Disposed

Aileen Properties Pvt. Ltd. v. State of Maharashtra, through Secretary, Law and Judiciary Dept and Ors.

Bombay HC26 Sept 2012LPA/179/2012

Case brief

AI extract

What is this about?

The High Court disposed of an appeal by confirming the sale of public trust land to a respondent who offered a lower price but guaranteed exclusive charitable medical use of a portion of the property, aligning better with the trust's objects than a higher commercial offer.

What did the court decide?

Appeal disposed seeking payment of balance consideration by the purchaser, execution of a correction deed reflecting the revised consideration and conditions, and refund of the appellant's deposited a

Aileen Properties Pvt. Ltd. Vs State of Maharashtra… — Property and Title | Bombay HC (2012)

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IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION

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LETTERS PATENT APPEAL NO.179 OF 2012

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IN WRIT PETITION NO.5627 of 2012 WITH

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CIVIL APPLICATION NO. 344 OF 2012

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Aileen Properties Pvt. Ltd. ... Appellant Vs.

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State of Maharashtra & Ors. … Respondents

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Mr.Shishir Joshi with Vachan Bodke & Reshma Chitnis i/b M/s Chitnis Vaity & Co., for appellant.

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Mr.S.N.Patil, AGP, for respondent No.1 & 2, for State. Mr.Y.M.Pendse, for respondent No.3.

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Mr.P.K.Dhakephalkar, Senior advocate a/w Neha Palshikar Bhide, for respondent No.4.

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CORAM : MOHIT S. SHAH, C.J. &

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N.M. JAMDAR J.

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Wednesday, September 26, 2012.

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P.C.:

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This appeal is directed against the Judgment dated 28 August 2012 of this Court by the learned Single Judge dismissing the appellant's Writ Petition challenging the order of the Joint Charity Commissioner dated 16 June 2012 under section 36(1)(a) of the Bombay Public Trusts Act, 1950.

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The above application was made by respondent No.3-Koproli Gramastha Mandal, a Public Trust registered under the Bombay Public Trusts Act, for permission to alienate a piece of land admeasuring 6 acres and 20 gunthas in village Koproli, taluka Alibaug of district

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Raigad. It was mentioned in the application made by trustees that the land is barren and is not yielding any income. A public notice was issued in two prominent newspapers in Mumbai and two offers were received, one from the appellant and the other from respondent No.4.

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After considering the resolution of the Trust and the valuation report of the Government approved valuer and after considering the offers in response to the public advertisements and the affidavits on record, the Joint Charity Commissioner concluded that the trustees had proved that there is a necessity to sell and alienate the Trust property so as to raise and generate income and that the benefit and interest of the Trust will be protected when the sale is permitted.

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As far as valuation of offers is concerned, the offer of the appellant before Joint Charity Commissioner was Rs.2.50 crores whereas the offer of respondent No.4 before the Joint Charity Commissioner was Rs.2.65 crores. It is the case of the appellant that the appellant had expressed its desire to enhance the offer before the Joint Charity Commissioner to Rs.2.75 crores but the Joint Charity Commissioner did not permit the appellant to raise its offer.

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According to the Joint Charity Commissioner what tilted the balance in favour of respondent No.4 was that respondent No.4 is a doctor by profession and proposes to start charitable activities on the Trust property to be sold to him, in addition to exploitation of the property. Respondent No.4 intends to provide free medical services by growing medicinal herbs, providing medical consultation and care, and prepare specialised medicines for the people residing in the nearby villages and also by developing the property. On the other hand, the Joint Charity Commissioner noted, that the appellant has been facing

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complaints and litigations from various authorities including allegation of encroachment on the Government land and non-payment of public dues to the extent of Rs.96,00,000/-. Joint Charity Commissioner therefore, concluded that although the offer of respondent No.4 at Rs.2.65 crores was lower than the offer of Rs.2.75 crores made by the appellant, considering the nature of the activities that respondent No.4 proposes to undertake on the land in question, the interest of the Trust will be better served by permitting the sale of the land in question to the respondent No.4 rather than the appellant.

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The above decision of the Joint Charity Commissioner came to be challenged in the Writ Petition before the learned Single Judge which has been dismissed by the learned Single Judge for the same reasons which commended to the Joint Charity Commissioner.

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The learned counsel for appellant, at the hearing on 17 September 2012, invited our attention that the market value of the land in question is Rs.4.68 crores as per the endorsement made by the authorities, under the Bombay Stamp Act and therefore, the sale of land to respondent No.4 at Rs.2.65 crores would be at gross under valuation and contrary to the interest of the Trust. The appellant had accordingly submitted its offer of Rs.4.68 crores for the said land and to show the bonafides appellant also deposited amount of Rs.1 crore and agreed to pay the balance amount of Rs.3.68 crores within eight weeks. Thereupon in view of the above offer, respondent No.4 also sought time and at the next hearing on 24 September 2012 stated that respondent No.4 is also ready to pay Rs.4.68 crores including the amount of Rs.2.65 crores which respondent No.4 has already paid to the Trust at the time of execution of the sale deed by trustees in favour of respondent No.4, on 20 June 2012.

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Our attention was also invited to the following averments made in the affidavit dated 24 September 2012 of respondent No.4 indicating that out of the land admeasuring 6 acres 20 gunthas, respondent No.4 will use 2 acres of land exclusively for medical and charitable purposes, and that respondent No.4 is in the process of creating a Trust for public charitable purposes to be registered with the Office of the Deputy Charity Commissioner, Greater Mumbai Region, Mumbai and thus property admeasuring about 2 acres of land will always remain under the control of the Charity Commissioner, Maharashtra State, Bombay, who will be the guardian of the said Trust. The relevant averments in the affidavit are as under:-

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“4. I say that I have made it very clear that out of the property purchased, 2 Acres of land will be exclusively used for medical and charitable purposes which are of public purposes in nature and therefore, I am in the process of creating a Trust for public charitable purposes to be registered with the Office of the Deputy Charity Commissioner, Greater Mumbai Region, Mumbai. With the result, the property admeasuring about 2 Acres of land will always remain under the control of the Charity Commissioner, Maharashtra State, Bombay and the Charity Commissioner, Maharashtra State, Bombay will be the guardian of the said Trust. I further states that the income from the property admeasuring about 2 Acres which is settled upon a Trust will be utilized for charitable purposes. At the same time, 2 Acres of land settled upon a Trust will also be utilised exclusively for public charitable purposes.

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….......... In the event for any reason, if 2 Acres of land is required to be sold, that land can be sold only with the permission of the Charity Commissioner, Maharashtra State, Bombay under Section 36-1(a) of the Bombay Public Trusts Act, 1950 and the amount of sale proceeds will not come into my pocket but it will go into the accounts of newly created Public Charitable Trust of which the Charity Commissioner, Maharashtra State, Bombay will be the guardian for all

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purposes. Therefore, nowhere herein I will be able to claim any benefits out of the 2 Acres of land proposed to be settled upon a Trust as well as upon the income generated out of 2 Acres of land proposed to be settled upon a Trust.

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I say that in furtherance of the above affidavit, I hereby undertake to provide free medical consultation to the villagers of Koproli Village as well as to people from surrounding villages; till it is physically and circumstantially possible for me to do so.”

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At the hearing today, learned counsel for the appellant submits that the appellant is ready to increase its offer to Rs.5.25 crores. In response to a specific query from the Court as to whether the appellant proposes to undertake any activities on the said land on lines similar to those indicated by respondent No.4 in its affidavit dated 24 September 2012, the answer was that the appellant proposes to develop the entire property for commercial purpose and for no other purpose. However, learned counsel for the appellant submits that the land in question should be sold at the highest available consideration and that the Trust can spend from out of the sale proceeds for any other charitable purposes which the trustees desire to pursue.

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Having heard the learned counsel for the parties, we find that respondent No.4 is ready and willing to pay the Trust the market value assessed by the authorities as per the Ready reckoner at Rs.4.68 crores and over and above paying the said consideration, also proposes to earmark 2 acres of land exclusively for medicinal and charitable purposes to be undertaken by Trust which is proposed to be formed and registered with the Charity Commissioner Maharashtra State, Bombay, the respondent No.4 himself being a medical doctor by profession has undertaken to provide free medical consultation to the Koproli villagers as well as people in the surrounding villages. The interest of the Trust

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and larger public interest will, therefore, be better served by permitting the respondent No.3 Trust to sell the land in question i.e land admeasuring 6 acres and 20 gunthas to respondent No.4 subject to the conditions stipulated in paragraphs 4, 5 and 6 of the affidavit dated 24 September 2012 of respondent No.4, which activities are already set out hereinabove.

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As per the settled legal position, while granting sanction under section 36(1)(a) of the Bombay Public Trusts Act 1950, the Charity Commissioner is not required to look at only the amount of sale consideration which will be received by the Trust but also the objects of the Trust. The objects of the Koproli Gramastha Mandal Trust are as under :-

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“1] Social and educational development of village Koproli. 2] …..... 3] …..... 4] …..... 5] …..... 6] To hold medical camps.”

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Taking into consideration the above objects of the respondent No.3 Trust and considering the assurance given by respondent No.4 in the form of the undertaking set out hereinabove, there can be no manner of doubt that the objects of the Trust will be better served by accepting the offer of respondent No.4. Merely because the appellant is prepared to offer a higher amount of Rs.5.25 crores, the offer of the appellant cannot be considered to be a better offer. After all, respondent No.4 has undertaken to exclusively use the 2 acres of land out of 6 acres and 20 gunthas land being purchased by him for medicinal and charitable purposes and to render free medical

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consultation to the villagers of Koproli and nearby villages. Respondent no.4 will thus not enjoy any ownership rights over the said 2 acres of land nor will he claim any income accruing from the property on the said land admeasuring 2 acres. In case, said 2 acres of land is required to be sold in future, the sale proceeds will not go into the hands of respondent No.4, but, will go to the public charitable trust to be formed by respondent no.4. We are therefore, of the view that the interests of the Trust as well as larger public interest will be better served by permitting the respondent No.3-Trust to sell the said land admeasuring 6 acres 20 gunthas in favour of respondent No.4 rather than the appellant.

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We also need to note that respondent No.4 has made the above offer and has given the undertaking even after execution of the conveyance in his favour on 20 June 2012.

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In the result, appeal is disposed of in terms of the following directions :

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i) Respondent No.4 shall pay respondent No.3-Koproli Gramastha Mandal Trust, a further sum of Rs.2,03,00,000/(Rupees Two Crores and Three Lakhs only) within eight weeks from today.

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ii) Upon receipt of the aforesaid amount, respondent No.3Koproli Gramastha Mandal Trust shall execute a deed of Rectification indicating that the land admeasuring 6 acres 20 gunthas in question which was earlier sold by respondent No.3-Koproli Gramastha Mandal Trust to respondent No.4 for a consideration of Rs.2.65 crores will be sold to respondent no.4 for a total consideration of Rs.4.68 crores and subject to

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the conditions which are indicated in paragraphs 4 to 6 of the affidavit dated 24 September 2012, to the respondent No.4 in the present appeal, and the said conditions shall form part of the deed of rectification.

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iii) Since it is the case of respondent No.3 and respondent No.4 that stamp duty has been paid on consideration of Rs.4.68 crores, it will be open to them to point out this fact before the authorities under the Bombay Stamp Act.

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iv) The amount of Rs.1,00,00,000/- (Rupees One crore only) deposited by the appellant shall be refunded to the appellant, upon making an application before the registry for this purpose within one week from the date of receipt of the application.

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v) In case of default in payment of the aforesaid balance consideration of Rs.2.03 crores by respondent No.4 to respondent No.3-Koproli Gramastha Mandal Trust, the appeal shall be listed for appropriate orders.

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Appeal accordingly stands disposed of. In view of disposal of the appeal, the Civil application does not survive, hence it is also disposed of.

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CHIEF JUSTICE

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N.M.JAMDAR, J.

Aileen Properties Pvt. Ltd. v. State of Maharashtra, through Secretary, Law and Judiciary Dept and Ors.

Case brief

What is this about?

What did the court decide?

Aileen Properties Pvt. Ltd. v. State of Maharashtra, through Secretary, Law and Judiciary Dept and Ors.

Case brief

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What did the court decide?

What the court decided

A compact analysis

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Statutes considered

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