P L D 1964 Supreme Court 220 (PLP)

B. Z. KAIKAUS, J..‑This is an appeal against the order of a learned Single Judge of the High Court of West Pakistan, Karachi Bench, dismissing objections filed by the appellant, the Hyderabad Rehabilitation Trust, against the attachment of the Ceramic Industries Factory, in execution of a decree obtained by respondent No. 1, the Standard Vacuum Oil Company, against the Hyderabad Relief and Rehabilitation Trust. The Hyderabad Relief and Rehabilitation Trust which has not been made a party to this appeal was created on the 15th September 1950 by a declaration signed by Mir Laik Ali and others, six persons in all, who declared themselves to be hence forth trustees of a sum of Rs. 10,00,000 for the relief and Rehabilitation of Hyderabadis who had been forced to leave Hyderabad. By clause 23 of this declaration power had been conferred upon the trustees to transfer the whole or part of the income or corpus of the Trust fund to any trust, charity or institution in Pakistan for the benefit of Hyderabadis. The Ceramic Industries Factory had been constructed by this Trust with the help of some funds received from another trust which existed for the welfare of Hyderabadis called the Hyderabad Imdadi Trust. On the 19th January 1955, there came into existence another trust called the Hyderabad Rehabilitation Trust which is the appellant in these proceedings (though Mir Laik Ali its Chairman is shown as the appellant) by means of a registered declaration signed by Mir Laik Ali and three others as trustees. The trustees stated in this declaration that in respect of a sum of Rs. 1,00,000 which they held they would henceforth be trustees for the relief of Hyderabadis. Three out of these four trustees were also trustees of the Hyderabad Relief and Rehabili tation Trust and Mir Laik Ali was the Chairman of the Boards of Trustees of both trusts. On the 18th January 1955, i.e., one day before the registration of the declaration of the Hyderabad Rehabilitation Trust, the Hyderabad Relief and Rehabilitation Trust had passed a resolution to the effect that the Ceramic Industries Factory be, after the registration of the declaration relating to the Hyderabad Rehabilitation Trust, gifted to that trust, and that Mir Laik Ali the Chairman of the Trust should hand over the possession of the property to the donee. The gift was subject to the condition that the donee would pay all the outstanding liabilities of the Ceramic Industries Factory including a short term advance of Rs. 3,00,000 from the Habib Bank Limited and a sum of Rs. 22,00,000 to be paid to the Hyderabad Imdadi Trust on account of their investment in the Ceramic Industries Factory. On the 17th January 1959, the Standard Vacuum Oil Company, hereinafter called the respondent, filed a money‑suit against the Hyderabad Relief and Rehabilitation Trust in the High Court of West Pakistan, Karachi Bench, and on the 19th January 1960, obtained a decree for Rs. 59,464‑3‑

0. On the 13th of May 1960, the respondent applied for execution of its decree by the attachment inter alia of the Ceramic Industries Factory. On the 16th September 1960, an application was submitted for sale of the attached property including the Ceramic Industries Factory. On the 16th March. 1961, the appellant submitted in, the High Court of West Pakistan the application out of which this appeal arises, under Order XXI, rule 58 and section 151 of the Civil Procedure Code, for removal of attach ment of the Ceramic Industries Factory. It was alleged in the application that the Ceramic Industries Factory had been gifted to the appellant and was in its possession and was not liable to attachment and sale. On behalf of the respondent it was contended before the learned Single Judge who heard the application that :‑ (i) the gift in favour of the appellant was invalid because‑ (a) the trustees under the Relief and Rehabilitation Trust had no power to make the gift ; and (b) the gift being of immovable property required registration under section 123 of the Transfer of Property Act ; and (ii) that the two Trusts were one and the same. The learned Single Judge who heard the case rejected the contention that the trustees had no power to make the gift relying upon clause 23 of the declaration of trust. He found force in the contention that no valid gift was possible without a registered deed on account of section 123 of the Transfer of Property Act. In the resolution of the Hyderabad Relief and Rehabilitation Trust which directed the making of a gift it had been stated that the gift was to be made under Muslim Law and the trustees who made the gift were all of them Muslims. If the gift was in fact made under Muslim Law it would be saved from the operation of section 123 of the Transfer of Property Act because section 129 of that Act provided that section 123 would not affect any rule of Muslim Law which may be applicable. Under Muslim Law a gift could be made without any registration by an oral declaration, acceptance, and delivery of possession. The learned Single Judge acted on the assumption that if the donor was a Muslim, the gift would be governed by Muslim Law, but he rejected the applicability of Muslim Law on the ground that the trustees were Muslims by chance and may well have been non --Muslims. As regards the contention that the two trusts were one the learned Single Judge was of the opinion that in reality the two trusts were one and the same but technically they were two and the facts which pointed to the oneness of the trusts could not destroy their separate technical existence. The decree‑holders could, therefore, in the opinion of the learned Single Judge, rely only upon the invalidity of the gift and could not take any advantage of the fact that two trusts were one and the same. On behalf of the appellant it was argued before the learned Single Judge that Order XXI, rule 58, contemplated an inquiry only an the question of possession and whether the gift was valid or invalid the possession of the Ceramic Industries Factory was with the appellant through its Managing Agents Saya and Company. The learned Single Judge rejected this contention on the ground that if the gift was invalid, the appellant should be deemed to be holding the property not in its own right, but for the benefit of the donor. We do not think the learned Judge reached a correct conclusion when he said that although the trustees of the Hyderabad Relief and Rehabilitation Trust were Muslims the rule of Muslim Law as to gifts was not applicable because the trustees were Muslims only by accident. A perusal of the declaration relating to this trust will show that it was created for the benefit of Muslims and that the trustees were Muslims no by accident but by careful design. According to the preamble of the declaration "many Hyderabadis had left or were leaving Hyderabad" and they were "in Pakistan and other places in the position of displaced persons". The Trust was created for such persons and it is clear the object was the relief and Rehabilitation of Muslims of Hyderabad who had to leave their homes on account of the Partition of India. There was no need to state that they were all Muslims for that would be obvious. The original trustees who made the declaration were all Muslims and they were stated in the declaration to be such. In accordance with clause 3 of the declaration, no trustee could be appointed to take the place of a trustee who had, on account of death or any other cause, ceased to act, unless he was a Muslim. The applicability of Muslim Law could not have been excluded on the ground that the trustees were Muslims by accident. This, however, does not conclude the matter. The learned Judge of the High Court had assumed that in case the donor was a Muslim the gift would be governed by Muslim Law. He did not refer to the enactment which made Muslim Law applicable. We find on a reference to the relevant enactments that the question of applicability of Muslim Law to the transaction in dispute is not a simple one. In Sind, the area with which we are here concerned, there was no provincial enactment which specifically made Muslim Law applicable to Muslims. Sind was originally a part of Bombay and with respect to the mofussil of Bombay the relevant provision was contained in section 26 of Regulation IV of 1827 according to which in the absence of statutes the law "to be observed in the trial of suits" was the "law of the defendant". It will be difficult to apply Muslim Law by virtue of the words "law of the defendant" to all cases of gifts and in any case the Hyderabad Relief and Rehabilitation Trust was not a defendant in the proceedings which give rise to this appeal. The only provision, therefore, which could be invoked for the application of Muslim Law was the Central Shariat Act, 1937, section 2 of which runs: "

2. Notwithstanding any custom or usage to the contrary, in all questions (save questions relating to agricultural land) regarding intestate succession, special property of females, including personal property inherited or obtained under contract or gift or any other provision of Personal Law, marriage, dissolution of marriage, including talaq, ila, zihar, lian, khula and mubaraat, maintenance, dower, guardianship, gifts, trusts and trust properties, and wakfs (other than charities and charitable institutions and charitable and religious endowments) the rule of decision in cases where the parties are Muslims shall be the Muslim Personal Law (Shariat)" It will be observed that this section excludes from the operation of Muslim‑Law "charitable endowments" other than those which fall within the description of waqf and that it mentions gifts as well as trusts It has not been contended that this is a case of waqf. The gift in dispute was in substance a charitable endowment. The property which was the subject‑matter of the gift was being dedicated for a charitable purpose. Every dedication for a charitable purpose is a gift to charity or to the institution to which property is transferred for a charitable purpose. Gift is nothing more than the act of giving and such an act is involved in every dedication. Both gifts and charitable endowments are mentioned in section 2 of the Shariat Act and presumably a gift does not include a charitable endowment. To the transaction in dispute therefore prima facie Muslim Law of gifts would not be applicable. Trusts too are governed by Muslim Law and as private trusts are governed by the Trust Act, "trusts" in section 2 may refer to public trusts. But then the question would be whether the Muslim Law relating to trusts provides for the creation of a public trust by an oral declaration. At the same time if the transfer in dispute is not a gift within the meaning of section 2 of the Shariat Act, it may not be a gift within the meaning of section 123 of the Transfer of Property Act and in that case the transaction would not stand in need of a registered deed. The Transfer of Property Act does appear to be applicable even to transfers for religious or charitable purposes for section 18 excepts such transfers from the operation of some only of the sections which apply to transfers generally. Also a living person (a transfer within the meaning of the Transfer of Property Act is a transfer from one living person to another) after the amendment of 1929 includes a body of individuals etc. In the view that we take of the scope of Order XXI, rule 58, C. P. C. not only is it unnecessary to decide the question whether there was a valid gift in favour of the appellant, but it would be improper to do so. We have reached the conclusion, for reasons which we will presently state that the basis of decision in an inquiry under Order XXI, rule 58, is possession and we would by a decision on the question of title be prejudging the issue which will arise in a regular civil suit between the parties. We have just indicated the considerations which present themselves and we are not expressing any opinion on the matters that are relevant to the question of title only. We may add that as the present appeal arises out of proceedings under Order XXI, rule 58, every finding of fact recorded in this judgment is subject to the findings arrived at in a regular civil suit between the parties. We take up now the question as to the scope of the inquiry under Order XXI, rule

58. It will be proper, however, before proceeding with the discussion to refer to the amendment of Order XXI during the pendency of the proceedings before the learned Single Judge. On the 7th June 1962, by Ordinance XLIV of 1962 rules 58, 59 and 60 of Order XXI were amended so as to enable the executing Court to hear the objection to attachment as if it were a suit. The Court was to go into the question of title and the judgment though subject to appeal was not liable to be challenged in any separate suit. Arguments were concluded before the learned Single Judge in this case on the 30th January 1962, but orders were pronounced on the 2nd July 1962, that is, after the amendment had come into force. The learned Single Judge however took no notice of the amendment and decided the case as he would have decided it on the date when the arguments were concluded. By Act III of 1963 the amendment introduced by Ordinance XLI V of 1962 was repealed so that the original rules of Order XXI were restored. At the same time a provision was made that any order which had been passed by any Court during the time when the amendment was in force would not bar any suit for determination of any question of title. Now it could be argued that on the date on which the learned Single Judge decided the objection the new law was in force and he could go into the question of title, but if that was so then the order of the learned Single Judge would have to be set aside and the case would have to be remanded for an inquiry in accordance with the amended provision because admittedly the inquiry made by the learned Single Judge was under the original provision. However such a remand has now become meaningless for the amendment has been repealed and now again the enquiry has to be made in accordance with the original provisions. We have in view of these considerations come to the conclusion that the repealed amendment has altogether to be ignored and we have to decide this appeal on the basis that the proceedings should have been in accordance with the unamended provisions of the Civil Procedure Code. It would be convenient before proceeding further to reproduce rules 58, 59, 60 and 61 of Order XXI of the Civil Procedure Code. "58.‑(1) Where any claim is preferred to, or any objection is made to the attachment of, any property attached in execution of a decree on the ground that such property is not liable to such attachment, the Court shall proceed to investi gate the claim or objection with the like power as regards the examination of the claimant or objector, and in all other respects, as if he was a party to the suit: Provided that no such investigation shall be made where the Court considers that the claim or objection was designedly or unnecessarily delayed. (2) Where the property to which the claim or objection applies has been advertised for sale, the Court ordering the sale may postpone it pending the investigation of the claim or objection.

59. The claimant or objector must adduce evidence to show that at the date of the attachment he had some interest in, or was possessed of, the property attached.

60. Where upon the said investigation the Court is satisfied that for the reason stated in the claim or objection such property was not, when attached, in the possession of the judgment‑debtor or of some person in trust for him, or in the occupancy of a tenant or other person paying rent to him, or that, being in the possession of the judgment‑debtor at such time, it was so in his possession, not on his own account or as his own property, but on account of or in trust for some other person, or partly on his own account and partly on account of some other person the Court shall make an order releasing the property, wholly or to such extent as it thinks fit, from attachment.

61. Where the Court is satisfied that the property was, a1 the time it was attached, in the possession of the judgment- debtor as his own property and not on account of any other person, or was in the possession of some other person in trust for him, or in the occupancy of a tenant or other person paying rent to him, the Court shall disallow the claim," It will be observed that although under rule 58 the ground of objection is that the property is not liable to attachment, the evidence which is to be adduced by the claimant or the objector relates to his interest in or possession of the property attached. Under rule 60 if the Court comes to the conclusion that when the property was attached it was not in the independent possession of the judgment‑debtor, actual or constructive, the property is to be released. On the other hand if the Court is satisfied as stated in rule 61 that the property was in the possession of the judgment -debtor as his own property or in the possession of some person in trust for him or m the occupancy of a tenant or other person paying rent to him the claim is to be disallowed. There can be little doubt on a perusal of these provisions that the only inquiry that affects the decision is the enquiry for ascertainment of possession. Title may have a bearing on the question of posses sion and for that purpose may be relevant, but an inquiry into, title as such is‑ of no avail. The learned Single Judge found that possession of the attached property had been delivered to the appellant and that the appellant was in constructive possession of it through its managing agents Saya & Co. The only reason why on this point the learned Single Judge decided against the appellant was that he found the appellant to be holding the property in trust for the judgment‑debtor. The learned Single Judge has not cited any principle of law or any precedent in support of his conclusion that if a transaction remains ineffective for want of a registered deed the possession which the transferee has acquired in pursuance of the transfer is possession on behalf of the transferor and in trust for him. When there is an invalid transfer in favour of a person and he holds possession of the property transferred as transferee, his possession is in his own right and adverse to the transferor. If he continues in possession of immovable property for more than twelve years he will acquire an indefeasible title. Of course it is open to a transferee if he finds the transaction in his favour to be invalid not to treat the property as his own, but that will be where he accepts the invalidity of the transfer and hence forth proposes to hold the property on behalf of the transferor. If it be his claim that he holds it by virtue of a transfer which he regards as valid he is obviously holding in his own right and no on behalf of the transferor or in trust for him. A large number of cases could be cited wherein it was held that an unregistered deed though it could not effect a valid transfer could be looked as to ascertain the nature of possession of the transferee. In al these cases it is the. transferee who relied on this proposition and who put forward the deed as evidence of the fact that his possession was in assertion of the title which the unregistered deed purported to convey and it has always been held, in the absence of some rebutting circumstance, that a person in possession under an invalid deed which he claimed as valid held in his own right and his possession was adverse to the true owner. We bold, therefore, that the possession of the appellant was not on behalf of the judgment‑debtor. Another point that has been argued by the respondents in this connection is that the two trusts are one. The learned Single Judge found that the two trusts were in reality one, but that technically they were different and that the decree‑holder could not take any advantage of the fact that they were truly one. The view taken by the learned Single Judge as to the respondents being unable to avail themselves of the true position on account of the technical position has been challenged by learned counsel for the respondents. On a reference to the record however we are unable to agree with the learned Single Judge that in reality the two trusts are one. The reasons for the finding of learned Judge appear in the following extract from his judgment: "Technically speaking the capacities of Mir Laik Ali with reference to two trusts are different, but the background of the source of funds, the interchange-ability of funds, the jointness of the management through the preparation of common balance‑sheets and the free gift from one trust to another, leave no doubt that, in reality, two trusts are one and the same." The record does not support the observation that the funds were interchangeable or the balance‑sheet was joint. Learned counsel for the respondents was unable to refer to any fact pointing to the conclusion that the funds were inter changeable. The balance‑sheets of the two trusts are no doubt contained in a single document, but they are separate balance sheets and there is no intermingling of the assets or liabilities of one fund with the other. There is at the same time no material supporting the conclusion that there is a common source for the two funds, but assuming that the source was common that would hardly be a ground for holding that there is only one trust. A free gift by one trust to the other also cannot be a basis for the conclusion that two trusts are one, but as a matter of fact though the gift was free in the sense that there was no obligation to make it, it has not the same significance as a pure and simple gift because it was burdened with the obligation to pay a sum of more than twenty‑five lacs of rupees. It is also a question whether in the face of acceptance of two separate juristic persons the argument that they are one is open at all. If either the two trusts or the trustees as a board in the case of each trust, are to be regarded as juristic persons, the argument that they are one is only as plausible as the argument that two living persons are one. Of course, it is always possible to argue that one of the two is a ficticious person and that there was no intention to create a new juristic person, but that is not the plea which has been taken before us. That would be a plea of fraud. It was urged before us that the trustees of the Hyderabad Trust were not authorised to grant themselves the power of making gifts of property as they purported to do by clause 23 of their declaration. It has already been stated that clause 23 granted to the trustees power to transfer property belonging to the trust to any trust, charity or institution for the benefit of Hyderabadis. Learned counsel for the respondents contended before us that the trustees were not owners of the sum of Rs. 10,00,000 in respect of which they made a declaration of trust and that they had exceeded their authority in granting a free power to themselves to alienate the property in terms of clause

23. Learned counsel had to accept that on the record there was no material to support his contention that the trustees had not the power with respect to the money in their hands which they purported to exercise. The only argument which he put forward in support of his contention was that according to the declaration the trustees only "held" the sum of Rs. 10,00,000 and did not own it. The person in possession of property is presumed to be its owner as provided in section 110 of the Evidence Act and if the right of the trustees to deal with the sum of Rs. 10,00,000 is to be challenged it is for the party asserting a want of power to establish it. The plea should be taken not by the respondents, but by the person who in fact owned the money which was made the subject of trust. This objection is at the same time not within the scope of the present proceedings. The Hyderabad Relief and Rehabilitation Trust was in possession of the Ceramic Industries Factory. It made a gift of that property to the appellant and handed over possession of the factory to the appellant. The independent possession of the appellant is sufficient for proving a claim under Order XXI, rule 58 of the Civil Procedure Code. In view of the conclusion which we have reached as to the possession of the appellant and as to the scope of Order XXI, rule 58 this appeal should be allowed and the property in dispute released from attachment. In this judgment the two trusts have been referred to as if they were juristic persons. There is no intention to decide the question whether a trust is a juristic person. It can be argued that the property of a trust vests in the trustees though as a board. The reference to the trusts as juristic persons is for convenience only. This appeal is allowed. The order of the learned Single Judge is set aside and the property in dispute is released from attachment. The parties are, however, left to bear their own costs throughout. A. H. Appeal allowed.