1 IN THE HIGH COURT OF JUDICATURE OF BOMBAY BENCH AT AURANGABAD WRIT PETITION NO.1136 OF 1990 Smt.Rukminibai Tejmal Verma, aged about 40 years, Household work, R/o Mankeshwar Galli, Ahmednagar. Petitioner Versus 1 The State of Maharashtra; 2 Charity Commissioner, State of Maharashtra, Worli, Bombay 400 018. 3 Shree Nagnath Virshaiva Pancham Trust, Registration No.A-332, 2295/96, Adate Bazar, Ahmednagar – 414 001. 4 Smt.Parvatibai Dagaduappa Bhinge, age: major, Occ: Household work, R/o No.3402, Manakeshwar Galli, Ahmednagar – 414 001. 5a Bhaskar s/o Babasaheb Bhinge, age: 37 years, Occ: Business, R/o Ashoknagar, behind Pandurang Mandir, Pandharpur, District Solapur. Respondents Mr.D.K.Kulkarni, advocate for petitioner. Mr.B.V.Wagh, A.G.P. For Respondent Nos.1 & 2. Mr.Mr.V.S.Bedre, advocate for Respondent No.3. Mr.R.N.Dhorde, advocate for Respondent No.4 & 5a.. 2 CORAM: R.M.BORDE, J. DATE : 10 th February, 2010. ORAL JUDGMENT: 1 The order passed by Charity Commissioner, Maharashtra State, Bombay on 29.03.1990, according sanction to the alienation in respect of property belonging to the Trust in favour of Respondent No.5, is subject matter of challenge in the instant petition. 2 Disputed property is CTS No.3915, Municipal House No.3402 situate at Mankeshwar Galli, Ahmednagar. The property belongs to Respondent No.3-Trust. It is contended that, for certain beneficial purpose, Trust intended to alienate the property and in furtherance thereof, issued public notice which was published in local News paper on 14.06.1988. Tenders were invited by the Trust calling upon interested persons to submit their offers relating to price of the property, which was sought to be disposed of. It transpires that about five tenders were received, out of which, petitioner’s tender for an amount of Rs.47,000/- was highest. The Trust, therefore, accepted offer of petitioner and entered into an agreement to sell on 04.08.1988. It is contended by petitioner that she has parted with sum of Rs.4700/- at the time of execution of agreement to sell and balance of amount was to be paid at the time of execution of sale deed after receiving sanction of Charity Commissioner. 3 The Trust thereafter approached Charity Commissioner for according sanction in respect of alienation. The Charity Commissioner, it appears, called all the bidders in order to assess as to whether any of them is prepared to raise the bid. It transpires that Respondent No.5 raised bid and 3 offered to pay an amount of Rs.85,000/- towards consideration for purchase of property. The offer extended by Respondent No.5 appears to have been accepted and Charity Commissioner accorded sanction in favour of Respondent No.5 in view of order passed on 29.03.1990. The order passed by Charity Commissioner, in exercise of powers under Section 36 of Bombay Public Trusts Act, 1950, according sanction for alienation in favour of Respondent No.5, is subject matter of this petition. 4 It is contended by petitioner that it was not open for the Charity Commissioner to suo motu call the parties with a view to assess as to who would be willing to offer highest amount. It is contended that as the Trust had already entered into agreement to sell in favour of petitioner, it was not open either for the Trust or Charity Commissioner to take into account any other offer. 5 Respondent No.5, however, contends that it is within the exclusive domain of Charity Commissioner to take into account all relevant aspects before passing any order under Section 36 of the Act. It is contended that it is open for the Charity Commissioner, in order to protect interest of the Trust, to assess as to whether any of the parties is willing to part with more amount. It is further contended that all the bidders, who had participated in the bid, were given an opportunity to revise their offers. Respondent No.5 offered highest amount and as such, Charity Commissioner was justified in accepting the offer and issuing orders in exercise of powers under Section 36 of the Act. 6 Learned Counsel appearing for Respondent No.3 contends that interest of the Trust shall be deemed to be of paramount consideration. 4 It is contended that even if the Trust felt need to alienate the property at the relevant time, the transaction did not materialise. It is contended that due to passage of time, prices of properties have gone up considerably. At this stage, if interest of the Trust is to be taken into consideration, the Trust shall have to be given an opportunity to float fresh tenders. It is further contended that in 1987, while issuing public notice, merely offers were invited and it would be perfectly within the domain of the Trust to either accept or refuse the offers or to float fresh bids. It is, therefore, contended that in the interest of Trust, Trust needs to be left with option of inviting fresh bids or tenders. 7 In order to consider the controversy involved in the matter, it would be appropriate to quote provisions of Section 36 of the Act. 36 (1) Notwithstanding anything contained in the instrument of trust - (a) no sale, exchange of gift of any immovable property, and (b) no lease for a period exceeding ten years in the case of agricultural land or for a period exceeding three years in the case of non-agricultural land or a building. Belonging to a public trust, shall be valid without the previous sanction of the Charity Commissioner. Sanction may be accorded subject to such condition as the Charity Commissioner may think fit to impose, regard being had to the interest, benefit or protection of the trust; (c) if the Charity Commissioner is satisfied that in the interest of any public trust any immovable property 5 thereof should be disposed of, he may, on application, authorise any trustee to dispose of such property subject to such conditions as he may think fit to impose, regard being hand to the interest or benefit or protection of the trust. (2) The Charity Commissioner may revoke the sanction given under clause (a) or clause (b) of sub- section (1) on the ground that such sanction was obtained by fraud or misrepresentation made to him or by concealing from the Charity Commissioner, facts material for the purpose of giving sanction; and direct the trustee to take such steps within a period of one hundred and eighty days from the date of revocation for such further period not exceeding in the aggregate one year as the Charity Commissioner one year as the Charity Commissioner may from time to time determine as may be specified in the direction for the recovery of the property. (3) No sanction shall be revoked under this section unless the person in whose favour such sanction has been made has been given a reasonable opportunity to show cause why the sanction should not be revoked. (4) If, in the opinion of the Charity Commissioner, the trustee has failed to take effective steps within the period specified in sub-section (2), or it is not possible to recover the property with reasonable effort or expense, the Charity Commissioner may assess any advantage received by the trustee and direct him to pay compensation to the trust equivalent to the advantage so assessed. 8 It is to be noted at this stage that although the agreement was executed by the Trust with petitioner in respect of alienation of property, the transaction did not materialise as the Charity Commissioner did not accord sanction under Section 36 of the Act. It is specifically noted in the agreement 6 to sell itself that same would be conditional subject to sanction by Trust authorities. It is also recited in the agreement to sell itself that if Charity Commissioner refuses to accord sanction, petitioner herein would be entitled to recover amount of Rs.4700/- without charging any interest thereon. It is, thus, clear that the Charity Commissioner, while considering proposal tendered by the Trust, refused to accord sanction in favour of petitioner, on the contrary, permission has been accorded in favour of Respondent No.5. Respondent No.5 has also, in his affidavit-in-reply, has stated that after accepting offer extended by him, a draft of Rs.8500/- was tendered to the Trust, however, no agreement appears to have been reached between Trust and Respondent No.5. The order passed by Charity Commissioner is subject matter of challenge in the instant petition. 9 On consideration of course of events, those have taken place since 1987, it is clear that no deal has been finalised with either of the parties. Even Respondent No.5, in fact, also cannot insist upon the Trust to honour his offer on the face of pendency of petition before this Court for considerable period of twenty years and transaction having not attained finality. Even otherwise, Respondent No.5 had merely extended his offer and same has not culminated in any binding contract. In these circumstances, therefore, as contended by learned Counsel appearing for the Trust, it is open for the Trust to take a fresh decision and if at all the Trust wants to alienate the property, they can be permitted to invite fresh bids. 10 My attention is invited to Full Bench decision in the matter of Sailesh Developers and another Vs. Joint Charity Commissioner, Maharashtra and others, reported in 2007 (3) Mh.L.J. 717. One of the issues, before the Full Bench for consideration, was as to: 7 Whether the power vesting in the Charity Commissioner under section 36 of the Bombay Public Trusts Act, 1950 is confined to grant or refusal of sanction to a particular sale transaction which the trustees propose to make or it extends to compelling trustees to sell or transfer the property to another party who participates in the proceedings under section 36 and gives his offer? The Full Bench, while answering the issue, has recorded thus: “ The power vesting in the Charity Commissioner under Section 36 of the Bombay Public Trusts Act, 1950 is not confined merely to grant or refusal of sanction to a particular sale transaction in respect of which sanction is sought under section 36 of the said Act. The power of the Charity Commissioner extends to inviting offers from the members of the public and directing the trustees to sell or transfer the trust property to a person whose bid or quotation is the best having regard to the interest, benefit or protection of the trust. Hence we declare that the decision of the Division Bench of this Court in the case of M/s Jigna Construction Co. Mumbai Vs. State of Maharashtra and others does not lay down correct law. 11 On perusal of the judgment of Full Bench, it is clear that the Charity Commissioner is invested with the power to take decision for protecting interest of the Trust. The offer made cannot be confined merely to a particular section and it is open for the Charity Commissioner to permit the Trust to invite offers from members of public or to do the needful himself and to sell or transfer the Trust property to such a person whose bid or quotation is found to be in the best interest of the Trust. While arriving at this conclusion, in paragraph 28 of the judgment, the Full Bench has recorded analogy and laid down that interest of the Trust would be paramount consideration. 8 “While exercising power either under clause (b) or clause (c), the Charity Commissioner can impose conditions having regard to the interest, benefit or protection of the trust. Before passing an order of sanction or authorisation, the Charity Commissioner has to be satisfied that the trust property is required to be alienated. Once the Charity Commissioner is satisfied that the alienation of the trust property is necessary in the interest of the trust or for the benefit of the trust or for the protection of the trust, it is very difficult to accept the submission that the power of the Charity Commissioner is restricted either to grant sanction to a particular proposal of the trustees or to reject it. It is the duty of the Charity Commissioner to ensure that the transaction of alienation is beneficial to the trust and its beneficiaries. He has to ensure that the property is alienated to a purchaser or buyer whose offer is the best in all respects. It is not necessary in every case that the Charity Commissioner has to ensure that property is sold by the trustees to the person offering highest price or consideration. What is the best offer in the interest of trust will again depend on facts and circumstances of each case. In a given case, while alienating the trust property, the trustees may provide that as a part of consideration for alienation, the purchaser should construct a building on a part of the trust property for the use by the trustees for the objects of the trust. In such a case, it may be necessary to ascertain the reputation and capacity of the purchaser apart from the consideration offered. When the Charity Commissioner is satisfied that trust property needs to be alienated and when he finds that the offer received by the trustees may not be the best offer, he can always direct that bids be invited by a public notice. When a better offer is received in public bidding or auction, it is very difficult to say that the power of the Charity Commissioner is restricted and he cannot enjoin the trustees to sell or transfer the trust property to a third party who has given an offer which is the best in the interest of the trust. The Trustees approach the Charity Commissioner only when they are satisfied that there is a necessity to alienate the trust property. The trustees 9 hold the property for the benefit of the beneficiaries and therefore once they express desire to alienate the property, it is obvious that Charity Commissioner can always impose condition while granting sanction that the property shall be sold or transferred to a person who has come with an offer which is the best offer in the interests of the trust. The section gives a power to the Charity Commissioner to impose conditions and the said conditions will include a requirement of selling or transferring or alienating the trust property to a purchaser who has offered the best deal having regard to the interest and benefit of the beneficiaries and the protection of the trust. The power to impose conditions cannot be a limited power when the law requires the Charity Commissioner to exercise the said power having regard to the interest, benefit and protection of the trust. Once the Charity Commissioner accepts the necessity of alienating the trust property, the trustees cannot insist that the property should be sold only to a person of their choice though the offer given by the person may not be the best offer. The property may be vesting in the trustees but the vesting is for the benefit of the beneficiaries. The Charity Commissioner has jurisdiction to ensure that the property is sold or transferred in such a manner that the maximum benefits are available to the beneficiaries of the Trust. Under clause (b) of section 36 of the said Act, the Charity Commissioner has jurisdiction to decide whether it is in the interest of the trust that the property of the trust be sold or transferred. Once the learned Charity Commissioner is satisfied that the property is required to be transferred or sold in the interest of the Trust, the learned Charity Commissioner cannot remain silent spectator when he finds that the transaction proposed by the Trustees is not in the interest of the Trust or its beneficiaries. Once the necessity of sale or transfer is established, the Charity Commissioner can certainly ensure that best available offer is accepted, so that the transaction is for the benefit of the trust. 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. While 10 deciding which is the best offer, the learned Charity Commissioner is bound to take into consideration various factors which cannot be exhaustively listed. However, the paramount consideration is the interest, benefit and protection of the trust. It is obvious from the scheme of section 36 that legislature never intended that trustees could sell or transfer the trust property vesting in them as if it was their personal property. It is the duty of Charity Commissioner to ensure that the property should be alienated in such a manner that maximum benefits are accrued to the trust. The Charity Commissioner while considering an application under section 36 (1) of the said Act of 1950, in a given case can opt for public auction or can invite bids. Thus narrow interpretation sought to be given to the power of Charity Commissioner under clauses (a) and (b) of sub-section (1) of section 36, cannot be accepted. Thus the view taken in the case of A.R. Khan Construwell and Co. (supra) is the correct view. The case of Arunodaya Prefab is not correctly decided.” 12 In view of the observations made by the Full Bench in the judgment cited supra, I am of the opinion that the argument advanced by learned Counsel appearing for Trust needs to be accepted, which course would be in the best interest of the Trust. It is to be noted that offers were invited for alienating the property belonging to the Trust in the year 1987 and even after 22 years, the transaction could not be concluded or materialised. By passage of time, value of the property has gone up considerably. In such circumstances, it would be only the Trust, which should be permitted to avail benefits flowing from rise in prices of the property. In changed scenario, it is open for the Trust to consider whether the need itself subsist to alienate the property. It would be for the Trust to take decision as to whether the property should be alienated or not and if it is required to be alienated, the Trust would 11 be free to invite fresh offers/bids. If the Trust considers it necessary to alienate the property, it would be open for the Trust to initiate proceedings afresh and after observing procedure laid down under Section 36 of Bombay Public Trusts Act, 1950, proceed to dispose of the property. 13 For the reasons stated above, I am of the opinion that the petition needs to be allowed partly. The order passed by Charity Commissioner on 29.03.1990 is quashed and set aside. The Trust would be at liberty to decide further course of action in view of observations made in the judgment. 14 Rule is made absolute accordingly. In the facts and circumstances of this case, there shall be no order as to costs. Pending Civil Applications do not survive and stand disposed of accordingly. (R.M.BORDE) JUDGE ******* adb/wp113690