Clarification on Charitable Trust in Sri Lanka.

by Ashmila Mubarak (LL.B-Hons)

While the Trusts Ordinance applies to all trusts in Sri Lanka, it made certain important concessions to religious communities. Chapter 10 of the Trusts Ordinance deals with charitable trust. The chapter starts with Section 99 and Section 99(1) reads as follows:

The expression “charitable trusts” includes any trust for the benefit of the public or any section of the public within or without Ceylon of any of the following categories:

(a)for the relief of poverty;

(b)for the advancement of education and knowledge;

(c)for the advancement of religion or the maintenance of religious rites and practices; or

(d)for any other purposes beneficial or of interest to mankind not falling within the preceding categories.

This has enabled courts of Sri Lanka to uphold trusts to observe an annual Muslim festival, (Mohamadu v Meera Kandu (1923) 24 NLR 390) and to keep a lamp burning in a Buddhist temple. (Ratgama Pannasekara Nayaka Thero v Caldera (1956) 58 NLR 331).

Section 100 provides that ‘the court has the same power for the establishment, regulation, protection, and adaptation of all charitable trusts as are exercised for the time being with reference to charitable trusts within the meaning of English law by the High Court of Justice in England’. At the same time, the Ordinance expressly provides that in determining any question relating to the constitution of any trust, the devolution of trusteeship and the administration of a trust, or in settling a scheme of arrangement for a religious trust, the court must have regard to the religious law and custom of the community concerned, and to the local custom or practice with reference to the particular religious trust concerned. Section 106 of the Trusts Ordinance.

Sri Lanka as a multi-cultural country the religious practices vary. Therefore the nature of a charitable trust is determined in accordance with the provisions of the Trusts Ordinance construed in the context of local religious practices and customs.  The Trusts Ordinance thus provides a harmonious co-existence of statute law which is based on English law and religious laws which are rooted in local usage.

In Sri Lanka, the Hindu religious practice had to be in tune with the Trusts Ordinance, which required the trustee to have legal ownership of trust property. The Trusts Ordinance defines a trust as ‘an obligation annexed to the ownership of property’ in the sense that the owner of the property is under an obligation to hold it for the benefit of another.

In Kumaraswamy Kurukkal v Karthigesu Kurukkal((1923) 26 NLR 33) members of a Brahmin family built a Hindu temple, with public donations, and dedicated it. They executed an instrument providing for the administration of the temple designating S and T as the founder administrators. T transferred his interest in the temple to his son by way of donation and the son sued T for a declaration of title as owner of the temple. T pleaded that the temple was a charitable trust. The Supreme Court agreed that the temple was intended as a religious charity but there was a formal defect in creating the charitable trust, in that no instrument of trust was executed. Therefore the formalities in Trust Ordinance should be met with.

Bertram CJ conceded that according to Hindu religious law prevalent in India, the temple becomes the property of the deity to whom it is dedicated, with the manager of the temple serving as trustee, but pointed out that religious law and custom must yield to legislation. The Trusts Ordinance, the dominium of the property remains vested in the legal owners.

Thus the Supreme Court upheld the charitable trust not on the basis that the temple became the property of the deity, as in India, the trust was upheld on the basis that the founders remained legal owners but bound as de facto trustees. (Section 107 of the Trusts Ordinance ).In (Karthigasu Ambalavaner v. Subramaniar Kathiravelu (1924) 27 NLR 15 at 21.  Bertram CJ said:

When a person who is the owner of property purports to transfer it to a Temple, the effect of his so doing is to constitute himself a trustee of the Temple. The document of dedication is, in fact, a declaration of trust and the dominium remains with the dedicator and passes on his death to his heirs subject to the trust.

Murugesoe v Chelliah (1954) 57 NLR 463, 468 where it was reaffirmed that unlike a deity in India, a temple in Sri Lanka was not a juristic person and that the dedication of a temple was considered

a declaration of trust and the donor was regarded as the trustee.

The Trusts Ordinance of Sri Lanka, while it applies to religious and charitable trusts, relaxes its rule relating to the formal constitution of trusts. 67 Section 107 states as follows:

In dealing with any property alleged to be subject to a charitable trust, the court shall not be debarred from exercising any of its powers by the absence of evidence of the formal constitution of the trust, if it shall be of opinion from all the circumstances of the case that a trust in fact exists, or ought to be deemed to exist.

It has been held that Section 107 gives power to courts to define terms of a trust where it appears that a charitable trust is intended. Kumaraswamy Kurukkal v Kathiragesu Kurukkal(1923) 26 NLR 33 which is discussed above, is a good illustration of the application of that section.

Suppramanium v Erampakurukkal( 1922) 23 NLR 417, is a case where the settlor who wished to dedicate property to build a religious institution declared himself trustee with a co-trustee but did not formally transfer the property to the co-trustee. The Supreme Court refused to hold that a valid charitable trust can be created by transferring the property to a trustee without compliance with the necessary formalities. However, since the settlor had made a self- declaration of trust, the failure to transfer property to the co-trustee did not stand in the way of a valid trust.(1923) 26 NLR 33.

It is interesting to note that after the enactment of the Wakfs Ordinance of 1931, the Trusts Ordinance was amended to provide that Chapter 10 of the Ordinance on charitable trusts does not apply to religious trusts regulated by the Wakfs Ordinance in so far as it is inconsistent with the provisions of the Wakfs Ordinance’. (s109 of the Trusts Ordinance).In Bhai Beebi v Naeem [1981] 2 SLR 335.the Court of Appeal examined Indian authorities on the meaning and scope of wakfs. While the principles enunciated in Indian cases were useful to understand the concept, the Court of Appeal felt that wakfs operate in Sri Lanka in the context of charitable trusts, in the sense that provisions in the Trusts Ordinance apply to wakfs. What does not apply to a wakf is any provision in the chapter on charitable trusts, which is inconsistent with the Wakfs Ordinance. There was no inconsistency between Chapter 10 of the Trusts Ordinance and the Wakfs Ordinance; the definition of wakf in the Wakfs Ordinance of 1931 was very similar to the definition of charitable trusts in the Trusts Ordinance. The Court of Appeal decided that when a property is dedicated for a Muslim charitable purpose, such as for the purpose of a Muslim burial ground, legal title to the property remains in the dedicator (the wakif) but he becomes a trustee holding the property in trust for the benefit of the objects of the dedication. Where no provision is made for the appointment of trustees, the wakif is a trustee and the devolution of trusteeship would be as in the case of Hindu religious trusts.

The conflict between English law of trusts and religious and customary laws arose from the fact that Muslim law and Hindu law had developed their own ideas of trusts in their religious context, which were not easily reconcilable with the English concept of trusts. We saw how courts of Sri Lanka gave effect to the Trusts Ordinance in relation to Muslim and Hindu trusts, avoiding any friction between the local practices and the imported English law. The Trusts Ordinance made inroads into traditional religious practices, not so much to oppress, but to regulate religious charities in accordance with the Trusts Ordinance. There are examples of the positive contribution that the English concept of trust made to special laws. Seelachchy v Visuanathan, (1922) 23 NLR 97. where the court gave effect to the Thesawalamai concept of community of property between husband and wife, provides a good illustration. The community of property requires that any property acquired by a spouse becomes part of the community of property. However, unless the acquiring spouse transfers a share of it to the other in compliance with formalities, the legal title remains with the acquiring spouse. This meant that the acquiring spouse could dispose of that property thereby prejudicing the other party’s interest. Bertram CJ held that the other spouse acquires an ‘equitable right’ to have that property declared part of the community and held that section 99 of the Trusts Ordinance covered the situation by imposing a constructive trust. Section 99 provides that ‘where […] the person having possession of the property has not the whole beneficial interest therein, he must hold the property for the benefit of the persons having such interest, or the residue thereof (as the case may be), to the extent necessary to satisfy their just demands.’

While Hindu and Muslim religious trusts are regulated by the Trusts Ordinance, trusts relating to the administration of Buddhists Temples are regulated by a separate statute, the Buddhist Temporalities Ordinance of 1981. That Ordinance contains provisions relating to the administration of Buddhist temples through the medium of a trust under the Public Trustee’s supervision. Kandyan law, the law applicable to Sinhalese people resident in the Kandyan Provinces, does not know of trusts and therefore Kandyan Sinhalese will have to use English law of trusts, as set out in the Trusts Ordinance if they wish to create a trust.

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