IN THE HIGH COURT OF JUDICATURE AT MADRAS (APPELLATE JURISDICTION) Thursday THE TWENTY EIGHTH DAY OF AUGUST TWO THOUSAND AND EIGHT PRESENT THE HONOURABLE MR.JUSTICE M.CHOCKALINGAM AND THE HONOURABLE MR.JUSTICE M.VENUGOPAL O.S.A.Nos.294, 295, 298 and 299 of 2007 and MP Nos.1/2007, 1/2007 & 1/2008 in OSA 294/2007 and 295/2007 2 and 9/2008 in OSA 294/2007 and 1/2007 in OSA 298/2007 OSA 294/2007: 1.M.E.Devarajan 2.Sriram Educational Trust Represented by its Chairman M.E.Devarajan 3.Dr.K.Bakthavatchalu 4.M.D.Kasthuri .. Appellants (Plaintiffs 1,2,6 AND 7) vs 1.B.Adhikesavalu 2.L.Kesavalu Naidu 3.K.Venkatarathnam 4.Kasthuri Parthasarathy 5.V.Venkateswaralu Naidu 6.V.Ellammal 7.K.Babu 8.G.V.Lakshminarayanan .. Respondents (Defendants 3,4,6,8,9 4 & 5 Plaintiffs OSA 295/2007: 1.M.E.Devaraj 2.Dr.K.Bakthavatchalu 3.M.D.Kasthuri .. Appellants (Plaintiffs 1,6, & 7) vs 1.L.Kesavalu Naidu 2.K.Venkatarathnam 3.B.Adhikesavalu https://hcservices.ecourts.gov.in/hcservices/ 4.V.Venkateswaralu Naidu 5.Kasthuri Parthasarathy 6.G.V.Lakshminarayanan 7.V.Ellammal 8.K.Babu .. Respondents (Plaintiffs 2,3,5,7 and Defendants 2,5,3 and 4) OSA 298/2007: K.Babu .. Appellant (4th Defendant) vs 1.L.Kesavalu Naidu 2.K.Venkatarathinam 3.B.Adikesavalu 4.V.Venkatesewaralu Naidu 5.Kasthuri Parthasarathy 6.M.E.Devarajan since they are performa not necessary parties. They are given up 7.G.V.Lakshminarayanan 8.Dr.K.Bakthavatchalu 9.M.D.Kasthuri 10.V.Ellammal .. Respondents Plaintiffs 2,3,4 Defendants 2,1,5,6,7,8, OSA 299/2007: K.Babu .. Appellant (4th Plaintiff) vs 1.B.Adikesavalu 2.L.Kesavalu Naidu 3.K.Venkatarathinam 4.Kasthuri Parthasarathy 5.V.Venkatesewaralu Naidu 6.V.Ellammal 7.Sriram Educational Trust Rep. By its Chairman M.E.Devarajan Office at 18, Evening Bazaar Road Chennai 600 003. 8.M.E.Devarajan | 9.G.V.Lakshminarayanan | 10.Dr.K.Bakthavatchalu | 11.M.D.Kasthuri | Since they are performa not parties they are given up .. Respondents (Defendants 3,4,5,6,8 & 9) https://hcservices.ecourts.gov.in/hcservices/ Appeals under clause 15 of the Letters Patent against the order of the Honourable Mr. Justice M. Jeyapaul dated 21.9.2007 and made in the exercise of the Ordinary Original Civil jurisdiction of the C.S.No.1620 and 2078/95. ORDER:- The OS Appeals coming on for hearing on this day upon perusing the Grounds of Appeals the order of the Honourable Mr.Justice M. Jeyapaul dated 21.9.2007 and made in the exercise of the Ordiinary Original Civil jurisdiction of the High Court in C.S.Nos.1620 and 2078 of 1995 and all other papers material to this case, and upon hearing the arguments of Mr.T.V. Ramanujam, Senior Advocate for Mr.T. V.Krishnamachari Advocate for the Appellants in O.S.A.294 and 295/2007 Mr.P.S.Raman, Senior Advocate for Mr.N.S.Nandakumar Advocate for the Appellants in OSA 298 and 299/07 and 7th Respondent in OSA.294/07 and 8th Respondent in OSA 295/07 and of Mr.T.R. Rajagopalan, Senior Advocate for Mr. Sathish Parasaran for respondents 1 to 3 and 5 in OSA 294/97 and for respondents 1 to 4 in OSA 295/07 and RR1 to R3 in OSA 298 and 299/07 and of Mr.P.N. Prakash for Mr.M. Rajasekar, Advocate for the 6th Respondent in OSA 294/07 and 299/07 for the 7th respondent in OSA 295/07 and of Mr.T.Viswanatha Rao, Advocate for the 4th Respondent in OSA 294/07 and for the 5th respondent in OSA 295/07 and of Mr.R. Thiagarajan, Advocate for the 8th Respondent in OSA.294/07 and R6 in OSA 295/07 the Court made the following order: COMMON JUDGMENT (Judgment of the Court was delivered by M.CHOCKALINGAM, J.) This judgment shall govern these four appeals in OSA Nos.294, 295, 298 and 299 of 2007. They challenge a common judgment of the learned Single Judge made in C.S.Nos.1620 and 2078 of 1995 decreeing the suit in C.S.No.2078 of 1995 and dismissing the suit in C.S.No.1620 of 1995. 2.The plaintiffs in C.S.No.2078 of 1995 have sought for a declaration that the alleged meeting purported to have been held on 29.9.1995, and the resolutions said to have been passed at the meeting are non-est, ab initio void, illegal and invalid; that the meeting held on 11.10.1995 by the plaintiffs 1 to 4 and the resolutions passed thereat are valid and binding upon the defendants; that the first defendant ceased to be the chairman of the board of trustees of the suit trust; and that the plaintiffs 1 and 2 alone are the trustees of the suit trust and also for a consequential permanent injunction restraining the first defendant from functioning as Chairman of the board of trustees of the trust and defendants 3 to 8 from functioning or claiming to be the trustees of the board of trustees of the suit trust with the following allegations: (a) Sri Ram Educational Trust was founded by the fifth plaintiff by a registered trust deed dated 20.10.1983, with the object of establishing, running and maintaining educational https://hcservices.ecourts.gov.in/hcservices/ institutions. The founder Initially appointed three persons as permanent trustees namely M.A.Ethirajulu Naidu, L.A.Parthasarathy and M.E.Devarajan. The trust deed provided for a maximum of nine permanent trustees, and the three permanent trustees were given right to nominate the remaining six trustees. Any vacancy in the board will be filled up by co-option by the surviving or remaining trustees of the Board. The deed also provided for nominating the Chairman, Secretary and the Treasurer among the trustees. Till 15.4.1985, the first three trustees did not nominate any trustees. In the board meeting on 15.4.1985, the board of trustees nominated the plaintiffs 1 to 4 as trustees. They were informed about the same by a communication dated 17.4.1985, sent by the first defendant as chairman of the trust. From that time onwards, they were functioning so. (b) The first defendant who is the son of Ethirajulu Naidu, and who did not evince any interest in the trust affairs, assumed for himself the post of Chairmanahip. His position as Chairman has been duly recognized by all. The said Ethirajulu Naidu died in the year 1987, and nobody was nominated in his place. The other trustee Parthasarathy died in the year 1988, and in his vacancy, his wife Kasthuri alias Kumudha Parthasarathy was nominated as a trustee. After the death of Parthasarathy, the fourth plaintiff Varadarajulu Naidu, who was nominated as trustee in the year 1985, was appointed as the Treasurer as per the resolution dated 13.5.1988. (c) The first plaintiff was unilaterally removed from the post of Correspondent on 19.6.1986, without obtaining any approval from the board of trustees. The first defendant started acting arbitrarily. The fifth plaintiff addressed a letter dated 8.6.1995 to all the trustees calling for a meeting of the board to discuss the affairs of the trust. The first defendant did not convene any meeting. The plaintiffs 1 to 3 issued a notice dated 9.8.1995 to the fourth plaintiff and defendants 1 and 2 calling for a meeting of board of trustees on 26.8.1995. The first defendant for the first time came forward to state in his letter dated 16.8.1995, that the plaintiffs 1 to 3 had not been nominated as trustees since they did not fulfill the obligation to pay contribution of Rs.3 lakhs as decided in the meeting of the Governing Council dated 26.10.1989. (d) The first defendant convened a meeting on 20.9.1995 where the plaintiffs 1 to 4 also participated, and after obtaining the signature of the trustees and the members of the Governing Council, the first defendant abruptly left the meeting stating that he had some urgent work. In such circumstances, having no other alternative, the plaintiffs 1 to 3 convened the requisition meeting on 11.10.1995, after giving prior notice to the defendants 1 and 2 and to the fourth plaintiff. All the plaintiffs 1 to 4 attended the meeting; but, the defendants 1 and 2 did not attend. In the said meeting, the clause 'c' of the Trust Deed was amended invoking powers under Clause 21 of the Trust Deed by removing the phrase "above three Trustees" at the end of clause 3(c) and substituting in its place the phrase "Trustees holding office from time to time". The said amendment was absolutely necessary; otherwise, new trustees cannot be nominated so as to increase the strength of the https://hcservices.ecourts.gov.in/hcservices/ trustees to 9. Following the same, the present trustees nominated plaintiffs 5 to 7 as trustees of the trust board. As such, there are nine trustees including the plaintiffs 1 to 4 and the defendants 1 and 2, as on 11.10.1995. In the said meeting, the first defendant was removed from the post of Chairmanship and in that place, the first plaintiff was elected as Chairman. The founder of the trust, the fifth plaintiff herein, was elected as Secretary and the fourth plaintiff continued to be the Treasurer. The plaintiffs 1 to 4 as majority of trustees have validly nominated plaintiffs 5 to 7 as trustees. (e) The second defendant Kasthuri Parthasarathy did not attend any of the meetings held ever since she was nominated as a trustee. In the meeting of the board of trustees purported to have been held on 29.9.1995, the defendants 3 to 8 who are the close relatives of the first defendant were nominated as trustees by the first defendant. The said meeting and the resolutions said to have been passed thereat are to be treated as non-est and the so-called trustees namely the defendants 3 to 9, cannot claim to be the trustees. There was no notice to any of the trustees for the said meeting, and hence the meeting dated 29.9.1995 is invalid, illegal and not binding on the plaintiffs. 3.The defendants 1 and 3 to 7 have filed written statements containing the allegations as found in the plaint in C.S.No.1620 of 1995 filed by them as plaintiffs. 4.The second defendant resisted the suit by filing a written statement stating that her husband Parthasarathy, one of the first permanent trustees, took enormous pains to develop the trust and trust properties spending his own huge moneys; that no allegations have been made against her in the plaint; that the conduct of M.E.Devarajan, the first defendant herein, in co-opting the other trustees who are the other plaintiffs in C.S.No.1620 of 1995, is nothing but arbitrary in and by which a public charitable trust is sought to be converted into a purely family concern; that when she became aware of the same, she sent a telegram to the first defendant on 15.10.1995 informing that the proposed meeting on 16.10.1995 is not valid; that she also sent a letter dated 15.10.1995 to the plaintiffs informing them that she had no notice of the alleged meeting of the trust board on 11.10.1995; that both the resolutions dated 29.9.1995 and 11.10.1995, are illegal and invalid; that while she is not concerned with the prayers 1 and 2 in C.S.No.1620/95 or the prayers a, b and c in this suit, the plaintiffs in CS 1620/95 have no justification to seek the extraordinary relief of injunction restraining her from in any way interfering with the administration and management of the trust; that she is a permanent trustee and hence, there is no justification to seek the relief of injunction against her from acting as trustee. 5.The plaintiffs in C.S.No.1620 of 1995 have sought for a declaration that the first plaintiff, plaintiffs 3 to 7 and the defendants 2, 6 and 9 continued to hold the office as members of the board of trustees under the second plaintiff trust; that the https://hcservices.ecourts.gov.in/hcservices/ alleged meeting purported to have been held on 11.10.1995 and all other resolutions said to have been passed thereat, are ab initio void and illegal and that the first plaintiff continues as the Chairman of the board of trustees and for consequential injunction restraining the defendants 1, 3, 4, 5, 7 and 8 from in any way interfering with the administration and management of the second plaintiff trust by the first plaintiff as Chairman and plaintiffs 3 to 7 and defendants 2, 6 and 9 as trustees with the following allegations: (a) Out of the three original permanent trustees, one M.A.Ethirajulu Naidu died in the year 1987, and in his place, K.Varadarajulu Naidu was co-opted in the year 1987. The other trustee L.A.Parthasarathy also died in the year 1988 and in his place Mrs.Kasthuri Parthasarathy was co-opted as member of the board of trustees. In April 1985, there was need for expanding the activities of the trust and to enlist various supporters or volunteers to help the administration of the board. To instill confidence in the mind of the donating public and other members of the Telugu community, letters were sent to individuals namely L.Kesavalu, Kothandapani Naidu, K.Venkatarathnam, R.Nagabushanam, Babu and M.Rajagopal nominating them as trustees. In fact, the said letter is sham. The letter reads as if there was a meeting of the board of trustees on 15.4.1985; but, no such meeting was ever held. A trustee becomes entitled to hold office only on his accepting the office. They have neither functioned as trustees ever since 1985, the date of such appointment, nor participated in the management of the trust or in the administration thereof. The entire management of the trust vested in the hands of the first plaintiff and two other permanent trustees namely K.Varadharajulu Naidu and Mrs.Kasthuri Parthasarathy. The first plaintiff alone was incharge of the entire management. For the purpose of record, the third plaintiff was appointed as Secretary; but, he was not functioning so. (b) There was mix-up of the functions of the board of trustees as also the Governing Council. The Governing Council never interfered in the functions of the first plaintiff. There was acrimonious correspondence between some members, the prominent among whom are the defendants 1, 2, 4 and 5 and they purported to call a meeting as a requisitioned meeting. The deed of trust does not permit anybody to call a requisitioned meeting. Meetings are always called by the Chairman or under his authorisation by the Secretary and no one else. If any meeting is called by such persons, that will be ab initio void and no resolution could be validly passed. No such resolution passed by the illegally convened meeting, would bind the trust or the first plaintiff. A need arose for co-opting six more trustees, and at a meeting of the board where some of the defendants also participated, co-option of six more members was done on 29.9.1995. The defendants who attended the meeting, are estopped from questioning either the regularity or otherwise of such a meeting and they are not entitled to question the decisions taken thereat. One Varadarajulu Naidu, the 2nd defendant, particularly participated in the said meeting. Strangely those defendants claim to have conducted a meeting on 11.10.1995, wherein they purported to have passed a resolution https://hcservices.ecourts.gov.in/hcservices/ removing the 1st plaintiff from the post of Chairman of the Board of Trustees and appointing M.Kothandapani Naidu as the Chairman, K.Varadarajulu Naidu as the Treasurer and N.Adhikesavalu, the original author of the trust, as Secretary. The said resolution purports to appoint Mrs.Kasthuri Parthasarathy, Chiranjeevalu, Venkatesalu, Kesavalu and K.Venkatarathinam as trustees. The said meeting held on 11.10.1995 and also the decisions taken thereon are null and void, ab initio and illegal and cannot operate against the plaintiffs and will not bind the trust. The purported removal is also bad in law. (c) Under the trust deed, the first plaintiff holds office for life time, and he had been nominated as Chairman at the very inception and has been functioning as such. The deed of trust does not contemplate any removal by any body of any permanent trustee or the chairman. Moreover the removal of the first plaintiff ought not to be done without informing him. It is a case where the principles of natural justice have been flouted. The persons who attended the above meeting on 11.10.1995, are not duly appointed trustees and they are not members of the board of trust. They have no power either to remove a trustee or appoint a fresh trustee. The first plaintiff has been functioning as Chairman of the Board without any interruption or interference. 6.The defendants 2 to 5, 7 and 8 have filed written statements containing the allegations as found in the plaint in C.S.No.2078/95 filed by them as plaintiffs. The ninth defendant adopted the written statement filed by the defendants 4 and 5. 7.The sixth defendant filed a written statement containing the same allegations as found in the written statement filed by her in C.S.No.2078/95. 8.In both the suits, the issues originally framed were recast by the trial Court, and they were five in number. The parties went on trial. On the side of the plaintiffs in CS No.2078 of 1995, 3 witnesses were examined and 26 documents were marked. On the side of the defendants, 1 witness was examined and 103 documents were marked. The learned Single Judge after hearing the submissions made, took the view that the plaintiffs in CS No.2078/95 are entitled for the reliefs and hence decreed the suit. The other suit in CS 1620/95 was dismissed. The aggrieved plaintiffs 1, 2, 6 and 7 in CS 1620/95 and the aggrieved defendants 1, 6 and 7 in CS No.2078/95 have brought forth OSA Nos.294 and 295 of 2007, while the fourth defendant in CS 2078/95 and the fourth plaintiff in CS 1620/95 has brought forth OSA Nos.298 and 299 of 2007. 9.The learned Senior Counsel for the appellants in OSA Nos.294 and 295 of 2007 Mr.T.V.Ramanujun would submit that the main issue revolves upon the questions whether M.Kothandapani Naidu, L.Kesavalu Naidu, K.Venkatarathinam and K.Varadharajulu Naidu have been appointed as trustees as per the terms of the trust deed and whether there was a board meeting on 15.4.1985 attended by all the then existing three permanent trustees M.A.Ethirajulu Naidu, M.E.Devarajan and L.A.Parthasarathy; that in order to decide the https://hcservices.ecourts.gov.in/hcservices/ questions, the relevant clauses in the trust deed are Clause 3(a) and 3(c); that the plea raised by the said four persons is that they have become trustees in view of the letter dated 17.4.1985 marked as Ex.D31; that according to them, M.E.Devarajan as Chairman of the trust has sent that letter to them, and in that letter, he has admitted that there was a trust board meeting held on 15.4.1985; but, Devarajan has clearly averred in the plaint that the said letter is sham and there was no board meeting on that date; that it would indicate that there was no board meeting on 15.4.1985, as alleged by them; that apart from that, the evidence both oral and documentary would go to show that there was no board meeting on that date; that the evidence also do not disclose that the then existing three trustees as stated above, jointly acted and appointed the other four persons as per Clause 3(c) of the deed of trust; that Devarajan has produced the original minutes book Exs.D4, D24 and D26; that Ex.D4 has been in the custody of Adhikesavalu till July 1986; that at this juncture, the minutes of the meeting dated 4.7.1986 is relevant for the purpose of deciding the issue on hand; that the minutes has been recorded to the effect that who ever wants to spoil the unity, action should be taken against them; that apart from that, from the evidence of P.W.1, it would be quite clear that the office of the trust was functioning at his residence and the records were kept in the premises of the polytechnic; that it is pertinent to point out that in Ex.D4, there is no minutes dated 15.4.1985; that as per clause 3(c), the then existing three trustees have to nominate the remaining six trustees; but, admittedly, there is no such nomination; that according to P.W.1, there was a meeting on 15.4.1985 in which Devarajan, Parthasarathy and himself were present; but, he does not say Ethirajulu Naidu was present and thus, there was no meeting on 15.4.1985, attended by all the three then existing permanent trustees. 10.Added further the learned Senior Counsel that P.W.1 has candidly admitted that there is nothing in writing signed by all the three permanent trustees nominating the plaintiffs 1 to 4 in CS 2078/95; that it is true that it is stated in Ex.D7 minutes dated 14.4.1985, that to discuss in detail, there will be a meeting on Sunday; but, according to the witness, he did not know whether any such meeting was held on Sunday; that apart from that, the evidence would go to show that no notice was sent to the board meeting held on 15.4.1985; that according to P.W.2, Venkatarathinam, he was appointed as a trustee at a meeting held in 1985 at Cosmopolitan Club, and he received a letter in that regard; that the witness would add that to his knowledge, Ethirajulu Naidu never attended any of the said meetings; that P.W.2 would further say that he does not have any receipt for having made any monetary contribution to the trust and he did not see any resolution appointing him as a trustee; that the evidence of P.W.2 would go to show that he attended the 7th meeting of the board on 14.4.1985 and he did not receive any letter dated 17.4.1985 calling upon him to contribute Rs.2.80 lakhs; that apart from that, Devarajan examined as D.W.1 has clearly stated that there was no board meeting on that date and the letter dated 17.4.85 was only a sham document; and that under https://hcservices.ecourts.gov.in/hcservices/ the circumstances, it can be held that there was no board meeting on 15.4.1985. 11.Added further the learned Senior Counsel that it is pertinent to point out that the letter dated 17.4.1985, is only a format; that the fact that Devarajan is the Chairman from the inception cannot be disputed; that under the circumstances, the prayer that M.E.Devarajan, the first defendant, ceased to be the Chairman is not tenable; that had there been a board meeting on 15.4.1985, it would have been recorded in the minutes books; that the records consisting of the minutes books were in the custody of B.Adhikesavalu; but, the minutes book Ex.D4 do not contain any board resolution dated 15.4.1985; that the aforesaid four persons have not chosen to produce the original of the letter dated 17.4.1985; that no explanation was offered as to why original was not produced; that if the plaintiffs wanted to rely on the said document, they would not have lost the original, but would have preserved it; that in fact, in the said format, the name and address of the addressee is left blank; and that in Ex.D95 the address is filled up in ink by some one and not in the handwriting of Devarajan. 12.Relying on a decision of the Apex Court reported in AIR 1979 SUPREME COURT 861, the learned Senior Counsel would submit that it is settled law that the office of trustee is a joint one and therefore the said office should be executed in the joint capacity of the trustees; that in the instant case, all the three trustees have not acted jointly; that the decisions reported in AIR 1945 PC 23 and AIR 1944 BOMBAY 222 are relevant in this regard; that clause 3(c) of the trust deed says that three permanent trustees should act jointly; that in such circumstances, it can be well stated that there was no board meeting on 15.4.1985 attended by all the three permanent trustees; that there is no board resolution signed by all the three and the letter dated 17.4.1985 is a format and it is sham. 13.The learned Senior Counsel would further contend that in the trust board meeting dated 4.7.1986, there is no mention of trustees against the names of plaintiffs 1 to 4; that even in the meeting dated 15.7.1986 as against the names of the plaintiffs 1 to 4, there is no reference as trustees; and that in view of the above, the claim made by the plaintiffs 1 to 4 in CS 2078/95 falls to ground. 14.It is the further submission of the learned Senior Counsel that the next issue is whether there was trust board meeting on 29.9.1995; that admittedly, Devarajan, the only permanent trustee, was alive and he nominated Varadharajulu Naidu and Mrs.Kasthuri Parthasarathy; that admittedly, there was a meeting on 29.9.1995; that the new minutes book was started on 17.7.1995 and not suddenly on 29.9.1995; that from 17.7.1995, minutes were signed by Varadharajulu Naidu and Mrs.Kasthuri Parthasarathy and thus, the minutes of the meetings dated 29.9.1995 and 3.10.1995 have been admittedly signed by all the three trustees and that is valid and https://hcservices.ecourts.gov.in/hcservices/ binding upon the trust; that in the instant case, the non- examination of Varadharajulu Naidu and