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CS Executive · Setting Up of Business, Industrial and Labour Laws · Non-Corporate Entities

Beneficiary Kavita transfers her interest to Dinesh. Trustee Joshi, without any notice of this transfer, pays the trust money to Kavita, who would have been entitled in the absence of the transfer. Dinesh claims Joshi is liable. What is the position under the Indian Trusts Act, 1882?

Joshi is not liable. When a beneficiary's interest vests in another person and the trustee, having no notice of that vesting, pays the person who would otherwise have been entitled, the trustee is not liable for the property so paid.

  1. AJoshi is not liable for the property so paidCorrect
  2. BJoshi is liable to pay Dinesh again in full
  3. CJoshi is liable only for half the amount paid
  4. DJoshi is liable because trustees must verify all transfers

Explanation

Section 28 states that where a beneficiary's interest becomes vested in another and the trustee, without notice of the vesting, pays the person who would have been entitled in its absence, the trustee is not liable. Joshi had no notice, so the payment protects him.

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