Charitable / Religious Endowments and trusts

The Charitable Endowments Act, 1890

vesting and administration of property held in trust for charitable purposes.Whole of India except J&K.Already discussed: charitable purpose: section 2.

Q. Of appointment and incorporation treasurer Charitable endowments The Central Government may appoint an officer of the Government by the name of his office to be treasurer of Charitable Endowments for India, and state govt..Take, hold, transfer the property may sue and be sued in his nameSeal

Vesting property in treasurer: orders. Sec 4.on application made,The appropriate govt. may decide on..held or is to be applied in trust for charitable purpose,notification in the Official Gazette, that the property be vested in the treasurer of Charitable Endowments,on such terms as to the application of the property or the income thereof as may be agreed on between the 1[appropriate Government] and the person or persons making the application, and the property shall thereupon so vest accordingly.

Only the treasurer, not trusteeAn order under this section vesting property in a treasurer of Charitable Endowments shall not require or be deemed to require him to administer the property, or impose or deemed to impose upon him the duty of a trustee with respect to the administration thereof.

Section 5. Schemes for administration of property vested in the TreasurerOn application made as hereinafter mentioned, and with the concurrence of the person or persons making the application, the 1[appropriate Government], if it thinks fit, may settle a scheme for the administration of any property which has been or is to be vested in the treasurer of Charitable Endowments, and may in such scheme appoint, by name or office, a person or persons, not being or including such treasurer, to administer the property.

Section 5 contd.In the settlement of such a scheme effect shall be given to the wishes of the author of the trust so far as they can be ascertained, and, in the opinion of the 3 [appropriate Government], effect can reasonably be given to them.

Section 8. Bare trusteeship of Treasurer1. a treasurer of Charitable Endowments shall not, as such treasurer, act in the administration of any trust whereof any of the property is for the time being vested in him under this Act.Treasurer - Shall keep separate account of each property.Treasurer shall permit the persons acting in the administration of the trust to have the possession, management and control of the property and the application of the income thereof, as if the property had been vested in them (other than for securities for money).

Annual publication of list of properties vested in Treasurer official gazette.

Limitation of functions and powers of TreasureTreasurer shall not, as such treasurer, take or hold any property otherwise than under the provisions of this Act, or, subject to those provisions, transfer any property vested in him except in obedience to a decree divesting him of the property, or in compliance with a direction in that behalf issuing from the authority by whose order the property became vested in him.

Such a direction may require the treasurer to sell or otherwise dispose of any property vested in him, and, with the sanction of the authority issuing the direction, to invest the proceeds of the sale or other disposal of the property in any such security for money as is 1[specified in the direction], or in the purchase of immovable property.

When a treasurer of Charitable Endowments is divested, by a direction of 2[the appropriate Government] under this section, of any property, it shall vest in the person or persons acting in the administration thereof and be held by him or them on the same trust as those on which it was held by such treasurer.

Section 11. Provision for continuance of office of Treasurer in certain contingenciesSection 12. Transfer of property from one Treasurer to another

UK16012006, Charities Act2011, CA (2012)Oppenheim v Tobacco Securities Trust Co LTd (1951) AC 297 (HL): criticized over time. (discussed).

Political trustsCan they be charitable? funds for political parties!Amnesty International sets up a trust with the following objects:1. relief to needy persons who were, or might be, prisoners 2. attempting to secure their release3. abolition of torture or other inhumane methods of treatment or punishment4. research into human rights

Failure of charitable trustIn his will, richard left Rs. 10,000 to his old school. however, at the date of his death, the school ceased to exist. Advise the trustees of Richards will.

1. charitable purpose2. doctrine of cypress.

Kings v. Bultitude (2010) EWHC 1795 (HC)Facts:Application of cypress doctrine?

Another possibility for richards problemIf school has amalgamated with another school, so that the school is carrying on its purpose. If so, then it may claim the gift (Re Faraker, 1912)

More on charitable trusts: examplesPoverty? Define? -- different things to different people

2 faulty decisions?2 cases:Re de Carteret [1933] Ch 103the term poverty was taken to cover women with an income of between 80 and 130 per annum.

Can millionaire become poor when he loses half his millions?

Re deCarteretone may be legally poor even though others are poorer but there must surely be some limit on the extent to which accustomed lifestyle can affect a persons individual definition of poverty.

Trust for the advancement of educationCan all forms of education and the trusts created for them be considered as charitable trusts?

physical education and sports, and other extracurricular activities such as field trips

have all been held to fall within the ambit of education, provided they are for the young, who it is assumed are still undergoing a process of education and development.

Re Shaw [1957] 1 All ER 748

schools for prostitutes or pickpocketswould not be regarded as charitable.

Court regarded it as harmless value judgement.

Education and politicsAttempts to disseminate political propaganda under the guise of education have been consistently rebuffed by the courts. Similarly, educational charities will be restrained from using their resources for political purposes.

Baldry v Feintuck [1972] 2 AllER 81Sussex University Students Union, a registered charity, was restrained from spending money on a campaign to restore free school milk. Since this was an attempt to challenge government policy, it was regarded by the courts as political and not charitable.This has been confirmed in the case of Re Webb v ODoherty (1991) The Times, 11 February, where an injunction was granted to restrain a students union from spending money in support of a campaign against the Gulf War.

advancement of animal welfare

advancement of animal welfareValid animal charities have often been concerned with organisations such as animal hospitals and homes.

Re Grove-Grady [1929] 1 Ch 557testator left money to provide a refuge or refuges for the preservation of all animals, birds or other creatures not human . . . so that they shall be safe from molestation and destruction by man.Since man was entirely excluded, he had no opportunity to be elevated and so there was no public benefit.

Q. Does preference for private groups make the trust non-charitable?

Koettgen Wills Trusts

A trust with preference to family and employees benefiting 75% of the trust was seen as being charitable. However, it was later said in other cases that the higher the percentage of benefit for private people the less the chances of the trust being charitable. The key point here was that a preference for private groups does not necessarily make the trust non-charitable.

Other decisive cases

Re Holborn Air Raid Distress Fund [1946] Ch 194a fund collected by employees of a certain firm to provide money for the relief of distress suffered by any employees as a result of air-raids could not be charitable. The benefits were limited to the employees of a company which, as we shall see, is too limited a class anyway.

Lord Greene MRThe point, to my mind, which really puts this case beyond doubt is the fact that a number of employees of this company, actuated by motives of self-help, agreed to a deduction from their wages to constitute a fund to be applied for their own benefit without any question of poverty coming into it. Such an arrangement seems to me to stamp the whole transaction as one having a personal character, money put up by a number of people, not for the general benefit, but for their own individual benefit.

Advancement of the arts, culture, heritage or scienceRe shaw (1957)mere acquisition of knowledge would not per se be a charitable object

Re Hopkins [1964] 3 All ER 46money was given to the Francis Bacon society to search for the BaconShakespeare manuscripts. In other words, money was provided to discover documentary proof that Shakespeares plays were written by Francis Bacon and to discover the original manuscript of these plays.

advantages1. certainty of trust: moggridge: a gift to A to dispose of to such charities as he shall deem fit valid.2. perpetuity3. tax advantages4. beneficial principle in uk, the attorney general, representing the crown, appears on behalf of the beneficiaries,

Trusts for the advancement of religionReligion?Means only -- Monotheism.

Wider scope of religionCharities Act, UK:Section 2(2) (c ): that religion includes (i) a religion which involves belief in more than one god, and (ii) a religion which does not involve belief in a god.

Random examples:Other than research and progress of a religion:. maintenance of religious buildings -extends even to tombs and monuments if they are part of the fabric of the church. support of sick and aged clergy.

see Re Forster [1938] 3 All ER 767.

Base principle: For a religious gift to be charitable the public must be able to derive a benefit from the presence of religious people in thecommunity.

hornton v Howe (1862) 54 ER 1042, A trust was established for the publication of the writings of Joanna Southcott, a religious mystic who believed herself to be with child by the Holy Ghost. This was held to be charitable.

Gilmour v Coats [1949] 1 All ER 848A gift was given to a small contemplative order of nuns. This community was cloistered and had no contact with the outside world. The House of Lords held that the gift was not charitable.

reasonsThe necessary public benefit was not to be found in the prayers and intercession which the nuns made on behalf of members of the public who requested it; this was held to be manifestly not susceptible of proof in a court of law. Nor was benefit to be found in the edifying example set by the nuns spiritual life, nor in the fact that that religious life was open to any Catholic woman who might choose it.

Is there public benefit here: Re Hetherington [1989] 2 All ER 129saying of masses for the soul of the testator.

first, that the saying of masses for the dead was prima facie charitable as a religious purpose and, secondly, that the public benefit was provided by the fact of the masses being said in public. Once again, it was not that individuals might participate in the ceremonies, but rather that their public nature provided an edifying example of religious observance.

Religious endowments act, 1863

Religious endowments act, 1863Section 3. Government to make special provision respecting mosques, etcIn the case of Every mosque, temple or other religious establishment to which the provisions of either of the Regulations specified in the preamble to this Act are applicable, and nomination of the trustee, manager or superintendent thereof, at the time of the passing of this Act, is vested in, or may be exercised by, the Government or any public officer, or in which the notification of such trustee, manager or superintendents shall be subject to the confirmation of the Government or any public officer, the State Government shall, as soon as possible after the passing of this Act, make special provision as hereafter provided.

Transfer to trustees, etc., of trust-property in charge of Revenue Board

Procedure in case of dispute as to right of succession to vacated trusteeshipApply to civil courtPowers of managers appointed by court: similar to power of pre-existing managers.

s. 7: appointment of committeesGovernment shall once for all appoint one or more committees in every division or district to take the place, and to exercise the powers, of the Board of Revenue and the local agents under the Regulations hereby repeated.Such committee shall consist of three or more persons, and shall perform all the duties imposed on such Board and local agents, except in respect of any property, which is specially provided for under Section 21 of this Act.

Section 8. Qualifications of members of committeeshall be appointed from among person professing the religion for the purposes of which the mosque, temple or other religious establishment was founded or is now maintained, and in accordance, so far as can be ascertained, with the general wishes of those who are interested in the maintenance of such mosque, temple or other religious establishment.Notified in official gazette.

Section 9. Tenure of OfficeFor lifeUnless removed for misconduct or unfitness; and no such member shall be removed except by an order of the Civil Court as hereinafter provided.

Vacancy to be filled. S. 10 selection of new members Procedure:remaining members of the committee shall, as soon as possible, give public notice of such vacancy, and shall, fix day, which shall not be later than three months from the date of such vacancy, for an election of a new members.In case vacancy does not fill within 3 months, then an application can be moved to the Civil Court (new member or from pre-existing member of the committee).

s. 11: No member of committee to be also trustee, etc. of mosque, etc

No member of a committee appointed under this Act shall be capable of being, or shall act, also as a trustee, manager or superintendent of the mosque, temple or other religious establishment for the management of which such committee shall have been appointed.

Duty of trustee to accounts.Person interested may singly sue in case of breach of trust, etc.

Person interestedneed not be direct or immediate interest or such an interest as would entitled the person suing to take any part in the management or superintendence of the trusts.Any person having a right of attendance, or having been in the habit of attending, at the performance of the worship or service of any mosque, temple or religious establishment, or of partaking in the benefit of any distribution of alms, shall be deemed to be a person interested within the meaning of the list preceding section.

Lawful: reference to arbitration.+ court may require accounts of trust to be filed.

Section 21. Cases in which endowments are partly for religious and partly for secular purposesIn any case in which any land or other property has been granted for the support of an establishment partly of a religious and partly of a secular character, or in which the endowment made for the support of an establishment is appropriated partly to religious and partly to secure uses, the Board of Revenue, before transferring to any trustee, manager or superintendent, or to any committee of management appointed under this Act, shall determine what portion, if any, of the said land or other property shall remain under the superintendence of said trustee, manager or superintendent, or of the committee, and made payable to the said Board or to the local agents, for secular uses as aforesaid.

Charitable and Religious Trusts Act, 1920An Act to provide more effectual control over the administration of Charitable and Religious Trusts.obtaining of information regarding trust created for public purposes of a charitable or religious nature, etc.Enable trustees of these trusts to get directions from the courts on certain matters

Section 3. Power to apply to the Court in respect of trusts of a charitable or religious natureany person having an interest in any express or constructive trust created or existing for a public purpose of a charitable or religious nature may apply by petition to the Court within the local limits of whose jurisdiction any substantial part of the subject-matter of the trust is situate to obtain an order embodying all or any of the following directions, namely:1. nature and objects of the trust, and of the value condition, management and application of the subject-matter of the trust, and of the income 2. accounts

Section 4. Contents and verification of petitionHas to show how he is interestedSigned and verified.

procedureGeneral.Failure of trustee to comply with order: committed a breach of trust affording ground for a suit under the provisions of s. 92, cpc (public charities).

Role of advocate general (India AG otherwise)Advocate General, or two or more persons having an interest in the trust and having obtained the consent in writing of the Advocate General, may institute a suit..in the principal Civil Court of original jurisdiction or in any other Court empowered in that behalf by.. to obtain a decree:

Removing any trusteeAppointing a new trusteeVesting any property in a trusteeDirecting accounts and inquiriesDeclaring what proportion of the trust-property or of the interest therein shall be allocated to any particular object of the trust. Authorizing the whole or any part of the trust-property to be let sold, mortgaged or exchangedSettling a scheme, or Granting such further or other relief as the nature of the case may require

Power of trustee to apply for directionsAs in the Indian Trusts Act, 1882.for the opinion, advise or direction of the Court on any question affecting the management or administration of the trust property, and the Court shall give its opinion, advice or direction, as the case may be.No appeal.

Constitutional valid?K. Mukundaraya Bhenoy v. The State of Mysorecourt has considered the right of administration of a religious denomination temple. The Court ruled in that case that a law which takes away the right of administration from the hands of a religious denomination altogether and vests it in any other authority would amount to a violation of the right guaranteed underArticle26 of theConstitutionof India.

FIDUCIARY RELATIONSHIP

Section 88 Advantage gained by fiduciary - ITAWhere a trustee, executor, partner, agent, director of a company, legal advisor, 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 person the advantage so gainedNo definition of the word fiduciary

Definition The fiduciary relationship, it is said, defies definition. Discerning what constitutes a fiduciary relationship is one of the great unfinished tasks of modern legal scholarship.WalkerA fiduciary is a person in a position of trust, or occupying a position of power and confidence with respect to another

A fiduciary relationship", as observed by Anantnarayanan, J., "may arise in the context of a jural relationship. Where confidence is reposed by one in another and that leads to a transaction in which there is a conflict of interest and duty in the person in whom such confidence is reposed, fiduciary relationship immediately springs into existence." [see Mrs.Nellie Wapshare v. Pierce Lasha & Co. Ltd. (AIR 1960 Mad 410)]

The principal is entitled to the single-minded loyalty of his fiduciary. This liability has several facets. A fiduciary must act in good faith; he must not make a profit out of his trust; he must not place himself in a position where his duty and his interest may conflict;he may not act for his own benefit or the benefit of a third person without the informed consent of his principal.

2 analogy between trust and fiduciary relationship1. PropertyIn case of the trust property in the hands of trustee can be followed by the beneficiary.2. remedy for wrong

However the similarity does not necessarily make a fiduciary relation a trustthe fiduciary relation is a genus, while a trust is one of its species.

When it arisesWhenever 2 persons stand in such a situation that confidence is necessarily reposed by one in the other, there arises a presumption as to a FR which grows naturally out of that confidence.

natureInflexible Rule of Equity that a person in a fiduciary position will not be allowed to misuse his office and gain out of it.His interest should not conflict with the interest of those whose interest he is bound to protect.Bray v Ford [1896] AC 44.

Mr Bray was a governor of Yorkshire College. Mr Ford was the vice-chairman of the governors and had also been working as a solicitor for the college. Bray sent him a letter, and circulated it to others, saying,Sir, during last summer, as you are aware, it came to my knowledge that whilst holding the fiduciary position of vice-chairman of the Yorkshire College you were illegally and improperly, as you know, making profit as its paid solicitor.

It does not appear to me that this rule is, as has been said, founded upon principles of morality. I regard it rather as based on the consideration that, human nature being what it is, there is danger, in such circumstances, of the person holding a fiduciary position being swayed by interest rather than by duty, and thus prejudicing those whom he was bound to protect.

examplesTrusteeAgent / principalPartnerDonor / doneeParent / childguardian / ward

Fiduciary duties are duties enforced by law and imposed on persons in certain relationships requiring them to act entirely in the interest of another, a beneficiary, and not in their own interest.

Typical remedies for breach of fiduciary duty include account of profits, equitable compensation, rescission, and constructive trust. Liability for breach is strictly enforced.In order to obtain an account of profits, the beneficiary is not required to prove that he or she suffered any harm; breach alone is sufficient.

constructive trusts and Resulting trusts

Constructive trustA constructive trust is difficult to define. imposed by the court where it would be unconscionable for the legal owner of property to deny a beneficial interest to a claimant. It differs from a resulting trust because it does not usually give effect to the intentions of the parties but arises as a response to circumstances.

exampleFabian and Gerald No need ofrlawyers cost too much money They write the agreed terms on two separate pieces of paper andboth sign each piece of paper.Two weeks later Fabian changes his mind and refuses to sell to Gerald. CanGerald force him to sell?

Fabian holds the property as constructive trustee on behalf of Gerald and Gerald can force Fabian to sell to him. If he refuses, the court may make an order for specific performance in favour of Gerald.

Midland Bank v. Cooke [1995] 4 All ER 562 concerned property, which had been purchased in the name of the husband with contributions by both parties. The woman had contributed a small amount but the court found that there was a common intention to share the property and it also found that there was an intention to share the interests in the property equally.

Resulting trustsa resulting trust does not depend on intention but operates automatically.

Re Vinogradoff [1935] WN 68A grandmother Mrs Vinogradoff voluntarily transferred war loan stock valued at 800 into the joint names of herself and her grandchild who at the time was 4 years old. The grandmother continued to receive the interest. After her death the court concluded that the stock was held by the granddaughter on resulting trust for the estate of Mrs Vinogradoff. It did not matter that the granddaughter was underage because it is possible to be a resulting trustee of personality under the age of majority.

Equitable remedies

Freezing Injunctions, Mareva injunctions, Anton Piller Orders and Search Orders.

Anton Piller KGv. Manufacturing Processes Ltd. [1976] 1 All ER 779

Court of Appeal was required to Judge the legality of certain ex parte orders, being passed by lower Courts, ordering the Defendants to allow Plaintiffs to enter the premises of the Defendants for an inspection and removal of critical evidence which could be easily destroyed by the Defendant, if it had a forewarning of any legal action.

factsTrade secrets of the Plaintiff that were being illegally traded by the Defendant and the Plaintiff needed to search the premises of the Defendant, without prior notice, in order to seize the material intact. If prior notice had been issued to the Defendant it is likely that the Defendant would have destroyed the critical evidence in order to evade legal action.

Why the need for such ordersL. Denning: king of the house defendant + not search warrants (orders did not authorize the Plaintiff to forcefully enter the premises of the Defendant--Defendants could resist entry of the Plaintiff into its premises, with the caveat that such resistance is bound to be treated as contempt of Court and accordingly punished.)However: the Plaintiffs demonstrated a strong prima facie case of infringement and where there was the possibility of the Defendant destroying the evidence that was required by the Plaintiff to establish its case at trial

Criticism plaintiffs abusing scope of these ordersColumbia Picture Industries Inc. v. Robinson, [1986] 3 W.L.R. 542.Universal Thermosensors Ltd. v. Hibben and Others [1992] I WLR 840.

the balance had swung too much in favour of Plaintiffs who were often suppressing vital facts while procuring Anton Piller ordersduring the execution of the orders the Defendants were not properly briefed by the Plaintiffs solicitors as to the extent of the orders because of which the Defendants were consenting to the removal of material which was not even covered by the Order.

Plaintiffs were seizing the material for an unreasonable time and that the Defendant was not being given a proper receipt of the material taken away from his premises.

John doeex-parte interim injunction with the added benefit that the Plaintiff is given liberty to add to the array of parties, infringers who have been identified after the filing of the suit. These orders are an exception the general rule which requires the defendant to be identified prior to the filing of a law-suit. The ex-parte interim injunction then applies against even the later defendants.

Combined with anton piller?In the original version the John Doe order was usually combined with an Anton Piller order which used to allow for the seizure of any infringing material. The concept of the John Doe order evolved in a setting where it was necessary to operate quickly against fly-by-night operators who did not operate out of a fixed location.

indiaR. K. Production (producers of 3) v. B.S.N.L & 14 other ISP and several yet to be named,

29th of March, 2012 Justice Vasuki passed the first-ever John Doe order in the history of the Madras High Court.

Ashok Kumars

Taj Television v. Rajan Mandal, 2002 delhi high courtPlaintiffs owned an Indian sports broadcasting channel and also the Indian broadcasting rights for the Football World Cup organized by FIFA. The Plaintiff had filed this law-suit against 6 known cable-operators and another 14 unknown cable-operators and had sought injunctions against not only the 20 cable-operators but also against all other un-named cable-operators who maybe violating the broadcast rights of the Defendants.

Departure from CPCC.P.C requires the Plaintiff to clearly identify, in the plaint, not only the particulars of the Defendant but also the cause of action i.e. the civil wrong committed by the said Defendant.A plaint which fails to provide these details could be dismissed under Order VII Rule 10 of the CPC.

Case - criticismMSM Satellite Singapore Pvt. Ltd v. Star Cable Networks and Others, 2010 , delhi high court

Division bench: said yes to JD orderSingle bench: appointed commissioners instead refused to grant an ex parte John Doe/ Anton Piller injunction against un-named Defendants since he was of the view that the appointment of Commissioners to record and preserve evidence of infringement would serve as adequate evidence for a future trial

mareva order freezing orderfreezes the assets of a party pending further order or final resolution by the Court.

the court has power to freeze defendants assets, where there exists a probability of the assets being dissipated or cancelled so as to make a judgment against him worthless and un-enforceable

Mareva Compania Naviera S.A. V. International Bulkcarriers S.A. [1980] 1 All E.R. 213 (C.A. 1975):

plaintiffs, Mareva Company (the ship-owners) issued a writ against the defendant company (the charters) for an unpaid hire and damages for repudiation of a charter party.

Mareva Compania Naviera S.A. V. International Bulkcarriers S.A. [1980] 1 All E.R. 213 (C.A. 1975)Hon'ble Judge granted injunction restraining the defendant from removing or disposing out of the jurisdiction moneys standing to the credit of the charters' account at a London bank.

Grupo Mexicano de Desarrollo, S.A. v. Alliance Bond Fund, Inc. 1999Criticism:there was little evidence that Grupo Mexicano was going to dispose of its assets in a way that Mareva principles find objectionable.

Indian caseTata Sons Ltd. v. H. P. Singhal, Tata Sons obtained an ex parte injunction from the Delhi High Court in a suit filed against the defendant-defendant was duping gullible employment seekers by offering jobs in a company called 'Tata India Ltd.', with its address in Delhi. The Hon'ble High Court Judge had passed an order in the nature of a 'Mareva Injunction', freezing the defendants assets, including bank accounts, as the defendant was involved deceiving people by using Tatas brand name.

Remedying criticismIt is suggested that a Mareva order should be granted only to prevent a defendant from abusing the process of the court, and that such an order should never be granted to guarantee to the plaintiff that the defendant will have sufficient assets to satisfy judgment.