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High Court Of Himachal Pradesh
S.NATARAJAN,KULDIP SINGH
R.VENUGOPALA NAIDU - Appellant
Versus
VENKATARAYULU NAIDU CHARITIES - Respondent
Civil Appeal No. 3577 of 1989
Decided On : 10/26/1989
PUBLIC TRUST - REPRESENTATIVE SUIT - LOCUS STANDI - PARTIES - INTERPRETATION OF SCHEME-DECREE - SALE OF TRUST PROPERTY - PUBLIC AUCTION - MINIMUM BID.
Fact of the Case:
Venkatarayulu Naidu Charities, a public trust, faced allegations of improper alienation of trust properties by the trustee. A scheme-decree was passed in 1910 for the future management and administration of the trust, including clauses 13 and 14, which dealt with alterations to buildings and the parties' right to apply for further directions. In 1984 and 1985, the trustee obtained permission from the subordinate court to sell two trust properties, which were sold for significantly lower prices than their market value. Four individuals, who were not named as parties in the original suit but claimed to be beneficiaries of the trust, filed an application to set aside the sale orders, arguing that they had locus standi under clauses 13 and 14 of the scheme-decree.
Finding of the Court:
The Supreme Court held that a suit under section 92 of the Code of Civil Procedure, which deals with public trusts and charities, is a representative suit that binds not only the named plaintiffs but also all those who are interested in the trust. The court interpreted the term "parties" in clause 14 of the scheme-decree to include all interested persons, as the suit was filed on behalf of the entire body of beneficiaries. The court also found that the subordinate court and the High Court erred in holding that the appellants lacked locus standi to file the application.
Issues: 1. Whether the appellants, who were not named as parties in the original suit, had locus standi to file an application under clauses 13 and 14 of the scheme-decree. 2. Whether the sale of the trust properties was conducted properly and in accordance with the scheme-decree.
Ratio Decidendi: 1. The court relied on the principles of representative suits and the interpretation of section 92 of the Code of Civil Procedure to conclude that all persons interested in the trust are considered parties to the suit, even if they are not named in the suit-title. 2. The court held that the sale of the trust properties was not conducted properly as it was done through private negotiations without wide publicity, leading to a significantly lower sale price compared to the market value.
Final Decision: The Supreme Court allowed the appeal, set aside the orders permitting the sale of the properties, and directed that the properties be sold by public auction with wide publicity. The court also directed that the respondents/purchasers be entitled to a refund of the purchase price with interest and compensation for any superstructure or improvements made to 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 called original suit) in the court of Subordinate Judge, Mayavaram under section 92 of the Code of Civil Procedure praying inter alia that the defendant trustee be removed from the said office and a new trustee be appointed with directions to recover trust properties improperly and fraudulently alienated by the defendant. The subordinate court permitted the trustee to continue and framed a scheme-decree dated September 9, 1910 for the future management and administration of the trust. Clauses 13 and 14 of the scheme are as under : "13. The trustee shall not effect any alterations or additions to the existing buildings except with the permission of the Tanjore Sub-Court." "14. Liberty is given to the parties to apply to the Tanjore Sub-Court for further directions if any from time to time as regards the administration of the trusts."
2. The question for consideration in this Appeal is whether "parties” mentioned in clause 14 of the scheme-decree reproduced above mean only the named plaintiffs and defendant in the suit-title and their successors-in-interest or the suit being representative it includes all those who are interested in the trust.
3. Further necessary facts are as under : The trust owns several items of properties. We are concerned with the following two properties alone of the trust.
1. Property situate at Muthukumara Moopannar Road in T.S. No. 2936 to an extent of 11484 Sq. ft.
2. Property situate at ward No. 6 Gandhiji Road, in T.S. No. 2937 to an extent of 4429 Sq. ft.
4. The trustees filed interim application No. 453 of 1984 in the Original Suit before the subordinate court for permission to sell the first property which was granted by the order dated October 27, 1984 and the property was sold for Rs. 11,000. Similarly the second property was sold for Rs. 69,328 with the permission of the court dated January 23, 1985.
5. R. Venugopala Naidu and three others who are the present appellants filed interim application No. 175 of 1985 in the original suit before the subordinate Judge. Thanjavur for setting aside the orders dated October 27, 1984 and January 23, 1985 granting permission to the trust to sell the above mentioned two properties. It was alleged that the negotiated sale was at a price which was almost 20% of the market price. There was no publication in any newspaper or even in the court notice board inviting the general public.
6. The learned subordinate judge dismissed the application on the ground that the applicants have no locus standi to file the application under clauses 13 and 14 of the scheme-decree as they were not parties to the original suit. A further revision before the Madras High Court was dismissed. The High Court also came to the conclusion that the application was not maintainable. It was also held by the High Court that two of the four applicants who are muslims cannot have any interest in the administration of the trust. Against the High Court judgment the present appeal by way of special leave has been filed.
7. Mr. S. Padmanabhan, learned Counsel for the appellants has vehemently argued that though the appellants were not shown as parties in suit-title but the suit under section 92 of Civil Procedure Code being a representative suit the scheme-decree binds not only the parties thereto but all those who are interested in the trust. According to him "parties" in clause 14 of the scheme-decree would include appellants and all those who are interested in the trust. He has relied on Raje Anandrao v. Shamrao’ (1961) 3 SCR 930: AIR 1961 SC 1206, where, this Court held as under (at p. 1211 of AIR):— ".........It is true that the pujaries were not parties to the suit under section 92 but the decision in that suit binds the pujaris as worshippers so far as the administration of the temple is concerned, even though they were
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