# Operation Asha v. Shelly Batra & Ors

- **Citation:** 2025 INSC 932
- **Court:** Supreme Court of India
- **Decided:** 2025-08-05
- **Case number:** Civil Appeal No. 10048 of 2025
- **Bench:** J.B. Pardiwala, R. Mahadevan
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/operation-asha-v-shelly-batra-ors-39000
- **Pages:** 157

## Headnote

Issue arose as to whether the appellant Society registered under
the Societies Registration Act, 1860 can be said to have fulfilled
all the requirements stipulated u/s.92 CPC for the purpose of
instituting a suit under the said provision.
Headnotes†
Code of Civil Procedure, 1908 - s.92 - Public charities -
Requirements to be fulfilled for instituting a suit u/s.92 -
Appellant society, is a not-for-profit society, registered
under the 1860 Act - Respondent no.3-CEO of the appellant
society, terminated the services/employment of respondent
no.1-medical health professional and co-founder - After the
removal of the respondent no.1 as a Board member, both the
respondent no.1 and her mother-respondent no.2 instituted
a suit u/s.92 for declaration, permanent and prohibitory
injunction and, rendition of accounts alleging misconduct
and breach of several society's by-laws by the respondent
no.3 and respondent no.4 - Thereafter, respondent nos. 1 and
2 filed an application seeking leave to institute the civil suit
against the appellant Society along with the respondent nos.3
to 10 - Single Judge granted leave to the respondent nos.1
and 2 for instituting a suit u/s.92 holding that all the elements
and ingredients u/s.92 stood fulfilled - Appeal thereagainst
dismissed by the Division Bench - Challenge to:
Held: Respondent nos.1 and 2 made several allegations of
siphoning of funds by the respondent nos.3 and 4, for their own
personal use, could be said to have prima facie satisfied the
condition required to apply the doctrine of constructive trust to the
present facts - If these allegations are found to have no substance
or plainly false, the entire suit would fail - That would happen
* Author
412
[2025] 8 S.C.R.
Supreme Court Reports
also when the circumstances which required the imposition of a
constructive trust do not exist/have not been proven - However,
if found true, all the property diverted for the purpose of obtaining
a pecuniary advantage would be subject to a constructive trust,
the administration of which can be sought in a suit u/s.92 and the
respondent nos.3 and 4 respectively would be considered to be
'constructive trustees'- While scrutinising whether the respondent
nos.1 and 2 are persons interested in the trust and whether they
are bringing the suit in a representative capacity, it is not just
their designation or position which must be looked into or given
importance to - While recognising that they have also sought some
remedies related to personal grievances and the wrongful dismissal
of the respondent no. 1 which could be seen as unduly magnifying
an election dispute, there are several other allegations in the plaint
which cannot simply be ignored and which give the respondent
nos.1 and 2, a dual role/capacity, whilst they're agitating the matter
u/s.92 - Larger background in which the suit is brought alludes
to the existence of public interest also at play - Reliefs claimed
by the plaintiffs, must fall within those reliefs outlined u/s.92(1) -
Reliefs in the present plaint, insofar as they agitate private rights,
cannot be granted under a suit of this nature - Suit filed before
the Single Judge of the High Court to be commenced - Societies
Registration Act, 1860. [Paras 137 (xv), (xvii), 138]
Code of Civil Procedure, 1908 - s.92 - Object and purpose -
Conditions to be fulfilled for the applicability of s.92:
Held: Suit u/s.92 is a representative suit of a special nature since
the action is instituted on behalf of the public beneficiaries and
in public interest - Obtaining a 'grant of leave' from the court
before the suit can be proceeded with, acts as a procedural and
legislative safeguard in order to prevent public trusts from being
subjected to undue harassment through frivolous suits being filed
against them - However, at the stage of grant of leave, the court
neither adjudicates upon the merits of the dispute nor confers any
substantive rights upon the parties - Certain conditions or essential
pre-requisites

## Text

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[2025] 8 S.C.R. 411 : 2025 INSC 932
Operation Asha
v.
Shelly Batra & Ors.
(Civil Appeal No. 10048 of 2025)
05 August 2025
[J.B. Pardiwala* and R. Mahadevan, JJ.]
Issue for Consideration
Issue arose as to whether the appellant Society registered under
the Societies Registration Act, 1860 can be said to have fulfilled
all the requirements stipulated u/s.92 CPC for the purpose of
instituting a suit under the said provision.
Headnotes†
Code of Civil Procedure, 1908 - s.92 - Public charities -
Requirements to be fulfilled for instituting a suit u/s.92 -
Appellant society, is a not-for-profit society, registered
under the 1860 Act - Respondent no.3-CEO of the appellant
society, terminated the services/employment of respondent
no.1-medical health professional and co-founder - After the
removal of the respondent no.1 as a Board member, both the
respondent no.1 and her mother-respondent no.2 instituted
a suit u/s.92 for declaration, permanent and prohibitory
injunction and, rendition of accounts alleging misconduct
and breach of several society's by-laws by the respondent
no.3 and respondent no.4 - Thereafter, respondent nos. 1 and
2 filed an application seeking leave to institute the civil suit
against the appellant Society along with the respondent nos.3
to 10 - Single Judge granted leave to the respondent nos.1
and 2 for instituting a suit u/s.92 holding that all the elements
and ingredients u/s.92 stood fulfilled - Appeal thereagainst
dismissed by the Division Bench - Challenge to:
Held: Respondent nos.1 and 2 made several allegations of
siphoning of funds by the respondent nos.3 and 4, for their own
personal use, could be said to have prima facie satisfied the
condition required to apply the doctrine of constructive trust to the
present facts - If these allegations are found to have no substance
or plainly false, the entire suit would fail - That would happen
* Author
412
[2025] 8 S.C.R.
Supreme Court Reports
also when the circumstances which required the imposition of a
constructive trust do not exist/have not been proven - However,
if found true, all the property diverted for the purpose of obtaining
a pecuniary advantage would be subject to a constructive trust,
the administration of which can be sought in a suit u/s.92 and the
respondent nos.3 and 4 respectively would be considered to be
'constructive trustees'- While scrutinising whether the respondent
nos.1 and 2 are persons interested in the trust and whether they
are bringing the suit in a representative capacity, it is not just
their designation or position which must be looked into or given
importance to - While recognising that they have also sought some
remedies related to personal grievances and the wrongful dismissal
of the respondent no. 1 which could be seen as unduly magnifying
an election dispute, there are several other allegations in the plaint
which cannot simply be ignored and which give the respondent
nos.1 and 2, a dual role/capacity, whilst they're agitating the matter
u/s.92 - Larger background in which the suit is brought alludes
to the existence of public interest also at play - Reliefs claimed
by the plaintiffs, must fall within those reliefs outlined u/s.92(1) -
Reliefs in the present plaint, insofar as they agitate private rights,
cannot be granted under a suit of this nature - Suit filed before
the Single Judge of the High Court to be commenced - Societies
Registration Act, 1860. [Paras 137 (xv), (xvii), 138]
Code of Civil Procedure, 1908 - s.92 - Object and purpose -
Conditions to be fulfilled for the applicability of s.92:
Held: Suit u/s.92 is a representative suit of a special nature since
the action is instituted on behalf of the public beneficiaries and
in public interest - Obtaining a 'grant of leave' from the court
before the suit can be proceeded with, acts as a procedural and
legislative safeguard in order to prevent public trusts from being
subjected to undue harassment through frivolous suits being filed
against them - However, at the stage of grant of leave, the court
neither adjudicates upon the merits of the dispute nor confers any
substantive rights upon the parties - Certain conditions or essential
pre-requisites need to be fulfilled for a suit to be maintainable under
this provision are-the trust in question must be created for public
purposes of a charitable or religious nature; there must exist a
breach of trust or a direction of the court must be necessary for
the administration of the trust; and the relief claimed must be one
or other of the reliefs as enumerated u/s.92(1) - To establish that a
suit is not maintainable u/s.92, it is sufficient to prove that any one
[2025] 8 S.C.R.
413
Operation Asha v. Shelly Batra & Ors.
of the conditions enumerated above has not been met, however,
in order to assert its maintainability, all the said conditions need
to be satisfied - Furthermore, special nature of the suit u/s.92
requires it to be filed fundamentally on behalf of the public for the
vindication of public rights - Thus, courts must go beyond the reliefs
and also give due regard to the object and purpose for which the
suit is brought - True nature of the suit must be determined on
a comprehensive understanding of the facts of the matter and a
hard-and-fast rule cannot be made - Fact that certain private rights
are being agitated must not be reason enough to ignore the other
allegations made in the suit and dismiss it outrightly, provided the
suit is instituted in a representative capacity - Issues involving
the day-to-day management of the institution and grievances by
members qua other members as regards the election of members or
certain board decisions, must not be made in a suit of this nature,
especially when such grievances can be redressed through other
mechanisms or under a regular suit not falling within s.92. [Para
137(i), (ii), (xix), (xx)]
Societies Registration Act, 1860 - s.5 - Property of society
how vested - Doctrine of constructive trust and its applicability
to a society:
Held: Effect of registration under the 1860 Act would not be to
automatically invest the properties of the society with the character
of trust property - s.5 provides two options, or mechanisms through
which a society can hold the property belonging to itself, one, in
trustee(s) or, two, in the governing body of the society - While the
society cannot be considered as an 'express trust', for an entity to
be brought within the rigours of s.92, the plaintiff has the option of
also contending that a 'constructive trust' exists in the circumstances
and a breach of such a constructive trust has occurred or that the
directions of the Court are necessary for the administration of such
a constructive trust - Constructive trust, arises by operation of law,
without regard to or irrespective of the intention of the parties to
create a trust - It is imposed predominantly because the person
holding the title to the property would profit by a wrong or would
be unjustly enriched if they were permitted to keep the property -
For this equitable doctrine to be applied, fiduciary must receive
property or money which he cannot conscientiously retain - It is
only thereafter that a constructive trust would be raised in favour
of the beneficiaries on whose account the money was originally
received - Factum that the fiduciary 'withheld' the property from its
414
[2025] 8 S.C.R.
Supreme Court Reports
rightful beneficiaries must be established - That such a fiduciary
sought to misapply the property in contravention to the covenants
that bound him, or sought to gain an advantage for himself, must
be proved for a constructive trust to come into existence by the
operation of law - That he further divested the said siphoned
property/funds, would have to be proved in order to assert that the
'constructive trust' has additionally been breached - Even in the
absence of such a further divestment, the directions of the court
may still be necessary for the administration of the constructive
trust. [Para 137 (vii), (xi), (xii), (xiii), (xiv)]
Case Law Cited
Ashok Kumar Gupta & Anr. v. Sitalaxmi Sahuwala Medical Trust &
Ors. [2020] 2 SCR 983 : (2020) 4 SCC 321; Shiromani Gurudwara
Prabandhak Committee v. Som Nath Dass [2000] 2 SCR 705 :
(2000) 4 SCC 146; Swami Paramatmanand Saraswati v. Ramji
Tripathi [1975] 1 SCR 790 : (1974) 2 SCC 695; Ahman Adam Sait
and Others v. M.E. Makhri and Others, 1963 SCC OnLine SC 71;
Shiromani Gurdwara Parbandhak Committee v. Mahant Harnam
Singh [2003] Supp. 3 SCR 805 : (2003) 11 SCC 377; Vidyodaya
Trust v. Mohan Prasad [2008] 3 SCR 569 : (2008) 4 SCC 115;
Swami Shivshankargiri Chella Swami v. Satya Gyan Niketan [2017]
2 SCR 365 : (2017) 4 SCC 771; Bihar State Board Religious
Trust, Patna v. Mahant Sri Biseshwar Das [1971] 3 SCR 680 :
(1971) 1 SCC 574; Kuldip Chand and Another v. Advocate-General
to Government of H.P. and Others [2003] 1 SCR 1195 : (2003) 5
SCC 46; Board of Trustees, Ayurvedic and Unani Tibia College,
Delhi v. State of Delhi and Another [1962] Supp. 1 SCR 156 :
1961 SCC OnLine SC 145; Illachi Devi and Ors. v. Jain Society,
Protection of Orphans India and Others [2003] Supp. 4 SCR 62 :
(2003) 8 SCC 413; Tata Memorial Hospital Workers Union v.
Tata Memorial Centre and Another [2010] 9 SCR 723 :
(2010) 8 SCC 480; Janardan Dagdu Khomane and Another v.
Eknath Bhiku Yadav & Ors. [2019] 13 SCR 390 : (2019) 10 SCC
395; Syed Mohd. Salie Labbai v. Mohd. Hanifa [1976] 3 SCR
721 : (1976) 4 SCC 780; T. Varghese George v. Kora K. George
[2011] 12 SCR 1070 : (2012) 1 SCC 369; Mahant Pragdasji Guru
Bhagwandasji v. Patel Ishwarlalbhai Narsibhai [1952] 1 SCR 513 :
(1952) 1 SCC 323; Charan Singh v. Darshan Singh [1975] 3 SCR
48 : (1975) 1 SCC 298; Sugra Bibi v. Hazi Kummu Mia [1969] 3
SCR 83 : 1968 SCC OnLine SC 99 - referred to.
[2025] 8 S.C.R.
415
Operation Asha v. Shelly Batra & Ors.
S.R. Bahugana v. All India Women's Conference and Ors. (2009)
ILR 7 Delhi 614; Abhaya v. JA Raheem, 2005 SCC OnLine Ker 234;
K. Rajamanickam v. Periyar Self Respect Propaganda Institution,
Thiruchirapalli, 2006 SCC OnLine Mad 379; The Young Mens
Christian Association of Ernakulam and Ors. v. National Council
YMCAS of India, 2018 SCC OnLine Del 9909; Babu Bhagwan Din
and Ors. v. Gir Har Saroop and Ors., 1939 SCC OnLine PC 47;
Gurunatharudhaswami Guru Shidharudhaswami v. Bhimappa
Gangadhrawappa Divate, 1948 SCC OnLine PC 43; Kesava
Panicker v. Damodara Panicker and Others, 1974 SCC OnLine
Ker 58; C. Chikka Venkatappa & Another v. D. Hanumanthappa &
Others, 1970 SCC OnLine Kar 16; Shri Dnyaneshwar Madhuradwait
Sampradayik Mandal, Amravati v. Charity Commissioner, Bombay
and Another, 1980 SCC OnLine Bom 120; Board of Governors
St. Thomas School and Others v. A.K. George and Another, 1984
SCC OnLine Cal 56; The Advocate General v. Bhartiya Adam Jati
Sewak Sangh and Ors., MANU/HP/0182/2001; Gopal L. Raheja v.
Vijay B. Raheja, 2007 SCC OnLine Bom 399; Budreedas v.
Choonilal, ILR 33 Cal 789; Tirumalai-Tirupati Devasthanams
Committee v. Udiayar Krishnayya Shanbhaga, 1943 SCC OnLine
Mad 48 - referred to.
Knight v. Knight (1840) 3 Beav 148; Beatty v. Guggenhein
Exploration Co. (1919) 225 N. Y. 380; Meinhard v. Salmon (1928)
249 N.Y. 458; Newton v. Porter, 69 N.Y. 133 (1877); Campbell v.
Drake, 39 N.C. 94 (1845); Pope v. Garrett, 147 Tex. 18 (1948);
McAnulty v. Std. Ins. Co. (2023) 81 F.4th 1091; Bailey v. Angove's
Pty Ltd. (2016) UKSC 47; Keech v. Sandford (1726) Sel Cah
Ch 61; Paragon Finance plc v. Thakerar & Co. (1999) 1 All ER
400; Stevens v. Hotel Portfolio II UK Ltd. (2025) UKSC 28 -
referred to.
Books and Periodicals Cited
Mukherjee on the Indian Trust Act, 1881 (2021); Halsbury Laws of
India; P Ramantha Aiyar in Advanced Law Lexicon - referred to.
List of Acts
Code of Civil Procedure, 1908; Societies Registration Act, 1860;
Trusts Act, 1882; Prohibition of Benami Property Transactions
Act, 1988.
416
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List of Keywords
Section 92 CPC; Public charitable institutions; Public charities;
Trust; Public purpose; Charitable or religious nature; Society
construed as trust or constructive trust; Vesting of properties in
Executive Committee; Doctrine of constructive trust; Breach of
trust; Administration of trust; Persons having an interest in the
trust; Constructive trustees; Public interest; Express trust; Gross
financial impropriety; Siphoning off funds/donations; Representative
suit of a special nature; If not vested in trustee.
Case Arising From
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 10048 of 2025
From the Judgment and Order dated 21.08.2024 of the High Court
of Delhi at New Delhi in FAOOS No. 114 of 2024
Appearances for Parties
Advs. for the Appellant:
Dama Seshadri Naidu, Sr. Adv., Bishwajit Dubey, Ms. Radhika
Bishwajit Dubey, Karan Khetani, Umesh Dubey, Ms. Madhulika,
Ms. Vuzmal Nehru, Manoj K. Mishra.
Advs. for the Respondents:
Jai Anant Dehadrai, Sidharth Sharma, Anubhav Lamba, Pulkit
Agarwal.
Judgment / Order of the Supreme Court
Judgment
J.B. Pardiwala, J.
For the convenience of exposition, this judgment is divided into the
following parts: -
INDEX*
A.
FACTUAL MATRIX ...................................................................
2
B.
THE IMPUGNED JUDGMENT .................................................
15
C.
SUBMISSIONS OF THE PARTIES .........................................
18
* Ed. Note: Pagination as per the original Judgment.
[2025] 8 S.C.R.
417
Operation Asha v. Shelly Batra & Ors.
i.
Submissions on behalf of the Appellant .......................
18
ii. Submissions on behalf of the respondent no. 1 ..........
22
iii. Submissions on behalf of the respondent nos. 3
and 4 ..................................................................................
24
D.
ISSUES FOR DETERMINATION .............................................
25
E.
ANALYSIS ................................................................................
25
i.
The Object and purpose behind Section 92 of the
CPC ....................................................................................
25
ii. Conditions to be fulfilled for the applicability of Section
92 of the CPC ...................................................................
33
A. The trust being created for a public purpose of a
charitable or religious nature .......................................
36
I.
Whether a Society can be construed to be a 'trust
or a 'constructive trust'? ........................................
37
a. Circumstances under which the creation of a
trust has been inferred ...................................
37
b. Views of different High Courts on the issue ...
55
c. Section 5 of the Societies Registration Act,
1860 and the 'vesting' of properties in the
Executive Committee. .....................................
82
d. The doctrine of constructive trust and its
applicability to a society functioning for public
purposes of a religious or charitable nature ...
99
B. A breach of trust or the directions of the court being
necessary for the administration of the trust ............... 129
C. The institution of the suit must be made by two or more
persons "having an interest in the trust" ...................... 136
D. The reliefs falling within the scope of those enumerated
under Section 92(1) of the CPC along with the object,
purpose and capacity in which the suit is brought. ....... 140
F.
CONCLUSION ......................................................................... 157
418
[2025] 8 S.C.R.
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1.
Leave granted.
2.
This appeal arises from the judgment and order passed by the
High Court of Delhi dated 21.08.2024 in FAO(OS) No. 114 of 2024
(hereinafter, the "impugned decision"), by which the High Court
dismissed the appeal filed by the appellant herein against the judgment
and order dated 03.05.2024 passed by a learned Single Judge of
the High Court in CS(OS) No. 153 of 2020 allowing the application
under Section 92 of the Code of Civil Procedure, 1908 (hereinafter,
the "CPC") filed by the respondent nos. 1 and 2 respectively, seeking
leave to institute the subject suit.
A.
FACTUAL MATRIX
3.
Operation ASHA (hereinafter, the "appellant Society/original
defendant no. 1") is a not-for-profit society founded in the year 2005
and registered under the Societies Registration Act, 1860 with its
registered office in New Delhi. The appellant Society is engaged in
providing health services through a plethora of activities primarily to
the underprivileged sections of the society across India with special
emphasis on the treatment, education and prevention of tuberculosis
and other diseases. The same can be inferred from the Memorandum
of Association (hereinafter, the "MoA") of the appellant Society. The
aims and objectives of the appellant Society are as follows:
"4. AIMS AND OBJECTS
MAIN OBJECTIVES OF THE SOCIETY ARE GIVEN
BELOW.
4.1.1 To develop, establish, maintain and provide health
and all other related services, and to help, aid, assist,
arrange, co-ordinate, organize maintain and carry on
activities connected with one of health quality of life,
nursing facilities, socio-economic aspects, general welfare
and problems of the society with special emphasis on
provision of services for the underprivileged sections of
the society as per Govt. rule.
4.1.2 To develop, establish, make and provide microcredit
microfinance and all other related services, and to help,
aid, assist, arrange, contribute, co-ordinate, organize
maintain and carry on activities connected with concerns
[2025] 8 S.C.R.
419
Operation Asha v. Shelly Batra & Ors.
of microcredit and micro finance. Socio-economic aspects,
general welfare and problems of the society with special
emphasis on provision of services for the underprivileged
sections of the society as per Govt. rule.
4.1.3 To establish hospitals, medical schools and colleges,
nursing schools and colleges, dispensaries, laboratories
research institutions and other educational institutions as
per Govt. rule.
4.1.4 To purchase or otherwise deal in medicines and
equipment required for maintenance of health, hygiene
and microcredit/ microfinance.
4.1.5 To aid, promote establish, maintain, run and
encourage alternative systems of medicine and establish
training and research centers for this purpose as Govt, rule.
4.1.6 To aid, promote, establish, maintain, run and
encourage microcredit/microfinance as per Govt. rule.
4.1.7 To open centers and institutes for diagnostic,
curative, therapeutic and research of medical sciences
as per Govt. rule,
4.1.8 To provide free medicines to the poor."
4.
The MoA of the appellant Society also stipulates that all the incomes
and earnings of the society, whether movable or immovable, shall
solely be utilised to further the aims and objectives of the appellant
Society. Furthermore, it is also stated that the members of the
appellant society would not be entitled to any profits by virtue of their
membership. The relevant portion of the MoA is extracted hereinbelow:
"All the incomes, earnings, movable or immovable
properties of the society shall be solely utilized and applied
towards the promotion of its aims and objectives only as
set forth in the memorandum of association and no profits
thereof shall be paid or transferred directly or indirectly
by way of dividends, bonus, profits or in any manner
whatsoever to the present or past members or to any
person claiming through any one or more of the present
or the past members, no member of the society shall have
any profits, whatsoever by virtue of his membership, the
420
[2025] 8 S.C.R.
Supreme Court Reports
names, addresses, occupations and signatures of the
present members of the executive committee tο whom
the management and affairs of the society are entrusted
as required under section 2 of the societies registration
act, 1860 (punjab amendment act of 1957) as extended
and applicable to the national capital territory & all state
of india."
(Emphasis supplied)
5.
A few other relevant clauses from the Articles of Association
(hereinafter, the "AoA") of the appellant Society are reproduced
hereinbelow:
"6. DUTIES & OBLIGATIONS OF MEMBERS
All and every member
6.1 Shall attend the Board of meetings regularly;
6.2 Shall give necessary information to the Society,
pertaining to matters necessary to be known by the Society;
6.3 Shall not indulge in activities, which may prove
prejudicial to the Aims and Objects of the Society and/or
to the Rules and Regulations of the Society;
6.4 Shall maintain sanctity of the secrets and confidentiality
of police matters of the Society and its members;
-xxx11.2 POWERS & DUTIES OF THE EXECUTIVE
COMMITTEE
11.2.1 All the properties, movable, immovable, and other
kind of assets shall stand vested in the Committee.
11.2.2 The business and the affairs of the Society shall be
managed and administered by the Committee.
11.2.3 Without prejudice to the generality of the foregoing
provisions, the Committee shall have the following powers.
11.2.3.1 To acquire by gift, purchase, exchange, lease or
in any other manner land, building, or other immovable,
property together with all rights pertaining thereto.
[2025] 8 S.C.R.
421
Operation Asha v. Shelly Batra & Ors.
11.2.3.2 To manage the properties of the Society.
11.2.3.3 To accept the management of any trust, fund,
or endowment or any other ... in which the Society is
interested.
11.2.3.4 To raise funds for the Society by way of gifts,
donations, grants-in-aid or otherwise within India or outside,
as provided in the bye-laws.
11.2.3.5 To raise loans, stand guarantee for loans and
do all acts necessary to raising the loans to further the
objects of the Society.
11.2.3.6 To receive monies, securities, instruments,
investments, or any other assets for and on behalf of the
Society.
11.2.3.7 To enter into agreements contracts for and on
behalf of the Society.
11.2.3.8 To manage, serve, transfer or otherwise disposeoff any property, movable or immovable of the Society.
11.2.3.9 To prescribe the powers, duties and functions of
the office-bearers.
11.2.3.10 To exercise control over the President and the
General secretary of the Society including the powers of
dismissal.
11.2.3.11 To appoint the Secretary of the Society.
11.2.3.12 To elect new members to the Committee when
casual vacancies occur.
11.2.3.13 To appoint the Secretary of the society.
-xxx13. SOURCES OF INCOME & UTILIAZATION OF FUNDS
Funds will be raised by way of grants-in-aid, donations,
gifts, subscriptions fees, and income from investments,
loans and other means available to the Society under
the Act. Funds will be used to carry out the Aims and
Objectives of the Society."
422
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6.
Dr. Shelly Batra (hereinafter, the "respondent no. 1/original plaintiff
no. 1") is a medical health professional and co-founder of the appellant
Society. Vide communication dated 19.06.2020, Mr. Sandeep Ahuja
(hereinafter, the "respondent no. 3/original defendant no. 2") who
is also the co-founder and CEO of the appellant Society terminated
the services/employment of the respondent no. 1. The communication
alleged that the termination of the respondent no. 1 was on account
of various "omissions including misrepresentation" of her daughter's
previous employment, fabrication of documents, misappropriation
of the assets and funds of the NGO as well as gross misbehaviour
with the staff and the employees. Subsequently, on 23.06.2020, the
Board of the appellant Society is said to have passed a resolution
terminating the respondent no. 1 from the post/office of President of
the appellant Society. Soon thereafter, on 27.06.2020, the Board of
the appellant Society is also said to have removed the respondent
no. 1 from her capacity as a member of their Board.
7.
Mrs. Usha Gupta, (hereinafter, the "Respondent No. 2/original
plaintiff no. 2"), who is the mother of the respondent no. 1, is
one of the current members of the Board of the appellant Society.
Immediately after the removal of the respondent no. 1 as a Board
member, both the respondent no. 1 and respondent no. 2 (collectively
also referred to as the "original plaintiffs") instituted an Original
Suit bearing CS (OS) No. 153 of 2020 on 28.06.2020 under Section
92 of the CPC before a learned Single Judge of the High Court for
declaration, permanent & prohibitory injunction and, rendition of
accounts. They alleged misconduct and breach of several of the
society's by-laws by the respondent no.3 and one Ms. Suniti Ahuja
(hereinafter, the "respondent no. 4/original defendant no. 3").
The original defendant nos. 4 to 8 respectively are current Board
members and the original defendant no. 9 is a former Board member
of the appellant Society.
8.
To further elaborate in detail, the respondent nos. 1 and 2 respectively
(original plaintiffs) alleged the following in the suit instituted by them:
i.
That the respondent nos. 3 and 4 respectively, were indulging in
gross financial impropriety, misconduct and siphoning off funds/
donations which were received by the appellant Society into
various shell companies/entities controlled by them and their
friends/relatives. Such funds were utilised and misappropriated
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for personal gains. Furthermore, that the funds received by the
society have been utilised for activities outside India, which is
impermissible, since the requisite permission was not taken from
the appropriate governmental authorities and yet, tax benefits
were illegally availed for the same.
ii.
That there has been a severe mismanagement in the
administration of the appellant Society by the respondent nos.
3 and 4 respectively. They have avoided making accounting
provisions for statutory disbursements in the form of provident
fund or gratuity to their employees and are also engaging in
cross-payment of salaries to employees through their sister
concerns with a view to avoid the grant of statutorily mandated
employee benefits.
iii.
That the respondent no. 3 has misrepresented information and
thereby misled the donors of the appellant Society with an
intent to defraud them by claiming that the appellant society
had provided COVID-19 related services to more than 12,600
families and 10,000 migrants, however, the same remains
entirely uncorroborated and unsubstantiated.
iv.
That the respondent nos. 3 and 4 respectively, used force and
coerced several employees in order to illegally take away the
property of the appellant Society. This includes pressurizing the
original defendant no. 8 to hand over the ATM card, passbook
etc. of the account in which his salary is remitted and utilising
those funds for personal needs. Furthermore, it was alleged
that they have also demanded compulsory kickbacks from the
employees engaged by the appellant Society by threatening,
coercing and blackmailing them with immediate termination of
employment, with a view to siphon employee payments.
v.
That respondent no. 3 has also regularly misbehaved by issuing
threats of personal injury and also indulged in discriminatory
behaviour against the employees of the appellant society on
the basis of race, caste, religion and sex.
vi.
That, around February 2020, the respondent no. 1 approached
the respondent nos. 3 and 4 respectively to resolve the aforesaid
issues, amongst others. In retaliation, she was harassed and
threatened to exit from her position at the appellant Society.
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9.
The reliefs prayed for in the aforesaid suit are reproduced hereinbelow:
"PRAYER
35. In light of the above facts and circumstances of the
case, Plaintiffs most humbly pray that this Hon'ble Court
may grant the following reliefs in its favour:
(a) Pass a decree of declaration holding that all the
decisions taken by the Board of Defendant No.1 and/or
any Board member or employee or personnel w.e.f. 01-062020 onwards are illegal, wrong and void, in the present
facts and circumstances, and therefore, set-aside; and/or
(b) Pass a decree of declaration holding that the
termination of Dr.Shelly Batra (Plaintiff No. 1) from the
post/office of President vide Board Resolution dated
23-06-2020 and ouster from the Board of Defendant
No. I vide Board Resolution dated 27-06-2020 is illegal,
wrong and void in the present facts and circumstances,
and restoring her office/post in the affairs of Defendant
No. 1; and/or
c) Pass a decree for permanent & prohibitory injunction
against the Defendant Nos.2 and 3 by removing them from
the Board of Defendant No.1 on account of the illegalities &
breach of the bye-laws of Defendant No.1, and restraining
them from being involved in the activities/affairs of the
Board of Defendant No.1 either as member or employee
or contractor or advisor or anyway whatsoever;
(d) Pass a decree for rendition of accounts of profits/
monies siphoned, misappropriated, illegally earned by
Defendant Nos.2-3 for their personal use/benefit from the
accounts/funds of Defendant No.1, and further a decree
for recovery of the amount be found to be due, siphoned,
misappropriated, etc. by the Defendant Nos. 2-3 along
with interest @18% in favour of Defendant No. 1; and/or
I Pass a decree or order regarding settling the scheme
of the Defendant No. 1 by amending its bye-laws in such
manner that no one family gets complete control of the
affairs of Defendant No. 1:
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Operation Asha v. Shelly Batra & Ors.
(f) Costs:
(g) Any other relief (s) which this Hon'ble Court deems,
fit, just and proper may also be awarded in favour of the
Plaintiffs, in the interest of justice."
10. In pursuance of the aforesaid, the respondent nos. 1 and 2 respectively,
filed an application being I.A. No. 5009 of 2020 in CS (OS) No. 153
of 2020 seeking leave to institute the civil suit against the appellant
Society along with the respondent nos. 3 to 10 (collectively referred
to as the "original defendants") before the learned Single Judge of
the High Court. In the said application, it was stated that the appellant
Society is a public charitable institution - an NGO engaged in the
healthcare industry. The main objectives of the society as evidenced
by its by-laws is public welfare and therefore, it would fall under the
ambit of "public charities" mentioned under Section 92 of the CPC.
The respondent nos. 1 and 2 respectively (original plaintiffs) have
been involved in the functioning of the appellant Society since its
inception and have a justified and bona fide interest in the society,
Therefore, they are "interested persons" as required by Section 92.
Furthermore, since numerous breaches have occurred in the conduct
of business/affairs of the appellant Society, the direction of the court
would be of utmost necessity for its administration.
11. After taking seisin of the matter, vide order dated 05.08.2020, the
learned Single Judge of the High Court appointed Justice (retd.) R.V.
Easwar as the Chairperson of the Board of the appellant Society
with the consent of both the parties. Directions were issued to the
Chairperson to submit a report and conduct a financial audit in order
to ascertain, amongst others, whether there has been a defalcation
or siphoning off of funds that the donors have contributed towards
the appellant Society and to make suggestions as to how the working
of the society can be improved. The Chairperson submitted three
reports dated 26.08.2020, 03.10.2020 and 09.12.2020 respectively.
On, 13.08.2021, an Interim Forensic Audit Report and on 20.09.2021,
a Final Forensic Audit Report respectively, are also said to have been
submitted by the auditors appointed for the said purpose.
12. The learned Single Judge of the High Court vide the judgment and
order dated 03.05.2024 granted leave to the respondent nos. 1 and
2 (original plaintiffs) for the purpose of instituting a suit under Section
92 of the CPC. While holding that all the elements and ingredients
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under Section 92 of the CPC stood fulfilled and granting leave, the
learned Single Judge observed as follows:
i.
First, whether it be the Interim Forensic Audit Report dated
13.08.2021 or the various reports submitted under the
Chairmanship of Justice (retd.) R.V. Easwar, there was no
gainsaying that actions are required to be taken to remedy the
state of affairs of the appellant Society, particularly in relation to
its financial affairs and administrations, for which the directions
of the court may be necessary.
ii.
Secondly, heavy reliance was placed on the decision of this
Court in Ashok Kumar Gupta & Anr vs. Sitalaxmi Sahuwala
Medical Trust & Ors. reported in (2020) 4 SCC 321 to grant
leave under Section 92 of the CPC since the enunciation of
law in the said decision is also said to have been made in a
strikingly similar factual background. It was reiterated that it is
the dominant purpose of the suit, as discernible strictly from the
allegations made in the plaint that is required to be assessed
by the court while considering whether leave must be granted
to institute the suit or not.
iii.
Thirdly, that the respondent no. 1 (original plaintiff no. 1) being
one of the co-founders of the appellant Society and a long-time
President of its Board, along with the respondent no. 2 (original
plaintiff no. 2) who has been associated with the appellant
Society for an extended period of time while also continuing
to be a member of its Board, would constitute 'persons having
an interest in the trust'.
iv.
Fourthly, while referring to Article 13 of the AoA as per which
the society is entitled to raise funds by way of gifts, donations,
grants-in-aid or otherwise strictly for the purpose of carrying
out the aims and objectives of the society, it was opined that
the formal 'entrustment' of property or funds by a third-party
to the appellant Society would not be a necessary ingredient
to hold that the society is a 'constructive trust'. If that formality
were a sine-qua-non, the very distinction between a 'trust'
and a 'constructive trust' would stand obliterated. Since any
grant-in-aid, donation or gift made by a third-party to the
society would, by its very nature, be intended to be used for
the benefit of those in need of medical care in furtherance of
[2025] 8 S.C.R.
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Operation Asha v. Shelly Batra & Ors.
the objects of the society, it was held that this in-itself would
be sufficient to infer that all such grants-in-aid, donations gifts
etc., made to the society would become property 'entrusted' to
it, by reason of which the society would acquire the character
of a 'constructive trust'.
v.
Fifthly, after perusing the aims and objects of the appellant
Society as detailed in the MoA it was declared that the appellant
Society is evidently engaged in a 'public purpose of charitable
nature' since they principally provide health care services to the
underprivileged sections of the society, specifically with respect
to the treatment, education and prevention of tuberculosis.
vi.
Lastly, that the claims made in the suit also co-relate and fall
within the scope of the reliefs contemplated under Section 92 of
the CPC, more particularly sub-sections (1)(d) and (1)(h) thereof.
13. The relevant observations made by the learned Single Judge are
reproduced hereinbelow:
"20. Therefore, we must not lose sight of the fact, that for
purposes of deciding whether leave should be granted
under section 92 CPC, it is only the allegations in the
plaint that should be looked into in the first instance; it
being available to the court to even dismiss the suit if
after evidence is led it is found that the breach of the trust
alleged was not made-out.
21. To reiterate it is the dominant purpose of the suit, as
discernible only from the allegations in the plaint, that
is required to be assessed by the court at the stage of
considering whether leave should be granted under section
92 CPC to institute a suit."
22. In the present case, the following assertions are found
in the plaint:
22.1. Plaintiff No.1 is one of the co-founders of defendant
No. 1 society and has been a long time President of its
Board, Plaintiff No.2. has been associated with defendant
No.1 society for a long time and continues to be a member
of the Board of the society, even if she is plaintiff No.1's
mother. In fact these assertions appear to reflect the
admitted position.
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22.2. Plaintiff No.1 has played a pivotal role in the
functioning of the society ever since it was established.
-xxx-
"22.4. Furthermore, a perusal of the Articles of Association
('AOA') of defendant No.1 society inter-alia shows that the
management of the society is entrusted to an Executive
Committee, which is entitled to raise funds for the society
by way of gifts, donations, grants-in-aid or otherwise, which
funds are to be used to carry-out the aims and objectives of
the society. Attention in this behalf may be drawn to Article
13 of the AoA of the society, which reads as follows [...]
In the opinion of this court, the formal 'entrustment' of
property or funds by a third-party to defendant No.1 society
is not a necessary ingredient to hold that the society is a
constructive trust'. If that formality were a sine-qua-non,
the very distinction between a 'trust' and a 'constructive
trust' would get obliterated. This court is of the view, that
any grant-in-aid, donation or gift made by a third-party to
the society is, by its very nature, meant and intended to
be used for the benefit of those in need of medical care
in furtherance of the objects and purpose of the society.
This, in itself, is sufficient to infer that all such grants-inaid, donations, gifts etc. made to the society are property
entrusted to it, by reason of which the society acquires
the character of a 'constructive trust'."
22.5. Also, defendant No.1 is evidently engaged in a public
purpose of charitable nature, since it provides medical-aid
and relief to patients of tuberculosis who otherwise cannot
afford treatment, thereby fulfilling the other criterion of
section 92 CPC.
22.6. In this manner, defendant No.1 society fulfils all
conditions necessary to invoke section 92 CPC, as
enunciated by the Supreme Court in Ashok Kumar
Gupta (supra) and the elements required to qualify as a
'constructive trust' as laid down by a Co-ordinate Bench
of this court in The Young Mens Christian Association of
Ernakulam (supra) cited above.
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Operation Asha v. Shelly Batra & Ors.
23. In addition, the IFAR as well as the multiple audit reports
submitted in relation to the administration and financial
affairs of the society, including under the chairmanship of
Justice Easwar, clearly disclose that the manner in which
the affairs of the society are being run, requires closer
consideration and scrutiny.
24. Furthermore, the claims made in the suit also co-relate
and fall within the scope of the reliefs contemplated in
section 92 CPC, especially section 92(d) and (h) thereof;
25. In the above view of the matter, this court is persuaded
to hold that all elements and ingredients of section 92
CPC are satisfied; and that therefore, the plaintiffs are
entitled to grant of leave to institute the present suit under
section 92, CPC.
26. To obviate any ambiguity, it may be clarified that the
grant of leave to the plaintiffs to institute the suit would not
prevent the court from dismissing die suit subsequently,
if the allegations contained in the plaint are found not to
be substantiated.
27. The application is accordingly allowed."
(Emphasis supplied)
B.
THE IMPUGNED JUDGMENT
14. Aggrieved by the aforesaid judgment and order of the learned
Single Judge dated 03.05.2024, the appellant Society preferred an
appeal being FAO (OS) No. 114 of 2024 before the Division Bench
of the High Court.