Maharashtra Public Trusts Act, 1950 as amended by Maharashtra Public Trusts (Second Amendment) Act, 2017

Charity Commissioner (C.C.)

The online filing of Charitable Trusts forms including filing of Annual Accounts is to be done on the Portal www.charity.maharashtra.gov.in

Investments (Section 35)

Public trust can invest its funds in any of the following modes :

1. Scheduled Bank as defined in Reserve Bank of India Act, 1934.
2. Postal Savings Bank.
3. Co-operative bank approved by the State Government.
4. Public Securities (Sec. 2(12)) (Units issued by the Unit Trust of India are declared as Public Securities).
5. First mortgage of immovable property situated in India provided the property is not leased for a term of years that is lease for 50 or 99 or 999, it must be in perpetuity and for an indefinite period.
6. Any other investments permitted by CC by a special or general order. CC is bound to decide on the application within 3 months from date of receipt of such application or record reasons for not doing so. CC circular provides that investment made pursuant to such order should not exceed 50% of total investments.
7. Any public trust has made the application to the Charity Commissioner for seeking the order granting the permission for investing the money in any other manner under the second proviso, the Charity Commissioner shall decide such application within three months from the date of receipt of such application and where it is not practicable so to do, the Charity Commissioner shall record the reasons for the same.

Immovable Property (Section 36)

Investment in immovable property requires CC’s permission. No permission is necessary for development of immovable property to fulfil objects of the trust; e.g., construction of school building, library, etc. However, the trustee needs to file change report for addition of building u/s. 22 of the Maharashtra Public Trusts Act, 1950.

Sale, exchange, lease or gift of any immovable property of a public trust is invalid unless previously approved by the CC. Lease exceeding a period of 3 years requires prior permission of the Charity Commissioner. CC shall not sanction any lease for a period of more than 30 years. Memorandum of Understanding/Sale Deed in case of sale and Lease Deed in case of lease has to be enclosed, as the case may be. No sanction shall be revoked after conveyance, unless the same was obtained after fraud.

CC may grant a post facto sanction in respect of property in extra ordinary situations where a prior sanction results in hardship to the trust, a large body of persons or a bona fide purchaser for value, provided he is satisfied that:

1. there was an emergent situation which warranted such transfer,
2. there was compelling necessity for the said transfer,
3. the transfer was necessary in the interest of trust,
4. the property was transferred for consideration which was not less than prevalent market value of the property so transferred, to be certified by the expert,
5. there was reasonable effort on the part of trustees to secure the best price,
6. the trustees actions, during the course of the entire transaction, were bona fide and they have not derived any benefit, either pecuniary or otherwise, out of the said transaction, and
7. the transfer was effected by executing a registered instrument, if a document is required to be registered under the law for the time being force
8. the transfer was effected by executing a registered instrument, if a document is required to be registered under the law for the time being force

Contribution (Section 58, Rules 32 & 33)

Every public trust not exempt having gross annual income exceeding ₹ 25,000/- has to pay contribution to Public Trust Administration Fund at rates notified by State Government from time-to-time. For last 21 years, the rate notified has been 2%. Stay has been granted by Hon’ble Bombay High Court in CA No. 1 of 2009 and PIL Nos. 40, 1780 and 1864 of 2007, order dtd. 25-9-2009.

Gross annual income means gross income from all sources including donations and offerings, but excluding corpus donations. Contribution is payable at the prescribed rate on the gross annual income after making deductions prescribed in Rule 32.

The following trusts are exempt from payment of contribution.

1. Small trusts having annual income of ₹25,000/- or less.
2. Public trusts exclusively for advancement/propagation of *education/medical relief/veterinary treatment.

   *(till 5th August, 1997 the law provided deduction for secular education.)

3. Recognised Public Libraries and Reading Rooms.
4. Public Trusts exclusively for the purpose of relief of distress caused by scarcity, drought, flood, fire, or other natural calamity.

Recently Bombay High Court has by an interim order stayed the payment of contribution in response to a PIL. The office of the Charity Commissioner is accepting the accounts from the year 2009 without payment of contribution subject to the final order.

Borrowing Powers of Trustees (Section 36A)

No trustee shall borrow moneys (whether by way of mortgage or otherwise), even from banks, for purpose of or on behalf of the trust except with the previous sanction of the Charity Commissioner and subject to such conditions and limitations as may be imposed by him in the interest or protection of the trust. The trust has to give the names of the prospective lenders and their consent letter along with the application.

CC may grant an ex post facto sanction to borrow money from a nationalized bank or Scheduled bank by the trustee under exceptional and extraordinary situations where obtaining the previous sanction results in hardship to the trust, beneficiary or bona fide third party.

CYPRESS (as amended on 1-9-2017) (Section 55)

Assistant or Deputy Charity Commissioner suo motu or upon an application made to them shall pass appropriate orders and make a report to CC (who may direct that the property or income of the public trust or any portion thereof to be applied cypress to any other charitable or religious objects) if they are of the opinion that:

1. the original object for which the public trust was created has failed;
2. the income or any surplus balance of any public trust has not been utilized or is not likely to be utilized;
3. in the case of a public trust other than a trust for a religious purpose, it is not in public interest expedient, practicable, desirable, necessary or proper to carry out wholly or partially the original intention of the author of the public trust or the object for which the public trust was created and that the property or the income of the public trust or any portion thereof should be applied to any other charitable or religious object; or
4. in any of the cases mentioned in sections 10 to 13 or in regard
5. to the appropriation of the dharmada sums held in trust under section 54, the directions of the Charity Commissioner are necessary

CC may give directions and in giving such directions, he shall give effect to original intention of the author of the public trust or purpose or object for which such trust was created. In doing so, it shall be lawful for the CC to alter any scheme already settled or to vary the terms of any decree or order already passed in respect of the public trust or the conditions contained in the instrument of the public trust.

An appeal against such an order may be made within 60 days from date of receipt of the order.

It is pertinent to note that there is no provision to afford an opportunity of being heard to the trust or the trustee before passing such an order. However, section 69(n) provides power to CC to give a notice to the trustees for cypres application of trust money.

Penalties (as amended on 18-5-2009) (Section 66)

Section 66A: Whoever alienates or attempts to alienate immovable property in contravention of Section 36 shall be punishable with imprisonment up to 6 months or with fine of ₹ 25,000/- or with both.

Section 66B: Whoever fails to comply with direction u/s. 41AA as regards medical centres shall be punishable with imprisonment up to 
3 months or with fine up to ₹ 20,000 or with both.