Original Owner Cannot Create Trust Over Property Already Sold; Separate Relief For Title Declaration Not Required: Madras High Court

"Admittedly, after divesting title over the immovable property, the original owner along with some other person cannot create a Trust over the same property, which was already sold by him." Madras High Court, in a significant ruling, held that an original owner of a property cannot create a valid trust over it after having completely divested their title through a prior sale.

A bench comprising Justice N. Sathish Kumar and Justice M. Jothiraman observed that once plaintiffs clearly establish their ownership through a chain of registered documents, they are not strictly required to seek a separate declaratory relief for title while suing to cancel subsequently fabricated trust and lease deeds.

The plaintiffs purchased the suit property in 1982, tracing their title back to a 1945 registered sale deed executed by the original owner, S. Gnanabhiran Naidu. The dispute arose when the defendants claimed title based on a Private Trust Deed allegedly executed by the same original owner in 1952, along with a subsequent 2007 supplemental deed and a 2010 lease deed. The plaintiffs filed a civil suit to declare these three documents null and void and sought an injunction, which the Trial Court partly decreed by only holding the documents as not binding on the plaintiffs, prompting appeals from both sides.

The primary question before the court was whether the plaintiffs were mandatorily required to seek a separate declaratory relief for title when challenging the validity of the defendants' subsequent deeds. The court was also called upon to determine whether an original owner could validly create a trust over a property years after having completely divested his ownership rights.

Title Validly Divested By Original Owner

The court noted that the property's original ownership by S. Gnanabhiran Naidu was undisputed, and his title was completely divested in 1945 when he sold the property to one Seethalakshmi. The judges observed that the plaintiffs had successfully traced a continuous chain of title through various registered sale deeds culminating in their own purchase in 1982. The bench firmly rejected the defendants' late attempt to dispute the 1945 sale deed during the trial, noting that no such objections were raised in their pleadings.

No Right To Create Subsequent Trust

Analyzing the defendants' claim based on a 1952 Private Trust Deed, the bench highlighted the legal impossibility of such an act. The court emphasised that once the original owner lost all rights over the property by selling it in 1945, it could not be inferred by any stretch of imagination that he could later create a valid trust over the exact same property.

"Admittedly, after divesting title over the immovable property, the original owner along with some other person cannot create a Trust over the same property, which was already sold by him."

Separate Declaration Of Title Not Mandatory

The defendants had fiercely argued, relying on the Supreme Court's decision in Anathula Sudhakar Vs. P. Buchi Reddy, that the suit was not maintainable without a specific prayer seeking a declaration of title. The High Court rejected this contention, ruling that the proposition laid down by the apex court depends on the unique facts and pleadings of each case and cannot be applied automatically. The bench clarified that since the plaintiffs had already proved their title beyond doubt through registered conveyances, the necessity for a separate declaratory relief did not arise.

"Once title has been clearly established by the plaintiffs by way of registered documents, the necessity to seek for separate relief for declaration of their right over the suit property does not arise."

No Legal Right Conferred By Fabricated Deeds

The court further held that any trust deed executed subsequently over property standing in the name of a third party confers absolutely no legal rights on the beneficiaries. Noting that the 1952 Trust Deed, the 2007 Supplemental Deed, and the 2010 Lease Deed were seemingly created for unjust enrichment, the bench declared them void and unenforceable. The judges pointed out that leaving such documents uncancelled could lead to successive encumbrances on the plaintiffs' rightful property.

Suit Not Barred By Limitation

Addressing the issue of limitation under Article 59 of the Limitation Act, the bench observed that the three-year period to cancel an instrument begins when the facts entitling the plaintiff to seek such cancellation first become known to them. Since the plaintiffs immediately approached the court in 2010 upon discovering the fraudulent lease deed and the consequent forgery, the court ruled that the suit was filed squarely within the permitted limitation period.

Ultimately, the High Court partly allowed the plaintiffs' appeal and dismissed the defendants' appeal in its entirety. The bench modified the Trial Court's decree, specifically declaring the three disputed documents as void and granting a permanent injunction restraining the defendants from alienating or creating any encumbrance on the property based on the fabricated records.

Date of Decision: 29 June 2026