Section 48 Indian Trusts Act Unanimity Rule Doesn't Override Society By-Laws Allowing Majority-Backed Decisions: Supreme Court

 “Section 48 of the Trusts Act could not have been applied as though it imposed an overriding requirement that all trustees must act in consonance and that absence of joinder by even one trustee would defeat the decision.” Supreme Court, in a significant ruling dated May 26, 2026, held that the requirement of unanimity among co-trustees under Section 48 of the Indian Trusts Act is subject to the governing instrument of the trust or society.

A bench of Justice Vikram Nath and Justice Sandeep Mehta observed that when a society’s by-laws expressly permit delegation or decisions by a majority of trustees, such provisions must prevail over the default statutory rule of "acting in consonance." The Court set aside a Calcutta High Court order that had nullified majority-backed decisions on the ground of a lack of unanimity.

The appeals arose from a dispute regarding the exercise of voting rights attached to shares held by three societies—Hindustan Medical Institution, Eastern India Educational Institution, and Belle Vue Clinic—in Birla Corporation Limited (BCL). Disputes emerged within the societies' internal governance, leading to rival claims over who was authorized to cast votes at BCL’s Annual General Meetings. The Calcutta High Court had issued an interim order holding that trustees must act unanimously and that the "first cast vote" would prevail regardless of the source of authority, leading the societies to approach the Apex Court.

The primary question before the Court was whether Section 48 of the Indian Trusts Act imposes an absolute requirement of unanimity that overrides specific society by-laws permitting majority-backed decisions. The Court was also called upon to determine if the "first cast vote" rule in electronic voting under the Companies Act, 2013 can substitute for lawful authority.

By-Laws Must Be Construed To Give Effect To Every Provision Without Redundancy

The Court emphasized the settled principle of interpretation that a provision must be read in the context of the entire scheme to which it belongs. Relying on Reserve Bank of India v. Peerless General Finance and Investment Co. Ltd., the bench noted that interpretation depends upon both text and context. The Court analyzed Clause 24 of the societies’ by-laws, which specifically allows for delegation through resolutions evidenced in writing under the hands of the "majority of the trustees."

Majority-Backed Decisions Are Valid If Permitted By The Governing Instrument

The bench observed that the structure of the societies' by-laws was deliberate and complete, conferring legal efficacy to majority acts. Referring to J.K. Cotton Spinning & Weaving Mills Co. Ltd. v. State of U.P., the Court held that a construction reducing express language to redundancy is not permissible. It concluded that a resolution supported by a majority of trustees cannot be disregarded merely because all trustees did not concur, as the by-laws themselves provided for a "deeming effect" for such majority decisions.

Section 48 Of The Trusts Act Is Not An Absolute Mandate For Unanimity

Addressing the High Court’s reliance on Section 48 of the Indian Trusts Act, the Supreme Court clarified that the provision itself contains an inherent exception. The bench noted that Section 48 requires all trustees to join in the execution of the trust "except where the instrument of trust otherwise provides." The Court held that since the by-laws of the societies specifically allowed for majority action, the High Court erred in lifting the general rule of Section 48 to nullify the express exception created by the governing documents.

“Once that position emerges from the governing instrument itself, Section 48 of the Trusts Act could not have been applied by the Division Bench as though it imposed an overriding requirement that all trustees must act in consonance.”

The Principle Of Unanimity In Janakirama Iyer Subject To The Trust Instrument

The Court noted that while the precedent in L. Janakirama Iyer v. Nilakanta Iyer explains the general principle of Section 48, it cannot be read divorced from the statutory language. The bench held that any precedent explaining Section 48 must be read subject to the qualification that the trust instrument can provide otherwise. The error in the impugned judgment lay in applying the general rule of "consonance" without giving due effect to the societies’ own specific governing framework.

Statutory Framework For E-Voting Prioritizes Lawful Authority Over Chronology

The Court further addressed the High Court’s direction that the "vote cast first" by a society should prevail irrespective of who cast it. Analyzing Section 108 of the Companies Act, 2013 and Rule 20 of the 2014 Rules, the bench held that the law protects the first "valid" vote against duplication, but it does not validate an unauthorized act simply because it was performed first. The Court observed that the statutory scheme contemplates a fair scrutiny of authority, not a race between rival claimants.

“The impugned caveat, therefore, substitutes chronology for authority. A vote cast first but without lawful authority cannot become valid merely by reason of priority in time.”

Internal Hierarchy Of Societies Must Be Respected In Determining Voting Rights

The Court observed that the constitutive documents of the societies established a two-tier structure where the Board of Trustees is the source body and the Managing Committee is a subordinate body of delegated administration. Since the shares vest in the trustees, the authority to vote must be traced to them unless there is a demonstrable delegation in favor of the Managing Committee. The Court held that the High Court’s approach of treating both bodies as interchangeable for voting purposes was inconsistent with the societies' governing framework.

The Supreme Court allowed the appeals and set aside the High Court’s directions. It held that majority-backed decisions are valid under the societies' by-laws and that the validity of a vote must rest upon lawful authority traceable to governing documents rather than simple priority in time. The Court restored the suits to the High Court for fresh consideration of factual disputes in light of these legal observations.

Date of Decision: May 26, 2026