Section 15 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 15 sets the standard of care for a trustee: deal with the trust property as carefully as a man of ordinary prudence would deal with such property if it were his own. A trustee who does so is not responsible for loss, destruction or deterioration, unless there is a contract to the contrary. The section has eight illustrations, which show where the line falls between bad luck and carelessness. If a loss has already happened and you need to know where you stand, legal dispute resolution support is available.
A trustee must deal with trust property as carefully as a man of ordinary prudence would deal with such property if it were his own. If he does so, then, "in the absence of a contract to the contrary", he is not responsible for loss, destruction or deterioration of the property. If he fails in that care, the Act's illustrations show he must make good the loss.
Scope of the Act
The Act deals with private trusts. Public, charitable and religious trusts are governed by other laws; see private trust vs public trust. Section 15 sets the care standard for a private trustee.
The text
Section 15 reads: "A trustee is bound to deal with the trust-property as carefully as a man of ordinary prudence would deal with such property if it were his own; and, in the absence of a contract to the contrary, a trustee so dealing is not responsible for the loss, destruction or deterioration of the trust-property."
| Phrase | What it means |
|---|---|
| "as carefully as a man of ordinary prudence" | The yardstick is an ordinary, sensible person, not an expert and not a gambler |
| "if it were his own" | The trustee must take the same trouble as for his own property of that kind |
| "in the absence of a contract to the contrary" | The standard can be altered by contract |
| "not responsible for the loss, destruction or deterioration" | A careful trustee is not an insurer; loss that happens despite ordinary prudence stays with the trust |
Two sides of one rule: a trustee who meets the standard is protected, and a trustee who falls short is exposed. The text does not name any particular act of carelessness; the illustrations do the work. For the general consequences of a breach, see our guide on liabilities of trustees for breach of trust.
The Act's illustrations
Eight illustrations are printed. These are the Act's own, restated in plain words.
| Illustration | Facts in brief | Outcome |
|---|---|---|
| (a) | Trustee in Calcutta remits trust funds to the beneficiary in Bombay by bills drawn by a person of undoubted credit, payable at Bombay; the bills are dishonoured | Trustee is not bound to make good the loss |
| (b) | Trustee directs the tenant to pay rents to a banker then in credit and leaves the money there only till wanted; the banker becomes insolvent; the trustee had no reason to think him insolvent | Not bound to make good |
| (c) | Trustee of two debts releases one and compounds the other in good faith, reasonably believing it is for the beneficiary's interest | Not bound to make good |
| (d) | Trustee directed to sell by auction does not advertise and fails in reasonable diligence in inviting competition | Bound to make good the loss |
| (e) | Trustee sells trust property but, for want of due diligence, fails to receive part of the purchase money | Bound to make good |
| (f) | Trustee of an insurance policy has funds for premiums but neglects to pay; the policy is forfeited | Bound to make good |
| (g) | Trustees are authorised to continue money on the personal security of a firm; the firm changes; they permit the money to remain on the new firm's security | They must not permit it to remain |
| (h) | Trustee lets the trust be executed solely by his co-trustee, who misapplies the property | The trustee is personally answerable for the loss |
The pattern is plain. Where the trustee acted on reasonable grounds and the loss came from something he could not foresee (illustrations (a) to (c)), he is protected. Where the loss followed his own inaction or lack of diligence (illustrations (d) to (h)), he is not.
A modern example of our own
Ritu Bansal creates a trust holding a flat in Jaipur for her son's education, with her cousin Nikhil as trustee. Nikhil lets the flat and, as a precaution, deposits the rent in a scheduled bank's savings account until it is needed for the school fee. The bank is not known to be in trouble. If the account were later frozen through no fault of Nikhil, he has acted as an ordinary prudent person would, and under section 15 he is not responsible for the loss.
Change the facts. Nikhil leaves the flat vacant and does not renew its insurance policy although the trust has funds, and a fire occurs. Following illustration (f), he would be bound to make good the loss his neglect caused. Likewise, if the deed directs him to sell by auction and he advertises nowhere, illustration (d) applies.
What the instrument of trust can change
Section 15 says "in the absence of a contract to the contrary". So the standard can be raised or lowered by agreement. A deed might require the trustee to take specialist advice before a sale, which raises the bar. Whether a deed can lower it, and by how much, is not answered in section 15's text, and a clause that tries to remove all responsibility should be taken to a lawyer.
Practical points
- Settlors: if you want a higher standard (say, professional valuation before any sale), put it in the deed.
- Trustees: keep a paper trail: advertisements, quotations, bank confirmations. In a dispute, the file shows prudence.
- Beneficiaries: if you think a loss came from carelessness, collect the documents before you write to the trustee.
- Advisers: read section 15 together with section 23 (liability for breach of trust) and section 30 (indemnity), which we cover in later articles in this series.
Need help with a trustee dispute?
If you suspect a loss to a trust from a trustee's carelessness, or you are a trustee facing such an allegation, our legal dispute resolution service can review the facts and the deed. Bring the trust deed, the accounts and any correspondence.
Key takeaways
- The standard is a man of ordinary prudence dealing with his own property.
- A trustee meeting the standard is not responsible for loss, destruction or deterioration, absent a contract to the contrary.
- Illustrations (a) to (c) protect trustees who acted reasonably; (d) to (h) make trustees answerable for neglect.
- A co-trustee who leaves everything to the other is personally answerable (illustration (h)).
- The standard can be varied by contract.
Read next
- Sections 12-14: know the trust property, protect title, no adverse title
- Sections 16-18: converting wasting property, impartiality and preventing waste
- Duties of trustees under the Trusts Act
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.