In a significant ruling, the Allahabad High Court has held that disputes concerning public charitable trusts are not arbitrable and must be adjudicated under Section 92 of the Code of Civil Procedure (CPC). The court dismissed an appeal challenging the Commercial Court’s order, which had rejected an application for interim relief under Section 9 of the Arbitration and Conciliation Act, 1996, in the case of a public charitable trust dispute. The ruling reinforces the principle that matters related to the administration and management of public charitable trusts fall within the exclusive domain of civil courts.
Case Background
The case, titled “Appeal Under Section 37 of Arbitration and Conciliation Act, 1996 No. – 356 of 2024,” involved a dispute between members of the Guru Tegh Bahadur Charitable Trust based in Meerut. The appellants, Sanjit Singh Salwan and four others, had challenged an order dated May 24, 2024, of the Commercial Court, Meerut, which had rejected their application for interim relief under Section 9 of the Arbitration and Conciliation Act, 1996. The respondents were Sardar Inderjit Singh Salwan and two others.
The trust, which has been engaged in charitable activities since 1970, also manages the Guru Tegh Bahadur Public School in Meerut. Disputes arose regarding the membership and administration of the trust and the school, leading to various legal proceedings, including arbitration.
Legal Issues Involved
The key legal issue in the case was whether the disputes concerning the administration and management of a public charitable trust could be referred to arbitration or if they were non-arbitrable under the law. The appellants argued that the dispute, which had already been referred to an arbitrator by mutual consent, could be settled through arbitration. In contrast, the respondents contended that such disputes fall exclusively within the purview of Section 92 of the CPC and, therefore, are not arbitrable.
The court observed:
“Plainly and simply, the disputes, which were adjudicated and which became the part and the parcel of the award, fall within the purview and the rigours of Section 92 of the CPC, as it is beyond shadow of doubt that the award touches the issue of removal and induction of members of the Trust and also directions for management of the Trust.”
The court also referred to several precedents, including Vidya Drolia v. Durga Trading Corporation (2021) and Vimal Kishore Shah v. Jayesh Dinesh Shah (2016), to underscore that the disputes regarding public charitable trusts cannot be resolved through arbitration since they involve issues in rem rather than in personam.
Decision of the Court
The Division Bench comprising Chief Justice Arun Bhansali and Justice Vikas Budhwar upheld the decision of the Commercial Court, reiterating that the disputes relating to public charitable trusts are not arbitrable and must be adjudicated under Section 92 of the CPC. The court emphasized that the provisions of Section 92 CPC are mandatory and exclusive concerning disputes of public charitable trusts.
Notable Observations by the Court
The court made several critical observations while delivering the judgment:
– The court reiterated the principle that disputes involving public charitable trusts created for public purposes of a charitable or religious nature require judicial intervention as per the procedure laid down under Section 92 of the CPC.
– The court held that “Section 92 of CPC deals with the disputes of public charities/trusts created for public purposes or charitable or religious nature, wherein a complete procedure has been laid down for taking legal action.”
– The judgment emphasized that parties cannot confer jurisdiction to an arbitrator by consent when the law expressly bars arbitration for specific disputes.
Counsel Representation
The appellants were represented by Mr. Manish Goyal, Senior Advocate, along with Utkarsh Birla and Aarushi Birla. The respondents were represented by Mr. Navin Sinha, Senior Advocate, along with Naman Agarwal, Nipun Singh, and Vinayak Mithal.
