1 MISC. PTN. 70/2010
PGK/MNM
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
TESTAMENTARY AND INTESTATE JURISDICTION
Miscellaneous Petition No.70 of 2010
Ferani Hotels Pvt. Ltd. .. .. Petitioner
V/s.
Nusli Neville Wadia .. .. Respondent
Dr.A.M. Singhvi, Sr. Advocate with Mr.T.N. Subramanian,
Sr. Advocate, Mr.Ashok Gupta, Mr.Zubin Behramkamdin,
Mr.Vivek Vashi Sushma Nagraj, Ms.Anusha Jegadeesh and
Mr.Ameesh Patnair for i/by M/s.Bharucha & Partners for
Petitioner.
Mr.F.S. Nariman, Sr. Advocate with Mr.N.H. Seervai, Sr.
Advocate, Mr.V.R. Dhond, Mr.Rohan Kelkar, Mr.S.V. Doijode,
Mr.P.A. Kabadi and Ms.F.J. Thakkar i/by M/s.Doijode
Associates for Respondent.
------
CORAM : SMT.ROSHAN DALVI, J.
Date of reserving the judgment : 18th October, 2010
Date of pronouncing the judgment :15th December, 2010
JUDGMENT :
1. This Petition was filed for revocation and annulment
of the order dated 20th November 2003 authorising and
permitting the Respondent to continue to act as
Administrator of the estate of one Eduljee Framroze
Dinshaw passed in Miscellaneous Petition No.41 of 2003,
to remove the Respondent from the office of
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Administrator of the estate of the deceased and to
appoint a fit and proper person, including the
Petitioner as such Administrator, for disclosure of the
estate of the deceased and accounts.
2. The deceased died in New York, United States of
America (U.S.A.) on 14th March 1970 leaving behind his
last Will and Testament dated 4th February 1970 (the
Will). Under Clause IV of the Will, the deceased (the
testator)bequeathed a life interest in the net income
of his properties ig in India to his sister one
Mrs.Bachoobai Woronzow Dashkow (Bachoobai) and upon her
death to two charitable institutions in the U.S. the
Salvation Army and the American Society for the
Prevention of Cruelty to Animals (U.S. Charities).
Clause IV reads thus:
In the event that at the time of my death I
shall own outright and free from any trust any
real or personal property physically locatedin the Republic of India, then and in such
event, I give, devise and bequeath the same to
my Trustees, hereinafter named, IN TRUST
NEVERTHELESS, to hold, invest and re-invest
the same and to collect and receive the rents,interest, issues and income therefrom and to
pay the net income thereof at such times as my
said Trustees may consider appropriate, but
not less frequently than quarter annually to,
or apply the same for the benefit of my
sister, BACHOO WORONZOW, for life if she
survives me and upon the death of my said::: Downloaded on – 09/06/2013 16:41:56 :::
3 MISC. PTN. 70/2010sister, BACHOO WORONZOW or upon my death if
she shall predecease me, I give, devise and
bequeath the then principal of said trust fundtogether with any accrued income thereon, in
equal shares to THE SALVATION ARMY, New York,New York and THE AMERICAN SOCIETY FOR THE
PREVENTION OF CRUELTY TO ANIMALS, New York,
New York for their general uses and purposes.
Under Clause V of the Will, he granted the residue of
his estate to his sister Bachoobai. Clause V reads
thus:
I give, devise and bequeath all the rest,
residue and remainder of my estate, both real
and personal to my sister, BACHOO WORONZOW, ifshe survives me or, if she shall predecease me,
in equal shares, to THE SALVATION ARMY, New York
and THE AMERICAN SOCIETY FOR THE PREVENTION OF
CRUELTY TO ANIMALS, New York, New York, fortheir general uses and purposes.
Bachoobai had not predeceased the deceased. Hence she
would take the remainder of the estate of the deceased
after the U.S. Charities were bequeathed the principal
of the Trust fund and the accrued interest in the real
and personal properties of the deceased, including
properties in India.
3. Under Clause VIII of the Will, he appointed Bachoobai
as the executrix of his Will and certain other as
successor executor in the event that she predeceased
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him, failed to qualify or ceased to act for any reason.
He authorised them to designate another individual to
act on their behalf if they could not act in a foreign
jurisdiction. The relevant part of Clause VIII of the
Will runs thus:-
I nominate, constitute and appoint my sister,
BACHOO WORONZOW, to be Executrix of this my
Will and in the event that she shall
predecease me, fail to qualify or cease to act
for any reason, I nominate, constitute andappoint as successor such then partner of
Coudert Brothers as shall be designated by anythree then partners. Should any executor be
unable for whatever reason to exercise her or
his functions in a jurisdiction outside theUnited States of America, I hereby authorize
her or him by written instrument, duly
acknowledged, to designate an individual or a
bank to act on her or his behalf in respect toproperty located in such foreign jurisdiction.
I nominate, constitute and appoint ALEXIS C.
COUDERT and JEHANGIR B. DUBASH to be the
trustees under this my Will.
4. The executrix, the trustees and the successor
executors or trustees were given full power and
authority to retain, manage and administer the estate
of the deceased under Clause IX of the Will. The
relevant part of Clause IX runs thus:
I hereby grant to my Executrix and Trustees and
any of their successors full power and authority
to retain, manage and administer my estate as
freely as I could handle my own affairs if::: Downloaded on – 09/06/2013 16:41:56 :::
5 MISC. PTN. 70/2010living. Without limiting the foregoing, and
irrespective of any legal restrictions otherwise
applying to the powers of executors or trusteesin any jurisdiction, I hereby specifically
empower my Executrix and Trustees and any oftheir successors, with respect to both principal
and income, as follows:
(a) Without obligation to diversify, to retain
any shares of stock of any corporate trustee,
shares of stock in closely held corporations,
shares of stock of corporation in which I own
all or the greater part of the shares, any any
other stocks, bonds, mortgages, real estate or
other form of property or investment which I may
leave at the time of my death or which may
subsequently be received or held by my estate or
any trust hereunder as a result of the exercise
of any powers herein granted, or otherwise.
(b) . . . . .
(c) For any purpose, to sell for cash or on
credit, exchange, lease for any term of years
(including a term of more than ten years),
mortgage, or extend or modify the terms of
mortgages on, any real or personal property or
interest or estate therein at any time forming a
part of my estate or any trust created by this
my Will, and to execute such instruments as may
be necessary or advisable.
5. The Will, as any other document, is required to be
read as a whole and every part given effect to. No part
can be rendered otiose upon its construction. The
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judgment relied upon by the Petitioner in the case of
Bhura vs. Kashi Ram, (1994) 2 SCC 111 makes this
position clear. As emphasised by Mr.Nariman on behalf
of the Respondent, this would require consideration of
the entire Clause IX of the Will to see the power given
to Bachoobai as the executrix to deal with the real
property of the deceased during her lifetime. How she
exercised that power shall be seen presently.
Bachoobai survived the deceased. Bachoobai also
qualified to be the executrix. She applied for probate
of the Will in the competent Court which was the
Surrogate’s Court of the County of New York (New York
County Court). The only named executrix in the Will is
the testator s sister Bachoobai who also has a life
interest and the residuary interest. There is no other
named executor in the Will directed or authorised to
administer the estate of the deceased along with
Bachoobai. It is only upon happening of a contingency
specified in Clause 8 of the Will, by which Bachoobai
would no longer remain executrix, that a successor
executor is directed to take charge. Such successor
executor would be a partner nominated by any three
partners of the Firm of Coudert Brothers.
6. Bachoobai, therefore, had to act singly until she
ceased to act for any reason. She was accordingly the
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sole executrix to administer the estate of the
deceased. The successor of the executrix cannot act
along with the executrix. He must necessarily act
after her death or after she ceases to act for any
reason by virtue of his designation as successor
executor . Hence only if Bachoobai ceased to act for
any reason, a successor executor, as nominated under
the Will, would require to be appointed. Bachoobai
continued as the executrix until she died.
7. Since Bachoobai did not cease to act for any reason
during her lifetime but continued as the executrix
until her death, it is contended on behalf of the
Respondent that Clause VIII of the Will would not come
into effect with regard to the nomination of any
successor executor upon the death of Bachoobai. It is
contended on behalf of the Petitioner that by virtue of
her death she would cease to act and by reason of her
death a successor executor would have to be appointed
as per the directions contained in Clause VIII of the
Will.
8. It would have to be seen whether upon her death also a
successor executor as directed in the Will was
imperatively to be appointed on the premise that she
ceased to act as such executrix by reason of her death.
Similarly it would have to be seen whether ceasing to
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act implied a contingency that arose upon a voluntary
act of an individual during her lifetime or also an
involuntary act such as death. Since it is made a
contentious issue, it would then have to be seen
whether, in the facts of this case, that would make any
difference.
9. Cease is defined in Black s Law Dictionary, Eighth
Edition, page 237 as to stop, forfeit, suspend or bring
to an end.
It is defined in Advanced Law Lexicon, Vol.I, page 722
as to put an end to; to put a stop to; to come to an
end; to stop doing.
Cease to act has not been defined. Cease is
different from cease to act . The above meanings of
cease require a voluntary act; it is specifically
inconsistent with an involuntary act. The expression
cease to act as also cease to exist , or cease to
be , on the other hand, would imply an involuntary act
and would, therefore, include death . (Ref : Kishore
Kumar Birla vs. Rajendra Sing Lodha, (2008) 4 SCC 300)
The term cease to act is often used in testamentary
dispositions along with the expressions fails to
qualify, dies, resigns etc.
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10. Stocker and Rikoons on Drawings, Wills and Trusts in
the Chapter on Fiduciaries and Administrative Powers
sets out these expressions in paragraph 6:1:3. With
regard to designation of successor beneficiary, it
specifically enjoins that in the contingency that an
executor or trustee may refuse to act or may not
qualify for some other reason or may seek to resign
after qualification, or may die before closing of the
estate or termination of the trust should be considered
and provided for. What would be the situation requiring
an application to be made to Court for appointment of
an administrator or a substitute trustee is considered
thus :
The contingencies that an executor or trustee
may refuse to act or may not qualify for someother reason, or may seek to resign, after
qualification, or may die before the closing
of the estate or the termination of the trust,
should be considered and provided for.
11. This denotes that contingency of death is different
from the contingency of ceasing to act as trustee.
Whereas the executor or executrix in his or her
lifetime would discontinue to act or put an end to
their work of administration or to bring an end such
work of administration themselves, the administration
ipso facto would come to an end upon their death,
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premature or otherwise.
12. The expression cease to act came up for
consideration before the Supreme Court of Canada in the
case of Reginald Hayes And Maude Edwards Mayhood,
(1959) S.C.R. 568. In that case, certain mineral
rights in the lands of the testator were bequeathed to
the beneficiaries. This remained in the hands of the
executrix for nearly twenty years unadministered
because the executrix did not act to compel the
concurrence of a dissenting beneficiary to dispose of
the mineral rights. Upon the contention of the
beneficiaries that it should have been vested in them
during the period that it remained unapplied because of
the inaction on the part of the executrix, it was
argued that the executrix had ceased to act as an
executrix and was merely a bare trustee of the mineral
rights on behalf of the beneficiaries. The contention
was rejected. It was held that delayed application
made by the executrix was properly made at the time she
applied to Court and she should not be precluded from
making an application on the ground of delay.
13. The expression cease to act for any reason in the
Will of the testator should, therefore, be read
alongside the expressions pre-deceased me and failed
to qualify . These are the three eventualities
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specified in Clause VIII of the Will in which event the
nomination of the successor is made. It, therefore,
implies a situation when she could not act because she
predeceased the testator and after the death of the
testator if she failed to qualify to become executrix
or if she failed to act herself. In those
eventualities, the estate could not have been
administered because she was, at the relevant time, the
only named executrix. Consequently, if she had earlier
died or if though living, she could not become the
executrix or if after becoming an executrix, she did
not act as such for whatever reason, another executor
would have had to act. If she had acted as the
executrix and administered the estate of the testator
no other executor would have been required to be
appointed. Hence until she died if she had not ceased
to act as executrix and had continued to act as
executrix, the nomination of the successor would not
take effect.
14. The Petitioner has relied upon the fact that
citations have been issued in 1970 upon the successor
executors named in the Will. Issue of citation showing
the names of various partners of Coudert Brothers as
successor executors does not show that they or any of
them were to act as executors along with Bachoobai. The
very expression successor executor , referred to by
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Dr. Singhvi on behalf of the Petitioner, shows that he
would succeed Bachoobai as executor of the estate of
the testator. The citation is a notice issued by the
Court upon the person concerned interested in the
estate of the deceased testator to invite or inform the
beneficiaries or the executors about a bequest made
under the Will or the authority or power granted under
the Will to act as per the directions contained
therein. If a beneficiary is granted a legacy, which
would take effect upon a contingency or after a period
of time, all that the citation would do is to inform
him of such bequest. Similarly if the executor has to
act as such upon a contingency or after a period of
time, he would be informed of the directions in the
Will to that end. Neither the bequest nor the
executorship would come into effect so soon as the
citation is served. Service of the citation,
therefore, does not show that any one or some of
persons mentioned therein became executors. Similarly
if the citation is served upon the two charities named
in the Will, who are the ultimate beneficiaries of the
trust fund of the entire real property of the deceased
in India, they would only know that after the death of
Bachoobai, who had life interest, their beneficial
interest would be effectuated. Service of the citation
cannot accelerate such interest.
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15.It is contended by Dr.Singhvi that the expression
ceased to act for any reason would include ceasing to
act by death. The term successor implies the executor
succeeding her. In every case of an executor dying, an
administrator or executor would have to be appointed by
the Court. The provision for a successor executor
would require a Court to appoint the executor so
designated or nominated by the deceased himself. To
that extent, of course, a successor executor would have
to be appointed if the estate remained unadministered.
16. The property of the deceased in India bequeathed
under Clause IV of the Will, by which Bachoobai was to
enjoy the benefit for her lifetime and after which it
would vest in the U.S. Charities, would have to be
administered during the lifetime of Bachoobai as well
as thereafter. Upon her death, Bachoobai would cease
to be the executrix but upon her death, the U.S.
Charities would become the beneficiaries under the Will
and the estate of the deceased would be required to be
administered for vesting them in the U.S. Charities.
Consequently, by way of necessity of administration of
the estate of the deceased after the death of
Bachoobai, having a life interest in the properties of
the deceased, an executor would be required to be
appointed. Clause VIII of the Will sets out who such
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executor would be and how such executor would be
appointed.
17. The aforesaid Will was probated by the New York
County Court on 2nd April 1970. A notice came to be
issued by the New York County Court inter alia to the
beneficiaries mentioned under the Will, trustees
nominated under the Will and the successor executors
mentioned in Clause VIII of the Will. This successor
executor was to be a partner of the Firm of Coudert
Brothers to be designated by any of the three partners
of the firm at the relevant time. Hence citation was
served upon all the partners of the firm also.
18.Since a large part of the real and personal property
of the deceased was in India and provision was made in
respect of the administration of those properties in
Clause IV of the Will, Bachoobai, as the executrix,
was required to, authorised to and did execute a Power
of Attorney for enabling Letters of Administration to
be granted for the properties of the deceased within
India to her as an absent executor for her use and
benefit until she obtained probate or Letters of
Administration herself.
19. The Power of Attorney of Bachoobai dated 16th June
1970 sought to appoint one of the trustees mentioned in
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the Will itself, one Jehangir B. Dubash (Dubash), to
act in her name and on her behalf to obtain Letters of
Administration with the copy of the Will annexed from
the competent Court in India and to realise all monies,
estate, properties and effects belonging to the
deceased upon obtaining such Letters of Administration.
Pursuant to the Power of Attorney, the said Dubash
applied for being granted Letters of Administration
with the Will annexed of the deceased under Petition
No.671 of 1971 on 27th August 1970 in the Testamentary
and Intestate Jurisdiction
ig of this Court. The said
application was made under Section 241 of the Indian
Succession Act, 1925 (the IS Act) for grant of Letters
of Administration for the use and benefit of Bachoobai
limited until she obtained probate or Letters of
Administration herself.
20. The said Dubash was issued Letters of Administration
with the Will of the deceased annexed thereto on 12th
November 1971 as the Constituted Attorney of Bachoobai,
the sole executrix named in the Will for her use and
benefit as such executrix limited as aforesaid upon the
undertaking of the said Dubash to administer the same
and to make the full and true inventory of the property
and credits of the deceased within six months thereof
and to render true account to this Court in its
Testamentary and Intestate Jurisdiction.
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21. Soon thereafter on 1st December 1972, the said Dubash
expressed his willingness to retire and to be relieved
of the administratorship of the estate of the deceased.
Bachoobai executed another Power of Attorney in favour
of the Respondent. Bachoobai nominated, constituted and
appointed the Respondent to apply for discharge of the
said Dubash as the executor and legal representative in
his favour as the successor of the said Dubash to the
properties and credits of the deceased remaining to be
administered and also to apply for and obtain an order
vesting in him the properties and credits which had
vested in Dubash as the administrator of the estate of
the deceased in India. This was apparently done by
Bachoobai under the power granted to her by the
aforesaid Clause IX of the Will, which power was not
exercised by her in the appointment of Dubash earlier.
22. Miscellaneous Petition No.29 of 1972 came to be filed
on 20th December 1972 by the said Dubash and the
Respondent. Under a Judge s Order signed by the then
Testamentary Judge of this Court on 21st December 1972,
the said Dubash was discharged as Administrator of the
estate of the deceased and the Respondent was appointed
as Administrator of the estate of the deceased in the
place and stead of the said Dubash. Further the
property and the estate of the deceased mentioned in
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the schedule to the grant of the Letters of
Administration dated 12th November 1971 was by the said
Judge s Order vested in the Respondent as
Administrator. Whereas the Petition appointing Dubash
was filed under Section 241 of the IS Act, the Petition
appointing the Respondent was filed under Section 301
of the IS Act. It is contended by Mr.Nariman on behalf
of the Respondent that he has not been appointed under
Section 241 of the IS Act, but he has been appointed
under Section 301. The order of discharge of the said
Dubash and the appointment
ig of the Respondent was,
therefore, passed under Section 301 of the IS Act. The
properties of the deceased came to be vested in the
Respondent as such Administrator.
23. Sections 241 and 301 of the IS Act run thus:
241. Administration, with will annexed, to
attorney of absent executor.-When any executor is
absent from the State in which application ismade, and there is no executor within the State
willing to act, letters of administration, with
the will annexed, may be granted to the attorney
or agent of the absent executor, for the use and
benefit of his principal, limited until he shallobtain probate or letters of administration
granted to himself.
301. Removal of executor or administrator and
provision for successor.-The High Court may , on
application made to it, suspend, remove or
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18 MISC. PTN. 70/2010and provide for the succession of another person
to the office of any such executor or
administrator who may cease to hold office, andthe vesting in such successor of any property
belonging to the estate.
24. Whereas Section 241 of the IS Act grants limited
Letters of Administration to the attorney or agent of
an absent executor, Section 301 removes an executor or
administrator already appointed and provides for
his/her successor. Consequently, there is no vesting of
any property in the administrator appointed under
Section 241 of the
ig IS Act under the limited grant
granted by the Court. The property vests in the
successor executor appointed by the Court upon removal
of an executor already appointed under a Will or by the
Court.
25. Section 301 contemplates removal of an executor
appointed by the Court but not an administrator of an
absent executor appointed by the Court. Section 301,
therefore, contemplates a case for removal of the
executor to be made out so that the Court would
suspend, remove or discharge such executor and
thereupon appoint a successor vesting in him the
property. Section 301, therefore, presupposes that the
property of the deceased had vested in the previous
executor who was removed by an order of the Court under
that section. If the property had not vested in the
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earlier executor, none could be vested in the successor
executor simpliciter. If only limited Letters of
Administration were granted to an attorney of an absent
executor, there would be no vesting of the property of
the deceased in him. The grant being limited per se
until the executor obtained probate or Letters of
Administration himself or herself, no property could
vest in such attorney. A reading of the section makes
it clear by the absence of the term executor in the
attorney or the agent who is given the limited grant
whilst the executorig remains absent from the state.
Similarly the executor sought to be removed under
Section 301 is not, and at least necessarily not, an
executor appointed under Section 241 of the IS Act,
though an executor appointed under Section 241 of the
IS Act may also be removed in a given case. Assuming
that such an executor is removed and another one is
appointed as a successor, he would necessarily be a
successor executor under Section 241 of the IS Act.
He would not obtain higher rights as a permanent
executor under Section 301 of the IS Act, except if he
is sought to be so appointed by the executor named in
the Will, who had the power to administer the estate of
the testator irrespective of any legal restrictions as
did Bachoobai under Clause IX of the Will.
26. The Power of Attorney executed by Bachoobai dated 1st
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December 1972, however, sought to appoint the
Respondent as succecssor of the said Dubash and also to
apply for vesting in him the property which was earlier
vested in the said Dubash. Under the Power of Attorney
executed by Bachoobai in favour of the said Dubash, no
property of the deceased had vested in him. The said
Dubash was to only apply and obtain limited Letters of
Administration and thereafter realise the money,
estate, property and effects of the deceased. The
Letters of Administration obtained by the deceased
Dubash dated 12th November 1971 were also limited until
Bachoobai obtained probate of the said Will and under
that grant, the said Dubash was to administer the
estate of the deceased, make full inventory of the
property and credit and render an account thereof. The
Letters of Administration were not separately granted
to the Respondent. Instead in the Petition taken out
by the said Dubash and the Respondent, the Respondent
was appointed administrator and was vested as such
administrator the properties of the estate of the
deceased in India.
27. The two Powers of Attorney are distinctly different.
These powers are granted upon the power she was herself
given under Clause IX of the Will. Consequently, the
two orders of the Court dated 12th November 1971 in
Miscellaneous Petition No.671 o 1976 in favour of
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Dubash and the order dated 21st December 1972 in
Miscellaneous Petition No.29 of 1972 in favour of the
Respondent are also different and under different
provisions of the law relating to testamentary
succession contained in Sections 241 and 301 of the IS
Act.
28. The order of this Court dated 21st December 1972 has
not been challenged. The Petitioner as well as the
Respondent have acted pursuant to the said order. That
was the grant which has not been sought to be revoked.
29. Certain properties of the deceased came to be agreed
to be developed by the Petitioner as the project co-
ordinator of the said properties under an Agreement
dated 2nd January 1995 executed by and between the
Petitioner and the Respondent. The parties relied upon
and recited about the Will, the administration by
Bachoobai under the Will, the appointment by her
initially of the said Dubash and later the Respondent
upon the powers conferred on her under Clause XI of the
said Will, her interest and legal rights thereunder in
various recitals, more specially recitals a, b, c, g,
h, i, j, w and y which run thus:
(a) One Eduljee Framroze Dinshaw (son of the
late F.E. Dinshaw, being one of the two children
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22 MISC. PTN. 70/2010Mrs.Bachoobai Woronzaw Dashkow) was in his own
right entitled to a vast estate partly located
in India and partly located abroad.
(b) The said Eduljee Framroze Dinshaw
(hereinafter referred to as the said deceased )
died in New York on 14th March 1970 leaving his
last Will and Testament dated 4th February, 1970
under which he appointed his sister, the said
Bachoobai, as the sole Executrix of the said
Will and of his entire estate.
(c)Under his said Will, the said deceased
empowered and authorised his sister, the said
Bachoobai (as such Executrix) to sell or
otherwise alienate, dispose off or deal with his
entire estate and she was to be the sole life-
beneficiary of the estate of the said deceased
and on and after her death, the residuary estate
of the said deceased to be held in trust, by the
Trustees named in the said Will, for the objects
as specified in the said Will but subject to the
directions that may be given by the said
Bachoobai during her lifetime.
(g) One Jehangir Behram Dubash (hereinafter
referred to as the said Dubash ) at the
instance and by the direction of the said
Bachoobai, (being the sole Executrix under the
Will and of the estate of her said deceased
brother, the said Eduljee) applied to the Bombay
High Court and obtained grant of Letters of
Administration (with exemplification of Probate
of Will annexed thereto of the estate of the
said deceased Edulji F. Dinshaw, in India) by
and under such Letters of Administration dated
12th November 1971.
(h) By Judge s Order dated 21st December 1972
passed in Misc. Petition No.29 of 1972, the
Bombay High Court, in its Testamentary and
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Intestate jurisdiction, appointed the Owner [the
Respondent herein was described as such]
abovenamed as such Administrator of the estate
in India of the said deceased Eduljee in place
and stead of the said Jehangir Behram Dubash.
This Order was passed and the Owner became such
Administrator at the request and by the
direction of the said Bachoobai (being the sole
executrix of the Will and of the estate and
effects of the said deceased Eduljee and being
the sole life beneficiary of such estate).
(i) In these circumstances the Owner has ever
since the date of the said Judge s Order, that
is, ever since 21st December 1972 functioned as
the sole Administrator of the estate in India of
the said deceased Eduljee.
(j) In the year 1984-85 the above named Nusli N.
Wadia and three others (hereinafter referred to
as the said Trustees ) were and even now are
functioning as the Trustees of the public
charitable trust named F.E. Dinshaw Trust
which was so created by the said Bachoobai by
and under the said Deed of Trust dated 28th
December 1973 and which said Trustees owned and
held, on such trust, as undivided half share
right, title and interest interalia in the said
lands which had belonged to the said F.E.
Dinshaw and which had formed part of his estate
and in which one half share had belonged to the
said deceased Eduljee having been so transferred
to the joint names of the said Bachoobai and the
said Eduljee by and under the said Deed of
Transfer dated 18th December 1969.
(w) In the altered situation and conditions
prevailing in Bombay, and with a view to improve
the investment potential of the estate of the
said deceased Eduljee so held by the Owner
(including with a view to avoid the possibility
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of further encroachment on the said lands
described in the First, the Second and the Third
Schedules hereunder written and also litigation
in respect thereof), with the consent and
concurrence and by the direction of the said
Bachoobai (which is given by her in writing
signed by her), the Owner desires that the said
lands described in the First, Second and Third
Schedules hereunder written be developed by an
experienced and capable party and such
development by such party would be on its own
account and at its own risk, since the Owner
does not have either the expertise or the infra-
structure to carry out such development.
(y) This Agreement sets out the terms and
conditions of such development so mutually
agreed upon by and between the Company and the
Owner (with the consent and concurrence of the
said Bachoobai as aforesaid).
(Underlining and box bracket supplied)
Further, it appears from a reading of Recital (d) of
the Agreement that the estate of the deceased comprised
his undivided half share in the lands at villages
Kanheri, Goregaon, Malad, Borivali, etc. and the other
undivided half share belonged to Bachoobai who was his
sister. They both had inherited their respective
shares from their deceased father and which was
transferred to them under a Deed of Transfer dated 28th
September 1969 pursuant to their father s Will dated
23rd July 1934.
It appears from a reading of Recital (e) to the said
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Agreement that Bachoobai had created a registered
Trust dated 28th December 1973 for her undivided half
share in the lands inherited and transferred to her.
The other undivided half share was the estate of the
deceased in respect of which the Respondent was
appointed administrator and vested those properties and
which he sought to have developed under the said
Agreement dated 2nd January 1995 executed with the
Petitioner.
Recital (j) to the said Agreement shows that the
Respondent functioned as one of the trustees of the
Trust created by Bachoobai under the Deed of Trust
dated 28th December 1973.
Recital (l) to the said Agreement shows that the
aforesaid lands came to be partitioned under an Award
dated 25th October 1985 of Justice Hidayatullah as the
Sole Arbitrator so that the estate of the deceased
formed a half portion and the other properties were the
part of the Trust created by Bachoobai of the
properties which devolved upon her from her father and
transferred to her as aforesaid.
30. Hence the parties took Bachoobai to be the sole
executrix of the Will of the deceased and of his
entire estate . The parties took Bachoobai to be the
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sole life beneficiary of the estate as well as the
residuary legatee of the estate of the deceased to be
held in trust by the trustees mentioned in the Will for
the objects specified in the Will but subject to her
directions during her lifetime. The parties were aware
of the contents of the Will and powers granted to
Bachoobai thereunder. The parties accepted the Will.
The parties interpreted it as to describe Bachoobai as
the sole executrix thereunder. Bachoobai was indeed
the only named executrix under the Will during her
lifetime. She never ceased to act as such executrix
during her lifetime. Bachoobai was granted, as such
executrix, full power and authority to retain, manage
and administer the estate of the deceased as freely as
he would have done if he was living under Clause IX of
the Will. She was specifically empowered with respect
to the principal as well as the income of the
properties of the Will of the deceased to inter alia
diversify the real estate or other form of property
under sub-clause (a) thereof and also to sell or lease
any property or interest or the estate of the deceased
under sub-clauses (b) and (c) thereof and to execute
such instruments as would be necessary or advisable.
This was sought to be done under the aforesaid
Agreement dated 2nd January 1995 by the Respondent
describing himself as the owner upon the property of
the deceased having been vested in him pursuant to the
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order dated 21st December 1972. This was accepted by
the Petitioner who accepted the said Will and entered
into the said Agreement. The Respondent functioned as
the sole administrator of the estate of the deceased in
India as per the order dated 21st December 1972 which
came to be incorporated in Recital (i) of the said
Agreement.
31. The Petitioner thus obtained specific knowledge about
the execution of the aforesaid Powers of Attorney of
Bachoobai and the aforesaid orders of this Court in its
testamentary jurisdiction. Consequently, the
Respondent, described as the owner therein, was the
sole administrator of the estate of the deceased since
21st December 1972 and functioned as such known to and
accepted by the Petitioner.
32. Hence with the consent and concurrence of Bachoobai,
exercising her powers under Clause IX of the Will, the
Respondent, described as the owner in the said
Agreement, desired to have the lands developed by the
Petitioner. Bachoobai has, in fact, confirmed the
contents of the agreement and declared that it was
entered into by the Respondent with her consent,
concurrence and as per her directions and that it would
be binding on the estate of the deceased. This
declaration has been got made in the U.S.A. where she
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resided and has been endorsed and identified by the
relevant authority in the State of Florida, U.S.A.
33. Under the said Agreement, the Respondent was to lease
the immovable property belonging to the testator to the
Petitioner for five years commencing from 12th January
1995 in consideration of receiving 12% of the gross
receipts and realisations (proceeds) from the property
under Clause 12(a) of the Agreement subject to a
minimum guarantee of Rs.75 Lakhs under Clause 12A of
the Agreement. The development of the property by the
Petitioner was to be in control of the members of the
Raheja family under Clause 12B of the Agreement. The
12% share of the Respondent was to be paid into his
designated Bank Account under Clause 16(e) of the
Agreement. Under Clause 18(b) of the Agreement, the
Petitioner declared and confirmed, that it had made all
inquiries on its own and had entered into that
Agreement after familiarising itself in all respects
factually that the status of the lands in the Agreement
devolved upon the Respondent.
34. The Petitioner, therefore, had knowledge and must be
taken to have had knowledge of the entire aforesaid
chronology of events that transpired since the death of
the deceased.
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35. The Respondent also executed a Power of Attorney in
favour of the Petitioner empowering him to develop the
property and carry out acts and deeds incidental to
such development.
36. The parties have fallen out. The Agreement and the
Power of Attorney have been terminated by the
Respondent. A suit in that behalf has been filed on
13th May 2008 being O.O.C.J. Suit No.1628 of 2008.
Certain order of injunction has been obtained by the
Respondent on 17th June 2010 from this Court in its
Ordinary Original Civil Jurisdiction in Notice of
Motion No.1863 of 2008 in Suit No.1628 of 2008. The
said order is challenged in Appeal filed by the
Petitioner.
37. This Petition has been filed on 11th June 2010. The
Petition seeks to revoke, not the initial grant, but an
order dated 20th November 2003 obtained by the
Respondent authorising and permitting him to continue
as the administrator of the estate of the deceased upon
the death of Bachoobai. Bachoobai expired on 12 th
August 2003. About three months thereafter, the
aforesaid order was obtained by the Respondent from
this Court in its testamentary jurisdiction. The
Respondent was the administrator of the estate of the
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deceased appointed under the order dated 21st December
1972. He was appointed administrator of the property
and credits of the deceased as successor of the said
Dubash for the property and credits remaining to be
realised and administered and also for vesting in him
the said property. The order of his appointment does
not mention an application made under Section 241 of
the IS Act but under Section 301 of the IS Act.
38. It is contended by Dr.Singhvi on behalf of the
Petitioner that it matters not under what provision of
law the application was made; the Court has to see the
substance of the right of the Applicant and the
application made. The Respondent could act as
administrator essentially and only under Section 241 of
the IS Act. He was appointed administrator in the
place and stead of the said Dubash, who was appointed
administrator under the limited grant issued by this
Court. Under such limited grant, the said Dubash and
later the Respondent as the attorney of Bachoobai, the
executrix under the Will, were to administer the estate
of the deceased. Consequently, they administered the
estate under the Power of Attorney issued by the
Bachoobai and the authority as administrator came to an
end when Bachoobai died because the Power of Attorney
came to be terminated on her death under Section 201 of
the Indian Contract Act.
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39. Neither the said Dubash nor the Respondent acted
under the Power of Attorney of Bachoobai simpliciter.
Pursuant to the power granted by Bachoobai, they
obtained the order of the Court. Those orders of the
Court were under Sections 241 and 301 of the IS Act,
respectively. It is true that the Respondent stepped
into shoes of the said Dubash and the said Dubash was
appointed under Section 241 of the IS Act. That
appointment was as an attorney or agent of Bachoobai
but not under the
ig Power of Attorney granted by
Bachoobai alone. The said Bachoobai and the
Respondent could have been appointed attorney or agent
of Bachoobai even without the Power of Attorney
executed by Bachoobai. They could have been the
agents of Bachoobai, the absent executrix. The
execution of a Power of Attorney is merely a mode of
appointment generally made. Their appointment is,
therefore, by an order of the Court and not only upon
execution of the Power of Attorney. The order of the
Court under Section 241 of the IS Act would come to an
end for the limited grant granted thereunder when
probate would be obtained by the absent executrix. If
the probate is not obtained by the absent executrix,
the grant would not come to an end.
40. The Petitioner knew the status of the Respondent in
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the lands under the agreement entered into by the
Petitioner. The Petitioner knew of the aforesaid
chronology of events recited in the agreement. The
Petitioner also knew of the execution of the Will and
the distinct orders obtained by the two Administrators.
Hence the contention of the Petitioner that the
Respondent acted as a mere Constituted Attorney of
Bachoobai, who had confirmed the contents of the
agreement and with whose consent and concurrence and
under whose directions the agreement was entered into,
cannot be accepted.
41. The Petitioner, as a prudent developer and litigator,
must be taken to have kept note of the lifetime of
Bachoobai. Bachoobai expired on 12th August 2003. If
the authority of the Respondent as her Constituted
Attorney came to an end on 12th August 2003, the
Petitioner was required to have called off the
agreement soon thereafter. The Petitioner continued the
development through the years. It is the case of the
Petitioner that some 2000 flats have been constructed
in 33 buildings and the development is continuing. In
fact, the Petitioner strenuously contested the
Respondent s suit seeking to injunct him from
developing the properties under the agreement which
formed a part of the estate of the deceased in the suit
filed by the Respondent in 2008 and in the Interim
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Application prosecuted by the Respondent in 2010.
42. It may further be stated that the Petitioner has also
sought to develop the property under the aforesaid
Agreement dated 2nd January 1995 coupled with the Power
of Attorney executed by the Respondent in his favour.
If the power of the Respondent ceased, it need hardly
be stated that the power of the Petitioner also ceased
at the same time.
43. The order challenged in this Petition is the order
obtained by the Respondent from this Court in its
testamentary jurisdiction permitting him to continue as
the administrator of the estate of the deceased after
the death of Bachoobai and not the initial grant
itself. Assuming that the authority of the Respondent
came to an end, the Respondent sought to have it
continued by an order of the Court in a Petition filed
by him which came to be granted on 20th November 2003.
The order enured for the benefit of the Petitioner and
the Respondent alike. The order allowing the Respondent
to continue as administrator, impliedly allowed the
Petitioner to continue as the project co-ordinator
under the Development Agreement dated 2nd January 1995.
44. It is intriguing to note the timing of the Petition.
This Petition has been filed six and half years after
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the order was obtained and soon after the interim
application in the suit of the Respondent was passed.
45. It is contended by the Respondent that the Petitioner
knew of the order being passed, acted in unison with
the Respondent and was privy thereto since the order
was passed by way of abundant caution to continue the
legal title and right which the Respondent had as an
executor of the estate of the testator under the order
dated 21st December 1972 in the interest of the
Petitioner itself. ig It is contended on behalf of the
Petitioner that the Petitioner only came to know of the
said order being obtained by the Respondent when a
statement to that effect was made for the first time in
the Affidavit of the Respondent in Sur-Sur-Rejoinder
filed in the Interim Application taken out by the
Respondent in the suit filed by him, terminating the
Agreement and the Power of Attorney.
46. Paragraph 5 of the said Affidavit shows the
continuance of the Respondent as administrator
notwithstanding the death of Bachoobai and paragraphs
6 and 7 of the said Affidavit show the filing of the
Miscellaneous Petition, the contents of the Petition
and the order obtained therein. Petition No.41 of 2003
filed by the Petitioner shows the recitation of the
devolution of the estate of the testator and of
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Bachoobai, the development of the estate of the
testator, the beneficial interest of U.S. Charities and
the effect of the legacy to such charities determined
and adjudicated by this Court in an originating summons
in its original jurisdiction, the execution of an
Indenture by Bachoobai on 26th September 2001 and the
death of Bachoobai, all of which shall be considered
presently. The Respondent contended that since
Bachoobai was the sole executrix under the Will of the
deceased of which probate was granted by the New York
County Court in the U.S.A., the Petitioner was advised
to obtain order permitting him to continue with the
administration of the estate of the deceased.
47. The Affidavit-in-sur-sur-rejoinder came to be filed
by the Respondent on 26th April 2010. The Petitioner
claims to have applied for and obtained inspection of
the records of Miscellaneous Petition No.41 of 2003. It
claims knowledge of the said order from the date of
such inspection. It contends that the Petition is not
barred by limitation but is promptly filed to revoke
the order passed therein and to remove the Respondent
as the executor.
48. The transactions that transpired after the execution
of the Agreement dated 2nd January 1995 and prior to
the filing of Miscellaneous Petition No.41 of 2003 have
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been recited in the said Petition and of which the
Petitioner claims ignorance. Indeed, the Petitioner
cannot otherwise be imputed knowledge of what
transpired between Bachoobai and the Respondent after
the execution of the Agreement unless specifically
shown by the Respondent. Nevertheless it would be too
gullible for the Court to accept that the Petitioner,
who would essentially benefit from lapsing of the
legacies to the U.S. Charities or from the specific
transfer in favour of the Respondent by Bachoobai of
the properties which were being developed, can be taken
not to have been at all concerned with those
transactions. It is contended by the Respondent that
the Petitioner not only knew of those transactions and
not only consented to those transactions but actively
participated in them and has benefited from them. The
import of those transactions shall be considered
presently.
49. Since it is contended by the Petitioner that it came
to know of the filing of Miscellaneous Petition No.41
of 2003 only upon reading the Affidavit-in-sur-sur-
rejoinder of the Petitioner dated 24th April 2010 in
the Notice of Motion taken out in Suit No.1628 of 2008
and since it is contended by the Respondent that the
Petitioner knew of the Petition and has sought to show
by circumstantial evidence such knowledge, the case of
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lack of knowledge of the Petitioner must be first
considered for its veracity.
50. The Petitioner knew about execution of the Will, the
bequest to U.S. Charities, the life interest of
Bachoobai, the power of Bachoobai as the executrix
under the Will to sell, lease or mortgage the property
of the deceased under the Will, the appointment by
Bachoobai of her attorney and agent to obtain the
limited grant in India whilst she lived in the U.S.,
the full power to manage and administer the properties
of the testator irrespective of any legal restrictions
and specifically the grant obtained by the Petitioner
under the order dated 21st December 1972 consequent
upon such unfettered powers.
51. If the Petitioner contends that Bachoobai had limited
power and interest which would terminate on her death,
the Petitioner, as a prudent business Company, would
keep abreast of the lifetime of Bachoobai who had
granted power to the Petitioner to develop the property
and after whose lifetime it would cease. Bachoobai was
a lady of advanced age residing in the U.S. The
Petitioner would know of her impending death. Bachoobai
died in August 2003. The Respondent has stated in
paragraph 3(b) of his Affidavit-in-reply that after he
returned from the U.S.A. after attending obsequial
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ceremonies of Bachoobai, the Petitioner s main Director
Gopal Raheja called on him to offer his condolences.
He and the Respondent discussed what would be done
since the Agreement may be in jeopardy. Though denied
by the Petitioner, this oral statement, prima facie,
stands to reason if the Petitioner s director came to
know of the death of Bachoobai. If that was so, the
Petitioner would have discussed in 2003 the steps to be
taken to allow the development to continue which would
have been in progress and which the Petitioner has
always wanted to continue and see through the end given
its strenuous defences to the Respondent s suit also.
52. In paragraph 23 of the Affidavit-in-rejoinder of the
Director of the Petitioner in reply to the aforesaid
paragraph 3(b) of the Respondent s Affidavit-in-reply,
the Director has stated that he became aware of the
death of Bachoobai very much after her death and had
been informed by the Respondent that her death did not
affect his appointment as administrator. Very much
after her death, there would be no specific occasion
for the Respondent to inform the Petitioner that
Bachoobai s death did not affect his appointment. None
is shown. Besides, the Petitioner s Director has not
stated precisely when that important event took place
which would change the course of his development. It is
not known even approximately how much after her death
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he would have come to know of that event. She died in
2003. Disputes between the parties arose after 2005.
The suit came to be filed in 2008. The Affidavits-in-
reply to the Notice of Motion have essentially been
filed in 2010 followed by this Petition. The
Petitioner has not stated anywhere when it came to know
the death of Bachoobai. Bachoobai died at the advanced
age of 89 years. She would have been 95 years old when
the suit came to be filed. The Petitioner claims that
it did not know of her death well past the filing of
the suit by the Respondent against the Petitioner.
ig It
cannot be accepted that the Petitioner never even
inquired about the state of health of a woman in such
dotage when everything depended upon her life and her
life interest in the estate of the deceased. Hence the
statement of the Petitioner that it came to know of
Bachoobai s death very much after her death is seen
to be discernibly left vague.
53. To understand and appreciate the knowledge on the
part of the Petitioner of what transpired prior to the
filing of Miscellaneous Petition No.41 of 2003 not only
such visualisation but the intrinsic circumstantial
evidence that would be a pointer to such knowledge must
be appreciated.
54. The Respondent s Attorneys for obtaining the initial
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grant in 1972 were Little & Company. The Attorneys of
the parties in the Agreement of Development were A.H.
Parpia & Company. The Respondent s Attorneys in the
suit filed by him were Doijode Associates. The
Respondent s Attorneys in the aforesaid Originating
Summons, the Appeal therefrom and the aforesaid
Miscellaneous Petition No.41 of 2003 were Maneksha &
Sethna. Maneksha & Sethna were admittedly the
Attorneys of the Petitioner and/or its Director Gopal
Raheja since 1974. The statement of the Respondent in
paragraph 3(e) of the Affidavit-in-reply in that behalf
is not denied by the Petitioner. The partner of the
said firm refused to divulge certain information called
for by the Respondent as constituting breach of
confidence on his part to disclose anything concerning
Rahejas . That has been accepted as correct by the
Petitioner s Director in paragraph 28 of its Affidavit-
in-rejoinder.
55. It is intriguing how and why the Respondent would be
represented by the Attorneys of the Petitioner and/or
its Director only in the Originating Summons, the
Appeal therefrom (including the execution of a
Memorandum of Settlement in and consequent upon the
said appeal) and the aforesaid Miscellaneous Petition
No.41 of 2003.
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56. The Respondent has sought to show that the Petitioner
actively participated in certain negotiations for
settlement with the U.S. Charities. These came about in
an Originating Summons (which shall be dealt with
presently) taken out by the Respondent herein in which
the U.S. Charities were party Respondents and
separately represented. The order on the Originating
Summons has been obtained by the Respondent from the
learned Single Judge of this Court in its original
jurisdiction holding that the bequest to charity has
failed since the provisions of Section 118 of the IS
Act, which deal with bequests to religious and
charitable usage, did not apply to the Will of the
deceased. The U.S. Charities challenged that decision
in Appeal. The U.S. Charities withdrew the Appeal and
recorded a settlement. A Memorandum of Settlement
(MOS) came to be executed immediately upon the
withdrawal of the Appeal. In that MOS also, the
Respondent was represented by Maneksha & Sethna as his
Attorneys. It is stated that the U.S. Charities were to
be paid Rs.3.89 Crores in full and final settlement of
the bequest under the Will of the deceased to them. The
Respondent has sought to contend that the Petitioner as
also the Companies of his brothers, who are also to
develop part of the properties of the deceased, were to
reimburse the Respondent their respective proportionate
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shares in the said settlement. The Respondent has
shown letters written by the two brothers of the
aforesaid Director of the Petitioner as Directors of
other Companies honouring their oral Agreement and
remitting a cheque towards reimbursement in respect of
their proportionate share. The Petitioner is stated to
have defaulted and failed to honour the oral
commitments made by its Director Gopal Raheja. The
letters dated 25th July 2003 addressed by one Suresh
Raheja on behalf of K. Raheja Universal Private Limited
and on behalf of
ig Radhakrishna Properties Private
Limited in respect of the Agreement dated 2nd January
1995 entered into by the Respondent with the Petitioner
as also by one Chandru Raheja on behalf of one Ivory
Properties and Hotels Private Limited have been annexed
to the Affidavit-in-reply filed by the Respondent.
Similarly the letters dated 15th September 2003 and 22nd
October 2003 of Ivory Properties and Hotels Private
Limited show reimbursement of Rs.1 Crore and Rs.60
Lakhs made by the said Companies towards their
proportionate share in the legal costs incurred for the
out-of-Court settlement in the Originating Summons
taken out by the Respondent herein which are also
annexed to the Affidavit-in-reply of the Respondent.
57. The letters of Suresh Raheja, enclosing the two
cheques for such reimbursement were issued four days
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before the Appeal came to be withdrawn and a week
before the actual Memorandum of Settlement was executed
between the Attorneys of the parties. The letters of
Chandru Raheja followed close on the heels of the
settlement on 15th September 2003 and 22nd September
2003, enclosing the cheques for reimbursement towards
the costs of the Appeal and the Court settlement.
58. These letters make interesting reading. The letters
of K.Raheja Universal Private Limited relate inter
alia to the aforesaid Agreement dated 2nd January 1995.
They make reference to our share therein and our
proportionate share . They also make a reference to
agreed shares . The subject matter of the letter
makes a specific reference to the Petitioner. The
amounts are sent by cheque. They are towards
reimbursement of the High Court Appeal No.155 of 2002
(which was filed by the U.S. Charities) in Suit No.5034
of 2000 (in which the Originating Summons was taken out
by the Respondent represented by Maneksha & Sethna).
The letters of Ivory Properties and Hotels Private
Limited are similar and refer to the reimbursement of
the costs of settlement. That settlement was with the
U.S. Charities. These letters show a C.C. being marked
to one Rajesh Batra of M/s.Proline Sportswear.
59. The Agreement dated 2nd January 1995 made a specific
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declaration in paragraph 12B that the immovable
property to be developed would be in control of the
Raheja family whichever be the Company (controlled by
the Raheja family) actually carrying out the
development .
60.The Petitioner has not explained in its Rejoinder how
such letters could have been sent by the Companies of
the Rajeja Group or how reference to the name of the
Petitioner came to be made in the letter dated 25th
July 2003 of K. Raheja Universal Private Limited. Of
course, the Petitioner has contended that such a
transaction would be against the public policy being
against the intention of the deceased.
61. The Petitioner has sought to brush aside the
contributions made by the brothers of its Directors who
are Directors of the other Companies of the Raheja
family on the ground that they had separated from the
family earlier. Whilst this Petition is not concerned
with the inter se disputes with the family members,
the fact remains that development of the property
albeit by the brothers separately after partition was
to be the development of the Raheja family under
Section 12B of the Agreement dated 2nd January 1995.
The contention of the Petitioner regarding the
partition in the Raheja family, the independent
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businesses of Suresh and Chandru Raheja as Directors of
the aforesaid Companies and their resignation from the
Petitioner are really of no consequence in view of the
fact that the development of the deceased s property
was to be by the Raheja family no matter which brother
was on the Board of any Company. All of them would,
therefore, be equally affected by the bequests under
the Will. Consequently, the total lack of explanation
by the Petitioner of the reference to the Petitioner in
the aforesaid letter dated 25th July 2003 is rather
telling. These letters are intrinsic circumstantial
evidence reflecting the knowledge of the Petitioner in
the entire transaction.
62. Similarly a reference to one Rajesh Batra in the
letter dated 15th September 2003 of Ivory Properties
and Hotels Private Limited (also Raheja Company) gets
corroborated in an E-mail stated to have been received
by the Respondent from Rajesh Batra relating to the
oral Agreement with regard to the settlement of the
claim of the U.S. Charities upon the offer which came
from their Attorneys Singh & Gorthi Trilegal annexed to
the Affidavit-in-sur-rejoinder of the Respondent.
However, the contents of the E-mail are completely
hearsay and otherwise inadmissible in evidence until
the said Rajesh Batra is examined and may not be
considered upon Affidavits.
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63. To counter the case of knowledge of the Petitioner of
the claim and the settlement of the claim of U.S.
Charities, the Petitioner relies upon a letter written
by it to the Respondent on 10th May 2008, requiring the
disputes between the parties to be referred to
arbitration joining U.S. Charities as the beneficiaries
under the Will. The letter was addressed a mere three
days before filing Suit No.1628 of 2008. It is not
shown when it was received by the Respondent. The
complaint that it ig has not been responded by the
Respondent need hardly be considered; it is not shown
to be a part of this proceeding requiring a reply. Of
course, the Petitioner contended that the U.S.
Charities were necessary parties to the suit in the
Affidavit-in-reply filed by the Petitioner in the
Interim Application taken out in that suit. That may
not have been responded by the Respondent in the
Interim Application which dealt with the acts of the
parties to the suit alone for the grant of the reliefs
claimed. The later statement of the Respondent that
U.S. Charities were no longer beneficiaries in the
Affidavit-in-rejoinder to that application must also be
taken to be an ancillary statement not germane to the
main reliefs pressed in that Application which dealt
with only the acts of the parties to the suit for the
grant of the reliefs in the Interim Application. It
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need hardly be stated that a party who is an insider
having knowledge of particular facts could always feign
ignorance of those facts to raise disputes in the suit.
Such raising of disputes is not evidence of the
knowledge or the lack of knowledge of that party; only
the circumstantial evidence would be. The aforesaid
events show not only that the Petitioner must be
imputed knowledge of what transpired and in fact must
be taken to be at least a partner architect of the
entire scheme of releasing the property to be developed
by them from the lawful interest of the U.S. Charities
therein.
64. Marshalling the aforesaid intrinsic circumstantial,
corroborative documentary evidence must lead to at an
unmistakable conclusion that the Petitioner, given its
position in the business world and in developing the
property of the testator, had knowledge of an insider
and had taken an active role in removing the only cloud
upon the property.
65. The Respondent applied to Court for its opinion in
interpreting the bequest to charity made under the
aforesaid Will by the deceased under Clause IV recited
above. The Will was executed on 4th February 1970; the
deceased expired on 14th March 1970, about 40 days
after the execution of the Will. The bequest would be
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governed by Section 118 of the IS Act, which runs
thus:-
118. Bequest to religious or charitable uses.-
No man having a nephew or niece or any nearer
relative shall have power to bequeath any
property to religious or charitable uses, except
by a will executed not less than twelve monthsbefore his death, and deposited within six
months form its execution in some place provided
by law for the safe custody of the wills of
living persons:
[Provided that nothing in this section shall
apply to a Parsi.]
The bequest would require the testator not to have any
near relative such as his sister to obtain the power to
bequeath his property to charity, failing which the
testator would be required to execute his Will at least
12 months before his death. It was contended by the
Respondent in the Originating Summons, and on which an
opinion of the Court was sought, that because the
testator died within a year of making the Will the
bequest to charity would fail. It was held in the
order on the Originating Summons by this Court dated
22nd October 2001 that since the deceased left his
sister and died within 12 months of making his Will, he
did not have the power to bequeath the property to
religious or charitable use.
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66. The statement of objects and reasons brought to my
attention by Dr.Singhvi on behalf of the Petitioner in
respect of Section 118 runs thus:
3.Further, under section 118 of the Act, a
testator, if he has a nephew, niece or a nearerrelative, cannot bequeath any of his property to
religious or charitable purposes or uses except in
the manner and within the time limit provided in
that section. The Parsi community would like tobe exempted from such a provision so that a Parsi
can bequeath his property without any
restrictions.
The Amending Act of 1991, aside from bringing about the
gender equality and eliminating the gender
discrimination that prevailed for succession amongst
parsis in Chapter III of the Indian Succession Act,
which dealt with special rules for Parsi intestates,
added the aforesaid proviso to Section 118.
67. It is contended on behalf of the Petitioner that the
application was blasphemous inasmuch as the executor of
the Will has himself sought to challenge the bequest
made under the Will. It is also contended on behalf of
the Petitioner that the Respondent has not challenged
the bequest but has sought to have it interpreted and
opined by the Court. It is also contended on behalf of
the Petitioner that prior to the order on the
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Originating Summons the section was declared ultra
vires the Constitution of India by the Kerala High
Court in the case of Preman vs. Union of India, AIR
1999 Kerala 93. This judgment was not brought to the
notice of the learned Judge answering the Originating
Summons.
68. The U.S. Charities filed an Appeal and pending the
Appeal, in the case of John Vallamattom vs. UOI, AIR
2003 SC 2902 the Supreme Court declared the said
section ultra vires
ig the Constitution of India as
discriminatory, it being then applicable only to
Christians. Besides, Section 118 did not apply to
Parsis since the amending Act of 1991. It is contended
by the Respondent that the Act could not have
retrospective operation and hence did not apply to a
Will which took effect in 1970, though it may apply to
Wills executed after the amendment.
69. It was under these state of affairs that the U.S.
Charities settled their claim under Memorandum of
Settlement (MOS) executed by and between the Attorneys
of the Respondent, Bachoobai and the U.S. Charities
dated 1st August 2003. It is contended by the
Petitioner that the MOS was not personally executed by
any of these parties and hence would be of no effect.
The MOS was executed, 11 days before Bachoobai s death.
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A death certificate, to which my specific attention has
been drawn, shows that Bachoobai was hospitalised from
19th July 2003 in New York. It is, therefore, unlikely
that she would have or could have given instructions
for settlement with the U.S. Charities which was
carried out by her Attorneys on the date the MOS was
executed. The Appeal of the U.S. Charities came to be
withdrawn on 29th July 2003. The MOS has been executed
three days thereafter. The MOS shows that it was
executed in the Appeal itself. Though it is contended
that Bachoobai was extremely old and ill and could not
have known of the MOS, the authority given to her
Attorneys in the Originating Summons, of which she was
fully aware as can be seen from the Indenture of
Transfer executed by her on 17th September 2001,
continued in Appeal and the MOS was executed in Appeal.
Hence though Bachoobai was hospitalised from 19th July
2003 until her death and though the MOS was executed in
the interregnum, her authority to her Attorneys
continued. Similarly the authority given by the U.S.
Charities to their respective Attorneys in the
Originating Summons was continued in Appeal. It is
under that authority that the MOS is executed.
70. The authority of Attorneys implicitly includes the
authority to settle. The implied authority of Counsel
to compromise on behalf of the client even without the
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consent of the client came up for consideration
initially in the case of Sourendra Nath Mitra Vs.
Tarubala Desi AIR 1930 Privy Council 158 followed in
the case of (Babu) Sheonandan Prasad Singh Vs. Hakim
Abdul Fateh Mohammad Reza AIR 1935 Privy Council 119;
and Smt. Jamilabai Abdul Kadar Vs. Shankarlal
Gulabchand & Ors. AIR 1975 Supreme Court 2202 upon the
authority of the Pleader under Order 3 Rule 1 read with
Order 3 Rule 4 of the C.P.C. It was held that the
authority of the Pleader implied in itself the act of
compromising a case without the specific consent of his
client subject only to he acting in good faith and for
the benefit of his client not against any specific
instruction to the contrary. When, therefore, there was
no mala fide action imputed upon the Pleader and his
conduct was seen to be motivated for good for his
client, it was observed that his implied authority was
not abused.
In Sourendra s case it was held, per Lord Justice
Atkin that the implied authority of Counsel to settle
matters in the interest of their clients even without
the client s consent, as prevalent in the U.K applied
in equal measure in India. The act of the Advocate in
India would bind his client, even if she were a
pardanashin lady, as in that case. Considering the
general principles of formation of contracts, as the
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contract between an Advocate and client was, the actual
and obstensible as also the apparent authority were
considered. It was reasoned that the implied authority
was necessary to effectuate the relations between
Advocate and client to make possible his duties. The
skill and understanding of the Advocate to take a final
decision upon various aspects of his work (eg., to take
or give up a point of argument) as also to accept an
offer of settlement or to receive or pay something
less than the full claim was held to be within the
purview of his brief. ig Often such a decision must be
taken at once so that a valuable opportunity is not
lost to his client, provided only that inconsistent
instructions were not received.
This was followed in the case of Byram Pestonji
Gariwala Vs. Union Bank of India AIR 1991 Supreme Court
2234. That was after the amendment of 1976 of the
C.P.C concerning compromises. It was observed that the
relationship between Counsel as the recognized agent of
his principal (the client) was a matter of contract
with which the legislature would not generally
interfere except if it was against public policy. Hence
it cannot be presumed that the legislature disallowed
the parties to enter into compromise by Counsel in the
course of their duty as authorized agents (much as
their constituted attorneys). This legislative intent
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was observed in view of the object of the amendment in
attaining quick reduction of arrears in Court by
elimination of uncertainties and enlargement of the
scope of compromises. This was specifically observed
to be true in case of non-resident persons. It was
observed that if a constituted attorney could enter
into compromise on behalf of his Principal, so can
Counsel possessing of the requisite authorisation by
Vakalatnama, on behalf of his client. The
authorisation under the Vakalatnama of Bachoobai given
in the Originating Summons continued in the Appeal and
consequently, in the compromise which was entered into
in the appeal as reflected by its title.
In para 9 of the judgment the role of Counsel in
Courts in England as described in Halsbury s Laws of
England 4th Edition, Vol. 3 paras 1181 and 1183 came to
be considered. The Counsel s authority included the
authority to compromise. The observation inter alia is:
thus if, in Court, in the absence of the client, the
compromise or settlement is entered into by the Counsel
whose authority has not been expressly limited, the
client is bound .
Of course, no Counsel would have authority to
enter into compromise on collateral matters in the
absence of express authority and a compromise would be
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set aside in circumstances which would invalidate the
agreements between the parties. That provision has
been specifically made under Order 23 Rule 3 of the
C.P.C. Hence, if the compromise can be avoided on the
ground that it would be voidable, the party himself or
herself may avoid it. There is nothing to show or
suggest that the stranger to the compromise could avoid
the compromise. In this case neither Bachoobai nor her
estate has sought to avoid it.
In para 19 the observation of Lord Justice Atkin
in Sourendra s case (supra), that it is implied in the
interest of the client, to give the fullest beneficial
effect to the employment of his Advocate, has led the
Supreme Court to hold that after the amendment of the
C.P.C Counsel s role in a compromise decree would
extend also to matters collateral to the suit.
It would, therefore, be in vain to question the
authority of Bachoobai s attorneys who were her
recognized legal agents, pursuant to her Vakalatnama in
the Originating Summons, to continue to act on her
behalf and to compromise the claim made by the U.S.
Charities upon which she, as a residual legatee, came
to be a full owner capable of bequeathing the property
of the deceased in India herself as she did. The same
holds true of the U.S. Charities. It can be challenged
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only by the party giving the authority if it is
exceeded or by his/her representative-in-interest. It
can hardly be challenged or questioned by a stranger to
the settlement.
71. It is contended by Dr.Singhvi that it is astounding
that the MOS mentions that the judgment of the Supreme
Court does not apply to Parsis and hence to the case of
the deceased; the judgment only declares the section
ultra vires and its effect would be that the section
would not be on the Statute Book.
ig Be that so, the U.S.
Charities have settled their disputes for
consideration. The Respondent paid both the Attorneys
of the U.S. Charities Rs.18.95 million each (Rs.1.8
Crores each) aggregating a total of Rs.3.79 Crores in
full and final settlement of their claim and in
consideration of their withdrawing the Appeal. The
Attorneys of the U.S. Charities undertook to hold the
said amount and deal with it subject to the Foreign
Exchange Management Act, 1999 and the Foreign
Contribution Regulation Act, 1976. They further
undertook to remit the said amount or such amount as is
permitted by the Reserve Bank of India to the U.S.
Charities and if not permitted to a Charitable
Organisation in India which had permission under the
Foreign Contribution Regulation Act, 1976 at the
directions of the U.S. Charities. It was recorded that
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the Respondent paid the costs incurred in the
Originating Summons as well as the Appeal to the
Attorneys of the U.S. Charities out of the estate of
the Testator.
72. It is, therefore, demonstrated that the acts of the
Respondent resulted in removing the cloud upon the
estate and its development by the Petitioner and
resulted in its benefit. Similarly, therefore, it is
manifest that the action by the Petitioner is motivated
and filed as a counterblast to the suit filed by the
Respondent against the Petitioner. It is, however, a
counterproductive counterblast. If the Respondent is
held to have no authority to deal with the property of
the testator after the death of Bachoobai, the
authority given by the Respondent to the Petitioner to
develop the properties of the testator would also
similarly fall. The contract to develop the lands would
get frustrated since it would become impossible of
performance and unlawful to perform consequent upon
Bachoobai s death under Section 56 of the Indian
Contract Act, the relevant part of which runs thus:
56. Agreement to do impossible act.- An
agreement to do an act impossible in itself is
void.
Contract to do act afterwards becoming or
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58 MISC. PTN. 70/2010the contract is made, becomes impossible, or,
by reason of some event which the promisor
could not prevent, unlawful, becomes void whenthe act becomes impossible or unlawful.
73. Similarly it would have to be seen whether the
Agreement dated 2nd January 1995 entered into by the
parties would become impossible of performance upon and
in view of the judgment of the Supreme Court in the
case of John Vallamattom (supra) declaring Section 118
of the IS Act to be ultra vires the Constitution of
India. As aforesaid, though the Will of the testator
as well as the two grants in favour of the said Dubash
as well as the Respondent have been recited in the
agreement, the bequest to the U.S. Charities is
conspicuous by its absence. Both the parties knew of it
very well. Both the parties knew of its consequences.
Both the parties knew that it would take effect on the
death of Bachoobai whatever agreement that was entered
into and whatever development that came to be made
pursuant thereupon with consent, confirmation and
concurrence of Bachoobai whilst she had life interest
therein. Even if the agreement were to continue after
her death and when the charitable bequest took effect,
it could only have been with a similar confirmation,
consent and concurrence of the legatees who were given
absolute bequests. Hence even if this Court held that
the bequest failed because the testator did not live
for more than 12 months after the execution of the
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Will, in view of the judgment of the Supreme Court in
the case of John Vallamattom (supra), the bequest would
be valid and the agreement, as entered into and without
the confirmation of the legatees, would stand
frustrated; the judgment itself was the supervening
impossibility.
74. In the case of Satyabrata Ghose vs. Mugneeram Bangur,
AIR 1954 SC 44, it has been held that the word
impossible in Section 56 of the Indian Contract Act
would not only mean physical or literal impossibility.
The impossibility may be only impracticability or
uselessness of the contract such that the object and
performance which the parties had in view would get
upset by an untoward event or change of circumstances
and which would totally upset the very foundation upon
which the parties rested their bargaining so that the
promisor would find it impossible to do the act which
he promised to do. It was observed in that judgment
that the changed circumstances which make the
performance of the contract impossible absolve the
parties from further performance of it as they did not
promise to perform an impossibility. The contract will
stand discharged by reason of the supervening
impossibility or illegality of the act agreed to be
done and hence will stand frustrated upon being hit by
Section 56 of the Indian Contract Act.
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It was observed that the doctrine of frustration
would apply when the terms in the contract, upon
implied or express construction would require the
contract to be discharged on the happening of certain
circumstances when the contract will stand dissolved
but the relief could also be given by the Court even if
there was no such term of the contract on the ground of
subsequent impossibility when the Court finds that
whole purpose and basis of the contract was frustrated
by the inclusion or occurrence of an unexpected event
or change of circumstances which was beyond what was
contemplated by the parties at the time they entered
into the agreement. If such a change of circumstance
was so fundamental as to be regarded as striking at the
root of the contract as a whole, the Court could
pronounce that contract as frustrated and at an end. It
is observed that the Court would require to examine the
contract and the circumstances under which it was made.
The belief, knowledge and intention of the parties are
evidence upon which the Court would form its conclusion
whether the changed circumstances destroyed the
contract altogether.
In that case, a land was to be developed for
residential purpose. The development was to take place
during the second world war. Requisition orders were
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usually passed during the period. There was scarcity
of building material and the Government restrictions in
respect of them. Taking into account the evidence in
that case, including the fact that there was no
stipulated period during which the development was to
be completed and war conditions prevailing at the time
of the development, it was observed that the
requisition order under the Defence of India Rules
could not be taken to have vitally affected the
contract or made its performance impossible so as to
frustrate the contract. ig Under those circumstances, the
applicability of doctrine of frustration to a contract
was laid down.
75. This case was followed in the case of The Naihati
Jute Mills Ltd. vs. Khyaliram Jagannath, AIR 1968 SC
522. It was held that the Court would grant relief on
the ground of subsequent impossibility when it finds
that the whole purpose or the basis of the contract was
frustrated by the inclusion or occurrence on an
unexpected event or change of circumstances which was
not contemplated by the parties at the date of the
contract. It was observed that in such a case there
would be no question of finding out an implied term
agreed to by the parties embodying a provision for
discharge affirming the view in the case of Satyabrata
Ghose (supra). It was further held that when an event
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or a change of circumstances so fundamental as to
strike at the root of the contract occurred, the Court
could pronounce the contract to be frustrated and at an
end. It was held that that was the positive rule
enacted in Section 56 of the Indian Contract Act and in
those cases the doctrine of frustration applied.
In that case the parties entered into a contract to
sell goods under the form prescribed by the Indian Jute
Mills Association for importing jute from Pakistan
under the import licence obtained by the buyer.
ig During
the subsistence of the contract, there was a change in
the policy of the Government which the parties could
not foresee when they entered into the contract. It
was observed that impossibility of performance would
have to be inferred by the Courts from the nature of
the contract and the surrounding circumstances
considering that parties would have made their bargain
upon the basis that that particular thing or state of
thing would continue to exist and because of the
altered circumstances the bargain should no longer be
held binding. The Courts would infer that the
foundation of the contract had disappeared either by
the destruction of the subject-matter or by reason of
interruption or delay in performance. The Court
considered the bounden duty of the contracting parties
to perform their obligations undertaken under the
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contract which could not be excused except when such
performance was made impossible by intervening causes,
over which the parties had no control. Referring to the
case of Davis Contractors vs. Fareham U.D.C., 1956 AC
696, it was quoted thus :
Frustration occurs whenever the law
recognises that without default of either
party a contractual obligation has become
incapable of being performed because the
circumstances in which performance is called
for would render it a thing radically
different from that which was undertaken by
the contract.
It was observed that it was not only hardship or
inconvenience or material loss which brought about the
frustration of the contract but the change in the
significance of the obligation, which if performed,
would be different from that which was contracted for.
In that case what was to be considered was whether the
change in the policy of Government of India brought out
the total prohibition of import of Pakistan jute which
was not envisaged by the parties which intervened at
the time of performance of the contract and which made
the performance impossible. The evidence showed that
there were circulars issued since March 1958 showing
warnings of the Government of India that import of
Pakistan jute would be permitted to the absolute
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minimum and that the Jute Mills should satisfy their
needs by purchasing Indian jutes. The licence to import
jute was granted in the ratio of 5:1 to the importer
upon producing evidence of purchase of five times the
Indian jute for being able to import one time the
Pakistan jute. The Indian Jute Mills Association had
issued a circular showing the said policy. Further the
evidence of the parties with regard to the import of
jute showed that there was a complete embargo on the
import of jute placed by the Government. The licencing
authority was to scrutinise each case on merits.
ig It
was observed that the parties were aware that licences
were not freely issued. The contract made a provision
for the shipment period to be extended if the import
licence was not obtained. Damages were provided in
respect of failure to furnish the licence. The contract
indicated that the parties were conscious of the
difficulty of obtaining the licence knowing of the
damages they would incur upon refusal to accept licence
and hence there was no question of the performance
becoming impossible by reason of the Government policy.
Under such cases, therefore, the contract did not
become impossible of performance and was held not void
on the ground that it was frustrated.
76. The aforesaid two judgments, therefore, lay down that
if the parties knew not about an occurrence which
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actually happened after the contract was entered into
but which made the contract void, it would stand
frustrated.
In this case, the parties had no inkling that the
Supreme Court would hold Section 118 ultra vires the
Constitution but it was so held. If the parties
contemplated that the bequest to charity could be
avoided and they appeared to have so contemplated as
they had gone on to sign the contract of development
which would span a number of years and may outlive the
life interest of Bachoobai they would be bound by the
judgment and would have to honour the bequest to
charity. Their contract was, therefore, subject to
such absolute bequest. It could not have continued
except with the permission of such absolute legatees.
Upon the judgment of the Supreme Court, the Respondent
could have thrown up his hands, his 12% share in the
proceeds notwithstanding, and claimed the contract as
having been frustrated. The Petitioner would have been
none the safer. Of course, both the parties would want
the contract to continue. They would brook no
interference from the U.S. Charities but they had to
contend with the U.S. Charities. It is inconceivable
that the Petitioner, an adroit litigator, would have
left that stone unturned and not cared about buying off
or settling with the U.S. Charities to be able to
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continue his project as the project co-ordinator
uninterrupted by the claims of those absolute
legatees.
77. This circumstance itself lends enough credence to the
fact that the Petitioner at least tacitly and behind
the curtain aided and assisted the Respondent in
settling with the U.S. Charities. Of course, the
Petitioner had no right or direct interest to do so
directly and positively. But having regard to its 88%
stake in the proceeds, which the Respondent was not
likely to grant him on a platter and free of cost, he
would have been constrained, even if he was not himself
interested, in settling with the U.S. Charities.
78. The charitable bequest, which was sought to be
effectuated under the MOS for paying off the U.S.
Charities was subject to the permission of the Reserve
Bank of India being obtained for transferring the funds
out of India. If the permission was not obtained, it
was for the administrator of the estate to apply to
Court for necessary directions to otherwise effectuate
the estate. The MOS itself sets out the alternative
mode of payment to a charitable organisation in India.
79. This is in consonance with the doctrine of cy-pres
applied in England. In the case of White s Will Trusts
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Barrow vs. Gillard, (1955) Chancery Division 188, the
testatrix provided for two cottages to be missioinary
homes in her Will. The cottages were occupied by
tenants who were protected under the Rent Restriction
Acts. The homes were not free from effectuating the
charitable bequest. It was held, considering the case
of Attorney General vs. Bishop of Chester, (1785) 1
Bro. C.C. 444 and Sinnett vs. Herbert, (1872) 7
Chancery 232, that there was a valid charitable gift.
It was observed that there was no particular charitable
purpose of the testatrix which could not be carried out
so as to have the gifts failed since it was held that
existing body was willing to take over one of the
cottages occupied by tenants and use it for the purpose
mentioned in the testamentary document when they can
obtain possession. That was allowed to be effectuated.
The case of Wallis vs. Solicitor-General for New
Zealand, (1903) A.C. 173 was referred to. In that case
an express gift of land and money for particular
purposes was held not invalidated by the fact that
particular application directed would not necessarily
take place within any definite time and might never do
so and the doctrine of cy-pres applied. It was also
observed that there were many cases where funds were
paid into Court until it was seen whether or not
certain purpose became practicable citing the case on
Bishop of Chester (supra). It was observed that if the
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intention of the testatrix was practicable to be
carried out at some time in future also, it could be so
allowed.
80. In the case of Woodhams, deceased Lloyds Bank Ltd.
vs. London College of Music, (1981) Weekly Law Reports,
493, also the doctrine of cy-pres was applied. In that
case a charitable bequest was made to the school of
music by way of a scholarship meant for absolute
orphans coming from two named homes. The college felt
that creation of a scholarship strictly in accordance
with the conditions of the testatrix s Will would
create problems which would more than outweigh any
practicable benefit which might be derived from it.
Considering the case of the college and its curriculum
and activities and other cases of similar bequests and
interpreting the clause relating to the charitable
bequest setting out the scheme for foundation of the
scholarship, it was held that intention of the
testatrix was to further musical education by founding
scholarship at colleges which valued such education.
The testatrix chose absolute orphans from homes run by
well-known charities as those most likely to need
assistance. But it was observed that there was no
specific requirement in the essential part of the
scheme that scholarship should be so restricted and
hence it was held that the part of the scheme or the
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mode of achieving charitable purpose can be modified
without frustrating the intention of the testatrix. It
was, therefore, held that the Trust did not fail. The
Trust could have been carried into effect by a
modification of the Trust of each moiety deleting the
restriction to absolute orphans from the named homes.
Consequently, a settlement of a scheme was directed.
The doctrine of cy-pres was accordingly used.
In this case, the parties themselves have provided
for the doctrine of cy-pres. If the agreed amounts
could not be transmitted to the U.S.A. for want of
permission of the Reserve Bank of India, the said
amounts were to be donated to an Indian charity
nominated by the U.S. Charities. It is seen,
therefore, that the parties expressly provided so as
not to have their agreement frustrated by any
supervening impossibility. It is, therefore, required
to be carried out. If that is carried out, the
administrator will have complied with his duty as
administrator; if not the U.S. Charities who would be
interested in such a grant as compromised by them under
the MOS would be the party who could apply for removal
of the executor or for revocation of the grant.
81. It is contended on behalf of the Petitioner that what
was to be paid to the U.S. Charities was a pittance out
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of the estate valued at more than Rs.150 Crores. Though
a contract with consideration cannot be challenged on
the ground of inadequacy of consideration, in view of
the fact that pursuant to the judgment of the Supreme
Court, the U.S. Charities alone would have been
entitled to the entire bequest, it would beat the
conscience of any Court to turn a Nelson s eye to such
a transaction. The Respondent had not mentioned in his
Affidavits how the Agreement was pursued to satisfy the
Court how the U.S. Charities or any other charitable
organisation in India directed by the U.S. Charities
were ultimately paid off. The Respondent only showed
the Court the acts behind the scenes of the Petitioner
by the evidence of the Companies of the other family
members of the Raheja family also developing the said
properties reimbursing the Respondent their
proportionate share not only in the settlement but also
in the costs of the litigation to be paid and incurred
by the Respondent from the estate of the Testator to
the U.S. Charities through their Attorneys, Trilegal.
82.The Court in its, discretion, required the Respondent
to show the Court for its satisfaction the amounts
actually received by the U.S. Charities under the
settlement by them. The Respondent has got produced,
through the firm of Trilegal, the correspondence with
the U.S. Charities showing remittance by Telegraphic
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Transfers (TTs) made to both the charities in a sum of
Rs.1,87,26,500/- each on 27th December 2003 after
deduction of the costs incurred by them in a sum of Rs.
2,23,500/- each authorised and accepted in writing by
the U.S. Charities. The Petitioner s Attorneys, in
their reply to the Respondent s Attorney s note
annexing the aforesaid documents raised fishing
inquiries about further details not sought by the Court
and questioned the transactions as gift . The doubt
expressed is perhaps upon ignorance of the procedural
requirements of TTs. ig The forms required to be filled
in, under RBI guidelines for TTs, require the
transmittor to tick one of the reasons for the
transfer. Personal gifts and donations is the
applicable column in the form to be ticked. The
consequent banking transaction is rightly described as
gift . The MOS was executed in the appeal (see its
title). Hence the U.S. Charities have rightly given
the reference of the Appeal. That would set at rest
any of the Court s doubts about the transaction
reflected in the receipts. Any further questions or
doubts by the Petitioner would be completely outside
the scope of the inquiry by the Court and its purport.
83. It is, therefore, true that the anomalies in the MOS
or any play upon words resulting in any mis-statement
or misrepresentation to the U.S. Charities would
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require the Court to reach out to them. It is true that
Courts must hear those who cannot speak; listen to
those who cannot shout. The U.S. Charities being
uninformed of this litigation would require the
positive act of the Court in that behalf. However, the
Court can be, at best, a watchdog; not a bloodhound.
84. Once it is seen that the U.S. Charities have received
the amounts agreed upon in the MOS, they are seen to
have obtained full access to justice. They had been
represented by their Attorneys and Counsel. They had
the advice of Indian Lawyers for the law that had
applied, however, strange their interpretation may
sound to the Petitioner. They are taken to have waived
the consequences of litigating in India and dealing
with the developers who had been litigating previously
with the administrator in India. They must also be
taken to have exercised an informed choice of washing
their hands off their onerous bequest requiring them to
take and keep accounts which would entail
infrastructural costs and may result in a negative
cost-benefit ratio, they being mere charities ill-
equipped to be as litigious as the Petitioner whom they
might be required to contend with. Once, therefore, it
is seen that the U.S. Charities or their nominees in
India have received the full share agreed by them
pursuant to the withdrawal of their Appeal, which would
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in turn result in withdrawal of their grounds of Appeal
or any allegations made by them or surprises expressed
by them in the Memo of Appeal, consequent upon their
constraint in receiving the amounts agreed to be paid
to them under the Foreign Exchange Regulations in
India, neither the Petitioner nor the Court can go
further.
85. Consequently, the contention of Dr. Singhvi that the
Indenture of Transfer as well as the MOS are bad as
unregistered and unstamped and/or inadequately stamped
documents, though correct on first principle, may lead
the Petitioner no further.
86. Ergo, the Petitioner must show its interest
prejudicially affected.(See: Parimal Kr. Das vs. Prasun
Kr. Das, (2004) 1 Cal LT 621 para 6). The prejudice, if
any, suffered must be shown to be derogatory to the
interest of the estate and the beneficiaries who would
claim the estate pursuant to the administration of the
estate in which the Petitioner s interest is adversely
affected. It must show how the estate suffered,
sustained or underwent any loss by the administration.
The prejudice suffered is not the loss incurred, the
nuisance borne, the supervision endured, the accounts
withstood, the proceeds partaken or even the litigation
met by an outsider to the estate or a third party that
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the estate would have to contend with and whose
interests are diametrically different from the interest
of the estate, such as are of the Petitioner. It is
not for the Petitioner to show how any other party
could be at the receiving end. The Petitioner,
therefore, cannot merely show its woes or travails at
the hands of the Respondent who sought to administer
the estate in the best interests of the estate. The
prejudice shown by the Petitioner to claim locus,
therefore, itself militates against the reliefs that
could be granted to the Petitioner to do away with the
Respondent whom it has to withstand and contend. (See:
Dwarika N. Addya vs. Jogabandhu D. Poddar, (1896) ILR
23 Calcutta 446).
87. Rather than showing how any of those acts have caused
prejudice to the Petitioner, it is only made clear to
Court that those acts, even if undertaken by the
Respondent individually and singly and without even the
tacit participation of the Petitioner, enured for the
benefit of the Petitioner the most. The Petitioner
would continue to reap the benefits of its capital
investments in the estate of the testator being
developed by him to the extent of 88% of the proceeds.
88. The Petitioner, however, contends that if the
Respondent is removed as administrator, the Petitioner
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would be required to pay the U.S. Charities 12% of the
profits made by the Petitioner instead and hence his
development would not be, in any way, altered. It is
contended by Dr.Singhvi that the Petitioner has a right
to pay the profits arising out of the estate of the
deceased to a legitimate estate holder and not a
pretender as the Respondent. If that is so, the
Petitioner has suffered no prejudice by the grant or
the continuance of the grant to the Respondent.
Consequently, the Petitioner would not be entitled to
maintain an action for removal of the Respondent.
89. The Petitioner has challenged the order dated 20th
November 2003 and prayed for its revocation alleging
mala fides on the part of the Respondent. The order,
as aforesaid, has been obtained about three months
after the death of Bachoobai. It is an order to allow
the Respondent to continue to be the administrator of
the estate of the deceased under the power granted by
Bachoobai. Bachoobai having expired, her power had
terminated. The grant, however, is contended to be
made not under Section 241 limited until Bachoobai
herself obtained probate but under Section 301 of the
IS Act, which deals with appointment of an executor
upon the removal of the earlier executor and which does
not deal with any limited grant or appointment.
Nevertheless, the Respondent applied for continuation
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to act as an administrator. It is contended by the
Petitioner that this itself shows that the Respondent
believed that his power to act as administrator would
have otherwise ended but for the permission to continue
by the Court.
90. To appreciate the mala fides alleged by the
Petitioner, what was the position of the parties in
November 2003 must, therefore, be appreciated.
Bachoobai had died. The Power of Attorney had come to
an end. The Grant was pursuant to the said Power of
Attorney. The Petitioner as well as the Respondent had
acted upon the Grant. Bachoobai had exercised her power
as executor under Clause IX of the Will. She had
consented to the property being developed by the
Petitioner. The Petitioner had put in enormous capital
in developing the property. The Respondent, as the
administrator, was receiving 12% of the proceeds. The
Petitioner was receiving the commensurate 88%. There
was none else to administer the property. The U.S.
Charities had been paid off upon the settlement reached
with them. There were no other beneficiaries under the
Will. Bachoobai having been a residuary legatee became
the absolute owner of the properties of the testator in
India which were developed by the Petitioner. Bachoobai
had left the Will in which she bequeathed all her
properties to the Respondent s sons as the only
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beneficiaries and appointed the Respondent her sole
executor. The clock turned full circle.
91. If the Respondent was not to continue, the
development would come to a premature halt. The
Petitioner would have to call it a day. The Petitioner
would have been most adversely affected. The Respondent
had the authority as well as the title under
Bachoobai s Will as an executor thereunder. There was
no party to whom the estate of the deceased would have
vested who was not brought to light or whose claim was
suppressed. In a case such as that, this Court in its
testamentary jurisdiction would exercise its inherent
and discretionary power to continue the administration
once granted in the hands of the same administrator who
had until then administered the estate. If however,
there would be any party who had a legitimate claim to
the estate of the testator but whose claim was
suppressed, he/she could have come to Court to have the
permission of the Court granted to the Respondent to
continue as an administrator set aside.
92. The Petitioner has sought to do that. The Petitioner
is not the beneficiary of the estate of the testator or
even of Bachoobai. The only interest of the Petitioner
is in developing the property. It is contended on his
behalf that the authority given to the Petitioner to
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develop the property would continue even after
Bachoobai s death; only 12% share in the proceeds could
be given to another person or another administrator.
That would simpliciter not give the Petitioner the
cause of action to have the administrator changed or to
revoke the permission of the Court granted to the
administrator to continue in administration, if the
administrator did not go well with the Petitioner.
93. The Petitioner has questioned the mode of applying
for such continuance also. My attention is drawn to
certain objections that the office of the Prothonotary
and Senior Master of this Court had raised, including
questioning why the Petition was filed when the
Petitioner was already appointed administrator under
the order dated 21st December 1972. This, though
assured to be mentioned to the Judge for his
satisfaction, is not shown to have been questioned or
mentioned. My attention is also drawn to the fact that
the documents upon which the Respondent craves leave to
refer to and rely upon were filed in the separate
compilation and were not present to the mind of the
Court when the order came to be passed. The Petitioner
contends that the aforesaid objections show that
material facts were suppressed. Dr.Singhvi contended
that the cryptic order passed so soon after the filing
of the Petition shows that the Respondent was in an
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indecent hurry. The Petition has been filed on 12th
November 2003. It was brought up on Board on 20th
November 2003. It was accepted, made returnable
forthwith and disposed of in terms of the Judge s Order
which allowed the Petitioner to continue as the
administrator.
94. The two orders granted in favour of the Respondent by
the same Court in respect of the same Will must fairly
be compared to appreciate this contention of ill-gotten
order. The order dated 21st December 1972 was passed
in Misc. Petition No.29 of 1972. That Petition was
filed a day before – on 20th December 1972. That order,
obtained on the very next day after filing that
Petition, is accepted and acted upon by both the
parties. It is not challenged. It is the source of
authority of the Petitioner as developer. Misc.
Petition No.41 of 2003 was filed on 12th November 2003.
The order/directions for continuing the grant to the
Respondent as administrator was passed 8 days
thereafter. It was passed under similar uncontested
circumstances. Yet it is challenged because the tables
have turned.
95. So much for two like orders reflective of similar
situations of instant justice!
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96. Misc. Petition No.41 of 2003 was not for application
of the grant. The grant had earlier been applied for.
The Petitioner was already an administrator. The
Petition was, therefore, only for directions.
Directions were not against the interest of any
beneficiary named in the Will who was not paid off or
whose legacy remained to be effectuated. There were no
contestants. It was, by its nature, for ministerial
directions of continuing the work of administration.
The only work to continue was the development of the
property by the Petitioner as the project co-ordinator
as also the other firms of the Raheja family similarly.
A Judge s Order, in such a Petition, suffices under the
procedure, by which this Court is governed under the
rules framed by this Court on its Original Side. Such
directions are necessarily obtained ex-parte, upon mere
application on a Judge s Order. Of course, if any party
is prejudiced by any misrepresentation or fraud, the
order would stand vitiated upon an application made in
that behalf in accordance with law and procedure.
Though, therefore, the Petition was filed, the Will and
the other documents were annexed thereto as well as in
a compilation as per the requirement in the objections
of the Prothonotary & Senior Master s office, it would
be understandable that they were neither referred to
nor shown to the Court, unless required by Court. In
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an uncontested case such as this, it would not be
required as there would be no reason for the Court to
doubt the bona fides of the claim. The Petition makes a
reference to the facts that transpired prior to the
Petition, including the efforts of the administrator
with regard to the development of the property of the
deceased, the question relating to the failing of the
legacy, the transfer of Bachoobai s interest to the
administrator and her ultimate demise.
97. The grant was obtained
ig by the Respondent on 27th
December 1972. The order dated 27th December 1972 is
not sought to be revoked. That is the order under which
the Respondent, as the administrator, sought to allow
the Petitioner to develop the property. The order dated
20th November 2003 is alone sought to be revoked. That
is the order passing directions to continue the grant.
Though Petition No.41 of 2003 does not show a specific
section of the Indian Succession Act, under which it
came to be filed, Mr. Nariman on behalf of the
Respondent stated that it was only for directions to an
administrator under Section 302 of the IS Act. Section
302 runs thus:-
302. Directions to executor or administrator.-
Where probate or letters of administration in
respect of any estate has or have been granted
under this Act, the High Court may, on
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in regard to the estate or in regard to the
administration thereof.
98. Dr.Singhvi argued that the continuation of the
Respondent as administrator of the estate of the
testator in India militates against the express
provision made by the testator for appointment of
successor executor in Clause VIII of the Will.
Bachoobai had a life interest under Clause V of the
Will. The U.S. Charities had the absolute beneficial
interest under Clause IV of the Will. After the death
of Bachoobai, the successor executor would have to
apply the estate of the deceased for the benefit of the
U.S. Charities and administer the estate such as to
transfer the estate of the deceased to them.
99. A reference was made by Dr.Singhvi to the case of C.
Masilemani Mudaliar & ors. vs. Idol of Sri
Swaminathswami Thirukorl & ors., 1996 8 SCC 529 to
contend that life interest could never be converted
into absolute interest except when specifically
provided by law as in Section 14 of the Hindu
Succession Act under which a Hindu widow in possession
of property in lieu of her right of maintenance (which
includes residence) would be entitled to full interest
thereunder so that her possession would ripen into
ownership which can devolve upon her heirs by
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testamentary and intestate succession. However, the
Respondent never sought substantive rights under the
order dated 20th November 2003.
100.Since the U.S. Charities had already settled their
interest and claim and/or were paid off prior to the
death of Bachoobai, that beneficial interest had itself
been accelerated. Bachoobai was the residuary legatee.
Once the beneficial interest in the properties of the
deceased was settled, the remainder would be the
residuary bequest going only to Bachoobai. The entire
of the remainder of the property of the deceased was
the property which was being developed in India. No
part of that property then had to be administered to be
paid over to the U.S. Charities in the U.S.A. The
successor executor was the partner of Coudert Brothers
who would be designated by three of the partners of
that firm. He was the executor in the U.S.A. He would
be required to administer the property of the deceased
in India. He would be required to administer that
property for Bachoobai (as the residuary legatee) and
not for U.S. Charities. He was authorised to designate
an individual or a Bank to act on his behalf in India.
It is technically correct to say that such successor
executor should have been appointed by the competent
Court in New York, U.S.A. from amongst the partners of
Coudert Brothers. Such executor would then designate an
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individual or a Bank in India to administer the estate.
If that is not done, the person prejudiced would
certainly obtain orders of the Court to get that
appointment made. If the ultimate beneficiaries were
paid off, no one other than Bachoobai, who was then the
residuary legatee would be the beneficiary. The
Respondent was appointed administrator by this Court
pursuant to the Power of Attorney of Bachoobai herself.
For the lifetime of Bachoobai or until she revoked her
power, the Respondent had the authority to continue to
administer the estate. Until then the nomination of the
deceased had not ripened. If the successor executor
nominated by the deceased had to be appointed, it could
have been only after Bachoobai s death. Instead of
having that successor executor appointed, the
Respondent sought to continue to act as administrator
under the order obtained in Miscellaneous Petition No.
41 of 2003. Upon the death of Bachoobai, there was no
beneficial interest under the Will of the deceased
which remained to be paid off and hence none could have
applied under the Will of the deceased either to
appoint the nominated successor as the executor or to
challenge the continuation of the Respondent as the
administrator. This was, therefore, a matter wholly
uncontentious. Hence nothing but directions of the
Court under Section 302 were required to be passed for
allowing the Respondent to continue to act as
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administrator of the estate of the deceased.
101. In the judgments relied upon by Dr.Singhvi himself,
this position is made absolutely clear. In the case of
Provas Chandrar Sinha vs. Ashutosh Mukherji, AIR 1930
Calcutta 258, it has been held that the disputed
questions of title could not be determined in an
application under Section 302 where the jurisdiction of
the Court is confined to the issue of directions to the
executor relating to the management of the estate
alone.
102. In the case of Akshoy K. Ghose, deceased AIR (36)
1949 Calcutta 462, it has been held that the directions
required to be passed in an application under Section
302 involving no substantial rights for adjudication or
determination were only to help the executor in the
difficulties in respect of practical management or
administration where no disputed questions of title or
difficult questions of construction of the Will or
complicated questions of law were involved. Those
orders are necessarily ex-parte but do not give final
protection to the executors, if on a subsequent inquiry
it was found that they had acted improperly. Hence if
the U.S. Charities were not paid, the executors will be
seen to have acted improperly. After the order came to
be passed on 20th November 2003 allowing the Respondent
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to continue as an administrator, nothing further was
done or had to be done for paying off any beneficiary
under the Will of the deceased. The administrator had
to take only accounts of the development of the
property in India which, by then having been vested in
Bachoobai, was bequeathed to his sons in a separate
testament of which also he was an executor.
103. The moot questions that would be the test of the
Petition are : Would it prejudice the Petitioner ? If
the order of continuance of the administrator was not
granted, would it have then prejudiced the development
of the Petitioner ? Was it, in fact, for the benefit
of the Petitioner ? Needless to state that only a
party having an interest in the estate of the deceased
which would be detrimentally affected by passing of
such order could have it set aside, restored or
annulled, be it merely a direction.
104. The Petitioner also contends that the order dated
20th November 2003 requires to be revoked as it was
obtained fraudulently by the Respondent, making a false
suggestion and concealing from the Court material
aspects. The Petitioner also contends that grant was
obtained by mentioning untrue allegations of facts
essential in point of law to justify the grant . The
case of the Petitioner of suggestio falsi and
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suppressio veri is upon the fact that :
(i) Bachoobai has been claimed to be the sole executrix
which she was not;
(ii) the bequest to charity has been shown to be
frustrated which was not; and
(iii) the indenture made by Bachoobai in favour of the
Respondent and his Companies was a fraud for want of
adequate consideration that passed thereunder.
These three aspects are, therefore, required to be
separately considered thus :
105.(i) It is contended by Dr.Singhvi that since there
were successor executors mentioned in the Will even the
nomenclature of Bachoobai as sole executrix is
fraudulent and fraught with mischief. It is argued on
behalf of the Petitioner that the expressions
successor and any executor in Clause VIII show that
Bachoobai was not the sole executrix. The contention
is incorrect as Clause VIII begins thus:-
I nominate, constitute and appoint my sister,
Bachoo Woronzow, to be the executrix of this my
will and in the event that she shall predeceased
me, fail to quality or cease to act for any reason
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The expression executrix in first part of Clause VIII
of the Will shows clearly that she was the only named
executrix. There was none to act along with her.
106. In fact the boot is on the other foot. It may be
mentioned that Bachoobai was described as the sole
executrix as well as the sole beneficiary under the
Will of the testator in Miscellaneous Petition No.29 of
1972 itself, under which the Respondent obtained his
initial grant from this Court. The Petition filed as
well as the grant obtained have been recited in the
Agreement of the Respondent with the Petitioner dated
2nd January 1995. The Petitioner knew about the said
description since 1995 since the execution of the Will
itself came to be recited in the said Agreement and the
Petitioner knew and must be taken to have known the
contents thereof. Even the bequest to charity was
known to the Petitioner from the contents of the Will.
It is only in view of the bequest to charity that
Bachoobai would have a life interest albeit with the
powers conferred upon her in her capacity as the
executrix in Clause IX of the Will.
107. Of course, the Will mentions how successor executors
would be appointed. They would be partners of the U.S.
Attorneys firm of Coudert Brothers. Those partners have
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been mentioned in the citation along with the trustees
named in the Will as also the executrix mentioned in
the Will. They would be certainly required to be
notified of the death of Bachoobai, if her life
interest came to an end. The Respondent would be duty
bound to notify the same; they were not to call upon
the Respondent to perform their obligation as executor
as claimed by him. However, that duty would come into
play if the life interest came to an end without any
other interest having ripened. If the U.S. Charities,
who were the beneficiaries under the Will, no longer
had any beneficial interest under the Will and if
Bachoobai, as a residuary legatee, would get the
remainder of the estate of the testator there would be
nothing left in the Will to execute by the successor
executor for the beneficiaries mentioned in the Will.
In such an event alone, they would not be required to
be informed of their position and obligations by the
Respondent. The beneficial interest of Bachoobai in
the properties of the deceased in India could be
continued to be administered by the administrator
appointed in India. Consequently, much ado that was
made about the successor executors not being informed
by the administrator in India, who sought to continue
to act, comes to nothing, at least when it is not so
contended by the only beneficiaries who would have an
interest in the administration of the estate of the
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90 MISC. PTN. 70/2010
deceased the U.S. Charities.
(ii) The Respondent had applied for an opinion of this
Court in Originating Summons No.1504 of 2000 in Suit
No.5034 of 2000 (O.S.) filed by him that the bequest to
charities had failed. This led to an appeal by the U.S.
Charities and ended in a settlement as aforesaid.
Pending disposal of the Originating Summons and prior
to the order passed therein, an indenture came to be
executed by Bachoobai.
108.(iii) The Indenture executed by Bachoobai is indeed
rather strange. This was during the time she only had
a life interest. She could not have transferred the
entire property of the deceased to the Respondent
unless she came to own the said property pursuant to a
full and absolute bequest. Yet it is contended that the
Indenture is a transfer of the properties under the
Will of the testator to the Respondent and certain four
Companies of the Respondent for a consideration of only
Rs.20 Lakhs when the properties were worth several
crores going by the consideration mentioned in the
Agreement for development of the said property dated
2nd January 1995. That consideration is not at all as
propagated by Dr.Singhvi. The Indenture dated 26th
September 2001 was pursuant to Bachoobai being the
residuary legatee under Clause V, though she had a life
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interest in the properties sought to be transferred.
The Indenture interpreted Section 118 of the IS Act
showing its inapplicability to the Will to render the
charitable bequest void as contended in the Originating
Summons and showed the intention of Bachoobai to sell
her right, title and interest in the corpus of the
property of the deceased in India contingent upon the
High Court decision that that property vested in her.
The consideration of Rs.20 Lakhs payable thereunder was
subject to her right to receive the income of that
property during her lifetime and down to her death and
also subject to the donation of Rs.10 Crores to the
corpus of another Trust under the Deed of Settlement
settled by her on 28th December 1973 being F.E. Dinshaw
Trust.
109. The transfer has merged in Bachoobai s Will dated
17th October 2001, which came into effect upon her
death on 12th August 2003, under which also her
property came to be bequeathed to the Respondent s
sons.
110. Hence though this indenture came to be executed
between Bachoobai and the Respondent whilst she
continued to have the only life interest and whilst the
legacy to the U.S. Charities were known to have been
made and not held to have failed or lapsed, it is seen
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to have been executed by Bachoobai under the vast,
unfettered powers inter alia to sell the properties of
the testator given to her under Clause IX of the Will
recited above the power to manage the estate of the
testator irrespective of any legal restrictions.
111. The transfer by Bachoobai of all the properties
under the Will to the Respondent would confer upon him
a clear title subject only to the claim of the U.S.
Charities thereon. There is none other who can
challenge the transfer, however unique that transaction
would be. Yet the transfer would enure for the benefit
of the Petitioner even more; whereas the Respondent
would have a clear 12% of the gross proceeds from the
development; the Petitioner would be entitled to
appropriate 88% of it. Similarly if the bequest to
U.S. Charities failed and if Bachoobai, upon her
residuary interest, became the sole beneficiary and is
bequeathed that property absolutely, aside from the
Respondent, who claims through Bachoobai under the
aforesaid transfer, the Petitioner would benefit from
being freed of the only encumbrance on that property
which was of the U.S. Charities. Pertinently and
interestingly, there is no mention of the only cloud of
the U.S. Charities upon the rights of the Petitioner as
well as the Respondent in the Development Agreement.
Nonetheless, they could not be wished away. They had to
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be dealt with. It is impossible to accept that the
Petitioner, who is an astute business Company in the
business of development, would not have its hand in
such dealing. Hence, the entire transaction is either
not fraudulent from the inception or it was an attempt
to deceive which failed to deceive or defraud the
Petitioner.
112.Of course, following up Derry Vs. Peak (1889) 14 AC
337 fraud vitiates any transaction. (See : Yeshwant
Deorao vs. Walchand Ramchand, AIR (38) 1951 SC 16;
Punjab Mercantile Bank Ltd. Sardar Kishan Singh, AIR
1963 Punjab 230; Shrisht Dhawan vs. M/s.Shaw Brothers,
(1992) 1 SCC 534; Devu Veerabhadra Rao Vs. Gollapalli
Latchanna 2002(3) ALT 608; Ram Chandra Singh vs.
Savitri Devi, (2003) 8 SCC 319; A.V. Papayya Sastry
vs. Govt. of A.P., (2007) 4 SCC 221 and Meghmala vs.
G. Narasimha Reddy, (2010) 8 SCC 383).
113. However, a contract vitiated by fraud is not a void
contract. It is voidable at the instance of the party
defrauded or injured; (See Sarala Sundari Dassya Vs.
Dinabandhu Roy Brajaraf Saha (Firm), AIR (31) 1944
Privy Council 11; (which was held to be a fraud by
which the applicant would be affected adversely by the
grant of probate per Atkin LJ) it is not voidable at
the instance of the party benefited. If the U.S.
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Charities are seen to be defrauded, the Respondent
could expect no cover from the Court no matter that the
U.S. Charities did not file the Petition but
nevertheless, thanks to the Petitioner, the fraud came
to light. If however, the U.S. Charities are not
defrauded, the Petitioner would not be entitled to the
cover of the Court.
114. Dr.Singhvi has drawn my attention to Section 310 of
the Indian Succession Act which runs thus:
310. Purchase by executor or administrator of
deceased s property.-If any executor oradministrator purchases, either directly or
indirectly, any part of the property of the
deceased, the sale is voidable at the instance
of any other person interested in the propertysold.
The Respondent, as the administrator of the property of
the deceased, did purchase it from the holder of the
life interest before the ultimate bequest could take
effect. The purchase would be voidable at the instance
of the other person interested in the property. But for
the settlement, the U.S. Charities would be the only
persons interested in the property and consequently,
the transfer to the Respondent could be voidable at
their instance alone. They having been stated to have
been paid off under the settlement, they would no
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longer be interested in the property sold, except if
the settlement itself failed. The Petitioner, who has
questioned the Indenture dated 26th September 2010 is
not the person interested in the property sold pursuant
to being a developer thereof. It is a mere developer.
It has to develop the property, appropriate 88% of the
proceeds of the property of development and pay 12% to
the estate of the testator. It hardly behoves the
Petitioner, therefore, to question the indenture of
transfer of the property when it cannot and has not
even avoided it in a separate civil suit.
115. Dr.Singhvi contended that Section 310 of the IS Act
is analogous to Section 53 of the Indian Trust Act and
Section 91 of the Probate and Administration Act, which
enjoins trustees not to purchase the interest of the
beneficiaries with court permission and to indemnify
the transferor respectively. He contended that the
Respondent, as the administrator, was in the position
of a trustee because he was in a fiduciary
relationship. This relationship was also with the
ultimate beneficiary. The Respondent herein is himself
the ultimate beneficiary, individually or along with
his sons. Hence though the argument is rather
attractive, it is also only academic. (See : Laxmidas
G. Dossa vs. Ismail G. Kassum, (1926) 28 BLR 1262;
Baroda P. Banerji vs. Gajendra N. Banerji, I IC 289;
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Manohar Mukherjii Vs. Raja Peary Mohan Mukherjee 54 IC
6 and 1921 LR 48 IA 258 in appeal to Privy Council from
Calcutta High Court and Hari Narain vs. Badri Das, AIR
1963 SC 1558 which related to the relationship of
landlord and tenant only).
116. It is contended, and upon a plain reading of the
Indenture dated 26th September 2001 would stand to
reason, that the Respondent, as the administrator,
buying over the property in administration in his
personal capacity was hit by the doctrine of conflict
of interest as he was a fiduciary. (See : James, Ex
parte, Court of Chancery, (1803) Vol.32. ER 385;
Manohar Mookerjee vs. Raja Peary Mohan Mookerjee, 54
I.C 6 and 1921 LR 48 1A in appeal to Privy Council
from Calcutta High Court; Pandurang Shamrao Laud vs.
Kalliandas, AIR 1933 Bombay 342; Brijkishore Singh vs.
Smt.Nazuk Bai, AIR 1948 Calcutta 19 and Regal
(Hastings) Ltd. vs. Gulliver, House of Lords, (1967) 2
A.C. 134 which is an authority for acts of Directors of
a Limited Company as trustees of the Company). This
proposition of law would have attracted the embargo
under Section 310 of the IS Act, if a person interested
in the estate of the deceased whose interest was
affected by such transfer would have applied. The
Petitioner is not interested in the property sold and
its interest is not affected by such transfer. In fact,
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its interest is safeguarded under such transfer.
117. Dr.Singhvi contended that the Petitioner, as a
developer, is bound to agitate its rights of
development of the estate of the deceased upon even a
bare possibility of an interest in the estate of the
Testator as a purchaser or transferee from an heir of
the deceased or a contingent interest. (See: Kipping
and Barlow vs. Ash (1845) 163 E.R. 1035; Muddun Mohun
Sircar vs. Kali Churn Dey, 1892 (Vol.XX)ILR Calcutta
37; Lalit Mohan Bhuttacharjee
ig vs. Navadip Chandra
Kaparia, 1901 (Vol.XXVIII) ILR Calcutta 587;
Mokashadayini Dassi vs. Karnadhar Mandal, AIR 1915
Calcutta 421; A.P. Ismail Rowther vs. Mynoon Bivi, AIR
1966 Madras 84 and Inox Air Products Ltd. vs. Harshita
Ltd., MANU/DE/1923/2010 (which are cases for setting
aside a sale in execution by a judgment debtor);
Banwarilal Shriniwas vs. Kumari Kusum Bai, AIR 1973
Madhya Pradesh 69; Elizabeth Antony vs. Michel Charles
John Chown Lengera, AIR 1990 SC 1576 (holding that a
party can apply even without caveatble interest) which
was followed in Krishna Kumar Birla Vs. Rajendra Singh
Lodha 2008 4 SCC 300 (for contingent interest).
118. Dr.Singhvi drew my attention to the case of Tara
Chand Sharma vs. Uma Aggarwal, Punjab & Haryana High
Court, AIR 2010 P & H page 30 para 29 in which it was
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observed that though the Petitioner must come to Court
with clean hands and his conduct has to be above board,
the jurisdiction under Section 301 to remove the
executor for misconduct has to be exercised by the
Court upon taking an overall view of the matter. The
Court cannot shut its eyes to the conduct of the
executor and allow the executor to continue
irrespective of his work to the detriment of the
property bequeathed merely because the complainant s
conduct was not above board. It is gratifying to note
how Dr.Singhvi fairly
ig conceded the conduct of the
Petitioner. In fact, it has not come up for
consideration except for challenging bona fides of the
Petitioner. In this Petition, it is not for the Court
to see the acts of the Petitioner in development of the
testator s property that would be seen in the suit
filed by the Respondent. The misconduct of the executor
would certainly be seen by the Court and would never be
countenanced. It must, however, be misconduct such as
to prejudicially affect the party interested in the
estate, which would be such that the party interested
would not get its due share upon the administration by
the executor. That party, in this case, would be the
only U.S. Charities and no other not by any count the
Petitioner.
119. Similarly in the case of Maj. Gen. Jonathan Reuben
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Samson vs. Zillah Solomon, AIR 1991 Bombay 222 para 35
also this Court has observed that motive of filing the
Petition under Sections 263 and 301 is irrelevant and
if the grounds for removal of administrator or
revocation of the grant are proved, the Petitioner
would be entitled to those reliefs. That, of course,
would be the Petitioner whose interest in the estate of
the deceased would be prejudicially affected by the
grant itself or by the acts of the administrator and
not a Petitioner whose interest would be, in fact,
protected by such administrator.
120. The only effect of the said order allowing him to
continue was to take accounts of the development of the
property to obtain 12% of the proceeds thereof under
the Agreement signed by him as the executor and to
allow the development to go on smoothly so that the
ultimate transfer of the properties, which were
developed, could be made to the ultimate purchasers of
those developed properties. Of course, if the 12% share
in the estate of the deceased which the Respondent had
to administer was not received, the ultimate
beneficiaries would be entitled to apply to set aside
that order or to remove him as executor. Those ultimate
beneficiaries are the sons of the Respondent. The
Petitioner is nowhere a contender.
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121. The various legally sound and correct arguments of
Dr.Singhvi, though a gratification for one s
intellectual appetite, remain purely academic, thanks
to the total lack of any beneficial interest of the
Petitioner in the estate of the testator and the total
lack of prejudice suffered by him as also each event
having a kinetic effect that transpired to put the
Respondent at the helm.
122.It has been urged on behalf of the Respondent that
the Petitioner has no locus to file a Petition for
revocation of the grant or even the order continuing
the grant and that the Petition filed for ulterior
reason must be dismissed. Other than any stranger or
an interloper any party with even a minor interest in
the estate would be entitled to maintain an application
for revocation of the grant (See : Perviz Sarosh
Batliwalla vs. Mrs.Viloo Plumber, 2000(3) Maharashtra
Law Journal 39; Pirojshah Bhikaji vs. Pestonji
Merwanji, 1910 (Vol.XII) Bombay Law Reporter; Dwarika
N. Addya Vs. Jogabandhu D. Poddar (1896) ILR 23
Calcutta 446).
123. The Respondent has also contended that the Petition
is barred by limitation because it is filed more than
three years after the order came to be passed in
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Miscellaneous Petition No.41 of 2003 which is sought to
be revoked. That contention speaks of the law without
considering the exception. The Petition would be
barred, if on the Petitioner s own showing it came to
Court to revoke the order more than three years after
it received knowledge of the order. In the alternative,
the bar could be considered if the Respondent showed a
precise date on which the Petitioner derived knowledge
of the filing of Petition No.41/1993 to start the
period of limitation. The precise date when limitation
began to run is
ig not shown by the Petitioner s
knowledge. Mere delay or even knowledge cannot
constitute a bar. (See : Manorama Chowdhurani vs. Shiva
Sundari Mozumdar, 1914 (Vol.XLII) Indian Law Reports
Calcutta 480). In the absence of oral evidence in that
behalf and upon only the circumstantial evidence of the
knowledge that the Petitioner is imputed the Petition
by itself cannot be taken to be barred. Dr. Singhvi
relied upon the principle in A.P.Ismail Rowther vs.
Mynoon Bivi & ors., AIR 1966 Mad 84 (which is an
execution application); Ram Chandra Singh vs. Savitri
Devi, (2003) 8 SCC 319 (which is a partition suit); and
Shrisht Dhawan vs. M/s.Shaw Brothers, (1992) 1 SCC 534
para 20. Consequently, the judgments relied upon by
Mr.Nariman on behalf of the Respondent with regard to
the requirement of filing the Petition within three
years or the explanation of delay would not come into
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play in this case. (See Hari Narain (deceased) vs.
Subhash Chander, AIR 1985 Punjab & Haryana 211 and
Ramesh Nivrutti Bhagwat vs. Dr.Surendra Manohar
Parakhe, AIR 2001 Bombay 461).
124. The Petitioner contends that this Petition is filed
under Section 263 of the IS Act. Section 263 runs
thus:
263.Revocation or annulment for just cause.-The
grant of probate or letters of administrationmay be revoked or annulled for just cause.
Under Section 263, the Letters of Administration
granted to the Respondent can be revoked for just
cause. This Petition does not seek to revoke the grant.
It seeks only to revoke the order of continuation of
the grant. The order was not even an ancillary grant.
Probate was obtained in the New York County Court in
1970. A limited grant was obtained from this Court in
1972. The limited probate had become final. A mere
direction to continue the grant in India cannot be
challenged when the initial grant in the U.S as well as
the limited grant in India is in force. In the case of
Ramesh Nivrutti Bhagwat Vs. Dr. Surendra Mandar Parkhe
A 2001 Bom 461 it was held that when the grant of the
Superior Court in California, which was a judgment in
rem was in force, the ancillary grant also could not be
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revoked.
125. Dr.Singhvi argued that the grounds showing just
cause for revocation of the grant under Section 263 of
the IS Act were not exhaustive. He relied upon a
number of judgments to show different facts situations
when the grant was revoked. (See : Ganeshammal vs.
Arunachalam, AIR 2002 Madras 417; V.Arunachalam, In
re., (2002) 2 M.L.J. 407; R. Ramachandran vs. G.
Hariharan, (2001) 2 Mad.L.J. 417; N.Saroja vs. Sri
Vidya Chits and Finance (P) Ltd., Karur, (1996) The
Madras Law Journal Reports 74; Gita alias Gita Ravi
vs. Mary Jenet James alias M.J. James, (1995) The
Madras Law Journal Reports 467; G. Shanmugham Chetti
vs. Chinnammal, AIR 1978 Madras 304; Dhanabakkiyammal
vs. Thangavelu Mudaliar, AIR 1927 Madras 994 = (1927)
53 MLJ 644; F.C.S. Amalnathan vs. J.S. Victor Basco,
AIR 1995 Karnataka 258; Uday Chand Vs. Shankar Lal AIR
1978 Supreme Court 765 (which related to revocation of
leave in a SLP); and G. Gopal Vs. G. Nagarathinam, AIR
2007 Madras 28). The Respondent would argue otherwise.
(See: Sharad S. Mane vs. Ashabai Shripati Mane, AIR
1997 Bombay 275; Annoda Prasad Chatterjee Vs.
Kalikrishna Chatterjee (1896) XXIV ILR Calcutta. 95
(relating to the analogous provision in S.50 of the
Probate and Administration Act, 1881; Pramode Kumar Roy
Vs. Sephalika Dutta AIR 1957 Calcutta. 631, Anil Behari
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Ghosh Vs. Latika Bala Dassi, AIR 1955 Supreme Court
566; Bal Gangadhar Tilak Vs. Sakwarbai Maharaj, (1902)
IV Bombay Law Rreporter 637) The facts in all these
cases are different and need not be enumerated.
126. The other prayer in the Petition is for removal of
the Respondent as the administrator. An administrator
can be removed under Section 301 of the IS Act. The
Petitioner would require to make out a case for such
removal. The case that the Petitioner has sought to
make out is that the Respondent has sought to brush
aside the U.S. Charities by paying them a pittance of
their legacy, and has sought to get the transfer of the
interest of Bachoobai in the property of the deceased
to himself and his Companies. Those acts, though
appearing to be of doubtful repute, do not adversely
affect the Petitioner or development of its property.
Those acts, in fact, facilitate such development and
the consequent profits by the Petitioner. It is only
the U.S. Charities who would have a legitimate right to
challenge the acts of the Petitioner as administrator
because only their interest may be prejudiced. That
would have been the case but for the settlement. It
may still be the case if the settlement sought to be
reflected in the MOS dated 1st August 2003 is not
effectuated. If that Agreement is not effectuated and
stands frustrated because of any supervening
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impossibility in executing it despite the doctrine of
cy-pres resorted to by the Respondent and is rendered
void, the claim of the U.S. Charities would hold good.
In view of the Supreme Court judgment in the case of
John Vallamattom (supra), the U.S. Charities would be
the only party whose legal interest in the properties
of the deceased would continue. If the MOS fails, not
the Petitioner but, the U.S. Charities would obtain the
entire interest in the properties of the deceased and
the Petitioner s development would come, in the words
of the Respondent,
ig to a grinding halt . These
attractive propositions of law cannot, therefore, come
to the aid of the Petitioner.
127. Dr.Singhvi has brought out the inherent distinction
between the two sections; the former revoking the grant
itself but the latter removing only the executor for
his wrongful acts or his misconduct whilst continuing
the grant are seen to be mischievously though artfully
applied. Though prayer (a) of the Petition is under
Section 263, it is seen that the Petitioner would
rather continue the initial grant dated 12th December
1972 in the interest of the Petitioner itself. If that
grant is revoked, the entire development of the
Petitioner would ipso facto fall through.
128. The application for removal of the Respondent as
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executor can be entertained only upon showing his
misconduct in administration which prejudicially
affects the Petitioner and which is not shown. The hope
of the Petitioner to continue the grant upon doing away
with the Respondent can, therefore, only be duped.
129. Surprisingly, the Petitioner claims that the
Respondent has not provided accounts relating to the
estate of the deceased. The Respondent was never
required to provide accounts to the Petitioner. The
estate of the deceased has never claimed accounts or
made a complaint of its non-receipt. In fact, the
Respondent has claimed accounts from the Petitioner in
respect of the development of the testator s property
under the Agreement dated 2nd January 1995. The
Respondent is the most apt, if not the best, person to
be able to demand, receive and evaluate the accounts.
In fact, that is the moot reason why the Petitioner
would be safe to do away with the Respondent and to
substitute him by another administrator who would not,
for lack of knowledge of the facts of the case alone,
be as well equipped to receive the accounts submitted
by the Petitioner as the Respondent would be.
130. The Respondent, who was abreast of the estate of the
deceased and who was shown to be acting as an
administrator until then, could have been the only
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person directed to continue as administrator in the
interest of the estate.
131. On considering the intrinsic merits of the case, the
application of the Petitioner is seen to be accentuated
by mala fides and as a counterblast to the suit of the
Respondent.
132.Hence none of the reliefs prayed for by the
Petitioner can be granted. The Petition is dismissed
with costs.
(SMT.ROSHAN DALVI, J.)
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