Delhi High Court (July 17, 2001) 2001 (TLS)125332 2001-DLT-93-359 :: 2001-AD (Del)-5-1013 RAJ KISHAN DASS Vs. Kusum Singh J. D. Kapoor ( 1 ) THE short controversy to be settled at this stage is the determination of issue No. 2 which has been framed as a preliminary issue and is as under:- "whether a trust as alleged could be a valid trust in view of the provisions of Section 5 of the Indian Trusts Act?"facts germane for the issue in question need to be capituated in brief. ( 2 ) THE defendant was married to late Mr. O. P. Sanghi on 9/3/1969 and has been residing alongwith her family members at 4, Ring Road, Kilokari, New delhi since then. The plaintiff has been living with mr. Jai Kishan Das at 3,pusa Road, New Delhi. In the year 1981-82 late Mr. O. P. Sanghi, the husband of the defendant mentioned to Shri Jai Kishan Das that an opportunity is available to invest in a residential plot of land at Maharani Bagh, New Delhi. Shri Jai Kishan Das then expressed his desire that the plot of land be acquired partly for the benefit of his son, the plaintiff herein and partly for the benefit of the children of the defendant herein to vest in thorn when they attain majority. ( 3 ) A perpetual sub lease in respect of the said property was executed on 11/1/1982 in the name of the plaintiff herein as the sub lessee by Maharani Bagh cooperative House Building Society and the President of the India. This Perpetual lease Deed was registered with the Registrar of Deeds and Assurances on 11. 1. 1982. The plaintiff herein at all material times has continued to live with his father at 3, pusa Road, New Delhi. ( 4 ) DAUGHTER of the defendant became major on 27/1/1988. At a family gathering immediately after 27. 1. 1988 Ghri Jai Kishan Das and the plaintiff herein, in the presence of other near relatives, declared that 1/2 share in the property at 9, Western avenue, Maharani Bagh, New Delhi is being held in trust by the plaintiff herein and the same shall continue to be held in Trust for the benefit of Ms. Priya. 1. 1988 Ghri Jai Kishan Das and the plaintiff herein, in the presence of other near relatives, declared that 1/2 share in the property at 9, Western avenue, Maharani Bagh, New Delhi is being held in trust by the plaintiff herein and the same shall continue to be held in Trust for the benefit of Ms. Priya. The plaintiff and the said Jai Kishan Das also declared that daughter of the defendant will be entitled to construct a residential building first against her share and the plaintiff may construct the residential building against his share. ( 5 ) ON or about July, 1988 daughter of the defendant approached M/s. H. V. Mahendru of M/s. Designs Atelier, Architects for drawing up the plans of the residential building on the said property. Architect duly drew a building plan for construction on the ground floor of the plot of land as per the requirement of defendant no. 2. All expenses in connection with the above were paid and discharged by defendant no. 2. ( 6 ) MR. Pradip Nandara jog, learned counsel for the defendants has relied upon the following paras of the written statement filed by defendants 2 and 3 in support of the creation of trust in favour of Ms. Priya, defendant no. 2: DEFENDANT no. 2 was informed by her mother that in the year 1981-82 late shri O. P. Sanghi, the. father of the defendant no. 2 mentioned to Shri Jai Kishan das that an opportunity is available to invest in a residential plot of land at maharani Bagh, New Delhi. 8. The plaintiff was, therefore, a Trustee of the property being Plot No. 9, western Avenue, Maharani Bagh, New Delhi acquired in 1982 in his name to the effect that 1/2 share in the property would be given by the plaintiff to the children of the defendant no -1 as Shri Jai Kishan Das may designate. 12. Defendant no. 2 became a major ton 27. 1-1988. At a family gathering immediately after 27-1. 1988 Shri Jai Kishan das and the plaintiff herein in the presence of other near relatives, declared that 1/2 share in the property at 9, western Avenue, Maharani Bagh, New Delhi is being held in Trust by plaintiff herein and the. same shall thereafter continue to be held in Trust for the benefit of defendant no. 2. 1988 Shri Jai Kishan das and the plaintiff herein in the presence of other near relatives, declared that 1/2 share in the property at 9, western Avenue, Maharani Bagh, New Delhi is being held in Trust by plaintiff herein and the. same shall thereafter continue to be held in Trust for the benefit of defendant no. 2. The plaintiff and the said Jai kishan Das also declared that defendant no. 2 -will be entitled to construct a residential building first against her share and thereafter the plaintiff herein may construct the residential building against his share. 13. In pursuance of the above declaration of Trust Shri Jai Kishan Das and the plaintiff herein confirmed the delivery of the possession of the land to defendant no. 2 who in turn in March, 1988 took the possession of the plot of land. 16. At all times it was clearly agreed and understood that the residential plot of land standing in the name of the plaintiff was held in Trust in respect of the. share in the property for the benefit of defendant no-2,and both the plaintiff and Jai Kishan Das had made declaration of the Trust in regard to the said share in the presence of various persons. " ( 7 ) MR. Nandrajog s main contention is that the pith and substance of these paras when read together and particularly in context of the purchase of the suit property in the name of the plaintiff is that it was as a consequence of an understanding that the plaintiff was appointed as a trustee of the property because of holding the same for the. benefit of defendant no. 2 as the acquisition of the plot in the name of the plaintiff was pursuant to his understanding and not. that the plot shall vest exclusively in the plaintiff. In other words the plaintiff was not the trustee in strictest sense but was holding over the suit property for the benefit of defendant No-2 as the provisions of Section 5 of the Indian Trusts Act recognise only those trusts in relation to immovable property that are created by way of duly registered instrument in writing. ( 8 ) MR. In other words the plaintiff was not the trustee in strictest sense but was holding over the suit property for the benefit of defendant No-2 as the provisions of Section 5 of the Indian Trusts Act recognise only those trusts in relation to immovable property that are created by way of duly registered instrument in writing. ( 8 ) MR. Nandarajog has invoked the doctrine of proprietary estoppel as according to him trust in question when viewed in context of family trust was an implied constructive trust and therefore the doctrine of proprietary estoppel operates against the plaintiff. ( 9 ) ACCORDING to him had it not been on the understanding that the plaintiff was having a trust and having ownership or the possession as a trustee for defendant No. 2, defendant, No. 2 would not have incurred expenses in constructing half of the portion of the premises and if such a promise is disregarded and the land is taken back, the land owner is benefited unjustly and unjust enrichment is neither permissible in law nor in equity. Mr. Nandarajog further contended that the construction of the suit premises was made only on the reliance of the implied,trust and that the promise of the trust, the one in question is oftenly made in family context and without contractual intention and sometimes without consideration and the promise of such alleged contract its often too vague to refer to the requirement of such a certainty. According to the learned counsel this is animplied constructive trust being based upon the promise made in the context of the family and not without any contractual intention and not the trust as defined in Section 5 of the Indian Trust Act. Since learned counsel has invoked the doctrine of "proprietary estoppel", issues 1 and 3 need to be referred and reproduced. These are: 1. Whether any trust was created in favour of defendant No. 2 as alleged in the written statement? 3. Whether- the defendant No. 2 has right, title or interest as owner in the basement and ground floor of the property in dispute and whether the plaintiff did not raise any claim adverse to any right, title and interest of defendant No. 2 in this case the same as well as in. 1/2 share in the land in dispute? ( 10 ) IN support of theory of constructive trust and proprietary estoppel, Mr. 1/2 share in the land in dispute? ( 10 ) IN support of theory of constructive trust and proprietary estoppel, Mr. Mandrajog quoted from Chitty on Contract. Chitty s observations in this regard are as under : "scope of proprietary estoppel - proprietary estoppel operates in a variety of cases to disparate that it has been described as "an amalgam of doubtful utility". . The cases can be divided broadly into two categories. In the first, one person acts under a mistake as to the existence or as to the extent of his rights in or over another s land. Even though the mistake was in no way induced by the landowner, he might be prevented from taking advantage of it, particularly if he "stood by" knowing of the mistake, or actively encouraged the mistaken party to act in reliance,on his mistaken belief. These cases of so-called "acquiescence" do not raise any questions as to the enforceability of promises and therefore do not call for further discussion in this chapter. In the Second situation, there is not merely "acquiescence" by the landowner, but "encouragement". The other party acts in reliance on the landowner s promise (or on conduct or a representation from which a promise can be inferred) that the promisee has a legally recognised interest in the land or that one will be created in his favour. The question then arises, to what extent such a promise can be enforced, even though it may not be supported by consideration, or fail to satisfy the other requirements (such as certainty) of a binding contract. Expenditure on another s land in reliance on a promise. . . . . . . . . . . . . . . . . . . Cases, of this kind can be explained on the basis of unjust enrichment in all of them, the landowner would benefit unjustly if he were allowed to disregard his promise and to take back the land after having induced the promisee to make improvements to it. This explanation is, perhaps, reflected in statements found in some modern cases that the liability is based on "an implied or constructive trust". This explanation is, perhaps, reflected in statements found in some modern cases that the liability is based on "an implied or constructive trust". But the unjust enrichment explanation will not account for cases in which the doctrine has been applied even though the promisee s expenditure on another s land did not result in any benefit at all to the owner of that land. It follows that, although unjust enrichment of the promisor may be the most obvious basis of proprietary estoppel, it cannot provide complete explanation of the doc"trine. " ( 11 ) HE further urged that since the doctrine of estoppel, is originated as a rule of evidence, the substantive law is not applicable and since the decision of issue No. 2 depends upon the findings of issue No. 1 so no observations can be made as to whether the trust created in the instant case is governed by the provisions of substantive law or by rule of estoppel which is a rule of evidence- In other words Section 5 communicates rule of substantive law and the principle of proprietary estoppel is one of evidence and two operate on different fields and under different conditions and there is no ground for reaching a conflict between them or for whittling down the ambit of one by referring to another. ( 12 ) MR. Nandarajog has, in support of the above principle relied upon Jumma Masjid. Mercara vs. Kodimaniandra Deviah and Ors. 1962 SC 847 wherein the supreme Court held as under :- where a person transfers property representing that he has a present interest therein, whereas he has, in fact, only a spes succession is, the transferee is entitled to the benefit of S. 43, if he has taken the transfer on the faith of that representation and for consideration. Such a construction of S. 43 has not the effect of nullifying S. 6 (a ). Section 6 (a) and S. 43 relate to two different subjects, and there is no necessary conflict between them. Section 6 (a) deals with certain kinds of interests in property mentioned therein, and prohibits a transfer simpliciter of those interests. Section 43 deals with representations as, to title made by a transferor who had no title at the time of transfer, and provides that the transfer shall fasten itself on the title which the transferor subsequently acquires. Section 6 (a) deals with certain kinds of interests in property mentioned therein, and prohibits a transfer simpliciter of those interests. Section 43 deals with representations as, to title made by a transferor who had no title at the time of transfer, and provides that the transfer shall fasten itself on the title which the transferor subsequently acquires. Section 6 (a) enacts a rule of substantive law, while s. 43 enacts a rule of estoppel which is one of evidence. The two provisions operate on different fields, and under different conditions, -and there is no ground for reading a conflict between them. or for. cutting down the ambit of the one by reference to the other; both of them can be given full effect on their own. terms, in their respective spheres. To Hold that transfers by persons who have only a spes successionis at the date of transfer are not within the protection afforded by S. 43 would destroy its utility to a large extent. Section 43 embodies a rule of estoppel and enacts thai a person who makes a representation shall not be heard to allege the contrary as against a person who acts on that representation. It is immaterial whether the transferor acts bona fide or fraudulently in making the representation. It is only material to find out whether in fact the transferee has been misled. For the purpose of the section it matters not whether the transferor acted fraudulently or innocently in making the representation, and that what is material is that he did make a representation and the transferee has acted on it- where the transferee knows as a fact that the transferor does not possess the title which he represents he has, then he cannot be said to have acted on it when taking a transfer. Section 43 would then have no application, and the transfer will fail under S. 6 (a ). But where the transferee does act on the representation, there is no reason why he should not have the benefit of the equitable doctrine embodied in S. 43, however fraudulent the act of the transferor might have been. Mr. Nandarajog concluded that if it is found that the defendant rip. But where the transferee does act on the representation, there is no reason why he should not have the benefit of the equitable doctrine embodied in S. 43, however fraudulent the act of the transferor might have been. Mr. Nandarajog concluded that if it is found that the defendant rip. 2 was allowed to enter upon the land and raise the construction of the basement and the ground floor out of her own funds on the understanding as pleaded in the written statement that she would be the half owner of the plot and would be entitled to raise the construction on the plot and pursuant thereto, raised the construction without objection and resistance by the plaintiff, it would prima facie support the, averment that the plot in question was- purchased in. the name of the plaintiff on the understanding that one half interest therein would be that of defendant No. 2 which amounted to implied or constructive trust and, therefore, the plaintiff is estopped from raising the plea that no such understanding or trust had come into existence. ( 13 ) THUS, according to Mr. Nandrajog if the finding of issue No. 1 is returned to the effect that the property was purchased in the name of the plaintiff on the understanding that half of the portion would be that of defendant No. 2 and in pursuance thereto the plaintiff allowed the defendant to enter into the premises and raise the construction, there would be no other inference than that it was an implied and constructive trust. ( 14 ) MR. Arun Mohan, learned counsel for the plaintiff refuted the contention of his rival effectively. His contention that the facts pleaded by the defendant in support of the creation of trust and effect thereof are such that are subject matter of issue nos- 1 and 3 and would be decided at trial has substance and merit as Issue no. 2 is confined to the proposition whether the kind of trust set up by the defendant is valid in law or not. ( 15 ) THUS Issue No. 2 is a pure question of law with regard to the validity of the alleged trust. Main contention of Mr. 2 is confined to the proposition whether the kind of trust set up by the defendant is valid in law or not. ( 15 ) THUS Issue No. 2 is a pure question of law with regard to the validity of the alleged trust. Main contention of Mr. Arun Mohan is that since section 5 of the Trust ^ct is a part of the statutory law and specifically prohibits trusts in relation to an immovable property except by an instrument in writing duly registered, common law prevailing in england, even if applicable, cannot be imported. ( 16 ) SECTIONS 5 and 6 of Trust Act govern the trusts in relation to immovable properties and provide as under:- section 5 "no trust in relation to immovable property is valid unless declared by a non-testamentary instrument in writing signed by the author of the trust or the trustee and registered, or by the Uill of the author of the trust or of the trustee. Trust of movable property No trust in relation to movable property is valid unless declared as aforesaid or unless the ownership of the property is transferred to the trustee- these rules do not apply where they would operate so as to effectuate a fraud. "section 6 Creation of Trust subject to the provisions of Section 5, a trust is created when the author of the trust indicates with reasonable certainty by any words or acts (a) an intention on his part to create thereby a trust, (b) the purpose of the trust, (c) the beneficiary, and (d) the trust-property, and (unless the trust is declared by will or the author. of the trust is himself to be the trustee) transfers the trust-property to the trustee. ( 17 ) THOUGH in the written statement the defendant has brought out and pleaded all the necessary elements and ingredients of Section 6 of the Trusts Act in order to set up and support the plea that a trust was created but at the same time has contended that It was an implied or a constructive trust and therefore was governed by rule of evidence and not by statutory law. thus the defendant is barred from taking the plea that section 5 of the Trust Act is not applicable. thus the defendant is barred from taking the plea that section 5 of the Trust Act is not applicable. ( 18 ) KERNEL of the controversy is reflected in para 12 of the written statement as referred above- It is beyond the pale of controversy that the concept of oral trust in respect of immovable property is otherwise not recognisable in the Indian Law. If the trust like the one set up by the defendant is recognised and accepted than anybody s properties would be unsafe as anyone would raise a plea of oral trust and grab another s property. This is the precise reason why the statute makes the requirement of written instrument duly registered for I: he purpose of legal enforcement of the trust. ( 19 ) THE plaintiff became a member of the co-operative" society way back in the year 1966 vide resolution dated 23/7/1966 before Priya was born- Ms. Sharda who became member of the Housing society in the year 1966, is the sister of the father of Priya, defendant No. 2 and the Society under the signature of Priya s grand father had written to the plaintiff as far back as on 29/10/1973 that - "you applied for an allotment of a plot in maharani. Bagh Cooperative House Building society Ltd. , Mew Delhi. If you are still interested in acquiring the plot in Maharani bagh, please send your affidavit on the prescribed form, latest by the 10/11/1973. In case your affidavit is not received within the above prescribed time, it will be taken as granted that you do not fulfil the conditions prescribed by the Delhi administration and the Society and/or not interested in acquiring the plot. Your name from the waiting List will be removed without any further intimation to you. " ( 20 ) SINCE the pleas set up in paras 12,13 and 16 reproduced above when taken into totality show that the claim of the defendant is based on the oral declaration of trust and since the only trust in relation to immovable properties that is recognizable in law is the trust created by way of an instrument in writing followed by registration, the trust in question is not valid in law. ( 21 ) AS a consequence the answer to Issue No. 2 has to be given in the affirmative i. e. the trust set up by the defendants is legally not a valid trust. However, any observation made in this order that may have any effect, or bearing in respect of the facts pertaining to remaining : issues will not tantamount to expression of opinion on merits. --- *** --- .