1 wp6746-2010 IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION WRIT PETITION NO. 6746 OF 2010 WITH CIVIL APPLICATION NO. 2801 OF 2010 Somwanshi (All Mahar) Shikshan Vardhak Fund ...Petitioners vs. Joint Charity Commissioner, Nashik ...Respondent Mr.Venkatesh A. Shastry for the Petitioners. Mr.Suresh Bhosale, AGP for the Respondent. Mr.R.S. Khadapkar for the Intervenor in Civil Application No.2801 of 2010. CORAM : A.S. OKA, J. DATE OF SUBMISSIONS : 29th October, 2010 DATE OF JUDGMENT TO BE PRONOUNCED : 19th November,2010 ORAL JUDGMENT :- 1 I have heard the learned Counsel appearing for the petitioners in support of the writ petition. 2 wp6746-2010 I have heard the learned AGP representing the respondent. I have also heard the learned Counsel appearing for the applicants in Civil Application No.2801 of 2010. 2 The petitioners claim to be the Trustees as well as the President and the Secretary, respectively of Somwanshi Shikshan Vardhak Fund, Nashik, which is a public trust duly registered under the Bombay Public Trusts Act, 1950 (hereinafter referred to as the said Trust ). The petitioners made an application before the respondent  Joint Charity Commissioner by invoking Section 36(1)(a) of the said Act seeking permission to sell the trust property bearing final plot No.124 admeasuring 3497.25 sq. metres situated at Gangapur Road, Taluka and District Nashik. In the application, it was contended that the said trust was running a boarding for students and was intending to start various educational courses. It was contended in the application that for starting 3 wp6746-2010 the educational courses, sufficient funds were not available with the trust. Therefore, Board of Trustees passed a resolution on 4th July, 2007 by which it was resolved to develop the said trust property by giving the same on lease for a period of 99 years. Accordingly, a tender notice was published in Marathi dailies Gaokari and Maharashtra Times and English Daily Business Standard . As per the tender notice, quotations were received from M/s.Suyojit Builders Pvt.Ltd. and M/s.Talware Builders Pvt.Ltd. The tenders were considered in the Special General Body Meeting of the trust held on 6th January, 2008 and it was resolved to accept the offer of M/s.Talware Builders Pvt.Ltd. It was contended that the said builders had offered sum of Rs.4,90,00,000/- along with the constructed area of 18000 sq.ft. in the building to be constructed on the said trust property. Moreover, the said builders offered to pay monthly rent of Rs.20,000/- in respect of the trust property and monthly maintenance charges of Rs.20,000/- with a further 4 wp6746-2010 clause that both the amounts will be increased by 25% after every five years. Accordingly, a prayer was made for grant of permission to alienate the trust property to the said builders. By the impugned order, the learned Joint Charity Commissioner rejected the said application on the ground that the same was defective and premature. 3 The learned Counsel appearing for the petitioners submitted that the learned Joint Charity Commissioner has committed an error by not considering the application on merits. He submitted that the observations made by the learned Joint Charity Commissioner in paragraph 9 of the impugned order are factually incorrect. He submitted that even if by the instrument of trust, there is no power conferred on the trustees to alienate the trust property, the permission could have been granted under Section 36 of the said Act. He submitted that the tenders were invited by publishing tender notice in three leading newspapers 5 wp6746-2010 having a very wide circulation. He submitted that the observation made by the learned Joint Charity Commissioner in paragraph 10 of the impugned order is erroneous inasmuch as the builders who had submitted tenders must have taken into consideration the fact that additional FSI is available. He invited attention of the Court to the tender document and a copy of the development scheme forming part of the tender document. He submitted that essentially the tenders were invited from developers for development of the trust property and as per the terms and conditions, lease of the property was to be executed in favour of the allottee for a period of 99 years. He submitted that the entire approach of the learned Joint Charity Commissioner is perverse. He submitted that even assuming that there were technical defects in the application, an opportunity ought to have been granted to the petitioners to remove the deficiencies and the application could not have been dismissed on the ground that the application was 6 wp6746-2010 defective. The learned AGP supported the impugned order. The learned Counsel appearing for the intervenors pointed out that it was not in the interests of the trust to accept the tender of M/s.Talware Builders Pvt.Ltd. He submitted that the action of accepting the tender of the said builders is not consistent with the terms and conditions of the tender. 4 I have given careful consideration to the submissions. The first ground on which the application made by the petitioners was rejected is that the nature of the activities which the trust was intending to start was not specified in the application. The learned Joint Charity Commissioner further observed that it was not disclosed by the petitioners whether any budget was prepared and whether necessary permission from the competent authority to run the activities was obtained. It was further observed in the impugned order that a copy of the instrument of trust showing that the trustees 7 wp6746-2010 were authorised to alienate the trust property, was not produced. The learned Joint Charity Commissioner further proceeded to observe that it is not stated as to how the proposed alienation by creating lease for a longer period of 99 years was in the interest of the trust. In paragraph 9 of the impugned order, the learned Joint Charity Commissioner observed that even the amended name of the trust was not mentioned in the application. Lastly, it is observed that the trust will be entitled to benefit of FSI of 1.2 instead of 1.1 and therefore, the trust will suffer loss. The ultimate conclusion recorded in the impugned order in paragraph 12 thereof is that the application being defective and premature was liable to be dismissed. 5 It must be noted here that under Section 36(1) of the said Act, the Charity Commissioner was empowered to permit the trustees to alienate or dispose of the trust property even though there may not be any specific clause in the Lease Deed 8 wp6746-2010 authorising the trustees to sell the property. However, such a permission can be granted provided that Charity Commissioner is satisfied that in the interests of the trust, the property should be disposed of. The Charity Commissioner is empowered to impose suitable conditions, regard being had to the interest or benefit or protection of the trust. In the case of Sailesh Developers and another vs. Joint Charity Commissioner, Maharashtra and others, (2007 (3) Maharashtra Law Journal 717), a Full Bench of this Court has laid down the scope of powers under Section 36 of the said Act. This Court held that the power of the learned Charity Commissioner under Section 36 of the said Act is not confined merely to grant or refuse the sanction to a particular transaction in respect of which the sanction is sought. The Charity Commissioner can invite offers from the members of the public and can direct the trustees to alienate the trust property to a person whose bid or quotation is the best having regard to the interest, benefit or protection 9 wp6746-2010 of the trust. 6 In the affidavit in support of the application filed by the petitioners, it was specifically stated that the hostel run by the trust is likely to close down as there were no proper facilities. It was pointed out that the building on the trust property in which the boarding/hostel was run was in dilapidated condition. It was stated that the members of the Board of Trustees were themselves contributing certain amounts and were collecting donations for meeting the expenditure of the hostel. It was stated that apart from the fact that the trust intended to start various educational courses, the trust was desirous of running the hostel/boarding by adopting modern concepts. It was stated that apart from the fact that the existing building was in dilapidated condition, the trust will require a bigger building for running the hostel and for conducting various courses. It was stated that the trust was not having sufficient 10 wp6746-2010 funds to develop the property. 7 The learned Counsel for the petitioners placed reliance on a resolution passed in the Annual General Meeting held on 15th June, 2005 by which it was resolved that the trust property shall be developed by appointing a developer and that a hostel with all the modern facilities and amenities should be started in the developed property. It was resolved to conduct educational courses in the developed property. Accordingly, tender notice was published in three newspapers. Notice was published in Marathi dailies Gaokari and Maharashtra Times and English daily Business Standard . In fact, tenders were invited from skilled developers to develop the trust property. A copy of the development scheme formulated by the trust was a part of the tender document. The scheme provided that out of the FSI available, FSI of 10000 sq.ft. was required to be used for hostel and FSI of 4000 sq.ft. was required to be used for hall of the 11 wp6746-2010 trust. It was provided that the remaining FSI available to the trust shall be available for commercial development by the developer. The scheme makes it clear that the developer will be allowed to use FSI of only 1.00 and in fact, the structure to be constructed by the developer shall be such that the Trust should be able to carry out further construction inasmuch as in future, the FSI was likely to be increased to 2.00. It was provided in the development scheme that the building plan shall be prepared by the successful developer in such manner that area of third and fourth floor should be 10000 sq.ft. each and the developer shall have only a limited right in respect of lower ground, first and second floor. The development scheme further provided that the developer will be entitled to enter into agreement for allotting any portion of the ground, first and second floor premises. It was further provided that the developer will be granted 99 years lease in respect of the land of the trust but the building will continue to be of ownership of 12 wp6746-2010 the trust. Thus, essentially, tenders were invited for development of the trust property and the scheme of development provided that third and fourth floor of the proposed building having area of 10000 sq.ft. shall be available for the purposes of the trust. To enable the developer to dispose of the premises on the lower floors, it was provided that the lease for the period of 99 years shall be granted in favour of the developer. In fact, the offer of a developer which was accepted by the trustees provided for payment of a sum of Rs.4,90,00,000/- to the trust and allotment of constructed area of 18000 sq.ft. 8 From the resolution passed by the General Body of the Trust on 15th June, 2005, it is apparent that the building on the trust property was in dilapidated condition and the same was required to be reconstructed for setting up a modern hostel and for conducting various educational courses. It is set out that the trust was not possessing funds to develop the property on its own. It is not the 13 wp6746-2010 finding recorded by the learned Joint Charity Commissioner that the existing building is in sound condition and that there is a sufficient space available in the building for the activities of the trust. The audited accounts of the trust were placed before the learned Joint Charity Commissioner to show that the trust was not possessing the kind of funds required for development of a large property in the city of Nashik. Therefore, there was no impediment in granting sanction for alienation in terms of the scheme of development which was part of the tender. To that extent, the learned Joint Charity Commissioner has committed an error. The learned Joint Charity Commissioner could not have dismissed the application on the ground that the amended name of the trust was not mentioned in the application inasmuch as the learned Joint Charity Commissioner could have always allowed the petitioners to carry out amendment for correcting name. The learned Joint Charity Commissioner has completely ignored that the proposal was essentially 14 wp6746-2010 to develop the trust property by demolishing the old building and by constructing a new building. The development rights sought to be conferred on the developer where for utilising FSI of only 1.0 and as per the scheme of development forming part of the tender, the trust was to retain the right to carry out the further development by utilising FSI which may be available in future over and above 1.00. Therefore, a condition was incorporated that building shall be constructed by the developer in such manner which will take the load of the further construction which may be carried out in future. The observation made by the learned Joint Charity Commissioner in paragraph 10 of the impugned order is, therefore, factually incorrect. 9 The reasoning adopted by the learned Joint Charity Commissioner is, thus, completely erroneous. The learned Joint Charity Commissioner has completely overlooked the averments made in the application and in affidavit in support as well as 15 wp6746-2010 the contents of the documents including the scheme of development which was a part of the tender document. There was no reason to deny permission to the trust for alienation in terms of the scheme of the development. As a result of the implementation of the scheme, not only that large amount will become available to the trust for achieving its objects, moreover, a newly constructed premises will become available to the trust. Moreover, the trust will retain the right to carry out further development by utlising additional FSI which may become available in future. 10 Therefore, the learned Joint Charity Commissioner ought to have considered the offer of Talware Builders Pvt.Ltd. on merits. He could have also examined offer made by M/s.Suyojit Builders Pvt.Ltd. If the learned Joint Charity Commissioner was of the view that the offer of M/s.Suyojit Builders Pvt.Ltd was the best offer having regard to the interests of the trust, he could have directed 16 wp6746-2010 the trustees to alienate the trust property in favour of the said builders. If he was of the view that both the offers were not the best in the interests of the trust, he could have invited fresh bids in accordance with the terms and conditions of the tender containing scheme of development. However, the learned Joint Charity Commissioner has adopted a very hyper technical approach and has rejected the application made by the petitioners. If there was any doubt in the mind of the learned Joint Charity Commissioner as to whether all the trustees have consented to the scheme for development or at least majority of them have consented, the learned Joint Charity Commissioner could have called upon the petitioners to produce affidavits of the trustees. 11 Hence, as a case was made out for permitting the trustees to develop the trust property on the terms and conditions incorporated in the scheme for development, the only course open for 17 wp6746-2010 this Court is to set aside the impugned order and to remand the application to the learned Joint Charity Commissioner with a direction to consider the proposal for alienation of the trust property. 12 As far as the applicants in Civil Application No.2801/2010 are concerned, the averments made in the application and especially, paragraph 12 thereof, show that the the said applicants are not objecting to development of the trust property but their objection seems to be to grant a permission to alienate the property to M/s.Taleware Builders Pvt.Ltd. Thus, there is no prejudice to the said applicants if order of remand is passed as the applicants can aways apply for permitting intervention before the learned Joint Charity Commissioner. 13 Hence, I pass the following order :- (i) The impugned judgment and order is quashed and set aside and Application No.31/2008 is 18 wp6746-2010 restored to the file of the Joint Charity Commissioner. (ii) The learned Joint Charity Commissioner shall consider afresh the application made by the petitioners for grant of permission to alienate the trust property in accordance with terms and conditions of the scheme for development forming part of the tender. The application shall be considered on its own merits in the light of the observations made in this judgment. (iii) It will be open for the Joint Charity Commissioner to examine both the offers received by the trustees and permit alienation in favour of the one of the developers. It will also be open for the Joint Charity Commissioner to direct that the fresh bids be invited. (iv) The learned Joint Charity Commissioner shall be guided by the decision of this 19 wp6746-2010 Court in the case of Sailesh Developers (supra). (v) As the applicants in Civil Application No.2801/2010 were heard by this Court, the learned Joint Charity Commissioner will give an opportunity of being heard to the said applicants before passing order. (vi) The application shall be disposed of by the learned Joint Charity Commissioner, as expeditiously as possible and in any event, before the end of April, 2011. (vii) The writ petition is partly allowed in the above terms with no orders as to costs. (viii) The learned Joint Charity Commissioner will act upon the authenticated copy of this order. (A.S. OKA, J.)