Section 40 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
This article explains the Maharashtra Public Trusts Act, 1950 as it applies in the State of Maharashtra, formerly the Bombay Public Trusts Act, 1950. Section 40 says what the Charity Commissioner may do with the report of a Deputy or Assistant Charity Commissioner under section 39: after giving the person concerned an opportunity and holding the inquiry he thinks fit, he may determine the loss and who is liable, or remand the matter, compromise it or drop it.
This article explains section 40 as amended up to Maharashtra Act No. XXXVI of 2018 (in force 21 May 2018), per the official text of the Law and Judiciary Department modified up to 19 December 2018. Maharashtra amended the Act again in 2019, 2020, 2024 and 2025; the amending texts consulted do not change this section, but the current text should be checked on the Charity Commissioner's website before relying on it.
After considering the Deputy or Assistant Charity Commissioner's report, giving the person concerned an opportunity and holding such inquiry as he thinks fit, the Charity Commissioner may (1) determine the amount of loss caused to the trust, whether it was due to gross negligence, breach of trust, misappropriation or misconduct, who was responsible, and what amount a trustee or connected person is liable to apply to the trust; or (2) remand the matter for further inquiry, compromise it for reasons recorded in writing, or drop it if a suit has been instituted for taking accounts under section 50.
How section 40 got its present form
Section 40 as printed is the product of the 1971 amendment. The footnotes record that "The Charity Commissioner may," replaced "The Charity Commissioner, shall" (Mah. 20 of 1971, s. 27(a)); that the words "as he thinks fit,— (1) determine—" replaced "as he thinks fit, determine—" (s. 27(b)); that the words "gross negligence," were inserted (s. 27(c)); that "any person connected with the public trust" replaced "any other person" in two places (s. 27(d) and (e)(i)); that "for such loss, or" replaced "for such loss" (s. 27(e)(ii)); that clause (2) was added (s. 27(f)); and that the heading was substituted for the marginal note (s. 27(g)). The change from "shall" to "may" matters: the Charity Commissioner is not bound to make a determination on every report.
The preconditions
Before acting, the Charity Commissioner must:
- Consider the report of the Deputy or Assistant Charity Commissioner under Section 39;
- Give "an opportunity to the person concerned"; and
- Hold "such inquiry as he thinks fit".
The opportunity is a statutory step. A person against whom a determination may be made is entitled to be heard before it is made. The section does not fix the form or length of the inquiry; it is "as he thinks fit". Trustees who face such a determination can take legal dispute resolution advice at this stage, because the record made here is the record on which later steps depend.
Option 1: determine four questions
| Clause | Question the Charity Commissioner determines |
|---|---|
| (a) | "the amount of loss caused to a public trust" |
| (b) | "whether such loss was due to any gross negligence, breach of trust, mis-appropriation or misconduct on the part of any person" |
| (c) | "whether any of the trustees, or any person connected with the public trust was responsible for such loss" |
| (d) | "the amount which any of the trustees or any person connected with the public trust is liable to apply to the public trust for such loss" |
These follow the same grounds as section 39. The first question is quantitative, the second about the cause, the third about responsibility and the fourth about liability. Clause (d) uses the words "liable to apply to the public trust": the person is to put the amount back into the trust. A determination under clause (d) then leads, in the Charity Commissioner's discretion, to a direction under Section 41 that the amount be surcharged on the person.
Option 2: remand, compromise or drop
Clause (2) was added by Mah. 20 of 1971, s. 27(f). The Charity Commissioner may:
- remand the matter "for further inquiry to the officer, who made the report or to any other officer as he thinks fit";
- compromise the matter "for reasons to be recorded in writing"; or
- drop the matter "if a suit is instituted for obtaining a decree for a direction for taking accounts under section 50".
The last route avoids a double process. If a suit for taking accounts has been instituted under Section 50, the Charity Commissioner may drop the matter. The text allows compromise only for recorded reasons; it does not say who the parties to a compromise are or what it must contain. The section prints no time limit for any of the options.
Appeals and finality
Section 40 itself prints no appeal. The appeals from findings of a Deputy or Assistant Charity Commissioner are dealt with in Section 70; for the position of the Charity Commissioner's own order, read the current official text, because the provision that once dealt with applications from his decisions under sections 40 and 41 (section 72) has been deleted, as the Act's own footnotes show.
Illustration. In a trust in Nashik, the Deputy Charity Commissioner reports that a trustee spent building-fund money on a private function. The Charity Commissioner notices the trustee, hears him with his documents and holds an inquiry. He determines the amount of loss, finds it was due to misappropriation by that trustee, finds that the other trustees were not responsible, and determines the amount the trustee must apply to the trust. In a second trust, the Charity Commissioner finds that the inquiry was incomplete and remands the matter to the same officer for further inquiry.
Need help in a proceeding before the Charity Commissioner?
If a trustee or the trust is facing a determination of loss or liability, our team can assist with the reply, the evidence and the strategy, including whether a suit under section 50 is a better route. Contact us for legal dispute resolution support.
Key takeaways
- The Charity Commissioner "may" act on a section 39 report; the 1971 amendment replaced "shall".
- He must consider the report, give the person concerned an opportunity and hold the inquiry he thinks fit.
- He may determine the amount of loss, its cause, who was responsible and the amount a person is liable to apply to the trust.
- Alternatively he may remand, compromise (with recorded reasons) or drop the matter if a suit for accounts under section 50 has been instituted.
- Surcharge follows under section 41.
Read next
- Sections 38 and 39: explanation and report to the Charity Commissioner
- Section 41: order of surcharge against trustees
- Section 70: appeals from the Deputy or Assistant Charity Commissioner
- Section 50: suits relating to public trusts
Disclaimer: Based on the Maharashtra Public Trusts Act, 1950 as modified up to 19 December 2018 in the official text of the Law and Judiciary Department, Government of Maharashtra, as consulted on 3 October 2026. Maharashtra amended the Act again in 2019, 2020, 2024 and 2025; the current text, the Maharashtra Public Trusts Rules and the Charity Commissioner's circulars should be checked. This article is general information, not legal advice; check the official text before acting.