Allahabad High Court Sets Aside Waqf Tribunal Order, Holds Beneficiaries are Necessary Parties in De-listing Cases

Lucknow: The Allahabad High Court, in a significant ruling under Section 83(9) of the Waqf Act, 1995, has set aside an order passed by the Uttar Pradesh Waqf Tribunal that had resulted in the de-listing of several properties from the register of Waqf Faridi (Waqf No. 42-A, Lucknow). The Court emphasized the fundamental principle that beneficiaries are necessary parties in proceedings before the Waqf Tribunal, particularly when the status of Waqf property is in question.

The judgment, rendered by Hon'ble Justice JaspreetSingh , underscored that the absence of beneficiaries in the Tribunal proceedings, coupled with allegations of non-disclosure and potential fraud by the then mutawalli, vitiated the impugned order dated July 4, 2018.

Background of the Dispute

The case revolves around Waqf Faridi, a 'Waqf-Alal-Nafs and Alal-Aulad' (a private Waqf for the benefit of the settlor's descendants) created by a Waqf deed dated November 9, 1945, by Dr. Mohd. Abdul Jalil Faridi and his brother Lt. Mohd. Rafey Faridi. Initially, two properties were dedicated to the Waqf. Clause 6 of the deed stipulated that if a Waqf property was sold, the proceeds must be used to purchase new property, which would also be dedicated to the Waqf.

In 1960, the first mutawalli, Dr. Mohd. Abdul Jalil Faridi , sold a part of the original Waqf property. Using the proceeds, he purchased two new properties in 1961: Plot No. 3 at 23/B Ashok Marg and Plot No. 3/1 Mohalla-Karbala, Alamgir (Ram Teerth Marg), Lucknow. These properties were seemingly treated as Waqf properties thereafter.

Upon the death of the first mutawalli, his son, Mohd. Abdul Jalil Faridi (the subsequent mutawalli), initially sought to incorporate these newly acquired properties into the Waqf register. However, later, he sought permission to de-list these two properties from the Waqf register, claiming they were leasehold and thus could not be permanently dedicated. His application to the Waqf Board was rejected, but he then approached the Waqf Tribunal (Case No. 37 of 2018).

Before the Tribunal, Mohd. Abdul Jalil Faridi impleaded only the Waqf Board. The Tribunal, relying on precedents concerning leasehold properties, allowed his petition and ordered the de-listing of the two properties. Shortly after this order, Mohd. Abdul Jalil Faridi got the leasehold rights converted to freehold and executed a will bequeathing these properties to his daughters, also appointing one of them as the new mutawalli for the remaining original Waqf property. After his death, his daughters transferred one of the de-listed properties to a third party, M/s Syks Infratech Pvt. Ltd.

Aggrieved by the Waqf Tribunal's order, the sisters of the late mutawalli (daughters of the original mutawalli) filed a revision petition before the High Court, claiming to be direct beneficiaries of the Waqf and necessary parties who were deliberately excluded from the Tribunal proceedings.

Arguments Presented

The revisionists argued that the Waqf Tribunal proceedings were collusive and aimed at facilitating the fraudulent transfer of Waqf property. They contended that as beneficiaries, they had a direct interest and should have been impleaded. They submitted documents showing the late mutawalli himself had previously treated the properties as Waqf. They asserted that under Clause 6 of the Waqf deed, properties acquired from the sale proceeds of original Waqf property were also Waqf properties, irrespective of their initial leasehold nature, especially after conversion to freehold. They also questioned the applicability of precedents cited by the Tribunal and the validity of the property transfers, including the third-party sale, arguing that fraud vitiates everything.

The respondents (including the daughters of the late mutawalli and the third-party purchaser) challenged the maintainability of the revision, arguing the revisionists were not parties before the Tribunal and were raising disputed questions of fact. They reiterated the Tribunal's finding that leasehold properties could not be permanently dedicated as Waqf, citing High Court judgments in Mst. Peeran v. Hafiz Mohammad Ishaq and Abhishek Shukla v. High Court of Judicature , which was affirmed by the Supreme Court. They argued that upon expiry of the lease, the Waqf's interest ceased. The third-party purchaser claimed to be a bona fide buyer for valuable consideration, protected by law.

The Waqf Board adopted the submissions of the private respondents.

Court's Analysis on Necessary Parties and Fraud

Justice Singh meticulously analyzed the concept of necessary and proper parties under Order 1 Rule 10 CPC, citing Supreme Court judgments in Ramesh Hirachand Kundanmal , Mumbai International Airport , and Baluram v. P.Chellathangam . The Court held that in a dispute before the Waqf Tribunal initiated by the mutawalli to de-list properties, the direct beneficiaries, whose rights and interests are directly affected by the change in the character and composition of the Waqf property, are both necessary and proper parties.

"Applying the principles as culled out from the aforesaid decisions, it would be clear that in so far as the present dispute is concerned, where a mutawalli was seeking the permission to de-list certain properties from the register of Waqf then in such a case, at least those parties who, in the knowledge of the mutawalli, were the direct beneficiaries and would be affected ought to have been impleaded in the proceedings before the Tribunal."

The Court noted that the late mutawalli, being a beneficiary himself in a Waqf-Al-Aulad, was well aware that his sisters were also direct beneficiaries. Their exclusion from the Tribunal proceedings deprived them of an opportunity to present their case and relevant documents, which the High Court noted could potentially reveal a "scheming" attempt by the mutawalli to transfer Waqf properties for personal benefit.

The Court also took serious note of the allegations of fraud, non-disclosure, and suppression of material facts, citing numerous Supreme Court judgments including S.P. Chengalvaraya Naidu , Indian Bank v. Satyam Fibres , and A.V. Papayya Sastry . The Court observed that the documents filed by the revisionists, although not before the Tribunal, indicated potential fraudulent activities and selective disclosure by the late mutawalli.

"Apparently, had the revisionist been impleaded and were granted an opportunity to contest and the aforesaid documents would have been placed on record of the Tribunal then at least its impact could have been noticed and assessed by the Tribunal... this Court finds that in absence of the revisionist who were not impleaded and they could not raise their defence nor could produce the relevant documents before the Waqf Tribunal, hence, they have been deprived of an opportunity to contest as they were both necessary and proper parties."

Issues for Re-adjudication

The High Court identified eight critical issues requiring proper adjudication by the Tribunal after impleading the revisionists: 1. Whether the subsequently purchased properties were Waqf properties in terms of Clause 6 of the 1945 deed. 2. Whether a leasehold property could be Waqf property and if the Waqf was extinguished upon lease expiry. 3. The effect of the mutawalli's conduct in initially treating the properties as Waqf and later acting adversely. 4. The rights accruing to the third-party purchaser (M/s Syks Infratech Pvt. Ltd.) after the de-listing order and subsequent transfers. 5. Whether the third-party purchaser was bona fide and if their rights are protected (e.g., under Section 44 of the Transfer of Property Act). 6. The applicability of the Transfer of Property Act versus the Government Grants Act, 1885. 7. Whether the late mutawalli could bequeath Waqf properties by will and appoint a mutawalli to the exclusion of his sisters under their personal law. 8. The impact and correct application of the judgments in Mst. Peeran and Abhishek Shukla .

High Court's Decision

Finding that the revisionists were necessary and proper parties who were denied an opportunity to contest, the High Court allowed the revision. The impugned order of the Waqf Tribunal dated July 4, 2018, was set aside, and Waqf Case No. 37 of 2018 was restored to the Tribunal.

The Court directed the parties to appear before the Tribunal on July 1, 2024. The revisionists were granted the right to move a formal application for impleadment, which the Tribunal must allow. They will be permitted to file written statements and documents and lead evidence on the issues arising from the pleadings, including those identified by the High Court.

The Waqf Tribunal is directed to hear the matter afresh without unnecessary adjournments and pass a reasoned and speaking order after affording full opportunity to all parties. The High Court explicitly stated that its observations should not be construed as an opinion on the merits of the case, leaving all issues open for the Tribunal to decide after a comprehensive rehearing.

The decision underscores the importance of procedural fairness and the rights of beneficiaries in Waqf disputes that affect the very corpus of the dedicated property.

Case Details: * Court: Allahabad High Court * Bench: Hon'ble JaspreetSingh , J. * Case Type: Revision under Section 83(9) of the Waqf Act, 1995 * Relevant Legal Provisions: Section 83(9) of the Waqf Act, 1995; Order 1 Rule 10 CPC; Principles of fraud and necessary parties. * Status: Revision Allowed, Tribunal Order Set Aside, Case Remanded.