Full Text
CIVIL APPELLATE JURISDICTION
WRIT PETITION NO. 2505 OF 2023
Vijay Narayan Sawant, Trustee/Member
Society of Servants of God
Address – 1/59, Botavala Building, New Prabhadevi Road, Mumbai – 400 025.
..Petitioner
Acting through the office of the
Government Pleader (Writ Cell), Mumbai.
2. Joint Charity Commissioner
Greater Mumbai Region, Sasmira, Worli, Mumbai.
3. Lal Ghanshani
Flat No.1, Prem Kutir, 9A, Sadhu Vaswani Road, Pune – 411 101.
4. Vineet V. Samtani
122, Delmar Towers I,
5. Shivshankar G. Kher, 33, Rajgurav Colony, Telegaon Dabhade, Talegaon Station, Taluka – Maval, District – Pune.
6. Shireen Sethna, Residing at Keivcote, Club Road, Coonoor, Tamil Nadu.
…Respondents
Shireen Sethna, Residing at Keivcote, Club Road, Coonoor, Tamil Nadu. ..Petitioner
Acting through the office of the
Government Pleader (Writ Cell), Mumbai.
2. Joint Charity Commissioner
Greater Mumbai Region, Sasmira, Worli, Mumbai.
3. Lal Ghanshani
Flat No.1, Prem Kutir, Sadhu Vaswani Road, Pune – 411 101.
4. Vineet V. Samtani
122, Delmar Towers I,
5. Shivshankar G. Kher, 33, Rajgurav Colony, Telegaon Dabhade, Talegaon Station, Taluka – Maval, District – Pune.
…Respondents
Mr. Rishabh Shah, with Suyash Gadre and Madhav Paranjape, for the
Petitioners in WP/2505/2023.
Adv Shivani Bansal, i/b R.S. Associate, for Petitioner in WP(ST) NO. 7575 of 2024 and for Respondent No. 6 in WP/2505/2023.
Mr. Aseem Naphade, with Sanket Mangale, i/b Kartik Vig, for
Respondent No.3 & Applicant in IA/1442/2025.
Mr. B.B. Dahiphale, AGP
, for the Respondent-State.
Mr. Abhijit Adagule (through VC) with S.S. Patwardhan & A.V.
Hardas, for Respondent No. 7.
JUDGMENT
1. Rule. Rule made returnable forthwith, and, with the consent of the learned Counsel for the parties, heard finally.
2. By these Petitions under Article 227 of the Constitution of India, the Petitioners take exception to a judgment and order dated 28th October 2022 passed by the learned Joint Charity Commissioner, Mumbai, whereby an Application, being Application No. 77 of 2021, preferred by the Respondent Nos. 3 to 5, seeking the permission of the Charity Commissioner under Section 36(1) of the Maharashtra Public Trusts Act 1950 (“Trust Act 1950”) for sale of the property admeasuring 50000 sq ft equivalent to 4645.11 sq mtrs, bearing old Survey No. 703, new Survey No. 479, situated Village Talegaon, Tal Haveli, District Pune (“the Trust property”), came to be allowed and permission was accorded to the Respondent Nos.[3] to 5, to alienate the Trust property on ‘as is where is basis’ in favour of the M/s Uttam Associates (R[7]), for a consideration of Rs.10 Crores, subject to certain conditions.
3. Background facts can be stated in brief as under: 3.[1] The Petitioner in Writ Petition No. 2505 of 2023 claims to be a member of the managing committee/trustee of the Society of Servants of God (“the Trust”), registered under the Trust Act 1950, vide registration No. F-454, Mumbai. The Trust was established by late Dr. Dinshaw K. Mehta. Mrs. Shireen Sethna, the Petitioner in Writ Petition (Stamp) NO. 7575 of 2024, is the daughter of late Dr. Dinshaw Mehta. 3.[2] The Trust is governed by the Rules and Regulations (Exhibit “A” to the Petition). Principal object of the Trust is to serve the public at large and the membership of the Trust is open to anyone who leads and aspires to lead a “God Guided way of Life”. 3.[3] Dr Mehta, the original Trustee and Settler, had purchased parcels of land bearing Survey Nos. 702, 703 and 730, admeasuring 63 acres in aggregate. The said land is recorded as the Trust property in the Schedule -I of the Trust. 3.[4] Respondent No.3 claims that the Respondent No.3 was the only surviving Trustee. In exercise of the power conferred by Clause 27 of the Rules and Regulations, the Respondent Nos. 4 and 5 came to be appointed as the Trustees of the Trust on 13th January 2021. A report filed by the Respondent No.3 to record the said change awaits adjudication. 3.[5] The Respondent Nos. 3 to 5 filed an Application under Section 36(1) (a) of the Trust Act asserting that under the Rules and Regulations of the Trust, the Trustees are empowered to deal with the Trust properties. To achieve the objects of the Trust, a number of charitable and philanthropic activities are required to be carried out. To carry out such activities, funds are required. In addition, for securing and preserving the Trust property which admeasures approximately 63 acres and to pay the regular outgoings for the staff, the Trust required funds. Therefore, the Trust decided to sell the subject property to raise the funds. 3.[6] A public notice inviting the bids was issued on 9th June 2021. Three offers were received. The Respondent No. 7 gave the highest offer of Rs.9.50 crores, with willingness to further enhance the bid if directed by the Competent Authority. Thus, the Respondent Nos. 3 to 5 sought permission to sell the subject property to Respondent No. 7. 3.[7] The Petitioners resisted the Application by filing intervention applications. 3.[8] By the impugned judgment and order, the learned Joint Charity Commissioner was persuaded to allow the Application opining, inter alia, that the alienation appeared to be necessary as there was an apprehension of acquisition of the subject property and the Trust properties by Talegaon Dabhade Municipal Council and encroachment over the subject property. The learned Joint Charity Commissioner noted that the Trust required funds to secure the Trust property. However, since a Suit in respect of the subject property was sub-judice before the Bombay High Court and Change Reports were also awaiting adjudication, though the Respondent Nos. 3 to 5 could execute the Sale Deed, yet, the consideration could not be allowed to be withdrawn or used in any form until the disposal of the said Suit and the Change Report. Resultantly, the Application came to be allowed subject to the condition that the Trustees shall invest the entire consideration amount in any nationalized bank or with approved government securities and nobody should be entitled to utilize the said consideration or interest thereon till the final disposal of the Suit No. 3151 of 1997 and the Change Report. 3.[9] Being aggrieved, the Petitioners have assailed the impugned order passed by the learned Joint Charity Commissioner.
4. Affidavits in Reply are filed on behalf of the Respondent No.3 and Respondent No. 7, followed by the Affidavits in Rejoinder on behalf of the Petitioners.
5. I have heard Mr. Rishabha Shah, the learned Counsel for the Petitioner, Ms. Shivani Bansal, the learned Counsel for the Petitioner in Writ Petition (Stamp) No. 7575 of 2024, Mr. Dahiphale, the learned AGP for the Respondent-State, Mr. Assem Naphade, the learned Counsel for Respondent No.3 and Mr. Abhijeet Adgule, the learned Counsel for the Respondent No. 7, in Writ Petition No. 2505 of 2023.
6. Mr. Shah, the learned Counsel for the Petitioner in Writ Petition No. 2505 of 2023, submitted that the impugned order suffers from manifest errors. The learned Joint Charity Commissioner did not properly appreciate the nature of the jurisdiction which the Charity Commissioner exercises under Section 36 of the Trust Act 1950. In the process, the learned Joint Charity Commissioner went on to grant permission for alienation of the subject property for the reasons which were not at all pleaded by Respondent Nos. 3 to 5.
7. Mr. Shah submitted that, in the Application seeking permission to alienate the subject property, the Applicants-Respondent Nos. 3 to 5 have not ascribed any specific reason which necessitated the sale of the subject property. Moreover, during the course of the evidence, Lal Ghansani (R-3 – A-1) sought to ascribe myriad reasons to justify the sale of the subject property, which were demonstrably unsustainable. Ignoring all these infirmities, the learned Joint Charity Commissioner permitted the alienation of the valuable Trust property by recording circuitous reasons.
8. Mr. Shah would further urge that, the very competence of Lal Ghansani (A[1]), in particular, and the Applicants, in general, to seek permission to alienate the Trust property was in serious controversy. The Applicants were not at all in the management of the affairs of the Trust. The Respondent No.3-Applicant No.1 had indulged in several criminal, fraudulent and illegal activities. In fact, the Applicant No.1 was removed from the post of the Secretary of the Trust with effect from 15th March 2019 and a Change Report to record the said change was filed. Therefore, the grant of permission for sale of the subject property to the Applicants was not at all in the benefit and interest of the Trust and was, on the contrary, prejudicial to the interest of the Trust.
9. The mere continuation of the name of the Applicant No.1 on the Schedule I of the Trust, long after the Applicant No.1 ceased to be a Trustee of the Trust, did not empower the Applicant No.1 to act as the Trustee of the Trust. To this end, Mr. Shah placed reliance on a judgment of this Court in the case of Muridhar S/o Janrao Kale & Ors Vs State of Maharashtra through Secretary, School Education Department & Ors[1]
10. Ms. Shivani Bansal, the learned Counsel for the Petitioner in Writ Petition (Stamp) No. 7575 of 2024, supplemented the submissions of Mr. Shah.
11. At the outset, Mr. Naphade, questioned the locus standi of the Petitioner. It was submitted the Petitioner in Writ Petition No. 2505 of 2023, being a complete stranger and a rank outsider, has no locus to challenge the impugned order, which has been passed to advance the objects of the Trust.
12. Suffice to note, in view of the Full Bench Judgment in the case of Sailesh Developers And Ors Vs Joint Charity Commissioner, Maharashtra the concept of locus standi in the matter of challenge to a final order granting sanction for alienation under Section 36 of the Trust Act 1950, stands considerably expanded and, thus, the aforesaid submission does not deserve much consideration.
13. Mr. Naphade next submitted that, in exercise of the writ jurisdiction, what has to be tested is the decision making process. In the case at hand, the Respondent Nos. 3 to 5 had followed the most transparent process to sell the asset of the Trust. A public notice was issued. The Trust obtained the valuation report in respect of the subject property. The managing committee considered the three offers received from the bidders. The managing committee, thereafter, resolved to 2 2007(3) Mh.L.J. 717. alienate the subject property to Respondent No. 7, who had given the highest offer.
14. Mr. Naphade canvassed a further submission that the learned Joint Charity Commissioner has also ascribed justifiable reasons which necessitated the alienation of the subject property. Thus the learned Joint Charity Commissioner was well within her rights in returning a finding that the alienation of the Trust property was necessary for achieving the objects of the Trusts. The learned Joint Charity Commissioner has provided several safeguards while granting permission for alienation of the subject property. Such discretionary order is not open for interference in exercise of writ jurisdiction, urged Mr. Naphade.
15. Before adverting to appreciate the rival submissions canvassed across the bar, it may be apposite to appreciate the nature of the power exercised by the Charity Commissioner under Section 36 of the Trust Act
1950. Evidently, sub-Section (1) of Section 36 begins with a nonobstante clause. Notwithstanding the conferment of the power on the Trustees to sell or otherwise alienate the Trust property, under Clauses (a) and (b) of sub-Section (1) of Section 36, no sale, exchange or gift of any immovable property or no lease beyond the stipulated term shall be valid without the previous sanction of the Charity Commissioner. The Charity Commissioner is empowered to accord sanction for such sale or alienation regard being had to the interest, benefit or protection of the Trust and subject to such conditions as the Charity Commissioner may deem fit to impose.
16. The power under Section 36(1) of the Trust Act 1950 is thus not unfettered or unbridled. The sanction for alienation is conditioned by the imperativeness to secure the interest, benefit or protection of the Trust. The fact that in addition to the non-obstante clause with which Sub-section (1) of Section 36 begins, clauses (a) and (b) which begin with the negative word “no”, underscore the peremptory nature of the sanction by the Charity Commissioner. To put in other words, the power to sanction the sale or alienation of the Trust property is neither unregulated nor uncanalized. On the contrary, the said power is to be exercised in the interest or for the benefit or protection of the Trust.
17. From the phraseology of Section 36(1) of the Trust Act 1950, it becomes evident that the Charity Commissioner when confronted with the question of grant of sanction for the sale of the trust property ought to embark upon a two-fold inquiry. First, whether it is necessary to sell or alienate the trust property? Second, how best the sale or alienation would be effected to sub-serve the interest of the trust and its beneficiaries? The Legislature has broadly indicated the touchstone on which these two questions are to be tested, namely, the interest of the trust or for the benefit or protection of the trust.
18. In the case of Mehrwan Homi Irani & Anr Vs Charity Commissioner, Mumbai[3] while remitting the matter of grant of sanction for the alienation of the trust property to the Charity Commissioner, the Supreme Court observed that the important point to be considered was, whether the Agreements entered between the Trust and the 5th Respondent therein, (for alienation in whose favour the sanction was accorded) are capable of carrying out the objects of the trust to provide a Sanatorium for convalescing and sick persons. The objects of the Trust should be accomplished in the best of its interests. Leasing out of a major portion of the land for other purposes may not be in the best interest of the Trust. The Charity Commissioner while granting the permission under Section 36 of the Bombay Public Trusts Act could have explored those possibilities.
19. In the case of Sailesh Developers (Supra), the Full Bench of this Court considered the following questions. “i) Whether the power vesting in the Charity Commissioner under Section 36 of the Bombay Public Trusts Act, 1950 is confined to grant or refusal of sanction to a particular sale transaction which the trustees propose to make or it extends to compelling trustees to sell or transfer the property to another party who participates in the proceedings under Section 36 and gives his offer?
ii) Whether the party who comes forward to submit his offer directly before the Charity Commissioner in a pending application under Section 36 of the said Act of 1950 has locus standi to challenge the order passed in a proceeding under Section 36?”
20. The Full Bench answered the aforesaid questions thus: “(i) The power vesting in the Charity Commissioner under Section 36 of the Bombay Public Trust Act 1950 is not confined merely to grant or refusal of sanction to a particular sale transaction in respect of which sanction is sought under Section 36 of the said Act. The power of the Charity Commissioner extends to inviting offers from the members of the public and directing the trustees to sell or transfer the trust property to a person whose bid or quotation is the best having regard to the interest, benefit or protection of the trust. Hence we declare that the decision of the Division Bench of this Court in the case of Jigna Construction Co. Mumbai v. State of Maharashtra and Ors. does not lay down correct law.
(ii) The party who comes forward and submits his offer directly before the Charity Commissioner and complies with other requirements as may be laid down by the Charity Commissioner in a pending application under Section 36 of the said Act of 1950 has a locus standi to challenge the final order passed in a proceeding under Section 36. However, the scope of the challenge will be limited as indicated in paragraph 29 above.”
21. While arriving at aforesaid answers, the Full Bench held that the enquiry contemplated under Section 36 of the Trust Act 1950 is a judicial enquiry. While exercising power either under Clause (b) or clause (c), the Charity Commissioner can impose conditions having regard to the interest, benefit or protection of the trust. Before passing an order of sanction or authorisation the Charity Commissioner has to be satisfied that the trust property is required to be alienated. Once the Charity Commissioner is satisfied that the alienation of the trust property is necessary in the interest of the trust or for the benefit of the trust or for the protection of the trust, it is very difficult to accept the submission that the power of the Charity Commissioner is restricted to either to grant sanction to a particular proposal of the trustees or to reject it. It is duty of the Charity Commissioner to ensure that the transaction of alienation is beneficial to the Trust and its beneficiaries. He has to ensure that the property is alienated to a purchaser or a buyer whose offer is the best in all respects. It is not necessary in every case that the Charity Commissioner has to ensure that property is sold by the trustees to the person offering the highest price or consideration. What is the best offer in the interest of the trust will again depend on facts and circumstances of each case.
22. The Full Bench further observed, while deciding which is best offer, the learned Charity Commissioner is bound to take into consideration various factors which cannot be exhaustively listed. However, the paramount consideration is the interest, benefit and protection of the trust. It is obvious from the scheme of Section 36 that the legislature never intended that trustees could sell or transfer the Trust property vesting in them, as if it was their personal property. It is the duty of the Charity Commissioner to ensure that the property should be alienated in such a manner that maximum benefits are accrued to the trust.
23. In the case of Cyrus Rustom Patel Vs Charity Commissioner, Maharashtra State & Ors,[4] the Supreme Court exposited the factors which ought to be kept in view while deciding an Application for grant of sanction under Section 36 of the Trust Act 1950. The observations in paragraph 26 are instructive and hence extracted below:
24. On the anvil of the aforesaid enunciation of law, reverting to the facts of the case at hand, it is imperative to first note the case with which the Respondent Nos. 3 to 5 approached the Charity Commissioner seeking permission for the sale of the subject property.
25. The averments in paragraphs 20 and 21 of the Application, whereupon Mr. Naphade laid emphasis, purportedly spell out the necessity of the sale of the subject property. They read as under:
26. I am afraid, the aforesaid averments do indicate, with sufficient clarity, the necessity of the sale of the subject property. The assertions are too general and vague. By stretching one’s imagination, one gets an impression that funds were required to finance the charitable and philanthropic activities of the Trust, to secure the Trust property and pay remuneration of the staff. Reference is made, on a tangent, to a communication received from Talegaon Dabhade Municipal Council to make available 1000 sq mts of land from old Survey No. 702. It, however, does not appear that, any portion of the land of the Trust was acquired under the statutes which permit the acquisition of the land for the public purpose.
27. Mr. Naphade, the learned Counsel for the Respondent No.3, attempted to selvage the position by canvasing a submission that though the Applicants had not pleaded the causes and material particulars, in detail, which warranted the sale of the subject property, yet, the Applicants had furnished those causes and particulars during the course of recording of their evidence and all those factors cumulatively weighted with the learned Joint Charity Commissioner in according the sanction.
28. To appreciate the aforesaid submission in a correct perspective, the reasons which weighed with the learned Joint Charity Commissioner in according the sanction, deserve to be noted. In the impugned order the learned Joint Charity Commissioner has observed, inter alia as under: “The alienation seems to be necessary because of the apprehension of acquisition by Talegaon Dabhade Municipal Council and also future acquisition/encroachment. Secondly the applicant submitted in his reply to intervention application at Exh. 20 that presently he is incurring expenses for safeguarding the trust property and ha also constructed compound wall. He erected a barbed wire fence along the periphery of the property as well as compound wall which has cost the applicant No.1 around Rs.40-50 lakhs. Further the Trust is required the amount for compound wall along with Security Guards is needed to enhance the safety and security from the land grabbers and encroachers and to keep trespassers at bay, to propagate “Nature cure’ and ‘ nutritious meals’ which are the main objects of the Trust. The society is also awaiting from long time to give scholarship to the students studying naturopathy in India. Therefore also the alienation is necessary.”
29. The aforesaid consideration by the learned Joint Charity Commissioner, is far from satisfactory. The learned Joint Charity Commissioner did not pose unto herself the pivotal question as to whether the proposed sale of the subject property would be in the interest or for the benefit or protection of the Trust. The said question ought to have been examined in the light of the causes and circumstances ascribed by the Respondent Nos. 3 to 5 necessitating the sale of the subject property. In the absence of the particulars in the Application especially as regards the claim of the Applicant No.1 that he had incurred expenses to the tune of Rs. 40 to 50 lakhs and the general assertions that the funds were required to enhance the safety and security of the Trust property and to insulate it from land grabbers and encroachers, the learned Joint Charity Commissioner could not have lightly acceded to the ever improving version of the Respondent No.3 in regard to the necessity of sale.
30. It is imperative to note, an averment that the Applicant No.1 had incurred expenses to the tune of Rs.40 to 50 lakhs to erect a barbed wire fencing and compound wall was conspicuous by its absence. Nor any particulars of the alleged expenditure for the said purpose were furnished. No material was placed to show how the Trust property was then being secured and the expenditure incurred for the same. Such claims bereft of specific pleading and supporting document should have put the learned Charity Commissioner on guard.
31. While granting permission for sale of the Trust property, the Charity Commissioner exercises parens patriae jurisdiction. If the permission for sale of the Trust property is granted for the mere asking on flimsy grounds, without evaluating the necessity of the sale of the Trust property, the very object of entrusting the power with the Charity Commissioner to accord sanction or authorisation for sale and alienation of the Trust property would be defeated. The control over the sale and alienation of the trust property, which the Charity Commissioner is expected exercise, to advance the objects of the public Trust, in particular, and the public interest, in general, would be rendered illusory, if such sanction and authorization is granted in a casual manner.
32. As noted above, the paramount consideration which ought to weigh with the Charity Commissioner is the interest, benefit or protection of the Trust. Thus, in the absence of the necessity for the sale of the Trust property having been clearly made out, the learned Joint Charity Commissioner was not justified in constructing a case of necessity of sale of the Trust property for the Respondent Nos. 3 to 5.
33. The submission of Mr. Naphade that there are adequate safeguards which protect the interest of the Trust in as much as the sale consideration is not to be utilized till the final disposal of the Suit NO. 3151 of 1997and the Change Reports, if properly appreciated, runs counter to the purpose for which the property of the Trust was professed to be sold. The property of the Trust can be sold primarily to advance the objects of the Trust. The funds were allegedly necessary to undertake the charitable and philanthropical activities. A restraint on utilisation of the funds for any purpose till the final disposal of the Suit, with the attendant vicissitudes of the litigation, in a sense, defeats the very object of according sanction for sale. Therefore, no mileage can be drawn from the stipulation that the Trustees were not to use the consideration at all till the final disposal of the Suit and the Change Reports.
34. The conspectus of the aforesaid consideration is that, looked from any perspective, the impugned order does not deserve to be sustained. The sanction accorded by the learned Joint Charity Commissioner suffers from singular non application of mind and is, thus, perfunctory. The impugned order, therefore, deserves to be quashed and set aside.
35. At this stage, it is necessary to note that, Mr. Adgule, the leaned Counsel for the Respondent No.7 submitted that, in the event, the order according sanction is set aside, the Respondent Nos. 3 to 5 be directed to refund the amount which has been paid by the Respondent No. 7 to the Trust, as shown in the Schedule (Exhibit “C”) appended to the Affidavit in Reply.
36. This Court can only clarify that, in view of the setting aside of the order granting sanction for the sale of the Trust property, the Trust would be obligated, in law, to refund the part consideration which has been paid to the Trust by Respondent No. 7.
37. Hence the following order:: O R D E R:
(i) The Petitions stand allowed.
(ii) The impugned order according sanction to the sale of the trust property stands quashed and set aside.
(iii) The Application No. 77 of 2021 stands rejected.
(iv) In view of the disposal of the Petitions,
(v) Rule is made absolute in the aforesaid terms.