Bombay High Court

National Centre For The ... vs The Joint Charity Commissioner ... on 10 October, 2017

Bench: M.S. Sonak

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SAS
IN THE HIGH COURT OF JUDICATURE AT BOMBAY

ORDINARY ORIGINAL CIVIL JURISDICTION

WRIT PETITION NO.890 OF 2017

National Centre for the Performing Arts
(NCPA) & Anr. ..Petitioners.
V/s.

The Joint Charity Commissioner & Ors. ..Respondents.

Mr.D.J.Khambata, Senior Advocate with Ms.Naira Jeejabhoy with
Mr.H.D.Nanavati, Mr.H.N.Vakil & Ms.S.M.Vakil i/b. Mulla & Mulla
and Cragie Blunt & Caroe for the Petitioners.

Mrs.Uma Palsuledesai, AGP for Respondent Nos.1 & 2-State.

CORAM: M.S. SONAK, J.

DATE : OCTOBER 10, 2017

ORAL JUDGMENT

Rule. At the request of learned counsel for the parties,

rule is made returnable forthwith.

2. Heard Mrs.Naira Jejeebhoy for the Petitioner and Ms.Uma

Palsuledesai, AGP for Respondent Nos.1 to 3 - State.

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3. Challenge in this petition is to the order dated December 27,

2016 by which the Petitioner's Miscellaneous Application No.532/2016

seeking modification to the order dated June 20, 2015 came to be

dismissed by the Joint Charity Commissioner.

4. The operative part of the Joint Charity Commissioner's order

dated June 20, 2015 reads as follows:-

"Thus, I answer both the points are in the affirmative and
proceed to pass the following order :-

ORDER

       1)       Application is allowed.

       2)     Permission is granted to the applicant trust to sell and

alienate trust property described in application at Exh.1 in favour of Ms.Smita G.Crishna, Ms.Freyan V.Crishna & Mrs. Nyrika V.Crishna respectively for Rs.372 crores by executing registered sale deed within the period of six months from passing of this order on the terms and conditions of draft indenture of conveyance which is annexed and marked as Exh.'L'.

3) The Governing Council is hereby directed to deposit Rs.300 crores in any nationalized bank as defined in the Reserve Bank of India Act, 1934 or in any co-operative bank approved by the State Government and to utilize interest earned thereon for carrying out the objects of the trust.

4) The applicant trust is hereby directed to deposit remaining Rs.72 crores in saving bank account of said trust to meet the immediate expenses and losses suffered by the trust.

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       5)    Permission is granted subject to the provision or

prohibition of any other Act for the time being in force. "

5. By the Miscellaneous Application No.533/2016, the

Petitioner trust had basically applied for the modification of clause (3) of

the operative portion of the order dated June 20, 2015. The modification

applied for was in order to permit the Petitioner trust to withdraw the

amount of Rs.300 crores from the nationalized bank and to re-invest the

said amount in permitted securities as specified by section 35 of the

Maharashtra Public Trust Act, 1950 ('the Trust Act').

6. By the impugned order dated December 27, 2016, however,

the Joint Charity Commissioner has dismissed this application by holding

that there is no justification for the request made. The Joint Charity

Commissioner further observed that the mere fact that the trust could

earn more interest cannot be said to be relevant or sufficient to protect the

interest of the Petitioner trust, which is of paramount consideration in

trust matters.

7. The Joint Charity Commissioner has observed that deposit in

nationalized bank is more safe and more secure, than, investment in any

permitted securities.

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8. Ms. Jejeebhoy, learned counsel for the Petitioner submits that

section 35 of the Trust Act specifically provides for investment of public

trust's money in any scheduled bank as defined in the Reserve Bank of

India Act, 1934 or any in the Postal Savings Bank or in a Co-

operative Bank approved by the State Government for the purpose

or to invest it in public securities. Since, the statute itself permits a

public trust to make such investment, it was not open to the Joint Charity

Commissioner to decline the permission based upon his opinion, that

deposits in nationalized bank are more safe and secure. Ms. Jejeebhoy also

drew the attention of this Court to a circular dated October 12, 1978

stating that trustees should not be compelled to invest the trust funds in

any one particular manner. The trust should be encouraged to invest the

surplus funds in securities floated from time to time by the public sector

undertakings of the State Government like the SICOM, CIDCO and

MSEB, etc. on their debentures being declared on public securities under

section 2(12)(d) of the Trust Act.

9. Ms.Palsuledesai, learned AGP submits that the impugned

order has been made by the Joint Charity Commissioner keeping in mind

the interest of the Petitioner trust. Learned AGP further submits that she

is not in a position to state as to whether the circular dated October 12,

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1978 upon which reliance was placed by Jeejaboi, is clearly emanating

from the office of the Charity Commissioner and whether the same is in

force, till date.

10. The Petitioner Trust in Miscellaneous Application

No.533/2015 had applied for following substantive reliefs :-

(a) Application be allowed;

(b) The Judgment and order dated 20-6-2015 passed in Application No.70/2014 under section 36-1(a) of the Maharashtra public Trust Act, 1950 in the matter of National Centre for Performing Arts be modified to the extent that the Applicant Trust is permitted to invest the amount of Rs.300 crores in the afore mentioned permitted securities as permitted u/s.35 of the Maharashtra Public Trust Public Trust Act, 1950;

(d) Cost of this Application be allowed."

11. Section 35 of the Maharashtra Public Trust Act, 1950 reads

as follows :-

" 35. Investment of public trust money

(1) Where the trust property consists of money and cannot be applied immediately or at any early date to the purposes of the public trust the trustee shall be bound 3[notwithstanding any

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direction contained in the instrument of the trust) to deposit the money in any Scheduled Bank as defined in the Reserve Bank of India Act, 1934, in the Postal Savings Bank or in a Co- operative Bank approved by the State Government for the purpose or to invest it in public securities] :

Provided that such money may be invested in the first mortgage of immovable property situate in 4[any part of India] if the property is not leasehold for a term of years and the value of the property exceeds by one-half the mortgage money :

Provided further that the Charity Commissioner may by general or special order permit the trustee of any public trust or classes of such trusts to invest the money in any other manner.

(2) Nothing in sub-section (1) shall affect any investment or deposit already made before the coming into force of the Bombay Public Trusts (Amendment) Act, 1954, in accordance with a direction contained in the instrument of the trust:

Provided that any interest or dividend received or accruing from such investment or deposit on or after the coming into force of the said Act or any sum [so invested or deposited] on the maturity of the said investment or deposit shall be applied or invested in the manner prescribed in sub-

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        section (1)]. "

12. As observed by the Joint Charity Commissioner in the

impugned order, no doubt, interest of the trust is of paramount

consideration. However, that does not mean that trust have to be

restrained from making investment in terms of what is permitted by

section 35 of the Trust Act. The legislative policy in this case is reflected

in section 35 of the Trust Act which provides that where the trust

property consists of money that cannot be applied immediately or at

any early date to the purposes of the public trust, the trustees shall be

bound, notwithstanding any direction contained in the instrument of

the trust, to deposit the money in any Scheduled Bank as defined in

the Reserve Bank of India Act, 1934, in the Postal Savings Bank or in

a Co-operative Bank approved by the State Government for the

purpose or to invest it in public securities.

13. The expression "public securities" is defined under

section 2(12) of the Trust Act to mean as follows :-

"2(12) "public securities " means--

      (a)       securities of the Central Government or any State





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      Governments;

      (b)       stocks, debentures or shares in Railway or other

companies, the interest or dividend on which has been guaranteed by the Central or any State Government;

(c) debentures or other securities for money issued by or on behalf of any local authority in exercise of the powers conferred by an Act of the Central or State Legislature;

(d) a security expressly authorised by an order which the State Government makes in this behalf . "

14. In this case, although this Court was prima facie satisfied

that the impugned order warrants interference, the Petitioner Trust

was directed to indicate the manner in which the amount of Rs.300

crores was proposed to be invested at-least in first instance.

15. In pursuance to the said direction Mr. Khushroo

Nariman Suntook, Chairman of the Petitioner trust has filed an

affidavit. Paragraphs 2 and 3 of his affidavit are relevant and the

same reads as follows :-

"(2) Accordingly, the Petitioners have decided to make the

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initial re-investments as hereunder, till such time as circumstances require such investments to be varied depending upon the prevailing rates of interest and other relevant factors or till such time as the Petitioners require these funds or part thereof, for utilization towards fulling the Objects of the Trust ;

a) Rs.200 crores (approximately) in Fixed Deposits with HDFC Ltd.

b) Rs.100 crores (approximately) in 8% GOI Savings Taxable Bonds.

3. a) Fixed deposits with HDFCA Ltd. are declared as "Public Securities' , under section 2(12) (d) of the Bombay public Trusts Act, 1950. A certificate issued by HDFC Ltd. along with Order No.BPT/1989/2743(89)-VI dated 22nd July, 1986 issued by Law and Judiciary Department, Mantralaya, stating that HDFC Trust Deposits (i.e. Deposits made under the category of 'Ttusts') are declared as 'Public Securities', are hereto annexed and marked as Exhibit-1 and Exhibit-2 respectively.

b) The GOI Savings Taxable Bonds are eligible investments as 'public securities' under section 35 of the Trust Act read with the definition of 'public securities' in section 2(12) of the Trust Act. "

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16. From the aforesaid, it is clear that the Petitioner trust

seeks to invest Rs.300 crores in HDFC Limited and 8% GOI Savings

Taxable Bonds. In the affidavit, it is stated that the fixed deposits

with HDFC Limited are declared as public securities for the purpose

of section 2(12) of the Trust Act. Necessary certificate in this regard

has also been enclosed along with the affidavit. Similarly, 8% GOI

Savings Taxable Bonds are also public securities under section 2(12)

of the Trust Act. Further, the Petitioner trust in the affidavit has

undertaken that they shall intimate the office of the Charity

Commissioner, Mumbai annually of such further re-investments or

variations thereto, till such time as monies are completely utilized for

fulfilling the objectives of the trust. In this case, since investments

are proposed to be made in terms of section 35 of the Trust Act in

'public securities' as defined under section 2(12) of the Trust Act,

there is no necessity of adverting to the issue as to whether the

circular dated October 12, 1978 is in force or not. Irrespective of

whether such circular has been issued by the Charity Commissioner

or not, the reliefs applied for by the Petitioner trust, can be

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considered to the extent indicated.