The Madhya Pradesh High Court has clarified that a Registrar of Public Trust may directly approach the Court under Section 26 of the Madhya Pradesh Public Trust Act, 1951, when no functioning trustee exists, irrespective of technical procedural lapses. This ruling reinforces the statutory duty of judicial authorities to safeguard public trust assets from mismanagement, even in the absence of formal trustees.
Background & Facts
The Dispute
The dispute centers on the mismanagement of Shri Achleshwar Mahadev Sarvjanik Nyas, a public trust registered under the Madhya Pradesh Public Trust Act, 1951. The Trust, established in 1976, was originally managed by 20 trustees, including Smt. Binno Bai as working trustee. After her death in 1993 and the subsequent demise of other trustees, the Trust’s management was taken over by unauthorized persons. By 2017, the last elected executive committee had completed its two-year term, and no fresh elections were held, leaving the Trust without any legally constituted executive.
Key Facts
- The Trust was registered on 30.10.1976 under the M.P. Public Trust Act, 1951
- Smt. Binno Bai, the original working trustee, died in 1993
- No elections were held after 2017, rendering the executive’s term expired by 2019
- The Trust’s accounts showed serious irregularities, as per the Joint Director, Treasury & Accounts’ report dated 10.11.2020
- Respondent No. 5, Narendra Kumar Singhal, a former working trustee, resigned on 10.05.2019
- The appellant, Santosh Singh Rathore, filed an application under Section 26 of the Act on 15.01.2019 seeking judicial intervention
- The Registrar registered the application as Case No. 0001/B-113/2019-20 on 29.07.2021
- The District Judge, Gwalior, had previously issued directions on 23.06.2005 in Misc. Case No. 66/2000, finding the Trust’s purpose had failed due to mismanagement
Procedural History
- 25.02.1976: Application filed by Smt. Binno Bai for registration of Trust
- 30.10.1976: Trust registered by Registrar, Public Trust, Gwalior
- 1993: Death of Smt. Binno Bai
- 2017: Last election of Trust executive
- 10.05.2019: Resignation of Respondent No. 5 as working trustee
- 15.01.2019: Appellant’s application under Section 26 filed with Registrar
- 02.03.2020: Registrar directed SDO and Joint Director to conduct enquiry
- 10.11.2020: Joint Director submitted report highlighting financial irregularities
- 29.07.2021: Registrar filed reference application under Section 26 before District Judge
- 21.11.2019: High Court disposed of W.P. No. 13649/2019, directing Collector to decide application within 3 months
- 18.09.2020: High Court disposed of W.P. No. 13200/2020, directing Registrar to treat resignation under Section 9
- 09.03.2022: District Judge held that executive term expired in 2019 and appointed a Receiver
- 15.11.2022: District Judge rejected the reference under Order 7 Rule 11 CPC, remitting matter to Registrar and reinstating the expired executive
- 15.06.2026: High Court heard appeal and delivered judgment
The Parties' Positions
For the Appellant (Santosh Singh Rathore)
- Argued that the Registrar’s reference was legally valid under Section 26(2) as no trustee existed
- Contended that the District Judge erred in applying Order 7 Rule 11 CPC, which is meant for pleadings, not factual references
- Highlighted that the Joint Director’s report established mismanagement
- Emphasized that the Court’s prior orders (2019 and 2020) mandated action on the application
For the Respondents (State and Trustee Representatives)
- Supported the District Judge’s technical grounds: failure to hear all trustees, non-compliance with Section 26(1), and absence of reasons for Registrar’s application
- Argued that the SDO’s non-participation vitiated the enquiry report under Section 34
- Claimed that the resignation of Respondent No. 5 required separate adjudication under Section 9
Relief Sought
The appellant sought:
- Setting aside of the District Judge’s order dated 15.11.2022
- Direction to the Principal District Judge to decide the reference on merits
- Continuation of the Receiver appointed on 09.03.2022
- Conduct of fresh elections for the Trust executive within a stipulated time
The Legal Issue
The central question was whether Section 26(2) of the Madhya Pradesh Public Trust Act, 1951 permits the Registrar to directly approach the Court when no trustee exists, and whether procedural irregularities in notice or enquiry can justify rejection of the reference under Order 7 Rule 11 CPC.
Arguments Presented
For the Appellant
The appellant’s counsel argued that Section 26(2) explicitly empowers the Registrar to file an application directly when there is no trustee, which was the case here since the executive’s term expired in 2019. The report by the Joint Director, Treasury & Accounts, detailing financial irregularities, constituted sufficient grounds for the Registrar’s satisfaction. The District Judge’s reliance on Order 7 Rule 11 CPC was misplaced, as that provision applies to plaints, not references under a special statute. The failure to serve notice on former trustees was irrelevant since they no longer held office. The appellant cited Shri Ram Mandir Trust v. State of M.P. (2011 MPLJ 560) to affirm the Court’s duty to protect public trust assets.
For the Respondent
The State and trustee representatives contended that the Registrar failed to comply with Section 26(1) by not first directing a working trustee to apply to the Court. They argued that the SDO’s non-participation in the enquiry rendered the report invalid under Section 34. They also claimed that the resignation of Respondent No. 5 required separate adjudication under Section 9, and that the Registrar did not assign special reasons for filing the application under Section 26(2). They maintained that the District Judge’s rejection was procedurally sound.
The Court's Analysis
The High Court undertook a detailed statutory interpretation of Section 26 of the Madhya Pradesh Public Trust Act. It held that Section 26(2) operates as an independent and self-contained provision, allowing the Registrar to file an application directly in three scenarios: (i) when the trustee fails to apply after being directed; (ii) when no trustee exists; or (iii) for any other reason deemed expedient.
"As observed hereinabove, there is no trustee available in the trust as the term of the executive has already expired in the year 2019. Therefore, the Registrar was competent to make application to the Court."
The Court rejected the District Judge’s finding that the Registrar had not assigned reasons for filing the application. It held that the Joint Director’s report, which documented financial mismanagement, constituted an implicit and sufficient reason under Section 26(2). The Court emphasized that the Act’s purpose is to protect public endowments, and technicalities cannot override substantive justice.
Regarding the SDO’s non-participation, the Court held that while it may be an irregularity, it does not vitiate the enquiry. The Joint Director, Treasury & Accounts, is the appropriate authority to examine financial records, not the SDO. The Court further noted that no party had objected to the report during proceedings, and the Registrar had acted in good faith.
The Court also dismissed the argument that the resignation of Respondent No. 5 required separate adjudication under Section 9. It held that since his term had expired in 2019, his resignation was infructuous, and the Registrar’s focus on the broader mismanagement was legally justified.
The Court condemned the District Judge’s use of Order 7 Rule 11 CPC to reject the reference. It clarified that this provision applies only to plaints and cannot be invoked to dismiss applications under a special statute like the Public Trust Act. The Court reiterated that Section 27 imposes a mandatory duty on the Court to conduct a full enquiry and pass appropriate orders.
The Verdict
The appeal was allowed. The District Judge’s order dated 15.11.2022 was set aside. The matter was remitted to the Principal District Judge, Gwalior, for assignment to a competent Presiding Officer to decide the reference on merits. The earlier executive, whose term expired in 2019, was no longer authorized to function. The Receiver appointed on 27.11.2021 shall continue until fresh elections are conducted. The Court directed that elections for the Trust executive be held within six months of the order. The record was to be sent back forthwith.
What This Means For Similar Cases
Registrar’s Power Under Section 26(2) Is Independent
- Practitioners must now argue that Section 26(2) is not contingent on prior compliance with Section 26(1) when no trustee exists
- A Registrar’s application is valid if the trust is in disarray, even if formal notice to former trustees was not given
- The burden shifts to the Court to examine substantive mismanagement, not procedural technicalities
Enquiry Reports Cannot Be Invalidated on Minor Irregularities
- Non-participation of an SDO in a financial enquiry does not vitiate the report if the designated expert (e.g., Treasury Officer) conducted it
- Courts must distinguish between procedural lapses and substantive prejudice
- Objections to reports must be raised during proceedings; silence waives the right to challenge
Order 7 Rule 11 CPC Is Inapplicable to Trust References
- Applications under special statutes like the Public Trust Act cannot be dismissed under Order 7 Rule 11 CPC
- Courts must treat such references as petitions for judicial intervention, not pleadings subject to technical rejection
- This precedent applies to all trust-related references under state-specific Public Trust Acts
