Skip to content


Gandhi Sewa Shikshan Samiti Vs. Gulam HussaIn Welji - Court Judgment

LegalCrystal Citation
SubjectTrusts and Societies
CourtMumbai High Court
Decided On
Case NumberFirst Appeal No. 4 of 1956
Judge
Reported in(1962)64BOMLR206
AppellantGandhi Sewa Shikshan Samiti
RespondentGulam HussaIn Welji
DispositionAppeal allowed
Excerpt:
madhya pradesh public trusts act (xxx of 1951), sections 32, 2(4) - bombay public trusts act (bom. xxix of 1950), sections 2(13), 31, 50-52a--civil procedure code (act v of 1908), section 92; order xxxi, rule 1--societies registration act (xxi of 1860), section 6--indian trusts act (ii of 1882), section 3--indian partnership act (ix of 1932), section 69--society, a public trust, registered under societies registration act but not registered under m.p. public trusts act--whether such society entitled to get decree against third party.;a society registered under the societies registration act, 1860, which is a public trust as defined in section 2(4) of the madhya pradesh public trusts act, 1951, but is not registered under the latter act, is entitled to get a decree against a third party,..........if the trustees wanted to get the benefits derived from the registration, then they must have the trust registered. section 31 introduces an element of compulsion upon the trustees for getting the trust registered. in the absence of registration, it would not be open to claim the advantages of the provisions of the act and also the special advantages of having the suits filed by the charity commissioner and by two persons with his consent in the manner laid down in sections 50 and 51. this holds good in a greater measure 80 far as the privilege conferred by section 52-a of the bombay public trusts act, is concerned. in the same context i may also refer to the provisions of order xxxi of the code of civil procedure. order xxxi relates to suits by or against trustees, executors arid.....
Judgment:

Naik, J.

1. This appeal arises out of a suit filed by the plaintiffs on behalf of an association known as 'Gandhi Sewa Shikshan Samiti, Chimur', which is registered under the Societies Registration Act, for the recovery of a sum of Rs. 6,000 and odd from the defendant on the basis that the latter having made certain recoveries on behalf of the association has retained the same without any right and in a wrongful manner. Although the pleadings in this case are very much prolix, the facts so far as they are necessary for deciding this appeal lie within a narrow compass. Prominent residents of the village of Chimur held a meeting on June 15, 1952, for forming an Association with a view to start a High School to be named as 'Rashtriya Vidyalaya'. It appears that thirty members attended this meeting. It further appears that each of them agreed to donate a sum of Bs. 100. A committee to be styled as 'managing' committee' was formed comprising nine members. Some other meetings took place and it is not. necessary to set out the details of what transpired in the course of these meetings. Finally, in the meeting held on February 23, 1953, it was resolved that an association to be styled as 'Gandhi Sewa Shikshau Samiti' should be started. This meeting was attended by 69 members each of whom contributed a sum of Bs. 100. A constitutional sub-committee which was appointed in one of the earlier meetings had already submitted its report which came to be adopted in the general meeting. It was also resolved that the Samiti should be got registered under the Indian Societies Registration Act. In accordance with the said resolution, the society came to be registered on March 24, 1953. It is, however, necessary to remember that only sixteen members subscribed to the memorandum of this association at the time of its registration. It is the case for the plaintiffs that certain amounts, that were collected on behalf of the association, remained in the hands of the defendant as a temporary custodian. It is further their case that the defendant has been refusing to render accounts and pay the money in respect of the same and that is why the plaintiffs have been compelled to file the present suit for the recovery of the amounts that have remained in the hands of the defendant and which he has no right to retain. The plaintiffs have averred that the association has authorised them by a special resolution to file the present suit.

2. Several objections were raised on behalf of the defendant, only two of which are relevant for deciding this appeal. The first was that the association amounted to a public trust within the meaning of the expression in the Madhya Pradesh Public Trusts Act, 1951, and inasmuch as the association was not registered under the provisions of the said Act, the suit filed was not maintainable. The second contention raised was that although the association consisted of 69 members, only 16 of them subscribed to the memorandum of the association at the time of registration of the association. That being the case, the association must be deemed to be an association of only 16 members. The monies in respect of which the suit was filed, on the other hand, belonged to the association of 69 members and, therefore, the present association has no right to claim this amount from the defendant.

3. The first objection formed the subject-matter of issue No. 10 (a) and (b) which ran as follows;

10. (a) Whether the society is a public trust under the Madhya Pradesh Public Trusts Act, 1951?

(b) Whether the suit is barred by section 32 of the Act as the society has not been registered under it?

4. The trial Court gave its findings on this issue in the first instance and came to the conclusion that the suit cannot legally be heard nor decided in view of the fact that the society which, according to it, was a public trust, was not got registered under the provisions of the Madhya Pradesh Public Trusts Act. Since, however, the section did not render the institution of the suit invalid, the trial Court allowed this suit to proceed so as to give an opportunity to the plaintiffs to get the association registered under the Madhya Pradesh Public Trusts Act, 1951, before proceeding to the stage of hearing- and passing of a decree. Later on, the other objection was heard as a preliminary issue. That objection formed the subject-matter of two issues Nos. 5(b) and 6(b) which ran as follows:

5.(b) Was the registration, the petition for which was signed by 16 members, valid?

6.(b) Whether all of them should have joined the petition for registration?

The finding of the trial Court on issue No. 5(b) was that the registration was valid for the society consisting of 16 members only. On issue No. 6(b) it held that all the members should have joined the petition for registration. In view of these findings, the Court came to the conclusion that this suit on behalf of the registered association comprising 16 members was not maintainable. Consequently the suit was dismissed. It is against that decision that the plaintiffs have come up in appeal.

5. Mr. Mangalmurti, who appears on behalf of the plaintiffs, contended that the trial Court was wrong in holding that the suit was not maintainable by reason of the fact that the association was not registered under the Madhya Pradesh Public Trusts Act. He argued that in the first place the finding that the association is a public trust is wrong in law. Secondly, he contended that assuming that the association amounts to a public trust within the meaning of the expression in the Madhya Pradesh Public Trusts Act, still the association, by reason of the fact that it has been registered under the Indian Societies Registration Act, has a right to maintain the suit. He also contended that the trial Court was wrong in holding that this suit in so far as it purported to have been filed on behalf of the registered association was bad as the property vested in the association consisting of 69 members.

6. I will take up the question about the effect of non-registration of the association under the Madhya Pradesh Public Trusts Act on the right of that body for maintaining a suit, first, for discussion. It was strenuously contended by Mr. Mangalmurti that an association can never become a trust much less a public trust. In that connection, he referred me to the definition of 'trust' contained in Section 3 of the Indian Trusts Act and argued that the concept of trust has relation to a legal obligation and has nothing to do with an association. Section 3 of the Indian Trusts Act defines 'trust' to mean an obligation annexed to the ownership of property, and arising out of a confidence reposed in and accepted by the owner, or declared and accepted by him, for the benefit of another, or of another and the owner. The essential idea underlying the trust is a legal obligation which runs with the ownership of the property. It appears to me at any rate that it is semantically inaccurate to call an association a trust which means legal obligation. In the present case, it is not disputed that the subscriptions were collected for starting a school. It is settled law that an educational purpose is a charitable purpose and when a school is started for disseminating education amongst the children of all classes, it is evident that the purpose is a public charitable purpose. When the association tables upon itself the obligation of carrying out the object for which the donations were granted, evidently they are taking upon themselves the legal responsibility and in that sense they can be said to have been charged with the trust. The association, therefore, is a body of persons who have undertaken upon themselves the responsibility of carrying out the object with which the monies were collected. In that loose sense the association can perhaps be called a trust, although ordinarily the trust connotes a legal obligation or a vineulum juris. The Madhya Pradesh Public Trusts Act defined 'public trust' vide Section 2(4) to mean an express or constructive trust for a public religious or charitable purpose and includes a temple, a math, a mosque, a church, a wakf or any other religious or charitable endowment and a society formed for a religious or charitable purpose. It should be remembered at this stage that the first Act of 1937 omitted an association or a society from the ambit of the definition of the 'public trust'. The definition contained in the Bombay Public Trusts Act is still more clear. Section 2(75) of the Bombay Public Trusts Act, 1950, defines 'public trust' to mean an express or constructive trust for either a public religious or charitable purpose or both and includes a temple, a math, a wakf, a dharmada or any other religious or charitable endowment and a society formed either for a religious or charitable purpose or for both and registered under the Societies Registration Act, 1860. It will thus be noticed that the definition of 'public trust' includes a society formed either for a religious or charitable purpose and registered under the Societies Registration Act, 1860. That being the case, the question as to whether a society registered under the Societies Registration Act can be included within the purview of trust is not open for consideration although, it must be conceded that it is only by stretch of language and by use of a transferred epithet that the society can be included within the meaning of a public trust. We must, therefore, proceed on the footing that the society that came into existence in 1952 for the purpose of spreading higher education amongst the students of the village and its neighbourhood, was a public trust.

7. The more important question, however, to be considered is whether the mere fact that the society was not registered under the Madhya Pradesh Public Trusts Act would disentitle the society from, getting a decree against a third party, that is to say, a party claiming an interest adverse to the society. Chapter II of the Madhya Pradesh Public Trusts Act relates to the registration of public trusts. Tinder Section 5 of the Act, the Registrar holds an enquiry with a view to find out as to whether the trust is a public trust and whether the trust holds any property of its own etc. The findings recorded by the Registrar are not final and an aggrieved party has a right to approach the Civil Court for .setting aside or modifying those findings. The provisions of the Trusts Act are neither exhaustive nor comprehensive. For instance, the Act does not make any provision as to how the public trust is to institute suits for the reliefs mentioned in Section 92 of the Code of Civil Procedure. That means that the provisions of Section 92 of the Code of Civil Procedure are left untouched, and if anybody wants to institute a suit for the reliefs specified in Section 92, he must follow the procedure laid down in that section. In this background, let us now turn to the provisions of Section 32 of the Madhya Pradesh Public Trusts Act, 1951. Section 32 runs thus:

32. (1) No suit to enforce a right on behalf of a public trust which has not been registered under this Act shall be heard or decided in any court.

(2) The provisions of Sub-section (1) shall apply to a claim or set off or other proceeding to enforce a right on behalf of such public trust.

8. Mr. Siras for the defendant contended that this provision is analogous to the provision of Section 69 of the Indian Partnership Act and it imposes an absolute bar upon an unregistered society to maintain a suit of any kind against anybody whatsoever. For appreciating this argument it is necessary to closely scrutinize the wording of Sub-section (1) of Section 32 of the Madhya Pradesh Public Trusts Act, 1951. The words utilised are 'suit to enforce a right on behalf of a public trust'. The question, therefore, that falls for consideration is whether the expression 'suit to enforce a right on behalf of a public trust'' covers all claims to be instituted on behalf of the society even against third persons and. strangers. The wording undoubtedly appears to be wide, at first sight. At the same time, we cannot forget the fact that there are different kinds of claims which a public trust can make against strangers and third parties. The public trust may also be a society registered under the Indian Societies Registration Act and by reason of the fact that it is registered under the Indian Societies Registration Act, it gets a right of filing suits. The question as to whether the society which has been registered under the Indian Societies Registration Act becomes a corporate body or a juridical person, has been considered by Mr. Justice Bhagwati, as he then was, in Satyavart Sidhantalankar v. Arya Samaj (1945) 48 Bom. L.R. 341. The learned Judge came to the conclusion on examination of the provisions of the Societies Registration Act and comparing those provisions -with the provisions of the Indian Companies Act that once the society is registered, the society enjoys the status of a legal entity apart from the members constituting the same and is capable of suing or being sued. The question as to whether the plaintiff-society became a legal entity by reason of its registration need not be considered in detail for the purpose of the present appeal. It is sufficient to note that under Section 6 of the Societies Registration Act, the society 'has a right to sue in the manner prescribed therein. Section 6 runs thus:

Every society registered under this Act may sue or be sued in the name of the president, chairman, or principal secretary, or trustees, as shall be determined by the rules-end regulations of the society, and, in default of such determination, in the name of such person as shall be appointed by the governing body for the occasion:

9. It is, therefore, clear that Section 6 confers a right upon a society registered under the Indian Societies Registration Act to file suits in the manner provided therein. If we interpret Section 32 of the Madhya Pradesh Public Trusts Act, 1951, to mean that it introduced a comprehensive bar for filing any suit against anybody, the provisions will obviously run counter to the provisions of Section 6 of the Indian Societies Registration Act. It is, therefore, necessary to interpret the provisions of Section 32 of the Madhya Pradesh Public Trusts Act, 1951, in such a manner as to harmonise with the provisions of Section 6 of the Indian Societies Registration Act and the only way to do so is to hold that! Section 32 is intended for suits contemplated under Section 92 of the Code of Civil Procedure.

10. This view will be strengthened if we consider the provisions of the Bombay Public Trusts Act which are more elaborate. Chapter IV of the Bombay Public Trusts Act relates to the registration of Public Trusts. Sections 18 and 19 lay down the manner in which enquiries are to be held for the purpose of registering a public trust. Section 31 is identical in terms with Section 32 of the Madhya Pradesh Public Trusts Act. It is significant to note that this section is included in the Chapter of registration of public trusts. Section 31 of the Bombay Public Trusts Act, 1950, runs thus:

31. (1) No suit to enforce a right on behalf of a public trust which has not been registered under this Act shall be heard or decided in any Court.

(2) The provisions of Sub-section (1) shall apply to a claim of set off or other proceeding to enforce a right on behalf of such public trust.

11. Chapter VII relates to the other functions and powers of Charity Commissioner, Section 50, which introduces substantial change and modification in the provisions of Section 92 of the Code of Civil Procedure, is included in this-Chapter, Section 50 relates to the suits relating to public trusts. It runs thus (material part cited) :

50. In any case-

(1) where it is alleged that there is a breach of a public trust,

(ii) where a direction is required to recover possession of a property belonging to-a public trust or the proceeds thereof or for an account of such property or proceeds' from any person including a person holding adversely to the public trust, or

(iii) where the direction of the court is deemed necessary for the administration-of any public trust,

the Charity Commissioner or two more persons having an interest in the trust and having obtained the consent in writing of the Charity Commissioner, may institute a? suit...to obtain a decree for...the following reliefs.

12. The reliefs have then been set out in Sub-clauses (a) to (h). Clause (a) relates-to the relief of an order for the recovery of the possession of such property or proceeds thereof. Section 51 deals with the procedure as to how the consent of the Charity Commissioner for instituting a suit is to be secured. Section 52A is somewhat important. It provides:

Notwithstanding anything contained in the Indian Limitation Act, 1908, no suit against an assignee for valuable consideration of any immovable property of the public trust which has been registered or is deemed to have been registered under this Act for the purpose of following in his hands, such property or the proceeds thereof, or for an account of such property or proceeds, shall be barred by any length of time.

Section 52A contemplates a suit against an assignee for the recovery of immovable property or the proceeds thereof. It will thus be seen that Sections 50 and 52 have reference to special kinds of suits and Sections 50 and 51 lay down a special procedure as to how these suits are to be instituted and by whom. In my opinion, the provisions of Section 31 of the Bombay Public Trusts Act, which introduces a bar against an unregistered trust of asking for a decree in enforcement of a right on behalf of the public trust, will have to be read in the context of the provisions of Sections 50, 51, 52 and 52A and must be limited in its application to the kinds of suits contemplated in those sections. This view also explains the peculiar wording of Section 31, namely, 'no suit to enforce a right on behalf of a public trust'. Although in one sense the words 'no suit to enforce a right on behalf of a public trust' are wide, still emphasis must be laid upon the expression 'suit to enforce a right' which appears to suggest that Section 31 is intended to apply to the kinds of suits as contemplated in the Bombay Public Trusts Act and not to other suits. It may be that by introducing Section 31 in the Bombay Public Trusts Act and corresponding Section 32 in the Madhya Pradesh Public Trusts Act, the object of the Legislatures was to bring a sort of pressure upon public trusts to get themselves registered. Certain advantages would flow from the registration of the public trusts under the provisions of the Public Trusts Act. If the trustees wanted to get the benefits derived from the registration, then they must have the trust registered. Section 31 introduces an element of compulsion upon the trustees for getting the trust registered. In the absence of registration, it would not be open to claim the advantages of the provisions of the Act and also the special advantages of having the suits filed by the Charity Commissioner and by two persons with his consent in the manner laid down in Sections 50 and 51. This holds good in a greater measure 80 far as the privilege conferred by Section 52-A of the Bombay Public Trusts Act, is concerned. In the same context I may also refer to the provisions of Order XXXI of the Code of Civil Procedure. Order XXXI relates to suits by or against trustees, executors arid administrators. Rule (1) of Order XXXI provides:

In all suits concerning property vested, in a trustee, executor or administrator, where the contention is between the persons beneficially interested in such property and a third person, the trustee, executor or administrator shall represent the persons so interested, and it shall not ordinarily be necessary to make them parties to the suit...

Rule (1) contemplates a suit between persons who are beneficially interested and a third person. The persons beneficially interested may include the 'the public'. The provisions of Order XXXI, Civil Procedure Code, will also apply to a public trust and so far as the disputes between trustees on the one side and third persons or strangers on the other are concerned. The trustees will represent the interest of the beneficiaries and as such will be entitled to file a suit- under this rule. It will thus be seen that: there is a distinction between a suit against a third party or a stranger and a suit for the specific reliefs that have been contemplated under Section 92 of the Code of Civil Procedure, and Section 50 of the Bombay Public Trusts Act. Even, under Section 32 of the Madhya Pradesh Public Trusts Act, the institution of the suit was not bad and what was prohibited was the hearing of the suit and the passing of a decree at the conclusion of that hearing. That is why the suit was kept pending for some time, and although the suit was eventually dismissed it was not dismissed on the ground of non-registration but it was dismissed on the other ground already mentioned. The distinction, which has been drawn between suits against third persons as contemplated by Order XXXI, Rule 1, of the Cod of Civil Procedure, and suits as contemplated by Section 50 of the Bombay Public Trusts Act, will explain the provisions of Section 32 of the Madhya Pradesh Public Trusts Act and Section 31 of the Bombay Public Trusts Act, and Section 92' of Civil Procedure Code, and will produce a sort of harmony between these provisions and the provisions of Section 6 of the Indian Societies Registration Act. So, far as the distinction between the suits against strangers and the suits contemplated by Section 50 of the Bombay Public Trusts Act is concerned, I may refer to .my own decision reported in Gurusiddappa v. Miraj Education Society (1960) 63 Bom. L.R. 312. I, therefore, hold that the suit is maintainable and there is no bar for the pending suit in culminating in a decree, imposed by virtue of the provisions of Section 32 of the Madhya Pradesh Public Trusts Act or Section 31 of the Bombay Public Trusts Act.

13. The solution of the second problem, that was posed, is very simple. It was contended by Mr. Siras on behalf of the defendant, though this contention is inconsistent with the first contention that the property for which the suit was maintained, was the property of 69 individual donors and inasmuch as only 16 persons have joined in the registration of the society, that society comprising 16 members has no right to claim the return of the money which, according to the plaintiffs, is in the hands of the defendant. This argument is fallacious. The society is a voluntary organisation. It has come into being as a result of the free volition of 69 residents of Chimur village and its surroundings. The society came into being as soon as 69 persons decided to form the same and made their contributions for carrying out the object for which the society was to be formed. The registration of the society under the Indian Societies Registration Act only afforded the society a legal status and consequently certain facilities. The preamble of the Indian Societies Registration Act states the object of that enactment in the following terms:

Whereas it is expedient that provision should be made for improving the legal condition of societies established for the promotion of literature, science, or the fine arts, or for the diffusion of useful knowledge, the diffusion of political education or for charitable purposes; it is enacted as follows:

So the object of the legislation was to improve the legal condition of the societies already existing. The societies did not come into existence by reason of their registration. By reason of its registration the society does not become a creature of the statute. The society is a voluntary organisation already formed by the people and gets its seal and a sort of imprimatur by virtue of its registration. Although, therefore, it may be conceded that the amount belongs to the society, which comprises 69 members, I am unable to understand how the mere fact that only 16 out of 69 persons came forward to subscribe to the memorandum and get the society registered in any way affects the situation relating to the property of the society. The property is still vested in the society which was voluntarily formed. The society, that came to be registered, is just the spearhead or a vanguard of the society that was voluntarily formed by the free-will of the people and the society registered tinder the Societies Registration Act can maintain a suit for and on behalf of the entire body. The proceedings of the general body, which met on February 23, 1953, and the resolution passed by them are on record. It is clear, therefore, that the society known as 'Gandhi Sewa Shikshan Samiti, Chimur' was decided to be formed at its meeting and it was further decided that the society should be got registered under the Societies Registration Act. It was in pursuance of this resolution that the society was got registered by 16 persons. The mere fact that 16 persons came forward to have the society registered is no ground for holding that the registered society is a different body from the society that was formed in the general meeting held on February 23, 1953. It is also necessary to remember that if the allegations contained in the plaint are eventually held proved against the defendant, it means that the defendant has unlawfully collected the monies which legitimately belonged to the society. The only object of putting forward this technical defence on behalf of the defendant is to defeat the claims of the society, that is, the larger body in whose name the present contentions have been raised. In my opinion, therefore, the suit as instituted by the registered society is clearly maintainable.

14. The result is that the appeal succeeds, the order of dismissal passed by the trial Court is set aside, the suit is remanded to the trial Court for proceeding according to law i.e. to record evidence and decide the remaining issues in the case. The costs of this appeal to abide the result of the suit.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //