A, a trustee for B of a policy of insurance, has funds in hand for payment of the premiums. A neglects…
Illustration (f) to section 15 holds that a trustee who has funds for the premiums but neglects to pay them "is bound to make good the loss to B". A man of ordinary prudence…
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A, a trustee for B of a policy of insurance, has funds in hand for payment of the premiums. A neglects to pay the premiums, and the policy is consequently forfeited. Under the Indian Trusts Act, 1882, what follows?
Answer and explanation
Correct answer D
Illustration (f) to section 15 holds that a trustee who has funds for the premiums but neglects to pay them "is bound to make good the loss to B". A man of ordinary prudence would keep his own policy alive, so letting it lapse breaches the standard in section 15. Misappropriation of the funds is not needed; neglect is enough.