Disabilities of Trustee

Q. Define trust and how can it be created .
What are the disabilities of trustee

under Indian trust act 1882.
Ans. Definition – According to section 3 of Indian Trust Act, trust means an obligation annexed
to the ownership of property, & arising out of a confidence reposed in & accepted by the owner
for the benefit of another or for another and owner.
According to Prof. Keeton "A Trust is the relationship which arises wherever a person called the
`trustee' is compelled in Equity to hold property whether real or personal, whether by legal or
equitable title, for the benefit of some persons or for some object permitted by law, in such a
way that the real benefit of the property accrues, not to trustee but to the beneficiaries or
other objects of trust."
As per Halsbury "A Trust in the modern and confined sense of the word is a confidence reposed
in a person with respect to property of which he has possession or over which he can exercise a
power to the intent that he may hold the property or exercise the power for the benefit of
some other person or object."
CREATION OF TRUST
The elements of valid trust are presented in section-6.The act defines how the author could
create the trust, assign trustees and give them his monetary assets to be controlled by the
trust. It may be express or implied. It includes-
 Intention of the author to create the trust.

 Purpose of the trust.
 The monetary asset is assigned for the benefit of the trustee.
 Gives control or transfer the trust property to the trustee which includes intention of
the author.
 Trustee can claim expenses & salary from the benefits from the trust of his work.
The requirement of the trust law is that the author should indicate by words or conduct with
the reasonable intention to create a trust.
RULE OF THREE CERTAINTIES: In the case of Knight V. Knight(1840) Lord Langdale has introduced
the rule of three certainties in which he said that a valid trust cannot be created unless these
certainties are present:
(i) Certainty of words.
(ii) Certainty of subject matter.
(iii) Certainty of object.
Disabilities of a Trustee - The disabilities of a trustee have been enumerated under Sections 46
to 54 of the Indian Trusts Act which are as under :
(1) Trustee cannot renounce after acceptance - A trustee who has accepted the trust by words
or acts, cannot afterwards renounce it except -
(a) with the permission of the principle Civil Court of Original Jurisdiction; or
(b) if the beneficiary is competent to contract, with his consent; or
(c) by virtue of special power in the instrument of trust. [Section 16]
It has been held in Doyle v. Bloke, that it is a rule, without any exception, that a person who has
once undertaken the office, either by actual or constructive acceptance cannot discharge
himself from liability by subsequent renunciation. The only way in which a trustee can obtain a
release from the office is - (a) by obtaining the discharge from the Court, (b) if all the cestui
que trustment are competent to contract by obtaining their consent to his renunciation; or (c)
by virtue of a special power in the instrument of trust.
(2) Trustee cannot delegate his office - A trustee cannot delegate his office or any of his duties
either to a co-trustee or to a stranger, unless -
(a) the instrument of trust so provides; or
(b) the delegation is in the regular course of business; or
(c) the delegation is necessary; or
(d) the beneficiary, being competent to contract, consents to the delegation. [Section 47]
(3) Co-trustee cannot act singly - When there are more trustees than one, all must join in the
execution of the trust, except where the instrument of trust otherwise provides. (Section 48)
(4) Control of discretionary power - Where a discretionary power conferred on a trustee is not
exercised reasonably and in good faith, such power may be controlled by a Principal Civil Court
of Original Jurisdiction. (Section 49)
(5) No right to remuneration - A trustee has no right to charge of services rendered or loss of
time in executing the trust except -
(a) where there is express direction in the instrument of the trust ; or
(b) there is a contract entered into with the beneficiary or
(c) where the Court at the time of accepting the trust has sanctioned it.
Therefore, as a general rule, a trustee is not entitled to any remuneration or charge for his
trouble, skill and loss of time executing the trust. But this general rule has three exceptions
where a trustee may ask for remuneration for his time and labour spent in execution of the
trust, which are as under -
(a) where there is express direction in the instrument of the trust; or
(b) There is a contract entered into with the beneficiary - Where beneficiary is competent to
contract and the beneficiary has freely and without pressure or under influence assented to
such stipulation; or
(c) where the Court at the time of accepting the trust has sanctioned it. (Section 50)
(6) Trustee may not use trust-property for his own profit - A trustee has no right to use or deal
with the trust property for his own profit or for any other purpose unconnected with the trust.
(Section 51)
(7) Trustee for sale or his agent may not buy - No trustee whose duty it is to sell trust-property,
and no agent employed by such trustee for the purpose of the sale, may, directly, or indirectly,
buy the same or any interest therein, on his own account or as agent for a third person.
(Section 52)
(8) Trustee may not buy beneficiary's interest without permission - No trustee and no person
who has recently ceased to be a trustee, may without the permission of a Principal Civil Court
of Original Jurisdiction, buy or become mortgagee or lessee of the trust property or any part
thereof and such permission shall not be given unless the proposed purchase, mortgage or
lease is manifestly for the advantage of the beneficiary.
And no trustee whose duty it is to buy or to obtain mortgage or lease of particular property for
the beneficiary may buy it, or any part thereof, or obtain a mortgage or lease of it, or any part
thereof, for himself.
Therefore a general rule is that a trustee cannot in his private capacity purchase trust property
or take lease or a mortgage of it from himself or his co-trustee even at a public auction. But this
general rule has the following exceptions or in the following exceptional circumstances, a
trustee may purchase the Trust property : -
(a) If the trustee gives a fancy price; or
(b) When the offer of sale proceeds from the Cestui que trust and the trustee gives market
price; keeping him at arm's length; or
(c) When the sale is by public auction and the trustee has leave of the Court; or
(d) When the trustee is only a leave trustee or has retired from the trust for a considerable
time.
(9) Co-trustee may not lend to one of themselves - A trustee or Co-trustee, whose duty it is to
invest trust money of mortgage personal security must not invest it on a mortgage by, or on the
personal security of himself or one of his co-trustee. (Section 54)

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Q. Define trust and how can it be created .

What are the disabilities of trustee

 Intention of the author to create the trust.

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