Case: Shiva Nath Prasad Vs. State Of West Bengal

of mutual and reciprocal wills and trusts only to understand the basis of the complaint. At this stage we are required to read the complaint as it is. Suffice it to state at this stage of the matter that the couple had executed mutual wills in 1981 and 1982; followed by reciprocal trusts in 1988 which are in almost identical words. The scheme of the mutual deeds read together is almost identical. It is not disputed that a mere declaration can create a trust obligation, particularly when the settlor is the sole trustee under the trust. Before us what is argued by the appellants is that there is no valid creation of trust; that, there was no "vesting" of the assets in the three public charitable institutions; that, the act of Smt. Birla in revoking the trusts and/or treating them as her own property was within her competence; that, the trusts were revocable; that, at the highest it is case of failure of the second charity and that predominantly the dispute is a civil dispute. At this stage, we may point out that what is complained of in the complaint filed by respondent no.2 herein is regarding the acts of management including dissolution of the trusts and making of the will by which trust properties have been allegedly converted dishonestly into personal properties of R.S. Lodha constituting an offence of criminal misappropriation under sections 405 and 406 and cheating under section 420, IPC. Here we may add that question as to whether Smt. Birla had the authority to revoke is different from the allegation that the acts of setting up personal title to the trust property constituted criminal breach of trust and that, the act was performed with the intent of converting trust property into private property pursuant to a conspiracy by the accused.23. In the complaint, respondent no.2 herein has averred that he was present and consulted when the couple opted for mutual wills in 1981, 1982 and even in 1988 when mutual and reciprocal trusts were executed. The complaint is based on the alleged oral agreement and understanding between the husband and wife regarding disposal of properties on their demise. Suffice it to say that these facts in issue are matters of evidence. The question as to whether there existed a valid trust or that Smt. Birla was entitled to dissolve the trust even during her lifetime are defences which can be taken at the appropriate time. As stated above, in this case we have mutual wills and mutual and reciprocal trusts in 1981, 1982 and 1988; clauses 7(b) and 8 of the trust deed reflect charitable intention coupled with nominations of 1990. What we would like to stress is that the complaint is based on an important aspect of mutual trust. The allegation is that the beneficial interest (enforceable not against the assets but against the trustees) is dishonestly misappropriated by the accused. The complaint is about dishonestly setting up personal title to the trust property. 24. The complaint is based on mutual and oral agreements imposing secret trust obligations as evidenced by the trust deeds. In this connection we may reiterate that "secret trust" is a doctrine evolved to prevent fraud; that, fraud is not an ingredient for the application of the said doctrine. However, the substance of the complaint here is that the secret trust has become the reason for fraud because the legatee under the secret trust is made to believe by the accused that she was the beneficial owner, free from any trust [See: Re Cleaver (Deceased) reported in 1981 (2) All.ER 1018]. Lastly, we may point out that in a matter of this type, oral evidence was admissible to prove what is called "fraud" [See: Ottaway v. Norman reported in 1971 (3) All.ER 1325]. 25. We have entered into the above discussion, not to express any opinion, but to answer the main plank of the argument advanced on behalf of the appellant that this case basically involves a civil dispute. None of our observations be treated as expression of our opinion on the rightfulness of the claim made in the complaint. In conclusion, we may quote Law of Crimes by Ratanlal and Dhirajlal page 2069 : "In a case under section 406 the question of trust must be fully inquired into. For this purpose it is essential that the whole prosecution evidence should be recorded. It is impossible to guess at an interim stage, what will be the result of the inquiry. Consequently, when only a few of the prosecution witnesses have been examined, it is too premature to decline to examine any more witnesses for the prosecution and discharge the accused on the ground that the case is of a civil nature." 26. Before us, number of judgments have been cited in support of the case that respondent no.2 (complainant) is the disgruntled employee of the MP Birla Group of Companies and that he has been put up by the Birlas, hence, the complaint is based on malafides and should, therefore, be dismissed. We need not go into the said judgments as the basic principle settled in the citations is that the question of malafides has to be decided on the facts of each case. At the outset, we reiterate that credentiality of the complainant at this stage is not relevant. As stated above, in this case, what is alleged by the complaint, inter alia, is that he was a privy to the discussions and consultations and thinking which went into making of the mutual wills and the mutual trusts; that, he was a formal witness to some of these deeds and that he was aware that the couple had mutually agreed to the disposal of the property to charity after their demise. In the facts and circumstances of this case, at this stage, we are not inclined to accept the argument that the complaint should be dismissed at the initial stage on the ground of alleged malafides of the complainant.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]20. A will on its own terms is inherently revocable during the lifetime of the testator. However, "mutual wills" and "secret trusts" are doctrines evolved in equity to overcome the problems of revocability of wills and to prevent frauds. Mutual wills and secret trusts belong to the same category of cases. The doctrine of mutual wills is to the effect that where two individuals agree as to the disposal of their assets and execute mutual wills in pursuance of the agreement, on the death of the first testator (T1), the property of the survivor testator (T2), the subject matter of the agreement, is held on an implied trust for the beneficiary named in the wills. T2 may alter his/her will because a will is inherently revocable, but if he/she does so, his/her representative will take the assets subject to the trust. The rationale for imposing a "constructive trust" in such circumstances is that equity will not allow T2 to commit a fraud by going back on her agreement with T1. Since the assets received by T2, on the death of T1, were bequeathed to T2 on the basis of the agreement not to revoke the will of T1 it would be a fraud for T2 to take the benefit, while failing to observe the agreement and equity intervenes to prevent this fraud. In such cases, the Instrument itself is the evidence of the agreement and he, that dies first, does by his act carry the agreement on his part into execution. If T2 then refuses, he/she is guilty of fraud, can never unbind himself/herself and becomes a trustee, of course. For no man shall deceive another to his prejudice.21. Such a contract to make corresponding wills in many cases get established by the Instrument itself as the evidence of the agreement [See: Law of Trusts and Equitable Obligations by Robert Pearce and John Stevens pages 320 and 321]; See also : Re Dale (Deceased) reported in 1993(4) All. ER page 129]. In the case of mutual wills generally we have an agreement between the two testators concerning disposal of their respective properties. Their mutuality and reciprocity depends on several factors. Mutual wills and trusts are evidenced by the Deeds themselves (the recitals, terms and conditions mentioned therein) as also by the surrounding circumstances, namely, the simultaneity and the similarity of the terms of the wills/trusts, the pattern of successive wills, the reciprocity of one to the other, the age of the settlors, the value of the estates, dying of the settlors without any issues, making of the last will without reference to the revocation of previous wills. Lastly, in law we have the concept of accessory liability for having assisted in a breach of trust. In such a case the accused is not charged for having received trust income or assets for his own benefit but for having acted as an accessory to a breach of trust.22. We have referred to the doctrine of mutual and reciprocal wills and trusts only to understand the basis of the complaint. At this stage we are required to read the complaint as it is. Suffice it to state at this stage of the matter that the couple had executed mutual wills in 1981 and 1982; followed by reciprocal trusts in 1988 which are in almost identical words. The scheme of the mutual deeds read together is almost identical. It is not disputed that a mere declaration can create a trust obligation, particularly when the settlor is the sole trustee under the trust. Before us what is argued by the appellants is that there is no valid creation of trust; that, there was no "vesting" of the assets in the three public charitable institutions; that, the act of Smt. Birla in revoking the trusts and/or treating them as her own property was within her competence; that, the trusts were revocable; that, at the highest it is case of failure of the second charity and that predominantly the dispute is a civil dispute. At this stage, we may point out that what is complained of in the complaint filed by respondent no.2 herein is regarding the acts of management including dissolution of the trusts and making of the will by which trust properties have been allegedly converted dishonestly into personal properties of R.S. Lodha constituting an offence of criminal misappropriation under sections 405 and 406 and cheating under section 420, IPC.accused.23. In the complaint, respondent no.2 herein has averred that he was present and consulted when the couple opted for mutual wills in 1981, 1982 and even in 1988 when mutual and reciprocal trusts were executed. The complaint is based on the alleged oral agreement and understanding between the husband and wife regarding disposal of properties on their demise. Suffice it to say that these facts in issue are matters ofstated above, in this case we have mutual wills and mutual and reciprocal trusts in 1981, 1982 and 1988; clauses 7(b) and 8 of the trust deed reflect charitable intention coupled with nominations of 1990. What we would like to stress is that the complaint is based on an important aspect of mutual trust. The allegation is that the beneficial interest (enforceable not against the assets but against the trustees) is dishonestly misappropriated by the accused. The complaint is about dishonestly setting up personal title to the trust property.Before us, number of judgments have been cited in support of the case that respondent no.2 (complainant) is the disgruntled employee of the MP Birla Group of Companies and that he has been put up by the Birlas, hence, the complaint is based on malafides and should, therefore, be dismissed. We need not go into the said judgments as the basic principle settled in the citations is that the question of malafides has to be decided on the facts of each case. At the outset, we reiterate that credentiality of the complainant at this stage is not relevant. As stated above, in this case, what is alleged by the complaint, inter alia, is that he was a privy to the discussions and consultations and thinking which went into making of the mutual wills and the mutual trusts; that, he was a formal witness to some of these deeds and that he was aware that the couple had mutually agreed to the disposal of the property to charity after their demise. In the facts and circumstances of this case, at this stage, we are not inclined to accept the argument that the complaint should be dismissed at the initial stage on the ground of alleged malafides of the complainant.