IN IN IN THE HIGH COURT OF JUDICATURE AT BOMBAY THE HIGH COURT OF JUDICATURE AT BOMBAY THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL CIVIL CIVIL APPELLATE JURISDICTION APPELLATE JURISDICTION APPELLATE JURISDICTION WRIT WRIT WRIT PETITION NO. 6458 OF 2003 PETITION NO. 6458 OF 2003 PETITION NO. 6458 OF 2003 1. A.R.Khan Construwell Company. ... Petitioner. V/s. 1. Youth Education & Welfare Society, Nashik. 2. Silver Realtors Pvt.Ltd. 3. National (India) Contractors & Engineers. 4. Al-Haj Ajmal Sarfaraj Khan. 5. Wasim Sujauddin Pirjada. 6. M/s.Suyojit Buildtech Pvt.Ltd. 7. The Joint Charity Commissioner, Nashik Region, Nashik. 8. State of Maharashtra. ... Respondents. WRIT WRIT WRIT PETITION NO. 6459 OF 2003 PETITION NO. 6459 OF 2003 PETITION NO. 6459 OF 2003 1. Ahmed Dagumiya Shaikh, 2. Murtaz Abdul Razak Chanegav, 3. Abdul Razak N. Chanegaon, 4. Rafique N. Chanegav, 5. Iqbal Gafoor Shaikh. ... Petitioners. V/s. 1. New Education and Welfare Society, Nasik. 2. Silver Realtors Pvt.Ltd. 3. National (India) Contractors & Engineers. 4. Al-Haj Ajmal Sarfaraj Khan. - 2 - 5. Wasim Sujauddin Pirjada. 6. A.R.Khan, Construwel Company. 7. M/s.Suyojit Builttech Pvt.Ltd. 8. The Joint Charity Commissioner, Nashik Region, Nashik. 9. State of Maharashtra. ... Respondents. WRIT WRIT WRIT PETITION NO. 6518 OF 2003 PETITION NO. 6518 OF 2003 PETITION NO. 6518 OF 2003 1. Al-Haj Ajmal Sarfaraj Khan. 2. Wasim Sujauddin Pirjada. ... Petitioners. V/s. 1. Youth Education & Welfare Society, Nashik. 2. Silver Realtors Pvt.Ltd. 3. National (India) Contractors & Engineers. 4. A.R.Khan Construwell Company. 5. M/s.Suyojit Buildtech Pvt.Ltd. 6. The Joint Charity Commissioner, Nashik Region, Nashik. 7. State of Maharashtra. ... Respondents. S.S.Kulkarni for the appellant (in W.P.No.6458/03) Ravi Kadam with Kiran Bapat for the appellant (in W.P.No.6459/03) S.G.Deshmukh for the appellants (in W.P.No.6518/03) M.H.Shah, senior counsel with R.V.More and S.A.Sawant for the Trust (Youth Education & Welfare Society) V.R.Manohar, senior counsel with V.A.Gangal, Harshad Deshpande, Amit - 3 - Sakalikar, Ulhas Naik and Amit Karande for the Builder and Developer (M/s.Suyojit Buildtech Pvt.Ltd.) CORAM CORAM CORAM : : : V.C.DAGA, V.C.DAGA, V.C.DAGA, J. J. J. RESERVED RESERVED RESERVED ON : 18th August, 2004. ON : 18th August, 2004. ON : 18th August, 2004. PRONOUNCED PRONOUNCED PRONOUNCED ON: 1st October, 2004. ON: 1st October, 2004. ON: 1st October, 2004. JUDGMENT JUDGMENT JUDGMENT : : : ======== ======== ======== . These writ petitions have been filed against the common order dated 26th June, 2003 passed by the Joint Charity Commissioner, Nasik, whereby Application No.21 of 2002 taken out by Youth Education and Welfare Society, Nasik (the "Trust" for short) under section 36(1)(b) of the Bombay Public Trusts Act, 1950 (the "Trust Act" for short) came to be allowed and decision taken by the said Trust to develop Trust property for through respondent No.7 (in Writ Petition No.6549/2003), viz., M/s.Suyojit Builders Pvt.Ltd. (the "Builder and Developer" for short) came to be affirmed. 2. As the principal arguments were addressed in the case of M/s.Ahmed Dagumiya Shaikh and others v/s. Youth Education and Welfare Society and others (W.P.No.6459/2003) by Shri Ravi Kadam assisted by Shri K.S.Bapat, Advocate, I propose to refer to the relevant facts appearing in that case, for the sake of convenience. - 4 - Introduction Introduction Introduction of Litigation : of Litigation : of Litigation : -------------------------- -------------------------- -------------------------- 3. The introduction of litigation, based on more or less undisputed facts, is that the respondent No.1 - Trust is a public Trust bearing registration No.F-1892 having its registered office at Nashik. 4. The then Government of Bombay granted land bearing Survey No.643-B corresponding to C.T.S.No.614-B corresponding to final Plot No.TPS-I-Nashik having area of about 4,000 sq.mtrs. situate opposite to Central Bus Stand and District Court, Nashik within the limits of Nashik Municipal Corporation, Nashik ("suit property" for short). 5. The General Body of the Trust passed resolution and decided to develop the said property under the Sanad granted to the Trust sometime in the year 1994-95. Sanction was granted to construct 1/4th area for construction of Muslim Hostel for boys. Accordingly, hostel was constructed for 35 students. Considering the present precarious condition of the structure, demand to accommodate more students upto the capacity of about 200 students and its commercial potential, the Trust decided to exploit the said property in consonance with the object of the Trust which, inter alia; - 5 - provides (a) to start and maintain schools, colleges, hostels, libraries, educational institutions, technical; medical; agricultural and polytechnic education etc.; (b) to award scholarship and/or other awards to the deserving students; (c) to arrange for supply of books, stationary etc. to the students; (d) to start dispensaries, hospitals, medical centres; (e) to arrange for sports, programmes for students and others. 6. The Executive Committee of the Trust in its meeting held on 22nd June, 2002 resolved to develop the said Trust property having the hostel premises and also resolved to appoint one Shri S.L.Deshpande, Advocate and M/s.Deore - Dhamne, Architects to prepare tender documents and also decided to publish tender notices in the Indian Express (Mumbai) and Gavkari (Nashik). Accordingly, tender notices appeared in the said newspapers published on 12th July, 2002. 7. The tender form for due approval of the General Body were placed in a meeting held on 16th July, 2002 and the same were approved by it. 8. The last date for sale of tender forms was 27th July, 2002. 14 tender forms were sold for - 6 - Rs.10,000/- each. None of the petitioners have purchased tender forms nor did they submit tenders to compete with others. 9. The General Body meeting held on 29th July, 2002 resolved to authorise Executive Committee to enter into an agreement with the developer offering highest bid. The last date for acceptance of tenders was 5th August, 2002. By this date, total eight (8) tenders were received by the office of the Trust. 10. The tenders were opened on 6th August, 2002 in the presence of seven (7) Executive Members, twelve (12) members of General Body and seven (7) other eminent persons from the city of Nasik. All the developers and/or tenderers with their respective representatives were also present. Four (4) tenders out of eight (8) were rejected due to disqualification. None of them have challenged their disqualification. The rates offered by remaining four tenderers were as under: (1) M/s.Suyojit Buildtech (P) Ltd. Rs.1,591/- per sq.ft. (2) M/s.Samath Enterprises Rs.1,550/- per sq.ft. - 7 - (3) M/s.Thakkar Developers Rs.1,451/- per sq.ft. (4) M/s.Sainath Enterprises Rs.1,550/- sq.ft. 11. It appears that, after opening and knowing the rates, the rates were negotiated by the Trust with M/s.Suyojit Buildtech (P) Ltd., who, ultimately, appears to have agreed to increase their rate from Rs.1,591/- to Rs.1,678.60 and also agreed to provide solid construction with basement and ground + three upper floors, out of which they agreed to hand over:- (i) Underground pay and park portion admeasuring 14,352 sq.ft. to the trustees so that the Trust can generate regular income from the same; (ii) Top floor of the building having the built-up area of 9,568 sq.ft. to the Trust to accommodate about 200 students so as to enable the Trust to fulfil the object of the Trust. - 8 - It, thus, appears that M/s.Suyojit Buildtech Pvt.Ltd. agreed to pay: (i) Cash component enhanced from Rs.6,74,56,219 to Rs.7,25,00,000/-; (ii) the Nazarana to the Government for conversion amounting to Rs.2,00,13,600/-; (iii) entire stamp duty, registration and other charges. M/s.Suyojit Buildtech Pvt.Ltd. also agreed to hand over the entire property, after expiry of lease period of 99 years, with the construction thereon to the trustees. 12. After considering the aforesaid tender submitted by M/s.Suyojit Buildtech Pvt.Ltd., the Trust in its meeting dated 11th August, 2002 appears to have considered revised rates and benefits offered by M/s.Suyojit Buildtech Pvt.Ltd. and took decision to award contract to the Builder and Developer. 13. The Trust submitted its application to the Joint Charity Commissioner to seek necessary - 9 - sanction under section 36(1)(b) of the Trust Act for development and to lease out the Trust property to the said contractor - M/s.Suyojit Buildtech Pvt.Ltd. 14. Some of the objectors appeared before the Joint Charity Commissioner and filed their objections to oppose grant of sanction in favour of the Trust. The objectors were: Al-Haj Ajmal Sarfaraj Khan and Wasim Sujauddin Pirjada (petitioners in Writ Petition No.6518.2003); A.R.Khan Construwell Company (petitioner in Writ Petition No.6458/2003); M/s.Silver Realtors Pvt.Ltd. and M/s.National (India) Contractors & Engineers. At this stage it is relevant to mention that none of the objectors had purchased tender forms or submitted their tenders. 15. The Joint Charity Commissioner after hearing the objectors was pleased to accord his sanction and approval to the proposal of the Trust vide his order dated 26th June, 2003 and granted permission to the Trust to go ahead with their decision, whereby the Trust had resolved to grant development rights in favour of highest bidder, namely, M/s.Suyojit Buildtech Pvt.Ltd. However, the learned Joint Charity Commissioner while granting his sanction, considering larger interest of the Trust, was pleased to enhance cash components and - 10 - raised it to Rs.7,25,00,000/- and directed the trustees and M/s.Suyojit Buildtech Pvt.Ltd. to execute lease and development agreement within three months from the date of the order and further directed the Developer to bear all expenses for necessary permission, Sanad, Nazarana deposit, development charges and the charges as agreed which may be payable to the municipal corporation for development of the Trust property together with stamp duty and registration charges, etc. 16. In view of aforesaid order of the Joint Charity Commissioner dated 26th June, 2003, the Executive Committee of the Trust in its meeting dated 3rd July, 2003 resolved to instruct their Advocate and Architect to prepare draft of agreement. The draft agreements were prepared and placed before the General Body of the Trust for its approval. The General Body of the Trust in its meeting held on 13th August, 2003 resolved to authorise Executive Committee to enter into an agreement with M/s.Suyojit Buildtech Pvt.Ltd. as per the order of the Joint Charity Commissioner. 17. The Trust, accordingly, entered into an agreement with M/s.Suyojit Buildtech Pvt.Ltd. and the said agreement was finally approved by the Executive Committee in its meeting dated 25th - 11 - August, 2003 and finally resolved to grant power of attorney in favour of the said Builder and Developer. The building plans were approved on 3rd September, 2003 and, ultimately, development agreement was executed by 7 trustees in favour of the M/s.Suyojit Buildtech Pvt.Ltd. on 6th September, 2003 on behalf of Trust and documents were submitted to the Sub-Registrar of Stamps for adjudication. It also appears that M/s.Suyojit Buildtech Pvt.Ltd. has deposited Rs.50,00,000/- (rupees fifty lakh only) with the Trust as per the tender terms and offered to deposit more amount, the details of which are as under: Details Details Details of Cheque/D.D. of Cheque/D.D. of Cheque/D.D. Amount Amount Amount ---------------------- ---------------------- ---------------------- ------ ------ ------ D.D.No.6476 dtd. 19th July, 2003 drawn on Janakalyan Co-op. Bank, Nashik. Rs.20,00,000/- D.D.No.629759 dtd. 19th July, 2003 drawn on Andhra Bank. Rs.30,00,000/- Cheque No.0600909 dtd. 4th October, 2003 drawn on S.B.I., Nashik Main Branch. Rs.95,00,000/- Cheque No.0600910 dated 4th October, 2003 drawn on S.B.I., Nashik Main Branch. Rs.50,00,000/- It appears that last two cheques of Rs.95,00,000/- and Rs.50,00,000/- are still lying with the Trust without encashment on account of directions given by this Court during the course of initial hearing. - 12 - 18. The aforesaid action of the Trust and the order of the Joint Charity Commissioner dated 26th June, 2003 granting his sanction under section 36(1)(b) of the Trust Act are the subject matter of challenge in all the three writ petitions filed under Article 226 and 227 of the Constitution of India. The The The Challenges : Challenges : Challenges : -------------- -------------- -------------- 19. The challenges set up in all the three petitions are more or less common. The principal contention of the petitioners appear to be that the properties of the Trust are being leased out at throw away price. That the scheme of development adopted by the Trust is neither in the interest of the Trust nor in the interest of beneficiaries thereof. That the learned Joint Charity Commissioner did not apply his mind to the conditions incorporated in the tender invitation, which, according to the petitioners, were clearly in favour of M/s.Suyojit Buildtech Pvt.Ltd. to whom the Trust wanted to lease out their property for development for extraneous consideration. That the interest of the Trust, according to the petitioners, ought to have been the paramount consideration while considering the issue of grant of sanction under section 36(1)(b) of the Trust Act by the Joint Charity Commissioner. That he did not take into - 13 - account the interest of the Trust and, mechanically, granted sanction without application of mind to the facts and circumstances of the case. 20. In Writ Petition No.6518/2003, some additional contentions are raised to contend that the Trust was not competent to give away entire property of the Trust for development and that the grant of property on lease of 99 years to M/s.Suyojit Buildtech Pvt.Ltd. is not a prudent commercial decision as such the same is liable to be quashed and set aside apart from the fact that it is malafide and not in the interest of Trust. The petitioners in this petition filed one affidavit of Mr.Shyam B. Chapalkar, Partner of M/s.B.M.Chapalkar & Co. dated 30th July, 2004 stating therein that his firm is a Class-I Contractor recognised by P.W.D. of the Government of Maharashtra and expressed his willingness to offer rate @ Rs.1,857/- per sq.ft. and offered to pay rupees eight crore by way of cash component. He also offered to deposit rupees one crore with this Court to show his bonafides. 21. In Writ Petition No.6458/2003 filed by M/s.A.R.Khan Construwell Co., the contention sought to be raised is that the Condition No.29(VI) of the tender invitation had an effect of restricting the - 14 - field of choice and that of the competitors. In view of this condition, only specified group of contractors were permitted to submit their tenders. With the result, majority of the contractors, who are not registered with the P.W.D. of Government of Maharashtra but have an equal amount of experience and business were left out from consideration. They were deprived of their right to compete with others. The petitioners in this petition have, before this Court, initially, offered to pay Rs.7,25,00,000/- (rupees seven crore twenty five lakh only) and after offer of M/s.M.B.Chapalkar & Co. went on to enhance it to Rs.8,00,00,000/- (rupees eight crore only). The petitioners also made certain personal allegations against some of the trustees of the Trust and also imputed certain bad motives. With the aforesaid pleadings on record, these petitions were heard. Let me now proceed to recapitulate the rival submissions. Submissions Submissions Submissions : : : ----------- ----------- ----------- 22. The principal contentions were canvassed on behalf of petitioners by Mr.Ravi Kadam in Writ Petition No.6459/2003 as stated hereinabove. He was supported by Mr.S.G.Deshmukh and Mr.S.S.Kulkarni, learned counsel for the petitioners in other two petitions. - 15 - 23. The contentions in detail on behalf of respondent - Trust were canvassed by Mr.M.H.Shah, senior counsel appearing with R.V.More; whereas Mr.V.R.Manohar, senior counsel with Mr.V.A.Gangal appeared for M/s.Suyojit Buildtech Pvt.Ltd. Mr.A.H.Palekar, A.G.P. appeared on behalf of the State and Joint Charity Commissioner. The other respondents, namely, M/s.Silver Realtors Pvt.Ltd.; M/s.National (India) Contractors & Engineers and New Education and Welfare Society, Nasik are concerned, did not put up their appearances, though served. 24. The main points argued in these petitions in support of the contesting petitioners can be catelogued as under: . Mr.Ravi Kadam, learned counsel appearing in Writ Petition No.6459 of 2003 on behalf of the petitioners, said to be the beneficiaries being members of the community, would submit that the Trust property is situated in the heart of the Nasik city. Considering its location in prime locality, the price which has been offered by M/s.Suyojit Buildtech Pvt.Ltd. is too far below the prevailing market price. In other words, the Trust property is being leased out at throw-away price and that the trustees are not protecting the interest of the Trust. He submits that respondent No.2 therein M/s.Silver Realtors Pvt.Ltd. had offered an amount - 16 - of Rs.2,278.60 per sq.ft. totalling to Rs.9,15,67,860/-. The said tenderer had also objected to the sanction in favour of M/s.Suyojit Buildtech Pvt.Ltd. He also submits that the offer given by respondent No.3 therein viz. M/s.National (India) Contractors & Engineers was @ Rs.2,297.86 per sq.ft. could not have been rejected either by the Trust or the Joint Charity Commissioner since it was a better offer than that of M/s.Suyojit Buildtech Pvt.Ltd. 25. Mr.S.S.Kulkarni, learned counsel for the petitioners in Writ Petition No.6458/2003 submits that the paramount consideration under section 36 of the Trust Act is advancement of interest of the Trust. In his submission, it is consistently held by this Court that terms and conditions of alienation can be examined by the Charity Commissioner. It was, thus, his duty to examine legality of the terms and conditions which were put in the tender invitation by the Trust and to examine whether or not it was put with a view to favour M/s.Suyojit Buildtech Pvt.Ltd. In his submission, the learned Joint Charity Commissioner has completely overlooked these important aspects of the matter and unnecessary went on to discuss as to whether or not the condition is auxiliary and ancillary, which was not in issue. - 17 - 26. Mr.Kulkarni further submits that without determining the main issues, it was not open for the Joint Charity Commissioner to proceed to consider merits and/or demerits of application filed under section 36(1)(b) of the Trust Act. He, thus, submits that having regard to the interest of the Trust, the offerer of the highest lease premium ought to have been considered. He submits that if the object was to receive best market price and highest lease premium, then clause 29(vi) of the tender invitation is contrary to the very object sought to be achieved. In his submission, it is absurd to presume that the contractor holding "A" class certificate of the Public Works Department ("P.W.D." for short) of the Government of Maharashtra alone can provide good quality work. According to him, a person other than the persons recognised as Class-A Contractor by the P.W.D. of the State, who are in the business of development of the properties and having turnover of crores of rupees are not expected to compromise on quality of work since they are always concerned about quality of their work, reputation and goodwill. He submits that in view of the extraneous terms and conditions prescribed in the tender invitation, the Trust has been deprived of its right to receive good amount of - 18 - genuine offers from the open market, with the result, it did not get highest bid. In his submission, learned Joint Charity Commissioner ought to have held open bid by calling upon petitioners (A.R.Khan Construwell Company) and like persons including M/s.Suyojit Buildtech Pvt.Ltd. to take part in the spot auction. In his submission, impugned order being arbitrary and contrary to the interest of the Trust is liable to be quashed and set aside. 27. Mr.S.G.Deshmukh, learned counsel for the petitioners in Writ Petition No.6518/2003 submits that entire exercise done by the Trust is malafide and is in collusion with the M/s.Suyojit Buildtech Pvt.Ltd. He submits that Mr.S.L.Deshpande, Advocate, who had been acting as Legal Adviser of M/s.Suyojit Buildtech Pvt.Ltd. was deliberately appointed to act as an Advocate/Legal Adviser of the Trust for the purposes of preparing the tender documents in such a manner that it will accommodate M/s.Suyojit Buildtech Pvt.Ltd. alone and would exclude other builders irrespective of the fact that they are professionally and financially better than M/s.Suyojit Buildtech Pvt.Ltd. 28. Mr.Deshmukh further submits that the term set out in clause 29(vi) requiring offers from - 19 - the holders of certificate as "A" Class Contractor with Public Works Department of the State Government was really irrelevant for the purposes of receiving best offers. According to him, only those builders, who deal with Government contracts, can have certificate of "A" Class Contractor. In his submission, most of the professionally competent and financially sound builders and developers are, normally, not interested in Government contracts. If that be so, they are not expected to have certificate of "A" Class Contractor though, most of the times, they are much better than the Government contractors. He submits that by putting such condition, large number of offerers have been kept away right from the stage of offer itself as such the Trust is deprived of having better offers from better and competent builders and developers. He submits that after conveniently shortlisting the offerers, the number was reduced to four offerers only. The Trust chose to negotiate only with M/s.Suyojit Buildtech Pvt.Ltd. and finalised its deal without safeguarding the interest of the Trust. 29. Mr.S.G.Deshmukh further submits that the tender notice published by the Trust was also misleading. Although the Trust had taken a decision to develop the property by leasing it out for a period of 99 years, the said notice nowhere referred - 20 - to the lease period of 99 years. It merely referred to the development of the property of the Trust. 30. In his submission, there are serious allegations of mismanagement against the trustees of the Trust who have entered into the transaction with M/s.Suyojit Buildtech Pvt.Ltd. According to him, necessary enquiry in respect of the said allegations is pending with the Charity Commissioner, as such, in his submission, learned Joint Charity Commissioner ought not to have granted sanction and/or permission to the said trustees to deal with the property of the Trust. 31. Mr.Deshmukh further submits that learned Joint Charity Commissioner failed to appreciate the objections raised by the petitioners and other objectors. In his submission, he went on to enhance the offer of Rs.6,74,56,219 given by M/s.Suyojit Buildtech Pvt.Ltd. to Rs.7,25,00,000/-, perhaps with a view to create a picture of reasonableness and application of mind. 32. Lastly, Mr.Deshmukh submits that the transaction entered into by the Trust with M/s.Suyojit Buildtech Pvt.Ltd. is bad in law and not in the interest of the Trust and is required to be struck down. He, thus, urged that the impugned - 21 - order be quashed and set aside and the Trust be directed to start entire process afresh by deleting the condition regarding requirement of being a holder of certificate of "A" Class Contractor from the Public Works Department of the Government. Per Per Per Contra : Contra : Contra : ---------- ---------- ---------- 33. Mr.M.S.Shah, senior counsel appearing for the Trust and Mr.V.R.Manohar, senior counsel for M/s.Suyojit Buildtech Pvt.Ltd. urged that the petitioners in all the three petitions have agreed that considering the increasing need to accommodate more Muslim boys students, the fact that the earlier accommodation could hardly accommodate 35 students, the building being dilapidated and that the Trust having no other source of income, it became necessary to develop the said property and construct a bigger hostel for the Muslim (boys) students. All other objectors including two of the petitioners were also of the view that alienation by lease by inviting tenders was proper. Only two objectors, namely, Al-haj Ajmal Sarfaraj Khan and Wasim Sujjauddin Pirjade (petitioners in Writ Petition No.6518/2003) had objected on the ground that the hostel could be constructed without alienating the property by raising loan from Maulana Azad Foundation Trust of Delhi. But none of them could produce any documents in support of their claim in - 22 - that behalf. However, now after making enquiries with the said Maulana Azad Foundation Trust, the respondent No.1 - Trust found that they did not have any scheme for such project. In their submission, learned Joint Charity Commissioner has correctly rejected submissions of the petitioners made in this behalf and rightly came to the conclusion that the need to