Query - Resignation of Founder Trustee in a Public Charitable Trust

This query is : Resolved

Arun M (Querist)
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12 April 2021 Dear Experts,

I request to clarify the doubts pertaining to the Consequences in Resignation of Founder Trustee in a Public Charitable Trust.

I am one of the Trustee in a Registered Public Charitable Trust. In which there are some disputes with regard to Approval of Accounts between the Trustees.

Two of the existing Trustees are living in abroad & tendered their resignation, Now the Founder Trustee of the Registered Charitable Trust had also tendered his Resignation.

As per Articles of the Trust Deed "the Trust is Irrevocable."

My doubt is whether if the Founder Trustee resigns, should the Public Charitable Trust should have to merge with some other trust with same doing activity or what is the consequences to the other trustee's if founder trustee resignation is accepted in the Trust Board Meeting.

Should the Trust been dissolved or it cannot continue to be a part of trustee, and the Assets and deposits should have to be attached with some other trust?

I REQUEST THE EXPERTS TO KINDLY CLARIFY THE SAME AND SUGGEST HOW TO HANDLE THIS SITUATION DUE TO RESIGNATION OF FOUNDER TRUSTEE?

FYI. The Trust was registered in TAMILNADU with the O/o. the Sub Registrar, with the Registered Office of the Trust Jurisdiction concerned.

Thanks in Advance,
Arun M

Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
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10 July 2024 In the context of a Public Charitable Trust where there are disputes among trustees and the Founder Trustee has tendered resignation, several legal and practical considerations come into play. Here’s a structured approach to understanding the consequences and potential next steps:

### 1. Irrevocability of the Trust:
- **Trust Deed Stipulations**: If the Trust Deed explicitly states that the trust is irrevocable, this means that the core objectives and nature of the trust cannot be altered or revoked. However, resignation of trustees and management of the trust affairs can still proceed as per legal provisions.

### 2. Resignation of Founder Trustee:
- **Impact**: The resignation of the Founder Trustee, who likely played a crucial role in establishing the trust and its mission, can have significant implications.
- **Board Resolution**: The resignation should ideally be accepted through a Board Resolution passed by the trustees in accordance with the procedures laid down in the Trust Deed.

### 3. Management and Governance:
- **Trustee Roles**: In the absence of specific provisions in the Trust Deed regarding the resignation of a Founder Trustee, the remaining trustees have the responsibility to manage the affairs of the trust.
- **Appointment of New Trustees**: Depending on the Trust Deed provisions, new trustees may need to be appointed to fill vacancies, ensuring that the minimum number of trustees required by law is maintained.

### 4. Continuity of the Trust’s Operations:
- **Preservation of Objectives**: Despite changes in trustee composition, the trust should continue to operate in accordance with its stated objectives and in compliance with legal requirements.
- **Assets and Deposits**: The assets and deposits of the trust remain under the custody and management of the trustees collectively. There should be transparency and accountability in handling these assets, ensuring they are used solely for the trust’s charitable purposes.

### 5. Legal Considerations:
- **Trustee’s Legal Duties**: Trustees owe fiduciary duties to the trust and its beneficiaries. They must act in good faith, with prudence, and in the best interests of the trust.
- **Legal Advice**: Given the complexities involved, seeking legal advice from a lawyer specialized in trust and estate matters, particularly under Tamil Nadu law, is advisable. They can provide guidance specific to your trust’s circumstances and the applicable legal framework.

### Dispute Resolution:
- **Internal Mechanisms**: If there are disputes among the trustees, the Trust Deed may outline procedures for dispute resolution. Mediation or arbitration clauses, if present, could be explored before resorting to litigation.
- **Charity Commissioner**: In some jurisdictions, the Charity Commissioner or Registrar of Trusts oversees trust matters. They may offer mechanisms for resolving disputes or provide guidance on trustee responsibilities.

### Conclusion:
- The resignation of a Founder Trustee is a critical juncture for any Public Charitable Trust. It requires careful consideration of legal obligations, governance structure, and the trust’s charitable objectives. Working within the framework of the Trust Deed and seeking professional advice will help ensure compliance with legal requirements and the continued effective operation of the trust for its intended purposes.

Given the specific nuances of your situation and the legal implications under Tamil Nadu law, consulting with a local legal expert experienced in trust matters is strongly recommended. They can provide tailored advice based on the Trust Deed provisions and the current status of the trust’s governance.