Repeal

of enactments.

Interpre

tation clause.

'trust':

' author

of the trust':

'trustee':

ments, or to trusts to distribute prizes taken in war among the captors; and nothing in the second chapter of this Act applies to trusts created before the said day.

2. The Statute and Acts mentioned in the schedule hereto annexed shall, to the extent mentioned in the said schedule, be repealed, in the territories to which this Act for the time being extends.

3. A 'trust' is 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 1, or of another1 and the owner:

the person who reposes or declares the confidence is called the author of the trust': the person who accepts the confidence is called the trustee': the person for whose benefit the confidence is accepted is called the beneficiary': the subject-matter of the trust is called 'trust-property' or 'trustmoney': the beneficial interest' or 'interest' of the benebeneficial ficiary is his right against the trustee as owner of the trustinterest': property; and the instrument, if any, by which the trust is

'beneficiary ':

'trust-pro

perty':

'instru

ment of trust':

'breach of trust':

'registered':

'notice.'

Expres

sions defined in Act IX

of 1872.

declared is called the 'instrument of trust':

a breach of any duty imposed on a trustee, as such, by any law for the time being in force, is called a breach of trust':

and in this Act, unless there be something repugnant in the subject or context, 'registered' means registered under the law for the registration of documents for the time being in force a person is said to have notice' of a fact either when he actually knows that fact or when, but for wilful abstention from inquiry or gross negligence, he would have known it, or when information of the fact is given to or obtained by his agent, under the circumstances mentioned in the Indian Contract Act, 1872, section 229; and all expressions used herein and defined in the Indian Contract Act, 18722, shall be deemed to have the meanings respectively attributed to them by that Act.

1i. e. another 'person,' which includes a corporation (Act I of 1868, supra, p. 487), but not an animal; see Pettingall v. Pettingall, II L. J., N. S., Ch. 176, where the testator be

queathed an annuity of £50 in trust for a favourite mare.

2 such as 'fraud,' 'coercion,'' undue influence,' 'consent, supra, pp. 553, 554, 555.

CHAPTER II.

OF THE CREATION OF TRUSTS.

purpose.

4. A trust may be created for any lawful purpose1. The Lawful purpose of a trust is lawful unless it is (a) forbidden by law, or (b) is of such a nature that, if permitted, it would defeat the provisions of any law, or (c) is fraudulent 2, or (d) involves or implies injury to the person or property of another, or (e) the Court regards it as immoral or opposed to public policy 3.

Every trust of which the purpose is unlawful is void. And where a trust is created for two purposes, of which one is lawful and the other unlawful, and the two purposes cannot be separated, the whole trust is void 4.

Explanation. In this section, the expression 'law' includes, where the trust-property is immoveable and situate in a foreign country, the law of such country 5.

Illustrations.

(a) A conveys property to B in trust to apply the profits to the nurture of female foundlings to be trained up as prostitutes. The trust is void ".

(b) A bequeaths property to B in trust to employ it in carrying on a smuggling business, and out of the profits thereof to support A's children. The trust is void.

(c) 4, while in insolvent circumstances, transfers property to B in trust for A during his life, and after his death for B. A is declared an insolvent. The trust for A is invalid as against his creditors".

Trust of immoveable

5. No trust in relation to immoveable property is valid unless declared by a non-testamentary instrument in writing property. signed by the author of the trust or the trustee and registered 1, or by the will of the author of the trust or of the trustee.

Trust of moveable property.

Creation

of trust.

No trust in relation to moveable property is valid unless declared as aforesaid, or unless the ownership of the property is transferred to the trustee.

These rules do not apply where they would operate so as to effectuate a fraud.

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 acts2 (a) an intention on his part to create thereby a trust, (b) the purpose of the trust, (c) the beneficiary, and (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 3. Illustrations.

(a) A bequeaths certain property to B, 'having the fullest corfidence that he will dispose of it for the benefit of' C. This creates a trust so far as regards A and C‘.

(b) A bequeaths certain property to B, hoping he will continue it in the family.' This does not create a trust, as the beneficiary is not indicated with reasonable certainty.

(c) A bequeaths certain property to B, requesting him to distribute it amongst such members of C's family as B should think

1 See above, sec. 3. The requirement of registration is an addition to the former rule on the subject, 3 All. 466.

2 See L. R., 6 I. A. 161, for a case where a member of a joint family, being qabuliyatdár of a ta'luq in Oudh on behalf of the family, obtained in his own name a sanad of the ta'luq and was deemed, from his acts and declarations, to have consented to hold it in trust for the family.

Where A, a Hindú, opened an account in his books in the name of his son B, in which money was credited to B, this did not make A a trustee for B of the sums appearing in the account, 9 Bom. 115.

3 That as between Pársís transmutation of possession is unnecessary, see 2

Bom. H. C., O. C. J. 133. As to voluntary declarations of trust under Hindú law, see 4 Mad. H. C. 460. For a case in which a transaction was held to be a trust for the eventual benefit of an absent Hindú, see 7 Bom. H. C., A. C. J. 149.

Another instance of a precatory trust, 2 All. 55; and see the Specific Relief Act, infra, sec. 3, ill. (a). More in Lewin, 130, 131.

5 Harland v. Trigg, 1 Brown, C. C. 142. So where A bequeathed all his property to his widow, 'feeling confident that she will act justly to our children in dividing the same when no longer required by her,' Mussoorie Bank v. Raynor, L. R., 9 I. A. 70.

most deserving. This does not create a trust, for the beneficiaries are not indicated with reasonable certainty1.

(d) A bequeaths certain property to B, desiring him to divide the bulk of it among C's children. This does not create a trust, for the trust-property is not indicated with sufficient certainty 2.

(e) A bequeaths a shop and stock-in-trade to B, on condition that he pays A's debts and a legacy to C. This is a condition, not a trust for A's creditors and C3.

7. A trust may be created

(a) by every person competent to contract, and,

() with the permission of a principal Civil Court of original jurisdiction, by or on behalf of a minor 5;

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.

Who may

create

trusts.

8. The subject-matter of a trust must be property trans- Subject ferable to the beneficiary.

It must not be a merely beneficial interest under a subsisting trust.

4

of trust.

9. Every person capable of holding property may be a Who may beneficiary.

be beneficiary.

ficiary.

A proposed beneficiary may renounce his interest under Disclaimer the trust by disclaimer addressed to the trustee, or by by benesetting up, with notice of the trust, a claim inconsistent therewith.

be trustee.

10. Every person capable of holding property may be a Who may trustee; but where the trust involves the exercise of discretion, he cannot execute it unless he is competent to contract 7.

No one is bound to accept a trust.

No one

bound to

A trust is accepted by any words or acts of the trustee accept indicating with reasonable certainty such acceptance.

trust. Accept

trust.

See the Indian Majority Act, IX ance of of 1875. Sec. 3, supra. King v. Bellord, 1 H. & M. 343. even though he have promised to accept it, Doyle v. Blake, 2 Sch. & Lef. 239.

8

Such as signing the trust-deed, or bringing a suit on the footing of the trust, or otherwise proceeding to act in the execution of its duties.

Disclaimer of trust.

Instead of accepting a trust, the intended trustee may, within a reasonable period1, disclaim it, and such disclaimer shall prevent the trust-property from vesting in him 2.

A disclaimer by one of two or more co-trustees vests the trust-property in the other or others, and makes him or them sole trustee or trustees from the date of the creation of the trust 3.

Illustrations.

(a) A bequeaths certain property to B and C, his executors, as trustees for D. B and C prove A's will. This is in itself an acceptance of the trust, and B and C hold the property in trust for D1.

(b) A transfers certain property to B in trust to sell it and to pay out of the proceeds A's debts. B accepts the trust and sells the property. So far as regards B, a trust of the proceeds is created for A's creditors.

(c) A bequeaths a lákh of rupees to B upon certain trusts and appoints him his executor. B severs the lákh from the general assets and appropriates it to the specific purpose. This is an acceptance of the trust 3.

1 The reasonableness of course depends on the circumstances of each If a long interval elapse, there will be a presumption that the trust has been accepted.

case.

2 The disclaimer may be by word of mouth, Bingham v. Clanmorris, 2 Moll. 253.

3 Peppercorn v. Wayman, 5 De G. & S. 230.

Mucklow v. Fuller, Jac. 198.

But merely taking the trust deed into his custody until a trustee could be found is not enough, Erans v. John, 4 Beav. 35, 37

In England, if a trustee is, by the same instrument, nominated trustee of two distinct trusts, it is said that he cannot divide them: but if he' accept the one he will be taken to have accepted the other, Lewin, p. 204.