Amalgamation Of Two Trusts Not Germane For Inquiry Conducted U/S 50A Of Trusts Act: Bombay High Court

The Bombay High Court stated that amalgamation of two trusts are not germane for inquiry to be conducted under Section 50A Of Trusts Act.Further, the Bench of Justice Sharmila U. Deshmukh disagreed that the publication of notice in official Gazette is sought to be elevated to the status of a jurisdictional condition for exercise of power under Section 50A(2). “It is the formation of prima facie opinion that the proposed amalgamation is in interest of proper management or administration of trusts which is the jurisdictional fact for the Assistant Charity Commissioner to proceed further. The publication of notice is for giving notice to all concerned and hearing them before framing a common scheme, which is procedural aspect,” opined the bench.Section 23 of the Indian Contract Act, 1872, deals with agreements where the object or consideration is unlawful, rendering them void.Section 50A(2) of the Maharashtra Public Trusts Act, 1950 empowers the Charity Commissioner to frame a common scheme for two or more public trusts if he believes it's in the best interest of their proper management or administration.In this case, Kailas Seva Sadan Trust had entered into Agreement to Sell with the Brihan Mumbai Municipal Corporation (Respondent No. 1) in respect of their immovable property pursuant to sanction accorded under Section 36 of Trusts Act. An Application was filed by the Trustees of 'Rizvi Education Society' and 'Kailas Seva Sadan Trust' before the Assistant Charity Commissioner under Section 50A(2) of the Trusts Act seeking amalgamation of the two trusts and to approve and sanction the draft common scheme of amalgamation and to de-register Kailas Seva Sadan Trust. The Assistant Charity Commissioner ordered the amalgamation and settled the common scheme.The Respondent No. 1/ Brihan Mumbai Municipal Corporation challenged the order of the Assistant Charity Commissioner permitting amalgamation of two Trusts by way of Charity Application in the City Civil Court under Section 72 of the Trusts Act. The City Civil Court allowed the Charity Application and remanded the matter to the Assistant Charity Commissioner. Upon remand, the Assistant Charity Commissioner allowed the Application of Trustees and passed an order of amalgamation of two trusts. The Respondent No 1 challenged the order passed by the Assistant Charity Commissioner before the City Civil Court which was allowed.The appellant submitted that the Respondent No. 1 being an adversary in the proceedings filed against the Appellant cannot have any say in internal affairs of the Trust. The issue is not about locus of Respondent No 1 but merits of the objections, which are not germane for the inquiry under Section 50A.As per the appellant the plea of non-publication of notice in Official Gazette is not available to Respondent No 1 as it was heard while deciding the Application for amalgamation. In any event, the failure will not entail dismissal of the Application of amalgamation and at the most, the matter ought to have been remanded for complying with the said procedure.The Brihan Mumbai Municipal Corporation and The Assistant Charity Commissioner submitted that the order under Section 50A(2) can be passed only upon subjective opinion of the Charity Commissioner and that too after following the prescribed procedure. It was submitted that subsections (1) and (2) of Section 50A are independent provisions and the requirements of Section 50A(1) cannot be read into Section 50A(2).Considering the mandate of Section 50A(2), the objections designed to protect the interests of Respondent Corporation cannot be said to be germane to an inquiry under Section 50A(2). The objections are in nature of a challenge by a party aggrieved by the order and not by a party with the purpose of showing that the beneficial interest of the Trusts is better served by its independent existence. The hearing before the Assistant Charity Commissioner was not an adversarial litigation where challenges can be raised on grounds alien to the interest of the Trusts and designed to resolve inter se disputes, stated the bench.The bench observed that the City Civil Court failed to note that one of the objects of Rizvi Education Society was to provide medical relief and the objects of both the trusts were aligned.The direction to continue the existence of Kailas Seva Sadan Trust which is now defunct and fighting for revival of its activities and for recovery of its sole property with depleting financial resources cannot be said to be in the interest of the Trust, added the bench.In view of the above, the bench allowed the appeal. Case Title: Rizvi Education Society v. The Brihan Mumbai Municipal CorporationCitation: 2025 LiveLaw (Bom) 182Case Number: FIRST APPEAL NO. 1156 OF 2015Counsel for Appellant: Mayur Khandeparkar, Anand Pai, Mahesh R. Mishra and Mr. ArunCounsel for Respondent: Narendra WalavalkarClick Here To Read/Download Order

Amalgamation Of Two Trusts Not Germane For Inquiry Conducted U/S 50A Of Trusts Act: Bombay High Court

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