Constructive Trusts & Registered Societies: Supreme Court Opens the Door for Section 92 CPC Suits
A Comprehensive Commentary on Operation ASHA v. Shelly Batra (2025 INSC 932)

I. Introduction

The decision of the Supreme Court of India in Operation ASHA v. Shelly Batra & Ors. (Civil Appeal No. 10048 of 2025, decided on 05-08-2025) addresses a long-standing doctrinal puzzle: Can a society registered under the Societies Registration Act, 1860 be proceeded against under Section 92 of the Code of Civil Procedure, 1908? By holding that a registered society may be treated as a constructive trust when donor funds are diverted from their avowed charitable purposes, the Court has:

• Re-aligned Indian law with the institutional constructive-trust model of English equity;
• Harmonised Section 5 of the Societies Registration Act with the protective ethos of Section 92 CPC; and
• Provided a granular test to separate private internecine disputes from bona fide representative actions.

The ruling thus charts fresh precedent on both who may sue under Section 92 and what entities may be sued.

II. Summary of the Judgment

1. The plaintiffs—Dr. Shelly Batra (co-founder and erstwhile President) and her mother Mrs. Usha Gupta—filed an action under Section 92 CPC alleging financial impropriety and mismanagement by the CEO (Mr. Sandeep Ahuja) and his spouse within Operation ASHA, a tuberculosis-focused NGO registered as a society in 2005.
2. The Delhi High Court (Single Judge & Division Bench) granted leave under Section 92 and allowed the suit to proceed.
3. On appeal, the Supreme Court dismissed the society’s challenge, endorsing six key findings:
   • A society’s charitable property is “entrusted” to its governing body within the meaning of a constructive trust (¶112).
   • Section 5 of the Societies Act creates a fiduciary vesting; breach of that fiduciary duty can trigger Section 92.
   • Plaintiffs—in their representative capacity—sufficiently allege siphoning of donor funds; the dominant purpose is public, not personal.
   • The reliefs sought (removal of trustees, rendition of accounts, settlement of a modified scheme) fall squarely under clauses (a), (d) and (g)/(h) of Section 92(1).
   • Private employment-related reliefs can be severed and pursued elsewhere; their joinder does not scuttle the representative suit.
   • The case sets out a structured test for future courts when faced with Section 92 actions against societies (¶137 of the judgment).

III. Detailed Analysis

1. Precedents Cited & Their Influence

• Ashok Kumar Gupta v. Sitalaxmi Sahuwala Medical Trust (2020) 4 SCC 321: Re-affirmed the three sine-qua-non conditions for Section 92 (public trust, breach/direction, reliefs under clauses (a)–(h)). The present judgment applies those conditions mutatis mutandis to societies.
• Kesava Panicker FB (Ker) 1975: Recognised a pre-existing public trust that later adopted society form. The Supreme Court distinguishes by extending the doctrine even where the society is primary, not derivative.
• Paragon Finance v. Thakerar (CA, UK), Bailey v. Angove’s (UKSC 2016) & Stevens v. Hotel Portfolio II (UKSC 2025): Quoted to explain institutional constructive trust. Used to justify that equity will treat fiduciary misappropriation by a governing body member as trust-breach.
• Sugra Bibi (1969) 3 SCR 83, Ramji Tripathi (1976) 4 SCC 780, Vidyodaya Trust (2008) 4 SCC 115: Relied upon for distinguishing representative actions from personal-right litigation.
• High Court authorities (e.g., S.R. Bahuguna, Abhaya, Periyar Institute) rejecting Section 92 suits against societies are reviewed and expressly limited to facts lacking fiduciary breach.

2. Legal Reasoning – Stepwise

1. Statutory Fusion: Section 5 of the Societies Act deems property to be vested in the governing body “if not vested in trustees”. The Court reasons that this fiduciary vesting, though not labelled a trust, is functionally identical to a constructive trust.
2. Constructive Trust Trigger: Diversion of donor funds is prima facie “unconscionable” enrichment. Equity therefore instantaneously imposes a constructive trust on the wrong-doer (¶110-112).
3. Representative Capacity: Plaintiffs, as co-founder and sitting board member, hold a direct, present, and substantial interest; their action is not merely personal. The capacity test is thus satisfied (¶121-123).
4. Relief Alignment: Even though some prayers (re-instatement of Dr. Batra) are personal, the core prayers match clauses (a), (d) & (g)/(h). Personal reliefs can be trimmed without aborting the entire suit (¶134-135).
5. Impact on Pending Litigation: The Court maintains the High Court’s leave order, directs speedy trial, and allows subsequent separation of personal-grievance components.

3. Impact Assessment

The ruling is poised to recalibrate litigation strategy in the NGO/charity sector:

• Expanded Defendant Pool: Governing bodies of societies can now be impleaded under Section 92 for fiduciary lapses. This will deter mismanagement and enhance transparency.
• Predictability Test: The Court’s criteria (¶137) offer lower courts a ready checklist—public purpose, fiduciary breach, representative character, clause-based reliefs.
• Risk Management for NGOs: Societies will need robust internal controls, forensic audits, and conflict-of-interest policies to stave off Section 92 exposure.
• Docket Filtration: Trial courts, armed with the new test, can swiftly sift genuine public-interest actions from mere factional feuds.
• Harmonisation with Benami & Trusts Acts: By clarifying that Chapter IX of the Indian Trusts Act and Section 151 CPC still supply equitable jurisdiction, the Court resolves confusion created by repeal of Section 94 ITA.

4. Complex Concepts Simplified

• Institutional vs. Remedial Constructive Trust: Institutional means the trust springs into being automatically when the wrong occurs; the court only declares its existence later. Remedial (popular in US/Canada) is imposed ad hoc as a discretionary remedy. India now aligns with the English–institutional model.
• “Persons having an interest”: Not every donor or casual well-wisher qualifies. The interest must be current, substantial and bona fide—e.g., founder, board member, regular beneficiary, major donor.
• Clause (h) of Section 92: Works in two ways—“further” (ancillary to prayers under clauses (a)-(g)) or “other” (akin in nature to those clauses). Purely personal reliefs are outside its sweep.
• Deeming Vesting under Section 5, Societies Act: The society cannot hold property in its own name (it is not a corporation). Hence the law deems the governing body to hold it, making them fiduciaries.

IV. Conclusion

Operation ASHA is a watershed. By declaring that fiduciary misconduct inside a registered society can activate the equitable machinery of constructive trusts—and with it, Section 92 CPC—the Supreme Court has:

1. Plugged a jurisprudential gap that previously allowed errant office-bearers to shield themselves behind the Societies Act;
2. Provided a workable framework to balance public-interest oversight with protection against frivolous litigation; and
3. Brought Indian charity law up-to-date with modern equitable thinking while firmly retaining the institutional constructivism of English trust law.

As trial courts apply this precedent, two practical tips emerge: (a) pleadings must carefully articulate fiduciary breach and representative intent, and (b) societies must proactively strengthen governance to avoid being tagged as constructive trustees gone awry.