Case: Sri Agasthyar Trust, Madras Vs. Commissioner of Income Tax, Madras

became an irrevocable trust. The powers of the trustee in respect of the said Trust continued to remain the same as set out in clause (8) of the partnership deed which has been extracted hereinabove. The said trustee was only required to carry out the objects of the Trust and spend the trust funds for charitable purposes in the manner indicated therein. No power was given to the trustee to amend, alter, vary or change in any manner the objects of the Trust as created in 1941. The result of this is that neither the trustee nor the founders could bring about any change in the objects of the Trust as set out in their partnership deed dated 28-11-1941. This being so, the document dated 1-7-1944 executed by the trustee was clearly without any authority and was non est. He had no right or jurisdiction to execute the document of 1-7-1944 which in effect changed the objects of the Trust radically and in fact converted what was meant to be a public charitable trust to a non-charitable trust as held by this Court in East India Industries case when the deed dated 1-7-1944 was construed by it. It will be useful at this juncture to refer to the following passage from Tudor on Charities (6th Edn.). At p. 131, it is stated as follows "When a charity has been founded and trusts have been declared, the founder has no power to revoke, vary or add to the trusts. This is so irrespective of whether the trusts have been declared by an individual, or by a body of subscribers, or by the trustees." * 15. When the founders of the Trust have no power to alter or vary the terms of the Trust, a trustee appointed to manage the properties of the Trust for securing its object can under no circumstances be regarded as having such a power specially when the original deed dated 28-11-1941 does not bestow such power on him. Such a question also came up for consideration before the Madras High Court in Thanthi Trust v. ITO (Mad)). Dealing with the question whether the founder of a trust had power to revoke the same, at pp. 284-85, this Court observed as follows "It is well established that the subsequent acts and conduct of the founder of the trust cannot affect the trust if there has been already a complete dedication. (Vide Krishnaswamy Pillai v. Kothandarama Naicken ( 1914 (27) MLJ 582 : 25 IC 428 (Mad)), Sunder Singh Mallah Singh Sanatan Dharam High School Trust v. Managing Committee ( 1938 (1) MLJ 359 : 1938 AIR(PC) 73)) and Gokuldas Jumnadas and Co. v. Lakshminarasimhalu Chetti 1940 (2) MLJ 409 : 1940 AIR(Mad) 920). If a valid and complete dedication had taken place, there would be no power left in the founder to revoke and no assertion on his part or the subsequent conduct of himself or his descendants contrary to such dedication would have the effect of nullifying it. If the trust had been really and validly created, any deviation by the founder of the trust or the trustees from the declared purposes would amount only to a breach of trust and would not detract from the declaration of trust. Therefore, the subsequent conduct of the founder in dealing with the funds of the trust long after the creation of the trust may not put an end to the trust itself." * 16. We are in full agreement with the principle stated in the aforesaid passage and we hold that the trustee had no authority or jurisdiction to execute a fresh trust deed and the document dated 1-7-1944 is of no consequence and is no more than a scrap of paper. The Trust as originally established by the deed dated 28-11-1941 remained unchanged or unaffected by the latter document dated 1-7-1944 17. As the trust deed dated 1-7-1944 is of no consequence, now what has to be seen is whether, by reason of the partnership deed dated 28-11-1941, the Trust which has been constituted is a public charitable trust or not. This question was gone into by the Madras High Court when it had to decide an appeal arising out of the judgment in a suit instituted by Nanjappa Chettiar, one of the partners of the firm which had established the Trust. In this suit for accounts which was filed by Nanjappa Chettiar, one of the pleas which was taken related to the genuineness of the Trust. The contention of the plaintiff was that no valid or genuine trust was created or established by the deed dated 28-11-1941 and on the dissolution of partnership, the assets of the Trust were also liable to be distributed amongst the partners. This contention not having been accepted by the trial court, the same was reagitated in appeal before the Madras High Court. A Division Bench of that Court by its judgment dated 26-10-1951 in V. S. Nanjappa Chettiar v. K. Rajgopal Chetty (OS (Appeal) No. 69 of 1949) held that the dedication for religious and charitable object by the deed dated 28-11-1941, after the power to revoke had been withdrawn, was absolute and irrevocable. It concluded that there was a real dedication to charity and the plaintiff therein was not entitled to a share in the funds set apart for charity or in the properties purchased therefrom18. In view of the aforesaid decision, it can be safely concluded that an irrevocable trust had been established by the partnership deed dated 28-11-1941. The objects of the Trust are contained in clause (8) of the deed and, in our opinion, none of the objects contained therein can be regarded as non-charitable. The Tribunal, therefore, was right in considering the said objects and in coming to the conclusion that the appellant was a public charitable trust. In view of the aforesaid discussion, we would answer all the six questions of law referred by the Tribunal in the affirmative and in favour of the assessee

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

Explanation:
1[ds]16. We are in full agreement with the principle stated in the aforesaid passage and we hold that the trustee had no authority or jurisdiction to execute a fresh trust deed and the document datedis of no consequence and is no more than a scrap of paper. The Trust as originally established by the deed datedremained unchanged or unaffected by the latter document datedAs the trust deed datedis of no consequence, now what has to be seen is whether, by reason of the partnership deed datedthe Trust which has been constituted is a public charitable trust or not. This question was gone into by the Madras High Court when it had to decide an appeal arising out of the judgment in a suit instituted by Nanjappa Chettiar, one of the partners of the firm which had established the Trust. In this suit for accounts which was filed by Nanjappa Chettiar, one of the pleas which was taken related to the genuineness of the Trust. The contention of the plaintiff was that no valid or genuine trust was created or established by the deed datedand on the dissolution of partnership, the assets of the Trust were also liable to be distributed amongst the partners. This contention not having been accepted by the trial court, the same was reagitated in appeal before the Madras High Court. A Division Bench of that Court by its judgment datedin V. S. Nanjappa Chettiar v. K. Rajgopal Chetty (OS (Appeal) No. 69 of 1949) held that the dedication for religious and charitable object by the deed datedafter the power to revoke had been withdrawn, was absolute and irrevocable. It concluded that there was a real dedication to charity and the plaintiff therein was not entitled to a share in the funds set apart for charity or in the properties purchased therefrom18. In view of the aforesaid decision, it can be safely concluded that an irrevocable trust had been established by the partnership deed datedThe objects of the Trust are contained in clause (8) of the deed and, in our opinion, none of the objects contained therein can be regarded asThe Tribunal, therefore, was right in considering the said objects and in coming to the conclusion that the appellant was a public charitable trust. In view of the aforesaid discussion, we would answer all the six questions of law referred by the Tribunal in the affirmative and in favour of the assessee