Sections 27-29 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 27, 28 and 29 deal with three distinct situations. Section 27 says that when co-trustees commit a breach together, each is liable to the beneficiary for the whole loss, but as between themselves they can seek contribution. Section 28 protects a trustee who pays the wrong person because he had no notice that a beneficiary's interest had passed to someone else. Section 29 says what the trustee does when a beneficiary's interest is forfeited or awarded to the Government. If you act with others as trustee, a legal dispute resolution opinion on your exposure is useful before any dispute arises.
Section 27: where co-trustees jointly commit a breach, or one by neglect enables another to commit it, each is liable to the beneficiary for the whole loss; between themselves, the less guilty may compel the more guilty to make good the loss, and if all are equally guilty, those who refunded may compel contribution, but not a trustee guilty of fraud. Section 28: a trustee who pays or delivers to the person who would have been entitled, without notice of a transfer of the beneficiary's interest, is not liable. Section 29: where a beneficiary's interest is forfeited or awarded to the Government, the trustee holds the property to that extent as the State Government directs.
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 trusts.
Section 27: several liability and contribution
The first paragraph: "Where co-trustees jointly commit a breach of trust, or where one of them by his neglect enables the other to commit a breach of trust, each is liable to the beneficiary for the whole of the loss occasioned by such breach."
A second paragraph, headed "Contribution as between co-trustees", reads: "But as between the trustees themselves, if one be less guilty than another and has had to refund the loss, the former may compel the latter, or his legal representative to the extent of the assets he has received, to make good such loss; and if all be equally guilty, any one or more of the trustees who has had to refund the loss may compel the others to contribute."
A third paragraph: "Nothing in this section shall be deemed to authorize a trustee who has been guilty of fraud to institute a suit to compel contribution."
| Situation | Result under section 27 |
|---|---|
| Co-trustees jointly commit a breach | Each is liable to the beneficiary for the whole loss |
| One trustee's neglect enables the other's breach | Each is liable to the beneficiary for the whole loss |
| One is less guilty and has had to refund | May compel the more guilty trustee (or his legal representative, to the extent of assets received) to make good the loss |
| All equally guilty | Any trustee who refunded may compel the others to contribute |
| A trustee guilty of fraud | Not authorised by this section to sue for contribution |
The beneficiary can therefore pursue any one of the trustees for the full amount; sorting out the shares is a matter among the trustees afterwards. This differs from section 26, which says one trustee is not, as such, liable for a co-trustee's breach (see our article on sections 24 to 26). Section 27 applies once a breach is committed jointly or enabled by neglect.
Section 28: payment without notice
Section 28 reads: "When any beneficiary's interest becomes vested in another person, and the trustee, not having notice of the vesting, pays or delivers trust-property to the person who would have been entitled thereto in the absence of such vesting, the trustee is not liable for the property so paid or delivered." The protection depends on lack of notice. A trustee who knew of the transfer cannot rely on it. The section does not say what counts as notice or how it must be given, so a beneficiary who transfers his interest should tell the trustee in writing.
Section 29: forfeiture to the Government
Section 29 reads: "When the beneficiary's interest is forfeited or awarded by legal adjudication to the Government, the trustee is bound to hold the trust-property to the extent of such interest for the benefit of such person in such manner as the State Government may direct in this behalf." The source's footnotes say the words "to Govt." and "the Govt." were amended successively by the "A.O. 1937" and "A.O. 1950" to read as printed; the printed wording in our copy is "to the Government" and "the State Government", and the current text should be checked.
The Act's illustrations
No illustrations are printed under sections 27, 28 or 29 in our source.
A modern example of our own
A family trust created by Lalitha Naidu holds Rs 20 lakh in fixed deposits for her grandchildren. The trustees are her sons Ramesh and Suresh. Ramesh withdraws the money for his business; Suresh, who never looked at the bank statements, let him. The trust loses the money. The beneficiary can sue either trustee for the whole Rs 20 lakh (section 27, first paragraph). If Suresh refunds it, he may be able to compel Ramesh, as the more guilty trustee, to make good the loss (second paragraph). If Ramesh had also lied to the beneficiary, the section does not authorise Ramesh, guilty of fraud, to sue Suresh for contribution.
Under section 28: suppose grandchild Priya transfers her future interest to a lender, and the trustees, not having notice, pay her the instalment due. They are not liable for that payment. Under section 29, if Priya's interest were forfeited to the Government by adjudication, the trustees would hold the property to that extent as the State Government directs.
What the instrument of trust can change
None of the three sections contains "subject to the instrument of trust" wording. A deed can state who is to handle money and who is to supervise, which affects whether there is a breach, and can give a procedure for notice of transfers. Whether a deed can alter the several liability in section 27 is not addressed; do not assume it can.
Practical points
- Trustees: supervise; one trustee's silence can make you liable for the whole loss. Keep records of what each did.
- Beneficiaries: if you assign your interest, give written notice to the trustee at once (section 28).
- Settlors: use the deed to allocate roles, require joint signing for withdrawals and say how notices are to be delivered.
- Advisers: see our guide on liabilities of trustees for breach of trust for the wider picture.
Need help with a co-trustee dispute?
If you have been asked to refund a loss, or want to claim contribution from a co-trustee, our legal dispute resolution service can review the deed and the facts. Bring the deed, accounts and correspondence.
Key takeaways
- Co-trustees who jointly breach, or whose neglect enables a breach, are each liable to the beneficiary for the whole loss (s.27).
- As between themselves, the less guilty may compel the more guilty; if all are equally guilty, contribution is shared; a trustee guilty of fraud cannot sue for contribution under the section.
- A trustee paying without notice of a transfer is not liable (s.28).
- On forfeiture or award of the beneficiary's interest to the Government, the trustee holds as the State Government directs (s.29).
Read next
- Sections 24-26: no set-off and non-liability for predecessor or co-trustee default
- Section 30: indemnity of trustees
- Rights of a beneficiary under a 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.