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Dattatraya Baburao Walawalkar & Ors. v. Siddhivinayak Construction Pvt. Ltd. & Ors.

Civil Appeal · Neutral citation not assigned (Civil Appeal No. 2981 of 2016)Decided 15 Mar 2016
Civil Appeal No. 2981 of 2016
Justice Kurian Joseph · Justice Rohinton Fali Nariman

Background

Trustees of a charitable trust in Mumbai sought to redevelop and sell a tenanted trust property to M/s Raunak Corporation for Rs. 6 crores plus free built-up area for the trust and tenants, under the redevelopment scheme for old cessed buildings. The Charity Commissioner sanctioned the sale, but a competing party (Siddhivinayak Construction and others) challenged this in the Bombay High Court, which set aside the sanction and directed a fresh, competitive advertisement inviting higher bids. The Division Bench upheld this, and the original bidder (Raunak Corporation) and others appealed to the Supreme Court.

Decision Breakdown

The Supreme Court first directed the trust to issue a fresh advertisement (with modified minimum terms) to test whether Raunak Corporation's original offer was genuinely fair. Only Raunak Corporation and one other bidder, Ramee Constructions, responded; after comparing the two detailed offers and hearing further upward revisions from both bidders during the hearing, the Court found Raunak Corporation's offer (further revised upward to Rs. 8.25 crores with other terms unchanged) to be in the best interest of the trust, noting that nearly 74% of occupiers had already given consent (above the statutory 70% threshold required under Development Control Regulation 33(7)). It accepted this best and final offer, allowed the appeals, and set aside the Division Bench's order directing an open-ended bidding process.

Lesson Learnt

Courts overseeing the sale of charitable trust property will test a sanctioned sale through a real competitive process when challenged, but once a fair, competitively-tested, and trust-beneficial offer emerges, especially where statutory consent thresholds from affected occupants are met, the court will approve that offer rather than prolong the process indefinitely.

Official source (sci.gov.in)View Judgment (PDF)

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