
trust for the heirs of the last Baronet absolutely and
shall also stand possessed of the said hereditaments
and premises particularly described in the Second
Schedule hereunder written or such of them as may be
still vested in the said Corporation and any other
hereditaments of a leasehold tenure which may then be
vested in the said Corporation by virtue of this Act
upon trust for the heirs of the last Baronet for all
the then residues of the terms granted by the lessees
by which the same are demised.”
Although s. 27 can come into play only “upon failure
and in default of heirs male of the body of the said Sir
Currimbhoy Ebrahim”- and that condition is absent in the
present case-the provision provides evidence, in the light
of what has been said above, of the intention of the First
Baronet that the trust properties and funds should be
confined even ultimately to the line of Mohamedbhoy. They
would go to the heirs of the last Baronet, and not be
distributed among his own heirs.
We are of opinion that upon the provisions of the
Baronetcy Act and of the Will, a direction by the first
Baronet must be necessarily presumed that if the trust
created by the Baronetcy Act fails or is revoked, the trust
properties and funds must go to the last Baronet. The
Division Bench of the High Court has found that the Fourth
Baronet is entitled to the trust properties and funds, and a
resulting trust does not come into existence. For the
reasons which have prevailed with us, we hold that such a
conclusion should ordinarily follow. However, the ultimate
determination must turn on the validity of the claim made by
711
the Custodian of Evacuee Property that by virtue of sub-s.
(4) of s. 7 of the Repealing Act the trust properties and
funds to which the Fourth Baronet would be entitled must
vest in the Custodian.
In understanding the import of sub-s. (4) s. 7 of the
Repealing Act it is imperative to note that it is a part of
the scheme embodied in s. 7 providing for the distribution
of trust properties by the Official Trustee to “the persons
rightfully entitled thereto”. It comes into play as a step
in the proceedings taken for that purpose. It is considered
for application when the Official Trustee under sub-s. (1)
or the High Court under sub-s. (2) is determining who are
the persons entitled to the trust properties on
distribution. Sub-s. (1) declares that if the claims
received by the Official Trustee are justified and
uncontested he must distribute the trust properties in
accordance with such claims. Sub-s. (2) provides that if the
Official Trustee is of the opinion that the claims are not
justified, or if they are contested, he may apply to the
High Court for orders and directions as regards the
distribution of the trust properties amongst the several
claimants. Sub-s. (3) provides that on obtaining such orders
and directions, he must distribute the trust properties
amongst the persons rightfully entitled thereto in
accordance with the final decree or order passed in that
behalf. Sub-s. (4) declares:
“If any person entitled to-the trust properties,
or any part thereof, has been or is declared an evacuee
within the meaning of the Administration of Evacuee
Property Act, 1950, and if any right, title and
interest of such person in the trust properties has
been or is declared to be evacuee property under that
Act, then the Official Trustee shall, subject to any
order or direction which the High Court may make or
give, transfer and vest in the Custodian the trust
properties, or so much thereof as is found to be
evacuee property, and the provisions of the law
relating to evacuee property shall as far as may apply
to such right, title and interest in the trust
properties as they apply to any other evacuee property
under that law”.
An analysis of the provisions of this sub-section is
necessary. It applies where:
(a) a person is entitled to the trust properties or
any part thereof;
(b) such person has been or is declared as an evacuee
with in the meaning of the Administration of
Evacuee Property Act, 1950 and
712
(c) his right, title and interest in the trust
properties has been or is declared to be evacuee
property under the Administration of Evacuee
Property Act, 1950.
If the three conditions are satisfied, the Official
Trustee is required to transfer and vest in the Custodian
the trust properties, or so much thereof as is found to be
evacuee property. And the law relating to evacuee property,
the sub-section says, shall apply to such right, title and
interest in the trust properties as they apply to any other
evacuee property under that law. When the sub-section speaks
of “any person entitled to the trust properties” it refers
to the person found entitled to the trust properties by the
Official Trustee under sub-s. (1) of s. 7 or by the High
Court under sub-s. (2) of that section. In the present case,
the Fourth Baronet has been found by us to be entitled to
Repealing Act has been defined by cl. (d) of s. 2 of that
Act to mean all the trust properties and funds settled and
created under the Baronetcy Act. The second condition is
also satisfied because the Fourth Baronet was declared an
evacuee on June 10, 1952 under the Administration of Evacuee
Property Act, 1950. The third condition is similarly
fulfilled. The right, title and interest of the Fourth
Baronet in the trust properties, that is to say, his
beneficial interest therein, was declared to be evacuee
property on June 16, 1952 under the Administration of
Evacuee Property Act 1950. All three conditions being
satisfied, sub-s. (4) takes effect and the direction
contained in it must be carried out. The Official Trustee is
required to transfer and vest in the Custodian the trust
properties found to be evacuee property.
Now, the expression “evacuee property” has not been
defined in the Repealing Act and, therefore, it must take
its meaning from the definition in the Administration of
Evacuee Property Act, 1950. Clause (f) of s. 2 defines
“evacuee property” to mean “any property of an evacuee”. The
definition does not require that for property to be evacuee
property, there must be a direction under the Administration
of Evacuee Property Act that it is evacuee property. A
perusal of the relevant provisions of the Administration of
Evacuee Property Act, 1950 indicates that the Act
contemplates the necessity of a declaration that property is
an evacuee property in order that it should vest in the
Custodian of Evacuee Property. Unless that declaration is
made the evacuee property, even though it belongs to an
evacuee, cannot vest in the Custodian. But there may be
another law under which evacuee property may vest in the
Custodian. sub-s. (4) constitutes that law. It provides for
another kind of case where evacuee property may also vest in
the Custodian. sub-s. (4) of s. 7 of the Repealing Act, in
essence, is a law in addition
713
to the Administration of Evacuee Property Act, 1950 for
vesting evacuee property in the Custodian. The provision in
sub-s. (1) that the Official Trustee shall transfer and vest
in the Custodian the trust properties found to be evacuee
property has the same statutory consequence is a declaration
made under s. 7 of the Administration of Evacuee Property
Act, 1950,. In opposition to the claim of the Custodian, it
was pointed out that a declaration that evacuee property is
vested in the Custodian is barred after May 7, 1954 by s. 7A
of the Administration of Evacuee Property Act, 1950. The
provision in sub-s. (4) of s. 7, on which the Custodian
relies, is not a declaration under that Act. As we have held
the Fourth Baronet to be entitled to the trust properties,
it must be taken that those properties in virtue of the
definition of “evacuee property mentioned above have been
found to be evacuee property. The words “found to be evacuee
property” mean found to be evacuee property in proceedings
under s. 7 of the Repealing Act. Therefore it is beyond
dispute that the Official Trustee must, by virtue of sub s.
(4), transfer and vest in the Custodian the trust
properties. Sub-s. (4) of s. 7 further declares that the law
relating to evacuee property shall apply to such right title
and interest in the trust properties as they apply to any
other evacuee property under the law. The words “such right,
title and interest in the trust properties” mean the right,
title and interest in the trust properties which we have
found the evacuee entitled to in this proceeding under s. 7,
and which now vest in the custodian. That is distinct from
the right, title and interest of the Fourth Baronet in the
trust properties which were declared to be evacuee property
under the Administration of Evacuee Property Act, 1950.
It is urged on behalf of Sir Fazalbhoy Currimbhoy that
if sub-s. (4) of s. 7 of the Repealing Act is construed as
declaring the trust properties to be evacuee property to
which the provisions of the law relating to evacuee property
would apply, the sub-section must be regarded as ultra vires
on the ground that the State Legislature is not possessed of
legislative competence to declare any property as evacuee
property. The submission is misconceived. Sub-s. (4) of s. 7
of the Repealing Act can be attributed to the legislative
power of the State Legislature in respect of Entry 41 of
List III of the Seventh Schedule to the Constitution of
India, which speaks of:-
“41. Custody, management and disposal of property
(including agricultural land) declared by law to be
evacuee property”.
Reference may also be made to Entry 27 of List III of the
Seventh Schedule, which speaks of:-
714
“27. Relief and rehabilitation of persons
displaced from their original place of residence by
reason of the setting up of the Dominions of India and
Pakistan.”
The Repealing Act received the assent of the President. In
case of any repugnancy between the Repealing Act and the
Administration of Evacuee Property Act, 1950, the former
will prevail by reason of Article 254(2) of the
Constitution. On the view taken by us, how ever, the sub-
section is not repugnant to any provision of the
Administration of Evacuee Property Act for, as we have
pointed out already, it is in the nature of additional
legislation on the subject.
It is also submitted on behalf of Sir Fazalbhoy
Currimbhoy that as the definition of the expression “the law
relating to evacuee property’ in the Repealing Act has been
defined by cl. (b) of s. 2 of that Act to include the
Evacuee Interest (Separation) Act, 1951, the Legislature
must be taken to have intended that a part of the trust
properties would be distributed among the heirs of the First
Baronet. It seems to us that by defining the words “the law
relating to evacuee property” in cl. (b) of s. 2 of the
Repealing Act to mean the Administration of Evacuee Property
Act, 1950, the Evacuee Interest (Separation) Act, 1951, the
Displaced Persons (Compensation and Rehabilitation) Act,
1954 and any other law for the time being in force in
relation to evacuees or evacuee property, the Legislature
intended to give the same powers to the Custodian in dealing
with the trust properties as he enjoys in respect of other
evacuee property.
The object in enacting sub-s. (4) of s. 7 of the
Repealing Act is apparent. The Fourth Baronet had been
declared an evacuee. His interest in the trust properties
under the Baronetcy Act had been declared evacuee property
under the Administration of Evacuee Property Act, 1950. With
the repeal of the Baronetcy Act and the revocation and
extinction of the trust, that interest came to an end and
the declaration ceased to have effect. The Legislature
presumed that when the Official Trustee took proceedings for
the distribution of the trust properties under s. 7 of the
Repealing Act, the Fourth Baronet would be found entitled to
the trust properties or part thereof. He had already been
declared an evacuee, and consistently with the earlier
declaration vesting his interest in the trust properties as
evacuee property in the Custodian-now lapsed in consequence
of the Repealing Act-the Legislature intended that the trust
properties falling in full ownership to the Fourth Baronet
on repeal, should likewise be vested in the Custodian. That
could not be accomplished by a declaration under the
Administration of Evacuee Property Act, 1950, in view of s.
7A
715
thereof which prohibited such a declaration after May 7,
1954. The result could be accomplished under some other law,
and sub. s. (4) of s. 7 was included in the Repealing Act to
make provision accordingly. The trust properties were
evacuee property because they belonged to an evacuee, and by
the operative clause in sub-s. (4) of s. 7, they were vested
in the Custodian. The law relating to evacuee property was
applied to the right, title and interest of the evacuee in
the trust properties, even as they applied to any other
evacuee property under that law. The terms in which the law
relating to evacuee property has been applied to the trust
properties fully confirms the conclusion that the trust
properties falling to the Fourth Baronet were to be treated
at par with evacuee property generally.
It has been urged on behalf of the appellants in Civil
Appeal No. 1221 of 1967 that the trust failed on March 14
1952, on the death of the Third Baronet, even before the
Repealing Act was passed, and that the trust properties
devolve, therefore on the heirs of the Third Baronet, that
is to say his widow, son and two daughters, The submission
was made before a Division Bench of the Bombay High Court
and was rejected. We are also of the view that there is no
substance in this contention. On the death of the Third
Baronet, the benefit of the trusts created by the Baronetcy
Act passed to the Fourth Baronet.
Towards the conclusion of the hearing, it was contended
by learned counsel for Sir Fazalbhoy Currimbhoy that by
virtue of the Notifications bearing No. 12/2/65-E-PTY and
No.12/3/65-E-PTY dated September 10, 1965 and September 11,
1965 respectively the trust properties which could be
rightfully claimed by the Fourth Baronet would stand vested
in the Custodian of Enemy property under the Defence of
India Rules, 1962. For that reason, it is said, the Fourth
Baronet cannot be held entitled to the trust properties, and
therefore they would not vest in the Custodian of Evacuee
Property. The record before us does not show that the
Custodian of Enemy Property filed any claim before the
Official Trustee under sub-s. (1) of s. 7 of the Repealing
Act and, consequently, we consider it inappropriate to enter
into this matter.
The Division Bench of the High Court has held that the
Custodian of Evacuee Property is entitled to be paid a sum
of Rs. 1,334.06 representing the unpaid amount of the net
income of the trust properties upto March 14, 1960. This
finding has not been challenged, and we affirm it.
716
The Official Trustee has pointed out that various
liabilities on account of Income-tax, Wealth tax, House tax
and other taxes are outstanding in respect of the trust
properties. He prays for directions that those tax
liabilities be allowed to be cleared before the trust
properties are transferred by him. He also points out that
there are fees, charges, costs and other expenses to be paid
off. We propose to remand the case to the High Court for
making necessary orders in that regard after satisfying
itself as to the existence and amount of these liabilities.
In the result, Civil Appeal No. 722 of 1967 and Civil
Appeal No. 1221 of 1967 are dismissed, and Civil Appeal No.
1016 of 1967 is allowed. There is no order as to costs of
these appeals in this Court except an order for costs in
favour of the Official Trustee, who shall be entitled to
recover his costs of these appeals from the trust funds in
his hands. The judgment and order dated August 9, 1966 of
the Division Bench of the Bombay High Court are set aside,
except in so far as they contain the direction for payment
of Rs. 1,334.06 to the Custodian of Evacuee Property and in
so far as they direct, and make provision for, the payment
of the costs of the Official Trustee and other parties and
affirm the order for costs made by the learned Single Judge.
The Official Trustee shall transfer to and vest, in the
Custodian of Evacuee Property the accumulated trust
properties and funds settled and created under the Sir
Currimbhoy Ebrahim Baronetcy Act, 1913, subject, however to
the aforesaid directions and orders and to the directions
and orders by the Bombay High Court for prior payment of the
liabilities, if any, on account of Income Tax, Wealth Tax,
House tax and other taxes and other charges, expenses, fees
and costs incurred by the official Trustee. The case is
remanded to the Bombay High Court for that purpose.
P.B.R. C. A. Nos. 722 & 1221 of 1967 dismissed.
C. A. No. 1016 of 1967 allowed.
717