Scope of the section relating to declaration by persons not holding beneficial interest in share ‑Declaration of Beneficial Interests in Shares Rules, 1975 framed thereunder - Companies Law - Circular : No. 8/18/75‑CL-V,

Circular : No. 8/18/75 CL-V, dated 7 6 1975. Subject:- Scope of the section relating to declaration by persons not holding beneficial interest in share Declaration of Beneficial Interests in Shares Rules, 1975 framed thereunder A question has been raised whether provisions of section 187C are applicable to private trusts. Private trusts are governed by the Indian Trusts Act, 1882. That law contemplates the existence of two clear interests, namely, the legal interest which vests in the trustees and beneficial interest which vests in the beneficiaries. This dichotomy is envisaged by section 187C as well, which lays down that a person whose name is entered in the register of members of a company as the holder of a share in that company but does not hold the beneficial interest in such shares shall make a declaration specifying the name and other particulars of the person who holds the beneficial interest in such shares. This dichotomy is kept up in the other sub sections of this section as well. Where the legal interest vests in trustees, it is only to be expected that the names of trustees would find a place in the register of members of a company. It is, therefore, the duty of the trustees to make the declaration as the persons legally entitled and to specify the persons for whom they hold the shares. It is not possible to limit the application of section 187C on its own terms to the type of constructive trust arising under section 82 of the Indian Trusts Act and if that is the sense to be attributed to the word benami occurring in the Statement of Objects and Reasons and the Notes on Clauses preceding the Act, it is of little relevance at the present stage to control the clear language of the relevant statutory provisions. Hence, non compliance with the requirements of section 187C, in cases of private trusts, will amount to an infringement of the law which will attract the consequences laid down in it.