Case Note & Summary
The petitioners, trustees of Shah Mulji Deoji Charitable Trust, Nagpur, filed a writ petition challenging the order of the Joint Charity Commissioner, Nagpur, dated 22-7-2009, which rejected their application for permission to sell the trust property (Municipal House No.633) to respondent Nos.2 and 3. The trust was created by a trust deed for providing educational and medical facilities and other charitable purposes. The trust deed did not contain any provision for sale of trust property. The trustees decided to sell the property because it was in a dilapidated condition, earning no income, and reconstruction was not feasible. The trust needed money to fulfill its objects. Advertisements were issued in newspapers on 1-10-2006 inviting bids. Respondent Nos.2 and 3 quoted the highest rate of Rs.1,251 per square foot, which was higher than the government valuation of Rs.17,35,586 and the architect's valuation of Rs.21,43,785. The trustees applied to the Joint Charity Commissioner for permission to sell, which was rejected on 7-10-2008. The trustees challenged that order in Writ Petition No.1562 of 2009, which was partly allowed by this Court on 2-5-2009, remanding the matter to the Joint Charity Commissioner for fresh consideration. The Joint Charity Commissioner again rejected the application on 22-7-2009, leading to the present petition. The High Court examined the provisions of the Bombay Public Trusts Act, 1950, and held that trustees have an inherent power to sell trust property if it is beneficial for the trust, even without express authorization in the trust deed. The Court found that the sale was bona fide, for adequate consideration, and in the interest of the trust. The Court set aside the impugned order and granted permission to the trustees to sell the property to respondent Nos.2 and 3.
Headnote
A) Charitable Trusts - Sale of Trust Property - Inherent Power of Trustees - Bombay Public Trusts Act, 1950, Section 36 - Trustees sought permission to sell dilapidated trust property that was not generating income, with proceeds to be used for charitable objects. The trust deed did not contain any provision for sale. The Joint Charity Commissioner rejected the application. The High Court held that trustees have an inherent power to sell trust property if it is beneficial for the trust, even without express authorization in the trust deed, provided the sale is bona fide and for adequate consideration. The Court allowed the sale, setting aside the Commissioner's order. (Paras 5-7) B) Charitable Trusts - Permission to Alienate - Adequacy of Consideration - Bombay Public Trusts Act, 1950, Section 36 - The trustees had obtained the highest bid of Rs.1,251 per sq. ft., which was higher than the government valuation and architect's valuation. The Court held that the consideration was adequate and the sale was in the interest of the trust. (Paras 3, 6)
Issue of Consideration
Whether trustees of a public trust can sell trust property when the trust deed does not expressly authorize sale, and whether the Joint Charity Commissioner's refusal to grant permission was justified.
Final Decision
The High Court allowed the writ petition, set aside the impugned order dated 22-7-2009, and granted permission to the trustees to sell the trust property to respondent Nos.2 and 3.
Law Points
- Charitable Trust
- Sale of Trust Property
- Permission under Section 36 of Bombay Public Trusts Act
- 1950
- Inherent Power of Trustees
- Beneficial Administration
