How to Challenge an Unauthorized Sale of Trust Immovable Property

Vikrant D. Shetty

Aug 24

9 min read

Updated: Aug 26

How to Challenge an Unauthorized Sale of Trust Immovable Property

A trustee who sells trust land without the Charity Commissioner's sanction has not simply made a procedural mistake. The sale itself is void, and everyone who deals with that property afterward, including a purchaser who paid full price in good faith, can find their title unravelling years later once the defect surfaces. This article explains why prior sanction under Section 36 of the Maharashtra Public Trusts Act, 1950 (the "MPT Act") is treated so strictly, and what a trust, a beneficiary, or even an affected third party can do once an unauthorised sale comes to light.

Section 36: Why Prior Sanction Cannot Be an Afterthought

What Section 36 Actually Requires

Section 36 provides that no sale, exchange, or gift of immovable property belonging to a public trust, and no lease exceeding ten years for agricultural land or three years for non-agricultural land or a building, is valid without the previous sanction of the Charity Commissioner. The word "previous" has been read strictly by the Bombay High Court: sanction obtained after the transaction has already been completed does not cure the defect, since the statute contemplates the Commissioner's scrutiny happening before the trust's interest is given up, not after the fact.

The Rule Against After-the-Event Sanction

In Central Hindu Military Education Society v. Joint Charity Commissioner [2009 (2) BomCR 499], the Bombay High Court held that only prior sanction satisfies Section 36, and that the Charity Commissioner has no power to grant sanction retroactively to validate a sale that has already taken place. The legislature subsequently introduced a narrow exception allowing ex-post facto sanction for money borrowed from a nationalised or scheduled bank under Section 36A, but that exception is confined to borrowing, and does not extend to an outright sale, exchange, or gift of trust immovable property carried out under Section 36 without prior sanction.

What Happens When a Sale Proceeds Without Sanction

Is a Sale Without Sanction Void or Merely Voidable?

A sale of trust property carried out without the Charity Commissioner's prior sanction is void, not merely defective or open to challenge at the trust's option. This matters because a void transaction confers no title at all on the purchaser, regardless of how much was paid or how genuinely the purchaser believed the trustee had authority to sell. The purchaser's remedy, if any, generally lies against the trustee who sold without authority, not against the trust whose property was never validly transferred in the first place.

Sainath Mandir Trust v. Vijaya: Recovering Possession Years Later

Sainath Mandir Trust v. Vijaya [(2011) 1 SCC 623] illustrates how long these disputes can take to resolve and how the sanction requirement operates even outside a straightforward sale by the trust itself. The trust claimed ownership of a plot based on a gift deed from 1974, while the respondents claimed to have validly purchased the same land in 1982 from a different party. The Supreme Court held that because the trust was already in possession of the property under its 1974 gift deed, the purchasers seeking to recover that property from the trust were themselves obliged to seek the Charity Commissioner's permission under Section 51 of the then Bombay Public Trusts Act before pursuing recovery, since the trust's possession and claim over the property could not simply be displaced by a later private transaction without going through the Act's protective machinery. The judgment underscores that the Charity Commissioner's involvement in disputes touching trust property is not limited to sales by the trust itself, but extends to any proceeding that would have the effect of depriving the trust of property it holds or claims.

Scenario	Sanction Required Under	Consequence of Proceeding Without It
Trust sells, exchanges, or gifts immovable property	Section 36 (prior sanction)	Sale is void; confers no title
Trust leases property beyond the statutory period	Section 36	Lease invalid beyond the permitted term
Trust borrows money by mortgage of trust property	Section 36A	Generally requires prior sanction; narrow ex-post facto exception for bank loans
A third party seeks to recover property from a trust in possession	Section 51	Suit or recovery action barred without Commissioner's consent

How the Charity Commissioner Evaluates a Sanction Application

What Does the Charity Commissioner Look For Before Granting Sanction?

Before granting sanction under Section 36, the Charity Commissioner typically expects the trust to demonstrate that the proposed sale, exchange, or long lease genuinely serves the trust's interests, for instance because the property is no longer useful for the trust's objects, because the sale proceeds will be reinvested to better serve those objects, or because the transaction resolves a dispute or liability the trust cannot otherwise manage. A bare application that simply states an intention to sell, without explaining why the sale benefits the trust, is unlikely to be sanctioned quickly, and may be sanctioned subject to conditions such as reinvestment of the proceeds in specified instruments or property.

Valuation and Public Notice

The Commissioner's office commonly requires an independent valuation of the property before sanctioning a sale, and in many cases directs that the proposed sale be publicised, for instance by inviting competing offers, to guard against trust property being sold at an undervalue to a favoured buyer. Trustees who arrange a private sale without any real price discovery process often find their sanction application delayed or questioned on precisely this ground.

Challenging an Unauthorised Sale: The Practical Steps

Establishing That No Sanction Was Obtained

The first step in any challenge is straightforward but essential: obtaining a certified copy of the Charity Commissioner's records to confirm whether sanction was ever sought or granted for the specific transaction. Where no application for sanction appears on record at all, the challenge is considerably more straightforward than where an application was made but is disputed on its scope or conditions.

Who Can Challenge an Unauthorised Sale of Trust Property?

A challenge to an unauthorised sale can be brought by the trust itself through its properly constituted trustees, by a beneficiary or other person interested in the trust, or by the Charity Commissioner acting on his own initiative once the irregularity comes to his attention, typically through a change report or an audit that reveals the property is no longer reflected in the trust's holdings.

Recovering the Property Through a Civil Suit

Where the property has already passed into a third party's possession, recovering it generally requires a suit under Section 50 of the MPT Act, since this is exactly the kind of claim, requiring a decree to recover property belonging to a public trust, that the section is designed to address. As with any Section 50 suit, Charity Commissioner's consent under Section 51 is a mandatory precondition, and the Commissioner has to be joined as a necessary party.

The Position of an Innocent Purchaser

A purchaser who bought the property without knowing that Section 36 sanction had never been obtained is not without any remedy at all, but that remedy typically lies against the trustee who purported to sell without authority, for return of the purchase price and any consequential loss, rather than against the trust, whose title to the property generally survives an unauthorised sale intact.

Preventing Unauthorised Sales Before They Happen

Due Diligence for Anyone Buying From a Trust

Anyone purchasing immovable property from a public trust should insist on seeing the Charity Commissioner's sanction order before completing the transaction, and should independently verify with the Commissioner's office that the order is genuine and covers the specific property and transaction in question, rather than relying solely on a copy produced by the trustee.

Internal Controls Within the Trust

Trusts can reduce the risk of an unauthorised sale by requiring that any proposal to sell, exchange, mortgage, or lease trust property beyond the statutory threshold first be approved by a resolution of the full board of trustees and documented before an application for sanction is even made to the Charity Commissioner, so that no single trustee can present a completed transaction to the Commissioner's office as a fait accompli.

Frequently Asked Questions

Can the Charity Commissioner grant sanction after a sale of trust property has already been completed?

Generally no. The Bombay High Court has held that Section 36 requires previous sanction, and a sale carried out without it remains void even if the Commissioner is later approached, apart from the narrow statutory exception for certain bank borrowings under Section 36A.

Does an unauthorised sale of trust property become valid if the purchaser held it for many years without challenge?

Not automatically. Because the sale is void from the outset, mere passage of time does not by itself cure the underlying defect, although a challenger who delays unreasonably in bringing proceedings may face separate difficulties relating to limitation and delay.

What should a beneficiary do on first suspecting that trust land was sold without sanction?

Requesting the relevant sanction records from the Charity Commissioner's office is the essential first step, since establishing definitively whether sanction was sought and granted determines the entire course of any subsequent challenge.

Is sanction required for every transaction involving trust property, however small?

No. Section 36 applies specifically to sales, exchanges, gifts, and leases beyond the specified terms. Ordinary transactions of trust administration that do not involve disposing of or encumbering the trust's immovable property fall outside this requirement.

Can trustees who sold property without sanction face personal consequences beyond the sale being void?

Yes. Trustees who proceed with such a sale can face removal proceedings under Section 41D of the MPT Act and may be personally liable to restore the property or its value to the trust, quite apart from the sale itself being of no legal effect.

How does a purchaser find out whether a seller claiming to act for a trust actually has Charity Commissioner sanction?

The purchaser should request a certified copy of the sanction order directly from the seller and independently verify its authenticity and scope with the Charity Commissioner's office before completing the purchase, rather than relying on the trustee's representations alone.

Does Section 36 apply to trusts registered outside Maharashtra?

Section 36 is specific to the Maharashtra Public Trusts Act, though most Indian states have broadly comparable statutory schemes requiring similar regulatory sanction before a public trust in that state can sell or encumber its immovable property.

Can the Charity Commissioner impose conditions while granting sanction for a sale?

Yes. It is common for sanction to be granted subject to conditions, such as a minimum sale price based on an independent valuation, a requirement that proceeds be deposited in specified instruments, or that a portion of the proceeds be earmarked for a particular charitable purpose connected with the trust's objects.

What is the limitation period for challenging an unauthorised sale of trust property?

Indian law does not fix a special limitation period for challenging a sale made in breach of Section 36; the general provisions of the Limitation Act, 1963 apply to a suit for recovery of trust property under Section 50 of the Maharashtra Public Trusts Act, 1950. Because delay can complicate proof and invite objections even though the underlying sale remains legally void, a beneficiary or trust that discovers an unauthorised sale should apply for Charity Commissioner consent and begin recovery proceedings without unnecessary delay.

Does a beneficiary need the Charity Commissioner's consent before filing a suit to recover an unauthorised sale?

Yes. Section 51 of the Maharashtra Public Trusts Act, 1950 requires a person interested in the trust to obtain the Charity Commissioner's written consent before filing a civil suit to recover trust property from an unauthorised purchaser, and the Commissioner must also be joined as a necessary party to that suit. A suit filed without this consent is liable to be rejected at the threshold as barred by the statute, regardless of how strong the underlying claim is.

What happens to a mortgage created on trust property without sanction under the MPT Act?

A mortgage of trust immovable property, like a sale, exchange or gift, generally requires the Charity Commissioner's prior sanction under Section 36 of the Maharashtra Public Trusts Act, 1950. Section 36A carves out a narrow exception permitting ex-post facto sanction where the mortgage secures money borrowed from a nationalised or scheduled bank; outside that situation, a mortgage created without prior sanction is void on the same footing as an unauthorised sale, and the mortgagee acquires no enforceable security interest over the trust's property.

Can a trustee who sold property without sanction face criminal prosecution, not just removal?

Yes. In addition to removal proceedings under Section 41D of the Maharashtra Public Trusts Act, 1950 and civil liability to restore the property or its value, a trustee who deals with trust property dishonestly can face a criminal complaint for offences such as criminal breach of trust, since the MPT Act's civil remedies do not preclude a parallel criminal proceeding arising from the same conduct.

Does an unauthorised sale become valid once the property is later sold again to a second, good-faith purchaser?

No. Because the original sale is void, not voidable, the seller never acquired good title to pass on, and this defect does not disappear merely because the property later changes hands to a further good-faith buyer. Each subsequent purchaser's title remains vulnerable to a challenge grounded in the trust's original, unimpaired ownership, until the sale is properly regularised or the trust's claim becomes barred by limitation.