Saji Koduvath, Advocate.

Introduction

Property of a society or a club is the ‘joint property’ held by its members. Usually, unlike a club, the property of a society is meant to be maintained for the benefit of its future members also. Therefore, the property of a society is encumbered with obligations as in a ‘trust’. Hence, such property cannot be dealt with by the members and administrators disregarding the objectives of its foundation.

Property of an Unincorporated Club Vests in Members.

A club is a compendium of its members. Property of an unincorporated club vests in its members. Or, in other words, the members thereof are the owners of its property. But, it is subject to its bye laws and the principles of its foundation.

Salmond on Jurisprudence[1] reads:

• “The Club property is the joint property of the members, though in fact, it is often held by trustees on behalf of the members.”

Halsbury’s Laws of England[2] says:

• “Unincorporated members’ clubs. – An unincorporated members’ club is a society of persons each of whom contributes to the funds out of which the expenses of conducting the society are paid. ……. Subject to any rule to the contrary, the property and funds of the club belong to the members of the time being jointly in equal shares.”

Enjoyment and Appropriation of Property of an Unincorporated Club

Property of a club is held by its members as ‘joint tenants’ (i.e., without a right to partition). If the bye laws of a club allow, it can distribute its property among its members, on dissolution.

Joint ownership of property is an incidence of membership when one joins the club, though the motivation of joining the club is not acquisition of wealth or sharing of profits as in the case of a partnership. It is also an incidence of membership that the property of the club will be distributed among the members,[3] on dissolution.

Members of a club are entitled to enjoy or use the club premises in accordance with the rules, so long as they duly pay the subscription and continue to be members. In an unincorporated Members’ club, the members for the time being are jointly entitled to all the property and funds; and it is only on a valid dissolution the individual interest of the members becomes capable of realisation.[4]

If the intention of the founders of an unincorporated club or an unregistered society, as expressed in the bye laws or otherwise, is to use the property obtained to it for the benefit of the present and future members, then the members of a particular time, even if sui juris or of one mind, are not entitled to put an end to the same and to appropriate the property by themselves. If no such intention is laid down by the founders, and the members are sui juris, they may be entitled to put an end and to appropriate the property by themselves. But, it is not open for the majority of an association to alter the fundamental principles upon which it is founded.[5]

Because members were joint owners of all the club property including the excisable liquor, the Gujarat High Court held in Sports Club of Gujarat Vs Commissioner of Sales Tax[6]that the supply of liquor to a member at a fixed price by the club could not be regarded as ‘sale’. The court referred various decisions of English courts[7] and Supreme Court.[8]

But a contrary view is taken by the  Bombay High Court in Gondwana Club, Nagpur Vs. Sales Tax Officer[9] when it considered the question whether the provisions supplied by the Club to its members were the joint property belonging to all the members; and observed that, although the Club consists of members, the Club had an entity distinct from the entities of the members and that once the money was paid by the members and once the money passed into the coffers of the Club, the said money could not be said to belong to the members, and in these circumstances, it was difficult to accept the proposition that the property which was purchased by the Club was the property of the members of the Club.This decision is followed in Commissioner of Sales Tax, Gujarat, Ahmedabad Vs. Anil Co-Operative Credit Society[10] pointing out that the court had relied on the inclusive clause in the definition of “dealer” in the concerned Sales Tax Act.

Vesting of Property in a Registered Society

Sec. 5 of the Societies Registration Act, 1860 speaks as to vesting of property, for administration, in registered societies. It reads as under:

"5. Property of society how vested:  The property, movable and immovable belonging to a society registered under this Act, if not vested in trustees, shall be deemed to be vested, for the time being, in the governing body of such society, and in all proceedings civil and criminal, may be described as the property of the governing body of such society for their proper title."

‘If Not Vested in Trustees’: Connotations

Management and Vesting of Property may be Separate

Though the administrative affairs of the societies are carried on by its governing body, the properties of the same may be vested with (separate) trustees (like ecclesiastical authorities, in case of religious associations). It is obvious that this system of vesting of property in trustees and administration of affairs by governing body is primarily viewed in the So. Regn. Act of 1860 when it refers, ‘if not vested in trustees, shall be deemed to be vested, for the time being, in the governing body’. It is definite that our law accepts the ‘wider’ or ‘general’ expression as to ‘trust’, used by the progressive jurists like Salmond and Halsbury; and the same principle is adopted in the So. Regn. Act. The progressive jurists preferred investing principles of trust in the matters of various fiduciary relationships under which one holds property on behalf of, or for the benefit of, others.[11]

Halsbury’s Laws of England defines ‘trust’ as a confidence reposed in a person with respect to property of which he has possession or over which he can exercise a power, to the intent, that he may hold the property or exercise the power for the benefit of some other person or object. Salmond brings-in principles of trust in the affairs of associations.

Salmond on Jurisprudence reads as under:[12]

• “Thirdly, it is expedient that property in which large numbers of persons are interested in common should be vested in trustees.” 

It is held by the Supreme Court in RV Sankara  KurupVs. Leelavathy  Nambiar[13] that the property in the hands of the agent was for the principal; and the agent stood in the fiduciary capacity,as a trustee,for the beneficial interest he had in the property. The petitioner had acted as an agent as a cestui que trust was a trustee and he held the property in trust for the respondent in his fiduciary capacity as an agent or trustee and he had a duty and responsibility to make over the unauthorised profits or benefits he derived while acting as an agent or a trustee and properly account for the same to the principal. Therefore, the High Court was right in its holding that the petitioner was an agent and trustee acted in the fiduciary capacity on behalf of the respondent-plaintiff as General power-of-attorney.

A society can be formed for the administration of a trust.[14]

If a trust is created for the benefit of a religious society, such trust shall continue to exist and it would not cease to exist by the resolution of the society. Such ‘creation of trust’ is considered by our Apex Court in Vinodkumar M. Malavia  Vs. Maganlal  Mangaldas  Gameti[15] and held:

• ^“The High Court has rightly observed that: ‘… the trust which has been created as public trust for a specific object and the charitable or the religious nature or for the bonafide of the Society or any such institution managed by such trusts for charitable and religious purpose shall continue to exist in perpetuity and it would not cease to exist by any such process of thinking or deliberation or the Resolution, which does not have any force of law’.”

In Church of North India Vs. Lavajibhai  Ratanjibhai[16] it is held that in terms of Section 5 of the Societies Registration Act, the property would vest in the trustees, and that only in the absence of vesting of such properties in the trustees, the same would be deemed to have been vested for the time being in the governing body of such society.[17]

In Pamulapati  Buchi Naidu College Committee, Nidubrolu  Vs. Govt. of Andhra Pradesh[18] it is observed:

• “If what is vested in the College Committee or its governing body is a right of management simpliciter, there is no question of the members of the society or the members of the governing body being beneficially interested in its property. It necessarily follows that by the fact of appointment of a treasurer, there can be no deprivation of the society of its rights in property. The consequence, which would flow on the appointment of a treasurer by the Government under the provisions of the Charitable Endowments Act, would be that he will take charge of the management of the properties held by the society. There is no divesting of the rights of the society in its properties. As already stated, what all the society is deprived of would be right of management which cannot be equated to any right in the property.”[19]

See Blog: Incidents of Trust in Clubs and Societies

Members do not have any Beneficial Interest

Members have no interest other than that of bare trustees

During the subsistence of a registered society, or on dissolution, the members do not have any proprietary or beneficial enjoyment/interest[20] in the property the society holds.[21] It is held in Pamulapati  Buchi Naidu College Committee, Nidubrolu  Vs. Govt. of Andhra Pradesh[22] as under:

“The Societies Registration Act, therefore, does not create in the members of the registered society any interest other than that of bare trustees. What all the members are entitled to, is the right of management[23] of the properties of the society subject to certain conditions.”

Underhill, in his treatise, ‘Law of Trusts and Trustees’, explained:

• “However, the crucial difference surely is that no absolutely entitled members exist if the gift is on trust for future and existing members, always being for the members of the Association for the time being. The members for the time being cannot under the Association rules appropriate trust property for themselves for there would then be no property held on trust as intended by the testator for those persons who some years later happened to be the members of the Association for the time being.”[24]

Read blog: Doctrine of Substantial Representation in Suits

Is Society a ‘Living Person’ under S. 5 of the TP Act 

Can transfer of property be made to or by Associations

Sec. 5 of the TP Act reads as under:

• 5. “Transfer of property” defined:  In the following sections “transfer of property” means an act by which a living person conveys property, in present or in future, to one or more other living persons, or to himself and one or more other living persons; and “to transfer property” is to perform such act.
• In this section “living person” includes a company or association or body of individuals, whether incorporated or not, but nothing herein contained shall affect any law for the time being in force relating to transfer of property to or by companies, associations or bodies of individuals.

Existing Laws as to Transfer of Property, will Remain in Force

Two points are emphasised in the 2^nd paragraph of Sec. 5 –

• First, all unregistered associations, whether incorporated or not, are ‘living persons’, so that transfer of property can be made.
• Second, the qualifying second limb – ‘nothing herein contained shall affect any law for the time being in force relating to transfer of property to or by companies, associations or bodies of individuals‘ – makes it clear:
  • if any law regulates transfer of property to (or by) companies, associations or bodies of individuals, it will remain in force.

The accepted and authoritative view is that company, incorporated club,^[25] statutory body etc. alone can be considered as legal persons.

See: Usha Rani Kundu  Vs. Agradut  Sangha[26]

“Body of individuals” in Sec. 5, TP Act

It may also be pointed out that, “body of individuals” in Sec. 5, TP Act (transfer to – “living person” includes a company or association or body of individuals) is wide in meaning; and it stands independent. It is broad enough to take-in Beneficiaries/Trustees of a Trust.

• Note: Order 31 rule 1 CPC spells out – a trust is not a legal person. It enables to file a suit by (or be sued) a trustee concerning ‘property vested in trustees’.

Can ‘Law for the Time Being in Force’ Include ‘Common Law’

Our courts have unhesitatingly held: ‘law for the time being in force’ in Sec. 5, TP Act includes “common law”;[27] and sumptuously exhibit and refer to the deeds executed by or in favour of such entities as valid and binding documents;[28] and the registration/revenue authorities, without objection, register deeds relating to such properties in the names of such institutions, associations etc.

 It is a reality: the common law of our country accepts as valid the ‘transfer of property’ made to or effected by well known institutions, organisations,[29]and associations attached to well reputed trusts,[30] institutions[31] etc., though they are not juristic persons in its strict sense. Our courts sumptuously refer to such deeds as documents executed by or in favour of such entities, when they are referred to as exhibits. For example:

• Settlement deed by Ashramam–Swayam  Prakash  Ashramam Vs. G Anandavally  Amma : AIR  2010 SC 622;
• Settlement to trust – S N Mathur  Vs. Board of Revenue: 2009-13  SCC 301;
• Sale deed by unregistered society – Suresh s/o. Bhagwanrao  Puri Vs. State of Maharashtra: 2016-3 AIR Bom R (Cri.) 603;
• Gift to unregistered Association – Pullamma Vs. Valmiki Anna Satram: 1984-2 ALT 157;
• Sale deed to an association – K. Kala Vs. Dist Registrar, Madurai: 2016 3 MLJ 50, 
• Sale deed to an association – State of Punjab Vs. Amolak Ram Kapoor: [1990] 79 STC 315; ILR1991- 2 P&H 218.
• Sale deed to an association – Asst. Commr. Vs. Shivalingawwa: ILR 2003 Kar 2855;
• Lease deed by trust to school – TNP Mothoo  Natarajan Vs. PV Ravi: 2015-2 MLJ (Cri.) 656;
• Lease deed by a firm -2014-3 ALT 46;
• Settlement deed to private trust –Kolli  Venkata Raja Vs. Govt. of AP: 2014-1 ALT 155;
• Lease deed to a public trust –Nadigar  Sangham Charitable Trust, rep. by its managing Trustee, R. Sarathkumar Vs. S. Murugan:2013-1 MLJ 433;
• Sale deed to Board of Trustees – Commissioner of Income Tax Vs. Chemists and Druggists Association Building Trust: 1995-215 ITR(Mad) 741;
• Mortgage deed by a College – Sonar Bangla Bank Vs. Calcutta Engineering College:  AIR 1960 Cal 450.

Similarly, the registration and revenue authorities, without objection, register deeds relating to such properties in the names of such institutions, associations etc.

Dedication can be made in favour of a Tank

It was held by our Apex Court in Kamaraju  Venkata Krishna Rao Vs. Sub Collector,  Ongole, AIR 1969 SC 563, that, under Hindu Law, a tank can be an object of charity and when a dedication was made in favour of a tank, the same was considered as a charitable institution. Without deciding whether that institution can also be considered as a juristic person, it was held that the same had to be registered in its name (ie., in the name of the tank) in the Inam register though it had continue to be managed by its Manager.

It is also noteworthy that Salmond on Jurisprudence reads: “Legal persons, being the arbitrary creations of the law, may be of as many kinds as the law pleases.”

It is also noteworthy that Salmond on Jurisprudence[32] reads:

• “Legal persons, being the arbitrary creations of the law, may be of as many kinds as the law pleases.”

How Can a Society or a Club Acquire Property and Enter into a Contract?

Companies Act and various Cooperative Societies Acts[33] confer juristic personality to the Companies and Cooperative societies. Such entities can enter into contracts in their own names and through its officers.

In view of the edict that even the societies registered under the So. Regn. Act are not legal persons capable of holding properties, as laid down in Board of Trustees, Ayurvedic  &  Unani Tibia College, Delhi Vs. The State of Delhi,[34] Illachi Devi Vs. Jain Society[35]  and Tata Vs. Tata,[36] the correct position emerges is that both registered and unregistered societies are not capable of contracting ‘in its own name’.[37]

The AP High Court has observed in N. Tyagaraju Vs. Narayanaswamy[38] that an unregistered entity was not a ‘living person’ under Section 5 of the Transfer of Property Act. Nevertheless it was held in this decision that the president of an unregistered club was entitled to enter into an agreement of sale for purchase of a property as the agreement would be one executed not in favour of an unregistered body, but it would be one in favour of its president who was an identifiable and a living person. It was further observed that the acquisition of property in the name of its president would also be valid.

In short, the proper way to execute contracts with respect to both registered and unregistered societies and unincorporated clubs is to enter into the agreements by the competent office bearer of the society or club, in his name for and on behalf of the society or club, as done by a trustee for and on behalf of a trust. It must also be according to the bye laws, or as approved by the general body or governing body. That is, it should be legal[39] and intra-vires;[40]and it should not be ab-initio void. And, in an appropriate case, the act of an office bearer can be ratified[41] by the general body or governing body, as the case may be.

Can the Members of a Society Convert the Society into a ‘Trust’?

Society and trust are two different concepts in the eye of law. The former is association of persons and the latter is a legal conception. But, in cases where the association, and the ‘trust’ expressly attached to the same, are inseparably related, the term ‘trust’ is used as synonym to the association. A society can be formed for the administration of a trust.[42]

Societies Registration Act (Section 14) provides special procedure for dissolution of societies. The left-behind-property of a Society, on dissolution, goes to another Society as determined by the members of the Society or by the court.

As shown above, the members of a registered society are trustees[43] for the future members who have to continue the aim and objects of the Society as envisaged by the founders or as manifested in the Rules or Bylaws;and the property of a society cannot absolutely vest in its members. Either during the subsistence of a society or at the time of its dissolution the members do not have beneficial enjoyment of its property.[44] Such property ‘shall continue to exist in perpetuity and it would not cease to exist by a resolution’ of the society;[45] and it cannot transfer its property to any other entity, or transform or vary its nature, disregarding the fundamental principles upon which the society is founded.

Vesting of Ownership of Trust/Association Property

The following propositions can be presented as to the vesting of ownership of the trust-property, and the property held by an association.

1. The terms of dedication (as revealed from the deed, if any, or other evidence) determine the person or body of persons in whom/which such property ultimately vest in.
2. If the ownership of the property of a trust vests in a legal person, such vesting is permanent (thereby it cannot be put to an end) and as representing or subject to the purpose envisaged by the founder.
3. If the property is that of an association and the members thereof are ascertainable (as in the case of a society or a mutt) the actual ownership of the property will be presumed to be vested with those members (from time-to-time), as joint owners (contra-distinct to ownership under tenants-in-common).
4. If the property is one dedicated to public so as to form a public trust and beneficiaries are unascertainable (as in the case of a political party or a church) the property ultimately vests with the entire members (of such Association or Church), from time to time, permanently(Thereby it cannot be put to an end.), subject to the trust and its objectives.
5. If the property is one dedicated to public at large by a known or unknown person and administered and maintained by persons volunteering themselves as trustees (as in the case of a waiting shed or a public well) the property permanently and ultimately vests with the entire general public or the State, subject to the trust and its objectives. 
6. If the property is one acquired by a branch of a larger body or a parish of a church with various parishes, for the benefit of all persons/members of the larger body, the entire members of the larger body, from time to time, will be presumed to be the owners, subject to the trust impressed upon the property. 

Vesting of Ownership of Property in Registered Societies

Section 5 of the Societies Registration Act, 1860 does not state whether the vesting referred to therein pertains to ‘vesting of ownership’ or ‘vesting for administration’. If it refers to ‘vesting for administration’ a question will arise – in whom the ownership actually vests.  If it is assumed that the word ‘vested’ is used to denote ownership, the same question may arise – beyond the deemed vesting in the governing body, in whom the property actually vests.

‘Property Belonging to a Society’ & Property of a Company

The Society continues to exist and to function as such until its dissolution under the provisions of Act. The properties of the society continue to be vested in the trustees or in the Governing Body irrespective of the fact that the members of the society for the time being are not the same as they before; nor will be the same thereafter.

By reason of the provisions of the Societies Registration Act, once the society is registered the Registrar, by the filing of the memorandum and certified copy of the rules and regulations the Registrar has certified that the society is registered under the Act, it enjoys the status of a entity apart from the members constituting the same and is capable of suing or being sued. But the fact to be noted is that what different a society registered under the Act of 1860 a company incorporated under the Companies Act is that in the latter case the share -holders of company hold the properties of the company as their own whereas in the case of a society registered under the Act of 1860, the members of the society or the members of the governing body do not have any proprietary or beneficial interest; to the property the society holds.

Having regard to the fact that the members of the general body or the members of the governing body of the society do not have any proprietary or beneficial interest in the property of the society, it follows that upon its dissolution, they cannot claim any interest in the property of the dissolved society. The Societies Registration Act, therefore, does not create in the members of the registered society any interest other than that of bare trustees. What all the members are entitled to, is the right of management of the properties of the society subject to certain conditions.

As I have already stated, the Charitable Endowments Act, 1890, provided that the conditions specified therein are satisfied, makes provision for the appointment of a treasurer, in whom certain powers are vested. Sub -section (4) of S. 4 contains a clear enunciation of the nature of that vesting. The said provision makes it clear that an order, vesting property in a treasurer shall not require or be deemed to require him to administer the property, or impose or be deemed to impose upon him the duty of a trustee with respect to the administration thereof.

Section 10 of the Charitable Endowments, Act contains a specific limitation of the functions and powers of a treasurer. It says that a Treasurer of Charitable Endowments shall always be a sole trustee, and shall not, as such treasurer, take or hold any property otherwise than under the provisions of the Act, or, subject to those provisions, transfer any property vested in him except in obedience to a decree divesting him of the property, or in compliance with a direction in that behalf issuing from the authority by whose order the property became vested in him.

Having regard to the specific limitation of the functions and powers of treasurer under S. 10 the treasurer shall not take or hold any property. He cannot dispose of property. He is a bare trustee as S. 8 of the Act makes it clear.

‘Property Belonging to a Society’: Comparable to Definition in Partnership Act

In Unani Tibia College case[46] the Constitution Bench of the Supreme Court has held that the expression ‘property belonging to a society’ does not give the society a corporate status and it ‘merely describes the property which vests in trustees or governing body’ and that the provisions of the Societies Registration Act did not give a ‘corporate status’ to a society ‘for the purpose of holding and acquiring property’.  In this decision it is further held:

• “….. Those provisions undoubtedly give certain privileges to a society registered under that Act and the privileges are of considerable importance and some of those privileges are analogous to the privileges enjoyed by a corporation, but there is really no incorporation in the sense in which that word is legally understood.”
• “…..  Thus something in the nature of perpetual succession is conceded by the provision that the society’s property is to vest in the trustees for the time being of the society for the use and benefit of the society and its members and of all persons claiming through the members according to the society’s rules, and further (and this is the most noteworthy provision) that the property shall pass to succeeding trustees without assignment or transfer.”

It can be seen that the expression ‘property belonging to a society’ is comparable to the definition of property of partnership in Section 14 of the Indian Partnership Act, 1932. Referring to the definition in Sec. 14, Addanki Narayanappa  Vs. Bhaskara  Krishnappa[47]our Apex Court held as under:

• “From a perusal of these provisions it would be abundantly clear that whatever may be the character of the property which is brought in by the partners when the partnership is formed or which may be acquired in the course of the business of the partnership it becomes the property of the firm and what a partner is entitled to is his share of profits, if any, accruing to the partnership from the realisation of this property, and upon dissolution of the partnership to a share in the money representing the value of the property. No doubt, since a firm has no legal existence, the partnership property will vest in all the partners and in that sense every partner has an interest in the property of the partnership. During the subsistence of the partnership, however, no partner can deal with any portion of the property as his own. Nor can he assign his interest in a specific item of the partnership property to anyone. His right is to obtain such profits, if any, as fall to his share from time to time and upon the dissolution of the firm to a share in the assets of the firm which remain after satisfying the liabilities set out in Clause (a) and sub-Cls. (i), (ii) and (iii) of Clause (b) of Section 48. ..”

Propositions as to Vesting of Ownership in Registered Societies

Five propositions are possible.

1. In members, jointly. 
2. In society itself.
3. In governing body.
4. Legal title in the trustees or governing body and equitable title in the society.
5. In the members subject to the provisions of the Societies Registration Act and the basic principles upon which the society is founded.

I.   Can Ownership of Property Vest in Members, Absolutely?

No.

Property of a Society being maintained for benefit of future members also, as held in Pamulapati  Buchi Naidu College Committee, Nidubrolu  Vs. Govt. of Andhra Pradesh[48], it cannot be dealt with by the members disregarding the objectives of foundation of the societies.

The property of a registered society cannot vest in its members in view of the various provisions of the Societies Registration Act. As per Sec. 13 and 14 of the Societies Registration Act, 1860, on dissolution, the members of a society, even if sui juris, are not entitled to appropriate, by themselves, the property of a registered society.In Board of Trustees, Ayurvedic  &  Unani Tibia College, Delhi Vs.The State of Delhi[49] the Constitution Bench of the Supreme Court held as to beneficial enjoyment of property of a registered society as under:

• “During the subsistence of a society, the right of the members is to ensure that the property will be utilised for the charitable objects set out in the memorandum and these did not include any beneficial enjoyment.  Nor did the members of the society acquire any beneficial interest[50] on the dissolution of the society.”[51]

It is pointed out in Unani Tibia College case[52] that the vesting of legal ownership of the property of a society in the governing body is merely a method or mechanism permitted by the law.

II  Can Ownership of Property Vest in Society itself?[53]

No.

Registration of Societies under the Central or State Societies Registration Act does not give the society a corporate status.[54] It is unequivocally determined in Illachi Devi Vs. Jain Society[55] that even a registered society is not a juristic person.[56]  It is held:

• i) The mere fact of registration will not make a society distinct from association of persons. (Para 20);
• ii) A Society registered under the Societies Registration Act is not a body-corporate as is the case in respect of a company registered under the Companies Act. In that view of the matter, a Society registered under the Societies Registration Act is not a juristic person.  (Para 21); and
• iii) A society, whether registered or unregistered, may not be prosecuted in criminal court, nor is it capable of ownership of any property or of suing or being sued in its own name (Para 22). Vesting of (ownership of) property does not take place in the Society. Similarly, the society cannot sue or be sued. It must sue or be sued through a person nominated in that behalf (Para 26).

For the society is not a juristic person, Section 6 of the Act lays down that  the society may sue or be sued in the name of President, Secretary, etc.  It (impliedly) bars filing a suit in the name of society, without reference to the President, Secretary, etc.

The view that Sec. 6 is an enabling provision and it does not affect the right of a society to sue or be sued in its own name[57]is not a good law in view of Unani Tibia College case[58] and Illachi Devi case.[59]

Read Blogs: Doctrine of Substantial Representation in a Suit by or against an Association

• Order I rule 8, CPC (Representative Suit) When and How? Whether Order I rule 8 Decree is Enforceable in Execution?

III.  Can Ownership of Property Vest in Governing Body.

No.

The governing body is only a small group which represents a larger body; and therefore, the ownership of the property cannot vest in the governing body, unconditionally or absolutely.

Sec. 5 So. Regn. Act directs only deemed vesting of property in the governing body.  

 It is noteworthy that the vesting of property in the governing body is read along with the vesting of property in trustees. Under common law, actual title (other than legal title) does not vest in the trustees, and the trustees always hold the property for others.  It is pointed out by our Apex Court, in Church of North India Vs. Lavajibhai  Ratanjibhai,[60] that, in terms of Section 5 of the Societies Registration Act, only in the absence of vesting of such property in the trustees the same would be deemed to be vested for the time being in the governing body of a society.

IV. Can Legal Title Vest in Gov. Body, & Equitable Title in Society.

No.

The theory as to vesting of ‘equitable title’ in society (and ‘legal title’ in the trustees or governing body)[61] is, in-substance, endorses the view of vesting property in members of the society. Since the property cannot unconditionally vest in members of a society for their absolute enjoyment, as shown above, it is not proper to say that equitable title vests in society.

V. Can Ownership of Property Vest in Members, Conditionally.

Had it been so accepted by our system, the ownership of property of a society could have been vested in the society itself; but it is not so accepted.[62] In this eventuality, for propounding a theoretical proposition as to actual vesting of property of a regd. society we have to give effect to the following edicts of law:

1) Property of Unregistered Society Vests in Members

• Property of an unregistered society is the joint property of the members of the society subject to the trust and obligations imposed by the founders or by the bye laws of the society.

2) Present members are Trustees.

• The members of a society are trustees for the future members who have to continue the objects of the society as envisaged by the founders and as manifested in the Rules or Bye laws.[63]

3) Ultimate Administrative Authority is General Body.

• Subject to the bye laws of the society, the ultimate authority with respect to the administration of a society is vested with the general body of the members; and the general body elects the trustees or governing body.  This principle is affirmed in the provisions of the Societies Registration Act.

4) Management alone in Governing Body.

• As per the Common law and also as per the definition of governing body in Sec. 16, and under Sec. 4, of the Societies Registration Act, governing body is entrusted with the management of the society alone.[64]

5) Governing Body administers for attaining the ‘aim and objects’.

• The trustees or the governing body administer the property ‘of the society’ as per its bye laws so as to fulfill or attain the ‘aim and objects’ the founders viewed.  They acquire and hold the property for and on behalf of the members of the society subject to the trust and obligations imposed by law and the bye laws or the fundamental principles[65] or trust[66] upon which it is founded.

6) A Registered Society is also an Association of Persons.

• The registration will not make a society distinct from ‘association of persons’[67] and it is not a juristic person. It cannot own property also[68] though it has certain characteristics of a legal person.

7) ‘Property of the society’, “merely describes, property vests in Governing Body”

• Expressions in the Societies Registration Act, ‘property belonging to a society’[69] and ‘property of the society’,[70] do not give the society a corporate status; and it “merely describes the property which vests in trustees or Governing Body”.[71]

8) Regn. Brings in Permanency; on Dissolution, Property Goes to Another Society

• As per the Societies Registration Act, on dissolution, the left-behind-property of a society goes to another society as determined by the members of the society or by the court (S. 14) for being managed by some other charitable organisation and to be utilised for like purposes. Either during the subsistence of a society or at the time of its dissolution the members of a society do not have beneficial enjoyment of its property.[72]

9) Right of Dissolution Vested with Members.

• A society is dissolved on determination of the members of the society with required majority, if so provided in the bye laws. If the rules of a registered Society do not lay down the rules for disposal and settlement of the property on dissolution, the governing body is authorized to do the same as it ‘finds expedient’ (S. 13).

VI. Conclusion: Property vests in the members subject to the contract and the fundamental principles upon which it is founded.

From the above, it can be legitimately concluded that the ownership of the ‘property of a society’ does not absolutely vest either in its members or in the governing body; but it vests in the members of the society[73] subject to the bye laws or contract, and the fundamental-principles or trust[74] upon which it is founded.[75] We can take cue (i) from the observations of our Apex Court in Addanki Narayanappa  Vs. Bhaskara  Krishnappa[76] that the property which is brought in by the partners when the partnership is formed or which may be acquired in the course of the business of the partnership becomes the property of the firm, and the partnership property will vest in all the partners since a firm has no legal existence;[77] and (ii) from the following erudite assertion of Dr. BK Mukherjea, J., on Hindu Law of Religious and Charitable Trusts:[78]

• “The idol as representing and embodying the spiritual purpose of the donor is the juristic person recognised by law and in this juristic person the dedicated property vests.”[79]

In case of Registered Societies, the vesting of ownership of the ‘property of a society’ is further subject to the provisions of the Act under which it is registered.

Vesting of Property in Various Kinds of Associations and Trusts

Club, Society and Company

No.	Nature of Association.	Right of Manage-ment or Vesting of Legal Ownership.	Vesting  of actual/ultimate ownership	Whether permanent or not (so as to put an end to)
1	Club	Trustees or Gov. Body, as per  Byelaws	Members, subject to the byelaws and objectives of foundation.	Presumed to be not permanent.[80]
2	Unregistered Society/ Association	-do-	-do-	Presumed to be permanent.
3	Registered Society	-do-	-do-	SR Act governs dissolution.
4	Firm	Partners	Partners	Contract governs
4	Trading Company	Board of Directors	Company	Comp. Act governs winding up.
5	Charitable or Non-trading company	-do-	-do-	-do-

Trusts / Religious-Endowments:

6	Public Trust– English Law[81]	Trustees	Legal ownership in Trustees; beneficial ownership – though not absolute – in Beneficiaries.	Permanent
7	Public Trust-Indian (common) Law	-do-	In trust/institution/ endowment itself.  If it cannot be – for it is not a legal person –in public or section of public who are beneficiaries, subject to the objectives of foundation, as revealed from the facts or from the deed of foundation or bye laws, if any.	Permanent
8	Public School, Public Library, etc.	Manager, Headmaster, Librarians, Gov. Body, etc.	-do-	Permanent.
9	Private religious or charitable trusts	Trustees	-do-	Presumed to be permanent.
10	Mosque, Church, Gurudwara, etc.	Trustees (by different names)	In trust/institution/ Church[82]/ endowment itself.  If it cannot be – for it is not a legal person – in section of public who are beneficiaries, subject to the objectives of foundation, as revealed from the facts or from the deed of foundation or bye laws, if any.	Permanent
11	Temple (Public)	Shebaits/ Darmkarta/Ooralen	Idol/deity	-do-
12	Temple (private)	-do-	-do-	-do-
13	Matt	Madathipathi	Mutt	-do-
14	Private Trust (Coming under the Trusts Act	Trustees	Terms/ Deed of Trust govern.	Trusts Act governs Extinction and Revocation.[83]

Government School, University, etc.

15

University, Govt. Hospital, Govt. College, etc.

Administrators as provided in the statute concerned

In the institution itself, if not expressly stated to be in the Government.

Presumed to be permanent. (Permanent until decided to close by the Government.)

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[1]      12^th Edition, Page 326

[2]      IV Edition, Vol. 6, Para 205

[3]      Orient Club Vs. Commissioner of Wealth Tax: 1982-10 TAXMAN 57 (Bom): 1982-29 CTR 117: 1982-136 ITR 697: Quoted in Commissioner of Wealth Tax Vs. Mulam Club: 1991-191 ITR 370: 1991-1 Ker LT 762: 1991-58 TAXMAN 63

[4]      Orient Club Vs. Commissioner of Wealth Tax: 1982-10 TAXMAN 57 (Bom): 1982-29 CTR 117: 1982-136 ITR 697: Quoted in Commissioner of Wealth Tax Vs. Mulam Club: 1991-191 ITR 370: 1991-1 Ker LT 762: 1991-58 TAXMAN 63

[5]      Prasanna  Venkitesa  Rao Vs. Srinivasa  Rao: AIR 1931 Mad. 12: Relied on: Milligan Vs. Mitchel: 40 ER 852; Free Church of England Vs. Overtoun: (1904) AC 515.

[6]    1975-36 STC 511: This decision is distinguished in: Bangalore Golf Club Vs. Assistant Commr. of Luxury Taxes: 1999-115 STC 338 (Kar); Government Medical Store Depot Vs. State of Haryana. 1977-39 STC 114 (P&H) .

[7]     Hotel and Catering Industry Vs. Automobile Proprietary: ([1969] 1 WLR 697; Inland Revenue Commissioners Vs. Eccentric Club Ltd.: [1924] 1 KB 390.

[8]     Safdar Jung Hospital Vs. KS Sethi: AIR 1970 SC 1407;  Deputy Commercial Tax Officer Vs. Enfield India: [1968] 21 STC 317 (SC). Joint Commercial Tax Officer Vs. Young Men’s Indian Association: 1970SC1212

[9]     1958-9 STC 450

[10]   1969 24 STC 180 (Guj)

[11]    See: Balram  Chunnilal  Vs. Durgalal  Shivnarain: AIR1968 MP 81.

[12]    Salmond on Jurisprudence: 12^th  Edition, page 257.

[13]   AIR 1994 SC 2694

[14]    Tata Memorial Hospital Workers Union Vs. Tata Memorial Centre: AIR 2010 SC 2943

[15]    2013 AIR (SCW) 5782: AIR 2013 SC (CIV) 2849; (2013) 15 SCC 394

[16]    AIR 2005 SC 2544: 2005 (10) SCC 760.

[17]    Quoted in Vinodkumar M.  Malavia  Vs.  Maganlal  Mangaldas  Gameti: 2013 AIR (SCW) 5782: AIR 2013  SC (CIV) 2849; (2013) 15  SCC 394.

[18]    AIR 1958 AP 773

[19]    Quoted in Chief Controlling Revenue Authority Vs. H Narasimhaiah: AIR 1991 Kar 392.

[20]    That is, ‘proprietary interest’ or interest pertaining to owner.

[21]    Board of Trustees, Ayurvedic  &  Unani Tibia College Vs.  The State: AIR 1962 SC 458; DharamDutt Vs. Union of India: AIR 2004 SC 1295; Pamulapati Buchi Naidu College Committee, Nidubrolu  Vs. Govt. of AP: AIR 1958 AP 773.

[22]    AIR 1958 AP 773. See also: Raj Kumar Gaba Vs. State of UP: 2012-49 VST 252; Commissioner of Income Tax Vs. Merchant Navy Club: 1974-96 ITR 261; Gurdwara  Prabandhak Committee Vs. Jagmonan Singh: ILR  1971-2 Del 515.

[23]    In companies, the share-holders hold the property as their own.

[24]    Quoted in Most Rev. PMA Metropolitan Vs.  Moran Mar Marthoma: AIR 1995 SC 2001- Para 69.

[25]    Under the Companies Act.

[26]    (2006) 3 Cal LT 139; 2006 (3) CHN 77.

[27]   See:Kelans Son Kodakkat  Kannan Vs. Tharakandi  Kadissa: AIR 1971 Ker 61; Shantilal Ambalal Mehta Vs. M.A. Rangaswamy: 1977-79 BLR 633; Union of India Vs. Official Assignee of Bombay: 1971-73 BLR 623; Tan Bug Taim Vs. Collector of Bombay: AIR  1946  Bom 216.

[28]    Settlement deed by Ashramam–Swayam  Prakash  Ashramam Vs. G Anandavally  Amma : AIR  2010 SC 622; Settlement to trust – S N Mathur  Vs. Board of Revenue: 2009-13  SCC 301; Sale deed by unregistered society – Suresh s/o. BhagwanraoPuri Vs. State of Maharashtra: 2016-3 AIR Bom R (Cri.) 603; Gift to unregistered Association – Pullamma Vs. Valmiki Anna Satram: 1984-2 ALT 157; Sale deed to an association – K. Kala Vs. Dist Registrar, Madurai: 2016 3 MLJ 50,  Sale deed to an association – State of Punjab Vs. Amolak Ram Kapoor: [1990] 79 STC 315; ILR1991- 2 P&H 218. Sale deed to an association – Asst. Commr. Vs. Shivalingawwa: ILR 2003 Kar 2855; Lease deed by trust to school – TNP MothooNatarajan Vs. PV Ravi: 2015-2 MLJ (Cri.) 656; Lease deed by a firm -2014-3 ALT 46; Settlement deed to private trust –Kolli  Venkata Raja Vs. Govt. of AP: 2014-1 ALT 155; Lease deed to a public trust –Nadigar  Sangham Charitable Trust, rep. by its managing Trustee, R. Sarathkumar Vs. S. Murugan:2013-1 MLJ 433; Sale deed to Board of Trustees – Commissioner of Income Tax Vs. Chemists and Druggists Association Building Trust: 1995-215 ITR(Mad) 741; Mortgage deed by a College – Sonar Bangla Bank Vs. Calcutta Engineering College:  AIR 1960 Cal 450.

[29]    Such as well-known political parties, trade-unions, etc.

[30]    Such as temple-related trusts, Wakfs, church-related trusts, etc.

[31]    Such as libraries, universities, etc. See: Pullamma Vs. Valmiki Anna: 1984-2 ALT 157

[32]    12^thEdn., Page 305.

[33]   Ramji  Mandir  Narsinhji Vs. Narsinh  Nagar:  AIR  1979Guj.  134

[34]    AIR 1962 SC 458

[35]    AIR 2003 SC 3397

[36]    AIR 2010 SC 2943

[37]   Mahamayatala Housing Co-Operative Society Vs. Charu Chandra Banerjee:1999-1 CalLJ 259; 1999-1 CalLT 450; 1999 CTJ 743

[38]   2013  LAP  149; 2014-1 ALD 108;  2014-2 ALT 540

[39]    T S Thinnappa  Chettiar Vs. Grajagopalan: AIR  1944 Mad 536

[40]    Weavers Mills Vs. Balkis  Ammal: AIR 1969 Mad 462. Murari  Ganguly Vs. Kanailal  Garal:   AIR  2003 Cal 105; ValiPattabhiramaRao Vs. Ramanuja: AIR  1984 AP 176.

[41]    Contract Act: Sec. 196.

[42]    Tata Memorial Hospital Workers Union Vs. Tata Memorial Centre: AIR 2010 SC 2943

[43]    It is held in Pamulapati  Buchi Naidu College Committee, Nidubrolu  Vs. Govt. of Andhra Pradesh: AIR 1958 AP 773.  See also: Raj Kumar Gaba Vs. State of UP: 2012-49 VST 252;         Commissioner of Income Tax Vs. Merchant Navy Club: 1974-96 ITR 261;   Gurdwara  Prabandhak Committee Vs. Jagmonan Singh: ILR  1971-2 Del 515.

[44]    Board of Trustees, Ayurvedic  &  Unani Tibia College, Delhi Vs. The State of Delhi:  AIR 1962 SC 458– Para 23.

[45]    Church of North India Vs. Lavajibhai  Ratanjibhai: AIR 2005 SC 2544. Followed in Vinodkumar M. Malavia Vs. Maganlal Mangaldas  Gameti: (2013) 15  SCC 394.

[46]    Board of Trustees, Ayurvedic  &  Unani Tibia College Vs. The State: AIR 1962 SC 458.

[47]   AIR 1966 SC 1300: Referred to in: Mohd. Laiquiddin Vs. Kamala Dev Mishra: 2010-2 SCC 407; Jagatram  Ahuja  Vs. Comner. of Gift Tax Hyderabad: AIR 2000 SC 3195; Sunil Siddharthbhai Sarabhai Vs. Comner. of Income Tax: AIR1986 SC 368; Malabar Fisheries Co Vs. Comner. of Income Tax Kerala: AIR1980 SC 176.

[48]    Pamulapati Buchi Naidu College Committee, Nidubrolu  Vs. Govt. of AP: AIR 1958 AP 773.

[49]    AIR 1962 SC 458

[50]    That is, ‘proprietary interest’ or interest pertaining to owner.

[51]    In companies, the share-holders hold the property as their own.

[52]    AIR 1962 SC 458

[53]    See Chapter: Is Registered Society A Juristic Person

[54]    Board of Trustees, Ayurvedic  &  Unani Tibia College Vs. The State: AIR 1962 SC 458.

[55]    AIR 2003 SC 3397 – Para 22

[56]    Company is a juristic person. Property belongs to it. Bacha F Guzdar Bombay Vs. Commissioner of Income Tax, Bombay:  AIR 1955 SC 74; Rustom  Cavasjee Cooper Vs. Union of India, (1970) 1 SCC 248 : AIR 1970 SC 564; Electronics Corporation Vs. Secretary Revenue Department AP: AIR1999 SC  1734.

[57]    Shanti Sarup Vs. Radhaswami  Satsang  Sabha, Dayalbagh Agra: AIR 1969 All. 248; K.C. Thomas Vs. R.B. Gadaook, AIR 1970 Pat 163; Khiri Ram Gupta and Another versus Nana Lal:  AIR 1964 Pat. 114; State of Punjab Vs. Amolak Ram Kapoor: [1990] 79 STC 315; ILR1991- 2 (P&H) 218. Satyavart  Sidhantalankar  Vs.  Arya  Samaj, Bombay: AIR 1946 Bom. 516

[58]    Board of Trustees, Ayurvedic  &  Unani Tibia College Vs. The State: AIR 1962 SC 458. 

[59]    Illachi Devi Vs. Jain Society: AIR 2003 SC 3397. See also Tata Vs. Tata:  AIR 2010 SC 2943

[60]    AIR 2005 SC 2544: 2005 (10) SCC 760. Relied on in Vinodkumar M. Malavia Vs. Maganlal  Mangaldas  Gameti: 2013 AIR (SCW) 5782; (2013) 15  SCC 394.

[61]    KC Thomas Vs. RL Gadeock: AIR 1970 Pat 163 (DB)

[62]    See Notes above, under the heading: Can Ownership of Property Vest in Society itself. 

[63]    Pamulapati Buchi Naidu College Committee, Nidubrolu  Vs. Govt. of AP: AIR 1958 AP 773. See also: Raj Kumar Gaba Vs. State of UP: 2012-49 VST 252; Commissioner of Income Tax Vs. Merchant Navy Club: 1974-96 ITR 261; Gurdwara  Prabandhak Committee Vs. Jagmonan Singh: ILR  1971-2 Del 515.

[64]    Pamulapati Buchi Naidu College Committee, Nidubrolu  Vs. Govt. of Andhra Pradesh, AIR 1958 AP 773

[65]    Prasanna  Venkitesa  Rao Vs. Srinivasa  Rao: AIR 1931 Mad. 12:         Relied on: Milligan Vs. Mitchel: 40 ER 852; Free Church of England Vs. Overtoun: (1904) AC 515.         See also: Inderpal Singh Vs. Avtar Singh: 2007-4 Raj LW 3547.

[66]    Church of North India Vs. Lavajibhai  Ratanjibhai: AIR 2005 SC 2544; Vinodkumar M. Malavia Vs. Maganlal  Mangaldas  Gameti: (2013) 15  SCC 394.

[67]    Illachi Devi Vs. Jain Society: AIR 2003 SC 3397- Para 20; Board of Trustees, Ayurvedic  &  Unani Tibia College, Delhi Vs. The State of Delhi: AIR 1962 SC 458 – Para 38, 42

[68]    Illachi Devi Vs. Jain Society: AIR 2003 SC 3397- Para 22.

[69]    Societies Registration Act: Sec. 5

[70]    Societies Registration Act: Sec. 8 and 10

[71]    Board of Trustees, Ayurvedic  &  Unani Tibia College, Delhi Vs. The State of Delhi: AIR 1962 SC 458 -Para 11.

[72]    Board of Trustees, Ayurvedic  &  Unani Tibia College, Delhi Vs. The State of Delhi: AIR 1962 SC 458 – Para 23

[73]   As in a partnership: See notes above under the head: ‘Property Belonging to a Society: Comparable to Definition in Partnership Act’

[74]    Prasanna  Venkitesa  Rao Vs. Srinivasa  Rao: AIR 1931 Mad. 12:         Relied on: Milligan Vs. Mitchel: 40 ER 852; Free Church of England Vs. Overtoun: (1904) AC 515.         See also: Inderpal Singh Vs. Avtar Singh (2007-4 Raj LW 3547).

[75]    Church of North India Vs. Lavajibhai  Ratanjibhai: AIR 2005 SC 2544:         Relied on in Vinodkumar M. Malavia Vs. Maganlal  Mangaldas  Gameti: (2013) 15  SCC 394

[76]   AIR 1966 SC 1300: Referred to in: MohdLaiquiddin Vs. Kamala Dev Mishra: 2010-2 SCC 407; Jagatram  Ahuja  Vs. Comner. of Gift Tax Hyderabad: AIR 2000 SC 3195; Sunil Siddharthbhai Sarabhai Vs. Comner. of Income Tax: AIR1986 SC 368; Malabar Fisheries Co Vs. Comner. of Income Tax Kerala: AIR1980 SC 176.

[77]   See notes: ‘Property Belonging to a Society’: Comparable to Definition in Partnership Act

[78]   At page 45.

[79]    Quoted in Yogendra  Nath  Naskar Vs. Commissioner of Income Tax: AIR 1969 SC 1089; Idol of Shri Radhaji Vs. State of MP: AIR  1979 MP 129; Commissioner of Income Tax  Vs. Jogendra Nath Naskar: AIR 1965 Cal 570.

[80]    Agreement (Bylaws) governs. If the objectives of foundation envisage benefit to future members also, the present members and administrators are trustees for future members.

[81]    Preferred name: Charities

[82]   The properties of the (parish) churches are also vested in the Church (larger sense). See: Varghese Vs. St. Peters and Pauls Syrian Orthodox Church: (2017) 15 SCC 333.

[83]    It is settled that in the matter of (secular) private trusts, English principles are followed in India which lay down that if the beneficiaries are sui juris and of one mind, the trust can be put to an end or use the trust fund for any purpose (they wish): Profulla  Chorone  Requitte Vs. Satya  Chorone  Requitte: AIR 1979 SC 1682.

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