Princess Fatima Fronzia And Others v. Sri Sayeed-Ul-Mulk Alias Nawab Saheb Chattari And Others, Andhra Pradesh High Court, Judgment, Law, casemine.com

Precedent	Rule or Principle Cited For	Application by the Court
Seethal Achi v. Meyappa (A.I.R. 1937 Madras 337)	Representative suits under Order 1 Rule 8 CPC are not exhaustive; representative proceedings affecting many must not be withdrawn without leave and may permit others to come on record.	Supported conclusion that an appellant cannot unilaterally terminate proceedings affecting all beneficiaries and that a co-beneficiary should be allowed to come on record and continue the appeal.
Masulipatnam Municipality v. Venkatappayya (A.I.R. 1960 A.P. 572)	When a petition for withdrawal is filed, the appeal does not automatically end and a person affected may join and continue before the court's final order.	Followed to permit another beneficiary (Princess Amina Mirza) to be impleaded and to continue proceedings despite the original appellant's wish to withdraw.
Atma Ram v. Beni Prasad (A.I.R. 1935 P.C. 185)	Suits withdrawn or dismissed upon withdrawal may be continued by interested parties (reversioners), and courts may recall dismissal to permit continuation.	Used to justify allowing interested beneficiaries to continue proceedings affecting trust property after an attempt to withdraw.
P. R. Nallathambi v. Raghavan (Madras High Court)	Managing members or representatives in family/representative litigation: junior members affected may be allowed to come on record; courts should protect those affected from prejudicial compromises.	Applied to emphasize the Court’s duty to protect beneficiaries and to implead parties affected by a withdrawal or compromise.
Man Mohan Das v. Janki Prasad (Privy Council; quoting Lewin on Trusts)	Co-trustees hold office jointly; trustees must execute duties jointly and a single trustee cannot act alone to bind the trust absent clear authority.	Relied upon to hold that trustees must act collectively and that unilateral or partial actions by some trustees do not bind the trust.
Janakirama Iyer v. Nilakanta Iyer (Supreme Court)	Section 48 Trust Act: trustees generally must act collectively; where deed otherwise provides, those provisions govern; majority decision binding only if arrived at after deliberation by all trustees.	Applied to conclude that the trustees failed to satisfy the collective decision-making requirements in Clause 20 of the Trust Deed and Section 48, so no binding decision to accept tenders was shown.
Fakira v. Ganpat	Majority decision is binding only if it is the result of due deliberation by all trustees; an act of the majority alone without proper deliberation is not binding.	Applied to find that purported acceptances by some trustees without deliberation by all were not binding on the trust.
Shyam Rangini Ray Chaudharani v. Ajindra Nath Tagore (Calcutta High Court)	The law does not recognise an "acting trustee" who administers and binds the trust without the concurrence of co-trustees.	Used to support the position that individual or partial trustee actions cannot be treated as binding actions of the Board of Trustees.
Buttle v. Saunders (Chancery Division)	Trustees have an overriding duty to obtain the best price for beneficiaries; receipt of a higher offer may oblige trustees or the court to probe and consider the higher offer.	Relied upon to justify probing a later higher offer and, where appropriate, preferring it to earlier incomplete/defective transactions to protect beneficiaries' interests.
Ramaswamy v. Alagia Singaperumal Kadavul	In proceedings for removal of trustees, the validity of alienation of trust property can be considered.	Cited to support the Court's power to examine and set aside an improper sale of trust property in removal proceedings.
In re Hodges; Davey v. Ward (citations in opinion)	Courts must examine whether trustees' exercise of discretion was honest, proper and for the benefit of beneficiaries; the court may substitute its judgment where discretion was not properly exercised.	Invoked to explain the Court's role in scrutinising trustees' discretionary sale decisions and in setting aside exercises of discretion not reasonably and properly performed.

The Judgment of the Court was delivered by

Madhava Reddy, J.

This appeal is directed against the order of the Chief Judge, City Civil Court, Hyderabad in I.A No. 565 of 78 dissolving the interim injunction issued by that Court on 14-3-1978 and dismissing the application for injunction. I.A, No. 565 of 1978 was made by the Appellant herein praying for an injunction “restraining the respondents herein from taking any further steps whatsoever by way of finalisation of tenders or in any other manner in the matter pertaining to the sale of Jewellery as per Schedule-I of the trust deed known as H.E H. The Nizam's Main Jewellery Trust dated 29th March, 1951, pending an application O.P No. 141 of 1978 filed by him for the removal of the respondents-trustees.

2. H.E.H Nizam, who was accepted by the Government of India to be the owner of certain jewellery and other moveable property and certain securities created a trust of the said properties known as “The Nizam Jewellery Trust” under a Registered Trust Deed dated 29th March, 1951 for the benefit of his relatives specified in III Schedule to the Trust Deed. For the sake of brevity, this trust will be referred to hereinafter as the Jewellery Trust or simply as “The Trust”. Respondents 1 to 5 are the present trustees of the said Jewellery Trust. There is no dispute that these respondents are legally appointed trustees of the said Trust in accordance with the Trust Deed. It is therefore unnecessary for the purpose of this appeal to notice the circumstances in which respondents 1 to 5 came to be appointed as trustees of the said Trust. There is also no dispute that the trustees are at present authorised to sell the said jewels. The Trust Deed enjoins the trustees to hold the trust properties and among others direct them to sell the jewels specified in the I Schedule thereof, “after the death of the settlor as well as of his eldest son Prince Azam Jah Bahadur within a period of three years.” That event has occurred. When the trustees appointed under the said Trust proceeded to bring to sale 37 items of Jewellery which form part of First schedule of Trust Deed, Princess Fatima Fouzia, the eldest daughter of Prince Mouzam Jah Bahadur and grand-daughter of Nizam VII of Hyderabad, the Settlor filed a petition O.P 141/78 to discharge the trustees. She is one of the eight beneficiaries mentioned in the Third Schedule Part I of the Trust Deed. The Principle Ground on which that petition was filed was that 107 items of Jewels mentioned in the First Schedule of the Trust Deed which includes the famous ‘Jacob Diamond’ are very valuable, but the Trustees are proceedings to dispose of the same in India by way of sale. It is alleged that the trustees have chosen to call for tenders from local jewellers and the local jewellers “have formed into a ring in collusion with Trustees”. Although the jewellery is worth more than 100 crores of rupees, the amount offered by these jewellers in their tenders is hardly 20 crores of rupees. It is alleged that inspite of several requests, the Trustees have failed to comply with the request of the petitioner and husband for rendering account and furnishing information about the securities. This, according to her, is a dereliction of the Statutory duty on the part of the. Trustees and constitutes mismanagement of the Trust properties. “The arbitrary and capricious manner in which these jewels are sought to be disposed of for a song” jeopardises the interest of the beneficiaries and causes them irreparable loss. She alleges that this is being done by the Trustees deliberately. She prays that the Trustees “should be directed to sell the jewellery in a proper legal manner taking into consideration the interest of all the beneficiaries”. According to the petitioner, the jewels now sought to be sold in addition to their being very valuable by themselves are of rate antique value.

3. Pending the petition for discharging the trustees, a petition I.A 565/78 for restraining the respondent trustees from finalisaing the sale of jewellery was also made. In this petition, several irregularities in the sale of the jewels by the trustees were alleged. In the original petition for injunction, the petitioner merely alleged that the trustees are going to finalise the sale on 20-3-1978 and that the sale was collusive and clandestine and if the trustees were to finalise the same, the beneficiaries would suffer heavy and irreparable loss. In this affidavit filed on 10th March, 1978 the petitioner staled that the jewels are in the safe custody of Mercantile Bank at Bombay and as they are of great antique value they would fetch higher price in foreign market at the hands of foreign buyers. Upon that petition, initially the Chief Judge of the City Civil Court issued an in erim injunction as prayed for against the trustees.

4. One of the trustees—Mohammad Ali Abbasi filed a counter affidavit denying the allegations in the O.P and in the affidavit filed in support of the injunction petition. It was asserted that the petitioner has no personal interest under the Trust Deed and therefore she cannot be considered to be a beneficiary. It is stated that under the terms of the Trust Deed only a “small moity” out of Prince Moazam Jah's Fund would be payable to the petitioner in the event of her surviving Prince Moazzam Jah. It was therefore contended that the petitioner has no locus standi to file a petition for removal of the trustees or to seek injunction. It is further asserted that under clause (3) of the Trust Deed, the trustees are empowered to sell the jewellery in exercise of their discretion either in India or in any foreign country and that they are not liable to account to any person whatsoever, about the propriety or justification for any such sale or in regard to the reasonableness or otherwise of the consideration secured. The trustees have neither flouted any direction in the Trust Deed nor contravened any provision of law and the petitioner has no right to call in question any fo their actions. He further stated that the trustees had requested the Government of India to acquire the jewels, if it should attach any National or historical or antique value to the jewels and in the alternative, to permit them to sell. The Director (Antiquity) Archeological Survey of India by letter dated 22-2-1978 declared certain items of jewellery as antiques, and certain other items to be non-antiques and issued a certificate accordingly. It is out of those jewels which are declared to be non-antiques that 37 items are now selected and are being sold; and famous -Jacob Diamond’ is not among the items of Jewellery proposed to be sold by the trustees now. In bringing the jewellery to sale, the trustees have sought the aid of reputed jewellers of Bombay and have given wide publicity for their sale within and outside the country. All the leading jewellers in the country as well as the reputed jewellers abroad have been informed of the proposed sale and were invited to inspect participate in the sale. About 30 foreign buyers attended the sale personally along with their Indian counter-parts. Out of the total 107 items of jewellery which form the subject matter of the jewellery Trust, 37 items were put to sale in the first instance and about 60 (Sixty) Indian and foreign buyers of repute inspected the jewellery between 6th and 8th March 1978 at Bombay. Before the sale, the trustees circulated amongst all the buyers a memo setting out the conditions for sale of jewellery by open tender. The buyers conveyed their unqualified acceptance of the conditions of sale. On 9th March, 1978, the trustees received the tenders and the same were opened on 10th March, 1978. The highest tenders alone were accepted and letters of acceptance were issued on the same day to those whose tenders were accepted, in no case was a lower tender accepted. There is thus a concluded contract of sale and the property in the jewels sold has passed to the buyers. The trustees have also received a part of the sale consideration. These 37 items of jewellery have ceased to be the property of trust. The Trustees are now bound to deliver these 37 items of jewellery to the tenderers whose lenders have been accepted. The Trustees have been receiving telegraphic notices for delivery of the Jewellery. It is the case of the trustees that as a result of the method adopted by them for the sale the jewellery has fetched a far higher price than the value placed upon them by the Expert Government Valuers, They did not publish sale notices in newspapers for reasons of security. The assertion that if the jewellery were to be sold abroad, it would fetch a much higher price is without any basis. They rejected the suggestion of the petitioner that the precious stones should have been separated from the gold arnaments and sold separately and stated that that would have caused great damage to the jewels. They plead that jewellery belonging, as it does to a former rules of Hyderabad, has a better market value in the form they existed rather than as ordinary pieces of gold or precious stones. The trustees among whom is included a trustee appointed by the Central Government, who is a high Government Official asserted that every precaution had been taken by them for the safety and security of the jewels and sale to obtain the best pos-sible offer for the jewellery. They vehemently deny the allegation that sale of the jewellery was made in collusion with the local jewellers and described it “as. absolutely false and mischievous and highly defamatory”. They also stated that several beneficiaries under the Trust have been urging the trustees to sell the jewellery without any further delay so that they may not be deprived of the benefit from the income therefrom during their life time and any injunction issued by the court at this stage would seriously affect their rights.

5. In the reply affidavit, the petitioner reiterated that if proper publicity of the proposed sale of 37 items of jewellery were given through Newspapers, Magazines, Brochures containing coloured photographs on art paper with description in Andhra Pradesh and other States of India and foreign countries, they would fetch a high price. The so called security hazard in giving wide publicity for sale of jewellery was stated to be untenable. It is contended that there is no concluded contract of sate in favour of the Shanti Wijay & Company or any of the tenderers, for the reason that neither 10% amount was tendered nor the balance was paid It was also asserted that all the trustees had not accepted the tenders. In a further additional affidavit, it was averred that one of the trustees lives ou side India and the two of the trustees are very elderly persons who could not be expected at their age to exercise a proper judgment. To the representation of the Trustees that if the sale is not allowed to be finalised before the end of March, 1978, the Trust would become liable to pay a substantial sum by way of capital gains, it was asserted on behalf of the petitioner that this exemption from capital gains tax was available only upto 1st March, 1978. The petitioner stated that she heard a rum our that a “foreign firm or individual had paid rupees twelve crores to the Trustees secretly to accept the so-called “fictitious tenders”, it was urged that the world's “best known auctioneers of jewellery are (1) Sotheby's of London, Geneva, New York, Los Angeles; (2) Christies of London………………………………New York, Geneva who have been selling the costliest gems and jewellery for over 200 years”. They and some of the most reputed International Jewellers of New York, Paris and London were not notified about the sale of these unique jewels. The petitioner prays that these jewels be sold after inviting the reputed jewellers or the sale be conducted outside India and to restrain the trustees from proceeding with the sale and delivery of these jewels to the tenderers.

6. The Chief Judge, City Civil Court after hearing both parties held by his order, dated 27-3-1978, that “the trustees made ceaseless efforts to persuade the Union Government to acquire the items of jewels so that they should be preserved. Only when their efforts proved futile, they took steps to sell the permitted items”. There was no breach of trust in doing so. He also found that sufficient publicity for the sale was given within and outside the country and that a total sum of Rs. 14.43 crores of rupees was realised by sale of 37 items of jewellery. There was no “imperative obligation cast upon the trustees to sell the jewellery only in foreign country”. They could sell it even in India. The sale of these items is very much above the value put by the Government Valuers. The learned Chief Judge also held that the allegations levelled against and that they sold the items for “ridiculously low price of 14.43 crores of rupees, is wholly uncharitable if not reckless and malicious”. He accepted the explanation offered by the Trustees that in the circumstances the publicity given for the sale was sufficient, and observed that the petitioners could not secure even a single offer from any of the leading business bouses either in India or abroad tendering price higher than that tendered by the successful tenderers in respect of any of the 37 items of jewellery sold. It was not obligatory on the part of the Trustees to obtain the permission of the Court to effect the sale of the jewellery. They were empowered to sell the jewellery in their discection. The trustees acted within the ambit of their power into bringing the said items to sale and that there was no prima facie case to discharge the trustees. In short, none of the alleged acts of breach of trust is made out and the balance of convenience is not in favour of granting injunction. He accordingly vacated the injunction order made on 14-3-1978.

7. In this appeal by the petitioner, Mr. Virendra Bahadur Saigal, the learned counsil for the appellant strongly contended—(1) that the petitioner is a beneficiary who is entitled to challenge the acts of the Trustees and maintain this petition; (2) that the trustees did not act reasonably and prudently and in good faith in not giving wide publicity for the sale of the jewellery and have thereby caused irreparable loss to the beneficiaries: (3) that the trustees did not act bona fide in bringing the jewels to sale in India; and (4) that all the trustees had not joined in deciding whether the tenders should be accepted or not and whether they should negotiate for a higher price and there was no valid acceptance by the trustees; consequently there was no concluded contract for the sale of any of the items of jewellery in favour of t he tenderers.

8. Before we consider these contentions, we may refer to some developments subsequent to the filling of O.P 141 of 1978 on the file of the Chief Judge, City Civil Court, Hyderabad and during the pendency of this appeal. This Court after admitting the appeal issued an injunction on 13-4-1978. One Peter Jauis Fernandez filed a petition C.M.P 4248/78 on 14-4-1978 offering a sum of Rs. 20.25 crores for the purchase of 37 items of the Jewellery provided he was given an inspection of the very items which were offered for sale to the other tenderers. One of the tenderers who had offered to purchase 16 and 86 items of the list and claimed that there was a valid and concluded contract of sale of the said items between him and the trustees, filed a petition in C.M.P No. 4059/78 on 17-4-1978 for being impleaded as party respondent. Both those petitions were allowed and they were respectively impleaded as respondents 6 and 7 in the C.M.A Respondent No. 6 also filed a petition for giving him an inspection of the said 37 items of jewels. This Court by its order, dated 21-4-1978 permitted inspection provided the 6th respondent established his bona fides by depositing the sum of Rs. 20.25 crores offered by him. The 6th respondent thereupon filed a letter of guarantee of the State Bank of India guaranteeing the payment of Rs. 20 25 crores in the event of the sale of 37 items of jewellery being made in his favour. This Court by its order dated 8-5-1978 accepted this letter of guarantee alter it was filed without any pre-condition and after the party offered to renew the same for such period as the Court may direct. However, before the inspection was granted it was brought to the notice of this Court that one of the tenderers for five items of jewels Messrs. Keshavlal Dalpat Rai Zaveri bad instituted a suit O S. No. 598 of 1978 on the original side of the High Court of Judicature at Bombay and obtained an injunction against the Trustees on 7th May, 1978 restraining them from selling or delivering the plaint schedule jewellery to any one except the plaintiff therein and from giving inspection of any of the 37 items of the jewels and from handling the same or opening the locker in the Mercantile Bank of India, Fort Bombay wherein they were kept. However, on the application of the Trustees, that order was modified on 17th May, 1978 by the Vacation Judge of the Bombay High Court and in accordance with the orders of this Court dated 19-5-1978 the 6th respondent was given an inspection of those 37 items. After Inspection of the jewels in the presence of the trustees, the 7th respondent and the plaintiff in O.S, 598/1978 on the file of the High Court of Judicature at Bombay, the sixth respondent confirmed his offer of Rs. 20.25 crores. The case was then posted for further hearing and judgment on 5-6-1978 i.e, the first day of the reopening of the High Court after summer recess. That day, the appellant through her counsel stated that she did not wish to proceed with the appeal and sought leave to withdraw the same. She accordingly filed C.M P. 6064/78 to permit her to withdraw her C.M A. without costs.

9. At that stage, Sri J.V Suryanarayana Rao, the learned Advocate represented to the Court that he was instructed to appear on behalf of Princess Amina Mirza, one of the beneficiaries of the jewellery Trust and to oppose the withdrawal of the appeal and took permission of the Court to come on record and continue the proceedings. The learned advocate also orally represented that Princess Amina Mirza would file a petition to bring herself on record as appellant No. 2 and requested that the matter be posted on 9-6-1978. This request of the third party to come on record was opposed by the appellant as well as the 7th respondent. The petition for withdrawal was not opposed either by the trustees or by the seventeenth respondent, but it was opposed by the sixth respondent who had offered to purchase 37 items of jewellery for Rs. 20.25 crores. These petitions were, therefore posted for hearing on 12-6-1978. We have, therefore, to consider at the outset whether the petition for withdrawal should be allowed and whether the third party petitioner should be permitted to come on record at this stage and continue the appeal and other proceedings.

10. A proceeding for the removal of the trustees initiated by a beneficiary affects the Trust as such. Any order thereon affects the interests of the entire body of the beneficiaries. Whether a trustee should be continued or removed is a matter which concerns all the beneficiaries. In making any order in such a proceeding, the Court, has to keep in view the interest of all the beneficiaries and not merely that of the particular individual who has moved the Court. Any inter-locutory matter that may come up during the course of these proceedings and more especially regarding the sale of the Trust property would have to be disposed of by the Court haviug regard to the interest of all the beneficiaries. In fact, in filing the Original Petition, the present appellant who now seeks to withdraw the appeal had averred in paragraph 4 of the petition that “the trustees cannot sell the same, (that is 37 items of jewellery) in an arbitrary and capricious manner by selling it for a song thus jeopardising the interest of the beneficiaries and causing deliberate irreparable loss to them”. Even in seeking an injunction restraining the trustees from finalising the sale, the appellant had asserted that “it is settled law that the Courts of Law and Equity are empowered to safeguard the interest of all (he beneficiaries”, and that the sale would not only affect her but all the other beneficiaries. In having filed the Original Petition, the petition for injunction and the present appeal, the appellant was really representing the entire body of beneficiaries. Though this is not a representative suit filed after following the procedure laid down under Order 1 Rule 8 C.P.C, still any decision rendered in this petition would affect the entire body of beneficiaries either favourably or adversely. Presumably, because such a petition was already filed by one of the beneficiaries and was pending, the other beneficiaries may have thought it unnecessary to take similar proceedings separately. In fact, aggrieved by the order of the Chief Judge, City Civil Court vacating the injunction the petitioner, herself has taken expeditious steps to prefer an appeal to this Court and obtained an injunction. During the pendency of the appeal, a higher offer was received for the very same jewels which were offered for sale by the trustees and which were not yet delivered to the tenderers. It was the case of the appellant-petitioner that there was not a concluded contract of sale in favour of the tenderers and therefore the Court should restrain the trustees from delivering the jewels and that the Court should secure to the beneficiaries the benefit of the higher offer of the third party petitioner in C.M.P 4248/78. In the above circumstances, the entire body of beneficiaries would have been obviously under the impression that their interests are being adequately safeguarded by the appellant who had taken the initiative to move the Court. After the hearing of the appeal and interlocutory matters was concluded and the orders were about to be pronounced in the light of the confirmation of the offer made by the third party-petitioner, the appellant sought to withdraw the appeal. The other beneficiaries could not have foreseen that at that final stage the appellant would withdraw the appeal and thus jeopardise their interest. The effect of withdrawal would be that the appeal would be dismissed. As a result of the dismissal of the appeal while the petition for removing of the trustees would be pending trustees would stand dissolved and the trustees having taken the stand in confirmity with the stand taken by tenderers, would deliver 37 items of jewels to them. If as contended by the appellant-petitioner herself and the other beneficiary who now seeks to come on record as an appellant and continue the proceedings there was no concluded contract and on account of inadequate publicity, the jewels were sold for a much lesser value, obviously the interest of the entire body of beneficiaries would be very seriously affected, There would be no way of making good this heavy loss to the Trust and the beneficiaries. As the matters stand, it is obvious that if the appeal is allowed to be withdrawn and the petitioner in C.M.P is not allowed to come on record and continue appeal in the proceedings, instead of a sum of Rs. 20.25 crores only a sum of Rs. 14.70 crores would be available for being allotted to the beneficiaries. They would thus incur a loss of about Rs. 5.55 crores. The withdrawal of the appeal is not therefore in the interest of the benificiaries. No doubt under Order 23 Rule 1 C.P.C, if a plaintiff wants to withdraw a suit, prima-facie there appears to be no impediment whatsoever and the Court does not seem to have any say in the matter. Order 23 Rule I C PC. reads as follows:

“At anytime after the institution of a suit, the plaintiff may as against all or any of the defendants abandon hit suit or abandon a part of bis claim.”

11. The question of the permission of the Court would arise only where the withdrawal of the suit or abandonment of a part or whole of the claim is sought with liberty to institute a fresh suit or proceeding in respect of the subject matter of the suit or claim. But where no such reservation is sought and the appellant seeks to withdraw or abandon the claim, the Court cannot stop. Only he would be precluded from instituting a fresh suit in respect of the subject matter of claim. However, if a suit or a proceeding were to be a representative one, the position appears to be somewhat different. As observed in Seeihal Achi v. Meyappa . A.I.R 1937 Madras 337. Order 1 Rule 8 CPC. is not exhaustive of representative suits. A representative suit falling within Order 1 Rule 8 C.P.C may not be withdrawn without leave of the Court for the suit itself is instituted after notice to all such persons on whose behalf it is instituted and consequently withdrawal could be only after notice to them. But as pointed out in the aforesaid judgment those are not the only suits which cannot be allowed to be withdrawn without notice to the others having similar interest in the subject matter; there are other suits also which fall into this case and such suits are, suits for partition, suit for accounts, suits for specific performance, in all of which not merely the plaintiff but even the defendant may be entitled to some relief. Included in such suits are also suits by trustees which may affect the entire body of the trustees and the beneficiaries. Such suits, or appeals, which are merely continuation of the suits, cannot be allowed to be withdrawn, without reference to others having a similar interest for, that would set at nought all proceedings. While the plaintiff is undoubtedly dominus litis and may withdraw and put an end to the proceedings unconditionally, still in the aforementioned cases if any party interested seeks to come on record and continue the proceedings, be is entitled to do so. Nay it would be the duty of the Court to permit such person to come upon record, that would not merely avoid multiplicity of proceedings but would effectively safeguard the interest of all concerned.

12. May be as contended by the appellant-petitioner is entitled to withdraw. If he has an unconditional right to withdraw, whether the grounds which have impelled him to withdraw are proper or not, the Court cannot refuse permission to withdraw. But at the same time, if the suit or proceeding is in effect a representative one, the appellant-petitioner cannot thereby put an end to all the proceedings taken upto that point or that would logically follow, The right of an appellant to withdraw the appeal is one thing and the power of the Court to allow another person, who has an interest similar to that of the appellant, to continue the suit, appeal or proceeding is another. On account of such withdrawal, the suit or appeal does no terminate. In Seethal Achi v. Meyappa the Division Bench held that where a plaintiff withdraws from a suit before the Court passes a final Order recording the withdrawal, the suit cannot be deemed to have been terminated. Ordinarily, when the Court finds no impediment to the dismissal of a suit after the announcement of the withdrawal of the claim by the plaintiff, it will simply say that the suit is dismissed as the plaintiff has withdrawn from it. An order as to costs will also be passed. But several exceptions have been recognized to (his general rule, as for example, partition suits, partnership suits, suits for accounts etc. The Court further proceeded to consider whether “the moment the plaintiff announces the fact of withdrawal, the court is deprived of all the jurisdiction over the suit for any purpose except for passing an order in view of such withdrawal by the plaintiff” and held that “before the final order of the Court is passed after such withdrawal the suit cannot be deemed to have been terminated” The Court further observed “the withdrawal by the plaintiff should not necessarily lead to the dismissal of the suit because some appropriate reliefs may have to be given even in favour of the defendants. In a representative suit, the Court need not dismiss the suit inspite of withdrawal by the plaintiff, but it may add another person as party in substitution of the plaintiff or transpose the defendant as plaintiff and direct the continuation of the suit.” The principle ennunciated in this case was followed by a Bench of this Court in Masulipatnam Municipality v. Ven- katappayya . A.I.R 1960 A.P 572. that was an administrative suit. The Court held that “the moment a petition for withdrawal is filed or made, the appeal does not come to an end, the order of the Court is necessary and in an administrative suit before the Order of the Court any person affected may join and continue the suit.”

13. The Privy Council in Atma Ram v. Beni Prasad . A.I.R 1935 P.C 185. allowed a suit filed by the plaintiff which was sought to be withdrawn and in fact was withdrawn and dismissed, to be continued by the reversioners of the Estate exdebito justitiae. As the suit was dismissed upon its withdrawal, in order to give effect to its order to continue the suit, the Supreme Court recalled the dismissal of the suit as well.

14. In a case where the managing member of the joint family sought to enter into a compromise, the Madras High Court in P R. Nallathambi v. Raghavan allowed the junior member of the family to come on record and contest as they would be effected by any such compromise. The Court held that managing member was litigating in a representative capacity “Order 1 Rule 8 C.P.C specially enables a party so represented, if he so desires to come on record. It would be a travssty of justice to hold that a party who is bound by the result of a litigation, though not a co-nominee a party to the litigation, shall be denied an opportunity to draw the attention of the Court to some step, which seeks to prejudice his interests behind bis back. In all such cases it is the plain duty of the Court to implead the parties concerned either under Order 1 Rule 10 C.P.C, or in exercise of its undoubted, inherent power under Section 151 C.P.C Further, illustration (b) of Section 61 of the Trust Act makes it clear that when more than one beneficiary is entitled under a Trust, one of the beneficiaries was competent to apply on behalf of the others as well, such a proceeding would therefore be a representative one.

15. In the instant case, the action taken by the respondents-trustees to bring the jewels to sale is challenged by the appellant on behalf of the entire body of beneficiaries. In Fact, that is the main ground on which the removal of the trustees is sought by him. The proceedings that have been initiated by the appellant have resulted in securing an offer of Rs. 20.25 crores for purchase of 37 jewels which is higher by Rs. 5.82 crores than the offer received by the trustees for the same items of jewellery. The unconditional withdrawal of the appeal and other proceedings at this stage by the appellant would undoubtedly affect the interest of all the beneficiaries. But while her right to withdraw cannot be questioned on that ground, she cannot insist upon termination of the proceedings in this Court and deprive the other beneficiaries of their right to continue the proceedings. This Court which is enjoined to protect the interests of all the beneficiaries under a Trust, cannot terminate the proceedings by refusing leave to the other beneficiary to come on record. It is an eminently fit case in which the third party petitioner Princess Amina Mirza, who is one of the beneficiaries under the aforesaid Trust should be allowed to come on record and continue the proceedings. C.M.P 6269/78 is, therefore, allowed and the petitioner therein is permitted to be impleaded as Appellant No. 2 in the above appeal and in all other applications in which the former appellant is a party. The appellant who has filed C.M.P 6064/78 for withdrawal of the C.M.A is designated as appellant No. 1 and is permitted to retire.

16. In the result, notwithstanding the petition for withdrawal of the appeal filed by appellant No. 1, the appeal would have to be proceeded with and disposed off on merits.

17. The next question to be considered is whether the respondents—the trustees should be restrained from finalising the sale and delivering 37 items of jewels for which tenders were called and are purported to have been accepted and whether they should be further restrained from selling the other jewels without the leave of the Court.

18. The main ground on which the injunction is sought against the trustees finalising the sale and delivering 37 items of jewels to the persons whose tendes are purported to have been accepted is that the trustees have not given due publicity for the sale of these priceless jewels and gems, formely collected and owned by Nizam VII and that as a consequence they have fetched a far lesser amount than they would otherwise have fetched. The trustees claim that they have taken the advice of reputed jewellers at Bombay and keeping in view considerations of security, have adopted the customary practice of requesting reputed jewellers and purchasers of jewels in India and abroad to inspect the jewels and give their offers for the purchase by way of tenders. It is, their further case that in respect of all the items of jewels, they have accepted only the highest tenders and in some cases have even negotiated with the highest tenderers and secured a higher offer than what was tendered. They have thus acted bona fide and did what in their considered opinion was in the best interest of they Trust. They also stated that as the exemption from payment of tax on capital gains was available only in respect of sales effected before 31st March, 1978 provided the sale proreeds were invested in the particular manner envisaged by the exemption clause, they adopted the method they did for expediting tbe sale of the jewels. They contended that as their action is not malafide, the sale held by them cannot be impugned and they cannot be restrained from delivering the jewels to the purchasers. According to them, there is a concluded contract between the trustees and the tenderers entitling the tenderers to the delivery of the jewels and the failure to deliver the jewels would expose the trust to a claim for damages.

19. That under the terms of the Trust Deed, the trustees are empowered to sell the jewels three years after the death of Prince Azam Jab Bahadur, the eldest son of the settlor is not in dispute. It is also not in dispute that as the jewels, which form the subject matter of the trust were not fetching any income, most of the beneficiaries were anxious that they should be sold at the earliest. In fact, even the appellant does not question the authority of the trustees to bring the jewels to sale. The decision of the trustees to sell the jewels is, therefore, in accordance with the Deed of Trust and their authority to sell the same is not in question.

20. It is also not in dispute, though a contrary stand was taken in the counter, that the appellant is one of the beneficiaries entitled to file a petition for removal of the trustees and also to question their actions. All that is contended in this behalf is, that a prima facie case has not been made out either for the removal of the trustees or for restraining them from discharging their duties under the Trust Deed, one of them being the sale of the jewels at this particular juncture. The only question therefore in this behalf is whether the trustees, who had authority to sell the jewels, look proper and bona fide steps to bring these valuable jewels to sale which a prudent person entrusted with property in Trust for the benefit of others would take steps to secure the highest possible price. The Trustees are bound to deal with such property if it were his own. The Trustees have no doubt given power in the matter of sales but where it is not exercised is good faith, such power may be controlled by the Court. If they have not exercised due care and caution that is reasonably expected of a person in that position in a matter tike this, then although their action may not be positively mala fide, or, as rashly alleged by the petitioner vitiated by any corruptive motive of receiving “twelve crores of rupees secretly”, still it cannot be sustained by this Court.

21. It is unnecessary for our present purpose to refer to the protracted correspondence which the trustees entered into with a view to persuade the Government of India to purchase the jewels. That correspondence went on from 1972 and ultimately ended with the Government of India permitting the sale of these jewels. The written permission for the sale of the jewellery was communicated by the Government of India in its Ministry of Finance Department of Economics Affairs letter Ex, B 45 dated 13-3-1978 addressed to the Secretary, H.E.H Nizam's Jewellery Trust, Hyderabad. The Trust was intimated that it was “free to sell the relevant items of jewellery subject to payment of taxes and other relevant laws including the Antiquities and Art Treasures Act”. From that, it would appear that oral intimation of the Governments’ disclination to purchase any of the items of the jewellery forming the subject matter of the Trust was conveyed to Sri R.N Malhotra, Chairman and Representative of the Government of India on the Board of Trustees and Additional Secretary to Government on 27-1-1978. That was confirmed under the aforesaid letter. The Government of India however added therein that it would be willing to accept suitable items if the same were donated or offered for display. Evidently envisaging such a contingency, the trustees were simultaneously taking steps to obtain a certificate from the Director General or Archaeological Survey of India. One of the Trustees addressed a letter (Ex. B-39) dated 25th January, 1978 to the Union Minister for Finance to expedite the determination of the question as to whether any of these jewels were antiques or not. The Director of Antiqui-ties, Government of India in his letter dated 22-2-1978 (Ex. B-44) issued “non-antiquity certificate” in respect of 65 items of jewels. Some other items however were declared to be antiquities and in respect of some, particulars were called for before they could be certified to be either antiqui???ies or non-antiquities. It is from out of these 65 items, that the Trustees, in the first instance, proceeded to select 37 items for bringing them to sale. From the endorsement thereon, this letter appears to have been received in New Delhi by one of the Trustees on 22-2-1978 itself. The first steps for the sale of these items was issuing letters to prospective purchasers intimating them of the sale of jewellery. That steps could therefore have been taken only on or after that date. A list of the names and addresses of the persons to whom letters were issued in February, 1978 (Ex. B-46) is furnished in which the names of 28 persons or firms are mentioned. Of these 7 are from outside India—three are of France, One of United States of America, One of Italy and two of Saudi Arabia. Of the remaining one is from Jaipur, Rajasthan, and three from Delhi and the rest are all from Bombay. There are none from Madras, Calcutta, Hyderabad or Bangalore. There are none from places reported for the sale of antique diamonds and jewellery like Geneva or Brussels and Belgium and Holand. The learned Advocate General has stated that these letters were despatched from 1-2-1978 onwards to the persons mentioned in the said list. But neither in the earliest counter affidavit filed by Mr. Md. Abbassi, one of the Trustees, nor in any subsequent affidavit has it been specifically averred that the letters were addressed from 8-2-1978 onwards. On the other hand, the averment in paragraph 6 of the affidavit filed by Mr. Md. Abbasi, would show that only after the permission of the Government of India was obtained, the trustees could take any steps for the sale of these items. That averment is in the following words.

“Such of the articles as had been declared by him as non-antiques he issued non-antiquity certificate and permission for sale and export of the same.was accorded. It is pursuant to this permission of the Government that the trustees made arrangements for the sale of the permitted items of jewellery……………”.

22. Therefore, the conclusion is inacceptabte that whatever steps the trustees took for giving publicity for the sale of the jewellery were taken only on and from 22-2-1978.

23. We may now examine what those steps were. The trustees averred in their counter affidavit that they took the aid and assistance of reputed jewellers of Bombay to guide them in the sale of jewellery. Evidently the procedure adopted by the Trustees for the sale was as per their advice. The affidavits of even one of those jewellers has not been filed. They claim that wide and sufficient publicity for the sale was given both within and outside the country and all leading jewellers in the country as well as reputed jewellers abroad had been informed of the proposed sale and they were asked to inspect and participate in the sale to be conducted in India. They have furnished a list (Ex. B-46) of the jewellers whom they have informed. That list is of 29 individuals or firms, already referred to above. It is, therefore, clear that the trustees by themselves did not contact curators of reputed Museums or Collectors of such precious stones and jewels here and abroad. It is averred by the petitioner that there are reputed jewellers and collectors of Paris, Geneva, Holland and Belgium. None or them have been contacted. None of the jewellers at Madras or Calcutta or Bangalore or Hyderabad were informed. Admittedly, publicity was not given either in the local press or foreign press. It would thus appear that the Museums or Collectors of such rare gems and jewels who would ultimately acquire the jewels from the dealers had no information about the sale of this precious jewellery. The information passed on to a few individuals does not satisfy the requirements of an open sale. The sale of jewellery such as the trustees were dealing with required a wide publicity in the world markets. The trustees did not exercise a proper discretion in adopting the procedure they did for the sale of these jewels. The few jewellers that were informed, were addressed by letters but were not furnished along with those letters all the particulars of the jewellery or the list or their estimated value. According to the Trustees, publicity in the Newspapers was not given for reasons of security. But we fail to comprehand how publicity in Newspapers would have exposed these jewels to any greater security risk. These jewels have all along been in the safe deposit lockers of the Mercantile Bank of India at Bombay. Whether the publicity was given in the newspapers or by addressing letters to some individuals, the jewels would still be in the safe deposit lockers of a Bank known to one and all. All those desirous of and complying with the conditions imposed by the Trustees would be allowed inspection on the specified dates. Evidently, the Trustees would have taken every step from the security point of view to Safeguard the jewels, when the jewels were being thus exposed for inspection. If a wider publicity through the press was given, a larger number would have undoubtedly known about the sale, inspected the jewels and tendered their offer. If larger number of persons turned up to inspect the jewels by making necessary deposit, the inspection would have taken one or two days more and the Trustees would have had to make security arrangements for those days as well, but thereby the risk was in no way increased. The reason given for not publishing in the newspapers in a way amounts to an admission that wide publicity was not given; but that reason does not appeal to us in the least.

24. The procedure adopted for the sate of the jewels was, as stated by the trustees themselves to allow inspection of 37 items offered for sale from 6th March, 1978 to 9th March, 1978 at Bombay. The conditions of the tenders were circulated to the 29 firms or individuals to whom letters were addressed in the form of memorandum (Ex. B-49). Sealed tenders were invited from parties subject to the stipulated conditions (Ex. B-49). For the purpose of inspection the intending tenderers were required to register themselves either at Gazdar (Private) Limited, Taj Mahal Hotel, Bombay or with the Secretary, H.E.H The Nizam's Jewellery Trust, Parade Villa, Fateh Maidan Road, Hyderabad at least three days before the date of inspection giving the particulars of their gold licence and a bank draft on a recognised bank in Bombay for Rs. 30,000/- made out in favour of the Trust as security deposit. The tenderers were furnished printed pamphlets Ex. B-47 and Ex. B-48 containing the description together with the Group and serial number of each items of jewellery offered for sale. The printed list of jewellery is Ex. B-51 and the statement of Groupwise allocation is Ex. B-52. Tenderers were required to given separately for each lot or articles of jewellery accompanied by the Demand Draft, Bank Payslips or cheques in Indian Rupees on a Recognised Bank for 10% of the offer. The Trustees reserved to themselves the right not to accept the highest bid. As inspection fee of Rs. 1,500/- per person was required to be paid. Tenders were to be opened by the Trustees on the date to be announced at the time of inspection and the parly whose tender was accepted was to be notified thereafter. It is stipulated in Condition No. 12 of the invitation for tenders that “the jewellery shall, on acceptance of the tender become immediately the property of the buyer and shall be available for delivery to the buyer immediately thereof on payment of the balance or 90% of the tendered amount as specified”. The tenderers whose offers are accepted are required to deposit in full the tendered amount after deducting 10% already deposited on the date or dates to be announced on the day of inspection before taking delivery. If the tenderers fail to pay the balance within the stipulated period, the sale would stand cancelled and the earnest money paid by them would stand forfeited to the Trust. The Trustees were at liberty to offer the same jewellery at the next sale and any deficiency arising out of such sale together with all expenses arising from the subsequent sale was to be borne by the tenderer who were also required to pay interest at the rate of 10% to the trust until the completion of the revised sale (Condition No. 12). Thus the intending purchasers were given time from 22-2-78 to 3-3 78 to register themselves for the purchase. Assuming that all the 29 persons who were addressed letters came to know of the sale of these priceless jewels even on 22nd February, 1978, they had hardly 10 days, to register themselves. Leave alone the foreign tenderers to whom the letters could not reach earlier than a week after 22-2-1978, even the intending tenderers of India would not have known about the sale for at least a day or two after 22nd February, 1978. Further, they had barely 12 days time to get ready with the amount for the purchase of these items and proceed to inspect on 6th, 7th and 8th March, 1978. They had to give bank guarantee or cheques for the amounts. This time was hardly sufficient for any foreign buyer to proceed to India, arrange for the amount and also for transmission, of the same to India for payment in Indian currency. Such unusual haste was not at all necessary for the sale of jewellery which were held in Trust for so long.

25. It is stated that with the publicity the trustees had chosen to give by addressing letters to only 29 persons, as many as 60 foreign and Indian buyers of repute inspected the jewellery vide Ex. B-53. This fact in our opinion, far from supporting the Trustees stand justifying the procedure adopted by them for sale, proves that many more persons than the Trustees chose to inform were keenly interested in the purchase of this jewellery. Obviously, the persons who were not addressed any letters came to know only through some jewellers who chose to disclose the news to them. Obviously if a wider publicity were to be given in the newspapers, as is generally done in the matter of sale of jewellery, and if reputed collectors and curators of museums of rare gems and jewels were to be addressed, they would have surely come forward to inspect and give their offers for purchase certainly, many more would have given their offers. It would be pertinent to note that even while conveying their intention not to purchase the jewels and permitting the trust to sell them, the Government of India in its letter dated 13-3-1978 had informed the Trustees that if any of these items are donated they would be displayed in the museums. That shows that what were sought to sell were rather rare and priceless pieces of jewels which the Government of India was anxious to display for prestige and public benefit. The rich collectors and museums abroad would have been certainly interested in purchasing such items. As a result of the procedure adopted by the Trust for the sale of the jewels, it received an offer of Rs. 14.43 crores in the aggregate for all the 37 items. Subsequent events positively establish that there were also other persons who were prepared to offer a higher price for the very same items of jewellery. One such, Peter Jancis Fernandez, made an offer by way of petition C.M.P 4248/78 on 14-4-1978 during the pendency of this appeal. This Court in order to test the bonafides of his offer, directed him to deposit the amount offered. In complicance with the said order, be filed a letter of guarantee of the State Bank of India. He has since inspected the said items of jewellery and confirmed his offer. He is anxious that the sale should be finalised and the jewels delivered to him. The margin between the price realised by the process adopted by the trustees and that offered by the subsequent publicity the sale of the jewels received during the pendency of the proceedings in this Court, is Rs. 5.82 crores. And this is inspite of the threat of a protracted litigation. If only wide publicity were given, we have absolutely no doubt, that many more intending purchasers would have inspected the jewels and this price of Rs. 20.25 crores would have been offered even at that time. In any case, a much higher price than what was realised by the trustees would have been received. It was however contended on behalf of the Trust that the receipt of a higher offer subsequent to the sale cannot be a ground to hold that the sale was itself not conducted bonafide and in a reasonable manner. It is urged that the subsequent higher offer cannot be an indication of the offer which a particular item offered for sale would have fetched at a safe. They even suggest that one of the unsuccessful tenderers now appears to have set up the petitioner in C.M.P, 4248/78 to deprive the other tenderers of the benefit of a fair and reasonable bargain.We are, however, not impressed by this contention. IF the previous tenderers thought that the value of the jewels was much more certainly they would not have taken the risk of offering a lower amount and losing the jewels to other parties. Further nothing is brought on record to suggest that the petitioner in C.M.P 4248/78 is one of the unsuccessful tenderers. The amount is offered by a person from Bangalore for the benefit of a foreign buyer. It may be recalled that the Trustees did not choose to address even a single individual or Firm at Bangalore. The amount has been arranged from a place in Middle East. 1 he margin between the offers received by the trustees and the offer now made by the said petitioner is so wide that no reasonable person can ignore the subsequent tender and confirm the former sale. That apart as would be discussed presently there is no sale at all in favour of the tenderers whose tenders are purported to have been accepted by the Trustees. To this aspect of the matter we will address ourselves forthwith.

26. The jewels offered for sale were placed in different groups and each item was identified with reference to the serial number it was given in the first schedule of the Trust Deed. The intending buyers were required their tender to offer for the jewels with reference to the group number and item number. Messrs. Shanti Vijay & Co., one of the several tenderers gave a bid of Rs. 1,60,00,101/- for item 6 of group XIII and Rs. 6,31,00,000/- for item No. 16 of Group XIV. Likewise, all other tenderers gave their offer for various items. The Secretary of the Trust Board drew up a list of the offers made by the several tenderers with reference to each item nothing the highest tender at the top. Although this list was not exhibited in the lower Court, at the time of hearing of this appeal, it was placed before the Court for perusal and relied upon by the Respondents. In fact, the trustees in order to establish that they have accepted only the highest offer in respect of each of these items, produced the same and also asserted that in respect of some of the items, they negotiated with the highest tenderer and secured a higher price than what was tendered. From that list, it is undoubtedly clear that the trustees have purported to accept only the highest price tendered and in respect of some of the items, they also negotiated with the highest tenderer and secured a higher price than what was tendered. In the case of Shanti Vijay & Co. while a sum of Rs. 6,80,00,001 was tendered for item 16 of Group XIV by way of negotiations, it was raised to Rs. 6,92,00,001/- This negotiated offer is signed by Sri M. A, Abbasi on 9-3-1978. It is not signed by any other trustee. That signature purports to have been affixed on 10th March, 1978. In the column of remarks, it is endorsed “negotiated offer accepted”. Under the said endorsement, three trustees have signed on 9-3-1978. Sri M.A Abbasi and another trustee R.N Malhotra have not signed that endorsement. Thus the total amount secured by the trustees by the sale of 37 items of jewels is Rs. 14.43 crores. The acceptance of these tenders is said to have been communicated under letters dated 10-3-1978 signed by the Secretary of the Trust and addressed to the tenderers whose tender has been accepted. In all these letters (Exs. B-54 to B. 65) it was stated that the tenderers should arrange to pay “the full balance of amount on 21st or 22nd March 1978”, and take delivery on that date at 11 A.M at the Mercantile Bank of India, Bombay. The numbers of the items inrespect of which their tenders were accepted with reference to the items, and the total amount payable by them was noted therein In the case of Respondent No. 6 M/s. Shanti Vijay & Co., the dates 21st and 22nd March 1978 are scored off and in its place ‘17th March. 1978’ inserted. That alteration is signed, but it does not bear any date. The letter itself appears to have been delivered on 11-2-78. But on the 10th itself, there is another endorsement signed by Mr. M.A Rahiman and Mr M.A Abbasi directing “May Please see before issue”. This is evidently a direction to the Secretary of the Trust to see the Trustees before issuing that letter. What instructions were issued by them to the Secretary is not clear. It may be pertinent to note at this stage that on 10-3-1978 the present appellant had filed O.P 141/78 for the removal of the trustees and had obtained an exporte ad-interim injunction on 14-3-1975 in I.A 565/78 restraining the Trustees from completing the sale. The representative of the Government of India Sri R.N Malhotra, who is one of the trustees and Chairman of the Board of Trustees had left Bombay on the 8th March, 1978 and was not available from that date onwards for discussion with the co-trustees. He, therefore, did not participate in any of the negotiations which the Secretary of the Trust or any of the other trustees had with any of the tenderers. Sri R.N Malhotra did not accept or reject any of the offers made by the tenderers. He was away at Delhi. It is stated by the Trustees that papers were sent to Sri R.N Malhotra and they were placed before him on 17-3-1978 and he communicated the confirmation of the acceptance of the offers. From the above narration of facts it is clear that in accepting the tenders all the trustees did not join and arrive at a decision either unanimously or by majority. There is no record to show that the Secretary or any of the two trustees were authorised to act on behalf of all the trustees or that all the trustees having accepted the highest offer directed the Secretary to communicate the acceptance as be did under the several letters (Exs. B-54 to B-65) addressed by him on 10th March 1978 to the tenderers. Much less is there any record to show that the trustees bad decided to negotiate with the highest tenderers and accept any particular sum by way of negotiations for any item of jewellery that was offered for sale. It is also not clear as to what amount all the trus tees negotiated with the highest tenderer and determined that the offer received at such negotiations was the highest price that could be. fetched for any particular item. It is, therefore necessary to ascertain the scope and extent of the authority vested in the Trustees under paragraph 20 of the Trust Deed is as under:

“And it is Hereby Further Agreed and Declared that in all matters wherein the trustees have a discretionary power the votes of the majority of the trustees for the time being voting in the matter shall prevail and be binding on the minority as well as on those trustees who may not have voted and if the trustees shall be equally divided in opinion the matter shall during the life time of the settlor be decided according to the opinion of the settlor and after his death according to the opinion of the trustee most senior in age for the time being”.

27. It would be seen from the above, that the Trustees are not empowered to take decisions separately. The decisions of the Trustees have to be arrived at by voting which implies that all of them must be present, take part in the delibra-tions and vote. If on such voting there is no unanimity, the decision would be by majority. It does not dispense with the meeting of all the Trustees. It does not permit a majority of the Trustees alone sitting and sending their decision to the others who were not informed of such matters coming up for discussion and decision. Under the terms and conditions of the sale itself, it was categorically declared in clauses 7 and 8 that “the trustees reserve the right to withdraw any lot or lots or articles of jewellery from the sale at their absolute discretion without assigning any reason” and that “the trustees are not bound to accept the highest or any offer and reserve the right of accept- ing the whole or such part of any tender or tenders as they may think fit”. From these terms and conditions it is quite clear that the trustees had the absolute choice to reject all tenders and proceed to negotiate with each tenderer for a higher price or reject all tenders, postpone the sale and put them up for a fresh sale after giving much wider publicity. That was a decision that was required to be taken by all the trustees. That was reserved to the Trustees under the specific terms and conditions of sale. However, the fact remains that all the Trustees never met to decide upon either accepting or rejecting the tenders or negotiation for a higher price. Hence the question of all the Trustees taking a decision either unanimously or by majority did not arise. Such of those trustees as were present seem to have accepted the tenders and in some cases negotiated with the tenderers. At what stage they gave up further negotiations and who and how many among them decided to accept the amount offered, is not clear from the record. It does not appear from the record that Sri R.N Malhotra, at any stage before the injunction order was issued by the Court, ever confirmed or accepted the highest tender or negotiated in respect of any of the items offered for sale. As the Court had issued an injunction against the trustees even on 14-3-1978, it was not at all proper on the part of any of the trustees to take any further steps in the matter of sale of the jewels without the leave of the Court. Any such step taken by the Trustees, contrary to the directions of the Court, would be illegal and invalid. Unless the instruments otherwise provides, as laid down under Section 48 of the Trust Act, all Trustees shall have to act collectively. Clause 20 of the instrument of the Trust extracted above only provides for decision by majority, but does not dispense with requirement of the matter being placed for the consideration of all the Trustees.

28. In Man Mohan Das v. Janki Prasad the Privy Council referred with approval to the following passage in Lewin “On Trusts” which is as follows:—

“In the case of co-trustees the office is a joint one. Where the administration of the trust is vested in co-trustees, they all form as it were but one collective trustees, and therefore must execute the duties of the office in their joint capacity. It is not uncommon to hear one of several trustees spoken of as the acting trustee, but the Court knows no such distinction; all who accept the office are in the eyes of the law acting trustees. If any one refuses or be incapable to join, it is not competent for the others to proceed without him, but the’ administration of the trust must in that case devolve upon the Court, However, the act of one trustee done with the sanction and approval of a co-trustee may be regarded as the act of both. But such sanction or approval must be a strctly proved.”

29. Their Lordships further observed that “this is the correct statement of law applicable in England that the same doctrine applies in India also, AS observed in Janakirama v. Nilakanta.

“The Trust Act does not empower the trustees to delegate their power and the Act has also gives specific instance where one trustee out of two or more trustees can act so to bind the entire trust and none of these provisions confer powers on the majority to deal with trust property by transferring the same”,

la that case, the Trust Deed had provided as under:

“In all the proceedings to be taken in connection with this estate, you three, either unanimously or according to the decision of the majority, shall act”.

30. The Court held the meaning of that clause to be in all matters connected with the trust, “the decision could be taken either unanimously or by majority of the trustees and the majority decision shall be binding on all the trustees and all the trustees should act in accordance with such decision. The majority could only decide and such decision would be binding on the entire body of the trustees but it was the entire body of the three trustees should act, and any action taken in pursuance of the decision could only be by three trustees joining together and not by two trustees alone and therefore the further steps to be taken in pursuance of the decision including the execution of a sale deed must be by all the three trustees. The view taken by the Madras High Court in Janakiram v. Nilakanta was approved by the Supreme Court in Janaki-rama Iyer v. Nilakanta Iyer.

31. In Fakira v. Ganpat it was held as follows:—

“The majority decision, in order to be binding on the entire body of the trustees, should have been arrived at after due deliberations by all the trustees. Where it was an act of the majority alone it will not; be binding on the minority”.

32. This is the situation in the present case. All the five trustees never discussed and decided by majority to accept any particular tender or to enter into negotiations for a higher price. There was no provision for such a negotiation in the terms and conditions communicated to the tenderers. The discussion after intimation to all the Trusiees was absolutely necessary in view of clauses 7 and 8 of the conditions of the sale. If after such deliberation, the majority of the trustees had decided, then such a decision would have been binding on the Trust. As all the Trustees were never called upon to deliberate and only some of the trustees who constitute a majority decided to accept a particular offer or negotiated price, that decision cannot be said to be the decision of the Board of Trustees so as to be binding on the Trust or the minority of the other Trustees who never participated in the decision. Before there could be binding contract between Trust and the Tenderers, the decision had to be reached by the Trust either to accept the tender or to negotiate for a higher price as stated above. There was no such decision in the case of any of the tenderers. As observed by the Calcutta High Court in Shyam Rangini Ray Chaudharani v. Ajindra Nath Tagore “the law does not recognise any such thing as an acting trustee who carries on the administration and whose decisions are merely endorsed by the other trustees”. In Janakirama Iyer v. Nilakanta Iyer the Supreme Court referring to the oft-quoted passage of Lewin “On Trusiees” already extracted above observed:

“Section 48 contemplates that its provisions will not apply where the instrument of trust otherwise provides, In other words, if a trust deed under which more trustees than one are appointed expressly provides that the execution of the trust may be carried out not by all but by one or more then of course the matter would be governed by the special provision of the trust deed”.

33. The Supreme Court considering Clause 23 of the Trust Deed therein held that “all the trustees could have joined in the execution of the sale in question”.

34. On the strength of that decision, it was contended that only for the execution of the sale deed, all the trustees are required to join, and not for deciding upon the consideration for the sale and taking other steps for finalising the sale. That in our opinion, is not the purport of the judgment or the purport of Section 48 of the Trust Act; or the intendment of the Settlor in this case in imposing he stipulation under Clause 20 of the Nizam's Jewellery Trust Deed. The action of the Secretary signifying his acceptance by signing in the list and three other trustees Sri M.A Abbasi and Sri M.A Rahiman signing the said list thereafter may at the most amount to endorsement of the action of the Secretary. The subsequent confirmation of this action by Sri R.N Malhotra on 22-3-1978 may amount to a confirmation of that action, but the action of none of the trustees would amount to a decision by the Trustees either by majority or unanimously before the letters dated 10th March, 1978 were issued to the tenderers. This action of the Trustees does not result in a binding contract between the Trust and the Tenderers. As observed by the Calcutta High Court in the above cited decision:—

“Where there are trustees more than one, it is essential that they should join together in the performance of any duty which the Trust Deed imposes upon them………When the settlor has made a settlement with the trustees each one of the trustees has got to exercise individual judgment and discretion on every matter. The exceptions which exist with regard to this principle are well settled. If there is a direction to the contrary in the deed of settlment, all the trustees need not join in any particular act. They also need not act together…………… In the absence of a direction to the contrary in the deed of settlement, it is not competent to one of the trustees even though be was a beneficiary trustee to consent to the splitting up of division of the rent”.

35. The direction in Clause 20 of the Nizam's Jewellery Trust Deed does not mean that even three out of four trustees would be entitled to take any decision and send tbat decision for confirmation to the other trustees. It merely authorises a decision to be arrived at by a majority after each one of the trustees has considered the matter. When one of the trustees was never given an opportunity to consider and was merely intimated after letters dated 10-3-1978 were despatched to and received by the tenderers about the action taken by the other trustees on the tenders received, the confirmation by that trustee is of no consequence; more so, when that confirmation is said to have been made after the Court had issued an injunction. Until all the Trustees have considered the matter, there could not have been a valid decision by majority.

36. It is also significant to note that while every tenderer, whose tender is purported to have been accepted, was asked to deposit the amount on 21st and 22nd March, 1978 and a similar communication is also said to have been addressed to Messrs. Shanti Vijay & Co. that date was altered to 17th March, 1978. Among the several offers received the offer of M/s Shanti Vijay & Co., for two out of the 37 items is the highest at Rs. 8,52,00,001 and it is more than half the total amount socured by the sale of 37 items of jewellery. In that circumstances that date was altered from 21st to 17th is not explained. The trustees did not act in accordance with clause 20 of the Trust Deed in issuing letters dated 10-3-1978 to the various tenderers purporting to accept the highest tender or negotiated offer. In our opinion, therefore, there was no concluded contract between the trustees and tenderers so as to pass the property in the jewels to the tenderes so as to entitle them to the delivery of those items,

37. The next question, therefore, would be whether in the circumstances, the offer of Rs. 20.25 crores given by the 6th respondent could and ought to be accepted by the Court in these proceedings. This appeal arises out of an order vacating the interim injunction issued by the original Court pending a petition for the removal of the trustees. The trustees had not acted reasonably and with due care and caution, Though they have the power to sell and in their discretion they may accept an offer, they were required by law to exercise all care and caution expected of a prudent man acting in good faith. The jewels in question were of rare value and two of the items are reputed and have been bought by a former Nizam from the Czar and Czarina of Russia. No reasonable man would have sold away such priceless jeweles with such meagre publicity. The publicity which the sale of these jewels received since the institution of the proceedings has resulted in this higher offer of Rs. 20-25 crores as against Rs. 14.43 crores. Although the proceedings have been pending for the last three months, no offer higher that has been received. The Trustees and now the appellant also expresses the apprehension that if the same jewels are put to resale, they may not fetch even the previous price of Rs. 14 43 crores leave alone Rs. 20-25 crores. It therefore appears to us that that is the highest offer that could be secured for these 37 items of jewels. It was contended that in these proceedings, the Court cannot accept such a tender, we are unable to agree with this contention, Undoubtedly the acceptance of the present offer which exceeds the previous offers purported to have been accepted by the trustees by Rs. 5,82 crores and is certainly beneficial to the Trust and the entire body of beneficiaries. In Ramaswamy v. Alagia Singaperumal Kadavul. It was held that even in a suit for removal of the trustees, the validity of the alienation of the trust property could be decided. In Janakirama Iyer v. Nilakanta Iyer the Supreme Court laid down that in the case of private trusts, where the trust properties are improperly alienated by the trustees, Section 63 cannot be read as exhaustively dealing with all the remedies available to the beneficiary. In a proper case, the beneficiary is entitled to sue for the removal of the trustee appointed under the Trust, for the appointment of a new trustee and for delivery to the new trustee of the property improperly alienated by the previous trustee. Such a suit is not prohibited by Section 63 of the Trust Act.

In re Hodges, Davey v. Ward Malin V.C Opined……………………“XXXX The view I have always acted upon, which, I think, is the proper view, and which I shall continue to act upon, is this, that where the trustee acts in the exercise of his discretion, it is incumbent upon the Court to pay every respect to that exercise, but it must consider whether it is properly done; adopting the language of Sir T. Wigratn, which Mr. Bristowe cites to me, the Court must consider whether it is an honest and proper discretion. Paying every respect, as I always do, and as I am bound to do, to the discretion of the trustees, I still must exercise my own judgment, and take that course for my wards which I think is most for their benefit”.

38. We think that this, the course we ought to adopt in the circumstances, for, the Trustees, in our view, did not deal with the trust property as carefully as a man of ordinary prudence would deal with such properly if it were bis own. The discretionary power not having been exercised reasonably and in good faith, though not malafide, the Court ought not to sustain it. Once the discretionary power of the Trustees is found to be not properly exercised, the Court ought to set it at naught. And when the Trustees have already decided to sell the jewels, neither the beneficiaries nor the trustees can have any objection to the sale of the jewels at a higher price which would benefit the Trust and all the beneficiaries. The decision to sell the jewels having been already taken by the trustees and beneficiaries having insisted that the jewels should be brought to sale, in the absence of a concluded contract between the Trustees and the Tenderers, there is no reason why the offer of the petitioner in C.M.P 4248/78 i e, Rs. 20.25 crores should not be accepted. It was urged on behalf of the Trustees that if at this stage, the tenders accepted by them are nullified by the Court, merely because a higher offer is received later it would be difficut for the Trustees to sell the remaining Jewels. We however do not think so. Firstly, it must be remembered that the offer of Rs. 20.25 crores itself is received after purported acceptance of the previous offers by the Trustees; secondly, when the sale of the Trust property is under the auspicies of the Court, the purahaser would give their offers with more confidence; and lastly, as discussed above, there is no concluded contract between the Trustees and the Tenderers at the most all that can be said is that the negotiations had reached an advanced stage. In Buttle v. Saunders where negotiations for sale of property, which was held by the Trustees for sale, were in an advanced stage, the Trustees received a higher offer from one of the beneficiaries, but “they considered themselves bound by commercial morality to complete with the original purchaser” and refused the higher offer, the Chancery Division held————

“Although in such circumstances trustees had such a discretion as would allow them to act with prudence and it would redound to the credit of an ordinary vendor to close the deal with the original purchaser notwithstanding the receipt of a higher offer, trustees were, not vested with such freedom, but had an overriding duty to obtain the best price for their beneficiaries; in the present case it was their duty to have probed the later offer and to have agreed to it on condition that the person making it bound himself immediately to complete the purchase at the higher price”.

39. Having regard to the events subsequent to filing of the O.P and C.M.A and all the facts and circumstances of the case more especially the fact that there is not higher offer than that of the petitioner in C.M.P 4248/78 the offer of the said petitioner is accepted. In view of the conclusions we have reached above, the acceptance of the offer of Rs. 20-25 crores ought to be accepted and sale of 37 items of jewels in question completed.

40. We, therefore, direct that the 37 items of the jewellery of which inspection has already been granted to the petitioner in C M.P, 4248/78 shall be delivered to him by way of sale on payment of the said amount by the State Bank of India on behalf of the said petitioner subject to the production of the licence under Gold Control Act.

41. We may also notice that the Trust is subject to the jurisdiction of the Courts in Andhra Pradesh. The office of the Trustees is located at Hyderabad. The proceedings in O P. 141/78 and I.A 565/78 have been initiated much earlier than the suit O S. No. 598 of 1978. One of the tenderers M/s. Keshavlal Dalpat Rat Zaveri whose tender was accepted in respect of five items of jewellery had instituted the above suit on the original side in the Bombay High Court claiming that there is a concluded contract in his favour in respect of the said five items of jewels and has sought on injunc-tion against the trustees restraining them from giving inspection of any of the 37 items of jewels and also from delivering to anyone else the 5 items purchased by him. That injunction was slightly modified by the Bombay High Court itself to enable the Trustees to give an inspection of the jewels as per the directions of this Court. An inspection was accordingly given. The question whether there was a concluded contract or not is a matter directly or substantially in the issue in these proceedings before this Court and had been raised much earlier to the institution of the above suit on the original side of the Bombay High Court. In these circumstances, we are of the view that having regard to the decision arrived at by us in this behalf, the petitioner in C.M.P 4248/78 is entitled to the delivery of the 37 items of jewellery by way of sale subject to the Gold Control Order and subject to the payment of Rs. 20.25 crores. The Trustees shall, therefore, take such steps as may be necessary expeditiously to deliver the said items of jewels to the petitioner. As there is no valid or concluded contract between the trustees and the former tenderers, the respondents trustees are restrained from selling or delivering to them any of the 37 items of jewellery of which inspection was given to the petitioner in C.M.P 4248/78 in pursuance of the orders of this Court dated 8-5-1978 and 19-5-1978.

42. In the Result, the C.M.A is allowed, the order under appeal is set aside and the following directions shall be issued.

43. The respondent-trustees shall immediately on production of the necessary licence under the Gold Control order and the payment of the amount of Rupees Twenty crores and Twenty five lakhs by the State Bank of India on behalf of the petitioner as guaranteed by it earlier, deliver by way of sale the aforesaid 37 items of jewellery to the petitioner in C.M.P 4248 of 1978 or the Foreign Collector represented by him or his nominee in the presence of the petitioner in C.M P. 4248/1978 his counsel and the Commissioner Sri P. Srirama Raju, Additional Registrar, High Court of Andhra Pradesh, Hyderabad. The petitioner in C.M.P No. 4248 of 1978 shall deposit a sum of Rs. 2,500/- in the Court within one week from today towards the Commissioner's fee and expenses The Commissioner shall, on receipt of the intimation from the trustees, proceed to Bombay to verify whether the seals put by the Commissioner on the lockers are in tact and be present at the delivery of the 37 items of jewellery by the Trustees to the petitioner in C.M.P No. 4248/78.

44. For the reasons stated above, princess Amina Marzia is allowed to be impleaded in C.M.A No. 147/78 as appellant No. 2 and she is permitted to continue the appeal and the other interlocutory proceedings in the appeal. In view of the above, the petitioner in C.M.P No. 6259/78 Princess Amina Marzia is designated as appellant No. 2. Appellant No. 1 is permitted to retire from the appeal and other proceedings but it is hereby made clear that her retirement of itself shall not operate as dismissal of the appeal or any of the other petitions. They shall be disposed of on their merits.

45. The petitioner in C.M.P No. 6259/78 has also orally prayed for being impleded as petitioner in C.P 141 of 1978 on the file of the Chief Judge. City Civil Court, Hyderabad, That request is also allowed. Princess Amina Marzia shall be brought on record as petitioner No. 2 in O P. 141/78. She will be entitled to continue the said O.P

46. Both the petitions are allowed accordingly.

47. It is represented by the learned Advocate General that in view of the order pronounced by this court in the C.M.A and the other petitions, Peter Jansin Fernandez having become entitled to the delivery of the 37 items of Jewellery, the State Bank of India ought to be directed to put the amount in fixed deposit to the credit of the C.M.A 147/78 so that it may earn interest. Mr. Sadutulla Hussainni the learned counsel for Jansin Fernandez has no objection to this course. The State Bank of India is therefore, directed to deposit 20-25 crores of rupees as guaranteed by it on behalf of Jansin Fernandez to the credit of the C.M.A 147/78 and the said fixed Deposit Receipt shall be filed into the Court.

Orders accordingly.

A.A.O No. 147/1978 and C.M.P Nos. 4248 Etc. of 1978

Princess Fatima Fronzia And Others v. Sri Sayeed-Ul-Mulk Alias Nawab Saheb Chattari And Others

Structured Summary of the Court's Opinion

Factual and Procedural Background

Legal Issues Presented

Arguments of the Parties

Appellant's Arguments

Respondents / Trustees' Arguments

Table of Precedents Cited

Court's Reasoning and Analysis

Holding and Implications

Princess Fatima Fronzia And Others v. Sri Sayeed-Ul-Mulk Alias Nawab Saheb Chattari And Others

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