Case: PARSI ZOROASTRIAN ANJUMAN, MHOW Vs. THE SUB DIVISIONAL OFFICER/THE REGISTRAR OF PUBLIC TRUSTS &amp; ANR

may think fit under Section 31 (1) (b) and Section 36 (1)(c). The Charity Commissioner has to be objectively satisfied that property should be disposed of in the interest of public trust; in doing so, he has right to impose such conditions as he may think fit, taking into account aforesaid triple classic requirements. It is also open to the Charity Commissioner, in exercise of power of Section 36 (2) of the, to revoke the sanction, given under clauses (a) and (b) of Section 36 of the, on the ground that the sanction had been obtained by fraud or misrepresentation or those material facts have been suppressed while obtaining sanction. The intendment of the revocation provision is also to sub-serve the interest, benefit, and protection of the Trust and its property. 24. In the instant case, the Joint Charity Commissioner was required to consider the interest and benefit of the Trust. We are compelled to observe that Joint Charity Commissioner has totally abdicated its duty, and failed to act as per the mandate of Section 36. The observations made by Joint Charity Commissioner in its Order clearly reflect that Charity Commissioner has failed to exercise the duties enjoined upon to protect trust under Section 36 of the Act. It has not considered the interest, benefit, and protection of the trust at all. The order is wholly perverse. Joint Commissioner abdicated its responsibilities, in as much as it observed that it was the outlook of the Trust as to whom it wanted to sell the property, and as certain development was to be made; as such market value of the property was not a relevant consideration. There is the sale made in the form of Joint Venture development cum sell agreement and lease was for 999 years. Right from the beginning, it was to be a joint venture agreement coupled with a sale option, as apparent from the minutes of the meeting of the trust. The trustees had been acting in collusion with developer even before resolution had been passed. Negotiations were going on with M/s. Astral Enterprises- developer. 26. It is apparent that these decisions of the court were in the context of Section 36 of the Bombay Public Trust Act, which confers decidedly wider powers on the Commissioner (including imposition of such conditions as he may think fit to impose, regard being had to the interest or benefit or protection of the trust) than the kind of powers conferred on the Registrar, under Section 14 of the M.P. Public Trusts Act. Under the latter enactment, the Registrars power to grant or withhold sanction is guided by the stipulations in the trust instrument, or under a law, as directed by a court. There is, consequently, a marked difference in the nature of the powers under the two enactments. The Bombay law confers a wider supervisory role; however, such a wide power is not available to the Registrar, under the M.P Public Trusts Act. 27. Public control of charities (whether social or religious) has been recognized in our country for over a century. In the context of religious endowments, such public control is essential, for the simple reason that in its absence, there is likelihood of diversion of monies and properties accumulated through public donation and gifts. The role of the designated state official (commissioner, or registrar, etc.) is to ensure that accounts are properly maintained; monies are expended in accordance with the aims and objects of the endowments; the proper rituals are conducted, etc. Such regulation does not mean that the state is allowed to appropriate monies which rightly belong to the endowment. In the case of public charities and trusts, slightly different considerations prevail. The aim of public control is to ensure that the trust is administered efficiently and smoothly. The state interest is that far, and no more; it cannot mean that the state can dictate what decisions can or cannot be taken. In the specific context of alienation of properties, depending on the nature of the oversight, the states interest is to ensure that valuable assets of public trusts are not frittered away. It is for this reason, that provisions like Section 36 clearly enunciate a principle that the Commissioner can impose such conditions as may be appropriate. However, the statute in the present case (the M.P. Public Trusts Act) does not contain such a power to impose conditions; the only considerations that weigh with the officer (Registrar) are the stipulations in law, or in the instrument of public interest. Other than these considerations, the principle of autonomy and democratic decision-making cannot be undermined. Any organization which is self-governed, cannot be subjected to overarching state control. As long as its decisions are well informed, and grounded on relevant considerations, the interests of the trust are those defined by its members. Any measure of public control enacted through express stipulations in law, should not be expanded to such an extent that the right to freedom of association, under Article 19 (1) (c), is reduced to an empty husk, bereft of meaningful exercise of choice. 28. In the facts of the present case, the record shows that the decision to sell the properties was a consequence of a two layered process, where all members participated and decided to dispose of the property. The decision was based on a realistic assessment of the trusts existing and future liabilities, the obligations towards charity, aid to senior citizens, education, medical aid, and religious ceremonies, imposed by the trust instrument. Furthermore, the proposed spending from the returns earned through the investment made from the consideration arising from sale, were also outlined and clearly disclosed. Most crucially, the properties were valued, and proposed to be sold by public tender. Disregarding all this disclosed transparency, the Registrar, on the basis of her subjective notion of what constituted best interests of the trust, could not have rejected the application, as she did. The High Court, in this courts opinion fell into error, in endorsing that rejection.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]If one recollects that the power to impose conditions is absent in the main provision of the parent enactment, i.e., Section 14 (1) or (2), clearly, sub-rule (3) goes beyond enacted law. A plain look at Rules 9 (1) and (2) would show that the conditions mentioned in those rules, are in conformity with the framework of Section 14. However, if Rule 9 (3) were to be read independently, it can be construed as conferring additional power to impose conditions. Such a reading would lead to Rule 9 (3) being rendered ultra vires. However, a proper and harmonious reading of Rule 9 (3) would be that the Registrar, in a given case may impose conditions, if the instrument of public trust, or any law, relating to public trusts, results in a court direction to such effect. In the absence of these objective factors, the Registrar, in this courts opinion, cannot unilaterally impose conditions which in her, or his opinion would inure to the interest of the public trust.In Chenchu Rami Reddy (supra) Section 74 (1) (c) of the Andhra Pradesh Charitable and Hindu Religious Endowments Act, 1966 obliged that public trust property had to be put to auction by the Commissioner (of trusts). In that case, the property of the trust was sought to be sold by private negotiation, despite an offer of three times more consideration, by another party. The Commissioner had approved such private sale. This court set aside the sale, holding inter alia, that:property of such institutions or endowments must be jealously protected. It must be protected, for, a large segment of the community has beneficial interest in it (that is the raison detre of  itself). The authorities exercising the powers under  must not only be most alert and vigilant in such matters but also show awareness of the ways of the present day world as also the ugly realities of the world of today. They cannot afford to take things at their face value or make a less than the closest-andbest-attention approach to guard against all pitfalls. The approving authority must be aware that in such matters the trustees, or persons authorised to sell by private negotiations, can, in a given case, enter into a secret or invisible under-hand deal or understanding with the purchasers at the cost of the concerned institution. Those who are willing to purchase by private negotiations can also bid at a public auction. Why would they feel shy or be deterred from bidding at a public auction? Why then permit sale by private negotiations which will not be visible to the public-eye and may even give rise to public suspicion unless there are special reasons to justify doing so? And care must be taken to fix a reserve price after ascertaining the market value for the sake of safeguarding the interest of the endowment. With these words of caution we close the matter.25. In Cyrus Rustom Patel (supra), again, the applicability of Section 36 of the Bombay Public Trust  Act was in issue. This court set aside a sale, after observing that the Commissioner neither ascertained the value of the property, nor made any attempt to secure the best price for it. Further, the Commissioner did not attempt to explore if other conditions could be imposed on the proposed developer or purchaser. It was observed that:23. The power to grant sanction has to be exercised by the Charity Commissioner, taking into consideration three classic requirements i.e. the interest, benefit, and protection of the Trust. The expression that sanction may be accorded subject to such conditions as Charity Commissioner may think fit under Section 31 (1) (b) and Section 36 (1)(c). The Charity Commissioner has to be objectively satisfied that property should be disposed of in the interest of public trust; in doing so, he has right to impose such conditions as he may think fit, taking into account aforesaid triple classic requirements. It is also open to the Charity Commissioner, in exercise of power of Section 36 (2) of  the, to revoke the sanction, given under clauses (a) and (b) of Section 36 of  the, on the ground that the sanction had been obtained by fraud or misrepresentation or those material facts have been suppressed while obtaining sanction. The intendment of the revocation provision is also to sub-serve the interest, benefit, and protection of the Trust and its property.24. In the instant case, the Joint Charity Commissioner was required to consider the interest and benefit of the Trust. We are compelled to observe that Joint Charity Commissioner has totally abdicated its duty, and failed to act as per the mandate of Section 36. The observations made by Joint Charity Commissioner in its Order clearly reflect that Charity Commissioner has failed to exercise the duties enjoined upon to protect trust under Section 36 of the Act.  It has not considered the interest, benefit, and protection of the trust at all. The order is wholly perverse. Joint Commissioner abdicated its responsibilities, in as much as it observed that it was the outlook of the Trust as to whom it wanted to sell the property, and as certain development was to be made; as such market value of the property was not a relevant consideration. There is the sale made in the form of Joint Venture development cum sell agreement and lease was for 999 years. Right from the beginning, it was to be a joint venture agreement coupled with a sale option, as apparent from the minutes of the meeting of the trust. The trustees had been acting in collusion with developer even before resolution had been passed. Negotiations were going on with M/s. Astral Enterprises- developer.26. It is apparent that these decisions of the court were in the context of Section 36 of the Bombay Public Trust  Act, which confers decidedly wider powers on the Commissioner (including imposition of such conditions as he may think fit to impose, regard being had to the interest or benefit or protection of the trust) than the kind of powers conferred on the Registrar, under Section 14 of the M.P. Public Trusts Act.  Under the latter enactment, the Registrars power to grant or withhold sanction is guided by the stipulations in the trust instrument, or under a law, as directed by a court. There is, consequently, a marked difference in the nature of the powers under the two enactments. The Bombay law confers a wider supervisory role; however, such a wide power is not available to the Registrar, under the M.P Public Trusts Act.However, the statute in the present case (the M.P. Public Trusts Act) does not contain such a power to impose conditions; the only considerations that weigh with the officer (Registrar) are the stipulations in law, or in the instrument of public interest. Other than these considerations, the principle of autonomy and democratic decision-making cannot be undermined. Any organization which is self-governed, cannot be subjected to overarching state control. As long as its decisions are well informed, and grounded on relevant considerations, the interests of the trust are those defined by its members. Any measure of public control enacted through express stipulations in law, should not be expanded to such an extent that the right to freedom of association, under Article 19 (1) (c), is reduced to an empty husk, bereft of meaningful exercise of choice.28. In the facts of the present case, the record shows that the decision to sell the properties was a consequence of a two layered process, where all members participated and decided to dispose of the property. The decision was based on a realistic assessment of the trusts existing and future liabilities, the obligations towards charity, aid to senior citizens, education, medical aid, and religious ceremonies, imposed by the trust instrument. Furthermore, the proposed spending from the returns earned through the investment made from the consideration arising from sale, were also outlined and clearly disclosed. Most crucially, the properties were valued, and proposed to be sold by public tender. Disregarding all this disclosed transparency, the Registrar, on the basis of her subjective notion of what constituted best interests of the trust, could not have rejected the application, as she did. The High Court, in this courts opinion fell into error, in endorsing that rejection.