Classification & Creation of Trusts

Law of Trusts & Waqfs in India Assignment

Submitted by

Name: Nirbhay Gupta

Student ID: 202005330

LL.M. (2nd Semester) (Regular)

Faculty of Law, Jamia Millia Islamia

Submitted to: Dr. Kahkashan Y. Danyal, Professor (Faculty of Law,

Jamia Millia Islamia, New Delhi)

June 26, 2021

 ACKNOWLEDGEMENT

I have taken efforts in this project. However, it would not have been possible without the kind
support and help of certain individuals. I would like to extend my sincere thanks to all of them.

I am highly indebted to Prof. Dr. Kahkashan Y. Danyal for her guidance and constant supervision
as well as for providing necessary information regarding the project.

I would like to express my gratitude towards my parents for their kind co-operation and
encouragement which help me in completion of this project.

My thanks and appreciations also go to the authors and creators of sources which I have used for
this project and people who have willingly helped me out with their abilities.
 TABLE OF CONTENTS

RESEARCH METHEDOLOGY................................................................................................. 1

 STATEMENT OF PROBLEM..................................................................................................... 1

 RESEARCH OBJECTIVE ........................................................................................................... 1

 RESEARCH QUESTIONS ......................................................................................................... 1

 HYPOTHESIS.......................................................................................................................... 1

 METHODOLOGY .................................................................................................................... 2

1. INTRODUCTION ................................................................................................................. 3

2. CLASSIFICATION OF TRUSTS ........................................................................................ 4

2.1 EXPRESS TRUSTS ............................................................................................................... 5

2.2 IMPLIED TRUSTS ................................................................................................................ 5

2.3 CONSTRUCTIVE TRUSTS .................................................................................................... 5

2.4 PRIVATE AND PUBLIC TRUSTS ........................................................................................... 6

2.5 SIMPLE AND SPECIAL TRUSTS ........................................................................................... 6

2.6 TRUSTS OF PERFECT AND IMPERFECT OBLIGATION ........................................................... 7

2.7 RESULTING TRUST ............................................................................................................ 7

2.8 PRECATORY TRUST ........................................................................................................... 7

2.9 SECRET TRUST .................................................................................................................. 7

2.10 TRUST FOR VALUE ............................................................................................................ 8

2.11 VOLUNTARY TRUST .......................................................................................................... 8

2.12 ILLUSORY TRUST............................................................................................................... 8

3. CREATION OF TRUSTS..................................................................................................... 8

3.1 ESSENTIALS ....................................................................................................................... 8

3.2 PARTIES TO TRUST (SECTION 3)......................................................................................... 9

 3.3 LAWFUL PURPOSE (SECTION 4) ......................................................................................... 9

3.4 NECESSARY FORMALITIES FOR CREATION OF TRUST (SECTION 5)................................... 10

3.5 WHEN IS A TRUST CREATED (SECTION 6) ....................................................................... 10

3.6 WHO MAY CREATE TRUST (SECTION 7).......................................................................... 11

3.7 WHO MAY BE BENEFICIARY (SECTION 9) ....................................................................... 12

3.8 WHO MAY BE TRUSTEE (SECTIONS 10 AND 60) .............................................................. 12

4. RULE OF THREE CERTAINTIES .................................................................................. 12

4.1 CERTAINTY OF INTENTION OR WORDS ............................................................................ 13

4.2 CERTAINTY OF SUBJECT MATTER ................................................................................... 14

4.3 CERTAINTY OF OBJECT OR BENEFICIARIES ..................................................................... 16

5. RECTIFICATION OF INSTRUMENTS OF TRUSTS................................................... 17

6. CONCLUSION .................................................................................................................... 19

BIBLIOGRAPHY ....................................................................................................................... 20
 RESEARCH METHEDOLOGY

 STATEMENT OF PROBLEM
There is a notion in the society that it is only the elite sector of the society who can create
trusts. However, that is not true. A trust can be created by not just the high net worth
individuals but even by ordinary men and women. There are two types of trusts in India:
private trusts and public trusts. While private trusts are governed by the Indian trusts Act,
1882, public trusts are divided into charitable and religious trusts. The Charitable and
Religious Trust Act, 1920, the Religious Endowments Act, 1863, the Charitable
Endowments Act, 1890, the Bombay Public Trust Act, 1950 are some of the statutes for
the enforcement of public trusts in India. Recently, trusts can also be used as a vehicle for
investments, such as mutual funds and venture capital funds. These trusts are governed by
Securities and Exchange Board of India (SEBI). This project tries to analyze various types
of trusts which can be created and the purpose behind creating these trusts. The project also
deals with various provisions under Indian law which are required to be followed for
creation of trusts in India.

 RESEARCH OBJECTIVE
The project tries to study various types of trusts which an individual can form and the
purpose behind formation of these trusts and how a trust can be formed under Indian
Jurisdiction.

 RESEARCH QUESTIONS
I. What are the various of trusts?
II. How to create trust in India?
III. Who can create Trust in India?
IV. How can a trust deed be rectified?

 HYPOTHESIS
Any individual competent to contract can form trust in India. Rectification of trust deed
can be done under Specific Relief Act, 1963.

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 METHODOLOGY
The research undertaken is Doctrinal Research. Doctrinal research asks what the law is
on a particular issue. It is concerned with analysis of the legal doctrine and how it has been
developed and applied. This type of research is also known as pure.
A Descriptive method is also used in completion of this project. Books, Journals, Articles
and World Wide Web are the tools used for the study.

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 CLASSIFICATION AND CREATION OF TRUSTS

Nirbhay Gupta*

1. INTRODUCTION
The concept of trust in India is not merely a transplantation of the English concept of trust.
However, in its administration in India many of the detailed rules have been borrowed from the
English law of trusts. Indian system 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 the others than the possessor.”1 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. The Indian
concept of trust therefore, was developed embodying well established principles of English equity.

Till 1882 the process of development of law of trusts was almost completely left to the courts.
There were only few statutory provisions relating to trusts. Provision was made in Penal Code for
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 and also for suits relating to
public charities. The Limitation Act contained certain provisions as to limitation in action
pertaining to trusts and trust properties. Apart from these there were few others- the Stature of
Frauds, sections 7 to 11, which were in force only in Presidency Towns and the Indian Trustee
Act, 1866 and the Trustees and Mortgages Powers Act, 1866 both of which were generally
regarded as applicable only in cases where the parties were European British subjects.

Such in short was the position when Whitney Stokes prepared a draft bill of law relating to private
trusts in 1878-79. This bill was referred to the Fourth Law Commission consisting of the author of
the bill besides Sir Charles Turner and Raymond West. The Bill as modified by the Commission
came to be enacted with a few changes as the Indian Trusts Act, 1882.

The Trusts Act has proved to be very successful piece of legislation. It has stood the test of time.

*
Studying in 2nd Semester LL.M. at Jamia Millia Islamia, Delhi. The author greatly acknowledges the advice and
assistance of Prof. Dr. Kahkashan Y. Danyal.
1
Ganendra Mohan Tagore v. Upendra Mohan Tagore 4 Beng. O.C.J. 134.

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Its provisions are remarkable alike for lucidity and conciseness. There have been practically very
few difficulties felt in the interpretation of the Act. This is as much due to the skilled draftsmanship
of Whitney Stokes as to the fact that the rules of English law of trusts were well developed by the
time of drafting the Act.

2. CLASSIFICATION OF TRUSTS
There is a divergence of opinion on the question of classification of trusts. Maitland2 classifies
trusts according to the mode of their creation. Trusts are created either by

i) The act of party, or

ii) By operation of law

Express and implied trusts come under the first classification and resulting or constructive trusts
in the second. According to Hanbury3 trusts are

i) Express
ii) Implied
iii) Resulting
iv) Constructive

There can be different trusts according to the nature of their classification:

1) Viewed at from the mode of their creation we have express or declared trusts, implied or
presumed trusts, and constructive trusts.
2) According to the nature and duties of the trustees, trusts may be classified into two
categories of simple trusts and special trusts.
3) Considering the trusts with reference to their objects, there are two divisions of trusts:
private trusts and public trusts
4) Lastly from the viewpoint of supplying consideration trusts are divided into: trusts for
value, voluntary trusts and trusts of imperfect obligation or illusionary trusts.

2
F.W. Maitland, Equity: A Course of Lectures, Cambridge University Press, 1969, p. 53.
3
Hanbury & Martin, Modern Equity, Sweet & Maxwell, 2015, p. 98.

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2.1 EXPRESS TRUSTS

If the trust was created verbally, in written or in expressed term and a person is being nominated
to be the trustee of the trust it would amount to express trust.4 If the property is moveable then
firstly it should be registered & have to physically transferred to the trustee.5 In Fitzgerald v.
Steward6, Lord Broughman explained that an express trust is the one which is created by express
words and not by facts and circumstances. In Solar v. Ashwell7 it was held that if a trust is created
in expressed terms, whether verbal or oral, a person is in terms nominated to be the trustee of that
trust, such a trust is called an express trust.

2.2 IMPLIED TRUSTS

A creation of Equity, resulting trust operates on the presumed or anticipated intention of the settlor.
It is implied from the conduct of the parties (settlor, trustee, beneficiaries) and the surrounding
circumstances of the case .An implied trust is also created by an act of the parties. It appears from
the conduct of the parties. The conduct of the party creates presumption & shows the intention of
the parties. It was held in Cook v. Fountain 8 that when a trust is implied by law or presumed by
court it is known as implied trust.

2.3 CONSTRUCTIVE TRUSTS

This category of trusts is imposed by law, irrespective of the intention to create a trust. In this
situation, the court compels an individual to hold property for another in order to prevent them
from escaping with unconscionable conduct. E.g. a trustee getting renewal of a lease of land held
by him as a trustee is bound by trust. Lewin on Trusts9 has given the most accurate distinction
between implied and Constructive trust. An implied trust is one declared by party not directly but
only by implication whereas trusts by operation of law are not at all declared by party but result
from the effect of a rule of equity.

Such trusts are imposed on the principle to prevent unjust enrichment of one person at the expense

4
Patrick Parkinson, “Reconceptualising the Express Trust”, Vol. 61, 2002, The Cambridge Law Journal, available
at, https://www.jstor.org/stable/4508936. (Last Accessed on June 23, 2021).
5
Ibid.
6
Fitzgerald v. Steward, (1831) 2 Russ & M, 457.
7
Solar v. Ashwell, (1893) 2 QBD 390.
8
Nathan & Marshall, Casebook on Trusts, Stevens & Sons Ltd., 1967; (1676) 3 Swans 585.
9
Rennei & Brymer, Lewin on Trusts, Sweet & Mawell, 2007, p.154.

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of another.

2.4 PRIVATE AND PUBLIC TRUSTS

When a trust is made with an individual or group of individuals as the object, such trust is private.
Examples of private trusts include trusts made in favour of wives, kids, family etc.

A Public trust confers benefit on public at large. Trusts to promote public welfare or education are
public trusts and they may incidentally confer a benefit on an individual, or a class of them. A
public trust may be a charitable trust or a religious trust but it must serve a considerable portion of
public10 because it is for the benefit of the community.11

There is very little difference between a charitable and a public trust. While a charitable trust is
always a public trust, not all public trusts are charitable trusts. This is because, while the trust may
be made for the benefit of the public or a section, it may not qualify as a charitable trust as per the
requirements provided under the law.

2.5 SIMPLE AND SPECIAL TRUSTS

Where A vests his property in B for the benefit of C and A has not laid down the nature of the
trust, what results is a simple trust. The beneficiary in such a trust has a right to be put in possession
of the trust property and consequently call upon the trustee to execute a conveyance of the legal
estate. The simple reason is that here a trustee has no duties to perform. The trust is also termed a
bare trust12 and it is for the law to construe its nature.

A “special trust” requires a trustee to actively execute a settlor’s instructions. A special trust varies
from a simple trust in that these actions can include selling the trust property and using the proceeds
to pay off debts or investing cash that is part of the trust in a particular manner; whereas the trustee
simply transfers the trust property to the beneficiaries at the time specified by the settlor. The
beneficiary in such a trust cannot order a particular part of the income from the trustees as he can
do in a simple trust, because it all depends upon the discretion of the trustees.13

10
Nabi Shirazi v. Province of Bengal, ILR 1942 Cal 211.
11
Cambay Municipality v. Ratilal Ambalal Reshamwala, 1995 Supp (2) SCC 591.
12
Tomlinson v. Gylns Executor and Trustee Co., 1970 Ch. 112.
13
Ibid.

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2.6 TRUSTS OF PERFECT AND IMPERFECT OBLIGATION

This distinction is based on the object of trust. If the object of a trust is certain and it can be
enforced then it is known as trust of perfect obligation and if the object is not certain and cannot
be enforced then it is known as trust of imperfect obligation. A trust for the preservation of the
independence and integrity of newspapers14 or for maintenance of good understanding between
the nations15 or for pursuing inquiries into new alphabet16 are void because the purpose involved
therein is abstract and impersonal.17

2.7 RESULTING TRUST

A resulting trust is an implied trust that comes into existence by operation of law, where property
is transferred to someone who pays nothing for it; and then is implied to have held the property
for benefit of another person. In such a trust, the beneficial property results or reverts to the creator.
Creation of such a trust is not dependent on compliance with formalities and is also not subject to
all rules regarding express trusts.

According to Maitland18, resulting trusts are of two kinds:

i) Where there is a gift and the question is whether the donee takes beneficially or merely as
a trustee, and
ii) Where a person buys something but the conveyance of it is at his instance made not to him
but to someone else, i.e. cases of purchases in the name of third parties.

2.8 PRECATORY TRUST

It is not exactly a trust but more like a gift. It is essentially a gift that is given to beneficiary but
along with it there is an attached ‘wish’ by the testator that the beneficiary passes these asset onto
other people, as per testator’s instructions.

2.9 SECRET TRUST

A secret trust is a trust which arises when property is left to a person (the legatee) under a will on

14
Halsbury's Laws of India, Trust and Charities, Lexis Nexis Butterworths, 2nd ed., 2017, p. 145.
15
Ibid.
16
Ibid.
17
Ibid.
18
Supra note, 2.

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the understanding that they will hold the property as trustee for the benefit of beneficiaries who
are not named in the will.

2.10 TRUST FOR VALUE

Where consideration has been paid by the beneficiaries to the settlor on order to bring the trust in
existence, the resultant trust is one for value.

2.11 VOLUNTARY TRUST

In voluntary trust, no consideration is moving from the beneficiary to the settlor or no detriment is
suffered by the beneficiary. If trust is executed it comes into force at once and the beneficiaries
can enforce the same at once.

2.12 ILLUSORY TRUST

Illusory trust refers to an arrangement that gives the outward impression of being a trust, but is not
in fact so because of powers retained in the settlor. The apparent trustee has no power to deal with
the property of the trust. In illusory trusts the settlor retains so much control that, in effect,
no trust exists.

3. CREATION OF TRUSTS
3.1 ESSENTIALS

Following essentials are needed to be complied with for formation of a valid trust.

i) The purpose of creation of trust must be lawful.19

ii) In case of immovable property, it must be declared by a non-testamentary instrument in
writing signed by the author of trust or trustee and registered, or by the will of the author
of the author of the trust or of the trustee.20
In case of movable property, trust comes into operation only upon transfer of property to
the trustee.21
iii) The subject matter of trust must be property transferable to the beneficiary.22

19
Section 4, the Indian Trusts Act, 1882.
20
Section 5, the Indian Trusts Act, 1882.
21
Ibid.
22
Section 8, the Indian Trusts Act, 1882.

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 iv) Only persons competent to contract must create trust.23
v) The author of the trust must indicate with reasonable certainty by any words or
acts an intention on his part to create a trust, the purpose of the trust, the beneficiary
and the trust property.24

3.2 PARTIES TO TRUST (SECTION 3)

For creation of trust there must be three parties:

i) The author of trust called settlor

ii) The trustee
iii) The beneficiary

Section 3 of Indian Trusts Act, 1882 provides that a trust is an obligation annexed to the ownership
of the 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. The section further
states that the person who reposes or declares the confidence is called the “author of the trust”, the
person so accepting the confidence is called the “trustee”, and the person for whose benefit the
confidence is accepted is the “beneficiary”.

3.3 LAWFUL PURPOSE (SECTION 4)

If the trust is to be operative, the purpose of trust, the ultimate intention of creating the trust, must
be lawful. If it is otherwise, the trust cannot operate though it exists. Section 4 lays this down. The
purpose of trust is lawful unless it is

a) Forbidden by law
b) Is of such nature that if permitted, would defeat the purpose of law
c) Is fraudulent
d) Involves or implies injury to the person or property of another
e) The court regards it as immoral or opposed to public policy

Where a trust is created and for two purposes, of which one is lawful and the other unlawful, and
the two purposes cannot be separated, the whole trust is void.25 It was held by Supreme Court in

23
Section 7, the Indian Trusts Act, 1882.
24
Section 6, the Indian Trusts Act, 1882.
25
Supra Note, 17.

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the case of Chogmal Bhandari v. CTO26 that trust created for discharging debts is not unlawful.

If part of the trust funds is to be developed in the first instance to an unlawful purpose and the
remaining to a lawful purpose, but if the first part is unascertainable, the whole trust will fail. In
such contingency, the court, if practicable, should strive to ascertain and uphold the remainder.27

3.4 NECESSARY FORMALITIES FOR CREATION OF TRUST (SECTION 5)

In England, a trust may be created without deed, without writing, without formalities of any kind,
by mere words of mouth; and no particular word are necessary. But this was position before the
State of Frauds, 1677. After the enactment of this statute, a trust must be manifested and proved
by some writing and signed by the author, or else they shall be utterly void.28 In India, Section 5
lays down the formalities. As provided by the section, the immovable property must be transferred;
mere vesting is not enough. Movables must actually be transferred. Registration of will as
contemplated by the first part of Section 5 is compulsory. A trust when declared in a will must
comply with the provisions of the Indian Succession Act, 1925, except where the testator is
Mohammedan.

Last para of section 5 provides that these rules do not apply where they would operate so as to
effectuate fraud, property obtained by fraudulent representation will be held in trust. In case of
waqf, property is dedicated to God and title to property vests in God whereas trusts exist for
whatever purpose they are created, including for charitable purposes and title to the properties
remains vested in the trustees.29

3.5 WHEN IS A TRUST CREATED (SECTION 6)

Subject to the provisions of Section 5, a trust is created when the author of the trust indicates with
reasonable certainty by any words or acts

a) an intention on his part to create thereby a trust,

b) the purpose of the trust,
c) the beneficiary, and

26
Chogmal Bhandari v. CTO, (1976) 3 SCC 749.
27
Milford v. Reynolds, 1842 1 Ph. 185.
28
Hemchand v. Pyarelal, AIR 1942 PC 64.
29
Maharashtra State Board of Waqfs v. Yusuf Bhai Chawala, (2012) 6 SCC 328.

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 d) the trust-property, and (unless the trust is declared by will or the author of the trust is
himself to be the trustee) transfers the trust-property to the trustee.

While commenting on Section 6, court in the case of Moti Lal Chhandami Lal Jain v. CIT30, held
that while a trust is not complete until the trust property is vested in trustees for the benefit of the
trustee, this can be done by the settlor, where he is himself the trustee, by a declaration of trust,
using language which, taken in connection with his acts shows a clear intention on his part to divest
himself of all beneficial interest in it and to exercise dominion and control over it exclusively in
the character of a trustee. Section 6 of the Indian Trusts Act, 1882 makes this clear beyond doubt.

In the case of Shiv Nath Prasad v. State of W.B.31, it was held that a mere declaration can create a
trust obligation, particularly when the settlor is the sole trustee under the trust. Relation between
Trustees and Beneficiary is not that of debtor and creditor.32 Also, there is no bar to a
Mohammedan creating a simple English trust. It is not always necessary that in order to make a
settlement of his properties, a Mohammedan has always to create a waqf.33

3.6 WHO MAY CREATE TRUST (SECTION 7)

The capacity to create a trust is, co-extensive with the ability to hold and dispose of a legal or
equitable interest in property. As provided by the section, a trust may be created-

i) By every person competent to contract

ii) With the permission of principal Civil Court of original jurisdiction, by on or behalf of a
minor, but subject in each case to the law for the time being in force as to the circumstances
and extent in and to which the author of the trust may dispose of the trust property.

Whether a trust is violative of Section 7 for being created by or on behalf of minors could be
determined only in the light of contents of the trust deed and not with reference to letters and
documents not referred to therein.34

30
Motilal Chhandami Lal Jain v. CIT, 1991 Supp (1) SCC 229.
31
Shiv Nath Prasad v. State of W.B., (2006) 2 SCC 757.
32
Nawab Mir Barkat Ali Khan Bahadur v. CEO, (1996) 10 SCC 685.
33
Mohd. Kasim v. Mohd. Dastagir, (2006) 13 SCC 497.
34
T.A.V. Trust v. CIT, (1993) 3 SCC 7.

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3.7 WHO MAY BE BENEFICIARY (SECTION 9)

Every Person capable of holding property may be a beneficiary. This means that even a minor, or
a child in its mother’s womb may be a beneficiary. However, in giving property to such an unborn
person, the rule as to perpetuities35 should not be broken.

3.8 WHO MAY BE TRUSTEE (SECTIONS 10 AND 60)

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.36 Thus a minor can
be a trustee but where the question of using discretion arises, he is considered not competent to
become a trustee. Also, the beneficiary has a right that the trust-property shall be properly protected
and held and administered by proper persons, and by a proper number of such persons.37 The
following are not proper persons within the meaning of this section:

a) A person domiciled abroad

b) An alien enemy
c) A person having interest inconsistent with that of the beneficiary
d) A person in insolvent circumstances and
e) Unless the personal law of the beneficiary allows otherwise, a woman and a minor.

Reading Section 10 with Section 60 it is clear that though a minor can be a trustee, if the
beneficiaries object to his being such and the court does not consider him to be a proper person,
he cannot be one.38 A married woman’s position is also the same. If the personal law of the
beneficiary allows a minor or a woman to be a trustee, the section has no application, e.g., under
Hindu and Muslim laws a minor can be a trustee. That a married woman is not a proper person as
a trustee is now no longer acceptable. Keeping this in view the Law Commission of India in its
seventeenth report dated 6th January, 1961, has recommended the deletion of these words.

4. RULE OF THREE CERTAINTIES

To create a trust, the relevant property must be vested in trustees, all the requisites must be

35
Section 14, Transfer of Property Act, 1882.
36
Section 10, the Indian Trusts Act, 1882.
37
Section 60, the Indian Trusts Act, 1882.
38
Medha Srivastava and Akshit Kapoor, “India: Trusts”, available at, https://www.mondaq.com/india/trusts/876980/
trusts (Last Accessed on June 23, 2021).

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complied with and three certainties must be present. Three certainties are39:

i) Certainty of intention to create trust,

ii) Certainty of subject matter of trust, and
iii) Certainty of Beneficiaries or Object.

These are mechanisms to ensure that there are obligations that are administratively workable and
capable of being adjudged by a court.

If it is uncertain that a property owner has intended to create a trust then he or his estate will retain
the beneficial interest in the relevant property.40 If there is uncertainty of subject matter, then the
alleged trust will be ineffective because it will be impossible to tell which property is bequeathed
as trust property.41 If certainty of intention and of subject—matter are both present but there is
uncertainty of beneficiaries, then the intended trustee will hold the property on a resulting trust for
the owner or his estate as the case may be.42 If property is given by will or other instrument to
someone absolutely and subsequently in that instrument trusts are imposed on that absolute interest
then if these trusts fall for uncertainty the donee will take property for himself absolutely.43

4.1 CERTAINTY OF INTENTION OR WORDS

Certainty being an essential requirement for the constitution of a trust, the words expressing a trust
must be so used that on the whole they ought to be constructed as imperative. Moreover, if on the
whole it can be gathered that a trust was intended, no particular form of expression is necessary.

If the intention to create a trust, the purpose of it, the beneficiaries to it, and the trust-property are
indicated by the settlor (or trustor) along with a transfer of the trust-property to the trustee, all with
reasonable certainty, there is nothing that can stop a trust from taking form.44

But if the "intention" in the declaration of trust is lacking, no trust can arise and the transferee takes
the property beneficially for himself.

39
Knight v. Knight (1840) 3 Beav. 148.
40
Ian Hull, “Trust Basics- The Three Certainties”, available at, https://hullandhull.com/2012/01/trust-basics-the-
three-certainties/ (Last Accessed on June 24, 2021).
41
Ibid.
42
Ibid.
43
Ibid.
44
David Wilde, “The Three Certainties Required to Declare a Trust-or Is it Four?”, Vol. 79, 2020, The Cambridge
Law Journal, pp. 349-359.

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The Settlor must have shown to have intended to create a trust before the court will hold that one
has been created. No particular form of words is needed and it is not even necessary to use the
word "trust". Similarly, there is no actual requirement for the trust to be in writing, but it would be
a brave trustee not to have at least some evidence of his appointment.

The words used must show that the obligation on the alleged trustees is sufficiently imperative as
to amount to a trust. In the 18 th and 19 th centuries, the English Court of Chancery (now replaced
by a division of the High Court) was prepared to accept precatory words. Words in the will or deed
expressing the donor’s wish, hope, desire or confidence that the donee should deal with the
property in a particular way.45

Law on this point and other certainties is the same in England and in India46 and Section 6 lays
down this fact. If the intention to create a trust, the purpose of it, the beneficiaries to it, and the
trust-property are indicated by the settlor along with a transfer of the trust-property to the trustee,
all with reasonable certainty, there is nothing that can stop a trust from taking form. But if the
intention in the declaration of trust is lacking47, no trust can arise and the transferee takes property
beneficially for himself.

In determining whether or not a trust has been created, courts will take into consideration the
situation and relations of the parties, the character of property and the purpose which the settlor
had in view in making the declaration.48It is sufficient if the language used shows that the settlor
intended to create a trust, and clearly points out the property, the beneficiary and the disposition
to be made of the property. The use of the words ‘trust’ or ‘trustee’ is not essential to the creation
of a trust.

4.2 CERTAINTY OF SUBJECT MATTER

The subject matter of a trust must be property transferable to the beneficiary. Property of any kind,
movable or immovable, that is legally transferable can be the subject matter of trust. But a mere
beneficial interest under a subsisting trust cannot be a subject matter of trust in India. This is a
departure from English law as in India equitable interest is not recognized. It therefore follows that

45
Ibid.
46
Mussorie Bank v. Raynor, 4 All 500 (PC).
47
Chambers v. Chambers, AIR 1944 PC 78.
48
Wayne v. Hawkins (1782) 1 Bro CC 179.

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a trust of mere expectancy which is not transferable according to section 6 of Transfer of Property
Act, is not possible in India. Similarly, a chance of being heir apparent to succeed a contingent
interest of reversionary49, pay of a public office50, pension of a government servant 51 or any other
interest restricted to enjoyment personally52 cannot be a subject of trust.

For creation of trust the owner of the property must fully divest himself of the property. In a case53
the owner of the property executed a trust expressing a desire to construct a Dharmashala in order
to perpetuate the memories of himself and his family members. The executant however, did not
divest herself of rights of the property and transferred the same to the trustees. The court decided
that the document cannot be said to have created a trust in present.

There are two aspects to this requirement of subject matter:

i) There must be certainty as to what property is to be held upon trust; and

ii) there must be certainty as to the extent of the beneficial interest of each beneficiary.

The first is essential as a trustee must know exactly what is and what is not included within the
trust. A failure to deal with the property that belongs to the trust appropriately may result in a
breach of trust.

In Bhaidas v. Bai Gulam54, a Hindu testator bequeathed estate to his wife as a sole executrix,
constituting her the owner and directed that whatever remained of the property after her death
should go to the testator’s two daughters in such a manner as she, the executrix, may like. The trust
for daughters failed for uncertainty of the subject-matter as “whatever may remain” was uncertain.

The beneficial interest of each beneficiary must be certain so that the trustees know exactly what
or how much each beneficiary will be entitled to on distribution of the trust and prior to that, what
income should be accumulated for or paid to the beneficiary.

In Boyce v. Boyce55 a trust failed for uncertainty as to beneficial interest where a testator left
several houses on trust for his wife for life and on her death to convey any one house to his daughter

49
Section 6 (a), Transfer of Property Act, 1882.
50
Section 6 (f), Transfer of Property Act, 1882.
51
Section 6 (g), Transfer of Property Act, 1882.
52
Section 6 (d), Transfer of Property Act, 1882.
53
Kumari Chandan v. Longa Bai, AIR 1998 MP 1.
54
Bhaidas v. Bai Gulam, AIR 1922 (PC) 193.
55
Boyce v. Boyce, (1849) 16 Sim 476.

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A, as she might choose and the remaining houses to his daughter B. A died before she could make
a choice; this left uncertainty as to what particular house B should receive, so the trust for B was
void.

Note however, where the Court can make an interpretation as to the testators or settlor’s intentions
they will seek to do so, as in Re Golay 56 where a trust was created providing " a reasonable
income" from certain properties, the Court was able to determine what a reasonable income was.

Note there will be no uncertainty in the following cases:

i) Where the trustees have a discretion as to what each beneficiary should receive in the case
of a discretionary trust.
ii) Where the trust does not refer to the beneficial interest of the beneficiaries and where it is
possible to apply the maxim "equity is equality" and divide the trust equally between the
beneficiaries.
iii) Where the Settlor declares a trust in respect of an identified bank account, which unknown
to the Settlor is subsequently changed in form, i.e. from a cheque account to a deposit
account.
iv) Where the Settlor declares, say for example, 5% of the shares in a company, X when for
example he holds 950 out of the 1,000 issued shares, the Court will seek to identify the 50
shares to be held on trust.

Again, if uncertainty persists, the gift will be absolute.

4.3 CERTAINTY OF OBJECT OR BENEFICIARIES

Certainty of object or the beneficiaries is also necessary for the validity of a trust, except where
the trust is for the benefit of “charity”. If there be a clear trust but for uncertain objects, the property
that is subject of the trust is undisposed of and the benefit of such trust must result to those to
whom the law gives the ownership in default of disposition by the former owner.57 But this doctrine
does not hold good with regard to trusts for charity.

The Certainty of Objects refers to the fact that you must be certain who the beneficiaries of the

56
Re Golay, (1965) 1 WLR 1969.
57
Norson B. Harris, “The Three Certainties or: When is a Trust Not a Trust?”, available at, https://www.mondaq.com
/guernsey/trusts/20355/the-three-certainties-or-when-is-a-trust-not-a-trust. (Last Accessed on June 23, 2021).

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trust are.58 For a trust to be valid, the trustee must know who they are to direct the benefits of the
trust property towards, and who can hold the trustee to account in the event of anything going
wrong.59 As such, a group so large or so vague that the trustee would unable to identify who the
beneficiaries are would not be valid. The Objects have to be easily ascertainable and identified in
order to be a valid trust.

When a trust fall for uncertainty of object, the donee does not and cannot take for his own benefit,
but holds for the settlor or his legal representatives as a trustee i.e., a resulting trust arises here.60

The "three certainties" have to coincide, or in other words, they all have to be present for a trust to
be valid. If one of the certainties is missing the trust will be void ab initio and the person intended
to act as trustee may be given the assets personally. This means, that rather than the individual or
individuals, intended to benefit from the gift, receiving their entitlement, the person intended to
act as trustee receives the assets for his own use.

5. RECTIFICATION OF INSTRUMENTS OF TRUSTS

If by mistake a written instrument does not accord with the true agreement between the parties,
equity has power to reform or rectify that instrument so as to make it in accord with the true
agreement. What is rectified is not a mistake in transaction itself, but a mistake in the way in which
transaction has been expressed in writing.61 Rectification of an instrument is a distinct equitable
remedy, based on the facts of an instrument not according to intentions of the parties to it. It must
be clearly shown that the parties had come to a final and genuine agreement and that the instrument
had failed to record it.

It was held in Sudha Singh v. Munshi Ram62, the principle on which court acts in correnting
instruments, is that the parties, are to be placed in a position as that in which they would have store
if no error had been committed.

In a proper case the court will amend the language of an instrument for the purpose of making it

58
Ibid.
59
Ibid.
60
Morice v. Bishop of Durham, (1805) 10 Ves 522; Chhotabhai v. Gnanchanra AIR 1935 PC 97.
61
Fredrick E. Rose (London) Ltd. v. William H. Pim Jur. & Co. Ltd., (1953) 2 QB 450.
62
Sudha Singh v. Munshi Ram, AIR 1927 Cal 605.

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accord with the true intention of the parties, having ascertained:

i) What that intention was, and also

ii) That the words as they stand fail to express it.

Rectification cannot be adjudged unless the court is satisfied on both these points.63 According to
Snell64,

i) There must be a mistake sufficient to invoke the doctrine

ii) There must be strong evidence
iii) There must be absence of alternative remedy

Rectification will not be decreed if the desired result can conveniently be achieved by other means.
In India, Section 26 of the Specific Relief Act, 1963, provides for the remedy of rectification of
instruments. As the section on rectification goes, to avail this right one has to establish that there
had been cause for not truly expressing the real intention of parties. The relief is to be specifically
claimed. Unilateral mistake is no ground for rectification unless there was fraud. To prove fraud
or mistake, oral evidence is admissible.

The court has to be satisfied before an order of rectification can be made. Rectification may take
place at the instance of either party or their representatives, or by a plaintiff or defendant in any
suit, or by the court in its own discretion. The rectified contract will be enforced if so prayed by
the plaintiff. The material question in rectification is what the parties intended to express and not
what they “always intended”.

Under Section 26, any instrument can be rectified. Court will allow rectification of an instrument
so as to bring the legal consequences into conformity with those intended by parties. This is the
limit of rectification and the court will not allow it to be abused. Also, articles of association of a
company cannot be rectified because the articles are a contract between the company and its
shareholders, and the company cannot have had a different intention before incorporation.

Court in the case of CIT v. Kamla Town Trust,65 observed that the words “other instruments” used
in Section 26(1) include a trust deed and therefore a civil court had jurisdiction to entertain suit for

63
Pollock & Mulla, Indian Contract Act and Specific Relief Act, Lexis Nexis Butterworths, 9th Edition, 1982, p.888.
64
Edmund Henry Snell, Snell’s Principle of Equity, Lightening Source UK Ltd., 2010, pp. 610-619.
65
CIT v. Kamla Town Trust, (1996) 7 SCC 349.

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rectification of a trust deed.

6. CONCLUSION
Classification of trusts is an important aspect, which is needed to be remembered before creating
any trust. There are various types of trusts, which fulfill different purposes regarding the trust
property, so the purpose of each trust should be kept in mind before creating any trust. Each type
of trust has a specific purpose to be fulfilled. After deciding the type of trust to be formed the next
most important step is to create the trust. For creation of a valid trust each formality and
requirement provided under the Indian Trusts Act, 1882 should be fulfilled otherwise the resultant
trust which has any discrepancy will not be a valid trust.

The provisions regarding creation of trusts are very clearly laid down under the Indian Trusts Act,
1882. This law has been developed on the basis of English law but has been drafted very skillfully.
The Trusts Act has proved to be very successful piece of legislation. It has stood the test of time.
Its provisions are remarkable alike for lucidity and conciseness. There have been practically very
few difficulties felt in the interpretation of the Act. This is as much due to the skilled draftsmanship
of Whitney Stokes as to the fact that the rules of English law of trusts were well developed by the
time of drafting the Act.

Remedy of rectification of trust deed is provided under the Specific Relief Act, 1963. The remedy
is provided by Indian courts if the deed does not represent the intention of parties. By rectification,
parties can rectify several mistakes made in the original deed. A supplementary deed can also be
created, to make additions or subtractions in the original deed. A rectification deed is recognized
under Section 17 of the Registration Act, 1908 and is a legal way to correct errors in legal
documents. The deed must be registered, to become legally valid.

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 BIBLIOGRAPHY

PRIMARY SOURCES

 STATUTES
1) The Indian Trusts Act, 1882.
2) The Specific Relief Act, 1963.
3) The Transfer of Property Act, 1882.

SECONDARY SOURCES

 BOOKS
1) Edmund Henry Snell, Snell’s Principle of Equity, Lightening Source UK Ltd., 2010.
2) F.W. Maitland, Equity: A Course of Lectures, Cambridge University Press, 1969.
3) Halsbury's Laws of India, Trust and Charities, Lexis Nexis Butterworths, 2nd ed.,
2017.
4) Hanbury & Martin, Modern Equity, Sweet & Maxwell, 2015.
5) Nathan & Marshall, Casebook on Trusts, Stevens & Sons Ltd., 1967.
6) Pollock & Mulla, Indian Contract Act and Specific Relief Act, Lexis Nexis
Butterworths, 9th Edition, 1982.
7) Rennei & Brymer, Lewin on Trusts, Sweet & Mawell, 2007.

 ARTICLES
1) Medha Srivastava and Akshit Kapoor, “India: Trusts”, available at
https://www.mondaq.com/india/trusts/876980/trusts. (Last Accessed on June 23,
2021).
2) Patrick Parkinson, “Reconceptualising the Express Trust”, Vol. 61, 2002, The
Cambridge Law Journal, available at, https://www.jstor.org/stable/4508936. (Last
Accessed on June 23, 2021).
3) Ian Hull, “Trust Basics- The Three Certainties”, available at,

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 https://hullandhull.com/2012/01/trust-basics-the-three-certainties/ (Last Accessed on
June 24, 2021).
4) Norson B. Harris, “The Three Certainties or: When is a Trust Not a Trust?”, available
at, https://www.mondaq.com/guernsey/trusts/20355/the-three-certainties-or-when-is-
a-trust-not-a-trust. (Last Accessed on June 23, 2021).
5) David Wilde, “The Three Certainties Required to Declare a Trust-or Is it Four?”, Vol.
79, 2020, The Cambridge Law Journal, pp. 349-359.

 WEBSITES
1) https://global.oup.com/?cc=in
2) https://lexisnexis.in/lexis-advance/
3) https://www.manupatrafast.com/
4) https://www.jstor.org/
5) https://www.mondaq.com/
6) https://www.scconline.com/

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