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

Kiran, a beneficiary, has transferred his interest in a trust to Lata. Lata did not inform the trustee, Mr. Desai. Not having notice of the transfer, Mr. Desai delivers the trust property to Kiran, who would have been entitled had there been no transfer. What is Mr. Desai's position under the Indian Trusts Act, 1882?

Mr. Desai is not liable for the property delivered to Kiran. The Indian Trusts Act, 1882 protects a trustee who, without notice that the beneficiary's interest has vested in another, pays or delivers trust property to the person who would otherwise have been entitled.

  1. AHe is liable to Lata because the transfer was valid
  2. BHe is not liable for the property so deliveredCorrect
  3. CHe is liable unless Kiran returns the property within a reasonable time
  4. DHe is liable because trustees must investigate all possible transfers

Explanation

Where a beneficiary's interest becomes vested in another and the trustee, without notice of the vesting, delivers property to the person who would have been entitled in its absence, the trustee is not liable. Mr. Desai had no notice, so delivery to Kiran protects him. The option imposing a duty to investigate is not in the provision.

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