Second Appeal No.842 of 2004

10th January, 2005

Petitioner Counsel: Mr. R. N. DHORDE
Respondent Counsel: Mr. P. M. SHAH,Mr. S. S. JADHAVAR,Mrs. A. V. GONDHALEKAR

Cases Cited:
Asaram Vs. State of Maharashtra, 2001(4) Mh.L.J. 548 [Para 9]
Ramdas Vs. Karuji, 2002(2) Mh.L.J. 304 [Para 9]
Wajubhai Patel Vs. Charity Commissioner, Maharashtra, 1990(2) Bom.C.R. 702 [Para 9]
Sardar Khan Rajdar Khan Vs. Charity Commissioner, AIR 1996 SC 575 [Para 9]
Hukumchand Vs. Union of India, AIR 1975 SC 789 [Para 9]
Charity Commissioner, Maharashtra Vs. Hirjibhoy, AIR 1972 Bom. 229 9, 10, 11
Shri. Bipinchandra Vs. Jashwant, AIR 1974 Guj. 129 [Para 10,11,12]
Saiyad Mohd. Vs. Abdulhabib, AIR 1998 SC 1624 [Para 10]
Attorney General Vs. The Bishop of Worcester, (1851)68 E.R. 530 [Para 11]
Dr. R. P. Kapoor Vs. Charity Commissioner, Maharashtra, AIR 1989 Bom 274 [Para 12]

JUDGMENT

JUDGMENT :- The original respondents No.5 and 9 in Enquiry Application No.53 of 2003 on the file of Assistant Charity Commissioner, Osmanabad Region, have preferred this Second Appeal against the concurrent decisions of the Assistant Charity Commissioner and District Judge, Osmanabad.

2. Application under section 50-A of the Bombay Public Trusts Act, 1950 (henceforth referred as BPT Act for the sake of brevity) was filed before the Assistant Charity Commissioner, Osmanabad by present respondents No.2 and 3 praying for framing of a scheme for the trust named as Tryambakeshwar Bahu-Uddeshiya Shikshan Prasarak Mandal, Tamalwadi, Taluka Tuljapur, District Osmanabad, registered at P.T.R.No. F-1097 (Osmanabad). A draft scheme was annexed to the petition as annexure "A". The grounds on which the fresh scheme was said to be necessary in spite of existing scheme, can be summarised as follows :

(i) The old scheme is ambiguous, incomplete and faulty and has become obsolete.

(ii) Old scheme is against the principles of democracy.

(iii) The trust instead of being a public trust is converted into a private hereditary property.

(iv) There has been obstruction in the progress of the trust and there has been misappropriation in the financial matters.

(v) There is no control over the employees of the trust for which clear rules are required to be framed.

(vi) There have been incidents of financial transactions without sanction from the Charity Commissioner and taking disadvantage of the records in hands.

(vii) Instead of having membership from all sources only relatives are being admitted as members.

(viii) There is no provision for amendment and for transformation of the scheme into a scheme touching all aspects.

(ix) Rules against the democratic principles provide a margin for action against the interest of the trust.

(x) There are no specific provisions for harmonized relations between the employees and the management.

(xi) There is no definite plan for raising funds.

(xii) There is no provision to remove the trustees in case of default in attending the meetings.

(xiii) There is no provision for maintaining record of moveable and immovable properties.

3. The application was opposed by the then existing trustees including the present appellants. Apart from denial of all the reasons for which scheme was prayed to be necessary by the applicants it was contended that there is provision in the existing scheme for all the purposes which are stated to be the reason for framing new scheme in the application. It was also added that applicant No.1 Nagnath was desirous of being appointed as a Secretary of the trust but he could not assume that position by election and hence the application is filed for satisfying the said ambition. He is serving as a teacher with Osmanabad Zilla Parishad school, and therefore, he cannot be even a member of the trust. Needless to say that the then existing trustees prayed for dismissal of the application.

4. The Assistant Charity Commissioner, Osmanabad, allowed the application by his judgment and order dated 26-12-2003. By the said decision he has adopted the scheme annexed to the petition by certain modifications observing that settlement of a scheme for better management and smooth administration of the trust was necessary. He has also appointed nine persons including two applicants as initial trustees under the new scheme and these initial trustees were expected to hold elections within six months for constitution of new Board of Trustees for a period of five years.

In order to arrive at a conclusion that new scheme was necessary for better management and smooth administration of the trust, the learned Charity Commissioner, after considering the evidence that was led before him; has recorded the following conclusions:

The first Executive Committee was still on record, and therefore, possibly there were no elections after every five years as per the old scheme. The trustees had failed to submit accounting returns from time to time as prescribed under the old Scheme. The accounts were not kept properly and there was neglect about getting the accounts audited. It was also said that the funds received by the trust were not deposited in the trust account. Trustees have borrowed loans without obtaining permission from the Charity Commissioner, School run at Sangvi was closed down because of negligence of the trustees and thus there was no proper management of the trust. There was no adequate provision in the old constitution to cope up with day to day administration and hence it was desirable to frame a comprehensive and exhaustive scheme for efficient and proper management.

5. The order of Assistant Charity Commissioner was challenged before the District Judge, Osmanabad by an application under Section 72 of the BPT Act numbered as Misc. Civil Application No.1 of 2004 which was dismissed by judgment and order dated 29-6-2004 by the learned District Judge. The learned District Judge almost concurred with all the findings of the Assistant Charity Commissioner. He has confirmed the finding that the accounts of the trust were not submitted regularly. Reports of the Audit were submitted belatedly on 31st March, 2003. Either no elections were held or change reports of the election held were not submitted from time to time, which were submitted only on 7-5-2003 after the legal battle had already commenced. The property register did not show entry of immovable property owned by the trust. The school was required to be closed down, donations and loans were obtained without any sanction from on intimation to Charity Commissioner. Heirs of deceased members were accepted as members. D.W.1 Balbhim Londhe had acted as Secretary even before so being appointed.

Repelling the arguments of the appellants that the applicants had no locus standi to file the application for settling a new scheme and observing that Section 50-A did confer powers upon the Charity Commissioner to frame a scheme without a suit being filed, the learned District Judge has confirmed the judgment and order passed by the Assistant Charity Commissioner.

6. Second Appeal was admitted by this Court vide order dated 29-7-2004 and the relevant portion of the order reads as follows :

"2. The ground No.XI set out in the memo of appeal which is reproduced hereinbelow, raises a substantial question of law :

"XI" Whether, both the Courts below have ignored the provisions of Section 41-D and have arbitrarily and malafide exercised the powers under the garb of section 50-A?"

Hence admit."

In the light of substantial question of law on the basis of which appeal is admitted, Advocate Shri. R.N.Dhorde, for the appellants tried to substantiate his arguments that Section 50-A of the BPT Act is utilised to give go-bye to the provision and remedy available under section 41-D and 41-E of the BPT Act, for the purpose of replacing present Board of Trustees by a new Board of Trustees. It is urged that all the provisions in the new scheme were present in the old scheme. Although certain clauses are added in the new scheme, the provisions so incorporated are from the Rules or sections of the Act. Thus, the changes in the scheme are only cosmetic changes. There was provision for amendment in the old scheme i.e. Rules 21 and 22 and changes if any could have been introduced by amendment. Thus, when there was already scheme in existence which was also duly approved by the Charity Commissioner, there was no necessity for framing a new scheme. If the trustees had failed in performing their duty, sections 41-D and 41-E provided the powers to the Charity Commissioner for taking action against them. On the contrary by communication dated 20-9-2003 Assistant Charity Commissioner, Osmanabad has informed the trust that accounts for the period ending on 31-3-2003 are already filed with the office of Assistant Charity Commissioner and there are no complaints received by the said office about mismanagement in the trust. It was also urged that the petition pleaded shortcomings in the old scheme whereas both the lower Courts have arrived at a conclusion regarding necessity of framing a new scheme, by drawing conclusions that there is mismanagement in the trust. Thus, by the action of framing new scheme existing Board of Trustees is removed from the trusteeship without being put to stand trial for a specific charge. Consequently, according to Advocate Shri. R. N. Dhorde, action must be termed as malafide.

According to Advocate Shri. R. N. Dhorde, presuming for the sake of arguments; even if there are irregularities or omissions in the functioning of the Board of Trustees, that is not sufficient to frame a new scheme. Powers under section 50-A could have been exercised if there was only instrument of trust but not an approved scheme. On the face of existing approved scheme with provision for amendment, if necessary, action against erring trustees under section 41-D and/or 41-E of the BPT Act, could have been taken, instead of drastic steps such as framing totally new scheme and installing new Board of Trustees. Advocate Shri. R. N. Dhorde also did not fail to point out that change reports of all annual general meetings held in the years 1990, 1995 and 2000 are filed in the office of Assistant Charity Commissioner may be belatedly, so also the audit reports of the audit carried out of the accounts.

7. Replying the arguments and defending the concurrent findings and orders, Senior Counsel Shri. P.M.Shah urged that the concurrent findings of fact cannot be lightly dislodged by this Court in its second appeal jurisdiction. According to Mr. Shah, finding arrived at, that there is mismanagement, in other words, there is no proper management of the trust is sufficient ground for Assistant Charity Commissioner to invoke the powers conferred upon him by section 50-A(1) of the BPT Act and such powers can be exercised in spite of an approved scheme already being in vogue. According to him section 50-A (1) which begins with non obstante clause supersedes other provisions such as 41-D, 41-E or section 50 and the Assistant Charity Commissioner in passing the impugned order and settling a new scheme has committed no illegality. The trial Court as well as the District Court had perused the records of the trust and arrived at a conclusion that there was mismanagement, nepotism, irregularities in compliance of the requirements under the existing scheme as also under the Act and the Rules and this was sufficient for the Charity Commissioner to invoke the powers under section 50-A of the BPT Act. According to him sections 41-D and 41-E may enable the Charity Commissioner to take action against individual members of the managing committee but when the authority in question could arrive at a conclusion that there was no proper management section 50-A was the appropriate provision and powers under the same were rightly exercised.

8. The text of the substantial question of law i.e. Ground XI as framed in the Appeal memo and borrowed by learned Brother Judge is required to be considered. It must be said that the ground is drafted, somewhat in an erroneous manner and it may not be out of place to say that the same is drafted in an offending manner. Although the word 'arbitrarily' could have been possibly used, but not the term 'malafide', which is prefixed to the terminal clause "..... exercised the powers under the garb of Section 50-A". The right of appeal is a right to challenge the judgment or order by which a party is aggrieved. It is not a right to wage an assault on the Judge. Unfortunately the point is drafted in such a manner as if it was an assault on the Judge and as if Judge is being alleged of using the power under Section 50-A with malafide intentions.

Eventually during the course of his arguments, Advocate Shri. Dhorde for the appellants has never assaulted the Judge. The argument was confined to claim that the powers under Section 50-A are exercised, although there was no occasion to do so in the light of existence of provisions such as Sections 41-D and 41-E already on the Statute Book. It was contended that those were the provisions which could have been utilised in the interest of the Trust, in the fact situation, to which both lower courts arrived at by concurrent findings of fact i.e. there was mismanagement of Trust by non compliance of legal requirements.

Although the ground of appeal is borrowed as it is by learned Brother Judge, it must be read and considered in a modified form. The challenge must be read somewhat as follows :

"Whether original applicants, with malafide intentions, invited the Charity Commissioner to exercise the power under Section 50-A of BPT Act instead of powers under Section 41-D and/or 41-E, for the purpose of displacing the present trustees under the garb of inviting action of framing new Scheme?

AND

Whether both lower courts erroneously exercised the powers under Section 50-A of the BPT Act by ignoring the provisions of Section 41-D and 41-E of the said Act?"

At the cost of repetition, it must be said that during whole of his arguments, Advocate Shri. Dhorde never attacked the Judge, but he assailed the correctness of the order by challenging the same to be erroneous because of exercise of powers under wrong provision. Naturally, the core issue in the Second Appeal would be :-

"Whether lower courts were justified in exercising powers under Section 50-A if other provisions could have enabled the Charity Commissioner to take appropriate steps in the interest of Trust ?"

As a corollary, it was argued by Advocate Shri. Dhorde that power to frame a new scheme, as conferred by Section 50-A, could not have been exercised on the face of existing scheme and provision for amendment of the same in the existing scheme as also powers to amend the scheme conferred upon the Charity Commissioner by sub-section 3 of Section 50-A. Needless to say that the said argument was replied by Senior Counsel Shri. Shah, for the respondents by contending that the power to frame a fresh scheme as conferred by Section 50-A is available in spite of existing scheme. According to learned counsel for the appellants, the lower courts are successfully persuaded by the applicants to frame a new scheme in spite of existing scheme and under the said garb they have been able to dislodge present Board of Trustees without defeating them in the elections. It may be stated here itself that the new Board of Trustees, appointed under the newly framed scheme as initial Board of Trustees, has eliminated all existing trustees and that is the beginning spark of this legal fire.

9. Before proceeding to the discussion of core issue, I may refer to certain reported judgments relied upon by Advocate Shri. Dhorde. The observations is these cases, in my opinion, do not touch the core issue, but are of limited use for the purpose of appellants, although not irrelevant.

In Asaram Vs. State of Maharashtra (2001(4) Mh.L.J. 548), it is observed that the Charity Commissioner, in exercise of the powers under Section 41-A can only issue directions for proper administration of the Trust. He cannot appoint Committee for administration of the Trust. The said provision does not empower the Charity Commissioner to remove existing trustees or to appoint any new Committee for the administration of the Trust. This view was followed by another Single Judge of this High Court in the matter of Ramdas Vs. Karuji (2002(2) Mh.L.J. 304).

Note "G" was relied upon from the reported judgment in the case of Wajubhai Patel Vs. Charity Commissioner, Maharashtra (1990 (2) Bom.C.R. 702). The note is based upon contents in paras 64 to 66 of the judgment and lays down that every technical deviation is not liable to be used against trustee for removal and emphasis is on persistent default. It was further observed that when lapse cannot be said to be actuated by vitiating factors of dishonesty or utter lack of competence, no action could be taken against the trustee.

All these rulings were relied upon by Advocate Shri. Dhorde by referring to Section 41-D and in order to submit that removal of all trustees is practically a penal action. As can be seen from Section 41-D and more particularly sub-section 2 of the same, the trustee is entitled to an opportunity of meeting the charges framed against him before taking penal action such as suspension, removal or dismissal of the trustee. If they have defaulted in their duty by commissions or omissions, they could have been removed by appropriate action against them under Section 41-D, which provided them an opportunity to meet the charges framed against them. By taking resort to Section 50-A, as invited by the applicants, this opportunity is denied and removal of trustees has taken place by easier passage and at the cost of principles of natural justice.

It must be said that if Section 50-A has overriding effect above other provisions of the Act, as pleaded by Senior Counsel Shri. Shah, argument as submitted by Advocate Shri. Dhorde by relying upon the cases referred hereinabove would not survive and, therefore, as expressed earlier, the scope and ambit of the powers conferred upon Charity Commissioner by Section 50-A of the Act and whether said provision has so much overriding power as to supersede all other provisions of the Act is the core issue in the present appeal.

In AIR 1996 SC 575 (Sardar Khan Rajdar Khan Vs. Charity Commissioner & others), while allowing the appeals by Mutawalli, the Supreme Court disapproved the action of the High Court of taking drastic step of totally depriving Mutawalli of his hereditary right as well as of his entitlement to remuneration fixed under the scheme as illegal, and observed that High Court could have given appropriate directions for finalisation of accounts giving Mutawalli an opportunity to explain or rectify the accounts. In the reported case, the scheme framed by the Court itself prescribed that at least one of the trustees shall be a lineal descendant of Mutawalli. Apart from this factual distinction, the reported case can be of limited use to the case of appellants, i.e. whether Charity Commissioner could have exercised powers under Section 50-A, if the powers under other provisions could have been sufficient to meet the fact situation.

AIR 1975 SC 789 (Hukumchand Vs. Union of India) was relied upon by Advocate Shri. Dhorde for observations in para 18 to following effect :-

"It is well settled that where a power is required to be exercised by a certain authority in a certain way, it should be exercised in that manner or not at all, and other modes of performance are necessarily forbidden."

According to Advocate Shri. Dhorde, if the power to suspend, remove or dismiss the trustees is provided in other provisions of the Act, such as Section 41-D, the Charity Commissioner could not have effected removal of the trustees by framing a new scheme. By resorting to Section 50-A, the Charity Commissioner has achieved the result of removal of existing trustees by a mode not prescribed by the Statute. Impliedly it was submitted that Section 50-A does not empower the Charity Commissioner to remove the existing trustees.

The argument was met with by learned Senior Counsel Shri. Shah by relying upon the observations of this High Court in the matter of Charity Commissioner, Maharashtra Vs. Hirjibhoy (AIR 1972 Bom. 229). The observations relied upon from para 5 are as follows:-

"The language of Section 50-A itself provides that the Charity Commissioner should proceed to frame a scheme under that section after giving an opportunity to be heard to the trustees of the trust concerned. It is patent that the power to frame a scheme for the management or administration of a trust must include power altogether to amend and nullify the previously existing scheme of appointment, removal etc. of the trustees. The power must be sufficiently large to enact that the persons in the management of the trust as at the date of the framing of the scheme will not continue in the management or cease to be managers and/or trustees."

Thus, according to view taken in the matter, the power to frame a fresh scheme includes the power of removal of existing trustees and appointment of new trustees.

10. In order to support the proposition that Section 50-A of the Act confers powers upon the Charity Commissioner to frame a fresh scheme, even if there be in existence an instrument of trust or scheme already framed, learned Senior Counsel Shri. Shah for the respondents has placed reliance upon judicial pronouncements in the matters of Shri. Bipinchandra Vs. Jashwant (AIR 1974 Guj. 129) and The Charity Commissioner, Maharashtra State Vs. Hirajibhoy (AIR 1972 Bom.229).

Although some support is sought to be drawn from the observations in para 6 in the judgment reported in AIR 1998 SC 1624 (Saiyad Mohd. Vs. Abdulhabib), the issue involved in that matter was, "Whether the proceedings under Section 50-A of the Bombay Public Trusts Act, 1950 would abate for the non substitution of one of the applicants (since deceased), and Whether the Charity Commissioner has power under the Act to grant belated substituted application made after long delay." The core issue with which we are concerned, was not before the Court in that matter. Although, while considering the Scheme of the Act, it was observed in para 7 that Section 50-A infuses the Charity Commissioner with power in addition to Section 50, to frame, amalgamate or modify any scheme in the interest of proper management of a public trust, none of the observations in the reported judgment lay down ratio that Charity Commissioner is empowered to frame a new scheme although there may be instrument of trust or a scheme framed either by Charity Commissioner or by the Court in existence.

11. In the matter of Charity Commissioner Vs. Hirjibhoy, the question under consideration of the Court was, whether having regard to the scheme in Sections 47 and 47-AA, the power vested in the Charity Commissioner under Section 50-A of the BPT Act, 1950, to frame a scheme does not include power to appoint trustees. It must be said again that whether a new scheme can be framed and substituted on the face of and in lieu of existing scheme was not the question under consideration of Bombay High Court in the reported matter. There are observations in para 5, which support the contention of learned Senior Counsel Shri. Shah and the same read as follows :-

"It is patent that the power to frame a scheme for the management or administration of a trust must include power altogether to amend and nullify the previously existing scheme of appointment, removal etc. of the trustees"

The observations which support the contentions raised on behalf of the respondents must be said to be obitur-dictum and not a ratio laid down by the Court. This is evident from the fact that in the latter part of the same paragraph, the Court observed that this wider construction was, however, not necessary for the purposes of the case before the Court. The Bombay case, therefore, cannot be relied upon to claim that a ratio has been laid down to the effect that Section 50-A of the Act empowers the Charity Commissioner to frame a new scheme on the face of existing one and substitute the same for the existing.

Observations of Gujarat High Court (Single Judge in the matter of Bipinchandra Vs. Jashwant (AIR 1974 Guj. 129) fully support the submission of learned Senior Counsel Shri. Shah. A contention was raised before the Court in that matter arising out of suo-motu enquiry by the Charity Commissioner as follows :-

"On a true interpretation of Section 50-A of the Act, the Charity Commissioner has jurisdiction to frame a scheme only in a case where a trust exists, but there is no scheme for its administration."

The said contention was rejected by the Court for the reasons recorded in paragraphs 4, 7 and 8, which may be usefully quoted hereinbelow :-

"There is non-obstante clause. It is, therefore, evident that in spite of the provisions of Section 50 of the Act, the Charity Commissioner has got overriding powers. Sub-section (1) of Section 50-A of the Act in which that non obstante clause is found, clearly indicates that the Charity Commissioner has been empowered by the legislature to frame a scheme for the management or administration of such public trust, if he is satisfied that it is necessary or expedient so to do. He himself has been empowered to initiate proceedings if he has reason to believe that in the interest of a proper management or administration of a public trust, a scheme should be settled for it. It will naturally depend upon his subjective decision."

It was further observed in para 7 :-

"A plain reading of sub-section (1) of Section 50-A of the Act clearly indicates that the Charity Commissioner has jurisdiction to frame a scheme for the proper management or administration of a public trust, if, after giving the trustees of such trust due opportunity to be heard, he is satisfied that it is necessary or expedient so to do. It does not indicate that if the instrument of trust presents a complete scheme for the administration of the trust, the Charity Commissioner has no jurisdiction or power to frame a scheme for the management or administration of such public trust. We cannot import any restrictions and read any such restrictions in this section where the legislature has not placed any such restrictions." (Emphasis added)

It was further added in the same paragraph that a scheme is required to be framed by a competent authority i.e. either the Charity Commissioner or the Court and the contents in the instrument of the trust cannot be said to be a scheme. In the light of observations quoted hereinabove, the Court arrived at a conclusion.

"But the fact that the instrument of the trust makes all these provisions will not in any way come in the way of the Charity Commissioner as regards his jurisdiction to frame a scheme, if the conditions referred to in Section 50-A of the Act are satisfied."

Eventually the judgment being of that Gujarat High Court and of the forum of equal strength (Single Judge), has persuasive value, but not a binding force so far as this Court is concerned. With due respect, on examination of the provisions from the Act, a possibility of other view cannot be ruled out, as will be evident from the reasons discussed hereinbelow.

The non obstante clause, which is opening part of Section 50-A, relied upon in the reported judgment reads thus :-

"Notwithstanding anything contained in Section 50, where the Charity Commissioner has reason to believe that, ....................."

It is evident that Section 50-A, which is a provisions inserted by Bombay Amendment Act VI of 1960, is given an overriding effect over and above Section 50 of the Act. Section 50 empowers either the Charity Commissioner or two or more persons having an interest in the trust after having obtained the consent in writing of the Charity Commissioner, to institute a suit for obtaining reliefs as embodied in clauses (a) to (q). Before a Charity Commissioner can institute a suit, either of the three conditions laid down in Section 50(i to iii) are required to be satisfied. The non-obstante clause, with which Section 50-A beings, overrides these difficulties. The Charity Commissioner is not required to approach the Court for seeking relief of the settlement of a scheme or variation or alteration in a scheme already settled, if he is satisfied that in the interest of proper management or administration of the public trust, it is necessary and expedient to frame a scheme. Powers conferred upon the Charity Commissioner by Section 50-A also dispense with requirement of existence of any of the three conditions, which are pre requisite for institution of a suit by the Charity Commissioner or fourth condition in case couple of interested persons, for any of the reliefs as contained in clauses (a) to (q) i.e. breach of trust, negligence etc. or requirement to recover the possession of property belonging to a public trust or direction of the Court being necessary for the administration of a public trust. It may not be incorrect to say that Section 50-A has conferred the same powers on the Charity Commissioner, which the Court can exercise in a suit under Section 50 for the relief as contained in clause (j) i.e. settlement of a scheme or variation or alteration in a scheme already settled, provided of course requirements of Section 50-A were satisfied. However, it must be taken a note that there is nothing in the non-obstante clause indicating supersession of any other provisions of the Act by Section 50-A.

It must also be taken a note that under clause (j), a relief could be sought from the Court by a decree for the settlement of a scheme or variation or alteration in a scheme already settled. Similar power is contained in sub-sections (3) and (4) of Section 50-A. By sub-section (4), the scheme framed under sub-section (1) or sub-section (2) or modified under sub-section (3), is given the status of a decree of a Court, although subject to the decision of the competent Court under Section 72. Sub-section (3) empowers the Charity Commissioner, at any time and after hearing the trustees, to modify the scheme framed by him under sub-section (1) or sub-section (2).

A reference can usefully be made also to some commentary in the Book "The Bombay Public Trusts Act, 1950" by Kesarichand Nemchand Shah an revised by G. M. Divekar (1999 - Tenth Edition). On reference to Note 18, captioned as 'Scheme-Modification', following commentary needs to be taken a note:-

"Any scheme settled by the Court may be altered by the Court if through lapse of time or change of circumstances, which has become clear that interests of the charity require that the scheme be altered. A proposed alteration of a scheme must be based on substantial grounds. It is (not?) enough to say that the existing scheme as settled by the Court is not beneficial to the charity; it must also be shown that if the proposed alteration is made, the scheme as amended will operate beneficially in a manner consistent with the objects of the foundation."

It is added that, the principle "By reason of changed circumstances, the scheme, if it becomes impracticable, may be altered", was laid down as early as 1851 in the case of Attorney General Vs. The Bishop of Worcester (1851)68 E.R. 530, where it was held that scheme which had been settled under the directions of the Court were not do be disturbed merely on speculative view or in matters of direction or regulation upon which Judges or Attorneys General might differ in opinion or except upon substantial grounds and clear evidence, not only that the scheme did not operate beneficially, but that it could by alteration be made to do so consistently with the object of the foundation.'

Further commentary reads :-

"A scheme once settled by the Court cannot be altered even by the Court except on substantial grounds. Changes in times and circumstances may ex debito justitiae require that alteration should be made in the scheme to carry out the objects of the endowment and to see that the scheme operates beneficially. At the same time the Court has always to exercise caution in this matter and to see that what has been done by the Court is not disturbed except when there are substantial grounds for doing so and where satisfactory evidence to sustain those grounds is brought before the Court."

In the matter at hands, although Advocate Shri. Dhorde has argued that there is a settled scheme and hence new scheme cannot be lightly introduced, there is no material on record to indicate whether existing scheme was framed by Charity Commissioner or by a competent Court. On the contrary, on reference to copy of entry regarding registration of the Trust, it is evident that while submitting a proposal for registration, apart from memorandum of association, a list of rules and regulations was also submitted. There is, therefore; room to believe that the existing scheme is one that was submitted by the trustees and approved by the Charity Commissioner. There is nothing to indicate that the scheme was framed by the Court. The matter being inquired into and dealt with by the Charity Commissioner, therefore, there should be no obstruction in varying or altering the scheme or even substituting the scheme, in spite of assumption that the earlier scheme was either approved or framed by the Charity Commissioner, provided of course, requirements of Section 50-A are satisfied.

In the oral evidence of applicant Nagnath, he has narrated that the institution was registered in the year 1985 as a result of Enquiry Application No.287/1985 and thereafter it was registered under BPT Act. The trust has rules and regulations as required by Societies Act. Therefore, there is reason to believe that probably the scheme then submitted, was approved by the Charity Commissioner during the course of enquiry.

Although in the absence of proof that earlier scheme was framed by the Court, Charity Commissioner has no impediment in framing a scheme, if conditions under Section 50-A are satisfied, in the light of text of Section 50(j), which powers are now conferred on Charity Commissioner under Section 50-A taking into consideration the fact that sub-section (3) of Section 50-A also empowers the Charity Commissioner to amend or alter the scheme and the fact that by virtue of Section 50-A(4) the scheme framed by the Charity Commissioner has a status of a decree of a Court, it must be said that the powers to frame the scheme, as conferred by Section 50-A, cannot be said to be as wide as observed by learned Single Judge of Gujarat High Court in the matter of Bipinchandra (supra). In fact the learned Judge, during the course of discussion in para 8, took a note of the definition of instrument of trust, which includes a scheme framed by a competent authority and yet observed that fact that instrument of trust makes all these provisions will not in any way come in the way of the Charity Commissioner as regards his jurisdiction to frame a scheme, if conditions referred to in Section 50-A of the Act are satisfied.

I am of a considered view that powers are not as wide as expressed at the conclusion of para 8 of the judgment of Gujarat High Court. In the light of the commentary from the book of K. N. Shah, it must be said that when there is a scheme framed by competent authority such as Charity Commissioner or the Court, total substitution of the same would be in very very exceptional circumstances and ordinarily there should be endeavour to safeguard and insulate the interest of a public trust by suitable variations, alterations or amendments in the scheme. If the powers are taken to be so unbriddled as can be exercised by ignoring existing scheme, those may become a tool to dislodge the existing Board of Trustees under the pretention of framing of new scheme. The powers of the Charity Commissioner, as conferred by Section 50-A, could not have been intended by the legislature to be so wide as to become arbitrary and unbriddled.

For the reasons discussed, I am inclined to differ with learned Single Judge of Gujarat High Court and observe that on the face of existing scheme framed by competent authority (i.e. Charity Commissioner or Court), ordinarily powers under Section 50-A cannot be exercised to frame a new scheme and substitute the same for the existing one. Such an exercise would be in very very exceptional circumstances and upon arriving at a conclusion that existing scheme proves to be inadequate to safeguard the interest of a public trust and cannot operate in the interest of trust even by variations, alterations and amendments in the same.

In fact observations in para 8 of the judgment of Gujarat High Court indicate how wide are the powers, considered to be by the learned Judge and I quote.

"So far as Section 50-A of the Act is concerned, there are no such restrictions placed as in Sections 50 and 51." There is, therefore, no indication in any of the provisions of the Act that for exercising the jurisdiction of the Charity Commissioner for framing a scheme for the management or administration of a public trust, if he has reason to believe that in the interest of a proper management or administration of a public trust, a scheme should be settled for it, it must be proved that the instrument of trust itself did not present a complete scheme for the administration of the trust."

I would like to differ and say that before substituting the existing instrument of trust or a scheme framed by the competent authority, it must be proved that the earlier document cannot provide a compete scheme for the administration of trust even after certain variations, alterations, additions and amendments, otherwise the exercise of power would prove unbriddled and arbitrary. A finding that settlement of scheme for proper management of a public trust is necessary or expedient, without finding inadequacies in the existing scheme, would be illogical and, therefore, unsustainable.

12. Advocate Shri. Dhorde for the appellants has placed reliance upon the judgment of this High Court in the matter of Dr. R. P. Kapoor & others Vs. Charity Commissioner, Maharashtra (AIR 1989 Bom. 274). On reference to observations in para 15, it is evident that the learned Single Judge of this High Court did not express any disagreement or dissent with the view taken by learned Single Judge of Gujarat High Court in the matter of Bipinchandra (supra). On the contrary, learned Judge has observed that he has dealt with the matter before him in the manner in which Gujarat High Court has dealt with the issue. The observations in the judgment, therefore, do not pose any challenge to the view taken by Gujarat High Court in the matter of Bipinchandra (supra).

This was a case in which Joint Charity Commissioner, by his order, had allowed the application, suggesting a new scheme and challenge to the same was dismissed by the City Civil Court. The Second Appeal was allowed by learned Single Judge of this High Court because the changes envisaged in a new scheme, which were indicative of the defects, were trifle and learned Single Judge felt that the Charity Commissioner, under Section 50-A, was not at all justified for which the condition precedent was his satisfaction that it was necessary or expedient to frame a scheme for the management or administration of public trust. Learned Single Judge also concurred with the observations of learned Judge of the City Civil Court that dispute was more a matter of clash of personalities than principles. It was also observed that the nature of complaint required to be dealt with the accordance with the provisions of Section 41-D and 47 of the Act rather than Section 50-A. There were two grounds, on which the Joint Charity Commissioner felt it necessary to frame a new scheme, (1) the document of the trust was not sufficient to manage the day-to-day affairs, and (2) there were complaints against trustees regarding the management. The learned Single Judge felt that the first reason was too general and vague. The nature of complaints and the cause of doubts were not at all stated by the Charity Commissioner in his judgment. The Judge, City Civil Court found the judgment of the trial court sustainable for two reasons. (1) existing trustees did not care to fill in the vacancies for quite some time, and (2) Dr. Purandare (founder of the trust) filed an affidavit indicating that his complaints to the then Chairman were not attended to. On these grounds, the Judge of the City Civil Court arrived at a conclusion that the trust was not being properly managed and needed a new scheme. The learned Single Judge found that the first reason recorded by City Civil Court was correct, but the second one was not, for the reason that Dr. Purandare himself had taken over as Chairman of the trust.

It may not be out of place to say that the reasons for which new scheme was felt to be necessary and expedient by the Charity Commissioner in the matter of Dr. R. P. Kapoor were much less serious than the reasons recorded by the Charity Commissioner and confirmed by the District Judge in the present matter.

13. However, submission of learned counsel Shri. Dhorde for the appellants that the application under Section 50-A(1) was filed for framing a new scheme by contending that existing instrument of trust is inadequate to cope with the requirements, whereas the Charity Commissioner has arrived at a conclusion that it is necessary and expedient to frame a scheme, totally on a different ground i.e. there is no proper management of the trust or rather there was considerable mismanagement of the trust and hence a scheme was necessary for proper management of the same. The argument of learned counsel that subjective satisfaction of the Charity Commissioner has come on grounds different than those pleaded in the application has some substance. On going through the text of the application, it is evident that all the grounds pleaded in the application, which are summarised in para 2 ante, except sr.nos.(iii), (iv)(vi) and (vii), are pertaining to the shortcomings in the scheme. But, grounds iii, iv, vi and vii make some reference to mismanagement.

On going through the entire judgment of the learned trial Judge, there is no discussion of reasons and conclusions that the provisions of existing scheme are inadequate to cope up with the affairs of the trust and, therefore, are required to be modified or substituted. On the contrary, reason to believe that in the interest of proper management or administration of a public trust a scheme should be settled is only on the ground that there is no proper management of the trust in question, the learned Judge has gone a step further and observed that it is not necessary to prove that instrument of trust itself did not present a complete scheme for the administration of the trust. This observation is not sustainable in the light of view differing with Gujarat judgment taken by this Court.

If there is no scheme, Charity Commissioner would be justified in saying that it is necessary or expedient to settle a scheme for proper management. If there is a scheme in existence, Charity Commissioner would be justified in exercising the power to alter or amend on finding that provisions of scheme (in spite of being observed) are inadequate to protect the Charity. Likewise he would be justified in altogether substituting the scheme, in spite of being followed scrupulously. But he may not be able to claim that it is necessary and expedient to settle a new scheme, merely because existing scheme is being observed in breach by trustees, thereby acting against the interest of trust. He may be justified in taking steps against erring trustees or providing additional checks by amendment of the scheme, in such a situation.

Section 50-A requires two conditions to be satisfied before a Charity Commissioner can settle a scheme for administration of a public trust, (1) reason to believe that in the interest of proper management or administration of a public trust a scheme should be settled for it, and (2) it is necessary and expedient to frame a scheme. When there is no scheme at all, it would be easier and faster for the Charity Commissioner to arrive at a conclusion that it is necessary or expedient to settle a scheme for proper management of the trust, but if there is an instrument of trust or a scheme in existence, he will have to be slower and cautious before arriving at such a conclusion. The distinction must be remembered between inadequacy of the scheme and non execution of the scheme or behaviour of the trustees in disregard of the Scheme, Act and Rules. If there is no provision in the scheme, which is required for beneficial operation of the trust, the same is inadequacy of the scheme. But, if there is a provision that succession should be by election after every five years and there is no election held, the same is an instance of omission on the part of Board of Trustees to execute the scheme and certainly not an instance of inadequacy or insufficiency in the scheme. The Charity Commissioner must be further slow in exercising the powers under Section 50-A either for modifying the exiting scheme or for substituting the existing scheme by a totally new scheme if the complaints are only regarding non execution/disobedience of existing scheme. There are provisions in the Act, which empower the Charity Commissioner to appoint, suspend, remove or discharge the trustees as contained in Section 41-D as also Section 47 in case there is default on the part of trustees to execute the scheme or to abide by the rules and regulations incorporated in the scheme. He also has powers to issue directions for proper management of the trust under Section 41-A, to institute enquiries with regard to charities under Section 41-B, to act for protection of the charities under Section 41-E. Requirement of an action against erring trustees can seldom be a reason to believe that it is necessary and expedient to settle a new scheme.

14. In the light of above discussion regarding scope and ambit of the powers conferred by Section 50-A of the Act upon Charity Commissioner to settle a scheme/new scheme in lieu of existing one, grounds at sr. nos.(iii), (iv), (vi) and (vii) in para 2 ante can hardly provide reason, much less necessity or expediency to settle a scheme, although those may provide a reason for action against erring trustee/s. Instead of taking action against the erring trustees, removing them by framing a new scheme, in fact would be against the interest of trust, in view of the fact that not only mismanagement but even misappropriation is alleged against them and they may go scot free after removal as trustees.

What is necessary or expedient is borrowed in para 15 of the judgment in the matter of Dr. R. P. Kapoor from commentary on The Bombay Public Trusts Act, 1950, which reads as follows :

"'Necessary' and 'Expedient' - meaning : This is a power conferred under the Act in a special contingency, when it is necessary or expedient to frame a scheme in the interest of a public trust. Recently the Gujarat High Court explained the words 'necessary' and 'expedient'. The term 'necessary' means what is indispensable, needful and essential. The term has a precise meaning and a connotation and there is nothing vague or nebulous about it. The term 'expedient' has no doubt a wider ambit and gives much scope to the exercise of power. But this expression has also a recognised connection in the eye of law. The dictionary meaning of the term 'expedient' that what in the context it is used and which is most fitting is 'useful for effecting a desired result, fit or suitable for the purpose." (emphasis added)

Even taking into consideration the wider meaning of the term expedient, the Court ought to come to a conclusion that it is desirable for achieving the necessary result i.e. safeguarding the charity, to settle a new scheme and, therefore, unless the learned Charity Commissioner can arrive at a conclusion that existing scheme is insufficient for the purpose, or that even after amendment to the existing scheme the purpose of the trust would not be served, the Charity Commissioner would not be in a position to record a finding that it is expedient in the interest of trust to settle a new scheme.

15. Having gone through the judgment of the Charity Commissioner, the only sentence in the judgment which touches to the issue of inadequacy of the existing scheme reads as follows :

"There is no adequate provisions made in the old constitution to cope up with the day-to-day administration of the trust."

It must be said that the observation is too general and vague. It does not illustrate as to how the old scheme is inadequate, nor it demonstrates as to how new scheme has coped up with this aspect and bettered over the shortcomings in the old scheme. In fact it was necessary for the Charity Commissioner to demonstrate that even amendment of the old scheme would not serve the purpose, before embarking upon the exercise to substitute the same by a totally new scheme.

We may refer to a paragraph in the internal pages 8 and 9 of the judgment (Paper Book Pages 54 and 55). Learned Judge has referred to the changes or rather provisions of the new scheme. On comparison of this discussion with the old scheme, it can be seen that all the the provisions in the new scheme were already there in the old scheme. The membership of two types i.e. life member and ordinary member was in existence under old Rule 6. By new scheme, only membership fee is increased to Rs.1001/- and Rs.101/- p.a. for life members and ordinary members respectively, instead of Rs.501/- and 51/- under the old scheme. Although a form is prescribed for applying to be a member, even under the old Rule 5(1) and (2), an individual was required to apply for membership and he could be granted membership only by resolution of majority in the meeting of Board of Trustees as in the new scheme. So far as cancellation of membership is concerned, old Rule 9 did make a provision for the same. Only addition in the new scheme is of a new ground i.e. regarding removal from membership in case the member acted against the interest of the trust. Procedure for filing in the vacancies was provided in old Rule 15(2) and total Rule 15 spoke about rights and duties of the Board of Trustees.

There is some discussion about new provisions also in the last paragraph of the judgment. The provisions for meetings of the trustees, notice, quorum etc., which are incorporated in the new scheme were also in existence in Rule 14 of the old scheme. Rule 7 under the old scheme provided for general body meeting, although there was no provision for special general meeting. Although it is said that new rule regarding election is incorporated, the same was in existence also in the old scheme (Rule 12). Rights and duties of the office bearers i.e. Board of Trustees were in Rule 15. In fact the contention that there was no provision for amendment of the scheme in the old rules, is patently false, because Rule 21 of the old scheme did make a provision for the same.

The discussion hereinabove will demonstrate that all the provisions referred by learned Charity Commissioner as making some new provision were already in existence in the old scheme and couple of new provisions, which are also indicated hereinabove could have been added by a simple amendment. The argument of learned Advocate Shri. Dhorde to that effect deserves to be upheld.

As directed by this Court, Advocate Shri. Dhorde has provided a chart indicating the comparison of the provisions of new scheme and old scheme, which is taken on record and marked EXHIBIT 'A' for the purpose of identification. Senior Counsel Shri. Shah has also provided another table, which according to respondents 2 and 3, are the new provisions, which did not exist in the old scheme. The same is also taken on record and marked EXHIBIT 'B' for the purpose of identification.

On referring to Exhibit 'B', following can be said to be new additions in the scheme. Some more objects of the trust are incorporated, such as holding gatherings, conferences, industrial and agricultural exhibitions. By new scheme, membership is restricted to the citizens of Osmanabad district instead of to any Indian citizen as under the old scheme. As already discussed hereinabove, increase in the membership fee and additional ground for removal i.e. acting against the interest of trust, are new additions. Clauses 9 and 10 in the new scheme regarding eligibility for being appointed as trustee and disqualification are certainly new addition. Power of the Board of Trustees under clause 12 of the new scheme are in more details. So far as election is concerned, appointment of an officer as Election Officer as nominated by the Charity Commissioner is certainly welcome improvement. Special General meeting is provided by the new scheme. Under the new scheme, a post of Joint Secretary is provided. Clauses 18, 19 and 20 under the new scheme although are new provisions, as rightly pointed out by Advocate Shri. Dhorde, those are just borrowings of Sections 36-B, 35 and 36 from the Act and, therefore, cannot be said to be new additions in the real sense.

In spite of some new additions, I am unable to appreciate as to why these additions could not be incorporated either by proposing an amendment under existing Rule 21 by procedure prescribed therein or by an application to the Charity Commissioner under Section 50-A(3) of the Act. I am also unable to appreciate as to how these new additions are capable of making better provision for day-to-day working of the trust than provisions under old scheme.

16. For the reasons discussed hereinabove, it is evident that the learned Charity Commissioner could not have arrived at a conclusion of necessity or expediency for settlement of a new scheme for the trust in question, on the face of existing scheme and without arriving at a conclusion that the same scheme could not have been used by amendments. In fact this observation should stand confirmed by taking into consideration the nature of provisions which are new and not in existence in the old scheme. Some of the new provisions are borrowings from legal provisions such as Sections of the Act and all are of such a nature that those could have been incorporated by amendment. The finding of Charity Commissioner, as confirmed by the District Court, that it was necessary and expedient to have a totally new scheme, is, therefore, not sustainable. In fact on reference to grounds (i), (ii), (v), (viii) to (xiii), in the light of new provisions, it can be said that there is hardly anything in the new provisions touching the aspects covered by those grounds.

17. The District Judge has confirmed the finding of the Charity Commissioner that there is mismanagement of the trust by relying upon admissions of defence witness Balbhim Londhe. However, both lower courts have not referred to admissions by the witnesses for the petitioners, P.W.1 Nagnath and P.W.2 Balbhim Gaikwad are original applicants. Nagnath has admitted to have attended annual general meetings held on 31-5-1991, 31-5-1995 and 16-7-2002. According to him, the resolutions passed were in his presence, the admission at least demonstrates that the contention of no meetings being held is not sustainable. Shri. Dhorde has pointed out from the Paper Book of Civil Application No.5051/2002, that election meetings were held on 20-10-1990, 15-8-1995 and 16-7-2000, notices of which were issued on 15-10-1990, 11-8-1995 and 4-7-2000 respectively (Pages 55 to 64-B of that Paper Book of Civil Application No.5051/2004). The material is sufficient to speak against the concurrent finding that it was doubtful whether there was election of Board of Trustees after every five years.

Nagnath has admitted regarding existence of provisions for amendment of the scheme, whereas Balbhim has pleaded ignorance about the same. Nagnath also admitted that Board of Trustees does not incorporate descendants of deceased trustees. Although Nagnath has stated that the descendants of existing trustees are admitted as members, he has also not admitted that seven persons including the two applicants, were also admitted as members although none of them have any relation with the founder members. This would speak against the contention that the trustees have made the Board of Trustees to be a hereditary office, because in any case the legal heirs of existing trustees are admitted only as members of the Trust and not as members of the Board of Trustees of managing body.

In fact all this discussion is unnecessary in view of the reasons already recorded, however, are being referred to indicate that even for arriving at a subjective satisfaction regarding necessity or expediency of framing the scheme on the grounds of mismanagement, instead of on the ground of inadequacy in the scheme, those grounds are not scanned to desired extent.

One more thing may be pointed out, applicant Balbhim has admitted in his cross-examination that water tap connection sanctioned for the trust by the Grampanchayat is fitted at his residence. It may also be mentioned that learned Charity Commissioner has simply perused the Bio Data and consent letters of the 9 persons appointed as initial trustees under the new scheme, which includes this Nagnath, who admittedly is guilty of misappropriating water tap connection of the trust.

18. For the reasons already discussed hereinabove and the conclusion as drawn in para 16 above, the appeal is required to be allowed.

The Appeal is allowed. Judgments and orders passed by Assistant Charity Commissioner in Enquiry Application No.53/2003 on 26-12-2003 and 2nd Ad-hoc Additional District Judge, Osmanabad in Misc. Civil Application No.1/2004 on 29-6-2004 are quashed and set aside.

It is clarified that this judgment will not be an impediment for the Charity Commissioner to take action in accordance with procedure laid down by the Act against the trustee/s if he finds them guilty of mismanagement etc. This judgment will also not be an obstruction in considering the scheme for amendment in future.

No orders as to costs.

Appeal allowed.