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SUPREME COURT OF INDIA
S. NATARAJAN AND KULDIP SINGH, JJ.
R. Venugopala Naidu and others, Appellants
Versus
Venkatarayulu Naidu Charities and others, Respondents
Civil Appeal No. 3577 of 1989, D/-26-10-1989.
Advocates appeared :
Mr. S. Padmanabhan Sr. Advocate, M/s. Mr. T.A. Subramaniyam, Mr. R.N. Keshwani, and Mr. S. Balakrishnan, Advocates with him, for Appellants; Mr. G. Ramaswamy, Addl. Solicitor General, Mr. K. Swami, M/s. S. Srinivasan, Mr. Rajappa, Mr. S. Murlidhar, Mr. Diwan Balak Ram, and Mr. M.K.D. Namboodari, Advocates with him, for Respondents.
- as observed in the case of R. Venugopala Naidu v. Venkatarayulu Naidu Charities, AIR 1990 SC 444, it is not necessary to go in to the finding of the High Court that two of the appellants being muslims can have no interest in the Trust as the other two appellants claim to be the beneficiaries of the Trust and their claim has not been negative. Moreover, the Trust has been constituted to perform not only charities of a religious nature but also charities of a secular nature such as providing for drinking water and food for the general public without reference to caste or religion.
- as held in the case of R. Venugopala Naidu v. Venkatarayulu Naidu Charities, AIR 1990 SC 444, the properties of religious and charitable endowment or institutions must be judiciously protected because large segment of the community has beneficial interest therein. Sale by private negotiations which is not visible to public eye and may even give rise to public suspicion should not, therefore be permitted unless there are special reasons to justify the same. In the case of Chenchu Ram Reddy v. Govt. of Andhra Pradesh, AIR 1986 SC 1158 = (1986) 3 SCC 391, it has been held that care must be taken to fix the reserve price after ascertaining the market value for safeguarding the interest of the endowment. Hence the order permitting the sale was set-aside, with the direction that it will be open to the respondents/purchasers to participate in the auction and compete with others for purchasing the properties.
- the legal position which emerges is that a suit under Section 92 of the Code is a suit of a special nature for the protection of public rights in the Public Trusts and Charities. The suit is fundamentally on behalf of the entire body of persons who are interested in the trust. It is for the vindication of public rights, as in the case of R. Venugopala Naidu v. Venkatarayulu Naidu Charities, AIR 1990 SC 444. The beneficiaries of the Trust, which may consist of public at large, may choose two or more persons amongst themselves for the purpose of filing a suit under Section 92 of the Code and the suit title in that event would show only, their names as plaintiff. Can we say that the persons whose names are on the suit title are the only parties to the suit? The answer would be the negative. The named plaintiffs being the representatives of the public at large which is interested in the trust all such interested persons would be considered in the eyes of law to be parties to the suit. A suit under Section 92 of the Code is thus a representative suit and as such binds not only the parties named in the suit title but all those who are interested in the trust. It is for that reason that explanation VI to Section 11 of the Code constructively bars by res judicata the entire body of interested persons from agitating the matters directly and substantially in issue in an earlier suit under Section 92 of the Code. A suit whether under Section 92 or under Order 1 Rule 8 of CPC is by representatives of large number of persons who have a common interest. The very nature of representative suit makes all those who have common interest in the suit as parties. Held that the subordinate Court and the High Court were in error in holding that the appellants had no locus standi to file the application for setting aside the orders permitting the sale of the properties.
Certainly. Based on the provided legal document, here are the key points summarized:
The case involves a public trust which has both religious and secular charitable objectives, including providing water and food to the public without regard to caste or religion (!) (!) .
The trust's properties were sold through private negotiations without public notice or auction, which was challenged by interested parties who argued that such sales should be conducted via public auction to protect community interests (!) (!) .
The individuals who filed the application to set aside the sale were initially dismissed on the grounds of lack of locus standi, as they were not parties to the original suit. However, the court later clarified that in suits under Section 92, which are representative in nature, all interested persons are considered parties, and the suit binds the entire body of interested persons, not just the named plaintiffs (!) (!) (!) (!) .
The legal position emphasizes that a suit under Section 92 of the Civil Procedure Code is a special, representative suit aimed at protecting public rights in trusts and charities. Such suits are brought on behalf of the entire interested community, and the decree in such suits is binding on all interested persons, whether or not they are individually parties to the suit (!) (!) (!) .
Interested persons who are not parties to the suit can still have their rights protected and can raise objections, especially when the trust's properties are involved, and such objections are valid even if they were not originally part of the suit (!) (!) .
The court observed that the sale of trust properties at prices significantly below market value, without public bidding and proper valuation, jeopardizes the interests of the trust and the community. Therefore, the sale was set aside, and the properties were ordered to be sold by public auction with wide publicity, ensuring transparency and fair market value (!) (!) (!) (!) .
The auction process was to be conducted with a minimum bid set at a court-offered offer, and interested parties, including the respondents, were allowed to participate and bid competitively (!) (!) .
The court also directed that any amounts paid by the respondents for the properties should be refunded with interest, and that compensation for any structures or improvements made by the respondents should be determined based on expert valuation, ensuring protection of the trust's assets and interests (!) (!) .
The appeal was allowed, and previous orders permitting private sale were overturned to uphold the principles of transparency, community interest, and proper management of charitable properties (!) .
Overall, the case underscores the importance of safeguarding public and community interests in trusts and charities, emphasizing transparency in transactions, and recognizing the rights of interested persons to participate in proceedings concerning the management and sale of trust properties.
JUDGMENT
HINDU RELIGIOUS TRUST—WHETHER MUSLIM PERSONS CAN CLAIM TO BE INTERESTED—OBJECT OF TRUST BOTH OF SECULAR AND RELIGIOUS NATURE - RELIGIOUS AND CHARITABLE ENDOWMENTS—Sale OF ITS PROPERTIES SHOULD NOT BE PERMITTED BY COURT TO BE BY PRIVATE NEGOTIATIONS—SALE BY PUBLIC AUCTION - REPRESENTATIVE SUIT—PROTECTION OF PUBLIC RIGHTS IN PUBLIC TRUSTS AND CHARITIES - LOCUS STANDI OF PERSONS TO RAISE OBJECTION ALTHOUGH NOT PARTIES TO THE SUIT
- as observed in the case of R. Venugopala Naidu v. Venkatarayulu Naidu Charities, AIR 1990 SC 444, it is not necessary to go in to the finding of the High Court that two of the appellants being muslims can have no interest in the Trust as the other two appellants claim to be the beneficiaries of the Trust and their claim has not been negative. Moreover, the Trust has been constituted to perform not only charities of a religious nature but also charities of a secular nature such as providing for drinking water and food for the general public without reference to caste or religion.
- as held in the case of R. Venugopala Naidu v. Venkatarayulu Naidu Charities, AIR 1990 SC 444, the properties of religious and charitable endowment or institutions must be judiciously protected because large segment of the community has beneficial interest therein. Sale by private negotiations which is not visible to public eye and may even give rise to public suspicion should not, therefore be permitted unless there are special reasons to justify the same. In the case of Chenchu Ram Reddy v. Govt. of Andhra Pradesh, AIR 1986 SC 1158 = (1986) 3 SCC 391, it has been held that care must be taken to fix the reserve price after ascertaining the market value for safeguarding the interest of the endowment. Hence the order permitting the sale was set-aside, with the direction that it will be open to the respondents/purchasers to participate in the auction and compete with others for purchasing the properties.
- the legal position which emerges is that a suit under Section 92 of the Code is a suit of a special nature for the protection of public rights in the Public Trusts and Charities. The suit is fundamentally on behalf of the entire body of persons who are interested in the trust. It is for the vindication of public rights, as in the case of R. Venugopala Naidu v. Venkatarayulu Naidu Charities, AIR 1990 SC 444. The beneficiaries of the Trust, which may consist of public at large, may choose two or more persons amongst themselves for the purpose of filing a suit under Section 92 of the Code and the suit title in that event would show only, their names as plaintiff. Can we say that the persons whose names are on the suit title are the only parties to the suit? The answer would be the negative. The named plaintiffs being the representatives of the public at large which is interested in the trust all such interested persons would be considered in the eyes of law to be parties to the suit. A suit under Section 92 of the Code is thus a representative suit and as such binds not only the parties named in the suit title but all those who are interested in the trust. It is for that reason that explanation VI to Section 11 of the Code constructively bars by res judicata the entire body of interested persons from agitating the matters directly and substantially in issue in an earlier suit under Section 92 of the Code. A suit whether under Section 92 or under Order 1 Rule 8 of CPC is by representatives of large number of persons who have a common interest. The very nature of representative suit makes all those who have common interest in the suit as parties. Held that the subordinate Court and the High Court were in error in holding that the appellants had no locus standi to file the application for setting aside the orders permitting the sale of the properties.
KULDIP SINGH, J.:- Venkatarayulu Naidu Charities is a public trust.- V. P. Venkatakrishna Naidu and V. P. Rajagopala Naidu, filed an original suit No. 28 of 1909 (hereinafter call
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