Section 338: Breach of trust

1) If a trustees fail to fulfill the duties required to be fulfilled pursuant to this Chapter, the trustee shall be deemed to have committed a breach of trust.

2) In the event of a breach of trust pursuant to sub-section (1), the trustee so breaching trust shall be responsible for the loss and damage caused to the beneficiary and bear liability for the same.

3) In bearing the liability pursuant to sub-section (2), the trustee breaching trust shall bear such profits as may be equal to the income or profits which the trust or beneficiary would have made or earned if the trust had not been breached.

4) If a trust has more than one trustee, all trustees who commit a breach of trust shall collectively bear the liability for the loss and damage caused by such breach of trust.

5) If, in relation to one portion of any trust, the trust is breached, and, in relation to another portion of the trust, benefit is derived, the trustee shall not use such benefit in the fulfillment of his or her liability.

6) Notwithstanding anything contained elsewhere in this Section, the trustee shall not bear the liability for the loss and damage caused by the breach of trust, in the following circumstances:

(a) If the loss and damage are caused by the operation of law,

(b) If the loss and damage are a result of the breach of trust by any act done by the previous trustee or the consequence thereof.

7) Notwithstanding anything contained elsewhere in this Section, anyone who does any of the following acts in relation to a trust in operation upon being incorporated in accordance with law in force for the time being prior to the commencement of this Act shall be deemed to have committed a breach of trust:

(a) Failing to do acts set forth in the Donative inscription, Shilapatra of the trust or deed establishing such trust,

(b) Selling, disposing of, gifting, donating, pledging, or mortgaging the trust property by the trust founder or his or her offspring or heir, except for the residual property that can be possessed and used after making operation as set forth in the deeds, including the Donative inscription, Shilapatra of the trust.

(c) Embezzling the movable trust property by the trustee, except for reasonable wear and tear while using it for the trust purpose.

7) One who commits a breach of trust under sub-section (7) shall be liable to action in accordance with the law in force at the time of the commencement of this Act.