ITA | Module 1 : (2) Public Trust & Private Trust
KEY POINTS – SUMMARY (JP)
INDIAN TRUSTS ACT , 1882
Module 1 – Introduction to Private Trust
TOPIC (2) : PUBLIC TRUST & PRIVATE TRUST
Ø Meaning
1. Public Trust
- A Public Trust is set up with the object for carrying out of a purpose which will benefit
society / public at large, or the members of an uncertain and fluctuating body of person.
- In a Public Trust, the beneficiary is the society / public or any class of society / public. There
are no specific persons who are the beneficiaries.
- All religious or charitable trusts are Public Trusts.
- Illustration : “A” as the Settlor/ Author of sets up a trust for the running of educational
institutions in India. The trust set up by “A” is for the benefit of the society / public and not
for certain specified individuals. Hence, the trust set up by “A” is a Public Trust.
2. Private Trust
- A Private Trust is the contrary of a Public Trust.
- It is set up with the object for carrying out of a purpose which will benefit any specific /
definite persons and not for the public / society
- In a Public Trust, the beneficiary are specific / definite persons.
- Illustration : “A” as the Settlor/ Author of sets up a trust for supporting his sons and
daughters through the Trust Property. The beneficiaries are specific / definite persons i.e.
the sons and daughters of “A”. Hence, the trust set up by “A” is a Private Trust.
Ø Difference b/w Public Trust & Private Trust
Points Public Trust Private Trust
Legislation Public Trust is governed by the Private Trusts are governed by the
laws passed by the state where they Indian Trust Act, 1882, which
have been incorporated or specifically excludes Public Trusts
established from its ambit.
Beneficiaries In a Public Trust, the beneficiaries In a Private Trust, the beneficiaries are
are uncertain, not known / certain and known / identifiable, such as
unidentifiable and very large in relative, friends or family of the author
number. The society / public or any of trust.
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ITA | Module 1 : (2) Public Trust & Private Trust
KEY POINTS – SUMMARY (JP)
Points Public Trust Private Trust
class of the society / public will be
the beneficiaries.
Management Public Trust is managed by a Private Trust has 1 or more Trustees
Board of Trustees
Revocability Public Trust is irrevocable Private Trust is revocable or
irrevocable, depending on what is
specified in the Instrument of Trust
Longevity Public Trusts are generally made Private Trusts are generally made for a
for a larger group of people, and specific individual or group of
are for religious or charitable individuals and for specific purposes,
purposes – so they are functional and so they are functional for a shorter
for a longer period of time period of time (typically till the specific
purpose is completed).
Devolution of In case of Public Trusts , the Trust In the case of Private Trusts, the
Property Property can be devolved only as property and monies of the Private
per the terms and conditions of the Trust will go to the beneficiaries or
Instrument of Trust and the laws heirs declared in the Instrument of Trust
applicable to the Public Trust and to no one else.
Inspection Public Trusts have to maintain Terms of Private Trusts are only to be
transparency as they are created for seen by the stakeholders who are
the benefit of the public. Hence it involved in it, such as (trustors, trustees,
is open for inspection. People can beneficiaries and lawyers). People who
crutinize its processes and question are not involved in it are not supposed
its management as well. to go through it.
Regulation Public Trusts are regulated by the Private Trusts are not registered or
competent authority established regulated by any authority under the
under the concerned laws for the Indian Trusts Act.
same e.g. in Maharashtra, the
Charity Commissioner is the
competent authority under the
Bombay Public Trusts Act, with
whom the Public Trust is
registered and regulated.
Ø Case Laws
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ITA | Module 1 : (2) Public Trust & Private Trust
KEY POINTS – SUMMARY (JP)
- Deoki Nandan vs. Murlidhar (1956) , it was observed by the Supreme Court that the
distinction between a Private Trust and a Public Trust is that whereas in a Private Trust the
beneficiaries are specific individuals, in a Public Trust the beneficiaries are the general
public or a class thereof. While in a Private Trust the beneficiaries are persons who are
ascertained or capable of being ascertained, in a Public Trust the beneficiaries constitute a
body which is incapable of ascertainment".
- Shanti Devi vs. State & Anr., it was observed by the Delhi High Court that in Private Trust
the beneficial interest is vested absolutely in one or more individuals who are, or within
certain time may be, definitely ascertained. In a Public Trust, the beneficiaries are an
uncertain and fluctuating body. Such a Public Trust is permanent and indefinite in character
and is not confined within the limits prescribed to a settlement upon a Private Trust.
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