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

Ravi is the beneficiary of a private trust created by Mehta. He transfers his interest in the trust to Sunita for a price. Under the Indian Trusts Act, 1882, what is Sunita's position as regards that interest?

Sunita steps into Ravi's shoes. A transferee of a beneficiary's interest has the rights, and is subject to the liabilities, of the beneficiary in respect of that interest as they stood at the date of transfer, under the Indian Trusts Act, 1882.

  1. AShe has the rights and is subject to the liabilities that Ravi had in respect of that interest at the date of transferCorrect
  2. BShe has the rights of Ravi but takes none of his liabilities
  3. CShe has no rights until the trustee consents to the transfer
  4. DShe acquires only the right to sue Ravi for the price paid

Explanation

Section 69 provides that a person to whom a beneficiary transfers his interest has the rights and is subject to the liabilities of the beneficiary in respect of that interest at the date of transfer. The option stating rights without liabilities is wrong because the liabilities pass along with the rights.

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