Where obligation
in nature of trust is created.

80. An obligation
in the nature of a trust is created in the following cases.

Where it does not appear that transferor intended to dispose of
beneficial interest.

81. [Omitted
by the-Benami Transactions (Prohibition) Act, 1988, w,e.f. 19-5-1988.]

Transfer to one for consideration paid by another.

82. [Omitted
by the Benami Transactions (Prohibition) Act, 1988, w.e.f. 19-5-1988.]

Trust incapable
of execution or executed without exhausting trust-property.

83. Where a trust is incapable of being executed, or where
the trust is completely executed without exhausting the trust-property, the
trustee, in the absence of a direction to the contrary, must hold the
trust-property, or so much thereof as is unexhausted, for the benefit of the
author of the trust or his legal representative.

Illustrations

(a) A conveys
certain land to B—

"upon
trust", and no trust is declared; or

"upon trust
to be thereafter declared", and no such declaration is ever made; or

upon trusts that
are too vague to be executed; or

upon trusts that become
incapable of taking effect; or

"in trust
for C", and C renounces his interest under the trust.

In each of these
cases B holds the land for the benefit of A.

(b) A transfers Rs. 10,000 in the four per cents to B, in
trust to pay the interest annually accruing due to C for her life. A dies. Then
C dies. B holds the fund for the benefit of A's legal representative.

(c) A conveys land to B upon trust to sell it and apply one
moiety of the proceeds for certain charitable purposes, and the other for the
mainte­nance of the worship of an idol. B sells the land, but the charitable
purposes wholly fail, and the maintenance of the worship does not exhaust the
second moiety of the proceeds. B holds the first moiety and the part unapplied
of the second moiety for the benefit of A or his legal representative.

(d) A bequeaths Rs. 10,000 to B, to be laid out in
buying land to be conveyed for purposes which either wholly or-partially fail
to take effect. B holds for the benefit of A's legal representative the
undisposed of interest in the money or land if purchased.

Transfer for Illegal purpose.

84. Where the owner of property transfers it to another for
an illegal purpose and such purpose is not carried into execution, or the
transferor is not as guilty as the transferee, or the effect of permitting the
transferee to retain the property might be to defeat the provisions of any law,
the transferee must hold the property for the benefit of the transferor.

Bequest for illegal purpose.

85. Where a testator bequeaths certain property upon trust
and the purpose of the trust appears on the face of the will to be unlawful, or
during the testator's lifetime the legatee agrees with him to apply the
property for an unlawful purpose, legatee must hold the property for the
benefit of the testator's legal representative.

Bequest of which
revocation is prevented by coercion.

Where property is bequeathed and the revocation of the
bequest is prevented by coercion, the legatee must hold the property for the
benefit of the testator's legal representative.

Transfer pursuant to rescindable contract.

86. Where property is transferred in pursuance of contract
which is liable to rescission or induced by fraud or mistake, the transferee
must, on receiving notice to that effect, hold the property for the benefit of
the transferor, subject to repayment by the latter of the consideration
actually paid.

Debtor becoming creditor's representative.

87. Where a debtor becomes the executor or other legal
representative of his creditor, he must hold the debt for the benefit of the
persons interested therein.

Advantage gained by fiduciary.

88. Where a trustee, executor, partner, agent, director of a
company, legal advisor, or other person bound in a fiduciary character to
protect the interests of another person, by availing himself of his character,
gains for himself any pecuniary advantage, or where any person so bound enters
into any dealings under circumstances in which his own interests are, or may
be, adverse to those of such other person and thereby gains for himself a
pecuniary advantage, he must hold for the benefit of such other person the
advantage so gained.

Illustrations

(a) A, an executor, buys at an undervalue from B, a legatee,
his claim under the will, B is ignorant of the value of the bequest. A must
hold for the benefit of B the difference between the price and value.

(b) A, a trustee, uses the
trust-property for the purpose of his own business. A holds for the benefit of
his beneficiary the profits arising from such user.

(c) A, a trustee, retires from his trust in consideration of
his successor paying him a sum of money. A holds such money for the benefit of
his beneficiary.

(d) A, a partner,
buys land in his own name with funds belonging to the partnership. A holds such
land for the benefit of the partnership.

(e) A, a partner, employed on behalf of himself and his
co-partners is negotiating the terms of a lease, clandestinely stipulates with
the lessor for payment to himself of a lakh of rupees. A holds the lakh for the
benefit of the partnership.

(f) A and B are partners. A dies. B, instead of winding up
the affairs of the partnership, retains all the assets in the business. B must
account to A's legal representative for the profits arising from A's share of
the capital.

(g) A, an agent employed to obtain a lease for B, obtains
the lease for himself. A holds the lease for the benefit of B.

(h) A, a guardian, buys up for himself incumbrances
on his ward B's estate at an undervalue. A holds for the benefit of B the
incumbrances so bought, and can only charge him with what he has actually paid.

Advantage gained by exercise of undue Influence.

89. Where, by the exercise of undue influence, any advantage
is gained in derogation of the interests of another, the person gaining such
advantage without consideration, or with notice that such influence has been
exercised, must hold the advantage for the benefit of the person whose
interests have been so prejudiced.

Advantage gained by qualified owner.

90. Where a tenant for life, co-owner, mortgagee or other
qualified owner of any property, by availing himself of his position as such,
gains an advan­tage in derogation of the rights of the other persons interested
in the property, or where any such owner, as representing all persons interested
in such property, gains any advantage, he must hold, for the benefit of all
persons so interested, the advantage so gained, but subject to repayment by
such persons of their due share of the expenses properly incurred, and to an
indemnity by the same persons against liabilities properly contracted, in
gaining such advantage.

Illustrations

(a) A, the tenant for life of
leasehold property, renews the lease in his own name and for his own benefit. A
holds the renewed lease for the benefit of all those interested in the old
lease.

(b) A village belongs to a Hindu
family. A, one of its members, pays nazrana to Government and thereby procures
his name to be entered as the inamdar of the village. A holds the village for
the benefit of himself and the other members.

(c) A mortgages land to B, who enters into possession. B
allows the Govern­ment revenue to fall into arrear with a view to the land
being put up for sale and his becoming himself the purchaser of it. The land is
accordingly sold to B. Subject to the repayment of the amount due on the
mortgage and of his expenses properly incurred as mortgagee, B holds the land
for the benefit of A.

Property acquired
with notice of existing contract.

91. Where a person acquires property with notice that
another person has entered into an existing contract affecting that property,
of which specific performance could be enforced, the former must hold the
property for the benefit of the latter to the extent necessary to give effect
to the contract.

Purchase by
person contracting to buy property to be held on trust.

92. Where a person contracts to buy property to be held on
trust for certain beneficiaries and buys the property accordingly, he must hold
the prop­erty for their benefit to the extent necessary to give effect to the
contract.

Advantage
secretly gained by one of several compounding creditors.

93. Where creditors compound the debts due to them, and one
of such creditors, by a secret arrangement with the debtor, gains an undue
advantage over his co-creditors, he must hold for the benefit of such creditors
the advantage so gained.

Constructive
trusts in cases not expressly provided for.

94. [Omitted
by the Benami Transactions (Prohibition) Act, 1988, w.e.f. 19-5-1988.]

Obligor's duties,
liabilities and disabilities.

95. The person holding property in accordance with any of
the preceding sections of this Chapter must, so far as may be, perform the same
duties, and is subject, so far as may be, to the same liabilities and disabilities,
as if he were a trustee of the property for the person for whose benefit he
holds it:

Provided that (a)
where he rightfully cultivates the property or employs it in trade or business,
he is entitled to reasonable remuneration for his trouble, skill and loss of
time in such cultivation or employment; and (b) where he holds the
property by virtue of a contract with the person for whose benefit he holds it,
or with any one through whom such person claims, he may, without the permission
of the Court, by or become lessee or mortgagee of the property or any part
thereof.

Saving of rights
of bona fide purchasers.

96. Nothing contained in this Chapter shall impair the
rights of transferees in good faith for consideration, or create an obligation
in evasion of any law for the time being in force.