THE INDIAN
TRUSTS ACT, 1882
(Act No. 2 of 1882)
[13th January 1882]
CONTENTS
CHAPTER I
Preliminary
1. Short title
and commencement.
3. Interpretation-clause.
- “Trust”.
Of the creation of trusts
5. Trust of
immovable property.
Of the duties
and liabilities of trustees
12. Trustee to
inform himself of state of trust-property.
13. Trustee to
protect title to trust-property.
14. Trustee not
to set up title adverse to beneficiary.
15. Care
required from trustee.
16. Conversion
of perishable property.
20. Investment
of trust-money.
20A. Power to
purchase redeemable stock at a premium.
21. Mortgage of
land pledged to Government under Act 26 of 1871.
Deposit in Government
Savings Bank.
22. Sale by trustee directed to
sell within specified time.
23. Liability for breach of
trust.
24. No set-off allowed to
trustee.
25. Non-liability for
predecessor’s default.
26. Non-liability
for co-trustee’s default Joining in receipt for conformity.
27. Several liabilities of
co-trustees.
Contribution as between co-trustees.
28. Non-liability of trustee
paying without notice of transfer by beneficiary.
29. Liability of trustee where
beneficiary’s interest is forfeited to the Government.
Of right and powers of trustees
32. Right to
reimbursement of expenses.
Right to recouped for erroneous over-payment.
33. Right to indemnity from
gainer by breach of trust.
34. Right to apply to Court for
opinion in management of trust-property.
35. Right to apply settlement
of accounts.
36. General authority of
trustee.
37. Power to sell in lots,
and either by public auction or private
contract.
38. Power to
sell under special conditions.
Time allowed for
selling trust-property.
39. Power to convey.
40. Power to vary investments.
41. Power to apply property of
minors, etc., for their maintenance, etc.
44. Power to several trustees
of whom one disclaims or dies.
45. Suspension of trustee’s
power by decree.
Of the disabilities of trustees
46. Trustees cannot renounce
after acceptance.
48. Co-trustees
cannot act singly.
49. Control of
discretionary power.
50. Trustee may
not charge for services.
51. Trustee may
not use trust-property for his own profit.
52. Trustee for
sale or his agent may not buy.
53. Trustee may not buy
beneficiary’s interest without permission.
54. Co-trustees may not lend to
one of themselves.
Of the rights and liabilities of the
Beneficiary
55. Rights to
rents and profits.
56. Right to
specific execution.
Right to transfer of possession.
57. Right to
inspect and take copies of instrument of trust accounts, etc.
58. Right to
transfer beneficial interest.
59. Right to
sue for execution of trust.
61. Right to
compel to any act of duty.
62. Wrongful
purchase by trustee.
64. Saving of
rights of certain transferees,
65. Acquisition
by trustee of trust-property wrongfully converted.
66. Right in
case of blended property.
67. Wrongful
employment by partner trustee of trust-property for partnership purposes.
68. Liability
of beneficiary joining in, breach of trust.
69. Rights and
liabilities of beneficiary’s transferee.
Of vacating the office of trustee
72. Petition to
be discharged from trust.
73. Appointment of new trustees on death, etc.
Rule for selecting new
trustees.
75. Vesting of trust-property
in new trustees.
Of the extinction of trusts
79. Revocation
not to defeat what trustees have duly done
Of certain obligations in the nature
Of trusts
80. Where
obligation in nature of trust is created.
81. Where it
does not appear that transferor intended to dispose of beneficial interest.
82. Transfer to
one for consideration paid by another.
83. Trust
incapable of execution or executed without exhausting trust property.
84. Transfer for illegal
purpose.
85. Bequest for
illegal purpose.
Bequest of which revocation
is prevented by coercion.
86. Transfer pursuant to
rescindable contract.
87. Debtor
becoming creditor’s representative.
88. Advantage
gained by fiduciary.
89. Advantage
gained by exercise of undue influence.
90. Advantage
gained by qualified owner.
91. Property
acquired with notice of existing contract.
92. Purchase by
person contracting to buy property to be held on trust.
93. Advantage
secretly gained by one of several compounding creditors.
94. Constructive
trusts in cases not expressly provided for.
95. Obligor’s
duties, liabilities and disabilities.
96. Saving of
rights of bona fide purchasers.
THE INDIAN TRUSTS ACT, 1882
(Act No. 2 of 1882)
[13th January 1882]
CHAPTER I
Preliminary
An Act to define and amend the law relating to Private Trusts and
Trustees
Whereas
it is expedient to define and amend the law relating to private trusts and
trustees; it is hereby enacted as follows:
CHAPTER I
PRELIMINARY
1. Short title
and commencement. -This Act may be called the
Indian Trusts Act, 1882, and it shall come into force on the first day of
March, 1882.
Local extent, savings. -It extends to the whole of India 1[except the State of Jammu and Kashmir and
the Andaman and Nicobar Islands] but the Central Government may, form time to
time, by notification in the Official Gazette, extend it to the Andaman and
Nicobar Islands or to any part thereof.
But nothing herein contained affects the rules of Mohammdan law as to
Waqf or the mutual relations of the members of an undivided family as
determined by any customary or personal law, or applies to public or private
religious or charitable endowments, or to trusts to distribute prizes taken in
war among the captors; and nothing in the Second Chapter of this Act applies to
trusts created before the said day.
1. Subs by
Act No.3 of 1951, for “except part B states”.
2. Repeal of
enactments. -The Statute and Acts mentioned in the Schedule hereto annexed shall,
to the extent mentioned in the said Schedule, be repealed in the territories to
which this Act for the time being extends.
3. Interpreation-clause.
–”Trust”. -A
“trust” is an obligation annexed to the ownership of property, and arising out
of a confidence reposed in and accepted by the owner, or declared and accepted
by him, for the benefit of another, or of another and the owner;
The person who reposes or declares
the confidence is called the “author of the trust”; the person who accepts the
confidence is called the “trustee”; the person for whose benefit the confidence
is accepted is called the “beneficiary”; the subject-matter of the trust is
called “trust-property” or “trust-money”; the “beneficial interest” or
“interest” of the beneficiary is his right against the trustee as owner of the
trust-property; and the instrument, if any, by which the trust is declared is
called the “instrument of trust”;
A
breach of any duty imposed on a trustee, as such, by any law for the time being
in force is called a “breach of trust”;
And
in this Act, unless there be something repugnant in the subject or context,
registered” means registered under the law for the registration of documents
for the time being in force; a person is said to have notice” of a fact either when he actually
knows that fact, or when, but for wilful abstention from inquiry or gross
negligence, lie would have known it, or when information of the fact is given
to or obtained by his agent, under the circumstances mentioned in the Indian
Contract Act, 1872, Section 229; and all expressions used herein and defined in
the Indian Contract Act, 1872, shall be deemed to have the meanings
respectively attributed to them by that Act.
CHAPTER II
OF THE CREATION OF TRUSTS
4. Lawful
purpose. -A
trust may be created for any lawful purpose.
The purpose of trust is lawful unless it is (a) forbidden by law, or (b)
is of such a nature that, if permitted, it would defeat the provisions of any
law, or (c) is fraudulent, or (d) involves or implies injury to the person or
property of another, or (e) the Court regards it as immoral or opposed to
public policy.
Every
trust of which the purpose is unlawful is void. In addition, where a. trust is created for two purposes, of which
one is lawful and the other unlawful, and the two purposes cannot be separated,
the whole trust is void.
Explanation. -In this section, the
expression “law” includes, where the trust-property is immoveable and situate
in a foreign country, the law of such country.
Illustrations
(a) A
conveys property to B in trust to apply the profits to tile nurture of female
fondings to be trained up as prostitutes.
The trust is void.
(b) A
bequeaths property to B, in trust to employ it in carrying on a smuggling
business, and out of the profits
thereof to support A’s children. The
trust is void:
(c) A,
while in insolvent circumstances transfers’ property to B in trust for A during
his life, and after his death for B. A is declared an insolvent. The trust for A is invalid as against his
creditors.
5. Trust of
immovable property. -No trust in relation to immovable property is valid unless declared by
a non-testamentary instrument in writing signed by the author of the trust or
the trustee and registered, or by the will of the author of the trust or of the
trustee.
Trust of movable property. -No trust in relation to movable property is
valid unless declared as aforesaid, or unless the ownership of the property is
transferred to the trustee.
These rules do not apply where they would operate to
make a fraud.
6. Creation of
trust.
-Subject to the provisions of Section 5, a trust is created when the author of
the, trust indicates with reasonable certainty by any words or acts (a) an
intention on his part to create thereby a trust, (b) the purpose of the trust,
(c) the beneficiary, and (d) the trust-property, and (unless the trust is
declared by will or the author of the trust is himself to be the trustee)
transfers the trust-property to the trustee.
Illustrations
(a) A
bequeaths certain property to B, “having the fullest confidence that he will
dispose of it for the benefit of’ C. This creates a trust so far as regards A
and C.
(b) A
bequeaths certain property to B “hoping he will continue it in the
family”. This does not create a trust, as the beneficiary is not indicated
with reasonable certainty.
(c) A
bequeaths certain property to B, requesting him to distribute it among such
members of C s family as B should think most deserving. This does not create a trust, for the
beneficiaries are not indicated with reasonable certainty.
(d) A
bequeaths certain property to B, desiring him to divide the bulk of it among
among C’s children. This does not create a trust, for the trust-property is not
indicated with sufficient certainty.
(e) A
bequeaths a shop and stock-in-trade to B, on condition that he pays A’s debts
and a legacy to C. This is a condition, not a trust for A’s creditors and C.
7. Who may create
Trusts. -A trust may be created-
(a) By
every person competent to contract, and
(b) With
the permission of a principal Civil Court of original jurisdiction, by or on
behalf of a minor;
But subject in each case to the law for the time being in force as to
the circumstances and extent in and to which the author of the trust may
dispose of the trust-property.
8. Subject of
trust. -The subject matter of a trust must be property
transferable to the beneficiary.
It must not be merely beneficial interest under a
subsisting trust.
9. Who may be
beneficiary. –Every Person capable of
holding property may he a beneficiary.
Disclaimer by beneficiary. -A proposed beneficiary may renounce his
interest under the trust by disclaimer addressed to the trustee, or by setting
up, with notice of the trust, a claim inconsistent therewith.
10. Who may be
trustee,
-Every Person capable of holding property may be a trustee; but, where the
trust involves the exercise of discretion, he cannot execute it unless he is
competent to contract.
No one bound to accept trust. -No one is bound to accept
a trust.
Acceptance of trust. -A trust is accepted by ally words or acts of the trustee indicating with
reasonable certainly such acceptance.
Disclaimer of
trust. -Instead of accepting a trust, the
intended trustee may, within a reasonable period, disclaim it and such
disclaimer shall prevent the trust-property from vesting in him.
A
disclaimer by one of two or others, and makes him or them sole trustee or
trustees from the date of the creation of the trust.
Illustration
(a) A
bequeaths certain property to B and C, his executors, as trustees for D, B and
C prove A’s will. Ibis is in itself an
acceptance of the trust, B and C hold the property in trust for D.
(b) A transfers certain Property to B in
trust to sell it and to pay out of the Proceeds A’s debts. B accepts the trust and sells the
property. So far as regards B, a trust
of the proceeds is created for A’s creditors.
(c) A
bequeaths a lakh of rupees to B upon certain trusts and appoints him his
executor. B severs the lakh from the general assets and appropriates it to the
specific purpose. This is an acceptance
of the trust
CHAPTER III
OF THE DUTLES AND LIABILITIES OF TRUSTEES
11. Trustee to
execute trust. -The trustee is bound to fulfil the purpose of the turst, and to obey
the directions of the author of the given at the time of its creation, except
as modified by the consent of all the beneficiaries being competent to
contract.
Where the beneficiary is incompetent to contract, his consent may, for
the purposes
Of this section, be g’ en by a principal Civil Court
of original jurisdiction.
Nothing
in this section shall be deemed to require a trustee to obey any direction when
to do so would be impracticable, illegal or maifastly injurious to the
beneficiaries.
Explanation-Unless a contrary intention
be expressed, the purpose of a trust for the payment of debts shall be deemed
to be (a) to pay only the debts of the author of the trust existing and
recoverable at the date of the instrument of trust, or, when such instrument is
a will, at the date of his death, and (b) in the case of debts not bearing
interest, to make such payment without interest.
Illustration
(a) A, a
trustee, is simply authorized to sell certain land by Public auction. He cannot sell the land by private contract.
(b) A, a
trustee of certain land for X, Y and Z, is authorized to sell the land to B for
a specified sum. X, Y and Z, being
competent to contract, consent that A may sell the land to C for a less
sum. A may sell the land accordingly.
(c) A, a
trustee for B and her children, is directed by the author of the trust to lend,
on B’s request, trust property to B’s husband, C, on the security of his
bond. C becomes insolvent and B
requests A to make the loan. A may
refuse to make it.
12. Trustee to
inform himself of state of trust-property. -A
trustee is bound to acquaint himself, as soon as possible, with the nature and
circumstances of the trust property; to obtain, where necessary, a transfer of
the trust-property to himself; and subject to the provisions of the instrument
of trust) to get in trust-moneys invested oil insufficient or hazardous
security.
Illustrations
(a) The
trust-property is a debt outstanding on personal security. The instrument of trust gives the trustee no
discretionary power to leave the debt so outstanding. The trustee’s duty is to recover the debt without unneccessary
delay.
(b) The trust-property is money in the hands
of one of two co-trustees. No
discretionary power is given by the instrument of trust. The other co-trustee must not allow the
former to retain the money for a longer period than the circumstances of the
case required.
13. Trustee to
protect title to trust-property. -A trustee is bound to maintain and defend all such suits, and (subject
to the provisions of the instrument of trust) to take such other steps as,
regard being had to the nature and amount or value of the trust-property, may
be reasonably requisite for the preservation of the trust-property and the
assertion or protection of the tide thereto.
Illustration
The
trust-property is immovable property which has been I given to the author of
the trust by an unregistered instrument.
Subject to the provisions of the 1[Indian Registration Act, 1877] the
trustee’s duty is to cause the instrument to be registered.
1. See
now the Indian Registration Act, 1908.
14. Trustee not to
set up title adverse to beneficiary. -The trustee must not for himself or another set up
or aids any title to the trust-property adverse to the interest of the
beneficiary.
15. Care required
from trustee. -A truste is bound to deal with the trust-property as carefully as a
man of ordinary prudence would deal with such property if it were his own; and,
in the absence of a contract to the contrary, a trustee so dealing is not
responsible-for the loss, destruction or deterioration of the trust-property.
Illustrations
(a) A,
living in Calcutta, is a trustee for B, living in Bombay. A remits trust-funds to B by bills drawn by
a person of undoubted credit in favour of die trustee as such, and payable at
Bombay. The bills are dishonoured. A is not bound to make good the loss.
(b) A, a
trustee of leasehold property, directs the tenant to pay the rents on account
of the trust to a banker B, then in credit.
The rents are accordingly paid to B, and A leaves the money with B, and
A leaves the money with B, only till wanted.
Before the money is drawn out. B
becomes insolvent. A, having had not
reason to believe that B was in insolvent circumstances, is not bound to make
good the loss.
(c) A, a
trustee of two debts for B, releases one and compounds the other, in good faith
and reasonably believing that it is for B’s interest to do so. A is not bound to make good any loss caused
thereby to B.
(d) A, a
trustee directed to sell the trust-property by auction, sells the same but does
not advertise the sale and otherwise fail in reasonable dilligence in inviting
competition. A is bound to make good
the loss caused thereby to the beneficiary.
(e) A, a
trustee for B, in execution of his trust, sells the trust-property, but for
want of the due diligence on his part fails to receive part of the
purchase-money. A is bound to make good
the loss thereby caused to B.
(f) A, a
trustee for B of a policy of insurance, has funds in hand for payment of the
premiums. A neglects to pay the
premiums, and the policy is consequently forfeiled. A is bound to make good the loss to B.
(g) A
bequeaths certain moneys to B and C as trustees, and authorizes them to
continue trust-moneys upon the personal security of a certain firm in which A
had himself invested them. A dies, and a change takes place in the firm. B and C must not permit the moneys to remain
upon tile personal security of tile new firm.
(h) A, a
trustee for B, allows tile trust to be executed soley by his co-trustee, C. C
misapplies the trust-property. A is
personally answerable to the loss resulting to B.
16. Conversion of
perishable property. -Where the trust is created for the benefit of several persons in
succession, and the trust-property is of a wasting nature or a future or
reversionary interest, the trustee is bound unless all intention to the
contrary may be inferred from the instrument of trust, to convert the property
into property of a permanent and immediately profitable character. -
Illustration
(a) A
bequeaths to B all his property in trust for C during his life, and on his
death for D, and oil D’s death for E. A’s property consists of three leasehold
houses and there is nothing in A’s will to show that he intended the houses to
be enjoyed in specie. B should sell the
houses, and invest the proceeds in accordance with Section 20.
(b) A
bequeaths to B his three leasehold houses in Calcutta and all the furniture
therein in trust for C during his life, and on his death for D, and on D’s
death for E. Here anlintention that the houses and furniture should be enjoyed
in specie appears clearly, and B should not sell them.
17. Trustee to be impartial. -Where there ire more beneficiaries than one,
die trustee is bound to be impartial, and trust not execute the trust for the
advantage of one at the expense of another.
Where
the trustee has a discretionary power, nothing in this section shall be deemed
to authorize the Court to control the exercise reasonably and in good faith of
such discretion.
Illustration
A, a trustee for B, C and D is empowered to choose between several
specified anodes of investing the trust-property A in good faith chooses one of
these modes. The Court will not
interfere, although the result of tile choice may be to vary the relative
rights of B. C and D.
18. Trustee to
prevent waste. -Where the trust is created
for the benefit of several persons in succession and one of them is in
possession of the trust-property, if he commits, or threatens to commit, any
act, which is destructive, or permanently injurious thereto, the trustee is
bound to take measures to prevent such act.
19. Accounts and
information. -A trustee is bound (a) to keep clear and accurate accounts of the
trust-property, and (b) at all reasonable times, at the request of the
beneficiary, to furnish him with fill and accurate information as to the amount
and state of the trust-property.
20. Investment of
trust-money. -Where the trust-property consists of money and cannot by applied
immediately or at all early date to the purposes of the trust, the trustee is
bound (subject to any direction contained in the instrument of trust) to invest
the money on the following securities, and on no others:
(a) In
promissory notes, debentures, stock or other securities of any State Government
or of the Central Government or of the United Kingdom of Great Britain and
Ireland:
Provided that securities, both the principal whereof and the interest
whereon shall have been fully and unconditionally guaranteed by any such
Government shall be deemed, for the purposes of this clause, to be securities
of such Government.
(b) In
bonds, debentures and annuities charged or secured by the Parliament of the
United Kingdom before the fifteenth day of August, 1947 on the revenues of
India or of the Governor General in Council or of any Province:
Provided that, after the fifteenth day of February, 1916, no money shall
be invested in any such annuity being a terminable annuity unless a sinking
fund has been established in connection with such annuity; but nothing in this
proviso shall apply to investments made before the date aforesaid:
(bb) In India
three and a half percent stock, India three per cent stock, India two and a
half per cent stock or any other capital stock, which before the 15th day of August, 1947, was
issued by the Secretary of State for India in Council under the authority of an
Act of Parliament of the United Kingdom and charged on the revenues of India or
which was issued by the Secretary of State on behalf of the Governor-General in
Council under the provisions of Part XIII of the Government of India Act, 1935;
(c) In
stock or debentures of, or shares in, Railway or other Companies the interest
whereon shall have been guaranteed by the Secretary of State for India in
Council or by the Central Government or in debentures of the Bombay Provincial
Co-operative Bank Limited, the interest whereon shall have been guaranteed, by
the Secretary of State for India in Council or the State Government of Bombay;
(d) In
debentures or other securities for money issued under the authority of any
Central Act or Provincial Act or State Act, by or on behalf of any municipal
body, port trust or city improvement trust in any Presidency-town, or in
Rangoon Town, or by or on behalf of the trustees of the port of Karachi:
Provided that after the 31st day of March, 1948, no money shall he
invested in any securities issued by or on behalf of a municipal body, port
trust or city improvement trust in Rangoon Town, or by or on behalf of the
trustees of the port of Karachi;
(e) On a
first mortgage of immovable property situate in any part of the territories to
which this Act extends: provided that the property is not a leasehold for a
term of years and that the value of the property exceeds by one-third, or, if
consisting of buildings, exceeds by one-half, the mortgage money 1[*
* * *] 2[(ee)
in units issued by the Unit Trust of India under any unit scheme made under
Section 21 of the Unit Trust of India Act, 1963; or]
(f) On any
other security expressly authorized by the instrument of trust, [or by the
Central Government by notification in the official gazette,] or by any rule
which the High Court may from time to time prescribed in this behalf:
Provided that, where there is a person competent to contract and
entitled in possession to receive the income of the trust-property for his
life, or for any greater estate, no investment on any security mentioned or
referred to in clauses (d), (e) and (f) shall be made without his consent in
writing.
1. Certain
words omitted by Act No. 16 of 1975.
2. Inserted
by Act No. 16 of 1975.
20A. Power to purchase redeemable stock at a premium. –
(1) A
trustee may invest in any of the securities mentioned or referred to in Section
20, notwithstanding that -the same may be redeemable and that the price exceeds
the redemption value:
Provided that a trustee may not purchase at a price exceeding its
redemption value any security mentioned or referred to in clauses (c) and (d)
of Section 20 which is liable to be redeemed within fifteen years of the date
of purchase at par or at some other fixed rate, or purchase any such security
as it mentioned or referred to in the said clause which is liable to be
redeemed at par or at some other fixed rate at a price exceeding fifteen per
centum above par or such other fixed rate.
(2) A trustee
may retain until redemption any redeemable stock, fund or security which may
have been purchased in accordance with this section.
21. Mortgage of
land pledged to Government under Act 26 of 1871. -
Deposit in Government
Savings Bank. -Nothing in Section 20 shall apply to investments made before this Act
comes into force, or shall be deemed to preclude an investment on a mortgage of
immovable property already pledged as security for an advance under the Land
Improvement Act, 1871 or, in case the trust-money does not exceed three
thousand rupees, a deposit thereof in a Government Savings Bank.
22. Sale by
trustee directed to sell within specified time.
-Where a trustee directed to sell within a specified time extends such time,
the burden of proving, as between himself and the beneficiary, that the latter
is not prejudiced by the extension lies upon the trustee, unless the extension
has been authorized by a, principal Civil Court of original jurisdiction.
Illustration
A
bequeaths property to B, directing him with all convenient speed and within
five years to sell it, and apply the proceeds for the benefit of C. In the
exercise of reasonable discretion, B postpones the sale for six years. The sale is not thereby rendered invalid,
but C, alleging that he has been injured by the postponement, institutes a suit
against B to obtain compensation. In
such suit the burden of proving that C has not been injured lies on B.
23. Liability for
breach of trust-Where the trustee commits a breach
of trust, he is liable to make good the loss which the trust-property or the
beneficiary has thereby sustained, unless the beneficiary has by fraud induced
the trustee to commit the breach, or the beneficiary, being competent to
contract, has himself, without coercion or undue influence having been brought
to bear to him, concurred in the breach, or subsequently acquiesced therein,
with full knowledge of facts of the case and of his rights as against the
trustee.
A
trustee committing a breach of trust is not liable to pay interest except in
the following cases:
(a) Where
he has actually received interest;
(b) Where
the breach consists in unreasonable delay in paying trust-money to the
beneficiary;
(c) Where
the trustee ought to have received interest, but has not done so;
(d) Where
he may be fairly presumed to have received interest.
He is liable, in case (a), to account for the
interest actually received, and, in cases (b), (c) and (d), to account for
simple interest at the rate of six per cent per annum, unless the Court
otherwise directs.
(e) Where
the breach consists in failure to invest trust-money and to accumulate the
interest or dividends thereon, he is liable to account for Compound interest
(with half-yearly rests) at the same rate;
(f) Where
the breach consists in the employment of trust- property or the proceeds
thereof in trade or business, he is liable to account, at the option of the
beneficiary, either for compound interest (with half-yearly rests) at the same
rate, or for the net profits made by such employment.
Illustrations
(a) A trustee improperly leaves
trust-property outstanding, and it is consequently lost: he is liable to make
good the property lost, but he is not liable to pay interest thereon.
(b) A
bequeaths a house to B in trust to sell it and pay the proceeds to C. B
neglects to sell the house for a great length of time, whereby the house is
deteriorated and its market price falls. B is answerable to C for the loss.
(c) A
trustee is guilty of unreasonable delay in investing trust-money in accordance
with Section 20, or in paying it to the beneficiary. The trustee is liable to
pay interest thereon for the period of the delay.
(d) The
duty of the trustee is to invest trust-money in any of the securities mentioned
in Section 20, clause (a), (b), (c) or (d).
Instead of so doing, he retains the money in his hands. He is liable, at the option of the
beneficiary, to be charged either with the amount of the principal money and
interest, or with the amount of such securities as lie might have purchased
with the trust-money when the investment should have been made, and the
intermediate dividends and interest thereon.
(e) The
instrument of trust directs the trustee to invest trust-money either in any of
such securities or on mortgage of immovable property. The trustee does neither.
He is liable for the principal money and interest.
(f) The
instrument of trust directs the trustee to invest trust-money in any of such
securities and to accumulate the dividends thereon. The trustee disregards the direction. He is liable, at the option of the beneficiary, to be charged
either with the amount of the principal money and compound interest, or with
the amount of such securities as tie might have purchased with the trust-money when
the investment should have been made, together with the amount of the
accumulation which would have arisen from a proper investment of the
intermediate dividends.
(g) Trust-property
is invested in one of the securities mentioned in Section 20, clauses (a). (b),
or (d). The trustee sells such security
for some purpose not authorized by the terms of the instrument of trust. He is liable, at the option of the
beneficiary, either to replace the security with the intermediate dividends and
interest thereon, or to account for the proceeds of the sale with interest
thereon.
(h) The
trust-property consists of land. The
trustee sells the land to a purchaser for a consideration without notice of the
trust. The trustee is liable, at the
option of the beneficiary to purchase other land of equal value to be settled
upon the like trust, or to be charged with the proceeds of the sale with
interest.
24. No set-off
allowed to trustee. -A trustee who is liable for a loss occasioned
by a breach of trust in respect of one portion of the trust property cannot set
off against his liability again which has accrued to another portion of the
trust-property through another and distinct breach of trust.
25. Non-liability
for predecessor’s default. -Where a trustee
succeeds another, he is not, as such, liable for the acts or defaults of his
predecessor.
26. Non-liability
for co-trustee’s default. -Subject to the provisions of Sections 13 and
15, one trustee is not, as such, liable for a breach of trust committed by his
co-trustee:
Provided
that, in the absence of an express declaration to the contrary in the
instrument of trust, a trustee is so liable-
(a) Where
he has delivered trust-property to his co-trustee without seeing to its proper
application;
(b) Where
he allows his co-trustee to receive trust-property and fails to make due
enquiry as to the co-trustee’s dealings therewith, or allows him to retain it
longer then the circumstances of the case reasonably require;
(c) Where
he becomes aware of a breach of trust committed or intended by his co-trustee,
and either activity conceals it or does not within a reasonable time take
proper steps to protect the beneficiary’s interest.
Joining in receipt for conformity. -A co-trustee who joins in signing a receipt for trust-property and
proves that he has not received the same is not answerable, by reason of such
Signature only, for loss or misapplication of the property by his co-trustee.
Illustration
A bequeaths certain property to B
and C, and directs them to sell it and invest the proceeds for the benefit of
D. B and C accordingly sell the property, and the purchase-money is received by
B and retained in his hands. C pays no
attention to the matter for two years and then calls oil B to make the
investment. B is unable to do so,
becomes insolvent, and the purchase-money is lost. C may be compelled to make good the amount.
27. Several
liabilities of co-trustees. -Where Co-trustees jointly commit a breach of
trust, or where one of them by his neglect enables the other to commit a breach
of trust, each is liable to the beneficiary for the whole of the loss
-occasioned by such breach.
Contribution as between co trustees. -But
as between the trustees themselves, if one be less guilty than another and has
had to refund the loss, the former may compel the latter, or his legal
representative to the extent of the assets he has received, to make good such
loss; and if all be equally guilty, any one or more of the trustees who has had
to refund the loss may compel the others to contribute.
Nothing in this section shall be deemed to authorize a trustee who has
been guilty of fraud to institute a suit to compel contribution.
28. Non-liability
of trustee paying without notice of transfer by beneficiary. -When any
beneficiary’s interest becomes vested in another person, and the trustee, not
having notice of the vesting, pays or delivers trust-property to the person who
would have been entitled thereto in the absence of such vesting, the trustee is
not liable for the property so paid or delivered.
29. Liability of
trustee where beneficiary’s interest is forfeited to the Government. -When
the beneficiary’s interest is forfeited or awarded by legal adjudication to the
Government, the trustee is bound to hold the trust-property to the extent of
such interest for the benefit of such person in such manner as the State
Government may direct in this behalf.
30. Indemnity of
trustees. - Subject to the provisions of the instrument of trust and of Sections
23 and 26, trustees shall be respectively chargeable only for such moneys,
stocks, funds and securities as they respectively actually receive, and shall
not be answerable the one for the other of them, nor for any banker or other
person in whose hands any trust-property may be placed, nor for the
insufficiency or deficiency of ally stocks, funds or securities, nor otherwise
for involuntary losses.
CHAPTER IV
OF THE RIGHTS AND POWERS OF TRUSTEES
31. Right to title
deed. -A
trustee is entitled to have in his possession the instrument of trust and all
the documents of title (if any) relating solely to the trust-property.
32. Right to
reimbursement of expenses. -Every trustee may reimburse himself, or pay or discharge out of the
trust-property, all expenses properly incurred in or about the execution of the
trust, or the realization, preservation or benefit of the trust-property, or
the protection or support of the beneficiary.
If he pays such expenses out of his own pocket he has a first charge
upon the trust-property for such expenses and interest thereon; but such charge
(unless the expenses have been incurred with the sanction of a principal Civil
Court of original Jurisdiction) shall be enforced only by prohibiting any
disposition of the trust-property without previous payment of such expenses and
interest.
If the trust-property fail, the trustee is entitled to recover from the
beneficiary personally on whose behalf he acted, and at whose request,
expressed or implied, he made the payment, the amount of such expenses.
Right to be recouped for erroneous over-payment. -Where
a trustee has by mistake made an over-payment to the beneficiary, he may
reimburse the trust-property out of the beneficiary’s interest. If such interest fails, the trustee is
entitled to recover from the beneficiary personally the amount of such
over-payment.
33. Right to indemnity from gainer by
breach of trust. -A person other than a trustee who has gained an advantage from a
breach of trust must indemnify the trustee to the extent of the amount actually
received by such person under the breach; and where he is a beneficiary the
trustee has a charge on his interest for such amount.
Nothing
in this section shall be deemed to entitle a trustee to be indemnified who has
in committing the breach of trust, been guilty of fraud.
34. Right to apply
to Court for opinion in management of trust-property. -Any trustee may, without instituting a suit, apply by petition to a principal
Civil Court of original jurisdiction for its opinion, advice or direction on
any present questions respecting the management or administration of the
trust-property other than questions of detail, difficulty or importance, not
proper in the opinion of the Court for summary disposal.
A copy of such petition shall be served upon, and the hearing thereof
may be attended by, such of the persons interested in the application as the
Court thinks fit.
The trustee stating in good faith the facts in such petition and acting
upon the opinion, advice or direction given by the Court shall be deemed, so
far as regards his own responsibility, to have discharged his duty as such
trustee in the subject matter of the application.
The costs of every application under this section shall be in the
discretion of the Court to which it is made.
35. Right to
settlement of accounts. -When the duties of a trustee, as such, are completed, he is entitled to
have the accounts of his administration of the trust-property examined and
settled; and, where nothing is due to the beneficiary under the trust, to an
acknowledgment in writing to that effect.
36. General
authority of trustee. -In addition to the powers expressly conferred by this Act and by the
instrument of trust, and subject to the restrictions, if any, contained in such
instrument, and to the provisions of Section 17, a trustee may do all acts
which are reasonable and proper for the realization, protection or benefit of
the trust-property, and for the protection or support of a beneficiary who is
not competent to contract.
Except
with the permission of a principal Civil Court of original jurisdiction, no
trustee shall lease trust-property for a term exceeding twenty-one years from
the date of executing the lease, nor without reserving the best yearly rent
that can be reasonably obtained.
37. Power to sell
in lots, and either by public auction or private contract. -Where
the trustee is empowered to sell any trust-property, he may sell the same
subject to prior charges or not, and either together or in losts, by public
auction or private contract, and either at one time or at several times, unless
the instrument of trust otherwise directs. -
38.
Power to sell under special
conditions. -
Power to buy in and
resell. -The
trustee making any such sale may insert such reasonable
stipulations either as to title or evidence of title, or otherwise, in any
conditions of sale or contract for sale, as he thinks fit; and may also buy-in
the property or any part thereof at any sale by auction, and rescind or vary
any contract for sale, and resell the property so bought in, or as to which the
contract is so rescinded, without being responsible to the beneficiary for any
loss occasioned thereby. –
Time allowed for selling trust-property. -Where
a trustee is directed to sell trust property or to invest trust-money in the
purchase of property, he may exercise a reasonable discretion as to the time of
effecting the sale or purchase
Illustration
(a) A
bequeaths property to B, directing him to sell it with all convenient speed and
pay the proceeds to C. This does not tender an immediate sale imperative.
(b) A
bequeaths property to B, directing him to sell it at such time and in such
manner as he shall think fit and invest the proceeds for the benefit of C. This
does not authorize B, as between him and C, to postpone the sale to an
indefinite period.
39. Power to
convey. -For the purpose of completing any such sale,
the trustee shall have power to convey or otherwise dispose of the property
sold in such manner as may be necessary.
40. Power to vary
investments. -A trustee may, at his discretion, call in any trust property invested in
any security and invest the same on any of the securities mentioned or referred
to in Section 20, and from time to time vary any such investments for others of
the same nature:
Provided
that, where there is a person competent to contract and entitled at the time to
receive the income of the trust-property for his life, or for any greater
estate, no such change of investment shall be made without his consent in
writing.
41. Power to apply
property of minors, etc., for their maintenance, etc. -Where any property is held
by a trustee in trust for a minor, such trustee may, at his discretion, hay to
the guardians (if any) of such minor, or otherwise apply for or towards his
maintenance or education or advancement in life, or the reasonable expenses of
his religious worship, marriage or funeral, the whole or any part of the income
to which he may be entitled in respect of such property; and such trustee shall
accumulate all the residue of such income by way of compound interest by
investing the same and the resulting income thereof from time to time in any of
the securities mentioned or referred to in Section 20, for the benefit of the
person who shall ultimately become entitled to the property from which such
accumulations have arisen:
Provided
that such trustee may, at any time, if he thinks fit, apply the whole or any
part of such accumulations as if the same were part of the income arising in
the then current year.
Where the income of the trust-property is insufficient for the minor’s
maintenance or education or advancement in life, or the reasonable expenses of
his religious worship, marriage or funeral, the trustee may, with the
permission of a principal Civil Court of original jurisdiction, but not
otherwise, apply the whole or any part of such property for or towards such
maintenance, education, advancement or expenses.
Nothing in this section shall be deemed to affect the provisions of any
local law for the time being in force relating to the persons and property
minors.
42. Power to give
receipts. -Any trustee or trustees may give a receipt in
writing for any money, securities or other movable property payable,
transferable or deliverable to them or him by reason, or in exercise, of any
trust or power; and, in the absence of fraud, such receipt shall discharge the
person paying, transferring or delivering, the same therefrom, and from seeing
to the application thereof, or being accountable for any loss or misapplication
thereof.
43. Power to
compound, etc. -Two or more trustees acting
together may, if and as they think fit, -
(a) Accept
any composition or any security for any debt or for any property claimed;
(b) Allow
any time for payment of any debt;
(c) Compromise,
compound, abandon, submit to arbitration or otherwise settle any debt, account,
claim or thing whatever relating to the trust; and
(d) For any
of those purposes, enter into, give, execute and do such agreements,
instruments of composition or arrangement, releases and other things as to them
seem expedient, without being responsible for any loss occasioned by any act or
thing so done by them in good faith.
The powers conferred by this section on two or more trustees acting
together may be exercised by a sole acting trustee when by the instrument of
trust, if any, a sole trustee is authorised to execute the trusts and powers
thereof.
This section applies only if and as far as a contrary intention is not
expressed in the instrument of trust, if any, and shall have effect subject to
the terms of that instrument and to the provisions therein contained.
This section applies only to trusts created after this Act comes into
force.
44. Power to
several trustees of whom one disclaims or dies. -When an authority to deal
with the trust-property is given to several trustees and one of them disclaims
or dies, the authority may be exercised by the continuing trustees, unless from
the terms of the instrument of trust it is apparent that the authority is to be
exercised by a number in excess of the number of the remaining trustees. -
45. Suspension of
trustee’s powers by decree. -Where a decree has been made in a suit for the execution of a trust.
the trustee must not exercise any of his powers except in conformity with such
decree, or with the sanction of the Court by which the decree has been made,
or, where an appeal against the decree is pending, of the Appellate Court.
CHAPTER V
OF THE DISABILITIES OF TRUSTEES
46. Trustees
cannot renounce after acceptance. -A trustee who has accepted the trust cannot
afterwards renounce it except (a) with the permission of a principal Civil
Court of original jurisdiction, or (b) if the beneficiary is competent to
contract, with his consent, or (c) by virtue of a special power in the instrument
of trust.
47. Trustee cannot
delegate. -A
trustee cannot delegate his office or any of his dudes either to a co-trustee
or to a stranger, unless (a) the instrument of trust so provides, or (b) the
delegation is in the regular course of business, or (c) the delegation is
necessary, or (d) the beneficiary, being competent to contract, consents to the
delegation.
Explanation. -The appointment of an
attorney or proxy to do an act merely ministerial and involving no independent
discretion is not a delegation within the meaning of this section.
Illustrations
(a) A
bequeaths certain property to B and C on certain trusts to be executed by them
or the survior of them or the assigns of such survivor, B dies, C may bequeath
the trust-property to D and E upon the trusts of A’s will.
(b) A is a
trustee of certain property with power to sell the same A may employ an
auctioneer to effect the sale.
(c) A
bequeaths to B fifty houses let at monthly rents in trust to collect the rents
and pay them to C. B may employ a proper person to collect these rents.
48. Co-trustees
cannot act singly. -When there are more trustees than one, all must join in the execution of the trust, except where the
instrument of trust otherwise provides.
49. Control of
discretionary power. -Where a discretionary power conferred on a trustee is not exercised
reasonably and in good faith, such power may be controlled by a principal Civil
Court of -original jurisdiction. -
50. Trustee may
not charge for services. -In the absence of express directions to the contrary contained in the
instrument of trust or of a contract to the contrary entered into with the
beneficiary or the Court at the time of accepting the trust, a trustee has no
right to remuneration for his trouble, skill and loss of time in executing the
trust. Nothing in this section applies to any Official Trustee, Administrator
General, Public Curator, or person holding a certificate of administration.
51. Trustee may
not use trust-property for his own profit. -A
trustee may not use or deal with the trust-property for his own profit or for
any other purpose unconnected with the trust.
52. Trustee for
sale or his agent may not buy. -No trustee whose duty it is to sell trust-property, and no agent
employed by such trustee for the purpose of the sale, may, directly or
indirectly, buy the same or any interest therein, on his own account or as
agent for a third person.
53. ‘Trustee may
not buy beneficiary’s interest without permission. -No trustee, and no person
who has recently ceased to be a trustee, may, without the permission of a
principal Civil Court of original jurisdiction, buy or become mortagee or
lessee of the trust-property or any part thereof and such permission shall not
be given unless the proposed purchase, mortgage or lease is manifestly for the
advantage of the beneficiary,
Trustee for purchase. -And no trustee whose
duty it is to buy or to obtain a mortgage or lease of particular property for
the beneficiary may buy it, or any part thereof, or obtain a mortgage or lease
of it, or any part thereof, for himself.
54. Co-trustees
may not lend to one of themselves. -A trustee or co-trustee whose duty it is to invest
trust-money on mortgage or personal security must not invest it on a mortgage
by, or on the personal security of, himself or one of his co-trustees.
CHAPTER VI
OF THE RIGHTS AND LIABILITIES OF THE BENEFICIARY
55. Rights to
rents and profits. -The beneficiary has subject
to the provisions of the instrument of trust, a right to the ‘rents and profits
of the trust-property.
56. Right to
specific execution. -The beneficiary is entitled
to have the intention of the author of the trust specifically executed to the
extent of the beneficiary’s interest.
Right to transfer of possession. -Where there is, only one
beneficiary and he is competent to contract, or where there are several
beneficiaries and they are competent to contract and all of one mind, he or
they may require the trustee to transfer the trust-property to him or them, or
to such person as he or they may direct.
When property has been transferred or bequeathed for the bequeathed for
the benefit of a married woman, so that she shall not have power to deprive
herself of her beneficial interest, nothing in the second clause of this
section applies to such property during her marriage.
Illustrations
(a) Certain
Government securities are given to trustees upon trust to accumulate the
interest until A attains the age of 24, and then to transfer the gross amount
to him. A on attaining majority may, as
the person exclusively interested in the trust-property, require the trustees
to transfer it immediately to him.
(b) A
bequeaths Rs. 10,000 to trustees upon
trust to purchase an annuity for B, who has attained his majority and is
otherwise competent to contract. B may
claim the Rs. 10,000.
(c) A
transfers certain property to B and directs him to sell or invest it for the
benefit of C, who is competent to contract. C may elect to take the property in
its original character.
57. Right to
inspect and take copies of instrument of trust accounts, etc. –The beneficiary has a
right, as against the trustee and all persons claiming under him with notice of
the trust, to inspect and take copies of the instrument of trust, the documents
of title relating solely to the trust-property, the accounts of the
trust-property and the vouchers (if any) by which they are supported, and the
cases submitted and opinions taken by the trustee for his guidance in the
discharge of his duty.
58. Right to
transfer beneficial interest-The beneficiary, if
competent to contract, may transfer his interest, but subject to the law for
the time being in force as to the circumstances and extent in and to which he
may dispose of such interest:
Provided
that when property is transferred or bequeathed for the benefit of a married
woman, so that she shall not have power to deprive herself of her beneficial
interest, nothing in this section shall authorize her to transfer such interest
during her marriage.
59. Right to sue
for execution of trust. -Where no trustees are appointed or all the trustees die, disclaim, or
are discharged, or where. for any other reason the execution of a trust by the
trustee is or becomes impracticable, the beneficiary may institute a suit for
the execution of the trust, and the trust shall, so far as may be possible, be
executed by the Court until the appointment of a trustee or new trustee.
60. Right to proper trustees. -The beneficiary
has a right (subject to the provisions of the instrument of trust) that the
trust-property shall be properly protected, held, and administered by proper
persons and by a proper number of such persons.
Explanation I. -The following are not proper
persons within the meaning of this section:
A person domiciled abroad; an alien enemy; a person having an interest
inconsistent with that of the beneficiary; a person in insolvent circumstances;
and, unless the personal law of the beneficiary allows otherwise, a married
woman and a minor.
Explanation II. -When the administration of
the trust involves the receipt and custody of money, the number of trustees
should be two at least.
Illustrations
(a) A, one
of several beneficiaries, proves that B, the trustee, has improperly disposed
of part of the trust-property, or that the property is in danger from B’s being
in insolvent circumstances, or that he is incapacitated from acting as
trustee. A may obtain a receiver of the
trust-property.
(b) A bequeaths
certain jewels to B in trust for C. B die- during A’s life-time; then A
dies. C is entitled to have the
property conveyed to a trustee for him.
(c) A
conveys certain property to four trustees in trust for B. Three of the trustees
die, B may institute a suit to have three new trustees appointed in the place
of the deceased trustees.
(d) A
conveys certain property to three trustees in trust for B. All the trustees
disclaim B may institute a suit to have three trustees appointed in place of
the trustees so disclaiming.
(e) A, a
trustee for B, refuses to act, or goes to reside permanently out of India or is
declared an insolvent, or compounds with his creditors, or suffers a co-trustee
to commit a breach of trust. B may
institute a suit to have A removed and a new trustee appointed in his room.
61. Right to
compel to any act of duty. -The beneficiary has a right that his trustee shall be compelled to
perform any particular act of his duty as such, and restrained from committing
any contemplated or probable breach of trust.
Illustration
(a) A
contracts with B to pay him monthly Rs. 100 for the benefit of C. B writes and
signs a letter declaring that he will hold in trust for C the money -so to be
paid. A fails to pay money in
accordance with his contract. C may
compel B on a proper indemnity to allow C to sue on the contract in B’s name.
(b) A is
trustee of certain land, with a power to sell the same and pay the proceeds to
B and C equally. A is about to make an
improvident sale of the land. B may sue
(in behalf of himself and C for an injunction to restrain A from making the
sale.
62. Wrongful
purchase by trustee. -Where a trustee has
wrongfully bought trust property, the beneficiary has a right to have the
property declared subject to the trust or retransferred by the trustee, if it
remains in his hands unsold, or, if it has been bought from him by any person
with notice of the trust, by such person.
But in such case the beneficiary must repay the purchase-money paid by
the trustee and such other expenses (if any) as he has properly incurred in the
preservation of the property; and the trustee or purchaser must (a) account for
the net profits of the property, (b) be charged with an occupation-rent, if he
has been in actual possession of the property, and (c) allow the beneficiary to
deduct a proportionate part of the purchase-money if the property has been
deteriorated by the acts or omissions of the trustee or purchaser.
Nothing in this section-
(a) Impairs
the rights of lessees and others who, before the institution of a suit to have
the property declared subject to the trust or retransferred, have contracted in
good faith with the trustee or purchaser; or
(b) Entitles
the beneficiary to have the property declared subject to the trust or
retransferred where he, being competent to contract, has himself, without
coercion or under influence having been brought to bear on him, ratified the
sale to the trustee with full knowledge of the facts of the case of his rights
as against the trustee.
63. Following
trust-property-into the hands of third persons; into that into which it has
been converted. -Where trust-property comes into the hands of a third person
inconsistently with the trust, the beneficiary may require him to admit
formally, or may institute a suit for a declaration, that the property is
comprised in the trust.
Where the trustee has disposed of trust-property and the money or other
property which he has received therefor can be traced in his hands, or the
hands of his legal representative or legatee, the beneficiary has, in respect
thereof, rights as nearly as may be the same as his rights in respect of the
original trust-property.
Illustrations
(a) A, a
trustee for B of Rs. 10,000, wrongfully invests Rs. 10, 000 in the purchase of
certain land. B is entitles to the
land.
(b) A, a
trustee, wrongfully purchases land in his own name, partly with his own money,
partly with money subject to a trust for B. B is entitled to a charge on tile land
for the amount of the trust money so misemployed.
64. Saving of rights of certain transferees. -Nothing in Section 63
entities the beneficiary to any right in respect of property in the hands of-
(a) A
transferee in good faith for consideration without having notice of the trust,
either when the purchase-money was paid, or when the conveyance was executed;
or
(b) A
transferee for consideration from such a transferee.
A judgment-creditor of the trustee attaching and purchasing
trust-property as not a transferee for consideration within the meaning of this
section.
Nothing in Section 63 applies to money currency notes and negotiable
instruments in the hands of a bona fide holder to whom they have passed in
circulation, or shall be deemed to affect the Indian Contract Act, 1872,
Section 108, or the liability of a person to whom a debt or charge is
transferred.
65. Acquisition by
trustee of trust-property wrongfully converted. -Where
a trustee wrongfully sells or otherwise transfers trust-property and afterwards
himself becomes the owner of the property, the property again becomes subject
to the trust, notwithstanding any want of notice on the part of intervening
transferees it) good faith for consideration.
66. Right in case
of blended property. -Where the trustee wrongfully
mingles tile trust-property with his own, the beneficiary is entitled to a
charge on the whole fund for the amount due to him.
67. Wrongful
employment by partner-trustee of trust-property for partnership purposes. -If a partner, being a trustee, wrongfully employs trust-property in the
business or on the account of the partnership, no other partner is liable
therefor in his personal capacity to the beneficiaries, unless he had notice of
the breach of trust.
The partners having such notice are jointly and severally liable for the
breach of trust.
Illustrations
(a) A and B
are partners. A dies, having bequeathed
all his property to B in trust for Z, and appointed B his sole executor. B, instead of winding up the affairs of tile
partnership, retains all the assets in the business. Z may compel him, as partner, to account for so much of tile
profits as are derived from A’s share of
the capital. B is also answerable to Z
for the improper employments of A’s assents.
(b) A, a
trader, bequeaths his property to B in trust for appoints B his sole executor and dies. B enters into partnership with X and Y in die same trade and
employs A’s assents in the partnership business. B given an indemnity to X and Y against the claim,,; of C. Here X
and I’ are jointly liable with B to C as having knowingly become parties to the
breach of trust committed by B.
68. Liability of
beneficiary joining in breach of trust.-Where one of several beneficiaries.-
(a) Joins
in committing breach of trust, or
(b) Knowingly
obtains any advantage therefrom, without the consent of the other
beneficiaries, or
(c) Becomes
aware of a breach of trust committed or intended to be committed, and either
actually conceals it, or does not within a reasonable time take proper steps to
protect the interests of the other beneficiaries, or (d) has deceived the
trustee and thereby induced him to commit a breach of trust, the other
beneficiaries are entitled to have all his beneficial interest impounded as
against him and all who claim under him (otherwise than as transferees for
consideration without notice of the breach) until the loss caused by the breach
has been compensated.
When property has been transferred or bequeathed for the benefit of a
married woman, as that she shall not have power to deprive herself of her
beneficial interest, nothing in this section applies to such property during
her marriage.
69. Rights and
liabilities of beneficiary’s transferee. -Every person to whom a beneficiary transfers his
interest has the rights, and is subject to the liabilities, of the beneficiary
in respect of such interest at the date of the transfer.-
CHAPTER VII
OF VACATILNG THE OFFICE OF TRUSTEE
70. Office how
vacated.
-The office of a trustee is vacated by his death or by his discharge from his
office.
71. Discharge of
trustee. -The trustee may be discharged from his office
only as follows:
(a) By the
extinction of the trust;
(b) By the
completion of his duties under the trust;
(c) By such
means as may be prescribed by the instrument of trust;
(d) By
appointment under this Act of a new trustee in his place;
(e) By
consent of himself and the beneficiary, or, where there are more beneficiaries
than one, all the beneficiaries being competent to contract; or
(f) By the
Court to which a petition for his discharge is presented under this Act.
72. Petition to be
discharged from trust. -Notwithstanding the
provisions of Section 11, every trustee may apply by petition to a principal
Civil Court of original jurisdiction to be discharged from his office; and if
the Court finds that there is sufficient reason for such discharge, it may
discharge him accordingly, and direct his costs to be paid out of the
trust-property. But where there is no
such reason, the Court shall not discharge him, unless a proper person can be
found to take his place.
73. Appointment of new trustees on death, etc. -Whenever any person appointed a
trustee disclaims, or any trustee, either original or substituted, dies, or is
for a continuous period of six months absent from India, or leaves India for
the purpose of residing abroad, or is declared an insolvent, or desires to be
discharged from the trust, or refuses or becomes, in the opinion of a principal
Civil Court of original jurisdiction, unfit or personally incapable to act in
the trust, or accepts an inconsistent trust, a new trustee may be appointed in
his place by:
(a) The
person nominated for that purpose by the instrument or trust (if any), or
(b) If
there be no such person, or no such person able wid willing to act, the author
of the trust if he be alive and competent to contract, or the surviving or
continuing trustees or trustee for the time being, or legd representative of
the last surviving and continuing trustee, or (with the consent of the Court)
the retiring trustees, if they all retire simultaneously, or (with the like
consent) the last retiring trustee.
Every such appointment shall be by writing under the hand of the person
making it.
On an appointment of a new trustee the number of trustees may be
increased.
The Official Trustee may, with his consent and by die order of the
Court, be appointed under this section, in any case, in which only one trustee
is to be appointed and such trustee is to be the sole trustee.
The provisions of this section relative to a trustee who is dead include
the case of person nominated trustee in a will but dying before the testator,
and those relative to continuing trustee include a refusing or retiring trustee
if willing to act in the execution of the power.
74. Appointment by
Court.
-Whenever any such vacancy or disqualification occurs and it is found impracticable to appoint a new
trustee under Section 73, the beneficiary may, without instituting a suit, apply
by petition- to a principal Civil Court of original jurisdiction for the
appointment of a trustee or a new trustee, and the Court may appoint a trustee
or a new trustee accordingly.
Rule for selecting new trustees. -In appointing new
trustees, the Court shall have regard (a) to the wishes of the author of the
trust as expressed in or to be inferred from the instrument of trust; (b) to
the wishes of the person, if any, empowered to appoint new trustees; (c) to the
question whether the appointment will promote or impede the execution of the
trust; and (d) where there are more beneficiaries than one, to the interests of
all such beneficiaries.
75. Vesting of
trust-property in new trustees. -Whenever any new trustee is appointed under Section 73 or Section 74,
all the trust-property for the time being vested in the surviving or continuing
trustees or trustee, or in the legal representative of any trustee, shall
become vested in such new trustee, either solely or jointly with the surviving
or continuing trustees or trustee as the case may require.
Powers of new trustees. -Every new trustee so appointed, and every trustee appointed by a Court
either before or after the passing of this Act, shall have the same powers,
authorities and discretions, and shall in all respects act, as if he had been
originally nominated a trustee by the author of the trust.
76. Survival of trust -In the death or
discharge of one of’ several co-trustees, the trust survives and the
trust-property passes to the others, unless the instrument of trust expressly
declares otherwise.
CHAPTER VIII
OF THE EXTINCTION OF TRUSTS
77. Trust how
extinguished. -A trust is extinguished-
(a) When
its purpose is completely fulfilled; or
(b) When
its purpose becomes unlawful; or
(c) When
the fulfilment of its purpose becomes impossible by destruction of the
trust-property or otherwise; or
(d) When
the trust, being revocable, is expressly revoked.
78. Revocation of
trust. -A trust created by will may be revoked at the
pleasure of the testator.
A trust otherwise created can be revoked only-
(a) Where
all the beneficiaries are competent to contract-by their consent;
(b) Where
the trust has been declared by a non-testamentary instrument or by word of
mouth-in exercise of a power of revocation expressly reserved to the author of
the trust; or
(c) Where
the trust is for the payment of the debts of the author of the trust, and has
not been communicated to the creditors-at the pleasure of the author of the
trust.
Illustration
A
conveys property to B in trust to sell the same and pay out of the proceeds the
claims of A’s creditors. A reserves no
power of revocation. If no
communication has been made to the creditors, A may revoke the trust. But if the creditors are parties to the
arrangement, the trust cannot be revoked without their consent.
79. Revocation not
to defeat what trustees have duly done. -The author of the trust so as to defeat or prejudice
what the trustees may have duly done in execution of the trust can revoke no
trust.
CHAPTER IX
OF CERTAIN OBLIGATIONS IN THE
NATURE OF TRUSTS
80. Where
obligation in nature of trust is created. -An obligation in the nature of a trust it created
in the following cases.
81. Where it does
not appear that transferor intended to dispose of beneficial interest. -[Repealed by the Benami Transactions (Prohibition) Act, 1988 (45 of
1988)].
82. Transfer to
one for consideration paid by another. -[Repealed
by the Benami Transactions (Prohibition) Act, 1988 (45 of 1988)].
83. Trust incapable
of execution or executed without exhausting trust-property. -Where a trust is incapable of being executed, or where the trust is
completely executed without exhausting the trust-property, the trustee, in the
absence of a direction to the contrary, must hold the trust property, or so
much thereof as is unexhausted, for the benefit of the author of the trust or
his legal representative.
Illustrations
(a) A
conveys certain land to B. -
Upon trust”, and no trust declared; or
Upon trust to be thereafter declared”, and no such declaration is ever
made; or upon trusts that are too vague to be executed; or
Upon trust that become incapable of taking effect; or
“In trust for C’, and C renounces his interest under the trust.
In each of these cases B holds the land for the benefit of A.
(b) A
transfers Rs. 10,000 at the four per cent to B, in trusts to pay the interest
annually accruing due to C for her life.
A dies. Then C dies. B holds the fund for the benefit of A’s
legal representative.
(c) A
conveys land to B upon trust to sell it and apply one moiety of the proceeds
for certain charitable purposes, and the other for the maintenance of the
worship of an idol. B sells the land,
but the charitable purposes wholly fail, and the maintenance of the worship
does not exhaust the second moiety of the proceeds. B holds the first moiety and the part unapplied for the second
moiety for the benefit of A or his legal representative.
(d) A
bequest Rs. 10,000 to B, to be laid out, in buying land to be conveyed for
purposes which either wholly or partially fail to take effect. B holds for the benefit of A’s legal
representative the undisposed of interest in the money or land if purchased.
84. Transfer for illegal purpose. -Where the owner of property transfers
it to another for an illegal purpose and such purpose is not carried into
execution, or the transferor is not as guilty as the transferee, or the effect
of permitting the transferee to retain the property might be to defeat the
provisions of any law, the transferee must hold the property for the benefit of
the transferor.
85. Bequest for
illegal purpose. -Where a testator bequeaths
certain property upon trust and the purpose of the trust appears on the face of
the will to be unlawful, or during the testator’s lifetime the legatee agrees
with him to apply the property for an unlawful purpose, the legatee must hold
the property for the benefit of the testator’s legal representative.
Bequest of which revocation is prevented by coercion. -Where property is bequeathed and the
revocation of the bequest is prevented by coercon, the legatee must hold the
property for the benefit of the testator’s legal representative.
86. Transfer
pursuant to rescindable contract-Where
property is transferred in pursuance of a contract which is liable to
rescission or induced by fraud or mistake, the transferee must, on receiving
notice to that effect, hold the property for the benefit of the transferor,
subject to repayment by the latter of the consideration actually paid.
87. Debtor
becoming creaditor’s representative. -Where a debtor becomes the executor or other legal
representative of his creditor, he must hold the debt for the benefit of the
persons interested therein.-
88. Advantage
gained by riduciary. -Where a trustee, executor, partner, agent, director of a company,
legal advisor, or other person bound in a fiduciary character to protect the
interests of another person, by availing himself of his character, gains for
himself any pecuniary advantage, or where any person so bound enters into any
dealings under circumstances in which his own interests are, or may be, adverse
to those of such other person and thereby gains for himself a pecuniary
advantage, he must hold for the benefit of such other person the advantage so
gained.
Illustrations
(a) A, an
executor, buys at an undervalue from B, a legatee, his claim under the
will. B is ignorant of the value of the
bequest. A must hold for the benefit of
B the difference between the price and value.
(b) A, a
trustee, uses the trust property for the purpose of his own business. A holds for tile benefit of his beneficiary
the profits arising from such user.
(c) A, a
trustee, retires from his trust in consideration of his successor paying a sum of money. A holds such money for the
benefit of his beneficiary.
(d) A, a
partner, buys land in his own name with funds belonging to the
partnership. A holds such land for the
benefit of the partnership.
(e) A, a
partner, employed on behalf of himself and his co-partners is negotiating tile
terms of a lease, clandestinely stipulates with the lessor for payment to
himself of a lakh of rupees. A holds
the lakh for the benefit of the partnership.
(f) A and B
are partners. A dies. B, instead of winding up the affairs of the
partnership, retains all the assets in the business. B must account to A’s legal representative for the profits
arising from A’s share of the capital.
(g) A, an
agent employed to obtain a lease for B, obtains the lease for himself. A holds the lease for the benefit of B.
(h) A, a
guardian, buys up for himself encumbrances on his ward B’s estate at an
undervalue. A holds for the benefit of
B the encumbrances so bought, and can only charge him with what lie -has
actually paid.
89. Advantage
gained by exercise of undue influence. -Where, by the exercise of undue influence, any
advantage is gained in derogation of the interests of another, the person
gaining such advantage without consideration, or with notice that such influence
has been exercised, must hold the advantage for the benefit of the person,
whose interests have been so prejudiced,
90. Advantage
gained by qualified owner. -Where a tenant for life, co-owner, mortgagee or other qualified owner
of any property, by availing himself of his position as such, gains all
advantage in derogation of the rights of the other persons interested in the
property, or where any such owner, as representing all persons interested in
such property, gains any advantage, he must hold, for the benefit of all
persons so interested, the advantage so gained, but subject to repayment by
such persons of their due share of the expenses properly incurred, and to all
indemnity by the same persons against liabilities properly contracted, in gaining
such advantage.
Illustrations
(a) A, the
tenant for life of leasehold property, renews the lease in his own name and for
his own benefit. A holds the renewed
lease for the benefit of all those interested in the old lease.
(b) A
village belongs to a Hindu family. A,
one of its members, pays Nazrana to Government and thereby procures his name to
be entered as the inamdar of the village.
A holds the village for the benefit of himself and the other members.
(c) A
mortgages land to B, who enters into possession. B allows the Government revenue to fall into arrear with a view
to the land being put up for sale and his becoming himself the purchaser of
it. The land is accordingly sold to B.
Subject to the repayment of the amount clue on the mortgage and of his expenses
properly incurred as mortgagee, B holds the land for the benefit of A.
91. Property
acquired with notice of existing contract. -Where a person acquires
property with notice that another person has entered into all existing contract
affecting that property, of which specific performance could be enforced, the
former must hold the property for the benefit of the latter to the extent
necessary to give effect to the contract.
92. Purchase by
person contracting to buy property to be held on trust. -Where
a person contracts to buy property to be held oil trust for certain
beneficiaries and buys the property accordingly, he must hold the property for
their benefit to the extent necessary to give effect to the contract.
93. Advantage
secretly gained by one of several compounding creditors. -Where creditors compound the debts due to them, and one of such
creditors, by a secret arrangement with the debtor, gains an undue advantage
over his co-creditors, he must hold of the benefit of such creditors the
advantage so gained.
94. Constructive
trusts in cases not expressly provided for.
-[Repealed by the Benami Transactions (Prohibition) Act, 1988 (45 of 1988)].
95. Obligor’s
duties, liabilities and disabilities. -The
person holding property in accordance with any of the preceding sections of
this Chapter must, so far as may be, perform the same duties, and is subject,
so far as may be, to the same liabilities and disabilities, as if he were a
trustee of the property for the person for whose benefit he holds it:
Provided
that (a) where he rightfully cultivates the property or employs it ill trade or
business, he is entitled to reasonable remuneration for his trouble, skill and
loss of time in such cultivation or employment; and (b) where he holds the
property by virtue of a contract with a person for whose benefit he holds it or
with any one through whom Such person claims, he may, without the permission of
the Court, buy or become lessee or mortgagee of the property or any part thereof.
96. Saving of
rights of bona fide purchasers. -Nothing contained in this Chapter shall impair
the rights of transferees in good faith for consideration, or create all
obligations in evasion of any law for the time being in force.
(See Section 2)
STATUTE
|
Year and Chapter |
Short title |
Extent of repeal |
|
29 Car. 11, c. 3 |
The Statute of Frauds... |
Sections 7, 8, 9, 10 and 11 |
|
ACTS OF THE
GOVERNOR-GENERAL IN COUNCIL |
||
|
Number and year |
Short title |
Extent of repeal |
|
XXVIII of 1866 |
The Trustees and Mortgagees Powers Act, 1866. |
Sections 2, 3, 4, 5, 32, 33, 34, 35, 36 and 37. In Section 43 the word “trustee” wherever it
occurs; and in Section 43 the words “management or” and “the trust-property
or”. |
|
1 of 1877 |
The Specific Relief Act, 1877 |
In Section 12, the first Illustration. |