Civil Appeal Nos 1105 1245 and 1269 of 1978
From the Judgment and order dated 12 6 78 of the Andhra Pradesh High Court in appeal against order No 14778
AND SPECIAL LEAVE PETITION CIVIL NOS
3648 364978 In the matter of HEH
The Nizam s Jewellery Trust
465 Rajni Patel Malini Kapadia P G Gokhale B R Agarwala and Gujarat  Co for the Appellant in CA 1105 and for Respondent No 3 in CA 1269178
O P Verma B V Singh Anil B Diwan B Parthasarathi and J V Suryanarayan Rao for Respondent in CA 110578
section V Gupte section T Desai and A Subba Rao for RR 4 6 and 7 in CA 110578 and Appellant in CA 126978
A K Sen Anil B Diwan section section Hussaine J B Dadachanji K J John and A G Menses for Respondent No 8 in CA 110578 124578 and 126978
F section Nariman P R Mridul B Jaivalu Dhimant Thakkar P H Parekh C B Singh Miss Vineeta Caprihan and B L Verma for the Appellant in CA 124578
B A Zaibala Dhimant Thakkar P H Parekh and Miss Kamlesh Bansal for the Petitioner in SLP 364878
n B A Zaibala Dhimant Thakkar P H Parekh and Mukul Mudgal for the Petitioner in SLP 364978
The Judgment of the Court was delivered by SEN J
In these appeals one of which is by special leave and the other two on certificate brought from a judgment of the Andhra Pradesh High Court dated June 12 1978 the short question is whether that Court was justified in setting aside the alleged sale of 37 items of jewellery belonging to HEH the Nizam s Jewellery Trust effected by the Board of Trustees in exercise of their discretionary power of sale under cl 13 of the trust deed in favour of the appellants and other successful tenderers for Rs 1443 crores and accepting instead the offer of the eighth respondent Peter Jansin Fernandez for Rs 2025 crores made during the pendency of the appeal before The facts of the case so far as they are material are not now in dispute and are as follows The late HEH Nawab Mir Sir Osman Ali Khan Bahadur the Nizam of Hyderabad by ah indenture dated March 29 1951 created a trust called HEH The Nizam s Jewellery Trust in respect of 107 items of extremely valuable rare and priceless jewellery of exquisite design and beauty studded with emeralds diamonds sapphires rubies etc
Of the highest quality and purity belonging to him specified in the first Schedule and Government securities of the aggregate face value 466 of Rs 10 lakhs specified in the Second Schedule for the benefit of his two sons Prince Azam Jha and Prince Muazzam Jah two grandsons Prince Mukarram Jah and Prince Muffakham Jah two granddaughters Princes Fatima Fouzia and Princess Amina Mirzia daughter Shahzadi Begum and his step brother Sahebzada Nawab Basalat Jah Bahadur
Clause 13 of the trust deed exhibit A  confers upon the trustees the power of sale of the Jewellery the material portion of which is in these terms 13
Subject to the Trusts aforesaid in respect of the articles referred to in clause 3c d7 e and f hereof during the lifetime of his eldest son Prince Azam Jah if and so long as the Dynasty of the Settlor continues and Prince Azam Jah succeeds him as the Nizam of Hyderabad it shall be at the option of the trustees either to keep the said jewels and other articles mentioned in the first Schedule hereunder written unsold or to sell the same or any part thereof at such time or times and in such manner as they may in their discretion think fit but subject as aforesaid after death of the Settlor as well as of the said Prince Azam Jah the Trustees shall sell the said jewels and other articles specified in the First Schedule hereunder written within a period of three years after the date of the death of the survivor of the Settlor and the said Prince Azam Jah and any such sale as aforesaid shall be effected by the Trustees at such price or prices or for such consideration and on such terms as the trustees may in their absolute discretion think fit and either in India or in any foreign country without the trustees being liable or accountable to any person whomsoever for the propriety of or justification for any such sale or for the reasonableness or otherwise of the price or consideration or other terms in respect of the sale of any of the said articles  The said jewellery is kept in the safe deposit vault of the Mercantile Bank Ltd at Bombay
R N Malhotra Addl
Secretary to the Government of India Ministry of Finance Department of Economic Affairs is the Chair man of the present Board of Trustees of HEH
The Nizam s Jewellery Trust as a nominee of the Government of India
The other four trustees are Prince Muffakham Jah Zaheer Ahmed Ataur Rehmarr and M A Abbasi
M A Ashruff is the Secretary of the Trust
467 It appears that Prince Azam Jah died in October 1970 and there after on July 1 1972 the trustees submitted a memorial to the then Prime Minister of India to acquire the jewellery as they were of great historical and cultural value and keep it intact as a national heritage and not allow it to pass into the hands of people who were interested only in their money value
It appears that the trustees acted upon legal opinion that there was no objection to the sales being arranged through negotiation on the basis of valuation by two independent valuers
The Government of India constituted an Experts Committee whose function was purely of an advisory nature with a view to guide the Government whether any part of the jewellery should be acquired as antiques under the Antiquity and Art Treasures Act 1972
It was required to select and evaluate such items of antique jewellery as had to be acquired in the national interest
The Experts Committee inspected the jewellery at the vault of the Mercantile Bank
During these proceedings the Government appointed a Committee of Valuers which by its report dated January 3 1976 valued all the 107 items of jewellery at Rs 66258500 while Vithaldas RW 6 the valuer appointed by the trustees by his valuation report dated March 18 1976 valued these 37 items of jewellery at Rs 102630000
Eventually the Government of India acquired 18 selected pieces of antique jewellery for their cultural and historical importance at a mutually negotiated price of Rs 117 crores
It has been represented that the beneficiaries are in very straitened circumstances due to the abolition of privy purse heavy incidence of income tax and wealth tax and are heavily indebted due to the trustees applying the income of the trust largely towards payment of taxes making it increasingly difficult to maintain themselves
The beneficiaries were therefore pressing the Board of Trustees to effect an immediate sale of the 37 items of jewellery
On January 9 1978 it is alleged that there was a meeting of the Board of Trustees
Malhotra who is the Chairman conveyed to the trustees that the Government of India were not likely to acquire any of the 37 pieces of jewellery with regard to which negotiations were being made
The Board of Trustees accordingly passed a resolution to sell the jewellery immediately
The next meeting of the Board was held on January 25 1978 but Malhotra could not attend it
Pursuant to the resolution of the Board of January 9 1978 the Secretary of the trust applied to the Director of Archaeological Survey of India for the grant of clearance for sale of the said jewellery and 468 in consultation with Dinshaw Jehangir Gazdar RW 3 a noted jeweller of Bombay with the concurrence of M A Abbasi decided upon the procedure to be adopted for the eventual sale of these 37 items of jewellery
It appears that the conditions of sale exhibit B 49 were got drafted by M A Abbasi one of the trustees and M A Ashruff Secretary through a firm of solicitors
Conditions 11 and 12 which formed an integral part of the contract of sale are as follows 11
Tenders will be opened by the Trustees on the date announced at the time of inspection and the party whose tender is accepted will be notified soon thereafter
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 thereafter on payment of the balance of 90 of the tendered amount as specified in para 12 below
If delivery is not taken at that time the jewellery will be held for and on behalf of the tenderer at his risk
Tenderers whose offers are accepted will be required to deposit in full the tendered amount after deducting the amount of 10 deposited as per clause 4 above on the date or dates to be announced on the day of inspection before taking delivery
It is hereby agreed that if the tenderer fails to pay the balance amount within the stipulated period the sale shall stand cancelled and the earnest money paid by him to the Trust shall be forfeited by the Trustees and the Trustees shall be at liberty to offer the same jewellery at the next sale and any deficiency arising at such sale together with all expenses arising from the subsequent sale shall be borne by the tenderer who shall also pay interest at the rate of 10 per annum to the Trust until the completion of the resale
 On January 31 1978 Gazdar sent intimations Exs B130 133 to some foreign and Indian nationals abroad regarding the intended sale of the jewels
It appears that M A Ashruff Secretary also addressed letters dated February 810 1978 Exs
B72 87 and also sent telegrams dated February 25 1978 Exs
B88 100 to 29 reputed dealers seven of whom were jewellers from abroad and the remaining 22 in the country as per list exhibit B 46
The letters of the Secretary as far as material read The unique collection of the fabulous oriental jewellery of the once richest man of the world HEH the Nizam 469 of Hyderabad and Berar the erstwhile premier prince of India is coming up for sale in Bombay sometime during the first or second week of March 1978
The exact dates will be notified later
 The telegrams sent by him mentioned that inspection of the jewellery could be had from March 6 to 9 
It would thus appear that the intending buyers were not notified the date of sale
The 37 items of jewellery put up for sale were divided into 16 groups
Inspection of these 37 items of jewellery was to be offered to the intending bidders from March 6 to March 9
During the course of inspection however the trustees decided to restrict the period of inspection till March 8 and they informed the intending bidders accordingly and asked them to give their bids before a particular hour an March 9
On the 8th of March Malhotra was present throughout at the Mercantile Bank Ltd and there was also a meeting of the Board of Trustees
The resolution of the Board of Trustees of March 8 1978 exhibit B 106 was in these terms 1
To confirm the minutes of the last meeting
The Minutes of the last meeting of the Trustees held on 5th March 1978 were confirmed
Consideration and decision on tenders received
Resolved that the tenders received be examined and decided by the Trustees present at the meeting to be held for the purpose on 9th March 1978
And further resolved that in case such Trustees did not find a satisfactory offer or offers in respect of any of the items offered for sale they may reject the tendered offers and negotiate the sale of any item with any party for a higher price
Delivery of articles sold
Resolved that the delivery of articles sold be arranged on dates convenient to the Trustees preferably not later than 25th March 1978
 The Chairman of the Board of Trustees Malhotra was admittedly not present in Bombay on March 9 1978 when the tenders were opened by the remaining four trustees
He had to be away from Bombay on the morning of 9th and 10th March due to official 470 preoccupation at New Delhi
He was busy at Delhi heading a group which was negotiating with a high powered Russian delegation to settle the rupee rouble exchange ratio and connected matters
He could not leave Delhi from March 9 to 23 during which period the talks commenced earlier on January 28 1978 had entered a crucial stage
These talks required his personal presence at Delhi because they were matters of national importance
On March 9 1978 the remaining four trustees are alleged to have opened the tenders and accepted all the highest tenders except in respect of item No 16 of Group XIV which was negotiated on the next day for a higher price of Rs 692 crores
On March 10 1978 the Secretary addressed letters of acceptance Exs
B54 65 to the appellants and other successful bidders requiring them to pay the balance of 90 per cent of the tender price on or before March 21 and 22 1978 as the case may be and to take delivery of the items of jewellery purchased by them
In respect of the appellants Ms Shanti Vijay  Co the date fixed was March 17 1978
On March 10 1978 the first respondent Princess Fatima Fouzia one of the beneficiaries and a grand daughter of the Nizam instituted the present proceedings being OP No 141 of 1978 in the Court of the Chief Judge City Civil Court Hyderabad under section 74 of the Trusts Act for removal of the present trustees for alleged dereliction of duty negligence and mismanagement on their part with particular 
reference to the manner in which the 37 items of jewellery belonging to the trust were brought to sale
She also filed an application for temporary injunction under ord 39 r 1 of the Civil Procedure Code for restraining the trustees from taking any further steps towards the finalization of the sale of jewellery
The application was taken up by the Court on March 14 1978 and the learned Judge on the same day granted an ad interim injunction restraining the trustees from taking any steps to finalise the sale of the jewellery
On March 16 1978 M A Abbasi one of the trustees filed a counter and prayed for vacating the injunction and ultimately the Court after hearing the parties vacated the injunction on March 27 1978
On March 28 1978 the first respondent Princess Fatima Fouzia filed an appeal before the Andhra Pradesh High Court and on April 13 1978 the High Court directed that the status quo ante be maintained
It appears that in the meanwhile the eighth respondent Peter Jansim Fernandez made an offer to purchase the 37 items of jewellery in one lot for Rs 2025 crores and also applied to be impleaded as a party respondent in the appeal
On April 18
1978 the 471 appellant Ms Shanti Vijay  Co one of the successful bidders also applied to be impleaded as a party respondent
On April 21 1978 the High Court impleaded the appellant as a party to the appeal and in order to test the bona fides of the eighth respondent Peter Jansin Fernandez directed that he should deposit the amount of Rs 2025 crores within one week from that date
On such deposit being made the eighth respondent along with his foreign counterpart were to be B given an opportunity to inspect the 37 items of jewellery which were previously offered for sale by the Board of Trustees
On May 8 1978 the State Bank of India overseas Branch Bombay furnished an unconditional guarantee to the tune of Rs 2025 crores on behalf of the eighth respondent and his counterpart
The eighth respondent C having furnished the bank guarantee the High Court directed that inspection of the jewellery be granted to him and his counterpart at the Mercantile Bank Ltd On May 27 1978
After an inspection of the 37 items of jewellary the eighth respondent Peter Jansin Fernandez confirmed his offer and deposited the amount of Rs 2025 crores in Court and was therefore permitted to intervene
At this stage the first respondent Princess Fatima Fouzia filed an application to withdraw the appeal
The parties were heard on the application but before any orders could be passed her sister Princess Amine Mirzia the second respondent applied for permission to be impleaded as appellant No 2 as there was a danger of entire body of the beneficiaries being deprived of an amount of Rs 578 crores
On June 12 1978 Princess Fatima Fouzia was permitted to withdraw and her sister Princess Amina Mirzia was brought on record as appellant No 2
The High Court by its order dated Jun 12 1978 set aside the alleged sale of the 37 items of jewellery by the Board of Trustees in favour of the appellant and other successful tenderers for a sum of Rs 1443 crores on the ground that there was no concluded contract between the parties and instead accepted the offer of the eighth respondent Peter Jansin Fernandez for the sale of the aforesaid jewellery to him for Rs 2025 crores
When the matter came up for hearing before this Court a grievance was made that the High Court had no power to set aside the sale of the jewellery by the Board of Trustees for Rs 1443 crores without impleading the other successful tenderers and without affording an opportunity to the appellants Ms Shanti Vijay  Co to substantiate their claim that there was a concluded contract for the sale of the jewellery to them for Rs 1443 crores
Inasmuch as the appellants Ms Shanti Vijay  Co were alone a party respondent to the 472 appeal and the remaining successful tenderers were not so impleaded the matter was remitted by this Court by its order dated September 14 1978 to the High Court for a decision afresh on the question whether there was a concluded contract or not after impleading all the necessary parties and affording them an opportunity to lead such oral or documentary evidence as they desired
In compliance of the order of this Court the High Court impleaded the other tenderers respondents Nos 7 to 17 in the appeal and they were given an opportunity to substantiate their claim and they as well as the opposite parties filed their statements and counter statements touching upon the question of the factum validity and propriety of the alleged sales effected by the Board of Trustees of the 37 items of jewellery for Rs 1443 crores in favour of the appellants and other tenderers
In the present case the learned Judges of the High Court in their judgment dated February 28 1979 have very carefully examined all the evidence and have reached a result unfavourable to the appellants
It would serve little purpose to go through the evidence which has already been dealt with in detail by these learned Judges seeing that the accuracy of their statement of facts and the soundness of their reasoning has not been successfully criticized
It is sufficient to say that we entirely agree with the judgment and reasoning of Kondaiah J who delivered the judgment of the High Court on remand
We shall only touch upon the salient features to show that no other conclusion is possible
There was in fact no evidence that any binding contract came into existence
In these appeals three questions arise for consideration
The first is whether there was a concluded contract effected between the appellants and the other successful bidders of the one part and the Board of Trustees of the other for the sale of the 37 items of jewellery for Rs 1443 crores by the alleged acceptance of their bids by the four trustees on March 9 1978 secondly whether there was frustration of contract in that the ad interim injunction of March 14 1978 made further performance of the alleged contracts impossible and thirdly whether the exercise of the discretionary power of sale exercised by the trustees conferred on them by cl 13 of the trust deed which is subject to the Court s over riding power under section 49 of the Trusts Act to interdict the sale and issue necessary directions in that behalf ought not to be set aside as an improvident sale because of the fact that an amount of Rs 2025 crores for the 37 items of jewellery had been offered by the eighth respondent which showed that the trustees had not acted with prudence and due care or attention or whether it 473 merely indicates an error of judgment on their part and the sale by them was on a mistaken impression of the actual value of the jewellery
This in the arguments before us has resolved into two subsidiary questions namely 1 whether in the absence of a provision for the B delegation of powers in the trust deed it was competent for four of the Trustees to effect a sale and if so whether in the absence of authorisation by R N Malhotra Chairman of the Board of Trustees the remaining four trustees could exercise the power of sale of the jewellery under cl 13 of the deed and 2 whether if there was a valid acceptance of the bids as alleged by the remaining trustees on March 9 1978 the Chairman of the Board of Trustees could not have accorded his approval on the Secretary s note exhibit B 124 dated March 14 1978 in view of the ad interim injunction granted by the Court of the Chief Judge City Civil Court Hyderabad dated March 14 1978 by which the trustees were r strained from taking any further steps to finalize the sale of the jewellery
The law governing the execution of trusts is well settled
In the case of a private trust where there are more trustees than one all must join in the execution of the trust
The concurrence of all is in general necessary in a transaction effecting the trust property and a majority cannot bind the trust estate
In order to bind the trust E estate the act must be the act of all
They constitute one body in the eye of law and all must act together
This is of course subject to any express direction given by the settlor
The Judicial Committee in Lala Man Mohan Das vs Janki Prasad quoted a passage from Lewin s Law of Trusts 15th ed p 190 to the effect  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 trustee and there fore 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 eye 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 474 regarded as the act of both
But such sanction or approval must be strictly proved
 which in their opinion contains a correct statement of law applicable in England and that the same doctrine applied to India also
The  decision in Lala Man Mohan Das s case has been followed with approval by this Court in L Jankirama Iyer  Ors
vs Neelakanta Iyer  ors
It follows as a necessary corollary that where there are several trustees they must act unanimously in making a sale or a contract of sale unless it is provided otherwise by the terms of the deed
In exercising the power of sale as in the exercise of other powers a trustee cannot therefore properly delegate the performance of the acts which he ought personally perform
Although a trustee may listen to the opinions and wishes of others he must exercise his own judgment
Thus a trustee for sale of property cannot leave the whole conduct of the sale to his co trustees
The reason for this is the settlor has entrusted the trust property and its management to all the trustees and the beneficiaries are entitled to the benefit of their collective wisdom and experience Underhill s Law of Trusts and Trustees 12th Ed pp 434 442 43 Scot on Trusts vol
2 p 1033
In L Janakirama Iyer s case this Court observed that all acts which the trustees intend to take for executing the trust must be taken by all of them acting together as provided by section 48 of the Trusts Act 1882
Section 48 of the Trusts Act provides as follows 48
When there are more trustees than one all must join in the execution of the trust except where the instrument of trust otherwise provides
 It is axiomatic that where there are more trustees than one all must join in the execution of the trust except where the instrument of trust otherwise provides
Therefore as laid down by this Court in L Janakirama Iyer s case if the validity of an alienation effected by the trustees falls to be considered only in the light of s 48 the fact that out of the three trustees only two have executed the sale deed would by itself make the transaction invalid and would not convey a valid title to the transferee
In the present case as the High Court rightly observes there is no such clause in the trust deed authorising the execution of the trusts to be carried out not by all but by one or more or majority of the trustees
In the absence of such a specific provision the general law 475 envisaged in section 48 of the Act would govern the rights of the parties
We are accordingly of the opinion that the alleged contracts of sale entered into by the four trustees were not binding and of no legal effect and could not be enforced
It must necessarily follow that the alleged contracts for sale entered into by them could not ripen into concluded contracts so as to bind the entire body of beneficiaries
It was not disputed that a trustee cannot delegate his functions except as provided in section 47 which reads 47
A trustee cannot delegate his office or any of his duties either to a co trustee or to a stranger unless a the 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
 Section 48 is a corollary of section 47 for if the trustees cannot delegate their duties it follows that they must all personally perform those duties and not appoint one of themselves to manage the business of the trust for the settlor has trusted all his trustees and it behoves each and every one of them to exercise his individual judgment and discretion on every matter and not blindly to leave any questions to his co trustees or co trustee
In the course of the arguments the resolution of the Board of Trustees dated March 8 1978 has been discussed with great minuteness but we have no doubt that the view taken of it by the High Court was right
The language used is perhaps not of a trained draftsman but it clearly does not in terms confer authorisation  upon the remaining four trustees to accept the bids or any one of them
It Learned counsel for the appellants strenuously urges that the resolution of March 8 1978 is in two parts
It is pointed out that the second part unequivocally confers upon the trustees the power of rejection of bids
It is therefore urged that the first part must be construed with reference to the second
It is said that we must correlate the second part to the First and when so read the words be examined and decided must in the context in which they appear mean the conferment of authority to reach a decision  ie as to acceptance or rejection of bids
It was also submitted that the words by the trustees present clearly meant the remaining four trustees
It was argued that when the Board of Trustees met on March 8 1978 the trustees knew full well that R N Malhotra the Chairman could not be present at the meeting of the Board of Trustees to be held on March 9 1978 as he had to leave Bombay on the morning of the 9th as his presence in Delhi was 476 required for pressing official business
Upon these premises it is contended that the resolution of March 8 1978 cannot but be construed as giving authorisation  to the remaining four trustees to accept the bids on March 9 1978
While we are not oblivious of Malhotra s statement that it was decided at the meeting on March 8 1978 that the trustees were free to accept the highest tenders if they did not see any reason to reject the same  and also that if the trustees felt that a higher amount could be obtained they could negotiate with the tenderer and obtain a higher price  May be that is what the trustees meant ie the remaining four trustees were fully authorised to deal with the matter in all its aspects
But that intention of trustees is not at all manifested in the resolution of March 8 1978 the terms of which are clear and explicit
In the case of a trust we are clearly of the view that the authorisation  must be express specific and in the clearest of terms
The word be examined and decided in the first part of the resolution may mean anything and are not necessarily susceptible of the only construction as contended for namely that of acceptance 
The expression to negotiate for sale in relation to the authority of an estate agent has a definite legal connotation
He gets an authority to find a purchaser but he cannot bind the principal by entering into a contract of sale Chadburn vs Moore and Rosenbaum vs Belson
These two decisions have been approved of by this Court in Abdul Ahmed vs Animendra Kissen Mitter laying down that there is a substantial difference between to sell  and to find a purchaser 
There is no reason why the same principle should not apply with regard to the authority if any of the remaining trustees in terms of the resolution of March 8 1978
If the second part of the resolution has to be construed with reference to the first as is contended for then their authority was limited to find purchasers for the jewellery and then place the matter before a meeting of the Board of Trustees for acceptance of their bids
When the trustees took care in drafting the second part which relates to rejection of bids there was no reason for their leaving any ambiguity in the first part
It is not permissible to spell out something which is not explicit by merely saying that it is implicit when the language is clear and it does not bear out any such construction
We arc not prepared to take a view which would be prejudicial to the entire body of beneficiaries
There is no reason why the words be examined and decided in the first part should not have their plain meaning that 477 the tenders were to be opened and examined by the remaining four trustees to see if they were valid tenders
The first part did not in our opinion give any authorisation  to the remaining trustees to accept any of the tenders
If they did not find a satisfactory offer or offers for any of the items offered for sale they could only under the second part reject the tenders submitted
It is needless to stress that delegation must be express
The trend of cross examination of Malhotra also shows that his concurrence was necessary
What transpired on March 9 1978 is completely shrouded in mystery
The Secretary s note exhibit B 124 dated March l 4 1978 reveals that the tenders were received on March 9 1978 in sealed covers accompanied by ten per cent of the value of jewellery tendered for in room No 305 Ambassador Hotel Bombay between 3 and 4 pm
It asserts that 27 tenders were received and they were opened at 430 pm
On the same day in the presence of the trustees and except for item No 16 of group XIV they accepted the same
As regards item No1 of group XIV negotiations were entered into with the appellants Ms Shanti Vijay  Co the highest tenderer and the price of Rs 68100000 offered by them for item No 16 was enhanced to Rs 69200000 which the trustees accepted
It then mentions that acceptance letters were issued to all the tenderers whose tenders had been accepted
The date for delivery of groups VII and XIV had been fixed for March 17 1978 and for the other items on March 21 and 22 1978
The Secretary s note exhibit B 124 reached R N Malhotra the Chairman of the Board of Trustees at New Delhi on March 23 1978 and bears his initials of that date It is accepted before us that Malhotra was not aware till March 23 1978 that the tenders or any of them had been accepted by the four trustees On March 9 1978
In his examination in chief he states that one or two days after he had left for Delhi the Secretary rang him up at Delhi
He says I remember that the Secretary of trust intimated to me on phone that the trustees had opened the tenders and the highest amount offered for all the items was over 14 crores
I remember I received that phone call one or two Days after I reached Delhi and at a time when I was in my office
I enquired of the Secretary whether the amount was the total of the highest bid for each item and he confirmed it
I made a particular enquiry from the Secretary as to how much amount the item consisting of 22 emeralds had fetched
The Secretary told me that item fetched over six crores
As I was 478 broadly aware of the values of the jewels per the valuations earlier made
I said Teek Hai
 During his cross examination he states When the Secretary telephoned to me within one or two days after I left Bombay he did not inform me as such that the trustees have accepted the tenders He then goes on to say that he read in the newspapers that a suit had been instituted against the trustees at Hyderabad and that an injunction was granted and accordingly rang up the Secretary of the Trust and states I remember it was about 15th of March 1978 and I rang up the Secretary on that very day to enquire what it was about
Till then the Secretary did not inform me about the institution of the proceedings in the City Civil Court
It will be more correct to say that I had not received any intimation from the Secretary before I contacted him on telephone
 It therefore appears that the Secretary drew up the note exhibit B 124 in undue haste despite the Court s order granting the injunction
It is not disputed that Malhotra had no knowledge of the acceptance of the tenders till March 23 1978 when the note of the Secretary exhibit B 124 reached him
It is also not disputed before us that no minutes of the alleged meeting of the remaining four trustees held on March 9 1978 exist
We have gone through the Minutes Book of the Board of Trustees
It reveals that minutes were regularly kept and indeed each and every meeting began with the confirmation of the minutes of the earlier meeting
The minutes of the meetings held on March S 1978 and of March 8 1978 are there
Thereafter appears the minutes of a meeting held on May 15 1978 exhibit B 125
But there are no minutes of the alleged meeting held on March 9 1978
It is thus clear that no meeting of the Board of Trustees was held at all on March 9 1978
The story of the alleged acceptance of bids by the remaining four trustees on March 9 1978 appears to be
complete myth
The Secretary s note exhibit B 124 was intended to mislead R N Malhotra the Chairman of the Board of Trustees in a frantic attempt to obtain his concurrence to something which never transpired
One fact in particular may be alluded to
The absence of any minutes of the alleged meeting held on March 9 1978 must as it should clearly excite our suspecision about the genuineness of the sale
nm attention was drawn to the tabular statement prepared by the 479 Secretary containing acceptance of bids by the four trustees exhibit B 123
The authenticity of this document is not beyond question
It is a tabular chart running into 34 large sheets with minute details
On each of the sheets there is a letter A  encircled against the highest tender and at the foot appear the alleged initials of three trustees bearing the date March 9 1978
None of the remaining trustees except M A Abbasi have entered the witness box
We do not know whether the initials at the foot of the document exhibit B 123 are of the trustees or not as none has proved them
Nothing is known as to when the initials were put and by whom
There is another alarming feature
According to Abbasi he encircled the highest tender with the letter A  and then initialed it on the statement exhibit B 123
During his cross examination he gave a lie to this and asserted that the letter A  encircled against the highest tender was not inscribed by him but by the Secretary and he only initialed it
Though the other three trustees are alleged to have put their initials at the foot of the statement on March 9 1978 there is nothing on record to show that all this was done that day at one Sitting at the same time
This document certainly cannot take the place of the minutes of the alleged meeting
The Secretary s note exhibit B 124 shows that the sealed tenders were received between 3 and 4 pm and they were opened at 430 pm ie within half an hour
It was humanly impossible to prepare this document within such a short time
Furthermore if the four trustees with the assistance of the Secretary could prepare these large tabular charts there was no reason why they could not record the minutes of the meeting if any held on that day showing that there was acceptance of the bids by them
The Minutes Book is the primary evidence and the chart cannot form the basis for a finding that there was any acceptance of the tenders on March 9 1978
It is apply clear that there was no meeting of the Board of Trustees on March 9 1978
The allegation that there was such a meeting is completely belied by the affidavit of M A Abbasi the material portion of which may be extracted 8
Out of the 107 items of jewellery only 37 items were put up for sale in the first instance and tenders invited
About sixty foreign and Indian buyers of repute inspected the jewellery between the 6th and 8th March 1978 at Bombay
On 9th March 1978 the trustees received the tenders and the same were opened on the 10th March 1978
The highest tenders received were accepted and letters of acceptance were issued on the same day to the persons whose 480 tenders had been accepted
In no case has any lower tender been accepted
 This tends to suggest that the alleged meeting was held not on March 9 1978 but on March 10 1978
He clearly states that the tenders were opened on March 10 1978 they were accepted on that day and letters of acceptance were sent to the persons on the same day whose tenders had been accepted
This is in contradiction with the Secretary s note exhibit B 124
It is quite clear to our mind that either M A Abbasi is not speaking the whole truth or that the story of the alleged meeting of the Board of Trustees of March 9 1978 was feigned to beguile R N Malhotra the Chairman of the Board of Trustees and also the beneficiaries
We cannot rely on the bare assertion of MA Abbasi RW 1 that the bids were accepted by the trustees on March 9 1978
It must accordingly be held for all these reasons that the High Court was justified in setting aside the alleged sale of 37 items of Jewellery belonging to HEH the Nizam s Jewellery Trust effected by the Board of Trustees in favour of the appellants and other tenderers for Rs 1443 crores on the ground that there was no concluded contract between the parties
The second question is perhaps a more difficult one for the appellants to surmount though the difficulty was sought to be explained away by saying that they had fulfilled their part of the con tract and they should not be deprived of the fruits of their bargain merely because of the Court s injunction
It is unfortunate that this aspect of the case was not submitted to the High Court and we there fore have not the assistance of that Court s opinion
We however think that the meaning of section 56 of the Contract Act is clear
The section insofar as material runs as follows 56
An agreement to do an act impossible in itself void
A contract to do an act which after the contract is made becomes impossible or by reason of some event which the promisor could not prevent unlawful becomes void when the act becomes impossible or unlawful
 In the present case cls
11 and 12 of the conditions of sale embodied the terms of the contract
By cl 11 time is made the essence of contract
Clause 11 cannot be read in isolation but both cls
11 and 12 must be read together because they form an integral part of the contract
These clauses in addition to making time the essence of contract clearly provide that in the event there was a failure to pay 90 481 per cent of the tender amount ie the balance of the price the contract would be deemed to have been cancelled
It is however argued that upon acceptance of the tender the property in the goods passed to the buyer
We are afraid we cannot appreciate this line of argument
It totally ignores the effect of the defeasance clause contained in cl 12
On a reading of both cls
11 and 12 together there can be no doubt that the passing of the property was dependent upon the tender of the balance of the price and the taking delivery of the goods upon payment
Even assuming that there was acceptance of tenders by the four trustees on March 9 1978 as alleged hl terms of the resolution of March g 1973 the contract was frustrated by the grant of an ad interim injunction by the Court of the Chief Judge City Civil Court Hyderabad on March 14 1973
The grant of such injunction prevented the performance of the alleged contracts
The appellants could not have tendered 90 per cent of the tender amount ie the balance of the price by the stipulated date or taken delivery of the jewellery so long as the injunction lasted
It is however pointed out that the appellants Ms Shanti Vijay  Co by their lawyer s notice dated March 15  confirmed that they had sent a telegram making a demand for delivery of the two items of the jewellery purchased by them against payment of Rs 852 crores
It is true that the letter was accompanied with a photostat copy of a certificate of foreign inward remittance of the amount
But the fact remains that in terms of the said notice the appellants never made a tender of the balance amount to the Board of Trustees at the Mercantile Bank at Bombay on March 17 1978
They knew full well that the trustees would not accept the amount nor could deliver all the jewellery in question in view of the injunction granted by the Court
The injunction in terms restrained the trustees from taking any steps to finalise the sale of the jewellery
The injunction was not vacated till March 27 1978
Even after the injunction was vacated the appellants or other successful tenderers never made an attempt to pay the balance amount till April 13 1978 on which date the High Court passed an order for maintaining the status quo ante
It is nobody s case that a new contract was ever entered into
We are clearly of the opinion that there was a frustration of the alleged contracts in the facts and circumstances of the present case
It was faintly argued by learned counsel appearing for some of the appellants that by reason of the concluding words without the trustees being liable or accountable to any person whomsoever  in cl 13 of the trust deed the discretionary power of sale conferred upon the trustees 482 was not liable to be interfered with under section 49 of the Trusts Act which is in these terms 49
Where a discretionary power conferred on a trustee is not exercised reasonably and in good faith such power may be controlled by a principal Civil Court of original jurisdiction
 After a stage in the arguments before us learned counsel appearing for the Board of Trustees was at pains to impress upon us that the trustees would be subject to the directions of the Court and would act in the best interests of the beneficiaries
This if we may say so is a complete change of front
On the contrary the submission in the High Court was that not only the Court will refuse to restrain the exercise of discretionary power but it will give no relief to the beneficiaries where honest exercise of such a power has by an error of judgment led to loss for as Lord Normand said in Dundee General Hospitals Board of Management vs Walker  It is one thing to say that the trustees must honestly discharge their trust and keep within the bounds of the powers and duties entrusted to them and quite another to say they must not fall into errors which other persons including a court of law might consider unreasonable The learned Judges of the High Court however have rightly in our opinion repelled the contention
It was certainly open to the Board of Trustees to effect a sale of the 37 items of jewellery under cl 13 of the deed
But the power although discretionary must be exercised reasonably and in good faith
The power conferred on the Board of Trustees is no doubt discretionary but the principle embodied in section 49 viz that when such discretionary power is not exercised reasonably and in good faith such power may be controlled by a court
There was no warrant for the suggestion made by the Board of Trustees before the High Court that the power is absolute
The law on the subject is succinctly stated in Underhill s Law of Trusts and Trustees 12th Ed p 472  it would seem that even where trustees claim to exercise their discretion as to investments the court will in a proper case direct an inquiry whether it is for the interest of the beneficiaries that a particular investment should be continued or called in
So too where absolute discretion has been given to trustees to do a particular act eg to sell the 483 trust property the court cannot compel them to exercise the power but if they do exercise it the court will see that they do not exercise it improperly or unreasonably
 The proposition is no doubt one which speaks for itself
When it appears from the facts that the act of the trustees in offering for sale these 37 items of jewellery at an inadequate price of Rs 1443 crore was not the act of all that it was undoubtedly an improvident sale as the jewellery has been found to be worth Rs 2025 crores if not more and more so when the alleged sale was effected by them in favour of the appellants and other bidders without trying to ascertain their actual price it certainly follows that they acted in flagrant disregard of the interests of the entire body of beneficiaries
It is somewhat disconcerting that throughout this litigation the trustees should have as they appear to have done aligned themselves with the appellants and other successful tenderers
They not only asserted that there was a concluded contract  for the sale of 37 items of jewellery by the alleged acceptance of bids by them on March 9 1978 but also that the Court had no power to interdict the sale under section 49
If we may say so the attitude adopted by the Board of Trustees was clearly against the interests of the beneficiaries
In the present case evidence is tendered by the trustees not for the purpose of showing that they tried to protect the interest of the beneficiaries but for proving facts from which it could be inferred that accepting that the price of Rs 1443 crores offered by the appellants and other tenderers was wholly inadequate the discretionary power of sale was not liable to be interfered with
It remains then to determine whether on the whole of the evidence as tendered the appellants have established facts from which a sale in their favour could be inferred or that the act of the trustees was not a bona fide exercise of their power so as to attract the Court s over riding power to annul the sale under section 49 of the Trusts Act
The testimony of Dinshaw Jahangir Gazdar RW 3 Kashmir Chand RW 4 and Vithaldas RW 6 goes to show that they have been in jewellary business since long and selling jewellery belonging to several Indian princes
Dinshaw Jahangir RW 3 was a consultant to the late Nizam for sale of his jewellery and had also arranged the sale of jewellery belonging to late Salarjung of Hyderabad
Kashmir Chand RW 4 partner of the appellant firm Ms Shanti Vijay  Co had participated in the sale of jewellery belonging to the Maharajahs of Gwalior Darbhanga Jodhpur and Bikaner
Vithaldas RW 6 is one of approved valuers appointed by the Government of India and had 484 valued the jewellery belonging to the Paiga of Khrusheed Jah and also some jewels belonging to the late Salarjung
At the instance of the Government of India he had valued the jewellery belonging to he Nizam as also the Nawab of Rampur
According to these jewellers the only method of sale adopted in all these sales was to inform reputed jewellers both in the country and abroad
and none of the sales were by advertisement in the press
As regards value of the jewellery Dinshaw Jahangir Gazdar RW 3 and M A Abbasi RW 1 want us to believe that Rs 1443 crores was the best possible price  that the 37 items of jewellery could ever fetch despite the fact that the eighth respondent Peter Jansin Fernandez made an offer of Rs 2025 crores for the same during the course of the proceedings
For this they largely relied upon the valuation report of Vithaldas RW 6 showing that these 37 items of jewellery were worth Rs 10363000
We shall deal with these witnesses later It is somewhat strange that the Board of Trustees should have acted in a cavalier fashion in disposing of the jewellery without trying to ascertain their actual value
The alleged sale effected by them was clearly detrimental to the interests of the beneficiaries
M A Abbasi RW 1 admits during his cross examination that the trustees had no definite idea of the value of the 37 items of jewellery  when they were offered for sale
He further admits that he did not consult anyone except Dinshaw Jahangir Gazdar RW 3 about the actual value
He also admits that he did not get in touch with any curators of Museums of foreign countries to find out whether they were interested in purchasing any of the items nor were any letters sent to any jewellers of Holland Belgium United Kingdom Switzerland and Geneva
Even in this country the trustees did not appear to have written to any jeweller from Calcutta Madras Hyderabad or Bangalore
M A Abbasi states that the trustees were advised particularly by Dinshaw Jahangir Gazdar that it was not desirable to give publicity in the daily newspapers as undesirable elements might step in for inspecting the jewels and he could not assure them the bona fides of every such person who wanted to inspect the jewellery
He therefore approached some of the jewellers through letters
Then we come to Dinshaw Jahangir Gazdar RW 3
It is true that this witness has wide experience in jewellery business and tries to assert that the amount of Rs 1443 crores offered by the successful tenderers was a very good price  but then had to admit that he does not possess any qualification in gemmology
According to this witness
485 there is no principle as such in valuing an item of jewellery
One looks at it and values the same  He however had to admit that he never participated in sales of rare jewels held abroad nor is he aware of the practice where jewels are sold abroad in auction rooms after proper advertisement
This witness goes on to say It is only a jeweller who can value jewels by having a look at them
He will keep in consideration the size cutting clarity and lustre and colour  Vithaldas RW 6 also asserts that the price of Rs 1443 crores fetched was a very good price  in March 1978 for these jewels
When be was confronted with the offer made by the eighth respondent during his cross examination he stated that according to him an offer of Rs 2025 crores for these 37 items of jewellery was a fancy price 
He explains by saying that a fancy price would be higher than the market price
All this evidence was led by the appellants and the other tenderers as well as by the Board of Trustees in trying to establish that the trustees acted honestly and there was no lack of good faith on their part
It appears that as so often happens when one deals with another s property it matters little to him what price the property fetches
But in the case of a trust there arises the duty of the trustees to act with prudence and as a body of reasonable men
The High Court has come to a definite conclusion that the improvident sale of the jewellery at such a low price without due public notice was not a bona fide exercise of their power conducive of beneficial management
There is no reason for us to come to a different conclusion
On the totality of the evidence in our opinion the High Court rightly came to the conclusion that though there were no mala fides corrupt motives fraud or mis representation on the part of the trustees and they acted honestly the trustees in the facts and circumstances of the present case did not act reasonably and in good faith ie with due care and attention
Upon its finding that there was no concluded contract between the parties within the meaning of s 2 h of the Contract Act it accepted the offer of the eighth respondent Peter Jansin Fernandez for Rs 2025 crores for the purchase of 37 items of jewellery
It is necessary to mention that upon receipt of the findings recorded by the High Court these appeals were placed before the Court for orders on April 18 1979 when it issued a direction to the effect The parties will submit the methodology by which a maximum price may be fetched for the benefit of the bene 486 ficiaries
Any offer which is below Rs 20 crores will automatically be ignored Since the Court was rising for the summer vacation from May 5 1979 learned counsel for the eighth respondent Peter Jansin Fernandez made a request for withdrawal of the deposit of Rs 2025 crores made by him before the High Court for the purchase of the 37 items of jewellery and instead gave an undertaking to furnish an irrevocable bank guarantee by the State Bank of India overseas  Branch Bombay to that extent
This was duly complied with by the eighth respondent Peter Jansin Fernandez and the irrevocable bank guarantee for Rs 2025 crores furnished by him is due to expire on September 20 1979
The appeals came up for hearing before the Court on August 18 199 We request to say that though the appellants and other successful tenderers had nearly four months  time no better offer than the one made by the eighth respondent Peter Jansin Fernandez for Rs 2025 crores was forthcoming
We therefore proceeded to hear the appeals on merits
The parties were heard on all aspects
The question still remains as to the course open
Accepting the offer of the eighth respondent Peter Jansin Fernandez without inviting fresh tenders would be subject to the same infirmity
From the evidence on record it appears nobody really knows the actual value of the 37 items of the jewellery
It may be well worth more than Rs 2025 crores
We must therefore uphold the judgment of the High Court setting aside the alleged sale of 37 items of jewellery belonging to
HEH the Nizam s Jewellery Trust effected by the Board of Trustees in favour of the appellants and other successful tenderers for Rs 1443 crores but set aside its order accepting the bid of the eighth respondent Peter Jansin Fernandez for purchase of the jewellery for Rs 2025 crores and direct a re auction on the terms specified separately
The appeals are disposed of accordingly
The appellants in all these appeals excepting Civil Appeal No 1269 of 1978 shall bear their own costs and pay one set of cost to the respondents as they have substantially failed
The two special leave applications are also dismissed


Summary:
The late HEH Nawab Mir Sir Osman Ali the Nizam of Hyderabad by an indenture dated March 29 1951 created the trust called HEH the Nizam s Jewellery Trust in respect of 107 items of extremely valuable rare and priceless jewellery for the benefit of his two sons two grand sons two grand daughters daughter and step son
The nominee of the Government of India 
N Malhotra Addl
Secretary to the Government of India Ministry of Finance Department of Economic Affairs was made the Chairman of the Board of Trustees
In addition to the Chairman there were four trustees and a Secretary for the Trust
Clause 13 of the trust deed provided that after a period of three years from the date of the death of the settlor and his eldest son the trustees may sell the trust property in their absolute discretion either in India or in any foreign country without their being liable or accountable to any person whomsoever for the propriety of or justification for such sale or for reasonableness or otherwise of the price or consideration or other terms in respect of the sale
Prince Azam Shah the eldest son of the Nizam died in October 1970 and the trustees on July 1 1972 submitted a memorial to the Prime Minister to acquire the jewellery as they were of great historical and cultural value and keep the same intact as part of the national heritage
The Government of India appointed an Expert Committee to advise whether any part of the jewellery should be acquired as antiques under the Antiquity and Art Treasures Act 1972 and in pursuance to its report acquired eighteen selected pieces of jewellery at a mutually negotiated price of Rs 117 crores
It appears that the beneficiaries of the trust were in very straitened circumstances due to abolition of privy purse heavy incidence of income tax and wealth tax and being thus heavily indebted pressed upon the Board of Trustees to effect an immediate sale of 37 items of jewellery
On January 9 1978 the Chairman conveyed to the trustees that the Government of India were not likely to acquire any of the 37 pieces of jewellery with regard to which tho negotiations were being made
The Board of Trustees 460 accordingly passed a resolution to sell the jewellery immediately
Pursuant to the resolution of the Board the Secretary of the Board decided upon the procedure to be adopted for the sale of the 37 items of jewellery and eventually on March 9 1978 the tenders that were submitted in respect of the sale of those items were opened by the four trustees in Bombay the Chairman R N Malhotra being absent due to official pre occupation at New Delhi
On March 10 1978 the first respondent in the appeal who was one of the beneficiaries of the Trust and a grand daughter of the Nizam instituted proceedings under section 74 of the Trust Act for removal of the trustees alleging dereliction of duty negligence and mismanagement on their part in respect of the 37 items of jewellery belonging to the Trust which were brought to sale
An application for injunction under order 39 Rule 1 of the Code of Civil Procedure was filed for restraining the trustees from taking any further steps towards the finalisation of the sale of the jewellery
The City Civil Court granted an ad interim injunction restraining the trustees from taking any steps towards the finalisation of the sale of the jewellery which was got vacated by one of the trustees
On March 28 1978 the first respondent filed an appeal in the High Court which directed that status quo ante be maintained
In the meanwhile the 8th respondent made an offer to purchase the 37 items of jewellery in one lot for Rs 2025 crores and also applied to be impleaded as a party in the appeal
On April 18 1978 the appellant who was one of the successful bidders also applied to be impleaded as a party respondent
The High Court impleaded the appellant as a party to the appeal and in order to test the bona fides of the 8th respondent directed that he should deposit the offered amount within one week
On such deposit being made the 8th respondent was allowed to inspect all the items of jewellery
The first respondent filed an application to withdraw the appeal which was heard but before any orders could be passed her sister the second respondent applied for permission to be impleaded as appellant No 2 as there was a danger of the entire body of the beneficiaries being deprived of an amount of Rs 578 crores
The first respondent was permitted to withdraw and the second appellant was brought on record
The High Court set aside the alleged sale of 37 items of jewellery by the Board of Trustees in favour of the appellant and other successful tenderers on the ground that there was no concluded contract between the parties and instead accepted the offer of the eighth respondent
On appeal to this Court the matter was remitted to the High Court for impleading all the tenderers and affording an opportunity to the appellants to substantiate their claim that there was a concluded contract for the sale of the jewellery to them for Rs 1443 crores
The High Court impleaded the other tenderers respondents Nos 7 to 17 and after giving opportunity to substantiate their claims held that no binding contract came into existence
In appeals to this Court on the questions 1 Whether there was a concluded contract effected between the appellants and the other successful bidders on the one part and the Board of Trustees on the other for the sale of the 37 items of jewellery for Rs 1443 crores by the alleged acceptance of their bids by the four trustees on March 19 1978
461 2 Whether there was frustration of the contract in that the ad interim injunction of the City Civil Court on March 14 1978 made further performance of the alleged contracts impossible and 3 Whether the exercise of the discretionary power of sale exercised by the trustees conferred on them by cl 13 of the trust deed ought not to be set aside under section 49 of the Trusts Act as an improvident sale because of the fact that an amount of Rs 2025 crores for the 37 items of jewellery had been offered by the eighth respondent
 HELD 1
The High Court was justified in setting aside the alleged sale of 37 items of jewellery belonging to HEH the Nizam s Jewellery Trust affected by the Board of Trustees in favour of the appellants and other tenderers for Rs 1443 crores on the ground that there was no concluded con tract between the parties
480D 2
The contract was frustrated by the grant of an ad interim injunction by the Court of the Chief Judge City Civil Court Hyderabad on March 14 1978
The grant of such injunction prevented the performance of the alleged contacts
The appellants could not have tendered 90 percent of the tender amount ie the balance of the price by the stipulated date or taken delivery 1 of the jewellery so long as the injunction lasted
481C 3
The High Court had come to a definite conclusion that the improvident sale of the jewellery at such a low price without due public notice was not a bonafide exercise of power conducive of beneficial management
There is no reason to come to a different conclusion
When one deals with another s property it matters little to him what price the property fetches
But in the case of a trust there arises the duty of the trustees to act with prudence and as a body of reasonable men
485E D 4a
In the case of a private trust where there are more trustees than one all must join in the execution of the trust
The concurrence of all is in  general necessary in a transaction affecting the trust property and a majority cannot bind the trust estate
In order to bind the trust estate the act must be the act of all
They constitute one body in the eye of law and all must act together
This is subject to any express direction given by the settlor
473 E Lala Mohan Das vs Janki Prasad LR 1944 72 IA 39 L Jankiranza Iyer  ors vs Neelakanta lyer  Ors 1962 Supp
I SCR 206 Lewin s Law of Trusts 15th Ed 198 referred to
Where there are several trustees they must act unanimously in making a sale or a contract of sale unless it is provided otherwise by the terms of the deed
In exercising the power of sale as in the exercise of the other powers a trustee cannot therefore properly delegate the performance of the acts which he ought personally perform
Although a trustee may listen to the opinion and wishes of others he must exercise his own judgment
A trustee for sale of property cannot leave the whole conduct of the sale 11 531SCI79 462 to his co trustees
The reason for this is that the settler has entrusted the trust property and its management to all the trustees and the beneficiaries are entitled to the benefit of their collective wisdom and experience
474C D Underhill s Law of Trusts and Trustees 12th Ed pp 434 442 443 Scot on Trusts Vol
p 1033 5
All acts which the trustees intend to take for executing the trust must be taken by all of them acting together as provided by section 48 of the Trusts Act 1882
Where there are more trustees than one all must join in the execution of the trust except where the instrument of trust otherwise provides
If the validity of an alienation affected by the trustees falls to be considered only in the light of section 48 the fact that out of the three trustees only two have executed the sale deed would by itself make the transaction invalid and would not convey a valid title to the transferee
474E G 6
The High Court rightly observed there is no clause in the trust deed authorising the execution of the trusts to be carried out not by all but by one or more or majority of the trustees
In the absence of such a specific provision the general law envisaged in section 48 of the Act would govern the rights of the parties
The alleged contracts of sale entered into by the four trustees were not binding and of no legal effect and could not be enforced
It must necessarily follow that the alleged contracts for sale entered into by them could not ripen into concluded contracts so as to bind the entire body of beneficiaries
474H 475B 7
Section 48 is a corollary of section 47
If the trustees cannot delegate their duties it follows that they must all personally perform those duties and not  appoint one of themselves to manage the business of the trust for the settlor has trusted all his trustees and it behoves each and every one of them to exercise his individual judgment and discretion on every matter and not bindly to leave any questions to his co trustees or co trustee
The view taken by the High Court of the resolution of the Board of Trustees dated March 8 1978 was right
The language used in the resolution is perhaps not of a trained draftsman but it clearly does not in terms confer authorisation  upon the remaining four trustees to accept the bids or any of them
475D F 8
The statement of Malhotra that it was decided at the meeting on March 8 1978 that the trustees were free to accept the highest tenders if they did not see any reason to reject the same  and also that if the trustees felt that a higher amount could be obtained they could negotiate with the tenderer and obtain a higher price  is of little consequence
Perhaps that is what the trustees meant ie the remaining four trustees were fully authorised to deal with the matter in all its aspects
But that intention of the trustees is not at all manifested in the said resolution the terms of which are clear and explicit
476B C 9
In this case of a trust the authorisation  must be express specific and in the clearest of terms
The words be examined and decided in the first part of the resolution may mean anything and are not necessarily susceptible of the only construction as contended for namely that of acceptance 
The expression to negotiate for sale in relation to the authority of an estate agent has a definite legal connotation
He gets an authority to find a purchaser 463 but he cannot bind the principal by entering into a contact of sale
There is a substantial difference between to sell  and to find a purchaser 
476D E  Chadburn vs Moore  Rosenbaum vs Abdul Ahmed vs Animendra Kissen Mitter  referred to 10
If the second part of the resolution has to be construed with reference to the first as is contended for then their authority was limited to find purchasers for the jewellery and then place the matter before a meeting of the Board of Trustees for acceptance of their bids
When the trustees took care in drafting the second part which relates to rejection of bids there was no reason for their leaving any ambiguity in the first part
It is not permissible to spell out something which is not explicit by merely saying that it is implicit when the language is clear and it does not bear out any such construction
A view which would be prejudicial to the entire body of beneficiaries is not to be taken
There is no reason why the words be examined and decided  in the first part should not have their plain meaning that the tenders were to be opened and examined by the remaining four trustees to see if they were valid tenders
The first part did not give any authorisation to the remaining trustees to accept any of the tenders
If they did not find a satisfactory offer or offers for any of the items offered for sale they could only under the second part reject the tenders submitted
Delegation must be express
The trend of cross examination of Malhotra also shows that his concurrence was necessary
476F 477B 11
The Secretary drew up the note dated March 14 in undue haste despite the Court s order granting the injunction
478D 12
The minutes of the meetings held on March 5 1978 and of March 8 1978 are there
Thereafter appears the minutes of a meeting held on May 15 1978 Ext
B 125
But there are no minutes of a meeting held on March 9 1978
It is thus clear that no meeting of the Board of Trustees was held at all on March 9 1978
The absence of any minutes of the alleged meeting held on March 9 1978 must as it should clearly excite suspicion about the genuineness of the sale
exhibit 123 is the tabular statement prepared by the Secretary containing acceptance of bids by the four trustees
The authenticity of this document is not beyond question
It is a tabular chart running into 34 large sheets with minute details
On each of the sheets there is a letter A  encircled against the highest tender and at the foot appear the alleged initials of three trustees bearing the date March 9 1978
None of the remaining trustees except M A Abbasi have entered the witness box and none of the trustees has proved the initials at the foot of the document exhibit 123 Nothing is known as to when the initials were put and by whom
Though the other three trustees are alleged to have put their initials at the foot of the statement on March 9 1978 there is nothing on record to show that all this was done that day at one sitting at the same time
478F 478H 479D 13
If the four trustees with the assistance of the Secretary could prepare these large tabular charts there was no reason why they could not record the 464 minutes of the meeting if any held on that day showing that there was acceptance of the bids by them
The Minutes Book is the primary evidence and the chart cannot form the basis for a finding that there was any acceptance of the tenders on March 9 1978
479E F In the instant case cls
11 and 12 of the conditions of sale embodied the terms of the contract
By cl 11 time is made the essence of contact
Clause 11 cannot be read in isolation but both cls
11 and 12 must be read together because they form an integral part of the contract
These clauses in addition to making time the essence of contract clearly provided that in the event there was a failure to pay 90 percent of the tender amount the balance of the price the contract would be deemed to have been cancelled  on a reading of both cls
11 and 12 together there can be no doubt that the passing of the property was dependent upon the tender of the balance of the price and the taking delivery of the goods upon payment
480H 481B 14
It was certainly open to the Board of Trustees to effect a sale of the 37 items of jewellery under cl 13 of the deed
But the power although discretionary must be exercised reasonably and in good faith
The power conferred on the Board of Trustees is no doubt discretionary but the principle embodied in section 49 is that when such discretionary power is not exercised reasonably and in good faith such power may be controlled by a court
There was no warrant for the suggestion made by the Board of Trustees before the High Court that the power is absolute
482E G Underhill s Law of Trusts  Trustees 12th Ed 472 p 472 referred to 15
On the totality of the evidence the High Court rightly came to the conclusion that though there were no mala fides corrupt motives fraud or mis representation on the part of the trustees and they acted honestly the trustees in the facts and circumstances of the case did not act reasonably and in good faith ie with due care and attention
485F 16
Upon the finding that there was no concluded contract between the parties within the meaning of section 2h of the Contract Act the High Court accepted the offer of the eighth respondent for Rs 2025 crores for the purchase of the 37 items of jewellery but this part of the order is set aside as acceptance of his bid without calling for fresh tenders would be subject to the same infirmity
From the evidence on record that no body knows the actual value of the jewellery and it may be well worth more than Rs 2025 crores and therefore reauction ordered
485G 486E G