Two Decades Too Late: High Court Upholds Rejection of Stale Trust Property Sale Extension.


07 April 2025 Wills/Trusts >> Family Law  

In Commission on Ecumenical Mission & Relations of the Presbyterian Church (USA), through it\'s Managing Trustee Prem Masih, Mumbai v/s The State of Maharashtra, represented through the Office of the Government Pleader, Appellate Side & Others., the Bombay High Court recently upheld a decision by the Joint Charity Commissioner, Kolhapur Division, refusing to grant an extension of time to a Public Trust for executing a sale deed. The original permission for the sale of trust property was granted nearly two decades ago, in 2001. The High Court, in its judgment dated today, January 2, 2025, emphasized the importance of timely completion of such transactions and the need to protect the best interests of the Trust, especially considering the significant appreciation in property values over the intervening period.

The petitioner, a registered Public Trust, sought to challenge the Joint Charity Commissioner's order that rejected their application for an extension to finalize a sale agreement with respondent No. 5, a transaction initially approved under Section 36(1)(a) of the Maharashtra Public Trusts Act, 1950. The Trust had sought permission to sell a substantial piece of land in Kolhapur, citing its idle status, lack of income generation, and vulnerability to encroachments. Following a public advertisement in 1989, respondent No. 5 emerged as the highest bidder, and the Charity Commissioner granted permission for the sale in 2001 for a consideration of ?2,63,97,300, stipulating that the sale deed be executed within one year, i.e., by February 6, 2002.


 

 

The Trust attributed the delay in executing the sale deed to procedural and legal hurdles, including title investigation and securing necessary approvals, such as land conversion for residential purposes granted in 2007 and the rectification of land tenure by the Collector in 2010, with corresponding revenue record entries made in 2011.

Interestingly, the court noted that despite the lapse of the initial deadline, respondent No. 5 had proceeded to create third-party rights over a portion of the land in favor of another trust. Subsequently, a settlement agreement in 2019 involved a third private trust (respondent No. 3) agreeing to pay the government-determined land price to the petitioner as a nominee of respondent No. 5, along with an additional payment and transfer of built-up area from respondent No. 5 to respondent No. 3.

Faced with these developments, the petitioner sought an extension of time from the Joint Charity Commissioner to execute the sale deed based on the original 2001 permission. This application was initially rejected, a decision that was challenged in a previous writ petition. The High Court had then remanded the matter, noting the willingness of respondent No. 3 to pay the government-fixed price. However, upon reconsideration, the Joint Charity Commissioner again rejected the extension, citing non-compliance with the High Court's remand order. This led to the present writ petition.

The petitioner's counsel argued that the Joint Charity Commissioner had failed to properly consider the willingness of respondent No. 3 to pay the government-determined price, as directed by the High Court in the remand order. He contended that no further action was required from the petitioner and that the extension should have been granted.

The High Court, however, firmly rejected this argument. Justice [Name of Judge, if available in the original document] emphasized the settled legal position regarding Section 36 of the Maharashtra Public Trusts Act, underscoring that any alienation of trust property must be in the "interest, benefit, or protection" of the Trust and that the paramount consideration is the welfare of the beneficiaries, typically translating to securing the highest possible return.

The court heavily relied on the Supreme Court's landmark judgments in Chenchu Rami Reddy and Another v. Government of Andhra Pradesh and Mehrwan Homi Irani v. Charity Commissioner, Bombay & Others, which strongly advocate for the protection of public trust properties and emphasize the need for transparency and securing the best possible price, preferably through public auction rather than private negotiations.

Drawing a parallel with a coordinate bench decision in Anna Dhuraji Patil v. State of Maharashtra and Others, where an extension of time was refused after a six-year delay due to significant market appreciation, the High Court noted the extraordinary delay of nearly 24 years in the present case. The court reasoned that allowing the sale to proceed at the 2001 price, without any re-evaluation or fresh offers, would be manifestly detrimental to the Trust's interests, given the likely substantial increase in property value in Kolhapur over two decades.

The High Court explicitly stated that the time-bound condition imposed in the original permission order was not a mere formality but a crucial element to protect the Trust from potential undervaluation in a fluctuating market. The failure to adhere to this timeline, coupled with the significant lapse of time, warranted a reassessment of the transaction.

Ultimately, the High Court concluded that the Joint Charity Commissioner was justified in rejecting the extension. While dismissing the writ petition, the court granted liberty to the petitioner-Trust to file a fresh application under Section 36 seeking permission for a fresh sale of the property. The court directed the Joint Charity Commissioner to consider such a fresh application expeditiously, within four months, following due process, including inviting public offers through a widely circulated Marathi daily and fixing a reserve price based on a current and objective market valuation.

This judgment serves as a strong reminder of the judiciary's commitment to safeguarding the assets of public trusts and ensuring that any disposal of such properties adheres to principles of fairness, transparency, and maximization of benefit for the beneficiaries, particularly in the context of significant delays and changing market dynamics.


Section 36, MAHARASHTRA PUBLIC TRUSTS ACT - 1950  

Section 36A, MAHARASHTRA PUBLIC TRUSTS ACT - 1950  

MAHARASHTRA PUBLIC TRUSTS ACT, 1950