Full Judgment Text
2009:BHC-AS:2115
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
WRIT PETITION NO.8127 OF 2008
1.Vijay K.Mehta,
2.Sushila V.Mehta,
3.Dr.Amritlal C.Shah,
A-791, Bandra Reclamation,
Bandra (West), Mumbai-400 050. ...Petitioners
Versus
1.Charu K.Mehta,
2.Rekha H.Sheth,
3.Niket V.Mehta,
A-791, Bandra Reclamation,
Bandra (West), Mumbai-400 050.
4.Mithun H.Mehta,
311-312 Chadda Crescent,
Sector-17, Vashi,
Navi Mumbai-400 705.
5.Jatin V.Mehta,
C-203, Nirman Vihar,
Rajmata Jijabai Road,
Andheri (W), Mumbai-400 093.
6.Sandeep Rathi,
61, Alaknanda, Road No.10,
J.V.P.D. Scheme, Juhu,
Mumbai - 400 049.
7.Sanjay Bhutada,
C-6, Gautam Towers,
Gokhale Road, Naupada,
Thane (W), Mumbai-400 602.
8.Kishor K.Mehta,
Usha Kiran, 18th floor,
15, Carmichael Road,
Mumbai - 400 026.
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9.Rajiv K.Mehta,
Usha Kiran, 23rd floor,
15, Carmichael Road,
Mumbai - 400 026.
10.Prashant K.Mehta,
Usha Kiran, 18th floor,
15, Carmichael Road,
Mumbai - 400 026.
11.Prabodh K.Mehta
12.Rashmi K.Mehta
13.Chetan P.Mehta
14.Nanik Rupani
15.Vijay Choraria,
A-791, Bandra Reclamation,
Bandra (West), Mumbai-400 050.
16.The Joint Charity Commissioner,
Greater Mumbai Region,
Mumbai. ...Respondents
......
Mr.Iqbal Chagla, Sr.Counsel with Mr.Sanjay Jain,
Mr.Kunal Vajani, Atul Daga and Mr.Rohan Dakshini
i/b M/s.Wadia Ghandy & Co. for Petitioner.
Mr.Mahesh Jethmalani with Mr.Raj Patel, Mr.Anushak
Davar, Ms.Hetal Thakore i/b M/s.Thakore Jariwala &
Associates for Respondent No.1.
Mr.Janak Dwarkadas, Sr.Counsel with Ms.Jyoti Shah
i/b M/s.Daru Shah & Co. for Respondent No.2.
Mr.Pranav Badheka with Mr.Amey Nabar i/b Hariani &
Co. for Respondent No.8.
Ms.R.C.Nichani i/b Hariani & Co. for Respondents 9
& 10.
Mr.Jay Kansara i/b Paras Kuhad & Associates for
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Respondents 11 to 15.
Mr.P.P.Kakade, A.G.P. for Respondent No.16.
......
CORAM: A.M.KHANWILKAR, J. CORAM: A.M.KHANWILKAR, J. CORAM: A.M.KHANWILKAR, J.
FEBRUARY 2, 2009. FEBRUARY 2, 2009. FEBRUARY 2, 2009.
ORDER : ORDER :
ORDER :
1. This Writ Petition takes exception to the
decision of the Joint Charity Commissioner
(hereinafter referred to as ‘the JCC’ for the sake
of convenience), Greater Mumbai, Region Mumbai
dated 10th October 2008 passed on Application
(Exhibit 2), whereby, pending enquiry of charges,
the five trustees (including the present three
Petitioners) have been suspended in exercise of
powers under Section 41D(3) of the Bombay Public
Trusts Act, 1950 (hereinafter referred to as ‘the
Act’). This Petition has been finally heard at the
admission stage, by consent.
2. The moot question that needs to be
addressed in this Petition is: whether the
exercise of powers under Section 41D(3) of the Act
by the JCC can be said to be just and proper in the
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fact situation of the present case?
3. The background in which the present matter
arises is that the Respondent No.1 filed
Application before the JCC for initiating action
under Section 41D of the Act against nine trustees
of the Lilavati Kirtilal Mehta Medical Trust
(hereinafter referred to as ‘the Trust’) on certain
allegations elaborated in the said Application.
The said Application is registered as Application
No.17 of 2006. The Respondent No.1 claims to be a
permanent trustee of the said Trust. The Trust is
running a super speciality hospital in the name of
"Lilavati Hospital" at Bandra, Mumbai and is a
well-known hospital in the Country. The hospital
has facility of 300 beds and out patients
department, casualty department, etc. It engages
nearly 1700 employees and 230 consultant Doctors
attached to the hospital. In the said Application
moved by the Respondent No.1, after allowing the
parties to exchange documents and pleadings, the
JCC by his order dated 3rd June 2008 on finding
prima facie material to indicate the complicity of
the said nine trustees proceeded to frame following
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eight charges :
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"C H A R G E S
1) The opponents No.1 to 9, trustees of
the trust advanced huge amounts more than
Rs.15 crores to M/s.Mayfair Realtors
Pvt.Ltd. & Vesta India Pvt.Ltd. for
procuring medical equipments during years
2001-02 to 2003-04 without taking proper
care & despite failure by these companies
to supply the equipments, did not take
steps to recover the money & thus,
continuously neglected their duties &
committed mis feasance & also dealt
improperly with the trust property.
2) The opponents No.1 to 9, trustees of
the trust, gave donations regularly to the
tune of Rs.6.36 crores from year 2003-04
to 2005-06 to Madhulaxmi Trust, without
verifying that the donations are utilised
to fulfil objects of the trust and thus,
continuously neglected the duties &
committed mis feasance & also dealt
improperly with the trust property.
3) The opponents No.1 to 9, trustees of
the trust & committed mis feasance & also
dealt improperly with the trust property
purchased a Honda Accord Car MH 02 MA 4343
for and in the name of Mr.Dushyant Mehta &
thus dealt improperly with trust funds &
mis appropriated the trust money.
4) Opponent No.9, a trustee of the trust,
utilised the trust funds to the tune of
Rs.36,06,470/- during financial years
2003-04 to 2005-06 towards payments of his
credit cards & thus received personal
benefits from trust funds & thereby
mis-appropriated the trust money &
committed mal feasance.
5) The opponents No.1 to 9, trustees of
the trust arranged meetings of the
trustees as well as other meetings at
Antewerp, Belgium & other foreign
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countries instead of India & spent huge
amounts to the tune of Rs.58,40,456/- from
year 2002-03 to August, 2006 & squandered
the trust money & committed mis feasance &
also dealt improperly with the trust
property.
6) The opponents No.1 to 9, trustees of
the trust have spent money from trust
funds to meet travelling expenses of
Mr.Suresh Motwani who has no concern with
the trust, for his trips to Goa & Dubai &
committed mis feasance & also dealt
improperly with the trust property.
7) The opponents No.1 to 9, trustees of
the trust, advanced amount of Rs.2.75
crores to M/s.Albina Developers Pvt.Ltd.
without verifying its track record &
without taking proper care & acted
negligently in dealing with this
transaction & committed mis feasance &
also dealt improperly with the trust
property.
8) The opponents No.1 to 9, trustees of
the trust, allowed mis use of a trust
account for the purpose of clandestine
transaction in favour of Golden Sea Shell
C.H. & thereby committed mal feasance."
4. Insofar as the relief claimed by the
Respondent No.1 in Application (Exhibit 2) to
suspend the trustees during the pendency of the
enquiry, the JCC by the same order proceeded to
hold that at the relevant time, he was not in a
position to identify a fit person to be appointed
to discharge the duties in place of the suspended
trustees, which order could be passed in exercise
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of provisions under Section 41D(4) of the Act.
Against the said decision, the two trustees against
whom charges were framed by the JCC filed Writ
Petition No.3849 of 2008. The three other trustees
against whom no allegations were made in the main
Application filed by Respondent No.1 or any charges
framed, filed separate Writ Petition being Writ
Petition No.3850 of 2008 questioning the
correctness of the decision of the JCC in his order
dated 3rd June 2008. Both these Petitions were
disposed of by the Single Judge of this Court on
11th July 2008. Insofar as the three trustees
against whom there were no allegations in the
Application or charges framed, the Court observed
that the order passed against them, which was
impugned in their Writ Petition was in gross
violation of the principles of natural justice. By
the said Judgement, the learned Single Judge was,
however, pleased to set-aside only the interim
order dated 3rd June 2008 and issued direction to
the JCC to pass fresh interim order in accordance
with law. Significantly, the relief as claimed by
the two trustees in Writ Petition No.3849 of 2008
to set-aside the order framing charge against them
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was not disturbed. The parties had moved the same
learned Single Judge of this Court for speaking to
minutes of the order passed earlier, which
application was disposed of on 15th July 2008. The
matter then proceeded before the JCC for passing
necessary interim order afresh.
5. At the same time, the Petitioners in Writ
Petition No.3849 of 2008 questioned the correctness
of the view taken by the learned Single Judge in
its Judgment dated 11th July 2008 and in turn, the
order passed by the JCC framing charges by way of
Letters Patent Appeal No.328 of 2008.
6. The JCC instead of deciding the pending
Application (Exhibit 2) filed by the Respondent
No.1 for suspending the charged trustees in
exercise of powers under Section 41D(3) of the Act,
adjourned the matter by order dated 23rd July 2008.
Consequently, Writ Petition was filed challenging
order dated 23rd July 2008 passed below Exhibit 1
in Application No.17/2007 being Writ Petition
No.5732 of 2008. The said Writ Petition came to be
disposed of on 9th September 2008 inter alia
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directing the JCC to expeditiously decide
Application (Exhibit 2) filed by the Respondent
No.1 herein in accordance with law and not to pass
a mechanical order of suspension solely on the
ground that charges have already been framed
against the concerned trustees. All questions in
that behalf were left open. It is not necessary to
refer to the other issues dealt with in the said
decision.
7. Against this decision also, Letters Patent
Appeal has been carried by the two trustees against
whom charges have been framed by the JCC under
order dated 3rd June 2008. In the pending Letters
Patent Appeals, the Division Bench of this Court on
1st October 2008 passed following order:
"P.C. :
1. The learned counsel for the parties
agree that the matter be taken up for
disposal at the stage of admission.
Tentatively, this court is listing the
matter at 20.10.2008 at 3.00 p.m.
2. In the meantime, the proceedings
before the Joint Charity Commissioner in
the matter will go on. We make it clear
that the Joint Charity Commissioner would
not implement or give effect to the order
which he may pass after concluding the
hearing, if it is adverse to the
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appellant/trustees and the order passed by
the learned single Judge (A.M.Khanwilkar,
J) will continue to operate in the field
as it sufficiently protects the interest
of the trust."
8. In view of this order, the JCC proceeded
to consider the Application (Exhibit 2) in view of
the direction issued by the Single Judge in Writ
Petition No.5732 of 2008 decided on 9th September
2008. After granting opportunity to both sides to
file affidavits and further material, the JCC
proceeded to dispose of the said Application
(Exhibit 2) by his order dated 10th October 2008.
The JCC passed the following order:
"O R D E R
1) Pending disposal of charges, the
trustees, respondent No.1 (Smt.Rekhaben
Seth), Respondent No.3 (Smt.Sushila
Mehta), Respondent No.6 (Dr.Amrutlal
Shah), Respondent No.8 (Shri Niket Mehta)
& respondent No.9 (Shri Vijay Mehta) of
Lilavati Kirtilal Mehta Medical trust are
put under suspension.
2) This order will not be implemented till
further directions are received from
Hon.High Court in Letters Patent Appeal
No.328 of 2008 in Writ Petition
No.3849/2008 with Letters Patent Appeal
no.330 of 2008 in Writ Petition
No.5732/2008, pending there.
3) The applicant (Ex.2) is accordingly
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disposed of."
9. It is this order which is subject matter
of challenge in the present Writ petition at the
instance of three trustees out of five suspended
trustees. Here it may be clarified that although
charges have been framed against nine trustees, as
four trustees have tendered resignation and were no
more associated with the Trust, the question of
suspending the said trustees did not arise. For
that reason, the JCC proceeded to consider
Application (Exhibit 2) only against five charged
trustees who continued to be on the Trust. The two
other suspended trustees besides the three
Petitioners herein have not chosen to challenge the
order of suspension. Whereas, the present Petition
has been filed only by the three suspended trustees
who were Respondent No.9, Respondent No.3 and
Respondent No.6 respectively in the proceedings
before the JCC.
10. To complete the narration of relevant
events, it may be appropriate to refer to two other
orders of this Court passed by the Division Bench
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in pending Letters Patent Appeals. The one passed
on 20th October 2008 and the other passed on 24th
October 2008, which are reproduced thus:
ORDER DATED 20TH OCTOBER 2008 ORDER DATED 20TH OCTOBER 2008 ORDER DATED 20TH OCTOBER 2008
"P.C.:
1. Heard the learned counsel for the
parties.
2. A preliminary issue is raised
by the respondents regarding
maintainability of these appeals.
Sufficient time would be required for this
court to hear the matter as this court
proposes to dispose of the appeals at the
stage of admission itself. In the
meantime, the interim order passed by this
court can continue to operate. We further
make it clear that in place of trustees
who have been suspended, no new trustees
would be appointed or nominated.
3. The learned counsel for the appellants
submit that as far as the order of
suspension is concerned, the appellants
propose to independently challenge the
same. We make it clear that the pendency
of these Letters Patent Appeals do not
preclude the appellants from challenging
the order of suspension by which they are
aggrieved and which is a fresh cause of
action in the matter.
4. In view of the fact that the
appellants propose to challenge the order
of suspension, our interim order which has
been continued would stand extinguished as
soon as the order of suspension is
challenged before the learned single Judge
and decision in the matter is taken.
5. Stand over to 24th November, 2008".
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ORDER DATED 24TH OCTOBER 2008 ORDER DATED 24TH OCTOBER 2008 ORDER DATED 24TH OCTOBER 2008
"P.C.:
1. This application is made for
speaking to minutes of the order dated
20th October, 2008.
2. We have heard the parties. In para 2
of the said order the last sentence
namely, "We further make it clear that in
place of trustees who have been suspended,
no new trustees shall be appointed or
nominated." stands substituted by "Parties
will maintain statusquo on the board of
trustees of the trust."
3. Para 4 of the said order is not
required and therefore, stands deleted."
11. The learned Counsel appearing for the
charged trustees against whom suspension order has
been passed by the JCC have criticized the order of
suspension on the argument that the charges framed
by the JCC are ex-facie untenable. If so, the
question of suspending the charged trustees on the
basis of such infirm charges would be
inappropriate. It was argued that there was no
material to substantiate the finding recorded by
the JCC that there was likelihood of further misuse
of powers or influencing witnesses and tampering
with the evidence. The said finding is based on
conjecture and surmises. If that opinion is to be
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discarded then there is no tangible material to
sustain the order of suspension. This argument is
on the premiss that the order of suspension during
the pendency of enquiry is a drastic order and
cannot be passed merely as a consequence of the
order framing charges. It was argued that there
was no possibility of any loss likely to be caused
to the Trust on account of any action of the
charged trustees. To buttress this argument,
amongst others, reliance was placed on
communication sent on the letterhead of M/s.Vesta
India Ltd., dated 1st October 2008, under the
signature of its authorised signatory Mr.Suresh
Motwani. According to the suspended trustees, the
said document was indicative of positive steps
being taken by the charged trustees for recovery of
the amount receivable by the Trust. It was
contended that in any case, there was enough
safeguards to check the activities of the charged
trustees. In that, the charges were founded on the
transactions effected between year 2001 to 2006 in
respect of which, the entire record was already in
custody of the JCC. There was no question of
tampering the said record. Besides, as the charge
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was founded on documents, the question of
influencing the witnesses was a misplaced
apprehension. It was then argued that the other
trustees including the rival camp would continue to
be associated in taking any decision for and on
behalf of the Trust. Moreover, the Supreme Court
appointed regime of Joint Administrators was also
in place. Besides, the earlier restriction imposed
by the JCC and as modified by this Court in its
order dated 9th September 2008 restraining the
charged trustees from taking any policy decision
and to enter into any financial transaction with
regard to the Trust without prior approval of the
JCC till further orders was sufficient to protect
the interest of the Trust. It was contended that
there was neither possibility of charged Trustees
influencing the enquiry or causing any loss to the
Trust. In that case, there was absolutely no
necessity to suspend the charged trustees and the
enquiry can proceed even without suspension of the
said trustees. It was then contended that already
five trustees out of the nine charged trustees have
resigned. The Respondents 14 and 15 have been
restrained from acting as trustees. In such a
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situation, the Trust will not be able to function
especially in absence of Petitioner No.1 who for
all this period responsibly discharged his duties
and was successful in enhancing the income of the
Trust manifold. On the above arguments, the order
of suspending the Petitioners herein from acting as
Trustees during the pendency of the enquiry has
been challenged as inappropriate and unwarranted.
12. The question is: whether the order passed
by the JCC suspending the Petitioners herein can be
said to be manifestly wrong, perverse and
untenable. To consider this aspect, we will have
to advert to the reasons recorded by the JCC for
recording his satisfaction to order suspension of
the Petitioners herein and two others during the
pendency of the enquiry in exercise of powers under
Section 41D(3) of the Act. The JCC has first
considered the decision of the Apex Court in the
case of Sri Digyadarsan Rajendra Ramdassjivaru v. Sri Digyadarsan Rajendra Ramdassjivaru v. Sri Digyadarsan Rajendra Ramdassjivaru v.
The State of Andhra Pradesh reported in 1969 (1) The State of Andhra Pradesh reported in 1969 (1) The State of Andhra Pradesh reported in 1969 (1)
SCC 844 SCC 844 and another unreported Judgment of Division SCC 844
Bench of our High court in the case of Gulabsingh Gulabsingh Gulabsingh
Dipa Chavan & Ors. v. Joint Charity Commissioner, Dipa Chavan & Ors. v. Joint Charity Commissioner, Dipa Chavan & Ors. v. Joint Charity Commissioner,
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Maharashtra State, Bombay & Anr. (Special Civil Maharashtra State, Bombay & Anr. (Special Civil Maharashtra State, Bombay & Anr. (Special Civil
Application No.1912/1976) decided on 18th December
Application No.1912/1976) decided on 18th December Application No.1912/1976) decided on 18th December
1978 1978 and deduced the principles to be kept in mind 1978
for exercising powers under Section 41D(3) of the
Act to suspend the charged trustees during the
pendency of the enquiry. It has then adverted to
the decision in the case of K.K.Ramamurthy Vs. K.K.Ramamurthy Vs. K.K.Ramamurthy Vs.
State of Kerala reported in 1972(II) L.L.J. 509 State of Kerala reported in 1972(II) L.L.J. 509, State of Kerala reported in 1972(II) L.L.J. 509
which deals with the principle to be kept in mind
while suspending a civil servant against whom
disciplinary proceedings are initiated. Reference
is then made to another decision in the case of
State of Orissa Vs. Bimal Kumar Mohanti reported State of Orissa Vs. Bimal Kumar Mohanti reported State of Orissa Vs. Bimal Kumar Mohanti reported
in (1994) 4 SCC 126 in (1994) 4 SCC 126. Once again, this case deals in (1994) 4 SCC 126
with the suspension of Government Officer during
the pendency of disciplinary enquiry. The JCC
after culling out the principles stated in these
decisions, proceeded to observe that many factors
to be considered for suspension of Government
Servant during pendency of Departmental Enquiry may
be applicable for exercising powers under section
41D(3) of the Act to suspend the charged trustees
during the pendency of enquiry. The JCC has
adverted to the principle that the Court or the
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Tribunal must consider each case on its own facts
and no general law could be laid. That suspension
is not a punishment, but is only one of forbidding
or disabling an employee to discharge the duties of
office or post held by him. That the suspension
must be a step-in-aid to the ultimate result of the
investigation or enquiry and lastly, that the
Authority should always keep in mind public
interest of the impact of the delinquent’s
continuance in office while facing departmental
enquiry or trial of a criminal charge. The JCC has
then adverted to the decision of Sub-Divisional Sub-Divisional Sub-Divisional
Officer Vs. Shambhu Singh reported in 1969 (1) SCC Officer Vs. Shambhu Singh reported in 1969 (1) SCC Officer Vs. Shambhu Singh reported in 1969 (1) SCC
825 825, which dealt with person who was not a 825
Government Servant but an elected representative.
Even so, the principle highlighted is that the
existence of power must be exercised when it is
absolutely essential for the discharge of the power
conferred and not merely that it is convenient to
have such a power. The JCC has then adverted to
two other decisions of the Supreme Court relied by
the contesting Respondents which expounds the
principles to be kept in mind by the Court while
granting interim relief. The JCC has noted that
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the said principles cannot be applied for exercise
of powers under Section 41D(3) of the Act as the
authority is not granting any interim relief as
such in favour of any individual but is expected to
pass an order in the interest of the Trust for its
better management and to prevent further misuse of
the Trust affairs at the hands of the charged
trustees during the pendency of the enquiry and to
prevent the trustees from hampering the course of
investigation. In other words, the JCC first
proceeded to examine the principles that ought to
be borne in mind to exercise powers under Section
41D(3) of the Act and noted that gravity or
seriousness of the charges, nature of evidence,
necessity to keep the charged trustees away from
the administration of Trust and from sphere of
influence by passing order of suspension and that
each case differs on facts.
13. The JCC then proceeded to examine other
points raised on behalf of the charged trustees
such as main Application is not maintainable, it is
barred by limitation, barred by principles of
res-judicata, etc. That the Applicant’s son had
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filed two criminal complaints based on same
allegations against the Respondents which have been
dismissed by the Court, for which, principle of
double jeopardy would be attracted. That the names
of some of the trustees are not on record and
change reports are pending. That charges are
factually incorrect. The JCC has rejected each of
these objections on the finding that the same were
already addressed on the earlier occasion and were
not relevant for deciding the matter in issue for
exercising powers under Section 41D(3) of the Act
to suspend the charged trustees during the pendency
of the enquiry.
14. The JCC then adverted to the argument of
the charged trustees that in any case, it was not a
case of misfeasance or malfeasance but lapse of
lesser degree. To consider this argument, the JCC
proceeded to consider the charges already framed in
seriatim, which, in his opinion, were suggestive of
the gravity of charges. The JCC has adverted to
the arguments in respect of each of the said charge
and rejected the argument of the charged trustees.
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15. The JCC has then adverted to the argument
of the charged trustees that the hospital run by
the Trust has yearly turn over of hundreds of
crores of rupees and under the able charge of
Petitioner No.1 herein there was considerable rise
in the income and consequently in the profit of the
Trust. The argument of good work done by the
charged trustees and the charge amount is
comparatively meagre amount, has been rejected by
the JCC. He has held that lapses on the part of
trustees involves minor financial implication, can
be no justification. The JCC has also rejected the
argument that the acts of commission or omission
for which charges have been framed were essentially
error of judgment or a business mistake. Instead,
the JCC observed that a casual approach, omission
to take immediate steps to cure the defects, if
singular in number, can be excused but the repeated
acts occurring every year in one or other form,
which results in loss to the Trust will have to be
viewed differently. The JCC has referred to the
charges framed which prima facie evince the
approach and attitude of the charged trustees and
held that there is repetitive misuse of the Trust
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fund on different occasion by different means.
According to the JCC, these acts, leave
cumulatively, even individually, cannot be termed
as minor lapses. It went on to observe that the
magnitude of the charges is amplified, if they are
considered in totality.
16. The JCC then proceeded to examine the
argument that there was no likelihood of misuse of
the powers by the trustees. In that, the accounts
and other record is already submitted in his
Office. Thus, there could be no tampering of this
evidence and that there was presence of other
trustees on record, completely excluding the
possibility of further misuse of powers. Even this
argument of the charged trustees did not appeal to
the JCC. While considering the said argument, the
apprehension expressed by the Applicant on the
basis of the events unfolding after passing of the
order by Court such as issuance of cheques which
however, was claimed as not delivered or
despatched. At the same time, the JCC was
conscious that the report of Shri Halbe, former
Judge of this Court, who was appointed as Joint
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Administrator was not relevant to decide the
question in issue regarding suspension of the
charged trustees. The JCC has adverted to the
grievance made by the Applicants that payment of
Advocates’ fees from Trust fund for fighting
personal litigation of the charged trustees but has
noted that that grievance will have to be
considered at the appropriate stage as was observed
in the order framing charge dated 3rd June 2008.
The JCC, however, has noted that the fact that the
cheques were prepared, was indisputable. The same
were prepared, obviously to be delivered. He held
that the fact that the same were not delivered was
of little consequence. This is one of the factum
which has weighed with the JCC about the
possibility of further misuse.
17. The JCC has then considered the argument
that the suspension of the trustees would be
against the interest of the Trust and that, the
charged trustees were in fact the main pillars of
the Trust. This argument has been rejected on the
opinion that no body was indispensable and that
looking to the consequence which the charged
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trustees are facing, others will learn lesson and
act with more care and diligence and in the
interest of the Trust.
18. After having analysed all these aspects,
the JCC proceeded to hold that allowing the charged
trustees to continue in the management during
enquiry, will have adverse effects. There is
likelihood of their taking further decisions for
their benefits, there may be repetition of past
errors and lapses. That some of the witnesses may
be employees of the Trust and the hospital. That
they would be reluctant to come forward and give
evidence against the persons who are holding posts
as trustees. This is the satisfaction recorded by
the JCC to justify the necessity of placing the
charged trustees under suspension.
19. The JCC has then considered the subsequent
conduct reflected from the letter sent to the Heads
of the Department by the charged trustees in
response to the circular issued by Shri Halbe to
hold that the circumstances do not inspire
confidence in one’s mind that further functioning
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of the Trust would be smooth and would be in the
interest of Trust if continued in the hands of the
charged trustees. It has also observed that the
genuineness about the letter issued by Mr.Suresh
Motwani filed with Application (Exhibit 99) cannot
be brushed aside lightly.
20. The JCC then proceeded to consider the
argument advanced at the instance of Respondent
No.8 before him/Respondent No.3 herein who has
virtually blamed his father for the situation,
which argument was pressed to persuade the JCC that
he had no concern with the acts of commission and
omission committed by the Petitioners herein. This
argument has been rejected.
21. It is on the above basis, the JCC summed
up that considering the gravity of charges,
likelihood of further misuse of powers and
likelihood of influencing the witnesses and
tampering with the evidence, smooth enquiry and
smooth functioning of the Trust, it was necessary
to suspend the charged trustees during the pendency
of enquiry.
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22. On careful and close analysis of the order
passed by the JCC which is impugned in this
Petition, in my opinion, it is not a case where any
material argument of the charged trustees have been
overlooked and not adverted to. Whereas, all
aspects of the matter have been carefully
considered and answered. By no standards, the
order under Appeal can be said to be a mechanical
order. I have no hesitation in taking the view
that it is a well considered opinion and
satisfaction recorded by the JCC keeping in mind
all relevant aspects of the matter. The JCC has
clearly recorded the basis on which satisfaction
has been reached that it was necessary to place the
charged trustees under suspension during the
pendency of the enquiry. The view taken by the JCC
cannot be said to be either perverse or manifestly
wrong. All relevant factors have been adverted to
and have been duly considered by the JCC.
23. Indubitably, the power to be exercised by
the JCC under Section 41D(3) of the Act is a
discretionary power. Indeed, merely because the
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power exists, the JCC cannot mechanically exercise
that power. In the present case, every point
raised on behalf of the charged trustees has been
noted and considered by the JCC. Assuming that
there is some error here or there, that cannot be
the basis to interfere with such a well considered
discretionary order passed by the JCC upon
recording satisfaction about the necessity to do
so. I have no hesitation in taking the view that
the discretion exercised by the JCC is replete of
judicial conscience and his satisfaction on
relevant matters. The view taken by the JCC is not
only a possible view, but the only view that could
be taken in the fact situation of the present case.
24. Notably, it is not a case as if the
mistake committed by the JCC is incapable of
correction. The wrong done to the charged
trustees, if any, would be set right and their
rights and equities adjusted at the appropriate
stage in the main application (proceedings). If
the said application was to be rejected upon
discharge of the trustees of charges framed against
them, as a necessary corollary, the charged
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trustees who have been suspended under the impugned
order, will have to be reinstated as trustees of
the Trust. Even if the decision of the JCC on the
main application was to be adverse, the wrong
caused to the charged trustees on account of
suspension during the pendency of the enquiry, if
any, would be set right or rights and equities
adjusted in Appeal to be preferred by them at the
conclusion of the proceedings. If such is the
situation, the Court ought to be loath in
exercising writ jurisdiction. It will be useful to
recall the dictum of the Apex Court in the case of
Surya Dev Rai v. Ram Chander Rai & Ors. reported Surya Dev Rai v. Ram Chander Rai & Ors. reported Surya Dev Rai v. Ram Chander Rai & Ors. reported
in (2003) 6 SCC 675 in (2003) 6 SCC 675. In Paragraph 39 of the said in (2003) 6 SCC 675
decision, the Apex Court observed thus:
"If it intervenes in pending proceedings
there is bound to be delay in termination
of proceedings. If it does not intervene,
the error of the moment may earn immunity
from correction. The facts and
circumstances of a given case may make it
more appropriate for the High Court to
exercise self-restrain and not to
intervene because the error of
jurisdiction though committed is yet
capable of being taken care of and
corrected at a later stage and the wrong
done, if any, would be set right and
rights and equities adjusted in appeal or
revision preferred at the conclusion of
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the proceedings. But there may be cases
where "a stitch in time would save nine".
At the end, we may sum up by saying that
the power is there but the exercise is
discretionary which will be governed
solely by the dictates of judicial
conscience enriched by juridical
experience and practical wisdom of the
judge."
(emphasis supplied)
25. The question is: whether the present case
falls in the excepted category. In my opinion, the
answer is an emphatic ‘NO’. Indeed, the order of
suspension may result in deprivation of the
Petitioners to act as trustees during the pendency
of the enquiry, but that is inevitable. More so,
in the backdrop of the finding and satisfaction
recorded by the JCC, which I am disinclined to
interfere with. Significantly, the Petitioners
have already carried the matter before the Division
Bench by way of Letters Patent Appeal questioning
the correctness of the order dated 3rd June 2008
framing charges against the nine trustees including
them. If the said Appeal were to succeed, it would
necessarily follow that the question of suspending
the Petitioners as trustees may not arise.
However, in the face of the charges already framed,
if that order were to be upheld even by the
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Division Bench of this Court, keeping in mind the
gravity thereof and the possibility of enquiry or
investigation being influenced and of further loss
to be caused to the Trust due to likelihood of the
charged trustees taking further decisions for their
benefits, the question of allowing the Petitioners
to discharge their functions as trustees of the
Trust during the pendency of the enquiry cannot be
countenanced.
26. It has been rightly noted by the JCC with
reference to the exposition of the Apex Court that
each case has to be considered on its own facts and
no general law can be laid down on the issue of
suspension of a charged trustee during the pendency
of the enquiry. The suspension would be
step-in-aid to the ultimate result of the
investigation or enquiry. In the context of the
proposed action to be eventually taken against the
charged trustees, it would be necessary to avoid
further injury or loss likely to be caused to the
Trust property/funds. By suspending the charged
trustees, whose complicity has been prima facie
noticed in respect of serious charges on the basis
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of material already made available before framing
of charges, it would be in the general interest of
the Trust and its beneficiaries to place them under
suspension. In the case of Sri Digyadarsan Sri Digyadarsan Sri Digyadarsan
Rajendra Ramdassjivaru (supra), Rajendra Ramdassjivaru (supra), the suspension of a Rajendra Ramdassjivaru (supra),
Madadhipathi during the enquiry was one of the
issue and whether power to suspend is necessary and
reasonable part of the procedure was considered by
the Apex Court. While examining that aspect, the
Apex Court has noted that if such a person (the
charged trustee) was allowed to function during the
pendency of an enquiry, the entire purpose of the
enquiry might be defeated. It opined that such
person during the pendency of enquiry may do away
with most of the evidence or tamper with the books
of account or otherwise commit acts of
misappropriation and defalcation in respect of the
properties of the Math, for which, it was essential
to make a provision for suspending him till the
enquiry concludes and an order is made either
exonerating him or directing his removal. The Apex
Court upheld the order of suspension of the charged
trustee in that case on the finding that the
enquiry pending against the Petitioner was in
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respect of serious charges of misappropriation and
defalcation of trust funds and of leading an
immoral life which were being investigated.
Reference has been rightly made by the JCC to the
unreported decision of the Division Bench of our
High Court in the case of Gulabsing Dipa Chavan Gulabsing Dipa Chavan
Gulabsing Dipa Chavan
(supra). (supra). The Division Bench has noted that Section (supra).
41D(3) clearly enables the Charity Commissioner to
place the trustees under suspension pending
disposal of the charges. The argument that hearing
was required to be given to the Petitioners before
order of suspension was passed has been rejected in
the following words:
"6. Mr.Dalvi then contended that the
petitioners, who are the trustees and were
holding the office at the time of the
passing of the impugned order, were not
served with any notice by the Joint
Charity Commissioner. It was urged by the
learned Counsel that the Joint Charity
Commissioner was in error in passing the
order without any notice to the petitioner
and thereby the principles of natural
justice are violated. Mr.Dalvi,
therefore, contends that the interim order
passed by the Joint Charity Commissioner
should be set aside. It is impossible to
accept the contention of the learned
Counsel for more than one reason.
Firstly, the Act nowhere makes a provision
of issuance of a notice prior to the
passing of the interim order of suspension
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under sub-section (3) or of the
appointment of a fit person to discharge
duties under sub-section (4) of section
41D of the Act. Apart from that, it must
be remembered that the Joint Charity
Commissioner exercised the powers of
suspension only in the cases where he is
satisfied that the trustee or the Board of
Trustees are mismanaging the affairs of
the trust and causing loss to the interest
of the trust. In cases of such a serious
nature, if the Charity Commissioner issues
notice prior to the passing of the order
under sub-sections (3) or (4) of sec.41D,
then obviously the trustees who are
mismanaging the trust would have an
opportunity to do away with the trust
property and the purpose of enquiry would
be defeated. In the case in hand, the
allegations made against Jadhav are of
such a serious nature that giving an
opportunity either to Jadhav or to other
trustees who are alleged to be aiding and
abetting Jadhav in his acts of misfeasance
would really defeat the purpose of making
an order of suspension and appointing a
fit person to discharge the duties. In
our judgment, the Joint Charity
Commissioner was justified in passing the
order without issuing any notice to the
petitioners. In this connection, it must
also be mentioned that on behalf of the
Joint Charity Commissioner, a return has
been filed by Smt.Kelkar, the
Superintendent in the office of the
Charity Commissioner, and in the
affidavit, Mrs.Kelkar specifically stated
that the petitioners are not the present
trustees and their names do not appear in
Schedule I under section 17 of the Bombay
Public Trusts Act. Smt.Kelkar has
specifically stated that the change report
has not been made to the Charity
Commissioner and as such the petitioners
are not recognized as trustees. If the
petitioners are not recognized as
trustees, then the grievance of Mr.Dalvi
that there was no notice of the order
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passed by the Joint Charity Commissioner
loses its substance."
(emphasis supplied)
27. This decision would be relevant also to
reject the argument of Respondent No.8 (Respondent
No.3 herein) that he should be extricated from the
proposed action and more particularly suspension
during the pendency of the enquiry. As a matter of
fact, the said Respondent has not challenged the
order of suspension but that was the argument
advanced on his behalf even before the JCC which
has been rightly rejected on the finding that the
management was under the control of Petitioner No.1
herein and Respondent No.3 had converted himself to
the secondary position.
28. The charges "as framed" against the
Petitioners and other trustees are indicative of
the involvement of the concerned Trustees not only
for breach of duty, but their actions have been
actuated by malice or bad faith. If these charges
were to be eventually established, there is no
reason to doubt the satisfaction recorded by the
JCC that there is possibility of further loss to be
caused by the charged trustees and it was necessary
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to keep them away from the trust management so as
to prevent any further loss to the Trust.
29. Significantly, the JCC has adverted to the
subsequent conduct of the charged trustees in
preparing fresh cheques immediately after the
restriction order was vacated. The JCC has rightly
observed that the fact that the said cheques were
not actually delivered, does not take the matter
any further. It nevertheless, is good reason to
infer that the charged trustees were waiting for
the opportune moment to make payment. In this
context, it was argued that payment which was to be
made was in respect of professional fees to be paid
to lawyers who were attending litigation for and on
behalf of the Trust. On the other hand, it was
argued by the Counsel for the Respondent No.1 that
the payment was not in respect of professional fees
to represent the Trust, but, in fact, was to handle
the personal litigation of the charged trustees and
which payment runs into "couple of crores" of
rupees and is not a legitimate spending. It is not
necessary for me to address the controversy as to
whether payment already made or to be made towards
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professional fees is or was in fact towards
litigation handled for and on behalf of the Trust
or the personal litigation of the charged trustees.
Indeed, if it were to be found that all or any of
the litigation was nothing but personal litigation
of or against the charged trustees and they were
liable to defend themselves on their own and not
from the funds of the Trust, obviously, it will
have to be held that any such amount paid towards
that head would be unauthorised and illegitimate.
On that finding, the concerned charged trustees
would become jointly and severally liable to make
good commensurate amount paid from the corpus of
the Trust. That aspect will have to be decided at
the appropriate stage, if raised in the pending
proceedings or arises in any other proceedings
initiated for that purpose. It was argued that the
professional fees though appear to be substantial
one, was necessitated on account of several
proceedings pending before different forums. In
that, about 22 main proceedings are pending before
the Supreme Court, 29 before the Bombay High Court,
6 Suits before the Bombay City Civil Court, 18
before the Charity Commissioner and 4 before the
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Court of Chief Metropolitan Magistrate. At the
cost of repetition, I would observe that if it were
to be held that any amount paid or to be paid
towards professional fees was or is to defend the
Trust as such, the same would be permissible one;
whereas, if paid to defend the proceedings in
respect of any of the personal litigation of the
charged trustees that may be impermissible spending
from the Trust funds and will have to be recovered
from the charged trustees personally, jointly and
severally.
30. Be that as it may, no fault can be found
with the opinion recorded by the JCC that the
subsequent conduct of producing the letter
purportedly sent by Suresh Motwani filed along with
application (Exhibit 99), arguments regarding
genuineness thereof cannot be brushed aside
lightly. This observation is in the context of the
stand taken by the Applicant/Respondent No.1 herein
that the said document is a fabricated document for
more than one reason. Firstly, where, when and
between whom the alleged negotiations took place
and under whose instructions such negotiations were
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held is not forthcoming. This objection is
significant in the context of the fact that
Mr.Suresh Motwani is admittedly a proclaimed
offender. If he is a proclaimed offender, it was
necessary to explain the circumstances in which the
discussion was held with him by the charged
trustees. What is relevant for our purpose is,
that the contents of the said letter would reveal
that some deliberations were held in relation to
the claim amount ascribable to charge No.1.
Suffice it to observe that if the argument of
Respondent No.1 regarding genuineness of this
document is to be eventually accepted, it would
necessarily follow that the charged trustees have
made attempt of creating evidence to be used in
their defence to answer the charge already framed.
That cannot be countenanced. Further, if it is to
be held that this letter is a fabricated document,
the argument of the Petitioners that if the
arrangement referred to in the said communication
is to be acted upon, no loss would be caused to the
Trust, will have to be stated to be rejected.
Assuming that the arrangement provided for in the
said communication were to be acted upon, that
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would not necessarily lead to an inference that the
charged trustees are fully extricated of charge
No.1 for their acts of commission and omission
thereof. Those are matters to be answered in the
pending enquiry.
31. For the time being, the opinion recorded
by the JCC that there is likelihood of influencing
the witnesses and tampering with the evidence is
reinforced from at least abovesaid two subsequent
conduct of the charged trustees referred to by the
JCC is a possible view. The JCC has also adverted
to the letter issued to the Heads of the Department
in response to the Circular of Shri Halbe.
According to the Petitioners, there was nothing
wrong in issuing such letter to the Heads of the
Department because the Joint Administrator was
appointed only to look after the management of the
hospital and the Research Centre and not to dabble
with the affairs of the management of the Trust as
such. This argument is an attempt to over simplify
the matter. The satisfaction recorded by the JCC
is that if the charged trustees were allowed to
preform as trustees, there was likelihood of
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influencing the witnesses as they would not come
forward to depose against the trustees. It was
argued that the JCC has placed reliance on report
submitted by Shri Halbe which did not depict
correct facts and was biased. It was argued that
another Single Judge of this Court had occasion to
consider the question regarding improper conduct of
the said Joint Administrator and to replace him by
appointing another Joint Administrator in his
place. This argument is of no avail. I am in
agreement with the argument of the Respondent No.1
that the JCC in Paragraph 67 has made it amply
clear that criticism of the said reports submitted
by Shri Halbe were not relevant to decide the
question in issue.
32. Taking overall view of the matter as
aforesaid, the satisfaction recorded by the JCC in
the order impugned in this Writ Petition is a
possible view, for which reason, no interference in
exercise of writ jurisdiction is warranted.
33. Counsel for the charged trustees had
argued that although charges have been framed, the
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same were untenable. This argument has been
considered by the JCC in Paragraphs 44 to 56 and in
my view rightly rejected. It was suggested that
hearing of the present Petition ought to be
deferred till the decision of the Appeal Court on
the issue regarding correctness of the order
framing charges against the Petitioners is
rendered. This argument will have to be turned
down at least for two reasons. Firstly, the issue
regarding framing of charges and to pass order in
exercise of powers under Section 41D(3) of the Act
both are separate matters. The fact that appeal
against the order framing charges is pending, does
not preclude one from considering the issue of
suspension of the charged trustees during the
pendency of the enquiry. That power flows from
Section 41D(3) of the Act. The Division Bench of
our High Court in the case of Gulabsingh Chavan Gulabsingh Chavan Gulabsingh Chavan
(supra) (supra) has observed that it is open to the Charity (supra)
Commissioner to "simultaneously" suspend the
trustee against whom charges are framed and that
too without issuing notice to such person. As a
matter of fact the suspension order ought to have
been passed simultaneously with the order of
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framing charges against the concerned Trustees. In
any case, the orders passed by the Division Bench
in the pending appeals which are reproduced
hitherto, in no way, preclude the consideration of
the present Petition. It is for that reason, the
matter was proceeded and fully heard by consent.
34. Reverting to the argument that there are
enough safeguards and it was not necessary to place
the charged trustees under suspension during the
enquiry is concerned, it is noticed that this
argument has also been considered by the JCC and
rightly negatived. The JCC has recorded his
satisfaction on the basis of tangible factors that
having regard to the gravity of charges framed and
the likelihood of further misuse of powers and
likelihood of influencing the witnesses and
tampering with the evidence it would be necessary
for the purpose of smooth enquiry and smooth
functioning of the Trust to suspend the charged
trustees. No interference with that satisfaction
is warranted in exercise of writ jurisdiction.
35. Even the grievance of the Petitioners that
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the Trust will not be in a position to meaningfully
function in absence of the charged trustees who are
the main pillars of the Trust has been considered
and rightly rejected by the JCC in Paragraphs 77
and 78 of the impugned Judgment. The view so taken
is the correct view that no one is indispensable
and when one goes out, somebody would take his
place and the functions of the Trust will continue.
The argument also overlooks that besides the
Petitioners, there are other trustees who would
continue to discharge their duties as trustees. In
that, besides Respondent No.1, there are other
trustees who are capable of continuing with the
activity of the Trust which aspect has been
considered in Paragraph 84 in the context of
argument of order to be passed in exercise of
powers under Section 41D(4) of the Act. The JCC
has recorded that the Trust Deed provides for
minimum number of only three trustees. Besides the
charged trustees, there are some more trustees who
are competent to perform functions as trustees and
they can function and administer the Trust. I am
in agreement with the said view expressed by the
JCC. It is not the case of the Petitioners that
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excluding the suspended and resigned trustees, the
requirement of minimum three trustees will not be
fulfilled.
36. Accordingly, no case for interference in
exercise of writ jurisdiction against the
discretionary and well reasoned order passed by the
JCC is made out, for which reason, the Petition
should fail.
37. While parting, I would once again clarify
that this decision may not be construed as
expression of any opinion either way in relation to
the controversy of payment of amount towards
professional fees whether it results in entering
into any financial transaction or for that matter,
being impermissible payment made to handle the
personal litigation of the charged trustees. All
questions in that behalf are left open, to be
considered at appropriate stage, if raised in the
pending proceedings or would arise in any other
proceedings.
38. It was argued by the Counsel for the
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Respondent No.1 that even payment made towards
professional fees to handle the personal litigation
of the charged trustees from the funds of the Trust
would amount to entering into financial transaction
and such transaction is in breach of restriction
placed by this Court in its decision dated 9th
September 2008 of taking prior approval of the JCC,
thereby, disentitling the Petitioners from any
relief, much less, in exercise of extra ordinary
jurisdiction in Writ Petition. As aforesaid, it is
unnecessary to burden this Order any further, as I
am not examining the question as to whether the
payment of professional fees would result in
financial transaction and/or is impermissible. I
may also clarify that the enquiry pending before
the JCC will have to proceed on its own merits
uninfluenced by any observation made at this stage
either for framing of charges or to suspend the
charged trustees during pendency of the enquiry.
For, the charges and all aspects relevant thereto
will have to be eventually answered on the basis of
material that would come on record during the
enquiry on its own merits.
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39. For the reasons already recorded in the
earlier part of this Order, no interference is
warranted in exercise of writ jurisdiction. Hence,
dismissed with costs.
40. At this stage, Counsel for the Petitioners
submits that the operation of the suspension order
be stayed for a period of two weeks from today to
enable the Petitioners to carry the matter in
appeal. Counsel for the Respondent No.1 has
opposed this prayer on the argument that interim
protection granted by the Division Bench is already
operating in favour of the Petitioners. The
Counsel for the Respondent No.1 further submits
that in the event, the Letters Patent Appeals which
are already pending in this Court were to be
dismissed before two weeks, an anomalous situation
would arise because of the protection given under
this order to the Petitioners would enure even
thereafter. This argument is misplaced. In that,
the decision to be arrived at on the pending
appeals by the Division Bench would be in relation
to question of appropriateness of framing charges
against the charged trustees; whereas, the present
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challenge is in respect of order passed under
Section 41D(3) of the Act suspending the charged
trustees during the pendency of the trial which is
a separate matter. It is, therefore, clarified
that the suspension order qua the Petitioners
herein shall remain in abeyance for a period of two
weeks from today subject to the restriction
specified in Order dated 9th September 2008 passed
in Writ Petition No.5732 of 2008 is observed by the
Petitioners.
A.M.KHANWILKAR, J.
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
WRIT PETITION NO.8127 OF 2008
1.Vijay K.Mehta,
2.Sushila V.Mehta,
3.Dr.Amritlal C.Shah,
A-791, Bandra Reclamation,
Bandra (West), Mumbai-400 050. ...Petitioners
Versus
1.Charu K.Mehta,
2.Rekha H.Sheth,
3.Niket V.Mehta,
A-791, Bandra Reclamation,
Bandra (West), Mumbai-400 050.
4.Mithun H.Mehta,
311-312 Chadda Crescent,
Sector-17, Vashi,
Navi Mumbai-400 705.
5.Jatin V.Mehta,
C-203, Nirman Vihar,
Rajmata Jijabai Road,
Andheri (W), Mumbai-400 093.
6.Sandeep Rathi,
61, Alaknanda, Road No.10,
J.V.P.D. Scheme, Juhu,
Mumbai - 400 049.
7.Sanjay Bhutada,
C-6, Gautam Towers,
Gokhale Road, Naupada,
Thane (W), Mumbai-400 602.
8.Kishor K.Mehta,
Usha Kiran, 18th floor,
15, Carmichael Road,
Mumbai - 400 026.
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9.Rajiv K.Mehta,
Usha Kiran, 23rd floor,
15, Carmichael Road,
Mumbai - 400 026.
10.Prashant K.Mehta,
Usha Kiran, 18th floor,
15, Carmichael Road,
Mumbai - 400 026.
11.Prabodh K.Mehta
12.Rashmi K.Mehta
13.Chetan P.Mehta
14.Nanik Rupani
15.Vijay Choraria,
A-791, Bandra Reclamation,
Bandra (West), Mumbai-400 050.
16.The Joint Charity Commissioner,
Greater Mumbai Region,
Mumbai. ...Respondents
......
Mr.Iqbal Chagla, Sr.Counsel with Mr.Sanjay Jain,
Mr.Kunal Vajani, Atul Daga and Mr.Rohan Dakshini
i/b M/s.Wadia Ghandy & Co. for Petitioner.
Mr.Mahesh Jethmalani with Mr.Raj Patel, Mr.Anushak
Davar, Ms.Hetal Thakore i/b M/s.Thakore Jariwala &
Associates for Respondent No.1.
Mr.Janak Dwarkadas, Sr.Counsel with Ms.Jyoti Shah
i/b M/s.Daru Shah & Co. for Respondent No.2.
Mr.Pranav Badheka with Mr.Amey Nabar i/b Hariani &
Co. for Respondent No.8.
Ms.R.C.Nichani i/b Hariani & Co. for Respondents 9
& 10.
Mr.Jay Kansara i/b Paras Kuhad & Associates for
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Respondents 11 to 15.
Mr.P.P.Kakade, A.G.P. for Respondent No.16.
......
CORAM: A.M.KHANWILKAR, J. CORAM: A.M.KHANWILKAR, J. CORAM: A.M.KHANWILKAR, J.
FEBRUARY 2, 2009. FEBRUARY 2, 2009. FEBRUARY 2, 2009.
ORDER : ORDER :
ORDER :
1. This Writ Petition takes exception to the
decision of the Joint Charity Commissioner
(hereinafter referred to as ‘the JCC’ for the sake
of convenience), Greater Mumbai, Region Mumbai
dated 10th October 2008 passed on Application
(Exhibit 2), whereby, pending enquiry of charges,
the five trustees (including the present three
Petitioners) have been suspended in exercise of
powers under Section 41D(3) of the Bombay Public
Trusts Act, 1950 (hereinafter referred to as ‘the
Act’). This Petition has been finally heard at the
admission stage, by consent.
2. The moot question that needs to be
addressed in this Petition is: whether the
exercise of powers under Section 41D(3) of the Act
by the JCC can be said to be just and proper in the
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fact situation of the present case?
3. The background in which the present matter
arises is that the Respondent No.1 filed
Application before the JCC for initiating action
under Section 41D of the Act against nine trustees
of the Lilavati Kirtilal Mehta Medical Trust
(hereinafter referred to as ‘the Trust’) on certain
allegations elaborated in the said Application.
The said Application is registered as Application
No.17 of 2006. The Respondent No.1 claims to be a
permanent trustee of the said Trust. The Trust is
running a super speciality hospital in the name of
"Lilavati Hospital" at Bandra, Mumbai and is a
well-known hospital in the Country. The hospital
has facility of 300 beds and out patients
department, casualty department, etc. It engages
nearly 1700 employees and 230 consultant Doctors
attached to the hospital. In the said Application
moved by the Respondent No.1, after allowing the
parties to exchange documents and pleadings, the
JCC by his order dated 3rd June 2008 on finding
prima facie material to indicate the complicity of
the said nine trustees proceeded to frame following
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eight charges :
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"C H A R G E S
1) The opponents No.1 to 9, trustees of
the trust advanced huge amounts more than
Rs.15 crores to M/s.Mayfair Realtors
Pvt.Ltd. & Vesta India Pvt.Ltd. for
procuring medical equipments during years
2001-02 to 2003-04 without taking proper
care & despite failure by these companies
to supply the equipments, did not take
steps to recover the money & thus,
continuously neglected their duties &
committed mis feasance & also dealt
improperly with the trust property.
2) The opponents No.1 to 9, trustees of
the trust, gave donations regularly to the
tune of Rs.6.36 crores from year 2003-04
to 2005-06 to Madhulaxmi Trust, without
verifying that the donations are utilised
to fulfil objects of the trust and thus,
continuously neglected the duties &
committed mis feasance & also dealt
improperly with the trust property.
3) The opponents No.1 to 9, trustees of
the trust & committed mis feasance & also
dealt improperly with the trust property
purchased a Honda Accord Car MH 02 MA 4343
for and in the name of Mr.Dushyant Mehta &
thus dealt improperly with trust funds &
mis appropriated the trust money.
4) Opponent No.9, a trustee of the trust,
utilised the trust funds to the tune of
Rs.36,06,470/- during financial years
2003-04 to 2005-06 towards payments of his
credit cards & thus received personal
benefits from trust funds & thereby
mis-appropriated the trust money &
committed mal feasance.
5) The opponents No.1 to 9, trustees of
the trust arranged meetings of the
trustees as well as other meetings at
Antewerp, Belgium & other foreign
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countries instead of India & spent huge
amounts to the tune of Rs.58,40,456/- from
year 2002-03 to August, 2006 & squandered
the trust money & committed mis feasance &
also dealt improperly with the trust
property.
6) The opponents No.1 to 9, trustees of
the trust have spent money from trust
funds to meet travelling expenses of
Mr.Suresh Motwani who has no concern with
the trust, for his trips to Goa & Dubai &
committed mis feasance & also dealt
improperly with the trust property.
7) The opponents No.1 to 9, trustees of
the trust, advanced amount of Rs.2.75
crores to M/s.Albina Developers Pvt.Ltd.
without verifying its track record &
without taking proper care & acted
negligently in dealing with this
transaction & committed mis feasance &
also dealt improperly with the trust
property.
8) The opponents No.1 to 9, trustees of
the trust, allowed mis use of a trust
account for the purpose of clandestine
transaction in favour of Golden Sea Shell
C.H. & thereby committed mal feasance."
4. Insofar as the relief claimed by the
Respondent No.1 in Application (Exhibit 2) to
suspend the trustees during the pendency of the
enquiry, the JCC by the same order proceeded to
hold that at the relevant time, he was not in a
position to identify a fit person to be appointed
to discharge the duties in place of the suspended
trustees, which order could be passed in exercise
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of provisions under Section 41D(4) of the Act.
Against the said decision, the two trustees against
whom charges were framed by the JCC filed Writ
Petition No.3849 of 2008. The three other trustees
against whom no allegations were made in the main
Application filed by Respondent No.1 or any charges
framed, filed separate Writ Petition being Writ
Petition No.3850 of 2008 questioning the
correctness of the decision of the JCC in his order
dated 3rd June 2008. Both these Petitions were
disposed of by the Single Judge of this Court on
11th July 2008. Insofar as the three trustees
against whom there were no allegations in the
Application or charges framed, the Court observed
that the order passed against them, which was
impugned in their Writ Petition was in gross
violation of the principles of natural justice. By
the said Judgement, the learned Single Judge was,
however, pleased to set-aside only the interim
order dated 3rd June 2008 and issued direction to
the JCC to pass fresh interim order in accordance
with law. Significantly, the relief as claimed by
the two trustees in Writ Petition No.3849 of 2008
to set-aside the order framing charge against them
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was not disturbed. The parties had moved the same
learned Single Judge of this Court for speaking to
minutes of the order passed earlier, which
application was disposed of on 15th July 2008. The
matter then proceeded before the JCC for passing
necessary interim order afresh.
5. At the same time, the Petitioners in Writ
Petition No.3849 of 2008 questioned the correctness
of the view taken by the learned Single Judge in
its Judgment dated 11th July 2008 and in turn, the
order passed by the JCC framing charges by way of
Letters Patent Appeal No.328 of 2008.
6. The JCC instead of deciding the pending
Application (Exhibit 2) filed by the Respondent
No.1 for suspending the charged trustees in
exercise of powers under Section 41D(3) of the Act,
adjourned the matter by order dated 23rd July 2008.
Consequently, Writ Petition was filed challenging
order dated 23rd July 2008 passed below Exhibit 1
in Application No.17/2007 being Writ Petition
No.5732 of 2008. The said Writ Petition came to be
disposed of on 9th September 2008 inter alia
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directing the JCC to expeditiously decide
Application (Exhibit 2) filed by the Respondent
No.1 herein in accordance with law and not to pass
a mechanical order of suspension solely on the
ground that charges have already been framed
against the concerned trustees. All questions in
that behalf were left open. It is not necessary to
refer to the other issues dealt with in the said
decision.
7. Against this decision also, Letters Patent
Appeal has been carried by the two trustees against
whom charges have been framed by the JCC under
order dated 3rd June 2008. In the pending Letters
Patent Appeals, the Division Bench of this Court on
1st October 2008 passed following order:
"P.C. :
1. The learned counsel for the parties
agree that the matter be taken up for
disposal at the stage of admission.
Tentatively, this court is listing the
matter at 20.10.2008 at 3.00 p.m.
2. In the meantime, the proceedings
before the Joint Charity Commissioner in
the matter will go on. We make it clear
that the Joint Charity Commissioner would
not implement or give effect to the order
which he may pass after concluding the
hearing, if it is adverse to the
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appellant/trustees and the order passed by
the learned single Judge (A.M.Khanwilkar,
J) will continue to operate in the field
as it sufficiently protects the interest
of the trust."
8. In view of this order, the JCC proceeded
to consider the Application (Exhibit 2) in view of
the direction issued by the Single Judge in Writ
Petition No.5732 of 2008 decided on 9th September
2008. After granting opportunity to both sides to
file affidavits and further material, the JCC
proceeded to dispose of the said Application
(Exhibit 2) by his order dated 10th October 2008.
The JCC passed the following order:
"O R D E R
1) Pending disposal of charges, the
trustees, respondent No.1 (Smt.Rekhaben
Seth), Respondent No.3 (Smt.Sushila
Mehta), Respondent No.6 (Dr.Amrutlal
Shah), Respondent No.8 (Shri Niket Mehta)
& respondent No.9 (Shri Vijay Mehta) of
Lilavati Kirtilal Mehta Medical trust are
put under suspension.
2) This order will not be implemented till
further directions are received from
Hon.High Court in Letters Patent Appeal
No.328 of 2008 in Writ Petition
No.3849/2008 with Letters Patent Appeal
no.330 of 2008 in Writ Petition
No.5732/2008, pending there.
3) The applicant (Ex.2) is accordingly
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disposed of."
9. It is this order which is subject matter
of challenge in the present Writ petition at the
instance of three trustees out of five suspended
trustees. Here it may be clarified that although
charges have been framed against nine trustees, as
four trustees have tendered resignation and were no
more associated with the Trust, the question of
suspending the said trustees did not arise. For
that reason, the JCC proceeded to consider
Application (Exhibit 2) only against five charged
trustees who continued to be on the Trust. The two
other suspended trustees besides the three
Petitioners herein have not chosen to challenge the
order of suspension. Whereas, the present Petition
has been filed only by the three suspended trustees
who were Respondent No.9, Respondent No.3 and
Respondent No.6 respectively in the proceedings
before the JCC.
10. To complete the narration of relevant
events, it may be appropriate to refer to two other
orders of this Court passed by the Division Bench
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in pending Letters Patent Appeals. The one passed
on 20th October 2008 and the other passed on 24th
October 2008, which are reproduced thus:
ORDER DATED 20TH OCTOBER 2008 ORDER DATED 20TH OCTOBER 2008 ORDER DATED 20TH OCTOBER 2008
"P.C.:
1. Heard the learned counsel for the
parties.
2. A preliminary issue is raised
by the respondents regarding
maintainability of these appeals.
Sufficient time would be required for this
court to hear the matter as this court
proposes to dispose of the appeals at the
stage of admission itself. In the
meantime, the interim order passed by this
court can continue to operate. We further
make it clear that in place of trustees
who have been suspended, no new trustees
would be appointed or nominated.
3. The learned counsel for the appellants
submit that as far as the order of
suspension is concerned, the appellants
propose to independently challenge the
same. We make it clear that the pendency
of these Letters Patent Appeals do not
preclude the appellants from challenging
the order of suspension by which they are
aggrieved and which is a fresh cause of
action in the matter.
4. In view of the fact that the
appellants propose to challenge the order
of suspension, our interim order which has
been continued would stand extinguished as
soon as the order of suspension is
challenged before the learned single Judge
and decision in the matter is taken.
5. Stand over to 24th November, 2008".
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ORDER DATED 24TH OCTOBER 2008 ORDER DATED 24TH OCTOBER 2008 ORDER DATED 24TH OCTOBER 2008
"P.C.:
1. This application is made for
speaking to minutes of the order dated
20th October, 2008.
2. We have heard the parties. In para 2
of the said order the last sentence
namely, "We further make it clear that in
place of trustees who have been suspended,
no new trustees shall be appointed or
nominated." stands substituted by "Parties
will maintain statusquo on the board of
trustees of the trust."
3. Para 4 of the said order is not
required and therefore, stands deleted."
11. The learned Counsel appearing for the
charged trustees against whom suspension order has
been passed by the JCC have criticized the order of
suspension on the argument that the charges framed
by the JCC are ex-facie untenable. If so, the
question of suspending the charged trustees on the
basis of such infirm charges would be
inappropriate. It was argued that there was no
material to substantiate the finding recorded by
the JCC that there was likelihood of further misuse
of powers or influencing witnesses and tampering
with the evidence. The said finding is based on
conjecture and surmises. If that opinion is to be
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discarded then there is no tangible material to
sustain the order of suspension. This argument is
on the premiss that the order of suspension during
the pendency of enquiry is a drastic order and
cannot be passed merely as a consequence of the
order framing charges. It was argued that there
was no possibility of any loss likely to be caused
to the Trust on account of any action of the
charged trustees. To buttress this argument,
amongst others, reliance was placed on
communication sent on the letterhead of M/s.Vesta
India Ltd., dated 1st October 2008, under the
signature of its authorised signatory Mr.Suresh
Motwani. According to the suspended trustees, the
said document was indicative of positive steps
being taken by the charged trustees for recovery of
the amount receivable by the Trust. It was
contended that in any case, there was enough
safeguards to check the activities of the charged
trustees. In that, the charges were founded on the
transactions effected between year 2001 to 2006 in
respect of which, the entire record was already in
custody of the JCC. There was no question of
tampering the said record. Besides, as the charge
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was founded on documents, the question of
influencing the witnesses was a misplaced
apprehension. It was then argued that the other
trustees including the rival camp would continue to
be associated in taking any decision for and on
behalf of the Trust. Moreover, the Supreme Court
appointed regime of Joint Administrators was also
in place. Besides, the earlier restriction imposed
by the JCC and as modified by this Court in its
order dated 9th September 2008 restraining the
charged trustees from taking any policy decision
and to enter into any financial transaction with
regard to the Trust without prior approval of the
JCC till further orders was sufficient to protect
the interest of the Trust. It was contended that
there was neither possibility of charged Trustees
influencing the enquiry or causing any loss to the
Trust. In that case, there was absolutely no
necessity to suspend the charged trustees and the
enquiry can proceed even without suspension of the
said trustees. It was then contended that already
five trustees out of the nine charged trustees have
resigned. The Respondents 14 and 15 have been
restrained from acting as trustees. In such a
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situation, the Trust will not be able to function
especially in absence of Petitioner No.1 who for
all this period responsibly discharged his duties
and was successful in enhancing the income of the
Trust manifold. On the above arguments, the order
of suspending the Petitioners herein from acting as
Trustees during the pendency of the enquiry has
been challenged as inappropriate and unwarranted.
12. The question is: whether the order passed
by the JCC suspending the Petitioners herein can be
said to be manifestly wrong, perverse and
untenable. To consider this aspect, we will have
to advert to the reasons recorded by the JCC for
recording his satisfaction to order suspension of
the Petitioners herein and two others during the
pendency of the enquiry in exercise of powers under
Section 41D(3) of the Act. The JCC has first
considered the decision of the Apex Court in the
case of Sri Digyadarsan Rajendra Ramdassjivaru v. Sri Digyadarsan Rajendra Ramdassjivaru v. Sri Digyadarsan Rajendra Ramdassjivaru v.
The State of Andhra Pradesh reported in 1969 (1) The State of Andhra Pradesh reported in 1969 (1) The State of Andhra Pradesh reported in 1969 (1)
SCC 844 SCC 844 and another unreported Judgment of Division SCC 844
Bench of our High court in the case of Gulabsingh Gulabsingh Gulabsingh
Dipa Chavan & Ors. v. Joint Charity Commissioner, Dipa Chavan & Ors. v. Joint Charity Commissioner, Dipa Chavan & Ors. v. Joint Charity Commissioner,
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Maharashtra State, Bombay & Anr. (Special Civil Maharashtra State, Bombay & Anr. (Special Civil Maharashtra State, Bombay & Anr. (Special Civil
Application No.1912/1976) decided on 18th December
Application No.1912/1976) decided on 18th December Application No.1912/1976) decided on 18th December
1978 1978 and deduced the principles to be kept in mind 1978
for exercising powers under Section 41D(3) of the
Act to suspend the charged trustees during the
pendency of the enquiry. It has then adverted to
the decision in the case of K.K.Ramamurthy Vs. K.K.Ramamurthy Vs. K.K.Ramamurthy Vs.
State of Kerala reported in 1972(II) L.L.J. 509 State of Kerala reported in 1972(II) L.L.J. 509, State of Kerala reported in 1972(II) L.L.J. 509
which deals with the principle to be kept in mind
while suspending a civil servant against whom
disciplinary proceedings are initiated. Reference
is then made to another decision in the case of
State of Orissa Vs. Bimal Kumar Mohanti reported State of Orissa Vs. Bimal Kumar Mohanti reported State of Orissa Vs. Bimal Kumar Mohanti reported
in (1994) 4 SCC 126 in (1994) 4 SCC 126. Once again, this case deals in (1994) 4 SCC 126
with the suspension of Government Officer during
the pendency of disciplinary enquiry. The JCC
after culling out the principles stated in these
decisions, proceeded to observe that many factors
to be considered for suspension of Government
Servant during pendency of Departmental Enquiry may
be applicable for exercising powers under section
41D(3) of the Act to suspend the charged trustees
during the pendency of enquiry. The JCC has
adverted to the principle that the Court or the
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Tribunal must consider each case on its own facts
and no general law could be laid. That suspension
is not a punishment, but is only one of forbidding
or disabling an employee to discharge the duties of
office or post held by him. That the suspension
must be a step-in-aid to the ultimate result of the
investigation or enquiry and lastly, that the
Authority should always keep in mind public
interest of the impact of the delinquent’s
continuance in office while facing departmental
enquiry or trial of a criminal charge. The JCC has
then adverted to the decision of Sub-Divisional Sub-Divisional Sub-Divisional
Officer Vs. Shambhu Singh reported in 1969 (1) SCC Officer Vs. Shambhu Singh reported in 1969 (1) SCC Officer Vs. Shambhu Singh reported in 1969 (1) SCC
825 825, which dealt with person who was not a 825
Government Servant but an elected representative.
Even so, the principle highlighted is that the
existence of power must be exercised when it is
absolutely essential for the discharge of the power
conferred and not merely that it is convenient to
have such a power. The JCC has then adverted to
two other decisions of the Supreme Court relied by
the contesting Respondents which expounds the
principles to be kept in mind by the Court while
granting interim relief. The JCC has noted that
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the said principles cannot be applied for exercise
of powers under Section 41D(3) of the Act as the
authority is not granting any interim relief as
such in favour of any individual but is expected to
pass an order in the interest of the Trust for its
better management and to prevent further misuse of
the Trust affairs at the hands of the charged
trustees during the pendency of the enquiry and to
prevent the trustees from hampering the course of
investigation. In other words, the JCC first
proceeded to examine the principles that ought to
be borne in mind to exercise powers under Section
41D(3) of the Act and noted that gravity or
seriousness of the charges, nature of evidence,
necessity to keep the charged trustees away from
the administration of Trust and from sphere of
influence by passing order of suspension and that
each case differs on facts.
13. The JCC then proceeded to examine other
points raised on behalf of the charged trustees
such as main Application is not maintainable, it is
barred by limitation, barred by principles of
res-judicata, etc. That the Applicant’s son had
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filed two criminal complaints based on same
allegations against the Respondents which have been
dismissed by the Court, for which, principle of
double jeopardy would be attracted. That the names
of some of the trustees are not on record and
change reports are pending. That charges are
factually incorrect. The JCC has rejected each of
these objections on the finding that the same were
already addressed on the earlier occasion and were
not relevant for deciding the matter in issue for
exercising powers under Section 41D(3) of the Act
to suspend the charged trustees during the pendency
of the enquiry.
14. The JCC then adverted to the argument of
the charged trustees that in any case, it was not a
case of misfeasance or malfeasance but lapse of
lesser degree. To consider this argument, the JCC
proceeded to consider the charges already framed in
seriatim, which, in his opinion, were suggestive of
the gravity of charges. The JCC has adverted to
the arguments in respect of each of the said charge
and rejected the argument of the charged trustees.
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15. The JCC has then adverted to the argument
of the charged trustees that the hospital run by
the Trust has yearly turn over of hundreds of
crores of rupees and under the able charge of
Petitioner No.1 herein there was considerable rise
in the income and consequently in the profit of the
Trust. The argument of good work done by the
charged trustees and the charge amount is
comparatively meagre amount, has been rejected by
the JCC. He has held that lapses on the part of
trustees involves minor financial implication, can
be no justification. The JCC has also rejected the
argument that the acts of commission or omission
for which charges have been framed were essentially
error of judgment or a business mistake. Instead,
the JCC observed that a casual approach, omission
to take immediate steps to cure the defects, if
singular in number, can be excused but the repeated
acts occurring every year in one or other form,
which results in loss to the Trust will have to be
viewed differently. The JCC has referred to the
charges framed which prima facie evince the
approach and attitude of the charged trustees and
held that there is repetitive misuse of the Trust
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fund on different occasion by different means.
According to the JCC, these acts, leave
cumulatively, even individually, cannot be termed
as minor lapses. It went on to observe that the
magnitude of the charges is amplified, if they are
considered in totality.
16. The JCC then proceeded to examine the
argument that there was no likelihood of misuse of
the powers by the trustees. In that, the accounts
and other record is already submitted in his
Office. Thus, there could be no tampering of this
evidence and that there was presence of other
trustees on record, completely excluding the
possibility of further misuse of powers. Even this
argument of the charged trustees did not appeal to
the JCC. While considering the said argument, the
apprehension expressed by the Applicant on the
basis of the events unfolding after passing of the
order by Court such as issuance of cheques which
however, was claimed as not delivered or
despatched. At the same time, the JCC was
conscious that the report of Shri Halbe, former
Judge of this Court, who was appointed as Joint
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Administrator was not relevant to decide the
question in issue regarding suspension of the
charged trustees. The JCC has adverted to the
grievance made by the Applicants that payment of
Advocates’ fees from Trust fund for fighting
personal litigation of the charged trustees but has
noted that that grievance will have to be
considered at the appropriate stage as was observed
in the order framing charge dated 3rd June 2008.
The JCC, however, has noted that the fact that the
cheques were prepared, was indisputable. The same
were prepared, obviously to be delivered. He held
that the fact that the same were not delivered was
of little consequence. This is one of the factum
which has weighed with the JCC about the
possibility of further misuse.
17. The JCC has then considered the argument
that the suspension of the trustees would be
against the interest of the Trust and that, the
charged trustees were in fact the main pillars of
the Trust. This argument has been rejected on the
opinion that no body was indispensable and that
looking to the consequence which the charged
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trustees are facing, others will learn lesson and
act with more care and diligence and in the
interest of the Trust.
18. After having analysed all these aspects,
the JCC proceeded to hold that allowing the charged
trustees to continue in the management during
enquiry, will have adverse effects. There is
likelihood of their taking further decisions for
their benefits, there may be repetition of past
errors and lapses. That some of the witnesses may
be employees of the Trust and the hospital. That
they would be reluctant to come forward and give
evidence against the persons who are holding posts
as trustees. This is the satisfaction recorded by
the JCC to justify the necessity of placing the
charged trustees under suspension.
19. The JCC has then considered the subsequent
conduct reflected from the letter sent to the Heads
of the Department by the charged trustees in
response to the circular issued by Shri Halbe to
hold that the circumstances do not inspire
confidence in one’s mind that further functioning
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of the Trust would be smooth and would be in the
interest of Trust if continued in the hands of the
charged trustees. It has also observed that the
genuineness about the letter issued by Mr.Suresh
Motwani filed with Application (Exhibit 99) cannot
be brushed aside lightly.
20. The JCC then proceeded to consider the
argument advanced at the instance of Respondent
No.8 before him/Respondent No.3 herein who has
virtually blamed his father for the situation,
which argument was pressed to persuade the JCC that
he had no concern with the acts of commission and
omission committed by the Petitioners herein. This
argument has been rejected.
21. It is on the above basis, the JCC summed
up that considering the gravity of charges,
likelihood of further misuse of powers and
likelihood of influencing the witnesses and
tampering with the evidence, smooth enquiry and
smooth functioning of the Trust, it was necessary
to suspend the charged trustees during the pendency
of enquiry.
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22. On careful and close analysis of the order
passed by the JCC which is impugned in this
Petition, in my opinion, it is not a case where any
material argument of the charged trustees have been
overlooked and not adverted to. Whereas, all
aspects of the matter have been carefully
considered and answered. By no standards, the
order under Appeal can be said to be a mechanical
order. I have no hesitation in taking the view
that it is a well considered opinion and
satisfaction recorded by the JCC keeping in mind
all relevant aspects of the matter. The JCC has
clearly recorded the basis on which satisfaction
has been reached that it was necessary to place the
charged trustees under suspension during the
pendency of the enquiry. The view taken by the JCC
cannot be said to be either perverse or manifestly
wrong. All relevant factors have been adverted to
and have been duly considered by the JCC.
23. Indubitably, the power to be exercised by
the JCC under Section 41D(3) of the Act is a
discretionary power. Indeed, merely because the
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power exists, the JCC cannot mechanically exercise
that power. In the present case, every point
raised on behalf of the charged trustees has been
noted and considered by the JCC. Assuming that
there is some error here or there, that cannot be
the basis to interfere with such a well considered
discretionary order passed by the JCC upon
recording satisfaction about the necessity to do
so. I have no hesitation in taking the view that
the discretion exercised by the JCC is replete of
judicial conscience and his satisfaction on
relevant matters. The view taken by the JCC is not
only a possible view, but the only view that could
be taken in the fact situation of the present case.
24. Notably, it is not a case as if the
mistake committed by the JCC is incapable of
correction. The wrong done to the charged
trustees, if any, would be set right and their
rights and equities adjusted at the appropriate
stage in the main application (proceedings). If
the said application was to be rejected upon
discharge of the trustees of charges framed against
them, as a necessary corollary, the charged
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trustees who have been suspended under the impugned
order, will have to be reinstated as trustees of
the Trust. Even if the decision of the JCC on the
main application was to be adverse, the wrong
caused to the charged trustees on account of
suspension during the pendency of the enquiry, if
any, would be set right or rights and equities
adjusted in Appeal to be preferred by them at the
conclusion of the proceedings. If such is the
situation, the Court ought to be loath in
exercising writ jurisdiction. It will be useful to
recall the dictum of the Apex Court in the case of
Surya Dev Rai v. Ram Chander Rai & Ors. reported Surya Dev Rai v. Ram Chander Rai & Ors. reported Surya Dev Rai v. Ram Chander Rai & Ors. reported
in (2003) 6 SCC 675 in (2003) 6 SCC 675. In Paragraph 39 of the said in (2003) 6 SCC 675
decision, the Apex Court observed thus:
"If it intervenes in pending proceedings
there is bound to be delay in termination
of proceedings. If it does not intervene,
the error of the moment may earn immunity
from correction. The facts and
circumstances of a given case may make it
more appropriate for the High Court to
exercise self-restrain and not to
intervene because the error of
jurisdiction though committed is yet
capable of being taken care of and
corrected at a later stage and the wrong
done, if any, would be set right and
rights and equities adjusted in appeal or
revision preferred at the conclusion of
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the proceedings. But there may be cases
where "a stitch in time would save nine".
At the end, we may sum up by saying that
the power is there but the exercise is
discretionary which will be governed
solely by the dictates of judicial
conscience enriched by juridical
experience and practical wisdom of the
judge."
(emphasis supplied)
25. The question is: whether the present case
falls in the excepted category. In my opinion, the
answer is an emphatic ‘NO’. Indeed, the order of
suspension may result in deprivation of the
Petitioners to act as trustees during the pendency
of the enquiry, but that is inevitable. More so,
in the backdrop of the finding and satisfaction
recorded by the JCC, which I am disinclined to
interfere with. Significantly, the Petitioners
have already carried the matter before the Division
Bench by way of Letters Patent Appeal questioning
the correctness of the order dated 3rd June 2008
framing charges against the nine trustees including
them. If the said Appeal were to succeed, it would
necessarily follow that the question of suspending
the Petitioners as trustees may not arise.
However, in the face of the charges already framed,
if that order were to be upheld even by the
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Division Bench of this Court, keeping in mind the
gravity thereof and the possibility of enquiry or
investigation being influenced and of further loss
to be caused to the Trust due to likelihood of the
charged trustees taking further decisions for their
benefits, the question of allowing the Petitioners
to discharge their functions as trustees of the
Trust during the pendency of the enquiry cannot be
countenanced.
26. It has been rightly noted by the JCC with
reference to the exposition of the Apex Court that
each case has to be considered on its own facts and
no general law can be laid down on the issue of
suspension of a charged trustee during the pendency
of the enquiry. The suspension would be
step-in-aid to the ultimate result of the
investigation or enquiry. In the context of the
proposed action to be eventually taken against the
charged trustees, it would be necessary to avoid
further injury or loss likely to be caused to the
Trust property/funds. By suspending the charged
trustees, whose complicity has been prima facie
noticed in respect of serious charges on the basis
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of material already made available before framing
of charges, it would be in the general interest of
the Trust and its beneficiaries to place them under
suspension. In the case of Sri Digyadarsan Sri Digyadarsan Sri Digyadarsan
Rajendra Ramdassjivaru (supra), Rajendra Ramdassjivaru (supra), the suspension of a Rajendra Ramdassjivaru (supra),
Madadhipathi during the enquiry was one of the
issue and whether power to suspend is necessary and
reasonable part of the procedure was considered by
the Apex Court. While examining that aspect, the
Apex Court has noted that if such a person (the
charged trustee) was allowed to function during the
pendency of an enquiry, the entire purpose of the
enquiry might be defeated. It opined that such
person during the pendency of enquiry may do away
with most of the evidence or tamper with the books
of account or otherwise commit acts of
misappropriation and defalcation in respect of the
properties of the Math, for which, it was essential
to make a provision for suspending him till the
enquiry concludes and an order is made either
exonerating him or directing his removal. The Apex
Court upheld the order of suspension of the charged
trustee in that case on the finding that the
enquiry pending against the Petitioner was in
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respect of serious charges of misappropriation and
defalcation of trust funds and of leading an
immoral life which were being investigated.
Reference has been rightly made by the JCC to the
unreported decision of the Division Bench of our
High Court in the case of Gulabsing Dipa Chavan Gulabsing Dipa Chavan
Gulabsing Dipa Chavan
(supra). (supra). The Division Bench has noted that Section (supra).
41D(3) clearly enables the Charity Commissioner to
place the trustees under suspension pending
disposal of the charges. The argument that hearing
was required to be given to the Petitioners before
order of suspension was passed has been rejected in
the following words:
"6. Mr.Dalvi then contended that the
petitioners, who are the trustees and were
holding the office at the time of the
passing of the impugned order, were not
served with any notice by the Joint
Charity Commissioner. It was urged by the
learned Counsel that the Joint Charity
Commissioner was in error in passing the
order without any notice to the petitioner
and thereby the principles of natural
justice are violated. Mr.Dalvi,
therefore, contends that the interim order
passed by the Joint Charity Commissioner
should be set aside. It is impossible to
accept the contention of the learned
Counsel for more than one reason.
Firstly, the Act nowhere makes a provision
of issuance of a notice prior to the
passing of the interim order of suspension
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under sub-section (3) or of the
appointment of a fit person to discharge
duties under sub-section (4) of section
41D of the Act. Apart from that, it must
be remembered that the Joint Charity
Commissioner exercised the powers of
suspension only in the cases where he is
satisfied that the trustee or the Board of
Trustees are mismanaging the affairs of
the trust and causing loss to the interest
of the trust. In cases of such a serious
nature, if the Charity Commissioner issues
notice prior to the passing of the order
under sub-sections (3) or (4) of sec.41D,
then obviously the trustees who are
mismanaging the trust would have an
opportunity to do away with the trust
property and the purpose of enquiry would
be defeated. In the case in hand, the
allegations made against Jadhav are of
such a serious nature that giving an
opportunity either to Jadhav or to other
trustees who are alleged to be aiding and
abetting Jadhav in his acts of misfeasance
would really defeat the purpose of making
an order of suspension and appointing a
fit person to discharge the duties. In
our judgment, the Joint Charity
Commissioner was justified in passing the
order without issuing any notice to the
petitioners. In this connection, it must
also be mentioned that on behalf of the
Joint Charity Commissioner, a return has
been filed by Smt.Kelkar, the
Superintendent in the office of the
Charity Commissioner, and in the
affidavit, Mrs.Kelkar specifically stated
that the petitioners are not the present
trustees and their names do not appear in
Schedule I under section 17 of the Bombay
Public Trusts Act. Smt.Kelkar has
specifically stated that the change report
has not been made to the Charity
Commissioner and as such the petitioners
are not recognized as trustees. If the
petitioners are not recognized as
trustees, then the grievance of Mr.Dalvi
that there was no notice of the order
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passed by the Joint Charity Commissioner
loses its substance."
(emphasis supplied)
27. This decision would be relevant also to
reject the argument of Respondent No.8 (Respondent
No.3 herein) that he should be extricated from the
proposed action and more particularly suspension
during the pendency of the enquiry. As a matter of
fact, the said Respondent has not challenged the
order of suspension but that was the argument
advanced on his behalf even before the JCC which
has been rightly rejected on the finding that the
management was under the control of Petitioner No.1
herein and Respondent No.3 had converted himself to
the secondary position.
28. The charges "as framed" against the
Petitioners and other trustees are indicative of
the involvement of the concerned Trustees not only
for breach of duty, but their actions have been
actuated by malice or bad faith. If these charges
were to be eventually established, there is no
reason to doubt the satisfaction recorded by the
JCC that there is possibility of further loss to be
caused by the charged trustees and it was necessary
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to keep them away from the trust management so as
to prevent any further loss to the Trust.
29. Significantly, the JCC has adverted to the
subsequent conduct of the charged trustees in
preparing fresh cheques immediately after the
restriction order was vacated. The JCC has rightly
observed that the fact that the said cheques were
not actually delivered, does not take the matter
any further. It nevertheless, is good reason to
infer that the charged trustees were waiting for
the opportune moment to make payment. In this
context, it was argued that payment which was to be
made was in respect of professional fees to be paid
to lawyers who were attending litigation for and on
behalf of the Trust. On the other hand, it was
argued by the Counsel for the Respondent No.1 that
the payment was not in respect of professional fees
to represent the Trust, but, in fact, was to handle
the personal litigation of the charged trustees and
which payment runs into "couple of crores" of
rupees and is not a legitimate spending. It is not
necessary for me to address the controversy as to
whether payment already made or to be made towards
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professional fees is or was in fact towards
litigation handled for and on behalf of the Trust
or the personal litigation of the charged trustees.
Indeed, if it were to be found that all or any of
the litigation was nothing but personal litigation
of or against the charged trustees and they were
liable to defend themselves on their own and not
from the funds of the Trust, obviously, it will
have to be held that any such amount paid towards
that head would be unauthorised and illegitimate.
On that finding, the concerned charged trustees
would become jointly and severally liable to make
good commensurate amount paid from the corpus of
the Trust. That aspect will have to be decided at
the appropriate stage, if raised in the pending
proceedings or arises in any other proceedings
initiated for that purpose. It was argued that the
professional fees though appear to be substantial
one, was necessitated on account of several
proceedings pending before different forums. In
that, about 22 main proceedings are pending before
the Supreme Court, 29 before the Bombay High Court,
6 Suits before the Bombay City Civil Court, 18
before the Charity Commissioner and 4 before the
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Court of Chief Metropolitan Magistrate. At the
cost of repetition, I would observe that if it were
to be held that any amount paid or to be paid
towards professional fees was or is to defend the
Trust as such, the same would be permissible one;
whereas, if paid to defend the proceedings in
respect of any of the personal litigation of the
charged trustees that may be impermissible spending
from the Trust funds and will have to be recovered
from the charged trustees personally, jointly and
severally.
30. Be that as it may, no fault can be found
with the opinion recorded by the JCC that the
subsequent conduct of producing the letter
purportedly sent by Suresh Motwani filed along with
application (Exhibit 99), arguments regarding
genuineness thereof cannot be brushed aside
lightly. This observation is in the context of the
stand taken by the Applicant/Respondent No.1 herein
that the said document is a fabricated document for
more than one reason. Firstly, where, when and
between whom the alleged negotiations took place
and under whose instructions such negotiations were
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held is not forthcoming. This objection is
significant in the context of the fact that
Mr.Suresh Motwani is admittedly a proclaimed
offender. If he is a proclaimed offender, it was
necessary to explain the circumstances in which the
discussion was held with him by the charged
trustees. What is relevant for our purpose is,
that the contents of the said letter would reveal
that some deliberations were held in relation to
the claim amount ascribable to charge No.1.
Suffice it to observe that if the argument of
Respondent No.1 regarding genuineness of this
document is to be eventually accepted, it would
necessarily follow that the charged trustees have
made attempt of creating evidence to be used in
their defence to answer the charge already framed.
That cannot be countenanced. Further, if it is to
be held that this letter is a fabricated document,
the argument of the Petitioners that if the
arrangement referred to in the said communication
is to be acted upon, no loss would be caused to the
Trust, will have to be stated to be rejected.
Assuming that the arrangement provided for in the
said communication were to be acted upon, that
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would not necessarily lead to an inference that the
charged trustees are fully extricated of charge
No.1 for their acts of commission and omission
thereof. Those are matters to be answered in the
pending enquiry.
31. For the time being, the opinion recorded
by the JCC that there is likelihood of influencing
the witnesses and tampering with the evidence is
reinforced from at least abovesaid two subsequent
conduct of the charged trustees referred to by the
JCC is a possible view. The JCC has also adverted
to the letter issued to the Heads of the Department
in response to the Circular of Shri Halbe.
According to the Petitioners, there was nothing
wrong in issuing such letter to the Heads of the
Department because the Joint Administrator was
appointed only to look after the management of the
hospital and the Research Centre and not to dabble
with the affairs of the management of the Trust as
such. This argument is an attempt to over simplify
the matter. The satisfaction recorded by the JCC
is that if the charged trustees were allowed to
preform as trustees, there was likelihood of
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influencing the witnesses as they would not come
forward to depose against the trustees. It was
argued that the JCC has placed reliance on report
submitted by Shri Halbe which did not depict
correct facts and was biased. It was argued that
another Single Judge of this Court had occasion to
consider the question regarding improper conduct of
the said Joint Administrator and to replace him by
appointing another Joint Administrator in his
place. This argument is of no avail. I am in
agreement with the argument of the Respondent No.1
that the JCC in Paragraph 67 has made it amply
clear that criticism of the said reports submitted
by Shri Halbe were not relevant to decide the
question in issue.
32. Taking overall view of the matter as
aforesaid, the satisfaction recorded by the JCC in
the order impugned in this Writ Petition is a
possible view, for which reason, no interference in
exercise of writ jurisdiction is warranted.
33. Counsel for the charged trustees had
argued that although charges have been framed, the
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same were untenable. This argument has been
considered by the JCC in Paragraphs 44 to 56 and in
my view rightly rejected. It was suggested that
hearing of the present Petition ought to be
deferred till the decision of the Appeal Court on
the issue regarding correctness of the order
framing charges against the Petitioners is
rendered. This argument will have to be turned
down at least for two reasons. Firstly, the issue
regarding framing of charges and to pass order in
exercise of powers under Section 41D(3) of the Act
both are separate matters. The fact that appeal
against the order framing charges is pending, does
not preclude one from considering the issue of
suspension of the charged trustees during the
pendency of the enquiry. That power flows from
Section 41D(3) of the Act. The Division Bench of
our High Court in the case of Gulabsingh Chavan Gulabsingh Chavan Gulabsingh Chavan
(supra) (supra) has observed that it is open to the Charity (supra)
Commissioner to "simultaneously" suspend the
trustee against whom charges are framed and that
too without issuing notice to such person. As a
matter of fact the suspension order ought to have
been passed simultaneously with the order of
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framing charges against the concerned Trustees. In
any case, the orders passed by the Division Bench
in the pending appeals which are reproduced
hitherto, in no way, preclude the consideration of
the present Petition. It is for that reason, the
matter was proceeded and fully heard by consent.
34. Reverting to the argument that there are
enough safeguards and it was not necessary to place
the charged trustees under suspension during the
enquiry is concerned, it is noticed that this
argument has also been considered by the JCC and
rightly negatived. The JCC has recorded his
satisfaction on the basis of tangible factors that
having regard to the gravity of charges framed and
the likelihood of further misuse of powers and
likelihood of influencing the witnesses and
tampering with the evidence it would be necessary
for the purpose of smooth enquiry and smooth
functioning of the Trust to suspend the charged
trustees. No interference with that satisfaction
is warranted in exercise of writ jurisdiction.
35. Even the grievance of the Petitioners that
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the Trust will not be in a position to meaningfully
function in absence of the charged trustees who are
the main pillars of the Trust has been considered
and rightly rejected by the JCC in Paragraphs 77
and 78 of the impugned Judgment. The view so taken
is the correct view that no one is indispensable
and when one goes out, somebody would take his
place and the functions of the Trust will continue.
The argument also overlooks that besides the
Petitioners, there are other trustees who would
continue to discharge their duties as trustees. In
that, besides Respondent No.1, there are other
trustees who are capable of continuing with the
activity of the Trust which aspect has been
considered in Paragraph 84 in the context of
argument of order to be passed in exercise of
powers under Section 41D(4) of the Act. The JCC
has recorded that the Trust Deed provides for
minimum number of only three trustees. Besides the
charged trustees, there are some more trustees who
are competent to perform functions as trustees and
they can function and administer the Trust. I am
in agreement with the said view expressed by the
JCC. It is not the case of the Petitioners that
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excluding the suspended and resigned trustees, the
requirement of minimum three trustees will not be
fulfilled.
36. Accordingly, no case for interference in
exercise of writ jurisdiction against the
discretionary and well reasoned order passed by the
JCC is made out, for which reason, the Petition
should fail.
37. While parting, I would once again clarify
that this decision may not be construed as
expression of any opinion either way in relation to
the controversy of payment of amount towards
professional fees whether it results in entering
into any financial transaction or for that matter,
being impermissible payment made to handle the
personal litigation of the charged trustees. All
questions in that behalf are left open, to be
considered at appropriate stage, if raised in the
pending proceedings or would arise in any other
proceedings.
38. It was argued by the Counsel for the
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Respondent No.1 that even payment made towards
professional fees to handle the personal litigation
of the charged trustees from the funds of the Trust
would amount to entering into financial transaction
and such transaction is in breach of restriction
placed by this Court in its decision dated 9th
September 2008 of taking prior approval of the JCC,
thereby, disentitling the Petitioners from any
relief, much less, in exercise of extra ordinary
jurisdiction in Writ Petition. As aforesaid, it is
unnecessary to burden this Order any further, as I
am not examining the question as to whether the
payment of professional fees would result in
financial transaction and/or is impermissible. I
may also clarify that the enquiry pending before
the JCC will have to proceed on its own merits
uninfluenced by any observation made at this stage
either for framing of charges or to suspend the
charged trustees during pendency of the enquiry.
For, the charges and all aspects relevant thereto
will have to be eventually answered on the basis of
material that would come on record during the
enquiry on its own merits.
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39. For the reasons already recorded in the
earlier part of this Order, no interference is
warranted in exercise of writ jurisdiction. Hence,
dismissed with costs.
40. At this stage, Counsel for the Petitioners
submits that the operation of the suspension order
be stayed for a period of two weeks from today to
enable the Petitioners to carry the matter in
appeal. Counsel for the Respondent No.1 has
opposed this prayer on the argument that interim
protection granted by the Division Bench is already
operating in favour of the Petitioners. The
Counsel for the Respondent No.1 further submits
that in the event, the Letters Patent Appeals which
are already pending in this Court were to be
dismissed before two weeks, an anomalous situation
would arise because of the protection given under
this order to the Petitioners would enure even
thereafter. This argument is misplaced. In that,
the decision to be arrived at on the pending
appeals by the Division Bench would be in relation
to question of appropriateness of framing charges
against the charged trustees; whereas, the present
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challenge is in respect of order passed under
Section 41D(3) of the Act suspending the charged
trustees during the pendency of the trial which is
a separate matter. It is, therefore, clarified
that the suspension order qua the Petitioners
herein shall remain in abeyance for a period of two
weeks from today subject to the restriction
specified in Order dated 9th September 2008 passed
in Writ Petition No.5732 of 2008 is observed by the
Petitioners.
A.M.KHANWILKAR, J.
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