Madras High Court
T.Manimekalai vs M/S.Professional Educational Trust on 29 April, 2024
Author: A.D.Jagadish Chandira
Bench: A.D.Jagadish Chandira
1
IN THE HIGH COURT OF JUDICATURE AT MADRAS
Reserved on : 04.03.2025
Delivered on : 17.04.2025
CORAM
THE HON'BLE MR.JUSTICE A.D.JAGADISH CHANDIRA
C.R.P.No.4727 of 2024
and
C.M.P.Nos.26395 and 26396 of 2024
T.Manimekalai Petitioner
vs.
1. M/s.Professional Educational Trust,
rep. by its Chairman cum
Managing Trustee Dr.C.Subramaniam,
Having its Registered Office at
Door No.400-B, 6th Street Extension,
Gandhipuram, Coimbatore 641 012 and
Administrative Office at
Professional Nagar,
Coimbatore-Trichy Road,
K.N. Puram (PO) Palladam 641 662.
Tiruppur, Tiruppur District.
2. M/s.Bloom Promoters LLP,
rep. by its Authorized Signatory
N.Nagappan,
having registered office at
No.54, Mettupalayam Road,
G.N.Mills (PO),
Coimbatore 641 029. Respondents
Civil Revision Petition filed under Article 227 of the Constitution
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2
of India against the Fair and Decreetal order dated 29.04.2024 passed
in Trust O.P.No.90 of 2019 on the file of the Principal District Judge,
Tiruppur.
For Petitioner : Mr. Mr.R.Selvakumar
For R1 : Mr.R.Bharath Kumar
For R2 : Mr.K.R.Sankaran
ORDER
An erstwhile Trustee, who appears to have resigned from the Trusteeship of the first respondent Trust, had come up with the present civil revision petition challenging the order dated 29.04.2024 passed by the Principal District Judge, Tiruppur in Trust O.P.No.90 of 2019, which permits the petition mentioned property to be sold in public auction.
2. Brief facts of the case that could be elicited from the materials available are as under:-
i) M/s.Professional Educational Trust, the first respondent herein is a Public Charitable Trust formed and founded under a Deed of Trust dated 14.9.2009 registered as Document bearing No.795/2009 registered on the sale of SRO, Gandhipuram, Coimbatore and a Supplementary Deed dated 15.6.2011 registered as Document bearing https://www.mhc.tn.gov.in/judis ( Uploaded on: 17/04/2025 06:56:08 pm ) 3 No.1530/2011 registered on the file of SRO, Palladam.
ii) The main objects of the said Trust is imparting of education by running educational institutions and extending other related services.
iii) The petition mentioned properties along with other properties belong to the Trust by virtue of Sale Deed Nos. 14951/2009 dated 27.11.2009, 15257/2009 dated 02.12.2009 (for an extent of 18.87 Acres, as described In the Schedule No.1), Sale Deed No.3176/2014-
dated 10.03.2014 (in respect of property of 4 House Sites — 5291 sq.ft, or 12 cents 64 sq.ft, as described in the Schedule No.2) and by virtue of Sale Deed Nos. 9565/2010 dated 16.07.2010 and 9566/2010 dated 16.07.2010 (in respect of property of 18 sites — 33,212 sq.ft. or 76 cents 106 sqft. as described In the Schedule No.3) and sale deed dated 14.2.2011 under document No.2865/2011 (in respect of property to the extent of 10 cents in the schedule 4) as such the Trust is in absolute possession and enjoyment of the same.
iv) In order to accomplish the primary objectives of the Trust, the Trust had mortgaged the petition mentioned properties and had availed loan from Central Bank of India, Cross Cut Road, Gandhipuram, Coimbatore. The Trust had to shell out huge sums of https://www.mhc.tn.gov.in/judis ( Uploaded on: 17/04/2025 06:56:08 pm ) 4 money as interest periodically. As such, the Trust was struggling to repay the loan with interest. The Trust, therefore, obtained loan to the tune of Rs.21.00 crores by way of a Demand draft bearing No.038158 dated 15.3.2019 drawn on Central Bank of India for the purpose of clearing the aforesaid mortgage loan in respect of the petition schedule properties except petition schedule IV properties (10 cents). The Trust had borrowed the said sum of Rs.21.00 crores from Mr.S.Martin with an oral understanding that the Trust shall sell the Trust properties and discharge the loan amount to Mr.S.Martin with interest @ 10% per annum as early as possible. Accordingly, the loan availed from Central Bank of India, Coimbatore had been cleared and as a consequence, the Trust had to clear the debt that they had borrowed from Mr.Martin, as evident from the receipt issued by the Trust to Mr.S.Martin and hence it has no other option but to sell the Trust properties at the earliest point of time.
v) On 19.12.2018, the Board of Trustees Meeting was held and a Resolution was passed by the Board unanimously requesting the Trust to look for a prospective buyer for the best price. Accordingly, the Trust had identified the respondent, who offered best price in the given market conditions. The respondent agreed to buy the properties https://www.mhc.tn.gov.in/judis ( Uploaded on: 17/04/2025 06:56:08 pm ) 5 at a final price of Rs.24 crores and the petitioner agreed to sell the same for the like sum.
vi) As per clause 13.2 (vi) of the Trust Deed, the Trustees have powers to do all things necessary or incidental to carry out the objects and purpose of the Trust in such a manner as they may think fit and in particular they shall have power to sell, exchange, mortgage or otherwise dispose of any properties belonging to the Trust.
vii) In consonance with the aforesaid clause and as per the aforesaid resolution dated 19.12.2018, which was passed in the Board of Trustees meeting, it was unanimously agreed to sell the Trust properties to the second respondent herein for the aforesaid price and for the said purpose, it was also agreed to obtain permission from the Court and then execute the sale deed.
viii) The Trust had to borrow the aforesaid amount to discharge the mortgage loan as otherwise the account would have become a Non Performing Asset (NPA). The borrowed money has been fully utilized for the purpose of discharging the bank loan so as to save the petition mentioned properties from being auctioned in the SARFAESI proceedings. The petition mentioned properties are also not yielding adequate income. On the other hand, there are lot of overheads by https://www.mhc.tn.gov.in/judis ( Uploaded on: 17/04/2025 06:56:08 pm ) 6 way of tax and maintenance, which means that the petition mentioned properties only incur periodical expenses without there being sufficient income and thus, the Trust is put to heavy monetary loss. The income sourced out of the property is also not sufficient to give salary to the teaching staff, other charges, electricity consumption charges and other expenses. Under these circumstances, the education of the students was also at stake and therefore, there is no alternative other than to sell the petition mentioned properties and the second respondent herein has come forward to purchase the petition mentioned properties and to continue the objectives of the Trust by running the educational institution.
ix) Accordingly, the Trust and the second respondent had a negotiation and both the Trust and the second respondent agreed to enter into a registered sale-agreement for the purpose of sale of the petition mentioned properties except petition schedule IV properties under registered agreements of sale dated 1.4.2019, by and under which, the Trust had agreed to sell the petition properties other than the petition schedule IV property for a total sale consideration of Rs.24 crores. The second respondent had paid a sum of Rs.2 crores as an advance to the Trust on the date of sale agreement itself, which has https://www.mhc.tn.gov.in/judis ( Uploaded on: 17/04/2025 06:56:08 pm ) 7 been reflected in the sale agreement.
x) Pursuant to clause 13.2 (vi) of the Trust Deed and the resolution mentioned above, the Trust and the second respondent had entered into three registered sale agreements dated 1.4.2019 registered as document Nos.4669/2019, 4670/2019 and 4671/2019 agreeing to sell the petition mentioned properties in schedule I to III for the agreed sale consideration to the respondent. Further, the Trust had agreed to sell the Schedule IV property to the second respondent on the prevailing market price. The said property was omitted to be included at the time of entering into an agreement of sale. The Trust also agreed and assured the second respondent that necessary Court permission would be obtained for the purpose of executing the sale deed.
xi) On a reading of the clauses of the Trust Deed, there is no bar for the Trust to sell the Trust properties. Even under clause 13.2(vi) of the Trust Deed, the Trust is permitted to sell the Trust properties without Court permission, however, by way of abundant caution, the Trust, being the public charitable Trust, had come forward with the application seeking permission of the Court to sell the petition mentioned properties.
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xii) The Trust is holding on to the Trust properties which are not fetching adequate income and under these circumstances, if the Trust is not selling the petition mentioned properties, it may not be able to discharge the loan amount of Rs.21.00 crores borrowed from the aforesaid Mr.S.Martin and in such an event, the liabilities in respect of the Trust will become accumulated which will be detrimental to the interests of the Trust and would cause irreparable loss to the Trust and hence, the petition was filed seeking permission to sell the petition mentioned properties.
xiii) The stand taken by the revision petitioner, who got herself impleaded in the Trust O.P. as second respondent is as under:-
a) The Trust is running an engineering college having more than 750 students with a goodwill for the institution since 2010 and having properties in schedule Nos.1 to 5. The property in question holds a significantly higher market value of about Rs.80 crores and there is no legitimate necessity to secure a loan from the bank as the Trust was sufficiently capable of sustaining its operations. The loan was strategically borrowed to create debt with the ulterior motive of alienating the property to the second respondent herein for a very meagre price viz., Rs.22,84,00,000/-, thereby enabling the prevailing https://www.mhc.tn.gov.in/judis ( Uploaded on: 17/04/2025 06:56:08 pm ) 9 Trustees to misappropriate the assets of the Trust.
b) Without convening a General Body Meeting or without issuing notice to the Trustees, on 1.4.2019, the sale agreements were entered. In addition to that, the Trust owes money to the revision petitioner and in the event of the assets of the Trust being sold for a meagre price, it would unduly prejudice her interest.
xiv) The Trial Court allowed the Trust O.P., permitting sale of the petition mentioned properties, however through a public auction to be conducted by a committee of three Advocate Commissioners after effecting publication in two local dailies widely circulated in Tiruppur and Coimbatore District both English and Tamil and also by way of e- auction, with respect to the sale of the property by fixing the value of the property after consulting the Revenue and Registration Department as to the market value of the property. The Trial Court also permitted the second respondent herein to participate in the said auction. Challenging the above order, the present civil revision petition has been filed by the second respondent.
3. The submissions of Mr.R.Selvakumar, learned counsel appearing for the revision petitioner are as under:-
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i) The scope of the Trust being one of carrying out educational and charitable activities and not to dispose of assets for the private benefit of an individual, the learned Principal District Judge erred in law by allowing the sale of Trust property without considering that the sale is contrary to the objectives of M/s.Professional Educational Trust.
ii) The judgment of the court below is vitiated by non-joinder of necessary parties, especially the other trustees and Mr.Martin, who holds an interest in the subject property. In all the proceedings involving Trust property, all trustees and interested parties must be included to ensure a fair and comprehensive adjudication. The absence of these essential parties renders the order incomplete and legally unsound.
iii) The court below misinterpreted Clause 13.2(vi) of the Trust Deed, which grants trustees power to act as necessary to achieve the objectives of the Trust. This clause does not grant the authority to alienate the Trust property for the purposes not aligned with the mission of the Trust. The decision thus constitutes an abuse of discretion and misapplication of the clause.
iv) The petition filed under Section 34 of the Indian Trusts Act, 1882 and section 7 of the Charitable and Religious Trusts Act, 1920 is https://www.mhc.tn.gov.in/judis ( Uploaded on: 17/04/2025 06:56:08 pm ) 11 not maintainable for the purpose of approving a sale and the court below ought to have dismissed the petition as legally untenable, recognizing that neither provision permits the disposal of charitable trust property, especially when it contravenes the objectives of the Trust, in view of the decisions in:
a) M/s.A.R.R.Charitable Trust Rep by its Founder Trustee B.Ramachandran, Chennai & Others v. Amrita Vishwa Vidyapeetham, Coimbatore & another (CDJ 2023 MHC 7233)
b) K.Srinivasan & another v. G. Kuppusamy Naidu Memorial Sports Trust, K. Selvaraj & Others (CDJ 2010 MHC 5821).
v) The court below erroneously allowed the Trust O.P. without an independent valuation prior to the order, which constitutes a miscarriage of justice, as it deprives the Trust of the true value of its assets and subjects its property to sale at a grossly inadequate price.
vi) The Court below failed to scrutinize the validity of the Trust resolution dated 19.12.2018, which allegedly authorizes the sale. This resolution is claimed to be a fabricated one and non-compliant with the procedural requirements outlined in the By-laws of the Trust. By relying on this disputed resolution, the learned Judge endorsed a https://www.mhc.tn.gov.in/judis ( Uploaded on: 17/04/2025 06:56:08 pm ) 12 questionable action that lacks legal sanctity.
vii) The court below erred in ignoring the evidence of alleged financial mismanagement by the Chairman of the Trust. The claimed financial distress appears to stem from mismanagement rather than actual operational issues.
viii) The judgment of the court below is in contravention of the public trust doctrine by approving the sale of property that was intended for charitable purposes. The doctrine mandates that assets held in public Trust be used solely for the objectives of the Trust.
Permitting this sale to private individuals undermines the charitable mission of the Trust, making the order legally untenable. The court below failed to consider less drastic alternatives to selling the Trust property, such as restructuring debt or revising the Trust's management to rectify mismanagement. In failing to apply the doctrine of least invasive means, the court has unduly resorted to property alienation without exploring reasonable alternatives.
ix) The revision petitioner was not provided adequate opportunity to present evidence disputing the financial claims and demonstrating the true value of the property. The decision, therefore, suffers from procedural irregularities and violates the principles of https://www.mhc.tn.gov.in/judis ( Uploaded on: 17/04/2025 06:56:08 pm ) 13 natural justice, as the petitioner was deprived of a fair hearing in the matter.
x) The judgment overlooks the allegations of collusion between the Trust Chairman and Mr.Martin, a private industrialist, who allegedly stands to benefit unduly from the transaction. The decision of the court below to approve the sale without considering this possible conflict of interest violates the Principles of equitable and fiduciary conduct in trust management.
xi) The court below ought to have dismissed the petition outright as the combined provisions of Section 34 of the Indian Trusts Act, 1882 and Section 7 of the Charitable and Religious Trusts Act, 1920, do not empower the court to sanction a sale of property that could undermine the objectives of the Trust. Instead, the proper course that would have been available for the Trustees was to apply under relevant property disposal provisions within the Trust Deed or, if unavailable, seek legislative recourse rather than judicial authorization for a sale.
xii) The court below ought to have directed the first respondent herein to file a petition solely under Section 92(1)(f) of the Code of Civil Procedure, which pertains to suits for the removal of Trustees and https://www.mhc.tn.gov.in/judis ( Uploaded on: 17/04/2025 06:56:08 pm ) 14 similar matters. The failure to do so has resulted in procedural irregularities that warrant the intervention of this Hon'ble Court.
xiii) The court below failed to consider all the objections raised by the revision petitioner. The court below ought to have evaluated those objections in order to ensure a fair hearing and to uphold the principles of natural justice.
xiv) The court below failed to consider that the first respondent herein is a Public Charitable Trust which has no authority to mortgage its property without obtaining prior permission from the Jurisdictional Court.
xv) There is no averment or documentary evidence to demonstrate that prior permission from the Jurisdictional Court was obtained for mortgaging the Trust Property. Therefore, the mortgage is null and void and should be deemed unenforceable. Had the Court below probed the necessity of mortgage, nature of mortgage and thereafter borrowing from third party etc., it would have come to lime light that the interest of the trust is misused for the personal benefit of the Chairman and few other Trustees.
xvi) The court below failed to look into the objections raised by the revision petitioner regarding the Trust property, which https://www.mhc.tn.gov.in/judis ( Uploaded on: 17/04/2025 06:56:08 pm ) 15 encompasses 18.87 acres, including over 305,000 square feet of constructed buildings. The first respondent Trust has been operating a professional group of institutions for engineering students since 2010 within these premises. Presently, the institution employs more than 150 faculty members and serves approximately 750 students, earning a commendable reputation among both students and parents. The first respondent Trust receives other sources of income, indicating that the Trust is financially viable. Under these circumstances, there was no necessity for the sale of the Trust property. The failure on the part of the court below to scrutinize these critical aspects undermines the integrity of the proceedings, rendering the order and final judgment in Trust O.P.No.90 of 2019 unsustainable and contrary to the interests and objectives of the Trust.
xvii) The court below ought to have considered that the mortgage and subsequent loan were mere sham transactions orchestrated to benefit the Chairman and a select few Trustees personally. These actions were taken to favor Mr.Martin, who nominated the 2nd respondent in the acquisition of the Trust Property at an unreasonably low value and without any legitimate necessity for such a transaction. As a result, the order and final judgment passed by https://www.mhc.tn.gov.in/judis ( Uploaded on: 17/04/2025 06:56:08 pm ) 16 the court below in Trust O.P.No.90 of 2019 are unsustainable, as they do not serve the interests and objectives of the Trust.
xviii) The court below failed to properly appreciate the allegation that the Trust property is intended to be sold in a manner that would effectively swindle the property. This oversight raises significant concerns about the integrity of the proceedings and the motivations behind the proposed sale. In any event, the order of the court below is not sustainable and thus, intervention by this Court is warranted to rectify the situation and uphold the principles of justice.
4. The crux of the submissions of Mr.R.Bharath Kumar, learned counsel for the first respondent is as under:-
i) The revision petitioner is no longer a Trustee of the Trust having resigned from the Trusteeship on 10.10.2017 itself as evident from Resolution No.6 dated 10.10.2017 of the Minutes Book of the first respondent-Trust and thereby she has no locus standi to raise any objection.
ii) The Trust is following the rules and regulations and its accounts are regularly submitted to Income Tax by subjecting them to audit and thereby the allegations of mismanagement of the Trust are https://www.mhc.tn.gov.in/judis ( Uploaded on: 17/04/2025 06:56:08 pm ) 17 misleading and not sustainable.
iii) Similarly, when regular meetings were convened in respect of the activities of the Trust and no allegation of any dissenting voice was recorded in any Minutes of the meeting, the allegations of indulging into any illegal activities by the Managing Trustee are also not sustainable.
iv) The market value of the property mentioned is not fixed by the seller or buyer. The 1st respondent Trust had borrowed loan from Central Bank of India for construction of building and other developmental activities and since it was not able to repay the loan, the bank has given notice treating the properties as Non-Performing Assets under section 13(2) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act (SARFAESI), 2002.
v) Even in the bank notice and public auction notice, nobody was interested in purchasing the property. Therefore, the allegations that the property would fetch Rs.80 crores in the open market is farce.
vi) The petitioner has no locus standi in the case having already resigned from the Trusteeship and also received Rs.41,00,000/- given to the Trust as an unsecured loan by cheque No.115704 dated https://www.mhc.tn.gov.in/judis ( Uploaded on: 17/04/2025 06:56:08 pm ) 18 6.3.2018.
vii) Though the court below had approved for sale of the petition mentioned properties, it had made it clear that the properties shall be sold only in public auction and thereby protecting the interest of the Trust. Therefore, the revision petition is liable to be dismissed.
5. The submissions of Mr.K.R.Sankaran, learned counsel appearing for the second respondent are as under:-
i) The first Respondent-Trust had availed Financial Assistance from Central bank of India, Coimbatore Branch and created an equitable mortgage offering the properties of the Trust as Security for due repayment of the loan.
ii) The first respondent-Trust could not settle the loan account and consequently to avoid SARFAESI proceedings, the first respondent-Trust had borrowed a sum of Rs.21 crores from Mr.S.Martin with the understanding that the Trust properties shall be sold and the sale proceeds shall be utilized to discharge the loan amount to Mr.S.Martin with interest at 10% P.A.
iii) The first respondent-Trust had settled the loan amount to Central bank of India, Coimbatore Branch and the mortgage with the https://www.mhc.tn.gov.in/judis ( Uploaded on: 17/04/2025 06:56:08 pm ) 19 Bank was duly discharged with the amount borrowed from Mr.S.Martin, who is one of the Partners of M/s.Bloom Promoters LLP.
The first respondent-Trust has entered into three agreements of sale dated 01.04.2019, registered as Document Nos.4669, 4670 and 4671 of 2019 with the second respondent, M/s. Bloom Promoters LLP, agreeing to sell the Trust properties and received a total advance amount of (Rs.10 Lakh + 65 Lakh + 1.25 crore) totally Rs.2 Crores. As per the terms and conditions of the agreements of sale, if the first respondent fails to obtain the court order and register the sale deed within six months, the first respondent-Trust is liable to refund the advance amount of rupees two crores with a compound interest at the Rate of 15% per annum.
iv) The court below, while ordering the Trust O.P., had appointed a Committee of three Advocate Commissioners to bring the subject property for sale in public auction, after making due paper publication in local dailies widely circulated in Tiruppur and Coimbatore Districts both English and Tamil and also after assessing the value of the subject property with the assistance of independent appraiser/surveyors and permitted the second respondent herein to participate in the public auction.
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v) The second respondent herein is willing to participate in the proposed auction sale to be conducted by the Committee of Advocate Commissioners and ready and willing to comply with the terms and conditions to be imposed by the Committee of Advocate Commissioners. In the event of failure to succeed in the public auction, the second respondent herein is willing to receive back the advance amount of rupees two crores with compound interest at the rate of 15% per annum from the first respondent-Trust as per the terms of the Sale Agreement and execute necessary deed of cancellation of agreements of sale.
vi) In the event of failure to succeed in the public auction and on receipt of the advance sale consideration, the second respondent will not have any charge, demand or right over the subject properties of the first respondent-Trust.
6. An affidavit has been filed by one K.Senthilkumar, power of attorney of Mr.S.Martin to the following effect:-
i) Mr.S.Martin had lent a sum of Rs.21 crores to the first respondent-Trust for discharge of mortgage loan obtained by the first respondent-Trust from Central Bank of India, Coimbatore Branch. The https://www.mhc.tn.gov.in/judis ( Uploaded on: 17/04/2025 06:56:08 pm ) 21 mortgage had been duly discharged with an understanding that the first respondent-Trust shall repay the loan amount of Rs.21 crores to Mr.S.Martin with interest at 10% per annum.
ii) The second respondent herein will participate in the proposed auction sale of the properties of the first respondent-Trust. In the event of failure to succeed in the auction sale by the second respondent, the first respondent shall repay a sum of Rs.21 crores together with interest at 10% per annum from the date of respective payments till realization and neither the second respondent nor he shall have any lien over the properties of the first respondent-Trust and they are willing to hand over the original title deeds to the successful bidder through the Advocate Commissioners.
7. Heard the learned counsel appearing for the parties and perused the materials available on record.
8. The core issue revolves around the petition mentioned properties of the first respondent-Trust, which are sought to be sold in favour of the second respondent. The revision petitioner, being an erstwhile Trustee, having resigned from the Trusteeship on https://www.mhc.tn.gov.in/judis ( Uploaded on: 17/04/2025 06:56:08 pm ) 22 10.10.2017 as evident from resolution No.6 of the Minutes Book of the first respondent-Trust, has raised her objection for sale of the petition mentioned properties in favour of the second respondent, contending that the Trust owes money to her and in the event of approval of the proposed sale of the petition mentioned property, her interest could be prejudiced as the probability of recovering the money from the Trust would be bleak, as according to her the properties are sought to be sold for a song.
9. In this regard, it is relevant to note that one of the grounds taken by the revision petitioner, who happens to be an erstwhile Trustee of the first respondent-Trust, is that the first respondent-Trust receives other sources of income, indicating that the Trust is financially viable and thereby there was no necessity for the sale of the Trust property. Therefore, it is clear that the revision petitioner herself has taken such a contradictory hypotheses. On one hand, she seeks to putforth a presumption that she may not be able to recover her dues from the Trust in the event of sale of the petition mentioned properties, while on the other hand she takes a stand as if the Trust is financially viable to manage the situation rather than selling the https://www.mhc.tn.gov.in/judis ( Uploaded on: 17/04/2025 06:56:08 pm ) 23 properties.
10. With such inconsistent stands, the revision petitioner seeks to challenge the order passed by the court below permitting sale of the petition mentioned properties, of course, only in public auction after observing the formalities and after ascertaining the market value of the property by consulting the Revenue and Registration Department. Further, it is seen that the revision petitioner has not come out with any details with regard to the amount due to her from the Trust, while it is the case of the first respondent-Trust that the revision petitioner had received Rs.41,00,000/- given to the Trust as an unsecured loan by way of cheque bearing No.115704 dated 6.3.2018.
11. If at all, it is the case of the revision petitioner that some more money is due to her from the Trust, she could have moved the appropriate civil forum for recovery of the same. Peculiarly, she appears to have not initiated any such steps, instead, her present attempt is only to put an embargo against the Trust to prevent them from selling the petition mentioned properties to overcome its financial constraints. In such circumstances, this court is of the view that the https://www.mhc.tn.gov.in/judis ( Uploaded on: 17/04/2025 06:56:08 pm ) 24 court below has rightly observed that the revision petitioner has to work out her remedy before the appropriate civil forum to recover any amount due to her from the Trust.
12. While the so-called prophecy of undue hardship appears to be a predominant one to raise objection for sale of the petition mentioned properties, the revision petitioner has raised many more grounds in support of her case. Though the revision petitioner seeks to club such grounds with one of her interest in securing the alleged dues from the Trust, this court feels that they have to be dealt with separately as under.
13. Mismanagement & collusion:- The situation for the proposal of sale of the petition mentioned properties is claimed to have arisen due to mismanagement by the Chairman and the present Trustees. The further case of the revision petitioner is that without exploring the least invasive means like restructuring debt or revising the management of the Trust, the court below had erred in permitting for sale of the petition mentioned properties in public auction and that too without a fair opportunity of hearing to the revision petitioner, https://www.mhc.tn.gov.in/judis ( Uploaded on: 17/04/2025 06:56:08 pm ) 25 when she had alleged collusion on the part of the present Trustees with an industrialist viz., Mr.Martin, a partner of the second respondent herein and thereby paved way to the Chairman and some of the Trustees to swindle the funds of a Public Charitable Trust by selling the petition mentioned properties for a meagre price.
14. A perusal of the materials would show that the first respondent-Trust appears to have availed loan from Central Bank of India in January 2011 itself, when the revision petitioner was holding the office of the Trusteeship, as she is said to have resigned on 10.10.2017 as evident from Resolution No.6 dated 10.10.2017 of the Minutes Book of the first respondent-Trust, however, no dissenting voice appears to have been recorded by the petitioner with regard to the proposal for availing loan from the Bank, in any Minutes of the meeting that could have been convened while she was holding the office of the Trusteeship, which goes to suggest that she was well aware and not denied the requirement of the Trust to avail loan from the Bank for its administration. Further, it is seen that on 19.12.2018, after the resignation of the revision petitioner, a Meeting of Board of Trustees was held and a Resolution was passed by the Board https://www.mhc.tn.gov.in/judis ( Uploaded on: 17/04/2025 06:56:08 pm ) 26 unanimously to the effect that the Trust shall look for a prospective buyer for the best price. Therefore, at this stretch, the revision petitioner cannot be permitted to take such a vague stand of mismanagement by the present Trustees, in support of her case.
15. Sofar as the contention of the revision petitioner that the Managing Trustee and some of the Trustees had colluded with a partner of the second respondent in swindling the funds of the Trust by selling the petition mentioned properties for a meagre price is concerned, it is seen that the though court below had permitted for sale of the properties, it had observed that such a sale shall be conducted only through public auction after ascertaining the market value of the property by consulting the Revenue and Registration Department and thereby, the stand taken by the revision petitioner does not persist in view of the observation made by the court below.
16. Misuse of power and maintainability of the petition:- It is also contended by the revision petitioner that the first respondent being a Public Charitable Trust, the mortgage of its properties without prior permission from the jurisdictional court is null and void. She also https://www.mhc.tn.gov.in/judis ( Uploaded on: 17/04/2025 06:56:08 pm ) 27 contended that when Section 92(1)(f) of the Code of Civil Procedure pertains to sale or mortgage of a Trust property, the petition had been filed under Section 34 of the Indian Trusts Act, 1882 and Section 7 of the Charitable and Religious Trusts Act, 1920 and thereby it is not at all maintainable.
17. In this regard, reliance is placed on behalf of the first respondent-Trust on clause 13.2(vi) of the by-laws of the Trust Deed dated 14.9.2009, which deals with the power of the Board of Trustees, to contend that no permission is sought to be obtained from any court and the said clause permits the Trustees to do all things necessary or incidental to carry out the objects and purpose of the Trust in such a manner as they may think fit and in particular they shall have power to sell, exchange, mortgage or otherwise dispose of any properties belonging to the Trust, however, only by way of abundant caution, the Trust, being the public charitable Trust, had come forward with the application seeking permission of the Court to sell the petition mentioned properties.
18. Clause 13(2)(vi) of the Trust Deed dated 14.9.2009 relied on by the first respondent is extracted hereunder for ready reference:-
"13. POWERS OF THE BOARD OF TRUSTEES:-
https://www.mhc.tn.gov.in/judis ( Uploaded on: 17/04/2025 06:56:08 pm ) 28 13.2. Subject to the general provisions of the Trust and without prejudice to the general and specified powers conferred on the Trustees by the other provisions contained in these presents, the Board of Trustees shall have the following powers also.
..... ...... .......
vi) To acquire any property in exchange for some other property or partly for such exchange and partly for other consideration and to sell, demise, lease, give out on lease and/or license, give in exchange, transfer, surrender, dispose of, take or give for hire, pledge, hypothecate or mortgage the property movable or immovable for the time being belonging to the Trust in such manner and on such terms as the Trustees may deem fit."
19. A perusal of the above clause makes it clear that the Trustees are vested with powers to do any activities referred therein. It is also true that it does not insist for any prior permission to be obtained from the jurisdictional court. Similarly, it also does not say https://www.mhc.tn.gov.in/judis ( Uploaded on: 17/04/2025 06:56:08 pm ) 29 that no prior permission needs to be obtained from the court. Therefore, it is very much essential to find out whether any legal provision makes it mandatory on the part of the Trustees to approach the jurisdictional court seeking permission to alienate the properties of the Trust or it is an optional one.
20. The revision petitioner has raised a contention that the present Trust O.P., having been filed by the first respondent-Trust under Section 34 of the Indian Trusts Act, 1882 and section 7 of the Charitable and Religious Trusts Act, 1920, is not maintainable and the proper provision, which ought to have been invoked is Section 92 of the Code of Civil Procedure. The said legal provisions are extracted hereunder for ready reference:-
Section 34 of the Indian Trusts Act, 1882 "34. Right to apply to Court for opinion in management of trust-property.
Any trustee may, without instituting a suit, apply by petition to a principal Civil Court of original jurisdiction for its opinion, advice or direction on any present questions respecting the management or https://www.mhc.tn.gov.in/judis ( Uploaded on: 17/04/2025 06:56:08 pm ) 30 administration of the trust-property other than questions of detail, difficulty or importance, not proper in the opinion of the Court for summary disposal. A copy of such petition shall be served upon, and the hearing thereof may be attended by, such of the persons interested in the application as the Court thinks fit. The trustee stating in good faith the facts in such petition and acting upon the opinion, advice or direction given by the Court shall be deemed, so far as regards his own responsibility, to have discharged his duty as such trustee in the subject-matter of the application. The costs of every application under this section shall be in the discretion of the Court to which it is made."
Section 7 of the Charitable and Religious Trusts Act, 1920 "7. Powers of trustee to apply for directions (1) Save as hereinafter provided in this Act, any trustee of an express or constructive trust created or existing for public purpose of a charitable or religious nature may apply by petition to the Court, within the https://www.mhc.tn.gov.in/judis ( Uploaded on: 17/04/2025 06:56:08 pm ) 31 local limits of whose jurisdiction any substantial part of the subject-matter of the trust is situate, for the opinion, advice or direction of the Court on any question affecting the management or administration of the trust property, and the Court shall give its opinion, advice or direction, as the case may be, thereon:
Provided that the Court shall not be bound to give such opinion, advice or direction on any question which it considers to be a question not proper for summary disposal.
(2) The Court on a petition under sub-section (1), may either give its opinion, advice or direction thereon forthwith, or fix a date for the hearing of the petition, and may direct a copy thereof, together with notice of the date so fixed, to be served on such of the persons interested in the trust, or to be published for information in such manner, as it thinks fit.
(3) On any date fixed under sub-section (2) or on any subsequent date to which the hearing may be https://www.mhc.tn.gov.in/judis ( Uploaded on: 17/04/2025 06:56:08 pm ) 32 adjourned, the Court, before giving any opinion, advice or direction, shall afford a reasonable opportunity of being heard to all persons appearing in connection with the petition.
(4) A trustee stating in good faith the facts of any matter relating to the trust in a petition under sub-
section (1), and acting upon the opinion, advice or direction of the Court given thereon, shall be deemed, as far as his own responsibility is concerned, to have discharged his duty as such trustee in the matter in respect of which the petition was made."
Section 92(1)(f) of the Code of Civil Procedure, 1908 "92. Public charities .-
(1)In the case of any alleged breach of any express or constructive trust created for public purposes of a charitable or religious nature, or where the direction of the Court is deemed necessary for the administration of any such trust, the Advocate-General, or two or more persons having an interest in the trust and https://www.mhc.tn.gov.in/judis ( Uploaded on: 17/04/2025 06:56:08 pm ) 33 having obtained the [leave of the Court,] may institute a suit, whether contentious or not, in the principal Civil Court of original jurisdiction or in any other Court empowered in that behalf by the State Government within the local limits of whose jurisdiction the whole or any part of the subject- matter of the trust is situate to obtain a decree-
....... ........ .......
(f) authorizing the whole or any part of the trust property to be let, sold, mortgaged or exchanged;"
21. A careful perusal of the above legal provisions on obtaining permission from the Court for alienating the Trust properties would disclose that the scope of such provisions is only to protect the interest of the Trust and its properties. The present case is not the one where the Trustees have unilaterally taken a decision to sell the property whereas they had approached the court below by filing a petition under Section 34 of the Indian Trusts Act, 1882 and section 7 of the Charitable and Religious Trusts Act, 1920 and the court below has also granted permission for sale of the property, however, through public https://www.mhc.tn.gov.in/judis ( Uploaded on: 17/04/2025 06:56:08 pm ) 34 auction by appointing Advocate Commissioners after giving advertisements in newspapers.
22. Admittedly, the Trust is suffering on account of loans drawn from the bank by mortgage its properties. Such properties were sought to be attached and thereupon the Trust had also obtained loan from one Martin to settle the loan availed from the bank in order to avoid the properties being brought for distress sale. Though the fact remains that the Trust had approached the court below under Section 34 of the Indian Trusts Act instead of filing a suit under Section 92 CPC, it is seen that the revision petitioner, an erstwhile Trustee had impleaded herself in the said petition and contested the case and only after considering the objections raised by her, the court below had passed the order granting permission for sale of the properties, of course, through public auction in order to protect the interest of the Trust.
23. Moreover, when the loan transaction with the Central Bank of India was commenced, the revision petitioner appears to have been one of the Trustees, however, she did not raise any objection for such https://www.mhc.tn.gov.in/judis ( Uploaded on: 17/04/2025 06:56:08 pm ) 35 an act of the Trustees or the Managing Trustee, but, only after her resignation from the Trusteeship, probably due to some strained relationship with other Trustees, she had chosen to raise an objection to stall the further proceedings of the Trust in reconciling its financial imbalance. The inaction on the part of the revision petitioner while she was holding the office in raising any objection for the activities of the Trust speaks much about her present attempt to stall the proceedings of the Trust after her resignation from the Trusteeship. However, the court below had considered the objections of the revision petitioner, after impleading her as party to the Trust O.P.
24. Still, the revision petitioner seeks to raise an objection for approval of sale contending that the petition filed by the first respondent-Trust under Section 34 of the Indian Trusts Act is not maintainable, as a suit under Section 92 CPC alone ought to have been filed for alienating the properties of a Public Charitable Trust in view of the decisions in
a) M/s.A.R.R.Charitable Trust Rep by its Founder Trustee B.Ramachandran, Chennai & Others v. Amrita Vishwa Vidyapeetham, Coimbatore & another (CDJ 2023 MHC 7233) https://www.mhc.tn.gov.in/judis ( Uploaded on: 17/04/2025 06:56:08 pm ) 36
b) K.Srinivasan & another v. G. Kuppusamy Naidu Memorial Sports Trust, K. Selvaraj & Others (CDJ 2010 MHC 5821).
25. No doubt, the above decisions emphasize for filing of a suit under Section 92 CPC instead of filing a petition under Section 34 of the Indian Trusts Act when the Trust happens to be a Public Charitable Trust. In the case on hand, though a petition alone has been filed by the first respondent-Trust under Section 34 of the Indian Trusts Act instead of filing a suit under Section 92 CPC, considering the financial restraints of the Trust and the fact that the court below had passed the order after elaborately considering the objections of the revision petitioner, this court is of the view that it may not be appropriate to direct the first respondent-Trust to redo the entire process once on mere technicalities considering the fact that the scope of the scope of the legal provisions is only to protect the interest of the Trust and its properties and the same has been assured by permitting the property to be sold through public auction rather simply approving the direct sale.
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26. Redundance and inconsonance:- The revision petitioner contends that the Trust is financially viable and there was no necessity for sale of the properties of the Trust, however, without conducting any General Body Meeting to discuss on the issue, by misinterpreting clause 13.2(vi) of the Trust Deed and without impleading necessary parties, the petition mentioned properties are sought to be sold when the said clause does not grant any authority for alienation of the properties of the Trust for the purposes not aligned with the mission of the Trust in order to benefit some of the present Trustees. The petitioner further contends that the Trust Resolution dated 19.12.2018 relied on by the first respondent-Trust authorising the sale is a fabricated one and non-compliant with the procedural requirements outlined in the by-laws of the Trust.
27. As observed above, the revision petitioner seeks to take contradictory stands on the financial viability of the first respondent- Trust. On one hand, for objecting the sale of the Trust properties, she contends that the first respondent-Trust is financially sound as it has got income from other sources and thereby there is no necessity for selling its properties and on the other hand, she feigns an https://www.mhc.tn.gov.in/judis ( Uploaded on: 17/04/2025 06:56:08 pm ) 38 apprehension that in the event of sale of the Trust properties in question, she may not be able to recover her dues from the Trust. This court feels that based on such contradictory versions, it would be unsafe to restrict the proposal of the first respondent-Trust to sell its properties in order to discharge its debts. Similarly, when the first respondent appears to have convened a Meeting of the Board of Trustees on 19.12.2018, wherein it was resolved unanimously that the Trust shall seek for a prospective buyer for the best price in respect of the petition mentioned properties, no question of non-convening of a General Body Meeting would arise at the instance of an erstwhile Trustee.
28. In view of the above, this court finds that the order dated 29.04.2024 passed in Trust O.P.No.90 of 2019 by the Principal District Judge, Tiruppur in permitting sale of the petition mentioned properties through public auction does not warrant any interference. However, in order to protect the interest of the Trust, ensure that maximum higher sale price for the petition mentioned properties is fetched and to prevent monopoly, this court is of the view that wide publication all over India with regard to the proposed auction sale needs to be made. https://www.mhc.tn.gov.in/judis ( Uploaded on: 17/04/2025 06:56:08 pm ) 39 Therefore, instead of giving publication in two local dailies having circulation in Tiruppur and Coimbatore District as directed by the court below, the publication shall be effected in English in the newspaper "The Hindu" having circulation all over India and a Tamil Daily "Dina Thanthi" in all its Editions throughout India. The second respondent is also permitted to participate in the auction. The rest of the order passed by the court below does not require any interference.
29. While the order passed by the court below permitted the second respondent herein to take part in the auction, it is also made clear that if the second respondent does not succeed in the auction, the advanced amount received from the second respondent shall be returned with agreed interest. Similarly, the first respondent may discharge its debts to its creditors from and out of the sale proceeds of the petition mentioned properties.
30. The civil revision petition is disposed of with the above observation and modification. No costs. In view of the order passed in the civil revision petition, the connected Miscellaneous Petitions seeking interim orders are dismissed.
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Index: Yes/No. Internet: Yes/No. ssk.
To
1. Principal District Judge, Tiruppur.
2. M/s.Professional Educational Trust, rep. by its Chairman cum Managing Trustee Dr.C.Subramaniam, Having its Registered Office at Door No.400-B, 6th Street Extension, Gandhipuram, Coimbatore 641 012 and Administrative Office at Professional Nagar, Coimbatore-Trichy Road, K.N. Puram (PO) Palladam 641 662.
Tiruppur, Tiruppur District.
3. M/s.Bloom Promoters LLP, rep. by its Authorized Signatory N.Nagappan, having registered office at No.54, Mettupalayam Road, G.N.Mills (PO), Coimbatore 641 029.
https://www.mhc.tn.gov.in/judis ( Uploaded on: 17/04/2025 06:56:08 pm ) 41 A.D.JAGADISH CHANDIRA, J.
Ssk.
P.D. ORDER IN C.R.P.No.4727 of 2024 Delivered on 17.04.2025.
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