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Self-run trusts can't have excess State control: SC

January 29, 2022 00:05 IST

Self-governed social and religious trusts cannot be subjected to 'overarching state control' as it would undermine the principle of autonomy and democratic decision-making and would reduce the fundamental right of freedom of association 'an empty husk,' the Supreme Court said on Friday.

IMAGE: Supreme Court of India. Photograph: ANI Photo

The verdict dealing with the right of the state instrumentalities over the affairs of registered social and religious trusts came on an appeal of Parsi Zoroastrian Anjuman, Mhow, which was denied the nod by the registrar of the society to sell its five properties in Madhya Pradesh despite following the due procedures.


“The impugned judgment and the decision of the registrar are hereby set aside,” a bench comprising justices UU Lalit, R Ravindra Bhat, and Bela M Trivedi said and permitted the Parsi trust to implement its decision to sell its five properties after fresh valuation of each of the properties.

Justice Bhat, writing the judgement, acknowledged the state's power to monitor the affairs of registered social and religious trusts to ensure that their properties are not frittered away, but said it cannot control the decision-making process of self-governed societies.

The verdict said the role of designated state officials like the commissioner or registrar is to ensure that accounts are properly maintained and monies are expended in accordance with the aims and objects of the endowments.

“Such regulation does not mean that the state is allowed to appropriate monies which rightly belong to the endowment..the aim of public control is to ensure that the trust is administered efficiently and smoothly,” it said.

"The aim of public control is to ensure that the trust is administered efficiently and smoothly. The state interest is that far, and no more; it cannot mean that the state can dictate what decisions can or cannot be taken. In the specific context of alienation of properties, depending on the nature of the oversight, the state's interest is to ensure that valuable assets of public trusts are not frittered away,” the verdict said.

Other than these considerations, the principle of autonomy and democratic decision-making cannot be undermined, it said.

“Any organisation which is self-governed, cannot be subjected to overarching state control. As long as its decisions are well informed, and grounded on relevant considerations, the interests of the trust are those defined by its members,” the verdict said.

Any measure of public control enacted through express stipulations in law should not be expanded to such an extent that the right to freedom of association, under Article 19 (1) (c), is reduced to “an empty husk, bereft of meaningful exercise of choice,” it said.

The verdict, however, said, “public control of charities (whether social or religious) has been recognised in our country for over a century... such public control is essential, for the simple reason that in its absence, there is a likelihood of diversion of monies and properties accumulated through public donation and gifts.”

Referring to the facts of the present case, it said the records showed that the decision to sell the properties was a consequence of a two-layered process, where all members of the Parsi body participated and decided to dispose of the property.

“The decision was based on a realistic assessment of the trust's existing and future liabilities, the obligations towards charity, aid to senior citizens, education, medical aid, and religious ceremonies, imposed by the trust instrument,” it said.

Most crucially, the properties were valued, and proposed to be sold by public tender, and disregarding all this disclosed transparency, the Registrar, based on her subjective notion of what constituted the best interests of the trust, could not have rejected the application, as she did, it said.

“The high court, in this court's opinion, fell into error, in endorsing that rejection,” it held.

Parsi Zoroastrian Anjuman, Mhow, in a meeting held on December 14, 2014, unanimously agreed that five of its immovable properties should be sold.

As required under the state law, the trust applied for the previous sanction for the sale of the five properties which was denied and the decision was endorsed by the Indore bench of the state high court.