The Indian Trusts Act 1882

Trust and trustees is a concurrent subject [Entry 10 of List III of Seventh Schedule to Constitution]. - Thus, the Act will apply all over India except when specifically amended / altered by any State Government. The Indian Trusts Act was passed in 1882 to define law relating to private trusts and trustees. A trust is not a 'legal person'. Property of trust is held in name of trustee for benefit of beneficiary. WHAT IS A TRUST - 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. [section 3 para 1]. The person who reposes the confidence is called 'author of trust' (testator), the person who accepts the confidence is called 'trustee' and the person for whose benefit the confidence is accepted is 'beneficiary'. The subject matter of trust is called 'trust property' or trust-money. The beneficial interest or interest of the beneficiary is his right against the trustee as the owner of trust-property. The instrument by which trust is declared is called as instrument of trust. [section 3 para 2]. Thus, when a property is held by one person as trustee for the benefit of another, it can be regarded as a trust. Trusts are governed by Indian Trust Act, as may be modified by State Governments. A trust can be created for any lawful purpose. [section 4]. A trust can be created by deed, will or even word of mouth. However, trust of immovable property can be created only by non-testamentary instrument signed by author of trust and is registered, or by will of author. [section 5]. Thus, will is not required to be registered, even if it pertains to immovable property. DUTIES OF TRUSTEES - Trustee is not bound to accept the trust. [section 10]. However, once accepted, he cannot renounce it except permission of civil court or beneficiary (if he is major) or by virtue of special power in the instrument of trust. [section 46]. - Once trustee accepts trust, he is bound to fulfil the purpose of trust and to obey directions given at the time of creation of the trust. It can be modified with consent of beneficiary. [section 11]. His duties are - * Inform himself of state of trust property (section12) * Protect title to trust property (section 13) * Not to set up title adverse to beneficiary (section 14) * Take care of property as a man of ordinary prudence would deal with such property as own property (section 15) Conversion of perishable property to permanent and immediately profitable character (section 16) * To be impartial (section 17) * To prevent waste (section 18) * Keep proper accounts and information (section 19) and * Invest trust-money in prescribed securities and not others (section 20). - - Trustee is liable for breach of trust. [section 23]. Breach of trust means a breach of duty imposed on a trustee, as such, by any law for the time being in force. [section 3 para 3]. RIGHTS AND POWERS OF TRUSTEE Trustee has following powers - * Rights to title deed (section 31) * Right to reimbursement of expenses (section 32) * Right to indemnify from gainer by breach of trust (section 33) * Right to apply to court for opinion on management of trust property (section 34) * Right to settlement of accounts (section 35) * All acts necessary and reasonable and proper for trust property or protection of beneficiary (section 36). * Power to covey property when he is authorised to sell (section 39) * Power to vary investments (from one security to another (section 40) * Power to apply property of minors for their maintenance (section 41) * Power to give receipts (section 42) * Power to compound or compromise (section 43). RIGHTS AND LIABILITIES OF BENEFICIARY The beneficiary has * rights to rent and profits (section 55) * Right to specific execution of intention of author of trust (section 56) * Right to inspect and take copies of instrument of trust, accounts etc. (section 57) * Right to transfer beneficial interest (section 58) * Right to sue for execution of trust (section 59) * Right to proper trustees (section 60) * Right to compel

trustee to perform an act of duty * Follow trust property into hands of third persson and into which it has been converted (section 63). - - A beneficiary is liable if he joins in breach of trust. [section 68]. REVOCATION OF TRUST - A trust created by will can be revoked at the pleasure of testator. A trust created otherwise by will can be revoked (a) by consent of all beneficiaries if they are competent to contract (b) In exercise of power of revocation expressly reserved by author of trust, if the trust has been declared by a non-testatory instrument or by word of mouth or (c) At pleasure of author of trust, if the trust is for payment of debts and the author of trust has not communicated to the creditors. [section 78].

Societies Registration Act 1860

Purpose of the Act is to provide for registration of literary, scientific and charitable societies. Societies Registration Act is a Central Act. However, unincorporated literary, scientific, religious and other societies and associations is a State Subject (Entry 32 of List II of Seventh Schedule to Constitution, i.e. State List). Thus, normally, there should have been only State Laws on this subject. However, Societies Registration Act was passed in 1860, i.e. much before bifurcation of power between State and Centre was specified. Though the Act is still in force, it has been specifically repealed in many States and those States have their own Acts. Thus, practically, the Central Act is mainly of academic interest.

Societies to which the Act applies Following societies can be registered under the Act - *
Charitable societies * Military orphan funds or societies * Societies established for promotion of science, literature, or for fine arts * Societies established for instruction and diffusion of useful knowledge, diffusion of political education * Societies established for maintenance of libraries or reading rooms for general public * Societies established for Public museums and galleries for paintings or other works of art, collections of natural history, mechanical and philosophical inventions, instruments or designs [section 20] REGISTRATION Any seven or more persons associated for literary, scientific or charitable purpose can register a trust by subscribing their names to memorandum of association. [section 1]. [The Act envisages filing the memorandum with Registrar of Joint Stock Companies. Practically, the memorandum will have to be filed with Registrar appointed under corresponding State Act]. - - The memorandum of association shall contain name and objects of society and names and addresses of governors/council/ directors or other governing body. - - Copy of rules and regulations of society will also have to be filed along with memorandum. [section 2]. ANNUAL LIST OF MANAGING BODY TO BE FILED Annual list of managing body should be filed within 14 days after AGM. [section4]. If there is no provision of AGM, then list should be filed in January every year. [section 4]. - - The governing body may be termed as governors, council, directors, committee, trustees or other body to whom by rules and regulations of society, the management of the affairs of society is entrusted. [section 16]. SOCIETY IS NOT A BODY CORPORATE Society is not a body corporate. This is evident from following (a) Entry 32 in List II of Schedule to Constitution itself uses the words unincorporated (b) As per section 4, property of society vests in governing body, if not vested in trustees. Thus, property does not vest in society as such. (c) Section 6 states that suit by or against society can be only in name of President, Chairman, Principal Secretary or Trustees, as determined by rules of society. Thus, suit cannot be in name of society as such.

OFFICE BEARERS NOT PERSONALLY LIABLE Section 8 makes it clear that though suit against society is instituted in name of some person, he is not personally liable, but property of society will be liable. MEMBERS OF SOCIETY A member is a person who is admitted according to rules and regulations of society and who pays subscription, or signed the roll or list of members, and who has not resigned from membership. [section 15]. A member can be sued as stranger for arrear in subscription or if he injures or destroys property of society. [section 10]. Member guilty of offence of stealing, embezzlement or wilful destruction of society property can be punished as stranger, i.e. not a member. [section 11]. ALTERATION, EXTENSION OF PURPOSES, AMLAGAMATION OR DISSOLUTION Society can alter, extend or abridge is purposes, or amalgamate with other society after approval of general meeting of members. [section 12]. Society can be dissolved if three-fifths of members determine to do so. [section 13]. Upon dissolution, balance amount should be given to other society and not to any member. [section 14].

FCRA Act

Foreign Contribution (Regulation) Act, 2010 The Foreign Contribution (Regulation) Act, 2010 [FCRA] has been passed by both the houses of Parliament to replace Foreign Contribution (Regulation) Act, 1976 [FCRA 1976] to regulate the acceptance and utilization of foreign contribution [FC] or foreign hospitality by specified persons and prohibit acceptance and utilization of FC or foreign hospitality for any activities detrimental to national interest. FCRA 2010 would be brought into force from such date as the Central Government (CG) may by notification in the Official Gazette appoint. Different dates may be appointed for bringing into force different provisions of FCRA 2010. Considering the flow of funds into the country for purposes other than business, the Government has specified that acceptance of FC against national interest would not be permissible, requiring persons accepting FC to be subject to enhanced scrutiny. The measures include prior CG approval for accepting FC, registration and renewal, conditions for end use of FC and for transfer of FC to other persons etc. Salient changes between provisions of FCRA 2010 and FCRA 1976 are as under: Modification of definition

FC would also inter alia include donation, delivery or transfer made by any foreign source of any security as defined in section 2(h) of the Securities Contracts (Regulation) Act, 1956

interest accrued on FC deposited in bank, any other income derived from FC or interest thereon. Prohibition to accept FC: Following persons have been prohibited from accepting FC: (i) Association or company engaged in the production or broadcast of audio news or audio visual news or current affairs programmes through any electronic mode or form or any other mode of mass communication (ii) Correspondent or columnist, cartoonist, editor, owner of the association or company referred in (i) above. (iii) Organization of political nature not being a political party, which may be specified by the CG, would be banned from accepting FC as against earlier provision of obtaining prior approval of CG for accepting FC. Non applicability of FCRA 2010 to certain FC FCRA 2010 will not apply to FC accepted from a relative (under FCRA 1976 prior approval of CG is required for receipt of FC in excess of ` 8000 p.a.) by way of any scholarship, stipend or any payment of like nature

Prohibition to transfer FC to other Person Person who is granted certificate of registration or has obtained prior permission under FCRA 2010 and receives any FC is prohibited from transferring such FC to any other person unless that other person is also granted certificate of registration or obtained prior permission under FCRA 2010. A part of FC can be transferred to any other person with prior approval of CG.

Restriction on utilization of FC FCRA 2010 restricts utilization of FC and any income arising from FC for speculative businesses

 year

FC for payment in excess of 50% of FC towards administrative purpose in one financial

Registration with CG Any person having definite cultural, economic, educational, religious or social programme can accept FC only after obtaining certificate of registration from CG; or prior permission from CG

Certificate of registration would be valid for 5 years (under FCRA 1976 no end date of validity of registration is specified) and prior permission would be valid for the specific purpose or specific amount of FC proposed to be received. Any registration / permission granted under FCRA 1976 would be valid for 5 years from the effective date. CG shall within 90 days of receiving application grant the certificate of registration / permission or communicate reasons for not granting such registration / permission (under FCRA 1976 no timeframe is mentioned for disposal of application). While granting registration / permission, CG would inter alia consider various factors including whether applicant is fictitious or benami,

whether applicant has been prosecuted / convicted for creating communal tension or disharmony has been found guilty of diversion / mis-utilization of its funds etc. acceptance of FC is not likely to affect prejudicially sovereignty and integrity of India, public interest, freedom or fairness of election to any Legislature, friendly relation with any foreign State, harmony between religious, racial, social, linguistic, regional groups, castes or communities etc. acceptance of FC shall not lead to incitement of an offence or endanger the life or physical safety of any person etc. in case the person being an individual, such individual has been convicted under any law or prosecution for any offence is pending against him in case the person other than an individual, any of its directors or office bearers has been convicted under any law or prosecution for any offence is pending against him Registration certificate can be suspended for a period upto 180 days or cancelled by CG on various grounds like: information in the application / renewal thereof is incorrect or false

holder of certificate has violated terms of the certificate public interest holder of certificate has violated any provisions of FCRA 2010

holder of certificate has not been engaged in any reasonable activity in its chosen field for the benefit of the society for 2 consecutive years or has become defunct Bank Account FC shall be received only in a single bank account. However, multiple bank accounts can be opened for utilization of FC. Others CG empowered to issue notification with regard to: person or class of persons who shall obtain prior permission of CG before accepting FC; area in which FC shall be accepted and utilized with prior permission of CG purpose for which FC shall be utilized with prior permission of CG source from which FC shall be accepted with prior permission of CG