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Trusts Act, 1882

THE TRUSTS ACT, 1882

THE Trusts Act, 1882 act No. II of 1882 An Act to define and amend the law relating to Private Trusts and Trustees.

and trustees; It is hereby enacted as follows : CHAPTER I preliminary and it shall come into force on the first day of March, 1882.

as to waqf, or the mutual relations of the members of an undivided family as determined by any custo and nothing in the second Chapter of this Act applies to trusts created before the said day.

ereto annexed shall, to the extent mentioned in the said Schedule, be repealed, in the territories to w

arising out of a confidence reposed in and accepted by the owner, or declared and accepted by him, fo alled the "author of the trust":

ed the "beneficiary ": "trust-money": is his right against the trustee as owner of the trust-property; ared is called the "instrument of trust": y law for the time being in force, is called a "breach of trust": bject or context, "registered" means registered under the law for the registration of documents for the gross negligence, he would have known it, or when informa*tion of the fact is given to or obtained by 1872, shall be deemed to have the meanings respectively attributed to them by that Act. CHAPTER II of THE creation OF trusts se of a trust is lawful unless it is

y law, or

ed for two purposes, of which one is lawful and the other unlawful, and the two purposes cannot be se property is immovable and situate in a foreign country, the law of such country.

e foundlings to be trained up as prostitutes. The trust is void. g business, and out of the profits thereof to support As children. The trust is void. uring his life, and after his death for B. A is declared an insolvent. The trust for A is invalid as against rty is valid unless declared by a non-testamentary instrument in writing signed by the author of the tr

id unless declared as aforesaid, or unless the ownership of the property is transferred to the trustee. . when the author of the trust indicates with reasonable certainty by any words or acts

the trust is himself to be the trustee) transfers the trust-property to the trustee.

ill dispose of it for the benefit of C". This creates a trust so far as regards A and C. ". This does not create a trust, as the beneficiary is not indicated with reasonable certainty. uch members of Cs family as B should think most deserving. This does not create a trust, for the bene ong Cs children. This does not create a trust, for the trust-property is not indicated with sufficient cert debts and a legacy to C. This is a condition, not a trust for As creditors and C.

n behalf of a minor; but subject in each case to the law for the time being in force as to the circumsta

ble to the beneficiary. It must not be merely beneficial interest under a subsisting trust.

ng property may be a bene*ficiary. est under the trust by disclaimer addressed to the trustee, or by setting up, with notice of the trust, a

a trustee; but, where the trust involves the exercise of discretion, he cannot execute it unless he is co

cat*ing with reasonable certainty such acceptance. within a reasonable period, disclaim it, and such disclaimer shall prevent the trust-property from vestin other or others, and makes him or them sole trustee or trustees from the date of the creation of the t

B and C prove As will. This is in itself an acceptance of the trust, and B and C hold the property in tru ceeds As debts. B accepts the trust and sells the property. So far as regards B, a trust of the proceed

executor. B severs the lakh from the general assets and appropriates it to the specific purpose. This CHAPTER III of THE duties AND liabilities OF trustees

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

poses of this section, be given by a principal Civil Court of original jurisdiction. on when to do so would be impracticable, illegal or manifestly injurious to the beneficiaries. st for the payment of debts shall be deemed to be (a) to pay only the debts of the author of the trust bearing interest, to make such payment without interest.

cannot sell the land by private contract. B for a specified sum. X, Y and Z, being competent to contract, consent that A may sell the land to C f lend, on Bs request, trust-property to Bs husband, C, on the security of his bond. C becomes insolve

nd to acquaint himself, as soon as possible, with the nature and circumstances of the trust-property; t vested on insufficient or hazardous security.

ent of trust gives the trustee no discretionary power to leave the debt so outstanding. The trustees du cretionary power is given by the instrument of trust. The other co-trustee must not allow the former t

in and defend all such suits, and (subject to the provisions of the instrument of trust) to take such oth y and the assertion or protection of the title thereto.

of the trust by an unregistered instrument. Subject to the provisions of the Indian Registration Act, 1

ot for himself or another set up or aid any title to the trust-property adverse to the interest of the ben

operty as carefully as a man of ordinary prudence would deal with such property if it were his own; an

t-funds to B by bills drawn by a person of undoubted credit in favour of the trustee as such, and paya

ccount of the trust to a banker, B, then in credit. The rents are accord*ingly paid to B, and A leaves th ances, is not bound to make good the loss. good faith, and reasonably believing that it is for Bs interest to do so A is not bound to make good an but does not advertise the sale and otherwise fails in reasonable diligence in inviting competition. A is m want of due diligence on his part fails to receive part of the purchase-money. A is bound to make g the premiums. A neglects to pay the premiums, and the policy is consequently forfeited. A is bound t o continue trust-moneys upon the personal security of a certain firm in which A had himself invested t C. C misapplies the trust-property. A is personally answerable for the loss resulting to B.

benefit of several persons in succession, and the trust-property is of a wasting nature or a future or re perty of a permanent and immediately profitable character.

eath for D, and on Ds death for E. As property consists of three leasehold houses, and there is nothin

niture therein in trust for C during his life, and on his death for D, and on Ds death for E. Here an int

he trustee is bound to be impartial, and must not execute the trust for the advantage of one at the ex eemed to authorize the Court to control the exercise reasonably and in good faith of such discretion.

modes of investing the trust-property. A in good faith chooses one of these modes. The Court will no

several persons in succession and one of them is in possession of the trust-property, if he commits, or

urate accounts of the trust-property, and (b), at all reasonable times, at the request of the beneficiary

y and cannot be applied immediately or at an early date to the purposes of the trust, the trustee is bo

cial Government] or] of the Central Government], or of the United Kingdom of Great Britain and Irelan shall have been fully and uncondi*tionally guaranteed by any such Government, shall be deemed, for ugust, 1947] by the Parlia*ment of the United Kingdom] on the revenues of India or of the [Governor vested in any such annuity being a terminable annuity unless a sinking fund has been established in c

two and a half per cent. stock or any other capital stock which was at any time] issued by the Secret issued by the Secretary of State on behalf of the Governor General in Council under the provisions of erest whereon shall have been guaranteed by the Secretary of State for India in Council or by the "[C y the Secretary of State for India in Council] or the Provincial Government of Bombay]: provided that

any [Central Act or Act] of a Legislature established in [a Province] by or on be*half of any municipal

ney in any securities issued by or on behalf of a municipal body, port trust or city improve*ment trust ed that the property is not a leasehold for a term of years and that the value of the property exceeds

y any rule which the High Court may from time to time prescribe in this behalf: possession to receive the income f the trust-property for his life, or for any greater estate, no investme

e may invest in any of the securities mentioned or referred to in section 20, notwithstanding that the s value any security mentioned or referred to in clauses (c) and (d) of section 20 which is liable to be r

said clauses which is liable to be redeemed at par or at some other fixed rate at a price exceeding fift ity which may have been purchased in ac*cordance with this section.]

Deposit in Government savings Bank. Nothing in section 20 shall apply to investments made befo e under the Land Improvement Act, 1871. or, in case the trust-money does not exceed three thousan

e directed to sell within a specified time extends such time, the burden of proving, as between himsel Court of original jurisdiction.

five years to sell it, and apply the proceeds for the benefit of C. Tn the exercise of reasonable discreti es; a suit against B to obtain compensation. In such suit the burden of proving that C has not been inj

st, he is liable to make good the loss which the trust-property or the beneficiary has thereby sustained oercion or undue influence having been brought to bear on him, concurred in the breach, or subseque

e following cases:

the beneficiary:

ases (b), (c) and (d), to account for simple interest at the rate of six per cent. per annum, unless the te the interest or dividends thereon, he is liable to account for compound interest (with half-yearly re eeds thereof in trade or business, he is liable to account, at the option of the beneficiary, either for com

ently lost: he is liable to make good the property lost, but he is not liable to pay interest thereon. eglects to sell the house for a great length of time, whereby the house is deteriorated and its market p ance with section 20, or in paying it to the beneficiary. The trustee is liable to pay interest thereon fo entioned in section 20, clause (a), (b), (c) or (d). Instead of so doing, he retains the money in his han ties as he might have purchased with the trust-money when the investment should have been made, any such securities or on mortgage of immoveable property- The trustee does neither. He is liable for such securities and to accumulate the dividends thereon. The trustee disregards the direction. He is lia ties as lie might have purchased with the trust-money when the investment should have been made t

clause (a), (b), (c) or (d). The trustee sells such security for some purpose not authorized by the term eon, or to account for the proceeds of the sale with interest thereon. er for a consideration without notice of the trust. The trustee is liable, at the option of the beneficiary,

ed by a breach of trust in respect of one portion of the trust-property cannot set-off against his liabilit

her, he is not, as such, liable for the acts or defaults of his predecessor.

ons 13 and 15, one trustee is not, as such, liable for a breach of trust committed by his co-trustee: nstrument of trust, a trustee is so liable s proper application: due enquiry as to the co-trustees dealings therewith or allows him to retain it longer than the circums s co-trustee, and either actively con*ceals it or does not within a reasonable time take pro*per steps t t for trust-pro*perty and proves that he has not received the same is not ans*werable, by reason of s

Illustration the proceeds for the benefit of D. B and C accordingly sell the property, and the purchase-money is r ecomes insolvent, and the purchase-money is lost. C may be compelled to make good the amount.

ach of trust, or where one of them by his neglect enables the other to commit a breach of trust, each

ves, if one be less guilty than another and has had to refund the loss, the former may compel the latt ees who has had to refund the loss may compel the others to contribute. uilty of fraud to institute a suit to compel contribu*tion.

iciary. When any beneficiarys interest becomes vested in an*other person, and the trustee, not havi not liable for the property so paid or delivered.

overnment. When the beneficiarys interest is forfeited or awarded by legal adjudication [to the Gov ernment] may direct in this behalf.

st and of sections 23 and 26, trustees shall be respectively chargeable only for such moneys, stocks, person in whose hands any trust-property may be placed, nor for the insufficiency or deficiency of an CHAPTER IV of THE rights AND powers OF trustees

nstru*ment of trust and all the documents of title (if any) relating solely to the trust-property.

mself, or pay or discharge out of the trust-property, all expenses properly incurred in or about the exe

e trust-property for such expenses and interest thereon; but such charge (unless the expenses have b property without previous payment of such expenses and interest. personally on whose behalf he acted, and at whose request, expressed or implied, he made the paym may reimburse the trust-property out of the benefi*ciarys interest. If such interest fail, the trustee is

an a trustee who has gained an ad*vantage from a breach of trust must indemnify the trustee to the e ount. who has, in committing the breach of trust, been guilty of fraud.

rty. Any trustee may, without instituting a suit, apply by peti*tion to a principal Civil Court of original questions of detail, difficulty or importance, not proper in the opinion of the Court for summary dispo attended by, such of the persons interested in the application as the Court thinks fit. opinion, advice or direction given by the Court shall be deemed, so far as regards his own responsibil

e Court to which it is made.

, are completed, he is entitled to have the accounts of his administration of the trust-property examin

rred by this Act and by the instrument of trust, and subject to the restrictions, if any, contained in suc e trust-property, and for the protection or support of a beneficiary who is not competent to contract. trustee shall lease trust-property for a term exceeding twenty-one years from the date of executing th

ct. Where the trustee is empowered to sell any trust-property, he may sell the same subject to prior c rust other*wise directs.

. The trustee making any such sale may insert such reason*able stipulations either as to title or evide auction, and rescind or vary any contract for sale, and re-sell the property so bought in, or as to whic

he purchase of property, he may exercise a rea*sonable discretion as to the time of effecting the sale

and pay the proceeds to C. This does not render an immediate sale imperative. manner as he shall think fit and invest the proceeds for the benefit of C. This does not authorize B, a

ee shall have power to convey or otherwise dispose of the property sold in such manner as may be ne

trust-property invested in any security and invest the same on any of the securi*ties mentioned or re

he time to receive the income of the trust-property for his life, or for any greater estate, no such chan

. Where any property is held by a trustee in trust for a minor, such trustee may, at his discretion, pay s of his religious worship, marriage or funeral, the whole or any part of the income to which he may be e and the resulting income thereof from time to time in any of the securities mentioned or referred to

r any part of such accumulations as if the same were part of the income arising in the then current ye nce or education or advancement in life, or the reasonable expenses of his religious worship, marriag operty for or towards such maintenance, education, advancement or expenses. w for the time being in force relating to the persons and property of minors.

iting for any money, securities or other moveable property payable, trans*ferable or deliverable to th or delivering the same therefrom, and from seeing to the application thereof, or being accountable for

and as they think fit, imed;

any debt, account, claim or thing whatever relating to the trust; and, ts, instruments of composition or arrange*ment, releases and other things as to them seem ex*pedie

may be exercised by a sole acting trustee when by the instrument of trust, if any, a sole trustee is aut n the instrument of trust, if any, and shall have effect subject to the terms of that instrument and to t

authority to deal with the trust-property is given to several trustees and one of them disclaims or dies sed by a number in excess of the number of the remaining trustees.

made in a suit for the execution of a trust, the trustee must not exercise any of his powers except in c the Appellate Court. CHAPTER V of THE disabilities OF trustees

ed the trust cannot afterwards renounce it except (a) with the permission of a principal Civil Court of o

his duties either to a co-trustee or to a stranger, unless

ministerial and involving no independent discretion is not a delegation within the meaning of this sect Illustrations y them or the survivor of them or the assigns of such survivor. B dies. C may bequeath the trust-prop oy an auctioneer to effect the sale. nts and pay them to C. B may employ a proper person to collect these rents. all must join in the execution of the trust, except where the instrument of trust otherwise provides.

on a trustee is not exercised reasonably and in good faith, such power may be controlled by a princip

ons to the contrary con*tained in the instrument of trust or of a contract to the contrary entered into the trust. Public Curator or person holding a certi*ficate of administration.

ay not use or deal with the trust-property for his own profit or for any other purpose unconnected wit

to sell trust-property, and no agent employed by such trustee for the purpose of the sale, may, direc

trustee, and no person who has recently ceased to be a trustee, may, without the permission of a prin unless the proposed purchase, mortgage or lease is manifestly for the advantage of the beneficiary. mortgage or lease of particular property for the beneficiary may buy it, or any part thereof, or obtain a

stee whose duty it is to invest trust-money on mortgage or personal security must not invest it on mo CHAPTER VI of THE rights AND liabilities OF THE beneficiary

ns of the ins*trument of trust, a right to the rents and profits of the trust-property.

tion of the author of the trust specifically executed to the extent of the bene*ficiarys interest; and, w ne mind, he or they may require the trustee to transfer the trust-property to him or them, or to such d woman, so that she shall not have power to deprive herself of her beneficial interest, nothing in the

ulate the interest until A attains the age of 24, and then to transfer the gross amount to him. A on atta

B, who has attained his majority and is otherwise competent to contract. B may claim the Rs. 10,000. benefit of C, who is competent to contract. C may elect to take the property in its original character.

tc. The beneficiary has a right, as against the trustee and all persons claiming under him with notice o st-property and the vouchers (if any) by which they are sup*ported, and the cases submitted and opin

ontract, may transfer his interest, but subject to the law for the time being in force as to the circumst married woman, so that she shall not have power to deprive herself of her beneficial interest, nothing

r all the trustees die, disclaim, or are discharged, or where for any other reason the execution of a tru e, be executed by the Court until the appointment of a trustee or new trustee.

visions of the instrument of trust) that the trust-property shall be properly protected and held and ad his section: sistent with that of the beneficiary: a person in insolvent circumstances; and, unless the personal law d custody of money, the number of trustees should be two at least. Illustrations disposed of part of the trust-property, or that the property is in danger from Bs being in insolvent circ

hen A dies. C is entitled to have the property conveyed to a trustee for him. tees die. B may institute a suit to have three new trustees appointed in the place of the deceased trus s disclaim. B may institute a suit to have three trustees appointed in place of the trustees so disclaimi kistan] or is declared an insolvent, or compounds with his creditors, or suffers a co-trustee to commit

trustee shall be com*pelled to perform any particular act of his duty as such, and res*trained from co

s and signs a letter declaring that he will hold in trust for C the money so to be paid. A fails to pay the

eeds to B and C equally. A is about to make an improvident sale of the land. B may sue on behalf of h

trust-property, the beneficiary has a right to have the property declared subject to the trust or retran n such case the beneficiary must repay the purchase-money paid by the trustee, with interest, and suc s of the property, (.b) be charg*ed with an occupation-rent, if he has been in actual possession of the s of the trustee or purchaser.

t to have the property declared sub*ject to the trust or retransferred, have contracted in good faith w r retransferred where he, being competent to contract, has himself, without coercion or undue influen

trust-property comes into the hands of a third e person inconsistently with the trust, the beneficiary

ed of trust-property and the money or other property which he has received therefor can be traced in espect of the original trust-property. Illustrations urchase of certain land. B is entitled to the land. wn money, partly with money subject to a trust for B. B is entitled to a charge on the land for the amo

he beneficiary to any right in respect of property in the hands of st, either when the purchase-money was paid, or when the conveyance was executed, or

not a transferee for consideration within the meaning of this section. ments in the hands of a bonafide holder to whom they have passed in circulation, or shall be deemed to

ere a trustee wrongfully sells or otherwise transfers trust-property and afterwards himself becomes th good faith for consideration.

es the trust-property with his own, the beneficiary is entitled to a charge on the whole fund for the am

nership purposes. If a partner, being a trustee, wrongfully employs trust-property in the business, ust. of trust.

ust for Z, and appointed B his sole executor. B, instead of winding up the affairs of the partnership, re o answerable to Z for the improper employment of As assets.

executor, and dies. B enters into partnership with X and Y in the same trade, and employs As assets i come parties to the breach of trust committed by B.

al beneficiaries

her beneficiaries, or ed, and either actually conceals it, or does not within a reasonable time take proper steps to protect t rust, the other beneficiaries are entitled to have all his beneficial interest impounded as against him an mpensated. d woman, so that she shall not have power to deprive herself of her beneficial interest, nothing in this

om a beneficiary transfers his interest has the rights, and is subject to the liabilities, of the beneficiary

of vacating THE office OF trustee

his discharge from his office.

y as follows:

ciaries than one, all the bene*ficiaries being competent to contract, or Act.

f section 11, every trustee may apply by petition to a principal Civil Court of original jurisdiction to be sts to be paid out of the trust-property. But, where there is no such reason, the Court shall not discha

pointed a trustee disclaims, or any trustee, either original or substituted, dies, or is for a con*tinuous rged from the trust, or refuses or becomes, in the opinion of a principal Civil Court of original jurisdict

, or uthor of the trust if he be alive and competent to contract, or the surviving or continuing trustees or t hey all retire simultaneously, or (with the like consent) the last retiring trustee. Every such appointme Official Trustee may, with his consent and by the order of the Court, be appointed under this section, in

e of a person nominated trustee in a will but dying before the testator, and those relative to a continui

ccurs and it is found impracticable to appoint a new trustee under section 73, the beneficiary may, wi ay appoint a trustee or a new trustee accordingly.

all have regard (a) to the wishes of the author of the trust as expressed in or to be in*ferred from the te or impede the execution of the trust; and (d) where there are more beneficiaries than one, to the in

is appointed under section 73 or section 74, all the trust-property for the time being vested in the su he surviving or continuing trustees or trustee, as the case may require. appointed by a Court, either before or after the passing of this Act, shall have the same powers, auth

s, the trust survives and the trust-property passes to the others, un*less the instrument of trust expre CHAPTER VIII of THE extinction OF trusts

e trust-property or otherwise; or

ure of the testator. A trust otherwise created can be revoked only

y word of mouthin exercise of a power of revocation expressly reserved to the author of the trust; o and has not been communicated to the creditorsat the pleasure of the author of the trust. Illustration he claims of As creditors. A reserves no power of revocation. If no communication has been made to

n be revoked by the author of the trust so as to defeat or prejudice what the trustees may have duly d CHAPTER IX of CERTAIN obligations IN THE nature OF trusts

ture of a trust is created in the following cases.

neficial interest. Where the owner of property transfers or bequeaths it and it cannot be inferred co or the benefit of the owner or his legal representative. Illustrations rt. It cannot, consistently with the circumstances under which the transfer is made, be inferred that A

ing about Z. It cannot, consistently with the circumstances under which the transfer is made, be infer

nd B. It cannot, consistently with the circumstances under which the transfer is made, be inferred tha

est in the land free from any trust in favour of A, for it may be inferred from the circumstances that th

transferred to one person for a con*sideration paid or provided by another person, and it appears tha nefit of the person paying or pro*viding the consideration. ection 317, or Act No. XI of 1859 (to improve the law relating to sales of land for arrears of revenue i

property. Where a trust is incapable of being executed, or where the trust is completely executed wi usted, for the benefit of the author of the trust or his legal representa*tive. Illustrations

or

est annually accruing due to C for her life. A dies. Then C dies. B holds the fund for the benefit of As l eds for certain charitable purposes, and the other for the maintenance of the worship of an idol. B sell moiety land the part unapplied of the second moiety for the benefit of A or his legal representative. for purposes which either wholly or partially fail to take effect. B holds for the benefit of As legal repr

o another for an illegal purpose and such purpose is not carried into execu*tion, or the transferor is no e must hold the property for the benefit of the transferor.

ty upon trust and the purpose of the trust appears on the face of the will to be unlawful, or during the tators legal re*presentative. s bequeathed and the revocation of the be*quest is prevented by coercion, the legatee must hold the

red in pursuance of a contract which is liable to rescission or induced by fraud or mistake, the transfe ally paid.

the executor or other legal representative of his creditor, he must hold the debt for the benefit of the

ent, director of a company, legal adviser, or other person bound in a fiduciary character to protect the any dealings under circumstances in which his own interests are, or may be, adverse to those of such

he will. B is ignorant of the value of the bequest. A must hold for the benefit of B the difference betwe A holds for the benefit of his beneficiary the profits arising from such user. him a sum of money. A holds such money for the benefit of his beneficiary. ership. A holds such land for the benefit of the partnership. ing the terms of a lease, clandestinely stipulates with the lessor for payment to himself of a lakh of ru tnership, retains all the assets in the business. B must account to As legal representative for the profi . A holds the lease for the benefit of B. an undervalue. A holds for the benefit of B the incumbrances so bought, and can only charge him with

rcise of undue influence, any advantage is gained in derogation of the interests of another, the person erson whose interests have been so pre*judiced.

er, mortgagee or other qualified owner of any property, by availing himself of his position as such, ga in such property, gains any advantage, he must hold, for the benefit of all persons so in*terested, the sons against liabilities pro*perly contracted, in gaining such advantage.

me and for his own benefit. A holds the renewed lease for the benefit of all those interested in the old o Government and thereby procures his name to be entered as the inamdar of the village. A holds the nt revenue to fall into arrears with a view to the land being put up for sale and his becoming himself ncurred as mortgagee, B holds the land for the benefit of A.

cquires property with notice that another person has entered into an existing contract affecting that p ffect to the contract.

Where a person contracts to buy property to be held on trust for certain beneficiaries and buys the pr

s. Where creditors compound the debts due to them, and one of such creditors, by a secret arrangem

not coming within the scope of any of the preceding sections, where there is no trust, but the person or the residue thereof (as the case may be), to the extent necessary to satisfy their just demands.

out having paid the whole of Bs debts. The legatees hold for the benefit of Bs creditors, to the extent the trust receives certain money. B may compel him to account for such moneys. nt, power to revoke at pleasure the gift as to Rs. 10,000. The gift is void as to Rs. 10,000, and B holds

ty in accordance with any of the preceding sections of this Chapter must, so far as may be, perform th enefit he holds it: ade or business, he is entitled to reasonable re*muneration for his trouble, skill and loss of time in suc ugh whom such person claims, lie may, without the permission of the Court, buy or become lessee or

apter shall impair the rights of transferees in good faith for consideration, or create an ob*ligation in e

(SEE SECTION 2) STATUTE

acts OF THE governor general IN council

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