More MCQs on Indian Trusts Act, 1882
- Under Section 41, when can a trustee resign from the trust?
a) Without any conditions
b) After obtaining consent from the beneficiaries or the court
c) Only if the settlor approves
d) Only after fulfilling the trust’s obligations
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Answer: b) After obtaining consent from the beneficiaries or the court
Explanation: A trustee can resign from the trust only after obtaining consent from the beneficiaries or a court order, to ensure that the trust is properly managed.
- What does Section 24 of the Indian Trusts Act primarily deal with?
a) Powers of a trustee
b) Definition of trust property
c) The duties of a trustee
d) The appointment of new trustees
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Answer: c) The duties of a trustee
Explanation: Section 24 specifies the duties of a trustee, emphasizing their responsibility to act in the best interests of the beneficiaries and manage the trust property with care and diligence.
- What is the effect of an unauthorized act by a trustee?
a) The act is void automatically
b) The trustee must compensate the trust for any loss caused
c) The beneficiaries must approve the act
d) The act becomes valid after a period of time
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Answer: b) The trustee must compensate the trust for any loss caused
Explanation: If a trustee performs an unauthorized act, they are liable to compensate the trust for any loss incurred due to that act, as it is a breach of their fiduciary duty.
- Which of the following is true about a trust created for the benefit of a group of people?
a) It must have a clear and specific beneficiary
b) It can only be for the benefit of the settlor’s relatives
c) The beneficiaries must approve the trust deed
d) It can be for a class of persons, not necessarily specific individuals
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Answer: d) It can be for a class of persons, not necessarily specific individuals
Explanation: A trust can be created for a class of persons, such as “the poor,” “relatives,” or any identifiable group, without naming each individual specifically, as long as the class is reasonably certain.
- What does Section 13(b) state about the trustee’s liability?
a) The trustee is only liable for their own mistakes
b) The trustee cannot be liable for any errors made
c) The trustee is not liable for the acts of co-trustees
d) The trustee is liable for any misapplication of the trust property
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Answer: d) The trustee is liable for any misapplication of the trust property
Explanation: Section 13(b) holds the trustee liable for any misapplication or improper use of the trust property, ensuring that the property is used solely for the benefit of the beneficiaries.
- Who is responsible for the maintenance of trust records?
a) Only the settlor
b) The trustee
c) The beneficiaries
d) The court
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Answer: b) The trustee
Explanation: The trustee is responsible for maintaining accurate records of the trust, including financial records and the management of trust property, to ensure transparency and accountability.
- Can a trustee delegate their duties to others?
a) Yes, always
b) Yes, with the beneficiaries’ consent
c) No, delegation is not allowed
d) Yes, if specified in the trust deed
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Answer: d) Yes, if specified in the trust deed
Explanation: A trustee can delegate certain duties to others, but only if the trust deed expressly allows for such delegation, or the court permits it. The trustee remains responsible for the overall management of the trust.
- What is the effect of a trustee purchasing trust property for themselves?
a) The purchase is valid if the trustee obtains approval from the settlor
b) The purchase is invalid and the property must be transferred to the beneficiaries
c) The trustee can retain the property unless challenged by the beneficiaries
d) The purchase is valid only if the trustee discloses the transaction
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Answer: b) The purchase is invalid and the property must be transferred to the beneficiaries
Explanation: If a trustee purchases trust property for themselves, it is generally considered a breach of trust. The trustee must transfer the property to the beneficiaries or compensate them for any loss.
- Which section of the Indian Trusts Act addresses the powers of a trustee?
a) Section 7
b) Section 10
c) Section 38
d) Section 41
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Answer: c) Section 38
Explanation: Section 38 of the Indian Trusts Act deals with the powers of a trustee, detailing the legal actions they are permitted to take, such as managing trust property, investing, and making decisions in the best interest of the beneficiaries.
- Can a trust be created for an illegal or immoral purpose?
a) Yes, if the settlor desires it
b) Yes, but the court will invalidate it
c) No, a trust must have a lawful purpose
d) Yes, but it must comply with religious guidelines
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Answer: c) No, a trust must have a lawful purpose
Explanation: A trust cannot be created for illegal or immoral purposes. Under the Indian Trusts Act, the purpose of a trust must be lawful and cannot contravene public policy.
- What happens if a trust deed is lost or destroyed?
a) The trust is automatically revoked
b) The court may reconstruct the deed from available evidence
c) The trustee is held liable for negligence
d) The trust becomes invalid
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Answer: b) The court may reconstruct the deed from available evidence
Explanation: If the trust deed is lost or destroyed, the court may attempt to reconstruct it based on available evidence to ensure that the settlor’s intentions are respected.
- In case of conflict between the trustee and beneficiaries, who has the final say?
a) The settlor
b) The court
c) The trustee alone
d) The majority of beneficiaries
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Answer: b) The court
Explanation: In case of a conflict between the trustee and the beneficiaries, the court has the final say and can intervene to resolve the issue in the best interests of the trust.
- Can a trust created for a religious purpose be revoked?
a) Yes, at the discretion of the settlor
b) No, it is irrevocable
c) Yes, with the approval of the court
d) Yes, if the trust deed allows for revocation
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Answer: b) No, it is irrevocable
Explanation: A trust created for religious purposes is typically considered irrevocable unless the terms of the trust deed expressly allow for revocation or the purpose of the trust becomes impossible.
- What is the primary responsibility of a trustee towards the beneficiaries?
a) To maximize profit
b) To act in the best interests of the beneficiaries
c) To maintain secrecy of trust affairs
d) To avoid making any decisions without the beneficiaries’ consent
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Answer: b) To act in the best interests of the beneficiaries
Explanation: The primary responsibility of a trustee is to act in the best interests of the beneficiaries, ensuring that the trust property is managed and distributed as per the terms of the trust deed.
- Under what circumstances can a trustee’s authority be terminated by the court?
a) If the trustee violates the terms of the trust
b) If the trustee becomes mentally incapacitated
c) If the trustee is convicted of a crime
d) All of the above
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Answer: d) All of the above
Explanation: The court can terminate a trustee’s authority if the trustee violates the trust terms, becomes mentally incapacitated, or is convicted of a crime, as these situations breach the fiduciary duty owed to the beneficiaries.
