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WHETHER A COMPANY CAN BECOME TRUSTEE OF THE TRUST - YES SAYS MADRAS HIGH COURT JUSTICE N.V. BALASUBRAMANIAN

THIS IS THE OBSERVATIONS OF MADRAS HIGH COURT BY JUSTICE N.V. Balasubramanian, in the case of B. Ramachandra Adityan vs Educational Trustee Co. (P.) Ltd. citation - 2003 113 Comp Cas 334 Mad,


Section 25 deals with charitable companies and licence from the Central Government is necessary so that company can be formed for promoting commerce, art, science, religion, charity or any other useful objects with no profit motive in mind.

Section 11 of the Companies Act in all cases, the company must carry on some trading or commercial activity and the object of the company must be to earn income. In the case of a company which is formed to act as trustee, such company must also carry on the activity for profit and unless there is an activity for profit, it would be of no benefit either to the company or to the shareholders who have invested money to the company.

Section 32 of the Trust Act which prohibits the receipt of any personal benefit to the trustees from the trust. Section 32 of the Indian Trusts Act, 1882 also provides that the trustee is entitled to get reimbursement out of the trust property all expenses properly incurred in relation to the execution of the trust property and for preservation of the trust property.

It is well settled that the company can be a trustee. The following observation made in Halsbury's Law of England, Volume VI, paragraph-20 (III Edn. Volume-4), the learned author, at page 394 clearly shows that the company can be a trustee. "As charitable corporations exist solely for the accomplishment of charitable purposes, they are necessarily trustees of their corporate properly, whether the beneficiaries are members of the corporation, as in the case of hospitals and colleges, or not. Accordingly, like other trustees, charitable or otherwise, they are subject to the jurisdiction of the Court. Though called directors and empowered to make and amend bye-laws for the corporation, apart from any provision in the constitution of the corporation, they have no right to remuneration and cannot amend the byelaws to permit remuneration to be paid to themselves."

In Palmer's Company Precedents, while dealing with the topic, 'Trust Company', learned author has observed that a company can be a trustee in the following words : "To undertake the office of and act as trustee, executor, administrator, manager, agent or attorney of or for any person or persons, company, corporation, government, state, colony, province, dominion sovereign, or authority, supreme, municipal, local or otherwise, and generally to undertake, perform and discharge any trusts, or trust agency business, and any office of confidence."

In Section 6 of the Banking Regulation Act, 1949, a banking company can be a trustee and it can act for the administration of estates as an executor, trustee or otherwise and Section 6 provides that the banking company can act as a trustee in several manners as indicated in Section 6(1)(j).

In the Indian Trusts Act by N. Suryanarayana Iyer, learned author has observed as under:--"Formerly the notion was that the relationship of a trustee being one of confidence involving a personal element, a corporation could not be a trustee as there could not be a question of confidence being reposed in a corporation and therefore that it could not be a trustee. This notion, however, has long ago been given up. Corporate bodies have been held to be amenable to the jurisdiction in Chancery and compellablc to carry out the intentions of the settlor of property which has been vested in them.... Under the Indian law also a corporation, whether aggregate or sole, can be a trustee and there is ample jurisdiction in the court to enforce the performance of its duty by such trustee."

Section 12 of the Companies Act deals with the mode of formation of incorporated companies and under Section 12, any seven or more persons or where the company to be formed will be a private company, any two or more persons, associated for any lawful purpose, by subscribing their names to a memorandum, may form an incorporated company with or without limited liability. The company so formed may be limited by shares or limited by guarantee. Section 13 deals with the requirements with respect to memorandum and the company has to set out its main objects to be pursued by the company on its incorporation and the objects incidental or ancillary to the attainment of the main objects. Section 11(2) of the Companies Act provides that no company or association or partnership consisting of more than twenty persons shall be formed for the purpose of carrying on any business that has for its object the acquisition of gain by the company, etc. unless it is registered as a company under the Companies Act or is formed in pursuance of some other Indian Law. Section 11(1) deals with the case of a banking company, while Section 11(2) deals with cases other than banking companies. From these two provisions, it cannot be said that a company must always be formed to carry on a business venture with a view to make profit. If such an interpretation is given, then the trustee companies will have no place of existence at all in the Companies Act.


The concept of trust is a peculiar concept. Therefore, the word, 'business' found in Section 11(2) of the Companies Act is to be construed to mean any useful activity and it is not necessary to confine it to commercial activity for profit. The charitable companies are not formed or not intended for commercial activities.



LAND ACQUISITION BY HOUSING SOCIETIES THROUGH ILLEGAL CONTRACTS CANNOT BE LEGALISED 2012 SC

READ FULL JUDGMENT
Justice G.S. Singhvi, and Justice Asok Kumar Ganguly in the case of Bangalore City Cooperative Housing Society Ltd vs State Of Karnataka Decided on 02-02-2012 Discussed following case law on the subject of land acquisition in favour of Housing Societies. In this case also the Estate Agent, namely, M/s. Rejendra Enterprises with whom the appellant had entered into an agreement dated 21.2.1988 had played crucial role in the acquisition of land. The tenor of that agreement does not leave any manner of doubt that the Estate Agent has charged huge money from the appellant for getting the notifications issued under Sections 4(1) and 6(1) of the 1894 Act and sanction of layout plan by the BDA. The respondents could not have produced any direct evidence that the Estate Agent had paid money for facilitating the acquisition of land but it is not too difficult for any person of reasonable prudence to presume that the appellant had parted with crores of rupees knowing fully well that a substantial portion thereof will be used by the Estate Agent for manipulating the State apparatus. Therefore, we do not find any justification to invoke the doctrine of prospective overruling and legitimize what has been found by the Division Bench of the High Court to be ex-facie illegal. In Narayana Reddy v. State of Karnataka ILR 1991 (3) KAR 2248, the Division Bench of the High Court considered whether the acquisition of land made on behalf of 7 house building cooperative societies including H.M.T. Employees' Cooperative Society and Vyalikaval House Building Cooperative Society was for a public purpose as defined in Section 3(f)(vi) or the same was colourable exercise of power by the State Government. A reading of the judgment shows that when the writ petitions questioning the acquisition of land were placed before the learned Single Judge, he felt that the points which were raised by the petitioners had not been considered in the earlier judgment of the Division Bench in Narayana Raju v. State of Karnataka ILR 1989 KAR 376, which was confirmed by this Court in Narayana Raju v. State of Karnataka ILR 1989 KAR 406 and referred the matter to the Division Bench under Section 9 of the Karnataka High Court Act. The Division Bench first considered whether the acquisition of land on behalf of house building cooperative societies was for a public purpose. After noticing the relevant statutory provisions, the Division Bench referred to the judgments of this Court in State of Gujarat v. Chaturbhai Narsibhai AIR 1975 SC 629, General Government Servants Cooperative Housing Society Limited v. Kedar Nath (1981) 2 SCC 352 and M/s. Fomento Resorts and Hotels Limited v. Gustavo Ranato Da Cruz Pinto AIR 1985 SC 736 and held that the earlier decisions support the writ petitioners' plea that they were entitled to be heard before the Government could grant approval for the acquisition of land on behalf of cooperative societies, but their plea cannot be accepted in view of the latter judgment. The Division Bench further held that the aggrieved person can raise all points during the course of an inquiry held under Section 5A of the 1894 Act. The Division Bench then referred to the averments contained in Writ Petition Nos.7683, 7699/1988 in which the acquisition of land for various House Building Cooperative Societies was challenged, the advertisement issued by the society, agreement entered into between HMT Cooperative Society and the Estate Agent who assured that he will get the acquisition approved at an early date subject to payment of the specified amount, various reports including the one prepared by G.V.K.Rao, order dated 14.1.1991 passed by the State Government and quashed the acquisition. ………. The Division Bench of the High Court held that the whole acquisition was vitiated due to malafides and manipulations done by the House Building Cooperative Societies through the Estate Agent. The Division Bench also referred to Section 23 of the Contract Act, judgment of Supreme Court in Rattan Chand Hira Chand v. Askar Nawaz Jung JT 1991 (1) SC 433 and held as under: “Applying the ratio of the above judgment, there can be no doubt that the Agreements entered into between the six respondent- Societies and their respective agents in which one of the condition was payment of huge sums of money by the Society to the agent in consideration of which the agent had to get the Preliminary and Final Notifications issued by the Government, was for the purpose of influencing the Government and to secure approval for acquisition of the lands and therefore opposed to public policy.” ……. The question however, for our consideration is, whether the impugned Notifications are liable to be quashed. In our opinion, once it is clear that the Agreement entered into between the Societies and the agents concerned, under which the purport of one of the clauses was that the agent should influence the Government and to procure Preliminary and Final Notifications under Sections 4 and 6 of the Act respectively are opposed to public policy, the impugned Notifications being the product or fruits of such an agreement are injurious to public interest and detrimental to purity of administration and therefore cannot be allowed to stand. ………… The irresistible inference flowing from the facts and circumstances of these cases is, whereas the power conferred under the Land Acquisition Act is for acquiring lands for carrying out housing scheme by a housing society, in each of the cases the acquisition of lands is not for a bona fide Housing Scheme but is substantially for the purpose of enabling the concerned office bearers of respondent-Societies and their agents to indulge in sale of sites in the guise of allotment of sites to the Members/Associate Members of the Society and to make money as alleged by the petitioners and therefore it is a clear case of colourable exercise of power. Thus the decision of the Government to acquire the lands suffers from legal mala fides and therefore the impugned Notifications are liable to be struck down. ……….. If requirement of Section 3(f)(vi) is not strictly enforced, every housing cooperative society shall approach the appropriate Government for acquisition by applying Section 3(f) (vi) instead of pursuing the acquisition under Part VII of the Act which has become more rigorous and restrictive. In this background, it has to be held that the prior approval, required by Section 3(f)(vi), of the appropriate Government is not just a formality; it is a condition precedent to the exercise of the power of acquisition by the appropriate Government for a housing scheme of a cooperative society.

LAND ACQUISITION CASE LAW DIGEST

Land Acquisition Case Law Digest Collections

ACQUISITION OF LANDS FOR LYING GAS PIPELINE DISTRICT COURT HAS JURISDICTION TO DETERMINE APPROPRIATE COMPENASATION

MANUAL OF LAW REGARDING THE SUBJECT
Filing the application for enhanced compensation under Section 10(2) of the Petroleum and Minerals, Pipelines (Acquisition of Right of User in Land) Act, 1962, (hereinafter referred to as 'the Act'). The Act provides for the acquisition of right of use of the land for laying pipelines for transport of petroleum and minerals and for matters connected therewith. As per the provisions of the Act, the owners of the land are entitled to compensation for the damages caused to the land. This is to be determined by the competent authority under the Act.

The owners of the land were not satisfied with the order passed by the competent authority. They have approached the District Court by challenging the order passed by the competent authority, Section 10(2) of the Act says thus: "If the amount of compensation determined by the competent authority under Sub-Section (1) is not acceptable to either of the parties, the amount of compensation shall, on application by either of the parties to the District Judge within the limits of whose jurisdiction the land or any part thereof is situated, be determined by that District Judge".

Section 17 of the Act provides for framing of Rules by the Central Government. Accordingly, Rules have been framed as the Petroleum and Minerals, Pipelines (Acquisition of Right of User in Land) Rules, 1963. Rule 4 of the above Rules says that any person interested in any land may file before the competent authority a claim for compensation within 60 days of the date of publication of the declaration under Section 6(1). There is a proviso stating that the competent authority may admit any claim within thirty days after the expiry of the period specified in this sub-rule, if he is satisfied that the applicant had sufficient cause for not making the application within such specified periods. Rule 5 deals with the application to the District Judge for determination for compensation. It says that any party aggrieved by the determination of the amount of compensation may prefer an application to the District Judge within the limits of whose jurisdiction the land or any part thereof is situated, not later than ninety days of the receipt of the intimation from the competent authority under Rule 4(3).

In Mangu Ram v. Delhi Municipality, AIR 1976 SC 105, the Supreme Court held as follows: "There is an important departure made by the Limitation Act, 1963 in so far as the provision contained in Section 29, Sub-section (2) is concerned. Since under the Limitation Act, 1963, Section 5 is specifically made applicable by Section 29, Sub-section (2), it can be availed of for the purpose of extending the period of limitation prescribed by a special or local law if the applicant can show that he had sufficient cause for not presenting the application within the period of limitation".
In Mukri Gopalan v. C.P. Aboobacker, AIR 1995 Supreme Court 2272, the Supreme Court held as follows: "When the first schedule of the Limitation Act prescribes no time limit for a particular appeal, but the special law prescribes a time limit for it, it can be said that under the first schedule of the Limitation Act all appeals can be filed at any time, but the special law by limiting it provides for a different period. While the former permits the filing of an appeal at any time, the latter limits it to be filed within the prescribed period. It is therefore, different from that prescribed in the former and thus Section 29(2) would apply even to a case where a difference between the special law and Limitation Act arose by the omission to provide for limitation to a particular proceeding under the Limitation Act. Once the two conditions namely (i) There must be a provision for period of limitation under any special or local law in connection with any suit, appeal or application, (ii) The said prescription of period of limitation under such special or local law should be different from the period prescribed by the schedule to the Limitation Act are satisfied Section 29(2) on its own force will get attracted to appeals filed before Appellate Authority under Section 18 of the Rent Act. When Section 29(2) applies to appeals under Section 18 of the Rent Act, for computing the period of limitation prescribed for appeals under that Section, all the provisions of Sections 4 to 24 of the Limitation Act would apply. Section 5 being one of them would therefore get attracted. It is also obvious that there is no express exclusion anywhere in the Rent Act taking out the applicability of Section 5 of the Limitation Act to appeals filed before Appellate Authority under Section 18 of the Act. Consequently, all the legal requirements for applicability of Section 5 of the Limitation Act to such appeals in the light of Section 29(2) of Limitation Act can be said to have been satisfied".
In the said act and rules since there is no express exclusion of the Limitation Act, Section 5 of the Limitation Act can be applied.

The above guidelines is from JUSTICE S Sankarasubban OF KERAL HIGH COURT in Petronet Cck Ltd. vs Vijayan Decided on 18 January, 2005

THE TECHNICALITY OF LAW CANNOT BE OVERLOOKED IN CASE OF WILL ATTESTATION AND ITS PROOF. 2001 SC

FULL JUDGMENT
N. KAMALAM (DEAD) AND ANOTHER vs AYYASAMY AND ANOTHER, ILR 2002 KAR 4273. The relevant paragraphs-28 and 32 read as under: "Para 28 : It is on this count that the learned Advocate in support of the appeal very strongly contended that there is existing a responsibility on to the law Courts to deal with the matter having due regard to the concept of justice. Technicalities. It has been contended there may be many - but would that sub-serve the ends of justice; one needs to ponder over the same. Justice oriented approach cannot be decried in the present day society as opposed to strict rigours of law; Law Courts existence is dependant upon the present day social approach and thus cannot and ought not to be administered on sheer technicalities. The discussion of the law as above, definitely make us ponder over the legal aspects once more since the tenor of the observations contained therein obviously looked into being in favour of the technicality rather a justice oriented approach and in that perspective let us now have review of the whole situation on the factual context. Masaney Gowder executed a Will said to have been written by one Arunachalam and attested by Subbaiah and Govindaraju. The two attesting witnesses were not called to give evidence against them - why it has not been done? The explanation has been that both the attesting witnesses were inimical towards appellants and as such there was a refusal on their part to come to Court and prove the document - how far however the same is an acceptable evidence; We Will have to examine; but before so doing the factum of non-availability of the attesting witnesses cannot be discarded and if so, what would be its consequences. The application for additional evidence as dealt with herein before, was made after a lapse of about 10 years after the appeal was filed and the learned judges though it fit to reject such a prayer and we also do lend out concurrence thereof without taking any exception - but then what is the effect? we have thus existing on record a document said to be a Will of one Masaney gowder whose signatures stand accepted and two attesting witnesses though named in the body of the document were not made available but the writer of the will or the scribe came forward and deposed as to the state of affairs on the date of signing of the will, it would be convenient thus to note the evidence of the scribe and see for ourselves as to whether even a justice oriented approach would be able to save the will in the absence of the attesting witnesses. Arunachalam stated in his examination in Chief as below: "I have written Ex.A.1 `THE WILL', I have written the WILL EX. A1 for the Sake of Masane Gowder. The said Masane Gowder has been introduced to me by the Advocate G.M. Nathan who was formerly have. During the execution of the WILL, Advocate G.M. Nathan was residing at Thomas Street.At that time Masane Gowder was residing at the same place after one house of Advocate's home. Before the preparation of the `WILL' I had been to his house and discussed with him about the details and he has stated the details. At that time Masane Gowder Mental and Physical status were found good. After writing the Ex.A.1 the Will, I have read out the same to him, and he had stated that all were correct. Then in my presence Masane Gowder had affixed his thumb impression in each page. The affixing of thumb impression by Masane Gowder in Ex.A1 WILL had been witnessed by attestor Subbaiah,Govindaraju and myself.The signing of signature for witness by us, was eye witnessed by Masane Gowder. After the Ex.A1 Will had been prepared and signed I handed over the `WILL' to Masane Gowder". Para - 32 : While it is true that Arunachalam, in the facts of the matter under consideration did write the Will and has also signed it but it is of utmost requirement that the document ought to be signed by the witnesses in order to have the statutory requirement fulfilled. Arunachalam has signed the document as a scribe not as a witness, if there were no signatures available as witness, probably we would have to specifically deal with such a situation and to consider that aspect of the matter but presently in the facts situation of the matter under consideration, we have the advantage of two attesting witnesses, none of whom have been examined and the factum of their non-availability also does not satisfactorily been proved. The requirement of the statute when Arunachalam himself has specifically identified himself as Writer and not as a witness though in his evidence, he tried to improve the situation, but this improvement however, cannot said to be accepted. The Will thus fails to have its full impact and its effect stands out to be non est."

RAJAMMAL vs CHINNATHAL, AIR 1976 MADRAS, AIR 1976 MADRAS 4. In this case it was held that once the execution of the Will is denied by the alleged executant the document cannot be admitted in evidence, unless one attesting witness atleast has been called for proving the execution of the document, if alive, and subject to the process of the Court. In that case there was no evidence to show that the attesting witnesses were not alive and none of them were examined. Therefore, the requirement of Section 68 of the Indian Evidence Act has not been complied with and as such the Will could not be used in evidence.

CASE LAW ON LAND LAWS

KARNATAKA LAND LAWS