Karnataka High Court
Mr.Moin Ulla Khan vs K.R.S.M. Educational And Charitable ... on 21 November, 2023
-1-
NC: 2023:KHC:41908
CRP No. 42 of 2021
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 21ST DAY OF NOVEMBER, 2023
BEFORE
THE HON'BLE MR JUSTICE R. NATARAJ
CIVIL REVISION PETITION NO. 42 OF 2021
BETWEEN:
MR.MOIN ULLA KHAN,
AGED ABOUT 58 YEARS,
SON OF LATE H. N. RAHMATH ULLA KHAN,
RESIDING AT J. T. HOUSE,
BEHIND GREEN BUILDINGS,
MAHALAKSHMI LAYOUT, KOLAR - 563 101,
BEING THE FOUNDER TRUSTEE/ PRESIDENT OF
K.R.S.M. EDUCATION AND CHARITABLE TRUST.
...PETITIONER
(BY SRI. RAJENDRA. S, ADVOCATE)
AND:
Digitally 1. K.R.S.M. EDUCATIONAL AND CHARITABLE TRUST,
signed by HAVING OFFICE AT
SUMA
Location: PEMMASHETTAHALLI VILLAGE,
HIGH
COURT OF ARABIKOTNUR POST, KOLAR - 563 101,
KARNATAKA
REPRESENTED BY ITS TRUSTEE
MR. T. SUDHAKAR CHWODHARAY.
2. MR. T. SUDHAKAR CHWODHARAY,
AGED ABOUT 64 YEARS,
SON OF T. HANUMANNA,
RESIDING AT NO.688, 6TH MAIN ROAD,
3RD BLOCK, BEL LAYOUT,
VIDYARANYAPURA, BENGALURU - 560 097,
BEING THE MANAGING DIRECTOR
-2-
NC: 2023:KHC:41908
CRP No. 42 of 2021
OF RESPONDENT NO.1 TRUST.
3. MR. MIR MOHAMED HAJI,
AGED ABOUT 57 YEARS,
SON OF LATE MIR NAZEER AHMED,
RESIDING AT NO.513, 3RD CROSS,
7TH MAIN ROAD, 5TH BLOCK,
1ST STAGE, HBR LAYOUT,
BENGALURU - 560 043.
BEING THE TRUSTEE OF RESPONDENT NO.1 TRUST.
4. MR. M. AFAQUE AHAMED,
AGED ABOUT 55 YEARS,
SON OF LATE MUSHTAQUE AHMED,
RESIDING AT NO.589, 7TH MAIN,
3RD BLOCK, 1ST STAGE,
HBR LAYOUT, BENGALURU - 560 043.
BEING THE TRUSTEE OF RESPONDENT NO.1 TRUST.
...RESPONDENTS
(BY SRI. SHARATH GOWDA G.B, ADVOCATE FOR
R1, R3 AND R4;
VIDE ORDER DATED 18.11.2022 IN RESPECT
OF R2 STANDS ABATED)
THIS CRP IS FILED UNDER SEC.115 OF CPC., 1908
AGAINST THE ORDER DATED 04.12.2020 PASSED ON IA
NO.X IN OS NO.4/2019 ON THE FILE OF THE PRINCIPAL
DISTRICT AND SESSIONS JUDGE, AT KOLAR DISMISSING THE
IA NO.X FILED UNDER SEC.92 R/W. SEC.151 OF CPC. AND
REVOKE THE ORDER ON IA NO.4 DATED 26.04.2019 WHEREIN
THE LEAVE IS GRANTED TO THE PLAINTIFFS TO INSTITUTE
THIS SUIT.
-3-
NC: 2023:KHC:41908
CRP No. 42 of 2021
THIS PETITION, COMING ON FOR DICTATING ORDERS,
THIS DAY, THE COURT MADE THE FOLLOWING:
ORDER
The petitioner has challenged an order dated 04.12.2020 passed by the Principal District and Sessions Judge, Kolar in O.S.No.4/2019 by which an application to revoke the leave granted under Section 92 read with Section 151 of CPC was rejected.
2. The parties shall henceforth be referred as they were arrayed before the Trial Court. The petitioner was the defendant while the respondents were the plaintiffs before the Trial Court.
3. The respondents filed a suit under Section 92 read with Section 151 of CPC seeking for various orders. The Trial Court registered the suit as O.S.No.4/2019. Along with the suit, they filed an application (I.A.No.1) seeking leave to file the suit, which as withdrawn due to technical defects. Thereafter another application was filed seeking leave to file a suit. The said application was entertained and the respondents were permitted to prosecute the suit for following reliefs. -4-
NC: 2023:KHC:41908 CRP No. 42 of 2021
1. The removal of the Defendant Founder Trustee from the first plaintiff.
2. Appointing new Founder Trusty and Trustees.
3. Enquiring into accounts of the trust estate as from 2014-15 till date.
4. Direct the defendant to deliver all the books, trust properties in his possession relating to the plaintiff trust.
5. Restrain the defendants from holding out an representing himself as Founder Trustee of the plaintiff No.1 trust before the statutory authorities, banks and financial institution and general public or act as such to the Delhi Public School belonging to the plaintiff No.1 Trust.
4. The plaintiffs claimed that the plaintiff No.1 was a public charitable trust formed with an object to serve develop and educate all sections of people and alleviate human suffering eradicate illiteracy, poverty and to conduct research -5- NC: 2023:KHC:41908 CRP No. 42 of 2021 etc. They claimed that all the trustees had personally contributed their hard-earned money to purchase land bearing Sy No.125 measuring 1 acre 35 guntas at Pemmashettihali village, Vakkaleri Hobli, Kolar Taluk and District, which was converted for educational purpose to establish a school to carry out the objects of the Trust. Subsequent there to few trustees were brought into the trust and a supplementary deed of trust was executed and registered on 14.10.2016. Amongst the trustees, the defendant was designated as a Founder trustee of the Trust and he was made the managing director while the other trustees were designated as trustees of the trust.
5. The plaintiffs claimed that after establishment of the school, the defendant started behaving negligently in accounting the income of the trust within time and allowed accumulation of arrears of salaries to administrative and teaching staff. He borrowed hand loans from outsiders for his private purposes by misusing the letterhead and seal of the trust. They alleged that the defendant started administering the trust as if it was his personal firm and institution and treated the trust properties as his own. The defendant already approached private financiers for loan to develop the institution -6- NC: 2023:KHC:41908 CRP No. 42 of 2021 without the notice and knowledge of the other Trustees. They alleged that a major portion of the loan advanced by private financiers was siphoned off by the defendant. They accused the defendant of collecting huge amount as fees and donation from the economically poor students thereby defying the object of the trust. They alleged that the funds collected by the defendants was misused by him and other trustees. The plaintiffs therefore accused the defendant of not properly carrying on the purposes of the trust and was misusing the properties and its income for private purposes. They alleged that the other trustees were not taking any steps to compel the defendant to adhere to the objects of the trust, as they were financially benefited from the misdeeds of the defendant. They alleged that from the year 2015 till date they were only two meetings of the trust and the last minutes of meeting was drawn on 30.04.2017. They claimed that as per the trust deed, monthly and quarterly meetings had to be conducted to pass resolutions to carry on the objectives of the trust. They alleged that the defendant never conducted the Annual General Body Meetings from the day of inception of the trust and all decision were taken by him unilaterally. They alleged that at the trust -7- NC: 2023:KHC:41908 CRP No. 42 of 2021 meeting dated 30.04.2017, the defendant was required to present the accounts for ratification but, he failed to present the same before the trustees and though the trust meeting was adjourned to the end of June-2017, for the said purpose no such meeting was ever scheduled.
6. They further alleged that many of the parents who admitted their children to the school had complained that the defendant was collecting huge amount as fee and donation in the name of the trust flouting instruction to the parents to deposit the fees directly into the account of the Trust at the bank. They alleged that as per the records available in the school about Rs.20,00,000/- was deposited in the school account, while a sum of Rs.40,00,000/- was received in the form of cash, which was not accounted by the defendant during the academic year 2017-18. They alleged that the defendant claimed that a sum of Rs.5,00,000/- was deposited with Delhi Public School Private Limited, Kolkata for the franchise agreement. However, after a case filed by the Delhi Public School Private Limited, Kalkata was lost, the defendant did not take any steps to recover the sum of Rs.5,00,000/-. They alleged that the defendant claimed that he paid a sum of -8- NC: 2023:KHC:41908 CRP No. 42 of 2021 Rs.36,00,000/- for obtaining a Franchise of the Delhi Public School which was not accounted to the Trust. With these and other various allegations, they claimed that the defendant was not a suitable person to act as a Trustee of the Trust and therefore was liable to be removed and a suitable person be appointed in his place to fill the vacancy. The Trial Court after considering the contentions urged in the application for leave to file a suit and after being satisfied that the plaintiffs were interested in the affairs of the trust, allowed the application and granted leave to file the suit.
7. The Trial Court instead of first considering the application seeking leave to file the suit, committed an error in registering the suit and then granting leave. At this stage it is relevant to note that under Rule 16-A of the Karnataka Civil Rules of Practice which mandated that the Trial Court must have first granted leave to file a suit and then must have registered the suit.
8. After the leave was granted, the defendants filed an application for revocation of leave contending that the trust cannot join in instituting any proceeding under Section 92 of -9- NC: 2023:KHC:41908 CRP No. 42 of 2021 CPC. It was contended that the suit was registered on the day it was filed without considering the application filed for leave to file a suit which is bad in law. It was also claimed that the plaintiffs attempted to settle personal scores against the defendants. He claimed that the documents produced by the plaintiffs themselves demonstrated beyond doubt that the plaintiff trust was managed well by the defendant. He also claimed that the property of the trust was not encumbered by the defendant in any manner what so ever. He alleged that plaintiff Nos.2 to 4 were sending letters to various officers making false allegations against him though the plaintiff No.2 had himself vouched that the trust was being managed properly, when he replied to a notice issued by the plaintiff No.3. Therefore, he contended that there was no genuine reason to be concerned about the welfare and management of the plaintiff trust.
9. This application was opposed by the plaintiffs who contended that the fact that the defendant who was required to conduct meetings of the Trust and was required to maintain transparency in transactions related to the trust failed to do so, was sufficient ground to invoke the jurisdiction of the Court
- 10 -
NC: 2023:KHC:41908 CRP No. 42 of 2021 under Section 92 of CPC. It was contended that the various documents produced along with the plaint as well as the application for leave to defend established beyond doubt that the defendant was not managing the affairs of the Trust in accordance with the deed but was managing it as per his discretion and whims and fancies.
10. Based on these contention, the trial Court held that the procedure adopted by the Court in registering the suit and thereafter granting leave under Section 92 of CPC was incorrect. However, it held that the question whether the procedure adopted in registering the suit was correct or not could be considered by the Trial Court at the time of disposing the suit. The Trial Court refer to a judgment of the Hon'ble Apex Court in the case of Bansidhar Sankarlala V/s Md. Ibrahim and another reported in AIR 1971 SC 1292 and held that if leave was granted subsequent to registration of the suit, then the suit has to be construed as instituted on the date on which the leave was granted. The Trial Court further held that the defendant had produced many documents such as print-out of whatsapp messages between him and the plaintiff No.2, copies of email extracts, legal notices etc., and held that
- 11 -
NC: 2023:KHC:41908 CRP No. 42 of 2021 those documents were yet to be proved at the trial and therefore the leave granted cannot be revoked. Consequently, the Trial Court rejected the application filed by the defendant for revocation of leave granted to file the suit under Section 92 of CPC. Being aggrieved by the said order, the defendant has filed this revision petition.
11. The learned counsel for the petitioner/defendant contended the following.
1. A trust cannot be the plaintiff in a proceeding under Section 92 of CPC.
2. That all trustees of the plaintiff No.1 trust must have been arrayed as plaintiffs in view of Order XXXI Rule 2 of CPC, that the Trial Court could not have registered the suit without granting leave under Section 92 of CPC. He relied upon the judgment of the Hon'ble Apex Court in the case of R.M.Narayana Chettiar V/s N.Lakshmanan Chettiar reported in (1991) 1 SCC 48 and the judgment of the Hon'ble
- 12 -
NC: 2023:KHC:41908 CRP No. 42 of 2021 Apex Court in the case of Vidyodaya Trust V/s Mohan Prasad.R reported in (2008) 4 SCC 115.
3. That leave granted without notice to the defendant is not absolute as a defendant is entitled to seek revocation of leave. That the Trial Court committed an error in not looking into the documents on the ground that the plaintiff did not admit them. The learned counsel in support of the above contention relied upon the judgment in the case of Union of India and Others V/s Mahendra Singh reported in 2022 SCC Online SC 909.
4. That the trust and its affairs were conducted by the defendant in accordance with the deed of trust and the plaintiff No.2 had acknowledged it. Even otherwise, he contends, that there was no breach of trust warranting invocation of Powers of the Court under Section 92 of CPC. He contends that the allegations made against the defendant is a gross attempt by the plaintiffs to indicate their personal vengeance against the defendant.
- 13 -
NC: 2023:KHC:41908 CRP No. 42 of 2021
12. Per contra, the learned counsel for the plaintiffs/respondents contended that the very fact that the trust was not conducted in accordance with the trust deed was sufficient to indicate that the defendant was not conducting the affairs of the trust in accordance with the trust. It was also contended that the defendant had raised substantial sums of money through private financiers which was not accounted and this was also sufficient, disqualification for him to continue as a trustee of the trust. In support of his contention that in the facts and circumstances of this case, the leave granted by the Trial Court was just and proper, he relied upon the judgment in the case of Union of India and another V/s M/s Parameswaran Match Works and Others reported in (1975) 1 SCC 305.
13. I have considered the submissions made by the learned counsel for the defendant as well as the learned counsel for the plaintiffs.
14. The fact that the plaintiff No.1 is a public charitable trust is not in dispute. The dispute between the plaintiffs and the defendant essentially relates to the alleged
- 14 -
NC: 2023:KHC:41908 CRP No. 42 of 2021 mismanagement of the affairs of the trust and not providing sufficient and proper accounts of the trust funds and also in the defendant dealing with the affairs of the trust as if it was his proprietary concern. The assertions made in the application for leave to file a suit, prima-facie indicates that they do fall within the measures provided under Section 92 of CPC, to ensure regularity in the functioning of the plaintiff No.1 trust. There are allegations against the defendant about mismanagement of the trust not conducting regular meeting, malversation of funds, non-accounting of funds, raising loan and not accounting it, collecting money from the parents of the children admitted at the school and not accounting them etc. The Hon'ble Apex Court in the case of Swami Pramatmanand Saraswati and Another V/s Ramji Tripathi and Another reported in (1974) 2 SCC 695, held that the grounds under Section 92 of CPC to be exercised are merely illustrative and not exhaustive. Therefore, many religion warranting the exercise of power by the District Court to ensure regularity in the functioning the plaintiff No.1 Trust, truth fall within the same firm Section 92 of CPC. In the case on hand this Court has referred to the said incidents in the judgment rendered in the case of
- 15 -
NC: 2023:KHC:41908 CRP No. 42 of 2021 Sri. Sathya Sai Loka Seva Trust Vs Sri Sathya Sai Central Trust-RSA No.140/2019, dated 19.04.2022.
15. If the application filed by the plaintiffs under Section 92 of CPC is perused, it discloses that the application is filed by two persons apart from the trust and these two persons were interested in the affairs of the trust and this satisfied the initial requirement of Section 92 of CPC. There are allegation which indicate that the trust is not managed properly by the defendant. Therefore, there is sufficient material before the Trial Court to exercise jurisdiction under Section 92 of CPC. In so far as the grounds urged by the defendant for revocation the leave granted by the Trial Court, they are all defences available to the defendant to establish that the plaintiff trust is administered in accordance with the deed of trust. Even otherwise, the documents filed along with the application for revocation indicates that these are messages exchange between the defendant and the plaintiffs and nothing worth while can be gathered at this stage to revoke the leave granted to the plaintiffs. The defendant is bound to adduce evidence in support of the documents filed along with application for leave to revoke so as to give a comprehensive picture of the way in
- 16 -
NC: 2023:KHC:41908 CRP No. 42 of 2021 which the trustees conducted themselves in the trust. As rightly held by the Trial Court, there is no justification to revoke the leave granted to the plaintiffs to institute a suit under Section 92 of CPC. In so far as the contention that all the trustees of the trust must have been join in the suit in view of Order 31 Rule 2 of CPC, it is relevant to note that the Trial Court has noticed that an application is filed by the other trustees to come on record and therefore, the leave granted by the Trial Court cannot be revoked on this ground.
16. In so far as the contention urged by the defendant that the Trial Court committed an error in registering the suit and then granting a leave to file a suit, this contention is worth considering as a perusal of Section 92 of CPC leaves no doubt that prior to instituting a suit, the Trial Court should have exercised its discretion to ascertain whether the trust is a public trust and whether there is any breach of trust warranting interference by the Court to ensure regularity in the functioning of the trust. If the Court is satisfied that its indulgence is required to ensure regularity then it may permit persons interested in the trust to institute a suit.
- 17 -
NC: 2023:KHC:41908 CRP No. 42 of 2021
17. In the case on hand, the Trial Court has committed an error in first registering the suit and then granting leave to file the suit. Having regard to the fact that the Trial Court has already exercised jurisdiction, in view of the judgment of the Hon'ble Apex Court in the case of Bansidhar Shankarlal v/s Md. Ibrahim and another reported in AIR 1971 SC 1292, the suit shall be treated to have been instituted on the date on which the leave is granted.
18. In that view of the matter, there is no error in the order passed by the Trial Court warranting interference by this Court. Hence, this revision petition is dismissed.
Sd/-
JUDGE KBM List No.: 1 Sl No.: 24 CT: BHK