RIGHTS AND DISABILITIES OF TRUSTEE

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PROJECT WORK ONRIGHTS AND DISABILITIES OF TRUSTEE

SUBMITTED TO - Dr. B. Ravi Narayan SharmaSubmitted By-

Mayuresh SrivastavRoll No. 5563rd Semester

ACKNOWLEDGEMENT


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RIGHTS AND DISABILITIES OF TRUSTEE Page 2

Writing a project is one of the most significant academic challenges I have

ever faced. Though this project has been presented by me but there are

many people who remained in veil, who gave their all support and helped me

to complete this project.

First of all I am very grateful to my subject teacher Dr. B. Ravi Narayan

Sharma without the kind support of whom and help the completion of the

project was a herculean task for me. He donated his valuable time from his

busy time to help me to complete this project and suggested me from

where and how to collect data.

I am very thankful to the librarian who provided me several books on this

topic which proved beneficial in completing this project.

I acknowledge my friends who gave their valuable and meticulous advice

which was very useful and could not be ignored in writing the project. I also

ove special thanks to Shaleen for her selfless help which was very useful in

preparing the project.

MAYURESH SRIVASTAV

ROLL NO 556

3RD SEMESTER


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TABLE OF CONTENT

CHAPTER 1- INTRODUCTION.04

CHAPTER 2- MEANING AND CONCEPT OF TRUST06

WHO CAN CREATE TRUST.07

CHAPTER 3- TRUSTEE..07

WHO CAN BE TRUSTEE08

WHO CAN NOT BE TRUSTEE09

CHAPTER 4- RIGHTS OF THETRUSTEE..10

CHAPTER 5- DISABILITIES OF THE TRUSTEE..14

CHAPTER 6 CONCLUSION18

BIBLIOGRAPHY20


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CHAPTER 1- INTRODUCTION

As Maitland observes: Of all the exploits of equity the largest and the most important is thw

invention and development of the trust. According to him, the trust is an institute of great

elasticity and generality; as elastic, as general as contract.

The maxim of equity has a strong root not only in the English legal system but also has well

laid in the Indian Legal System of ancient time, but the basic fact is that most of the

equitable principle followed by the English court of equity have been incorporated in the

various enactment of the India. In this row the modern INDIAN TRUST ACT, 1882 is one

of the same. Trusts, in general, under Indian law have a statutory basis, namely the Indian

Trusts Act, 1882. The modern trust Act of 1882 embodies in a concise form the whole

structure of trust built up by the equity court of England. This act is the successor of what

were called uses in the English law. With a very few exception, the rule of law in the Indian

Trust Act, 1882 are substantially those that were administerd at the time of its enactment by

the English court of equity.

A trust can be and has been applied as a device for accomplishing many different purposes. 1

The uses of trust go far beyond affecting family settlements. It is frequently employed in

business transactions. As pointed out by Professor Issacs, Trusteeship has become a readily

available tool for everyday purposes of organisation, financing, risk-shifting, credit

operations, settling of disputes, and liquidation of business affairs. By the employment of

1Prafulla Pant, N Suryanarayana Iyers The Indian Trust Act, 5

thedition, [New Delhi: Butterworths India,

2001] at p. 4


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trust it has been possible to devote large sum of money to charitable purposes without the

necessity of applying to the Legislature for a charter of incorporation. Through the trust, it is

also possible to devote property to the purposes of other unincorporated associations of a

social rather than a charitable character.

OBJECTIVES

The aims and objective of the project work is to-

To throw light on the meaning and concept of trust.

To create an understanding about the trustee and what are the essentials of creating a

trustee..

To study the various right by which the trusty is vested and what are the disabilities faced

by the trustees.

RESEARCH METHODOLOGY

The research methodology for the project-work is doctrinal i.e., library based research. The

researcher has chosen such type of methodology as through it the evaluation of relevant

provisions as well as case laws can be done easily and efficiently.

SOURCES OF DATA

The sources of data for the project work are secondary sources. Secondary sources include

textbooks, articles, case laws, etc.


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CHAPTER 2- MEANING AND CONCEPT OF TRUST

Trust connotes a legal concept or relationship just as other relationships known to the law,

namely, contract, agency, guardianship, partnership, etc. the essential feature of a trust is the

vesting of the property or its being placed under the control of a person in the confidence that

he will hold it for the benefit of a third person, or a third person and himself. 2 In common

parlance, trust is referred to as the confidence which one person reposes in another person to

whom he transfers the property with an obligation that the funds so generated there from shall

be utilised for the befit of another. Thus, when a property is held by one person as trustee forthe benefit of another, it can be regarded as a trust. As per Blacks Law Dictionary

3the term

trust means the right enforceable solely in equity, to the beneficial enjoyment of property to

which another person holds the legal title; a property interest held by one person(the trustee)

at the request of the another (the settler) for the benefit of a third party (the beneficiary).

The underlining scheme behind the creation of a trust was for the purpose of setting up

charitable public trust for the benefit of the public by philanthropic individuals as well as

creation of private trusts in the form of wills for the benefit of a few ascertainable

beneficiaries. Generally, there are two types of trusts in India: private trusts and public trusts.

The Indian Trusts Act, 1882 governs the private trusts. Public trusts are classified into

charitable and religious trusts. The Charitable and Religious Trusts Act, 1920, the Religious

Endowments Act, 1863, the Charitable Endowments Act, 1890, the Societies Registration

2

Supra 1 at p. 53.3Blacks Law Dictionary,p. 1567


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Act, 1860, and the Bombay Public Trust Act, 1950 are the relevant legislations for the

recognition and enforceability of public trusts.

The person who reposes the confidence is called 'author of trust' (testator), the person who

accepts the confidence is called 'trustee' and the person for whose benefit the confidence is

accepted is 'beneficiary'. The subject matter of trust is called 'trustproperty' or trust-

money. The beneficialinterest or interest of the beneficiary is his right against the

trustee as the owner of trust-property. The instrument by which trust is declared is called as

instrumentoftrust.4

WHO CAN CREATE TRUST

Section 7 of the Act lays down as to who can create the trust. It is as follows:-

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

(a)by every person competent to contract and,

(b)with the permission of a principal Civil Court of original jurisdiction, by or on behalf of a

minor; but subject in each case to the law for the time being in force as to the circumstances

and extent in and to which the author of the trust may dispose of the trust- property.

A trust may be created by every person competent to contract. In case of minor it can be done

only with the permission of a principal Civil Court of original jurisdiction. However in both

the cases it is subject to the law for the time being in force with respect to circumstances and

extent in and to which the author of the trust may dispose of the trust-property. Competency

to contract is the test laid down for the capacity to create a trust. Any person who is not

competent to contract cannot create a trust. Competency under contact is dealt with under

Section 11 of the Indian Contract Act. The creation of trust involves transfer of property to

be held (by the trustee) for the benefit of another (beneficiary), even where a person declares

himself to be a trustee for another without there being a transfer of ownership, there is a

change of capacity in holding the property.5

4Section 3 Para 2 of the Indian Trust Act, 1882.

5Supra 1 at p. 193.
http://indiankanoon.org/doc/255441/http://indiankanoon.org/doc/255441/http://indiankanoon.org/doc/914885/http://indiankanoon.org/doc/914885/http://indiankanoon.org/doc/914885/http://indiankanoon.org/doc/255441/


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CHAPTER 3- TRUSTEE

Trustee is a legal term which, in its broadest sense, can refer to any person who holds

property, authority, or a position of trust or responsibility for the benefit of another. Although

the strictest sense of the term is the holder of property on behalf of a beneficiary, the more

expansive sense encompasses persons who serve, for example, on the Board of Trustees for

an institution that operates for the benefit of the general public. A trust can be set up either to

benefit particular persons, or for any charitable purposes (but not generally fornon-charitable

purposes): typical examples are a will trust for the testator's children and family,

a pension trust (to confer benefits on employees and their families), and a charitable trust. In

all cases, the trustee may be a person orcompany, whether or not they are a prospective

beneficiary.

The trustee while having the legal ownership or possession of, or dominion, the subject of the

trust is bound to allow the beneficial enjoyment or usufruct of the property to another, who is

cestui que trust or the beneficiary. The trustee is destitute of any rights of the beneficial

enjoyment of the trust property.

There may be a trustee de facto, which refers to the criterion of actual possession and

management as the distinguishing feature; a trustee de son tort6, which refers to illegal

trusteeship, and a constructive trustee.

The Indian Trust Act 1882 uses the term trustee in a restricted and technical sense. Re

Lalchand Deomal 7 case it was held that where a person sets apart a sum for charity and

invests it with a merchant and the interest paid by the merchant is spend on charity, the

merchant is not a trustee in respect of the amount.

In English law an infant can be a trustee, but as observed inLamplugh vs Lamplugh8

From the great inconvenience attending the appointment of an infant as a trustee, there

arises a strong presumption wherever property is given to an infant, that he is intended to

take not as trustee but beneficiary.

6

[290.028], [290.062], Halsbury Law of India.7AIR 1925 Sind 259

8(1709) 1 P. Wms. 111
http://en.wikipedia.org/wiki/Legal_termhttp://en.wikipedia.org/wiki/Beneficiary_(trust)http://en.wikipedia.org/wiki/Board_of_Trusteeshttp://en.wikipedia.org/wiki/Trust_lawhttp://en.wikipedia.org/wiki/Charitable_trusthttp://en.wikipedia.org/wiki/Purpose_trusthttp://en.wikipedia.org/wiki/Purpose_trusthttp://en.wikipedia.org/wiki/Testamentary_trusthttp://en.wikipedia.org/wiki/Testatorhttp://en.wikipedia.org/wiki/Pensionhttp://en.wikipedia.org/wiki/Companyhttp://en.wikipedia.org/wiki/Companyhttp://en.wikipedia.org/wiki/Pensionhttp://en.wikipedia.org/wiki/Testatorhttp://en.wikipedia.org/wiki/Testamentary_trusthttp://en.wikipedia.org/wiki/Purpose_trusthttp://en.wikipedia.org/wiki/Purpose_trusthttp://en.wikipedia.org/wiki/Charitable_trusthttp://en.wikipedia.org/wiki/Trust_lawhttp://en.wikipedia.org/wiki/Board_of_Trusteeshttp://en.wikipedia.org/wiki/Beneficiary_(trust)http://en.wikipedia.org/wiki/Legal_term


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In the case of Mohomed Bibi vs N P Sulaiman Ahmed12 it was ruled out that under muslim

law, a donor can be either a trustee and though remaining in actual possession can transfer the

legal possession by decaling his possession as done.

WHO MAY NOT BE TRUSTEE

An infant or a minor who requires a guardianto look after his property is incapable of acing

as a trustee as it involves the exercise of discretion, beside this a minor cannot be held liable

for the breach of the trust but if he receives any unjust benefit under the trust then h can be

asked to restore the benefit.

The person who is insolvent is also not competent to be appointed as trustee. A beneficiary or

the husband of the beneficiary under the trust will not be appointed as trustee though thisappointed may be made by the Court. In exception to this , where a suitable independent

perso cannot be found to undertake the office or there are otherspecial circumstances. In that

case an under taking has been required from the person appointed that, if he become sole

trustee, he will use every

Under Indian Trust Act 1882, an insolvent can not appointed as a trustee and must be

replaced by a new trustee. Similarly the Act laid down that an insolvent firm cannot be a

trustee and must be replaced by a new trustee13

CHAPTER 4- RIGHTS OF THE TRUSTEE

After understanding the concept of the trust tht what is the trust and why it is created who are

trustees and what are the various qualifications required to be the trustees. In this chapter all

those rights by which the trustee is vested is discussed. Chapter IV of the Indian Trust Act

deals with all those rights which are vested with the trustees.

Right to Possession of the Title Deed-

Section 31 of the Indian Trust Act 1882 talks about the Right to title deed, it lays down that

12AIR 1926 Mad 1110

13AIR 1941 BOM 41.


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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.

In this section the word title deed refers to the title of the author of the trust, they are the accessories

to the estate itself and ought to pass with the estate.14

The right to custody the title deed is necessary

consequence of the trustees duty to institute and defend all actions for the protection of the trust

property.

Right to Reimbursement of Expenses-

Section 32 of the Indian Trust Act 1882 lays down the provision about reimbursement of the

expenses incurred by the trustee.It runs as

Every trustee may reimburse himself, or pay or discharge out of the trust-property, all

expenses properly incurred in or about the execution of the trust, or the realization,

preservation or benefit of the trust-property, or the protection or support of the beneficiary.

If he pays such expenses out of his own pocket he has a first charge upon the trust-property

for such expenses and interest thereon; but such charge (unless the expenses have been

incurred with the sanction of a principal Civil Court of original Jurisdiction) shall be

enforced only by prohibiting any disposition of the trust-property without previous payment

of such expenses and interest.

If the trust-property fail, the trustee is entitled to recover from the beneficiary personally on

whose behalf he acted, and at whose request, expressed or implied, he made the payment, the

amount of such expenses.

A trustee is entitled to be reimbursed the money spend by him on a bona fide litigation

believed to be in the interest of the cestui que trust, but a person not really entitled to the

office cannot so claim. As the trustee has a charge over the both on the capital and on the

income of the trust property in priority to the claim of beneficiary and the person claiming

under him. If in case he has made the breach then in that case he cannot recover unless good s

made to that breach

A de facto trustee is allowed to recover the expenses incurred in making the improvements in

the trust property, as in a constructive property.

14Krishanji Sakharam v Devrao Madhavrao ILR 11 BOM 485


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A trustee has a right to recover his expenses incurred from the trust property for money

expended by him in its preservation and a person who on his request advances certain money

for its preservation obtains a similar right by subrogation. Thus if a trustee has no trust fund

for paying the premium, he has a charge on the policy and applies his own money for keeping

up the policy, he has charged on the policy for the amount advanced by him for the purpose

of keeping it on foot.

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

beneficiarys interest. If such interest fails, the trustee is enti tled to recover from the

beneficiary personally the amount of such over-payment.

Over-payment made by the trustee to the beneficiary is also treated like expenses incurred in

execution of the trust and the trustee is entitled to recover it. The term overpayment means in

excess of and does not include wrongful payment or any payment made due to the improper

exercise of the discretion.

Section 33 of the Act further ratifies that ifany person, other than the trustee, has received

any advantages from a breach of trust must indemnify the trustee to the extent of the actually

received by such person due to the breach. If the trustee is guilty of the fraud then he loses his

right to be indemnified. In the case of

15

it war pinted out that the right of trustee to recoupedout of the interest of the beneficiaries is entitled to rank in priority to the claims of the general

body of the creditors.

Right To Apply To Courts For Advice-

Section 34 of the Indian Trust Act, runs as follows

Any trustee may, without instituting a suit, apply by petition to a principal Civil Court of

original jurisdiction for its opinion, advice or direction on any present questions respecting

the management or administration of the trust-property other than questions of detail,

difficulty or importance, not proper in the opinion of the Court for summary disposal.

A copy of such petition shall be served upon, and the hearing thereof may be attended by,

such of the persons interested in the application as the Court thinks fit.

15William vs Allen, [1863] 32 Beav. 650


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The trustee stating in good faith the facts in such petition and acting upon the opinion, advice

or direction given by the Court shall be deemed, so far as regards his own responsibility, to

have discharged his duty as such trustee in the subject matter of the application.

The costs of every application under this section shall be in the discretion of the Court to

which it is made.

This section particularly focus upon the trustee right to apply to the court for advice. A

trustee can apply to the court to give its opinion in the management of the trust. Any trustee

may, without instituting the suit , apply by petition to a principal civil court for its opinion or

advice. Trustee can also seek advice on any present question respecting the management or

administration of the trust property other than question of detail, difficulty which is not for

summary disposal in the courts opinion.

In the case ofOfficial Trustee, west Bengal vs Sachindra Nath Chatterjee16it was held that

Under this provision the court could have only given "opinion, advice or direction on any

presented question respecting the management or administration of the trust property" and

not on any other matters. The relief prayed for by the settlor did not relate to the management

or administration of the trust property but on the other hand it asked for authority to alter the

quantum of interest given to each of the beneficiaries B by a deed inter vivos. The jurisdiction

conferred on the court under Section34is a limited jurisdiction. Under that provision, the

court has not been conferred with overall jurisdiction in matters arising under a Trust deed.

The statute has prescribed what the court can do and inferentially what it cannot do. From

the fact that the court has been conferred power to grant only certain reliefs it follows as a

matter of law that the court has been prohibited from granting any other relief. The

jurisdiction of the court is circumscribed by the provisions of Section34of the Trusts Act.

The court had no jurisdiction to pronounce on the pleas put forward by the settlor. From the

facts stated in the petition and from the relief asked for, it was obvious that the case did not

come within the scope of Section34of the Trust Act. Therefore when the learned judge

granted the relief asked for, he did something which he was not competent to do under

s.34of the Trusts Act.

The jurisdiction given by the court id of delicate nature and must be exercised with the great

care and diligence. The court cannot direct a co-trustee to pay certain sum of money to

16AIR 1969 SC 8231
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another co-trustee to defend a suit relating to the trust property. Although it can direct the

trustee to advance money to himself to raise loan for the security of the trust property.

The court is competent to answer question and pass sanction with respects to the question of

details and difficulties concerning the administration in a regular suit.

Right to Settlement of Accounts-

Section 35 of the Indian Trust Act 1882 runs as follows

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 acknowledgement in writing to that effect.

This section provides that where the duties of a trustee are complete, 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, acknowledgement to that effect should be given to the

trustee.

Where the beneficiary has settled his shares of the trust property, the trustee is entitled to

have a release from him. A trustee is bound to handover the trust property to the beneficiary,

but he cannot insist on his giving him a release of all the claims under the trust. In a suit by

the cestui que trust for account, the court can pass decree in favour of the trustee if the

balance is in his favour.

CHAPTER 5- DISABILITIES OF THE TRUSTEE

Apart from the various rights that is vested with the trustee, they also have some disabilities

which are associated with them. Chapter V of the Indian Trust Act 1882 deals with the

disabilities of the trustee. These disabilities have been incorporated in various chapters these

are dealt in this chapter.

Trustee cannot Renounce After Delegation

Section 46 of the Indian Trust Act 1882 lays down the provision that a trustee which has

accepted the trust cannot afterwards renounce the trust. A person who has once under taken

the office of the trustee, either by actual or constructive acceptance cannot escape liability by


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a mere subsequent renunciation. In the case ofSheikh Abdul Kayum vs Mulla Alibai17 it was

held by the court that the trustee cannot renounce nor delegate their powers in spite of there

being a clause in the deed thet they can appoint new trustee from time to time.

Power to appoint new trustee will not empower the existing trustee to substitute new trustee

in their own place, that is, in the place of old trustee. A trustee acting under the trust which he

knows or subsequently knows that is void or illegal is not bound to surrender the possession

of the property before he can allowed to repudiate by giving evidence to explain away his

admission arising out of his conduct as a so called trustee. There are certain exceptions have

been mentioned in this section when a trustee can renounce the trust, these are

He can renounce the trust with the permission of the principal civil court of original

jurisdiction

if the beneficiary is competent to contract, with his consent, or

by virtue of a special power in the instrument of trust.

Bar Aginst Delegation

Fiduciary duties cannot be made subject to the delegation. A trustee cannot delrgate the

performance of acts that he ought personally to perform. An agreement to do so is illegaland

void. He cannot delegate his office or any of his duties either to a co trustee or to a stranger.

Section 47 of the Act lays down the provision that

A trustee cannot delegate his office or any of his dudes either to a co-trustee or to a stranger,

Since the trustee is appointed by reason of special confidence reposed upn him, he cannot

delegate his office or any part of his duties to another. In the case of Parasuram vs

Thirumal18 it was hels that power of appointment and dismissal of the hereditary temple

servant involved the exercise of independent discretion and could not be delegated to an

agent. There are few exception to this rule under which this authority can be delegated these

are

a) the instrument of trust authorizes the trustee for delegate of trust or

17 AIR 1963 SC 309

18ILR 44 MAD 636


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b) trustee may delegate his office with the consent of all the beneficiaries.

c) the delegation is necessitatedby the nature of the business , or

d) the beneficiary, being competent to contract, consents to the delegation.

Disability To Receive Personal Remunaration

A has no right to remuneration of his trouble, skill and loss of time in executing the trust. He

is not entitled to a salary or compensation for the personal trouble. Section 50 of the act lays

down thatIn 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. Where by position as trustee a person has drew remuneration, he

is not entitled to retin the remuneration received by virtue of the independent bargain with the

firm employing him.

There are certain situations when a trustee can receive remuneration these situation are19

an express provision in the instrument

a provision in the contract with the beneficiary

a direction of the court to that effect

Bar Against Use of the Trust Property

Section 51 of the Act lays down the provision that A trustee may not use or deal with the

trust-property for his own profit or for any other purpose unconnected with the trust.

Though this section of the Act uses the word may not but it should be interpreted as must

notor shall not20 voluntary service is the foundation of the underlying all trusteeship and

law preclude all trustee from making an profit from the office of trustee. In the case ofR.B.

Seth Jessaram Fatehchand Vs. Om Narain Tankha and Anr. It was held that

The mere fact that money was deposited as a security in not sufficient to come to the

conclusion that it must be treated as trust money. The court will have to look to all the terms

of the agreement if in writing and to the facts and circumstances of the case and to the

19[290.122] Halsbury Law of India.

20[290.123] Halsbury Law of India.


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conduct of the parties before coming to the conclusion whether a security deposit was

impressed with a trust. If a trust can clearly be spelled out from the terms of the agreement

that ends the matter. But if the trust cannot be spelled out clearly the fact that there was no

segregation provided for and the fact that interest was to be paid would go a long way to

show that the deposit was not impressed with the character of a trust particularly where the

person with whom the deposit was made could mix it with his own money and could use it for

himself. In such a case the inference would be that the relationship between the parties was

that of a debtor and creditor.

Thus a person in a fiduciary relation is not entitled to make the profit for himself ar any

member of his family. In another case ofM. V. Ramasubbier And Others vs Manicka

Narasimhachari21

it was held that

It has in fact been well recognised as an inflexible rule that a person in a fiduciary position

like a trustee is not entitled to make a profit for himself or a member of his family. It can also

not be gainsaid that he is not allowed to put himself in any such position in which a conflict

may arise between his duty and personal interest, and so the control of the trustee's

discretionary power prescribed by section 49 of the Act and the prohibition contained in

section 51 that the trustee may not use or deal with the trust property for his own profit or for

any other purpose unconnected with the trust, and the equally important prohibition in

section 52 that the trustee may not, directly or indirectly, buy the trust property on his own

account or as an agent for a third person, cast a heavy responsibility upon him in the matter

of discharge of his duties as the trustee. It does not require much argument to proceed to the

inevitable further conclusion that the rule prescribed by the aforesaid sections of the Act

cannot be evaded by making a sale in the name of the trustee's partner or son, for that would.

in fact and substance, indirectly benefit the trustee.

Disqualification for Acquiring the Trust Property

Section 52 of the Act lays down thatNo trust 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

21AIR 1979 SC 671


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Any such purchase is automatically voidable at the option of any beneficiary no matter how

honest and fair this purchase may be. A trustee cannot sell his property to the trust I order to

avoid the conflict between the interest and duties of the trustee.

if a trustee desire to purchase the trust property then he first have to discharge himself from th

e trusteeship and even then the transaction may be unimpeachable, it must be clear that I

transaction he is not taking any advantage, which he has acquired during his trusteeship.

Moreover a trustee cannot sell the property to himself jointly with others, or a trustee for

himself. If any trustee mixes his money with the fund of the trust then whole money will be

treated as trust money unless he is able to distinguish that what is his own. Where a trustee

wrongfully mingles his property with that f the trust property and become insolvent, the

beneficiary is entitled to charge upon the trust property which vest in the official assignee.

Bar Against Buying Beneficiary Interest Without Permission

It has been laid down in the section 53 of the Act that 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 mortgage or lessee of the trust-property or any party

thereof; any such permission shall not be given unless the proposed purchase, mortgage or

lease is manifestly for the advantage of the beneficiary. It further lays down that And no

trustee whose duty it is to buy or to obtain a mortgage of 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.

No trustee whose duty is to obtain or by a lease of a particular property from the beneficiary

may buy it. Once the trust is accepted, the bar applies. A successor of the trusty who was not

the party to the misappropriation of his predecessor trustee will acquire good title. In case the

property is transferred to the wife of the trustee , the court will seek to be certain, vigilantscrutiny, of the true nature of such a transaction.

Some exceptions has been laid down that a trustee may acquire from beneficiary who are sui

juris an estate in which they are interested provided he makes full disclosure to them of all

the relevant and material information within his knowledge affecting or which might affect

the value and condition of the estate.

Co-Trustee Not To Lend To One of Themselves


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Section of the Act says thatA trustee or co-trustee whose duty it is to invest trust-money on

mortgage or personal security must not invest it on a mortgage by, or on the personal

security of, himself or one of his co-trustees.

However it is open to the author of the trust to make provision to the contrary and remove the

disabilities which prevent the trustee from using the property from his own benefit.

CHAPTER 6- CONCUSION

In India, trusts are being increasingly used for succession planning and asset distribution,

since they are considered to be one of the preferred modes of managing and passing on the

family assets in the most efficient manner. Creating a legal framework for the family assets,

bypassing probate process, safe-guarding interests of family members including

maintenance of members with special needs/disabilities, attaching conditions to gifts (be it

on attaining a particular age or fulfilment of the settlors wishes) and avoiding family

disputes over the property being some of the prime considerations while designing a trust.A

trust essentially refers to the confidence which one person reposes in another person to whom

he transfers the property with an obligation that the funds so generated there from shall be

utilised for the benefit of another.

There are many rights which are vested wuth the tustee and also trustee have certain

obligations and disabilities which bound him in the ambit so that he cannot mis use his

position. A post of trustee is since createdby the faith and it involves the fiduciary relation he

must take all reasonable care and due diligence to exercise his powers and position. He vested

with the certain rights which are

1- right to title deed

2- Right to reimbursement of expenses

3- Right to indemnity from gainer by breach of trust

4- Right to apply to Court for opinion in management of trust-property

5- Right to settlement of accounts

With tis right certain disabilities is also imposed upon the trustee which are as-

1- Not to renounce the trust after acceptance

2- Not to dekegate the authority

3- No charge for the services
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4- No trabsaction of the beneficiary property

5- Not tomuse the trust property for personal benefit

BIBLIOGRAPHY

1. Halsburys Laws of India, Volume 29(2) 2000, New Delhi, Butterworths.

2. Garner, Bryan A., Blacks Law Dictionary, 8th edition, 2004, USA, Thomson.

3. P. Ramanatha Aiyars Advanced Law Lexicon, Book 4, 3rd edition, 2005, Nagpur:

Wadhwa Nagpur.

4. Pant, Prafulla C, N Suryanarayana Iyer's The Indian Trust Act, 5th edition, New

Delhi, Butterworths.

5. Subbarao, Transfer to Property Act, (1994), C. Subbiah Chetty, Madras

6. Mulla, Transfer of Property Act, (1999), Universal, Delhi.

7. Universals Legal Manual, Society and Trust Laws, 4 th edition, Universal Publishing

Co., New Delhi (2012).


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8. Setalvad, M Atul, Law Of Trusts and Charities, 1st edition, Wadhwa Book Co.,

Nagpur (2008).

9. V.P Sarthi,G.C.V. SUBBARAOS Law Of Transfer Of Property, Vol I, ALT

Publication, Hyderabad, 2008

RIGHTS AND DISABILITIES OF TRUSTEE

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