M. V. RAMASUBBIER AND OTHERS versus MANICKA NARASIMHACHARI AND OTHERS

Citation: [1979] 2 S.C.R. 1177 · Decided: 30-01-1979 · Supreme Court of India · Bench: P.N. SHINGAL · Disposal: Appeal(s) allowed

Judgment (excerpt)

.Ji. ... 
J ., 
1177 
M. V. RAMASUBBJER AND OTHERS 
v. 
MANICKA NARASIMHACHARI AND OTHERS 
January 30, 1979 
[P. N. SmNGIIAL AND p. · S. KArLASAM, JJ.] 
Trusts Act-Ss. 49, 51 and 52-Scope of-Managing Trustee 
purchased 
property for the trust sold it to his son for lesser price than offered by others-
Sale if valid-Duty of trustee. 
A 
B 
Pleintiffi and defendants \Vere descendants of a common ancestor who was 
the founder of a trust. Defendani no. 1, at the relevant time, was the manag-
ing trustee of the trust. 
On partition and sale of family properties a house, 
C 
which was the suit property, was purchased for the 
trust. 
Soon thereafter 
defendant no. 1 sold it to his son. 
Before the sale, however, the tenant of lhe 
house who was a man of substance, offered a much higher price than what was 
paid by the son but the defendant sold it to his son. 
In the plaintiffs' suit challenging sale of the trust property to the managing 
trustee's son for a lesser consideration the defendant claimed that the property 
D 
had to be sold because his son who was the owner of adjacent property raised 
a dispute claiming easementary rights over the property. 
The suit was decreed by the trial court but on appeal the High Court held 
that the consideration was adequate and fair, that the sale was bona fide and 
that no ulterior motive could be attributed to the defendant .no. 1 in the sale. 
The High Court, therefore, dismissed the suit. 
E 
Allowing appeal, 
1-~LD : (a) The sale had to be viewed with suspicion The High 
C0urt 
committed an error of law in ignoring important aspects of law which bad a 
direct bearing on the controversy before it. 
[ll8l1\] 
(b) It is well recognised that a person in a fiduciary position like a trustee 
F 
is not entitled to make a profit for himself or a 
member of his family. 
I:-Ic 
is not allowed to put himself in a position in which a conflict may arise between 
his duty as a trustee and his personal interest. 
[1180E] 
( c) The control of the trustee's discretionary power prescribed by s. 49 of 
the Trusts Act and the prohibition contained in s. 51 that the trustee may not 
use or deal with the trust property for his own profit or for any other purpose 
G 
unconnected with the trust and the equally important prohibition in s. 52 that 
the trustee may not directly or indirectly buy the .trust property on his own 
account or as an agent for a third person, cast a heavy responsibility upon hin1 
in the matter of discharge of his duties as 
trustee. 
The rule prescribed by 
these sections connot be evaded by making a sale in the name of the trustee's 
partner or son, for that would, in fact and substance, indirectly benefit the 
trustee. 
[11 BOF-G] 
H 
(d) Where a trustee makes the sale of a property belonging to the trust, 
without any compc1Iing reason in favour 
of his son, 
without obtaining the 
1178 
SUPREME COURT REPORTS 
[ 1979] 2 S.C.R. 
A 
permission of the court concerned, it is the duty of the court 
to examine 
w-hether the trustee has acted rCasonably and in good faith or whether he bas 
committed a breach of the trust by benefiting himself from the transaction in 
::in indirect n1anner. 
f 1180H1 
B 
c 
(i) In the instant case defendant no. 1 was the tiustee of the property. It 
was his duty to be faithful to the trust and execute it with reasonable diligence 
Ill the manner in which an ordinary prudent man of business would conduct 
his own affairs. He could not occasion any loss to the trust and it was his duty 
to sell the property, if that was so necessary to sell, to the best advantage of 
the trust. 
fl l 80D] 
(ii) l'he I-ligh Court was wrong in blaming the plaintiffs _that they had 
brought the suit on account of persona] grouse and spite. Assuming that they 
\Vere so actuated, their action was eminently 
for the 
advantage of the tru.o;.t 
created by their ancestor in which they had a substantial and direct interest. 
[l 18lD] 
(iii) Defendant no. 1 was not able to explain how the sale was beneficial 
to the trust. Income by way of rent which the property was fetching Was fa!:' 
more than interest which the sale proceeds fetched when they were invested in 
fixed deposits in a Bank. He was therefore unable to explain how he acted as 
D 
a rru:1n of cndinary prudence in slashing do\vn the income of the trn'i+ by mat-
ing the rn!e. 
[l 181GJ 
(iv) When defendant no. 1 sold the trust property to his son at a le1Mer 
price than was otherwise available, he did not act in acc

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