POSITIVE CASES – WHERE ITA WAS HELD TO BE APPLICABLE

State Of Uttar, Pradesh vs Bansi Dhar And Others, 1974 AIR SC 1084, 1974 SCR (2) 679

While in India we shall not be hidebound by English decisions on this point, luckily both sides agree here-
and that accords with the sense of the law-that a hospital for women is a charitable object, being for
medical relief. Moreover, the beneficiaries are a section of the public, women-that still silent, suffering
half of Indian humanity. Therefore, this 'elecent connotes a public' trust. The next question is whether the
Indian Trusts Act, 1882, applies to the present case. The Courts below have argued themselves into an
application of s. 83 of the Trusts Act. Sri Dixit rightly objects to this course because that Art relates only to
private trusts, public charitable trusts, having been expressly, excluded from its ambit But while these
provisions proprio vigore do not apply, certainly there is a common area of legal principles which covers
all trusts, private and public, and merely because they find a place in the Trusts Act, they cannot became
'untouchable' where public trusts are involved.- Care must certainly be exercised not to import by analogy
what is not germane to the general law of trusts, but we need have no inhibitions in administering the
law by invoking the universal rules of equity and good conscience upheld by the English Judges, though
also sanctified by the statute relating to private trusts. The Court below have drawn inspiration from s. 83
of the Trusts Act and we are not inclined to find fault with them on that score because the provision
merely reflects a rule of good conscience and of general application. The de- tails of the argument on the
basis of this principle will be discussed a little later.

Sheikh Abdul Kayum v. Mulla Alibhai, AIR 1963 SC 309

17. It is true that s. 1 of the Indian Trusts Act makes provisions of the Act inapplicable to public or private
religious or charitable endowments; and so, these sections may not in terms apply to the trust now in
question. These sections however embody nothing more or less than the principles which have been
applied to all trusts in all countries. The principle of the rule against delegation with which we are
concerned in the present case, is clear; a fiduciary relationship having been created, it is against the
interests of society in general that such relationship should be allowed to be terminated unilaterally. That
is why the law does not permit delegation by a trustee of his functions, except in cases of necessity or
with the consent of the beneficiary or the authority of the trust deed itself; apart from delegation "in the
regular course of business", that is, all such functions which a prudent man of business would ordinarily
delegate in connection with his own affairs.

Sanjay Gupta and Ors. vs. The Corporation of Chennai and Ors. (01.04.2011 - MADHC) :
MANU/TN/0760/2011, following Sheikh Abdul Kayum Case

7. The portion of the decision of the Supreme Court extracted above, makes it clear that though the
provisions of the Indian Trusts Act, 1882, may not apply per se to public trusts, the Courts can always
invoke the universal rules of equity and good conscience, sanctified by the statute relating to private
trusts. To come to the said conclusion, the Apex Court drew inspiration from the following English
decisions:
 (i) The decision in In Re Ulverston and District New Hospital Building Trust 1966 (1) Ch. 622, where
the particular charitable purpose for which the fund was intended, was found to have failed ab
initio.

(ii) The decision of the Privy Council in Commissioner, Lucknow Division v. Deputy Commissioner
of Partapgarh MANU/PR/0069/1937 : AIR 1937 PC 240, where subscriptions were paid to a
Committee for fulfilling a charitable purpose, but the same could not be carried out on account
of impracticability.

(iii) The decision in In Re: Rymer 1895 (1) Ch. 19, where a bequest was made in favour of a
particular institution, but that institution ceased to exist in the Testator's lifetime and the legacy
could not be applied cy pres (as nearly as possible).

(iv) The decision in In Re University of London Medical Sciences Institute Fund 1909 (2) Ch. 1, in
which the University of London was wound up to found an institute of Medical Sciences, but the
supervening circumstances prevented the proposed scheme.

58. Therefore, what is important, is to see if the provisions of Section 77 of the Indian Trusts Act, 1882,
reflect a rule of equity and good conscience. I think they do so and hence, there is no embargo upon this
Court to test the action of the Board of Trustees on principles analogous to those contained in Section 77.

Prathyusha Educational Trust vs. Principal Commissioner of Income Tax, Central 2 and Ors. (19.06.2018
- ITAT Chennai) : MANU/IX/0067/2018 following Sheikh Kayum and Bansi Dhar Case

7.8 From the above, it is clear that since the provisions of Indian Trusts Act reflect principles of equity,
justice and good conscience, in our considered opinion, the authorities granting exemptions are duty
bound to verify for any such violations. As the tax concessions involve a sacrifice of public revenue, it
becomes imperative to ensure the tax concessions are not abused and enjoyed only by those charitable
Trusts which actually deserve.

Laxminarain Lath Trust vs. Commissioner of Income Tax (14.05.1987 - RAJHC) : MANU/RH/0085/1987
also referring to Bansi Dhar Case

13. With regard to the aforesaid provisions of the Indian Trusts Act, it may be stated that in Section 1 of
the Indian Trusts Act, it has been Expressly laid down that nothing contained in the said Act would apply
to public or private religious or charitable endowments. Although the provisions of the Indian Trusts Act
as such are not applicable to public trusts in view of Section 1 of the said Act, the principles underlying
them, being based on general principles or rules of English Law, are applied by the courts to public trusts
also (See Phulchand Lakhmichand Jain v. Hukumchand Gulabchand Jain MANU/MH/0189/1960 : AIR 1960
Bom 438 and Kishore Joo v. Guman Behari Joo Deo MANU/UP/0001/1978 : AIR1978All1 .
Phulchand Lakhmichand Jain and Ors. vs. Hukumchand Gulabchand Jain and Ors. (15.09.1959 - BOMHC)
: MANU/MH/0189/1960

10…..It is true that by section 1 the provisions of the Indian Trusts Act are not made applicable to public
trusts. Even so, the provisions of the Trusts Act are founded on general principles, and Rules of English
Law. In matters which are not provided for, the Courts in India apply the principles and Rules of English
Law. on the subject unless they are inconsistent with the Rules and practice of this Court. (See Shivramdas
v. B. V. Nerurkar, MANU/MH/0214/1936 : AIR1937Bom374 , Rambabu v. Committee of Rameshwar Bom
LR 667 and Nathiri Menon v. Gopalan Nair 39 Mad 597 : AIR 1916 Mad 92 . The principles above stated
therefore apply to the present case.

Kishore Joo vs. Guman Bihari Ju Deo (06.10.1977 - ALLHC) : MANU/UP/0001/1978

11. The Court is aware that in view of the provisions of Section 1 of the Indian Trusts Act the Act will not
apply to a public or private or religious endowments. However, the principles of. the English law of Trusts
which have been incorporated in the Indian Trusts Act will apply to such Trusts. Section 48 of the Indian
Trusts Act provides that where there are more trustees than one, all must join in the execution of the
Trust except where the Instrument of Trust otherwise provides. Section 47 of the Trusts Act provides for
the special circumstances in which a trustee may delegate his duties. Such delegation is only permissible
where (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. None of these conditions are asserted to have existed when Shri K. Arora, District Magistrate,
Hamirpur in his capacity as President, Rainpur Temple Trust filed the execution application; hence the
decree could not be executed on the basis of the application as all the trustees had not joined in the
application.

11A. The law in regard to the application of the English law of Trusts to public trusts in India was explained
by the Bombay High Court in Phulchand v. Hukumchand (MANU/MH/0189/1960), in the following words
: (at p. 441)

"It is true that by Section 1 the previsions of the Indian Trusts Act are not made applicable to
public trusts. Even so, the provisions of the Trusts Act are founded on general principles, and Rules
of English Law. In matters which are not provided for, the Courts in India apply the principles and
Rules of English Law on the subject unless they are inconsistent with the Rules and practice of this
Court. (See Shivramdas v. B. V. Nerukar MANU/MH/0214/1936 : AIR1937Bom374 ), Rambabu v.
Committee of Rameshwar (1899) 1 Bom LR 667 and Nathiri Menon v. Gopalan Nair 39 Mad 597 :
(MANU/TN/0128/1915 : AIR 1916 Mad 692). The principle above stated, therefore apply to the
present case."

Mathura Bai Fatechand Damani Maternity Home vs. The Regional Provident Fund Commissioner and
Anr. (14.09.1992 - RAJHC) : MANU/RH/0273/1992

37. It is not disputed, and perhaps can not be disputed, that the Maternity Home, Family Planning Centre
as well as the Kendra, are Trust properties. While the Kendra is run and managed by a Trust settled by
Suraj Ratan Fateh Chand Damani in the year 1963; the Maternity Home, thought established in 1957, is
being run and managed since 1970 by a Trust settled by Madan Gopal Damani. The issue of unity of
ownership, in the present case, has to be considered with reference to principle governing ownership of
trust-properties. While in the Anglo-American Law, the Trust has been described in varying letters, the
Indian Trust Act has defined the Trust', under Section 3, as under:

3. Interpretation Clause: "trusts". - 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;

"Author of the trust"; "trustees"; "beneficiary"; "trust property"; "beneficial interest" -

"Instrument of trust". The person who reposes or declares 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 the trust is declared is called the "instrument of the trust";

38. An analysis of definition shows that the essential features of the Trust Act are - (1) Obligation arising
out of ownership of the property; (2) This may not be a personal obligation; but is with reference to
property held by a person who is called a trustee, (3) Such obligation arises out of confidence reposed in
the owner of the property; (4) The obligation is to use the property for the benefit of a third person or the
third person and the owner or a class of persons; and such third person or class of persons, for whose
benefit the property is held, is called 'beneficiary'.

39. In its legal sense, it involves what is usually called 'three certainties' - namely; a person who is 'trustee',
property which may be movable or immovable, and, the person or class of persons for whose benefit the
property is held. The combination of three elements must exist. It is true, that Trust is not a juristic person,
and the legal ownership of property vests in the trustees; but it has to be seen that the ownership cannot
be divorced from the obligation attached to it. The ownership of a Trust property has to be seen in the
light of obligation attached to it. It is quite possible, that different property may vest in the same person
as 'trustee', but for different obligations attached with such ownership in respect of different properties.
In that event, the ownership of trustee with obligation A attached thereto cannot be the same as
ownership of another trust-property with obligation B, attached thereto; notwithstanding the physical
personality of the trustee being the same. There is no unity of ownership in the two cases, and the
execution of two separate obligations by the trustee cannot be considered; as one dependent on the
other or one execution of the Trust as primary and other execution of Trust as subsidiary or ancillary, to
other main objects. Both the obligations which are expressed or confidence deposed or properties settled
on Trust, are independent and separate from each other.
NEGATIVE CASES – WHERE ITA WAS HELD TO BE NOT APPLICABLE

Charu Kishor Mehta vs. Joint Charity Commissioner, Greater Bombay Region and Ors. (2015) 8 SCC 207

21. Further, the reliance placed upon Sections 46 and 47 of the Act of 1882, by the learned senior counsel
on behalf of the Appellant is not applicable to the public charitable Trust as held by this Court in the case
of Thayarammal v. Kanakammal and Ors. MANU/SC/1034/2004 : (2005) 1 SCC 457, which reads thus:

15. The contents of the stone inscription clearly indicate that the owner has dedicated the
property for use as "Dharamchatra" meaning a resting place for the travellers and pilgrims visiting
the Thyagaraja Temple. Such a dedication in the strict legal sense is neither a "gift" as understood
in the Transfer of Property Act which requires an acceptance by the done of the property donated
nor is it a "trust". The Indian Trusts Act as clear by its preamble and contents is applicable only to
private trusts and not to public trusts. A dedication by a Hindu for religious or charitable purposes
is neither a "gift" nor a "trust" in the strict legal sense....

Thayarammal (dead) by L.R. v. Kanakammal and others (2005) 1 SCC 457

- followed by Calcutta HC in Ram Babu Yadav and Ors. Vs. Managing Committee, Arsh Vidya Niketan
and Ors., (2018) 6 WBLR (Cal) 590, MANU/WB/1054/2018
- followed by Bom HC in Shyamabai and Ors. Vs. Madan Mohan Mandir Sanstha,
MANU/MH/1790/2013, 2014 (2) Mh LJ 547

The Indian Trusts Act as clear by its Preamble and contents is applicable only to private trusts and not to
public trusts. A dedication by a Hindu for religious or charitable purposes is neither a 'gift' nor a 'trust' in
the strict legal sense. [See: BK Mukherjea on Hindu Law of Religious and Charitable Trusts, fifth Edition by
AC Sen pages 102 103]