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The Khasgi (Devi Ahilyabai Holkar Charities) Trust, Indore & Anr. vs Vipin Dhanaitkar & Ors.

Civil Appeal · 2022 INSC 739Decided 21 Jul 2022
Civil Appeal No. 4839 of 2022
A.M. Khanwilkar · Abhay S. Oka · C.T. Ravikumar

Background

The Khasgi Trust, formed in 1949 out of a settlement between the former Maharaja of Indore and the Government of India as part of the merger of princely states, held certain properties for charitable purposes. Disputes arose over whether the Trust was a "public trust" governed by the Madhya Pradesh Public Trusts Act, 1951, whether certain sales of Trust land by the Trustees were valid, and whether authorities like the Collector and the Economic Offences Wing could unilaterally decide the Trust's title and order a misappropriation inquiry. The Madhya Pradesh High Court's Division Bench had passed a common judgment addressing writ petitions filed by the Trustees and a separate public interest litigation, which the Trust and a purchaser-appellant then challenged before the Supreme Court.

Decision Breakdown

The Supreme Court held that the Khasgi Trust is indeed a public trust governed by the Public Trusts Act, and that any alienation of Trust properties requires prior sanction of the Registrar under Section 14 of that Act, affirming this part of the High Court's view. However, it set aside the High Court's declaration that certain sale transactions were void (since the purchasers had not been made parties) and its direction to the Economic Offences Wing to investigate the Trustees for misappropriation, finding no evidence of fraudulent intent and no case registered against them. It directed the Registrar to conduct a proper inquiry under Sections 22-23 of the Act into all past alienations, quantify any loss to the Trust, and take further action (including approaching the Court under Section 26) if warranted, while directing the Trustees to get the Trust formally registered under the Act.

Lesson Learnt

A trust holding properties tied to historical royal/state settlements can still be a "public trust" subject to statutory oversight, meaning trustees cannot freely sell trust property without the regulator's prior sanction; and courts/authorities cannot order a criminal-style investigation against trustees or declare third-party sales void without first giving those affected parties a hearing.

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

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