Disposed

Mr. Shapur Dadabhoy Broacha v. Ms. Pirojbai (Pilloo) Dadabhoy Broacha and 2 Others

Bombay HC7 Aug 2014NMS/452/2015

Case brief

AI extract

What is this about?

The applicant trustee sought to restrain respondents from distributing trust premiums and requested appointment of a receiver for six vacant flats. The court appointed a receiver to let out flats and distribute income including premiums equally among beneficiaries, directed respondents to provide accounts, and allowed the applicant participation in trustee meetings.

What did the court decide?

Appointment of court receiver for six flats; permission to let out flats and distribute all income including premiums among beneficiaries; direction to furnish accounts and allow attendance at meeting

Mr. Shapur Dadabhoy Broacha Vs Ms. Pirojbai… — Pension and Retirement Benefits | Bombay HC (2014)

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905.nmsl.1678.2014.doc

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dik

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IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION NOTICE OF MOTION (L) NO. 1678 OF 2014 IN

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SUIT (L) NO.698 OF 2014

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Mr Shapur Dadabhoy Broacha ...Applicant/Plaintiff

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Ms Pirojbai (Pilloo) Dadabhoy Broacha & Ors.

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...Defendants

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Mr Chirag Balsara, Mr Clive D'souza & Ms Meeta Dagli i/b Mulla & Mulla & CBC for the Plaintiff.

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Mr Vijaysingh Thorat, Sr. Advocate a/w Satyam Vaishnav a/w Nupur J. Mukhiyar i/b M/s N.N.Vaishnawa & Co. for the Defendants

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CORAM : S.C. GUPTE, J. AUGUST 07, 2014

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P.C. :

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This Notice of Motion is taken out by the Applicant/ Plaintiff inter alia praying for a mandatory injunction against the Defendants to invest the monies received by the Defendants, by way of premium for transfer of tenancies, in the corpus of the trust and not to distribute the same to the beneficiaries. The Notice of Motion also seeks an order against the Defendants immediately to take steps to let out six residential flats, forming part of the property jointly owned by the parties.

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2 The Plaintiff and the Defendants are trustees of a private trust. The Plaintiff and Defendant Nos.1 and 2 are also beneficiaries of the trust, whilst father of Defendant No.3 is the other beneficiary of the trust. Each of the Plaintiff, Defendant Nos.1 and 2 and father of Defendant No.3 has as such beneficiary 25 % share in the income and properties of the trust. The trust property consists of seven buildings, all of which are fully tenanted. It is the case of the Plaintiff that Defendant Nos.1 to 3, who are in the management of the trust properties, have been unauthorizedly collecting premium for transfer of tenancies in the trust properties and not investing the premium into the corpus of the trust, which is the requirement of the trust deed. Secondly, it is submitted that the income of the trust property including the premium received for transfer of tenancy, has not

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been properly distributed by the Defendants, in accordance with the terms of the trust deed. It is submitted that as of the date of this application, as many as six tenements in the buildings owned by the trust are lying vacant and the Defendants are likely to create tenancies in respect of these tenaments by accepting premium in cash. Accordingly, the Plaintiff, as a fellow trustee and beneficiary along with the Defendants, claims directions against the Defendants to take steps to let out six residential flats with the consent of the Plaintiff and to invest the premium receivable in respect of such tenancies in the corpus of the trust. The Plaintiff also prays for accounts of the trust property from the Defendants.

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3 The Defendants have no objection to having a court receiver appointed in respect of the six vacant residential flats and tenancies created in respect of them through the court receiver. This course is acceptable to the Plaintiff as well. It is, however, the Plaintiff's case that the premium received in respect of any creation or transfer of tenancies ought to be invested in the corpus of the trust and not allowed to be distributed amongst the beneficiaries. The controversy in the present Notice of Motion, thus, concerns only the distribution of the premium received towards the tenancies in the trust property.

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4 The Plaintiff's claim in this behalf is based on relevant clauses of the indenture of trust deed dated 20 October 1941, namely, clauses 15, 26, 27 thereof. Clause 15 of the trust deed authorizes the trustees to pay the income, interest, dividends, rents and profits of the trust property to the beneficiaries of the trust. Clause 26 of the trust deed requires the trustees to keep the trust fund or any part or parts thereof in its present state of investment for such time as they in their absolute discretion think proper. The clause also provides that it shall be lawful for the trustees, in case any of the properties mentioned in Schedule A and B of the indenture are sold or converted, to invest the proceeds in any of the stipulated investments. The clause lists out various instruments in which the trust fund could be invested by the trustees. Clause 27 of the trust deed provides for the authority of the trustees from time to time to sell by public auction or by private contract or exchange or transfer or assign or grant leases or sub-leases

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for any term, however long, of the Trust Properties described in Schedule A and B or any part thereof. Schedules A and B to the trust deed set out the description of the immovable properties owned by the trust. It is pertinent to note that the main income of the beneficiaries has always been the income generated from and out of the tenancies created in the trust properties. All receipts against creation of tenancies in the suit property including the premiums received towards transfer of tenancies, are part of the income of the trust generated out of renting of the premises in the trust property. The relevant clause of the trust deed authorizing the trustees to distribute the income of the trust properties amongst the beneficiaries governs the receipt and distribution of the premiums for creation and transfer of tenancies within the trust property. Creation or transfer of tenancies within the trust property does not amount to sale or conversion of the properties described in Schedules A and B, namely, the buildings owned by the trust, within the meaning of Clause 26 of the trust deed.

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5 It is pertinent to note that for the last many years, the premiums received for creation or transfer of tenancies have admittedly been distributed between the beneficiaries of the trust including the Plaintiff herein. An extensive record in this behalf has already been placed by the Defendants through their reply to the Notice of Motion. Admittedly, for all these years, the Plaintiff has accepted the amounts coming to his share towards the distribution of the premium received for creation or transfer of tenancies and it is now only, for the first time in the present suit, that the Plaintiff has objected to the distribution of income received by way of premium amongst the beneficiaries.

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6 It is submitted by the learned Counsel for the Defendants that the Defendants are of advanced age, Defendant No.1 being 79 years old and Defendant No.2 being 73 years old, whose livelihood depends on the income generated out of the tenancies in the trust properties. It is an admitted position that the rental income of the tenaments in the suit property is hardly sufficient to defray the expenses and outgoings of the trust properties and that only substantial source of income for the beneficiaries is the premium received for creation and transfer of tenancies.

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7 Having regard to these circumstances, it is just and convenient and in the interest of justice a court receiver is appointed of the six vacant residential flats described in prayer clause (b) of the Notice of Motion and tenancies are created and premiums and rents are collected through the receiver. The receiver may then distribute the income in respect of these six residential flats including the premiums received for such tenancies amongst the beneficiaries, including the Plaintiff and Defendant Nos.1 and 2 and father of Defendant No.3 equally. It is agreed between the parties that the tenants of these six residential flats shall be treated as tenants of the trust and not agents of the receiver. In case any tenament in the trust properties becomes vacant at any future date, the parties shall not directly create tenancy or transfer tenancy in respect of such vacant tenament, but will be at liberty to approach this Court for appointment of court receiver in respect of the vacant tenament and for receipt and distribution of income from such tenancy including the premium receivable in respect thereof, as in the case of the six residential flats described above.

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8 The Plaintiff has also applied for signing authority to the Plaintiff for the banking operations of the trust. The trust deed provides for a decision by majority of trustees. The Defendants are in majority. As far as the affairs of the trust are concerned, the same can certainly be carried out by the Defendants on the strength of their majority and at this stage, the Plaintiff's application for giving signing authority to the Plaintiff need not be considered. The Plaintiff shall of course be entitled to attend the meetings of the trustees and receive accounts from the Defendants.

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9 Accordingly, the following order is passed:

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i) The Court Receiver, High Court, Bombay is appointed as a receiver in respect of six residential flats, namely, flat Nos.D-2, F-2, F-17, G-8, G14 and G1-8 of Shapur Baug, V.P.Road, Mumbai 400 004 ;

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ii) The Court Receiver is directed to take steps to let out the six residential

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flats inter alia on receipt of premium. The parties will be at liberty to bring offers from third parties to accept such tenanies. The Court Receiver shall sign the tenancy agreements in favour of the highest offerers, as a case may be, for and on behalf of the trustees of Bai Bhicajji Hormusji Bennett Trust. It is clarified that the tenants of these six residential flats shall not be treated as agents of the Receiver, but shall occupy their respective tenaments as tenants of Bai Bhicajji Hormusji Bennett Trust;

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(ii)(a) The Receiver may distribute the income received in respect of six residential flats referred to above, including the rent and premium received towards the tenancies, amongst the beneficiaries including the Plaintiff, Defendants Nos.1 and 2 and father of Defendant No.3 equally.

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iii) In the event of any difficulties in the matter of creation of tenancies by the Court Receiver, the parties will be at liberty to approach this Court;

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iv) In the event of any tenament in the trust properties becoming available for letting at a future date, the Defendants shall not directly create tenancy or part with the possession of the tenament, but will be at liberty to approach the Court for appointment of Court Receiver, whereupon similar orders for creation of tenancy and distribution of income, as in the case of six residential flats described above, may be passed;

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v) The Defendants are directed to furnish accounts in respect of the income of trust properties other than the six residential flats described above, to the Plaintiff;

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vi) The Defendants are directed to give notice of any trust meeting to be held by the Defendants for managing the affairs of the trust to the

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Plaintiff and allow the Plaintiff to participate in such meeting;

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vii) The Notice of Motion is disposed of accordingly;

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viii) There shall be no order as to costs.

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( S.C.GUPTE J. )

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Mr. Shapur Dadabhoy Broacha v. Ms. Pirojbai (Pilloo) Dadabhoy Broacha and 2 Others

Case brief

What is this about?

What did the court decide?

Mr. Shapur Dadabhoy Broacha v. Ms. Pirojbai (Pilloo) Dadabhoy Broacha and 2 Others

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Parties & counsel

Coram

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