The Doctrine of Cypres Trusts in Indian Law

The Doctrine of Cypres Trusts in Indian Law: Principles, Application, and Evolution

Introduction

The doctrine of cypres, derived from the Norman-French phrase "cy près comme possible" (as near as possible), is a principle of equity applied predominantly to charitable trusts. It empowers a court to vary the original terms of a charitable trust when the specific purpose declared by the settlor becomes impossible, impracticable, or illegal to execute, or where a surplus remains after the original purpose has been fulfilled. The core objective is to prevent the failure of a charitable gift by redirecting the trust property to another charitable object that aligns as closely as possible with the settlor's general charitable intention. This doctrine has been adopted and applied by Indian courts, reflecting a commitment to upholding charitable intentions and ensuring the continued public benefit from dedicated funds. As B.K. Mukherjea, J. observed in Ratilal Panachand Gandhi v. State of Bombay (1954 AIR SC 388), cited in Abid Hatim Merchant v. Janab Salebhai Saheb Shaifuddin And Others (2000 AIR SCW 1216), "When the particular purpose for which a charitable trust is created fails or by reason of certain circumstances the trust cannot be carried into effect either in whole or in part, or where there is a surplus left after exhausting the purposes specified by the settlor, the court would not, when there is a general charitable intention expressed by the settlor, allow the trust to fail but would execute it ‘cy-pres’." This article examines the conceptual framework, judicial application, statutory recognition, and evolving contours of the cypres doctrine within the Indian legal landscape.

Conceptual Framework of Cypres in Indian Law

The application of the cypres doctrine in India hinges on several foundational principles, primarily derived from English equity jurisprudence and adapted through judicial pronouncements and statutory enactments.

General Charitable Intention: The Cornerstone

A paramount prerequisite for the invocation of the cypres doctrine is the existence of a "general charitable intention" on the part of the settlor. The court must be satisfied that the settlor had a broader benevolent purpose beyond the specific mode or object indicated. If the settlor's intention was narrowly confined to a particular object, and that object alone, the failure of that specific object will typically lead to a resulting trust in favour of the settlor or their estate, rather than a cypres application.

The Calcutta High Court in Santana Ray v. The Advocate-General Of Bengal (ILR 48 Cal 124), emphasized that "to attract the application of the cy pres doctrine, an absolute declaration of intention to give to charity must be established." It further clarified that there must be "a general charitable intent overlying the particular charitable bequest." Similarly, the Andhra Pradesh High Court in Potti Swami And Brothers v. Rao Saheb D. Govindarajulu (AIR 1960 AP 605) observed that "where the prescribed mode of doing the charitable act is the only one the testator has at all contemplated, the Court cannot apply the doctrine of ‘cypres’, but there will be a resulting trust for the testator's estate." The Supreme Court in State Of Uttar Pradesh v. Bansi Dhar And Others (1974 SCC (1) 446) reiterated this, stating, "The settlor must, in general, have shown a general charitable intention." The primary rule, as noted in Man Singh (Dr.), In Re (ILR (1974) 1 Delhi 689) and Abid Hatim Merchant v. Janab Salebhai Saheb Shaifuddin And Others (2000 AIR SCW 1216), is that the donor's intention must be observed as far as possible.

Impossibility, Impracticability, Illegality, or Inexpediency of Original Purpose

The cypres doctrine is typically invoked when the original charitable purpose becomes:

  • Impossible: The object ceases to exist or cannot be achieved.
  • Impracticable: While not strictly impossible, carrying out the trust according to its literal terms is unfeasible or would defeat the underlying charitable intent. The Supreme Court in State Of Uttar Pradesh v. Bansi Dhar And Others (1974 SCC (1) 446) clarified that impossibility should be understood "not in the strict physical sense but in the liberal, diluted sense of impracticability."
  • Illegal: The purpose becomes contrary to law.
  • Inexpedient: Some statutes, like the Bombay Public Trusts Act, 1950, have expanded the grounds to include inexpediency or when it is undesirable in the public interest to carry out the original object (Chhotalal Lallubhai Shah v. The Charity Commissioner, Bombay, AIR 1958 Bom 354).

The doctrine also applies where there is a surplus of funds after the original charitable purpose has been fully achieved (Man Singh (Dr.), In Re, ILR (1974) 1 Delhi 689; Official Trustee, 1993 SCC Online Mad 320).

Application to Wills and Gifts Inter Vivos

Historically, there was a debate about whether the cypres doctrine was confined to testamentary trusts (wills) or also extended to trusts created inter vivos (during the settlor's lifetime). The Andhra Pradesh High Court in Potti Swami And Brothers v. Rao Saheb D. Govindarajulu (AIR 1960 AP 605) noted, "the preponderance of authority is in favour of the application of the doctrine of cypres to wills and not to deeds or gifts inter vivos," citing older English authorities and Lewis on Perpetuity.

However, the Supreme Court of India in State Of Uttar Pradesh v. Bansi Dhar And Others (1974 SCC (1) 446) took a broader view:

"We are inclined to the view that, both testamentary and non-testamentary gifts for public charitable purposes must be saved by a wider intervention of court, for public interest is served that way. Neither principle nor precedent bars this broader invocation of the Courts' beneficent jurisdiction."

This stance was reaffirmed by the Madras High Court in Official Trustee (1993 SCC Online Mad 320), which cited Bansi Dhar. Thus, the contemporary Indian position supports the application of cypres to both testamentary dispositions and gifts inter vivos, provided the other conditions are met.

Judicial Application and Interpretation of Cypres

Indian courts have consistently applied and interpreted the cypres doctrine, balancing the settlor's intent with the practical needs of ensuring charitable funds serve a public benefit.

Key Supreme Court Pronouncements

The Supreme Court has played a crucial role in shaping the cypres doctrine in India.

  • Ratilal Panachand Gandhi v. State Of Bombay (1954 AIR SC 388): While primarily addressing religious autonomy, this case (as cited in Abid Hatim Merchant) acknowledged the court's power to execute a charitable trust cypres if a general charitable intention is present and the original purpose fails or there is a surplus.
  • State Of Uttar Pradesh v. Bansi Dhar And Others (1974 SCC (1) 446): This is a seminal judgment on cypres. The Court held that a conditional gift for a specific hospital construction failed because the conditions were not met, and the cypres doctrine could not be invoked due to the lack of a general charitable intent beyond the specific conditions. It clarified the "twin conditions" for cypres: (1) a general charitable intention, and (2) impossibility or impracticability of the original purpose. It also crucially extended the doctrine's applicability to non-testamentary gifts.
  • Abid Hatim Merchant v. Janab Salebhai Saheb Shaifuddin And Others (2000 AIR SCW 1216): The Court reiterated that the primary rule is to observe the donor's intention. If the donor prescribed a particular mode which is incapable of performance, but had a charitable intention transcending that mode, the court can carry out the charitable intention cypres.
  • N.S Rajabathar Mudaliar v. M.S Vadivelu Mudaliar And Others (1970 SCC (1) 12): The Court clarified that cypres applies where a charitable trust is initially impossible or impracticable, and not to non-charitable provisions (like maintenance for family members) if they are secondary to the main charitable object.

High Court Perspectives and Nuances

Various High Courts have contributed to the jurisprudence on cypres:

  • Potti Swami And Brothers v. Rao Saheb D. Govindarajulu (AIR 1960 AP 605): Emphasized that if the specific mode is the only one contemplated, cypres is inapplicable, leading to a resulting trust. It also highlighted the traditional view limiting cypres to wills.
  • Man Singh (Dr.), In Re (ILR (1974) 1 Delhi 689; also referred to as State v. Man Singh And Ors., AIR 1974 Delhi 228): Stressed observing the donor's intention as far as possible. If the specified mode is impracticable, illegal, impossible, or inexpedient, the charitable intention is executed cypres. The case involved utilizing funds donated for a specific hall (found inadequate) for constructing an operation theatre in a Parsi hospital, showcasing a practical application.
  • Official Trustee (1993 SCC Online Mad 320): Applied cypres where original conditions (geographical limits, monetary amounts fixed in 1935) became outdated due to changed circumstances and inflation, allowing surplus funds to be used for similar charitable purposes beyond the original constraints, given a general charitable intent.
  • Santana Ray v. The Advocate-General Of Bengal (ILR 48 Cal 124): A foundational case stressing the need for an "absolute declaration of intention to give to charity" and a "general charitable intent overlying the particular charitable bequest."
  • Balkrishna Vishvanath v. Vinayak Narayan (1931 SCC Online Bom 121): Directed the lower court to consider cypres if will directions were unfulfillable, ensuring the testator's wishes were given effect as nearly as possible.

Distinction from Resulting Trusts

The cypres doctrine operates to prevent a resulting trust where a charitable gift might otherwise fail. A resulting trust typically arises when a trust fails and there is no provision for what happens to the property, or when the trust purpose is fulfilled with a surplus remaining, and no general charitable intent is discernible. In such cases, the property "results" back to the settlor or their estate. Section 83 of the Indian Trusts Act, 1882, codifies this for private trusts: "Where a trust is incapable of being executed, or where the trust is completely executed without exhausting the trust property, the trustee, in the absence of a direction to the contrary, must hold the trust property...for the benefit of the author of the trust or his legal representative."

However, as observed by the Income Tax Appellate Tribunal in M.K. CHANDRAKANTH v. INCOME-TAX OFFICER (1983 ITD Madras 5 319), this doctrine of resulting trust "does not apply to charitable trusts where the doctrine of cypres would apply." The presence of a general charitable intention is the key differentiator that allows a court to apply funds cypres rather than letting them revert.

Statutory Recognition and Expansion

While cypres is primarily an equitable doctrine, its principles are reflected in and sometimes expanded by Indian statutes.

The Indian Trusts Act, 1882

The Indian Trusts Act, 1882, primarily governs private trusts and does not explicitly apply to public or private religious or charitable endowments (Section 1). However, its general principles, embodying rules of equity and good conscience, can be applied to public charitable trusts where appropriate (Sheikh Abdul Kayum v. Mulla Alibhai, 1963 AIR SC 309; TRUSTEES OF HEH THE NPM TRUST v. THE COMMR. OF INCOME-TAX, HYDERABAD, 2000 INSC 230). As discussed, Section 83 of the Act provides for resulting trusts, which stands in contrast to the cypres application for charitable trusts.

Specific State Enactments (e.g., Bombay Public Trusts Act, 1950)

Several states have enacted legislation to regulate public charitable trusts, and these often include provisions for cypres application. For instance, Sections 55 and 56 of the Bombay Public Trusts Act, 1950 (now applicable in Maharashtra and Gujarat with amendments) significantly widen the scope of cypres.

The Bombay High Court in Chhotalal Lallubhai Shah v. The Charity Commissioner, Bombay (AIR 1958 Bom 354), observed:

"by ss. 55 and 56 the Bombay Legislature has considerly widened the scope of the application of a fund cy pres... If in the view of the Court it is inexpedient, impracticable, undesirable, unnecessary or improper in public interest to give effect to the original intention... the Court is entitled to direct application of the funds to any other charitable or religious objects... The Court is not obliged to apply the fund to a purpose even similar to the purpose of the settlor which has failed."

This indicates a legislative trend towards granting courts broader discretion in applying funds cypres, moving beyond strict impossibility to grounds like inexpediency or public interest, for public trusts (though originally, the power under Section 56 was for all public trusts, religious or charitable, but its application to religious trusts might have been subsequently nuanced by judicial interpretation, as hinted in the judgment with reference to a Supreme Court decision regarding Ratilal Panachand Gandhi).

Section 92 of the Code of Civil Procedure, 1908

Section 92 of the Code of Civil Procedure, 1908 (CPC) provides a mechanism for suits relating to public charities. It allows the Advocate General, or two or more persons having an interest in the trust and having obtained the leave of the Court, to institute a suit for various reliefs, including the application of the cypres doctrine. When a situation arises requiring the cypres application of trust funds (e.g., original objects failing, surplus funds), proceedings are often initiated under Section 92 CPC. The Supreme Court in TRUSTEES OF HEH THE NPM TRUST v. THE COMMR. OF INCOME-TAX, HYDERABAD (2000 INSC 230) implicitly recognized that a cypres application for a public trust would typically be sought through a proper suit, potentially under Section 92 CPC, rather than under provisions like Section 34 of the Indian Trusts Act, 1882 (which applies to private trusts for seeking court opinion or direction).

Challenges and Considerations in Applying Cypres

The application of the cypres doctrine, while beneficial, presents certain challenges:

  • Ascertaining "General Charitable Intention": Determining whether a settlor possessed a general charitable intention or merely a specific one can be a complex exercise in interpretation, often relying on the nuanced language of the trust deed and surrounding circumstances. This involves a degree of judicial discretion.
  • Defining "Impracticability": The threshold for what constitutes "impracticability" can be subjective and may evolve with societal changes and judicial attitudes. Courts must balance respecting the settlor's original directions with the need for practical utility of the charitable funds.
  • Balancing Donor's Intent with Public Benefit: The core tension in cypres applications lies in faithfully adhering to the donor's presumed overarching charitable wishes while adapting the trust to contemporary needs and ensuring maximum public benefit. The court's role is to find an object "as near as possible" to the original, which itself can be a matter of debate. As stated in MARTIN BORCHERT AND OTHERS Vs ARZAN KHAMBATTA AND OTHERS (2011 SCC OnLine Bom 203), quoting Attorney General for New South Wales Vs. Perpetual Trustee Co. Ltd. (1940) 63 CLR 209, "More is to be gained by examination of the nature of the charitable trust itself and what is involved in the author's plan or project" than by mere linguistic construction.

Conclusion

The doctrine of cypres is an indispensable tool in the administration of charitable trusts in India. Rooted in equity, it ensures that charitable intentions are not frustrated by unforeseen circumstances, supervening impossibility, or the obsolescence of specific objects. The Indian judiciary, led by the Supreme Court, has progressively interpreted and applied the doctrine, extending its reach to gifts inter vivos and emphasizing the paramountcy of a general charitable intent. Statutory enactments in various states have further codified and, in some instances, expanded the grounds for cypres application, reflecting a pragmatic approach to trust administration.

While challenges in ascertaining intent and defining impracticability persist, the cypres doctrine remains vital for adapting charitable trusts to changing societal needs, thereby ensuring that resources dedicated to public good continue to serve their benevolent purpose effectively. It embodies the legal system's commitment to upholding philanthropy and maximizing the utility of charitable endowments for the benefit of the community.