Dismissed

Chandra Shekhar Gupta v. M/S S.R.G.P. Corporation Limited and Another

Allahabad HC7 Nov 2019A227/6082/2019

Case brief

AI extract

What is this about?

In this Article 227 writ petition challenging an order permitting the transfer of a trust property, the High Court dismissed the petition. The Court held that Section 7 of the Charitable and Religious Trusts Act is advisory and does not permit adversarial litigation regarding disputes between interested parties, especially given the inordinate delay and lack of bona fides by the petitioner.

What did the court decide?

Petition dismissed as it lacks merit due to inordinate delay, lack of bona fides, and the limited scope of Section 7 of the Act.

Chandra Shekhar Gupta Vs M/S S.R.G.P… — Pension and Retirement Benefits | Allahabad HC (2019)

Reserved

AFR

Case :- MATTERS UNDER ARTICLE 227 No. - 6082 of 2019 Petitioner :- Chandra Shekhar Gupta Respondent :- M/S S.R.G.P. Corporation Limited And Another Counsel for Petitioner :- Swapnil Kumar,Sudhanshu Kumar Counsel for Respondent :- Rahul Sahai

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Hon'ble Manoj Kumar Gupta,J.

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The petitioner has called in question an order dated 19.12.2016 by Additional District Judge, Court No.6, Kanpur Nagar in Misc. Case No.123/70/2016, whereby permission has been granted to respondent no.2, Managing Trustee and Sarvarakar of Shri Dwarikadhish Temple to execute assignment/transfer deed in respect of a trust property in favour of respondent no.1.

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Shri Dwarikadhish Temple Trust is a public charitable trust and respondent no.2 is the Managing Trustee and Sarvarakar of the trust. The trust was owner of perpetual lease hold rights of premises no.364 Harrisganj, Kanpuar having an area 12315 sq. meters. An application was filed by respondent no.2 in his capacity as Managing Trustee and Sarvarakar of Shri Dwarikadhish Temple Trust under Section 7 of the Charitable and Religious Trusts Act, 1920 (hereinafter referred to as 'the Act') seeking permission of the court to execute and register assignment/transfer deed in respect of the said property for a total sale consideration of Rs.18,00,00,000/-in favour of respondent no.1. It was alleged in the application that the said

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premises was not yielding any income, rather a huge amount was being spent on its maintenance and up-keep and to save it from encroachments; that it was in occupation of tenants and some part of it had also been encroached upon; that 25% of the total area of the said property was covered by a tank, 23 feet in depth; that there exists a temple in the said premises known as Sewa Ramji Singhaniya Temple and the Trust was finding it difficult to maintain the temple because of paucity of funds; that respondent no.1 approached the Trust vide its letter dated 10.6.2014 to acquire perpetual lease hold rights for Rs.18,00,00,000/- and also offered to maintain the temple at its own expenses; that the Trust, after due deliberation, agreed to accept the offer, as it was found beneficial to the interest of the Trust and as the price offered was above the prevailing market rate. A meeting of the Trust Committee was held on 15.10.2015 in which the offer was formally accepted. In pursuance thereof, a registered agreement was executed by the Trust in favour of respondent no.1 containing the rights and obligations of the respective parties.

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The court, upon receipt of the application, issued public notice in leading newspapers of the area. The petitioner entered appearance in the proceedings pending before the District Judge and raised objection to the proposal of the Trust to transfer lease hold rights of

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the property in favour of respondent no.1. The petitioner offered to purchase the lease hold rights in the property for a sum of Rs.20,00,00,000/-. The court, after considering the objections filed by the petitioner, allowed the application and granted permission to transfer the lease hold rights in the property in favour of respondent no.1 or its nominee subject to payment of a consideration of Rs.20,00,00,000/- by respondent no.1. The order further stipulates that in case respondent no.1 fails to pay Rs.20,00,00,000/-, the Trust shall transfer the property in favour of the petitioner for the same amount. The court, in order to protect the interest of the Trust, also imposed a condition that the entire sale consideration would be invested in FDR of Nationalized Bank which would remain in the custody of the court and withdrawal of money therefrom would require prior approval of the court.

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In pursuance of the order of the court dated 19.12.2016 granting permission to transfer lease hold rights in favour of respondent no.1, four sale deeds dated 19.12.2016, 24.12.2016, 20.1.2017 and 20.1.2017 were executed by the Trust in favour of respondent no.1.

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The petitioner did not challenge the order dated 19.12.2016. However, a fresh application purporting to be under Section 151 CPC was filed by the petitioner offering to purchase the property for

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Rs.22,00,00,000/-. The said application came to be registered as Misc. Case No.61/74/2017.

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During pendency of the said application, the instant petition has been filed challenging the main order dated 19.12.2016 by which permission to transfer lease hold rights in the property in favour of respondent no.1 was granted by the court. It is admitted in para 18 of the petition that in pursuance of the said order, respondent no.2 had already transferred the property in favour of respondent no.1 by means of four sale deeds dated 19.12.2016, 24.12.2016, 20.1.2017 and 20.1.2017. It is stated in the petition that in case the instant petition is entertained by this Court, the petitioner will withdraw Misc. Case No.61/74 of 2017. It is alleged that the delay occurred in filing the instant petition as, upon legal advice, he was pursuing his application making a higher offer. In para 22 of the petition, it is alleged that the petitioner is still willing to purchase the property for a sum of Rs.20,00,00,000/- or any other higher amount, as may be fixed by the court.

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I have heard Sri Shashi Nandan, learned senior counsel assisted by Sri Swapnil Kumar on behalf of the petitioner and Sri Rahul Sahai on behalf of respondent no.1.

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Sri Shashi Nandan, learned senior counsel submitted that once the petitioner made a higher offer, it was not open to the court to

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permit transfer of the property in favour of respondent no.1. The other limb of the argument is that the court should have permitted the parties to make counter offers so that the highest amount is fetched, thereby safeguarding the interest of the Trust. However, by not following the said procedure, the court committed a manifest error of law.

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On the other hand, learned counsel for the contesting respondent submitted that the instant petition is highly belated and should be dismissed on this ground alone. He submitted that in pursuance of the impugned order, the lease hold rights in the property in dispute stood transferred in favour of respondent no.1 by four registered instruments which are not under challenge. It is urged that the entire sale consideration had already been paid and a huge amount was spent by way of stamp duty, registration charges etc. in obtaining registered conveyance deeds. Respondent no.1 had further transferred some part of the property by executing registered deeds in favour of third parties. It also filed an application bringing the said fact to the notice of the court below and sought rejection of Misc. Case No.61/74 of 2017 on the ground that during pendency of these proceedings, third party rights had also come into existence. He further submitted that the petitioner had not filed the application to secure the interest of the trust, but in his own personal interest. He

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cannot be said to be a person “interested in the trust” as envisaged under Section 7 (2) of the Act, nor can compel the trust to transfer the property in his favour. The court, while granting permission, recorded, its satisfaction that the offer of Rs.18,00,00,000/- made by respondent no.1 was higher than the prescribed circle rate, according to which the market value comes to Rs.16,47,04,650/-. However, in view of the objection filed by the petitioner, the court further enhanced the consideration amount to Rs.20,00,00,000/-. Since the Trust had already entered into registered agreement for transfer of lease hold rights in November, 2015, therefore, to safeguard the interest of the Trust, the court imposed the condition for transfer subject to payment of Rs.20,00,00,000/-. The contesting respondent had agreed to the direction issued by the court and after paying the said amount, it had obtained registered conveyance deeds. In the said backdrop, the present petition filed almost three years after the passing of the impugned order is wholly malicious and frivolous and deserves to be rejected.

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I have given anxious consideration to the submissions made by learned counsel for the parties and I am of the considered opinion that the instant petition deserves to be dismissed for more than one reason:-

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Firstly, as rightly pointed out by learned counsel for respondent

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no.1, the instant petition has been filed with inordinate delay of almost three years since the date of passing of the impugned order. In the interregnum, not only the lease hold rights in the property stood transferred in favour of respondent no.1, but respondent no.1 is also said to have transferred some part of the said property in favour of third parties, who are not before this Court, although any order passed in the instant petition would also adversely affect their rights.

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Second, the applicant claims that he has filed the petition in the interest of the Trust, but at no stage it appeared that the action of the petitioner is being undertaken to sub-serve the interest of the Trust. This is clear from the manner in which the petitioner had been prosecuting the litigation. Initially, when the petitioner appeared in the proceedings before the court below and filed objections, he did not specify the sum at which he proposed to purchase the property in dispute. It was only during course of hearing of the application of respondent no.2 when it was pointed out that the petitioner had not made any concrete offer, then the petitioner filed an affidavit dated 17.12.2016 offering a sum of Rs.20,00,00,000/-. Alongwith the said affidavit, no amount was enclosed by way of draft or pay order to show seriousness in the offer. The court, still taking notice of the offer made by the petitioner, enhanced the sale consideration for transfer of the property in favour of respondent no.1 to

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Rs.20,00,00,000/-. The petitioner did not challenge the order of the court dated 19.12.2016, but instead preferred to file an application once again making a counter offer of Rs.22,00,00,000/-. Once again, no amount was enclosed with the said application to establish his bonafides. The petitioner kept on pursuing the said application for three years and thereafter took somersault and filed the instant petition challenging the order dated 19.12.2016 with an undertaking that he would withdraw his application pending in the court below, if his petition is entertained. This again shows malafides on part of the petitioner while invoking the jurisdiction of this Court.

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Thirdly, Section 7 is not a forum for adversial litigation to decide contentious issues.

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Section 7 reads thus:-

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“ 7. Powers of trustee to apply for directions. (1) Save as hereinafter provided in this Act, any trustee of an express or constructive trust created or existing for public purpose of a charitable or religious nature may apply by petition to the Court, within the local limits of whose jurisdiction any substantial part of the subject-matter of the trust is situate, for the opinion, advice or direction of the Court on any question affecting the management or administration of the trust property, and the Court shall give its opinion, advice or direction, as the case may be, thereon:

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Provided that the Court shall not be bound to give such opinion, advice or direction on any question which it considers to be a question not proper for summary disposal. (2) The Court on a petition under sub-section (1), may either give its opinion, advice or direction thereon forthwith, or fix a date for the hearing of the petition, and may direct a copy thereof, together with notice of the date so fixed, to be served on such of the person interested in the trust, or to be published for information in such manner, as it thinks fit.

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(3) On any date fixed under sub-section (2) or on any subsequent date to which the hearing may be adjourned, the Court, before giving any opinion, advice or direction, shall afford a reasonable opportunity of being heard to all persons appearing in connection with the petition.

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(4) A trustee stating in good faith the facts of any matter relating to the trust in a petition under sub-section (1), and acting upon the opinion, advice or direction of the Court given thereon, shall be deemed, as far as his own responsibility is concerned, to have discharged his duty as such trustee in the matter in respect of which the petition was made.”

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An application under Section 7 of the Act is maintainable only at the behest of any trustee of a trust of charitable or religious nature seeking opinion, advice or direction of the court on any question affecting the management or administration of the trust property. The power cannot be exercised on application of any third party or even suo motto. It is also not a provision for obtaining prior approval of the Court before the trust property is transferred. It is advisory in nature and a trustee who approaches the court, seeks its advice, opinion or direction, and acts on it, is deemed to have discharged his duty as such trustee. The court gives its opinion, advice or direction, as the case may be, exercising its parens patriae jurisdiction. It is not bound to give opinion, advice or direction on questions which it considers not proper for summary disposal. Likewise, if a trustee chooses not to seek opinion, advice or direction of the court under Section 7 of the Act, his action per se cannot be said to be illegal or void, though it would not be immune from challenge.

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The facts of the instant case reveal that the court, while passing the impugned order, was satisfied that the action of the trust in entering into agreement for sale with respondent no.1 for Rs.18,00,00,000/- was a bonafide act in the interest of the Trust. The amount offered was higher than the prevailing market value of Rs.16,47,04,650/-. In order to further safeguard the interest of the Trust, the court enhanced the consideration amount to Rs.20,00,00,000/-, though it was not agreed to between the parties. The court, while granting the permission, issued certain other directions relating to investment of entire sale consideration in fixed deposit of a Nationalized Bank and for withdrawal subject to its permission, so that it is not frittered away. As noted above, the petitioner, except for filing his objections and offering Rs.20,00,00,000/-, did not make any effort to impress upon the court that he was actually serious in the offer being made by him. Even before this Court, in para 22 of the petition, it is asserted that the petitioner is still willing to purchase the property for a sum of Rs.20,00,00,000/-, albeit the offer of Rs.22,00,00,000/- having been already made in Misc. Case No.61/74 of 2017. The assertion that the petitioner would be willing to purchase the property at any other higher amount, as may be fixed by this Court, is wholly vague and creates doubt regarding the bonafides of the petitioner. It seems that

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he is only interested in subterfuging the deal made between the the respondents, rather than acting in any public purpose.

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Learned counsel for the petitioner placed reliance on judgement of the Supreme Court in R. Venugopala Naidu and others Vs. Venkatarayulu Naidu Charities and others, AIR 1990 SC 444 . The said judgement is in reference to a suit under Section 92 CPC which is in nature of a representative suit and where the power exercised by the court is very wide as compared to Section 7 of the instant Act. Moreover, in that case, the trust had sold the property for Rs.11,000/- and Rs.69,329/-. The persons approaching the court for setting aside the sales alleged that the negotiated price was merely 20% of the market value. They made offer of Rs.9,00,000/- and Rs.10,00,000/- respectively and to show their bonafides, they deposited 10% of the offer amount in the court. In the said backdrop, the Supreme Court set aside the sales and directed for fresh sale in which the purchasers were also given right to participate. However, as noted above, the facts of the instant case are entirely different. Consequently, the judgement cited is no help to the petitioner.

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In Official Trustee, West Bengal Vs. Cachindra Nath Chatterjee and another, AIR 1969 SC 823 , the Supreme Court considered the scope of Section 34 of the Trusts Act which is pari materia with Section 7 of the instant Act. The Supreme Court held

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that under the said provision, the court has only a limited power. It was held as follows:-

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“Under this provision the court could have only given "opinion, advice or direction on any presented question respecting the management or administration of the trust property" and not on any other matters. The relief prayed for by the settlor did not relate to the management or administration of the trust Property but on the other hand it asked for authority to alter the quantum of interest given to each of the beneficiaries by a deed inter vivos. The jurisdiction conferred on the court under S. 34 is a limited jurisdiction. Under that provision, the court has not been conferred with overall jurisdiction in matters arising under a Trust deed. The statute has prescribed what the court can do and inferentially what it cannot do. From the fact that the court has been conferred power to grant only certain reliefs it follows as a matter of law that the court has been prohibited from granting any other relief. The jurisdiction of the court is circumscribed by the provisions of s. 34 of the Trusts Act. The court had no jurisdiction to pronounce on the pleas put forward by the settlor. From the facts stated in the petition and from the relief asked for, it was obvious that the case did not come within the scope of S. 34 of the Trust Act. Therefore when the learned judge granted the relief asked for, he did something which he was not competent to do under S. 34 of the Trusts Act.”

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Again, in Sennimalai Swamy Madam Trust Vs. NIL, 1999 (3)

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CTC 390 , the Supreme Court held that the power of the court under the Act is a limited one to advise the trustee as to the management and administration of the trust property and not to decide any question affecting the rights of parties inter se:-

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"My understanding of that section of the Act is, that it was intended by the Legislature that the court should have the power to advice a trustee or executor as to the management and administration of the trust property in the manner which will be most for the advantage of the parties beneficially interested, but not to decide any question affecting the rights of those parties inter se:....”

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Having regard to the nature of jurisdiction exercised under Section 7, the court was not bound to call for a counter offer from the petitioner or enter into contentious issues between the petitioner and the respondents. Once the court was satisfied that the deal was in the interest of the Trust and the sale consideration was at par being offered by the petitioner, it committed no illegality in putting its seal of approval to the deal between the respondents.

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In consequence and as a result of discussion made above, the petition lacks merit and is dismissed.

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Order Date :- 7.11.2019 SL

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(Manoj Kumar Gupta, J.)

Chandra Shekhar Gupta v. M/S S.R.G.P. Corporation Limited and Another

Case brief

What is this about?

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Chandra Shekhar Gupta v. M/S S.R.G.P. Corporation Limited and Another

Case brief

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