CYRUS RUSTOM PATELversusTHE CHARITY COMMISSIONER MAHARASHTRA, STATE & ORS.

                           [2017] 9 s·.c.R. 277 ·


                       CYRUS RUSTOM PATEL                             A
                                       v.
      THE CHARITY COMMISSIONER MAHARASHTRA,
                    STATE & ORS.
                     (Civil Appeal No. 1745 of 20 I 0)                B
                         SEPTEMBER2l,2017
                 [ARUN MISHRA AND
            MOHAN M. SHANTANAGOUDAR, JJ;J
        Trusts and Charities: ·
          Bombay Public Trusts Act, 1950 - s. 36 - Alienation of
                                                                      c
 immovable property of public trust - On facts, a Trust property
 admeasuring about 3012 sq mtrs wherein stood a Parsi Fire Temple
 and other structures with 21 tenants - Joint venture agreement for
  development-cum-sale between Trust and the developer for_ a sum
 of Rs. 2,95,00,0001- - Accord of sanction to development-cum-sale. D
 tr_ansaction by Joint Charity Commis.l'ioner uls. 36 - Uphelc!.bJ! ,the
 High Court ~ On appeal, held: Joini<:;ha;·ity
                 '           .     4       . ..... t ..
                                       • 1"4~.
                                                        Commissioner -ivas
 required to consider the interest, bei1efit and protection of the trust
                                                              to
 - Charity Commissioner totally abdicated its diit)\ and failed ai::t
  as per 'the mandate of s. 36 - Trustee as well as Joint Commissioner E
 failed to act in the interest, benefi{and to protect the Trust - Order
  is wholly perverse - Such a huge area in a prestigious locality could
 hot have -bee11 sold for a paltry sum of Rs.2,95,00,000/- and that
 too by a private negotiations - No effort made to ascertain the
  market value - No urgency to throw away the valuable property of
  the tr~st, which was derogatory to its interest - Requireinent _of F ·
                                   a
 publishing a publip notice in newspaper, cOuld not have b_een
  waived _:___ Inviting an offer by public noiice would haye disclosed _
  actual 1-Yoi:th of property _:___ Order passed by the Charity
_Commissioner as well as High Court set aside - Trust to reP.ay the
  amount of Rs.2,95,00,0001- to the developer - Imposition of cost of G
  Rs.J,00,0001- on the developer - Costs.
        Allowing the appeal, the Court
        HELD: 1.1 It is apparent from the provisions of Section
 36 of the Bombay Public Trusts Act, 1950 that sale, exchange or
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                                 277
278            SUPREME COURT REPORTS                      [2017] 9 S.C.R.


A gift of an} immovable property or lease, extending beyond 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 not be valid without previous
  sanction of the Charity Commissioner. The power to grant
  sanction has to be exercised by the Charity Commissioner, taking
B
  into consideration three classic requirements i.e. "the interest,
  benefit, and protection" of the Trust. The expression that sanction
  may be accorded subject to such conditions as Charity
  Commissioner may think fit under section 3l(l)(b) and Section
  36(l)(c). The Charity Commissioner has to be objectively satisfied
c that property should be disposed of in the interest of public trust;
  in doing so, he has right to impose such conditions as he may
  think fit, taking into account the said triple classic requirements.
  It is also open to the Charity Commissioner, in exercise of power
  of Section 36(2), to revoke the sanction, on the ground that the
D sanction had been obtained by fraud or misrepresentation or those
  material facts have been suppressed while obtaining sanction.
  [Paras 22-23)(294-F-H;. 295-A, BJ
          1.2 In the instant case, the Joint Charity Commissioner
  was required to consider the interest and benefit of the Trust.
  The Charity Commissioner totally abdicated its duty, and failed
E to act as per the mandate of Section 36. The observations made
  by the Commissioner in its Order clearly reflect that Charity
  Commissioner failed to exercise the duties enjoined upon to
  protect trust under Section 36. It has not considered the interest,
  benefit, and protection of the trust at all. The order is wholly
F perverse. There is the sale made in the form of Joint Venture
  development cum sell agreement and lease was for 999 years.
  Right from the beginning, it was to be a joint venture agreement
  coupled with a sale option, as apparent from the minutes of the
  meeting of the trust. The trustees had been acting in collusion
  with developer even before resolution had been passed.
G Negotiations were going on with the developer. [Para 24](295-
  C-E]
             1.3 This is a prestigious locality, where one would cherish
      to own a property. Judicial notice is taken of the fact, that such a
      huge area could not have been sold for a paltry sum of
H
  CYRUS RVSTOM PATEL v. THE CHARITY COMMISSIONER                         279
            MAHARASHTRA, STATE & ORS.

  Rs.2,95,00,000/-. Trustees, as well as Joint Commissioner, have A
  failed to act in the interest, benefit and to protect the Trust, and
  the same could not have been sold by such private negotiations.
  The value was many a time more at the time of entering into the
  agreement. The paltry sum that was n•served by the Trust could
- not be said to be in the interest and benefit of the trust. Merely
                                                                       8
  obtaining a valuation report, from a person of choice, without
  making any serious effort to ascertain the market value by way of
  any method known to law, and fixing its reserve price, was an
  eye-wash; such a dubious transaction was not at all acceptable,
  and it shocks conscience as to how such a valuable property could
  have been sold at such a throw-away price. It was not considered c
. as to why trust should sell such a valuable property at all, and as
  to what was the compelling necessity. Ordinarily, the trust
  property is to be protected, such property is held in trust; in
  case its condition was not good, there could be several other
  ways to improve it; it could not have been achieved by virtually D
  throwing away the property. [Para 26] [295-H; 296-A-E]
         1.4 Sale of trust property, which is like public property, if
 at all necessary, is not permissible by way of private negotiations;
 could be done only in exceptional circumstances, for reasons to
 be recorded. There was no exceptional circumstance, no urgency
                                                                         E
 to throw away the valuable property of the trust, which was
 derogatory to its interest and would have defeated the very object
 of the creation of the trust for the preservation and protection of
 religion and Parsi culture. [Para 28][300-B-C]
        _ 1.5 The joint venture development was not an intended
  transaction; sale option was mentioned dubiously in the F
  agreement; same indicated that transaction was not bonafide. It
                  a
  was. a cloak or device adopted by the trust so as to sell the
· property, and the transaction could not be said to be in the interest
  and benefit of the trust at all. Unfortunately, Joint Charity.
  Commissioner totally failed in observance of statutory duties and G
  did not look into the various aspects, neither conducted an
  enquiry envisaged under Section 36. Thus, the transaction could
  not have been sanctioned, considering the spirit .of the· provisions
  ofSection 36 of the Act. The sanction had been granted in flagrant
  violation of basic principles of the law; it cannot withstand judicial
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280          SUPREME COURT REPORTS                    [2017] 9 S.C.R.


A scrutiny. [Para 29][300-C-F]
          1.6 The prayer was made in the application to dispense
  with public notice in a newspaper on the pretext that it was joint
  venture agreement and development was to be made by trustees,
  whereas it was, in fact, not the actual factual situation. There was
B a clause for sale, and lease of999 years would also tantamount to
  a sale, and admittedly sale option had been exercised. [Para
  30][300-G]
          1.7 It is apparent from the averment that there was a
  necessity of publishing a public notice in a newspaper, which
c requirement was sought to be waived on the ground that it was a
  joint venture and that development was being done hy the
  trustees themselves, due to that, a public notice was not
  necessary. However, as a matter of fact, in Joint venture itself,
  the sale was contemplated and in fact it had taken place. The
  issuance of public notice could not have been waived. Inviting an
D offer by public notice would have disclosed actual worth of
  property; the said averments had been made designedly to evade
  the public notice, and it was not in the interest or for the benefit
  of the Trust to act in such a clandestine manner. It is clear that
  the application under Section 36 of the Act was not filed with
E clean hands, and it illegally aimed to get rid of public notice and
  unfortunately trustees succeeded in it. There was
  misrepresentation made as to the actual transaction that was
  intended and had ultimately taken place, in as much as it was
  stated in the application that no purpose would have been served
  by issuance of the public notice, as it was joint development
F venture, however, the property was totally unencumbered and
  easily marketable in its present form. The Joint Charity
  Commissioner also omitted to take into account actual nature of
  transaction how such property has to be sold. [Para 31)(301-D-
      G]
G        1.8 The trust could not have entered into such negotiations
  with the builder without public notice, which was admittedly not
  given in the instant case and, thus, the joint venture-cum-sale
  and lease for 999 years amounted to a sale. In such a manner and
  method, the application could not have been entertained at all,
H much less allowed, by the Joint Charity Commissioner. The High
 CYRUS RUSTOM PATEL v. THE CHARITY COMMISSIONER                           281
           MAHARASHTRA, STATE & ORS.

Court did not look into the market value of the property, and             A
rejected the petition mainly on the basis of the delay, 'that was
not very material in the facts, as no development had taken place.
When such a prime and valuable public property was involved,
the said delay could not be said to be fatal in the facts and
circumstances of the case. [Paras 32-33][301-H; 302-A-C]
                                                                    B
        1.9 Such a frivolous prayer could not have been
entertained, and the order of'the Joint Charity Commissioner is
absolutely illegal. When trust has obtained money, obvfously it
has to repay the amount of Rs.2,95,00,000/~ to the developer.
Considering the value of the property and the arguments made,
the trustees were. not up to the task of protecting the interest of C
the trust, and Clearly colluded with the developer while entering
into such· an agreement for development-cum•s·ale. The order
passed by the Charity Commissioner as well as by the High Court.
is set aside. The costs -0f Rs;l,00,000/- to be deposited .by the
developer with the S'upreine Court Advocate~ Bar Association · o
Welfare Fund. [Paras 34-35][302-D-F]               ,'.   '.


       Sciilesh Developers v. The Joint Charity C.b'm111issioner ··
       Maharashtra 2007 (4) ALL MR 100 : 2007 (3) Born.•
       CR7; Chenchu Rami Reddy and Another v. Govt. of
       A.P. and Others [1986] 1 SCR 989 : (1986) 3 SCC                    E
       391; R. Venugopata Naidu and Ors. v. Venkatarayulu
       Naidu Charities and Ors. (1989) 1 Suppl. SCR 760 :
       (1989) Supp. 2 sec 356; Bhaskar Laxman Jadhav V.
       Karamveer Kakasaheb Wagh Education Society
       (2012] 11 SCR 767 : (2013) 11 SCC 531; Vedica
       Procon Private Limited v. Batleshwar Greens Private                F
       Limited and Ors [2015] 8 SCR.1099 :. (2015) 10 SCC
       94 - referred to.
                       Case Law Reference
2007 (4) ALL MR 100             referred to                   . Para 10   G
[1986] 1 SCR 989                referred to                   Para 11
[1989] 1 Suppl. SCR 760         referred to                   Para 11
[2012] 11 SCR 767               referred to                   Parall
[2015] 8 SCR 1099               referred to                   Para 14     H
282            SUPREME COURT REPORTS                         [2017] 9 S.C.R.


A           CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1745
      of2010.
            From the Judgment and Order dated 04.02.2008 passed by the
      High Court of Bombay in Writ Petition No. 2655 of2007.
              Chandra Shekhar, S. K. Verma. Saurabh Upadhyay,
 B    Ms.Akansha Verma, Chandok,Arindam Mukharji, Ms. Gargi Tuli, Ad vs.
      for the AppeJlant.
              Jaideep Gupta, Gopal Jain, Atul Yeshwant Chitale, Sr. Advs.,
      Sum it Goel, Ms. S. Lakshmi Iyer, Ms. Anwesha Padhi, Ms. Kriti Awasthi
      (for Mis. Parekh & Co.), Ms. SuchitraAtul Chitale, Gurjyot Sethi, Kuna I
 C    Cheema, N ishant Katneshwarkar, Yogesh Ahirrao, Amar Dave, Mahesh
      Agarwal, Rishabh Parikh, Himanshu Satija, E. C. Agrawala, Advs. for
      the Respondents.
             The Judgment of the Court was delivered by
 D            ARUN MISHRA, J. I. This appeal has been preferred
      questioning the dismissal of the Writ Petition by the High Court, vi de
      impugned Judgment and Order dakd 04-02-2008, thereby declining to
      interfere in the order passed by the Joint Charity Commissioner on
      03-07-2004 granting sanction to development cum sale transaction.
 E            2. The B.C. Batliwala Agiary Trust is registered under the
      Bombay Public Trusts Act, 1950 (hereinafter referred to as 'the Act').
      The Trust, in its meeting dated 20-01-2003, decided to enter into an
      agreement with M/s. Astral Enterprises. It was noted in the minutes of
      the meeting that the tenants in the premises had, in principle, agreed to
      the development of the Trust property at Tardeo, on the condition that
 F    the interest of the tenants would be looked after and that the tenants
      would be provided flats in new buildings on ownership basis, and that the
      development would be completed in a time bound manner by the said
      developer.
            3. The minutes of the Trustees meeting dated 20-01-2003 states
 G that Shri Suresh Mehta, partner of Mis. Astral Enterprises, had been
   invited to the meeting. It was decided that in case there was any difficulty
   in carrying out the development agreement, it would be converted into
   an outright sale. The Trustee would have an exit option. It was decided
   that development would be on a time-bound basis. The registration
   charges of the deed would be borne by the developer, as wel I as the cost
 H
 CYRUS RUSTOM PATEL v. THE CHARITY COMMISSIONER                               283
   MAHARASHTRA, STATE & ORS. [ARUN MISHRA, J.]

of construction. Trustees would have an exit option if trustees felt that it A
was not in the interest of the Trust to carry on with the joint venture
development; the Trustees alone shall have the option to convert the
joint venture arrangement into a sale, in that event M/s. Astral Enterprises
would require paying a fixed pre-determined price to the Trust. The
application was filed under the provisions of Section 36 of the Act, for
                                                                             8
granting sanction to enter into joint venture cum sale agreement between
the trust as well as the M/s. Astral Enterprises.
         4. The aforesaid development agreement was with respect to
 "Fire Temple", bearing Cadastral Survey No.727 of Malabar Hill
·Division, Mumbai admeasuring about.3012 sq. meters, situated at 160          C
 Tardeo, Mumbai. On the said property stand a "Parsi Fire Temple'' and
 certain other structures that are occupied by 21 occupants in the capacity
 of tenants. There was no further availability ofF.S.l.
         5. It was mentioned in the application filed under Section 36 of
 the Act that construction of the temple was done prior to 1940, it was old
 and in a dilapidated condition, and required extensive repairs. The Trust D
 was getting a meager income from the building. It was in need of funds
 to meet the objectives of the trust; as such trustees decided to develop
 the property after prolonged discussions. As trust had no such funds as
 were required for carrying out the construction work, it was considered
 necessary to take help of the developer. Mis. Astral Enterprises was E
 ready to provide the necessary services to the trust, with a proposal to
 jointly develop the property. It transpires that agreement for joint venture
 development-cum-sale had been entered into and ultimately sale had
  been effected, for a sum ofRs.2,95,00,000/-.
          6. The Charity Commissioner had accorded the sanction under          F
 Section 36 of the Act. Though it was noted by the Charity Commissioner
 that no public notice had been published in the newspaper for inviting the
·offers, yet for non-publication of the same in newspapers, the applicant,
 gave an explanation by way of an affidavit, that public notice was not
 mandatory in all cases, before a grant of sanction.
                                                                               G
         7. Charity Commissioner has further observed that it was
 concerned only with according or refusing sanction to a particular sale
 which the trustees propose to make and that it was for the trustees to
 decide to whom they should sell the property, subject to the sanction of
 the Charity Commissioner. Ther<l was no necessity to invite others by
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284           SUPREME COURT REPORTS                          [2017] 9 S.C.R.


A   way of public advertisement. It was not open to the Charity Commissioner
   to invite offers from third parties. As per the development agreement,
   the temple would be renovated and 33% of the built-up area would be
   given out of balance F.S.J. In addition, a sum ofRs.2,95,00,000/- as sale
   consideration was given; and the alienation was for the compelling
   necessity. and in the interest of the public trust. At the same time, while
B
   considering whether the offer was proper, fair arid adequate, as compared
   to the market value, the Joint Charity Commissioner has observed that it
   was not the case of an outright sale; and further that it was not necessary
   to take into consideration the market value of the property as the
   developer had agreed to make the extension of Fire Temple, and to re-
c house the tenant, and to give 33 % of the constructed portion out of the
   balance F.S.I. As such, the transaction has been found by the Joint Charity
   Commissioner to be in the interest of the. trust and sanctioned sell and
   lease for 999 years of the property. It was ordered that joint venture
   agreement for development-cum-sale with the Astral Enterprises may
   be entered into, as per MOU dated 3-04-2003, following order has been
D. passed :

            "!. xxxxxx
            2. The Trustees are permitted to enter into the joint venture
            agreement coupled with the sale option in terms of the
E           memorandum of Understanding dtJ .4. 03 Ex.5 executed between
            the trustees and the Astral enterprises.
            3. The Trustees are permitted to enter into joint venture with
            astral enterprises in terms of Memorandum of Understanding
            dt.3.4.03 (Ex.5) executed between the trustees and the Astral
F           Enterprises & consequently permitted the trustees to execute a
            lease of the balance land i.e. the said property minus the land
            underneath Agiary building. which Agiary building land
            admeasures 620 sq. mtrs or thereabouts for a term of999 years
            at a token annual rent of Rs. I/- in favour of Astral Enterprises
            or its nominee.
G
            4. In the event of trustees exercise the option as provided in cl.
            18 of the said MOU Ex.5 they are permitted to sell the
            development rights in respect of the balance land i.e. the said
            entire propertv minus the land underneath the Agiary building
            admeasuring 620 sq.mtrs for a total consideration of Rs.2.
H
CYRUS RUSTOM PATEL v. THE CHARITY COMMISSIONER                              285
  MAHARASHTRA, STATE & ORS. [ARUN MISHRA, J.]

    95,00,000 {Rupees two crores ninety-five lacs only) to Astral A
    Enterprises and consequently the trustees are permitted to lease
    the balance land of a term of999 years at a· token annual rent of
    Rs. I/- in favour ofAstral Enterprises or its nominee. Jn the event,
    the B.E.S.T. Authorities so require as a precoii'dition to providing
    the necessary electrical power, the trustees are permitted to .
                                                                                  -..
                                                                                  " '(T .



                                                                         8
    transfer such area as may be necessary but ~ot exceeding I 00
    sq. m. out of the said property in favour ofB.E.S.T. undertaking
    to accommodate a subsection. The trustees are permitted to hand
    over such setback area as may be ultimately determined to be
    handed over to the Bombay Municipal Corporation on such terms
    and for such consideration as may be stipulated by the c
    Corporation or by any statutory.Authority and execute such
    documents as may necessary or incidental for completing the
    process of such handling over of the setback area.
    5. Necessary and relevant documents are executed within a
    period of six months from the date cif passing of this order for D
    giving effect to the Memorandum of Understanding dt.2.4.2003
    (Ex.5).All the expenses are required to ,be made for the
    development of the trust and for executing the-<locuinent, shall
    be made by the Astral Enterprises.
    6. The above permission is grante1i subject to the-provisions and       E        ' .
    prohibition contained in any other act and laws for the time being
    in force, relating to trust property in question.
    7. The consideration amount, income received by the trust in
    view of the transaction permitted shall be utilized in carrying out
    the objects of the trust and for protecting the interest of the trust   p
    and its property.                                \
    8. The trustees shall invest the amount, which will be received in
    this transaction in the fixed deposits in any Nationalized Bank or
    Public Seci1rities of their choice. It shall form the part of the
    corpus of the trust property.                                           G
    9. The trustees are directed to file necessary change report under
    Sec.22 of the Bombay Public Trust Act, 1950 before the
    Competent Authority after the transaction completed."
                                                  (Emphasis supplied)
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286            SUPREME COURT REPORTS                          [2017] 9 S.C.R.


A             8. The appellant Cyrus Rustom Patel filed writ application in the
      High Court of Bombay. The High Court dismissed the same. mainly, on
      the ground of delay, as petitioner was aware of the transaction w.ef the
      year 2003. The High Court has observed that offer made by the Nilkanth
      Realtors in respect of sale transaction of an amount of Rs.55 crores
      was not proper. ft was to acquire property rights on a freehold basis and
8
      not in the form where the setback line runs through the Sanctum
      Sanctorum. The High Cou1t opined that offer may have been tempting.
      but could not be said to be genuine as per provisions contained in Section
      36 of the Act.
             9. It has not"beeri disputed that so far the Municipal Corporation
c     of Mumbai has not granted the permission forthe aforesaid development,
      as such no development has taken place.
           I0. The learned counsel appearing on behalf of the appellant
  urged that in the instant case, the Charity Commissioner while granting
  sanction has not safeguarded the interest of the Trust. The property is a
D prime property in Mumbai. It is worth multi-folds more than at what it
  had been sold away. The relevant aspect to grant sanction under Section
  56 of the Act had been considered by a Full Bench of the High Court at
  Bombay in Sailesh Developers v. The Joint Charity Commissioner
  Maharashtra: 2007 (4) ALL MRI 00= 2007 (3) Born. CR7. in which it
E has been held that it was open to the Charity Commissioner to take care
  of the interest of the Trust in such transactions. and if necessary, to
  invite the other best offers to safeguard the interest of the Trust.
              11. Learned counsel for the appellant has also relied upon the
      decisions of this Court .in Chenchu Rami Reddy and Another v. Govt.
 F of A.P. and Others (1986) 3 SCC 391; R. Venugopa!a Naidu and
      Ors. v. Venkatarayulu Naidu Charities and Ors. ( 1989) Supp. 2 SCC
      356, Bhaskar Laxman Jadhav v. Karamveer Kakasaheb Wagh
      Education Society, (2013) 11 SCC 53 l.
            12. He has submitted that sale of the property could only be
 G done in the prescribed method and manner in which it was to be done, as
   apparent from the minutes of the meeting dated 201h January 2003, that
   in the said meeting only Mis. Astral Enterprises had been invited. The
   Trustees invited no other offer. Thus, trustees have totally failed to act in
   an objective manner. No transparency was observed while selling the
   valuable trust property for a paltry sum, and that such transaction could
H
 CYRUS RUSTOM PATEL v. THE CHARITY COMMISSIONER                                 287
   MAHARASHTRA, STATE & ORS. [ARUN MISHRA, J.]

not be said to be beneficial for the Trust. The trustees had failed to live     A
upto the expectations of the beneficiaries and creator of the trust and to
protect the property of Trust.
         l 3. On the other hand, learned counsel appearing for the
respondents contended that no case for inte1ference was made out as
the market value was not required to be taken into consideration in this        B
case. Tenants were to be settled, and the Temple was also to be protected,
and no other builder was corning forth so as to develop the property by
keeping intact the "Fire Temple". The prope1ty was in a dilapidated
condition: hence the decision had been taken in the best of the interests
of the trust to sell the property.
                                                                                c
         14. It was also· submitted on behalf of the respondents that the
competent authority the Joint Charity Commissioner had duly accorded
sanction under the provisions contained in Section 36 of the Act, and at
the relevant time, it was not open to Charity Commissioner to make
much interference in such a matter. It was not open even to this Court to
interfere in such a matter, in view of the decision of this Court in Vedica     D
Procon Private Limited v. Balleshwar Greens Private Limited and
Others; (2015) 10 SCC. 94.
         15. It was also urged on behalf of the respondents that at the
relevant time when the matter had been decided by the Charity
Commissioner, the Full Bench decision of the Bombay High Court was              E
not available. As per the then prevailing decision, which had been noted
by the Charity Commissioner, permission had been accorded in
accordance with law. Now the Full Bench Decision of the Bombay
High Court has widened the scope of Section 36; said decision cannot
be said to have retrospective effect. It was also submitted on behalf of        F
the trust that at present the trust would not be in a position to repay the
amount ofRs.2.95 crores \Vhich had been obtained from the developer.
         16. After hearing learned counsel for the parties, first, we propose
to take note of the certain principles laid down by this Comi with respect
to the duties enjoined upon the trustee in the matter of sale of trust          G
properties.
         17. This Comi in Chenchu Ram Reddy (supra) considered the
sale of immovable property belonging to public religious and charitable
endowments by private negotiatior.s. The Government had sanctioned
the sale of land by private negotiations for a sum ofRs.20.00.000/- without     H
288          . SUPREME COURT REPORTS                            [2017) 9 S.CR.


A recording reasons whereas, the appellants made the offer to purchase
  the land for Rs.80,00,000/-. This Court observed that in all circumstances,
  the concept of an auction of the property was primarily for the benefit of
  the Trust, and that disposal of public prope11y should normally be done
  by public auction. with full application of mind by the competent authority.
  This Court made the observations on consideration of the provisions
B
  contained in Article 14 of the Constitution oflndia. This Court held that
  in view of the provisions contained in Section 74 (I) oftheAndhra Pradesh
  Charitable & Hindu Religious and Endowments Act 1966, Government
  must be satisfied that it was in the interest of the institution or endowment
  to permit the sale of the concerned lands otherwise than by a public
c auction, and then reasons to reach that satisfaction must be recorded in
  the order.
           It was also observed by this Court in Chenchu Ram Reddy
  (supra) that public officials and public-minded citizens entrusted with
  the care of 'public property' have to show exemplary vigilance: the
D property of religious and charitable institutions or endowments must be
  jealously protected. The sale of such a property by private negotiations
  which will not be visible to the public eye, and may even give rise to
   public suspicion, should not be, therefore, made, unless there are reasons
  to justify the same. This Court observed:
 E          "l 0. We cannot conclude without observing that property of such
            institutions or endowments must be jealously protected. It must
            be protected, for, a large segment of the community has a
            beneficial interest in it (that is the raison d'etre of the Act itself).
            The authorities exercising the powers under the Act must not
            only be most alert and vigilant in such matters but also show
 F          awareness of the ways of the present day world as also the ugly
            realities of the world of today. They cannot afford to take things
            at their face value or make a less than the closest-and-best-
            attention approach to guard against all pitfalls. The approving
            authority must be aware that in such matters the trustees, or
 G          persons authorized to sell by private negotiations, can, in a given
            case, enter into a secret or invisible under-hand deal or
            understanding with the purchasers at the cost of the concerned
            institution. Those who are willing to purchase by private
            negotiations can also bid at a public auction. Why would they
            feel shy or be deterred from bidding at a public auction? Why
 H
 CYRUS Rl}STOM PATEL v. THE CHARITY COMMISSIONER                            289
   MAHARASHTR_A, STATE & OR.S. [ARUN MISHRA, J.]

       then permit sale by private negotiations, which will not be visible. A
       to the public eye and may even give rise to public suspicion unless
       there are special reasons to justify doing so? And care must be
       taken to fix a reserve price after ascertaining the market value
       for the sake of safeguarding the interest of the endowment. With
       these words of caution, we close the matter.
                                                                            B
         18. Again, in R. Veni1gopala Naidu (supra), this Court observed
that fraudulent sale of the property of public charities by way of private
negotiations should not be permitted. This Court forther held that reserved
price should be fixed after ascertaining the market value and offer of
higher price by filing an affidavit. In the aforesaid case, the Subordinate. C
Court and the High Court, instead of going into the merits of the case.
non-suited the plaintiffs on the ground of locus standi. This Court had
considered the fact that the value of the prope11y which the trust got
was not the market vaJue, and quashed and set aside the sale order of
the subordinate court and the consequerit sale. Relying on Chenchu
Ram Reddy (supra), this Court observed:                                      D
        '"13. The subordinate court and the High Court did not go into
        the merits of the case as the appellants were non-suited on the
        ground of locus-standi. We would have normally remanded the
        case for decision on merits but in the facts and circumstances of
        this case, we are satisfied that the value of the property which E
        the trust got was riot the market value. Two persons namely
         S.M. Mohamed Ya.aseen ad S.N.M. l)bayadully have filed
        affidavit offering Rs.9.00 lacs and Rs. 10.00 lacs respectively
        for these properties. In suppo11 of their bonafide, they have
        deposited I 0% of the offer in this Court. This Court in Chenchu
         Ram Reddy and another v. Government of Andhra Pradesh and F
        Others have held that the property of religious and charitable
        endowments or institutions must be jealously protected because
        a large segment of the community has a beneficial interest therein ..
         Sale by private negotiations. which is not visible to the public eye
         and may, even give rise' to public suspicion, should not, therefore, G
         be permitted unless there are special reasons to justify the same.
         It has further been held that' care must be taken to fix the reserve
         price after ascertaining the market value for safeguarding the
         interest of the endowment.

                                                                            H
290            SUPREME COURT REPORTS                          [2017] 9 S.C.R.


A          19. In Bhaskar Laxman Jadhav (supra), this Cotirt considered
  the alienation of the immovable pro petties of public Trust under Section
  36 of the Bombay Public Trusts Act, 1950; sanction was sought from
  the Charity Commissioner to alienate the property of the public trust,
  there was continuation of negotiations between trustees of public trust
   and prospective purchasers. There were successive applications
B
   submitted, seeking permission to alienate after each negotiation. This
  Court held that it would tantamount to an abuse of the process of law
  and that such an act of the party meant that they were trying to take
  advantage of the absence of any clear-cut provisions under the act
  relating to the sale. To prevent the abuse, this Cou1t considered the
c factual scenario that Trustees and the petitioners had been indulging in a
  flip-flop, and in a sense taking advantage of the absence of any clear-
  cut statutory measures designed to prevent abuse of the process of law
  in the Act. It was held by this Court that Charity Commissioner had
  rightly rejected the first application for two reasons, firstly since the
D trustees were not voluntarily selling the trust land and secondly, in the
  given circumstances, the sale transaction was not for the benefit, and in
  the interest of, the Trnst. This Court also considered the background
  facts, as also the compromise affected between the trustees and the
  petitioners in the High Court on 28-08-2008, which appeared to this Court
  to be suspicious. On an overall consideration of the facts and
E circumstances of the case, it observed that it was not possible to rule out
  the possibility of collusion between trustees and the petitioners.
           20. This Court in Bhaskar Laxman Jadhav (supra) further
  observed that the lack of honafide of trustees and the petitioners could
  not have been overlooked by the High Court. Therefore, the safest course
F was  to sell off the trust land through auction. It was also observed that it
  was quite ciear that due to the passage of time, the value of the trust
  land had increased considerably, and that it would be in the best interest
  of the Trust if the maximum price is made available for the trust land
  from the open market. This Comt also observed that under Section 36
  of the Act enjoins duties on the Charity Commissioner to consider the
G sale of immovable property of the trust with regard being had to the
  "interest, benefit or protection" of the trust. This Court considered the
  decision in Chenchu Rami Reddy case (supra) and held that the only
  course available to the High Cou1t was to mold the relief and to direct
  the Charity Commissioner to have a relook at all the bids received
H
 CYRUS RUSTOM PATEL v. THE CHARITY COMMISSIONER                                291
   MAHARASHTRA, STATE & ORS. [ARUN MISHRA, J.]

pursuant to the public notice dated 19-02-2007. In Bhaskar Laxman              A·
Jadhav (supra), this Court observed:
       "30. It was also submitted that since Shri Vyankatesh Mandir
       Trust is a charitable trust, it was expected of the High Court (as
       also this Court) to subserve the larger interest of the charitable
       trust. In achieving this, necessary and appropriate orders can be       B
       passed for the ultimate benefit of the trust. In support of this
       submission learned counsel for respondent No. I relied on
       Chenchu Rami Reddy v. Government of Andhra Pradesh
       (1986) 3 SCC 391, R. Venugopala Naidu v. Venkatarayulu
       Naidu Charities (1989) Supp 2 SCC 356. and Mehrwan Homi                 C
       Irani v. Charity Co111111issio11er (200 I) 5 SCC 305.
       xxxxxxxxxxxxxxx
       49. It appears to us that another factor that weighed with the
       High Court in this regard was the submission of the learned
       Assistant Government Pleader that the Charity Commissioner              o
       had received an offer higherthan that given by respondent No. I.
       Therefore, it is quite clear that due to the passage of time, mainly
       because of the flip-flop of the trustees and the petitioners, the
       value of the Trust land had increased considerably. In these
       circumstances, it would be in the best interest of the trust if the
       maximum price is available for the Trust land from the open             E
       market. While this may or may not have been a consideration
       before the High Court. it is certainly one of the considerations
       before us for not interfering with the order passed by the High
       Court, even though it may have, in a loose sense, over-stepped
       its jurisdiction.     ·                                                 F
       50. Section 36 of the Act clearly provides that the trustees may
       be allowed by the Charity Commissioner to dispose ofimmovable
       property of the trust with regard being had to the "interest. benefit
       or protection" of the trust. It cannot be doubted that the interest
       of the trust would be in getting the maximum for its .immovable         G
       property.
       xxxxxxxxxxxxxxxxxxxxxxxx
       53. In Mehrwan Homi Irani (2001) 5 SCC 305, it was
       categorically held that the Charity Commissioner while granting
                                                                               H
292           SUPREME COURT REPORTS                           [2017] 9 S.C.R.


A           sanction under Section 36 of the Act, must explore the possibility
            of getting the best price for the trust properties. In keeping with
            this, the Charity Commissioner was directed to issue a fresh
            advertisement for leasing out the trust property and "formulate
            and impose just and proper conditions so that it may serve the
            best interests of the Trust." The observations of this Court and
B
            directions given are as follows:-
              "9 .... In the best interests of the Trust and its objects. we feel
              it appropriate that Respondents 2 to 4 should explore the further
              possibility of having agreements with better terms. The objects
              of the Trust should be accomplished in the best of its interests.
c             Leasing out of a major pot1ion of the land for other purposes
              may not be in the best interests of the Trust. The Charity
              Commissioner while granting permission under Section 36 of
              the Bombay Public Trusts Act could have explored these
              possibilities. Therefore, we are constrained to remit the matter
D             to the Charity Commissioner to take a fresh decision in the
              matter. There could be fresh advertisements inviting fresh
              proposals and the proposal of the 5th respondent could also be
              considered. The Charity Commissioner may himself formulate
              and impose just and proper conditions so that it may serve the
              best interests of the Trust. We direct that the Charity
 E            Commissioner shall take a decision at the earliest."
            54. Following the consistent view taken by this Court as well as
            the language of Section 36 of the Act, we have no hesitation in
            concluding that the only course available to the High Court was
            to mould the relief and direct the Charity Commissioner to have
 F          a re-look at all bids received pursuant to the public notice dated
             19-2-2007 ."
           21. Before coming to the facts and circumstances of the case.
   we propose to take note of the decision relied upon by the respondent-
   developer in Vedica Procon Private Limited (supra). In that case, this
 G Court considered irregularity in the conduct of sale of the property. It
   was observed that duty of the Court was to satisfy itself that having
   regard to the market value of the property, the price offered was
   reasonable and when rights had been acquired as per the law, it could
   not be disturbed. No subsequent higher offer can be considered as a
 H valid reason. Once the Court reaches a conclusion that adequate price
 CYRUS RUSTOM PATEL v. THE CHARITY COMMISSIONER                              293
   MAHARASHTRA, STATE & ORS. [ARUN MISHRA, J.]

was offered, a subsequent increase in the value, or any subsequent higher A
offer, is of no avail. In case after the auction the value of the properties
had increased, it would not be a ground to recall the auction, and to
interfere in the auction sale. The offer of a higher price than that of the
successful bidder was made after the sale had been confirmed, and
there were no allegations of fraud, irregularity, and inadequacy of price
                                                                             B
when the sale was confirmed. This Court has observed:
        "47.A survey of the above-mentioned judgments relied upon by
        the first respondent does not indicate that this Court has ever
        laid down a principle that whenever a higher offer is received in
        respect of the sale of the property of a company in liquidation,
        the Court would be justified in reopening the concluded C
        proceedings. The earliest judgment relied upon by the first
        respondent in Navalkha & Sons laid down the legal position very
        clearly that a subsequent higher offer is no valid ground for
      · refusing confirmation of a sale or offer already made.
        Unfortunately, in Divya Mfg. Co. this Court departed from the D
        principle laid down in Navalkha & Sons. We have already
        explained what exactly is the departure and how such a departure .
        was notj ustified.                                           ·
       22. The provisibns contained in Section 36 of the Act are extracted
hereunder:                                                                   E
        36. Alienation of immovable property of public trust
        [(I)] [N:otvv.ithstanding anything ~ontained in the instrument of
        trust~]

        (a) no sale, exchange or gift of any immovable property, and         F
        (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 ofnon-agricultural land ora building, belonging to- a public
        trust, shall be valid without the previous sanction of the Charity
        Commissioner. Sanction may be accorded subject to such G
        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 tmstee to dispose
                                                                              H
294             SUPREME COURT REPORTS                            [2017] 9 S.C.R.


A             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 ( l) on the ground
B             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
c             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
D             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
E             assess any advantage received by the trustee and direct him to
              pay compensation to the trust equivalent to the advantage so
              assessed.
               It is apparent from the provisions of Section 36 that sale, exchange
      or gift of any immovable property or lease, extending beyond ten years
F     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 not be valid without previous sanction of the Charity Commissioner.
           23. The power to grant sanction has to be exercised by the Charity
  Commissioner, taking into consideration three classic requirements i.e.
G "the interest, benefit, and protection" of the Trust. The expression that
  sanction may be accorded subject to such conditions as Charity
  Commissioner may think fit under section 31 (I )(b) and Section 36 (I)( c).
  The Charity Commissioner has to be objectively satisfied that property
  should be disposed of in the interest of public trust: in doing so, he has
H right to impose such conditions as he may think fit, taking into account
 CYRUS RUSTOM PAfEL v. THE CHARITY COMMISSIONER                                 295
   MAHARASHTRA, STATE & ORS. [ARUN MISHRA, J.]

aforesaid triple classic requirements. It is also open to the Charity A
Commissioner, in exercise of power of Section 36(2) of the Act, to revoke
the sanction, given under clauses (a) and (b) of Section 36 of the Act, on
the ground that the sanction had been obtained by fraud or
misrepresentation or those material facts have been suppressed while
obtaining sanction. The intendment of the revocation provision is also to B
sub-serve the interest, benefit, and protection of the Trust and its property.
         24. In the instant case, the Joint Charity Commissioner was
required to consider the interest and benefit of the Trust. We are
compelled to observe that Joint Charity Commissioner has totally
abdicated its duty, and failed to act as per the mandate of Section 36.
The observations made by Joint Charity Commissioner in its Order clearly        c
reflect that Charity Commissioner has failed to exercise the duties
enjoined upon to protect trust under Section 36 of the Act. It has not
considered the interest, benefit, and protection of the trust at all. The
order is wholly perverse. Joint Commissioner abdicated its responsibilities,
in as much as it observed that it was the outlook of the Trust as to whom       D
it wanted to sell the propetiy, and as certain development was to be
made; as such market value of the property was not a relevant
consideration. There is. the sale made in the form of Joint Venture
development cum sell agreement and lease was for 999 years. Right
from the beginning, it was to be a joint venture agreement coupled with
a sale option, as apparent from the minutes of the meeting of the trust.        E
The trustees had been_ acting in collusion with developer even before
resolution had been passed. Negotiations were going on with Mis. Astral
Enterprises- developer.
         2 5. It was not disputed at Bar, by the trust or the developer, that
it was a case of the sale, and right from beginning an option for sale was      F
made. No effort has been made by the Trust, in case the sale was
necessary, to ascertain the real market value of the property, nor has it
been ascertained by the Joint Charity Commissioner. The propetiy is
located in a prime location of the city ofMwnbai, at Malabar Hill Division
near Central Mumbai Railway Station, and that the market value was,             G
obviously, sky high as compared to paltry sum offered.
       26. This is a prestigious locality, where one would cherish to
own a property, and in the true sense, it would be like a treasure house.
We unhesitatingly take judicial notice of the fact. that such a huge area
could not have been sold for a paltry sum ofRs.2,95,00,000/-. Trustees,         H
296            SUPREME COURT REPORTS·                          [2017] 9 S.C.R.


A as well as Joint Commissioner, have failed to act in the interest, benefit
   and to protect the Trust, and the same could not have been sold by such
   private negotiations. In our opinion, the value was many a time more at
   the time of entering into the agreement. The paltry sum that was reserved
   by the Trust could not be said to be in the interest and benefit of the
B tmst. Merely obtaining a valuation report, from a person of choice, without
   making any serious effort to ascertain the market value by way of any
   method known to law, and fixing its reserve price, was an eye- wash;
   such a dubious transaction was not at all acceptable. and it shocks
   conscience as to h\)w such a valuable property could have been sold at
   such a throw-away price. Thus, we find, on the basis of the principles
C laid down in aforesaid decisions, and even on the basis of the decision
   relied upon by the learn~d counsel appearing on behalf of the developer,
   in Vedica Procon Private Limited (supra), that the respondents have
   no case at all. In the later decision, this court unequivocally held that sale
   should be at market price. In this case, no such effort had been made; it
D has not been considered as to why trust should sell such a valuable
   prope11y at all, and as to what was the compelling necessity. Ordinarily,
   the tmst property is to be protected, such property is held in trust: in
   case its condition was not good, there could be several other ways to
   improve it; it could not have been achieved by virtually throwing away
  ·the property.
E             27. A full Bench of High Court of Bombay considered the whole
      gamut of the powers of the Charity Commissioner to act in the interest,
      for the benefit, and to protect the trust property under the provisions of
      Section 36 have been considered in Sailesh Developers (supra): it
      observed:
F            27. While exercising powers under Section 36 of the said Act of
             1950, the Charity Commissioner has to safeguard the interests
             of the trust as well as the interests of beneficiaries. The learned
             Single Judge in the case of Arunodaya Prefab (supra) has held
             thus:
G               It may not be open for the Charity Commissioner to consider
             the offers of third parties except only to the extent that they
             might disclose to him what might be the market value of the land
             only for the limited purposes of ascertaining the market value of
             the land.              ·                   ·
H
CYRUS RUSTOM PATEL v. THE CHARITY COMMISSIONER                                297
  MAHARASHTRA, STATE & ORS. [ARUN MISHRA, J.]

         The said view was rightly criticised before us by pointing A
    out that if Charity Commissioner was to invite offers only for the
    purpose of ascertaining the market value of the property no
    genuine buyer or purchaser will come forward and offer a
    genuinely competitive price. It was submitted that no genuine
    buyer would be interested in coming forward with the offer if his
                                                                        B
    offer is to be considered only for a limited purpose of finding out
    as to what the market value was on the relevant date. If offers
    are invited only for this purpose, there is every possibility that
    the offers will not be bonafide and genuine.
    28. While exercising power either under Clause (b) or Clause
    (c), the Charity Commissioner can impose conditions having                C
    regard to the interest, benefit or protection of the trust. Before
    passing an order of sanction or authorization, the Charity
    Commissioner has to be satisfied that the trust property is
    required to be alienated. Once the Charity Commissioner is
    satisfied that the alienation of the trust property is necessary and      D
    in the interest of the trust or for the benefit of the trust or for the
    protection of the trust it is very difficult to accept the submission
    that the power of the Charity Commissioner is restricted either
    to grant sanction to a particular proposal of the trustees or to
    reject it. It is the duty of the Charity Commissioner to ensure
    that the transaction of alienation is beneficial to the trust and its     E
    beneficiaries. He has to ensure that the property is alienated to a
    purchaser or buyer whose offer is the best in all respects. It is
    not necessary in every case that the Charity Commissioner has
    to ensure that property is sold by the trustees to the person offering
    highest price or consideration. What is the best offer in the interest    F
    of the trust will again depend on facts and circumstances of
    each case? In a given case, while alienating the trust property,
    the trustees may provide that as a part of the consideration for
    alienation, the purchaser should construct a building on a part of
    the trust property for the use by the trustees for the objects of
    the trust. In such a case, it may be necessary to ascertain the           G
    reputation and capacity of the purchaser apart from the
    consideration offered. When the charity· Commissioner is satisfied
    that trust property needs to be alienated and when he finds that
    the offer received by the trustees may not be the best offer, he
                                                                              H
298    SUPREME COURT REPORTS                             [2017] 9 S.C.R.


A     can always direct that bids be invited by a public notice. When a
      better offer is received in public bidding or auction, it is very
      difficult to say that the power of the Charity Commissioner is
      restricted and he cannot enjoin the trnstees to sell or transfer the
      trust property to a third party who has given an offer which is
      the best in the interest of the trust. The Trustees approach the
B
      Charity Commissioner only when they are satisfied that there is
      a necessity to alienate the trust property. The trustees hold the
      property for the benefit of the beneficiaries and therefore once
      they express desire to alienate the property, it is obvious that
      Charity Commissioner can always impose condition while granting
c     sanction that the property shall be sold or transferred to a person
      who has come with an offer which is the best offer in the interest
      of the trust. The Section gives a power to the Charity
      Commissioner to impose conditions and the said conditions will
      include a requirement of selling or transferring or alienating the
      trust property to a purchaser who has offered the best deal having
D
      regard to the interest and benefit of the beneficiaries and the
      protection of the trust. The power to impose conditions cannot
       be a limited power when the law requires Charity Commissioner
      to exercise the said power having regard to the interest, benefit,
      and protection of the trust. Once the Charity Commissioner
 E    accepts the necessity of alienating the trust property, the trustees
      cannot insist that the prope11y should be sold only to a person of
      their choice, though the offer given by the person may not be the
       best offer. The property may be vested in the trustees, but the
      vesting is for the benefit of the beneficiaries. The Charity
      Commissioner has jurisdiction to ensure that the property is sold
 F
      or transferr!)d in such a manner that the maximum benefits are
      available to the beneficiaries of the trust. Under clause (b) of
       Section 36 of the said act, the Charity Commissioner has
      jurisdiction to decide whether it is in the interest of the trust that
      the property of the trust be sold or transferred. Once the learned
 G     Charity Commissioner is to be satisfied t'1at the property is
       required to be transferred or sold in the interest of the Trust, the
       learned Charity Commissioner cannot remain a silent spectator
      when he finds that the transaction proposed by the Trustees is
       not in the interest of the Trust or its beneficiaries. Once the
       necessity of sale or transfer is established, the Charity
 H
CYRUS RUSTOM PATEL v. THE CHARITY COMMISSIONER                          299
  MAHARASHTRA, STATE & ORS. [ARUN MISHRA, J.]

    Commissioner can certainly ensure that best available offer is A
    accepted, so that the transaction is for the benefit of the trust. If
    the trustees were to be the final authority to judge as to what is
    in the interest of the Trust, the legislature would not have enacted
    provision requiring prior sanction. While deciding which is the
    best offer, the learned Charity Commissioner is bound to take
                                                                          B
    into consideration various factors, which cannot be exhaustively
     listed. However, the paramount consideration is the interest,
     benefit, and protection of the trust. It is obvious from the scheme
    of Section 36 that the legislature never intended that trustees
    could s~ll or transfer the trnst property vesting in them as if it
     was their personal property. It is the duty of Charity Commissioner C
    to ensure that the property should be alienated in such a manner
    that maximum benefits are accrned to the trust. The Charity
     Commissioner; while considering an application under Section
     36 (I) of the said Act of 1950, in a given case, can opt for public
     auction or can invite bids.
                                                                          D
     30. Hence, we answer the questions referred to our decision as
     under:
    (i) The power vesting in the Charity Commissioner under Section
    36 of the Bombay Public Trusts Act 1950 is not confined merely
    to grant or refusal sanction to a particular sale transaction in E
    respect of which sanction is sought under Section 36 of the said
    Act. The power of the Charity Commissioner extends to inviting
    offers from the members of the public and directing the trustees
    to sell or transfer the trust property to a person whose bid or
    quotation is the best, having regard to the interest, benefit, and
    protection of the trust. Hence we declare that the decision of F
    the Division Bench of this Court in the case of J igna Construction
    Co. Mumbai v.,State of Maharashtra and Ors. does not lay down
    correct law.
    (ii) The party, who comes forward and submits his offer directly
    before the Charity Commissioner and complies with other G
    requirements as may be laid down by the Charity Commissioner
    in a pending application under Section 36 of the said Act of J 950
    has a locus standi to challenge the final order passed in a
    proceeding under Section 36. However, the scope of the challenge
    will be limited as indicated in paragraph 29 above.                H
300            SUPREME COURT REPORTS                           (2017] 9 S.C.R.


A            (iii) We direct the Office to place the Writ Petitions before the
             appropriate Benches for deciding the same in accordance with
             law.
           28. As discussed, this Court has directed a number of times that
  sale of trust property, which is like public property. if at all necessary, is
B not permissible by way of private negotiations; could be done only in
  exceptional circumstances, for reasons to be recorded. There was no
  exceptional circumstance, no urgency to throw away the valuable property
  of the trust, which was derogatory to its interest and would have defeated
  the very object of the creation of the trust for the preservation and
  protection ofreligion and Parsi culture.
c
           29. The joint venture development was not an intended
  transaction; sale option was mentioned dubiously in the agreement: same
  indicated that transaction was not bonafide. It was a cloak or a device
  adopted by the Tru~t so as to sell the property, and the transaction could
  not be said to be in the interest and benefit ofthe trust at all. Unfortunately,
D Joint Charity Cominissioner totally failed in observance ofstatutory duties
  and did not look into the various aspects, neither conducted an enquiry
  envisaged under Section 36 of the Act. Thus, we find that the transaction
  could not have been sanctioned, considering the spirit of the provisions
  of Section 36 of the Act. Though the aforesaid Full Bench decision of
E High Court has come later on, however. intendment of the statutory
  provision, even for a moment, could not be to sanction such a derogatory
  transaction. The decisions ofthis court were available. even in the absence
  ofexposition of the ambit of Section 36 of the Act by the high court; they
  had been conveniently ignored. The sanction at a glance had been granted
  in flagrant violation of basic principles of the law; it cannot withstand
F judicial scrutiny.
           30. Apart from that, it is also apparent that prayer was made in
  the application to dispense with public notice in a newspaper on the
  pretext that it was j_oint .venture agreement and development was to be
  made by trustees, whereas it was, in fact, not the actual factual situation.
G There was a clause for sale, and lease of999 years would also tantamount
  to a sale, and admittedly sale option had been exercised. In the application,
  that was filed under Section 36 before Charity Commissioner, suppotted
  by the affidavit of Mr.Hoshang N. Wania, one of the trustees of B.C.
  Batliwala Trust, it was mentioned in para 6 thus:
H
 CYRUS RUSTOM PATEL v. THE CHARITY COMMISSIONER                                 30 I
   MAHARASHTRA, STATE & ORS. [ARUN MISHRA, J.]

''EXEMPTION FROM. INSERTING PUBLIC NOTICE IN                                    A
NEWSPAPER"
       (a) xxx that the arrangement contemplated in the said MOU is
       that of joint venture and the development is being done by the
       Trustees themselves with the active support and financial
       resources of Astral and hence the question of inserting public           B
       notice in newspaper does not arise. In any event, the Trustees
       pray that this procedural formality may please be waived in this
       case.
       (b) Further, no useful purpose will be achieved by inserting Public
       Notice, as the said property is totally encumbered and not easily        c
       marketable in its present form.
       (c)Also, some of the disgruntled occupants may find it convenient
       to stop the proposal and may embroil the trust in wasteful litigation.
         31. It is apparent from aforesaid averment that there was a
necessity of publishing·a public notice in a newspaper, which requirement D
was sought to be waived on the ground that it was a joint venture and
that development was being done by the trustees themselves, due to
that, a public notice was not necessary. However, as'a matter of fact, in
Joint venture itself, the sale was contemplated and in fact it had taken
place. The issuance of public notice could not have been waived. Inviting E
an offer by public notice would have discfosed actual worth of property;
the aforesaid averments had been made designedly to evade the public
notice, and it was not in the interest or for the benefit of the Trust to act'
in.such a clandestine manner. It is clear that the application under Section
36 of the Act was not filed with clean hands, and it illegally aimed to get
rid of public notice and unfortunately trnstees succeeded in it. There F
was misrepresentation made as to the actual transaction that was intended
and had ultimately taken place, in as much as it was stated in the
application that no purpose would have been served by issuance of the
public notice, as it was joint development venture, however, the property
was totally unencumb_ered. and easily marketable in its present form. 0
The Joint Charity Commissioner also omitted to take into account actual
nature of transaction.how such property has to be sold and co,nveniently
overlooked the provisions of the Act and decisions of this court.
       32. As a matter of fact, the trust could not have entered into .
such negotiations with Mis. Astral Builders without public notice, which H
302                SUPREME COURT REPORTS                    [2017] 9 S.C.R.


A was admittedly not given in the instant case and, thus, the joint venture-
  cum-sale and lease for ~99 years amounted to a sale. In such a manner
  and method, the application could not have been entertained at all, much
  less allowed, by the Joint Charity Commissioner.
          33. The High Court has also failed to consider the various aspects,
B and has rejected the petition mainly on the basis of th~ delay, that was
  not very material in the facts, as no development had taken place. When
  such a prime and valuable public property was involved, the aforesaid
  delay could not be said to be fatal in the facts and circumstances of the
  case. The High Court has also not looked into the market value of the
  property and has dismissed the writ application on untenable and flimsy
C grounds.
           34. We refrain from making any further remarks in the matter.
  Suffice it to say that such a frivolous prayer could not have been
  ente1tained. and the order of the Joint Charity Commissioner is absolutely
  illegal. Learned counsel for the trust stated that it would be difficult to
D repay the money. When trust has obtained money. obviously it has to
  repay. Let trust repay the amount of Rs.2,95,00.,-000/- to the developer.
  Considering the value of the property and the arguments made on behalf
  of the trustees, we are of the view that the trustees were not up to the
  task of protecting the interest of the trust, and clearly colluded with the
E developer while entering into such an agreement for development-cum-
  sale.
         3S. The order passed by the Charity Commissioner as well as by
  the High Court is hereby set aside. The appeal is allowed with the costs
  of Rs.1,00,000/- to be deposited by the developer with the Supreme
F Court Advocates Bar Association Welfare Fund within six weeks from
  today.


      Nidhi Jain                                                Appeal allowed.