Report No. 17

36. Section 23.-

A suggestion was made that a section protecting the trustee from the consequences of a breach committed by him where he acts honestly and reasonably should be introduced in the Act. When the Trusts Act, 1882, was passed there was no power in English courts to save a trustee from the consequences of breach of trust. Sections 8 and 9 of the Trustee Act, 1893 and section 3 of the Trustee Act, 1896 provided for relief in such cases. These sections are now replaced by section 61 of the Trustee Act of 1925. This section empowers the court to relieve a trustee from the consequences of a breach when he has furnished the court with information that he acted in the matter honestly and reasonably.

The standard of care required by a trustee is not laid down in any of the provisions of the Trustee Act, 1925, but in India we have section 15. The standard of care and prudence that is required of a trustee has to be borne in mind when considering the proper discharge of the duties enjoined by the Act upon a trustee. If a trustee violates a statutory duty laid down under the Act, he cannot be said to have acted as a man of ordinary prudence even though he might have been honest and reasonable. The standard of prudence has to be judged in the light of the provisions of the Act and not with reference to any objective standard.

On this principle it has been held in Tirupatirayudu v. Lakshminarasamma, ILR 38 Mad 71 (75) by a bench of the Madras High Court that where a trustee in violation of the provisions of section 20 of the Trusts Act made an unauthorised investment he was not absolved from his liability even though he might have acted honestly and reasonably. If a trustee violated a definite direction contained in the Act he cannot be said to have acted reasonably and the protection under a provision similar to section 61 of the Trustee Act, 1925 would be of no avail and the court has no power to relieve the trustee from the consequences of a breach. In view of these considerations, we think it unnecessary to make a provision on the lines of section 61 of the Trustee Act, 1925.

37. The corresponding sections in the American Restatement are: Sections 205,1 2072 and 2163 which are general provisions corresponding to sections of the Trusts Act, 1882.

1. Vol. 1, 553 (2).

2. Ibid, 566. .

3. Mid, 609.