PART IV
Constructive Trusts
There are fourteen cases of constructive trusts which are enumerated in the Trust Act.
They fall under five heads :—
(1) C ONSTRUCTIVE T RUSTS ARISING OUT OF T RANSFERS — S ECTIONS 81,
82,84,85.
(2) C ONSTRUCTIVE T RUSTS ARISING OUT OF UNFAIR ADVANTAGE GAINED BY ONE PERSON AS AGAINST ANOTHER PERSON — SECS . 85, 88, 89, 90, 93.
(3) C ONSTRUCTIVE T RUSTS ARISING OUT OF CONTRACTS MADE —S ECS . 86,
91,92.
(4) C ONSTRUCTIVE T RUSTS ARISING OUT OF A MERGER OF TWO PERSONALITIES IN ONE INDIVIDUAL — SECTION 87.
(5) C ONSTRUCTIVE T RUSTS ARISING OUT OF A PAST TRUST — S ECTION 83.
(1) T RANSFER OR B EQUEST OF P ROPERTY
(i) Section 81.
- In certain cases the transfer or bequest of property imposes an obligation upon the tranferee or legatee in the nature of a trust in favour of the owner or his legal representative.
Ordinarily the transferee or legatee would take the property absolutely without any such obligation.
When can it be held that the transferee or legatee takes it subject to an obligation ? He takes it subject to an obligation when there is no intention on the part of the owner to dispose of the beneficial interest in the property to the transferee or legatee.
How is intention to be determined ?—In the light of the circumstances of the case. It is the circumstances which must be referred to in order to find out the intention of the owner.
(ii) Section 82.
- The second case where the transfer of property imposes an obligation upon the transferee in the nature of a trust is the case where the transferee is made to one and the consideration is paid by another—in such a case the transferee holds it on trust for the person who paid the consideration.
Ordinarily the transferee would be the owner in the eye of the law, the property being conveyed to him by the transferor.
- This rule that a transferee who has not paid consideration holds it on trust for a person who has paid consideration applies generally except in one case—