Sections 37-39 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.
Where a trustee is empowered to sell trust property, sections 37, 38 and 39 say how. He may sell subject to prior charges or not, together or in lots, by public auction or private contract, at one time or several, unless the deed says otherwise (section 37). He may set reasonable conditions, buy in, rescind or vary a contract and resell, and exercise a reasonable discretion on the time of sale (section 38). He may convey the property sold (section 39). If your trust deed will give a trustee power to sell, an agreement drafting review of the powers clause is worth doing first.
Where a trustee is empowered to sell, he may sell subject to prior charges or not, together or in lots, by public auction or private contract, at one time or at several times, unless the instrument of trust otherwise directs (s.37). He may insert reasonable stipulations, buy in at an auction, rescind or vary a contract and resell, without being responsible to the beneficiary for loss from doing so, and where directed to sell or to invest in property he has a reasonable discretion as to time (s.38). To complete a sale he may convey the property as necessary (s.39).
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. Sections 37 to 39 are about a private trustee's sale powers.
Section 37: how a trustee may sell
Section 37 reads: "Where the trustee is empowered to sell any trust-property, he may sell the same subject to prior charges or not, and either together or in lots, by public auction or private contract, and either at one time or at several times, unless the instrument of trust otherwise directs." It is a menu of methods, each of which is open unless the deed forbids it.
| Choice | Options the trustee has |
|---|---|
| Charges | Sell subject to prior charges, or not |
| Lots | Sell together, or in lots |
| Method | Public auction, or private contract |
| Timing | At one time, or at several times |
| Override | "unless the instrument of trust otherwise directs" |
The section starts "Where the trustee is empowered to sell": it assumes there is a power to sell, whether from the deed or the Act, and says how it can be used. Note how this interacts with section 11: if the deed says "by public auction only", the trustee must follow it, as the Act's own illustration (a) to section 11 shows. See our article on section 11.
Section 38: conditions, buy-in and timing
The first paragraph says the trustee making any such sale "may insert such reasonable stipulations either as to title or evidence of title, or otherwise, in any conditions of sale or contract for sale, as he thinks fit; and may also buy-in the property or any part thereof at any sale by auction, and rescind or vary any contract for sale, and resell the property so bought in, or as to which the contract is so rescinded, without being responsible to the beneficiary for any loss occasioned thereby."
The second paragraph, headed "Time allowed for selling trust-property", says: "Where a trustee is directed to sell trust-property or to invest trust-money in the purchase of property, he may exercise a reasonable discretion as to the time of effecting the sale or purchase."
The Act's illustrations to section 38, restated in plain words:
- (a) A bequeaths property to B, directing him to sell it with all convenient speed and pay the proceeds to C. This does not render an immediate sale imperative.
- (b) A bequeaths property to B, directing him to sell it at such time and in such manner as he shall think fit and to invest the proceeds for C. This does not authorise B, as between him and C, to postpone the sale to an indefinite period.
So "reasonable discretion" as to time is not unlimited delay. For the burden-of-proof rule when a trustee extends a specified time, see our article on section 22.
Section 39: power to convey
Section 39 reads: "For the purpose of completing any such sale, the trustee shall have power to convey or otherwise dispose of the property sold in such manner as may be necessary." It completes the picture: a sale power would be pointless without a power to transfer title. The text says "in such manner as may be necessary" and gives no detail on forms or registration; the Registration Act and stamp laws are outside this Act's text.
A modern example of our own
Prakash Gupta's trust holds a plot divided into four sub-plots in Nagpur, with his nephew Yash as the beneficiary on turning 25 and Neelam as trustee. The deed empowers sale but is silent on method.
- Under section 37, Neelam may sell the plots together or in lots, one now and others later, by auction or private contract. She decides to sell two sub-plots now by public auction and keep two for later.
- Under section 38, she sets reasonable conditions about proof of title. At the auction the bids are too low, so she buys in, withdraws the plot and resells it later when the market improves, without being responsible to Yash for the loss caused by that step, as the text provides.
- If the deed had said "sell with all convenient speed", she need not sell at once (illustration (a)); if it said "at such time as you think fit", she cannot postpone indefinitely (illustration (b)).
- Under section 39, she signs the transfer documents to complete each sale.
What the instrument of trust can change
Section 37 ends "unless the instrument of trust otherwise directs". So a deed can require auctions, ban lots or require beneficiary consent. Sections 38 and 39 carry no such words in the text we read, and the deed's effect on them is not stated. Under the Act's own scheme, a trustee must also follow directions of the author (section 11), so a clear deed matters.
Practical points
- Settlors: decide whether you want to restrict the method of sale; state it.
- Trustees: document your reasons for the method, the conditions and the timing; keep valuation evidence.
- Beneficiaries: ask to see the conditions of sale and the valuation.
- Advisers: do not confuse the buy-in in section 38 with a trustee buying trust property for himself; our later article on sections 51 and 52 deals with that restriction.
Need help with a sale power in your trust?
If you are drafting a power of sale, or a trustee wondering how the Act lets you sell, our agreement drafting service can help prepare or review the clause. Bring the deed and details of the property.
Key takeaways
- A trustee empowered to sell may sell subject to prior charges or not, together or in lots, by auction or private contract, at one or several times, unless the deed directs otherwise (s.37).
- He may set reasonable conditions, buy in, rescind or vary and resell without being responsible to the beneficiary for the loss (s.38).
- He has a reasonable discretion on time, but not an indefinite postponement (s.38 illustrations).
- He may convey the property as necessary to complete a sale (s.39).
Read next
- Section 36: general authority of a trustee
- Sections 40-42: power to vary investments, maintain minors and give receipts
- Powers of trustees: sale, lease, investment
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.