Transfer of Immovable Property of Public Trust

This article revolves round the provisions of  section 36 of The Gujarat Public Trusts Act, 1950. Section 36 plays very important role so far as the immovable property of the Public Trust is concerned. Let me evaluate this section in detail.

Instead of reproducing the entire section 36 here, I prefer to mention what this section speaks about or what are the ingredients of this section. The title of the section itself is suggestive. It says that alienation of immovable property of public trust. Meaning thereby there is alienation or transfer of the immovable property of the public trust.

 As per section 36(1)(a),  it is  submitted that what so ever is stated in the instrument of Trust is  irrespective for analysis of this provision. It says that sale, mortgage, exchange, gift  of any immovable property under the ownership of a public trust is valid only when the previous sanction of the Charity commissioner ( herein after referred as C.C ) has been taken. By way of this terms of provisions, it emerges out that the previous sanction of the Charity Commissioner is a condition precedent to transfer the immovable property belonging to the public trust by any mode or manner prescribed herein in above. If no previous sanction of C.C. is sanctioned in respect of transfer of immovable property of public trust, and the alienation is made of such property, such act is void ab initio.

As per section 36(1)(b), if there is a question of lease of the agricultural land is concerned, the period of such lease is not exceeding ten years and in the case of a non-agricultural land or a building, such period of lease is not exceeding three years. 

 Sub-section 2 of Section 36 depicts two conditions for C.C.  He shall communicate his decision to the Trustees of the public trust regarding the sanction and he shall publish the same accordingly. 

Section 36(3) says about the appeal against the decision taken by the C.C under section 36(2). It says that the person aggrieved may file an appeal to the Gujarat Revenue Tribunal within thirty days from the date of publication of such decision. 

Section 36(4) says  that the decision taken by the C.C is final provided it should not be under challenge before Gujarat Revenue Tribunal. 

Now, after the  discussion of Section 36 of the Act, let me describe the rules related to this section. Rule 24 of the Bombay Public Trusts (Gujarat) Rules, 1961 is the platform where it is mentioned how the application under Section 36 of sanction of alienation is made and what should be mentioned in the said application and how the entire procedure is followed by C.C.  Let me discuss Rule 24 in detail. 

Rule 24 is related to the provisions Section 36. Rule 24(1) says very important factors to be mentioned in the application for transfer of the immovable property of the public trust. It says that the following points are mentioned in the application. 

i) whether there is any clause about direction so as to transfer or alienation of immovable property in the Trust instrument.

ii)  What is the necessity for the proposed alienation.

iii) how the proposed alienation is in the interest of the public trust and (iv) in the case of a proposed lease, the terms of the past leases, if any. 

Further it is pointed out that such application is accompanied by a valuation report of an expert if it is practicable. This rule suggests that  the Charity Commissioner has applied his  judicial mind in the interest of the public trust before granting the sanction.

Rule 24(2) says that C.C. may make an inquiry before according or refusing sanction.

Rule 24(3) speaks about the conditions to be imposed  or  directions to be given by the C.C. at the time of sanction.

Rule 24(4) says about the procedure to be followed by the C.C. It says that the decision of C.C. in respect of transfer under section 36(1) shall be published in a local newspaper having circulation in the area where the  concerned property is situated. The said decision of the C.C. is also published on the notice boards of the offices of the C.C, Deputy C.C. and Assistant C.C. as the case may be, of the region. All detailed information  pertaining to the description of property, name of public trust, number of application for sanction, grant of sanction,  in which region such property is situated and price for proposed sale or mortgage or rent or period of lease along with the substance of decision are provided in the publication. 

Let me discuss certain judgements on the subject matter of this article. 

1) Cyrus Rustom Patel vs. Charity Commissioner, Maharashtra State and others reported in (2018) 4 SCC (Civ) 684.

In paragraph no. 26 of  this case it was held that," The power to grant sanction has to be exercised by the Charity Commissioner, taking into consideration three classic requirements i.e. the interest, benefit and protection of the Trust. .....The Charity Commissioner has to be objectively satisfied that the property should be disposed of in the interest of public trust; in doing so, he has right to impose such conditions as he may think fit, taking into account the aforesaid triple classic requirements ...."

In paragraph no. 27 of this judgement, Hon'ble Supreme Court held that,"..... the Joint Charity Commissioner has totally abdicated its duty and failed to act as per the mandate of Section 36.  The observations made by the Joint Charity Commissioner in its order clearly reflect that the Charity Commissioner has failed to exercise the duties enjoined upon in to protect the Trust under Section 36 of the Act. It has not considered the interest, benefit and protection of the Trust at all. The order is wholly perverse......."  Having made the above mentioned observation and after discussing the fact, Hon'ble SC set aside the order passed by the Charity Commissioner and High Court of Bombay.

2) Sailesh Developers v. Charity Commissioner reported in 2007 SCC Online Bom 124 (Full Bench)

In paragraph no. 57  it was held that, "while exercising powers under section 36  of the Act, the Charity Commissioner has to safeguard the interests of the Trust as well as interest of beneficiaries...." In paragraph no. 59, it was held that, " while exercising the power either under clause (b) or clause (c), the Commissioner can impose conditions having regard to the interest, benefit and protection of the trust. Before passing an order of sanction or authorisation, the Charity Commissioner has to be satisfied the trust property is required to be alienated. Once the Charity Commissioner is satisfied that the alienation of he trust property is necessary and in the interest of the trust or for the benefit of the trust or for the protection of the  trust, it is very difficult to accept the submission that the power of the Charity Commissioner is restricted either to grant sanction to a particular proposal of the trustees or to reject it. It is the duty of the Charity Commissioner to ensure that the transaction of alienation is beneficial to the trust and its beneficiaries. He has to ensure that the property is alienated to a purchaser or buyer whose offer is the best in all respects. ........... It is the duty of the Charity Commissioner to ensure that the property should be alienated in such a manner that maximum benefits are accrued to the trust. The Charity Commissioner, while considering an application under section 36(1) of the Act 1950, in a given case, can opt for public auction or can invite bids. ..."

3) Thakorbhai Gangaram v. Ramanlal Maganlal Reshainwala reported in 1993 (1) GLH 473

In paragraph no. 4 Hon'ble Gujarat High Court held that there is no dispute about the fact the trustees have power to transfer the property of the trust by any mode provided that the previous sanction has to be required to be taken from the Charity Commissioner under Section 36 of the Act. When the application is made to Charity Commissioner in this regard,  it is for the Charity Commissioner to decide whether such application should be granted or not. The intention of the Legislature for the provisions of section 36 is clear and there is no ambiguity in it. While exercising the power under section 36, the Charity Commissioner has first to consider whether the proposed alienation is in the interest of the Trust. In order to find out the answer of that question, the Charity Commissioner is required to find out the need on the part of the public trust to dispose of or to alienate the property. Once the need is established, the Commissioner would consider various other factors. The Charity Commissioner has to apply his mind on the following points before sanctioning the alienation of the property.

i) whether there is any compelling necessity to justify the alienation in question . 

ii) whether the proposed alienation is fair or just.

iii)whether the proposed alienation in any way adversely affects the interest of the trust. 

The Hon'ble Gujarat High Court set aside the order of Revenue Tribunal and restored the Order passed by the Charity Commissioner in this case. 

Conclusion:

Having discussed the section and rules of transfer of the immovable property belonging to the public trust and the views of Hon'ble Courts, in my opinion, information provided in the application has reasoning enough to convenience the C.C. qua sanction. Moreover, (1) communication of decision of C.C. with the trustees of the public trust as well as (2) publication of decision of C.C. in the concerned local news paper in accordance with law,  must be made. If either of them is not made, the entire sanction becomes futile. The Charity Commissioner is not to play his role as a spectator for  mere granting or refusing his sanction qua alienation of the immovable property of the public trust. Section 36 of the Act gives him ample powers to deal with the question of alienation.  He has to play his judicially active role by considering the three elements i..e interest, benefit and protection of the public trust. He has to be very much aware for protecting the interest and benefit of the Trust. He can impose any reasonable conditions on the trustees to save these classical trinity of the Trust. He has to take care of all the aspects of the Trust before giving his sanction. For instance, the Charity Commissioner has to look out the condition of the Trust, the financial capacity of it, the price of the immovable property of the it, market value of the property,  the carving or compelling  necessity for alienation of the property. the proposal from trustees is fair or unfair, whether such proposal of alienation is  really in the interest of the trust or it is in the personal interest or benefits of the trustees. 

Chirag Bhatt

Advocate

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