M.N.R. Educational Trust vs Mr. M.N. Raju
2021 Latest Caselaw 2542 Tel

     THE HON'BLE SRI JUSTICE T.AMARNATH GOUD

    CIVIL MISCELLANEOUS APPEAL NOs.236 & 237 OF 2021

COMMON JUDGMENT:

1       These two Civil Miscellaneous Appeals are filed

aggrieved by the common order dated 01.5.2021 passed in

I.A.No.2458 of 2019 in O.S.No.434 of 2019 and I.A.No.1328

of 2019 in O.S.No.245 of 2019.          The parties to both the

appeals are one and the same and the point involved in

both the CMAs is also one and the same and hence both

the CMAs are disposed of by this common judgment.


2       For the sake of convenience I refer to the parties as

they are arrayed before the trial Court and also as were

arrayed in Civil Miscellaneous Appeal No.434 of 2021 filed

in this Court.


3       Mr. M.S.Vasu Varma, the plaintiff in O.S.No.434 of

2019 filed that suit styling himself as Author of MNR

Educational Trust against his father Mr. M.N.Raju and

younger brother Mr. Ravi Varma, the defendants. It is his

case that he established the Trust to promote education

and impart quality education.         He appointed his father,

mother and younger brother as Trustees. The plaintiff came

to know in the last week of February 2017 that the

defendants siphoned off huge funds by deceitful methods in

order    to   float   different   companies.   The   defendants

fraudulently transferred the funds of the Trust to their

business concerns in flagrant violation of terms of the Trust
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Deed as well as the applicable laws. Accounts were

manipulated in such a way by inflating and deflating the

same to suit their convenience to perpetuate the fraud. The

defendants committed breach of trust by misappropriation

of funds entrusted to them as Trustees with dishonest

intention. Despite issuance of legal notices the defendants

did not mend their minds. The defendants and their

followers started creating problems, nuisance for the

smooth running of the Trust. Hence he filed O.S.No.434 of

2019 seeking decree of perpetual injunction restraining the

defendants and their agents from interfering and causing

disturbance to the staff, students and parents and plaintiff

other than due process of law in respect of suit A and B

schedule properties.


4     Be that as it may, the defendants in O.S.No.434 of

2019, filed O.S.No.245 of 2019 against the plaintiff in

O.S.No.434 of 2019 contending that the second plaintiff,

being the Managing Trustee of the first plaintiff, originally

started his career as a school teacher in 1960. He started a

small school under the name of Indo-English High School

at Santoshnagar, Hyderabad, which grew step by step and

it reached a strength of more than 3,600 students over the

years. At that time, the age of the defendant in this suit was

five years. Over the years, the second plaintiff established

various other schools and that the first plaintiff Trust has

been doing yeomen service to the people at large.
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5     In the year 1992 MNR Educational Trust was

established for imparting higher education by establishing

Schools, Junior Colleges, Degree Colleges etc., As on date

38 institutions at various places are being run under the

aegis of the first plaintiff Trust.


6     Since beginning, the first defendant in the present

suit was obsessed to vices and was not able to even

complete his education.       He started stealing money from

the institutions by fraudulent methods and thus totally

breaching the confidence reposed in him by the plaintiffs

while permitting him to be an authorized signatory in

respect of some institutions. With a fond hope he was made

an author of the Trust but was not made a trustee of the

Trust in view of his irresponsible behavior.


7     It is pertinent to note that an Author of the Trust

unless he himself becomes a Trustee, does not have any

right either in the Trust or the affairs of the Trust, in

accordance with law. Though the first defendant is aware

of the same, he wants to proclaim as if he has the status of

a Trustee equivalent to that of a Trustee, which in fact, is

not so. The first defendant was given authorization to

represent the Trust in respect of some of the institutions.


8     The defendant No.1 was authorized in pursuance of

the resolution dated 01.4.2011 to administer some of the

institutions and operate the bank accounts. The second
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plaintiff herein, as the Managing Trustee, issued letters to

the Banks authorizing the defendant as the signing

authority   of    the   respective    bank    accounts    of    the

institutions. Over the years the defendant has taken

advantage    of   the    authorization     given   to   him    and

mismanaged the affairs of the institutions and he siphoned

off the funds of the institutions by illegally opening separate

bank accounts without any information or knowledge to the

Trust by fraudulently creating resolution dated 25.10.2011

by forging the signatures of the Managing Trustee i.e.

second plaintiff herein and other trustees. In that process

the defendant waylaid more than Rs.17 crores either by

such illegal transfers or by depositing the amounts received

in fictitious accounts opened.


9     While opening the said accounts, the defendant

signed as a Trustee, whereas he was never appointed as a

Trustee of the First plaintiff Trust. The defendant has been

acting in gross violation and abuse of the spirit with which

the second plaintiff had reposed confidence in him while

permitting him to represent some of the institutions. Hence

the   authorization     given   to   the   defendant    has    been

ultimately terminated as per the resolution of the Trust

dated 25.7.2017. Thus the defendant cannot discharge any

functions as authorized representative of the first plaintiff

Trust, leave aside as a Trustee as he has never been a

Trustee.
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10    The defendant, having realized that the plaintiff in

the present suit have taken steps, filed O.S.No.1379 of

2019 on the file of VII Senior Civil Judge, Ranga Reddy

District at L.B.Nagar and obtained ex parte injunction. The

defendant   has   not   challenged   the   resolution   dated

25.7.2017

. However, taking advantage of the ex parte

injunction in O.S.No.1379 of 2019, the defendant is

interfering with the affairs of the management of two

institutions. Hence they filed O.S.No.245 of 2019 against

the defendant for perpetual injunction.

11 The plaintiff in O.S.No.434 of 2019 filed I.A.No.2458

of 2019 and the plaintiffs in O.S.No.245 of 2019 filed

I.A.No.1328 of 2019. Both the applications are filed seeking

temporary injunctions against the other parties. The trial

Court by common order dated 01.5.2021, dismissed the

I.A.No.2458 of 2019 in O.S.No.434 of 2019 and allowed the

I.A.No.1328 of 2019 in O.S.No.245 of 2019. Aggrieved

thereby, the petitioner / plaintiff in O.S.No.434 of 2019

filed these two Civil Miscellaneous Appeals.

12 Mr. Satya Prasad, learned senior counsel requested

this court to have an in camera proceedings with both

parties before passing orders, to which Mr. Sunil B Ganu,

advocate also consented. Both parties along with their

respective counsel were accordingly called and they were

present on 03.9.2021 in chambers at 2.00 PM. I spoke to

them. This Court felt that orders need to be passed on

merits.

13 This is a case of a person who has set an example to

the society. Mr.M.N.Raju's journey as an illiterate

mendicant to mentor with his hard work, earned the

recognition in the society. Turned into an Educational

Giant as MNR Group and runs the institutions to impart

education in terms of charitable institutions Act without

having profit motto. There are around 32,000 students and

2,500 employees. The institutions are spread in different

parts of the country and also in overseas. His sons were

infants when Mr. M.N.Raju started his educational

institutions.

14 Having taken note of the legal position, the

interference into the management and running of the

schools by the Managing Trustee on behalf of the schools

including the day to day affairs of the same is allowed to be

continued, the trial Court observed that it will grossly effect

the interest of the innocent students studying in not only

the subject institutions but also the other institutions of

the Trust and since balance of convenience also lies in

favour of the Trust represented by the Managing Trustee /

MNR i.e. second plaintiff in O.S.No.245 of 2019 in running

and managing the subject institutions.

15 The trial Court further observed that the petitioner in

I.A.No.2458 of 2019 in O.S.No.434 of 2019 has not

approached the Court with clean hands. The trial Court

also observed that the plaintiff has not prima facie

established that the respondents 1 and 2 in I.A.No.2458 of

2019 have made threats as alleged by the petitioner therein

since they are not strangers to the subject schools and their

entry is prima facie legal and that the first respondent MNR

as managing Trustee of the Trust is in the management of

the subject schools and it is authorizedly represented by

the first and second respondents.

16 The trial Court also observed that from the conduct

and approach of the plaintiff in O.S.No.434 of 2019 in his

personal capacity and in the authority of an Author of the

Trust, it is prima facie established that there is a threat to

the management and running of the subject schools and

also in respect of the day to day affairs of the Trust.

17 Since the suits are pending before the trial Court and

if any observations are made by this court in disposal of

these Civil Miscellaneous Appeals, the same may have some

bearing on the disposal of the suits by the trial Court. The

case of the parties to the litigation is oath against oath. In

such circumstances, while granting temporary injunction,

the Court has to take into consideration the paramount

requirements of prima facie case, balance of convenience

and irreparable loss that may be caused to the parties.

There is a factual dispute with regard to the authorization

given in respect of the petitioner in I.A.No.2458 of 2019 in

O.S.No.434 of 2019, which would only be adjudicated after

full fledged trial and hence this Court cannot express any

opinion on that aspect.

18 However, in view of the voluminous documentary

evidence placed on record, I am of the considered opinion

that the petitioners in I.A.No.1328 of 2019 in O.S.No.245 of

2019 have established their prima facie case and also

balance of convenience in their favour. On the other hand,

the petitioner in I.A.No.2458 of 2019 in O.S.No.434 of 2019

could not establish his prima facie case.

19 In the present case, the plaintiff in O.S.No.434 of

2019 is claiming to be an author. The role of an author is

limited. He is not a trustee or managing trustee to look into

the affairs of the educational institutions under the Trust.

In the Trust deed the plaintiff Mr. Vasu Varma has not

been delegated any powers in the Trust for seeking orders

of injunction in his favour. The plaintiff has not

established prima facie case, balance of convenience and

irreparable loss to consider his case for granting the relief.

Criminal complaints are filed before police stations by both

parties against each other and are pending. This court is

not inclined to go into that aspect as they are separate

proceedings and for the present are not relevant in deciding

these appeals.

20 I have gone through the entire record and the order

impugned in these Civil Miscellaneous Appeals. The trial

Court has given cogent and convincing reasons for its

conclusions. I see no irregularity or illegality in the

impugned order warranting interference of this Court.

21 For the sake of observations, at one point of time, Mr.

Satya Prasad, learned senior counsel appearing for the

appellant has drawn attention of this Court with regard to

the docket proceedings of the trial Court, which this Court

feels that to comment on the same is not necessary at this

juncture, since the same will be diverting the main case

from deciding the case on merits.

22 Having regard to the facts and circumstances of the

case and also the legal position adverted to by the trial

Court, I am of the considered opinion that the Civil

Miscellaneous Appeals lack any merit and accordingly they

are liable to be dismissed.

23 In the result, the CMA No.236 of 2021 and CMA

No.237 of 2021 are dismissed. No order as to costs. The

trial Court may consider disposal of the suits at the earliest

keeping in mind the COVID situation. Miscellaneous

petitions, if any, pending in these Civil Miscellaneous

Appeals shall also stand dismissed.

__________________________ T. AMARNATH GOUD, J.

Date:07.9.2021.

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