Trustee & Beneficiary

Trustee:
Section 10 of Indian Trusts Act 1882 states that “Every Person capable of holding
property may be a trustee; but, where the trust involves the exercise of discretion, he
cannot execute it unless he is competent to contract.”
A trustee has a fiduciary relationship, with regards to the beneficiary. Their main
function is to carry out their duties (S.11) and to act in the best interests of the
beneficiaries.
Trustees are not obligated to perform any such direction, which may be impracticable,
illegal or manifestly injurious to the beneficiaries.

Duties and Rights

1. They are obligated to defend title of trust property (S.13). Preservation of trust
property is one of the essential functions of trustees under the trust laws in India.
The trustee has to assert his right to the property and to protect the title to the
property. For this purposes, the trustee has the power to maintain and defend suits
and all other authorities under the trust laws in India. Subject to the provisions of the
instrument of trust and keeping in mind the nature and kind of trust property, the
trustee may do anything which is necessary for the preservation of the trust property.
2. However, under no circumstance can a trustee claim title to the trust property, which
is adverse to the interests of the beneficiary. (S.14) Thus, the trustee only holds the
property for the ultimate benefit of the beneficiary, and his title is subject to that of
the beneficiary.
3. Duty of Care: A trustee can deal with trust property, but he has to show that his
conduct was as careful as a man of ordinary prudence and that he acted in good faith
(S.15).
4. He also has to be impartial, in case there are multiple beneficiaries (S.17).
5. Furthermore, where the trustee commits a breach of trust, he is liable to make good
the loss sustained by the beneficiary or the trust property. He is exempted if the
beneficiary induced the trustee, or was involved in the breach of trust (S.23).
6. He is empowered do all acts which are reasonable and proper for the realization,
protection or benefit of the trust-property, and for the protection or support of a
beneficiary who is not competent to contract (S.36).
7. Where the discretion of a trustee is not exercised in good faith, court may intervene
(S.49). He also cannot use trust property for his own profit or for any other purpose
unconnected with the trust (S.51)

Beneficiary:
According to Sec 9 of Indian Trust Act 1882 “Every person capable of holding
property may be a beneficiary”. In the case of a private trust, beneficiaries are
predetermined or ascertained individuals. A beneficiary can be a minor as well.

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 Rights and Duties
1. Right to Rents and Profit: A beneficiary is entitled to receive the rents and profits of
the trust property. This right is subject to the provisions of the instrument of trust
(S.55).
2. Right to specific execution: The beneficiary has the right to have the intention of the
author of the trust specifically executed to the extent of his interest. Thus he can
compel the trustee by means of a court order to carry out the purpose of the trust.
This right also includes the right to have the trust property transferred to the
beneficiary. If the beneficiary is competent to contract he can direct the trustee to
transfer the property to him or to any other person at his choice. (S.56)
3. Subject to the law in force, the beneficiary can choose to transfer his beneficial
interest to another (S.58).
4. Subject to the provisions of the instrument of trust, the beneficiary has a right to say
that the trust property shall be properly protected and that it should be held and
administered by proper person and proper number of trustees (S.60).
5. Right to compel act of duty: The beneficiary has a right to assure that the trustee shall
perform a particular act of duty and also to restrain him from committing any
contemplated or probable breach of trust (S.61).
6. The beneficiary has the right to restrain the trustee from committing breach of trust.
One aspect of this right is that if the trustee has wrongfully purchased the trust
property for himself, the beneficiary can recover it back from him and also compel
him to hold the property in trust for the beneficiary (S.62).

Relation between Trustee and Beneficiary

Trustees have a fiduciary relationship with the trust’s beneficiaries i.e. they are liable
for taking care of all the property in the name of trust kept for the beneficiary. The
relationship is such that a trustee can be made liable for breaching the trust. The
ownership of the property, as well as any rents and profits collected belong to the
Beneficiary.

Impediments on the rights of a trustee

As has been mentioned above, the trustee cannot have rights or claims to title, which
are adverse to the interests of the beneficiary. As trustees, they are bound by the
fiduciary relationship towards the beneficiary. This means that while they can deal
with the property, they cannot do so in absence of good faith and are bound by a
reasonable duty of care.
Furthermore, S.36 and S.37 strengthen the proposition that a trustee must act only in
accordance with the trust. He has the responsibility to manage the affairs of the trust
in a judicious manner. The general authority of a trustee is subject to the conditions
contained of the trust, the trustee is bound to act in accordance with the paramount
interest of the trust.1

1
R.Subramanian Chettiar vs Nil C.R.P.(NPD)(MD)No.1413 of 2015 (Madras HC)

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Due consideration must be given to the creator’s wishes, in case the instrument of the
trust provides for a particular manner of enjoyment of property, then it should be
enjoyed in that manner only.2

Conclusion
It is clear from the above points that a beneficiary’s rights and claims over the trust
property are superior than that of a trustee, who is empowered to hold it/ deal with it
for the beneficiary.

2
R.Subramanian Chettiar vs Nil C.R.P.(NPD)(MD)No.1413 of 2015 (Madras HC)