IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
WRIT PETITION NO. 6743 OF 2007
The Central Hindu Military Social
Education Society, A Society duly
registered under the Societies
Registration Act & also under the
Public Trust Act, 1950, having
office at Rambhoomi, Bhosla
Militiary School Compound,
Anandvalli, Nashik, through its
Secretary- Shri Divakar K.
Kulkarni. ... Petitioner.
Vs.
1. The Joint Charity Commissioner
Nashik Region, Nashik.
2. The Chairman/Manager, Janlaxmi
Co-operative Bank Ltd.
Sammruddhi Gadkari Chowk, Agra
Road, Nashik. ... Respondents.
P.N.Joshi for the petitioner.
S.D.Rayrikar, A.G.P. for respondent No.1.
A.S.Desai for the Respondent No.2.
Umesh Mankapure, Amicus Curiae is present.
WITH
WRIT PETITION NO. 5861 OF 2008.
2008
Maharashtra Rashtrabhasha Sabha,
Rashtrabhasha Bhavan, 387, Narayan
Peth, Pune Through it's authorised
Representative Satish Sampathlal
Surana, Age 45 years, Occupation
Service, R/o 24, Nutan Housing
Society, Nutan Colony, Aurangabad. ... Petitioner
Vs.
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1. The State of Maharashtra,
Through:Charity Commissioner,
Maharashtra State, Mumbai.
2. The Joint Charity Commi-
ssioner, Pune Region,Pune.
3. Shantaram Ramchandra Patil, Age
65 years, Occ: Retired, R/o
1327/A, Sadashiv Peth, Pune-30.
... Respondents.
P.B.Shirsath with V.N.Tayade
for the Petitioner.
V.A.Sonpal, A.G.P. for Respondent Nos
N.P.Deshpande for Respondent No.3.
ig CORAM : V.C.DAGA, J.
DATED : 22nd October 2008.
JUDGMENT :
——–
. Rule in both petitions returnable forthwith.
Heard finally by consent of the parties.
2. These petitions, filed under Article 227 of
the Constitution of India, are directed against the
orders passed by the Joint Charity Commissioner,
Nashik and Pune rejecting applications filed under
section 36(1)(a) of the Bombay Public Trust Act, 1950
(‘B.P.T.Act’ for short). In both petitions parties
are different but the legal contentions raised are
common based on more or less similar basic facts, so
this common judgment shall dispose of both
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these petitions.
Facts in W.P.No.6743/2007 :
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3. The petitioner- Central Hindu Military Social
Education Society is a Trust duly registered under the
provisions of the B.P.T.Act owning properties one of
which bearing Plot No.11, Survey Nos. 710, 711, 714,
Hissa No.12, admeasuring 517.50 sq.mtrs. situate
within the limits of the Nashik Municipal Corporation,
Nashik (“said property” for short).
4. The
ig petitioner trust is running a Bhosala
Military School and other allied institutions. The
petitioner trust finding it difficult to develop the
said property for want of financial resources, adopted
a resolution in its General Body Meeting held on 30th
November, 1997 to enter into an agreement of
development with one Janlaxmi Co-operative Bank Ltd.,
(“Bank” for short). Accordingly, the petitioner-
Trust executed development agreement in favour of the
said Bank and handed over possession of the said
property in the year 1977 itself and got it developed.
5. The petitioner- Trust faced legal problems in
executing the registered documents in favour of the
Bank so as to transfer part of the interest in the
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said property in favour of the Bank for want of
permission of the Charity Commissioner under section
36(1)(a) of the B.P.T. Act. Consequently, the
petitioner- Trust moved an application before the
Joint Charity Commissioner, Nashik some time in the
month of July, 1999, to seek permission under section
36(1)(a) of the B.P.T. Act so as to transfer part of
the property in favour of the Bank in terms of the
development agreement.
6. The Charity Commissioner after hearing parties
to the
application, by a reasoned order, refused to
grant post facto sanction finding that no tenders were
invited by the Trust before sealing the agreement and
handing over possession of the subject property in
favour of the Bank and that as per clause (iv) of the
development agreement dated 30th September, 1998, the
obligation to obtain permission from the Charity
Commissioner under B.P.T. Act was thrown on the Bank,
especially, when the trustees were supposed to have
obtained such sanction. This order is under challenge
in this petition at the instance of the petitioner in
W.P.No.6743/2007.
Facts in W.P.No.5861/2008 :
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7. In this petition also, petitioner is a public
trust registered under the provisions of the B.P.T.
Act established and controlled by the Central
Government for promotion of Hindi language owning a
property bearing Survey No.44, Sheet No. 73
admeasuring 1077 sq. meters situated at Aurangabad.
8. The said trustees considering prime location
of the Trust property resolved to develop the said
property and assigned the rights of development in
favour of one “M/s. Yogiraj Builders” in the year
1977.
9. The petitioners claim to have moved an
application under section 36 of the B.P.T. Act
sometime in the year 1977. However, according to the
office of the Charity Commissioner, no such
application was filed by the Trust. No evidence was
produced on record to show that such an application
was moved at any time muchless on 23rd October, 1997.
The present proceedings under section 36 (1)(a) of the
B.P.T. Act were initiated by filing an application
dated dated 9th August, 2001.
10. According to the petitioners, the tenders were
floated in the local newspapers on 13th February,
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1998. In response thereto, four persons submitted
their tenders on 25th February, 1998. According to
the petitioners, one M/s.Yogiraj Builders offered to
give highest percentage of constructed portion in the
building to the Trust to be constructed on the subject
plot of the Trust within a period of 20 months from
the date of development agreement.
11. The agreement for development was executed on
16th March, 1998. The total built up area was 2,154
sq.meters. Out of this 1,217 sq.mtrs. area was
agreed
to be given to the Trust. As against this, 17
shops in the basement plus 17 shops on the ground
floor were to be retained by the builder and developer
on lease for a period of 99 years. The Trust was to
execute lease deed in favour of the builder and
developer.
12. The application dated 9th August, 2001 moved
under section 36 (1)(a) was treated as application for
ex post facto sanction by the Charity Commissioner.
The said application, after hearing the trustees, was
rejected by the Charity Commissioner for want of power
to grant ex post facto sanction to the arrangement
arrived at between the trust and the developer.
Consequently, application came to be rejected.
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Submissions :
———–
13. Mr.P.N.Joshi, learned counsel appearing for
the petitioner in W.P.No.6743/2007 raised solitary
contention that the Joint Charity Commissioner was not
precluded from considering the grant of ex post facto
approval or sanction to the development agreement. He
thus, submits that matter be remitted back to the
Joint Charity Commissioner for consideration afresh.
14.
Mr.Shirsath, learned counsel appearing for the
petitioners in W.P.No.5861/2008 urged that the Joint
Charity Commissioner without ascertaining the fact of
filing earlier two applications dated 23rd October,
1997 and 24th October, 1998 filed by the petitioners
erroneously held that no such applications were
received by its office.
15. He further submits that the impugned order
dated 16th May, 2008 is passed without hearing the
Advocate for the petitioner as such impugned order is
in breach of the principles of natural justice.
16. According to Mr.Shirsath, the agreement for
development is not within the sweep of section 36 of
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the B.P.T.Act, 1950. The lease is to be created after
the terms of development agreement are fulfilled.
Therefore, it was well within the rights of the
trustees to apply for sanction before execution of the
long term agreement of lease.
17. In the submission of the learned counsel, the
Charity Commissioner while granting sanction under
section 36 is required to bear in mind the interest,
benefit and protection of the trust. He has power to
refuse
permission for sale of the trust property on
the ground of inadequacy of consideration and he may
reject the agreement on that ground. The Joint
Charity Commissioner has committed error in relying
upon the Division Bench judgment of this Court in the
case of Madhukar Sundarlal Seth v. S.K.Laul, 1993
Mh.L.J. 1107. According to him, power under section
36 of the B.P.T.Act, which vests with the Charity
Commissioner, is very limited. He has to consider
genuine need to sell immovable property of the Trust.
Secondly, he has also to consider whether or not the
said property is being sold in the interest of Trust
and its beneficiaries. He cannot substitute his own
ideas and views vis-a-vis functioning of trust as held
by the Division Bench of this Court in Suburban
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Education Society v. Charity Commissioner of
Maharashtra State, 2004 (2) All.M.R. 575.
18. According to the learned counsel, in the
present case, the learned Joint Charity Commissioner
has erroneously held that the construction will be
unauthorised and the same will not come in the aid of
Trust or the builder to regularise the transaction
without any sound reason. In his submission, various
reasons mentioned by the Trust for developing its
property have not been considered by the learned Joint
Charity Commissioner.
19. Mr.Shirsath submits that if the Trust has
taken a decision that the Trust wants to dispose of
the property to fulfil its objects, then it is not
within the jurisdiction of the Charity Commissioner to
go behind this decision in exercise of powers under
section 36 of the B.P.T. Act. Reliance is placed on
the judgment of this Court in the case of Bara Imam
Masjid Trust v. Charity Commissioner, Maharashtra
State, 2006 (1) Mh.L.J. 809. In his submission, the
power conferred on the Charity Commissioner under
section 36(1) is to ascertain whether or not the
property is being sold in the interest of the Trust
and that at the best available price.
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20. It is further submitted that the since the
petitioner Trust had no finance to construct and
develop the old building, it had no option but to
invite tenders and enter into an agreement of
development with M/s.Yogiraj Builders as it had
offered to give maximum constructed area to the Trust
as compared to other offerers. The learned Joint
Charity Commissioner failed to take into consideration
the legal and factual aspects and thereby erred in
rejecting the application.
21. He further submits that the Trust has entered
into an agreement for development of its plot with the
builder and, immediately, applied for sanction as
contemplated under section 36 of the B.P.T. Act to
the Joint Charity Commissioner. No ex post facto
sanction was asked for by the petitioners because the
lease was to be created only after the terms of
agreement for development are fulfilled as per
condition No.4 in the agreement. Reliance is placed
on the judgment of the division bench of this Court in
the case of A.R.Khan Construwell & Co. v. Youth
Education and Welfare Society, Nasik,
Nasik 2006(2) Mh.L.J.
595.
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22. Per contra, Mr.Deshpande, learned counsel
appearing for respondent No.3 urged that this is not a
fit case for entertaining petition under Article 227
of the Constitution of India. He further submits that
it is absolutely false on the part of the petitioners
to contend that they had filed application on 23rd
October, 1997 and another application on 14th October,
1997. According to him, had these applications been
filed, the petitioners would have certainly pressed
those applications rather than entering into
transactions with the builder. He further submits
that
no evidence in this behalf is produced on record
to support filing of two applications on earlier
occasions.
23. Mr.Deshpande further submits that under
section 36 of the B.P.T.Act previous sanction is
contemplated. Therefore, the Trust should not have
finalised the transaction. He submits that one cannot
finalise the deal and then approach for permission or
sanction. In his submission, the Charity Commissioner
by the impugned order has rightly held that
application is not maintainable. He further submits
that the petitioners had engaged as many as three
advocates. All of them chose to remain absent when
the matter was heard by the Joint Charity
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Commissioner. If that be so, he submits that no
grievance in this behalf can be allowed to be made or
entertained at the instance of the petitioners.
24. Mr.Deshpande further submits that the trustees
of the Trust have executed an agreement to purchase
built-up area of 1,197 sq.ft. in the same building
for Rs.13,00,000/-. The amount has been paid.
According to him, the builder has earned profit
running into crores, as against which the Trust has
suffered loss of about Rs.64,00,000/-. He, thus,
prayed for dismissal of the petition.
Consideration :
————-
25. At the outset, having seen the pleadings in
the petition being Writ Petition No.6743/2007 and the
prayers made, the facts of the case do not justify
invocation of Article 226 of the Constitution of
India. Hence petition as filed under Article 226 is
liable to be rejected. Order accordingly.
26. Let me first consider the submission of
Mr.Shirsath (in W.P.No.5861/2008) that the application
moved by the Trust under section 36(1) of the B.P.T.
Act was not for post facto sanction. The submission
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made is misplaced. In this case, property has already
been developed. Construction is complete in toto.
Funds are spent by the developer. Third party rights
are already created. Now, no other person can
compete. The fate of the property is already sealed.
Under these circumstances, by no stretch of
imagination it can be said to be an application for
prior sanction. The condition to execute lease deed
is a part of composite transaction. It is one of the
conditions of the development agreement.
27.
Now, let me examine, the submission made as to
whether or not an application for post facto sanction
can be considered on the text of section 36(1) of
B.P.T. Act. The relevant part of the section 36
reads as under :
S.36 (1) : Notwithstanding anything contained
in the instrument of trust —
(a) no sale, exchange or gift of any
immovable property; and
(b) no lease for a period exceeding ten
years in the case of agricultural land or for
a period exceeding three years in the case of
non-agricultural land or building; belongingto a public trust shall be valid without the
previous sanction of the Charity Commissioner.
Sanction may be accorded subject to such
conditions as the Charity Commissioner may
think fit to impose, regard being had to the
interest, benefit or protection of the trust;
(c) If the Charity Commissioner is
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satisfied that in the interest of any public
trust any immovable property thereof should be
disposed of, he may, on application, authorise
any trustee to dispose of such property
subject to such conditions as he may think fitto impose, regard being had to the interest or
benefit protection of the trust.” (Emphasis
supplied)
28. The question posed is no more res integra in
view of earlier judgements of this Court on the issue.
29. In the case of Chandrabhan Chunnilal Gour v.
Shravan Kumar Khunnolal Gour,
Gour 1980 Mh.L.J. 690; the
learned single Judge has held as under :
“The use of the word “previous” before the
word “sanction” in section 36(1), Bombay
Public Trusts Act clearly means that sanction
contemplated by subsection (1) has to be
obtained before the transaction is completed
and not thereafter. Ex-post -facto sanctioncannot validate the transaction. The second
sentence added by the Amending Act of 1971merely authorises the Charity Commissioner to
impose conditions as he may think fit while
granting sanction. Once having said that
sanction has to be previous, it was not
necessary to repeat the same word again whileempowering the Charity Commissioner to impose
conditions. Hence, merely because the word
“sanction” in the second sentence is not
preceded by word “previous” it cannot be said
that Legislature had empowered the Charity
Commissioner to accord sanction after thetransaction. Clause (g) of section 69 refers
to sanction under section 36 and cannot be
taken to enlarge the scope of section 36. It
the Charity Commissioner has to exercise power
under section 69, he can exercise it only in
the manner provided in section 36(1). Hence,
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Commissioner to accord sanction after the
transaction and validate it by the so called
ex-post-facto sanction. Section 36(1) is not
merely procedural or technical. Section 41-E
cannot be said to empower the Charity
Commissioner to grant an ex-post -facto
sanction.” (Emphasis supplied)
The above judgment is approved by the Division Bench
of this court in the case of Charity Commissioner v.
Shantidevi L. Chhaganlal Foundation Trust,
Trust 1989
Mh.L.J. 1048 in the following words :
"16. In Chandrabhan vs. Shrawan Kumar
(supra), a single Judge of this Court held
that sanction contemplated by section 36(1)
has to be obtained from the Charity
Commissioner before the transaction is
completed and there is no power in the Charity
Commissioner to accord sanction after the
transaction is completed and validate it by ex
post facto sanction.” ……
30. Reading of the aforesaid sub-section
unequivocally goes to show the permission contemplated
under section 36(1) is a prior “permission” and not
subsequent “permission or sanction”.
31. The Supreme Court in para-63 of its judgment
in the case of Life Insurance Corporation of India v.
Escorts Ltd., & Ors.,
Ors. (1986) 1 SCC 264, observed as
under:
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“63. …………. We find, on a perusal of
the several, different sections of the very
Act, that the Parliament has not been
unmindful of the need to clearly express its
intention by using the expression “previous
permission” whenever it was thought that
“previous permission” was necessary. In
Sections 27(1) and 30, we find that the
expression ‘permission’ is qualified by the
word ‘previous’ and in Sections 8 (1), 8(2)
and 31, the expression ‘general or special
permission’ is qualified by the word
“previous”, whereas in Sections 13(2), 19(1),
19(4), 20, 21(3), 24, 25, 28(1) and 29 the
expressions ‘permission’ and ‘general or
special permission’ remain unqualified. The
distinction made by Parliament between
permission simpliciter and previous permission
in the several provisions of the same Act
cannot be ignored or strained to be explained
away by us. That is not the way to interpret
statutes. …………..”
In the above view of the matter, submission made by
Mr.Shirsath holds no water.
Absence of transparency :
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32. So far as absence of a transparency leading to
absence of public invitation of tenders is concerned,
this Court as well as the Apex Court have repeatedly
held that the sale of socialist/ public property must
be transparent.
33. In a case of Ram and Shyam Company v. State
of Haryana,
Haryana AIR 1985 SC 1147; the Apex Court tried to
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make distinction between two types of properties and
disposal thereof, i.e. the use and disposal of the
private property and socialist property; and went on
to observe that owner of private property may deal
with it in any manner he likes without causing injury
to any one else. But the socialist property has to be
dealt with in a public interest. The marked
difference lies in this is that while the owner of
private property may have a number of considerations
which may permit him to dispose of his property a
song. On the other hand, disposal of trust property
partakes
the character of a Trust in its disposal and
there should be nothing hanky and panky and it must be
done at the best price so that larger revenue coming
into the coffers of the State.
34. While taking the above view, the Apex Court
relied upon various judgments including that of Ramana
Dayaram Shetty v. The International Airport Authority
of India,
India (1979) 3 SCR 1014 = AIR 1979 SC 1628;
wherein the property of the public sector undertaking
was involved. It is, thus, clear that the socialist
property or the property held in Trust is treated at
par with the public property or government property
for the purposes of sale or transfer. If that be so,
the same consideration would hold good for disposal of
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the properties of the public Trust.
35. The only question that arises in this case for
consideration is: whether on the facts found, the
petitioner Trust was justified in agreeing to transfer
property held by it in favour of the developer or Bank
by a private negotiation without inviting public
offers.
36. It is needless to mention that while
developing the property held in Trust by public
charitable
trust, the Trust is expected to make all
attempts to obtain best available price while
disposing of the public property or the property held
in trust. This principles may be taken as well
established by now.
37. In Fertilizer Corporation Kamagar Union v.
Union of India,
India AIR 1981 SC 344 (at p. 350) the Apex
Court speaking through Chandrachud, C.J., observed :
“We want to make it clear that we do not doubt
the bona fides of the authorities, but as far
as possible, sales of public property, whenthe intention is to get the best price, ought
to take place publicly. The vendors are not
necessarily bound to accept the highest or any
other offer, but the public at least get the
satisfaction the the Government has put all
its cards on the table”.
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38. In Sachidanand Pandey v. State of West
Bengal, AIR 1987 SC 1109 (at p.1133) O.Chinnappa
Reddy, J. after considering almost all the decisions
of the Apex Court on the subject summarised the
propositions in the following terms :
“On a consideration of the relevant cases
cited at the bar the following propositions
may be taken as well established : State
owned or public owned property is not to be
dealt with at the absolute discretion of theexecutive. Certain precepts and principles
have to be observed. Public interest is the
paramount consideration. One of the methodsof securing the public INTELSAT when it is
considered necessary to dispose of a property
is to sell the property by public auction or
by inviting tenders. Though that is theordinary rule, it is not an invariable rule.
There may be situations where there are
compelling reasons necessitating departure
from the rule but then the reasons for the
departure must be rational and should not be
suggestive of discrimination. Appearance ofpublic justice is as important as doing
justice. Nothing should be done which givesan appearance of bias, jobbery or nepotism”.
39. On the aforesaid touchstone, if the cases in
hand are examined, the petitioner trust, neither
invited tenders nor held public auction but chose to
hold negotiations with private party straightway. Had
they invited tenders, the possibility of the Trust
getting better offers. In both petitions,
transparency in the subject transactions is lacking.
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40. On the above canvass, both these petitions are
without any merit. In the result, both these
petitions are dismissed. Rule is discharged with no
order as to costs.
(V.C.DAGA, J.)
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