In SLP (CIVIL) No. 12133 of 2020-SC- Top Court declares Khasgi (Devi Ahilyabai Holkar Charities) Trust as Public Trust; says EOW cannot hold investigation in connection with alleged misappropriation, however, directs Registrar to hold inquiry Justices A.M.Khanwilkar, Abhay S. Oka & C.T.Ravikumar [21-07-2022]

Read Judgment: The Khasgi (Devi Ahilyabai Holkar Charities) Trust, Indore & Anr v. Vipin Dhanaitkar & Ors 

Tulip Kanth

New Delhi, July 22, 2022: In a case revolving around the Khasgi Trust where illegal alienations were alleged to have been made without obtaining prior permission from the Government, the Supreme Court has held that the direction issued by the Madhya Pradesh High Court to the Economic Offences Wing of the State Government to hold an inquiry, was not warranted. However, the Top Court has directed the Registrar under the Public Trusts Act, to hold an inquiry and determine whether by virtue of the alienations made by the Trustees, any loss was caused to the Public Trust.

The Larger Bench of Justice A.M.Khanwilkar, Justice Abhay S. Oka and Justice C.T.Ravikumar said, “It is noticed from the record placed before us that the entire consideration received from the purchasers has been credited to the account of the Trust. The allegation of misappropriation can be gone into only by the Authorities under the Public Trusts Act. Moreover, the direction issued by the High Court proceeds on the erroneous assumption that the Trustees have made misappropriation of the Government properties. There is no offence registered against the Trustees. Hence, Economic Offences Wing cannot be directed to hold an inquiry or investigation in connection with the subject matter of this proceeding.” 

In this case, the Khasgi Properties were charities and religious endowments of the family of Rulers of Indore and certain alienations had been made by the trustees. Thereafter, the Collector of District Indore passed an order holding that the properties mentioned in the Trust Deed were the properties of the State Government and the trustees had made illegal alienations without prior permission from the Government. Therefore, the alienations were held to be invalid.

A Writ Petition was filed by the Khasgi Trust and its Trustee in the Madhya Pradesh High Court for challenging the aforesaid order.When the matter reached the Division Bench, it was ordered that the allegation of misappropriation of Government properties and its disposal to favour someone and to cause loss to Public Exchequer, would be examined by Economic Investigation Wing of the State of Madhya Pradesh. 

Observing that the Khasgi Trust will be governed by the Public Trusts Act and the same is required to be registered accordingly, the Bench held that the alienations could not have been made without prior sanction of the Registrar.So, the Bench asserted that it was necessary for the Registrar to exercise powers under Section 22 of the Madhya Pradesh Public Trusts Act, 1951 and call for necessary records pertaining to the alienations made by the Trustees. Thereafter, the Registrar shall decide whether any loss was caused to the Public Trust as a result of alienations and if any loss was found to have been caused, he shall quantify the amount in accordance with sub-Section (2) of Section 23.

The Bench was of opinion that the view taken by the Division Bench that the Khasgi Trust is governed by the Public Trusts Act and no alienation of the Trust properties could be made without complying with Section 14 thereof, would have to be affirmed. On the Collector’s Order, the Bench held that  the Collector had no jurisdiction to decide the issues of title as well as mismanagement of the affairs of a Public Trust. The Bench also held the EOW’s probe directed by the High Court to be non est in law.

Thus, the Bench held that the Khasgi (Devi Ahilyabai Holkar Charities) Trust, Indore, is a Public Trust governed by the provisions of the Madhya Pradesh Public Trusts Act, 195 and directed the Trustees to get the Khasgi Trust registered under the Public Trusts Act by making the necessary application within a period of one month.With these observations and directions, the Apex Court partly allowed the appeals.