Impartiality, Accounts and Information (Sections 17 and 19)

Two duties keep a trustee fair and accountable. Section 17 requires him to be impartial where there is more than one beneficiary, so that he does not run the trust for one at the expense of another. Section 19 requires him to keep clear and accurate accounts and to give beneficiaries full and accurate information about the trust property on request. Together with the beneficiary's right of inspection in Section 57, these duties make the trustee's stewardship visible and open to challenge.

1. The Duty of Impartiality (Section 17)

Section 17, Indian Trusts Act, 1882 (trustee to be impartial)

Where there are more beneficiaries than one, the trustee is bound to be impartial, and must not execute the trust for the advantage of one at the expense of another.

Where the trustee has a discretionary power, nothing in this section shall be deemed to authorise the Court to control the exercise reasonably and in good faith of such discretion.

What impartiality means

Impartiality does not mean giving every beneficiary the same amount. The instrument may give unequal shares, or give one beneficiary income and another capital. Impartiality means holding the balance fairly according to the terms of the trust: the trustee must not, by his own choices, shift value from one beneficiary or class to another beyond what the instrument intends.

Where the duty bites

Situation	Risk of partiality	What the trustee should do
Income and capital beneficiaries (life tenant and remainderman)	Investments yielding high income but eroding capital favour the life tenant; growth investments with no income favour the remainderman	Choose a mix that produces reasonable income while preserving capital; convert wasting assets (Section 16)
Allocation of receipts and expenses	Treating a capital receipt as income, or charging capital expenses to income, shifts value between classes	Allocate receipts and outgoings to income or capital on a principled basis
Beneficiaries with competing claims	Favouring one family branch in sales, tenancies or information	Deal with all on equal terms and give each the information they are entitled to
Trustee who is also a beneficiary	Using his position to advance his own share	Act for the trust as a whole; where conflict is acute, seek directions or step aside

Discretionary powers

The second paragraph of Section 17 protects discretion. Where the instrument gives the trustee a choice, for example how much income to pay to each member of a class, or which of several authorised investments to make, the court will not interfere with a choice made reasonably and in good faith, even though it affects beneficiaries differently. An illustration to the section shows trustees with a discretion to invest in any of several modes; the court will not control their choice even if it favours one class. Impartiality in a discretionary trust therefore means genuine consideration of all eligible beneficiaries, not equal treatment. Section 49 states the same limit on the court's control (Topic 22).

2. The Duty to Keep Accounts and Inform (Section 19)

Section 19 (accounts and information)

A trustee is bound (a) to keep clear and accurate accounts of the trust property, and (b), at all reasonable times, at the request of the beneficiary, to furnish him with full and accurate information as to the amount and state of the trust property.

Clear and accurate accounts

The trustee must at all times be ready with his accounts. This means records of receipts and payments, the assets held and their investment, income and its application, and supporting vouchers. The accounts must be clear (intelligible to a beneficiary or the court) and accurate. Keeping trust money in a separate account, apart from the trustee's own, is the foundation of good accounts and also protects against blending (Section 66).

Full and accurate information on request

Who may ask: any beneficiary. In a discretionary trust, the objects of the discretion have a legitimate interest in proper administration and may seek information, though their claim is weaker than that of a beneficiary with a fixed share.
What must be given: information about the amount and state of the trust property: what it is, how it is invested, what it yields and how it has been applied.
When: at all reasonable times, on request. A trustee cannot insist on a court order before giving information.

The related right of inspection (Section 57)

Section 57 gives the beneficiary a right, against the trustee and those claiming under him with notice of the trust, to inspect and take copies of the instrument of trust, the documents of title relating solely to the trust property, the accounts and vouchers, and the cases submitted and opinions taken by the trustee for his guidance. Section 19 imposes a duty on the trustee; Section 57 confers a matching right on the beneficiary (Topic 25).

Limits on disclosure

The duty is not unlimited. Courts have generally accepted, drawing on English authority such as Re Londonderry's Settlement (1965), that trustees of a discretionary trust need not disclose their reasons for exercising a discretion, as distinct from the accounts and documents showing what was done. Later English authority (Schmidt v Rosewood Trust, Privy Council, 2003) treats disclosure as a matter for the court's supervisory discretion rather than a strict proprietary right. Indian courts may draw on these principles where the Act is silent.

3. Consequences of Failure

Suit for accounts: a beneficiary may sue for an account and for the trustee to be compelled to perform his duty (Sections 59 and 61). The court may order the accounts to be taken and pass a decree for any sum found due.
Presumptions against the trustee: where a trustee fails to keep proper accounts, doubts are resolved against him, and he bears the burden of showing that sums were properly applied.
Costs: a trustee who fails to account, or obstructs inquiry, may be made to pay the costs of proceedings personally.
Removal: persistent failure to account is a ground for the court to remove the trustee and appoint another (Topics 29 and 30).
Criminal liability: where the failure conceals dishonest misappropriation, it may support a charge of criminal breach of trust (Topic 38).

⚠ Note

For public charitable trusts, statutory regimes add further obligations: State public trust laws require annual accounts and audit, and income tax law requires audited accounts as a condition of exemption (Topics 42 and 48). The Section 19 duty is the private trust baseline on which these build.

⚠ Key point

Where there are several beneficiaries, a trustee must be impartial and must not execute the trust for the advantage of one at the expense of another; this means holding the balance fairly under the instrument (especially between income and capital beneficiaries), not equal shares, and the court will not control a discretion exercised reasonably and in good faith (Section 17). A trustee must keep clear and accurate accounts and, at all reasonable times, give a requesting beneficiary full and accurate information on the amount and state of the trust property (Section 19), matched by the beneficiary's right to inspect and copy under Section 57.

4. Related Topics and Provisions

Standard of care and preservation (Topic 14): Section 16 and successive beneficiaries
Rights of trustees (Topic 20): settlement of accounts under Section 35
Discretionary trusts and the court's control (Topic 22): Section 49
Rights of the beneficiary (Topic 25): inspection under Section 57