Indian Trusts Act,1882

Act No : 2

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Section : Wrongful employment by partner-trustee of trust-property forpartnership purposes

67. Wrongful employment by partner-trustee of trust-property for partnership purposes.-If a partner, being a trustee, wrongfully employs trust-property in the business or on the account of the partnership, no other partner is liable therefor in his personal capacity to the beneficiaries unless he had notice of the breach of trust. The partners having such notice are jointly and severally liablefor the breach of trust. Illustrations (a) A and B are partners. A dies, having bequeathed all hisproperty to B in trust for Z, and appointed B his sole executor. B,instead of winding up the affairs of the partnership, retains all theassets in the business. Z may compel him, as partner, to account forso much of the profits as are derived from A's share of the capital. Bis also answerable to Z for the improper employment of A's assets. (b) A, a trader, bequeaths his property to B in trust for C,appoints B his sole executor, and dies. B enters into partnership withX and Y in the same trade, and employs A's assets in the partnership-business. B gives an indemnity to X and Y against the claims of C.Here X and Y are jointly liable with B to C as having knowingly becomeparties to the breach of trust committed by B.

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