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

Neha bequeaths a shop and its stock-in-trade to Dev on the condition that he pays her debts and a legacy to her cousin Tara. Under the illustration in the Indian Trusts Act, 1882, how is this treated?

It is a condition, not a trust. Where a shop and stock are bequeathed on condition that the recipient pays the testator's debts and a legacy, the Act's illustration says no trust arises in favour of the creditors or the legatee.

  1. AA trust for the creditors and Tara, with Dev as trustee
  2. BA condition attached to the bequest, not a trust for the creditors and TaraCorrect
  3. CA void bequest since conditions cannot be attached to wills
  4. DA trust only for Tara, not the creditors

Explanation

The Act's illustration states that a bequest of a shop and stock-in-trade on condition of paying debts and a legacy is a condition, not a trust for the creditors and the legatee. Dev takes beneficially subject to the condition. Treating it as a trust for anyone is therefore wrong.

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