Indian Trusts Act,1882
Act No : 2
Section : Liability for breach of trust
23. Liability for breach of trust.-Where the trustee commits abreach of trust, he is liable to make good the loss which the trust-property or the beneficiary has thereby sustained, unless thebeneficiary has by fraud induced the trustee to commit the breach, orthe beneficiary, being competent to contract, has himself, withoutcoercion or undue influence having been brought to bear on him,concurred in the breach, or subsequently acquiesced therein, with fullknowledge of the facts of the case and of his rights as against thetrustee. A trustee committing a breach of trust is not liable to payinterest except in the following cases:- (a) where he has actually received interest: (b) where the breach consists in unreasonable delay in paying trust-money to the beneficiary: (c) where the trustee ought to have received interest, but has not done so: (d) where he may be fairly presumed to have received interest. He is liable, in case (a), to account for the interest actuallyreceived, and, in cases (b), (c) and (d), to account for simpleinterest at the rate of six per cent. per annum, unless the Courtotherwise directs. (e) where the breach consists in failure to invest trust- money and to accumulate the interest or dividends thereon, he is liable to account for compound interest (with halfyearly rests) at the same rate: (f) where the breach consists in the employment of trustproperty or the proceeds thereof in trade or business, he30 is liable to account, at the option of the beneficiary, either for compound interest (with half-yearly rests) at the same rate, or for the net profits made by such employment. Illustrations (a) A trustee improperly leaves trust-property outstanding, andit is consequently lost: he is liable to make good the property lost,but he is not liable to pay interest thereon. (b) A bequeaths a house to B in trust to sell it and pay theproceeds to C. B neglects to sell the house for a great length oftime, whereby the house is deteriorated and its market price falls. Bis answerable to C for the loss. (c) A trustee is guilty of unreasonable delay in investing trust-money in accordance with section 20, or in paying it to thebeneficiary. The trustee is liable to pay interest thereon for theperiod of the delay. (d) The duty of the trustee is to invest trust-money in any ofthe securities mentioned in section 20, clause (a), (b), (c) or (d).Instead of so doing, he retains the money in his hands. He is liable,at the option of the beneficiary, to be charged either with the amountof the principal money and interest, or with the amount of suchsecurities as he might have purchased with the trust-money when theinvestment should have been made, and the intermediate dividends andinterest thereon. (e) The instrument of trust directs the trustee to invest trust-money either in any of such securities or on mortgage of immoveableproperty. The trustee does neither. He is liable for the principalmoney and interest. (f) The instrument of trust directs the trustee to invest trust-money in any of such securities and to accumulate the dividendsthereon. The trustee disregards the direction. He is liable, at theoption of the beneficiary, to be charged either with the amount of theprincipal money and compound interest, or with the amount of suchsecurities as he might have purchased with the trust-money when theinvestment should have been made, together with the amount of theaccumulation which would have arisen from a proper investment of theintermediate dividends. (g) Trust-property is invested in one of the securities mentionedin section 20, clause (a), (b), (c) or (d). The trustee sells suchsecurity for some purpose not authorized by the terms of theinstrument of trust. He is liable, at the option of the beneficiary,either to replace the security with the intermediate dividends andinterest thereon, or to account for the proceeds of the sale withinterest thereon. (h) The trust-property consists of land. The trustee sells theland to a purchaser for a consideration without notice of the trust.The trustee is liable, at the option of the beneficiary, to purchaseother land of equal value to be settled upon the like trust, or to becharged with the proceeds of the sale with interest.
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