Section 23 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 23 is the central rule on what happens when a trustee commits a breach of trust: he must make good the loss that the trust property or the beneficiary has sustained. The section also names three situations in which he is not liable: where the beneficiary induced the breach by fraud, where the beneficiary, competent to contract, concurred in it without coercion or undue influence, and where the beneficiary later acquiesced with full knowledge. This article covers the first paragraph and the main limbs; our companion article covers the interest provisions of the same section. If a loss has occurred, a legal dispute resolution review of the facts is the first practical step.
A trustee who commits a breach of trust is liable to make good the loss which the trust property or the beneficiary has sustained, unless (1) the beneficiary induced the breach by fraud, (2) the beneficiary, being competent to contract, himself concurred in it without coercion or undue influence, or (3) he subsequently acquiesced in it with full knowledge of the facts and of his rights against the trustee.
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 23 is about the trustee of a private trust.
The text
The first paragraph of section 23 reads: "Where the trustee commits a breach of trust, he is liable to make good the loss which the trust-property or the beneficiary has thereby sustained, unless the beneficiary has by fraud induced the trustee to commit the breach, or the beneficiary, being competent to contract, has himself, without coercion or undue influence having been brought to bear on him, concurred in the breach, or subsequently acquiesced therein, with full knowledge of facts of the case and of his rights as against the trustee."
Limb by limb
| Element | Plain meaning |
|---|---|
| "commits a breach of trust" | The section is triggered by a breach; the section itself does not list what counts as one (see the other sections on duties) |
| "liable to make good the loss" | The measure is the loss to the trust property or to the beneficiary |
| "unless the beneficiary has by fraud induced" | If the beneficiary tricked the trustee into the breach, no liability to that beneficiary |
| "being competent to contract ... concurred" | An adult beneficiary of sound mind who agreed to the breach cannot later complain |
| "without coercion or undue influence" | The agreement must have been genuine |
| "subsequently acquiesced ... with full knowledge" | Later acceptance counts only if the beneficiary knew the facts and his rights against the trustee |
Several observations.
- Concurrence needs competence. The text limits concurrence to a beneficiary "being competent to contract". A minor's approval does not release the trustee under this wording.
- Acquiescence needs full knowledge of both the facts and "his rights as against the trustee". Silence without that knowledge is not enough.
- The exceptions are stated in terms of "the beneficiary". Where there are several beneficiaries, the text does not say whose fraud, concurrence or acquiescence counts for whom; treat a trustee's reliance on one beneficiary's consent with caution as against the others.
- No limit on kinds of breach. Whether the breach is carelessness (section 15), an unauthorised investment (section 20) or something else, section 23 sets the consequence.
For the general picture, see our article on liabilities of trustees for breach of trust. Interest on a breach is dealt with in the second paragraph of section 23; our companion article on interest payable by a trustee on breach of trust covers it.
The Act's illustrations
The illustrations to section 23 are printed after the interest paragraphs. Two of them (illustrations (a) and (b)) deal with making good a loss. The Act prints no illustration on the beneficiary's fraud, concurrence or acquiescence.
- (a) A trustee improperly leaves trust property outstanding, and it is consequently lost. He is liable to make good the property lost, but he is not liable to pay interest on it.
- (b) A bequeaths a house to B in trust to sell it and pay the proceeds to C. B neglects to sell for a great length of time, whereby the house deteriorates and its market price falls. B is answerable to C for the loss.
The remaining illustrations, (c) to (h), concern interest and are restated in the companion article.
A modern example of our own
Pooja Verma sets up a family trust for her two sons, Aman (28) and Nitin (16), holding a rented shop in Lucknow. The trustee, Girish, lets the shop to a tenant at far below the rent a prudent trustee would accept, and the trust loses Rs 3 lakh over two years.
- If nothing else is shown, Girish is liable to make good the loss under section 23.
- If Aman, being an adult, had read the lease, understood the rent was low and agreed in writing without pressure, section 23 would protect Girish against Aman's claim (concurrence).
- Nitin's position is different: he is not "competent to contract", so his agreement, if any, does not fall within the concurrence limb.
- If Aman had falsely told Girish that the market rent was low in order to get a favourable lease for a friend, that is fraud inducing the breach, and Girish is not liable to Aman for that loss.
What the instrument of trust can change
Section 23 carries no "subject to the instrument of trust" wording. A deed can still define the trustee's duties and powers, which changes what counts as a breach in the first place, and can record beneficiary consents. Whether a deed can excuse a breach beyond what section 23 allows is not stated in the section; do not assume that it can.
Practical points
- Trustees: before departing from the deed, get written consent from every adult beneficiary who has the facts.
- Beneficiaries: do not sign approvals you do not understand; acquiescence "with full knowledge" can bind you.
- Advisers: read this section with sections 15, 24, 26 and 27.
Need help with a breach of trust claim or defence?
If you are a beneficiary who has suffered a loss, or a trustee facing a claim, our legal dispute resolution service can review the deed, the accounts and the sequence of events. Bring the deed, bank statements and correspondence.
Key takeaways
- A trustee who commits a breach of trust must make good the loss to the trust property or the beneficiary.
- The beneficiary's fraud, informed concurrence (if competent to contract and uninfluenced) or subsequent informed acquiescence removes liability.
- A minor's approval does not count as concurrence under the wording.
- The Act prints no illustration on the three exceptions.
Read next
- Section 23: interest payable by a trustee on breach of trust
- Sections 24-26: no set-off and non-liability for predecessor or co-trustee default
- Rights of a beneficiary under a trust
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.