Madras High Court
R.Shanmuganathan (Died) vs Thirupparankundram Arumuga on 22 December, 2023
Author: G.Chandrasekharan
Bench: G.Chandrasekharan
S.A.(MD) No.510 of 2023
BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT
RESERVED ON 13.12.2023
PRONOUNCED ON 22.12.2023
CORAM:
THE HONOURABLE MR.JUSTICE G.CHANDRASEKHARAN
S.A.(MD) No.510 of 2023
and
C.M.P.(MD) No.12166 of 2023
Nakoda Homes Pvt.Ltd.,
rep.through its partners,
S.Bhawarlal
R.Shanmuganathan (died) ..Appellant
Vs.
Thirupparankundram Arumuga
Nainar Trust
rep. Through its trustees
1.S.Venugopal
2.T.A.S.Ramasubramanian (died)
3.S.Durga Balakumar
(R2 died and exonerated vide Court
order dated 15.09.2023)
...Respondents
PRAYER: Second Appeal filed under Section 100 of C.P.C., to set aside the
judgment and decree of the Court of the II Additional Subordinate Judge, Madurai
Town dated 11.07.2023 in A.S.No.35 of 2021 confirming the judgment and decree
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1/33
S.A.(MD) No.510 of 2023
on the file of the Additional District Munsif, Madurai Town dated 29.04.2021 in
O.S.No.976 of 2013.
For Appellants : Mr.M.Vallinayagam Senior Counsel for
M/s.A.Amala
For Respondents : Mr.T.R.Subramanian
JUDGMENT
This second appeal is filed challenging the concurrent judgments in
A.S.No.35 of 2021 on the file of the II Additional Sub Court, Madurai and
O.S.No.976 of 2013 on the file of the Additional District Munsif Court, Madurai.
2.The respondents/plaintiffs filed a suit in O.S.No.976 of 2013 for the
following reliefs a) for declaring the registered lease deed dated 30.03.2007
entered into between the plaintiffs and the defendants is null and void, in-
executable and inoperative under law; a (i) for directing the defendants to vacate
the suit property and hand over the keys thereof with vacant possession; b) for
permanent injunction restraining the defendants from in any way altering or
changing the character of the suit property and c) for costs.
3.The case of the plaintiffs, in brief, is that the plaintiffs are the trustees
of Thirupparankundram Arumuga Nainar Trust. They had leased out the suit
property to the defendants under a registered lease agreement dated 30.03.2007.
The recital of the lease deed shows that the plaintiffs have leased out the suit
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property to the defendants in their individual capacity and not as trustees of the
plaintiffs' Trust. The plaintiffs filed Trust O.P.No.2 of 2009 on the file of the
Principal District Court, Madurai, as trustees of Thirupparankundram Arumuga
Nainar Trust seeking permission to sell the suit property in favour of the first
defendant, S.Bhawarlal, his wife, B.Kamaladevi and his son, S.B.Rajkuar. The
petition was allowed on 04.08.2010 directing sale price to be deposited within a
period of two months. The two months period expired on 04.10.2010. The sale
price was not deposited within the time fixed by the Court. Therefore, the
plaintiffs filed I.A.No.1038 of 2012 for cancelling the order passed in Trust
O.P.No.2 of 2009.
4.After contest, the learned Principal District Judge, Madurai, allowed
the petition and cancelled the order passed in Trust O.P.No.2 of 2009 on
04.08.2010. One third party, R.Gopalakrishnan, filed CRP.(MD) No.398 of 2011
before this Court challenging the order passed in Trust O.P.No.2 of 2009. This
Court, while disposing of CRP(MD) No.398 of 2011, held that without making
any public notice and without giving any opportunity to third parties, who are
willing to purchase the properties, without mentioning the private negotiation
entered into between the trustees with the first defendant, his wife and his son the
proposed sale is not legal and thus, set aside the order passed by the learned
Principal District Judge, Madurai, in Trust O.P.No.2 of 2009. It was finally
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decided by this Court that whatever transactions the plaintiffs had with the first
defendant, his wife and his son are all invalid under law.
5.The lease deed dated 30.03.2007 entered into between the plaintiffs in
their individual capacity and the defendants, is not only invalid under law but also
totally void lease deed under law. In paragraph No.15 of the order made in CRP.
(MD) No.398 of 2011, this Court commented that “those, who are willing to
purchase by private negotiations can also bid at the public auction and why would
they feel shy or be deterred from bidding at public auction. Further, the sale by
private negotiations will not be visible to the public eye and may even give rise to
public suspicion unless there are special reasons to justify doing so”. For the same
reasons, the registered lease deed dated 30.03.2007 entered into between the
plaintiffs and the defendants is not valid under law. Therefore, on the basis of the
lease deed dated 30.03.2007, the defendants cannot claim any relief for the reason
that it becomes non-est under law and in-executable. The defendants have no
option except to vacate the leased property and hand over the same to the
plaintiffs by receiving the remaining advance amount of Rs.7,92,500/-, after
deducting the rent amount payable by the defendants with the end of 31.10.2013.
6.Defendants filed a suit in O.S.No.642 of 2013 on the file of the
learned I Additional District Munsif, Madurai and obtained an order of ad-interim
injunction in I.A.No.412 of 2013. The second defendant died on 05.11.2014. The
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plaintiffs sent a notice dated 17.10.2012 terminating the tenancy of the defendants
with the end of 30.11.2012. The defendants sent a reply dated 27.10.2012. The
plaintiffs sent a reminder notice dated 21.06.2013 for vacating the suit property
and handing over the possession. The defendants sent a reply dated 06.07.2013. In
the said circumstances, the suit was filed for the aforesaid reliefs.
7.The defendants filed written statement and additional written
statement stating that believing the words of the plaintiffs, the defendants entered
into the registered lease deed dated 30.03.2007. With the mala fide intention of
cheating the defendants, the plaintiffs had executed a registered lease deed in their
individual capacity. It is settled principle of law that the trust property has to be
leased out by the trustees only, but wantonly the plaintiffs had executed the lease
deed in their individual capacity. It is a clear case of cheating on the part of the
plaintiffs. Against the order passed in CRP.(MD) No.398 of 2011, the defendants
filed Special Leave Petition (Civil) in No.2766-2767 of 2014 before the Hon'ble
Supreme Court. The plaintiffs have received a sum of Rs.9,90,000/- being the rent
for 33 years at the rate of Rs.30,000/- per year. The lease period is for 33 years.
The plaintiffs cannot seek possession before the expiry of the lease period. The
lease deed executed between the plaintiffs and the defendants had not been
declared as null and void by any Court of law. The Trust O.P. relates to sale of the
suit property. The lease deed relates to possession of the suit property. Thus, both
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the transactions were different. It is specifically stated in the lease deed that the
defendants have right to demolish the old building and construct a new building
by getting plan approval from Madurai Corporation; to get water tap connection,
drainage connection, EB connection in the name of the defendants. The
defendants put up a construction at the cost of Rs.10,00,000/-. Right of sub-lease
is also given to the defendants. The plaintiffs were given right to purchase the
super structure constructed by the defendants after the expiry of the lease period.
For the notices sent, suitable replies were sent. Plaintiffs also threatened the
defendants to vacate from the suit property. Therefore, the suit in O.S.No.642 of
2013 was filed. Before the expiry of 33 years lease period, plaintiffs cannot seek
the relief claimed in the plaint. The prayer for cancelling or setting aside the lease
deed should have been filed within three years from 30.03.2007. Therefore, the
suit filed in 2013 is barred by limitation.
8.In the reply statement, the plaintiffs stated that Article 59 of the
Limitation Act is not applicable to the present case and therefore, the suit was
filed in time from the date of disposal of CRP.(MD) No.398 of 2011 on
26.04.2013. On the basis of these pleadings, the trial Court framed the following
issues:-
“1.Whether the plaintiffs are entitled for the relief of
declaration as prayed for?
2.Whether the plaintiffs are entitled to the relief of permanent
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injunction as prayed for?
3.Whether the plaintiffs are entitled for the relief of recovery
of possession as prayed for?
4.Whether the suit is barred by law of limitation or not?
5.To what other relief the plaintiffs are entitled to?”
9.During trial, P.W1 was examined and Ex.A1 to Ex.A13 were marked.
D.W1 was examined and Ex.B1 to Ex.B10 were marked.
10.On the basis of the oral and documentary evidence, the learned trial
Judge decreed the suit as prayed for. The plaintiffs filed an appeal in A.S.No.27 of
2021 against the judgment in O.S.No.642 of 2013. The defendants filed an appeal
in A.S.No.35 of 2021 against the judgment in O.S.No.976 of 2013. Both the
appeals were heard jointly and a common judgment was pronounced. The learned
appellate Judge dismissed the appeal in A.S.No.35 of 2021 and allowed the appeal
in A.S.No.27 of 2021. Challenging the judgment in A.S.No.35 of 2021, this
second appeal is filed.
11.The learned counsel appearing for the appellants submitted that
originally the suit was filed only for declaration that the registered lease deed
dated 30.03.2007 is null and void and for the consequential relief of permanent
injunction. The suit is clearly barred under Article 59 of the Limitation Act. The
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relief for recovery of possession was introduced by way of an amendment
application in I.A.No.93 of 2016 on 21.03.2016. Assuming that the suit for
recovery of possession was filed from the date of order of amendment on
21.03.2016, the declaratory relief mentioned under Article 65 of the Limitation
Act is only with reference to declaration of title and not in respect of any other
declaration as prayed in the present suit, ie., for declaration that the lease deed
dated 30.03.2007 is null and void. The Courts below ought not have taken the date
of order passed in CRP.(MD) No.398 of 2011 ie., 30.06.2014 to calculate the
starting point of limitation. The order in CRP.(MD) No.398 of 2011 relates to sale
of trust properties, whereas suit is filed for different relief. Unless the lease deed
dated 30.03.2007 is declared as null and void by a competent Court, it is legally
enforceable in law. The lease deed, which is for 33 years, dated 30.03.2007 is only
a voidable document and not void document. The plaintiffs received the total lease
amount of Rs.9,90,000/- for 33 years on 30.03.2007. They are estopped from
challenging the lease deed dated 30.03.2007.
12.Plaintiffs filed Trust O.P.No.2 of 2009 in their capacity as trustees for
selling the property. It is clear that they treated the suit properties as trust
properties and therefore, they sought permission from the Court for selling the suit
property. Very cleverly and ingeniously, plaintiffs had executed the lease deed in
their individual capacity without referring that they are representing the trustees.
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In CRP.(MD) No.398 of 2011, the order of the learned Principal District Judge,
Madurai, in Trust O.P.No.2 of 2009 was set aside for the reason that there are
procedural violations in the process of selling the property. There was no
discussion about the trustees' right to lease out the property.
13.Section 36 of the Indian Trust Act, 1882, permits the trustees to lease
the trust property for a term of 21 years. Only if the lease term exceeds 21 years,
the permission of the principal Civil Court of original jurisdiction is necessary. In
that case, the lease executed in favour of the appellants for 33 years can only be
considered as voidable lease deed and not a void lease deed. There is no
consequence provided in the Act, if the lease deed is executed beyond the period
of 21 years, whereas consequences are provided under Section 34 of Hindu
Religious & Charitable Endowment Act. The trustees cannot challenge the lease
deed, when they are the parties to the lease deed. They are estopped from
challenging the lease deed. The relief of declaration is the substantial relief. When
the cancellation of instrument is sought for, the period for filing the suit is 3 years,
as per Article 59 of the Limitation Act. Plaintiffs are the parties to the lease deed
dated 30.03.2007 and they ought to have filed the suit within 3 years from the date
of execution of the lease deed on 30.03.2007. When the principal relief of
declaration/cancellation of the lease deed as null and void, is barred by limitation,
the consequential prayer for recovery of possession cannot be maintained.
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14.The reliance placed by the appellate Court under Article 65 to hold
that the suit was filed in time is not correct. Thus, the learned counsel for the
appellants submitted that both the Courts below have not properly appreciated the
facts and evidence in a proper manner and wrongly decreed the suit. He prays for
setting aside the judgment of the Court below and for dismissal of the suit. In
support of his submissions, he placed reliance on the following judgments:
“i) In Guddappa Chikkappa Kurbar Vs. Balaji Ramji Dange
reported in (1941) 43 Bomlr 681.
ii) In Rajpal Singh Vs. Saroj (deceased) through Lrs and another
reported in AIR Online 2022 SC 732.
iii) In Kadir Ibrahim Rowther and others Vs. Arunachellam
Chettiar and others reported in 4 Ind Cas 1082.
iv) In Vellayya Konar died and another Vs. Ramaswami Konar
and another reported in 1939 0 AIR (Mad) 894.”
15.In response, the learned counsel for the respondents submitted that
the Court is the custodian of the trust and trust properties. The trust is different
from its trustees. If the trustee commits any mistake, the trust cannot be held
responsible. The lease deed dated 30.03.2007 is contrary to the terms of Section
23 of the Indian Contract Act and Section 36 of the Indian Trust Act, 1882. When
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the trust is not a party to the lease deed dated 30.03.2007, it cannot be held liable.
The trustee cannot act against the interest of the trust and trust properties. It is
specifically mentioned in the lease deed dated 30.03.2007 that the property
covered in the lease deed is the individual property of the trustees and the name of
the trust is not mentioned in any part of the lease deed dated 30.03.2007. The
trustees cannot execute the lease deed claiming property as their own property.
The lease deed was executed without reserving the best yearly rent and for this
reason also, the lease deed is not valid. The suit was filed within the time. The
Courts below have rightly decreed the suit and thus, he prayed for dismissal of
this appeal. In support of his submissions, he relied on the following judgments:-
“i) In Nangappan Vs. Ramasamy and another reported in 2015
SAR (Civil) 403.
ii) In Kaka Hajee MD.Ishaque Sahib Vs. Kaka.MD.Saddiq Sahib
and others reported in (1969) 82 LW 622.
iii) In A.R.Rengaraj @ A.R.R.Raju and another Vs. Aranamanai
Raman Chettiar Chathiram through trustees and others reported in 2018
(2) CTC 721.
iv) In Civil Appeal Nos.6989-6992 of 2021 (Kewal Krishnan Vs.
Rajesh Kumar and others dated 22.11.2021.
v) In Appanna Vs. Jami Venkatappadu and others reported in
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(1953) 1 MLJ 476.”
16.In reply, the learned counsel for the appellant submitted that the
Trust is an artificial person and it can function only through its trustees. Act of
trustees bind the trust. Having been part of the lease deed, the trustees cannot
challenge it now. Mis-description of parties in the lease deed by omitting the name
of the trust is not a ground for doubting the legality of the lease deed. Unless there
is a penal provision or consequence, the violation of Section 36 of the Act only
makes the deed voidable in nature. The trustees had received the lease amount on
behalf of the trust. The proceeding in Trust O.P.No.2 of 2009 shows that the
respondents had acted in their capacity as trustees. Therefore, he reiterated his
prayer for setting aside the judgments of the Courts below and dismissal of the
suit.
17.On the basis of the submissions of the learned counsel appearing for
the parties, the following questions of law are framed for consideration:-
“1) Whether the present suit filed for the relief of declaration
declaring that the registered lease deed dated 30.03.2007 as null and
void is barred by the law of limitation or not?
2) Whether the Courts below right in entertaining the present
suit for declaration of the registered lease deed dated 30.03.2007 as null
and void, when the suit is filed only on 28.09.2013 which is clearly bared
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by time in view of Article 58 of the Limitation Act?
3) When the Article 65 of the Limitation Act permits to file the
suit within 12 years, when the possession of the defendant becomes
adverse to the plaintiffs, for recovery of possession based on title and in
the present suit there is no title dispute, whether the lower appellate
Court right in applying the said provision to grant the decree for
declaration of lease deed dated 30.03.2007 as null and void and granted
the consequential relief of order of eviction?
4) When the cause of action to file the present suit is the date
on which the plaintiffs entered into the lease agreement dated 30.03.2007
with the defendant to declare the said lease agreement as null and void
and the order of the eviction is only the ancillary relief introduced only
during later point of time in the suit, whether the lower appellate Court
right in applying Article 65 of the Limitation Act instead of Article 58 of
the Limitation Act?”
18.From the pleadings, oral and documentary evidence, the judgments
of the Courts below and the submissions of the learned counsel appearing for the
parties, it is not in dispute that the suit property belongs to Thirupparankundram
Arumuga Nainar Trust. The trustees of the trust are the respondents herein, by
name, S.Venugopal, T.A.S.Ramasubramanian and S.Durga Balakumar.
T.A.S.Ramasubramanian died subsequent to the disposal of the suit. It is also not
in dispute that the plaintiffs and the defendants have entered into the registered
lease deed on 30.03.2007 for leasing out the suit property in favour of the
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defendants. The copies of the lease deed are marked as Ex.A1 and Ex.B1.
19.Perusal of the lease deed shows that the appellants/defendants as first
party and the respondents/plaintiffs as second party had executed the lease deed. It
is claimed that the property covered under the lease deed ie., the suit property
belonged to the second party, namely the plaintiffs and they leased out this
property to the first party, namely the defendants for a period of 33 years. There
are other recitals as well and we will consider it later. The plaintiffs have not
denied the execution of the lease deed. As per the lease deed, the lease is for 33
years. The plaintiffs have instituted the suit after the order passed in CRP.(MD)
No.398 of 2011 by this Court. In fact, this order is the cause for initiating the suit.
This order was passed in consequence of the order passed in Trust O.P.No.2 of
2009 by the Principal District Court, Madurai. The plaintiffs as trustees of
Thirupparankundram Arumuga Nainar Trust filed a petition under Sections 34, 37
and 38 of the Indian Trust Act, seeking permission to dispose of the suit properties
ie., to sell the suit properties in favour of S.Bhawarlal, his wife, B.Kamaladevi and
his son, S.B.Rajkuar. This petition was allowed subject to deposit of the sale price
within a period of two months from the date of passing of the order on
04.08.2010. Since the sale price was not deposited within a period of two months,
the plaintiffs as trustees filed I.A.No.1038 of 2012 for cancelling the permission
granted in Trust O.P.No.2 of 2009. One K.R.Gopala Krishnan, a third party, had
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also challenged the order passed in Trust O.P.No.2 of 2009 by filing CRP.(MD)
No.398 of 2011. The learned Principal District Judge, Madurai, allowed I.A.No.
1038 of 2012 and revoked the permission granted in Trust O.P.No.2 of 2009. This
order was passed on 18.04.2013.
20.In CRP.(MD) No.398 of 2011, after considering as to whether the
Thirupparankundram Arumuga Nainar Trust is a public trust or a private trust and
holding that this trust is a private trust, this Court held that the private sale
proposed is bad in law for violating the basic norms and set aside the order passed
in Trust O.P.No.2 of 2009. It is pertinent to refer to the relevant portion of the
order.
“9.Further, having regard to the objects of the Trust, it cannot be
stated that the Trust is a Public Trust on the ground that the Trustees are
directed to perform ‘Maheswara Pooja’ which means ‘Food distribution’ and
considering the overall recitals in the Trust Deed, namely taking of
Palgudam and Abishegam on Vaigasi Vishagam and also do Maheswara
Pooja and considering the finding given in O.S.No.129 of 1965, dated
31.8.1967 marked as Ex.B2, I hold that it is a Private Trust and Trust Act
will apply. Though, the properties are Private Trust properties, the trustees
cannot sell the properties by entering into a Private negotiations and the
Court below should not also encourage private negotiations and the Court
below ought not to have directed the sale of all the properties through private
negotiation.
10.It is admitted that the trustees entered into a Private agreement
of sale for the sale of the Trust properties and the Private negotiations were
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approved by the Court below and the Trustees were permitted to sell all those
properties to the Respondents 4 to 9. The Agreements of Sale entered into
between the Trustees and the prospective purchasers were filed in the typed
set of papers, the Petitioners herein.
11.It is seen from the Agreements of Sale that the purchasers,
namely the Respondents 4 to 9 herein entered into an Agreement of Sale only
with the Trustees in their individual capacity and not as trustees of the Trust
and it is seen from the recitals in the Agreement of Sale that the property is
described as property belonging to the trustees and the trustees agreed to get
permission from the Court to sell the property and after getting permission,
the sale can be executed. Therefore, the question that arises for
consideration is whether the Trust properties an be sold in private sale.
12.According to me, whether it is Private Trust or Public trust,
once the property has been described as Trust property and permission was
sought for from the Court below to sell the said property, the Court must be
very vigilant in safeguarding the Trust properties and ought not to have
allowed the sale of the Trust properties by Private negotiation.
13.In this case, though the Public Notice was issued calling for
objection from the public, the Public Notice was issued only for the purpose
of calling for objection for sale of the property and in that notice, it was not
mentioned that the properties are to be sold to particular prospective
purchasers, namely the Respondents 4 to 9 herein for the agreed price and if
objection is raised, they can approach the Court. The publication was only
calling for objection for the sale of the Trust property and therefore, the
publication made by the Trust cannot justify the sale of the property.
14.In the judgment reported in Chenchu Rami Reddy and another
v. Government of Andhra Pradesh and others, 1986 (3) SCC 391, it was held
that the property of Institutions or Endowments must be jealously protected
and the Authorities exercising the powers under the Act must not only be
most alert and vigilant in such matters, but also show awareness of the ways
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of the present day world as also the ugly realities of the world of today. They
cannot offer to take things at their face value or make a less than the closest-
and best-attention approach to guard against all pitfalls. They must be aware
that in such matters the trustees or persons authorized to sell by Private
negotiations, can, in a given case, enter into a secret or invisible underhand
deal or understanding with the purchasers at the cost of the concerned
institution.
15.The Hon’ble Judges also raised questions that those, who are
willing to purchase by Private negotiations can also bid at the Public
Auction and why would they feel shy or be deterred from bidding at Public
Auction? Why then permit sale by Private negotiations which will not be
visible to the public eye and may even give rise to public suspicion unless
there are special reasons to justify doing so?
16.In the judgment reported in R. Venugopala Naidu and others v.
Venkataryulu Naidu Charitable and others, 1989 Supp (2) SCC 356, the
principles laid down in Chenchu Rami Reddy and another v. Government of
Andhra Pradesh and others, 1986 (3) SCC 391, was reiterated. Therefore,
from the above Hon’ble Supreme Court judgments, the Trust properties are
to be jealously guarded and it cannot be allowed to be sold by Private
negotiations and it must be sold only by Public Auctions.
17.As stated supra, no Public Notice was given seeking public to
quote their price for the properties and Public Notice was given only for
calling for objection for the sale of the properties, without mentioning the
Private negotiations entered into between the Trustees, namely the
Respondents 1 to 3 herein with the Respondents 4 to 9. Therefore, even
assuming that the Respondents 4 to 9 agreed to pay the market price for the
properties, having regard to the conduct of the trustees in entering into a
private negotiation, the Court below ought not to have granted permission to
the respondents 1 to 3 to sell the properties of the trust to the respondents 4
to 9 without conducting public auction.
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18.One another reason for setting aside the order is that even
after two years, the respondents 4 to 9 have not paid the sale consideration
and it is a common knowledge that the properties of land are increasing by
loops and bounds by every day and therefore, the respondents 4 to 9 cannot
be permitted to purchase the properties, after three years by paying interest
on the sale consideration agreed earlier. Therefore, according to me, the sale
can be done only by public auction and therefore, the order of sale by the
Court below through private negotiations is bad in law and it is liable to set
aside and it is hereby set aside.
19.In the result, the revision petition is allowed. Consequently,
connected Miscellaneous Petition is closed. No costs.”
21.Only after the order passed in CRP.(MD) No.398 of 2011, the
plaintiffs have filed the suit in O.S.No.976 of 2013 originally for the relief of
declaration and injunction and subsequently, for declaration, recovery of
possession and injunction by way of amendment. The basis for filing the suit as
seen from the plaint is the order passed in CRP.(MD) No.398 of 2011, wherein it
was held that the private sale is bad in law. On the same footing, the plaintiffs
claim that the lease deed dated 30.03.2007 is also bad in law and is liable to be
declared as void and in-executable.
22.On going through the order passed in CRP.(MD) No.398 of 2011,
this Court finds that there is no discussion about the trustees' right to lease the
property. Even in the order passed in CRP.(MD) No.398 of 2011, the private sale
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is not held altogether void, but it must be conducted by giving wide publicity to
the public, inviting offers from the public and through public auction. “Only the
secret seated negotiation between the trustees and the private individuals was
deprecated. It was found that though public notice was issued, it was issued only
for the purpose of calling for objections for the sale of property. It was not
mentioned that the properties are to be sold to particular prospective purchasers.
There is also no mention that if any objection is raised, they can approach the
Court. The publication was issued only for calling for objections for the sale of the
trust properties and therefore, the publication cannot justify the sale of the
property. The other reason for setting aside the order passed in Trust O.P.No.2 of
2009 is that the prospective purchasers had not paid the sale consideration even
after 2 years of passing the order. Finally, it was held that the sale can be done by
public auction and private negotiation was bad in law in the facts and
circumstances of the case and was set aside”. It is evident from Section 37 of the
Indian Trust Act, 1882, that the trustee is empowered to sell any trust property by
public auction or private contract. For the better understanding, Section 37 of the
Indian Trust Act, 1882, is extracted hereunder:-
“37.Power to sell in lots and either by public auction or private
contract.—Where the trustee is empowered to sell any trust property, he may
sell the same subject to prior charges or not, and either together or in lots,
by public auction or private contract, and either at one time or at several
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times, unless the instrument of trust otherwise directs.”
23.Coming to lease of the trust property, Section 36 of the Indian Trust
Act, 1882, deals with general authority of trustee. It reads as follows:
“36. General authority of trustee.—In addition to the powers
expressly conferred by this Act and by the instrument of trust, and subject to
the restrictions, if any, contained in such instrument, and to the provisions of
section 17, a trustee may do all acts which are reasonable and proper for the
realisation, protection or benefit of the trust property, and for the protection
or support of a beneficiary who is not competent to contract. Except with the
permission of a principal Civil Court of original jurisdiction, no trustee shall
lease trust property for a term exceeding twenty-one years from the date of
executing the lease, nor without reserving the best yearly rent that can be
reasonably obtained.”
24.As per this Section, a trustee may do all acts, which are reasonable
and proper for the realisation, protection or benefit of the trust-property and for
the protection or support of a beneficiary, who is not competent to contract.
However, the trustee cannot lease out the trust property for a term exceeding 21
years from the date of executing the lease, nor without reserving the best yearly
rent that can be reasonably obtained, except with the permission of the principal
Civil Court of original jurisdiction. It means that the trustees can lease the trust
properties for a term not exceeding 21 years without the permission of Principal
Civil Court of original jurisdiction with reserving the best yearly rent.
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25.It is relevant to extract the commentaries presented before this Court
by the learned counsel for the appellants. It is stated in the commentary to Section
36 that a lease by the trustee of a private trust for term exceeding twenty one years
is not void but voidable at the instance of the cestui que trust. The provision
contained in the second paragraph of this section is intended for the benefit of the
cestui que trust and this is secured better by treating such leases as voidable than
by holding that they are necessarily illegal and void.
26.Neither parties have filed the trust deed. In the absence of production
of trust deed, this Court is not in a position to understand who are the
beneficiaries, but the fact remains that the beneficiaries of the trust ie., Cestui que
trust have not filed the suit. Only the beneficiaries under the trust can say whether
Ex.A1 lease deed is against the interest of beneficiaries or not. In effect, when the
beneficiaries have not challenged Ex.A1 lease deed, it can be considered only as a
voidable lease deed and not void. Definitely the lease is valid for 21 years, if not
for 33 years.
27.It is now required to consider the judgments cited by the learned
counsel appearing on either side. The learned counsel for the appellants relied on
the following judgments:
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“i) The Hon’ble Madras High Court in the case of Vellaya
Konar v. Ramaswami Konar, 1939 SCC OnLine Mad 149 held that
when a person seeks to establish title, which cannot be established
without removing a decree or an instrument to which he himself is a
party, then whatever be the garb in which he dresses his suit, its
substantial character must be suit for the cancellation of the decree or
instrument; but if the establishment of his title is being impeded by the
effect of a transaction between other parties, he cannot legitimately ask
for the cancellation of that transaction but can only ask for a declaration
that so far as he is concerned it is not binding.
ii) The Hon’ble Bombay High Court in the case of Guddappa
Chikkappa Kurbar v. Balaji Ramji Dange, 1941 SCC OnLine Bom 9
held that the Court must never allow itself to be used to assist in the
perpetration of fraud. Where a fraudulent purpose has been effected by a
colourable grant, the maxim in pari delicto potior est conditio
possidentis applies and the Court will help neither party. If, as a result of
such refusal the defendant is left in possession of some advantage
derived from his own fraud, that is not due to any action on the part of
the Court. The law on the subject was summarized as follows:—
I. In all cases of unilateral or bilateral fraud which
has not been successfully effected, either party can repudiate
the fraudulent transaction and can recover or maintain his
possession by proving his real title.
II. In cases where fraud is accomplished—
(1) where only one party acts fraudulently, he
cannot be allowed, either as plaintiff or as defendant,
to plead his fraud, on the principle that no man shall
be heard to plead his own fraud;
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(2) where both parties are equally
fraudulent, the Courts will refuse to enforce the
fraudulent transaction on the principles that where
each party is equal in fault, the law favours him who is
actually in possession, and will give relief to neither,
and that a right of action cannot arise out of fraud,
with the result that—
(a) where the plaintiff seeks relief on the allegation
and on the basis of joint fraud, his suit will be dismissed; and
(b) where he seeks relief by suppressing the fraud, the
defendant can plead and prove the common fraud to defeat the
plaintiff's claim.
Where a plaintiff can make out his title to the
property in dispute on independent evidence, the defendant
should not be allowed to defeat such plaintiff by pleading his
own fraud. Fraud has been allowed to be pleaded by the
defendant only in three class of cases:—
(1) where the fraud has not been carried out,
(2) where the consideration for the agreement is
executory and in a suit by the plaintiff to enforce the
performance of the promise, the defendant resists the
enforcement by pleading common fraud,
(3) where the plaintiff seeks to repudiate any illegal
transaction after it is carried out and seeks to recover back the
money paid under it.
iii) The Hon’ble Madras High Court in Kadir Ibrahim
Rowther And Ors. vs Arunachellam Chettiar And Ors, 4 Ind Cas 1082
held that Section 36 of the Indian Trusts Act was intended for the benefit
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of the cestui que trust (beneficiary of the trust). Thus leases should not be
treated as void for being malum prohibitum (prohibited by statute) and
illegal per se,but voidable at the instance of the cestui que trust.
iv) The Hon’ble Supreme Court in Rajpal Singh v. Saroj, 2022
SCC OnLine SC 638 held that the suit seeking cancellation of the sale
deed was required to be filed within a period of three years from the date
of the knowledge of the sale deed. Further, when a composite suit is filed
for cancellation of the sale deed as well as for recovery of the possession,
the limitation period required to be considered with respect to the
substantive relief of cancellation of the sale deed, would also be three
years from the date of the knowledge of the sale deed sought to be
cancelled.”
28.The learned counsel for the respondents relied on the following
judgments:
“i) The Hon’ble Madras High Court in the case of Jami
Appanna v. Jami Venkatppadu, 1952 SCC OnLine Mad 318 dealt in
detail, Article 91 of the Indian Limitation Act. The Court held that, Art.
91 applies only to voidable instruments and has no application when the
instrument sought to be cancelled is void ab initio and inoperative.
When a person executes a deed of one character under a
misrepresentation that it is of a different character, it is void. To such
instruments, the period of limitation applicable is under Art. 144. If in
such a suit there is a prayer for cancellation of the instrument, it can
only be regarded as ancillary to the substantive prayer for possession
and can be treated as mere surplusage.
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ii) The Hon’ble Supreme Court in Kewal Krishan V. Rajesh
Kumar & Ors. Etc, Livelaw 2021 SC 670 has held that a sale of an
immovable property has to be for a price. The price may be payable in
future or partly paid and the remaining payable in future. The payment
of price is an essential part of a sale covered by section 54 of the
Transfer of Property Act. If a sale deed in respect of an immovable
property is executed without payment of price and if it does not provide
for the payment of price at a future date, it is not a sale at all in the eyes
of law. It is of no legal effect. Therefore, such a sale will be void. It will
not effect the transfer of the immovable property.
iii) The Hon’ble Madras High Court in the case of A.R.
Rengaraj and Ors. vs. Aranamanai Raman Chettiar Chathiram and
Ors. MANU/TN/1700/2018 held that the trust and its properties are to
be protected in order to carry out the objectives, in its original spirit
and by following the terms and conditions stipulated in the original
trust deed. The paramount importance is to protect the noble ideas set
out by great souls, who constituted the public trust. If those ideas are
diluted, discarded or destroyed, then the Court cannot shut it eyes and it
is for the Courts to oversee such deeds are properly implemented in its
original sense. In respect of a public trust concerned, who all are having
concern over the public trust are to be treated as necessary parties and
public in general are the relevant parties for the purpose of protection
of the trust properties.
Under these circumstances, the point of limitation, the point
of consent and the point of filing of a fresh suit, all stand on the
technical grounds. If all these grounds are accepted, then would amount
destroying the soul and spirit of the public Trust. If such technical
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grounds are raised, then this Court is of an apprehension that the
persons may connive with each other and commit misappropriations
and other illegalities. The intention of the Legislators are unambiguous
that in all respects, the properties of the public trust are to be protected
without any compromise.
iv) The Hon’ble Madras High Court in the case of Kaka
Hajee Md Ishaque Sahib v. Kaka Md. Saddiq Sahib, 1969 SCC
OnLine Mad 81 dealt with law on cancellation of instruments. The
court observed that, normally a transaction will bind a person if he or
persons under whom he derives title are co nomine parties to the same
and must be set aside before any relief is claimed thereunder. This,
however, is subject to two important exceptions:
(1) Where the transaction is only a sham and nominal one, not intended
to be given effect to; and
(2) Where the transaction is void in law.
It necessarily follows that,
(1) transactions to which a person or persons under whom the said
person derive title are not eo nomine parties;
(2) transactions which are challenged as sham and nominal and
(3) transactions which are void ab initio are not legally binding in
character need not be cancelled and set aside, before any claim is made
thereunder. The reason is fairly obvious.
In the first group of cases, there can be no difficulty, as it is an
elementary principle of law that transactions to which a person or
persons under whom the said person derives title are not parties cannot
bind them. In the case of sham and nominal or void transactions
comprised in the second and third group of cases, title has not passed to
the transferees. Prayer for setting aside such transactions will be
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superfluous and the plaintiff will be entitled to ignore them altogether.
The case is otherwise in respect of voidable transactions and benami
transactions. In such cases the law will uphold the ostensible title
conferred by those instruments; and the said title will prevail until the
transactions are challenged with success by seeking appropriate reliefs
declaratory or other wise in court of law.
v) The Hon’ble Supreme Court in the case of Nanjappan v.
Ramasamy, (2015) 14 SCC 341 held that as per Section 92 of the
Evidence Act, when the terms of any such contract have been reduced to
the form of a document, no evidence of any oral agreement or statement
shall be admitted as between the parties to any such instrument for the
purpose of contradicting, varying, adding to or subtracting from, its
terms. The courts have recorded concurrent findings rejecting the stand
of the appellant that the actual sale price was rupees three lakhs and for
the purpose of stamp duty and registration charges, lesser amount was
written and this is well in accordance with Section 92 of the Evidence
Act and we do not find any reason warranting interference in the said
concurrent findings of the courts below.”
29.In the case before hand, the plaintiffs have received the entire lease
amount for 33 years. The lease deed reads that the defendants were given
permission for demolishing the old building for the construction of new building
after obtaining necessary permission from Madurai Corporation for getting water
connection, telephone connection, etc in the name of the defendants. The
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defendants were also given permission for leasing out the property. The only right
reserved in respect of the improvements made in the suit property is that the
plaintiffs can purchase the building after the lease period. It is seen from the
evidence that the defendants have constructed a new building in the suit property.
This is specifically referred in Ex.A11, reply notice.
30.Ex.B1 shows that the first defendant has given a complaint against
the plaintiffs for making him to enter into the lease deed claiming that the trust
property as their own property. On the basis of the complaint, FIR in Crime No.
423 of 2016 was registered against the plaintiffs for the offences under Sections
406 and 420 of I.P.C. Claiming that the trust property as their individual property
and executing the lease deed, no doubt is an illegal act of cheating. It appears that
the plaintiffs' motive is to earn money by using the trust properties. Initially they
wanted to sell the trust property without following proper procedures. They filed
Trust O.P.No.2 of 2009 in the capacity as trustees. They filed the suit as trustees of
Thirupparankundram Arumuga Nainar Trust. Therefore, it is patently clear that the
plaintiffs in order to cheat the defendants have deliberately omitted the inclusion
of the trust in Ex.A1, lease deed. From the oral and documentary evidence
available, it can only be concluded that the plaintiffs have executed Ex.A1, lease
deed in favour of the defendants in their capacity as trustees of
Thirupparankundram Arumuga Nainar Trust. As already stated, the lease deed
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cannot be considered as void, but can be considered only as voidable lease deed.
Definitely the lease deed is valid for 21 years, even without permission from the
principal Civil Court of original jurisdiction. There is no pleading or evidence that
the lease amount of Rs.30,000/- fixed per year is not the best yearly rent.
Therefore, it can be concluded that Rs.30,000/- fixed as lease amount per year is
the best yearly rent.
31.In the judgment relied upon by the learned counsel appearing for the
appellant reported in 1941 SCC Online Bom 9 (referred supra) it was held that
when one party acts fraudulently, he cannot be allowed, either as plaintiff or as
defendant, to plead his fraud, on the principle that no man shall be heard to plead
his own fraud. It is not in dispute that the respondents/plaintiffs have deliberately
shown the trust properties as their individual properties and entered into the lease
deed. Therefore, they cannot justify the fraud to claim the relief. The judgment
reported in 4 Ind Cas 1082 (referred supra) shows that Section 36 of the Indian
Trusts Act is intended for the benefit of the Cestui que trust and the leases should
not be treated as void for being malum prohibitum and illegal per se, but voidable
at the instance of the cestui que trust. In the judgment reported in 2022 SCC
Online SC 638 (referred supra), it was held that when a composite suit is filed for
cancellation of sale deed and recovery of possession, the limitation period is
required to be considered with respect to the substantive relief of cancellation of
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the sale deed. In the case before hand, the substantive relief is cancellation of the
lease deed and therefore, the suit should have been filed within a period of three
years. It was held that the lease deed dated 30.03.2007 between the appellants and
the respondents is not a void deed, but only a voidable document and therefore,
the judgment relied upon by the learned counsel for the respondents reported in
1952 SCC Online Mad 318 (referred supra) is not applicable to the facts and
circumstances of the case. In the light of the discussions held above, the other
judgments relied upon by the learned counsel for the respondents are also not
applicable to the facts and circumstances of the case.
32.In view of the discussions held above, this Court finds that Ex.A1,
lease deed is valid only for 21 years and not for 33 years. With regard to
limitation, this Court finds substance in the submissions of the learned counsel for
the appellants. The principal prayer in this case is for declaring that the registered
lease deed dated 30.03.2007 as null and void, in-executable and in-operative
under law. The limitation for filing the suit is covered under Article 59. The period
of limitation is 3 years from the date of accrual of right. When the plaintiffs claim
that Ex.A1 lease deed is a void document, the suit should have been filed within
three years from the date of execution of the lease deed on 30.03.2007. That is not
the case here. The suit was filed only in the year 2013 and therefore, the main
prayer seeking declaration that the lease deed 30.03.2007 as null and void is
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barred by limitation. When the main prayer is barred by limitation, the
consequential prayer for recovery of possession cannot be maintained. The Courts
below have not considered these aspects. They proceeded to decree the suit on the
basis of the order passed in CRP.(MD) No.398 of 2011.
33.As already held, the order passed in CRP.(MD) No.398 of 2011
relates to attempted sale through private negotiation without following necessary
procedures. That is not the case here. The lease for a period of 21 years is
permissible under Section 36 of the Trust Act. Therefore, this Court is of the view
that the Courts below have not considered the issues involved in proper
perspective and wrongly decreed the suit and accordingly, the same are liable to
be set aside.
34.In view of the foregoing discussions and observations, this Court
answers the substantial questions of law as follows:
Insofar as the substantial questions of law Nos.1 and 2 are concerned,
the suit filed for the relief of declaration for declaring the registered lease deed
dated 30.03.2007 as null and void is barred by limitation.
Insofar as the substantial questions of law Nos.3 and 4 are concerned,
the lower appellate Court was not right in applying Article 65 of the Limitation
Act to hold that the suit was filed within the time.
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35.In the result, this Second Appeal is allowed. The judgment of the
Courts below in A.S.No.35 of 2021 on the file of the II Additional Subordinate
Judge, Madurai Town, dated 11.07.2023 and in O.S.No.976 of 2013 on the file of
the Additional District Munsif, Madurai Town, dated 29.04.2021, are set aside and
the suit in O.S.No.976 of 2013 is dismissed. The parties are directed to bear their
own costs. Consequently, connected Miscellaneous Petition is closed.
Speaking : Yes / No 22.12.2023
NCC : Yes / No
Internet : Yes / No
Index : Yes / No
mm
To
1.The II Additional Subordinate Judge,
Madurai.
2.The Additional District Munsif,
Madurai.
3.The Section Officer (2 Copies),
V.R.Section,
Madurai Bench of Madras High Court, Madurai.
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G.CHANDRASEKHARAN, J.
mm
Judgment made in
22.12.2023
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