Rajasthan High Court: Fraud on Trust Property Can Be Challenged Without Section 92 CPC Leave

Court says bar under Section 92 applies to trust administration suits, not to allegations of illegal alienation of property — In a significant ruling that could reshape how disputes over public trust properties are litigated, the Rajasthan High Court has held that a civil suit challenging the fraudulent sale of trust property is maintainable without prior leave under Section 92 of the Code of Civil Procedure, 1908 (CPC). Justice Arun Monga, sitting at the Jodhpur Bench, set aside orders of the trial and appellate courts that had returned the plaint on the ground that the plaintiffs had failed to seek Section 92 permission.

The case involved allegations that trustees of a registered public trust had colluded with outsiders to sell prime immovable property of the trust without any legal necessity or statutory sanction. The plaintiffs sought cancellation of the sale deed and an injunction to prevent further alienation.

“This is not a suit for administration or settlement of the trust; it is a suit for protection against fraudulent alienation,” the Court observed, rejecting the lower courts’ view that all trust-related disputes require Section 92 leave.

According to the plaintiffs, the managing trustee, acting in concert with private parties, executed the sale deed in clear violation of the trust’s objects and without obtaining sanction from the Charity Commissioner as mandated under the relevant law. They argued that the alienation was void ab initio, being the product of fraud, and that the jurisdiction of the civil court could not be ousted merely by invoking Section 92 CPC.

The trial court, however, returned the plaint, holding that since the dispute involved trust property, it fell squarely within Section 92, which requires prior leave of the court. The first appellate court endorsed this view, leaving the plaintiffs without a hearing on the merits.

“Section 92 is intended to govern suits for the administration of public charitable and religious trusts, not every dispute in which trust property is mentioned,” Justice Monga explained. He referred to settled precedent holding that where relief is directed solely at recovering or protecting trust property from illegal sale, such a suit is outside the bar of Section 92.

The Court drew a sharp distinction between cases that require reorganisation of a trust’s management and those that merely challenge a transaction tainted by fraud. “When the gravamen of the complaint is fraud and misappropriation, the court’s role is not to frame a scheme or supervise administration, but to undo an illegal act,” the judgment noted.

Placing reliance on past rulings of the Supreme Court and various High Courts, Justice Monga underscored that the substance of the relief, not the mere presence of trust property, determines whether Section 92 applies. “The cloak of Section 92 cannot be used to shield fraudulent transactions from judicial scrutiny,” the Court remarked.

In conclusion, the High Court allowed the writ petition, quashed the orders of the subordinate courts, and directed the trial court to restore the plaint to its original number and proceed to trial on merits. The ruling clears the way for the plaintiffs to press their claim that the impugned sale deed is null and void.

With this decision, the Rajasthan High Court has reaffirmed that statutory safeguards for public trusts cannot be misread as procedural barriers preventing scrutiny of fraudulent alienations. “Fraud vitiates every solemn act,” the Court reminded, “and the law will not permit it to hide behind procedural technicalities.”

Date of Decision: 29 July 2025