1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY BENCH AT AURANGABAD LETTERS PATENT APPEAL NO. 52 OF 2010 1] Nandkumar s/o. Jagannath Nalandwar, Age 43 yeras, Occ. Business Secretary, Mathura Shikshan Prasarak Mandal, Wanjarwada, Tq. Jalkot, Dist. Latur. 2] Jagannath s/o. Tukaram Nalandwar, Age 65 years, Occ. Business, Vice President, Mathura Shikshan Prasarak Mandal, Wanjarwada, Tq. Jalkot, Dist. Latur. 3] Ram S/o. Jagannath Wanjarwadekar, Age 38 years, Occ. Business, Joint Secretary, Mathura Shikshan Prasarak Mandal, Wanjarwada, Tq. Jalkot, Dist. Latur. 4] Vishakha Sunil Mandurwar Age 40 years, Occ. Household Member, Mathura Shikshan Prasarak Mandal, Wanjarwada, Tq. Jalkot, Dist. Latur. 5] Swati Dattatraya Wanjarwadekar Age 41 years, Occ. Household, Vice President, Mathura Shikshan Prasarak Mandal, Wanjarwada, Tq. Jalkot, Dist. Latur. 6] Kum. Reena Bhagwanrao Bongirwar, 2 Age 41 years, occ. Househo,d Vice President, Mathura Shikshan Prasarak Mandal, Wanjarwada, Tq. Jalkot, Dist. Latur. 7] Seema Venkatrao Pensalwar, Age 41 years, Occ. Household Vice President, Mathura Shikshan Prasarak Mandal, Wanjarwada, Tq. Jalkot, Dist. Latur. .. APPELLANTS. Versus 1] Shri Chandrakant Bhagwat Gudmewar Age 48 years, Occ. President, Mathura Shikshan Prasarak Manda, Wanjarwada, Tq. Ahmedpur, at pesent residing at Udgir, Tq. Udgir, Dist. Latur. 2] Sow. Anusaya w/o. Chandrakant Gudmewar, Age __ years, Treasurer Mathura Shikshan Prasarak Mandal, Wanjarwada, Tq. Ahmedpur, at present residing at Udgir, Dist. Latur. .. Respondents. (Original Respondent Nos. 1 and 2) --- Mr. V.D. Salunke, Advocate for appellants Mr. N.P. Patil Jamalpurkar, Advocate for the respondent No.1 CORAM : A.P. DESHPANDE & N.D. DESHPANDE,JJ. DATE : 9TH MARCH, 2010. 3 ORAL JUDGMENT [PER A.P. DESHPANDE, J.] :- 1] Heard. Admit. By consent of parties, taken up for final hearing. . The appellants and the respondent Nos. 1 and 2 are the Trustees of a public Trust, namely, Mathura Shikshan Prasarak Mandal. The said Trust administers and manages an Ashram School, under the name and style of “Veer Savarkar, Adivasi Ashram Shala”, at Shirur. The respondent Nos. 1 and 2, herein filed an application under Section 41-D of the Bombay Public Trust Act against the present appellants for their removal from the Trusteeship. The respondent Nos. 1 and 2 averred in the application that the petitioners are guilty of some of the acts covered by sub-section (1) of Section 41D and hence, liable for being removed. The Charity Commissioner, after issuing notices to the present appellants, framed two charges. The same read as under :- “1.That, you opponent Nos. 1 to 7 being trustees of Mathura Shikshan Prasarak Mandal, Wanjarwada, trust registration No.F-3800(Latur) have committed persistent default in 4 submission of audit report during the period 31.3.1996 to 31.3.2007 and thereby committed at actionable U/section 41-D(1) (a) of the Bombay Public Trust Act. “2.Secondly, that you opponent Nos. 1 to 7 neglected to hold election of managing committee in general body meeting of the trust at the interval of every 5 years since 2001 and neglected to maintain regular account of the trust and thereby neglected to perform your duty as trustees towards trust and thereby committee an actionable U/section 41-D(1)(c) of the Bombay Public Trust Act.” 2] Besides framing the charges against the present appellants, the Joint Charity Commissioner, also placed the appellants under suspension in exercise of powers under sub- section (3) of Section 41-D and in place of the present Trustees, proceeded to appoint a fit person. The order passed by the Joint Charity Commissioner on a request made by the appellants was stayed so as to enable the appellants to question the correctness thereof, by filing writ petition in this court. The appellants filed a 5 writ petition bearing W.P. No. 8299/2009, challenging the order passed by the Jt. Charity Commissioner. 3] The learned Single Judge has partly allowed the writ petition, by quashing one of the charges framed against the present appellants. The charge framed against the appellants in regard to alleged negligence in holding the election of the Managing Committee, has been quashed and set aside. Aggrieved by that part of the order passed by the learned Single Judge, which rejects the petition to the extent it challenges the remaining charge, which pertains to committing persistent default in submission of the audit report during the period from 31/3/996 to 31/3/207 and the order of suspension of the Trustees, the present LPA has been filed. 4] Thus, the question that falls for consideration of this court is, as to whether the charge as framed can be sustained and if yes, is it necessary to place the appellants under suspension. The charge, if minutely perused, the same relates to persistent default in submission of audit report. Thus, the objection in substance, is that the reports were not submitted from the year 6 1996 to 2007. It is a matter of record that on one day, i.e. on 19/3/2008, all the audit reports were placed on record of the Jt. Charity Commissioner, i.e. after filing of the application under Section 41-D. 5] The learned counsel Shri Salunke, for the appellants in the first place contended that the appellants are not obliged to submit the audit reports to the office of the Charity Commissioner. So contending, our attention is invited to the relevant provisions contained in Chapter V of the Bombay Public Trust Act, which deals with the Budget, accounts and audit. Chapter V is the sole repository of the obligations on the part of the trustees , so also, the auditor and the office of the Charity Commissioner. Section 31-A mandates that the Trustees of the public trust shall prepare and submit a budget showing the probable receipts and disbursement of the trust during the following year and every budget shall make adequate provision for carrying out the objects of the trust and for maintenance and preservation of the trust property. Every trustee of a public trust is expected to keep the regular accounts and the accounts are to kept in such form, as may be approved by the Charity Commissioner, is a requirement 7 of Section 32. Section 33, regulates the subject of submission of the audit reports. Section 33 lays down that the accounts kept under Section 32 shall be balanced each year on the 31st day of March. In so far as Audit of the accounts are concerned, sub- section (2) provides thus :- “ Accounts shall be audited annually by a person who is a chartered accountant within the meaning of the Chartered Accountants Act, 1949 or by such persons as the State Government may, subject to any conditions, authorize in this behalf.” Sub-section (3) declares that , “Every auditor acting under sub-section (2) shall have access to the accounts and to all books, vouchers, other documents and records in the possession of or under the control of the trustee; and it shall be the duty of the trustee to make them available for the use of the auditor.” Auditor's duties are laid down in Section 34, sub- section (1) provides that it shall be the duty of every auditor auditing the accounts of a public trust under section 33 to prepare the balance sheet and income and expenditure accounts and to 8 forward a copy of the same alongwith a copy of his report to the trustee, and to the Deputy or Assistant Charity Commissioner of the region or sub-region or to the Charity Commissioner, if the Charity Commissioner requires him to do so. Thus, under Section 34(1) it is the primary statutory obligation on the auditor after preparing the balance sheet, income and expenditure account, to forward a copy of the same to the Trustees so also to the Deputy or Assistant Charity Commissioner of the region concerned, whereas, sub-section (1A) provides that it shall be the duty of the trustee of a public trust to file a copy of the balance sheet and income and expenditure account forwarded by the auditor before the Deputy or Assistant Charity Commissioner of the region or sub-region or to the Charity Commissioner, if the Charity Commissioner required him to do so. A conjoint reading of sub-section (1) and (1A) of Section 34, leaves no room of doubt that the primary responsibility to forward the copies of the balance sheet and income and expenditure account is that of the auditor and it is the secondary duty of the trustee to submit the same to the authorities concerned, if the authority require him to do so. It is not the charge that the Charity 9 Commissioner or Deputy or Assistant Charity Commissioner, called upon the trustees to submit the audit report and the appellants have failed to do so. Relying on the provisions contained in Sections 31-A to Section 34 , from Chapter V, the learned counsel for the appellants has submitted that in the absence of any statutory obligation cast on the trustees to submit the audit reports to the Charity Commissioner, the appellants cannot be held responsible for non-submission of the audit reports and as such, the said charge is wholly misconceived. 6] Our attention is also invited to the relevant rules including Rule 21. Rule 21 deals with submission of the audit reports under Section 34 of the Act. Sub-rule (1) of Rule 21, lays down that the trustee shall get the accounts audited within six months of the date of balancing the accounts under sub-section (1) of Section 33 and the auditor shall forward a copy of the balance-sheet and income and expenditure account alongwith the audit report to the Deputy or Assistant Charity Commissioner within a fortnight of the audit. Section 34, as pointed out hereinabove, deals with the preparation of the balance sheet and income and expenditure account to be audited by the auditor. 10 Perusal of section 34(1) and Rule 21(1) leaves no room of doubt that the auditor himself is under an obligation to submit the balance sheet, income and expenditure account and his audit report, to the Charity or Assistant Charity Commissioner, within the stipulated time frame. However, in case, the Deputy or Assistant Charity Commissioner demands the trustees to so furnish the balance sheet, income and expenditure account or the audit report, the trustees are expected to submit the same. 7] In that view of the matter, it is submitted by the learned counsel for the appellants that no charge can be framed against the appellants under Section 41-D(1)(a) on the ground that they have persistently made default in submission of the accounts, report or return. It is also contended that, at any rate, no case is made out for placing the appellants under suspension, having regard to the charge framed against the appellants. It is submitted that if continuance of trustees in office is likely to hamper the enquiry into the charges, or if the trustees are likely to tamper with the documents, which may affect the outcome of the enquiry into the charges, then and then alone, a penal action as envisaged by section 41-D(3) need to be resorted to. It is not that, in every case, 11 where charges are framed trusteed need to be placed under suspension. 8] In reply, the learned counsel appearing for the respondent nos. 1 and 2 has submitted that every trustee is obliged to submit the audit report regularly to the Charity or Assistant Charity Commissioner. According to the learned counsel for the respondents, the said obligation can be read from Section 31-A of the Act. . In our reading of the said provision, there is only an obligation to prepare and submit the budget, showing the probable receipts and disbursement of the trust during the following year. Section 31-A, does not oblige the trustee to submit the audit reports. . According to the learned counsel for the respondents, the appellants have failed to get the accounts audited every year. That does not appear to be so. Our attention is invited to Exhibit C, which is a copy of Schedule 10, prepared under Rule 21(2). As stated hereinabove, under the signatures of the chartered accountant, the appellants placed on record the audit 12 reports submitted by the auditor for the year 1996 to 2007, in the year 2008. The Deputy /Assistant Charity Commissioner has caused an entry of those reports to be made in Schedule 10. According to the appellants, the accounts were regularly audits and duly certified by the Chartered Accountant and, copies of those reports were regularly submitted by the appellants to the Project Officer. As stated hereinabove, the trust is administering an Ashram School, which is admitted to grants. According to the appellants, grants are released on submission of audited accounts accompanied by the audit report to the Project Officer, Integrated Adivasi Development Project. During the course of hearing of the application under Section 41-D, the appellants had placed on record of the Joint Charity Commissioner, a communication issued by the project officer, dated 17/19-11-2009, certifying the dates on which the audit statements were furnished by the present appellants to the said office. Perusal of the said communication reveals that every year, audited statements were submitted and it is the case of the appellants that on submission of the audited statements only, grants were released. With a view to doubly assure as to whether the accounts were audited every year or 13 otherwise, we had directed the learned counsel for the appellants, to place on record, the audit report alongwith the balance sheet and income and expenditure accounts of the Trust, duly audited by the auditor. The learned counsel has placed on record the copies of the balance sheet, income and expenditure accounts and the audit reports for the year 1996 to 2008. Perusal of the said documents reveal that the accounts were audited every year by the Chartered Accountant and copies thereof were submitted by the appellants to the Project Officer, Integrated Tribal Development Project, with a view to obtain grants from the State Exchequer. However, the copies of the audit report and or balance sheet and income and expenditure accounts were not submitted at any point of time to the deputy or Assistant Charity Commissioner from 1996 to 2008. Non-submission of the said audit reports to the deputy Charity Commissioner could, at the most, be a lapse, in case there is a statutory obligation on the trustees to submit the same to the Assistant/Deputy Charity Commissioner. In our view, in the first place, the trustees are not obliged to submit the balance sheet, income and expenditure account and audit 14 reports to the Deputy/Assistant Charity Commissioner. The said obligation is on the Chartered Accountant. There could arise an obligation on the trustees to submit the said documents, in case it is so directed by the Deputy/Assistant Charity Commissioner. There has been no such direction from the said Officer to the appellants and hence, there is hardly any case to place the present appellants under suspension. We do not propose to examine as to whether the charge in that regard is sustainable or not at this stage. 9] On the material available, the joint Charity Commissioner, being of the view that the charge could be framed, has framed the charge. Even the learned Single Judge has found the framing of the charge in regard to non-submission of audit reports to be permissible. We do not propose to interfere with the said findings at this stage. However, in our view, for the reasons recorded hereinabove, the order, which goes to place the appellants under suspension in exercise of powers under Section 41-D (3) of the Bombay Public Trust Act, is wholly unsustainable, even assuming that there is material available on record to frame the charge against the present appellants. 15 10] In the result, the LPA is partly allowed. The order passed by the Joint Charity Commissioner placing the present appellants under suspension and appointing a fit person in place of the appellants/trustees being unsustainable, we quash and set it aside. . It shall be open for the Charity Commissioner to proceed with the enquiry touching the charge framed against the present appellants. At this stage, the learned counsel for the respondent Nos. 1 and 2, seeks liberty to move the Jt. Charity Commissioner, with a view to make a request to frame an additional charge. We make it clear that it shall be open for the respondent Nos. 1 and 2, to approach the Jt. Charity Commissioner in that regard, and in case the respondents make such an application, the same shall be considered on its own merits, in accordance with law. [N.D. DESHPANDE,J.] [A.P. DESHPANDE.J.] Grt/- 16