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    Question

    Under common law principles on trusts (applied in Indian

    jurisprudence), Mr. W transfers property valued at ₹100 lakhs to Mr. X with the following circumstances: (i) no consideration is given (gratuitous transfer); (ii) no written trust instrument is executed; (iii) the parties are not family members; (iv) no verbal declaration of beneficial ownership is made. Years later, W claims he retains beneficial interest in the property. Which of the following correctly determines W's legal entitlement?
    A W has no claim because the property was transferred without conditions or written trust, indicating an absolute gift to X Correct Answer Incorrect Answer
    B The law presumes a resulting trust in W's favour because the property was transferred gratuitously without evidence of a gift; the presumption can only be rebutted by clear evidence that X was intended to be the beneficial owner Correct Answer Incorrect Answer
    C W's claim is valid only if the transfer was induced by fraud; otherwise, the presumption of resulting trust does not apply to gratuitous transfers Correct Answer Incorrect Answer
    D A resulting trust cannot arise because Section 5 of the Indian Trusts Act requires written instruments for all trusts Correct Answer Incorrect Answer
    E The presumption of advancement applies, making X the absolute owner; resulting trusts apply only to family members Correct Answer Incorrect Answer

    Solution

    Explanation: Resulting trusts arise from presumed intention when property is transferred without clear expression of gift. The doctrine operates on the principle that where beneficial interest is not disposed of, it "results" back to the transferor. This principle is recognized in Indian jurisprudence, though the Indian Trusts Act does not explicitly codify resulting trusts (which emerged from English equity). Key principles: (i) Automatic resulting trusts: when an express trust fails or incompletely disposes of beneficial interest; (ii) Presumed resulting trusts: when property is transferred gratuitously without gift intention. In Mr. W's case: The gratuitous transfer (no consideration) without evidence of gift intention or written trust creates a presumed resulting trust in W's favour. The burden shifts to X to prove the transfer was intended as a gift. Courts presume gratuitous transfers retain beneficial interest in the transferor unless rebutted. The presumption of advancement (which would make the transfer a gift) historically applied to transfers by fathers to children or husbands to wives, but modern courts recognize its limitations. In W-X's relationship (non-family, gratuitous, no gift language), the presumption of resulting trust is stronger. The resulting trust does NOT require a written instrument under Section 5 because Section 5 applies to express trusts "declared" by the author; resulting trusts arise automatically by operation of law. Thus, option (B) correctly applies resulting trust principles.

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