Sections 53-54 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 53 says a trustee, or a person who has recently ceased to be a trustee, may buy or take a mortgage or lease of trust property only with the permission of a Civil Court, and it also bars a trustee whose duty is to buy or lease property for the beneficiary from taking it for himself. Section 54 says a trustee who must invest trust money on mortgage or personal security may not lend it to himself or to a co-trustee. The Act deals with private trusts; public, charitable and religious trusts are governed by other laws (see private vs public trust). If a trustee has already done something of this kind, our legal dispute resolution team can review the papers with you.
A trustee, or a person who has recently ceased to be one, may not buy, or become mortgagee or lessee of, the trust property without the permission of a principal Civil Court of original jurisdiction, and permission is not given unless the proposal is manifestly for the advantage of the beneficiary (s.53). A trustee whose duty is to buy or lease particular property for the beneficiary may not take it for himself (s.53). A trustee whose duty is to invest trust money on mortgage or personal security must not invest it on a mortgage by, or the personal security of, himself or a co-trustee (s.54).
Section 53: permission of the Court
The first paragraph of section 53 reads: "No trustee, and no person who has recently ceased to be a trustee, may, without the permission of a principal Civil Court of original jurisdiction, buy or become mortgagee or lessee of the trust-property or any part thereof; and such permission shall not be given unless the proposed purchase, mortgage or lease is manifestly for the advantage of the beneficiary."
| Part of the section | What it says |
|---|---|
| "No trustee" | A sitting trustee is bound |
| "no person who has recently ceased to be a trustee" | A former trustee is also bound; the Act does not say how long "recently" lasts |
| "buy or become mortgagee or lessee" | Three dealings: purchase, mortgage, lease |
| "the trust-property or any part thereof" | Even a part is covered |
| "permission of a principal Civil Court of original jurisdiction" | The permission must come from that court |
| "manifestly for the advantage of the beneficiary" | The court may allow it only if the advantage is clear |
Compare this with section 52. Section 52 bars a trustee whose duty is to sell, and his agent, from buying at all; the text of section 52 mentions no permission. Section 53 covers trustees generally and former trustees, and allows a dealing only through the Court. The two sections use different words, so read each on its own terms.
The words "recently ceased" close an obvious gap. A trustee who resigns on Monday and buys the property on Tuesday would otherwise escape the rule. The Act does not give a number of days or years, so what is "recent" depends on the facts. We cannot say more without the official text of any rules; the scanned copy states none.
Section 53: trustee whose duty is to buy or lease for the beneficiary
The second paragraph deals with a different situation: "And no trustee whose duty it is to buy or to obtain a mortgage or lease of particular property for the beneficiary may buy it, or any part thereof, or obtain a mortgage or lease of it, or any part thereof, for himself."
Here the trustee is the buyer for the trust. If the trust has bought, or is about to buy, a particular house for a beneficiary, the trustee may not take that house for himself. The paragraph, as printed, does not speak of Court permission. It states a plain bar.
Section 54: lending trust money to a co-trustee
Section 54 reads: "A trustee or co-trustee whose duty it is to invest trust-money on mortgage or personal security must not invest it on a mortgage by, or on the personal security of, himself or one of his co-trustees."
The section applies where the trustee's duty is to invest on mortgage or personal security. It then forbids a loan of the trust money in which the borrower is the trustee himself or one of his co-trustees. The risk is plain: the person deciding to lend is also the person who owes the money. The section does not say what the trust may lawfully invest in generally; for that, see section 20 on investment rules and the deed.
The Act's illustrations
In the scanned copy consulted, no illustrations are printed under sections 53 and 54, so none are restated here.
A modern example of our own
Prakash Menon and Leela Menon are the two trustees of a family trust whose duty, under the deed, is to invest part of the fund on mortgage security.
- Prakash resigns as trustee in March. In April he asks to buy a trust-owned shop. The word "recently" in section 53 is there for this: he needs the permission of the Civil Court, which may give it only if the sale is manifestly for the advantage of the beneficiary.
- The trust deed directs the trustees to purchase a particular flat for a minor beneficiary. Leela cannot buy it herself instead. That is the second paragraph of section 53.
- Prakash asks to borrow Rs 20 lakh of trust money to expand his business, against a mortgage of his own factory. Section 54 forbids the trustees from investing trust money on a mortgage by one of themselves.
What the instrument of trust can change
Neither section opens with "subject to the instrument of trust". The printed text does not say that a deed can lift these bars, so it should not be assumed that it can. A settlor who wants a trustee to have a particular power to deal with trust property should say so clearly in the deed and take advice on whether it is effective.
Practical points
- Trustees and former trustees: do not buy, mortgage or lease trust property until the Court has given permission.
- If a Court application is made, remember the test the section sets: "manifestly for the advantage of the beneficiary".
- Keep the trust's investments with outsiders, not the trustees' own companies or relatives, unless the deed clearly allows otherwise and advice has been taken.
- Beneficiaries: ask for the investment details and accounts.
Need help with a trustee's purchase or loan?
If a trustee, or someone who has just stepped down, wants to buy or lease trust property, or has already done so, or if trust money has been lent to a trustee, collect the deed, the sale or loan papers and the accounts first. Our legal dispute resolution team can read them and advise on the next step.
Key takeaways
- Section 53: a trustee, or a person who has recently ceased to be one, needs the permission of a principal Civil Court of original jurisdiction to buy or become mortgagee or lessee of trust property.
- Permission is not given unless the proposal is manifestly for the advantage of the beneficiary.
- A trustee whose duty is to buy or lease particular property for the beneficiary may not take it for himself.
- Section 54: trust money to be invested on mortgage or personal security must not be lent to a trustee or co-trustee.
- No illustrations are printed under these sections in the scanned text.
Read next
- Sections 51-52: trustee may not use trust property for profit or buy it
- Section 62: wrongful purchase by trustee
- Sections 55-56: beneficiary's right to rents and profits and specific execution
- 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.