Sixty years after Independence, the Government has finally decided to amend the India Trusts Act of 1882 and do away with clauses governing investment of trust money that were relevant only for the British Raj. There are clauses in the Act that speak of investments made by trusts in “Presidency-town, or in Rangoon Town, or by or on behalf of the trustees of the port of Karachi”. Or consider this. Some clauses of the Act, that have not been deleted since Independence, say “the trustee is bound to invest the money on the following securities, and on no other: (a) In promissory notes, debentures, stock or other securities of any state Government or of the Central Government or of the United Kingdom of Great Britain and Ireland”.Or, for that matter, the Act also talks of investments “in stock or debentures of, or shares in Railway or other Companies the interest whereon shall have been guaranteed by the Secretary of State for India in Council or by the Central Government or in debentures of the Bombay Provincial Co-operative Bank Limited, the interest whereon shall have been guaranteed, by the Secretary of State for India in Council or the State Government of Bombay”.All these clauses fall under Section 20 of the Act and on Monday when the Union Cabinet meets, it is expected to clear a proposal to amend this section and even have irrelevant clauses completely deleted.The amendment, say officials from the Union Finance Ministry, has been necessitated as they currently serve no purpose and are a complete anachronism under the current conditions.Officials said the Finance Ministry had proposed changes in the Act earlier this year and now the Law Commission has given its consent for amending Section 20 of the Act.Explaining the significance of the section, officials said if a trust was created with the intention that funds in the trust were for a future generation, say after two decades, then there should be some provision that guided where these funds could be invested.Officials explained that Section 20 of the India Trusts Act guided where investments could be made by trusts in the event the trust agreement itself did not define where money could be invested. The Act in its current form has a clarificatory paragraph in the section that makes a distinction between pre and post-Independence. However, these were only through adminsitrative orders.Consider this: one clause in the Act (Section 20 d) that allows investments “in debentures or other securities for money issued, under the authority of any Central Act or Provincial Act or State Act, by or on behalf of any municipal body, port trust or city improvement trust in any Presidency-town, or in Rangoon Town, or by or on behalf of the trustees of the port of Karachi”.After Independence, it was only through an administrative order that the following para was added to this Section 20 d and the law therefore currently reads: “Provided that after the 31st day of March,1948, no money shall be invested in any securities issued by or on behalf of a municipal body, port trust of city improvement trust in Rangoon Town, or by or on behalf of the trustees of the port of Karachi.”There are other similar instances in the Act which have an associated administrative order issued after Independence. However, all these have now lost their relevance and need to be removed, officials said.
