Bombay Public Trusts Act, 1950:
s.36 – Sale of Trust property – Power of Charity Commissioner – Application seeking permission to sell Trust property, after accepting earnest money – Objections by two persons stating that they were ready to purchase the property at much higher price – Objection also by newly elected body of Trust stating that it did not intend to sell the properties – Despite the objections, Charity Commissioner granted permission to sell – Writ petition – Dismissed by High Court – On appeal, held: While disposing of Trust property, Charity Commissioner has to consider interest, benefit and protection of Trust – Action of Trust seeking permission to sell after accepting earnest money was improper, illegal and impermissible – Prior sanction was necessary to create any right in the properties – Such illegal transaction could not have been sanctioned – It was impermissible and violative of intendment of the provisions contained in s.36.
Allowing the appeals, the Court
HELD: 1. The Charity Commissioner has to be objectively satisfied that there is necessity to dispose of the property in the interest of public Trust. Three classic requirements have to be considered by the Charity Commissioner i.e., the interest, benefit and protection of Trust. Sale should be free from suspicion and reserved price should be fixed after ascertaining the market value. In case the Charity Commissioner accepts the necessity of alienating the trust property, the trustees cannot insist that the property should be sold only to a person of their choice, though the offer given by the person may not be the best offer. The property may be vested in the trustees, but the vesting is for the benefit of the beneficiaries. Best available offer should be accepted in the case of sale.[Paras 9, 11 and 13] [490-H; 491-A; 492-A; 494-D-E]
Cyrus Rustom Patel v. Charity Commissioner
Maharashtra 2017 (13) SCALE 44 : [2017] 9 SCR
277 ; Chenchu Rami Reddy v. Govt. of Andhra Pradesh, (1986) 3 SCC 391 : [1986] 1 SCR 989 ; R. Venugopala Naidu v. Venkatarayulu Naidu Chairities (1989) 2 Suppl. SCC 356 : [1989] 1 Suppl. SCR 760 ; Bhaskar Laxman Jadhav v. Karamveer Kakasaheb Wagh Education
Society (2013) 11 SCC 531 : [2012] 11 SCR 767 – relied on.
2. The action of the Trust seeking permission to sell after accepting the earnest money was wholly improper and impermissible. The transactions could not have been finalised nor possession could have been handed over before filing application to Joint Charity Commissioner under Section 36 of the Act of 1950. Prior sanction was necessary to create any right in the properties. [Para 16] [495-B]
3. It was not open to the Joint Charity Commissioner to permit the sale on the ground of receipt of earnest money in illegal manner. Before permission to sell, no such agreement could have been entered into. The same indicated predisposition of Trust to sell it in illegal manner. The valuation report from Talathi was based on ipse dixit indicated the value of the land as Rs.8,000/- per acre. The offer could not have been accepted in view of the available higher offers. The Joint Charity Commissioner has failed to protect the interest of the Trust. [Para 16] [495-E-F]
4. Mere statement by the Trust that earnest money was received from prospective purchasers of house in the year 1990, thus, it should be sold to them, could not be said to be a legally permissible approach. It was not legally permissible to receive earnest money or to create any interest without grant of prior permission to sale. Thus, no equitable consideration could have arisen in favour of purchasers by the payment of earnest money in the year 1990. This kind of illegal transaction could not have been sanctioned by the Joint Charity Commissioner. It was wholly impermissible and violative of intendment of the provisions contained under Section 36 of the Act of 1950. [Paras 17 and 18][495-G-H; 496-B]
5. The offers were invited for land in 1994 and the applications were filed in the year 1997-98 for grant of permission to sell the properties of the Trust. The prices of 1994, thus, could not have been considered to be the value as on the date the permission was applied for. Apart from that, no serious efforts were made by the Joint Charity Commissioner to ascertain the value of the properties in the years 1990, 1994 or 1998. No effort was made to ascertain the valuation of the house and no reserved price was fixed, thus, the sale of the properties was wholly impermissible. The Joint Charity Commissioner has also observed that it was not for him to consider the effect of enormous delay in approaching for grant of permission. No such delayed application could have been entertained to validate illegal transaction. The Joint Charity Commissioner has failed to consider the interest, benefit and the protection of the property of the Trust. The permission to sale with respect to agricultural lands as well as the house was granted illegally. [Paras 16 and 19][495-C-D; 496-C-D]
6. When there was a dispute between old and new body, the Joint Charity Commissioner was required to be on the guard and in view of the objection raised by 15 Trustees by presenting themselves before the Joint Charity Commissioner that Trust properties should not be sold, the Joint Charity Commissioner could have waited and should have ascertained the genuineness of the objection and need for sale of properties and whether sale was in the interest of Trust. [Para 20] [496-G-H]
7. The Trust is directed not to fritter away with the properties in the manner in which it has been done. In future also, let the properties of the Trust and its legacy be protected and guarded and it should not be sold away in the manner as has been done in the present case. [Para 21] [496-H; 497-A]
8. It was contended on behalf of purchasers that they have made the land cultivable by spending the amount and have levelled it also. As a matter of fact, under an illegal sale, they have enjoyed the properties for more than two decades. It was wholly impermissible and they have earned more than the value of the land as in the Land Acquisition Act, the compensation is granted in the absence of exemplar sale evidence on the basis of usufruct of 10 years. They have enjoyed the properties for more than two decades, thus there is absolutely no equity in their favour and they are not entitled to retain the possession of the same. [Para 22] [497-B-C]
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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