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The Trusts Act (II OF 1882)
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(13th January, 1882)
An Act to define and amend the law relating to Private Trusts and Trustees
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Preamble: Whereas it is expedient to define and amend the law
relating to private trusts and trustees; it is hereby enacted as follows: -
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CHAPTER I
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PRELIMINARY
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1. Short Title and Commencement:
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This Act may be called the Trusts Act, 1882 and it shall come into force on the
first day of March, 1882.
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Local Extent and Savings:
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It extends to the whole of Pakistan. But nothing herein contained, affects the rules
of Islamic Law as to Waqf, or the mutual relations of the members of an undivided
family as determined by any customary or personal law, or applies to public or private,
religious or charitable endowments, 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.
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COMMENTS
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Object of the Act:
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Prior to the enactment of the Act the principles of the English Law regarding the
trusts were made applicable to Pakistan. The English concept of Trusts consists
of double ownership one being legal and the other being equitable estate. The Trusts
Act was intended to get rid of the English conception of double ownership. It was
otherwise necessary because under the Local system of judiciary there are no separate
Courts for dealing with equity; rather both the aspects of legal and equitable ownership
are to be exercised by the judicial Courts. There were various forms of trusts created
by Muslims & Hindus, which the Legislature thought, it was desirable to keep
free from the complication of double estates, in which, without the intervention
from the Legislature, they were certain to have become entangled.
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Moreover there was a legal body of domiciled Europeans and Eurasians who had for
nearly a century enjoyed and taken advantage of a trust law recognised by our Courts.
The number and wealth of this class were daily increasing, and every Court in the
country might be called upon to administer a trust law to members of such community.
To meet such cases, the Trusts Act was undertaken. The enactment of Trusts Act was
considered to be nece3ssary because the system of Benami or the enjoyment of property
held by another in trust for the beneficiary was familiar to the people of sub-continent
prior to the introduction of British rule and the implied trusts in case of Benami
purchase were recognised and established in the Judicial Committee.
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The short title of the Act apparently shows that it applies to all sorts of trusts
but is not so. As the long title and the preamble of the Act show the Act applies
to private trusts only. Although obligations annexed to the ownership of property
which arise out of a confidence reposed in, and accept by, the owner for the benefit
of another were consciously created by the Hindus and Muslims and the British Government
in India and did not desire to legislate upon the religious institutions and customs
of the natives yet in view of the fact that there was a large body of domiciled
Europeans and Eurasians who had for nearly a century enjoyed and taken advantage
of a trust law recognised by British Courts and also because some sections of the
population such as Parsees, had no personal law and were governed either by the
statutory law of India or b y common law of England the necessity arose of promulgating
this Act in the year 1882. In view of the fundamental difference between the juridical
conceptions on which the English Law relating to trusts is based and those which
form the foundation of the Hindu and the Islamic System the Legislature in enacting
the Trusts Act deliberately exempted from its operation the rules of law applicable
to Waqf and Hindu religious endowments, the mutual relations of the members of an
undivided Hindu family as determined by any customary or personal law, public or
private, religious or charitable endowments, etc.
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Scope and applicability of the Act:
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Prior to the enactment of the Act there were several provisions which dealt with
the Trusts in different laws, for example the Penal Code contained provisions for
the punishment of criminal breach of trust; the Specific Relief Act defined ‘trust’
and ‘trustees’, and provided that a trustee may sue for the possession
of property to the beneficial interest in which the person for whom he is trustee
is entitled; the Civil Procedure Code contained provisions for the conduct of suits
by and against trustee’s executors, and administrators and provisions as to
suits relating to Public Charities; the Limitation Act provided that no suit against
the express trustee or his legal representative or assigns shall be barred by any
length of time, and contained provisions for the limitation of suits to make good
loss caused by the breach of trust of a person deceased, for contribution against
the estate of person deceased, against the purchaser of movable property from a
trustee, and against the purchaser of land from a trustee. But there was no enactment
which could deal or express the word Trust. Consequently the Act was passed in order
to define and amend the laws relating to private Trusts and trustees.
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Several Muslim co-sharers living together and some of them acquiring property, no
presumption arises as to such acquisition having been for the benefit of members
of family. Acquisition, however, where made by managing member in fiduciary relationship
with other members applicability of Trust Act cannot be ruled out and burden lies
on managing members to prove acquisition having been made during their management
from their independent source of income, others having no interest therein. Burden
cannot be discharged by merely producing also deeds and revenue records. Appellants
not producing any evidence to prove any independent or separate source of income,
property, held, purchased from funds of family. P L D 1982 Kar. 172.
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The principles of the Trusts Act may however be applied to cases which do not fall
within the definition of Waqf or religious, or charitable endowments. Hence, the
utility of the Act. The Trusts Act, 1882, has been made applicable to Muslims. From
this it follows that only such provisions of the Trusts Act as are not inconsistent
with the rules of Islamic Law shall be followed in cases of trusts made by Muslims.
The Trusts Act save only the rules of Islamic Law as to Waqfs, or the mutual relations
of the members of an undivided family as determined by any customary or personal
law, public or private, religious or charitable endowments, and trusts to distribute
prizes taken in war among captors. The Act does not apply to Waqfs including waqfs-alal
aulad, A I R 1945 All. 261, and public or private religious or charitable endowments.
All other private trust, shall therefore, as a necessary corollary, be governed
by this Act.
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The Act does not apply to the following which are expressly saved from the operation
of the Act:
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(1)
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The Rules of Islamic law as to Waqf;
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(2)
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The mutual relations of the members of an undivided family as determined by any
customary or personal law;
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(3)
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Public or private religious or charitable endowments;
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(4)
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Trusts to distribute prizes taken in war among the captors.
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Where a complete divesture has been established the principal may be applied that
a breach of trust does not destroy the trust. But where the complete divesture of
the title of the settlers has not been established it is wrong to think that once
the execution and registration of a deed has been proved it is not open to the parties
who are not executants of the deed to show that nevertheless the deed was an illusory
or sham document and was never intended to be given effect to. A gift or a dedication
is not complete until possession has been made over to the donees or the trustees
or shebaits and the owners and settlers have completely divested themselves of their
right, title interest in the dedicated or gifted properties. 1969 S C M R 898.
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Public and Private Trusts:
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The Act also does not apply to public trusts. The criterion for deciding whether
a particular trust is or is not of a private nature is whether the said trust is
or is not for the benefit of individuals. A I R 1935 All. 139. It is the extensiveness
of the object which affords some indication of the public nature of a trust. The
test is, whether it is for a large and extensive section of the community.
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Lewin1 while distinguishing private trusts from public trusts observed as under:
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“By public must be understood such as are constituted for the benefit either
of the public at large or of some considerable portion of it answering a particular
description. To this class belong all trusts for charitable purposes, and indeed
public trusts and charitable trusts may be considered in general as synonymous expressions.
In private trusts beneficial interest is vested absolutely in one or more individuals
who are, or within a certain time may be, definitely ascertained.”
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The most fundamental distinction between private and public trusts depends upon
the character of the persons for whose benefit they are created. The essential difference
between a private and public trusts is that in the former the beneficiaries are
defined and ascertained individuals or who within a definite time can be definitely
ascertained while in the latter the beneficial interest is vested in an uncertain
and fluctuating body of persons who may be public at large or a portion of it answering
a particular description. A I R 1982 Delhi 453 (D.B.). For example
a public trust may be created for a set of persons of a certain religious persuasion,
e.g., Shhias or even a sect of Shias and it would not make any difference in the
matter and would not make a wakf of trust or a private character. A I R 1942
Cal. 343.
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The difference between a private and public trust was discussed at length in the
case of Deoki Nandan v. Murlidhar A I R 1957 S C 133 wherein Venkaterama
Ayyar, J. of Supreme Court observed as under: “The distinction between a private
and a public trust is that whereas in the former the beneficiaries are specific
individuals, in the latter they are the general public or a class thereof. While
in the former the beneficiaries are persons who are ascertained or capable of being
ascertained, in the latter they constitute a body which is incapable of ascertainment.”
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Classification of trusts:
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Trusts may be classified as follows:
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(1)
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Public or charitable.
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Private.
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(2)
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Express, i.e., one which is clearly and directly created in express words by the
settler.
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Implied, indirectly gathered from unexpressed but presumable intention of the settler.
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(3)
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Constructive, arising by operation of equity in favour of another.
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For value
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Voluntary.
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(4)
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Executed, i.e., when it is fully and finally declared by the instrument creating
it.
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Act does not apply to Public or Private Religious or Charitable Endowments:
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A close scrutiny of the savings clause of the section shall reveal and as has already
been discussed earlier the public or private religious or charitable endowments
are saved from the operation of the Act. All the charitable trusts are for the benefit
of the public and are consequently enforceable either by the Advocate-General or
by the public suing through Advocate-General under Section 92 of the Code of Civil
Procedure after completing the formalities as provided in Section 92 of the Code.
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Charitable Purposes defined:
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The term ‘Charity’ has not been defined in the Trusts Act. Therefore
one has to resort to other cases to study the aspects of the term ‘Charity’.
In 20th Century Dictionary the term ‘Charity’ means universal love:
the disposition to think favourable of others and do them good; alms giving; on
charitable foundations, institutions or cause, etc., etc. The Charitable Endowments
Act, 1890 defines Charitable purposes as under:-
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“In this Act “charitable purpose” includes relief of the poor,
education, medical relief and the advancement of any other object of general public
utility, but does not include a purpose which relates exclusively to religious teaching
or worship.”
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The illustrations to Section 118 of the Succession Act, 1925 enumerate some religious
or Charitable Acts in the following words:- ‘Relief of poor people; maintenance
of sick soldiers, erection or support of a hospital; education and preferment of
orphans; support of cholars; erection or support of a school; repairs of a bridge;
making of roads; erection or support of a church; repairs of a church; benefit of
ministers of religious; formation or support of a public garden.’
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Doctrine of Cypress:
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Cypress is the principle of applying the money to some object as near as possible
to the one specified, when the object that is specified becomes or is impracticable.
This doctrine is a doctrine of equity, and its course has not been confined to any
rigidly fixed grove but has covered diverse situation. A I R 1969 All 35.
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The cases on the subject may be classified under the following two heads:
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(1)
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A general charitable gift in which the creator of a trust might have not expressed
or might have failed to express with sufficient distinctness the modes by which
it is to be carried out, e.g., a gift by will to such charitable purpose as the
testator had by writing formerly directed where no writing is found at his death,
or as he intends to name hereafter, is a good charitable gift.
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(2)
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There may be cases where the creator of the trust has made gift either to a particular
charitable purpose, but the particular gift either is incapable of taking effect
when the trust comes into operation or afterwards becomes incapable of taking effect.
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Applicability of the Cypress Doctrine:
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It is worthwhile to point out here that the doctrine of Cypress applies only to
charitable trusts. A private trust does not come within the ambit of this doctrine.
As per Keeton:2 In one important respect the law of charities greatly favours gifts
for charity, and saves a number of gifts for charitable purposes which would otherwise
fail for uncertainty. This occurs where the donor has shown either expressly or
by inference, a general intention to devote the gift to charitable purpose exclusively
and either:
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(1)
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He has indicated a purpose which it is impossible to achieve; or
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(2)
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The specific purpose indicated has never existed; or
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(3)
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The object has existed, but has ceased to exist after the testator’s death;
or
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(4)
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The purpose or institution has ceased to exist after the testator’s death.
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Where such a situation arises, the Court will direct the gift to be applied to the
next nearest purpose to that indicated by the donor.”
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Joint family concept as understood by Hindu Law—Alien to Islamic Jurisprudence:
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Several Muslim co-shares living together and some of them acquiring property, no
presumption arises as to such acquisition having been for the benefit of members
of family. Acquisition, however, where made by managing member in fiduciary relationship
with other members applicability of Trust Act cannot be ruled out and burden lies
on managing members to prove acquisition having been made during their management
from their independent source of income, others having no interest therein. Burden
cannot be discharged by merely producing also deeds and revenue records. Appellants
not producing any evidence to prove any independent or separate source of income,
property, held, purchased from funds of family. PLD1982Kar. 172.
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Repeal of enactments:
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[Omitted by the Federal Laws (Revision & Declaration) Ordinance, XXVII of 1981]
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Interpretation clause—Expressions defined in Act, IX of 1872:
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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: 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 “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”;
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Keeton on Trusts, 9th Edn., p.171.
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