Mod 2

1. Delay Defeats Equity

 Explanation: This principle means that if a person delays in asserting their legal rights,
especially in equity, the courts may refuse to grant a remedy. Equity is based on fairness, and
if a party waits too long without a justifiable reason, they may lose their claim.

 Relevant Provision: This concept is linked to the Limitation Act, 1963, which prescribes time
limits for various legal actions. Courts of equity refuse to assist claimants who have been
slow in enforcing their rights.

 Illustration: If a person discovers a breach of contract but waits for years to bring a suit, the
court may deny relief on the basis of delay, even if they have a valid claim.

 Case Law: Vithalrao Narayanrao Patil v. Vithalrao & Ors. (2009), where the court observed
that unreasonable delay in asserting rights can be fatal to claims in equity.

2. Equity Acts in Personam

 Explanation: This means equity judgments are directed at individuals (personam) rather than
property (in rem). It emphasizes that equitable relief binds the conscience of the defendant.

 Relevant Provision: The concept is reflected in Section 16 of the Specific Relief Act, 1963,
which deals with personal obligations.

 Illustration: In a trust case, the court may order the trustee to act in a certain way or make
restitution to the beneficiary, targeting the person rather than the trust property itself.

 Case Law: Radha Kissan v. Radha Charan (1951) – The court emphasized that equity relief is
directed at individuals and not towards property, hence acting in personam.

3. He Who Seeks Equity Must Do Equity

 Explanation: This maxim means that a person who asks for equitable relief must be willing to
act fairly towards the other party and must fulfill their own obligations.

 Relevant Provision: This principle is embodied in Section 41(h) of the Specific Relief Act,
1963, which requires the plaintiff to comply with equitable obligations.

 Illustration: A borrower seeking the court’s help to prevent a foreclosure must show a
willingness to repay the loan in a fair manner.

 Case Law: Sita Ram v. Radha Bai (1968), where the court denied relief because the plaintiff
failed to act fairly and fulfill their own obligations.

4. He Who Seeks Equity Must Come with Clean Hands

  Explanation: This principle asserts that a person seeking equitable relief must not be guilty
of improper conduct in relation to the subject matter of the lawsuit. Courts of equity do not
assist those who have acted in bad faith.

 Relevant Provision: This principle is recognized in Section 16(c) of the Specific Relief Act,
1963, where the conduct of the plaintiff is considered before granting equitable relief.

 Illustration: If a person seeks specific performance of a contract but has acted fraudulently
or deceitfully in obtaining the contract, the court will refuse to assist them.

 Case Law: Shrimant Shamrao Suryavanshi & Anr. v. Pralhad Bhairoba Suryavanshi & Ors.
(2002), where the court held that a party with unclean hands would not be entitled to an
equitable remedy.

5. Equity Follows the Law

 Explanation: Equity does not override the law; instead, it supplements the law and ensures
fairness where strict legal rules may produce unjust outcomes.

 Relevant Provision: Article 141 of the Constitution of India, stating that the law declared by
the Supreme Court is binding on all courts, reinforces the idea that equity must follow legal
principles.

 Illustration: A legal mortgage cannot be converted into an equitable mortgage if doing so

violates statutory provisions.

 Case Law: Union of India v. Raghubir Singh (1989), where the Supreme Court stated that
while equity ensures fairness, it cannot contradict the law laid down by the legislature.

6. Equality is Equity

 Explanation: This principle asserts that where two parties have equal rights, equity treats
them equally. This maxim stresses fairness and impartiality in equitable decisions.

 Relevant Provision: This is closely related to Article 14 of the Constitution of India, which
guarantees equality before the law.

 Illustration: In the partition of jointly owned property, equity will ensure an equal division of
the property among the co-owners.

 Case Law: Gurbux Singh v. Bhooralal (1964), where the court stressed the importance of
equal treatment in equity, particularly in cases of partition.

7. Equity Will Not Suffer a Wrong Without a Remedy

 Explanation: This maxim asserts that whenever a legal right is violated, equity provides a
remedy. If no legal remedy exists, equity steps in to prevent injustice.

 Relevant Provision: This principle aligns with Section 9 of the Civil Procedure Code, 1908,
which provides that the court has jurisdiction to try all civil suits unless explicitly barred.
  Illustration: In cases where a breach of trust occurs and there is no specific legal remedy,
equity will ensure that the trustee makes restitution to the beneficiaries.

 Case Law: Ashby v. White (1703) – Though an old English case, this maxim has been upheld
in India as well, where the court noted that a wrong should always have a remedy.

8. Equity Looks to Intent Rather Than the Form

 Explanation: Courts of equity focus on the substance or intent of the parties rather than the
strict form or language used. The primary concern is achieving fairness based on what the
parties intended.

 Relevant Provision: This principle is evident in Section 91 and 92 of the Indian Evidence Act,
1872, where courts look at the intention behind written documents rather than just the
wording.

 Illustration: If a contract is poorly drafted but the intent of both parties is clear, the court will
enforce the contract based on that intent, rather than the flawed language.

 Case Law: Ram Kumar Agrawal v. Thawar Das (1999), where the court looked beyond the
literal terms of an agreement and enforced it based on the parties' true intentions.

9. Equity Imputes an Intention to Fulfill an Obligation

 Explanation: Equity assumes that if a person has an obligation, they intend to fulfill it. This
principle holds people accountable for obligations they have implicitly or explicitly
undertaken.

 Relevant Provision: This maxim aligns with Section 60 of the Indian Contract Act, 1872,
which deals with the imputation of payment in contractual obligations.

 Illustration: If a person borrows money and later makes a payment without specifying which
debt they are paying off, equity assumes the payment applies to the most urgent or overdue
debt.

 Case Law: State of Maharashtra v. M.N. Kaul (1967), where the court presumed the
intention of parties in fulfilling contractual obligations based on the nature of their actions.

10. Where Equities Are Equal, the First in Time Shall Prevail

 Explanation: When two parties have equal claims or rights in equity, the party whose claim
arose first will have priority.

 Relevant Provision: This principle is akin to Section 48 of the Transfer of Property Act, 1882,
where earlier transfers take precedence over later ones.

 Illustration: If two mortgagees have claims over the same property, the one who registered
their interest first will have priority in receiving payments from the sale of the property.
  Case Law: Annamalai Chettiar v. Subramanian Chettiar (1958), where the Supreme Court
held that where equities are equal, the earlier claim would prevail.

11. Where Equities Are Equal, the Law Shall Prevail

 Explanation: If two parties have equal claims in equity, but one party has a legal right
recognized by law, that legal right will prevail over the equitable claim.

 Relevant Provision: This maxim is closely related to Section 48 of the Transfer of Property
Act, 1882.

 Illustration: If one person has an equitable right over a property and another has a legal
right, the legal right will take precedence.

 Case Law: Bai Dosabai v. Mathurdas Govinddas (1980), where the court stated that legal
rights will prevail over equitable rights when both are equal.

12. Equity Regards That as Done Which Ought to Be Done

 Explanation: Equity treats obligations as fulfilled when a person is under a legal duty to
perform them, even if they have not yet been completed. This maxim helps enforce
contracts and promises in equity.

 Relevant Provision: This principle underpins Section 53A of the Transfer of Property Act,
1882 (part performance doctrine), where a contract for the sale of immovable property can
be enforced even without formal transfer.

 Illustration: If a seller agrees to transfer property but delays the paperwork, equity will treat
the transaction as complete once the buyer has fulfilled their obligations.

 Case Law: Madhavlal Sindhu v. Official Assignee of Bombay (1946), where the court ruled
that equity will consider an obligation fulfilled if all other conditions have been met, even if
formal legal requirements are pending.

Mod 3
1. Concept and Meaning of Trust
A trust is a legal relationship in which one person (the settlor) transfers property to
another person (the trustee) to hold and manage for the benefit of a third party (the
beneficiary). The trustee holds legal title to the property but is bound to manage and use
it according to the terms set by the settlor, ensuring that the interests of the beneficiary
are safeguarded.
Indian Trusts Act, 1882
 Under Section 3 of the Indian Trusts Act, 1882, a trust is defined 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."
Key Elements of a Trust:
1. Settlor: The person who creates the trust.
2. Trustee: The person who manages the trust property.
3. Beneficiary: The person(s) for whom the trust is created.
4. Trust Property: The subject matter of the trust, such as money, land, or other
assets.
5. Trust Deed: The legal document that sets out the terms and conditions of the trust.

2. Classification / Kinds of Trust

Trusts can be categorized in several ways depending on their nature, beneficiaries, or
purpose. The key types of trusts are:
a) Private Trust
 Definition: A trust created for the benefit of specific individuals.
 Example: A parent sets up a trust to provide for their children’s education.
b) Public Trust
 Definition: A trust created for the benefit of the public or a section of society. This
type of trust typically focuses on charitable, religious, or public purposes.
 Example: A trust established to provide free education to underprivileged children.
c) Charitable Trust
 Definition: A type of public trust focused on charitable purposes, such as poverty
alleviation, education, or healthcare.
 Example: A trust that runs free clinics for the poor.
d) Religious Trust
 Definition: A trust established to promote religious activities and maintain religious
institutions like temples or churches.
 Example: A trust managing the daily operations and funds of a temple.
e) Express Trust
 Definition: A trust that is intentionally created by the settlor, usually through a
written document like a trust deed or a will.
  Example: A trust set up through a will to distribute the settlor’s property upon
death.
f) Implied Trust
 Definition: A trust created by law, inferred from the conduct or relationships of the
parties, rather than explicitly stated.
 Example: If one person buys property in another’s name without intending it as a
gift, the law may impose an implied trust in favor of the actual purchaser.
g) Constructive Trust
 Definition: A trust imposed by courts to prevent unjust enrichment or fraud. The
court recognizes that someone holds property in trust for another, even though
there was no formal trust arrangement.
 Example: A person who fraudulently acquires property may be declared a trustee,
holding the property on behalf of the person defrauded.
h) Discretionary Trust
 Definition: A trust where the trustee has discretion in deciding how to distribute
the trust property among the beneficiaries.
 Example: A trust where the trustee has the power to decide which beneficiaries
receive income and how much.
i) Fixed Trust
 Definition: A trust where the shares or interests of the beneficiaries are fixed and
predetermined by the settlor.
 Example: A trust in which three children are each entitled to one-third of the
income generated by the trust property.

3. Fiduciary Relations Between Trustee and Beneficiary

In a trust relationship, a fiduciary duty is the highest standard of care, wherein the trustee
is legally bound to act in the best interests of the beneficiaries. This duty arises because
the trustee manages property for the benefit of the beneficiaries, who are dependent on
the trustee’s integrity and management.
Fiduciary Duties of Trustees:
1. Duty of Loyalty: The trustee must act in the best interests of the beneficiaries,
avoiding conflicts of interest or self-dealing.
2. Duty of Prudence: The trustee must manage the trust property carefully, ensuring
that it is preserved and generates income for the beneficiaries.
 3. Duty of Impartiality: The trustee must treat all beneficiaries fairly and cannot favor
one beneficiary over another unless the trust deed specifies otherwise.
4. Duty to Account: The trustee must keep accurate records and provide beneficiaries
with information regarding the trust’s administration.
5. Duty to Follow the Trust Deed: The trustee must administer the trust in accordance
with the settlor's wishes as outlined in the trust deed.
Breach of Fiduciary Duties:
A breach of fiduciary duty occurs when the trustee fails to fulfill their obligations. Common
breaches include mismanagement of trust property, self-dealing, failure to provide
information to beneficiaries, or favoring one beneficiary over another without
justification.

4. Endowments
Endowments are funds or properties donated to institutions, often with specific directions
for their use, particularly in charitable, educational, or religious contexts. The endowment
is managed to generate income, and only the income, not the principal amount, is used for
the intended purposes.
Religious Endowments:
 Definition: Property or funds donated for religious purposes, often to temples,
mosques, or churches.
 Governed by: State-specific legislation in India, such as the Hindu Religious and
Charitable Endowments Act.
Educational Endowments:
 Definition: Funds donated to educational institutions for scholarships,
infrastructure development, or other academic purposes.
Example: A philanthropist donates ₹10 crore to a university to establish a scholarship
fund. The fund’s principal amount remains intact, and the income generated is used to
award scholarships.

5. Trust and Breaches

A breach of trust occurs when a trustee fails to carry out their fiduciary duties or acts
contrary to the terms of the trust deed. A breach can be either intentional or due to
negligence.
Types of Breach of Trust:
 1. Fraudulent Breach: The trustee intentionally acts against the interest of the
beneficiaries, such as embezzling funds.
2. Negligent Breach: The trustee fails to manage the trust property prudently, leading
to a loss for the beneficiaries.
3. Self-Dealing: The trustee uses trust property for their own benefit rather than for
the benefit of the beneficiaries.
4. Conflict of Interest: The trustee engages in transactions that create a conflict
between their personal interests and those of the trust.
Consequences of Breach:
 Personal Liability: The trustee can be held personally liable for any loss resulting
from the breach.
 Restoration of Trust Property: The trustee may be required to return misused or
lost property.
 Removal of Trustee: The court may remove the trustee and appoint a new one.
Remedies for Breach of Trust:
 Compensation: The court may order the trustee to compensate the beneficiaries
for losses.
 Specific Performance: The court may order the trustee to fulfill specific obligations
as outlined in the trust deed.
Indian Case Law:
 Suraj Bhan v. Union of India (1982) – The court held that trustees are personally
liable for breaches of trust, and equity can compel them to restore the trust
property.

6. Doctrine of Cy-press
The Doctrine of Cy-pres (French for "as near as possible") is a principle applied to
charitable trusts. If the original purpose of the trust becomes impossible or impractical to
fulfill, the court will modify the trust to serve a purpose as close as possible to the settlor's
original intent.
Application:
The doctrine is used when:
1. The trust's original purpose is no longer feasible.
2. The charitable objectives can no longer be carried out due to changes in
circumstances.
 3. A charitable purpose becomes illegal or obsolete over time.
Illustration:
A trust is created to establish a hospital to treat smallpox patients. After smallpox is
eradicated, the court may modify the trust so that the funds are used to treat other
infectious diseases.
Indian Context:
The Doctrine of Cy-pres is applied judicially in cases where charitable trusts need to be
modified to fulfill purposes similar to the original one.
Indian Case Law:
 T. M. Balkrishna Mudaliar v. H.C. Mukherjee (1959) – The Supreme Court of India
applied the doctrine of cy-pres to allow a charitable trust to fulfill a purpose closely
aligned with the original one, as the original purpose could no longer be achieved.

Conclusion
The law of trusts provides a structured way to manage property for the benefit of others.
Trustees are bound by fiduciary duties to act in the best interests of the beneficiaries and
manage trust property responsibly. Breaches of these duties can lead to legal action and
personal liability. For charitable trusts, courts have the power to modify the trust under
the Doctrine of Cy-pres when the original purpose becomes impossible or impractical.
Trusts, fiduciary relationships, and endowments are critical for protecting the rights

Mod 4
1. Creation of Trusts
A trust is created when the settlor (the person creating the trust) expresses a clear intention
to transfer property to the trustee for the benefit of the beneficiary. In India, the creation of
trusts is governed by the Indian Trusts Act, 1882.
Requirements for the Creation of Trust (Section 6):
 Intention to Create a Trust: The settlor must clearly intend to create a trust.
 Trust Property: The property must be transferable and can include land, money, or
other assets.
 Beneficiaries: There must be identifiable beneficiaries, either specific individuals or a
class of persons.
 Trustee: A trustee must be appointed to manage the trust property.
 Lawful Object: The purpose of the trust must be legal and not against public policy.
Modes of Creation (Section 5):
A trust can be created either by a written instrument or by oral declaration, except for trusts
involving immovable property, which must be in writing, signed by the settlor, and registered
under the Registration Act, 1908.

2. Duties and Liabilities of Trustees

The trustee holds legal ownership of the trust property and is under a fiduciary duty to
manage the property for the benefit of the beneficiaries.
Duties of Trustees:
1. Duty to Execute the Trust (Section 11):
o The trustee is bound to fulfill the intentions of the settlor as expressed in the
trust deed.
2. Duty of Care (Section 15):
o The trustee must manage the trust property with the same care as a prudent
person would manage their own property.
3. Duty to Protect and Preserve Trust Property (Section 13):
o The trustee must safeguard the trust property and prevent its deterioration.
4. Duty to be Impartial (Section 17):
o The trustee must treat all beneficiaries equally and fairly, without favoring
one over another.
5. Duty to Invest (Section 20):
o The trustee is required to invest trust funds in approved securities that are
safe and provide a reasonable return.
6. Duty to Provide Information (Section 19):
o The trustee must keep accurate accounts and provide beneficiaries with
information related to the trust upon request.
Liabilities of Trustees:
1. Liability for Breach of Trust (Section 23):
o A trustee is personally liable for any loss caused to the beneficiaries due to a
breach of trust. The court can order compensation for any mismanagement
or wrongful acts.
2. Liability for Co-Trustee’s Acts (Section 26):
 o If a trustee concurs in or facilitates a co-trustee’s wrongful act, they may also
be held liable for breach of trust.
3. Prohibition Against Profit (Section 51):
o Trustees cannot use their position to make personal profits. Any profits made
must be returned to the trust.

3. Rights and Powers of Trustees

Trustees have various powers that enable them to manage the trust property effectively.
Rights of Trustees:
1. Right to Reimbursement (Section 32):
o Trustees are entitled to be reimbursed for all expenses properly incurred in
executing the trust.
2. Right to Indemnity (Section 30):
o If a trustee has entered into contracts or incurred liabilities in good faith for
the execution of the trust, they have a right to indemnity from the trust
property.
3. Right to Seek Court’s Direction (Section 34):
o If the trustee is in doubt about the proper course of action, they may apply to
the court for directions regarding the administration of the trust.
Powers of Trustees:
1. Power to Sell Trust Property (Section 39):
o A trustee may sell the trust property if it is authorized by the trust deed or is
necessary for the execution of the trust.
2. Power to Vary Investments (Section 20A):
o Trustees are empowered to change investments of trust funds, provided they
invest in approved securities.
3. Power to Compound Liabilities (Section 35):
o Trustees have the power to compound, settle, or discharge any liabilities due
to or by the trust.
4. Power to Lease Trust Property (Section 36):
o Trustees may lease out the trust property for a term of years if it is in the best
interest of the beneficiaries.
4. Disabilities of Trustees
Certain restrictions and disabilities are imposed on trustees to prevent conflicts of interest
and ensure that they act in the best interests of the beneficiaries.
Disabilities of Trustees:
1. Prohibition Against Delegation of Duties (Section 47):
o Trustees cannot delegate their duties unless authorized by the trust deed or
by law.
2. Trustee Cannot Purchase Trust Property (Section 52):
o Trustees are prohibited from purchasing the trust property, either directly or
indirectly, to avoid conflicts of interest.
3. Prohibition Against Profit (Section 51):
o A trustee cannot derive any profit from their position, except for authorized
remuneration.

5. Rights and Liabilities of the Beneficiary

The beneficiary has an equitable interest in the trust property and is entitled to the benefits
conferred by the trust.
Rights of the Beneficiary:
1. Right to Enjoy the Trust Property (Section 55):
o The beneficiary is entitled to enjoy the benefits of the trust property as per
the terms of the trust deed.
2. Right to Compel Performance (Section 56):
o The beneficiary has the right to compel the trustee to perform their duties in
accordance with the trust deed.
3. Right to Transfer Interest (Section 58):
o The beneficiary may transfer their beneficial interest, subject to the trust
deed’s provisions and conditions.
4. Right to Inspection (Section 57):
o Beneficiaries have the right to inspect trust documents and accounts.
Liabilities of the Beneficiary:
1. Liability for Breach of Trust:
 o If the beneficiary actively participates in the breach of trust or consents to it,
they may forfeit their rights under the trust.
2. Repayment of Benefits:
o If a beneficiary has wrongfully received benefits from the trust property, they
may be required to repay or restore those benefits to the trust.

6. Vacating the Office of Trustee

A trustee may vacate their office under certain circumstances:
Modes of Vacating Office (Section 71):
1. By Retirement: A trustee may retire with the consent of the co-trustees or under the
terms of the trust deed.
2. By Removal: The court can remove a trustee for misconduct, breach of trust, or
incapacity.
3. By Resignation: A trustee may resign if permitted by the trust deed or with the
consent of all beneficiaries.

7. Extinction of Trusts
A trust may come to an end through several means.
Modes of Extinction (Section 77):
1. Fulfillment of Purpose: A trust is extinguished when its purpose is fulfilled, such as
when the trust property has been distributed according to the terms of the trust
deed.
2. Revocation by the Settlor: The settlor can revoke the trust if they have retained the
power of revocation.
3. Expiration of Time: A trust can terminate if it was created for a specified period, and
that period has ended.
4. Destruction of Trust Property: If the trust property is destroyed or becomes
incapable of being applied for the trust’s purpose, the trust will be extinguished.

8. Obligations in the Nature of Trusts

An obligation in the nature of a trust refers to situations where the legal owner of a
property holds it for the benefit of another, even though no formal trust has been created.
These obligations are treated as quasi-trusts under Sections 80-94 of the Indian Trusts Act,
1882.
Examples of Obligations in the Nature of Trust:
1. Constructive Trusts (Section 88):
o Arises when someone obtains property through wrongful means, such as
fraud or breach of confidence, and is treated as holding it in trust for the
rightful owner.
2. Resulting Trusts (Section 83):
o Occurs when property is transferred to a person without any intention to
confer a beneficial interest, and the property must be held for the benefit of
the transferor or another party.

9. Doctrine of Cy-pres
The Doctrine of Cy-pres (meaning “as near as possible”) is applied to charitable trusts. If the
original purpose of a charitable trust becomes impractical or impossible to fulfill, the court
may modify the trust to apply the property to a purpose as close as possible to the original
intent of the settlor.
Application in India:
The Doctrine of Cy-pres is applied in India through judicial interpretation, primarily in cases
where charitable trusts need to be modified to meet contemporary needs or unforeseen
circumstances.
Illustration:
A trust created to establish a hospital to treat a specific disease (e.g., smallpox) may be
modified by the court to provide general healthcare services if that disease has been
eradicated.

Conclusion
The Indian Trusts Act, 1882, provides a comprehensive framework for the creation,
management, and dissolution of trusts in India. Trustees are bound by fiduciary duties to act
in the best interests of the beneficiaries, while beneficiaries have rights to enjoy the benefits
of the trust and hold trustees accountable. The act also recognizes obligations in the nature