Countering the Commissioner

Charity Commissioner (CC) M. K. Chure’s order on the special audit of the Bombay Parsi Punchayet (BPP) has been postponed to October 22, 2009. The earlier dates had been set for October 8 and 16.

Chure has to primarily rule on whether a copy of the preliminary report of inspection conducted in December 2008 submitted to him by his officials regarding the special audit should be given to the BPP trustees; if so whether the BPP should be given an opportunity to present their arguments as to why the 10 year audit of accounts is not required; and whether the fees levied by him amounting to around Rs 1,20,00,000 are to be reduced.

Arguing on behalf of the BPP on October 3, counsel Percy Gandhi referred to Chure’s order on the audit dated July 13, 2009 terming it "bad” in law "as we have not been heard…as per the rights of natural justice.” He further contended that the show cause notice under section 41D dated September 5, 2009 inquiring why the seven BPP trustees should not be suspended or removed "should be dropped.” The allegations made by the CC in the notice were "totally unfounded and non-existent,” argued Gandhi. "Annexure A gives no reason why the special audit is ordered.”

Pointing out that the BPP had filed their applications on time as required, Gandhi argued there was no intention to delay the proceedings or to obstruct the audit.

"All our letters state two fold grievances: that the audit fees are exorbitant and that the special investigating report” be given to the BPP so "that we know the basis of your order. All our letters are for that purpose” and not to delay matters. He explained the BPP was not in a position to provide some of the required papers by the CC’s investigators during the visit as they were "in the BPP’s godown in Bandra,” there not being sufficient room at the Fort office.

Aside from the "mammoth cost” of the audit which would divert funds from the objectives of the trust which are to help the poor and needy, "great hardship and trouble” would be incurred in "obtaining documents, challans, vouchers, etc for 10 years, argued Gandhi. The Income Tax Act in contrast only required records be kept for seven years.

"As a charitable trust we should not be liable to pay such exorbitant fees,” observed Gandhi. Instead the CC should "recover the amount from the complainant Percy Patel or the erstwhile trustees,” he suggested.

Crowd outside the Charity Commissioner’s office

He advocated "the special audit be stayed as no hearing had been given to the trustees.” The special report "cannot be kept under lock and key. We have repeatedly asked for a copy” without success. The CC’s justification that the report "is secret in nature is against the (norms) of natural justice.” He referred to the CC’s letter dated August 12, 2009 which stated the report "cannot be furnished because of the Official Secrets Act. The Officials Secrets Act has nothing to do with this matter. It relates to matters of national security, national interest — to the army — cabinet meetings…it has nothing to do with statutory or quasi judicial issues.”

The BPP’s current auditors Kalyaniwalla and Mistry charge Rs 90,000 a year as versus the Rs 11,00,000 demanded by Chure. "This is more than ten times our normal charges,” pointed out Gandhi. This fee would "militate against the very principles of a public charitable trust. Funds would be diverted to purposes other than that of the trust.”

The BPP’s statutory auditors had raised "no queries regarding the audit,” he added. The auditors were an independent body and "not the employees of the BPP.” Under Rule 20 of the Bombay Trusts Act fees for a special audit should "in no case exceed one percent (of the trust’s income) or be less than Rs 50,” said Gandhi. The present income of the BPP is around 12 crore rupees.

Gandhi opined the CC "may have not been aware of the income of the trust” when he levied the fee. "Do you think I passed the order blindly?” queried Chure.

Gandhi cited a Supreme Court judgment of Justice S. B. Sinha referring to an Income Tax matter, to justify his argument that the CC must "be objective. (This is possible) only after you hear me. Otherwise it is subjective.” Sinha had referred to the "grave civil consequences” the party who was raided would face from the Income Tax department if he was not given a fair hearing.

BPP chairman Dinshaw Mehta noted that while the trust’s income was high, "our expenditure is also very huge.” After allowing for fixed expenses, "our net income is a small one. It is not that the trust has vast funds for disposal.”

Gandhi appeared for the BPP along with counsels Kishore Jadhav and Mangesh Chavan.