HC strikes down trust’s land sale citing flawed valuation

The Bombay high court annulled the sale of Ratanshi Premji Charitable Trust land, citing flawed valuation and lack of transparency, directing a fresh inquiry.

MUMBAI: The Bombay high court on Friday set aside an order issued by the joint charity commissioner allowing the sale of land belonging to the Ratanshi Premji Charitable Trust, citing flawed valuation process, non-transparency, and non-assessment of the market value.

Mumbai, India - Aug. 28, 2015 : Bombay High Court : ( Photo by Bhushan Koyande )

On July 8, 2024, the managing directors and the office bearers of the trust addressed a letter to the joint charity commissioner, seeking the sanction of the sale of a property. The commissioner permitted the sale for a total consideration of ₹75.05 crore to M/s. Fenkin Infotech LLP. However, while granting the permission, he imposed certain conditions, mandating the proceeds of the sale to be kept in fixed deposits and categorically restrained its utilisation without his prior approval.

Aniruddh Nikhil Makhecha, a former trustee, challenged the order in the high court, contending it to be in derogation to the principles governing the administration of charitable trusts.

Senior advocate Veerendra Tulzapurkar, representing Makhecha, submitted that the valuation wrongly reduced the market price by 80%. He further highlighted that M/s. Fenkin Infotech LLP did not meet the eligibility criteria, highlighting that its bank guarantees, issued by a non-banking financial company, did not satisfy the net-worth requirement.

“No due regard was given to the entitlement of an owner whose plot is affected by reservation and is eligible for development under the Pradhan Mantri Awas Yojana,” he concluded.

Senior advocate Atul Damle, representing M/s. Fenkin Infotech LLP, asserted that the valuation was fair and reasonable, as it was based on the assessment of a duly qualified expert.

After examining the matter, a single-judge bench of justice Amit Borkar quashed the sale of the land, ruling that the scrutiny of the valuation report issued by the commissioner on May 22, 2024, revealed multiple infirmities. “The charity commissioner has neither explained nor adequately examined the basis for the drastic reduction in the valuation and there is no detailed discussion as to how these negative weightages align with the property’s actual ground realities,” the bench said, adding that it is impermissible for trustees to alienate immovable property purely to enhance profitability or to speculate in the real estate market.

Saying this, the bench struck down the order and the registration of the conveyance deed, and transferred the ownership of the property back to the trust.

It also directed the joint charity commissioner to hold a fresh inquiry and issue a reasonable order within six months.