Holding

The Court held that, due to the unavailability of proper accounts, the Deputy Charity Commissioner shall make a best‑judgment estimate of the trust’s income and expenditure for the relevant period and direct recovery of any shortfall, with the respondents' properties remaining attached.

Summary

The petitioner, Krishna Veer Singh Chauhan, was appointed Secretary of the Vidharbha Rashtrabhasha Prachar Samiti in 1982 but the respondents forcibly took control of the trust's affairs and properties. The petitioner obtained orders from the Joint Charity Commissioner and the Supreme Court directing the respondents to hand over control, furnish audited accounts, and deposit trust income, which the respondents failed to do adequately. The Supreme Court found that the respondents had deposited only a negligible sum over twelve years, indicating possible misappropriation, and that the trust's books were unavailable for verification. Consequently, the Court directed the Deputy Charity Commissioner to make a best‑judgment estimate of the trust’s income and expenditure from April 1, 1982 to August 22, 1994, consider the audited accounts filed, and recover the shortfall from the respondents. All immovable properties of the respondents were attached pending final orders, and the contempt petition was disposed of.

Issues considered

Whether the respondents complied with the Supreme Court's orders to furnish complete accounts and deposit the trust's income.
Whether the respondents can be held in contempt for non‑compliance with the orders.
What remedial measure should be taken in the absence of proper account books to determine the trust's income and expenditure.

Legislation cited

Bombay Public Trust Act, 1950s. 2(13), s. 32, s. 33, s. 35, s. 50-A

Subjects

public trustmisfeasancemisappropriationcontemptaudit of accountsbest‑judgment estimatecharity commissionertrusteeshipattachment of property

Judgment

KRISHNA VEER SINGH BACHAN SINGH CHAUHAN A
v.
WASUDEO MOTIRAM KALMEGH AND ANR.

AUGUST 30, 1995

[B.P. JEEVAN REDDY AND M.K. MUKHERJEE, JJ.] B

Bombay Public Trust Act, 1950 :

Ss.2( 13), 32, 35 50A-Public tlust-Respondents unauth01isedly
managed to get control over prope1ties and office of trnst-Audited rep01t not C
showing c01rect position of income and expenditure of T!ust-Account books
not available-Held. Deputy Chmity Commissioner to make best judgment
.. estimate of income of tlust prope1ties--Meanwhile immovable prope1ties of
respondents attached.

Public Tmst-Administration of-Authorities incharge of enswing D
proper management of public trusts to be more vigilant and prompt in
discharge of their duties.

The petitioner was appointed as Secretary of the Vidharabha
Rashtrabhasha Prachar Samiti, in February, 1982 but as alleged by him, E
the respondents forcibly took control of the affairs of the Samiti. The
petitioner applied to the joint Charity Commissioner for a direction to the
respondents to hand over the charge of the affairs of the trust to him. The
prayer was allowed. On 2.11.1987 the Joint Charity Commissioner passed
an order dismissing the respondents from the trusteeship of the Samiti
holding that they were proved to have committed misfeasance and misap- F
propriation of the trust property. The respondents challenged the said
order in a writ petition before the High Court. In 1988 the Joint Charity
Commissioner initiated suo motu proceedings under s.50-A of the Bombay
PulJlic Trust Act, 1950 to inquiry into the affairs of the trust. The High
Court directed the Deputy Charity Commissioner to constitute a body of G
five persons to which the petitioner and the respondents should hand over
the charge to the said ad hoc Managing Committee of the Samiti. Ag-
grieved, the petitioner filed the appeal.

The Court on 6.8.1990 directed the ad hoc Managing Committee,
which included the respondents, to furnish accounts in respect of the H
161
162 SUPREME COURT REPORTS [1995] SUPP. 3 S.C.R.

A income and expenditure of the trust for the years 1982-83 to 1990-91, and
to deposit with the Charity Commissioner the amounts found in the hands
of the respondents. The petitioner filed the instant contempt petition
alleging that the respondents failed to carry out the order of this Court.
On 23.8.1993 this Court directed the respondents to furnish complete
accounts and ordered that the proceedings under the Bombay Public Trust
B Act be expedited.
~·

The Joint Charity Commissioner concluded the proceedings under
s.50-A of the Act. Thereupon, trustees were appointed. The petitioner was
appointed as the Secretary of the Trust.
c Pursuant to the order of this Court the respondents filed audited
accounts and the Deputy Charity Commissioner filed a report indicating
that the total amount of rent deposited by the respondents during the ...
period April 1, 1982 and June 1994 was Rs. 92,489.92. He reported that
relevant registers and books of the Samiti were not made available to him.
D The petitioner alleged that the income of the Samiti was Rs. 1-11/2 lakhs
every year and the deposit by the respondenis of Rs. 92, 497.92 p. for a
period of 12 years was not only non-compliance of the order of the Court
but also a positive proof of misappropriation and mismanagement.

E Adjourning the matter for four months, this Court

HELD : 1.1. The facts of the case show how the validity appointed
persons have been thwarted by the respondents from coming into posses-
sion of the properties and oOice of the trust. The respondents were
interested in protracting their control and management by one or the other
F means, obviously with a view to enrich themselves unjustly at the cost of
the trust and its properties. They deposited for the period April 1,1982 to
July 31,1990 a petty sum of Rs. 124,92 on 4.10.1990. For subsequent period,
various amounts have been deposited but neither there is any consistency
in the amounts deposited .nor is there any regularity in lhe timing of the
G deposits. In the circumstances, this is proper case where a reasonable
ascertainment should be made of the income derived and expenditure
incurred by the respondents from April 1, 1982 to August 22, 1994, the
period during which they were in management and control of the affairs
and the properties of the trust. [169-G-H; 170-A-C]

H 1.2. Since the relevant account books have been made scarce, the
K. V. SINGH B. S. CHAUHAN v. W.M. KALMEGH 163

Deputy charity commissioner, Nagpur shall make a best-judgment es- A
timate, of income of the trust properties for the period April 1, 1982 to
August 22, 1994 after making such appropriate enquiries as he may find
necessary. He can, of course, look into and consider the audited accounts
filed by the respondents in this connection. He shall also make an estimate
of the expenditure which was reasonably required for running and manag-
B
ing the trust and trust properties. This exercise will disclose the amount
that should have been deposited by the respondents for the said period.
After giving credit to the amount already deposited, recovery of the balance
can be made from the person and properties of the respondents by taking
appropriate proceedings according to law. All the immovable properties
of the respondents are attached herewith. The attachment shall continue C
until final orders are passed in this case. [170-E-H; 171-A]

2. The authorities in-charge of ensuring proper management of
public trusts should be more vigilant and prompt in discharge· of their
duties. Delays on their part only help the unscrupulous persons in wasting
the trust properties and in other acts of misfeasance. [169-F-G] D

CIVIL APPELLATE JURISDICTION: Contempt Petition No. 295
of 1991.

IN
E
Civil Appeal No. 4374 of 1990.

From the Judgment and Order <lated 21.4.89 of the Bombay High
"' Court in C.W.P. No. 1607 of 1988.
F
San<leep Mittal for S.K. Mehta for the Appellant.

S.B. Wad, Ms. Usha S. Reddy and Ms. Jayashree Wad for the
Respondents.

The following Order of the Court was delivered : G
On August 6, 1990, this Court made the following order :

"Having regard to the circumstances that the body that is brought
into being is an adhoc managing committee pending final decision
by the joint Charity Commissioner it appears to us that ends of H
164 SUPREME COURT REPORTS [1995) SUPP. 3 S.C.R.

A justice would be met by directing the said adhoc managing com-
mittee, which includes the said Vasudeo Motiram Kalmegh and·
Suresh Moolchand Agarwal to furnish accounts of the rents or
licence fee colloected from the licencees (who were not- applicants
4 to 7 respondents ~before the Charity Commissioner) for the
period from April, 1987 to 31st of July, 1990. If upon such furnish-
B ment of accounts and funds are found to be in the hands of the
adhoc managing committee or with Vasudeo Motiram Kalmegh
and Suresh Moolchand Agarwal or any of them, as the case may
be, such balance shall also be deposited with the Charity Commis-
sioner within two months from today. The adhoc managing com-
c mittee shall, wiih effect from the 1st August, 1990 collect the said
licence fee and deposit the same with the Charity Commissioner
every month regularly.

This arrangement shall continue till the matter before the Joint
Charity Commissioner is finally disposed of as envisaged by the
D order of the High Court.

Whatever we have said in this Order or whatever may be
implicit in it, it may not be taken into account in the final disposal
of the proceedings now pending or to be taken in future in respect
E of this Samiti, as this order is intended to operate as an interim
arrangement."

Complaining that the respondents have failed to carry out the said
order, the petitioner, Sri Krishna Veer Singh Bachan Singh Chauhan (K.S.
Chauhan) moved the prc;;ent application for contempt.
F
Vidharbha Rashtrabhasha Prachar Samiti, Nagpur (Samiti) is a body
registered under the Bombay Trust Act, 1950 having its office at Nagpur.
In February 1982, the petitioner, Chauhan, was appointed as the Secretary
of the Samiti. He says that in April 1982, the respondents, Sri Kalmegh and
G Sri Suresh Agarwal, forcibly took away the keys of the office of the Samiti
and took control of the affairs of the Samiti. The petitioner says that he
applied to the joint Charity Commissioner to direct the respondents (S/Sri
Kalmegh and Agarwal) to hand over the charge of the <1.ffairs of the trust
to him. Orders were made by the authorities against both the respondents
as prayed for by the petitioner. The respondents were also restrained from
H dealing with or alienating or otherwise transferring the Samiti properties.
K. V. SINGH B. S. CHAUHAN v. W.M. KALMEGH 165

On November 3, 1987, the Joint Charity Commissioner passed the A
following orqer :

"Non-applicant No. 1 Prof. W.M. Kalmegh and NA No. 3 Shri
Jagannath Jaida are proved to have. committee misfeasance and
misappropriation in respect of property of Rs.35,000 and 125
cement bags of the trust Vidharbha Rashtrabhasha Prachar Samiti, B
Nagpur, PTR No. F-639 (Nagpur) and, therefore, they are hereby
dismissed from the trusteeship of the aforesaid Trust, PTR No. F-
639 (Nagpur)."

It is stated that the respondents challenged the said order by way of C
a writ petition in the Bombay High Court, Nagpur Bench.

In the year 1988, the Joint Charity Commissioner initiated suo motu
proceedings under Section 50-A of the Bombay Public Trust Act to enquire
into the affairs of the trust.
D
On April 21, 1989, the High Court disposed of the writ petition filed
by the respondents directing the Deputy Charity Commissioner, Nagpur
"to draw a list of the persons who belong to category Nos. 1 to 3 of clause-7
of the Constitution and cause a body of five persons to be elected by them
by treating category Nos.1 to 3 as an electoral college, within two months
from the date of this order. The petitioners and the respondent No.1 shall E
thereupon hand over the charge of the adhoc Managing Committee which
will manage the affairs of the Vidharbha Rashtra Bhasha Prachar Samiti,
Nagpur, until the matter is finally decided in suo moto proceedings in-
itiated by the Joint Charity Commissioner, Nagpur, under section 50-A of
the Bombay Public Trusts Act." F
Against the said order, the petitioner approached this Court by way
of Special Leave petition (c) Nos. 2545 of 1990 in September 1989. After
notice to the respondents and after hearing them, this Court made the
aforesaid order August 6, 1990. .
G
In this contempt petition, the following order was made by this Court
on August 23, 1993 :

"We have heard Sri G.L. Sanghi, learned senior counsel for the
petitioner and Sri S.B. Wad, Learned senior counsel for the ad-hoc
trustees. H
166 SUPREME COURT REPORTS [1995) SUPP. 3 S.C.R.

A We are afraid the compliance of the order dated 6th August,
1990 by the ad hoc trustees is only partial and incol11Plete. The ad
hoc trustees are directed to furnish to this Court within four weeks
from today an affidavit of the year-wise break-down of the income
and expenditure of the Trust for the years 1982-83 to 1990-91. 'T~1ey
shall indicate in respect of each year; how many tenants ur licen-
B
sees were in occupation of the property of the Trust; the specifica-
tion of the area and extent of such occupation; what was the
amount of rent or licence fee realisable from them; what amounts
were actually realised and what amounts remained unrealised.
They shall also indicate in an year-wise break-up what action was
c taken by the ad-hoc trustees to recover the amounts in arrears.

That apart, in respect of the period 6th August, 1990 to 5th
August, 1993, a similar statement with similar break- down of the
figures shall also be furnished. It would appear that for none of
these years the accounts were got audited by the trustees. The
D
trustees are admittedly governed by the provisions of the Bombay
Public Trust Act, 1950. Provisions of Section 32 and 33 statutorily
require the trustees to have the accounts audited. We do not know
how the authorities under the Act permitted or ignored this lapse.

E Likewise, the petitioners shall also file their affidavits giving the
necessary particulars as to how, according to them, the income of
Rs. 10 lacs per year.

Sri wad submitted that the trustees have produced the books
F of accounts before the Charity Commissioner and that they need
permission to inspect the books of accounts. The trustees have
such permission.

It would be appropriate if a certificate of a Chartered Account-
ant is also produced as regards the accounts. This would go in
G favour of the trustees while examining the rectitude of their con-
duct in respect of the management of the affairs and funds of the
Trust.

We would also like to comment on the undue protraction of
H the proceedings under the Bombay Public Trust Act, 1950 which

' '
K. V. SINGH B. S. CHAUHAN v. W.M. KALMEGH 167

were commenced suo motu by the authorities. It is appropriate A
that these proceedings are expedited and the Charity Commis-
sioner or the Deputy Charity Commissioner, as the case may be,
concludes these proceedings expeditiously and, in any event, not
later than within four months from today. Let a copy of this order
go to the Charity Commissioner for compliance. B
Call on 4th October, 1993. Personal Presence of the contemners
is discharged."

Meanwhile, the Joint Charity Commissioner concluded the suo motu
proceedings initiated by him under Section 50-A of the act and passed c
orders on December 31, 1993 framing a scheme for the trust and appoint-
ing trustees thereunder. The petitioner was appointed as the secretary of
the trust. The said Board was directed to take over charge from the then
existing body, whosoever it may be, and to manage the affairs of the trust
in accordance with its objects and the law. Pursuant to the orders of the D
Joint Charity Commissioner, the petitioner says, he obtained possession of
the trust properties on August 22, 1994 with the help of police.

Pursuant to the order of this Court dated August 23, 1993, the
respondents filed certain audited accounts, the correctness whereof was
E
questioned by the petitioner. when the matter came up before this Court
against on November 10, 1994, the following further order was made :

"In this contempt case, this Court made an order on 23rd August,
1993. According to the said order, the ad hoc Trustees, who were
respondents herein, were directed to submit year-wise breakdown F
of the income and expenditure of the Trust for the years 1982-83
and 1990-91. Indeed, even subsequent to the year 1990-91, they
were directed to continue to deposit the amounts and file accounts
so long as they remained in management of the Trust property. It
is stated now that the respondent ad hoc Trustees were in manage- G
ment of the Trust property till August, 1994. Mr. S.B. Wad, learned
senior counsel for the respondents says that in compliance with
the aforesaid order as well as earlier order dated 6th August, 1990
the respondents have filed the audited accounts for the years
1982-83 to 1990-91. He further submits that the audited accounts H
168 SUPREME COURT REPORTS (1995] SUPP. 3 S.C.R.

A for the subsequent years have been submitted before the Charity
Commissioner. Learned Counsel says that in accordance with the
said.accounts, the deposits have also been made by the respondents
with the Charity Commissioner. Learned counsel for the petitioner,
however, disputes the correctness of the audited accounts filed hy
B the respondents.

Inasmuch as the audited accounts are quite voluminous and
also because it is not possible or feasible for this Court to go into
the correctness or otherwise of the said accounts, we direct the
Charity Commissioner, Bombay, to look into the matter. The
c Charity Commissioner, Bombay, or such other officer as the·
Charity Commissioner may designate, will look into the correctness
of the accounts, make necessary enquiries and verifications as may
be called for in the circumstances of the case,. after notice to the ......
petitioner and the respondents herein, and submit a Report to this
D Court about the correctness of the said accounts and deposits
which may have been made by the respondents. It is obvious that
the Charity Commissioner or the officer as may be designated by .
the Charity Commissioner shall be empowered to receive such
evidence as may be produced before him or as may be gathered
E by them for the aforesaid purpose.

The Report of the Charity Commissioner shall be submitted
within four months from today.

Copies of the order dated 6-8-1990 and 23-8-1993 shall be
F enclosed to the copy of this order communicated to the Charity
Commissioner."

Pursuant to the said order, the Deputy Charity Commissioner, Nag- .
pur (who was entrusted the job of submitting the report) has submitted his
G report dated February 7, 1995. In this report, the Deputy Charity Commis-
sioner has mentioned the total amount of rent deposited by the respon-
dents during the period April 1, 1982 to June 30, 1994 and the dates on
which the various amounts were deposited. According to this statement, a
total amount of Rs. 92,487.92p. has been deposited for the said period of .:
H over twelve years. The Deputy Charity Commissioner has reported that it
K. V. SINGH B. S. CHAUHAN v W.M. KALMEGH 169

has not been possible for him to check the correctness of the accounts A
submitted by the respondents inasmuch as the relevant registers and books
of the Samiti have. not been made available to him. He has reported that
while the respondents complain that inasmuch as the possession of the
office and properties of the Samiti was taken by the petitioner by force and
with police help, and because they do not have access to the office of the B
Samiti, they are not in a position to produce the accounts and registers to
enable the Deputy Charity Commissioner to verify the accounts submitted
by them. On the other hand, the report says, the petitioner complained that
when he took possession of the office and properties of the Samiti with the
police help there were no records, registers and account books of the
Samiti in the office and that only a few properties not belonging to Samiti
c
were found in its premises. He stated that all the account books must have
been taken away by the respondents to cover up and conceal their acts of
misfeasance, misappropriation and mismanagement. The petitioner has
also submitted that the income of the Samiti is more than Rs. 1-1/2 lakhs
every year and that depositing a measly amount of Rs. 92,497.92p for a D
period of twelve years is not only a non-compliance of the orders of this
Court but also a positive proof of their misappropriation and mismanage-
ment. He prays that the respondents should be directed to deposit the true
amount realised by them from the Samiti properties.
E
Before we deal with the contentions urged by the parties, we feel
constrained to reiterate the observations made by this Court in its order
dated August 23, 1993 with respect to "under protraction of the proceed-
ings under the Bombay Public Trust Act, 1950 which were commenced suo
motu by the authorities". The authorities in-charge of ensuring proper f
management of public trusts should be more vigilant and prompt in dis-
charge of their duties. Delays on their part only help the unscrupulous
persons in wasting the trust properties and in other acts of misfeasance.
The facts of this case show how the validity appointed persons have been
thwarted by the respondents from coming into possession of the properties
and ,.,ffice of the trust. It would not be unreasonable to assume in the G
circumstances of this case that the respondents who somehow came into
possession and management of the trust properties were interested in
protracting their control and management by one or the other means,
obviously with a view to enrich themselves unjustly at the cost of the trust
and its properties. The table contained in the report of the Deputy Charity H
170 SUPREME COURT REPORTS (1995J SUPP. 3 S.C.R.

A Commissioner discloses that the first deposit by the respondents is in a
grand sum of Rs. 124.92p on October 4, 1990. Several amounts have been
deposited thereafter from time to time. Plima f acie it is not explicable how
it is that for the period April 1, 1982 to July 31, 1990 only a sum of Rs.
124.92p. was be available and why was it deposited after a lapse of eight
years. For subsequent period, various amounts have been deposited but
B neither there is any consistency in the amounts deposited nor is there any
regularity in the timing of the deposits. In the circumstances, this is a
proper case where a reasonable ascertainment should be made of the
income derived and expenditure incurred by the respondents for the period
April 1, 1982 to August 22, 1994, the period during which they were in
c management and control of the affairs and the properties of the trust. No
doubt, they have filed certain audited accounts but the correctness of the
said accounts is disputed by the petitioner. The Deputy Charity Commis-
sioner has also not reported that the said audited accounts are acceptable.
There is a controversy with respect to the custody and possession of the
D relevant account books and registers. In this contempt case, it is not
possible to go into the truth or otherwise of the rival contentions with
respect to the custody and possession of the books possession of the books
and accounts. At the same time, the matter cannot be left as it is, more
particularly, in view of the fact that not a single paise was deposited for
the period April 1, 1982 to July 31, 1990 except a petty sum of Rs. 124.92p.
E on October 4, 1990. The respondents cannot be allowed to get with trust
funds just because the relevant account books have been made scarce. The
income and expenditure can yet be ascertained by other means. In the
circumstances, the following direction is made: the Deputy Charity Com-
missioner, Nagpur shall make a best-judgment estimate of income of the
trust properties for the period April 1, 1982 to August 22, 1994 after
F
making such appropriate enquiries as he may find necessary. He can, of
course, look into and consider the audited accounts filed by the respon-
dents in this connection. He shall make an estimate of the expenditure
which was reasonably required for running and managing the trust and
trust properties. This exercise will disclose the amount that should have
G been deposited by the respondents for the said period. After giving credit
to the amount already deposited, we can then direct recovery of the
balance from the person and properties of the respondents by taking
appropriate proceedings according to law.

H All the immovable properties of the respondents are attached
K. V. SINGH B. S. CHAUHAN v. WM. KALMEGH 171

herewith. The attachment shall continue until final orders are passed in this A
case. The Deputy Charity Commissioner shall give effect to this order by
making appropriate directions.

The matter is adjourned by four months. List after four months. The
Deputy Charity Commissioner shall send a report of the proceedings taken
and orders passed by him in the said period of four months pursuant to B
this order.

RP. Petition disposed of.