Section 16 of The Indian Trusts Act, 1882

16. Conversion of perishable property.—Where the trust is created for the benefit of several persons in succession, and the trust property is of a wasting nature or a future or reversionary interest, the trustee is bound, unless an intention to the contrary may be inferred from the instrument of trust, to convert the property into property of a permanent and immediately profitable character. Illustrations

(a) A bequeaths to B all his property in trust for C during his life and on his death for D, and D’s death for E. A’s property consists of three lease-hold houses, and there is nothing in A’s will to show that he intended the houses to be enjoyed in specie. B should sell the houses and invest the proceeds in accordance with section 20.
(b) A bequeaths to B his three lease hold houses in Calcutta and all the furniture therein in trust for C during his life, and on his death for D, and on D’s death for E. Here an intention that the houses and furniture should be enjoyed in specie appears clearly, and B should not sell them. Comments The rule contained in this section has been explained by Wigam V-C in these words: “Where personal estate is given in terms amounting to a general bequest to be enjoyed by persons in succession, the interpretation the court puts upon the bequest in that the persons indicated are to enjoy the same thing in succession, and in order to effectuate that intention, the court as a general rule converts into permanent investments so much of the personality as is of a wasting or perishable nature at the death of the testator, and also reversionary interests. The rule did not originally ascribe to testators the intention to effect such conversions, except in so far as a testator may be supposed to intend that which the law will do; but the court, finding the intention of the testator to be that the objects of his bounty shall take successive interests in one and the same thing, converts the property, as the only means of giving effect to that intention”; Hiuves v. Hiuves, (1844) 3 Hare 609.

Complete: The Indian Trusts Act, 1882