Sections 63-64 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 63 lets a beneficiary follow trust property when it has gone into the hands of a third person inconsistently with the trust, or has been turned into other money or property that can still be traced. Section 64 then protects certain transferees, mainly those who took in good faith, for consideration and without notice of the trust. The Act deals with private trusts; public, charitable and religious trusts are governed by other laws (see private vs public trust). If trust property has gone astray and you want to trace it, our legal dispute resolution team can look at the papers with you.
Where trust property comes into a third person's hands inconsistently with the trust, the beneficiary may require him to admit formally, or may sue for a declaration, that the property is comprised in the trust (s.63). Where the trustee has disposed of it and the money or other property received for it can be traced in his hands, or those of his legal representative or legatee, the beneficiary has rights as nearly as may be the same as in the original property (s.63). Section 64 shields a transferee in good faith for consideration without notice of the trust, and one who takes from such a transferee, and says a judgment-creditor who attaches and buys is not such a transferee.
Section 63: two kinds of following
1. Property in a third person's hands. The first paragraph reads: "Where trust-property comes into the hands of a third person inconsistently with the trust, the beneficiary may require him to admit formally, or may institute a suit for a declaration, that the property is comprised in the trust."
The beneficiary has two routes: ask the holder to admit it, or sue for a declaration. The key words are "inconsistently with the trust". Property that reaches a third person in a way the trust allows does not fall under this paragraph.
2. What the trust property was turned into. The second paragraph reads: "Where the trustee has disposed of trust-property and the money or other property which he has received therefor can be traced in his hands, or the hands of his legal representative or legatee, the beneficiary has, in respect thereof, rights as nearly as may be the same as his rights in respect of the original trust-property."
If the trustee sold a trust asset and the sale money, or something bought with it, can still be traced, the beneficiary's rights follow into it. The paragraph names three possible holders: the trustee, his legal representative and his legatee. The section does not define "traced" or lay down a method of tracing; the text is silent, and the facts of each case decide.
Section 64: transferees who are protected
Section 64 begins: "Nothing in Section 63 entitles the beneficiary to any right in respect of property in the hands of" (a) "a transferee in good faith for consideration without having notice of the trust, either when the purchase-money was paid, or when the conveyance was executed; or" (b) "a transferee for consideration from such a transferee."
| Person | Protected under section 64? |
|---|---|
| Transferee in good faith, for consideration, without notice of the trust | Yes |
| Transferee for consideration from such a protected transferee | Yes |
| A transferee who knew of the trust | The section gives no protection |
| A transferee who paid nothing | The section gives no protection; consideration is required |
| A judgment-creditor of the trustee who attaches and buys trust property | Not a transferee for consideration within the section |
The section adds a second paragraph on that last point: "A judgment-creditor of the trustee attaching and purchasing trust-property is not a transferee for consideration within the meaning of this section."
The notice test has two moments: "either when the purchase-money was paid, or when the conveyance was executed". The section does not explain how the two moments interact; the words should be read as printed, and the official text checked for fine points.
A final paragraph says: "Nothing in Section 63 applies to money currency notes and negotiable instruments in the hands of a bona fide holder to whom they have passed in circulation, or shall be deemed to affect the Indian Contract Act, 1872, Section 108, or the liability of a person to whom a debt or charge is transferred." The OCR of the opening phrase is run together ("money currency notes"); it appears to list money, currency notes and negotiable instruments, but check the official text. The section also names section 108 of the Indian Contract Act, 1872 as printed.
The Act's own illustrations
The Act gives two illustrations under section 63. In plain words:
- Illustration (a). A, a trustee for B of Rs 10,000, wrongfully invests the Rs 10,000 in the purchase of certain land. B is entitled to the land.
- Illustration (b). A, a trustee, wrongfully purchases land in his own name, partly with his own money and partly with money subject to a trust for B. B is entitled to a charge on the land for the amount of the trust money so misemployed.
The first shows the whole fund traced into land. The second shows a mixed purchase, where the beneficiary gets a charge on the land for the trust money, not the whole land. For deliberate mingling of funds, see section 66 in sections 65-67.
A modern example of our own
Farhan Qureshi is trustee of a trust for his late brother's daughter, Zoya. He sells a trust-owned flat in Lucknow for Rs 60 lakh and uses the money to buy a shop in his own name.
- Under the second paragraph of section 63, the sale money was received for trust property and, being traceable into the shop, Zoya has rights in the shop as nearly as may be the same as in the flat, in line with the Act's illustration (a).
- If Farhan instead sold the flat to a buyer who knew it was trust property, the first paragraph lets Zoya ask that buyer to admit formally, or sue for a declaration, that the flat is comprised in the trust.
- If the buyer was a stranger who paid full value in good faith and knew nothing of the trust, section 64 protects him, and so it would protect a person who then bought from him for consideration.
- If a creditor of Farhan attached and bought the flat in execution of a judgment, section 64 says he is not a transferee for consideration within the section.
What the instrument of trust can change
Sections 63 and 64 do not mention the instrument of trust, and the text does not say that a deed can alter them. They protect people outside the trust, such as buyers, who are not parties to the deed, so a deed cannot easily bind them. Take advice if a deed purports to restrict following of property.
Practical points
- Beneficiaries: if you suspect trust property was sold or converted, collect the sale papers and bank records quickly, because tracing depends on documents.
- Buyers from trustees: ask for the trust deed and check the trustee's power of sale. Notice of the trust takes away the protection of section 64.
- Trustees: keep trust money in a separate account so that it can always be identified; see liabilities of trustees.
Need help tracing trust property?
If trust property has been sold on, or trust money used to buy something else, the deed, the sale papers and the bank statements are the starting point. Our legal dispute resolution team can read them and advise on a declaration or a claim over what the property became.
Key takeaways
- Section 63: a beneficiary may require a third person holding trust property inconsistently with the trust to admit formally, or sue for a declaration, that it is comprised in the trust.
- Where the sale money or other property can be traced in the hands of the trustee, his legal representative or his legatee, the beneficiary has rights as nearly as may be the same as in the original property.
- Section 64 protects a transferee in good faith for consideration without notice, and a transferee for consideration from him.
- A judgment-creditor who attaches and buys trust property is not such a transferee.
- The Act's two illustrations show tracing into land: the whole land, or a charge where funds are mixed.
Read next
- Sections 65-67: wrongfully converted, blended and partner-trustee property
- Section 62: wrongful purchase by trustee
- Liabilities of trustees for breach of trust
- Rights of beneficiary under 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.