AMBADEVI SANSTHA & ORS. versus JOINT CHARITY COMMISSIONER & ORS.

Citation: [2018] 11 S.C.R. 484 · Decided: 25-09-2018 · Supreme Court of India · Bench: ARUN MISHRA · Disposal: Appeal(s) allowed

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Judgment (excerpt)

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484
SUPREME COURT REPORTS
[2018] 11 S.C.R.
         SHRI AMBADEVI SANSTHA & ORS.
v.
JOINT CHARITY COMMISSIONER & ORS.
(Civil Appeal No. 9936 of 2018)
SEPTEMBER 25, 2018
[ARUN MISHRA  AND VINEET SARAN, JJ.]
Bombay Public Trusts Act, 1950:
s.36 – Sale of Trust property – Power of Charity Commissioner
– Application seeking permission to sell Trust property, after
accepting earnest money – Objections by two persons stating that
they were ready to purchase the property at much higher price –
Objection also by newly elected body of Trust stating that it did not
intend to sell the properties – Despite the objections, Charity
Commissioner granted permission to sell – Writ petition – Dismissed
by High Court – On appeal, held: While disposing of Trust property,
Charity Commissioner has to consider interest, benefit and protection
of Trust – Action of Trust seeking permission to sell after accepting
earnest money was improper, illegal and impermissible – Prior
sanction was necessary to create any right in the properties – Such
illegal transaction could not have been sanctioned – It was
impermissible and violative of intendment of the provisions contained
in s.36.
Allowing the appeals, the Court
HELD:  1. The Charity Commissioner has to be objectively
satisfied that there is necessity to dispose of the property in the
interest of public Trust. Three classic requirements have to be
considered by the Charity Commissioner i.e., the interest, benefit
and protection of Trust. Sale should be free from suspicion and
reserved price should be fixed after ascertaining the market value.
In case the Charity Commissioner accepts the necessity of
alienating the trust property, the trustees cannot insist that the
property should be sold only to a person of their choice, though
the offer given by the person may not be the best offer. The
[2018] 11 S.C.R. 484
 484
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property may be vested in the trustees, but the vesting is for the
benefit of the beneficiaries. Best available offer should be
accepted in the case of sale.[Paras 9, 11 and 13] [490-H; 491-A;
492-A; 494-D-E]
Cyrus Rustom Patel v. Charity Commissioner
Maharashtra 2017 (13) SCALE 44 : [2017] 9 SCR
277 ; Chenchu Rami Reddy v. Govt. of Andhra Pradesh,
(1986) 3 SCC 391 : [1986] 1 SCR 989 ; R. Venugopala
Naidu v. Venkatarayulu Naidu Chairities (1989) 2 Suppl.
SCC 356 : [1989] 1 Suppl. SCR 760 ; Bhaskar Laxman
Jadhav v. Karamveer Kakasaheb Wagh Education
Society (2013) 11 SCC 531 : [2012] 11 SCR 767 –
relied on.
2. The action of the Trust seeking permission to sell after
accepting the earnest money was wholly improper and
impermissible. The transactions could not have been finalised
nor possession could have been handed over before filing
application to Joint Charity Commissioner under Section 36 of
the Act of 1950.  Prior sanction was necessary to create any right
in the properties. [Para 16] [495-B]
3. It was not open to the Joint Charity Commissioner to
permit the sale on the ground of receipt of earnest money in
illegal manner. Before permission to sell, no such agreement
could have been entered into.  The same indicated predisposition
of Trust to sell it in illegal manner.  The valuation report from
Talathi was based on ipse dixit indicated the value of the land as
Rs.8,000/- per acre.  The offer could not have been accepted in
view of the available higher offers. The Joint Charity
Commissioner has failed to protect the interest of the Trust.
[Para 16] [495-E-F]
4. Mere statement by the Trust that earnest money was
received from prospective purchasers of house in the year 1990,
thus, it should be sold to them, could not be said to be a legally
permissible approach.  It was not legally permissible to receive
earnest money or to create any interest without grant of prior
permission to sale.  Thus, no equitable consideration could have
SHRI AMBADEVI SANSTHA & ORS. v. JOINT CHARITY
COMMISSIONER & ORS.
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SUPREME COURT REPORTS
[2018] 11 S.C.R.
arisen in favour of purchasers by the payment of earnest money
in the year 1990. This kind of illegal transaction could not have
been sanctioned by the Joint Charity Commissioner. It was wholly
impermissible and violative of intendment of the provisions
contained under Section 36 of the Act of 1950. [Paras 17 and
18][495-G-H; 496-B]
5. The offers were invited for land in 1994 and the
applications were filed in the year 1997-98 for grant of permission
to sell the properties of the Trust.  The prices o

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