Supreme Court Upholds Leave for Suit Against Medical Trust: Ashok Kumar Gupta vs. Sitalaxmi Sahuwala Medical Trust (2020)

Introduction

Date of the Judgment: 03 March 2020

Citation: Civil Appeal No. 1917 of 2020 (Arising out of SLP(C) No. 21306 of 2019)

Judges: Uday Umesh Lalit, J., Vineet Saran, J.

Can a suit seeking to frame a scheme for the administration of a public charitable trust be dismissed on the grounds that it also seeks to include a specific individual as a trustee? The Supreme Court of India addressed this question in a recent case involving a medical trust, clarifying the scope of Section 92 of the Code of Civil Procedure, 1908. This judgment clarifies when a suit related to a public trust can be maintained and when it is considered to be for private interests. The bench comprised Justices Uday Umesh Lalit and Vineet Saran, with the judgment authored by Justice Uday Umesh Lalit.

Case Background

The case revolves around the M/s Sitalaxmi Sahuwala Medical Trust, established on 09 April 1980 by the second defendant, who intended to create a charitable hospital for his son, the first plaintiff, a qualified surgeon. The trust’s objectives included establishing and maintaining hospitals, surgical homes, and other healthcare facilities. The original trustees were the plaintiffs (the first plaintiff and his wife) and defendants 2 and 3 (parents of the first plaintiff). The first plaintiff was appointed as the Joint Managing Trustee. Over time, amendments were made to the trust deed, introducing additional objectives such as providing free education and conducting orphanages. The first plaintiff managed the hospital until 2003-04. Subsequently, the fourth defendant, the first plaintiff’s brother, took control of the trust. The plaintiffs alleged that the fourth defendant, lacking medical qualifications, mismanaged the trust, converting it into a private family trust and misappropriating funds. They also claimed that the trust was not fulfilling its charitable objectives.

Timeline:

Course of Proceedings

The appellants filed Original Suit No. 566 of 2012 in the Court of the District Judge, Coimbatore, seeking a scheme for the administration of the trust, removal of certain trustees, and the appointment of new trustees. They also sought a declaration that the appointment of the 6th defendant as a trustee was void. Along with the suit, they filed IA No. 1416 of 2012 seeking leave to institute the suit under Section 92 of the Code of Civil Procedure, 1908. The District Judge granted leave on 31 July 2012. Subsequently, Respondent No. 2 filed IA No. 1435 of 2012 seeking revocation of the leave. The District Court dismissed this application on 27 November 2012, stating that the appellants had made out a prima facie case. The respondents challenged this decision in the High Court of Judicature at Madras, which allowed the civil revision petition on 30 April 2019, holding that the suit was essentially to vindicate private rights and leave could not have been granted under Section 92 of the Code.

Legal Framework

The case primarily concerns Section 92 of the Code of Civil Procedure, 1908, which deals with suits relating to public charities. The section states:

“92. Public Charities .–(1) In the case of any alleged breach of any express or constructive trust created for public purposes of a charitable or religious nature, or where the direction of the Court is deemed necessary for the administration of any such trust, the Advocate-General, or two or more persons having an interest in the trust and having obtained the leave of the Court may institute a suit, whether contentious or not, in the principal Civil Court of original jurisdiction or in any other Court empowered in that behalf by the State Government within the local limits of whose jurisdiction the whole or any part of the subject-matter of the trust is situate to obtain a decree–
(a) removing any trustees;
(b) appointing a new trustee;
(c) vesting any property in a trustee;
(cc) directing a trustee who has been removed or a person who has ceased to be a trustee, to deliver possession of any trust property in his possession to the person entitled to the possession of such property;
(d) directing accounts and inquiries;
(e) declaring what proportion of the trust property or of the interest therein shall be allocated to any particular object of the trust;
(f) authorizing the whole or any part of the trust property to be let, sold, mortgaged or exchanged;
(g) settling a scheme; or
(h) granting such further or other relief as the nature of the case may require.
(2) Save as provided by the Religious Endowments Act, 1863 (20 of 1863), or by any corresponding law in force in the territories which, immediately before the 1st November, 1956, were comprised in Part B States, no suit claiming any of the reliefs specified in sub-section (1) shall be instituted in respect of any such trust as is therein referred to except in conformity with the provisions of that sub-section.”

This section allows for suits to be filed in cases of breach of trust or when the court’s direction is needed for the administration of a public charitable or religious trust. Such suits can seek various reliefs, including the removal or appointment of trustees and the settling of a scheme for the trust’s administration.

Arguments

Appellants’ Arguments:

• The appellants contended that the suit was filed to protect the public interest and ensure the proper functioning of the charitable trust.
• They argued that the trust was being mismanaged and converted into a private family trust, deviating from its original charitable objectives.
• They submitted that the inclusion of the first plaintiff as a trustee was not for personal gain but to ensure that a qualified medical professional was part of the trust’s administration, aligning with the trust’s objectives.
• The appellants emphasized that the trust was not being managed by medical professionals and that there was siphoning of funds.

Respondents’ Arguments:

• The respondents argued that the suit was primarily aimed at vindicating the personal rights of the appellants, particularly the first plaintiff, who wanted to be reinstated as a trustee.
• They contended that the allegations of mismanagement were merely a pretext to achieve the personal objective of the first plaintiff’s inclusion as a trustee.
• The High Court agreed with the respondents, stating that the suit was framed to vindicate private rights and not public rights.

The innovativeness of the argument by the appellants lies in their assertion that the inclusion of the first plaintiff as a trustee is essential for the proper functioning of the trust, given his medical qualifications, and is not merely a personal pursuit.

Issues Framed by the Supreme Court

The primary issue before the Supreme Court was:

1. Whether the appellants were rightly granted leave under Section 92 of the Code of Civil Procedure, 1908 by the Trial Court.

Treatment of the Issue by the Court

Authorities

The Supreme Court considered the following authorities:

Judgment

How each authority was viewed by the Court:

✓ The Supreme Court relied on Chairman Madappa vs. M.N. Mahanthadevaru and Others [(1966) 2 SCR 151]* to emphasize that Section 92 of the Code of Civil Procedure, 1908 is designed to protect public trusts from harassment and ensure proper administration.

✓ The Court also relied on Bishwanath and anr. vs. Shri Thakur Radhaballabhji & ors. [(1967) 2 SCR 618]* and Sugra Bibi vs. Hazi Kummu Mia [(1969) 3 SCR 83]* to reiterate the three conditions necessary to invoke Section 92 of the Code of Civil Procedure, 1908.

✓ The Court considered S. Massirat Hossain v. Hossain Ahmad Chowdhury [1897 SCC OnLine Cal 42 : (1896-97) 1 CWN 345]* and Vaidya Nath Aiyyar v. Swaminatha Ayyar [(1923-24) 51 I.A. 282]* to support the view that a suit is maintainable if the trust is substantially for a public purpose.

✓ The Court also considered Budreedas v. Choonilal [I.L.R. 33 Cal. 789]*, Appanna v. Narasigna [I.L.R. 45 Mad. 113]*, The Tirumalai-Tirupati Devasthanams Committee v. Udiayar Krishnayya Shanbhagal [I.L.R. [1943] Mad. 619]*, Shanmukham Chetty v. Govinda Chetty [I.L.R. 1938 Mad. 39]*, Abdur Rahim v. Mahomed Barkat Ali [(1927) I.L.R. 55 Cal. 519 (P.C.)]* and Janki Bai v. Thiruchitrambala Vinayakar [(1935) I.L.R. 58 Mad. 988 (F.B.)]* to distinguish between suits for public interest and those for personal rights.

What weighed in the mind of the Court?

The Supreme Court was primarily influenced by the fact that the suit was filed to address the mismanagement of a public charitable trust and ensure its proper administration. The Court found that the allegations of the trust being run as a private family trust, the deviation from its charitable objectives, and the lack of qualified medical professionals in its administration were significant factors. The Court also considered the fact that the first plaintiff, being a qualified medical professional, was associated with the trust since its inception, and his inclusion as a trustee was seen as a means to ensure the trust’s objectives were met. The Court emphasized that the suit was brought in a representative capacity on behalf of the beneficiaries of the trust, and not merely for the personal gain of the first plaintiff.

The court’s reasoning was primarily based on the legal interpretation of Section 92 of the Code of Civil Procedure, 1908, and its application to the facts of the case. The court emphasized that the suit was not merely to vindicate the personal rights of the appellants, but to protect the public interest in the proper administration of the trust. The court also relied on several precedents to distinguish between suits for public interest and suits for personal rights.

The court considered the alternative interpretation that the suit was for the personal gain of the first plaintiff but rejected it, emphasizing that the primary relief sought was the framing of a scheme for proper administration. The court also considered the fact that the first plaintiff was a qualified medical professional and his inclusion as a trustee was to ensure the trust’s proper functioning.

The decision was reached by applying the legal principles of Section 92 to the facts of the case and by considering the precedents on the matter. The court found that the three conditions for invoking Section 92 were satisfied, and the suit was brought in a representative capacity for the public interest.

The court’s decision was based on the following reasons:

• The trust was created for public purposes of a charitable nature.
• There were allegations of mismanagement and deviation from the trust’s original objectives.
• The reliefs sought were within the scope of Section 92 of the Code of Civil Procedure, 1908.
• The suit was brought in a representative capacity for the public interest, not merely for the personal gain of the first plaintiff.

“The main purpose of Section 92(1) is to give protection to public trusts of a charitable or religious nature from being subjected to harassment by suits being filed against them.”

“The reliefs prayed for are diverse which include inter alia framing of a proper scheme of administration, for removing certain trustees and appointment of fresh trustees from medical profession and from public and for other ancillary reliefs.”

“The expression “including the first plaintiff” has to be understood in the context that the first plaintiff, as a qualified medical professional, was associated with the Trust right since the inception but now stands removed. The relief prayed for cannot be said to be in the nature of vindicating personal rights of the first plaintiff.”

Key Takeaways

• Suits seeking to address the mismanagement of public charitable trusts and ensure their proper administration are maintainable under Section 92 of the Code of Civil Procedure, 1908.
• The inclusion of a specific individual as a trustee in such suits does not automatically disqualify the suit if the individual’s inclusion is to ensure the trust’s objectives are met and not merely for personal gain.
• Courts will look at the substance of the matter and the primary relief sought to determine if the suit is for public interest or private rights.
• This judgment clarifies the scope of Section 92 of the Code of Civil Procedure, 1908 and provides guidance on when a suit related to a public trust can be maintained.

The judgment has potential implications for future cases involving public charitable trusts. It clarifies that suits seeking to address mismanagement and ensure proper administration are maintainable, even if they include a request for the appointment of a specific individual as a trustee, provided that the individual’s inclusion is in the public interest.

Directions

The Supreme Court set aside the view taken by the High Court and restored the decision of the District Court, allowing the appeal with no order as to costs.

Development of Law

The ratio decidendi of this case is that a suit seeking to frame a scheme for the administration of a public charitable trust, including the appointment of a specific trustee, is maintainable under Section 92 of the Code of Civil Procedure, 1908, if the primary purpose is to protect the public interest and ensure the proper functioning of the trust, and not merely to vindicate personal rights. This judgment does not change the previous position of law but clarifies its application in cases where a specific trustee is sought to be included in the scheme.

Conclusion

In conclusion, the Supreme Court allowed the appeal, setting aside the High Court’s decision and restoring the District Court’s order granting leave under Section 92 of the Code of Civil Procedure, 1908. The Court held that the suit was brought in the public interest to address the mismanagement of a public charitable trust and ensure its proper administration. The inclusion of the first plaintiff as a trustee was viewed in the context of ensuring the trust’s objectives were met and not as a personal pursuit. This judgment clarifies the scope of Section 92 and provides guidance for future cases involving public charitable trusts.