Nation Current Affairs 17 Apr 2019 Investment not diver ...

Investment not diversion of funds: Pachaiyappa’s Trust

Published Apr 17, 2019, 6:04 am IST
Updated Apr 17, 2019, 6:04 am IST
No materials have been produced before the court to substantiate the allegations of misfeasance and malfeasance.
Madras high court
 Madras high court

Chennai: Former chairman of the Pachaiyappas Trust has informed the Madras HC that investment made by the trust on the construction of the two multi-purpose halls for the purpose of earning money would not amount to diversion of funds.

Senior counsel Sankaranarayanan, appearing for a former chairman of the Pachaiyappas trust made the submission on Tuesday during the hearing of a batch of applications before Justice R.Suresh Kumar.


When the batch of applications filed by various persons for and against the Pachaiyappas trust came up for hearing, advocate K.V. Sundararajan, appearing for the interim administrator submitted that there is no special Act which prohibits filing of these applications. The scheme court sitting on the original side can entertain these applications. Interim Administrator has also filed an application for enhancement of rent for the two multi purpose halls. The halls cannot be used for commercial purposes.

If it was used for commercial purpose, the Income Tax exemption will go. However, demolition of the building was not advisable in the interest of the trust. It can be used as auditorium, he added.


Senior counsel Sankaranarayanan, appearing for  a former chairman of the trust submitted that earning money by investing the trust funds to achieve the object of the trust was not a sin. There was no diversion of funds as alleged by the applicants.

No materials have been produced before the court to substantiate the allegations of misfeasance and malfeasance. There was no empirical data to substantiate the allegation of low income, he added.

Advocate P.V.S. Giridhar appearing for one of the former trustee submitted that all the applications were not maintainable.


If there was allegation of mismanagement, the advocate general or two or three persons interested can move the court and for that purpose they have to obtain leave from the court.

In this case, the applicants have not obtained leave from the court to file these applications. Moreover, they have to produce evidences to prove the allegations. Other than the interim administrator none of the applicants have direct knowledge of the subject matter and therefore, all the applications have to be eschewed.

None of the averments made in the affidavit were based on direct knowledge. The entire proceeding has to be dismissed on the ground that there was no evidence. In this case, before preparing the reports, the interim administrator did not consult the trustees.


The evidential value of the reports was nil in this case. The court can modify the scheme without disturbing the basic structure of the scheme. When the 9 member trust was created, if the court substitute some one or replace a member, it amounts to interfering with the basic structure of the scheme, Giridhar added.

  The judge posted to April 22, further hearing of the case, to enable the counsel for the remaining applicants to make their submissions.