Table of Contents
Introduction
In England, trustees are in the first instance almost invariably appointed by the settlor under the instrument constituting the trust, but, where necessary, they may be appointed by the Court. Such trustees are called ‘Original Trustees’.
The settlor has the freedom to select eligible persons to be the first trustees. He may appoint the trustees inter vivos or by his will. In the case of an inter vivos trust the settlor is required to transfer the property to the trustees for failure to achieve this result will make the trust imperfect.
The appointment of a new trustee under the provisions of Section 73 of Indian Trusts Act, need not be by a registered document. When none of the other provisions for retirement is capable of compliance, it is open to the trustee to be absolved from his office by application to Court.
Appointment Of Trustees
Section 73 of the Indian Trusts Act, 1882 deals with appointment of new trustees under certain circumstances, which are as under:-
- if any person appointed as a trustee disclaims;
- if any trustee, either original or substituted:-
- dies; or
- is absent from India for a continuous period of six months; or
- leaves India for the purpose of residing abroad; of
- he is declared an insolvent; of
- desires to be discharged from the trust; of
- refuses to act, or becomes, in the opinion of the Court, unfit or personally incapable to act in the trust; of
- accepts an inconsistent trust.
In cases where there is no trustee then the Court provides a trustee for such trusts and executes it. In such cases, the Court acts on the principle “Equity never allows a trust to fail for want of a trustee”. In other words, if a settler or testator has manifested a clear intention to create a trust but has omitted to appoint a trustee, or if the sole trustee nominated by him has declined to act, equity will not allow the trust to fail on that account.
In the case of Mallo vs Welsor, if the settlement is created inter vivos and the trustee appointed disclaims the trust, then the property will revert to the settlor himself, and if he is dead, to his personal representative, and the settlor, or his personal representatives, must hold the property on the trusts which have been declared with regard to it.
Modes in which trustees appointed
A person is legally appointed trustee who:
- Is originally designated as a trustee by the instrument creating the trust.
- Or he is duly appointed as a trustee under a power for the purpose contained in the instrument.
- Accepts the trust either expressly or by acting in the execution of it.
Who can appoint Trustee
A new trustee may be appointed by-
- The person who has been nominated for the purpose of appointment and such power is granted by the instrument of trust, if any, or
- If there be no such person, or no such person is able and willing to act, the author of the trust if he be alive and competent to contract; or
- The surviving or continuing trustees or legal representative of the last surviving or continuing trustee, or
- With the consent of the Court, by the retiring trustees, if they all retire simultaneously.
- With the consent of the court, by the last retiring trusted
Appointment Of Trustees By Court
Section 74 lays down that whenever any such vacancy or disqualification occurs and it is found impracticable to appoint new trustee under Section 73, the beneficiary may without instituting a suit, apply by petition to a principal Civil Court of original jurisdiction for the appointment of a trustee or a new trustee and the court may appoint a trustee or a new trustee accordingly.
Every appointment of a new trustee shall be made by writing under the hand of the person making it on appointment of a new trustee the number of trustees may be increased. If there is any objection from the side of the surviving or continuing trustee, the court should not make it a sole ground of refusal of appointment of a new trustee. It must fully ascertain that the objection is well-founded.
Rule for selecting new trustee
Section 74 of the Indian Trust Act expressly provides that appointing new trustees, the court shall have regard to following:
- The wishes of the author of the trust as expressed in, or to be inferred from the instrument of trust;
- To the wishes of the person (if any) empowered to appoint new trustees;
- The question whether the appointment will promote or impede the execution of the trust;
- To the interest of all the beneficiaries where there are more than one beneficiary.
Application of these rules and principles also has been in vogue as they apply in English cases, as has been made clear by Turner L.J. in the case of Re Tempest.
In Janta Bibi vs Wali Ullah, it was held,
“Section 73 does not entitle a beneficiary to ask for the verdict of the court as to the unfitness of the sitting trustee. It is only when he makes petition under Section 74 that the court gets an opportunity to express its opinion as to the fitness or un fitneses of the trustee.”
Jurisdiction Of The Court
The jurisdiction under this section would be exercised only where other avenues of appointment have failed or have become impracticable. Where it is a matter of doubt whether the statutory power or the express power under the instrument would be applicable, the court would step in to make the appointment.
In the case of Smt. Shanti Devi v. State Of Delhi (1982), it was held that Section 73 does not apply to charitable trusts. If the settlor did not appoint a trustee, the court can appoint and enforce it as trust never fails for the want of the trustee.
Effect Of The Appointment Of Trustees
According to Section 75, When a trustee is discharged from office and any new trustee is appointed, all the trust property for the time being vested in the surviving or continuing trustee or trustees, or in the legal representative of any trustees, shall become vested in such a new trustee, either solely or jointly with the surviving or continuing trustees, or trustee as the case may require.
Similarly, every new trustee so appointed and every trustee appointed by a court, either before or after passing of this act, shall in all respects have the same powers, authorities and discretions, and shall in all respects act, as if he had originally nominated a trustee by the author of the trust.
However, if the number required by the trust deed is not complete the remaining trustee cannot exercise the right of the execution of the aim of the trust.
Conclusion
The law of appointment of trustees is enshrined under the Indian Trust Act,1882. Appointment of a new trustee plays a vital role in the management of trust deed and trust property. It is the duty of the settlor and the court to appoint eligible trustees capable of performing their duties following the principles laid down within the code.
