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

Landmark Cases of India / सुप्रीम कोर्ट के ऐतिहासिक फैसले

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

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.

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

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

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.

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

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

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

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

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.

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

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;

(d) the Khasgi Trust was governed by the Public Trusts Act;

and

(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.

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);

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

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

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)

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

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

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

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

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.

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.

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.

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

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

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.

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.

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.

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

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

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?

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

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

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.

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

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,

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

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)

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

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

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

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

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.

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

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

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

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

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.

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

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

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

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

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

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

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

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

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

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

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

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.

(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;

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

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;

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

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:

(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;

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

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

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

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

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

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

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;

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

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;

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

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