Baltutis, Michael C. “Recognition and Legislation of private religious endowments in Indian law”

Baltutis, Michael C. “Recognition and Legislation of private religious endowments in Indian law” in Religion and Law in Independent India second enlarged edition ed. Robert D. Baird, (New Delhi: Manohar, 2005), 443-467

SUMMARY: This essay examines the history of religious and charitable endowment regulation form 1810 to present. Baltutis looks at eh laws, overseeing institutions, and the realities of endowment management. Since the creation of the HRCE in 1927, the Courts and the HRCE Commission have defined the distinction between public and private endowments differently, with the HREC Commission denying the title of “private” to be given hardly at all. In addition, Baltutis points out that after the British stopped overseeing endowments in 1843, misuse proliferated and endowments started being used as tax shelters and sources of income. These practices, however, were drastically reduced with the Income Tax Act of 1961 and by challenges from the HREC Commission. He gives several examples from the wording of various Acts and Court rulings.


443-endowment of religious institutions goes back to as long as they’ve been around; documents of temples go back to 500 BCE; “temples containing images of deities” [aka “idols”] date from first century CE; and “sankara is said to have established the first four maths in the 8th century C.E.”

-“A tradition of gift-giving (dana) in India as a means of distributing wealth and attaining fame and prestige extends back through the Vedic period and is imbued with a legal format by the turn of the Common Ear. By this time, dana is being applied in the form of land grants to brahmanas, large gifts of cash to religious beneficiaries, and the building of alms—houses for distribution of food and clothing to the city’s needy.”—(444) these were the original “endowments” and were used to found new institutions for any number of purposes. Furthering the goals of the institution, “undergoing personal penance, giving for purely altruistic purposes, and establishing and improving one’s reputation.”

444-“From very early on, local governments began to take notice of and oversee the endowments received by the institutions. Reddy discusses the existence of a separated Religious Endowment Department in 15th century Andhra Desa, which supervised the functioning of religious institutions and maintained copies of original grants; similar arrangements were also made in other Hindu Kingdoms.” (cf Hindu and Muslim Religious Institutions)—this supports Derret’s theory (in Religion, Law and the State…) that modern Indian regulation of endowments is in consonance with its own traditions’ and not imitating Western ones. (individual state’s regulations; income tax laws thru Act of 1961, and courts “have been analyzed and reinforced by the Hindu Religious Endowments Commission’s Report of 1962.”

-w/ these mechanisms, the government defines categories and regulates endowments: “Religious,” “charitable,” “temple,” “math,” “absolute,” “partial,” “public,” and “private” are all different categories used—and endowments must meet requirements to be considered valid



-“state legislation since 1927 has explicitly defined (445) endowments so as to exclude private religious endowments, assuming regulatory duties for public endowments while allowing private endowments nearly absolute autonomy; numerous High and Supreme Court cases have strained to define the boundary between public and private endowments, ensuring the constitutionality of endowment acts and the proper administrations of the endowments themselves…income tax codes have addressed the tax-exempt status of each, excluding private endowments from the benefits accrued by their public counterparts; and the Report of the Hindu Religious Endowment Commission of 1962 has put forth recommendations whose goals mirror those of the states’ legislations.”

445-“The courts hear cases on a regular basis and are exposed to the wide variety of existing endowments. They allow oral and documentary evidence to establish the ‘custom and usage’ of an endowment, of the region, or of the religion or sect…”

-“Endowment acts and the income tax laws, on the other hand, do not look at every case; their goal is to establish general policies pertaining to each and every religious endowment…(Interestingly, the Commission also looked at individual cases, yet sided with the state acts and income tax law.)”, courts are conservative, preserving traditional ways; Preler, in Religion Under Bureaucracy, says the HRCE is the opposite and does not take into account differences b/c it is single mindedly focused on preventing (446) “patrimonial-like interests on the part of those with authority in the temple”; but Baltutis says Presler forgets to show how the HRCE also makes sure endowments and being managed with grantor’s intentions and that India, in its past, had other institutions that were similar to HRCE—Presler’s view favors the courts which allows for “privately-managed temples”


446-“While charitable purposes are defined by the benefits bestowed upon the public, religious purposes have no such necessary ‘public’ corollary. A privately endowed family ideol, then, constitutes a valid religious endowment just as much as a math established for the religious education of the public.”

-Acts have identified valid charitable purposes: “Health, education, relief of the poor, and preservation of sciences and literature”; but “religious purposes are rarely if ever provided for in the Acts”—though examples are drawn from actual practices—money for an idol, temple, shraddhas and pujas

-the donor must be competent (legal age and sound mind)

447-no ceremony is necessary now, though “centuries ago” there was 2 parts: sankalpa, in which “one indicated the purpose and direction of the property” and utsarga in which “one renounced all ownership of the property”; now donor must make clear he has divested himself of all the thing donated, usually through a will; though there is no need for a written document “detailing the origin and nature of the endowment”, there are tests done to prove the donor’s “intention” (eg that future financial gains from endowment are applied to religious things, but if “the intention of the donor was to tie up the dedicated money in the family”, then this would be seen as invalid); most states require endowments to be registered with all the pertinent information (including the specific uses and employees); and it must have a specific purpose—can’t be for an unspecified deity or “dharma”, or “without the provision of a specific amount of money have all been judged invalide.”

-“individual who would have inherited the property, had it not been endowed, may appeal the validity of an endowment for any of these reasons”


448-depending on the court, state act, or income tax law, the terms “endowments”, and “trusts” can be used almost interchangeably

449-“In a public temple, the installed idol itself is held to be the temple’s legal owner, and the beneficiaries—those to whom the endowment is dedicated—are the general public. In a private temple, the owner is the individual who endowed the idol, and the beneficiaries are the family members.”

-the Income Tax Act of 1961 defines only public endowments, not private ones, most individual state Acts similarly don’t define or identify private endowments, but Bihar’s Trust Act is the only one that mentions “private”, (and says those endowments are not in its jurisdiction); though (450) its definition of “private” is unclear, and so it could fall under the state jurisdiction

-“The Supreme Court has shied away from offering a strict distinction between public and private endowments,” eg in Radhakanta Deb v. Comnr., Hindu Religions Endowments, Orissa (1981) they said that it should be decided on a case by case basis, (451) and sometimes it’s inconsistent in its rulings, sometimes “size of temple, manner of worship, [or] structure and location of temple”, or other things (eg Did the public build it? Is it for an idol? How is the temple treated?)

-some supreme court “factors have been consistently applied by the court in a majority of cases” eg private trusts have beneficiaries which are “an ascertainable group or specific individuals” while public ones are for the “general public or a class thereof”; though some rulings have said trusts are private if the specific individuals are the only ones that have “interest” (452) (which is strictly defined as the “right” to use the temple, even if the public goes there), while other decisions say that if the public uses it, it is public—there’s a “fine line between the public’s worship in private tempels and the public’s right to worship in public temples”


452-thoughout history “There have been three major financial benefits associated with religious endowments” and numbers 1) and 2) “have been eroded through income tax laws and now the third has been challenged by the Endowment Commission.”
1)”Income tax exemption”: income from endowment for public purposes is not to be taxed, while income from private endowments is
2) “perpetuities and accumulation” based off English models, (454) the Transfer of Property Act of 1882 allowed people to use endowments as tax shelters for several years after someone dies before inheritor gets it b/c it’s an exception for private endowments while these time lengths (more than 18 years after death) are forbidden in that same act if the trust is not for religious purposes
(455) 3) “property rights”: “The landmark Shirur Math [1954] case established the foundation for property owenership within religious endowments. It established that the mahant (like the shebait of the temple) is more than just a servant of the math but is something less than the property owner. Both mahants and shebaits have rights over the disposition of the institutions property and are to be compensated for their services; they may receive personal donations but are not legally entitled to offerings made to the temple itself.” And the Profullo Chorone v. Satya Chorone ruling also said shebait had a “right to a part of the usufruct”


-says for both public and private, ownership of endowed property reside in the idol and profits go the institution [this contradicts p 449], says the identities of beneficiaries and direction of dedication are the only differences legally; but for practical purposes, the difference is a private idol owner can make a profit


456-Central Endowment Regulations (1810-1920)—regulations in which British took control over charitable and religious trusts to prevent people “reaping lucrative financial benefits through the mismanagement of an endowment’s funds”; regulations were done state by state, beginning with Bombay

457-in these, “the states’ Boards of Revenue (BOR) acquired ultimate responsibility for the regulation of endowments.” As well as provide for “repairs and maintenance of buildings, appoint trustees for non-hereditary temples, supervise trustees of hereditary temples, and ensure that the endowments were not used for any private purpose.”

-“Subordinate to the BOR were district-level Local Agents who supplied the Board with information on the temples (e.g. names and numbers of endowments, names of trustees, method of trustee election for each temple). The appointed trustees themselves comprised the third level of the regulatory hierarchy, who directly managed the religious institutions, collecting and appropriating land and cash revenue. Those services were financially supported by a fee taken out of temple funds—kept in the government’s treasuries.”

-Presler has pointed out that the BOR Collector, besides “ensuring the proper administration of endowments”, was to “resume misused or uncared for land, resulting in a new source of governmental income”

458-British continued regulation until 1830’s, “when religious groups in England began to protest their government’s involvement in non-Christian institutions.” Which also included “payments to temples whose endowments had lapsed”, “In 1843, the British government began its withdrawal from endowment regulation; all regulation was given over to local rajas, panchayats, newly-formed committees, or existing temple priests and trustees. This withdrawal produced a vacuum of authority in endowment regulation, producing mismanagement on a scale rivaling, and possibly surpassing, that of any period. The British severed all ties between the BOR and endowment regulation in the Religious Endowment Act of 1863 (Act XX), which provided for the appointment of Local Committees to replace the BOR. These Committees exercised supervision only over those temples whose trustees were appointed; temples whose trustees were hereditary were left wholly unmanaged until 1920…The Charitable and Religious Trusts Act of 1920 (Act XIV)—passed almost 60 years later—allowed an interested party to apply to a court” to get the financial information of trusts for public use—and this Act, like all preceding ones, was only for public trusts, and “private religious endowments were still wholly unregulated”

-“Act XIV operated within the existing framework (459) of Article 92 of the Civil Procedure Code of 1908, the combination of which allowed ‘interested parties’ to hold trustees responsible for alleged mismanagement by forcing them to open their books and file suit in cases of mismanagement; beginning with Madras in 1925, state governments, under continued local pressure, began to eschew the four pages of Act XIV creating more proactive and cost-effective legislation, allowing the states themselves to hold public endowments responsible for their financial dealings, instead of forcing devotees to bring their own suits against wealthy temples”


459-“The HRE Act (Madras Act II of 1927) marked the government’s first attempt to proactively address the issue of temple mis-administration. The Act’s proactivity was effected by a shift from a court-based system to an executive-based system, signaling a departure from the long-standing British policy of non-interference.”

-and most states made their own Acts on it since the Constitution was adopted with Article 25(2)(a) allowing states to regulate or restrict “any economic, financial, political or other secular activity which may be associated with religious practice”, “while leaving all religious activities to the administration of the temples themselves. The ‘secular’ duties assumed include: Preparing codes of conduct for endowment staff, appointing a Board of Trustees, inspecting ledgers, removing the head of the institution of various reasons, and assessing fees…”


460-The Income Tax Act of 1961 eroded 2 old financial benefits of religious endowments; exemption from tax and ability to tax shelter inheritance

-a public religious endowment has 2 sources of income: rental property and donations—they are taxed differently; the Act distinguishes between two types of income from property: applied and accumulated. For Section 11, “Applied funds are those spent during the tax-year; these are tax-exempt. Of those funds accumulated, or unspent, only the first 25 per cent is exempt. The endowment can delay taxation on the remaining 75 per cent for up to ten years, if it discloses the intention behind its accumulation to the Income Tax Officer and invests the accumulated funds in certain approved [government-owned] investments. Section 12 addresses income derived from contributions from the general public applied solely to religious purposes to be excluded for the income for that year; an amendment was passed in 1973, however, making these voluntary contributions taxable as of April 1, 1973. Under sub-section 2, contributions made by another “trust or charitable or religious institution to which the provisions of Section 11 apply” will be treated as income for that year and will not be tax-exempt.”

461-and private trusts are not exempt; a rule actually started in an Act in 1922 [unclear if this rule was ubiquitous form 1922 on]


462-the 3rd financial benefit was owning property which has not been eliminated, but limited—HREC said in early Commission Report that there can be no personal ownership of maths, but shebaits could keep donations that are expressly for them


-“in the past 30 years, the Supreme Court has heard approximately twenty cases involving disputes over the publicity/privacy of a religious institution. In (463) six of these cases, the Court has ruled that the institutions—five temples and one math—were private, in each case overturning the prior judgment of the respective Higher Court.”

465-the Commission Report and Courts define private endowments differently; Commission looks more a “the object of dedication, beneficiaries, and scope of worshippers” and essentially didn’t think people could have private endowments

-while the Court does the opposite, even saying “that to refuse worship to a member of the public is ‘a heresy which is scarcely expected in Hindus (466) who are by and large constitutionally reverent and prone to worship’”—directly contradicting a statement in the Commission Report, the Report even criticizes courts for being too willing to call endowments private