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PETITIONER: ABINASH CHANDRA BANNERJI AND OTHERS

       Vs.

RESPONDENT: UTTARPARA HITAKARI SABHA AND OTHERS

DATE OF JUDGMENT: 18/04/1961

BENCH:

ACT: Will-  Construction  of Testator giving Property  to  heirs with  direction  to pay half the income  to  charity-Whether creates trust or charge.

HEADNOTE: One  P died in 1874 leaving considerable property.  He  also left  a will which provided for several  contingencies;  the first   respondent   was  given  an  interest   under   each contingency   which   was  enlarged  from   contingency   to contingency.  Under the last contingency which happened  the entire property was given to the heirs with a direction that half  of  the income of the property be given to  the  first respondent.   The heirs contended that the direction  merely created a charge and not a trust of half of the property. Held,  that  the  direction created a trust  rather  than  a charge.  The charity was conceived to be a permanent one and it  was  necessary to secure regular payments  to  it.   The testator  clearly intended that the heirs  should  regularly pay  half  the income to the first respondent  so  that  the specified  charities  may be carried on  perpetually.   This object could not be achieved if the direction merely created a charge and not a trust. The  Commissioners of Charitable Donations and  Bequests  v. Wybrants  , (1845) 69 R. R. 278 and Bailey v. Ekins, 7  Ves. 319, referred to.

JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeal No. 147 of 1958. Appeal  from the judgment and decree dated January 4,  1955, of  the  Allahabad High Court in Special Appeal  No.  36  of 1955. A.   V.  Viswanatha Sastri, C. P. Lal and G. C. Mathur,  for the appellants. K.   B.  Bagchi,  S. N. Mukherjee for P. K.  Bose,  for  the respondent No. 1. 1961.  April 18.  The Judgment of the Court was delivered by SUBBA RAO, J.-This appeal by certificate raises the question of  construction  of  a will executed  by  one  Pyare  Mohan Bannerji.                              29 The facts giving rise to this appeal lie in a small  compass and  they  are  as follows: Pyare  Mohan  Bannerji  died  in October  1874 leaving behind him considerable property.   He executed  a  will dated February 12,  1874,  making  various bequests,  including the payment of certain amounts  to  the first  respondent,  Uttar-para Hitakari  Sabha.   After  his

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death,  his widow held the property for life till her  death on  March 25, 1945.  Thereafter, the property went into  the possession  of the appellants, who are the heirs at  law  of the  testator.   On March 17, 1950,  the  first  respondent, Uttarpara  Hitakari  Sabha (hereinafter referred to  as  the Sabha) filed an application in the High Court of  Judicature at  Allahabad under s. 10 of the Official Trustees Act  (Act II of 1913) claiming that the late Pyare Mohan Bannerji  had created  a  trust by his will and praying that  an  official trustee be appointed to be the trustee of the properties  of the  trust.  This was registered as Testamentary Case No.  9 of  1950.  The appellants contested the claim of  the  Sabha and contended, inter alia, that no trust had been created by the testator and that the appellants, being the legal  heirs of the testator, were entitled to succeed to the entire pro- perty  left by him.  Mootham, J., as he then was, who  heard the  said case at the first instance, held that by his  last will  Pyare Mohan Bannerji created a trust in favour of  the Sabha,  and appointed the Official Trustee a trustee of  all the  properties  left by Pyare Mohan Bannerji  specified  in Schedule B to the petition.  On appeal, a division bench  of the  said  High  Court,  consisting of  Malik,  C.  J.,  and Agarwala,  J.,  agreed with Mootham, C. J.,  that  the  will created  a  trust in favour of the Sabha;  but  the  learned Judges held that the Sabha was entitled only to a half share in  the cash and properties pertaining to the estate of  the said testator, and appointed the Official Trustee as trustee only  in regard to the said share: on that  basis,  suitable directions  were given.  The first respondent accepted  that position, but the appellants, i.e., the persons claiming  to be  the heirs at law, preferred the present  appeal  against the judgment of the High Court in so far as it went  against them. 30 Learned  counsel for the appellants contends that under  the will not a trust but only a charge was created in favour  of the  first respondent and, therefore, the  first  respondent could not invoke in aid the provisions of S. 10 of the  Act. Section 10 of the Act reads:               "(1)  If  any property is subject to  a  trust               other than a trust which the Official  Trustee               is   prohibited  from  accepting   under   the               provisions  of  this  Act,  and  there  is  no               trustee   within  the  local  limits  of   the               ordinary   or  extraordinary  original   civil               jurisdiction  of  the High  Court  willing  or               capable  to act in the trust, the  High  Court               may  on  application  make an  order  for  the               appointment  of the Official Trustee  by  that               name  with  his consent to be the  trustee  of               such property."               It  is common case that if the will created  a               trust, it would not fall under any one of  the               exceptions    mentioned   in   the    section.               Therefore,  the only question is  whether  the               will created a trust or a charge in favour  of               the first respondent. The concepts of trust and charge are well defined.  A  trust is "an obligation annexed to the ownership of property,  and arising  out of a confidence reposed in and accepted by  the owner  or declared and accepted by him, for the  benefit  of another,  or of another and the owner." Where  property  "of one  person  is made security for the payment  of  money  to another,  the latter person is said to have a charge on  the property." The boundaries between the two concepts are  well

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demarcated;   but,  more  often  than  not,   courts   found considerable difficulty in construing a particular  document to  place  it in one or other of the categories.   The  same difficulty  was encountered even in England.  The test  laid down  for marking out the one from the other by some of  the authoritative  text-books  on the subject may be  useful  in construing  the  will in question.  In  Halsbury’s  Laws  of England, 2nd Edn.  Vol. 33 (Lord Hailsham), the  distinction between the two concepts has been stated thus at p. 98:               "Where  property  is given to  a  person  upon               condition  that  he  does  a  certain  act  or               confers a               31               certain   benefit  on  another   person,   the               condition  may  constitutes a trust if  it  is               directed  to  be,  or  must  necessarily   be,               performed  and satisfied out of the  property,               and  consequently imposes a fiduciary  obliga-               tion  in respect of the property; but it  will               not be construed as a trust if this is not the               case  and  the  condition  merely  imposes   a               collateral duty.  Similarly, a devise of  land               upon condition of paying a sum of money or  an               annuity does not create a trust, though it may               create a charge.               A  charge does not in itself create  a  trust,               but  it may do so if it is coupled with  other               trusts or the context, otherwise so  requires.               Conversely  a  trust may amount  merely  to  a               charge."               Lord  St.  Leonards  points  out  (Sugden   on               Powers, 7th Edn., p. 122) that,               "What by the old law was deemed a devise  upon               condition, would now, perhaps, in almost every               case  be  construed as a devise  in  fee  upon               trust,  and by this construction,  instead  of               the  heir  taking advantage of  the  condition               broken,  the  cestui que trust can  compel  an               observance of the trust by suit in equity." In The Commissioners of Charitable Donations and Bequests v. Wybrants  (1) a testator had devised lands to  trustees  and their  heirs upon trust to grant and convey the same to  the use  of John Wybrants for life ’subject nevertheless to  and charged and chargeable with’ four annuities, three of  which were to be paid to charitable institutions and the fourth to the  poor  of a parish.  In construing that  provision,  the Lord Chancellor said at p. 285:               "It certainly is not necessary to use the word               ’trust’  in order to create an express  trust.               I  do  not intend to lay it  down  that  every               charge creates a trust, although it imposes  a               burden;  but  a  charge may  create  a  trust;               depending  on  the nature of the  charge.   In               Bailey  v.  Ekins (2) Lord Elton said  he  was               confident  Lord Thurlow’s opinion was  that  a               charge  (of debts) is a devise of the  estate,               in substance and effect, pro tanto upon  trust               to pay the               (1) (1845) 69 R.R. 278.               (2) 7 Ves. 319, 323.               32               debts:and this is supported by the current  of               authorities.    The  principle  is   no   less               powerful    in   the   case   of    charities,               particularly   where  the  charity  is  to   a

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             fluctuating, uncertain body, like the poor  of               a  parish.  The testator gives the  estate  to               one,  subject to this charge.  Who is  to  pay               the annuities but the person who is liable  to               the  burden:  and  this,  in  the  case  of  a               charity, impresses him with the character of a               trustee for the charity.  By the ancient  rule               of  equity,  no one could acquire  an  estate,               with notice of a charitable use, without being               liable to it." The  fact  that  a beneficial interest is  also  created  in favour of the trustees in respect of the property subject to a trust does not make the transaction any the less a  trust. The law permits a person to bequeath his property to another subject to a trust in respect of a portion of the income  in favour  of a third party or a charity.  On this  subject  in Lewin on Trusts, it is stated at P. 133:               "Upon  this  subject  a  distinction  must  be               observed  between a devise to a person  for  a               particular   purpose  with  no  intention   of               conferring  the  beneficial  interest,  and  a               devise   with  the  view  of  conferring   the               beneficial   interest,   but  subject   to   a               particular injunction."               So  too, Tudor in his book on  Charities,  5th               Edn., says much to the same effect at p. 52:               "A charitable trust may be made to attach to a               part  of  the  property only,  or  it  may  be               limited to particular payments directed to  be               made  out  of the income, as in  the  numerous               cases  where  property  has been  given  to  a               college,  or  municipal corporation,  or  city               guild,  upon  trust  or  to  the  intent  that               certain specified charitable payments shall be               made  or  subject to or charged  with  certain               charitable payments.  In these cases, as  will               be   seen,   the  donees  as   a   rule   take               beneficially,  subject only to  the  specified               charitable payments." The  said  tests may afford a guide to ascertain  whether  a document  creates a charge or a trust; but they are  subject to the fundamental rule of construction that a trust may  be created in language sufficient                              33 to show the intention, and no technical words are necessary; the  said intention must be gathered from a fair reading  of the provisions of the document. In the light of the foregoing discussion, let us look at the provisions of the will to ascertain the express intention of the testator.  At the time the testator executed the will he had a wife, and a nephew by name Sital Prasad Chatterji, but no  children.   He  had  many  other  close  relatives   and dependents.   He was also charitably disposed.  He  executed the  will  making suitable provision for his  wife,  nephew, relatives  and  for  charities.   He  could  carry  out  his intention in two ways: he could bequeath his entire property to  his widow and nephew subject to a  fiduciary  obligation imposed on them to pay certain amounts to the relatives  and the charities; or, he could give the entire property to  his widow  and nephew subject to the payment of certain  amounts charged on the said property.  The question is, what did  he intend  to do by this document?  He did not use  either  the word "trust" or "charge" and, therefore, we must gather  the intention only from the circumstances obtaining at the  time the  document was executed and the recitals  found  therein.

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Under  the  will the testator made  the  following  bequests depending   upon  different  contingencies:   Firstly,   the property  was given to his wife and nephew in  equal  shares for their lifetime subject to the payment of all his  debts, annuities  and charges; it is also provided therein for  the sale  of  a standing jungle in Doomree and  Sukhiae  in  the Gorakhpore  District  for  the purpose  of  discharging  the debts.   The second contingency related to the event of  the testator  and  his  nephew begetting son or  sons;  in  that event, after the lifetime of his wife and nephew the son  or sons  of  his nephew would get one-fourth share  subject  to their  paying one-fourth of the annuities and  charges,  and whole of the remainder was given to his son or sons  subject to their paying the remaining three-fourths of the annuities and charges.  The third contingency related to the  testator getting  no  children, but his nephew having sons;  in  that event, after the 34 death  of  his wife and nephew, the whole  of  his  property would  go  to  the  said son or sons  subject  to  the  said annuities and charges.  In the event of the testator  having children  and  the nephew having no son or sons,  after  the death  of his wife and nephew, the property would go to  his children  subject  to the payment of annuities  and  charges mentioned  in  the  first portion of  the  will.   The  last contingency  contemplated was that neither the testator  nor his  nephew  had any issue; in that event the whole  of  the property was given to his legal heirs subject to the payment of  annuities and charges.  The quantum of bequests made  in favour   of   the  Sabha  expanded   from   contingency   to contingency.  During  the  lifetime of the  nephew  and  the widow, the said Sabha got rupees fifteen per month.  In  the event  of either the testator or his nephew not  having  any children,  the direction was that the said Sabha should  get rupees  fifty per month.  In that contingency not  only  the said  Sabha but any other institution which took its  place’ would  get the said amount.  It was also mentioned that  the amount should be given only to be spent in paying the school fees  of indigent boys of Coterie reading in  the  Ooterpara School  and  whose parents or guardians might not  have  the means  to  pay their school fees.  On the happening  of  the last contingency, that is, both the testator and his  nephew dying  without children, his legal heirs took  the  property subject to the payment of half of the net income to the said Sabha  or any institution which might take its  place.   The said amount was directed to be paid thus: "Rupees fifty  per month  in  payment  of schooling fees of  indigent  boys  of Ooterpara  reading in the Ooterpara school and the  balance, if any, as scholarships to persons resident of Ooterpara  or failing  such  of  Bengal who  after  passing  the  entrance examination  of  the Calcutta University may wish  to  learn practical agriculture or Chemistry or Mechanics." At present it is common case that all the relatives for whom  provision was  made  in  the  will passed  away,  that  there  are  no daughters  of  testator’s nephew and that the Sabha  is  the only institution entitled to receive the 35 amounts  provided  for under the will.  We  are,  therefore, only concerned with the question whether a trust was created in  favour of the first respondent or not, on the  happening of  the  last contingency, namely, the testator  leaving  no children  and his nephew no sons.  On the happening of  that event  the  property passed to his legal heirs.   When  that stage  was  reached  the testator  was  more  interested  in charities than to make provision for persons for whom he had

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love and affection.  The amount was payable to the Sabha  or any other institution which might take its place.   Further, there  was a direction that the said amount should be  spent towards  specified charitable purposes.  The  direction  was couched in an elastic form to prevent the charitable  object being defeated.  The charity was conceived to be a permanent one  and  it was necessary that the regular payment  of  the amount was secured.  It is, therefore, clear that under  the will, on the happening of the said contingency, the testator clearly  intended that his legal heirs should regularly  pay half  the  net income to the first respondent  so  that  the specified  charities may be carried out  perpetually.   That object  would  not be achieved if the first  respondent  was placed  in the position of a creditor with a charge  on  the property with an off chance of the charge being defeated  by a bonafide purchaser for value of the property bequeathed to the legal heirs. Learned counsel emphasized the fact that under the will  the first  respondent  had  to spend the  moneys  for  specified objects and not the legal heirs and contended that the first respondent might be in the position of a trustee in  respect of the amounts received from the legal heirs, but the  legal heirs  were  not trustees in respect of  the  charity.   The question  is  not  whether the legal  heirs,  or  the  first respondent, are the trustees in respect of the fund after it reached the hands of the first respondent; but the  question is whether the legal heirs, as owners of the property,  were under  a  fiduciary obligation to pay the  said  amount  for charitable  purposes.   Having regard to  the  circumstances visualized at the time the last contingency happened, 36 the fluctuating amount the donees had to pay, the  permanent nature  of  the charity and the declared  intention  of  the testator  to pay as much as half the net income towards  the carrying out of the said charitable object, we hold that the legal  heirs took the property of the testator subject to  a trust rather than a charge. No other question arises in this appeal.  For the  foregoing reasons, we hold that the conclusion arrived at by the  High Court  is correct.  In the result, the appeal fails  and  is dismissed with costs. Appeal dismissed.