GANESH RAMCHANDRA JADHAVversusGOVARDHAN SANSTHA (REGD) WAI PUNE AND OTHERS

                        [2021] 6 S.C.R. 491                              491


               GANESH RAMCHANDRA JADHAV                                  A
                                  v.
 GOVARDHAN SANSTHA (REGD) WAI PUNE AND OTHERS
                   (Civil Appeal No 2748 of 2021)
                           JULY 19, 2021                                 B
        [DR. DHANANJAYA Y CHANDRACHUD AND
                   M. R. SHAH, JJ.]
       Maharashtra Public Trust Act, 1950 – Tender – In 2015, a
tender notice was issued by the first respondent-registered charitable
                                                                         C
trust inviting bids for the development of the property – Bids were
tendered by the appellant and the second respondent – There were
various rounds of litigation between the first respondent, second
respondent, third respondent-Joint Charity Commissioner and the
appellant regarding the bids offered – In 2021, the appellant filed
an intervention application in the writ proceedings, alleging            D
collusion between the first and second respondent for the sale of
the said property – Appellant offered an amount of Rs. 75 lakhs for
the property – However, appellant did not abide by its offer despite
various opportunities given by the High Court – Thereafter, second
respondent made an offer of Rs.80 lakhs and accordingly, the High
                                                                         E
Court directed to complete the transaction with the second
respondent – Before the Supreme Court, the appellant submitted
that he was ready with Rs. 75 lakhs and High Court should have
granted further extension of time – On 18.03.2021, the appellant
was directed to deposit Rs.1 crore in the High Court to his
bona fides and the same was complied with – It was contended by          F
the second respondent that all along, it was second respondent who
has participated in the process of auction sale and the appellant
had failed to avail of the opportunities which were granted by the
High Court – It was urged that having regard to the principles of
law which have evolved by the judgments of the Supreme Court, it
                                                                         G
would be necessary to reject the offer which is now made by the
appellant and to award the property to the second respondent –
Held: At the present time, the appellant has deposited an amount of
Rs. 1 crore before the High Court – To accept the bid of the second
respondent in the amount of Rs. 80 lakhs will deprive the trust of
the opportunity of realising the full market value – The decision of     H
                                 491
492            SUPREME COURT REPORTS                       [2021] 6 S.C.R.


A     the High Court to award the sale in favour of the second respondent
      would cause serious jeopardy to the interests of the public charitable
      trust – The manner in which the second respondent has increased
      his offer in driblets (from Rs.50 lakhs to Rs.75 lakhs and thereafter,
      to Rs.80 lakhs) leads to a reasonable inference that the true value
      of the property was not realized – The appropriate direction would
B
      be to require the third respondent to conduct the auction process by
      inviting fresh bids after a proper valuation – Accordingly, directions
      issued.
            Allowing the appeal, the Court
C            HELD: 1. The offer which was made by the second
      respondent initially was in the amount of Rs 50 lakhs. It was only
      after the appellant had indicated before the High Court that an
      amount of Rs 75 lakhs would be offered and failed to do so, that
      the second respondent stated before the High Court that he was
      willing to match the offer of the appellant and to go beyond it by
D     an amount of Rs 5 lakhs. At the present time, the appellant has
      deposited an amount of Rs 1 crore before the High Court. To
      accept the bid of the second respondent in the amount of Rs 80
      lakhs will deprive the trust of the opportunity of realising the full
      market value. In this view of the matter, this Court is of the view
E     that the submission which has been urged on behalf of the
      appellant is worthy of acceptance. This Court is unable to
      subscribe to the submission of the second respondent for the
      simple reason that the course of dealings would indicate that even
      the second respondent has progressively enhanced its offers from
      Rs 50 lakhs to Rs 75 lakhs and, thereafter, to Rs 80 lakhs. Before
F     this Court, now it has been indicated that the second respondent
      would be willing to match the offer of the appellant of Rs 1 crore.
      There has undoubtedly been a default on the part of the appellant
      before the High Court. But the decision of the High Court to
      award the sale in favour of the second respondent would cause
G     serious jeopardy to the interests of the public charitable trust.
      The manner in which the second respondent has increased his
      offer in driblets leads to a reasonable inference that the true value
      of the property has not been realized. Hence, the order of the
      High Court to dismiss the petition cannot be sustained. This Court

H
   GANESH RAMCHANDRA JADHAV v. GOVARDHAN SANSTHA                         493
                 (REGD) WAI PUNE

is of the view that the appropriate direction would be to require        A
the third respondent to conduct the auction process by inviting
fresh bids after a proper valuation and to issue further
consequential directions for the submission of a report in the
proceedings before the Bombay High Court. Accordingly, the
following directions are issued: (i) The third respondent shall
                                                                         B
obtain a fresh valuation report for the property, and shall fix an
upset price which shall not, in any circumstances, be less than
the amount of Rs 1 crore. The upset price shall be based on the
valuation, subject to the minimum of Rs 1 crore; (ii) The third
respondent shall invite fresh bids by publishing an advertisement
in at least two widely circulated local newspapers for the sale of       C
the property; (iii) Both the appellant and the second respondent
shall be at liberty to submit their fresh bids, which shall be
considered by the third respondent together with all other bids
which are received; (iv) The third respondent shall, upon the
bids so received, submit a report to the High Court, which shall
                                                                         D
consider the report while passing such final directions as are
necessary in the writ petition; (v) Consequently, the impugned
order of the High Court dated 26 February 2021 dismissing the
petition shall stand set aside. The writ petition, being Writ Petition
No 3894 of 2019, shall hence stand restored to the file of the
High Court. The High Court shall upon the receipt of the report          E
of the third respondent take an appropriate view and decide upon
the merits of the petition in respect of which all the rights and
contentions of the parties on all aspects are kept open; and (vi)
The amount of Rs 1 crore which has been deposited with the
Bombay High Court by the appellant, shall be invested in a Fixed
                                                                         F
Deposit of a nationalized bank to be renewed periodically during
the pendency of the writ petition and shall abide by such further
directions as may be issued by the High Court. In the event that
the appellant desires to bid for the property at the auction, it
would be open to him to move a Civil Application before the High
Court to adjust the amount of Rs 1 crore deposited in pursuance          G
of the order of this Court towards the bid. [Para 18][500-C-H;
501-A-G]
      Cyrus Rustom Patel v Charity Commissioner (2018) 14
      SCC 761 : [2017] 9 SCR 277 – relied on.
                                                                         H
494                SUPREME COURT REPORTS                       [2021] 6 S.C.R.


A                               Case Law Reference
               [2017] 9 SCR 277            relied on              Para 17
               CIVIL APPELLATE JURISDICTION: Civil Appeal No.2748 of
      2021
B           From the Judgment and Order dated 26.02.2021 of the High Court
      of Judicature at Bombay in Writ Petition No.3894 of 2019.
               Dilip Annasaheb Taur, Adv. for the Appellant.
            Vikas Mishra, Ms. Shivani Shah, Sanchit Gawri, Ms. B.
      Vijayalakshmi Menon, M. V. Mukunda, Kailas Bajirao Autade, Ms.
C     Sheetal Patil, Prashant Shantaram Chaudhari, Advs. for the Respondents.
               The Judgment of the Court was delivered by
               DR. DHANANJAYA Y CHANDRACHUD, J.
               1. Leave granted.
D           2. This appeal arises from a judgment and order of the High Court
      of Judicature at Bombay dated 26 February 2021.
             3. The subject matter of the dispute relates to a parcel of land1
      admeasuring 2 hectares 48 ares belonging to the first respondent, Shri
      Govardhan Sanstha (Regd) Wai, which is a registered charitable trust,
E     bearing registration No F-133 (Pune), under the Maharashtra Public
      Trust Act, 19502. The property is comprised in Survey No 90, Hisra No
      6, at Village Dabewadi, Taluka and District Satara.
             4. In 2015, a tender notice was published by the first respondent
      inviting bids for the development of the property. During the course of
F     the tender process, two bids were received, out of which one was tendered
      by the appellant and the other by the second respondent. The first
      respondent accepted the offer of the second respondent in its meeting
      on 6 November 2015, in which the second respondent had offered a
      cash consideration of Rs 32 lakhs along with 6000 sq. ft. of constructed
G     area in the property, admeasuring 30 ares.
              5. On 4 January 2016, an application for the grant of approval
      under Section 36(1) of the Act was filed by the first respondent before
      the third respondent, the Joint Charity Commissioner, Pune. The application
      1
          the “property“
H     2
          the “Act“
       GANESH RAMCHANDRA JADHAV v. GOVARDHAN SANSTHA                              495
      (REGD) WAI PUNE [DR. DHANANJAYA Y CHANDRACHUD, J.]

was rejected by the third respondent on 8 February 2017, by noting that           A
the first respondent had not filed a copy of the resolution dated 19
November 2015 in which its members had decided to sell the subject
property. Further, that the second respondent’s offer was held not to be
reasonable since the Assistant Charity Commissioner, Satara’s report
valued the land at Rs 5 crores. Finally, the Joint Charity Commissioner
                                                                                  B
also held that there was no legal necessity to sell the property, since the
first respondent was not getting offers for the property due to its ongoing
disputes with tenants, which should be resolved prior to the sale.
       6. The order of the Joint Charity Commissioner, Pune resulted in
the first respondent instituting a writ petition3 for challenging the order
dated 8 February 2017. The High Court of Judicature at Bombay, by a               C
judgment and order dated 21 June 2018, set aside the order dated 8
February 2017. It directed the third respondent to decide the first
respondent’s application afresh and the first respondent was granted an
opportunity to file a copy of their resolution deciding to sell the subject
property and to also to address the merits of the valuation report relied         D
upon by the third respondent in respect of the subject property.
      7. It appears that on 1 August 2018, a fresh valuation report was
obtained from a government approved valuer, according to which the
market value of the property was determined to be Rs 1,82,25,000.
       8. Thereafter, the third respondent by an order dated 22 October           E
2018, once again dismissed the first respondent’s application under Section
36(1) of the Act. The third respondent noted that the second respondent’s
offer had not changed since the last order which was passed on 8
February 2017, and during the course of the proceedings, the second
respondent also indicated their inability to enhance their offer. As held         F
previously, this offer by the second respondent was not reasonable, in
light of the valuation report. Further, it was noted that the fact that tenants
of the property were not paying rent was not an adequate reason to sell
the property, when the first respondent could file and contest a suit for
possession.
                                                                                  G
     9. Another writ petition4 was then instituted before the Bombay
High Court by the first respondent on 23 January 2019. During the
pendency of the petition, the High Court by an order dated 7 August

3
    Writ Petition No 8625 of 2017
4
    Writ Petition No 3894 of 2019                                                 H
496                SUPREME COURT REPORTS                         [2021] 6 S.C.R.


A     2019 directed the third respondent to call for fresh bids by issuing a
      fresh advertisement. In pursuance of this order, the third respondent
      invited fresh bids, in pursuance of which, only one offer, that of the
      second respondent, was received for an amount of Rs 50 lakhs.
             10. On 6 January 2021, the appellant filed an intervention
B     application5 in the writ proceedings, alleging collusion between the first
      and second respondent for the sale of the property. The appellant also
      offered an amount of Rs 75 lakhs for the property, while highlighting his
      willingness to further increase the amount. In pursuance of the aforesaid
      position, the writ petition was listed before the High Court on several
      occasions and orders were passed on 11 January 2021, 20 January 2021,
C     5 February 2021, 15 February 2021 and 22 February 2021. The appellant
      did not abide by its offer to deposit Rs 75 lakhs.
             11. On 26 February 2021, the High Court declined to grant any
      further time to the appellant to make good the offer of Rs 75 lakhs. The
      High Court was of the view that though sufficient opportunities were
D     granted to the appellant to deposit an amount of Rs 75 lakhs, no
      compliance had been effected. However, the second respondent matched
      the offer of Rs 75 lakhs made by the appellant by increasing the offer
      further by an amount of Rs 5 lakhs to make a total offer of Rs 80 lakhs.
      The High Court accordingly directed the third respondent to complete
E     the sale formalities by entering into a sale transaction with the second
      respondent for a consideration of Rs 80 lakhs.
             12. Aggrieved by the order of the High Court, the appellant moved
      these proceedings under Article 136 of the Constitution.
                13. On 18 March 2021, the following order was passed by this
F     Court:
                “1 Permission to file the Special Leave Petition is granted.
                2 Mr Dilip Annasaheb Taur, learned counsel appearing on behalf
                of the petitioner submits that the petitioner was ready with a
                Demand Draft in the amount of Rs 75 lakhs and the High Court
G               should have granted a further extension of time. From the record
                it emerges that the High Court had granted several opportunities
                to the petitioner to comply with the statement of depositing Rs 75
                lakhs, but the petitioner was unable to do so and a cheque which
                was issued was, in fact, dishonored.
      5
H         Intervention Application St No 499 of 2021
    GANESH RAMCHANDRA JADHAV v. GOVARDHAN SANSTHA                                497
   (REGD) WAI PUNE [DR. DHANANJAYA Y CHANDRACHUD, J.]

      3 In order to test the bona fides of the petitioner and having regard      A
      to the fact that the property in question belongs to a charitable
      trust, we direct the petitioner to deposit an amount of Rs 1 crore
      in the Registry of the High Court of Judicature at Bombay within
      a period of two weeks from today. In order to facilitate the
      petitioner in making the deposit, we order the status quo to be
                                                                                 B
      maintained for a period of two weeks. The petitioner shall file on
      affidavit in the Registry of this court a receipt indicating proof of
      deposit on or before 9 April 2021, failing which the Special Leave
      Petition shall stand dismissed without further reference to this
      Court. In the event, the proof of deposit is produced, notice shall
      issue, returnable on 23 April 2021 and the order of status quo will        C
      stand extended till the next date of listing.
      4 In the event that the petitioner fails to effect deposit, in addition,
      to the consequences which have been envisaged above, the
      petitioner would be saddled with exemplary costs, in which event
      an office report shall be placed before this Court for directions.         D
      5 After the order was dictated, Mr Dilip Taur had requested the
      Court to pass over the case in order to enable him to get specific
      instructions from his client whether they were ready and willing
      to abide by the above understanding, as reflected in the order.
      6 After seeking instructions, Mr Dilip Taur states that his client         E
      has been made aware and he is agreeable to the above terms.”
      14. In pursuance of the above order, the appellant has produced
proof of having effected a deposit of an amount of Rs 1 crore in the
High Court of Bombay and an affidavit dated 5 April 2021 has been filed
in compliance of the order dated 18 March 2021. It is at this stage that         F
the matter now appears before this Court for resolution.
       15. Mr Dilip Taur, learned counsel appearing on behalf of the
appellant submits that the appellant has indicated his bona fides in
complying with the direction of this Court of depositing the amount of Rs
75 lakhs, and the appellant has gone even beyond that by depositing an           G
amount of Rs 1 crore before the High Court. Hence, it was urged that
the order of the High Court may be set aside and the writ petition may
be restored before the High Court.
      16. On the other hand, Mr Vikas Mishra, learned counsel appearing
on behalf of the second respondent, submitted that all along, it has been        H
498               SUPREME COURT REPORTS                       [2021] 6 S.C.R.


A     the second respondent who has participated in the process of auction
      sale and the appellant had failed to avail of the opportunities which were
      granted by the High Court. It has been urged on behalf of the second
      respondent that having regard to the principles of law which have been
      evolved by the judgments of this Court, it would be necessary to reject
      the offer which is now made by the appellant and to award the property
B
      to the second respondent.
             17. The property which is sought to be sold belongs to a public
      charitable trust. A two-Judge Bench of this Court In Cyrus Rustom
      Patel v Charity Commissioner6, noted the principles laid down by this
      Court with respect to the duties enjoined upon a trustee in the matter of
C     sale of trust properties:
               “17. …This Court held [Chenchu Rami Reddy v. State of A.P.,
               (1986) 3 SCC 391] that in view of the provisions contained in
               Section 74(1) of the Andhra Pradesh Charitable and Hindu
               Religious and Endowments Act, 1966, the Government must
D              be satisfied that it was in the interest of the institution or
               endowment to permit the sale of the lands concerned
               otherwise than by a public auction, and then reasons to
               reach that satisfaction must be recorded in the order.
             18. It was also observed by this Court in Chenchu Rami Reddy
E     [Chenchu Rami Reddy v. State of A.P., (1986) 3 SCC 391] that public
      officials and public-minded citizens entrusted with the care of
      “public property” have to show exemplary vigilance; the property
      of religious and charitable institutions or endowments must be
      jealously protected. The sale of such a property by private negotiations
F     which will not be visible to the public eye, and may even give rise to
      public suspicion, should not be, therefore, made, unless there are reasons
      to justify the same…
             19. Again, in R. Venugopala Naidu [R. Venugopala Naidu v.
      Venkatarayulu Naidu Charities, 1989 Supp (2) SCC 356], this Court
G     observed that fraudulent sale of the property of public charities by way
      of private negotiations should not be permitted. This Court further
      held that reserved price should be fixed after ascertaining the
      market value and offer of higher price by filing an affidavit…This
      Court had considered the fact that the value of the property which the
      6
H         (2018) 14 SCC 761
   GANESH RAMCHANDRA JADHAV v. GOVARDHAN SANSTHA                               499
  (REGD) WAI PUNE [DR. DHANANJAYA Y CHANDRACHUD, J.]

Trust got was not the market value, and quashed and set aside the sale         A
order of the subordinate court and the consequent sale…
      20. In Bhaskar Laxman Jadhav [Bhaskar Laxman Jadhav v.
      Karamveer Kakasaheb Wagh Education Society, (2013) 11 SCC
      531], this Court considered the alienation of the immovable
      properties of public trust under Section 36 of the Bombay Public         B
      Trusts Act, 1950; sanction was sought from the Charity
      Commissioner to alienate the property of the public trust, there
      was continuation of negotiations between trustees of public trust
      and prospective purchasers. There were successive applications
      submitted, seeking permission to alienate after each negotiation.
      This Court held [Bhaskar Laxman Jadhav v. Karamveer                      C
      Kakasaheb Wagh Education Society, (2013) 11 SCC 531]
      that it would tantamount to an abuse of the process of law
      and that such an act of the party meant that they were trying
      to take advantage of the absence of any clear-cut provisions
      under the Act relating to the sale. To prevent the abuse, this           D
      Court considered the factual scenario that trustees and the
      petitioners had been indulging in a flip-flop, and in a sense taking
      advantage of the absence of any clear-cut statutory measures
      designed to prevent abuse of the process of law in the Act. It was
      held by this Court that the Charity Commissioner had rightly
      rejected the first application for two reasons, firstly since the        E
      trustees were not voluntarily selling the trust land and secondly, in
      the given circumstances, the sale transaction was not for the benefit,
      and in the interest of, the Trust. This Court also considered the
      background facts, as also the compromise effected between the
      trustees and the petitioners in the High Court on 28-8-2008, which       F
      appeared to this Court to be suspicious. On an overall
      consideration of the facts and circumstances of the case, it
      observed that it was not possible to rule out the possibility
      of collusion between the trustees and the petitioners.
      21. This Court in Bhaskar Laxman Jadhav [Bhaskar Laxman                  G
      Jadhav v. Karamveer Kakasaheb Wagh Education Society,
      (2013) 11 SCC 531] further observed that the lack of bona
      fide of trustees and the petitioners could not have been
      overlooked by the High Court. Therefore, the safest course
      was to sell off the trust land through auction. It was also
      observed that it was quite clear that due to the passage of time,        H
500             SUPREME COURT REPORTS                           [2021] 6 S.C.R.


A           the value of the trust land had increased considerably, and that it
            would be in the best interest of the Trust if the maximum price is
            made available for the trust land from the open market. This
            Court also observed that Section 36 of the Act enjoins
            duties on the Charity Commissioner to consider the sale
            of immovable property of the Trust, with regard being had
B
            to the “interest, benefit or protection” of the Trust…”
                                                          (emphasis supplied)
              18. The offer which was made by the second respondent initially
      was in the amount of Rs 50 lakhs. It was only after the appellant had
C     indicated before the High Court that an amount of Rs 75 lakhs would be
      offered and failed to do so, that the second respondent stated before the
      High Court that he was willing to match the offer of the appellant and to
      go beyond it by an amount of Rs 5 lakhs. At the present time, the appellant
      has deposited an amount of Rs 1 crore before the High Court of Judicature
      at Bombay. To accept the bid of the second respondent in the amount of
D     Rs 80 lakhs will deprive the trust of the opportunity of realising the full
      market value. In this view of the matter, we are of the view that the
      submission which has been urged on behalf of the appellant is worthy of
      acceptance. We are unable to subscribe to the submission of the second
      respondent for the simple reason that the course of dealings would indicate
E     that even the second respondent has progressively enhanced its offers
      from Rs 50 lakhs to Rs 75 lakhs and, thereafter, to Rs 80 lakhs. Before
      this Court, Mr Vikas Mishra has now indicated that the second respondent
      would be willing to match the offer of the appellant of Rs 1 crore. There
      has undoubtedly been a default on the part of the appellant before the
      High Court. But the decision of the High Court to award the sale in
F     favour of the second respondent would cause serious jeopardy to the
      interests of the public charitable trust. The manner in which the second
      respondent has increased his offer in driblets leads to a reasonable
      inference that the true value of the property has not been realized. Hence,
      the order of the High Court to dismiss the petition cannot be sustained.
G     We are not inclined to conduct an auction process within the precincts
      of this Court and are accordingly of the view that the appropriate direction
      to be passed would be to require the third respondent to conduct the
      auction process by inviting fresh bids after a proper valuation and to
      issue further consequential directions for the submission of a report in
      the proceedings before the Bombay High Court. We accordingly issue
H     the following directions:
    GANESH RAMCHANDRA JADHAV v. GOVARDHAN SANSTHA                                501
   (REGD) WAI PUNE [DR. DHANANJAYA Y CHANDRACHUD, J.]

       (i)     The third respondent shall obtain a fresh valuation report        A
               for the property, and shall fix an upset price which shall not,
               in any circumstances, be less than the amount of Rs 1 crore.
               The upset price shall be based on the valuation, subject to
               the minimum of Rs 1 crore;
       (ii)    The third respondent shall invite fresh bids by publishing an     B
               advertisement in at least two widely circulated local
               newspapers for the sale of the property;
       (iii)   Both the appellant and the second respondent shall be at
               liberty to submit their fresh bids, which shall be considered
               by the third respondent together with all other bids which        C
               are received;
       (iv)    The third respondent shall, upon the bids so received, submit
               a report to the High Court of Judicature at Bombay, which
               shall consider the report while passing such final directions
               as are necessary in the writ petition;                            D
       (v)     Consequently, the impugned order of the High Court dated
               26 February 2021 dismissing the petition shall stand set
               aside. The writ petition, being Writ Petition No 3894 of 2019,
               shall hence stand restored to the file of the High Court.
               The High Court shall upon the receipt of the report of the        E
               third respondent take an appropriate view and decide upon
               the merits of the petition in respect of which all the rights
               and contentions of the parties on all aspects are kept open;
               and
       (vi)    The amount of Rs 1 crore which has been deposited with            F
               the Bombay High Court by the appellant, shall be invested
               in a Fixed Deposit of a nationalized bank to be renewed
               periodically during the pendency of the writ petition and
               shall abide by such further directions as may be issued by
               the High Court. In the event that the appellant desires to
               bid for the property at the auction, it would be open to him      G
               to move a Civil Application before the High Court to adjust
               the amount of Rs 1 crore deposited in pursuance of the
               order of this Court towards the bid.
      19. We clarify that there was no challenge before this Court in
regard to the findings on the aspect of legal necessity in selling the subject   H
502                SUPREME COURT REPORTS                      [2021] 6 S.C.R.


A     property, as a consequence of which, the present order shall not disturb
      the findings of the High Court in that regard. The third respondent shall
      act immediately on the receipt of a certified copy of this order and
      endeavour to complete the process on or before 31 December 2021.
             20. The appeal is accordingly allowed in the above terms.
B            21. Pending applications, if any, stand disposed of.


      Ankit Gyan                                                    Appeal allowed.



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F




G




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