Difference between De-registration and Dissolution of a Trust
Until 2016 the concept of De registration of trust was unknown as Trust being a perpetual entity. But in 2016 -initially by ordinance and thereafter by amendment in the law, a specific provision was enacted for deregistration of a registered trust. The De- registration proceedings are suo-motu and does not involve the willingness of Trustees. Whereas Dissolution of Trust depends on the provision mentioned in the Trust deed and involves the mutual consent of the Trustees.
Grounds for De- registration of Trust:
By inserting sub-section 3A after sub-section 3 of section 22 of the Maharashtra Public Trusts Act, 1950 , the State Legislature has made a provision for de-registering a trust on the following five grounds:
The Deputy or Assistant Charity Commissioner may, after detailed and impartial inquiry and following such procedure as may be prescribed, de-register the trust on the following grounds:
(a) when its purpose is completely fulfilled; or
(b) when its purpose becomes unlawful; or
(c) when the fulfilment of its purpose becomes impossible by destruction of the trust-property or otherwise; or
(d) when the trust, being revocable, is expressly revoked; or
(e) when the trustees are found not doing any act for fulfilling object of the trust:
Provided that, no trust shall be de-registered under clause (e) unless its trustees have committed default in reporting the change under sub-section (1), in submission of the audited accounts as prescribed by sub-section (2) of section 33 or sub-section (1A) of section 34 or in making any other compliance prescribed by or under this Act for a period of five years from the last date of reporting the change, submission of the accounts or making the compliance, as prescribed by or under this Act or the rules made thereunder, as the case may be.
List of Documents required for De-registration section 22 (3) (A)
- Number Existing Trustees
- Notice of Meeting
- Attendance for Meeting
- Resolution of Meeting
- Movable Property- Yes/ No
- Immovable Property- Yes/No
- Account/ Audit Statement
- Any legal proceeding is pending before any forum
- Original Registration Certificate
- Copy of Trust Deed
- Schedule- I
Grounds for Dissolution of Trust:
A trust may be extinguished or terminated if “its purpose becomes unlawful” (vide section 77 of the Indian Trusts Act, 1882). However, when a public charitable trust is properly and completely constituted, it becomes irrevocable, even though it is voluntary. Accordingly, there is no provision under the various Public Trusts Acts (including the Bombay Public Trusts Act, 1950) to legally terminate or dissolve a valid public charitable trust. However, the assets and liabilities of the trust can be transferred to another charitable trust having similar objects thereby the former trust can be dissolved. But a revocable trust can be dissolved as per the terms and conditions of the trust deed.
The trust need not be retained in its original form and it can be dissolved, varied, modified or revoked provided all the beneficiaries concerned who are competent to contract give their respective consent to such resort/procedure.
List of documents required for Dissolution of Trust
- Schedule 3 (Format given below)- Registered Notary/ before me notary
- Notice and Minutes
- Notice received acknowledgment
- Consent Letter
- Evidence Affidavit/ Covering Letter
- Delay Affidavit (incase of time lapse)- 90 days
- Delay Application
- Reporting trustee affidavit
- By laws of Trust- Certified by advocate
- Death certificate/ appointment letter or any other relevant document to intimate the change
- Last 3 years Audited Account Statement and Copy of ITRV filing.