IMPORTANT POINT
Payments to advocates for defending court case amount to financial transactions.

JUDGMENT

Altamas Kabir, J. —

1.These Special Leave Petitions arise out of an order dated 11th September, 2009 passed by a learned Single Judge of the Bombay High Court in Contempt Petition No.123/09 arising out of an order passed on 9th September, 2008, in Writ Petition No.5732/08.

2.The Respondent No.1, Charu K. Mehta, is a permanent Trustee of the Lilavati Kirtilal Mehta Medical Trust. She had filed an application under Section 41D of the Bombay Public Trusts Act, 1950, against the Petitioner herein and the Respondent Nos.2 - Vijay K. Mehta, Respondent No.3 - Dr. Amritlal C. Shah, Respondent No.4 - Niket V. Mehta, and Respondent No.5 - Sushila V. Mehta in SLP(C)No.35164/09, for their removal from Trusteeship of the aforesaid Trust on the ground of malfeasance, misfeasance, misappropriation of Trust funds, breach of Trust, etc. An interim application was also filed for the removal/ suspension/dismissal of the colluding Trustees. Charges were framed against the Petitioner and the aforesaid Respondents by the Joint Charity Commissioner, Mumbai, on 3rd June, 2008, and the Trustees were restrained from taking any policy decision and from entering into any financial transaction with regard to the Trust.

3.The aforesaid Respondents Nos.2 and 3 in SLP(C)No.35164/09 challenged the said order of the Joint Charity Commissioner in Writ Petition Nos.3849 and 3850 of 2008. By common orders passed in those writ petitions on 11th July, 2008 and 15th July, 2008, the orders impugned in the writ petitions were set aside and the Joint Charity Commissioner was directed to pass fresh orders in accordance with law. Thereafter, the Joint Charity Commissioner passed an ad-interim order on 9th September, 2008, restraining the Petitioner and the Respondent Nos.2, 3, 4 and 5 herein from taking any policy decision and entering into financial transactions, without the prior approval of the Joint Administrators appointed by this Court. Aggrieved by the said ad- interim order, the Respondent Nos.2 and 3 herein filed Writ Petition No.5732/08, wherein the High Court modified the aforesaid order passed by the Joint Charity Commissioner on 9th September, 2008. The operative part of the order of the Joint Charity Commissioner was modified to the extent that the prior approval was to be taken not from the Administrators but from the Joint Charity Commissioner.

4.The Bombay High Court, therefore, confirmed the order of the Joint Charity Commissioner that the Respondents Nos.1 to 9 in the Application filed before him should not take any policy decision and should not enter into any financial transaction with regard to the Trust without the prior approval of the Joint Charity Commissioner till further orders.

5.In the Contempt Petition filed by the Respondent No.1 herein, it has been alleged that the Petitioner herein and the Respondents Nos.2, 3, 4 and 5 had withdrawn huge amounts from the Trust funds and had issued cheques in favour of solicitors and advocates appearing for them in the litigations pending before the various courts, including the proceedings before the Joint Charity Commissioner under Section 41D of the Bombay Public Trusts Act, 1950. Rejecting the defence of the Petitioner and the Respondents Nos.2, 3, 4 and 5 herein that payment of fees to advocates and solicitors did not amount to financial transactions being undertaken by the Trust and that the services of the advocates and solicitors had to be engaged to defend the interest of the Trust, the learned Single Judge observed that the question as to whether payments to advocates were financial transactions within the meaning of the order passed by the Joint Charity Commissioner, as modified by the High Court, was still at large.

6.The learned Single Judge arrived at a prima facie view that the payments made to advocates would constitute financial transactions with regard to the Trust and, therefore, prior approval of the Joint Charity Commissioner was required to be obtained before such payments were mad