EQUITY AND TRUST

MODULE 3
TRUSTS IN GENERAL

CONCEPT OF TRUSTS IN GENERAL:

Creation of trust: The elements of valid trust are presented in section-6.
The act defines how the author could create the trust, assign trustees and give them his monetary
assets to be controlled by the trust. It may be express or implied. It includes-

• Intention of the author to create the trust.

• Purpose of the trust.

• The monetary asset is assigned for the benefit of the trustee.

• Gives control or transfer the trust property to the trustee which includes intention of the
author.

• Trustee can claim expenses & salary from the benefits from the trust of his work.
The requirement of the trust law is that the author should indicate by words or conduct with the
reasonable intention to create a trust.

• Certainty of author’s intention,

• Certainty of object,

• Certainty of beneficiary &

• Certainty of trust property.

For example: A property transfer within the same family no valid trust will arise because the
beneficiary of the trust is not indicated with certainty similarly if the transferee distributed the
property amongst the member of same family, as he should think most deserving, here there is also
no valid trust because there should be no certainty about beneficiaries but where a person transfer is
property and his assets to another person for payment of his creditor. This is not trust but a transfer
on a condition mentioned under a trust law in India.
SECTION 8 – About the subject matter

Under this provision, the trust law requires that the subject matter must be property & are capable of
being transferred to beneficiary.

SECTION 5 – Nature of the property

Under this provision, properties which are transferred to the trustee may be moveable or
immoveable.

In case of immovable property, it may be valid if the author of the trust & the trustee being signed
on the instrument & by the will of the author of the trust

The provision of trust law in India cannot be used for the purpose of committing fraud. (R/W Sec-4)

SECTION 4 – Purpose should be lawful

Under the provision, sec4 states that a trust must be created for lawful purpose.
Where the purpose of law of trust is unlawful, the trust becomes void.

But as if the trust property is located in foreign country, the law of that country shall apply.

Trust Law in India requires that the purpose should be lawful.

Unless it is not being-

• It is forbidden by the law,

• It is fraudulent,

• It is of such nature that, if permitted it would defeat the provision,

• The court regards it as immoral or opposed to public policy.

Suppose for example- trust for fraudulent of creditors,
SECTION 7– Competent to contract

According to sec-7 of the trust law in India says that a trust may be created by every person
competent to contract. But where the trust is created on behalf of minor, permission from civil court
jurisdiction should be obtained first.

SECTION 9 – Who may be beneficiary

Under the provision, every person capable of holding property may be a beneficiary. As if the
proposed beneficiary may renounce his interest under the trust he can by disclaimer addressed to the
trustee, by giving notice.

WHO MAY BE TRUSTEE UNDER THE TRUST LAWS

Section 10 says that every person who is competent to contract are capable of holding property as
trustee.

However no person is bound to accept a trust. When a person is appointed as a trustee, he has the
option to accept or reject the trust. He has to intend his acceptance by words, written, spoke or by
conduct. The assigned trustee may disclaim it also, but he must do with in the reasonable time. His
disclaimer will prevent the property to transfer to the trustee. But in case of more than one proposed
trustee & one of the trustees disclaim, the property will vest to the other trustee & he will become
the sole trustee vice versa. A proposed trustee who accepts becomes the trustee from the date of the
creation of trust. Where a person by his will leaves certain property in trust for another & the
proposed trustees prove his will that amounts to acceptance of the trust on their part.

Under English law, the property becomes to the subject of two kinds of ownership. The trustee
becomes the legal owner & beneficiary regarded as beneficial owner.

Under Hindu law, provision clearly says that the trustee having possession of the property. The
beneficiary has certain rights under the trust under Indian trust law. Beneficial ownership is also
known as equitable ownership but it is not known in the trust law in India.
KINDS OF TRUST UNDER THE TRUST LAW

There are different kinds of trust which are discussed below-

Express trust– If the trust was created verbally, in written or in expressed term and a person is
being nominated to be the trustee of the trust it would amount to express trust. If the property is
moveable then firstly it should be registered & have to physically transferred to the trustee.

Implied trust– An implied trust is also created by an act of the parties. It appears from the conduct
of the parties.
The conduct of the party creates presumption & also shows the intention of the parties.

Public & private trust– A public trust under the trust law in India is one which is created for the
benefit of the public. In general Public doesn’t mean public as whole. The trust may be created for a
part of public & it will be valid trust so long as every member of particular class is permitted to
enjoy the benefit of the trust. Examples of general public purpose are- medical, health, social
service, education, training etc.

Private trust is basically is made for a specified person so that no one left the one can draw the
benefit. Such a trust is enforceable at the private action of intended beneficiary.

Secret Trust– Where neither the existence of trust nor its terms are disclosed, it is called secret
trust. In case the existence of trust is disclosed but its terms are not disclosed it is a half secret. This
is a misuse of concept trust.

REQUIREMENTS FOR STARTING PUBLIC TRUST UNDER THE TRUST LAW

The general rules emerge from judicial authorities is that the charitable trust must satisfy 3
requirements-

• The trust must be for the promotion of public benefit.

 • The trust must be wholly & exclusively charitable

• The trust must be charitable of nature

Definition of a Trust:
As per section 3 of Indian Trust Act 1882: A Trust is an obligation annexed to the ownership of the
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.

Purpose of creating a Trust:

Trusts are generally formed or created to fulfill any or more of the following objectives:
• For discharge of the charitable and/or religious sentiments of the author of settlor of the
trust, in a way that ensures public benefit;
• For claiming exemption from Income tax U/s 10 or 11, as the case may be, in respect of
incomes applied to charitable or religious purposes;
• For the welfare of the members of the family and/or other relatives, who are dependent on
the settlor of the trust;
• For the proper management and preservation of a property;
• For regulating the affairs of a provident fund, superannuation fund or gratuity fund or any
other fund constituted by a person for the welfare of its employees.

Who can create a Trust:

As per Section 7 of the Indian Trusts Act, a trust may be created by every person competent to
contract and by or on behalf a minor, with the permission of a principal court of original
jurisdiction. Following are eligible to create a Trust.
• Trust by an Hindu Undivided Family;
• Trust by a Minor;
• Trust by a Woman;
• Association of Persons;
• Company.

Types of Trusts:
1. Private Trust:
A trust is called a Private Trust when it is constituted for the benefit of one or more
individuals who are, or within a given time may be, definitely ascertained. Private Trusts are
governed by the Indian Trusts Act 1882. A Private Trust may be created inter vivos or by
will.

Pre-requisites for creation of a Private Trust:

Following are essential conditions to bring into being a valid Private Trust [6]:
◦ The person who creates a trust (settlor) should make an unequivocal declaration
binding on him.
◦ The objects of the trust must be defined and specified.
◦ The beneficiaries are specified.
◦ He must transfer an identifiable property under irrevocable arrangement and totally
divest himself of the ownership and the beneficial enjoyment of the income from the
property.

Unless all the above requisites are fulfilled, a trust cannot be said to have come into
existence.

2. Public Trust
A trust is called as Public Trust when it is constituted wholly or mainly for the benefit of
Public at large, in other words beneficiaries in the Public trust constitute a body which is
incapable of ascertainment. The Public trusts are essentially charitable or religious trusts and
are governed by the general Law. The provisions of Indian Trusts Act do not apply on Public
Trusts. Like the private trusts, public trusts may be created inter vivos or by will. The Indian
Trusts Act does not apply to public trusts which can be created by general law.

Pre-requisites for creation of a Public Trust:

There are three certainties required to create a charitable trust are as follows:
◦ a declaration of trust which is binding on settlor,
◦ setting apart definite property and the settlor depriving himself of the ownership
thereof, and
 ◦ a statement of the objects for which the property is thereafter to be held, i.e. the
beneficiaries.

It is essential that the transferor of the property viz the settlor or the author of the
trust must be competent to contract. Similarly, the trustees should also be persons
who are competent to contract. It is also very essential that the trustees should
signify their assent for acting as trustees to make the trust a valid one. When once a
valid trust is created and the property is transferred to the trust, it cannot be revoked,
If the trust deed contains any provision for revocation of the trust, provisions of
sections 60 to 63 of the Income-tax Act will come into play and the income of the
trust will be taxed in the hands of the settlor as his personal income.

Difference between Private and Public Trust:

The difference between a public and private trust is essentially in its beneficiaries. A
private trusts beneficiaries are a closed group, while a public trust is for the benefit
of a larger cross-section having a public purpose.

3. Public-cum-Private Trusts
There may be certain trusts whose part of the income may be applied for public purposes and
a part may go to a private person or persons, such trusts are known as Public cum Private
Trusts. Such trusts, in respect of the portion of the income going to private person or persons
are assessable as private trusts and in respect of that portion of the income which is applied
for public purposes, they shall be eligible for exemption under section 11 provided these
trust are created before the commencement of Income-tax Act, 1961 i.e. before 1-4-1962.
Public-cum-private created on or after 1-4-1963 shall not be eligible for exemption u/s 11.

FIDUCIARY RELATIONS:
Definition of Fiduciary Relationship
There is no precise definition of Fiduciary Relation. Even Indian Trust Act, 1882 does not define
the term fiduciary relationship. The definition of Fiduciary Relationship can be gathered from
various judgments of the High Courts and Supreme Courts. Justice Anant Narayan of Madras High
Court in case of Mrs. Nellie Wapshare v. Pierce Leslie and Co. Ltd (1) in which the term Fiduciary
Relation is defined as follows:
A fiduciary relationship may arise in the context of a jural relationship. Where confidence is
reposed by one in another and that leads to a transaction in which there is a conflict of interest and
duty in the person in whom such confidence is reposed, fiduciary relationship immediately springs
into existence.

The term fiduciary relations relates to a person to whom property or power is entrusted for the
benefit of another. It is the relationship of a person to another, where the former is bound to exercise
rights and powers in good faith for the benefit of later, e.g. trustee and beneficiary. This fiduciary
relationship may arise out of jural relationship or it may not.

Nature of Fiduciary Relationship:

Fiduciary relationship covers variety of relations having some common features. Whether the
relation between the two persons is of fiduciary or not, depend upon the fact and circumstances of
the case. Though there is no hard and fast rule to determine the existence of fiduciary relationship
but it could be said that whether one has reposed confidence in another, i.e. whether confidential
relationship exists, is the material test to determine the existence of fiduciary relationship.

Generally fiduciary relationship is a confidential relationship created by the equity in the interest of
good consciences and justice. It was held by Supreme Court in Jaya Singh v. Krishna, (2) that
wherever a person clothed with a fiduciary character obtains some personal advantage by availing
himself of his position, such person remains as fiduciary for all the profits which are to be held for
the benefit of person at whose expenses and in derogation of whose rights, the profit has been made
or advantage has derived.

Classification of Fiduciary Relationship:

The fiduciary relationship may arise out of numerous human transactions, wherein a confidence is
reposed by one person in another. In number of human transactions the fiduciary relationship is
recognized and enforced by law. The classification of the fiduciary relationship can be grouped in
following categories
1. Classification on the basis of human transactions.2. Classification of fiduciary relationship
according to the confidential dimensions.

1. Classification on the basis of human transactions

i) Fiduciary relationship in trusteeship: In this transaction the trustee is under an obligation to
protect the interest of beneficiary, for whose benefit the confidence has been reposed on him. Thus
there is fiduciary relationship between trustee and beneficiary. The basic principle of the trust that
the trustee generally acts voluntarily and is not paid for his services, though he may claim
remuneration if he can show a specific entitlement of it. A trustee cannot be a purchaser of trust
property, as he cannot be both seller and purchaser.

ii) Fiduciary relationship in commercial transaction

• Directors of the Company: There is fiduciary relationship between the Company and
Director. It was held by Patna High Court in Commercial of Agricultural Income Tax, Bihar
v. Shri Hanuman Sugar Mills Ltd., (3) that company was entitled to take back the lands
because it was possible to take the view that the directors obtained gains by impugned
dealings with the company. In this case the directors of the company and their relatives had
purchased the land belonging to the Company. Allahabad High Court in Co-operative
Company Ltd., Saharanpur v. Bhagwandas & Co., (4) held that Company selling the shares
belonging to one of the share holders which were subsequently purchased by the minor sons
of the Managing Director, that the position of managing director is of fiduciary relation and
hence if the Managing Director gained any advantage under the sale, whether the purchase
is made in his own name or his minor sons, the benefit was bound to go to the owners of
those shares.

• Partnership: The whole law of partnership and the duties of the partners are based on the
principle of fiduciary relationship. Therefore, every partner must be just and faithful to each
other and to act for the greatest common advantage of the firm. Section 37 of Partnership
Act, 1932, clearly provides that the relationship between the existing partners and former
partners is fiduciary in nature arising out of jural relationship. Section 88 of the Indian Trust
Act, 1882, gives a statutory recognition to this principle. Allahabad High Court in Gopinath
v. Satish Chandra, (5) held that the partners of the firm hold fiduciary relationship towards
 their deceased partner’s representatives as regards his interest in the partnership property.

• Agency: Section 182 of Indian Contract Act, defines principle of agency. Agency is a
fiduciary relationship whereby the principal ropes confidence in the agent who accepts it
and undertakes to act on behalf of the person who so confided. Therefore the agent to make
full and frank disclosure of al material circumstances to the principal. The agent has to obey
the instruction given by the principal and to carry out the contract with due diligence, skill
and care. Agent cannot acquire the property of the principal in his own name and also cannot
deny the title of the principal.

iii) Fiduciary relationship in domestic transaction: There are number of domestic transactions which
are based on confidential relationship, in such family relations there exists a fiduciary relationship:
• Manager/Karta of the Joint Hindu Family and family members: A Karta of Joint Hindu
Family is a coparcener of the joint family and managing the joint property for the other
coparceners is in fiduciary relationship. Madras High Court in N.C. T Chidambaram v.
C.A.C. Subramaniam, (6) held that a coparcener of joint Hindu family utilizing the joint
property was held to be in a fiduciary capacity.

• Parent and Child: The relationship between the parent and the child is of fiduciary nature
and hence, parents to act in good faith for the benefit of child to safeguard and to protect the
interest of the child. Himachal Pradesh High Court in Bramha Raj Singh v. Brahma Raj
Devi, (7) held that father in possession of property on behalf of the son is in fiduciary
relation.

iv) Fiduciary Relationship in professional transaction: Persons taking confidential employment such
as religious, medical, legal and other advisors are deemed to occupy fiduciary position in relation to
persons who they advised, e.g. advocate and client, doctor and patient, etc.

Section 126 of Indian Evidence Act deals with professional communication, which provides for No
barrister, attorney, pleader or vakil shall at any time be permitted, unless with his client’s express
consent to disclose any communication made to him in the course and for the purpose of his
employment as such barrister, pleader, attorney or vakil, by or on behalf of his client, or to state the
contents or condition of any document with which he has become acquainted in the course and for
the purpose of his professional employment, or to disclose any advice given by him to his client in
the course and for the purpose of such employment.This section is based upon the principle that if
communications to legal adviser were not privileged, a man would be deterred from fully disclosing
his case, so as to obtain proper professional aid in the matter in which he is likely to be thrown in to
litigation.

v) Fiduciary relationship in jural transactions: Fiduciary relationship in such transactions includes

the relations between the executor and heir, and between guardian and ward. A testator of will
appointing an executor either expressly or by implication, for the management, and disposal of the
property under the will to the heirs, i.e. legatees. A guardian under Guardian and Ward Act, 1890 or
under Personal Law or appointed by the Court for the protection of person and property of the
minor ward is in fiduciary relationship.

vi) Fiduciary relationship in public transaction: This transaction may arise out of master and servant
relationship. It may be in between the government and its employees or public officers. In State of
Madras v. Jaya Laxmi Rice mills, Contractors, (8) it was held that licencees appointed on
remuneration to purchase stocks on behalf of government stand in fiduciary position.

In this case Court recognized and applied following three principles:

• Where a person using his official position earns money, the Government has right to the
money, even though no loss has been caused.
• There exists a fiduciary relationship between the officer and the Government.
• A person who enriches or benefits himself unjustly is obliged by the ties of natural justice
and equity to refund the money so gained.
vii) Fiduciary relationship in other confidential transactions to be made out by circumstances:
The question of fiduciary relationship in other transactions arises when it is proved that confidence
has under the circumstances been reposed in fact. The principle applies to every case where
influence is acquired and abused, where confidence is reposed and betrayed. In Indian Contract Act,
1872, it is provided that the consent is not free consent if it is obtained by undue influence
(Section.16).

2. Classification of fiduciary relations according to confidential dimensions:

Following fiduciary relations are classified according to confidential dimensions in different shades:
 • Fiduciary relationship induced by control over property: In this transaction the property of
one person is under the control of another person whatever position is at law may be, the
latter person is in fiduciary position. The relationship between bailer and bailee, lessor and
leasee, etc. fall into this category and such person is under obligation to keep the property in
his control separate from his own and must not use it in trading for his own benefit.

• Fiduciary relationship induced by commitment of job: Fiduciary relationship under this

category arises out of employment, commission or charge. This category is wider in the
sense that includes the whole of fiduciary relationship induced by control over property and
it includes many more relationship such as employer and employee, crown and its servants,
government and officers, company and directors, agents, solicitors, promoters, even though
they do not hold control over property.

• Fiduciary relationship induced by profit: In this transaction a person, in whom a confidence

is reposed, gains profits by availing himself of his position. Equity refuses such person
(fiduciary) to claim for himself the profit which has been obtained by him in pursuance of
his undertaking or discharge of his own obligation.

• Fiduciary relationship induced by undue influence: Fiduciary relationship is induced by

undue influence, wherever two persons stand in such a position that confidence is
necessarily reposed by one and the influence which naturally grows out of that confidence is
possessed by the other persons. In such circumstances the relation between the two parties is
such that one is in position to dominate the will of another, and thereby takes undue
advantage of his position.

• Fiduciary relationship induced by confidential influence: In this transaction one person gives
information to another person for certain purposes of his own interest. The relation between
doctors and patients, solicitors, advocates and their clients and such other relations were one
is under obligation not to disclose confidential information given to him (Section 126 of
Indian Evidence Act).

ENDOWMENTS:
An endowment is a sum of money or property that is donated to an institution with the intention of
providing a permanent source of income. Endowments are an important aspect of Indian culture
and tradition. They provide a way for individuals and organizations to give back to society and
promote social welfare. In this article, we will discuss the different kinds of endowments, the role of
Shebaits and Mahants in managing endowments, and the challenges that endowments face.

Kinds of endowments

• Religious Endowments

Religious endowments are established to promote religious activities, maintain temples, and support
priests or religious leaders. These endowments are typically managed by Shebaits or Mahants, who
are responsible for performing religious rituals and ceremonies. Some examples of religious
endowments include funds for the upkeep of a temple, funds for the maintenance of a deity, and
funds for the welfare of the priests or religious leaders.

• Educational Endowments

Educational endowments are established to promote education and support educational institutions.
These endowments are typically used to fund scholarships, support research, and provide financial
assistance to students. Some examples of educational endowments include funds for the
establishment of a school, funds for the construction of a library, and funds for the provision of
scholarships.

• Charitable Endowments

Charitable endowments are established to support charitable activities and provide assistance to the
less fortunate. These endowments are typically used to fund hospitals, orphanages, old-age homes,
and other charitable institutions. Some examples of charitable endowments include funds for the
construction of a hospital, funds for the provision of free medical services, and funds for the care of
the elderly.
Essentials of Endowment

For the creation of a valid endowment, the following points must exist:

1. Absolute Dedication of Property: The dedication of the property must be absolute and in
perpetuity. The donor must dedicate the property for a charitable cause and divest himself from any
beneficial interest in the property.

2. Object Must be Definite: The dedication made needs to be clear and definite. For example, if the
endowment is for a charitable purpose, it needs to be clear for what it has been made.

3. Property Must be Definite: The property being dedicated needs to be definite. Any uncertainty
with regards to the subject matter of the endowment might challenge the validity of such
endowment.

4. Person Setting or Creating the Endowment should be competent: It is absolutely necessary that
the person creating the endowment is legally competent to do so. The person creating the
endowment must be major, of sound mind and not legally disqualified to make the endowment.

5. Endowment must not be opposed to law: Such endowment must not be opposed to law. The
endowments made should be for valid purposes.

TRUST AND BREACHES: Not got.

DOCTRINE OF CY-PRES: The term ‘cy pres’ comes from the old French phrase ‘cy pres comme
possible’, which means “as near as possible.” In the legal sphere, the phrase refers to ensuring that a
donor’s or testator’s desires are followed out as nearly as possible, whether in a will or as part of a
charitable trust or estate. When legal complications occur that make it impossible to distribute cash
for any reason, the instrument or trust may become null and invalid. For example, if a charity goes
bankrupt and is unable to function or meet its goals, legal action may be required. The cy pres
doctrine can be used by courts to prevent it from ‘failing.’ The cy pres concept allows courts to
develop their own interpretations to guarantee that a donor’s, charity trust’s, estate’s, or will’s
wishes are followed out as precisely as possible, even if some revisions are required. In the case of a
charity, for example, the Internal Revenue Service (IRS) specifies that a court might “substitute
another benevolent aim that is judged to approximate the original charitable purpose as nearly as
practicable.”

Purpose of the cy pres doctrine

1. The cy pres doctrine is a legal theory that courts use to prevent a charity trust from failing
when a philanthropic purpose is impossible or impractical to achieve at the outset or
afterwards.

2. Rather than nullifying the charitable donation, the court might choose a new beneficiary
who closely matches the donor’s original purpose. For example, if a deceased formed a trust
with the purpose that the remaining trust funds must go to a specific charity that no longer
exists after the death of their last living relative, the court may transfer the funds to a similar
organisation that satisfies the decedent’s general philanthropic aim.

3. The cy pres concept has also been used in the distribution of class action settlement awards
if the money goes unclaimed or it is not cost-effective to distribute the cash to each
individual class member. A beneficiary, such as a charity organisation, may be approved by
the court in such instances.
Cy pres doctrine in India : an insight

Under Section 92 of the Code of Civil Procedure, 1908, the Court of the District Judge has the
power to administer public charities. Sub-section (3) of Section 92 embodies the doctrine of cy pres.
This provision was taken from Section 13 of the Charities Act of England of 1960. Even before the
adoption of sub-section (3), Indian courts had the authority to apply the cy pres concept to public
trusts under England’s law. Sub-section (3) effectively broadens the scope of when the property can
be used by pres. This establishes the conditions under which a charity or religious trust’s ‘original
intentions’ can be changed and the property utilised cy pres. Mergers of many organisations are also
allowed under sub-section (3). This provision provides the most significant modification of the old
cy pres norm, and will likely be of the most practical utility in allowing money to be used for the
greatest public advantage.

Before the addition of sub-section (3), the cy pres doctrine could only be used if carrying out the
trust’s aim was ‘difficult or impracticable.’ This requirement, despite the fact that the word
‘impossible’ was widely interpreted, created a number of problems; for example, nothing could be
done in cases where the continued administration of the trust was highly inconvenient but not
‘impossible’, or where an old charity served no useful purpose in modern times, perhaps due to
changes in societal needs or the value of money. The Chantries Act of 1960 (parts 13 and 14 in
England) and Section 92(3) in India modernised the whole matter surrounding the cy pres doctrine.

All you need to know about Section 92 of the Civil Procedure Code, 1908

Section 92 of the Code of Civil Procedure, 1908 provides that in one or more of the following
circumstances, the court may alter an express or constructive trust created for a public purpose of a
charitable or religious nature and allow the trust’s property or income, or any portion thereof, to be
applied cy pres:

1. Where the original purpose of the trust has been accomplished in whole or in part, or where
the original purpose of the trust cannot be carried out at all or according to the guidelines
given in the trust instrument.

2. When the trust’s original purpose is used for a portion made available by virtue of the trust.

3. Where the original intention was put out in whole or in part.

1. Have been well-provided for by other means.

2. Stopped being a waste of time or a danger to the community.

 3. Stop providing an appropriate and effective technique of exploiting the property in any other
way.
Indian judiciary’s take on the cy pres doctrine

Over the years, the Indian judiciary has been of the clarified view that since the notion of cy-pres
has its origins in equity, it has a broad scope and is applied liberally, however, there are certain
limitations. Courts have opined that the doctrine of cy pres is resorted not only for the initial use of
the sum given to charity but also for the continuing application of any surplus of capital or revenue.
The cy-pres rule is in line with Hindu Shastra principles and has been applied to charitable offerings
by Hindus. These thoughts and opinions are very well reflected in precedent judgments discussed
hereunder.

State v. Man Singh and Others (1974)

Tara Chand Saraf who lived in Peshawar many years ago had a jeweller’s shop, as it appeared
before the Delhi High Court in the present case of State v. Man Singh and Others (1974). He didn’t
have any children. He had created a will and had it recorded on December 20, 1927. The original
will has been lost or is no longer traceable or procurable. Mr. Partap Singh, one of the current
trustees of the trust established by that bequest, has approved the aforementioned facts before the
High Court. He claimed that he had travelled to Peshawar in 1964 and attempted unsuccessfully to
locate the original will. He further claimed that he was informed that the will’s records in the
Peshawar Sub-office Registrar’s had been burned.

Delhi High Court’s decision

The Delhi High Court had noted that in light of the present case, there is no question that the
testator had a broad benevolent aim that extended beyond the specific forms of application that he
established. Everything in the will, with the exception of the statement that he has no children, leads
to it. A performance like this was thought to indicate a desire to give to the general public. The key
guideline to follow while applying the notion of cy-pres is that the donor’s purpose must be
followed as closely as feasible. The trustees must therefore follow the concept of cy-pres and
accomplish what is as near as possible to the intention of the testator. In light of this observation,
the Court ordered that the funds in the hands of the trustees must be allotted to public welfare
purposes.

Abid Hatim Merchant v. Janab Salebhai Saheb Shaifuddin (2000)

The question before the Apex Court in the current Civil Appeal against the Bombay High Court
judgment is whether the avowed object with which Sir Adamji Peerbhoy, the great Philanthropist,
founded the trust for the Dawoodi Bohra Community in 1883 A.D. requires a change of object
under cypres doctrine with regard to constitutional parameters in order to make the Trust truly
secular in nature, since the situation in the early nineteenth century may not suit the purpose in the
21st century. The respondent Trust argued that the Constitution’s Preamble declares India to be
secular and that what was possible in 1883 may not be proper or in line with the Indian
Constitution’s lofty ideas, because the constitutional mandate is to be obeyed in its observance
rather than in its violation, and it is this concept that prompted the Trustees of Sir Adamji Peerbhoy
Sanatorium Trust to petition the High Court for variation and amendment to the scheme of the Trust
as sanctioned by the Court in 1931.

Apex Court’s opinions

It is to be noted that the use of the courts’ ordinary jurisdiction to manage a charitable trust whose
particular form of application has not been indicted by the donor, results in a cy-pres application.
Where he has prescribed a particular mode of application that is incapable of being carried out, but
he had a charitable intention that was greater than the particular mode of application prescribed, the
court can carry out the charitable intention as if the particular direction had not been expressed at
all.

Further, the most important thing to remember while using the cy-pres concept is to follow the
donor’s purpose as closely as possible. As a result, if the donor selects a specific item capable of
taking effect, any subsequent application for cy-pres must be limited to the scope of that object, and
the manner of application must, as much as possible, correspond to his intentions. If no other object
with a closer link can be located, a charity may cy-pres to the original object, even if it appears to
have no similarity to it, however things closer to the donors purpose will always be picked in
preference to those more distant. The Apex Court in light to the facts of the present case has opined
that necessary changes in the object of the Trust should be carried out to eliminate hindrance in its
application.