Regstration of trust and society

Trust is defined in section 3 of the Trust Act, 1882 as " 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. In simple words it is a transfer of property by the owner to another for the benefit of a third person alongwith or without himself or a declaration by the owner, to hold the property not for himself and another.

In India, the second most popular form of registration is as a Trust. However, the statutory provisions, procedures and the laws relating to trusts are confusing. Under Indian Laws, various kinds of public and private trusts can be formed. Here, we have dealt with the laws and procedures related to Public Charitable Trusts.

The Indian Trust Act, 1882 is not applicable to Public Charitable Trust. There is no specific act under which a Public Trust is to be registered, except in the State of Gujarat and Maharastra. Public Trusts are formed under general law, with guidance drawn from the Indian Trust Act, 1882. The other relevant acts are Religious Endowment Act, 1863, Charitable & Religious Trust Act, 1920 and The Bombay Public Trust Act, 1950.

The following are the basic ingredients of a valid trust :

i) There must be an author or settlor of the trust. The author or the settlor refers to the person who sets aside certain property for the benefit of the beneficiaries

ii) There must be a trustee. The trustee are the persons who manage this property for the benefit of the beneficiaries as per the Trust Deed. The author himself may or may not become a trustee.

iii) There must be a beneficiary or beneficiaries.

iv) There must be clearly delineated trust property.

v) The objects of the trust must be specific.

THE THREE CERTAINITIES REQUIRED

Three Certainties of a Trust are :

i) Certainty of intention to create Trust.

ii) Certainty of the objects and the beneficiaries.

iii) Certainty of the subject matter of the Trust i.e. fund or properties must be specified and settled in the deed.

WHO CAN FORM A TRUST ?

Every person competent to make a contract and competent to deal with property can create a Trust. Besides individuals, a body of individuals or an artificial person such as an association of persons, an institution, a limited company, a Hindu Undivided Family through its Karta can also form a Trust. For all practical purposes, two or more individuals are required to form a charitable trust.

CHARITABLE PURPOSE

To form a public charitable trust it is very important that the objects of the Trust must be of charitable nature & of general public utility. The Charitable Endowment Act, 1890 defines ‘charitable purpose’ as a purpose for the relief of the poor, education, medical relief and advancement of any other object of general public utility but does not include a purpose which relates exclusively to religious teachings or worship.

No clear statutes are available for the formation of a Charitable Trust. The only Central Legislation available is the Charitable and Religious Trust Act, 1920. This Act is very limited in its application, and does not provide any effective control over Public Charitable Trusts.

Preparation of trust deed

To form a valid Public Charitable Trust it is always desirable to prepare a Trust Deed. Such Trust Deed should clearly specify and satisfy the certainties of a Trust. 

A trust deed, generally, incorporates the following:

Registration of trust deed

Registration is to be made as per the provisions of the Registration Act, 1908. It may be noted that the trust deed and not the trust is registered. The deed has to be registered with the Sub-Registrar of the registration department of the respective State Governments. For Public Charitable Trusts in the State of Maharastra and Gujarat, registration is to be made under The Bombay Public Trust Act, 1950.