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

Vikram bequeaths his shop and stock-in-trade to Deepak 'on condition that he pays Vikram's debts and a legacy to Chitra'. Chitra and a creditor claim to be beneficiaries of a trust over the shop. Which statement is correct under the Indian Trusts Act, 1882?

No trust exists for the creditors or Chitra. A bequest made on condition that the legatee pays debts and a legacy imposes a condition, not a trust. Identifying the property and the payees does not turn the condition into a trust obligation in their favour.

  1. AA trust exists for the creditors but not for Chitra
  2. BA trust exists for Chitra and the creditors because the property and persons are identified
  3. CNo trust exists for the creditors or Chitra; the payment is only a condition attached to the bequestCorrect
  4. DA trust exists only if Deepak accepts the shop in writing

Explanation

The Act's illustration treats a bequest of a shop and stock-in-trade on condition of paying debts and a legacy as a condition, not a trust for the creditors and the legatee. Hence neither Chitra nor the creditors are trust beneficiaries. Identification of property and persons does not convert a condition into a trust, and written acceptance is not the test.

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