Section 92 CPC maintainable for Societies: Operation Asha v. Shelly Batra

Section 92 of the CPC is maintainable and applies to public trusts and constructive trusts. In Operation Asha vs. Shelly Batra, a non-profit society that works for disadvantaged communities, the Apex Court found that the Doctrine of Constructive Trust applies even if societies are registered under the Societies Registration Act, 1860 as long as some fiduciary criteria are met.

The aim and objective of Operation Asha is of public and charitable nature. All the incomes, earnings, properties and MoAs are to be solely dedicated to promote the society’s aims. Furthermore, the strict “non-profit” rule of the society determines the society to have a credible fiduciary relationship in this scenario. 

A bench of Justices J B Pardiwala and R Mahadevan reaffirmed the English principle of constructive trusts for application in Indian courts too. The codification of the constructive trust principles was to limit judicial discretion but it does not mean that the doctrine has been removed from Indian law. The 2019 judgment in Janardan Dagdu Khomane and Another v. Eknath Bhiku Yadav & Ors. had elaborated upon this concept. 

The repeal of Section 94 of the Trusts Act, 1882 by Benami Transactions Prohibition Act, 1988 does not prevent the Court from declaring a trust outside the scope of this Act. In Sugra Bibi v. Hazi Kummu Mia (1968), the Court stressed on the dominant purpose of the plaint which must be in furtherance of public interest. Section 92 suits need to be motivated from representative capacity to vindicate public rights and not merely individual interests. 

The serious allegations of mismanagement and financial misconduct affecting the public interest may be pursued under Section 92 because it is a special provision. However, personal grievances need to be addressed separately. Even if certain private rights are agitated, it does not take away the importance of the other allegations.

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MSMED Act is of prospective nature, has no retroactive effect

The Apex Court has iterated that the MSMED Act of 1993 is of prospective nature and has no retroactive effects. In Odisha State Financial Corporation vs Vigyan Chemical Industeries decided on 5 August 2025, the Supreme Court strongly disapproved of the Odisha State Financial Corporation (‘OSFC’) for its legal mismanagement. A bench of Justices J B Pardiwala and R Mahadevan has put forward that procedural compliance is not just a mere formality; it is rather a substantive safeguard designed to protect the interests of State instrumentalities and the public exchequer.

The liability to make payments under Sections 3 and 4 of the The Interest On Delayed Payments To Small Scale And Ancillary Industrial Undertakings Act, 1993 can only arise after the Act has come into force. Since no prior events and liabilities are attached, the Act only acts prospectively and has no retroactive role. 

The Court referred to the International Airport Authority’s case on the question of when a corporation may be considered an instrumentality or agency of the government. This is not by mere government ownership. These include (1) entire shareholding by the government, (2) substantial financial assistance by the state, (3) state-conferred or protected monopoly, (4) deep and pervasive government control, (5) performance of functions of public importance closely related to governmental duties, and (6) transfer of a government department to the corporation. These are indicative tests and their cumulative effects determine whether a corporation qualifies as “State” under Article 12 of the Constitution. 

Section 29 of the State Financial Corporation Act, 1951 empowers financial corporations to enforce security without court intervention, limiting their liability strictly to funds recovered from the borrower’s assets. These corporations cannot be held personally liable. The judgement has reaffirmed the principle established in the Assam Small Scale Industries case.

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