Elixir Enterprises and Hotels Private Ltd., Vs. Mr M Fuaad Musvee - Court Judgment

1 IN THE HIGH COURT OF KARNATAKA AT BANGALORE DATED THIS THE12H DAY OF AUGUST2014® BEFORE: THE HON’BLE MR. JUSTICE ANAND BYRAREDDY WRIT PETITION No.18382 OF2011(GM-CPC) CONNECTED WITH WRIT PETITION No.18383 OF2011(GM-CPC) IN W.P.No.18382/2011 BETWEEN: Elixir Enterprises and Hotels Private Limited, Having its registered office at No.135, Residency Road, Bangalore – 560 025, Represented by its Managing Director, Mr. K.V.Kupparaju. …PETITIONER (By Shri D.L.N.Rao, Senior Advocate for Shri. R.V.S.Naik, Advocate) AND:

1. Mr. M.Fuaad Musvee, Son of Late M. Ebrahim Musvee, Aged 53 years, residing at No.17, Kothari Road, Chennai – 600 034. 2 2. Mohammed Musa Saik Wakf, Having its registered office at No.22, Model School Road, Chennai 600 006, Represented by its Muthavalli, Mr. M.Muneer Sait. …RESPONDENTS (By Shri. M.G.Javeed Ahmed Khan, Advocate for Respondent No.1 Shri. R. Sreedhar, Advocate for Respondent No.2 ) ***** This Writ Petition is filed under Articles 226 and 227 of the Constitution of India, praying to set aside the impugned order dated 23.4.2011 passed by the Principal District and Sessions Judge, Bangalore in Misc.No.324/2008 at Annexure-F IN W.P.No.18383 of 2011 BETWEEN: Mohammed Musa Sait Wakf, Having its registered office at No.22, Model School Road, Chennai 600 006, Represented by its Muthavalli, Mr.M.Muneer Saik, By G.P.A.Holder Mr. Md. Khalid. (By Shri. R. Sreedhar, Advocate) AND:

1. Mr. M.Fuaad Musvee, …PETITIONER2 3 Son of Late M. Ebrahim Musvee, Aged 53 years, residing at No.17, Kothari Road, Chennai – 600 034. Elixir Enterprises and Hotels Private Limited, Having its registered office at No.135, Residency Road, Bangalore – 560 025, Represented by its Managing Director, Mr. K.V.Kupparaju. …RESPONDENTS (By Shri. M.G.Javeed Ahmed Khan, Advocate for Respondent No.1 Shri. D.L.N.Rao, Senior Advocate for Shri. R.V.S.Naik, Advocate for Respondent No.2 ) ***** This Writ Petition is filed under Articles 226 and 227 of the Constitution of India, praying to set aside the impugned order dated 23.4.2011 passed by the Principal District and Sessions Judge, Bangalore in Misc.No.324/2008 at Annexure-F These petitions having been heard and reserved on 07.08.2014 and coming on for pronouncement of orders this day, the Court delivered the following:- 4 ORDER

These writ petitions are disposed of by this common order as the petitioners are aggrieved by the same order. The brief facts leading up to these petitions are as follows.

2. The petitioner in the first of these petitions is a private limited company. The petitioner in the second of these petitions is said to be the Muthavalli of a private trust created under Mohammedan law, (Wakf-Ul-Aulad), known as the Mohammed Musa Sait Wakf. The said Muthavalli had approached the Court of the Principal City Civil and Sessions Judge at Bangalore, invoking its power as the ‘Kazi’ (a ‘religious’ judge working under the guidance of the Shariat), which role has come to be conferred on the civil court, by judicial precedent commencing with the decision of the Judicial Committee of the Privy Council in Mohammed Ismail v. Ahmed Moolia, (1916) 43 I.A.

127. The wakf was created by one Mohammed Musa Sait under a registered deed dated 30.10.1920. The beneficiaries were named as his family consisting of his children and other 5 descendants, in perpetuity and thereafter to the poor, when there was no surviving descendant. The terms of the Trust placed an absolute restriction on the authority of the Muthavalli to alienate the property by way of sale or mortgage or from leasing the property for any period exceeding three years or to receive any advance rentals for a period exceeding three months. It was in that background that the Muthavalli was constrained to approach the Civil Court in respect of a proposed variation of an earlier lease deed executed in respect of one the several items of the wakf property. It is stated that premises No.12, General K.M.Cariappa Road (then bearing no.135, Residency Road) Bangalore, measuring about 94717 Square Feet was granted on a lease, by then Muthavalli, in the year 1973 for a period of 30 years to M/s Elixir Enterprises & Hotels Private Limited, the petitioner in the first of these petitions. Since the lessee had not commenced construction of the building, which was to be erected in terms of the lease – it transpires that there were further proceedings 6 initiated for cancellation of the lease deed, which ended in a compromise-recorded before the civil Court, with the lessee surrendering an extent of 24000 Square Feet, while increasing the ground rent in respect of the area retained and also varying the term of the lease for a period of 50 years, commencing from 1.8.1988 to 31.7.2038. Pursuant to the said extended lease period, the lessee is said to have constructed a commercial complex with a floor area of 3 lakh Square Feet, comprising of three basement floors, a ground and a mezzanine floor and nine upper floors. On completion of construction as aforesaid, the phenomenal increase in the rentals and the increase in land value, which was unprecedented and unforeseen, having been taken in to account, the parties had renegotiated the terms of lease and recorded the same under a Memorandum of Understanding, which were incorporated into a draft lease deed proposed to be executed and the petition in Mis.938/2006, as aforesaid was filed before the Civil Court, enclosing the said documents seeking leave of the 7 court to execute the proposed lease deed. The learned Judge while allowing the said petition, justified the order thus : “6. A perusal of the petition averments and the evidence of P.W.1 coupled with the calculation of the increase in the amount that the petitioner Wakf would get by revising the lease would come to Rs.77,35,64,908/- for the period from 1.1.2006 to 31.7.2038 as against 1,05,45,000/- as per the old rates specified in the lease deed dated 14.12.1988. Further, the lease deed dated 14.11.2006 and the memorandum of understanding which are at Exs.P.2 and 3 coupled with the evidence of P.W.1 disclose that the petitioner Wakf would receive a sum of Rs.115,50,00,000/- upto 31.7.2088 for both the period adverted to above i.e., from 1.1.2006 to 31.7.2038 and 1.8.2038 to 31.7.2088 which is inclusive of rents that would be receivable by the Wakf by leasing an additional space of 35,000 square feet at the rate of Rs.55/- per square feet per month. Therefore, in my view, having regard to the averments made in the petition coupled with evidence of P.W.1, the terms and conditions set out in the Memorandum of Understanding and the draft Lease Deed annexed thereto, the petitioner Wakf will stand considerably benefited if the existing lease is revised and extended upto 31.7.2088 on the terms and conditions set out therein. As already pointed out, this Court has power 8 under Section 36 of the Trust Act to revise and extend the lease that has been entered into by the petitioner Wakf with Elixir Enterprises and Hotels Private Limited. I am also supported in my view with the principles laid down in the decision reported in 1975(1) KARNATAKA LAW JOURNAL PAGE58in the case of Yusuf Nusvee – Vs.- Mrs. Devasunder & others. The counsel for the petitioner Wakf submitted that even in the absence of principles laid down in the aforesaid decision by virtue of what is contemplated under Section 36 this Court has power to revise the existing lease and extend the same upto 31.7.2088. I agree with the said submission. But, that does not by itself go to show that the principles laid down in the aforementioned decision will not come in the aid of this Court to grant the relief prayed for in this petition by relying upon the same since it fortifies what is contemplated under Section 36 of the Trust Act. Apart form this, this Court has also granted similar relief to this very petitioner in respect of other properties belonging to the petitioner Wakf in Misc.No.738/2003. In view of the same, I do not find any justifiable reasons to decline the request of the petitioner. Accordingly, I proceed to pass the following:

9. ORDER

The Miscellaneous Petition filed by the petitioner- Trust invoking the powers vested with this Court under Mohammedan Law is allowed. The Petitioner-Trust is accorded permission to revise and extend the existing lease period of petition schedule property upto 31.7.2088 on the terms and conditions set out in the Memorandum of Understanding dated 14.11.2006 and the draft Lease Deed annexed thereto in favour of Elixir Enterprises and Hotels Private Limited and further permission is accorded to Muthavalli to execute the registered lease deed in terms of the draft Lease Deed annexed to the Memorandum of Understanding dated 14.11.2006.” It is pursuant to the above Order having been acted upon that an application under Section 151 of the Code of Civil Procedure, 1908 (Hereinafter referred to as the ‘CPC’, for brevity) in case No.Mis 324/2008 came to be filed by the first respondent, in these petitions. It was his contention that he along with his brother and another, had filed a representative suit, under Order I Rule 8 of the CPC, in suit bearing no.OS95032006, before the Court of the Additional City Civil Judge, Bangalore, against the 10 Muthavalli, the petitioner in the second of these petitions, even prior to the petition in Mis.938/2006, seeking the removal of the said Muthavalli for breach of trust, apart from other consequential reliefs. It was his contention that he had also sought the interim relief of injunction restraining the said Muthavalli from entering into any renewed lease deed in respect of the particular property hereinabove. That application was said to be pending, when he learnt of the Order dated 18.12.2007 passed in Mis.938/2006. It is his contention that he learnt of the development only when he received three cheques for Rs.7.35 lakh, Rs.2.10 lakh and Rs.14.76 lakh, in his capacity as a beneficiary under the Wakf, in March 2008. According to the said respondent, the cheques had been duly encashed by his office staff routinely, without realizing the source from which they originated or the account on which they were issued. The respondent, however, soon after realizing that the said amounts were in respect of the renewed terms of the lease, had immediately refunded the amounts to the Muthavalli. 11 It was contended that there were no individual notices to the beneficiaries, of the proceedings initiated by the Muthavalli. Further, that the Muthavalli had deliberately suppressed the fact of the pending representative suit filed for his removal. Therefore, the Order had been obtained by misrepresentation and suppression of facts. It was contended that the original lease of the year 1988 was to expire in 2038, on such expiry, the entire construction put up by the lessee would have been the property of the Wakf and would have fetched a handsome rent, in perpetuity. In that, 3 lakh Square Feet of built up area in a prime locality in the City of Bangalore would have certainly fetched a substantial rent even by conservative estimates, from the year 2038. There was hence no warrant to extend the lease and share the benefit with the lessee for an extended period. This was obviously done mala fide for the apparent illegal benefit of the Muthavalli, at the cost of the beneficiaries, who had not been taken into confidence. 12 The said application was opposed by both the petitioners herein. The bona fides of the respondent no.1 herein were questioned. In that, it was pointed out that the very respondent who had sought to implead himself in yet another petition filed by the very Muthavalli on behalf of the Wakf, seeking permission to give on lease for commercial purposes, a property adjacent to the property in question, namely, 135/1, to another private limited company. Apparently, had realized the futility of the exercise and had withdrawn the application thereby consenting to the transaction and was receiving benefits in respect of that transaction, as a beneficiary. Therefore, the said respondent seeking to raise untenable objections in the present case was with ulterior and mala fide motives. Further, it is pointed out that the respondent no.1 is the Muthavalli of a Wakf known as Hajee Ibrahim Sait Wakf, Chennai. It transpires two of the brothers of the Muthavalli of the Wakf, involved in these petitions, who are said to be beneficiaries of the Wakf at Chennai, are said to have filed a civil suit in OS1366/2005, before the High Court of Madras, in its original jurisdiction, seeking removal of the respondent no.1, as the Muthavalli of the Wakf at Chennai. This circumstance had hence provoked the said respondent to raise untenable objections in respect of the transactions and to allege breach of trust in seeking to remove the Muthavalli of the Bangalore Wakf, namely, the petitioner in the second of these petitions. The alleged negation of the cheques received in consideration of the benefits arising out of the renewed lease pursuant to the Order in case No.Mis.938/2006, is clearly an after thought and the alleged refund was purely deliberate and engineered to avoid being guilty of approbation and reprobation. It was asserted that there was no irregularity in the procedure adopted to seek extension of the lease deed, which was duly deliberated by the Civil Court before passing an order granting leave. In the absence any fraud or unjust benefit being conferred on any contracting party, to the detriment of the beneficiaries, none of whom have raised any objection over the 14 years, the complaint of the respondent no.1 was clearly motivated and mala fide and was without basis. The Civil Court had after recording the evidence of the parties and on a consideration of the respective contentions has opined that the Muthavalli, the petitioner in WP183832011, was the defendant in the suit filed by respondent no.1 herein, in OS95032006 on the file of the Additional City Civil Judge, Bangalore, inter-alia, seeking the removal of the said petitioner from the Muthavalliship, and that the said petitioner had entered appearance in the same even prior to the conclusion of the proceedings in Mis.938/2006. But did not choose to take the court into confidence of such a suit by one of the beneficiaries, who had even filed an interlocutory application in the said suit to restrain the renewal of lease as proposed in Mis.938/2006. Therefore, it was prima facie opined that there was indeed suppression of facts. Accordingly, the Court proceeded to condone the delay in the filing of the application in Mis.324/2008. 15 Secondly, it was found that there were 56 beneficiaries to the knowledge of the Muthavalli, it was necessary for him to take each one of them into confidence in dealing with the Wakf property. The respondent was a resident of Chennai and the petition of the Muthavalli being notified in a local Kannada daily, it would hardly be expected of the Urdu speaking sect living in Bangalore itself to have become aware of the same, let alone residents of other cities. Accordingly, the Civil Court has concluded that no prejudice would be caused in the earlier order dated 18.12.2007 passed in Mis.938/2006 being recalled and the respondent no.1 being heard. It is this which is under challenge in the present writ petitions. The learned Senior Advocate, Shri D.L.N.Rao, appearing on behalf of the counsel for the petitioner in the first of these petitions, while appraising this court of the facts of the case, would contend that the Civil Court having permitted the respondent no.1 to invoke Section 151 of the CPC, to reconsider an Order that had attained finality, is wholly without jurisdiction. 16 The application was neither in the nature of a Review petition or an appeal. The Order dated 18.12.2007 was passed on the petition seeking leave of the court to enable the Muthavalli to enter into multiple transactions, which having been granted, the lower Court ought to have proceeded with due regard to the rights of third parties that may have intervened in the interregnum. There is not even a reference to the mode or manner to be adopted to set the clock back. The party who is most affected is the lessee who has parted with substantial sums of money and has drastically changed its position. In the absence of any details as to how there has occasioned any disadvantage to the Wakf by virtue of the renewed terms of the lease , and in the face of the Court having passed a considered Order addressing the advantage to be gained by the Wakf and beneficiaries thereunder, the reasons assigned by the court below in having recalled the Order dated 18.12.2007, results in a grave miscarriage of justice. 17 It is also pointed out that the mala fides on the part of respondent no.1 in filing the application is further apparent from the circumstance that he was fully aware of the negotiations preceding the preparation of the draft renewal of the lease deed, as he was a participant at the meetings in that regard. And this is even stated by him in the pleadings in his suit filed much prior to the petition seeking leave of the court even being filed. It is hence contended that the impugned order be set aside. The said contentions are echoed by the petitioner in the second of these petitions. The learned counsel appearing for respondent no.1, on the other hand, seeks to justify the impugned order. The learned counsel highlights the manner in which the Muthavalli has, by design, suppressed the pending suit against him filed by the respondent no.1 herein, and in having proceeded to obtain the order on the petition from the court – which was nothing short of playing fraud on the court and would hence contend that it is settled law that a court may exercise its inherent power to protect 18 and maintain its dignity and to unravel and reverse all actions pursuant to such mischief, notwithstanding any inconvenience or hardship that may follow in its wake. Reliance is placed on the decisions of the apex court in K.D.Sharma v. Steel Authority of India Limited, (2008)12 SCC481and Indian Bank v. Satyam Fibres India Ltd., (1996) 5 SCC550, in this regard. In the light of the above facts and circumstances, the question to be considered is whether the court below was justified in recalling the Order dated 18.12.2007, passed in case no.Mis 938/2006 and restoring the said petition to file to be reconsidered. It is noticed that the petition filed by respondent no.1 seeking leave of the Court in the first instance, had sought to invoke Section 36 of the Indian Trusts Act, 1882 (Hereinafter referred to as the ‘1882 Act’, for brevity), and the Civil Court has also insisted on drawing sustenance with reference to the said Section and a decision of this Court in the case of Yusuf Nusvee v. Mrs. Devasunder, 1975(1) Kar.L.J.

58, in allowing the petition. 19 This is inexplicable The very decision relied upon clearly lays down that the provisions of the Indian Trust Act are not applicable. Section 1 of the Act expressly excludes the operation of the Act, pertaining to rules of Mohammedan law as to wakf, or to private religious or charitable endowments. Section 1 of the 1882 Act is reproduced for ready reference. “1. Short title, commencement.—This Act may be called the Indian Trusts Act, 1882, and it shall come into force on the first day of March, 1882. Local extent.—2[It extends to 3[the whole of India 4[except the State of Jammu and Kashmir]. and]. the Andaman and Nicobar Islands, 5[***].; but the Central Government may, from time to time, by notification in the Official Gazette, extend it to 6[the Andaman and Nicobar Islands]. or to any part thereof.].” __________________________________________________________ 2. Subs. by the A.O.1948 for the first sentence.

3. Subs. by the A.O.1950 for “all the Provinces of India, except”; 4. Subs. by Act 3 of 1951, sec. 3 and Sch., for “except part B States”.

5. The words “and Panth Piploda” omitted by the A.O.1950.

6. Subs. by A.O.1950, for”either or both of the said Provinces”. 20 Savings.- But nothing herein contained affects the rules of Mohammedan law as to waqf, or the mutual relations of the members of an undivided family as determined by any customary or personal law, or applies to public or private religious or charitable endowments, or to trusts to distribute prizes taken in war among the captors; and nothing in the Second Chapter of this Act applies to trusts created before the said day.” Therefore, the practice that has evolved, in the Civil Court exercising power in relation to a Private Wakf, can be traced to the decision of the Privy Council in Mahomed Ismail’s case, supra. Though the said case was in relation to a public trust for a religious purpose, in the course of the judgment , in dealing with a contention that under the Mohammedan law, the Civil Court has no discretion in the matter and that it must give effect to the rule laid down by the founder in all matters relating to the appointment and succession of trustees or muthavallis, it was held that the extreme proposition urged on behalf of the appellants was misconceived. In the case of a private trust created for specific individuals, the Kazi, whose place in the British Indian system is taken by the civil Court, has in carrying the trust into execution to give effect so far as possible to the expressed wishes of the 21 founder……………..etc.; It is this dictum which is the basis on which the civil courts in India continue to exercise power in circumstances such as in the present case on hand. Therefore, in dealing with the above petition, in the absence of any special procedure prescribed, the civil court was well within its power to apply such provisions of the CPC, in so far as they would be applicable, given the facts and circumstances of each case to address the claim or relief sought for and which if found to be within its jurisdiction. It is further noticed that the petition was filed by the Muthavalli, without naming any respondents to the petition. He had indicated the respondents as being none. The admitted position is that there are 56 beneficiaries of the Wakf, who are known and identified. They should have been named as the respondents, unless they were shown to have supported the petition along with the Muthavalli. It is stated in more than one place , in the course of the pleadings that issuance of notices to the said respondents individually was not contemplated. This is not 22 apparently stated with reference to any known legal principle. The civil Court was therefore required to direct individual notices to known beneficiaries. A notice issued in a local newspaper of the proceedings could only have been in addition to such individual notices. The notice should also have been issued in such newspapers as had a wider circulation, including in Urdu newspapers, having regard to the community to which the beneficiaries belonged. It is quite possible that many of the beneficiaries may not even be aware that they have a right to protect their interest and may have a say in the matter. There may also be persons claiming under the Beneficiaries who would seek to stake their claim. This was certainly not achieved by recourse to advertisement of the proceedings in a local Kannada daily. There was a proposal for renewal of a subsisting lease deed before the court, the lessee was certainly a necessary and proper party. In that, if the court should have felt the need for directing the parties to address any particular aspect either in the interest of the beneficiaries or on matters of public policy, there 23 was no possibility of ensuring a consensus ad idem, in the absence of the lessee. The presence of the lessee was also necessary to provide clarifications if any required by the court. It was hence unusual for the court to have proceeded on a unilateral application of the Muthavalli. Hence, even though the Court below has recalled the Order dated 18.12.2007 at the instance of respondent no.1 and on grounds urged by him, notwithstanding the vehement objections of the petitioners as to the bona fides of the said respondent, apart from the Court below having been satisfied of the proposed transaction being in the best interest of the beneficiaries and not being illegal or opposed to public policy, it would have been prudent to have the views of all concerned, who may have valuable inputs and observations involving nuances on the terms proposed which may not have been present to the mind of the Court and not brought to light or emphasized, though relevant and significant in addressing the best interest of the beneficiaries. 24 Therefore there is certainly a need to reconsider the particulars of the transaction on hearing the views, if any, of the several beneficiaries, including respondent no.1. There is however, the circumstance that the court below has not concerned itself with the immediate difficulty of the petitioners being able to comply with the Order impugned. In that, to give full effect to the Order, it would be necessary that all concerned should revert to a position that existed prior to the Order dated 18.12.2007. This may involve many events and actions being retraced and may even warrant a series of proceedings for restitution, involving many third parties. Any such proceedings are not even enumerated as yet. Such enumeration and implementation of restitution proceedings would be wholly cumbersome and interminable. That would not be welcome. Therefore, it is necessary to make it clear that the Order impugned directing the recall of the Order dated 18.12.2007, does not ipso facto require that all the acts committed pursuant to the same be reversed as of now. It would suffice if the Court below directs 25 that all the beneficiaries be made parties to the proceedings and personal notices be served on all of them of the proceedings. Newspaper publication shall also be taken of the proceedings in such newspapers as would afford a wider coverage and to also include Urdu newspapers with a wide coverage. On conducting such enquiry as may be deemed necessary, while adopting such procedure as is deemed expedient, shall assist the parties in arriving at a consensus on the lease deed which may have already been executed, to be supplemented with such corrigenda, if any, as may be warranted. The endeavour obviously is only to consider if there could be any better terms that could be worked into the contract in favour of the beneficiaries, while not jeopardizing the commercial interests of the lessee, unreasonably and unfairly, while also keeping in view any third party interest that may have intervened in the interregnum. The Court below shall endeavour to complete the proceedings within a period of six months if not earlier, from the date of receipt of a copy of this order. 26 The Writ petitions are accordingly disposed of in terms as above. nv Sd/- JUDGE