Concept of ‘holding in trust’ cannot pass from one person to another

Supreme Court of Democratic Republic of Sri Lanka: A Bench comprising of S. Eva Wanasundera PCJ, H.N.J. Perera and Murdu Fernando, JJ., set aside the judgment of the lower courts, and granted the relief sought by the plaintiffs in the present case.

The pertinent facts of the case are that the defendant had come into the ownership of two small allotments of land by means of a title deed, which was duly attested by the notary public. She had transferred the same to a third party named Premlatha for a purchase price of Rs. 500,000, as stated by the notary public. Premlatha, by means of another deed, transferred the said property to the plaintiff. On the very same day on which this transfer took place, the plaintiff entered into a lease agreement in favour of the defendant, which was for a period of two years and the lease amount was Rs. 12000 per year, which the defendant agreed to pay in installments of Rs. 500 every month. After the expiry of the lease period, the defendant had refused to move out, as a result of which the plaintiffs filed an action for ejection against the defendant. In the trial, the defendant had presented evidence, but had not been present for cross examination. In spite of the same, the district court had reserved the case for judgment, and further dismissed the plaint but did not grant the relief prayed for by the defendant. The High Court had upheld the decision of the District Judge. The contention of the defendant was that the transfer of the property to Premlatha was in the nature of a transaction of security, for which the defendant was paying interest, and as she had failed to ‘pay the loan’, she was unable to get the property retransferred to herself. The transaction between the defendant and Premlatha was in the nature of a trust, as the defendant never intended to pass the title of the property. The defendant was a witness to the deed which was signed between Premlatha and the plaintiff, and thus it is evident that there was no intention on the part of the defendant to retain her status as owner of the property, as the deed was for the sale of the property, for a consideration of Rs. 6 lakhs. The contention that the plaintiff was holding the property in trust for the defendant was also rejected by the court, which stated that ‘holding in trust’ is a concept which cannot pass or be transferred from one person to another.

The court placed reliance on the case of Dr. Rasiah Jeyarajah v. Yogambihai Thambirajahnee-Renganathan Pillei, 2015 SCC OnLine SL SC 8, to state that the plaintiff was entitled to evict the defendants from the property upon the conclusion of the lease agreement, and that there was no need to prove title over the premises. The plaintiff was not obligated under law to provide notice of termination of lease and license, contrary to what was held by the High Court.

Accordingly the appeal was allowed with costs and the judgment of the District Court and the Civil Appellate High Court set aside. [Hallewa Mangalika Jayasinghe v. Udeni Bandara Jayasinghe, SC Appeal 183/2016, order dated 28.09.2018]

Join the discussion

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.