Sections 91-93 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.
Three more obligations in the nature of trusts sit in sections 91 to 93. Section 91 deals with a person who acquires property knowing that another has an existing contract about it that could be specifically enforced. Section 92 deals with a person who contracts to buy property to be held on trust for others and then buys it. Section 93 deals with a creditor who, when creditors compound a debtor's debts, gains a secret advantage over the others. Not to be confused with CGST section 91 or other Acts' sections 91 and 92; this article is only about the Trusts Act. The Act deals with private trusts; public, charitable and religious trusts are governed by other laws (see private vs public trust). If you face a competing claim over property, our legal dispute resolution team can look at the papers.
Section 91: a person who acquires property with notice that another has entered into an existing contract affecting it, of which specific performance could be enforced, must hold the property for the benefit of the other to the extent necessary to give effect to the contract. Section 92: a person who contracts to buy property to be held on trust for certain beneficiaries and buys it must hold it for them to the extent necessary to give effect to the contract. Section 93: a creditor who, when creditors compound their debts, gains an undue advantage over his co-creditors by a secret arrangement with the debtor must hold that advantage for the creditors.
Section 91: acquiring property with notice of an existing contract
Section 91 reads: "Where a person acquires property with notice that another person has entered into an existing contract affecting that property, of which specific performance could be enforced, the former must hold the property for the benefit of the latter to the extent necessary to give effect to the contract."
| Element | The Act's words |
|---|---|
| Acquirer's knowledge | "with notice that another person has entered into an existing contract affecting that property" |
| Nature of the contract | "of which specific performance could be enforced" |
| Result | "must hold the property for the benefit of the latter" |
| Extent | "to the extent necessary to give effect to the contract" |
An example is a buyer who knows that the seller has already agreed to sell the same property to someone else, under an agreement a Court could order to be carried out. The later buyer holds the property for the earlier one, but only so far as needed to give effect to the earlier contract. The words "with notice" matter; a buyer who did not know is not described in the text as caught by this section. Whether a contract is one "of which specific performance could be enforced" depends on other law, which the section does not set out; the text is silent.
Section 92: purchase by a person contracting to buy for a trust
Section 92 reads: "Where a person contracts to buy property to be held on trust for certain beneficiaries and buys the property accordingly, he must hold the property for their benefit to the extent necessary to give effect to the contract."
The idea is straightforward. If someone has contracted to buy property for certain beneficiaries and then buys it, he does not get to keep it for himself. He holds it for them, "to the extent necessary to give effect to the contract". The section does not say that the contract must be in writing, and the text is silent on form. It should be read with the bar in section 53 on a trustee whose duty is to buy particular property for a beneficiary taking it for himself; see sections 53-54.
Section 93: advantage secretly gained by one of several compounding creditors
Section 93 reads: "Where creditors compound the debts due to them, and one of such creditors, by a secret arrangement with the debtor, gains an undue advantage over his co-creditors, he must hold for the benefit of such creditors the advantage so gained."
To "compound" debts here means that the creditors agree to accept less than the full debts. If one of them quietly makes a private deal with the debtor to get more than the others, that extra is held for the creditors as a group. Two elements: a "secret arrangement with the debtor" and an "undue advantage over his co-creditors". The section does not say how the advantage is shared out, and the text is silent on that.
The Act's illustrations
In the scanned copy consulted, no illustrations are printed under sections 91, 92 and 93, so none are restated here.
A modern example of our own
- Section 91. Rakesh Tandon signs an agreement to buy a plot from Mrs Bhatia for Rs 50 lakh and pays an advance. Mrs Bhatia then sells the same plot to Sameer, who knows about Rakesh's agreement. Sameer holds the plot for Rakesh to the extent needed to give effect to Rakesh's agreement.
- Section 92. Dhruv agrees with the other family members to buy a farmhouse to be held on trust for the family's three children. He buys it. He cannot keep it for himself; he holds it for the children to the extent necessary to give effect to the contract.
- Section 93. A struggling company owes money to five suppliers, who agree to take 60 per cent of what they are each owed. One supplier privately gets the company to pay him an extra Rs 2 lakh on top. He must hold that extra for the five suppliers.
What the instrument of trust can change
These sections do not mention the instrument of trust. They create obligations by operation of the Act in the situations they describe, and the text does not say whether a deed or agreement can displace them. Parties who want their rights settled in a particular way should put them in a written agreement and take advice. On the general consequences for the person who holds property under these obligations, see sections 95-96.
Practical points
- Buyers: before you buy, ask whether anyone else holds an agreement to buy the same property. Notice of such an agreement can make you hold the property for that person.
- Sellers: keep a record of earlier agreements and tell later buyers about them.
- Agents buying for a family or trust: record in writing that you are buying for the beneficiaries and keep the purchase documents with the trust papers.
- Creditors taking part in a compromise with a debtor: disclose any side arrangement to the others. A secret one is the problem section 93 deals with.
Need help with a competing claim over property or a creditor arrangement?
If you hold, or want to challenge, a purchase made with notice of another's agreement, or a secret advantage in a creditors' compromise, the documents and the dates matter. Our legal dispute resolution team can review them and explain where sections 91 to 93 may apply.
Key takeaways
- Section 91: a person who acquires property with notice of an existing contract capable of specific performance holds it for the other party to the extent necessary to give effect to the contract.
- Section 92: a person who contracts to buy property to be held on trust for certain beneficiaries and buys it holds it for them.
- Section 93: a compounding creditor's secret undue advantage is held for his co-creditors.
- The Act prints no illustrations under these sections in the scanned text.
- Do not confuse these with other Acts' sections numbered 91 or 92.
Read next
- Sections 95-96: obligator's duties, liabilities and saving of bona fide purchasers
- Sections 89-90: advantage by undue influence and by a qualified owner
- Section 88: advantage gained by a fiduciary
- Liabilities of trustees for breach of 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.