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Parsi Zoroastrian Anjuman, Mhow vs. The Sub Divisional Officer/The Registrar of Public Trusts & Anr.

Civil Appeal · 2022 INSC 108Decided 28 Jan 2022
Civil Appeal No. 490 of 2022

Background

A century-old Parsi trust in Mhow, which looks after the local Parsi community and a consecrated holy fire, decided through its Managing Committee and general body to sell five of its fifteen dilapidated immovable properties to fund charity, medical aid, education and upkeep of trust buildings. It applied to the Registrar of Public Trusts for the mandatory prior sanction required under Section 14 of the Act, but the Registrar refused sanction, reasoning that the trust should instead look for other ways to raise money and preserve the properties. The Madhya Pradesh High Court (Single Judge and then Division Bench) upheld the Registrar's refusal, holding the trust should have tried harder to repair the buildings rather than sell them to preserve Parsi cultural heritage in Mhow. The trust appealed to the Supreme Court.

Decision Breakdown

The Supreme Court held that Section 14 of the M.P. Public Trusts Act gives the Registrar a much narrower power than similar provisions in other states (like Section 36 of the Bombay Public Trusts Act): the Registrar can refuse sanction only if the proposed sale would be "prejudicial to the interests" of the trust, and this refusal must be tied to specific stipulations in the trust deed or in law, not the Registrar's own subjective view of what is best for the trust. The Court found that the trust's decision was made through a transparent, two-step democratic process (Managing Committee and general body), was backed by a detailed "Vision Document" showing the properties would be sold by public tender after proper valuation and the proceeds invested to generate far higher income for charitable purposes, and that the Registrar had substituted her personal opinion for the objective statutory test. It therefore set aside both the Registrar's rejection and the High Court's judgment upholding it, allowing the trust to proceed with the sale subject to fresh valuation of the properties and sale to the highest bidder by public tender, with the Registrar's oversight limited to that process.

Lesson Learnt

A statutory authority's power to withhold approval over a trust's internal decisions is only as wide as the actual words of the statute. Where the law only permits refusal on objective, defined grounds (like "prejudicial to the trust's interest"), the authority cannot substitute its own personal notion of what is good for the organisation, especially where the trust's own democratic decision-making process was transparent and well-documented.

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

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