Bombay High Court
Pradnya Niketan Education Society Thr ... vs Amar Vijay Jadhav on 29 April, 2025
2025:BHC-AS:21698
932 Fa-884-2025 (final).doc
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
FIRST APPEAL NO. 884 OF 2025
1. Pradnya Niketan Education Society ]
Survey No. 80/1/2/1. ]
Baner-Mahalunge Road, ]
Baner, Pune - 411 045 ]
through its Authorized Representative, ]
Vilas Balaram Patil ]
Age:- 62 years, Occupation:- Service ]
Residing at A3-1203, 12th floor, ]
Nandan Prospera, Laxman Nagar, ]
Baner, Pune - 411 045. ]
2. Vilas Balaram Patil ]
Age :- 62 years, Occupation :- Service ]
Residing at A3-1203, 12th floor, ]
Nandan Prospera, Laxman Nagar, ]
Baner, Pune - 411 045. ]
3. Asmita Subarao Patil ]
Age :- 37 years, Occupation - Service, ]
Residing at 12, Gulmohar, Rutuja Park ]
Society, Baner-Mhalung Road, ]
Baner, Pune - 411 045. ]
4. Shweta Subarao Patil ]
Age - 32 years, Occupation - Business ]
Residing at 12, Gulmohor, Rutuja Park ]
Society, Baner-Mhalung Road, ]
Baner, Pune - 411 045. ]
5. Kanchan Subarao Patil ]
Age - 64 years, Occupation - Business ]
Residing at 12, Gulmohor, Rutuja Park ]
Society, Baner-Mhalung Road, ]
Baner, Pune - 411 045. ]
6. Subarao Balaram Patil ]
Age - 67 years, Occupation - Service, ]
Residing at 12, Gulmohor, Rutuja Park ]
Society, Baner-Mhalung Road, ]
Baner, Pune - 411 045. ]
7. Ankush Sheshrao Chavhan ]
Age - 63 years, Occupation - Retired, ]
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Residing at 1403, Building No. 49, ]
Seawoods Estate Phase-II, Palm Beach Road, ]
Nerul, Navi Mumbai - 400 706. ]
8. Amar Annarao Patil ]
Age - 62 years, Occupation - Service, ]
Residing at Flat No. 5, Harilila Apartments, ]
Balewadi Phata, Baner, Pune - 411 045. ] ...Appellants
Versus
1. Amar Vijay Jadhav, ]
Age: 61 years, R/at: Flat No. 1502, ]
Building No. 56, NRI Complex, ]
Seawoods Estate, Phase 2, ]
Sector 54, 56 and 58, ]
Nerul, Palm Beach Road, ]
Navi Mumbai - 400706. ]
2. Venkatrao Vishwanatrao Gaikwad ]
Age : 77 years, Occ: Retired ]
R/at: 05/24, Mandakinee Apartment, ]
Prabhat Road, Lane No. 14, ]
Erandwane, Pune - 411 004. ]
3. Sunil Annarao Patil ]
Age: 57 years, Occ: Business ]
R/at: Chincholi Jahagir ]
PO: Chincholi Jahagar, ]
Dist: Osmanabad, Maharashtra - 413606. ]
4. Mrs. Surekha Shinde ]
Adult, Occupation - Homemaker, ]
Flat No. 19, Arihant Apartments, ]
Mahalunge, Pune - 411 045. ]
5. Sushil Chandrakant Garje ]
Age : 56 years, Occupation - Service ]
R/at: 1101 and 1102, Building No. 50 ]
Seawood Estate Phase-II, ]
Palm Beach Road, Nerul - 400 706. ]
6. Sanjay Dattatray Yenpure ]
Age : 60 years, Occupation - Service, ]
Add: 98/2, Bhupali Apartments, ]
Prabhat Road, Erandwane, Pune - 411 004. ]
7. Mayuresh Govind Bodke ]
Age : 34 years, Occupation - Business ]
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Add: 22/504, Chandan Co-Op. Housing ]
Society, ]
Vasant Vihar, Thane (West) - 400 610. ]
8. Popatrao Dada Malikner ]
Age : 60 years, Occupation - Service ]
Add - 17/B-22, Haji Ali, ]
Govt. Colony, Mumbai - 400034. ]
9. Dattatray Rajaram Yevale ]
Age : 60 years, Occupation : Service ]
Add: Jagat Vidya Co-Op. Housing Society, ]
A-103, BKC Road, Behind Guru Nanak ]
Hospital, Bandra - East, Mumbai - 400 051. ]
10. Thane Bharat Sahakari Bank Ltd., ]
Having registered office at Shataraka, ]
Baji Prabhu Deshpande Marg, Naupada, ]
Thane - 400 602. ] ...Respondents.
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Mr. Aspi Chinoy, Senior Advocate a/w Mr. Kamlesh Ghumre, Ms. Sonali Jadhav
for Appellants.
Mr. Ashutosh Kulkarni i/b Mr. Akshay Kulkarni for Respondent Nos. 1 to 4.
Mr. Charles D'souza, Mr. Nikhil Rajani, Mr. Dhruva Gaikwad, Mr. Ajay Deshmane
i/b M/s. V. Deshpande and Co. for Respondent No. 10.
------------
Coram : Sharmila U. Deshmukh, J.
Date : 29th April, 2025.
Judgment :
1. The present Appeal has been preferred against the order dated
12th March, 2025 passed by the Joint Charity Commissioner rejecting
the prayer for modification of the order dated 17 th February, 2025
passed in Application No. 009 of 2025 filed under Section 41E of the
Maharashtra Public Trusts Act, 1950 [for short, "Trusts Act"].
2. Application No. 009 of 2025 was filed by four Applicants who are
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Respondent Nos. 1 to 4 herein against the Appellant-Education Society
before the Joint Charity Commissioner under Section 41E of Trusts Act
seeking an order of injunction against the present Appellants from
entering into transaction with Respondent-Bank for purchasing the
property comprising of auditorium (4500 sq. ft.), basement parking
admeasuring 18,500 sq. ft. and terrace top admeasuring 9983 sq. ft.
situated at Survey No. 80 (Hissa No. 1/1 and 2/2) Baner, Pune under
Securitisation and Reconstruction of Financial Assets And Enforcement
of Security Interest Act, 2002 Act [for short, "SARFAESI Act"] at sum of
Rs. 9.54 crores.
3. The Applicants came with a case that Applicant No. 1 is the
founder life member of the Trust. The Applicant No. 2 is one of the
current trustees of the Trust and Applicant Nos. 3 and 4 are
beneficiaries of the Trust being guardian and parents of students of
the Trust. It was contended that the school property was purchased by
the Trust from one M/s. Vidya Vardhini Developers Private Limited [for
short, "VVDPL"] which was building with basement, ground and four
floors. Out of the said property, VVDPL retained with itself the
auditorium, basement and terrace top and sold rest of the property to
the Trust. Since the Trust required the portions of the property
retained by vendor, in 2015, Registered Lease Deed of ten years was
executed on 3th March, 2015 between the Vendor and the Respondent
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Trust. It was contended that VVDPL had taken loan from M/s. Thane
Bharat Sahakari Bank while developing the subject property. For the
purpose of recovery, upon default, the Bank tried to sell the area of
the auditorium, basement and terrace top on two occasions and was
unable to sell the property even at the base price of Rs. 8 crore. The
Bank was approached by the Trust to buy the property at very high
price. It was contended that there is an ulterior motive and element of
fraud to put the Trust at loss in the transaction. To support the
contention, the Respondents relied upon Valuation Report dated 1 st
August, 2023 obtained by the Trust from the registered valuer in which
the subject property was valued at Rs. 2.70 crore. The Valuation
Report obtained by Bank dated 26th December, 2024 valued the
property at Rs. 8 crore. Alleging that the Trust will be put at loss, the
relief of injunction was sought on the basis of discrepancy in the
valuation.
4. The Joint Charity Commissioner passed an ex parte order of
injunction on 17th February, 2025 below Exhibit-5. It noted that on two
occasions, the value of property was shown at Rs. 8,50,00,000/- and Rs.
8,00,00,000/- respectively whereas actual market value is Rs.
2,70,00,000/-. It held that the Trust is going to enter into transaction
with the Bank which is in excess of market value of the property which
will result in loss to the Trust and as the Trust is in occupation of the
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property, no loss will be caused to it if it is restrained and passed the
order of temporary injunction from entering into any transaction with
the Bank.
5. Subsequently, after the notice was served, the Appellant Nos. 1
to 6 as well as the Bank appeared before the Joint Charity
Commissioner seeking modification of the order. The Joint Charity
Commissioner noted that from the documents filed by Appellants
during the hearing, an Annual General Meeting was called by Trust on
21st March, 2025 to discuss the proposed purchase of the basement,
auditorium and terrace and does not reflect that there is any resolution
to purchase the property and even if private treaty has been entered
into, it is without any resolution. The Joint Charity Commissioner held
that the apprehension of present Appellant that the property will go
away from their hands if they do not pay the balance consideration till
16th March, 2025, does not appear to be valid as there is no resolution
passed by the members to purchase the said property. It held that if
the Appellants are not restrained, further amount of the Trust will also
be in danger and refused to modify the order.
6. During the hearing before Joint Charity Commissioner, it was
pointed out that Respondent-Bank had issued a letter dated 25 th
February, 2025 calling upon the present Appellant Nos. 1 to 6 to make
payment of balance consideration till 16 th March, 2025 failing which the
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private treaty with the Trust will be cancelled.
7. Mr. Chinoy, learned Senior Advocate appearing for the
Appellants would submit that the Applicants before the Joint Charity
Commissioner were the Directors and Shareholders of M/s. Vidya
Vardhini Developers Private Limited. He would further submit that in
2019, the Applicant No. 1 and one Shinde and Patil had resigned as
Trustees and in 2024, Applicant No. 1 before the Charity Commissioner
had preferred Appeal against the order accepting the Change Report.
He would submit that the Sale Deed excluded the area of basement,
auditorium and terrace which was integral part of the building. He
would further point out that the admitted position is that VVDPL had
obtained a Term loan facility of Rs. 8 crores from the Ghatkopar (East)
Branch and had created a registered mortgage on 11 th March, 2015. He
would submit that for the period from 1st January, 2015 to 6th June,
2020, pursuant to the Lease Deed executed between VVDPL and the
Trust, lease rent of Rs. 8,94,36,729/- was paid. He submits that since
there was default in repaying the loan amount, proceeding under
SARFAESI Act was initiated by the Bank in which before the Debt
Recovery Tribunal, the Trust as well as the Bank arrived at Consent
Terms in which it was agreed to pay sum of Rs. 9,54,41,565/- for
purchase of subject property, i.e. the excluded portions of the school
building. He would further point out that by communication dated 27 th
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January, 2025, VVDPL by its letter conveyed to Respondent No. 10
Bank that it has 'no objection' to the property being sold for Rs. 9.71
crore on the basis that it would stand relieved from all its obligations
under the loan. He would further submit that Government valuation
for stamp duty purposes, was determined at Rs. 10,40,37,511/-. He
would submit that on 8th February, 2025, VVDPL addressed a
communication to the Bank alleging that the said portions of the
building were worth Rs. 24 crore and could not be sold to Rs. 9 crore.
He submits that subsequently, Applicant No. 1 who was also the
shareholder and Director in VVDPL alleged that the property has been
sold in excess to the market value of the property and that it will cause
loss to the Trust and has obtained an order of injunction. He submits
that the Trust has filed Special Civil Suit against VVDPL against the
purported exclusion of the portions of Building from the Sale Deed as
well as impugning the Mortgage Deed. He would submit that by reason
of restraint order, the Appellants were unable to deposit the amount
as called upon by the Bank and the Bank has entered into the private
sale in respect of these portions with son of Respondent No. 2 who is
one of the Trustees of the Trust for sum of Rs. 9.57 crore. He submits
that the present orders would bind the Trust who would be unable to
proceed further to challenge the said sale by Bank or proceed with
pending Special Civil Suit.
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8. Per contra, Mr. Kulkarni, learned counsel appearing for
Respondents would submit that Respondent Nos. 1 and 2 have no
connection with VVDPL and are not even the shareholders or directors
of the said company. He submits that the Valuation Report of the Trust
has valued the property at Rs. 2.70 crore and therefore, the offer to
purchase the said property at Rs. 9.54 crore would cause loss to the
Trust, which was brought to the notice of Joint Charity Commissioner.
He would further submit that it is not disputed that the property was
earlier sought to be sold for Rs. 8 crore and Rs. 8.50 crore at which
point of time, the Trust did not take any steps to purchase the said
property. He would further submit that the property which is valued at
Rs. 2.70 crore is now sought to be purchased at Rs. 9.54 crore and
therefore, the Joint Charity Commissioner has arrived at finding that if
the transaction is not restrained, it will cause loss to the Trust. He
would further submit that as subsequently, the property has now been
sold to third party, the Application has become infructuous. He would
further submit that the present Appeal has been preferred against the
ad-interim order and final adjudication of Exhibit-5 Application is still
pending and all the issues can be considered before the Joint Charity
Commissioner.
9. I have considered the submissions and perused the record.
10. The sole basis for passing of the ex parte order of injunction
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dated 17th February, 2025 is the valuation of the subject property as
the Trusts' valuer had valued the same at Rs. 2,70,00,000/- and the
Bank had on two occasions offered to sell the property at Rs.
8,50,00,000/- and Rs. 8,00,00,000 in which the Trust did not
participate.The facts are mostly undisputed except as regards the
connection of present Respondent Nos. 1 and 2 with VVDPL. Even
accepting that the Respondent No 1 and 2 were unconnected with
VVDPL, what assumes significance is that the owner of the subject
property raised an objection that the subject property worth Rs 24
crores is sought to be sold to the Appellants at Rs 9.5 crores.
11. The school building was purchased by the Appellants from
VVDPL which retained the auditorium, basement and terrace with
themselves. Subsequently, the subject property was leased by VVDPL
to the Appellants for period of about ten years and lease rent of Rs.
8,94,36,729/- has been paid, which demonstrates that the subject
property was integral part of the school building. Upon acquiring
ownership rights in the subject property, the entire building would
come in the hands of the Trust and would eliminate the payment of
lease rent.
12. The finding of Joint Charity Commissioner that the Trust
property i.e. the Trust funds are being wasted is based on solitary
ground of market value of the subject property. The basis for the
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finding is that the Trust's valuer had valued the subject property at Rs
2.70 Crores whereas the Trust had entered into an agreement with the
bank for Rs 9.54 Crores. As rightly pointed out by Mr. Chinoy, the
market value of Rs. 2.70 Crores has been arrived at by the Trust's
Valuer by taking the valuation of basement and terrace as 'NIL'
considering the same as school amenities. The Valuation Report was
therefore, restricted only to the valuation of auditorium. It also cannot
be lost sight that the subject property was mortgaged to the Bank for
loan of about Rs 8 Crores and it is known fact that the value of the
collateral security is higher than the loan amount. On earlier occasions
the Bank had fixed the reserved price in the range of Rs. 8,00,00,000/-
to Rs. 8,50,00,000/-. It is therefore a clear indicator that valuation of
the subject property at Rs 2.70 Crores was way below the market price
of the subject property.
13. The question is whether the valuation of the subject property
should be sole consideration in facts such as involved in the present
case. In my view, what is also required to be taken into consideration is
the importance of the subject property for the proper functioning of
the school. In the reply Affidavit before the Joint Charity
Commissioner, the Appellants have set out in detail the litigation which
was being pursued by the Appellants before the Debt Recovery
Tribunal, the Civil Court and the High Court to ensure that the subject
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property is not alienated in favour of third party. The diligent
pursuance by the Trust is indicator of the fact that the subject property
is integral to the functioning of the school. The utilisation of the trust
funds for the purpose of acquiring an asset which is of utmost
importance to the functioning of the school cannot be held to be waste
of trust funds solely based on the market valuation. It is contended by
learned counsel appearing for the Bank that the Bank has taken the
possession of subject property and permitted the Trust to occupy the
same as it was found that it was integral for the functioning of the
school.
14. The Joint Charity Commissioner while passing the ex parte
restraint order has held that as Trust is already in occupation of the
said property, no loss will be caused to the Trust if it is restrained. The
said finding overlooks the fact that upon the sale of said property to a
third party, the Trust will be bound to vacate the Trust property which
will cause loss to the Trust. That apart, the Joint Charity Commissioner
has not considered the Trust's Valuer's report in detail,which would
have made it clear that the same is restricted only to the auditorium's
valuation. At the stage of passing ex-parte injunction, the Joint Charity
Commissioner would have considered the prima facie case, however,
even after the application for modification is filed, necessary factors
were not considered by the Joint Charity Commissioner. In the reply
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Affidavit of the Appellants, it was brought out that consent terms were
entered into with the Bank by entering into a private treaty for
purchase of property at Rs 9.54 crores as provided under the SARFAESI
Act and Rules to ensure that no adverse orders were passed by the
Debt Recovery Tribunal. The valuation for stamp duty purposes was
determined at Rs 10,40,37,511/- which lends colour of legitimacy to
the purchase of the property at Rs 9.54 crores.
15. The Joint Charity Commissioner while rejecting the modification
application has held that there is no resolution to purchase the
property without noticing the various litigation which was pursued by
the Appellants in order to acquire ownership rights of the subject
property. The allegation was not that the transaction was not backed
by resolution but that of wastage of trust property. The Joint Charity
Commissioner did not place any importance on the fact that part
consideration was already paid and the Bank had issued an ultimatum
calling upon the Appellants to pay the balance amount till 15 th March,
2025 failing which the private treaty with the Trust will be cancelled.
No consideration was given to the importance of the subject property
to the functioning of the school.
16. There is no allegation that the Trustees have unduly benefitted
from the transaction with the Bank and the valuation by the Trust's
valuer is the sole factor considered by the Joint Charity Commissioner.
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The valuation of Rs 2.70 crores cannot be accepted for the following
reasons:
(a) VVDPL valued the subject property at Rs 24 crores.
(b) The subject property was offered as collateral security for lease
rent discounting loan of Rs 8 crores.
(c) The valuation for stamp duty purpose was Rs. 10,40,37,511/-.
17. The Joint Charity Commissioner has adopted one dimensional
approach by taking into consideration only purported market value
based on market valuation which is also a superficial observation
without detailed investigation into Valuation Report of Rs. 2.70 crore.
In event, the Valuation Report would have been considered in detail,
the Joint Charity Commissioner would have noticed that the Valuation
Report of Rs. 2.70 crore has been arrived at by taking into
consideration, the basement and terrace as 'NIL'.
18. Though it is sought to be contended that Application has been
rendered infructuous by reason of the fact that subject property has
been sold to third party by Bank, the restraint order would preclude
the Appellants from proceeding further to secure the subject
properties. The order of Joint Charity Commissioner being
unsustainable should not be permitted to remain in force. The order of
the Joint Charity Commissioner which prima facie holds that the
purchase consideration of Rs 9.54 crores is excessive and the trust
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funds are being wasted would bind the Appellants in all proceedings.
Hence, I do not find any substance in the submission raised that order
which is impugned in the present Appeal is an ad-interim order and
Exhibit-5 Application is still pending.
19. The order of 17th February, 2025 was sought to be modified by
Appellants specifically pointing out to the Joint Charity Commissioner
that the balance amount has to be paid by 15 th March, 2025, i.e. after
the ex parte order was passed on 17th February, 2025 or else the private
treaty will be cancelled. Despite the crucial fact being pointed out to
the Joint Charity Commissioner, the Joint Charity Commissioner did
not modify the said order and the properties have now been sold by
Bank to the third party.
20. The most disturbing aspect is that the property has been sold by
the Bank to the son of Respondent No. 2, who was one of the
Applicants to Section 41E Application before the Joint Charity
Commissioner, alleging that the market value of the property is Rs.
2.70 crore and purchase of said property at Rs. 9.54 crore is excessive.
The Respondent No. 2's son has purchased the said property from the
Bank at Rs 9.57 crores which has been affirmed by learned Advocate
for Respondent No. 10-Bank.
21. When the totality of the facts and circumstances are taken into
consideration, it is very clear that the intention of the Applicants was
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to stall the purchase of the said property by the Trust so as to privately
benefit the son of Respondent No. 2 and continue to have a leverage
over the Trust qua the subject property which forms integral portions
of the school building. The reply affidavit also sets out the complaints
filed by the Appellant Trust against the Applicant No 1 and the
allegations in the application appears to be counterblast to those
proceedings. Mala fide intention is writ large on the part of
Respondents, who are the Applicants before the Joint Charity
Commissioner. Considering the subsequent development, it is no
longer open for Respondents to now say that Exhibit-5 Application is
still pending and can be decided by Joint Charity Commissioner.
22. The purchase of subject property by Respondent No. 2's son at
Rs. 9.57 crore changes the complexion of the entire matter and it could
no longer be said that the Trust was purchasing the property for an
excessive price of Rs. 9.54 crore and amounts to wastage of the trust
funds. As the order is clearly unsustainable, the same cannot be
permitted to continue.
23. In light of above, the First Appeal is allowed. The orders dated
17th February, 2025 and 12th March, 2025 are hereby quashed and set
aside.
[Sharmila U. Deshmukh, J.]
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24. At this stage, the request is made for the stay of this order. In
light of the fact, that the Respondent No. 2's son has purchased the
property, I am not inclined to stay the order. The request of stay stands
rejected.
[Sharmila U. Deshmukh, J.]
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