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CS Professional · CSR and Social Governance · Societies and Trusts

Ms. Kavita Nair is the treasurer of a registered society that runs a hostel. While negotiating a bulk purchase of mattresses for the society, she accepts a private cash commission of Rs 15,000 from the supplier. Under the rule on obligations in the nature of trusts, what is the position of the commission?

She holds the Rs 15,000 commission for the society. A fiduciary who gains an advantage through her position must hold it for the person she owes the duty to. The obligation arises by law, so no resolution is needed and the supplier's voluntary payment does not let her keep it.

  1. AShe may keep it, because the supplier paid it voluntarily
  2. BShe holds it for the benefit of the society, as a fiduciary who gained an advantage by using her positionCorrect
  3. CShe must share it equally with the supplier and the society
  4. DIt belongs to the society only if the governing body passes a resolution claiming it

Explanation

A person in a fiduciary position who gains an advantage by availing herself of that position holds the advantage for the benefit of the person to whom the fiduciary duty is owed. Kavita is the society's treasurer, so the commission is held for the society. Keeping it because it was voluntary is wrong because the duty arises by operation of law, not by the society's claim or resolution.

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