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Attorney(S)
  • — Sh. R.M Lal, Sr. Advocate with Sh. Arun Mohan and Shri Shiv Khorana, Advocates.
  • — Sh. S.N Chopra, Sr. Advocate with Sh. Roshan Lal Advocate.
Judges
  • Mr. Justice V.S. Deshpande
Acts
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Citation Codes
Equivalent Citations
citation codes
Case Number
Attorney(S)
  • — Sh. R.M Lal, Sr. Advocate with Sh. Arun Mohan and Shri Shiv Khorana, Advocates.
  • — Sh. S.N Chopra, Sr. Advocate with Sh. Roshan Lal Advocate.
Judges
  • Mr. Justice V.S. Deshpande
Acts
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Smart Summary

Factual and Procedural Background

The case concerns a second appeal arising from an eviction petition filed by trustees of a charitable trust. The trust deed, executed in 1959, vested a four-storeyed building in trustees to establish a memorial and maintain a charitable and religious institution providing a free Ayurvedic dispensary, a public library, and a place for propagation of principles such as Truth, Charity, and Non-violence. The eviction petition was filed against tenants occupying part of the ground floor, which was intended for charitable and religious purposes. The petition was dismissed by the Controller and the dismissal was upheld by the Rent Control Tribunal on three grounds: the appellant was not a public institution, the premises were not needed bona fide for the furtherance of the activities of a public institution, and that one co-trustee could not bring the eviction petition in the name of the trust. This second appeal challenges the correctness of these grounds.

Legal Issues Presented

  1. Whether the appellant qualifies as a “public institution” within the meaning of section 22 of the Delhi Rent Control Act, 1958.
  2. Whether the premises occupied by the respondents tenants are bona fide required for the furtherance of the activities of a public institution.
  3. Whether one of the co-trustees can file an eviction petition in the name of the trust without the joinder of all trustees.

Arguments of the Parties

Appellant's Arguments

  • The appellant contended that the trust deed created a public charitable trust which should be regarded as a public institution for the purposes of section 22 of the Delhi Rent Control Act, 1958.
  • The appellant argued that the premises were required bona fide for carrying out the charitable and religious purposes of the trust.
  • It was contended that the eviction of the respondents tenants was necessary to enable the trust to carry out its objectives.

Respondents' Arguments

  • The respondents argued that the purposes of the trust were exclusively religious and thus excluded the trust from being charitable under section 2 of the Charitable Endowments Act, 1890.
  • They contended that the appellant was not a public institution as no organised activity or institution had come into existence to carry out the trust’s objects.
  • The respondents challenged the bona fides of the appellant’s need for the premises, suggesting the trust was created primarily to evict tenants.
  • It was also argued that the eviction petition could not be validly filed by one trustee alone in the name of the trust, which is not a legal person.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Re Shaw Public Trustee v. Day and others, (1957) I All E.R 745 at 725 Definition and scope of charitable purposes including religion, poverty, education, and other beneficial community purposes. Used to establish that the trust deed satisfied criteria to be considered a public charitable trust.
Minister of National Revenue v. Trusts and Guarantee Company Ltd., (1940) A.C 138 Distinction between a charitable trust and a charitable institution; an institution requires organised activity beyond mere legal trust. Supported the conclusion that the appellant was a charitable trust but not a public institution under section 22.
Siva Ram Gupta v. Ganga Devi Jain Dharmarth Trust, Delhi, 1960 PLR 804 Distinction between trust as a legal concept and institution as a social concept involving organised activity. Reinforced the court’s view that the appellant trust lacked an active institution and thus was not a public institution.
Gulab Rai Kishori Lal v. Shri Benarsidas Chandiwala Sewa Smarak Trust, 1964 PLR 731 Similar distinction between trust and institution; importance of organised activity for institutional status. Further supported the court’s reasoning on the difference between trust and institution.
Mayor, etc. of Manchester v. Mcadam, 3 Tax Cases 491 at 497 Definition of an institution as a living and active body translating founders’ purposes into social impact. Used to explain that an institution is more than a trust; it requires active social presence and operation.

Court's Reasoning and Analysis

The court first examined whether the appellant qualified as a “public institution” under section 22 of the Delhi Rent Control Act, 1958. It noted that the trust deed created a charitable trust with religious and charitable objectives. However, relying on established case law and statutory interpretation, the court distinguished between a charitable trust and a public institution. The court emphasized that a trust is a legal arrangement for holding property, whereas an institution is a social entity characterised by organised activity to fulfil public purposes.

The court found that since the trustees had not demonstrated any active operation or organised activity to carry out the trust’s objects since its constitution in 1959, the appellant did not qualify as a public institution. The court also rejected the appellant’s argument that eviction was necessary for carrying out the trust’s purposes, noting that the trust’s objects extended beyond the premises occupied by the tenants and that the mere existence of a trust deed did not elevate the trustees to institutional status.

Regarding bona fides, the court expressed doubt about the trustees’ intentions, observing that the trust was created after unsuccessful attempts by former owners to evict tenants, suggesting an ulterior motive. The court held that the Legislature intended section 22 protections only for bona fide public institutions, not for trusts created as a facade to evade tenant protections.

On the procedural issue of whether one trustee could file the eviction petition in the name of the trust, the court held that while the trust is not a legal person and the petition’s description was incorrect, one trustee authorised by others could represent the trust. Thus, joinder of all trustees was not necessary.

Consequently, the court upheld the findings of the Controller and the Rent Control Tribunal dismissing the eviction petition.

Holding and Implications

The court DISMISSED the second appeal.

The direct effect of this decision is that the appellant trust is not recognised as a “public institution” under section 22 of the Delhi Rent Control Act, 1958, and therefore cannot claim eviction rights under this provision. The tenants’ occupation of the premises is protected. No new precedent was established beyond affirming the distinction between a charitable trust and a public institution and the necessity of bona fide institutional activity for section 22 protections.

Show full summary ...

    Birdhi Chand Jain Charitable Trust v. Kanhaiya Lal Sham Lal

    V.S Deshpande, J.:— The substantial question of law arising in this second appeal is whether the appellant is a “Public institution” which bona fide requires the premises occupied by the respondents tenants “for the furtherance of its activities” within the meaning of section 22 of the Delhi Rent Control Act, 1958.

    The owners of the premises executed a trust deed on 9-2-1959 vesting the four storeyed building of which the premises are a part in five trustees for the purpose of establishing a suitable memorial in the memory of their ancestor and to provide for the maintenance of a charitable and religious institution which should provide a free Ayurvedic dispensary, a free public library and a place for propagation of principles of Truth, Charity and Non-violence. It was further provided in the trust deed that the thrustees shall, as soon as funds permit, establish and provide for the upkeep and maintenance of a free charitable Ayurvedic dispensary and a free library for use by members of the Hindu community in general in a suitable portion of the ground floor of the building. The premises are a part of the ground floor. One of the trustees authorised by the other four by a resolution filed the petition for eviction in the name of the trust against the tenants. The petition was dismissed by the Controller and the dismissal was upheld by the Rent Control Tribunal in the first appeal on the grounds that: —
    (1) The appellant is not a public institution,
    (2) The premises were not needed in furtherance of the activities of a public institution bona fide and
    (3) That one of the co-trustees could not bring this eviction petition in the name of the trust.
    In this second appeal, the correctness of all these grounds is questioned. They are examined as below:
    GROUND NO. 1.
    A perusal of the trust deed shows that a charitable trust was created by it. In para 18 (a) of the eviction application, it was stated that the premises in the occupation of the respondents have always to be used for religious and charitable purposes such as the holding of prayers, religious discourses and such other useful and beneficial and charitable purposes according to the trust deed. It was argued for the respondents that these purposes are exclusively religious and this would exclude the trust from being a charitable one in view of section 2 of the Charitable Endowments Act, 1890. But the trust deed is to be seen as a whole. The four storeyed building as a whole is to be used for charitable as well as religious purposes. There are four heads which can fall under the word “charitable”, namely: —
    (1) religion,
    (2) poverty,
    (3) education,
    (4) other purposes beneficial to the community.
    But at the same time it is not every object which comes within one or other of these categories that is charitable although an object to rank as charitable must either fit into one or more of the first three categories or if not must be of general public utility. (Re Shaw Public Trustee v. Day and others, (1957) I All E.R 745 at 725), (1). —
    The trust deed in the present case satisfies the above criteria and brings into existance a public charitable trust. For the appellant it was argued that as soon as that trust is shown to be a public one, it should be regarded as a public institution. This argument ignores the distinction between a trust and an institution. In Minister of National Revenue v. Trusts and Guarantee Company Ltd., (1940) A.C 138, (2) the Privy Council heard an appeal from Canada. The settlor had transferred to the trustees various assets to be converted into money and transferred to an investment account. After 21 years the whole fund including interest was to be paid by the trustees to the municipal council of the town of Colne in Lancashire in England to be used by the said council for the benefit of the aged and deserving poor of the said town in such manner and without restriction of any kind as shall be deemed prudent to the said council. The question arose whether the trustees could succeed upon the ground that the income in question was exempted from taxation as being of a charitable institution. Before the trial Court it was contended that the trustees themselves or the municipal council, Colne or the town of Colne were charitable institutions. Lord Romer who wrote the judgment for the Privy Council rejected this contention in the following words at pages 149 and 150 of the report: —
    “Any such contention is obviously absurd and was very properly omitted from the argument on behalf of the respondents before this Board. It was however, strenuously urged before their Lordships that the trust regarded as a whole was a charitable institution. That it is a charitable trust no one can doubt. But their Lordships are unable to agree that it is a charitable institution such as is contemplated by section 4 (e) of the Act. It is by no means easy to give a definition of the word “institution” that will cover every use of it. Its meaning must always depend upon the context in which it is found. It seems plain, for instance from the context in which it is found in the sub section in question that the word is intended to connote something more than a mere trust. Had the Dominion Legislature intended to exempt from taxation the income of every charitable trust, nothing would have been easier than to say so. In view of the language that has in fact been used, it seems to their Lordships that the charitable institutions exempted are those which are institutions in the sense in which boards of trade and chambers of commerce are institutions, such, for example, as a charity organisation society, or a society for the prevention of cruelty to children. The trust with which the present appeal is concerned is an ordinary trust for charity. It can only be regarded as a charitable institution within the meaning of the sub-section if every such trust is to be so regarded, and this, in their Lordships' opinion, is impossible. An ordinary trust for charity is, indeed, only a charitable institution in the sense that a farm is an agricultural institution. It is not in that sense that the word institution is used in the sub-section (sub-section (2) of section 11 of the Income War Tax Act, R.A.C 1927, Chapter 97).”
    In Corpus Juris Vol. 32, page 943, note 7, “public institution” has been defined as any organised activity created or established by law or public authority.
    The crux of the distinction between a trust and an institution appears to be that a public trust may come into existence when property is transferred for charitable and public purposes. But a public institution cannot be said to exist unless organised activity is undertaken to carry out such public purposes. Similar views were expressed by Falshaw, J. in Siva Ram Gupta v. Ganga Devi Jain Dharmarth Trust, Delhi, 1960 PLR 804, (3) and the unreported division bench decision of the Punjab High Court referred to therein and again by Falshaw, C.J in Gulab Rai Kishori Lal v. Shri Benarsidas Chandiwala Sewa Smarak Trust, 1964 PLR 731, (4).
    A trust is primarily a legal concept, a mode of transfer of property and of holding property. On the other hand, an institution is primarily a social concept. It is not a legal concept at all. For, there is established legal method by which an institution may come into being. It may be established by way of an organisation which may assume any or no legal form. It may be a trust or a company or a statutory corporation or a mere unincorporated association or a society registered of otherwise. It is its work and place in the society that is the hall-mark of an institution. As observed by Lord Macnaghten in Mayor, etc. of Manchester v. Mcadam, 3 Tax Cases 491 at 497 (5), “it is the body (so to speak) called into existence to translate the purpose as conceived in the mind of the founders into a living and active principle.” In the present case, the founders of the trust may have transferred their property to a charitable purpose and thus created a public trust. But the body to translate the trust into a living and active principle has not yet come into existence. It is that body which will be entitled to be called an institution. It is not a mere legal arrangement like a trust but an active working body with a social impact which can be called an institution.
    From the constitution of the public trust in 1959 onwards till now the appellant has not been able to show any activity on the part of the trustees to carry out the objects of the trust. It was argued for the appellant that the objects of the trust called not be carried out without the eviction of the respondents tenants. But only a part of the trust building is in the possession of the respondents tenants. The objects of the trust are not confined only to the use of the premises for the purpose stated in the trusted deed. It is only if the trust deed had shown that they were carrying on the activity which would have enhanced the status of the trustees into that of a public institution that the trust and the trustees could have been considered to be a public institution. The distinction between a trust and an institution is well established. Exemption from taxation is given, for instance, by section 12 of the Income Tax Act to the income of a trust for charitable or religious purpose or “of a charitable or religious institution.” The Legislature thus distinguished a charitable or religious trust from a charitable or religious institution. If the intention of the Legislature in section 22 of the Delhi Rent Control Act, 1958 was to enable the trustees of every charitable trust to avail themselves of section 22, then nothing was easier for the Legislature than to use the words “charitable trust” in place of the words “public institution.” In these circumstances, I agree with the Controller and the Rent Control Tribunal that the trustees and the trust are not a “public institution” within the meaning of section 22.
    GROUND NO. 2
    The bonafides of the trustees is also doubtful. Three of the trustees are the former owners of the building. The trust was created after the former owners failed to evict the respondents tenants from the premises. The main object of the creation of the trust may, therefore, be taken to be the eviction of the tenants from the building. It could not be the intention of the Legislature that any landlord who is unable to evict his tenants under section 14 of the Delhi Rent Control Act, 1958 may create a public trust of the property and then get the tenants evicted. This is why the Legislature granted the benefit of section 22 only to public institutions. The explanation to section 22 gives instances of public institutions namely, “any educational institution, library, hospital and charitable dispensary”. The expression “public institution” which originally means an established society or a foundation of a public character has also been at times applied to the building or buildings occupied by such an organisation. Neither the organisation carrying on the activity nor the building housing the organisation carrying on such activities has been shown to exist in the present case. It is only the former owner of the building who are trying to get their purpose served through the facade of a public trust. It cannot be said, therefore, that their need for the premises is bonafide.
    GROUND NO. 3
    The joint trustees are the owners of that property and they have all to join as petitioners. If, however, they authorised (as they have done by resolution in this case) one of them to file the petition on their behalf, they would be represented by the authorised trustee and would be bound by the decision against him. It was not necessary in this case, therefore, that all the trustees should be joined inasmuch as the authorisation in favour of one of them by the others has been proved. The petition for eviction, however, has been filed in the name of the trust. But the trust is not a legal person and the description of the petitioners is, therefore, wrong. It could have been amended, if necessary. But that question does not now arise.
    The second appeal is, therefore, dismissed but without any order as to costs.
    Appeal dismissed.
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    Comments

    Birdhi Chand Jain Charitable Trust v. Kanhaiya Lal Sham Lal
    (Sep 4, 1972)