Amendment of Trust Deed

It’s important to remember that the trustees don’t have the right to change the trust deed by default. Even the settler, for that matter, has no power to change the agreement later. The authority to amend is limited to the extent set forth in the trust deed. As a result, trust deed drafting is vital, and appropriate terms should be retained in case of future modifications or exigencies.

The Andhra Pradesh High Court in the case of DIT (Exemptions) v. Ramoji Foundation [2015] 55  held that If all of the conditions spelled down by the settler are met, the power entrusted to the trustees can be changed without having to go to civil court. The approach of the civil court is required where no such power has been provided in the Trust Deed and amendment becomes necessary due to change in time and circumstances and the amendment is such that it would not defy the original intent of the settlor.

The civil court does not have the authority to change or repair the provisions of a trust under Section 92 of the Code of Civil Procedure. It only allows the civil court to remove a trustee, appoint a new trustee, vest any property in a trustee, direct any ex-trustee to deliver possession of the trust property to the person entitled to such possession, direct accounts and enquiries, declare that a portion of the trust property or interest therein shall be allotted to any particular object of the trust, or settle a scheme in appropriate cases.

In Kamla Town Trust v. CIT[1982] 133 ITR 632 (All.), the Supreme Court observed that When it came to amending a trust deed, section 34 of the Indian Trusts Act of 1882 did not apply. Even a civil court, according to the Supreme Court, lacks the authority to modify a Trust Deed. However, an application for a trust deed change could be brought under section 26 of the Specific Relief Act, 1963, if the amendment is required under the CyPres doctrine, which states that the settlor’s original aim cannot fail. Even if the revenue or the ITO were not a party to the rectification proceedings, the assessee-trust must rely on rectification orders issued by civil courts allowing rectification of trust deeds under the applicable provisions of the Specific Relief Act in assessment proceedings.

In the case of Laxmi Narain Lath Trust v. CIT [1998] 99 Taxman 332(Raj.), it was held that the department was legally bound by a supplementary trust deed approved by the competent civil court. Finance Act, 2017 has amended section 12A providing for the condition of registration and made it mandatory for a charitable institution to make an application for fresh registration upon change or modification of objects. Earlier, there was no explicit provision in the Act that mandated a charitable institution to approach for fresh registration in the event of adoption or undertaking modifications of the objects, after the registration had been granted.

In the case of CIT v. Paramount Charity EX Trust [2019] 103 419/262 Taxman 164 the SLP was dismissed by Supreme Court, and the High Court’s decision was upheld, holding that where the original trust deed’s objects were sufficiently broad and covered a range of charitable activities related to education, medical aid, and aid to the poor in times of calamity, registration of the assessee-trust could not be denied for amended objects clarifying the operation of the diagnostic centre on a no-profit basis.


*Dr. Deepak Miglani, Email id.:- [email protected]

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