http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 7

PETITIONER:

R. VENUGOPALA NAIDU AND ORS.

Vs.

RESPONDENT:

VENKATARAYULU NAIDU CHARITIES AND ORS.

DATE OF JUDGMENT26/10/1989

BENCH:

KULDIP SINGH (J)

BENCH:

KULDIP SINGH (J)

NATRAJAN, S. (J)

CITATION:

1990 AIR 444 1989 SCR Supl. (1) 760

1989 SCC Supl. (2) 356 JT 1989 (4) 262

1989 SCALE (2)902

ACT:

Civil Procedure Code, 1908: Section 92--Representative

suit-Nature of--Whether all persons interested in a trust

are parties to the suit.

HEADNOTE:

Respondent No. 1 is a public trust. The trust owns

several properties. On the ground that the trust properties

were improperly and fraudulently alienated, a suit was fried

under Section 92 CPC for removing the trustee and appointing

a new trustee and to recover trust properties alienated by

the said trustee. The sub-judge permitted the trustees to

continue and framed a scheme-decree for the future manage-

ment and administration of trust. The scheme also granted

liberty to the parties to apply to the sub-court for further

directions as regards the administration of the trust.

The trustees filed an interim application before the

sub-court and obtained permission to sell two properties.

The appellants filed an interim application for setting

aside the order granting permission to the trust for selling

the two properties, alleging that the negotiated price was

only about 20% of the market price. The sub-judge dismissed

the application on the ground that the applicants had no

locus-standi to file the application under clauses 13 and 14

of the Scheme-decree as they were not parties to the Origi-

nal suit.

On revision the High Court also came to the conclusion

that the application was not maintainable.

This appeal, by special leave, is against the said

judgment of the High Court.

On behalf of the appellants, it was contended that

since the suit under section 92 CPC being a representative

suit, the scheme-decree binds not only the parties thereto,

but all those who are interested in the trust.

The contention of the Respondents was that only the

two persons

761

who filed the original suit can be considered as "parties"

in terms of clause 14 of the scheme-decree and since the

appellants were not plaintiffs in the suit, they have no

locus-standi to file an application under clauses 13 and 14

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 7

of the scheme decree.

Allowing the appeals, this Court,

HELD: 1.1 A suit under Section 92 of the Code is a suit

of a special nature for the protection of Public rights in

the Public Trusts and charities. The suit is fundamentally

on behalf of the entire body of persons who are interested

in the trust. It is for the vindication of public rights.

The beneficiaries of the trust, which may consist of public

at large, may choose two or more persons amongst themselves

for the purpose of filing a suit under Section 92 of the

Code and the suit-title in that event would show only their

names as plaintiffs. The named plaintiffs being the repre-

sentatives of the public at large which is interested in the

trust all such interested persons would be considered in the

eyes of law to be parties to the suit. A suit under Section

92 of the Code is thus a representative suit and as such

binds not only the parties named in the suit-title but all

those who are interested in the trust. It is for that reason

that explanation VI to Section 11 of Code constructively bar

by res-judicata the entire body of interested persons from

reagitating the matters directly and substantially in issue

in an earlier suit under Section 92 of the Code. [766B-C]

1.2 A suit whether under Section 92 of the Civil Proce-

dure Code or under Order 1 Rule 8 of Civil Procedure Code is

by the representatives of large number of persons who have a

common interest. The very nature of a representative suit

makes all those who have common interest in the suit as

parties. In the instant case all persons who are interested

in the respondent trust are parties to the original suit and

as such can exercise their rights under clauses 13 and 14 of

scheme-decree. [766H; 767A]

Raje Anandrao v. Shamrao and Ors., [1961] 3 SCR 930;

Ahmed Adam Sait and Ors. v. Inayatullah Mekhri and Ors.,

[1964] 2 SCR 647 relied on.

2.1 The property of religious and charitable endowments

or institutions must be jealously protected because large

segment of the community has beneficial interest therein.

Sale by private negotiations which is not visible to the

public eye and may even give rise to public suspicion should

not, therefore, be permitted unless there are special

762

reasons to justify the same. Care must be taken to fix the

reserve price after ascertaining the market value for safe-

guarding the interest of the endowment. [767F-G]

2.2 The orders of subordinate court dated October 27,

1984 and January 23, 1985 permitting the sale of the two

properties and consequent sale in favour of the respondents,

are set aside. The properties in question may be sold by

public auction by giving wide publicity regarding the date,

time and place of public auction. The offer of Rs. 10 lacs

made in this Court will be treated as minimum bid of the

person who has given the offer and deposited ten percent of

the amount in this Court. It will also be open to the re-

spondents/purchasers to participate in the auction and

compete with others for purchasing the properties. The

respondents-vendees from the trust shall be entitled to

refund of the price paid by them with 10% interest from the

date of payment of the amount till the date of auction of

the property. They will also be entitled to compensation for

any superstructure put up by them in the properties includ-

ing compensation for any additions or improvements made by

them to the building and the property. [767H; 768A-C]

Chenchu Ram Reddy and Anr. v. Govt. of Andhra Pradesh

and Ors., [1986] 3 SCC 391, relied on.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 7

JUDGMENT:

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 3577 of

1988.

From the Judgment and Order dated 19.9.1986 of the

Madras High Court in C.R.P. No. 3210 of 1985.

S. Padmanabhan, Mr. T.A. Subramaniyam, R.N. Keshwani and

S. Balakrishnan for the Appellants.

G. Ramaswamy, Additional Solicitor General, K. Swami, S.

Srinivasan, Rajyappa, S. Murlidhar, Diwan Balak Ram and

M.K.D. Namboodari for the Respondents.

The Judgment of the Court was delivered by

KULDIP SINGH, J. Venkatarayulu Naidu Charities is a

public trust V.P. Venkatakrishna Naidu and V.P. Rajagopala

Naidu, filed an original suit No. 28 of 1909 (hereinafter

called original suit) in the court of Subordinate Judge,

Mayavaram under Section 92 of the Code of Civil Procedure

praying inter alia that the defendant trustee be

763

removed from the said office and a new trustee be appointed

with directions to recover trust properties improperly and

fraudulently alienated by the defendant. The subordinate

court permitted the trustee to continue and framed a

scheme-decree dated September 9, 1910 for the future manage-

ment and administration of the trust. Clauses 13 and 14 of

the scheme are as under:

"13--The trustee shall not effect any altera-

tions or additions to the existing buildings

except with the permission of the Tanjore Sub

Court."

"14--Liberty is given to the parties to apply

to the Tanjore Sub Court for further direc-

tions if any from time to time as regards the

administration of the trusts."

The question for consideration in this Appeal is whether

"parties" mentioned in Clause 14 of the scheme-decree repro-

duced above mean only the named plaintiffs and defendant in

the suit-title and their successors-in-interest or the suit

being representative it includes all those who are interest-

ed in the trust.

Further necessary facts are as under:

The trust owns several items of proper-

ties. We are concerned with the following two

properties alone of the trust.

1. Property situate at Muthukumara Moopannaar

Road in T.S. No. 2936 to an extent of 11484

sq. ft.

2. Property situate at ward No. 6 Gandhiji

Road, in T.S. No. 2937 to an extent of 4429

sq. ft.

The trustees filed interim application No. 453 of 1984

in the Original Suit before the subordinate court for per-

mission to sell the first property which was granted by the

order dated October 27, 1984 and the property was sold for

Rs.11,000. Similarly the second property was sold for

Rs.69,328 with the permission of the court dated January 23,

1985.

R. Venugopala Naidu and three others who are the present

appellants filed interim application No. 175 of 1985 in the

original suit before the subordinate judge, Thanjavur for

setting aside the orders dated October 27, 1984 and January

23, 1985 granting permission to

764

the trust to sell the above mentioned two properties. It was

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 7

alleged that the negotiated sale was at a price which was

almost 20% of the market price. There was no publication in

any newspapers or even in the court notice board inviting

the general public.

The learned subordinate judge dismissed the application

on the ground that the applicants have no locus-sandi to

file the application under clauses 13 and 14 of the scheme-

decree as they were not parties to the original suit. A

further revision before the Madras High Court was dismissed.

The High Court also came to the conclusion that the applica-

tion was not maintainable. It was also held by the High

Court that two of the four applicants who are muslims cannot

have any interest in the administration of the trust.

Against the High Court judgment the present appeal by way of

special leave has been filed.

Mr. S. Padmanabhan, learned counsel for the appellants

has vehemently argued that though the appellants were not

shown as parties in suit-title but the suit under Section 92

of Civil Procedure Code being a representative suit the

scheme-decree binds not only the parties thereto but all

those who are interested in the trust. According to him

"parties" in clause 14 of the scheme decree would include

appellants and all those who are interested in the trust. He

has relied on Raje Anandrao v. Shamrao and Others, [1961] 3

SCR 930 wherein this Court held as under:

" ..... It is true that the pujaris were not

parties to the suit under s. 92 but the deci-

sion in that suit binds the pujaris as wor-

shipers so far as the administration of the

temple is concerned, even though they were not

parties to it, for a suit under s. 92 is a

representative suit and binds not only the

parties thereto but all those who are inter-

ested in the trust."

The learned counsel further relied on Ahmed Adam Sait

and Others v. Inayathullah Mekhri and Others, [1964] 2 SCR

647 wherein this Court observed as under:

"A suit under s. 92, it is urged, is a repre-

sentative suit, and so, whether or not the

present respondents actually appeared in that

suit, they would be bound by the decree, which

had framed a scheme for the proper administra-

tion of the Trust. In support of this argu-

ment, reliance is placed on the decision of

this Court in Raja Anandrao v. Shamrao,

765

where it is observed that though the Pujaris

were not parties to the suit under s. 92, the

decision in that suit binds the pujaris as

worshipers so far as the administration of the

temple is concerned, because a suit under s.

92 is a representative suit and binds not only

the parties thereto, but all those who are

interested in the Trust ....... "

" ..... In assessing the validity of this

argument, it is necessary to consider the

basis of the decisions that a decree passed in

a suit under s. 92 binds all parties. The

basis of this view is that a suit under s. 92

is a representative suit and is brought with

the necessary sanction required by it on

behalf of all the beneficiaries interested in

the Trust. The said section authorises two or

more persons having an interest in the Trust

to file a suit for claiming one or more of the

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 7

reliefs specified in clauses (a) to (h) of

sub-section (1) after consent in writing there

prescribed has been obtained. Thus, when a

suit is brought under s. 92, it is brought by

two or more persons interested in the Trust

who have taken upon themselves the responsi-

bility of representing all the beneficiaries

of the Trust. In such a suit, though all the

beneficiaries may not be expressly impleaded,

the action is instituted on their behalf and

relief is claimed in a representative charac-

ter. This position immediately attracts the

provisions of explanation VI to s. 11 of the

Code. Explanation VI provides that where

persons litigate bona fide in respect of a

public right or of a private right claimed in

common for themselves and others, all persons

interested in such right shall, for the pur-

poses of this section, be deemed to claim

under the persons so litigating. It is clear

that s. 11 read with its explanation VI leads

to the result that a decree passed in a suit

instituted by persons to which explanation VI

applies will bar further claims by persons

interested in the same right in respect of

which the prior suit had been instituted.

Explanation VI thus illustrates one aspect of

constructive res judicata. Where a representa-

tive suit is brought under s. 92 and a decree

is passed in such a suit, law assumes that all

persons who have the same interest as the

plaintiffs in the representative suit were

represented by the said plaintiffs and, there-

fore, are constructively barred by res judica-

ta from reagitating the matters directly and

substantially in issue in the said earlier

suit.

A similar result follows if a suit is either

brought or

766

defended under 0.1., r. 8. In that case per-

sons either suing or defending an action are

doing so in a representative character, and so

the decree passed in such a suit binds all

those whose interests were represented either

by the plaintiffs or by the

defendants ....... "

The legal position which emerges is that a suit under

Section 92 of the Code is a suit of a special nature for the

protection of Public rights in the Public Trusts and chari-

ties. The suit is fundamentally on behalf of the entire body

of persons who are interested in the trust. It is for the

vindication of public rights. The beneficiaries of the

trust, which may consist of public at large, may choose two

or more persons amongst themselves for the purpose of filing

a suit under Section 92 of the Code and the suit-title in

that event would show only their names as plaintiffs. Can we

say that the persons whose names are on the suit-title are

the only parties to the suit? The answer would be in the

negative. The named plaintiffs being the representatives of

the public at large which is interested in the trust all

such interested persons would be considered in the eyes of

law to be parties to the suit. A suit under Section 92 of

the Code is thus a representative suit and as such binds

only the parties named in the suit-title but all those who

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 6 of 7

are interested in the trust. It is for that reason that

explanation VI to Section II of the Code constructively bar

by res judicata the entire body of interested persons from

reagitating the matters directly and substantially in issue

in an earlier suit under Section 92 of the Code.

Mr. G. Ramaswamy, learned counsel appearing for the

respondent trust has argued that only the two persons who

filed the original suit can be considered as "parties" in

terms of clause 14 of the scheme decree and according to him

since the appellants were not the plaintiffs they have no

locus-standi to file any application under clause 13 and 14

of the scheme-decree. According to the learned counsel

Section 92 of the Code brings out a dichotomy in the sense

that there are "parties to the suit" and "persons interested

in the trust." According to him persons interested in the

trust cannot be considered parties to the suit although the

judgment/decree in the suit in binding on them. He has also

argued that a suit under Section 92 of Civil Procedure Code

is different from a suit filed under Order 1 Rule 8 of Civil

Procedure Code. We do not agree with the learned counsel. A

suit whether under Section 92 of Civil Procedure Code or

under Order 1 Rule 8 of Civil Procedure Code is by the

representatives of large number of persons who have a common

interest. The very nature of a representative suit makes all

those who have common interest in the suit as parties. We,

767

therefore, conclude that all persons who are interested in

Venkatarayulu Naidu Charities which is admittedly a public

trust are parties to the original suit and as such can

exercise their rights under clauses 13 and 14 of scheme-

decree dated September 9, 19 10.

It is not necessary to go into the finding of the High

Court that two of the appellants being muslims can have no

interest in the trust as the other two appellants claim to

be the beneficiaries of the trust and their claim has not

been negatived. Moreover, the trust has been constituted to

perform not only charities of a religious nature but also

charities of a secular nature such as providing for drinking

water and food for the general public without reference to

caste or religion.

In view of our findings above the subordinate court and

the High Court were in error in holding that the appellants

had no locus-standi to file the application for setting

aside the order permitting the sale of the properties. We,

therefore, allow the appeal and set aside the order of the

subordinate court and that of the High Court.

The subordinate court and the High Court did not go into

the merits of the case as the appellants were non-suited on

the ground of locus-standi. We would have normally remanded

the case for decision on merits but in the facts and circum-

stances of this case we are satisfied that the value of the

property which the trust got was not the market value. Two

persons namely S.M. Mohamed Yaaseen ad S.N.M. Ubayadully

have filed affidavit offering Rs.9.00 lacs and Rs. 10.00

lacs respectively for these properties. In support of their

bona fide they have deposited 10% of the offer in this

Court. This Court in Chenchu Ram Reddy and another v. Gov-

ernment of Andhra Pradesh and Others, [1986] 3 SCC 391 has

held that the property of religious and charitable endow-

ments or institutions must be jealously protected because

large segment of the community has beneficial interest

therein. Sale by private negotiations which is not visible

to the public eye and may, even give rise to public suspi-

cion should not, therefore, be permitted unless there are

special reasons to justify the same. It has further been

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 7 of 7

held that care must be taken to fix the reserve price after

ascertaining the market value for safeguarding the interest

of the endowment.

We, therefore, set aside the orders of subordinate court

dated October 27, 1984 and January 23, 1985 permitting the

sale of the two properties and also set aside the consequent

sale in favour of the respondents. We direct that the

properties in question may be sold by

768

public auction by giving wide publicity regarding the date,

time and place of public auction. The offer of Rs. 10 lacs

made in this Court will be treated as minimum bid of the

person who has given the offer and deposited ten percent of

the amount in this Court. It will also be open to the re-

spondents/purchasers to participate in the auction and

compete with others for purchasing the properties.

The respondents--vendees from the trust shall be enti-

tled to refund of the price paid by them with 10% interest

from the date of payment of the amount till the date of

auction of the property. They will also be entitled to

compensation for any super structure put up by them in the

properties including compensation for any additions or

improvements made by them to the building and the property.

The value of such super structure and the improvements and

additions shall be ascertained by the subordinate court

through a qualified engineer and by Such other method as the

court may deem fit. The court shall fix the value and com-

pensation amount after affording opportunity to the respond-

ents and the trust to make their representation in that

respect. There shall be no order as to costs.

G.N. Appeal al-

lowed.

769