Saji Koduvath, Advocate, Kottayam.
Synopsis.
- Introduction
- Important Enactments During British regime
- Important Enactments After Independence:
- Public Trusts and The Indian Trusts Act, 1882
- Registration of Public Trusts under Public Trusts Act
- Effect of Non-Registration upon Vesting of Property
Introduction.
(i) ‘Trust and trustees’ and (ii) ‘charities and charitable institutions, charitable and religious endowments, and religious institutions’ are included as subjects in ‘Concurrent List’ of Schedule VII of the Constitution of India, whereby both the Centre and the States are competent to legislate and regulate trusts or charities and charitable institutions. Charitable institutions allowed to be founded by our law include trusts, societies, Wakfs etc. The Constitution of India guarantees its citizens the right to form associations or unions, under Article 19(1)(c).
Public Trusts and The Indian Trusts Act, 1882
The Indian Trusts Act, 1882 is enacted primarily to govern private trusts; and ‘public or private charitable or religious endowments’ are expressly excluded from its ambit.
Sec. 1, under the head ‘Savings’, reads:
- “But nothing herein contained affects the rules of Mohammedan law as to waqf, or the mutual relations of the members of an undivided family as determined by any customary or personal law, or applies to public or private religious or charitable endowments, or to trusts to distribute prizes taken in war among the captors; and nothing in the Second Chapter of this Act applies to trusts created before the said day.”
But there are common legal principles which cover matters of both public and private trusts; and merely because they find a place in the Trusts Act, 1882, they cannot become ‘untouchable’ where affairs of public trusts are involved as held by VR Krishna Iyer J. in State of Uttar Pradesh Vs. Bansi Dhar.[1]
Our courts apply the general law of trusts and the universal rules of equity and good conscience upheld by the English judges in this matter. In other words, the principles of the English law of Trusts which have been incorporated in the Indian Trusts Act will apply to public trusts also.[2]
Bombay Public Trust Act, 1950
Bombay Public Trust Act, 1950 (BPTA) is the first Public Trusts Act enacted by a State, invoking the principle of ‘parens-patriae’. It required registration of all public trusts with the authorities appointed under the Act. All other State Public Trust Acts Orissa, Tamil Nadu Public Trusts Acts followed this Act in their legislation. State Acts include the following:
- Bihar Hindu Religious Trusts Act, 1950
- Madhya Pradesh Public Trusts Act, 1951
- Rajasthan Public Trust Act, 1959
Other important State-Acts are the following:
- Travancore-Cochin Hindu Religious Institutions Act, 1950
- Orissa Hindu Religious Endowments Act, 1951
- Tamil Nadu Hindu Religious and Charitable Endowments Act, 1959
- Madras Hindu Religious And Charitable Endowments Act, 1951
- Uttar Pradesh Charitable Endowments (Extension of Powers) Act, 1950
- Charitable Endowments (U.P. Amendment) Act, 1952
- AP Charitable and Hindu Religious Institutions and Endowments Act, 1987
- Karnataka Hindu Religious Institutions and Charitable Endowments Act, 1997
Constitutional Validity of BPTA (Qua Articles 25 and 26)
The Bombay Public Trust Act, 1950 was enacted, as seen from its preamble, ‘to regulate and to make better provision for the administration of public religious and charitable trusts in the State of Bombay’. The constitutional validity (qua Articles 25 and 26) of some provisions of Bombay Public Trust Act, 1950 was considered by our Apex Court in Ratilal Panachand Gandhi Vs. The State of Bombay.[3] Challenges against certain provisions were upheld, and some were overruled.
Article 25 of the Constitution guarantees to all persons the freedom of conscience (and free profession), practice and propagation of religion. Article 26 guarantees to all religious denominations, the freedom to manage its own affairs in matters of religion. However, Article 26(d) requires religious denomination or its representatives to administer its property ‘in accordance with law’. Therefore, the right of administration guaranteed to the religious denominations is subject to such restrictions and regulations enacted by the legislatures.
Article 26 of our Constitution reads as under:
- 26. Freedom to manage religious affairs – Subject to public order, morality and health, every religious denomination or any section thereof shall have the right
- (a) to establish and maintain institutions for religious and charitable purposes;
- (b) to manage its own affairs in matters of religion;
- (c) to own and acquire movable and immovable property; and
- (d) to administer such property in accordance with law.
It is clear from clause (d), read with clauses (a) and (b), of Article 26 that the legislature is empowered to enact laws relating to secular matters related to the field of administration of property, acquired and owned by a religious denomination. Certain secular activities associated with religion may not be amenable to State regulations. But those secular activities which do not relate to an essential part of religion or religious activity will always be amenable to State regulations. What constitutes the ‘essential part’ of religion has to be ascertained from the doctrines of that religion according to its tenets, historical background and change in evolved process etc.[4]
Just before passing the judgment in Ratilal Panachand Gandhi Vs. The State of Bombay (18 March, 1954), by J. Mukherjea, for the Constitution Bench, it has been held in Commissioner, Hindu Religious Endowments, Madras Vs. Sri Lakshmindra Thirtha Swamiar of Sri Shirur Mutt (16 March, 1954),[5] the leading decision in this subject, rendered by J. Mukherjea himself, for a 7 Judge Bench, that only a law which took away the right of administration altogether from the religious denomination and vested it in any other secular authority[6] would alone be taken to be violative of the right under Article 26(d).
In Ratilal Panachand Gandhi Vs. The State of Bombay, Section 44 of the BPT Act was held to be unconstitutional. It is observed in this decision as under:
- “The language of the two Clauses (b) and (d) of Article 26 would at once bring out the difference between the two. In regard to affairs in matters of religion, the right of management given to a religious body is a guaranteed fundamental right which no legislation can take away. On the other hand, as regards administration of property which a religious denomination is entitled to own and acquire, it has undoubtedly the right to administer such properly but only in accordance with law.”
The challenge against the constitutional validity of Section 58 of the Act which made it obligatory on every public trust to pay to the Administration Fund a contribution was upheld. Section 35 of the Act was also upheld in Ratilal Panachand Gandhi Vs. The State of Bombay observing as under:
- “It is a well-established principle of law that trustees in charge of trust properties should not keep cash money in their hands which are not necessary for immediate expenses; and a list of approved securities upon which trust money could be invested is invariably laid down in every legislation on the subject of trust.”[7]
In Syedna Mohamed Burhanuddin[8] while Gujarat High Court examining whether the partial deprivation by devising system of regulation and control of public funds violate Article 26 (d), it was held that Article 26 (d) would be violated only if a denomination was deprived of the administration of the property altogether. And that the impugned section neither violated Article 25 (1) nor clauses (b) and (c) of Article 26. The impugned section was protected by clause (d) of Article 26 and that the matters which the impugned section provided for were purely secular matters and that they related to the field of administration of property, acquired and owned by a religious denomination.
Registration of Trusts under Bombay Public Trust Act, 1950
Section 4 of the Bombay Public Trust Act, 1950 provides that within three months from the date of coming into force of the section, the working trustees of every public trust shall apply to the Registrar having jurisdiction for the registration of the public trust. Subsection (5) of Section 4 provides an appeal against the decision made by the Registrar regarding registration of a public trust and it also lays down that the order of the Appellate Authority shall be final.
Section 5 enjoins the Registrar to make inquiry in the prescribed manner for the purposes of ascertaining whether the trust is a public trust; whether any property is the property of the trust; the names and addresses of the trustees and mangers and the mode of succession to the office of the trustee of such trust; the amount of gross average annual income and expenditure etc. Section 6 lays down that on completion of the inquiry provided for under Section 5, the Registrar shall record his findings with reasons therefor as to the matters mentioned in the said section.
Section 8 lays down that any working trustee or person having interest in a public trust or any property found to be trust property, feeling aggrieved by any finding of the Registrar under Section 6 may, within six months from the date of the publication of the notice under sub-section (1) of Section 7, institute a suit in a civil court[9] to have such finding set aside or modified.[10]
Section 18(2) allows registration under the said Act if the trustee has an office of administration of the Trust within the local limits of the jurisdiction of the operation of Act, even though the trust property or substantial trust property is not located within the local limits of jurisdiction of the he Bombay Public Trusts Act.
Section 22(C) requires informing the Charity Commissioner the immovable property vesting in the public trust within a period of three months.
Alienation and Sanction of Charity Commissioner under Public Trusts Acts
(State) Public Trusts Acts impose restrictions for sale, mortgage, exchange, lease etc. of immovable properties of public trust.
Section 36 of the Bombay Public Trusts Act reads as under:
- “Alienation of immovable property of public trust:
- (1) Notwithstanding anything contained in the instrument of trust –
- (a) no sale, exchange or gift of any immovable property, and
- (b) no lease for a period exceeding ten years in the case of agricultural land or for a period exceeding three years in the case of non-agricultural land or a building, belonging to a public trust, shall be valid without the previous sanction of the Charity Commissioner. 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;
- (c) if the Charity Commissioner is satisfied that in the interest of any public trust any immovable property thereof should be disposed of, he may, on application, authorise any trustee to dispose of such property subject to such conditions as he may think fit to impose, regard being had to the interest or benefit or protection of the trust.
- (2) The Charity Commissioner may revoke the sanction given under clause (a) or clause (b) of sub-section (1) on the ground that such sanction was obtained by fraud or misrepresentation made to him or by concealing from the Charity Commissioner, facts material for the purpose of giving sanction; and direct the trustee to take such steps within a period of one hundred and eighty days from the date of revocation (or such further period not exceeding in the aggregate one year as the Charity Commissioner may from time to time determine) as may be specified in the direction for the recovery of the property.
- (3) No sanction shall be revoked under this section unless the person in whose favour such sanction has been made has been given a reasonable opportunity to show cause why the sanction should not be revoked.
- (4) If, in the opinion of the Charity Commissioner, the trustee has failed to take effective steps within the period specified in sub-section (2), or it is not possible to recover the property with reasonable effort or expense, the Charity Commissioner may assess any advantage received by the trustee and direct him to pay compensation to the trust equivalent to the advantage so assessed.
Similar provisions are found in other Public Trusts Acts also.[11] Our courts dealt with these provisions several times.[12]
In Cyrus Rustom Patel Vs. Charity Commissioner, Maharashtra (2017)[13] our Apex Court pointed out that ‘the power to grant sanction has to be exercised by the Charity Commissioner, taking into consideration three classic requirements of the Trust: ie. ‘the interest, benefit and protection’.
Non-Registration: No Effect upon Vesting of Property
Non-registration of a public trust under the State Public Trusts Act will not have any effect upon vesting of property in a Trust. If a property is vested in a public trust by means of a duly registered Settlement Deed in terms of Section 17(1)(b) of the Registration Act by the Settler of the Trust, then such a transfer would not be void on the ground that the details of the trust properties were not given to the Charity Commissioner under the Public Trusts Act.[14]
Quoting various provisions of the Rajasthan Public Trust Act, 1959 including Section 29 (which provides that ‘no suit to enforce a right on behalf of a public trust which is required to be registered under the Act but has not been so registered shall be heard or decided in any Court’) it is held by the Rajasthan High Court that none of the provisions of the Act spells about any such compulsory registration of all the trusts.[15]
Formation and Registration of Public Trusts Independent
Formation of trusts and registration of the same under the Public Trusts Acts are two independent actions. A public trust arises by dedication of property and appointment of trustees. Declaration by a registered deed, or transfer rights to trustee, is the usual mode of dedication of immovable property. A document not is essential for the dedication of property to charity.
In Menakuru Dasaratharami Reddi Vs. D Subba Rao[16] it is held:
- “The principles of Hindu Law applicable to the consideration of questions of dedication of property to charity are well settled. Dedication to charity need not necessarily be by instrument or grant. It can be established by cogent and satisfactory evidence of conduct of the parties and use of the property which shows the extinction of the private secular character of the property and its complete dedication to charity.”
In Kuldip Chand Vs. Advocate General to Government of HP[17], while dealing with a Dharmasala, it is held:
- “Dedication of property either may be complete or partial. When such dedication is complete, a public trust is created in contradistinction to a partial dedication which would only create a charity…… A dedication for public purposes and for the benefit of the general public would involve complete cessation of ownership on the part of the founder and vesting of the property for the religious object…. A dedication, it may bear repetition to state, would mean complete relinquishment of his right of ownership and proprietary.”
In State of Madras Vs. SSM Paripelena Sangam[18] it was held that in order to constitute a valid endowment it is necessary that the donor should divest himself of the property.[19] In Ramalinga Chetti Vs. Sivachidambara Chetty[20] it was held that the dedication of property to an idol of a temple is not required by law to be in writing and may be made orally.[21] In Kapoor Chand Vs. Ganesh Dutt[22] it is held that dedication of private property for religious and charitable purpose may be proved by oral evidence or may be inferred from the conduct of the parties.[23] It can also be established by cogent and satisfactory evidence of conduct of the parties, and extinction of the private secular character of the property and its complete dedication to charity.[24]
In those States where Public Trusts Acts are enacted, the affairs of Trusts therein are to be carried on in accordance with those Acts. These Acts cast duty on the trustees of the public trusts to register the Trusts before the Deputy or Assistant Charity Commissioner. Non registration does not entail the dedication void.
Non-Registration: Effect upon Suits
Section 31 of the Bombay Public Trust Act, 1950 reads as under:
- “(1) No suit to enforce a right on behalf of a public trust which has not been registered under this Act shall be heard or decided in any Court.
- (2) The provisions of Sub -section (1) shall apply to a claim of set off or other proceeding to enforce a right on behalf of such public trust.”
In Idol Shri ‘Shriji’ Vs. Chaturbhai,[25] the Madhya Pradesh High Court considered the scope of the Section in the Trusts Act that bars civil suit and it was observed:
- “A suit on behalf of an idol for declaration that the suit properties belonged to the idol and as such were not liable to attachment and sale in execution of a decree obtained against the shebait of the idol was a suit ‘to enforce a right on behalf of a public trust within Section 32 of MP Public Trusts Act. 1951, and as the trust was not registered as per provisions of the said Act the suit could not be heard or decided by any court.”
But, the Bombay High Court had, in Gandhi Sewa Shikshan Samiti Vs. Gulam Hussain Welji,[26] taken the view that the bar against an unregistered trust of asking for a decree in enforcement of a right on behalf of the public trust, would have to be read in the context of other Sections of the Act which pertain to filing of suits, such as Sec. 50, 51, 52 and 52A, and the bar was limited in its application to the kinds of suits contemplated in those sections.
In Parshvanath Jain Temple Vs. LRs. of Prem Dass[27] it was held that irregularity, if any, on account of non-registration of the Trust at the time of institution of the suit could be cured with the subsequent registration of the Trust. It was pointed out that the bar under Section 29 of the Rajasthan Act was only against the hearing and final decision of the suit, and not against the institution of the suit itself.
Registered Societies also to be Registered under BPT Act
All Societies registered under the So. Regn. Act of 1860, which appertain public trusts, are also required to be registered under the Public Trusts Acts. Bombay Public Trusts Act, 1950, defines ‘public trust’ to mean an express or constructive trust for either a public religious or charitable purpose or both and includes a temple, a math, a wakf, a dharmada or any other religious or charitable endowment and a society formed either for a religious or charitable purpose or for both and registered under the Societies Registration Act, 1860.
Registration with IT Authorities
Various Tax laws direct registration with IT authorities also, for exemption from Tax. Section 11 of the Income Tax Act, 1961 provides that the income from property held for charitable or religious purposes, shall not be included in the total income of the assessee. Section 12 gives the benefit of exemption to the income of trusts and institutions. Section 12 also provides for conditions for registration of trusts, societies etc.
[1] AIR 1974 SC 1084
[2] The Nizams Pilgrimage Money Trust Vs. Commissioner of IT: AIR 2000 SC 1802;
Kishore Joo Vs. Guman Behari JooDeo: AIR 1978 All 1.
Bonnerji Vs. Sitanath: 49 IA 46:
referred to in Arjan Singh Vs. Deputy Mal Jain: ILR 1982- 1 Del 11;
Sk. Abdul Kayum Vs. Mulla Alibhai: AIR 1963 SC 309;
See also: Shivramdas Vs. B V Nerukar: AIR 1937 Bom 374;
Rambabu Vs. Committee of Rameshwar: (1899) 1 Bom LR 667;
Nathiri Menon Vs. Gopalan Nair: AIR 1916 Mad 692.
[3] AIR 1954 SC 388.
[4] Durgah Committee, Ajmer Vs. Syed Hussain Ali: AIR 1961 SC 1402;
Sardar Sarup Singh Vs. State of Punjab: AIR 1959 SC 860;
Indian Young Lawyers Assn. Vs. State of Kerala: 2018 13 Scale 75; 2018 8 SCJ 609.
[5] AIR 1954 SC 282.
[6] The Commr, Hindu Religious Endowments Vs. Sri Lakshmindra Thirtha Swamiar of Sri Shirur Mutt: AIR 1954 SC 282;
Indian Young Lawyers Assn. Vs. State of Kerala: 2018 13 Scale 75; 2018 8 SCJ 609;
KS VargheseVs. St. Peters and St. Pauls Syrian Orthodox Church: (2017) 15 SCC 333;
VM Malaviya Vs. GY Dewaji: 2018-1 GLR 435
[7] This decision is referred to in Vinodkumar M. Malavia Vs. Maganlal Mangaldas Gameti: 2013 AIR (SCW) 5782: AIR 2013 SC (CIV) 2849; 2013 (15) SCC 394;
T.N. Godavarman Thirumulpad Vs. Union of India: AIR 2005 SC 4256;
State of Rajasthan Vs. Sajjanlal Panjawat: AIR 1975 SC 706.
[8] Syedna Mohamed Burhanuddin :1992 (1) GLH 331;
VM Malaviya Vs. GY Dewaji: 2018-1 GLR 435
[9] Seth Chand Ratan Vs. Pandit Durga Prasad: AIR 2003 SC 2736;
Prahlad Kushwaha Vs. Rani Devmati: 2012-3 MPLJ 673;
Swami Indredevanand Vs. State of MP: 1976 MPLJ 722.
[10] Kada Manikpuri Jijhotia Brahman Trust Vs. Regtar, Public Trusts :LAWS(MPH) 2017 8 178
[11] See: Orissa, Tamil Nadu Public Trusts Acts.
[12] K. Arjun Das Vs. Commissioner of Endowments, Orissa: 2019 0 Supreme(SC) 1024;
Natesan Agencies VS State: 2019 0 Supreme(SC) 891;
Joint Commissioner, HR and CE Vs. Jayaraman: 2006-1 SCC 257
Idol of Sri Ranganathaswamy VS Gopaldas Dwarakadoss: 2019-3 LW 642; 2019-5 MLJ 769
Executive Officer, Arulmigu Yoganarasimmar Vs. S. Kuppan: 2012-5 LW 171
T Subbaraman Vs. Sri Vedantha Desikar Devasthanam: 2007-5 MLJ 87
Mahanta Srikrushna Chandra Das Vs. Rajkishore Mohanty: AIR 1982 Ori 123.
[13] 2018-14 SCC 761
[14] Priti Pratap Singh Vs. Rani Prem Kumari: 2018-8 LAWS (DLH) 492
[15] Ramesh Chandra Vs. Milap Chand: 2015-3 CDR 1072: 2015-4 WLC 143,
[16] AIR 1957 SC 797
[17] AIR 2003 SC 1685
[18] AIR 1962 Mad 48
[19] See also: Idol Murli Manoharji Vs. Gopilal Garg: AIR 1971 Raj 177
[20] (1918) ILR 42 M 440: 36 MLJ 575
[21] See also: R Venugopala Reddiar Vs. Krishnaswamy: AIR 1971 Mad 262
[22] AIR 1993 SC 1145
[23] Referred to in Bala Shankar Maha Shanker Vs. Charity Comner: AIR 1995 SC 167
[24] Shri Ram Kishan Mission Vs. Dogar Singh: AIR 1984 All 72.
[25] AIR 1965 MP 4
[26] 1962-64 Bom LR 206;
Both these decisions referred in: Jagannath Vs. Satya Narainlaws: AIR 1973 Raj 13.
[27] 2009-3-RCR(CIVIL) 133
