Case Note & Summary
The petitioner, a builder, challenged an order dated 31st May 2005 passed by the Court granting permission to the respondent No.1 Trust to alienate its property admeasuring 5,39,595 sq.ft. at Yerawada, Pune, to respondent No.8 M/s. Premsagar Hotels Pvt. Ltd. for a consideration of Rs.35,70,00,000/- (Rs.661 per sq.ft.). The Trust had received offers from six parties without public advertisement due to past experience of encroachment when the property was advertised earlier. The petitioner argued that the property should have been sold by public auction or advertisement to fetch a higher price. The Court held that the permission was validly granted under Section 36 of the Indian Trusts Act, 1882, as the Trust had obtained multiple offers, the highest offer was adequate, and the Trust's decision was bona fide. The Court noted that the petitioner's own offer was lower and that the Trust had acted in its best interest. The petition was dismissed with no order as to costs.
Headnote
A) Trust Law - Alienation of Trust Property - Section 36 Indian Trusts Act, 1882 - Permission to sell - Court granted permission to the Trust to sell its property to the highest offerer at Rs.661 per sq.ft. without public advertisement, considering past experience of encroachment and the adequacy of the price. Held that public advertisement is not mandatory if the court is satisfied that the price is adequate and the transaction is in the interest of the trust (Paras 1-6).
Issue of Consideration
Whether the order granting permission to the Trust to alienate its property to the highest offerer without public advertisement is valid and whether the consideration is adequate.
Final Decision
The petition is dismissed. Rule discharged. No order as to costs.
Law Points
- Trust property alienation
- Permission under Section 36 Indian Trusts Act
- 1882
- Public advertisement not mandatory
- Court's supervisory jurisdiction
- Adequacy of consideration
- Private negotiations permissible
Case Details
2005 LawText (BOM) (09) 83
Writ Petition No. 5797 of 2005
Mr. Tejas Deshpande for the Petitioner; Mr. V.V. Tulzapurkar with Mr. Ramesh Soni with Ms. Iyer i/by Doijode Associates for the Respondents Nos.1 to 7; Mr. V.A. Thorat with Mr. Ameet Hariani with Ms. Khatri i/by Hariani & Co. for the Respondent No.8
M/s. Pudhari Publications Pvt. Ltd.
Sri Kikabhai Premchand Trust Settlement No.VI and Ors.
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Nature of Litigation
Writ petition challenging an order granting permission to a trust to alienate its property.
Remedy Sought
The petitioner sought to quash the order dated 31st May 2005 granting permission to the Trust to sell its property to Respondent No.8.
Filing Reason
The petitioner alleged that the property should have been sold by public auction or advertisement to fetch a higher price, and that the consideration was inadequate.
Previous Decisions
The Court had earlier granted permission to the Trust to sell the property to the highest offerer, M/s. Premsagar Hotels Pvt. Ltd., vide order dated 31st May 2005.
Issues
Whether the order granting permission to the Trust to alienate its property without public advertisement is valid.
Whether the consideration of Rs.661 per sq.ft. is adequate.
Submissions/Arguments
The petitioner argued that the property should have been sold by public auction or after due advertisement to ensure the best price.
The Trust contended that public advertisement was not necessary due to past experience of encroachment, and that the price offered was the highest among six offers and was adequate.
Ratio Decidendi
Under Section 36 of the Indian Trusts Act, 1882, a court may grant permission to a trustee to alienate trust property if it is satisfied that the alienation is necessary or beneficial to the trust. Public advertisement is not mandatory if the court is satisfied that the price is adequate and the transaction is in the interest of the trust. The court must consider the bona fides of the trustee and the adequacy of consideration.
Judgment Excerpts
The petitioner, who is a builder, has challenged the order dated 31st May, 2005, granting permission to the respondent No.1 -Sir Kikabhai Premchand Trust Settlement No.VI; hereinafter referred to as 'the Trust' to alienate its property for a consideration of Rs.35,70,00,000/- (Rupees Thirty Five Crores Seventy lakh only) to the Respondent No.8 -M/s. Premsagar Hotels Pvt. Ltd..
The respondent Trust received offers from about six parties for sale of its property. These offers were not invited in pursuance of any advertisement in the newspapers due to past experience of the respondent Trust, which is set out in its affidavit in paragraph 6.
Procedural History
The Trust filed an application seeking permission to sell its property. The Court granted permission vide order dated 31st May 2005. The petitioner, a builder, filed the present writ petition challenging that order. The petition was heard and dismissed on 30th September 2005.
Acts & Sections
- Indian Trusts Act, 1882: Section 36
