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IN THE HIGH COURT AT CALCUTTA
Indira Banerjee, J.
Mohan Lall Seal & Ors.
vs.
Kanak Lall Seal & Ors.
with
Kanak Lall Seal & Anr.
vs.
Trustees to the Trust Estate of Mutty Lall Seal & Ors.
G.A. No. 3095 of 2008; G. A. No. 1782 of 2008; C. S. No. 116 of 208; A.T.A. No.2 of 208;
Decided On: April 9, 2009
TRUST PROPERTIES - LEASE - VALIDITY - RELIGIOUS AND CHARITABLE TRUST - PRINCIPLES OF INDIAN TRUSTS ACT, 1882 - APPLICATION - PUBLIC INTEREST - TRANSPARENCY - PUBLIC NOTICES - BEST OFFERS - LONG-TERM LEASE - COURT'S SANCTION - WEST BENGAL PREMISES TENANCY ACT, 1997 - EFFECT - TRUSTEES' OBLIGATION - PUBLIC AND PRIVATE CHARITABLE TRUST - PROPERTY ALIENATION - COMPULSORY REASONS - BEST RENT - JUDICIAL SCRUTINY - LEASE FOR 99 YEARS WITH RIGHT OF DEMOLITION AND CONSTRUCTION - JUSTIFICATION - INJUNCTION - PUBLIC AUCTION.
Fact of the Case:
A religious and charitable trust executed a deed of trust in 1848 dedicating its properties for religious, charitable, and benevolent activities. The trust expired in 1947, and a new trust was created to continue the benevolent activities. The trustees granted a 99-year lease of one of the trust properties to the defendant without issuing public notices or inviting open offers. The plaintiffs, descendants of the trust's founders, filed a suit challenging the lease, seeking a declaration of its illegality, cancellation, and other reliefs.
Finding of the Court:
1. The principles of the Indian Trusts Act, 1882, apply to public and private religious and charitable trusts, even though the Act may not strictly apply. 2. Public interest demands that any transfer or alienation of trust property should be transparent, fair, and in public interest. 3. Transfers of property held by religious or charitable trusts should be open, by issuance of public notices and/or advertisement, to fetch the best offers. 4. A long-term lease exceeding 21 years requires the sanction of the Court and must be at the best rent. 5. Properties of public and/or private charitable trusts cannot be decimated by the trustees at their own whims and fancies. 6. The trustees did not justify the grant of a 99-year lease with the right of demolition and construction at a premium of Rs. 20 lakhs.
Issues: 1. Whether the principles of the Indian Trusts Act, 1882, apply to public and private religious and charitable trusts. 2. Whether public interest demands that any transfer or alienation of trust property should be transparent, fair, and in public interest. 3. Whether transfers of property held by religious or charitable trusts should be open, by issuance of public notices and/or advertisement, to fetch the best offers. 4. Whether a long-term lease exceeding 21 years requires the sanction of the Court and must be at the best rent. 5. Whether properties of public and/or private charitable trusts can be decimated by the trustees at their own whims and fancies. 6. Whether the trustees justified the grant of a 99-year lease with the right of demolition and construction at a premium of Rs. 20 lakhs.
Ratio Decidendi: 1. The provisions of the Indian Trusts Act, 1882, are similar to those of the Charitable and Religious Trusts Act, and the principles underlying the sections serve as a useful guide for charitable and religious trusts. 2. Public interest demands that any transfer or alienation of trust property should be completely transparent, fair, and in public interest. 3. It is expedient that all transfers of property held by religious or charitable trusts should be open, by issuance of public notices and/or advertisement, to fetch the best offers. 4. A long-term lease exceeding 21 years requires the sanction of the Court as provided in section 26 of the Indian Trusts Act, 1882, and in any case has to be at the best rent. 5. Properties of public and/or private charitable trust cannot be decimated by the trustees at their own whims and fancies. A property held in trust cannot be alienated save for compelling reasons at rent that is not the best. 6. The trustees did not justify the grant of a 99-year lease with the right of demolition and construction at a premium of Rs. 20 lakhs.
Final Decision: 1. The lease granted by the trustees to the defendant is declared illegal and void. 2. The trustees are directed to issue public advertisements for the grant of lease of the trust property and to consider the respective offers, including the offer of the defendant, with the approval of the Court. 3. If better offers are not received, the trustees may transfer/lease out the property to the defendant with the approval of the Court.
1. One Mutty Lall Seal, during his life time executed a deed of trust on 21st February, 1848 dedicating all his properties inter alia for religious, charitable and benevolent activities.
2. The said trust, which was for a period of 99 years expired on 20th February, 1947 and the trust properties devolved upon their heir's of Mutty Lall Seal. On 20th February, 1947, the heirs of Mutty Lall Seal created a new trust to continue the benevolent activities of the original trust. The properties of the trust estate included amongst others Premises No.2 Red Cross Place, Kolkata and Premises No.6 Jawaharlal Nehru Road, Kolkata.
3. The plaintiffs and the defendants in CS No. 116 of 2008 except the plaintiff No. 11 and the defendant No.7 are the heirs of Mutty Lall Seal.
4. In terms of the deed of trust dated 20th February, 1947, the Board of Trustees were to be reconstituted every five years and was to comprise of 3 persons from the line of Panna Lall Seal, 4 persons from the line of Gobinda Lall Seal and 3 persons from the line of Kanai Lall Seal. The constitution of the Board of Trustees underwent a change in February, 2007, upon expiry of the terms of five years.
5. The plaintiff Nos. 1, 2 and 6 in C.S. No. 116 of 2008 are the descendants of Panna Lall Seal, the plaintiff Nos. 3, 4, 5 and 10 are the descendants of Gobinda Lall Seal and the plaintiff Nos. 7 to 9 are the descendants of Kanai Lall Seal. The aforesaid plaintiffs were appointed trustees on or about 21st February, 2007.
6. On 22nd January, 2007 shortly before the constitution of the new Board of Trustees, the majority of the erstwhile trustees approved the proposal for execution of a deed of lease of Premises No.2 Red Cross Place, Kolkata, in favour of the defendant No.7 at a premium of Rs. 20,000,00/and lease rend of Rs. 20,000/- per month. The deed of leases was executed on 24th January, 2007 in favour of the defendant No.7.
7. The plaintiff No.2 in C.S. No. 116 of 2008 filed an application being ATA 1 of 2007 in this Court under section 34 of the Indian Trusts Act, 1882 for an order of injunction restraining the trustees from dealing with and/or disposing of and/or granting any long term lease in respect of the aid two properties of the trust estate referred to above.
8. The Court by its order dated 7th February, 2007 directed that status quo with regard to the said properties be maintained. However, by the time the order of status quo was passed, the deed of lease referred to above, had already been executed.
9. The plaintiff No.2 had also filed a suit being T.S. No. 331 of 2007 (Mohit Lal Seal vs. Trust Estate of Mutty Lall Seal) in the City Civil Court at Calcutta in February, 2007 inter alia challenging the lease in favour of the defendant No.7.
10. The aforesaid suit was, however, withdrawn and the present suit being C.S. No. 116 of 2008 filed in this Court for inter alia a declaration that the deed of lease dated 24th January, 2007 is illegal and void, delivery up and cancellation of the said deed of lease and other consequential reliefs.
11. Two applications filed in the suit being G.A. 1782 of 2008 and G.A 3095 of 2008 have been assigned to this Bench. The first, that is, G.A. 1782 of 2008 has been filed by the plaintiffs seeking directions for issuance of public advertisements for grant of lease of the said Premises No.2 Red Cross Place, Kolkata, orders permitting the present trustees to lease out the said premises at the best available terms, injunction restraining the defendant No.7 from transferring, alienating, parting with possession or changing the nature and character of the said premises or otherwise taking steps on the basis of the deed of lease.
12. The application being G.A. No. 3095 of 2008 has been filed by the defendant No.7 inter alia for dismissal of the suit and stay of all proceedings including G.A. No. 1782 of 2008.
13. The defendant No.1 has, along with one Abhiram Lall Seal, filed an application under section 34 read with section 39 of the India
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