Bombay High Court Declines Intervention in Trust Loan Proceedings, Upholds Charity Commissioner’s Order.


16 October 2025 Civil Writ Petition >> Civil & Consumer Law  

A writ petition challenging an order passed by the Joint Charity Commissioner, Pune, refusing to implead a former trustee in loan sanction proceedings initiated under Section 36A(3) of the Maharashtra Public Trusts Act, 1950, was dismissed by the Bombay High Court. The case represents a long-ongoing conflict within the MTES, a reputed educational trust running several institutions across Maharashtra.

The petitioner, who was a Chairman of the Board of Control of MTES, sought to be impleaded in the proceeding for permission by the Trust to borrow a sum of Rs. 10 crore from Janata Sahakari Bank to complete the remaining construction of an international school building at Sangli. Since his application for impleadment had been declined by the Joint Charity Commissioner, he had filed this writ petition.

 

 

Appearing for the petitioner, counsel contended that the loan application itself was unauthorized since the persons representing the Trust had no legitimate authority to act on its behalf. It was contended that the petitioner, being a member and erstwhile office-bearer, had an existing interest in the affairs of the Trust and was thus entitled to be heard under Section 73A of the Act, which allows any “person having interest” to join as a party to proceedings concerning a public trust.

Opposing the plea, counsel for the Trust contended that the petitioner had long ceased to be a member following his removal in an Extraordinary General Body Meeting held in 2011, which also led to his expulsion from membership in 2016. The legality of these actions, though once disputed in civil proceedings, had been upheld, and no subsisting challenge remained. It was argued that the petitioner's repeated attempts to insert himself into the affairs of the Trust amount to an abuse of process designed to obstruct regular administration.

The Court, upon examining the statutory scheme in some detail, observed that Section 36A(3) of the Act mandates prior sanction of the Charity Commissioner for a trust to borrow money and that such sanction is essentially to be guided by the interest and protection of the trust. The decision-making under this provision, the Court thus noted, was confined to financial and administrative suitability and not extending to questions of internal governance or management disputes.

The operative clause, therefore, will have to be construed narrowly while understanding the meaning of "person having interest" in Section 2(10). Thus, it held that only a trustee or beneficiary of the trust can claim such an interest under the relevant clause. In the instant case, once the petitioner had been validly removed as a member, he could no longer claim rights of participation in the proceedings before the respondent. It also clarified that the expansion of the loan sanction application to cover the dispute on management would clearly frustrate the legislative intent to decide such an application expeditiously, preferably within fifteen days when a bank has given a provisional sanction to the loan. 

The High Court held that the petitioner's intervention would result in unnecessary protraction and complexity of the limited enquiry contemplated under Section 36A(3). It observed that the petitioner's removal and membership-related grievances were separate issues previously adjudicated in earlier litigation and could not be reopened incidentally through intervention in these proceedings. Accordingly, the petition was dismissed. The Court called upon the Charity Commissioner to process the pending loan application in accordance with law and without further delay. 

The decision thus reiterates the principle that the statutory control exercised by the Charity Commissioner in financial matters is not a forum for contesting factions to litigate internal power tussles. It holds that only persons having a legal standing as trustees or beneficiaries are entitled to participate in such a proceeding under the Maharashtra Public Trusts Act.