Statutory Control over Alienation of Trust Property: An Analysis of Section 36 of the Bombay Public Trusts Act, 1950

Statutory Control over Alienation of Trust Property: An Analysis of Section 36 of the Bombay Public Trusts Act, 1950

Introduction

The alienation of immovable property belonging to public, religious, and charitable trusts raises acute concerns of fiduciary accountability and preservation of charitable assets in India. Section 36 of the Bombay Public Trusts Act, 1950 (hereinafter “BPT Act”) constitutes the fulcrum of statutory control in the States of Maharashtra and Gujarat, mandating ex ante approval of the Charity Commissioner for any sale, exchange, gift, mortgage, or long-term lease of trust immovables. This article undertakes a doctrinal and jurisprudential examination of Section 36, critically evaluating its legislative evolution, the scope of the Charity Commissioner’s jurisdiction, the normative standards applied in granting or refusing sanction, and the interface with civil-court jurisdiction under Section 92 of the Code of Civil Procedure, 1908 (“CPC”). The analysis is anchored in authoritative judicial pronouncements, most notably Tribhuvandas Purshottamdas Thakur v. Ratilal Motilal Patel (1968) and the line of cases culminating in Church of North India v. Lavajibhai Ratanjibhai (2005), while engaging with contemporary decisions such as Sailesh Developers v. Joint Charity Commissioner (2007) and Avinash Kishorchand Jaiswal v. Shri Rammandir Deosthan (2020).

Legislative Evolution of Section 36

Original Text (1950)

Section 36(1) originally read: “Subject to the directions in the instrument of trust—no sale, mortgage, exchange… shall be valid without the previous sanction of the Charity Commissioner.” The deference to the settlor’s directions reflected classical private-law orthodoxy, permitting donors to override statutory control.[1]

Amendment of 1960

By Bombay Act 6 of 1960 the opening words were replaced with “Notwithstanding anything contained in the instrument of trust”. This inversion subordinates donor intent to public-interest oversight, consonant with the public character of such trusts.[2]

Amendment of 1971

Maharashtra Act 20 of 1971 consolidated the provision and introduced the power to impose conditions while according sanction, aligning the section with modern administrative-law principles of proportionality and reasoned decision-making.[3]

Core Elements and Purpose of Section 36

  1. Mandatory Prior Sanction: Any alienation without sanction is void ab initio, not merely voidable (Tribhuvandas, 1968).
  2. Scope of Transactions: Sale, exchange, gift, mortgage, and leases exceeding ten years (agricultural) or three years (non-agricultural/buildings).
  3. Protective Objective: Ensuring optimal economic utilisation of trust property and preventing dissipation by errant trustees.[4]

Jurisdictional Character of the Charity Commissioner

Although the BPT Act is an administrative statute, the Charity Commissioner, when acting under Section 36, exercises quasi-judicial powers. The Bombay High Court in Sailesh Developers characterised the enquiry as “judicial” and subject to the procedural disciplines of the CPC so far as possible.[5] Rule 7 of the Public Trusts Rules, 1951 reinforces this by prescribing notice, hearing, and reasoned orders.

The Supreme Court in Church of North India underscored the exclusivity of the Commissioner’s jurisdiction in matters “pertaining to public trusts”, holding that civil courts are barred by Section 80 BPT Act when adequate statutory remedies exist.[6] The Court relied on Dhulabhai v. State of M.P. (1968) to reaffirm that exclusion clauses are effective where the statute provides a complete scheme with finality clauses and appellate mechanisms.

Standards Governing Grant or Refusal of Sanction

“Interest, Benefit or Protection” Test

Post-1971, sanction “may be accorded subject to such conditions as the Charity Commissioner may think fit, regard being had to the interest, benefit, or protection of the trust”. Jurisprudence delineates three conjunctive enquiries:

  • Necessity: Is alienation necessary for discharge of debts, maintenance of beneficiaries, or augmentation of trust corpus?
  • Adequacy of Consideration: Has the property been valued through competitive bidding or independent valuation? In Bhaskar Laxman Jadhav v. Karamveer Kakasaheb Wagh Education Society (2013) the Supreme Court endorsed public auction as best practice.[7]
  • Fiduciary Prudence: Will the transaction defeat or advance the objects of the trust? Mehrwan Homi Irani v. Charity Commissioner (2001) validated a 99-year lease where the trust lacked resources to sustain its sanatorium.[8]

Procedural Safeguards

Notice to persons having interest, hear-ins, disclosure of valuation reports, and speaking orders are indispensable. Failure vitiates the sanction and invites appellate correction under Section 70 BPT Act (Syedna Mohamed Burhanuddin v. Charity Commissioner, 1970).

Revocation, Post-Sanction Remedies, and Enforcement

Section 36(2) (inserted 2017) empowers the Charity Commissioner to revoke sanction for fraud, misrepresentation, or concealment and to direct recovery within 180 days. The Bombay High Court in Avinash Kishorchand Jaiswal construed Section 36 as a “complete code” governing:

  1. Application, hearing, and grant of sanction;
  2. Revocation and recovery;
  3. Assessment of unjust enrichment where third-party purchasers succeed in civil suits.[9]

Interface with Civil-Court Jurisdiction and Section 92 CPC

Prior to 1950, the exclusive vehicle for alienation was a consent decree under Section 92 CPC. Section 52 BPT Act now overrides Section 92, vesting jurisdiction in the Charity Commissioner. Nevertheless, civil courts retain a residual role:

The Supreme Court’s admonition in Church of North India against “overlapping and conflicting decisions” underscores the necessity of respecting the specialised statutory forum.[10]

Comparative Perspective and Wider Implications

States without a comprehensive public-trust statute rely heavily on Section 92 CPC, producing fragmented oversight. The Madhya Pradesh Public Trusts Act, 1951 replicates Section 36 (as Section 14), albeit with exemptions for society-registered bodies (Prakashveer Sharma v. Murti Shri Dwarikadheesh, 2023). The Kerala High Court in Ray Sudhan highlighted the lacuna created by absence of a specialised authority, reinforcing calls for a national public-trusts legislation patterned on the BPT Act.

Conclusion

Section 36 of the BPT Act epitomises a robust statutory mechanism that reconciles donor intent, beneficiary welfare, and public interest. Its evolution from a deferential clause to a stringent “notwithstanding” provision reflects a deliberate shift towards fiduciary accountability. Judicial exposition—spanning Tribhuvandas to Avinash Jaiswal—has crystallised the Charity Commissioner’s role as a quasi-judicial sentinel guarding charitable assets. The section’s procedural rigour, coupled with post-sanction controls, forms an integrated code that largely obviates recourse to civil courts, thereby expediting trust administration while curtailing opportunistic dissipation. As jurisdictions outside Maharashtra and Gujarat grapple with inadequate regulatory frameworks, Section 36 offers a paradigmatic template for national reform.

Footnotes

  1. Sailesh Developers v. Joint Charity Commissioner, (2007) Bom HC (legislative history extracted).
  2. Ibid.
  3. Ibid.
  4. Syedna Mohamed Burhanuddin v. Charity Commissioner, (1970) Gujarat HC.
  5. Sailesh Developers, supra.
  6. Church of North India v. Lavajibhai Ratanjibhai, (2005) 10 SCC 760.
  7. Bhaskar Laxman Jadhav v. Karamveer Kakasaheb Wagh Education Society, (2013) 11 SCC 531.
  8. Mehrwan Homi Irani v. Charity Commissioner, (2001) 5 SCC 305.
  9. Avinash Kishorchand Jaiswal v. Shri Rammandir Deosthan, (2020) Bom HC.
  10. Church of North India, supra.