- According to the Supreme Court, trust property cannot be alienated unless it is for the benefit of the Trust and/or its beneficiaries.
- When a Trust property is transferred without the prior sanction of the Registrar under Section 14 [of the Madhya Pradesh Public Trusts Act, 1951] and/or without following a fair and transparent process, it can be said that the property is not being properly administered,the bench comprising Justices AM Khanwilkar, Abhay S. Oka, and CT Ravikumar observed in a judgement in the matter of Khasgi (Devi Ahilyabai Holkar Charities) Trust.
- Though the bench overturned the Madhya Pradesh High Court's order for an investigation by the Economic Offences Wing (EOW) into the trustees, it directed the Registrar under the Public Trusts Act, who has jurisdiction over the Trust, to obtain the Trust's record relating to all alienations made by the Trustees.
- The appeal raised the question of whether the provisions of the Public Trusts Act apply to the Khasgi Trust.
- The court noted that the trust was established with the goal of preserving and maintaining the Trust's properties, which are charities and endowments.
- As a result, the Khasgi Trust can be described as an express trust for public, religious, and charitable purposes.
- The court noted that Section 14 prohibits the sale, mortgage, or gift of any immovable property of the Public Trust, as well as leases, for a period of more than seven years in the case of agricultural lands, and more than three years in the case of non-agricultural land or building.
- The decision also discusses the Registrar's authority under various provisions of the Trust Act.
- The court noted that, with the exception of one, all of the alienations made by the Trustees of the Khasgi Trust were made without complying with the mandatory requirement of obtaining prior sanction, as required by Subsection (1) of Section 14.
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