The Bombay High Court has upheld a major ₹6.53 crore trust property transaction by quashing the Joint Charity Commissioner’s 2020 revocation order, ruling that sanctions under the Maharashtra Public Trusts Act can be cancelled only on clear proof of fraud, misrepresentation, or concealment of material facts — not on merits, valuation disputes, or procedural irregularities.
In a detailed judgment delivered by Justice Amit Borkar on 10 June 2026 in Writ Petition No. 1736 of 2020 (with connected interim applications), the Court allowed the petition filed by Bagasarwala Property LLP and restored the validity of the sanction granted on 24 May 2018.
Background of the Transaction
The property belongs to a Public Trust (Respondent No. 3). It had a historical lease from 1917 and assignment in 1932. The Trust terminated the previous lessee’s rights via a 2016 notice. In 2018, the Trust obtained Charity Commissioner’s permission to grant a 29-year lease to Bagasarwala Property LLP, along with renewal rights and an option to purchase reversionary rights.
Following sanction, the lease deed was executed on 18 September 2018, the petitioner purchased reversionary rights through a conveyance deed, and a Change Report deleting the property from Trust records was accepted in October 2018.
Heirs of the earlier assignee (Vinod Srikrishna Poddar and Vivek Vinod Poddar) challenged the deal under Section 36(2), alleging suppression of the termination notice, lack of transparency in the advertisement, inadequate valuation, and that the Trust lacked authority due to ongoing tenancy claims.
The Joint Charity Commissioner accepted these pleas in the order dated 29 January 2020, cancelled the sanction, and directed the trustees to refund ₹6.53 crore plus rent and restore the property in Trust records within 180 days.
Court’s Key Reasoning on Section 36(2)
Justice Borkar explained the narrow and restricted scope of revocation powers under Section 36(2) of the Maharashtra Public Trusts Act:
- Revocation is not an appellate review of the original sanction. The Charity Commissioner cannot re-examine the wisdom, necessity, valuation, or desirability of a transaction once sanction is granted.
- After execution of the conveyance deed, revocation is permissible only on the ground of fraud practised upon the authority before granting sanction.
- Allegations of fraud must be pleaded with specific particulars and proved with clear evidence. Mere omissions (such as not attaching one termination notice) or deficiencies in advertisement do not constitute fraud when the Commissioner was already aware of disputes, encumbrances, and the “as is where is” condition of the property.
- The original 2018 sanction order showed that the Charity Commissioner had considered pending litigations, earlier leases, structural condition, and valuation by a government-approved valuer.
- Issues of tenancy validity, ownership of structures, and title disputes cannot be adjudicated in Section 36(2) proceedings — they must be decided in appropriate civil or tenancy forums.
- Valuation differences or claims of “haste” do not amount to fraud. The law protects the finality of completed transactions approved under the Act.
The Court held that the 2020 revocation order travelled beyond statutory limits and effectively converted revocation proceedings into a merits review, which is impermissible.
Operative Directions
The High Court:
- Quashed the impugned order dated 29 January 2020.
- Declared that the sanction dated 24 May 2018 continues to remain valid and operative.
- Set aside all directions for refund of money and restoration of the property in Trust records.
- Explicitly clarified that the judgment does not decide any title, tenancy, leasehold rights, ownership of structures, or other civil claims between the parties. All such disputes remain open for adjudication in proper forums.
- Rejected the request for stay of the judgment.
- Made no order as to costs.
Significance for Real Estate & Trusts
This ruling is important for developers, investors, and public trusts dealing with charity properties, cessed buildings, or redevelopment projects in Mumbai. It strengthens legal certainty for transactions that have received prior sanction and reached completion, while limiting the Charity Commissioner’s power to reopen deals without strong evidence of fraud.
The judgment reinforces the protective intent of Section 36 while preventing its misuse as a tool to unsettle concluded deals on grounds of subsequent dissatisfaction or rival claims.
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