OF CERTAIN OBLIGATIONS IN THE NATURE OF TRUSTSCentral

Section 96 of The Indian Trust Act, 1882 in hindi

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.

Summary

Under Section 96 of this trust legislation, the rights of innocent third-party buyers who pay for property in good faith are completely protected.
The constructive trust rules in Chapter IX cannot be used to impair or destroy the legal rights of such genuine purchasers.
No obligation can be created under Chapter IX that would result in evading any law currently in force.

Practical examples

1Ramesh holds land under a constructive trust for Suresh. Ramesh secretly sells the land to Priya, who has no idea that Suresh has any interest in the land. Priya pays Ramesh the full market price of ten lakh rupees in good faith. Under Section 96 of the Indian Trusts Act, Priya's rights as an innocent buyer are protected, and Suresh cannot reclaim the land from her.

2Vikram tries to set up an informal property holding arrangement with Kavita specifically to bypass local land ceiling limits. Vikram claims that Kavita holds the property under a constructive trust for him. Under Section 96 of the private trust rules, no constructive trust obligation can be created because its sole purpose is to evade an active law.

FAQ

1. How does Section 96 of the Indian Trusts Act, 1882 protect innocent buyers?

Section 96 of the Indian Trusts Act, 1882 ensures that nothing in Chapter IX of the Act shall impair or harm the legal rights of transferees who acquire property in good faith and for consideration.

2. Can Section 96 of the Indian Trusts Act be used to bypass other active laws?

No, Section 96 of the Indian Trusts Act, 1882 explicitly prevents the creation of any constructive trust obligation that would act in evasion of any law for the time being in force.

3. Does a bona fide purchaser's protection under Section 96 of the Indian Trusts Act depend on having notice of the trust?

No, a bona fide purchaser, who is a transferee in good faith and for consideration, does not have notice of the trust, and Section 96 of the Indian Trusts Act, 1882 preserves their rights intact.

Test yourself

Q1.Under Section 96 of the Indian Trusts Act, 1882, whose rights are protected from being impaired by any of the constructive trust provisions of Chapter IX?

Q2.Under Section 96 of the Indian Trusts Act, 1882, what type of obligation is prohibited from being created under the constructive trust rules of Chapter IX?

Q3.How do Section 95 and Section 96 of the Indian Trusts Act, 1882 interact when an obligor under Section 95 sells the property to an innocent third party?

Q4.Under Section 96 of the Indian Trusts Act, 1882, what is the status of an obligation that is created under Chapter IX if it operates to bypass or evade another active legal statute?

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