Holding

An Official Trustee who breaches trust by exceeding a court sanction is protected from personal liability under Section 15 of the Official Trustees Act, 1913, and the High Court’s order directing personal payment of excess costs cannot be sustained.

Summary

The Official Trustee of Tamil Nadu, acting as trustee of a marriage hall trust, demolished the existing building and planned a new construction after an architect’s report recommended demolition, but without obtaining a fresh High Court order beyond the earlier sanction for roof conversion costing Rs 6 lakhs. The High Court rejected his application for additional funds and directed that any excess expenditure be borne personally by the trustee, finding a breach of trust. On appeal, the Supreme Court examined whether the trustee’s actions constituted a breach of trust and, if so, whether he could be held personally liable under Section 15 of the Official Trustees Act, 1913. The Court held that while the trustee did breach trust by proceeding without specific court permission, Section 15 shields an Official Trustee from personal liability for such breaches, provided there is no negligence that could have been avoided. Consequently, the High Court’s order was set aside and the appeal was allowed.

Issues considered

Did the Official Trustee breach his fiduciary duties by demolishing the building and incurring expenditure beyond the court‑sanctioned amount without a specific order?
Can an Official Trustee be held personally liable for such a breach of trust under the Official Trustees Act, 1913?
Whether the High Court’s direction that the trustee bear the excess expenditure was legally valid.

Legislation cited

Indian Trusts Act, 1882s. 2(2)
Official Trustees Act, 1913s. 15, s. 28(b)

Subjects

Official Trusteebreach of trustpersonal liabilitySection 15Section 28trust estatecourt sanctionbona fide

Judgment

A OFFICIAL TRUSTEE OF TAMIL NADU
v.
UDAVUMKARANKAL AND ORS.

JANUARY 29, 1993

B (KULDIP SINGH AND P.B. SAWANT, JJ.]

Official Trnstees Act, 1913 :

Sections 15, 28-Powers and duties of Official Trnstee-Action taken
C bona fide-Breach of trnst-Personal liability-Whether arises.

By a Court decree, schemes for administration of two estates belong-
ing to a couple were sanctioned. The subject matter of the present appeal
is the property comprised in the estate of the wife. The said premises have
been used as a marriage hall.
D
The predecessor of the appellant made an application to the High
Court for permission to incur an expenditure of Rs. 6 lakhs for converting
the tiled roof into RCC roof as also for a modernisation plan involving
about Rs. 17,500, so that the marriage hall could fetch higher income. The
E High Court accorded permission for the plan and the expenditure in-
volved. Thereafter some correspondence took place with some Architects.
But there was no further progress. In the mean time the present appellant
took charge of the trust and he wrote to an Architect about the proposal
and requested him to inspect and report about its feasibility. The Architect
inspected the preinises and reported that the building was very old and in
F a dilapidated condition. He recommended the demolition of the building
and putting up of a new construction. The appellant requested the Ar-
chitect to submit his estimates, plan and other details. Just prior to these
developments, the Deputy Official Receiver inspected the premises belong-
ing to both the trusts and submitted a report that the buildings belonging
G to both the trusts be demolished and reconstruction of the Marriage Hall
and construction of a shopping complex be taken up.

The appellant paid the scrutiny and demolition fee to the Corpora-
tion as demanded by it and the building was demolished. The Architect
sent his estimate of Rs. 9.60 Iakhs for the construction of the Marriage
H Hall. The appellant filed an application before the High Court for its
380
OFFlCIAL TRUSTEE v. UDAVUMKARANKAL 381
permission to transfer a snm of Rs. 7 lakhs from the other Trost to enable A
him to incur a total expenditure of Rs. 10 lakhs and for ratification of the
.action taken by him. The hereditary trustees and the residual beneficiaries
intervened and opposed the application. The matter was heard by a Single
Judge and he held that the appellant had proceeded to demolish the
marriage ball without getting specific orders of the Court and in undue B
haste, in an irresponsible manner and to the detriment of the trust. The
Single Judge rejected the application and directed the appellant to con·
stroct the marriage ball within Rs. 6 lakhs sanctioned earlier. He further
directed that expenditure in excess of Rs. 6 lakhs should be borne by the
appellant himself. Being aggrieved by the said order, the appellant-offi·
cial trustee filed an appeal which was dismissed by the Division Bench. C
Against this, the official trustee preferred the present appeal by special
leave.

Allowing the appeal, this Court,
D
HELD : 1. It is evident from record that out of the three Architects
who responded to the invitation of the predecessor of the appellant for
replacement of the tiled-roof by R.C.C. slab, one architect did not even
care to visit the site and examine whether the old structure could bear the
weight of the R.C.C. slab. As regards the second architect, he did not refer
to the fact whether the old structure was capable of bearing the weight of E
the R.C.C. slab. He merely stated that he bad inspected the premises and
then proceeded to indicate his charges for preparing the plan etc. It may,
however, be presumed that since he had not referred to the condition of
the building, he was of the opinion that the old building could bear the
weight of the R.C.C. slab. It is only the third architect, who stated that it F
was worth demolishing the old building and constructing a new one in its
place as per the Development Control Rules of the Madras Municipal
Corporation. This was the state of affairs on the files of the Official
Trustee when the appellant took charge. In the circumstances, there was
nothing unnatural on the part of the appellant to have specifically ad-
dressed a letter to one more architect, pointing out to him, that it was G
proposed to convert the existing tiled-roof into RCC-roof, and requesting
him to inspect the premises and submit a report specifically on the point
as to whether the existing building could withstand the conversion or
whether it had to be demolished and a new building constructed in its
place. Anyone in bis place acting as a responsible and a reasonable man H
382 SUPREME COURT REPORTS (1993] 1 S.C.R.
A would have done so. Since the new architect gave his report after inspecting
the premises that no matter however much improvement was carried out
in the building, the net result would be neither appreciable nor would it
yield maximum returns for the investments made as the existing building
was very old and in a dilapidated condition, there was nothing wrong ifthe
B appellant accepted the said report and proceeded to take immediate steps
in the interest of the trust estate. The building was at least 76 years old, if
not more, in 1988. Therefore, it is difficult to doubt the bona fides of the
recommendations made by one of the three earlier architects or by the new
architect. Io any case, the bona fides of the appellant could hardly be
questioned. [389A·H, 39~A-E)
c
2. The rapid steps taken by the appellant can only be consistent with
bis intention to act as early as possible in the interest of the trust since by
the new construction, the income of the trust was expected to be aug·
mented. Further, the delay in construction was also likely to increase the
D cost of construction, apart from the loss of income that was to result from
such delay. Hence, the so-ailled baste cannot be looked upon only with
suspicion or as contributing only to the ma/a fide intentions on the part
of the appellant. It is also consistent both with a diligent and responsible
conduct. on bis part and with the best of bis intentions to subserve the
interests of the trust. [390F-H]
E.
3.1. .There is no doubt that the appellant knew that the earlier
sanction obtained was only for replacement of the tiled-roof by R.C.C.
slab. The sanction was also for incurring only an expenditure of Rs. 6 lakbs
and some other sundry expenses for providing minor facilities. Since the
F new proposal which he sanctioned consisted of the demolition of the entire
building and of constructing a new one in its place which also involved a
further expenditure of Rs. 4 lakhs or so, the proposal was completely
different and it could not be acted upon on the basis of the old sanction.
It was, therefore, absolutely necessary for the appellant to approach the
Court before be embarked upon the new proposal, even though in doing
G so be was acting in the interests of the trust and no ma/a fides could be
attributed to him. This is the only error committed by the appellant lo the
present case. However, in the facts and circumstances of the case, the error
could not be said to have been actuated by any ma/a fide intentions on his
part. The expenses that he had undertaken to incur were also within
H reasonable bounds looking at the proposal. His intention In promoting the
OFFICIAL TRUSTEE v. UDAVUMKARANKAL [SAWANT, J.] 383
proposal was in the interest of the Trust. [391A-D] A
3.2. To the extent that the appellant did not take permission of the
High Court before proceeding to demolish the existing structure and to
construct a new one in its place, and before undertaking the expenditure
of Rs. 4 lakhs over and above that sanctioned earlier, he did commit a
breach of trust. But the appellant could not be made personally liable for B
the breach of trust committed by him, in view of the provisions of Section
15 of lite Official Trustees Act, 1913. [391-H, 392A,B]

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 491 of
1993.
c
From the Judgment and Order dated 5.10.90 of the Madras High
Court in O.S.A No. 271 of 1989.

KK Venugopal and P.P. Tripathi for the Appellant.
D
S. Mura!idhar and Kailash Vasudev for the Respondents.

The Judgment of the Court was delivered by

SAWANT, J. Special leave granted.
E
By a decree in C.S. No. 363 of 1912, schemes for administration of
two trust estates were sanctioned. One trust estate comprised Premises No.
246, R.K. Mutt Road, Mylapore, Madras belonging to one Poonambalarn
Pillai and the other trust estate comprised the adjoining Premises No. 247
belonging to his wife, Nagai Visalakshi Ammal. We are concerned in this
appeal with the premises bearing No. 246 belonging to the trust estate of F
Poonambalam Pillai. These premises were being used as a marriage hall
[Kalyanamandaparn).

2. It appears that in both the said trusts, hereditary trustees were
appointed. It is not clear from the judgments of the courts below as to when G
the Official Trustee in place of or in addition to the hereditary trustees
callll: ~n the scene. However, that is not relevant for the decision of the
issue Involved in the present appeal.

3. The predecessor of the present appellant - Official Trustee had·
made an application to the High Court being Application No. 2043 of 1988, H
384 SUPREME COURT.REPORTS (1993) 1 S.C.R.
A for permission to incur an expenditure of Rs. 6 lakhs for converting the
existing tiled-roof of the mru;riage hall into RCC-roof and for providing
A.
other facilities therein. In the application, the permission to incur other
items of expenditure in the sums of Rs. 4,750, Rs. 9,620 and Rs. 3,161.70
for providing kadappa slab flooring in the kitchen, erecting a bore-well,
B and for the purchase of vessels, respectively was also sought. The report
which was filed along with the application stated that the marriage hall
would fetch a higher income if it was modernised by converting the existing
tiled-roof into RCC-roof and was provided with the other facilities. The
report further gave an estimate of Rs. 6 lakhs prepared by the Assistant
Engineer attached to the office of the Official Trustee, in respect of the
C said modernisation plan. Along with the report, the estimate and the plan
of construction were also filed. From the report, it was seen that out of the
total plinth area of 3822 s.f., only 2145 s.f. were sought to be covered with
RCC-roof. The Court by its order dated 3.5.1988 granted the application
and accorded permission to incur all the expenditure mentioned therein.
D
4. It appears that after the said sanction was· given, one Kanakraj
filed an application in the High Court for a direction to the Official Trustee
to give a lease of the marriage hall to him on certain terms. That applica-
tion was dismissed by the Court. While dismissing the application, the
Court directed the Official Trustee to get the blue print and the approval
E of the concerned authorities and to commence the work of modernisation
without any delay as ordered earlier on 3.5.1988.

5. Pursuant to the direction, the then Offii:ial Trustee sent a com-
munication dated 1.12.1988 to six architects requesting them to give their
F quotations for preparing the plan, estimate and design for c.onversion of
the tiled-roof into RCC-roof and for providing the other provisions as
sanctioned by the Court. Of the six architects, only three responded. Mis
C.R. Narayana Rao, Architects and Engineers, by their letter of 9.12.1988
merely riuoted the fees for their professional services without inspecting
the premises. Mis Madan Associates by their letter of 30.12.1988, after
G stating that they had inspected the site, gave particulars of the services to
be rendered as well as of their fees.for the same. The third architect, Mr.
C.H. Gopinatha Rao by his communication on 7.12.1988 stated that he
had inspected the property on 6.12.1988 and that it was worth demolishing
the structure and constructing a new building as per the Development
H Control Rules of the Madras Metropolitan Authority.
OFFICIAL lRUSTEE v. UDAVUMKARANKAL (SAWANT, J.] 385
6. The present appellant took charge of the trust estate as the A
Official Trustee on 5.1.89, and on 12.1.1989 wrote a letter to one
Mohammed Ibrahim Sait, architect, informing him, that it was proposed to
convert the existing tiled-roof of the marriage hall into RCC-roof, and
requested him to inspect the premises and submit his report as to whether
the existing building could ~thstand such conversion or whether it had to B
be demolished and reconstructed. The letter also staled thal in the event
of the need for demolition and reconstruction, he shoitld quote his fees for
the plan, estimate and design for the construction of the new building, after
inspection and within Rs. 6 lakhs. The architect, Sbri Sail by his letter of
2.2.1989, replied [which reply was received on 3.2.1989] that he had in-
spected the premises and that no matter however much improvement was C
carried out in the existing building, the net result would be neither appreci-
able nor would it yield maximum returns for the investments .uade, as the
· existing building was very old and in a dilapidated condition. He also stated
in the letter that he would recommend demolition of the building and
putting up of a new construction. He quoted his fees at 3-1/2 per cent of D
the total cost of the work. On 6.2.1989, the Official Trustee accepted the
quotations for the preparation of the estimate, plan and design, and
requested Shri Sail to submit his estimate, plan and design and "oth~r
details at an early date. On 10.2.1989 again, the Official Trustee addressed
another letter under the caption "very urgent" to Shri Sail whereby he sent
the site-plan and the plan of the existing building along with a Xerox ropy E
of the Wtll of Poonambalam Pillai for further action.

In the meanwhile, on 2.2.1989, i.e., even prior to the receipt of the
reply from Shri Sail to the Official Trustee's letter of 12.1.1989 [which, as
stated, was received on 3.2.1989), the Deputy Official Trustee submitted a F
report of his inspection of certain properties comprised in the trust estate
~ .. in which he also stated that marriage hall was a choultry and was being let
out for various functions and that there was a proposal to demolish and
reconstruct that building and that the said proposal might also be extended
to the property bearing No. 247 belonging to the other trust estate [viz.,
the trust estate of the . wife of Poonambalam Pillai], by taking up the G
demolition and reconstruction of both the buildings thus constructing a
shoppinJ complex besides the marriage hall.

7. Thereafter, the Official Trustee by his letter of 10.4.1989 ad-
dressed to the Commissioner of the Metropolitan Corporation of Madras, H
386 SUPREME COURT REPORTS [1993) 1 S.C.R.
A sought permission to demolish the existing building of the marriage hall.
The Corporation by its letter of 3.5.1989 directed the Official Trustee to
deposit a sum of Rs. 10,240 towards scrutiny and demolition fee. It does
not appear from this letter that the Corporation had in terms granted
permission to demolish the building as the fee so demanded was only for
B taking further actic;n on the application for demolition made by the Official
Trustee. On 5.5.1989, Shri Sail sent an estimate of Rs. 9.60 lakhs for the
proposed new construction of the marriage hall on 8.5.1989, the Official
Trustee sent a cheque for· Rs. 10,240 to the Revenue Officer of the
Municipal Corporation of Madras and informed Shri Sail to the effect that
the Corporation had sanctioned the demolition of the marriage hall. He
C also asked Shri Sail to obtain quotations for the demolition, and to offer
his specific recommendations for taking further action. On 10.5.1989, Shri
Sait demanded payment of Rs. 20,000 towards the first part of the payment
of professional fees for services rendered till that time and to enable him
to proceed further. On 12.5.1989, the Official Trustee sent a sum of Rs.
D 15,000 to Shri Sail. By letter dated 15.5.1989, one S.A. Naina Mohammed
Soris, Building Demolition Contractors made an offer to demolish the
marriage hall and to remove the debris for Rs. 15,000. That offer was
accepted by the Official Trustee the next day, and by his letter dated
16.5.1989 addressed to the said Contractors he requested them to pay a
sum of Rs. 15,000 and take up the work of the demolition. On 17.5.1989,
E the Official Trustee informed the persons who had booked the choultry for
marriages earlier, that the allotments had been cancelled omng to the
demolition and asked them to receive their refunds of the rent paid by
them.

F 8. On 8.6.1989, a sum of Rs. 15,000 was collected from Shri Sait on
behalf of the contractor- S.A. Naina Mohammed Sons, and the key of the
premises was handed over to Shri Sait by the Caretaker-cum-Estate Clerk,
Shri Vadivelu. This was approved of by the Official Trustee on 9.6.1989.
The work of the demolition of the marriage hall commenced on 8.6.1989
and the building was completely demolished.
G
9. On 13.6.1989, the Official Trustee filed an Application No. 2592
of 1989 before the High Court. Along "1th the application, he also filed a
report prepared on 6.6.1989. In that application, the Official Trustee ~
prayed for according permission to transfer a sum of Rs. 7 lakhs from the
H other trust estate, viz. that of Nagai Visalakshi Ammal (wife of Poonam-
OFFICIAL TRUSTEE v. UDAVUMKARANKAL [SAWANT, J.J 387
balam Pillai) to the trust estate of Poonambalam Pillai, to enable him to A
incur a total expenditure of Rs.10 lakhs and for ratification of the action
taken by him, in engaging Shri Sail as an architect and also for permission
to pay the fees of the architect and further to permit him to incur the
revised additional expenditure of Rs.4 lakhs in addition to the sum of Rs.6
lakhs already sanctioned for replacing the tiled-roof by the RCC-roof and B
for providing other facilities. In this report, the Offici31 Trustee referred
to the earlier order of 3.5.1988 and stated that though a sum of Rs. 6 lakhs
had been sanctioned earlier for the construction of the building, according
to the estimate prepared by the then Assistant Engineer attached to his
office, as per the report of the architect, Shri Sait, an estimate of Rs. 9.60
lakhs was being submitted and thus an additional sum of Rs. 4 lakhs was C
required to dismantle the existing structure and to construct a new one in
its place. It was further stated in the said report that as only a sum of Rs.
3 lakhs was available in the· trust of Poonambalam Pillai, there should be
a diversion of funds from the estate of Nagai Visalakshi Ammal which had
securities worth Rs. 15 lakhs available with it. The report also stated that D
the Junior Engineer attached to the office of the Official Trustee was only
a technical officer not having the benefit of the services of an technical
assistant and, therefore, the services of an architect were engaged. The
report mentioned the payment of Rs. 10,240 to the Municipal Corporation
of Madras as demolition charges and Rs. 15,000 to the architect, Shri Sait.
Along with the said report, copies of the estimate furnished by the ar- E
chitect, Shri Sail and the plan prepared by him were also filed.

10. It appears that though notice of the said application was not
given to the persons interested in the trust, the hereditary trustees as well
as the residual beneficiaries intervened in the application, to oppose it. The F
learned Judge held that the Official Trustee had proceeded to demolish
the marriage hall without getting specific orders of the Court and that he
had done so in undue haste and to the detriment of the trust. The learned
Judge further held that the Official Trustee had not placed all the facts
before the Court and had also acted in an irresponsible manner in
demolishing the building, and hence the relief prayed for could not be G
granted. In addition to rejecting the application, the learned Judge gave
certain directions to the Official Trustee regarding the reimbursement of
the fee paid to the architect, Shri Sail and for the construction of the
choultry within Rs. 6 lakhs as sanctioned earlier. He further directed that
expenditure in excess of Rs. 6 lakhs for building the hall should be borne H
388 SUPREME COURT REPORTS (1993] 1 S.C.R.
A by the Official Trustee himself.

11. The appellant- Official Trustee preferred an appeal against
the said order to the Division Bench of the High Court which confirmed
the same by the impugned decision.

B 12. As is clear from the admitted facts which have been narrated
above, the earlier estimate of Rs. 6 lakhs. iliven by the predecessor of the
appellant was only for the replacement of the tiled-roof by R.C.C. slab. It ~
was admittedly not for the demolition of the old building and construction
of a new building in its place. It is not necessary to have the benefit of an
C expert opinion to appreciate that if for the replacement of the roof only,
the cost as sanctioned by the Court itself was Rs. 6 lakhs, the cost for the
demolition and construction of the new building estimated at Rs. 9.60 lakhs
could not be said to be excessive. The estimate by all accounts appears to
be reasonable. It does not also appear from the judgments of both the
D courts below that it was ever suggested by any party before them that the
*
said estimate was either excessive or unreasonable. Nor is it argued even
before us that it was excessive. Hence, when the appellant accepted the
said estimate and sanctioned the demolition of the old building and the
reconstruction of the new one for the s.aid amount, it cannot be said that
he was not acting bona fide. In this connection, it must further be remem-
E bered that the appellant came on the scene for the first time on 5.1.1989 ,,J..
after his predecessor had already obtained sanction for replacing the
tiled-roof by R.C.C. slab and for other expenditure, and after he had
invited the quotations from the architects concerned. The appellant is a
senior District Judge and had assumed the charge in his oflicial capacity
F as such Judge. There is no whisper against his integrity in the discharge of
his duties as Judge and in fact as it transpires, this was his last posting
before he retired in 1991. -l

13. However, both the courts below have held two factors as going
against his conduct. The first is that he had not obtained the permission of
G the Court for demolition of the old building and construction of a new one
in its place before he ordered the same, and the second is that he had
sanctioned the proposal with haste. There is no doubt that, as the facts ~
disclose, the earlier sanction granted by the Court by its order of 3.5.1988
was only for replacement of the tiled-roof by R.C.C. slab .and for other
H minor provisions. The sanction was not for demolition of the entire building
OFFICIAL TRUSTEE v. UDAVUMKARANKAL [SAWANT, J.] 389
and for construction of a new one. However, the record shows that out of A
~ the three architects who responded to the invitation of the predecessor of
the appellant for replacement of the tiled-roof by the R.C.C. slab,_ one
architect did not even care to visit the site and examine whether the old
structure could bear the weight of the R.C.C. slab. As regards the second
architect, he did not refer to the fact whether the old structure was capable
B
of bearing the weight of the R.C.C. slab. He merely stated that he had
inspected the premises and then proceeded to indicate his charges for
preparing the plan etc. It may, however, be presumed that since he had not
referred to the condition of the building, he was of the opinion that the old
building could bear the weight of the R.C.C. slab. It is only the third
architect, viz., Shri Gopinatha Rao who stated that it was worth demolish- c
ing the old building and constructing a new one in its place as per the
Development Control Rules of the· Madras Municipal Corporation. This
·was the state of affairs on the files of the Official Trustee when the
appellant took charge. In the circumstances, there was nothing unnatural
on the part of the appellant to have specifically addressed a letter to one D
more architect, viz., Shri Sait pointing out to him, as he did, that it was
I proposed to convert the existing tiled-roof into RCC-roof, and requesting
him to inspect the premises and submit a report specifically on the point
I
I. as to whether the existing building could withstand the conversion or
whether it had to be demolished and a new building constructed in its
place, as suggested by Shri Gopinatha Rao. In fact, in view of the said state E
of affairs on record, anyone in his place acting as a responsible and a
reasonable man would have done so. Since Shri Sait, the new architect gave
his report after inspecting the premises that no matter however much
improvement was carried out in the building, the net result would be
neither appreciable nor would it yield maximum returns for the investments F
made as the existing building was very old and in a dilapidated condition,
there was further nothing wrong if the appellant accepted the said report
and proceeded to take immEdiate steps in the interest of the trust estate.
The courts below have no doubt made much of the fact that there was no
other evidence except the report of Shri Sail to show that the building had
become "very old" and was in a "dilapidated condition". That was certainly G
not the fault of the appellant. As stated above, out of the three earlier
architects, one had not even inspected the site, the second did not refer to
the state of the building in his quotations and the third had very much
suggested the demolition of the old building and construction of a new one.
H
390 SUPREME COURT REPORTS (1993] 1 S.C.R.
A It is true that the third architect while suggesting the demolition of the old
and construction of a new one, did not say as to why he was making such
a recommendation, viz., whether the building had become old and
dilapidated and, therefore, was unable to bear the burden of the R.C.C.
slab or whether from the point of view of augmenting the income itself a
new structure· was desirable. But that is the precise reason why it became
B necessary for the appellant to make a reference on the point to the fourth
architect, who in terms stated so. If, according to the courts below there
was no evidence except Shri Sait's report that the building had become old
and dilapidated, there was equally no evidence to show that it was not
dilapidated or was strong enough to bear the burden of the R.C.C. slab.
C The courts further forgot to take into consideration the fact that the
building was in existence at least from 1912 if not from an earlier date,
since the order of the Court creating the trust schemes refers to the said
building. The courts below have also unfortunately not brought on record
which it was possible for them to do, as to when the said building was in
D fact originally constructed. The building was thus at least 76 years old, if
not more, in 1988. In the circumstances, it is difficult to doubt the bona
fides of the recommendations made by one of the three earlier architects,
viz., Shri C.H. Gopinatha Rao or by the new architect, Shri Sait. In any
case, the bona fides of the appellant who acted on the said facts oti record
could hardly be questioned.
E
14. The findings of the courts below which undoubtedly impeach the
bona fides of the appellant are, as stated earlier, also influenced by the fact
that the appellant had acted hastily in ordering the demolition of the old
building and construction of the new one.on the site. But, if for the reasons
F pointed out earlier, the bona fides of the appellant could not be doubted,
the rapid steps taken by the appellant can only be consistent with his
intention to act as early as possible in the interest of the trust, since by the
new construction, the income of the trust was expected to be augmented.
Further, the delay in construction was also likely to increase the cost of
construction, apart from the loss of income that was to resulr from such
G delay. Hence, the so-called haste cannot be looked upon only with
suspicion or as contributing only to the ma/a fide intentions on the part of
the appellant. It is also consistent both with a diligent and responsible
conduct on his part and with the best of his intentions to subserve the
interests of the trust.
H
OFFICIAL TRUSTEE v. UDAVUMKARANKAL (SAWANT, J.] 391
15. There is no doubt that the appellant knew that the earlier A
sanction obtained was only for replacement of the tiled-roof by the R.C.C.
slab. The sanction was also for incurring only an expenditure of Rs. 6 lakhs
and some other sundry expenses for providing minor facilities. Since the
new proposal which he sanctioned consisted of the demolition of the entire
building and of constructing a new one in its place which also involved a B
further expenditure of, Rs. 4 lakhs or so, the proposal was completely
different and it could not be acted upon on the basis of the old sanction.
It was, therefore, absolutely necessary for the appellant to approach the
Court before he embarked upon on the new proposa~ even though in doing
so he was acting in the interests of the trust and no ma/a fides could be
attributed to him. We find that this is the only error committed by the C
appellant in the present case. However, in the facts and circumstances of
the case, the error could not be said to have been actuated by any ma/a
fide intentions on his part. The expenses that he had undertaken to incur
were also within reasonable bounds looking at the proposal. His intention
in promoting the proposal could not be said to be other than· honourable, D
and in any case it could not be said that it was not in the interests of the
trust. In view of this, it was wrong on the part of the courts below to make
the appellant himself pay for the excess expenditure involved in the
proposal.

"' 16. Under Section 2(2) of the Indian Trusts Act, 1882, "breach of E
trust' for which alone a trustee is liable is defined as "a breach of any duty
imposed on the trustee, as such, by any law for the time being in force."
Section 28(b) of the Official Trustees Act, 1913 states that :

"28. General Powers of administration. - The Official
Trustee may in addition to and not in derogation of any F
other powers of expenditure lawfully exercisable by him,
incur expenditure-

(a] ...........................................................................................
G
[b] with the sanction of the High Court on such religious,
charitable and other objects and on such improvements
as may be reasonable and proper in the case of such
property".

It is, therefore, true, as stated earlier, that to the extent that the H
392 SUPREME COURT REPORTS (1993) 1 S.C.R.

A appellant did not take permission of the High Court before proceeding to
demolish the existing structure and to construct a new one in its place, and ,.._
before undertaking the expenditure of Rs. 4 lakhs over and above that
sanctioned earlier, he did commit a breach of trust. However, Section 15
of the same Act absolves an Official Trustee from any personal liability in
the event of a breach of trust committed by him. The said section reads as
B
follows:

"15. Lability or Government. ( 1) The Government shall
be liable to make good all sums required to discharge any ~
liability which the Official Trustee, if he were a private
c trustee, would be personally liable to discharge, except
when the liability is one to which neither the Official
Trustee nor any of his officers has in any way contributed
or which neither he nor any of his officers could by the
exercise of reasonable diligence have averted and in either
of those cases the Official Trustee shall not, nor shall the k
D Government be subject to any liability.

(2) Nothing in sub-section (1) shall be deemed to render
the Government or any Official Trustee appointed under
this Act liable for anything done by or under the authority ,,...
E of any Official Trustee before the commencement of this
Act." .A

In view of these provisions, it is clear that the appellant could not be
made personally liable for the breach of trust committed by him. Although
it is disputed on behalf of respondent No. 3 that this point was urged before
F the Division Bench, it is stated on behalf of the appellant that the point
was very much canvassed before the Bench but was unfortunately not
noticed by it. Whatever the controversy, we are of the view that in view of
the clear provisions of the Act, the legal question cannot be ignored by us.
This is particularly so when no further evidence is necessary to answer it.
G
17. In the circwnstances, we are of the view that the impugned order
. of the High Court cannot be sustained. The appeal is accordingly allowed
and the decision of the High Court is set aside. In the facts and cir·
cumstances of the case, there will be no order as to costs.

G.N. Appeal allowed.