CS Professional · CSR and Social Governance · Societies and Trusts
Shree Vidya Trust, created in 2005 by a trust deed that is silent on compromise of claims, has three trustees. A debtor owes the trust ₹4,00,000 and offers to settle in instalments over 18 months. The three trustees, acting together in good faith, agree to allow this time for payment. Later the debtor defaults and the trust suffers a loss. Under the Indian Trusts Act, 1882, what is the position of the trustees?
The trustees are not responsible for the loss. Two or more trustees acting together may allow time for payment of a debt or compromise claims, and they bear no liability for loss from acts done in good faith, provided the trust deed does not express a contrary intention.
- AThey are not responsible for the loss, because two or more trustees acting together may allow time for payment in good faithCorrect
- BThey are personally liable, because trustees can never allow time for payment of a debt
- CThey are liable unless the beneficiaries consented in writing to the instalments
- DThey are liable, because compromise powers belong only to the Court
Explanation
Section 43 allows two or more trustees acting together to allow time for payment of any debt and to compromise claims, without responsibility for loss from acts done in good faith. The deed is silent, so no contrary intention exists and the trust was created after the Act. Hence the trustees are not liable for the later default.
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