INDIAN TRUST ACT, 1882

This act came into force from 1st March, 1882. This act extends to the whole of India.

SECTION 3(INTERPRETATION CLAUSE)

Section 3 is the Interpretation clause of this act provides various definitions such as:

1. Trust- A “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.
2. Author of trust- The person who reposes or declares the confidence is called the “author
of the trust.
3. Trustee- The person who accepts the confidence is called the Trustee.
4. Beneficiary- The person for whose benefit the confidence is accepted is the beneficiary.
The beneficiary is also called as the cesstui que trust i.e the person who gets benefit from
the trust.
5. Trust Property/ Trust money- The subject matter of trust is known as trust property or
trust money.
6. Beneficial Interest- It is the right of beneficiary as against the trustee as owner of trust
property.
7. Instrument of Trust – The instrument by which trust is declared is known as trust
instrument.
8. 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”

PURPOSE OF TRUST
Section 4 of the Indian Trust Act, 1882 deals with the purpose of the trust. According to it, a trust
must be created for a lawful purpose and the purpose of trust should not be

(a) Forbidden by law or

(b) Such of nature if permitted would defeat provisions of any law
(c) Fraudulent or
(d) Involves of implies injury to property of another or
(e) Immoral or against public policy

This section also defines valid trust and void trust as:

Valid Trust- The trust whose purpose is lawful is valid trust

Void Trust- The trust whose purpose is not lawful is void trust.
Partly Valid and Partly Void Trust- When there are two purposes of trust, one which is valid
and one which is void and the two purposes cannot be separated then the whole trust will be void.
But if both the purposes are separable, then the trust to the extent of valid part will be valid.

SECTION 5( IMMOVABLE TRUST AND MOVABLE TRUST)

Section 5 provides that :

Trust of Immovable Property- This section provides that no trust in relation to immovable
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.

In simple words the trust of immovable property is valid only when it is declared by a non
testamentary signed by the author and registered by him, or by his will or the will of trustee.

Trust of Movable 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.

In simple words the trust of movable property is valid only when the ownership of property is
transferred to trustte or declared by aforesaid provisions.

These rules do not apply to effectuate the fraud.

CREATION OF TRUST
Section 6 provides that when the author of the trust indicates with reasonable certainty by any
words or acts the following things:

(i) Intention to create trust- There must be a intention to create a trust by the author of
the trust. If there is absence of intention on behalf of the owner of trust then in such
absence there can be no trust.
(ii) Purpose of Trust- The purpose of trust should be lawful. If a purpose of trust is
partially lawful then, it is valid only to the extent of such purpose.
(iii) Beneficiary- There should be a beneficiary of Trust. There is no trust in absence of the
beneficiary.
(iv) Trust Property- There must be a certain trust property on which the concept of trust
is present. Trust property is major on which the whole concept of this act prevails.
(v) Transfer of property to the Trustee- The final and major thing related to the concept
of trust is that there must be a transfer of the property related to the trust.

WHO MAY CREATE THE TRUST

Section 7 defines the parties who may create the trust as follows:

(i) The parties must be competent to contract.

 (ii) Any person can create the trust on behalf of the minor can create the trust but for this
purpose he must have to take approval from the High court or District court.

SUBJECT OF TRUST
Section 8 provides that the subject matter of trust must be property transferable to the beneficiary.

WHO MAY BE BENIFICIARY

Section 9 provides that a person who is capable of holding the property may be a beneficiary. It
simply means that a minor or a person in the mother `s womb can also be a beneficiary.

Disclaimer by beneficiary- A proposed beneficiary may renounce his interest under the trust by
the disclaimer addressed to the trustee or by setting up, with the notice of trust, a claim inconsistent
therewith.

WHO MAY BE A TRUSTEE

Section 10 provides that a person who is capable of holding property can be a trustee, but where it
involves the exercise of discretion, he cannot execute unless he is competent to contract. It means
a person incompetent to contract can make a trust but cannot exercise his discretion on it.

No one bound to accept the trust- This section also provides that no one is bound to accept the
trust.

Acceptance of Trust- The trust can be accepted by the words or act of the trustee indicating with
reasonable certainty such acceptance.

Disclaimer of Trust- Instead of accepting the trust, the trustee may within a reasonable period ,
disclaim it, and such disclaimer render him to be property vested in him.

DIFFERENCE BETWEEN TRUST AND AGENCY

Basis Trust Agency
Definition A “trust” is an obligation Agency refers to the capacity
annexed to the ownership of of individuals or entities to act
property, and arising out of a independently, make their
confidence reposed in and own choices, and exert control
accepted by the owner, or over their actions and
declared and accepted by him, decisions.
for the benefit of another, or of
another and the owner.

Governed by Equity Common Law

Contractual relationship Not Necessary Necessary
Property Property is vested under Property is not vested under
Trustee agency.
Liability A trustee cannot make An agent can make his
beneficiary liable principle liable
Control Trustee is not under control of Agent is under control of
Beneficiary principal

DIFFERENCE BETWEEN TRUST AND CONTRACT

Basis Trust Contract
Definition A “trust” is an obligation Contract refers to an
annexed to the ownership of agreement which is enforced
property, and arising out of a by law
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.

Governed by Equity Common Law

Act Indian Trust act, 1882 Indian Contract act, 1872
Parties involved Beneficiary, Trustee and Offeror and offeree
author of trust

KINDS OF TRUST
1. Express Trust- Express trust refers to the trust which is created by the express words of
trust and not just by facts and circumstances.
2. Implied Trust- Implied trust refers to the trust which is created by facts and circumstances
of trust.
3. Constructive Trust- A trust that arises by operation of law is called as constructive trust.
4. Private Trust- It refers to the trust which confers its benefit on certain persons or class of
them.
5. Public Trust- It refers to the trust which confers its benefit on the public at large.
6. Charitable trust- Charitable trust is a kind of trust which is formed for the purpose of
providing public with religious or humanitarian facilities.
7. Precatory trust- Precatory trust refers to the trust where the person who creates the trust
wishes someone to do something with his property or money but such a trust is not legally
binding.

CHARITABLE TRUST
Charitable trust is a kind of trust which is formed for the purpose of providing public with religious
or humanitarian facilities. It is a legal entity created to manage and oversee assets intended for
charitable purposes. Unlike private trusts, which benefit specific individuals, charitable trusts serve
public or societal interests and are usually tax-exempt. The characteristics of charitable trust are:

1. Charitable Purpose- The foremost purpose of the charitable trust is that it should be of
the nature that provides benefit to the public at large rather than to a specific person. The
main object is to provide facilities to the society.
2. Perpetual- The charitable trust are generally perpetual as they are made for indefinite time
period. Generally there is no fixed time period for the charitable trusts.
3. Tax Exemption- The charitable trusts usually gets benefit of the tax exemption as they are
open for the welfare of the society at large. But such exemptions are according to the tax
law which are prevalent.
4. Non Profit status- The charitable trust maintain its non profit status and only deals in
providing charity to the society at large.

OBJECTS OF CHARITABLE TRUST.

The "objects" of a charitable trust refer to the specific purposes or goals it aims to achieve.
Common objects include:

1. Relief of Poverty: Trusts focused on alleviating poverty provide financial aid, shelter,
food, or other essential services to people in need. This can include housing for the
homeless, food banks, or grants for low-income families.

2. Education Advancement: Trusts with educational objectives fund schools, scholarships,

research, and public educational programs. The goal is to improve access to knowledge
and learning opportunities for a broad audience.

3. Health and Medical Relief: Charitable trusts often support health-related initiatives, such
as funding hospitals, providing medical equipment, conducting research, and offering
health services to underserved communities.

4. Advancement of Religion: Some trusts support religious activities or places of worship,

including funding for religious education, maintaining sacred buildings, and promoting
religious harmony.

RESULTING TRUST
Resulting trusts are defined under section 83- 85 of the Indian Trust act.

Where a trust is incapable of execution or where it is completely executed and some property
remains still, the trustee must hold such property in trust for the benefit of the author of trust or
legal representative and is called as resulting trust. This definition is basically inferred from
Section 83 of the Indian Trust act.

Transfer of Illegal purpose- Section 84 of the Indian trust act provides that when property is
transferred to another for an illegal purpose but such a purpose cannot be executed and the
transferor is less guilty then the transferee, there results a trust where transferee holds the property
for the benefit of transferor

Bequest for illegal purpose – Section 85 of the Indian Trust act provides that If a testator leaves
property in a will for a trust with an unlawful purpose, or if the legatee agrees with the testator to
use the property unlawfully, the legatee must hold the property for the benefit of the testator’s legal
representative.

DIFFERENCE BETWEEN TRUST AND WAQF

Basis Trust Waqf
Definition A “trust” is an obligation It is an 6slamic endowment
annexed to the ownership of where property is held
property, and arising out of a indefinitely for religious or
confidence reposed in and charitable purposes.
accepted by the owner, or
declared and accepted by him,
for the benefit of another, or of
another and the owner.

Governing Law Indian Trust act, 1882 Waqf Act, 1995

Parties Trustee, Author and Mutawali, Waqif and
beneficiary Beneficiaries
Modification Can be modified Cannot be modified

PYQ
Q. Name various kinds of trust(2014, 2019) 1 marks

Q. Define breach of trust(2014, 2022) 1 marks

Q. Give another name of cesstui que trust(2016) 1 marks

Q. Explain charitable trust(2016) 1 marks

Q. Define trust(2017,2018,2019) 1 marks

Q. Distinguish between public and private trusts(2017) 1 marks

Q. How a trust differs to an agency(2017) 1 marks

Q. Mention any two characteristics of the Indian Trust act, 1882(2017) 1 marks

Q. Clarify the difference between trust and contract(2017) 1 marks

Q. What do you understand by precatory trust(2018) 1 marks

Q. Which are the relevant sections of CPC, 1908, TPA, 1882 and Indian Succession act, 1925,
which describes the objects of Charitable trust?(2018) 1 marks

Q. Write down essential points of a valid trust(2019) 1 marks

Q. Define agency(2022) 1 marks

Q. What do you mean by the term notice defined under Indian Trust act(2022) 1 marks

Q. 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. Whether the trust is valid(2022) 1 marks

Q. Who may create trust(2022) 1 marks

Q. Who is an author of trust(2022) 1 marks

Q. Define charitable trust and also explain characteristics of equitable trust(2016) 4 marks

Q. Distinguish between trust and waqf(2017) 4 marks

Q. What are the essentials of a valid trust(2017) 4 marks

Q. Distinguish between trust and agency(2018, 2022) 4 marks

Q. How Trust is created(2022) 4 marks

Q. Write down short critical notes on (a) Rights of a bona fide purchaser (b) Requisites for the
creation of trust(2014) 8 marks

Q. Discuss in detail the essentials for the creation of trust(2016) 8 marks

Q. What do you mean by charitable trust? Discuss characteristics and objects of a charitable
trust(2018) 8 marks