A company can be a trustee of a public trust and is liable to be registered under the Public Trusts Act if it holds property in trust for public religious or charitable purposes.

Headnote:
PUBLIC TRUST - REGISTRATION - COMPANY ACT - PUBLIC TRUSTS ACT - WHETHER A COMPANY CAN BE A TRUSTEE OF A PUBLIC TRUST - WHETHER A COMPANY IS LIABLE TO BE REGISTERED UNDER THE PUBLIC TRUSTS ACT - INTERPRETATION OF SECTIONS 2(13), 3, 25, 26 OF THE COMPANIES ACT, 1956 AND SECTION 2(13) OF THE BOMBAY PUBLIC TRUSTS ACT, 1950.
Fact of the Case:

The Akhil Deshastha Rigvedi Brahman Madhyawarti Mandal (Mandal), a company limited by guarantee incorporated under the Companies Act, 1956, applied for registration as a public trust under the Bombay Public Trusts Act, 1950. The Joint Charity Commissioner held that the Mandal was a public trust and liable to be registered. The Mandal appealed to the Bombay City Civil Court, which upheld the decision of the Joint Charity Commissioner.
Finding of the Court:

The court held that the Mandal was a public trust and liable to be registered under the Public Trusts Act. The court found that the Mandal was a juristic person capable of owning property and acting as a trustee, and that the object clauses in its Memorandum of Association authorized it to hold property in trust for public religious or charitable purposes.
Issues: 1. Whether a company can be a trustee of a public trust? 2. Whether a company is liable to be registered under the Public Trusts Act?
Ratio Decidendi: 1. A company can be a trustee of a public trust if its object clauses in its Memorandum of Association authorize it to hold property in trust for public religious or charitable purposes. 2. A company is liable to be registered under the Public Trusts Act if it holds property in trust for public religious or charitable purposes.
Final Decision: The appeal was dismissed, and the order of the City Civil Court dated 3rd March 1966 was confirmed.

JUDGMENT - 1. This is an appeal by the original Applicants No. 1 against the order dated 3rd March 1966 of a Judge of the Bombay City Civil Court. The Applicants No. 1 are Akhil Deshastha Rigvedi Brahman Madhyawarti Mandal (hereinafter for the sake of brevity referred to as "the Mandal"). The Mandal is a Company limited by guarantee incorporated under the Indian Companies Act, 1913 and now under the Companies Act, 1956 under a license from the Central Government under Section 26 of the Indian Companies Act, 1913 corresponding the Section 25 of the Companies Act, 1956 dispensing with the word "Limited" in the name of the Mandal. The Respondent No. 1 is the Joint Charity Commissioner, State of Maharashtra. The Respondent No. 2 was formerly the Chairman of the Mandal. The order under appeal held that the Mandal was a public trust and as such was liable to be registered under Section 18 of the Bombay Public Trusts Act, 1950 (hereinafter referred to as "the Punble Trusts Act") as a public trust notwithstanding the fact that it was a Corporation.

2.A few facts leading to this litigation may be briefly stated. The Mandal applied for and obtained a license u nder Section 26 of the Indian Companies Act, 1913 to register itself under the said Act without the word "limited" added to its name of the representation that it was a non - profit making concern and charitable institution. The Mandal was incorporated on 3rd April 1939 as a company limited by guarantee without the word "limited" added to its name. It appears between 1939 and 1961, the Mandal acquired some property for the objects set out in its Memorandum of Association. On 12th October 1961 the Mandal made an application to the Charity Commissioner for its registration as a public trust under the Public Trusts Act. It is alleged on behalf of the Mandal that this application was made under protest and to find out whether it was liable to be registered under the Public Trusts Act so that it may not be charged with the contravention of the provisions of the Public Trusts Act. On 26th April 1962 as a result of an inquiry the Assistant Charity Commissioner, Bombay, held that the Mandal did not require registration under the Public Trusts Act. It appears the Joint Charity Commissioner, Bombay, was satisfied with this order. He therefore commenced review proceedings suo motu and by an order dated 27th April 1965 set aside the order dated 26th April 1962 of the Assistant Charity Commissioner, held that the Mandal constituted a public trust and remanded the proceedings to the Assistant Charity Commissioner for inquiry and findings on the remaining statutory issues provided for in Section 19 of the Public Trusts Act.

3. Against the decision of the Joint Charity Commissioner the Mandal appealed to the Bombay City Civil Court. By its order dated 3rd March 1966 the Bombay City Civil Court dismissed the appeal and upheld the decision of the Joint Charity Commissioner. It is against the said decision that the present appeal has been filed.

4.As I have stated above the Mandal is a company limited by guarantee registered under a license under Section 26 of the Indian Companies Act, 1913 corresponding to Section 25 of the Companies Act, 1956. It is a corporation and therefore a juristic person and a distinct legal entity. This is a well - established proposition from the time of the decision of the Judicial Committee of the House of Lords in Salomon v. Salomon Co. Ltd., 1897 AC 22, which has been followed in India by the Supreme Court in Mrs. Cacha f. Guzedar v. Commr. of Income - tax, Bombay, AIR 1955 SC 74, State Trading Corporation of India Ltd. v. commercial Tax Officer, AIR 1963 SC 1811 and Tata Engineering and Locomotive Co. Ltd. v. State of Bihar, AIR 1965 SC 40. As a juristic person the Mandal can carry on all human activities subject to such limitations as arise from its not being a natural person and the limitations imposed upon its activities by its own charter contained in the Object

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