FATIMA FAUZIA Vs. SYED UI MULK

JUDGEMENT

(1.) Pursuant to the order of the Supreme Court dated 14 -9-1978 in Civil Appeals Nos. 1105, 1245 and 1269 of 1978 on its file, C. M. A. No. 147 of 1978 is restored to the file of this Court and had come up before us for deciding afresh the principal issue i.e. whether or not there has been a valid and concluded contract of sale between H.E.H. the Nizam Jewellery Trust on the one hand and the respondents 7 to 17, the various tenderers, on the other hand.

(2.) We may briefly state the material facts, which lie in a narrow compass and gave rise to the submission of our finding to the Supreme Court. The late H. E. H. the Nizam of Hyderabad, Nawab Mir Sir Osman Ali Khan Bahadur had executed a trust deed on 29/03/1951 true copy of which is Ext. A-1, creating the trust called H- E. H, the Nizams Jewellery Trust (hereinafter referred to as the Trust) in respect of 107 items of valuable and rare Jewellery belonging to him, for the benefit of his (1) two sons (i) Prince Azam Jah and (ii) Prince Muzzam Jah: (2) two grandsons (i) Prince Moukkarram Jah and (ii) Prince Muffakam Jah; (3) two grand daughters (i) Fatima Fouzia and (ii) Amina Narzia (4) daughter Shahazadi Begum and (i) his step brother Sahebzada Nawab Basalath Jah Bahadur and other sons and daughters. Clause 13 of the trust deed requires the trustees to sell the jewellery within a period of three years after !he death of Prince Azam Jah, who had in fact died in October. 1970. The jewellery is kept in the safe Vault of Mercantile Bank of India at Bombay as per the wish of the settlor, R. N. Malhotra (R. W. 2) the nominee of the Government of India, M. A. Abbas (R. W. 1), Prince Muffakam Jah Mr. Zaher Ahmed and Mr. Ataur Rahman are the trustees since 1977. The trustees submitted a memorial under Ex. B-l to the Prime Minister of India to acquire the rare and valuable pieces of jewellery as part of the collection of a public museum since they are articles of great historical and cultural value for a proper and reasonable price. The efforts of the trustees, which commenced in July, 1972 as noticed from the correspondence (Exs. B-l to B-38), did not fructify. In December, 1975 the jewellery was inspected by Vittaldas (R. W. 6) and also by a Committee of Valuers appointed by Government of India They submitted their valuation reports Exs. B-123 and B-70 respectively. The Government of India had informed the trustees through Ex. B-45 dated 13-3-78 that they are not interested in acquiring any of the jewellery having antique value. In January, 1978 Prince Muzzam Jah, the principal beneficiary had expressed through Ex. B-41, his concern about the delay in selling the jewels and wanted the trustees to expedite the sale. To the same effect is Ex .B-2 from some other beneficiaries. The Trustees consulted Gazdar (R. W 3) regarding the mode of sale and decided that the best method of sale would be to invite some reputed dealers in this country and from abroad for the intended sale. Then, R. W. 3 and the Secretary of the Trust addressed letters Exs. B-72 to B-100 to some reputed jewellers specified in Ex. B-46 informing them about the intended sale of the jewellery. Out of 107 items of jewellery mentioned in the first schedule of the trust, 37 items with which we are concerned were sought to be sold by the trustees after arranging them into different lots Exs. B-47 and B-48 are the printed brochures and Ex. B-50 is the printed list of the jewellery. The terms and conditions of sale were settled as per Ex. B-19 dated 3-3-1978. The intending purchasers were permitted to inspect the jewellery at the Bank on payment of security deposit of Rs. 30,000.00 and an inspection fee of Rs. 1,500.00 by each party. About 26 or 27 foreigners and 42 Indians who were permitted by R. W. 3, had inspected the jewellery on 6-3-78, 7-3-78 and 8-3-78 in the presence of some of the trustees and R. W. 3, as seen from Ex. B-134. In the course of inspection, the tenderers were informed to send their tenders, accompanied by drafts for 10 per cent, of the tender amount drawn on the State Bank of India. in sealed covers so as to reach the trustees on or before 4-00 p.m. on 9-3-78. R. W. 2, the Chairman of the trust was present on 8-3-78. He left Bombay on the 9th morning for New Delhi to attend the urgent official work, as he is Additional Secretary in the Ministry of Finance, Government or India. On 8-3-78 all the trustees had resolved at a meeting that the tenders received be examined and decided by the trustees present at the meeting an 9-3-1978, that in case they do not find satisfactory offer or offers in respect of any of the 37 items, they could reject the tendered offers and negotiate sale of any item with any party for higher price and that the delivery of articles sold be arranged on dates convenient to the trustees, preferably not later than 25-3-1978. On 9-3-1978, the four trustees who were present at Bombay bad opened the sealed tenders and accepted all the highest tenders except m respect of item 18 which was negotiated on the next day for a higher price of Rs. 6.92 crores, The tenderers had received letters of acceptance from the Secretary of the trust on 12-3-1978 requiring them to pay the balance of 90 per cent of the tender price on or before 23-3-78 and to take delivery of the items of jewellery purchased by them. However in respect of item 16, the date was advanced to 17-3-1978 at the request of respondent 7. The sale of the 31 items of jewellery fetched 14.43 crores. Ex. B-124 dated 14-3-1978 sent by the Secretary of the trust to R.W. 2 at New Delhi was actually seen by him on 23-3-78 and only thereafter he approved the action of the other trustees in accepting the highest tenders.

(3.) In the meanwhile, on 10-3-1978, the first appellant one of the beneficiaries and a granddaughter of the settlor, instituted in the Court of the Chief Judge, City Civil Court, Hyderabad in O. P. No. 141 of 1978 under S. 74 of the Indian Trusts Act (hereinafter referred to as the Act) for removal of the trustees alleging breach of trust, dereliction of statutory duty, negligence and mismanagement with particular reference to the manner in which the valuable jewels belonging to the trust were being brought to sale. She also filed I. A. No. 563/78 along with the said O. P. on 10/03/1978 for an injunction restraining the trustees from taking any further steps towards the finalisation or tenders for the Sale of the jewellery on the ground that the sale was collusive and clandestine and trustees were going to finalise the sale on 23-3-78. 11 th and 12/03/1978 being holidays for the Court, the application which came upon on Monday, 13th March, 1978 before re the Court was ultimately taken up on 14-3-78 and on the same day an interim injunction was granted by the Court restraining the trustees from taking any steps to finalise the sale of the jewellery. On coming to know of the institution of the O. P. and the granting of the interim injunction from the newspapers R W. 2 contacted the Secretary of the Trust on phone, who confirmed the news published in newspaper. R. W. 1 filed a counter on 16-3-1978 and opposed the application for injunction. Ultimately the trial Court Passed an order vacating the interim injunction, against which the present C. M. A. is filed by the first appellant. Pending disposal of the C. M. A. this Court ordered maintenance of status quo with regard to any further action relating to the sale of the jewellery. During the pendency of the C. M. A. respondent 6 filed an application on 11-4-1978 offering 20-25 crores for the aforesaid 37 items of jewellery. After inspecting the jewels, the 6th respondent con firmed his offer and deposited the amount and therefore he was permitted to intervene. On 12-6-1978 the first appellant was permitted to withdraw and her sister (P. W. 1) came on record as 2nd Appellant. Later the 6th respondents offer was accepted by a Division Bench of this Court, after setting aside the earlier sales. Aggrieved by the said decision, respondent 7 and other tenderers preferred appeals to the Supreme Court on the ground that all the tenderers were not parties to the proceedings and they are entitled to be heard before any order, affecting their rights, is passed by the Court. Hence the present order of the Supreme Court directing the submission of a fresh finding on the said issue, after affording an opportunity to all the parties.