"As fraud vitiates everything and in the present case, trustees have played a fraud upon the State Government, the sale deeds executed by the Trust in respect of the properties of the State Government are null and void and stands vitiated."
Resolving the dispute as to the current title of properties of the erstwhile Ruler of Holkar State, Maharaja Yashwant Rao Holkar, the Indore Bench of the Madhya Pradesh High Court has held that the title belongs to the State of Madhya Pradesh.
The Bench of Justice SC Sharma and Justice Shailendra Shukla has therefore set aside a single-Bench order which restrained the revenue authorities from entering the name of State of Madhya Pradesh in all properties of the Khasgi (Devi Ahilya Bai Holkar Charities) Trust, Indore, to ensure that the properties of the Trust are not sold to other persons.
The Court noted that the Khasgi (Devi Ahilya Bai Holkar Charities) Trust, Indore does not have title of the Trust properties and therefore, it does not have the power to alienate the Trust's properties.
It further observed that the erstwhile Ruler had signed a covenant whereby the title of all properties was transferred to Madhya Bharat, now State of Madhya Pradesh.
In view thereof the Bench held,
"The Trust does not have any power of whatsoever kind to alienate the Trust properties in any manner. The original trust deed in respect of Khasgi Trust and the settlement of claim by Government of India in Khasgi properties makes it very clear that the Khasgi properties and the income from Khasgi shall be treated as lapsed for all time to the Madhya Bharat Government, and therefore, any subsequent trust deed amending the original trust deed providing for sale of Khasgi properties is null and void."
"To protect the public trust property various safeguards have been provided under the statutory provisions and it is the divine and pious duty of a trustee to ensure that the trust property is kept safe, intact and useful for the generations to come. In the present case, as the State of Madhya Pradesh is the titleholder of the property, it is the duty of the State to protect and preserve the property."
Fraud vitiates everything
The Court was also informed that some of the Trust's properties had been sold by the trustees for peanuts, for personal gains by playing a fraud.
The Trustees had on the other claimed that the properties were sold to ensure availability of funds to keep the Trust running. It was further contended that they derived the power to alienate the properties from the State Chief Secretary's letter dated June 13, 1969.
Rejecting these arguments however, the Court observed,
"In the present case, the properties have not been sold for objective of the Trust, they have sold with an oblique and ulterior motive. In case, there was insufficiency of fund in managing the affairs of the Trust, in all fairness, a request should have been made to the State of Madhya Pradesh to provide grant or the Trust should have approach this Court or should have availed other remedy for issuance of a direction to the State of Madhya Pradesh to provide funds. The inaction on the part of the Trust in respect of the aforesaid issue speaks volume about the conduct of the trustees and about their oblique and ulterior motive."
"The letter dated 13.06.1969, which is allegedly the permission granted by the State Government / decision of the State Government, is nothing but a D.O. letter of the then Chief Secretary and as per the Business Allocation Rules, any decision of the Government for sale of property has to be issued in the name of Governor of the State of Madhya Pradesh."
The Court went on to observe that the Trustees had played a fraud upon the State Government to alienate Government properties for personal gains and therefore all the sales/transfers effected by them are null and void. It remarked,
The Bench quoted the Hindu Vedic sage Yajnavalkya thus:
"He who steals communal wealth or violates the rules of a trust should be exiled from the country after being deprived of all wealth."
The Bench also recalled the saying of Manu in Smritichandrika:
"He who, having truthfully undertaken a trust for the village, the country or community, violates it out of greed should be exiled from the country."
The Court has therefore taken stern view of such fraud pulled off by the Trustees and has ordered the Economic Investigation Wing of the State of Madhya Pradesh to thoroughly examine the allegations of misappropriation of Government properties.
"A prayer has been made for issuance of an appropriate writ, order or directing a CBI inquiry. So far as the prayer with regard to directions for CBI inquiry is concerned, this Court is of the considered opinion that no such directions are required.
The allegation of misappropriation of Government properties and its disposal to favour someone and to cause loss to Public Exchequer, if at all, can very well be examined by Economic Investigation Wing of the State of Madhya Pradesh and accordingly, it is directed that the said Wing will thoroughly examine the matter and if it finds any criminality into the actions of any authority, it is expected that appropriate action should be taken by the said Wing.
Hence, no positive direction to register a First Information Report is required. Resultantly, the Economic Offences Wing shall examine the matter and shall be free to proceed ahead in accordance with law."
Jurisdiction of courts to examine pre-constitutional agreements with Rulers
The Division Bench was also of the opinion that the Single Judge did not in the first place have the power to decide the impugned writ petitions, as the same is barred under Article 363 of the Constitution of India.
Article 363 of the Constitution bars the jurisdiction of all courts in any dispute arising out of any agreement which was entered into or executed before the commencement of the constitution by any Ruler of an Indian state to which the Government of India was a party.
The Division Bench observed,
"The dispute, as to whether a particular property was or was not recognized as private property of the Ruler, is itself a dispute arising out of the terms of the Covenant, and therefore, not adjudicable in light of Article 363 of the Constitution of India.
The Trust's properties are certainly not at all private properties of the Ruler, the property is vested in the State of Madhya Pradesh and it is the State of Madhya Pradesh, which is the titleholder of the properties and by no stretch of imagination, the learned Single Judge could have decided the writ petition there being a specific bar under Article 363 of the Constitution of India."
The Court has now ordered the State of Madhya Pradesh to take all possible steps to preserve the cultural heritage including the Ghats, Temples, Dharamshalas, which find place in the Trust property, being the title holder of the property in question.
It has also asked the State to take appropriate action in accordance with law against all those persons, who have allegedly illegally sold the Trust's property from time to time.
Case Title: State of Madhya Pradesh & Ors. v. Khasgi (Devi Ahilya Bai Holkar Charities) Trust, Indore & Ors.
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