1 wp-4273n9440.10 Ash IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION WRIT PETITION NO. 4273 of 2010 WITH WRIT PETITION NO. 9440 OF 2010 WP NO. 4273 OF 2010 M/s. Raj Darshan Ventures. .. Petitioner Vs The Joint Charity Commissioner & Others. .. Respondents ­­ Shr R.Z. Moray i/by Shri Amit Sale for the Petitioner. Shri G.S. Godbole and Shri Snehal Shah and Ms Prachi Manekar i/by Vijay Dhingreja for Respondent No.2. Shri Nitin Thakkar, Sr. Advocate and Shri Satyen Vora and Shri Sahil Gandhi i/by M/s. Markand Gandhi & Co. for Respondent No.3. Shri R.M. Patne, AGP for Respondent No.1. ­­ WITH WP NO. 9440 OF 2010 Smt. Malti Girish Thakkar & Others .. Petitioners Vs Joint Charity Commissioner & Others .. Respondents ­­ Shri A.A. Kumbhakoni, with Shri A.S. Khandeparkar, Shri Arun H. Mehta and Ms Ranjan Parikh i/by Akshar & Co. for the Petitioners. Shri R.M. Patne, AGP for Respondent No.1. ­­ 2 wp-4273n9440.10 CORAM : A.S.OKA, J. DATE ON WHICH THE SUBMISSIONS WERE HEARD : 21ST DECEMBER, 2010. DATE ON WHICH THE JUDGMENT IS PRONOUNCED : 6TH JANUARY, 2011. JUDGMENT : 1. These two Writ Petitions were taken up for hearing together as the challenge therein is to the same order. As the daily board of this Court was very heavy from September, 2010 onwards, by consent of the learned counsel appearing for the parties, the Petitions were heard on some occasions after the Court hours. 2. The challenge in these Petitions is to the judgment and order dated 17th May, 2010 passed by the learned Joint Charity Commissioner, Mumbai. By the said judgment and order, an application made by a Public Charitable Trust ( the 2nd Respondent in Writ Petition No. 4273 of 2010 ) under Section 36(1)(a) of the Bombay Public Trust Act, 1950 ( hereinafter referred to as “the said Act” ) has been allowed. By the impugned judgment and order, a permission has been granted to the 2nd Respondent­ Trust to sell a property vesting in the said Trust to M/s. Gold Plaza Developers Private Limited (the 3rd Respondent in Writ Petition No. 4273 of 2010 ). The Trust property has been permitted to be sold on the terms and 3 wp-4273n9440.10 conditions incorporated in the impugned judgment and order. 3. The application under Section 36(1)(a) of the said Act was filed by the 2nd Respondent on 3rd May, 2010. In the said application, it was stated that the scheme for management of the said Trust was settled by this Court by an order dated 23rd April, 1937. Reliance was placed on Clause 29 of the Trust Deed. In the application, it is stated that Cutchi Lohana Samast Mahajan in its meeting held on 26th March, 2000 sanctioned the proposal for re­development of the Trust property being Cadestral Survey No. 126 of Mazgaon Division, admeasuring 4581.95 sq. meters consisting of structures and dwelling houses standing thereon and being occupied by about 225 tenants. In the said application, it was stated that the structures thereon have been occupied by 225 tenants and the income of the said property for the financial year ending with 31st March, 2009 was Rs.3,18,461/­ and the yearly expenses incurred on the said property were Rs.3,73,929/­. Various details have been set out in the said application which, according to this Trust, show that there was necessity of alienating of the said property. Reliance is placed on the resolution passed in the meeting of the Board of Trustees held on 16th April, 2010 by which the Trustees resolved to sell the said property by calling offers. According to the case of the Trust, a public notice was published in daily newspapers “Indian Express” and “Maharashtra Times” on 21st April, 2010 calling for the offers. The Gold Plaza Developers Private Limited ( hereinafter referred to as “the Purchaser” ) submitted an offer by which the Purchaser 4 wp-4273n9440.10 offered to pay the sum of Rs.3,51,00,000/­ ( Rupees Three Crores Fifty One Lacs Only ) to the Trust and also offered to allot in the newly constructed property 10 rooms having carpet area of 300 sq. ft. each, one office premises admeasuring 500 sq. ft. of carpet area and a well­equipped centrally Air Conditioned Auditorium having sitting capacity of about 600 persons. Apart from the offer from the said Purchaser, there were 5 other offers received. The public notice required deposit of a sum of Rs. 5,00,00,000/­ ( Rupees Five Crores Only ) by way of Earnest Money Deposit(for short ‘EMD’) along with the offer. In the application made by the Trust, a prayer was made for grant of permission for sale of the said property to the Purchaser on the terms and conditions set out therein. By the impugned order, a permission was granted to sell the said property to the Purchaser. The Trustees of the said Trust executed a Deed of Conveyance dated 24th May, 2010 by which the said property was conveyed to the Purchaser. The said Deed of Conveyance was lodged for registration on the same day. 4. The Writ Petition No. 4273 of 2010 has been filed by M/s. Raj Darshan Ventures. The case made out in the said Petition is that the said Petitioner could not come across the advertisements published in the daily newspapers “Indian Express” and “Maharashtra Times” inviting the offers. It is stated that the said Petitioner became aware of the same on or about 14th May, 2010. It is stated that on 15th May, 2010, an application dated 14th May, 2010 was filed by the Petitioner before the Learned Joint Charity 5 wp-4273n9440.10 Commissioner in the said application filed by the Trust. In the said application, it was stated by the Petitioner that the Petitioner was interested to purchase the said property and that the Petitioner was ready and willing to pay maximum amount of bid amount. It was stated that the Petitioner was willing to purchase the said property ‘by offering highest offer more than the offer given by the present purchaser’ in the application filed by the Trust. In the said application, the Petitioner requested for grant of time to deposit earnest money deposit. On 17th May, 2010, the said application was rejected by the learned Joint Charity Commissioner by observing that the Petitioner has not complied with the mandatory condition of submitting Pay Order or Demand Draft in the sum of Rs.5 Crores. The said order was passed after calling upon the parties to the application under Section 36(1) (a) of the said Act to file reply. According to the Petitioner, on 17th May, 2010 itself, an application was submitted by the Petitioner in the office of the learned Joint Charity Commissioner by which the Petitioner submitted an offer of payment of an amount along with the offer to make available to the Trust various premises in the developed property. It is contended that without considering the offer contained in the application dated 17th May, 2010, the learned Joint Charity Commissioner has hurriedly passed the impugned order. 5. The prayer in Writ Petition No. 4273 of 2010 which was initially made was of setting aside the impugned order. The Writ Petition was filed on 25th May, 2010. Later on, the amendment was carried out by 6 wp-4273n9440.10 adding a prayer for declaring the Deed of Conveyance dated 24th May, 2010 as non­est and having no validity. 6. The Writ Petition No. 9440 of 2010 was filed on 30th November, 2010. The Petitioners in the said Petition are 82 in number. The first two Petitioners claim to be the members of the Trust and rest of the Petitioners claim to be tenants of the Trust in respect of the premises in the property subject matter of sale. The challenge in the said Petition is also to the same impugned judgment and order. A prayer is also made for setting aside the Deed of Conveyance dated 24th May, 2010. 7. Learned counsel appearing for the Petitioner in Writ Petition No. 4273 of 2010 submitted that essentially the challenge in the petition is to the decision making process adopted by the learned Joint Charity Commissioner. The learned counsel appearing for the Petitioner relied upon a decision of the Full Bench of this Court in the case of Sailesh Developers and Another v. Joint Charity Commissioner, Maharashtra and Others ( 2007(3) Mh.L.J. 717 ). He also placed reliance on a decision of the Apex court in the case of Mehrwan Homi Irani & Anr. v. Charity Commissioner, Bombay & Ors. ( AIR 2001 SC 2350 ). He submitted that the learned Joint Charity Commissioner has not performed his duty. He submitted that there is no consideration of the basic issue as to whether the necessity of alienating the Trust property is established. He invited the attention of the Court to the objects of the scheme of the Trust settled by 7 wp-4273n9440.10 the Court way back in the year 1937. He submitted that as per the Clause 29 of the said Scheme, a prior sanction was required to be obtained from Cutchi Lohana Samast Mahajan. He pointed out that the Resolution was passed in the meeting dated 26th March, 2000 of Cutchi Lohana Samast Mahajan. He submitted that the consent was granted in the said meeting to the Scheme of development of the Trust property on 7 conditions incorporated therein. He pointed out that the scheme sanctioned was of re­development of the Trust property and not of the sale of property. He submitted that the Resolution contemplates the joint development of the said property by the Trust and Developers with authority to the Trust to sell the surplus rooms to the vegetarian Hindus by giving first preference to the members of Cutchi Lohana Samast Mahajan Community. He submitted that apart from the fact that the application under Section 36(1)(a) of the said Act could not have been made on the basis of the said Resolution after a lapse of 10 years, the Resolution passed by the Trustees on 16th April, 2010 is not consistent with the Resolution dated 26th March, 2000. He submitted the Resolution dated 26th March, 2000 is essentially for permitting the joint development of the Trust property which does not contemplate sale or transfer of the land. He submitted that the Resolution of the Board of Trustees contemplates sale of the land. He submitted that the effect of Clause 29 of the scheme of the Trust has not been considered by the learned Joint Charity Commissioner. The learned counsel submitted that on 17th May, 2010, the Petitioner submitted a detailed offer to the learned Joint Charity Commissioner which is much better than the offer of 8 wp-4273n9440.10 the Purchasers. He submitted that a clear illegality was committed by the learned Joint Charity Commissioner by even not considering the offer. He submitted that the learned Joint Charity Commissioner hurriedly disposed of the application under Section 36 of the said Act in a span of only 14 days without holding any proper inquiry or without satisfying himself regarding necessity to alienate the Trust property. He submitted that the entire decision making process adopted by the learned Joint Charity Commissioner is bad in law. He pointed out that even the Deed of Conveyance was hurriedly executed within 7 days from the date of the impugned judgment and order. He submitted that even assuming that the case of existence of necessity was made out, no effort was made by the learned Joint Charity Commissioner to examine whether the consideration offered was adequate. He urged that the petitioner was ready and willing to offer its bid. He submitted that the impugned order deserves to be quashed and set aside. He submitted that the learned Joint Charity Commissioner, in any event, ought to have adopted the course suggested by the Apex Court in the case of Mehrwan Homi Irani (supra). 8. The learned counsel appearing for the Petitioners in Writ Petition No. 9440 of 2010 submitted that the Petitioners are the beneficiaries of the Trust. He submitted that the Trustees could have themselves developed the Trust property. He submitted that what was contemplated was re­development of the Trust property, but the learned Joint Charity Commissioner has permitted the sale of the Trust property. 9 wp-4273n9440.10 He submitted that in the advertisement published by the Trustees, it is stated that there were 205 tenants in the property but in the Deed of Conveyance, it is stated that there were 225 tenants. He submitted that there is a misrepresentation by showing more number of tenants than the actual number of tenants in the property. He submitted that the Clauses 35 and 38 of the Scheme of the Trust have not been considered by the learned Joint Charity Commissioner which empower the Trustees to re­ develop the property. He pointed out that in terms of Clause 29 of the scheme of the Trust, the trustees of the said Trust did not obtain prior permission of the Cutchi Lohana Samast Mahajan. He pointed out that even assuming that in the year 2000 the permission was obtained, the same is a permission for joint development and the terms and conditions incorporated in the impugned order are totally contrary to the terms and conditions incorporated in the Resolution passed by the Cutchi Lohana Samast Mahajan. The learned counsel submitted that the Petitioner No. 79 had filed a caveat before the learned Joint Charity Commissioner but no notice of the proceedings was served to the said Petitioner. He pointed out that an application for modification of the Clause 29 of the scheme of the Trust is pending in the City Civil Court and, therefore, during the pendency of the said application, the permission could not have been granted by the learned Joint Charity Commissioner. He submitted that by selling adjoining Trust property, the Trust has received a sum of Rs.82 lacs apart from the large funds still available with the Trust. He submitted that the financial position of the Trust was very sound and, therefore, there was no 10 wp-4273n9440.10 reason to apply for permission to sell the Trust property. He submitted that the order impugned has been passed in undue haste. 9. The learned counsel appearing for the 2nd Respondent Trust pointed out that the Petitioner in the Writ Petition No. 4273 of 2010 is the competitor of the purchaser. He submitted that the Petitioner did not submit any bid on the basis of the public notice. He submitted that even along with the application dated 14th May, 2010 submitted to the learned Joint Charity Commissioner, the Petitioner did not offer to pay EMD of Rs.5 Crores. He submitted that the alleged proposal dated 17th May, 2010 addressed to the Trust was never submitted to the Trust and a copy of the said letter was submitted not before the learned Joint Charity Commissioner but in the inward Section of the office of the learned Joint Charity Commissioner. He pointed out that the order passed on the application dated 14th May, 2010 was not challenged. He pointed out that there is no departure made from the Resolution dated 26th March, 2000 while passing the Resolution dated 16th April, 2010. He submitted that the interest of the beneficiaries has been completely protected by the learned Joint Charity Commissioner imposing appropriate terms and conditions. He submitted that there is no inconsistency between the resolutions and the terms and conditions incorporated in the Sale Deed. He submitted that apart from offering a large amount, number of premises including an Auditorium will be made available to the Trust by the purchaser to the Trust. He submitted that as of today, there are no vacant 11 wp-4273n9440.10 premises in possession of the Trust. He submitted that the Writ Petition No. 9440 of 2010 has been belatedly filed by the Petitioners who are in fact beneficiaries under the sale transaction inasmuch as they will get self­ contained premises in a newly constructed building on ownership basis. He submitted that the Petitioners were all along aware of the proceedings before the learned Joint Charity Commissioner and the Deed of Conveyance but the said Petitioners have belatedly approached this Court on 30th November, 2010. He submitted that there is absolutely no explanation whatsoever for the delay. 10. The learned counsel appearing for the Purchaser pointed out that the Petitioners in the Writ Petition No. 9440 of 2010 have participated in the meetings held after the execution of the Deed of Conveyance. He submitted that the Petition is completely malafide. He pointed out that he Petitioner in the Writ Petition No. 4273 of 2010 has no bona fides and he has not even offered to pay the EMD of Rs.5 Crores. 11. The learned counsel appearing for the Petitioner in the Writ Petition No.4273 of 2010 submitted that the challenge is to the decision making process and most of the contentions raised by him have remain unanswered. The learned counsel appearing for the Petitioners in both the Writ Petitions have tendered the written submissions on record. 12 wp-4273n9440.10 12. I have given careful consideration to the submissions. Before dealing with the rival submissions, it will be necessary to advert to the law laid down by the Full Bench of this Court in the case of Sailesh Developers (supra). This Court has considered the scope of the powers under Section 36 of the said Act. The questions formulated, which were referred to the Full Bench, read thus:­ “i) 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 ? ii) Whether the party who comes forward to submit his offer directly before the Charity Commissioner in a pending application under section 36 of the said Act of 1950 has locus standi to challenge the order passed in a proceeding under section 36 ?” The Paragraph 28 of the said decision reads thus:­ 13 wp-4273n9440.10 “28. ........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 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 the 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 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 14 wp-4273n9440.10 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 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 15 wp-4273n9440.10 1950, in a given case can opt for public auction or can invite bids. ” In paragraph 29 of its Judgment, the Full Bench observed thus: “29. The second question referred to the Full Bench for decision is regarding locus standi of a person who appears before the Charity Commissioner and offers his bid to challenge the order passed by the Charity Commissioner. The trustees and persons having an interest in the Trust can always challenge the order. We have already held that the proceeding under section 36 of the said Act before the