CS (OS) 193/2010, I.A. Nos. 1407/2010 & 1408/2010 Page 1 * IN THE HIGH COURT OF DELHI AT NEW DELHI Reserved on: 12.05.2010 Pronounced on: 26.07.2010 + CS (OS) No. 193/2010, I.A. Nos. 1407/2010 & 1408/2010 SHISHIR BAJAJ & OTHERS ..... Plaintiffs Through : Mr. Sudhir Chandra Aggarwal, Sr. Advocate with Sh. P.K. Mittal, Sh. Uday Kumar, Sh. Naveen Chawla and Ms. Roma Ahuja, Advocates. versus INDIA YOUTH CENTRES TRUST & OTHERS ..... Defendants Through : Sh. Sanjay Jain, Sr. Advocate with Sh. Digvijay Rai, Advocate, for Defendant Nos. 1 and 2. Sh. V.P. Chaudhry, Defendant No.3 in person. Sh. G. Tushar Rao, Advocate, for Defendant Nos. 4, 5 and 6. CORAM: MR. JUSTICE S. RAVINDRA BHAT 1. Whether the Reporters of local papers YES may be allowed to see the judgment? 2. To be referred to Reporter or not? YES 3. Whether the judgment should be YES reported in the Digest? MR. JUSTICE S.RAVINDRA BHAT % 1. The plaintiffs seek declaration challenging the appointments of the fourth, fifth and sixth defendants as the trustees of the first defendant (hereafter referred to as “the trust”); directing their consequential removal from the Board of Trustees; further, declaration that the resolutions in the meetings held on 19.09.2009 are illegal and void and injunction against the defendants from holding or participating in any meetings of the Board of Trustees in relation to the trust. 2. The facts to the extent they are relevant and undisputed are that the Trust was originally incorporated as “WAY India Youth Centres Trust” through a Deed dated 10.08.1961 - its founder trust included Shri Morarji Desai, Smt. Indira Gandhi, Shri Naval Tata and Shri R.K. Bajaj etc. On 05.06.1973, through a supplementary deed, Trust’s name was changed to “Indian CS (OS) 193/2010, I.A. Nos. 1407/2010 & 1408/2010 Page 2 Youth Centres Trust”; the other terms of the Trust remained unchanged. The second and third defendants and the three plaintiffs are trustees. The manner of appointments as well as the appointment of 4th, 5th and 6th Trustees is challenged in the suit. 3. The plaintiffs rely upon some material terms of the Trust Deed, which are extracted below: - “Clause 13 The number of Trustees shall not be less than 5 and more than 11 provided however that if the number of Trustees become less than 5 the surviving or the continuing Trustees shall be entitled to act with a view to appoint new Trustees or Trustees, so as to bring the number of Trustees to the minimum as herein provided. Clause 14 The Trustees shall be entitled to appoint not more than two persons from amongst themselves as the Managing Trustee or Trustees with such power and for such period and upon such terms as the Trustees may from time to time decide. Clause 15 Whenever any Trustee shall resign, die or become insolvent or be convicted of a criminal offence involving moral turpitude or desire to be discharged from or refuse or become unfit or incapable to act, then and in every such case, the surviving or the continuing Trustees or trustee for the time being, shall be entitled to appoint a Trustee or Trustees in place of the Trustee or Trustees so resigning or dying, or becoming involvement or being convicted or refusing or becoming unfit or incapable to act as aforesaid. The surviving or continuing Trustees shall also be entitled to appoint additional Trustee or Trustees form time to time as they may consider proper but so that the number of Trustees shall not be more than eleventh. Clause 17 Every new Trustee appointed as aforesaid shall as well before as after such transfer of the Trust fund or property, have the same powers, authorities and discretions and shall in all respects act as if he had been originally appointed a Trustee under these presents. Clause 18 Every resolution of the Trustees and every decision by them, unless unanimous shall be taken by majority of the Trustee present and voting and in case of equality of voters, the Chairman shall have a casting vote. The Trustees may pass any resolution by circular if it is unanimous.” 4. It is submitted that a joint reading of the above conditions mandates the prescribed procedure for appointment of trustees, i.e. (i) The total number of trustees can be 11. CS (OS) 193/2010, I.A. Nos. 1407/2010 & 1408/2010 Page 3 (ii) The surviving and continuing trustees have to ensure that at all times at least 5 trustees are there. (iii) The power of appointing new trustees vests with surviving and continuing trustees. (iv) The decision for appointment of new trustees has to be taken by all, either unanimously or by majority of such surviving and continuing trustees. 5. The suit contends that on 23.10.2007, a meeting of the trustees was held in which the third defendant proposed for fresh appointments on the basis of suggestions from existing trustees, to be made to the second defendant who was, at that time, Chairman of the meeting. It is stated that the procedure stated was that such suggestions would be considered by the second defendant who would consult with the first plaintiff - the managing trustee and appointment two new trustees. This Resolution or proposal, say the plaintiffs, was not in conformity with the Deed of Trust. They accordingly allege to have expressed their unwillingness. It is alleged that the third defendant explained that the procedure was in accordance with the Trust Deed and in accordance with law, which the plaintiffs believed. On that date, i.e. 23.10.2007, the following Resolution was made: - “2. Resignation letters of Shri P.T. Kuriakose and Dr. L.S. Kothari and appointment of new Trustees: The Board then discussed the resignation letters forwarded by Dr. L.S. Kothari and Shri P.T. Kuriakose. The Board placed on record its deep sense of gratitude to the services rendered by Shri Kuriakose and Dr. Kothari, and accepted their resignations. Shri Viresh Pratap Chaudhary stated that it would be in the fitness of things if the two vacancies that have occurred in the Board of Trustees, consequent to the resignation of Shri P.T. Kuriakose and Dr. L.S. Kothari, were filled as early as possible. After some deliberations, it was decided that the Trustees might recommend suitable names to the Chairman within a month and the Chairman, in consultation with the Managing Trustee, might then induct two more Trustees in the Board of Trustees.” 6. The plaintiffs next say that on 11.10.2008, Board of Trustees, including them and defendant nos. 2 & 3 again met; however, the appointment of trustees was kept in abeyance. The plaintiffs contend that despite lack of considerable time, the second defendant could not communicate the fate of recommendations made by the surviving trustees and in these CS (OS) 193/2010, I.A. Nos. 1407/2010 & 1408/2010 Page 4 circumstances, the first two of them (the plaintiffs) met him, i.e. the second defendant on 26.02.2009 when request for filling vacancies was made. The plaintiffs next advert to a letter dated 03.04.2009 by the second defendant where he nominated four persons to act as Trustees, i.e. Dr. Bhishma Narain Singh, Shri Gopal Krishan Gandhi, Shri Anil K. Shastri and Shri R.N. Anil. These nominations, according to the suit, are illegal as the appointments were not in conformity with the procedure prescribed with the Trust Deed dated 05.06.1973, as there was no unanimity or majority backing of the existing and continuing trustees. The relevant extract of the said letter (produced with the suit, and which is not in dispute) reads as follows: - “Shri Shishir Bajaj Managing Trustee, Indian Youth Centres Trust C/o Bajaj Hindustan Ltd. Bajaj Bhawan, 226, Nariman Point Mumbai – 400 021. Dear Shri Shishir Bajaj As you are kindly aware, the Board of Trustes of the Indian Youth Centres Trust at its Meeting held in October, 2007 had decided that the Trustees might recommend suitable names to fill the vacancies, to the Chairman and the Chairman in consultation with the Managing Trustee, might then induct the new Trustees. Since no names were received, the Chairman urged the Trustees to send the nomination for the three vacancies that had arisen. I had received the recommendations from all the Trustees. I before taking decision, consulted the Managing Trustee, and as well as other Trustees. Keeping in view the recommendations received and the consultations held, I decided that I should take the consent of the following four eminent persons to become Members of the Trust: 1. Dr. Bhishma Narain Singh 2. Shri Gopal Krishna Gandhi 3. Shri Anil K. Shastri 4. Shri R.N. Ani. Accordingly, I wrote to each one of them. Only Shri Gopal Krishna Gandhi declined to send his consent, due to heavy burden of his work, as he is a Governor. The other three persons have sent their consents. Accordingly, I have nominated the following as Trustees of the Indian Youth Centres Trust, with immediate effect: - 1. Dr. Bhishma Narain Singh 2. Shri Anil K. Shastri 3. Shri R.N. Anil” CS (OS) 193/2010, I.A. Nos. 1407/2010 & 1408/2010 Page 5 7. The plaintiffs talk about a reply to the above communication, by letter dated 09.04.2009 (by the first plaintiff), which after extracting the Board Resolution of 23.10.2007 went on to state as follows: - “From the above it is clear that both your goodself and me were jointly given the responsibility by the present Trustees to only appoint 2 Trustees and not 3 Trustees, with mutual consent, in view of the resignation of Shri Kuriakose and Dr. Kothari. As you may recall I and Rajat had met you at the Kendra’s office on 26th February 2009 and we had a discussion about the names of Trustees who could be considered for this August Body. In fact, I had discussed the names of Mr. Justice Chandrasekharji Dharmadhikari and Smt. Usha Gokhani, Chairman of Mani Bhavan, Mumbai, where Mahatama Gandhi had stayed for many years. She also happens to be the granddaughter of Mahatma Gandhi (daughter of Shri Ramdas Gandhi). I also remember Rajat discussing the name of the candidate which he had proposed and few other names including that of Shri Gopal Gadhi. However, we frankly did not get a chance to discuss other recommended names given by the other present Trustees of the Indian Youth Centres Trust. In view of the same no two categorical names of the Trustees were finalized between yourself and me. In the history of this August Body there has never arisen any dispute over the appointment of Trustees. Hence I would humbly request you to immediately put in abeyance the appointment of the above 3 Trustees.” 8. The plaintiffs rely upon a similar correspondence by one of them with the second defendant. It is stated that in reply to their protest - a letter of the first plaintiff dated 09.04.2009 - the second defendant responded by his letter dated 15.04.2009. The relevant portion of that letter reads as follows: - “I find that some of the facts in your letter, as also the letter of Shri Rajat Narainji have not been correctly set out. The correct facts, so far as I know, are as under: - You have in your letter under reference, set out correctly the relevant extracts of the Proceedings of the Meeting of the Board of Trustees held on 23.10.2007. However, when that matter cam up again in the Meeting of the Board of Trustees held on 11.10.2008, Shri Viresh Pratap Chaudhuryji pointed out that apart from two vacancies on the Board of Trustees, another vacancy on account of the demise of Shri Ravindra Vermaji had since arisen, and that the same should also be filled by the same process, as had been decided in the Meeting of the Board of Trustees held on 23.10.2007. This was agreed to in the Meeting. However, when the Draft Minutes of the Meeting held on 11.10.2008 were circulated by Shri Suresh Ambekar, Director of the Kendra, there was no mention of the said point in the Draft Minutes. I came to know that Shri Viresh Pratap Chaudhryji had sent a letter in response to the Draft CS (OS) 193/2010, I.A. Nos. 1407/2010 & 1408/2010 Page 6 Minutes, for incorporation of the said point in the Minutes and Shri Chaudhryji has sent me a copy of the letter which he had written to Dr. Ambekar in this behalf. Even otherwise, the clear vacancy arose due to the sudden passing away of former Chairman Shri Ravindra Vermaji. Therefore there were three clear vacancies existed on the Board. In furtherance of completing the process of inducting New Trustees, the Director of the Kendra sent me your letter dated 28.1.2009 in which you had recommended only one name of Shri K.S.Vaidyanathan. Shri Rajat Narainji also sent a letter dated 30.1.2009 to Shri Ambekar, recommending the name of Shri Kusharga Nain Bajaj. He acknowledged in that letter that Shri Kushagra Nain Bajaj was your son, but he stated that Shri Kushagra Nain Bajaj was in his own right eminently suited to be inducted as a new Trustee. After all the Trustees had sent their recommendations. I had asked Shri Ambekar to prepare a list of all such recommendations and send a copy to you and to me. Shri Ambekar did so. As I was to be in Delhi on 26.2.2009, I thought of discussing with you the names of the proposed Trustees, and invited you to meet me in the office of the Kendra. Earlier, I had also got in touch with Shri Rajat Narainji at Haridwar, requesting him to give some more names. Shri Rajat Narainji incidentally was also in Delhi on 26.2.2009. He had also accompanied you in your meeting with me in the office of the Kendra on that date. I had a free and frank discussion with you, as well as Shri Rajat Narainji, for quite some time. I also indicated my reservation for the names suggested by both of you. You then suggested to me the names of Mr. Justice Chandrasekharji Dharmadhikari and Smt. Usha Gokhani. Shri Rajat Narainji also suggested the name of Shri Gopalkrishna Gandhi. Regarding the names circulated to Managing Trustee and the Chairman, I had also consultation about the names with Shri Manohar Golpelwarji and Shri Viresh Pratap Chaudhryji. Neither you nor Shri Rajat Narainji indicated to me any reservation about the other names in the list prepared by Shri Ambekar. The name of Shri Gopalkrishna Gandhi appeared to me to be suitable. Therefore, I sent him a letter seeking his consent, but he declined. I had also sought consent of Dr. Bhishma Narain Singhji, Shri Anil K. Shastriji and Shri R.N. Anilji. They have sent their consents. Thereupon, I nominated them as new Trustees on the Board of Trustees of the Indian Youth Centres Trust and intimated them about their induction as new Trustees. By my letter dated 3.4.2009, I also intimated you and other Trustees about the said nominations. In view of what I have stated above, I feel that it would not be correct to keep in abeyance the decision to induct the three New Trustees. That decision has already come into effect” 9. The plaintiffs have adverted to several other letters dated 16 & 17.04.2009, 13.05.2009 and 20.06.2009 written to the second defendant. The sum and substance of these letters is that the plaintiffs reiterated their objections to the appointment of the new Trustees, i.e. Defendant Nos. 4-6 and also to the procedure adopted on two counts. The second and third defendant, on the other hand, stated that there was no infirmity or legal irregularity, in the appointment of such new CS (OS) 193/2010, I.A. Nos. 1407/2010 & 1408/2010 Page 7 trustees, in their subsequent correspondence, with the plaintiffs, starting with the second defendant’s letter dated 22.06.2009. In this background of circumstances, a meeting of the Board of Trustees of the first defendant was held on 19.09.2009, which comprised of the three plaintiffs, the first two defendants and two out of the three new Trustees. This meeting appears to have been stormy where the subject of the appointment of three new trustees was raised. The discussion appears to have occurred along the predictable lines. In that, the plaintiffs recorded their protest to the three appointments stating that there was no consultation and also that in any event, the third trustee could not be appointed; the third defendant, on the other hand, supported the appointments. 10. The plaintiffs while instituting the suit stated in paragraph-2 as follows: - “The present suit is being filed to address personal grievances and to assert personal rights, may be as the office bearers of the trust. It is not in the representative capacity or in the nature of public interest. This suit is filed for vindication of the own rights of the Plaintiffs”. 11. The defendants had at the preliminary stage stated that the Trust is a public charitable one and, therefore, beyond the ambit of the Indian Trust Act. They had denied the plaintiffs’ locus standi to claim the reliefs. In these circumstances, the plaintiffs urged I.A. No.1407/2010 - which had been instituted earlier along with the suit on 03.02.2010, seeking leave to sue under Section- 92 of the Code of Civil Procedure (CPC). The plaintiffs aver that the application is preferred as a matter of abundant caution so that no technical objection may be raised by the defendants. 12. The plaintiffs, during the course of hearing, reiterated their submissions; besides, they relied on judgments reported as Swami Paramatmanand Saraswati & Anr. v. Ramji Tripathi and Another, (1974) 2 SCC 695 to say that in case the Court holds that their interest is private, they can maintain the suit. It is urged, principally, however, that as the parties are agreed that the trust is a public charitable one, covered by Section 92, the Court should see the larger aspect and decide, unconstrained by the adversarial submissions, whether the appointments sought to be justified by the first two defendants, can be affirmed, in the light of the trust deed. It is submitted that the Trust, as well as the Trustees, are circumscribed, in their powers by the Deed, which clearly postulates that appointment of new trustees, has to be by all the surviving and continuing trustees, acting unanimously, or by majority. Counsel urged that this leaves no room for delegation of such essential powers to one or the other trustee. It is argued, alternatively, that if CS (OS) 193/2010, I.A. Nos. 1407/2010 & 1408/2010 Page 8 for some reason, the Court were to uphold the resolution of 2007 whereby the second defendant could nominate two trustees, after due consultations with them (the plaintiffs), even then, the record, of the admitted minutes of meeting and correspondence do not indicate any such effective or meaningful consultation, but clearly point to a unilateral imposition of names. The plaintiffs urge that the suit is not as much a reflection on the suitability or eminence of the new trustees, as to the adherence to the terms of the Trust Deed, which forms the charter within the framework of which the parties had to conduct their affairs. The plaintiffs also relied on the express terms of Section 92 to say that once a Court finds that an appointment is irregular, then, regardless of other details, the declaration about the effect of such consequence has to follow, having regard to the wider interests of the public in the affairs of the trust, and its efficient and proper functioning. 13. The first two defendants have filed a common written statement contending that the plaintiffs are not entitled to leave under Section 92. It is stated that the Trust has been set up for public charitable purposes and that the grievances articulated about the so called illegal appointment of the new trustees, is a relief personal to them which does not impinge on the administration of the Trust. It is contended that the practice followed by the Trust in organising its activities for the last several decades is that even though the Board of Trust decides on policy aspects, their actual implementation is left to a highly qualified person, appointed as Director. The defendants rely on the fact that ever since 1996 till February, 2010 only 19 meetings of the Board of Trustees were held, which meant that such high level meetings took place barely once a year. The written statement mentions about appointment of the first plaintiff as Trustee on the demise of Shri Ram Krishan Bajaj when the then existing Managing Trustee had discussion with the Bajaj family and thereafter proposed that he should join the Board of Trustees to which the Board unanimously agreed. This is said to have occurred on 28.01.1995. It is stated that similarly the appointment of plaintiff nos. 2&3 and the defendant no.2 took place by unanimous consent and approval of the then Board of Trustees. The instance when the third defendant was appointed as Trustee on 26.10.2004 when the suggestions were accepted by the Board, has also been cited. The common written statement then mentions about the second defendant’s appointment, which was unanimously approved by the Board of Trustees on 26.10.2006. CS (OS) 193/2010, I.A. Nos. 1407/2010 & 1408/2010 Page 9 14. It is stated that in the light of the above practice when two Trustees had resigned and the matter came up for filling those vacancies, the Board of Trustees deliberated upon the issues on 23.10.2007 and resolved as they did that each one of them might recommend suitable names to the Chairman who would in consultation with the Managing Trustee induct two more Trustees. The written statement relies upon the Board of Trustees’ meeting dated 11.10.2008 and states that the Minutes clearly record approval to the previous decision recorded on 23.10.2007, whereby the Chairman was given the discretion after due consultation with the Managing Trustee to nominate names for the two vacancies. The written statement goes on to mention about a letter dated 29.11.2008 by the third defendant and subsequently letter dated 04.11.2008 by the second plaintiff suggesting names of certain persons to fill the vacancies. It is submitted that in these circumstances, second defendant recommended the names of Shri Bhishma Narain Singh and Shri R.N. Anil. The first two defendants allude to a letter dated 28.01.2009 written by the first plaintiff proposing the name of Shri K.S. Vaidyanathan as one of the Board Trustees and similarly another letter by the third plaintiff to the Director of the Kendra on 30.01.2009. The latter had suggested the name of Mr. Kushagra Nain Bajaj, the first plaintiff’s son to fill one of the vacancies. Copies of all these letters have been filed by the defendants. 15. It is contended that the plaintiffs M/s Rajat Narain and Shishir Bajaj met the second defendant on 26.02.2009 and held discussions for filling vacancies, during the course of which, the first plaintiff had suggested certain names, to which, the second defendant voiced reservations. It is submitted that in the light of all these consultations and taking into account the overall circumstances, the second defendant finally made up his mind and wrote the letter dated 19.03.2009 to M/s Bhishma Narain Singh, Anil K. Shastri, Gopal Krishan Gandhi and R.N. Anil enquiring if they were willing to act as Trustees. It is submitted that all of them, except Shri Gopal Krishan Gandhi, accepted and gave their concurrence whereas he did not do so. The defendants urge that there is nothing wrong in this procedure as it was in full concurrence with the procedure that all the Trustees had agreed upon in the meeting held on 23.10.2007. Urging that the plaintiffs cannot now go back upon those decisions, which were really in consonance with the past practice and the manner in which the Trust was functioning, the defendants rely upon the letter of the third defendant dated 10.04.2009, which according to them, sets the records straight. In that letter, the third defendant had mentioned that if the second defendant