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

Vikram's beneficial interest in a trust was assigned to Neha, but the trustee, Arun, had no notice of the assignment and paid the trust money to Vikram. Under the Indian Trusts Act, 1882, what is Arun's liability?

Arun is not liable. When a beneficiary's interest vests in another person and the trustee, having no notice of the vesting, pays the person who would otherwise have been entitled, the trustee is not liable for the property so paid.

  1. ALiable to pay Neha again, because assignment operates automatically against the trustee
  2. BLiable to pay Neha again, but may recover from the Court
  3. CNot liable for the money so paid, since he had no notice of the vestingCorrect
  4. DLiable only if Vikram is insolvent

Explanation

Section 28 says that where a beneficiary's interest vests in another and the trustee, without notice of the vesting, pays the person who would have been entitled without the vesting, the trustee is not liable for what was paid. Arun acted without notice, so he is protected.

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