# THE KHASGI (DEVI AHILYABAI HOLKAR CHARITIES) TRUST, INDORE & ANR v. VIPIN DHANAITKAR & ORS

- **Citation:** [2022] 17 S.C.R. 173
- **Court:** Supreme Court of India
- **Decided:** 2022-07-21
- **Case number:** Civil Appeal No. 4839 of 2022
- **Bench:** A.M. Khanwilkar, Abhay S. Oka, C.T. Ravikumar
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/the-khasgi-devi-ahilyabai-holkar-charities-trust-indore-anr-v-vipin-dhanaitkar-35553
- **Pages:** 49

## Headnote

Trusts and Charities:
Madhya Pradesh Public Trusts Act, 1951:ss. 2 (4), 4 (1), 14,
36 (1) - Registration of Public Trusts - Alienation of trust property
-Previoussanction of Registrar - On facts, matter pertaining to
illegal alienation of appellant trust-Khasgi Trust by the trustees -
Trust deed of the appellant trust executed in 1962 and is traced to
Holkar rulers - Alienations were made by the trustees in relation to
at least six properties -Collector held that the properties mentioned
in the Trust Deed were the properties of the State Government; that
the trustees made illegal alienations without prior permission from
Government, thus the alienations held to be invalid-Collector
directed that the name of the State Government to be entered in
revenue records to prevent further alienations- Said order
challenged by the appellant Trust and its trustee - Single Judge of
the High Court disposed of the petition by issuing diverse directions
for the administration of Khasgi Trust - Another writ petition filed
by the appellant-Khasgi Trust disposed of by directing the authorities
to correct the revenue record - Appeals before the Division Bench,
wherein it was held that the Appellant- Khasgi Trust was governed
by the Public Trusts Act; that the Trustees had no authority to alienate
the Khasgi properties as the same was vested in the State
Government; and that the Single Judge had virtually re-written the
Trust Deed and therefore, the judgment could not be sustained -
On appeal, held: Khasgi (Devi Ahilyabai Holkar Charities) Trust,
Indore, is a Public Trust governed by the provisions of the 1951 Act
-Khasgi Trust, is an express Trust for public, religious and charitable
purposes -Trustees have a duty to safeguard the interests of the
beneficiaries of the Public Trust - Thus, the trustees directed to get
the Khasgi Trust registered under the Public Trusts Act by making
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the necessary application- Properties described in Part 'B' of the
Schedule to the Trust Deed, are properties of the said Public TrustAlienationof the said properties can be made only by taking recourse
to s.14 - Supplementary Trust Deed is also valid - Issuance of the
direction by the High Court to Economic Offences Wing of the State
Government to hold an inquiry was not warranted-Registrar having
jurisdiction over Khasgi Trust, to call for the record of the Trust
relating to all the alienations made by trustees and after holding an
inquiry to determine if any loss was caused to the Public Trustby
alienation - Subjectto the said directions, the judgment of the
Division Bench as well as the Single Judge set aside.
Partly allowing the appeals, the Court
HELD: 1.1 The properties described in Part 'B' of the
schedule to the Trust Deed which were vested in the State
Government were transferred to the autonomous Khasgi Trust
on its incorporation.In fact, till 2012, the State Government never
disputed that the Khasgi properties listed in Part 'B' of the
Schedule to the Trust Deed were the Trust properties of the
Khasgi Trust. Therefore, to that extent, the Division Bench of
the High Court is not right when it concluded that the properties
incorporated in Part 'B' of the Schedule to the Trust Deed
continue to be the Government properties even after 16th July
1962. The said properties are vesting in the Khasgi Trust.[Para
33][205-E-F]
1.2 The High Court proceeded on the erroneous footing
that as there was no notification issued under sub-section (2) of
section 36, clause (a) of sub-section (1) of section 36 will not
apply. Sub-Sections (1) and (2) of Section 36 operate in different
fields. When sub-Section (1) is applicable to a Public Trust, none
of the provisions of the Public Trusts Act is applicable to the
Trust. Sub-Section (2) is an independent power of the State
Government to issue a notification exempting certain Public
Trusts from all or any of the provisions of the Public Trusts Act.
[Para 39][208-E-G]
1.3 T

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 [2022] 17 S.C.R. 173
173
THE KHASGI (DEVI AHILYABAI HOLKAR CHARITIES)
TRUST, INDORE & ANR.
v.
VIPIN DHANAITKAR & ORS.
(Civil Appeal No. 4839 of 2022)
JULY 21, 2022
[A.M. KHANWILKAR, ABHAY S. OKA AND
C.T. RAVIKUMAR, JJ.]
Trusts and Charities:
Madhya Pradesh Public Trusts Act, 1951:ss. 2 (4), 4 (1), 14,
36 (1) - Registration of Public Trusts - Alienation of trust property
-Previoussanction of Registrar - On facts, matter pertaining to
illegal alienation of appellant trust-Khasgi Trust by the trustees -
Trust deed of the appellant trust executed in 1962 and is traced to
Holkar rulers - Alienations were made by the trustees in relation to
at least six properties -Collector held that the properties mentioned
in the Trust Deed were the properties of the State Government; that
the trustees made illegal alienations without prior permission from
Government, thus the alienations held to be invalid-Collector
directed that the name of the State Government to be entered in
revenue records to prevent further alienations- Said order
challenged by the appellant Trust and its trustee - Single Judge of
the High Court disposed of the petition by issuing diverse directions
for the administration of Khasgi Trust - Another writ petition filed
by the appellant-Khasgi Trust disposed of by directing the authorities
to correct the revenue record - Appeals before the Division Bench,
wherein it was held that the Appellant- Khasgi Trust was governed
by the Public Trusts Act; that the Trustees had no authority to alienate
the Khasgi properties as the same was vested in the State
Government; and that the Single Judge had virtually re-written the
Trust Deed and therefore, the judgment could not be sustained -
On appeal, held: Khasgi (Devi Ahilyabai Holkar Charities) Trust,
Indore, is a Public Trust governed by the provisions of the 1951 Act
-Khasgi Trust, is an express Trust for public, religious and charitable
purposes -Trustees have a duty to safeguard the interests of the
beneficiaries of the Public Trust - Thus, the trustees directed to get
the Khasgi Trust registered under the Public Trusts Act by making
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the necessary application- Properties described in Part 'B' of the
Schedule to the Trust Deed, are properties of the said Public TrustAlienationof the said properties can be made only by taking recourse
to s.14 - Supplementary Trust Deed is also valid - Issuance of the
direction by the High Court to Economic Offences Wing of the State
Government to hold an inquiry was not warranted-Registrar having
jurisdiction over Khasgi Trust, to call for the record of the Trust
relating to all the alienations made by trustees and after holding an
inquiry to determine if any loss was caused to the Public Trustby
alienation - Subjectto the said directions, the judgment of the
Division Bench as well as the Single Judge set aside.
Partly allowing the appeals, the Court
HELD: 1.1 The properties described in Part 'B' of the
schedule to the Trust Deed which were vested in the State
Government were transferred to the autonomous Khasgi Trust
on its incorporation.In fact, till 2012, the State Government never
disputed that the Khasgi properties listed in Part 'B' of the
Schedule to the Trust Deed were the Trust properties of the
Khasgi Trust. Therefore, to that extent, the Division Bench of
the High Court is not right when it concluded that the properties
incorporated in Part 'B' of the Schedule to the Trust Deed
continue to be the Government properties even after 16th July
1962. The said properties are vesting in the Khasgi Trust.[Para
33][205-E-F]
1.2 The High Court proceeded on the erroneous footing
that as there was no notification issued under sub-section (2) of
section 36, clause (a) of sub-section (1) of section 36 will not
apply. Sub-Sections (1) and (2) of Section 36 operate in different
fields. When sub-Section (1) is applicable to a Public Trust, none
of the provisions of the Public Trusts Act is applicable to the
Trust. Sub-Section (2) is an independent power of the State
Government to issue a notification exempting certain Public
Trusts from all or any of the provisions of the Public Trusts Act.
[Para 39][208-E-G]
1.3 The Supplementary Trust Deed which enables the
Trustees to alienate the Trust Property cannot be illegal. However,
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alienation of the Trust property can be made only in accordance
with Section 14. The Trustees by executing such a document
cannot overcome the mandate of Section 14. Therefore, the power
to alienate under the Supplementary Trust Deed is subject to the
constraints imposed by Section 14 of the Public Trusts Act. To
that extent, the Division Bench of the High Court was not
right.[Para 41][210-B-C]
1.4 Section 14 is applicable to immovable property of a
Public Trust. Section 13 governs the investment of public trust
money. The State's control of charities and religious endowments
in some form is not foreign to our jurisprudence. A Public Trust
invariably depends on charity done by individuals by donating
immovable property or by making cash donations. Though in law,
the assets and properties of a Public Trust vest in its Trustees,
they hold the Trust property in a fiduciary capacity for the benefit
of the beneficiaries of the Trust. They hold the property for giving
effect to the objects of the Public Trust. A Trust property cannot
be alienatedunless it is for the benefit of the Trust and/or its
beneficiaries. The Trustees are not expected to deal with the
Trust property, as if it is their private property. It is the legal
obligation of the Trustees to administer the Trust and to give
effect to the objects of the Trust. Therefore, the statutes dealing
with the Public Trusts which are operating in various States,
provide for limited control of the activities of a Public Trust. The
control is exercised by providing for the submission of the annual
accounts by the Trustees and filing of returns with the concerned
charity organization or other authority under the law. There are
statutory constraints on the power of the Trustees to alienate
the property of a Public Charitable Trust. There are provisions
in such statutes for penalizing the Trustees for misappropriation
of the property of the Trust. Many such Statutes empower the
authorities under the Statutes to remove a Trustee of a Public
Trust, on account of misbehaviour or acts of misappropriation,
etc. The Trustees are the custodians of Trust properties.The
Trustees have a duty to safeguard the interests of the beneficiaries
of the Public Trust. That is how a provision in Public Trust Law,
like Section 14 of the Public Trusts Act, is of importance. This
provision seeks to protect the Trust property in the hands of the
THE KHASGI (DEVI AHILYABAI HOLKAR CHARITIES) TRUST,
INDORE v. VIPIN DHANAITKAR
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Trustees from unwarranted alienations. In the present case, the
transactions of sale in favour of the appellant in Civil Appeal
arising out of Special Leave Petition 19063 of 2021, have been
effected admittedly without obtaining prior permission under
Section 14. The Division Bench of the High Court has gone into
the question whether the alienations were null and void. However,
the purchasers were not parties to the proceedings before the
High Court. Hence, final adjudication could not have been made
on the issue of nullity of the alienations made by the Trustees of
the Khasgi Trust in absence of the necessary parties. [Para
45][212-D-H; 213-A-C]
1.5 In the present case, all the alienations made by the
Trustees of Khasgi Trust except alienation made in favour of the
appellant in Civil Appeal arising out of Special Leave Petition
(C) No.19063 of 2021, have been made without complying with
the mandatory requirement of obtaining the previous sanction as
required by sub- Section (1) of Section 14.[Para 48][217-A-B]
1.6 The impugned judgment of the Division Bench arises
out of three proceedings. Two out of three are writ petitions filed
by the Trustees. The first one was filed for challenging the
impugned order of the Collector and the second one was filed
seeking directions regarding entering the names of the Trustees
in revenue records in respect of the Trust properties. The third
proceeding is the Public Interest Litigation, in which there is a
prayer for issuing a writ of mandamus to direct inquiry through
CBI. Therefore, there was no occasion for the Division Bench to
declare that the sale transactions are void, especially when the
purchasers were not before the High Court. Nevertheless, it is
necessary for the Registrar to exercise powers under Section 22
and call for necessary records pertaining to the alienations made
by the Trustees. Thereafter, the Registrar shall exercise powers
under Section 23 and decide whether any loss was caused to the
Public Trust as a result of alienations and if any loss was found to
have been caused, he shall quantify the amount in accordance
with sub-Section (2) of Section 23. He may also consider of
invoking sub-section (1) or (2) of Section 26, if found
necessary.[Para 49][217-C-F]
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1.7 The order of the Collector which was impugned before
the High Court was passed without giving an opportunity of being
heard to the Trustees of the Khasgi Trust and the purchasers. A
show cause notice was issued to the Trustees by the Registrar
on the basis of the complaint of the Member of the Parliament.
Though the Trustees replied to the notice, even thereply was
not considered by the Collector. Only on this ground, the said
order ought to be set aside. As a matter of fact, the Collector had
no jurisdiction to decide the issues of title as well as
mismanagement of the affairs of a Public Trust. For the same
reason, even the report of the Commissioner and the report of
the Principal Secretary to the Chief Minister are without
jurisdiction. The reports have been made in breach of the
principles of natural justice without affording an opportunity of
being heard to the Trustees. [Para 50][217-G-H; 218-A-B]
1.8. There was no warrant to direct inquiry through the
Economic Offences Wing of the State Government as there is no
finding that there was mens rea on the part of the Trustees. No
finding has been recorded by the High Court based on material
that the alienation made by the Trustees has resulted in causing
loss to the Trust and that the entire sale consideration being
diverted for personal use. The entire consideration received from
the purchasers has been credited to the account of the Trust.
The allegation of misappropriation can be gone into only by the
Authorities underthe Public Trusts Act. Moreover, the direction
issued by the High Court proceeds on the erroneous assumption
that the Trustees have made misappropriation of the Government
properties. There is no offence registered against the Trustees.
Hence, Economic Offences Wing cannot be directed to hold an
inquiry or investigation in connection with the subject matter of
this proceeding. In other words, the direction given by the High
Court vide the impugned Judgment in that regard will have to be
held to be non est in law. Though the said direction is unwarranted,
the Registrar will have to initiate necessary proceedings under
the Public Trusts Act and carry them to a logical conclusion.[Para
51][218-C-F]
1.9 The impugned order of the Collector purports to decide
the issue of Title of the Trust properties by holding that the
THE KHASGI (DEVI AHILYABAI HOLKAR CHARITIES) TRUST,
INDORE v. VIPIN DHANAITKAR
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properties in Part 'B' of the Schedule to the Trust Deed are vested
in the State Government. Even assuming that there was no
express authority given to the writ petitioner inthe form of a
resolution of the Board of Trustees to file the writ petitions, even
an individual Trustee was entitled to take proceedings for
questioning such orders, which adversely affect the Trust and /or
its beneficiaries. On the contrary, it is the duty of every Trustee
to take such action of challenging an order holding that the
properties held by the Trust are not the Trust properties.
Moreover, none of the Trustees has come forward to challenge
the authority of Trustee who had filed writ petitions and further
proceedings. There was also a direction issued to the Economic
Offences Wing to hold an inquiry about the misappropriation of
the Trust property by the Trustees. Every Trustee was affected
by the said direction. Therefore, in the facts of the case, the
objection raised to the maintainability of the petition filed by one
of the Trustees cannot be sustained.[Para 49][217-C-F]
1.10 The impugned judgment of the Division Bench cannot
be sustained in toto. However, the view taken by the Division
Bench that the Khasgi Trust is governed by the Public Trusts
Act and no alienation of the Trust properties could be made
without complying with Section 14 thereof, is affirmed. Even the
order of the Single Judge cannot be sustained as he has virtually
directed the rewriting of the Trust Deed. There are submissions
canvassed across the Bar about the locus of the applicant in
I.A.No.124266 of 2020 filed in Civil Appeals arising out of Special
Leave Petition (C) Nos.12241-42 of 2020. It is not necessary for
the Court to go into the said question finally. Thus, the said
question is left open to be decided in appropriate proceedings.
As far as Civil Appeal arising out of Special Leave Petition (C)
No.19063 of 2021 is concerned, the alienation was made by the
Trustees in favour of the appellant after obtaining the previous
sanction of the Registrar by the order dated 16th October 1997.
Therefore, the Registrar will have to make an inquiry limited to
the question whether compliance of the conditions incorporated
under the said order has been made by the Trustees. If there is a
non-compliance, the Registrar will have to invoke the provisions
of the Public Trusts Act for taking necessary action. [Para 5355][219-D-G]
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1.11 The Khasgi (Devi Ahilyabai Holkar Charities) Trust,
Indore, is a Public Trust governed by the provisions of the
Madhya Pradesh Public Trusts Act, 1951. The trustees are
directed to get the Khasgi Trust registered under the Public
Trusts Act by making the necessary application within the
stipulated period. The properties described in Part 'B' of the
Schedule to the Trust Deed, are properties of the said Public
Trust. However, alienation of the said properties can be made
only by taking recourse to Section 14 of the Public Trusts Act;
The Supplementary Trust Deed dated 08th March 1972 is valid.
But, the Trustees of the Khasgi Trust shall be entitled to alienate
the Trust Property only after complying with Section 14 of the
Public Trusts Act. The direction issued by the High Court to
Economic Offences Wing of the State Government to hold an
inquiry was not warranted. The Registrar is directed under the
Public Trusts Act, having jurisdiction over Khasgi Trust, to call
for the record of the Trust relating to all the alienations made by
the Trustees. After holding an inquiry as contemplated by Section
23, the Registrar after giving an opportunity of being heard to all
concerned shall determine whether by virtue of the alienations
made by the Trustees, any loss was caused to the Public Trust. If
according to him any such loss was caused to the Public Trust, he
shall decide and quantify the amount liable to be paid by the
concerned Trustees to the Khasgi Trust. After holding an inquiry,
if found necessary, he may invoke the power of making an
application to the Court under sub-Section (2) of Section 26.
Subject to the said directions, the impugned judgment of the
Division Bench as well as the impugned judgment and orders of
the Single Judge are set aside.[Para 56][220-A-G; 221-C]
Parsi Zoroastrian Anjuman, Mhow v. Sub Divisional
Officer/The Registrar of Public Trusts and Anr. 2022
SCC Online SC 104 ; Akhil Bhartiya Upbhokta
Congress v. State of Madhya Pradesh and Ors. (2011)
5 SCC 29 : [2011] 5 SCR 77 - referred to.
Case Law Reference
[2011] 5 SCR 77
 referred to
 Para 42
THE KHASGI (DEVI AHILYABAI HOLKAR CHARITIES) TRUST,
INDORE v. VIPIN DHANAITKAR
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[2022] 17 S.C.R.
CIVIL APPELLATE JURISDICTION : Civil Appeal No.4839
of 2022.
From the Judgment and Order dated 05.10.2020 of the High Court
of Madhya Pradesh, Bench at Indore in Writ Petition No.11234 of 2020.
With
Civil Appeal Nos.4840-4841, 4842-4844 and 4845 of 2022.
Balbir Singh, Vikramjit Banerjee, ASGs, Saurabh Mishra, AAG,
Dr. A. M. Singhvi, Shyam Divan, Amit Desai, P. S. Patwalia, Huzefa
Ahmadi, Siddharth Bhatnagar, Sr. Advs., Ms. Nandini Gore, Ms. Ruby
Singh Ahuja, Aman Ahluwalia, Ms. Tahira Karanjawala, Abhinav
Malhotra, Sidhant Kumar, Ms. Kritika Sachdeva, Ms. Garima Singh,
Akshay Aggarwal, Amit Bhandari, M/s Karanjawala & Co., Ayush
Agarwala, Anuj P. Agrawala, M/s PBA Legal, Ms. Qurratulain, Braj
Kishor Sah, Mrs. Mrinal Gopal Elker, Kannu Aggarwal, Manish Yadav,
Ms. Pratibha Yadav, Prafull Singh Chandel, Harish Pandey, P. V.
Yogeswaran, Saurabh Mishra, Chandra Prakash, Arvind Kumar Sharma,
Naheed Carrimjee, Sohan Kinkhabwala, Rishi Maheshwari, Ms. Anne
Mathew, Bharat Sood, Ms. Shruti Jose, P. S. Sudheer, Utsav Trivedi,
Abhinay, Ms. Manini Roy, Himanshu Sachdeva, Ms. Shivani Bhushan,
Ms. Unnati Vijay, Pooran Chand Roy, Umang Shankar, Mayank
Kshirsagar, Ms. Anu Gupta, Prashant Bhushan, Ms. Neha Rathi, Alice
Raj, Rahul Gupta, Arjun Garg, Ronak Karanpuria, Pulkit Tare, Advs. for
the appearing parties.
The Judgment of the Court was delivered by
ABHAY S. OKA, J.
1. Permission to file Special Leave Petition is granted. Leave
granted.
FACTUAL MATRIX
2. These appeals take exception to the common judgment and
order dated 5th October 2020 of a Division Bench of the High Court of
Madhya Pradesh, Bench at Indore. By the said decision, the Madhya
Pradesh High Court decided two Writ Appeals filed by the appellants in
Civil Appeals arising out Special Leave Petition (C) 12133 of 2020 and
Special Leave Petition (C) No. 12241-42 of 2020. The Khasgi (Devi
Ahilyabai Holkar Charities) Trust, Indore (for short, 'the Khasgi Trust')
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and its Trustee Shri S. C. Malhotra are the said appellants. The two writ
appeals decided under the impugned judgment arise out of Writ Petition
Nos. 11618 of 2012 and 5372 of 2010 filed by the Khasgi Trust. Writ
Appeal No. 92 of 2014 arises out of Writ Petition No. 11618 of 2012.
The Writ Appeal No. 135 of 2014 arises out of Writ Petition No.5372 of
2010. By the impugned judgment, a Public Interest Litigation filed by the
first respondent-Shri Vipin Dhanaitkar in Civil Appeal arising out of
Special Leave Petition (C) No. 12133 of 2020 was also decided.
3. The controversy revolves around the properties claimed by the
Khasgi Trust as the Trust Properties. On 30th October 1948, an instrument
called as "The Covenant" was executed by the erstwhile Rulers of
Gwalior, Indore and certain other States in Central India for the formation
of the United State of Gwalior, Indore and Malwa (Madhya Bharat).
Late Yashwantrao Holkar, the Maharaja of Indore (for short "the
Maharaja") was a party to the said Covenant who agreed to unite and
integrate the territory of Indore into one State with a common executive,
legislature and judiciary, by the name of the United State of Gwalior,
Indore and Malwa (Madhya Bharat). Article XII provided that the Ruler
of each covenanting State shall be entitled to the full ownership, use and
enjoyment of all private properties (as distinct from the State Properties)
belonging to them on the date of their making over the administration of
their respective States to Raj Pramukh (the Head of the State of the
United State of Gwalior, Indore and Malwa). Article XII further provided
that the Ruler of each covenanting State shall furnish to Raj Pramukh,
before the first day of August 1948, an inventory of all immovable
properties, securities and cash balance held by him. The Convention
further provided that if any dispute arises as to whether any item of
property is a private property of the Ruler or a State Property, it shall be
referred to such person as the Government of India may nominate in
consultation with the Raj Pramukh. It is further provided that the decision
of that person shall be final and binding on all parties concerned. It appears
that Maharaja Yashwantrao Holkar submitted two inventories in terms
of Article XII. The first inventory was concerning his alleged private
properties. The second inventory submitted by the Maharaja was of the
properties known as the Khasgi Properties. In terms of Clause (3) of
Article XII, the Government of India appointed Shri V.P. Menon, the
Secretary of the Ministry of States as the authority to decide the claims.
By the letter dated 7th May 1949, Shri V.P. Menon informed the Maharaja
that the claim made by him in respect of his private properties as listed in
THE KHASGI (DEVI AHILYABAI HOLKAR CHARITIES) TRUST,
INDORE v. VIPIN DHANAITKAR [ABHAY S. OKA, J.]
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Annexure 'A' to the said letter has been finally approved, accepted and
signed in pursuance of Article XII of the Covenant. Annexure 'A' contains
a detailed description of the private properties of the Maharaja, which
are accepted as per Article XII of the Covenant to be his private
properties. By another letter dated 6th May 1949, Shri V.P. Menon
informed the Maharaja that his claim in respect of the properties described
as the Khasgi properties has been finally settled on the basis of the
enclosure to the said letter. In the enclosure to the letter, it was mentioned
that the Khasgi properties and income received from the Khasgi
properties shall be treated as lapsed for all the time to the Madhya Bharat
Government. In lieu thereof, certain guarantees were given. The
enclosure provided that the Madhya Bharat Government shall in perpetuity
set aside a sum of Rs.2,91,952/- (Rupees Two Lakh Ninety-One
Thousand Nine Hundred and Fifty-Two only) for the charities. The amount
shall be put under a permanent Trust for the said charities, including the
charities of Maharani Ahilya Bai Holkar. It provided that the Trust shall
consist of the Ruler of erstwhile Indore State, who will be the President.
There will be two nominees of the Ruler. One nominee shall be of the
Central Government, and two nominees shall be of the Madhya Bharat
Government. However, it was stated that the trustees nominated by the
Government of India and the Madhya Bharat State shall be appointed in
consultation with the Ruler. It provided that powers and functions of the
Trust shall be subject to such legislation as the Central Government or
the Madhya Bharat Government may enact generally to regulate such
Trusts. However, the composition of the Trust and the manner of its
formation shall not be liable to any modification or change by such
legislation.
4. It must be noted here that the State Government enacted the
Madhya Pradesh Public Trusts Act, 1951 (for short, 'the Public Trusts
Act'). On 26th May 1959, the Ministry of Home Affairs of the
Government of India addressed a letter to the Maharaja, which refers to
the settlement of Khasgi Property. By the said letter, the Central
Government nominated one Shri S.V. Kanungo as its nominee. The letter
records that Shri Kanungo was already a trustee nominated by the
Central Government on two other family Trusts of the Holkar family.
Before that, on 6th January 1959, by addressing a letter, the General
Administration Department of the State Government informed the Private
Secretary to the Maharaja that the State Government was proposing to
nominate the Commissioner, Indore Division and the Superintending
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Engineer (B & R), Public Works Department, Indore Circle as the
trustees. The State Government requested the Secretary to the Maharaja
to communicate the concurrence of the Maharaja to the said nominations.
By another letter dated 1st April 1959, the General Administration
Department of Madhya Pradesh communicated to the Secretary to the
Maharaja requesting him that representatives of the Ruler on the Trust
be nominated. The letter records that the State Government has prepared
a draft of the Trust Deed which will be finalised without any delay. The
letter dated 14th November 1959 of the State Government addressed to
the Secretary of Maharaja which is by way of reminder to the Maharaja
to nominate his two representatives. The said letter also records that the
draft of the Khasgi Trust Deed will be finalised and sent for approval of
the Maharaja. The letter dated 14th April 1961 addressed by the State
Government to the Secretary to Maharaja records that the draft of the
Deed of Khasgi Trust is under examination and will be sent soon.
5. Ultimately, in terms of the draft provided by the State
Government, the Deed of Trust of the Khasgi Trust (for short, "the Trust
Deed") was executed on 27th June 1962 by and between Her Highness
Maharani Usha Devi of Indore, the daughter and successor of Maharaja
Yashwantrao Holkar, described therein as the Settlor, Shri K.A. Chitale,
Senior Advocate and Shri S.C. Malhotra as the nominees of the Settlor
and Shri S.V. Kanungo, the nominee of the President of India. The Trust
Deed was also signed by the Commissioner, Indore Division and
Superintending Engineer (B & R), Public Works Department, Indore
who were nominated as trustees by the State Government. In the recitals,
it is mentioned that the Trust was being created of the annuity of
Rs.2,91,952/- in perpetuity for maintenance, upkeep and preservation of
charities and religious endowments provided in the budget of the Holkar
State for the year 1947-48 inclusive of the charities founded by Maharani
Devi Ahilaya Bai Holkar. The said endowments were described in part
'A' of the Schedule. Further, it is provided that the Trust will be for the
management and maintenance of the properties described as the Trust
Properties, more particularly described in Part 'B' of the Schedule to
the Deed of Trust. Part 'B' of the Schedule contains a list of a large
number of properties in various States.
6. There was a notification issued by the State of Madhya Pradesh
on 27th July 1962. It was mentioned therein that on the formation of the
Madhya Bharat State, institutions, factories, religious places, chhatries,
THE KHASGI (DEVI AHILYABAI HOLKAR CHARITIES) TRUST,
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etc. fell under the supervision and management of the Commissioner,
Pardon Office. It was further stated in the notification that the State
Government while granting permission for the formation of the Khasgi
Trust and the Alampur Trust (the Holkar Chhatries Trust), has granted
recognition/approval to the transfer of the areas, and institutions etc.
included in the Trust Deeds of the aforesaid Trusts. It is further mentioned
that accordingly, the areas, institutions, factories, religious places, chhatries
etc. were transferred to the respective Trusts on 16th July 1962. A report
of making over and taking over charge of the properties described as
the Alampur and Khasgi trust properties was recorded on 16th July 1962.
For the sake of completion, it must be mentioned here that on 8th March
1972, a Supplementary Deed of Trust was executed by and between the
Trustees for incorporating a clause that the Trustees have always had
and shall have the power to alienate not only the income but any other
item of the corpus of Trust Property for the necessity or for the benefit
to the objects of the Trusts.
7. Alienations were made by the Trustees in relation to at least six
properties. On 18th April 2012, a letter was addressed by Smt. Sumitra
Mahajan, a Member of the Parliament to the Chief Minister of the
Government of Madhya Pradesh. She contended in the said letter that
the property mentioned in the Trust Deed was vesting in the erstwhile
State of Madhya Bharat. It is mentioned that a valuable property shown
in the Trust Deed at Haridwar was sold by the trustees without the
permission of the Registrar under the Public Trusts Act. Therefore, she
requested the Chief Minister to order an inquiry. Along with the notice
dated 23rd May 2012, a copy of the said complaint was forwarded to the
trustees of the Khasgi Trust by the Registrar of Public Trusts, District
Indore. The Trustees replied on 20th June 2012 contending that the Public
Trusts Act was not applicable to the Khasgi Trust and it is for the benefit
of the Trust that the alienations have been made. Thereafter, the Collector
of District Indore passed an order dated 5th November 2012 holding that
the properties mentioned in the Trust Deed were the properties of the
State Government. He held that the trustees have made illegal alienations
without prior permission from the Government. Therefore, the alienations
were held to be invalid. Hence, the Collector directed that the name of
the State Government be entered in revenue records/land records to
prevent further alienations.
8. A Writ Petition being Writ Petition No. 11618 of 2012 was filed
by the Khasgi Trust and its Trustee Shri S.C. Malhotra in the Madhya
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Pradesh High Court for challenging the aforesaid order dated 5th
November 2012 passed by the Collector and praying for restraining the
Collector from interfering with affairs of the Trust. The learned Single
Judge disposed of the petition by the judgment and order dated 28th
November 2013 by issuing diverse directions for the administration of
the Khasgi Trust. The learned Single Judge directed that the Board of
Trustees shall be reconstituted by including Smt. Sumitra Mahajan and
two the persons as trustees. The State Government was directed to
make a provision for payment of Rs.1 crore every year to the Khasgi
Trust. Another writ petition (W.P. No. 5372 of 2010) filed by the Khasgi
Trust was disposed of by the order dated 3rd December 2013 by the
learned Single Judge directing the authorities to correct the revenue
record in terms of the aforesaid order dated 28th November 2013. As
stated earlier, both the said orders of the learned Single Judge were
challenged by the State Government by filing two writ appeals. The
Public Interest Litigation which was decided along with the writ appeals
contained a prayer for directing inquiry through CBI regarding the affairs
of the trust and in particular, regarding the alienations made by the
Trustees.
9. Following are the important findings rendered by the Division
Bench in the impugned judgment and order:
(a)
the Khasgi properties mentioned in Part 'B' of the Schedule
to the Trust Deed continued to be vested in the State
Government and therefore, the Trustees had no authority
to alienate the same;
(b)
the subsequent modification of the Trust Deed made by the
Trustees empowering them to alienate the properties
described in Part "B" of the Trust Deed was illegal and
was not binding on the State Government;
(c)
the alienations made by the Trustees were void;
(d)
the Khasgi Trust was governed by the Public Trusts Act;
and
(e)
the learned Single Judge while deciding the writ petitions
filed by the Khasgi Trust has virtually re-written the Trust
Deed and therefore, his Judgment cannot be sustained.
In paragraphs 158 to 166 of the impugned judgment, the Division
Bench issued following directions:
THE KHASGI (DEVI AHILYABAI HOLKAR CHARITIES) TRUST,
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"158. This Court is not reproducing the entire report as the
Covenants, Trust Deeds and the notification issued by the
Government of India have already been reproduced in earlier
paragraphs. Thus, it is wrong on the part of the respondent to say
that the mechanical exercise was undertaken by the Collector
based upon letter of Member of Parliament. With due application
of mind, the State Government through Collector, Indore keeping
in view the covenant, trust deed and the statutory provisions has
taken action in the matter.
159. In the considered opinion of this Court, this Court does not
have the power to draft the Trust Deed nor is having the power to
enact the statute in respect of trust in question. However, as the
properties which are under the ownership of State of Madhya
Pradesh have been sold by the Trust/Trustees, a committee
deserves to be constituted to ensure that the trust properties as
per the schedule appended with the original trust deed are
preserved, maintained and kept intact for the future generations
to come.
160. The Committee so constituted shall inquire in respect
of the properties sold by the Trust and shall take all possible
steps to recover and retrieve any property or fund of the
property, which have been sold or have been in unauthorized
occupation or misappropriated. For doing the aforesaid task,
the State of Madhya Pradesh shall incur all the expenditures, in
case there is paucity of fund in the accounts of the trust, especially
in light of the fact that it is the State of Madhya Pradesh, who is
having title over all properties.
161. The following Committee is constituted for the aforesaid
work comprising of:-
(a) Chief Secretary, State of Madhya Pradesh (Chairman);
(b) Principal Secretary, Finance Department (Member);
(c) Additional Chief Secretary, Dharmaswa Department
(Member);
(d) Commissioner, Indore Division, Indore (Member);
(e) Collector, Indore (Secretary).
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The State of Madhya Pradesh shall be free to proceed ahead in
accordance with law.
162. In the connected writ petition i.e. W.P. No. 11234/2020, which
is a Public Interest Litigation, a prayer has been made for issuance
of an appropriate writ, order or directing a CBI inquiry. So far as
the prayer with regard to directions for CBI inquiry is concerned,
this Court is of the considered opinion that no such directions are
required. The allegation of misappropriation of Government
properties and its disposal to favour someone and to cause
loss to Public Exchequer, if at all, can very well be examined
by Economic Investigation Wing of the State of Madhya
Pradesh and accordingly, it is directed that the said Wing
will thoroughly examine the matter and if it finds any
criminality into the actions of any authority, it is expected
that appropriate action should be taken by the said Wing.
Hence, no positive direction to register a First Information
Report is required.
Resultantly, the Economic Offences Wing shall examine the matter
and shall be free to proceed ahead in accordance with law.
163. The State of Madhya Pradesh is directed to take all possible
steps to preserve the cultural heritage including the Ghats, Temples,
Dharamshalas, which find place in the Trust property, being the
titleholder of the property in question. The State of Madhya Pradesh
shall also take appropriate action in accordance with law against
all those persons, who have allegedly illegally sold the Trust's
property from time to time.
164. In W.P. No. 11234/2020, the Union of India is already a
party and Shri Milind Phadke has also been heard in the matter
before delivering the judgment. He has also stated that the
properties in question, on account of the covenant and the statutory
notifications issued from time to time, are the exclusive properties
of the State of Madhya Pradesh.
165. This Court on 23-4-2014 has directed the parties to maintain
status quo and it has been informed by learned counsel for the
State of Madhya Pradesh that some construction has taken place
by the private parties.
THE KHASGI (DEVI AHILYABAI HOLKAR CHARITIES) TRUST,
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166. Resultantly, the State of Madhya Pradesh is directed
to take appropriate action in respect of the construction
which has taken place over the Khasgi properties and shall
restore it to its original position and the entire expenditure
shall be borne by the State of Madhya Pradesh through
Commissioner, Indore. The Collector, Haridwar shall assist
the Divisional Commissioner, Indore in the matter and the
Divisional Commissioner, Indore shall ensure that Kusha
Ghat as well as other properties are again, which are meant
for public charities are made available to public at large.
The aforesaid direction is not only in respect of present
property but in respect of other properties also. The State
of Madhya Pradesh shall ensure by taking appropriate steps in
accordance with law that no further sale takes place in respect of
such properties and they shall maintain the properties for the
generations to come keeping in view their historic importance.
The Collector, Indore shall be free to take action in accordance
with law pursuant to the order passed by him dated 5-11-2012
and the Registrar shall also be free to take appropriate action in
accordance with law pursuant to the order passed by him dated
30-11-2012."
(emphasis added)
SUBMISSIONS ON BEHALF OF THE KHASGI TRUST
10. The submissions have been made initially by Shri Mukul
Rohatgi, Senior Advocate and thereafter, by Dr. A.M. Singhvi, Senior
Advocate in Civil Appeals arising out of Special Leave Petition (C)
No.12133 of 2020 and Special Leave Petition (C) No.12241-42 of 2020.
The learned senior counsel appearing for the appellants urged that at the
time of the merger of the erstwhile State of Indore with the newly formed
State of Madhya Bharat, there were three categories of properties - (A)
State Properties covered by Article VI(1)(c) and Article XII of the
Covenant; (B) Private Properties of the Ruler of Indore; and (C) Charities
and Trust Properties held by the family of the Ruler of Indore. The
contention raised by the appellants is that the charities which were already
dedicated to the public, could not lapse to the State Government. The
main submission is that in the impugned order of the Collector dated 5th
November 2012, there is an error committed by holding that the properties
described in Part 'B' of the Schedule to the Trust Deed of the Khasgi
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Trust, were not the Trust Properties but, were the properties of the State.
It was submitted that the properties mentioned in Part 'B' of the Schedule,
are the properties vested in the Khasgi Trust, as can be seen from various
clauses of the Trust Deed. It was submitted that the Supplementary
Deed of Trust dated 8th March 1972 clearly confers a power on the
Trustees to alienate the Trust properties mentioned in Part 'B' of the
Schedule to the Trust Deed. The submission is that as the Khasgi Trust
is a State-controlled Trust, in view of clause (a) of the sub-Section (1) of
Section 36 of the Public Trusts Act, the provisions of the Public Trusts
Act, are not applicable to it. The learned senior counsel relied upon a
specific order passed in that behalf by the Registrar of Public Trusts. He
submitted that there are as many as 246 properties listed in Part 'B' of
the Schedule to the Trust Deed, out of which, only six have been
transferred by the Trustees during the span of over sixty years. He
submitted that apart from the fact that Section 14 of the Public Trusts
Act is not applicable to the Khasgi Trust, the scope of Section 14 has
been laid down by this Court in the case of Parsi Zoroastrian Anjuman,
Mhow v. Sub Divisional Officer/The Registrar of Public Trusts and
Anr.1 He submitted that as the Public Trusts Act allows the Trustees to
alienate the Trust properties, the Registrar would be required to grant
permission for alienation in view of sub-Section (2) of Section 14 of the
Public Trusts Act.
11.