Supreme Court Sets Aside HC Direction For EOW Probe Against Trustees Of Khasgi Trust; Directs Inquiry Under MP Public Trusts Act Into All Property Alienations

The Supreme Court on Thursday set aside the direction issued by Madhya Pradesh High Court for an investigation by the Economic Offences Wing (EOW) against the trustees of the Khasgi (Devi Ahilyabai Holkar Charities) Trust of Indore over alleged misappropriation of government properties.However, the Court held that the Madhya Pradesh Public Trusts Act 1951 will apply to the Khasgi trust and directed the trustees to get the Khasgi Trust registered under the Public Trusts Act by making the necessary application within a period of one month from today.The trust is created in relation to certain properties of the erstwhile princely state of Indore. The trust deed was executed in 1962 between Maharani Usha Devi of Indore, the daughter and successor of Yashwantrao Holkar( the Maharaja of Indore at the time of joining India) and the nominee of the President of India. In 2020, the Madhya Pradesh High Court ordered EOW probe into alleged illegal sale of the Khasgi properties, observing that government properties vested with the state were alienated.The Court further directed the Registrar under the Public Trusts Act, having jurisdiction over Khasgi Trust, to call for the record of the Trust relating to all the alienations made by the Trustees. After holding an inquiry as contemplated by Section 23, the Registrar after giving an opportunity of being heard to all concerned shall determine whether by virtue of the alienations made by the Trustees, any loss was caused to the Public Trust. If according to him any such loss was caused to the Public Trust, he shall decide and quantify the amount liable to be paid by the concerned Trustees to the Khasgi Trust, the Court ordered.It further said that the Registrar shall determine whether by virtue of the alienations made by the Trustees, any loss was caused to the Public Trust and in case of any such loss, also decide and quantify the amount liable to be paid by the concerned Trustees to the Khasgi Trust.With regards to the alienation made in favour of Shri Gajanan Maharaj Sansthan, the bench directed the Registrar to hold an inquiry limited to the issue whether the alienation was made only after complying with the conditions incorporated in the order dated 16th October 1997."If he finds after holding an inquiry that compliance was not made with any of the conditions, he shall initiate appropriate proceedings in accordance with the Public Trusts Act," court added.HC direction for EOW probe unwarranted : SCAllowing the appeals filed by the trustees in part, the Supreme Court observed :"There was no warrant to direct inquiry through the Economic Offences Wing of the State Government as there is no finding that there was mens rea on the part of the Trustees. No finding has been recorded by the High Court based on material that the alienation made by the Trustees has resulted in causing loss to the Trust and that the entire sale consideration being diverted for personal use. It is noticed from the record placed before us that the entire consideration received from the purchasers has been credited to the account of the Trust. The allegation of misappropriation can be gone into only by the Authorities under the Public Trusts Act. Moreover, the direction issued by the High Court proceeds on the erroneous assumption that the Trustees have made misappropriation of the Government properties. There is no offence registered against the Trustees. Hence, Economic Offences Wing cannot be directed to hold an inquiry or investigation in connection with the subject matter of this proceeding. In other words, the direction given by the High Court vide the impugned Judgment in that regard will have to be held to be non est in law".A bench comprising Justices AM Khanwilkar, Abhay S Oka and CT Ravikumar held that the 246 immovable properties also called as "Trust Properties" that were listed in Part 'B' of its Schedule of the Trust Deed belongs to the Trust.Remarking that the High Court was not right to the extent of holding that the properties described in "Part B" of schedule to Trust Deed belonged to the Government, the bench said that the properties were vesting in the Khasgi Trust."The properties described in Part 'B' of the schedule to the Trust Deed which were vested in the State Government were transferred to the autonomous Khasgi Trust on its incorporation. In fact, till 2012, the State Government never disputed that the Khasgi properties listed in Part 'B' of the Schedule to the Trust Deed were the Trust properties of the Khasgi Trust. Therefore, to that extent, the Division Bench of the High Court is not right when it concluded that the properties incorporated in Part 'B' of the Schedule to the Trust Deed continue to be the Government properties even after 16th July 1962. The said properties are vesting in the Khasgi Trust," the Court said while setting aside the High Court's judgment.The bench also upheld the legality of the Supplementary Trust Deed dated March 8, 1972 executed by and...

Supreme Court Sets Aside HC Direction For EOW Probe Against Trustees Of Khasgi Trust; Directs Inquiry Under MP Public Trusts Act Into All Property Alienations

Shruti Kakkar

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Supreme Court Sets Aside HC Direction For EOW Probe Against Trustees Of Khasgi Trust; Directs Inquiry Under MP Public Trusts Act Into All Property Alienations

Shruti Kakkar

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