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CASE NO.: Appeal (civil) 3788  of  2001

PETITIONER: MEHRWAN HOMI IRANI & ANR.

       Vs.

RESPONDENT: CHARITY COMMISSIONER, BOMBAY & ORS.

DATE OF JUDGMENT:       10/05/2001

BENCH: S. Rajendra Babu & K.G. Balakrishnan

JUDGMENT:

K.G. BALAKRISHNAN, J.

Leave granted. L...I...T.......T.......T.......T.......T.......T.......T..J

   This  appeal is directed against the order passed by the Bombay  High Court in Writ Petition No.  2005 of 1988.   The appellants  herein unsuccessfully challenged an order passed by  the Charity Commissioner, Bombay, under Section 36(1) of the Bombay Public Trusts Act, 1950.

   Five  philanthropic  members  of the  ’Parsi’  community created  a  Trust,  by name, "The  Tithal  Parsi  Sanatorium Trust".   They felt the necessity of having a Sanatorium  at Tithal,  a  small coastal town in the South Western part  of the  State of Gujarat.  They collected some money and in the year  1907  a committee was constituted to hold these  funds and  to carry out the objects of the Trust.  Initially, they acquired  two and half acres of land with some buildings  on it.   Thereafter, further donations were collected and  with those  funds they purchased some more properties.  All these properties  and  assets  were  held by the  members  of  the committee  in trust and they made a declaration of Trust  on 10.7.1911.   Some Rules & Regulations were also made for the administration  of the said Trust.  These Rules contained  a provision to appoint new Trustees by the surviving Trustees. The  object  of  the  Trust  was to  have  a  Sanatorium  or Convalescent  Home  for the poor and middle class  sick  and convalescent   of  the  Parsi   community   professing   the Zoroastrian  religion, on payment of such nominal fee as may be  fixed from time to time by the Trustees in  consultation with  the  committee  of Management.  The Trust came  to  be registered as a Public trust on 15.10.1952.

   The  Trust  owns  eleven pieces of land having  a  total extent  of  13  acres.   There  is  no  income  from   these@@                 JJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJ properties.   The  moveable properties consist of  furniture@@ JJJJJJJJJJJJJJJJJJJJJJJJJJJ and   utensils   of  the   Sanatorium.   These   are   worth

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Rs.10,000/-.   In bonds and other fixed deposits, there is a corpus  of  Rs.8,485.20.  For want of money, the  Sanatorium could  not  effecitvely function.  As there was no  tangible source  of  income,  it  became  difficult  to  conduct  the Sanatorium and even to preserve the building situated on the property.   Therefore,  the  Trustees  wanted  to  launch  a programme  of putting the property to use by granting  lease thereof  in  such  a  manner as  to  preserve  the  property permanently  for  the Trust.  It was stated by the  Trustees that  they secured an offer from the 5th respondent  herein. The  5th  respondent  is an association  of  persons  called "Mahavideh"  having  its head office at Bombay and one  Shri Vipin Shantilal Shah is its promoter.  The Trustees filed an application  before  the Charity Commissioner,  Bombay,  for permission under Section 36 of the Bombay Public Trusts Act, 1950.  In the application, they stated that they had entered into an agreement of lease with the 5th respondent whereby 2 acres  of  Trust property were to be alienated and given  on lease to the 5th respondent for a period of 99 years and the 5th respondent agreed to construct 8 blocks of 450 sq.  feet each  for  the Trust at a cost of Rs.7,75,000,  which  would form  the Sanatorium.  It was also stated that the remaining area  would  be  leased  to the 5th  respondent  on  certain conditions.   Two agreements of lease were thus entered into by  the  Trustees  with  the 5th  respondent.   The  Charity Commissioner,  on  receipt  of   the  application  from  the Trustees,  advised  them  to  give  more  publicity  to  the intended transaction of lease.  The Trustees thereafter gave advertisement in the Ahmedabad edition of the Indian Express and  also  in a Gujarat Newspaper, ’Dainik Lok Satta’.   Two offers  were received, including that of the 5th  respondent and  the  Trustees  accepted  the  offer  made  by  the  5th respondent.   Thereafter,  they  filed a  fresh  application under  Section  36  of the Bombay Public  Trusts  Act.   The present   appellants  got  themselves   intervened  in   the proceedings  before  the Charity Commissioner and  contended that  the Trustees have no power to execute long-term  lease agreements  in  favour  of the 5th  respondent.   They  also alleged  that  the object of the Trust would be defeated  in case  the  5th  respondent  is allowed to make  use  of  the property for other purposes.  They also contended that there were  no  compelling necessities for the Trust to lease  out the property to the 5th respondent and there would be better proposals  from  other parties.  The  Charity  Commissioner, after hearing both sides, granted permission to the Trustees under Section 36 of the Bombay Public Trusts Act.

   Aggrieved  by the order of the Charity Commissioner, the appellants  preferred a Writ Petition before the Bombay High Court.   In the High Court also, the appellants alleged that the  agreements  executed between the Trustees and  the  5th respondent,  if implemented, would defeat the purpose of the Trust.  The appellants also urged before the High Court that there  could  be better proposals from other  parties.   The High  Court,  however,  held  that the Trust  is  not  in  a position  to  run the Sanatorium and the leasing out of  the property  was being done with a view to carry out the object of  the  Trust.   The  High  Court  further  held  that  the petitioners  could  not substantiate their claim that  there were better proposals from other parties.  Consequently, the order of the Charity Commissioner was upheld.

   We  heard  learned  counsel for the appellants  as  also learned  counsel  for respondents 2-4.  The counsel for  the appellants  drew our attention to the various clauses in the

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two  agreements executed by the 5th respondent in favour  of the  Trustees.   It  was  pointed out that 2  acres  of  the property  were  to  be  alienated   and  given  to  the  5th respondent  for a period of 99 years and that only 1 acre of the  Trust  property  is to be used for  construction  of  8 blocks of buildings at a cost of Rs.7,75,000/- to be used as Sanatorium.   It  was  pointed out that the  remaining  area would  also  be leased out to the 5th respondent to be  used for other purposes.

   Learned  counsel  for respondents 2 to 4, on  the  other hand,  contended  that the agreements entered into with  the 5th respondent are only with a view to carry out the objects of  the Trust and as there was no other source of income  to run the Sanatorium, the 5th respondent had come forward with the  scheme and the same was accepted and according to these respondents,  the agreements entered into between the  Trust and  the  5th  respondent are in the best interests  of  the Trust.

   The  important  point  to be considered is  whether  the agreements  entered  into  between  the Trust  and  the  5th@@             JJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJ respondent  are  capable of carrying out the objects of  the@@ JJJJJJJJJJJJJJJJJJJJJJJJJJJ Trust  to provide a Sanatorium for the convalescing and sick persons.   It  is  to  be noted that under  the  two-  lease agreement,  a  total of 12 acres of land is to be leased  to the  5th  respondent for a period of 99 years at  an  annual rent  of Rs.1,51,000/-.  In the agreements, there is no sort of  covenant as to how the property would be used by the 5th respondent.   In  the application filed before  the  Charity Commissioner  also,  it is not explained as to how  the  5th respondent-lessee would make use of the 12 acres of lands to be given to him at an annual rent of Rs.1,51,000/- under the lease agreements.

   The  counsel for the appellants also pointed out that it is  likely  that  there would be better  offers  from  other parties.  The offer made by the appellants themselves is not very  encouraging  and  the respondents were  right  in  not accepting  the  same.  However, we are told that there  were some  other  offers  also from  some  well-known  charitable institutions.   In  the best interests of the Trust and  its objects, we feel it appropriate that respondent nos.  2 to 4 should  explore the further possibility of having agreements with  better  terms.   The objects of the  Trust  should  be accomplished  in the best of its interests.  Leasing out  of major  portion of the land for other purposes may not be  in the  best interests of the Trust.  The Charity  Commissioner while  granting  permission under Section 36 of  the  Bombay Public  Trusts Act could have explored these  possibilities. Therefore,  we  are constrained to remit the matter  to  the Charity Commissioner to take a fresh decision in the matter. There could be fresh advertisements inviting fresh proposals and  the  proposal  of  the 5th  respondent  could  also  be considered.   The Charity Commissioner may himself formulate and  impose just and proper conditions so that it may  serve the best interests of the Trust.  We direct that the Charity Commissioner  shall  take  a decision at the  earliest.   We allow  the appeal as indicated above and remit the matter to the  Charity  Commissioner in modification of the orders  of the  High  Court  in  Writ  Petition  and  that  of  Charity Commissioner.

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   The  appeal  is thus disposed of without,  however,  any order as to costs.@@             JJJJJJ