1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY APPELLATE SIDE, BENCH AT AURANGABAD WRIT PETITION NO. 5888 OF 2009 Terna Public Charitable Trust, bearing P.T.R. No. E-91, Osmanabad Through its Trustee ....Petitioner. Versus 1. Joint Charity Commissioner, Latur at Latur. 2. The Charity Commissioner, Mumbai. 3. The State of Maharashtra 4. Institute for Technology and Management, a Public Trust bearing P.T.R. No. 14745, 6th Floor, Centre Point Building, 18th Road, Chembur, Mumbai - 400 071 Through Authorized Signatory and Deputy Director Shri. Jaywant Vasudeo Shelar ....Respondents. Shri. Vinit Naik h/f. Shri. Sachin Deshmukh and I.M. Khairdi, Advocates for petitioner. Shri. K.M. Suryawanshi, A.G.P. for respondent Nos. 1 to 3. Shri. K.C. Sant, Advocate for respondent No. 4. WITH WRIT PETITION NO. 6073 OF 2009 Terna Public Charitable Trust, bearing P.T.R. No. E-91, Osmanabad Through its Trustee ....Petitioner. Versus 1. Joint Charity Commissioner, Latur at Latur. 2 2. The Charity Commissioner, Mumbai. 3. The State of Maharashtra 4. Institute for Technology and Management, a Public Trust bearing P.T.R. No. 14745, 6th Floor, Centre Point Building, 18th Road, Chembur, Mumbai - 400 071 Through Authorized Signatory and Deputy Director Shri. Jaywant Vasudeo Shelar ....Respondents. Shri. Vinit Naik h/f. Shri. Sachin Deshmukh and I.M. Khairdi, Advocates for petitioner. Shri. K.M. Suryawanshi, A.G.P. for respondent Nos. 1 to 3. Shri. K.C. Sant, Advocate for respondent No. 4. CORAM : R.K. DESHPANDE, J. DATE OF PRONOUNCEMENT : 30th June 2010. DATE OF DICTATION : 3rd July 2010. ORAL JUDGMENT : 1. The Joint Charity Commissioner, Latur Region, Latur by his order dated 11.11.2008, has rejected application No. 04/2008, filed by the petitioner/trust, for grant of sanction under section 36 (1) of the Bombay Public Trust Act, 1950 (hereinafter referred to as "the said Act") to alienate the property in question, on the ground that the petitioner/ trust has failed to establish the genuine need to sell the property. This is the subject matter of challenge in Writ Petition No. 5888/2009, filed by the petitioner/trust. By an order dated 23rd January 2009, the Joint Charity Commissioner has rejected the subsequent application No. 13/2008, filed by the petitioner/trust, trying to make out a case that the 3 need for alienation of the property is genuine. It has been rejected, on the ground that the second application for the same relief is not maintainable. Hence, this order is the subject matter of challenge in second Writ Petition No. 6073/2009, filed by the petitioner/trust. 2. This Court had issued notice before admission on 8th September 2009 in Writ Petition No. 5888/2009. In Writ Petition No. 6073/2009, notice before admission was issued on 14th September 2009 and it was directed that both the matters shall be heard together. Shri. Vinit Naik, the learned counsel holding for Shri. Sachin Deshmukh and Shri. I.M. Khairadi appeared for the petitioner in both the writ petitions, whereas Shri. K.M. Suryawanshi, the learned A.G.P. appeared for respondent Nos. 1 to 3 in both the petitions and Shri. K.C. Sant, the learned counsel appeared for respondent No. 4 in both the petitions. The learned counsels for the parties agreed that the matter can be disposed of finally at the stage of admission. Hence, on 30.6.2010, Rule was made returnable forthwith. The learned counsels appearing for the respondents waived the service of notice. By consent of parties, the matter was heard finally. After hearing was concluded, operative portion of the judgment was dictated as under :- "For the reasons to follow, both writ petitions are dismissed. Rule is discharged. No order as to costs." 3. Now, I proceed to state the facts as under :- 4 The petitioner/trust owns the following properties, which were the subject matter of proceedings under section 36 (1) of the Bombay Public Trusts Act, given below:- (1) Open plot No. 09, Sector No. 12, Panvel, admeasuring 2287.50 Sq. Mtrs. (2) Open plot No. 18/B, Sector No. 13, Panvel, admesuring 1036.29 Sq. Mtrs. (3) Plot No. 13, Sector No. 12, Panvel, admeasuring 4516.57 Sq. Mtrs. with construction thereon admeasuring 35,000 Sq. Fts. plus two storied building for hospital. All the aforesaid properties, hereinafter referred to as "the property in question." 4. The petitioner/trust was running a public charitable hospital on the property in question, since 1991. The said hospital was closed down in the year 2004. The petitioner/trust filed an application dated 4.3.2008 in the prescribed form under section 36 (1) (a)/(b) of the said Act, before the Joint Charity Commissioner, Latur Region, Latur for grant of sanction to alienate the property in question. The reasons for alienation, as were stated in the application, are reproduced below :- "The trust was running a hospital for quite some time on the property. But due to low patient response and due to the better Commercial medical facilities available at the same area the Trust was not in a position to run the hospital due to non recovery of MINIMUM MAINTENANCE cost and it was just not possible for the Trust to run the hospital with 5 such a poor turn out of the patients and hence the Trust had to discontinue its hospital services 3 years back ie. it was closed in the year 2004, by incurring losses. Presently, it is being abandoned without any activity and on the contrary the Trust is incurred losses for the maintenance of the hospital and the property and thus it is just and equitable to dispose of the property in the interest of the Trust. " 5. On 16.8.2008, the order was passed by the Joint Charity Commissioner for inviting fresh bids in respect of the property in question, by publishing an advertisement in English daily newspaper "Times of India" and Marathi daily newspaper "Loksatta". It seems that accordingly, notices were published on 24.9.2008 in both the newspapers. The highest bid was that of I.T.M Business School, Mumbai, the respondent No. 4 herein, for an amount of Rs. 6,80,00,000/-. The said bidder deposited 10% of the amount of offer i.e. Rs. 68,00,000/- in the office of the Joint Charity Commissioner, as was required. 6. The Joint Charity Commission by his order dated 11.11.2008, rejected the application No. 4/2008, filed by the petitioner for grant of sanction for alienation of the property in question. Although, it is held that the alienation is in the interest and for the benefit of the the trust, it is also held that the trust has failed to prove the genuine need for alienation of the property in question. It was held that the property in question was allotted by CIDCO at concessional rate, only because the petitioner/trust showed willingness to run the charitable hospital, for the poor persons from the society, at Panvel area. The property in 6 question was granted on lease to the petitioner/trust by CIDCO at meagre rent, keeping in view the purpose for which, the property was asked for. Although, it was accepted that the trust was running the hospital since 1991 to 2004, when it was closed down, it was held that the petitioner/trust has failed to establish that it was not in a position to run the hospital, for want of sufficient income. It was held that the trustees have forgotten, that the charity and the profitable income, cannot run together and the petitioner/trust, which is found to be financially sound, was expected to run the hospital, for charitable purpose and not for the purpose of earning profits out of it. It was held that the trust can make out loss, out of the income from other profit making units of the trust like medical and engineering colleges run by the said trust. The Joint Charity Commissioner also noted that the valuation report submitted by the petitioner/trust from Bharadwaj Company shows the distress sale value of the said property at Rs. 5,85,00,000/-, whereas the actual market value of the property was found to be Rs. 6,80,00,000/-. Thus, for all such reasons, the application filed by the petitioner/trust was rejected and it was directed that the cheque/draft of deposit of 10% amount given by I.T.M. Business School, Mumbai be returned. 7. The petitioner/trust filed another application No. 13/2008 on 27.11.2008, seeking permission to alienate the property, after filing necessary documents, showing the income and expenditure over the 7 hospital and trying to justify the need for sale of the property. This application was rejected by the Joint Charity Commissioner by his order dated 23rd January, 2009, holding that the second application for the same relief, is not tenable and the question that the trust was having genuine need for alienation of the property, does not arise. 8. The learned counsel for the petitioner has urged that the property in question was granted on lease by CIDCO for the purpose of running charitable hospital. However, by communication dated 14.3.2007, placed on record of the Joint Charity Commissioner, no objection for transferring the property in question, to the trust having the same objective, was granted, subject to the grant of permission by the Charity Commissioner. According to him, there was no impediment for transfer of such property by CIDCO. The learned counsel has further urged that the petitioner/trust has established its genuine need and the Joint Charity Commissioner was in error in holding that the petitioner/trust has failed to establish genuine need for alienation of the property in question. He has urged that in fact the question, whether there is need or such a need is genuine or not, cannot be gone into by the Joint Charity Commissioner under section 36 (1) of the said Act, as it would amount to exercising appellate jurisdiction over the decision of the trustees of the trust. According to him, there is a presumption that the trustees shall be acting for the welfare and benefit of the trust, in taking such decision and the Joint Charity Commissioner cannot sit in appeal to judge the 8 object, propriety and justification of the decision taken by the trustees. 9. The learned counsel for petitioner further urged that what the Charity Commissioner is required to see under section 36 (1) of the said Act, is that the alienation sought to be made, is in the best interest of the trust and the trust gets the best price upon alienation of the trust property. He submits that the Joint Charity Commissioner has carried out such exercise and was satisfied that the sale of the property at Rs. 6,80,00,000/- would be in the interest of the trust and having recorded such finding, could not have rejected the application, on the ground that the trust has not established the genuine need for alienation. He further submits that the Charity Commissioner has also erred in holding that instead of selling the property, the trust can very well construct boys hostel and other buildings required for the medical college, run by the trust at Nerul. According to him, the Joint Charity Commission cannot substitute his decision for the decision of the trust. He further submits that the Charity Commissioner has interfered with the decision of the trustees to sale the property, on the grounds, which are not germane to the object and purpose of the powers conferred under section 36 (1) of the said Act. He relies upon the following decisions of this Court. (a) 2004 (2) Mh.L.J. 792, Suburban Education Society, Mumbai and another Vs. Charity commissioner of Maharashtra State. (b) 2006 (1) Mh.L.J. 809, Bara Imam Masjid Trust and others Vs. Charity Commissioner, Maharashtra 9 State. He further submits that at the most, the Charity Commissioner could have imposed such conditions as he deems fit and proper, regard being had to the interest, benefit or protection of the trust property as contemplated by section 36 (1) (b) of the said Act, but sanction could not have been refused. 10. The learned A.G.P. supports the order passed by the Joint Charity Commissioner, whereas Shri. K.C. Sant, learned counsel appearing for respondent No. 4 in both the writ petitions, supports the arguments advanced by Shri. Vinit Naik, learned counsel for petitioner, as it was the bid of the respondent No. 4. 11. The question is, whether the Joint Charity Commissioner was justified in refusing to grant sanction under section 36 (1) of the said Act, on the ground that the trust has failed to establish the genuine need, although, a finding is recorded that the proposed alienation is in the interest of trust. 12. The Full Bench of this Court in its judgment reported in 2007 (3) Mh.L.J. 717 in the case of Sailesh Developers and another Vs. Joint Charity Commissioner, Maharshtra had an occasion to consider the scope of the powers conferred upon the Charity Commissioner under 10 section 36 of the said Act, read with section 73 and Rule 7 and 24 of the Rules framed under the said Act. It has been held in paragraph 17 that the Charity Commissioner under section 36 of the said Act, discharges judicial function and in paragraph 28, it has been held that before passing an order of sanction or authorization, the Charity Commissioner has to be satisfied, that the trust property is required to be alienated and once the necessity of sale or transfer is established, then the Charity Commissioner can certainly ensure that the best available offer is accepted, so that the transaction is for the benefit of the trust. In the same paragraph, it has been further held that if the trustees were to be the final authority to judge what is in the interest of the Trust, the legislature would not have enacted provision requiring prior sanction. 13. In another decision of the Division Bench of this Court reported in 2004 (2) Mh.L.J. 792 cited supra, which is infact relied upon by the learned counsel for the petitioner, it has been observed in para 12 of the said judgment, that the Apex Court as also this Court, has time and again held that the Charity Commissioner should consider the need of the trust and grant permission, wherever the property of the trust is being sold after following the procedure, so that the market value of the property is received by the trust. In para 16 of the said judgment, it has been held that the Charity Commissioner, in the first place, is required to consider, whether the trust has a genuine need for the purpose of selling its immovable property and secondly, whether the said property is being 11 sold in the interest of the trust and its beneficiaries. In view of these two judgments, I need not delve upon the scope of powers of Charity Commissioner under section 36 of the said Act, any more. 14. In view of aforesaid two judgments of this Court, it is apparent that the Charity Commissioner, while according sanction under section 36 (1) of the said Act read with section 73 and Rule 7 and Rule 24 of the Rules, has to be satisfied that the property should be disposed of. Such a satisfaction has to be reached, only upon an enquiry as to the necessity for the proposed alienation, and that such alienation is in the interest of Trust. Hence, the findings in respect of following three things apart from other aspects involved in each case, is must. (1) That, there is need to alienate the property; (2) That, the need put forth is found to be genuine; and (3) That, the alienation is in the interest of the trust and its beneficiaries. In the absence of all the three findings, no order of sanction under section 36 (1) of the said Act, can be passed. Thus, merely because the Charity Commissioner has recorded a finding that the proposed alienation is in the interest of trust, that by itself is not enough to accord his sanction. If it is found that there is no need to alienate the property or that the need put forth is not found to be genuine, the sanction can be 12 refused. 15. In the instant case, the Joint Charity Commissioner, after going through the entire evidence put forth by the petitioner/trust, has recorded a finding that there is no need to sell the property and in fact, the need put forth is not found to be genuine. The finding is recorded that the valuation report submitted by the Trust showed the distress sale value of the property at Rs. 5,85,00,000/- as against the real market value of Rs. 6,80,00,000/-. It is also the finding recorded that the trust has failed to establish that it is not in a position to run the hospital for want of sufficient income from it. The further finding is recorded that the trust has very good financial position, as it is running the engineering and medical colleges and the object and purpose for which the property is allotted by CIDCO would be frustrated, if property in question is alienated. Such a findings on facts based upon relevant consideration and material placed on record, cannot be reopened in exercise of jurisdiction of this Court under Articles 226 and 227 of the Constitution of India. There is neither any illegality, irrationality or perversity in recording such findings pointed out. Hence, no interference is called for. 16. Section 36 (1) of the said Act regulates the power of Trustees to alienate the property, subject to the control of Charity Commissioner, to grant sanction. While exercising such control, the Charity Commissioner being the custodian of the trust property, is competent to find out, that 13 the trustees are interested in protecting and preserving the property of the Trust, that there subsists a real and genuine need, and that the decision to alienate is taken for genuine purpose and lawful necessity. In view of Nature, Scope and Power of inquiry conferred upon the Charity Commissioner under section 36 (1), 73 of the said Act read with Rule 24 of the Rules, no constraints can be read in the power of Charity Commissioner and it can extend to find out the object, propriety, legality and justification for such alienation. As pointed out earlier, the Full Bench has held that if the trustees were to be the final authority to judge what is in the interest of the Trust, the legislature would not have enacted provision requiring obtaining of prior sanction. The findings recorded cannot, therefore, be said to be beyond the scope of power under section 36 (1) of the said Act. 17. The learned counsel for the petitioner has urged that the Joint Charity Commissioner ought to have seen that the Trust was not in a position to run and maintain the hospital which was closed down in the year 2004. According to him, sanction could have been granted by imposing certain conditions as the Joint Charity Commissioner may deem fit and proper for alienation of the property in question. However, he could not have refused to accord his sanction, particularly when, it is found that the proposed alienation is in the interest of the trust. The submission cannot be accepted for the reason that the Charity Commissioner, having once found that there was no necessity to sell the 14 trust property, the question of imposing conditions to grant sanction would not arise. Merely because Trust has closed down the hospital in the year 2004, would not establish there is need to sell the property in question and that such need is genuine. 18. The decision relied upon by the learned counsel for the petitioner in case of Bara Imam Masjid cited supra for the proposition that the Charity Commissioner cannot substitute the decision of the trust, is of no help for the reason that the Charity Commissioner has merely discussed the alternate avenues, open for the trustees. As pointed out earlier, in order to judge the object, propriety, justification and legality of such alienation, it has to be seen, whether trustees have tried to explore other possibilities. Unless a specific direction is issued by the Charity Commissioner to utilize the property in question, for any particular purpose, it cannot be said that there is substitution of opinion of trustees. In this case, there is no direction issued to the trust to utilize the said property for other purposes. When the Charity Commissioner has refused to grant his sanction under section 36 (1) of the said Act, the question of substituting his own opinion, does not arise. It is true that in the said judgment of the learned Single Judge, it has been held that the Charity Commissioner cannot go in to the validity of the decision, whether the property should be rightly decided to be sold or not, and this is not the ground on which the decision of the trustees to sell the property can be inferred with and/or set aside by the Charity 15 Commissioner in his exercise of his jurisdiction under section 36 (1) of the said Act, still the said observations are contrary to the law laid down by the Division Bench and Full Bench of this Court which is referred to in earlier para, wherein it has been expressly held that the Charity Commissioner can find out the actual necessity of sale or transfer of the property and whether need put forth for alienation is genuine or not. I am bound by the decision of the larger bench. Hence, the contention raised by the learned counsel is rejected. 19. The writ petition No. 6073/2009, challenges the decision of the Joint Charity Commissioner, holding that in view of his earlier decision rendered on the application under section 36 (1) of the Bombay Public Trusts Act, the second application for the same relief is not tenable. The decision given cannot be faulted with as it is based upon the principle of public policy. The same is legal and proper and needs no interference. 18. In the result, there is no substance in the instant writ petitions. The same are, therefore, dismissed. Rule is discharged. No order as to costs. [ R.K. DESHPANDE, J. ] ssc/wp5888.09