Trust Properties Must Be Leased Through Public Auction to Ensure Transparency and Protect Trust Interests

The applicant, K. Paneer Selvam, was a long-time lessee of a Trust property under the management of the Administrator General and Official Trustee (AG & OT) of Tamil Nadu.

His lease period expired on December 31, 2022.

Despite the expiry, the applicant continued to occupy the property for approximately four years under a discretionary court order dated March 6, 2025, which permitted him to pay enhanced rent.

The applicant filed this Review Application seeking to review the said order dated March 6, 2025.

The procedural history reveals that the lease had been extended repeatedly through individual court applications rather than through a competitive process.

1. Whether the court should exercise its review jurisdiction to further extend or modify a discretionary order allowing an erstwhile tenant to occupy Trust property after the expiry of the lease.

2. Whether the practice of granting or renewing leases of Trust properties through individual applications without a public auction is legally sustainable.

The court applied the principles of fiduciary duty and transparency governing Trust properties, emphasizing that Trust assets vest in the Administrator General and Official Trustee to achieve specific charitable objectives.

The discretionary power of the Judiciary cannot used to bypass transparent procedures.

The court established the doctrine that Trust properties must be managed in a "transparency manner" to protect the interest of the Trust, which necessitates the disposal of leasehold rights via public auction rather than individual renewals to ensure fair market value and equity.

The court reasoned that the applicant has remained in possession for four years without a valid lease, relying solely on the protection of a discretionary order.

The Court observed that continuing such relief in perpetuity would cause "prejudice to the interest of Trust property".

The Judge critiqued the prior practice of extending leases based on individual applications as "not desirable" and "unfortunate," noting that it evades the requirement for public auctions.

By applying the principle of transparency to the facts, the court determined that once a lease expires (as it did on 31.12.2022), the occupant loses the right to remain, and the state's interest—represented by the AG & OT—must be protected by re-leasing the property through a competitive bidding process.

The Court directed the Administrator General and Official Trustee of Tamil Nadu to initiate appropriate action to evict the existing tenant and conduct a public auction to ensure the property is leased out in a manner known to law.

The Court concluded that judicial discretion must not be used to grant or renew leases in the absence of a transparent public process.