The Khasgi (Devi Ahilyabai Holkar Charities) Trust Vs Vipin Dhanaitkar (Supreme Court of India)
Held that as Public Trust Act is applicable to the Khasgi Trust, the Trustees cannot alienate the trust properties without complying with section 14.
Facts-
The main issue involved here is that whether Khasgi Trust is a Public Trust. Also, whether the trustee of the Khasgi Trust were obliged to obtain previous sanction of the Registrar in accordance with section 14 of the Public Trust Act, 1951.
Conclusion-
Held that the Khasgi trust was created with the object of preservation and maintenance of the Trust properties which are charities and endowments. Thus, it can be said that the Khasgi Trust, is an express Trust for public, religious and charitable purposes. Under Section 4(1) of the Public Trusts Act, every such Trust requires compulsory registration.
Held that a Trust property cannot be alienated unless it is for the benefit of the Trust and/or its beneficiaries. The Trustees are not expected to deal with the Trust property, as if it is their private property. It is the legal obligation of the Trustees to administer the Trust and to give effect to the objects of the Trust. Therefore, the statutes dealing with the Public Trusts which are operating in various States, provide for limited control of the activities of a Public Trust.
FULL TEXT OF THE SUPREME COURT JUDGMENT/ORDER
1. Permission to file Special Leave Petition is granted. Leave granted.
FACTUAL MATRIX
2. These appeals take exception to the common judgment and order dated 5th October 2020 of a Division Bench of the High Court of Madhya Pradesh, Bench at Indore. By the said decision, the Madhya Pradesh High Court decided two Writ Appeals filed by the appellants in Civil Appeals arising out Special Leave Petition (C) 12133 of 2020 and Special Leave Petition (C) No. 12241-42 of 2020. The Khasgi (Devi Ahilyabai Holkar Charities) Trust, Indore (for short, ‘the Khasgi Trust’) and its Trustee Shri S. C. Malhotra are the said appellants. The two writ appeals decided under the impugned judgment arise out of Writ Petition Nos. 11618 of 2012 and 5372 of 2010 filed by the Khasgi Trust. Writ Appeal No. 92 of 2014 arises out of Writ Petition No. 11618 of 2012. The Writ Appeal No. 135 of 2014 arises out of Writ Petition No.5372 of 2010. By the impugned judgment, a Public Interest Litigation filed by the first respondent–Shri Vipin Dhanaitkar in Civil Appeal arising out of Special Leave Petition (C) No. 12133 of 2020 was also decided.
3. The controversy revolves around the properties claimed by the Khasgi Trust as the Trust Properties. On 30th October 1948, an instrument called as “The Covenant” was executed by the erstwhile Rulers of Gwalior, Indore and certain other States in Central India for the formation of the United State of Gwalior, Indore and Malwa (Madhya Bharat). Late Yashwantrao Holkar, the Maharaja of Indore (for short “the Maharaja”) was a party to the said Covenant who agreed to unite and integrate the territory of Indore into one State with a common executive, legislature and judiciary, by the name of the United State of Gwalior, Indore and Malwa (Madhya Bharat). Article XII provided that the Ruler of each covenanting State shall be entitled to the full ownership, use and enjoyment of all private properties (as distinct from the State Properties) belonging to them on the date of their making over the administration of their respective States to Raj Pramukh (the Head of the State of the United State of Gwalior, Indore and Malwa). Article XII further provided that the Ruler of each covenanting State shall furnish to Raj Pramukh, before the first day of August 1948, an inventory of all immovable properties, securities and cash balance held by him. The Convention further provided that if any dispute arises as to whether any item of property is a private property of the Ruler or a State Property, it shall be referred to such person as the Government of India may nominate in consultation with the Raj Pramukh. It is further provided that the decision of that person shall be final and binding on all parties concerned. It appears that Maharaja Yashwantrao Holkar submitted two inventories in terms of Article XII. The first inventory was concerning his alleged private properties. The second inventory submitted by the Maharaja was of the properties known as the Khasgi Properties. In terms of Clause (3) of Article XII, the Government of India appointed Shri V.P. Menon, the Secretary of the Ministry of States as the authority to decide the claims. By the letter dated 7th May 1949, Shri V.P. Menon informed the Maharaja that the claim made by him in respect of his private properties as listed in Annexure ‘A’ to the said letter has been finally approved, accepted and signed in pursuance of Article XII of the Covenant. Annexure ‘A’ contains a detailed description of the private properties of the Maharaja, which are accepted as per Article XII of the Covenant to be his private properties. By another letter dated 6th May 1949, Shri V.P. Menon informed the Maharaja that his claim in respect of the properties described as the Khasgi properties has been finally settled on the basis of the enclosure to the said letter. In the enclosure to the letter, it was mentioned that the Khasgi properties and income received from the Khasgi properties shall be treated as lapsed for all the time to the Madhya Bharat Government. In lieu thereof, certain guarantees were given.
The enclosure provided that the Madhya Bharat Government shall in perpetuity set aside a sum of Rs.2,91,952/- (Rupees Two Lakh Ninety-One Thousand Nine Hundred and Fifty-Two only) for the charities. The amount shall be put under a permanent Trust for the said charities, including the charities of Maharani Ahilya Bai Holkar. It provided that the Trust shall consist of the Ruler of erstwhile Indore State, who will be the President. There will be two nominees of the Ruler. One nominee shall be of the Central Government, and two nominees shall be of the Madhya Bharat Government. However, it was stated that the trustees nominated by the Government of India and the Madhya Bharat State shall be appointed in consultation with the Ruler. It provided that powers and functions of the Trust shall be subject to such legislation as the Central Government or the Madhya Bharat Government may enact generally to regulate such Trusts. However, the composition of the Trust and the manner of its formation shall not be liable to any modification or change by such legislation.
4. It must be noted here that the State Government enacted the Madhya Pradesh Public Trusts Act, 1951 (for short, ‘the Public Trusts Act’). On 26th May 1959, the Ministry of Home Affairs of the Government of India addressed a letter to the Maharaja, which refers to the settlement of Khasgi Property. By the said letter, the Central Government nominated one Shri S.V. Kanungo as its nominee. The letter records that Shri Kanungo was already a trustee nominated by the Central Government on two other family Trusts of the Holkar family. Before that, on 6th January 1959, by addressing a letter, the General Administration Department of the State Government informed the Private Secretary to the Maharaja that the State Government was proposing to nominate the Commissioner, Indore Division and the Superintending Engineer (B & R), Public Works Department, Indore Circle as the trustees. The State Government requested the Secretary to the Maharaja to communicate the concurrence of the Maharaja to the said nominations. By another letter dated 1st April 1959, the General Administration Department of Madhya Pradesh communicated to the Secretary to the Maharaja requesting him that representatives of the Ruler on the Trust be nominated. The letter records that the State Government has prepared a draft of the Trust Deed which will be finalised without any delay. The letter dated 14th November 1959 of the State Government addressed to the Secretary of Maharaja which is by way of reminder to the Maharaja to nominate his two representatives. The said letter also records that the draft of the Khasgi Trust Deed will be finalised and sent for approval of the Maharaja. The letter dated 14th April 1961 addressed by the State Government to the Secretary to Maharaja records that the draft of the Deed of Khasgi Trust is under examination and will be sent soon.
5. Ultimately, in terms of the draft provided by the State Government, the Deed of Trust of the Khasgi Trust (for short, “the Trust Deed”) was executed on 27th June 1962 by and between Her Highness Maharani Usha Devi of Indore, the daughter and successor of Maharaja Yashwantrao Holkar, described therein as the Settlor, Shri K.A. Chitale, Senior Advocate and Shri S.C. Malhotra as the nominees of the Settlor and Shri S.V. Kanungo, the nominee of the President of India. The Trust Deed was also signed by the Commissioner, Indore Division and Superintending Engineer (B & R), Public Works Department, Indore who were nominated as trustees by the State Government. In the recitals, it is mentioned that the Trust was being created of the annuity of Rs.2,91,952/- in perpetuity for maintenance, upkeep and preservation of charities and religious endowments provided in the budget of the Holkar State for the year 1947-48 inclusive of the charities founded by Maharani Devi Ahilaya Bai Holkar. The said endowments were described in part ‘A’ of the Schedule. Further, it is provided that the Trust will be for the management and maintenance of the properties described as the Trust Properties, more particularly described in Part ‘B’ of the Schedule to the Deed of Trust. Part ‘B’ of the Schedule contains a list of a large number of properties in various States.
6. There was a notification issued by the State of Madhya Pradesh on 27th July 1962. It was mentioned therein that on the formation of the Madhya Bharat State, institutions, factories, religious places, chhatries, etc. fell under the supervision and management of the Commissioner, Pardon Office. It was further stated in the notification that the State Government while granting permission for the formation of the Khasgi Trust and the Alampur Trust (the Holkar Chhatries Trust), has granted recognition/approval to the transfer of the areas, and institutions etc. included in the Trust Deeds of the aforesaid Trusts. It is further mentioned that accordingly, the areas, institutions, factories, religious places, chhatries etc. were transferred to the respective Trusts on 16th July 1962. A report of making over and taking over charge of the properties described as the Alampur and Khasgi trust properties was recorded on 16th July 1962. For the sake of completion, it must be mentioned here that on 8th March 1972, a Supplementary Deed of Trust was executed by and between the Trustees for incorporating a clause that the Trustees have always had and shall have the power to alienate not only the income but any other item of the corpus of Trust Property for the necessity or for the benefit to the objects of the Trusts.
7. Alienations were made by the Trustees in relation to at least six properties. On 18th April 2012, a letter was addressed by Smt. Sumitra Mahajan, a Member of the Parliament to the Chief Minister of the Government of Madhya Pradesh. She contended in the said letter that the property mentioned in the Trust Deed was vesting in the erstwhile State of Madhya Bharat. It is mentioned that a valuable property shown in the Trust Deed at Haridwar was sold by the trustees without the permission of the Registrar under the Public Trusts Act. Therefore, she requested the Chief Minister to order an inquiry. Along with the notice dated 23rd May 2012, a copy of the said complaint was forwarded to the trustees of the Khasgi Trust by the Registrar of Public Trusts, District Indore. The Trustees replied on 20th June 2012 contending that the Public Trusts Act was not applicable to the Khasgi Trust and it is for the benefit of the Trust that the alienations have been made.
Thereafter, the Collector of District Indore passed an order dated 5th November 2012 holding that the properties mentioned in the Trust Deed were the properties of the State Government. He held that the trustees have made illegal alienations without prior permission from the Government. Therefore, the alienations were held to be invalid. Hence, the Collector directed that the name of the State Government be entered in revenue records/land records to prevent further alienations.
8. A Writ Petition being Writ Petition No. 11618 of 2012 was filed by the Khasgi Trust and its Trustee Shri S.C. Malhotra in the Madhya Pradesh High Court for challenging the aforesaid order dated 5th November 2012 passed by the Collector and praying for restraining the Collector from interfering with affairs of the Trust. The learned Single Judge disposed of the petition by the judgment and order dated 28th November 2013 by issuing diverse directions for the administration of the Khasgi Trust. The learned Single Judge directed that the Board of Trustees shall be reconstituted by including Smt. Sumitra Mahajan and two the persons as trustees. The State Government was directed to make a provision for payment of Rs.1 crore every year to the Khasgi Trust. Another writ petition (W.P. No. 5372 of 2010) filed by the Khasgi Trust was disposed of by the order dated 3rd December 2013 by the learned Single Judge directing the authorities to correct the revenue record in terms of the aforesaid order dated 28th November 2013. As stated earlier, both the said orders of the learned Single Judge were challenged by the State Government by filing two writ appeals. The Public Interest Litigation which was decided along with the writ appeals contained a prayer for directing inquiry through CBI regarding the affairs of the trust and in particular, regarding the alienations made by the Trustees.
9. Following are the important findings rendered by the Division Bench in the impugned judgment and order:
(a) the Khasgi properties mentioned in Part ‘B’ of the Schedule to the Trust Deed continued to be vested in the State Government and therefore, the Trustees had no authority to alienate the same;
(b) the subsequent modification of the Trust Deed made by the Trustees empowering them to alienate the properties described in Part “B” of the Trust Deed was illegal and was not binding on the State Government;
(c) the alienations made by the Trustees were void;
(d) the Khasgi Trust was governed by the Public Trusts Act; and
(e) the learned Single Judge while deciding the writ petitions filed by the Khasgi Trust has virtually re-written the Trust Deed and therefore, his Judgment cannot be sustained.
In paragraphs 158 to 166 of the impugned judgment, the Division Bench issued following directions:
“158. This Court is not reproducing the entire report as the Covenants, Trust Deeds and the notification issued by the Government of India have already been reproduced in earlier paragraphs. Thus, it is wrong on the part of the respondent to say that the mechanical exercise was undertaken by the Collector based upon letter of Member of Parliament. With due application of mind, the State Government through Collector, Indore keeping in view the covenant, trust deed and the statutory provisions has taken action in the matter.
159. In the considered opinion of this Court, this Court does not have the power to draft the Trust Deed nor is having the power to enact the statute in respect of trust in question. However, as the properties which are under the ownership of State of Madhya Pradesh have been sold by the Trust/Trustees, a committee deserves to be constituted to ensure that the trust properties as per the schedule appended with the original trust deed are preserved, maintained and kept intact for the future generations to come.
160. The Committee so constituted shall inquire in respect of the properties sold by the Trust and shall take all possible steps to recover and retrieve any property or fund of the property, which have been sold or have been in unauthorized occupation or misappropriated.
For doing the aforesaid task, the State of Madhya Pradesh shall incur all the expenditures, in case there is paucity of fund in the accounts of the trust, especially in light of the fact that it is the State of Madhya Pradesh, who is having title over all properties.
161. The following Committee is constituted for the aforesaid work comprising of:—
(a) Chief Secretary, State of Madhya Pradesh (Chairman);
(b) Principal Secretary, Finance Department (Member);
(c) Additional Chief Secretary, Dharmaswa Department (Member);
(d) Commissioner, Indore Division, Indore (Member);
(e) Collector, Indore (Secretary).
The State of Madhya Pradesh shall be free to proceed ahead in accordance with law.
162. In the connected writ petition i.e. W.P. No. 11234/2020, which is a Public Interest Litigation, a prayer has been made for issuance of an appropriate writ, order or directing a CBI inquiry. So far as the prayer with regard to directions for CBI inquiry is concerned, this Court is of the considered opinion that no such directions are required. The allegation of misappropriation of Government properties and its disposal to favour someone and to cause loss to Public Exchequer, if at all, can very well be examined by Economic Investigation Wing of the State of Madhya Pradesh and accordingly, it is directed that the said Wing will thoroughly examine the matter and if it finds any criminality into the actions of any authority, it is expected that appropriate action should be taken by the said Wing. Hence, no positive direction to register a First Information Report is required.
Resultantly, the Economic Offences Wing shall examine the matter and shall be free to proceed ahead in accordance with law.
163. The State of Madhya Pradesh is directed to take all possible steps to preserve the cultural heritage including the Ghats, Temples, Dharamshalas, which find place in the Trust property, being the titleholder of the property in question. The State of Madhya Pradesh shall also take appropriate action in accordance with law against all those persons, who have allegedly illegally sold the Trust’s property from time to time.
164. In W.P. No. 11234/2020, the Union of India is already a party and Shri Milind Phadke has also been heard in the matter before delivering the judgment. He has also stated that the properties in question, on account of the covenant and the statutory notifications issued from time to time, are the exclusive properties of the State of Madhya Pradesh.
165. This Court on 23-4-2014 has directed the parties to maintain status quo and it has been informed by learned counsel for the State of Madhya Pradesh that some construction has taken place by the private parties.
166. Resultantly, the State of Madhya Pradesh is directed to take appropriate action in respect of the construction which has taken place over the Khasgi properties and shall restore it to its original position and the entire expenditure shall be borne by the State of Madhya Pradesh through Commissioner, Indore. The Collector, Haridwar shall assist the Divisional Commissioner, Indore in the matter and the Divisional Commissioner, Indore shall ensure that Kusha Ghat as well as other properties are again, which are meant for public charities are made available to public at large. The aforesaid direction is not only in respect of present property but in respect of other properties also. The State of Madhya Pradesh shall ensure by taking appropriate steps in accordance with law that no further sale takes place in respect of such properties and they shall maintain the properties for the generations to come keeping in view their historic importance. The Collector, Indore shall be free to take action in accordance with law pursuant to the order passed by him dated 5-112012 and the Registrar shall also be free to take appropriate action in accordance with law pursuant to the order passed by him dated 3011-2012.”
(emphasis added)
