Delhi High Court: The present appeal was filed challenging the judgment dated 03-05-2024, passed by the Single Judge, whereby an application under Section 92 of the Civil Procedure Code, 1908 (‘CPC’) seeking leave to institute the subject suit, filed by the Respondents 1 and 2 was allowed. The Division Bench of Manmohan, ACJ* and Tushar Rao Gedela, J., stated that the appellant-society was of a charitable nature, as it had been formed primarily for serving the under-privileged sections of the society, in particular, patients suffering from tuberculosis. The Court agreed with the view of the Single Judge that all the donations, gifts etc. made to the appellant-society were property entrusted to it, by reason of which the society acquired the character of a ‘constructive trust’. Thus, the Court stated that the impugned judgment did not call for an interference and accordingly, dismissed the present appeal.
Background
Appellant-Operation Asha was not-for-profit society registered under the Societies Registration Act, 1860 and provided treatment, education and prevention of tuberculosis and other diseases. It was stated by the appellant that Respondents 1 and 2, former President and Board Member of the Appellant-society respectively, had instituted the subject suit falsely alleging mismanagement and defalcation of funds of the appellant. Further, it was stated that this allegation was never raised in the past fifteen years, during which time, Respondent 1 was herself signing the financial statements of the appellant.
Appellant contended that the impugned judgment was contrary to settled law as the appellant was a registered society and not an express nor constructive trust. It was stated that the Single Judge had erred in holding that any entity receiving donations for public purpose was automatically to be equated to a constructive trust.
Analysis, Law, and Decision
The Court stated that the appellant-society was of a charitable nature as it had been formed primarily for serving the under-privileged sections of the society, in particular, patients suffering from tuberculosis. The Court noted that the Memorandum of Association (‘MoA’) stipulated that all the incomes, earnings, movable or immovable properties of the society should be solely utilized and applied towards the promotion of its aims and objectives, as set forth in the MoA. Further, no profits should be paid or transferred directly or indirectly in any manner to the present/past members or to any person claiming through any one or more of the present/past members.
The Court further noted that Article 11.2.1 of the Article of Association specifically stipulated that all the properties, movable, immovable and other kinds of assets should stand vested in the Committee. Thus, considering the aforesaid and the fact that the appellant was set-up with the primary objective of providing medical relief to patients, who otherwise could not afford such treatment, the Court agreed with the view of the Single Judge that all the donations, gifts etc. made to the appellant-society were property entrusted to it, by reason of which the society acquired the character of a ‘constructive trust’.
The Court relied on Shiromani Gurudwara Prabandhak Committee v. Som Nath Dass, (2000) 4 SCC 146 and stated that it was clear that donations, gifts etc., which were being received by the appellant, and being vested in the committee, from various institutions would be endowments for public purpose. Thus, the Court stated that the impugned judgment did not call for an interference and accordingly, dismissed the present appeal.
[Operation Asha v. Dr. Shelly Batra, 2024 SCC OnLine Del 5936, decided on 21-08-2024]
*Judgment authored by: Acting Chief Justice Manmohan
Advocates who appeared in this case :
For the Appellant: Sanjeev Sindhwani, Senior Advocate with Radhika Bishwajit Dubey, Bishwajit Dubey, Karan Khetani and Kritarth Upadhyay, Advocates;
For the Respondents: Jai Anant Dehadrai with Siddharth Sharma and MD Tasnimul Hassan, Advocates; Shivanshu Bhardwaj with Mridual Gaur, Advocates; Dushyant Manocha with Brian Moses, Advocates.
