TRUST

LAW RELATING TO CHARITABLE TRUSTS IN INDIA

It is one of the cardinal rules governing execution of charitable trusts that the intention of the donor must be observed. This principle has been evolved as an auxiliary to this rule and is never allowed to defeat it. If the charity can be administered according to the directions of the founder, the law requires that it should be so administered. The Courts will not allow any departure from them on the grounds of expediency.

Cy pres means near to it. The doctrine of Cy pres applies only to charitable trusts. The reason is that a public charity is perpetual and the rule against perpetuity does not apply to it. It can never die though its nature may be changed. In Halsbury's Law of England, in 3rd Edn. Vol. 4, P. 317, it is stated:
"Where a clear charitable intention is expressed, it will not be permitted to fail because the mode, if specified, cannot be executed, but the law will substitute another mode Cy pres, that is, as near as possible to the mode specified by the 'donor'.

However, the above doctrine is subject to the doctrine of severability, i.e., the doctrine of Cy pres, applies if the nature of the charitable object is general and not specific.

TRUST OF IMMOVABLE PROPERTY

Section 5 of the Act lays down the formalities which are to be observed for creation of a trust. It provides that a trust of immovable property can be created by an instrument in writing and registered, signed by the author of the trust or by Will. Trust of movable property requires no writing or registration. The mere transfer of possession coupled with the intention of the parties that such delivery of possession should vest the property in the trustee is sufficient to create a trust. 

CREATION OF CHARITABLE TRUST

Section 6 lays down provisions for creating a trust. It provides that 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; transfer the trust property to the trustee except where a trust is declared by Will or the author of the trust is himself to be the trustee. If a trust is to be valid and enforceable, it is material to ascertain the author of the trust. Next the intention to create a trust, the purpose of the trust, the trust-property and the beneficiaries must
be indicated and in such a way that the trust could be administered by the Court if the occasion arose.

CREATION OF TRUSTS FOR LAWFUL PURPOSES ONLY

The Act allows creation of a trust for any lawful purposes. What is lawful can be gathered from the provisions of Section 4 of the Act which provides that purpose of a trust is lawful unless it is

1. forbidden by law, or

(b) is of such a nature which will 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.

Thus a trust which does not fall in any of the above prohibitions, is deemed to be
for lawful purpose.

WHO CAN CREATE A TRUST

A trust may be created (i) by every person competent to contract, and (ii) with the permission of a Principal Civil Court of original jurisdiction, by or on behalf of a minor (Section 7). Thus, generally any person competent to contract and competent to deal with the property can create a trust.

WHO MAY BE A TRUSTEE

Every person capable of holding property may be a trustee. But if the trust involves the exercise of discretion, he cannot execute it unless he is competent to contract (Section 10).

No one is bound to accept a trust. Acceptance of the trust by a trustee may be express or implied.

MEANING OF A BENEFICIARY

The person or persons for whose benefit, a trust has been created, is called the beneficiary or beneficiaries. While the trustees hold the legal title in trust property, the beneficiary holds the beneficial interest in that property.

WHO MAY BE A BENEFICIARY

A beneficiary may be any person, so specified by the author of the trust, a beneficiary may be a near or distant relative of the author or a person not related to the author at all or general public or a class thereof. A minor, woman and even an unborn person can be a beneficiary. In case of a charitable or religious trust, there need not be a specific beneficiary; the beneficiary thereunder is the object or the purpose of the trust