The Indian Trust Act, 1882

THE INDIAN TRUSTS ACT, 1882

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THE INDIAN TRUSTS ACT, 1882 __________ ARRANGEMENT OF SECTIONS __________ PREAMBLE CHAPTER I PRELIMINARY SECTIONS 1. Interpretation-clause. “trust”. “author of the trust”: “trustee”: “beneficiary”: “trust-property”: “beneficial interest”: “instrument of trust”: “breach of trust”: “registered”: “notice”: Expressions defined in Act 9 of 1872. CHAPTER II OF THE CREATION OF TRUSTS 4. CHAPTER III OF THE DUTIES AND LIABILITIES OF TRUSTEES 11. Trustee to inform himself of state of trust-property. Trustee to protect title to trust-property.

SECTIONS

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Power to purchase redeemable stock at a premium. Mortgage of land pledged to Government under Act 26 of 1871. Deposit in Government Savings Bank. Sale by trustee directed to sell within specified time. Non-liability for predecessor’s default. Non-liability for co-trustee’s default.

SECTIONS.

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Suspension of trustee’s powers by decree. CHAPTER V OF THE DISABILITIES OF TRUSTEES 46. Trustee cannot renounce after acceptance. Trustee may not charge for services. Trustee may not use trust-property for his own profit. Trustee for sale or his agent may not buy.

SECTIONS.

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Appointment of new trustees on death, etc. Vesting of trust-property in new trustees. CHAPTER VIII OF THE EXTINCTION OF TRUSTS 77. Revocation not to defeat what trustees have duly done. CHAPTER IX OF CERTAIN OBLIGATIONS IN THE NATURE OF TRUSTS 80. Where obligation in nature of trust is created.

THE INDIAN TRUSTS ACT, 1882

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Section 1 — Short title.—This Act may be called the Indian Trusts Act, 1882. Commencement

Section 2 — Repeal of enactments

THE INDIAN TRUSTS ACT, 1882 1 ACT NO. 2 OF 1882 [13th January, 1882.] An Act to define and amend the law relating to Private Trusts and Trustees. Preamble.—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.—This Act may be called the Indian Trusts Act, 1882. 2 3 4 Local extent.— [It extends to [the whole of India *** and] the Andaman and Nicobar 5 Islands ***; but the Central Government may, from time to time, by notification in the 6 Official Gazette, extend it to [the, Andaman and Nicobar Islands] or to any part thereof.] Savings.—But nothing herein contained affects the rules of Muhammadan 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. For Report of the Indian Law Commission on the Private Trusts Bill which they were instructed to consider among others, see Gazette of India, 1880, Supplement, p.

“registered”:—and in this Act, unless there be something repugnant in the subject or context,

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Section 4 — Lawful purpose

Section 5 — Trust of immoveable property

Section 6 — Creation of trust

“registered”:—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: “notice”:—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, he 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 (9 of 1872), section 229; Expressions defined in Act 9 of 1872:—and all expressions used herein and defined in the Indian Contract Act, 1872 (9 of 1872), shall be deemed to have the meanings respectively attributed to them by that Act. CHAPTER II OF THE CREATION OF TRUSTS 4. The purpose of a 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. Trust of immoveable property.—No trust in relation to immoveable 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 moveable property.—No trust in relation to moveable property is valid unless declared as aforesaid, or unless the ownership of the property is transferred to the trustee. 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.

7. Who may create trusts.—A trust may be created—

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Section 7 — Who may create trusts

Section 8 — Subject of trust

Section 9 — Who may be beneficiary

Section 10 — Who may be trustee

Section 11 — Trustee to execute trust

This is a condition, not a trust for A’s creditors and C. Who may create trusts.—A trust may be created— 1 (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 d ispose of the trust-property. Subject of trust.—The subject-matter of a trust must be property transferable to the beneficiary. It must not be a merely beneficial interest under a subsisting trust. 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. 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.

Explanation.—Unless a contrary intention be expressed, the purpose of a trust for the

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Section 12 — Trustee to inform himself of state of trust-property

Section 13 — Trustee to protect title to trust-property

Section 14 — Trustee not to set up title adverse to beneficiary

Section 15 — Care required from trustee

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. 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. 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 on 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. Care required from trustee.—A trustee 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.

16. Conversion of perishable property.—Where the trust is created for the benefit of several

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Section 16 — Conversion of perishable property

Section 17 — Trustee to be impartial

Section 18 — Trustee to prevent waste

Section 19 — Accounts and information

Section 20 — Investment of trust-money

(d) A, a trustee directed to sell the trust-property by auction, sells the same, but does not advertise the sale and otherwise fails in reasonable diligence 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 from want of due diligence on his part fails to receive part of the purchase-money. 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 an 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 trustee for B, C and D, is empowered to choose between several specified modes of investing the trust - property. 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. Investment of trust-money.—Where the trust-property consists of money and cannot be applied immediately or at an early date to the purposes of the trust, the trustee shall, subject to any direction contained in the instrument of trust, invest the money in any of the securities or class of securities expressly authorised by the instrument of trust or as specified by the Central Government, by notification in the Official Gazette: 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 in any of the securities or class of securities mentioned above shall be made without his consent in writing.

Explanation.—For the purposes of this section, the expression “securities” shall have the

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Section 20A — Power to purchase redeemable stock at a premium

Section 21 — Mortgage of land pledged to Government under Act 26 of 1871. Deposit in Government Savings Bank

Section 22 — Sale by trustee directed to sell within specified time

Section 23 — Liability for breach of trust

Explanation.—For the purposes of this section, the expression “securities” shall have the same meaning as assigned to it in clause (h) of section 2 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956).] 1 [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: 2 * * * * * (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 immoveable property already 3 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. 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 authorised 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.

(e) where the breach consists in failure to invest trust-money and to accumulate the interest or

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Section 24 — No set-off allowed to trustee

Section 25 — Non-liability for predecessor’s default

Section 26 — Non-liability for co-trustee’s default

(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. 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). 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 he 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 immoveable property. 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. 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 he 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 devidends. (g) Trust-property is invested in one of the securities mentioned in section 20, clause (a), (b), (c) or (d). 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 than 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 actively 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 -

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Section 27 — Several liability of co-trustees

Section 28 — Non-liability of trustee paying without notice of transfer by beneficiary

Section 29 — Liability of trustee where beneficiary’s interest is forfeited to the Government

Section 30 — Indemnity of trustees

Section 31 — Right to title-deed

Section 32 — Right to reimbursement of expenses

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 s ame is not answerable, by reason of such signature only, for loss or misapplication of the property by his co -trustee. Nothing in this section shall be deemed to authorise a trustee who has been guilty of fraud to institute a suit to compel contribution. 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. Liability of trustee where beneficiary’s interest is forfeited to the Government.—When the 1 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 2 manner as [the State Government] may direct in this behalf. 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. 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 realisation, preservation or benefit of the trust -property, or the protection or support of the beneficiary.

If the trust-property fail, the trustee is entitled to recover from the beneficiary per sonally

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Section 33 — Right to indemnity from gainer by breach of trust

Section 34 — Right to apply to Court for opinion in management of trust-property

Section 35 — Right to settlement of accounts

Section 36 — General authority of trustee

Section 37 — Power to sell in lots, and either by public auction or private contract

Section 38 — Power to sell under special conditions. Power to buy-in and re-sell

If the trust-property fail, the trustee is entitled to recover from the beneficiary per sonally 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 fail, the trustee is entitled to recover from the beneficiary personally the amount of such over-payment. 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. 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. General authority of trustee.—In addition to the powers expressly conferred by this Act and by the instrument of trust, and subject to the restr ictions, 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 realisation, protection or benefit of the trust-property, and for the protection or support of a beneficiary who is not competent to contract.

and re-sell the property so bought in, or as to which the contract is so rescinded, without being

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Section 39 — Power to convey

Section 40 — Power to vary investments

Section 41 — Power to apply property of minors, etc., for their maintenance, etc

Section 42 — Power to give receipts

Section 43 — Power to compound, etc

and re-sell 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. Illustrations (a) A bequeaths property to B, directing him to sell it with all convenient speed and pay the proceeds to C. This does not render an immediate sale imperative. (b) A bequeaths property to B, directing him to sell it at such time and in such m anner as he shall think fit and invest the proceeds for the benefit of C. 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 securitie s 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. 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, pay 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.

(d) for any of those purposes, enter into, give, execute and do such agreements, instruments

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Section 44 — Power to several trustees of whom one disclaims or dies

Section 45 — Suspension of trustee’s powers by decree

Section 47 — Trustee cannot delegate

Section 48 — Co-trustees cannot act singly

Section 49 — Control of discretionary power

(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 goo d 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 authorized 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. 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. Illustrations (a) A bequeaths certain property to B and C on certain trusts to be executed by them or the survivor of them or the assigns of such survivor. 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

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Section 50 — Trustee may not charge for services

Section 51 — Trustee may not use trust -property for his own profit

Section 52 — Trustee for sale or his agent may not buy

Section 53 — Trustee may not buy beneficiary’s interest without permission

Section 54 — Co-trustees may not lend to one of themselves

Section 55 — Rights to rents and profits

Section 56 — Right to specific execution

Section 57 — Right to inspect and take copies of instrument of trust, accounts, etc

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 Off icial Trustee, Administrator General, Public Curator, or person holding a certificate of administration. 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 pu rpose unconnected with the trust. 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. 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 mortgagee 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.

inspect and take copies of the instrument of trust, the documents of title relating solely to the

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Section 58 — Right to transfer beneficial interest

Section 59 — Right to sue for execution of trust

Section 60 — Right to proper trustees

Section 61 — Right to compel to any act of duty

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. 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. 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 and held and administered by proper persons and by a proper number of such persons. 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.

62. Wrongful purchase by trustee.—Where a trustee has wrongfully bought trust-property,

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Section 62 — Wrongful purchase by trustee

Section 64 — Saving of rights of certain transferees

Section 65 — Acquisition by-trustee of trust-property wrongfully converted

Section 66 — Right in case of blended property

Section 67 — Wrongful employment by partner-trustee of trust-property for partnership purposes

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. 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 undue influence having been brought to bear on him, ratified the sale to the trustee with full knowledge of the facts of the case and of his rights as against the trustee. Following trust-property—into the hands of third persons;—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. into that into which it has been converted.—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. 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 in good faith for consideration. Right in case of blended property.—Where the trustee wrongfully mingles the trust- property with his own, the beneficiary is entitled to a charge on the whole fund for the amount due to him. 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 18

the partnership, no other partner is liable therefor in his personal capacity to the beneficiaries, unless

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Section 68 — Liability of beneficiary joining in breach of trust

Section 69 — Rights and liabilities of beneficiary’s transferee

Section 70 — Office how vacated

Section 71 — Discharge of trustee

Section 72 — Petition to be discharged from trust

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 tru st. 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 the partnership, retains all the assets in the business. 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. 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.

where there is no such reason, the Court shall not discharge him, unless a proper person can be

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Section 73 — Appointment of new trustees on death, etc

Section 74 — Appointment by Court

Section 75 — Vesting of trust-property in new trustees

Section 76 — Survival of trust

Section 77 — Trust how extinguished

where there is no such reason, the Court shall not discharge him, unless a proper person can be found to take his place. 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 1 1 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 of trust (if any), or (b) if there be no such person, or no such person able and 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 legal 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. The Official Trustee may, with his consent and by the 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. 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.

(b) when its purpose becomes unlawful; or

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Section 78 — Revocation of trust

Section 79 — Revocation not to defeat what trustees have duly done

Section 80 — Where obligation in nature of trust is created

Section 82 — [Transfer to one for consideration paid by another.] Rep. by s. 7, ibid. (w.e.f. 19-5-1988). 83. Trust incapable of execution or executed without exhausting trust-property

(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. 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. 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 c onsent.

84. Transfer for illegal purpose.—Where the owner of property transfers it to another for an illegal

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Section 84 — Transfer for illegal purpose

Section 85 — Bequest for illegal purpose

Section 86 — Transfer pursuant to rescindable contract

Section 87 — Debtor becoming creditor’s representative

Section 88 — Advantage gained by fiduciary

Section 89 — Advantage gained by exercise of undue influence

Section 90 — Advantage gained by qualified owner

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. 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 coercion, the legatee must hold the property for the benefit of the testator’s legal representative. 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. Advantage gained by fiduciary.—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. 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 an 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 22

all persons so interested, the advantage so gained, but subject to repayment by such persons of their due

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Section 91 — Property acquired with notice of existing contract

Section 92 — Purchase by person contracting to buy property to be held on trust

Section 93 — Advantage secretly gained by one of several compounding creditors

Section 94 — [Constructive trusts in cases not expressly provided for]

Section 95 — Obligor’s duties, liabilities and disabilities

Section 96 — Saving of rights of bona fide purchasers

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 an indemnity by the same persons against liabilities properly contracted, in gaining such advantage. A holds the renewed lease for the benefit of all those interested in the old lease. (b) A village belongs to a Hindu family. Subject to the repayment of the amount due on the mortgage and of his expenses properly incurred as mortgagee, B holds the land for the benefit of A. Purchase by person contracting to buy property to be held on trust.—Where a person contracts to buy property to be held on 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. 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 for the benefit of such creditors the advantage so gained. 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 in 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 the 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.

THE SCHEDULE

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THE SCHEDULE (See section 2) STATUTE Year and Chapter Short Title Extent of repeal 1 29 Car. 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 2 XXVII of 1866 . . . The Trustees’ and Sections 2, 3, 4, 5, 32, 33, 34, Mortgages’ Powers Act, 1866 35, 36 and 37. 3 In sections *** 43 the word “trustee” wherever it occurs; and in section 43 the words “management or” and “the trust-property or”. 3 In section 12 the first The Specific Relief Act, 1 of 1877 . . . illustration.