Bom HC | Under what circumstances can drastic action be taken against trustee under S. 41-D of Bombay Public Trust Act? Provision explained

Bombay High Court: Anil S. Kilor, J., while addressing the present petition observed that,

“Unless and until the lapse on part of the trustee is proved to be actuated by dishonestly, the drastic action under Section 41-D of the Bombay Public Trust Act, 1950 may not be warranted.”

The present appeal questions the dismissal of proceeding under Section 41-D(5) of the Bombay Public Trust Act, 1950 upholding the removal of appellants from posts of President, Secretary and Trustees of the Trust by the Joint Charity Commissioner, Nagpur.

Respondents 1 to 7 are claiming to be trustees whereas the appellants dispute the same. An application was filed under Section 41-D against the appellants and respondent 8 for removal of them from their respective posts.

Allegations against appellants and respondent 8 were of misappropriation of non-salary grant and amount of fees of the students and procurement of hand loan without any resolution of the Managing Committee and in violation of Section 36(A) of the Act, 1950.

Counsel for the appellants Shambharkar, Counsel for respondent’s 1, 2, 5 and 7 Jibhkate, Senior Advocate R.L. Khapre, assisted by D.R. Khapre, counsel for the respondent 3 and 4, A.G.P for respondent 9.

Analysis and Decision

Section 41D(1)(c) makes it clear that the Charity Commissioner may either on the application of a trustee or any person interested in the trust, or on receipt of a report under Section 41B or suo motu suspend, remove or dismiss any trustee of public trust, if he, continuously neglects his duty or commits any mal-feasance or misfeasance, or breach of trust in respect of the trust under clause (c) of Sub-Section 1 of Section 41-D of the Act, 1950.

Bench had considered the scope of inquiry under Section 41D of the Bombay Public Trust Act in the case of Mukund Waman Thatte v. Sudhir Parshuram Chitale, 2012 SCC OnLine Bom 392.

Court states that “Misfeasance” as used in Clause (c) of Section 41D is more than mere negligence of the trustee to perform his duty.

“Misfeasance” includes breach of duty by the trustee which would result into loss to the trust or would cause unlawful gain to such a trustee, charged with the act of misfeasance.

Further, the above Judgment makes it clear that imputation reflecting on the integrity of trustees has to be fortified by proof of high degree which will have to be higher than the standard of proof required in civil proceedings.

Unless and until the lapse on part of the trustee is proved to be actuated by dishonestly, the drastic action under Section 41-D of the Act, 1950 may not be warranted.

Courts below have committed error in holding that the appellants have committed malfeasance and misfeasance or breach of trust in respect of Trust.

Bench also held that the orders and judgments passed against appellant 2 by both Courts below are without jurisdiction.

Hence, the Court does not want to go into the issue raised by the counsel for the appellants that the respondents 1 to 7 are removed from the trusteeship of the Trust, as an answer, either way to the said issue will not change the result of the present proceeding because even if they are held to be removed as trustees, they are ‘persons having an interest in the Trust’ which is sufficient to maintain the application under Section 41-D of the Act, 1950. [Eknath Tukaramji Pise v. Rama Kawaduji Bhende, 2020 SCC OnLine Bom 934, decided on 17-09-2020]

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