Citation Codes

Equivalent Citations

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Case Number

W.P Nos. 9964, 10009 & 11660/92

Attorney(S)

For the Appellant: A. Chaya Devi, K.V. Ramana Murthy, M.S.K. Shastri, M.V. Suresh, Matta Chandrasekhar Rao, Advocates.

Judges

M.S Liberhan, C.J
Goda Raghuram, J.

Acts

provisions of Secs. 15 and 29 of the A.P Act 38 of 1987 (A new Act which replaced A.P Act 17 of 1966).(h)
provisions of A.P Act, 17 of 1966 (for short 1966 Act).
Section 80 of the Endowments Act (Act 38/87)
provisions of 1966 and 1987 Acts,
Section 29 of the 1987 Act
Section 38 of the 1966 Act
Section 27 of 1966 Act

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Smart Summary

Structured Summary of the Court's Opinion — Hitakarini Samaj, Rajahmundry (Common Judgment)

Factual and Procedural Background

This common judgment disposes three writ petitions that concern the affairs of the Hitakarini Samaj, Rajahmundry. The narrative below is drawn exclusively from the opinion.

The Hitakarini Samaj was notified as a charitable institution on 14-10-1968 under the A.P. Act, 17 of 1966 and was registered under Section 38 of that Act on 4-5-1972. The private management repeatedly sought and obtained temporary exemptions from certain provisions of the Endowments Act (initially under G.O.Ms No. 881 dated 21-9-1976 and later G.O.Ms No. 1815 dated 10-12-1981). Several complaints, audits and reports recorded alleged gross mismanagement, misappropriation and violation of rules by the private management.

Following these reports, the Commissioner of Endowments issued orders under Section 27 of the 1966 Act appointing an Executive Officer to manage the Samaj. The private management contested administrative action and invoked writ proceedings and an Original Application; some petitions were withdrawn and some stayed at various stages. In 1990 the Government issued G.O.Rt No. 1133 dated 23-8-1990 proposing withdrawal of the Executive Officer and restoration of management to the private committee, subject to conditions (including withdrawal of a pending Supreme Court writ). The petitioner contends it withdrew the Supreme Court petition relying on that proposal and sought restoration.

Subsequently, the Commissioner purported to require the private management to repay a sum (Rs. 3,40,000/-) to another devolved institution as a precondition to processing exemption under Section 29 of the 1987 Act. Then, by G.O.Ms No. 642 dated 14-7-1993 the Government cancelled the earlier proposals in G.O.Rt No. 1133 and rejected handing over management to the private committee. The Hitakarini Samaj challenged G.O.Ms No. 642 in W.P. No. 9964 of 1992.

W.P. No. 10009 of 1992 concerned challenge to sale of a portion of Samaj property (Ac. 2.99 cts., Sy. No. 411) by the Executive Officer by sale deed dated 18-3-1992 to Raghu Industries. The writ petitioner alleged illegality, collusion, inadequate price and procedural failure. Respondents filed counter-affidavits describing prior leases, tenant-option-to-buy terms, Government permissions (G.O.Rt No. 1110 dated 20-8-90), constitution of a Committee to fix price and that sale proceeds were realized and deposited as FDR.

W.P. No. 11660 of 1992 was filed by a journalist challenging G.O.Rt No. 1133 (23-8-90). That petition became infructuous after G.O.Ms No. 642 (14-7-93) superseded the proposals in G.O.Rt No. 1133, and because G.O.Ms No. 642 was upheld in W.P. No. 9964.

Legal Issues Presented

Whether G.O.Ms No. 642 dated 14-7-1993 (cancelling G.O.Rt No. 1133 dated 23-8-1990 and rejecting restoration of management to the private committee) is invalid on grounds of promissory estoppel and breach of principles of natural justice (W.P. No. 9964 of 1992).
Whether the sale of Samaj land (Ac. 2.99 cts., Sy. No. 411) by the Executive Officer by sale deed No. 2646/92 dated 18-3-1992 to Raghu Industries was illegal, without jurisdiction, effected contrary to the Endowments Act and procured at an inadequate price (W.P. No. 10009 of 1992).
Whether the writ petition in the name of the Samaj by an individual styling himself as Secretary was maintainable while the institution was under the control of an Executive Officer appointed under the Endowments Act (issue of locus / authority to sue) (W.P. No. 10009 of 1992).
Whether a challenge to G.O.Rt No. 1133 by a private citizen / journalist remains justiciable after the Government issued G.O.Ms No. 642 cancelling those proposals (W.P. No. 11660 of 1992).

Arguments of the Parties

Petitioners (summarised from the opinion)

W.P. No. 9964 (Hitakarini Samaj): Sought declaration that G.O.Ms No. 642 (14-7-1993) is illegal, null and void; asked that G.O.Rt No. 1133 (23-8-1990) be implemented so that management be handed back to private committee. Principal legal contentions: promissory estoppel (Government promise in G.O.Rt No. 1133) and violation of principles of natural justice.
W.P. No. 10009 (Hitakarini Samaj represented by Sri R. Subba Rao): Contended the sale of land (18-3-1992) was illegal, without jurisdiction, contrary to Endowments Act, effected at an undervalue due to collusion, and procedural steps were not followed.
W.P. No. 11660 (journalist): Argued G.O.Rt No. 1133 would subvert the purposes of the Samaj and that handing management back to private committee would violate the Act, public policy and the objectives of the founder.

Respondents / Official Position (summarised from the opinion)

Respondents in W.P. No. 9964 / general official position: The Commissioner and Executive Officer must act in accordance with the Endowments Act; prior record showed grave mismanagement which justified refusal to grant exemption and to restore private management in public interest.
Respondents 1–3 in W.P. No. 10009 (State, Commissioner, Executive Officer): Argued writ petition not maintainable because the institution was under an Executive Officer who alone could institute proceedings. Stated historical leases, tenant's possession and option-to-purchase rights, constitution of a Government committee to determine sale price (in G.O.Rt No. 1062 and related resolutions), collection of sale proceeds (Rs. 12,65,600/- plus interest Rs. 1,75,200/-) and deposit in FDR on behalf of the Samaj. Asserted sale was bona fide and in interest of the institution.
4th respondent (purchaser Raghu Industries): Reiterated that purchase followed committee scrutiny, price was above market value at the time, and additional interest was paid from Government permission date to registration date; sale bona fide and conforms with Act.
Senior Counsel for petitioner (in W.P. No. 10009) relied on Chenchu Rami Reddy and a Division Bench decision to argue that sale otherwise than by public auction is deprecated and thus invalid in that public-property-sales context.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
State of Rajasthan v. Mahaveer Oil Industry, (1999) 4 SCC 357	Limits on application of promissory estoppel where public interest and statutory obligations prevail.	The court relied on this decision to reaffirm that promissory estoppel cannot be invoked to override statutory duties or public interest where gross mismanagement of a public charitable institution is established.
Venkata Ramana Rao v. Government of A.P., AIR 1966 SC 828	Executive orders will not be invalidated where their operation would produce public mischief; scope of judicial review/exercise under Art. 226 in such contexts.	The court invoked this principle to support the position that an executive order (or withdrawal of a prior proposal) need not be quashed if implementing it would harm public interest; used to reject natural justice contention where restoration would cause public mischief.
Chenchu Rami Reddy v. Government of A.P., (1986) 3 SCC 391 (AIR 1986 SC 1158)	Authority cited for the principle that public property should normally be sold by public auction to secure best price and avoid maladministration.	The petitioner's counsel relied on this case to argue sale otherwise than by public auction is invalid. The court acknowledged the principle but held that the facts of the case justified a departure from the normal rule.
Division Bench decision of this Court, W.A. No. 1 of 1996, dated 4-10-1996	Authority relied on by petitioner-counsel for the position that disposal otherwise than by public auction is deprecated.	Cited by petitioner's counsel; the court considered the principle but found the exceptional factual matrix permitted sale otherwise than by auction and therefore did not treat the authority as decisive against respondents.

Court's Reasoning and Analysis

The court's analysis proceeded in structured stages for each petition, applying statutory context, factual findings and settled principles of public law. The reasoning is summarized below closely following the opinion.

On status of the institution and applicability of the Endowments Act

The court found, on the basis of documentary history and prior proceedings (dismissal of O.A. No. 12/80; withdrawal of W.P. No. 4501/81; prior grants of exemption by the Government), that the Hitakarini Samaj is a public charitable institution within the purview of the Endowments Act. The petitioner's prior conduct (seeking and accepting exemptions) estopped it from now contending that the Act did not apply. Orders by quasi-judicial officers and withdrawal of petitions disentitled the petitioner to later challenge applicability.

On promissory estoppel and G.O.Rt No. 1133 vs G.O.Ms No. 642 (W.P. No. 9964)

The court treated G.O.Rt No. 1133 as being "merely in the nature of proposals" calling upon the Commissioner to send proposals for exemption. Because the Commissioner and other statutory functionaries operate under a legislative mandate, no government promise can subvert the statutory scheme or prevent the Commissioner from performing duties commanded by the statute. Given the recorded gross mismanagement, granting exemption to return management to the private committee would subvert public policy and public interest. Consequently, the doctrine of promissory estoppel does not apply to compel the Government to grant exemption in such circumstances. The court relied on State of Rajasthan v. Mahaveer Oil Industry to reinforce this principle.

On natural justice challenge to cancellation of proposal

The court held that principles of natural justice could not help the petitioner where implementation of the proposed order (restoring private management) would produce public mischief. Citing Venkata Ramana Rao, the court observed an executive order need not be saved from invalidation where its activation would be productive of public mischief. Also, G.O.Rt No. 1133 did not create a vested right in the petitioner; any exemption can only be granted by lawful exercise of discretion consistent with the Endowments Act. On these bases the natural justice challenge failed.

On validity of sale (W.P. No. 10009)

The court acknowledged the general principle that public property should normally be sold by public auction (as relied upon from Chenchu Rami Reddy and local Division Bench authority). However, having examined the factual matrix the court found exceptional circumstances justified a departure from the usual auction requirement: long standing leasehold possession by an industry (over 30 years), established industry and structures, significant workforce, a low nominal rent (Rs. 4,200/- p.a.) and an express tenant option to purchase under the lease.

Evicting the lessee and obtaining clear possession was held to be highly impractical, protracted and likely to frustrate institutional interests. The Government constituted a Committee to determine price under the statutory procedure; the Committee fixed Rs. 400/- per sq. yd. which exceeded the stated basic value (Rs. 233/- per sq. yd.). The purchaser also agreed to pay interest from the date of Government permission (20-8-90) to the date of registration (18-3-92). The total consideration realized (Rs. 14,40,800/- including interest) was contrasted favourably with the negligible annual rent previously realized. Considering these facts the court concluded the sale did not suffer from infirmity warranting judicial invalidation in exercise of Art. 226 jurisdiction.

On maintainability and locus (W.P. No. 10009)

The court found the writ petition brought in the name of the Samaj by Sri R. Subba Rao (styling himself Secretary) was not maintainable because at the date of institution and thereafter the Samaj was under the management of an Executive Officer appointed under the Endowments Act, and that Executive Officer alone was authorised to institute proceedings on behalf of the institution. The court further recorded that the motive of Sri R. Subba Rao in instituting the petition was not bona fide and appeared designed to obtain control of the management for personal ends; thus there was no public interest underpinning the suit.

W.P. No. 11660 — subsequent infructuousness

Since G.O.Rt No. 1133 had been superseded by G.O.Ms No. 642 (14-7-93), and because the court upheld G.O.Ms No. 642 in disposing W.P. No. 9964, the challenge to the earlier G.O.Rt No. 1133 became infructuous. The court therefore dismissed the petition as infructuous and declined to pronounce on locus standi issues raised in the counter-affidavit.

Holding and Implications

Holdings (core rulings)

W.P. No. 9964 of 1992: The writ petition challenging G.O.Ms No. 642 dated 14-7-1993 is without merit and is dismissed. The court held that G.O.Ms No. 1133 (23-8-1990) was only a proposal; promissory estoppel and natural justice could not be invoked to compel restoration of management where public interest and statutory duties precluded such action.
W.P. No. 10009 of 1992: The writ petition challenging the sale deed No. 2646/92 dated 18-3-1992 is rejected. The court held the sale did not merit invalidation under Art. 226 given the special factual circumstances, and the petition was not maintainable as filed by a person lacking authority to sue for the institution. Costs of Rs. 5,000/- were imposed on Sri R. Subba Rao to be paid to the A.P. State Legal Services Authority within three months.
W.P. No. 11660 of 1992: The writ petition challenging G.O.Rt No. 1133 is dismissed as infructuous because the proposals in that G.O. were superseded by G.O.Ms No. 642, which was upheld in W.P. No. 9964.

Implications

The direct effects are:

The Government's cancellation of the earlier proposal to restore management to the private committee (G.O.Ms No. 642) stands; no order was made restoring private management pursuant to G.O.Rt No. 1133.
The sale of the specified portion of Samaj land to Raghu Industries (sale deed dated 18-3-1992) is upheld and will remain effective; the proceeds were ordered to be held for the Samaj (deposited as FDR as recorded in the affidavit).
The writ petition filed by an individual claiming to be Secretary while the Samaj was under management of an Executive Officer was held not maintainable; the Executive Officer is the proper authority to represent the institution.
W.P. No. 11660 is dismissed as infructuous; no substantive pronouncement on locus standi in that petition was made.

No broad new legal principle was announced beyond applying established authorities: the court applied settled law limiting promissory estoppel where public interest and statutory duties are involved; it applied the principle that public property should normally be sold by auction but accepted a factual exception; and it reaffirmed the rule that an Executive Officer appointed under the Endowments Act is the authorised representative of the institution. The opinion does not purport to lay down a novel precedent beyond these applications.

This summary has been prepared exclusively from the opinion text provided and does not add or infer facts beyond that text.

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Hitakarini Samaj, Rajahmundry & Anr. v. State Of Andhra Pradesh, Endowments Dept. & Ors.

The Order of the Court was delivered by

Goda Raghuram, J.:— These three writ petitions pertain to the affairs of the Hitakarini Samaj, Rajahmundry and though raising different aspects for consideration, could conveniently be disposed of together and having been heard, are being disposed of by this common judgment.

W.P No. 9964 of 1992:—

2. Hitakarini Samaj, Rajahmundry, represented by its Secretary filed this writ petition seeking the relief of “a declaration that G.O.Ms No. 642, Revenue (Endowments-IV) Dept. dt. 14-7-1993, is illegal, null and void and for directing the respondents — the State of Andhra Pradesh, the Commissioner of Endowments and the Executive Officer, Endowments Dept., in charge of Hitakarini Samaj, to implement G.O.Ms No. 1133, dt. 23-8-90 and to hand over all the institutions belonging to the petitioner Samaj.” This relief of challenging G.O.Ms No. 642, dt. 14-7-1993, was amended into the writ petition, by way of order dt. 16-8-1994 in W.P M.P No. 3819/94. The facts relevant and necessary for considering the issues arising in this writ petition, are as follows, in brief:

(a) The Hitakarini Samaj, Rajahmundry, was notified as a Charitable institution by a publication dated 14-10-1968 issued under the provisions of A.P Act, 17 of 1966 (for short ‘1966 Act’). It was also registered as a charitable institution under Section 38 of the 1966 Act in a proceedings dated 4-5-1972.

(b) On an application made by the private management, the State Government in G.O.Ms No. 881, dated 21-9-1976 accorded exemption under Secs. 15 and 27 of the 1966 Act, to the petitioner's Institution for a period of 3 years enabling the continuance of the private management. On the expiry of the term of exemption, the Secretary of the Samaj sought exemption for a further period of 3 years. On account of several complaints having been received by the Government from the public against the conduct of the management qua the affairs of the Samaj and its attached educational institutions and on account of discovery of irregularities in the management of Institutions as were pointed in an Audit report, the Endowments Dept., recommended rejection of the application seeking further exemption. Consequent thereupon, the Commissioner of Endowments issued orders under Section 27 of 1966 Act appointing an Executive Officer to the Samaj.

(c) The private management thereupon moved the State Government against the orders of the Commissioner above referred to, and obtained stay of the orders appointing the Executive Officer. The Management also filed W.P No. 4501/80 before this Court contending that the provisions of the 1966 Act are not applicable to the Samaj since it is a minority institution falling outside the purview of the Act. Simultaneously they also filed an O.A No. 12/80 before the Deputy Commissioner, Endowments, Kakinada, contending that the Samaj is a private institution beyond the purview of the 1966 Act. The O.A was dismissed by the Deputy Commissioner, Endowments, on 4-9-1981 and the W.P No. 4501/80 was withdrawn by the petitioner on 2-11-1981.

(d) Thereafter the private management moved the Government again for exemption from the provisions of the Act. The State Government by G.O.Ms No. 1815, dated 10-12-1981 again issued orders exempting the Samaj from the purview of Secs. 15 and 27 of the 1966 Act, for a period of 3 years. After issue of the above orders, there was a public outcry alleging mismanagement by the private management and that the purposes for which the institutions were brought into existence by the great social reformer late Sri Kandukuri Veeresalingam Panthulu Garu, are being subverted by the private management. Representations were also made to the Commissioner, Endowments and the Government in this behalf. Consequent upon the allegations, the Assistant Commissioner, Endowments, was asked to enquire and submit a detailed report. In the report, various irregularities were noticed in the management of the Samaj and its allied institutions. Instances of gross mismanagement, misappropriation and wastage of the properties apart from violation of the Rules, were recorded in the report.

(e) Consequent upon the report, the Government issued show-cause notice to the Committee. Thereupon the Committee filed W.P 8676/83 against the show-cause notice and the proposal for cancellation of exemption contained therein and obtained stay in the said writ petition. The writ petition was, however, not pressed and was withdrawn on 4-5-85 and the period of exemption granted had also expired by November, 1984. The application of the private management for further exemption from 1984 was rejected and the Inspector, Endowments Department, Rajahmundry, was appointed as Executive Officer and he assumed charge as such on 15-4-1985. The suit filed by the management committee was also dismissed on 30-4-1985.

(f) Thereupon the management filed W.P (C) No. 5388/85 before the Supreme Court again contending that the Samaj is a minority institution and that the provisions of the 1966 Act are not applicable. In the said writ petition a stay was obtained on 3-6-85 against the appointment of the Executive Officer. The said stay was, however vacated subsequently since the Executive Officer took charge of the Samaj Prior to the grant of the orders of stay. During this period a number of representations were made from the people of the locality and also from public representatives complaining of irregularities in the management by the private management, including non-payment of salaries to the staff of the educational institutions under their management. These representations urged that it is not desirable to entrust the management to the private persons.

(g) While so under G.O.Rt No. 1133, Revenue (Endowments-IV) Dept. dated 23-8-90, orders were issued, considering the representations of the private management proposing withdrawal of the appointment of Executive Officer and restoration of the management to the private committee, on condition that the management committee withdraws the Civil W.P 5388/85 and the connected CMPs, pending before the Supreme Court. The said order also averred that the Commissioner of Endowments may take further necessary action and send proposals for exempting the institution for a specific period from the provisions of Secs. 15 and 29 of the A.P Act 38 of 1987 (A new Act which replaced A.P Act 17 of 1966).

(h) According to the petitioner, pursuant to the above orders of the Government they withdrew the Civil Writ Petition in the Supreme Court and withdrawal was accorded by the Supreme Court by orders dt. 25-3-91. A consequent application was also made to the Department on 31-7-91 requesting orders restoring the management in terms of the proposal contained in G.O.Ms No. 1133, dt. 23-8-1990.

(i) The petitioner contended that contrary to the proposals in G.O.Ms No. 1133 the Commissioner of Endowments issued proceedings calling 10 upon the private management to repay an amount of Rs. 3,40,000/- due from the Committee to Annavaram Devasthanam as a condition precedent to processing the proposal for grant of exemption under Section 29 of the 1987 Act and for withdrawing the Executive Officer. It is contended that such a condition, not contained in G.O.Ms No. 1133, is arbitrary and illegal.

(j) However, in G.O.Ms No. 642, Revenue (Endowments-IV) Department, dt. 14-7-93, orders were issued by the Government cancelling the earlier orders 25 issued in G.O.Ms No. 1133, dt. 23-8-90, rejecting the proposal for handing over the management to the private committee and thus declined to grant orders of exemption from the provisions of the 1987 Act. Assailing the said G.O the present writ petition is filed.

3. The principal contention in the writ petition is that G.O.Ms No. 642, Revenue (Endowments-IV) Dept., 14-7-1993 is invalid as it is barred by principles of promissory estoppel and violation of principles of natural justice. Integral to the said contention it is contended that as G.O.Ms No. 1133 proposed grant of exemption, the cancellation can only be done after giving an opportunity and that since a promise of exemption was made in G.O.Ms No. 1133, dt. 23-8-90, based on which the petitioner withdrew the writ petition in the Supreme Court, the Government is bound by principles of promissory estoppel from resiling from the promise contained therein and the issuance of the impugned G.O is thus invalid and non est.

4. The factual narrative above as established from the pleadings clearly discloses grave allegations and a sordid record of mismanagement and irregularities by the private management committee in the conduct of affairs of a public charitable institution. That it is a public charitable institution falling within the purview of the Endowments Act is clear from the various proceedings already narrated. The dismissal of O.A No. 12/80 on 4-9-81 by the Deputy Commissioner of Endowments, Kakinada; the withdrawal of W.P No. 4501/81 by the orders dt. 2-11-81, the various applications of the writ petitioner for exemption from the provisions of the Endowments Act, which were granted by the Government, would all conclusively establish that the petitioner himself concedes the applicability of the provisions of the Endowment Act to the institutions in question and recognises the status of the institution as a public charitable institution falling within the provisions of the Endowments Act. Orders passed by the quasi judicial officers under the Act and the withdrawal of various writ petitions filed by the petitioner, would disentitle the petitioner to agitate the question of non-applicability of the provisions of the Endowments Act to the petitioner-institutions. Be that as it may, the contents of G.O.Ms No. 1133, dt. 23-8-1990, are merely in the nature of proposals calling upon the Commissioner of Endowments to send proposals for grant of exemption. The Commissioner of Endowments, who is a statutory functionary operating under the legislative dicta of the provisions of the Act is ordained to exercise his powers in accordance with the text and structure of the Act in order to advance the purposes of the legislation, in particular such of those provisions which are meant to preserve, protect and regulate the properties and management of a public charitable institution. No promise of the Government could subvert this legislative position nor disable the Commissioner of Endowments nor even the Government itself from performing its legitimate role in obedience to the commands of the legislation. The gross mismanagement of the affairs of the institution by the private management is amply recorded and to grant exemption from the provisions of the Act and restore the management of the public charitable institutions into such hands would be a gross subversion of public policy and of public interest. The principles of promissory estoppel do not enure in such situations. This position is well settled and it is not necessary to reiterate the vast catena of authorities on this aspect. Sufficient to state that the recent decision of the Supreme Court in State of Rajasthan v. Mahaveer Oil Industry, (1) (1999) 4 SCC 357, reaffirms this settled principle circumscribing the application of the doctrine of promissory estoppel.

5. Supervening and preponderating public interest ordains that no exemption be granted to the private management from the operation of the provisions of the Endowments Act. The doctrine of promissory estoppel cannot thus be validly invoked.

6. The other contention regarding the violation of principles of natural justice would also not avail the petitioner in obtaining the relief. It is equally a settled principle of law that an executive order will not be invalidated where it would result in the activation of an order which would be productive of public mischief, in particular in exercise of discretionary jurisdiction under Art. 226 of the Constitution of India - vide Venkata Ramana Rao v. Government of A.P, (2) AIR 1966 SC 828. In our view the provisions of G.O.Ms No. 1133 dt. 23-8-90 are only in the nature of proposals which do not confer any vested right to exemption in favour of the petitioner. An exemption can only be granted by exercising a discretion in accordance with the law and within the parameters of the text and legislative philosophy of the Endowments Act, which clearly, as we have noticed above, do not warrant issuance of any such exemption, in public interest.

7. For the reasons stated above there are no merits in the writ petition, which fails and is accordingly dismissed, but in the circumstances of the case without costs.

W.P No. 10009 of 1992:

8. The Hitakarini Samaj, Rajahmundry, represented by one Sri R. Subba Rao, styling himself as its Secretary, has filed this writ petition. The petitioner contends

(a) Among the properties of the Samaj land measuring Ac. 2.99 cts., in Sy. No. 411 was mixed up in Rajahmundry town.

(b) Respondents 1 to 3 who are the State of Andhra Pradesh, the Commissioner of Endowments and the Executive Officer appointed to look after the affairs of the Samaj, intended to sell the said property and in pursuance of the said objective paper publication was issued inviting tenders for the purchase of the said land. The objections of some of the members of the Samaj were ignored and the property was ultimately sold to the 4th respondent and others as per sale deed No. 2646/92, dt. 18-3-1992.

(c) the said transfer by way of sale is illegal, without jurisdiction and opposed to the provisions of the Endowments Act.

(d) The property worth more than Rs. 25 lakhs was sold for a very low sum and that the sale was a result of collusion and for gaining illegal benefit.

(e) The prescribed procedure was not followed.

9. Founded on the above allegations, the petitioner sought a declaration that the transfer of land measuring Ac. 2.99 cts., in Sy. No. 411 in Rajahmundry town by sale deed No. 2646/92, dt. 18-3-92, executed by the 3rd respondent in favour of the 4th respondent and others is illegal and for a consequential order directing the respondents to resume the said property and hand it over to the petitioner.

10. Counter-affidavits have been filed by the official respondents, one on behalf of respondents 1 and 2 and another on behalf of 3rd respondent. Taken together the averments in the above said affidavits are to the effect—

(a) that the writ petition is not maintainable as on the date of its institution it is governed by the Hindu Religious and Charitable Endowments Act and under the management of an Executive Officer appointed under the provisions of the said Act, who alone is authorised to institute proceedings on behalf of the institution.

(b) that the private management in the year 1968 has leased out an extent of 2029 Sq. yds, comprised in the land in question to an individual for a period of ten years on an monthly rent of Rs. 100/- to continue in tenancy for two further terms of ten years each on a monthly rent of Rs. 150/- and Rs. 200/- respectively, that the said lease agreement entitles the tenant to erect 5 structures, plant and machinery in the said land and also provide an exclusive option to the lessee to purchase the premises on the same terms and at the same price as any bona fide offer for the premises received by the Samaj, is acceptable to the lessee.

(c) that the tenant sold away the equipment in the site to one Sri M. Veera Raghava Reddy by an agreement dt. 9-4-76 and that the private management committee also agreed to assign the leasehold rights to Sri M.V Raghava Reddy, Managing Partner of Sri Raghu Industries, who is paying the current monthly rent of Rs. 200/- and that the lease is due to expire on 30-9-1998.

(d) that the private committee under another agreement leased out another 500 Sq. Yds., to the eastern side of Sri Raghu Industries, to one Sri K. Veerabhadra Rao, for a period of 5 years on a monthly rent of Rs. 150/- and that the said lessee sub-leased the said extent of land to Sri Raghu Industries. It is also stated that on measurement the extent of land, however, was found to be not 500 Sq. Yds. but 942 Sq. Yds.

(e) that the Managing Partner of Sri Raghu Industries by his letter dt. 23-11-89 requested the Samaj to sell away the site under his leasehold rights at the rate of Rs. 250/- per Sq. Yd., that later he also gave consent to purchase the site of 942 Sq. Yds. at the rate of Rs. 400/- per Sq. Yd.

(f) that the basic value of the site is Rs. 233/- per Sq. Yd.

(g) that the State Government in G.O.Rt No. 1110 Rev. (Endts. IV) Department, dt. 20-8-90, accorded permission for sale of the land admeasuring 3,164 Sq. Yds., in favour of Raghu Industries Rajahmundry, the sitting tenant at the rate of Rs. 400/- per Sq. yd., otherwise than by public auction and that the Commissioner, Endowments, in accordance with the procedure laid down under Section 80 of the Endowments Act (Act 38/87) issued a notice dt. 15-11-90 calling for objections and suggestions in respect of the said proposal and further that the Secretary of the erstwhile committee requested the Commissioner, Endowments, to defer the matter for the present to enable availability of a better price for the institution.

(h) that the Commissioner of Endowments, directed that the issue will be placed before a committee of 3 officials nominated by the Government in G.O.Rt No. 1062 Revenue (Endts. IV) Dept., 18-7-91, consisting of the Joint Collector, E.G District, Deputy Commissioner, Endowments Department, Kakinada and. District Women Welfare Officer (Women & Child Welfare Dept.) E.G District.

(i) that the matter was considered by the Official Committee on 7-12-91 and a resolution was passed to the effect that the sale value of Rs. 12,65,600/- should be realised in lump sum in addition to the interest thereof collected from the date of issuance of the G.O, that the said proposal of the Committee is stated to have been approved by the Commissioner, Endowments on 29-2-1992.

(j) that accordingly an amount of Rs. 12,65,600/- was collected towards the sale proceeds in addition to an amount of Rs. 1,75,200/- towards that stipulated interest and the property was registered in favour of Raghu Industries, on 18-3-92. It is further stated that the aforesaid amount was deposited in the shape of FDR in the name of the Samaj in Andhra Bank, Danavaipet Branch, Rajahmundry.

11. In the counter-affidavits it is further averred that the writ petitioner cannot be heard to contend that the sale is arbitrary, particularly when it is the private committee's decision which has brought about this imbroglio. The terms of the lease including the right accrued in the tenant by the said terms to purchase the property have necessitated the action of the official respondents in disposing of the property at far above the market value together with the benefit of calculating interest. It is also averred that as against an annual rent of Rs. 4200/- which was being realised from the tenant, on account of the sale an amount of Rs. 14,40,800/- was realised which on deposit in the Bank fetches an annual interest of Rs. 1,30,980/- and that in the circumstances the sale is bona fide, made in the demonstrable interest of the institution, in accordance with the procedure ordained by the Endowment Act and as the best possible alternative in the circumstances narrated above. It is also contended that the writ petition, apart from being not maintainable for the reasons already stated, has been instituted with a mala fide intention of subverting the interest of the charitable institution.

12. The 4th respondent-Purchaser, in his counter-affidavit reiterates the contentions in the counter - affidavit of respondents 1 to 3 and contends that he purchased the property pursuant to a detailed scrutiny and determination of the value by the Committee Constituted by the Government for the said purpose and at a price far above the market value prevailing on the date of the transaction. He also contends that apart from the sale consideration, he paid an amount of Rs. 1,75,200/- towards interest from the date of the Government's permission to sell the property, viz., 20-8-90, despite the fact the property was registered only on 18-3-92. In summation the 4th respondent contends that the sale is bona fide, in accordance with the provisions of the Act and is not liable to be invalidated by this Court.

13. Sri M.S.K Sastry, learned Senior Counsel for the writ petitioner places reliance on decision of the Supreme Court in Chenchu Rami Reddy v. The Government of A.P (3) (1986) 3 SCC 391 : AIR 1986 SC 1158, and a judgment of the Division Bench of this Court dt. 4-10-1996 in W.A No. 1 of 1996, for contending that the action of the official respondents in disposing of the endowment's property otherwise than by public auction has been deprecated and that the property ought to have been sold only by way of public auction and having been sold otherwise than by the said method, the sale is invalid.

14. The principle is well settled that public property intended to be sold for the purpose of generating revenue ought normally to be sold by public auction so as to avoid the evils of maladministration and to achieve the best possible price involved in the competitive bidding, which can only be achieved by sale in public auction.

15. The facts of the case on hand, in our view, warrant a departure from the said principle. On account of the lease granted by the private management of the Samaj (under the aegis of the writ petitioner himself) the tenant has been in possession of the property on payment of very meagre rent of Rs. 4,200/- per annum, as on the date of the sale proposals. Under the terms of the lease he was also entitled to exercise the first option to purchase the property if proposed to be sold by the lessor. There were an established industry and structures on the land in question which were in possession of the lessee for over 30 years. Large number of workmen were employed in the said industry. A conspectus of this fact situation rendered the process of evicting the lessee and obtaining clear possession of the property by the institution, remote, tortuous and time consuming. The charitable institution thus had either to continue with the tenancy at a nominal rent or to dispose of the property for getting reasonable good return which if invested would fetch a far better annual return. In these circumstances the State Government and the Commissioner of Endowments decided to dispose of the property to the sitting tenant otherwise than by public auction. The price for the sale was arrived at on a procedurally rational method by constituting a Committee for the said purpose. The Committee determined the price at Rs. 400/- per square yard, which was above the basic value of the land during the 30 period as stated in the counter affidavit. The Government could also manage to persuade the 4th respondent to pay interest from the date the Government permitted the sale of the property till the actual date of the sale. An amount of Rs. 12,65,600/- plus an amount of Rs. 1,75,200/- coming to a total amount of Rs. 14,40,800/- was obtained which, when invested in the Bank, fetches an annual interest of Rs. 1,30,980/- as against the annual rent of Rs. 4,200/- being paid by the lessee.

16. In the totality of the circumstances of the case, we are satisfied that the sale impugned in the writ petition, by the respondents 1 to 3 in favour of the 4th respondent does not suffer from any infirmity warranting invalidation in exercise of discretionary jurisdiction under Art. 226 of the Constitution. Apart from the above we are clearly of the view that the writ petition instituted in the name of Hitakarini Samaj by one Sri R. Subba Rao, styling himself as the Secretary is certainly not maintainable, The admitted and demonstrated fact is that as on the date of the institution of the said suit and even thereafter the Hitakarini Samaj, a public charitable institution, governed by the provisions of the Endowments Act is under the management of an Executive Officer, appointed under the provisions of the said Act, who alone is authorised to institute proceedings in the name of the public charitable institution. We are also clearly of the view, having regard to the totality of the pleadings in this writ petition and on a conspectus of the other two writ petitions disposed of by this Judgment, that the motive of Sri R. Subba Rao in instituting the present proceedings is not bona fide. To say the least, Sri Subba Rao is actuated by a selfish motive of obtaining control of the management of the properties of the public charitable institution and to deal with the same according to his personal whims. There is no public interest underlying the initiation of the present writ petition.

17. In the circumstances stated above, there are no merits in the writ petition and it is accordingly rejected and for the reasons referred to with costs quantified at Rs. 5,000/- to be paid by Sri R. Subbarao to the A.P State Legal Services Authority, Hyderabad, within a period of three months.

W.P No. 11660 of 1992:

18. A journalist of Rajahmundry has filed this writ petition assailing the validity of G.O.Rt No. 1133 Revenue (Endowments IV) Department, dt. 23-8-90. The petitioner avers that he is a permanent resident of Rajahmundry, follower of teachings of late Sri Kandukuri Veerasailingam Pantulu Garu, deeply associated with social, educational and cultural activities and Editor of a Telugu daily published from the town and that his forefathers were closely associated with the social reformer who brought into existence and endowed his vast personal properties in favour of the Trust Known as Rajahmundry Hitakarini Samaj.

19. In the writ petition he has chronicled the aims and objects for the achievement of which the Samaj was funded and the manner in which the private management has over the years subverted the objectives for which the Trust was founded. Details of various litigations initiated by the private management to subvert the attempts of the Endowments Department to manage the properties in accordance with the provisions of 1966 and 1987 Acts, have also been set out. Specific details have been pleaded to show that the properties of the samaj were mismanaged, wasted and mis-utilised by the private management. The petitioner also pleaded that the Samaj cannot, in terms of the trust deed and the objectives of the endowment, be termed as either a minority institution or a private trust falling outside the purview and reach of the Endowments Act. This writ petition has been filed aggrieved by the proposals of the Government in the impugned G.O In the contention of the writ petitioner the impugned proposals for handing over the institution to the private management by exempting the Samaj from the provisions of the Endowments Act, would be in violation and subversion of the provisions of the Act, public policy and public interest and would also run contrary to the objectives of the late Social reformer, which animated the founding of this institution. The petitioner also pleaded that the plea of the private management seeking exemption is founded on bad faith and motives of personal aggrandizement and in the circumstances no exemption could be granted as proposed in the impugned G.O In view of the fact that the proposals contained in G.O.Rt No. 1133 10 Revenue (Endts. IV) Dept., dt. 23-8-90, have been superseded by G.O.Ms No. 642, Revenue (Endts. IV), dt. 14-7-93 and for the further reason that the later orders of the Government dt. 14-7-93 have been upheld by us in W.P No. 9964 of 1992, the case urged in this writ petition does not survive for consideration. The 4th respondent in this writ petition has filed a counter-affidavit questioning the locus standi of the writ petitioner to maintain this writ petition. Since, in our view, as stated above, the writ petition has become infructuous, a pronouncement on the locus standi of the writ petitioner is not called for.

20. The writ petition is accordingly dismissed as infructuous.

21. No order as to costs.

Hitakarini Samaj, Rajahmundry & Anr. v. State Of Andhra Pradesh, Endowments Dept. & Ors.

Structured Summary of the Court's Opinion — Hitakarini Samaj, Rajahmundry (Common Judgment)

Factual and Procedural Background

Legal Issues Presented

Arguments of the Parties

Petitioners (summarised from the opinion)

Respondents / Official Position (summarised from the opinion)

Table of Precedents Cited

Court's Reasoning and Analysis

On status of the institution and applicability of the Endowments Act

On promissory estoppel and G.O.Rt No. 1133 vs G.O.Ms No. 642 (W.P. No. 9964)

On natural justice challenge to cancellation of proposal

On validity of sale (W.P. No. 10009)

On maintainability and locus (W.P. No. 10009)

W.P. No. 11660 — subsequent infructuousness

Holding and Implications

Hitakarini Samaj, Rajahmundry & Anr. v. State Of Andhra Pradesh, Endowments Dept. & Ors.

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