SC sets aside MP High Court direction against trustees of Khasgi Trust, grants relief to Holkar royal family

New Delhi[India], July 22 : The Supreme Court has set aside the directions passed by the High Court of Madhya Pradesh to conduct an EOW investigation against the trustees of Khasgi (Devi Ahilyabai Holkar Charities) Trust, Indore where two of the trustees are daughter and son-in-law of late king Yashwant Rao Holkar who was the great-great-grandson of Devi Ahilyabai Holkar.
"We hold that the direction issued by the High Court to Economic Offences Wing of the State Government to hold an inquiry was not warranted," a bench of justices A.M.Khanwilkar, Abhay S. Oka and C. T. Ravikumar said.
"No finding has been recorded by the High Court based on material that the alienation made by the Trustees has resulted in causing loss to the Trust and that the entire sale consideration was being diverted for personal use. It is noticed from the record placed before us that the entire consideration received from the purchasers has been credited to the account of the Trust," the top court said.
"The allegation of misappropriation can be gone into only by the authorities under the form of a resolution of the Board of Trustees to file the writ petitions, even an individual Trustee was entitled to take proceedings for questioning such orders, which adversely affect the Trust and /or its beneficiaries. On the contrary, it is the duty of every Trustee to take such action of challenging an order holding that the properties held by the Trust are not the Trust properties," the court said.
"Moreover, none of the Trustees has come forward to challenge the authority of Trustee Shri S.C. Malhotra who had filed writ petitions and further proceedings. There was also a direction issued to the Economic Offences Wing to hold an inquiry about the misappropriation of the Trust property by the Trustees. Every Trustee was affected by the said direction. Therefore, in the facts of the case, the objection raised to the maintainability of the petition filed by one of the Trustees cannot be sustained," the court said.
The top court, however, said that the view taken by the Division Bench that the Khasgi Trust is governed by the Public Trusts Act and no alienation of the Trust properties could be made without complying with Section 14 thereof, will have to be affirmed.
The Supreme Court hold that the Khasgi (Devi Ahilyabai Holkar Charities) Trust, Indore, is a Public Trust governed by the provisions of the Madhya Pradesh Public Trusts Act, 1951 and direct the Trustees to get the Khasgi Trust registered under the Public Trusts Act by making the necessary application within a period of one month from today.
The Supreme Court also put to rest the issue of ownership of the 246 properties that were the subject matter of the list.
The Khasgi (Devi Ahilyabai Holkar Charities) Trust, Indore has been embroiled in contentious litigation, since the year 2012, over the ownership of the 246 properties which was held by the Registrar of the Public Trusts which asserted that the ownership lies with the State of Madhya Pradesh. However, the order of the Registrar of Public Trust was set aside by the Ld. Single Judge of the High Court of Madhya Pradesh. The State being aggrieved by the said order, challenged the same before the Division Bench wherein vide order dated 05.10.2020, it was held that the ownership of the properties lies with the State of Madhya Pradesh.
The Division Bench further directed the Economics Office Wing (EOW) to conduct a detailed investigation into the matter and take appropriate steps regarding the sale and creation of third-party rights of some of the properties. The order passed by the Division Bench of the High Court of Madhya Pradesh was assailed before the Supreme Court of India by the Trust.
The Supreme Court while partially allowing the appeals held that, though Trust was owner of 246 properties, however, Section 14 of the Madhya Pradesh Public Trust Act, 1951 will be applicable to the Trust which simply states that prior permission of the Registrar, Public Trusts would be required in case of sale etc. of the property belonging to the public Trust.
The Supreme Court of India also directed the Registrar, Public Trust to hold a fresh enquiry into the sale of the properties sold by the Trust to ascertain if by virtue of alienation made by trustees any loss was caused to the Public Trust and to take necessary action in this regard.
The Khasgi (Devi Ahilyabai Holkar Charities) Trust, Indore was represented by Senior Advocates Mukul Rohatgi, Abhishek Manu Singhvi and Amit Desai, assisted by the team from Karanjawala & Co-led by Ruby Singh Ahuja, Senior Partner, Nandini Gore, Senior Partner, Tahira Karanjawala, Principal Associate and others.