The Supreme Court ruled that a society registered under the Societies Registration Act, 1860, can be construed as a constructive trust under Section 92 CPC if it is created for public charitable purposes and its properties are held in a fiduciary capacity. This allows aggrieved parties to sue for breach of trust and seek remedies like a scheme for administration.
Facts Of The Case:
In 2005, Operation ASHA, a society registered under the Societies Registration Act, 1860, was established to provide healthcare services, particularly tuberculosis treatment, to underprivileged sections of society. A dispute arose in 2020 when its co-founder and CEO, Sandeep Ahuja (Respondent No. 3), terminated the services of another co-founder, Dr. Shelly Batra (Respondent No. 1), alleging misrepresentation and misappropriation of funds. Subsequently, Dr. Batra was also removed from her position as President and as a member of the society’s Board. Along with her mother, a current board member, Dr. Batra instituted a suit under Section 92 of the Code of Civil Procedure, 1908, before the Delhi High Court. The plaintiffs alleged gross financial impropriety, siphoning of donor funds into shell companies, and mismanagement by Mr. Ahuja and his associate. The Single Judge and a Division Bench of the High Court granted leave to file the suit, holding that the society, due to its charitable objectives and the nature of entrustment of donor funds, functioned as a constructive trust, making Section 92 CPC applicable. Operation ASHA appealed to the Supreme Court, contending that a registered society, by its very nature, cannot be considered a trust for invoking Section 92 CPC.
Procedural History:
The suit was initially instituted as CS(OS) No. 153 of 2020 before a learned Single Judge of the Delhi High Court. The plaintiffs, Dr. Shelly Batra and another, filed an application (I.A. No. 5009 of 2020) under Section 92 of the CPC seeking leave to sue. Vide order dated 03.05.2024, the Single Judge granted leave, holding all ingredients of Section 92 were satisfied. Aggrieved, the appellant society filed an appeal, FAO(OS) No. 114 of 2024, before the Division Bench of the High Court. The Division Bench dismissed the appeal and affirmed the Single Judge’s order on 21.08.2024. The appellant then approached the Supreme Court by way of a special leave petition (SLP (Civil) No. 29830 of 2024), which was converted into Civil Appeal No. 10048 of 2025 upon grant of leave.
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Court Observation:
The Supreme Court made several key observations. It held that a society registered under the Societies Registration Act, 1860, can be deemed a constructive trust for the purpose of Section 92 CPC if it is created for a public, charitable purpose and its properties, including donations, are held and managed in a fiduciary capacity for the benefit of the public. The Court emphasized that the vesting of property in the governing body under Section 5 of the Societies Registration Act does not negate the fiduciary obligations; the governing body acts as a trustee for the society’s properties. The allegations of the fiduciaries siphoning funds for personal gain, if proven, would constitute a breach of this constructive trust, making the suit for directions and a scheme of administration maintainable. The legal status is derived from the entity’s function and purpose, not merely its registration.
Final Decision & Judgement:
The Supreme Court dismissed the appeal and upheld the decisions of the Delhi High Court. It affirmed the grant of leave to institute the suit under Section 92 of the Code of Civil Procedure, 1908. The Court conclusively ruled that the appellant society, Operation ASHA, given its overarching charitable objectives and the fiduciary nature in which it holds and manages its properties and donor funds, qualifies as a constructive trust. Consequently, the allegations of breach of trust and the prayer for directions for its proper administration were deemed triable in a suit framed under the provisions of Section 92 CPC. The merits of the allegations were left to be adjudicated in the pending suit before the High Court.
Case Details:
Case Title: Operation ASHA vs. Shelly BATRA & ORS. Criminal/Civil Appeal No: Civil Appeal No. 10048 of 2025 (Arising out of S.L.P (Civil) No. 29830 of 2024) Date of Judgement:5th August 2025 Judges/Justice Name: Justice J.B. Pardiwala
Download The Judgement Here