The Charitable and Religious Trusts Act, 1920
Introduction
The Charitable and Religious Trusts Act, 1920 was enacted to clarify, regulate, and strengthen the administration of charitable and religious trusts in India. Its primary aim is to ensure that:
Trust property is used according to the objectives of the trust.
Trustees perform their duties lawfully and transparently.
There is legal recourse in cases of mismanagement or disputes over trust property.
It specifically deals with trusts created for religious purposes, charitable purposes, or both.
Applicability
Applies to the whole of India, except where state legislation provides otherwise.
Covers:
Religious trusts – temples, mosques, churches, gurudwaras.
Charitable trusts – educational, medical, relief of the poor, public welfare.
Excludes trusts that are private in nature or not for public benefit.
Key Definitions
Religious Trust – A trust established for the promotion or maintenance of religion, including rituals, religious education, or temples.
Charitable Trust – A trust for public benefit in areas like education, relief of poverty, medical care, or any socially beneficial object.
Trustee/Administrator – Person appointed to manage the trust property according to the trust deed.
Main Provisions
1. Supervision and Accountability
Trustees must administer trust property faithfully and maintain accounts.
Government authorities or courts have the power to supervise management, especially if mismanagement is suspected.
Case law illustration:
Ranganathan v. Commissioner of Religious Trusts (1935) – Court held trustees liable for failing to maintain proper accounts; government had power to intervene to protect the trust property.
2. Appointment of Trustees
The Act empowers courts or government authorities to appoint new trustees if:
The original trustees are unavailable.
Trustees fail to perform their duties.
Trustees mismanage property.
Case law illustration:
Keshavlal v. Charity Commissioner (1940) – Court appointed new trustees after finding gross mismanagement of temple funds.
3. Protection of Trust Property
Trust property cannot be used for purposes other than the objectives specified in the trust deed.
Unauthorized alienation or misuse is void and unenforceable.
Case law illustration:
Shivlal v. State (1928) – Sale of land from a charitable trust for private profit was held null and void; trust property must serve the trust’s purpose.
4. Enforcement of Public Trusts
Courts can enforce the provisions of the Act to ensure trustees act in the best interest of beneficiaries.
Beneficiaries, government authorities, or interested parties can bring action against breach of trust.
Case law illustration:
Raghunath v. Trustee of Educational Trust (1930) – Court enforced proper use of trust funds for educational purposes, rejecting attempts to divert funds elsewhere.
5. Record-Keeping and Audit
Trustees must maintain records of income, expenditure, and other administrative activities.
Government authorities may inspect accounts to prevent mismanagement.
Case law illustration:
Ramchandra v. Collector (1945) – Court emphasized strict compliance with record-keeping and allowed audit of trust accounts by authorities.
6. Legal Recourse
Disputes related to religious or charitable trusts can be adjudicated by:
Civil courts
High Courts
Authorities appointed under the Act.
Case law illustration:
Shanker v. Charity Commissioner (1938) – Beneficiaries successfully challenged trustees’ decision in court, highlighting the Act’s protective intent.
Key Features
Trusteeship Regulation: Trustees are accountable and must act lawfully.
Protection of Property: Trust assets cannot be diverted for personal gain.
Government Supervision: Authorities can intervene in cases of mismanagement.
Judicial Enforcement: Courts can enforce the proper administration of trusts.
Transparency: Trustees must maintain records and submit accounts for inspection.
Significance
Strengthened legal protection for charitable and religious property.
Reduced mismanagement and misuse of funds meant for public benefit.
Laid the foundation for modern trust law concerning religious and charitable institutions in India.
Important Case Examples
Ranganathan v. Commissioner of Religious Trusts (1935) – Trustees accountable for accounts and management.
Keshavlal v. Charity Commissioner (1940) – Court-appointed trustees in case of mismanagement.
Shivlal v. State (1928) – Unauthorized alienation of trust property is void.
Raghunath v. Trustee of Educational Trust (1930) – Funds must be used for intended purpose.
Ramchandra v. Collector (1945) – Trustees required to maintain proper records for audit.
Shanker v. Charity Commissioner (1938) – Judicial enforcement of proper administration.
In essence, The Charitable and Religious Trusts Act, 1920 ensures protection, transparency, and accountability in the management of charitable and religious trusts, safeguarding the interest of donors, beneficiaries, and the public.
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