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5. Section 47 of The Indian Trusts Act, 1882, observes that a trustee cannot delegate his office or authority. It reads as under;

47. Trustee cannot delegate.

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.

According to Section 47, 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. From a perusal of Section 47, it would clearly appear that a trustee cannot delegate his office or any of his duties unless the instrument of trust so provides or the consent is given by the beneficiary provided the beneficiary is competent to contract. Section 11 of The Indian Contract Act says that every person is competent to contract who is of the age of majority according to the law to which he is subject, and who is of sound mind and is not disqualified from contracting by any law to which he is subject.

10. Section 47 of the Trust Act clearly puts an embargo on the authority of trustee when it says that a trustee cannot delegate his office or any of his duties either to a co-trustee or to a co-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.

So far as the authority under the Trust Deed is concerned, from a very perusal of Clause 3 of the Trust Deed, it would appear that the Trustees are entitled and expressly authorised to invest the Trust funds or any monies subject to the Trust Deed in any such securities or investments as the trustee may deem fit, whether such securities or investments be authorised or not by law for investment of the Trust funds and to vary or transpose any such investments for or into others as they may from time to time think fit and without prejudice to general power conferred upon the trustees they have been authorised to invest in shares, stock, debentures, or debenture stock or bond of any company (Private or Public) or corporation or municipality or legal authority or local body in or outside India, they may invest in deposits with interest with any person, firm or company or any Bank or Banks. They may also invest in relation to loan on security, and they would also be entitled to invest in any other securities or investments not specifically provided if the trustees in their absolute and uncontrolled wisdom consider this investment to be suitable or advantageous. Clause 4(3) of Trust Deed authorises the trustees to invest the property exercising their discretion but that does not give them an authority to become a partner and invest the money through the help and assistance of a firm. We could understand a case that the Trustees on the authority conferred upon them under Clause 3 were investing money of the Trust in shares, stocks, debentures deposits, were extending loan on security or were making investments in some other securities or so but we cannot hold that creation of the partnership was authorised in favour of the trustees. Up to the date of the order of assessment, the beneficiaries did not come and say to the Assessing Officer that the instrument of the Trust did not authorise the trustee to delegate his office or any of his duties but the beneficiary being competent to contract was consenting to such delegation or specifically authorised the trustee to create and enter into a partnership. When Section 47 says that a trustee cannot delegate his office or any of his duties unless the instrument of Trust so provides or the delegation is in the regular course of business or the delegation is necessary or the beneficiary, being competent to contract, consents to delegation and when none of the conditions enumerated in Section 47 of The Indian Trusts Act, 1882 is applicable, then as a sequel to the aforesaid discussion it has to be held that Section 47 puts a bar against the Trustee to delegate his office or any of his duties in favour of a co-trustee or to a stranger.

15. Once Section 47 of the Trusts Act puts an embargo on the authority of the trustee that he cannot delegate his office or any of his duties either to a co-trustee or to a stranger, then he would be a person disqualified under Section 47 of the Trusts Act. If it is not the case of the trustee that the delegation was in the regular course of the business or the delegation became necessary, then, for all practical purposes, he is disqualified under the law to which he is subject. If a person is disqualified from entering into a partnership, no legally constituted partnership would come into existence. Section 11 of The Indian Contract Act would provide foundational capability to enter into an agreement which ultimately would be an enforceable contract. Coming into existence of a legal partnership under Section 4 of the Act would be a consequence of a legal agreement which can be entered into by a person entitled to contract under Section 11 of the Contract Act. If the person is not authorised to enter into an agreement, then the consequent partnership would be bad and illegal.