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

2. The appellant was registered as a public trust on 29.01.1973 under the provisions of the Madhya Pradesh Public Trusts Act, 1951 (hereafter ). The trusts membership was made up exclusively of members of the Parsi community at Mhow. On 15.05.2011, at the behest of the trust and on its application, a revisited final scheme in relation to the trust was approved by the District Judge, Mhow (Order dated 15.05.2011 in Case No.3/2010) . The revisited scheme contained the following clause:The Managing Committee members, after getting from a majority of the General Body Members and a specific concurrence of the FPZAI members, shall be entitled to liquidate the assets and immovable properties of the Anjuman which have taken vacant and utilize the proceeds of the objects of the Trust, including the upkeep of the consecrated holy fire from the Mhow Agiari and the maintenance of a priest to look after it as also for the benefit of the Parsi and Irani Zoroastrian community, always giving preferences to those connected with Mhow and after ensuring that event he last Zoroastrian left in Mhow is duly cared for, if poor or needy.3. In a meeting held on 14.12.2014, the members of the trusts Managing Committee unanimously agreed that five of its immovable properties should be sold. This decision was consented to by the individual members of the Managing Committee which included representatives of the Parsi Zoroastrian Anjuman community, i.e., the apex body of the Parsi community in the country. As a followup, the proposal was placed before a general meeting of all members of the trust on 19.01.2015 in which a majority of members supported the Managing Committees decision to sell the five items of property. The trust had circulated what was termed as a Vision Document which listed the existing income, expenditure, and the likely projection in the event the properties were sold and the proposed use for which the funds received from such transaction were to be utilized.4. As was required of it, the trust applied under Section 14 of  theto the Registrar of Public Trusts for previous sanction for the sale of the five said properties. The application languished before the Registrar, for a while. Resultantly, the trust approached the M.P. High Court by filing a writ petition (W.P. 2903/2017) . This petition was disposed of by an order (Dated 10.07.2017) requiring the Registrar to take a decision preferably within 45 days. The trust approached the Registrar on 17.07.2017 with a request to dispose of its pending application; it filed relevant documents and a more detailed application in which it was contended inter alia that:7(c) The sale proceeds generated through the proposed sale will be invested only in scheme approved and permissible for charitable trusts. Such investment will generate sufficient income for achieving the objectives of the applicant Trust by assisting those members who are in need of medical, educational and other financial assistance.5. The trust contends that the copy of the Vision Document (which was circulated to its members and formed the basis of majority opinion confirming the sale) was also filed with the Registrar. The Registrar notified Ms. Pervin Rumi Jehangir, the second respondent (hereafter referred to as Ms. Jehangir), asking her to respond to the trusts application seeking previous sanction - apparently in view of her previous objection to the proposal. Accordingly, detailed objections were filed by Ms. Jehangir which was provided to the trust. The trust in turn filed its written submissions. It was pointed out that the details of the status of the properties proposed to be sold were given - most of them were in a dilapidated condition or required extensive repairs. The trust also pointed out that the properties would be sold after due and proper valuation and would be under the supervision of the Court. It was furthermore urged by the trust that the tenants occupying the premises were paying nominal rent and that its expenditure had increased to26 lakhs per annum. Its income was not adequate to meet the continuously mounting expenditure.6. The Registrar, by her order dated 10.11.2017, rejected the trusts application for previous sanction under Section 14(1), and noticed that the trust had previously sold other properties. The Registrar reasoned as follows:……if property is continued to be sold for meeting expenses of the Trust, then the entire property would be exhaustive in that condition. No such plan has been submitted on behalf of the Trust from the Trust property remains secured and expenses of the Trust are also met. Information has also been given by the Trust that Trust expenses are about Rs.26 lacs per annum. In my opinion, it is necessary and proper to take expert opinion as to what measures can be taken to limit the expenses of the Trust and augment income of the Trust. For this purpose, services of some chartered accountant may also be taken. Trust property has become dilapidated. In this regard, no solid evidence has been produced either. For maintenance and security of the property also, it is necessary to take appropriate measures.Trust properties are located at extremely important places of Mhow Town which have lot of value. It is necessary to take measures for safety of the property while properly running activities of the Trust. In my opinion, there would be adverse effect from permission to sell the property on interest of the Trust, Therefore, the application for sale of property by the Trust is rejected after consideration……..7. The trust approached the Indore Bench of the M.P. High Court alleging that the rejection of its application for previous sanction was unjustified. It contended that the sale was mooted to augment its income and that it was preceded by a proper Vision Document which outlined the income likely to be garnered by the sale and the expenditure to be borne by the trust. The trust highlighted that the Vision Document clearly showed that the interest accruing from the investment (made with the expected proceeds of the sale) would be used for the purpose of charity and the expenses of the trust. A copy of the Vision Document was also filed along with the writ petition.8. Ms. Jehangir was arrayed as the second respondent; she resisted the trusts petition. The learned Single Judge of the High Court, by his order (Dated 18.07.2018 in W.P. 23231/2017) noticed the judgment of this Court reported as Cyrus Rustom Patel v. Charity Commissioner (2018) 14 SCC 761   and upheld the Registrars order rejecting the application under Section 14. The learned Single Judge reasoned that the record disclosed that the property sought to be sold were all old and that they had been donated by the members of the Parsi community. The learned Single Judge observed that:in all fairness, the Trust should have made all possible endeavor to repair the buildings which are Trust properties and to ensure that the rich cultural heritage of the Parsis which is still alive in the township of Mhow, is not destroyed by selling it to builders and to other persons at throwaway price and therefore, this Court is of the considered opinion that the Registrar, Public Trust was certainly justified in rejecting the application filed by the Trust. No case for interference is made out in the matter. The present Writ Petition is dismissed.The trust appealed, unavailingly, to the Division Bench.

Court's reasoning:
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.