Gujarat High Court
K L N Sastry vs Charity Commissioner, State Of Gujarat on 5 June, 2023
Author: Nirzar S. Desai
Bench: Nirzar S. Desai
NEUTRAL CITATION
C/SCA/6055/2021 CAV JUDGMENT DATED: 05/06/2023
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 6055 of 2021
With
CIVIL APPLICATION (FOR STAY) NO. 2 of 2021
In R/SPECIAL CIVIL APPLICATION NO. 6055 of 2021
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE NIRZAR S. DESAI
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1 Whether Reporters of Local Papers may be allowed
to see the judgment ?
2 To be referred to the Reporter or not ?
3 Whether their Lordships wish to see the fair copy
of the judgment ?
4 Whether this case involves a substantial question
of law as to the interpretation of the Constitution
of India or any order made thereunder ?
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K L N SASTRY
Versus
CHARITY COMMISSIONER, STATE OF GUJARAT
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Appearance:
MR BHAVESH B CHOKSHI(3109) for the Petitioner(s) No. 2
MR C B UPADHYAYA(3508) for the Petitioner(s) No. 1,3,4,5,6,7
DECEASED LITIGANT for the Respondent(s) No. 3
DS AFF.NOT FILED (N) for the Respondent(s) No. 5
MR.HARDIK MEHTA, AGP for the Respondent(s) No. 1
HARSH M KHEMKA(7880) for the Respondent(s) No. 4
MANTHAN N PATEL(8227) for the Respondent(s) No. 2
NOTICE SERVED BY DS for the Respondent(s) No. 6,7,8
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CORAM:HONOURABLE MR. JUSTICE NIRZAR S. DESAI
Date : 05/06/2023
CAV JUDGMENT
1. Rule. Learned AGP Mr. Hardik Mehta waives service of Page 1 of 38 Downloaded on : Sat Sep 16 19:57:08 IST 2023 NEUTRAL CITATION C/SCA/6055/2021 CAV JUDGMENT DATED: 05/06/2023 undefined notice of rule for and on behalf of the respondent - State, learned advocate Mr. Manthan N. Patel waives service of notice of rule for and on behalf of the respondent no.2 and learned advocate Mr. Harsh M. Khemka waives service of notice of rule for and on behalf of the respondent no. 4.
2. By way of this petition under Articles 226 and 227 of the Constitution of India, the petitioners have prayed for quashing and setting the order dated 12.03.2021 passed below Exh. 33 partly allowing the application preferred by the present respondent no. 2 whereby learned Joint Charity Commissioner confirmed the interim order dated 21.09.2020 and directed the present petitioners and more particularly, the petitioners no. 1 and 2 who are the respondents no. 3 and 4 in the said application directing them that in future none of the opponents in the application including opponents no. 3 to 6 of that application shall not claim any salary, allowances or any other amount under any head from the Trusts/ Trusts fund or from any other institutions managed by Trust. Aforesaid direction was given by exercising the powers under section 41 (a) and Page 2 of 38 Downloaded on : Sat Sep 16 19:57:08 IST 2023 NEUTRAL CITATION C/SCA/6055/2021 CAV JUDGMENT DATED: 05/06/2023 undefined section 69 of the Bombay Public Trust Act. By way of the impugned order, learned Joint Charity Commissioner, Ahmedabad also gave liberty to the applicant - present respondent no. 2 for initiating the separate legal action for recovery of amount which has already been paid to the respondents by way of salary, remuneration or other allowances.
3. The brief facts giving rise to the present petitioners are stated as under:-
As stated in the petition, the present petitioners are Trustees of ASIA Charitable Trust which was registered under the provisions of Bombay Public Trust Act by virtue of settlement Deed dated 13.12.1965. As per the provisions of said Trust Deed, the Board of Trustees were provided with the supreme authority to administer the affairs of trusts with a view to safeguard the interest and achieve the objects of Trust.
As per the petition, the respondent no. 3 who is now Page 3 of 38 Downloaded on : Sat Sep 16 19:57:08 IST 2023 NEUTRAL CITATION C/SCA/6055/2021 CAV JUDGMENT DATED: 05/06/2023 undefined expired was the Chairman of the Board of Trustees, the respondent no. 4 happens to be his son, the respondent no. 8 is the grandson of the respondent no. 3. It is alleged that the respondent no. 3 in his capacity as the Chairman of the Trust, without consulting the majority of the Trustees, delegated all his powers to the respondent no. 4 who happens to be his son and as the respondent no. 4 took over the affairs of the Trust, the present petitioners issued a notice to the said chairman calling for a special requisition meeting on or before 03.08.2020. Accordingly, the meeting of the Trust was convened on 08.08.2020 and ultimately, status quo prevailing as on 27.06.2020 was maintained and delegation of administrative powers to respondent no. 4 was set aside. Thereafter, also as the Trustees were not happy with the way, the chairman was managing the trust, another requisition came to be issued on 17.09.2020 and meeting was to be convened on 19.09.2020. However, the meeting on 19.09.2020 was Page 4 of 38 Downloaded on : Sat Sep 16 19:57:08 IST 2023 NEUTRAL CITATION C/SCA/6055/2021 CAV JUDGMENT DATED: 05/06/2023 undefined postponed to 20.09.2020.
In this background, in the petition, it is stated that the petitioners have alleged that the Chairman was acting against the interest of Trust and therefore, the Chairman apprehended some action against himself as well as his son and therefore, he filed application being Misc. Application No. 45 of 2020 through his alleged agent namely Bhargav Harendra Vyas who is respondent no. 2 in this petition and one application i.e. Misc. Application No. 46 of 2020.
Out of those two applications being Misc. Application No. 45 of 2020 and Misc. Application No. 46 of 2020, the present petition arises out of the prayers made in the Misc. Application No. 45 of 2020 and order passed therein in Misc. Application No. 45 of 2020 by one Bhargav Harendra Vyas - respondent no. 2 herein. He claims to be the beneficiary to the Trust and in that application filed under section 41 (A) of the Bombay Page 5 of 38 Downloaded on : Sat Sep 16 19:57:08 IST 2023 NEUTRAL CITATION C/SCA/6055/2021 CAV JUDGMENT DATED: 05/06/2023 undefined Public Trust Act, he raised the issue about the mismanagement of the Trust and alleged that between a period from 01.04.2018 to 31.03.2019, the Trust has paid to M. P. Chandran an amount of Rs. 51,00,000/-, Mr. K.L.N. Sastry an amount of Rs. 5,00,000/-, Mr. K.P. Nair an amount of Rs. 13,50,000/- and amount of Rs. 8,10,000/- to Mr. Thumpykutty towards salary. Though all those four persons were acting as the Trustees of the Trust and were not supposed to accept the salary from the Trust, they being Trustees paid the aforesaid amount to themselves and therefore, the Trust was mismanaged and therefore, it was prayed to restrain them from paying any of the Trustees any salary, allowances or remuneration and to order recovery of the amount already paid along with 9% interest. Upon the aforesaid application being presented before the Joint Charity Commissioner, even the present petitioners also appeared and contested the application on Caveat. The learned Joint Charity Commissioner vide Page 6 of 38 Downloaded on : Sat Sep 16 19:57:08 IST 2023 NEUTRAL CITATION C/SCA/6055/2021 CAV JUDGMENT DATED: 05/06/2023 undefined order dated 21.09.2020 below Exh, 4 passed an order restraining the opponent no. 3 to 6 from accepting any amount from the Trust by way of any salary, allowances or remuneration.
The aforesaid order was challenged by the present petitioners by preferring the Special Civil Application No. 14666 of 2020 before this Court. However, thereafter, as Misc. Application No. 45 of 2020 was decided by learned Joint Charity Commissioner vide order impugned in this petition dated 12.03.2021 and therefore, vide order dated 24.03.2021, the aforesaid Special Civil Application No. 14666 of 2020 was withdrawn as the same had become infructuous. It is final order passed in the Misc. Application No. 45 of 2020 dated 12.03.2021 which has already referred to in foregoing paragraph is under challenged by way of this petition.
4. Upon issuance of notice from this Court, the respondents Page 7 of 38 Downloaded on : Sat Sep 16 19:57:08 IST 2023 NEUTRAL CITATION C/SCA/6055/2021 CAV JUDGMENT DATED: 05/06/2023 undefined appeared and ultimately the matter was heard finally on 12.10.2022 with the consent of all the parties.
5. Learned advocate Mr. C. B. Upadhyay appearing for the petitioners made following submissions:-
1. That the locus of the respondent no. 2 - original applicant before the learned Joint Charity Commissioner is questionable as he has no locus to seek any direction against the Trust and its Trustees for alleged mismanagement as the respondent no. 2 is merely a member of ASIA Society but is neither a member nor a Trustee of the ASIA Trust and therefore, he cannot be said to be either a beneficiary or person interested in the Trust or its activities and therefore, he could not have filed any such application under section 41 A of the Bombay Public Trust Act before Joint Charity Commissioner.
2. By way of Misc. Application No. 45 of 2020, the issue about payment of salary and remuneration to the petitioners was raised in the year September, 2020, when the Page 8 of 38 Downloaded on : Sat Sep 16 19:57:08 IST 2023 NEUTRAL CITATION C/SCA/6055/2021 CAV JUDGMENT DATED: 05/06/2023 undefined application was filed. However, the issue relates back to the financial year 2018-2019 and therefore, the issue was belatedly raised and therefore, the application was required to be dismissed on the ground of delay by the Joint Charity Commissioner.
3. It was contended that before payment of remuneration, certain resolutions were passed by the Trusts and the remunerations were paid validly as per those resolutions passed by the Trust. As the applicant did not challenge those resolutions, he could not have prayed for the relief prayed in the application and in absence of challenge to the resolutions permitting the trust to pay remuneration to the Trustees, no such orders restraining the Trustees to accept the remuneration could have been passed by the Joint Charity Commissioner.
4. It was contended by learned advocate Mr. Upadhyay that the petitioners were paid the remuneration in their capacity as full time employees of various institutions managed and Page 9 of 38 Downloaded on : Sat Sep 16 19:57:08 IST 2023 NEUTRAL CITATION C/SCA/6055/2021 CAV JUDGMENT DATED: 05/06/2023 undefined run by the Trust and they were paid remuneration for giving their professional services either as Executive Director or CEO or Secretary of those institutions run by the Trust and they were not paid any remuneration for rendering their services to the Trusts in their capacity as Trustees. The Trustees had the right to appoint any person on the post of Executive Director or Secretary or CEO to manage all those institutions and as some of the Trustees were found suitable for those post, they were appointed by the Trust and therefore, by passing necessary resolutions, they were appointed on those respective posts.
5. It was contended by learned advocate Mr. Upadhyay that the remuneration was not paid to the petitioners in their capacity as Trustees of the Trusts as the respondent no. 2 was trustees of the Trust since, 1996 but he was paid remuneration only from the year 2012 and since, they were not paid remuneration in their capacity as Trustees in the coloum no. 19 in Schedule 1 of the PTR, it was not shown. Page 10 of 38 Downloaded on : Sat Sep 16 19:57:08 IST 2023
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6. It was contended on behalf of the petitioners that Joint Charity Commissioner has transgressed his jurisdiction under section 41 A of the Act. As section 41 A of the Act provides that the Charity Commissioner may issue directions to any Trustee or any other person to ensure that the Trust is properly administered and the income thereof is properly accounted for or duly appropriated and applied to the objects and for the purposes of the Trust. In the instant case, broadly the allegations made by the original applicant are concerning "appropriation and application of the income of the Trust to the objects and purposes of the Trust". Upon perusal of the Trust deed, the objects and purposes of the Trust are enlisted in paragraph no. 3 (c) (I) to (xviii), wherein Clauses (iv) and (v) provides for establishment of educational and technical institutes, colleges, schools, libraries, polytechnic establishments etc. Paragraph no. 4 (a) to (m) describes the powers of the Trustees, wherein Clauses (g) and (h) specifically mentions about appointing and to employ staff for the said purpose. Page 11 of 38 Downloaded on : Sat Sep 16 19:57:08 IST 2023
NEUTRAL CITATION C/SCA/6055/2021 CAV JUDGMENT DATED: 05/06/2023 undefined Clause (m) is a general clause enabling the Trustees to do all such things that are incidental to or conducive to the attainment of the objects of the Trust.
7. By drawing attention about the provisions of section 41 A of the Act, it was contended that remuneration paid by the Trust to the office bearers of such institution was only in furtherance of the object of the Trust, said cannot be said to be mismanagement. The order passed by the Joint Charity Commissioner would affect the management of the Trust and therefore, impugned order is required to be quashed and set aside.
8. It was further contended by learned advocate Mr. Upadhayay that the Gujarat Public Trust Act, 1950 does not bar any remuneration payable to the Trustees as there is no embargo on making payment under any head by the Trust or to the Trustees. In fact the column No. 19 of Schedule I of PTR, provides for colomn under the head "remuneration to Trustees or managers" which would show that the Page 12 of 38 Downloaded on : Sat Sep 16 19:57:08 IST 2023 NEUTRAL CITATION C/SCA/6055/2021 CAV JUDGMENT DATED: 05/06/2023 undefined Trustees or the Manager of the Trust are entitled to remuneration and therefore, such payment is not prohibited and therefore, also the Joint Charity Commissioner ought not to have passed impugned order.
9. It was contended by learned advocate Mr. Upadhyay that after the interim order was passed by the learned Joint Charity Commissioner on 21.09.2020, the present petitioners/office bearers have not been paid any remuneration by the Trust. One Mr. Thampykutty Varghese ceased to be a Trustee from October, 2020 and hence, relinquished his post as the Treasurer and Mr. K.P.M. Nair also retired as Trustee in January, 2022 but he had ceased to be the Secretary of the Trust since, October, 2020 and though, Mr. Chandran and Mr. K.L.N. Sastry continues to be the Trustees of the Trust. They have relinquished their respective posts as Executive Director and Chief Executive Officer from January, 2022 and since, the date of interim order, no payment is made to the Trust to the aforesaid office bearers.
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6. By making the aforesaid submissions, learned advocate Mr. Upadhyay for the petitioners submitted that in view of the above submissions, the impugned order dated 12.03.2021 being illegal, contrary to the provisions of law and beyond the powers of section 41 A of the Bombay Public Trust Act, the same is required to be quashed and set aside.
7. Though compilation of judgments containing four judgments was submitted much prior to date of which the matter was finally heard, none of the judgments from the aforesaid compilation were cited at the time of arguments nor any of the judgments were referred to or relied upon by the petitioners alongwith the written submissions which were submitted by the petitioners on 14.10.2022 and in absence of any reference or reliance made upon those judgments either at the time of oral arguments or in written submissions, this Court has not considered those judgments.
8. It is also clarified that though the written submissions were submitted by the petitioners and bares the signature of learned Page 14 of 38 Downloaded on : Sat Sep 16 19:57:08 IST 2023 NEUTRAL CITATION C/SCA/6055/2021 CAV JUDGMENT DATED: 05/06/2023 undefined advocate Mr. C. B. Upadhyay, it is titled as written submissions on behalf of the respondents. However, considering the tone and tenor of the submissions, those submissions are considered as written submissions by the petitioners.
9. Learned advocate Mr. Harsharday Dave appearing with learned advocate Mr.Manthan Patel for the respondent no. 2 vehemently opposed this petition and made following submissions:
1. That the petition may not survive or issue agitated before the Joint Charity Commissioner and which is subject matter of this petition will become academic in view of the fact that the petitioners have ceased to become Executive Director/CEO as Mr. Thumtykutty Varghese and Mr. K. P.m. Nair are no more Trustees at present and Mr. Chandran M.P. and Mr. K.L.N. Sastry have relinquished their respective posts as Executive Director and CEO from January, 2022 though they Page 15 of 38 Downloaded on : Sat Sep 16 19:57:08 IST 2023 NEUTRAL CITATION C/SCA/6055/2021 CAV JUDGMENT DATED: 05/06/2023 undefined continued to be the Trustees.
2. It was submitted by learned advocate Mr. Dave that the petitioners were riding on two horses simultaneously, on one hand they continued to be the Trustees and contends that The Trustees are entitled to fetch remuneration under the Bombay Public Trust Act and on the other hand, they are pleading that they are not fetching any remuneration as Trustees but were getting remuneration as Executive Director of J. G. University.
3. Learned advocate Mr. Dave submitted that in so far as the contention that there is no embargo on fetching the remuneration by the trustees under the act is concerned, it is true that there is no embargo. However, the same is coupled with the condition that such remuneration has to be mentioned in the trust deed which would reflect in PTR. If not the deed has to be modified as per section 50 A of the Act which may provide for remuneration as provided in sub section 2 A of Section 50 A. It is Page 16 of 38 Downloaded on : Sat Sep 16 19:57:08 IST 2023 NEUTRAL CITATION C/SCA/6055/2021 CAV JUDGMENT DATED: 05/06/2023 undefined therefore, submitted that by way of the resolution the Trust deed cannot be amended. In the present case, the Trust deed is silent as to the remuneration to be paid and therefore, the Joint Charity Commissioner has rightly came to be conclusion that the Trustees cannot fetch salary.
4. So far as the other contentions are concerned that the petitioner is fetching remuneration as the Executive Director and/or CEO of J. G. University, it is submitted that the conditions of service of the petitioners are not fixed, by the Governing Body of the University as provided under the statues of the University, nor any document in support thereof is produced. Further it is submitted that no resolution is passed by the Trust to pay salary or remuneration to the Executive Director of J. G. University. Therefore, any payment made under that head amounts to misappropriation of funds.
5. Learned advocate Mr. Harshadray Dave submitted Page 17 of 38 Downloaded on : Sat Sep 16 19:57:08 IST 2023 NEUTRAL CITATION C/SCA/6055/2021 CAV JUDGMENT DATED: 05/06/2023 undefined that the Joint Charity Commissioner was justified in issuing the directions issued by way of Indian Public Trust Act, even if there is no specific bar upon the Trustees to accept the remuneration as section 2 (20) of the Bombay Public Trust Act provides that if any provision is silent in that case, the same can be considered by applying the relevant provisions of the Indian Trust Act and therefore, in any case, considering the fact that the petitioners were the Trustees of Public Charitable Trust, they could not have accepted remuneration in their capacity as Trustees of the Trust.
It was also submitted by learned advocate Mr. Dave that the petitioners are the Executive Directors of J. G. University which is a private university. Private Universities have their separate set-up including their separate avenues of generating the revenue by way of fees and otherwise and the expenditure of that University is required to be borne only from the income of the university. In the instant case, though the petitioners Page 18 of 38 Downloaded on : Sat Sep 16 19:57:08 IST 2023 NEUTRAL CITATION C/SCA/6055/2021 CAV JUDGMENT DATED: 05/06/2023 undefined were serving as Executive Directors or CEO of J. G. University, the remuneration or salary paid to them were paid by the Trust which runs on donations and as the Trust is the Charitable Trust, the fund of the Trust could not have been utilized for any other purpose other than the objects mentioned in the Trust deed.
6. Learned advocate Mr. Dave submitted that the Charity Commissioner being the custodian of all the Trusts and as section 41 A of the Act provides wide powers to Charity Commissioner for better administration of the Trust, the order passed by learned Joint Charity Commissioner is passed keeping in mind the object of the Trust and with a view of protect the interest of the beneficiaries and therefore, also learned Joint Charity Commissioner was well within its powers to issue such directions.
7. As far as the locus of the respondent no. 2 - original applicant is concerned, learned advocate Mr. Dave Page 19 of 38 Downloaded on : Sat Sep 16 19:57:08 IST 2023 NEUTRAL CITATION C/SCA/6055/2021 CAV JUDGMENT DATED: 05/06/2023 undefined submitted that the respondent no. 2 is a member of Ahmedabd South India Association (ASIA Trust) and is having membership no. 2532 and therefore, he is not only the beneficiary but also an interested party for invoking the remedy of section 41 (A) of the provisions of the Act.
8. Learned advocate Mr. Dave further submitted that the petitioners' case is that they were paid salary for their services rendered as Executive Director and other posts of the university. However, as per the provisions of Gujarat Private Universities Act, 2009, there is a separate procedure fixed under the Act for fixing salary of Executive Directors and other posts. However, when the aforesaid procedure is not followed and the amount is paid from the fund of the Trust, the Joint Charity Commissioner was absolutely justified in passing the impugned order.
9. It was also contended by learned advocate Mr. Dave Page 20 of 38 Downloaded on : Sat Sep 16 19:57:08 IST 2023 NEUTRAL CITATION C/SCA/6055/2021 CAV JUDGMENT DATED: 05/06/2023 undefined that even the Fees Regulation Committee, Ahmedabad Zone, in its order dated 13.05.2019 has specifically stated in paragraph no. 8 (F) that the remuneration paid to Mr. Chandran of Rs. 42,00,000/- is not allowed and is not connected with educational of objects of the school.
10. By making the aforesaid submissions, learned advocate Mr. Dave prayed for dismissal of this petition.
11. Learned advocate Mr. Harsh Khemka for the respondent no. 4 submitted that he being the formal party, he has nothing to say and therefore, he did not make any submissions whereas learned AGP Mr. Hardik Mehta for the respondent - State submitted that under the facts and circumstances of the case, considering the object of the act and as the Trust is a public charitable trust, the Joint Charity Commissioner was justified in passing the impugned order which was passed with a view to protect the interest of the beneficiaries and to achieve the object of the act and therefore, he also prayed for dismissal of the petition.
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12. I have heard learned advocates for the parties and perused the record. I have also considered the written submissions submitted by learned advocate Mr. C. B. Upadhyay for the petitioners and learned advocate Mr. Manthan Patel for the respondent no. 2 - original applicant.
13. Before I deal with the matter, in respect of submissions made by the parties touching the merits of the matter, I may deal with the submissions made by learned advocate Mr. Upadhyay for the petitioners in respect of locus of the respondent no. 2 - original applicant before the Charity Commissioner and on aspect of delay.
14. As far as the locus of the respondent no. 2 - original applicant is concerned, I have considered the Trust Deed which is placed on record by the petitioners themselves. As per the Trust Deed itself, the Trust of which the petitioners are the Trustees is a Public Charitable Trust namely Ahmedabad South Indian Association Charitable Trust. As per the Clause 3 of the Trust which is in respect of the Trust fund and more Page 22 of 38 Downloaded on : Sat Sep 16 19:57:08 IST 2023 NEUTRAL CITATION C/SCA/6055/2021 CAV JUDGMENT DATED: 05/06/2023 undefined particularly, Clause 3 (c) speaks about how the trust fund should be utilized, which provides for utilization of the Trust fund for charitable purpose without reference to caste, sex or creed or general public utility which would mean that the Charitable Trust was created not for any specific class of people but for general public irrespective of their cast, sex or creed and it was created for charitable purpose.
15. The activities of the Trust includes the relief for poor, education and medical relief and advancement of any other objects or general public utility which would indicate that as per the Trust deed, the object behind creation of Trust is very wide and includes every class of people of the society. Further the respondent no. 2 - original applicant has in affidavit in reply categorically stated that he is the member of the Trust having membership no. 2532. After the aforesaid affidavit in reply was filed, though the petitioners once again filed additional affidavit, the petitioners did not file rejoinder. However, even in the additional affidavit, the petitioners did not dispute or deny the fact that the respondent no. 2 is not a Page 23 of 38 Downloaded on : Sat Sep 16 19:57:08 IST 2023 NEUTRAL CITATION C/SCA/6055/2021 CAV JUDGMENT DATED: 05/06/2023 undefined member of the ASIA Charitable Trust and therefore, the respondent no. 2 being a member of the ASIA Charitable Trust can be said to be the beneficiary of the trust or a person interested in the activities of the Trust and therefore, he has locus to file an application under Section 41 A of the Act before the Joint Charity Commissioner.
16. Even otherwise also considering the object of the trust, as it comes out from the Trust Deed produced by the petitioners any person belonging to the Society can be said to be the beneficiary of the Trust as the Trust has not confined its scope of activities to a particular caste, creed, community or sex. Even the activities of the Trust as per the objects are also very wide and therefore, even if the respondent no. 2 was not a member of the ASIA Charitable Trust than also he has the locus to seek relief against the Trust before Charity Commissioner for better management of the Trust.
17. As far as the aspect of delay is concerned, I am of the view that when there are allegations about mismanagement of Page 24 of 38 Downloaded on : Sat Sep 16 19:57:08 IST 2023 NEUTRAL CITATION C/SCA/6055/2021 CAV JUDGMENT DATED: 05/06/2023 undefined Trust and the amount allegedly mismanaged runs into lacks of rupees and when the allegations are against the trustees of the Trust, as the Trustees are having absolute control over the Trust and Trust activities, it is expected that they would act in furtherance of the object of the Trust. Therefore, when the allegations are against their own morality alleging financial irregularities against them by way of paying remuneration to themselves in a different capacity, such allegations are required to be tested and when a Trust is a Charitable Trust, when any of the activity of the Trustees of the Charitable Trust is questioned, as the Trust is a Charitable Trust and the Trustees are expected to serve the Trust selflessly and therefore, keeping in mind the larger interest of the beneficiaries of the Trust, the such applications must not be thrown-out only on account of delay. The Trustees are the guardian of the Trusts and therefore, they are accountable to the beneficiaries of the charitable trust. The Charity Commissioner being the custodian of the Trust, he is duty bound to consider such application, unless the delay is Page 25 of 38 Downloaded on : Sat Sep 16 19:57:08 IST 2023 NEUTRAL CITATION C/SCA/6055/2021 CAV JUDGMENT DATED: 05/06/2023 undefined unreasonably long and issue agitated is very old say more than10 to 15 years old.
18. In the instant case, the issue alleged was in respect of financial year 2018-2019 for which the application was preferred in the year 2020 and therefore, such application has rightly not been rejected on the technical ground of delay. Even otherwise when the allegations are about financial irregularities by the Trustees, irrespective of delay, it is the matter of discretion at the end of Charity Commissioner to entertain such application. However, such discretion is required to be exercised reasonably but in the instant case, I do not see any delay on the part of the respondent no. 2 and therefore, even the contention in respect of delay also would not help the petitioners and the application has rightly been considered by the Joint Charity Commissioner.
19. Now I may deal with the submissions made by learned advocates for parties on merits.
20. It was contended by learned advocate Mr. Upadhyay that Page 26 of 38 Downloaded on : Sat Sep 16 19:57:08 IST 2023 NEUTRAL CITATION C/SCA/6055/2021 CAV JUDGMENT DATED: 05/06/2023 undefined the petitioners were paid remuneration on account of validly passed resolutions and those resolutions are not challenged and therefore, in absence of challenge to those resolutions, the Charity Commissioner ought not to have passed the impugned order. In this regard, this Court is of the view that those resolutions remain in the custody of the Trust of which the present petitioners are the Trustees. A Beneficiary would not know about any such resolutions, if at all they were passed by the Trustees, unless disclosed by the Trustees themselves. From the record, I could not find anything which would indicate that all those resolutions were placed on record by the present petitioners before the Charity Commissioner and despite knowing about those resolutions, those resolutions were not challenged by the respondent no. 2. If those resolutions were placed on record before this Court, for the first time, in that case, in absence of there being any knowledge about such resolution to the original applicant - present respondent no. 2 cannot be expected to challenge those resolutions but merely because the resolutions are not Page 27 of 38 Downloaded on : Sat Sep 16 19:57:08 IST 2023 NEUTRAL CITATION C/SCA/6055/2021 CAV JUDGMENT DATED: 05/06/2023 undefined challenged that would not validate the action of the Trustees of paying salary or remuneration in their own favour. Therefore, the aforesaid contention cannot be accepted and the same is rejected.
21. Further on perusal of the record, I find that application for vacating interim relief was preferred by the petitioners before the Joint Charity Commissioner and in that application also there is no reference about the resolutions permitting the Trustees to draw salary by themselves.
22. As far as the submission of learned advocate Mr. Upadhyay that the remuneration was paid to the petitioners not in their capacity as Trustees but against full time employment and professional services rendered by the petitioners to the various institutions is concerned, I have considered the submissions of rival parties and found that the Trust runs as many as 24 institutions. Out of those 24 institutions, as per the additional affidavit filed by the petitioners except J. G. University remaining schools, colleges and institutions are run Page 28 of 38 Downloaded on : Sat Sep 16 19:57:08 IST 2023 NEUTRAL CITATION C/SCA/6055/2021 CAV JUDGMENT DATED: 05/06/2023 undefined by the Trust and therefore, as the Trust is running 23 institutions in their capacity as full time employment, the Trustees are entitled to remuneration.
23. The aforesaid contention cannot be accepted for the reason that the Trust is a Charitable Trust. The word charity itself suggest that the Trust was created for the benefit of its beneficiaries and for a charitable purpose. The present petitioners are the Trustees of the Trust who are in control of the trust activities and who would frame the road map of the trust activities on the basis of object of the Trust. Their duty was to protect the interest of the beneficiaries of the Trust as they were acting as the guardian of the Trust. When the Trust is created for charitable activities, the Trustees of the Trust who are the guardians of the Trust cannot be expected to earn anything for their own from the trust funds. If the Trustees wanted to have financial benefits by way of remuneration, salary, allowances or otherwise, in that case, they could have resigned as Trustees but so long as they remained as Trustees of the Trust, they are not expected to utilize the Trust fund for Page 29 of 38 Downloaded on : Sat Sep 16 19:57:08 IST 2023 NEUTRAL CITATION C/SCA/6055/2021 CAV JUDGMENT DATED: 05/06/2023 undefined payment of their remuneration, allowance or salary as the nature of the Trust is a Charitable Trust and they are the Trustees of the Charitable Trust. It seems that the present petitioners never thought of resigning as Trustees because being a Trustees, they themselves were the persons who were framed the policies of the Trust and passed resolutions. Making a way for the Trust to pay huge amount to them by way of salary, allowance or remuneration, the movement had they resigned, the control of the Trust would go to some other person and those persons might not have continueed to pay remuneration to the petitioners as full time employee and therefore, the petitioners continued to get the remuneration by way of various resolutions only so long as they are having control of the Trust and therefore, what is important to is the control of the Trust and by using that control only they passed various resolutions, found themselves suitable for full time employment and paid huge amount to themselves which cannot be permitted in respect of a Charitable Trust. Had it been a commercial organization, the things would have been Page 30 of 38 Downloaded on : Sat Sep 16 19:57:08 IST 2023 NEUTRAL CITATION C/SCA/6055/2021 CAV JUDGMENT DATED: 05/06/2023 undefined different. Here I am dealing with a case of the Charitable Trust, which has limited source of income by way of donations and other way of funding of the Trust but there is no investment by the Trustees which would expect them who have return over their investment. Further even the object or any other clause of the Trust deed does not provide that the Trustees at any point of time would be entitled to any remuneration, allowance, salary or any other financial benefits and therefore, not only as per the Trust deed but even as per the morality also the petitioners were not entitled to accept any salary, allowances or remuneration from themselves. Therefore, the aforesaid submissions of learned advocate Mr. Upadhayay cannot be accepted.
24. The submission of learned advocate Mr. Upadhyay that the petitioners were working as Executive Director or CEO of J.G. University and therefore, they were paid some remuneration also is required to be rejected out rightly for the reason that J. G. University is a separate entity as the same is a private university governed by Gujarat Private Universities Page 31 of 38 Downloaded on : Sat Sep 16 19:57:08 IST 2023 NEUTRAL CITATION C/SCA/6055/2021 CAV JUDGMENT DATED: 05/06/2023 undefined Act, 2009 and therefore, as rightly pointed out by learned advocate Mr. Harshadray Dave, any appointment or salary structure to any of the employee of the said private university would be governed by the provisions of Gujarat Private Universities Act, 2009. Further as per the additional affidavit filed by the petitioners themselves apart from J. G. University, other institutions are run and administered by the Trust, if that is so, in that case, the action of the Trust of paying remuneration to the CEO and Executive Director of the Trust of the university itself runs contrary to their own stand that the Trust has passed resolutions and on the basis of those resolutions, the petitioners were appointed on various suitable positions including the position in the university and they were paid remuneration by the Trust. When the Trust and J. G. University are two different entities, having separate source of income, account and management, the Trust was wholly unjustified in making payments to the petitioners working as Executive Director or CEO in the university from the trust fund and therefore, also the aforesaid contention cannot be Page 32 of 38 Downloaded on : Sat Sep 16 19:57:08 IST 2023 NEUTRAL CITATION C/SCA/6055/2021 CAV JUDGMENT DATED: 05/06/2023 undefined accepted. The same is required to be rejected and rejected accordingly.
25. As far as the contention of learned advocate Mr. Upadhyay that learned Joint Charity Commissioner has transgressed his jurisdiction under section 41 A of the Trusts Act is concerned, this Court is of the view that section 41 A of the Act reads as under:-
41 A:- Power of Charity Commissioner to issue directions to trustees and other persons.- (1) Subject to the provisions of this Act, the Charity Commissioner may, from time to time, issue directions to any trustee of a public trust or any person connected therewith to ensure that such Trust is properly administered and the income thereof is properly accounted for or duly appropriated and applied to the objects and for the purpose of the Trust.
(2) It shall be the duty of every such trustee and person to comply with a direction issued to him under sub-section (1).
26. Considering the aforesaid language of section 41 A of the Act, it is clear that the powers of Charity Commissioner under section 41 A is not limited to any particular aspect or clause, language of section 41 A empowers the charity Commissioner to issue directions to the Trustee and other persons to ensure that the Trust is properly administered and Page 33 of 38 Downloaded on : Sat Sep 16 19:57:08 IST 2023 NEUTRAL CITATION C/SCA/6055/2021 CAV JUDGMENT DATED: 05/06/2023 undefined the income thereof is properly accounted for or duly appropriated and applied to the objects and for the purpose of the Trust. This indicates that the powers under section 41 A of the Bombay Public Trusts Act even to the Charity Commissioner are very wide and whenever the Charity Commissioner is of the view that to ensure the proper management of Trust, such powers are required to be exercised, he can exercise those powers. Nature of powers under section 41 A of the Act is discretionary one based on his subjective satisfaction and therefore, in absence of any restrictions in respect of exercise of powers under section 41 A or in absence of any restrictions in respect of purpose for which powers under section 41 A can be exercised, this Court is of the view that it is open for the Charity Commissioner to exercise the powers under section 41 A of the Act for issuance of any directions not just to the Trustees but to any other persons as well which he deems appropriate for better management of the Trust or to achieve the object of the Trust and therefore, I do not see any illegality committed by the Page 34 of 38 Downloaded on : Sat Sep 16 19:57:08 IST 2023 NEUTRAL CITATION C/SCA/6055/2021 CAV JUDGMENT DATED: 05/06/2023 undefined Joint Charity Commissioner while passing the impugned order and issuing the directions which are under challenge.
27. As far as the submission of learned advocate Mr. Upadhyay that the Act does not provide any embargo on making payment under any head to the Trust or Trustees and therefore, considering the fact that there is no prohibition in making payment to Trust or Trustees and as Column No. 19 of the Schedule I in PTR also provides for paying remuneration to the Trustees or management cannot be said to be illegal or contrary to the provisions of the law. This Court is of the view that it is true that the Act does not prohibit the payment to Trustees or Manager but at the same time, what is required to be seen is the object for which the Trust is created and whether the Trust Deed provides for any salary or remuneration to be paid to the Trustee or Manager. If from the Trust deed, it is borne out that Manager or Trustee of the Trust are entitled to any salary or allowances, in that case, such contention can be accepted but when the Trust deed itself does not provide for any salary or remuneration to the Trustees or Management Page 35 of 38 Downloaded on : Sat Sep 16 19:57:08 IST 2023 NEUTRAL CITATION C/SCA/6055/2021 CAV JUDGMENT DATED: 05/06/2023 undefined making payment to Trustee or Manager by the Trust by way of salary honorarium can be said to be contrary to the object of the Trust for which the Trust was created, as the Trust deed is annexed by the petitioners along with petition, I have gone through the Trust deed and found that in Clause no. 4 of the Trust Deed, the powers of the Trustees are mentioned. Even on perusal of those powers, I could find only clause l which only provides for reimbursement of the expenses incurred by the Trustees. Considering the fact that reimbursement is totally a different aspect than paying fees, remuneration or allowances, I am of the view that looking to the Trust Deed, the petitioners are not entitled to any remuneration and therefore, even if there is no specific prohibition or bar under the Act for the payment of fees or salary to Trustees or Manager, looking to the object of the Trust and considering the Trust Deed when there is no specific clause or mentioned about the entitlement of the Trustees or managers for salary or allowances or remuneration, the contention of the learned advocate Mr. Upadhyay cannot be accepted.
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28. Even otherwise, considering the fact that this public trust is running and administering 24 different institutions and all institutions are in the field of education providing education right from pre-primary school till post graduation course and a private university also which is a pious activity not just legally but even morally also the petitioners were absolutely wrong in accepting the huge amounts from the Trust which is a charitable trust having its beneficiaries from the people of the society irrespective of sex, creed, caste or community and when the Trust runs on the donation which was impermissible for the petitioners to accept the huge amounts from the Trust in the name fees, allowances or remuneration.
29. In view of above discussions, I do not see any error committed by learned Joint Charity Commissioner, Ahmedabad while passing the impugned order dated 12.03.2021 and therefore, I do not see any reason to interfere with the aforesaid order. The present petition is required to be dismissed and the same is dismissed. Rule is discharged. No Page 37 of 38 Downloaded on : Sat Sep 16 19:57:08 IST 2023 NEUTRAL CITATION C/SCA/6055/2021 CAV JUDGMENT DATED: 05/06/2023 undefined order as to costs. In view of dismissal of main matter, connected Civil Application also would not survive and hence, the same is dismissed.
(NIRZAR S. DESAI,J) VARSHA DESAI Page 38 of 38 Downloaded on : Sat Sep 16 19:57:08 IST 2023