GURU GHASIDAS UNIVERSITY, BILASPUR, CG
SCHOOL OF LAW
ACADEMIC SESSION: 2019-20
PROJECT ON
“DUTIES OF TRUSTEE”
TRUST & EQUITY
Submitted To: Submitted By:
Mr. AJAY SINGH, SIMRAN M. TOPPO
Professor (TRUST AND EUITY) B.A.LLB
Guru Ghasidas University, Bilaspur 8th Semester
DATE: 15.06.20
ACKNOWLEDGEMENT
It feels great pleasure in submitting this research project to Mr. AJAY SINGH, Professor
(TRUST AND EQUITY), without whose guidance this project would not have been completed
successfully.
Next, we would like to sincerely thank our seniors, friends and family members, whose
suggestions and guidance assisted us throughout the entire tenure of making the project.
We would also like to express our special thanks to those original thinkers, whom we have taken
the privilege to quote.
Last but not the least, we would like to express our heartfelt gratitude towards the
examiner who would take pains to go through the project. Though a lot of care has been taken,
there may be scope for some improvement. All criticism and suggestions are kindly invited.
SIMRAN M. TOPPO
B.A.LLB.
8th Semester
CERTIFICATE
We are glad to submit this project report on “DUTIES OF TRUSTEE” as a part of our academic
assignment. The project is based on Research methodology and further discusses the interview
method.
We think this would be significant for academic purposes as well as prove Information to all the
readers.
Here though we declare that this paper is an original piece of research and the borrowed text and
ideas have been duly acknowledged.
Faculty Signature
________________
DECLARATION
I, SIMRAN M. TOPPO, BA..LLB 8thSemester of GURU GHASIDAS UNIVERSITY do
hereby declare that this project is my original work and I have not copied this project or any part
thereof from any source without acknowledgement.
I am highly indebted to the authors of the books that I have referred in this project as well as all
the writers of all the articles and the owners of the information taken from the website for it.
It is only because of their contribution and proper guidance of my faculty advisor Prof. Mr.
AJAY SINGH that I was able to gather light on the subject.
SIMRAN M. TOPPO
B.A.LLB
8th SEMESTER
DUTIES OF TRUSTEE
TABLE OF CONTENTS
1. INTRODUCTION
2. WHAT IS A TRUST?
3. OBJECTIVES OF CREATING A TRUST
4. WHO IS A TRUSTEE?
5. DUTIES OF A TRUSTEE
6. CONCLUSION
7. BIBLIOGRAPHY
INTRODUCTION
The law relating to private trusts and trustees is codified under the Indian Trusts
Act, 1882. The term ‘trust’ can be traced back to the ancient times when human
motivation to do charity and dedicate property for charitable and religious purposes
found its manifestation in the form of dharmashalas, annachatras, sadavarts,
educational and medical institutions, construction of water tanks and wells, etc.
moreover with the emergence of idol worship, temples and idols this came into
existence. In addition to public endowments/wakfs, private trusts can also be
formed for looking after the welfare, age, illness, disability or any other reason.
The trust laws came to India via English Trust law which stipulates dual ownership
of trust property i.e. legal titles vests with the trustee while equitable title vests
with the beneficiary. On this basis, Indian trusts act 1882 was enacted. It governs
private or family trusts and excludes wakfs and public or private charitable or
religious endowments.
WHAT IS A TRUST?
Under Indian laws, it is defined and dealt in accordance with the Indian Trusts Act.
Section 2 of the Act states the definition of ‘trust’. According to the section, “trust
means 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.”
Key terms under Trust are:
Author of the trust is the person who repossesses or declares the
confidence.
Trustee is the person who accepts the confidence.
Beneficiary is the person for whose benefit confidence is accepted. The
beneficial interest is the interest of the beneficiary.
The trust’s subject matter is called trust property or trust money.
Instrument of trust is the document or writing by which trust is created.
Therefore trust is an acceptance of an obligation by a person in relation to some
property or funds to use or hold it for the benefit of those for whom the trust is
created.
OBJECTIVES OF CREATING A TRUST
A trust is generally created for the benefit of a group of people/persons. For
example:
1. There exists certain movable and immovable property of an individual. The
Individual has children, but the children, for the time being, are unable to maintain
such property.
The father wants to create a mechanism by which the benefits of his property are
properly enjoyed by his children as well as the property is maintained. In such a
situation, the Father may choose to create a Trust for his children. Here, the Father
would be the Author, a trusted person who the Father wants to appoint for
delivering the benefits and maintaining the property, such person can be the
trustee, and the children would be the beneficiaries.
2. There is a wealthy senior citizen, who wants to set up an institution for the
welfare of the poor and needy. Here, such a person may create a trust for charitable
purposes and appoint an appropriate person for being the trustee.
In such a case, the beneficiaries would be the poor and needy people of the
society.
3. A Mutual fund is also a Trust, where generally the trustee is an artificial person,
i.e. a Company.
WHO IS A TRUSTEE?
A Trustee is a person appointed under a Trust to administer the Trust property. A
trustee should be a person who is capable of holding property and who is
competent to contract. A company, being an artificial person created by law, can
be a trustee as well. A Trustee is specifically required to accept or disclaim the
trust entrusted upon him, either expressly or by way of his actions. There can be
more than one trustees in a single Trust.
Section 10 of the trust laws deal with the question of who is eligible for becoming
a trustee. The section says that “every person capable of holding property may
be a trustee”.
A Corporation is capable of being a Trustee, it is a corporation is capable
of accepting the ownership of property with an obligation annexed to the
ownership for the benefit of another it can be a class of persons, however,
there can be no objection to a corporation acting as a trustee. However, a
person is not bound to accept a trust.
An Alien can be a trustee under the English law, however, it is not
applicable under the Indian law.
A married woman can be a trustee.
An infant can act as a trustee. However a minor is incapable of holding a
public trust.
A convict can act as a trustee.
An illegitimate child can act as a trustee.
An insolvent has the capacity to act as a trustee.
When a person is designated as a trustee, he has the option and it is up to him, to
accept or disclaim the trust. He may signify his acceptance by words, impliedly or
by consent in oral and written form. What is required, however, is that his intention
to accept should be reasonably certain under the trust laws.
The intended trustee can also disclaim the trust instead of accepting it. He must,
however, do so within a reasonable period of time. His disclaimer will prevent the
trust property from vesting in him under the trust laws in India. however, if there
are more than one proposed trustees and if any of them disclaims, the property will
vest in the other or others and he will become the sole trustee or them co-trustees.
A proposed trustee is the one who accepts to become a trustee from the date of the
creation of the trust under the trust laws. Where a person by his will leaves the
certain property in trust for another and the proposed trustees prove his will, which
amounts to an acceptance of the trust on their part. Similarly, where goods are
transferred to a person in trust for realization and payment of his debts, and the
transferee realizes the value of the goods, or where money is transferred in trust
and the proposed trustee separates the money from the rest of the assets, this
conduct amount to an acceptance of the trust under the trust laws in India.
DUTIES/LIABILITIES OF A TRUSTEE
The Indian Trusts Act, 1882 provides for certain duties/liabilities of a Trustee, we
shall see each one of them in brief detail.
Execution of Trust
The trustee is required to actually carry out the purpose of the trust as laid out in
the Trust deed. The trustee is also required to follow the directions of the Author of
the Trust at the time of creation of the trust.
However, the trustee is not required to follow such directions if they are
impractical or illegal.
Acquaintance 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.
Protection of Title of Trust Property
The trustee is required to defend all the claims against the title of the Trust
property and to take adequate measures to assert and protect the title of the
property.
Not to set up Title adverse to the beneficiary
As the trustee is entrusted with the trust property to maintain it for the benefit of
the beneficiaries, it is expected and required of the trustee to not set up any title
adverse to the beneficiary.
A good example explaining this point would be, suppose the trustee is entrusted
with an immovable property and is required to apply the rents and profits of such
property for the benefit of the beneficiaries. The trustee is also given the rights to
sell such property.
It is expected of the trustee that the trustee would not sell such property to himself
or anyone of his relatives or friends or a person of like nature, as such an action on
the Trustee’s part would be adverse to the beneficiaries, and the trust factor upon
which the foundation of the trust is built, would cease to exist.
Take care of the Trust Property
The trustee is required to provide adequate safeguard and required to apply such
prudence to the trust property, as that of an ordinary man would apply to his own
property.
However, the Act provides that the Trustee would not be responsible for any loss
caused to the trust property or the benefits arising thereof, if he had applied such
prudence as would an ordinary man would apply to his own property.
Convert perishable property
If the trust property is of such nature, that with time, it would keep on deteriorating
and keep losing value, the trustee is required to convert, i.e. sell and convert such
property into cash proceeds and apply such proceeds for the benefits of the
beneficiaries. This duty is especially required of a trustee when the trust is created
for the benefit of several persons in succession.
Be impartial among the beneficiaries
When the trust is created for the benefit of several beneficiaries, the trustee is
required to apply the benefits received from the trust property equally among the
beneficiaries, without being partial to anyone or any group among the
beneficiaries.
Protect the trust property from adverse beneficiary
When there are several beneficiaries of a trust, and one or more of such
beneficiaries commit, or threaten to commit an act, which would be adverse to the
interest of other beneficiaries and the trust in general, the trustee is required to take
measures to stop such act of such beneficiary/beneficiaries.
To maintain and keep books and accounts
The trustee is required to keep a clear and accurate account of the trust property
and at all times, provide the same to the beneficiary upon the request of the
beneficiary.
Investment of Trust money
The Act specifically provides that when the trust property consists of money, and
such money is not required to be immediately applied for the benefit of the
beneficiaries, the trustee is required to invest such money in such instruments as
provided for in the Act. The Act provides for instruments such as promissory notes
and other securities of the Central Government; in stock or debentures of the
Railways or other government companies; in Units issued by the Unit Trust of
India, etc.
CONCLUSION
It is said that the relation of Trust is like a glass. Once broken, it is never the same
as before. By a prima facie observation of the Indian Trust Act, it can be seen that
apart from the legal aspects, the duties and powers provided in the Act intend to
preserve the delicate relation of trust, so that the trust may be kept, and the
intention with which the trust is formed may be fulfilled. Therefore, here we may
conclude with the duties and powers of a Trustee as provided for in the Indian
Trust Act, 1882.
BIBLIOGRAPHY
WEBSITES
https://blog.ipleaders.in/duties-and-powers-of-a-trustee/
http://lawtimesjournal.in/trustee-under-the-trust-law/
http://www.legalservicesindia.com/article/article/who-can-be-a-trustee-&-beneficiary-of-a-trust-
under-indian-trust-act-1882-1025-1.html
