The law of trusts in India has developed in its own specialized way but it has definitely created a lot of advantages as a very convenient instrument for running religious and charitable organisations. A trust provides the means by which specific benefits are carved out for different people who are interest in the same Trust property.
In India, the Indian Trusts Act, 1882, deals with private trusts only. Section 1 of the Indian Trust Act, 1882 prohibits applicability of such Act into the area where Religious or Charitable endowment applies.
Section 3 of the Indian Trusts Act, 1882 defines a trust as “an obligation annexed to the ownership of property and arising out of 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 Charitable and Religious Trusts Act, 1920 was enacted to provide facilities for the obtaining of information regarding trust created for public purposes of a charitable or religious nature, and to enable the trustees of such trusts to obtain the directions of a Court on certain matters, and to make special provision for the payment of the expenditure incurred in certain suits against the trustees of such trusts
Section 7 of the Charitable and Religious Trusts Act, 1920 (Act XIV of 1920) provides as follows:–
Section 7–“(1) Save as hereinafter provided in this Act, any trustee of an express or constructive trust created or existing for a public purpose of a charitable or religious nature may apply by petition to the Court, within the local limits of whose jurisdiction any substantial part of the subject-matter of the trust is situate, for the opinion, advice or direction of the Court on any question affecting the management or administration of the trust property and the Court shall give its opinion, advice or direction, as the case may be, thereon:
Provided that the Court shall not be bound to give such opinion advice or direction on any question which it considers to be a question not proper foe summary disposal.
(2) The Court, on a petition under Sub-section (1), may either give its opinion, advice or direction thereon forthwith, or fix a date for the hearing of the petition and may direct a copy thereof, together with notice of the date so fixed, to be served on such of the persona interested in the trust, or to be published for information in such manner, as it thinks fit.
(3) On any date fixed under Sub-section (2) or on any subsequent date to which the hearing may be adjourned, the Court, before giving any opinion, advice or direction, shall afford a reasonable opportunity of being heard to all persons appearing in connection with the petition.
(4) A trustee stating in good faith the facts of any matter relating to the trust in a petition under Sub-section(1), and acting upon the opinion, advice or direction of the Court given thereon shall be deemed, as far as his own responsibility is concerned, to have discharged his duty as such trustee in the matter in respect of which the petition was made.”
Section 7 entitles a trustee to apply for the direction, advice or opinion of the Court with regard to the management or administration of the trust property where the trust is a public charitable or religious trust.
Sub-section (1) of said Section 7 confers the right upon any one of the trustees to apply under Sub-section (1) of the said section. If there be more than one trustee, then either one is entitled to apply to Court for necessary guidance.
Under Section 2 of the Charitable and Religious Trusts Act 1920, the Court” means the Court of the District Judge or any other Court empowered in that behalf by the State Government and includes the High Court in the exercise of its ordinary original civil jurisdiction.
In Mohan Lall Seal & Ors. v Kanak Lall Seal & Ors. G.A. No. 3095 of 2008 C.S. No. 116 of 2008 it has been held that:
“Under Section 36 of the Indian Trustees Act, it was necessary to obtain permission of the principal Civil Court of original jurisdiction to execute a long term lease, exceeding 21 years. Even though the trust was a charitable trust to which the Indian Trusts Act did not apply all the principles embodied in the Indian Trusts Act would apply.”
Property belonging to religious and charitable endowments could not be permitted to be sold, unless the same was justified by reasons as stated in R. Venugopala Naidu v. Venkatarayulu Naidu Charities & Ors. AIR 1990 SS 444.
The Supreme Court in Committee of Management of Pachaiyappa’s Trust vs. Official Trustee of Madras & Anr. AIR 1994 (1) SCC 475, has held that lease of trust property should be granted by public auction.
In Dhanalal Karnawat & Anr. AIR 1975 Cal. 67 it has been held that:
“The provisions of Section 34 of the Indian Trusts Act are similar to those of Section 7 of the Charitable and Religious Trusts Act. The impugned order was made on 11 th April, 1973 on the application were in the cause title mention was made of Section 34 of the Indian Trusts Act. Apart from the said mention of Section 34 there was nothing to show that the application was not made under Section 7 of the Charitable and Religious Trusts Act. The application in effect, was made by the trustees seeking a direction from this Court to grant lease of the Trust property No.48, Sir Hariram Goenka Street, Calcutta. As a matter of fact in the Charitable and Religious Trusts Act there are no provisions similar to those contain in the latter portion of Section 36 of the Indian Trusts Act. Therefore in this respect the provisions in the Trusts Act should be followed.
In a case reported in AIR 1941 All 387, it was held that though the Indian Trusts Act does not apply to public or private religious charitable endowments, but nevertheless the principles underlying the sections served as useful guide.
In Abdul Kayum vs. Alibhai AIR 1963 SC 309 the Supreme Court held that the principles embodied in the provisions of the Indian Trusts Act, 1882 would apply to public and private religious/charitable trusts. In Venugopala Naiduvs. Venkatarayulu Naidu Charities AIR 1990 SS 444 the Supreme Court held that the Court should not permit property belonging to religious and charitable endowments to be transferred by private negotiations.
It was finally held by the Court in Mohan Lall Seal & Ors. v Kanak Lall Seal & Ors. G.A. No. 3095 of 2008 C.S. No. 116 of 2008 that:
“Even though this Court is unable to arrive at any definite finding with regard to the appropriateness of the terms and conditions on which Premises No.2, Red Cross Place, Kolkata – 700 001 has been leased out, this Court is constrained to hold that efforts to obtain the best offers had not been made. Public notices could have ensured the best offers.
The trustees ought to have issued public notices in newspapers instead of privately negotiating an apparently unconscionable bargain.
This Court is also of the view that a long term lease exceeding 21 years requires the sanction of Court as provided in Section 26 of the Indian Trusts Act, 1882 and in any case has to be at the best rent. Properties of public and/or private charitable trust cannot be decimated by the trustees at their own whims and fancies. A property held in trust cannot be alienated save for compelling reasons at rent that is not the best. In this case, the transfer is coupled with the right of demolition and construction.”
Thus, in case of charitable and religious trusts, the trustees have an inherent obligation to act in the interest of the trust and its beneficiary and/or in other words, in public interest. Public interest demands that any transfer or alienation of the trust property should be completely transparent, fair and in public interest. It is, therefore, expedient that all transfers of property held by religious or charitable trusts, should be open, by issuance of public notices and/or advertisement. The transfer should be given sufficient publicity to fetch the best offers.
Thus, Section 7 of the Charitable and Religious Trust Act, 1920 gives power to the Trustee to apply to the Court for the purpose of obtaining certain directions. Such Section is very much comparable with Section 34 of the Indian Trust Act. In both the Sections, any Trustee without instituting the suit can be able to apply to the Court having appropriate Jurisdiction mentioned therein for getting any directions in respect of the management or administration of the Trust property.
But one aspect is very clear that the Court can proceed in a summary manner either under Section 34 of the Act of 1882 or under Section 7 of the Act of 1920 provided such application is made by a Trustee. It must also be noted that directions given by the Court under Section 7 of the Act is not appealable.
Section 12 of the Charitable and Religious Trusts Act, 1920 bars appeals from being filed and states that no appeal shall lie from any order passed or against any opinion, advice or direction given under the Act.
However, In Re: Birla Jankalyan Trust vs Unknown AIR 1971 Cal 290, it has been held that:
“Opinion expressed under said Section 7 of Religious and Charitable Trusts Act or advice or directions given thereunder cannot be challenged in appeal in view of the provisions of Section 12 of the Charitable and Religious Trusts Act. The said opinion, however, shall not operate as res iudicata in subsequent proceedings if and when they arise between the Revenue and the Trustees (See Babu Bhagwandin v. Gir Har Saroop, 67 Ind App 1 = (AIR 1940 PC 7).”
It was further held by the court that:
“The provisions of Section 7 of the Charitable and Religious Trusts Act are similar to the provisions of Section 302 of the Indian Succession Act. The said section is to the following effect:–
Section 302: – Where probate or letters of administration in respect of any estate has or have been granted under this Act, the High Court may on application made to it, give to the executor or administrator any general or special directions in regard to the estate or in regard to the administration thereof.
In construing the said Section 302, P. B. Mukharji, J. (as His Lordship then was) observed In re: Akshoy K. Ghose, AIR 1949 Cal 482 at page 466 as follows: “In my opinion Section 302 should not be read in such a way as to make this section in the statute a substitute for a suit in any and every case relating to the estate or its administration. The legislature uses the word “directions” which in my judgment should receive a construction consonant to the ordinary meaning of that word. The word “directions” does not in my view mean adjudication and determination of substantive rights, but they mean in my judgment directions to help the executors in the difficulties in respect of practical management or administration where no disputed question of title or difficult question of construction of will or complicated questions of law are involved.”
The aforesaid observations apply with equal force in my opinion to an application made under Section 7 of the Charitable and Religious Trusts Act as well.”
Thus, from the above discussion it is evident that leasing Trust property in any part of West Bengal, including, Mayapur, Kalyani or Krishnanagar requires adherence to Section 7 of the Charitable and Religious Trusts Act, 1920. A public notice, advertisement in local newspaper must be given regarding the lease of the said property and thereafter the necessary lease deed may be executed for the said purpose. Further, in case the Trust property requires reconstruction or demolition with subsequent construction, then the permission of the Court must be sought under Section 7 of the Charitable and Religious Trusts Act, 1920.