Section 64 of The Indian Trust Act, 1882
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. A judgment-creditor of the trustee attaching and purchasing trust-property is not a transferee for consideration within the meaning of this section. 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 (9 of 1872), section 108, or the liability of a person to whom a debt or charge is transferred.
Summary
- Protects honest buyers by stopping beneficiaries from claiming trust property from anyone who bought it in good faith for value without knowing about the trust.
- Shields anyone who buys the property from that honest buyer, even if the subsequent buyer knew about the trust.
- Declares that a court creditor who attaches and buys trust property at an auction is not protected as an honest buyer.
- Prevents tracing under Section 63 from applying to money, currency notes, or negotiable financial documents that are circulating in good faith.
- Keeps intact Section 108 of the Indian Contract Act, 1872 regarding property sales, and the standard rules for transferring debts.
Practical examples
FAQ
1. Who is protected from a beneficiary's claim under Section 64 of the Indian Trusts Act, 1882?
Section 64 of the Indian Trusts Act, 1882 protects a transferee, meaning a buyer, who purchases trust property in good faith, for consideration, which means value, and without having notice of the trust. It also protects anyone who buys the property from such a protected transferee.
2. Is a creditor who buys trust property at a court auction protected under Section 64 of the Indian Trusts Act, 1882?
No. Section 64 of the Indian Trusts Act, 1882 states that a judgment-creditor of the trustee who attaches and purchases trust property is not considered a transferee for consideration, so they do not get this protection.
3. Can a beneficiary trace cash or currency notes that were wrongfully spent by a trustee under Section 64 of the Indian Trusts Act, 1882?
No, under Section 64 of the Indian Trusts Act, 1882, the right to trace property does not apply to money, currency notes, or negotiable instruments, which are financial documents, in the hands of an honest holder to whom they passed in normal circulation.
Test yourself
Q1.Under Section 64 of the Indian Trusts Act, 1882, which of the following persons is NOT protected as a transferee for consideration?
Q2.Under Section 64 of the Indian Trusts Act, 1882, when must a good faith buyer be free of notice of the trust to be protected?
Q3.Under Section 64 of the Indian Trusts Act, 1882, what is the legal position of a person who buys trust property from an innocent, good faith buyer, even if this second buyer has notice of the trust?
Q4.Under Section 64 of the Indian Trusts Act, 1882, how do the tracing rights established in Section 63 apply to money and currency notes?