Liaquat Ali Sidddiqui.
“Definition and related problems”
‘Trust’ literally means confidence. But as a legal device of transferring property it may mean transferring property to someone with the confidence that he will hold the property for the use or benefit of Others as nominated by the transferor. For example. A conveys property to B for the use or benefit of C. Here A creates a trust. A is the author of the trust. B is the trustee and C is the beneficiary. But this is the most simple example for firsthand Knowledge on the subject. With the use and development of trust system for different purposes and in different manners, it has become almost difficult to give one commonly acceptable definition of trust. Many well-known authors and jurists bn the subject have tried to define trust. But no definition seems to be exhaustive. Prof. Keetons definition “Trust is a relationship which arises whenever a person called the trustee is compelled in equity to hold the property, whether real or personal, and whether by legal or equitable title, for the benefit of some persons {of whom he may be one and who are termed cestui que trust) or for some objects 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 the trust”[1] . But Keeton is criticized on that nobody can be compelled to undertake a trust and also that his definition does not solve the question who is the actual or real owner.[2] Underhill defines trust as” an equitable obligation binding a person (who is called a trustee) to deal with property over which he . has control (called the trust property) for the benefit of the persons (called the beneficiaries ) of whom he may himself be one, and any one of whom may enforce the obligation.”[3]
But underbills definition is not exhaustive in the sense that it does not include charitable trust and some unenforceable trust which are permitted by law although having no human beneficiaries.
Even to define a trust as a confidence (i. e. lewin’s definition)-has been criticized by maitland[4] . There may be cases where no reliance or confidence is reposed by one person in another e. g. where the owner creates a trust by declaring himself a trustee of his property i. e. a watch for his child Here a trust is constituted from the moment of the declaration though the child may not even know anything about it.
Hanbury in his Modern Equity [5] says:” It is not thought that a dissection and criticism of earlier definitions are very rewarding, rather it is better to describe than to define a trust, and than to distinguish it form related but distinguishable concepts”. Snell, a renowned authority on the subject, also holds the same view. [6]
We have got the same definition problem in Bangladesh. The definition of trust given in Section d of the Turst Act, 1882, says: “A Trust is an obligation annexed to the owneship 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.”
Since the Act applies to the private secular trusts only ; the definition does not include charitable trusts, public religious trust, private religious trust etc. Moreover, the words “confidence reposed in and accepted by the Owner” shows that it refers to express trusts only. Resulting and constructive trusts are not within the purview of the definition and are discussed seperately in chapter IX of the Act under the heading “Obligations in the nature of trusts. “In fact, no enactment has given an exhaustive definition of trust in Bangladesh.
In the history of English- legal system, as we know, because of the rigidity and inflexibility of the common law courts, it could not give remedies to the people in many cases. That is why the court of equity came into existence to solve the problems of the society on the basis of equity, Justice, fairness and good conscience. Thus trust dealings being a new innovation of society were unknown to the common law courts. Thus where ‘A’ transfers property to ‘B’ in trust for C, common law courts recognised B as the legat owner; because with the passing of the property legal ownership passed from A to B But for many reasons i.e. (i) the rigidity and inflexibility of the common law courts and (ii) there was no law before the court to recognize C, (iii) no capacity to enforce a moral obligation etc. the court, therefore, refused to help C in cases of breach of trust by B. To remove this uncertanity, court of equity came forward. The court of equity recognised B to be the legat owner but it attached an obligation to B on the basis of conscience, wherby he was bound to hold property for the benefit of C, for to do otherwise would be an act of dishonesty. Thus the court of equity gave B an equitable ownership. In other words equity converted moral obligation into legal obligation by separating beneficial interest from legal title and gave the benefit to C and the husk to B. A trust thus arises when beneficial interest is separated form legal title and confidence is reposed in the legai title- holder. This double ownership idea i. e. legal ownership to trustee and equitable ownership to beneficiary, is not present in this subcontinent. The same court here applies both law and equity. The beneficiary, here does not have equitable ownership but he has only rights against the trustees (Sec. 3 of Trust Act. 1882)[7]
Both private and public trusts are in operation in Bangladesh. A private trust is one where benefit is conferred to some selected individuals,!, e., beneficiaries are identified. For example, A conveys his land to B in trust for C. In a public trust benefit of the trust is conferred to public at large[8] • Here beneficiaries are not identifiable. Trusts to promote public welfare activities or education are public trusts. It may be a charitable or religious trust. For example, A transfers his land to B for building a hospital for the public at large.
In Bangladesh private trusts are at present guided mostly by the Trusts Act, 1882. Prior to the enactment of the Act there were various provisions under different enactments dealing with the subject. Thus trust Act of 1866; the penal code contained provisions for the punishment of criminal breach of trust, the Specific Relief Act made provisions of suit for the possession of property by trustee, the Civil Procedure Code made provisions of suite by and against the trustees executors and administrators and suits relating to public charity, Limitation Act, 1877 provides the time limit of recovering the property transferred by breach of Trust. So the Act. of 1882 was passed to define and ammend the laws relating to private tursts and trustees. But the Act does not apply to (i) The Rules of Mobammadan law as to wakf; (ii) The mutual relations of the members of an undivided family as determined by any customary or personal law; (iii) public or private religious or charitable endowments {iv} trusts to distribute prizes taken in war among the captors.[9] It is said that the English rulers, at the time of British India did not want to injure the religious feelings of the people. Therefore they made above reservations in order to leave Muhammaden and Hindu religious and charitable trusts untouched.
The Trust Act 1882 has got 96 Sections and is divided into nine chapters. In the Preamble it says that the object of making the lagislation is to define and amend the law relating to Private Trusts and Trustees. In section 3 – Interpretation clause -it defines the relevant terms like Trust, author of trust, trustee, beneficiary, trust property, breach of trust etc. The Act, does not use the English names like express trust, implied trust, resulting trust, constructive trust, etc rather the arrangements of the Act shows that Sections 479 deal with express trust and section 80-96 deal with implied, resulting or constructive trust. Section. 4 says that a trust can only be made for lawful purposes. A Private trust, in Bangladesh in order to comply with Section 4 of the Act must not be against the rules of valid disposition of property i. e. the rule against perpetuities under section 14 of T.P Act 1882, section 114 of the Succession Act, 1925, Section 13 of the T. P. Act 1882, Section 113 of the Succession Act relating to the gift infavour of unborn persons, the rule against accumulation under section 17, T. P. Act and section ■117 of the Succession Act.
Any trust which is directed to alter the ordinary law of descent or succession is void[10] Under the Act, a trust can be declared both by way of a gift and a will and of both for moveable and immoveable properties. In the case of a gift of immoveable properly it must be in writing signed by the author or the trustee and registered under the Registration Act, 1908. If it is by way of a will it must comply with the provisions of the Succession Act, 1925, except where the testator is a Muslim (section 58 of Succession Act, 1925). Trust of moveable properties can be declared as aforesaid or by transfering the ownership of the property to the trustee (Section 5). In the latter case registration is not compulsory. The property must be transferred to the trustee Unless – (a) The trust is declared by a will or (b) the author of the trust is himself to be the trustee (Section 6).
But the absence of the above mentioned formalities in the creation of trust (Section 5, 6) can not be pleaded as a means ol effectuating a fraud (Proviso to Section 5)[11]– It is also held that the acquisition of title by adverse possession will not be affected by the requirements of the trust Act. Thus where the trust is void ab initio for want of registration, uncertainty etc; the trusrtee acquiring title by 12 years adverse possession and a suit by settlor to repudiarte the trust and recover the possession from the trustee being void, would be barred.[12] [13]
Section 6 of the Act embodies the English rule of three certainties
- (i) certainty of intention (ii) certainty of subject matter (iii) certainty of object i. e. beneficiaries. Apart form these three it adds two further essentials – (iv) certainty of the purpose and (v) the transfer of the trust property to the trustee.
Sections 11-22 discuss about the duties of a trustee; and sections 23 to 30 discuss about the liabbilties of a trustee for breach of trust. Sections 31 to 45 deal with rights and powers fo a trustee, sections 46 to 54 deal with the disabilities of a trustee, sections 55-69 deal with the rights and liabilities of beneficiaries, sections 70-76 abput the vacation of office of trustee and appointment of trustees, sections 77 to 79 about extinction, revocation of trust, sections 80 to 96 about certain implied resulting or constructive trusts.
In the recent years, there have been major changes in the field of private trust i e. the annulment of Benami Transaction.Benami Transaction means a Transaction without using the name of a real purchaser. For example under sec. 82 of Trusts Act, 1882: where property is transferred to one person for a consideration paid or provided by another person, and it appears that such other person did not intend to pay or provide such consideration for the benefit of the transferee, the transferee must hold the property for the benefit of the person who pays or providing thg consideration.
In a Benami transaction, the apparent owner in not the real owner. The purchased land is regislerfed in the name of a third person, not in the name of a person who pays the money. People used to fake recourse to such transactions tor various purposes alongwith an object of defrauding the creditors. One of the legal characteristics of such transaction was that it did not create any title or interest in favour of the Benamdar i. e. apparent owner. To prove a Benami Transaction court had to cosider the foilwing points, (i) Source of consideration (sec. 82, trust Act, 1882) (ii) Relationship of the parties, if any (iii) Motive of purchase (iv) who was in possession and enjoying profits (v) who had the custody of title deeds (vi) Subsequent conduct of the parties relating to the property in question etc. Such transactions used to encourage lot of frauds, and malpractices in the society. Even in some cases the Benamdar did not know that his name had already been used. In the Trial Court it took lot of time and caused complexities to prove the transaction. Therefore it was repealed by sec. 5 of the Law Reforms Ordinance, 1984.
A major portion of public religious and charitable trust in Bangladesh relates to the wakf estates operation. The term “wakf” literally means detention or stoppage. According to the two disciples, Abu Usuf and Muhammad, Wakf, singnifies the extinction of the appropriators ownership in the thing dedicated and the detention of the- thing in the implied ownership of God, in such a manner that its pro,its may revert to or be applied for the benefit of mankind (Baillip, 557-558, Hedays 231, 234). According io Abu Hanifa-(i) It signifies the appropriation of any particular thing (Corpus) in such a way that (a) the appropriator’s right in it shall continue, and (b) the advantages of it go to some charitable object; or (ii) It is the (a) detention of a specific thing (Corpus) in the ownership of the waqf or appropriator, and (b) the devoting or appropriating of its profits or usufruct in charity, on the poor, or other good objects in the manner of an ariyat, or commodate loan.[14]
The view of Abu Yusuf and Imam Muhammad has been generally accepted. The term wakf in Islamic law, is not restricted to an appropriation of a pious or caritable nature but includes settlements on a person’s self and Children.
Under the wakf Ordinance of 1962, which applies to wakf in Bangladesh, “Wakf” means the permanent dedication by a person professing Islam of any movable or immovable property for any purpose recognised by Muslim Law as pious, religious or charitable, and includes any other endowments or grant for the aforesaid purposes, a Wakf by use and a wakf created by a non-Muslim.[15] [16] The above definition of wakf given by the wakf ordinance 1962 seems to cover wakfs of public nature i. e. wakf conferring benefit to the public at large. It is not an exhaustive definition since it does not include wakf al-al-aulad i. e. wakf in favour of family, children or descendants. The latter kind of wakf is dealt with under Mussalman Wakf validating Act, 1913 and the Bengal, Wakf Act, 1934. In fact, there is no officially recognised exhaustive, comprehensive or conclusive definition of wakf. 16
[1] George. W. Keeton:The Law of Trusts, 9th Edn. 5(1968).
[2] Snell’s Principles of equity, 27th Edn., 88 (1973), by R. E. Megarry and P. V Baker.
3 Sir A Underhill: Law of Trusts,12th Edn. 3(1970).
4 . F. W. Maittand: Lectures in Equity, 44-45 (1969 Edn.).
[5] Hanbury’a Modem Equity, by R. H. Maudsley, 9th Edn. 85 (1969).
[6] Snell’s Principles of equity,27th Edn. 87 (1973), by R. E. Megarry and P. V. Baker.
[7] Tagore vs. Tagore (1872) BLR.377(P. C.)
[8] Deokinandan V. Murlidhar AIR. 1957 SC 133.
[9] Sec, 1 of Trust Act, 1882
[10] Tagore V. tagore (1872) B. L. R. 377.
[11] RamchandraV. Anandibai, A. I. R. 1932 BOM 188.
[12] Hemchand V. Pearylal (1942) 47. C. W. N. 46. P. C.
[13] Knight V. Knight (1840) 3 Bear 148.
[14] Bail. I 549 (557)
- Sec. 2 (10) of the Wakfs ordinance, 1962
[16] Dr. Tahir Mahmood : The Muslim law of India, 269 (1980 Edn)