5434 of 2003 and 303 of 2004
1. Dr.G.Ebinesan
2. Mr.J.S.Jayakaradass
3. YMCA Madras Trust, rep by its Trustee Dr.G.Ebinesan Young Men's Christian Association, No.223, N.S.C.Bose Road, Chennai 600 001. Applicants in A.No.1614 of 2009 vs.
Crystal Creations (India) Pvt Ltd., AI-92, 9th Main Road, Anna Nagar, Chennai 600 040. Respondent in A.No.1614 of 2009
1. Dr.G.Ebinesan
2. Mr.J.S.Jayakardoss Plaintiffs in C.S.No.862 of 2003 vs.
Crystal Creations (India) Pvt Ltd., AI-92, 9th Main Road, Anna Nagar, Chennai 600 040 Defendant in C.S.No.862 of 2003 For Applicants in A.No.1614/2009 : Mr.R.Krishnamoorthy, Senior Counsel for Mr.S.Raghunathan For Respondent in A.No.1614 of 2009 : Mr.V.T.Gopalan, Senior Counsel for M/s.T.S.Gopalan & Co.
3. Application No.5434 of 2003 is filed seeking to revoke the leave granted to the plaintiffs by this court in Application No.4934 of 2003 dated 17.11.2003 to institute the suit in C.S.No.862 of 2003 under section 92 of the Code of Civil Procedure.
4. Application No.303 of 2004 is filed seeking to revoke the leave granted to the plaintiffs by this court to institute the suit in C.S.No.862 of 2003 under section 92 of the Code of Civil Procedure.
5. Application No.1614 of 2009 is filed seeking to implead the applicant as the third plaintiff in C.S.No.862 of 2003 pending on the file of this court and permit the applicants to carry out consequential amendments in the long and short cause title and address for service in the plaint.
6. The suit is filed seeking permission to YMCA to enter into with the developer, the memorandum of understanding as per annexure 'D' and/or such other agreements as may be required for the purpose of joint development and construction of the building(s) over the schedule mentioned property and further permission to execute lease deed or deeds in favour of the developer and/or its nominee(s)/assignee(s) of 53/100th share of the said property for a term not exceeding 99 years.
7. To avoid confusion, the plaintiffs are described herein as applicants and the applicants in Application Nos.5384, 5385 and 5434 of 2003 and Application No.303 of 2004 are described herein as respondents.
8. The brief case of the applicants:- The first applicant is the General Secretary of Young Men Christian Association (YMCA), a Trust registered under the Societies Registration Act, 1860. The second applicant is the Trustee of the YMCA. They are the persons who are having an interest in the Trust property. The YMCA has been rendering yeomen services to the community in and around Chennai primarily focussing on youth and their development irrespective of caste, colour or creed. The YMCA is managed by a Board of Directors. The properties belonging to YMCA is managed by the Board of Trustees. The YMCA owns a property situated at No.4/341, Old Mahabalipuram Road, Kottivakkam Chennai 600 041 which is described as suit property. The entire extent of the suit property is approximately 19 acres. The YMCA proposed to develop an extent of 10 acres out of 19 acres of land. The YMCA does not have the reserves nor the required liquidity to develop the said property. Therefore, it is proposed to enter into a joint development agreement with M/s.Crystal Creations India Private Limited which has consented to invest its own fund for developing the property. Only after perusing the offers from five Companies for the development of the suit schedule property, M/s.Crystal Creations Private Limited, who has been impleaded as defendant in the suit has been selected for the purpose. The YMCA's Board of Directors and Board of Trustees decided to accept the said offer on 3.9.2003 and 15.9.2003 respectively. The said 10 acres are agreed to be developed in the ratio of 47:53. The YMCA having retained 47% would lease out 53% of the property to the developer. The YMCA would execute a lease deed for 5.24 acres out of the total extent of 10 acres of the suit property for a period of 99 years in favour of the developer. The developer also would pay to the YMCA a sum of Rs.2,00,000/= per annum as lease rentals for a period of 33 years and thereafter, with increased rent of 10% over and above the last annual lease rent paid. On the expiry of 99 years lease period, the ownership of the building would revert to YMCA. Therefore, the applicants have sought for permission as stated supra invoking the provisions under section 92(1)(f) of the Code of Civil Procedure.
9. The defendant, being the developer selected by the applicants, have almost supported the case of the applicants.
10. The sum and substance of the case of the respondents under the various applications filed by them reads as follows:-
The respondents are the for former Directors and full members of YMCA. The suit property is a highly valuable property. The present market value is not less than Rs.30,00,000/= per ground. The General Body had not given any sanction for the proposal of development mooted by the applicants. The Board of Directors have not even authorised the applicants to institute the suit. The Board was not informed of the nature of joint venture. The attempt of alienation is completely behind the back of the Board. The suit property is best suited for establishing a Professional College. The proposed alienation is highly detrimental and destructive of the objects and prospects of YMCA. The applicants, have no authority to file the suit. The suit itself is not maintainable. The suit property is in active use for the institution for conducting sports. The YMCA is not in need of any funds. It has huge cash deposits in banks. The applicants should have approached the court invoking the provision under section 92 of the Code of Civil Procedure before the commencement of the Transaction. Having decided to alienate the property and also having entered into a joint venture agreement negotiating the terms, share and price, have come to the court without any bona fides seeking permission. The applicants, with ulterior motives, have chosen to cause publication only on the date prior to the date of hearing. All the Trustees should have been arrayed as parties to the suit. No prudent and reasonable Trust would ever think of leasing out the Trust property for 99 years. It is impracticable to restore status quo ante after a period of 99 years inasmuch as the promoter may create third party interest in the property leased out to them. The applicants are being investigated for the offence of criminal breach of trust. Therefore, the respondents have contended that they should be impleaded as necessary party to the suit and the leave granted for the applicants to file the suit under section 92 of the Code of Civil Procedure shall be revoked.
11. The following points arise for determination:-
i) Whether the proposed third plaintiff YMCA Madras Trust shall be impleaded as necessary party to the suit.
ii) Whether the leave granted to the applicants under section 92 of the Code of Civil Procedure is liable to be revoked.
iii) Whether the respondents are proper and necessary parties to the suit.
iv) Whether the proposed development agreement is prudent and beneficial to the YMCA Trust.
12. Point No.1:- The extract of the Minutes of the Meeting of the Board of Directors and Board of Trustees held on 3.9.2003 and 15.9.2003 would go to establish that the applicants herein have been authorised to complete the formalities in the matter of developing the suit property. The suit has been filed with the full authorisation of the Board of Trustees of the YMCA, Madras, but, by abundant caution, the applicants have sought to implead the Trust as a party as the entire issue revolves around the property owned by the Trust. This court, in its order passed in C.S.No.624 of 1999 dated 21.11.2000, has held that the properties of the Trust shall be vested in the Board of Trustees.
13. The learned counsel appearing for the respondents would contend that the entire body of Board of Trustees should have been made as parties to the suit. The Bench of this Court in CHENNAMMAL v. COMMISSIONER, H.R. & C.E.(1973 II MLJ 442) has observed that in a proceeding before the HR&CE Board to decide the question whether the Trust concerned was a public Trust or a private Trust, the entire Body of Trustees should have been made as a party to the proceedings and inasmuch as all the Trustees have not been made a party to the suit proceedings, the order passed by the authority concerned under the provisions of the Madras HR & CE will not bind those Trustees.
14. That was a case where there was a clash of interest between the Trustees. The Trustees, who laid the proceedings before the Endowment Board, have not been taken into confidence the views and opinions of the other Trustees. In the instant case, as already pointed by this court, the Board of Trustees have fully authorised the applicants herein to take all appropriate proceedings to complete the transaction relating to the development of the property. Therefore, no Trustee was left in the lurch in the matter of developing the suit property. It is not as if the other Trustees have come with a complaint as against the proposal mooted by the applicants herein armed with the resolutions passed not only by the Board of Directors but also by the Board of Trustees. Therefore, the aforesaid ratio does not apply to the facts and circumstances of this case.
15. It has been held in the ratio laid down by the Supreme Court in IN RE: H.E.H. THE NIZAM'S JEWELERY TRUST (AIR 1980 SC 17) that the Trustees can authorise the Co-Trustees in express, specific and clear terms to go ahead with certain transactions contemplated by the other Trustees.
16. The court finds that the suit filed as such by the applicants is quite maintainable even in the absence of the Trust. Only by way of abundant caution, the Trust is sought to be arrayed as third plaintiff. The respondents cannot have any serious objection for the Trust to come on record.
17. Therefore, YMCA Madras Trust is impleaded as third plaintiff. The plaintiffs shall carry out the amendment forthwith.
18. Point No.2:- Leave was granted by this court. Of course, the court ordered publication of notice inviting objections. It appears that the same was published a day earlier to the date of hearing of the suit.
19. It is vehemently submitted by the learned counsel appearing for the respondents that the applicants have attempted to take an order from this court ex parte without any objections from any quarters by not giving any opportunity to the members of the YMCA. That was a reason why the publication ordered by the court was effected just a day before the day of hearing, it was further submitted.
20. The learned Senior Counsel appearing for the applicants would contend that it is quite true that the publication was effected just a day earlier to the date of hearing of the suit. But, that cannot be a ground to revoke leave already granted more especially when the respondents have come out with their objections to revoke the leave granted by the applicants who have been authorised to act on behalf of the Trust.
21. Two or more persons having interest in the Trust can lay a suit before the court seeking permission relating to the affairs of the Trust. Once the court comes to a decision that the persons who have laid the suit have an interest in the Trust and they are two and more members and the issue relates to the affairs of the Trust, as contemplated under section 92 of the Code of Civil Procedure, the court has no other go except granting leave to sue. Further, as rightly pointed out by the learned Senior Counsel appearing for the applicants, the respondents have come out with their objections to the plea set up by the applicants to enter into a joint venture agreement on behalf of the Trust. Further, the order granting leave is administrative in character. It does not affect the rights and interests of the parties concerned. Of course, the said order is subject to the objections raised to the proposal mooted by the persons who laid the suit.
22. The mere lapse on the part of the applicants in not publishing the notice inviting objections cannot be the sole ground to revoke the leave which is administrative in nature granted to the applicants to lay the suit in connection with the affairs of the Trust. The applicants have established that they have the interest in the Trust. An order is invited with respect to the property owned by the Trust. In view of the above, it is held that the leave to sue is properly granted by the court. It does not warrant revocation. The point is answered accordingly.
23. Point No.3:- It is submitted by the learned Senior Counsel appearing for the applicants that four former Directors, who also participated in the proceedings of the Meeting have come out with the application seeking impleadment with ulterior motive. In order to prolong the matter, these applications have been filed seeking impleadment, it is further contended.
24. Per contra, the learned counsel appearing for the respondents would contend that the respondents have interest in the affairs of the Trust and therefore, they should be made as proper and necessary parties to the suit.
25. It is found that the Board of Directors as well as the Board of Trustees have sanctioned the proposal for entering into joint venture agreement with the defendant. In fact, the Board of Trustees have passed a resolution authorising the applicants to take efforts to complete the entire transaction. It is found that the four former Directors, who laid the application in O.A.No.5384 of 2003, did participate in the proceedings which culminated in passing a resolution approving the joint venture proposal of the defendant. Therefore, the court finds that the application seeking to implead themselves as party to the proceedings have been filed with ulterior motive to prolong the litigation as rightly contended by the learned Senior Counsel appearing for the applicants. It is found that Mr.G.K.Pattery, the fourth applicant in O.A.No.5384 of 2003 was suspended from the membership of YMCA pending enquiry for misbehaviour. Therefore, it is found that the respondents have come out with these applications objecting to the whole proposal mooted by the Board of Directors and the Board of Trustees with mala fide intention. At any rate, the court finds that the respondents are not proper parties inasmuch as the Trust is properly represented and the applicants are armed with proper authorisation for going ahead with the joint venture proposal with the defendant. At any rate, their counter version could be treated as objection for the proposal mooted by the applicants. Therefore, the court is not inclined to implead the respondents as proper and necessary parties to the suit. The point is answered accordingly.
26. Point No.4:- the first applicant is the General Secretary and Ex Officio Trustee of the YMCA. The YMCA is a Charitable and Religious Trust rendering various yeomen services to the community at large focussing primarily on youth and their development irrespective of caste, colour or creed.
27. The Management of YMCA completely vests in the Board of Directors. The properties are vested in the Trustees of the Board. This court, in the order passed in C.S.No.624 of 1999 dated 20.11.2000, has held that all the properties shall vest in the Board of Trustees. The Board of Directors, in their resolution passed on 3.9.2003, have completely approved the joint venture arrangement proposed with the defendant. The Board of Trustees in their meeting on 15.9.2003, have completely approved the said proposal and authorised the applicants to take all efforts to complete the proposal. It is to be noted that the resolutions were passed unanimously by the Board of Directors and also by the Board of Trustees with respect to the development proposal of the suit property.
28. There are 19 acres at No.4/31 Old Mahabalipuram Road, Kottivakkam, Chennai owned by YMCA. Out of which, only 10 acres are proposed to be developed by YMCA by entering into a joint venture development agreement with the defendant. It is contended that YMCA does not possess that much of resources and liquidity for developing the property. It is found on record that YMCA invited proposals from as many as five Companies. The offer of the defendant Company was unanimously accepted by the Board of Directors and Board of Trustees of YMCA in their respective resolutions.
29. Out of 10 acres that is proposed to be developed, 3.7 acres are proposed to be retained by YMCA and only 4.24 acres would be handed over to the developer. The aforesaid ratio is fixed at 47:53. The remaining 2 acres out of 10 acres are proposed to be divided equally by YMCA and the defendant for utilising the same for car parking.
30. The defendant has proposed to construct the entire structure at its own cost and hand over YMCA their share of the constructed area. The constructions have been proposed as per the specifications agreed upon between the applicants and the defendant. The draft memorandum of understanding has been placed for perusal of this court. Only after getting permission from this court, the memorandum of understanding is proposed to be signed by the applicants. YMCA has to lease out only 5.24 acres for a period of 99 years in favour of the defendant. During the tenure of lease, the defendant has proposed to pay annual lease rent of Rs.2,00,000/= and after a period of 33 years of the lease period, the lease rentals are proposed to be increased by 10%. The applicants have proposed to establish Home for the Retireees, Hostel for destitute boys, Boys Students Hostel, Teacher Training Institute, Community Hall and International Youth Centre in the constructed portions delivered on completion by the defendant to YMCA.
31. The learned counsel appearing for the respondents would vehemently submit that the General Body of YMCA has not sanctioned the joint venture proposal and the Board of Directors also have not authorised the filing of the suit. The Board of Directors were not informed of the nature of the joint venture. The property is very ideal for establishing a Professional College by YMCA. The applicants were involved in criminal cases. It is further submitted that YMCA is not in need of urgent funds as it has got huge cash deposits.
32. Per contra, the learned Senior Counsel appearing for the applicants would submit that the proposal has been cleared by the Board of Directors and the Board of Trustees considering the avowed object of the YMCA Trust and the benefit that would accrue to the Trust. Therefore, all the flimsy objections raised by the respondents will have to be rejected. There is no bona fides in the objections raised by the respondents, it is submitted.
33. As already pointed out by this court, the constructed portion of the property to be delivered by the developer to YMCA is going to be used for the purpose of effectively translating the object of the Trust. There are totally 19 acres in the Survey Number of the suit property. Out of which 10 acres alone have been proposed to be developed. Even in the developed area of 10 acres, 99 years lease is contemplated only in respect of 5.24 acres in favour of the developer. Firstly, it is found that it is not an absolute sale wherein the applicants ceased to have the right or interest over the suit property permanently. Even if any third party interest is created by the developer, the third party, who claims interest, cannot claim more than what he has acquired from the developer with all its limitations. After all, the property is going to be reverted back to the applicants after the period of lease enjoyed exclusively by the developer for 99 years comes to an end. The Trust does not have so much of wherewithal to shoulder the financial burden to develop 10 acres of vast stretch of land. The lands are lying vacant. There is every possibility for the miscreants to encroach upon the property and create some interest. In such event, there will be a series of litigations before the court. An individual may effectively protect the property but a Trust which keeps a large stretch of land vacant may not be in a position to protect effectively from encroachments.
34. The court has already held that C.S.No.624 of 1999 that the property of YMCA vests with YMCA Trust. The Board of Directors and the Board of Trustees have already cleared the proposal. They have given full authority to the applicants to clinch the deal with the developer. Therefore, there is no necessity to convene the General Body seeking sanction for the proposal. The materials produced by the applicants would go to show that the entire proposal is emerging only with the patronage of Board of Directors and Board of Trustees. It is too big a lie to say that the Board of Directors were not informed of the nature of joint venture. It is found that the former Directors, who laid O.A.No.5384 f 2003 have participated in the interaction that was held for clearing the joint venture proposal to be clinched with the defendant. Therefore, they cannot say that they were not aware of the nature of joint venture. It is true that the property is ideal for establishing professional college/hostel. There is no prohibition for putting to use the constructed portion handed over by the developer to the applicant for the purpose of establishing professional college.
35. The applicants have produced the documents to establish that the criminal case launched as against them on the allegation that they committed criminal breach of trust hatching criminal conspiracy was closed as mistake of fact by the investigating officer.
36. The courts are in a position of parens patriae in dealing with the Religious and Charitable Trust. A duty is cast upon the court to protect those properties. In the opinion of the court, the development mooted is the only way to protect the property. The Trust is going to be largely benefitted by the joint venture proposal. YMCA is clinching a very good deal with the developer. Such a deal will have to be approved by the court as it is found that it is more beneficial to the Trust.
37. Application No.1614 of 2009:- The application stands allowed. The applicants shall carry out the amendment forthwith.
38. Application Nos.5384, 5385, 5434 of 2003 and Application No.303 of 2004:- All these applications stand dismissed.
39. C.S.No.862 of 2003:- Permission is granted to enter into with the developer, the memorandum of understanding as per annexure 'D' and/or such other agreements as may be required for the purpose of joint development and construction of the building(s) over the schedule mentioned property and further permission is also granted to execute lease deed or deeds in favour of the developer and/or its nominee(s)/assignee(s) of 53/100th share of the said property for a term not exceeding 99 years. There is no order as to costs.
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