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.

                                                 [13th January, 1882.]

Preamble.

     Preamble.-WHEREAS  it  is  expedient  to define and amend the law

relating  to  Preamble.   private trusts and trustees;  It  is  hereby

enacted as follows:-

CHAPTER I

PRELIMINARY

                              CHAPTER I

                              PRELIMINARY

1.Short title. Commencement.

     1. Short  title. 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.

     Local extent, Savings.-2*[It  extends  to 3*[the  whole of  India

4*[except the State of Jammu and Kashmir] and] the Andaman and Nicobar

Islands  5***;  but the Central Government may, from time to time,  by

notification  in the Official Gazette, extend it to 6*[the Andaman and

Nicobar Islands] or to any part thereof.] 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.

2.Repeal of enactments.

     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Schedule, be  repealed, in  the territories  to which this Act for the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.Interpretation-clause "trust":

     3.Interpretation-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

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1  The Act has been extended to Berar by the Berar Laws Act, 1941 (4

   of 1941).

Extended to  and brought  into force in Dadra and Nagar Havoli (w.e.f.

1.7.1965) by Reg. 6 of 1963, s.2 and Sch.I

Extended to Goa, Daman and Diu by Re. 11 of 1963, s. 3 and Sch.

The Act  comes into  force in  Pondicherry on 1.10.1963 vide Reg. 7 of

1963, s. 3 and Sch. I.

The Act  shall come into force in the State of Sikkim on 1.9.1984 vide

Notifn. No.S.O.642(E),  dt.24.8.1984 Gaz. of India, Exty, pt. II Sec.3

(ii).

2    Subs. by  the A. O. 1948 for the original words as amended by the

A. O. 1937.

3    Subs. by the A. O. 1950 for "all the Provinces of India, except".

4    Subs. by Act 3 of 1951, s.3 and Sch., for "except Part B States".

5    The words "and Panth Piploda" omitted by the A. O. 1950.

6    Subs. by  the A.  O.  1950  for  "either  or  both  of  the  said

Provinces".

owner, or declared and accepted by him, for the benefit of another, or

of another and the owner:

"author of the trust":

     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":

"trustee": "beneficiary": "trust-property": "beneficial interest":

"instrument of trust": "breach 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":

"registered":

"notice":

Expressions defined in Act 9 of 1872.

     Expressions  defined  in Act 9 of 1872.-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, 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;  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

                              CHAPTER II

                      OF THE CREATION OF TRUSTS

4. Lawful purpose.

    4. Lawful purpose.-A trust may be created for any lawful purpose.-

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.

     Every trust of which the purpose is unlawful is void. And 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 the

nurture of  female foundlings  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 immoveable property.

     5.  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.

     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.

     These rules  do not  apply where  they would  operate  so  as  to

effectuate a fraud.

6.Creation of trust.

     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  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 legacy  to C. This is a condition, not a trust

for A's creditors and C.

7.Who may create trusts.

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

          (a) by every person competent to contract, 1* 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.

     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. Disclaimer by beneficiary.

     9. Who  may  be  beneficiary.  Disclaimer  by  beneficiary.-Every

person capable of holding property may be a 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.

     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.

     marginal heading. No one is bound to accept a trust.

Acceptance of trust.

     marginal heading. A trust  is  accepted  by  any  words  or  acts

of the trustee indicating with reasonable certainty such acceptance.

Disclaimer of trust.

     marginal heading. 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 more co-trustees vests the trust-

property in the other or others, and makes him or them sole trustee or

trustees from the date of the creation of the trust.

                            Illustrations

     (a) A  bequeaths certain  property to  B and C, his executors, as

trustees for  D. B  and C  prove  A's  will.  This  is  in  itself  an

acceptance of the trust, and 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.

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1     See s. 11 of the Indian Contract Act, 1872 (9 of 1872).

     (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 DUTIES AND LIABILITIES OF TRUSTEES

                             CHAPTER III

              OF THE DUTIES AND LIABILITIES OF TRUSTEES

11.Trustee to execute trust.

     11. Trustee  to execute trust.-The trustee is bound to fulfil the

purpose of  the trust, and to obey the directions of the author of the

trust 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 given 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

manifestly 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.

                            Illustrations

     (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.

     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