THE KHASGI (DEVI AHILYABAI HOLKAR CHARITIES) TRUST, INDORE & ANR. v. VIPIN DHANAITKAR & ORS.

A the possession of or under the control of the trustees; (c) to call for any return, statement, account or report which he may think fit from the trustees or any person connected with a public trust: Provided that in entering upon any property belonging to the public trust the officer making the entry shall give reasonable notice to the trustee and shall have due regard to the religious practices or usages of the trust.

23. Procedure after receipt of the report by the Registrar. – (1) If the report of the auditor made under section 17 shows, in the opinion of the Registrar, material defects in the administration of the public trust, the Registrar may require the working trustee to submit an explanation thereon within such period as he thinks fit. (2) If on the consideration of the report of the auditor, the accounts and explanation, if any, furnished by the working trustee, the D Registrar is, after holding an inquiry in the prescribed manner and giving opportunity to the person concerned, satisfied that the trustees or any other person has been guilty of gross negligence, a breach of trust, misapplication or misconduct which has resulted in the loss to the public trust he shall determine – (a) the amount of loss caused to the public trust; (b) whether such loss was due to any breach of trust, misapplication, or misconduct on the part of any person; (c) whether any of the trustees, or any other person is responsible for such loss; (d) the amount which any of the trustees or any other person is liable to pay to the public trust for such loss. (3) The amount surcharged on any trustee or other person in accordance with clause (d) of sub-section (2) shall, subject to any order of the Court under section 24, be paid by the trustee or person surcharged within such time as the Registrar may fix.” (emphasis added) H

THE KHASGI (DEVI AHILYABAI HOLKAR CHARITIES) TRUST, 215 INDORE v. VIPIN DHANAITKAR [ABHAY S. OKA, J.]

The Registrar by exercising powers under Section 22 of the Public A Trusts Act, can call for the record and report from the Trustees. If the report of the Auditor, submitted in accordance with Section 17, shows material defects in the administration of the Public Trust, the Registrar can always call upon the Trustees to submit an explanation. Under Sub- Section (2) of Section 23, the Registrar has power, after holding an inquiry in a prescribed manner, to decide whether Trustees have been guilty of any conduct which has resulted in any loss to the Public Trust. He is empowered to quantify the amount of loss caused to the Public Trust and also to decide the amount which any of the Trustees or any other person, is liable to pay to the Public Trust for compensating for such a loss. Section 24 provides for an appeal to the Court against an order made under Section 23. Section 31 of the Public Trusts Act provides that the amount determined in accordance with Sections 23 and 24, is recoverable as arrears of land revenue. In a given case, the Registrar can direct recovery from Trustees of an amount equivalent to the loss caused to the Trust due to illegal alienation of Trust property by the D Trustees.

47Copy pinpoint47. When a Trust property is transferred without prior sanction of the Registrar under Section 14 and/or without following a fair and transparent process, it can be always said that the Trust property is not being properly managed or administered. In such a case, apart from exercising the power under Section 23, the Registrar can make an application under sub-Section (1) of Section 26 inviting the attention of the Court to the mismanagement of the Trust. Sections 26 and 27 are material in this behalf, which read thus: - “26. Application to for directions.-(1) If the Registrar on the application of any person interested in the public trust or otherwise is satisfied that, – (a) the original object of the public trust has failed: (b)the trust property is not being properly managed or administered; or G (c)the direction of the court is necessary for the administration of the public trust; he may, after giving the working trustee an opportunity to be heard direct such trustee to apply to court for directions within the time specified by the Registrar. H

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A (2) If the trustee so directed fails to make an application as required, or if there is no trustee of the public trust or if for any other reason, the Registrar considers it expedient to do so, he shall himself make an application to the court.

27. Courts power to hear application- (1) On receipt of such application the court shall make or cause to be made such inquiry into the case as it deems fit and pass such orders thereon as it may consider appropriate. (2) While exercising the power under sub-section (1) the court shall, among other powers, have power to make an order for:- (a) removing any trustee; (b) appointing a new trustee; (c) declaring what portion of the trust property or of the interest therein shall be allocated to any particular object of the trust; (d) providing a scheme of management of the trust property; (e) directing how the funds of a public trust whose original object has failed, shall be spent, having due regard to the original intention of the author of the trust or the object for which the trust was created; (f) issuing any directions as the nature of the case may require. (3) Any order passed by the court under sub-section (2) shall be deemed to be a decree of such court and an appeal shall lie therefrom to the High Court. (4) No suit relating to a public trust under section 92 of the Code of Civil Procedure, 1908 (V of 1908), shall be entertained by any court on any matter in respect of which an application can be made under section 26.” (emphasis added) Under sub-Section (2) of Section 26, the Registrar can himself make an application to the Court seeking the exercise of powers under Section 27. On such an application being made and after holding an inquiry, the Court has the power to remove the Trustees of the Trust or

THE KHASGI (DEVI AHILYABAI HOLKAR CHARITIES) TRUST, 217 INDORE v. VIPIN DHANAITKAR [ABHAY S. OKA, J.]

to issue directions as provided in Section 27. A

48Copy pinpoint48. In the present case, all the alienations made by the Trustees of Khasgi Trust except alienation made in favour of the appellant in Civil Appeal arising out of Special Leave Petition (C) No.19063 of 2021, have been made without complying with the mandatory requirement of obtaining the previous sanction as required by sub-Section (1) of Section B 14.

49Copy pinpoint49. We may note here that there are no proceedings filed for specifically challenging the validity of stated alienations made by the Trustees. The impugned judgment of the Division Bench arises out of three proceedings. Two out of three are writ petitions filed by the Trustees. C The first one was filed for challenging the impugned order of the Collector and the second one was filed seeking directions regarding entering the names of the Trustees in revenue records in respect of the Trust properties. The third proceeding is the Public Interest Litigation, in which there is a prayer for issuing a writ of mandamus to direct inquiry through CBI. Therefore, there was no occasion for the Division Bench to declare that the sale transactions are void especially when the purchasers were not before the High Court. Nevertheless, it is necessary for the Registrar to exercise powers under Section 22 and call for necessary records pertaining to the alienations made by the Trustees. Thereafter, the Registrar shall exercise powers under Section 23 and decide whether any loss was caused to the Public Trust as a result of alienations and if any loss was found to have been caused, he shall quantify the amount in accordance with sub-Section (2) of Section 23. He may also consider of invoking sub-section (1) or (2) of Section 26 as observed above, if found necessary. F LEGALITY OF THE ORDER OF THE COLLECTOR (Question – e)

50Copy pinpoint50. We may note here that the order of the Collector which was impugned before the High Court was passed without giving an opportunity of being heard to the Trustees of the Khasgi Trust and the purchasers. A G show cause notice was issued to the Trustees by the Registrar on the basis of the complaint of the Member of the Parliament. Though the Trustees replied to the notice, even the reply was not considered by the Collector. Only on this ground, the said order ought to be set aside. As a matter of fact, the Collector had no jurisdiction to decide the issues of title as well as mismanagement of the affairs of a Public Trust. For the H

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A same reason, even the report of the Commissioner dated 24th May 2012 and the report of the Principal Secretary to the Chief Minister dated 2nd November 2012 are without jurisdiction. The reports have been made in breach of the principles of natural justice without affording an opportunity of being heard to the Trustees. B VALIDITY OF THE DIRECTION TO HOLD INQUIRY THROUGH ECONOMIC OFFENCES WING (Question – f)

51Copy pinpoint51. There was no warrant to direct inquiry through the Economic Offences Wing of the State Government as there is no finding that there was mens rea on the part of the Trustees. No finding has been recorded by the High Court based on material that the alienation made by the Trustees has resulted in causing loss to the Trust and that the entire sale consideration being diverted for personal use. It is noticed from the record placed before us that the entire consideration received from the purchasers has been credited to the account of the Trust. The allegation of misappropriation can be gone into only by the Authorities under the Public Trusts Act. Moreover, the direction issued by the High Court proceeds on the erroneous assumption that the Trustees have made misappropriation of the Government properties. There is no offence registered against the Trustees. Hence, Economic Offences Wing cannot be directed to hold an inquiry or investigation in connection with the subject matter of this proceeding. In other words, the direction given by the High Court vide the impugned Judgment in that regard will have to be held to be non est in law. Though the said direction is unwarranted, as observed earlier, the Registrar will have to initiate necessary proceedings under the Public Trusts Act and carry them to a logical conclusion. MAINTAINABILITY OF WRIT PETITIONS (Question – g)

52Copy pinpoint52. A contention was raised that only one Trustee had filed writ petitions before the Learned Single Judge for challenging the impugned order of the Collector and seeking other reliefs. The contention is that he was not authorized by the other Trustees to file the proceedings of writ petitions. The impugned order of the Collector purports to decide the issue of Title of the Trust properties by holding that the properties in Part ‘B’ of the Schedule to the Trust Deed are vested in the State H Government. Even assuming that there was no express authority given

THE KHASGI (DEVI AHILYABAI HOLKAR CHARITIES) TRUST, 219 INDORE v. VIPIN DHANAITKAR [ABHAY S. OKA, J.]

to the writ petitioner in the form of a resolution of the Board of Trustees A to file the writ petitions, even an individual Trustee was entitled to take proceedings for questioning such orders, which adversely affect the Trust and /or its beneficiaries. On the contrary, it is the duty of every Trustee to take such action of challenging an order holding that the properties held by the Trust are not the Trust properties. Moreover, none of the B Trustees has come forward to challenge the authority of Trustee Shri S.C. Malhotra who had filed writ petitions and further proceedings. There was also a direction issued to the Economic Offences Wing to hold an inquiry about the misappropriation of the Trust property by the Trustees. Every Trustee was affected by the said direction. Therefore, in the facts of the case, the objection raised to the maintainability of the petition filed C by one of the Trustees cannot be sustained. CONCLUDING PART

53Copy pinpoint53. In view of the discussions made above, the impugned judgment of the Division Bench cannot be sustained in toto. However, the view taken by the Division Bench that the Khasgi Trust is governed by the D Public Trusts Act and no alienation of the Trust properties could be made without complying with Section 14 thereof, will have to be affirmed. Even the order of the learned Single Judge cannot be sustained as he has virtually directed the rewriting of the Trust Deed.

54Copy pinpoint54. There are submissions canvassed across the Bar about the E locus of the applicant in I.A.No.124266 of 2020 filed in Civil Appeals arising out of Special Leave Petition (C) Nos.12241-42 of 2020. It is not necessary for us to go into the said question finally. We leave the said question open to be decided in appropriate proceedings.

55Copy pinpoint55. As far as Civil Appeal arising out of Special Leave Petition F (C) No.19063 of 2021 is concerned, the alienation was made by the Trustees in favour of the appellant after obtaining the previous sanction of the Registrar by the order dated 16th October 1997. Therefore, the Registrar will have to make an inquiry limited to the question whether compliance of the conditions incorporated under the said order has been G made by the Trustees. If there is a non-compliance, the Registrar will have to invoke the provisions of the Public Trusts Act for taking necessary action.

56Copy pinpoint56. Therefore, the appeals must succeed in part and we pass the following order:- H

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A a. We hold that the Khasgi (Devi Ahilyabai Holkar Charities) Trust, Indore, is a Public Trust governed by the provisions of the Madhya Pradesh Public Trusts Act, 1951; b. We, therefore, direct the Trustees to get the Khasgi Trust registered under the Public Trusts Act by making the necessary application within a period of one month from today; c. We hold that the properties described in Part ‘B’ of the Schedule to the Trust Deed, are properties of the said Public Trust. However, alienation of the said properties can be made only by taking recourse to Section 14 of the Public Trusts Act; d. We hold that the Supplementary Trust Deed dated 08th March 1972 is valid. But, the Trustees of the Khasgi Trust shall be entitled to alienate the Trust Property only after complying with Section 14 of the Public Trusts Act; D e. We hold that the direction issued by the High Court to Economic Offences Wing of the State Government to hold an inquiry was not warranted; f. We direct the Registrar under the Public Trusts Act, having jurisdiction over Khasgi Trust, to call for the record of the E Trust relating to all the alienations made by the Trustees. After holding an inquiry as contemplated by Section 23, the Registrar after giving an opportunity of being heard to all concerned shall determine whether by virtue of the alienations made by the Trustees, any loss was caused to the Public Trust. If according to him any such loss was caused to the Public Trust, he shall decide and quantify the amount liable to be paid by the concerned Trustees to the Khasgi Trust. g. After holding an inquiry as aforesaid, if found necessary, he may invoke the power of making an application to the Court under sub-Section (2) of Section 26.The Registrar may take such other action and initiate such other proceedings which are warranted by law; h. However, as regards the alienation made in favour of Shri H Gajanan Maharaj Sansthan – the appellant in Civil Appeal

THE KHASGI (DEVI AHILYABAI HOLKAR CHARITIES) TRUST, 221 INDORE v. VIPIN DHANAITKAR [ABHAY S. OKA, J.]

arising out of Special Leave Petition No.19063 of 2021, A after calling for the record, the Registrar will hold an inquiry limited to the issue whether the alienation was made only after complying with the conditions incorporated in the order dated 16th October 1997. If he finds after holding an inquiry that compliance was not made with any of the conditions, B he shall initiate appropriate proceedings in accordance with the Public Trusts Act; i. Subject to the above directions, the impugned judgment of the Division Bench as well as the impugned judgment and orders dated 28th November 2013 of the Learned Single Judge of the Madhya Pradesh High Court, are set aside. C

j. Civil Appeals are partly allowed in the above terms.

Nidhi Jain and Amarendra Kumar Appeals partly allowed. (Assisted by : Iram Jan, LCRA) D