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The Trusts Act

THE TRUSTS ACT, 1882

(ACT NO. II OF 1882).
[13th January, 1882 ]

1 An Act to define and amend the law relating to Private Trusts and
Trustees.
Preamble WHEREAS it is expedient to define and amend the law relating to private trusts
and trustees; It is hereby enacted as follows: –

CHAPTER I

PRELIMINARY
Short title
Commencemen
1. This Act may be called the Trusts Act , 1882: and it shall come
into force on the first day of March, 1882. Local extent
Savings

It extends to the whole of Bangladesh. But nothing herein contained
affects the rules of 2[ Muslim] law as to waqf, or the mutual
relations of the members of an un divided family as determined by
any customary or personal law, or applies to public or private
religious or charitable endowments, or to trust to distribute prizes
taken in war among the captors; and nothing in the second Chapter
of this Act applies to tru sts created before the said day. [Omitted]

2. [Omitted by section 3 and 2nd Schedule of the Bangladesh Laws
(Revision And Declaration) Act , 1973 (Act No. VIII of 1973).] Interpretation –
clause

3. 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: the person who reposes or de clares
the confidence is called the “author of the trust”: the person who
accepts 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, by which the trust is declared is called the
“instrument of trust”:

a bre ach of any duty imposed on a trustee, as such, by any law for
the time being in force, is called a “breach of trust”: Expressions
defined in Act IX
of 1872

And in this Act, unless there be something repugnant in the subject
or context, “registered” means registered under the law for the
registration of documents for the time being in force: a person is
said to have “notice” of a fact either when he actually k nows that
fact, or when, but for wilful abstention from inquiry or gross
negligence, he would have known it, or when information of the fact
is given to or obtained by his agent, under the circumstances
mentioned in the Contract Act , 1872, section 229; and all

expressions used herein and defined in the Contract Act , 1872, shall
be deemed to have the meanings r espectively attributed to them by
that Act.

CHAPTER II

OF THE CREATION OF TRUSTS
Lawful purpose

4. A trust may be created for any lawful purpose. The purpose of a
trust is lawful unless it is (a) forbidden by law, or (b) is of such a
nature that, if permitted, it would defeat the provisions of any law,
or (c) is fraudulent, or (d) involves or implies injury to the person or
property of another, or (e) the Court regards it as immoral or
opposed to public policy.

Every trust of which the purpose is unlawful is void. And where a
trust is created for two purposes, of which one is lawful and the
other u nlawful, and the two purposes cannot be separated, the
whole trust is void.

Explanation – In this section the expression “law” includes, where
the trust -property is immoveable and situate in a foreign country,
the law of such country.

Illustrations

(a) A conveys property to B in trust to apply the profits to the
nurture of female foundings to be trained up as prostitutes. The
trust is void.

(b) A bequeaths property to B in trust to employ it in carrying on a
smuggling business, and out of the pr ofits thereof to support A’s
children. The trust is void.

(c) A, while in insolvent circumstances, transfers property to B in
trust for A during his life, and after his death for B. A is declared an
insolvent. The trust for A is invalid as against his c reditors. Trust of
immoveable
property
5. No trust in relation to immoveable property is valid unless
declared by a non -testamentary instrument in writing signed by the
author of the trust or the trustee and registered, or by the will of
the author of the trust or of the trustee. Trust of
moveable
No trust in relation to moveable property is valid unless declared as
aforesaid, or unless the ownership of the property is transferred to

property the trustee.

These rules do not apply where they would operate so as to
effectuate a fraud. Creation of trust

6. Subject to the provisions of section 5, a trust is created when the
author of the trust indicates with reasonable certainty by any words
or acts (a) an intention on his part to create thereby a trust, (b) the
purpose of the trust, (c) the beneficiary, a nd (d) the trust -property,
and (unless the trust is declared by will or the author of the trust is
himself to be the trustee) transfers the trust – property to the
trustee.

Illustrations

(a) A bequeaths certain property to B, “having the fullest con fidence
that he will dispose of it for the benefit of C”. This creates a trust so
far as regards A and C.

(b) A bequeaths certain property to B, “hoping he will continue it in
the family”. This does not create a trust, as the beneficiary is not
indicated with reasonable certainty.

(c) A bequeaths certain property to B, requesting him to distribute it
among such members of C’s family as B should think most
deserving. This does not create a trust, for the beneficiaries are not
indicated with reasonable ce rtainty.

(d) A bequeaths certain property to B, desiring him to divide the
bulk of it among C’s children. This does not create a trust, for the
trust -property is not indicated with sufficient certainty.

(e) A bequeaths a shop and stock -in-trade to B, on condition that
he pays A’s debts and a legacy to C. This is a condition, not a trust
for A’s creditors and C. Who may create
trusts

7. A trust may be created –

(a) by every person competent to contract, and,

(b) with the permission of a principal Civil Court of original

jurisdiction, by or on behalf of a minor;

but subject in each case to the law for the time being in force as to
the circumstances and extent in and to which the author of the trust
may dispose of the trust –property. Subject of trust

8. The subject -matter of a trust must be properly transferable to
the beneficiary.

It must not be merely beneficial interest under a subsisting trust. Who may be
beneficiary
9. Every person capable of holding property may be a beneficiary.
Disclaimer by
beneficiary
A proposed beneficiary may renounce his interest under the trust by
disclaimer addressed to the trustee, or by setting up, with notice of
the trust, a claim inconsistent therewith. Who may be
trustee
10. Every person capable of holding property may be a trustee; but,
where the trust involves the exercise of discretion, he cannot
execute it unless he is competent to contract. No one bound to
accept trust
No one is bound to accept a trust.
Acceptance of
trust
A trust is accepted by any words or acts of the trustee indicating
with reasonable certainty such acceptance. Disclaimer of
trust

Instead of accepting a trust, the intended trustee may, within a
reasonable period, disclaim it, and such disclaimer shall prevent the
trust -property from vesting in him.

A disclaimer by one of two or more co -trustees vests the trust –
property in the other or others, and makes him or them sole trustee
or trustees from the date of the creation of the trust.

Illustrations

(a) A bequeaths certain property to B and C, his executors, as
trustees for D. B and C prove A’s will. This is in itself an acceptance
of the trust, and B and C hold the property in trust for D.

(b) A transfers certain property to B in trust to sell it and to pay out

of the proceeds A’s debts. B accepts the trust and sells the
property. So far as regards B, a trust of the proceeds is created for
A’s creditors.

(c) A bequeaths a lakh of Taka to B upon certain trusts and appoints
him his executor. B severs the lakh from the general assets and
appropriates it to the specific purpose. This is an acceptance of the
trust.

CHAPTER III

OF THE DUTIES AND LIABILITIES OF TRUSTEES
Trustee to
execute trust

11. The trustee is bound to fulfil the purpose of the trust, and to
obey the directions of the author of the trust given at the time of its
creation, except as modified by the consent of all the beneficiaries
being competent to contract.

Where the benef iciary is incompetent to contract, his consent may,
for the purposes of this section, be given by a principal Civil Court
of original jurisdiction.

Nothing in this section shall be deemed to require a trustee to obey
any direction when to do so would be impracticable, illegal or
manifestly injurious to the beneficiaries.

Explanation – Unless a contrary intention be expressed, the
purpose of a trust for the payment of debts shall be deemed to be
(a) to pay only the debts of the author of the trust existi ng and
recoverable at the date of the instrument of trust, or, when such
instrument is a will, at the date of his death, and (b) in the case of
debts not bearing interest, to make such payment without interest.

Illustrations

(a) A, a trustee, is simply authorised to sell certain land by public
auction. He cannot sell the land by private contract.

(b) A, a trustee of certain land for X, Y and Z, is authorised to sell
the land to B for a specified sum. X, Y and Z, being competent to
contract, consent that A may sell the land to C for a less sum. A
may sell the land accordingly.

(c) A, a trustee for B and her children, is directed by the author of
the trust to lend, on B’s request, trust -property to B’s husband, C,
on the securi ty of his bond. C becomes insolvent and B requests A
to make the loan. A may refuse to make it. Trustee to
inform himself
of state of trust –
property

12. A trustee is bound to acquaint himself, as soon as possible, with
the nature and circumstances of the trust -property; to obtain,
where necessary, a transfer of the trust -property to himself; and
(subject to the provisions of the instrument of trust) to get in trust –
moneys invested on insufficient or hazardous security.

Illustrations

(a) The trust -property is a debt outstanding on personal security.
The instrument of trust gives the trustee no discretionary power to
leave the debt so outstanding. The trustee’s duty is to recover the
debt without un -necessary delay.

(b) The trust -propert y is money in the hands of one of two co –
trustees. No discretionary power is given by the instrument of trust.
The other co -trustee must not allow the former to retain the money
for a longer period than the circumstances of the case required. Trustee to
protect title to
trust -property

13. A trustee is bound to maintain and defend all such suits, and
(subject to the provisions of the instrument of trust) to take such
other steps as, regard being had to the nature and amount or value
of the trust -property, may be reasonably requisite for the
preservation of the trust -property and the assertion or protection of
the title thereto.

Illustration

The trust -property is immoveable property which has been given to
the author of the trust by an unregistered instrument. Subject to
the provisions o f the 3[ Registration Act, 1908], the trustee’s duty is
to cause the instrument to be registered. Trustee not to
set up title
adverse to
beneficiary
14. The trustee must not for himself or another set up or aid any
title to the trust -property adverse to the interest of the beneficiary.
Care required
from trustee

15. A trustee is bound to deal with the trust -property as carefully as
a man of ordinary prudence would deal with such property if it were
his own; and, in the absence of a contract to the contrary, a trustee
so dealing is not responsible for the loss, destruction or
deterioration of the trust -property.

Illustrations

(a) A, living in Chittagong, is a trustee for B, living in 4[ Dhaka]. A
remits trust -funds to B by bills drawn by a person of undoubted
credit in favour of the trustee as such, and payable at 5[ Dhaka].
The bills are dis -honoured. A i s not bound to make good the loss.

(b) A, a trustee of leasehold property, directs the tenant to pay the
rents on account of the trust to a banker, B, then in credit. The
rents are accordingly paid to B, and A leaves the money with B only
till wanted. Bef ore the money is drawn out, B becomes insolvent. A,
having had no reason to believe that B was in insolvent
circumstances, is not bound to make good the loss.

(c) A, a trustee of two debts for B, releases one and compounds the
other, in good faith, and re asonably believing that it is for B’s
interest to do so. A is not bound to make good any loss caused
thereby to B.

(d) A, a trustee directed to sell the trust -property by auction, sells
the same, but does not advertise the sale and otherwise fails in
reasonable diligence in inviting competition. A is bound to make
good the loss caused thereby to the beneficiary.

(e) A, a trustee for B, in execution of his trust, sells the trust –
property, but from want of due diligence on his part fails to receive
part of the purchase -money. A is bound to make good the loss
thereby caused to B.

(f) A, a trustee for B of a policy of insurance, has funds in hand for
payment of the premiums. A neglects to pay the premiums, and the
policy is consequently forfeited. A is bound to make good the loss to
B.

(g) A bequeaths certain moneys to B and C as trustees, and
authorizes them to continue trust -moneys upon the personal
security of a certain firm in which A had himself invested them. A
dies, and a change takes place in the firm. B and C must not permit
the moneys to remain upon the personal security of the new firm.

(h) A, a trustee for B, allows the trust to be executed solely by this
co -trustee, C. C misapplies the trust -property. A is personally
answerable for the loss resulting to B. Conversion of
perishable
16. Where the trust is created for the benefit of several persons in

property succession, and the trust -property is of a wasting nature or a future
or reversionary interest, the trustee is bound, unless an intention to
the contrary may be inferred from the instrume nt of trust, to
convert the property into property of a permanent and immediately
profitable character.

Illustrations

(a) A bequeaths to B all his property in trust for C during his life,
and on his death for D, and on D’s death for E. A’s property consists
of three leasehold houses, and there is nothing in A’s will to show
that he intended the houses to be enjoyed in specie. B should sell
the houses, and invest the proceeds in accordance with section 20.

(b) A bequeaths to B his three leasehold ho uses in Chittagong and
all the furniture therein in trust for C during his life, and on his
death for D, and on D’s death for E. Here an intention that the
houses and furniture should be enjoyed in specie appears clearly,
and B should not sell them. Trustee to be
impartial

17. Where there are more beneficiaries than one, the trustee is
bound to be impartial, and must not execute the trust for the
advantage of one at the expense of another.

Where the trustee has a discretionary power, nothing in this section
shall be deemed to authorise the Court to control the exercise
reasonably and in good faith of such discretion.

Illustration

A, a trustee for B, C and D, is empowered to choose betw een
several specified modes of investing the trust -property. A in good
faith chooses one of the these modes. The Court will not interfere,
although the result of the choice may be to vary the relative rights
of B, C and D. Trustee to
prevent waste

18. Where the trust is created for the benefit of several persons in
succession and one of them is in possession of the trust -property, if
he commits, or threatens to commit, any act which is destructive or
permanently injurious thereto, the trustee is bou nd to take
measures to prevent such act. Accounts and
information
19. A trustee is bound (a) to keep clear and accurate accounts of
the trust -property, and (b), at all reasonable times, at the request
of the beneficiary, to furnish him with full and accurate information

as to the amount and state of the trust -property. Investment of
trust -money

20. Where the trust -property consists of money and cannot be
applied immediately or at an early date to the purposes of the trust,
the trustee is bound (subject to any direction contained in the
instrument of trust) to invest the money on the following sec urities,
and on no others: –

(a) in promissory notes, debentures, stock or other securities 6[ of
the Government]:

Provided that securities, both the principal wh ereof and the interest
whereon shall have been fully and un -conditionally guaranteed by 7[ the] Government, shall be deemed, for the purposes of this
clause, to be s ecurities of 8[ the] Government;
9[ * * *] 10[ (c) in stock or debentures of, or shares in, Companies the
interest whereon shall have been guaranteed by the Government:

(d) in debenture or other securities for money issued under the
authority of any Bangladesh Act, or on behalf of any municipal body
or port trust or city improvement trust: ]

(e) on a first mortgage of immoveable property situate in 11[ Bangladesh]: Provided that the property is not a leasehold for a
term of years and that the value of the property exceeds by one –
third, or, if consisting of buildings, exceeds by one -half, the
mortgage -money; or

(f) on any other security expressly authorised by the instrument of
trust, or by any rule which the 12[ Supreme Court] may from time to
time prescribe in this behalf:

Prov ided that, where there is a person competent to contract and
entitled in possession to receive the income of the trust -property for
his life, or for any greater estate, no investment on any security
mentioned or referred to in clauses (d), (e), and (f) sha ll be made
without his consent in writing. Power to
purchase
redeemable
stock at a
premium

13[ 20A.(1) A trustee may invest in any of the securities mentioned
or referred to in section 20, notwithstanding that the same may be
redeemable and that the price exceeds the redemption value:

Provided that a trustee may not purchase at a price exceeding its
redemption value any security mentioned or referred to in clauses
(c) and (d) of section 20 which is liable to be redeemed within
fifteen years of the date of purchase at par or at some other fixed
rate, or purchase any such security as is mentioned or referred to in
the said clauses which is liable to be redeemed at par or at some
other fixed rate at a price exceeding fifteen per centum above par

or such other fixed rate.

(2) A trustee may retain until redemption any redeemable stock,
fund or securi ty which may have been purchased in accordance with
this section.] Investment of
trust -money in
company
securities

14[ 20B. (1) Where the trust property comprises money and it
cannot be applied immediately to the purposes of the trust, the
trustee may, subject to any prohibition or restriction imposed in the
instrument of trust, invest an amount not exceeding 25% of such
money, hereinafter referred to in this section as the maximum limit
of investment, in any security listed with a stock exchange of
Bangladesh.

(2) In determining the exact amount of money that may be
invested under sub -section (1) at any given time, the money
already invested, if any, under this section and also under 20(f)
shall be deducted from the maximum limit of investment at that
time.

(3) Nothing in this section shall be construed to be a bar to
authorise the investment of trust -money by the author of the trust
beyond the maximum limit of investment.] Deposit in
Government
Savings Bank
21. Nothing in section 20 shall apply to 15[ * * *] in case the trust –
money does not exceed three thousand taka a deposit thereof in a
Government Savings Bank. Sale by trustee
directed to sell
within specified
time

22. Where a trustee directed to sell within a specified time extends
such time, the burden of proving, as between himself and the
beneficiary, that the latter is not prejudiced by the extension lies
upon the trustee, unless the extension has been authorised by a
principal Civil Court of original jurisdiction.

Illustration

A bequeaths property to B, directing him with all convenient speed
and within five years to sell it, and apply the proc eeds for the
benefit of C. In the exercise of reasonable discretion, B postpones
the sale for six years. The sale is not thereby rendered invalid, but
C, alleging that he has been injured by the postponement, institutes
a suit against B to obtain compensat ion. In such suit the burden of
proving that C has not been injured lies on B. Liability for
breach of trust

23. Where the trustee commits a breach of trust, he is liable to
make good the loss which the trust -property or the beneficiary has
thereby sustained, unless the beneficiary has by fraud induced the
trustee to commit the breach, or the beneficiary, being c ompetent
to contract, has himself, without coercion or undue influence having
been brought to bear on him, concurred in the breach, or

subsequently acquiesced therein, with full knowledge of the facts of
the case and of his right as against the trustee.

A trustee committing a breach of trust is not liable to pay interest
except in the following cases: –

(a) where he has actually received interest:

(b) where the breach consists in unreasonable delay in paying trust –
money to the beneficiary:

(c) wher e the trustee ought to have received interest, but has not
done so:

(d) where he may be fairly presumed to have received interest.

He is liable, in case (a), to account for the interest actually received,
and, in cases (b), (c) and (d), to account fo r simple interest at the
rate of six per cent. per annum, unless Court otherwise directs.

(e) where the breach consists in failure to invest trust -money and to
accumulate the interest or dividends thereon, he is liable to account
for compound interest ( with half -yearly rests) at the same rate.

(f) where the breach consists in the employment of trust -property
or the proceeds thereof in trade or business, he is liable to account,
at the option of the beneficiary, either for compound interest (with
half -yearly rests) at the same rate, or for the net profits made by
such employment.

Illustrations

(a) A trustee improperly leaves trust -property outstanding, and it is
consequently lost: he is liable to make good the property lost, but
he is not liable to pay interest thereon.

(b) A bequeaths a house to B in trust to sell it and pay the proceeds
to C. B neglects to sell the house for a great length of time,
whereby the house is deteriorated and its market price falls. B is
answerable to C for the loss.

(c) A trustee is guilty of unreasonable delay in investing trust –
money in accordance with section 20 , or in paying it to the
beneficiary. The trustee is liable to pay interest thereon for the
period of the delay.

(d) The duty of the trustee is to invest trust -money in any of the
securities mentioned in section 20, clause (a), (b), (c) or (d).
Instead of so doing he retains the money in his hands. He is liable,
at the option of the beneficiary, to be charged either with the
amount of the principal money and interest, or with the amount of
such securities as he might have purchased with the trust -money
whe n the investment should have been made, and the intermediate
dividends and interest thereon.

(e) The instrument of trust directs the trustee to invest trust -money
either in any such securities or on mortgage of immoveable
property. The trustee does neit her. He is liable for the principal
money and interest.

(f) The instrument of trust directs the trustee to invest trust -money
in any of such securities and to accumulate the dividends thereon.
the trustee disregards the direction. He is liable, at the o ption of the
beneficiary, to be charged either with the amount of the principal
money and compound interest, or with the amount of such
securities as he might have purchased with the trust -money when
the investment should have been made, together with the amount
of the accumulation which would have arisen from a proper
investment of the intermediate dividends.

(g) Trust -property is invested in one of the securities mentioned in
section 20, clause (a), (b), (c) or (d). The trustee sells such security
for some purpose not authorised by the terms of the instrument of
trust. He is liable, at the option of the beneficiary, either to replace
the security with the intermediate dividends and interest thereon, or
to account for the proceeds of the sale with intere st thereon.

(h) The trust -property consists of land. The trustee sells the land to
a purchaser for a consideration without notice of the trust. The
trustee is liable, at the option of the beneficiary, to purchase other
land of equal value to be settled upon the like trust, or to be
charged with the proceeds of the sale with interest.

No set -off
allowed to
trustee
24. A trustee who is liable for a loss occasioned by a breach of trust
in respect of one portion of the trust -property cannot set -off against
his liability a gain which has accrued to another portion of the trust –
property through another and distinct breac h of trust. Non -liability for
predecessor’s
default
25. Where a trustee succeeds another, he is not, as such, liable for
the acts or defaults of his predecessor.
Non -liability for
co -trustee’s
default

26. Subject to the provisions of sections 13 and 15, one trustee is
not, as such, liable for a breach of trust committed by his co –
trustee:

Provided that, in the absence of an express declaration to the
contrary in the instrument of trust, a trustee is so liable, –

(a) where he has delivered trust -property to his co -trustee without
seeing to its proper application:

(b) where he allows his co -trustee to receive trust -property and fails
to make due enqu iry as to the co -trustee’s dealing therewith or
allows him to retain it longer than the circumstances of the case
reasonably require:

(c) where he becomes aware of a breach of trust committed or
intended by his co -trustee, and either actively conceals i t or does
not within a reasonable time take proper steps to protect the
beneficiary’s interest. Joining in
receipt for
conformity

A co -trustee who joins in signing a receipt for trust -property and
proves that he has not received the same is not answerable, by
reason of such signature only, for loss or misapplication of the
property by his co -trustee.

Illustration

A bequeaths ce rtain property to B and C, and directs them to sell it
and invest the proceeds for the benefit of D. B and C accordingly
sell the property, and the purchase -money is received by B and
retained in his hands. C pays no attention to the matter for two
years, and then calls on B to make the investment. B is unable to
do so, becomes insolvent, and the purchase -money is lost. C may
be compelled to make good the amount.

Several liability
of co -trustees

27. Where co -trustees jointly commit a breach of trust, or where
one of them by his neglect enables the other to commit a breach of
trust, each is liable to the beneficiary for the whole of the loss
occasioned by such breach. Contribution as
between co –
trustees

But as between the trustees themselves, if one be less guilty than
another and has had to refund the loss, the former may compel the
latter, or his legal representative to the extent of the assets he has
received, to make good such loss; and, if all be equ ally guilty, any
one or more of the trustees who has had to refund the loss may
compel the others to contribute.

Nothing in this section shall be deemed to authorise a trustee who
has been guilty of fraud to institute a suit to compel contribution. Non -liability of
trustee paying
without notice
of transfer by
beneficiary

28. When any beneficiary’s interest becomes vested in another
person, and the trustee, not having notice of the vesting, pays or
delivers trust -property to the person who would have been entitled
thereto in the absence of such vesting, the trustee is not l iable for
the property so paid or delivered. Liability of
trustee where
beneficiary’s
interest is
forfeited to the
Government

29. When the beneficiary’s interest is forfeited or awarded by legal
adjudication to the Government, the trustee is bound to hold the
trust -property to the extent of such interest for the benefit of such
person in such manner as the Government may direct i n this behalf.
Indemnity of
trustees

30. Subject to the provisions of the instrument of trust and of
sections 23 and 26, trustees shall be respectively chargeable only
for such moneys, stocks, funds and securities as they respectively
actually receive and shall not be answerable the one for the other of
them, nor for any banker, broker or other person in whose hands
any trust -property may be placed, nor for the insufficiency or
deficiency of any stocks, funds or securities, nor otherwise for
involuntary losses.

CHAPTER IV

OF THE RIGHTS AND POWERS OF TRUSTEES
Right to title –
deed
31. A trustee is entitled to have in his possession the instrument of
trust and all the documents of title (if any) relating solely to the
trust -property. Right to
reimbursement
of expenses

32. Every trustee may reimburse himself, or pay or discharge out of
the trust -property, all expenses properly incurred in or about the
execution of the trust, or the realisation, preservation or benefit of
the trust -pro perty, or the protection or support of the beneficiary.

If he pays such expenses out of his own pocket, he has a first
charge upon the trust -property for such expenses and interest

thereon; but such charge (unless the expenses have been incurred
with th e sanction of a principal Civil Court of original jurisdiction)
shall be enforced only by prohibiting any disposition of the trust –
property without previous payment of such expenses and interest.

If the trust -property fail, the trustee is entitled to re cover from the
beneficiary personally on whose behalf he acted, and at whose
request, expressed or implied, he made the payment, the amount
of such expenses. Right to be
recouped for
erroneous
overpayment
Where a trustee has by mistake made an over -payment to the
beneficiary, he may reimburse the trust -property out of the
beneficiary’s interest. If such interest fail, the trustee is entitled to
recover from the beneficiary personally the amount of such ov er-
payment. Right to
indemnity from
gainer by
breach of trust

33. A person other than a trustee who has gained an advantage
from a breach of trust must indemnify the trustee to the extent of
the amount actually received by such person under the breach; and
where he is a beneficiary the trustee has a charge on his int erest for
such amount.

Nothing in this section shall be deemed to entitle a trustee to be
indemnified who has, in committing the breach of trust, been guilty
of fraud. Right to apply to
Court for
opinion in
management of
trust -property

34. Any trustee may, without instituting a suit, apply by petition to
a principal Civil Court of original jurisdiction for its opinion, advice or
direction on any present questions respe cting the management or
administration of the trust -property other than questions of detail,
difficulty or importance, not proper in the opinion of the Court for
summary disposal.

A copy of such petition shall be served upon, and the hearing
thereof may b e attended by, such of the persons interested in the
application as the Court thinks fit.

The trustee stating in good faith the facts in such petition and acting
upon the opinion, advice or direction given by the Court shall be
deemed, so far as regards his own responsibility, to have
discharged his duty as such trustee in the subject -matter of the
application.

The costs of every application under this section shall be in the
discretion of the Court to which it is made. Right to
settlement of
35. When the duties of a trustee, as such, are completed, he is
entitled to have the accounts of his administration of the trust –

accounts property examined and settled; and, where nothing is due to the
beneficiary under the trust, to an acknowledgement in writing t o
that effect. General
authority of
trustee

36. In addition to the powers expressly conferred by this Act and by
the instrument of trust, and subject to the restrictions, if any,
contained in such instrument, and to the provisions of section 17, a
trustee may do all acts which are reasonable and pro per for the
realisation, protection or benefit of the trust -property, and for the
protection or support of a beneficiary who is not competent to
contract.

Except with the permission of a principal Civil Court of original
jurisdiction, no trustee shall l ease trust -property for a term
exceeding twenty -one years from the date of executing the lease,
nor without reserving the best yearly rent that can be reasonably
obtained. Power to sell in
lots, and either
by public
auction or
private contract

37. Where the trustee is empowered to sell any trust -property, he
may sell the same subject to prior charges or not, and either
together or in lots, by public auction or private cont ract, and either
at one time or at several times, unless the instrument of trust
otherwise directs. Power to sell
under special
conditions
Power to buy in
and re -sell
38. The trustee making any such sale may insert such reasonable
stipulations either as to title or evidence of title, or otherwise, in
any conditions of sale or contract for sale, as he thinks fit; and may
also buy in the property or any part thereof at an y sale by auction,
and rescind or vary any contract for sale, and re -sell the property so
bought in, or as to which the contract is so rescinded, without being
responsible to the beneficiary for any loss occasioned thereby. Time allowed for
selling trust –
property

Where a trustee is directed to sell trust -property or to invest trust –
money in the purchase of property, he may exercise a reasonable
discretion as to the time of effecting the sale or purchase.

Illustrations

(a) A bequeaths property to B, directing him to sell it with all
convenient speed and pay the proceeds to C. This does not render
an immediate sale imperative.

(b) A bequeaths property to B, directing him to sell it at such time
and in such manner as he shall think fit and invest the proceeds for
the benefit of C. This does not authorise B, as between him and C,
to postpone the sale to an indefinite period.

Power to convey

39. For the purpose of completing any such sale, the trustee shall
have power to convey or otherwise dispose of the property sold in
such manner as may be necessary. Power to vary
investments

40. A trustee may, at his discretion, call in any trust -property
invested in any security and invest the same on any of the
securities mentioned or referred to in section 20, and from time to
time vary any such investments for others of the same nature:

Provided that, where there is a person competent to contract and
entitled at the time to receive the income of the trust -property for
his life, or for any greater estate, no such change of investment
shall be made without his consent in writing. Power to apply
property of
minors, etc, for
their
maintenance,
etc

41. Where any property is held by a trustee in trust for a minor,
such trustee may, at his discretion, pay to the guardians (if any) of
such minor, or otherwise apply for or towards his maintenance or
education or advancement in life, or the reasonable exp enses of his
religious worship, marriage or funeral, the whole or any part of the
income to which he may be entitled in respect of such property; and
such trustee shall accumulate all the residue of such income by way
of compound interest by investing the same and the resulting
income thereof from time to time in any of the securities mentioned
or referred to in section 20, for the benefit of the person who shall
ultimately become entitled to the property from which such
accumulations have arisen:

Provid ed that such trustee may, at any time, if he thinks fit, apply
the whole or any part of such accumulations as if the same were
part of the income arising in the then current year.

Where the income of the trust -property is insufficient for the
minor’s ma intenance or education or advancement in life, or the
reasonable expenses of his religious worship, marriage or funeral,
the trustee may, with the permission of a principal Civil Court of
original jurisdiction, but not otherwise, apply the whole or any par t
of such property for or towards such maintenance, education,
advancement or expenses.

Nothing in this section shall be deemed to affect the provisions of
any local law for the time being in force relating to the persons and
property of minors. Power to give
receipts

42. Any trustees or trustee may give a receipt in writing for any
money, securities or other moveable property payable, transferable
or deliverable to them or him by reason, or in the exercise, of any
trust or power; and, in the absence of fraud, such rece ipt shall
discharge the person paying, transferring or delivering the same

therefrom, and from seeing to the application thereof, or being
accountable for any loss or misapplication thereof. Power to
compound, etc

43. Two or more trustee acting together may, if and as they think
fit, –

(a) accept any composition or any security for any debt or for any
property claimed;

(b) allow any time for payment of any debt;

(c) compromise, compound, abandon, submit to arbitration or
otherwise settle any debt, account, claim or thing whatever relating
to the trust; and,

(d) for any of those purposes, enter into, give, execute and do such
agreements, instruments of composition o r arrangement, releases
and other things as to them seem expedient, without being
responsible for any loss occasioned by any act or thing so done by
them in good faith.

The powers conferred by this section on two or more trustees acting
together may be exercised by a sole acting trustee when by the
instrument of trust, if any, a sole trustee is authorised to execute
the trusts and powers thereof.

This section applies only if and as far as a contrary intention is not
expressed in the instrument of trus t, if any, and shall have effect
subject to the terms of that instrument and to the provisions therein
contained.

This section applies only to trusts created after this Act comes into
force. Power to
several trustees
of whom one
disclaims or dies
44. When an authority to deal with the trust -property is given to
several trustees and one of them disclaims or dies, the authority
may be exercised by the continuing trustees, unless from the terms
of the instrument of trust it is apparent that the authority is to be
exercised by a number in excess of the number of the remaining
trustees. Suspension of 45. Where a decree has been made in a suit for the execution of a

trustee’s
powers by
decree
trust, the trustee must not exercise any of his powers except in
conformity with such decree, or with the sanction of the Court by
which the decree has been made, or, where an appeal against the
decree is pending, of the Appellate Court.

CHAPTER V

OF THE DISABILITIES OF TRUSTEES
Trustee cannot
renounce after
acceptance
46. A trustee who has accepted the trust cannot afterwards
renounce it except (a) with the permission of a principal Civil Court
of original jurisdiction, or (b) if the beneficiary is competent to
contract, with his consent, or (c) by virtue of a special p ower in the
instrument of trust. Trustee cannot
delegate

47. A trustee cannot delegate his office or any of his duties either to
a co -trustee or to a stranger, unless (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) th e beneficiary, being
competent to contract, consents to the delegation.

Explanation – The appointment of an attorney or proxy to do an
act merely ministerial and involving no independent discretion is not
a delegation within the meaning of this section .

Illustrations

(a) A bequeaths certain property to B and C on certain trusts to be
executed by them or the survivor of them or the assigns of such
survivor. B dies. C may bequeath the trust -property to D and E
upon the trusts of A’s will.

(b) A is a trustee of certain property with power to sell the same. A
may employ an auctioneer to effect the sale.

(c) A bequeaths to B fifty houses let at monthly rents in trust to
collect the rents and pay them to C. B may employ a proper person
to coll ect these rents. Co -trustees
cannot act
singly
48. When there are more trustees than one, all must join in the
execution of the trust, except where the instrument of trust
otherwise provides. Control of
discretionary
49. Where a discretionary power conferred on a trustee is not
exercised reasonably and in good faith, such power may be

power controlled by a principal Civil Court of original jurisdiction. Trustee may not
charge for
services

50. In the absence of express directions to the contrary contained in
the instrument of trust or of a contract to the contrary entered into
with the beneficiary or the Court at the time of accepting the trust,
a trustee has no right to remuneration for his trouble, skill and loss
of time in executing the trust.

Nothing in this section applies to any Official Trustee, Administrator –
General, Public Curator or person holding a certificate of
administration. Trustee may not
use trust –
property for his
own profit
51. No trustee may not use or deal with the trust -property for his
own profit or for any other purpose unconnected with the trust.
Trustee for sale
or his agent
may not buy
52. No trustee whose duty it is to sell trust -property, and no agent
employed by such trustee for the purpose of the sale, may, directly
or indirectly, buy the same or any interest therein, on his own
account or as agent for a third person. Trustee may not
buy
beneficiary’s
interest without
permission
53. No trustee, and no person who has recently ceased to be a
trustee, may, without the permission of a principal Civil Court of
original jurisdiction, buy or become mortgagee or lessee of the
trust -property or any part thereof; and such permission shall n ot be
given unless the proposed purchase, mortgage or lease is
manifestly for the advantage of the beneficiary. Trustee for
purchase

And no trustee whose duty it is to buy or to obtain a mortgage or
lease or particular property for the beneficiary may buy it, or any
part thereof, or obtain a mortgage or lease of it, or any part
thereof, for himself. Co -trustees may
not lend to one
of themselves
54. A trustee or co -trustee whose duty it is to invest trust -money on
mortgage or personal security must not invest it on mortgage by, or
on the personal security of, himself or one of his co -trustees.

CHAPTER VI

OF THE RIGHTS AND LIABILITIES OF THE BENEFICIARY
Rights to rents
and profits
55. The beneficiary has, subject to the provisions of the instrument
of trust, a right to the rents and profits of the trust -property. Right to specific
execution
56. The beneficiary is entitled to have the intention of the author of
the trust specifically executed to the extent of the beneficiary’s
interest; Right to transfer
of possession

and, where there is only one beneficiary and he is competent to
contract, or where there are several beneficiaries and they are
competent to contract and all of one mind, he or they may require
the trustee to transfe r the trust -property to him or them, or to such

person as he or they may direct.

When property has been transferred or bequeathed for the benefit
of a married woman, so that she shall not have power to deprive
herself of her beneficial interest, nothing in the second clause of this
section applies to such property during her marriage.

Illustrations

(a) Certain Government securities are given to trustees upon trust
to accumulate the interest until A attains the age of 24, and then to
transfer the gross amount to him. A on attaining majority may, as
the person exclusively interested in the trust -property, require the
trustees to transfer it immediately to him.

(b) A bequeaths Tk. 10,000 to trustees upon trust to purchase an
annuity for B, who has attained his majority and is otherwise
competent to contract. B may claim the Tk. 10,000.

(c) A transfers certain property to B and directs him to sell or invest
it for the benefit of C, who is competent to contract. C may elect to
take the property in its original character. Right to inspect
and take copies
of instrument of
trust accounts,
etc
57. The beneficiary has a right, as against the trustee and all
persons claiming under him with notice of the trust, to inspect and
take copies of the instrument of trust, the document s of title
relating solely to the trust -property, the accounts of the trust –
property and the vouchers (if any) by which they are supported,
and the cases submitted and opinions taken by the trustee for his
guidance in the discharge of his duty. Right to transfer
beneficial
interest

58. The beneficiary, if competent to contract, may transfer his
interest, but subject to the law for the time being in force as to the
circumstances and extent in and to which he may dispose of such
interest:

Provided that when property is transferred or bequeathed for the
benefit of a married woman, so that she shall not have power to
deprive herself of her beneficial interest, nothing in this section shall
authorise her to transfer such interest during her marriage. Right to sue for
execution of
trust
59. Where no trustees are appointed or all the trustees die,
disclaim, or are discharged, or where for any other reason the
execution of a trust by the trustee is or becomes impracticable, the
beneficiary may institute a suit for the execution of the trust , and

the trust shall, so far as may be possible, be executed by the Court
until the appointment of a trustee or new trustee. Right to proper
trustees

60. The beneficiary has a right (subject to the provisions of the
instrument of trust) that the trust -property shall be properly
protected and held and administered by proper persons and by a
proper number of such persons.

Explanation I – The following are not proper persons within the
meaning of this section: –

A person domiciled abroad: an alien enemy: a person having an
interest inconsistent with that of the beneficiary: a person in
insolvent circumstances; and, unless the personal law of the
benefi ciary allows otherwise, a married woman and a minor.

Explanation II – When the administration of the trust involves the
receipt and custody of money, the number of trustees should be
two at least.

Illustrations

(a) A, one of several beneficiaries, proves that B, the trustee, has
improperly disposed of part of the trust -property, or that the
property is in danger from B’s being in insolvent circumstances, or
that he is incapacitated from acting as trustee. A may obtai n a
receiver of the trust -property.

(b) A bequeaths certain jewels to B in trust for C. B dies during A’s
life time; then A dies. C is entitled to have the property conveyed to
a trustee for him.

(c) A conveys certain property to four trustees in trust for B. Three
of the trustee die. B may institute a suit to have three new trustees
appointed in the place of the deceased trustees.

(d) A conveys certain property to three trustees in trust for B. All
the trustees disclaim. B may institute a suit to ha ve three trustees
appointed in place of the trustees so disclaiming.

(e) A, a trustee for B, refuses to act, or goes to reside permanently
out of Bangladesh or is declared an insolvent, or compounds with
his creditors, or suffers a co -trustee to commit a breach of trust. B
may institute a suit to have A removed and a new trustee appointed
in his room. Right to compel
to any act of
duty

61. The beneficiary has a right that his trustee shall be compelled to
perform any particular act of his duty as such, and restrained from
committing any contemplated or probable breach of trust.

Illustrations

(a) A contracts with B to pay him mont hly Tk. 100 for the benefit of
C. B writes and signs a letter declaring that he will hold in trust for
C the money so to be paid. A fails to pay the money in accordance
with his contract. C may compel B on a proper indemnity to allow C
to sue on the contra ct in B’s name.

(b) A is trustee of certain land, with a power to sell the same and
pay the proceeds to B and C equally. A is about to make an
improvident sale of the land. B may sue on behalf of himself and C
for an injunction to restrain A from making the sale. Wrongful
purchase by
trustee

62. Where a trustee has wrongfully bought trust -property, the
beneficiary has a right to have the property declared subject to the
trust or retransferred by the trustee, if it remains in his hands
unsold, or, if it has been bought from him by any person with n otice
or the trust, by such person. But in such case the beneficiary must
repay the purchase -money paid by the trustee, with interest, and
such other expenses (if any) as he has properly incurred in the
preservation of the property; and the trustee or purc haser must (a)
account for the net profits of the property, (b) be charged with an
occupation -rent, if he has been in actual possession of the property,
and (c) allow the

beneficiary to deduct a proportionate part of the purchase -money if
the property ha s been deteriorated by the acts or omissions of the
trustee or purchaser.

Nothing in this section –

(a) impairs the rights of lessees and others who, before the
institution of a suit to have the property declared subject to the
trust or retransferred, have contracted in good faith with the trustee

or purchaser; or

(b) entitles the beneficiary to have the property declared subject to
the trust or retransferred where he, being competent to contract,
has himself, without coercion or undue influence ha ving been
brought to bear on him, ratified the sale to the trustee with full
knowledge of the facts of the case and of his rights as against the
trustee. Following trust –
property – into
the hands of
third persons;
into that into
which it has
been converted

63. Where trust -property comes into the hands of a third person
inconsistently with the trust, the beneficiary may require him to
admit formally, or may institute a suit for a de claration, that the
property is comprised in the trust.

Where the trustee has disposed of trust -property and the money or
other property which he has received therefor can be traced in his
hands, or the hands of his legal representative or legatee, the
beneficiary has, in respect thereof, rights as merely as may be the
same as his rights in respect of the original trust -property.

Illustrations

(a) A, a trustee for B of Tk. 10,000, wrongfully invests Tk. 10,000 in
the purchase of certain land.. B is entitled to the land.

(b) A, a trustee, wrongfully purchases land in his own name, partly
with his own money, partly with money subject to a trust for B. B is
entitled to a charge on the land for the amount of the trust -money
so misemployed. Saving of rights
of certain
transferees

64. Nothing in section 63 entitles the beneficiary to any right in
respect of property in the hands of –

(a) a transferee in good faith for consideration without having notice
of the trust, either when the purchase -money was paid, or when the
conveyance was executed, or

(b) a transferee for consideration from such a transferee.

A judgment -creditor of the trustee attaching and purchasing trust –
property is not a transferee for consideration within the meaning of
this section.

Nothing in section 63 applies to money, currency notes and
negotiable instruments in the hands of a bona fide holder to whom
they have passed in circulation, or shall be deemed to effect the
Contract Act , 1872, section 108, or the liability of a person to whom
a debt or charge is transferred. Acquisition by
trustee of trust –
property
wrongfully
converted

65. Where a trustee wrongfully sells or otherwise transfers trust –
property and after wards himself becomes the owner of the
property, the property again becomes subject to the trust,
notwithstanding any want of notice on the part of intervening
transferees in good faith for consideration. Right in case of
blended
property
66. Where the trustee wrongfully mingles the trust -property with his
own, the beneficiary is entitled to a charge on the whole fund for
the amount due to him. Wrongful
employment by
partner -trustee
of trust –
property for
partnership
purposes

67. If a partner, being a trustee, wrongfully employs trust -property
in the business, or on the account of the partnership, no other
partner is liable therefor in his perso nal capacity to the
beneficiaries, unless he had notice of the breach of trust.

The partners having such notice are jointly and severally liable for
the breach of trust.

Illustrations

(a) A and B are partners. A dies, having bequeathed all his property
B in trust for Z, and appointed B his sole executor. B instead of
winding up the affairs of the partnership, retains all the assets in
the business. Z may compel him, as partner, to account f or so much
of the profits as are derived from A’s share of the capital. B is also
answerable to Z for the improper employment of A’s assets.

(b) A, a trader, bequeaths his property to B in trust for C, appoints
B his sole executor, and dies. B enters into partnership with X and Y
in the same trade, and employs A’s assets in the partnership –
business. B gives an indemnity to X and Y against the claims of C.
Here X and Y are jointly liable with B to C as having knowingly
become parties to the breach of trust committed by B. Liability of
beneficiary
joining in
68. Where one of several beneficiaries –

breach of trust
(a) joins in committing breach of trust, or

(b) knowingly obtains any advantage therefrom, without the
consent of the other beneficiaries, or

(c) becomes aware of a breach of trust committed or intended to be
committed, and either actually conceals it, or does not within a
reasonable time take proper steps to protect the interests of the
other beneficiaries, or

(d) has deceived the trustee and thereby induced him to commit a
breach of trust,

the other beneficiaries are entitled to have all his beneficial interest
impounded as against him and all who claim under him (otherwise
than as transferees for consideration without notice of the breach)
until the loss caused by the breach has been compensated.

When property has been transferred or bequeathed for the benefit
of a married woman, so that sh e shall not have power to deprive
herself of her beneficial interest, nothing in this section applies to
such property during her marriage. Rights and
liabilities of
beneficiary’s
transferee
69. Every person to whom a beneficiary transfers his interest has
the rights, and is subject to the liabilities, of the beneficiary in
respect of such interest at the date of the transfer.

CHAPTER VII

OF VACATING THE OFFICE OF TRUSTEE
Office how
vacated
70. The office of a trustee is vacated by his death or by his
discharge from his office. Discharge of
trustees

71. The trustee may be discharged from his office only as follows: –

(a) by the extinction of the trust;

(b) by the completion of his duties under the trust;

(c) by such means as may be prescribed by the instrument of trust;

(d) by appointment u nder this Act of a new trustee in his place;

(e) by consent of himself and the beneficiary, or, where there are
more beneficiaries than one, all the beneficiaries than one, all the
beneficiaries being competent to contract, or

(f) by the Court to whi ch a petition for his discharge is presented
under this Act. Petition to be
discharged from
trust

72. Notwithstanding the provisions of section 11, every trustee may
apply by petition to a principal Civil Court of original jurisdiction to
be discharged from his office; and, if the Court finds that there is
sufficient reason for such discharge, it may d ischarge him
accordingly, and direct his costs to be paid out of the trust –
property. But, where there is no such reason, the Court shall not
discharge him, unless a proper person can be found to take his
place. Appointment of
new trustees on
death, etc

73. Whenever any person appointed a trustee disclaims, or any
trustee, either original or substituted dies, or is for a continues
period of six months absent from Bangladesh, or leaves Bangladesh
for the pu rpose of residing abroad, or is declared an insolvent, or
desires to be discharged from the trust, or refuses or becomes, in
the opinion of a principal Civil Court of original jurisdiction, unfit or
personally incapable to act in the trust, or accepts an i nconsistent
trust, a new trustee may be appointed in his place by –

(a) the person nominated for that purpose by the instrument of
trust (if any), or.

(b) if there be no such person, or no such person 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 trustee for time being, or
legal representative of the last surviving and continuing trustee, or
(with the consent of the Court) the retiring trustees, if they all retire
sim ultaneously, or (with the like consent) the last retiring trustee.

Every such appointment shall be by writing under the hand of the
person making it.

On an appointment of a new trustee the number of trustees may be

increased.

The Official Trustee may, with his consent and by the order of the
Court, be appointed under this section, in any case in which only
one trustee is to be appointed and such trustee is to be the sole
trustee.

The provisions of this section relative to a trustee who is dead
include the case of a person nominated trustee in a will but dying
before the testator, and those relative to a continuing trustee
include a refusing or retiring trustee if willing to act in the execution
of the power. Appointment by
Court

74. Whenever any such vacancy or disqualification occurs and it is
found impracticable to appoint a 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. Rules for
selecting new
trustees

In appointing new trustees, the Court shall have regard (a) to the
wishes of the author of the trust as expressed in or to be inferred
from the instrument of trust; (b) to the wishes of the person, if any,
empowered to appoint new trustees; (c) to the ques tion whether
the appointment will promote or impede the execution of the trust;
and (d) where there are more beneficiaries than one, to the
interests of all such beneficiaries. Vesting of trust –
property in new
trustees

75. Whenever any new trustee is appointed under section 73 or
section 74, all the trust -property for the time being vested in the
surviving or continuing trustees or trustee, or in the legal
representative of any trustee, shall become vested in such new
trustee, either solely or jointly with the surviving or continuing
trustees or trustee, as the case may require. Powers of new
trustees

Every new trustee so appointed, and every trustee appointed by a
Court, either before or after the passing of this Act, shall have the
same powers, authorities and discretions, and shall in all respects
act, as if he had been originally nominated a trustee by the author
of the trust. Survival of trust

76. On the death or discharge of one of several co -trustees, the
trust survives and the trust -property passes to the others, unless
the instrument of trust expressly declares otherwise.

CHAPTER VIII

OF THE EXTINCTION OF TRUSTS

77. A trust is extinguis hed, –

(a) when its purpose is completely fulfilled; or

(b) when its purpose becomes unlawful; or

(c) when the fulfilment of its purpose becomes impossible by
destruction of the trust -property or otherwise; or

(d) when the trust, being revocabl e, is expressly, revoked.

78. A trust created by will may be revoked at the pleasure of the
testator.

A trust otherwise created can be revoked only –

(a) where all the beneficiaries are competent to contract – by their
consent;

(b) where the tru st has been declared by a non -testamentary
instrument or by word of mouth – in exercise of a power of
revocation expressly reserved to the author of the trust; or

(c) where the trust is for the payment of the debts of the author of
the trust, and hgas not been communicated to the creditors – at the
pleasure of the author of the trust.

Illustration

A conveys property to B in trust to sell the same and pay out of the
proceeds the claims of A’s creditors. A reserves no power of
revocation. If no communi cation has been made to the creditors, A
may revoke the trust. But if the creditors are parties to the
arrangement, the trust cannot be revoked without their consent.

79. No trust can be revoked by the author of the trust so as to

defeat or prejudice wh at the trustees may have duly done in
execution of the trust.

CHAPTER VIII

OF THE EXTINCTION OF TRUSTS
Trust how
extinguished

77. A trust is extinguished, –

(a) when its purpose is completely fulfilled; or

(b) when its purpose becomes unlawful; or

(c) when the fulfilment of its purpose becomes impossible by
destruction of the trust -property or otherwise; or

(d) when the trust, being revocable, is express ly, revoked. Revocation of
trust

78. A trust created by will may be revoked at the pleasure of the
testator.

A trust otherwise created can be revoked only –

(a) where all the beneficiaries are competent to contract – by their
consent;

(b) where the trust has been declared by a non -testamentary
instrument or by word of mouth – in exercise of a power of
revocation expressly reserved to the author of the trust; or

(c) where the trust is for the payment of the debts of the author of
the trust, and hgas not been communicated to the creditors – at the
pleasure of the author of the trust.

Illustration

A conveys property to B in trust to sell the same and pay out of the
proceeds the claims of A’s creditors. A reserves no power of

revocation. If no communication has been made to the creditors, A
may revoke the trust. But if the creditors are parties to the
arrangement, the trust cannot be revoked without their cons ent. Revocation not
to defeat what
trustees have
duly done
79. No trust can be revoked by the author of the trust so as to
defeat or prejudice what the trustees may have duly done in
execution of the trust.

CHAPTER IX

OF CERTAIN OBLIGATIONS IN THE NATURE OF TRUSTS
Where
obligation in
nature of trust
is created
80. An obligation in the nature of a trust is created in the following
cases.
Where it does
not appear that
transferor
intended to
dispose of
beneficial
interest

81. Where the owner of property transfers or bequeaths it and it
cannot be inferred consistently with the attendant circumstances
that he intended to dispose of the benef icial interest therein, the
transferee or legatee must hold such property for the benefit of the
owner or his legal representative.

Illustration

(a) A conveys land to B without consideration and declares no trust
of any part. It cannot, consistently with the circumstances under
which the transfer is made, be inferred that A intended to transfer
the beneficial interest in the land. B holds the land for the benefit of
A.

(b) A conveys to B two fields, Y and Z, and declares a trust of Y, but
says noth ing about Z. It cannot, consistently with the circumstances
under which the transfer is made, be inferred that A intended to
transfer the beneficial interest in Z. B holds Z for the benefit of A.

(c) A transfers certain stock belonging to him into the j oint names
of himself and B. It cannot, consistently with the circumstances
under which the transfer is made, be inferred that A intended to
transfer the beneficial interest in the stock during his life. A and B
hold the stock for the benefit of A during h is life.

(d) A makes a gift of certain land to his wife B. She takes the
beneficial interest in the land free from any trust in favour of A, for
it may be inferred from the circumstances that the gift was for B’s
benefit. Transfer to one 82. Where property is transferred to one person for a consideration

for
consideration
paid by another
paid or provided by another person, and it appears that such other
person did not intend to pay or provide such conside ration for the
benefit of the transferee, the transferee must hold the property for
the benefit of the person paying or provided the consideration.

16[ * * *] Trust incapable
of execution or
executed
without
exhausting
trust -property

83. Where a trust is incapable of being executed, or where the trust
is completely executed without exhausting the trust -property, the
trustee, in the absence of a direction to the contrary, must hold the
trust -property, or so much thereof as is unexhauste d, for the
benefit of the author of the trust or his legal representative.

Illustrations

(a) A conveys certain land to B –

“upon trust”, and no trust is declared; or

“upon trust to be thereafter declared,” and no such declaration is
ever made; or

upon trusts that are too vague to be executed; or

upon trusts that become incapable of taking effect; or

“in trusts for C,” and C renounces his interest under the trust.

In each of these cases B holds the land for the benefit of A.

(b) A transfers Tk. 10,000 in the four per cents. to B, in trust to pay
the interest annually accruing due to C for her life. A dies. Then C
dies, B holds the fund for the benefit of A’s legal representative.

(c) A conveys land to B upon trust to sell it and a pply one moiety of

the proceeds for certain charitable purposes, and the other for the
maintenance of the worship of an idol. B sells the land, but the
charitable purposes wholly fail, and the maintenance of the worship
does not exhaust the second moiety o f the proceeds. B holds the
first moiety and the part unapplied of the second moiety for the
benefit of A or his legal representative.

(d) A bequeaths Tk. 10,000 to B, to be laid out in buying land to be
conveyed for purposes which either wholly or part ially fail to take
effect. B holds for the benefit of A’s legal representative the
undisposed of interest in the money or land if purchased. Transfer for
illegal purpose

84. Where the owner of property transfers it to another for an illegal
purpose and such purpose is not carried into execution, or the
transferor is not as guilty as the transferee, or the effect of
permitting the transferee to retain the property might be to defeat
the provisions of any law, the transferee must hold the property for
the benefit of the transferor. Bequest for
illegal purpose

85. Where a testator bequeaths certain property upon trust and the
purpose of the trust appears on the face of the will to be unlawful,
or during the testator’s lifetime the legatee agrees with him to apply
the property for an unlawful purpose, the legatee must hold the
property for the benefit of the testator’s legal representative. Bequest of
which
revocation is
prevented by
coercion

Where property is bequeathed and the revocation of the bequest is
prevented by coercion, the legatee must hold the property for the
benefit of the testator’s legal representative.
Transfer
pursuant to
rescindable
contract
86. Where property is transferred in pursuance of a contract which
is liable to rescission or induced by fraud or mistake, the transferee
must, on receiving notice to that effect, hold the property for the
benefit of the transferor, subject to repayment by the latter of the
consideration actually paid. Debtor
becoming
creditor’s
representative
87. Where a debtor becomes the executor or other legal
representative of his creditor, he must hold the debt for the benefit
of the persons interested therein.
Advantage
gained by
fiduciary

88. Where a trustee, executor, partner, agent, director of a
company, legal adviser, or other person bound in a fiduciary
character to protect the interests of another person, by availing
himself of his character, gains for himself any pecuniary advantage,
or where any person so bound enters into any dealings under
circumstances in which his own interests are, or may be, adverse to
those of such other person and thereby gains for himself a
pecuniary advantage, he must hold for the benefit of such other
pers on the advantage so gained.

Illustrations

(a) A, an executor, buys at an undervalue from B, a legatee, his
claim under the will. B is ignorant of the value of the bequest. A
must hold for the benefit of B the difference between the price and
value.

(b) A, a trustee, uses the trust -property for the purpose of his own
business. A holds for the benefit of his beneficiary the profits arising
from such user.

(c) A, a trustee, retires from his trust in consideration of his
successor paying him a sum of money. A holds such money for the
benefit of his beneficiary.

(d) A, a partner, buys land in his own name with funds belonging to
the partnership. A holds such land for the benefit of the partnership.

(e) A, a partner, employed on behalf of himse lf and his co -partners
in negotiating the terms of a lease clandestinely stipulates with the
lessor for payment to himself a lakh of Taka. A holds the lakh for
the benefit of the partnership.

(f) A and B are partners. A dies. B, instead of winding up th e affairs
of the partnership, retains all the assets in the business. B must
account to A’s legal representative for the profits from A’s share of
the capital.

(g) A, an agent employed to obtain a lease for B, obtains the lease
for himself. A holds the lease for the benefit of B.

(h) A, a guardian, buys up for himself incumbrances on his ward B’s
estate at an undervalue. A holds for the benefit of B the
incumbrances so bought, and can only charge him with what he has
actually paid. Advantage
gained by
exercise of
undue influence
89. Where, by the exercise of undue influence, any advantage is
gained in derogation of the interests of another, the person gaining
such advantage without consideration, or with notice that such

influence has been exercised, must hold the advantage for th e
benefit of the person whose interests have been so prejudiced. Advantage
gained by
qualified owner

90. Where a tenant for life, co -owner, mortgagee or other qualified
owner of any property, by availing himself of his position as such,
gains an advantage in derogation of the rights of the other persons
interested in the property, or where any such owner, as
representing all persons interested in such property, gains any
advantage, he must hold, for the benefit of all persons so
interested, the advantage so gained, but subject to repayment by
such persons of their due share of the expenses properly incurre d,
and to an indemnity by the same persons against liabilities properly
contracted, in gaining such advantage.

Illustrations

(a) A, the tenant for life of leasehold property, renews the lease in
this own name and for his own benefit. A holds the re newed lease
for the benefit of all those interested in the old lease.

(b) A village belongs to a Hindu family. A, one of its members, pays
nazrana to Government and thereby procures his name to be
entered as the inamdar of the village. A holds the villa ge for the
benefit of himself and the other members.

(c) A mortgages land to B, who enters into possession. B allows the
Government revenue to fall into arrear with a view to the land being
put up for sale and his becoming himself the purchaser of it. T he
land is accordingly sold to B. Subject to the repayment of the
amount due on the mortgage and of his expenses properly incurred
as mortgagee, B holds the land for the benefit of A. Property
acquired with
notice of
existing
contract

91. Where a person acquires property with notice that another
person has entered into an existing contract affecting that property,
of which specific performance could be enforced, the former must
hold t he property for the benefit of the latter to the extent
necessary to give effect to the contract. Purchase by
person
contracting to
buy property to
be held on trust

92. Where a person contracts to buy property to be held on trust for
certain beneficiaries and buys the property accordingly, he must
hold the property for their benefit to the extent necessary to give
effect to the contract.
Advantage
secretly gained
by one of
several
93. Where creditors compound the debts due to them, and one of
such creditors, by a secret arrangement with the debtor, gains an
undue advantage over his co -creditors, he must hold for the benefit

compounding
creditors of such creditors the advantage so gained.
Constructive
trusts in cases
not expressly
provided for

94. In any case not coming within the scope of any of the preceding
sections, where there is no trust, but the person having possession
of property has not the whole beneficial interest therein, he must
hold the property for the benefit of the persons havi ng such
interest, or the residue thereof (as the case may be), to the extent
necessary to satisfy their just demands.

Illustrations

(a) A, an executor, distributes the assets of his testator B to the
legatees without having paid the whole of B’s de bts. The legatees
hold for the benefit of B’s creditors, to the extent necessary to
satisfy their just demands, the assets so distributed.

(b) A by mistake assumes the character of a trustee for B, and
under colour of the trust receives certain money. B may compel him
to account for such moneys.

(c) A makes a gift of a lakh of Taka to B, reserving to himself, with
B’s assent, power to revoke at pleasure the gift as to Tk. 10,000.
The gift is void as to Tk. 10,000, and B holds that sum for the
benefit of A. Obligor’s duties,
liabilities and
disabilities

95. The person holding property in accordance with any of the
preceding sections of this Chapter must, so far as may be, perform
the same duties, and is subject, so far as may be, to the same
liabilities and disabilities, as if he were a trustee of the pro perty for
the person for whose benefit he hold it:

Provided that (a) where he rightfully cultivates the property or
employs it in trade or business, he is entitled to reasonable
remuneration for his trouble, skill and loss of time in such
cultivation or e mployment; and (b) where he holds the property by
virtue of a contract with a person for whose benefit he holds it, or
with any one through whom such person claims, he may, without
the permission of the Court, buy or become lessee or mortgagee of
the prope rty or any part thereof. Saving of rights
of bona fide
purchasers
96. Nothing contained in this Chapter shall impair the rights of
transferees in good faith for consideration, or create an obligation in
evasion of any law for the time being in force. 1 Throughout this Act, ex cept otherwise provided, the words “Bangladesh”, “Government” and “Taka” or “Tk.” were substituted, for the words “Pakistan”, “Central Government” or “Provincial Government” and “rupees” or “Rs.” respectively by section 3 and 2nd Schedule of the Bangladesh Laws (Revision And Declaration) Act , 1973 (Act No. VIII of 1973)

2 The word “Muslim” was substituted, for the word “Muhammadan” by section 3 and 2nd Schedule of the Bangladesh Laws (Revision And Declaration) Act , 1973 (Act No. VIII of 1973) 3 The words, comma and figure “Registration Act, 1908” were substituted, for the words, comma and figure “Indian Registration Act , 1877” by section 3 and 2nd Schedule of the Bangladesh Laws (Revision And Declaration) Act , 1973 (Act No. VIII of 1973) 4 The word “Dhaka” was substituted, for the word “Karachi” by section 3 and 2nd Schedule of the Bangladesh Laws (Revision And Declaration) Act , 19 73 (Act No. VIII of 1973) 5 The word “Dhaka” was substituted, for the word “Karachi” by section 3 and 2nd Schedule of the Bangladesh Laws (Revision And Declaration) Act , 1973 (Act No. VIII of 1973) 6 The words “of the Government” were substituted, for the words and comma “of any Provincial Government or of the Central Government, or of the United Kingdom of Great Britain and Ireland” by section 3 and 2nd Schedule of the Bangladesh Laws (Revision And Declaration) Act , 1973 (Act No. VIII of 1973) 7 The word “the” was substituted, for the words “any such” and `such` respectively by section 3 and 2nd Schedule of the Bangladesh Laws (Revision And Declaration) Act , 1973 (Act No. VIII of 1973) 8 The word “the” was substituted, for the words “any such” and `such` respectively by section 3 and 2nd Schedule of the Bangladesh Laws (Revision And Declaration) Act , 1973 (Act No. VIII of 1973) 9 Clauses (b) and (bb) were omitted by section 3 and 2nd Schedule of the Bangladesh Laws (Revision And Declaration) Act , 1973 (Act No. VIII of 1973) 10 Clauses (c) and (d) were substituted, for clauses (c) and (d) by section 3 and 2nd Schedule of the Bangladesh Laws (Revision And Declaration) Act , 1973 (Act No. VIII of 1973) 11 The word `Bangladesh` was substituted, for the word `a Province` by section 3 and 2nd Schedule the Bangladesh Laws (Revision And Declaration) Act , 1973 (Act No. VIII of 1973) 12 The words “Supreme Court” were substituted, for the words “High Court” by section 3 and 2nd Schedule of the Bangladesh Laws (Revision And Declaration) Act , 1973 (Act No. VIII of 1973) 13 Section 20A was inserted by section 3 of the Indian Trusts (Amendment) Act , 1916 (Act No. I of 1916) 14 Section 20B was inserted by section 2 of the Trusts (Amendment) Act , 2000 (Act No. XXI of 2000) 15 The words, commas and figure “investments made before this Act comes into force, or shall be deemed to precluded an investment on a mortgage of immovable property already pledged as security for an advance under the Land Improvement Act, 1871 or” were omit ted by section 3 and 2nd Schedule of the Bangladesh Laws (Revision And Declaration) Act , 1973 (Act No. VIII of 1973) 16 The second paragraph of section 82 was omitted by section 3 and 2nd Schedule of the Bangladesh Laws (Revision And Declaration) Act , 1973 (Act No. VIII of 1973)
Copyright © 2010, Legislative and Parliamentary Affairs Division
Ministry of Law, Justice and Parliamentary Affairs

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