LAW OF TRUSTS & WAQFS IN INDIA ASSIGNMENT

ON

CONCEPT AND HISTORICAL DEVELOPMENT OF LAW OF TRUSTS

SUBMITTED BY

NAME: - AKASH RAGHAV

STUDENT ID: -202006089

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

FACULTY OF LAW, JAMIA MILLIA ISLAMIA

SUBMITTED TO

PROFESSOR (DR.) KEHKASHAN Y DANYAL

(FACULTY OF LAW, JAMIA MILLIA ISLAMIA, NEW DELHI)

SUBMISSION DATE

26 - 06 - 2021
 ACKNOWLEDGEMENT

I would like to express my special thanks of gratitude to my teacher Professor Dr. Kehkashan
Y. Danyal mam who gave me the golden opportunity to do this wonderful assignment of Law of
Trusts and Wakfs in India on The Concept and Historical Development of Law of Trusts and
also helped me in completing my assignment.

I came to know about so many new things. I am really thankful to him. Secondly, I
would like to extend my gratitude to my parents and friends who helped me a lot in finalizing
this assignment within the limited time frame.

Thank You

Akash Raghav
 INTRODUCTION

“A trust is the binding of the conscience of one to the intention of another” 1

BACON

To define a trust is a very uphill task. There is no such definition where its meaning is defined
clearly or in totality. So, all of the thinkers, jurists, either have prescribed it by comparing it with
other ideas or have provided incomplete definition.

Therefore, a trust may be defined as an equitable obligation binding a person (called trustee) to
deal with the property over which he has controlled (called the trust property) for the benefit of
the persons (called the beneficiaries or cestuis que trust) of whom he may himself be one and
anyone of whom may enforce the obligation i.e., a trust is an obligation -An equitable obligation
binding a person’s conscience. It is concerned with property which is to be held in confidence
and managed for the benefit of the certain persons called beneficiaries.
For example: - A transfers his property to B for the ‘use’ of and in trust of X. A is the owner of
the property; X is the beneficiary and B is a trustee in whom confidence by the owner of the
property reposed.

HISTORY OF THE TRUSTS

The opinion regarding the origin or history of Trusts is also very confusing. Some authors said
that the trust firstly developed under the Roman Law. Other said English Law is the first to adopt
the concept of Trust.

1
Blackwell v Blackwell (1929) AC 318...
CONCEPT OF A TRUST AND HOW A TRUST ARISED IN ENGLISH LAW

Some authors says that the Trust in English Law is concerned with the Romans while some says
that it is developed and introduced first in England itself. When we see in the above example, in
Common Law, A was the legal owner and B was to look after the property and managed it for
the benefit of X. These were the B’s moral obligations. English law could not enforce the
obligation of B because enforcement of moral obligation is not possible. In the equity courts also,
it was also difficult in the beginning to enforce the obligation as “Equity follow the law”. But
gradually chancery lawyers and judges found a way out to enforce this obligation of B and
provided punishment in case of nonfulfillment. Hence B was bound to hold and manage the
property, and not to give it away to anybody or damage to avoid punishment.
Equity converted moral obligation into equitable obligation by dissociating beneficial interests.
A trust thus arises when beneficial interests is dissociated from legal title and confidence is
reposed in the legal title holder.
Other thing to be noted is that under English Law according to the Maitland the word ‘use’ is
derived from the Latin word “ad opus” meaning is “on behalf of”. And the property was held
after the agreement between the inter vivos, i.e., both the parties must be alive along with the
beneficiary. Maitland said from this concept the land was held permanently by one man on
behalf of another which leads to the formation of the trust.

CONCEPT OF A TRUST AND HOW A TRUST ARISED IN ROMAN LAW

Under the Roman Law, the concept of trust was taken from the term “fideicommissum” which
expresses the obligation of the heir to execute the last wishes of the deceased. That means the
appointed heir who got property in trust for another was termed fideicommissum. And the citizen
while appointing a testamentary heir had but a limited choice in so far as he could not appoint an
alien, not a posthumous child outside his family, nor a woman, to inherit his property.
So, the law was adopted there to appoint a person who is qualified as an heir and made him to
transfer the property to the person who was to be the real object. This subsequent transfer was in
the form of a gift which the person receiving was not prohibited to receive. The qualified person
was thus to hold the property in trust for another until he transferred it to the real object.

CONCEPT OF A TRUST AND HOW A TRUST ARISED IN INDIAN LAW

In India, The Indian Trust Act ,1882 was exclusively enacted for the trust although it only be
implemented on the Private Trust. Unlike English law where double ownership prevails i.e.,
there are two kinds of estates, legal and equitable of which two different persons can be the
owners and these owners can well transfer their respective interests to any person or persons. But
there is no such thing like double ownership concept in India.
Before 1882, trusts under Hindu Law and Mohammedan law were enforced but in doing so
principles of English equity, justice and good conscience were applied where necessary. But
after the enactment of The Indian Trust Act, 1882 the trust was made a legal law in India.

DEFINITION OF TRUST

Ironically the definitions of trust given by the authors are not exclusive definitions. Some are
narrow so are incomplete or very broad. So, it is better to describe than to define a trust.
Following are some of the definitions of trusts: -
According to the Underhill’s definition which was also quoted by the courts in Marshall2 as
well as Green’s case 3 which says “a trust is an equitable obligation binding a person (who is
called a trustee) to deal with property over which he has control (called the trust property), for
the benefit of persons (called the beneficiaries), of whom he may himself be one, and anyone of
whom may enforce the obligation”.
But this definition is a narrow definition because it cannot contain charitable purposes or purpose
trusts which lack human beneficiary who can enforce them e.g., trusts of imperfect obligations or
honorary trusts.

2
(1945) Ch.217 pg.219

3
(1959) 2Q.B. 226 pg.241
According to the Lewin’s definition, a trust is “a confidence reposed in some other, not issuing
out of the land, but as a thing collateral, annexed in privity to the estate of the land, to the person
touching the land, for which the cestui que trust has no remedy but by subpoena in the chancery”.
Story defines the trust as “to be an equitable right, title or interest in property, real or personal,
distinct from the legal ownership thereof”.
According to Smith a trust “is as a duty deemed in equity to rest on the conscience off the legal
owner”.
Snell calls a trust is “a beneficial interests in, or a beneficial ownership of, real or personal
property unattended by the legal ownership”.
Here point to be noted is that, the legal title versts in the trustee but he is the nominal owner as
the real benefit does not accrue to him, while a beneficiary has the equitable title in him and is a
beneficial owner, as the real benefits accrues to him.

DEFINITION UNDER THE INDIAN TRUST ACT ,1882

Section 3 of The Indian Trust Act,1882 says like this “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, or of another and the owner” and the
person who reposed or declared 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 ‘beneficiary’, the subject matter of the trust is called ‘trust property’ or ‘trust
money’, the ‘beneficial interest’ or ‘interest’ of the beneficiary is his right against the trustee as
owner of the trust property, and the instrument, if any, by which the trust is 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’.
The definition under The Indian Trust Act,1882 is narrow and defective because it only covers
a specific field in the concept of trusts, private express trust and the section itself clears this,
apparently this definition is inspired by the definition given by the Lewin. It emphasises upon the
obligation, laying down that a trust is an obligation annexed to the ownership of property for the
benefit of the another. There is no trust where such obligation is absent. Secondly the beneficiary
has no interest in the trust property but has only a right against the trustee who is the owner of
the property but has only a right against the trustee who is the owner of the property. And lastly,
the settlor himself can be a trustee.

ESSENTIAL CHARACTERISTICS OF THE TRUST

a) The intention of the settlor to create a trust must be express and clear,
b) The purpose for which the trust is to be created,
c) The property that is to be held in trust, and
d) The beneficiaries who are to benefit from the trust must be certain and definite.

REQUISITES FOR A TRUST

a) Transfer of property: - A trust involves the transfer of property from the settlor to
the trustee. Where the property is immovable property given under a will or by non-
testamentary instrument it should be in writing, signed by the settlor and registered. And
in case of movable property along with a parol declaration to give it in trust would be
sufficient.
b) Author must be competent: - The author must be competent to transfer. It means
he should be competent to contract provided under Section 11 of the Indian Contract
Act,1872.
c) Trustee must also be competent to hold the property: - Section 11 of the
Contract Act also apply on the trustee. He must be competent to contract.
d) Trusts must be express and registered: - It means that implied or constructive
trusts under the English law are not within the purview of the definition and a trust in
India must be registered.
e) Subject matter of trust: - The subject matter of trust must be a property transferable
to the beneficiary.
In Common Cause, a regd. Society v Union of India4, it was held by the court that the Minister
holding a department of ministry holds a sacred trust on behalf of the people. And this can not be
employed for the determination of the offence of ‘Criminal Breach of Trust’ which is defined in
the IPC 1860.Whether the offence has been committed or not has to be determined according to
the definition of that offence.
In Allahabad Bank Ltd. v Commissioner of Income Tax5 it was held by the Supreme Court that
there can not be a trust where obligation is absent. There is always an obligation to be a trust.

COMPARISON BETWEEN DOUBLE OWNERSHIP AND SECTION 3 OF

THE INDIAN TRUST ACT,1882
The idea and the theory of double ownership in relation to the trust prevails in English law. This
double ownership is the peculiar and distinctive feature of the English trust. The trustee is the
nominal owner or the legal owner who has a direct and absolute ownership over the property,
while a beneficiary is the beneficial or equitable owner for whose purpose and benefit the trustee
has to hold and manage the trust property. The duty of the trustee regarding “using” his rights are
positive.

Thus, the trustee has rights but they cannot used them not for themselves but for the
accomplishment of a certain purpose and for the benefit of a Cestui qui trust(beneficiary).

But under the definition of Section 3 of The Indian Trust Act,1882 there is no such thing like
double ownership. Equitable ownership is not recognised in India. And the trustee is the owner
of the trust property when it is vested in him. And the Indian Beneficiary is not an equitable
owner but he has only rights against the trustees. In Tagore v Tagore, 6it was held by the court
that equitable ownership is not recognised in India. And double ownership idea is unknown in
India.

4
(1999) 6 SCC 667

5
(1953) AIR 476,1954 SCR 1955

6
(1872) 9 Beng. L.R.337 I.A. Sup.Vol.47:13 WR 45
DIFFERENCE BETWEEN THE TRUST AND OTHERS :-

A) DIFFERENCE BETWEEN THE TRUST AND BAILMENT: -

i) Bailment was recognised at Common Law and the rights and obligations of
a bailee are legal whereas a trust is merely equitable having equitable rights.
ii) Only person chattels can be bailed, while any property may be held in trust.
iii) A bailee has only a special property in the bailment, the bailor keeps general
property with himself, while a trustee has the full legal ownership subject to
the obligations attached to the property in trust with him.
iv) Only a bailor can enforce the duties of the bailee, but an obligation under the
trust can be enforced by anyone without notice of the trust.
v) A bailor uses his special rights for his own benefit but a trustee is bound to
use the property on behalf and for the benefit of the other.

B) DIFFERENCE BETWEEN THE TRUST AND CONTACT

i) A contract is a common law personal obligation resulting from an agreement

while a trust is an equitable proprietary relation which can arise
independently of an agreement.
ii) A contract is enforceable at common law, it gives a right in personam while
trust reposed as a matter of confidence was enforced in Equity Courts.
iii)A contract is governed under the Indian Contract Act, 1872 while Private trust is
governed by the Indian Trust Act,1882.
IV) Contract gives right in personam while trust gives right in rem.

C) DIFFERENCE BETWEEN THE TRUST AND MORTGAGES

i) A mortgage is the result of a contract whereas a trust is a result of a

confidence
ii) A mortgagee does not hold the mortgaged property as a trustee for the
 mortgagor while a trustee has to hold the trust property for the beneficiary’s
benefit.
iii) A mortgagee has an interest quite adverse to the mortgagor which the
trustee cannot have.
iv) The mortgagee can use or get sold the mortgaged property in suitable cases
while the trustee cannot use the property himself.
V) The mortgagee becomes a trustee, once the money is replaced by the mortgagor but a
trustee does not change his position in a trust even after fulfilment of his obligation.

D) DIFFERENCE BETWEEN THE TRUST AND THE DEBT

i) A debtor has the duty to pay money to the creditor but a trustee has to hold the property
for the beneficiary.
i) A debtor’s obligation is personal while the trust is proprietary
ii) A debtor is not a trustee for his creditor because he has not used any right for
his creditor’s benefit but a trustee is bound to exercise his rights for the
benefit of his Cestui que trust.
iii) A debtor can spend or use the money obtained or to do anything he likes
with it, but a trustee has no right to deal with the trust property like that.
iv) At the time of bankruptcy, a debtor, money cannot be followed but must be
claimed as a creditor in bankruptcy. While in trust if trustee gets bankrupt,
the trust property can be recovered to the extent of getting recovery.
vi)A debtor is bound to repay the money even if it is stolen, while trustee is
not liable for accidental loss.

E) DIFFERENCE BETWEEN THE TRUST AND AGENCY

i) Trusts are governed by the equity but agency by the common law.
ii) Agency normally arises by contract between the principal and agent whereas
most trusts have no such contractual relationship between trustees and
beneficiaries.
 iii)Property of trust vests in the trustee but property of agency does not vest in
the agent.
iv)A trustee can not involve his beneficiaries in liability while an agent can
make his principal liable.
v)A trustee is free from the control of both author and beneficiary but and an
agent is always in the control of his principal.
vi)A trustee can pass a legal title to a bonafide purchaser while an agent can
not pass the legal title to the same.
vii)A trustee drives such authority from the instrument of trusts while an
agent drives authority from a principal.

CONCLUSION

The common law choice of law rules for resulting and constructive trusts represents an area
which has garnered too little attention from Private International Law Lawyers. The common law
is very relevant as the choice of law rules set out in the Hague Trusts Convention are
inappropriate for resulting and constructive trusts and the Recognition of Trusts Act,1987 fails to
extend the Convention’s scope to foreign resulting and constructive trusts.
It has been argued that trusts claim involves a proprietary issue at heart, this is so even for
civil law trusts and analogues with prima facie may appear to reject the concept of the
‘beneficiary’ having a proprietary entitlement to the trust property. It has been submitted that one
should characterise trusts claims in accordance with its underlying proprietary nature and hence
apply the property choice of law rules. It has been demonstrated that such a choice of law rule is
practical, jurisprudentially sound, and represents the best option available.
BIBLIOGRAPHY

• PRIMARY SOURCES
1) The Constitution of India, 1950
2) The Indian Trust Act, 1882
3) The Indian Contract Act, 1872
4) The Transfer of Property Act, 1882
5) The Wakf Act, 1995

• SECONDARY SOURCES
1) BOOKS
• A. J Oakley, Parker and Mellows; The Modern Law of Trusts (8th edition) (London:
Sweetand Maxwell, 2003)
• L.C Goyle, The Law of Trusts (Calcutta: Eastern Law House, 1989)
• Mohamed Ramjohn, Sourcebook on Law of Trusts (London: Cavendish Publishing
Limited, 1998)
• Nabhi Kumar Jain, Nabhi’s Formation and Management of a Trust along with Tax
Planning, 1998-99 (New Delhi: Nabhi Publications, 1998)
• P.S Narayana, Law of Trusts, Endowments and Waqfs (Hyderabad: Gogia Law Agency,
2000
• Phillip H. Pettit, Equity and The Law of Trusts (Kent: ELBS with Butterworths, 1990)
• Prafulla C Pant, N. Suryanarayana Iyer’s the Indian Trusts Act (5th Edition), New Delhi:
Butterworths, 2001