Operation Asha vs. Shelly Batra

REPORTABLE

IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 10048 OF 2025
(Arising out of S.L.P (Civil) No. 29830 of 2024)


OPERATION ASHA …APPELLANT(S)

VERSUS

SHELLY BATRA & ORS. …RESPONDENT(S)



J U D G M E N T




Signature Not Verified

Digitally signed by
CHANDRESH
Date: 2025.08.05
18:05:58 IST
Reason:




J.B. PARDIWALA, J.
For the convenience of exposition, this judgment is divided into the following parts: -
INDEX
A. FACTUAL MATRIX ............................................................................................. 2
B. THE IMPUGNED JUDGMENT ........................................................................ 15
C. SUBMISSIONS OF THE PARTIES .................................................................. 18
i. Submissions on behalf of the Appellant .......................................................... 18
ii. Submissions on behalf of the respondent no. 1 .............................................. 22
iii. Submissions on behalf of the respondent nos. 3 and 4 .................................. 24
D. ISSUES FOR DETERMINATION .................................................................... 25
E. ANALYSIS ............................................................................................................ 25
i. The Object and purpose behind Section 92 of the CPC. ............................... 25
ii. Conditions to be fulfilled for the applicability of Section 92 of the CPC .... 33

a. Circumstances under which the creation of a trust has been inferred
................................................................................................................ 37
b. Views of different High Courts on the issue .......................................... 55
c. Section 5 of the Societies Registration Act, 1860 and the ‘vesting’ of
properties in the Executive Committee. ................................................. 82
d. The doctrine of constructive trust and its applicability to a society
functioning for public purposes of a religious or charitable nature ..... 99
B. A breach of trust or the directions of the court being necessary for the
administration of the trust .............................................................................. 129
C. The institution of the suit must be made by two or more persons “ having an

F. CONCLUSION ................................................................................................... 157



Page No. 1 of 167

1. Leave granted.

2. This appeal arises from the judgment and order passed by the High Court of Delhi
dated 21.08.2024 in FAO(OS) No. 114 of 2024 (hereinafter, the “ impugned
decision ”), by which the High Court dismissed the appeal filed by the appellant
herein against the judgment and order dated 03.05.2024 passed by a learned Single
Judge of the High Court in CS(OS) No. 153 of 2020 allowing the application under
Section 92 of the Code of Civil Procedure, 1908 (hereinafter, the “ CPC ”) filed by
the respondent nos. 1 and 2 respectively, seeking leave to institute the subject suit.

A. FACTUAL MATRIX


3. Operation ASHA (hereinafter, the “ appellant Society/original defendant no. 1 ”)
is a not-for-profit society founded in the year 2005 and registered under the Societies
Registration Act, 1860 with its registered office in New Delhi. The appellant Society
is engaged in providing health services through a plethora of activities primarily to
the underprivileged sections of the society across India with special emphasis on the
treatment, education and prevention of tuberculosis and other diseases. The same
can be inferred from the Memorandum of Association (hereinafter, the “ MoA ”) of
the appellant Society. The aims and objectives of the appellant Society are as
follows:
“ 4 . AIMS AND OBJECTS

MAIN OBJECTIVES OF THE SOCIETY ARE GIVEN
BELOW.


Page No. 2 of 167


4.1.1 To develop, establish, maintain and provide health and all
other related services, and to help, aid, assist, arrange, co-
ordinate, organize maintain and carry on activities connected with
one of health quality of life, nursing facilities, socio-economic
aspects, general welfare and problems of the society with special
emphasis on provision of services for the underprivileged sections
of the society as per Govt. rule.

4.1.2 To develop, establish, make and provide microcredit
microfinance and all other related services, and to help, aid,
assist, arrange, contribute, co-ordinate, organize maintain and
carry on activities connected with concerns of microcredit and
micro finance. Socio-economic aspects, general welfare and
problems of the society with special emphasis on provision of
services for the underprivileged sections of the society as per Govt.
rule.

4.1.3 To establish hospitals, medical schools and colleges, nursing
schools and colleges, dispensaries, laboratories research
institutions and other educational institutions as per Govt. rule.

4.1.4 To purchase or otherwise deal in medicines and equipment
required for maintenance of health, hygiene and microcredit/
microfinance.

4.1.5 To aid, promote establish, maintain, run and encourage
alternative systems of medicine and establish training and
research centers for this purpose as Govt, rule.

4.1.6 To aid, promote, establish, maintain, run and encourage
microcredit/microfinance as per Govt. rule.

4.1.7 To open centers and institutes for diagnostic, curative,
therapeutic and research of medical sciences as per Govt. rule,

4.1.8 To provide free medicines to the poor.”

4. The MoA of the appellant Society also stipulates that all the incomes and earnings
of the society, whether movable or immovable, shall solely be utilised to further the
aims and objectives of the appellant Society. Furthermore, it is also stated that the


Page No. 3 of 167

members of the appellant society would not be entitled to any profits by virtue of
their membership. The relevant portion of the MoA is extracted hereinbelow:
“ All the incomes, earnings, movable or immovable properties of
the society shall be solely utilized and applied towards the
promotion of its aims and objectives only as set forth in the
memorandum of association and no profits thereof shall be paid
or transferred directly or indirectly by way of dividends, bonus,
profits or in any manner whatsoever to the present or past
members or to any person claiming through any one or more of
the present or the past members, no member of the society shall
have any profits, whatsoever by virtue of his membership, the
names, addresses, occupations and signatures of the present
members of the executive committee το whom the management and
affairs of the society are entrusted as required under section 2 of
the societies registration act, 1860 (punjab amendment act of
1957) as extended and applicable to the national capital territory
& all state of india .”
(Emphasis supplied)

5. A few other relevant clauses from the Articles of Association (hereinafter, the
“ AoA ”) of the appellant Society are reproduced hereinbelow:

“ 6. DUTIES & OBLIGATIONS OF MEMBERS
All and every member
6.1 Shall attend the Board of meetings regularly;
6.2 Shall give necessary information to the Society, pertaining to
matters necessary to be known by the Society;
6.3 Shall not indulge in activities, which may prove prejudicial to
the Aims and Objects of the Society and/or to the Rules and
Regulations of the Society;
6.4 Shall maintain sanctity of the secrets and confidentiality of
police matters of the Society and its members;

-xxx-

11.2 POWERS & DUTIES OF THE EXECUTIVE
COMMITTEE



Page No. 4 of 167

11.2.1 All the properties, movable, immovable, and other kind of
assets shall stand vested in the Committee.

11.2.2 The business and the affairs of the Society shall be managed
and administered by the Committee.

11.2.3 Without prejudice to the generality of the foregoing
provisions, the Committee shall have the following powers.

11.2.3.1 To acquire by gift, purchase, exchange, lease or in any
other manner land, building, or other immovable, property
together with all rights pertaining thereto.

11.2.3.2 To manage the properties of the Society.

11.2.3.3 To accept the management of any trust, fund, or
endowment or any other … in which the Society is interested.

11.2.3.4 To raise funds for the Society by way of gifts, donations,
grants-in-aid or otherwise within India or outside, as provided in
the bye-laws.

11.2.3.5 To raise loans, stand guarantee for loans and do all acts
necessary to raising the loans to further the objects of the Society.

11.2.3.6 To receive monies, securities, instruments, investments,
or any other assets for and on behalf of the Society.

11.2.3.7 To enter into agreements contracts for and on behalf of
the Society.

11.2.3.8 To manage, serve, transfer or otherwise dispose-off any
property, movable or immovable of the Society.

11.2.3.9 To prescribe the powers, duties and functions of the
office-bearers.

11.2.3.10 To exercise control over the President and the General
secretary of the Society including the powers of dismissal.

11.2.3.11 To appoint the Secretary of the Society.

11.2.3.12 To elect new members to the Committee when casual
vacancies occur.



Page No. 5 of 167

11.2.3.13 To appoint the Secretary of the society.

-xxx-

13. SOURCES OF INCOME & UTILIAZATION OF FUNDS
Funds will be raised by way of grants-in-aid, donations, gifts,
subscriptions fees, and income from investments, loans and other
means available to the Society under the Act. Funds will be used
to carry out the Aims and Objectives of the Society.”


6. Dr. Shelly Batra (hereinafter, the “ respondent no. 1/original plaintiff no. 1 ”) is a
medical health professional and co-founder of the appellant Society. Vide
communication dated 19.06.2020, Mr. Sandeep Ahuja (hereinafter, the “ respondent
no. 3/original defendant no. 2 ”) who is also the co-founder and CEO of the
appellant Society terminated the services/employment of the respondent no. 1. The
communication alleged that the termination of the respondent no. 1 was on account
of various “ omissions including misrepresentation ” of her daughter’s previous
employment, fabrication of documents, misappropriation of the assets and funds of
the NGO as well as gross misbehaviour with the staff and the employees.
Subsequently, on 23.06.2020, the Board of the appellant Society is said to have
passed a resolution terminating the respondent no. 1 from the post/office of President
of the appellant Society. Soon thereafter, on 27.06.2020, the Board of the appellant
Society is also said to have removed the respondent no. 1 from her capacity as a
member of their Board.

7. Mrs. Usha Gupta, (hereinafter, the “ Respondent No. 2/original plaintiff no. 2 ”),
who is the mother of the respondent no. 1, is one of the current members of the Board


Page No. 6 of 167

of the appellant Society. Immediately after the removal of the respondent no. 1 as a
Board member, both the respondent no. 1 and respondent no. 2 (collectively also
referred to as the “ original plaintiffs ”) instituted an Original Suit bearing CS (OS)
No. 153 of 2020 on 28.06.2020 under Section 92 of the CPC before a learned Single
Judge of the High Court for declaration, permanent & prohibitory injunction and,
rendition of accounts. They alleged misconduct and breach of several of the society’s
by-laws by the respondent no.3 and one Ms. Suniti Ahuja (hereinafter, the
“ respondent no. 4/original defendant no. 3 ”). The original defendant nos. 4 to 8
respectively are current Board members and the original defendant no. 9 is a former
Board member of the appellant Society.

8. To further elaborate in detail, the respondent nos. 1 and 2 respectively (original
plaintiffs) alleged the following in the suit instituted by them:
i. That the respondent nos. 3 and 4 respectively, were indulging in gross financial
impropriety, misconduct and siphoning off funds/donations which were
received by the appellant Society into various shell companies/entities
controlled by them and their friends/relatives. Such funds were utilised and
misappropriated for personal gains. Furthermore, that the funds received by
the society have been utilised for activities outside India, which is
impermissible, since the requisite permission was not taken from the
appropriate governmental authorities and yet, tax benefits were illegally
availed for the same.


Page No. 7 of 167

ii. That there has been a severe mismanagement in the administration of the
appellant Society by the respondent nos. 3 and 4 respectively. They have
avoided making accounting provisions for statutory disbursements in the form
of provident fund or gratuity to their employees and are also engaging in cross-
payment of salaries to employees through their sister concerns with a view to
avoid the grant of statutorily mandated employee benefits.
iii. That the respondent no. 3 has misrepresented information and thereby misled
the donors of the appellant Society with an intent to defraud them by claiming
that the appellant society had provided COVID-19 related services to more
than 12,600 families and 10,000 migrants, however, the same remains entirely
uncorroborated and unsubstantiated.
iv. That the respondent nos. 3 and 4 respectively, used force and coerced several
employees in order to illegally take away the property of the appellant Society.
This includes pressurizing the original defendant no. 8 to hand over the ATM
card, passbook etc. of the account in which his salary is remitted and utilising
those funds for personal needs. Furthermore, it was alleged that they have also
demanded compulsory kickbacks from the employees engaged by the
appellant Society by threatening, coercing and blackmailing them with
immediate termination of employment, with a view to siphon employee
payments.
v. That respondent no. 3 has also regularly misbehaved by issuing threats of
personal injury and also indulged in discriminatory behaviour against the
employees of the appellant society on the basis of race, caste, religion and sex.


Page No. 8 of 167

vi. That, around February 2020, the respondent no. 1 approached the respondent
nos. 3 and 4 respectively to resolve the aforesaid issues, amongst others. In
retaliation, she was harassed and threatened to exit from her position at the
appellant Society.

9. The reliefs prayed for in the aforesaid suit are reproduced hereinbelow:
“ PRAYER

35. In light of the above facts and circumstances of the case,
Plaintiffs most humbly pray that this Hon’ble Court may grant the
following reliefs in its favour:

(a) Pass a decree of declaration holding that all the decisions
taken by the Board of Defendant No.1 and/or any Board member
or employee or personnel w.e.f. 01-06-2020 onwards are illegal,
wrong and void, in the present facts and circumstances, and
therefore, set-aside; and/or

(b) Pass a decree of declaration holding that the termination of
Dr.Shelly Batra (Plaintiff No. 1) from the post/office of President
vide Board Resolution dated 23-06-2020 and ouster from the
Board of Defendant No. I vide Board Resolution dated 27-06-2020
is illegal, wrong and void in the present facts and circumstances,
and restoring her office/post in the affairs of Defendant No. 1;
and/or

c) Pass a decree for permanent & prohibitory injunction against
the Defendant Nos.2 and 3 by removing them from the Board of
Defendant No.1 on account of the illegalities & breach of the bye-
laws of Defendant No.1, and restraining them from being involved
in the activities/affairs of the Board of Defendant No.1 either as
member or employee or contractor or advisor or anyway
whatsoever;

(d) Pass a decree for rendition of accounts of profits/monies
siphoned, misappropriated, illegally earned by Defendant Nos.2-
3 for their personal use/benefit from the accounts/funds of
Defendant No.1, and further a decree for recovery of the amount
be found to be due, siphoned, misappropriated, etc. by the


Page No. 9 of 167

Defendant Nos. 2-3 along with interest @18% in favour of
Defendant No. 1; and/or

I Pass a decree or order regarding settling the scheme of the
Defendant No. 1 by amending its bye-laws in such manner that no
one family gets complete control of the affairs of Defendant No. 1:

(f) Costs:

(g) Any other relief (s) which this Hon’ble Court deems, fit, just
and proper may also be awarded in favour of the Plaintiffs, in the
interest of justice.”

10. In pursuance of the aforesaid, the respondent nos. 1 and 2 respectively, filed an
application being I.A. No. 5009 of 2020 in CS (OS) No. 153 of 2020 seeking leave
to institute the civil suit against the appellant Society along with the respondent nos.
3 to 10 (collectively referred to as the “ original defendants ”) before the learned
Single Judge of the High Court. In the said application, it was stated that the
appellant Society is a public charitable institution - an NGO engaged in the
healthcare industry. The main objectives of the society as evidenced by its by-laws
is public welfare and therefore, it would fall under the ambit of “public charities”
mentioned under Section 92 of the CPC. The respondent nos. 1 and 2 respectively
(original plaintiffs) have been involved in the functioning of the appellant Society
since its inception and have a justified and bona fide interest in the society,
Therefore, they are “interested persons” as required by Section 92. Furthermore,
since numerous breaches have occurred in the conduct of business/affairs of the
appellant Society, the direction of the court would be of utmost necessity for its
administration.



Page No. 10 of 167

11. After taking seisin of the matter, vide order dated 05.08.2020, the learned Single
Judge of the High Court appointed Justice (retd.) R.V. Easwar as the Chairperson of
the Board of the appellant Society with the consent of both the parties. Directions
were issued to the Chairperson to submit a report and conduct a financial audit in
order to ascertain, amongst others, whether there has been a defalcation or siphoning
off of funds that the donors have contributed towards the appellant Society and to
make suggestions as to how the working of the society can be improved. The
Chairperson submitted three reports dated 26.08.2020, 03.10.2020 and 09.12.2020
respectively. On, 13.08.2021, an Interim Forensic Audit Report and on 20.09.2021,
a Final Forensic Audit Report respectively, are also said to have been submitted by
the auditors appointed for the said purpose.

12. The learned Single Judge of the High Court vide the judgment and order dated
03.05.2024 granted leave to the respondent nos. 1 and 2 (original plaintiffs) for the
purpose of instituting a suit under Section 92 of the CPC. While holding that all the
elements and ingredients under Section 92 of the CPC stood fulfilled and granting
leave, the learned Single Judge observed as follows:
i. First , whether it be the Interim Forensic Audit Report dated 13.08.2021 or the
various reports submitted under the Chairmanship of Justice (retd.) R.V.
Easwar, there was no gainsaying that actions are required to be taken to remedy
the state of affairs of the appellant Society, particularly in relation to its
financial affairs and administrations, for which the directions of the court may
be necessary.


Page No. 11 of 167

ii. Secondly, heavy reliance was placed on the decision of this Court in Ashok
Kumar Gupta & Anr vs. Sitalaxmi Sahuwala Medical Trust & Ors. reported
in (2020) 4 SCC 321 to grant leave under Section 92 of the CPC since the
enunciation of law in the said decision is also said to have been made in a
strikingly similar factual background. It was reiterated that it is the dominant
purpose of the suit, as discernible strictly from the allegations made in the
plaint that is required to be assessed by the court while considering whether
leave must be granted to institute the suit or not.
iii. Thirdly , that the respondent no. 1 (original plaintiff no. 1) being one of the co-
founders of the appellant Society and a long-time President of its Board, along
with the respondent no. 2 (original plaintiff no. 2) who has been associated
with the appellant Society for an extended period of time while also continuing
to be a member of its Board, would constitute ‘ persons having an interest in
the trust ’.
iv. Fourthly , while referring to Article 13 of the AoA as per which the society is
entitled to raise funds by way of gifts, donations, grants-in-aid or otherwise
strictly for the purpose of carrying out the aims and objectives of the society,
it was opined that the formal ‘entrustment’ of property or funds by a third-party
to the appellant Society would not be a necessary ingredient to hold that the
society is a ‘constructive trust’. If that formality were a sine-qua-non , the very
distinction between a ‘trust’ and a ‘constructive trust’ would stand obliterated.
Since any grant-in-aid, donation or gift made by a third-party to the society
would, by its very nature, be intended to be used for the benefit of those in need


Page No. 12 of 167

of medical care in furtherance of the objects of the society, it was held that this
in-itself would be sufficient to infer that all such grants-in-aid, donations gifts
etc., made to the society would become property ‘entrusted’ to it, by reason of
which the society would acquire the character of a ‘constructive trust’.
v. Fifthly , after perusing the aims and objects of the appellant Society as detailed
in the MoA it was declared that the appellant Society is evidently engaged in a
‘public purpose of charitable nature’ since they principally provide health care
services to the underprivileged sections of the society, specifically with respect
to the treatment, education and prevention of tuberculosis.
vi. Lastly, that the claims made in the suit also co-relate and fall within the scope
of the reliefs contemplated under Section 92 of the CPC, more particularly sub-
sections (1)(d) and (1)(h) thereof.

13. The relevant observations made by the learned Single Judge are reproduced
hereinbelow:

“ 20. Therefore, we must not lose sight of the fact, that for purposes
of deciding whether leave should be granted under section 92
CPC, it is only the allegations in the plaint that should be looked
into in the first instance; it being available to the court to even
dismiss the suit if after evidence is led it is found that the breach
of the trust alleged was not made-out.

21. To reiterate it is the dominant purpose of the suit, as
discernible only from the allegations in the plaint, that is required
to be assessed by the court at the stage of considering whether
leave should be granted under section 92 CPC to institute a suit. ”

22. In the present case, the following assertions are found in the
plaint:


Page No. 13 of 167


22.1. Plaintiff No.1 is one of the co-founders of defendant No. 1
society and has been a long time President of its Board, Plaintiff
No.2. has been associated with defendant No.1 society for a long
time and continues to be a member of the Board of the society,
even if she is plaintiff No.1's mother. In fact these assertions
appear to reflect the admitted position.

22.2. Plaintiff No.1 has played a pivotal role in the functioning of
the society ever since it was established.

-xxx-

“ 22.4 . Furthermore, a perusal of the Articles of Association
(‘AOA’) of defendant No.1 society inter-alia shows that the
management of the society is entrusted to an Executive Committee,
which is entitled to raise funds for the society by way of gifts,
donations, grants-in-aid or otherwise, which funds are to be used
to carry-out the aims and objectives of the society. Attention in this
behalf may be drawn to Article 13 of the AoA of the society, which
reads as follows […]

In the opinion of this court, the formal ‘entrustment’ of property
or funds by a third-party to defendant No.1 society is not a
necessary ingredient to hold that the society is a constructive
trust’. If that formality were a sine-qua-non, the very distinction
between a ‘trust’ and a ‘constructive trust’ would get obliterated.
This court is of the view, that any grant-in-aid, donation or gift
made by a third-party to the society is, by its very nature, meant
and intended to be used for the benefit of those in need of medical
care in furtherance of the objects and purpose of the society. This,
in itself, is sufficient to infer that all such grants-in-aid, donations,
gifts etc. made to the society are property entrusted to it, by reason
of which the society acquires the character of a 'constructive
trust'. ”

22.5. Also, defendant No.1 is evidently engaged in a public
purpose of charitable nature, since it provides medical-aid and
relief to patients of tuberculosis who otherwise cannot afford
treatment, thereby fulfilling the other criterion of section 92 CPC.

22.6. In this manner, defendant No.1 society fulfils all conditions
necessary to invoke section 92 CPC, as enunciated by the Supreme
Court in Ashok Kumar Gupta (supra) and the elements required
to qualify as a 'constructive trust' as laid down by a Co-ordinate


Page No. 14 of 167

Bench of this court in The Young Mens Christian Association of
Ernakulam (supra) cited above.

23. In addition, the IFAR as well as the multiple audit reports
submitted in relation to the administration and financial affairs of
the society, including under the chairmanship of Justice Easwar,
clearly disclose that the manner in which the affairs of the society
are being run, requires closer consideration and scrutiny.

24. Furthermore, the claims made in the suit also co-relate and
fall within the scope of the reliefs contemplated in section 92 CPC,
especially section 92(d) and (h) thereof;

25. In the above view of the matter, this court is persuaded to hold
that all elements and ingredients of section 92 CPC are satisfied;
and that therefore, the plaintiffs are entitled to grant of leave to
institute the present suit under section 92, CPC.

26. To obviate any ambiguity, it may be clarified that the grant of
leave to the plaintiffs to institute the suit would not prevent the
court from dismissing die suit subsequently, if the allegations
contained in the plaint are found not to be substantiated.

27. The application is accordingly allowed. ”
(Emphasis supplied)


B. THE IMPUGNED JUDGMENT


14. Aggrieved by the aforesaid judgment and order of the learned Single Judge dated
03.05.2024, the appellant Society preferred an appeal being FAO (OS) No. 114 of
2024 before the Division Bench of the High Court. The Division Bench while
dismissing the appeal, observed as follows:
i. First, reliance was, again, placed on the decision of this Court in Ashok Kumar
Gupta (supra) in order to delineate the conditions that are required to be
satisfied under Section 92 of the CPC.


Page No. 15 of 167

ii. Secondly, the Division Bench echoed the observations made by the Single
Judge in as much as observing that the appellant Society is admittedly of a
charitable nature as evident from its MoA.
iii. Thirdly, reliance was placed on the relevant provisions of the MoA which
stipulated that all the incomes, earnings, movable or immovable properties of
the society shall be solely applied towards furthering the objectives of the
society and no profits shall be paid, either directly or indirectly, to the members
of the Board or any person claiming through or under them. Furthermore,
while referring to Article 11.2.1 of the AoA which specifically stated that all
the properties, movable, immovable and other kinds of assets shall stand
vested in the Executive Committee of the appellant Society, the Division
Bench expressed its agreement with the views of the Single Judge that all
donations, gifts etc. made to the appellant Society are property ‘entrusted’ to
it, due to which the society would acquire the character of a ‘constructive
trust’.
iv. Fourthly, referring to the decision of this Court in Shiromani Gurudwara
Prabandhak Committee vs. Som Nath Dass reported in 2000 (4) SCC 146, it
opined that the donations, gifts, etc., being received by the appellant Society
and being vested in the Committee from various institutions would constitute
an ‘endowment’ for public purpose.
v. Lastly, although the Bench acknowledged the contention of the counsel for the
appellant Society that prayer (b) of the plaint agitates a personal/private
grievance, yet it took the view that the reliefs sought in prayers (d) and (e) of


Page No. 16 of 167

the plaint fall within those reliefs contemplated under sub-section (1) of
Section 92 of the CPC. The relevant observations of the Division Bench are
reproduced hereinbelow:
“ 12. Admittedly, the Appellant-society is of a charitable nature as
it has been formed primarily for serving the under-privileged
sections of the society, in particular, patients suffering from
tuberculosis. […]

13. The Memorandum of Association further stipulates that all the
incomes, earnings, movable or immovable properties of the
society shall be solely utilized and applied towards the promotion
of its aims and objectives only as set forth in the Memorandum of
Association and no profits thereof shall be paid or transferred
directly or indirectly by way of dividends, bonus or profits in any
manner whatsoever to the present or past members or to any
person claiming through any one or more of the present or the past
members. The Memorandum of Association also states that no
member of the society shall have any profits, whatsoever by virtue
of his membership, the names, addresses, occupations and
signatures of the present members of the Executive Committee to
whom the management and affairs of the society are entrusted, as
required under Section 2 of the Societies Registration Act, 1860
(Punjab Amendment Act of 1957).

14 . Article 11.2.1 of the Articles of Association specifically
stipulates that all the properties, movable, immovable and other
kinds of assets shall stand vested in the Committee.


15 . Keeping in view the aforesaid as well as the fact that the
Appellant has been set-up with the primary objective of providing
medical relief to patients, who otherwise cannot afford such
treatment, this Court is in agreement with the view of the learned
Single Judge that all the donations, gifts etc. made to the
Appellant-society are property entrusted to it, by reason of which
the society acquires the character of a ‘constructive trust’.


16. In the above context, it would also be necessary to refer to the
judgment of Supreme Court in Shiromani Gurudwara Prabandhak
Committee vs. Som Nath Dass 2000 (4) SCC 146, wherein it has
been held that an “endowment” is, when the donor parts with his


Page No. 17 of 167

property for it to be used for a public purpose and its entrustment
is to a person or group of persons for carrying out the objective of
such entrustment. It was held that once an endowment is made, it
is final and irrevocable and it is onerous duty of the persons
entrusted with such endowment to carry out the objectives of this
entrustment. It was further held once an endowment, it never
reverts even to the donor. The Supreme Court has also considered
that endowment” means property or pecuniary means bestowed as
a permanent fund, as endowment of a college, hospital or library,
and is understood in common parlance as a fund yielding income
for support of an institution. Having regard to the aforesaid, it is
clear that donations, gifts etc. which were being received by the
Appellant, and being vested in the committee, from various
institutions would be endowment for public purpose.”

17. Though the learned senior counsel for the Appellant is correct
in contending that prayer (b) of the plaint agitates a
personal/private grievance yet this Court is of the view that the
reliefs sought in prayers (d) and (e) of the plaint fall within the
reliefs mentioned in sub section (1) of Section 92 CPC.

18. Consequently, this Court is of the view that the impugned order
calls for no interference. Accordingly, the present appeal along
with the application is dismissed. ”
(Emphasis supplied)



C. SUBMISSIONS OF THE PARTIES

i. Submissions on behalf of the Appellant

15. Mr. Dama Seshadri Naidu, the learned Senior Counsel appearing for the appellant
Society submitted that the appellant Society is a ‘registered society’ under the
Societies Registration Act, 1960 and is not a ‘Trust’ for the purposes of Section 92
of the CPC. It was argued that it is a settled law that the governing body members
of the society shall only become ‘trustees’ if a trust is created for the purpose of


Page No. 18 of 167

managing the assets of the society. The same not being the case in the present
scenario, the suit cannot be held to be maintainable. To fortify his argument that a
suit under Section 92 would not be maintainable against a ‘registered society’, the
counsel placed reliance on the decision of the Delhi High Court in S.R. Bahugana
v. All India Women’s Conference and Ors. reported in (2009) ILR 7 Delhi 614 and
that of the Kerala High Court in Abhaya vs. JA Raheem reported in 2005 SCC
OnLine Ker 234 .

16. The counsel submitted that as per the AoA of the appellant Society, the property of
the society is not held in a ‘trust’, which is the fundamental requirement for the
appellant Society to be termed as a ‘constructive trust’. Specific reference was made
to Clauses 11.2.1 and 11.2.3.8 of the AoA respectively to contend that the property
of the society stands vested in the ‘Committee’ or Governing Body of the Society,
as per the mandate of Section 5 of the Societies Registration Act, 1860. On this
aspect, reliance was placed on the decision of the Madras High Court in K.
Rajamanickam v. Periyar Self Respect Propaganda Institution, Thiruchirapalli
reported in 2006 SCC OnLine Mad 379 .

17. Taking recourse to the decision of this Court in Swami Paramatmanand Saraswati
v. Ramji Tripathi reported in 1974 2 SCC 695, it was submitted that, while deciding
an application under Section 92 of the CPC, the court must only look at the
averments made in the plaint. The plaint, in the present case, is conspicuously silent
on how the appellant Society falls within the definition of the term ‘constructive


Page No. 19 of 167

trust’. Therefore, it was submitted that the underlying suit is clearly beyond the ambit
of Section 92.

18. To further substantiate his submissions as regards the appellant Society not being a
‘constructive trust’, the counsel stated that “ a constructive trust is another species
of trust where a trust is automatically imposed by equity on an owner of property
but in special circumstances where it is unconscionable for the owner of property to
hold the property purely for his own benefit ”. To illustrate, where a trustee of a
leasehold property at the termination of the lease renews the lease purportedly in his
own personal favour or where a trustee has wrongfully gratuitously transferred trust
property to an innocent done who upon subsequently discovering the trust attempts
to retain the property for himself. It was submitted that Mukherjee on the Indian
Trust Act, 1881 (2021) also elaborated on the Doctrine of Constructive Trust by
arguing that a ‘constructive trust’ arises not by the act of parties but by operation of
law. When a trustee gains some personal advantage by utilising his trusteeship, he
becomes a constructive trustee in respect of the advantages gained.

19. The counsel submitted that the Halsbury Laws of India on the nature of a
constructive trust remarks that a constructive trust attaches by law to a specific
property which is neither expressly subject to any trust nor subject to a resulting trust
but, which is held by a person in circumstances where it would be inequitable to
allow him to assert full beneficial ownership of the property. In the present case, he
argued that the factual situation is entirely different and the property of the appellant
Society is vested in the governing body of the Society.


Page No. 20 of 167


20. It was also submitted that the prayers made in the present suit demonstrate that the
same has been filed solely for the purpose of vindication of personal rights of the
respondent no. 1. More specifically, the prayers seek to declare the board decisions
taken by the appellant Society from 01.06.2020 as null and void, since her
employment/services were terminated during this time. The respondent no. 1 also
seeks a declaration that her termination was bad in law along with a direction that
the respondent no. 3 be removed from the appellant Society. These reliefs are clearly
beyond the scope of Section 92 and smack of personal vendetta and enmity. No relief
has been sought for the benefit of the society or to improve its functioning.

21. It was submitted that the provisions under Section 92 of the CPC can be invoked
only when two conditions are satisfied i.e. (a) it should be with regard to a public
trust to obtain a decree for the purposes mentioned in the said provision, and (b) the
suit should be on behalf of the Advocate General or two or more persons having an
interest in the trust. He submitted that both the aforesaid conditions have not been
fulfilled in the present case since the appellant Society is not a public trust and there
is no pleading in the plaint showing that the respondent no. 2 (original plaintiff no.
2) is a party having an “interest” in the society. Moreover, the respondent no. 2 has
not even signed the plaint in the instant suit.

22. In light of the aforesaid, it was submitted that the impugned decision is upheld, it
would obliterate the distinction carved out by law between a ‘trust’ and a ‘society’
for which two different legislations have been enacted. Therefore, it was prayed that


Page No. 21 of 167

the impugned decision be set aside and the underlying suit, pending before the High
Court, be dismissed.

ii. Submissions on behalf of the respondent no. 1

23. On the other hand, Mr. Jai Anant Dehadrai, the learned counsel appearing for the
respondent no. 1 submitted that the ingredients required to be satisfied before
invoking Section 92 of the CPC was clearly laid down in Ashok Kumar Gupta
(supra) as follows:
(a) There should be a breach of express or constructive trust;
(b) The trust must have been created for a public purpose, either of a charitable
or religious nature;
(c) The suit must seek for reliefs as enumerated under Section 92(1) of the CPC.

24. The counsel submitted that the appellant society was formed with the specific aim
to serve the underprivileged members of the society who are suffering from
tuberculosis and who cannot afford its treatment. The same is evident from the MoA
of the appellant Society. The donors, who are based in India as well as abroad,
primarily the United States, were providing funds in order to further this very
objective. Therefore, the appellant Society, being engaged in the social welfare of
the general public, possesses the characteristics of an organisation with a ‘charitable
nature’.


Page No. 22 of 167

25. In order to canvass the argument that a society registered under the Societies
Registration Act, 1860 can be construed as a ‘constructive trust’, the counsel placed
reliance on the decision of the Delhi High Court in The Young Mens Christian
Association of Ernakulam and Ors. v. National Council YMCAS of India reported
in 2018 SCC OnLine Del 9909 wherein it was opined that a society registered under
the Societies Registration Act, 1860 can be construed as a constructive trust if its
satisfies the elements mentioned in Section 3 of the Indian Trusts Act, 1882.

26. It was submitted that the appellant Society is being entrusted with the funds from
the donors for public service. Upon a perusal of the Memorandum of Association, it
is evident that all the earnings and income generated, or funds received by the society
shall only be utilised for the betterment of the general public and to provide free
health services, and no profits shall be transferred directly or indirectly to the
members of the society. Additionally, Clause 11.2.1 of the AoA specifically
provides that “ All the properties, movable, immovable and other kind of assets shall
stand vested in the Committee ”. Therefore, all the donor funds, gifts etc. are
entrusted to the appellant Society to be utilised for the public purpose as enumerated
in the aims and objectives contained in its MoA. For all these reasons, the society
acquires the character of a ‘constructive trust’.

27. It was submitted that the reliefs sought in the plaint are in complete consonance with
Section 92(1) of the CPC and the impugned decision has specifically held that the
reliefs sought by the respondent nos. 1 and 2 respectively in their plaint, in particular,


Page No. 23 of 167

prayers (d) and (e) fall within the reliefs mentioned under Section 92(1). Hence, the
plaint satisfies yet another ingredient required under Section 92 of the CPC.

28. In light of the aforesaid, it was submitted that the appellant Society though registered
under the Societies Registration Act, 1860 yet must be construed as falling within
the expression of a ‘constructive trust’ under Section 92 of the CPC as it holds
property for charitable work. Therefore, the impugned decision granting leave to
institute the suit, suffers from no infirmity and may not be interfered with.

iii. Submissions on behalf of the respondent nos. 3 and 4

29. The learned Counsel appearing on behalf of the respondent nos. 3 and 4 respectively,
submitted that the application seeking leave to institute the present suit has been filed
in complete disregard of the mandatory conditions stipulated under Section 92 of the
CPC. Section 92 requires a suit of this nature to be filed by at least two interested
parties. While the respondent no. 2 (original plaintiff no. 2) has been included as one
of the plaintiffs, it is pertinent to note that the plaint has not been signed by the
respondent no. 2. Additionally, there is neither any verification on behalf of the
respondent no. 2 nor an affidavit in support of the plaint, as required under Section
26(2) of the CPC. These substantial procedural breaches render the plaint non- est in
the eyes of law, and consequently, make it liable to be rejected at the very threshold.
It was further submitted that there is a strong likelihood that the signatures of the
respondent no. 2 was fraudulently affixed in the suit documents.


Page No. 24 of 167

30. The counsel vehemently submitted that the suit under Section 92 of the CPC is
legally untenable as it falls to fulfil the requisite conditions as regards maintainability
and also for the reason that it is completely based on false allegations and has been
filed to wreck a personal vendetta against the respondent nos. 3 and 4 respectively.
Therefore, it was prayed that the present appeal be allowed and the impugned
decision be set aside.

D. ISSUES FOR DETERMINATION

31. Having heard the learned counsel appearing on behalf of the parties and having gone
through the materials on record, the only question that falls for our consideration is
whether in the facts and circumstances of the present case, the appellant Society
registered under the Societies Registration Act, 1860 can be said to have fulfilled all
the requirements stipulated under Section 92 of the CPC for the purpose of
instituting a suit under the said provision?

E. ANALYSIS

i. The Object and purpose behind Section 92 of the CPC.

32. Section 92 of the CPC reads as follows:
“ 92. Public charities —
(1) In the case of any alleged breach of any express or constructive
trust created for public purposes of a charitable or religious
nature, or where the direction of the Court is deemed necessary


Page No. 25 of 167

for the administration of any such trust, the Advocate-General, or
two or more persons having an interest in the trust and having
obtained the [leave of the Court,] may institute a suit, whether
contentious or not, in the principal Civil Court of original
jurisdiction or in any other Court empowered in that behalf by the
State Government within the local limits of whose jurisdiction the
whole or any part of the subject-matter of the trust is situate to
obtain a decree—
(a) removing any trustee;
(b) appointing a new trustee;
I vesting any property in a trustee;
[(cc) directing a trustee who has been removed or a person who
has ceased to be a trustee, to deliver possession of any trust
property in his possession to the person entitled to the possession
of such property;]
(d) directing accounts and inquiries;
I declaring what proportion of the trust property or of the interest
therein shall be allocated to any particular object of the trust;
(f) authorising the whole or any part of the trust property to be let,
sold, mortgaged or exchanged;
(g) settling a scheme; or
(h) granting such further or other relief as the nature of the case
may require.
(2) Save as provided by the Religious Endowments Act, 1863 (20
of 1863), [or by any corresponding law in force in [the territories
st
which, immediately before the 1 November, 1956, were
comprised in Part B States]], no suit claiming any of the reliefs
specified in sub-section (1) shall be instituted in respect of any
such trust as is therein referred to except in conformity with the
provisions of that sub-section.
[(3) The Court may alter the original purposes of an express or
constructive trust created for public purposes of a charitable or
religious nature and allow the property or income of such trust or
any portion thereof to be applied cy pres in one or more of the
following circumstances, namely:—
(a) where the original purposes of the trust, in whole or in part,—
(i) have been, as far as may be, fulfilled; or


Page No. 26 of 167

(ii) cannot be carried out at all, or cannot be carried out according
to the directions given in the instrument creating the trust or,
where there is no such instrument, according to the spirit of the
trust; or
(b) where the original purposes of the trust provide a use for a part
only of the property available by virtue of the trust; or
I where the property available by virtue of the trust and other
property applicable for similar purposes can be more effectively
used in conjunction with, and to that end can suitably be made
applicable to any other purpose, regard being had to the spirit of
the trust and its applicability to common purposes; or
(d) where the original purposes, in whole or in part, were laid
down by reference to an area which then was, but has since ceased
to be, a unit for such purposes; or
I where the original purposes, in whole or in part, have, since they
were laid down,—
(i) been adequately provided for by other means, or
(ii) ceased, as being useless or harmful to the community, or
(iii) ceased to be, in law, charitable, or
(iv) ceased in any other way to provide a suitable and effective
method of using the property available by virtue of the trust,
regard being had to the spirit of the trust.] ”
(Emphasis supplied)

33. A suit under this provision can be termed as a ‘ representative suit of a special
nature’ since the object behind the enactment of this provision is the protection of
public rights in the public trust. Therefore, the parties filing a suit by invoking this
section are considered to be representatives of the public.

34. A three-judge bench of this Court in Ahman Adam Sait and Others v. M.E. Makhri
and Others reported in 1963 SCC OnLine SC 71 had elaborated on how a suit under


Page No. 27 of 167

Section 92 of the CPC is a ‘representative suit’ while deciding whether the second
suit would be barred by constructive res judicata . It was stated that when a suit is
brought under Section 92, by two or more persons interested in the trust, they could
be said to have taken upon themselves the responsibility of representing all the
beneficiaries in the trust and though, all the said beneficiaries may not be expressly
impleaded in the suit, the action is essentially instituted on their behalf and the relief
claimed is representative in character. While stating so, however, it was clarified that
the plaintiffs bringing the second suit must have the ‘same interest’ as that of the
plaintiffs or defendants of the earlier representative suit, for the principle of res
judicata to apply. In other words, it must be examined if the interest of the plaintiffs
in the second suit was represented in the earlier representative suit. The relevant
observations are thus:
“ 16. In assessing the validity of this argument, it is necessary to
consider the basis of the decisions that a decree passed in a suit
under Section 92 binds all parties. The basis of this view is that a
suit under Section 92 is a representative suit and is brought with
the necessary sanction required by it on behalf of all the
beneficiaries interested in the Trust. The said section authorises
two or more persons having an interest in the trust to file a suit for
claiming one or more of the reliefs specified in clauses (a) to (h)
of sub-section (1) after consent in writing there prescribed has
been obtained. Thus, when a suit is brought under Section 92, it is
brought by two or more persons interested in the trust who have
taken upon themselves the responsibility of representing all the
beneficiaries of the Trust. In such a suit, though all the
beneficiaries may not be expressly impleaded, the action is
instituted on their behalf and relief is claimed in a representative
character. This position immediately attracts the provisions of
Explanation VI to Section 11 of the Code. Explanation VI provides
that where persons litigate bona fide in respect of a public right or
of a private right claimed in common for themselves and others,
all persons interested in such right shall, for the purposes of this
section, be deemed to claim under the persons so litigating. It is


Page No. 28 of 167

clear that Section 11 read with its Explanation VI leads to the
result that a decree passed in suit instituted by persons to which
Explanation VI applies will bar further claims by persons
interested in the same right in respect of which the prior suit had
been instituted. Explanation VI thus illustrates one aspect of
constructive res judicata. Where a representative suit is brought
under Section 92 and a decree is passed in such a suit, law
assumes that all persons who have the same interest as the
plaintiffs in the representative suit were represented by the said
plaintiffs and, therefore, are constructively barred by res judicata
from reagitating the matters directly and substantially in issue in
the said earlier suit.”
(Emphasis supplied)

35. Similarly, in Shiromani Gurdwara Parbandhak Committee v. Mahant Harnam
Singh reported in (2003) 11 SCC 377, this Court had opined that a suit under Section
92 is of a special nature and for the protection of public rights in public trust and
charities. It is for the vindication of public rights since the suit is instituted
fundamentally on behalf of the entire body of persons who are interested in the trust.
It cannot be said that only those persons whose names are in the suit-title would be
considered to be the parties to the suit. The named plaintiffs are only the
representatives of the public at large who are interested in the suit and therefore, in
the eyes of law, all such interested persons would be considered to be parties to the
suit. The relevant observations are reproduced hereinbelow:
“ 19. As observed by this Court in R. Venugopala
Naidu v. Venkatarayulu Naidu Charities [1989 Supp (2) SCC 356
: AIR 1990 SC 444] a suit under Section 92 CPC is a suit of special
nature for the protection of public rights in the public trust and
charities. The suit is fundamentally on behalf of the entire body of
persons who are interested in the trust. It is for the vindication of
public rights. The beneficiaries of the trust, which may consist of
the public at large, may choose two or more persons amongst
themselves for the purpose of filing a suit under Section 92 CPC
and the suit-title in that event would show only their names as


Page No. 29 of 167

plaintiffs. Can we say that the persons whose names are in the suit-
title are the only parties to the suit? The answer would be in the
negative. The named plaintiffs being the representatives of the
public at large which is interested in the trust, all such interested
persons would be considered in the eyes of the law to be parties to
the suit. A suit under Section 92 CPC is thus a representative suit
and as such binds not only the parties named in the suit-title but
all those who share common interest and are interested in the
trust. It is for that reason that Explanation VI to Section 11 CPC
constructively bars by res judicata the entire body of interested
persons from reagitating the matters directly and substantially in
issue in an earlier suit under Section 92 CPC. ”
(Emphasis supplied)

36. In Vidyodaya Trust v. Mohan Prasad reported in (2008) 4 SCC 115 , this Court had
emphasised that it is not every suit which relates to a public trust of religious or
charitable nature and which contains reliefs which fall within some of the clauses
under sub-section (1) of Section 92 that can be brought under the ambit of Section
92 of the CPC. Those suits must also essentially be initiated by individuals as
representatives of the public for the vindication of public rights. While opining so,
this Court also elaborated on the object behind requiring a ‘grant of leave’ from the
appropriate court before the suit can be proceeded with. The same was said to have
been mandated as a pre-requisite or a procedural safeguard in order to prevent the
public trusts from being subjected to undue harassment through frivolous suits being
filed against them. If the persons responsible for the management of the trusts are
subjected to multiplicity of legal proceedings, then it would be the ultimate
beneficiaries of the trust who would lose out since the trust would have to dedicate
time to defend the suit and the funds which are to be utilised to further the objectives
of the public trust would also have to be re-routed and wasted on litigation. In the


Page No. 30 of 167

opinion of the Court, this ordeal might also dissuade persons of high moral character
and honest intentions from becoming trustees of public trusts. The pertinent
observations are reproduced hereinbelow:
18. Prior to legislative change made by the Code of Civil
Procedure (Amendment) Act (104 of 1976) the expression used
was “consent in writing of the Advocate General”. This expression
has been substituted by the words “leave of the Court”. Sub-
section (3) has also been inserted by the Amendment Act. The
object of Section 92 CPC is to protect the public trust of a
charitable and religious nature from being subjected to
harassment by suits filed against them. Public trusts for charitable
and religious purpose are run for the benefit of the public. No
individual should take benefit from them. If the persons in
management of the trusts are subjected to multiplicity of legal
proceedings, funds which are to be used for charitable or religious
purposes would be wasted on litigation. The harassment might
dissuade respectable and honest people from becoming trustees of
pubic trusts. Thus, there is need for scrutiny.

-xxx-

25. In Sugra Bibi v. Hazi Kummu Mia [AIR 1943 Mad 466] it was
held that the mere fact that the suit relates to public trust of
religious or charitable nature and the reliefs claimed fall within
some of the clauses of sub-section (1) of Section 92 would not by
itself attract the operation of the section, unless the suit is of a
representative character instituted in the interest of the public and
not merely for vindication of the individual or personal rights of
the plaintiffs.

26. To put it differently, it is not every suit claiming reliefs
specified in Section 92 that can be brought under the section; but
only the suits which besides claiming any of the reliefs are brought
by individuals as representatives of the public for vindication of
public rights. As a decisive factor the Court has to go beyond the
relief and have regard to the capacity in which the plaintiff has
sued and the purpose for which the suit was brought. The courts
have to be careful to eliminate the possibility of a suit being laid
against public trusts under Section 92 by persons whose activities
were not for protection of the interests of the public trusts.[…]”

(Emphasis supplied)


Page No. 31 of 167


37. In Swami Shivshankargiri Chella Swami v . Satya Gyan Niketan , reported in (2017)
4 SCC 771, while holding that a trust can be created by virtue of a conditional gift,
this Court had also elaborated on the purpose behind requiring grant of leave from
the court under Section 92 before a suit can be instituted. It was opined that such a
condition has been legislatively prescribed in order to prevent a public trust from
being harassed or to obviate the institution of reckless or frivolous suits against its
trustees. The relevant observations are as thus:
“ 11. The present Section 92 CPC corresponds to Section 539 of
the old Code of 1883 and has been borrowed in part from 52 Geo.
3, c. 101, called Romilly’s Act of the United Kingdom. A bare
perusal of the said section would show that a suit can be instituted
in respect of a public trust by the Advocate General or two or more
persons having an interest in the trust after obtaining leave of the
Court in the Principal Civil Court of Original Jurisdiction. An
analysis of these provisions would show that it was considered
desirable to prevent a public trust from being harassed or put to
legal expenses by reckless or frivolous suits being brought against
the trustees and hence a provision was made for leave of the court
having to be obtained before the suit is instituted.

(Emphasis supplied)
38. Thus, the grant of leave under Section 92 of CPC serves as a procedural safeguard,
ensuring that public charitable trusts are protected from mala fide suits that may have
the consequence of impeding their operations. At this stage, however, the court
neither adjudicates upon the merits of the dispute nor confers any substantive rights
upon the parties; what is established is merely the maintainability of the suit which
is sought to be initiated by the plaintiffs.



Page No. 32 of 167

ii. Conditions to be fulfilled for the applicability of Section 92 of the CPC

39. Section 92 of the CPC has been created for a specific purpose and to address a
specific kind of grievance which has the impact of affecting public rights as
enumerated above. Therefore, not all suits can be blindly brought within the fold of
this provision. In the facts and circumstances of each case, the court granting leave
must examine whether the suit qualifies certain conditions which align with the
intent behind the creation of this provision. Courts must tread with caution so as to
weed out those suits which are camouflaged as falling within its ambit just with a
view to take an undue benefit of provision and for causing harassment to the public
trust or for the vindication of personal rights.

40. This Court in Ashok Kumar Gupta (supra) had laid down three conditions which
are a sine qua non in order to invoke Section 92 of the CPC and maintain an action
under the said provision. Upon placing reliance on various decisions of this Court,
the conditions were delineated as follows – (a) the trust in question must be created
for public purposes of a charitable or religious nature; (b) there must exist a breach
of trust or a direction of the court must be necessary for the administration of the
trust; and (c) the relief claimed must be one or other of the reliefs as enumerated
under Section 92(1) of the CPC. The relevant observations are reproduced as thus:

Page No. 33 of 167

“7. It is settled law that to invoke Section 92 of the Code of
Civil Procedure, 3 conditions have to be satisfied, namely,
(i) the trust is created for public purposes of a charitable or
religious nature; (ii) there was a breach of trust or a
direction of court is necessary in the administration of such
a trust; and (iii) the relief claimed is one or other of the


Page No. 34 of 167

(Emphasis supplied)


41. As a natural corollary, it follows that in order to successfully establish that a suit
is beyond the scope of Section 92 of the CPC, it would be sufficient to prove that
any one of the conditions enumerated above has not been met. However, on the
other hand, for a suit to be maintainable under this provision, the plaintiffs must
be able to satisfy the court that all the conditions, or in other words, the necessary
ingredients, under this section, have been fulfilled.




Page No. 35 of 167

A. The trust being created for a public purpose of a charitable or religious
nature.

42. A trust can be said to have been created for a ‘public purpose’ when the beneficiaries
are the general public who are incapable of exact ascertainment. Even if the
beneficiaries are not necessarily the public at large, they must at least be a classified
section of it and not a pre-ascertained group of specific individuals.

43. What constitutes “charitable purpose” has been defined under Section 2 of the
Charitable Endowments Act, 1890 as follows:

“ 2. Definition.— In this Act “charitable purpose” includes relief
of the poor, education, medical relief and the advancement of any
other object of general public utility, but does not include a
purpose which relates exclusively to religious teaching or
worship. ”
(Emphasis supplied)

Therefore, the term includes relief to the poor, education, medical relief and
the advancement of any other object of ‘general public utility’, while excluding
activities whose purpose relates exclusively to religious teaching or worship.

44. There remains no doubt that the appellant Society in the instant case, working
towards bringing equity in public health, with particular focus on providing for the
education, treatment and prevention of tuberculosis, has been created for a ‘public
purpose of charitable nature’. This is clearly evident from its objectives outlined in
the MoA and the beneficiaries that it seeks to serve, amongst others. The same is an


Page No. 36 of 167

admitted position and we need not delve into the nitty-gritties of whether the
appellant society qualifies this aspect of the aforesaid condition. What remains
contested, however, is that the appellant society which has been registered under the
Societies Registration Act, 1860 cannot be construed to be a ‘trust’ or a ‘constructive
trust’ in order to subject it to the jurisdiction under Section 92 of the CPC.

I. Whether a Society can be construed to be a ‘trust or a ‘constructive

trust’?

45. A suit under Section 92 of the CPC being one of special nature, presupposes the
existence of a public trust of a religious or charitable character. The existence of a
public trust is essential, whether express or constructive. Therefore, a crucial
condition that needs satisfaction is whether the institution/organisation in relation
to which certain reliefs are sought can in fact be considered to be a ‘trust’ or a
‘constructive trust’. Having said so, however, an express declaration clearly
signifying that an entity is a trust or that the properties are trust properties would
not be a sine qua non in order to render a suit under Section 92 maintainable.

a. Circumstances under which the creation of a trust has been inferred

46. When no formal recognition has been given to the institution, the creation of a trust
can be inferred from the relevant circumstances surrounding the coming into
existence of and functioning of the institution/entity in question. The Privy Council
in Babu Bhagwan Din and Ors. v. Gir Har Saroop and Ors. reported in 1939 SCC


Page No. 37 of 167

OnLine PC 47 was concerned with the question whether a public trust of a religious
character existed in the facts and circumstances of the case. The decision also
established when a private temple may become dedicated to the public by subsequent
dealings. While negativing the contention that the private temple constituted a public
trust, emphasis was particularly laid on two aspects i.e., - First, the land in question
granted by the then Nawab of Oudh in 1781was not a grant to the idol or an
endowment of a temple or a gift made by way of trust for a public religious purpose.
Instead, it was a grant to a private individual and to his heirs in perpetuity. Therefore,
the historical setting and the circumstances of the grant was given importance to.
Secondly , While acknowledging that a private temple may become dedicated to the
public and morph into a public trust of a religious nature over the course of years, it
was held that such dedication has to be proved and the mere fact that the public were
never turned away and that offerings from them were accepted would not by itself
be sufficient proof of dedication, especially in the absence of an inference that the
public user exercised any ‘right’ pertaining to the temple or had acquired any
interest. Another pertinent factual aspect was also that the various forms of profit,
whether by offerings or rents received by letting out portions of the lands in their
own names, were divided amongst the family. The relevant observations are thus:

Page No. 38 of 167

attendance of the members of the family at its original home, and
erecting samadhs to the honour of its dead. In these
circumstances it is not enough, in their Lordships' opinion, to
deprive the family of their private property to show that Hindus
willing to worship have never been turned away or even that the
deity has acquired considerable popularity among Hindus of the
locality or among persons resorting to the annual mela.
Worshippers are naturally welcome at a temple because of the
offerings they bring and the repute they give to the idol : they do
not have to be turned away on pain of forfeiture of the temple
property as having become property belonging to a public trust.
Facts and circumstances, in order to be accepted as sufficient
proof of dedication of a temple as a public temple, must be
considered in their historical setting in such a case as the present;
and dedication to the public is not to be readily inferred when it is
known that the temple property was acquired by grant to an
individual or family. Such an inference, if made from the fact of
user by the public, is hazardous, since it would not in general be
consonant with Hindu sentiments or practice that worshippers
should be, turned away; and as worship generally implies
offerings of some kind, it is not to be expected that the managers
of a private temple should in all circumstances desire to
discourage popularity. […] The Chief Court have, in the opinion
of the Board correctly estimated the particular facts of the case,
before them and have rightly negatived the contentions that the
temple is a public temple and that the property in suit is impressed
with a trust of a public religious character. ”
(Emphasis supplied)

47. On the other hand, the Privy Council in Gurunatharudhaswami Guru
Shidharudhaswami v. Bhimappa Gangadhrawappa Divate reported in 1948 SCC
OnLine PC 43 , the issue related to whether the Court under Section 92 could direct
the removal of the head of the mutt while settling a scheme for the administration of
public trust properties despite the fact that the previous swami desired the said
person to succeed as the head of the mutt. The suit under Section 92, apart from the
aforesaid relief, was also concerned with whether the institution in question could
be called a ‘public trust’ of a religious or charitable nature. In deciding the aforesaid,


Page No. 39 of 167

particular reference was made to the circumstances in which the various properties
used in connection with the institution was acquired. Predominantly, all the offerings
made and gifts given by the public to the Swami was for the purposes of the ‘Math’
and additional properties were purchased out of the offerings initially given, except
one property which was concluded as having been received as a gift by the Swami’s
for his own personal benefit since there was no evidence to show that the said
solitary land was ever used for the benefit of the ‘Math’. Therefore, all the suit
properties with the exception of one, were regarded as accretions to the original
foundation/institution, and subject to an express or constructive trust created for
public purposes of a charitable or religious nature within the meaning of Section 92
of the CPC. The relevant observations are reproduced hereinbelow:

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Page No. 40 of 167

(Emphasis supplied)



Page No. 41 of 167

48. This Court in Bihar State Board Religious Trust, Patna v. Mahant Sri Biseshwar
Das reported in (1971) 1 SCC 574 had to determine whether the entity in question
constituted a religious trust so that it may be brought within the purview of a ‘public
trust’ under Section 2(1) of the Bihar Hindu Religious Trusts Act, 1951. The Trial
Court had also placed a lot of importance on ascertaining how the properties were
originally acquired and since, the respondent did not produce the Sanads under
which the founding Mahant had acquired the said properties and therefore, the nature
of the gifts and the manner in which they were made could not be determined, an
adverse inference was drawn against the respondent. However, this conclusion was
held to be misplaced since the onus of proof to show that the properties were being
held for public purposes of a religious or charitable character was said to rest on the
appellant Board who alleged that it was so. In holding thus, this Court also observed
as follows:
i. First , that it is true that a charitable trust might either be created by a grant for
an express purpose or a grant having been made in favour of an individual or a
class of individuals, and that individual or that class of individuals might, after
obtaining the grant, create a charitable trust.
ii. Secondly, that a property can be granted solely for the ‘grantee’s’ personal
benefit too, without there being any intention on part of the grantor to fetter the
grantee with any obligation in dealing with the property granted. Courts have
arrived at a conclusion whether the grant was for the benefit of the public, or
an unascertained section of the public, or for the benefit of the grantee himself,
or for class of ascertained individuals, either by keeping the manner and


Page No. 42 of 167

conditions of the grant itself at the forefront or, from the other circumstances
of the case. Further, an inference can also be drawn from the usage and custom
of the institution or from the mode in which its properties have been dealt with
along with other established circumstances.
iii. Lastly, that if a property is described as ‘appertaining to an
organisation/institution’ then for those properties to be considered as properties
of a public trust, the said organisation/institution must by itself first be a public
trust for religious or charitable purposes.

49. The relevant observations in Bihar State Board (supra) are thus:

-xxx-

10. Properties of the temple being thus admittedly in the
possession of the Mahants ever since the time of Gaibi Ramdasji,
the onus of proof that the respondent Mahant held them on trust
for public purposes of a religious or charitable character was
clearly on the appellant Board who alleged that it was so. The trial
Judge was, therefore, clearly in error in holding that the
respondent Mahant ought to have produced the Sanads and that
on his failure to do so an adverse inference could be drawn,
namely, that had they been produced they would have shown that
the grants to Gaibi Ramdasji were for public purposes of a


Page No. 43 of 167

-xxx-

-xxx-

21. Lastly, reference was made to some of the deeds of gifts made
by the reigning Mahants in favour of their nominees as successors
where the properties were described as appertaining to the Asthal.
Assuming that the scribes of these documents used the expression
“appertaining to the Asthal” in the sense in which such expression
is sometimes used in the deeds of conveyance, the expression
means things which are appurtenant to and forming part of the
principal property which is the subject-matter of the instrument.
[See Stroud's Judicial Dictionary, (3rd Edn.), Vol. I, 177.] The


Page No. 44 of 167

expression “appertaining to the Asthal” in these deeds, therefore,
would at best mean that the properties formed part of the Asthal
and are not the properties of the Mahant as distinct from those of
the Asthal. (See Sri Thakurji Ramji v. Mathura Prasad [AIR 1941
Pat 354 at 358] .) But unless the Asthal itself is a public trust for
religious or charitable purposes, the properties appertaining
thereto would not be properties of a public trust for religious or
charitable purposes. The use of the expression “appertaining to
the Asthal”, therefore, cannot lead to the conclusion that the
properties in question were stamped with a trust for public
purposes.”
(Emphasis supplied)

50. In another decision of this Court in Kuldip Chand and Another v. Advocate-General
to Government of H.P. and Others reported in (2003) 5 SCC 46, it was held that
the history of the institution, conduct of the parties and the user of the properties are
all factors to be examined to arrive to a determination as regards a public trust. The
issue related to whether by the mere use of the premises as a Dharamsala for about
125 years an inference could be drawn that the same belongs to a public trust.
Answering in the negative and holding that the Dharamsala was a private property
and not a public trust, this Court observed that a dedication for public purposes and
for the benefit of the general public would involve the complete cessation of
ownership on the part of the founder and vesting of the property for the religious
object. However, in circumstances where this dedication is not made via a formal or
express endowment, its character may have to be determined on the basis of the
history of the institution along with the conduct of the founder and his heirs. A
dedication would involve the complete relinquishment of individual right of
ownership. The owner must intend to divest himself of his ownership in the
dedicated property. The relevant observations are reproduced hereinbelow:


Page No. 45 of 167

“ 37. From the materials brought on record by the parties, as
noticed hereinbefore, the following facts emerge: (1) That the
shops were let out to other people. (2) People could come and stay
in the Dharamsala but for stay of more than three days, only upon
seeking permission therefor. (3) Rent received from the shops was
being used by the owners for their own purpose. (4) The
Dharamsala was being managed/maintained from the personal
funds of the owner. (5) The management and control of the
Dharamsala was all along with the owners. (6) A school was
opened in the Dharamsala. (7) A chowkidar was appointed by
Ranzor Singh to look after the Dharamsala and his salary used to
be paid by the owner from his own pocket. (8) The Dharamsala
could be used for marriage purpose but only with the permission
of the owners. (9) The first-floor rooms could be used only by the
officers or by others with the permission of the owner. (10) The
Dharamsala was ordinarily being used by the pilgrims only during
fair. (11) The public never contributed anything for maintenance
of the Dharamsala. (12) No member of the public had any say as
regards management of the Dharamsala and had no legal right to
use the same. (13) No member of public the ever participated in
the management of the Dharamsala. (14) No manager had ever
been appointed to look after and manage the property. (15) The
Dharamsala was not registered under the Sarais Act. (16) There
is no evidence to show that the owners acted as shebaits or
trustees.

38. A dedication for public purposes and for the benefit of the
general public would involve complete cessation of ownership on
the part of the founder and vesting of the property for the religious
object. In absence of a formal and express endowment, the
character of the dedication may have to be determined on the basis
of the history of the institution and the conduct of the founder and
his heirs. Such dedication may either be complete or partial. A
right of easement in favour of a community or a part of the
community would not constitute such dedication where the owner
retained the property for himself. It may be that right of the owner
of the property is qualified by public right of user but such right in
the instant case, as noticed hereinbefore, is not wholly
unrestricted. Apart from the fact that the public in general and/or
any particular community did not have any right of participation
in the management of the property nor for the maintenance thereof
any contribution was made is a matter of much significance. A
dedication, it may bear repetition to state, would mean complete
relinquishment of his right of ownership and proprietary. A
benevolent act on the part of a ruler of the State for the benefit of


Page No. 46 of 167

the general public may or may not amount to dedication for
charitable purpose.

39. When the complete control is retained by the owner — be it
appointment of a chowkidar, appropriation of rents, maintenance
thereof from his personal funds — dedication cannot be said to be
complete. There is no evidence except oral statements of some
witnesses to the effect that Raj Kumar Bir Singh became its first
trustee. Evidence adduced in this behalf is presumptive in nature.
How such trust was administered by Raj Kumar Bir Singh and
upon his death by his successors-in-interest has not been
disclosed. It appears that the family of the donor retained the
control over the property and, therefore, a complete dedication
cannot be inferred far less presumed. Furthermore, a trust which
has been created may be a private trust or a public trust. The
provisions of Section 92 of the Code of Civil Procedure would be
attracted only when a public trust comes into being and not
otherwise.

-xxx-

42. When a dedication to a charity is sought to be established in
absence of an instrument or grant, the law requires that such
dedication be established by cogent and satisfactory evidence of
conduct of the parties and user of the property which show the
extinction of the private secular character of the property and its
complete dedication to charity. It must be proved that the donor
intended to divest himself of his ownership in the dedicated
property. The meaning of charitable purpose may depend upon the
statute defining the same. ”.
(Emphasis supplied)


51. In Kuldip Chand (supra) , of the several factual circumstances that led this Court to
reach the conclusion that the Dharamsala was not a public trust in addition to the
owner’s intention to not relinquish ownership of the property, some are especially
pertinent – (a) in the premises of the Dharamsala, some portion was let out as shops
to other people, unconnected with the religious or charitable purpose; (b) the
income/rent received from those shops were not used to further the purpose of the


Page No. 47 of 167

alleged trust but was being used by the owners for their own purpose; (c) the
maintenance of the Dharamsala was also being done from the personal funds of the
owner and no contribution was made by the public for the maintenance of the
Dharamsala. All these facts were taken into account in arriving at the decision that
the Dharamsala was not a public trust.

52. On a conspectus of the aforesaid decisions, it could be said that the method of
devolution of the property to the institution or its acquisition, the intention behind
the grant of property i.e. whether it was for the benefit of the organization or for the
personal benefit of any particular individual/family – in other words, the historical
setting and the circumstances of the grant has been given considerable significance
while concluding whether a trust of a public charitable or religious nature exists.
Even if the grant was initially of a private nature, any subsequent dealings could
transform the organization into a public trust, however, such a ‘dedication’ to the
public must be sufficiently proved. That the public user or an unascertained class of
individuals could exercise any ‘right’ over the organization and its properties, could
also be a significant factor in concluding that a public trust has come into existence.
The manner of use of the profits accrued, more particularly, whether it was applied
towards the benefit of the organization or its objectives, could also lead to an
inference as regards the nature of the organization or the creation of a public trust.

53. Bihar State Board (supra) has reiterated that a charitable trust may either be created
by a grant for an express purpose or a grant having been made in favour of an


Page No. 48 of 167

individual(s), who might thereafter create a charitable trust. Due attention must also
be paid to whether the grant is accompanied with any fetter/obligation or qualified
with a condition, either express or implied, regarding its use by the grantee.
Therefore, the trifecta i.e., the intention, manner and conditions of the grant might
have to be scrutinized to see whether the grant was for the benefit of the public or
an unascertained section of the public. The intention to create a trust must be
indicated, either by words or acts with reasonable certainty. Other established
circumstances, including the method of use of the property and customs of the
institution or the mode and manner in which they have dealt with the properties in
the past, could also prove to be relevant.

54. Kuldip Chand (supra) had also placed emphasis on the history of the
institution/organization, the conduct of the parties and the beneficiaries of the
properties as relevant factors. Whether the ‘dedication’ was complete i.e., whether
there was an absolute cessation or complete relinquishment of ownership of the
property on the part of the grantor and a subsequent vesting of the property for the
said object, was also considered a key factor in determining if the dedication was for
public purposes. Furthermore, how the properties are managed, more specifically,
for whose benefit they are being managed; whether the profits are being re-routed to
the public and for their benefit; whether any personal funds of any founder/proprietor
are being applied for the running of the organization or is it maintained through funds
sourced from the public, are also aspects that one might need to paid due attention
to. Therefore, the overarching and fundamental purpose of the organization, the


Page No. 49 of 167

mode in which properties are acquired and its beneficiaries could color it with the
characteristics of a trust.

55. However, it must be noted that the aforementioned characteristics bear high
significance, when, as mentioned previously, there has been no formal recognition
of the entity in question and it has not been given a legal identity otherwise. Now,
the next question would be, how an entity which satisfies the aforementioned criteria
but has been, much later in time, registered as a society under the Societies
Registration Act, 1860, would be treated in the eyes of law. The answer to this lies
in the decision given by the Full Bench of the Kerala High Court in Kesava Panicker
v. Damodara Panicker and others reported in 1974 SCC OnLine Ker 58.

56. In Kesava Panicker (supra), the Full Bench had to decide, on the face of it, a
strikingly similar question i.e., whether a society registered under the Societies
Registration Act, 1860 could be considered to be a trust or a constructive trust for
the purposes of Section 92 of the CPC. However, the facts revealed that a public
trust was formed much before the society was registered. It is in such circumstances
that the Court arrived at the conclusion that the subject school, its properties and
monies formed a public trust of a charitable nature and that the suit under Section
92 was maintainable. The High Court elaborated as follows:
i. First, several factors led to the conclusion that the trust had been created, – that
the entire community in the area took an active interest and contributed funds
for the purpose of creating a ‘trust fund’ in order that the school may be


Page No. 50 of 167

established; A committee was formed for collecting funds either as donations
or as share capital; that long before the registration of the society, funds were
collected from the public towards share money; and there were other forms of
contributions as well. This according to the Full Bench reflected that there
existed a clear intention to form a trust and also that a trust fund was created.
These funds were utilized for the construction of the school building and for
other ancillary purposes including establishing and maintaining the other
functions of the school.
ii. Secondly, referring to Tudor on Charities, Sixth Edition , pg 128, it was opined
that a trust may be created by any language sufficient to show the intention, and
no technical words are necessary. Further, it was stated that the use of words
such as ‘intent’ or ‘purpose’ or a direction that a fund shall be applied by, or be
at the disposal of a person for certain intended charitable purposes, may very
well be as effective as the use of the word ‘trust’.
iii. Lastly, the mere factum of registration of a society under the Societies
Registration Act, 1860 could not change the character of the properties which
had already been constituted as trust properties and impressed with the trust,
especially when a trust has clearly been created by the public for a public
charitable purpose i.e., the establishing, maintaining and running of a school.
Any addition to the said properties would also possess the characteristics of a
trust property.

57. The relevant observations of the Full Bench are reproduced hereinbelow:


Page No. 51 of 167


“ 5. When once it has been found that the school building and the
furniture etc. as well as the funds of the school did not belong to
the appellant as is contended by him he was certainly liable to
account for the property of the school including the monies and
the direction to account cannot also be interfered with.
Considering the nature of the contentions raised by the appellant
the direction to remove him from management must also stand. It
is further essential that a scheme must be framed for the
management of the school and the decree permitting that being
done cannot also be altered.

6. All this we have said on the basis that the school and its
properties and its monies formed a public trust of a charitable
nature and that a suit such as the one envisaged by Section 92 of
the CPC and which was the type of suit that was instituted - it is
not even suggested that this is not so would be permissible and that
the suit in question was maintainable and that the plaintiffs were
entitled to sue. Regarding those questions the appellant's Counsel
vehemently argued that there has been no trust at all justifying
such an action. […] For a suit under Section 92 there must be a
public trust of the religious or charitable character. Herendra
Nath Bhattacharya v. Kaliram Das, (1972) 1 SCC 115 : AIR 1972
SC 246. The allegation in the plaint is that there is such a
charitable trust and that the appellant acting as a trustee de son
tort has misused the funds of the trust and have mismanaged the
properties. If the existence of a trust as alleged is established the
suit will have to be decreed. We shall presently consider whether
there is such a trust as alleged. Before going to that question we
shall refer to the other decisions as well relied on by counsel for
the appellant.

7. Counsel very strongly relied on the decision in G. Chikka
Venkatappa v. D. Hanumanthappa, (1970) 1 Mys LJ 296. The
decision is authority for the proposition that the formation of a
society under the Societies Registration Act to carry out any
charitable or useful or social purpose cannot be regarded as
amounting to creation of a trust for the application of Section 92
of the CPC. The effect of the Societies Registration Act is not to
invest properties of the society with the character of trust property.
Even if the purpose for which the society was formed was
charitable purpose the property acquired for this purpose will
belong to the society and there is no trust and no trust can be
predicated. So it was urged that even if the properties were
acquired by the Keralasseri High School Society there was no trust


Page No. 52 of 167

which would enable a suit being instituted in accordance with the
provisions of Section 92 of the CPC. If we may say so, with great
respect, the position stated in the decision is the correct one. That
was stated with reference to the facts of that case and the
conclusion arrived at after discussing the facts is seen from
paragraph 21 of the judgment which we shall extract.

“21. On the evidence, therefore, there cannot be the
slightest doubt that the construction of this building was
purely and exclusively an activity and concern of the
registered society called the Devanga Sangha. It was not
and cannot be described as a matter in which the entire
Devanga Community as Community took any interest or
any steps in such a way as to make it possible to suggest
that a specified item of property was dedicated by it, or
some members thereof, to public purpose, viz. some welfare
of the community at large.”

8. On the other hand the facts of this case show that the entire
community in the area took an active interest and contributed
funds for the purpose of creating a “trust fund” in order that a
school may be established. Though it was what was called the
“Keralasseri Food Committee” that first made a move for the
establishment of a High School by submitting Ext. A9
memorandum to the Chief Minister, Madras, the public took up the
matter and there was a meeting of the public on the 1st February,
1947 and at that conference a resolution was passed to start a
private school. A committee was formed for collecting funds either
as donations or as share capital. Ext. A14 is the proceedings of
that meeting embodying the decisions taken at the meeting. These
proceedings clearly indicate that the intention was to create a trust
fund. It is so specifically stated in Ext. A14. We shall extract the
relevant part.
(Text in Malayalam Language.)

9. Long before the registration of the society funds were collected
from the public towards share money is evidenced by Exts. A3, A4,
A24 and B26 receipts. There have been contributions as well, has
been established and this aspect has been discussed in the
judgment of the court below. It is thus clear that there has been a
clear intention to form a trust and that a trust fund was created
and that the fund was utilised for the construction of the school
building and for the ancillary purposes for establishing and
maintaining the work of the school.



Page No. 53 of 167

“A trust may be created by any language sufficient to show
the intention, and no technical words are necessary. The
use of such words as ‘intent’ or ‘purpose’ or a direction that
a fund shall be applied by, or be at the disposal of, a person
for the charitable purposes intended, may be as effectual as
the use of the word ‘trust’. Even the words ‘authorise and
empower’ may be enough, upon the true construction of the
instrument”. (See Tudor on Charities, Sixth Edition, Page
128).

10. No corporation would be created within the meaning of the
word “incorporated” occurring in Entry 44 of List 1 of the Seventh
Schedule to the Constitution by the formation and registration of
a society under the Societies Registration Act. The society would
continue to remain as an unincorporated society though under the
Societies Registration Act it would have certain privileges some of
them being analogous to those of corporations. See Board of
Trustees, Ayurvedic and Unani College, Delhi v. State of Delhi,
AIR 1962 SC 458. If there was a trust created by the public for a
public charitable purpose namely establishing, maintaining and
running a school the fact of the registration of a society could not
change the character of the properties which had already been
constituted as trust properties and impressed with the trust and
any addition to those properties must also have the same
character.

11. We have therefore no hesitation in reaching the conclusion
that a trust has been created and the High School buildings, the
land, all appurtenances, furniture, equipment and all other
properties are trust properties.
-xxx-

13. The suit is maintainable. By virtue of the registration of the
society the nature of the trust properties has not been changed and
on the allegations and the findings, a suit for the reliefs asked for
is competent. We dismiss this appeal with costs. ”
(Emphasis supplied)

58. As indicated above, a crucial factual aspect in Kesava Panicker (supra) , was that
the public trust was already created by the public and that it pre-existed the
registration of the society. It was in such circumstances that it was held that a
‘subsequent’ registration of the same entity as a society under the Societies


Page No. 54 of 167

Registration Act, 1860 would not take away from its character as a public trust and
affect the maintainability of a suit under Section 92 of the CPC. A trust was already
created by the public for a public charitable purpose and the properties were already
imbued with the character of trust properties and impressed with the trust. The mere
registration as a society to alter or circumvent the status of things which was already
present, was what was disallowed. However, whether this factual peculiarity has a
bearing on the facts of the present matter remains to be seen.

b. Views of different High Courts on the issue

59. Over the period of time, several decisions of different High Courts have been faced
with the same question which remains at the centre of the present litigation i.e.,
whether a society can be considered to be a public trust for the purposes of Section
92 of the CPC. The High Court of Mysore in C. Chikka Venkatappa & Another v.
D. Hanumanthappa & Others reported in 1970 SCC OnLine Kar 16 was
concerned with a suit filed under Section 92 in relation to ‘Devanga Sangha’, a
society registered under the Mysore Societies Registration Act of 1904 whose object
was to advance the educational, economic and social welfare of the members of the
Devanga community who are a section of Hindus. The plaintiffs prayed that the
defendants be removed from the office they held in the Devanga Sangha and that
they also be directed to render true and proper accounts as regards the collections
made by them on behalf of the Sangha in connection with the Silver Jubilee Building


Page No. 55 of 167

Fund of the Sangha. The suit was decreed and while the first prayer was not granted,
the second prayer was granted only against two out of the five defendants. The High
Court while holding that the suit was entirely misconceived on law and also wholly
unnecessary on facts, observed as follows:
i. First, that the words ‘creation of a trust’ under Section 92 obviously has
reference to similar phraseology employed in the Indian Trusts Act, 1882
although the same pertains to ‘private trust’. ‘Trust’ is therefore, an obligation
annexed to the ownership of property.
ii. Secondly , due regard was given to the object behind the enactment of the
Karnataka Societies Registration Act, 1960 and the Mysore Societies
Registration Act of 1904 respectively, along with the express provisions in those
legislations which provided that the property, whether moveable or immoveable,
belonging to a society shall be deemed to be vested in the Governing Body of
the Society unless it is separately vested in trustees. While also referring to the
provisions which provide that a society may sue or be sued, it was concluded
that the obvious effect of these legal provisions would be that such property
would belong to the society and be owned by the society like any other individual
since the society by itself is invested with the character of a legal person. This is
despite the fact that the society’s object may be described as being one of a
charitable nature and that it acquires property for the purpose of achieving those
objects. The existence of a trust, an author of the trust and a transfer of the said
property as trust property to any trustee cannot be predicated in such
circumstances where a society is involved. Further, it cannot be said that


Page No. 56 of 167

whenever a society acquires property, it declares itself as a trustee in respect of
that property. On the contrary, the obligation to use the property for the purposes
of the society is an obligation which is inherent or implicit in the MoA, which is
the basic document constituting the society. The same cannot be construed as
amounting to any declaration of trust in respect of a specified property.
iii. Thirdly, after clarifying the aforesaid differences in law between a trust and a
society, it was stated that it would not be possible to begin with the assumption
that there is a trust created for public purposes for the invocation of Section 92
of the CPC, unless some special circumstances are made out.
iv. Fourthly, it was stated that one must be able to draw a difference between an act
which is purely and exclusively an activity or concern of the registered society
in contrast to a matter in which an entire community takes any interest or steps,
which may suggest that a specified item of property was dedicated for a public
purpose or for the welfare of the community at large. Unless there are indications
of a separate vesting of the society’s property in a trust, effect must be given to
the normal provisions of law which vest the property in the Executive Council.
v. Lastly , while agreeing that a trusteeship can be vested in a ‘committee of
persons’ and that they can be treated as trustees for the purposes of Section 92,
it was however, held that the same would be different from the vesting of
properties in the governing body of a society registered under the Societies
Registration Act, 1860.



Page No. 57 of 167

60. The relevant observations in Chikka Venkatappa (supra) are reproduced
hereinbelow:
“ 2. […] There is in Bangalore an association called the Devanga
Sangha, which was registered as a society on the 12th of February
1924 under the Mysore Societies Registration Act of 1904. Like all
other societies of that nature, the Sangha is governed by a
Memorandum of Association, a set of Articles of Association and
subsidiary bye-laws framed by the Society. The objects of the
Sangha set out in the Memorandum are to advance the
educational, economic and social welfare of the members of the
Devanga community who are a section of Hindus. The membership
is limited to those belonging to the said community and is subject
to payment of donations or periodical subscriptions. There are, as
in other cases, different classes of members like Patrons who are
called by two different Kannada names ‘Poshaka and Sahavaka’,
Life members. Hon. members and ordinary members. The
management of affairs of the Sangha is vested in a body called the
Executive Council consisting of a President, four Vice-Presidents,
a Secretary, a Treasurer and 50 other members.

-xxx-

16. It is clear that the trust referred to in this section is one actually
created for a public purpose, whether that purpose be a charitable
one or a religious one. The choice of the words ‘creation of a trust’
obviously has reference to the similar phraseology adopted in the
Indian Trusts Act. ‘Trust’ is an obligation annexed to the
ownership of property—vide S. 3 of the Act. A trust is created when
the author of the trust indicates with reasonable certainty by any
words or acts an intention on his part to create thereby a trust, the
purpose of the trust, the beneficiary and the trust property and
(unless the trust is declared by will or the author of the trust is
himself to be the trustee) transfers the trust property to the
trustee—(vide S. 6 of the Act).

17. The question is whether the formation of a society under the
Societies Registration Act to carry out any charitable or useful or
social purpose can at all be regarded as amounting to creation of
a trust in the sense mentioned above. The Societies Registration
Act is an Act promulgated for the ??? of making provision for
regulating, controlling and improving the legal condition of
societies established for the promotion of literature, science or fine
arts or for the diffusion of useful knowledge or for any charitable


Page No. 58 of 167

purposes. The Act of 1960 which was substituted for the previous
Mysore Act No. 3 of 1904, has, however, limited the object to the
mere provision for registration of literary, scientific, charitable or
other societies in the State of Mysore. The manner in which the
said objects are given effect to in the two statutes is the same. They
enable individuals to get themselves formed into an incorporated
body, like Corporations or Companies with a separate legal
personality conferred upon the incorporated body. And express
provision is made (in S. 6 of the Act of 1904 and S. 14 of the Act
of 1960) to the effect that the property, moveable or immoveable,
belonging to a Society registered under the Act, unless it is vested
separately in trustees, shall be deemed to be vested for the time
being in the Governing Body of the society. S. 7 of the Act of 1904
corresponding to S. 15 of the Act of 1960 makes provision for the
manner in which the societies may sue or be sued. The general
provision is that every society registered under the Act may sue or
be sued in the name of President or other office bearer specified
for the purpose by the Rules and Regulations of the Society.

18. The obvious legal effect of these provisions is that although the
object of a society may be described as a charitable purpose and
by its regulations it is empowered to acquire property and use the
same for achieving its objects, the property belongs to the society
and is owned by the society like any other individual, because, the
society is itself invested with the character of a legal person by
virtue of the provisions of the statute. It is not property in respect
of which it is possible to predicate a trust, an author of the trust
and a transfer of the said property as trust property to any trustee,
nor can it be said that whenever a society acquires property, it
declares itself as a trustee in respect of that property. The
obligation to use the property for purposes of the society is an
obligation which is inherent or implicit in the Memorandum of
Association which is the basic document constituting the society.
That does not amount to nor can it be, by any stretch of
imagination, read as amounting to any declaration of trust in
respect of a specified property.

19. Such being the clear position in law in regard to trusts and in
regard to registered societies and the clear difference between the
two, the prima facie opinion in this case should necessarily be that
unless some special circumstances are made out, it is not possible
to start with an assumption that there is a trust created for public
purposes, in regard to which the provisions of S. 92 CPC. could
be invoked.



Page No. 59 of 167

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25. On the evidence, therefore, there cannot be the slightest doubt
that the construction of this building was purely and exclusively
an activity and concern of the registered society called the
Devanga Sangha. It was not and cannot be described as a matter
in which the entire Devanga community as community took any
interest or any steps in such a way as to make it possible to suggest
that a specified item of property, was dedicated by it, or some
members thereof, to public purpose, viz., some welfare of the
community at large.

26. […] All that happens is that the registered society acquires a
certain item of property which, under the law, must be deemed to
vest in the governing body unless they take steps to vest it
separately in trustees. There is no suggestion here of any such
separate vesting. Hence effect should be given to the normal
provisions of law which vest the property in the Executive Council.

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29. The other four-decisions are relied upon to make out one
general proposition, namely, that for the purpose of applying the
provisions of S. 92 CPC., it is not obligatory that the trustees
should be individual human beings, but may be statutory
committees or statutory bodies including incorporated bodies.
In T. Sitharama Chetty's case [ILR. 39 Mad. 700.] , it was held
that an Area Committee appointed under one of the provisions of
the Madras Endowments Act, which was in management of a
certain temple, may clearly be regarded as a trust for the purpose
of S. 92 CPC. In Commissioner, Lucknow Division's case [AIR.
1937 PC. 240.] , there was an unincorporated informal committee
of persons who collected subscriptions for a specific purpose.
In Gomathinayagam's case [AIR. 1963 Mad. 387.] , the founder of
a certain school who had endowed properties for purposes of the
school transferred those properties on trust to a Committee of
persons who got themselves incorporated into a company without
any motive of profits under S. 26 of the Indians Companies Act of
1913 (corresponding to S. 25 of the 1956 Act). In all these cares,
it was held that the fact that the trusteeship vested in a Committee
of persons, whether incorporated or not, made no difference to
treating them as trustees for the purpose of S. 92 CPC. But that
does not carry the plaintiffs' case any further in this case. In every
one of these decided cases, there was a clear creation of a trust
for public purposes within the meaning of S. 92 CPC. as explained


Page No. 60 of 167

by us. In every case, there was already either a temple with
endowed properties managed by the Area Committee or an actual
transfer of property on trust by the founder of the school in favour
of the Committee or the collection of funds by an informal
committee for a specified public purpose amounting in law to a
declaration of trust by themselves.

30. But one case which comes very near the present case is that
in P. Mahadevayya's case [53 Mys H.C.R. 167] . That was a case
of a registered society formed for the educational advancement of
the Veerasaiva community which became the victim of serious
differences of opinion between its members resulting in a split
threatening to put an end to the useful activities of the society. A
suit was filed with the consent of the Deputy Commissioner of the
relevant district under S. 92 CPC. for the framing of a scheme. The
bulk of the reported judgment discusses the facts and there is no
discussion of the legal principles adverted to by us above. The
Court seems to proceed upon the assumption that the case was one
to which S. 92, CPC. could be rightly applied. There is reference
made to the case reported in T. Sitharama Chetty's case [ILR. 39
Mad. 700.] at page 175 of the Mysore High Court Reports. The
contention disposed of by reference to the said decision was that
according to one of the rules governing the society, no changes in
the rules can be made without the consent of ¾th of the members
of the general committee and that as the rules themselves provided
a proper procedure, it was not competent for the Court to interfere
and frame a scheme. This is what the Court has stated in rejecting
that contention:

“We do not think that there is much substance in this
contention. The fact that there is a statutory body or
committee which governs an institution does not bar the
jurisdiction of the Court to frame a scheme because the
Court is the ultimate protector of charities and it is the
inherent right of the Court always to intervene to safeguard
and preserve a charity whenever it is necessary to do so.
In Sitharama Chetty v. S. Subramanja Iyer (ILR. 39 Mad.
700) where a similar contention was raised that the Court
ought not to frame a scheme for a temple when there is a
temple committee functioning under a statute, their
Lordships Sir John Wallis and Seshagiri Ayyar repelled the
contention and held that they had jurisdiction to do so.”

31. It will be seen that the analogy sought to be drawn between the
case in Sitarama Chetty's case [ILR. 39 Mad. 700.] and the case


Page No. 61 of 167

before the erstwhile High Court of Mysore may not have been
possible if the great distinction that existed between a temple
governed by an Area Committee under the Madras Endowments
Act and a society registered under the Societies Registration Act
had been brought to the notice of the Court. The Area Committee
referred to in Sitharama Chetty's case [ILR. 39 Mad. 700.] is
certainly not the same as the governing body of a society
registered under the Societies Registration Act.

32. As the ruling relied upon did not discuss the principle of law
??? before us we do not consider it to be a clear authority in
support of the proposition sought to be made by Mr. Nagaraja Rao
on behalf of the plaintiffs. If the decision should be regarded as
laying down by implication, that even in the case of an ordinary
society registered under the Societies Registration Act, a matter
exclusively and completely governed by the provisions of the said
Act and the general law, can be brought within the scope of S. 92
CPC. as if the position is clearly one of creation of a trust for
public purposes, with respect, we find ourselves unable to agree
with it. ”
(Emphasis supplied)


61. On the other hand, the High Court of Bombay in Shri Dnyaneshwar Madhuradwait
Sampradayik Mandal, Amravati v. Charity Commissioner, Bombay and another
reported in 1980 SCC OnLine Bom 120 while dealing with Section 2(13) of the
Bombay Public Trusts Act, 1950 observed that a society registered under the
Societies Registration Act, 1860 having an object which is religious or charitable or
both, would be covered by the definition of a ‘public trust’ under Section 2(13).
However, the said observation was made since the aforesaid State legislation which
governed public trusts explicitly included societies functioning for a public purpose
of a religious or charitable nature within the definition of a ‘public trust’. The
relevant observations are thus:
“7. Section 2(13) of the Bombay Public Trusts Act, 1950 which
defines “public trust” is in the following terms:


Page No. 62 of 167


“2(13) “public trust” means an express or constructive
trust for either a public, religious or charitable purpose or
both and includes a temple, a math, a wakf, church
synagogue, agiary or other place of public religious
worship, a dharmada or any other religious or charitable
endowment and a society formed either for a religious or
charitable purpose or for both and registered under the
Societies Registration Act, 1860.”

8. The present case falls under the last clause of this definition and
satisfies both the conditions, namely, that it is a registered society
under the Societies Registration Act and as pointed out above, the
society was formed for a religious purpose.”
(Emphasis supplied)

62. In Board of Governors St. Thomas School and Others v. A.K. George and another
reported in 1984 SCC OnLine Cal 56 leave to institute a suit under Section 92 of
the CPC pertaining to St. Thomas School, a statutory body constituted under the St.
Thomas School Act, 1923 was sought on the allegation that the Board of Governors
were not properly constituted and that the trust property was not being properly
managed by the trustees i.e., the Board of Governors of the said school. Leave was
granted ex-parte on the ground that the school constituted a public charitable trust.
While holding that the school was not a public charitable trust, the High Court of
Calcutta observed that the fact that a provision under the St. Thomas School Act,
1923 provided that all the property vested in the Governors by itself was not
sufficient to lead to the conclusion that they were held in trust or that a charitable
trust of a public nature was created. The relevant observations are thus:
“ 11. As regards the next contention that there is no public
charitable trust in respect of the St. Thomas School which is
expressly governed by the said St. Thomas School Act 1923, it was
tried to be contended on behalf of the respondents by referring to


Page No. 63 of 167

Section 11 of the said Act that all the property vested in the
Governors by or under this Act should be deemed to be held in
Trust, thereby meaning constructive charitable trust of a public
nature. This contention, in our opinion, is totally devoid of any
merit in view of the fact that Section 11 of the said Act does not at
all either expressly or impliedly purport to create a charitable
trust of a public nature. St. Thomas School and its property have
to be administered in accordance with the provisions of St.
Thomas School Act 1923 and if there is any breach of the provision
of the Act then the remedy is to be sought under the said Act. The
mode of constitution of the Board of Governors had been
specifically laid down in S. 2 of the said Act. In these
circumstances the contention that the St. Thomas School is a
public charitable trust cannot be sustained. Hence the instant suit
filed under Section 92 of the Civil P.C. with the leave of the Court
granted under the said section is not competent and the ex parte
leave that was granted is liable to be revoked and withdrawn. […]I
have already held that the St. Thomas School and its properties do
not constitute a public charitable trust at all but they are governed
by the provisions of the St. Thomas School Act, 1923 (Bengal Act
XII of 1923). ”
(Emphasis supplied)

63. In The Advocate General v. Bhartiya Adam Jati Sewak Sangh and Ors reported in
MANU/HP/0182/2001, the High Court of Himachal Pradesh held that even if the
defendant no. 1 and 2 societies respectively were performing charitable functions,
the same by itself would not attract the provisions of Section 92 of the CPC since
there was no evidence that any trust was expressly or impliedly created. In the said
case also the societies functioning for a charitable aim, i.e., the social and economic
upliftment of the weaker section of the society and money was being raised from
various sources, including the public at large as well as in the form of grants-in-aid
from the government. Further, the High Court interpreted Section 5 of the Societies
Registration Act, 1860 to mean that if the properties were already vested in trustees,
only then it shall not be deemed to be vested in the governing body of the society.


Page No. 64 of 167

In other words, the subsequent registration of a trust as a society would not have the
effect of altering the properties belonging to the trust and the trustees would continue
to be the legal owners of such properties. It adopted the interpretation given in
Kesava Panicker (supra) . In this context, it was held that there was no evidence to
show that any funds were collected from the general public before the defendant nos.
1 and 2 societies respectively came to be registered as societies and therefore, no
trust as such could be said to have been existed. Hence, all the monies received or
collected by them would vest in the governing body of the society only. Therefore,
there being no trust and the defendant nos. 1 and 2 respectively admittedly being
societies, the suit under Section 92 was not maintainable. The relevant observations
are reproduced hereinbelow:
“ 17. At this stage, reference is required to be made to Section 5 of
the Societies Registration Act, 1860, which provides :

The property, movable and immovable, belonging to a
society registered under this Act, if not vested in Trustees,
shall be deemed to be vested, for the time being in the
governing body of such society, and in all proceedings, civil
and criminal may be described as the property of the
governing body of such society by their proper title.

(Emphasis supplied in original)

18. Under the above provisions the properties shall not vest in the
Society, if such properties were already with the trustees. In other
words, the registration of a Trust as a Society under the Societies
Registration Act, 1860 would not alter the position and the
properties belonging to the trust would not vest in the society but
the trustees would continue to be the legal owners of such
properties.

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Page No. 65 of 167

21. In the present case, there are neither pleadings nor evidence
to show that any funds were collected from the general public
before the Defendants No. 1 and 2 came to be registered as
Societies under the Societies Registration Act, 1860. Therefore
there was no trust as such and vide Section 20 of the Societies
Registration Act, 1860, all moneys received by the Defendants No.
1 and 2 either by way of grants-in-aid or in the form of
contributions from the public would vest in the societies, that is,
Defendants No. 1 and 2.

-xxx-

24. In the present case, the very first condition is lacking. As stated
above, it is the admitted case of the Plaintiff that Defendants No.
1 and 2 are "societies" registered under the Societies Registration
Act, 1860. There is no averment and/or evidence that any trust was
expressly or impliedly created. Even if Defendants No. 1 and 2 are
carrying on charitable purpose, the same by itself would not
attract the provisions of Section 92, Code of Civil Procedure.

25. On the facts and circumstances of the case neither the
Defendants No. 1 and 2 are public trusts nor the Defendants No.
3 to 7 are the trustees. The issue is decided against the Plaintiff. ”

(Emphasis supplied)


64. In Abhaya (supra) , the Kerala High Court also refused to accept the contention that
a society can be considered to be a public trust for the purposes of Section 92 of the
CPC. The organisation therein was registered under the Travancore-Cochin Literary,
Scientific, and Charitable Societies Registration Act, 1955 and was constituted with
the objectives of serving the mentally-ill, improving the social and non-social
environment of the mental hospitals in Kerala, provision of facilities to improve the
life-conditions of the mentally-ill, and rehabilitation of the recovered patients,
especially those patients who have no familial support. The required capital of the
society was also raised by membership/subscription fees, donations, loans, grants


Page No. 66 of 167

and other voluntary contributions, including from the public. Allegations of
mismanagement, misconduct and misappropriation were levelled against the
defendants. While dismissing the original petition, it was held as follows:
i. First, that there was absolutely nothing in the Rules and Regulations of the
Memorandum of Association which indicated that prior to the formation and
registration of the society there was a trust having any property. In such a
scenario, the formation of a society to carry out any charitable or social purpose
would not ipso facto make the society a public trust, especially since the society
is also empowered to acquire property to use for its purposes. Such a property
which is then acquired will only be the property of the society which is a legal
person by virtue of the provisions of the statute and will not be a property in
respect of which a trust can be predicated. It cannot be said that whenever a
society acquires property, it declares itself as a trustee in respect of that property.
While it does have a legal obligation to use the property for its prescribed
purposes and strictly in accordance with the Rules and Regulations of the
Memorandum of Association, by no stretch of imagination can it be considered
as a declaration of trust.
ii. Secondly, on a reading of Section 8 of the Travancore-Cochin Literary,
Scientific, and Charitable Societies Registration Act, 1955, which is pari
materia to Section 5 of the Societies Registration Act, 1860, it was inferred that
unless the properties had already vested separately in trustees, they shall vest in
the governing body of the society.


Page No. 67 of 167

iii. Thirdly, it was opined that a procedure for the removal of the existing governing
body, appointment of a fresh governing body and framing a scheme for the better
and efficient management of the society was already contemplated within the
Travancore-Cochin Literary, Scientific, and Charitable Societies Registration
Act, 1955. Such a relief could be availed by the members of the society as well,
however, provided that a minimum of 10% of the members on the rolls of the
society join together. It was opined that this express provision cannot be sought
to be circumvented by the aggrieved members of the society by making an
allegation that the society is a public trust and adopting the route under Section
92 of the CPC instead.
iv. Lastly, while acknowledging that it is the allegation in the plaint that determines
the jurisdiction of the court under Section 92 of the CPC and that if a breach of
trust is ‘alleged’, the grant of leave may be given, it was cautioned that when the
very existence of a trust of any kind is seriously disputed/denied, the court must
prima facie satisfy itself of the existence of the trust. It is true that if the
contention is that there is no public trust but only a private one, a decision on
whether the trust is of a public or private nature can only be made after taking in
evidence. However, the same principle would not apply when the issue is that a
trust by itself is absent in the circumstances. There must be some material to
convince the court that a trust has been created.

65. The relevant observations made in Abhaya (supra) are reproduced hereinbelow:


Page No. 68 of 167

“ 7. In the 1st paragraph of the petition itself it is admitted that the
first petitioner-organisation “Abhaya” was constituted with the
objectives of serving the mentally ill-persons, improving the social
and non-social environment of the mental hospitals of Kerala,
providing the mentally ill-persons with facilities to improve their
life conditions and rehabilitating the recovered patients,
especially those who are unwanted by their families. It is also
admitted that in a general body meeting of the 1st petitioner held
on 5-1-1986 it was decided to register the 1st petitioner-
organisation under the provisions of Act XII of 1955 and the same
was registered with Reg. No. 71 of 1986 by the Registrar of Co-
operative Societies having its registered office at “Varda”
Nandavanam, Trivandrum. In paragraphs 3 to 13 the respondents
1 to 6 have extracted the various provisions of the Rules and
Regulation of the Society. A copy of the Memorandum of
Association is produced by respondents 1 to 6. The Memorandum
of Association shows that the name of the Society is “Abhaya” and
its registered office is at “Varada” Nandavanam, Trivandrum.
The area of activity of the Society is limited to State of Kerala.
Clause 4 of the Rules and Regulations of the Memorandum of
Association deals with the main objectives of the Society, which
reads as follows:—
4. The main objectives of the Society shall be the service of
the mentally ill, alcoholics and drug addicts, women in
distress and children and other groups in distress. The
society shall aim at—
(a) Improving the social and non-social environment of the
mental hospitals of Kerala.
(b) Providing the mentally ill with facilities to improve their
life conditions.
(c) Rehabilitating the recovered patients, especially those
who are unwanted by their families.”

[…] Clause 10 deals with the capital of the society, which reads
as follows:—
“10. The required capital of the society shall be raised by
the membership and subscription fees and donations, loans,
grants and other voluntary contributions from the public
State and Central Governments and other institutions or
organisations.”
[…]

8. It is true that Clause 4 of the Rules and Regulations shows that
the Society is constituted with the main objectives of rendering
service of the mentally ill, alcoholics and drug addicts, women in


Page No. 69 of 167

distress and children and other groups in distress. But, there is
absolutely nothing in the Rules and Regulations of Memorandum
of Association to show that prior to the formation and registration,
of the society there was a trust haying any property. On the other
hand, a reading of the memorandum of Association shows that
there were 7 promotees and they convened a General Body
meeting on 5-1-1986. The General Body held on 5-1-1986 decided
to register the 1st petitioner as a Society under Act XII of 1955.
Clause 10 shows that on the date of formation of the Society there
was no property over which the Society had any ownership. A
formation of a Society under the provisions of Act XII of 1955 to
carry out any charitable or social purpose will not make the
Society a public Trust. The Society is empowered to acquire
property also to use for its purposes. But, that property which is to
be Acquired will only be the property of the Society and it will not
be a property in respect of which it is possible to predicate a trust.
The preamble of the Act XII of 1955 is relevant. It states as
follows:—
“Whereas it is expedient that provision should be made for
improving the legal condition of Societies, established for
the promotion of literature, science, or the fine arts, or for
the diffusion of useful knowledge or for charitable
purposes.”
Section 3 of the Act provides that any seven or more persons
associated for any charitable purpose may by subscribing their
names to a memorandum of association and filing the same with
the Registrar, form themselves into a society. Section 32 of the Act
provides that the following Societies may be registered under the
Act:
“Charitable societies, societies established for the
promotion of science literature or the fine arts, the diffusion
of useful knowledge, the foundation or maintenance of
libraries or reading rooms for general use among the
members or open to the public, or public museums and
galleries of painting and other works of art collections of
natural history mechanical and philosophical inventions,
instruments or designs.”
Section 8 of the Act deals with the property of the Society. It reads
as follows:—
“8. Property of society how vested. The property, movable
and immovable, belonging to a society, if not vested in
trustees, shall be deemed to be vested, for the time being, in
the governing body of such society, and in all proceedings,
civil and criminal, may be described as the property of the
governing body of such society by their proper title.”


Page No. 70 of 167

A reading of Section 8 makes it clear that unless the properties had
already vested separately in trustees, it shall vest in the governing
body of the society. […] Section 25 deals with application to court
for dissolution framing schemes, etc. Section 25 reads as
follows:—
“25. Application to Court for dissolution, framing a
scheme, etc. — (1) When an application is made by the State
Government or ten per cent of the members on the rolls of
a society to the District Court within the jurisdiction of
which the society is registered, the Court may, after enquiry
and on being satisfied that it is just and equitable pass any
of the following orders:—
(a) removing the existing governing body and appointing a
fresh governing body; or
(b) framing a scheme for the better and efficient
management of the society; or
(c) dissolving the Society.
(2) Where the application under sub-section (1) is by the
members of the society, the applicant shall deposit in Court
along with the application the sum of one hundred rupees
in cash as security for costs.”
Section 25 makes it very clear that a suit can be filed before the
District Court by 10% of the members of the society against the
Society for removing the existing governing body and appointing
a fresh governing body or for framing a scheme for the better and
efficient management of the society. The right to file the suit to
frame a scheme is not confined to the State Government alone. The
relief that the District Court can grant is not restricted to ordering
dissolution of the society only. Section 25 confers power on the
members of the society to institute a suit for removing the
governing body or for appointing a fresh governing body and for
framing a scheme. The only condition is that to file such suit
minimum 10% of the members on the rolls of the society shall join
together and the suit is to be filed before the District Court, Sub-
section (2) of Section 25 provides that the plaintiff has to deposit
Rs. 100/- as security for costs.

9. A reading of the various Sections of Act XII of 1955 shows that
even if the object of a society formed under the provisions of Act
XII of 1955 is a charitable purpose and even if it acquires property
and use the same for achieving the object of the society, the
property is owned by the Society and it belongs to it. The property
is that of the society which is a legal person by virtue of the
provisions of the statute. It cannot be said that whenever a society
acquires property, it declares itself as a trustee in respect of that


Page No. 71 of 167

property. The Society has a legal obligation to use the property for
purposes of the society acquired strictly in accordance with the
provisions contained in the Rules and Regulations of
Memorandum of Association. By no stretch of imagination it can
be considered as a declaration of trust in respect of a property
acquired by the Society.

-xxx-

11. The preamble of the Indian Trusts Act, 182, states that it was
enacted to define and amend the law relating to private trusts and
trustees. Section 3 of the Indian Trusts Act defines “trust”. It reads
as follows:—
“A “Trust” is an obligation annexed to the ownership of
property, and arising out of a confidence reposed in and
accepted by the owner, or declared and accepted by him,
for the benefit of another, or of another and the owner.”
To constitute a trust, there must be an author of the trust, trustees,
beneficiary, trust property and beneficial interest. The concept of
trust involves four ingredients; a settlor or donor, a trustee or
trustees, the beneficiaries and the subject matter. Of course, the
beneficiaries may be a specified group or general public. Trust
may be either express or constructive. But, a trust is created only
when the author of the trust indicates with reasonable certainty by
words or act the intention in his part to create a trust, beneficiary
and the trust property. The subject matter of a trust must be a
property transferable to the beneficiary. It must not be merely a
beneficial interest.

12. In Kesava Panicker v. Damodara Panicker 1975 Ker LT 797:
(AIR 1976 Kerala 86) a Full Bench of this Court considered the
effect of the subsequent registration of a society. […] That
principle was followed in Sukumaran v. Akamala Sree Dharma
Sastha Idol (1992) 1 Ker LT 432: (AIR 1992 Kerala 406), but in
both those cases there were materials to show that a public trust
was in existence and later that trust got registered under the
provisions of Act XII of 1955. I shall consider whether there is any
material in this case to show that the 1st petitioner was a trust and
later it got itself registered under the provisions of Act XII of 1955.

13. […] A reading of various averments in the Original Petition
shows that though the word “Trust” is used to describe the 1st
petitioner, there is no averments in the pleadings to show the
existence of a Trust, whether Public or Private. On the other hand,


Page No. 72 of 167

the materials on record clearly shows that the 1st petitioner is a
Society registered under Act XII of 1955.

14. A comparison of Section 25 of the Act XII of 1955 and Section
92 of C.P. Code shows that the reliefs provided under Section 25
of the Act and under Section 92 of the C.P. Code are similar. The
suit under Section 25 of the Act is also to be filed before the
District Court. The main difference is that to file a suit under
Section 25 of the Act a minimum 10% of the members of the Society
must join together as plaintiffs. But they need not obtain any
permission as contemplated under Section 92 of the C.P. Code.
The minimum number of 10% of the members is insisted to see that
the Society is not unnecessarily dragged to court of law. The
member of the Society cannot be allowed to circumvent that
provision by making an allegation that the Society is a Trust.

15. The learned counsel appearing for the contesting respondents
has argued that when there are averments in the petition regarding
the existence of a trust, the Court is bound to grant the permission
sought for and the Court cannot consider whether the allegation
regarding the existence of trust is true or not. It is argued that is a
matter to be decided after taking evidence.

16. It is true that it is the allegation in the plaint that determines
the jurisdiction of the Court under Section 92 of C.P. Code. If a
breach of trust is alleged in the plaint, it is sufficient to confer
jurisdiction to the Court. But, when the very existence of a trust of
any kind is denied, the court must look into the pleadings and the
documents produced by the plaintiffs to see whether there is any
material to show a prima facie case of existence of the trust. Of
course, if the contention is that there is no public trust but only a
private trust, a decision as to whether the trust is public or private
can be taken only after taking evidence.

17. The learned counsel for the respondents 1 to 6 has argued that
if there are averments in the original Petition to the effect that the
O.P. relates to a trust the District Court shall not reject the O.P.
on the ground that there is no trust. It is argued that the Apex Court
has held that it is not even necessary to hear the respondent before
granting leave. It is true that in B.S. Adityan v. B. Ramachandran
Adityan 2004 AIR SCW 3044: (AIR 2004 SC 3448), the Apex Court
has held that leave can be granted without issuing notice to the
respondent. But in the very same decision it was also held that the
respondent after appearing in the suit, can file petition to revoke
the leave already granted. So, there is no merit in the contention


Page No. 73 of 167

of the contesting respondent that if there are averments in the
petition regarding the existence of trust, the District Court shall
entertain the application and grant leave.

18. The learned counsel appearing for respondents 1 to 6 has
argued that the scope of enquiry in an Original Petition is very
limited and the District Court has merely to see whether there is
prima facie case for granting the relief. […] It is true that the
plaintiff need only establish a prima facie case of existence of a
trust. But, there must be materials to make a prima facie case of
existence of a trust. There is total lack of any such materials in this
case.

-xxx-

21. The learned District Judge allowed the Original Petition on a
wrong assumption that the 1st petitioner Society is a Trust. There
is absolutely no material to show prima facie that 1st petitioner is
a Trust, either public or private. There is also no material to show
that there was a Trust of public nature, which subsequently got
registered under the provisions of Act XII of 1955. Since there is
no material to make out a prima facie case that the 1st petitioner
is a public Trust and any person had settled any properties for the
benefit of the beneficiaries, the provisions of Section 92 of C.P.C.
cannot be invoked. So, the impugned order is illegal,
unsustainable and liable to be set aside. ”

(Emphasis supplied)

66. While dealing with the same issue, the Madras High Court also in Periyar Self
Respect Propaganda Institution (supra), took the view that the properties in
question vested with a society and not a trust, thereby rendering the suit under
Section 92 not maintainable. Therein, the fact that the institution was registered
under the Societies Registration Act, 1860 and that the properties were vested in the
President and Secretary of the institution who were empowered to purchase and sell
properties on behalf of the institution, were, in the opinion of the High Court, factors


Page No. 74 of 167

which indicated that a trust neither existed nor was created. The relevant
observations are as thus:
“9. In order to maintain the suit under Section 92 CPC the
petitioners/plaintiffs should show the existence of a Trust and the
alleged breach of the terms of the Trust; besides which the
interestedness of the petitioners/plaintiffs in the running the Trust
shall also be made known.

10. But as seen from the Memorandum of Articles of Association
of the Periyar Self Respect Propaganda Institution (first
defendant), Tiruchirapalli, it is found that it was incorporated and
found to have been registered under the Societies Registration Act
21/1860. That Certificate number is 13/1952 with a Memorandum
of Articles of Association containing 13 life members and 30
Rules; according to Clause 22, the life members of the Executive
Committee alone shall be the Trustees of the properties already
purchased. According to Clause 23, the properties of the
Institution shall be in the names of the President and the Secretary
and they shall have to power to purchase and sell the properties
on behalf of the Institution. If it is a Trust Property, there will not
be a clause empowering the President to sell the properties. That
itself indicates that it is not a Trust. The fact that it was registered
under the Societies Act may also lend support to the above view.

-xxx-

14. In this case also the property vest with the President and
Secretary of the first defendant as per clause 23 of the
Memorandum of Articles of Association of the first defendant
Institution, which was registered under the Societies Registration
Act 21/1860. Therefore, the property is vested with a society and
not with a Trust and as per the observations made in the above
cited case a suit under Section 92, CPC is not maintainable, (to)
which Societies Registration Act is applicable, proceeding with a
suit under Section 92, CPC was deprecated in Babaji Kondaji
Garad v. Nasik Merchants Co-operative Bank Ltd., Nasik ((1984)
2 SCC 50 : AIR 1984 SC 192). There is also no interestedness
shown upon the plaintiffs in the running of the Trust.”
(Emphasis supplied)



Page No. 75 of 167

67. In S.R. Bahuguna (supra) , the Delhi High Court had held that the suit under Section
92 was not maintainable for not having satisfied two crucial ingredients i.e., the
defendant no. 1 was a society and not a public charitable trust, and the plaintiffs were
also not ‘persons interested’ in the trust. Therein, for the purpose of constructing a
building on a plot of land belonging to defendant society and develop it, a board of
five trustees was set up by the standing committee of the defendant society through
a registered trust deed dated 01.09.1975 where the President of the defendant society
was the Managing Trustee. However, the trust was revoked almost two years later
since the construction was complete and the purposes for which it had been set up
was fulfilled. In this context, the Delhi High Court emphasized that Section 5 of the
Societies Registration Act, 1860 cannot be construed to mean that the governing
body members of the society would automatically become trustees if no trust is
created to manage the assets of the society. The relevant observations are as follows:
“ 12. The sum and substance of the suit averments is that the AIWC,
a registered Society, constituted a trust on 01.09.1975 for the
purpose of constructing upon a plot of land allotted to it in 1962.
This was part of the avowed objectives that govern the Society. The
AIWC had resolved that after construction, the building would be
utilized to provide housing for as many working women as was
feasible and also at the same time generate rental income to
sustain its other welfare activities. The plaintiffs allege various
acts of financial irregularities in relation to construction activity
undertaken by the AIWC as well as alleged acts of embezzlement
on part of the Treasurer. They also rely upon certain observations
by the AIWC's Chartered Accountants or Auditors. Their claim to
be persons interested for the purpose of obtaining leave is that they
were associated with the Society having worked there for some
time and are, therefore, 'interested for its proper management and
functioning'.

-xxx-



Page No. 76 of 167

14. […] Besides, there is no denial that the first defendant is a
society, not a Trust; a Trust was set up for a limited period, for a
special purpose, i.e. to construct a building. Apparently, after that
objective was achieved, the Trust was dissolved or wound up. In
these circumstances, the Court is of opinion that the suit is not
maintainable.

-xxx-

16. In view of the above discussion, the Court is of opinion that the
suit is not maintainable, because two crucial ingredients, which
are essential pre-requisites for action under Section 92 are
lacking; the first, defendant is a society, and not a public
charitable Trust. The Trust which had been set up earlier was
dissolved in 1997; that has not been disputed. The suit was filed in
2001. Section 5 of the Societies Registration Act 1860, says that
the property and assets of a registered society vest either in a trust,
set up for that purpose, or the society's governing council or body.
This however, does not mean that the governing body members if
no trust is created to manage the society's assets, become trustees.
No authority was shown to advance such an argument. The second
ingredient, i.e. the plaintiffs being 'persons interested' is also
lacking, in this case.

17. For the above reasons, the plaintiffs cannot be granted leave
to file a suit, under Section 92 of the CPC. The suit and all pending
applications are, therefore, dismissed without any order on costs. ”
(Emphasis supplied)

68. In Young Mens Christian Association of Ernakulam (supra) , the plaintiffs alleged
before the Delhi High Court that the defendant society owned a large number of
movable and immovable properties across India and held in trust, various properties
of its member associations. The High Court accepted such a contention and leave to
institute a suit under Section 92 was granted by delineating the following:
i. First , emphasis was laid on several Articles of the Memorandum of Association
of the defendant society of which one provided that certain properties were
indeed held in trust by the defendant society on behalf of the member YMCAs.


Page No. 77 of 167

Furthermore, the historical background indicated that the defendant society
started administering and looking after existing member YMCAs which were
formed even before it was registered as a society, quite similar to the factual
scenario in Kesava Panicker (supra) . The defendant society was not only
holding properties in trust but also exercised the power to enter into transactions
in respect of such properties. On a consideration of all the above, it was held that
there remained no doubt that the defendant society was in both ‘express’ and
‘constructive’ trust of the properties belonging to its members.
ii. Secondly , by interpreting Section 3 of the Indian Trusts Act, 1882, the elements
that were required to be fulfilled for an express or constructive trust were said to
be – (a) ownership of a property, (b) a confidence reposed by the owner, and (c)
the said confidence being accepted for the benefit of another. It was stated that
if these elements are satisfied a trust could be said to be created. It was, however
acknowledged that the term “express or constructive trust” in Section 92 of the
CPC does not relate to a trust constituted under the Indian Trust Act, 1882 but
any body or entity which holds in trust any property and is created for public
purposes of a religious or charitable nature. Hence, a society might also be able
to satisfy the test of an express or constructive trust, when the facts reveal the
creation of a trust.

69. The relevant observations are reproduced as follows:
“ 11. A perusal of the above clauses of the Defendant's
Memorandum reveals that the Society is one which possesses a
public character. It is working for the people who constitute its


Page No. 78 of 167

members as also for the larger interest of the community. It is
common knowledge that the Defendant not only has a large
number of affiliated member associations in India but is also
affiliated to the international network of YMCAs. It has been
clearly created for a ‘public purpose’ and is both of a charitable
and a religious nature.

12. The Defendant has two bodies which manage and administer
its duties and functions. The National Board is the governing body
of the Defendant and under Article III(1), the management of the
society vests with it. […]

13. As per Article X of the rules and regulations, all the property
of the society is deemed to vest in the National Board which
consists of all the members of the National Executive, Secretary
members, immediate past National President, and Chairmen of the
National Standing Committees, etc.

14. The second body is the National Executive which is primarily
an elected body […]

15. Article X is relevant for the present purpose and is set out
herein below:
“X (1). All property of the Society, whether movable or
immovable, shall be deemed to be vested in the National Board
who shall have power to sell, lease, mortgage or otherwise deal
with the same, and also to purchase, take on lease, accept, grants
of or otherwise acquire movable or immovable property on behalf
of the society, and to enter into all contracts and convenants on its
behalf.”

16. Article XV in respect of ‘Property matters’ is extremely
relevant and is set out below:
“1. All matters related to the use and management of properties
owned and directly managed by the National Council shall be
authorized by the National Board or its Executive Committee.
Documents of such properties to which the seal of the society is
affixed shall be signed on behalf of the society by the National
General Secretary and by the President or Treasurer.
2. In respect of Property owned by the National Council and used
for National Council projects, the signing authority will be the
National General Secretary or his nominee as approved by the
National Executive Committee and by the President of the
National Council or the chairman of the project concerned as
approved by the National Executive Committee.


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3. In respect of the properties held in trust by the National Council
on behalf of the member YMCA, for all dealings the Executive
Committee may give a power of attorney on written requisition
with a resolution of the Board of the member YMCA, to the
President and Secretary of the member YMCA and such other
representatives of the National Executive Committee if deemed
necessary by the National Executive Committee.
In respect of properties mentioned in section (1) and [2] above, all
sales or disposals are to be approved by the National Board.”

(Emphasis in original)

-xxx-

18. Considering the nature and constitution of the Defendant, the
question is whether it comes under the purview of the Section 92 of
the CPC, it being a Registered Society under the Societies
Registration Act.

19. Section 3 of the Indian Trusts Act reads as under:
“ Section 3 - Interpretation clause - ‘trust’ - A “trust” is an
obligation annexed to the ownership of property, and arising out
of a confidence reposed in an accepted by the owner, or declared
and accepted by him, for the benefit of another, or of another and
the owner”

20. From a perusal of the above definition, it is clear that the
elements that are required to be fulfilled for an express or
constructive trust are:
i) Ownership of a property;
ii) A confidence reposed by the owner;
iii) The said confidence being accepted for the benefit of another.

21. If these elements are satisfied, a trust is created.

22. In this backdrop, a perusal of Section 92 of the CPC reveals
that the term “express or constructive trust” does not relate to a
trust constituted under the Indian Trusts Act, but any body or entity
which holds in trust any property and is created for public
purposes of a charitable or religious nature. A society can also
satisfy the test of express or constructive trust created for public
purposes.

23. In Abhaya (supra) cited by the Defendant, the case involved a
charitable Society which did not show that it held ‘in trust’ any


Page No. 80 of 167

property belonging to a different organisation. The property
vested in the governing body of the Society itself. Thus, the Kerala
High Court held that a suit under Section 92 of the CPC would not
be maintainable. […]

24. Thus, in the facts of the said case, the Court held that there
was no prima facie material to show existence of a trust.

25. Even in Rukmini Devi Arundale (supra), the Court held that
the question was as to whether the property belonged to the Trust
or the Society. In Bhartiya Adam Jati Sewak Sangh (supra), the
High Court of Himachal Pradesh held that there was no evidence
to show that any funds were collected from the general public
before the Society was created. […]

26. In the present case, as per Clause 3(ii) of the Preamble of the
Memorandum, one of the main objectives of the Defendant was to
promote the work of the Young Men's Christian Association
Movement in India and to resuscitate the existing languishing
YMCAs and aid in formation of new YMCAs in India. In effect, the
Defendant started administering and looking after the existing
YMCAs which were formed even before it came into existence as
a Society. Paragraph 14 of the Plaint clearly sets out the past
YMCA movement which dates back to 1857, the fore-runner of the
Defendant being formed in 1891 and thereafter the registration of
the Defendant as a Society only in 1964. All these organisations
came under the administration and supervision of the Defendant.
As per the Rules and Regulations set out hereinabove, the
Defendant holds in trust, properties on behalf of the member
YMCAs. The immovable properties are located across the country.
Thus, there is no doubt that the Defendant is in both ‘express’ and
‘constructive’ trust of the properties belonging to its members. In
fact, as pointed out by counsels, the agreements in respect of
immovable properties are actually signed for and on behalf of the
members by the Defendant. One such example is that of the
property in Vishakhapatnam. The Defendant is thus playing the
role of not merely an association holding something in trust but
also has the power to enter into a transaction in respect of such
properties. ”
(Emphasis supplied)


70. A conspectus of the aforesaid decisions of several High Courts indicate that they are
unanimous in their view as regards the fact that a society registered under the


Page No. 81 of 167

Societies Registration Act, 1860 cannot be termed as a trust or a constructive trust
merely by virtue of the fact that its properties are vested in its governing body. The
facts must contain circumstances clearly indicating the creation of a trust.

c. Section 5 of the Societies Registration Act, 1860 and the ‘vesting’ of properties
in the Executive Committee.

71. The appellant Society has submitted that no trust has been created for the purpose of
holding the society’s properties or its assets and it has been ‘vested’ in its Executive
Committee only as per the mandate under Section 5 of the Societies Registration
Act, 1860 which reads as thus:
“ 5. Property of society how vested.— The property, movable and
immovable, belonging to a society registered under this Act, if not
vested in trustees, shall be deemed to be vested, for the time being,
in the governing body of such society, and in all proceedings, civil
and criminal, may be described as the property of the governing
body of such society by their proper title. ”

72. A five-judge bench of this Court in Board of Trustees, Ayurvedic and Unani Tibia
College, Delhi v. State of Delhi and Another reported in 1961 SCC OnLine SC
145 while deciding a challenge to a State legislation, had the occasion to decide
whether an entity registered as a society can be considered to be a ‘corporation’.
Answering in the negative, it was stated that the most important aspect in resolving
the said issue would be to determine whether there was an intention to incorporate.
Upon perusal of the various provisions of the Societies Registration Act, 1860, it
was concluded that there were no sufficient words to indicate an intention to


Page No. 82 of 167

incorporate; on the contrary, the provisions only revealed the absence of such an
intention. Further, it was stated that the expression “property belonging to the
society” under Section 5, did not give the society a corporate status in the matter of
holding or acquiring property and that it merely described the property which either
vests in the trustees or the governing body for the time being. Though the provisions
of the Act undoubtedly confer certain privileges to a registered society and those
privileges are of considerable importance, some may even be analogous to the
privileges enjoyed by a corporation, it was held that there is no incorporation in the
sense in which the word is legally understood. The relevant observations are thus:
“ 9. The first and foremost question is whether the old Board was
a corporation in the legal sense of that word. What is a
corporation?[…]

10. The learned Advocate for the petitioners has referred us to
various provisions of the Societies Registration Act, 1860 and has
contended that the result of these provisions was to make the
Board a corporation on registration. It is necessary now to read
some of the provisions of that Act.[…]

11. Now, the question before us is — regard being had to the
aforesaid provisions — was the Board a corporation? Our
conclusion is that it was not. The most important point to be
noticed in this connection is that in the various provisions of the
Societies Registration Act, 1860, there are no sufficient words to
indicate an intention to incorporate; on the contrary, the
provisions show that there was an absence of such intention.
Section 2 no doubt provides for a name as also for the objects of
the society. Section 5, however, states that the property belonging
to the society, if not vested in trustees, shall be deemed to be vested
in the governing body of the society and in all proceedings, civil
and criminal, the property will be described as the property of the
governing body. The section talks of property belonging to the
society; but the property is vested in the trustees or in the
governing body for the time being. The expression “property
belonging to the society” does not give the society a corporate
status in the matter of holding or acquiring property; it merely


Page No. 83 of 167

describes the property which vests in the trustees or governing
body for the time being. Section 6 gives the society the right to sue
or be sued in the name of the president, chairman etc. and Section
7 provides that no suit or proceeding in a civil court shall abate
by reason of the death etc. of the person by or against whom the
suit has been brought. Section 8 again says that any judgment
obtained in a suit brought by or against the society shall be
enforced against it. It has been submitted before us that Sections
6, 7 and 8 clothe the society with a legal personality and a
perpetual succession; and Section 10 enables the members of the
society to be sued as strangers, in certain circumstances, by the
society, and the costs awarded to the defendant in such a suit may
be recovered, at his election, from the officer in whose name the
suit was brought. Dealing with very similar provisions (Sections
7, 8 and 9) of the English Trade Union Act, 1871 (34 and 35 Vict.
c. 31) Lord Lindley said in the celebrated case of Taff Vale
Railway v. Amalgamated Society of Railway Servants [1901 AC
426] […]

-xxx-

13. It is clear from the aforesaid decision that provisions similar
to the provisions of Sections 5, 6, 7 and 8 of the Societies
Registration Act, 1860 were held not to show any intention to
incorporate; on the contrary, the very resort to the machinery of
trustees or the governing body for the time being acquiring and
holding the property showed that there was no intention to
incorporate the society or union so as to give it a corporate
capacity for the purpose of holding and acquiring property. It
appears to us that the legal position is exactly the same with
regard to the provisions in Sections 5, 6, 7 and 8 of the Societies
Registration Act, 1860. They do not show any intention to
incorporate, though they confer certain privileges on a registered
society, which would be wholly unnecessary if the registered
society were a corporation. Sections 13 and 14 do not carry the
matter any further in favour of the petitioners. Section 13 provides
for dissolution of societies and adjustment of their affairs. It says
in effect that on dissolution of a society necessary steps shall be
taken for the disposal and settlement of the property of the society,
its claims and liabilities, according to the Rules of the society; if
there be no rules, then as the governing body shall find it expedient
provided that in the event of any dispute arising among the said
governing body or the members of the said society, the adjustment
of the affairs shall be referred to the court. Here again the
governing body is given a legal power somewhat distinct from that


Page No. 84 of 167

of the society itself; because under Section 16 the governing body
shall be the governors, council, directors, committee, trustees or
other body to whom by the Rules and regulations of the society the
management of its affairs is entrusted.

14. We have, therefore, come to the conclusion that the provisions
aforesaid do not establish the main essential characteristic of a
corporation aggregate, namely, that of an intention to incorporate
the society. […] Those provisions undoubtedly give certain
privileges to a society registered under that Act and the privileges
are of considerable importance and some of those privileges are
analogous to the privileges enjoyed by a corporation, but there is
really no incorporation in the sense in which that word is legally
understood. ”
(Emphasis supplied)


73. In Board of Trustees (supra) , this Court while deciding on the question whether the
Board members enjoyed any rights over the property of the society, clarified that,
during the subsistence of the society, the right of the members was to ensure that the
property was utilised for the charitable objects as set out in its memorandum and as
such, that did not include any beneficial enjoyment on the part of the board members.
The members also do not acquire any beneficial interest vis-à-vis the property on the
dissolution of the society since Section 14 of the Societies Registration Act, 1860
expressly negatives the right of the members of the society to any distribution of the
assets of the dissolved body. Upon dissolution, the property has to be given over to
some other society to be utilised for like purposes and the only right of the members
was to determine which society the funds or property might be transferred to. The
aforesaid right of the members to determine which new society the funds and
property may be transferred to, was held to be not a right to “acquire, hold and
dispose of property” within the meaning of the then Article 19(1)(f). The context in


Page No. 85 of 167

which the words “dispose of” occurred in Article 19(1)(f) was said to denote that the
kind of property which a citizen has a right to hold and upon dissolution of the
society, the members cannot be said to acquire any right to “hold” the property in
their individual capacity. The relevant observations made are reproduced
hereinbelow:
“ 23. […] We have already held that the impugned legislation was
well within the legislative competence of the Delhi State
Legislature. Now the question is — is the impugned legislation bad
on the ground that it violates the right of the petitioners under
Article 19(1)(f)? The property for the protection of which Article
19(1)(f) is invoked belonged either to the Board or to the members
composing the Board at the date of the dissolution. In either event,
on the terms of Section 5 of the Societies Registration Act, 1860,
the property was to be deemed to be vested in the governing body
of the Board. There could be no doubt that if the Board was
dissolved by competent legislative action, and in view of our
conclusions on the first point raised it must be held that this had
taken place, the Board would cease to exist and having ceased to
exist cannot obviously lay any claim to the property. This however
may not be sufficient to negative the contention urged before us by
the petitioners. If the legal ownership of the property by the Board
or the vesting of it in the governing body was merely a method or
mechanism permitted by the law whereby the members exercised
their rights quoad the property, the dissolution of the Board and
with it of the governing body thereof would merely result in the
emergence of the right of the members to that property. It is,
therefore, necessary to ascertain the precise rights the members of
the Board possessed to see whether the changes effected by the
impugned Act amount to an infringement of their rights within the
meaning of Article 19(1)(f). During the subsistence of the society,
the right of the members was to ensure that the property was
utilised for the charitable objects set out in the memorandum and
these did not include any beneficial enjoyment. Nor did the
members of the society acquire any beneficial interest on the
dissolution of the society; for Section 14 of the Act, quoted earlier,
expressly negatived the right of the members to any distribution of
the assets of the dissolved body. In such an event the property had
to be given over to some other society i.e. for being managed by
some other charitable organisation and to be utilised for like
purposes, and the only right of the members was to determine the


Page No. 86 of 167

society to whom the funds or property might be transferred and
this had to be done by not less than three-fifths of the members
present at the meeting for the purpose and, in default of such
determination, by the civil court. The effect of the impugned
legislation is to vary or affect this privilege of the members and to
vest the property in a new body created by it enjoined to administer
it so as to serve the same purposes as the dissolved society. The
only question is whether the right to determine the body which
shall administer the funds or property of the dissolved society
which they had under the pre-existing law is a right to “acquire,
hold and dispose of property” within the meaning of Article
19(1)(f), and if so whether the legislation is not saved by Article
19(5). We are clearly of the opinion that that right is not a right of
property within the meaning of Article 19(1)(f). In the context in
which the words “to dispose of” occur in Article 19(1)(f), they
denote that kind of property which a citizen has a right to hold —
the right to dispose of being part of or being incidental to the right
to hold. Where however the citizen has no right to hold the
property, for on the terms of Section 14 of the Societies
Registration Act the members have no right to “hold” the property
of the dissolved society, there is, in our opinion, no infringement
of any right to property within the meaning of Article 19(1)(f). In
this view, the question as to whether the impugned enactment
satisfies the requirements of Article 19(5) does not fall to be
determined. ”
(Emphasis supplied)

74. In Illachi Devi and Others v. Jain Society, Protection of Orphans India and Others
reported in (2003) 8 SCC 413 , this Court held that a society cannot be the grantee
of a probate or a letter of administration in accordance with the Indian Succession
Act, 1925 by reiterating that a society registered under the Societies Registration
Act, 1860 is not a body corporate or a juristic person and therefore, ineligible to be
a grantee for the aforesaid purposes. The fact that a society is not capable of
ownership of any property by itself was a characteristic which assumed significance
in arriving at the conclusion that it cannot be construed to be a body corporate. It is
due to this incapability that the property is vested either in trustees or the governing


Page No. 87 of 167

body of the society. Nevertheless, it was held that a probate or letter of
administration can be granted to a person who is authorised by the society, either
under the statute or through a resolution, so that a Will or gift in favour of a society
does not become totally unenforceable in law. Such an authorised person would
carry out the wishes of the testator for the benefit of the society. The relevant
observations made are reproduced hereinbelow:
“ 20. […] The mere fact of registration of a society under the
Societies Registration Act will not make the said society distinct
from association of persons. Sections 223 and 236 of the Act in
very categorical terms provide that an association of persons, be
it a society, a partnership or other forms of associations, a Letter
of Administration can be granted only to a company fulfilling the
conditions laid down under the Rules. […] A society registered
under the Societies Registration Act is not a “company” within the
meaning of “company”, as provided in the Act and the Rules. In
terms of Sections 223 and 236, a “company” must be a
“company” registered under the Companies Act. We are,
therefore, of the considered opinion that neither the provisions of
the Act nor the Rules framed thereunder contemplate that the
societies registered under the Societies Registration Act would
qualify to be considered as a company for the purpose of Sections
223 and 236.

21. A society registered under the Societies Registration Act is not
a body corporate as is the case in respect of a company registered
under the Companies Act. In that view of the matter, a society
registered under the Societies Registration Act is not a juristic
person. The law for the purpose of grant of a probate or Letter of
Administration recognises only a juristic person and not a mere
conglomeration of persons or a body which does not have any
statutory recognition as a juristic person.

22. It is well known that there exist certain salient differences
between a society registered under the Societies Registration Act,
on the one hand, and a company corporate, on the other, principal
amongst which is that a company is a juristic person by virtue of
being a body corporate, whereas the society, even when it is
registered, is not possessed of these characteristics. Moreover, a
society whether registered or unregistered, may not be prosecuted


Page No. 88 of 167

in a criminal court, nor is it capable of ownership of any property
or of suing or being sued in its own name.

23. Although admittedly, a registered society is endowed with an
existence separate from that of its members for certain purposes,
that is not to say that it is a legal person for the purposes of
Sections 223 and 236 of the Act. Whereas a company can be
regarded as having a complete legal personality, the same is not
possible for a society, whose existence is closely connected, and
even contingent, upon the persons who originally formed it.
Inasmuch as a company enjoys an identity distinct from its original
shareholders, whereas the society is undistinguishable, in some
aspects, from its own members, that would qualify as a material
distinction, which prevents societies from obtaining Letters of
Administration.

26. Vesting of property, therefore, does not take place in the
society. Similarly, the society cannot sue or be sued. It must sue or
be sued through a person nominated in that behalf.

-xxx-

48. The apprehension of the High Court that in a case of this
nature, in the event, a Letter of Administration is not granted in
favour of the beneficiary society, the purport of the “Will” will be
frustrated, is not wholly correct and for grant of Letter of
Administration what is necessary is that the person duly
authorised by the society in accordance with the law may file such
an application.

52. We, however, intend to lay emphasis on the fact that a Will or
gift in favour of a society is not totally unenforceable in law. A
probate or Letter of Administration with a copy of the Will
annexed although may not be granted in favour of a society but
may be granted in favour of a person authorised by a society either
in terms of the statute or a resolution adopted in this behalf by the
society, as the case may be, so that such person may be answerable
to the court. On grant of a Letter of Administration the person so
nominated by the society shall carry out the wishes of the testator
for the benefit of the society.

55. For reasons stated above, the appeal is allowed in part. The
judgment under challenge stands modified. The matter is sent back
to the High Court with liberty to the respondent to amend the
petition for grant of the Letter of Administration. It would be open


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to the respondent Society to nominate any of its office-bearers to
whom the Letter of Administration is granted. Such nominated
person may move an application for substitution of his name for
grant of the Letter of Administration. If such amendment
application is made, the High Court shall permit this amendment
and grant the Letter of Administration in favour of the person
nominated by the Society for carrying out the wishes of the testator
which is for the benefit of the Society. ”
(Emphasis supplied)


75. In Tata Memorial Hospital Workers Union v. Tata Memorial Centre and Another
reported in (2010) 8 SCC 480 , this court considered in detail the effect of Section 5
of the Societies Registration Act, 1860. Therein, the Rules and Regulations of the
respondent society had provided for the vesting of certain properties in the governing
body of the society distinct from what was or may be vested separately in the
trustees. While explaining the raison d’être behind Section 5, it was opined that:
i. First, the deeming provision, by default, creates a fictional vesting in favour of
the governing body of the society and not automatically in the society itself or
under a trust. The vesting is not with the society for the obvious reason that a
society is not a body corporate capable of holding the property by itself. On the
other hand, for a trust to hold the properties of the society, the creation of a
separate trust and the dedication of the property belonging to society, to itself,
must be made out. By keeping the smooth functioning of the society and its
autonomy at the forefront, this Court opined that the law has created this
automatic vesting of the property belonging to the society in its governing body
since – (a) the society cannot hold property in its name, and (b) the vesting of
properties solely in trusts would likely hinder the administration of the property,


Page No. 90 of 167

more particularly, when the trustees themselves or their legal representatives
claim adversely to the trust,.
ii. Secondly, that the phrase, “property belonging to a person” has two general
meanings – One, ownership, and two, the absolute right of user. The words
“property belonging to the society” would therefore, in the context of Section 5,
indicate that the society has an absolute right of user over its immovable
properties which is vested in its governing body.

76. The relevant observations are reproduced hereinbelow:
“ 68. Rule 26 of the Rules and Regulations of the first respondent
Society provides that all properties and funds of the Centre (except
the immovable properties as specified) vest in the Council:
“26. Properties and funds vested in the Council.—Except the
existing immovable properties of the Centre and such immovable
properties as may be vested in the holding trustees, all the other
properties of the Centre shall vest in the Council and more
particularly the following:
(a) recurring and non-recurring grants made by the Government;
(b) other grants, donations and gifts (periodical or otherwise),
other than those intended to form the corpus of the property and
funds of the Centre or held for the benefit of the Centre by the
holding trustees;
(c) the income derived from the immovable properties and the
income of the funds vested in the holding trustees and income of
the funds vested in the Council and also fees, subscription and
other annual receipts; and
(d) all plant and machinery, equipment and instruments (whether
medical, surgical, laboratory, workshop or of any other kind),
books and journals, furniture, furnishings and fixtures belonging
to the Centre.”

69. However, even when it comes to the immovable properties,
Section 5 of the Societies Registration Act provides for deemed
vesting of the properties belonging to a society into the governing
body of such society. Section 5 of the Societies Registration Act
reads as follows:


Page No. 91 of 167

“5. Property of society how vested.—The property, movable or
immovable, belonging to a society registered under this Act, if not
vested in trustees, shall be deemed to be vested, for the time being,
in the governing body of such society, and in all proceedings, civil
and criminal, may be described as the property of the governing
body of such society by their proper title.”

70. In this behalf, we must keep in mind, the raison d'être of the
above referred to Section 5 that once a trust is established and a
society is registered for the administration of the trust, the statute
contemplates that the society should be fully autonomous and that
the lack of actual transfer of property of the trust should not
prevent the governing body in its administration. Law recognises
that it would be proper to regard that as done which ought to have
been done. The deeming provision creates a fictional vesting in
favour of the Governing Council and not in favour of the society
or the trust. This is also for the reason that society is not a body
corporate which has also been held by this Court in Ayurvedic and
Unani Tibia College v. State of Delhi [AIR 1962 SC 458] and
reiterated in Illachi Devi v. Jain Society, Protection of Orphans
India [(2003) 8 SCC 413 : AIR 2003 SC 3397] . Since the society
cannot hold the property in its name, vesting of the property in the
trustees is likely to hinder the administration of the trust property,
particularly where the trustees themselves or their legal
representatives claim adversely to the trust. It is for this reason
that the law vests the property belonging to the society in its
governing body.

71. The phrase “property belonging to a person” has two general
meanings (1) ownership, (2) the absolute right of user (per Martin,
B. in Attorney General v. Oxford & C. Railway Co. [(1862) 31 LJ
218] , LJ at p. 227). “Belonging” connotes either ownership or
absolute right of user (Wills, J. in Governors of St. Thomas's, St.
Bartholomew's and Bridewell Hospitals v. Hudgell [(1901) 1 KB
364] ). The Centre has an absolute right of user over its immovable
properties which it has been exclusively exercising all throughout.
Section 5 of the Societies Registration Act clearly declares that the
property belonging to the society, meaning under its user, if not
vested in the trustees shall be deemed to be vested in the Governing
Council of the society.

72. In the present case, it is nobody's case that the property
remains vested in the trustees of Dorabji Tata Trust. It has been
canvassed on behalf of the first respondent that the property is
vested in the Central Government. However, the Central


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Government has never claimed any title to the property adverse to
the first respondent Tata Memorial Centre. It is true that the
property dedicated to Tata Memorial Centre has not been
transferred to the Society by the Central Government. But the fact
is that it is the Governing Council of the first respondent which
has been administering and controlling the day-to-day affairs of
Tata Memorial Centre and its property funds, employment of its
staff and their conditions of service. Hence, in view of the above
referred to factual as well as legal scenario the first issue will have
to be decided that the property dedicated to the first respondent
will be deemed to be vested in the Governing Council of the first
respondent Society. ”
(Emphasis supplied)

77. What follows from a conspectus of the aforesaid decisions discussing Section 5 of
the Societies Registration Act, 1860 and the vesting of property in the governing
body of the society is that, a society registered under the aforesaid Act is not a juristic
person or a body corporate capable of holding property by itself. It is for this reason
that a fictional vesting of the ‘property belonging to the society’ has been made in
favour of the governing body of the society.

78. However, it is to be noted that the property can also be held in trust by certain trustees
and this is evident from the use of the phrase “ if not vested in trustees ”. Several
decisions have interpreted this to mean that there must be certain circumstances
which give rise to the existence of a trust prior to the registration of the
entity/institution as a society. However, it is our view that the aforesaid phrase
cannot be restricted to such a narrow interpretation i.e., that the formation of the
trust, either expressly or impliedly, must pre-exist the registration of the society. We
say this simply because, if it were so, instead of using the phrase “ if not vested in


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trustees ”, the language employed in the provision would have read “ if not already
vested in trustees ”. Therefore, the property belonging to the society can be vested in
trustees even after its registration as a society. There is nothing under Section 5
which bars the same.

79. However, if it is argued that a trust has instead separately been created for holding
the property of the society after its registration as a society, the same must be clear
and sufficiently proven. The considerations that would have to be weighed in order
to ascertain if a public trust has been created prior to the registration of the society
are already very lucidly elaborated in the decisions of this Court in Babu Bhagwan
Din (supra), Gurunatharudhaswami (supra) , Bihar State Board (supra) and
Kuldip Chand (supra). Therein there remained no formal recognition of any sort of
the entity/institution and the court was tasked to see if - (a) properties were vested
in a public trust and, (b) if the trustee(s) was fettered with any obligation that
required the properties to be applied for a certain purpose and, (c) if there was any
condition or conduct which revealed a restriction of the exercise of individual rights
over the said property or its proceeds. The aforesaid considerations, along with some
others may also be pertinent to determine if the society, after its registration, has
created a trust or entrusted other trustees with the property belonging to itself. It is
not possible to exhaustively lay down all those circumstances in which such a
separate trust can be said to be created. Having said so, one of the possible methods
in which the society can create or intend to create a separate trust for holding its
properties is when its Rules and Regulations or the Articles of its Memorandum of


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Association provide for a separate trust or trustee(s) for the purpose of holding its
properties. Alternatively, as in Young Mens Christian Association of Ernakulam
(supra) , the trustee (if they happen to also be a society) can mention in their Articles
of Memorandum of Association that they hold the property belonging to another
society as trustees. Further, the existence of an unequivocal trust deed executed by
the society or its member representative, in favour of another trustee, for the purpose
of holding its properties, could also seal the deal as far as the separate creation of a
trust is concerned. All these could be a pertinent factors in determining the existence
of a trust, separate from the governing body of the society, in which the property
belonging to the society is vested. In this scenario, such a trust could be subjected to
the jurisdiction under Section 92 of the CPC provided the other conditions for its
invocation are met.

80. In the absence of the creation of a trust as aforesaid, property would be deemed to
be vested in the governing body only. The governing body of the society upon which
property is otherwise vested is duty bound to ensure that the property is put towards
and utilised for the purposes/aims of the society as laid out in its Memorandum of
Association or any Rules and Regulations governing the said matter. In case the
society is dissolved, a decision must be made to transfer or vest all the property in
another society working towards a like cause and the members would not have any
right to distribute the assets belonging to the society between themselves. Therefore,
both during the subsistence and dissolution of the society, the members or the


Page No. 95 of 167

governing body cannot be said to possess any beneficial or individual interest over
the property vested in them.

81. Hence, it follows that whenever a property is transferred to a society which is
working towards a public purpose of a religious or charitable nature, the property
would be said to belong to the society and be automatically vested in its governing
body. Once a society is registered, all gifts, donations, grants-in-aid, etc. would vest
in its governing body as per the mandate of Section 5 of the Societies Registration
Act, 1860, in the absence of the creation of a separate trust/entrustment to other
trustee(s), for the said purpose.

82. Moving ahead, the mere fact that a distinct trust can also be created i.e., either prior
to or post the registration of a society under the Societies Registration Act, 1860
would not alter the capacity in which the governing body holds the properties
belonging to the society. The governing body would also hold such properties in a
well-confined fiduciary capacity. In other words, the phrasing of Section 5, more
specifically that “ if not vested in trustees, shall be deemed to be vested, for the time
being, in the governing body of such society ”, does not indicate that if a trust has not
be created for the purpose of holding the society’s properties, any fiduciary
obligation that the governing body might owe to the society vis-à-vis the
management and administration of the properties would dissipate into thin air. The
aforesaid language employed in Section 5 must not be seen as giving rise to two
polar opposite mechanisms through which the property of the society can be held


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i.e., either in a trust with air-tight fiduciary obligations or not in a fiduciary capacity
at all. In other words, it must not be read to mean that if the property is not vested in
trustees, then it would remain vested in the governing body who would have zero
fiduciary obligations. The governing body is also bound by duties of that of a
fiduciary and this remains further fortified by the fact that the governing body does
not enjoy any beneficial interest over the properties that it holds and must ensure
that it is used for the object for which the society has been created.

83. In our opinion, the reason behind the use of the word “ trustees ” in the phrase “ if not
vested in trustees ”, is a reflection of the intention of the legislature that the vesting
of the property belonging to the society cannot be made in a casual manner to any
and all persons regardless of any obligation. For argument, let’s say that the phrase
instead read as “ if not vested in any person ”. In such a scenario, the persons in whom
the property of the society vested would be able to possibly assert their own
individual title or a competing claim to the property. This would give rise to a
conflicting situation and deviate from the original purpose for which the property
belonging to the society came to be vested in a third person. This is precisely the
reason due to which the word “ trustees ” has been used under Section 5 of the
Societies Registration Act, 1860. While interpreting the words employed in Section
5, we must not detract from the underlying purpose and objective for which it came
to be enacted. Legislative creativity was employed to ensure that the incapability of
the society to hold the property by itself does not have any practical effect on its
ability to use and administer those properties. The idea was to ensure that the


Page No. 97 of 167

property of the society may not be squandered or the object and purpose for which
the society was formed may not be defeated by persons having control of the
properties. The property was vested in such persons such that, in all circumstances,
they would remain bound and accountable to the society. The governing body of the
society would, no doubt, remain tethered to the aims and objectives for which the
society was formed and would be able to deal with the properties only as per the
Rules and Regulations of the Memorandum of Association. The other persons who
are capable and allowed to hold the property of the society were also intended to be
bound in a similar fashion and hence, the provisions incorporated the word
“ trustees ” to instil in such person(s), a fiduciary obligation which they could not
deviate from or ignore. However, this by itself, by no stretch of imagination, can be
interpreted to mean that since the provision allows for the property to be held by
trustees separately, the governing body of the society would not be constrained with
any fetter as regards their dealing with the property belonging to the society. It may
happen, more often than not, that a society does not create a trust for the purpose of
holding its properties and that is precisely why, there is an automatic vesting in the
governing body. What must instead reinforced is that, despite this automatic vesting
in the governing body, the fiduciary capacity in which the governing body would
hold the properties, not be altered. In simpler words, Section 5 seemingly provides
two options, or mechanisms through which a society can hold the property belonging
to itself – One, in trustee(s) or, two, in the governing body of the society. Both these
mechanisms/options belong to the same genus (fiduciaries), albeit they don’t fall in
the same species (the former is a trustee stricto sensu and the latter is not).


Page No. 98 of 167


84. The governing body of the society would not only hold the properties and administer
it as per their bye laws to fulfil its fundamental aims but also safeguard it for the
future members of the society or the future governing body who would also have to
tread the same path and continue the aims and objects of the society as envisaged by
the founding members or as reflected in its governing documents. Therefore,
perpetuity is assigned not only to the identity of the society but also to the properties
which belong to it, provided the society is not dissolved. This adds to the reason that
the governing body also acts within the contours of a strict fiduciary relationship.

85. Therefore, while it cannot be considered as an ‘express trust’, what must also be
noted, at this crucial juncture, is that, for an entity to be brought within the rigours
of Section 92, the plaintiff has the option of also contending that a ‘constructive
trust’ exists in the circumstances and a breach of such a constructive trust has
occurred or that the directions of the Court are necessary for the administration of
such a constructive trust.

d. The doctrine of constructive trust and its applicability to a society functioning
for public purposes of a religious or charitable nature

86. In light of the discussion in the preceding paragraphs, we are tasked with
determining whether a constructive trust could be created in a circumstance


Page No. 99 of 167

wherein a society vests its property in its governing body through the deeming
fiction employed under Section 5 of the Societies Registration Act, 1860.

87. On the one hand, an express trust is a legal relationship which is created by an
individual(s) out of his own volition, while manifesting an intention to create a
trust. This manifestation of intention can be express, either by words or through
conduct. However, it is not always necessary that such intention be overt,
unambiguous and unequivocal. Sometimes, the existence of an express trust
might have to be inferred from the attending circumstances. In other words, a trust
would be an express trust whether expressed in certain unambiguous language or
whether inferred from uncertain ambiguous words and conduct of the settlor, for
example, where precatory words are used by the settlor indicating a prayer or
expectation that something be done in a specific manner such that it be imperative
and binding in the circumstances. In English private trust jurisprudence, as
expounded in the landmark decision in Knight v. Knight reported in (1840) 3
Beav 148, ‘three certainties’ were required – (a) certainty of intention or an
imperative that a trust be created; (b) certainty of the subject-matter or the
property subject to the trust and; (c) the certainty of objects or the beneficiaries
and the interest to be enjoyed by them. In that context, it was observed as thus:

“ […] To create by precatory words such a trust as the Court will
carry into execution, there are three requisites; first, the precatory
words must be sufficiently clear; secondly, there must be a
certainty as to subject of the gift; and, thirdly, the objects to take
must be certain. […]



Page No. 100 of 167

[…] As to the first requisite, no particular form of words is
necessary; it is sufficient for a testator " to express a desire as to
the disposition of the property, and the desire so expressed
amounts to a command […]

-xxx-

Secondly, the subject of the gift is sufficiently certain, being the
estates and personal property devised and bequeathed by the will.

Thirdly, the persons to take are sufficiently defined being persons
in the male line in succession; a description much more perfect
than the expressions "family," "relations," which have been held
sufficiently certain to be carried into execution; […]

-xxx-

On the whole, I am under the necessity of saying, that for the
creation of a trust, which ought to be characterised by certainty,
there is not sufficient clearness to make it certain that the words
of trust were intended to be imperative, or to make it certain what
was precisely the subject intended to be affected, or to make it
certain what were the interests to be enjoyed by the objects. ”
(Emphasis supplied)

88. The aforesaid principle has been codified in Indian jurisprudence under the Indian
Trust Act, 1882 governing private trust which defines a private trust as a an
obligation annexed to the ownership of property and arising out of a confidence
reposed in and accepted by the owner, or declared and accepted by him, for the
benefit of another, or of another and the owner. While we are not directly importing
the aforesaid principles laid out under the Indian Trusts Act, 1882, which governs
private trusts, for application to a ‘public trust’, these principles aid in construing
how an express trust, whether public or private, may be created. P Ramantha Aiyar
in his Advanced Law Lexicon also adds that it is not necessary that the word ‘trust’
be used. The trust would be express even if it has to be made out from the terms of


Page No. 101 of 167

an instrument. Therefore, a declared and ascertainable intention to create a trust is
the cornerstone of an express trust which further determines where the trustee’s
fiduciary obligation can be sourced from.

89. Importing these principles to a society and its governing body which holds property
on its behalf, it cannot be ascertained with reasonable certainty whether a fairly clear
intention to create a trust on part of the settlor could be said to exist when the
deeming fiction under Section 5 of the Societies Registration Act, 1860 is set into
motion. It goes without saying that if the society creates a trust separately, as
reflected in the words “ if not vested in trustees ”, an express trust would be created.
However, in the absence of the same, the intention of the settlor to create a trust is
difficult to ascertain, more so because the legislative framework under which this
vesting is done is distinct. This is notwithstanding the fact that the governing body
would still be acting in a fiduciary capacity.

90. On the other hand, a constructive trust, arises by operation of law, without regard to
or irrespective of the intention of the parties to create a trust. It is imposed
predominantly because the person(s) holding the title to the property would profit
by a wrong or would be unjustly enriched if they were permitted to keep the property.
In other words, a constructive trust, does not, like an express trust, arise because of
a manifestation of an intention to create it, but it is imposed as a remedy to prevent
unjust enrichment. A fiduciary element may be present in the declaration of a
constructive trust when, say, for example , whenever a person clothed with a


Page No. 102 of 167

fiduciary character, gains some personal advantage by availing himself of his
situation as a trustee. In such cases, such person would also become a trustee of the
advantage so gained. In other words, if a trustee, by reason of his position, acquires
any advantage of a valuable kind, he would be a constructive trustee of that
advantage. Furthermore, although some form of wrongdoing is generally required
for the imposition of a constructive trust, it is not always a necessary element. It may
also be imposed in case of a mistake where no wrongdoing is involved, say, for
instance, when a fiduciary makes some profit even though he has not acted
fraudulently.

91. However, it cannot be strictly said that only cases which contain a fiduciary element
would serve as a bedrock for the declaration of a constructive trust. The
circumstances which give rise to it may or may not involve a fiduciary relation - at
least, this is the proposition laid down under American jurisprudence. Quoting the
observations of Cardozo, J. in Beatty v. Guggenhein Exploration Co. reported in
(1919) 225 N. Y. 380 - “ a constructive trust is a formula through which the
conscience of equity finds expression. When property has been acquired in such
circumstances that the holder of legal title may not in good conscience retain the
beneficial interest, equity converts him into a trustee ”. In his subsequent decision
rendered in Meinhard v. Salmon reported in (1928) 249 N.Y. 458, he also observed
that – “ A constructive trust is then the remedial device through which the preference
of the self is made subordinate to loyalty to others ”. It is, therefore, designed to
prevent fraud or other inequity. In applying this doctrine, courts be said to also resort


Page No. 103 of 167

to the maxim – “ equity regards as done that which ought to be done ”. According to
American jurisprudence, an express trust is a substantive institution whereas a
constructive trust is purely a remedial institution. That the term “constructive trust”
was an expansive remedial concept and quite different from a fiduciary relation
present in express trusts, was set in stone by the Restatement of the Law,
Restitution promulgated by the American Law Institute in the year 1936. Comment
(a) to Section 160 defining a constructive trust reads as follows:

(Emphasis supplied)


92. It is largely believed that English Courts are generally reluctant to accept the doctrine
of unjust enrichment as a broad ground for imposing a constructive trust, whereas
the United States is more open to recognising it as a sufficient basis. In other words,
American courts more often use constructive trust as a remedial device where
specific restitution is appropriate on detailed consideration of the facts, whereas
English Courts adopt a more institutional approach where some form of a fiduciary
or quasi-fiduciary relationship is a pre-requisite instead of just prioritizing the
overall equities. Therefore, in implying the existence of a constructive trust, the


Page No. 104 of 167

English Courts recognise or give legal efficacy to a relationship or ‘institution’ that
already exists. Some critics argue that the traditional American approach was,
however, akin to that of England but that the doctrine was slowly expanded beyond
the parallels of a fiduciary relationship over the period of time.

93. An example of the modern American approach is evident from the decision in
Newton v. Porter reported in 69 N.Y. 133 (1877) wherein a constructive trust was
imposed on the products of larceny. According to experts, this decision marked the
cusp in the change of approach by the American Courts (from the English model to
a remedial one) because in Campbell v. Drake reported in 39 N.C. 94 (1845) , on
similar facts, the Supreme Court of North Carolina had held that where a clerk in a
store pilfered money and goods from his employer and uses those proceeds in the
purchase of a tract of land, the employer who was robbed could neither hold the
clerk nor his representatives after his death, as trustees of the land for the benefit of
the employer, so as to enable him to call for a conveyance of the legal title to himself.
To further elaborate, Campbell (supra) held as follows:

Page No. 105 of 167

94. However, in Newton (supra) , the Court of Appeals of New York took the view
that the absence of a conventional relation of a trustee and cestui que trust between
the plaintiff and the persons who committed larceny, would not stand in the way
of enforcing an equitable remedy in the form of a constructive trust. It was opined
that this would place the owner, who had been a victim of larceny and was
deprived of his property, in a less favourable position in a court of equity than
persons who lost their property through an abuse of trust or by the wrongful acts
of a trustee to whom the possession of that trust property was confided. This must
not be countenanced, according to the Court. The relevant observations are thus:


Page No. 106 of 167

(Emphasis supplied)

95. In a similar fashion, in Pope v. Garrett reported in 147 Tex. 18 (1948), the Supreme
Court of Texas had opined that a constructive trust could arise in a situation wherein
the testator was prevented, by physical force or by creating a disturbance, shortly
before her death, by two of her heirs, from executing a will solely in favour of the
plaintiff who was the intended beneficiary. Therein, the legal title to the heirs has


Page No. 107 of 167

passed on account of intestate succession and it was held that the heirs who were
guilty of the wrongful acts would become constructive trustees for the intended
beneficiary. Additionally, since some of the other innocent heirs would not have
inherited interest in the property but for the wrongful acts committed by some of the
heirs, it was opined that the imposition of a constructive trust on the property that
passed to all the heirs was a necessary remedy in the interests of justice. In other
words, the policy against unjust enrichment was also considered sufficient to justify
the imposition of a constructive trust upon the other innocent heirs as well. In
deciding so, it was observed as follows:

-xxx-

The argument is often made that the imposition of the constructive
trust in a case like this contravenes or circumvents the statute of


Page No. 108 of 167