There cannot be overarching State control over self-governed public trusts: Supreme Court

The Supreme Court on Friday held that there cannot be overarching State control over public trusts and the government instrumentalities cannot dictate what decisions can be taken and what cannot be taken in the context of such trusts [Parsi Zoroastrian Anjuman, Mhow v. The Sub Divisional Officer/The Registrar Of Public Trusts]..A three-judge Bench of UU Lalit, S Ravindra Bhat and Bela M Trivedi held that in case of public charities and trusts, the aim of public control is to ensure that the trust is administered efficiently and smoothly.“The State interest is that far, and no more; it cannot mean that the State can dictate what decisions can or cannot be taken…..Any organization which is self-governed, cannot be subjected to overarching State control. As long as its decisions are well informed, and grounded on relevant considerations, the interests of the trust are those defined by its members,” the Court ruled.In the specific context of alienation of properties, depending on the nature of the oversight, the State’s interest is to ensure that valuable assets of public trusts are not frittered away, the Bench said."Any measure of public control enacted through express stipulations in law, should not be expanded to such an extent that the right to freedom of association, under Article 19 (1) (c), is reduced to an empty husk, bereft of meaningful exercise of choice," the Court added..The Court was hearing an appeal against a judgment of a Division Bench of the Madhya Pradesh High Court at Indore which had confirmed a single-judge decision.The single-judge had affirmed the decision of the registrar under the Madhya Pradesh Public Trusts Act, 1951 (Act) to reject the application filed by the appellant, Parsi Zoroastrian Anjuman, Mhow (trust), seeking sanction for the disposal of its trust property.The appellant was registered as a public trust on January 29, 1973 under the provisions of the Madhya Pradesh Public Trusts Act. The trust’s membership was made up exclusively of members of the Parsi community at Mhow.In December 2014, the managing committee of the trust unanimously agreed that five of its immovable properties should be sold.This decision was consented to by the individual members of the managing committee which included representatives of the Parsi Zoroastrian Anjuman community, i.e., the apex body of the Parsi community in the country..The proposal was placed before a general meeting of all members of the trust in January 2015 and majority of the members supported the same.The trust applied under Section 14 of the Act to the Registrar of Public Trusts for previous sanction for the sale of the five said properties.The registrar then notified one of the members of the trust, Pervin Rumi Jehangir who had opposed the proposal in the 2015 meeting.The registrar asked her to respond to the trust’s application seeking previous sanction, apparently in view of her previous objection to the proposal. Accordingly, detailed objections were filed by Jehangir which was provided to the trust. The trust in turn filed its written submissions.The registrar, by her order dated November 10, 2017, rejected the trust’s application for previous sanction under Section 14(1).The trust appealed to the Madhya Pradesh High Court but the single-judge upheld the registrar’s order, stating that the trust should have made all possible endeavor to repair the buildings which are trust properties and to ensure that the rich cultural heritage of the Parsis which is still alive in the township of Mhow, is not destroyed by selling it to builders and to other persons.The Division Bench upheld the same prompting the present appeal before the Supreme Court..The top court examined the relevant provision of the Madhya Pradesh Public Trusts Act – Section 14 which mandates previous sanction of registrar for sale of property belonging to a public trust.It also adverted to Rule 9 of the Madhya Pradesh Trust Rules, 1962 which lays down requirement for applications under Section 14.The Court noted that while Section 14(1) requires previous sanction of registrar for sale of property, Section 14(2) states that the registrar “shall not refuse his sanction” unless in his opinion the alienation, or transfer is prejudicial to the interests of the public trust.Besides, the Court also noted that Section 14(1) also opens by stating that the registrar’s previous sanction is subject “to the directions in the instrument of trust or any direction given under this or any other law by any Court.”Thus, the registrar’s discretion, the Court said, is relatable to directions in the trust document, or any provision of the Act, or any other law as ordered by any court.“Therefore, the Registrar, is not empowered to read into it her own notions of what is beneficial and what is prejudicial to the trust. The refusal has to be specific to the requirement of law, wherever such law clearly stipulates so, or any specific provision of the trust document,” the Court held..Hence, the Court concluded that the MP Public Trusts Act does not contain such a power to impose conditions and the only considerations that should weigh with the registrar are the stipulations in law, or in the instrument of public interest.Other than these considerations, the principle of autonomy and democratic decision-making cannot be undermined, the Court underscored.In the facts of the present case, the decision to sell the properties was a consequence of a two layered process, where all members participated and decided to dispose of the property, the Court observed.“The decision was based on a realistic assessment of the trust’s existing and future liabilities, the obligations towards charity, aid to senior citizens, education, medical aid, and religious ceremonies, imposed by the trust instrument,” the judgment said.The appeal was, therefore, allowed and the decisions of the High Court and the registrar were set aside..[Read Judgment]