Summary
The Supreme Court annulled sales of a public trust’s agricultural land and houses and set aside the Charity Commissioner’s permissions and the High Court judgments upholding them. The permissions were granted mechanically without proper valuation, reserve prices or an established necessity for sale, despite higher offers and objections from trustees. Earnest-money payments and possession before sanction created no equity for purchasers. Possession had to be restored within two months, with police assistance if necessary, and compliance reported within ten weeks.
Issues
- Whether permission to alienate public-trust properties satisfied the statutory duty to protect the trust’s interest.
- Whether pre-sanction earnest-money payments, possession and claimed improvements created equities supporting the sales.
Provisions considered
- Section 36, Bombay Public Trusts Act, 1950Prior sanction and an objective assessment of the trust’s interest, benefit and protection governed alienation. The Commissioner could not mechanically approve old transactions without establishing necessity and proper value. (¶ 9–20)
Held
- The Charity Commissioner had to be objectively satisfied that disposal was necessary in the trust’s interest, exploring the best available offer rather than merely accepting the trustees’ preferred purchaser. Charitable property required vigilant protection; ordinarily public auction with a properly assessed reserve price guarded against undervalue and suspicion. (¶ 9–13)
- No reserve prices were fixed and no serious effort established the relevant property values. Old land offers and an unsupported Talathi valuation could not justify approval in the face of higher offers. House valuations were also not properly ascertained. The permissions failed to protect the trust. (¶ 14–19)
- Accepting earnest money and handing over possession before seeking sanction did not create a purchaser’s right or equity warranting approval. A fear of litigation by prospective purchasers could not legitimise the transactions through delayed permissions. (¶ 15–19)
- The objections of fifteen trustees required caution and inquiry into their genuineness and the need for sale. It was unnecessary to resolve the dispute over the new body’s resolution because no necessity for selling the properties had been made out. The trust was directed to preserve its properties and legacy. (¶ 20–21)
- The appeals were allowed, both sets of impugned orders were set aside and the sales annulled. Purchasers’ claimed cultivation and levelling expenditure did not create an equity to retain possession after enjoying the properties for over two decades. Possession was to be restored within two months; on default, the authority was to recover it with police assistance. Compliance was to be reported within ten weeks. (¶ 21–22)
Result
Appeals allowed; Charity Commissioner permissions and High Court judgments set aside; sales annulled. Possession to be restored within two months, with police assistance on default; compliance report within ten weeks.