Public Trust through a Will

1. Introduction

The Maharashtra Public Trusts Act, 1950 (formerly the Bombay Public Trusts Act) serves as the primary legal framework for regulating public religious and charitable trusts in the State of Maharashtra. As an executor, you are the custodian of a testator’s final wishes. The Act is designed not to obstruct you, but to provide a secure structure that protects the deceased’s legacy from mismanagement and ensures their charitable intent is fulfilled for generations.

To begin, you must understand two foundational definitions:

• Public Trust (Section 2(13)): An express or constructive trust created for public religious or charitable purposes. This includes temples, maths, churches, and societies formed for charitable ends.
• Instrument of Trust (Section 2(7A)): This is the document that creates the trust. While the Will is your primary instrument, any “Scheme” subsequently framed by the Charity Commissioner for the trust’s management also becomes part of this legal instrument.
• A trust by Will (also called a testamentary public trust) is a public religious or charitable trust that comes into existence pursuant to the directions contained in a valid Will of a deceased person. The trust takes effect only after the death of the testator.
• Under the Maharashtra Public Trusts Act, 1950 (MPTA), such trusts are specifically recognised and are required to be registered.

2. Registration Mandate for Executors

When a Will directs the creation of a public trust, the executor is legally burdened with the duty of registration. This is not a task that can be delayed indefinitely.

Crucial Registration Deadlines (Section 29)

You must apply for registration (using Form Schedule II) within:

• One month from the date probate is granted; OR
• Six months from the date of the testator’s death;
• Whichever is earlier.

The “Whichever is Earlier” Trap: Executors often wait for probate to begin the process, but the six-month clock from the date of death is often the tighter deadline.

• Illustrative Example: If a testator passes away in January and probate is only granted in August, the six-month deadline (ending in July) has already lapsed. You must file based on the death date to remain compliant.

Extension Clause: If you cannot meet these deadlines due to valid complications, the Deputy or Assistant Charity Commissioner may extend the period upon showing “sufficient cause” (Section 29 Proviso).

3. The Relationship Between Probate and the Charity Commissioner

The Act creates a mandatory procedural bridge between the Civil Courts and the Charity Organization under Section 53.

1. Mandatory Forwarding: The executor must forward a copy of the Will to the Deputy or Assistant Charity Commissioner.
2. Court Prohibition: A Civil Court is legally prohibited from granting probate or letters of administration unless it is satisfied that the Will has been forwarded to the Charity Commissioner.
3. A Vital Distinction: Forwarding a copy of the Will to the Commissioner’s office satisfies the court for probate purposes, but it does not constitute an application for registration. You must still file the formal registration application independently.

4. Step-by-Step Registration Procedure https://capundit.com/registration-of-public-trusts/

Under Section 18, the application must be in writing, using the prescribed form, and accompanied by the appropriate fee. It must be signed and verified by the executor (as the initial trustee) or an authorized agent.

Checklist of Required Particulars:

• Trust Name: The designation of the trust.
• Trustee Information: Names and addresses of all trustees and managers.
• Succession: The mode by which future trustees will be appointed.
• Property Description: A detailed list of movable and immovable property.
• Valuation: The approximate value of all trust assets.
• Financial History: The gross average annual income and expenditure, estimated based on the three years immediately preceding the application (or the period since death).

Secondary Registration (Section 18(7)): If the trust contains immovable property (land/buildings), the trustee has a further duty to send a memorandum in the prescribed form to the Sub-Registrar of the sub-district where the property is located. This must be done within three months of the trust’s creation to ensure local land records are updated.

5. Financial Penalties & Legal Consequences

Non-compliance carries both financial and personal risks.

Compliance Violations & Fines (Section 66 & 66A)

Violation	Maximum Penalty
Failure to apply for registration (Sections 18 & 29)	₹10,000 Fine
Failure to report changes in trust particulars (Section 22)	₹10,000 Fine
Failure to keep regular accounts (Section 32)	₹10,000 Fine
Failure to invest money in public securities (Section 35)	₹10,000 Fine
Alienating (selling/gifting) property without sanction (Section 36)	6 Months Imprisonment and/or ₹25,000 Fine

6. Fiduciary Duties and Ongoing Management

As an executor-turned-trustee, you are held to the “Ordinary Prudence” rule (Section 36A). You must manage trust funds with the same care a person of ordinary prudence would use for their own affairs.

• Record-Keeping (Section 32): You must maintain regular accounts in the form approved by the Charity Commissioner.
• Budgeting (Section 31A): If the trust’s annual income exceeds the prescribed limit, you must submit a budget to the Charity Commissioner at least one month before the start of the accounting year.
• Investment Safety (Section 35): Trust money not required for immediate use must be deposited in Scheduled Banks, Postal Savings Banks, approved Co-operative Banks, or Public Securities.
• Restriction on Alienation (Section 36): You cannot sell, exchange, or gift immovable property without the previous sanction of the Charity Commissioner.
• Restriction on Borrowing (Section 36A(3)): You are prohibited from borrowing money (via mortgage or otherwise) on behalf of the trust without previous sanction from the Charity Commissioner.

7. Administrative Oversight

The Charity Organization is structured to ensure public accountability:

• Charity Commissioner: The state-level head with powers of general superintendence (Section 3).
• Deputy/Assistant Charity Commissioners: The regional heads who manage the Registration Offices and conduct inquiries (Section 16).
• Rights of Interested Persons: Under Section 19, any “person having interest”—defined in Section 2(10) to include beneficiaries and fellow trustees—can move the Commissioner to hold an inquiry into the trust’s management.

8. Summary Checklist for the Executor

To ensure 100% compliance following the testator’s death, follow these steps:

1. Notify the Commissioner: Immediately forward a copy of the Will to the Deputy/Assistant Charity Commissioner (Section 53).
2. File for Probate: Proceed with court filings, using proof of the forwarded Will to satisfy the Court.
3. Register the Trust: File Form Schedule II within one month of probate or six months of death, whichever is earlier (Section 29).
4. Notify Land Records: If there is immovable property, send a memorandum to the local Sub-Registrar within three months (Section 18(7)).
5. Open Statutory Accounts: Deposit funds in a Scheduled or approved Co-operative bank (Section 35).
6. Plan for Contributions: Be aware that the trust must pay an annual contribution to the Public Trusts Administration Fund (Section 58).
7. Maintain Prudence: Do not sell property or borrow money against trust assets without seeking formal “previous sanction” from the Charity Commissioner.