Case Note & Summary
The dispute arose from a suit instituted under Section 92 of the Code of Civil Procedure, 1908 by two plaintiffs, Dr. Shelly Batra and Mrs. Usha Gupta, against Operation ASHA, a not-for-profit society registered under the Societies Registration Act, 1860, and its office bearers. The society, founded in 2005, provides health services to the underprivileged, with a focus on tuberculosis treatment. The plaintiffs, one of whom was a co-founder and former president of the society, alleged gross financial impropriety, mismanagement, and breach of trust by the society's office bearers, specifically Sandeep Ahuja and Suniti Ahuja. Allegations included siphoning of funds to shell companies, misuse of donations for personal gain, unauthorized utilization of funds outside India, failure to make statutory disbursements, and cross-payment of salaries to avoid employee benefits. The suit sought declaration, permanent and prohibitory injunction, and rendition of accounts. The Single Judge of the Delhi High Court allowed the application for leave to sue under Section 92 CPC on 3 May 2024. The Division Bench dismissed the society's appeal on 21 August 2024, leading to the present civil appeal by special leave before the Supreme Court. The judgment examines the scope and applicability of Section 92 CPC to a society, the circumstances under which a society may be treated as a trust, and whether the conditions for granting leave were satisfied. However, the final analysis and decision of the Supreme Court are not included in the provided text.
Issue of Consideration
Whether a society registered under the Societies Registration Act, 1860 can be considered a trust for the purposes of Section 92 of the Code of Civil Procedure, 1908, and whether the conditions for granting leave to institute a suit under Section 92 were satisfied on the facts
Law Points
- Section 92 CPC
- conditions for leave to sue
- public charitable trust
- constructive trust
- societies as trusts
- breach of trust
- administration of trust
- persons having interest
- reliefs under Section 92(1)
Case Details
2025 LawText (SC) (08) 120
Civil Appeal No. 10048 of 2025
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Nature of Litigation
Suit under Section 92 of the Code of Civil Procedure, 1908 seeking declaration, permanent and prohibitory injunction, and rendition of accounts for alleged mismanagement and breach of trust in a charitable society registered under the Societies Registration Act, 1860.
Remedy Sought
Leave to institute suit under Section 92 CPC.
Filing Reason
Allegations of gross financial impropriety, siphoning of funds, misuse of donations, unauthorized foreign expenditure, failure to make statutory disbursements, and cross-payment of salaries by office bearers, constituting breach of trust and mismanagement.
Previous Decisions
Learned Single Judge of the High Court of Delhi allowed the application under Section 92 CPC on 03.05.2024 in CS(OS) No. 153 of 2020; the Division Bench of the High Court dismissed the appeal on 21.08.2024 in FAO(OS) No. 114 of 2024.
Issues
Whether a society registered under the Societies Registration Act, 1860 can be considered a trust or a constructive trust for the purpose of Section 92 of the Code of Civil Procedure, 1908.
Whether the trust was created for a public purpose of a charitable or religious nature.
Whether there was a breach of trust or the directions of the court were necessary for the administration of the trust.
Whether the suit was instituted by two or more persons having an interest in the trust.
Whether the reliefs sought fell within the scope of those enumerated under Section 92(1) of the CPC.
Judgment Excerpts
Operation ASHA ... is a not-for-profit society founded in the year 2005 and registered under the Societies Registration Act, 1860
All the incomes, earnings, movable or immovable properties of the society shall be solely utilized and applied towards the promotion of its aims and objectives only
All the properties, movable, immovable, and other kind of assets shall stand vested in the Committee.
the respondent nos. 3 and 4 respectively, were indulging in gross financial impropriety, misconduct and siphoning off funds/donations which were received by the appellant Society into various shell companies/entities controlled by them
Procedural History
On 19.06.2020, the employment of respondent no.1 was terminated by respondent no.3. On 23.06.2020, the Board of the appellant Society passed a resolution terminating respondent no.1 as President. On 27.06.2020, respondent no.1 was removed as a Board member. The original suit bearing CS(OS) No. 153 of 2020 was filed on 28.06.2020 under Section 92 CPC before a learned Single Judge of the High Court of Delhi. The learned Single Judge allowed the application for leave to institute the suit on 03.05.2024. An appeal was preferred by the appellant Society before the Division Bench of the High Court, registered as FAO(OS) No. 114 of 2024, and was dismissed on 21.08.2024. The appellant Society then filed Special Leave Petition (Civil) No. 29830 of 2024 before the Supreme Court, in which leave was granted, resulting in the present Civil Appeal No. 10048 of 2025.
Acts & Sections
- Societies Registration Act, 1860: Section 2, Section 5
- Code of Civil Procedure, 1908: Section 92
