Alienation of Immovable Property under Section 36 of the Bombay Public Trusts Act, 1950: A Critical Analysis

Alienation of Immovable Property under Section 36 of the Bombay Public Trusts Act, 1950: A Critical Analysis

Introduction

Section 36 of the Bombay Public Trusts Act, 1950 (“BPTA” or “the Act”) constitutes the statutory fulcrum governing alienation of immovable property belonging to public trusts in the State of Maharashtra (formerly Bombay). By mandating ex ante approval of the Charity Commissioner (“CC”), the provision seeks to safeguard charitable assets from improvident or mala fide transactions, while simultaneously permitting trustees to unlock the economic potential of land where such disposition demonstrably advances the objects of the trust. The section has undergone significant textual and doctrinal evolution through legislative amendments in 1960, 1971 and 2017, and through rich judicial interpretation by the Bombay High Court and the Supreme Court of India.

Legislative Trajectory and Normative Rationale

Original Text and 1960 Amendment

The original section opened with the words “subject to the directions in the instrument of trust”, thereby respecting settlor autonomy. Bombay Act 6 of 1960 replaced this phrase with the non-obstante clause “Notwithstanding anything contained in the instrument of trust”, signalling a decisive policy shift towards regulatory supremacy over private directives.[1] The amendment was prompted by repeated instances of trustees relying on expansive alienation clauses to dispose of valuable land without independent scrutiny.[2]

1971 Amendment: Codifying Revocation Powers

Maharashtra Act 20 of 1971 renumbered the existing provision as sub-section (1) and introduced sub-sections (2)–(4), empowering the CC to revoke an earlier sanction obtained by fraud, misrepresentation or concealment of material facts and to direct recovery of the property within specified timelines.[3]

2017 Amendment: Expanding Regulatory Architecture

By Mah. 55 of 2017, the Legislature inserted sub-section (5) enabling the CC, in exceptional and unavoidable circumstances, to permit alienation even where no application is moved by the trustees, provided such alienation is in the interest of the trust.[4] This amendment codifies the “pro-active” dimension of the CC’s jurisdiction, foreshadowed earlier in case-law.

Statutory Scheme of Section 36

Read as a composite code, the section today sets out:

  • Sub-section (1): Prohibitory mandate rendering void any sale, exchange, gift or long-term lease (10 years for agricultural land; 3 years for non-agricultural land/buildings) without previous sanction of the CC. Sanction may be subject to conditions “as the CC may think fit” having regard to “interest, benefit or protection of the trust”.
  • Sub-sections (2)–(4): Post-sanction supervision, including power to revoke and to order restitution.
  • Sub-section (5): Suo motu authority (2017).

Judicial Construction of Key Issues

1. Scope of the Charity Commissioner’s Powers

Whether the CC can merely grant/refuse sanction or may compel trustees to transact with a third-party bidder emerged as a contentious issue. In Sailesh Developers v. Joint CC (2007), a Division Bench referred the matter to a Larger Bench, framing two pivotal questions.[5] While the reference was later disposed of on facts, the judgment affirms that Section 36 proceedings are non-adversarial, aimed at ensuring optimal value for the trust rather than adjudicating inter-se civil rights.[6]

The Supreme Court in Bhaskar Laxman Jadhav v. Karamveer Kakasaheb Wagh Education Society (2013) upheld High Court directions compelling an auction process, reiterating that judicial and administrative intervention may be warranted “in the best interest of the trust”.[7]

2. Locus Standi of Third-Party Offerors and Beneficiaries

While beneficiaries patently possess standing, the position of third-party bidders was clarified in Sailesh Developers and later Bombay decisions: an offeror who participates in the Section 36 enquiry acquires limited standing to question the order to the extent it impacts transparency and value maximisation, though he does not enjoy contractual rights against the trust.[8]

3. Effect of Absence of Sanction

The Supreme Court in Tribhuvandas Purshottamdas Thakur v. Ratilal Motilal Patel (1967) declared a judicial sale of trust property void for want of sanction, illustrating the section’s mandatory character.[9] Subsequent Bombay cases have consistently adopted this strict approach, even setting aside transactions approved by civil courts or revenue authorities where Section 36 compliance was lacking.[10]

4. Revocation of Sanction

Shri Mahadeo Deosthan, Wadali v. JCC (1988) emphasised that revocation is possible only on the statutory grounds of fraud, misrepresentation or concealment, and after affording due hearing to the transferee.[11]

5. Jurisdictional Bar under Section 80

Section 80 bars civil-court jurisdiction over matters “to be decided” by authorities under the Act. The Bombay High Court in Shantidevi Lalchand Chhaganlal Foundation Trust (1989) held that challenges to alienations fall within this bar, thereby channelising disputes to the specialised forum.[12]

6. Interaction with Other Statutes

  • Code of Civil Procedure. Judicial sales without sanction are void (Tribhuvandas). Even consent decrees for specific performance are unenforceable absent approval.
  • Income-tax Act, 1961. Failure to obtain Section 36 sanction may attract adverse tax consequences, but does not ipso facto disqualify exemption under Section 11, as recognised in DIT (Exemption) v. G.K.R. Charities (ITAT 2013).[13]
  • Urban Development Regulations. Public Interest Litigation challenging a development agreement was dismissed where Section 36 compliance was demonstrated (Citizen Forum for Equality, 2016).[14]

7. Constitutional Competence

The 1988 Nagpur decision in Shri Mahadeo Deosthan affirms that legislative competence flows from Entry 10, List III (“Trusts and Trustees”), thereby confining the statute to trust property and insulating it from challenges based on property rights.[15]

Doctrinal Assessment

Section 36 embodies a calibrated balance between trustees’ fiduciary discretion and regulatory oversight. By conditioning validity of alienation on prior sanction, it re-affirms the equitable principle that trustees are custodians rather than absolute owners. The CC’s evaluative yardsticks—interest, benefit or protection—import public-interest considerations, aligning with the Supreme Court’s characterisation of trustees of public charities as acting in a “quasi-public capacity”.

Nonetheless, two doctrinal tensions persist:

  1. Autonomy v. Intervention. The 2017 expansion of suo motu powers raises concerns of regulatory overreach. Safeguards such as mandatory recording of “exceptional and unavoidable circumstances” and appellate review under Section 70 must be rigorously enforced.
  2. Procedural Economy v. Third-Party Rights. While Section 36 proceedings are non-adversarial, refusal to recognise robust standing of competing bidders may deter market discovery. Limited participatory rights—notice, opportunity to place offers, and right to challenge orders affecting transparency—strike an acceptable compromise.

Comparative Glimpse

Gujarat and Rajasthan, which adopted analogous provisions (vide Bombay Public Trusts (Extension) Acts), have interpreted Section 36 pari materia. The Gujarat High Court in Pavankumar Jain (2015) declined to apply the provision to societies registered under the Societies Registration Act, underscoring the distinct regulatory spheres.[16]

Conclusion

More than seven decades after its enactment, Section 36 of the BPTA remains a robust sentinel guarding charitable immovable assets. Judicial exposition has ensured that the CC’s supervisory jurisdiction is purposive, transparent and aligned with fiduciary ideals. Future reform, if any, should focus on:

  • Codifying objective valuation metrics to curtail arbitrariness;
  • Digitising application and auction processes for greater transparency;
  • Strengthening post-alienation monitoring to ensure utilisation of proceeds strictly for stated objects.

In sum, Section 36 exemplifies a nuanced model of state oversight that upholds both the autonomy of charitable institutions and the public interest embedded in their mission.

Footnotes

  1. Sailesh Developers & Another v. Joint Charity Commissioner, Maharashtra & Others, 2007 (3) Mh.L.J 717.
  2. Charity Commissioner, Maharashtra v. Smt. Shantidevi Lalchand Chhaganlal Foundation Trust, 1989 Bom CR (NOC) 145.
  3. Shri Mahadeo Deosthan, Wadali v. Joint Charity Commissioner, Nagpur, 1988 (2) BCR 478.
  4. Avinash Kishorchand Jaiswal v. Shri Rammandir Deosthan, Pavnar, 2020 (3) Mh.L.J 786.
  5. Sailesh Developers (supra) at pp. 725-26.
  6. Jigna Construction Co. v. State of Maharashtra, DB Judgment dated 02-12-2005 (Bom HC).
  7. Bhaskar Laxman Jadhav v. Karamveer Kakasaheb Wagh Education Society, (2013) 11 SCC 531.
  8. Sailesh Developers (supra) at p. 730.
  9. Tribhuvandas Purshottamdas Thakur v. Ratilal Motilal Patel, AIR 1968 SC 372.
  10. Madhukar Sunderlal Sheth v. S.K. Laul, 1992 SCC OnLine Bom 283.
  11. Shri Mahadeo Deosthan (supra) at p. 485.
  12. Shantidevi Lalchand Chhaganlal (supra).
  13. Director of Income-tax (Exemption) v. G.K.R. Charities, ITA No. 208/Mum/2013 (ITAT Mumbai).
  14. Citizen Forum for Equality v. State of Maharashtra, 2016 (6) Mh.L.J 501.
  15. Shri Mahadeo Deosthan (supra) at p. 488.
  16. Pavankumar Jain v. Priyavadan Patel, 2015 SCC OnLine Guj 998.