AMITY LAW SCHOOL NOIDA

Equity and Trust Law Project

on
TRUST UNDER INDIAN LAW

SUBMITTED TO SUBMITTED BY

Dr. Devendra Singh Avni Agarwal (A3221516263)

Professor BBA LL.B. (H), 2016-21
Section-D
Bhavya Yadav (A3221516239)
BBA LL.B. (H), 2016-21
Section-D

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 ACKNOWLEDGEMENT
We would like to express our special thanks of gratitude to our Professor Dr. Devendra Singh for
giving us the opportunity to work on the topic of Trust under Indian Law and various changes
introduced by the Ministry of Corporation over the years. The project helped us to understand the
various contours and intricacies that are involved in the creation of trust and rights and liabilities
of the trustees. We are really thankful to our parents who helped us a lot in finalizing this project
within the limited time frame.

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 _____________________________________________________________________________
TABLE OF CONTENTS
_____________________________________________________________________________

I. TRUST UNDER NDIAN LAW

i. Introduction
ii. Creation of Trust
iii. Who may be a Trustee
iv. Liabilities of a Trustee
v. Rights and Powers of a Trustee
vi. Conclusion

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 TRUST UNDER INDIAN LAW
Introduction
Creation of a Trust
Who may be a Trustee?
Liabilities of a Trustee

Rights and Powers of a Trustee

Becoming trustee confers important rights, powers and duties upon him/ her in order to protect
the interests of beneficiaries. However, the trustee also has certain rights when fulfilling its
duties. Given below are the rights of Trustee:
a. The right for reimbursement - 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. If you are a trustee and have had to incur some costs and expenses in the
proper administration of the trust, you have the right to be reimbursed. This burden must be
equally distributed amongst the beneficiaries. You can also have recourse to the trust
property. It’s worth noting in regards to this right that the indemnity must be reasonable
and must have properly incurred in the course of your duties as trustee. Further if you are
sued in your capacity as a trustee, you can claim your conduct as an incident of
administration and you can be reimbursed for your legal fees
You have the right to pursue the beneficiaries personally for reimbursement for costs and
expenses.
b. The right to seek advice from the court - As a trustee, you most likely have the statutory
right to seek help from the court on the proper administration of the court, except in the
Northern Territory and Tasmania. In these cases, the role of the court is to determine for
the trustee what should happen to protect and maintain the best interests of the trust.
c. The right to be relieved from a breach of trust - In all Trustee Acts in Australia, they
empower the court to relieve you as a trustee from liability for breaches of a trust only if
you acted reasonably, honestly and you ought fairly to be excused. An example is section
85 of the Trustee Act 1925 (NSW).

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 The onus of proof lies on you as trustee, and you’ll need to satisfy the court that you acted
in good faith and for the welfare of the trust and that the trustee acted in the best interest
for the trust and not for your own or any other trustee’s interest. In addition, your acquittal
not only grants you as trustee relief but also the beneficiaries.
d. The right to a contribution claim - If you as a trustee incur losses due to breach of trust,
you can hold all co-trustees jointly and severally liable to help recuperate the costs. You
can exercise this right even if you are solely responsible for the loss, as the court holds the
opinion that even if you are a passive trustee, your inactivity has permitted the culpable
trustee to breach the trust.
If you are an innocent trustee who has acted reasonably and have had a contribution claim
made against you, you may be entitled to an indemnity if the defaulting trustee has kept
trust property or has personally benefited from the breach.
e. 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.
f. 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.
g. 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.  However, if the
trustee himself is also guilty of fraud in committing such a breach, then he loses the right to
indemnify himself in such a situation.
h. 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.
i. 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.

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j. 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.
k. 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.

Apart from various rights granted by the law, a trustee also has the following powers within the
Indian Laws:
a. 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.
b. 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.
c. 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.  However, such power would not be exercisable, if the Trust
deed specifically requires a specific number or more of trustees to execute the authority

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 provided for in the trust, and after the death or disclaimer, such specific number is not
satisfied.

Conclusion
The concept of trust as it obtains in India is not Historical but merely a transplantation of the
English concept of trust. Indeed, there is little that is exotic about it, though in the course of the
administration of the law of trusts many of the detailed rules have been borrowed from the
English law of trusts. Untrammelled by any technical notions and distinctions such as legal and
equitable estates, the Indian systems of law evolved a concept of trust in the wider sense of
possession or dominion over property coupled with the obligation to use it, either wholly or
partially, for the benefit of others than the possessor. This wider concept of trust was an integral
part of both the Hindu and the Muslim systems. However, the detailed rules applicable to trusts
in this sense were not free from doubt, especially in the case of Hindu Law.
Till 1882 the process of development of the law of trusts was almost completely left to the
courts. There were only a few statutory provisions relating to trusts Provision was made in the
Penal Code for the punishment of criminal breach of trust. The Specific Relief Act embodied
definitions of the terms trust and trustee and provided for suits by trustees for possession of trust
property. The Civil Procedure Code made provisions for suits by and against trustees as also for
suits relating to public chart ties. The Limitation Act contained certain provisions as to limitation
in action pertaining to trusts and trust properties.
The Trusts Act has proved to be a very successful piece of legislation as it has stood the test of
time. 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.

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