Sections 24-26 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Sections 24, 25 and 26 follow the section 23 rule on breach of trust. Section 24 says a trustee cannot set off a gain from one breach against a loss from another. Section 25 says a new trustee is not, as such, liable for his predecessor's acts. Section 26 says one trustee is not, as such, liable for a co-trustee's breach, and then lists three cases where he is. If you are one of several trustees of a family trust, a legal dispute resolution review of your position before a problem arises is worth having.
Section 24: a trustee liable for a loss from one breach cannot set off against it a gain from another, distinct breach. Section 25: a successor trustee is not, as such, liable for his predecessor's acts or defaults. Section 26: one trustee is not, as such, liable for a co-trustee's breach, but in the absence of an express declaration to the contrary in the deed he is liable if he delivered trust property to the co-trustee without seeing to its application, allowed him to receive or keep it without due enquiry, or knew of a breach and concealed it or failed to protect the beneficiary within a reasonable time.
Scope of the Act
The Act deals with private trusts. Public, charitable and religious trusts are governed by other laws; see private trust vs public trust. These sections are about private trustees.
Section 24: no set-off
Section 24 reads: "A trustee who is liable for a loss occasioned by a breach of trust in respect of one portion of the trust property cannot set off against his liability a gain which has accrued to another portion of the trust-property through another and distinct breach of trust." In plain words, a trustee cannot say "I lost Rs 2 lakh on one asset by breach but made Rs 2 lakh on another by a different breach, so we are even." The two breaches must be dealt with separately. The section prints no illustration.
Section 25: predecessor's default
Section 25 reads: "Where a trustee succeeds another, he is not, as such, liable for the acts or defaults of his predecessor." The words "as such" matter: a successor is not liable merely because he succeeded. The text does not say what happens if the successor discovers a default and does nothing; that falls under his own duties, for example sections 12 and 13 on getting in trust property and protecting title (see our article on sections 12 to 14).
Section 26: co-trustee's default
The main rule: "Subject to the provisions of Sections 13 and 15, one trustee is not, as such, liable for a breach of trust committed by his co-trustee". The words "subject to sections 13 and 15" link it to the duties to protect title and to take ordinary prudent care.
Then the proviso: "in the absence of an express declaration to the contrary in the instrument of trust, a trustee is so liable":
| Case | Plain meaning |
|---|---|
| (a) | He has delivered trust property to his co-trustee without seeing to its proper application |
| (b) | He allows his co-trustee to receive trust property and fails to make due enquiry as to the co-trustee's dealings with it, or lets him keep it longer than the circumstances reasonably require |
| (c) | He becomes aware of a breach committed or intended by his co-trustee and either actively conceals it or does not, within a reasonable time, take proper steps to protect the beneficiary's interest |
Note "in the absence of an express declaration to the contrary in the instrument of trust": the deed can change the proviso. The main rule's own opening words ("subject to ... Sections 13 and 15") are separate.
Joining in receipt for conformity
Section 26 ends with a paragraph headed "Joining in receipt for conformity": a co-trustee who joins in signing a receipt for trust property, and proves that he has not received the property, "is not answerable by reason of such signature only, for loss or misapplication of the property by his co-trustee". Two conditions: he must prove he did not receive the property, and the protection covers "such signature only"; if other facts make him liable under the proviso, the signature does not shield him.
The Act's illustration
The Act prints one illustration to section 26, restated in plain words. A bequeaths property to B and C, directing them to sell it and invest the proceeds for the benefit of D. They sell. B receives the purchase money and keeps it. C pays no attention for two years and then asks B to make the investment. B cannot, becomes insolvent, and the money is lost. C may be compelled to make good the amount. This is case (b) of the proviso: he let his co-trustee keep the money longer than the circumstances reasonably required, without due enquiry.
A modern example of our own
Rohit Anand's family trust, for his daughter's marriage and education, has two trustees, his brother Sanjay and a friend, Meenal. The deed has no clause on co-trustee liability. Sanjay handles the bank account. Meenal signs cheques in blank at Sanjay's request and never checks the statements. Sanjay uses Rs 5 lakh for his business and the trust loses it.
- Under section 26(a) and (b), Meenal's conduct (delivering control without seeing to application, and not enquiring) makes her liable despite the general rule.
- If instead Meenal had found out in January, said nothing, and the loss grew, section 26(c) would apply: aware of a breach and failing to take proper steps within a reasonable time.
- Take a different case. Meenal joins Sanjay in signing a receipt for a payment of rent, but the money was handed only to Sanjay. If she proves she did not receive it, her signature alone does not make her answerable.
- If Meenal had succeeded Sanjay's earlier predecessor as trustee, section 25 would mean she is not liable merely for the predecessor's defaults.
What the instrument of trust can change
Section 26's proviso begins "in the absence of an express declaration to the contrary in the instrument of trust". So the deed can say that a trustee is not liable in the proviso cases, or can say more. Section 24 and section 25 do not have this wording; whether a deed can alter them is not stated. A deed should not be drafted to excuse the trustee's own duty of care in section 15.
Practical points
- Settlors: decide how involved each trustee must be, and put it in the deed.
- Trustees: do not hand over money or sign blank documents; ask for statements; if you learn of a breach, act promptly and record the steps you took.
- Beneficiaries: where more than one trustee is involved, look at each trustee's role, not just the one who handled the money.
- Incoming trustees: take over with an inventory and an account from your predecessor; it supports section 25.
Need help with co-trustee responsibilities?
If you are a co-trustee worried about the other trustee's handling of money, or a beneficiary trying to identify who is answerable, our legal dispute resolution service can review the deed and the facts. Bring the trust deed and recent statements.
Key takeaways
- No set-off: a gain from one breach cannot reduce liability for a separate breach (s.24).
- A successor trustee is not, as such, liable for his predecessor's acts or defaults (s.25).
- A trustee is not, as such, liable for a co-trustee's breach, but is liable in three listed cases unless the deed says otherwise (s.26).
- Signing a receipt alone does not make a co-trustee answerable if he proves he did not receive the property.
Read next
- Section 23: liability of a trustee for breach of trust
- Sections 27-29: several liability of co-trustees, payment without notice and forfeiture
- Liabilities of trustees for breach of trust
Disclaimer: Based on the text of the Indian Trusts Act, 1882 as consulted on 1 October 2026 from a scanned copy; the Act applies to private trusts, and public, charitable and religious trusts are governed by other laws. This article is general information, not legal advice; check the official text and take advice before acting.