Case Note & Summary
The petitioner, a trustee of Shriram Mandir Deosthan Trust, challenged an order dated 15/02/2011 passed by the Joint Charity Commissioner, Nagpur, granting permission to the Trust to sell its property to respondent No.2 under Section 36(1)(a) of the Bombay Public Trust Act, 1950. The Trust owned agricultural land admeasuring 7 hectares 70 ares in Wardha. To raise funds for constructing a Sabha Mandap, the Trust resolved to sell the property and issued advertisements in February 2008. Three offers were received: Rs.4,01,100 per acre from respondent No.2, Rs.2,01,000 per acre, and Rs.1,30,000 per acre. Dissatisfied, the Trust issued fresh advertisements but received no better offers. The Trust then applied to the Charity Commissioner for permission to sell to respondent No.2. The Commissioner granted permission, observing that the Trust had followed proper procedure and the price was adequate. The petitioner argued that the price was far below the market value, which was at least Rs.10-12 lakhs per acre, and that the Commissioner failed to apply his mind. The court framed two issues: whether the price offered was the market price and whether the order met Section 36(1)(a) requirements. The court noted that the Commissioner's order did not discuss the market value or the property's potential for non-agricultural use, despite the property being in a developing area. The court held that the Commissioner must ensure the price is the prevailing market price and that the order lacked proper consideration. Consequently, the court quashed the Commissioner's order and remanded the matter for fresh consideration, directing the Commissioner to determine the market price after hearing all parties and considering the property's potential. The court also directed the Trust to consider selling by public auction or inviting fresh tenders.
Headnote
A) Public Trust - Sale of Trust Property - Section 36(1)(a) Bombay Public Trust Act, 1950 - Market Price Determination - The Charity Commissioner must ensure that the price obtained for sale of trust property is the prevailing market price. In this case, the Commissioner failed to consider the potential value of the land for non-agricultural use and the fact that the property was situated in a developing area. The order granting permission was set aside. (Paras 3, 10-14) B) Public Trust - Duty of Charity Commissioner - Section 36(1)(a) Bombay Public Trust Act, 1950 - Adequacy of Consideration - The Commissioner must apply his mind to the adequacy of the price and not merely rely on the trust's resolution. The Commissioner's order did not discuss the market value or the basis for accepting the offer, rendering it unsustainable. (Paras 10-14) C) Public Trust - Procedure for Sale - Section 36(1)(a) Bombay Public Trust Act, 1950 - Tender Process - The trust issued advertisements and received three offers, with the highest being Rs.4,01,100 per acre. However, the Commissioner did not examine whether this was the market price, especially given the property's location and potential. The court held that the sale was not in the interest of the trust. (Paras 4-6, 10-14)
Issue of Consideration
Whether the price offered by the respondent No.2 for the trust property is the market price and whether the order passed by the Joint Charity Commissioner meets the requirements of Section 36(1)(a) of the Bombay Public Trust Act, 1950.
Final Decision
The court allowed the writ petition, quashed the order dated 15/02/2011 passed by the Joint Charity Commissioner, Nagpur, and remanded the matter back to the Charity Commissioner for fresh consideration. The Commissioner was directed to determine the market price of the property after hearing all parties and considering the property's potential for non-agricultural use. The Trust was also directed to consider selling the property by public auction or by inviting fresh tenders.
Law Points
- Section 36(1)(a) Bombay Public Trust Act
- 1950
- market price determination
- duty of Charity Commissioner
- public trust property sale
- adequacy of consideration
