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Bilasrai Joharmal And Another v. Shivnarayan Sarupchand And Others
Factual and Procedural Background
On 2 September 1939, with the sanction of the Advocate-General, the appellants instituted a suit on the Original Side of the High Court at Bombay under Section 92 of the Code concerning a public charity: a hospital at Bagar in Jaipur State originally established in 1926 as the Shivnarayan Joharmal Bagar Hospital to provide medical relief to the poor. The plaintiffs sought the removal of five trustees and the appointment of new trustees, and also sought accounts on the footing of alleged misapplication of trust funds. It subsequently became plain that the allegation of misapplication lacked substance and that the sole ground of complaint was that the defendants had changed the hospital's name to "Shivnarayan Chiranjilal Rungta Hospital" and were using that style on hospital papers and rent notes.
At trial, Chagla J. (decree dated 10 October 1941) removed the trustees, appointed new trustees, and directed handover of trust properties and books, but did not provide relief for misapplication or order accounts. On appeal, Beaumont C.J. and Somjee J. set aside the trial decree and dismissed the suit by decree dated 19 March 1942. The present appeal challenges that appellate dismissal. The deeds governing the trust include a deed of 21 April 1936 (naming the trust and prescribing the original title "Shivnarayan Juharmul/Joharmal Bagar Hospital") and a deed of 12 May 1939 (which records resignations, appoints new trustees and contains a clause declaring the charities shall henceforth be known as "The Shivnarayan Chiranjilal Rungta Hospital Charities").
The factual background includes family relationships relevant to the title: defendant 1 is Shivnarayan; Joharmal is his brother; "Rungta" is the family name. Bilasrai (plaintiff 1) is a son of Joharmal. The record shows significant financial contributions by Shivnarayan (a new hospital built and equipped at a cost of roughly four lacs and about three lacs invested in Bombay property), and that Joharmal is a co-owner of the site of the Bagar hospital.
Legal Issues Presented
- Whether the High Court of Bombay had jurisdiction and/or should exercise equitable jurisdiction to remove trustees and appoint new trustees of a charity whose hospital is conducted in the independent Jaipur State.
- Whether a change of the charity's name (to "Shivnarayan Chiranjilal Rungta Hospital") by the trustees amounted to a misapplication of trust funds or a breach of trust sufficiently serious to justify removal of the trustees.
- Whether taking a petition to a local court in Jaipur (the Court of Nizamat Shekhawati) to ratify the change of name constituted an act in defiance of the High Court of Bombay.
- What principles a Court of Equity should apply when asked to interfere with the administration of a charity that is carried on in a foreign jurisdiction and which the Court cannot effectively supervise.
Arguments of the Parties
Appellants' Arguments
- Sir Herbert Cunliffe for the appellants argued that Bombay had jurisdiction and could properly intervene because the trust was originally created in Bombay with monies then lying in Bombay.
- It was submitted that the trust funds had been invested in Bombay property pursuant to an order of the High Court of Bombay, and that some breaches of trust (in relation to rent notes and other papers) had been committed in Bombay.
- The appellants also relied on the deed language "hospital or hospitals in Bagar or elsewhere" to assert that Bombay's supervisory role was relevant.
Defendant / Respondent Position (as recorded)
- Shivnarayan's written statement asserted that Joharmal's name was included in the original title because Joharmal had promised to contribute equally to the funds; however, there is no proof of that promise in the record.
- The defendants sought ratification of the name change from the local Jaipur tribunal and thus invoked the local court's authority regarding the charity carried on in Jaipur State.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| '94) 18 Bom 551 | Invoked by the trial judge for the proposition that where a court cannot supervise a charity it will not frame a scheme but will take steps to safeguard trust funds within the jurisdiction. | The trial judge relied on this principle to justify safeguarding measures; their Lordships noted the principle but held that the trial judge exceeded what was appropriate by removing trustees for a name change. |
| Advocate-General v. Bai Punjabai ('16) 3 AIR 1916 Bom 225 : 32 IC 925 : 18 Bom LR 60 | Same general principle as above: courts reluctant to frame schemes for charities they cannot effectively supervise and instead will protect assets within jurisdiction. | The trial judge cited this authority; their Lordships accepted the protective element of the principle but disagreed with the trial judge's removal of trustees on the facts of this case. |
| Kanji v. Advocate-General (as cited) | Appears cited for the proposition about non-interference where supervision of the charity cannot be exercised by the court. | The trial judge relied on this series of authorities. Their Lordships agreed with the underlying principle but found the trial judge's application (removal of trustees for a name change and requiring resignation) to have been excessive. |
| Letterstedt v. Broers (1884) 9 AC 371 : 53 LJ PC 44 : 51 LT 169 | Establishes that jurisdiction to remove trustees is ancillary to the court's principal duty to ensure trusts are properly executed; the main guide in exercising such jurisdiction is the welfare of the beneficiaries. | Their Lordships relied upon this authority to frame the proper approach: removal of trustees is a delicate, ancillary jurisdiction and must be guided by beneficiaries' welfare. Applying this principle, they held removal was not justified on these facts and affirmed that supervision of the charity's administration should ordinarily rest with the courts of the country where the charity is carried on. |
Court's Reasoning and Analysis
The court proceeded in stages and adhered closely to the facts and established equitable principles as recorded in the opinion.
- Jurisdictional threshold: The court noted that no objection had been taken under clause 12 of the High Court's Letters Patent and therefore there was no procedural defect in the High Court of Bombay's jurisdiction in that technical sense. The court acknowledged that a Court of Equity acts in personam and sometimes exercises jurisdiction over trustees in matters touching foreign land or rights abroad.
- Distinction between protecting assets and supervising administration: The court drew a clear line between (a) protecting and preserving the trust funds that lie within its jurisdiction and (b) directing the proper conduct and administration of a charity carried on in a foreign country. It accepted that the former is a proper exercise of jurisdiction but the latter—imposing directions for the general administration of a foreign charity—is a different matter.
- Assessment of the trial judge's intervention: The court reviewed the trial judge's reasoning, including reliance on authorities that counsel non-intervention where the court cannot supervise a charity, yet observed that the trial judge nonetheless took broad steps affecting the charity's administration (removal of trustees, transfer of land and buildings in Bagar, and replacement of managers). Their Lordships characterized the requirement that the trustees resign, and the removal ordered when they refused, as action "far in excess" of what the circumstances warranted.
- Nature of the alleged breach: The court held that the mere change of name did not alter the nature of the charity and was not, on the facts as presented, a sufficiently serious breach of trust to justify removal of trustees. It found that the petition to the Jaipur tribunal seeking ratification was not an act of defiance against the High Court of Bombay.
- Local forum considerations: The court emphasized that the administration of a charity depends on the law and courts of the country where the charity is conducted. It observed that there was no evidence as to whether Jaipur law permitted trustees to alter the name of such a charity without a court order, and reasoned that if any court could sanction or condone such a change, the proper court would be that of the Jaipur State.
- Application of guiding principle (Letterstedt): Their Lordships reiterated that jurisdiction to remove trustees is ancillary and must be exercised with the beneficiaries' welfare as the primary guide. Given the charity operated in Jaipur State and the only hospital in question was at Bagar, it was appropriate discretion to leave the plaintiffs to remedies in the local courts of Jaipur rather than to permit intermittent intervention by the Bombay courts affecting the administration of the charity.
Holding and Implications
APPEAL DISMISSED.
Direct Consequences
The court dismissed the appellants' appeal and ordered that the appellants must pay the costs of respondents 1, 3, 4 and 5. The appellate decree of Beaumont C.J. and Somjee J., which set aside the trial judge's removal of the trustees and dismissed the suit, was affirmed.
Broader Principles and Practical Implications
The opinion affirms the following practical principles (as applied in this case):
- The High Court may protect and preserve trust funds within its jurisdiction, but direction of the proper conduct and ongoing administration of a charity carried on in a foreign independent State is ordinarily a matter for the courts of that State.
- A mere change of name does not alter the nature of a charity and, absent evidence that the change amounts to a serious breach affecting beneficiaries' welfare, does not automatically warrant removal of trustees.
- Removal of trustees is a delicate ancillary jurisdiction and must be exercised with the beneficiaries' welfare as the principal guide; courts should avoid excessive interference in the administration of charities conducted abroad where local remedies exist.
The decision leaves the plaintiffs to seek remedy from the courts of the jurisdiction where the hospital is carried on (Jaipur State) with respect to any matters of local administration or validation of the change of name.
Sir George Rankin.:-
The appellants on 2nd September 1939, with the sanction of the Advocate-General, brought a suit on the Original Side of the High Court at Bombay under S. 92 of the Code in respect of a public charity. The charity concerned is a hospital at a town in the Jaipur State called Bagar. It was established in 1926 for providing medical relief to the poor and was called Shivnarayan Joharmal Bagar Hospital. The plaint asked that the defendants, who were five in number, should be removed from their office as trustees and that new trustees be appointed by the Court. It also asked for accounts to be taken of the defendants' management, on the footing that they had been guilty of misapplying the funds of the trust; but it is now plain that this allegation is wholly without substance and that the sole ground of complaint is that the defendants have without authority changed the name of the hospital to Shivnarayan Chiranjilal Rungta Hospital and are employing this new style both in bills, papers and labels of the hospital and on the rent notes issued in respect of the property in which the funds are invested.
The learned trial Judge, Chagla J., by his decree of 10th October 1941, removed the trustees and appointed new trustees. He directed the defendants to hand over to the new trustees the trust properties in their possession, together with all the books of account, papers, vouchers, documents, etc., relating to the hospital, but the decree contains no provision giving relief against misapplication of trust monies and no direction for accounts. On appeal Beaumont C. J. and Somjee J. set aside this decree and dismissed the suit; and from their decree dated 19th March 1942, this appeal is brought.
Defendant 1 is Shivnarayan, and Joharmal is the name of his brother. Rungta is their family name. Bilasrai, plaintiff 1, is one of the two sons of Joharmal-the other, Govindram, having been given in adoption to Shivnarayan, whose only son Chiranjilal died in 1922. Shivnarayan and his brother are natives of Jaipur and come from Bagar. Both plaintiffs are described in the cause title as "of Bagar." The history and nature of the charity is sufficiently disclosed by two deeds. The first is dated 21st April 1936, and recites that in or about 1926 Shivnarayan had set apart the sum of one lac for the purpose of establishing and maintaining a hospital at Bagar and that the sum standing to the credit of the fund with the family firm had increased to Rupees 1,42,079. It provides that Shivnarayan (defendant 1), Bilasrai Joharmal (plaintiff 1), Bholaram Hardatrai and Onkarmal Pannalal (defendants 3 and 4), together with one Brijlal Ramjidas, should be trustees. They were to apply the trust monies in establishing and maintaining "a hospital or hospitals in Bagar or elsewhere for providing free medical aid to the poor people." Clause 3 was as follows:
"3. The said trust moneys, securities, investments and the properties forming part of the trusts shall be called Shivnarayan Juharmul Bagar Hospital Trust Fund and the hospital or hospitals established by the trustees out of the trust funds shall be called Shivnarayan Juharmal Bagar Hospital or Hospitals. The said trust moneys, securities, investments, etc., shall be kept in the said Shivnarayan Juharmal Bagar Hospital account."
The second deed is dated 12th May 1939. It recites that Brijlal Ramjidas and the plaintiff Bilasrai Joharmal had resigned from the trusteeship, that pursuant to a decree of the High Court at Bombay dated 15th October 1937, certain immovable property in Bombay known as Chowpatty Chambers had in 1938 been acquired for the trust as an investment of its funds, and that in addition to this property the trust was possessed of Rs. 81,800 in deposit with a Calcutta firm. By the operative clauses of this deed Shivnarayan Bholaram and Onkarmal appoint as new trustees Hariram Banarsidas and Motilal Nath (defendants 2 and 3 in the present suit). This deed ends by providing:
"And whereas the whole of the moneys subject to the trusts of the said deed poll deed of trust were contributed by the said Shivnarayan Sarupchand alone and the said Shivnarayan Sarupchand has requested the continuing and the new trustees that the charities created thereunder should henceforth be known by the name of 'The Shivnarayan Chiranjilal Rungta Hospital Charities' the continuing and the new trustees hereby declare that the name of the charities created by and subject to the trust of the said deed poll deed of trust shall henceforth be and be carried on in the said name of 'Shivnarayan Chirairilal Rungta Hospital Charities'."
From the plaint (para. 4) it would appear that for some time the family name "Rungta" had been used instead of the word "Bagar" in the title. However that may be, the effect of the change proposed by the deed of 1939 was to remove the name of "Joharmal" from the title of the charity and to put in its place the name of "Chiranjilal," the deceased son of Shivnarayan. That this should give offence to Joharmal and his son Bilasrai was perhaps only to be expected. Shivnarayan by his written statement makes the case that when he first provided the sum of one lac to found the charity he included his brother Joharmal's name in its title because Joharmal promised to contribute to its funds equally with himself. Of this allegation, however, there is no proof; but it is clear that while Joharmal is a co-owner of the site on which a hospital in Bagar has been built, Shivnarayan is the founder of the charity and has out of his own funds endowed it with large sums. A new hospital has been built and equipped at Bagar at a cost to Shivnarayan of some four lacs, and in addition thereto three lacs have been invested by him on behalf of the trust in property in Bombay. His removal from the office of trustee is therefore a drastic measure not readily to be justified in the interests of the charity or of the poor of Bagar.
The learned trial Judge refused to apply the principle that he ought not to interfere in the administration of a charity which is carried on within the borders of an independent State. He appears to have accepted as well settled the rule that if the Court is not in a position to supervise the carrying out of a charity it will not frame a scheme in respect of that charity but will take such steps only as are necessary to safeguard such trust funds as lie within the jurisdiction: ('94) 18 Bom 551, Advocate-General v. Bai Punjabai ('16) 3 AIR 1916 Bom 225 : 32 IC 925 : 18 Bom LR 60, Kanji v. Advocate-General But he took the view - somewhat unreasonably, as their Lordships think-that if the name was changed without proper authority the application of the hospital funds to the hospital was a misapplication of those funds and amounted to a breach of trust which required the Court to safeguard them. Further, he took strong exception to the defenants' conduct, in that on 13th February 1941-that is, pending suit - they had presented a petition to the Jaipur "Court of Nizamat Shekhawati" asking that the change of name might be ratified and confirmed. While acquitting them of dishonesty or moral turpitude, he suggested to their counsel that if they were prepared to resign he "might consider the question of condoning their breach of trust," and as this was not acceded to he removed them from office. In their Lordships' view this method of dealing with the matter is open to serious criticism even on the assumption that the defendants' conduct amounted to a breach of trust which the Court was called upon to correct. If the learned Judge had ordered the defendants to restore the original name they might or might not have obtained a stay of his order and appealed from it. If they failed to comply with it, a motion to remove them or to commit them could have been made in due course and upon proper materials. But to require them to resign, and on their refusal to direct their removal from office was to take action far in excess of anything that was called for. The defendants' refusal to resign added nothing whatever to the case against them.
Their Lordships agree with the Appellate Bench in holding that the petition to the Jaipur tribunal was not an act in defiance of the High Court of Bombay; that a charity does not change its nature merely by a change of name; and that on any view the change of name was not such a serious breach of trust as to justify the removal of the trustees. The learned Chief Justice further observed :
"Now, this charity, as appears from the plaint, is a foreign charity. It conducts a hospital in Jaipur State, and it is a well established principle that the administration of a charity depends upon the law, and is controlled by the Court, of the country where the charity is conducted. In my opinion, there is no jurisdiction in this Court to remove trustees of a charity functioning in Jaipur State, and to appoint new trustees of that charity."
The correctness of this view of the law has been challenged in argument by Sir Herbert Cunliffe on behalf of the appellants, who has, insisted on the facts that the trust was originally created in Bombay with monies then lying in Bombay; that these were invested in Bombay property pursuant to an order of the High Court of Bombay; and that the breaches of trust complained of had been to some extent committed in Bombay in connexion with the rent notes and other papers. He pointed also to the words "hospital or hospitals in Bagar or elsewhere " which appear in cl. (1) of the deed of 21st April 1936.
It does not appear that any objection was taken at the trial to the jurisdiction under cl. 12, High Court's Letters Patent, and their Lordships are satisfied that there was no defect of jurisdiction in that sense. As a Court of Equity acts in personam it may and sometimes does exercise its jurisdiction over trustees and others in respect of foreign land and otherwise in connexion with rights to property situated abroad. The question here, however, is as to the principles which the Court will observe in taking upon itself to interfere with the administration of a charity when that charity has to be conducted in a foreign country and the Court is for that reason in no position to supervise its administration effectively. That the Court will protect and preserve the funds of the charity by the exercise of its jurisdiction over the trustees or other persons is very certain. But the proper conduct of the charity and the giving of any necessary directions for that purpose are another matter. In this case the Court was asked to make an order which affected the administration of the charity at every point - namely, an order for the removal of the persons who were conducting the management of the hospital and for the transfer to other persons of the land and buildings at Bagar as well as of the immovables in Bombay in which the money of the charity was invested. The words ''or elsewhere" in the deed of 1936 do not seem to be important for the present purpose, seeing that the only hospital belonging to the trust was at Bagar and that no other charity was being conducted by the trustees. Once it is admitted that part of the cause of action arose within the jurisdiction so as to satisfy the requirements of cl. 12, Letters Patent, no great importance attaches to the place where the trust was created or its money invested, if there is no question of preserving or recovering its property and if the only question is as to the country whose Courts should supervise the conduct of the charity and the application of its funds. The jurisdiction of the Court to remove trustees, as Lord Blackburn said in(1884) 9 AC 371 : 53 LJ PC 44 : 51 LT 169, Letterstedt v. Broers, "is merely ancillary to its principal duty, to see that the trusts are properly executed." And he added that
"in exercising so delicate a jurisdiction as that of removing trustees, their Lordships do not venture to lay down any general rule beyond the very broad principle......that their main guide must be the welfare of the beneficiaries."
The learned Chief Justice has pointed out that no evidence was given upon the question whether the law of the Jaipur State permitted trustees to alter the name of a charity such as this without the order of a Court; and that if any Court can sanction such a change or condone the action of the trustees in making it, the proper Court for the purpose must be that of the Jaipur State. The case is not one of founding a charity abroad, or settling a scheme for a charity to be conducted abroad, nor of preserving the property of a foreign charity, nor of assisting a foreign charity or a foreign Court to collect or administer funds within the jurisdiction. Their Lordships cannot doubt that upon settled principles it was a correct exercise of discretion by the High Court of Bombay that it should leave the plaintiffs to their remedy from the Courts of the country in which this hospital is carried on and whose poor are the beneficiaries of the charity. It would be plainly inconvenient if not intolerable that the Courts of a foreign country should interpose their authority upon particular questions arising in the course of administering such a trust - acting intermittently according as they may be invoked by particular complainants in preference to the Courts of the country in which the charity was meant to operate, and enforcing their orders by removing the trustees and entrusting to others the management of all the charity and its affairs. Their Lordships will humbly advise His Majesty that this appeal should be dismissed. The appellants must pay the costs of respondents 1, 3, 4 and 5.
Appeal dismissed.
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