Section 88 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 88 is the Act's wide rule against a fiduciary profiting from his position. It names a trustee, executor, partner, agent, director of a company and legal adviser, and adds "other person bound in a fiduciary character to protect the interests of another person". If such a person, by availing himself of his character, gains a pecuniary advantage, or enters into dealings in which his own interests are or may be adverse to the other's and so gains an advantage, he must hold that advantage for the benefit of the other person. The Act deals with private trusts; public, charitable and religious trusts are governed by other laws (see private vs public trust). If you suspect a fiduciary has made a gain at your cost, our legal dispute resolution team can review the facts.
A trustee, executor, partner, agent, director of a company, legal adviser or other person bound in a fiduciary character who, by availing himself of his character, gains a pecuniary advantage for himself must hold that advantage for the benefit of the person whose interests he was bound to protect. The same applies where he enters into dealings in which his own interests are, or may be, adverse to the other's, and gains an advantage. The section is about money or money's worth gained by the fiduciary, and about conflicts of interest.
The text of section 88
Section 88 reads: "Where a trustee, executor, partner, agent, director of a company, legal advisor, or other person bound in a fiduciary character to protect the interests of another person, by availing himself of his character, gains for himself any pecuniary advantage, or where any person so bound enters into any dealings under circumstances in which his own interests are, or may be, adverse to those of such other person and thereby gains for himself a pecuniary advantage, he must hold for the benefit of such other person the advantage so gained."
The section has a list of persons, a general description and two situations.
| Element | The Act's words |
|---|---|
| Persons named | trustee, executor, partner, agent, director of a company, legal advisor |
| General class | "other person bound in a fiduciary character to protect the interests of another person" |
| First situation | "by availing himself of his character, gains for himself any pecuniary advantage" |
| Second situation | "enters into any dealings under circumstances in which his own interests are, or may be, adverse ... and thereby gains for himself a pecuniary advantage" |
| Result | "he must hold for the benefit of such other person the advantage so gained" |
The list ends with "or other person bound in a fiduciary character", so the named roles are examples and the class is wider. The test is not the job title but whether the person is "bound in a fiduciary character to protect the interests of another person". The section does not define "fiduciary" and does not list further roles, and the text is silent on how to decide in a doubtful case.
Two further words matter. "Pecuniary advantage" means a gain in money or money's worth; the section does not say that other kinds of advantage are covered. In the second situation, the words "are, or may be, adverse" mean the interests need not actually clash, so long as they may; but the section also requires that he "thereby gains" an advantage. A conflict with no gain does not produce the result in this section, on its wording.
The Act's own illustrations
The Act gives eight illustrations under section 88. In plain words, each stating the Act's own outcome:
- (a) A, an executor, buys at an undervalue from B, a legatee, his claim under the will. B is ignorant of the value of the bequest. A must hold for B the difference between the price and the value.
- (b) A, a trustee, uses the trust property for his own business. A holds for the beneficiary the profits arising from that use.
- (c) A, a trustee, retires from his trust in consideration of his successor paying him a sum of money. A holds that money for his beneficiary.
- (d) A, a partner, buys land in his own name with funds belonging to the partnership. A holds the land for the partnership.
- (e) A, a partner employed on behalf of himself and his co-partners to negotiate the terms of a lease, secretly stipulates with the lessor for payment to himself of a lakh of rupees. A holds the lakh for the benefit of the partnership.
- (f) A and B are partners. A dies. B, instead of winding up the partnership, retains all the assets in the business. B must account to A's legal representative for the profits arising from A's share of the capital.
- (g) A, an agent employed to obtain a lease for B, obtains it for himself. A holds the lease for the benefit of B.
- (h) A, a guardian, buys up for himself encumbrances on his ward B's estate at an undervalue. A holds the encumbrances for the benefit of B and can charge him only with what he actually paid.
The scan of this section has several OCR breaks: the letters (c) to (h) appear as a column of labels on a later page, and some words are damaged ("u-ust" for trust). The illustrations above are read by sense; check the official text if exact wording matters. Illustration (b) is the same idea as section 51 on a trustee's own profit; see sections 51-52.
A modern example of our own
Prerna Das is a director and trusted legal adviser to a small family company in Surat, which wants to buy a warehouse.
- Prerna arranges, in secret, to buy the warehouse herself first and sell it on to the company at a higher price. She "enters into dealings" in which her interest is adverse to the company's and gains an advantage. Under section 88 she must hold that gain for the company.
- Separately, Prerna's partner in her consultancy, Aslam, takes a Rs 2 lakh payment from a supplier in return for steering a contract to him, without telling the firm. As in the Act's illustration (e), he holds the money for the firm.
- A trustee who runs the trust's spare flat as his own guest house, as in illustration (b), holds the profits for the beneficiary.
What the instrument of trust can change
Section 88 does not mention the instrument of trust, and the text does not say that a deed can excuse a fiduciary from it. A trust deed can allow remuneration to a trustee (see section 50), but the text of section 88 does not say how that fits with it. Any permission for a fiduciary to profit should be spelled out and discussed with a lawyer, because the section describes the default rule.
Practical points
- Fiduciaries: disclose any interest of your own before dealing, and get written consent from the person you serve.
- Keep records of any benefit received, and do not keep commissions, rebates or side payments without written agreement.
- Beneficiaries and principals: look for secret profits, purchases through relatives and companies, and payments for appointments or retirements, as in the Act's illustration (c).
- When in doubt, treat the gain as belonging to the person you serve until you have taken advice.
Need help with a fiduciary's secret profit?
If a trustee, executor, partner, agent, director or adviser has gained from his position at your expense, the first step is to collect the documents that show the gain and the relationship. Our legal dispute resolution team can review them and explain how section 88 may apply.
Key takeaways
- Section 88 applies to a trustee, executor, partner, agent, director of a company, legal adviser or other person bound in a fiduciary character.
- If he gains a pecuniary advantage by availing himself of his character, or through dealings in which his interests are or may be adverse, he must hold it for the other person.
- The Act's eight illustrations include an executor buying at an undervalue, a trustee using trust property in business, a partner's secret payment, an agent taking a lease for himself and a guardian buying up encumbrances.
- The named roles are examples; the test is a fiduciary character.
- The section does not define "fiduciary".
Read next
- Sections 89-90: advantage by undue influence and by a qualified owner
- Sections 86-87: rescindable contract transfers and debtor as creditor's representative
- Liabilities of trustees for breach of trust
- 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.