Case: In Re: H.E.H. The Nizam's Jewellery Trust  Vs.


Decision:
1[ds]31. 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 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 beneficiaries34. In the course of the arguments, the resolution of the Board of Trusts 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 right37. 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 are 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 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 ofn of Malhotra also shows that his concurrence was necessary8. 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 March 6 and 8, 1978 at Bombay. On March 9, 1978 the trustees received the tenders and the same were opened on March 10, 1978. The highest tenders received were accepted and letters of acceptance were issued on the same day to the persons whose tenders had been accepted. In no case has any lower tender been acceptedThis 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 Secretarys not Ex.. 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 M. A. Abbasi, RW 1 that the bids were accepted by the trustees on March 9, 197845. 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 H.E.H. the Nizams Jewellery Trust effected by the Board of Trustees in favour of the appellants and other tenderers for Rs. 14.43 crores on the ground that there was no concluded contract between the parties46. 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 contract and they should not be deprived of the fruits of their bargain merely because of the Courts injunction. It is unfortunate that this aspect of the case was not submitted to the High Court, and we, therefore, have not the assistance of that Courts opinion. We, however, think, that the meaning of Section 56 of the Contract Act is clearWe are afraid, we cannot appreciate this line of argument. It totally ignores the effect of the defeasance clause contained in Clause 12. On a reading of both Clauses 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 paymentEven 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 nobodys 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 case51. 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 Clause 13 of the deed. But the power, although discretionary, must be exercised reasonably and in good faith55. 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 with61. It appears that, as so often happens when one deals with anothers 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 conclusion62. 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 misrepresentation 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, i.e., with due care and attention. Upon its finding that there was no concluded contract between the parties within the meaning of Section 2(h) of the Contract Act, it accepted the offer of the eighth respondent, Peter Jansin Fernandez, for Rs. 20.25 crores for the purchase of 37 items of jewellery.