A Bill to amend the “archaic” Indian Trusts Act, 1882, that will provide greater autonomy to trustees and allow them to invest trust funds in securities notified by the government, was passed by the Lok Sabha today.
The Indian Trusts (Amendment) Bill, 2015, was passed by a voice vote amid continued protests by the Congress members, who were in the Well raising slogans throughout the discussion on the Bill. They also opposed taking it up for passage, citing that the House was not in order.
Moving the bill for passage, Minister of State for Finance Jayant Sinha said the 1882 Act was a “relic of the colonial past”. Sections 20 and 20A needed to be amended to allow trustees to invest trust funds in securities and bonds notified by the government, he said.
Section 20 deals with the investment of trust money and restricts the trustees to investing only in the prescribed securities, including promissory notes, debentures, stock or other securities of any state government or central government or of the United Kingdom of Britain and Ireland.
Section 20A lists the limits of the power of the trustee to purchase redeemable stock at a premium.
“These provisions have been archaic …. Time has come to remove the archaic provision and replace them with modern rules,” Sinha said.
The Minister said the Bill would give greater autonomy and flexibility to trustees in deciding on investment on trust money. “Through this Bill, the Indian Trust Act will be ready for the 21st century,” Sinha noted.
In December 2014, Cabinet had approved the amendments to enable the central government to notify securities or class of securities for investment by trusts.
However, Parliamentary Affairs Minister Venkaiah Naidu said functioning of the Parliament cannot be disrupted and people of the country want the legislation.
Participating in the discussion, several members voiced concern over the use of trust money. While some said they at times became parking place for black money, others demanded that the funds be utilised for social sector spending and towards investments in railways.
“As far as the broader question about these multiple overlapping Acts (are concerned), particularly (those related to) religious charitable trusts, is concerned, it is under the consideration of the Law Commission right now,” the Minister said while replying to the debate on the Bill.
With the work done in repealing and amending some of the obsolete laws, “we will try and bring some sanity to all these trusts as well”, he said, adding that the rights and liabilities with regard to the trusts were laid out in the Indian Trusts Act.
Participating in the short debate on the bill, B Mahtab (BJD) wanted the government to come out with a model legislation for Trusts, Societies and Wakf Board.
“The Bill is consistent with the current economic scenario and has rightly shifted from merit based to disclosure based reporting,” he said.
Hukum Singh (BJP) said permitting trusts to invest in shares and bonds of listed companies would be a market boosting measure.
P Ravindra Babu (TDP) said that apart from investing in securities, the money should be routed for funding social sector sector projects or railways.
“Trusts are sometime parking place for black money. Lot of trusts are getting bad name as investigating agencies are enquiring into them… First there should be public trust in the Trusts,” Babu said.
P K Biju (CPI-M) said the amendments in the Act should ensure that there is no harm to the Trusts in the country.
“This government and the previous government are always looking to favour corporates,” he said.
P D Rai (SDF) said the Bill would be a small step in the government’s entire reform process, adding that in order to ensure effective regulation, there is a need for an overarching Act encompassing all laws on trusts and charities.
Dushyant Chautala (INLD) said more amendments are needed to various provisions in the Indian Trusts Act.
Vinayak Raut (Shiv Sena), Vinod Kumar (TRS), Pappu Yadav (expelled RJD member), Kaushalendra Kumar (JD-U) and Vinod Kumar B (TRS), among others, also spoke.
After Sinha completed his reply, some Opposition members, including NCP’s Tariq Anwar, said they too wanted to speak.
However, the requests were not entertained by Deputy Speaker M Thambidurai who was in the Chair. Congress members protested against the decision and Sushmita Dev was heard shouting “you (the Chair) are biased”.
Earlier, the House was adjourned for a brief while till 4 PM when Minister of State for Parliamentary Affairs Rajiv Pratap Rudy said one of the protesting members was not well and urged the Chair to adjourn the House for 15 minutes so that he could be medically examined. Thambidurai adjourned the House till 4 PM.
Soon thereafter, the Indian Trusts (Amendments) Bill was passed amid continuing protests from Congress members.
Earlier, Law Minister D V Sadananda Gowda moved for consideration the Bill to set up commercial benches in select high courts to deal with high value business disputes.
However, Rudy said there is an important discussion on drought situation in the country which was pending and requested the Chair to take up that discussion. The Chair agreed to it and the House took up debate on the issue.