A PROJECT

ON

“A STUDY ON THE RIGHTS OF THE BENEFICIARIES”

UNDER

‘INDIAN TRUST ACT, 1882’

[Submitted as a partial fulfillment of B.A.LL. B (Hons.) 5-year integrated course]

Submitted on: October 14, 2023

Submitted by: Submitted to:

Vinayak Sharma Mrs. Rakhi Sharma

Roll No. – 115 Faculty

Semester: V – B

University Five Year Law College

Rajasthan University

Jaipur
 CERTIFICATE

Mrs. Rakhi Sharma Date: October 14, 2023

Faculty
University Five Year Law College

This is to certify that Vinayak Sharma of V Semester of University Five Year Law College,
University of Rajasthan has carried out the project entitled “A STUDY ON THE RIGHTS OF
THE BENEFICIARIES UNDER INDIAN TRUST ACT, 1882” under my supervision and
guidance. It is an analysis report of a minor project. The student has completed research work in
my stipulated time and according to the norms prescribed for the purpose.

Mrs. Rakhi Sharma

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 DECLARATION

I, Vinayak Sharma, hereby declare that this project entitled “A STUDY ON THE RIGHTS OF
THE BENEFICIARIES UNDER INDIAN TRUST ACT, 1882” based on the original research
work carried out by me under the guidance and supervision of Mrs. Rakhi Sharma.

The interpretations put forth are based on my reading and understanding of the original Texts, the
books, articles and the websites etc. Which have been relied upon by me has been duly
acknowledged at the respective places in the text.

For the present project which I am submitting to the university, no degree or diploma has been
conferred on me either, in this or in other university.

Date: October 14, 2023

Vinayak Sharma

Roll no. 115

Semester: V – B

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 ACKNOWLEDGEMENT

I have written this project “A STUDY ON THE RIGHTS OF THE BENEFICIARIES UNDER
INDIAN TRUST ACT, 1882” under the supervision of Mrs. Rakhi Sharma, Faculty,
University Five Year Law College, University of Rajasthan, Jaipur. Her Valuable suggestions
herein have not only helped me immensely in making this work but also in developing an analytical
approach this work.

I found no words to express my sense of gratitude to Director Dr. Akhil Kumar and Dy. Director
Sandeep singh for constant encouragement at every step.

I am extremely grateful to librarian and library staff of the college for the support and cooperation
extended by them from time to time.

Vinayak Sharma

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 TABLE OF CONTENTS

CERTIFICATE ............................................................................................................................... 1

DECLARATION ............................................................................................................................ 2

ACKNOWLEDGEMENT .............................................................................................................. 3

TABLE OF CONTENTS ................................................................................................................ 4

INTRODUCTION .......................................................................................................................... 5

RESEARCH METHODOLOGY.................................................................................................... 7

OBJECTIVES OF THE RESEARCH ............................................................................................ 7

RESEARCH QUESTIONS ............................................................................................................ 7

CHAPTER – I ................................................................................................................................. 8

RIGHTS OF BENEFICIARIES UNDER THE INDIAN TRUST ACT, 1882 .............................. 8

CHAPTER – II.............................................................................................................................. 11

LIABILITIES OF A TRUST BENEFICIARY IN INDIA ........................................................... 11

CONCLUSION ............................................................................................................................. 13

BIBLIOGRAPHY ......................................................................................................................... 14

 BOOKS REFERRED......................................................................................................... 14

 WEB SOURCES................................................................................................................ 14

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 INTRODUCTION

According to Section 9 of Indian Trust Act 1882, “Every person capable of holding property may
be a beneficiary. A proposed beneficiary may renounce his interest under the trust
by disclaimer addressed to the trustee, or by setting up, with notice of the trust, a claim inconsistent
therewith.” Every private trust must have a designated beneficiary or one so described that his
identity can be learned when the trust is created or within the time limit of the Rule of Perpetuity,
which is usually measured by the life of a person alive or conceived at the time the trust is created.
This rule varies from state to state, is designed to prevent a person from tying up property in a trust
for an unlimited number of years. A person or corporation legally capable of taking and holding
legal title to property can be a beneficiary of a trust. Partnerships and unincorporated associations
can also be beneficiaries. Unless restricted by law, aliens can also be beneficiaries.

Who can be termed as beneficiaries?

A class of persons can be named the beneficiary of a trust as long as the class is definite or
definitely ascertainable. If property is left in trust for "children," the class is definite and the trust
is valid. When a trust is designated for “family," the validity of the trust depends on whether the
court construes the term to mean immediate family in which case the class is definite or all
relations. If the latter is meant, the trust will fail because the class is indefinite. When an
ascertainable class exists, a author may grant the trustee the right to select beneficiaries from that
class. However, a trust created for the benefit of any person selected by the trustee is not
enforceable.1
If the author's designation of an individual beneficiary or a class of beneficiaries is so vague or
indefinite that the individual or group cannot be determined with reasonable clarity, the trust will
fail. The beneficiaries of a trust hold their equitable interest as tenants in common unless the trust
instrument provides that they shall hold as joint tenants. For example, three beneficiaries each own
an undivided one-third of the equitable title in the trust property. If they take as tenants in common,
upon their deaths their heirs will inherit their proportionate shares. If, however, the author specified
in the trust document that they are to take as joint tenants, then upon the death of one, the two

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https://www.legalservicesindia.com/

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beneficiaries will divide his share. Upon the death of one of the remaining two, the lone survivor
will enjoy the complete benefits of the trust.
Categories of the beneficiaries of the trust: -
There are two basic Trusts with regards to the exercises of the Beneficiaries' rights:
1. Beneficiaries of a Bare Trust (as known as a Simple Trust) is where the Beneficiary is entitled
to take actual ownership and control of the Trust and has the right to the income and capital.
The Trustees, in this case, act in accordance with the Beneficiaries' wishes.
2. Beneficiaries of an Express Trust are Trusts where by the Trustee is given additional duties
and powers assigned in the Trust Deed. The Express Trust can be either an Inter Vivos Trust,
which is a Trust created during the life of the Grantor, or the Express Trust can be a
Testamentary Trust, which is a Trust enacted after the death of the Grantor (as known as the
Will Trust).

As far as Trust is concerned, there are two main types of Beneficiaries:

1. Fixed Beneficiaries who simply have a fixed entitlement to the income and capital from
the Grantor.
2. Discretionary Beneficiaries to whom the Trustees have discretionary and decision-
making powers to the entitlements.

• The Crown – According to the law of England the sovereign may be a cestui que trust, and
similarly in India the Government may be a beneficiary.
• Unborn Child – An unborn child cannot be said to be a “a person capable of holding property”
within the meaning of this section and is therefore incapable of being a beneficiary.
• Corporation – In England a trust of lands cannot be limited to a corporation without a “license
from the crown”. But since the Mortmain Acts do not apply to India , a corporation in India
may be a censui que trust.
• Alien – An alien also may be a cestui que trust.
• Settler ad His wife – A trust was created for the benefit of the settler and his wife. Subsequent
to the trust the marriage was dissolved and the wife remarried. It was held in that the wife
forfeited the benefits under the trust.

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 RESEARCH METHODOLOGY

The researcher has adopted doctrinal method research. The researcher has made extensive use of
available resources at the library of University Five Year Law College, University of Rajasthan
and also internet resources.

OBJECTIVES OF THE RESEARCH

1. To study the rights of the trust beneficiaries under the Indian trust act, 1882.
2. To study the liabilities of the trust beneficiaries under the Indian trust act, 1882.

RESEARCH QUESTIONS

1. Who can be termed as beneficiaries?

2. What are the categories and types of beneficiaries under the Indian trust Act, 1882?
3. What are the rights of the trust beneficiary under the Indian trust Act, 1882?
4. What are the liabilities of the trust beneficiary under the Indian trust Act, 1882?

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 CHAPTER – I
RIGHTS OF BENEFICIARIES UNDER THE INDIAN TRUST ACT, 1882

It was found in S. Darshan Lal V. Dr. R.E.S Dalliwal (AIR 1952 All 825) that a beneficiary has
no rights in a Trust other than just to wait and see what the trustee’s actions are and what, how the
trustee will distribute exactly to them. However, this is not true as trust beneficiary have certain
rights to them provided under the Trusts Act as well. They have certain rights in relation to the
trust. The rights of the beneficiaries, except for those mentioned in the Act, typically depend on
the type of trust, provisions contained under the trust, type of beneficiary that they hold, and lastly,
state law.

The Indian Trust Act, 1882 confers certain rights on the part of the beneficiary to obtain the
interests-2

1. Right to rents and profits [S.55]- The trust beneficiary has the right to receive all the rents
and profits incurred by the trust property. This provision makes an obligation on the part of the
author or the trustee to make sure that the interest is received by the beneficiary.
2. Right to Specific Execution [S.56]- The beneficiary has the right to receive all the information
regarding the intention of the author and to what extent their interest lies in the trust specifically
executed for them. Therefore, it makes mandatory on the part of the trustee to provide the
beneficiary with all the information.
3. Right to Transfer of Possession [S.56]- The provision also makes an obligation on the part
of the trustees to transfer the trust property to the beneficiary(s) or to such person as directed
by the beneficiary(s).

In case a trust is created for the benefit of a married woman so that she does not deny the right
of her beneficial interest, during her marriage the right of the beneficiary to have the property
transferred will not be available to her.

4. Right to inspect and take copies of instrument of trust, accounts, etc. [S.57]- The
beneficiary is entitled to inquire about any documents related to the trust property be it the trust
deed, accounting of trust property, or vouchers if any, and take copies of any such document.

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https://www.legalservicesindia.com/

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 It makes an obligation on the part of the trustee to maintain an accounting record and submit
it by the end of each year. Beneficiaries are also entitled to waive off any records.
5. Right to transfer beneficial interest [S.58]- The beneficiary who is competent to the contract
has the right to transfer the beneficial interest but should be in accordance with the law
prevailing at that time. However, the transfer must be under the circumstances and to an extent
to which the right can be transferred.

In case the trust is bequeathed for the benefit of a married woman so that she does not deny
the beneficial interest she is not conferred with the right to transfer such trust property during
the period of her married life.

6. Right to sue for Execution of Trust [S.59]- This provision deals with the situation where
trustees are not appointed or have died, disclaimed or discharged, or for any other reason where
the execution of the trust by the trustees becomes impracticable, the beneficiary can file for a
suit for the execution of the trust. In such cases, the court is bound to carry out the execution
of the trust under its own supervision until a new trustee is appointed.
7. Right to proper trustee [S.60]- This provision confers the beneficiary the right to demand
protection and administration of the trust property by a proper person or a proper number of
any such person. The provision also lists down persons who cannot be defined as a proper
person with the ambit of this section:
• A person having domicile of abroad;
• An alien enemy;
• A person having interest that is inconsistent with that of the beneficiary;
• A person in insolvent circumstances and unless otherwise provided by the personal
laws of the beneficiary,
• A married woman,
• A minor child.

In cases where the administration of trust requires the receipt and custody of money, then the
number of trustees for the job should be at least two.

8. Right to compel to any act of duty [S.61]- The provision confers a right to the beneficiary
that he can compel the trustee to perform a particular act of his duty or as such. He can also
restrict the trustee from performing any contemplated or probable breach of trust.

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9. Wrongful purchase by trustee [S.62]- This provision provides the beneficiary with the right
to restrain the trustee from committing any breach of trust. If the beneficiary has wrongfully
bought the trust property with the intention to use it for himself, the beneficiary has the right
to recover it back from him and can also compel him to hold the trust property for the
beneficiary.

If the property has been sold to a third party knowing that it was trust property, the beneficiary has
the right to recover it from the third party. However, in such a case, the beneficiary needs to repay
the purchase amount along with the interest, and any such expenses which have incurred while
preserving the property will be paid by the trustee.

The provision puts certain obligations on the part of the trustee or the purchaser. He must:

1. Account for the net profits of the property,

2. Pay the occupation rent if he was in actual possession of the property, and
3. Allow the beneficiary to deduct a part of the purchase money if the property has been
deteriorated by certain acts or omissions of the trustee or purchaser. 3

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https://www.lawcolumn.in/

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 CHAPTER – II
LIABILITIES OF A TRUST BENEFICIARY IN INDIA

The Indian Trust Act, 1882 confers certain liabilities on the part of the beneficiary to obtain the
interests-

1. Duty to compensate the trustee – It is the duty of the beneficiary to compensate or reimburse
the trustee in case there are any damages caused either to the trustee or to the trust, due to the
beneficiary. It is legally mandatory for the beneficiary to compensate if there is any injury or
damage caused by himself.
2. Liability in breach of trust – The beneficiary is held liable, if by any chance, in any case,
he/she breaches the trust agreement in any way. He is held fully liable for all losses/damages
if he commits a breach of trust.
3. Liability not to harm others’ interests – Beneficiary cannot harm another party’s interests in
any way in the trust, as he will be liable for any harm caused to another party within the trust
that is due to him or his behaviour/etc.
4. Liability not to obtain any advantage without the consent of other beneficiaries – It is
mandatory for the beneficiary to take consent of all other beneficiaries involved in the trust
in case, he/she needs to obtain any kind of advantage. If not done, it will be considered as a
breach of trust.
5. Liability to receive his interest – The beneficiary is entitled to get his/her interest from the
trust, but the beneficiary should not claim more than his interest in the trust property.
6. Liability to become aware of breach of trust – It is the beneficiary’s liability to become
aware of all types of breach of trust, whether by the author or by the trustee, and it is his liability
and responsibility to become fully aware and proceed against any party, if a breach of trust is
found by the beneficiary.
7. Liability in case to deceive the trustee – The beneficiary will be held liable if in case, it is
found that he has deceived the trustee in any way or induced him to commit a breach of trust.
Court will proceed against the beneficiary in this matter.
8. Liability to take reasonable steps – The beneficiary will be held liable in case he fails to take
reasonable steps and actions, as mentioned in the trust deed, within the rights and duties of

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 other beneficiaries. It is mandatory for the beneficiary to only take steps within the limitations
and boundaries set of all other beneficiaries.
❖ Bar to Remedies for Breach of Trust
The beneficiary’s right of action can be lost in anyone one of the following ways:
1. By concurrence
2. By the way of limitation (lapse of time)
3. By continued acceptance in the breach
4. By release of trustee from any liability
5. By subsequent confirmation of breach4

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 CONCLUSION

A trust is created for the benefit of the beneficiary and possesses certain rights on the trust property,
there are also certain liabilities and responsibilities imposed on him. The Indian Trust Act, 1882
ensures that the beneficiary not only enjoys the rights and benefits on the trust property but also
complies with the provisions of the trust deed in order to avoid any damages which may be caused
to other beneficiaries, hence balancing the scale.

Under the provisions of the Trusts Act, the beneficiary is entitled to many rights and is equally
liable for any breaches as well. There is an equal ratio of rights as well as the liabilities of the
beneficiary. This analysis also proves that it is compulsory for the beneficiary to maintain a good
co-operation with the trustees of the trust, which help him save himself from any breach of trusts.

Lastly, even though trust is primarily created for the benefit of the beneficiary, there are still certain
rights and liabilities that the beneficiary will hold, and there is still a way and manner that a
beneficiary needs to act and behave in within the limitations of the Trust.5

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 BIBLIOGRAPHY

 BOOKS REFERRED

1. Rao C.R., The Indian Trust Act and Allied laws (1999)
2. Philip H. Pettit, Equity and Law of Trust (1970)

 WEB SOURCES

• https://blog.ipleaders.in/
• https://www.legalwindow.in/
• https://www.lawteacher.net/
• https://www.legalservicesindia.com/
• https://www.lawcolumn.in/

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