Case: Committee Of Mgt.Of Pachaitappa'S Trust Vs. Official Trustee Of Madras

2.Under a will executed by one C. Kandaswamy Naidu on May 21, 1948, the testator made various bequests in favour of his children as well as other persons and bequeathed the rest of his properties to the Trustees of  Pachaiyappas Charities subject to the conditions, payment and restrictions mentioned therein. The Official Trustee of Madras has been appointed as the executor and the trustee of the will and he has been empowered to sell and dispose of the properties, immovable as well as moveable. O.P. No. 278 of 1948 is the original proceeding instituted in the Madras High Court on the basis of the said will by the Official Trustee. Among the properties vested in the Official Trustee under the will is a vacant plot of land measuring about 5.65 grounds (13566.85 sq. ft.) situated at No. 21, Barrington Road, Madras. On the western side of the s aid plot of land, there is a building. The ground floor of the said building has been let out to Pachaiyappas Trust for the Office of the Trust. The first floor of the building is in occupation of another tenant.  3.On January 29, 1986, R.V.A. &Co. , (Respondent 2), a partnership firm consisting of three unemployed medical graduates, filed an application (C.M.P. No. 495 of 1986) in O.P. No. 278 of 1948, wherein it was prayed that the Official Trustee be directed to enter into a lease agreement with the applicant firm for an initial period of 50 years with an option to the said applicant firm to renew the lease for a further period of 50 years on such terms and conditions which the court may deem fit to impose. In the affidavit of M.K. Rajasekar, one of the partners, filed in support of that application, it was stated that the partnership had been formed with the object of constructing and running a Nursing Home at Madras with a view to provide employment to the partners who were unemployed medical graduates. In the said affidavit, it was also stated that the applicants wish to take the plot of land on long lease with a view to construct a medium size hospital with about 30 rooms and they wanted t he lease of the property initially for a minimum period of 50 years with an option to renew for a like period on the expiry of 50 years. In the said affidavit, it was also stated that after the expiry of the lease period the applicants would undertake to deliver the vacant possession of the premises with all the improvements made in the site ]eased out to them. As regards rent it was stated that Rs 4, 500 per annum was a fair rent payable for the vacant land for the first year and that for every succeeding year the rent could be increased by 5% on the rent payable in respect of every preceding year.  4.The said application was opposed by the appellant. In the counter affidavit filed on its behalf it was stated that the grant of lea se for 50 years with an option to renew for a further period of 50 years was not in the interest of the Trust and not beneficial to it and it would be detrimental to the interests of the Trust to lease the property for a long period as it would amount to tying down the property in the hands of the applicants. It was also stated that the solvency of the applicants was not clear and that it would not be prudent to lease the trust property for a long period however laudable the objects of the partnership may be and it would be highly risky to lease out the property as sought for.  5.The Official Trustee also filed a report wherein he admitted the availability of the vacant space for lease and stated that he had no objection to the court directing a reasonably long term of lease for the vacant site but according to him the rent offered by Respondent 2 was very low and that the period of lease could not be as long as 50 years but it could be a lease for 15 or 20 years.  6.The Official Trustee filed a supplemental report on April 25, 1986 wherein it was stated that the applicants have no legal right to insist on a lease and that the applicants could be granted lease only if the court was satisfied that the applicants a re agreeable to the terms and conditions which would really benefit the trust estate and that the applicants who want the indulgence of a long term lease in their favour by an order of the court should be prepared to offer attractive terms for grant of lease in their favour. Thereafter the Official Trustee set out the factors which may be taken into consideration if at all the court was inclined to grant the long term lease in favour of the applicants. The said factorse initial rent of Rs 4, 500 per annum (Rs 375 per month) offered by the applicants is very low and that even at the rate of 10 paise per sq. ft. the rent for the area of13566.85 sq. ft. comes to about Rs 1, 356 per month.(2)The period of lease of 50 years with an option to renew for another 50 years is definitely not in the interest of the trust estate and that the lease period can at best befor 15 years.(3) The rent for the site has to be increased each year by 10%.(4) That applicants may be directed to deposit a sum of Rs 50, 000 with the Official Trustee as security deposit for the fulfillment of the proposed project which could be forfeited in the event of applicant failing to carry out the project or to show adequate progress in pushing through the project within a period of one year but it would be refunded without interest if the project as envisaged in the application is completed in full.  (5)The applicants may be required to deposit Rs 10, 000 as advance repayable without interest when the applicants vacate the property.  (6)The tenancy would stand terminated in the event of the applicants failing to pay rent continuously for a period of more than 3 months.  (7)The superstructure to be put up by the applicants must be surrendered to the trust estate at the time when they vacate without claiming any compensation for the same.(8) The applicants would have no right to sub-lease7.The Official Trustee further stated that if for some reason or other the court holds that the lease in favour of the applicants cannot be granted then the Official Trustee may be permitted to lease the property by public auction through M/s Murray and Company or some other public auctioneer on terms quite favorable to the trust estate after giving due publicity.  8.The said application of Respondent 2 was disposed of by a learned Single Judge of the High Court (K.M. Natarajan, J.) by order dated May 2, 1986 by treating it as an application under Section 25 of the Act. The learned Single Judge came to the conclusion that it is beneficial and in the best interest of the Trust to lease out the property to others. While considering the offer made by Respondent 2, the learned Single Judge held that the monthly rent can be fixed at 15 paise per sq. ft. which works out to Rs 2034 for 13566.85 sq. ft. and it could be rounded to Rs 2, 000 per month and that the rent was to be increased by 5% every year for a period of first five years and thereafter by 10% every year on the rate of the monthly rent of the preceding year. With regard to the period of lease the learned Single Judge was of the view that the period can be fixed at 30 years with liberty to the applicants to apply for extension of the lease period according to the then prevailing circumstances to the court and abide by the other terms and conditions to be imposed by the court or such other order of the court. As regards the objections of the appellant the learned Single Judge observed that even though the appellant Trust is a residuary legatee they have no locus standi in the matter of granting lease of the trust property. According to the learned Single Judge in view of Section 25 of the Act and the decision of the Division Bench of the Madras High Court in B. Muniswami Naidu v. Official

Court's reasoning:
41. Before parting with the case we feel constrained to say that the order dated May 2, 1986 passed by the learned Single Judge which was affirmed in appeal by the Division Bench as well as the order dated October 28, 1987 passed by the Division Bench on the application for modification leave an impression that the learned Judges were more concerned with the interests of Respondent 2 than those of the trust estate though the primary duty of the court was to safeguard the interest of the Trust which was being administered by the Official Trustee and in doing so they not only ignored the objections raised by the residuary legate who was the beneficiary under the Trust, but also did not accept the suggestions made by the Official Trustee in the interest of the Trust. In the matter of grant of leases and licences and award of contracts by the executive the decisions of this Court require the authorities to apply standards or norms which are not arbitrary, irrational or irrelevant. People expect much higher standards from the judiciary and rightly so. It would be a sad day if an impression gains ground that the judiciary is not free from the malaise that afflicts other fields of State activity. We need say no more at this stage