Amareswari, J.@mdashThe first two Civil Revision Petitions namely, C.R.P. Nos. 2793 and 1703 of 1984are filed against the order, dt. 7-4-1984 passed by the learned Chief Judge, City Civil Court, Hyderabad dismissing O.P. No. 30 of 1984 filed u/s 34 of the Indian Trusts Act requesting the said Court for its opinion and advice on the question whether the trust can be dissolved in the manner suggested by the trustees and the beneficiaries under the trust. C.R.P. No. 1703 of 1984 is filed by the beneficiaries and C.R.P. No. 2793 of 1984 is filed by the trustees.
2. The other five C.R.Ps. are filed by third parties against the order of the learned Chief Judge, City Civil Court, Hyderabad dismissing their petitions filed under Order 1, Rule 10 C.P.C. to implead them as parties in O.P. No. 30 of 1984.
3. The material facts giving rise to the above Civil Revision Petitions are as follows : --
The late H. E. H. Nizam Nawab Mir Osman Ali Khan Bahadur created a trust called H.E.H. the Nizam''s Miscellaneous Trust for the benfit of his family members by an indenture of trust dated : 6-8-1950. Under the said trust, the settlor constituted himself and two others Nawab Zamin Yar Jung Bahadur and Shava Ardeshirlal as trustees. The Nizam, Nawab Mir Osman Ali Khan and Nawab Zain Yar Jung Bahadur have since died and the other trustee Shava Ardeshirlal had retired from the trust. Ever since trustees have been appointed from time to time and the five petitioners in C.R.P. No. 2793 of 1984 are the trustees at the time when this petition was filed. The trust was created for the benefit of certain named persons who are all members of the Nizam''s family. The present corpus of the trust is : --
(i) Fixed Deposits with Banks Rs. 1,63,85,200/-; (ii) Compulsory Deposit Rs. 6,25,098/-; (iii) Cash at Bank Rs. 64,097/-(iv) Short term deposit Rs. 10,000/- and (v) Immovable to property of a building known as Parade Villa. The objects of the trust are mentioned in Clause (2) of the Trust deed. Most of the objects have been fulfilled. The trust now remaining to be administered to make payments of monthly allowances ranging from Rs. 50/- to Rs. 450/-. to each of the beneficiaries during their lifetime. Clause (4) with which we are very much concerned provides that the trust shall cease after the expiry of 50 years from the date of the trust and any portion or portions of the trust fund in the hands of the trustees shall be handed over to the then successor in tide of the Nizam and if there is no person holding the title of Nizam to the oldest male member in the male line of the settlor according to the rule of Primogeniture.
4. While matters stood thus, the beneficiaries made a representation to the trustees that the amount of Rs. 50/- to Rs. 450/- towards monthly allowances which is being paid to them is inadequate and the payment towards taxes are exhorbitant and almost equal if not greater to the benefits provided to them and that they are facing great financial hardship. They requested the trustees to distribute the entire corpus of the trust amongst the beneficiaries and the ultimate beneficiary in the proportion of 70; 30 in the cash balance and investments and the immovable property, Parade Villa to be transferred and handed over to the ultimate beneficiary. The H.E.H. Nawab Mir Barkat Ali Khan who is the present title holder and who is the ultimate beneficiary as the things stand at present also agreed for the breaking up of the trust and distribution of the corpus-between him and the other beneficiaries in the manner suggested by them. At a meeting held on 12-1-1983 the trustees considered the request of the beneficiaries and also a letter dated 23-1-1983 of the ultimate beneficiary agreeing to the proposal. They opined that it was advantageous to everyone concerned to dissolve the trust and divide the corpus between the immediate beneficiaries and the ultimate beneficiary in the ratio of 70.30 and make lump sum payments to the beneficiaries in the proportion of their monthly allowances subject to the advice and direction of the Court. Hence they filed O. P. No. 30 of 1984 u/s 34 of the Indian Trusts Act in the Court of the Chief Judge, City Civil Court, Hyderabad for its opinion and advice. The assets as on the date of filing of the petition and the expenditure including the payments to the beneficiaries every month in terms of Clause 2(1) of the trust deed have been mentioned in Schedules I and II attached to the petition. The wealth-tax payments for three years prior to the filing of the petition are furnished in Schedule III.
5. All the beneficiaries under the trust deed filed a common counter stating that it is in the best interests of all concerned to dissolve the trust and provide for lump sum payments in proportion of their monthly allowances. The first respondent H.E.H. Nawab Mir Barkat Ali Khan (Prince Mukrram Jah) who is the present title holder also filed a counter supporting the arrangement pleaded by the other beneficiaries.
6. The learned Chief Judge, City Civil Court, Hyderabad, however, dismissed the petition mainly on the ground that the settlor''s main intention was to provide some monthly allowances to the beneficiaries for their sustenance and if the beneficiaries are allowed to take their share in the corpus of the trust as proposed, there would not be any guarantee that the amounts received by them will be utilised for their daily food and that they may squander away the money and they being "in streets" with bowls for food cannot be ruled out and that it will defeat the intention of the settlor and create a class of relations of Nizam-VII who will be on the streets.
7. Aggrieved by the said order, the trustees as well as the beneficiaries have filed the above Civil Revision Petitions. They reiterated the same contentions which they urged before the Court below with reference to the averment made in the petition and the counter.
8. The C.R.Ps. came up for hearing before our learned brother Seetharam Reddy, J. who referred the same to a Division Bench observing that the case involves a question of importance.
9. This is a peculiar litigation. There is no dispute or lis between the parties. This type of litigation may aptly be called friendly actions.
10. Nawab Mir Osman Ali Khan, who created the trust in the instant case died on 24-2-1967. On 27-2-1967 the Government of India issued a certificate recognising Nawab Mir Barkat Ali Khan Bahadur, the first respondent herein as Ruler of Hyderabad in succession to his grand-father with effect from 24-2-1967. The said certificate has been unsuccessfully challenged by the other heirs of old Nizam. It is admitted on all hands that the first respondent herein is the present title holder of the Nizam. Hence he is the ultimate beneficiary under the trust deed which contemplated cessation of the trust in 2000 A.D. and whatever remained of the trust corpus should be handed over to him. Even otherwise, even if there is any dispute as regards the title, the first respondent is undoubtedly the male surviving member of the Nizam''s family as per the law of Primogeniture he being the eldest son of the late Prince of Berar who is the eldest son of Late Nawab Osman Ali Khan. It cannot be gainsaid that it is the first respondent that would been titled to the balance of the corpus in 2000 A.D. when the trust ceases. All the beneficiaries including the ultimate beneficiary thought it would be beneficial to them to dissolve the trust in the manner suggested in the petition. As per the relevant clauses in the trust deed, the beneficiaries are getting monthly allowances ranging from Rs. 50/- to Rs. 450/-. They are to receive this amount only during their lifetime. After their death, there is an end of the matter. Their survivor or heirs are not entitled to a pie. It is on record that all these beneficiaries were getting various amounts under several other trusts. The statement at Page 72 of the material papers shows that they are already subject to heavy Income Tax and wealth-tax and if the amounts under the present trust are included the tax burden is considerably increased as evidenced from Statement ''B'' at Page 74 of the material papers. They stated in their counter as well as at the time of arguments that the addition of this amount results in financial loss and increasing their tax burden. Hence instead of getting these monthly amounts which were only for their lifetime it would help them in a great way if a lum sum amount is paid from out of the corpus. To illustrate, a person getting Rs. 450/- a month equivalent of Rs. 5,400/- per year would under the present arrangement get a sum of Rs. 1,50,000/-. If the amount of Rs. 1,50,000/-is invested in any Bank by way of Fixed Deposit, it will fetch an interest of minimum Rs. 1500/- a month. Therefore, there is no doubt that this arrangement will be conducive to the welfare of the beneficiaries. There is no warrant for the apprehension expressed by the learned Chief Judge that if a lump sum amount is paid they will spend it away in no time and they will be on the streets with begging bowls. Most if not all of them are receiving huge amounts from other trusts. We do not think that there is any factual basis for the apprehension expressed by the learned Chief Judge.
11. So far as the corpus is concerned, it is seen from the particulars furnished at Page 78 of Paper Book that if the trust is continued and administered discharging all the liabilities, there will be a deficit of Rs. 8-77 lakhs for the year ending 31-3-1985. The particulars are as follows : --
Corpus as on 31-3-1980 ... 1,77,42,821-18
Corpus as on 31-3-1981 ... 1,75,85,223-17
Corpus as on 31-3-1982 ... 1,74,11,242-32
Corpus as on 31-3-1983 ... 1,72,96,470-95
Corpus as on 31-3-1984 .. 1,72,04,361-61
Corpus as on 31-3-1985 ... 1,63,48,182-71
Corpus as on 31-3-1986 ... 1,62,48,988-62
Corpus as on 31-3-1987 ... 1,60,58,189-57
From these figures, it is clear that the corpus is slowly getting depleted and from 1980 to 1987 the depletion was more than Rs. 17 lakhs. Hence the present arrangement is also in the interests of the ultimate beneficiary.
12. Now it is to be seen whether this course of action is impermissible in law. Section 11 of the Indian Trusts Act obligated the trustee to fulfil the purpose of the trust according to the directions of the author of the trust given at the time of its creation. But it also empowers modification of the conditions of the trust by the consent of all the beneficiaries being competent to contract and in case a beneficiary is incompetent to contract his consent may be given by the Principal Court of Original Jurisdiction. It further says that the terms of the trust cannot be modified in such a way as to be injurious to the beneficiary. Therefore, Section 11 contemplates modification or variation of the trust, and the trust need not be maintained in the same original form when it was created. Section 56 enables the beneficiary to have the trust specifically executed to the extent of his interest and if all the beneficiaries are of one mind, they may requite the trustee to transfer the trust property to them or to such person as he or they may direct. Section 78 provides that the trust otherwise created than by a will can be revoked by consent of all the beneficiaries who are competent to contract. Lastly, we come to Section 34 under which the present petition is filed which contemplates a petition being filed by a trustee for its opinion and advice in respect of management and administration of the trust property.
13. The above provisions make it abundantly clear that the trust need not be retained in its Original form and it can be varied, modified, revoked or dissolved subject to the conditions mentioned therein namely, that all the beneficiaries who are competent to contract, consent for such procedure. Ina petition u/s 34 seeking its advice the only consideration that would weigh with the Court is whether the arrangement pleaded is beneficial to all parties concerned. It should not result in injury to any of the parties. If these conditions are satisfied, we do not see any reason why the Court should refrain from granting its approval.
This type of actions are not unknown to law and Courts. The question how far the necessary benefits if financial, may be obtained at the expense of revenue, and how far the courts will approve such arrangements principally designed to save tax was considered in several cases.
14. In Chapman v. Chapman (1954) AC 429 decided before the Trusts Variation Act of 1958, Lord Morton of Henryton deprecated the alteration by the Court of settlements for the purpose of avoiding tax, observing that "the way would be open for a most undignified game of chess between the Chancery Division and the legislature". But the same scheme was later approved by the Court under the 1958 Act in Re Champman''s Settlement Trusts (No. 2) (1959) 2 All ER 48 having regard to the fact that any arrangement must be for the benefit of all the beneficiaries and it is perhaps inevitable that some of this benefit must often be given at the expense of the revenue.
15. At Page 514 of Underbill''s Law of Trusts Trustee, Twelfth Edition, Article 68 runs as follows : --
"If there is only one beneficiary, or if there are several (whether entitled concurrently or successively) and they are all of one mind, and he or they are not under any disability (a), the specific performance of the trust may be arrested, and the trust modified or extinguished by him or them without reference to the wishes of the settlor or the trustee."
We think that approval and arrangement is a matter of judicial discretion depending upon the facts of each case. The Court must be satisfied that each beneficiary is getting a substantial advantage. We do not think that there can be any objection for an arrangement when its object is to avoid fiscal burden.
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17. In Re Van Gruisen''s Will Trusts, Bagger v. Dean (1964) 1 WLR 449 it is observed as follows : --
"The Court is concerned whether the arrangement as a whole, in all the circumstances, is such that it is proper to approve it. The court''s concern involves, inter alia, a practical and business like consideration of the arrangement, including the total a mounts of the advantages which the various parties obtain, and their bargaining strength."
18. In an unreported Judgment in C.R.P. No. 3513 of 1982 a single Judge of this Court directed dissolution of the trust known as H.E.H. the Nizam''s Dependants and Khanazads Trust for the reason that the corpus of the trust if invested in better security would yield more income and if the corpus is distributed among the beneficiaries their tax burden would be considerably reduced.
19. In the present case, the petitioners have establised that if the trust is dissolved all the beneficiaries including the ultimate beneficiary namely, the 1st respondent would stand to gain. The beneficiaries other than the first respondent who are now getting a monthly allowance ranging from Rs. 50/- to Rs. 450/- would get a lump sum amount which if invested in other securities would yield more income. This arrangement will reduce the tax burden of the beneficiaries. If the trust is to continue, the corpus would get depleted every year with the result that the ultimate beneficiary who has to receive the remaining corpus in 2000 A.D. stands to disadvantage. We have given our serious thought to this matter and in our considered opinion the arrangement pleaded by the petitioners to dissolve the trust and distribute the corpus in the manner suggested by them is in the best interests of all the beneficiaries and we advise them to do accordingly.
20. We set aside the order of the lower Court and allow C.R.P. Nos. 1703 and 2793 of 1984.
C.R.P. No. 1079 of 1984:-
21. This revision is filed against the order refusing to implead the petitioners herein O.P. No. 30 of 1984. The petitioners are the daughters of one Ghousunnisa Begum, who died in the year 1955. Under Clause 2(G) of the Trust deed, there is no heritable interest and Ghousunnisa Begum was to be paid some allowance during her lifetime. The learned Judge has dismissed the petition holding that she is not a necessary or a proper party as she has no rights under the trust deed. The order passed by the lower Court is perfectly correct. Further, this revision has become infructuous in view of the fact that the main O.P. itself has been disposed of and the petitioners have not filed any application to implead themselves in the C.R.Ps. filed against the order in the main O.P. This C.R.P. is accordingly dismissed.
C.R.P. No. 1083 of 1984
22. In this Civil Revision Petition, the claim of the petitioner is on the basis that her mother had a right in the corpus of the trust by virtue of release deed executed by H.E.H. Nizam. But this assertion has no factual basis. Clause 2(K) of the Trust deed provides that the mother of the petitioner was entitled to a sum of Rs. 1000/- per month towards her maintenance till her death. Even here, the petitioner has no heritable right and her mother died long back and the lower Court rightly dismissed the petition. This C.R.P. has also become infruetuous as the main O.P. itself has been disposed of and there is no application by the petitioner to implead herself in the C.R.Ps. filed against the decision in the main O.P. The C.R.P. is accordingly dismissed.
C.R.P. No. 1085 of 1984.
23. The petitioner herein is the daughter of one of the beneficiaries who was provided a life interest and the trust deed provides that if any amount due was not paid to the named beneficiaries, it would revert back to the corpus. Hence the petitioners have no heritable right under the trust deed. Hence this petition also fails and also for the reason that it has become infructuous as the main O.P. in which the petitioners wanted to come on record have been disposed of and no application is filed by them to bring themselves on record in the C.R.Ps. filed against the decision in the main O.P. The C.R.P. is accordingly dismissed.
C.R.P. No. 1087 of 1984.
24. In this case, the petitioner is the son of one of the beneficiaries Nazeemunnisa Begum, who died in Oct. 1975. The petitioner has no heritable rights under the Trust deed. Hence his petition was rightly dismissed by the Court below. While dismissing the petition, the learned Judge imposed heavy costs of 1000/- on the ground that the petitioner had filed the petition knowing fully well that he has no right under the Trust deed and only to harass the parties. This part of the order we are unable to sustain and we accordingly set aside the order imposing costs of Rs. 1000/-. The Civil Revision Petition has also become infructuous in view of the fact that the main O.P. in which he wanted to come on record has been disposed of and no petition has been filed to implead him in the C.R.Ps. filed against the decision in the said O.P. With this modification, the C.R.P. is dismissed.
C.R.P. No. 1179 of 1984.
25. In this C.R.P. the petitioners are the children of Late Bhojath Jah, who died in the year 1982. As per Clause 2(i)(4) of the Trust Deed, the father of the petitioners was entitled for a monthly allowance of Rs. 100/- and the said benefit is not heritable. The petition was rightly dismissed as the petitioners have no right under the Trust deed. The C.R.P. has also become infructuous in view of the fact that the main O.P. in which they wanted to come on record has been dismissed. The C.R.P. is accordingly dismissed.
26. When the C.R.Ps. were admitted our learned Brother Madhava Rao, J. passed an order in C.M.P. Nos. 5619, 5655, 5662 and 5664 of 1984 directing the Trustees to retain a sum of Rs. 15,00.000 with them towards the claim of the petitioners pending disposal of the revision petitions. The learned Judge made it clear that the lower Court can pass appropriate orders in the main petition and to take further steps for implementation of the order passed by it. This direction is only to keep the money in deposit till the disposal of the Civil Revision Petitions. Now that the C.R.Ps. are disposed of, the trustees are under no obligation to retain the said amount of Rs. 15,00,000/- any longer. The order in the C.M.Ps. which are interlocutory applications does not survive beyond the main C.R.Ps.
27. In the result, C.R.P. Nos. 2793 and 1703 of 1984 are allowed and C.R.P. Nos. 1079, 1179, 1083, 1085 and 1087 of 1984 are dismissed. No costs.
