Court clarifies that revocation of sanction under the Maharashtra Public Trusts Act must be based on proven fraud, misrepresentation, or concealment.
In a significant decision, the Bombay High Court, presided over by Justice Amit Borkar, has quashed the order dated January 29, 2020, by the Joint Charity Commissioner that had cancelled an earlier sanction granted to Bagasarwala Property LLP for a lease agreement. The court ruled that the revocation under Section 36(2) of the Maharashtra Public Trusts Act, 1950, must be strictly limited to cases of fraud, misrepresentation, or concealment of material facts, which were not sufficiently demonstrated in this case.
The dispute arose when the Joint Charity Commissioner revoked the permission initially granted on May 24, 2018, for a 29-year lease of trust property to Bagasarwala Property LLP. The revocation was based on allegations of non-disclosure of crucial facts and procedural lapses. However, the court found that the allegations of fraud and concealment were not supported by concrete evidence, as required by law.
The court emphasized that the jurisdiction under Section 36(2) is not appellate and cannot be used to reassess the merits of the original sanction. Instead, it is confined to examining whether the sanction was obtained through fraudulent means. The court noted that the initial sanction involved thorough scrutiny of relevant facts, including valuation reports and the nature of the transaction, thereby dismissing claims of intentional deceit or significant omissions.
Justice Borkar's judgment also highlighted the need for strict pleadings and proof in allegations of fraud, stating that mere procedural irregularities or differences in opinion do not justify revocation under Section 36(2). The decision reinstates the original sanction, allowing the lease to Bagasarwala Property LLP to remain valid, while also clarifying that the judgment does not adjudicate on the independent rights or claims related to tenancy or ownership of structures on the property.
The court’s ruling underscores the legislative intent to protect trust properties from hasty and unbeneficial transactions, while also ensuring that revocations are grounded in substantive proof of wrongdoing, thus maintaining the integrity of trust property management.
Bottom line:-
Maharashtra Public Trusts Act, 1950 - Scope of Section 36(2) - Revocation of sanction granted by Charity Commissioner under Section 36(1) - Limited jurisdiction confined to fraud, misrepresentation, or concealment of material facts - Revocation proceedings cannot be converted into an appellate jurisdiction to reassess the merits of the original sanction.
Statutory provision(s): Maharashtra Public Trusts Act, 1950, Sections 36(1), 36(2)
Bagasarwala Property LLP v. Joint Charity Commissioner, (Bombay) : Law Finder Doc id # 2919922
