Section 36(2) cannot be used to undo valid sanction

The Bombay High Court, per Justice Amit Borkar, considered a challenge to an order by the Joint Charity Commissioner that had cancelled an earlier sanction granted under Section 36(1) of the Maharashtra Public Trusts Act, 1950. The impugned order had also directed the trustees to refund Rs. 6,53,00,000 and yearly rent of Rs. 30,000, and to restore the property in the trust records.

The dispute arose after the trust obtained permission on 24 May 2018 to grant the property on lease to the petitioner for 29 years, with a renewal option and a right to purchase reversionary rights. A lease deed followed on 18 September 2018, and a conveyance deed was later executed after the petitioner exercised the option to purchase the reversionary rights. A Change Report seeking deletion of the property from the trust register was also accepted.

Proceedings under Section 36(2) were then initiated by respondent No. 2 seeking cancellation of the sanction. The Joint Charity Commissioner accepted that request on 29 January 2020, mainly on the grounds that certain material, including the termination notice issued by the trust to the earlier lessee, had not been placed before the authority, that the public notice did not disclose the renewal and reversionary rights, and that the valuation process was incomplete and hurried.

The High Court examined, first, whether the Section 36(2) application itself was maintainable and, second, the extent of jurisdiction available to revoke a sanction already granted under Section 36(1). The petitioner argued that respondent No. 2 was neither a trustee nor a person with a legally recognised interest in the management, benefit, or welfare of the trust, and therefore could not invoke Section 36(2).

On the material before it, the Court held that the impugned exercise of jurisdiction could not be sustained. The directions cancelling the sanction, and the consequential directions for refund and restoration, were set aside. The Court further held that the sanction dated 24 May 2018 granted under Section 36(1) would continue to remain valid and operative in accordance with law.

At the same time, the Court was careful to limit the scope of its decision. It clarified that it had examined only the legality of the exercise of jurisdiction under Section 36(2), and that it was not deciding any independent rights, title, tenancy rights, leasehold rights, ownership rights in structures, succession claims, or other proprietary claims relating to the property. The Court also left open the legality, validity, and effect of the termination notice issued by the trust.

Practical takeaway: a sanction under Section 36(1) cannot be revoked unless the Section 36(2) jurisdiction is properly invoked and lawfully exercised.