1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION WRIT PETITION NO.2128 OF 2006 WITH CIVIL APPLICATION NO.2825 OF 2006 Champaklal Kishanlal Dave .. Petitioner Versus Kimjibhai N. Patel & Ors. .. Respondents Ms.Jane Cox for petitioner Mr.A.G.Damle for respondent No.6 Mr.Pankaj Shah for respondent Nos. 1 to 4 Ms.P.S.Cardozo, A.G.P. for State. CORAM : S.C.DHARMADHIKARI, J. DATE : 16th January 2008 ORAL ORDER:- . This petition under Article 226 and 227 2 of the Constitution of India is directed against the order passed by the Joint Charity Commissioner, Maharashtra State, Mumbai (Commissioner for short) dated 4th March 2006, permitting alienation of a Trust property by according sanction under section 36(1)(a) of the Bombay Public Trust Act, 1950 (Act for short). 2. Petitioner who has filed this petition is senior citizen and Advocate by profession. It appears that he occupies two rooms in the building of the first respondent Trust. Respondent Nos.. 1 to 4 before me are Trustees of the Trust which is known as Sheth Ranchoddas Lottiwala Trust. It is a registered Trust under the Act. The petitioner claims to be a beneficiary so also occupant of two rooms in the said building. It is his case that he was acquainted with the Founder of the Trust since his childhood and has taken keen interest in the activity of Trust. He is concerned about the 3 well being of Trust. 3. The property in question is more particularly described in the application which has been filed and copy of which is at Exh.D. The application No.156 of 2005 by the Trustees of the Trust elaborately sets out the objects of the Trust. The Trust has been settled by an Indenture of Trust dated 17th July 1919. The details of the present trustees and the powers to alienate the property are sufficiently elaborated. The Trust acquired property on as is where is basis and in fact the founder has leased the said property to the Trust for 999 years. Indenture of lease was made on 4th November 1908. 4. In para 7 of the application current use and position of the properties has been set out. Paras 7 and 8 read thus:- "7. The applicant hereinabove state 4 that there exists a building on the said property known as "Ranchod Bhuvan". The building is having ground plus four upper floors with a terrace on top. The entire property including shops on ground floor and upper floors given away on rental basis to the 53 tenants of the premises. The said building is more than 100 years old and is currently in dilapidated condition. It is demanding heavy repairs. In fact, the Bombay Housing and Area Development Board once repaired this building sometime in 1986/87. It being rather a slow moving process of effecting repairs to the old structure could not be completed even by the year 1991/92. On the contrary while carrying out the repairs, the work was done in such a callous and negligent manner, that it resulted into heavy damage to furniture and dismantling of the electric wiring in 5 15 out of 40 rooms of the students’ hostel. For all these years the said rooms of students hostel were required to be kept vacant, which ultimately resulted into the closure of the students hostel. The Trust was bound to pay an amount of Rs.18,18,180/- by way of repairs cess and other outstanding property taxes of approximately Rs.6,30,661/- to the Mumbai Municipal Corporation. Since the Trust was unable to pay this huge amount to the Mumbai Municipal Corporation, it resulted into attachment of the property. The Trust still as on today is saddled with arrears of the property tax, defaults on interest etc. The Trust does not have any other income apart from the rental income from the shops, offices and residential rooms." "8. The Trust is receiving very 6 meagre income as rent from the tenants/occupants of this property compared to the outgoings such as Municipal Taxes, property tax etc. and it is also not possible to increase the said lease rent of the property due to the present Rent Control restrictions nor the said tenants can be vacated as they are well protected under the Rent Control Act. The above problems get compounded by the fact as against the nominal rent received by the Trust, and return is required to pay for the Municipal Charges in respect of the said property and thus have to divert their funds which otherwise can be utilised for the objects of the Trust which includes inter alia the taxes, maintenance and other charges." 5. Insofar as compelling necessity is 7 concerned in para 10 of the application, the application sets out that the building is more than 100 years old and is in dilapidated condition. It is demanding heavy repairs. The Trust is unable to take up the repairs inasmuch as it is in arrears even with regard to repair cess and property taxes. Undisputed position is that the building is pretty old, taxes and cess are mounting, property was attached for non payment of property taxes and warrant of attachment was also pasted and issued. It is in such circumstances and valuing the property "on as is where is basis" that the Trustees approached the Commissioner for sanction to sell the property to one of the offerers viz., M/s.D.M.Exports. That offer came when Trustees gave notice in two daily newspapers "Free Press Journal" and "Tarun Bharat", M/s.D.M.Exports’ offered Rs.18 lakhs. The property was valued and valuation report at the relevant time showed its value at Rs.12,80,000/-. After setting out all 8 the above facts and pointing out that Rs.4,50,000/- have also been deposited by the offerer, the subject application was presented. The same was presented on 22nd July 2005. 6. The petitioner objector filed an application stating therein his objections in detail. His principal contention was that an attempt was made to alienate the property earlier but the application in that behalf was not pressed. The trustees sought to give some portion of the building on lease, but that request was disallowed by the then Charity Commissioner. According to objector on simple calculations the property is worth Rs.21 Crores 60 lakhs. He calculates it on the basis of the unexpired lease period in respect of the land and building comprising of ground plus four upper floors. According to him, the built up area is about 20,000 sft. At a very conservative estimate prices have been in the range of 9 Rs.9,000/- to Rs.12,000/- per sft. in the area. It is in such circumstances and by pointing out the so called misdeeds of the trustees committed earlier that the objections were raised. 7. The Charity Commissioner had before him the application of the Trustees, offer of M/s.D.M.Exports and the objections of the petitioner. The petitioner was represented by an Advocate before the Charity Commissioner. The Charity Commissioner has framed necessary points and has answered them in the affirmative. He has given a categorical finding with regard to the compelling necessity for alienation of the property in question. He has also considered whether the same is in the interest and for the benefit of the Trust. Further, he has satisfied himself with regard to the price offered. The learned Charity Commissioner has referred to the fact that the objector is an occupant of the room belonging to the Trust. There is some ongoing 10 dispute. Although, there are references to legal proceedings against the petitioner, there are assertions and counter assertions in that behalf. Even if one proceeds on the basis that the petitioner himself is a person having interest, the finding is that he has not disputed the fact that the building is occupied by about 53 occupants and is in dilapidated condition, being 100 years old. It requires heavy repairs. The building was sought to be repaired by the Repair Board but the repairs could not be completed by 1991-92 although, they commenced about six years prior thereto. Insofar as the structure is concerned, it is observed by the Charity Commissioner that the Students’ Hostel which was conducted in the building has been closed down. The Trust was required to spend about Rs.18,18,180 by way of repair cess. Further, there is liability of property tax of Rs.6,30,661/-. Since the Trust was unable to pay above amounts, the property was attached and 11 warrant was issued on 8th March 1999. It is in these circumstances that the Trustees called for a meeting and discussed the issue and passed unanimous resolution. The Trustees took a decision based upon the situation prevailing at site. The Trustees were of the opinion that the Trust is not generating sizable income from the property and it is not possible to remove occupants as they are occupying the properties for quite some time and for that purpose the Trustees thought that resorting to litigation is not feasible. Moreover, the recurring liability towards taxes has been taken note of. It is in such circumstances that the Charity Commissioner observed that there is compelling necessity and the property needs to be sold. 8. I do not see any error or perversity in the finding recorded on this point based as it is on the material that was produced before the Joint Charity Commissioner. Insofar as the 12 valuation is concerned, the Joint Charity Commissioner satisfied himself from the valuation reports placed before him. He has also taken note of the fact that the building is dilapidated and is occupied by about 53 persons. The building is more than 100 years old and would have to be sold on as is where is basis. It is in such circumstances that he considered the offer of M/s.D.M.Exports which was enhanced from Rs.18 lakhs to Rs.25 lakhs before him. The offer has been considered in detail and since the purchaser is willing to take over all the liabilities that the Charity Commissioner thought it fit to accord sanction to sell the property in question on as is where is basis. 9. It has been brought to my notice that pursuant to the order of sanction passed on 4th March 2006, the deed of conveyance has been executed on 8th May 2006. Full consideration is received by the Trustees. The purchaser has 13 spent a sum of Rs.15 lakhs approximately by clearing all the dues towards the Municipal Taxes, stamp duty and repair cess. That fact is placed before me on affidavit. There is rejoinder affidavit filed by the petitioner in which he has referred to an offer made on 29th December 2005 by one Pyare Shivpuri expressing his willingness by offering Rs.35 lakhs for the property. According to the petitioner this offer is more than the offer of respondent No.6 by about Rs.10 lakhs. The affidavit filed in rejoinder in para 5 makes a complaint that the offer of this Pyare Shivpuri was before the Charity Commissioner but it has been ignored. There are various allegations made against the Trustees. 10. When this matter was placed before this Court, noticing the affidavit in rejoinder, this Court (Marlapalle, J) passed an order on 6th June 2006, recording that the said Pyare Shivpuri 14 desires to present himself before the Court and renew his offer. Thereafter, this Court also directed that the offer made by Pyare Shivpuri needs to be scrutinised and for that purpose Pyare Shivpuri was directed to appear before the Registrar (Judicial) of this Court. The said Pyare Shivpuri appeared as indicated in the report of the Registrar (Judicial) on 20th June 2006. Thereafter, the matter has been adjourned by this Court from time to time. Respondent No.6 has been impleaded. The matter has been repeatedly adjourned. It is in such circumstances, that the same has been heard by me yesterday and today. The said Pyare Shivpuri has failed to remain present after the proceedings before the Registrar (Judicial). He has also not shown his bonafides by depositing any sums in this Court. In such circumstances, the offer of Pyare Shivpuri and the submissions in that behalf need not be gone into in further details. 15 11. Ms.Cox learned Counsel appearing for petitioner would urge that the Joint Charity Commissioner was obliged to consider not only the offers but also scrutinise the decision of the Trustees to sell the properties in question. She submits that the Trustees have committed various acts of omission and commission. They have changed user of the properties. They have allowed the areas/portions which are earmarked for Student Hostel to be occupied and used for commercial purposes. She submits that the Diamond Merchants who are having their offices within the vicinity of the subject building, had an eye on the building right through out and through the Trustees they have grabbed the property. She has also invited my attention to the impugned order and the applications made earlier. She submits that the offer accepted by the Trustees does not show that the price paid is the market value. The property has been undervalued and, therefore, the sale should not 16 have been sanctioned. She has invited my attention to a Full bench decision of this Court (W.P.1641 OF 2005 & Other connected matters - M/s.Sailesh Developers & Anr. Vs. The Joint Charity Commissioner and Ors) decided on 14th February 2007, wherein ambit and scope of the powers conferred on the Charity Commissioner have been explained elaborately. For all these reasons, she submits that the matter must go back to the Joint Charity Commissioner or Charity Commissioner and the subject application must be heard along with the complaint of the petitioner against the Trustees. 12. On the other hand, the Counsel for Trustees and the purchaser have contended that the sale has attained finality and the petitioner is trying to espouse the cause of Pyare Shivpuri. He has made reckless and false allegations which have not been substantiated at all. They have relied upon the contents of the affidavits filed 17 in this petition and have urged that the learned Joint Charity Commissioner has fully adhered to the law laid down by this Court and his order does not suffer from any infirmity or illegality soas to call for interference in writ jurisdiction. 13. Mr.Jamdar appearing for one of the beneficiary supports the petition. Additionally, he relies upon a decision of this Court reported in 2002 (5) BCR 497 (Kumar Constructions Vs. Deshastha Regved Sanstha & Anr). 14. I have perused the petition and the annexures thereto, including the impugned order. I have also perused the affidavits filed in reply and in rejoinder. Before considering the rival contentions, it would be appropriate to refer to the ambit and scope of powers conferred upon the Charity Commissioner while deciding the application under section 36(1)(a) of the Act. 18 Since all decisions in the field have been referred to in the Full Bench decision (supra) it would be appropriate to make a reference to the Full Bench decision. The Full Bench after noticing the legal provisions, has while disapproving the Single Judge’s view (1979 Mh.L.J. 104 - Arunodaya Prefab Vs. M.D.Kambli & Ors) and a Division Bench following the same, held that it is obvious from the scheme of section 36 that Legislature never intended that Trustees can sell or transfer the Trust property vesting in them, as if it was their personal property. It is duty of the Charity Commissioner to ensure that the property is alienated in such a manner that maximum benefits accrue to the Trust. In a given case, the Charity Commissioner can opt for public auction or can invite bids. The conclusions in that behalf are recorded in paras 27 and 28 of the Full Bench decision. 15. Applying this principle to the facts of 19 the present case, it is apparent that the Petitioner, who is beneficiary, has fully participated in the proceedings before the Charity Commissioner. The petition is full with allegations, not only against the Trustees but against the Charity Commissioner personally. The Charity Commissioner is alleged to have colluded with the Trustees in depriving the beneficiaries of the Trust property. The allegation of malafides and irregularities on the part of the Trust are not necessary to be gone into. If there are distinct proceedings pending, then, it is for the Charity Commissioner to take appropriate action based on the allegations therein. Neither the Trustees nor the Trust cease to exist or stand dissolved. The Trustees continue to hold the position and the Trust exists. Therefore, it is not necessary to go into these allegations in this petition. 16. Insofar as allegations and submissions 20 that the Charity Commissioner failed to exercise the powers conferred upon him in the interest of Trust and has not ensured that the benefit and interest of the Trust is sufficiently protected, I am of the view that the said allegation has not been substantiated at all. The petitioner does not deny that the Trust is founded sometime in 1919. The petitioner does not dispute that the subject building is 100 years old. He does not dispute that it is occupied by number of occupants and is thus not vacant. He does not dispute that the building being dilapidated requires repairs frequently. In such circumstances, I do not feel that the petitioner has substantiated his pleas that there were no compelling necessity for disposal of the subject property. 17. While there is litigation against the Trust and the Trustees involving petitioner himself, it is also not disputed before me that 21 the Trust does not get a sizable income from this property. Although, the petitioner would allege that the Trustees have earned exorbitant sums from this property, neither is this plea raised before the Charity Commissioner nor is the same substantiated before him or me. The allegations in that behalf are vague. All such allegations have been denied by the Trustees. The building is thus available for disposal and has been disposed of on "as is where is basis". The Trustees do not wish to enter into the litigation and spend more monies for evicting the existing occupants. In such circumstances, when they take a conscious decision to dispose of this property, then, I fail to see as to how they could be faulted. Ultimately, this Court cannot substitute its views in place of that of Trustees. They have been managing the properties and are aware of the realities. In such circumstances, their unanimous decision having been placed before the Charity Commissioner, 22 there is no error on his part in proceeding on the said basis. 18. Insofar as the offers are concerned, in pursuance of the public notice, the offer of M/s.D.M.Exports was there all through out. Not only it made the offer prior to other person Pyare Shivpuri, but it also deposited a sum of Rs.4,50,000/-. It enhanced its offer from Rs.18 lakhs to Rs.25 lakhs. The offer was based upon the valuation of the property. The offer is scrutinised in the backdrop of two valuation reports, which were placed before the Joint Charity Commissioner. The property is old and in a dilapidated condition. There are 53 occupants and was offered for sale on as is where is basis. It is in such circumstances, that the Charity Commissioner decided to accept the offer of M/s.D.M.Exports. No other offers are made. The Charity Commissioner was of the view that the purchaser having remained present and reiterating 23 his offer so also evincing interest in taking over the property which has not only occupants but pertaining to which there are number of liabilities, then, it would not have been just, fair and proper to direct the Trustees to undertake a fresh exercise of inviting offers. That the Charity Commissioner took the decision based upon all facts and circumstances, is clear to me. The Charity Commissioner has not acted arbitrarily or capriciously. The Charity Commissioner has not ignored anything which was necessary to be taken into consideration. The Point No.3 has been answered in the affirmative after taking into account not only the valuation report but the liability towards Taxes and repair cess. 19. The offer also has been enhanced from Rs.18 lakhs to Rs.25 lakhs by the purchaser before the Charity Commissioner. It is in such circumstances that the Charity Commissioner has 24 accorded sanction. 20. In the light of the detailed reasons assigned by the Charity Commissioner, I am of the view that the impugned order, according sanction is not vitiated by any error apparent or perversity soas to call for interference in my writ jurisdiction. 21. In the result, the petition fails and is accordingly dismissed. 22. At this stage I suggested to Mr.Damle appearing for respondent No.6 that respondent No.6 had offered to pay a sum of Rs.28 lakhs and that offer is noted by the Joint Charity Commissioner. In such circumstances, Mr.Damle states that the purchasers are willing to pay a further sum of Rs.5 lakhs provided some time is granted. 25 23. Mr.Damle seeks four weeks’ time to pay the sum of Rs.5 lakhs to the subject Trust. Statement is accepted. Needless to state that disposal of this petition shall not affect any proceedings which the petitioner may have initiated or proposes to initiate against the Trustees for their acts of commission, omission and mismanagement. Such proceedings shall be decided uninfluenced by any findings of the Charity Commissioner and on their own merits and in accordance with law. Interim order of status quo stands vacated forthwith. Civil Applications, if any, shall stand accordingly dismissed. (S.C.Dharmadhikari, J)