SCA/11542/2005 1/17 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD SPECIAL CIVIL APPLICATION No. 11542 of 2005 For Approval and Signature: HONOURABLE MR.JUSTICE JAYANT PATEL ========================================================= 1 Whether Reporters of Local Papers may be allowed to see the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to the civil judge ? ========================================================= RAMDEV DEVELOPERS THR' PARTNER-KISHOR.G.VAVIA - Petitioner(s) Versus JT.CHRITY COMMISSIONER & 3 - Respondent(s) ========================================================= Appearance : MR UTPAL M PANCHAL for Petitioner(s) : 1, GOVERNMENT PLEADER for Respondent(s) : 1, 3, MR MA KHARADI for Respondent(s) : 2, MR NILESH M SHAH for Respondent(s) : 4, ========================================================= CORAM : HONOURABLE MR.JUSTICE JAYANT PATEL Date : 07/05/2008 ORAL JUDGMENT SCA/11542/2005 2/17 JUDGMENT 1. The short facts of the case appears to be that the respondent No.2 is a charitable trust who is holding the land bearing Survey No.319, which was earlier admeasuring 2 Acre 4 Guntha but now given Final Plot No.14 admeasuring 6834 sq. mtrs. situated at Town Planning Scheme No.3, Katargam at Surat. The respondent No.2 Trust filed an application dated 26.06.2002 under Section 36 of the Bombay Public Trusts Act for sale of 60% of the land admeasuring 4100.40sq. Mtrs. The said application was submitted before the Charity Commissioner. It appears that the paper advertisements were given and offers were invited. Ultimately, the Charity Commissioner vide order dated 07.01.2004, granted permission to the respondent No.2 Trust for disposal of the land by accepting the offer of the petitioner for the sale consideration of Rs.2,71,00,000/-. The respondent No.4 claiming as the benefeciary of the Trust preferred appeal before the Tribunal being Appeal No.13/04. The Tribunal after hearing both the sides, found that whether the land vest to the Trust or to the Panchayat is not clear and it also found that there is no proper examination by the Charity Commissioner on the aspects of necessity to sell the land. It was also observed by the Tribunal that the intention appears to be of earning income by depositing the amount in the fixed deposit. Therefore, ultimately the Tribunal set aside the SCA/11542/2005 3/17 JUDGMENT order passed by the Charity Commissioner. The Trust has not preferred the petition before this Court, but the petitioner who is one of the offerer whose offer was accepted, has preferred the present petition for challenging the order passed by the Tribunal. Hence, the present petition. 2. Heard Mr. Panchal, learned counsel for the petitioner, Ms. Patel, learned AGP for respondents Nos.1 & 3 and Mr.Kharadi for respondent No.2 Trust and Mr. Shah for respondent No.4. 3. The first aspect on the basis of which the Tribunal exercised the power could be said as pertaining to the necessity to sell the land. This Court in Special Civil Application No.1009 of 2008 & allied matters in the matter of 5 Navtanpuri Dham-Khijda Mandir Trust & Ors. Vs. Anilbhai Bhagwanji Jobanputra & Ors. decided on 21.04.2008 had an occasion to consider the indispensable requirement on the part of the Charity Commissioner to examine the aspects of necessity and then only to permit the Trustees to sell the property, it was observed by this Court at paras 7 to 18 as under: “7. Section 36 of the Act, which is relevant for the purpose of this petition reads as under:- “Sec. 36 Alienation of immovable property SCA/11542/2005 4/17 JUDGMENT of public trust. [(1)] [Notwithstanding anything contained in the instrument of trust-] (a) no sale, mortgage, exchange or 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. [(2) The decision of the Charity Commissioner under sub-section (1) shall be communicated to the trustees and shall be published in such manner as may be prescribed. (3) Any person aggrieved by such decision may appeal to the Gujarat Revenue Tribunal within thirty days from the date of its publication. (4) Such decision shall, subject to the provisions of sub-section (3), be final.]” 8. As such on the plain language of Section 36 of the Act, it is apparent that it is having over-riding effect upon the instrument of the Trust. The section does not speak for the circumstances under which the Charity Commissioner may grant sanction to the Trust for sale of the immovable property. Rule 24, which is also relevant for the purpose of this petition reads as under:- “Rule 24. Application under Section 36 of sanction of alienations- (1) Every application for sanction of an alienation shall contain information inter alia on the following points: (i) whether the instrument of trust contains any directions as to alienation of immovable property; (ii) what is the necessity for the proposed alienation; (iii)how the proposed alienation is SCA/11542/2005 5/17 JUDGMENT in the interest of the public trust; and (iv) in the case of a proposed lease, the terms of the past leases, if any such application shall be accompanied, as far as practicable, by a valuation report of an expert. (2) The Charity Commissioner, before according or refusing sanction, may make such inquiry as he may deem necessary. (3) In according sanction, the Charity Commissioner may impose such conditions or give such directions as he may deem fit. (4) The decision of the Charity Commissioner under sub-section [1] of section 36 shall be published in a local newspaper having circulation in the area where the property concerned is situate, and also on the notice boards of the offices of the Charity Commissioner and the Deputy or Assistant Charity Commissioner, as the case may be, of the region in which the property is situate in a manner sufficient to give information about the material particulars regarding the number of the application for sanction, the name of the public trust, the description of the property for the alienation of which sanction is accorded and the price at which it is proposed to be sold or mortgaged or the rent at which and the period for which it is proposed to be leased and the substance of such decision.]” 9. Therefore, the Rule provides for the information to be supplied to the Charity and such information, inter alia, provides that whether the instrument of Trust contains any direction as to alienation of immovable property. The second is about the necessity for the proposed alienation. The third is as to how the proposed alienation would be the interest of Public Trust. The fourth clause pertains to the proposed lease, which is not subject matter of this petition and, therefore, SCA/11542/2005 6/17 JUDGMENT not required to be considered at this stage. Sub-Rule (2) provides for holding of inquiry by the Charity Commissioner as he may deem necessary. Sub-Rule (3) provides that the power may be exercised for according sanction upon the conditions as it may deem fit by the Charity Commissioner. Sub-Rule (4) provides for publication of the decision of the Charity Commissioner, which also is not the subject matter of this petition at this stage and, therefore, not required to be considered further. The aforesaid language of Rule 24 provides that while exercising the power by the Charity Commissioner, he would be required to examine the aspects as to any specific directions available pertaining to the alienation of the immovable property and the necessity for the proposed alienation and also about the satisfaction as to how the proposed alienation is in the interest of the Trust. The aforesaid information to be supplied in the application as provided by the Rules can be said as a broad criteria to be considered for the exercise of the power by the Charity Commissioner. 10. The aspects, which may assume importance at the first instance would be the necessity for the proposed alienation. If the case law is examined in order to consider the scope and ambit of the inquiry to be held by the Charity Commissioner for recording his satisfaction of the necessity of the proposed alienation, it appears that in case of “Sridhar Suar and Another v. Shri Jagan Nath Temple and Others”, reported in AIR 1976 SC, 1860 the Apex Court observed that the power of the Trustees to alienate the property of religious endowments was analogues to that of a Manager for an infant. In the said decision, the Apex Court had considered the earlier view of the Privy Council in case of Hunooman Pershad v. Mt. Babooee (1856). This Court in case of “Hamumiya Bachumiya and Ors. v. Mehdihusen Gulamhusen & Ors.”, reported at 1978 GLR, 661 had an occasion to consider the aspects of necessity of the Trust vis-a-vis the power of the Trustees to sell the properties of a religious Trust and it was observed at para 5, inter alia, as under:- SCA/11542/2005 7/17 JUDGMENT “5.The guidelines which have to be followed for sanctioning such alienation of properties of a religious trust by its trustees are also very well settled. In Shridhar v. Jagannathji Temple, A.I.R. 1976 S.C. 1860 at page 1965 proceeding on the settled principle that the power of the trustees of such religious trust to alienate property of the religious endowment was analogous to that of a manager for an infant as defined by the Judicial Committee in Hanooman Prasad v. Mt. Babootee, (1856) 6 Moors I.A. 393 P.C., it was held that such trustees had no power to alienate a debutter property except in case of need or for the benefit of the estate. A trustee was not entitled to sell property for the purpose of investing the price of its so as to bring income larger than that derived from the property itself. Nor could he except for legal necessity grant a permanent lease of debutter property, though he may create proper derivative tenures and estates comfortable to usage. Three main decisions of the Privy Council had been referred to pointing out that for such permanent alienation unavoidable necessity had to be made out, because otherwise the debutter estate shall be deprived of the chance which it would have, if the rent were variable, of deriving benefit from the enhancement in value in the future of the lands leased.” (Emphasis supplied) 11. It was further observed in the very paragraph by the Apex Court as under:- “5. ...The Revenue Tribunal proceeded on a thoroughly extraneous and irrelevant consideration that if this property was sold and the price invested in fixed deposit in a bank, the interest income would be much larger than derived by leasing this property to the tenant. This consideration was in terms found to be irrelevant in the aforesaid SCA/11542/2005 8/17 JUDGMENT Shridhar's case by referring to the decision in Hanooman Prasad at page 1865. The trustees had rightly pointed out that in such a ground would be accepted all the trust properties would be sold away because most of them were fetching low rent and thereby the trust would be permanently deprived of the benefit of rise in prices in future of the lands situated in such fast developing city like Baroda.” (Emphasis supplied) 12. In case of “Hasam Ibrahim Abdul Latiff Supediwala v. Bhaichand Pranlal Dhoneja & Ors.”, reported at 1999(1) GLH, 854 while considering the scope and ambit of Section 36 of the Act, this Court after considering the earlier decision of this Court in case of “Thakorebhai Gangaram v. Ramanlal Maganlal Reshamwala”, reported at 1993(1) GLH 473, inter alia, observed at para 9 as under:- “9. It cannot be doubted that law does not favour divesting of immovable properties of public trust ordinarily. The State Government is paramount guarding of public charity and it is its bounden duly to see that the funds and properties of public trusts are not floundered or misapplied. It is to safeguard the properties of different trusts from being misused provision like the one of seeking permission before transfer of the property has been made. The principles governing the application for grant of permission to sell the properties of public trust have been well settled. The basic guiding factor for the Charity Commissioner in considering the application for transfer of any immovable property of the public trust is whether such transfer is in the interest of the public trust and for its benefit and protection. In order to satisfy himself before the Charity Commissioner sanctions alienation of trust property he has to apply his mind to two material questions, namely, (i) whether there is a compelling necessary to justify SCA/11542/2005 9/17 JUDGMENT the alienation in question and (ii) whether the proposed alienation is fair and does in any way adversely affect the interest of the trust. The first enquiry is into the factors which have necessitated the transfer of the immovable property and the second question envisage inquiry into the fairness of proposed transaction. That is to say, whether it results in the best yield to the trust from its property.” (Emphasis supplied) 13. If the facts of the present case are examined in light of the aforesaid statutory provisions read with the judicial pronouncement, it appears that the area of the land, which is proposed to be sold is a huge chunk of land admeasuring about 6150.57 sq. mtrs., and if the proposal of the Trust is accepted, it may generate income to the Trust of about more than Rs.9 crore. As against the same, if the application is considered of the Trustees, the ground of necessity for generating income of the interest by disposal of the land cannot be accepted as relevant for recording the satisfaction by the Charity Commissioner and can rather be said as irrelevant in light of the above referred decision of this Court in case of “Hamumiya Bachumiya and Ors. v. Mehdihusen Gulamhusen & Ors.” (supra), which has been taken by following the decision of the Apex Court in case of “Sridhar Suar and Another v. Shri Jagan Nath Temple and Others” (supra). The ground contended for satisfying the Charity Commissioner on the aspects of necessity is that of expenses to be incurred for preservation of the property, the apprehension for encroachment, heavy burden of Municipal Tax, etc., as such has not been properly examined by the Charity Commissioner in detail. Even if they are considered on its face value, such cannot be read to create the necessity for disposal of the whole property of the land admeasuring more than 6000 sq. mtrs. The Trustees of a Charitable Trust are enjoined with the duty to preserve and protect the property of the Trust as if the Manager of an infant, but such power of the Trustees cannot be read as that of a pleasure doctrine or a SCA/11542/2005 10/17 JUDGMENT sweet will of the Trustees to dispose of the property. The degree of obligation is coupled with their fiduciary capacity to preserve and protect the property for the larger interest of the Trust and to be made available to the beneficiaries of the Trust to the maximum possible extent. Further, even if such is tested on the reasonable prudence, the attempt on the part of the Trustees would be to see that the money be realised to the extent required for preservation of the property for enabling the Trustees to bear the expenses to be incurred for preservation, including the local taxation, if any, by continuing with the property to the possible extent. Had the proposal been on the basis that a particular amount of money was required for preservation of the property and, therefore, the disposal of the land of a particular area, it may stand on a different footing, but merely because the Trustees cursorily make the statement that there are huge expenses to be incurred for preservation of the property, including the Municipal Tax, etc., or that they apprehend encroachment, per se, cannot be accepted as a valid ground to meet with the requirement of necessity as envisaged under Section 36 read with Rule 24 read with the aforesaid judicial pronouncement. As a matter of fact, the necessity of a particular Trust is relative aspect, which may vary from Trust to Trust. In a given case, keeping in view the financial condition of the Trust, requirement of a particular amount may be described as necessity, but such may not be the requirement to meet with the necessity of another Trust. Therefore, it would be required for the Charity Commissioner to examine the financial condition of the Trust in order to satisfy the necessity for disposal of the immovable property. As such, the Charity Commissioner has not at all examined the said aspects. Further, the Tribunal has taken into consideration some of the financial fund available with the Trust and has recorded that there is no necessity. Therefore, it appears that the view taken by the Tribunal cannot be said as an error on the face of record, which may be required to be upset by this Court while exercising the power under Article 227 of the Constitution of India. SCA/11542/2005 11/17 JUDGMENT 14. The learned Sr. Counsel for the petitioner Trust, Mr.Shelat did submit that the principles analogous to the Manager of an infant, as they are laid down by the Apex Court in case of “Sridhar Suar and Another v. Shri Jagan Nath Temple and Others” (supra) as well as “Hamumiya Bachumiya and Ors. v. Mehdihusen Gulamhusen & Ors.” (supra) would not be applicable to the facts of the present case since in his submission, such principle may apply to only religious Trusts and not to other Charitable Trusts. He also submitted that the Charity Commissioner, if satisfied that the proposed alienation is not adverse to the interest of the Trust, the Charity Commissioner has to accord sanction and, therefore, in the submission of Mr.Shelat, necessity is not an aspect over which the detailed scrutiny is required to be undertaken by the Charity Commissioner, nor is the satisfaction required to be recorded. 15. If the contention of the learned Counsel for the petitioner Trust, on its face value, is accepted, it would result into making Rule 24 as redundant inasmuch as the Rule also provides for the information to be supplied for the necessity of the proposed alienation. It may be that in a given case, the Trust may come out with a project on hand, for advancement of the objects of the Trust and the requirement of the fund based on the same, but such aspects of necessity cannot be termed as indispensable, nor can be equated with adverse to the interest of the Trust. So far as the scrutiny to the interest of the Trust is concerned, the same is one of the additional aspects to be examined by the Charity Commissioner while according sanction to the sale, but such is not the only consideration as sought to be canvassed on behalf of the petitioner Trust. Therefore, the submission of Mr.Shelat, learned Sr. Counsel for the petitioner Trust, cannot be accepted. 16. The petitioner Trust in the present petition, by filing additional affidavit, has tried to canvass that the Trust is proposing to utilize the amount for various other laudable objects in furtherance to the objects of the SCA/11542/2005 12/17 JUDGMENT Trust and various details are submitted and it was also submitted on behalf of the Trust that this Court may maintain the order of the Charity Commissioner, keeping in view the details produced on behalf of the Trust. It was submitted that since such projects are on hand, including that of establishing a School, etc., the Trust requires huge money and such can be said as necessity or for the larger interest of he Trust and, in any case, not in adverse of the interest of the Trust and, therefore, the order of the Charity Commissioner may be maintained by setting aside the order of the Tribunal. 17. In my view, the requirement by law is the inquiry on such aspects to be held by the Charity Commissioner. When the documents were neither produced before the Charity Commissioner, nor was there any inquiry on such aspects, nor even before the Tribunal in the proceedings of the appeals, this Court cannot conveniently undertake such inquiry, more particularly in a petition under Article 227 of the Constitution of India and record the satisfaction as that of the Charity Commissioner on the aspects of necessity. Therefore, such an attempt on the part of the petitioner Trust cannot be countenanced. 18. In view of the aforesaid, it can be said that the Charity Commissioner, while exercising the power under Section 36 of the Act failed to consider the aspects of necessity and as the Tribunal, has considered the said aspects and has recorded that there is no necessity on the basis of the record produced before the Charity Commissioner, it would not be a case to upset the order passed by the Tribunal to that extent.” 4. Therefore, if the facts of the present case are examined in light of the aforesaid legal position, it appears that in the application of the Trust, the only ground mentioned is that there is apprehension of encroachment and if the SCA/11542/2005 13/17 JUDGMENT Trust is permitted to sell the land, income can be realised and over the remaining portion of the land, the Trust is desirous to make construction for the benefit of the public. There is no concrete proposal produced by the Trust with the facts and figures of advancement of the objects of the Trust. Further, in the order of the Charity Commissioner, there is no examination whatsoever on the aspects of compelling necessity on the part of the Trust to sell the land. The Tribunal therefore, has rightly observed that there is no compelling necessity for the Trust to sell the land. In any case, on the basis of the material produced on the record before the Charity Commissioner and before the Tribunal in Appeal, it can be said that the aspects of necessity which is one of the germane consideration while exercising the power under Section 36 of the Act is not satisfied. 5. Mr.Kharadi, learned counsel appearing for the respondent Trust by tendering the affidavit today, placed on record the proposed construction plan for community hall and the attempt on the part of the learned counsel was that, if the fund is realised, it can be made use by constructing community hall over the remaining portion of the land and the expenditure as stated in the affidavit is approximately Rs.96,22,250/-. SCA/11542/2005 14/17 JUDGMENT 6. As such, objects of the Trust are not before the Court and therefore, it cannot be concluded as to whether construction of community hall is permitted in furtherance to or for advancing the objects of the Trust. Moreover, such documents were not produced before the Charity Commissioner nor were tendered before the Charity Commissioner. The requirement under Section 36 of the Act is application of mind and the examination of such aspects of necessity by the Charity Commissioner. If there were no documents produced for such purpose before the Charity Commissioner or before the Tribunal in a petition under Article 227 of the Constitution for the first time, such documents cannot be considered for examining the legality and validity of the impugned orders passed by the lower authority. Apart from the above, even if the affidavit is considered on its face value, the estimated expenditure is Rs.96,22,250/-. As against the same, the fund to be realised purssuant to the permission granted by the Charity Commissioner is Rs.2,71,00,000/-. Therefore, it cannot be said that the aspects of necessity would be satisfied if the object is only to construct community hall by disposal of the land.