Bombay High Court: The issue for consideration in the present petition was whether it was permissible for the Charity Commissioner to try and entertain application for removal of trustees under the provisions of Section 41-D of the Maharashtra Public Trust Act, 1950 (‘the MPT Act’) when appointment of the trustees was yet to be accepted in an enquiry under Section 22, that is, whether application for removal of trustees under Section 41-D of the MPT Act could be decided during pendency of Change Reports relating to their very appointments. A Single Judge Bench of Sandeep V. Marne, J., opined that it could not be accepted that if any Council Member misconducts, the Charity Commissioner was precluded from initiating action against him/her under Section 41-D of the MPT Act under specious plea that the report in respect of the change relating to his/her election as trustee was pending adjudication before the Deputy Charity Commissioner. The Court therefore held that petitioner and Respondents 3 to 25 could not contend that application for their suspension, removal, or dismissal under the provisions of Section 41-D of the MPT Act could not be decided by the Charity Commissioner until the Deputy Charity Commissioner decides all the Change Reports.
Background
College of Physicians and Surgeons of Mumbai was a Society brought into existence in 1912 and registered under the provisions of Societies Registration Act, 1860 in 1913. After enactment of the MPT Act, the College of Physicians and Surgeons of Mumbai was registered as Public Trust, with the objective of encouragement of study of medicine and surgery in all branches according to the methods of western teaching. Thereafter, disputes arose about management and control of the Trust in 2013-2014 and thus several Change Reports were filed from time to time under the provisions of Section 22 of the MPT Act seeking to report election of new trustees, changes relating to immovable properties, etc. There were in total of 13 Change Reports pending before the Deputy Charity Commission.
Petitioner and Respondents 3 to 25 submitted that there were presently two Members of Council of Trust and the Change Report for amendment of the constitution was pending adjudication before the Deputy Charity Commissioner. As per the bye-laws, every year, a maximum of three members of the Council retire by rotation and accordingly, the nature and of the Council changed every year. It was submitted that at present, petitioner and Respondents 3 to 25 were not reflected in Schedule-I of the Trust for the current tenure as Change Reports relating to their election were pending. Petitioner and Respondents 3 to 25 thus claimed that on account of the non-inclusion of their names in Schedule-I of the Trust, their status as trustees was yet to be adjudicated in an enquiry under Section 22 of the MPT Act.
Respondents 1 and 2-members of the Trust, claimed to be interested in its proper management and administration and beneficiaries of the trust, thus filed an application before the Charity Commissioner under the provisions of Section 41-D of the MPT Act seeking direction for suspension/removal/dismissal of petitioner and Respondents 3 to 25 by levelling various allegations. While the application was pending, petitioner filed an application for framing of issue of maintainability and jurisdiction and for dismissal of the application on the point of jurisdiction and maintainability, but the Charity Commissioner rejected the application by his order dated 04-06-2024.
Analysis, Law, and Decision
The Court took note of the provisions of the MPT Act and stated that every time there was any change in the names of the Trustees, included in the register maintained under Schedule I, such change was required to be reported by the trustees under provisions of Section 22 of the MPT Act and the Assistant or the Deputy Charity Commissioner, after holding an enquiry as prescribed, which was in the nature of a judicial enquiry, was supposed to record a finding with regard to such a change. The Court also stated that the Charity Commissioner could entertain an application of a trustee or of any person interested in the Trust or after receipt of report under Section 41-D or even suo motu suspend, remove, or dismiss any trustee of the Public Trust in the event of occurrence of the eventuality enumerating in Section 41-D(1) of the MPT Act.
The Court observed that under Section 22 of the MPT Act, the reporting trustee was to merely report the change that had occurred in any of the entries recorded in the Register maintained under Schedule-I. Thus, once new trustees were elected or appointed, which necessitated effecting of change in the entries maintained in the Register under Schedule-I, enquiry into such change under Section 22 of the MPT Act was only to ascertain as to whether the change had indeed occurred or not.
The Court relied on Chembur Trombay Education Society v. D.K. Marathe, 2001 SCC OnLine Bom 842 (‘Chembur Trombay Education Society Case’), wherein it was stated that the decision of a Change Report under the provisions of Section 22 merely recorded the change in an entry in the Register and the decision of the Change Report did not by itself effect appointment of trustees. The Court further noted that in Chembur Trombay Education Society Case (Supra), it was held that the conduct of elections by a Trust or adoption of resolution by the general body was sufficient to ignite the election of new general body for administering the affairs of the society/trust and mere pendency of Change Report before the Charity Commissioner did not mean that new general body for administering affairs of the Trust had not come into effect.
The Court thus opined that merely because Change Report for reporting election/appointment of petitioner and Respondents 3 to 25 as Council Members was pending, would not mean that change had not occurred. The Court stated that Section 41-D of the MPT Act was aimed at taking action against a trustee committing persistent defaults in submission of accounts reports, disobeying orders of the Charity Commissioner, neglecting his duties, committing act of malfeasance or misfeasance, or breach of trust, misappropriating the property of the Trust or was convicted in an offence involving moral turpitude.
The Court stated that if petitioner’s contention was accepted, then a person, whose appointment as a trustee was reported through a Change Report, could not be even suspended from his position upon his conviction for an offence involving moral turpitude during pendency of such Change Report. Similarly, a trustee, who had misappropriated the properties of the Trust would continue to hold the position as a trustee and remain in charge of the affairs of the Trust under a specious plea that action for his suspension, removal, or dismissal could not be taken during pendency of Change Report in relation to his appointment. The Court opined that such an interpretation would completely frustrate the entire objective behind enactment of Section 41-D of the MPT Act.
The Court thus opined that in the present case, mere pendency of the Change Reports would not mean that the change had not occurred, nor pendency of Change Report would provide an umbrella of protection to any of the persons appointed as trustees in respect of actions taken by them in their capacities as trustees.
The Court noted that in the present case, some of the Change Reports were pending for 7 years since the year 2018 and thus opined that it was difficult to believe that if any Council Member misconducts, the Charity Commissioner was precluded from initiating action against him/her under Section 41-D of the MPT Act under specious plea that the report in respect of the change relating to his/her election as trustee was pending adjudication before the Deputy Charity Commissioner. The Court therefore held that petitioner and Respondents 3 to 25 could not contend that application for their suspension, removal, or dismissal under the provisions of Section 41-D of the MPT Act could not be decided by the Charity Commissioner until the Deputy Charity Commissioner decides all the Change Reports.
The Court stated that while deciding the Change Report, the Deputy Charity Commissioner would merely ascertain the factum as to whether change had occurred or not and therefore, till such ascertainment was made, persons claiming to be trustees could not escape consequences of acts done by them while being in control of the management and affairs of the Trust. The Court thus rejected petitioner’s contention that confirmation of status as trustee of the Trust by decision of Change Report under Section 22 of the MPT Act was a sine qua non to entertain application for suspension, removal, or dismissal of trustee under Section 41-D of the MPT Act.
The Court held that the action for suspension, removal, or dismissal of the trustee under Section 41-D of the MPT Act was an independent action having no connection with the enquiry to be conducted under Section 22 of the MPT Act. Therefore, there was no fetter on the power of the Charity Commissioner to entertain and decide application for suspension, removal, or dismissal of a trustee, whose Change Report was pending before the Deputy Charity Commissioner.
The Court clarified that while deciding the application under Section 41-D of the Act, the Charity Commissioner needed to ensure that by ordering suspension, removal, or dismissal of a trustee, the disputes between two rival groups about validity of appointment of trustees were not indirectly determined. The jurisdiction under Section 41-D was special one, and the inquiry would center around individual acts of a particular trustee entailing his/her suspension, removal, or dismissal and during conduct of such special enquiry within the bounds of Section 41-D, the Charity Commissioner Could not usurp the jurisdiction under Section 22 by misusing the power under Section 41-D for ordering ouster of the entire governing body of the trust to ensure that the rival group takes over affairs of the Trust.
The Court dismissed the petition and held that it did not find any error in the order passed by the Charity Commissioner dismissing the application preferred by petitioner.
[Mehernosh Jamshed Jassawalla v. Lalitrao Bhaskarrao Patil, Writ Petition No. 9430 of 2024, 14-01-2025]
Advocates who appeared in this case :
For the Petitioner: Sanjiv Gorwadkar, Senior Advocate i/b. Suresh M. Kamble for the Petitioner
For the Respondents: Amrut Joshi with Yazadi Udwadiai i/b. Saakshat Relekar for Respondent 1; Gauri Jadhav ‘A’ Panel with M.S. Bane, AGP for Respondent-State; Nikhil Mishra with Shrawan Purohit, AGP for Respondent-State.