Imran, Tareen hold proprietary interest in trust, SC told.
ISLAMABAD -- A Pakistan Muslim League-Nawaz leader has said that the interest of Imran Khan and Jehangir Tareen in their trust property was of a proprietary interest that could be disposed of, and constituted an asset.
The PML-N leader Hanif Abbasi on Tuesday filed submissions before the Supreme Court regarding nature of beneficial interest in trust relationships in the PTI leaders' disqualification case.
He provided definitions of beneficial interest from various books, including Black's Law Dictionary and the references of the Indian and Privy Council courts.
Abbasi stated in his submissions that a trust , in terms of law, was always a relationship relating to some property where the legal title was vested in the trustee for the benefit of one or more beneficiaries.
It said that in English law there was a concept of duality of ownership or 'double dominion' and a distinction must be drawn between the legal ownership and the equitable ownership.
This capacity for dual ownership, at law and in equity, is a distinctive feature of English Property Law, Abbasi said in his submissions.
A trust can be a 'bare trust' where a trustee holds the property in trust for a single beneficiary, the PML-N leader stated in his submissions.
The trustee, in fact acts under the instructions of the beneficiary, the submissions state.
Unlike, a 'bare trust', which has a single beneficiary, there can also be a 'fixed trust' for more than one beneficiary. In both these kinds of trusts, the beneficiary has a definite identifiable, equitable interest in some property, the submissions maintain.
The case of Imran Khan involves a 'bare trust', Abbasi has claimed in his submissions.
On the other hand, there is also a concept of discretionary trust , in such trust although the beneficiary has an interest in the trust but there is no commitment on part of the trustee to confer on him the benefit of any defined property, the submissions state.
It is within the discretion of the trustee as to who, one or more, of the beneficiaries shall have the benefit of the trust property. The distribution of the trust property is at the discretion of the trustee, it adds.
The case of Jehangir Tareen involves a discretionary trust , the PML-N leader has claimed in his submissions.
Nevertheless, a beneficiary under a discretionary trust has an 'interest' to be considered as a potential recipient of benefit under the trust and a right to have his interest protected by a court of equity, it further elaborates.
The whole class of beneficial beneficiaries, under a discretionary trust , can call upon the trustee to surrender the property according to the instructions of the beneficiaries, it states.
This was the rule settled in the case 'Saunders vs Vautier', the submissions state.
The interest of a beneficiary is a proprietary interest, which can be assigned by a beneficiary or disposed of by will, the submissions state.
It has been pointed out in 'Lewin on Trusts' that the beneficiary of a beneficial interest under a Trust Act can even become a trustee for this interest for the benefit of another beneficiary, it adds.
Where the beneficiary sells interest in the trust property, the purchaser may compel the trustee also to make a conveyance in its favour, according to the terms of the sale, Abbasi points out in his submission.
Under Indian and Pakistani law, although the concept of a double ownership is absent since the laws of India and Pakistan do not recognise 'dual ownership' where the beneficiary has an 'equitable estate', it states.
Nevertheless, the beneficiary has an interest in the trust property and under Section 3, the rights that the beneficiary has against the trustee as title holder to the trust property is called the 'beneficial interest', the PML-N leader's submissions state.
Abbasi stated that Section 3 of the Trust Act, 1882 says; 'This interest constitutes a proprietary interest that is transferable. The beneficiary, if competent to contract, may transfer his interests but subject to the law for the time being in force as to the circumstances and extent in, and to which he may dispose of such interest.'
The Trusts Act is based on English Common Law tradition.
It has been held by the Supreme Court of India, in the case reported as 122 Company Cases 263, at page 284, 'A beneficial interest indisputably can be transferred. For the said purpose, the only legal requirement will be essence of a trust . The right of beneficiary to transfer the interest, being absolute, the transferee derived rights title and interests therein', the submissions quote.
It has been held by the Privy Council in the case reported as AIR 1940 Privy Council 134 that a beneficiary may even transfer his interests by way of mortgage, the submissions add.