Lucknow Nagar Nigam v. Kohli Brothers Colour Lab, 2024-2 SCR 847

It is observed: There is ‘Duplicate Ownership’, in ‘Trust’, according to Salmond.

But, the Theory of ‘Duel Ownership’ (Propounded in English Trust Law) is Not Preferred in India

Saji Koduvath, Advocate, Kottayam.

Lucknow Nagar Nigam v. Kohli Brothers Colour Lab: Facts in a Nutshell

  • Raja of Mahmudabad owned the subject property situated at Mahatma Gandhi Marg, Lucknow. He had migrated to Pakistan in 1947.
  • His property was treated as an ‘Enemy Property’ under the Enemy Property Act, 1968.
  • There is a statutory vesting of such property in the Custodian for Enemy Property.
  • The Custodian is under the Ministry of Commerce, Government of India.
  • Raja Mohammed Amir Mohammad Khan, the son of the Raja of Mahmudabad, remained in India as an Indian citizen.
  • He had been actively seeking the release of enemy properties owned by his late father.
  • Though the Government had agreed to release 25% of these properties, it had not yet acted upon this commitment.
  • In this situation, Raja Mohammed Amir Mohammad Khan approached the Bombay High Court in 1997 filing a Writ Petition.
  • The High Court ruled in his favour, directing the Custodian to surrender possession of the properties to him.
  • Being aggrieved with this decision, the Union of India approached the Apex Court by way of filing SLP in 2001.
  • The Apex Court by its judgment, Union of India v. Raja Mohammad Amir Mohammad Khan, (2005) 8 SCC 696, dismissed the appeal.
  • The Apex Court also directed the Union of India to get the buildings (residence or offices) vacated from such officers and handover the possession to Raja Mohammed Amir Mohammad Khan within eight weeks.
  • Thereafter proceedings were initiated by various tenants, including respondent No.1.
  • The Apex Court, in the SLP clarified its earlier judgment dated 21.10.2005 saying that the persons claiming possession prior to the Custodian’s appointment, based on valid tenancy agreements established by Raja Mahmudabad or his General Power of Attorney, were exempted from the directives.
  • The enquiry conducted in pursuance to the above orders of the Apex Court resulted in a report in favour of respondent No.1 herein. Ergo, they continued to remain in possession.
  • Following these events, on 28.05.2011, the appellant No.3, Jal Sansthan Lucknow, issued a notice to respondent No.1, demanding payment of Rs. 7,57,239.00 to pay the pending bills of Water Tax/Sewer Tax/Water price of Rs. 7,57,239/- by 31.03.2011.
  • Aggrieved by the aforesaid action, the assesse, respondent No.1, approached the High Court of Allahabad at Lucknow by filing Writ Petition. It was allowed, holding that the assesse/ occupier was not liable to pay any property tax.
  • SLP was filed against this decision.

SC Findings in Brief

The Apex Court allowed the appeal on the following findings, in brief:

  • Custodian for Enemy Property in India is a trustee only.
  • Union of India cannot assume ownership of the enemy properties.
  • Occupier of the subject property is liable to pay local taxes.

The Apex Court held as under:

  • “1) That the Custodian for Enemy Property in India, in whom the enemy properties vest including the subject property, does not acquire ownership of the said properties. The enemy properties vest in the Custodian as a trustee only for the management and administration of such properties.
  • 2) That the Central Government may, on a reference or complaint or on its own motion initiate a process of divestment of enemy property vested in the Custodian to the owner thereof or to such other person vide Rule 15 of the Rules. Hence, the vesting of the enemy property in the Custodian is only as a temporary measure and he acts as a trustee of the said properties.
  • 3) That in view of the above conclusion, Union of India cannot assume ownership of the enemy properties once the said property is vested in the Custodian. This is because, there is no transfer of ownership from the owner of the enemy property to the Custodian and  consequently, there is no ownership rights transferred to the Union of India. Therefore, the enemy properties which vest in the Custodian are not Union properties.
  • 4) As the enemy properties are not Union properties, clause (1) of Article 285 does not apply to enemy properties. Clause (2) of Article 285 is an exception to clause (1) and would apply only if the enemy properties are Union properties and not otherwise.
  • 5) In view of the above, the High Court was not right in holding that the respondent as occupier of the subject property, is not liable to pay any property tax or other local taxes to the appellant. In the result, the impugned order of the High Court dated 29.03.2017 passed in Misc. Bench No.2317 of 2012 is liable to be set aside and is accordingly set aside.
  • 6) Consequently, any demand for payment of taxes under the Act of 1959 made and thereby paid by the respondent to the appellant-authority shall not be refunded. However, if no demand notices have been issued till date, the same shall not be issued but from the current fiscal  year onwards (2024-2025), the appellant shall be entitled to levy and collect the property tax as well as water tax and sewerage charges and any other local taxes in accordance with law.”

In the Judgment, it is observed (obiter) as under:

  • A trust is a very important and curious instance of duplicate ownership.”

Theory of ‘Duel Ownership’, Under English Trust Law, is Not Preferred in India

Under English law of trusts, there is ‘duel ownership’ over the trust property.

  • First is the ‘legal ownership’. It is vested with trustees.
  • The other is the ‘equitable or beneficial ownership’. It is vested with the beneficiaries.

Indian law on trusts differs from English-Trust-Law on the doctrine of ‘duel ownership’. Under Indian law –

  1. Trustee is the ‘sole’ (legal) owner of the trust property; and, there is no ‘duel/duplicate ownership’.
  2. Beneficiaries do not have ‘beneficial ownership’; they have only ‘beneficial interest’.
  3. Trustees only ‘hold’ the trust property, and it is for mere administration.
  4. Trustees hold the trust property for the ‘benefit of the beneficiaries’; not ‘on their behalf‘.
  5. Since the trustees only ‘hold’ the properties for the beneficiaries, no legal ‘title’ vests with the trustees, though they have legal ‘ownership’.

Salmond Propounds Doctrine of ‘Duel Ownership’

Under English law, when the author of the trust creates a trust, by the dedication of the endowed property, he transfers the ‘legal ownership’ on the trust-property to the trustees and ‘beneficial ownership’ to the beneficiaries. Salmond on Jurisprudence (12th  Edition, page 256) refers these propositions as under:

  • “A trustee is the legal owner of the property, the actual owner thereof having lost title thereto by the creation of a trust. The equitable ownership in the trust property vests in the beneficiaries. The trust is thus an incident of dual ownership in which the creator of the trust no longer figures.”

Doctrine of ‘Duel Ownership’ has no Universal Acceptance.

Doctrine of duel-ownership on trust property is peculiar to English law. It has no universal acceptance.

In The I Congresso Del Partido [(1977) 1 Lloyd’s Rep. 536] the Queen’s Bench Division (Admiralty Court) pointed out that the trust-concept ‘involving a dichotomy between legal and equitable ownership is unknown to some, and perhaps most, other jurisdictions’. [Referred to in Owners and Parties Interested in the Vessel M.V. “Dong Do” v. Ramesh Kumar, (2000) 1 Cal LT 367].

Definition of Trust in the Indian Trusts Act, 1882

Sec. 3 of the Indian Trusts Act, 1882 defines trust as under:

  • Trust: A ‘trust’ is an obligation annexed to the ownership of property, and arising out of a confidence reposed in and accepted by the owner, or declared and accepted by him, for the benefit of another, or of another and the owner:

From the definition it is clear that ‘Trust’, in law, holds the following conceptions:

  • Trust is ‘an obligation’ upon the trustee.
  • It is to administer the endowed property.
  • The administration must be done by the trustee as if he is the owner.
  • It must be done by him accepting the desire of the author.
  • And, the same must be for the benefit of the beneficiaries.

‘Trustee’ is the Sole ‘Owner’ According to    the Definition of ‘Trust’

From the definition of ‘trust’ in the Indian Trusts Act, 1882 it is clear that the Act does not recognise ‘beneficial ownership’ in the beneficiaries. It recognises ‘ownership in trustee’ alone.

The definition of trust in Sec. 3 can be analysed as under:

(i) A ‘trust’ is an obligation-

  • annexed to the ownership of property (to administer), and
  • (i) arising out of a confidence reposed in (trustee, by the author) and accepted by the owner (that is, trustee, the legal owner), or (ii) declared and accepted by him(that is, trustee),#
    • for the benefit of another, or of another and the owner (that is, trustee, the legal owner).
  • the obligation that is declared and accepted by the same person. This situation comes-up when the the author himself declares to act as trustee. See notes below under the head: ‘Obligation … Declared And Accepted By Him’.

(ii) Confidence is ‘Reposed’ by the Author

Trust is defined to be an obligation arising out of a confidence ‘reposed in’ (the owner/trustee). When the ‘author of the trust’ is defined, it is stated:

  • “The person who reposes or declares the confidence is called the ‘author of the trust’.”

Therefore, it is definite that the words, confidence reposed in the owner’, denote the confidence that is ‘reposed’ by the author ‘in the owner’. (Allahabad Bank Vs. IT Commr.: AIR 1953 SC 476; Chikkamuniyappa Reddy Vs. State of Karnataka: ILR 1997  Kar 2460; Dinshaw Rusi Mehta Vs. State of Maharashtra: AIR 2017 SC 1557.)

(iii) The ‘Owner’ in whom  the Confidence is ‘Reposed’, is Trustee

As stated above, it is the author who ‘reposes’ the confidence; and the confidence is ‘reposed in’ the ‘owner‘. Then, who is the ‘owner’?

  • It is trustee(Khairul Bashar Vs. ThannuLal: AIR1957 All 553; Mysore Spinning and Manufacturing Co Vs. CIT: 1966-61 ITR 572 (Bom); Christopher Karkada VS Church of South India: ILR 2012  Kar 725; Chockalinga Sethurayar Vs. Arumanayakain: AIR  1969 SC 569;       Rajah SagiJanaki Vs. Appururu Bhukta: 1976-2 AndWR 117, 1976-1 APLJ 312;       Special Secy. Govt of WB Vs. State Bank of India: AIR  1989 Cal 40; CIT Vs. K Shyamaraju: 1991-1 KantLJ 233; Chikkamuniyappa Reddy Vs. State of Karnataka: ILR 1997  Kar 2460.)

The nexus between owner and trustee is clear from the definitions of ‘trust’ and ‘trustee’.

  • When ‘trust’ is defined, it is stated:
    • the confidence is ‘accepted by the owner’;
  • When ‘trustee’ is defined, it is stated:
    • the confidence is ‘accepted by the trustee’.

According to the definition of trust, the ‘obligation’ stands‘ annexed to the ownership’ of the trust-property. Sec. 6 of the Trusts Act makes it clear that ‘a trust is created when the author of the trust transfers the trust property to the trustee’. Therefore, the ‘obligation’ upon the trustee casts a duty upon him to administer the trust-property as (if) he is its ‘owner’.

(iv) The definition of Trust can be explained as under:

A trust is an obligation annexed to the ownership of property,Trust is an obligation (upon trustee to administer the trust-property as its (legal) owner. (Sec. 11 of the Trusts Act casts duty on the trustee to execute the trust, by fulfilling ‘the purpose of the trust’, and obeying ‘the directions of the author of the trust’.) (Ramabai Govind Vs. Raghunath Vasudevo: AIR 1952 Bom 106; State Bank of India Vs. Spl. Secretary: 1995-Supp. 4 SCC 30; Bhavna Nalinkant Vs. Commr. Gift Tax: 2002-174 CTR 152,2002-255 ITR 529)
and arising out of a confidenceDuty of a Trustee is fiduciary in nature. (R P Kapur Vs. Kaushalya Edl Trust: 1982-21 DLT 46: ILR  1982-1Del 801; Gobinda Chandra Ghosh Vs. Abdul Majid: AIR1944  Cal 163) (Paru Vs. Chiruthai: 1985 KerLJ 480, 1985  KerLT 563: Referred: UN Mitra’s Law of Limitation and Prescription, 9th Edn., Vol. II, at page 1574, Para 66; Bhavna Nalinkant  Vs. Commr Gift Tax: 2002-174 CTR 152: 2002-255 ITR 529; CBSE Vs. Aditya Bandopadhyay: AIR 2011 SCW  4888:  2011-8 SCC 497; Reserve Bank of India Vs. Jayantilal N. Mistry: AIR 2016 SC 1.)
It is moral as well as legal. (Dinshaw Rusi Mehta Vs. State of Maharashtra: AIR 2017 SC 1557.)
reposed inConfidence is reposed in Trustee (by the Author). (Mysore Spinning Vs. Commr of IT: ITR 1966-61 572 (Bom); Ramdass Trust Vs. Damodardas: 1967 RLW(Raj) 273; Canara Bank Vs. State of Kerala: AIR 1982 Ker 1: ILR 1981-2 Ker 649; R P Kapur Vs. Kaushalya: 1982-21 DLT 46; ILR  1982-1 Del 801; Chikkamuniyappa Reddy Vs. State of Karnataka: ILR 1997  Kar 2460.)
and accepted by the owner,Trustee the (legal) owner, must have accepted the confidence (reposed in by the author).(Mysore Spinning Vs. Commr of IT: ITR 1966-61 572 (Bom); R P Kapur Vs. Kaushalya: 1982-21 DLT 46; ILR  1982-1Del 801; Chikkamuniyappa Reddy Vs. State of Karnataka: ILR 1997  Kar 2460; DinshawRusi Mehta Vs. State of Maharashtra: AIR 2017 SC 1557. Trustee is the owner:       Chhatra Kumari Devi Vs. Mohan Bikram   Shah:  AIR 1931 PC 196; WO Holdsworth Vs. The State of Uttar Pradesh: AIR 1957 SC 887; Khairul Bashar Vs. Thannu Lal: AIR1957 All 553; Ramdass Trust Vs. Damodardas: 1967 RLW (Raj) 273; Quoted in: Sagar Sharma Vs. Addl. CIT: 2011-239 CTR 169:  2011-52 DTR 89. Benafasilal Rajgorhia Vs. Central Bank of India: 1971-76 Cal WN 807; Bomi Munchershaw Mistry Vs. Kesharwani Co Op H. Society: 1993 BCR 301; Chikkamuniyappa Reddy Vs. State of Karnataka: ILR 1997  Kar 2460.)
or declared and accepted by himTrustee (when author himself is the truste) (Heeralal  Vs. Firm RatanlalMahavir Prasad:1964 RajLW  33) can ‘declare and accept’ the ‘confidence’.
for the benefit of another, or of another and the owner.Author creates trust for the benefit of others. Trustee can be one among the beneficiaries.

Indian Law Recognises ‘Legal Ownership‘ on Trustees; Not ‘Title

The Privy Council, in Chhatra Kumari Vs.  Mohan Bikram (AIR 1931 PC 196) held as under:

  • “The Indian Law does not recognise legal and equitable estates. By that law, therefore, there can be but one owner; and where the property is vested in a trustee, the owner must, their Lordship think, be the trustee. This is the view embodied in the Indian Trusts Act: See Sec. 3, 55, 56, etc. … ” (Quoted in Special Secy. Govt of W B Vs. State Bank of India: AIR 1989 Cal 40; Christopher Karkada Vs. Church of South India: ILR 2012  Kar. 72; Raja Sir Muthiah Chettiar Vs. Commissioner of IT: 1984-38 CTR 76: 1984-17 TAXMAN 142: 1984-148 ITR532: Commissioner of Income Tax Vs. Ganga Properties Ltd: 1970-77 ITR 637; Sardarilal Vs. Shrimati Shakuntla Devi: AIR 1961 P&H 378.)

Inasmuch as Indian Law does not recognise legal and equitable estates (‘ownership’) (Chhatra Kumari Vs.  Mohan Bikram: AIR 1931 PC 196.) and trustee alone has ownership (legal ownership), this ‘ownership’ of trustees is not the ‘legal (or trust) ownership’ that is understood in English law.

In English law, when ‘legal ownership’ is referred to, it denotes ‘legal estate’. It is one component the duel-ownership. It confers a ‘title’ upon the trustee. But, in Indian Law, the trust properties ‘vest’ in the trustees for the limited purpose of administration or management; and the trustees only ‘hold’ the properties. (Thiagesar Dharma Vanikam Vs. Comner. IT, Madras: AIR 1964Mad 483).

Indian Law Does Not Recognise Equitable Ownership (Estate) of Beneficiaries

Similarly, the Indian Trusts Act does not refer to ‘beneficial ownership’; it refers merely to ‘interest’ or ‘beneficial interest’ of the beneficiary. (See: Ram Bharose Sharma Vs. Mahant Ram Swaroop: 2001 AIR- SCW  4062:  Mitar Sain Vs. Data Ram: AIR 1926 All 7; Urshottam Vs. Kanhaiyalal: AIR 1966 Raj 70.) It is clear from the following affirmations in the definition of ‘trust’ in Sec. 3 of the Indian Trusts Act, 1882:

  • (i) “A ‘trust’ is an obligation … arising out of a confidence reposed in and accepted by the owner… for the benefit of another….”
  • (ii) “(T)he ‘beneficial interest’…  is his (beneficiary’s) right against the trustee as owner of the trust property.”

In English law, when ‘beneficial interest’ is referred to, it denotes – ‘beneficial ownership’ or ‘beneficial estate’, the second component among the duel ownership.

The courts in India have followed the principles in Trusts Act, as to legal ownership of trustees and beneficial interest of the beneficiaries, in Common Law of Trust; and disfavoured doctrine of ‘duel ownership’. (Chhatra Kumari Devi Vs. Mohan Bikram Shah:  AIR 1931 PC 196; WO Holdsworth Vs. The State of Uttar Pradesh: AIR 1957 SC 887; Commissioner of Wealth Tax Vs. Kripashankar: AIR 1971 SC 2463, Bai Dosabai Vs. Mathuradas: AIR 1980 SC 1334; Bomi Munchershaw Mistry Vs. Kesharwani Co Op H. Society: 1993-2-BCR-301; Hem Chandra Vs. Suradham Debya: AIR 1940 P.C. 134;       Ramabai Govind Vs. Raghunath Vasudevo: AIR 1952 Bom 106. Deoki Nandan  Vs.  Murlidhar:  AIR 1957 SC 133; Behari Lal Vs. Thakur Radha Ballabhji: AIR 1961 All 73.)

Thus, under the Law of Trust in India, trustee holds the trust property as its sole (legal) owner, subject to the obligation to use this ownership for the benefit of the beneficiaries (Kansara Abdulrehman Sadruddin Vs. Trustees,  Maniar Jamat: AIR 1968 Guj 184).

The legal entitlement of beneficiaries in a trust (that is, beneficial interest) is legibly stated in The Province of Bihar v. FR Hayes,  1946-14 ITR 326 (Patna), by Fazl Ali, CJ (as he then was) while interpreting Bihar Agricultural Income-Tax Act, 1938, referring the definition of trust in the Indian Trusts Act, as under:

  • “The framers of the Act must be assumed to have known the accepted legal meaning of the expression and also known that the term ‘beneficiary’ in law is not generally used with reference to a full legal owner but with reference to a person who has ‘beneficial interest’ in some property which is usually in the possession and control of another person. The distinction between beneficial interest and legal ownership is one of the most notable features of a trust and in my judgment ‘beneficiaries’ referred to in Section 11 are those persons who have merely beneficial interest in a property while the legal ownership of the property vests in a person or persons who hold the property for their benefit.”

Trustee Holds ‘For the Benefit Of’; Not ‘On Behalf Of’ the Beneficiaries

The Indian Trusts Act, 1882 repeatedly lays down – trustees are ‘holding’ trust property (Sec. 10, 29 and Chap. IX: Sec. 80 onwards).  It is subject to the obligation to use his ownership ‘for the benefit of’ the beneficiaries.

Sec. 10 of the Indian Trust Act, 1882 reads:

  • 10. Who may be trustee.—Every person capable of holding property may be a trustee; but, where the trust involves the exercise of discretion, he cannot execute it unless he is competent to contract.

Sec. 29 of the Indian Trust Act, 1882 reads:

  • 29. Liability of trustee where beneficiary’s interest is forfeited to Government.—When the beneficiary’s interest is forfeited or awarded by legal adjudication to the Government, the trustee is bound to hold the trust property to the extent of such interest for the benefit of such person in such manner as the State Government  may direct in this behalf.”

In WO Holdsworth  Vs. State of Uttar Pradesh (AIR 1957 SC 887; See also: Ramabai Govind Vs. Raghunath Vasudevo: AIR 1952 Bom 106) it is laid down by our Apex Court as under:

  • “23. Whatever be the position in English Law, the Indian Trusts Act, 1882 (2 of 1882) is clear and categoric on this point. … These definitions emphasise that the trustee is the owner of the trust property and the beneficiary only has a right against the trustee as owner of the trust property. The trustee is thus, the legal owner of the trust property and the property vests in him as such. He, no doubt, holds the trust property for the benefit of the beneficiaries but he does not hold it on their behalf. The expressions ‘for the benefit of’ and ‘on behalf of’ are not synonymous with each other. They convey different meanings.”

Our Apex Court observed in Comm. Wealth Tax Vs. Kirpashanker Dayashankar, AIR 1971 SC 2463, that the trustee holds the trust property ‘on his own right’ and not ‘on behalf of’ someone else though he holds it ‘for the benefit of’ the beneficiaries. Obligations are casted upon trustees, only to manage the trust property for the benefit of the beneficiaries.  It is beyond doubt that the trustee has no ‘proprietary interest’ inasmuch as the beneficial interest is ‘carved out (Christopher Karkada Vs. Church of South India: ILR 2012  Kar 725; Ramabai Govind Vs. Raghunath Vasudevo: AIR 1952 Bom 106; Special Secy. Govt. of W B Vs. State Bank of India: AIR 1989 Cal 40) in the property itself. (It is not a mere ‘right’ similar to ‘right of easement’ for the dominant owner; but, it is an ‘interest’.) In dealings with the world at large, the trustee personates or represents as the owner of the property (Govardhandhari Devsthan  Vs. Collector of Ahmednagar: AIR 1982  Bom 332. Kapoorchand Rajendra Kumar Jain Vs. Parasnath Digambar: 2000-1 MPJR 199).

The Legal Principles are Vividly Explained

The legal principles related to the Trust are vividly explained by our Apex Court in Lucknow Nagar Nigam v. Kohli Brothers Colour Lab.  Pvt.  Ltd., 2024-2 SCR 847.

While so, the view of Salmond is pointed out –

  • “A trust is a very important and curious instance of duplicate ownershipAccording to Salmond, the trust property is that which is owned by two persons at the same time ….

It appears, the Court did not place the Indian law, on this matter (Note: Observations on this point is obiter.) 

The Apex Court said as under:

  • “14.9 Amongst the distinct kinds of ownerships, a trust ownership and beneficial ownership is relevant to the case. A trust is a very important and curious instance of duplicate ownership. According to Salmond, the trust property is that which is owned by two persons at the same time, the relation between the two owners being such that one of them is under an obligation to use his ownership for the benefit of the other. The former is called the ‘trustee’ and his ownership is the ‘trust ownership’; the latter is called the ‘beneficiary’ and his is beneficial ownership.
  • 14.10 The trustee’s ownership of any property is a matter of form rather than a substance and nominal rather than real. A trustee is not effectively an owner at all but in essence a mere agent, upon whom the law has conferred the power and imposed the duty of administering the property of another person. The trustee is a person to whom the property, substantially that of someone else is technically attributed by the law on the footing that the rights and powers that it vests under him are to be used by him on behalf of the real owner. As between the trustee and beneficiary, the law recognises that the property belongs to the latter and not to the former. But as between the trustee and the third persons, the fiction prevails, inasmuch as the trustee is clothed with the rights of his beneficiary and personate or represent him in dealings with the world at large. ……
  • 14.11 Thus, the trusteeship is to protect the rights and interests of persons, who, for any reason are unable effectively to protect them for themselves. The law vests those rights and interests for safe custody in a trustee, who is capable of guarding them and dealing with them and who is placed under an obligation to use it for the benefit of him to whom they in truth belong. One of the classes of persons on whose behalf the protection of the trusteeship is called is in respect of the property of those persons who are absent in the country, such as a person who has migrated to a country which is described as an enemy country by the Government of India as defined under the provisions of the Act under consideration.
  • 14.12 Thus, under the Act, the Custodian acts as a trustee. A trust is more than an obligation to use the property for the benefit of another; it is an obligation to use it for the benefit of another in whom it is already concurrently vested. Since the beneficiary is himself the owner of the enemy property, in the instant case, the Custodian who is the trustee appointed under the Act is therefore a statutory authority constituted for the administration of the enemy property, who is only a nominal owner of the property so administered by him vis-à-vis third parties. As already noted, the nominal ownership in the trustee is only for the purpose of using the rights and powers vesting with the trustee i.e., Custodian under the Act to be used by him or on behalf of the real owner of the property is absent, since he has left the country for an enemy country.
  • 14.13 The trustee or Custodian under the Act may, in pursuance of the powers vested in him under the Act which actually creates a trust by operation of law, can lease or mortgage the property without the concurrence of the beneficiary under the provisions of the Act just as the beneficiary could have dealt in the same way with his ownership of the property independently of the trustee as there is no bar in law to do so other than the provisions of the Act. Thus, a relationship of trusteeship exists between the trustee and all persons beneficially interested in the property, either as owners or encumbrancers.”

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