H. H. Sudhundra Thirtha Swamiar vs Commissioner for Hindu Religious and Charitable Endowments, Mysore

Rewritten Version Notice: This is a rewritten version of the original judgment.

Court: Supreme Court of India

Case Number: Not extracted

Decision Date: 20 November, 1962

Coram: J.C. Shah, Bhuvneshwar P. Sinha, P.B. Gajendragadkar, K.N. Wanchoo, K.C. Das Gupta

In this matter the petitioner identified as H. H. Sudhundra Thirtha Swamiar brought an action against the respondent, the Commissioner for Hindu Religious and Charitable Endowments of Mysore. The judgment was delivered on 20 November 1962 by the Supreme Court of India. The opinion was authored by Justice J. C. Shah and the bench was composed of Justice J. C. Shah, Justice Bhuvneshwar P. Sinha, Justice P. B. Gajendragadkar, Justice K. N. Wanchoo and Justice K. C. Das Gupta. The case is reported in the 1963 volume of the All India Reporter at page 966 and also appears in the 1963 Supplement to the Supreme Court Reports at page 302. Subsequent citations of the decision include references in the Supreme Court reports of 1965 (SC 1107), 1966 (SC 416), 1970 (SC 181 and SC 1114), 1971 (SC 344 and SC 1182), 1975 (SC 846), 1976 (SC 1207), 1980 (SC 1, SC 1008 and SC 1124), 1983 (SC 617 and SC 1246), 1985 (SC 218), 1989 (SC 100 and SC 317), and 1992 (SC 1383). The judgment concerns the Hindu Religious Endowments‑Maths Act, specifically the power of the Commissioner to institute suits for the removal of trustees and whether that authority infringes the fundamental rights guaranteed by the Constitution. Issues raised also involved the nature of the Pathakanika given to the Mahant as head of a Math, the personal ownership of the Math by the Mahant, the requirement that only the former be used for Math purposes, the levy of an annual contribution and whether such levy constituted a tax or a fee, the effect of retrospective legislation, and the legislative competence of the State Legislature under Article 19( f ) of the Constitution, Articles 25, 26 and 27, and the Seventh Schedule, List II, items 28 and 47. The statutory framework under discussion included the Madras Religious Endowments Act of 1951, as amended by Act XXVII of 1953, particularly sections 52(1)(f), 55, 76(1) and (2), 80, 81 and 82.

The headnote of the decision sets out the factual backdrop. In the town of Udipi in the South Kanara District there existed eight religious institutions, each called a Math, and each Math was administered by a Mathadhepathi or Swami. Historically, a ninth Math existed whose administration was rotated among the Swamis of the eight Maths in turn, and a tenth Math was headed by Shri Shankaracharya Swamigal. The Swami of Shirur Math, one of the eight traditional Maths, challenged the constitutionality of the Hindu Religious Endowments Act 1951 (Act XIX) before the Madras High Court. Upon appeal, this Court previously held that certain provisions of that Act were ultra vires because they infringed Article 19(1)(f), Articles 25, 26 and 27 of the Constitution. In response, the Madras Legislature enacted Act XXVII of 1954, amending or omitting the sections that had been struck down. Further petitions were filed in the High Court contesting various provisions of the amended Act. The High Court declared sections 21, 30(2), 31 and 76(5) and Rule 10 framed under section 100(2) to be unconstitutional, while it upheld the validity of sections 51(1)(f), 55, 76(1) and (2), 80, 81 and 82. The Mahant appealed this decision to the Supreme Court, obtaining a certificate of appeal from the High Court. The Supreme Court held that a Mahant does not constitute a mere manager or custodian. Although the Mahant is not a trustee in the strict legal sense, the Court observed that, by virtue of the office, he is bound by the duties of a trustee and is answerable for the management of the Math's property, a conclusion further elaborated in the subsequent portion of the judgment.

The Court observed that the Mahant holds his office with a duty to perform the functions of a trustee, and therefore he is accountable for the management of the Math’s property. The property is inseparably linked to the Mahant’s office, and the Mahant is prohibited from spending the property on personal luxuries or on items that are inconsistent with his position as Mahant. The Court further held that the Mahant’s right over the Math’s property is undeniably a property right; consequently, any unreasonable restriction on that right that does not serve the public interest would be void under Article 19(1)(f) read with clause (5). The Court cited the earlier decisions in Arunachallam Chetti v. Venkata Chalapathi Guruswamigal (1919) L.R. 46 I.A. 204, Vidyavaruthi Thirtha v. Baluswami Ayyar (1921) L.R. 48 I.A. 302, and Commissioner Hindu Religious Endowments, Madras v. Lakshmi Tirtha Swamiar of Sirur Math, [1954] S.C.R. 1005. The Court then explained that Section 52(1)(f) does not seek to diminish the traditionally recognised authority of the Mahant. Rather, it merely affirms that, by virtue of his position and the limited scope of his powers, the Mahant must not squander the Math’s property, nor use it for his personal enjoyment, for luxuries, for objects alien to his office, or for purposes wholly unrelated to the Math. Such a limitation, the Court said, serves the general public and cannot be characterised as unreasonable. Regarding Section 55 as amended, the Court clarified that it does not apply to Pathakanikas proven to be personal gifts to the Mahant; it applies only to Pathakanikas bestowed upon him as head of the Math. The Court noted that the annual contributions imposed under the amended Section 16(1) are placed in a separate fund, not in the state’s consolidated fund, and are earmarked exclusively for defraying service expenses. These contributions are payable to the Commissioner, not to the Government, and are levied as a fee rather than as a tax. The Court explained that a fee retains its character even if compulsion is involved, and that a fee need not have a direct link to the specific service rendered. Lack of uniformity alone does not convert a levy into a tax. The Legislature, the Court said, possesses the authority to enact retrospective legislation that characterises such levies as fees, stripping them of tax attributes, following the decision in M/s. J. K. Jute Mills Co. Ltd. v. State of Uttar Pradesh, [1962] 2 S.G.R. 1. Finally, the Court affirmed that the State Legislature may levy a fee under the Seventh Schedule, List II, Item 28 read with Item 47. The judgment then proceeded to list the civil appellate jurisdiction, the relevant appeal numbers, the originating High Court order dated 9 December 1955, and the counsel appearing for the parties.

Sastri appeared for the appellant in Civil Appeal No. 560 of 1961. G. S. Pathak, B. R. L. Iyengar and P. D. Menon represented respondent No. 1 in Civil Appeal No. 551 of 1961 and also represented the respondents in Civil Appeals Nos. 552 to 559 of 1961. A. Ranganadham Chetty and A. V. Rangam acted for the respondents in Civil Appeal No. 560 of 1961. The judgment was delivered on 20 November 1962 by Justice Shah. The Court noted that the group of ten appeals, which had been certified by the High Court of Madras under Article 132(1) of the Constitution, principally challenged the constitutional validity of sections 52(1)(f), 55, 76(1) and (2), 80, 81 and 82 of the Madras Hindu Religious Endowments Act XIX of 1951, as amended by Act XXVII of 1954.

The Court then described the factual setting. In the South Kanara District at Udupi, there are eight traditional monastic institutions, called Maths, that are said to have been founded by the philosopher‑theologian Shree Madhvacharya, who propagated a dualistic school of thought. Each of these eight Maths is headed by a Mathadhipati or Swami, who is invariably a Brahmin Sanyasin. In addition, a ninth institution known as Shri Krishna Devaru Math is administered, according to long‑standing custom, by the Swamis of the eight Maths in rotation, with each Swami serving for a period of two years. A tenth institution, the Sri Kanchi Kamakoti Peetam Math, is led by Shree Sank‑aracharya Swamigal. The ten appeals were directed against orders of the Madras High Court that refused to declare the aforementioned provisions of the Act ultra vires the legislative competence of the State Legislature. The Court explained that, to secure proper management of Hindu religious endowments, the Provincial Legislature of Madras had enacted the Hindu Religious Endowments Act II of 1927. That Act introduced several provisions for supervising the management of Hindu endowments and created a Board to carry out that supervision. Acting under the authority of the Act, the Board imposed a number of restrictions on the powers of trustees of religious endowments, formulated administrative schemes for such endowments, and appointed executive officers to administer the Maths and other religious properties. An enquiry was subsequently launched before the Hindu Religious Endowments Board to determine whether, in the interests of the Shirur Math—one of the eight Udupi Maths—a scheme for its administration should be framed, on the allegation that the Swami of that Math had mismanaged its affairs. Satisfied that there were sufficient grounds to devise a scheme, the Board served a draft scheme on the Swami and invited him to lodge any objections. The Swami responded by filing a petition before the Madras High Court challenging the constitutional validity of Act II of 1927, particularly the provisions that authorized the framing of the scheme. While this petition was pending, the Madras Legislature repealed Act II of 1927 and substituted it with Act XIX of 1951, which contained a wide range of provisions concerning the governance, management and administration of Hindu religious endowments. The Swami of Shirur Math subsequently obtained leave to amend his petition and proceeded to contest the validity of the new Act.

In this case the Swami of the Shirur Math challenged the constitutionality of Act XIX of 1951 on two grounds. First, he asserted that certain provisions of the Act violated his fundamental rights guaranteed by the Constitution. Second, he argued that some provisions exceeded the legislative competence of the State Legislature. The High Court of Madras examined the petition and declared several sections of the Act to be beyond the power of the State, finding that they infringed Articles 19(1)(f), 25, 26 and 27 of the Constitution. The Court also held that section 76(1) was ultra‑vires because it attempted to confer upon the State the authority to levy a tax on the income of religious endowments, a power which the State Legislature did not possess. The State of Madras appealed the High Court’s order. The Supreme Court, on review, pronounced sections 21, 30(2), 31, 55 (concerning the Mahant’s powers over personal gifts), 55 (relating to the Commissioner’s power to require trustees to appoint a Manager), and sections 63 through 69 (dealing with the notification of religious institutions and the imposition of penal consequences) to be invalid. The Court further ruled that section 76(1), which authorised the collection of contributions not exceeding five per cent of the income of the endowments, was beyond the legislative competence of the State. The judgment of this Court in the matter is reported as Commissioner, Hindu Religious Endowments, Madras v. Sri Lakshmindra Thirtha Swamiar of Sri Shirur Mutt (1) [1954] S.C.R. 1005. Following the Supreme Court’s decision, the Madras Legislature amended Act XXVII of 1954, obtaining the President’s assent on 22 September 1954, and altered or omitted the provisions that had been declared ultra‑vires while inserting new provisions intended to bring the enactment into conformity with the law as announced by this Court. Subsequently, the heads of ten maths filed petitions challenging the validity of various provisions of the amended Act. By an order dated 25 April 1955, the High Court declared sections 21, 30(2), 31 and 76(5), together with Rule 10 framed under section 100(2), to be invalid. However, the High Court upheld the validity of sections 52(1)(f), 55, 76(1) and (2), 80, 81 and 82. In the appeals that arose from these determinations, the Swamis of the maths contended that the provisions which the High Court had sustained infringed their fundamental rights or exceeded the authority of the State Legislature. It is observed at the outset that the present deliberations concern the validity of the impugned provisions as they apply to maths, and not to other religious institutions such as temples or alternative endowments. It is also noted that Act XIX of 1951 has been …

The earlier statute was repealed by the Madras State Legislature and replaced by Act Twenty‑Two of 1959, but the Court was not required to decide on the validity of the new Act’s provisions. This is because the lands on which the maths are located were, under the States Reorganisation Act of 1956, merged into the State of Mysore effective 1 November 1956. Consequently, by virtue of section 119 of that Reorganisation Act, those maths remained subject to Act Nineteen of 1951 until such time as the Mysore State Legislature amends or repeals that earlier Act.

Section 52(1) of the amended 1951 Act states that the Commissioner, or any two or more persons who have an interest in the endowment and who have obtained the Commissioner’s written consent, may file a suit in the Court seeking a decree for the removal of the trustee of a Math or of a particular endowment attached to a Math. The suit may be based on any one or more of the following grounds: (a) the trustee is of unsound mind; (b) the trustee suffers from any physical or mental defect or infirmity that makes him unfit to act as a trustee; (c) the trustee has ceased to profess the Hindu religion or the tenets of the Math; (d) the trustee has been convicted of an offence involving moral turpitude; (e) the trustee has breached any trust created with respect to the property of the religious institution; (f) there has been waste of the institution’s funds or property or their application to purposes unrelated to the institution; (g) the trustee has adopted devices to convert the institution’s income or property into “pathakanikas”; (h) the trustee leads an immoral life or otherwise conducts himself in a manner likely to bring contempt on the office of the head of the Math; and (i) the trustee has shown persistent and wilful default in performing his duties or functions under this Act or any other law.

This provision empowers the Commissioner, or two or more interested parties with the Commissioner’s consent, to commence such a suit for a decree removing the trustee of a Math or a specific endowment on any of the grounds enumerated above. The section is analogous to section 92 of the Code of Civil Procedure, although it is more limited in the types of relief that may be claimed. It merely lists the circumstances under which the Court, upon being satisfied that the stated grounds exist and that removal serves the institution’s interests, may order the removal of the trustee. Grounds (a), (b), (c), (d) and (h) relate to personal infirmity of the trustee, while grounds (e), (f), (i) and (i) pertain to conduct inconsistent with the duties of a trustee. Clauses (f), (g) and (h) were inserted by the Legislature to address improper use of the Math’s property.

Madras Act XXVII of 1954 contains several clauses that deal with the removal of a trustee of a math. Clause (c) provides that a breach of trust is a ground for removal. In addition, the Legislature enacted clauses (f), (g) and (i) with the purpose of imposing liability for removal when a trustee engages in improper conduct with respect to the property of the math, even though the trustee may possess special rights in that property. Counsel for the appellants argued that section 52(1)(f) of the Act, which permits a suit to be instituted on the basis that funds or property of the institution have been wasted or have been applied to purposes unrelated to the institution, infringes the fundamental right of the Mathadhipati guaranteed by article 19(1)(f) of the Constitution. To determine the true reach of section 52(1)(f), the Court considered it necessary to define the legal position of a Mathadhipati in relation to the property of the math. The Court therefore examined the authority of the Mahant or spiritual head over the math’s assets as articulated in earlier judicial decisions.

The Court referred to Arunachallam Chetty v. Venkatachalapathi Guruswamigal (1), a case that examined the title held by a Mahant in the property of a math. The Judicial Committee of the Privy Council observed that “two propositions may be cited as now expressing the general state of the law with regard to (1) (1919) L. R. 46 I. A. 204, 224, these institutions. In the first place, the nature of the ownership is an ownership in trust for the institution itself. Secondly, while it may no doubt be true that the ownership in the general case is with the spiritual head of the ‘institution, still to use the language of Sir Charles Turnver in Sammanatha Pandara v. Sellapa Chetti (I.L.R. 2 Madras 179) ‘We do not, of course, mean to lay it down that............ the property may not in some cases be held on different conditions and subject’ to different incidents.” The Court also noted the observation in Ram Parkaah Das v. Anand Das that there are many varieties of circumstances and tenures, and that the usage and custom of a particular math determine how the property is held. Once the usage and custom are established, they become the law of that math. Further, the Court cited Vidya Varuthi Thirtha v. Balusami Ayyangar (1), in which the Judicial Committee, while considering the application of articles 134 and 144 to suits for recovery of property alienated by a former Mathadhipati, stated: “It is also to be remembered that a ‘trust’ in the sense in which the expression is used in English law, is unknown in the Hindu System, pure and simple. Hindu piety found expression in gifts to idols and images consecrated and installed in temples, to religious institutions of every kind, and for all purposes considered meritorious in the Hindu social and religious system; to brahmans, goswamis, sanyasis, etc. When the gift was to a holy person, it carried with it in terms or by usage and custom certain obligations.” These authorities together help delineate the legal character of a Mathadhipati’s interest in the math’s property and the extent to which statutory provisions like section 52(1)(f) may be applied.

The courts noted that the Math institutions, as reported in the 1921 case cited as L R 48 I.A. 302, were established under spiritual teachers who were recognized for their sanctity. Those teachers possessed considerable discretion in how the funds of the Math were applied, yet that discretion was always limited by certain obligations and duties that were governed by established custom and usage. In the earlier decision of The Commissioner, Hindu Religious Endowments, Madras v. Sri Lakshmindra Thirtha Swamiar of Sri Shirur Mutt (1), which had already been referenced while describing the historical background of the present case, Justice Mukherjea, speaking for the Court, observed that the head of a Math, commonly called a Mahant, could not be described as a trustee in the strict legal sense. He explained that, according to the Privy Council, the Mahant may be regarded as a manager or custodian of the institution who must perform duties akin to those of a trustee and is answerable in that capacity; however, the Mahant is not merely a manager, and it would be inaccurate to characterize Mahantship as a mere office.

Justice Mukherjea further explained that the superior of a Math has responsibilities related to the endowment and also enjoys a personal beneficial interest that is sanctioned by custom and is considerably larger than the interest held by a Shebait in a de‑benture property. He clarified that, in the concept of Mahantship as well as Shebaitship, the elements of office and property, that is, duties and personal interest, are intertwined and cannot be separated. The personal or beneficial interest of the Mahant in the endowments attached to the institution is demonstrated by his extensive powers of disposal and administration, his authority to create derivative tenures over endowed properties, and other rights of a similar proprietary character. Although these rights may appear anomalous, the Court held that they constitute genuine legal rights.

The judgment reiterated that a Mahant is neither a mere manager nor a custodian, nor does he fit the strict definition of a trustee. By virtue of his office, a Mahant, as described in the 1954 report S.C.R. 1005, enjoys large powers of management and disposal together with certain proprietary rights over the property of the Math. Nevertheless, his office also imposes an obligation to discharge duties akin to those of a trustee, and he is answerable for the performance of those duties. The Court observed that the Mahant of a Math is generally a Sanyasin who has renounced worldly affairs, has no family ties by blood or marriage, and, in theory, has taken a vow not to own any personal property. Despite this, the Mahant holds considerable powers for the benefit of the institution he heads; he must incur expenditures for the Math, which include carrying out religious worship, providing for disciples, and maintaining the dignity of his office.

The Court emphasized that the property of the Math is attached to the office and is devoted to the endowment. Consequently, the Mahant cannot use the funds for personal luxury or for objects that are incongruous with his position. The power to waste the property or the income of the institution is therefore not a right that the Mahant may claim.

Counsel for the appellants submitted that the Mahant possesses absolute authority to dispose of the income generated by the Math, and therefore, the provision of section 52(1)(f), which authorises his removal when he applies the institution’s funds or property to purposes unrelated to the institution, imposes an unreasonable restriction on the property right vested in the Mahant.

The Court referred to the decision in Commissioner, Hindu Endowments, Madras v. Sri Lakshmindra Thirtha Swamiar of Sri Shirur Mutt, where Justice Mukherjea observed at page 1019 that there is no reason why the word “property” in Article 19(1)(f) of the Constitution should not be given a liberal and wide connotation, and should be extended to those well‑recognised interests that bear the insignia or characteristics of a proprietary right. On the basis of that observation, the Court held that the Mahant’s right over the property of the Math undeniably falls within the meaning of “property,” as reported in the 1954 Supreme Court Reporter at page 1005.

The Court further explained that any restriction placed upon the Mahant’s property right, which is not in the interest of the general public, would be void under Article 19(1)(f) read with clause (5). The reasonableness of any limitation must be assessed by considering the character and extent of the Mahant’s right, together with the general public interest that the restriction seeks to protect.

In support of this view, the Court cited Arunachallam Chetty v. Venkatachalapathi Guruswamigal, where the Judicial Committee of the Privy Council observed that the Mahant is obliged not to employ surplus income, after the expenses of the Math have been met, for personal enjoyment, but must instead add such surplus to the capital of the estate he administers. At page 226, the Committee, while dealing with accumulated income held by a receiver appointed during the pendency of a suit, stated that the decree entitled the gurukkal to immediate possession and complete beneficial enjoyment of the sum. However, if the present purposes of the Math did not require the amount, the gurukkal could not use it for personal purposes, as doing so would subvert the custom and usage of the Math and violate the law applicable to such institutions.

The Committee further explained that the proper test in such cases is to determine the true principle governing the administration of surplus income. It is the duty of a trustee to refrain from personal enjoyment of surplus and to add it to the capital of the estate to be administered. This principle also applies to the property of a Math or Asthal, irrespective of whether the title is held by the spiritual head of the institution in an ordinary case or by lay trustees such as the Chettys, as indicated in the 1919 Law Reports at pages 204 and 224.

The Court observed that the customary usage and customs of the institution, as they exist in the present case, govern the Mahant’s authority. It held that the Mahant’s power over the income of the Math is of the same character as his power over the Math’s property. Since both the property and the income belong to the Math, they must be utilised exclusively for the purposes of the Math and must be applied in a manner that is consistent with the established usage and customs of the endowment. The Court then referred to section 52(1)(f), which declares that the application of any funds or property for purposes that are not connected with the institution—meaning purposes that the customary usage of the institution does not sanction—is a valid ground for the Mahant’s removal. The Court rejected the argument that a statutory provision empowering a Court, in appropriate cases, to remove a Mahant who has diverted the institution’s funds or property to unrelated purposes creates an unreasonable restriction on the Mahant’s authority. It explained that the provision does not aim to diminish the traditionally recognised authority of the Mahant; rather, it merely underscores that, by virtue of his position and the limited scope of his powers, the Mahant may not waste the Math’s property, nor may he use it for personal enjoyment, luxury, or for objectives that are incongruous with his office or wholly unrelated to the Math. If he does so, the Court may order his removal. The Court stressed that this limitation serves the public interest and therefore cannot be characterized as unreasonable. The Court further noted that the observations made by the learned judges of the High Court—specifically, the statement that the Supreme Court, in Commissioner, Hindu Endowments, Madras v. Sri Lakshmindra Thirtha Swamiar of Sri Shirur Mutt, held that “the real limitations on the Mathadhipathi are that he should not spend any of the monies of the Math for wicked or immoral purposes”—are not supported by any portion of the Supreme Court’s judgment. That observation was founded on a dictum of the High Court in the judgment under appeal, and there is no indication that the Supreme Court endorsed that view. Instead, the Supreme Court clarified that the Mahant must discharge his duties as a trustee of the institution and is answerable in that capacity. Finally, the Court deemed it necessary to point out that, given the extensive powers the Mahant wields over the application of funds—not only for maintaining the dignity of his office and covering the Math’s maintenance expenses, but also for religious or charitable purposes that do not conflict with the usage and customs of the endowment—the misuse of those funds for personal enjoyment, luxury, or purposes wholly unrelated to the institution would fall squarely within the second part of section 52(1)(f). In the Court’s view, this analysis confirms the statutory limitation on the Mahant’s authority.

The Court observed that the provision which allows a suit to be instituted for the removal of a Mahant when he has wasted the funds or properties of the institution, or when he has applied such funds or properties to purposes wholly unrelated to the institution, does not constitute an unreasonable restriction on the Mahant’s fundamental right over the property he manages. Earlier, Section 55, before it was amended, had been challenged in a prior proceeding on the ground that it imposed an invalid restriction on the Mahant’s powers over gifts that were personal to him. Under the original enactment of Section 55(1) in Act XIX of 1951, the statute provided that “The trustee of a Math shall be entitled to spend at his discretion, for purposes connected with the Math any ‘Pathakanika’ that is to say any gift or property or money made as a personal gift to him as the head of the Math.” Sub‑section (2) further required the trustee to maintain regular accounts of receipts and disbursements relating to the items mentioned in sub‑section (1). Consequently, the Act compelled the Mahant to spend the ‘Pathakanika’ only for purposes of the Math, and the Court held that this represented an unwarranted limitation on the Mahant’s property right. The Court noted that ‘Pathakanikas’ are expressly defined in sub‑section (1) as personal gifts to the Mahant, and ordinarily such gifts would be at the Mahant’s disposal. While acknowledging that in some institutions custom may treat such personal gifts as gifts to the institution itself, the Court stressed that the general rule is otherwise. Because Section 55(1) does not confine the rule to institutions where such a custom exists, the provision in its unrestricted form amounts to an unreasonable encroachment upon the Mahant’s fundamental right. The same objection applied to clause (2); if the Pathakanikas constitute the Mahant’s property, there is no justification for compelling him to keep accounts of receipts and expenditures of those personal gifts. The Court further explained that, although the gifts may become part of the Math’s assets if the Mahant dies without disposing of them, this eventuality does not warrant restricting the Mahant’s powers over those gifts while he is alive. In response, the Legislature of Madras State repealed both sub‑sections of Section 55 and enacted a new clause stating: “The trustee of a math shall keep regular accounts of receipts of ‘Pathakanika’ that is to say, any gift of property made to him as the head of the math and shall be entitled to spend the said ‘Pathakanika in accordance with the customs and usages of the institution.’” This amendment replaced the earlier restrictive language with a requirement to keep accounts and to spend the gifts in line with institutional customs and usages.

The amendment to section 55 defines the term “pathakanikas” to mean gifts of property that are presented to a Mahant in his capacity as the head of a Math. Under this provision the Mahant must keep regular accounts of the receipt of such gifts and he may spend those gifts in accordance with the customs and usages of the institution, because the gifts, although received by the Mahant, are held in trust for the Math. The Court held that these duties imposed on the Mahant—to maintain regular accounts of the receipts of the pathakanikas defined in section 55 and to employ the gifts according to the institution’s customs—do not constitute an unreasonable restriction on the Mahant’s fundamental rights. The Mahant, as a trustee, is bound to discharge fiduciary duties and to answer for them; consequently a requirement that he keep accounts of such gifts aids the effective exercise of control over him, and the obligation to spend the gifts in accordance with the institution’s customs is consistent with his role, even though he retains a beneficial interest in the property.

The Court further clarified that the amended section 55 does not apply to gifts that are proved to be purely personal to the Mahant. Counsel for the appellants drew the Court’s attention to clause (g) of section 52(1), which provides that the adoption of devices to convert the income of the institution or its funds or properties into pathakanikas is a ground for a suit seeking the removal of a Mahant. The term “pathakanika” in section 52(1)(g) is understood in its larger, traditional sense, meaning personal gifts to the Mahant. If a Mahant were to employ devices that turned institutional income or assets into personal gifts, such conduct would be improper and would expose him to removal under section 52. However, section 55 explicitly limits the meaning of “pathakanika” by stating that it refers only to any gift of property made to the Mahant as the head of the Math. Accordingly, the Court could not interpret “pathakanika” in section 55 as personal gifts, and the Legislature, by enacting the amendment, was not attempting to re‑enact the original provision under a different guise.

The next provision examined was section 76(1). Before its amendment, section 76(1) read: “In respect of the services rendered by the Government and their officers, every religious institution shall, from the income derived by it, pay to the Government annually such contribution not exceeding five per centum of its...”

The provision of Section 76 required that every religious institution, from its income, pay to the Government an annual contribution not exceeding five per cent of that income, the exact amount to be prescribed. In addition, any institution whose annual income for the immediately preceding fasli year, as calculated for the levy under sub‑section (1), was at least one thousand rupees, was required to pay a further sum, not exceeding one and a half per cent of its income, for the cost of auditing its accounts; this amount was to be determined by the Commissioner. The statute further mandated that the payments specified in sub‑sections (1) and (2) were to be made irrespective of any scheme that might be settled or deemed settled under the Act for the particular religious institution. Moreover, the Government was directed to pay the salaries, allowances, pensions and other beneficial remuneration of the Commissioner, Deputy Commissioners, Assistant Commissioners and other officers and servants (excluding executive officers of religious institutions) employed for the purposes of the Act, together with all other expenses incurred for such purposes, including the costs of Area Committees and the auditing of religious institutions’ accounts. The Court, in an earlier decision, observed that the contribution levied under sub‑section (1) was, in substance, a tax. While the wording of the section gave the appearance of a fee because it spoke of a contribution in respect of services, the Court noted that the levy was based on the payer’s capacity rather than on any specific benefit conferred on a particular institution. It further pointed out that institutions whose income was below one thousand rupees were exempt from the additional charge under sub‑section (2), a feature that gave the levy a characteristic similar to income tax. The Court emphasized that the sums collected under the contribution were not earmarked for the specific expenses the Government incurred in performing the services; instead, all collections were deposited into the Consolidated Fund of the State, and the corresponding expenses were met from general revenues through the normal appropriation process, just as with other Government expenditures. Because there was no direct correlation between the Government’s expenses and the amount raised by the levy, the Court rejected any theory of a quid pro quo relationship. Consequently, the Court held that the contribution was a tax and that the State Legislature did not possess the authority to impose such a tax. The amendment to Section 76 altered the scheme, and the Madras High Court subsequently declared the newly enacted clause (5) ultra vires, a portion of the earlier decision that remains unchallenged.

In the amendment, clause (1) of the provision that had been challenged was changed so that the shortcomings of the earlier section were removed by the Legislature. Under the amended clause, contributions are now required to be paid to the Commissioner rather than to the Government. The contributions must be levied specifically for services that are performed by the Government and its officers, and the money is intended to cover the expenses that arise from those services. Sub‑section (2) provides that every religious institution whose annual income is at least one thousand rupees must pay to the Commissioner, each year, an additional amount for the purpose of covering the cost of auditing its accounts. That additional amount may not exceed one and a half per cent of the institution’s income, and the precise rate is to be fixed by the Commissioner. Sub‑section (4) obliges the Government to meet the salaries, allowances, pensions and other beneficial remuneration of the Commissioner, the Deputy Commissioner, Assistant Commissioners and all other officers and servants who are employed for the purposes of the Act. It also requires the Government to defray any other expenses incurred in carrying out those purposes, including the expenses of Area Committees and the cost of auditing the accounts of the religious institutions. The provision therefore clearly authorises the levy of a contribution not exceeding five per cent of the income of every religious institution, together with an audit fee for those institutions whose income is one thousand rupees or more. All sums collected under clauses (1) and (2) must be spent exclusively on meeting the expenses that arise from performing the duties owed to the religious institutions and on no other matters. Section 81(1) creates a separate fund, styled ‘The Madras Hindu Religious and Charitable Endowments Administration Fund’, which is vested in the Commissioner. Section 81(2) provides that the contributions payable under section 76(1) and the audit fees payable under section 76(2), when received, are to be credited to that fund. Previously, two main objections had been raised against the levy of the contribution under section 76 before it was amended. The first objection was that the money raised by the contribution was not earmarked or specified to defray the expenses that the Government had to incur in performing its services; instead, all collections were deposited in the State’s Consolidated Fund and the expenditures were funded out of general revenues through the normal appropriation process, as is done for other Government expenses. The second objection was that there was no correlation at all between the expenses incurred by the Government and the amount raised by the contribution under section 76. By amending section 76(1) and (4) and by establishing a separate fund under section 81, the Legislature has removed both of these defects. The amounts now raised are specifically earmarked for covering the expenses of rendering services; they no longer go into the State’s Consolidated Fund but are placed in the separate fund, and the contributions are payable directly to the Commissioner rather than to the Government. It was submitted that there

In this case the Court observed that the contention that there was no relationship between the expenses incurred by the administration and the amounts collected as contributions was not supported by any reliable evidence on the record. The Court’s attention was directed to Exhibit “A”, which was referred to in paragraph‑2 of the supplemental counter‑affidavit filed by the State of Madras in Writ Petition No. 323 of 1955. Exhibit “A” contained an abstract of the receipts and charges for a specified period. According to that document, during the period from 30 September 1951 to 30 June 1952 the total receipts recorded under head XXXVI “Miscellaneous‑(c.) Miscellaneous Administration of Madras Hindu Religious and Charitable Endowments Act, 1951” amounted to Rs 3,16,013‑1‑3. The total receipts under head XLVI “Miscellaneous‑(d) fees for Government Audit”, which represented contributions recovered from the religious institutions, amounted to Rs 2,27,531‑4‑10. The document further stated that the total expenditure for the same period, which covered salaries and allowances of officers and staff, contingencies, and fees paid to private auditors for auditing the accounts of religious institutions, amounted to Rs 6,93,539‑10‑3.

Following the abstract, a chart was presented that covered the fasli years 1361, 1362, 1363 and 1364. The chart listed various headings such as Arrear Demand, Current Demand, Total Demand, Write‑off, Net Demand, Collection and Balance. From the figures in the chart it was evident that there were substantial arrears in the collection of contributions. By the close of the fasli year 1364 the arrears had exceeded Rs 15.50 lakhs. An abstract placed at the foot of the chart indicated that the total actual collections for the four fasli years amounted to Rs 19.74 lakhs, leaving a balance recoverable of Rs 15.75 lakhs. The total expenditure for the same four‑year period was Rs 26.4 lakhs. The Court noted that, given these numbers, it was difficult to draw a definitive inference that the demand for contribution was wholly unrelated to the expenditure incurred from the accumulated funds. Moreover, no attempt had been made before the High Court to establish that the levy of contribution at a rate of five per cent was so excessive that it could be said to bear no true relation to the value of the services rendered to the endowments by the administration.

The Court also examined a statement of account showing that when the Act of 1951 came into force, the Commissioner possessed a total investment in fixed deposits, Government stock certificates, debentures of the Co‑operative Land Mortgage Bank, National Savings certificates and bank balances exceeding Rs 18 lakhs. The Court observed that this accumulation represented the result of nearly twenty‑five years of operation under the earlier Act of 1927. No evidence was placed before the Court regarding the specific sources from which this fund had been accumulated. Consequently, the Court held that from the statement of account it could not be inferred that the contributions collected under section 76(1) of the Act of 1951 were wholly disproportionate to the value of the services to be rendered. The Court further emphasized that a levy in the nature of a fee does not cease to be a fee merely because an element of compulsion or coerciveness is present, nor

In this case the Court observed that a fee does not have to bear a direct relationship to the exact services rendered to the individual who benefits from the service. The Court explained that when a levy is imposed by law for a specific purpose, and the expenses required to maintain that service are met from the amounts collected, a reasonable connection between the levy and the incurred expenses makes the levy a fee rather than a tax. It was further noted that although fees are generally uniform and do not consider the differing abilities of recipients, the lack of uniformity alone cannot be used to classify a levy as a tax. The Court clarified that a fee is a levy imposed in consideration of providing a particular type of service, and therefore a correlation between government expenditure and the levy must exist. However, a levy will not be deemed a tax merely because it is not uniform in its incidence, because its collection involves compulsion, or because some contributors receive a lesser degree of service than others. The Court then turned to the statutory scheme, stating that Section 80 makes the Commissioner a corporation sole with perpetual succession, while Section 81 provides for the formation of the Madras Hindu Religious and Charitable Endowments Administration Fund. These provisions were enacted to create a separate fund out of the income of the endowments that is wholly unrelated to the general revenues of the State. By virtue of Section 82, contributions that had been levied under the Act of 1951 before its amendment by the Act of 1954, specifically under Sections 76(1) and 76(2), were validated. Section 82(1) provided that contributions under Section 76(1) and the further sums payable under Section 76(2) would be payable from the commencement of that Act, and that for the period until the commencement of the Madras Hindu Religious and Charitable Endowments (Amendment) Act, 1954, the rate prescribed by the Government under Section 76(1) or determined by the Commissioner under Section 76(2) would be deemed to be the rate prescribed or determined under the amended sections as reflected in the 1954 Amendment Act. Consequently, any contributions and further sums paid to the Government would be deemed contributions and further sums paid to the Commissioner under the amended Sections 76(1) and 76(2). Section 82(2) further directed that the Government should pay to the Commissioner any balance remaining from the total of contributions and further sums paid or realized before the commencement of the 1954 Amendment Act, after deducting any amounts paid by the Government under Section 76(4). This statutory clarification was intended to retrospectively validate the earlier levies as fees rather than taxes, thereby separating them from the State’s general revenue.

The judgment observed that after deducting sums paid by the Government under section 76(4), the balance was to be dealt with under section 76(2). It acknowledged that contributions levied under section 76(1) of the Act before its amendment possessed the characteristics of a tax, and consequently the tax levy had been struck down. Nevertheless, the Court held that the Legislature possessed the authority to enact retrospective legislation that could reclassify those levies as fees by removing the features that made them tax‑like. By virtue of the explicit provision in subsection (1) of section 82, the rates that had been prescribed under section 76(1) or determined by the Commissioner under section 76(2) when the Act was originally enacted were to be deemed the rates prescribed under the amended sections 76(1) and 76(2) as incorporated by Act XXVII of 1954. Similarly, contributions and other sums that had been paid to the Government were to be deemed contributions and sums paid to the Commissioner under the amended provisions of sections 76(1) and 76(2). Retrospectively, the payments received by the Government were separated from the general revenue, and subsection (2) required that these payments be treated as forming a distinct and separate fund, with all such payments being deemed to have been received by the Commissioner rather than by the Government. The Court stated that the possibility of enacting such retrospective legislation was not open to dispute. Referring to the decision in M/s. J. K. Jute Mills Co. Ltd. v. State of Uttar Pradesh, the Court reiterated that a legislature’s power to legislate on a subject assigned to it is unqualified except for limitations imposed by the Constitution, and that power includes the competence to enact either prospective or retrospective laws. Citing Union of India v. Madan Gopal, the Court noted that the power to impose income tax under entry 82 of List I in Schedule VII also encompassed the authority to impose a tax retrospectively, even for periods preceding the Constitution, and that the same principle applied to taxes on the sale of goods. The Court then referred to M. P. V. Sundraramier & Co. v. State of Andhra Pradesh, where it examined the validity of a parliamentary law giving retrospective effect to state tax statutes on inter‑state sales. Although a contention was raised that Article 286(2) barred such retrospective legislation, the Court rejected it, observing that Article 286(2) merely states that no state law shall impose tax on inter‑state sales except insofar as Parliament may by law otherwise provide, and it imposes no restriction on the form or nature of the law that Parliament may enact.

The Court observed that the Constitution did not limit the form of legislation that Parliament might enact. It explained that the phrase “in so far as” clearly authorises Parliament to determine both the form and the nature of the law it chooses to pass. The Court further noted that the authority given to Parliament by Article 286(2) is a legislative power, and that such a power vested in a sovereign legislature includes the ability to make a law to take effect prospectively or retrospectively, unless the Constitution itself contains a specific restriction on that power. The Court stated that it had previously held that the legislation in question fell within the competence of the legislature that enacted it. Accordingly, the Court concluded that the Validation Act was not beyond the legislative powers conferred by entry 54, because the Act operated retrospectively. The judgment therefore affirmed that the State Lagislature’s authority to impose the fee retrospectively was consistent with the constitutional scheme. The Court then turned to the power of the State Lagislature under the Seventh Schedule, List III, Item 28 read with Item 47, to levy a fee. It held that the State Lagislature was therefore empowered to impose a fee for the services rendered in connection with the maintenance, supervision and control of religious institutions, and that the legislature could also levy that fee retrospectively. The Court explained that when the amounts received by the State had been expressly characterised as fees collected by the Commissioner under the amended provisions, the account between the Government and the Commissioner must be made on that basis, and any challenge to the validity of section 82(2) therefore had to fail. No error was perceived in the High Court’s analysis of the various statutory provisions. In the Court’s view, the High Court had correctly declared sections 52(1)(f), 55, 76(1) and (2), 80, 81 and 82 to be intra‑vires. Consequently, the appeals were dismissed with costs, a hearing fee was awarded, and the appeals were finally dismissed.