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WHETHER A COMPANY CAN BECOME TRUSTEE OF THE TRUST - YES SAYS MADRAS HIGH COURT JUSTICE N.V. BALASUBRAMANIAN

THIS IS THE OBSERVATIONS OF MADRAS HIGH COURT BY JUSTICE N.V. Balasubramanian, in the case of B. Ramachandra Adityan vs Educational Trustee Co. (P.) Ltd. citation - 2003 113 Comp Cas 334 Mad,


Section 25 deals with charitable companies and licence from the Central Government is necessary so that company can be formed for promoting commerce, art, science, religion, charity or any other useful objects with no profit motive in mind.

Section 11 of the Companies Act in all cases, the company must carry on some trading or commercial activity and the object of the company must be to earn income. In the case of a company which is formed to act as trustee, such company must also carry on the activity for profit and unless there is an activity for profit, it would be of no benefit either to the company or to the shareholders who have invested money to the company.

Section 32 of the Trust Act which prohibits the receipt of any personal benefit to the trustees from the trust. Section 32 of the Indian Trusts Act, 1882 also provides that the trustee is entitled to get reimbursement out of the trust property all expenses properly incurred in relation to the execution of the trust property and for preservation of the trust property.

It is well settled that the company can be a trustee. The following observation made in Halsbury's Law of England, Volume VI, paragraph-20 (III Edn. Volume-4), the learned author, at page 394 clearly shows that the company can be a trustee. "As charitable corporations exist solely for the accomplishment of charitable purposes, they are necessarily trustees of their corporate properly, whether the beneficiaries are members of the corporation, as in the case of hospitals and colleges, or not. Accordingly, like other trustees, charitable or otherwise, they are subject to the jurisdiction of the Court. Though called directors and empowered to make and amend bye-laws for the corporation, apart from any provision in the constitution of the corporation, they have no right to remuneration and cannot amend the byelaws to permit remuneration to be paid to themselves."

In Palmer's Company Precedents, while dealing with the topic, 'Trust Company', learned author has observed that a company can be a trustee in the following words : "To undertake the office of and act as trustee, executor, administrator, manager, agent or attorney of or for any person or persons, company, corporation, government, state, colony, province, dominion sovereign, or authority, supreme, municipal, local or otherwise, and generally to undertake, perform and discharge any trusts, or trust agency business, and any office of confidence."

In Section 6 of the Banking Regulation Act, 1949, a banking company can be a trustee and it can act for the administration of estates as an executor, trustee or otherwise and Section 6 provides that the banking company can act as a trustee in several manners as indicated in Section 6(1)(j).

In the Indian Trusts Act by N. Suryanarayana Iyer, learned author has observed as under:--"Formerly the notion was that the relationship of a trustee being one of confidence involving a personal element, a corporation could not be a trustee as there could not be a question of confidence being reposed in a corporation and therefore that it could not be a trustee. This notion, however, has long ago been given up. Corporate bodies have been held to be amenable to the jurisdiction in Chancery and compellablc to carry out the intentions of the settlor of property which has been vested in them.... Under the Indian law also a corporation, whether aggregate or sole, can be a trustee and there is ample jurisdiction in the court to enforce the performance of its duty by such trustee."

Section 12 of the Companies Act deals with the mode of formation of incorporated companies and under Section 12, any seven or more persons or where the company to be formed will be a private company, any two or more persons, associated for any lawful purpose, by subscribing their names to a memorandum, may form an incorporated company with or without limited liability. The company so formed may be limited by shares or limited by guarantee. Section 13 deals with the requirements with respect to memorandum and the company has to set out its main objects to be pursued by the company on its incorporation and the objects incidental or ancillary to the attainment of the main objects. Section 11(2) of the Companies Act provides that no company or association or partnership consisting of more than twenty persons shall be formed for the purpose of carrying on any business that has for its object the acquisition of gain by the company, etc. unless it is registered as a company under the Companies Act or is formed in pursuance of some other Indian Law. Section 11(1) deals with the case of a banking company, while Section 11(2) deals with cases other than banking companies. From these two provisions, it cannot be said that a company must always be formed to carry on a business venture with a view to make profit. If such an interpretation is given, then the trustee companies will have no place of existence at all in the Companies Act.


The concept of trust is a peculiar concept. Therefore, the word, 'business' found in Section 11(2) of the Companies Act is to be construed to mean any useful activity and it is not necessary to confine it to commercial activity for profit. The charitable companies are not formed or not intended for commercial activities.



THE TECHNICALITY OF LAW CANNOT BE OVERLOOKED IN CASE OF WILL ATTESTATION AND ITS PROOF. 2001 SC

FULL JUDGMENT
N. KAMALAM (DEAD) AND ANOTHER vs AYYASAMY AND ANOTHER, ILR 2002 KAR 4273. The relevant paragraphs-28 and 32 read as under: "Para 28 : It is on this count that the learned Advocate in support of the appeal very strongly contended that there is existing a responsibility on to the law Courts to deal with the matter having due regard to the concept of justice. Technicalities. It has been contended there may be many - but would that sub-serve the ends of justice; one needs to ponder over the same. Justice oriented approach cannot be decried in the present day society as opposed to strict rigours of law; Law Courts existence is dependant upon the present day social approach and thus cannot and ought not to be administered on sheer technicalities. The discussion of the law as above, definitely make us ponder over the legal aspects once more since the tenor of the observations contained therein obviously looked into being in favour of the technicality rather a justice oriented approach and in that perspective let us now have review of the whole situation on the factual context. Masaney Gowder executed a Will said to have been written by one Arunachalam and attested by Subbaiah and Govindaraju. The two attesting witnesses were not called to give evidence against them - why it has not been done? The explanation has been that both the attesting witnesses were inimical towards appellants and as such there was a refusal on their part to come to Court and prove the document - how far however the same is an acceptable evidence; We Will have to examine; but before so doing the factum of non-availability of the attesting witnesses cannot be discarded and if so, what would be its consequences. The application for additional evidence as dealt with herein before, was made after a lapse of about 10 years after the appeal was filed and the learned judges though it fit to reject such a prayer and we also do lend out concurrence thereof without taking any exception - but then what is the effect? we have thus existing on record a document said to be a Will of one Masaney gowder whose signatures stand accepted and two attesting witnesses though named in the body of the document were not made available but the writer of the will or the scribe came forward and deposed as to the state of affairs on the date of signing of the will, it would be convenient thus to note the evidence of the scribe and see for ourselves as to whether even a justice oriented approach would be able to save the will in the absence of the attesting witnesses. Arunachalam stated in his examination in Chief as below: "I have written Ex.A.1 `THE WILL', I have written the WILL EX. A1 for the Sake of Masane Gowder. The said Masane Gowder has been introduced to me by the Advocate G.M. Nathan who was formerly have. During the execution of the WILL, Advocate G.M. Nathan was residing at Thomas Street.At that time Masane Gowder was residing at the same place after one house of Advocate's home. Before the preparation of the `WILL' I had been to his house and discussed with him about the details and he has stated the details. At that time Masane Gowder Mental and Physical status were found good. After writing the Ex.A.1 the Will, I have read out the same to him, and he had stated that all were correct. Then in my presence Masane Gowder had affixed his thumb impression in each page. The affixing of thumb impression by Masane Gowder in Ex.A1 WILL had been witnessed by attestor Subbaiah,Govindaraju and myself.The signing of signature for witness by us, was eye witnessed by Masane Gowder. After the Ex.A1 Will had been prepared and signed I handed over the `WILL' to Masane Gowder". Para - 32 : While it is true that Arunachalam, in the facts of the matter under consideration did write the Will and has also signed it but it is of utmost requirement that the document ought to be signed by the witnesses in order to have the statutory requirement fulfilled. Arunachalam has signed the document as a scribe not as a witness, if there were no signatures available as witness, probably we would have to specifically deal with such a situation and to consider that aspect of the matter but presently in the facts situation of the matter under consideration, we have the advantage of two attesting witnesses, none of whom have been examined and the factum of their non-availability also does not satisfactorily been proved. The requirement of the statute when Arunachalam himself has specifically identified himself as Writer and not as a witness though in his evidence, he tried to improve the situation, but this improvement however, cannot said to be accepted. The Will thus fails to have its full impact and its effect stands out to be non est."

RAJAMMAL vs CHINNATHAL, AIR 1976 MADRAS, AIR 1976 MADRAS 4. In this case it was held that once the execution of the Will is denied by the alleged executant the document cannot be admitted in evidence, unless one attesting witness atleast has been called for proving the execution of the document, if alive, and subject to the process of the Court. In that case there was no evidence to show that the attesting witnesses were not alive and none of them were examined. Therefore, the requirement of Section 68 of the Indian Evidence Act has not been complied with and as such the Will could not be used in evidence.

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