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    Question

    Under Section 4 of the Indian Trusts Act, 1882, Mr. U

    creates a trust deed providing: "I settle this property upon Trustee V in trust to support political party X's election campaign exclusively and to finance media campaigns advocating the party's ideology." The purpose is clear, identifiable beneficiaries are named (the party), and the procedure complies with Section 5 and 6 requirements. Which of the following correctly applies Section 4 to this trust?
    A The trust is valid because Section 4 imposes no restrictions on political purposes; all purposes are lawful unless explicitly forbidden Correct Answer Incorrect Answer
    B The trust is invalid because Section 4 provides that a purpose is unlawful if it is "(c) of such a nature that, if permitted, it would defeat the provisions of any law"; creating trusts to finance political campaigns may violate election finance laws and would thus defeat statutory provisions Correct Answer Incorrect Answer
    C The trust is valid as long as the political campaign complies with election commission guidelines; Section 4 permits trusts for political advocacy Correct Answer Incorrect Answer
    D The trust is invalid solely because it involves a political party; trusts for ideological purposes are expressly prohibited under Section Correct Answer Incorrect Answer
    E The trust's validity depends on whether the political party has been registered under law; if registered, it is presumed lawful Correct Answer Incorrect Answer

    Solution

    Explanation: Section 4 of the Indian Trusts Act provides: "A trust may be created for any lawful purpose. The purpose of a trust is unlawful unless it is (a) forbidden by law; or (b) fraudulent; or (c) of such a nature that, if permitted, it would defeat the provisions of any law; or (d) involves or implies injury to the person or property of another; or (e) the Court regards it as immoral or opposed to public policy." Clause (c) is key: trusts that would defeat statutory provisions are unlawful. In Mr. U's case: Indian election laws (including the Representation of the People Act, 1951, and regulations under the Election Commission) impose strict limits on: (i) political funding; (ii) donation transparency; (iii) foreign funding prohibitions; (iv) individual/corporate contribution caps. Creating a trust specifically to circumvent these regulations or to channel funds in violation of election law would constitute a purpose "of such a nature that, if permitted, it would defeat the provisions of any law." While not automatically invalid (as option (D) suggests), the trust's validity depends on whether its operation would violate election finance laws. Section 4 illustration: "A bequeaths property to B in trust to employ it in carrying on a smuggling business, and out of the profits thereof to support A's children. The trust is void [as being opposed to public policy and destructive of law]." Similarly, political trusts that facilitate violation of election law would fail Section 4's lawfulness requirement. Thus, option (B) correctly applies Section 4(c).

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