Chapter 4 of the Indian Trust Act, 1882: The Rights and Powers of Trustees
Chapter 4 of the Indian Trust Act, 1882, titled “Of the Rights and Powers of Trustees,” represents one of the most significant and comprehensive sections of the Act. It outlines the substantive rights, duties, and powers conferred upon trustees in their management and administration of trust property[1]. This chapter (Sections 31-45) establishes the legal framework within which trustees operate, balancing their authority to act decisively with fiduciary responsibilities to beneficiaries[2]. Understanding these provisions is crucial for legal practitioners, trustees, beneficiaries, and anyone involved in trust administration in India.
Section 31: Right to Title-Deed
Section 31 grants trustees an essential right concerning documentary evidence of ownership. It states that “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”[3].
This provision ensures that trustees have access to critical documentation necessary for proper trust administration. The documents include:
- The instrument of trust (the deed or document creating the trust)
- Title deeds of immovable property held in trust
- Certificates of ownership for movable property
- Mortgage deeds or other security documents
- Registration certificates
The right to possession of these documents is essential for trustees to discharge their administrative duties effectively. However, courts have interpreted this section to mean that documents relating solely to the trust property are covered; documents mixed with personal property of the author of trust may not necessarily fall within this provision[3].
Section 32: Right to Reimbursement of Expenses
Section 32 provides trustees with the fundamental right to reimburse themselves for legitimate expenses incurred in executing the trust. This provision states: “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-property, or the protection or support of the beneficiary”[4].
Types of Expenses Covered
The expenses that can be reimbursed include:
- Costs of protecting and preserving the trust property
- Legal expenses incurred in trust administration
- Costs of realizing trust assets (such as selling property)
- Administrative costs and expenses
- Professional fees for accountants, advisors, or agents
- Expenses for the support and maintenance of beneficiaries
Charge Upon Trust Property
If a trustee pays such expenses from their own pocket, Section 32 grants them a first charge upon the trust property for such expenses and interest thereon. However, this charge cannot be enforced by disposing of the trust property without previous payment, unless the expenses have been incurred with the sanction of a Principal Civil Court of original jurisdiction[4].
Section 35: Right to Settlement of Accounts
Section 35 addresses the trustee’s right to have their accounts examined and settled once their duties are completed. The provision states: “When the duties of a trustee, as such, are completed, he is entitled to have the accounts of his administration of the trust-property examined and settled; and, where nothing is due to the beneficiary under the trust, to an acknowledgment in writing to that effect”[4].
This right serves multiple purposes:
- Provides trustees with closure and discharge from liability
- Protects trustees from future claims regarding their administration
- Ensures transparency in trust management
- Gives beneficiaries confidence in proper administration
The trustee can apply to a court for settlement of accounts if the beneficiaries refuse to do so. Courts have held that beneficiaries cannot arbitrarily refuse to settle the trustee’s accounts when the trustee has properly administered the trust[4].
Section 36: General Authority of Trustee
Section 36 is a broad and expansive provision that grants trustees general powers beyond those explicitly stated in the Act or trust deed. It provides: “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 proper 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”[4].
Scope of General Authority
This section has been interpreted by courts as conferring upon trustees the power to:
- Act for the preservation and protection of trust assets
- Make reasonable business decisions regarding trust property
- Adapt to changing circumstances affecting the trust
- Fulfill the beneficial intent of the trust despite unforeseen contingencies
- Invest and reinvest trust property within authorized parameters
- Enter into necessary transactions for trust benefit
The authority is, however, limited to acts that are “reasonable and proper,” meaning they must be consistent with the trustee’s fiduciary duties and the purposes of the trust[4].
Sections 37-40: Powers of Sale and Investment
Section 37: Power to Sell
Section 37 states: “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 contract, and either at one time or at several times, unless the instrument of trust otherwise directs”[4].
This provision grants trustees flexibility in executing sales while respecting the instrument of trust. A trustee cannot exceed the mode of sale prescribed in the trust deed. For instance, if the deed specifies a public auction sale, the trustee cannot sell by private contract[4].
Section 38: Power to Sell Under Special Conditions
Section 38 empowers trustees to insert reasonable stipulations in conditions of sale concerning title, evidence of title, and other matters. Importantly, this section also grants trustees the power to “buy-in” property at auction and to rescind or vary any contract for sale without being responsible to beneficiaries for loss occasioned thereby[4].
Section 40: Power to Vary Investments
Section 40 permits trustees to call in trust property invested in any authorized security and reinvest it in other authorized securities. This power is crucial for maintaining the value of trust assets and adapting to market conditions[4]. However, where a person is entitled to receive the income of the trust-property for life or a greater estate, no change of investment can be made without that person’s written consent.
Section 41: Power to Apply Property for Maintenance of Minors
Section 41 provides trustees with discretion regarding the maintenance, education, and advancement of minor beneficiaries. This provision states that when property is held in trust for a minor, the trustee may:
- Pay to the guardians or otherwise apply for the minor’s maintenance or education
- Apply funds for the minor’s advancement in life
- Pay for reasonable expenses of the minor’s religious worship, marriage, or funeral
- Accumulate residual income by investing in authorized securities
If trust income is insufficient for these purposes, the trustee may apply principal property only with the permission of a Principal Civil Court of original jurisdiction[4].
Section 43: Power to Compound and Compromise
Section 43 is a powerful provision enabling multiple trustees acting together to compromise, settle, or abandon claims related to the trust. Specifically, trustees may:
- Accept composition or security for any debt
- Allow time for payment of debts
- Compromise, abandon, or settle any debt, account, or claim
- Submit matters to arbitration
- Enter into agreements, releases, and arrangements as they deem expedient
These acts, when done in good faith, do not render trustees liable for any resulting loss. A sole trustee authorized by the instrument of trust to execute all powers can exercise these powers individually[4].
Section 44: Powers of Continuing Trustees
Section 44 addresses situations where one of multiple trustees disclaims the trust or dies. It provides that “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”[4].
This provision ensures that trusts do not become paralyzed when trustees cease their participation. The terms of the trust deed control whether a specific number of trustees is required for valid action[4].
Key Principles Underlying Chapter 4
Several fundamental principles underpin the rights and powers granted in Chapter 4:
Fiduciary Duty
Despite the extensive powers granted, trustees must exercise them in strict compliance with fiduciary duties. They must act in the best interests of beneficiaries, avoid conflicts of interest, and maintain the highest standards of integrity and care[2].
Reasonableness and Propriety
The powers granted are not absolute. Trustees must exercise them reasonably and for proper purposes. Courts will intervene if trustees abuse their discretion or act in a manner clearly contrary to the trust’s beneficial intent[2].
Subordination to Trust Terms
All powers under Chapter 4 are subject to the terms of the trust instrument. If the trust deed imposes restrictions or prescribes specific procedures, these take precedence over the general powers granted by the Act[2].
Beneficiary Accountability
While trustees have broad powers, they must account for their actions to beneficiaries. Section 35 and related provisions ensure that beneficiaries can require trustees to explain and justify their administrative decisions[4].
Practical Application in Trust Administration
Understanding Chapter 4 is essential for practical trust administration. When administering a trust, trustees should:
- Review the trust instrument carefully to identify any restrictions on the general powers granted by Chapter 4
- Maintain proper documentation of all transactions and decisions
- Ensure all expenses claimed are properly documented and reasonable
- Seek court direction when facing ambiguity or complex situations
- Communicate transparently with beneficiaries about major decisions
- Maintain detailed accounts for eventual settlement and discharge
Conclusion
Chapter 4 of the Indian Trust Act, 1882, provides the legal framework enabling trustees to manage trust property effectively and efficiently. While granting trustees extensive rights and powers, the chapter is carefully balanced with fiduciary duties and subject to the terms of trust instruments[1]. The provisions reflect the law’s recognition that trustees require operational flexibility to fulfill the trust’s beneficial purposes while maintaining accountability to beneficiaries[3].
The rights and powers enumerated in Sections 31-45 have been interpreted by courts over more than 140 years of jurisprudence, creating a sophisticated body of trust law. Practitioners and trustees must understand both the literal text of these provisions and their judicial interpretation to navigate trust administration successfully and avoid potential liability[2].
Understanding Chapter 4 is not merely academic; it provides the foundation for effective, lawful, and ethical trust administration that protects both trustees and beneficiaries while serving the ultimate purpose of trusts in wealth management, family protection, and charitable work[1].
References
[1] Trusts Act, 1882, Chapter IV (Sections 31-45). Ministry of Law and Justice, Government of India. Available at: https://www.indiacode.nic.in
[2] CLAWW. (2025). Overview of the Indian Trust Act, 1882. Retrieved from https://claww.in/overview-of-the-indian-trust-act-1882/
[3] Vidhijudicial. (2025). Sections 31 to 45: Chapter IV of the Rights and Powers of Trustees – The Indian Trusts Act, 1882. Retrieved from https://vidhijudicial.com/sec-31-to-45-(chapter-iv-of-the-rights-and-powers-of-trustees)-the-indian-trusts-act,-1882.html
[4] Advocatekhoj. (2023). Trusts Act, 1882 – Provisions and Sections. Law Commission of India. Retrieved from https://www.advocatekhoj.com/library/lawreports/trustsact1882/
[5] LawBhoomi. (2024). Creation of Trust under the Indian Trust Act, 1882. Retrieved from https://lawbhoomi.com/creation-of-trust-under-the-indian-trust-act-1882/
