SC: Temple funds cannot be diverted for the rescue of failing cooperative banks: The Supreme Court, in a landmark judgment, ruled that temple money is a sacred trust property and cannot be used to bail out financially distressed cooperative banks.

Introduction

In a landmark decision aimed at curbing the misuse of religious assets, the Supreme Court of India ruled that temple funds cannot be used to prop up failing cooperative banks. The case arose from a dispute involving a temple trust whose deposits were frozen after the cooperative bank ran into financial trouble.

The Court declared that temple funds—offerings made by devotees—possess both legal sanctity and spiritual significance, making them distinct from regular commercial assets.

This judgment reinforces that religious endowment funds are not meant for bailouts, profit-oriented ventures, or propping up financially unstable institutions. Instead, they must be dedicated solely to temple maintenance, religious activities, welfare programs, and administrative purposes.

Background of the Case

A prominent temple had placed a substantial sum in a cooperative bank, trusting that it was safe. However, over time, the bank’s finances crumbled due to poor management and mounting non-performing assets. When the temple tried to withdraw its funds, the bank refused, claiming that immediate withdrawal would worsen its liquidity crisis.

In effect, the bank sought to use temple funds as a cushion to stabilize itself. The temple trust filed a legal challenge, arguing that its funds could not be held hostage to rescue the bank.

As the case progressed through lower courts and eventually reached the Supreme Court, it became a significant constitutional issue concerning the rights of religious institutions and the obligations of struggling financial entities.

Supreme Court’s Core Findings

Temple Funds Are Trust Property, Not Public Money

The Supreme Court clarified that offerings made in temples belong to the deity, who is recognized under Indian law as a juristic person. This implies:

• The deity owns the funds.
• Trustees act only as custodians.
• The money must serve purposes connected to the temple.
• Diverting it for unrelated purposes violates both trust law and devotees’ faith.

This differentiation is key since trust property cannot legally be used for bailouts or commercial activities.

Cooperative Banks Cannot Use Religious Funds for Survival

The Court ruled that a failing bank cannot depend on deposits from religious institutions to stay afloat. Such actions are:

• Illegal
• Arbitrary
• Against public interest
• Contrary to the purpose of temple funds

Banks must return deposits upon demand, regardless of their financial condition.

Trustees Must Protect Temple Assets

Temple trustees carry a fiduciary duty—they must protect and prudently manage temple assets. This means they are:

• Legally obligated to safeguard temple property
• Required to ensure safe, low-risk investments
• Expected to perform due diligence
• Accountable for misuse or negligence

Trustees who knowingly invest temple money in high-risk ventures could face legal consequences.

Devotee Offerings Carry Emotional and Religious Value

The Court acknowledged the deep spiritual meaning behind offerings made by devotees. These funds symbolize faith, devotion, and cultural tradition. Misusing them for financial rescues would desecrate their sanctity and weaken public trust in religious institutions.

Legal Interpretation and Reasoning

Deity as a Juristic Person

Indian law grants a Hindu deity the status of a “juristic person,” allowing it to own property, accept donations, and take legal action or be subject to it. Thus, temple funds are not merely financial assets—they are the property of a legal entity that carries its own rights and responsibilities.

Principle of Fiduciary Responsibility

Trustees are not owners but custodians. They cannot use temple funds for commercial bailouts, corporate stabilization, or speculative investments. Their sole duty is the preservation and lawful use of the funds.

Obligations of Cooperative Banks

Banks must honor deposit withdrawals when demanded. They cannot cite public interest, financial instability, or policy restrictions as reasons to withhold temple money.

Impact of the Judgment

Stronger Legal Protection for Temples Nationwide

The ruling establishes a powerful precedent that:

• Temples cannot be exploited financially.
• Their funds cannot be used to rescue distressed banks.
• Temple assets remain protected.

This safeguards both religious heritage and public confidence.

Increased Accountability for Trustees

Trustees now face greater legal responsibility. They must:

• Avoid risky investments.
• Maintain financial transparency.
• Prioritize the welfare of the deity and devotees.

This promotes better governance of temple affairs.

Cooperative Banks Cannot Seek Unfair Advantage

Struggling banks can no longer rely on large religious deposits to survive. The judgment prevents them from coercing or depending on religious trusts for liquidity.

Protection of Devotee Trust

Millions of devotees contribute offerings, believing they fund spiritual and welfare initiatives. This ruling ensures that faith remains unshaken by financial misuse.

Practical Implications for Religious Institutions

• Temples should diversify and invest only in secure, government-backed financial instruments.
• Financial oversight committees must be strengthened.
• Regular audits and transparency measures are essential.
• Trustees should consult professional financial advisors for major investments.

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