The Doctrine of Non-Delegation by Trustees in Indian Law: Upholding Fiduciary Integrity
Introduction
The office of a trustee is one of profound fiduciary responsibility, demanding personal attention and diligence in the administration of the trust. A cornerstone of trust law in India, as in many other jurisdictions, is the principle that a trustee cannot delegate their duties, powers, or office to another. This rule, often encapsulated in the Latin maxim delegatus non potest delegare (a delegate cannot further delegate), stems from the understanding that a settlor reposes personal trust and confidence in the chosen trustee(s). Any unauthorized delegation would undermine this foundational trust and potentially jeopardize the interests of the beneficiaries. This article explores the contours of this doctrine within the Indian legal framework, analyzing its statutory basis, judicial interpretations, permissible exceptions, and the consequences of its breach, drawing significantly from established case law and the Indian Trusts Act, 1882.
The General Principle: Delegatus Non Potest Delegare in Trust Law
The rule against delegation is fundamental to the concept of trusteeship. The settlor selects a trustee based on their perceived integrity, skill, and judgment. Therefore, the trustee is expected to personally perform the duties of the office. As the Supreme Court of India observed in Sheikh Abdul Kayum v. Mulla Alibhai (1963 AIR SC 309), a fiduciary relationship, once created, cannot be unilaterally terminated or its responsibilities shirked through delegation, as this would be "against the interests of society in general" (Sheikh Abdul Kayum v. Mulla Alibhai, Supreme Court Of India, 1962, Ref 6). The Court emphasized that trustees cannot "transfer their duties, function and power to some other body of men and create them trustees in their own place unless this is clearly permitted by the trust deed, or agreed to by the entire body of beneficiaries" (Atmaram Ranchhodbhai v. Gulamhusein Gulam Mohiyaddin And Another, Gujarat High Court, 1972, Ref 9, quoting Sheikh Abdul Kayum). This prohibition ensures that the beneficiaries receive the benefit of the specific trustee's discretion and diligence, which was the basis of their appointment.
Statutory Embodiment: The Indian Trusts Act, 1882
The Indian Trusts Act, 1882 ("Trusts Act") codifies the principles governing private trusts in India. While Section 1 of the Trusts Act states that its provisions do not apply to public or private religious or charitable endowments, the principles enshrined therein, particularly regarding trustee duties, are often applied by analogy to such trusts by Indian courts.
Section 47: The Core Prohibition
Section 47 of the Trusts Act is the primary statutory provision addressing the non-delegation rule. It unequivocally states: "A trustee cannot delegate his office or any of his duties either to a co-trustee or to a stranger unless (a) the instrument of trust so provides, or (b) the delegation is in the regular course of business, or (c) the delegation is necessary, or (d) the beneficiary, being competent to contract, consents to the delegation." This provision has been consistently cited and upheld by various courts, including the Supreme Court in cases like Unknown v. In Re: H E H The Nizam'S (Supreme Court Of India, 1979, Ref 7) and Shanti Vijay And Co. And Others v. Princess Fatima Fouzia And Others (Supreme Court Of India, 1979, Ref 8), and reiterated by High Courts (Princes Fatima Fauzia And Another…* v. Syeed Ul-Mulk Alias Nawab Saheb Chathari & Others…, Andhra Pradesh High Court, 1979, Ref 20; Square Four Assets Management And Reconstruction Co. Pvt. Ltd. v. Orient Beverages Ltd., Calcutta High Court, 2019, Ref 21).
Section 48: The Duty of Joint Action
Section 48 of the Trusts Act, which stipulates that "When there are more trustees than one, all must join in the execution of the trust, except where the instrument of trust otherwise provides," serves as a corollary to Section 47. If trustees cannot delegate their duties, it naturally follows that they must act jointly. The Supreme Court in Unknown v. In Re: H E H The Nizam'S (1979 SC, Ref 7) noted that Section 48 emphasizes that "it behoves each and every one of them to exercise his individual judgment and discretion on every matter, and not blindly to leave any questions to his co-trustees or co-trustee." This principle of joint responsibility was also affirmed in Shanti Vijay And Co. And Others v. Princess Fatima Fouzia And Others (1979 SCC 4 602, Supreme Court Of India, 1979, Ref 14), where the Court, citing Lewin's Law of Trusts and Lala Man Mohan Das v. Janki Prasad (LR (1944) 72 IA 39), stated that co-trustees "all form as it were but one collective trustee, and therefore must execute the duties of the office in their joint capacity."
Applicability to Public and Charitable Trusts
Despite Section 1 of the Trusts Act, the principles of non-delegation embodied in Sections 47 and 48 have been consistently applied to public, religious, and charitable trusts. The Supreme Court in Sheikh Abdul Kayum v. Mulla Alibhai (1963 AIR SC 309, Ref 6) explicitly stated that these sections "embody nothing more or less than the principles which have been applied to all trusts in all countries." This view was echoed by the Gujarat High Court in Atmaram Ranchhodbhai v. Gulamhusein Gulam Mohiyaddin And Another (1972 SCC ONLINE GUJ 10, Gujarat High Court, 1972, Ref 16), which held that "whether trust is a private trust governed by the Indian Trust Act or is a public charitable or religion trust, a trustee cannot delegate any of his duties, function and powers to a co-trustee or to any other person" unless within the recognized exceptions. The Bombay High Court in Mukund S/O Rambhau Pinjarkar… v. Sarda Education Trust… (Bombay High Court, 1996, Ref 19) also affirmed that the principles of Sections 47 and 48 apply to public trusts under the Bombay Public Trusts Act, 1950.
Permissible Exceptions to the Rule Against Delegation
Section 47 of the Trusts Act itself carves out four specific exceptions to the general rule against delegation. These exceptions are narrowly construed by the courts to ensure that the core fiduciary responsibilities are not diluted.
(a) Provision in the Instrument of Trust
If the trust deed, which is the foundational document outlining the settlor's intentions and the trust's operational framework, expressly permits delegation, then a trustee may delegate their duties in accordance with such provisions. This exception respects the settlor's autonomy in structuring the trust. The Supreme Court in J.P Srivastava & Sons (P) Ltd. And Others v. Gwalior Sugar Co. Ltd. And Others (2005 SCC 1 172, Supreme Court Of India, 2004, Ref 17) noted that one trustee may act for all where the trust deed allows the trusts to be executed by one or more or by a majority of trustees.
(b) Delegation in the Regular Course of Business
Trustees are permitted to delegate tasks that are ministerial in nature and fall within the "regular course of business." This allows trustees to employ agents or professionals for functions that a prudent person of business would ordinarily delegate in connection with their own affairs (Sheikh Abdul Kayum v. Mulla Alibhai, 1963 AIR SC 309, Ref 6). Examples include employing an auctioneer to sell property (Illustration (b) to Section 47) or a person to collect rents (Illustration (c) to Section 47). In Kali Charan Keshan And Others Petitioners v. Vishvanath And Another S (2003 SCC ONLINE P&H 141, Punjab & Haryana High Court, 2003, Ref 15), the filing of an eviction application by an attorney jointly authorized by all trustees was deemed an act in the regular course of business, especially where the trust deed also permitted delegation. However, this exception does not extend to the delegation of core discretionary functions that require the trustee's personal judgment.
(c) Necessity
Delegation is permissible if it is "necessary." This implies situations where personal performance by the trustee is impracticable or impossible. The threshold for establishing necessity is high, and it must be demonstrated that such delegation is essential for the proper administration of the trust. This exception is invoked sparingly. The Patna High Court in Miss Elizabeth May Toomey v. Bhupendra Nath Bose (1928 SCC ONLINE PAT 24, Patna High Court, 1928, Ref 18), while dealing with registration formalities, touched upon the practicalities that might necessitate certain actions being performed through agents, though the primary argument there was about the validity of a power of attorney for registration rather than a broad delegation of trustee duties.
(d) Consent of Beneficiaries
If all beneficiaries, being competent to contract (i.e., sui juris and of sound mind), consent to the delegation, it is permissible. This consent must be free, informed, and given with full knowledge of the facts and implications. This exception acknowledges the beneficiaries' ultimate interest in the trust property and its administration.
Other Judicial Interpretations of Permissible Delegation
Beyond the explicit exceptions in Section 47, courts have recognized situations that, while related, might not strictly be "delegation" of the office itself. For instance, the Supreme Court in J.P Srivastava & Sons (P) Ltd. (2005 SC, Ref 17) acknowledged that one trustee might act for all with the "express sanction or approval of the act by the co-trustees" or where a "co-trustee merely gives effect to a decision taken by the trustees jointly." This aligns with the observation in Shanti Vijay & Co. (1979 SCC 4 602, Ref 14) that "the act of one trustee done with the sanction and approval of a co-trustee may be regarded as the act of both. But such sanction or approval must be strictly proved." This implies that while the decision-making must be collective, the execution of a joint decision can sometimes be carried out by one, provided there is clear evidence of prior joint deliberation and approval.
Judicial Scrutiny of Delegation: Key Precedents
Indian courts have consistently applied the rule against delegation with rigor, emphasizing the personal nature of the trustee's obligations.
Sheikh Abdul Kayum v. Mulla Alibhai (1963 AIR SC 309)
This landmark judgment (Ref 5 & 6) is pivotal. The Supreme Court held that the original trustees of the Burhanpur Trust lacked the authority to abdicate their duties and transfer the management and properties of the trust to a newly formed Hakimia Society. Such an act was deemed an illegal and void attempt at wholesale delegation, far exceeding any permissible exceptions. The Court clarified that the power to appoint additional trustees or frame rules did not extend to substituting the entire trustee body or transferring trust properties to a new entity without explicit authorization in the trust deed or from the court or beneficiaries.
Shanti Vijay & Co. v. Princess Fatima Fouzia (1979 SCC 4 602)
In this case (Ref 8 & 14), the Supreme Court reiterated that in a private trust with multiple trustees, all must join in the execution of the trust, and a majority cannot bind the trust estate unless the trust deed provides otherwise. The Court stressed that "a trustee for sale of property, cannot leave the whole conduct of the sale to his co-trustees. The reason for this is that the settlor has entrusted the trust property and its management to all the trustees, and the beneficiaries are entitled to the benefit of their collective wisdom and experience." This underscores the non-delegable nature of discretionary decision-making, even among co-trustees.
Atmaram Ranchhodbhai v. Gulamhusein Gulam Mohiyaddin (1972 SCC ONLINE GUJ 10)
The Gujarat High Court, in this Full Bench decision (Ref 9 & 16), extensively reviewed the law on trustee delegation. It firmly established that the principles of non-delegation apply equally to public charitable trusts. The Court held that "trustees cannot, even by a unanimous resolution, authorise one of themselves to act as managing trustee for executing the duties, functions and powers relating to the trust and every one of them must join in the execution of such duties, functions and powers," save for the recognized exceptions. The Court clarified that while the decision (e.g., to terminate a tenancy) must be taken by all co-trustees, the formal act of giving notice pursuant to that joint decision could be performed by one co-trustee on behalf of the others, provided the joint decision and approval are strictly proved.
H.E.H. The Nizam's Jewellery Trust (as cited in Square Four Assets, 2019 Cal HC, Ref 21)
The Calcutta High Court, referencing the Supreme Court's decision in H.E.H. The Nizam's Jewellery Trust (in re:) ((1979) 4 SCC 602 : AIR 1980 SC 17, which appears to be the same as Shanti Vijay & Co. or Unknown v. In Re: H E H The Nizam'S), noted that "No trustee can delegate his powers and duties to another trustee and any agreement to do so would be illegal and void and would not be covered by any of the exceptions in section 47." This highlights the severe consequence of unauthorized delegation.
Consequences of Improper Delegation
An unauthorized delegation of a trustee's duties or office constitutes a breach of trust. Such a breach can lead to several adverse consequences:
- Personal Liability: The trustee who improperly delegates may be held personally liable for any losses suffered by the trust as a result of the delegation, including losses caused by the acts or defaults of the delegate.
- Invalidity of Acts: Actions taken by the improperly appointed delegate may be deemed void or voidable, lacking legal authority. As seen in Sheikh Abdul Kayum (1963 AIR SC 309, Ref 5), the transfer of trust management to the Hakimia Society was declared illegal and void.
- Removal of Trustee: Persistent or gross breach of the duty not to delegate can be a ground for the removal of the trustee from office.
Distinction between Delegation of Duties and Seeking Professional Advice
It is crucial to distinguish between impermissible delegation of discretionary duties and the permissible act of seeking professional advice. Trustees are not expected to be experts in all fields (e.g., law, finance, property valuation). They are entitled, and often encouraged, to seek advice from qualified professionals. However, after receiving such advice, the trustee must exercise their own independent judgment in making the final decision. The ultimate responsibility for the decision rests with the trustee and cannot be abdicated to the advisor. The use of agents for ministerial tasks is permissible, but the delegation of the core fiduciary discretion is not.
Conclusion
The doctrine that a trustee cannot delegate their duties or office is a fundamental tenet of Indian trust law, deeply rooted in the fiduciary nature of the trustee-beneficiary relationship. Enshrined in Section 47 of the Indian Trusts Act, 1882, and consistently upheld and elaborated upon by the judiciary, this rule ensures that the personal skill, judgment, and integrity of the trustee, in whom the settlor reposed confidence, are directly applied to the administration of the trust. While the law recognizes specific and narrowly construed exceptions – such as provisions in the trust instrument, necessity, delegation in the regular course of business, or consent of competent beneficiaries – the overarching principle remains one of personal responsibility and joint action by co-trustees. The rigorous application of this doctrine by Indian courts, exemplified in cases like Sheikh Abdul Kayum v. Mulla Alibhai and Shanti Vijay & Co. v. Princess Fatima Fouzia, serves to protect the interests of beneficiaries, maintain the sanctity of the settlor's intentions, and uphold the integrity of trust administration in India.