Holkar Trust Case: State Can Control If Properties Are Sold Dubiously, MP Govt Tells Supreme Court

The matter SLP challenging the High Court's order was listed before the bench of Justices AM Khanwilkar, AS Oka and CT Ravikumar.

In the impugned order, the High Court had set aside a single-Bench order which restrained the revenue authorities from entering the name of State of Madhya Pradesh in all properties of the Khasgi (Devi Ahilya Bai Holkar Charities) Trust, Indore, to ensure that the properties of the Trust are not sold to other persons.

The High Court had noted that the Khasgi (Devi Ahilya Bai Holkar Charities) Trust, Indore does not have title of the Trust properties and therefore, it does not have the power to alienate the Trust's properties. It further observed that the erstwhile Ruler had signed a covenant whereby the title of all properties was transferred to Madhya Bharat, now State of Madhya Pradesh.

On October 16, 2020 the bench of Justice A.M. Khanwilkar and Justice B.R. Gavai had directed the concerned parties to maintain status quo with regard to the possession and title of properties, and not to transfer or create any third party interest. The Court also stayed the criminal proceedings ordered by the High Court of Madhya Pradesh.

The Court further went on to direct the State authorities to abstain from taking any precipitative steps to take over the management of properties, if the same had not been done so far.

In the hearing today, submissions were made by Additional Solicitor General Balbir Singh for the State of Madhya Pradesh.

Submission Of Counsels

State Government Can Control On Finding That Property Was Sold In Dubious Manner : ASG Balbir Singh

Apprising the bench with regards to the manner in which the Trust came into existence, ASG Balbir Singh submitted that on May 7, 1949 a tripartite instrument was entered into between the Government of India, Government of Madhya Pradesh and Maharaja Yashwant Rao Holkar.

He further submitted that the as per the covenant executed by the parties, the private property, as per the schedule appended to the covenant, became the exclusive properties of the Maharaja and a third species of property, which was not the State's property or the personal property of the Rulers of Holkar State, became the Trust's properties.

"Trust was made to upkeep the properties. All those are earmarked and they have been pooled in the trust. Originally the understanding was private and state and from them, Khasgi properties were also included. There were some khasgi parts of private properties," ASG further submitted.

ASG Singh further contended that a Trust Deed was entered into but since the grant of Rs.2,91,952/- was inadequate to maintain the properties, the then nominee of the Central Government in the Board of Trustees, for the purposes of generating income, sought a clarification from the State Government by way of letter dated May 9, 1969 for the sale of properties. He further argued that the then Chief Secretary, M.P. Shrivastava, vide letter dated June 13, 1969 informed the Trust that the Government did not come into picture in respect of sale of properties.

ASG also submitted that based upon the letter of the Chief Secretary, M.P. Shrivastava, the trust deed was amended by executing a supplementary deed of trust on March 8, 1972 which provided a clause for sale of the Trust properties.

Considering the submissions made by ASG, the bench at this juncture said that the State as per the amended trust deed had provided a clause for the sale of Trust properties.

The bench further said, "Administration is being done by whom? State government is itself of the position that they are not concerned. If the amount has gone to a private persons account after the sale consideration, we understand that is of serious issue but if the same has gone to the trust for value addition of the other properties, then it is legal. They went for permission based on which bonafide action took place. All respectable persons became trustees and it was with government approval. It was the opinion of the advocate also."

Responding to the submission made by the bench, ASG said, "Today the state government can control on finding that the property was sold in a dubious manner."

"The autonomy of trust has to be respected, that is what the Covenant says. It is not private or personal property and neither is state property. How to manage it, the decision has been left to the trustees and the decision has been taken on your behalf. There is no covenant to the effect. State Act will apply but the requirement of getting exemption will not be replied. There is no question of a mix up of both and there are 2 separate issues. Your representatives were party to the sale," the bench further remarked.

Purpose Of Trust Is To Maintain, Preserve & Upkeep Properties: ASG Balbir Singh

On ASG Balbir Singh's contention that the purpose of the trust was to maintain, preserve and upkeep the properties, Justice Khanwilkar, the presiding judge of the bench said, "These trust properties, have you visited any of them? They are laying waste unused and damaged condition. There is no income from these properties. How will you manage them? It's a commercial decision and the functionality aspect is also relevant. If acquired they would not have got anything and instead they got 1 lakh. It was a decision which was taken in the interest of the trust. It should be applicable prospectively. If you have power under the lapsing authority given to you, you may exercise that power. For all future transactions, whether you can do it or not is also debatable. It was not state property at all. It is not the government's property as such and is also understood to be a different property."

"They have very clearly stated in the letter," Justice Ravikumar added.

"All disclosures have been made. Whole problem is because of the HC's judgment and the collector declares the entire transaction as null and void. Under the Act whatever restrictions must apply, they will apply governed by state or central act those restrictions must apply. They cannot say anything to the contrary," Khanwilkar J.

M.P. Public Trust Act, 1956 Would Be Applicable On The Trust : ASG Balbir Singh

To further assert that the Trust was administered by an agency acting under the control of the State Government, ASG referred ti section 36(1)(a) of the M.P. Public Trust Act, 1956.

"There has to be some act which should apply. There is a State or Central act which should apply. It's not a sui generis trust. It's a public trust. It is an entity which has been trust and it has been defined from the beginning. Whatever legislation, State or Central, that must apply," the bench said at this juncture.

"Intent is not to open the transaction which is closed- the only fear is that the trust is not governed by any law. State has no issue on the applicability of the Act and whatever the process of law is verifying whether the same is genuine or not genuine," ASG submitted.

The hearing will now continue tomorrow.

Case Title: The Khasgi (Devi Ahilyabai Holkar Charities) Trust Indore And Anr. Versus Vipin Dhanaitkar And Ors.| SLP(C) No. 12133/2020

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