Sree Narayana Trust Office Bearers Involved In Criminal Offence Relating To Trust Barred From Holding Office Till Disposal Of Case: Kerala High Court

The Kerala High Court recently approved the modification of the scheme of Sree Narayana Trust. The Scheme was framed pursuant to a judgement of the court in a 1972 case and clause 34 permits any member of the Board of Trustees to approach high court for appropriate modification.

While the clause 34A of the Scheme permits members of the Board of Trustees to move civil court against office bearers of Trust or the executive committee for violation of Trust scheme or on breach of trust, the new modification states that "if an office bearer of a Trust is involved in a criminal offence of breach of trust or in an offence relating to the property of a Trust and, his continuation in the office is having conflict with the interest of the Trust, or is detrimental to the interest of the Trust, the office bearer shall abstain to hold the office till he is discharged or acquitted in such case."

The division bench of Justice A. Muhamed Mustaque and Justice Shoba Annamma Eapen allowed the addition, in the judgement on a petition filed by one of the Board of Directors of S.N. Trust. 

"...we must remind ourselves that the trustee is fiduciary and he must not place himself in a position wherein his interest may conflict with his duties. The duty of the trustee is to uphold the objectives of the Trust. The very criminal prosecution can be derailed, if a trustee, who is implicated in criminal charges in respect of the Trust property is permitted to have control over the administration of the Trust. It is not necessary to wait till final report is filed or charge is framed to take action against such an officer. Having regard to the nature of the allegations in such crime, he should not be permitted to continue to hold the office. The Court, in such a situation, in a regular suit will have to address whether the continuation of such office bearer or board of trustee is having conflict with interest of the Trust or is detrimental to the interest of the Trust. If the Court forms an opinion that fair trial will not be possible, the Court can very well act upon such clause to desist the trustee from functioning. The new clause is necessary to secure the objective and integrity of the Trust," the court observed while permitting the modification. 

The petitioner moved the court seeking the incorporation of a clause stipulating, "If any office bearer under the trust is charge sheeted for an offence of breach of trust by a Competent Court in a Criminal Proceedings, the office bearer/bearers shall abstain from continuing in the office till the final disposal of the case filed against him/them". 

The plea was "apparently" moved in the wake of implication of the Secretary of the Trust, Vellappally Nadesan for various offences under the Indian Penal Code, the court noted. It is alleged that he has misused the funds of the Trust.

"We are not here to decide upon any matter relating to individual trustee, whether a particular individual has committed breach of trust or he is not fit to continue as a trustee, which are all matters to be considered by an appropriate Court in proceedings under Section 92 of the Civil Procedure Code. The point that has arisen for consideration before us is whether any modification is required in the scheme approved by this Court," said the bench.

The court perused the Scheme, and discerned that there is no provision in the scheme to keep a trustee or office bearer of the Trust in suspension till such trustee or office bearer is cleared of criminal charges levelled against them for the offences committed in respect of the Trust property.

It however noted that a provision had been made in the Scheme to make a person ineligible to become a trustee, if such person is convicted by the criminal court for the offence involving moral turpitude, and a Trustee could also be removed for breach of trust by a regular suit. 

"However, we are wondering if a person is charge sheeted for committing offence in respect of trust property, can he continue to officiate in Trust till he is cleared of the charges? In a fair trial before the criminal court, it matters; as the witnesses and documents will be in the control and the custody of the office bearers of the Trust. Is it not detrimental to the interest of the Trust, if such office bearer is permitted to continue in the office?" the court said. 

The Court thus observed that the new clause would be necessary to ensure the integrity of the Trust. 

"Thus, we are of the view that the request of modification can be acceded with a slight modification as follows as clause 34B:
If an office bearer of a Trust is involved in a criminal offence of breach of trust or in an offence relating to the property of a Trust and, his continuation in the office is having conflict with the interest of the Trust, or is detrimental to the interest of the Trust, the office bearer shall abstain to hold the office till he is discharged or acquitted in such case," the court said. 

The petitioner in this case was represented by Advocates M. Balagovindan, S. Shibu Kumar, and A. Anoop. The Standing Counsel for S.N. Trust Advocate A.N. Rajan Babu and Advocates V.R. Kesava Kaimal, P.B. Sahasranamam, R. Rajasekharan Pillai, S. Sujin, Jose Pallattukaran, M.G. Kathikeyan, P. Gopalakrishnan, A.R. Easwar Lal, P.J. Anilkumar, and T.S. Harikumar appeared on behalf of the respondents. 

Case Title: Advocate Cherunniyoor V. Jayaprakash v. Sree Narayana Trust & Ors. 

Citation: 2023 LiveLaw (Ker) 30 

Click Here To Read/Download The Judgment