“Trustees cannot delegate...”

Trusts that file suits by delegating their authority to a power of attorney holder are in for a setback. A decision by the Small Causes Court Judge G. A. Sanap dated January 29, 2004 in the case B. K. Boman Behram vs M. R. Patel of 1980 states: "The suit which has been filed by the CA (constituted attorney) is not in fact a suit in the eyes of law. The defect which has been pointed out is a vital defect which goes to the root of the matter and vitiates (the) entire proceeding. It is (an) elementary requirement of the law that pleadings must be signed and verified by the party or by the recognized agent of the party.”

The defendant’s lawyer Shridhar B. Bobhate asked the plaintiffs to produce the resolution authorizing the trust to file the case in 1980.This resolution was not brought before the Court on the grounds that "it is not traced. It is an old record,” as stated the plaintiff’s witness.

The judge noted, "not a single trustee has signed and verified the plaint. Similarly not a single trustee has come forward to give evidence before (the) Court.”

Citing section 47 of the Indian Trust Act, the judge noted the Act "provides that (a) trustee cannot delegate his office or any of his duties either to a co-trustee or stranger (a) unless an instrument of trust so provides or (b) the delegation is in the regular course of business or (c) the delegation is necessary, or (d) the beneficiary, being competent to contract, consents to the delegation. Explanation to Section 47 provides that the appointment of an attorney or proxy to do an act merely ministerial and involving no independent discretion is not delegation within the meaning of this section.

"In order to substantiate the submission noted down herein... the learned advocate for the defendants has placed reliance on certain judgments.

"First judgment is in the case of Atmaram Ranchhodbhai vs Gulam­husein Gulam Mohiyaddin and another reported in Gujarat Law Reporter, Volume XIII, pg 828. This is a full bench judgment. In this judgment their Lordships have considered several judgments on the point including of the Privy Council in Man Mohan Das vs Janki Prasad reported in A.I.R. 1945, pg 23.

"(The) judgment in the case of Abdul Kayum vs Alibhai reported in A.I.R 1963, pg 309 and the judgment in the case of K. S. Bannerji vs Sitanath Das reported in A.I.R 1922 Privy Council, pg 209.

"In the case of Atmaram Ranchhod­bhai vs Gulamhusein Gulam Mohiyad­din and another cited (supra) the question involved was as to whether some only out of several co-trustees can effectively determine a tenancy by giving notice to quit and whether a suit to evict a tenant can be filed by one or more co-trustees without joining other co-trustees in the suit. In the case before their Lordship one co-trustee had given a notice to the tenant to quit. The authority of the co-trustee to give the notice to quit was challenged on the ground that he had no authority alone to terminate the tenancy and the delegation of the power between co-trustees or to stranger was not permissible under law. In this factual background it has been held by their Lordship that whether the trust is a private trust governed by the Indian Trusts Act or is a public charitable trust or religious trust, a trustee cannot delegate any of his duties, functions and powers to a co-trustee or to any other person unless the instrument of trust so provides or the delegation is necessary or the beneficiaries competent to contract consent to the delegation or the delegation is in the regular course of business. It has been further held that these are the only four exceptional cases in which delegation is permissible and, save in these exceptional cases, the trustees cannot even by a unanimous resolution, authorize one of themselves to act as managing trustee for executing the duties, functions and powers relating to the trust and every one of them must join in the execution of such duties, functions and powers.

"On the fact it has been held that granting of lease is not a matter which can be delegated by a trustee to any other trustee in the regular course of business. It has been further held that it must follow as a necessary corollary that the determination of a lease also cannot be regarded as a matter which can be delegated by a co-trustee to another co-trustee or to any one else. The power and function to determine a lease, is of the same nature and the power and function to grant a lease, and if one cannot be delegated, equally the other cannot be. Both functions are affected with a fiduciary duty with respect to which all co-trustees are bound to exercise their judgment and no one co-trustee can abdicate the exercise of his judgment by delegating these functions to his co-trustee or to any other person. As far as the point in dispute is concerned, it has been observed in para 4 that whatever might be the position in regard to the question whether such delegation is necessary or not, it is clear that such delegation i.e. authority to one co-trustee to give the notice to quit and determine the tenancy of the tenant of the trust cannot be said to be in the regular course of the business of the trust.

"In the case of Adul Kayum vs Alibhai ... it has been held that trustees cannot transfer their duties, functions and powers to some other body of men and create them trustees in their own place unless this is clearly permitted by the trust deed or agreed to by the entire body of beneficiaries. So the legal position is now crystal clear. The delegation of the power is permissible only in four cases set out in Section 47 itself. If the case is not covered by any of the permissible limit then obviously the claim of the plaintiffs has to fail being not maintainable.

"In the present case before me (a) CA has been appointed by the plaintiffs to file the suit for eviction under the Rent Act. The tenancy of the tenant can be determined by a notice to quit. Whether the notice was necessary or not necessary for filing the suit and/or obtaining the decree for eviction was the question involved in the said case. Therefore, in my view giving notice by co-trustee or any other person on behalf of the other trustees to the tenant to quit or to file the eviction suit to determine the tenancy are one and the same thing. Here, in this case the trustees have delegated their power to CA to seek the decree of eviction against the tenant under the Rent Act. Plaint has not been signed and verified by any of the trustees. Plaint has been signed and verified by the CA of the plaintiffs. Evidence has also been led by the CA. Therefore, (the) only question that I have to see is as to whether delegation of the power by the trustees to the CA could be said to be in the regular course of their business. It is to be noted that on identical fact it has been held in the case of Atmaram Ranchhodbhai, vs Gulamhusein Gulam Mohiya­ddin cited (supra) that the delegation of the power to one of the co-trustees to give notice to quit and determine the tenancy cannot be said to be the act or action in the regular course of business. In this case the trust deed has not been produced to bring the case of the plaintiffs within the scope of provisions of Section 47 to show that such delegation is permissible and provided in the instrument of the trust. No evidence has been led to prove that the delegation is necessary in any manner. On perusal of the power of attorneys it cannot be said that the delegation is in the regular course of the business and it is necessary. The plaintiffs’ witness I has not deposed before (the) Court anything about the inability of the trustees to come before Court and give evidence and to do all the necessary acts. It is further pertinent to note that filing of the substantive suit by the CA by no stretch of imagination could be said to be merely ministerial act involving no independent discretion. No sufficient evidence has been produced before Court to substantiate the contention of the plaintiff that (the) suit filed in the present form by the CA is maintainable. In my considered opinion the facts admitted on record and the provisions of law clearly go against the plaintiffs. The proposition fully supports the technical legal point raised on behalf of the defendants challenging the maintainability.”

As regards the authority cited by the plaintiffs’ advocate K. F. Bhot the judge noted, "After realizing that there is defect and lacuna in the case as a last resort without changing the factual scenario and making a slightest endeavor to remove this defect, learned advocate for the plaintiffs placed reliance on the judgment in the case of Sudan Hari Narvekar vs Ramdas Sachadev Nivlekar and two others reported in 1989 (I) A11 India Rent Control Journal pg 219 to contend that eviction proceeding has to be decided on merits and not on some technical points. In this case it has been held that eviction proceeding should be determined on its merits and not on a mere technical point. The question involved was on the point of failure of the deposit of arrears of rent as per the order of the Court. In my view the proposition in this judgment is of no help and assistance to the case of the plaintiffs. I have already observed that the defect in the present suit is of such a nature that it vitiates the entire proceeding. (The) act and action of the p1aintiffs is contrary to the express provisions of Section 47 of the Indian Trust Act. Therefore, I accept the submissions advanced on behalf of the defendants and conclude that the plaint and the proceeding initiated by the plaintiffs suffers from vital and eminent defect and as such it is not maintainable in the present form.”

In 1980 the then trustees of the Bombay Parsi Punchayet filed a suit for eviction against their tenant alleging she had sublet the premises of the trust.

Aside from finding this suit unmaintainable in law the judge also ruled that the plaintiffs had not been able to substantiate the other charges brought against the defendants.