The Madras High Court, Madurai Bench, has set aside a Tamil Nadu government order that permitted commercial activities to be carried out using surplus funds belonging to the historic Kallazhagar Temple in Madurai district. The court made it clear that temples cannot be handled in the same way as government development projects and that any activity proposed in the name of development must strictly follow the religious character of the institution and the law governing temple administration.

The ruling was delivered on 23rd January, when the court firmly stated that religious institutions have a unique status and cannot be subjected to commercial thinking. According to the judges, even well-intended development plans must remain within the boundaries set by law and tradition. Temples, the court said, exist primarily for worship and faith, not for generating income through business activities.

A division bench consisting of Justice Anita Sumanth and Justice C. Kumarappan quashed the government order dated 8th March, 2024. This order had allowed the construction of restaurants, shopping complexes, cottages and other commercial facilities by using funds accumulated by the temple over several years. The bench held that the order could not stand the test of law and clearly violated several provisions of the Tamil Nadu Hindu Religious and Charitable Endowments (HR&CE) Act.

The court also expressed concern that the decision reflected a growing tendency on the part of the State to treat temple resources as if they were government-owned assets. Such an approach, the judges noted, ignores the statutory safeguards created specifically to protect temples and other religious institutions from misuse of their funds.

Court stresses that temple development must respect its spiritual character

While delivering the judgment, the High Court strongly emphasised that temples are sacred spaces and not commercial zones that can be reshaped into infrastructure projects. The judges criticised the approach taken by the HR&CE Department and reminded it of its primary responsibility, which is to protect and preserve temples rather than turn them into revenue-generating ventures.

The court made detailed reference to the legal framework governing temple finances and expenditures. “Sections 35, 36, 66, 67 and 86 of the HR & CE Act, as well as the ‘Maintenance of Incorporated Devaswoms out of Devaswoms Fund Rules’, ‘Utilisation of Surplus Funds Rules’ and other Rules, stipulate that the incurrence of expenditure for temple upkeep should be only out of current receipts and not accumulated surpluses. The reserves of the temple have been depleted by the State in an irresponsible and illegal manner, and constitute a violation of the Act and Rules,” the court observed.

The bench also pointed out that the department had completely misunderstood the nature of the Kallazhagar Temple. Instead of recognising it as a place of worship with its own traditions and spiritual purpose, the authorities treated it like a modern project requiring upgrades. “Instead, the department has envisioned the temple as a ‘project’ requiring development and upgradation, concepts that are alien to a temple,” the judges remarked.

At the same time, the court acknowledged that providing basic facilities for devotees is necessary. However, it clearly stated that such facilities must never dilute the spiritual atmosphere of the temple or bypass the legal safeguards designed to protect religious institutions.

Use of temple funds without budget approval declared unlawful

One of the main reasons cited by the court for striking down the government order was the complete failure to follow the mandatory budgeting and approval process prescribed under the HR&CE Act. The judges pointed out that major expenditure plans were drawn up without preparing a proper budget and without obtaining approval from the temple’s Board of Trustees.

Under Section 86 of the HR&CE Act, there is a detailed and structured procedure for approving budgets. This includes scrutiny by the HR&CE Commissioner, discussions, clarifications and the removal of expenses that are not authorised by law. The court found that none of these required steps had been followed in this case.

Highlighting the seriousness of the lapse, the bench stated, “There is no material to show that the trustees applied their mind to the necessity or legality of the expenditure,” making it clear that decisions involving temple money cannot be taken casually.

The court further ruled that funds belonging to a religious institution cannot be diverted for commercial purposes without proper sanction, transparency and oversight, especially when the amounts involved run into several crores of rupees.

Steep fall in temple surplus alarms the High Court

The judges also expressed deep concern over the sharp and sudden reduction in the temple’s accumulated surplus funds. Based on audited financial statements submitted before the court, the bench noted a troubling trend in the temple’s finances over a short span of time.

According to the records, the temple’s accumulated surplus was ₹96.6 crore in March 2021. This amount increased to ₹107.60 crore by March 2023, but then dropped dramatically to ₹62.37 crore by March 2024.

Reacting strongly to this development, the court stated, “This reduction represents expenditure incurred without budgeting for the same and is without the sanction or authority of law. It is a crime against the deity and a clear illustration of the fence eating the crops,” using powerful language to underline the seriousness of the issue.

The judges noted that such unauthorised spending was not merely a violation of financial rules but also a breach of the trust placed in those responsible for managing temple funds.

Lack of Board of Trustees further weakens the State’s case

The High Court also examined the administrative structure of the temple and found another major flaw. The term of the temple’s Board of Trustees had expired, and no new board had been constituted as required under law. Despite the clear mandate under Section 46 of the HR&CE Act, there was no evidence to show that steps had been taken to appoint a fresh board.

The judges clarified that appointing a “Fit Person” or allowing an Executive Officer to function in place of trustees cannot be a permanent arrangement. Emphasising the legal requirement, the bench observed, “Such temples must be administered by a Board of Trustees, not by officials,” making it clear that statutory bodies cannot be sidelined.

According to the court, the absence of a properly constituted Board of Trustees further weakened the legality of all decisions taken regarding the temple’s finances and proposed development activities.

Temples are not State property, High Court cautions government

In one of its most significant observations, the High Court firmly reminded the Tamil Nadu government that temples are not extensions of the State machinery. They are independent religious institutions governed by specific laws and traditions.

“The State cannot treat temple properties as its own or use temple funds for projects conceived by the government,” the bench stated, rejecting the idea that the government has unrestricted control over temple resources.

The judges also criticised the State’s “Iconic Temple Development Scheme”, pointing out that development should emerge from the actual needs of the temple and its devotees. It should not be driven by political announcements or uniform models applied across different temples without considering their unique character.

Summing up this view, the court observed, “Temples are places of faith, not development projects for administrative experimentation,” reinforcing the central theme of the judgment.

Background: Events that led to the legal battle

The legal dispute began with the issuance of a Government Order on 8th March, 2024, followed by a work order dated 11th October, 2024. These orders approved civil works worth nearly ₹40 crore at the Kallazhagar Temple under the State’s Iconic Temple Development Scheme.

The proposed plan included the construction of guest houses, dormitories, shops, dining halls, parking facilities, a sewage treatment plant, quarters for archakas and renovation of existing temple structures.

Several petitions were filed before the High Court challenging these moves. The petitioners argued that temple funds were being diverted without legal authority, that no approval had been obtained from the Board of Trustees, and that multiple provisions of the HR&CE Act had been violated. They also alleged that the government was treating temple land and funds as if they were government property.

After hearing the batch of petitions in detail, the High Court quashed both the government order and the subsequent work order. The court also issued directions for the proper upkeep of the temple, including specific instructions for preserving the famous mural paintings located in the Vasantha Mandapam.

Earlier precedent: Arulmighu Nandeeswarar Shivan Temple case

This ruling is not an isolated one. The Madras High Court had earlier intervened in a similar matter involving the Arulmighu Nandeeswarar Shivan Temple. In January 2025, the court struck down a plan to use surplus funds of that temple for constructing a shopping complex.

A two-judge bench comprising Chief Justice K.R. Shriram and Justice Senthilkumar Ramamoorthy ruled that surplus funds of revenue-rich temples cannot be diverted for commercial construction. The judges held that such activities do not serve the religious purpose of the institution.

Referring to Section 66 of the HR&CE Act, the court observed that commercial complexes do not promote religious values. “Constructing the shopping complex using the funds of the temple certainly does not indicate any propagation of the religious tenets of the institution,” the bench stated.

The judges also criticised the HR&CE Department for failing to carry out a proper project study. They pointed out that even placing the surplus funds in a fixed deposit would offer predictable and safe returns, whereas commercial construction could result in litigation, tenant disputes and long-term encroachments.

In that case as well, the court quashed the government’s proposal and suggested alternative uses for surplus funds, such as planting native trees, conducting marriages for poor Hindus and feeding the needy. These activities, the court noted, are in harmony with the religious and charitable purpose of temples.