Vol. 12 · pages 381–385

PART V The Administration of a Constructive Trust THE INDIAN TRUST ACT 1. The Law relating to Trust is contained in Act II of 1882. 2. It is an Act which defines and amends—that means that it does not introduce any new principle. 3. The Act does not consolidate the Law—That means that it is not an Exhaustive Code. 4. The object of the Act was to group in one to enact the legal provisions relating to trusts. Before the Act of 1882 the statutory law relating to trust was contained in 29 Car II. C. 31 sections 7 —11. Act XXVII of 1866 Act XXVIII of 1866 There were also few isolated provisions scattered through the Penal Code, Specific Relief, C. P. Code Stamp Act, Limitation, Government Securities Act, Companies Act, Presidency Banks Act. 5. As originally passed, the Act did not apply to the whole of British India. For instance, it did not apply to Bombay. But provision was made to extend it by notification by local Government. 6. It is unnecessary to discuss here whether the Hindu Law and Mohammedan Law recognized trust as defined in the Trust Act. That may be dealt with by others. The nature of a Trust 1. Trust is defined in section 3. A trust involves three things : (1) A person who is the owner of some property. (2) Ownership burden with an obligation. (3) Obligation to use the property for the benefit of another or of another and himself. 2. It is ownership without beneficial enjoyment. It involves separation of ownership and beneficial enjoyment.

362 DR. BABASAHEB AMBEDKAR : WRITINGS AND SPEECHES 3. A trust arises out of a confidence reposed in and accepted by the owner. 4. The owner in the eye of the law is the trustee. After the trust is created the author of the trust ceases to be the owner of the property. I. WHAT IS A TRUST. 1. The terms Trust and Trustee are defined in various enactments of the Indian Legislature. (i) Definition in Specific Relief Act I of 1877. Section 3 — (1) Obligation includes every duty enforceable by law. (2) Trust includes every species of express, implied or constructive fiduciary ownership, (3) Trustee includes every person holding expressly, by implication, or constructively a fiduciary ownership. (ii) Definition in the Indian Trustees Act XXVII of 1866. Section 2— “Trust shall not mean the duties incident to an estate conveyed by way of mortgage; but with this exception, the words trust and trustee shall extend to and include implied and constructive trusts, and shall extend to and include cases where the trustee has some beneficial estate or interest in the subject of the trust, and shall extend to and include the duties incident to the office of executor or administrator of a deceased person. (iii) Definition in Limitation Act IX of 1908. Section 2 (ii) — Trustee does not include a benamidar, a mortgagee remaining in possession after the mortgage has been satisfied or a wrongdoer in possession without title. (iv) Indian Trusts Act II of 1872. (1) Section 3—“A trust is an obligation annexed to the ownership of property... (2) Ingredients of a Trust (i) A Trust in an obligation. (ii) The obligation must be annexed to the ownership of property. (iii) The ownership must arise out of confidence reposed in and accepted by the owner.

363THE LAW OF TRUST (iv) The ownership must be for the benefit of another (i.e., a person other than the owner) or of another and the owner. Explanation of Terms I. THERE MUST BE OBLIGATION. II. OBLIGATION MUST BE ANNEXED TO OWNERSHIP PROPERTY. 1. There may be an obligation to which a person is subject although there is no property to which it is annexed. E.g. Torts assault— 2. There may be property without there being any obligation attached to it. E.g. Full and complete ownership—sale of property. III. THE OWNERSHIP OF PROPERTY MAY BE FOUNDED IN CONFIDENCE OR IT MAY NOT. Illus. A person may transfer ownership to another with the intention of conferring upon him the right to enjoy the property. A person may transfer ownership to another without the intention of conferring upon him the right to enjoy the property. The difference between ownership founded in confidence and ownership not founded in confidence consists in this— (i) In the latter there is a jus in re (a complete and full right to a thing) or jus ad rem (an inchoate and imperfect right). (ii) In the former there is not E.g. Bailment. 3. The nature of a trust can be better understood by contracting it with other transactions resembling a trust. Trust distinguished from agency 1. Where there is a trust, the ownership of the trust property is in the trustee. The trustee is personally liable on all contracts entered into by him in reference to the trust, although he may have a right of recourse against the trust funds or against the beneficiary.

364 DR. BABASAHEB AMBEDKAR : WRITINGS AND SPEECHES 2. An agent has no ownership in law in the goods entrusted to him. If an agent enters into a contract as agent, he is not personally liable. The contract is with the principal. Trust distinguished from Condition 1. Cases of condition differ from cases of trust in two respects— First. A trust of property cannot be created by any one except the owner. But A may dispose of his property to B upon condition express or implied that B shall dispose of his own property in a particular way indicated by A. Second. The obligation of the person on whom the condition is imposed is not limited by the value of the property he receives, e.g., if A makes a bequest to B, on condition of B paying A’s debts, and B accepts the gift, he will be compelled in equity to discharge the debts although the exceed the value of the property. 2. But the words “upon condition” may create a real trust. Thus a gift of an estate to A on condition of paying the rents and profits to B constitutes a trust because it is clear that no beneficial interest was intended to remain in A. A may dispose of his property to B upon condition express or implied that B shall dispose of his property to C. There is a condition in favour of C. Is this a trust ? Trust distinguished from Bailment 1. Bailment is a deposit of chattel and may in a sense be described as a species of trust. But there is this great difference between a bailment and a trust, that the general property in the case of a trust, is in the trustee, whereas a bailee has only a special property, the general property remaining in the bailor. 2. The result of this difference is that an unauthorized sale by a trustee will confer a good title upon a bona fide purchaser who acquires the legal interest without notice of the trust, whereas such a sale by a bailee confers as a rule no title as against the bailor. 3. Bailee does not become the owner of the property as a result of the bailment. But a trustee does in law become the owner