Indian Trust Act 1882

Came into force from 1st March 1882

96 Sections divided into 9 chapters.
Extends to whole of India except the state of Jammu and
Kashmir.
Andaman and Nicobar Islands.
Exception
Wakf created under Mohammadan Law.
Chapter II does not applies to the Trust created before the
commencement.
Definition of Trust ( Sec 3)
 Trust is an obligation annexed to the ownership of property, and arising
out of a confidence reposed in and accepted by the owner or declared and
accepted by him for the benefit of another or of another and the owner.

 In simple words it is a transfer of property by the owner to another for the

benefit of a third person along with or without himself or a declaration by
the owner, to hold the property not for himself and another.
 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 ‘trust property’ or ‘trust-money.
 The ‘beneficial interest’ 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 ‘instrument of trust
Essentials Of Trust
Author of the Trust
Trustee
Beneficiary
The subject matter of the trust is called Trust
Property/Trust Money
Lawful Purpose ( sec 4)
The purpose of a trust is lawful unless it is
Forbidden Law or
Is of such a nature that if created It would
defeat the provisions of the any law or
Is fraudulent or
Involves or implies injury to the person or
property of another or
The Court regards it as immoral or opposed
to public policy.
 Trust for Immovable Property
( Sec 5)
 No trust in relation to a immovable proerty 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 ( sec 6)
A trust is created when the author of the trust
indicates with reasonable certainty by any
words or acts
An intention on the part of the author to
create trust.
The purpose of the Trust.
The beneficiary.
The trust property.
Who may create Trust ( Sec 7)
Competent to Contract
With the permission of the Principal
Civil Court of original Jurisdiction, by
or on behalf of the minor.
 Subject matter of the Trust
( Sec8)
The subject matter of the trust must
be the property transferable to the
beneficiary.
 Who can be a beneficiary
( Sec 9)
Every person capable of holing a
property can be a beneficiary
A proposed beneficiary may
renounce his interest under the trust
by disclaimer address to the trustee,
or by setting up, with notice of the
trust, a claim inconsistent therewith.
 Who can be a Trustee
( Sec 10)
Every person capable of holding
property may be trustee, but where
the involves the exercise of
discretion, he cannot execute it
unless he is competen.t to contract
Kinds of Trust
Public Trust -1. Religious Trust If it is
constituted to uphold and promote particular
religion, propagate views of a particular
religion, to maintain a particular religious
place, etc
2. Charitable Trust : charitable trust means
a trust crated for philanthropic purpose its
main object is the general welfare of the
community at large.
Private trust:
As to creation –Express Trust and Implied trust
As to creativity- Testamentary and trust inter vivos
As to revocability- Revocable and irrevocable
Nature of duty –simple and special
Mode of creation-
 Express-Executed and Executory
 implied or presumed trust,
 constructive,
 resulting ,
 precatory and
 secret trust.
A constructive trust is not an actual trust by
the traditional definition. It is a legal fiction
that is used as a remedy for unjust
enrichment. Hence, there is no trustee, but
the constructive trust orders the person who
would otherwise be unjustly enriched to
transfer the property to the intended party. A
Constructive Trust may be further divided
into two types:
i. Institutional Constructive Trust
 ii. Remedial Constructive Trust
 i. Institutional Constructive Trust
 An institutional constructive trust is a trust which is brought into
being on the occurrence of specified events, without the need for the
intervention of the court. The trust comes into being if the facts which
are necessary to give rise to it are proved to have occurred. It exists
from the time that the relevant events occurred.
 ii. Remedial Constructive Trust
 In contrast to the ‘institutional’ constructive trust, other jurisdictions
have come to regard constructive trusts as one of a range
of remedies which may effect restitution where a defendant has been
unjustly enriched at the expense of a claimant. Having found that
there has been an unjust enrichment, the court can, in its discretion,
impose a constructive trust over assets representing any remaining
enrichment in
the hands of the defendant if appropriate, or alternatively award a
monetary remedy.
4. Resulting Trust
A resulting trust (from the Latin 'result
are' meaning 'to jumpback‘) is the creation of an im
plied trust by operation of law, where property is
transferred to someone who pays nothing for it; and
then is implied to have held the property for benefit
of another person.
Resulting trust further may be divided into two
types:
i. Presumptive resulting trusts
ii. Automatic resulting trusts
5. Precatory Trust
A precatory trust arises when words of wish, hope,
desire or entreaty accompany a gift to the effect that
the donee may in some particular way, which shows
that a trust was intended.
6. Secret Trust
A secret trust is a trust which, though intended to be
created by the testator, has been suppressed on the
face of the will. The testator may have communicated
his intention to the legatee before making the will, or
may have communicated it some time between the
making of the will & his death or his intention may only
be made clear by a letter left for the legatee after his
death.
Classification according to Consideration

Trust may be classified from the point of view of consideration. They are :
i. Trust of Value ii. Voluntary Trust
i. Trust of Value
A trust for value or consideration is created when the consideration moves from the
beneficiary. Here the relation between the settlor & and the beneficiary is contractual.
Eg. – A trust created in favor of X if he marries Y.
ii. Voluntary Trust
A voluntary trust is created when no consideration proceeds from the beneficiary
Duties and Liabilities of Trustee ( 11-30)
 Trustee to execute trust ( Sec 11 )
 Trustee to inform himself the state of the trust property ( Sec 12 )
 Trustee to protect the title of the trust property ( Sec 13 )
 Not to set up title adverse to beneficiary ( Sec 14 )
 Conversion of perishable property ( Sec 16 )
 To be impartial ( Sec 17 )
 To Keep clear accounts ( Sec 19)
 Investment of Trust Money ( Sec 20 )
 Liability for breach of Trust ( Sec 23 )
 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.
 Trustee to inform himself of state of trust-property.-The
trustee is required to know about the details, whereabouts and
current condition of the trust property and also to take
appropriate measures to secure the trust property.
 Trustee to protect title to trust-property.-A trustee is bound to
maintain and defend all such suits, and (subject to the provisions
of the instrument of trust) to take such other steps as, regard
being had to the nature and amount or value of the trust property,
may be reasonably requisite for the preservation of the trust-
property and the assertion or protection of the title thereto
 Trustee not to set up title adverse to beneficiary.-The trustee
must not for himself or another set up or aid any title to the trust-
property adverse to the interest of the beneficiary.
 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;
 Conversion of perishable property.-
 Trustee to be impartial.-Where there are more beneficiaries than one, the
trustee is bound to be impartial, and must not execute the trust
for the advantage of one at the expense of another
 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.
 Accounts and information.-A trustee is bound (a) to keep clear
and accurate accounts of the trust-property, and (b), at all
reasonable times, at the request of the beneficiary, to furnish him
with full and accurate information as to the amount and state of
the trust-property.
 Liability for breach of trust.-Where the trustee commits a
breach of trust, he is liable to make good the loss which the trust
property or the beneficiary has thereby sustained,
Rights and Powers of Trustee
( 31-45)
Right to title deeds (Sec 31)
Right to reimbursement of expenses (Sec 32)
Right to indemnify from gainer by breach of trust (Sec 33)
Right to apply to court for opinion in management of trust-
property (Sec 34)
Right to settlement of the accounts(Sec 35)
Power to sell in lots and either by public auction or private
contract (Sec 37)
Power to sell under certain circumstances(Sec 38)
Rights and Powers Cond…
Power to Convey (Sec 39)
Power to vary investments(Sec 40)
Power to apply property of minors ,etc for their
maintenance (Sec 41)
Power to give receipts (Sec 42)
Power to Compound (Sec 43)
Power to several trustees of whom one disclaims or dies
(Sec 44)
Right to Title deed
 The trustee is entitled to possess the trust deed or any other instrument
by which the trust is created, and the title documents of the trust
property.
Right to reimburse expenses incurred for trust purposes
 The trustee has the right to be reimbursed for the expenses incurred by
him for the purpose of the trust, like expenses incurred for the execution
of the trust, for the preservation of the trust property, for the protection
or support of the beneficiary, etc.
Right to re-collect overpayment
 If a trustee has mistakenly made a payment over and above the required
amount to a beneficiary, the trustee has the right to collect such excess
amount from the beneficiary. Such collection might be made from the
interest of the beneficiary in the trust property, and if not possible, then
even from the beneficiary personally.
Right to indemnity from breach of trust, by a gainer
 If a person has committed a breach of trust and has gained from such
breach, the trustee has the right to indemnify himself against such gain
by the person who has committed such a breach.
Right to seek Court’s opinion in managing trust property
 The trustee has the right to apply to the Court, by way of a petition, to seek the
Court’s opinion, advice, opinion or direction with regards to the management of
the trust property.
Right to Settle accounts
 When the duties of a trustee are complete, the trustee is entitled to have the
accounts of the administration of the trust property examined and settled, and
when no benefit is due to any beneficiary under the trust after the completion of
the trustee’s duties, the trustee is also entitled to receive an acknowledgement to
that effect.
Right to sell trust property, along with power to convey
 The trustee has the power to sell the trust property as per the instructions laid out
in the trust deed, and if no such instructions are laid out, then by way of public
auction or private contract, in any way the trustee deems fit.
Right to vary or rescind the sale of trust property, and re-sell the same
 The trustee has the power to vary the conditions of the sale of trust property or
even rescind such sale. He also has the power to re-sell the same property. If in
such recession and re-sale, if any loss occurs, the trustee is not liable for the same.
Power to manage investments
 The Trustee has the power to sell any existing investment of the Trust property
and invest the same into any other instrument, as he deems fit.
 However, if there is a beneficiary who is competent to contract, then such power
cannot be exercised by the trustee without such beneficiary’s consent in writing.
Power to apply property of Trust for maintenance of minor beneficiaries
 In case the beneficiary is a minor, the Trustee has the power to apply, i.e. use the
income for the Trust property for the maintenance of the minor. Maintenance of
the minor may include functions such as food and clothing, Education, Religious
worship, marriage, funeral, etc.
Power to compound
 This power may also be called as power to settle disputes. When there is any
dispute related to any of the trust property, the trustees, when there are two or
more trustees appointed, or the sole trustee, may settle the dispute in the
manner they think fit. For example, they may compromise, compound, abandon
the dispute or may even submit the dispute to arbitration. In the doing of such
settlement, the sole trustee or the trustees may enter into any agreement, or
instruments, as they deem fit.
Trustees to continue with trust if one of
several trustees dies or disclaims
When there are two or more than two
trustees appointed, and one of them disclaims
the trust or dies, the remaining trustees shall
have the power to deal with the trust
property, as provided in the Trust deed.
 Disabilities of Trustees
(46-54)
Trustee cannot renounce after acceptance(Sec 46)
Trustee cannot delegate (Sec 47)
Co-trustees cannot act singly (Sec48)
Control of discretionary power (Sec 49)
Trustee not to charge for services (Sec 50)
Trustee not to use trust property for his benefit (Sec 51)
Rights and Liabilities of Beneficiary
(55-69)

Right to rent and profits (Sec 55)

Right to specific execution (Sec 56)
Right to inspect and take copies of instrument of trust,
accounts (Sec 57)
Right to transfer beneficial interest (Sec 58)
Right to sue for the execution of the trust (Sec 59)
Right to proper trustees (Sec 60)
Right to compel to any act of duty (Sec 61)
Rights of Beneficiary Cond….
Wrongful purchase of trustee (Sec 62)

Saving of rights of certain transferees (Sec 64)

Acquisition by trustee of trust-property wrongfully
converted (Sec 65)
Right in the case of blended property (Sec 66)
Discharge of trustee
1. disclaimer by the trustee:
2. Death of the trustee
3. Retirement of trustee
4. grounds of discharge of the trustee under section 71 are as
follows
By the extinction of the trust
By the completion of his duties under the trust
By such means prescribed by the instrument of trust
By the appointment of new trustee in his place(Sec 73)
By the consent of himself and the beneficiary
Appointment of trustee by the Court (Sec 74)
Extinction of trust (Sec 77)
 When its purpose in completely fulfilled or

 When the purpose become unlawful or

 When the fulfillment of its purpose becomes impossible by
destruction of the trust property or
 When the trust being revocable has expressly revoked
Revocation of trust (Sec 78)
A trust created by will may be revoked at the pleasure of the
testator
A trust otherwise created can be revoked only-
• Where all the beneficiaries are competent to contract-by their
consent
• In the exercise of a power of revocation expressly reserved to
the author of the trust or
• Where the trust is for the payment of the debts of the author of
the trust