Karnataka High Court
Prof. M.S. Padmarajaiah And Ors. vs The Commissioner, Bangalore ... on 1 August, 2007
Equivalent citations: AIR 2008 (NOC) 352 (KAR.) = 2007 (6) AIR KAR R 1, 2008 (1) ABR (NOC) 141 (KAR.) = 2007 (6) AIR KAR R 1, 2008 (1) AJHAR (NOC) 292 (KAR.) = 2007 (6) AIR KAR R 1, 2007 (6) AIR KAR R 1, 2008 A I H C 236
Author: V. Jagannathan
Bench: V. Jagannathan
JUDGMENT V. Jagannathan, J.
Page 1545
1. The petition under Section 92(1) of the CPC seeking leave of the Court to institute a suit under Section 92 of the CPC came to be dismissed by the trial Court and hence the petitioners are before this Court in this appeal.
2. The facts in brief are to the effect that late Mothikane Padmanabhaiah constituted a Trust by the trust deed dated 9.7.1921 as Mothikhane Thimmappaiah Jain Vidyarthi Nilaya, for the benefit of Jain students and as per the trust deed, the property which is mentioned therein comprised of a hostel, was to be made use of for the purpose of providing hostel facility to the Jain students and also for helping the Jain students to carry on their education and it was the desire of the settler that in order to perpetuate the memory of late Thimmappaiah, the trust property be run in the name of late Thimmappaiah Jain Vidyarthi Nilaye and the vacant portion of the Trust property shall be made use of in whatever manner the trustee deems fit, but the revenue or income i.e., received from making use of vacant portion shall also be used for the students' scholarship and the trustees shall also take steps to develop to the hostel building. The deed also mentioned that all these objects will have to be carried out by the Jaina Education fund Association. It is the case of the appellants herein that the main purpose of the Trust has now been given up and instead of developing the hostel which was there and providing scholarship and other educational facilities to the Jain students, the Trust property in now being converted into a Commercial complex in as much as a Jainbhavan has been constructed in the trust property and there is also a marriage hall which is in the name of ninth respondent Sri. D Virendra Heggede and apart from this, the old hostel building has been demolished and a new building has been put up and the Jainabhavan as well as newly put up hostel buildings are situated within the same trust property and they form two portion of the same huge complex. It is also the case of the appellants that apart from the above changes, the respondents have also mortgaged the entire Trust property to HUDCO and raised a loan of rupees Two Crores and in the process, the respondents have claimed themselves as the owners of the Trust property and as if the Trust property was given as a gift to them, they have mortgaged the entire trust property which act on the part of the respondents is a clear breach of the Trust's terms and conditions. Another reason for the appellants to move the trial Court for grant of leave is that the Khatha was also changed into the names of the respondents and so for as the income is concerned, even the latest statement of accounts of the respondents-association does not reveal as to what was the income derived by the Trust property and how much of the said income was spent towards achieving the objectives of the Trust. It is the case of the appellants that by changing the entire nature of the Trust property as well as by changing the objective behind the Trust, the respondents have allowed the Trust property now to become vulmerable in that, tax liability is also being faced by the Trust. The respondents by Page 1546 permitting the Trust property to be made use of for the purposes which are beyond the purview of the Trust deed itself and having commercialised the entire Trust property, and the income that is received being not less than Rs. 30 lakhs, the respondents having not been able to ensure that the Trust property continues to receive tax exemption under the Income Tax Act, but on the other hand, the tax liability is now put on the Trust property including Municipal tax, and thus have violated the conditions of the Trust. Further, a plain reading of the statement of accounts will also indicate that neither advance tax nor any income tax has been paid by the respondents and nowhere it is found from the perusal of the statement of account for the period 1.4.2006 to 31.3.2007 as to what was the amount that was spent towards the scholarship and other benefits to the students of the Jain community. All these facts therefore, clearly go to establish that the third respondent Karnataka Jain Association has violated the condition of the Trust and thus there has been a breach of the trust conditions. One other factor which also gives rise to the inference that there has been a breach of the Trust conditions is that several portions of the properties have been encroached upon by others and as such, the appellants were constrained to move the trial Court by filing a petition, under Section 92(1) of the CPC seeking leave of the Court to institute suit under Section 92 of the CPC. The relief claimed in the said suit are as fallow:
a) Appoint eleven new trustees in number including a representative of the Jain Association, defendant No. 3 to manage the affairs of the Jain hostel,
b) direct the vesting of the schedule trust property in the new Board of Trustees constituted by this Hon'ble Court.
c) Direct the delivery of possession of schedule trust property in the possession of Jain Association-defendant No. 3 to the Trustees eleven in number constituted by this Hon'ble Court.
d) Direct the Jain Association-Defendant No. 3 to render accounts relating to Jain Hostel-schedule properly from 9.7.1921 on which date the Trust was constituted and further direct enquiries in the matter of breach of trust and or misappropriation of trust funds and to direct the defendant No. 2 to deposit the amount in their hands relating to the trust property in the name and account of Mothikhane Thimmppaiah Jain Hostel.
e) Further pleased to direct the appropriation of the income of the Trust properly to realise the object of the trust.
f) In order to achieve the objects of the Trust, the Court may be pleased to settle a scheme.
g) To hold that all or any resolutions passed by the Jain Association-defendant No. 3 authorising defendant No. 4 to deal with the schedule trust property in any manner contrary to the objects of the trust examined in the Trust Deed dated 9.7.1931 as illegal and unauthorised and further hold that ace or deeds or contracts or Page 1547 compromise or judgment and decree of any court and or execution of the decrees against the trust properly or affecting the trust property or any agreements relating to the schedule property or alienations in any manner or mortgaging the schedule property if made as a security to the loan said to have been borrowed from defendant No. 2 or any other bank or financial institution pursuant to the resolutions of the General Body Meeting of the third Defendant Association held on 26.12.2004 as void, illegal, contrary to the instruments of Trust dated 9.7.1921 and not binding on trust and trust property.
h) Direct the defendant No. 1 to transfer the Khatha of the Trust property from the name of the Karnataka Jain association to Jain Hostel as before by setting a side Order No. DA(W)4PPR/96/02-03 vide Annexure-P as illegal, void and contrary to the facts and law.
i) Direct to erase the Inscriptions of the name of the ninth defendant "Rajashri Dr. Veerendra Heggade Sabhangana" in the Main Hall of Karnataka Jain Bhavan constructed within the trust property-Jain Hostel and to inscribe the name Mothikhane Thimmappaish Jain Hostel for the entire Trust property.
j) Award unliquidated damages for the injury or the damage caused on account of tortious acts committed by defendants 3 to 8 to the Trust Property contrary to the Instruments of Trust Deed dated 9.7.1921.
k) Award cost against defendants 3 to 8 and such other relief's as the Hon'ble Court deems fit to grant as the situation demands in the interest of justice.
3. The Objections were filed on behalf of respondents 2 to 7 which were adopted by respondents 8 and 9. No objections were filed by respondents 1 & 11. It is the stand of the above respondents in their objections before the trial Court that neither there has been violation of any of the conditions of the Trust nor can it be held that there has been any misappropriation of funds of the trusts. It is the specific case of the respondents that no Trust in the name of Mothikane Thimnappaiah was created and as could be seen from the Trust deed itself, that it is the Karnataka Jain Association which has been entrusted with the Trust property to carry out the objectives of the settler. It is also contended by the respondents that whatever encroachment that has been alleged were not due to the action taken by the present respondents but the said encroachment had taken place even before the present respondents came on the scene. It is also the case of the respondents that whatever improvements that have been now made over the trust property were the improvements which the appellants themselves had proposed to carry out. Therefore the allegation that is now made by the appellants does not stand to reason. As for as raising of the loan from financial institution is concerned, the said step was taken only to develop the Trust property and to provide more hostel rooms to the Jain students with modern facilities and therefore, it cannot be said that all the improvements done are in the nature of breach of trust.
Page 1548
4. The learned Judge after considering the submissions made in the petition as well as the objections and taking note of the objects of the Trust, came to the conclusion that although there is no serious dispute about creation of public charitable trust and appointment of third respondent as a sole trustee to fulfil the object mentioned in trust deed, yet the appellants herein were not able to satisfy the trial Court about the averments made in the petition as regards any breach of trust conditions by the respondents and therefore, the Court was of the view that no prima-facie material has been produced by the appellants to indicate that the affiairs of the Trust has not been properly managed by the respondents. One of the contentions put forward by the respondents which is also been taken note of by the trial Court is that the third respondent is the representative body of the entire Digambara Jain community in the State of Karnataka and the activities of the third respondent were being managed by the Executive Committee comprising of President, Vice President, Secretary, and other members and it was only after the 5th appellant herein loosing the elections held on 27.6.1999, that the present petition came to be filed. Therefore, taking note of all these factors, the trial Court held that the appellants herein had not made out a case for grant of leave to institute a suit under Section 92 of CPC and accordingly, the learned Judge of the trial court dismissed the petition filed seeking grant of leave. It is this order of the trial Court passed in Misc. No. 179/2005, that has given rise to this appeal.
5. I have heard the first appellant-party in person Professor M.S. Padmarajaiah and on behalf of other appellants, learned Sr. Counsel Shri C.B. Srinivasan submitted argument. On the side of respondents, Shri S.K. Venkatareddy argued the matter on behalf of respondents 3 to 6 and the learned Counsel Shri M.I. Arun submitted argument on behalf of the very same respondents. Shri K.N. Puttegowda for respondent No. 1 was also heard with regard to change of khatha and on behalf of respondents 6 and 9, Shri J. Prakash argued the matter and virtually adopted the argument addressed by Shri M.Y. Arun. I have also perused the entire material placed before the Court.
6. The learned Counsel Shri C.B. Srinivasan submitted that the trial Court though referred to the proposition of law concerning the object and scope of Section 92 as well as the power of the Court to grant leave, yet, the trial court did not adhere to the parameters of legal propositions laid down in the cases referred to by it while arriving at its conclusion. It was submitted that all that was required on the part of the trial court was to have found out from the plaint averments as to whether there are allegations of breach of trust and the Court for the said purpose could not have taken into consideration the averments made by the respondents by way of objections and it was also not required on the part of the trial Court to have gone in great detail into the averments made by the appellants herein and examine each one of the allegations as if the averments made were the evidence on record and such an approach is not called for at the stage of examining the Page 1549 matter for the limited purpose of granting leave. As for as breach of Trust condition is concerned, the learned Counsel submitted that there has been of the Trust property which fact is not denied by the respondents and khatha was also changed into the names of the trustee-third respondent and as could be seen from the memorandum of deposit of title deeds, the trust property has been treated at if it was gift made by settler in favour of third respondent-trustee and this is a clear violation of the trust conditions. It was further submitted that the very object behind the trust was to perpetuate the memory of the father of Mothikane Padmanabaiah, but the activities now being carried on seems to give an impression that what is sought to be perpetuated is not the name of Motikane Thimmappaish, but that of the 9th respondent and the said act is also indicative of breach of trust. It was then submitted that the main purpose of creating the trust was to provide hostel facilities to Jain students who come to Bangalore for higher studies, whereas the said nature of the Trust itself has been given a go-bye by resorting to multifarious activities which are far removed from the very object behind establishment of trust. The service that is being rendered to the students of the hostel is not commensurate with the income derived by the trustees from out of the Trust property. Therefore, the learned Judge of the trial Court ought to have had due regains to all these factors and as there has been express as well as implied breach of conditions of trust, the trial Court ought to have granted leave to the appellants. In support of the submission, the learned Counsel Shri C.B. Srinivasan place reliance on the decisions reported in 1991(1) SCC 48, AIR 1941 SC 221 and also AIR 1974 SC 2141.
7. The first appellant party in person Professor M.S. Padmarajaiah on his part took this Court through entire documents filed before the trial Court to point out that the third respondent-trustee has committed a breach of trust and the very purpose of the Trust has been loot sight of by the respondents and the entire Trust property has been mortgaged to secure a loan and before mortgaging the said Trust property, no permission before mortgaging the said Trust property, not permission from the Court was obtained which itself is a clear case of breach of express provisions of the trust Secondly, the statement of accounts of the third respondent association does not reveal anything about the amount that is spent towards achieved objectives of the Trust or for that matter amount that is earned from the Trust property and therefore, there has been professional negligence being committed on the part of the chartered accountant who has certified the accounts of the third respondent-association. It was also submitted by him that 85% of the revenue received from the Trust property ought to have been spent solely for achieving the purposes of Trust, i.e., providing hostel facilities to Jain students and also scholarship to the students but this has not been so end as such, the Trust property is now under the threat of incurring huge liability by way of income tax and also corporation tax. Therefore, the respondents under third respondent trustee have thus made the Trust property to incur liability which was not the objective of the Trust itself, because, settler had made his intention clear by indicating; in Page 1550 the trust dead that a portion of vacant part of the trust property will have to be made use of for achieving the purpose of providing hostel facilities to students. Therefore, when the respondents have failed to show from the material placed by them before the trial Court that 85% of the income generated has been used for fulfilling the objectives of the Trust, the trial Court would not have failed to note this important aspect in arriving at its conclusion. It was further contended by the first appellant that now the Trust property is also exposed to income tax because of the nature of change in the trust activities and this is going to be a liability which the Trust has to incur in perpetuity which was not what author of the Trust conceived when he endowed Trust property for the purpose of providing scholarship and hostel facilities to Jain students. The change of khatha in the name of third respondent is another instance of breach of Trust and therefore, when there is a clear bar to alienate the Trust property, the respondents could not have resorted to mortgage the Trust property towards loan obtained by the third respondent. Referring to all the above factors, the first appellant professor Padmarajaiah submitted that the approach of trial Court was totally erroneous and as if the averments made on the denial by the respondents were in the nature of evidence let in by the parties, the trial Court has proceeded to examine the said averments and this was not what was expected of the Court while exercising its power under Section 92 of CPC, concerning grant of leave. In support of the above submissions, the 1st appellant placed reliance on the following decisions:
1) 1970(1) Mys.L.J293: C. Chikka Venkatappa and Anr. v. D. Hanumanthappa and Ors.
2) 2006 Tax.L.R.227: The Commissioner of Income Tax (Central) Kanpur v. Dr. (Miss) Chandra Kanta Rohatgi.
3) 2006 Tax. L.R.426: Commissioner of Income Tax Trivandrum v. Trivandrum Club, Trivandrum.
4) : Joint Commissioner, Hindu Religious and Charitable Endowments ADMN. Department v. Jayaraman and Ors.
5) 2006 (3) SCC 549: Intellectuals Forum, Thirupathi v. State of A.P. and Ors.
6) Writ Petition No. 49486-93/2003(GM-RES) dated 18th November 2003, between S. Paramashivaiah and Ors. v. S. Gopal and Ors.
7) 2004 Tax.L.R.402: Ganjam Nagappa & Son Trust v. Director of Income Tax (Exemption) Bangalore.
8) 2004 Tax.L.R.507: Bangalore Education Trust v. Director of Income Tax.
9) 2004 Tax.L.R.565: Saurashtra Education Foundation v. Commissioner of Income-Tax.
Page 1551
10) 2004 Tax.L.R. 606: Mrs. Prabha Lal v. Income Tax Commissioner.
11) AIR 2007 (NOC) 490 (DEL): Hammad Ahmed and Anr. v. Abdul Mueed and Ors.
8. Referring to above argument advanced on behalf of the appellants, the learned Counsel Shri S.K. Venkatareddy for respondents 3 to 6 submitted that no fault can be found with the order passed by the trial Court and the trial Court has examined the material placed before it in an objective manner to find out as to whether prima-facie case existed or not and therefore, having viewed the whole material in the said background, the conclusion reached by the trial Court cannot be trained as erroneous nor contrary to the proposition of law laid down by the Apex Court with regard to scope of Section 92 of the CPC. It was submitted by him that encroachment had not been committed during the term of present committee but the said encroachment had taken place much earlier and the allegations made in this regard, therefore, does not carry much force behind it. As far as the loan obtained from the financial institution is concerned, it was submitted that the old hostel building has to be damolished as it was in a dilapidated conditions, putting up a new building with more rooms for the occupation of the Jain students, cannot be termed as an act of breach of trust, but on the other hand, it only shows an advancement made by the present trustees in fulfilling the object of the Trust. As for as other allegations are concerned, it was submitted that right from 1921 till 1999, when Trust elections were hold and when 5th appellant lost elections, no problems were there but only when the new committee took over in the year 1999, suddenly, allegations are made against the third respondent. Therefore the learned Counsel Shri S.K. Venkatareddy wound up his argument by contending that the trial Court has not committed any mistake in arriving at its conclusion and as it had approached the entire matter in the objective manner, no case has been made out by the appellants herein to set-aside the impugned order.
9. The learned Counsel Shri M.I. Arun while reiterating the argument advanced by Shri S.K. Venkat Reddy further submitted that even as far as loan raised by the third respondent is concerned, the said loan is being cleared without any default being committed and the very constitution of the new committee itself goes to indicate that the persons behind the Trust affairs are expert in their chosen field and the very foot that huge donation wore received by the association itself speak of the trust and the faith that the Jain community at large had with the Trust. It is after the 5th appellant lost the election that the allegations are now being made. Referring to the document produced before the trial court, it is contended by Shri M.I. Arun that very appellants themselves were contemplating of bringing into existence complex called Shanthinatha complex and what the respondents have now done is only to improve upon the goals which the previous committee had chosen to achieve, in the coming years. It was also submitted that the allegations made are vexatious and for personal gain of the persons who made the application before the trial Court for grant of leave. As the Page 1552 intention of the appellants herein it not for the bonafide welfare of Jain committee as such, but on the other hand, the very action on the part of the appellants in approaching the trial Court for grant of leave is, nothing but an action, which is intended to abuse the process of law. It was also submitted by the learned Counsel Shri M.I. Arun that there was no Trust as such, constituted in the name of late Mothikhane Thimmappaiah, whereas, on the other hand, it was third respondent association which is the sole trustee which has been given the responsibility of achieving the objectives of the settlor. As such, the question of any trust in the name of Mothikhane Thimmappaiah having been constituted and the said Trust being breached by the respondents, therefore does not arise. The learned Counsel also made a submission to the effect that the appellants herein are also the member of third respondent-association and have taken part in the elections which was hold recently on 29th July 2007, and if at all the appellants were aggrieved, they can very well take the matter before the Registrar of Societies and not to take recourse to Civil Court under Section 92 of the CPC. In support of the said submission, the learned Counsel also placed reliance on the decision of the Apex Court reported in 1991 (1) SCC 46 to submit that it is open to the respondents to bring to the notice of the Court that the allegations made in the plaint are frivolous or rookless and that persons who are applying for leave under Section 93 of CPC are doing so merely with a view to harass the trust or have such antecedents that it would be undesirable to grant leave to such persons. It was also submitted that, being the members of third respondent-association, the appellants also become trustees and unless the appellants come out of the third respondent-association, they cannot make such allegation.
10. The last of the submissions made by the learned Counsel Shri M.A. Arun is that doctrine of Cyprus will come into existence and therefore even on this ground, the allegations made by the appellants cannot be given much importance. Therefore, the learned Counsel supported the order passed by the trial court by submitting that the said order does not require any interference by this Court.
11. The learned Counsel Shri K.N. Puttegowda for the first respondent-Corporation on his behalf submitted that the only role played by the Corporation was that it has issued the khatha in respect of Trust property and as the said khatha had been issued in the name of third respondent and there is no further role played by the first respondent.
12. The other respondents though served have remained absent. But the objections have boon filed.
13. In the light of the contentions put forward by the learned Counsel for the parties as well as the first appellant-party in person, the only point for consideration is "whether the order pawed by the trial Court in refusing to grant leave to the appellants is sustainable in law?
14. Before I proceed to answer the said question, it is necessary to keep in view the position in law as has been laid down by the Apex Court with regard to Section 92 of the CPC and Power of the Court to grant leave.
Page 1553
15. In the case of Swami Paramatmanand Saraswati and Anr. v. Ramji Tripathi and Anr. , the Apex Court has observed thus:
Brief Note:-A) A suit under Section 92 is a suit of a special nature which presupposes the existence of a public trust of a religious or charitable character. Such a suit can proceed only on the allegation that there was a breach of such trust or that the direction of the Court is necessary for the administration of the trust and the plaintiff must pray for one or more of the relief's that are mentioned in the section. If the allegation of breach of trust is not substantiated or if the plaintiff has not made out a case for any direction by the Court for proper administration of the trust, the very foundation of a suit under the section would fail. If it is clear that the plaintiffs are not suing to vindicate the right of the public but are seeking a declaration of their individual or personal rights or the individual or personal rights of any other person or persons in whom they are interested, then the suit would be outside the scope of Section 92 (paragraph 10) It is not every suit claiming the reliefs specified in the section that can be brought under the section but only the suite which besides claiming any of the reliefs, are brought by individuals as representatives of the public for vindication of public rights and in deciding whether a suit falls within Section 92 the Court must go beyond the reliefs and have regard to the capacity in which the plaintiffs are suing and to the purpose for which the suit was brought. When the right to the office of a trustee is asserted or denied and relief asked for on that basis, the suit falls outside Section 92.
Brief Note:-B) It is no doubt true that it is only the allegation in the plaint that should be looked into in the first instance to see whether the suit falls within the ambit of Section 92. But if after evidence is taken, it found that the breach of trust alleged has not been made out and that the prayer for direction of the Court is vague and is not based on any solid foundation in facts or reason but is made only with a view to bring the suit under the section, then a suit purporting to be brought under Section 92 must be dismissed.
16. The conditions to be satisfied or to invoke Section 92 of the Code of Civil Procedure are concerned, the Apex Court in the case of Bishwanath and Anr. v. Sri Thakur Radha Ballabhji and Ors. has observed at paragraph-7 thus:
It is settled law that to invoke Section 92 of the Code of Civil Procedure, 3 conditions have to be satisfied, namely, (i) the trust is created for public purposes of a charitable or religious nature; (ii) them was a breach of trust or a direction of Court is necessary in the administration of such a trust; and (iii) the relief claimed is one or Page 1554 other of the reliefs enumerated therein. If any of the 3 conditions is not satisfied, the suit falls outside the scope of the said section. A suit by an idol for a declaration of its title to property and for possession of the same from the defendant, who is in possession thereof under a void alienation, is not one of the reliefs found in Section 92 of the Code of Civil Procedure. That a suit for declaration that a property belongs to a trust is held to fell outside the scope of Section 92 of the Code of Civil Procedure by the Privy Council in Abdur Rahim v. Abu Mahomed Barkat Ali 55 Ind App 96 : AIR 1928 PC 16, and by this Court in Pragdasji Guru Bhagwandasji v. Ishwarlalbhai Narsibhai , on the ground that a relief for declaration is not one of the reliefs enumerted in Section 92 of the Cods of Civil Procedure. So too, for the same reason a suit for a declaration that certain properties belong to a trust and for possession thereof from the alience has also been held to be not covered by the provisions of Section 92 of the Code of Civil Procedure: See Mukhda Mannudas Bairagi v. Chagan Kisan Bhawasar . Other decision have reached the same result on a different ground, namely, that such a suit is one for the enforcement of a private right. It was held that a suit by an idol as a Juristic person against persons who interfered unlafully with the property of the idol was a suit for enforcement of its private right and was, therefore, not a suit to which Section 92 of the Code of Civil Procedure applied: See (Darshan Lal v. Shibi Maharaj Birajman ILR 45 ALL 215 : AIR 1923 ALL 120; and Madhavrao Anand Rao v. Shri Omkareshvar Ghat 31 Bom LR 192 : AIR 1929 Bom 153). The present suit is filed by the idol for possession of its property from the person who is in illegal possession thereof and, therefore, it is a suit by the idol to enforce its private right. The suit also in for a declaration of the plaintiffs title and for possession thereof and is, therefore, not a suit for one of the reliefs mentioned in Section 92 of the Code of Civil Procedure. In either view, this is a suit outside the purview of Section 92 of the said Code and, therefore, the said section is not a bar to its maintainability.
17. As far as grant for leave to institute a suit is concerned, the Apex Court in the case of Chairman Madappa v. M.N. Mahanthadevaru and Ors. AIR 1966 SC 673 has observed that "whether then is a prima facie case either of breach of trust or of the necessity for obtaining directions of the Court" has been made out or not, is to be looked into.
18. In the caw of R.M. Narayan Chettair and Anr. v. N. Lakeshmanan Chettiar and Ors. the Hon'ble Supreme Court, while dealing Page 1555 with Section 92 of the Code of Civil Procedure, has laid down the following proposition of law at paragraphs 9 and 17 thus:
(9) We may now discuss the main cases relied on by the learned Counsel for the respective parties. Coming first to the cases relied upon by learned Counsel for the appellants, we find that the first decision cited by him was the decision of this Court in Swami Parmatmanand Saraswati v. Ramji Tripathi . In that case it was held that to see whether the suit falls within the ambit of Section 92, only the allegations in the plaint should be looked into in the first instance. But, if, after the evidence is taken, it is found that the breach of trust alleged has not been made out and that the prayer for direction of the court is vague and is not based on any solid foundation of fact or reason but is made only with a view to bring the suit under the section then such a suit must be dismissed. Learned Counsel next drew our attention to the decision of this Court in Charan Singh v. Darshan Singh . Section 92 of the Code before its amendment in 1976 was applicable to the case. The court cited with approval the observations of Mukherje, J., (as he then was), in Mahant Pragdasji Guru Bhagwandasji v. Patel Ishwarlalbhai Narsibhai . which rant as follows (at pp.374-75 of AIR):
A suit under Section 92, Civil Procedure Code, is a suit of a special nature which presupposes the existence of a public trust of a religious or charitable character. Such suit can proceed only on the allegation that there is a breach of such trust or that directions of the court are necessary. It is only when these conditions are fulfilled that the suit has got to be brought in conformity with the provisions of Section 92, Civil Procedure Code....
(17) A plain reading of Section 92 of the Code indicates that leave of the court is a precondition or a condition precedent for the institution of a suit against a public trust for the reliefs set out in the said section; union all the beneficiaries join in instituting the suit, if such a suit is instituted without leave, it would not be maintainable at all. Having in mind, the objectives underlying Section 92 and the language thereof, it appears to us that, as a rule of caution, the court should normally, unless it is impracticable or inconvenient to do so, give a notice to the proposed defendants before granting leave under Section 92 to institute a suit. The defendants could bring to the notice of the court for instance that the allegations made in the plaint are frivolous or rookless. Apart from this, they could, in a given case, point out that the persons who are applying for leave under Section 92 are doing so Page 1556 merely with a view to harass the trust or have such antecedents that it would be undesirable to grant leave to such persons. The desirability of such notice being given to the defendants, however, cannot be regarded as a statutory requirement to be complied with before leave under Section 92 can be granted at that would lead to unnecessary delay and, in a given case, cause considerable loss to the public trust. Such a construction of the provisions of Section 92 of the Code would render it difficult for the beneficiaries of a public trust to obtain urgent interim orders from the court even though the circumstances might warrant such relief being granted. Keeping in mind these considerations, in our opinion, although, as a rule of caution, Court should normally give notice to the defendants before granting leave under the said section to institute a suit, the Court is not bound to do so. If a suit is instituted on the basis, of such leave, granted without notice to the defendants, the suit would not thereby be rendered bad in law or non-maintainable. The grant of leave cannot be regarded as defeating or even seriously prejudicing any right of the proposed defendants because it to always open to them to file an application for revocation of the leave which can be considered on mental and according to law.
19. Keeping in view the above principles and also being aware of the position in law that while granting leave to sue Section 92 of the Code of Civil Procedure, the Court, does not decide the rights of the parties but only looks into the facts as regards existence of a prima facie case, in the case on hand, we have to examine the material placed to find out as to "whether the appellants have made out a case to come within the framework of a prima facie case?"
20. The trust deed was executed in the year 1921 and from a bare perusal of the material portion of the trust deed dated 9.7.1921 which has been extracted by the trial Court at page-22 of its order, it becomes clear that the trust deed was executed by Padmanabhaiah, son of late Thimmappaiah; and, it also makes it clear that the existing hostel building will have to be taken care of by the trustees i.e. Jain Association to ensure that the trust is created in perpetuation in the name of said late father, is carried out and for the said purpose the hostel building along with the vacant space has been handedover to the Jain Association and the trustee was also permitted to make use of the vacant portion for the purpose of generating revenue which in turn will have to be made use of for the development of the hospital building and also for providing scholarship to the students of Jain Community. Thus, the deed satisfies all the requirements of a trust.
21. The learned trial Judge has also accepted the contentions of the appellants that the trust in question is a charitable trust and therefore merely because no name has been given to the trust as such by mentioning that the trust shall be in the name of late Thimmappaiah, yet it has not deminished in its character as a 'trust' created to perpetuate the name of late Thimmappaiah. All that the Jain Association was required to do as a Page 1557 trustee is to ensure that the objectives of the trust at mentioned in the trust deed are carried out. Therefore, it is not possible to accept the contentions put forward lay the learned Counsel for the third respondent that there was no trust created in the name of late Mothikhane Thimmappaiah. The very mention of the name of Mothikhane Thimmappaiah in the trust deed and to perpetuate his memory by developing the hostel and to provide scholarship to the students of Jain Community, itself, clearly manifests the main objectives behind the trust. Therefore, the first contention put forward by the learned Counsel for the third respondent that there was no trust in the name of Mothikhane Thimmappaiah, cannot be accepted as having sufficient force behind it.
22. Having thus held that the trust was created to perpetuate in the name of Mothikhane Thimmappaiah and to achieve the objectives of the trust, the next factor to be taken note of is as to "whether the appellants have made out a case for grant of leave?
23. A careful perusal of the decisions referred to by me, will makes it clear that all that is required is, at the stage of considering the question of grant of leave is, "whether the allegations in the plaint make out a prima facie case of a breach of trust and at this stage the Court is not required to embark upon detailed examination of the material as if it is examining in the evidence. In this connection, it is necessary to refer to the observations of the Apex Court in the case of Charan Singh and Anr. v. Darshan Singh and Ors. . In the said case the Hon'ble Supreme Court has observed that the maintainability of the suit under Section 92 of CPC depends upon the allegations in the plaint and does not fall for decision with reference to averments in the written statement. The Court, therefore, made it dear that what was required to be examined at the stage of grant of leave is "whether the allegations in the plaint are of such nature requiring the grant of leave?
24. Seen in the light of the above said observation of the Apex Court, in the instant case, specific allegations have been made by the appellants in their petition before the trial Court and also in the plaint that is filed, that the trust property has been mortgaged by the trustees in favour of the financial institutions and before embarking upon such an action of mortgaging the trust property, the trustee did not take necessary permission of the Court. In this connection, the learned Counsel for the respondent did not deny the arguments advanced by the appellants' side that no permission as such, have been obtained from the Court before mortgaging the trust properties.
25. In the case of Joint Commissioner, Hindu Religious And Charitable Endowments, Administration Department v. Jayaraman and Ors. AIR (2006) 1 SCC 257, the Hon'ble Supreme Court has observed that the claimants Page 1558 were required to obtain permission of the Commissioner for alienation of the properties either under Section 34 or under Section 41 of the HR & CE Act and went on to observe further that the Court, in the course of its satisfaction about the income from sale and propriety of the sale being necessary or not while granting permission, must make enquiry into market value of the property at the relevant time and mere pleas regarding difficulty to protect the property or meagre income therefrom will not be sufficient. Therefore, in the case on hand, mortgage having been created by subjecting the entire trust property into mortgage, as could be seen from the document which is filled before the trial Court, it cannot be said that the allegations of breach of trust does not carry any substance behind it.
26. It is also the case of the appellants that there exists Joint ownership of the trust properly along side the newly constructed part forming part and parcel of the same complex and same building and a marriage hall has also been made available, and some of the rooms in the hostel have been earmarked for occupation of persons other than the students and a huge parking space has been carved by digging the trust property and all these development made in the trust properly have also fed to lot of income generated and the trust as such has lost its original nature. That apart, it has been pointed out toy the appellants that even in the statement of accounts, there is no mention of any tax being paid either advance tax or income tax, since 85% of the income generated has not been spent on the trust objectives. Learned Counsel for the respondents did not deny the submissions made in that regard by the appellants' side.
27. It is not the case of the respondents that the income tax or advance tax has been paid in respect of the income derived out of the trust property and they also do not dispute that the trust property is now subjected to tax liability as could be seen from the records produced before the trial Court. Although it has been pointed out by Sri. Arun, the learned Counsel for respondents 3-6 that in respect of the Association there has been tax exemption in respect of the income derived by it. Yet, the allegations of the appellants is that, so far as the income derived by the trust it concerned, no such exemption has boon obtained.
28. It is also pointed out by the appellants' counsel as well as the first appellant/party in person, that even a cursory look at the balancesheet of the third respondent-Association will make it clear that, out of the income derived by the Association, most of it has not been spent towards ensuring fulfillment of the objectives of the trust i.e. providing hostel facilities to the students and also the scholarship.
29. Another allegation made out by the appellants is that the khata has been changed in the name of the third respondent Association and this is a clear case of violation of the trust condition. The trial Court, did not take into account these factors and as such, at the stage of granting of leave, what was required, by the trial Court in view of the law laid down by the Apex Court was that, "whether the allegations make out a prima facie case of breach of trust?" But the trial Court Page 1559 has gone to examine the entire material placed before it and weighed the allegations made with the denials put forward by the respondents and has arrived at certain conclusions on those allegations. This approach of the trial Court was not the correct approach and the trial Court was required only to look into the allegations made by the appellants to satisfy itself as to "whether there existed a prima facie case for grant of leave?" I, therefore, find sufficient force in the submission made by Sri. C.B. Srinivasan, the learned Counsel for appellants 2 to 7 that the trial Court failed to assess the matter before it within the parameters of the law laid down by the Apex Court with regard to Section 92 of the Code of Civil Procedure as well as the power of the Court to grant leave.
30. The first appellant/party in person, has also pointed out that this Court in Writ Petitions No. 49486-93/2003 disposed of on 18.11.2003 has also observed that as far as the scope of enquiry under Section 92 of CPC is concerned, the Court in empowered to take such action as it deems necessary to protect any religious and charitable trust are being abused.
31. In the case of Ram Dularey v. Ram Lal and Ors. AIR (33) 1946 Privy Council 34 it has been hold that in cases of trusts coming under Section 92, the Court has a duty, once it finds that it is a trust for public purposes, to consider what is best in the interests of the public.
32. Therefore, at the stage of grant of leave, the trial Court ought to have kept in view the above requirement of law and duty cast upon it under Section 92 of CPC and it ought to have seen whether there is a prima facie case made out by the appellants that there has been a breach of trust. I us, therefore, of the view, that the approach of the trial Court was not in consonance with the sprit of Section 92 of CPC, and, as the respondents will always have the opportunity of denying all the allegations made against them by way of leading evidence at the trial, it was a premature stags for the trial Court to have considered the allegations made and testing them with the denials made by the respondents and weighing the same as if it was evidence before it.
33. Therefore, for the above said reasons, the order of the trial Court cannot be sustained in law and I have chosen not to dwell deeply into the details of the material placed at this juncture though both sides extensively referred to the documents produced by them before the trial Court, because, any observations at this juncture may affect the rights of the parties at a later stage. Therefore, the endeavor has been, to find out as to whether there axe allegations in the petition filed, indicating breach of trust. Therefore, it for the said limited purposes, the material has been looked into by this Court and having examined from that angle, this Court is of the view that the appellants have made out a case for grant of leave and the requirement of Section 92(1) of CPC have been fulfilled in the instant case by the appellants. The impugned order of the trial Court, therefore, cannot be sustained in law.
Page 1560 Hence, I pass the following:
ORDER The Appeal is allowed. The impugned order dated 16.11.2006 pasted by the Prl. City Civil & Sessions Judge, Bangalore, in Misc.No. 179/2000 it set aside. Leave sought for by the appellants to institute a suit under Section 92 of CPC is granted.
It is also made clear that the observations made herein above, shall not be construed as an expression of opinion on the merits of the case nor the said observation shall in any way influence the trial Court at a later stage white examining the matter on merits.