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SUPREME COURT OF INDIA
A.M. KHANWILKAR, ABHAY S. OKA, C. T. RAVIKUMAR, JJ.
The Khasgi (Devi Ahilyabai Holkar Charities) Trust, Indore & Anr. – Appellant
Versus
Vipin Dhanaitkar & Ors. – Respondents
Civil Appeal No. of 2022 [@ SLP (Civil) No. 12133 of 2020] with Civil Appeal No. of 2022 [@ SLP (Civil) No. 12241-12242 of 2020]; Civil Appeal No. of 2022 [@ SLP (Civil) No. of 2022] [D. No. 22151 of 2020] and Civil Appeal No. of 2022 [@ SLP (Civil) No. 19063 of 2021]
Decided on : 21-07-2022
(1) Public Trusts Act, 1951 (M. P.) -- S. 36 (1) (a) -- exemption from registration -- six trustees -- one ruler, who is ex-officio President -- two nominees of ruler -- remaining three nominees of State Government and Central Government -- nothing in order of Government of India or in Trust Deed to indicate that Trust is administered by any agency acting under control of State Government -- even power to nominate two trustees vested in State Government and similar power vested in Central Government to nominate one trustee has to be exercised in consultation with ruler -- three trustees nominated by Government do not have majority in decision making -- State Government has no effective control over functioning of Trust -- S. 36 (1) (a) has no application -- Trust cannot claim to be covered under excepted category -- will be governed by Public Trusts Act -- is required to be registered accordingly.
[Paras 38 & 39
(2) Public Trusts Act, 1951 (M. P.) -- S. 36 -- sub-sections (1) and (2) operate in different fields -- when sub-section (1) is applicable to public trust, none of the provisions of Public Trusts Act is applicable -- sub-section (2) is an independent power of State Government. [Para 39
(3) Public Trusts Act, 1951 (M. P.) -- S. 14 -- Act itself permits trustees of public trust to alienate Trust property subject to constraints imposed by S. 14 -- Supplementary Trust Deed which enables trustees to alienate Trust property cannot be illegal -- however, alienation of Trust property can be made only in accordance with S. 14 -- by executing such document, trustees cannot overcome mandate of S. 14 -- power to alienate under Supplementary Trust Deed is subject to constraints imposed by S. 14. [Para 41
(4) Public Trust -- alienation of property -- trustees are bound to dispose of Trust property only for benefit of Trust or its beneficiaries, not as private venture -- this can be achieved only by following fair and transparent process -- process must be such that Trust property fetches best possible price -- only if alienations are made in such manner, they will be in interest of beneficiaries. (2011) 5 SCC 29 relied on. [Para 42
(5) Public Trusts Act, 1951 (M. P.) -- Ss. 14, 22, 23 and 26 -- previous sanction of Registrar for sale -- alienations made by Trustees without complying with mandatory requirement of obtaining previous sanction -- it is necessary for Registrar to exercise powers u/s. 22 to call for necessary records pertaining to alienations -- thereafter, Registrar shall exercise powers u/s. 23 to decide whether any loss was caused to Public Trust as a result of alienations and if any loss is found, he shall quantify amount -- he may also consider invoking sub-section (1) or (2) of S. 26, if found necessary. 2022 (4) JLJ 124 (SC) referred to. [Paras 48 & 49
(6) Natural Justice -- order of Collector passed without giving opportunity of hearing to trustees of public trust and purchasers -- though trustees replied to show cause notice issued by Registrar, reply was not considered by Collector -- only on this ground, said order ought to be set aside. [Para 50
(7) Public Trust -- jurisdiction -- Collector had no jurisdiction to decide issues of title as well as mismanagement of affairs of public trust -- even report of Commissioner and report of Principal Secretary are without jurisdiction. [Para 50
(8) Public Trust -- inquiry through Economic Offences Wing -- no finding that there was mens rea on part of trustees -- no finding that alienation made by trustees resulted in loss to Trust and that entire sale consideration was diverted for personal use -- entire consideration credited to account of Trust -- allegation of misappropriation can be gone into only by authorities under Public Trusts Act -- no offence registered against trustees -- hence, Economic Offences Wing cannot be directed to hold inquiry or investigation. [Para 51
(9) Constitution of India -- Art. 226/227 -- maintainability of writ petition -- only one trustee of public trust filed writ petitions -- even assuming that there was no express authority in form of resolution of Board of Trustees, even individual trustee was entitled to question orders adversely affecting Trust and/or its beneficiaries -- it is duty of every Trustee to take such action of challenging order holding that properties held by Trust are not Trust properties -- none of the trustees challenged authority of trustee who filed writ petitions -- direction was also issued to Economic Offences Wing to hold inquiry about misappropriation of Trust property by trustees -- every trustee was affected by said direction -- objection to maintainability of petition filed by one trustee cannot be sustained. [Para 52
JUDGMENT
Abhay S. Oka, J.
Permission to file Special Leave Petition is granted. Leave anted.
FACTUAL MATRIX
2. These appeals take exception to the common judgment and order dated 5th October 2020 of a Division Bench of the High Court of Madhya Pradesh, Bench at Indore. By the said decision, the Madhya Pradesh High Court decided two Writ Appeals filed by the appellants in Civil Appeals arising out Special Leave Petition (C) 12133 of 2020 and Special Leave Petition (C) No. 12241-42 of 2020. The Khasgi (Devi Ahilyabai Holkar Charities) Trust, Indore (for short, “the Khasgi Trust”) and its Trustee Shri S. C. Malhotra are the said appellants. The two writ appeals decided under the impugned judgment arise out of Writ Petition Nos. 11618 of 2012 and 5372 of 2010 filed by the Khasgi Trust. Writ Appeal No. 92 of 2014 arises out of Writ Petition No. 11618 of 2012. The Writ Appeal No. 135 of 2014 arises out of Writ Petition No.5372 of 2010. By the impugned judgment, a Public Interest Litigation filed by the first respondent-Shri Vipin Dhanaitkar in Civil Appeal arising out of Special Leave Petition (C) No. 12133 of 2020 was also decided.
3. The controversy revolves around the properties claimed by the Khasgi Trust as the Trust Properties. On 30th October 1948, an instrument called as “The Covenant” was executed by the erstwhile Rulers of Gwalior, Indore and certain other States in Central India for the formation of the United State of Gwalior, Indore and Malwa (Madhya Bharat). Late Yashwantrao Holkar, the Maharaja of Indore (for short “the Maharaja”) was a party to the said Covenant who agreed to unite and integrate the territory of Indore into one State with a common executive, legislature and judiciary, by the name of the United State of Gwalior, Indore and Malwa (Madhya Bharat). Article XII provided that the Ruler of each covenanting State shall be entitled to the full ownership, use and enjoyment of all private properties (as distinct from the State Properties) belonging to them on the date of their making over the administration of their respective States to Raj Pramukh (the Head of the State of the United State of Gwalior, Indore and Malwa). Article XII further provided that the Ruler of each covenanting State shall furnish to Raj Pramukh, before the first day of August 1948, an inventory of all immovable properties, securities and cash balance held by him. The Convention further provided that if any dispute arises as to whether any item of property is a private property of the Ruler or a State Property, it shall be referred to such person as the Government of India may nominate in consultation with the Raj Pramukh. It is further provided that the decision of that person shall be final and binding on all parties concerned. It appears that Maharaja Yashwantrao Holkar submitted two inventories in terms of Article XII. The first inventory was concerning his alleged private properties. The second inventory submitted by the Maharaja was of the properties known as the Khasgi Properties. In terms of Clause (3) of Article XII, the Government of India appointed Shri V.P. Menon, the Secretary of the Ministry of States as the authority to decide the claims. By the letter dated 7th May 1949, Shri V.P. Menon informed the Maharaja that the claim made by him in respect of his private properties as listed in Annexure “A” to the said letter has been finally approved, accepted and signed in pursuance of Article XII of the Covenant. Annexure “A” contains a detailed description of the private properties of the Maharaja, which are accepted as per Article XII of the Covenant to be his private properties. By another letter dated 6th May 1949, Shri V.P. Menon informed the Maharaja that his claim in respect of the properties described as the Khasgi properties has been finally settled on the basis of the enclosure to the said letter. In the enclosure to the letter, it was mentioned that the Khasgi properties and income received from the Khasgi properties shall b
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