Case Note & Summary
The case involved a public trust created under a will dated August 6, 1915, of a Jain testator who died in 1916. The testator directed his executors to spend specified annual amounts on various religious and charitable objects, and to give an annual Swamivatsal feast to members of his caste in certain villages. After his niece Bai Jakore died in 1928, a sum of Rs. 75,000 was set apart as a trust for the purposes mentioned in clause (7) of the will. Over time, due to discontinuance of the feast and other reasons, a large accumulation of unexpended income arose, amounting to Rs. 45,019-14-0 by October 25, 1956. The Charity Commissioner filed an application before the District Judge, Broach, under sections 55(1)(b) and 56 of the Bombay Public Trusts Act, 1950, seeking directions for utilization of the accumulations for educational purposes. The District Judge directed division of the accumulation between an educational institution (Sad Vidya Mandal) and a hospital (Sevashram Hospital). The appellants, members of the testator's caste, appealed to the Bombay High Court, which dismissed the appeal. The appellants then appealed to the Supreme Court by special leave. The core legal issues were whether the court had power under sections 55 and 56 of the Bombay Public Trusts Act to divert accumulated trust funds from original objects, whether the trust was religious or charitable and thus whether section 56 applied, and whether the proposed diversion was justified in public interest and in accordance with the original intention of the settlor. The appellants contended that the trust was for religious purposes and its funds could not be diverted, and that accumulations should be used for the annual feast. The Charity Commissioner argued that diversion to educational and medical purposes was proper and in the public interest. The Supreme Court held that on an application under section 55(1)(a) or 55(1)(b) read with section 56(2), the court is bound to give directions in respect of all public trusts. Section 56(1) requires the court, so far as may be expedient, practicable, desirable, necessary or proper in public interest, to give effect to the original intention of the author of the trust. If such intention cannot be carried out wholly or partially, the court may direct application of the property or income to any other charitable or religious object. The court found that one of the original objects was the annual feast to the members of the testator's caste, and that looking at the interest of the community, it was certainly expedient, practicable, desirable and proper to give the feast. Even if not considered a religious act, it was meritorious according to Jain scriptures, and in the wider public interest it was proper to respect the sentiments of that section of the Jain public. The overriding intention of the founder was that the amounts set apart be devoted to the objects mentioned in the will so that they continue forever. Therefore, the surplus should be applied as nearly as possible to the original uses, either for carrying out the same objects in future or increasing the amounts spendable for surviving objects, rather than diverting them to other purposes. The Supreme Court set aside the directions of the District Judge and the High Court, and gave suitable directions for utilising the accumulations in accordance with the original objects of the trust.
Headnote
A) Trust Law - Diversion of Accumulated Funds - Power under ss.55 and 56 of Bombay Public Trusts Act - Bombay Public Trusts Act, 1950, Sections 55, 56 - The Court has jurisdiction to give directions for all public trusts, including religious trusts, on applications under ss.55(1)(a) or 55(1)(b) read with s.56(2); the court must first attempt to give effect to original intention if expedient, practicable, desirable, necessary or proper in public interest, and only if not, may divert to other charitable objects. Held that the lower courts erred in diverting the accumulated funds when the original objects, such as the annual feast, were still capable of being carried out and were in the public interest. (Paras Not mentioned) B) Trust Law - Interpretation of Original Intention - Section 56(1) - Bombay Public Trusts Act, 1950, Section 56(1) - The overriding intention of the testator was that the amounts set apart be devoted to the specified objects so that they continue forever; when surplus accumulation exists, it should be applied as nearly as possible to the original uses and purposes, either for carrying out same objects in future or increasing amounts for surviving objects, rather than diversion. Held that the savings should be applied suitably for carrying out the same objects in future or to increase amounts spendable for surviving objects. (Paras Not mentioned) C) Religious and Charitable Trusts - Distinction and Applicability of s.56 - Bombay Public Trusts Act, 1950, Section 56 - The lower courts held s.56 did not apply to wholly religious trusts; but the Supreme Court stated s.56 applies to all public trusts. Even assuming some objects were religious, the court could give directions as long as it respected original intention. Held that the directions given by District Judge were set aside because they did not take into account original objects. (Paras Not mentioned)
Issue of Consideration
Whether the Charity Commissioner's application for diversion of accumulated trust income was maintainable and justified under sections 55 and 56 of the Bombay Public Trusts Act, 1950, and whether the lower courts correctly diverted the funds away from the original religious and charitable objects including the annual Swamivatsal feast.
Final Decision
Supreme Court allowed the appeal, set aside the directions of the District Judge and the High Court, and gave suitable directions for utilising the accumulations by applying them as nearly as possible to the original objects of the trust, including the annual feast and increasing amounts for surviving objects.
Law Points
- Section 55 and 56 of Bombay Public Trusts Act empower court to give directions for all public trusts
- Court must give effect to original intention if expedient
- practicable
- desirable
- necessary or proper in public interest
- Surplus accumulation should be applied as nearly as possible to original uses
- Diversion only if original purpose not expedient
- necessary
- proper in public interest
- Religious trusts not excluded from court's jurisdiction under s.56
