ABSTRACT

The trust laws came to India via English Trust law which stipulates dual ownership of trust property i.e.
legal titles vests with the trustee while equitable title vests with the beneficiary. On this basis, Indian
trusts act 1882 was enacted. It governs private or family trusts and excludes public or private charitable or
religious endowments.

A trust has been defined as an obligation annexed to the ownership of property and arising out of
confidence, and the person who accepts the confidence is called the „trustee‟. The obligation being
annexed to the ownership of property it must vest in the trustee, or at any rate he must have a right to call
for a transfer of, or to possess such property. Mere appointment of a person as a trustee without the
vesting and transfer of property would not constitute his title.

Under Indian laws, it is defined and dealt in accordance with the Indian Trusts Act. Section 2 of the Act
states the definition of Trust. According to the section, “trust means 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.”

Section 10 of Indian Trust Act, 1882, defines a Trustee. It goes as follows, “Every person capable of
holding a property may be a trustee; but where the trust involves the exercise of discretion, he cannot
execute it unless he is competent to contract.”
 INTRODUCTION

A trust is a relationship whereby property (real or personal, tangible or intangible) is held by one party for
the benefit of another. A trust conventionally arises when property is
transferred by one party to be held by another party for the benefit of a third party, although it is also poss
ible for a legal owner to create a trust of property without transferring it to anyone else, simply by
declaring that the property will henceforth be held for the benefit of the beneficiary.

A trust is created by a settlor (archaically known, in the context of trusts of land, as the feoffor to uses),
who transfers some or all of his property to a trustee(archaically known, in the context of land, as
the feoffeeto uses), who holds that trust property (or trust corpus) for the benefit of the
beneficiaries(archaically known as the cestui queuse, or cestui que trust ).In the case of the self-declared
trust, the settlor and trustee are the same person. The trustee has legal title to the trust property, but the
beneficiaries have equitable title to the
trust property (separation of control and ownership). The trustee owes a fiduciary duty to
the beneficiaries, who are the "beneficial" owners of the trust property. (Note: A trustee may be either a
natural person, or an artificial person (such as a company or a public body), and there may be a single
trustee or multiple co-trustees. There may be a single beneficiary or multiple beneficiaries. The settlor
may himself be a beneficiary.)
The trust is governed by the terms under which it was created. The terms of the trust are usually written
down in a trust instrument or deed but, in England and Wales, it is not necessary for them to be written
down to be legally binding, except in the case of land. The terms of the trust must specify what property is
to be transferred into the trust (certainty of subject-matter), and who the beneficiaries will be of that trust
(certainty of objects). It may also set out the detailed powers and duties of the trustees (such as powers of
investment, powers to vary the interests of the beneficiaries, and powers to appoint new trustees).
The trust is also governed by local law. The trustee is obliged to administer the trust in accordance with
both the terms of the trust and the governing law. The Indian trust Act 1882, is an act to define and amend
the law relating to Private Trusts and Trustees. The trust can be and has been applied as a device for
accomplishing many different purposes as Maitland observes, “of all exploits of equity the largest and the
most important is the invention and development of the trust.” According to him, “the trust ‘is an
institute’ of great elasticity and generality; as elastic, as general as contract.”
Therefore trust is an acceptance of an obligation by a person in relation to some property or funds to use
or hold it for the benefit of those for whom the trust is created.
OBJECTIVE

The principle objective of this project is to study about the appointment, position and removal of
a trustee in detail.

HYPOTHESIS

RESEARCH METHODOLOGY

The research is followed descriptive method for the Study on the appointment, position and
removal of a trustee. A descriptive approach to research is called as the foundation for research.
The research is referred more descriptive information from books, articles, to gain more
knowledge for the Study about trustee.
 CHAPTER – 1

APPOINTMENT OF TRUSTEE

Appointment of the trustee should be done formally, expressly in writing, even though it will always be
implied “the individual will use the trust property, or performs any act to carry out the trust for the interest
of beneficiaries”. Once the acceptance has been tendered then no court of law can prevent the trustee from
holding the office from holding the office, except for the breach of trust or good cause dependent upon
clear and lawful necessity

Section 10 of the Indian Trust Act, 1882 is about the appointment of a trustee. The section says that
“every person capable of holding property may be a trustee”.

WHO MAY BE A TRUSTEE

Legal capacity to hold property is an essential qualification for being a trustee. Where the nature of trust
required exercise of discretion on the part of the trustee, he must also possess the capacity to contract
without which he cannot execute the trust.

As observed be Lewin, a person be a Trustee, must be capable of taking or holding the property of which
the trust is declared. The trustee should be competent to deal with the estate as required by the trustor as
directed by the beneficiaries. Whereas certain classes are by nature or by rules of law under disability, the
execution of the trust may call for the application of judgment and knowledge of business. The trustee
ought to be amenable to the jurisdiction of the court which administer the trust. In general terms,
therefore, a trustee should be a person capable of taking and holding the legal estate and possess a natural
capacity and legal ability to execute the trust and domiciled within the jurisdiction of a Court of Equity.

Thus in order to be a trustee, he must have the capacity to hold the property. For being a bare trustee or a
passive trustee whose function is merely to hold the trust property, no further qualification is needed.
Where, however, the trust involves duties requiring the exercise of discretion, the person to be appointed
as a trustee must also be competent to contract.

.
ACCEPTANCE OF OFFICE

Nobody is bound to accept a trust. The acceptance of a trust is by express declaration or by interfering
with the trust property and acting as a trustee. A person named as a trustee cannot be taken to have
accepted his office from the fact that he has taken possession of the trusteed, if he received the deed for
safe custody only. If the acts, however, are attributable only to his character as trustee, then they amount
to acceptance of trust. By the acceptance of the trust, the trustee becomes subject to the statutory duties
imposed upon him. He cannot therefore cannot renounce except under the provisions under section 71of
the Indian Trusts Act.

MODES OF ACCEPTANCE
• Acceptance by joining in the deed.
When the trustee executes the instrument of trust in which he is named a trustee, it constitutes an
express acceptance of the officer by him. A trustee joining in the execution of the instruments must
be careful about the recitals made therein because there is always a likelihood of his being bound by
those recitals. There is however no absolute bar on the trustee to contradict those recitals.
• Acceptance by express declaration.
An express declaration of acceptance, in the deed of appointment or otherwise, will fix the obligation
of acting in accordance with the instrument of trust.
• Acceptance by conduct.
The acceptance of office of the trustee maybe inferred from the conduct of the trustee. Where he has
acted with reference to the affairs of the trust such acts would be evidence of acceptance. Thus
giving a power-of-attorney to the co-trustees to receive the assets of the estate has been held to
amount to acceptance. A request to the debtors of the estate to pay would amount to acceptance of
the office. Likewise joining in an assignment of testator’s office would amount to acceptance. The
doing of an act which is preferable to the office of the executor or trustee would entail acceptance of
the office though the trustee or executor professes to disclaim. It would not be open to the trustee to
act univocally and afterwards take advantage of the doubt and plead that he did not act as a trustee.
Where, for instance, a trustee had collected rents of the estate which was under a lease to the
testator’s son he was not permitted to take up the position that he had collected as agent of the son
who was the heir-in-law and not as a trustee of the estate.
• Conduct not implying acceptance.
Where, however, the conduct is clearly referable to some other ground than the execution of the trust
it would not be construed as acceptance of the trust. Merely taking delivery of the settlement deed as
a measure of interim custody by a trustee has been held not to amount to acceptance.
• Bias or interest of person appointed as trustee.
When a person appointed as trustee has a discretionary power annexed to the office and he has a bias
or interest in the exercise of the power, he must disclose the same before acceptance, otherwise he
will be disentitled to exercise that discretionary power.
• Estoppel by acceptance.
A trustee who has once accepted his office is estopped from denying the existence of that trust.
Where for instance a person accepts a trust in relation to a specific sum of money and agrees to
invest it in his firm and also undertakes the duties of a trustee in respect thereto, it would not be open
to him to allege that the transaction in relation to the amount is not a trust, and that the character in
which he holds the property, is different from that of a trustee. In the event of his insolvency, the
beneficiaries as well as the co-trustees would be entitled to trace the fund in the assets held by the
Official Assignee and claim priority.
 CHAPTER – 2

POSITION OF TRUSTEE

2.1 DUTIES OF A TRUSTEE

• Duty to obey the direction of the testator or the settler (Section-11)

The guiding principle for the trustee is to obey the directions of the testator or settler. Where, for
instance, the author of the trust has directed calling in of the trust monies and investing the same
in the purchase of real estate the trustee must comply with the direction, and in case of default he
will have to make good the loss, if there is any, as a result of his default. But the trustee would not
be liable if the direction is not clear. In the case of a trust for sale within a particular time the
failure on the part of the trustee to sell within the prescribed time will make him liable in the
event of the property being thereafter lost, for instance, by destruction.

• Trustee to inform himself of the state of trust property.

Section 12 states that A trustee is bound to acquaint himself, as soon as possible, with the nature,
and circumstances of the trust property; to obtain, where necessary, a transfer of the trust to
himself, (and subject to the provisions of trust) to get in trust-moneys invested on insufficient or
hazardous security. The first duty of a trustee on acceptance of office is to acquaint himself with
the nature and circumstances of trust property. He is under a duty what the trust property consists
of that
isproposedto be handedover to him and what are the trusts. He must also look into the trustdocum
ents, make himself conversant with the terms of the trust deed, ascertain the encumbrances and
acquaint himself with all the matters affecting the trust.
He must ascertain whether assets are secure and examine whether the securities in which the
assets have been invested are sufficient.
• Duty to protect the title of the trust property.
Section 13 of the Indian Trusts Act states that „A trustee is bound to maintain and defend all such
suits, and (subject to the provisions of the instruments of trust) to take such other steps as, regard
being had to the nature and amount or value of the trust-property, may be reasonably requisite for
the preservation of trust property and the assertion or protection of the title thereto.
The paramount duty of the trustee is to take all necessary steps of preservation and protection of
the trust property. It is the duty of the trustee to see that if anything remains to be done to perfect
the title to the trust property it is carried out. Sometimes it may be necessary to protect the estate
 from the settler or others deriving title from him so that they may not deal with the property
in any manner adverse to the trust. Where under the terms of the trust, there is an authority to
purchase property, the trustee must investigate the title before concluding the purchase.
The title deeds of the trust property must be kept by the trustee under safe custody. If they are lost
the trustee will be liable unless he could show that the loss was not due to any negligence on his
part.

• Duty not to set up title adverse to beneficiary.

Section 14 of the Indian Trust Act states that „The trustee must not, for himself or another, setup
or aid any title to the trust property adverse to the interest of the beneficiary .The position of a
trustee being fiduciary it is not open to him to set up any title adverse to the beneficiary. This
section lays down two rules:
(a) a trustee cannot set up or aid an adverse title; and
(b) a trustee cannot set up or aid a third party’s title against the trust.
The principle underlying the provisions of this section is that a trustee who has accepted office
must assume the validity of the trust and the title of the beneficiaries to the trust property. Under
the provisions of this section, a trustee is not permitted to invoke formal title in himself in respect
to the trust property adversely against the interest of the beneficiary, nor should he act in a
manner inconsistent with his duty as trustee, nor can he take the benefit of breach of trust.
• Duty to maintain accounts and information.
Section 19 of the Indian Trusts Act states that, a trustee is bound (a) to keep clear and accurate
accounts of the trust property, and (b) at all reasonable times, at the request of
the beneficiary to furnish him with full and accurate information as to the amount and state of the
trust property. Trustees who have assumed management of the estates of the beneficiaries owe a
duty to them to keep a correct and true account of the transaction relating to trust estate. The duty
includes maintaining proper vouchers as regards the transactions. The duty to keep accounts
includes the maintenance of a diary relating to the administration. Besides the duty to keep
correct accounts the trustee must constantly be ready at all reasonable times to make them
available to the beneficiary. Under Section 19, it is not only the duty of a trustee to maintain
accurate accounts of the trust property but also a duty, an obligation to furnish beneficiaries with
full and accurate information as to the amount and condition of the trust property.

2.2 RIGHTS OF A TRUSTEE

• Right to reimbursement of expenses.

 Section 32 of the Indian Trust Act states that “Every trustee may reimburse himself, or pay
or discharge out of the trust property all expenses properly incurred in or about the execution
of the trust, or the realization, preservation or benefit of the trust property or the protection
or support of the beneficiary. When a trustee has, by mistake, made an overpayment to the
beneficiary, he may reimburse the trust property out of the beneficiary’s interest. If such interest
fails, the trustee is entitled to recover from the beneficiary personally the amount of such over
payment.
• Right to indemnify from gainer by breach of trust.
Section 33 of the Indian Trust Act states that ‘A person other than a trustee who has gained an
advantage from the breach of trust must indemnify the trustee to the extent of the amount actually
received by such person under the breach; and where he is a beneficiary, the trustee has a charge
on his interest for such amount.
Nothing in this section shall be deemed to entitle a trustee to be indemnified who has, in
committing the breach of trust, been guilty of fraud.’
• Right to apply to Court for opinion in management of the trust property.
Section 34 of The Indian Trusts Act states ‘Any trustee may, without instituting a suit, applyby
petition to a principal Civil Court of original jurisdiction for its opinion advice or direction on any
present questions respecting the management or administration of the trust property other than
questions of detail, difficulty or importance, not proper in the opinion of the court for summary
disposal.’
• Right of settlement of accounts.
Section 35 of The Indian Trusts Act states ‘When the duties of a trustee, as such, are completed,
he is entitled to have the accounts of his administration of the trust property examined and settled;
and where nothing is due to the beneficiary under the trust, to an acknowledgement in writing to
that effect.’

2.3 POWERS OF TRUSTEE

• General Authority of a Trustee.

Section 36 of Indian Trusts Act, 1882 states:
In addition to the powers expressly conferred by this Act and by the instrument of trust, and
subject to the restriction, if any, contained in such instrument, and to the provisions of section 17,
 a trustee may do all acts which are reasonable and proper for the realization, protection or benefit
of the trust-property, and for the protection or support of a beneficiary who is not competent to
contract. Except with the permission of a principal civil court of original jurisdiction, no trustee
shall lease trust-property for a term exceeding twenty-one years from the date of executing the
lease, nor without reserving the best yearly rent than can be reasonably obtained.
• Power to sell in lots and either by public auction or by private contract.
Section 37 states:
Where the trustee is empowered to sell any trust-property, he may sell the same subject to prior
charges or not, and either together or in lots, by public auction or private contract, and either at
one time or at several times, unless the instrument of trust otherwise directs.
• Power to sell under special conditions - Power to buy-in and re-sell.
The trustee making any such sale may insert such reasonable stipulations either as to title or
evidence of title, or otherwise, in any conditions of sale or contract for sale, as he thinks fit; and
may also buy-in the property or any part thereof at any sale by auction, and rescind or vary any
contract for sale, and re-sell the property so bought in, or as to which the contract is so rescinded,
without being responsible to the beneficiary for any loss occasioned thereby. Where a trustee is
directed to sell trust-property or to invest trust-money in the purchase of property, he may
exercise a reasonable discretion as to the time of effecting the sale or purchase.
• Power to convey.
For the purpose of completing any such sale, the trustee shall have power to convey or otherwise
dispose of the property sold in such manner as may be necessary.
• Power to vary investments.
Section 40 states: A trustee may, at his discretion, call in any trust-property invested in any
security and invest the same on any of the securities mentioned or referred to in section 20, and
from time to time vary any such investments for others of the same nature: PROVIDED that,
where there is a person competent to contract and entitled at the time to receive the income of the
trust property for his life, or for any greater estate, no such change of investment shall be made
without his consent in writing.
CHAPTER – 3
REMOVAL OF TRUSTEE

Section 70 of the Indian trusts Act states how the office of trustee is vacated. ‘The office of a trustee is
vacated by his death or by his discharge from his office.’
This Section lays down that the office of a trustee is vacated under two circumstances, namely-
(a) The death of the trustee, and
(b) Discharge of the trustee. Section 44, has laid down that when one of the trustees disclaims or dies, the
authority of trustee may be exercised by the continuing trustees in the absence of an intention to the
contrary under the terms of the instruments of the trust. Section 76 provides that on the death or discharge
of several co-trustees, the trust survives and the trust property passes to the others in the absence of an
express declaration to the contrary by the instrument of trust.
It may be noted that though the death of a trustee causes vacancy, his bankruptcy does not necessarily
have that effect. A trustee becoming a bankrupt doesn’t ipso facto cease to be a trustee. He can continue
to function till a new trustee is appointed.
This section provides that the office of a trustee is vacated by his discharge from office. The next section
prescribes the various modes as to the discharge of a trustee.
Section 71 states that: The trustee maybe discharged from his office only as follows:
• By extinction of the trust: Extinction of the trust automatically puts an end to the office of the
trustee, because there cannot be a trustee without a trust.
• By completion of his duties under the trust: Where the purpose of the trust has fulfilled itself,
there is no need to continue the trust and it will come to an end. Where, for instance, a trust is
constituted for looking after the estate of an infant, the office of the trustee comes to an end when
the trustee hands over the estate to the beneficiary on attainment of majority.
• By such means as may be prescribed by the instrument of trust: Prior to the statutory provisions
for appointment of a new trustee in the place of an existing trustee on his death or resignation, it
was the practice to insert a special power in the instrument of trust providing the appointment of a
new trustee on the death or retirement of any of the existing trustees. A common instance of
appointment of new trustees under the statutory power on removal of an existing trustee occurs in
the form that was usually taken by bankers in obtaining mortgages.
• By appointment under this act a new trustee in his place: A new trustee may be appointed either
under statutory power, or by court. In either event, the office of the old trustee gets vacated.
• By consent of himself and the beneficiary, or, where there are more beneficiaries than one, all
beneficiaries being competent to contract:
Where all the beneficiaries under a trust are Sui Juris it is open to them to discharge a trustee
even, as it would be open to them to put an end to the trust. The majority of trustees cannot,
however, give a valid consent for retirement. Where there are limitations under the trust
instrument in favor of infant beneficiaries and/or unborn children, the unanimity of consent on the
part of the beneficiaries is not possible of procurement and there cannot be therefore, a valid
 retirement in such a case. Where there are several trustees, it has been a matter of doubts as to
whether one of the trustees can retire even with the consent of all the beneficiaries but without the
consent of co-trustee or trustees.
• By the Court to which a petition for discharge is presented under this Act:
Section 72 of the Indian trusts Act states that, “Notwithstanding the provisions of Section 11,
every trustee may apply by petition to a principal Civil Court of original Jurisdiction to be
discharged from his office; and if the court finds that there is sufficient reason for such discharge,
it may discharge him accordingly, and direct his costs to be paid out of the trust property. But
where there is no such reason, the Court shall not discharge him, unless a proper person can be
found to take his place.

CHAPTER – 4
CONCLUSION

In the concept of a trust, the trustee becomes the legal owner but the element of legal ownership is absent
in the phenomenon of a security. The trustee although becomes the legal owner of the trust property, yet
he does not become the full owner thereof and cannot sell or otherwise dispose of the same contrary to the
provisions of the trust deed. The trustee no doubt holds the trust property for the benefit of the
beneficiaries, but he does not hold it on their behalf. The expression „on behalf of‟ is not synonymous but
conveys different meanings. In a trust of land, the legal estate is in the trustee and the interest of the
beneficiary or the cestui que trust is an interest in the land called equitable interest.
Therefore, what vests, in the trustee is only the legal estate or the legal ownership. The trustee is not the
full owner of the property in the real sense of the term because there is a beneficial interest and the
ownership therein carved out in the property. The legal ownership vesting in the trustee is for
the purpose of the trust and the administration of the provisions of the trust. Because the beneficiary,
until the trusts are carried out, is entitled to deal with the property, the trustee is the person who is
empowered to deal with the same, but can only deal with it in accordance with the provisions of the deed
of trust.
It is only for the provident administration of a particular charity that the trustees have
the power to sell the trust properties. Much will depend upon the provisions governing in a particular
trust.

BIBLIOGRAPHY