Bombay HC Quashes Charity Commissioner's Revocation of Trust Property Sanction, Holds Section 36(2) Cannot Become Appellate Jurisdiction
The Bombay High Court set aside a 2020 order cancelling a Charity Commissioner's sanction for a trust property transaction, ruling that Section 36(2) of the Maharashtra Public Trusts Act permits revocation only on proof of fraud, not on reassessment of the original decision.
Justice Amit Borkar, sitting singly at the Bombay High Court, on 10 June 2026 allowed a writ petition filed by Bagasarwala Property LLP and quashed an order dated 29 January 2020 passed by the Joint Charity Commissioner, Worli, Mumbai. The impugned order had cancelled a sanction granted on 24 May 2018 under Section 36(1) of the Maharashtra Public Trusts Act, 1950, which had permitted a public trust to lease and subsequently convey reversionary rights in its immovable property to the petitioner. The court held that the Joint Charity Commissioner had travelled beyond the narrow jurisdiction conferred by Section 36(2) and had effectively converted revocation proceedings into a fresh appellate examination of the original sanction — a course the statute does not permit. The sanction of 24 May 2018 was restored as valid and operative.
The Transaction and the Revocation Proceedings
Respondent No. 3, a public trust, had executed a lease deed in relation to the subject property as far back as 5 April 1917, followed by an assignment deed on 6 December 1932. On 30 August 2016, the Trust issued a notice to the earlier lessee, Shri Brijmohan Sharma, stating that the lease and assignment rights stood terminated.
On 27 April 2018, the Trust approached the Joint Charity Commissioner seeking permission under Section 36(1) to grant the property to Bagasarwala Property LLP on lease for 29 years, with a right of renewal and a right to purchase reversionary rights. The Joint Charity Commissioner granted sanction on 24 May 2018. A lease deed was executed on 18 September 2018. Two days later, on 20 September 2018, the petitioner exercised the option to purchase reversionary rights, and a conveyance deed was executed accordingly. The Trust then filed a Change Report seeking deletion of the property from trust records, which was accepted on 12 October 2018.
On 14 December 2018, Respondent No. 2 initiated proceedings before the Joint Charity Commissioner under Section 36(2) seeking cancellation of the sanction. The petitioner filed an affidavit in reply on 25 February 2019, followed by further rounds of pleadings. By the impugned order of 29 January 2020, the Joint Charity Commissioner allowed the revocation application. The order directed the trustees to return to the petitioner the entire consideration of Rs. 6,53,00,000 along with yearly rent of Rs. 30,000 if paid, and to restore the property in trust records within 180 days.
The Joint Charity Commissioner's reasons for revocation were: the termination notice dated 30 June 2016 issued to the earlier lessee had not been placed before the authority at the time of the original sanction; the public advertisement inviting offers did not mention the proposed right of renewal or the right to purchase reversionary rights; the valuer had not been supplied all necessary particulars; the Trust had shown no need for the transaction; and the entire process was completed in unusual haste.
The Legal Issue: Scope of Section 36(2)
Section 36(1) of the Maharashtra Public Trusts Act, 1950 prohibits sale, exchange, gift, or lease beyond prescribed periods of trust immovable property without prior sanction of the Charity Commissioner. The Charity Commissioner may impose conditions having regard to the interest, benefit, and protection of the trust.
Section 36(2) authorises the Charity Commissioner to revoke a sanction already granted, but only on the ground that such sanction was obtained by fraud, misrepresentation, or concealment of facts material to the grant of sanction. The proviso to Section 36(2) further restricts this power: once a conveyance has been executed, revocation is available only on the ground that fraud was practised upon the Charity Commissioner before the grant of sanction.
The central question before Justice Borkar was whether the grounds relied upon by the Joint Charity Commissioner — non-disclosure of the termination notice, omission of renewal and reversionary rights from the advertisement, valuation concerns, and alleged absence of necessity — amounted to fraud, misrepresentation, or concealment within the meaning of Section 36(2), or whether the authority had simply re-examined the merits of the original sanction.
How the Court Reasoned
Justice Borkar began by mapping the two distinct jurisdictions created by Section 36. The first, under sub-section (1), requires the Charity Commissioner to examine necessity, desirability, adequacy of consideration, and overall benefit to the trust before granting sanction. The second, under sub-section (2), is considerably narrower. It is not appellate in nature and does not permit reconsideration of the correctness of the original decision merely because another view is possible on the same material.
The court emphasised the significance of the proviso to sub-section (2). Since a conveyance had already been executed in favour of the petitioner before the impugned order was passed, the only permissible ground for revocation was fraud practised upon the Charity Commissioner before the grant of sanction. The court held that the legislature intended completed transactions to achieve finality and that irregularities or a subsequent difference of opinion regarding the desirability of a transaction cannot unsettle a completed conveyance.
On the locus of Respondent No. 2 to initiate proceedings, the court found that Section 36(2) does not restrict initiation of proceedings exclusively to trustees, beneficiaries, or persons concerned with trust administration. The legislature has not employed language imposing such a restriction. The court therefore declined to reject the proceedings on the ground of locus alone. However, it made clear that maintainability and the burden of establishing statutory grounds are distinct matters, and that the inquiry must remain confined to fraud, misrepresentation, and concealment — not to adjudication of title disputes, tenancy disputes, or succession claims.
Turning to the fraud allegation, the court held that fraud is a serious allegation carrying serious consequences and cannot be founded on suspicion or inferred merely because another authority might take a different view on the same material. The person alleging fraud must identify the false representation, the person making it, the manner in which it was false, the intention behind it, and the connection between the deception and the order obtained. The revocation application did not contain such particulars. The allegations were general in nature. No material was produced to show that the trustees withheld information with the intention of misleading the Charity Commissioner.
On the alleged suppression of the termination notice dated 30 June 2016, the court drew a distinction between omission to disclose a relevant fact and fraudulent concealment of a material fact. The former may amount to an irregularity; the latter requires withholding of information with intent to deceive. The original sanction order itself recorded reference to earlier transactions, pending proceedings, and encumbrances affecting the property. The Charity Commissioner was not acting in ignorance of disputes surrounding the property. The property was never projected as free from litigation. In those circumstances, non-production of one additional document could not automatically justify a finding of fraud. The court observed that inference cannot take the place of proof.
On the advertisement's omission of renewal and reversionary rights, the court accepted that transparency in trust property transactions is expected. However, it held that the detailed tender documents containing all terms and conditions formed part of the sanction proceedings and were before the authority. The advertisement was merely for inviting participation; the actual terms were in the tender papers. Every defect in an advertisement does not automatically mean fraud. Section 36(2) requires proof of deception and concealment, not merely proof of a procedural lapse.
The argument that the Trust had no authority to grant the lease because Respondent No. 2 continued to possess enforceable leasehold rights was also addressed. The court held that this argument questioned the correctness of the original sanction order itself and concerned rights arising under tenancy law and property law. Such questions can be decided by a competent forum in appropriate proceedings. If every dispute regarding the validity of a termination notice or continuation of tenancy rights were treated as sufficient ground for revocation, the limited jurisdiction under Section 36(2) would be converted into an appellate jurisdiction against the sanction order — which the legislature did not intend.
On valuation, the court noted that a Government-approved valuer had been appointed and a valuation report prepared after considering the condition of the building. The Charity Commissioner had before it the valuation report along with material regarding disputes, encumbrances, and liabilities. A later disagreement regarding valuation does not establish fraud. Different valuers may arrive at different figures. Inadequacy of consideration becomes relevant only when connected with fraud, misrepresentation, or concealment, and no such connection was established. The impugned order had effectively substituted a view regarding valuation in place of the view accepted at the stage of sanction.
On reversionary rights, the court found that whether such rights could be granted and on what conditions were matters for examination at the stage of sanction under Section 36(1). The authority granting sanction had undertaken that exercise. It was not open to the authority exercising powers under Section 36(2) to revisit the same issue merely because another view appeared possible.
Cumulatively, the court found that the findings in the impugned order — alleged concealment of the termination notice, alleged non-disclosure of renewal and reversionary rights, alleged inadequacy of valuation, and alleged absence of necessity — did not establish fraud, misrepresentation, or concealment within the meaning of Section 36(2), even when viewed collectively. They might give rise to questions concerning the prudence of the transaction, but prudence is not the statutory test. The court concluded that Respondent No. 1 had travelled beyond the jurisdiction conferred under Section 36(2) and had undertaken a reassessment of the sanction order rather than a revocation founded upon statutory grounds.
Order
Justice Borkar allowed the writ petition and passed the following directions:
The impugned order dated 29 January 2020 passed by the Joint Charity Commissioner under Section 36(2) of the Maharashtra Public Trusts Act, 1950 is quashed and set aside. The sanction order dated 24 May 2018 granted under Section 36(1) shall continue to remain valid and operative. The directions in the impugned order requiring the trustees to reimburse the petitioner the consideration amount and directing restoration of the property in trust records are set aside.
The court clarified that the judgment does not adjudicate upon any independent rights, title, tenancy rights, leasehold rights, ownership rights in structures, succession claims, or other proprietary claims asserted by any party in relation to the subject property. All such issues are expressly kept open to be agitated before the appropriate forum. The court also clarified that it has not expressed any opinion on the legality, validity, or effect of the termination notice issued by the Trust, nor on the merits of any pending or future proceedings concerning the property.
A request by counsel for Respondent Nos. 2(a) and 2(b) for stay of the judgment was rejected. There is no order as to costs. All pending interlocutory applications are disposed of as not surviving.