THE COMMITTEE OF MANAGEMENT OF PANCHAIYAPPA'S TR UST versus OFFICIAL TRUSTEE OF MADRAS AND ANOTHER

Citation: [1993] SUPP. 3 S.C.R. 710 · Decided: 17-11-1993 · Supreme Court of India · Bench: M.N. VENKATACHALIAH, S.C. AGRAWAL, A.S. ANAND
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Judgment (excerpt)

• 
A 
B 
THE COMMITTEE OF MANAGEMENT OF 
P ANCHAIY APP A'S TR UST 
v. 
OFFICIAL TRUSTEE OF MADRAS AND ANOTHER 
NOVEMBER 17, 1993 
[M.N. VENKATACHALIAH, CJ, S.C. AGRAWAL 
AND DR. A.S. ANAND, JJ.) 
Official Trustees Act 191rSecs. 25,26-Public Trust-Grant of long 
c tenn lease in respect of immovable property vested in official trustee-l'ower 
of High Court to make order in respect thereof.......Principles underlying the 
exercise of supervisory jurisdiction of the High Court-Equivalent to the stand-
ard for fiduciary conduct expected from a trustee-Must be guided by the 
consideration, to make the trust get the maximum advantage of a transaction 
D without prejudice to the security and safety of the trust property. Transactions 
relating to trnst property--Postulate wide publicity-Grant of lease must be 
either at a public auction or by inviting sealed offers-Must ensure participa-
tion of all interested parties to secure the best price. 
Application for grant of lease with respect to trnst property-Can be 
E moved only by persons beneficially interested in the trust property or by the 
trnstees. 
Indian Trusts Act 1882-Secs. 15,36-Fiduciary conduct expected from 
a trnstee-Bound to deal with the trust property as carefully as a man of 
ordinaty prudence would deal with his own propertr-All acts must be for the 
F realisation, protection or benefit of the trnst property. 
The appellant, a public trust, was a residuary legatee under a will 
dated 21-5-1948, executed by one K. The testator, bequeathed to the said 
trust, several properties, including a plot of land admeasuring 13566.66 
G sq.ft. situated at No. 21, harrington Road, Madras. 
In January, 1986, the respondent No. 2, a partnership firm, consist-
ing of three unemployed medical graduates, filed before the High Court of 
Madras an application seeking directions, to the official trustee to enter 
into a lease agreement with them, with respect to the said plot of land. The 
H applicants prayed therein, that they be granted the said plot of land on a 
710 
PACHAIYAPPA'STRUSTv. TRUSTEE OF MADRAS 
711 
lease (a) for an initial period of 50 years with an option to it to rene\\' the 
A 
lease for a further period of 50 years. (b) For an initial rent of Rs. -'5011 
per annum for the first year and for every succeeding year an increase by 
5% on the rent payable in respect of' every preceding ~·ear. in order to 
enable them to construct and run a medium sized Nursing Home on the 
said plot. 
The application was opposed by the appellant on the grounds that 
(a) the grant of such a long term lease Is neither in the interest of the trust 
nor beneficial to It, (b) it would be detrimental to the interests of the Trust, 
B 
as It would amount to tying down the property in the hands of the 
applicants; (c) the rent ofTered by the respondent No. 2 ' ·as very low. (d) 
C 
Since the solvency of the applicants was not clear, it would be highly risky 
to lease out the property to them, however laudable their objects may be. 
Subsequently, a supplemental report was filed by the official trustee, 
respondent no. 1, stating therein that although the respondent no. 2 hai; 
no legal right to insist on lease, however the same could be granted, under D 
the orders of the Court, on terms and conditions beneficial to the trust 
estate, or in the alternative the official trustee be permitted to lease out 
the said property at a public auction after giving due puhlicity. 
By its order dated 2.5.1986 the Single Judge of .he High Court E 
granted the lease in favour of respondent No.2 on a monthly rent or 2,000 
per annum, for an initial period of 30 years with an option or renewal lease 
period according to then prevailing clrc11mstances and other terms and 
conditions imposed by the Court. The said order was in appeal upheld and 
confirmed by an order or the Division Bench or the High Court. 
The respondent No. 2 then flied an application before the High 
Court, seeking certain modifications with reference to the terms and 
conditions of the lease imposed by the order or the Single Judge. 
F 
The appellant as well as the respondent No. 1 contested the said 
application on the ground that the respondent No. 2 not having filed any G 
appeal against the order of the learned single judge cannot seek to have 
the said order modified especially when the same has been affirmed and 
upheld by the Division Bench of High Court. 
The Division Bench rejected the objections raised by the appellant H 
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