Section 68 of The Indian Trust Act, 1882
Where one of several beneficiaries--
- (a)joins in committing breach of trust, or
- (b)knowingly obtains any advantage therefrom, without the consent of the other beneficiaries, or
- (c)becomes aware of a breach of trust committed or intended to be committed, and either actually conceals it, or does not within a reasonable time take proper steps to protect the interests of the other beneficiaries, or
- (d)has deceived the trustee and thereby induced him to commit a breach of trust, the other beneficiaries are entitled to have all his beneficial interest impounded as against him and all who claim under him (otherwise than as transferees for consideration without notice of the breach) until the loss caused by the breach has been compensated. When property has been transferred or bequeathed for the benefit of a married woman, so that she shall not have power to deprive herself of her beneficial interest, nothing in this section applies to such property during her marriage.
Summary
- Section 68 of the Indian Trusts Act, 1882 outlines when a beneficiary's interest can be impounded, which means legally taken or held, to pay for a breach of trust.
- A beneficiary's interest can be held if they join the trustee in committing the breach, or if they knowingly get an advantage from it without the other beneficiaries' consent.
- It also applies if a beneficiary discovers a breach is committed or planned and either hides it or fails to take quick steps to protect the other beneficiaries.
- A beneficiary is also liable under Section 68 of the Indian Trusts Act, 1882 if they deceive the trustee to make them commit the breach.
- These rules of the Indian Trusts Act, 1882 do not apply to the trust property of a married woman if she is legally barred from depriving herself of her beneficial interest during her marriage.
Practical examples
FAQ
1. What does it mean to impound a beneficiary's interest under Section 68 of the Indian Trusts Act, 1882?
Under Section 68 of the Indian Trusts Act, 1882, impounding means legally seizing or setting aside a beneficiary's share of the trust property to pay for the loss caused by a breach of trust they participated in or hid.
2. Can a beneficiary's interest be impounded under Section 68 of the Indian Trusts Act, 1882 if they did not join in the breach but simply knew about it?
Yes, under Section 68 of the Indian Trusts Act, 1882, if a beneficiary becomes aware of a breach of trust that is committed or intended, and they actively conceal it or fail to protect other beneficiaries within a reasonable time, their interest can be impounded.
3. Does Section 68 of the Indian Trusts Act, 1882 apply to married women who have a restriction on giving up their beneficial interest?
No, under Section 68 of the Indian Trusts Act, 1882, the rule does not apply during her marriage to trust property set up for a married woman where she has no power to deprive herself of her beneficial interest.
4. Who can claim protection against the impounding of a beneficiary's interest under Section 68 of the Indian Trusts Act, 1882?
Under Section 68 of the Indian Trusts Act, 1882, anyone who buys the beneficiary's interest in good faith and for payment without knowing about the breach of trust is protected.
Test yourself
Q1.Under Section 68 of the Indian Trusts Act, 1882, if a beneficiary knowingly obtains an advantage from a breach of trust without the consent of the other beneficiaries, what can the other beneficiaries do?
Q2.Under Section 68 of the Indian Trusts Act, 1882, which of the following actions by a beneficiary does NOT trigger the impounding of their beneficial interest?
Q3.Under Section 68 of the Indian Trusts Act, 1882, who is exempt from having their trust interest impounded during marriage?
Q4.Under Section 68 of the Indian Trusts Act, 1882, if a beneficiary's interest is impounded, against whom can this impounding be enforced?