The President, Mumbai.
Kindly consider the following and make an appropriate representation.
As per the Bombay Public Trust Act, 1950, the trust has to apply for approval of Charity Commissioner u/s 36A(3) in respect of raising loan or deposit. Along with application the trust has to furnish the following information.
1. Court fee stamp of Rs. 150 (stick the stamp on application).
2. Copy of the Constitution of the Trust to see whether the instrument of Trust contains any directions as to borrow moneys whether by way of mortgage or otherwise.
3. A certified copy of Schedule-I (with all particulars). The trust has to apply separately to get such (latest) copy of Schedule-I to the Public Trust Registration office. Sometimes it happens that the change reports may not be incorporated in schedule-I. In such cases the trust has to request them to incorporate the same & get the incorporated Schedule-I.
4. Statement whether the accounting returns (annual accounts etc.) are filed upto date with the Deputy Charity Commissioner/Assistant Charity Commissioner of the Region. A copy of the last/latest two years accounting returns. Acknowledgment copy of covering letter.
5. If all the trustees are unanimously in favour of the proposed borrowings then a copy of resolution in support of this duly signed by all the trustees. If there is opposition for proposal then names of the persons opposing and ground for opposition have to be communicated.
6. Affidavit (on Rs. 20 stamp paper) in support of the application. In the affidavit you must mention that the loan will be used only for the purpose it is being raised. It should be made before a competent authority.
7. Financer’s approval letter to advance the loan, containing terms & conditions of the loan, amount of loan, rate of interest etc.
8. If the loan is being raised for construction of the building then the estimates of the Architect for construction of building with copy of plan.
9. If budget estimate is made as per section 51-A with Rule 16-A, then a copy of the same have to be sent.
10. What is the necessity of the proposed borrowing.
11. Statement about how the proposed borrowing of money is in the interest of the trust.
12. Statement about the present net annual income from the property proposed to be mortgaged and type of mortgage.
13. Details of the cadastral survey No. or Municipal No., the area of the property proposed to be mortgaged (giving full description of the property). If loan is against security or movable property, details of such property.
14. Statement about how the loan is proposed to be repaid (if possible submit project report) and what will be the income from such source and whether it would be sufficient to repay loan. Copy of resolution passed if any for repayment of loan.
15. If the amount is to be raised by deposits from trustees and members then state the minimum amount of such deposit, interest to be paid for such deposit whether six monthly or annually.
16. Details of any hand loan or any other type of loan if already granted by the trust and when it will be repaid with interest Particulars of loan raised after 15-6-1972 and whether permission of the Charity Commissioner was obtained for such loan.
17. If the overdraft facility being availed off is for the purpose of payment of salaries and/or payment of current expenses then the particulars about months average of such payments.
18. Details of previous loans taken, repaid & plans of repayment.
19. They may also call for the copy of Resolution passed in the meeting regarding authorization u/s. 36A(3) & about repayment/refund.
The above list of information generally called for is only illustrative in nature.
Secondly the person who is handling this matter should be authorised by the trustees by executing a special power of attorney in his favour, whether such representative is a layman or C.A. or any employee of the trust. In other words the authorised person can only correspond with the charity commissioner regarding this matter.
They insist the matter to be attended either by authorised trustee/person or by the lawyer. Therefore an auditor/ Chartered Accountant (C.A.) cannot attend to this matter. If in any circumstances he attends the matter then he will have to produce the authority letter before the authority.
This procedure takes a long time. In such cases Trustees are advised to pursue the matter. Further as stated in Point – 3 above, sometimes schedule – I requires updation in case it is not updated earlier. In such cases getting schedule I amended takes a considerable time [in some cases more than 1 year] & therefore if a trust requires the loan urgently, it may not be in a position to get the same due to procedural delays from the department.
Thus, for the benefit of all the Public Charitable and Religious Trusts, Trustee & all such Trusts should jointly make a petition before Law Minister, Law and Judiciary Department Sachivalaya, Maharashtra to amend this and other similar provisions in such a way that the approval should be granted/rejected within 3/4 months on the lines of Chapter XXC of the IT. Act, 1961.
I hope you will make appropriate representation.
(C.A. Tushar Doctor)
(Zankhana Pranjal Mehta)