MCQs on Indian Trusts Act, 1882
- Under the Indian Trusts Act, 1882, which of the following is NOT an essential element to create a valid trust?
a) Intention to create a trust
b) Trust property
c) Beneficiary
d) Written agreement
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Answer: d) Written agreement
Explanation: Under the Indian Trusts Act, 1882, a trust can be created either orally or in writing. While written documentation is preferable for clarity, it is not mandatory for the creation of a valid trust unless specifically required under law. The essential elements include the intention to create a trust, the trust property, and a specified beneficiary.
- Who can be a trustee under the Indian Trusts Act, 1882?
a) A minor
b) Any person capable of holding property
c) Only a government employee
d) A company with no legal capacity
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Answer: b) Any person capable of holding property
Explanation: According to Section 10 of the Indian Trusts Act, 1882, any person capable of holding property and competent to contract can be a trustee. This excludes minors or individuals declared incompetent under the law.
- What is the main duty of a trustee under the Indian Trusts Act, 1882?
a) To maximize the profits of the trust
b) To fulfill the purpose of the trust
c) To distribute the property among all beneficiaries equally
d) To transfer the property back to the settlor
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Answer: b) To fulfill the purpose of the trust
Explanation: The primary duty of a trustee is to execute the trust according to its purpose, as stipulated by the settlor. The trustee must act in the best interest of the beneficiaries and abide by the terms of the trust deed.
- In case of breach of trust by a trustee, which of the following remedies is available to the beneficiary?
a) Demand specific performance of the trust
b) Sue for damages
c) Claim restitution of the trust property
d) All of the above
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Answer: d) All of the above
Explanation: If a trustee commits a breach of trust, the beneficiary has several remedies, including demanding specific performance, suing for damages, or seeking restitution of the trust property. These remedies are meant to protect the beneficiary’s interest.
- Which section of the Indian Trusts Act, 1882, defines a trust?
a) Section 3
b) Section 5
c) Section 10
d) Section 15
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Answer: a) Section 3
Explanation: Section 3 of the Indian Trusts Act, 1882, defines a trust as an obligation annexed to the ownership of property, arising out of confidence reposed in and accepted by the owner, or declared and accepted by him, for the benefit of another.
- A private trust is primarily created for the benefit of which of the following?
a) The general public
b) A specific individual or group of individuals
c) Charitable purposes only
d) Government agencies
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Answer: b) A specific individual or group of individuals
Explanation: A private trust is created for the benefit of a specific individual or group of individuals, as opposed to a public trust, which is established for the benefit of the general public or a community.
- What is the tenure of a trust if no specific time frame is mentioned?
a) 10 years
b) 21 years
c) Until the purpose of the trust is achieved
d) Permanent
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Answer: c) Until the purpose of the trust is achieved
Explanation: A trust continues to exist until the purpose for which it was created is achieved, unless otherwise stated in the trust deed. If the purpose becomes impossible to fulfill, the trust may be dissolved.
- Which of the following cannot be the subject matter of a trust under the Indian Trusts Act, 1882?
a) Movable property
b) Immovable property
c) Illegal property
d) Future property
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Answer: c) Illegal property
Explanation: A trust cannot be created for any illegal purpose or with illegal property as its subject matter. The property must be transferable and lawful as per the provisions of the Indian Trusts Act, 1882.
- Under which section of the Indian Trusts Act, 1882, can a beneficiary compel a trustee to perform his duties?
a) Section 11
b) Section 15
c) Section 23
d) Section 31
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Answer: c) Section 23
Explanation: Section 23 of the Indian Trusts Act, 1882, allows a beneficiary to compel a trustee to perform any duty imposed on him by the trust deed or law. This ensures the proper execution of the trust.
- In which of the following cases is a trustee NOT liable for breach of trust?
a) Acting negligently
b) Acting dishonestly
c) Acting within the scope of authority with reasonable care
d) Misapplying trust funds
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Answer: c) Acting within the scope of authority with reasonable care
Explanation: A trustee is not liable for breach of trust if they act within their scope of authority and with reasonable care, diligence, and honesty. Liability arises only in cases of negligence, dishonesty, or unauthorized actions.
More MCQs on Indian Trusts Act, 1882
- Which of the following is NOT a valid purpose of a trust?
a) Charitable purpose
b) Religious purpose
c) Fraudulent purpose
d) Purpose benefiting specific individuals
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Answer: c) Fraudulent purpose
Explanation: A trust cannot be created for a fraudulent or illegal purpose. It must have a lawful purpose as per Section 4 of the Indian Trusts Act, 1882.
- Which of the following is NOT a right of a beneficiary under the Indian Trusts Act, 1882?
a) To inspect trust property
b) To transfer ownership of trust property
c) To sue for breach of trust
d) To compel the trustee to fulfill the purpose of the trust
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Answer: b) To transfer ownership of trust property
Explanation: A beneficiary does not have the right to transfer the ownership of trust property as it is held by the trustee. However, the beneficiary can enforce their rights to ensure the trust’s proper execution.
- Which of the following is NOT true regarding the duties of a trustee?
a) A trustee must act in good faith.
b) A trustee must preserve the trust property.
c) A trustee can use trust property for personal benefit.
d) A trustee must act as an ordinary prudent person.
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Answer: c) A trustee can use trust property for personal benefit
Explanation: A trustee is prohibited from using trust property for personal benefit. They must act in good faith, preserve the property, and manage it prudently for the benefit of the beneficiaries.
- When can a trust be extinguished under the Indian Trusts Act, 1882?
a) When the trust property is destroyed
b) When the beneficiaries renounce their rights
c) When the purpose of the trust becomes unlawful
d) All of the above
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Answer: d) All of the above
Explanation: A trust is extinguished when the trust property is destroyed, the beneficiaries renounce their rights, or the purpose of the trust becomes unlawful or impossible to achieve.
- Who can enforce a private trust under the Indian Trusts Act, 1882?
a) The government
b) The general public
c) The specific beneficiary of the trust
d) The settlor only
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Answer: c) The specific beneficiary of the trust
Explanation: A private trust can be enforced only by the specific beneficiaries for whose benefit the trust was created. Public trusts, however, are enforced by the general public or relevant authorities.
- What happens if a trust is created for a lawful purpose but later becomes unlawful?
a) The trust continues to operate.
b) The trust is modified to meet legal requirements.
c) The trust is extinguished.
d) The trustee transfers the property to the settlor.
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Answer: c) The trust is extinguished.
Explanation: Under Section 77 of the Indian Trusts Act, 1882, a trust is extinguished if the purpose for which it was created becomes unlawful, impossible, or contrary to public policy.
- What does the doctrine of “Cypress” imply in the context of trusts?
a) Trust property is held for the trustee’s benefit.
b) Trust purpose is modified to closely align with the original intention when the purpose becomes impossible.
c) Trust funds can be used for any purpose.
d) The trust can never be dissolved.
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Answer: b) Trust purpose is modified to closely align with the original intention when the purpose becomes impossible.
Explanation: The doctrine of “Cypress” is used in cases where the original purpose of the trust becomes impossible. The courts may modify the purpose to reflect the settlor’s intent as closely as possible.
- Under the Indian Trusts Act, 1882, when does a trust become operative?
a) From the date of trust deed registration
b) As soon as the settlor declares the trust
c) From the date the trustee accepts the trust
d) Only after approval by the beneficiaries
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Answer: c) From the date the trustee accepts the trust
Explanation: A trust becomes operative when the trustee accepts the obligation imposed by the settlor to manage the trust property for the beneficiaries.
- What is the role of a settlor in a trust?
a) Beneficiary
b) Person who creates the trust
c) Person who manages the trust
d) None of the above
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Answer: b) Person who creates the trust
Explanation: A settlor is the person who creates a trust by transferring property to the trustee with the intention of benefiting specific beneficiaries or the public.
- What does the term “fiduciary relationship” mean in the context of a trust?
a) Legal ownership of property
b) Obligation to act in the best interest of beneficiaries
c) Equal distribution of property
d) Avoidance of all liabilities
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Answer: b) Obligation to act in the best interest of beneficiaries
Explanation: A fiduciary relationship means that the trustee is obligated to act in good faith and in the best interest of the beneficiaries, managing the trust property responsibly and ethically.
