Supreme Court upholds finding of misrepresentation against Art of Living-affiliated trust in land auction case

The Supreme Court recently upheld a Karnataka High Court ruling that a trustee of Ved Vignan Maha Vidya Peeth (VVMVP), a charitable trust founded by Sri Sri Ravi Shankar's Art of Living, committed misrepresentation while acquiring agricultural land through a court auction in 2003 [Sri R Raghu v. Sri GM Krishna & Anr].

However, a Bench of Justices Vikram Nath and PB Varale ruled that although the trustee had misrepresented his role during the auction, reopening the sale at this stage was not justified.

It thus concurred with the High Court's findings and ordered that ₹25 lakh per acre be paid as additional consideration to the original landowner and that a proper survey be conducted to fix the exact boundaries of the land.

The dispute dates back to 2003, when 5.5 acres of agricultural land in Bengaluru's Agara village was put up for sale by the Karnataka State Financial Corporation to recover dues from a defaulting borrower. The auction was won by R Raghu, a trustee of VVMVP, who posed himself as an individual agriculturist. At that time, trusts were barred from purchasing agricultural land under the Karnataka Land Reforms Act.

After the auction was confirmed and a sale certificate was issued in 2005, Raghu later claimed he had in fact purchased the land on behalf of the trust. This prompted the original landowner, GM Krishna, to challenge the sale, arguing that the court had been misled into allowing a transaction prohibited by law.

The district court agreed and in 2015 set aside the auction sale, holding that Raghu had played fraud by taking inconsistent stands. However, the High Court partly reversed this finding in 2023.

It confirmed that fraud had been played, but noting that the law barring trusts from buying agricultural land was repealed in 2020 with retrospective effect from 1974, chose not to cancel the auction. Instead, it directed the trust to pay additional compensation of ₹25 lakh per acre to the landowner and ordered a fresh survey of the property to determine its correct boundaries.

The High Court’s judgment was scathing in its criticism of the trust’s conduct. It observed that VVMVP had propped up its trustee to bypass legal restrictions and it amounted to a fraud on the court.

“Therefore, the Trust played fraud on the Court by setting up its trustee, who until the sale was declared, claimed that he was the purchaser but later he claimed that the Trust was the purchaser. The contention…that a Trust has no legal existence and is represented by its trustees…is thoroughly misplaced,” the High Court said.

It added that the property had been purchased not by Raghu but by the trust.

“The petitioner did play fraud upon the Court and the Court was unknowingly made a party to an illegality and to a benami transaction.”

The Supreme Court endorsed this reasoning and appreciated the manner in which the High Court had dealt with the long-running litigation.

“At the outset, we record our appreciation that the learned Single Judge of the High Court has carefully considered the long-drawn litigation, involving several rounds inter se the parties, as well as the various contentions raised and the conduct of the parties throughout. The learned Single Judge has rendered a just and equitable judgment by taking into account both the mitigating and aggravating aspects of their conduct,” the Bench said.

The Court was clear that the trust could not claim any land beyond what had been auctioned.

“In the garb of boundaries being mentioned, the appellant auction purchaser cannot claim any more area than what was put up for auction and thereafter purchased by him,” the Bench said.

On the issue of compensation, the Court said the High Court had acted correctly in balancing equities.

“Insofar as the direction for payment of Rs.25 lakhs per acre as additional sale consideration to the respondent is concerned, we do not wish to interfere with the same, considering the conduct of the appellant, whose dual role casts doubt on the entire proceedings."

The Court ultimately dismissed both appeals filed by Raghu and by the original landowner and closed contempt proceedings linked to the dispute.

The appellants were represented by Senior Advocate Gopal Sankaranarayanan along with Advocates Sajal Jain, Trisha Chandran, Sonakshi Malhan and Shashank Shekhar.

The respondents were represented by Senior Advocate Kiran Suri along with Advocates SJ Amith, Aishwarya Kumar and Vipin Gupta.

[Read Judgment]