Sections 68-69 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.
Section 68 deals with a beneficiary who takes part in, benefits from, hides or induces a breach of trust: the other beneficiaries may have his whole interest impounded until their loss is made good. Section 69 says that a person to whom a beneficiary transfers his interest has the rights and liabilities the beneficiary had at the date of transfer. The Act deals with private trusts; public, charitable and religious trusts are governed by other laws (see private vs public trust). If a beneficiary's conduct is in question in your trust, our legal consultation team can talk through the position.
Where one of several beneficiaries joins in a breach of trust, knowingly takes an advantage from it without the others' consent, conceals it or fails within a reasonable time to take proper steps to protect the others, or deceived the trustee into it, the other beneficiaries are entitled to have all his beneficial interest impounded until the loss is compensated (s.68). A person to whom a beneficiary transfers his interest has the rights, and is subject to the liabilities, of the beneficiary at the date of the transfer (s.69).
Section 68: four situations
Section 68 begins: "Where one of several beneficiaries" does any of the following.
| Limb | What the beneficiary did |
|---|---|
| (a) | "joins in committing breach of trust" |
| (b) | "knowingly obtains any advantage therefrom, without the consent of the other beneficiaries" |
| (c) | "becomes aware of a breach of trust committed or intended to be committed, and either actually conceals it, or does not within a reasonable time take proper steps to protect the interests of the other beneficiaries" |
| (d) | "has deceived the trustee and thereby induced him to commit a breach of trust" |
The consequence: "the other beneficiaries are entitled to have all his beneficial interest impounded as against him and all who claim under him (otherwise than as transferees for consideration without notice of the breach) until the loss caused by the breach has been compensated."
Several points follow from the wording. The section applies where there are "several beneficiaries"; it is a remedy for the others. The remedy is impounding of "all his beneficial interest", not merely the amount he gained, and it lasts "until the loss caused by the breach has been compensated". The section does not say how a court values the loss or sets the order of payments, and the text is silent on that. Limb (c) is the widest: staying silent after learning of a breach, or failing to act within "a reasonable time", can be enough. The Act does not define "reasonable time".
The impounding binds "all who claim under him", for example a person who took his interest, but not "transferees for consideration without notice of the breach". This protects the honest buyer in the same way as section 64 protects a good-faith buyer of trust property; see sections 63-64.
Married woman. Section 68 also ends: "When property has been transferred or bequeathed for the benefit of a married woman, as that she shall not have power to deprive herself of her beneficial interest, nothing in this section applies to such property during her marriage." The wording "as that" in the scan looks like OCR damage for "so that", which is how sections 56 and 58 put it; check the official text. So the impounding rule does not touch such an interest while the marriage lasts.
Section 69: the transferee takes the same position
Section 69 reads: "Every person to whom a beneficiary transfers his interest has the rights, and is subject to the liabilities, of the beneficiary in respect of such interest at the date of the transfer."
A buyer of a beneficiary's interest does not get a better position than the beneficiary had on the day of transfer. He gets the rights but also takes the liabilities. If the beneficiary's interest was already liable to be impounded under section 68, the transferee takes it subject to that liability, which is why section 68 itself protects only transferees for consideration without notice of the breach. Read the two sections together, and note that the text does not say how far the exception in section 68 and the wording of section 69 interact. Take advice.
How a beneficiary may transfer his interest at all is dealt with in section 58; see sections 57-58.
The Act's illustrations
In the scanned copy consulted, no illustrations are printed under sections 68 and 69, so none are restated here.
A modern example of our own
A family trust in Chennai holds a rental building for three brothers: Imran, Junaid and Kabir. The trustee, their uncle, wrongly sells part of the building at a low price to a company owned by Imran, who knows the sale breaches the trust.
- Imran has joined in the breach (limb (a)) and knowingly obtained an advantage without his brothers' consent (limb (b)). Junaid and Kabir may have Imran's whole beneficial interest impounded until the loss is made good.
- If Kabir learned of the sale, said nothing for years, and took no step to protect Junaid, limb (c) may apply to him as well, depending on what is "reasonable time" on the facts.
- If Imran had sold his interest to a stranger who paid full value and did not know of the breach, section 68 does not reach that stranger. But under section 69 a transferee who knew would take the interest with Imran's liabilities.
What the instrument of trust can change
Neither section refers to the instrument of trust. The text does not say whether a deed can excuse a beneficiary or change how his interest is dealt with after a breach. A settlor may wish to give the trustee power to withhold or set off payments against a beneficiary who causes loss, but the Act does not say that such a clause overrides section 68, so take advice.
Practical points
- Beneficiaries: if you learn of a breach, act promptly and tell the other beneficiaries in writing, because limb (c) punishes silence and delay.
- Never benefit from a trustee's improper act without the other beneficiaries' consent, even if the trustee proposes it.
- Buyers of a beneficiary's interest: ask for the accounts and the trust deed first, because under section 69 you take the beneficiary's liabilities along with his rights.
- For the beneficiary's rights generally, see rights of beneficiary under trust.
Need help with a beneficiary's role in a breach of trust?
If you are a beneficiary asked to approve something a trustee wants to do, or a co-beneficiary who suspects another has gained from a breach, the deed and the history of the transaction matter. Our legal consultation team can read both with you and explain how sections 68 and 69 may apply.
Key takeaways
- Section 68: a beneficiary who joins in a breach, knowingly obtains an advantage without the others' consent, conceals it or fails to act within a reasonable time, or deceived the trustee into it, may have all his interest impounded by the other beneficiaries.
- Impounding lasts until the loss caused by the breach has been compensated.
- It binds those claiming under him, except transferees for consideration without notice of the breach.
- Section 69: a transferee of a beneficiary's interest takes its rights and liabilities as at the date of transfer.
- No illustrations are printed under these sections in the scanned text.
Read next
- Sections 70-71: how a trustee's office is vacated and discharge of trustee
- Sections 65-67: wrongfully converted, blended and partner-trustee property
- Rights of beneficiary under trust
- 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.