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PETITIONER: R. VENUGOPALA NAIDU AND ORS.

       Vs.

RESPONDENT: VENKATARAYULU NAIDU CHARITIES AND ORS.

DATE OF JUDGMENT26/10/1989

BENCH: KULDIP SINGH (J) BENCH: KULDIP SINGH (J) NATRAJAN, S. (J)

CITATION:  1990 AIR  444            1989 SCR  Supl. (1) 760  1989 SCC  Supl.  (2) 356 JT 1989 (4)   262  1989 SCALE  (2)902

ACT:      Civil Procedure Code, 1908: Section  92--Representative suit-Nature  of--Whether all persons interested in  a  trust are parties to the suit.

HEADNOTE:      Respondent  No.  1 is a public trust.  The  trust  owns several properties. On the ground that the trust  properties were improperly and fraudulently alienated, a suit was fried under Section 92 CPC for removing the trustee and appointing a  new trustee and to recover trust properties alienated  by the  said trustee. The sub-judge permitted the  trustees  to continue  and framed a scheme-decree for the future  manage- ment  and administration of trust. The scheme  also  granted liberty to the parties to apply to the sub-court for further directions as regards the administration of the trust.      The  trustees filed an interim application  before  the sub-court  and obtained permission to sell  two  properties. The  appellants  filed an interim  application  for  setting aside the order granting permission to the trust for selling the  two properties, alleging that the negotiated price  was only about 20% of the market price. The sub-judge  dismissed the  application  on the ground that the applicants  had  no locus-standi to file the application under clauses 13 and 14 of the Scheme-decree as they were not parties to the  Origi- nal suit.      On revision the High Court also came to the  conclusion that the application was not maintainable.       This  appeal,  by special leave, is against  the  said judgment of the High Court.       On  behalf  of the appellants, it was  contended  that since  the suit under section 92 CPC being a  representative suit, the scheme-decree binds not only the parties  thereto, but all those who are interested in the trust.       The  contention of the Respondents was that  only  the two persons 761 who  filed the original suit can be considered as  "parties" in  terms  of clause 14 of the scheme-decree and  since  the appellants  were  not plaintiffs in the suit, they  have  no locus-standi to file an application under clauses 13 and  14

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of the scheme decree. Allowing the appeals, this Court,     HELD: 1.1 A suit under Section 92 of the Code is a  suit of  a special nature for the protection of Public rights  in the  Public Trusts and charities. The suit is  fundamentally on  behalf of the entire body of persons who are  interested in  the trust. It is for the vindication of  public  rights. The beneficiaries of the trust, which may consist of  public at large, may choose two or more persons amongst  themselves for  the  purpose of filing a suit under Section 92  of  the Code and the suit-title in that event would show only  their names  as plaintiffs. The named plaintiffs being the  repre- sentatives of the public at large which is interested in the trust all such interested persons would be considered in the eyes of law to be parties to the suit. A suit under  Section 92  of  the Code is thus a representative suit and  as  such binds  not only the parties named in the suit-title but  all those who are interested in the trust. It is for that reason that explanation VI to Section 11 of Code constructively bar by  res-judicata the entire body of interested persons  from reagitating the matters directly and substantially in  issue in an earlier suit under Section 92 of the Code. [766B-C]     1.2 A suit whether under Section 92 of the Civil  Proce- dure Code or under Order 1 Rule 8 of Civil Procedure Code is by the representatives of large number of persons who have a common  interest. The very nature of a  representative  suit makes  all  those who have common interest in  the  suit  as parties. In the instant case all persons who are  interested in the respondent trust are parties to the original suit and as such can exercise their rights under clauses 13 and 14 of scheme-decree. [766H; 767A]     Raje  Anandrao  v. Shamrao and Ors., [1961] 3  SCR  930; Ahmed  Adam  Sait and Ors. v. Inayatullah Mekhri  and  Ors., [1964] 2 SCR 647 relied on.     2.1 The property of religious and charitable  endowments or  institutions must be jealously protected  because  large segment  of the community has beneficial  interest  therein. Sale  by  private negotiations which is not visible  to  the public eye and may even give rise to public suspicion should not, therefore, be permitted unless there are special 762 reasons  to justify the same. Care must be taken to fix  the reserve price after ascertaining the market value for  safe- guarding the interest of the endowment. [767F-G]     2.2  The orders of subordinate court dated  October  27, 1984  and  January 23, 1985 permitting the sale of  the  two properties and consequent sale in favour of the respondents, are  set  aside. The properties in question may be  sold  by public auction by giving wide publicity regarding the  date, time  and place of public auction. The offer of Rs. 10  lacs made  in  this Court will be treated as minimum bid  of  the person who has given the offer and deposited ten percent  of the  amount in this Court. It will also be open to  the  re- spondents/purchasers  to  participate  in  the  auction  and compete  with  others  for purchasing  the  properties.  The respondents-vendees  from  the trust shall  be  entitled  to refund of the price paid by them with 10% interest from  the date  of payment of the amount till the date of  auction  of the property. They will also be entitled to compensation for any superstructure put up by them in the properties  includ- ing  compensation for any additions or improvements made  by them to the building and the property. [767H; 768A-C]     Chenchu  Ram Reddy and Anr. v. Govt. of  Andhra  Pradesh and Ors., [1986] 3 SCC 391, relied on.

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JUDGMENT:     CIVIL  APPELLATE JURISDICTION: Civil Appeal No. 3577  of 1988.     From  the  Judgment  and Order dated  19.9.1986  of  the Madras High Court in C.R.P. No. 3210 of 1985.     S. Padmanabhan, Mr. T.A. Subramaniyam, R.N. Keshwani and S. Balakrishnan for the Appellants.     G. Ramaswamy, Additional Solicitor General, K. Swami, S. Srinivasan,  Rajyappa,  S. Murlidhar, Diwan  Balak  Ram  and M.K.D. Namboodari for the Respondents. The Judgment of the Court was delivered by     KULDIP  SINGH,  J. Venkatarayulu Naidu  Charities  is  a public  trust V.P. Venkatakrishna Naidu and V.P.  Rajagopala Naidu,  filed an original suit No. 28 of  1909  (hereinafter called  original  suit) in the court of  Subordinate  Judge, Mayavaram  under Section 92 of the Code of  Civil  Procedure praying inter alia that the defendant trustee be 763 removed from the said office and a new trustee be  appointed with  directions to recover trust properties improperly  and fraudulently  alienated  by the defendant.  The  subordinate court  permitted  the  trustee  to  continue  and  framed  a scheme-decree dated September 9, 1910 for the future manage- ment  and administration of the trust. Clauses 13 and 14  of the scheme are as under:               "13--The trustee shall not effect any  altera-               tions  or additions to the existing  buildings               except with the permission of the Tanjore  Sub               Court."               "14--Liberty is given to the parties to  apply               to  the Tanjore Sub Court for  further  direc-               tions if any from time to time as regards  the               administration of the trusts."     The question for consideration in this Appeal is whether "parties" mentioned in Clause 14 of the scheme-decree repro- duced above mean only the named plaintiffs and defendant  in the suit-title and their successors-in-interest or the  suit being representative it includes all those who are interest- ed in the trust.               Further necessary facts are as under:                   The  trust owns several items  of  proper-               ties. We are concerned with the following  two               properties alone of the trust.               1. Property situate at Muthukumara  Moopannaar               Road  in T.S. No. 2936 to an extent  of  11484               sq. ft.               2.  Property  situate at ward No.  6  Gandhiji               Road,  in T.S. No. 2937 to an extent  of  4429               sq. ft.     The  trustees filed interim application No. 453 of  1984 in  the Original Suit before the subordinate court for  per- mission to sell the first property which was granted by  the order  dated October 27, 1984 and the property was sold  for Rs.11,000.  Similarly  the  second  property  was  sold  for Rs.69,328 with the permission of the court dated January 23, 1985.     R. Venugopala Naidu and three others who are the present appellants filed interim application No. 175 of 1985 in  the original  suit before the subordinate judge,  Thanjavur  for setting aside the orders dated October 27, 1984 and  January 23, 1985 granting permission to 764 the trust to sell the above mentioned two properties. It was

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alleged  that the negotiated sale was at a price  which  was almost 20% of the market price. There was no publication  in any  newspapers or even in the court notice  board  inviting the general public.     The learned subordinate judge dismissed the  application on  the  ground that the applicants have no  locus-sandi  to file the application under clauses 13 and 14 of the  scheme- decree  as  they were not parties to the  original  suit.  A further revision before the Madras High Court was dismissed. The High Court also came to the conclusion that the applica- tion  was  not maintainable. It was also held  by  the  High Court that two of the four applicants who are muslims cannot have  any  interest  in the  administration  of  the  trust. Against the High Court judgment the present appeal by way of special leave has been filed.     Mr.  S. Padmanabhan, learned counsel for the  appellants has  vehemently argued that though the appellants  were  not shown as parties in suit-title but the suit under Section 92 of  Civil  Procedure Code being a  representative  suit  the scheme-decree  binds  not only the parties thereto  but  all those  who  are interested in the trust.  According  to  him "parties"  in clause 14 of the scheme decree  would  include appellants and all those who are interested in the trust. He has relied on Raje Anandrao v. Shamrao and Others, [1961]  3 SCR 930 wherein this Court held as under:               "  .....  It is true that the pujaris were not               parties to the suit under s. 92 but the  deci-               sion  in that suit binds the pujaris  as  wor-               shipers  so far as the administration  of  the               temple is concerned, even though they were not               parties  to  it, for a suit under s. 92  is  a               representative  suit  and binds not  only  the               parties  thereto but all those who are  inter-               ested in the trust."     The  learned counsel further relied on Ahmed  Adam  Sait and  Others v. Inayathullah Mekhri and Others, [1964] 2  SCR 647 wherein this Court observed as under:               "A suit under s. 92, it is urged, is a  repre-               sentative  suit,  and so, whether or  not  the               present respondents actually appeared in  that               suit, they would be bound by the decree, which               had framed a scheme for the proper administra-               tion  of the Trust. In support of  this  argu-               ment,  reliance is placed on the  decision  of               this Court in Raja Anandrao v. Shamrao,               765               where  it is observed that though the  Pujaris               were not parties to the suit under s. 92,  the               decision  in  that suit binds the  pujaris  as               worshipers so far as the administration of the               temple  is concerned, because a suit under  s.               92 is a representative suit and binds not only               the  parties  thereto, but all those  who  are               interested in the Trust  .......  "               "   .....  In assessing the validity  of  this               argument,  it  is necessary  to  consider  the               basis of the decisions that a decree passed in               a  suit  under s. 92 binds  all  parties.  The               basis of this view is that a suit under s.  92               is  a representative suit and is brought  with               the  necessary  sanction  required  by  it  on               behalf of all the beneficiaries interested  in               the Trust. The said section authorises two  or               more  persons having an interest in the  Trust               to file a suit for claiming one or more of the

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             reliefs  specified  in clauses (a) to  (h)  of               sub-section (1) after consent in writing there               prescribed  has  been obtained. Thus,  when  a               suit is brought under s. 92, it is brought  by               two  or more persons interested in  the  Trust               who  have taken upon themselves the  responsi-               bility  of representing all the  beneficiaries               of  the Trust. In such a suit, though all  the               beneficiaries may not be expressly  impleaded,               the  action is instituted on their behalf  and               relief is claimed in a representative  charac-               ter.  This position immediately  attracts  the               provisions  of explanation VI to s. 11 of  the               Code.  Explanation  VI  provides  that   where               persons  litigate  bona fide in respect  of  a               public right or of a private right claimed  in               common for themselves and others, all  persons               interested  in such right shall, for the  pur-               poses  of  this section, be  deemed  to  claim               under  the persons so litigating. It is  clear               that s. 11 read with its explanation VI  leads               to  the result that a decree passed in a  suit               instituted by persons to which explanation  VI               applies  will  bar further claims  by  persons               interested  in  the same right in  respect  of               which  the  prior suit  had  been  instituted.               Explanation VI thus illustrates one aspect  of               constructive res judicata. Where a representa-               tive suit is brought under s. 92 and a  decree               is passed in such a suit, law assumes that all               persons  who  have the same  interest  as  the               plaintiffs  in  the representative  suit  were               represented by the said plaintiffs and, there-               fore, are constructively barred by res judica-               ta  from reagitating the matters directly  and               substantially  in  issue in the  said  earlier               suit.               A  similar result follows if a suit is  either               brought or               766               defended  under 0.1., r. 8. In that case  per-               sons  either suing or defending an action  are               doing so in a representative character, and so               the  decree  passed in such a suit  binds  all               those whose interests were represented  either               by     the     plaintiffs    or     by     the               defendants  .......  "     The  legal position which emerges is that a  suit  under Section 92 of the Code is a suit of a special nature for the protection of Public rights in the Public Trusts and  chari- ties. The suit is fundamentally on behalf of the entire body of  persons who are interested in the trust. It is  for  the vindication  of  public  rights. The  beneficiaries  of  the trust, which may consist of public at large, may choose  two or more persons amongst themselves for the purpose of filing a  suit under Section 92 of the Code and the  suit-title  in that event would show only their names as plaintiffs. Can we say  that the persons whose names are on the suit-title  are the  only  parties to the suit? The answer would be  in  the negative. The named plaintiffs being the representatives  of the  public  at large which is interested in the  trust  all such  interested persons would be considered in the eyes  of law  to be parties to the suit. A suit under Section  92  of the  Code  is thus a representative suit and as  such  binds only  the parties named in the suit-title but all those  who

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are  interested  in the trust. It is for  that  reason  that explanation VI to Section II of the Code constructively  bar by  res judicata the entire body of interested persons  from reagitating the matters directly and substantially in  issue in an earlier suit under Section 92 of the Code.     Mr.  G.  Ramaswamy, learned counsel  appearing  for  the respondent  trust has argued that only the two  persons  who filed  the original suit can be considered as  "parties"  in terms of clause 14 of the scheme decree and according to him since  the appellants were not the plaintiffs they  have  no locus-standi to file any application under clause 13 and  14 of  the  scheme-decree.  According to  the  learned  counsel Section  92 of the Code brings out a dichotomy in the  sense that there are "parties to the suit" and "persons interested in  the trust." According to him persons interested  in  the trust cannot be considered parties to the suit although  the judgment/decree in the suit in binding on them. He has  also argued that a suit under Section 92 of Civil Procedure  Code is different from a suit filed under Order 1 Rule 8 of Civil Procedure Code. We do not agree with the learned counsel.  A suit  whether  under Section 92 of Civil Procedure  Code  or under  Order  1  Rule 8 of Civil Procedure Code  is  by  the representatives of large number of persons who have a common interest. The very nature of a representative suit makes all those who have common interest in the suit as parties. We, 767 therefore,  conclude that all persons who are interested  in Venkatarayulu  Naidu Charities which is admittedly a  public trust  are  parties  to the original suit and  as  such  can exercise  their  rights under clauses 13 and 14  of  scheme- decree dated September 9, 19 10.     It  is not necessary to go into the finding of the  High Court  that two of the appellants being muslims can have  no interest  in the trust as the other two appellants claim  to be  the beneficiaries of the trust and their claim  has  not been negatived. Moreover, the trust has been constituted  to perform  not only charities of a religious nature  but  also charities of a secular nature such as providing for drinking water  and food for the general public without reference  to caste or religion.     In view of our findings above the subordinate court  and the High Court were in error in holding that the  appellants had  no  locus-standi to file the  application  for  setting aside  the order permitting the sale of the properties.  We, therefore,  allow the appeal and set aside the order of  the subordinate court and that of the High Court.     The subordinate court and the High Court did not go into the merits of the case as the appellants were non-suited  on the ground of locus-standi. We would have normally  remanded the case for decision on merits but in the facts and circum- stances of this case we are satisfied that the value of  the property  which the trust got was not the market value.  Two persons  namely  S.M. Mohamed Yaaseen ad  S.N.M.  Ubayadully have  filed  affidavit offering Rs.9.00 lacs and  Rs.  10.00 lacs respectively for these properties. In support of  their bona  fide  they  have deposited 10% of the  offer  in  this Court.  This Court in Chenchu Ram Reddy and another v.  Gov- ernment  of Andhra Pradesh and Others, [1986] 3 SCC 391  has held  that the property of religious and  charitable  endow- ments  or institutions must be jealously  protected  because large  segment  of  the community  has  beneficial  interest therein.  Sale by private negotiations which is not  visible to  the public eye and may, even give rise to public  suspi- cion  should not, therefore, be permitted unless  there  are special  reasons  to justify the same. It has  further  been

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held that care must be taken to fix the reserve price  after ascertaining the market value for safeguarding the  interest of the endowment.     We, therefore, set aside the orders of subordinate court dated  October 27, 1984 and January 23, 1985 permitting  the sale of the two properties and also set aside the consequent sale  in  favour  of the respondents.  We  direct  that  the properties in question may be sold by 768 public auction by giving wide publicity regarding the  date, time  and place of public auction. The offer of Rs. 10  lacs made  in  this Court will be treated as minimum bid  of  the person who has given the offer and deposited ten percent  of the  amount in this Court. It will also be open to  the  re- spondents/purchasers  to  participate  in  the  auction  and compete with others for purchasing the properties.     The  respondents--vendees from the trust shall be  enti- tled  to refund of the price paid by them with 10%  interest from  the  date of payment of the amount till  the  date  of auction  of  the  property. They will also  be  entitled  to compensation  for any super structure put up by them in  the properties  including  compensation  for  any  additions  or improvements made by them to the building and the  property. The  value of such super structure and the improvements  and additions  shall  be ascertained by  the  subordinate  court through a qualified engineer and by Such other method as the court  may deem fit. The court shall fix the value and  com- pensation amount after affording opportunity to the respond- ents  and  the trust to make their  representation  in  that respect. There shall be no order as to costs. G.N.                                            Appeal   al- lowed. 769