LexSHANTI VIJAY & CO. ETC. versus PRINCESS FATIMA FOUZIA & ORS. ETC.
Open in Lexace · Ask the AI about this caseJudgment (excerpt)
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459
SHANTI VIJAY & CO. ETC.
v.
PRINCESS FATIMA FOUZIA & ORS. ETC.
August 31, 1979
'[S. MURTAZA FAZAL ALI, P. S. KAILASAM AND A. P. SEN, JJ.]
Indian Trusts Act 1882 (2 of 1882)--Ss. 47, 48 &
49-Trust-Deed of
rtnut stipulating sale of trust property by trustees in their absolute discretion~
Absence of specific provision authorising execution to be carried out not by
, 1(1[{, but by one or more or majority of trustees-Applicability of s: 48.
Where trustees cannot delegate duties they 1n11st personally perfonn-Exer-
.cise of individual judRment and discretion-Necessity of.
Discretionary power not exercised reasonably and in good faith-lnter-
.jerence by court under s. 49-Validity of-Duty of trustees to act t-vith prudence
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,.as a body of reasonable men.
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The late H.E.H. Nlliwab :fyiir Sir Osn1an Ali, the Nizan1 of Hyderabad by
;an. indenture dated March 29, 1951 created the trust called H.E.H. the Nizam's
Jewellery Trust in respect of 107 items of extremely valuable, rare and price-
leii jewellery for the benefit of his two sons, two grand sons,
tv.'o
grand
daughters, daughter and step son.
The nominee of the Government of India
'R. N. Malhotra, Addl. Secretary to the Government of India, Ministry of
Finance, Department of Economic Affairs ¥:as made the Chairman of the
·Board of Trustees. In· addition to the Chairinan, there were four trustees and
a Secretary for the Trust. Clause 13 of the trust deed provided that after a
"Period of three years from the date of the death of the settlor and bis eldest son
the trustees may sell the trust 1 property in their absolute discretion either, in
India or in any foreign country without their being liable or accountable to any
·person whomsoever for the propriety of or justification for such sale, or for
reaionableness or otherwise of the price or consideration or other tenns in res-
·pect of the sale.
Prince Azam Shah the eldest son of the Nizam died in October, 1970 and
.the trustees on July l, 1972 submitted a memorial to the Prime 1Iinister
to acquire the je\vellery as they were of great historical and culturnl value and
1ceep the same intact as part of the national heritage.
The Government
-0f India appointed an Expert Committee to advise whether any part of the
jev.rellery should be acquired as antiques under the Antiquity and Art Treasures
Act 1972 and in pursuance to its report acquired eighteen selected pieces of
"jewellery at ~ mutually negotiated price. of Rs. 1.17 crores .
It appears that the beneficiaries of the trust v.'ere in very straitened cir-
··curnstances due to abolition of privy purse, heavy incidence
of
income-tax
and wealth-tax and being thus heavily indebted, pressed upon the Board of
Trustees to effect an immediate sale of 37 items of jewellery.
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On January 9, 1978 the Chairman conveyed to the trustees that the Go-
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vernment of India were not likely to acquire any of the 37 pieces of jewellery
\With regard to whiCh the negotiations were being made. The Board of Trustees
460
SUPREME COURT REPORTS
[1980] I S.C.R.
A
accordingly passed a resolution to sell the jewellery immediately.
Pursuant
to the resolution of the Board, the Secretary of the Board decided upon the
procedure to be adopted for the sale of the 37 items of jewellery and
eventually on March 9, 1978 the tenders that were submitted in respect of the
sale of those items were opened by the four .trustees, in Bombay, the Chair~
man R. N. Malhotra being absent due to official pre-occupation at New
Delhi.
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On March 10, 1978 the first respondent in the appeal who was one of the
beneficiaries of the Trust and a grand daughter of the Nizam instituted pro-
ceedings under S. 74 of the Trust Act for removal of the trustees alleging
dereliction of duty, negligence and mismanagement on their part in respect of
the 37 items of jewellery belonging to the Trust which were brought to sale.
An application for injunction under Order 39, Rule 1 of the Code of Civil
Procedure was filed for restraining the trustees from taking any further steps
towards the finalisation of the sale1 of the jewellery. The City Civil Court grant·
ed an ad~interim injunction restraining the trustees from taking any steps to
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wards the finalisation of the sale of the jewellery, which was got vacated by
one of the trustees. On March 28, 1978, the first respondent filed an appeal in
the High Court which directed thatExcerpt shown. Read the full judgment & AI analysis in Lexace.