CVOCA Gyaan Ganga – 31 – “Key Reforms Impacting Trustee Appointments, Jurisdiction and Governance of Public Trusts”
The Government of Maharashtra has brought in the Maharashtra Public Trusts (Amendment) Ordinance, 2025 to address long-standing ambiguities in trustee appointments, jurisdictional issues, trust registration, and enforcement provisions under the Maharashtra Public Trusts Act, 1950 (“MPT Act”). These changes have been introduced from 1st September 2025. In this issue we have tried summarise all such changes:
1. Classification and Limits on Trusteeship
- Two Distinct Classes: The Act now legally defines two categories of trustees: Perpetual Trustees (Lifetime/Permanent) and Tenure Trustees (Term-bound).
- Cap on Lifetime Trustees: The number of perpetual or lifetime trustees is strictly limited to 25% of the total board strength. Any appointment exceeding this limit is considered invalid and may constitute mismanagement.
- Documentation: Trusts are obligated to classify every trustee correctly in their filings, minutes, and Change Reports.
- Now Manager is excluded from the definition of trustee.
2. Tenure Expiry and Automatic Cessation
- Automatic Removal: Upon the expiry of their term, a tenure trustee automatically ceases to hold office.
- Loss of Authority: Once a term expires, the individual cannot sign resolutions, manage property, or act as a trustee; any decision made by them may be declared void and illegal.
- Default Term Limit: If the trust deed does not specify a tenure, the maximum term for a tenure trustee is set at 5 years per appointment.
- Reappointment: In such case reappointing a trustee requires a unanimous decision that must be recorded.
3. Restrictions on Appointments and Board Size
- Strict Adherence to Deed Limits: The number of trustees cannot exceed the maximum count specified in the trust deed. Appointments made beyond this limit are void ab initio (invalid from the start) and are grounds for the removal of trustees.
- Valid Vacancies Only: New trustees can only be appointed against actual vacancies caused by specific events such as death, insolvency, incapacity, conviction, permanent residence abroad, or term expiry of perpetual trustees.
4. Enhanced Penalties and Criminal Liability
- Illegal Property Transactions: Transferring, leasing, selling, or mortgaging trust property without the sanction of the Charity Commissioner is now a criminal offense punishable by up to 1 year of imprisonment and a ₹50,000 fine. It can also lead to the attachment of personal assets.
- Hospital Compliance: Non-compliance with rules regarding reserved beds for indigent patients attracts the same penalty of up to 1 year imprisonment and a ₹50,000 fine.
5. Jurisdiction and Legal Procedure
- Shift to Charity Commissioner: All references in trust deeds or court schemes regarding the Civil Court or District Court are now transferred to the authority of the Charity Commissioner. This means governance disputes will be handled administratively rather than through civil litigation.
- New Limitation Period: Applications for revision under Section 70A must now be filed within a strict timeline of 120 days.
6. Documentation and Fiduciary Duties
- Proof of Ownership: Documentary proof of ownership or interest in immovable property must be attached during registration or major amendments. False claims regarding this can lead to criminal prosecution for fraud.
- Reinforced Duties: Trustees face stricter fiduciary duties regarding financial transparency and the care of property; failure to uphold these can result in “surcharge” (personal financial liability) or removal.
The Ordinance significantly strengthens governance of public trusts by clarifying trustee structures, limiting perpetual control, centralising jurisdiction, enhancing transparency, and imposing stricter penalties. Trustees and persons in charge of public trusts are advised to review existing trust deeds, trustee composition, pending proceedings, and compliance frameworks to ensure alignment with the amended provisions. Given the legal, regulatory, and governance implications, it is strongly recommended to consult legal advisors or Chartered Accountants for a trust-specific evaluation and for undertaking necessary corrective or compliance actions in a timely manner.
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