Bombay High Court
Mishratola vs 6 Mr. Joshua Jacob Awaskar on 7 December, 2011
Bench: G. S. Godbole
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ata
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
WRIT PETITION NO.7233 OF 2011
1 Ms. Yafa Jacob Simon ]
Mumbai Indian inhabitant residing ]
at Nalanda Co-operative Housing ]
Society, Near Dr. Bedekar's hospital, ]
Ram Maruti Cross Lane, Thane ]
400 602. ]
2 Mr. Rajiv Ranjan Mishra, Indian ]
Inhabitant and trustees of the Sir
ig ]
Elly Kadoorie School Trust, having ]
permanent address at C/o. Shri ]
B. N. Mishra Supdt. Engineer (Retd.) ]
Mishratola, P.O. Hanumanganj, ]
Darbhanga-846004, Bihar presently ]
camped at Mumbai. ] .. Petitioners.
V/s.
1 The Joint Charity Commissioner, ]
Maharashtra State, having its office ]
at 83, Annie Besant Road, Worli, ]
Mumbai 400 018. ]
2 Sir Elly Kadoorie School Trust, ]
a public charitable trust registered ]
under the provisions of the Bombay ]
Public Trust Act, 1950, having its ]
address at Sir Elly Kadoorie School ]
Compound, Mazgaon, Mumbai ]
400 012. ]
3 Mr. Ezeriel R. Penkar ]
4 Mr. David Moses Talegaonkar, ]
5 Mr. Ezra Moses Talegaonkar, ]
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6 Mr. Joshua Jacob Awaskar, ]
7 Mr. Jashuva Nathan Nagavkar, ]
Respondent Nos. 3 to 7 claiming to ]
be the present trustees of Respondent]
No.2 Trust. ]
8 Shreepad Infratrade Private Limited ]
a company incorporated under the ]
Companies Act, 1956 and having its ]
registered office at 404, Kapadia ]
Chambers, 599, JSS Road, ]
Mumbai 400 002. ]
9
Siddharth Greenacres Private Limited]
a Company incorporated under the ]
Companies Act, 1956 and having its ]
registered office at 205, Commerce ]
House, 140, N.M. Road, Fort, ]
Mumbai 400 023. ] .. Respondents.
Mr. D. D. Madon a/w Ms Meenakshi Iyer and Mr. Ramesh Vidyanathan
i/b Advaya Legal,for the Petitioners.
Mr. Praveen Samdani, Senior Counsel a/w Dr. Birendra Saraf, Counsel
with Ms. Pallavi Dedhia i/b Sanjay Udeshi and Co, for Respondent Nos.2
to 7.
Ms. P. S. Cardozo, AGP for Respondent No.1.
Mr. Aspi Chinoy a/w C. S. Kapadia i/b Kishore Thakoradad and Co, for
Respondent Nos. 8 and 9.
CORAM : G.S.GODBOLE,J.
DATED : 07/12/2011
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JUDGMENT :-
1 On 18th November, 2011, I have issued a notice for final
disposal broadly indicating the points of controversy arising out of the
impugned order dated 6th May, 2010 passed by the learned Jt. Charity
Commissioner. Today, additional Affidavit in Reply sworn by Respondent
No.3 was tendered and the same is taken on record. Mr. Madon has
submitted that he should be permitted to proceed with the arguments on
the basis of denials. Since the Affidavit is tendered in Court, Mr. Madon
is permitted to proceed on the basis of denials.
2 Accordingly, Mr.Madon commenced the submissions on
behalf of Petitioners.
3 Mr. Madon has taken me through the impugned Judgment
and Order dated 6th May, 2010. He drew my attention to the fact that in
the Deed of Trust, there is no provision which empowers the trustees to
alienate the trust property and, hence, it was necessary to file
application under Section 36 (1)(c) of the Bombay Public Trusts Act,
1950. He has drawn my attention to the fact that the trustees had
adopted a strange procedure wherein the trustees first filed application
for obtaining sanction after completing the entire exercise of issuing
advertisement through their Advocate in little known newspapers,
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receiving tenders, passing resolutions to appoint Respondent No.8 as
developer and filing of application to get sanction. He invited my
attention to the fact that thereafter, an application under Section 36(1)
(c) was filed on 26th August, 2009 below Exhibit 28 in Application No.90
of 2009. Mr. Madon submitted that the application below Exhibit 28 has
never been disposed off and has been kept pending.
4 He submitted that only on the basis of the averments made
in the application and the Affidavit in support of the application, without
any independent scrutiny of the truth of the said averments, the Charity
Commissioner has mechanically granted sanction. He submitted that K.
C. Foundation has offered donation of Rs.4.5 crores and that the Charity
Commissioner had himself constituted a Repair Committee under aegis
of Senior Advocate to decide the modality of receiving donations which
were to be used for the purpose of carrying out repairs of the trust
property. He invited my attention to the Minutes of Meeting chaired by
the Charity Commissioner on 6th July, 2004 under which said decision
had been taken. He pointed out that there was complete suppression of
this meeting as also of the fact that the repair committee has been
constituted. There was no mention about the offer of K.C. Foundation.
All these were relevant factors and the same have been deliberately
suppressed from the Joint Charity Commissioner.
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5 Mr. Madon further pointed out that there was complete
suppression about the fact that earlier a similar application No.31 of
2002 had been filed which was dismissed for non-prosecution. He
submitted that the price which a particular trust property was likely to
fetch is irrelevant for deciding as to whether authority under Section 36
(1)(c) of the Act shall be given or not. He submitted that order under
Section 36(1)(c) cannot be passed only on the ground that the price
which is being offered is adequate price. He pointed out the discussion
in the impugned order about the application under Section 36(1)(c)
and, hence, according to Mr. Madon, no order was passed authorizing
the trustees to dispose off the property of the trust. He submitted that
application below Exhibit 28 ( record page 29 and 30) which sought
authorization had not been disposed off and directly sanction was given
under Section 36(1)(a) of the Act.
6 Mr. Madon has taken me through the Judgment of the Full
Bench in the case of Sailesh Developers & Others v/s. Joint Charity
Commissioner, Maharashtra & Others,a and particularly the
observations in paragraphs 24 to 31 of the said Judgment and reiterated
his submission that application under Section 36(1)(c) was never
disposed off. He submitted that the Jt. Charity Commissioner was having
a (2007) 3 BCR page 7
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a statutory duty to go into the question of capacity or ability of the
developer which has not been gone into at all. This submission is,
however, sought to be opposed by Mr. Chinoy by contending that there
was no plea. Mr. Madon invited my attention to the averments made in
paragraph 4 and contended that immediately after the impugned order,
the rights of development were assigned in favour of Respondent No.9
by Respondent No.8 and this clearly showed that Respondent No.8 did
not have a capacity to develop the trust property. It was submitted that
there is nothing on record to show as to what is the capacity or ability of
Respondent No.9. Referring to the averments made in the Affidavit in
Reply of the developer at record page 510, it was submitted that except
contending that the Respondent No.9 allegedly belongs to the Sumer
Group, no other particulars are available about Respondent No.9.
7 It was submitted that after suppressing all the material fact
from the Joint Charity Commissioner, it was not open for the
Respondents to now contend that K. C. Foundation has imposed
conditions. Mr. Madon submitted that the fact that a meeting dated 6th
July, 2004 was held by the Charity Commissioner had not been disputed.
He invited my attention to the letter dated 14th February, 2005 written
by David M. Talegaonkar President of the Trust and submitted that the
reliance placed on so called General Body Resolution dated 15th April,
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2003 was completely mis leading. It was submitted that even in the
year 2005, the trust had shown very keen interest in accepting the
donation from K. C. Foundation. Mr. Madon, thereafter, took me
through the scheme of Sir Elly Kadoorie School Trust and by relying on
clauses 5,6 and 7, it was pointed out that the Anglo Jewish Association
was having rights to nominate every five years two trustees of the trust
who may or may not be members of the School Trust or of Jewish faith.
Mr. Madon submitted that admittedly, these trustees had not been
appointed at the relevant time and the remaining trustees proceeded to
file application in a great hurry without even calling upon the Anglo
Jewish Association to nominate their two trustees. The remaining
trustees hurriedly passed the resolution in favour of the alienation of the
property of the trust. It was pointed out that the Petitioner No.2 and
Navin Munjal were nominated as trustees only on 9th December, 2010.
It was also pointed out that in this manner, the Anglo Jewish
Association had been completely bye passed and the trustees passed the
resolution with a view to somehow create right in favour of Respondent
Nos.8 and 9. He lastly submitted that all three newspapers namely
"Vritta-Manas" (Marathi), Mumbai Dainik Sandhya (Hindi) and "For
Me" (English) are completely unknown newspapers. Reliance was placed
on the Judgment of the Division Bench of Allahabad High Court in the
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case of A.S. Advertising Co., Meerut and another v/s. Nagar Nigam,
Meerut, and anotherb and particularly paragraphs 10 to 13 of the said
Judgment delivered by Mr. M. Katju J (as he was then). Reliance was
also placed on another Judgment of the Allahabad High Court in the
case of Shakti Narain Singh v/s. Anoop Singh and othersc (delivered
by M.Katju J.) and particularly paragraphs 3 to 5 thereof. Mr. Madon
pointed out that in Affidavit in Reply dated 26th November, 2011 filed by
Respondent No.3, it was submitted that the circulation of Vritta Manas is
75,000 copies per day and the Mumbai Sandhya has a daily circulation
of 1,10,000 in its Hindi Edition and 130000 in its Marathi Edition but no
certificates in support of this submission have been produced. He also
pointed out that no details regarding the circulation of English
newspaper "For Me" have been given. It was lastly urged that the Joint
Charity Commissioner has not taken into consideration the order dated
12th April, 2006 (record page 160) whereby the trustees were directed to
be prosecuted. He submitted that in the plan proposed in the M.O.U.
there is no provision made for a play ground, even though there is play
ground approximately of 2900 sq. meter: 33,000 sq. ft. Mr. Madon
therefore submits that consequently the conduct of the trust for inviting
tender was made with a pre-determined plan to allot a contract of
redevelopment to Respondent No.8.
b MANU/UP/0006/2001
c MANU/UP/0216/2004
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8 Mr. Madon invited my attention to paragraph (e) at page 420,
Affidavit of Respondent No.3 and the Rejoinder of the Petitioners. He
submitted that after the impugned order was passed on 6th May, 2010
there was a letter of Respondent No.8 to Respondent No.2 Trust. He
invited my attention to the Affidavit -in-Rejoinder at page 680 and to the
letter dated 9th November,2011, item No.11 in that letter. He submitted
that when inspection was given, letter dated 2nd September,2009
addressed by Respondent No.2 to Respondent No.8 with a copy to
Respondent No.9 was shown and hence a photocopy was asked for. He
submitted that it was made clear that inspection of that letter had not
been offered. He brought to my notice the contents of the Reply dated
12th November, 2011 and Item No. 16 of the said Reply and contended
that now the Respondents were claiming that the letter is dated 9 th
May, 2010. He invited my attention to the letter dated 15th November,
2011 which is again a letter written by the Advocate of the Petitioner
which reiterates that inspection of a copy of the letter dated 2nd
September, 2009 addressed by Respondent No.2 to Respondent No.8
with C.C. to Respondent No.9 was offered. He ultimately stated that on
6th May, 2010 the order of Charity Commissioner was passed
immediately on the next date i.e. on 7th May, 2010 the Respondent No.
8 wrote a letter to Respondent No. 2 and on 9th May, 2010, Respondent
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No.2 immediately accepted the Respondent No. 9 as nominee of
Respondent No.8 without any verification of the credentials of the
Respondent No.9.
9. He submits that by the very nature of the contract which was for
re-development, benefits under the contract could not have been
permitted to be transferred in as much as the Joint Charity
Commissioner has not considered the capacity or ability either of
Respondent No.8 or of Respondent No.9 and Mr. Madon, therefore,
requested that the case for interference under Articles 226 and 227 of
the Constitution of India has been made out and prayed that the
impugned order be quashed and set aside in its entity and the
application under Section 36(1)(a) should be dismissed. It was
ultimately submitted that the matter be remand back to the Charity
Commissioner with a direction to invite bids from reputed developers so
that the entire process of re-development and choosing of a developer
takes place in a transparent manner.
10 On the other hand Mr. Aspi Chinoy, learned Senior Counsel
appearing for the Respondent Nos. 8 and 9, submitted that the building
of the School is constructed in 1875 and is more than 125 years old.
That it was repaired in 1924 and 1932. That by 2002, major repairs
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were required costing Rs.1500/- per square foot and by 2007 the
building had become dangerous and was liable to be demolished and
notice under section 354 of the M.M.C. Act, 1988 was proposed to be
issued by MCGM. He submitted that in the year 2009, the Trust had no
funds to undertake such repairs. My attention was invited to Affidavit-
in-Reply of Respondent No.9 and paragraph 4 thereof was relied upon
to contend that there was a General Body Resolution passed on
09.11.2008 which was followed by Resolution by the Trust passed on
6th January, 2009. He submitted that internal noting of MCGM showed
that a decision to issue section 354 notice had been taken. He submitted
that public advertisements were issued in Daily 'Vritta-Manas' and
'Mumbai Sandhya' having substantially high circulation. A valuation
report was obtained in which the valuation was shown at Rs.
6,23,00,000/-. Nine Bids were received and a meeting was held on
18th June, 2009. He drew my attention to the comparative chart and
stated that the value offered by Respondent No.8 was rightly arrived
at Rs.13 crores 19 lakhs. The Trustees thereafter passed a resolution
on the same day and MOU was executed on 06.07.2009 followed by an
Application under section 36(1)(a) in August, 2009. He submitted that
only thereafter Aglo Jewish Association nominated two Trustees.
Inviting my attention to the letter written by Michael Kadoori to the
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Chief Minister of Maharashtra, he submitted that at least in September,
2010 the Anglo Jewish Association was aware about the order of
Charity Commissioner but no steps were taken. He submitted that all
arrears of lease rent and other property taxes have been paid. A
registered development agreement is executed on 24.05.2010. Letter
of possession and allotment of tenancy have been issued and consent
from 18 tenants have been obtained.
He submitted that the Court will have to see : (a) Whether there
was need; (b) whether the decision was taken by authorized
persons/trustees; (c) was a transparent process followed; (d) whether
the Charity Commissioner has considered all the relevant factors.
12 He submitted that no guess work is permissible. He submitted
that there was a complete inaction till August, 2011 and hence, the
Petition was barred by delay, laches and any interference at this stage
will cause severe prejudice to Respondent No. 9 as a lot of activities
have taken place. He submitted that the circulation figures of the
English News Papers "For Me" were not available but in fact the
Trustees did not decide to issue an advertisement in English News Paper
but that advertisement was issued since all three newspapers were of
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same publication and it was package deal. He submitted that there
were three aspects about the necessity of repairs namely : Stage -(1) No
doubt about necessity - the Buildings are about to fall, part of the
School is closed. There was Dire Necessity - Borne out by documents
which are unimpeachable. The cost of repairs was prohibitive; Stage-
(2) Process of Bidding which consists of : (a) Valuation Report; (b)
Advertisement in papers having circulation of 70,000/- and
1,30,000/-.; (c) Receipt of 9 Bids; (d) Rebidding permitted; (e)
Analysis of the Bids - Respondent No.8 emerging as highest; (d) The
choice of Respondent No.8 & Resolution.
13 Mr. Chinoy relied upon Chart at page 472 and contended that a
very elaborate process of preparing a chart of comparative bids was
followed and only thereafter a decision to accept the bid of Respondent
No. 8 was taken and MOU was executed followed by filing of
Application under section 36(1)(a). It is submitted that no case is made
out that there is any under valuation. No case of insufficiency of bids
is made out. No case that a higher amount could have been received
was made out and the Petition proceeds on entirely different footing to
the effect that it was not necessary to re-develop building of the
School. No one has come out with a higher bid. The Writ Petition is
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filed in August, 2011 i.e. 2 years after the development and three
months after the impugned order. He submitted that no case of
inadequate circulation of the newspapers is made out and submitted
that the advertisements have been issued in reputed newspapers having
sufficiently large circulation. He submitted that it will be hazardous to
make any guess work particularly when there is no argument about
under valuation. It was submitted that there is neither pleading nor any
material regarding under valuation and the Court should be loathe to
set aside sanction on presumptions particularly when there is no
under valuation pleaded and therefore, the Court should not proceed
on the basis of the presumption only in the mind of the Judge and the
Court cannot consider the case of under valuation in the absence of
the pleading. He submitted that since there is no other bidder and in
view of the absence of the pleadings, the Court need not carry a
feeling that there was any under valuation.
14 He submitted that even the third stage of proceeding before the
Charity Commissioner was very fair and it took almost 10 months. He
submitted that there was no suppression of material facts. He
submitted that the donation from Micheal Kadoori's Trust was initially
offered in the year 2001 but it did not materialize for 8 years. Though
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a committee was constituted in 2004, no steps were taken for 5 years
and, therefore, both the factors were completely irrelevant since in the
meantime the structure has become completely dilapidated in the year
2009. He, therefore, submitted that there was no necessity to disclose
about the offer of donation nor there was any necessity to disclose
about the fact that there was an earlier Application under Section 36
which was dismissed for non-prosecution. He submitted that there was
sufficient material before the Joint Charity Commissioner in the form
of chart to come to the conclusion that the offer was much more than
the valuation of 6.23 crores. He invited my attention to paragraphs
2,10 and 13 of the impugned order and contended that the Charity
Commissioner was conscious of the fact that the Trust Deed does not
contain any power of alienation and on a conscious application of
mind, the permission to alienate the Trust Property was given. It was
submitted that the offer given by the KCF was a conditional offer and
he wanted Godarej Properties and his nominees to take over the Trust.
It was submitted that the nominees of Anglo Jewish Association had
never been named from 1965 and the Trust was entitled to function
only with the elected Trustees and since nominees were not appointed
till 2010, no fault can be found with the remaining Trustees. He
tried to distinguish two Judgments delivered by Justice Katju of the
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Allahabad High Court and contended that the those were not applicable
since in those cases the number of circulation of the respective
newspapers was not available. He submitted that in the present case
there is no grievance about insufficiency of the bidders or insufficiency
of bids and 9 bidders participated in the tender process. Regarding
non-provision of the play ground, he submitted that there was a D.P.
Reservation of play ground and the play ground will be provided to the
owner. He submitted that the Petitioners are employees of the
company controlled by M.M. Kadoori and therefore, challenge at their
instance should not be entertained.
15 Mr. Samdani, learned Senior Counsel appearing for the
Respondent Nos. 2 to 7 advanced following submissions. At the
outset, he submitted an Affidavit of Respondent No. 3 stating that the
Trustees had decided to issue advertisement only in one Hindi and one
Marathi newspapers but since advertisement in a third newspaper
named "FOR ME' which was in English language and published by the
same publishing house was available as package deal and since, the
advertisement in the English newspapers was free of cost, the
advertisement was also published in English Paper. He submitted that
there were four aspects, namely, (i) condition of chawl and school
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building, (ii) financial condition of the Trust (iii) valuation of the
property and (iv) process of sanction.
16 On point No.(i) Mr. Samdani relied upon the reports of the
Architect of the year 2000 (pages 734 and 736) and submitted that the
structure was undisputedly in dilapidated condition and was more
than 75 years old. He submitted that even BMC had taken an internal
decision to issue notice for demolition and hence, the condition of the
Chawl and the School building was indisputably dangerous. It was
not possible to repair the said buildings and hence, demolition and re-
construction was the only possible solution.
17 On point No.2, regarding financial condition of the Trust, he
submitted that the Trust has no source of income, save and except the
meagre rent and funds received from the students though even the
taxes were in arrears and the MCGM was about to auction the
property of the Trust. There was no corpus available with the Trust and
the building requires re-construction and hence, the there was
compelling necessity for selling the land and reconstruction of the
building.
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18 On the third point regarding valuation Mr. Samdani submitted
that the report is prepared by a Government approved valuer on
18.05.2009. Since the report refers to slum pocket, on the query from
the Court, he frankly submitted that there was no slum and only the
chawl was being referred as slum. He also frankly admitted that the
valuer has not considered the entire area of the land for arriving at the
valuation but has considered only notional balance of FSI. On the
query from the Court he frankly submitted that there was no
consideration of the enhanced FSI available under D.C.R. 33(7) made
by the valuer. He however submitted that since there was no allegation
about incorrect valuation, the Court must proceed on the assumption
that the valuation was correct. He submitted that on 13.04.2010, the
Joint Charity Commissioner asked for explanation about the valuation
report which was submitted on 20th April, 2010 below Exh. 34.
However, this explanation, prima facie, gives entirely different figures
then those which are found in the comparative chart at page 472. Mr.
Samdani submitted that since there was no challenge to the valuation,
the Court cannot go and need not go in the question as to whether
the valuation was proper or improper.
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19 Regarding Point No. 4 of the process which is followed, he relied
upon page 418 of the record and stated that the General Body of the
Trust had taken a decision on 09.11.2008 to redevelop the property
and grant development rights which was followed by a Resolution of
the Trustees on 06.01.2009, valuation report dated 18.05.2009, public
notice dated 26.05.2009, submission of bids of 9 bidders and
participation of 4 bidders in the process of rebidding, preparation of
the report of the Advocate and the Trustees followed by signing of MOU
on 06.07.2009 and an Application under section 36 (1)(A) on
13.07.2009 followed by another Application under section 36(1)(C) on
26.08.2009 which ultimately culminated in passing of the order dated
6.5.2010. Thereafter, on the next date i.e. 07.05.2010 a request was
received from the Respondent No.8 for transferring the rights of
development to Respondent No.9 and hence, the Trustees immediately
convened urgent meeting and it was agreed that instead of Respondent
No.8, Respondent No. 9 should be appointed as developer. He,
therefore, submitted that the Trustees have followed a proper and
transparent process and have acted in the best interest of the Trust
and hence no fault can be found with the process adopted by the
Trustees.
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20 Countering the argument of Mr. Madon, regarding donation of
K.C. Foundation, he submitted that though there was an offer for
donation for the year 2000, it was a conditional offer from Michel
Kadoori who wanted to take over management of the Trust. Mr.
Samdani was, however, unable to show a single document on the
basis of which the offer for donation should be considered to be
conditional. He, however, submitted that in the Affidavit-in-Reply, the
Respondent No.3 had alleged that offer for donation was conditional
offer and that there was no denial in the rejoinder and hence, the Court
must accept that the offer for donation from K. C. Foundation was a
conditional offer. He relied upon the Resolution of the Special General
Body Meeting dated 15.04.2003 attended by 55 members to contend
that the conditional offer was rejected. However, on a careful perusal
of the said Resolution at pages 461 and 464 it is clear that the
Resolution does not indicate that the offer for donation was a
conditional offer. All that the resolution states is that the General Body
shall propose the amendment to the scheme or trust deed so as to
permit the non jewish members from becoming the members of the
Trust. Since this argument about conditional offer was again and again
being advanced, on a pointed question from the Court to show any
document available on record to show that the offer was conditional
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offer, Mr.Samdani was unable to pin point a single document to that
effect.
21 He submitted that the Petitioner No. 2 is an employee of the
private limited company which is a company controlled by Sir Micheal
Kadoori. He submitted that Petitioner No.1 has been set up by his
brother Herzel Simon, who had submitted an objection to the change
report and was fully aware of the impugned order. It was submitted
that Shri Herzel Simon had filed an Application for revocation of the
sanction before the Charity Commissioner under Section 36(2) of the BP
Act, 1950 which is pending. He submitted that there is no ground in
the Writ Petition about any under hand dealing. It was submitted that
no nominees were sent by the Anglo Jewish Association and hence
member of the trustees were under no obligation to accept such
nominations.
22 Relying on the observations in paragraphs 7 to 9 of the Judgment
of the Supreme Court in the case of M.Purandara & Ors. vs.
Mahadesha S. & Ors.d it was submitted that a ground which is not
taken in the Writ Petition should not be allowed to be argued or
agitated. Mr.Samdani also relied upon the observations in paragraph
d 2005 (6) SCC 791,
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No 37 of the Judgment of the Supreme Court in B.S.N. Joshi & Sons
Limited vs. Nair Coal Services Ltd. and Ors,e and contended that
since no plea regarding under valuation or inadequate consideration
for the Trust property had been raised in the Writ Petition, such
contention should not be allowed to be raised at the time of hearing.
He submitted that though contention about the newspapers had been
raised, two newspaper were shown to have substantial circulation. He
further contended that in any case, the question regarding circulation
of the newspapers was irrelevant as there was no allegation that the
Trust had suffered monetory loss.
23 Mr. V. A. Thorat, learned senior Advocate for the added
Respondents who are tenants/ occupants of the Chawl owned by the
Trust, contended that the impugned order was not a sanction for sale
but was a sanction for redevelopment. That the impugned order has
been acted upon by execution of the development agreement on
22.05.2010 and the Petition has been filed after 15 months and hence,
it should not be entertained. He submitted that it is the Petitioners'
desire that the property should have been repaired but the court's
intervention has not been sought for getting better price for the
property of the Trust. He submitted that the purpose of the Petitioner
e 2006(11) SCC 548
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will not be satisfied even if the Court directs re-bid or re-auction of the
property. He submitted that the Petitioners are the only persons who
have challenged the impugned order. He relied upon paragraph 39 of
the Writ Petition and contended that the principal challenge is of fraud,
collusion, mis-representation and suppression of material facts. He
submitted that same grounds had been reiterated in grounds (a) to
(c), (i) and (j). He submitted that under Articles 226 and 227 this
court cannot go into the question of fraud and jurisdiction to consider
a ground of fraud is an exclusive power conferred on Charity
Commissioner under sub-section 2 of Section 36. He submitted that
the Petitioners have an alternate remedy of approaching the Charity
Commissioner under that Section and that the High Court is not well
equipped to conduct such an enquiry. He submitted that the entire
challenge is one which is covered by subsection (2) of section 36. He
relied upon the Judgment in Shri Mahadeo Deosthan, Wadali & Ors.
vs. Joint Charity Commissioner, Nagpur and othersf in particular
paras 9 and 10 to contend that once the Development Agreement was
executed, even the remedy under sub-section 2 of Section 36 was not
available. He relied upon the Judgment of the learned single Judge of
this court (R.S.Mohite,J.) in the case of Shri Motilal Girdharilal
f 1989 Mh. L.J.269,
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Sharma & Ors. Vs. Shri Dattatray Bandu Jagtap & Ors.g para -3,
and other Judgment of the learned single Judge of this Court
(S.M.Daud, J.) in the case of Mrs. Fatmabai B. Bachooali Vs. State
of Maharashtra and Ors.h paras 6 and 7. He submitted that in view
of this settled position, the remedy under section 36(2) was not
available and for the same reasons remedy under Article 226 and 227
was also not available.
He submitted that the if the Court does not find any suspicious
circumstances, the exercise of inviting fresh offers is alway fraught
with difficulties and Trust would not or may not even get an offer
equivalent to the offer made by the Respondent No.8. He submitted
that the order of sanction has been worked out by the execution of the
Development Agreement, even tenancies have been attorned and
therefore, even if no actual development has taken place, this Court
is now powerless to interfere in the entire process. He submitted that
out of 24 tenants, 17 have entered into registered agreements with the
developers and the Court must consider the plight of the tenants and
the prejudice which will be caused to them. He submitted that the
Trust was benefited by getting a new building of 46 thousand sq. ft..
Relying on paragraph 21 of the Judgment of the Full Bench in the case
g 2006(2) ALL MR 121
h AIR 1991 Bombay 220
:25: 7233.11.wp
of Sailesh Developers (Supra) he submitted that there is no necessity
to file a separate Application under section 36(1)(c). Relying on the
judgment of the Division Bench in the case of Bomi Jal Mistry &
Ors. vs. Joint Charity Commissioneri it was submitted that the court
cannot sit in appeal over the decision of the Charity Commissioner
when the Charity Commissioner has recorded a subjective satisfaction.
He submitted that neither inadequacy of consideration nor any lack of
transparency in the process have been pleaded nor any loss to the Trust
is pleaded and the Petition is filed by the persons whose offers of
donation have failed. He submitted that any interference by this Court
would be detrimental not only for the Trust but also for the students
and tenants and hence, this Court should not interfere in the entire
process.
25 The record from the office of the Joint Charity Commissioner had
been called for and the same has been received earlier. All the
concerned Advocates were given an opportunity to take inspection of the
said record. Accordingly, inspection of the record has been taken and
submissions have also been made on the basis of the said inspection.
i 2002(3) ALL MR 749
:26: 7233.11.wp
26 Mr. Madon, the learned Advocate for the Petitioners in his brief
rejoinder submitted that the trustees have filed misleading affidavit, that
the certificates of circulation of newspapers are misleading and figures
are inflated. He also doubted the correctness of the Resolution allegedly
passed on 8th May, 2010 since there was no agenda. In respect of the
submission of Mr. Chinoy, that there are no competing bidders, Mr.
Madon, submitted that Charity Commissioner has not issued any public
notice and there was no opportunity for third party bidder to submit a
higher bid. He has drawn my attention to the caveat filed by Mr. Jain
before the Joint Charity Commissioner at page No. 781 of the record of
the proceedings before the Joint Charity Commissioner and pointed out
that no notice was given even to the said caveator. He relied upon the
Judgment of Madras High Court in the case of K.Narayanan Reddy Vs.
State of Tamilnadu.j
27 Mr. Madon, further submitted that area of ORT School is 9500
sq.ft, whereas Joint Additional Commissioner has wrongly considered it
as 5,000 sqft. He pointed out that that the explanation which was
offered by Advocate Bharat Mehta about pricing was also different than
the chart prepared by the trustees and their advocate during the process
of biding.
j (2008) 2 MLJ 582
:27: 7233.11.wp
28 In so far as submission of the Respondents that the offer for
donation by the K. C. Foundation was a conditional offer, he submitted
that there is not a single document on record to support the submission
of the Respondents that offer for donation was a conditional offer. He
submitted that except the statement and affidavit in reply of Respondent
No.3, there is nothing to indicate that a conditional offer for donation
was made. He submitted that even these statements have been denied
by the Petitioners by filing affidavit in rejoinder. He submitted that the
Petitioners are no doubt the employees of the companies which are
controlled by Shri. Michael Kadoorie. He therefore submitted that K. C.
Foundation was even today interested in giving donation to the
Respondent No.2 trust so that the entire trust property can be retained
with the trust.
29 In so far as the playground is concerned, he submitted that
Memorandum of Understanding between the trust and Respondent No.8
does not provide for any such playground and all that is provided for is
only overall constructed building. He pointed out that according to the
Memorandum of Understanding, trust will lose its right as lessee and
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developer will become a lessee on account of agreement of assignment
of lease hold rights executed in favour of developer by the trust. In so
far as delay in filing Petition is concerned he submitted that many letters
of consent from the tenants have been executed in the month of
September 2011 and, hence, there is no question of delay. He submitted
that Charity Commissioner has not considered the proposed prosecution
of the trustees and, according to him, this completely vitiates the
impugned order passed by the Charity Commissioner.
30 I have carefully considered the rival submissions. The attack
against the order of the Charity Commissioner has to be considered on
the basis of the following four aspects:-
i) Whether there was any need or compelling necessity for the
trustees to take a decision that the building of the school had to
be demolished and reconstructed?
ii) Whether the process followed by the trustees to invite bids from
intending developers was a fair and transparent process?
iii) Whether it was necessary for the trustees to disclose to the Charity
Commissioner that K. C. Foundation had shown its willingness to
donate Rs.4.51 crores to the trustees for the purposes of entire
restoration and repairs of the building owned by the trust and for
ensuring that trust has sufficient funds at its disposal?
iv) Whether the procedure followed by the trustees to invite bids
from intending developers was a fair and transparent and
:29: 7233.11.wp
whether the Joint Charity Commissioner had made any efforts to
get the best possible price for trust property and whether the
procedure followed by the Jt. Charity Commissioner was legal &
proper.
31 In so far as the first question as to whether it was necessary to
demolish the buildings of the trust and reconstruct them is concerned, it
is not in doubt that the buildings are more than 75 years old. It is also
not in doubt that even according to the architects appointed by K. C.
Foundation,the buildings required extensive repairs and restoration in
the year 2001 itself. By the year 2009, the condition of the building had
deteriorated further and it had become incumbent to ensure that either
the buildings are extensively repaired or reconstructed. The tentative
cost of the repairs, considering the age of the building and nature of
construction was almost equivalent to the cost of new construction. For
one reason or the other, the donation promised by K. C. Foundation had
not been received. In such a situation, it cannot be held that the trustees
were not justified in coming to the conclusion that the property of the
trust should be redeveloped. The first point has to be therefore,
answered in favour of the trustees. Though the Joint Charity
Commissioner has not passed a separate order on the application filed
under Section 36(1)(c) of the Act, a perusal of the entire impugned
order shows that there is some application of mind by the Joint Charity
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Commissioner to this controversy and, hence, it is difficult to accept the
submission of Mr. Madon, that Joint Charity Commissioner has not
applied his mind to Section 36(1)(c)of the Act. The Joint Charity
Commissioner was conscious of the fact that deed of trust did not
permit the trustees to alienate trust property and there is reference to
the application under Section 36 (1) (c). In paragraph No. 13, the
Charity Commissioner has held that permission to alienate the property
can also be very well granted.ig
32 This leads to the second aspect as to whether the trustees had
followed a transparent procedure in inviting bids from prospective
developers. In this regard, what is surprising to note that during the
course of submission, as also in the affidavit, which was filed by
Respondent No.3 dated 13th November, 2011 it is boldly stated that the
trustees desired to issue an advertisement only in Marathi and Hindi
newspapers. The property is situated in the heart of Mumbai and is
substantially valuable property. Any trustees who desire to redevelop
the property for the benefit of the trust will invariably have a strong
desire that trust's property should fetch best prices. Mumbai is a
Metropolitan city and many important publications and widely
circulated English newspapers are published in Mumbai and are widely
:31: 7233.11.wp
read. During the course of argument, Mr. Chinoy and Mr. Samdani fairly
accepted that the advertisement was published in English newspaper
namely "For Me" only because of the fact that the said advertisement
was offered as a complimentary advertisement. From the receipt,
which has been produced on record, it is clear that for two
advertisements, one in Marathi newspaper "Vratta Manas"and other in
Hindi newspaper "Mumbai Sandhya", a sum of Rs.11,500/- per
advertisement has been charged and there is a clear remark that the
advertisement in English newspaper was given as complimentary. Any
trustee who would desire to have a best bid for trust property, will never
think of not publishing an advertisement in English newspaper like
widely circulated and reputed newspapers like the Times of India,
Indian Express, Hindustan Times, DNA etc., which are published in
Mumbai and they are widely circulated. In such a situation, the
decision of the trustees not to publish advertisement in a reputed
English newspaper is quite baffling to say the least. Even the choice of
Marathi and Hindi newspaper is quite surprising. The Marathi
newspapers like Maharashtra Times, Loksatta, Samana, Sakal, Navakal
are widely circulated in Mumbai. Instead of publishing advertisement
in any of these newspapers, the decision to publish an advertisement in
a little known Marathi newspapers like " Vratta Manas" is also baffling.
:32: 7233.11.wp
The same is the case in respect of the choice of Hindi Newspaper. There
are many reputed Hindi Newspapers like Navbharat Times in Mumbai,
however the decision of not choosing any of these newspapers also does
not stand to any reason. Any person who desires to have a best possible
offer would have certainly ensured that the advertisements are
published in widely circulated Marathi, Hindi and English newspapers of
repute which has not been done. This action of the trustees cannot be
therefore held to be a bonafide action. Mr. Madon was justified in
relying upon the judgment of A. S. Advertisement Company, Meerut and
Anr(supra). Paragraph Nos.10 to 13 of the said judgment read thus:-
"10. It is settled law that auction by public authorities is
not largesse vide Ramanna Shetty V International Airport
Authority, MANU/ SC/0048/ 1979: AIR 1979 SC 1628.
Hence contracts by such bodies can only be given after wide
publication in well known newspapers so that all eligible
persons can participate in the auction/tender. IT is well
known that there are reputed newspapers like "Dainik
Jagran", "Amar Ujala" etc in Hindi and Times of India,
"Hindustan Times", etc in English which have wide
circulation in Meerut but it is very surprising that the
impugned auction notice was not made in any of these well
known newspapers but int he newspapers called "Meerut
Samachar"and "Dainik Heera Times" which are practically
unknown. We are not satisfied that 'Meerut Samachar' and
:33: 7233.11.wp
'Dainik Heera Times' are well known newspapers having
wide circulation. In fact, it is strange that whereas the
notice dated 16.06.2000 was published in the well known
newspaper Dainik Jagran, but thereafter the contract was
not finalized and instead the Nagar Nigam strangely again
advertised the auction but this time practically in unknown
newspapers.
11. As observed by this Court in S. K. Dixit v D. I. O. S.
1995(2) ALR 601." It is well known that in the State of
Uttar Pradesh several fraudulent newspapers have sprung
up in almost every city and these newspapers have very
little circulation and they publish only a few copies with
the intention of creating an impression that the vacancy or
auction was advertised (in case there is any challenge to
the same.) Very often it happens that even these few
newspaper copies carrying the so called advertisement are
either not distributed or sold, or the relevant page is
removed before distribution or sale. This nefarious
practice has become so widespread that now the time has
come when it must be stopped. There are well known
Hindi Newspapers e.g., Dainik Jagran, Amar Ujala,
Swatantra Bharat, Nav Bharat Times, etc., having wide
circulation in the State of Uttar Pradesh and it is
surprising that in almost all the cases which have come up
before this Court the vacancies are not advertised in
these well known newspapers which have wide circulation
but they are advertised in some fraudulent or unknown
newspaper having little or no circulation".
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12.In a Division Bench decision of this Court in the case of
M/s. Lalluji and Sons and others v State of U.P. And others,
Writ Petition No.41992 of 1993, decided on 16.12.1993,
it has been held that publication must be in a well known
newspaper having wide circulation, and the advertisement
in a newspaper having little or no circulation cannot be of
any avail to the petitioner.
13.In our opinion,advertisement in an unknown
newspaper stands on the same footing as no advertisement
at all since,the purpose of the advertisement is that there
should be wide publicity otherwise Article 14 of the
Constitution will b e violated"
33 The objection regarding deliberately publishing in unknown
newspapers has been specifically raised in the Writ Petition and there is
no question of absence of any pleadings in that regard.
34 Mr. Madon, was also justified in relying upon the judgment of
learned single Judge of Madras High Court in the case of K. Narayanan
Reddy v/s State ofk Tamilnadu Paragraph Nos. 12, 13,14 and 15 of the
said judgment read thus:
k( 2008) 2 M.L. J. 582.
:35: 7233.11.wp
12. First, let me consider the first contention of the writ
petitioner that 4(1) notification was not published in the
widely circulated newspapers of that area resulting in
vitiation of the acquisition proceedings.
13. It is true that in 2001(4) CTC 108 (cited supra),
2002(4) CTC 288 (cited supra) and 2002(1) CTC 28
(cited supra), this Court interfered with the acquisition
proceedings on the ground that 4(1) notification was not
published in a widely circulated newspapers in that
locality.
14. But in the unreported judgment dt.24.3.2006 (cited
supra), the First Bench of this Court, while dealing with
such a contention held as under:
"8. Coming to the last contention, namely lack of proper
newspaper publication, the learned counsel for the
appellants drew our attention to the affidavit filed in the
appeal proceedings. In this affidavit, which is sworn to by
the Member Secretary, Chennai Metropolitan Development
Authority, it is asserted that "Dinakaran", "Makkal Kural"
and "Kumari Murasu" are newspapers approved by the
Registrar, Newspapers of India and also approved by
the Government of Tamil Nadu. In fact, all the legal
advertisements of the Government, Local Bodies and Co-
operatives are published in these dailies. It is also asserted
that these newspapers are in wide circulation in the area
where the lands were acquired. The learned senior counsel
for the writ petitioners also fairly conceded that
"Dinakaran" and "Makkal Kural" are having wide
circulation. However, he maintained that "Kumari
Murasu" has very little or no circulation in the said area.
It is pertinent to note that this objection was not raised by
the writ petitioners at any point of time during the
acquisition proceedings. This point was also not originally
raised in the writ petitions, but subsequently, an affidavit
came to be filed alleging that there was lack of publicity. It
is not disputed before us that the land owners have
participated in the enquiry conducted under Section 5-A of
the Act and did not raise any objection at that time in the
:36: 7233.11.wp
matter of publication in the newspapers. The newspapers
in question are approved newspapers and all the legal
advertisements of the Government, Local Bodies and Co-
operatives are published in these newspapers. Considering
all these facts, we are of the view that there is no substance
in the grievance of the writ petitioners that there was lack
of proper paper publication."
15. Further, in a very recent judgment reported in 2007(2)
CTC 369 (cited supra), another Division Bench of this
Court held as follows:
"22.5. But, what all the petitioners contend is that the
publication of the notification was made in two dailies,
which do not have wide circulation in the locality.
22.6. Of course reliance was placed by the petitioners in
this regard on a decision of the Division Bench of this
Court dated 8.11.2001 made in W.A.No.1536 and 1554 of
2001 (The State of Tamil Nadu through its Secretary, Adi
Dravidar and Tribal Welfare, Chennai vs. Kailasa
Nambiar) whereunder it was held as under:
"Common question arises regarding the validity of the
publication of Section 4(1) notification in "Kumari
Murasu" and "Kinnus" newspapers. Both are Tamil dailies.
These two newspapers, indisputably are not having wide
circulation and have got very limited circulation. That
apart, one of the newspaper should be preferably in
English while the other should be compulsorily in the
Regional Language. If that be so, the publication of
Section 4(1) notification in two Tamil dailies, not having
wide circulation, does not conform to the requirement of
law. The legal imposition of publication in two daily
newspapers is mandatory, for the reason that they should
be made known to the general public, so that they have
knowledge of the intended acquisition and then put for
their objections, if they so wish. This being the object and
intendment, it cannot be scuttled by publishing the same in
the newspapers, which are very insignificant, and not
having wide circulation. In fact, this requirement of
publication in newspapers was not there before the
:37: 7233.11.wp
amending Act of 1984. Because of the experience in
working of the provisions and the complaints of the public,
particularly of the persons interested and affected, of
having no knowledge of the acquisition, the Parliament has
thought it fit to incorporate the provisions, making it
mandatory to publish Section 4(1) notification not only in
the gazette and locality, but also in two prominent daily
newspapers, one out of which should be in vernacular of
that area. We had already dealt with this proposition in
the case of Krishnan.V v. Government of Tamil Nadu (2001
(4) CDTC 108), which is also to the same effect that paper
publication should be made, one in English daily and
another in the Regional Language of wide circulation. We
have perused the judgments in RAMIAH MOOPANAR v.
STATE OF TAMIL NADU (2000 (1) CTC 117) and
CHELLADURAI,N. v. GOVERNMENT OF TAMIL NADU
(2000 (III) CTC 215). We approve the view taken by the
learned single Judge in those cases. A Division Bench
judgment of this Court was brought to our notice rendered
in W.A.No.673 of 2001, dated 10.4.2001. But the said
judgment did not lay down any legal principles. In fact the
judgments rendered by the learned Single Judge, referred
to supra, have been mentioned before the said Division
Bench. But, the Division Bench has dismissed the Writ
Appeal on the ground of laches, as the award was passed
long back. In the circumstances, we uphold the order of
the learned single Judge, and we hold that the paper
publication made is erroneous and direct that the paper
publication to be made in prominent daily newspapers, one
in English and another in the Regional Language, i.e.,
Tamil, having wide circulation."
22.7. No doubt, the publication in the newspapers as well
as the public notice in the locality should be made in an
effective manner, or otherwise it would seriously affect the
purport and intent of such publication, which was meant
specifically for bringing to the notice of the local people in
order to come forward with their say with regard to the
acquisition sought to be made, and the purpose of
effecting publication in the newspapers having circulation
in the locality cannot be treated as a mere formality.
There should be purposeful compliance of the provisions of
:38: 7233.11.wp
Section 4(1) of the Act and it cannot be reduced to an
empty formality. The requirement to cause publication in
the newspapers is basic and fundamental and the
statutory requirements cannot be compared with the
requirement of giving personal notice to interested persons.
22.8. But, in the instant case, the publication of the
notifications were made apart from the Government
Gazette also in Tamil dailies, viz., "Dina Bhoomi", "Malai
Murasu", "Kathiravan", "Makkal Seithi", etc. and also by
beat of tom tom in the locality. When the State strongly
contends that these newspapers are being circulated in the
locality, it may not be proper for this Court, while
exercising the power of judicial review under Article 226 of
of the Constitution of India, as the power under Article
does not permit this Court to go into the factual disputes of
the case, unless and otherwise the facts are indisputed, as
in the case in W.A.No.1536 and 1554 of 2001 ((The State
of Tamil Nadu through its Secretary, Adi Dravidar and
Tribal Welfare, Chennai vs. Kailasa Nambiar), nor it is
permissible for this Court to jump into the conclusion that
the publication of the notification was not made in the
newspaper having circulation in the locality, more so
where the records produced before us disclose that it is
otherwise and the public notice was also made by beat of
tom tom.
22.9. We, therefore, hold that the impugned acquisition
cannot be held to be vitiated for want of any compliance of
all three modes of publication as contemplated in Section
4(1) of the Act, as such publication by all three modes is
found to be correct on record."
35 There is virtually no explanation coming forth from the
Respondent No.2 and its trustees as to why they decided not to publish
any advertisement in an English Newspaper or what was the logic
behind publishing an advertisement in little known papers like
"Vrittamanas" and "Mumbai Sandhya". Merely because these two
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newspapers are shown to be having circulation exceeding 75,000 and
1,00,000 in the area of Mumbai and surrounding districts, it cannot be
overlooked that these News Papers are not known to be and cannot be
considered to be reputed newspapers which will attract attention of all
the builders and developers who may be intending to take up the
developments of the property of the trust.
36 The choice of the newspapers which are not reputed
newspapers having large circulation in Mumbai goes to the root of the
entire matter and in my opinion, it was not proper on the part of the
trustees to decide not to publish an advertisement in an English
newspaper. It was also an imprudent act to choose the newspapers like
'Vritta Manas' and Hindi 'Mumbai Sandhya' for the purpose of
publication of the advertisement.
37 The submission of Mr. Chinoy and Mr. Samdani that the
process which was followed was a transparent process, and, therefore
there were as many as nine bids received, is prima facie attractive, but,
on a deeper scrutiny the fallacy in the said submissions becomes
apparent. I had advantage of perusing the entire record of the case filed
before the Charity Commissioner and I have also seen each and every
:40: 7233.11.wp
bid which was received by the Advocate for the trustees. On a close
scrutiny of the revised bids, stated to have been received by Advocate
Nagori, the first bid is shown to be of Respondent No.8- Shreepad
Infratrade Pvt Ltd. The bid is on a letterhead prepared on computer.
The so called revised bid dated 18th June, 2009, is not even given on the
letterhead. All the revised bids are not on printed letterheads but are on
letterheads prepared on computer. This cannot be wished away as a
mere coincidence.
38 In the absence of the proper advertisement in the reputed
newspapers, the process which has been followed by the trustees cannot
be held to be a very transparent process. The said process does not
inspire confidence about the claim of the trustees that a very transparent
process was followed.
39 In so far as the third aspect is concerned, namely complete
suppression of the earlier offer of K. C. Foundation to donate the sum of
Rs.4.51 crores to the trust is concerned, according to Mr. Chinoy and Mr.
Samdani, this entire aspect was irrelevant. According to them, the offer
for donation was a conditional offer. As I have indicated above, from
the available record, it is difficult to reach a conclusion that the offer for
the donation was a conditional offer or that K. C. Foundation was
:41: 7233.11.wp
insisting on appointment of its nominees as trustees or managing
trustees. It is pertinent to note that even after the meeting of general
body dated 15th April, 2003, thee has been correspondence between the
trustees and K. C. Foundation, a joint meeting was convened, which was
attended by none less than Charity Commissioner himself, it was
decided to establish a repair committee consisting of reputed persons
and having wide representation from the trustees as also from the
representatives of the K. C. Foundation. Except the statement in the
affidavit of Respondent No.3 to the effect that the offer by K. C.
Foundation was a conditional offer, there is no letter or any other
material available on record to indicate that it was a conditional offer.
40 Apart from this, considering the fact that the offer was in respect
of the same subject matter namely the buildings of the trust and school,
it was expected that honest disclosure about the said offer and the
reasons as to why the trustees did not consider the said offer to be
viable was required to be done in the application filed under Section 36
of the Act. There is no dispute that in the application as filed there is
absolutely no disclosure about all the correspondence which had taken
place between the trustees and K. C. Foundation and the various events
of interaction between the trustees and representatives of K. C.
Foundation. There is nothing to indicate that the trustees had taken a
:42: 7233.11.wp
conscious decision that offer of K. C. Foundation should be rejected.
Even if the trustees were to take such decision, it was their duty to
disclose all these facts in the application before the Charity
Commissioner. The Charity Commissioner is the custodian of the trust
properties and this vital fact ought to have been disclosed before the
custodian. It is difficult to accept the argument of Mr. Chinoy and Mr.
Samdani that since the building was beyond the repairs, offer for
donation by KCF was irrelevant factor and that is the reason as to why
the same was not disclosed. Whether the said factor is relevant factor or
not is a matter which the Joint Charity Commissioner would have
decided if the said facts had been disclosed. On account of complete non
disclosure of the said facts, Joint Charity Commissioner had no occasion
to apply his mind to the said fact, and consequently, the impugned order
does not consider the said aspect. It is necessary to note that the Joint
Charity Commissioner was also considering the application under
Section 36(1) (c). Pressing need for demolition of the building and
reconstruction of the building is one of the factors which was relevant
under Section 36 (1) (c) of the Act. If the trustees were to disclose the
correspondence between the trust and K.C. Foundation and the fact that
the Charity Commissioner had himself established a repair committee,
those were relevant factors which would have been considered by the
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Joint Charity Commissioner before deciding whether to grant a
permission to alienate property of the trust or not. The Joint Charity
Commissioner in his discretion would have applied his mind as quasi
judicial authority and would have discussed the merits and demerits of
the plea as to whether the entire negotiations for donation from K. C.
Foundation were relevant factors or not. On account of suppression of
this fact by the trustees, which were material, Joint Charity
Commissioner who is custodian of the charities and property of the
trust has been deprived of the opportunity to consider such relevant
facts.
41 This takes me to the fourth question as to whether the Joint
Charity Commissioner has properly exercised the duty cast upon the
Joint Charity Commissioner under the provisions of Section 36. In this
regard, it is first necessary to note the precedents. The Full Bench of this
Court in Sailesh Developers and Ors v/s Joint Charity Commissioner
Maharashtra and Ors-l, made following observations in paragraph Nos.
28 to 31 which state the law in this regard:
1. While exercising powers under Section 36 of the
said Act of 1950, the Charity Commissioner has to
safeguard the interests of the trust as well as the
interests of beneficiaries. The learned Single Judge
l 2007 (3) Bom. C.R. Page 7.
:44: 7233.11.wp
in the case of Arunodaya Prefab (supra) has held
thus:
It may not be open for the Charity Commissioner
to consider the offers of third parties except only
to the extent that they might disclose to him what
might be the market value of the land only for the
limited purposes of ascertaining the market value
of the land.
The said view was rightly criticised before us by
pointing out that if Charity Commissioner was to
invite offers only for the purpose of ascertaining
the market value of the property, no genuine buyer
or purchaser will come forward and offer a
genuine competitive price. It was submitted that
no genuine buyer would be interested in coming
forward with the offer if his offer is to be
considered only for a limited purpose of finding
out as to what was the market value on the
relevant date. If offers are invited only for this
purpose, there is every possibility that the offers
will not be bonafide and genuine.
29. While exercising power either under Clause
(b) or Clause (c), the Charity Commissioner can
impose conditions having regard to the interest,
benefit or protection of the trust. Before passing
an order of sanction or authorisation, the Charity
Commissioner has to be satisfied that the trust
property is required to be alienated. Once the
Charity Commissioner is satisfied that the
alienation of the trust property is necessary in the
interest of the trust or for the benefit of the trust
or for the protection of the trust, it is very difficult
to accept the submission that the power of the
Charity Commissioner is restricted either to grant
sanction to a particular proposal of the trustees or
to reject it. It is the duty of the Charity
Commissioner to ensure that the transaction of
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alienation is beneficial to the trust and its
beneficiaries. He has to ensure that the property is
alienated to a purchaser or buyer whose offer is
the best in all respects. It is not necessary in every
case that the Charity Commissioner has to ensure
that property is sold by the trustees to the person
offering highest price or consideration. What is
the best offer in the interest of the trust will again
depend on facts and circumstances of each case.
In a given case, while alienating the trust property,
the trustees may provide that as a part of
consideration for alienation, the purchaser should
construct a building on a part of the trust property
for the use by the trustees for the objects of the
trust. In such a case, it may be necessary to
ascertain the reputation and capacity of the
purchaser apart from the consideration offered.
When the Charity Commissioner is satisfied that
trust property needs to be alienated and when he
finds that the offer received by the trustees may
not be the best offer, he can always direct that
bids be invited by a public notice. When a better
offer is received in public bidding or auction, it is
very difficult to say that the power of the Charity
Commissioner is restricted and he cannot enjoin
the trustees to sell or transfer the trust property to
a third party who has given an offer which is the
best in the interest of the trust. The Trustees
approach the Charity Commissioner only when
they are satisfied that there is a necessity to
alienate the trust property. The trustees hold the
property for the benefit of the beneficiaries and
therefore once they express desire to alienate the
property, it is obvious that Charity Commissioner
can always impose condition while granting
sanction that the property shall be sold or
transferred to a person who has come with an
offer which is the best offer in the interests of the
trust. The Section gives a power to the Charity
Commissioner to impose conditions and the said
conditions will include a requirement of selling or
transferring or alienating the trust property to a
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purchaser who has offered the best deal having
regard to the interest and benefit of the
beneficiaries and the protection of the trust. The
power to impose conditions cannot be a limited
power when the law requires the Charity
Commissioner to exercise the said power having
regard to the interest, benefit and protection of
the trust. Once 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 property may be vesting in the trustees but
the vesting is for the benefit of the
beneficiaries. The Charity Commissioner has
jurisdiction to ensure that the property is sold or
transferred in such a manner that the maximum
benefits are available to the beneficiaries of the
Trust. Under Clause (b) of Section 36 of the said
Act, the Charity Commissioner has jurisdiction to
decide whether it is in the interest of the trust that
the property of the trust be sold or transferred.
Once the learned Charity Commissioner is
satisfied that the property is required to be
transferred or sold in the interest of the Trust, the
learned Charity Commissioner cannot remain
silent spectator when he finds that the transaction
proposed by the Trustees is not in the interest of
the Trust or its beneficiaries. Once the necessity of
sale or transfer is established, the Charity
Commissioner can certainly ensure that best
available offer is accepted, so that the transaction
is for the benefit of the trust. If the trustees were
to be the final authority to judge what is in the
interest of the Trust, the legislature would not
have enacted provision requiring prior sanction.
While deciding which is the best offer, the learned
Charity Commissioner is bound to take into
consideration various factors which cannot be
exhaustively listed. However, the paramount
consideration is the interest, benefit and
protection of the trust. It is obvious from the
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scheme of Section 36 that legislature never
intended that trustees could sell or transfer the
trust property vesting in them as if it was their
personal property. It is the duty of Charity
Commissioner to ensure that the property should
be alienated in such a manner that maximum
benefits are accrued to the trust. The Charity
Commissioner while considering an application
under Section 36(1) of the said Act of 1950, in a
given case can opt for public auction or can invite
bids.
Thus narrow interpretation sought to be given to
the power of Charity Commissioner under Clauses
(a) and (b) of Sub section 1 of Section 36 cannot
be accepted. Thus the view taken in the case of
A.R. Khan Construwell and Co. (supra) is the
correct view. The case of Arunodaya Prefab is not
correctly decided.
30. The second question referred to the Full Bench for
decision is regarding locus standi of a person who
appears before the Charity Commissioner and offers
his bid to challenge the order passed by the Charity
Commissioner. The trustees and persons having an
interest in the Trust can always challenge the order.
We have already held that the proceeding under
Section 36 of the said Act before the learned Charity
Commissioner is a judicial proceeding. The Apex
Court has held that a trust property is on par with a
public property so far as its sale or transfer is
concerned. It is, therefore, very difficult to say that
such a person who appears before the Charity
Commissioner and offers his bid has no locus standi
to challenge the final order passed by the Charity
Commissioner. Such a person will certainly have
locus standi to file the petition under Articles 226
and 227 of The Constitution of India for challenging
the final order passed under Section 36 of the said
Act. However, the scope of challenge will be
naturally limited. Such a person will be in a
position of a bidder challenging the auction or
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tender process of sale of a public property. The
challenge by such a person to the order will be
limited to the decision making process of the
Charity Commissioner. In the case of A.R. Khan
Construwell the Division Bench has rightly held that
after the decision in the case of Arunodaya Prefab,
the concept of locus standi has been expanded.
31. Hence, we answer the questions referred to
our decision as under:
(i) The power vesting in the Charity
Commissioner under Section 36 of the Bombay
Public Trust Act 1950 is not confined merely to
grant or refusal of sanction to a particular sale
transaction in respect of which sanction is
sought under Section 36 of the said Act. The
power of the Charity Commissioner extends to
inviting offers from the members of the public
and directing the trustees to sell or transfer the
trust property to a person whose bid or
quotation is the best having regard to the
interest, benefit or protection of the trust. Hence
we declare that the decision of the Division Bench
of this Court in the case of Jigna Construction
Co. Mumbai v. State of Maharashtra and Ors.
does not lay down correct law.
(ii) The party who comes forward and submits his
offer directly before the Charity Commissioner
and complies with other requirements as may be
laid down by the Charity Commissioner in a
pending application under Section 36 of the
said Act of 1950 has a locus standi to challenge
the final order passed in a proceeding under
Section 36. However, the scope of the challenge
will be limited as indicated in paragraph 29
above.
(iii) We direct the Office to place the Writ Petitions
before the appropriate Benches for deciding the
same in accordance with law.
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42 In Chenchu Ram Reddy and Anr v/s Government of Andhra
Pradesh and Orsm,the Supreme Court had an occasion to consider the
provisions of the Andhra Pradesh Charitable and Hindu Religious
Institutions and Endowments Act, 1966. Paragraph Nos. 1 and 10 of the
said judgment throw light on the legal position.
1. More often than not detriment to what belongs to
'many', collectively, does not cause pangs to 'any', for no
one is personally hurt directly. That is why public officials
and public minded citizens entrusted with the care of
'public property' have to show exemplary vigilance. What
is true of 'public property' is equally true of property
belonging to religious or charitable institutions or
endowments. The facts of the present case involving the
sale of lands which have been sanctioned to be sold for
about Rs. 20 lakhs by private negotiations, instead of by
public auction, which the appellants are prepared to
purchase for about Rs.80 lakhs, illustrate this point in a
telling manner.
10. We cannot conclude without observing that property of
such institutions or endowments must be jealously
protected. It must be protected, for, a large segment of the
community has beneficial interest in it (that is the raison
d'etre of the Act itself). The authorities exercising the
powers under the Act must not only be most alert and
vigilant in such matters but also show awareness of the
ways of the present day world as also the ugly realities of
the world of today. They cannot afford to take things at
their face value or make a less than the closest-and-best-
attention approach to guard against all pitfalls. The
approving authority must be aware that in such matters
the trustees, or persons authorised to sell by private
negotiations, can, in a given case, enter into a secret or
invisible under-hand deal or understanding with the
purchasers at the cost of the concerned institution. Those
m(1986) 3 SCC 391
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who are willing to purchase by private negotiations can
also bid at a public auction. Why would they feel shy or be
deterred from bidding at a public auction? Why then
permit sale by private negotiations which will not be
visible to the public-eye and may even give rise to public
suspicion unless there are special reasons to justify doing
so? And care must be taken to fix a reserve price after
ascertaining the market value for the sake of safeguarding
the interest of the endowment. With these words of
caution we close the matter."
43 The Supreme Court has thus clearly laid down that the property of
the trusts and endowments must be jealously protected and that it must
be protected because large segment of the community has beneficial
interest in it. In the present case, noticing the choice of the newspapers
in which advertisement was published, the Joint Charity Commissioner
ought to have been put on an immediate guard and first question
which the Joint Charity Commissioner ought to have asked and
answered itself is whether this is a proper publication which would
fetch the best possible choice. Unfortunately the Joint Charity
Commissioner has not adverted to this factor at all. The Joint Charity
Commissioner should have and ought to have directed the trustees to
publish a fresh notice in reputed English and Marathi newspapers which
are having wide circulation in Mumbai like Maharashtra Times,
Loksatta, Indian Express, Times of India etc. and ought to have invited
bids for the disposal of the trust property. Such a process would alone
have resulted in finding out a correct price of the property of the trust.
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Unfortunately, this exercise, which ought to have been done by the Joint
Charity Commissioner, particularly when the trustees had not published
the advertisement in reputed newspaper, has not been done by the Joint
Charity Commissioner. In this regard, useful reliance can be placed on
the following observations of the Supreme Court in paragraph no.9 in
the case of Mehrwan Homi Irani and Anr v Charity Commissioner,
Bombay and Orsn which reads thus:
" The counsel for the appellants also pointed out that it is
likely that there would be better offers from other parties.
The offer made by the appellants themselves is not very
encouraging and the respondents were right in not
accepting the same. However, we are told that there were
some other offers also from some will-known charitable
institutions. In the best interests of the Trust and its objects,
we feel it appropriate that respondent nos. 2 to 4 should
explore the further possibility of having agreements with
better terms. The objects of the Trust should be
accomplished in the best of its interests. Leading out of
major portion of the land for other purposes may not be in
the best interests of the Trust. The Charity Commissioner
while granting permission under Section 36 of the Bombay
Public Trusts Act could have explored these possibilities.
Therefore, we are constrained to remit the matter to the
Charity Commissioner to take a fresh decision in the matter.
There could be fresh advertisements inviting fresh proposals
and the proposal of the 5th respondent could also be
considered. The Charity Commissioner may himself
formulate and impose just and proper conditions so that it
may serve the best interests of the Trust. We direct that the
Charity Commissioner shall take a decision at the earliest.
We allow the appeal as indicated above and remit the
matter to the Charity Commissioner in modification of the
n (2001) 5 SCC 305
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orders of the High Court in Writ Petition and that of
Charity Commissioner."
44 There is one more factor which obviously has been overlooked by
the Learned Joint Charity Commissioner that a person named Dilip Jain
filed a caveat in the proceeding under Section 36 of the Act. The said
caveat appears to have been marked as Exhibit 18. This caveat was
filed on 12th August, 2009 and the only order which is passed is that:
" to be alive for 90 days. Attached to the concerned file.
ig sd/-
12/08/09"
45 There is nothing to indicate that the Joint Charity Commissioner
has even considered of issuing any notice to the said person who had
filed a caveat. The caveat specifically indicates that the caveator is a
construction company interested in purchasing the said property by
giving higher price for the said property. Cavetor had made a request to
the Joint Charity Commissioner to give opportunity to make proper offer
in respect of the said property. There is nothing to indicate that this
proposed offerer was ever given notice of the proceeding. This does not
really form part of the pleading in the Writ Petition since this was
noticed during the course of argument, when the entire record was
called for and at that time, it was noticed that such caveat had in fact
been filed. The Supreme Court has already held that the property of
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the trust is like a public property and must be jealously protected. The
Joint Charity Commissioner has failed in performing this statutory duty
cast on him by law.
46 One more aspect which will have some bearing is the valuation
report. The trustees had relied upon valuation report prepared by Mr.
Vinay Patil and Associates, who had valued the said property at
6,22,941,86/-. I have carefully perused the said valuation report. The
valuation report proceeds on the assumption that there is a slum pocket
in the property. It is not the case of any party that any portion of the
property has been declared as slum. The valuation report thereafter
proceeds on the basis that the FSI potential of the entire land is only
1.33. It is the case of the trustees that all the buildings have become
dilapidated and dangerous. It is also their case that these are the
buildings which are categorized as A Cessed properties. The fact that
much higher FSI is available for redevelopment (demolition and
reconstruction) of such property under DCR 33(7) of the GDCR of
Greater Mumbai is well known. Despite this valuer had considered the
valuation on the basis that FSI of the property would be only 1.33. The
valuation is done only of the balance FSI of 25676.62 Sqft and that
figure had been multiplied by Rs.2340/- stated to be the price of the
open land as per ready reckoner. Thus the entire basis of the valuation
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done by the valuer was erroneous. This aspect ought to have been
noticed by the Joint Charity Commissioner which would had resulted in
directing a fresh valuation to be done under the orders of the Joint
Charity Commissioner. However, even this exercises has not been done.
On the other hand, the queries were raised about the valuation and the
Advocate for the trustees Mr. B. Mehta submitted an explanation.
Perusal of the said explanation would indicate that the total price of the
offer of Respondent No.8 as indicated in that explanation does not
match with the total price of the offer of the Respondent No.8, as
indicated in the comparative chart which had been prepared by the
Advocate of the trust and trustees on 18.06.2009.
47 There is one more infirmity in the order passed by the Joint
Charity Commissioner. The Joint Charity Commissioner was considering
a request for development of the property. This was not a case of out
right sale of the property of the trust. Under the proposal for alienation,
what was sought to be done was demolition and reconstruction of all
the buildings and allotment of area on ownership basis to the Trust in a
new building. By very nature of such an activity, it depends on the
individual ability and skills of the developers. Once this is borne in
mind, then it is difficult to understand as to how the Joint Charity
Commissioner granted sanction for alienation of the property either in
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the name of Respondent No.8 or in the name of any nominee of
Respondent No.8. By the very nature of redevelopment which was
expected to take place, the Joint Charity Commissioner could not have
permitted any nominee of the developer to be handed over the entire
work of redevelopment. What happened thereafter is also worthwhile to
note. On 6th May, 2010 impugned order was passed. On the immediate
next date i.e. on 7th May, 2010 Respondent No.8 submitted a letter of
request to the trustees that in place of and instead of Respondent No.8,
Respondent No.9 should be appointed as the developer. Immediately,
within one day on 8th May, 2010 the trustees appear to have passed a
resolution accepting Respondent No.9 as developer in place of and
instead of Respondent No.8. The speed with which all these events had
taken place speaks volumes. The trustees do not appear to have
independently assessed the ability of Respondent No.9 to execute the
project of this magnitude. In fact Joint Charity Commissioner ought not
to have allowed the project of such magnitude to be transferred in
favour of any nominee of Respondent No.8.
48 For all the aforesaid reasons, I have no hesitation in holding that
the impugned order deserves to be quashed and set aside and the entire
proceedings deserve to be remanded back to the Joint Charity
Commissioner for reconsideration in accordance with law. The Joint
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Charity Commissioner shall direct the trustees to publish a fresh
advertisement or at the cost of the trust, the Joint Charity Commissioner
should himself publish a fresh advertisement in reputed English, Marathi
and Hindi newspapers having wide circulation in Mumbai and invite
bids from willing bidders/developers. The advertisement should
indicate that the terms and conditions which were offered by
Respondent No.8, would constitute minimum/reserve price for the
bidding process. The Joint Charity Commissioner shall thereafter rehear
the entire application after giving an opportunity of hearing to the
Petitioners, one of whom is the trustee of the trust. After considering
the say of all stakeholders, the Application No. J-4/90/09 shall be
decided afresh in accordance with law as laid down by the Full Bench of
this Court in the cases of Sailesh Developers(supra), as also the
judgment of the Supreme Court in Chenchu Reddy (supra)referred
herein-above. Rule is made partly absolute in the aforesaid terms, with
no order as to costs.
49 At this stage, Mr. Chinoy, applies for a stay of this order for a
period of eight weeks and makes a statement that if the stay if granted,
Respondent Nos.8 and 9 will not enter into any further agreements, will
not process any further applications and stay should be granted subject
to the condition that all the parties will maintain status-quo in all
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respects.
50 It is therefore directed that operation of this order will remain
stayed for a period of eight weeks, subject to the condition that all
parties including Respondent Nos. 8 and 9 and added Respondents who
have been allowed to be added as intervenors being the Applicants in
Civil Application No. 2565 of 2011, will maintain status-quo as of today
in all respects.
51 On the request of all the learned counsels, it is further directed
that the record and proceedings received from the office of the Joint
Charity Commissioner shall also be retained in this Court for a period
of eight weeks.
( G. S. GODBOLE, J. )
