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Non-liability of Trustee

Non-liability of Trustee

Bare Provisions

25. Non-liability for predecessor’s default. —Where a trustee succeeds another, he is not, as such, liable for the acts or defaults of his predecessor.

26. Non-liability for co-trustee’s default. —Subject to the provisions of sections 13 and15, one trustee is not, as such, liable for a breach of trust committed by his co -trustee:

Provided that, in the absence of an express declaration to the contrary in the instrument of trust, a trustee is so liable—

a) where he has delivered trust-property to his co-trustee without seeing to its proper application;

b) where he allows his co-trustee to receive trust-property and fails to make due enquiry as to the co-trustee’s dealings therewith, or allows him to retain it longer than the circumstances of the case reasonably require;

c) where he becomes aware of a breach of trust committed or intended by his co- trustee, and either actively conceals it or does not within a reasonable time take proper steps to protect the beneficiary’s interest.

28. Non-liability of trustee paying without notice of transfer by beneficiary.—When any beneficiary’s interest becomes vested in another person, and the trustee, not having notice of the vesting, pays or delivers trust- property to the person who would have been entitled thereto in the absence of such vesting, the trustee is not liable for the property so paid or delivered.

30. Indemnity of trustees.—Subject to the provisions of the instrument of trust and of sections 23 and 26, trustees shall be respectively chargeable only for such moneys, stocks, funds and securities as they respectively actually receive, and shall not be answerable the one for the other of them, nor for any banker, broker or other person in whose hands any trust property may be placed, nor for the insufficiency or deficiency of any stocks, funds or securities, nor otherwise for involuntary losses.

NON-LIABILITY OF A TRUSTEE (Ss. 25, 26, 28 & 30)

The Indian Trusts Act also provides for the non-liability of a trustee in the following four cases:

Firstly, S. 25 lays down that if one trustee succeeds another, the former is not as such liable for the acts or defaults of his predecessor. Secondly, it is provided by

S. 26 that subject to the provisions of Ss. 13 and 15, one trustee is not, as such, liable for a breach of trust committed by his co-trustee.

However, in the absence of any contrary declaration in the trust deed, a trustee is nevertheless liable for a breach of trust committed by his co-trustee,

However, it is expressly provided that a co-trustee who joins in signing a receipt for trust property, but can prove that he has not received such property, is not answerable for the loss or misapplication of the property by his co-trustee, merely by reason of such signature.

A bequeathes certain property to B and C, and directs them to sell it and invest the proceeds for the benefit of D. B and C accordingly sell the property and purchase-money is received by B and retained in his hand. C pays no attention to the matter for two years and then calls on B to make the investment. B is unable to do so, becomes insolvent, and the purchase-money is lost. C may be compelled to make good the amount.

Thirdly, if any beneficiary’s interest becomes vested in another person, and the trustee, not having any notice of any such vesting, pays or delivers the trust property to the person who would have been entitled thereto in the absence of such vesting, the trustee is not liable for the property so paid or delivered. (S. 28).

Lastly, S. 30 provides that, subject to the provisions of the trust deed and Ss. 23 and 26 (discussed above), the trustees are respectively chargeable only for such money, stocks, funds and securities as they respectively actually receive. Any one of them is not answerable for the other or others; nor are they answerable for any bankers, brokers or other persons in whose hands any trust property may be placed, nor for insufficiency or deficiency of any stocks, funds, or securities, nor otherwise for any involuntary loss.

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