Vol. 12 · pages 386–390

365THE LAW OF TRUST of the property as a result of the trust notwithstanding he is under an obligation to deal with the property in a certain specified manner. Trust distinguished from Gift Ordinary contract differs from a trust. Contract which confers a benefit on a third party closely resembles a trust. 1. There is a similarity between a Trust and a Gift inasmuch as in both the transfer results in ownership. The Trustee and the Donee both become owners of the property. 2. But there is a difference between the two. In a gift the donee is free to deal with the property in any way he likes. In a Trust the trustee is under an obligation to use the property in a particular manner and for a particular purpose. Trust distinguished from Contract 1. That there is a distinction between trust and contract is evident from the existence of differing legal consequences attached to a trust and to a contract: (i) A trust, if executed, may be enforced by a beneficiary who is not a party to it whilst only the actual parties to a contract can, as a rule, sue upon it. (ii) An executed voluntary trust is fully enforceable while a contract lacking consideration is not. 2. However, the determination of the question whether a given set of facts gives rise to a trust or a contract is not easy. What is the test ? Keetan—pp. 5-6 (1919) A. C. 801 38 Bom. S. R. 610. (1926) A. C. 108 It is a question of intention. Trust distinguished from Power 1. The term “power” in its widest sense includes every authority given to a person (called the donee of the power) to act on behalf of or exercise rights belonging to the person giving him the authority (called the donor of the power). 2. Powers are of many kinds e.g. (i) The common law power of an agent to act for his principal, given sometimes by a formal “power of attorney”.

366 DR. BABASAHEB AMBEDKAR : WRITINGS AND SPEECHES (ii) Statutory power such as the power of sale given to a mortgagee. (iii) The various express and implied equitable powers possessed by trustees and executors. (iv) Powers to appoint trusts so as to create equitable interests. 3. The power of appointment is a transaction which resembles a trust and it is this which must be distinguished from a trust. The word appointment means -pointing out, indicatingthe act of declaring the destination of specific property, in exercise of an authority conferred for that purpose-the act of nominating to an office. The last class termed powers of appointment are made use of where it is desired to make provision for the creation of future interests, but to postpone their complete declaration. Thus in a marriage settlement, property may be given to trustees upon trust for the husband and wife for their lives and, after the death of the survivor upon trust for (i) Such of the children of the marriage as the survivor shall appoint, or (ii) All the children of the marriage in such shares as the survivors shall appoint. In such a case, upon appointment being made, the child to whom it is made takes exactly as if a limitation to the same effect had been made in the original instrument. A power of this kind, where there is a restriction as to its objects (i.e., persons in whose favour it may be exercised) is termed a special power of appintment. But there may be a general power of appointment when there is no such restriction, so that the donee may appoint to himself. In such a case the donee having the same powers of disposition as an owner, is for most purposes treated as the owner of the property : (i) A power may give a mere discretion and therefore is distinct from a trust, which creates an obligation or (ii) A power may impose an obligation to exercise the discretion. In the former case there is no trust. In the latter case there is. The former is called mere power. The latter is called power in the nature of a trust or power coupled with trust.

367THE LAW OF TRUST (iii) There is also a third category of cases which are cases of a trust coupled with a power. These are cases where a trustee of a property though under an obligation to apply it for the benefit of certain individuals or purposes, may have a discretion as to whether he will or will not do certain specified acts, or as to the amount to be applied for any one individual or purpose or as to the time and manner of its application. In such cases, the Court will prevent the trustee from exercising the power unreasonably, it will not compel him to do such acts or attempt to control the proper exercise of his discretion. 1. Power resembles a trust and also differs from it. (i) It resembles a trust inasmuch as a power is an authority to dispose of some interest in land, but confers no right to enjoyment of land. (ii) It differs from a trust inasmuch as a power is discretionary, whereas a trust is imperative ; the trustee if he accepts must necessarily do as the settlor directs. * VII. NEW TRUSTEES. (1) Survivorship of the office and estate or trustee on death. *(2) Devolution of the office and estate on Death of the survivor. *(3) Retirement or Removal of a Trustee. *(4) Appointment of New Trustees. * VIII. APPOINTMENT OF A JUDICIAL TRUSTEE. * IX. THE PUBLIC TRUSTEE. (1) Nature and Function. *(2) Appointment of a Public Trustee as an ordinary Trustee. * Except the title, each page is left blank in M.S.—ed.

368 DR. BABASAHEB AMBEDKAR : WRITINGS AND SPEECHES *(3) Appointment and Removal of the Public Trustee. *(4) Duties, Rights and Liability of the Custodian Trustee and Managing Trustee. *(5) Special Rules relating to the Public Trustee. * X. THE RIGHTS OF THE TRUSTEE. (1) Right to Reimbursement and Indemnity. *(2) Right to discharge on completion of Trusteeship. *(3) Right to pay Trust Funds into Court. *XI. RIGHT OF TRUSTEES AND BENEFICIARIES TO SEEK THE ASSISTANCE OF PUBLIC TRUSTEE OR COURT. *(1) Right of Official audit. *(2) Right to take direction of Court. *(3) Right to have Trust administered by Court. *(4) Right to take direction of Court. *(5) Right to have Trust administered by Court. XII. CONSEQUENCES OF A BREACH OF TRUST. 1. Definition of Breach of Trusts.—Breach of trust is defined in section 3, 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. 2. Under the English Law.—Any act or neglect on the part of a trustee which is not authorized or excused by the terms of the trust instrument, or by law, is called a breach of trust. 3. Breach of Duty. —A trustee has Duties, Right, Powers and disabilities. Only breach of duty is breach of trust. 1. The measure of liability is the loss caused to the trust property. * This is the title on each page. There are no details—ed.

369THE LAW OF TRUST 2. Is he liable to pay interest ? Only in the following cases— (a) Where he has actually received interest. (b) Where the breach consists in unreasonable delay in paying trust-money to the beneficiary. (c) Where the trustee ought to have received interest, but has not done so. (d) Where he may be fairly presumed to have received interest. (e) Where the breach consists in failure to invest trust-money and to accumulate the interest or dividents. (f) Where the breach consists in the employment of trust property or the proceeds thereof in trade or business. 3. Is he entitled to set off a gain from breach of trust against a loss from breach of trust. He cannot. zz