The Khasgi (Devi Ahilyabai Holkar Charities) Trust, Indore & Anr vs Vipin Dhanaitkar & Ors

The Khasgi (Devi Ahilyabai Holkar Charities) Trust, Indore & Anr vs Vipin Dhanaitkar & Ors


Landmark Cases of India / सुप्रीम कोर्ट के ऐतिहासिक फैसले


1
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. OF 2022
[@ SLP (CIVIL) No. 12133 of 2020]
The Khasgi (Devi Ahilyabai Holkar
Charities) Trust, Indore & Anr. … Appellants
v.
Vipin Dhanaitkar & Ors. … Respondents
WITH
CIVIL APPEAL NO. OF 2022
[@ SLP (CIVIL) No. 12241-12242 of 2020]
CIVIL APPEAL NO. OF 2022
[@ SLP (CIVIL) No. of 2022]
[D. No. 22151 of 2020]
CIVIL APPEAL NO. OF 2022
[@ SLP (CIVIL) No. 19063 of 2021]
J U D G M E N T
ABHAY S. OKA, J.
1. Permission to file Special Leave Petition is granted. Leave
granted.
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FACTUAL MATRIX
2. These appeals take exception to the common judgment and
order dated 5th October 2020 of a Division Bench of the High Court
of Madhya Pradesh, Bench at Indore. By the said decision, the
Madhya Pradesh High Court decided two Writ Appeals filed by the
appellants in Civil Appeals arising out Special Leave Petition (C)
12133 of 2020 and Special Leave Petition (C) No. 12241-42 of
2020. The Khasgi (Devi Ahilyabai Holkar Charities) Trust, Indore
(for short, ‘the Khasgi Trust’) and its Trustee Shri S. C. Malhotra
are the said appellants. The two writ appeals decided under the
impugned judgment arise out of Writ Petition Nos. 11618 of 2012
and 5372 of 2010 filed by the Khasgi Trust. Writ Appeal No. 92 of
2014 arises out of Writ Petition No. 11618 of 2012. The Writ Appeal
No. 135 of 2014 arises out of Writ Petition No.5372 of 2010. By
the impugned judgment, a Public Interest Litigation filed by the
first respondent–Shri Vipin Dhanaitkar in Civil Appeal arising out
of Special Leave Petition (C) No. 12133 of 2020 was also decided.
3. The controversy revolves around the properties claimed by
the Khasgi Trust as the Trust Properties. On 30th October 1948, an
instrument called as “The Covenant” was executed by the erstwhile
Rulers of Gwalior, Indore and certain other States in Central India
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for the formation of the United State of Gwalior, Indore and Malwa
(Madhya Bharat). Late Yashwantrao Holkar, the Maharaja of
Indore (for short “the Maharaja”) was a party to the said Covenant
who agreed to unite and integrate the territory of Indore into one
State with a common executive, legislature and judiciary, by the
name of the United State of Gwalior, Indore and Malwa (Madhya
Bharat). Article XII provided that the Ruler of each covenanting
State shall be entitled to the full ownership, use and enjoyment of
all private properties (as distinct from the State Properties)
belonging to them on the date of their making over the
administration of their respective States to Raj Pramukh (the Head
of the State of the United State of Gwalior, Indore and Malwa).
Article XII further provided that the Ruler of each covenanting
State shall furnish to Raj Pramukh, before the first day of August
1948, an inventory of all immovable properties, securities and cash
balance held by him. The Convention further provided that if any
dispute arises as to whether any item of property is a private
property of the Ruler or a State Property, it shall be referred to such
person as the Government of India may nominate in consultation
with the Raj Pramukh. It is further provided that the decision of
that person shall be final and binding on all parties concerned. It
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appears that Maharaja Yashwantrao Holkar submitted two
inventories in terms of Article XII. The first inventory was
concerning his alleged private properties. The second inventory
submitted by the Maharaja was of the properties known as the
Khasgi Properties. In terms of Clause (3) of Article XII, the
Government of India appointed Shri V.P. Menon, the Secretary of
the Ministry of States as the authority to decide the claims. By the
letter dated 7th May 1949, Shri V.P. Menon informed the Maharaja
that the claim made by him in respect of his private properties as
listed in Annexure ‘A’ to the said letter has been finally approved,
accepted and signed in pursuance of Article XII of the Covenant.
Annexure ‘A’ contains a detailed description of the private
properties of the Maharaja, which are accepted as per Article XII of
the Covenant to be his private properties. By another letter dated
6th May 1949, Shri V.P. Menon informed the Maharaja that his
claim in respect of the properties described as the Khasgi
properties has been finally settled on the basis of the enclosure to
the said letter. In the enclosure to the letter, it was mentioned that
the Khasgi properties and income received from the Khasgi
properties shall be treated as lapsed for all the time to the Madhya
Bharat Government. In lieu thereof, certain guarantees were given.
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The enclosure provided that the Madhya Bharat Government shall
in perpetuity set aside a sum of Rs.2,91,952/- (Rupees Two Lakh
Ninety-One Thousand Nine Hundred and Fifty-Two only) for the
charities. The amount shall be put under a permanent Trust for
the said charities, including the charities of Maharani Ahilya Bai
Holkar. It provided that the Trust shall consist of the Ruler of
erstwhile Indore State, who will be the President. There will be two
nominees of the Ruler. One nominee shall be of the Central
Government, and two nominees shall be of the Madhya Bharat
Government. However, it was stated that the trustees nominated
by the Government of India and the Madhya Bharat State shall be
appointed in consultation with the Ruler. It provided that powers
and functions of the Trust shall be subject to such legislation as
the Central Government or the Madhya Bharat Government may
enact generally to regulate such Trusts. However, the composition
of the Trust and the manner of its formation shall not be liable to
any modification or change by such legislation.
4. It must be noted here that the State Government enacted the
Madhya Pradesh Public Trusts Act, 1951 (for short, ‘the Public
Trusts Act’). On 26th May 1959, the Ministry of Home Affairs of the
Government of India addressed a letter to the Maharaja, which
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refers to the settlement of Khasgi Property. By the said letter, the
Central Government nominated one Shri S.V. Kanungo as its
nominee. The letter records that Shri Kanungo was already a
trustee nominated by the Central Government on two other family
Trusts of the Holkar family. Before that, on 6th January 1959, by
addressing a letter, the General Administration Department of the
State Government informed the Private Secretary to the Maharaja
that the State Government was proposing to nominate the
Commissioner, Indore Division and the Superintending Engineer
(B & R), Public Works Department, Indore Circle as the trustees.
The State Government requested the Secretary to the Maharaja to
communicate the concurrence of the Maharaja to the said
nominations. By another letter dated 1st April 1959, the General
Administration Department of Madhya Pradesh communicated to
the Secretary to the Maharaja requesting him that representatives
of the Ruler on the Trust be nominated. The letter records that the
State Government has prepared a draft of the Trust Deed which
will be finalised without any delay. The letter dated 14th November
1959 of the State Government addressed to the Secretary of
Maharaja which is by way of reminder to the Maharaja to nominate
his two representatives. The said letter also records that the draft
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of the Khasgi Trust Deed will be finalised and sent for approval of
the Maharaja. The letter dated 14th April 1961 addressed by the
State Government to the Secretary to Maharaja records that the
draft of the Deed of Khasgi Trust is under examination and will be
sent soon.
5. Ultimately, in terms of the draft provided by the State
Government, the Deed of Trust of the Khasgi Trust (for short, “the
Trust Deed”) was executed on 27th June 1962 by and between Her
Highness Maharani Usha Devi of Indore, the daughter and
successor of Maharaja Yashwantrao Holkar, described therein as
the Settlor, Shri K.A. Chitale, Senior Advocate and Shri S.C.
Malhotra as the nominees of the Settlor and Shri S.V. Kanungo,
the nominee of the President of India. The Trust Deed was also
signed by the Commissioner, Indore Division and Superintending
Engineer (B & R), Public Works Department, Indore who were
nominated as trustees by the State Government. In the recitals, it
is mentioned that the Trust was being created of the annuity of
Rs.2,91,952/- in perpetuity for maintenance, upkeep and
preservation of charities and religious endowments provided in the
budget of the Holkar State for the year 1947-48 inclusive of the
charities founded by Maharani Devi Ahilaya Bai Holkar. The said
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endowments were described in part ‘A’ of the Schedule. Further,
it is provided that the Trust will be for the management and
maintenance of the properties described as the Trust Properties,
more particularly described in Part ‘B’ of the Schedule to the Deed
of Trust. Part ‘B’ of the Schedule contains a list of a large number
of properties in various States.
6. There was a notification issued by the State of Madhya
Pradesh on 27th July 1962. It was mentioned therein that on the
formation of the Madhya Bharat State, institutions, factories,
religious places, chhatries, etc. fell under the supervision and
management of the Commissioner, Pardon Office. It was further
stated in the notification that the State Government while granting
permission for the formation of the Khasgi Trust and the Alampur
Trust (the Holkar Chhatries Trust), has granted
recognition/approval to the transfer of the areas, and institutions
etc. included in the Trust Deeds of the aforesaid Trusts. It is
further mentioned that accordingly, the areas, institutions,
factories, religious places, chhatries etc. were transferred to the
respective Trusts on 16th July 1962. A report of making over and
taking over charge of the properties described as the Alampur and
Khasgi trust properties was recorded on 16th July 1962. For the
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sake of completion, it must be mentioned here that on 8th March
1972, a Supplementary Deed of Trust was executed by and
between the Trustees for incorporating a clause that the Trustees
have always had and shall have the power to alienate not only the
income but any other item of the corpus of Trust Property for the
necessity or for the benefit to the objects of the Trusts.
7. Alienations were made by the Trustees in relation to at least
six properties. On 18th April 2012, a letter was addressed by Smt.
Sumitra Mahajan, a Member of the Parliament to the Chief
Minister of the Government of Madhya Pradesh. She contended in
the said letter that the property mentioned in the Trust Deed was
vesting in the erstwhile State of Madhya Bharat. It is mentioned
that a valuable property shown in the Trust Deed at Haridwar was
sold by the trustees without the permission of the Registrar under
the Public Trusts Act. Therefore, she requested the Chief Minister
to order an inquiry. Along with the notice dated 23rd May 2012, a
copy of the said complaint was forwarded to the trustees of the
Khasgi Trust by the Registrar of Public Trusts, District Indore. The
Trustees replied on 20th June 2012 contending that the Public
Trusts Act was not applicable to the Khasgi Trust and it is for the
benefit of the Trust that the alienations have been made.
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Thereafter, the Collector of District Indore passed an order dated
5th November 2012 holding that the properties mentioned in the
Trust Deed were the properties of the State Government. He held
that the trustees have made illegal alienations without prior
permission from the Government. Therefore, the alienations were
held to be invalid. Hence, the Collector directed that the name of
the State Government be entered in revenue records/land records
to prevent further alienations.
8. A Writ Petition being Writ Petition No. 11618 of 2012 was filed
by the Khasgi Trust and its Trustee Shri S.C. Malhotra in the
Madhya Pradesh High Court for challenging the aforesaid order
dated 5th November 2012 passed by the Collector and praying for
restraining the Collector from interfering with affairs of the Trust.
The learned Single Judge disposed of the petition by the judgment
and order dated 28th November 2013 by issuing diverse directions
for the administration of the Khasgi Trust. The learned Single
Judge directed that the Board of Trustees shall be reconstituted by
including Smt. Sumitra Mahajan and two the persons as trustees.
The State Government was directed to make a provision for
payment of Rs.1 crore every year to the Khasgi Trust. Another writ
petition (W.P. No. 5372 of 2010) filed by the Khasgi Trust was
11
disposed of by the order dated 3rd December 2013 by the learned
Single Judge directing the authorities to correct the revenue record
in terms of the aforesaid order dated 28th November 2013. As
stated earlier, both the said orders of the learned Single Judge were
challenged by the State Government by filing two writ appeals. The
Public Interest Litigation which was decided along with the writ
appeals contained a prayer for directing inquiry through CBI
regarding the affairs of the trust and in particular, regarding the
alienations made by the Trustees.
9. Following are the important findings rendered by the Division
Bench in the impugned judgment and order:
(a) the Khasgi properties mentioned in Part ‘B’ of the
Schedule to the Trust Deed continued to be vested in the
State Government and therefore, the Trustees had no
authority to alienate the same;
(b) the subsequent modification of the Trust Deed made by
the Trustees empowering them to alienate the properties
described in Part “B” of the Trust Deed was illegal and
was not binding on the State Government;
(c) the alienations made by the Trustees were void;
(d) the Khasgi Trust was governed by the Public Trusts Act;
and
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(e) the learned Single Judge while deciding the writ petitions
filed by the Khasgi Trust has virtually re-written the Trust
Deed and therefore, his Judgment cannot be sustained.
In paragraphs 158 to 166 of the impugned judgment, the Division
Bench issued following directions:

“158. This Court is not reproducing the entire report
as the Covenants, Trust Deeds and the notification
issued by the Government of India have already been
reproduced in earlier paragraphs. Thus, it is wrong
on the part of the respondent to say that the
mechanical exercise was undertaken by the Collector
based upon letter of Member of Parliament. With due
application of mind, the State Government through
Collector, Indore keeping in view the covenant, trust
deed and the statutory provisions has taken action in
the matter.
159. In the considered opinion of this Court, this
Court does not have the power to draft the Trust
Deed nor is having the power to enact the statute in
respect of trust in question. However, as the
properties which are under the ownership of State
of Madhya Pradesh have been sold by the
Trust/Trustees, a committee deserves to be
constituted to ensure that the trust properties as
per the schedule appended with the original trust
deed are preserved, maintained and kept intact for
the future generations to come.
160. The Committee so constituted shall
inquire in respect of the properties sold by the
Trust and shall take all possible steps to recover
and retrieve any property or fund of the
property, which have been sold or have been in
unauthorized occupation or misappropriated.
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For doing the aforesaid task, the State of Madhya
Pradesh shall incur all the expenditures, in case
there is paucity of fund in the accounts of the trust,
especially in light of the fact that it is the State of
Madhya Pradesh, who is having title over all
properties.
161. The following Committee is constituted
for the aforesaid work comprising of:—
(a) Chief Secretary, State of Madhya Pradesh
(Chairman);
(b) Principal Secretary, Finance Department
(Member);
(c) Additional Chief Secretary, Dharmaswa
Department (Member);
(d) Commissioner, Indore Division, Indore (Member);
(e) Collector, Indore (Secretary).
The State of Madhya Pradesh shall be free to
proceed ahead in accordance with law.
162. In the connected writ petition i.e. W.P.
No. 11234/2020, which is a Public Interest
Litigation, a prayer has been made for issuance
of an appropriate writ, order or directing a CBI
inquiry. So far as the prayer with regard to
directions for CBI inquiry is concerned, this
Court is of the considered opinion that no such
directions are required. The allegation of
misappropriation of Government properties
and its disposal to favour someone and to
cause loss to Public Exchequer, if at all, can
very well be examined by Economic
Investigation Wing of the State of Madhya
Pradesh and accordingly, it is directed that
the said Wing will thoroughly examine the
matter and if it finds any criminality into the
actions of any authority, it is expected that
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appropriate action should be taken by the said
Wing. Hence, no positive direction to register
a First Information Report is required.
Resultantly, the Economic Offences Wing shall
examine the matter and shall be free to proceed
ahead in accordance with law.
163. The State of Madhya Pradesh is
directed to take all possible steps to preserve the
cultural heritage including the Ghats, Temples,
Dharamshalas, which find place in the Trust
property, being the titleholder of the property in
question. The State of Madhya Pradesh shall also
take appropriate action in accordance with law
against all those persons, who have allegedly
illegally sold the Trust's property from time to
time.
164. In W.P. No. 11234/2020, the Union of
India is already a party and Shri Milind Phadke
has also been heard in the matter before
delivering the judgment. He has also stated that
the properties in question, on account of the
covenant and the statutory notifications issued
from time to time, are the exclusive properties of
the State of Madhya Pradesh.
165. This Court on 23-4-2014 has directed
the parties to maintain status quo and it has been
informed by learned counsel for the State of
Madhya Pradesh that some construction has
taken place by the private parties.
166. Resultantly, the State of Madhya
Pradesh is directed to take appropriate action
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in respect of the construction which has
taken place over the Khasgi properties and
shall restore it to its original position and the
entire expenditure shall be borne by the State
of Madhya Pradesh through Commissioner,
Indore. The Collector, Haridwar shall assist
the Divisional Commissioner, Indore in the
matter and the Divisional Commissioner,
Indore shall ensure that Kusha Ghat as well as
other properties are again, which are meant
for public charities are made available to
public at large. The aforesaid direction is not
only in respect of present property but in
respect of other properties also. The State of
Madhya Pradesh shall ensure by taking
appropriate steps in accordance with law that no
further sale takes place in respect of such
properties and they shall maintain the properties
for the generations to come keeping in view their
historic importance. The Collector, Indore shall
be free to take action in accordance with law
pursuant to the order passed by him dated 5-11-
2012 and the Registrar shall also be free to take
appropriate action in accordance with law
pursuant to the order passed by him dated 30-
11-2012.”
(emphasis added)
SUBMISSIONS ON BEHALF OF THE KHASGI TRUST
10. The submissions have been made initially by Shri Mukul
Rohatgi, Senior Advocate and thereafter, by Dr. A.M. Singhvi,
Senior Advocate in Civil Appeals arising out of Special Leave
Petition (C) No.12133 of 2020 and Special Leave Petition (C)
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No.12241-42 of 2020. The learned senior counsel appearing for the
appellants urged that at the time of the merger of the erstwhile
State of Indore with the newly formed State of Madhya Bharat,
there were three categories of properties - (A) State Properties
covered by Article VI(1)(c) and Article XII of the Covenant; (B)
Private Properties of the Ruler of Indore; and (C) Charities and
Trust Properties held by the family of the Ruler of Indore. The
contention raised by the appellants is that the charities which were
already dedicated to the public, could not lapse to the State
Government. The main submission is that in the impugned order
of the Collector dated 5th November 2012, there is an error
committed by holding that the properties described in Part ‘B’ of
the Schedule to the Trust Deed of the Khasgi Trust, were not the
Trust Properties but, were the properties of the State. It was
submitted that the properties mentioned in Part ‘B’ of the Schedule,
are the properties vested in the Khasgi Trust, as can be seen from
various clauses of the Trust Deed. It was submitted that the
Supplementary Deed of Trust dated 8th March 1972 clearly confers
a power on the Trustees to alienate the Trust properties mentioned
in Part ‘B’ of the Schedule to the Trust Deed. The submission is
that as the Khasgi Trust is a State-controlled Trust, in view of
17
clause (a) of the sub-Section (1) of Section 36 of the Public Trusts
Act, the provisions of the Public Trusts Act, are not applicable to
it. The learned senior counsel relied upon a specific order passed
in that behalf by the Registrar of Public Trusts. He submitted that
there are as many as 246 properties listed in Part ‘B’ of the
Schedule to the Trust Deed, out of which, only six have been
transferred by the Trustees during the span of over sixty years. He
submitted that apart from the fact that Section 14 of the Public
Trusts Act is not applicable to the Khasgi Trust, the scope of
Section 14 has been laid down by this Court in the case of Parsi
Zoroastrian Anjuman, Mhow v. Sub Divisional Officer/The
Registrar of Public Trusts and Anr.1 He submitted that as the
Public Trusts Act allows the Trustees to alienate the Trust
properties, the Registrar would be required to grant permission for
alienation in view of sub-Section (2) of Section 14 of the Public
Trusts Act.
11. The learned senior counsel would urge that for a period of
over fifty years from the date of execution of the Trust Deed, the
State Government never disputed the status of properties
mentioned in Part ‘B’ of the Schedule to the Trust Deed as the
1 2022 SCC Online SC 104
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properties of the Khasgi Trust. He submitted that only on the basis
of a complaint dated 18th April 2012, made by a senior Member of
Parliament of the ruling party to the office of the Chief Minister, the
Principal Secretary prepared an Inquiry Report dated 2nd November
2012. No notice of any such inquiry was served upon the Trustees.
He pointed out that the said Inquiry Report dated 2nd November
2012 proceeds on the footing that the Trust properties are, in fact,
the properties of the State Government. The Inquiry Report
suggests that the possession of the Government properties should
be taken over by the State Government. He pointed out that it is
on the basis of this Inquiry Report that the impugned order dated
5th November 2012 was passed by the Collector unilaterally holding
that the State Government was the owner of the properties
described as the Trust properties in the Trust Deed. Apart from the
fact that the Collector had no jurisdiction to adjudicate on the
disputed question of title, even the elementary principles of natural
justice have not been followed. He pointed out that a show cause
notice was issued by the Registrar of the Public Trusts to the
Khasgi Trust on the basis of the complaint made by the Member of
Parliament. Though, the Trustees replied to the said show cause
notice issued by the Registrar, the said reply has not been
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considered by the Collector while passing the impugned order
dated 5th November 2012.
12. Inviting our attention to the findings recorded in the
impugned judgment of the Division Bench, the learned senior
counsel submitted that correspondence on record and the clauses
in the Trust Deed have been completely overlooked by the Division
Bench of the High Court of Madhya Pradesh. He pointed out that
the Supplementary Deed of Trust was executed on 8th March 1972
by all the Trustees including the nominees of the State Government
as well as of the Central Government. Though the said
Supplementary Deed was not challenged specifically, the Division
Bench has gone into the issue of legality thereof. As regards the
sale of the property known as Holkar Bada at Haridwar, he pointed
out that the Bada which consists of only residential premises, has
been sold under four separate Sale Deeds, but the adjacent Kusha
Ghat has not been sold by the Trustees. The Bada property sold by
the Trustees was encroached upon. There is a resolution of the
Board of Trustees authorising the sale of the said property to which
all the Trustees are parties. He pointed out that the constituted
Attorney appointed by the Trustees may be related to the
purchasers, but the purchasers are not at all related to any of the
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Trustees. He submitted that the entire sale proceeds have been
deposited in the corpus of the Trust. Moreover, the Sale Deeds
executed by the Trustees in the year 2009, were never challenged
by the beneficiaries or any other person till 2012, when the Member
of Parliament raised an objection to the said transactions. If
according to the Authorities, the Trustees had violated the
provisions of the Public Trusts Act, assuming the same were
applicable, the Registrar could have invoked his powers under
Chapter V of the Public Trusts Act. He submitted that the
impugned order dated 5th November 2012 was passed by the
Collector behind the back of the Trustees. Moreover, the Collector
had no jurisdiction to make an adjudication on the question
whether the Trustees have violated any provision of law. He
submitted that the order of the Collector is without jurisdiction. In
any case, in view of the order dated 10th August 1971 passed by
the Registrar of Public Trust, Indore, the provisions of the Public
Trusts Act are not applicable to the Khasgi Trust. He pointed out
that each and every alienation has been made pursuant to the
resolutions passed by the Trustees which included the Government
nominees.
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13. The learned senior counsel submitted that when the Trustees
have acted within the four corners of the Trust Deed as well as the
Supplementary Trust Deed, criminal intention cannot be
attributed to them. There is a complete absence of mens rea. He
submitted that before making the first alienation in respect of a
garden, the Trustees approached the State Government for
sanction. The Chief Secretary of the State by communication dated
13th June 1969, clearly took a stand that the sanction of the
Government for making alienation was not required. He submitted
that the three nominees of the Governments are parties to the
decision taken by the Board of Trustees to alienate the properties.
He urged that the Trustees acted in a bona fide manner and
therefore, in the year 2020, the High Court ought not to have
ordered inquiry through the Economic Offences Wing of the State
Government especially when the transactions concerning Holkar
Bada were of 2009. He submitted that even the learned Single
Judge while deciding the writ petition filed by the Trustees, had
exceeded the jurisdiction vested in him and directed substantial
modifications to be made to the Trust Deed. He submitted that on
all counts, the impugned order of the Collector dated 5th November
2012, deserved to be set aside by allowing the writ petition.
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SUBMISSIONS OF THE APPELLANT IN CIVIL APPEAL FILED BY
THE PURCHASER
14. Civil Appeal arising out of Special Leave Petition (C) Diary
No.22151 of 2020 has been filed by the purchaser of Holkar Bada.
Shri P. S. Patwalia, the learned senior counsel firstly submitted
that by the impugned judgment, the High Court has declared that
the Sale Deeds executed in favour of the appellant, were void,
though, the appellant-purchaser was not a party to the writ
petition before the learned Single Judge and to the Appeals before
the Division Bench. Moreover, after eleven years of the execution
of the Sale Deeds, the High Court found fault with the same. He
submitted that the appellant are bona fide purchaser. He
submitted that one Mr. Vijay Singh Pal filed a Public Interest
Litigation before the High Court of Uttarakhand, seeking an inquiry
through the Central Bureau of Investigation into the sale
transactions and the said writ petition/PIL was dismissed by the
order dated 24th May 2018. The High Court held that the petitioner
therein had not challenged the Sale Deeds by approaching the Civil
Courts. The learned senior counsel pointed out that the said order
was confirmed by this Court. He submitted that the appellant has
been harassed and blackmailed by the said Mr. Vijay Singh Pal.
23
Therefore, a suit for injunction was filed by the
appellant/purchaser against him, which was decreed by the Civil
Court. He submitted that to the Public Interest Litigation decided
by the impugned judgment, the appellant/purchaser was not a
party and moreover, the same was belatedly filed in the year 2020.
He submitted that the Sale Deeds, under which Holkar Bada was
sold, were not challenged in any proceedings before any competent
Court. He submitted that the appellant has not purchased Kusha
Ghat and he is the purchaser of only the property known as Holkar
Bada.
15. He also invited our attention to the resolution passed by the
Board of Trustees on 5th June 2008, approving the sale
transaction. He submitted that there is no material to show that
the sale transaction was made at a price which was less than the
prevailing market value. He stated that the old tenants had
encroached upon the said property and their presence on the
property has been noted in the revenue records.
SUBMISSIONS ON THE INTERVENTION APPLICATIONS
16. Shri Prashant Bhushan, the learned counsel appearing for
the applicant/intervenor in I.A.No.124266 of 2020, filed in Civil
24
Appeals arising out of Special Leave Petition (C) Nos.12241-42 of
2020, has made detailed submissions. He submitted that the
dispute regarding the title claimed by a Maharaja of Indore was
resolved in terms of Article XII of the Covenant by Shri V. P. Menon
nominated by the Central Government. By a letter dated 6th May
1949, he settled the claim of Maharaja in respect of the Khasgi
properties by holding that the same shall be treated as transferred
to the State Government. He submitted that in the same order, a
Trust was proposed to be constituted for maintenance, upkeep and
preservation of the charities including the Khasgi properties vested
in the State Government. He submitted that apart from the fact
that the Trustees had no authority to sell the property described in
Part ‘B’ of the Schedule to the Trust Deed, the documents on record
show that the Trust was getting good income and therefore, there
was no necessity of selling the said property known as Holkar
Bada. He pointed out that on 23rd August 2007, a resolution was
passed by the Board of Trustees to authorize Shri S. C. Malhotra,
a Trustee to give a power of attorney to the concerned
employee/person, only for the purpose of looking after the legal and
other matters of the Trust as well as the property of the Trust. The
resolution did not authorize Shri S. C. Malhotra to execute a power
25
of attorney, authorizing the attorney to sell or dispose of the
property. However, Shri S. C. Malhotra fraudulently executed a
power of attorney in favour of one Mr. Raghvendra Sharma,
authorizing him to sell the property having an area of 13370 sq.ft.
at Kusha Ghat, Haridwar. Shri S. C. Malhotra had no authority to
execute such a power of attorney. Similarly, Mr. Kanwaljit Singh
Rathore claiming to be the Secretary of the Khasgi Trust executed
a similar power of attorney in favour of said Mr. Raghvendra. On
the basis of the said power of attorney, Mr. Raghvendra executed
four separate Sale Deeds in favour of his own brother Mr. Aniruddh
Kumar. In one of the four Sale Deeds, even Mr. Raghvendra’s wife
is shown as a purchaser along with Mr. Aniruddh. He would,
therefore, submit that a fraud has been played by the Trustees. He
relied upon various decisions in support of his contention that the
Sale Deeds executed in favour of said Mr. Aniruddh, are illegal and
void. He submitted that on the basis of the complaint filed by a
Member of Parliament, a detailed inquiry was conducted by the
Principal Secretary. He pointed out that only on the basis of the
findings recorded in the said inquiry that the impugned order has
been passed by the Collector.
26
17. Shri P.S. Patwalia, the learned senior counsel appearing for
the purchaser has raised a strong objection to the locus of the
applicant – Mr. Ved Prakash Pal, represented by Mr. Prashant
Bhushan by relying upon various documents annexed to the
counter affidavit. He pointed out that the applicant – Mr. Ved
Prakash Pal has been set up by Mr Vijay Singh Pal, who
unsuccessfully filed a Public Interest Litigation before the
Uttarakhand High Court, which was finally rejected. He submitted
that in one of the complaints filed by the intervenor – Mr. Ved
Prakash Pal before the District Magistrate in April 2019, he has
given the cell phone number of the said Mr Vijay Singh Pal as his
own. He relied upon several photographs and other documents to
show that the applicant is a close associate of Mr Vijay Singh Pal,
who was the petitioner in the Public Interest Litigation. He pointed
out that the members of the syndicate led by Mr Vijay Singh Pal,
have criminal antecedents. He pointed out several documents in
this regard. He submitted that the I.A. for intervention filed by Mr
Vijay Singh Pal has been dismissed by this Court by imposing costs
of Rupees Twenty-Five Lakhs. He would, therefore, submit that the
intervention application made by Mr. Prashant Bhushan deserves
to be dismissed with exemplary costs.
27
18. The learned senior counsel appearing for the applicant –
Richard Holkar in I.A. No.74790 of 2021 filed in Civil Appeals
arising out of Special Leave Petition (C) Nos.12241-42 of 2020,
submitted that the property known as ‘Maheshwar Wada’ was
accepted as a private property of Maharaja Yashwant Rao Holkar
by communication dated 7th May 1949. His submission is that the
lease granted to the applicant in respect of the said property cannot
be interfered with. He submitted that before executing the
transaction with him, the Trustees had applied for a permission
under Section 14 of the Public Trusts Act. He submitted that in
any case, the applicant was not impleaded as a party in the
proceedings before the High Court and therefore, the High Court
could not have dealt with the issue of the legality of the
transactions in favour of the applicant.
19. The learned counsel appearing for the intervenors/ applicants
in I.A. No.7103 of 2020 filed in Civil Appeal arising out of Special
Leave Petition (C) No. 12133 of 2020 submitted that for managing
the property subject matter of the Trust Deed, a High-Level
National Committee should be constituted. He submitted that the
annuity of Rs.2,91,952/- granted to the Khasgi Trust, is
inadequate and the State must substantially increase the same.
28
SUBMISSIONS ON BEHALF OF THE STATE OF MADHYA
PRADESH
20. Shri Balbir Singh, the learned Additional Solicitor General of
India submitted that only one Trustee of the Khasgi Trust Shri S.
C. Malhotra had filed the two writ petitions subject matter of these
Civil Appeals and therefore, the same were not maintainable. He
had no authority to represent the Khasgi Trust to the exclusion of
the other Trustees. He submitted that the property subject matter
of Part ‘B’ of the Schedule to the Trust Deed was treated as lapsed
in favour of the erstwhile Madhya Bharat Government. The Trust
Deed clearly recites that the Trustees were authorized only to
maintain and preserve the said properties. He pointed out that in
the written statement filed by the Trustees in Civil Suit No.15 of
1973 as well as in the writ petition filed by them before the High
Court, it is admitted that the Khasgi property subject matter of the
Trust Deed had lapsed in favour of the State Government. He
submitted that the correspondence exchanged between the
Maharaja and the Government of India constitutes a treaty or
agreement within the meaning of Article 363 of the Constitution of
India. Therefore, all disputes arising on the basis of the same are
required to be adjudicated by this Court. He submitted that in
29
terms of the adjudication made in accordance with Article XII of
the Covenant, the Khasgi properties vested in the State
Government and thereafter, the State Government was not
divested of the said properties. He submitted that what is
mentioned in the letter dated 13th June 1969 issued by the then
Chief Secretary, is contrary to law and therefore, not binding on
the State Government. He submitted that the Khasgi Trust is a
public trust, which is governed by the Public Trusts Act. He
submitted that as the Khasgi Trust cannot be said to be under the
control of the State Government, exemption under Clause (a) of
sub-Section (1) of Section 36 of the Public Trusts Act, was not
applicable. Though the constraints imposed by Section 14 of the
Public Trusts Act were applicable to all the alienations made by the
Trust, prior consent of the Registrar under Section 14 was not
obtained.
21. It is pointed out by him that on 28th July 2007, the land
appended to Ganpati Mandir admeasuring 1800 sq.ft. was given
on annual lease for thirty years for a meagre rent amount of
Rs.720/- per year. As the Khasgi property, which even according
to the case of the appellant was a Trust property was illegally sold,
an inquiry by the Economic Offences Wing has been rightly
30
ordered. He would, therefore, submit that no interference is called
for with the impugned judgment.
BROAD QUESTIONS FOR CONSIDERATION
22. After considering the submissions made across the Bar,
broadly the following main questions arise for our consideration:-
a. Whether the properties incorporated in Part ‘B’ of the
Schedule to the Trust Deed are the properties of the Khasgi
Trust?
b. Whether the Khasgi Trust is a Public Trust within the
meaning of the Madhya Pradesh Public Trusts Act, 1951
and whether its provisions are applicable to the Trust?
c. Whether the Supplementary Trust Deed dated 08th May
1972 is legal and valid?
d. Whether the Trustees of the Khasgi Trust were under an
obligation to obtain the previous sanction of the Registrar
in accordance with Section 14 of the Public Trusts Act,
1951 for alienating the Trust property?
e. Whether the Division Bench of the High Court was right in
holding that the impugned order dated 5th November 2012
passed by the Collector was lawful and correct?
31
f. Whether the High Court was justified in directing the
investigation into the allegations of misappropriation
against the Trustees by the Economic Offences Wing of the
State Government? and
g. Whether the writ petitions filed by only one Trustee of the
Khasgi Trust before the learned Single Judge were
maintainable?
THE STATUS OF THE PROPERTIES IN PART ‘B’ OF THE
SCHEDULE TO THE TRUST DEED (Question – a)
23. Perusal of the Trust Deed shows that 246 immovable
properties are listed in Part ‘B’ of its Schedule. In one of the recitals
of the Trust Deed, the properties in Part ‘B’ have been described as
“the Trust Properties”. It is necessary to consider the relevant
provisions of the Covenant to which the Maharaja is a party. Article
XII of the Covenant reads thus:
“(1) The Ruler of each Covenanting State shall
be entitled to the full ownership, use and
enjoyment of all private properties (as distinct
from State properties) belonging to him on the
date of his making over the administration of
that State to Raj Pramukh.
(2) He shall furnish to the Raj Pramukh before
the first day of August 1948 an inventory of
all the immovable properties, securities and
32
cash balance held by him as such private
property.
(3) If any dispute arises as to whether any item
of property is the private property of the Ruler
or State property it shall be referred to such
person as the Government of India may
nominate, in consultation with the Raj
Pramukh and the decision of that person shall
be final and binding on all parties concerned.
Provided that no such dispute shall be
referable after the first day of July 1949.”
24. It appears that the Maharaja made an inventory of all the
immovable properties, securities and cash balance held by him.
The Maharaja made claims in terms of clause (3) of Article XII. Shri
V.P. Menon, the Secretary to the Government of India was
nominated by the Government of India to make an adjudication on
the dispute in terms of clause (3) of Article XII. By the letter dated
6th May 1949 addressed by Shri V.P. Menon, the Maharaja was
informed that the inventory of private properties of Maharaja
submitted pursuant to Article XII has been approved and accepted.
It is mentioned in the said letter that Annexure ‘A’ contains a list
of properties which are approved as private properties of the
Maharaja. Annexure ‘A’ contains several properties. Admittedly,
none of these properties has been included in Part ‘B’ of Schedule
to the Trust Deed. Shri V.P. Menon addressed another letter dated
33
7th May 1949 to the Maharaja informing him that the claim
submitted by him in respect of the Khasgi properties in the
inventory has been also settled as per the enclosure to the said
letter. The enclosure to the said letter is very relevant which reads
thus:
“His Highness Maharaja Yashwant Rao Holkar,
Maharaja of Indore,
Indore
Settlement of the claim made by His Highness
Maharaja Yashwant Rao Holkar of Indore
concerning Khasgi
The Khasgi properties and the income from
Khasgi shall be treated as 'lapsed' for all time to
the Madhya Bharat Government. In lieu thereof
the following guarantees are given subject to the
conditions mentioned below:-
(1) The Madhya Bharat Government shall in
perpetuity set aside annually from its revenue a sum
of Rs.2,91,952/- (Rupees two lakhs, ninety-one
thousand nine hundred and fifty-two only), being
the amount provided in the Holker State budget of
1947-48 for charities. This amount shall be funded
and put under a permanent Trust for the said
charities including the charities of Her Highness
Mahar Ahilya Bai Holkar.
The Trust shall consist of the following:
1. Ruler of Indore who will always be the President
of the Trust.
2. Two nominees of the Ruler.
3. One nominee of the Government of India.
4. Two nominees of the Madhya Bharat Government.
34
Note: The trustees nominated by the Government
of India and the Madhya Bharat Government
shall be so appointed in consultation with the
Ruler.
The powers and functions of the Trust shall be
subject to such legislation as the Central or
Madhya Bharat Government may enact generally
for purposes of regulating such trusts, except
that the composition of the Trust and the
manner of its formation as stated above shall not
be liable to any modification or change by such
legislation.”
(emphasis added)
25. Thus, the Government of India held that the Khasgi
properties and the income from Khasgi should be treated as lapsed
for all time to the Madhya Bharat Government. This shows that
the claim made by the Maharaja in respect of the Khasgi properties
was not accepted and that a decision was taken that the said
properties shall vest in the State Government. In lieu thereof,
certain guarantees were given by the Government of India, which
included that an autonomous Trust would be created for the said
charities (the Khasgi properties and the charities of Maharani
Ahilyadevi Holkar). The Trust was to be headed by the Ruler of
Indore as its President. Out of five other Trustees, two were to be
the nominees of the Ruler, two were to be the nominees of the State
Government, and one was to be the nominee of the Government of
35
India. The government nominees were to be appointed after
consultation with the Ruler. The powers and functions of the Trust
were made subject to the State or Central legislation, which may
be enacted in future. However, it was clarified that the legislation
shall not change the manner of formation of the autonomous Trust
and the composition of the Trust.
26. Apart from the rejection of the claim by the Maharaja in
respect of the Khasgi properties, the Trustees have accepted time
and again that by virtue of the settlement of the dispute in
accordance with clause (3) of Article XII of the Covenant, the State
Government became the owner of the Khasgi properties. Suit No.
15 of 1975 was filed by a member of the Holkar family to which the
Khasgi Trust as well as other two Trusts of Holkar family were
party defendants. A written statement was filed by the Khasgi
Trust in the said suit. Paragraph 6 of the said written statement is
material, which reads thus:
“6. Reply to para 6:
It is admitted that the property descended to His
late Highness on succession from his predecessor
Ruler of Holkar Dynasty and recognition by
Paramount Power. The property comprised of the
Kingdom Malharrao extension acquired by
Shrimant Holkar and further and addition
Subhedar acquisition, by successive Rulers,
36
Including His late Highness. The property
bestowed on Maharani Gautamabai Holkar at
the instance of her husband Subhedar
Malharrao was held and managed separately by
or on behalf of the consent of the Ruler and
was called the "Khasgi" property, Devi
Ahilyabai created public religious and
charitable endowment from her resources and
in the year 1904 the Khasgi property came to
be administered by the Holkar State. In the
integration of the administration under the
Covenant entered into by the Rulers of the
States of Central India, the administration of
the property settled for public charitable and
religious endowments founded by Devi
Ahilyabai also passed to the United State of
Madhya Bharat, a provision having been made
that the endowments would be administered
subject to any directions or instructions that
may from time to time be given by the
Government of India. The properties had been
settled as a foundation for funds for charity. These
properties lapsed to the State and cash grant in
lieu thereof was made. The Khasgi (Devi Ahilyabai
Holkar Charities) Trust was constituted under the
appropriate directions of the Government of India
to administer this Trust fund and the charities.
The Registrar of Public Trusts has upheld the
Trust as a Public Trust administered by an agency
acting under the control of the State. Annexed
herewith is a copy of the relevant order and
marked 'B'.”
 (emphasis added)
27. Paragraphs 29.2 and 29.3 are also relevant, which read
thus:-
“29.2 As stated above, the list of Private
Properties settled in 1948 under the Covenant
37
excluded the endowments which were
eventually transferred to the Khasgi (Devi
Ahilyabai Holkar Charities) Trust and Alampur
(Subhedar Malharrao Holkar Chhatri) Trust.
These endowments vested in the United State
of Madhya Bharat till 1950, then in the Part 5
State of Madhya Bharat till 1956 and thereafter
in the reorganized State of Madhya Pradesh
until the year 1962 when the two Trusts were
created under the obligation to do so. Article
VI:(2) (c) of the Covenant recognised the
necessary of the Successor State providing for
management of the religious, charitable and
historical endowments and keeping them
separate from the Private Properties.
29.3 The defendants say that the properties
which eventually vested in these two Trusts
were not Private Properties of His late Highness.
They did not vest in His late Highness either before
or after 1940 either as personal or joint family
properties. Alternatively, they were either State
Props or properties which vested in the United
State of Madhya Bharat under Article 47 of the
Covenant.”
 (emphasis added)
Again in paragraph 29.4, it is stated thus:
“29.4 This vesting in three successive
Governments referred to above and the handing
over of the property by the Government of
Madhya Pradesh to the defendant No.1 for the
purposes of creation of trusts under the
Covenant were acts of State which cannot be
challenged by the Plaintiff in municipal courts.”
 (emphasis added)
38
28. Even in the writ petition filed by the Khasgi Trust out of which
the present Civil Appeals arise, a specific stand was taken in
Paragraph 5.1 that the Khasgi Properties were charities and
religious endowments of the family of Rulers of Indore. A stand
was taken that the Khasgi properties held by Holkar rulers vested
in the State Government which were restored to the Trust created
for that purpose. The relevant part of paragraph 5.1 reads thus:
“5.1. The petitioner is a religious and charitable
Trust duly constituted on 27.06.1962 by a
registered instrument. A copy of the Trust Deed is
annexed hereto marked ANNEXURE P-2.
However, the history of the Trust and its activities
can be traced to the Holkar rulers who had
founded and ruled Holkar State at Indore from
1761 A.D. to 1948 A.D. when the said State (i.e.
Holkar State) joined the Union of India by first
merging itself into a Part B State by the name of
Madhya Bharat. Right from the lime of
establishment of their rule, the Holkar rulers,
particularly the legendary Devi Ahilya Bai Holkar
being of an extra-ordinary and unprecedented
religious and charitable disposition, generously
established charities and religious endowments
spread all over the country including in their own
State. Since the said charities and religious
endowments were managed and looked after
personally by the Rulers and their Queens, the
same came to be called "Khasgi" or 'personal'
charities and religious endowments. However,
since during those days there was little or no
distinction between 'State' and 'personal' charities
and religious endowments, the funds for the
upkeep and management of the said charities and
religious endowments were provided by the State
39
and a budgetary provision was accordingly, made
therefor. Historically, therefore, the charities and
religious endowments came to be regarded as a
different and third species of property, as
distinguished from the State properties and/ or
personal properties of the Rulers of Holkar State.”
29. Paragraph 5.2 is also material, which reads thus:-
“5.2 The above nature of the charities and
religious endowments of the Trust is also clear
from the recitals of the Trust Deed, particularly,
clauses (3), (5), (12), (15) and (17) therein.
(Kindly see ANNEXURE P-2). It is, therefore,
apparent that the Holkar rulers acquired
properties in many religious places throughout
the country and established several temples,
dharamshalas, ghats etc. and dedicated the
same for public use. However, there were
apparently several properties which could not
be put to such use, but which continued to be
owned and managed as Khasgi properties
Ultimately, when the Trust was established in
1962, all such properties, including the
temples, dharamshalas, ghats etc, which
formed part of the Khasgi properties, were
vested in and handed over to the petitioner
Trust as per the list/ schedule to the Trust
Deed. It also appears that the petitioner
Trust was created with the active support,
participation and approval of the State
government as the latter's Muafi
Department, which had been looking after
the Khasgi properties after the merger of the
Holkar State with Madhya Bharat, was
apparently finding it difficult to manage the
numerous and far flung Khasgi properties in
the nominal budget grant of about Rs.2.91
lacs. The properties were apparently in danger
of being wasted or being encroached upon and
what was worse still, was the fact that the
charities and religious endowments were in
40
danger of losing their historical identity and
importance, both which were closely associated
with the erstwhile Holkar Rulers. Therefore, in
the above historical background, the State
Government in its wisdom decided to restore
the Khasgi properties to the erstwhile Holkar
Rulers by getting them to create the
petitioner Trust which was the vehicle used
for entrusting the Khasgi properties to them.
However, the petitioner Trust could come into
existence only after the demise of late Maharaja
Yeshwant Rao Holkar though the process had
begun much earlier during his lifetime.”
 (emphasis added)
30. On 23rd June 1969, an application was made by the Trustees
of Khasgi properties to the Registrar seeking a declaration
regarding exemption under clause (a) of sub-Section (1) of Section
36 of the Public Trusts Act. In paragraph 6 of the said application,
the Trustees stated that the charities and religious endowments
were initially under the management of the erstwhile Holkar State.
They further stated that after the merger of Holkar State with the
State of Madhya Bharat, the management and possession of the
charities and religious endowments remained with the State
Government and its successors till 16th July 1962, when the same
was handed over to the Trustees. The stand consistently taken by
the Trustees of the Khasgi Trust clearly shows that it is an
accepted position that the properties described in Part ‘B’ of the
41
Schedule to the Trust Deed vested in the State Government after
the adjudication was made in accordance with Clause (3) of the
Article XII. It must be noted here that the Maharaja or none of his
family members challenged the said adjudication made on the
issue of ownership of the Khasgi properties and none of them
disputed or challenged the act of the State Government of taking
over the Khasgi properties/charities. In fact, the Maharaja acted
upon it by nominating two trustees. The Khasgi Trust has been
created on the basis of the said adjudication. Hence, the Trustees
are bound by the adjudication.
31. Thus, as a result of adjudication made in accordance with
clause (3) of Article XII of the Covenant, the Khasgi properties
which are listed in Part ‘B’ of the Schedule to the Trust Deed vested
in the State Government.
32. On 6th January 1959, the Under Secretary to the Government
of Madhya Pradesh wrote to the Private Secretary of Maharaja that
the State Government proposes to nominate the Commissioner,
Indore Division and the Superintending Engineer (B&R), P.W.D.,
Indore Circle as their nominees to the Trust to be constituted as
per the enclosure to the letter dated 06th May 1949 addressed by
Shri V.P. Menon. Therefore, a request was made to convey to the
42
State Government whether the Maharaja had accepted their
nominations. The letter records that after receiving the reply from
the Maharaja, the draft of the Trust Deed would be finalised. By
the letter dated 1st April 1959, the Deputy Secretary to the State
Government requested the Private Secretary of the Maharaja of
Indore to make nominations of two persons for being appointed as
Trustees. A request was made to make nominations immediately
so that the State Government could finalise the draft of the Trust
Deed. The letter dated 14th November 1959 addressed by the Under
Secretary to the State Government to the Secretary to Maharaja
reiterates that after the Maharaja confirms the nominations, the
Trust Deed will be finalised. By the letter dated 14th April 1961,
the Under Secretary to the Government of Madhya Pradesh
informed the Personal Assistant to the Maharaja that the draft
deed of the Khasgi Trust was still under consideration and would
be sent as soon as it was finalised. These contemporaneous
documents establish that the State Government prepared the draft
of the Trust Deed in terms of which the Trust Deed dated 27th June
1962 was executed. As the Khasgi Trust was created on the basis
of the decision in terms of clause (3) of Article XII of the Covenant,
the draft of the Trust Deed was made by the State Government.
43
One of the recitals refers to the properties in Part ‘B’ of the
Schedule as the Trust properties. Various clauses of the Trust
Deed refer to the fact that the Khasgi properties, which vested in
the State Government, became the Trust property of the Khasgi
Trust. The recitals and clauses in the Trust Deed are very relevant
as the Trust Deed was drafted by the State Government. Clauses
3 and 5 are material which read thus:
“3. The Settlor hereby transfers the Trust properties
to the trustees who shall hold the same upon
trust and shall be responsible for the
maintenance, upkeep and preservation of the
said Charities and Religious Endowments.
xxx xxx xxx
5. The Trustees shall hold and possess the Trust
properties and shall have the power to manage the
said properties and collect all sums of money by way
of rent, profit, interest and any other income accruing
to the Trust.”
 (emphasis added)
Even Clause 7 of the Trust Deed again refers to maintenance,
upkeep and preservation of the Trust properties, which reads
thus:-
“(7). The Trustees shall prepare the Budget
estimates of the Trust every year and shall
apply the income for the fulfilment of the
objects of the Trust as referred to in paragraph
2 of the preamble of this Deed and for the
maintenance, upkeep and preservation of
44
the Trust Properties in good condition and
shall make necessary repairs thereto and the
balance, if any, shall be held and accumulated
for being applied in the fulfilment of the
aforesaid objects of the Trust and for purposes
set out in clause (14) hereunder.”
 (emphasis added)
33. Under the report dated 16th July 1962, Muafi Officer of the
State Government handed over the possession of properties of the
Khasgi Trust as well as of the Alampur Trust to the Secretary of
the Trusts. In terms of the handing over of the properties as
aforesaid, a notification was issued by the State Government on
27th July 1962. English translation of the said notification reads
thus.:-
“STATE OF MADHYA PRADESH DATED
27.07.1962
COMMUNIQUE FOR COMMISSIONERS AND
DISTRICT
CHAIRMANS
OFFICE OF COMMISSIONER, INDORE DIVISION.
INDORE
(PARDON SECTION)
Owing to the formation of Madhya Bharat, Areas,
Institutions, Factories, "Chhatris", Religious Places
etc. of Agreement Executor former State Indore fell
under the supervision and management of
Commissioner, Pardon Office. Now, in relation to
these properties, Government while granting
permission for formation two Trusts, one Khasgi
Trust (The Maharani Ahilyabai Charities Trust)
and second Alampur Trust (The Holkar Chhatris
Trust), has granted recognition to transfer of the
areas, institutions etc. included in the trust
45
deed to the aforesaid trusts. Accordingly, all the
Areas, Institutions, Factories, "Chhatris",
Religious Places etc., in connection with the
trust were transferred to them on 16.07.1962.
Hence, for the information of all government offices
and general public, this communiqué has been
published.
(2273) M. P. Shrivastava, Commissioner”
 (emphasis added)
Thus, the properties described in Part ‘B’ of the schedule to the
Trust Deed which were vested in the State Government were
transferred to the autonomous Khasgi Trust on its incorporation.
In fact, till 2012, the State Government never disputed that the
Khasgi properties listed in Part ‘B’ of the Schedule to the Trust
Deed were the Trust properties of the Khasgi Trust. Therefore, to
that extent, the Division Bench of the High Court is not right when
it concluded that the properties incorporated in Part ‘B’ of the
Schedule to the Trust Deed continue to be the Government
properties even after 16th July 1962. The said properties are
vesting in the Khasgi Trust.
APPLICABILITY OF THE PROVISIONS OF THE PUBLIC TRUSTS
ACT (Question – b)
34. The second issue to be decided is whether the provisions of
the Public Trusts Act apply to the Khasgi Trust. We have already
46
quoted the enclosure to the letter dated 6th May 1949, issued by
Shri V. P. Menon. The enclosure incorporates the decision of the
Government of India on the claim made by the Maharaja about
the Khasgi properties. It specifically records that the powers and
functions of the Khasgi Trust shall be subject to such legislation
as the Central Government or Madhya Bharat Government may
enact generally for the purposes of regulating such Trusts. It is in
this context that we will have to examine the provisions of the
Public Trusts Act, which was enacted in the year 1951. Subsection (4) of Section 2 defines a Public Trust, which reads thus.:-
“2. Definitions. – In this Act, unless there is
anything repugnant in the subject or context,–
(1).…………;
(2)………….;
(3)………….;
(4) "public trust" means an express or constructive
trust for a public, religious or charitable purposes
and includes a temple, a math, a mosque, a church,
a wakf or any other religious or charitable
endowment and a society formed for a religious or
charitable purpose;
(5)………….;
……………..”
35. Coming back to the Trust Deed, the object of the Trust is to
maintain up-keep and preserve the Trust properties and the
charities as well as religious endowments. Part ‘A’ of Schedule to
47
the Trust Deed contains details about the endowments to various
places of religion, such as, temples, anna chattras, peersthans,
donations to dharmshalas and chhatris. Some of the properties in
Part ‘B’ of the Schedule are temples and religious places. The trust
was created with the object of preservation and maintenance of the
Trust properties which are charities and endowments. Thus, it can
be said that the Khasgi Trust, is an express Trust for public,
religious and charitable purposes. Under Section 4(1) of the Public
Trusts Act, every such Trust requires compulsory registration.
36. The Trustees in support of their appeals relied upon the order
dated 10th August 1971, passed by the Registrar of Public Trusts,
holding that the Khasgi Trust was entitled to exemption under
Clause (a) of Sub-Section (1) of Section 36 of the Public Trusts Act.
Paragraph 3 of the said order reads thus.:-
“3 Out of five members of the Management
Committee of Khasgi (Devi Ahilyabai Holkar
Charities) Trust are nominated by the State
Government and Central Government. In such
circumstances, control of the State Government on
this Trust is evidently clear. Even the savings of the
Trust could be spent only with the prior permission
of the State Government in accordance with the
Section 14 of the Trust Deed. It is clear from it that
State Government is in full control of the present
Trust and it is eligible for the exemption from
registration. I believe that the Objection raised by
the Secretary of the Trust is valid and appropriate.
48
Thus, proceedings of the registration are
concluded.”
37. It is, therefore, necessary to consider the ambit of Section 36.
For the sake of convenience, we are reproducing Section 36, which
reads thus:-
“36. Exemption.–
(1) Nothing contained in this Act shall apply to–
(a) a public trust administered by any agency
acting under the control of the State or by
any local authority,
(b) a public trust administered under any
enactment for the time being in force, and
(c) a public trust to which the Muslim Wakfs Act,
1954 (29 of 1954) applies.
(2) The State Government may exempt by
notification, specifying the reasons for such
exemption in the said notification, any public trust
or class of public trusts from all or any of the
provisions of this Act subject to such conditions, if
any, as the State Government may deem fit to
impose.”
 (emphasis added)
38. The order of the Registrar proceeds on the footing that even if
Clause (a) of Sub-Section (1) of Section 36 is applicable, Section 14
of the Public Trusts Act will apply. Obviously, if Clause (a) is
attracted, nothing contained in the Public Trusts Act shall apply to
such a Trust, which will include Section 14 as well. The powers of
the Registrar under the Public Trusts Act are found in Chapter V.
None of the provisions of the Public Trusts Act confer any power on
49
the Registrar to decide the question whether an exemption under
Clause (a) of Sub-Section (1) of Section 36 is applicable to a
particular public Trust. Therefore, we have independently
examined whether Clause (a) of sub-Section (1) of Section 36 will
have application. It is not the case that the Khasgi Trust is being
administered by any local authority as such. The question is
whether it is being administered by any agency acting under the
control of the State Government. There are six Trustees of the
Khasgi Trust, out of which, one is the Ruler, who is the ex-officio
President. Two Trustees are the nominees of the Ruler. The
remaining three are the nominees of the State Government and
Central Government. Neither in the order of the Government of
India dated 6th May 1949 nor in the Trust Deed, there is anything
to indicate that the Khasgi Trust is administered by any agency
acting under the control of the State Government. Even the power
to nominate two Trustees vested in the State Government and
similar power vested in the Central Government to nominate one
Trustee has to be exercised in consultation with the Ruler. The
three Trustees nominated by the Government do not have a
majority in decision making. The State Government has no effective
control over the functioning of the Khasgi Trust. In one sense, it is
50
an autonomous public Trust. Therefore, on the face of it, Clause
(a) of Sub-Section (1) of Section 36 has no application. The Khasgi
Trust cannot claim to be covered under the excepted category in
clause (a) of sub-section (1) of Section 36.
39. We may note here that the High Court has proceeded on the
erroneous footing that as there was no notification issued under
sub-Section (2) of Section 36, Clause (a) of Sub-Section (1) of
Section 36 will not apply. Sub-Sections (1) and (2) of Section 36
operate in different fields. When sub-Section (1) is applicable to a
Public Trust, none of the provisions of the Public Trusts Act is
applicable to the Trust. Sub-Section (2) is an independent power of
the State Government to issue a notification exempting certain
Public Trusts from all or any of the provisions of the Public Trusts
Act. Thus, we have no manner of doubt that the Khasgi Trust will
be governed by the Public Trusts Act and that the same is required
to be registered accordingly.
VALIDITY OF THE SUPPLEMENTARY TRUST DEED (Question –
c) AND OBLIGATION TO OBTAIN A PERMISSION UNDER
SECTION 14 (Question – d)
40. We may note here that owing to the order of the Registrar
dated 10th August 1971, even the Trustees of the Khasgi Trust had
51
reason to believe that though by virtue of Clause (a) of Sub-Section
(1) of Section 36, the Trust was exempted from registration under
the Public Trusts Act, Section 14 thereof was applicable. Section
14 reads thus :
“14. Previous sanction of Registrar, in cases of sale,
etc., of property belonging to a public trust.-(1)
Subject to the directions in the instrument of trust
or any direction given under this or any other law
by any court –
(a) no sale, mortgage, exchange of gift of any
immovable property; and
(b) no lease for a period exceeding seven years in the
case of agricultural land or for a period exceeding
three years in the case of non-agricultural land or
building;
belonging to a public trust, shall be valid without
the previous sanction of the Registrar.
(2) The Registrar shall not refuse his sanction in
respect of any transaction specified in sub-section
(1) unless such transition will, in his opinion, be
prejudicial to the interests of the public trust.
An application was made by the Secretary of the Khasgi Trust on
21st August 1997 to the Registrar to grant permission under subSection (1) of Section 14 to sell the Trust property mentioned
therein which was sold to the appellant in Civil Appeal arising out
of Special Leave Petition (C) No. 19063 of 2021. By the order dated
16th October 1997, permission to alienate was accorded by the
Registrar to the Trustees, subject to several conditions. One of the
52
important conditions was that the property should be sold at the
maximum price by inviting tenders and that the sale price should
not be less than the market rate prevailing in the area where the
property is situated. In any event, as the Public Trusts Act is
applicable to the Khasgi Trust, the Trustees cannot alienate the
Trust properties without complying with Section 14.
41. The Trustees relied upon the Supplementary Trust Deed
dated 08th March 1972 for contending that they are empowered to
alienate trust property without taking recourse to Section 14 of the
Public Trusts Act. This document was not challenged in the
proceedings before the High Court. But, the issue of legality thereof
has been gone into by the High Court. As noted earlier, the Khasgi
Trust has been created on the basis of the adjudication made under
clause (3) of Article XII of the Covenant. The Khasgi properties
vested in the State Government by virtue of the said adjudication.
However, the Khasgi properties were transferred to the Khasgi
Trust on its establishment. Therefore, we have already held that
the Khasgi properties vested in the Khasgi Trust which is a public
Trust under the Public Trusts Act. The Public Trusts Act itself
permits the Trustees of a Public Trust to alienate the Trust Property
subject to constraints imposed by Section 14. Therefore, the
53
Supplementary Trust Deed which enables the Trustees to alienate
the Trust Property cannot be illegal. However, alienation of the
Trust property can be made only in accordance with Section 14.
The Trustees by executing such a document cannot overcome the
mandate of Section 14. Therefore, the power to alienate under the
Supplementary Trust Deed is subject to the constraints imposed
by Section 14 of the Public Trusts Act. To that extent, the Division
Bench of the High Court was not right.
42. Before we discuss Section 14 of the Public Trusts Act, even if
we assume that the exemption under Clause (a) of Sub-Section (1)
of Section 36 was applicable to the Khasgi Trust, it must be noted
that the Trustees held the property in a fiduciary capacity for the
benefit of the beneficiaries, which in the present case are the
members of the public as the Trust properties include a large
number of temples, ghats, etc. The property of the Khasgi Trust
could not have been sold without following a fair and transparent
process. The view consistently taken by this Court, as regards the
alienation of public property, right from the case of Akhil Bhartiya
Upbhokta Congress v. State of Madhya Pradesh and Ors.2, will
substantially apply to the alienation of the property of a public
2 2011 (5) SCC 29
54
Trust and therefore, the Trustees are bound to dispose of the Trust
property only for the benefit of the Trust or its beneficiaries, and
not as a private venture. This can be achieved only by following a
fair and transparent process. The process must be such that the
Trust property fetches the best possible price. Only if alienations
are made in such a manner, the same will be in the interests of the
beneficiaries.
43. As we have held that the provisions of the Public Trusts Act
shall apply to the Khasgi Trust, now we are referring to the
provisions of Section 14. Section 14 imposes an embargo on the
sale, mortgage or gift of any immovable property of the Public Trust
as well as lease for a period exceeding seven years in the case of
agricultural lands, or for a period exceeding three years in case of
a non-agricultural land or building. Such transactions shall not be
valid without the previous sanction of the Registrar. Sub-Section
(2) limits the power of the Registrar to refuse the sanction in respect
of transactions covered by sub-Section (1). The Registrar can refuse
sanction only when he is satisfied that the transactions will be
prejudicial to the interests of the Public Trust.
44. In the case of Parsi Zoroastrian Anjuman, Mhow1, a Coordinate Bench of this Court had an occasion to deal with the scope
55
of Section 14. The Co-ordinate Bench compared Section 14 with a
similar provision of Section 36 under the Maharashtra Public
Trusts Act, 1950, putting an embargo on the powers of the Trustees
of a Public Trust of alienating the trust property. Paragraph 22 of
the said judgment reads thus:
“22. As can be seen by Section 14(1), previous
sanction of the Registrar of public trusts is a
precondition, for the (a) “sale, mortgage, exchange
of gift of any immovable property” or (b) “lease for a
period exceeding seven years in the case of
agricultural land or for a period exceeding three
years in the case of non-agricultural land or
building.” If Section 14(1) had stopped there, the
embargo on alienation of the types enumerated in
the provision (sale, gift, exchange, mortgage etc., or
long-term lease(s) of agricultural or nonagricultural properties) i.e., obtaining previous
sanction, could well have meant that the Registrar's
role was conceivably intrusive. However, the
provisions of Section 14(1) and the power
conferred on the Registrar under it, are
controlled by Section 14(2) which states that
the Registrar “shall not refuse his sanction”
unless in his opinion the alienation, or transfer
is prejudicial to the interests of the public trust.
The clear reference in Section 14(2) is to the
power exercisable under Section 14(1). The
controlling expression in Section 14(1)
significantly, is that previous sanction in
respect of the two situations (i.e., alluded in
clauses (a) and (b)) is “subject to the directions
in the instrument of trust or any direction given
under this or any other law by any Court.” This
controlling or, rather opening words, clearly
indicate that the grant or refusal of sanction by
the Registrar have to be based on either “the
56
directions in the instrument of trust”, or “any
direction given under this (i.e., M.P. Public
Trusts Act) or any other law by any court”. The
discretion thus, is relatable to directions in the
trust document, or any provision of the Act, or
any other law as ordered (or directed) by any
court. Therefore, the Registrar, is not
empowered to read into it her own notions of
what is beneficial and what is prejudicial to the
trust. The refusal has to be specific to the
requirement of law, wherever such law clearly
stipulates so, or any specific provision of the
trust document.”
 (emphasis added)
This Court proceeded to permit the Trustees to alienate the Trust
Property, subject to fresh valuation of the property and subject to
selling the property to the highest bidder through a public tender.
45. Section 14 is applicable to immovable property of a Public
Trust. Section 13 governs the investment of public trust money.
The State’s control of charities and religious endowments in some
form is not foreign to our jurisprudence. A Public Trust invariably
depends on charity done by individuals by donating immovable
property or by making cash donations. Though in law, the assets
and properties of a Public Trust vest in its Trustees, they hold the
Trust property in a fiduciary capacity for the benefit of the
beneficiaries of the Trust. They hold the property for giving effect to
the objects of the Public Trust. A Trust property cannot be alienated
57
unless it is for the benefit of the Trust and/or its beneficiaries. The
Trustees are not expected to deal with the Trust property, as if it is
their private property. It is the legal obligation of the Trustees to
administer the Trust and to give effect to the objects of the Trust.
Therefore, the statutes dealing with the Public Trusts which are
operating in various States, provide for limited control of the
activities of a Public Trust. The control is exercised by providing for
the submission of the annual accounts by the Trustees and filing
of returns with the concerned charity organization or other
authority under the law. There are statutory constraints on the
power of the Trustees to alienate the property of a Public Charitable
Trust. There are provisions in such statutes for penalizing the
Trustees for misappropriation of the property of the Trust. Many
such Statutes empower the authorities under the Statutes to
remove a Trustee of a Public Trust, on account of misbehaviour or
acts of misappropriation, etc. The Trustees are the custodians of
Trust properties. The Trustees have a duty to safeguard the
interests of the beneficiaries of the Public Trust. That is how, a
provision in Public Trust Law, like Section 14 of the Public Trusts
Act, is of importance. This provision seeks to protect the Trust
property in the hands of the Trustees from unwarranted
58
alienations. In the present case, the transactions of sale in favour
of the appellant in Civil Appeal arising out of Special Leave Petition
19063 of 2021, have been effected admittedly without obtaining
prior permission under Section 14. The Division Bench of the High
Court has gone into the question whether the alienations were null
and void. However, the purchasers were not parties to the
proceedings before the High Court. Hence, final adjudication could
not have been made on the issue of nullity of the alienations made
by the Trustees of the Khasgi Trust in absence of the necessary
parties. However, there is no manner of doubt that the alienations
could not have been made without prior sanction of the Registrar.
POWERS OF THE REGISTRAR UNDER THE PUBLIC TRUSTS
ACT.
46. Under Chapter V of the Public Trusts Act, there are powers
vested in the Registrar of controlling a Public Trust. Sections 17,
22 and 23 are material, which read thus:-
“17. Auditor's duty to prepare balance sheet and
to report irregularities, etc. - (1) It shall be the duty
of every auditor auditing the accounts of a public
trust under Section 16 to prepare a balance sheet
and income and expenditure account and to forward
a copy of the same to the Registrar within whose
jurisdiction a public trust has been registered.
59
(2) The auditor shall, in his report specify all cases of
irregularities, illegal or improper expenditure or
failure or omission to recover monies or other
property belonging to the public trust or waste of
money or other property thereof and state whether
such expenditure, failure, omission, loss or waste
was caused in consequence of a breach of trust, or
misapplication or any other misconduct on the part
of the trustees, or any other person.
22. Power of the Registrar.–The Registrar shall
have powers,–
(a) to enter on and inspect or cause to be entered
on and inspected any property belonging to a
public trust;
(b) to call for or inspect any extract from any
proceedings of the trustees of any public trust
or any book or account in the possession of or
under the control of the trustees;
(c) to call for any return, statement, account or
report which he may think fit from the trustees
or any person connected with a public trust:
Provided that in entering upon any property
belonging to the public trust the officer making
the entry shall give reasonable notice to the
trustee and shall have due regard to the
religious practices or usages of the trust.
23. Procedure after receipt of the report by the
Registrar. – (1) If the report of the auditor made
under section 17 shows, in the opinion of the
Registrar, material defects in the administration of
the public trust, the Registrar may require the
working trustee to submit an explanation thereon
within such period as he thinks fit.
(2) If on the consideration of the report of the auditor,
the accounts and explanation, if any, furnished by
the working trustee, the Registrar is, after holding
an inquiry in the prescribed manner and giving
opportunity to the person concerned, satisfied
60
that the trustees or any other person has been
guilty of gross negligence, a breach of trust,
misapplication or misconduct which has resulted
in the loss to the public trust he shall determine
(a) the amount of loss caused to the public trust;
(b) whether such loss was due to any breach of
trust, misapplication, or misconduct on the part
of any person;
(c) whether any of the trustees, or any other
person is responsible for such loss;
(d) the amount which any of the trustees or any
other person is liable to pay to the public trust
for such loss.
(3) The amount surcharged on any trustee or
other person in accordance with clause (d) of subsection (2) shall, subject to any order of the Court
under section 24, be paid by the trustee or person
surcharged within such time as the Registrar
may fix.”
(emphasis added)
The Registrar by exercising powers under Section 22 of the Public
Trusts Act, can call for the record and report from the Trustees. If
the report of the Auditor, submitted in accordance with Section 17,
shows material defects in the administration of the Public Trust,
the Registrar can always call upon the Trustees to submit an
explanation. Under Sub-Section (2) of Section 23, the Registrar has
power, after holding an inquiry in a prescribed manner, to decide
whether Trustees have been guilty of any conduct which has
resulted in any loss to the Public Trust. He is empowered to
quantify the amount of loss caused to the Public Trust and also to
61
decide the amount which any of the Trustees or any other person,
is liable to pay to the Public Trust for compensating for such a loss.
Section 24 provides for an appeal to the Court against an order
made under Section 23. Section 31 of the Public Trusts Act
provides that the amount determined in accordance with Sections
23 and 24, is recoverable as arrears of land revenue. In a given
case, the Registrar can direct recovery from Trustees of an amount
equivalent to the loss caused to the Trust due to illegal alienation
of Trust property by the Trustees.
47. When a Trust property is transferred without prior sanction
of the Registrar under Section 14 and/or without following a fair
and transparent process, it can be always said that the Trust
property is not being properly managed or administered. In such a
case, apart from exercising the power under Section 23, the
Registrar can make an application under sub-Section (1) of Section
26 inviting the attention of the Court to the mismanagement of the
Trust. Sections 26 and 27 are material in this behalf, which read
thus: -
“26. Application to for directions.-(1) If the Registrar
on the application of any person interested in the
public trust or otherwise is satisfied that, –
(a)the original object of the public trust has failed:
62
(b)the trust property is not being properly
managed or administered; or
(c)the direction of the court is necessary for the
administration of the public trust;
he may, after giving the working trustee an
opportunity to be heard direct such trustee to
apply to court for directions within the time
specified by the Registrar.
(2) If the trustee so directed fails to make an
application as required, or if there is no trustee
of the public trust or if for any other reason, the
Registrar considers it expedient to do so, he
shall himself make an application to the court.
27. Courts power to hear application- (1) On receipt
of such application the court shall make or cause
to be made such inquiry into the case as it deems
fit and pass such orders thereon as it may consider
appropriate.
(2) While exercising the power under sub-section
(1) the court shall, among other powers, have
power to make an order for:-
(a) removing any trustee;
(b) appointing a new trustee;
(c) declaring what portion of the trust property
or of the interest therein shall be allocated to
any particular object of the trust;
(d) providing a scheme of management of the
trust property; (e) directing how the funds of a
public trust whose original object has failed,
shall be spent, having due regard to the original
intention of the author of the trust or the object
for which the trust was created;
(f) issuing any directions as the nature of the
case may require.
(3) Any order passed by the court under sub-section
(2) shall be deemed to be a decree of such court and
an appeal shall lie therefrom to the High Court.
(4) No suit relating to a public trust under section
92 of the Code of Civil Procedure, 1908 (V of 1908),
shall be entertained by any court on any matter in
63
respect of which an application can be made under
section 26.”
 (emphasis added)
Under sub-Section (2) of Section 26, the Registrar can himself make
an application to the Court seeking the exercise of powers under
Section 27. On such an application being made and after holding
an inquiry, the Court has the power to remove the Trustees of the
Trust or to issue directions as provided in Section 27.
48. In the present case, all the alienations made by the Trustees
of Khasgi Trust except alienation made in favour of the appellant in
Civil Appeal arising out of Special Leave Petition (C) No.19063 of
2021, have been made without complying with the mandatory
requirement of obtaining the previous sanction as required by subSection (1) of Section 14.
49. We may note here that there are no proceedings filed for
specifically challenging the validity of stated alienations made by
the Trustees. The impugned judgment of the Division Bench arises
out of three proceedings. Two out of three are writ petitions filed by
the Trustees. The first one was filed for challenging the impugned
order of the Collector and the second one was filed seeking
directions regarding entering the names of the Trustees in revenue
records in respect of the Trust properties. The third proceeding is
64
the Public Interest Litigation, in which there is a prayer for issuing
a writ of mandamus to direct inquiry through CBI. Therefore, there
was no occasion for the Division Bench to declare that the sale
transactions are void especially when the purchasers were not
before the High Court. Nevertheless, it is necessary for the Registrar
to exercise powers under Section 22 and call for necessary records
pertaining to the alienations made by the Trustees. Thereafter, the
Registrar shall exercise powers under Section 23 and decide
whether any loss was caused to the Public Trust as a result of
alienations and if any loss was found to have been caused, he shall
quantify the amount in accordance with sub-Section (2) of Section
23. He may also consider of invoking sub-section (1) or (2) of Section
26 as observed above, if found necessary.
LEGALITY OF THE ORDER OF THE COLLECTOR (Question – e)
50. We may note here that the order of the Collector which was
impugned before the High Court was passed without giving an
opportunity of being heard to the Trustees of the Khasgi Trust and
the purchasers. A show cause notice was issued to the Trustees by
the Registrar on the basis of the complaint of the Member of the
Parliament. Though the Trustees replied to the notice, even the
65
reply was not considered by the Collector. Only on this ground, the
said order ought to be set aside. As a matter of fact, the Collector
had no jurisdiction to decide the issues of title as well as
mismanagement of the affairs of a Public Trust. For the same
reason, even the report of the Commissioner dated 24th May 2012
and the report of the Principal Secretary to the Chief Minister dated
2nd November 2012 are without jurisdiction. The reports have been
made in breach of the principles of natural justice without affording
an opportunity of being heard to the Trustees.
VALIDITY OF THE DIRECTION TO HOLD INQUIRY THROUGH
ECONOMIC OFFENCES WING (Question – f)
51. There was no warrant to direct inquiry through the Economic
Offences Wing of the State Government as there is no finding that
there was mens rea on the part of the Trustees. No finding has
been recorded by the High Court based on material that the
alienation made by the Trustees has resulted in causing loss to the
Trust and that the entire sale consideration being diverted for
personal use. It is noticed from the record placed before us that
the entire consideration received from the purchasers has been
credited to the account of the Trust. The allegation of
misappropriation can be gone into only by the Authorities under
66
the Public Trusts Act. Moreover, the direction issued by the High
Court proceeds on the erroneous assumption that the Trustees
have made misappropriation of the Government properties. There
is no offence registered against the Trustees. Hence, Economic
Offences Wing cannot be directed to hold an inquiry or investigation
in connection with the subject matter of this proceeding. In other
words, the direction given by the High Court vide the impugned
Judgment in that regard will have to be held to be non est in law.
Though the said direction is unwarranted, as observed earlier, the
Registrar will have to initiate necessary proceedings under the
Public Trusts Act and carry them to a logical conclusion.
MAINTAINABILITY OF WRIT PETITIONS (Question – g)
52. A contention was raised that only one Trustee had filed writ
petitions before the Learned Single Judge for challenging the
impugned order of the Collector and seeking other reliefs. The
contention is that he was not authorized by the other Trustees to
file the proceedings of writ petitions. The impugned order of the
Collector purports to decide the issue of Title of the Trust properties
by holding that the properties in Part ‘B’ of the Schedule to the
Trust Deed are vested in the State Government. Even assuming
that there was no express authority given to the writ petitioner in
67
the form of a resolution of the Board of Trustees to file the writ
petitions, even an individual Trustee was entitled to take
proceedings for questioning such orders, which adversely affect the
Trust and /or its beneficiaries. On the contrary, it is the duty of
every Trustee to take such action of challenging an order holding
that the properties held by the Trust are not the Trust properties.
Moreover, none of the Trustees has come forward to challenge the
authority of Trustee Shri S.C. Malhotra who had filed writ petitions
and further proceedings. There was also a direction issued to the
Economic Offences Wing to hold an inquiry about the
misappropriation of the Trust property by the Trustees. Every
Trustee was affected by the said direction. Therefore, in the facts
of the case, the objection raised to the maintainability of the
petition filed by one of the Trustees cannot be sustained.
CONCLUDING PART
53. In view of the discussions made above, the impugned
judgment of the Division Bench cannot be sustained in toto.
However, the view taken by the Division Bench that the Khasgi
Trust is governed by the Public Trusts Act and no alienation of the
Trust properties could be made without complying with Section 14
thereof, will have to be affirmed. Even the order of the learned
68
Single Judge cannot be sustained as he has virtually directed the
rewriting of the Trust Deed.
54. There are submissions canvassed across the Bar about the
locus of the applicant in I.A.No.124266 of 2020 filed in Civil Appeals
arising out of Special Leave Petition (C) Nos.12241-42 of 2020. It is
not necessary for us to go into the said question finally. We leave
the said question open to be decided in appropriate proceedings.
55. As far as Civil Appeal arising out of Special Leave Petition (C)
No.19063 of 2021 is concerned, the alienation was made by the
Trustees in favour of the appellant after obtaining the previous
sanction of the Registrar by the order dated 16th October 1997.
Therefore, the Registrar will have to make an inquiry limited to the
question whether compliance of the conditions incorporated under
the said order has been made by the Trustees. If there is a noncompliance, the Registrar will have to invoke the provisions of the
Public Trusts Act for taking necessary action.
56. Therefore, the appeals must succeed in part and we pass the
following order:-
a. We hold that the Khasgi (Devi Ahilyabai Holkar Charities)
Trust, Indore, is a Public Trust governed by the provisions
of the Madhya Pradesh Public Trusts Act, 1951;
69
b. We, therefore, direct the Trustees to get the Khasgi Trust
registered under the Public Trusts Act by making the
necessary application within a period of one month from
today;
c. We hold that the properties described in Part ‘B’ of the
Schedule to the Trust Deed, are properties of the said
Public Trust. However, alienation of the said properties can
be made only by taking recourse to Section 14 of the Public
Trusts Act;
d. We hold that the Supplementary Trust Deed dated 08th
March 1972 is valid. But, the Trustees of the Khasgi Trust
shall be entitled to alienate the Trust Property only after
complying with Section 14 of the Public Trusts Act;
e. We hold that the direction issued by the High Court to
Economic Offences Wing of the State Government to hold
an inquiry was not warranted;
f. We direct the Registrar under the Public Trusts Act, having
jurisdiction over Khasgi Trust, to call for the record of the
Trust relating to all the alienations made by the Trustees.
After holding an inquiry as contemplated by Section 23, the
Registrar after giving an opportunity of being heard to all
70
concerned shall determine whether by virtue of the
alienations made by the Trustees, any loss was caused to
the Public Trust. If according to him any such loss was
caused to the Public Trust, he shall decide and quantify the
amount liable to be paid by the concerned Trustees to the
Khasgi Trust.
g. After holding an inquiry as aforesaid, if found necessary, he
may invoke the power of making an application to the Court
under sub-Section (2) of Section 26.The Registrar may take
such other action and initiate such other proceedings
which are warranted by law;
h. However, as regards the alienation made in favour of Shri
Gajanan Maharaj Sansthan – the appellant in Civil Appeal
arising out of Special Leave Petition No.19063 of 2021, after
calling for the record, the Registrar will hold an inquiry
limited to the issue whether the alienation was made only
after complying with the conditions incorporated in the
order dated 16th October 1997. If he finds after holding an
inquiry that compliance was not made with any of the
conditions, he shall initiate appropriate proceedings in
accordance with the Public Trusts Act;
71
i. Subject to the above directions, the impugned judgment of
the Division Bench as well as the impugned judgment and
orders dated 28th November 2013 of the Learned Single
Judge of the Madhya Pradesh High Court, are set aside.
j. Civil Appeals are partly allowed in the above terms.
…………..…………………J.
 (A.M.Khanwilkar)
…………..…………………J.
(Abhay S. Oka)
…………..…………………J.
 (C. T. Ravikumar)
New Delhi;
July 21, 2022. 

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