Chapter: 2 Trust Act

Trust Act

Objective

The law regarding trusts has assumed considerable importance in recent times. More and more charitable trusts are being registered to avail of facilities like getting contributions from donors as well as for getting income tax exemptions.

Introduction

Registrations are done either under "The Societies Registration Act" or "The Bombay Public Trust Act" .The Societies Registration Act is a Central Statue and is applicable nationwide. The Bombay Public Trust Act was passed in 1950 by the erstwhile State of Bombay (including present Maharashtra and Gujarat States) to tackle the issues of misadministration and mismanagement of religious and charitable trusts.

However any registration done under the Societies Registration Act also automatically gets converted into a registration under The Bombay Public Trust act. This is so because the definition of a "Public Trust" in the Bombay Public Trust Act includes a "Society" which is registered under the Societies Registration Act.

The Registration of any entity as a public trust brings it under the Supervision and control of the Charity Commissioner who has wide powers under the Bombay Public Trust Act to deal with the administration and control of all public trusts. Thus, the trusts once registered become answerable for their actions and deeds. The proceedings with the Charity Commissioner are of a quasijudicial nature and thereof are time consuming, as the usual courts procedures are to be followed. It is possible that ultimately nothing substantial may emerge or of it. Yet any such litigation have their own assurance value. The administering authorities of trusts, i.e. trustees have therefore to operate keeping in mind that their actions may be challenged through the forum of the Charity Commissioner.

The meaning of the word "Trust"

The Indian Trust Act which gives elaborate principles about the concept of trust, defines trust as "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".

Thus in simple words it means that trust is a transfer of property by the owner to another for the benefit of the third person along with or without himself.

The purpose of a trust must be lawful i.e.

•    Should not be forbidden by law.
•    Should not be of such a nature that if permitted it would defeat the provisions of any law.
•    Should not be fraudulent.
•    Should not involve injury to the property or person of another.
•    Should not be of such a nature as would be regarded as immoral.

A person competent to contract can create a trust,i.e. major person of sound mind and not disqualifiedby any other law.