Ambadevi Sanstha & Ors. v. Joint Charity Commissioner & Ors.
ARUN MISHRA, J. 1. The appellant-Shri Ambadevi Sanstha,
a registered Public Trust under the Bombay Public Trusts Act, 1950
(hereinafter referred as the “Act of 1950”), has filed the instant appeals
against the judgments and orders dated 3.5.2013 and 10.5.2013 passed
by the High Court of Judicature at Bombay, dismissing the writ petitions
filed by the appellant herein and confirming the order dated 8.10.1998 of
the Joint Charity Commissioner with respect to sale of the properties of
the Trust. The Trust had been permitted to execute sale deeds of field
Survey No.270/A/1 of village Khar, Talegaon, admeasuring 11 acres
and 28 gunthas and field Survey No.11 of Chandpur, admeasuring 4
acres and 8 gunthas to Mr. J.M. Karwa, field Survey No.202 of Khar,
Talegaon, admeasuring 16 acres to Mr. Manish Jaikishore Karw a and
15 acres and 33 gunthas out of field Survey No.202 of Khar, Talegaon to
Shri Ashish Jaikishore Karwa and 15 acres and 15 gunthas from Survey
No.12 of Chandpur to Shri Girish Jaikishore Karwa at t he rate of
Rs.7,651/- per acre.
2. The permission had also been granted by Joint Cha rity
Commissioner to sell the immovable properties belonging to Trust i.e.,
House No.210, Plot No.228, Sheet No. 92-A, admeasuring 174.8 sq.
meters situated in Ward No.15 in Bhaji Bazar Mohalla at Amravati for
Rs.3,11,000.
3. Permission had also been granted by the Joint Ch arity
Commissioner to sell House No.998 in Ward No.59 Taluka Bedmaru,
District Amravati for sum of Rs.1,00,000/- (Rupees One Lakh Only).
4. The erstwhile Secretary of the old body of Trust had applied to
the Joint Charity Commissioner for grant of permission to sell the
properties of Trust. At least two persons had raised obje ctions before
the Joint Charity Commissioner that they were ready to pur chase the
land at a much higher price up to Rs.25,000/- and Rs.11,000/- per acre.
The newly elected body of the Trust approached the J oint Charity
Commissioner and 15 trustees stated that Trust does not want to sell the
properties. Despite the objection, the Joint Charity Commissioner had
granted permission to sell the properties. Aggrieved ther eby, the writ
petitions were filed before the High Court by the Trust. The High Court
vide impugned judgments and orders has dismissed the writ p etitions.
Hence, the appeals have been preferred.
489
5. The Trust has raised the ground that Joint Charity Commissioner
did not act as per intendment of Section 36 of the Act of 1950. The Joint
Charity Commissioner has failed to observe that when the Trustees have
stated on behalf of Trust that the properties should not be sold, the Joint
Charity Commissioner ought not have passed the order directing sale of
the properties. The principles governing exercise of power under Section
36 had not been adhered to. There was no necessity to sell th e Trust
properties. Apart from that, the permission for sale of pr operties for a
meagre amount was not at all in the interest of the Trust. The objections
were rejected by the Joint Charity Commissioner for no go od reason.
The High Court has also committed illegality in dismissing the writ petitions.
6. It was contended on behalf of respondents that permission was
granted to sell properties in the interest of the Trust as the Trust was not
having proper income. The land is situated at a distance of 25 kms from
Amravati. Three out of four lands are situated about 5 kms away from
the locality of Khar Talegaon. The Trust wanted to construct a hospital.
The Trust was in dire need of money and had decided to invite tenders
on 1.6.1994 by advertisement for the sale of land and only one offer
from Mr. Naresh Laxmanrao Bhatkar was received for purchase of
land admeasuring 15 acres 15 gunthas at Chandpur at the rate of
Rs.4,500/- per acre. However, the said offer was not accepted by the
Trust in the meeting dated 9.8.1994. Thereafter, second advertisement
was published in the local newspapers in November and Decem ber,
1994. Varying offers for land between Rs.6,000/- to Rs.9,000/- per acre
were received. Late Mr. Jaikishore Karwa submitted offer of
Rs.7,651/- per acre for purchase of the entire land of the Trust i.e. , 63
acres 4 gunthas, whereas the offer of Mr. M.K. Lakd e was for
Rs.9,000/- per acre for certain piece of land i.e., 11 acres 28 gunthas.
The offer of Late Mr. Jaikishore Karwa, husband of responde nt no.2-
Smt. Tarabai, was accepted. The entire land was sold as in dicated by
Mr. Jaikishore Karwa in the names of several persons. The Trust in its
meeting dated 13.3.1995 passed a resolution and accepted earnest money
also.
7. It was further contended on behalf of respondents that the
price offered was proper and valuation report was call ed from Talathi
with respect to the land in question. Talathi had indicated that the market
value of the land was Rs.8,000/- per acre at Khar Talegaon and
Rs.5,000/- per acre at Chandpur, at the time of issuance of advertisement
SHRI AMBADEVI SANSTHA & ORS. v. JOINT CHARITY
COMMISSIONER & ORS. [ARUN MISHRA, J.]
in the year 1994. The Joint Charity Commissioner has considered the
valuation report of the Talathi and the offer made by Mr. J aikishore
Karwa was found to be proper.
8. It was contended by the respondents that Joint C harity
Commissioner did not grant permission in a mechanical way . Two
objectors namely Mr. Vinod Tank and Mr. Vijay Jaiswal had submitted
their higher offers before the Joint Charity Commissioner during the
pendency of the application. Mr. Vinod Tank had neither participated in
the tender process. It was not proper for him to submit a higher offer
once the earnest money had been paid. The offer of Mr. Vinod T ank
was rightly rejected. Similarly, the offer made by Mr. Narayan prasad
Jaiswal and Mr. Shankarlal Jaiswal of Rs.25,000/- per acre afte r 2 ½
years from the date of acceptance of earnest money by the Trusts, was
also rightly rejected. The Joint Charity Commissioner did not allow the
objection raised by 15 newly added trustees as there was a dispute
between old and the new trustees. The land was sold by the pre vious
body of the Trust, as such the objection raised by the new body was
rightly rejected. The Trust, in fact, had not passed any resolution dated
27.9.2018 before the decision was rendered by the J oint Charity
Commissioner, not to sell the properties. Resolution date d 27.9.1998
was not submitted before the Joint Charity Commissioner. The Trustees
did not pray before the Joint Charity Commissioner to withdraw the
application filed for grant of permission to sell the properties. The Trust
did not file the aforesaid resolution dated 27.09.1998 even before t he
High Court. No meeting was held on the aforesaid date. It was also
contended on behalf of respondents that Trust has fil ed false and
fabricated affidavit dated 18.11.1997, which was not filed by the Trust
before the Joint Charity Commissioner. The objectors Mr. Vinod Tank
and others have not approached the High Court against the order of
Joint Charity Commissioner. In other appeals also, it was c ontended
that order of Joint Charity Commissioner was appropri ate and in
accordance with law.
9. This Court has considered the duty of a Charity Commissioner
under Section 36 of the Act of 1950 in the recent decision in Cyrus
Rustom Patel v. Charity Commissioner Maharashtra , (2017) 13
SCALE 44 . This Court has observed that three classic requirements
have to be considered by the Charity Commissioner i.e., the int erest,
491
benefit and protection of Trust. The Charity Commissioner ha s to be
objectively satisfied that there is necessity to dispose of the property in
the interest of public Trust. The power of Charity Commissioner extends
to inviting offers from members of public and can also direct the trustees
to sell or transfer the trust property to a person whose bid or quotation is
the best.
10. In Chenchu Rami Reddy v. Govt. of Andhra Pradesh,
(1986) 3 SCC 391 , it was observed that there has to be full application
of mind while granting permission to sell by the competent authority and
the disposal of public property should normally be done by public auction.
The public-minded citizens have to show exemplary vigilance and the
property of religious and charitable institutions or endowment must be
jealously protected. Property should be sold by public auction after fixing
reserve price. This Court observed:
“10. We cannot conclude without observing that property of such
institutions or endowments must be jealously protected. It must
be protected, for, a large segment of the community has beneficial
interest in it (that is the raison d’etre of the Act itself). The
authorities exercising the powers under the Act must not only be
most alert and vigilant in such matters but also show awareness
of the ways of the present day world as also the ugly realities of
the world of today. They cannot afford to take things at their face
value or make a less than the closest-and-best-attention approach
to guard against all pitfalls. The approving authority must be aware
that in such matters the trustees, or persons authorized to sell by
private negotiations, can, in a given case, enter into a secret or
invisible underhand deal or understanding with the purchasers at
the cost of the concerned institution. Those who are willing to
purchase by private negotiations can also bid at a public auction.
Why would they feel shy or be deterred from bidding at a public
auction? Why then permit sale by private negotiations which will
not be visible to the public eye and may even give rise to public
suspicion unless there are special reasons to justify doing so? And
care must be taken to fix a reserve price after ascer taining the
market value for the sake of safeguarding the interest of the
endowment. With these words of caution we close the matter.”
(emphasis supplied)
SHRI AMBADEVI SANSTHA & ORS. v. JOINT CHARITY
COMMISSIONER & ORS. [ARUN MISHRA, J.]
11. In R. Venugopala Naidu v. Venkatarayulu Naidu Chairities,
1989 Supp (2) SCC 356 , this Court has reiterated that sale should be
free from suspicion and reserved price should be fixed after ascertaining
the market value. This Court has observed:
“13. The subordinate court and the High Court did not go into the
merits of the case as the appellants were non-suited on the ground
of locus standi. We would have normally remanded the case for
decision on merits but in the facts and circumstances of this case
we are satisfied that the value of the property which the trust got
was not the market value. Two persons namely S.M. Mohamed
Yaaseen ad S.N.M. Ubayadully have filed affidavit offering Rs.
9 lakhs and Rs. 10 lakhs respectively for these properties. In
support of their bona fides they have deposited 10 per cent of the
offer in this Court. This Court in Chenchu Ram Redd y v.
Government of Andhra Pradesh, (1986) 3 SCC 391, has held that
the property of religious and charitable endowments or institutions
must be jealously protected because a large segment of the
community has beneficial interest therein. Sale by private
negotiations which is not visible to the public eye and may even
give rise to public suspicion should not, therefore, be per mitted
unless there are special reasons to justify the same. It has further
been held that care must be taken to fix the reserve pri ce after
ascertaining the market value for safeguarding the interest of the
endowment.”
12. In Bhaskar Laxman Jadhav v. Karamveer Kakasaheb
Wagh Education Society, (2013) 11 SCC 531 , this Court took note of
the fact that Trustees and petitioners had been indulging in a flip-flop
and taking advantage of the absence of any clear-cut statutory measures
designed to prevent abuse of the process of law. T he Charity
Commissioner was justified in rejecting the application for permission to
sell for two reasons, firstly since the Trustees were not voluntarily selling
the Trust land and secondly, in the given circumstances, the sale transaction
was not for the benefit and in the interest of the Trust. I t was further
observed that lack of bonafide of trustees could not have been overlooked
by the High Court. Due to passage of time, the value of the Trust land
had increased considerably and it was necessary to have made e fforts
for obtaining maximum price from the open market. This Court observed:
493
“53. In Mehrwan Homi Irani v. Charity Commr., (2001) 5 SCC
305, it was categorically held that the Charity Commissioner, while
granting sanction under Section 36 of the Act, must explore the
possibility of getting the best price for the trust p roperties. In
keeping with this, the Charity Commissioner was directed to issue
a fresh advertisement for leasing out the trust proper ty and
“formulate and impose just and proper conditions so that it may
serve the best interests of the Trust.” The observatio ns of this
Court and directions given are as follows:
“9.... In the best interests of the Trust and its objects, w e feel it
appropriate that Respondents 2 to 4 should explore the furthe r
possibility of having agreements with better terms. The objects of
the Trust should be accomplished in the best of its int erests.
Leasing out of a major portion of the land for other purposes may
not be in the best interests of the Trust. The Charity Commissioner
while granting permission under Section 36 of the Bombay Public
Trusts Act could have explored these possibilities. Therefore, we
are constrained to remit the matter to the Charity Commissioner
to take a fresh decision in the matter. There could be fresh
advertisements inviting fresh proposals and the proposa l of the
5th respondent could also be considered. The Charit y
Commissioner may himself formulate and impose just and proper
conditions so that it may serve the best interests of the Trust. We
direct that the Charity Commissioner shall take a decision at the
earliest.”
13. In Cyrus Rustom Patel (supra) , the Court observed that
previous sanction of the Charity Commissioner has to be obtained for
sale of the Trust property:
“24. It is apparent from the provisions of Section 36 that sale ,
exchange or gift of any immovable property or lease, extending
beyond ten years in the case of agricultural land, or for a period
exceeding three years in the case of non-agricultural la nd or a
building, belonging to a public trust shall not be valid wit hout
previous sanction of the Charity Commissioner .
25. The power to grant sanction has to be exercised by the Charity
Commissioner, taking into consideration three classic requirements
SHRI AMBADEVI SANSTHA & ORS. v. JOINT CHARITY
COMMISSIONER & ORS. [ARUN MISHRA, J.]
i.e. “the interest, benefit, and protection” of the Trust. The
expression that sanction may be accorded subject to such conditions
as Charity Commissioner may think fit under Section 31(1) (b)
and Section 36(1)(c). The Charity Commissioner has to be
objectively satisfied that property should be disposed of in the
interest of public trust; in doing so, he has right to impose such
conditions as he may think fit, taking into account aforesaid triple
classic requirements. It is also open to the Charity Commissioner,
in exercise of power of Section 36(2) of the Act, to revoke the
sanction, given under clauses (a) and (b) of Section 36 of the Act,
on the ground that the sanction had been obtained by fraud or
misrepresentation or those material facts have been suppres sed
while obtaining sanction. The intendment of the revocation provision
is also to sub-serve the interest, benefit, and protection of the
Trust and its property.”
(emphasis supplied)
The Court has also observed that the trustees hold the pro perty
for the benefit of the beneficiaries. In case the Charity Comm issioner
accepts the necessity of alienating the trust property, the trustees cannot
insist that the property should be sold only to a person of their choi ce,
though the offer given by the person may not be the best of fer. 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.
14. When we consider the order passed by the Joint Chari ty
Commissioner on 8.10.1998 in the instant case, several applications were
decided by common order. The Joint Charity Commissioner noted that
objection was raised by 15 newly elected Trustees no t to sell the
properties. It was incumbent upon the Joint Charity Commis sioner to
ascertain the proper valuation of the properties. In the case of time
barred transaction, it was held that it was not for the Joint Charity
Commissioner to reject the offer on the ground that transact ion had
become time barred, but it was for the Civil Court to consider the said
aspect for transaction entered into in 1990 and 1994 for which the
applications for grant of permission were filed in 1997/1998.
495
15. The reserved price of various properties was also not fixed in
the instant matter and the Joint Charity Commissioner has failed to
consider what was the actual price as on the date of grant of permission
and when transactions were entered into. The permission to sel l the
properties had been granted in mechanical manner ignoring illegality of
transactions. 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 necessa ry to
create any right in the properties.
16. 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 appli ed for. Apart
from that, no serious efforts were made by the Join t Charity
Commissioner to ascertain the value of the properties in the years 1990,
1994 or 1998. After the advertisement inviting offer was issued in respect
to lands, it is apparent that the offer of Mr. M.K. Lakde was for
Rs.9,000/- per acre for a part of land, nonetheless it was much mo re
than the value accepted by the Joint Charity Commissioner. Merely on
the ground that Trust had accepted the earnest money from Mr. Jaikishore
Karwa of Rs.21,000/-, no equity was created in his favour to purchase
the property. It was not open to the Joint Charity Commissioner to permit
the sale on the ground of receipt of earnest money in illega l manner.
Before permission to sell no such agreement could have bee n 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.
17. 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 of Rs.1,60,000/- in the year 1990.
SHRI AMBADEVI SANSTHA & ORS. v. JOINT CHARITY
COMMISSIONER & ORS. [ARUN MISHRA, J.]
18. The Joint Charity Commissioner had also observed in its order
that if the request of Trust to sell the land to prospective purchaser was
rejected, the Trust was likely to be forced to face litigation at the instance
of the prospective purchasers as they claimed to be in possession of the
land for which they have paid the earnest money. This kind of illega l
transaction could not have been sanctioned by the J oint Charity
Commissioner. It was wholly impermissible and violative of intendment
of the provisions contained under Section 36 of the Act of 1950.
19. No effort was made to ascertain the valuation of the house
and no reserved price was fixed, thus, the sale of the prope rties 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 r espect to
agricultural lands as well as the house was granted illegally.
20. In view of the above, it is not necessary to go into the question
that newly elected body of the Trust had opposed the sale of the T rust
properties by old trustees. When there was such 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 as recorded by 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. The High Court had also recorded that the resolution was passed
on 27.9.1998 not to proceed with sale. Though, it was disputed that it
was not actually passed. Be that as it may. Fact remains that Trustees
themselves presented before the Joint Charity Commissioner before
arguments were heard and, in the circumstances, it was not at all proper
or justified to sell the properties of the Trust. No necessi ty for sale of
the properties was made out. Thus, the sale of the Trust properties was
wholly uncalled for.
21. In view of the above, we direct the Trust not to fritter away
with the properties in the manner in which it has been done. In f uture
also, let the properties of the Trust and its legacy be protected and guarded
497
and it should not be sold away in the manner as has been done in the
present case. We allow the civil appeals and set aside t he judgments
and orders passed by the High Court and that of the Joint Charity
Commissioner. Transactions of sale are annulled.
22. 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 evi dence
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.
Let the possession be restored forthwith within a period of two months,
failing which we direct the concerned authority to take the possession of
land and houses with the help of police authorities. Let compliance of
order be reported to this Court within 10 weeks.
Kalpana K. Tripathy Appeals allowed.
SHRI AMBADEVI SANSTHA & ORS. v. JOINT CHARITY
COMMISSIONER & ORS. [ARUN MISHRA, J.]