Bombay High Court
Dr. Sam Sarosh Bhacca And Ors. vs P.V. Kakade, Jt. Charity Commissioner ... on 8 February, 1994
Equivalent citations: (1994)96BOMLR714
JUDGMENT S.M. Jhunjhunuwala, J.
1. By this petition, the petitioners are challenging the order passed by the 1st respondent oh 6th November, 1989 on an application filed by the petitioner under Section 36(2) of the Bombay Public Trusts Act, 1950 (for short "the said Act") for revocation of the 1st Respondent's order according sanction to sell an immovable property admeasuring Order 47 Acres (20473.20 sq. ft.) bearing C.T.S. No. 1-B and situate at Moledina Road, Pune. within the limits of Pune Cantonment (for short, 'the Trust Property').
2. The petitoners are trustees of Surat Parsi Panchayet, a Public Trust registered at Surat in the State of Gujarat. The petitioners claim to be beneficiaries under the Deed of Trust in respect of Seth Pallanjee Patel Educational Charity Trust, (for short, 'the said Trust') a Public Trust registered under the said Act. The said Trust owned the Trust property. Pursuant to the sanction accorded by the 1st Respondent as per the order passed on 25th March, 1988 under the provisions of Sections 36(1)(a) of the said Act, the Trustees of the said Trust, by the Sale Deed dated 12th April, 1988, sold and conveyed the Trust property to the 7th Respondent who has been a partner in the firm of M/s. Darabjee & Co., tenants at the Trust property, for the consideration of Rs. 9,75,000/- on the terms and conditions mentioned therein. The said Sale Deed is registered under the provisions of the Indian Registration Act and the Trust Property has been transferred to the name of the 7th Respondent, The Trust Property ceased to be the property belonging to the said Trust and the 7th Respondent perfected his title thereto.
3. On 20th November, 1988, the Petitioners filed Writ Petition No. 5550 of 1988 in this Court against Trustees of the said Trust challenging the said Order dated 25th March, 1988 passed by the 1st Respondent. The Trustees of the said Trust seriously disputed and stoutly denied allegations of the Petitioners as contained in the said Petition. The 8th Respondent in whose favour the 7th Respondent has entered into an agreement to develop the said property was a party to the said Petition. By the Judgment dated 5th December, 1988, the Division Bench of this Court disposed of the said Petition in the following manner:
In the event a petition under Section 36(2) of the Bombay Public Trusts Act, 1950, be filed by the Petitioners within one week from today before the Joint Charity Commissioner, Pune, the Joint Charity Commissioner shall, after giving reasonable opportunity of hearing to all interested parties, dispose of in accordance with law the said Petition under Section 36(2) of the Act within a period of three months from today. In the event he is unable to dispose of the proceedings within the said stipulated period a liberty is given to the Joint Charity Commissioner and also the parties to apply before this Court for extension of time.
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Thereafter, the Petitioners filed Application No. 164 of 1988 under Section 36(2) of the said Act before the 1st Respondent for revocation of sanction accorded to the Trustees of the said Trust under Section 36 (l)(a) of the said Act to sell the Trust Property to the 7th Respondent by the said Order passed on 25th March, 1988 on the ground that it was obtained by fraud and misrepresentation and by concealing material relevant facts by the Trustees of the said Trust from the Authority according sanction.
4. In the said Application filed by the Petitioners under Section 36(2) of the said Act, the Trustees of the said Trust raised the preliminary point of jurisdiction of the 1st Respondent to entertain and decide the same. In the facts as aforesaid, the Trustees contended that the Trust Property ceased to be a property of the said Trust and the amount of consideration for sale received by the said Trust invested in Unit Trust of India became the property of the said Trust. It was further contended that the 7th Respondent, after having perfected his title to the Trust property, had created third party interest in respect thereof in favour of the 8th Respondent, who had applied to the Government of India to convert the same as a free-hold property and sanction of the President of India was accorded to withdraw the said property from the management of Cantonment Board and transfer the same as free-hold in the name of the 7th Respondent on payment of Rs. 54,31,525/- as occupancy fee to transfer as free-hold. The said amount was paid and the said property was converted into freehold. In support of their submission before the 1st Respondent that the said property on being sold and transferred to the 7th Respondent had ceased to retain as a Trust property and that the power of revocation of sanction under Section 36(2) of the said Act has to be exercised only when the sanction remains alive and does not get Itself merged into sale, the Trustees of the said Trust had, before the 1st Respondent, put reliance on the case of Shri Mahadeo Deosthan Wadali and Ors. v. Joint Charity Commissioner, Nagpur and Ors., in 1989 Maharashtra Law Journal 269.
5. In the case of Shri Mahadeo Deosthan Wadali, a question arose as to whether the Joint Charity Commissioner can, under Section 36(2) of the said Act, revoke the sanction given to a public trust for alienation of its immoveable - property by a sale - deed, after the sale-deed is executed pursuant to the sanction granted under Section 36(1) of the said Act and the property alienated by the trust no longer retains the character of property as that of a public trust. In that case, an application for obtaining sanction for transfer of 10 acres of land belonging to Shri Mahadeo Deosthan Wadali, a registered public trust was made to the Joint Charity Commissioner under Section 36(1) of the said Act. The Joint Charity Commissioner, after making necessary enquiries, had granted sanction, the trust executed a registered sale-deed in respect of the property in favour of the purchaser thereof and possession of the property was given to the purchaser. The entire transaciion was completed. Thereafter an application under Section 36(2) of the said Act for revoking the sanction already granted was filed by a trustee alongwith other persons on the ground that while obtaining sanction, the other trustees had grossly undervalued the property by suppressing material fact. The questions about maintainability of the application under Section 36(2) of the said Act and jurisdiction of the Joint Charity Commissioner to revoke the sanction after the sale-deed was executed exhausting the sanction already granted were raised. The Joint Charity Commissioner was of the view that the application for revocation was maintainable despite the earlier execution of the sale-deed. On Imerits, the Joint Charity Commissioner came to the conclusion that the earlier sanction was obtained by the concealment of material facts and revoked the .sanction. The Order of the Joint Charity Commissioner was challenged by the trust and the trustees other than one who had applied for revocation of the sanction in the Writ Petition before the Division Bench of this Court. The Division Bench held that if in pursuant to the sanction, a sale deed is executed, the property would be divested of the character as a trust property and interest would be created in the purchaser who may not get an opportunity to show why the sanction should not be revoked. A property may change hands several times and if a sanction granted in respect of a trust property could be revoked at any time even after successive sale-deeds and even after it changes its character as the trust property, a chaotic condition is likely to be created. It has been further held by the Division Bench that a sanction, therefore, has to be granted to alienate the trust property and has to be revoked only for the trust property i.e. while the property retains the character as the trust property land not after the public trust is divested of that property and interest in such property is created in persons other than trustees. The Division Bench has also held that the power of revocation in in the interest of harmony, has to be exercised only when the sanction remains alive and does not get itself merged in the sale deed and the power granted to the Joint Charity Commissioner under Section 36(2) of the said Act cannot be invoked by the Joint Charity Commissioner to revoke a sanction granted under Section 36(1) of the said Act, after the sanction merges itself into a sale deed and the property loses the character as that of a trust property. The Division Bench allowed the said Writ Petition and the orders passed by the Joint Charity Commissioner under Section 36(2) of the said Act were quashed and set aside as being without jurisdiction.
6. On 6th November, 1989, while relying upon the judgment of the Division Bench of this Court in the case of Shri Mehadeo Deosthan, Wadali, the 1st Respondent held that the ratio laid down therein applied to the facts involved in the present case and further held that he had no jurisdiction to entertain and decide the said application of the Petitioners filed under Section 36(2) of the said Act. The present Petition is filed to challenge the said Order of the 1st Respondent.
7. It is an admitted position that the said property sold to the 7th Respondent has been tenanted. The structure standing on the land was in dilapidated condition and the sum of Rs. 54,31,525/- was required to be paid as occupancy fees to the Central Government in order to convert the same into freehold property in addition to the sum of Rs. 9,75,000/- paid as and by way of purchase price to the said Trust.
8. Mr. Abhyankar, learned Counsel appearing for the Petitioners, has submitted that powers of the Charity Commissioner under the provisions of Section 36 are not limited. He has further submitted that Section 36(2) of the said Act contemplates situation where there is disclosure of certain facts subsequent to according of sanction by the Charity Commissioner under Section 36(1). In the submission of Mr. Abhyankar, if the sanction once granted cannot be revoked after the trust property loses its character as that of a trust property and the sanction earlier accorded merges into a sale-deed, the later portion of Section 36 (2) would be made nugatory. He has also referred to the provisions of Sections 50, 51 and 52-A of the said Act in support of his submission that despite the trust property losing its character as that of a trust property, the Charity Commissioner possesses the power to revoke the sanction earlier accorded under Section 36(1) of the said Act. Mr. Abhyanker has also submitted that since Sub-section (4) of Section 36 was not considered by the Division Bench in the case of Shri Mahadeo Deosthan, reference to Larger Bench should be made. Mr. Parshurami, the learned Counsel appearing for the 1st Respondent, has adopted the arguments advanced by Mr. Abhyankar.
9. Mr. Salvi, learned Counsel appearing for the 7th Respondent and Mr. Rane, learned Counsel appearing for the 8th Respondent, have put reliance on the judgment of Shri Mahadeo Deosthan and have submitted that the 1st Respondent has rightly held that in view of the trust property losing its character as that of a trust property and the sanction earlier accorded under Section 36(1) merging into the said Sale-deed executed on 12th April 1988, he had no jurisdiction to entertain the said application of the Petitioners filed under Section 36 (2) for revocation of the sanction. Mr. Rane has further submitted that Sub-section (4) of Section 36 of the said Act is in the nature of continuation of the provisions of Sub-section (2) of Section 36 and that the remedies provided under Sections 50, 51 and 52-A of the said Act are independent remedies not dependent upon revocation of the sanction accorded under the provisions of Section 36(1) of the said Act. Both Mr, Salvi and Mr. Rane have submitted that in view of Judgment in the case of Shri Mahadeo Deosthan, ratio whereof applies in all force to the facts in the instant case, there is no need to make a reference to Larger Bench as suggested by Mr. Abhyankar.
10. Sub-section (4) of Section 36 of the said Act provides for Charity Commissioner making assessment of any advantage received by a trustee in contingencies provided therein and empowers the Charity. Commissioner to direct such trustee to pay compensation to the trust equivalent to the advantage so assessed. In case where the trust property despite the sanction accorded by the Charity Commissioner as contemplated by Section 36(1) of the said Act does not lose its character as trust property and advantage as a result of such sanction is received by any trustee, the Charity Commissioner under Sub-section (4) of Section 36 is empowered to make assessment of such advantage received and direct the trustee concerned to make payment of compensation to the trust equivalent to the advantage so assessed. Sub-section (4) of Section 36 does not apply where pursuant to the sanction accorded under Section 36(1) the trust property loses its character as a trust property and sanction is merged into a sale deed.
11. Section 50 of the said Act is an enabling provision. It empowers the Charity Commissioner and beneficiaries of the trusts to initiate those suits enumerated in Clauses (a) to (q) thereof where the background is the one depicted in Clauses (i) or (ii) or (iii) or (iv) of the initial part thereof. Section 51 provides that if the persons having an interest in any public trust intend to file a suit of the nature specified in Section 50, they shall apply to the Charity Commissioner in writing for his consent. Section 52-A provides that suits against assignees of any property of any public trust for valuable consideration for the purpose of following in their hands trust property etc. would not be barred by limitation. As rightly submitted by Mr. Rane, remedies provided in Sections 50, 51 and 52-A are not dependent upon revocation of sanction accorded by the Charity Commissioner under Section 36(1) of the said Act. These are independent remedies.
12. The later portion of Sub-section (2) of Section 36 comes into operation when the sanction earlier accorded by the Charity Commissioner under Sub-clause (1) is revoked on the ground of fraud or misrepresentation for concealment of material facts prior to the trust property losing its character as trust property and sanction accorded merging into a sale deed as the power of revocation can be exercised only in respect of property owned by the trust and not after the trust is divested of the ownership in respect thereof.
13. The judgment of this Court in the case of Shri Mahadeo Deosthan has been subsequently followed by this Court. Even in the case of Mrs. Fatmabai B. Bachooali v. State of Maharashtra and Ors. in , the Charity Commissioner had accorded his sanction for sale of immoveable property of the trust under Section 36(1) of the said Act in pursuance whereof conveyance was executed by the trustees in favour of the purchaser thereof, the registration whereof had also taken, Thereafter, an application under Section 36(2) was made for revocation of the sanction accorded and Order passed whereon had occasioned the Writ Petition. Following the ratio laid down in Shri Mahadeo Deosthan, Daud J, held that the sale-deed had the effect of making the property ceased to have the character of a trust property and the power of revocation could be exercised only in respect of a property owned by the trust and not after the sale-deed. In our view, the view taken in the case of Shri Mahadeo Deosthan is a reasonable and possible view and the ratio laid down therein is binding on us. The 1st Respondent, while deciding the application of the Petitioners filed under Section 36(2) of the said Act, in the facts of the case, has righlty followed the said Judgment and rightly held that since the trust property lost character as a trust property, he had ceased to have jurisdiction in respect thereof. In this view of the matter, we feel that it is not necessary to make reference to Full Bench of this Court.
14. In the result, the Petition is dismissed and the Rule is discharge. However, in the facts of the case, there shall be no order as to costs.
15. Mr. Abhyankar applies for continuation of interim relief granted on 23rd November, 1989 for a period of eight weeks. We see no reason for continuation of such interim relief. However, it is needless to state that any development of or construction on the said property shall be subject to final result of this litigation.
Issurance of certified copy is expedited.