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

Trustee Imran succeeds Farid as trustee of a family trust. Farid had earlier defaulted by making an unauthorised investment. Under the Indian Trusts Act, 1882, what is Imran's liability for Farid's default merely because he succeeded him?

Imran is not liable, merely as successor, for Farid's default. The Act provides that a trustee who succeeds another is not, as such, liable for the predecessor's acts or defaults, though he remains answerable for his own conduct.

  1. AFully liable for all acts of Farid
  2. BNot liable, as such, for the acts or defaults of his predecessorCorrect
  3. CLiable only for defaults in the last year
  4. DLiable jointly with Farid automatically

Explanation

A succeeding trustee is not, as such, liable for the acts or defaults of his predecessor. Imran would be answerable only for his own acts or omissions. The other options wrongly impose automatic liability.

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