Court’s Decision
The Bombay High Court dismissed a writ petition challenging an order of the Joint Charity Commissioner, Pune, which had refused to implead a former member of a charitable trust in loan sanction proceedings under Section 36A(3) of the Maharashtra Public Trusts Act, 1950.
Justice N.J. Jamadar held that since the petitioner had been removed from the membership of the trust and the legality of that removal was not yet challenged, he could not claim to be a “person having interest” under Sections 2(10) and 73A of the Act. The Court emphasized that such proceedings are not meant to re-litigate management disputes, but to assess whether the loan is in the interest of the trust.
Accordingly, the Court upheld the Joint Charity Commissioner’s decision, finding no perversity or illegality warranting interference under Article 226 of the Constitution.
Facts
The respondent trust, a long-established educational institution running reputed engineering and medical colleges, had sought the Charity Commissioner’s permission to borrow ₹10 crore from Janata Sahakari Bank to finance the completion of a school building.
The petitioner, formerly the Chairman of the Board of Control (BOC) of the trust, was removed from his position and subsequently from the membership of the trust following allegations of misconduct. Several civil and statutory proceedings between rival factions were already pending.
Claiming that the application for loan permission was filed by unauthorized persons, the petitioner sought impleadment under Section 73A of the Maharashtra Public Trusts Act, arguing that as a long-standing member, he had an “interest” in ensuring lawful administration.
The Joint Charity Commissioner rejected his application, holding that he was neither an interested party in the loan application nor could his participation assist in deciding the issue. This led to the writ petition before the High Court.
Issues
- Whether a person who has been removed from the membership of a trust can still claim to be a “person having interest” within the meaning of Section 2(10) of the Maharashtra Public Trusts Act, 1950.
- Whether such a person can seek impleadment in loan sanction proceedings under Section 36A(3) through Section 73A.
- Whether refusal of impleadment in such circumstances violates any legal right warranting writ interference.
Petitioner’s Arguments
The petitioner contended that his removal from the trust and the BOC was illegal and sub judice. Until those issues were finally adjudicated, he continued to have a legitimate “interest” in the trust’s affairs.
He argued that the loan application was unauthorized, being filed by persons with no valid authority to represent the trust. The petitioner pointed to a prior order where he was permitted to intervene in “Change Report No. 850 of 2010” under Section 73A, suggesting that his locus had already been judicially recognized.
According to him, denying impleadment would prevent him from exposing mismanagement and misuse of trust property, thereby defeating the very purpose of the Maharashtra Public Trusts Act.
Respondent’s Arguments
The respondent trust, represented by senior counsel, submitted that the petitioner had been lawfully removed in the Extraordinary General Body Meeting (EGBM) of August 2011 for misconduct, and subsequently expelled from membership by a resolution dated December 3, 2016.
His civil suit challenging the 2011 resolution had been dismissed at multiple stages — the trial court, appellate court, and the High Court had all declined interim relief. Since the later 2016 resolution remained unchallenged, his membership had ceased to exist.
It was argued that the petitioner’s repeated interventions were malicious attempts to obstruct the trust’s functioning. The loan was urgently required for construction of an educational institution, and every day’s delay caused serious financial prejudice. Hence, intervention was unjustified and contrary to the legislative intent that such applications be decided expeditiously within 15 days.
Analysis of the Law
The Court examined Sections 36A(3), 73A, and 2(10) of the Maharashtra Public Trusts Act. Section 36A(3) mandates prior sanction from the Charity Commissioner before any trustee borrows money on behalf of the trust, to prevent reckless financial decisions that might encumber trust property.
Section 73A allows any “person having interest” to be joined as a party to any proceeding under the Act. However, Section 2(10), defining “person having interest,” uses the term “includes” (instead of “means”), suggesting a broad but not unlimited scope. Clause (e) limits this to trustees or beneficiaries in the case of other public trusts.
The Court observed that the 2017 amendment introduced a precise definition of “beneficiary” as one “entitled to any of the benefits under the objects of the trust and no other person.” This exclusionary phrase demonstrated the legislative intent to prevent outsiders or estranged members from interfering in trust administration.
Thus, a person who is neither a trustee nor a beneficiary — and who has been removed from membership — cannot claim locus under Section 73A.
Precedent Analysis
- Digambar Pralhad Jot v. Satyanarayan Biharilal Zunzumwala (AIR 1978 Bom 196)
The Division Bench clarified that the substitution of “includes” for “means” in Section 2(10) made the definition inclusive but not exhaustive, extending beyond the categories explicitly mentioned. - Shree Gollaleshwar Dev v. Gangawwa Shantayya Math (1985) 4 SCC 393
The Supreme Court held that “person having interest” under Section 2(10) includes not only beneficiaries but also trustees, emphasizing that the definition is broad but context-dependent. - Shree Khambhati Modh Vanik Samanj v. State of Maharashtra (WP 13384/2022, decided 20 Dec 2023)
The Bombay High Court distinguished between “interest in the trust” and “interest in the property of the trust.” Only those whose interest aligns with the trust’s objectives can seek impleadment under Section 73A.
Applying these precedents, Justice Jamadar concluded that while the term “person having interest” is inclusive, it cannot encompass individuals whose interests are adverse to the trust or its current management.
Court’s Reasoning
The Court reasoned that the petitioner’s application was not about the loan’s necessity or legality but an attempt to reintroduce his grievance over management control. His allegations questioned the competence of current trustees rather than addressing the merits of the loan application.
Once the petitioner was removed from membership and had not challenged that resolution, he lost any standing to claim “interest” under Sections 2(10)(d) or (e). Allowing his intervention would “expand the scope of the loan sanction proceeding into a management dispute,” contrary to the statute’s objective of expeditious disposal.
Further, the Court noted that the legislative scheme requires the Charity Commissioner to act as guardian of the trust’s interests and not as an arbiter in factional rivalries.
Conclusion
The Bombay High Court upheld the Charity Commissioner’s order refusing impleadment. It observed that the loan sanction proceeding under Section 36A(3) was confined to evaluating whether the proposed borrowing served the trust’s interest — not to adjudicate disputes over membership or governance.
Since the petitioner no longer qualified as a “person having interest,” his presence would only delay and derail legitimate trust activities. The writ petition was therefore dismissed, with the Charity Commissioner directed to decide the loan application in accordance with law and without delay.
Implications
This ruling reinforces the limited scope of Section 73A — only trustees, beneficiaries, or active members can intervene in trust proceedings. Former members or litigants engaged in management disputes cannot use impleadment as a backdoor to obstruct statutory permissions.
The judgment also clarifies that the Charity Commissioner’s jurisdiction under Section 36A is protective, not adversarial — intended to safeguard trust property, not entertain factional litigation.
