1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION CIVIL APPLICATION NO.4905 OF 2008 IN FIRST APPEAL NO.2667 OF 2007 Lilavati Kirtilal Mehta Medical Trust and another ..Applicants. Vs. Charu K. Mehta and others ..Respondents. .... Mr. Iqbal Chagla, Senior Advocate with Mr. Snehal Shah, Mr. Sanjay Jain, Mr. Kunal Vajani, Mr. Atul Daga and Mr. Rohan Deshmukh i/b M/s. Wadia Ghandy & Co. for the Applicantas. Mr. Navroz Seervai, Senior Advocate with Mr. Raj Patel and Mr. T.N. Tripathi i/b T.N. Tripathi & Co. for Respondent No.1. Mr. R. A. Dada, Senior Advocate with Mr. Prateek Sakseria with Ms. Jyoti Shah i/b M/s. Dhru Shah & Co. for Respondent No.2. Mr. Pranav Badhekar with Ms. Aziza Khatri and Mr. Shane Sapeco i/b Hariani & Co. for Respondent Nos.10 and 12. Mr. Janak Dwarkadas, Senior Advocate Mr. Prateek Sakseria, Mr. Manish Desai with Mr. Dhirendra Sinha i/b M/s. Paras Kuhad & Associates for Respondents 13 and 15. Mr. Rajesh Behere for the Joint Administrator. .... CORAM: DR. D.Y. CHANDRACHUD, J. 17th December, 2008. 2 ORAL JUDGMENT : 1. The Civil Application has been taken out in the pending First Appeal by the First and Tenth Defendants. The reliefs that have been sought are (i) the discontinuance of the joint administrators; or in the alternative (ii) the discharge of Mr. A.A. Halbe, who is one of the Joint Administrators; and (iii) the appointment of any one among four named individuals as a Joint Administrator in place of Mr. A.A. Halbe. 2. On 26th March, 2007 the Supreme Court appointed Dr. Narendra Trivedi, Vice President of the Lilawati Hospital and Dr. K Ramamurthy, a senior consultant to be in charge of the Hospital for the day to day running of the Hospital and the Research Institute. The order of the Supreme Court was pending the disposal of a suit instituted by the Plaintiff before the City Civil Court inter alia to challenge her removal from the Board of Trustees. The order of the Supreme Court records that the disputes between the parties were liable to impede the running of the Hospital which was under the management of the Trust. The Supreme Court observed thus : “After hearing the arguments on both sides, we find that there are serious disputes between the parties which 3 ultimately may cause serious difficulties in the running of the hospital, which is under the management of the Trust. In view of the present circumstances, as a temporary measure, we direct that Dr. Narendra Trivedi, Vice- President of the Leelavati Hospital and Dr. K. Ramamurthy, Senior Consultant in that hospital, shall be in-charge of the hospital of the day to day running of the Hospital and Research Institute. There two Administrators will take all decisions relating to the administration of the hospital. They shall give a report to the Board of Trustees every two weeks and any directions by the Board of Trustees are to be issued to these two Administrators only in the form of resolutions and not individual instructions by any Trustee. A copy of the report of resolution shall also be furnished to the appellant and if she is in any way aggrieved by the directions issued by the Board, she would be at liberty to seek appropriate direction from the City Civil Court, Mumbai where the suit is pending.” The two Administrators were appointed to look after the day to day running of the Hospital and the Research Institute. The Administrators were to furnish a report to the Board of Trustees. Directions by the Board of Trustees were to be issued to the two Administrators in the form of resolutions. A copy of each resolution was to be furnished to the Plaintiff and liberty was reserved to her, should she be aggrieved, to seek appropriate directions from the City Civil Court. There can be no manner of doubt from the order of 26th March, 2007 that the appointment of Administrators was for the 4 purpose of looking after the administration of the Hospital. There was evidently a dispute in regard to the administration of the Trust. Under the terms of appointment, the Administrators were not to be concerned with the administration of the Trust. The order of the Supreme Court therefore contemplates that directions would be issued to the Administrators by the Trustees and these directions were to be in the form of a resolution of the Board of Trustees. 3. On 20th August, 2007 Dr. K. Ramamurthy, one of the Joint Administrators, came to be replaced by Mr. A.A. Halbe, a Former Judge of this Court since he had expressed his inability to function as an Administrator on grounds of health. The suit was dismissed by the City Civil Court on 24th September, 2007. On 28th September, 2007 the Supreme Court issued directions to the effect that the Joint Administrators should continue for a period of ten weeks subject to any interim order or final order that may be passed in the appeal or in collateral proceedings. This order was clarified on 26th October, 2007 to the effect that these directions had been passed without prejudice to the rights of the parties and the order would not 5 tantamount to the continuance of the services of the Administrators if they were not required. 4. A First Appeal against the dismissal of the suit was lodged before this Court. A Civil Application was taken out for interim relief. On 15th February, 2008 the application for interim orders was disposed of by a Learned Single Judge. The Learned Single Judge observed that on a plain reading of the order passed by the Supreme Court appointing the Joint Administrators, it is evident that the appointment of the Administrators was in order to ensure that disputes between the Trustees do not cause any difficulties in the running of the Hospital. The Learned Single Judge was of the view that even as of date there were serious disputes between the Trustees and two separate groups were fighting a bitter battle not merely before this Court, but before the authorities constituted under the Bombay Public Trusts Act, 1950. The Learned Single Judge was of the view that the circumstances which existed when the Supreme Court passed the order appointing the Joint Administrators continued to exist even as of date. In the circumstances, until the disposal of 6 the appeal the interim arrangement which had been made under the order of the Supreme Court was directed to continue to operate. 5. At this stage it may be necessary to note that one of the two Joint Administrators, Mr. A.A. Halbe had submitted several reports both before this Court and before the Charity Commissioner in proceedings under the Bombay Public Trusts Act, 1950. An application was moved before the Supreme Court viz. Interim Application 5 of 2008 seeking the removal of Mr. A.A. Halbe on the ground that his conduct showed that he was colluding with the Plaintiff to the suit before the City Civil Court. In his judgment dated 15th February, 2008 the Learned Single Judge observed that since an application for the removal of Mr. Halbe was pending before the Supreme Court, it would not be proper to deal with the submissions that had been urged in regard to the role which had been played by the Joint Administrator. This aspect of the mater was dealt with in the following observations contained in paragraph 33 of the judgment of Mr. Justice A.S. Oka : “In so far as reports submitted by Mr. Justice A.A. Halbe (Retired) are concerned, it must be stated that an 7 application made by the contesting defendants for removing him as a Joint Administrator is pending before the Apex Court. Therefore, it will not be proper to deal with the submissions made by the counsel appearing for the defendants as regards the role played by the said Joint Administrator. Considering nature of the allegations made by the contesting defendants against the said Joint Administrator, I have not taken into consideration reports submitted by the said Joint Administrator.” 6. A Special Leave Petition was filed before the Supreme Court against the order of the Learned Single Judge dated 15th February, 2008. The Special Leave Petition was heard together with I.A. 5 of 2008 in which, as already noted, the relief that was sought was the removal of Mr. A.A. Halbe. On 14th July, 2008 the Supreme Court, while disposing of the Special Leave Petition and the I.A., observed that since the order of the Learned Single Judge of this Court was an interim discretionary order, the Supreme Court was not proposing to interfere with the order. The Supreme Court observed that Counsel appearing for the Petitioner before the Court had made a reference to the reports submitted by one of the Administrators according to which there were serious irregularities in the matter of administration. On this aspect, the Supreme Court observed thus : 8 “The parties on either side are at liberty to bring it to the notice of the High Court regarding these developments and take appropriate steps for redressal of the grievance and the High Court will be at liberty to pass appropriate orders in this matter. We clarify that in passing appropriate orders, the High Court need not be carried away because the administrators were appointed by this Court and the High Court may be at liberty to pass appropriate orders considering the claim of all parties concerned.” (emphasis supplied). The hearing of the appeal was expedited. The Civil Application has been instituted on 15th September, 2008, after the order of the Supreme Court and the relief that has been sought, as already noted earlier, is the removal of the Joint Administrators or, in the alternate, the removal of Mr. A.A. Halbe. 7. During the course of the hearing, Senior Counsel appearing on behalf of the Applicants did not press the wider relief that has been sought in the Civil Application for the removal of the Administrators. In fact, even before the concession was made, this Court had indicated to the learned counsel that it was not inclined to vacate the direction in regard to the regime of the Administrators. The circumstances which weighed in the appointment of Administrators, 9 pending the disposal of the suit, continued to exist as observed in the order of the Learned Single Judge of this Court dated 15th February, 2008. During the course of the hearing of the Civil Application the relief that has been pressed is the removal of Mr. A.A. Halbe as a Joint Administrator and for the appointment of any other administrator in his place. Counsel submitted that either a single administrator may be appointed or another Joint Administrator may be appointed in substitution of Mr. Halbe. The principal ground on which the removal of Mr. A.A. Halbe has been sought is that, the Joint Administrator has colluded with the Plaintiff and has failed to discharge his duties impartially. Learned Senior Counsel submitted that the Joint Administrators came to be appointed by the Supreme Court in order to look after the day to day administration of the Hospital and the Research Institute. The Joint Administrators, by the terms of their appointment, were not to be concerned with the administration or management of the Trust since disputes in regard to the Trust were pending before diverse authorities inter alia under the Bombay Public Trusts Act, 1950. Yet, the submission goes, Mr. Halbe overreached the bounds of his authority by submitting successive reports to this 10 Court and to the Charity Commissioner on matters which did not fall within his domain. A chart was submitted for the purposes of establishing before this Court that the reports submitted unilaterally by Mr. Halbe were on every occasion timed to coincide with the hearings either before this Court or before the Charity Commissioner. It was urged that the Joint Administrator had aligned himself with one of the litigating parties in disputes relating to the Trust, namely the Plaintiff, and on every occasion the submission of reports - not jointly as envisaged in the order of the Supreme Court but unilaterally by Mr. Halbe - was intended to influence and prejudice the outcome of a particular proceeding. This submission is sought to be buttressed by referring to the conduct of the Administrator. Firstly, a reference was made to the reports of the Administrator where he had sought to question certain payments though as a matter of fact in his joint report together with the other Administrator, he had sanctioned the very same payments as being in order. Secondly, a reference was made to the fact that in a suit instituted on the Original Side of this Court by Shri Rajiv K. Mehta (the son of the Plaintiff) on 7th March, 2008 a disclosure was made of a report which was to be submitted by Mr. 11 Halbe to this Court on 10th March, 2008. In sum and substance, the submission that has been urged is that as a Joint Administrator appointed in pursuance of the orders passed by the Supreme Court, Mr. Halbe was expected to discharge his duties impartially. However, the conduct of the Administrator, shows that he has failed to discharge that function with objectivity and impartiality and that he has been colluding with one of the litigating parties viz. the Plaintiff to the suit. 8. On the other hand, it has been urged on behalf of the Original Plaintiff that (i) The application for the removal of Mr. A.A. Halbe was not maintainable before this Court, having regard to the circumstance that the appointment of the Joint Administrators was continued in the interim order dated 15th February, 2008 and since the Supreme Court had declined to interfere with the interim order; (ii) The Application before the Court was submitted by the Trust and by one of the Trustees who had been suspended and against whom serious charges have been framed by the Charity Commissioner on a prima facie case being made out involving large sums of the Trust. 12 The role of an Administrator, it was urged, must be distinguished from the role of a Judge or an Arbitrator and there was absolutely no reason why an Administrator must be required to discharge his duties in the same manner as would a Judge in his judicial capacity. These submissions now fall for consideration. Maintainability 9. The first aspect of the matter is whether the application seeking the removal of Mr. A.A. Halbe as Administrator is maintainable, having regard to the order of the Learned Single Judge dated 15th February, 2008 and the order of the Supreme Court dated 14th July, 2008. The Joint Administrators were appointed by the Supreme Court on 26th March, 2007 pending the disposal of the suit. Upon the disposal of the suit, the Supreme Court continued their appointment for a stipulated period clarifying that this would be subject to such orders as may be passed by this Court in the appeal or in collateral proceedings. When the application for the grant of interlocutory relief came up before a Learned Single Judge of this Court during the pendency of the first appeal, this Court was of the 13 view that the circumstances which warranted the appointment of the Administrators during the pendency of the suit continued to subsist inasmuch as the disputes amongst the Trustees had not ceased to exist. Evidently, before the Learned Single Judge, a reference was made to the reports that were filed in diverse proceedings by Mr. A.A. Halbe and to the role that was being played by him. That role according to the Applicants was not either impartial or fair. The Learned Single Judge declined to take into consideration the reports of Mr. Halbe or the role that was being played by him, having regard to the circumstance that by then an interim application had already been filed before the Supreme Court seeking the removal of Mr. Halbe. Paragraph 33 of the order of this Court dated 15th February, 2008 makes it abundantly clear that the Learned Single Judge was of the view that it would not be proper to deal with the submissions made by counsel appearing for the Defendants as regards the role played by Mr. Halbe since an application for his removal was pending before the Supreme Court. The order of the Supreme Court of 14th July, 2008 disposed of both the Special Leave Petition against the order of the 14 Learned Single Judge continuing the mechanism of the Joint Administrators as well as the Interim Application for the removal of Mr. Halbe. The Supreme Court observed that while it was not interfering with an interim discretionary order passed by the High Court, the submission before the Supreme Court was that one of the Administrators had submitted reports according to which there were serious irregularities in the administration of the Trust. The Supreme Court expressly clarified that parties on either side would be at liberty to bring this to the notice of the High Court and to take appropriate steps for the redressal of their grievances. The High Court, the Supreme Court observed, would be at liberty to pass appropriate orders "in this matter". The expression “this matter” cannot, as the Plaintiff seeks be construed to exclude the grievance of the Applicants in regard to the conduct of Mr. A.A. Halbe. Significantly, the Supreme Court clarified that in passing appropriate orders "the High Court will not be carried away because the Administrators were appointed by this Court". The Supreme Court granted liberty to this Court to pass appropriate orders considering the claim of all the parties concerned. The observations of the Supreme Court to the effect that the High 15 Court should not be carried away because the Administrators were appointed by the Supreme Court is a matter of utmost significance. This assumes significance in the background of the fact that the Learned Single Judge of this Court had in the order dated 15th February, 2008 expressed a reservation in regard to adjudicating upon the role played by Mr. Halbe and upon expressing any view on the reports submitted by him having regard to the fact that an application for his removal was pending before the Supreme Court. It is in this background, that the observations of the Supreme Court would have to be interpreted. The order of the Supreme Court left it open to the parties to bring their grievances for the consideration of this Court. This would include the grievance in regard to the conduct of Mr. Halbe. The application for the removal of Mr. Halbe on the ground that he has failed to discharge his duties impartially is therefore maintainable before this Court. The submission that was urged on behalf of the Plaintiff is that what the Supreme Court kept open in its observations is the grievances of the parties which may be brought to the notice of this Court at the final hearing of the appeal. Such an interpretation cannot be accepted. When the parties were 16 granted liberty to move this Court for appropriate orders, that would enable the parties to seek both interlocutory orders as well as final orders in the appeal. The conduct of the Joint Administrator 10. The basic question which must be addressed in these proceedings is as to whether there is any merit in the submission that Mr. A.A. Halbe failed to discharge his duties impartially and with the objectivity that was to be expected from the appointment of a retired Judge of this Court as one of two Joint Administrators. 11. The order passed by the Supreme Court on 26th March, 2007 defines the role of the Administrators and the scope of their authority. The Administrators were placed incharge of the Hospital and were to look after the day to day running of the Hospital and the Research Institute. The two Administrators were directed to take all decisions relating to the administration of the Hospital. The Supreme Court observed that the Administrators were to give a report to the Board of Trustees every two weeks and any directions by the Board 17 of Trustees would have to be issued to the two Administrators in the form of resolutions. The order of the Supreme Court therefore clearly contemplates that there was a Trust in relation to which there were serious disputes and these disputes were causing difficulties in the running of the Hospital. The appointment of the Administrators was for the purpose of looking after the day to day management of the Hospital. The Administrators had no role to play either in the administration of the Trust or in the conduct of the litigation between the parties, relating to the Trust. Both the Administrators were expected to speak with one voice, because it is evident from the order of the Supreme Court that they were to submit a report - meaning thereby one report - to the Board of Trustees every two weeks. On their part, the Board of Trustees was expected to speak with one voice in the form of a resolution which was to be issued to the Administrators. The order passed by the Supreme Court did not contemplate the Administrators, least of all one of them, intervening in pending disputes between the Trustees relating to the affairs of the Trust. These disputes in regard to the affairs of the Trust were pending before diverse authorities inter alia constituted under the 18 Bombay Public Trusts Act, 1950. Those would be adjudicated upon. 12. The record before the Court reveals that Mr. Halbe unilaterally assumed to himself the authority to address reports to diverse authorities and to this Court in matters which fall within the domain of the administration and the management of the Trust. On 16th September, 2007 Mr. Halbe submitted his own individual communication, styled as a report, to the Chairman and members of the Trust. Mr. Halbe, as the report would show, commented upon disputes relating to the Trust and proceeded to make a detailed analysis of the Trust deed. It would be unnecessary to replicate every one of the observations in the report. As an illustration it would be material to refer to paragraphs 5, 6 and 7 of the report which reads as follows : “5) Mr. Kishor Kiritilal Mehta, Smt. Charu Kishor Mehta and Rekha Haresh Sheth were appointed as permanent trustees, i.e. for the life time. The permanent trustees have powers to appoint new additional trustees, who could be permanent trustee or trustee for 5 years term. At the expiry of 5 years, the permanent trustees were further authorized to appoint other trustees for the same period. The total period of the appointed trustees was for 3 terms, viz. 15 years. Regarding Governing Body and Advisory Body referred in paras 18 and 19 of the deed they 19 will be referred to at appropriate time. 6) The other important provisions that the Settler Kirtilal Manilal Mehta was also vested with the power to appoint not more than 5 trustees for 5 years and after his death, Vijay Kirtilal Mehta (eldest son), as he is living, will have the power to appoint not less than 5 trustees on the board. However, Kirtilal desired that majority of the trustees shall as far as possible be from the family members of Kirtilal or from branches of such family members for Settler Kirtilal Mehta. 7) Taking the overall view of the various paragraphs of the trust deed, one thing is manifestly clear that the trustees shall deal with the property only within ambits and purposes of the trust and that seems to be very consistent with the provisions of Bombay Public Trust Act, 1950. Under Section 36-A of the Act, it is clearly provided that the trustees of every public trust shall administer the affairs of the trust and apply the funds and property thereof for the purposes and objects of the trust in accordance with terms of the