OF CERTAIN OBLIGATIONS IN THE NATURE OF TRUSTSCentral

Section 92 of The Indian Trust Act, 1882

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.

Summary

A person who contracts to buy property specifically to hold it on trust for certain beneficiaries must hold it for their benefit.
This duty arises once the person actually goes ahead and buys the property as planned.
The buyer is legally bound to hold the property to the extent necessary to make the trust contract work.
This ensures that a person cannot buy property meant for a trust and then claim it as their personal, unrestricted property.

Practical examples

1Karan signs a contract with a landowner to buy a commercial shop, explicitly stating in the contract that he is buying it to hold on trust for his minor nephew, Rohit. Karan completes the purchase. Under Section 92 of the Act, Karan must hold the shop for Rohit's benefit.

2Seema enters into a contract to purchase a plot of land from an estate owner. The contract specifies that she is buying it to set up a trust for retired local teachers. After buying the land, she cannot keep it for herself; under Section 92 of the Act, she must hold it for the benefit of those teachers.

FAQ

1. What is the purpose of Section 92 of the Indian Trusts Act, 1882?

Under Section 92 of the Indian Trusts Act, 1882, the purpose is to ensure that if someone contracts to buy property specifically to hold it on trust for beneficiaries, they must actually hold it for their benefit once purchased.

2. Can a person who buys property under a contract to hold it on trust change their mind and keep it for themselves under the Indian Trusts Act, 1882?

No, under Section 92 of the Indian Trusts Act, 1882, once they buy the property under such an agreement, they are legally bound to hold it for the beneficiaries' benefit.

3. To what extent must the buyer hold the property for the beneficiaries under Section 92 of the Indian Trusts Act, 1882?

Under Section 92 of the Indian Trusts Act, 1882, the buyer must hold the property for the beneficiaries' benefit to the extent necessary to give effect to the contract.

Test yourself

Q1.Under Section 92 of the Indian Trusts Act, 1882, if a person contracts to buy a piece of land to be held on trust for certain beneficiaries, what is their duty upon buying that land?

Q2.Under Section 92 of the Indian Trusts Act, 1882, when does the obligation to hold the property for the beneficiaries actually arise?

Q3.Under Section 92 of the Indian Trusts Act, 1882, how much of the purchased property must the buyer hold for the beneficiaries?

Q4.Under Section 92 of the Indian Trusts Act, 1882, what is the key difference between this section and Section 91 of the same Act?

91PreviousSection 91 Property acquired with notice of existing contract 93NextSection 93 Advantage secretly gained by one of several compounding creditors.

←Section 91 Section 93→