2012 (12) TMI 993 - SC - Indian Laws

Whether respondent No.1 should be impleaded as a party in the proceedings before the Charity Commissioner in an application filed by a trust for sanction to sell off some land belonging to it?

Issues Involved:
1. Jurisdiction of the High Court in issuing directions.
2. Impleadment of respondent No.1 in proceedings before the Charity Commissioner.
3. Suppression of material facts by the petitioners.
4. Conduct of the petitioners and trustees.
5. Validity of the High Court's order directing a fresh auction.
6. Right to specific performance of agreements by the petitioners.

Issue-wise Detailed Analysis:

1. Jurisdiction of the High Court in Issuing Directions:
The core issue was whether the High Court over-stepped its jurisdiction in directing the Charity Commissioner to proceed with the auction of the Trust land. The Supreme Court upheld the High Court's decision, noting that while the High Court might have over-stepped, it acted in the best interest of the trust under Section 36 of the Bombay Public Trust Act, 1950. The High Court's directions were seen as necessary to protect the trust's interests.

2. Impleadment of Respondent No.1:
The High Court directed that respondent No.1 be impleaded in the proceedings before the Charity Commissioner. The Supreme Court agreed with this decision, noting that the High Court had no option but to ensure the Charity Commissioner considered all bids, including those of respondent No.1, to protect the trust's interests. This decision was made to avoid any potential collusion between the trustees and the petitioners.

3. Suppression of Material Facts by the Petitioners:
The petitioners were found guilty of suppressing the material fact of the Joint Charity Commissioner's (JCC) order dated 2nd May 2003, which had attained finality. The Supreme Court emphasized that litigants must disclose all facts and not decide unilaterally what is material. Due to this suppression, the Court declined to grant special leave to appeal.

4. Conduct of the Petitioners and Trustees:
The trustees and petitioners were found to be indulging in a "flip-flop" and taking advantage of the absence of clear statutory measures. The JCC had rightly rejected their applications for extension of time due to their lack of bona fides and the non-beneficial nature of the transactions for the trust. The Supreme Court noted the suspicious nature of the compromise between the trustees and petitioners and their overall conduct, which left much to be desired.

5. Validity of the High Court's Order Directing a Fresh Auction:
The High Court's order for a fresh auction was deemed necessary due to the collusion between the trustees and petitioners and the significant increase in the land's value over time. The Supreme Court referenced previous judgments, emphasizing that trust properties should be sold through public auctions to get the best price. The High Court's order was seen as aligning with the trust's best interests and Section 36 of the Act.

6. Right to Specific Performance of Agreements by the Petitioners:
The petitioners' right to specific performance of the agreements was not upheld. The Supreme Court noted that the conditions for the first agreement were not met, and the JCC did not sanction the subsequent agreements. The petitioners' claim to specific performance was therefore not valid, and the High Court's order did not set aside the earlier order collusively obtained by the petitioners and trustees.

Conclusion:
The Supreme Court declined to grant special leave to appeal due to the suppression of material facts by the petitioners and directed the Charity Commissioner to re-evaluate the sale of the Trust land. The Charity Commissioner was permitted to allow fresh offers and issue a new public notice if necessary, ensuring the sale price would not be less than Rs. 3.87 crore. The petitioners were ordered to pay costs of Rs. 15,000 to the Charity Commissioner.

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