Selling Trust Property & Section 36 in Maharashtra Public Trust Act

Selling Trust Property & Section 36 in Maharashtra Public Trust Act

Selling Trust Property & Section 36 in Maharashtra Public Trust Act

The person who gives land or building to public trust intends that such property should be used for the benefit or interest of the public trust forever. The Trustees sometimes unauthorized sell such trust property or give on long lease to persons either relatives or to interested persons because of the wide powers in the instrument of trust or “Trust Deed”. Due to this misuse of power, there were instances of misappropriation which resulted in great loss to the public trusts. With a view to discourage such unauthorized alienation, restrictions have been imposed on the powers of the trustees and also to avoid public suspicion by incorporating Section 36 in Maharashtra Public Trust Act.

Section 36 states, prior permission of Charity Commissioner is required for –

  1. Sale, exchange or gift of immovable property
  2. Lease for a period of 3 years or more (10 years for agricultural land).

The property of a public trust is not the private property of the trustees and cannot be dealt with or disposed of as a private property. Sanction may be accorded subject to such conditions as the Charity Commissioner may think fit to impose, regard being had to the interest, benefit or protection of the trust. The property is held by the trustees only for the benefit of the beneficiaries of the trust and thus the trustees act in a fiduciary capacity. The trust property is not the personal property of the trustees and as a custodian of public trust the Charity Commissioner is enjoined to ensure that the trust property is not alienated unless the alienation is in the interest of the trust and the Charity Commissioner is also enjoined to ensure that nothing less than the full market price of the property is received by the trust. The power to issue lawful direction under Section 36 is very wide. Section 36 itself puts fetters on the powers of the trustees and the Charity Commissioner being the guardian of the trust has to supervise and monitor the activity of alienation of the trust property.

The Charity Commissioner has to consider whether the proposed alienation in respect of a trust property should be sanctioned or not. The wording of section 36 clearly indicates that a very important duty is cast on the Charity Commissioner in this respect. This provision indicates that even in case in which the trust deed confers authority on the trustees to alienate trust property whenever necessary, sanction of the Charity Commissioner would be necessary. It is, therefore, obvious that before the Charity Commissioner can sanction an alienation of trust property, he has to apply his mind to two material questions,

  1. Whether there is compelling necessity to justify the alienation in questions, and
  2. Whether the proposed alienation is fair and does in any way adversely affect the interest of the trust”.

The Time limit is fixed for completion for the sale in order to protect the interest of the trust and the beneficiaries of the Trust. It is always in the interest of the Trust to get the entire consideration strictly within the time fixed by the Charity Commissioner.

The Bombay High court in judgment reported in 1979 Mah LJ 104 in Arunodaya Prefab v. M.D. Kambli has observed thus:

“Under the terms of Section 36, Bombay Public Trusts Act read with Rule 24, Bombay Public Trusts Rules, the Charity Commissioner is concerned only with according or refusing sanction to particular sale which the trustee propose to make. It is proceeding which concerns only the trustees. To decide whether the sale is in the interest of the trust, he is empowered to make such inquiry as he deems necessary. It is for the trustees to decide to whom they should sell the property, subject to sanction of the Charity Commissioner to the proposed sale, if the Charity Commissioner needs to ascertain the market price of the property he may issue such directions as he deems necessary and it is obligatory to the trustees to comply with those directions. It is not open to the Charity Commissioner to consider uninvited offers from third parties except for ascertaining the market price of the property. He cannot sell or require the trustees to sell the property to such third parties. If he considered the sale proposed by the trustees adverse to the interest of the trust he could only decline sanction”.

It is the duty of the Charity Commissioner to apply his mind to the question when an application is made to him for the grant of the sanction under Section 36, and to consider whether he should not grant such sanction and whether such sanction should be subject to any condition; but once he has granted such sanction, it is not open to the Charity Commissioner to revise, review or modify his order. In view of the recent amendment by the state of Maharashtra in section 36, the Charity Commissioner may revoke the sanction on the ground of fraud or misrepresentation or concealing material facts and directed the trustees to take steps as provided in the provisions of the section. Section 36 does not confer power on the Charity Commissioner to accord sanction after the transaction is completed and validate it by post facto sanction. Giving such a sanction would be against the empress requirement of section 36.

Comments

  1. Daljeet singh sehmbi says:

    I want to know if any TRUST is not public TRUST and un-registered TRUST, but worldwide recognized, having branch in Mangalore, Karnataka state in the name of “Ursuline Franciscan Congregation” having Immovable property in Mumbai, Flat in Co-operative Housing Society. Do they need any obtain Sale Permission from “Charity Commissioner of Karnataka” or any permission from Court. Can they take any Legal opinion from any Advocate and sell the Flat. and Society Transfers the flat with that opinion of Advocate. Is this valid

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