Sections 95-96 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.
Sections 95 and 96 close Chapter IX. Section 95 says that a person who holds property under any of the earlier sections of the Chapter, the "obligator", must so far as may be perform the duties and bear the liabilities and disabilities of a trustee for the person for whom he holds it, with two provisos. Section 96 saves the rights of transferees in good faith for consideration and refuses to create an obligation in evasion of any law. The Act deals with private trusts; public, charitable and religious trusts are governed by other laws (see private vs public trust). If you hold property under one of these obligations, or are owed it, our legal consultation team can help you understand the duties.
A person holding property under any of the preceding sections of Chapter IX must, so far as may be, perform the same duties and is subject, so far as may be, to the same liabilities and disabilities, as if he were a trustee of the property for the person for whose benefit he holds it (s.95). Two provisos: he is entitled to reasonable remuneration if he rightfully cultivates the property or employs it in trade or business, and, if he holds under a contract with the person for whom he holds it, he may buy or become lessee or mortgagee without the Court's permission. Section 96 protects transferees in good faith for consideration and creates no obligation in evasion of any law.
Section 95: the obligator is treated as a trustee
Section 95 reads: "The person holding property in accordance with any of the preceding sections of this Chapter must, so far as may be, perform the same duties, and is subject, so far as may be, to the same liabilities and disabilities, as if he were a trustee of the property for the person for whose benefit he holds it".
This is the section that turns the Chapter's special cases into something workable. Sections 83 to 93 say that in certain situations a person "must hold" property for someone else. Section 95 then says how he is to behave while he holds it: as if he were a trustee. That brings in the trustee's duties, such as accounting and care, and also the trustee's liabilities and disabilities, such as the bars on profiting and on buying, in the earlier chapters. See duties of trustees under the Trusts Act and sections 51-52.
The qualifier "so far as may be" matters: the trustee rules are applied to the extent they fit, not mechanically. The section does not list which duties fit. The text is silent on that, and the facts decide.
A note on what the Chapter now contains: section 94, which dealt with constructive trusts in cases not expressly provided for, is repealed, as shown in the text by the Benami Transactions (Prohibition) Act, 1988, section 7, with effect from 19 May 1988. Sections 81 and 82 are also repealed; see sections 80-83. Section 95 speaks of "the preceding sections of this Chapter"; the repealed sections are not part of what it applies to, and this article does not rely on their old wording.
The two provisos
| Proviso | The Act's words |
|---|---|
| (a) | "where he rightfully cultivates the property or employs it in trade or business, he is entitled to reasonable remuneration for his trouble, skill and loss of time in such cultivation or employment" |
| (b) | "where he holds the property by virtue of a contract with a person for whose benefit he holds it or with any one through whom such person claims, he may, without the permission of the Court, buy or become lessee or mortgagee of the property or any part thereof" |
The first proviso gives an obligator who does productive work with the property, such as farming it or using it in a business, "reasonable remuneration". The word "rightfully" is important: the work must be rightful. Compare section 50, which as a general rule says a trustee has no right to charge for his trouble, skill and loss of time; see section 50. The Act does not say what is "reasonable", and the text is silent on the amount or method.
The second proviso removes the need for the Court's permission where the obligator holds under a contract with the person for whom he holds. Compare section 53, which requires a trustee to obtain Court permission before buying or leasing trust property; see section 53. The proviso therefore lifts that bar only in the case it describes.
Section 96: saving of bona fide purchasers
Section 96 reads: "Nothing contained in this Chapter shall impair the rights of transferees in good faith for consideration, or create an obligation in evasion of any law for the time being in force."
It has two parts. First, a transferee in good faith for consideration keeps his rights; none of the Chapter's obligations can cut across them. Second, the Chapter cannot be used to "create an obligation in evasion of any law for the time being in force". The section does not define "good faith" and does not say how notice interacts with it; the text is silent. Note that some sections, such as section 91 and section 89, speak of "notice", and section 96 is the general saving across the Chapter.
The Act's illustrations
In the scanned copy consulted, no illustrations are printed under sections 95 and 96, so none are restated here. The Schedule that follows section 96 lists the enactments repealed by section 2; it is not part of these sections.
A modern example of our own
Tarun Reddy acquires a farm in Warangal from Meena Gowda by a transaction that falls within Chapter IX, so that he must hold the farm for Meena's benefit.
- Under section 95 he must act as a trustee of the farm for Meena, so far as may be: keep accounts, protect the property, and not use it for his own profit except as the provisos allow.
- If Tarun rightfully cultivates the farm himself, he may claim reasonable remuneration for his trouble, skill and loss of time under proviso (a).
- If Tarun holds the farm under a contract with Meena, and she agrees, he may buy or take a lease of part of it without going to the Court, under proviso (b).
- If Tarun had sold part of the farm to Ajay, who paid full price in good faith, section 96 means the Chapter does not impair Ajay's rights.
What the instrument of trust can change
There may be no instrument at all, since these obligations arise from the Act. Proviso (b) refers to a contract with the person for whom he holds, so an agreement between the parties can matter in that respect. The text does not say that a deed or contract can displace section 95 otherwise. Parties who want to settle the position should put it in writing and take advice.
Practical points
- Anyone who finds he is holding property for another under Chapter IX should treat himself as a trustee: keep accounts, keep the property safe, and do not take personal benefit without advice.
- Keep records of work done on the property if you may want to claim remuneration under proviso (a).
- Buyers: if you buy property in good faith for value, keep the proof of payment and your enquiry records, since that is what section 96 protects.
Need help with property you hold for someone else?
If you are holding property for another under one of these obligations, or you are a buyer worried about a prior claim, the facts and the documents decide how sections 95 and 96 apply. Our legal consultation team can review them and advise.
Key takeaways
- Section 95: a person holding property under Chapter IX is treated, so far as may be, as a trustee for the person for whom he holds it.
- Proviso (a): reasonable remuneration where he rightfully cultivates the property or employs it in trade or business.
- Proviso (b): where he holds under a contract with that person, he may buy or become lessee or mortgagee without the Court's permission.
- Section 96: transferees in good faith for consideration are protected, and no obligation is created in evasion of any law.
- Section 94 is repealed; sections 81 and 82 too.
Read next
- Sections 91-93: notice of contract, purchase for trust and secret creditor gain
- Sections 80-83: obligations in the nature of trust and trust incapable of execution
- Duties of trustees under the Trusts Act
- Introduction to the Indian Trusts Act 1882
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.