LAW OF PROPERTY- CODE:TJH

THE TRANSFER OF PROPERTY ACT, 1882

MEANING FOR PROPERTY:

Salmond, the famous Jurisprudence author says that Property is nothing but it’s a
bundle of right.

A person can own, possess, enjoy, transfer and destroy his property. No one
cannot question it. Hence it is a bundle of right.

SALIENT FEATURES:

 THE TRANSFER OF PROPERTY ACT, 1882 is the transfer between inter vivos i.e.,
transfer between living persons .

 Transfer by operation of law is the transfer of property under Will, Inheritance and
Order of court.

 Transfer of movable property by act of parties is governed by Indian Contract Act

( Ss. 76-123) and Sales of Goods Act.

 But for Transfer of immovable property , there is no law.

 Hence, the Anglo Indian courts decide to apply principles of Equity, justice, good
conscience with Madras Regulation of 1802, Bombay Regulation of 1827, Bengal
Regulation of 1798,1806.But even though it is not enough.Hence 1 st Law
Commission, drafted uniform code.2nd Law Commission modified the draft bill.

 Legislative council passed bill, became law on 17 th Feb, 1882.

 Enforceable w.e.f 1st July, 1882.

 Now T.P.A has completed and bridged the code of Contract Act.

 This Act incorporates Ss.1-137.

 THE TRANSFER OF PROPERTY ACT EMBODIES GENERAL RULES (Ss.1-53(a))

AND SPECIFIC TRANSER Ss.54-137

OBJECT:

 Uniform code of transfer of immovable property by act of parties i.e between inter
vivos

 T.P.Act paves way for acting along with Contract Act.

 Made Parallel to personal, testamentary.

Page 1 of 93
 SCOPE:

 NOT EXHAUSTIVE:

IN PREAMBLE per se, it is clear that

‘whereas it is expedient to define and amend certain parts of law relating to T.P by
act of parties’.

 TRANSFER BY OPERATION OF LAW EXCLUDED:

Operation Of Law such as Law of Inheritance, wills,transmission of Property in cases

of Insolvency, sale or forfeiture in execution of court’s decree.

 SAVING OF CERTAIN INCIDENTS AND RIGHTS:

 TERRITORIAL LIMITATION: As originally enacted,Not extended to the then State of

Bombay, Punjab and Delhi. Later extended to the State of Bombay by a notification
in official Gazette.

 It is not applicable to the territories included in the state of Punjab. Now applicable
to Punjab also.

In other parts of India, this Act extended as follows:

 The State of Tripura and Vindyapradesh by Act XXX of 1950

 Manipur by Act XXX of 1950

 Madhya Pradesh by M.P.Act of XII of 1950

 Shillong by Assam Act of 1947

 AMENDMENTS:Many amendments took place in

1885,1900,1904,1915,1920,1925,1926,1927. Major amendments took place in The
Transfer Of Property(Amendment) Act,1929amended more than 50 Sections and
introduced S.60(A), 63(A), 65(A), 67(A).

SECTIONS:

SEC. 1- Short title, commencement.

This Act may be called the Transfer of Property Act, 1882.

Commencement: It shall come into force on the first day of July, 1882.

Extent: It extends in the first instance to the whole of India except the territories
which, immediately before the lst November, 1956, were comprised in Part B States
or in the States of Bombay, Punjab and Delhi.

Page 2 of 93
 But this Act or any part thereof may by notification in the Official Gazette be
extended to the whole or any part of the said territories by the State Government
concerned.

And any State Government may from time to time, by notification in the Official
Gazette, exempt, either retrospectively or prospectively, any part of the territories
administered by such State Government from all or any of the following provisions,
namely,-

Section 54, paragraph 2 and sections 3, 59, 107 and 123.

Notwithstanding anything in the foregoing part of this section, section 54, paragraphs
2 and 3, and sections 59, 107 and 123 shall not extend or be extended to any district
or tract of country for the time being excluded from the operation of the Indian
Registration Act, 1908 (XVI of 1908), under the power conferred by the first section
of that Act or otherwise.

SEC. 2- Repeal of Acts, Saving of certain enactments, Incidents, Rights etc.

In the territories to which this Act extends for the time being the enactments
specified in the Schedule hereto annexed shall be repealed to the extent therein
mentioned. But nothing herein contained shall be deemed to affect-

(a) the provisions of any enactment not hereby expressly repealed;

(b) any terms or incidents of any contract or constitution of property which are
consistent with the provisions of this Act, and are allowed by the law for the time
being in force;

(c) any right or liability arising out of a legal relation constituted before this Act comes
into force, or any relief in respect of any such right or liability; or

(d) save as provided by section 57 and Chapter IV of this Act, any transfer by
operation of law or by, or in execution of, a decree or order of a court of competent
jurisdiction, and nothing in the second Chapter of this Act shall be deemed to affect
any rule of Mohammedan law.

SEC. 3- Interpretation clause

 S.3(1)Immovable Property: Does not include standing timber, growing crops and
grass.

 Defn. is given under S. 3(26) of General Clause Act, 1897 includes

* Land

* Benefits which arise out of land

* Things attached to earth

Page 3 of 93
LAND: Ex:

@ Soil, mud deposited on surface of earth

@ Water collected in pit, pond, lake

@ Space above the land.

BENEFIT WHICH ARISE OUT OF LAND:Right to Profit a PrendreAll the benefit which arise
out of land are Immovable Property.

EX:

# Even right to collect leaves, revenue from agricultural land, right to take out
minerals, to collect fishes from ponds, debt secured by mortgage of Immovable
property.

* Right to enter upon one’s land and catch fish is a right to profit a prendre.

* right to graze over land of another.

* Right to remove trees.

* Right to ferry.

* Right to take out minerals from land.

INSTRUMENT: S.3(2)

"Instrument" means a non-testamentary instrument

Page 4 of 93
 • It is the legal document.

• It is the deed of the document whereby recitals and terms, conditions of that
agreement or contract will be written or printed.

• It’s an evidence for transfer of property.

ATTESTATION: S.3(3)

"Attested", in relation to an instrument, means and shall be deemed always to have

meant attested by two or more witnesses each of whom has seen the executant sign
or affix his mark to the instrument, or has seen some other person sign the
instrument in the presence and by the direction of the executant, or has received
from the executant a personal acknowledgement of his signature or mark, or of the
signature of such other person, and each of whom has signed the instrument in the
presence of the executant; but it shall not be necessary that more than one of such
witnesses shall have been present at the same time, and no particular form of
attestation shall be necessary;

Attestation means ‘the process of witnessing the execution of deed and such
persons are attesting witness’ and ‘to sign and witness the fact of execution of a
document by the executant.’

INGREDIENTS FOR VALID ATTESTATION:

• There must be AnimoAttestandi - the attesting witness need to have intent that he is
going to sign that concerned person is executant and that is his signature.

• For a valid attestation, there must be at least 2 or more attesting witnesses.

• Any person who is of sound mind and who has attained the age of majority can be
an attesting witness.

• Attestation cannot take place before the signature of executant.

• 2 or more witnesses must have seen the executant sign the instrument.2 or more
witnesses must have seen the executant sign the instrument or must have obtained
the acknowledgement from the executant that this is his signature or mark or
impression.

• It is immaterial all the attesting witness need to sign before the executant or
executant must sign before the all the attesting witnesses.

• Kumar Harish Chandra Vs. BansidharMohanty: This case relates to a mortgage

deed. In the deed, the parties to the transaction had been the mortgagor and the
mortgagee but the money to the mortgagor was advance by a third party. The third
person i.e., the money-lender was one of the attesting witnesses. The question
arose whether the mortgage deed was validly attested. It was observed by the

Page 5 of 93
 Supreme court that a distinction has to be drawn between a person who is a party to
the deed and a person who though not a party to the deed, is a party to the
transaction and the latter is competent to attest the deed.

NOTICES- S.3(6)"a person is said to have notice" of a fact when he actually knows that
fact, or when, but for willful abstention from an enquiry or search which he ought to have
made, or gross negligence, he would have known it.

Explanation I: Where any transaction relating to immovable property is required by law to

be and has been effected by a registered instrument, any person acquiring such property or
any part of, or share or interest in, such property shall be deemed to have notice of such
instrument as from the date of registration or, where the property is not all situated in one
sub-district, or where the registered instrument has been registered under sub-section (2) of
section 30 of the Indian Registration Act, 1908 (16 of 1908), from the earliest date on which
any memorandum of such registered instrument has been filed by any Sub-Registrar within
whose sub-district any part of the property which is being acquired, or of the property
wherein a share or interest is being acquired, is situated:

PROVIDED that-

(1) the instrument has been registered and its registration completed in the manner
prescribed by the Indian Registration Act, 1908 (16 of 1908), and the rules made
thereunder,

(2) the instrument of memorandum has been duly entered or filed, as the case may be, in
books kept under section 51 of that Act, and

(3) the particulars regarding the transaction to which the instrument relates have been
correctly entered in the indexes kept under section 55 of that Act.

Explanation II : Any person acquiring any immovable property or any share or interest in
any suchproperty shall be deemed to have notice of the title, if any, of any person who is for
the time being in actual possession thereof.

Explanation III: A person shall be deemed to have had notice of any fact if his agent
acquires notice thereof whilst acting on his behalf in the course of business to which that
fact is material:

PROVIDED that, if the agent fraudulently conceals the fact, the principal shall not be
charged with notice thereof as against any person who was a party to or otherwise
cognizant of the fraud.

The knowledge about an incident or fact of something is called Notice.

2 KINDS OF NOTICES:

1. ACTUAL OR EXPRESS NOTICE.

Page 6 of 93
 2. CONSTRUCTIVE NOTICE.

ACTUAL NOTICE:

Actual Notice is nothing but the actual knowledge about incident or fact happened.

CONSTRUCTIVE/INDIRECT/IMPUTED NOTICE:

THE Court presumes that notice had been obtained indirectly in circumstances if a
person failed to invoke-

% Enquiry

% Search

% Gross Negligence

WILFUL ABSTENTION:

LOOTF ALI VS. PEAREE MOHAN- When a person refuses to take a registered letter
addressed to him, he cannot afterwards plead ignorance of the latter.

MOHD.YUNIS KHAN VS. COURT OF WARDS:

If purchaser omits to inspect contents of a little deed, then he cannot say ‘such deed
is not favourable to him’.

Presumed that purchaser might have obtained or got all knowledge regarding that
property.

GROSS NEGLIGENCE:

LLOYDS BANK LTD. VS. P.E.GUZDAR & CO.:

A, deposited a title deed to N, bank for securing over draft. A said to bank ‘need to sell and
clear off all over draft debt. Without getting any consent from attorney’s office, Bank gave
title deed to debtor. A, mortgaged that title deed with other bank and got money. Court Held
that Bank N has committed Gross negligence and it don’t have priority over the subsequent
bank.

EXP. 1: Here Registration acts as Constructive Notice.

 For those documents where registration is compulsory, such registration acts as a

Constructive notice.

 Sale, gift, exchange deeds, registration is mandatory. For other deeds, it is optional.

 If it is optional, then the purchaser need to inspect the spot diligently, and take
necessary steps to corroborate it.

EXP. 2: Actual Possession comes acts as Constructive notice.

Page 7 of 93
 A, sold his property to B. Now B is in actual possession. If C, wishes to buy that
property, then he must make a due enquiry that to whom this property belongs and
who is in the actual possession. If he fails so and tries to buy that property from A
and A fraudulently re-sell that property to C, then he don’t have any right over it
because he failed to make proper quest and enquiry.

Daniels vs. Davison:

A, leased out his property to B. Thereafter, sold property to C. C, without

knowing that B is in actual possession, bought the land. Now Court presumed that C
has taken constructive notice though he failed to put due enquiry.

EXP 3:NOTICE TO AGENT ACT AS CONSTRUCTIVE NOTICE (QUI FACIT PER ALLIUM
FACIT PER SE- IF A PERSON DOES THROUGH THE OTHER IS DEEMED TO ACT IN
PERSON)

 IF an agent receives the notice, then it is presumed that his Principal obtains the
notice constructively.

CONDITIONS:

# The agent need to receive notice in his capacity.

# Ordinary course of Business.

# During course of Agency.

# Any prior knowledge/ knowledge acquired after termination of Agency will not
amount to imputed notice to principal.

CH. II- TRANSFER OF PROPERTY BY ACT OF PARTIES Ss.5-37

SEC.5-WHAT IS MEANT BY TRANSFER

In the following sections "transfer of property" means an act by which a living person
conveys property, in present or in future, to one or more other living persons, or to
himself and one or more other living persons; and "to transfer property" is to perform
such act.

In this section "living person includes a company or association or body of

individuals, whether incorporated or not, but nothing herein contained shall affect any
law for the time being in force relating to transfer of property to or by companies,
associations or bodies of individuals.

SUBSTANTIAL POINTS IN THIS SECTION:

 AN act by which a person -

 Conveys his property

Page 8 of 93
  In present or future

 To one or more living person(includes co. Or Corp. Whether registered or not)

 Or himself(sole trustee by Amendment Act, 1929)

 Himself and one or more persons.

SECTION- 6GENERAL RULES FOR TRANSFER OF PROPETY :

Property of any kind may be transferred, except as otherwise provided by this Act or by any
other law for the time being in force.
(a) The chance of an heir-apparent succeeding to an estate, the chance of a relation
obtaining a legacy on the death of a kinsman, or any other mere possibility of a like nature,
cannot be transferred.
(b) A mere right of re-entry for breach of a condition subsequent cannot be transferred to
anyone except the owner of the property affected thereby.
(c) An easement cannot be transferred apart from the dominant heritage.
(d) An interest in property restricted in its enjoyment to the owner personally cannot be
transferred by him.
(dd) A right to future maintenance, in whatsoever manner arising, secured or determined,
cannot be transferred.
(e) A mere right to sue cannot be transferred.

(f) A public office cannot be transferred, nor can the salary of a public officer, whether
before or after it has become payable.
(g) Stipends allowed to military, naval, air-force and civil pensioners of the government and
political pensions cannot be transferred.
(h) No transfer can be made (1) insofar as it is opposed to the nature of the interest affected
thereby, or (2) for an unlawful object or consideration within the meaning of section 23 of
the Indian Contract Act, 1872 (9 of 1872), or (3) to a person legally disqualified to be
transferee.
(i) Nothing in this section shall be deemed to authorize a tenant having an untransferable
right of occupancy, the farmer of an estate in respect of which default has been made in
paying revenue, or the lessee of an estate, under the management of a Court of Wards, to
assign his interest as such tenant, farmer or lessee.
GENERAL RULES:
 PROPERTY MUST BE TRANSFERABLE.

 OBJECT OR CONSIDERATION MUST BE LAWFUL.

 TRANSFEROR OR TRANSFEREE MUST BE COMPETENT

 TRANSFER MUST NOT BE OPPOSED TO NATURE OF INTEREST.

EXCEPTION TO GENERAL RULES

Page 9 of 93
  WHAT MAY NOT BE TRANSFERRED:

i.SEC. 6(a) SPES SUCCESSIONIS:

SPES SUCCESSIONIS = EXPECTATION OF SUCCESSION/ POSSIBILITY

OF GETTING PROPERTY IN FUTURE

INCLUSION:

 A Chance of Heir-Apparent.

 Chance of relation obtaining legacy on death of kinsman.

 Any other mere possibility.

 Spessuccessionis is not transferable.

EX: A expecting that C, his aunt, who had no issues, would bequeath her house,
transfers it to B. The transfer is invalid.

ADHINARAYANA VS. RAMAHARI:

Mere a transfer of spessuccessionis is a Nullity and has no effect in law.

KarpagathatchiVs.Nagarathinathatchi

2 co-widows divided their husband’s property into 2 and entered into separate
possession under partition deed. Both gave up life interest. When 1 widow died, her
daughter took her share. When other filed suit for possession, stating her right was
relinquished. Held it is repugnant to S.6(A)

 SEC. 6(b)- RIGHT OF RE-ENTRY: If the lessee breaches his terms and conditions,
he couldnot restrain the lessor from entering upon his land. Thus his right of Re-entry
couldnotbe fettered.

 SEC. 6(C)- EASEMENTS: EASEMENTS means ‘RIGHT OVER THE PROPERTY

OF OTHER i.e., RIGHT IN RE-ALIENA.

Ex: if A has an easementary right to fetch water from B’s land, B cannot block the
way or convey that pathway to other person.

 INTEREST RESTRICTED IN ENJOYMENT TO OWNERS PERSONALLY S.6(d)

 RIGHT TO FUTURE MAINTENANCE S.6(dd)

 A MERE RIGHT TO SUE CANNOT BE TRANSFERRED S.6(e)

 PUBLIC OFFICES CANNOT BE TRANSFERRED S.6(f)

 STIPEND AND PENSION CANNOT BE TRANSFERRED S.6(g)

Page 10 of 93
  UNLAWFUL TRANSFERS CANNOT BE TRANSFERRED-S.6(h).
Sec. 23 of Indian Contract Act defines about Unlawful object or Consideration.

 CERTAIN OTHER OCCASIONS: S.6(i)

Ex: Res Communis( A thing belongs to all)

Res Nullis(A thing belongs to nobody)

Res Extra Commercium(A thing thrown out of commerce) Ex: property dedicated
to Deity.

A Tenant cannot give his rights in sub-tenancy, a default farmer of an estate in

respect of which default has been made in paying revenue, or the lessee of an
estate cannot assign their rights.

PERSONS COMPETENT TO TRANSFER S.7

Every person competent to contract and entitled to transferable property, or

authorised to dispose of transferable property not his own, is competent to transfer
such property either wholly or in part, and either absolutely or conditionally, in the
circumstances, to the extent and in the manner, allowed and prescribed by any law
for the time being in force.

INGREDIENTS:

 Every person competent to contract and entitled to transferable property.

 A person who is authorised to transfer the property

 Competent either wholly or in part

 Either absolutely or conditionally

S.11 -INDIAN CONTRACT ACT, 1872

 Persons those who have attained the age of Majority

 Person who is of sound mind S.12 of ICA

 Not to be debarred by any law to which he is subject.

 Even Minor can act as transferree.

 RAGAVACHARIAR VS. SRINIVASA RAGHAVACHARIAR:

Minor can be Mortgagee but there should not be any covenant which hinder him.
And can be a purchaser also through Guardian.

Page 11 of 93
S. 8 OPERATION OF TRANSFER :Unless a different intention is expressed or necessarily
implied, a transfer of property passesforthwith to the transferee all the interest which the
transferor is then capable of passing in the property and in the legal incidents thereof.

Such incidents include, when the property is land, the easements annexed thereto,
the rents and profits thereof accruing after the transfer, and all things attached to the
earth;

and, where the property is machinery attached to the earth, the movable parts
thereof; and, where the property is a house, the easements annexed thereto, the
rent thereof accruing after the transfer, and the locks, keys, bars, doors, windows,
and all other things provided for permanent use therewith;

and, where the property is a debtor other actionable claim, the securities therefor
(except where they are also for other debts or claims not transferred to the
transferee), but not arrears of interest accrued before the transfer;

and, where the property is money or other property yielding income, the interest or
income thereof accruing after the transfer takes effect.

 RES ESSORIRA SEQUITER REM PRINCIPALENE

( An accessory follows principal thing)

 If land being transferred

- easements attached to it.

- rents and profits

- all things attached to land.

b. Machinery : its movable parts will be transferred.

c. House: easements annexed

- its rent

- lock, keys, bar, door.

d. Debt: if it’s debt, then securities shall also be transferred.

S. 9 ORAL TRANSFERA transfer of property may be made without writing in every

case in which a writing is not expressly required by law.

IF it’s less than 100/-worth property, then orally it can be transferred.

Ex: Mortgage by deposit of title deed.

2 MODES OF TRANSFER:

 DELIVERY OF POSSESSION(Happens generally in Mov’le Pty)

Page 12 of 93
 REGISTRATION:

According to The Transfer of Property Act, 1882, the following transactions must be
made through a written document which must be duly registered:

A. Sale of immovable property exceeding Rs.100

B.Sale of Reversion or other intangible property (irrespective of its value) S. 54

c.Simple mortgage irrespective of amount specified S. 59

d.all other mortgage ( except the mortgage to deposit of title deeds)securing sum
exceed Rs. 100 S.59

e. lease from year to year, or for a term exceeding one year or reserving a yearly rent.
S. 107

f. exchange of immovable property exceeding Rs. 100 in value S. 118

g. Gift of an immovable property S. 123

h. transfer of actionable claim S. 130(where only writing is necessary, registration is not

compulsory)

AvvammaM.TalawarVs. St. of Karnataka:

Where Registration mandatory, need to comply and none other procedures

couldn’t be substituted for transferring property. A mutation(alteration) Entry made by
revenue authorities cannot be a substitute for registered Deed.Held that the Transfer
of Property in any other manner will be invalid transfer.

S.10 CONDITION RESTRAINING ALIENATION

Where property is transferred subject to a condition or limitation absolutely

restraining the transferee or any person claiming under him from parting with or
disposing of his interest in the property, the condition or limitation is void, except in
the case of a lease where the condition is for the benefit of the lessor or those
claiming under him:

PROVIDED that property may be transferred to or for the benefit of a women (not
being a Hindu, Muhammadan or Buddhist), so that she shall not have power during
her marriage to transfer or charge the same or her beneficial interest therein.

A restraint which absolutely prohibiting the transferee from alienating the property is
void. But when the restrictive condition does not amount to an absolute prohibition
under this section, it may be upheld. In other words, though one cannot absolutely
restrain a transferee from alienating his interest, still one can impose partial
restraints on his power of free disposition, provided one does not thereby materially
interfere with his freedom of enjoying his property according to his will.

Page 13 of 93
 ROSHER VS. ROSHER:

A gifted his Home to B with the Condition is that if B wishes to sell, he need to sell
only to A’s wife for Rs.10,000/-. But the actual value of home is Rs.10,00,000/-. Held
that it isvoidab initio.

AchammalVs.Rajamanickkam:

A Father bequested all his property to adopted son and conditioned that need to
enjoy in such and such manner. Court held that Legatee/Beneficiary shall enjoy as
per his wish and no need to comply.

 Section is silent about partial restraint.

 Total restraint is void but partial restraint is valid and binding.

 This section provides that where property is transferred subject to a condition

absolutely restraining the transferee from parting with his interest in the property, the
condition is void. And this provision secures the transferee’s right to transfer the
property.

 There are some conditions which are declared void by the act, and the transfer takes
effect as if no such conditions had been attached to the transfer.

 It has been held that a restriction for a particular time, particular person is not an
absolute but an partialrestraint.Mohd. RazaVs. Mohd. Abbas BandiBibi.

 A condition in a deed of partition that if any co-parcener were to sell his share in a
residential house, other co-parcener would be entitled to buy it was held to be void.

DEDICATION OF PROPERTY TO DEITY:

Not applicable if transferee is Deity and not living person.

 UNDER HINDU LAW- A condition restraining alienation in Gift is void.

 UNDER MUSLIM LAW- A condition restraining alienation in Gift is void.

Exception:

A. This section will not be applicable to Lease. Since, imposing condition on lease such
as not to go for sub-lease or other conditions is valid

B. A married woman shall not transfer her property vested upon her life interest. This is
the valid restriction.

S.11 RESTRICTION REPUGNANT TO INTEREST CREATED

Where, on a transfer of property, an interest therein is created absolutely in favour of

any person, but the terms of the transfer direct that such interest shall be applied or

Page 14 of 93
 enjoyed by him in a particular manner, he shall be entitled to receive and dispose of
such interest as if there were no such direction.

Where any such direction has been made in respect of one piece of immovable
property for the purpose of securing the beneficial enjoyment of another piece of
such property, nothing in this section shall be deemed to affect any right which the
transferor may have to enforce such direction or any remedy which he may have in
respect of a breach thereof.

 WHERE ON TRANSFER OF PROPERTY

- an interest therein is created in favour of a person

- wherebyterms provide that transferee need to enjoy in a particular manner.

- But here, transferee shall dispose off property as if there were no such
direction.

R & M TRUST VS. KORAMANGALA RESIDENTIAL VIGILANCE GROUP:

Held that once an absolute right has been conferred on a person as to a

property, then no rider can be put on enjoyment of that property.

 EX: A Person cannot sell his land to other with a condition that only wheat is to be
grown. Such a condition is void

 A person gifted his house stating that beneficiary need to reside in that house or
home will be taken back. Such condition is void.

 2 conditions need to be satisfied:

1. An absolute interest is created by the transfer in favorofthetransferee and

2. The terms of the transfer provide that the interest in the property shall be applied
or enjoyed in the manner prescribed by the transferor.

Ex: 1.X, makes an absolute gift of a house to Y, with a direction that Y need to reside
in that home. Here, the gift is absolute and direction is void. Y, may live or may not
live in that home.

2.A, assigns life interest in a farm to B, for her maintenance. The deed contains a
direction that B shall not cut down the trees. Here, the direction is valid, as there
exist no absolute transfer in favour of B.

S.13. TRANSFER FOR BENEFIT OF UNBORN PERSON.U.B.P- Unborn Person

( not even in the mother’s womb)

-Where, on a transfer of property, an interest therein is created for the benefit of a

person not in existence at the date of the transfer, subject to a prior interest created
by the same transfer, the interest created for the benefit of such person shall not

Page 15 of 93
 take effect, unless it extends to the whole of the remaining interest of the transferor
in the property.

• Object: There must be a owner for every property.Property at all times must vest with
some person. Property without owner leads to its destruction.If the testator goes on
reserving properties for generations to generations, it is also leads to destruction of
property. Generally, property can be alienated among inter-vivos i.e., between living
beings.

• No direct transfer – A transfer cannot be made directly to an unborn person. Property

should be never in abeyance

3 CONDITIONS NEED TO BE SATISFIED:

1.Prior interest – If an interest is to be created in favour of an unborn person, there

should be a transfer to some living person/persons till the unborn comes into
physical existence.

2.Absolute interest - The entire property must be transferred to the unborn person
with Absolute interest.

3. Before death of that life interested person, U.S.P must be in existence.

Ex: A transferred his property to B, for life interest and thereafter to U.B.P. This is
valid transfer to Un Born Person.

A transferred his property to B and to C(successively at the time of transfer), for life
interest and thereafter to U.B.P with absolute interest. This is valid transfer to Un
Born Person.

SOPHER VS. ADMINISTRATOR GENERAL OF BENGAL

 Here, the Testator after the death of himself and his wife , all the children, shall enjoy
the income out of the property for life.

 And also their grandchildren shall enjoy the income until the age of 18.

 The property shall be partitioned after the death of last surviving son, after attaining
the age of 18 of all the grandchildren.

 Privy council Held that this will is void in favour of the unborn persons.

 Because a transfer to unborn person must be without any restrictions or limitations.

 There should not be any clause of defeasance or clause of condition.

 Here, prior life interest holder need to be single person and even before the prior life
interest holder person’s death occurs, if the unborn person comes into existence,
property will be devolved upon the concerned unborn person. But in this case law,

Page 16 of 93
 after the death of his wife and all 3 son’s death, the property would be devolved
upon grandchildren only upon their attainment of majority is highly impossible.

GIRISH DUTT VS. DATTADIN: A, made a gift of her properties to B, who was her
nephew’s daughter. This gift by A was made for the life of B and then to B’s male
decendants absolutely, but if she doesn’t have male decendant, then to B’s daughter but
without the power of alienation, and again if B doesn’t have daughter also, then to A’s
nephew. But B passed away without any issue.

It was held that gift of unborn daughters was invalid because the gift was of a limited
interest and subject to the prior interest in favour of B.

Exceptions:-

1.Does not apply to vested interest.

2.Mortgagor’s right of redemption.

3.Personal Agreements.

4.Does not apply where property is transferred for benefit of public.

5.Does not affect the right of Govt.

ENGLISH LAWS

 1. Minority period is 21 years

 2. Period of gestation is a gross period.

 3. Property need not be given absolutely to unborn person.

 4. The unborn person must come into existence within 21 years of the death of last
life estate holder.

INDIAN LAWS

 1. It is 18 years.

 2. It should be actual period.

 3. It should be given absolutely.

 4.He must come into existence before the death of the last life estate holder.

Sec -15- Transfer to a class of people of whom come under sec 13 and 14.

Essentials:-

1. There is a transfer of property creating an interest for benefit of class of persons.

Page 17 of 93
 2. Of the class persons in respect of whom the interest so created fails by reason of his
not being in existence and transfer creates some prior interest to some other persons.

3. Above two conditions are fulfilled the interest so created fails in regard to such
persons who are not qualified under sec-15.

E.g; A makes a transfer of his property to B for life and then to B’s unborn children with
a condition that a female child was to get only a life interest. B dies leaving three sons
and one daughter. The interest of the daughter fails by reason of the rules contained in
sec-13.

S.14-RULE AGAINST PERPETUITY:-No transfer of property can operate to create an

interest which is to take effect after the life time of one or more persons living at the date of
such transfer, and the minority of some person who shall be in existence at the expiration of
that period, and to whom, if he attains full age, the interest created is to belong.

 PERPETUITY MEANS EVERLASTING OR FOREVER.

 JARMAN ON LAW OF WILLS states that “Perpetuity in the primary sense of word is
a disposition, which makes property inalienable for an indefinite period.”

 S. 114 of the I.S.A, 1925 also incorporates the same rule.

ANALYSIS:

 There should be a transfer of property.

 Transfer is to be created in favour of U.B.P.

 After life time of one or more person living at date of transfer and after the U.B.P
comes into existence and attained the age of Majority, the property shall be vested
unto him.

 U.B.P must be in existence before the death of prior life interest.

 The vesting cannot be postponed beyond the lifetime of any one or more persons
living at the date of the transfer.

EX: if an estate is given to a living person A for life and after his death , then to B ,
for life. A and B both are living person and must live in contemporary period. Before
the death of B, And then to C, an unborn person. Here the C must born before the
death of B and must have obtained the age of Majority.

PERPETUITY PERIOD:

Maximum period during which property may be rendered inalienable is- LIFE OF LAST
PRECEDING INTEREST + MINORITY OF ULTIMATE BENEFICIARY

TOTAL PERIOD:

Page 18 of 93
 May be postponed up to the life of last person holding property for life + Period of
Gestation + Minority of 18 years of ultimate beneficiary.

If unborn person doesn’t come into existence before the expiry of life interest obtained
person, but he is in mother’s womb—

LIFE OF LAST PRIOR INTEREST + PERIOD OF GESTATION (9 MONTHS)

BajrangBagadur Singh Vs. BhaktrajKaur : Testator wrote a will on 11.09.1929 bequeathing

his properties. He wrote his will like this. His properties were enjoyed for life by A, then to
A’s heirs each for life, and after the extinction of A and his heirs, the property were to be
devolved to B and his heirs. Testator died on 1930 , within short period of testators death,
A also died. A’s widow claimed the property as heirs of A. This was challenged by B. Apex
court gave judgment in favour of widow of A.

EXCEPTION TO RULE AGAINST PERPETUITY:

 This Rule does not apply to the PROVISO FOR PAYMENT OF DEBT.

 This Act imposes an additional restriction on Charitable and Religious bequest by a

person who has near relations under S.118 of I.S.A

 CREATION OF CHARGE- The rule doesnot apply to where only charge is created,
which does not amount to a transfer of any interest.

 PERSONAL AGREEMENT- agreements which do not create any interest in the

property, do not offend rule against perpetuity.EX:

Nafar Chandra Vs. Kailash: The Shebaits of a temple agree to appoint the family of
C, a Caries from generation to generation to perform the services of a temple and
makes provisions for the expense and remuneration of the office. The agreement is
valid and not hit by rule against perpetuity.

 AGREEMENT OF SALE-In Ram Baran Vs. Ram Mohit, the Apex Court has Held that
a mere contract for sale of an immovable property does not create any interest in
immovable property and therefore the rule cannot apply to such contracts E.g. it
cannot apply to a covenant of Pre-emption. Similarly, the Shebait of a temple under
an agreement, appointed Pujari out of a particular family to perform religious
services in the temple, the agreement was valid because the court held that being a
personal agreement.

 MORTGAGES-Once a mortgage, always a mortgage. Hence, the Right of

Redemption given to the Mortgagor, is against the rule of perpetuity. Such a right
given to Mortgagor is everlasting.

 RIGHT TO ENTRY AND RE-ENTRY- A Lessor is entitled to the Right to Right of

Entry and Re entry. He can revoke the lease and can get into his estate at any time.

Page 19 of 93
 COVENANT FOR RENEWAL OF LEASES- Rule against Perpetuity does not apply
to principle which is against the covenant for renewal of leases.

 COVENANT RUNNING WITH LAND- The Negative Covenant or Restrictive

Covenant depends upon the right of the owner who sells his adjoining land for the
beneficial enjoyment of his own land or other beneficial enjoyment. Such a covenant
will not be applicable for the beneficial enjoyment of neighbor’s land.

Sec -15- Transfer to a class of people of whom come under sec 13 and 14. - If, on a
transfer of property, an interest therein is created for the benefit of a class of persons
with regard to some of whom, such interest fails by reason of any of the rules
contained in sections 13 and 14, such interest fails in regard to those persons only
and not in regard to the whole class.

Essentials:-

1.There is a transfer of property creating an interest for benefit of class of persons.

2.Of the class persons in respect of whom the interest so created fails by reason of his
not being in existence and transfer creates some prior interest to some other persons.

3.Above two conditions are fulfilled the interest so created fails in regard to such
persons who are not qualified under sec-15.

E.g; A makes a transfer of his property to B for life and then to B’s unborn children with
a condition that a female child was to get only a life interest. B dies leaving three sons
and one daughter. The interest of the daughter fails by reason of the rules contained in
sec-13.

BhagbathiVs.Kalicharan:

A class gift was made by Hindu. At the time of the gift some person were born and were
entitled to take the gift and some persons were unborn. Who were qualified to take
unborn person’s benefit?. Who were unqualified to take gift was the question arose?
whether class gift shall be implemented or not? Privy Council Held Judgment in favour
of persons who had already born.

Sec 16. Transfer to take effect on failure of prior interest -Where, by reason of any of the
rules contained in sections 13 and 14, an interest created for the benefit of a person or
of a class of persons fails in regard to such person or the whole of such class, any
interest created in the same transaction and intended to take effect after or upon failure
of such prior interest also fails.

ESSENTIALS:

 An interest created for the benefit of a person or class of persons by reason of rules.
 Such an interest fails I regard to such person.

Page 20 of 93
  If 2 conditions are fulfilled the interest if any created by same transaction and
intended to take effect upon such failure, the interest also fails.

DIRECTION FOR ACCUMULATION-S.17

2 CONDITIONS NEED TO BE SATISFIED:

 The direction of accumulation is feasible only for the life of transferor or

 A period of 18 years from date of transfer.(whichever is longer)

when transfer fails to comply so , such transfer is void.

THELUSON VS. WOODFORD: This case-law evolved Doctrine of Accumulation

T, Bequeathed and made provisio for 3 of his sons and all descendants and afterward the
death of last survivor of them to be divided among the then living eldest male descendants
of his 3 sons.

Court Held that it is valid and donot contravene Rule against Perpetuity

EXEMPTIONS:

 PAYMENT OF DEBT: EX: A makes a gift of home to

HeathioteVs. Trench:

Direction of accumulation rule will not be applicable to payments for debt. Here debt is paid
out of the capital investment. Actually debt cannot be paid through capital. But eventhough
direction for accumulation of income is possible to recoup the capital only for some
statutory period.

 PROVISION FOR PORTION: PORTION FOR CHILDRES/ REMOTER ISSUE FOR

TRANSFEROR. IF PROPERTY GOT SETTLED AMONG CHILDREN.

 PRESERVATION AND MAINTENANCE OF PROPERTY

ENGLISH LAW: (ANY ONE CONDITION NEED TO BE FOLLOWED:

 The life of the transferor

 21years from death of the transferor

 During the minority of any person living at death of the transferor.

S. 18-TRANSFER IN PERPETUITY FOR THE BENEFIT OF PUBLIC

S. 14,16,17 will not be applicable to transfer of property for the benefit of

public(pro bono publico)in the advancement of religion, knowledge, commerce, health,
safety etc.

Page 21 of 93
 Gifts to the hospitals, gift for endorsement of a university, gift for
establishments and worship of idol, for burial ground etc.

DOCTRINE OF CY-PRES(AS FOR AS POSSIBLE)

 EX: IF beneficiary is not in existence in case where property is transferred to

charitable trust, Court will apply doctrine of cy-pres and carry out object as near as
possible to original object.

S.19 VESTED INTEREST:

 Where, on a transfer of property, an interest therein is created in favour of a person

without specifying the time when it is to take effect, or in terms specifying that it is to
take effect forthwith or on the happening of an event which must happen, such
interest is vested, unless a contrary intention appears from the terms of the transfer.
A vested interest is not defeated by the death of the transferee before he obtains
possession.

 Explanation : An intention that an interest shall not be vested is not to be inferred

merely from a provision whereby the enjoyment thereof is postponed, or whereby a
prior interest in the same property is given or reserved to some other person, or
whereby income arising from the property is directed to be accumulated until the
time of enjoyment arrives, or from a provision that if a particular event shall happen
the interest shall pass to another person.

AN Vested Interest is created in favour of person-

 Without specifying the time when it is to take effect Ex: A transfer property to B
without specifying the time, it is considered as vested interest is transferred to B.

 In term specifying that it is to take effect forthwith Ex: A transfer property to B with
specifying the time, it is considered as vested interest is transferred to B.

 There must be an incidence which must happen . EX. Death, sunrise, sunset. EX. A
transferred property to B, that X, an 80 year old man must die.

 A Vested Interest is not defeated by the death of transferee before he obtains

possession.

 The enjoyment of property is postponed.

 A prior interest in same property is given or reserved to some other person

 Income arising from property is directed to be accumulated until the time of

enjoyment arrives.

 If a particular event shall happen, the interest shall pass to another person.

 Time of vesting cannot be beyond the period allowed by the rule against perpetuity

Page 22 of 93
  As per S.6 even before transferee obtain that properties possession, he can transfer
to other

 After his death, legal heirs shall enjoy.

 Vested interest does not depend upon fulfillment.

 Mere enjoyment may be postponed.

 Vested interest is transferable and heritable.

 CONTINGENT INTEREST: (varunigzhalvuchaarnthaurimai) S.21-24

S.21 defines Contingent Interest defines that-Where, on a transfer of property,

an interest therein is created in favour of a person to take effect only on the
happening of a specified uncertain event, or if a specified uncertain event shall not
happen, such person thereby acquires a contingent interest in the property. Such
interest becomes a vested interest, in the former case, on the happening of the
event, in the latter, when the happening of the event becomes impossible.
Exception : Where, under a transfer of property, a person becomes entitled to an
interest therein upon attaining a particular age, and the transferor also gives to him
absolutely the income to arise from such interest before he reaches that age, or
directs the income or so much thereof as may be necessary to be applied for his
benefit, such interest is not contingent.

 A contingent interest is created in favour of a person – to take effect only on the

happening or non- happening of a specified uncertain event, which may or may not
happen.

 POINTS TO BE REMEMBERED FOR CONTINGENT INTEREST:

 It is only a chance of becoming an owner. However, it is different from spes

successions.

 It is solely dependent upon the fulfilment of the condition (after which it becomes
vested interest), so that if the condition is not fulfilled, the interest may fall through.

 Thus, the owner’s title is as yet imperfect, but is capable of becoming perfect.

DIFFERENCE BETWEEN VESTED INTEREST AND CONTINGENT INTEREST.

DEFINITION

Section 19 defines Vested Interest:

 Where, on a transfer of property, an interest therein is created in favour of a person

without specifying the time when it is to take effect, or in terms specifying that it is to
take effect forthwith or on the happening of an event which must happen, such
interest is vested, unless a contrary intention appears from the terms of the transfer.

Page 23 of 93
  Section 21 defines Contingent interest
Where, on a transfer of property, an interest therein is created in favour of a person
to take effect only on the happening of a specified uncertain event, or if a specified
uncertain event shall not happen, such person thereby acquires a contingent interest
in the property. Such interest becomes a vested interest, in the former case, on the
happening of the event, in the latter, when the happening of the event becomes
impossible.

Fulfilment of conditions:

 Vested interest does not depend upon fulfilment of any condition. It creates an
immediate right though the enjoyment is postponed to a future date.

 Contingent interest is solely depend upon the fulfilment of any condition. If the
condition is not fulfilled the  interest fails

Effects of transferee's death:

 Vested interest is not defeated by the death of transferee  before he obtains

possession.

 Contingent interest is defeated by the death of transferee before he obtains

possession.

Whether transferable  and heritable ?

 It is both Transferable and heritable. If the transferee of the vested interest dies
before actual possession or enjoyment it passes to his heirs.

 It is Transferable but whether it is heritable , depends upon

nature of condition. It passes not on heir on the death of the transferee  received to
transfer.

Present right of enjoyment.

 There is present, immediate right even when its enjoyment is postponed in the
vested interest.

 In the contingent interest, here is no present right of enjoyment, there is mere a

promise for giving such a right.

CONDITIONAL TRANSFER Ss.25-34 :

CONDITIONAL TRANSFER: Ss.25-34

EX: A leases out his his land to B, on a condition that he shall walk a hundred miles an
hour. The lease is void.

2.A transfers Rs. 500 to B on condition that he shall murder C. The transfer is void.

Page 24 of 93
3.A gives Rs.10000 to B, on condition that he shall marry A’s daughter, C. At the date of the
transfer C was dead. The transfer is void.

CONDITION PRECEDENT:

• EX. A makes gift of his home to B, provided B marry C. this is the condition
precedent because unless and until B marries c, the property will not to transferred
to him.

CONDITION SUBSEQUENT:

• EX. A transfers his land to B on the condition that within 2 years of the date of
transfer B will go to a foreign country for higher studies. Here if B doesnot go for
higher studies to a foreign country within 2 years of date of transfer his interest in the
land will cease.

COLLATERAL CONDITION:

EX: A, leases his house to B so long as B resides in the house of A, this condition is
collateral. The lease will remain vested in B, as long as he will be residing in that house.

According to S.25, an interest created on a transfer of property and dependent upon a

condition fails under the following conditions:

 If fulfillment of the condition is impossible or

 Is forbidden by law or

 Is of such a nature that, if permitted, it would defeat the provisions of any law or

 Is fraudulent or

 Involves or implies injury to the person or property of another or

 Court regards it immoral or opposed to public policy

FULFILMENT OF CONDITON PRECEDENT:S.26

 A transfers Rs.5000 to B, on condition that he shall marry with the consent of C, D

and E. E dies. B marries with the consent of C and D. B is deemed to have fulfilled
the condition.

 A transfers Rs.5000 to B, on condition that he shall marries with the consent of

C,D,E. Here B without the consent of C, D and E but obtains their consent after
their marriage. B has not fulfilled the condition.

 CONDITION PRECEDENT means the condition which is to be performed before

transfer takes place.

The characteristics of a condition precedent may be summarized as follows:

Page 25 of 93
  A condition precedent is one which must happen before the estate can vest.

 Where the condition is precedent, the estate doesnot vest in the transferee until the
condition is performed.

 Condition Subsequent has different types of Transfers.

They are:-

1. Subsequent Transfers S.27

2. Conditional Limitation S.28

3. Fulfilment of Condition Subsequent S.29

4. Prior disposition not affected by invalidity of ulterior disposition S.30

5. Condition that transfer to effect in specified uncertain events S.31

6. Condition invalid and S.32

7. Conditional on Performance. S.33,34

S. 27- CONDITIONAL TRANSFER TO ONE PERSON COUPLED WITH TRANSFER TO

ANOTHER ON FAILURE OF PRIOR DISPOSITION:

27. Conditional transfer to one person coupled with transfer to another on failure of
prior disposition Where, on a transfer of property, an interest therein is created in
favour of one person, and by the same transaction an ulterior disposition of the same
interest is made in favour of another, if the prior disposition under the transfer shall
fail, the ulterior disposition shall take effect upon the failure of the prior disposition,
although the failure may not have occurred in the manner contemplated by the
transferor. But, where the intention of the parties to the transaction is that the ulterior
disposition shall take effect only in the event of the prior disposition failing in a
particular manner, the ulterior disposition shall not take effect unless the prior
disposition fails in that manner. Illustrations (a) A transfers Rs. 500 to B on condition
that he shall execute a certain lease within three months after A's death, and, if he
should neglect to do so, to C. B dies in A's life-time. The disposition in favour of C
takes effect. (b) A transfers property to his wife; but, in case she should die in his life-
time, transfer to B that which he had transferred to her. A and his wife perish
together, under circumstances which make it impossible to prove that she died
before him. The disposition in favour of B does not take effect.

Para I :

 A transfers Rs. 500 to B on condition that he shall execute certain lease within 3
months after A’s death, if he failed to do so then to C. B dies in A’s life-time. The
disposition in favour of C takes effect.

Page 26 of 93
Para II:

UnderWoodVs. Wing

A transfers property to his wife, but in case if she dies in his life time, transfers to B. A and
his wife both perished in ship wreck toto and it is impossible to prove that she died prior to
her husband. The disposition in favour of B does not take effect.

SECTION 27 – RULE OF ACCELERATION :

EXCEPTIONS:

1. Where the prior interest is void the ulterior interest dependent upon it also fails.

Eg., A transfers property to B on the condition of B murdering C and then to D.

2. Where the intention of the transferor is specific and clear that the second transfer would
take effect only when the prior interest will fail in a particular manner.

Eg., A transfers property to his wife but in case she dies in his life time, transfer to B that
which he had transferred to her. A and his wife died an accident, it was impossible to prove
she died before him. So the disposition in favour of B does not take effect.

S.28 Ulterior transfer conditional on happening or non happening of specified event:

On a transfer of property an interest therein may be created to accrue to any person

with the condition superadded that in case a specified uncertain event shall happen
such interest shall pass to another person, or that in case a specified uncertain event
shall not happen such interest shall pass to another person. In each case the
dispositions are subject to the rules contained in sections 10, 12, 21, 22, 23, 24, 25
and 27.

 A specified uncertain event shall happen or

 A specified uncertain event shall not happen

EX: A transfers Rs. 1,00,000 to B with a condition that he will join the army within 3 years
from the date of transfer and if he fails to do so within the specified time, the money shall go
to C. Now, if B doesnot join the army within 3 years from the date of transfer or he fails to
do so at all, the money will go to C.

S.28 WHEN COMPARED WITH:

• S.10 –CONDITION RESTRAINING THE ALIENATION: A transfers his land to B,

without the power of alienation, in case of B’s death without issue, to C without
power of alienation. The restriction was held to be void in both the cases.

• S.12- CONDITION DEPENDING ON INSOLVENCY:

Page 27 of 93
A transfers his land to B and in case B becomes insolvent to C. The condition is void. The
property will not vest in C but in Official Receiver of official Assignee appointed under the
insolvency laws.

• S.21 – A transfers his land to B and in case of B’s death without issue, to C. C has
contingent interest in the property which will be vested if B dies without issue.

• S.22 – A transfers his land to B and on the death of B to such of the children of C as
shall attain the age of 18 years. Here all the children who are alive at the death of B
have an interest, which will vest when they will attain the age of 18.

• S.23 – A transfers his land to B for life and then to C, if C goes to England. C does
not go to England until a year after B’s death. Interest of C fails.

• S.24 – A transfers his land to B and in case B dies without issue to the sons of C or
the survivor of them. The sons of C who survive B take the land.

• S.25 – A transfers his land to B for life on the condition that he murders C and if B
will die without issue the land will be transferred to D. here the interests of both the B
and D fails.

S.29 – FULFILLMENT OF CONDITION SUBSEQUENT:

Ex: A transfers Rs. 500 to B, to be paid to him on his attaining his majority , with a proviso
that, if B dies as minor or marries without C’s consent, the Rs. 500 shall go to D. B marries
when only 17 years of age, without C’s consent. The transfer to D takes effect.

S-30. Prior disposition not affected by invalidity of ulterior disposition -If the ulterior
disposition is not valid, the prior disposition is not affected by it.

Illustration:

A transfers a farm to B for her life, and, if she does not desert her husband to C. B is
entitled to the farm during her life as if no condition had been inserted.

31. Condition that transfer shall cease to have effect in case specified uncertain
event happens or does not happen- Subject to the provisions of section 12, on a transfer
of property an interest therein may be created with the condition superadded that it shall
cease to exist in case a specified uncertain event shall happen, or in case a specified
uncertain event shall not happen.

Illustrations:

(a) A transfers a farm to B for his life, with a proviso that, in case B cuts down a certain
wood, the transfer shall cease to have any effect. B cuts down the wood. He loses his
life-interest in the farm.

Page 28 of 93
 (b) A transfers a farm to B, provided that, if B shall not go to England within three years
after the date of the transfer, his interest in the farm shall cease. B does not go to
England within the term prescribed. His interest in the farm not ceases.

S.32. Such condition must not be invalid- In order that a condition that an interest shall
cease to exist may be valid, it is necessary that the event to which it relates be one which
could legally constitute the condition of the creation of an interest.

S.33. Transfer conditional on performance of act, no time being specified for performance
-Where, on a transfer of property, an interest therein is created subject to a condition that
the person taking it shall perform a certain act, but no time is specified for the performance
of the act, the condition is broken when he renders impossible, permanently or for an
indefinite period, the performance of the act.

34. Transfer conditional on performance of act, time being specified -Where an act is to be
performed by a person either as a condition to be fulfilled before an interest created on a
transfer of property is enjoyed by him, or as a condition on the non-fulfilment of which the
interest is to pass from him to another person, and a time is specified for the performance
of the act, if such performance within the specified time is prevented by the fraud of a
person who would be directly benefited by non-fulfilment of the condition,

such further time shall as against him be allowed for performing the act as shall be requisite
to make up for the delay caused by such fraud. But if no time is specified for the
performance of the act, then, if its performance is by the fraud of a person interested in the
non-fulfilment of the condition rendered impossible or indefinitely postponed, the condition
shall as against him be deemed to have been fulfilled.

Eg:-

• "A" transfers property to "B" with a condition that if he does not go to England within
a year, it will pass on to "C". If "C", by playing a fraud, prevents "B" from performing
the condition, the delay in such performance is excused.

DIFFERENCE BETWEEN CONDITON PRECEDENT AND CONDITION SUBSEQUENT:

CONDITON PRECEDENT CONDITION SUBSEQUENT

• Condition comes before the • Condition comes after the property

property is transferred. is transferred.

• Vesting is postponed till the • Vesting completes before fulfillment

condition is performed of the condition.

• Once for all, the interest is vested, it • Though the interest is vested, it is

Page 29 of 93
 is vested. liable to be divested on the ground
of non-fulfilment of condition.

• Acquisition of an estate is affected in • Retention of the estate is affected in

the condition precedent . the condition subsequent .

• In condition precedent, the condition • In condition subsequent the

must be valid in the eye of law . condition’s invalidity will be ignored .

• The condition precedent may be • The condition subsequent must be

subsequently complied with the strictly complied with . The doctrine
doctrine of Cy-press applies . of Cy-press does not apply .

DOCTRINE OF ELECTION:

 S.35 of T.P Act and S.180-190 I.S.A deals with doctrine of election through wills.
S.35 defines "Election" means choosing of one right between two rights, when there
is clear intention that both the rights cannot be enjoyed but only one.

 The "Doctrine of Election" is based on the rule in Cooper vs Cooper.

 NEMO DAT QUOD NON HABET(No one can confer better title, than he himself has)

 This doctrine is exception to this maxim.

S.35 of T.P Act defines "Election" means choosing of one right between two rights,
when there is clear intention that both the rights cannot be enjoyed but only one. Section
35 of the Transfer of the Property Act defines the "Doctrine of Election".

 The "Doctrine of Election" is based on the rule in Cooper vs Cooper.

Cooper Vs. Cooper:

X, gave certain property to trustee on trust to sell it after his windows death and to hold the
sale proceeds in trust for his children in such form as his widow shall appoint before a
certain fixed period. Wife through will gave all the property to her sons A. thereafter again
bequeathed to deceased B’s son,C. Now A filed case for election of the property among
remaining heirs.

CONDITIONS FOR APPLICATION OF THE DOCTRINE OF ELECTION :

1. The transferor should dispose of the property in which he has no right to transfer.

2. The transferor must confer a benefit to the real owner of the property.

Page 30 of 93
 3. Both the benefits conferred and the transfer made must be part of the same
transaction or document.

4. The owner is now given a choice of election either to accept the benefit and allow the
transfer or to reject both.

Eg:-

"A" transfer C's property worth Rs.800 without his consent or knowledge to “B" and in
the same transaction, "A" gives Rs.1000 to “C".

 The basic of this doctrine is that a person who gets the benefits must also bear the
burden. Generally, the benefit is greater in value than the burden.

 The benefit should be express and particular. It must be in the same transaction. The
silence of the transferee for two years shows the acceptance of benefit and approval
of the transfer of his property to a third person.

 The transfer and benefit should be gratuitous without money.

 If the transferor has died or has become incapable of making a fresh transfer before
such election, then the subsequent election by owner of the property is void.

 Then his legal heir shall give property set out for elector, be granted to the
transferee.

 The Doctrine of Election only applies when the two donations are part of the same
transaction.

Mode of Election :

Election must be divide into two :

1. Direct Election or

2. Indirect Election.

 1. Direct Election :

There is no prescribed form. A letter, telegram, oral words of transferor or any other
sign by the person which conveys the intention of the transferor is enough.

 2. Indirect Election :

There are three types of Indirect Election.

They are :-

1. Acceptance of benefit without knowledge of duty to elect

2. Enjoyment for two years and

Page 31 of 93
 3. Status quo cannot be restored.

1. Acceptance of benefit without knowledge of duty to elect :

 If the donee accepts the benefit conferred upon him by the transfer, then such
acceptance on his part constitutes election by him. But the acceptance must be
made with full knowledge of his duty to elect and all matters about such benefits.

 If the donee accepts the benefits without knowledge, then the representatives of the
donee may revoke the election.

 If the election is made under mistake of fact, it may be revoked by the elector or his
representatives.

 But if the doneewillfully abstains from inquiring into the circumstances under which
the benefit is conferred upon him and makes an election, such an election is binding
on him and his representatives.

2. Enjoyment for two years : [ Section 188(1) of the Indian Succession Act ]

 If a person who has to elect knows that he is under a duty to elect, he must express
his dissent, if he retains the property for some time and not interested to elect in
favour of the proposal. If he keeps the property for two years, without expressing that
he is not in favour of the election, then it is presumed that the person so retaining the
property is doing so with knowledge and acceptance of the document.

3. Status quo cannot be restored :

 In the case of property which is exhaustible by consumption or use, if he once starts

consuming the property, election in his favour is presumed. No period of
consumption is necessary for this presumption.

 If any one who elects other than the elector, it couldnot be considered as benefit
given directly to elector.

ENGLISH LAW:

1. This doctrine is based on compensation

2. No time limit is prescribed for the elector. In the document per se it can be prescribed.

3. IF person to elect has disability (insane or insolvent) then Court will elect for disabled.

INDIAN LAW:

1. Based on forfeiture.

2.Max. period is 1 year.Ifenjoys continually for 2 years, then failure tantamounts to

acceptance of gift.

Page 32 of 93
3.Election is postponed during the period of disability or court guardian need to be
appointed.

DOCTRINE OF APPORTIONMENT S.36,37

S.36. Apportionment of periodical payments on determination of interest of person entitled

In the absence of a contract or local usage to the contrary, all rents, annuities, pensions,
dividends and other periodical payments in the nature of income shall, upon the transfer of
theinterest of the person entitled to receive such payments, be deemed, as between the
transferor and the transferee, to accrue due from day to day, and to be apportionable
accordingly, but to bepayable on the days appointed for the payment thereof.

 Apportionment means division of shares, distribution of shares and interest.

 APPORTIONMENT: DIVISION IN PROPORTION WITH ASSIGNMENT OF SHARE

 The above rule is based on the English Law.

 S.169 of the Indian Succession Act also emphazises on the same rule.

 There is the transfer of all rents, annuities, pensions, dividents and other periodical
payments in the nature of income in favour of pension, entitled to receive the same.

 Such payments shall be apportionable on the day to day basis but the payment shall
be on the day appointed for payment thereof.

Apportionment may be of 2 kinds:

 Apportionment by time

 Apportionment by estate

Ex: A let his house at a monthly rent of Rs.6000/-.House sold on 15 th June, Seller to get
rent for 14days, Buyer for 16days.

37. Apportionment of benefit of obligation on severance:

When, in consequence of a transfer, property is divided and held in several shares, and
thereupon the benefit of any obligation relating to the property as a whole passes from one
to several owners of the property,

 the corresponding duty shall, in the absence of a contract, to the contrary amongst
the owners, be performed in favour of each of such owners in proportion to the value
of his share in the property, provided that the duty can be severed and that the
severance

 does not substantially increase the burden of the obligation; but if the duty cannot be
severed, or
if the severance would substantially increase the burden of the obligation the duty
shall be

Page 33 of 93
 performed for the benefit of such one of the several owners as they shall jointly
designate for that
purpose:

 PROVIDED that no person on whom the burden of the obligation lies shall be
answerable for failure to discharge it in the manner provided by this section, unless
and until he has had reasonable notice of the severance.
Nothing in this section applies to leases for agricultural purposes unless and until the
State Government by notification in the Official Gazette so directs.

Illustrations
A sells to B, C and D a house situated in a village and leased to E at an annual rent of Rs.
30 and delivery of one fat sheep, B having provided half the purchase-money and C and D
one
quarter each. E, having notice of this, must pay Rs. 15 to B, Rs. 7.50 to C, and Rs. 7.50 to
D and must deliver the sheep according to the joint direction of B, C and D.

ESSENTIALS:

 There is a transfer of property for division.

 Such property shall be divided and held in several shares

 On such division, the benefit out of it as a whole passes from one owner to several
owners of property.

 When the supra 3 proviso’s are fulfilled the corresponding duty shall be performed
on favour of each of such owners who receive the property in proportion to its value.

S.37 doesnot apply to:

 Where there is a contract contrary amongst the owners.

 Leases for agricultural purpose unless and until the state Govt. by notification in
official gazette so directs. But it applies to joint family properties governed by
personal laws.

38. TRANSFER BY PERSON AUTHORISED ONLY UNDER CERTAIN

CIRCUMSTANCES TO TRANSFER:

Where any person, authorised only under circumstances in their nature variable to dispose
of immovable property, transfers such property for consideration, alleging the existence of
such circumstances,they shall, as between the transferee on the one part and the transferor
and other
persons (if any) affected by the transfer on the other part, be deemed to have existed, if the
transferee, after using reasonable care to ascertain the existence of such circumstances,
has acted in good faith.

Page 34 of 93
Persons authorized to transfer under certain circumstance: They are:

 A Hindu widow,
 the manager of a Hindu family,
 the guardian for a minor,
 a trustee or executor,
 theshebait of a debuttor estate.

EX:

A, a Hindu widow, whose husband has left collateral heirs, alleging that the property held by
her as such is insufficient for her maintenance, agrees, for purpose neither religious nor
charitable to sell a field, part of such property, to B. B satisfies himself by reasonable
enquiry that the income of the property is insufficient for A’s maintenance and that the sale
of the field is necessary and acting in good faith, buys the field from A.

A’s between B on the one part and A and the collateral heirs on the other part, a necessity
for the sale shall be deemed to have existed.

ESSENTIAL REQUIREMENTS FOR THE APPLICATION OF THIS SECTIONS ARE:

#The transferor should have a limited power of alienation over the property.

#The transferor is under certain special circumstances authorized to transfer the property.
Special circumstances are generally variable in nature.

#The transferor must transfer the property for consideration.

#The transferor must allege the existence of special circumstances at the time of transfer.

#The transferee must have used reasonable care to ascertain the existence of such
circumstances.

#The transferee must have acted in utmost good faith and must have honestly believed in
existence of those circumstances.

S.39 TRANSFER WHERE 3RD PERSON IS ENTITLED TO MAINTENANCE:

A Person having a right to receive maintenance out of the profits of immovable property can
enforce his rights against the transferee of the said immovable property under the following
circumstances:

 The right may be enforced against the transferee if he has notice thereof and the
transfer is of gratuitous
 But not against ,Where the transfer is for valuable consideration and transferee has
without notice of such right.
 When the transfer is gratuitous, the receiver of Maintenance shall take action against
such person.

Page 35 of 93
  When the transfer is gratuitous, the receiver of Maintenance shall take action against
such person.

S.40-BURDEN OF OBLIGATION OF IMPOSING RESTRICTION ON USE OF LAND:

THIS explains about covenants Positive and Negative. This should be read along with S.11
of the T.P.Act

General Rule: On a transfer of property, no condition restrictive of enjoyment of property

should be imposed on transferee.

Covenant means an agreement creating an obligation contained in a deed. It may be

positive or negative.

WHEN COVENANTS ARE ENFORCEABLE:PRIVITY OF CONTRACTS:

Privity of Contracts exists between parties concerned and registered valid as per the law all
the convenants of such contract are enforceable.

PRIVITY OF ESTATE:

THE covenants with all privity of estates are not enforceable. Privity of estates
which touch and concern the land are enforceable.

EXCEPTION TO THE ENFORCEABILITY OF COVENANT:

S.11 Para ii says if the covenant is intended for the benefit of land with the help o f another
part of land. The benefit so such covenant runs with both at law and equity.

Occupying owner of property or his assignee can enforce a negative covenant against
assignee of transferee provided, the restriction is one of the burdens which runs with the
land.

RESTRICTIVE COVENANT:

It is also called negative covenant. The burden of restrictive covenants runs with the land in
equity through not at law.

ESSENTIALS OF RESTRICTIVE COVENANT:

 THE covenant was negative in character.

 The burden of covenant would run with covenantor’s land in equity though not at law.
 It always run with the land.
 Restrictive covenants and easements are similar in one aspect both of them are
enforceable against trespasser.

TulkVs.Moxhay:

The plaintiff, T was the owner of a vacant site and an adjoining house. He sold the site to
one A with a condition that it should be kept vacant. This was for the benefit of the

Page 36 of 93
enjoyment of the adjoining house. A, transferred the land to Y. Y, in turn transferred the
land to M. M wanted to build a house on the vacant site.

The Court held that it was a negative covenant and so M could not construct a building. A
permanent injunction was granted.

AFFIRMATIVE COVENANT:It’s also called Positive covenant.

 They are collateral.

 They are not annexed to land and do not run with land.
 The positive covenants burden ancovenantor.
 It is not enforceable by law.

AUSTERBERRY VS. CORP. OF OLDHAM:

A sold his vacant land adjoining his house to B with covenant that B should construct a road
from the main municipality road to A’s door and also should keep it in repair for
convenience of A. B sold the site to C. C had notice of covenant to repair of road. But C
refused to repair the road.

Court of Appeal Held that in favour of C holding that covenant couldnotbe enforced against
C.

DISTINGUISH BETWEEN RESTRICTIVE AND AFFIRMATIVE COVENANT:

RESTRICTIVECOVENANT:

i.Burden of restrictive covenants runs with land in equity though not all law.

ii. The covenants are enforceable against everyone other than a bonafide purchaser for
value without notice.

AFFIRMATIVE COVENANT:

i.Burden of Positive covenant does not own with land either at law or in equity.

ii. The covenants are not enforceable.

TRANSFER BY OSTENSIBLE OWNER S.41 or DOCTRINE OF HOLDING OUT :

 OSTENSIBLE OWNER = APPARENT OWNER

 THIS Doctrine is exception to the Rule ‘NemoDat Quod Non Habet” which means
‘No one can confer a better title than he himself has”.

WHO IS OSTENSIBLE OWNER:

Page 37 of 93
 It is not precisely defined under S. 41. but we can mean that ‘A person who has title
in the property over which some other person/persons are interested.

ESSENTIALS FOR THE TRANSFER BY OSTENSIBLE OWNER:

 THE Transferor is the ostensible owner.

 He transfers only With the consent of Real owner.

 The transfer is for quid pro quo(consideration)

 The transferee has acted upon good faith and has reasonable care that the
transferor had power of transfer.

WHO IS NOT OSTENSIBLE OWNER:

 A trustee in a trust

 Karta in a joint family

 A guardian of a minor

 Proposed agent or manager

 A licensee in possession of property

 A manager or trustee of an idol

 A donor, who has not received to himself any power of revocation of the deed of gift.

LUCHMAN VS. KALICHARAN: (1873) 19 W.R 192

THE decision of Privy Council in this case, explains the nature of Ostensible Ownership.
In that case A during his life-time held out his wife as owner of certain immovable property
by taking the sale deed in her name with recital that purchase money was paid out of her
stridhana. After A’s death his wife sold out property to defendants who purchased it bona
fide and for value. A’s son as his heir sued to recover possession of property from
defendants. Held that he could not recover possession.

Ram Coomar Vs. Macqueen(1872) I.A.Supp.vol.40

One Alexander Macdonald who lived in Calcutta had a mistress known as BunnooBibee.
He has 2 children by her. One of them was purchased in the name of BunooBibee. The
sale deed stood in her name. she received the rent from the tenants.

In June 1843, she sold the property to RamdhoneKoondoo (father of Ram Kumoor) for Rs.
945. subsequently, the purchaser created important building upon the land

And increased the value to such extent that the property was valued toRs. 40,000. After
the death of the BunooBibi, a suit was brought against Ram Dhone by Macqueen, claiming
under the will of the Alexander Macdonald. The claim put forward in the suit was that the

Page 38 of 93
purchase, although in the name of BunooBibee was a purchase benami by Macdonald that
he was the real purchaser, but had used her name in making the purchase.

The defense put forward by the defendant was that their father (Ram Dhone) purchased the
estate of BunooBibee without any notice of the benami title.

The Calcutta High Court decided in favour of the Respondent,Macqueen and decreed the
suit. On appeal to the Privy Council the judgment of the Calcutta High Court was reversed
and suit dismissed.

Burden of Proof on Transferee:

 The real owner allowed another person to act as owner of the property.

 Transferee purchased the property for a valuable consideration and acted in good
faith.

 He should have made enquires.

PROTECTION TO TRANSFEREE:

This Section acts as a shield for transferee, who has acted in good faith.

BENAMI TRANSACTION PROHIBITION (AMENDMENT) ACT, 2016:

 This Act provides that a person can only obtain properties upon his wife and
unmarried daughter through the known source of income.

 A Benamidar could not be another person or stranger.

 S.53 says that A person who obtains property upon other stranger’s name will be
punished for 7 years and fine upto 25% of market value of that benami property.

 S. 54 says about if a person gives false information about benami transaction then
he will be punished 6months to 5 years rigorous imprisonment and penalty upto 10%
of proposed market value of that benami property.

S.42 TRANSFER BY PERSON HAVING AUTHORITY TO REVOKE FORMER

TRANSFER:

EX: A Lets a house to B and reserves power to revoke the letting if in the opinion of a
specified surveyor, B should make a use of it detrimental to its value. Afterwards A, thinking
that Such a use has been made, lets the house to C. This operates as a revocation of B’s
lease subject to the opinion of the surveyor as to B’s use of the house having been
detrimental to its value.

ESSENTIALS:

 Transfers Any immovable property

Page 39 of 93
  Reserving power to revoke the transfer for himself

Subsequently, transfers the property to another transferee for consideration.

Such transfer operates in favour of the subsequent transferee and amounts to the
revocation of the first transfer.

It must not contain any restrictive covenant not enforceable by law.

S.43-TRANSFER BY UNAUTHORIZED PERSON WHO SUBSEQUENTLY ACQUIRES

INTEREST IN THE PROPERTY TRANSFERRED OrDOCTRINE OF FEEDING THE
GRANT BY ESTOPPEL S.43

IN FRENCH, ESTOPPEL MEANS ESTOUP MEANS ‘SHUT THE MOUTH’ or Stop Doing or
Prohibited from taking back what is given’.This is exception to the Maxim ‘NemoDat Quod
Non Habet”.

English Law:

The English doctrine of estoppels by deed was stated in the case of Rajapakse Vs.
Fernando- ‘where a grantor has purported to grant an interest in land, which he did not at
that time possess but subsequently acquires, the benefit of the subsequent acquisition goes
automatically to the earlier grantee, or as it is usually expressed feed the estoppels.”

EX: A, intentionally and falsely tells B that, he is the owner of certain land and induces him
to purchase and pay for it. Later, A happens to become the owner of the said land. Then A
cannot a set aside the sale on the ground that he did nothave title at the time of the
contract for sale. In other words, A cannot estop B for execution of the contract of sale.

ESSENTIAL CONDITION:

 THE Transferor is an unauthorized person.

 The transferor made a fraudulent or erroneous representation with respect to his
right to transfer.
 The transferor is for consideration.
 The transferor subsequently acquired authority for the transfer.
 Transfer not be forbidden by law or invalid transfer.

EX: A, a Hindu, who has separated from his father B, sells to C, 3 fields, X,Y,Z
representing that A is authorized to transfer the same. Of these fields, Z does not belong to
A, it having been retained by B on the partition, but On B’s dying, A as heir obtains Z. C, not
having rescinded the contract of sale, may require A to deliver Z to him.

Delhi Development Authority Vs. Ravindra Mohan Aggarwal (1999) 3 SCC 172:

In this case, the Appellant Delhi Dev.t authority made certain plot in
Delhi and offered to public. Ravindra Mohan Aggarwal was one of the participants in open
auction and succeeded for one plot. As per the terms of the appellantHe paid 25% of bid

Page 40 of 93
amount. Subsequently the appellant found that the area, in which it intended to sell the plot,
was part of the green belt and not auctionable. It cancelled all the sales pertaining to that
part. Aggarwal sued DDA invoking S. 43. The Delhi High Court gave judgment in favour of
the purchaser and also gave instructions to the appellant to provide the purchaser with
alternative plot of same size, In same locality and at same price.

BhairabChandra Vs. Jiban Krishna:

A, obtained property by way of exchange from B. At the time of exchange B only had a half
share but he professed to transfer the whole. When B subsequently purchase the
remaining half, A was held entitled to it.

THIS SECTION IS NOT APPLICABLE TO:

 Transfer without consideration.

 Transfer which is against the public policy

 Involuntary transfer (sale at the instance of executor creditor).

S.43 S.6(A)

The transferor represents The transferor represents

himself as owner of the himself as the only legal heir
property. It amounts to entitled to succeed the
fraudulent transfer. property. It doesnot amount
to fraudulent transfer.

The transfer is valid. The transfer is void.

This enacts a rule of estoppel This enacts a rule of

substantative law.

10

Page 41 of 93
 S.43 S.41

Transferee believes fraudulent or Transferee doesnot depend upon

erroneous statement representation of transferor but in
good faith and had taken reasonable
care.

Transferee gets property which Ostensible owner is not real owner and
doesnot belong to transferor and claim transferee takes property from him.
property if it happens to come to him
by future chance.

Transferee need to act with utmost Transferee need to act with utmost
good faith good faith

Estoppel works against transferor. Estoppel works against real owner

Transferee believes and have no notice Transferee must believe that

of title. ostensible owner had power to
transfer. 11

S. 44 TRANSFER BY ONE CO-OWNER:

INGREDIENTS:

1. where one or two or more co-owners of immovable property are legally competent in that
behalf transfers his share in such property

2. The transferee acquires-

a. transferor’s right to joint possession, other common or part enjoyment of the property
(not where the transferee has taken a share of a dwelling house belonging to an
undivided family and he is not member of that family) and

b. transferor’s right to enforce partition of the property (subject to the conditions and
liabilities affecting the share so transferred.

Dwelling house means not only a residential building or structure by all the adjacent
buildings, gardens, courtyard and orchard etc. which are necessary for the convenient use
of the house.

• When a share in a dwelling house is transferred without partition and the transferree
attempted to take the possession of the property without maintaining a suit for
partition, the co-owners may restrain him from taking the possession.

S.45 JOINT TRANSFER FOR CONSIDERATION:

S.45 says that where an immovable property is transferred-

Page 42 of 93
  For consideration value to 2 or more persons and

 Such consideration value of property is paid out of a fund belonging to them in

common

 They are entitled to interest in such property identical to their interest in the common
fund respectively(if there is no contract to contrary) but Where such consideration is
paid out of separate funds belonging to them respectively.

They are entitled to interest in such property in proportion to the shares of consideration
paid or advanced by them respectively(when there is no contract to contrary)

In case there is no evidence as to their interest in the fund to which they are entitled or the
shares which they have respectively advanced- it will be presumed that they are equally
interested in the property.

S. 46- TRANSFER FOR CONSIDERATION BY PERSONS HAVING DISTINCT

INTERESTS:

TRANSFER BY PERSON WITH DISTINCT INTEREST:

1. Where immovable property is transferred for consideration by persons having distinct

interest in the property.

2. The transferor’s would be entitled to equal share in the consideration when their interests
in the property were equal (in the absence of the contract to the contrary)

3. Where the interests of the transferors were unequal, the transferors would be entitled to
shares proportionately to their interests in the property.

Ex:A, being entitled to a life-interest in mauzaatrali and B and C to reversion, sell the mauza
for Rs.1000. A’s life-interest is ascertained to be worth Rs. 600, the reversion Rs.400. A is
entitled to receive Rs.600 out of the purchase-money. B and C to receive Rs. 400.

SEC.47- TRANSFER BY CO-OWNER OF SHARE IN COMMON PROPERTY:

EX: A, the owner of an eight anna share and B and C, each the owner of a four anna
share in Mauzasultanpur, transfer A 2 anna share in the mauza to D, without
specifying from which of their several shares the transfer is made. To give effect to
the transfer 1 anna share is taken from the share of A, and ½ annashare from each
of the shares of B and C.

According to this Sec-

 Where co owners of immovable property transfer a share in it,

 Without specifying that the transfer is to take effect on which particular share of the
transferor,

 The transfer takes effect on such shares (among such transferors)-

Page 43 of 93
 – Equally,where the shares of transferors were equal and

– Proportionately to the extent of shares, where the shares were unequal.

DOCTRINE OF PRIORITY:

S. 48 PRIORITY OF RIGHTS CREATED BY TRANSFER:

In NandkishoreVs.Hajarilal;

The same property was transferred by the same transferor twice, the earlier
transferee was held to have priority to protect his possession of the land on the strength of
the agreement against any subsequent transferee. The subsequent Transferee was also
bound by the terms and conditions of the sale agreement of the earlier transferee.

TRANSFEREE’S RIGHT UNDER POLICY: S.49

 THE immovable property is transferred for consideration.

 Such property had been already insured against loss or damage by fire by the
transferor

 Property has been delivered by property in good faith

 If the transferor receives any money out of that insurance, then he need to settle to
the transferee.

S.50 RENT BONAFIDE PAID TO HOLDER UNDER DEFECTIVE TITLE:

EX: A lets a field to B at a rent of Rs. 50, and then transfers the field to C. B, having
no notice of the transfer, in good faith pays the rent to A. B, is not chargeable with
the rent so paid.

REQUIREMENTS:

 There need to be a bona fide payment of rent.

 The rent must be paid to the defective holder with utmost good faith.

SEC.51-IMPROVEMENTS MADE BY A BONAFIDE HOLDER UNDER DEFECTIVE TITLE

OBJECT:

DART in his book PROPERTY LAWS has explained ‘where a purchaser for value is
evicted in equity under a proper title owner he will be credited with all moneys expenditure
by him in necessary repairs or permanent improvements (Except improvements made after
he had discovered the defect of title)and will be debited with the rents he had received.

ESSENTIALS:

 The person evicted under a prior title must be transferee

Page 44 of 93
  He must have made certain improvements on the property
 Such improvements made by him in good faith.
 Such transferee has right to require better title owner to get back the value of
improvement made.
 To sell that land or other interest to transferee at its market value.
 When transferee has planted or sown crop, growing at time of eviction, he is entitled
to crop by free ingress and egress.

Chennapragada vs. Secretary of State AIR 1925 MAD 963:

Chennapragada, the Plaintiff was a poor agriculturist. He applied for land for
cultivation to his livelihood. The Tahsildar granted certain land. The plaintiff levelled the land
with his labour and sweat. He also dug a well and planted some plants. After 2 years
District Collector cancelled the Patta certificate of Plaintiff and Ordered for eviction. He was
evicted. He sued for the amount invested on plantation. Government refused to pay. Court
Held that judgment drawn in favour of Plaintiff holding that he had the right to get back the
amount invested in that land on good faith.

WHO ARE NOT ALLOWED FOR BENEFITS UNDER THIS SECTION:

 A Trespasser is not a bonafide transferee.

 A person who discovers wrong title and after deduction if he incurs further
expenditure in that property, he is not entitled.

NARAYANA RAO VS. BASAVARAYAPPAA: AIR 1956 SC727

The Apex Court held that even where the decree directs possession on payment of
compensation or in the alternative to sell the property, and time is given to the transferee for
his election, none the less, the date of valuation of improvement is to be the date of eviction
and not the date of election.

A person invest any amount for the improvements of the property with a hope that the
property would be transferred to him.

RAMSDEN VS. DYSON:

Dyson, the defendant was a landlord. He orally promised to give certain land on
long standing lease to Ramsden. As per oral instructions Ramsden took the land. He
incurred huge money for the development of the land with a hope that he would enjoy the
land for a Long period. After the land was improved Dyson evicted Ramsden. Ramsden
sued Dyson for the amount incurred for improvement. Dyson said there was no written
agreement and Ramsden was a Trespasser. House of Lord Held judgment in favour of
Ramsden.

A Mortgagee or lessee cannot make any improvement and claim from the true owner

NATESA DEVAN Vs. DIST. BOARD OF TANJORE:

Page 45 of 93
Where the transferee who purchased a property was given possession of a larger area than
he was entitled under the deed and who made improvements on excess land under a
mistaken belief that he was entitled to do so.

PanachandVs.Manoharlal(1917) 42 Bom.136

A Hindu Widow, who has only limited interest in estate gifted the property to X, donee. And
donee who out of gifted property made improvement upon that land. When the husband’s
brothers objected it, Court Held that donee need to be evicted by paying compensation.

MariappanThevar Vs. Kaliammal:AIR 1071 Mad.198

Court Held that spending money on Levelling the ground couldn’t be considered as
improvement made upon that land.

SidramappaVS.Shidappa: AIR 1929 Bom 230

A person constructed a new staircase in the old home, and asked for money for
improvements made upon that property , Court Held that such an improvement could not be
considered as an improvement.

S.52 DOCTRINE OF LIS PENDENS:

(TRANSFER OF PROPERTY PENDING SUIT RELATING THERETO)

 LIS= LITIGATION

 PENDENS = PENDING

 MAXIM: UT LITE PENDENTE NIHIL INNOVENTUR i.e. while a litigation is

pending, nothing shall be introduced new.

ILLUSTRATIONS:

1. A says he is the owner to the property of ‘X’. B says that he is the owner of the
property X. Now there exists dispute to the title of the property in court. Both parties
A,B should not transfer property X.

2. A, mortgaged his property to B. when he failed to repay, B filed suit for the recovery
of money. After B filed the suit A sold property to C. Here A and C has been
prohibited to transfer.

OBJECT:

 TO prevent unnecessary litigation.

 It is based on the maxim ‘interest republicaeut sit finish litigum”i.e, for the welfare
of the state there should be an end to litigation.

SCOPE:

Page 46 of 93
  There is a pendency of suit or proceeding
 Property cannot be transferred or otherwise dealth with;
 If so transferred, the transferee is bound by the decision of the court whether or not
he had notice of the suit

This Doctrine was evolved from the case law Bellamy Vs. Sabine,

One father, A sold his son, B’s share in property to one person,C. Now his son, B filed
case against his father and C. During the lispendens C sold the property to D. Actually D is
not aware of the dispute that exist between A,B and C. Court Held in favour of the son, B.
Hence A’s sale deed is void. Now, D is also liable upon the judgment.

REQUIREMENT FOR DOCTRINE OF LIS PENDENS:

 Suit or proceeding for a property is pending.

 Need to be pending before the competent court.

 Suit or proceeding should not be under any collusion between the parties.

Illustration for the above point:

Ex: A, owner of a house which is in possession of B. A and B secretly agree that B shall
declare himself as owner of the house whereupon A shall File a suit against B. it is further
agreed between them that during litigation B would sale the house and proceed shall be
divided equally between them. Both are sure that since the court shall determine the
ownership on merit A would retain the house and the sale by B shall be declared void and
the purchaser can never get the house. With such fraudulent pendency of the suit B sells
the property to C.

After sometime the Court gives its judgment in favour of A and it is held that B has no right
of ownership in the house which B had sold to C. since the suit between A and B was
collusive C is not bound by the decision of the Court. Accordingly, the transfer in C’s favour
would not be invalidated.

GouriDattVs.ShaikhSukar Mohammed AIR 1948 P.C 147

A Hindu wife filed a maintenance suit against her husband with a secret agreement that
during litigation the husband would transfer the property. During the pendency of the suit,
the husband sold the property. It was Held by the Privy Council that the suit was collusive in
nature and was, therefore, outside the scope of lispendens. Accordingly, the Court Held
that the purchaser was not bound by the charge on the property.

 Right to immovable property is involved directly and specifically in the suit.

i.e., Mere mentioning of an immovable property in the plaint is not enough rights in respect
of that immovable property must be directly and substantially be in question. In a suit for
specific performance of a contract to transfer an immovable property, the right to such

Page 47 of 93
immovable property is directly and substantially in question. Therefore, transfer of that
property is within the scope of this section.

Mahesh Prasad Vs. Mundar AIR (1951) All .141:

The test whether a suit or proceeding involves any question of right in immovable property
should be in the nature of claim and decree passed rather than the property mentioned in
the plaint.

However, following suits have been Held to involve question of rights in immovable property
and are within the scope of this Section:

 A Suit for Partition

 A Suit on mortgage
 A Suit for pre-emption.
 Easement Suit
 Suit for maintenance by a Hindu widow in which she claims to have her maintenance
made a charge on specific immovable property and a decree is passed creating a
charge on such property.(Ramachandra Vs. Kamalabai AIR(1944) BOm.191.

LIS PENDENS does not apply to following Suits:

 Suit for debt or damages where the claim is limited to money

 A Suit for the recovery of movables
 A Suit for an account
 Suit for recovery of rent of an agricultural holdings are outside the scope of
this Section.

 Further transfer has been made during pendency of proceeding. Suit is treated as
pending from the date of presentation of the plaint or institution of proceeding in a
court of competent jurisdiction. Suit is said to be continued until it is disposed of by a
final decree or order.

The transfer must affect the right of the other party to litigation.

BalaRamachandraVs.Daula:

Here A, gifted his property to B

before any suit which falls upon that property. And B gifted the same property to D. C,
stating that he is the legal representative of A, filed the suit for possession.while the suit is
pending B transferred the suit property to D, which is not known to him.

Court Held that A’s gift to B is before the suit and B was not the party to the suit at the time
of transfer from B to D.

Hence the Doctrine of LisPendens would not be made applicable in this case law.

In Supreme General Films Exchange Ltd. Vs. Sri nathSinghjiDeo:

Page 48 of 93
A theatre was attached in execution of a decree against its owner. During attachment, the
owner leased the theatre to M/s. Supreme General Films Exchange Ltd. It was Held by the
Apex Court that the lease was hit by the doctrine of LIS PENDENS.

KaruppanagounderVs.Rosammal:

Ordinarily a suit by a Hindu wife for maintenance against her husband is a personal suit.
Any purchaser of the family property during the pendency of the suit is not affected by the
rule of lispendens. But where in a suit for maintenance the widow claims that her
maintenance should be made a charge on the property, this section applies and any
alienation of the property made during the pendency of such suit is affected by the rule.

S.52 is applicable to the following circumstances:

1. COMPROMISE SUIT:

The doctrine of lispendens is applicable in cases where the pending litigation is ultimately
compromised and a compromise or consent decree is passed. The word decree or order in
this section contemplates compromise or consent decrees. However, the compromise must
be during the pendency of suit and not a compromise entered into after withdrawal of the
suit.

EX-PARTE JUDGMENT: In BagirathiVs. Raj Kishore

THIS doctrine is applicable to the exparte judgment. The Ex-parte judgment is given
in the absence of the defendant or Respondent.

COURT SALES:

IF a person becomes insolvent, then his property would be distributed among his creditors
through court. HENCE party to the suit cannot buy the property through the court sales.

The leading case law on the Doctrine of LisPendens is -

Faiyaz Husain Khan Vs. PragNarain:

In this case, a mortgagee sued to enforce his mortgage, but before the summons were
served, the mortgagor effected a subsequent mortgage. The prior mortgagee continued his
suit and obtained a sale-order from the court, in such condition if a person comes before to
get that property in auction, then such auction-purchaser will not bind under this doctrine.

TRANSFER WITH PERMISSION OF COURT:

Even though the said property is in pending litigation, property may be transferred with the
permission of court. In Final Decree, it will be distributed proportionately.

Making the subsequent mortgagee, a party to the suit. The court Held that the sale
extinguished the subsequent mortgagee’s right to redeem the prior mortgage.

GOVINDAPILLAI VS. ALYYAPPAN KRISHNAN:

Page 49 of 93
It was held the foundation for this doctrine does not vest upon notice, actual or constructive,
it rests

Solely upon the necessity- the necessity that neither party to litigation should alienate the
property in dispute so as to effect his opponents.

Kachhi Properties Vs. GanapatraoShankarraoKadam:AIR 2013 SC 2235

A temporary injunction restraining a transfer pendente lite has been Held not necessary to
be granted in each case.

Sec. 52 provides adequate protection to parties against such transfers. The occasion for
invoking powers under Or. 39 R.1,2 arises only in rare cases where the plaintiff
demonstrates that the rule of lispendens is inadequate to protect his interest.

S. 53 FRAUDULENT TRANSFER

S.53 CONSIST OF 2 RULES WHICH ARE GIVEN BELOW:

I.. EVERY TRANSFER OF IMMOVABLE PROPERTY-

 Made with an intent to defeat or delay the creditors of the trnsferor

 Shall be voidable at the option of any creditor so defeated or delayed.

 This sub-section will not impair the rights of a transferee in good faith and for
consideration.

 This will not affect any law for time being in force relating to insolvency. The law of
Insolvency aims at providing for equal distribution of assets of the insolvent among
his creditors and therefore its provisions are more stringent.

 It says that a transfer made voluntarily at the time within 2 years prior to adjudication
and a transfer for consideration made within 3 months prior to

 adjudication are voidable as against Official Receiver under Ss. 53 and 54 of the
Provincial Insolvency Act, 1920. Now this Act has been repealed and law applicable
is Insolvency and Bankruptcy Code, 2016

 A suit may be instituted by one creditor on behalf of or for benefit of all the creditor.

II.. Every transfer of immovable property-

 Made without consideration.

 With intent to defraud a subsequent transferee,

 Shall be voidable at the option of such transferee

Page 50 of 93
  Ex: A makes settlement of his property to his children. Subsequently A sells such
property to B. if B can prove that the sale was made with intent to defraud him, the
settlement is liable to be set aside.

TWYNE’S CASE :

IN this case Pierce was indebted to Twyne and C. C, filed against Pierce for satisfaction of
debt, but when the suit was pending in court, Pierce who was in goods and chattel, in
secret made a gift of deed of all his gifts to Twyne in satisfaction of his debts, without any
obstruction, that Pierce continued in the possession of goods and marked them with his
own mark . Afterwards C had judgment Against Pierce And when his goods were
sought to be seized in execution of judgment, Twyne and others resisted. Court Held that in
this case need to observe that even if there was true debt due to Twyne, but gift which was
made with no consideration and bonafide and it shall be deemed that gift made in trust in
favour of donee is considered to be done with fraud.

 REMEDIES AVAILABLE TO CREDITORS

THE Remedies available are:

 A debtor cum transferor who transfers his property to transferee, then the Creditors
to such transferor shall request court to declare the Sale as null and void. It is at the
option of creditors.

 A Creditor can file on behalf of all other creditors against debtor, Under OR. 1
RULE 8 OF C.P.C கட்டளை1 விதி 8

 A transferee who has obtained property without consideration and with the collusion,
creditor can file case against transferee.

EBRAHIM BHAI VS. FULL BHAI:

In this case, a person who was leading a life of dissipation transferred all his
property to his wife, so that he might not be tempted to lead such a life in the future. But
unfortunately he drifted back to his old ways, and began to contract heavy debts.

 In a suit by his creditors to set aside the transfer to his wife it was held that there was
no indebtedness at the time of the transfer, the consideration involved was natural
love and affection and therefore no mala fide could be presumed, merely because
the transfer might have prejudiced the claims of subsequent creditors.

PALAMALAI MUDALIAR VS.THE SOUTH INDIAN EXPORT CO.

A, in order to deceit or defraud his creditors his got ready to sell his properties to B.
And B in turn to help A colluded with him and bought that property from him. Hence the
creditors can fetch his property back and Court Held that such sale is voidable at the
options of the concerned creditors.

Page 51 of 93
 If the same transferee proved himself that he acted upon ex aqueo et
bono and bought for consideration, then such a sale is valid. The creditors of the transferor
cannot disturb the transferee.

MUSAHUR SAHU VS. HAKIM LAL

KishunBinod was debtor and MusahurSahu was creditor. In Dec 1900, the creditor
MusahurSahu sued the judgment debtor KishunBinod , for recovery of his debts. During
pendency of suits , in Jan 1901, MusahurSahu presented a petition before the court for
attaching properties of the debtor by way of security. In February, 1901 KishunBinod, the
debtor gave an affidavit that he did not intend to transfer any of his properties whereupon
the petition for attachment was dismissed. But, despite his affidavit KishunBinod (debtor)
sold his Properties to Hakim Lal who was another creditor of KishunBinod .

MusahurSahu, the plaintiff(appellant) pleaded that since the transfer of properties by his
debtor KishunBinod were made with the intent to defeat or otherwise delay his interest, it
should be Held void under S. 53 and Hakim Lal should not be given properties transferred
to him.

DECISION:

THE PRIVY COUNCIL dismissed the appeal and Held that the transfer of property
by a debtor to one creditor in preference of other is not a fraudulent transfer with intent to
delay or defeat the interest of another creditors.

The court observed the transfer which defeats or delays creditors is not an
instrument which prefers one creditor to another.

 IshanChander Vs. BishuSardar 24 Cal. 825

As against execution of money decree against the property of the judgment

debtor, the objector contended that he was a bona fide purchaser of the property of the
decree and whether it was a bonafide purchase for valuable consideration were all
questions of fact and law and could not be decided without evidence and arguments, the
property being also not immovable sec. 52 was not applicable, it requires a definite and
conclusive finding that there was not bonafide transaction before it can be declared to be hit
by Sec. 53.

Gokul Chand Vs. Mst. KananNur (1936) Pesh.1216

Where a judgment debtor who was a Muslim transferred his property to his wife
saying that it was in lieu of her dower and the transfer was made soon after the attachment
of his properties in execution of decree against him, it was Held that the transfer was
fraudulent. (Under Muslim Law, on marriage every husband has to pay some money or
property to wife as dower. Unpaid dower is debt.)

S.53-A DOCTINE OF PART PERFORMANCE

Page 52 of 93
OBJECT:

 THIS section confirms the Right on the transferee to protect his interest in the
property transferred to him on the basis of part-performance.

 This Act defends the possession of the transferee. It can be availed of only as a
shield and not as sword.

MEANING OF PART-PERFORMANCE:

THIS is also known as ‘Equity of Part-Performance’ says that if a person has

taken possession of an immovable property on the basis of a contract of sale and has either
performed or is willing to perform his part of the contract then, he would not be ejected from
the property on the ground that the sale was unregistered and the legal title has been
transferred to him.

Illustration: A contracts with B to sell his plot for X amount of money. A accepts the advance
from B towards the sale of the plot and hands over the possession of the said plot to B.
After some time, B is ready to pay the remaining sale amount but A refuses to accept the
same. Further A asks B to hand over the plot back to him.

Here B is ready to perform his part of the contract but A is not. In such a case, B can bring
a case requiring specific performance from A. It does not matter that the sale was not
registered.

As per law, a transfer of immovable property valued over Rs. 100 has to be registered. But
it was believed that strict compliance may lead to extreme hardships especially where one
party has already performed his part in the confidence that the other party will honour the
agreement. If such registration or other formalities have not taken place, the doctrine of part
performance will be applicable. If such a transferee takes possession of the property, he
can not be evicted due to an unregistered contract.

ESSENTIAL REQUIREMENT OF S.53

1.There must be a contract to transfer an immovable property.

2.Trasfer must be for consideration.

3.The contract should be in writing.

4.Must be signed by transferor.

5.Its terms can be ascertained with reasonable certainity.

6.The transferee should have been taken the possession of the property in part-
performance of the contract.

7.Or if he Is already in possession, should have continued in possession in part-

performance of contract,

Page 53 of 93
8.Should have done something in furtherance of the contract.

9.The transferee is ready and willing to perform his remaining part of the contract .

THIS DOCTRINE IS NOT APPLICABLE TO-

1.ORAL AGREEMENTS

2.Person who took possession through adverse possession and if he made improvements,
such person could not be entitled to such possession. This Doctrine would not help him.

EVOLUTION OF THIS DOCTRINE:

S.4 OF STATUTE OF FRAUD, 1677 PROVIDES that ‘All agreements in respect of transfer
need to be in writing. Therefore all oral agreements were Held to be illegal and transferee
could not get title to land. Then Courts of Equity(Chancery Court), came forward and held
that part-performance is applicable.

The Bonafide transferees who had performed their part by paying full Price and getting into
possession need not to follow The Statute Of Fraud, 1677.

MADDISON vs. ALDERSON (1883) 8 AC 467

B was A’s servant. A, had promised B certain property as life estate, meaning B could enjoy
the property during his life time. B served A for years upon this promised life estate. The will
bequeathing such interest and property to B failed due to want for proper attestation. After
A died, one of his heirs brought action to recover the property from B. Privy Council Held
that since B failed to occupy land, A’s Son is entitled to inherit.

WALSH Vs. LONSDALE 1882 21 Ch. D. 9

Walsh took a cotton mill on lease for 7 years from Lonsdale, the owner of the mill. The
agreement was prepared but not signed. In the meantime, rent had been paid by Walsh
with the quarterly payments of rent.

An advance of one year’s rent was demanded by Lonsdale as per the contract. Lonsdale
demanded the advance rent for one year and seized some goods of Walsh when he
defaulted. Walsh sued for damages.

The House of Lords decided in favour of Lonsdale stating that by running the mill, Walsh
had admitted he was a lessee and evidenced his consent to the unsigned lease deed.

PART PERFORMANCE IN INDIA

 In old Madras case, Kurri VeeraReddi Vs. Kurri BapiReddi (1906) 29 Mad 336, the
High Court Held that English Doctrine of Part Performance was not applicable in
Indian law.

 But Privy Council Held that Doctrine of Part Performance is made applicable to
Indian law through Mohd. Musa’s Case

Page 54 of 93
MOHAMMED MUSA VS. AGHORE KUMAR GANGULI(1905)PC

FACTS OF THE CASE ARE:

There was a dispute between the 2 parties regarding the mortgaged

properties. Both of them came to a compromise and got ‘Razinamah Deed’. According to
the Razinamah, the properties were divided equally between them and each of them
partitioned and retained the property as per their Razinamah.

The Razinamah Deed need to be registered. After 40 years approximately, the heirs of a
party sued for redemption of the properties, which were left with the others under
Razinamah.

The Privy Council dismissed the suit relying upon MaddisonVs. Alderson’s Case.

 After 2 contrary cases, Doctrine of Part Performance has been inserted.

 Before Section 53A was inserted in the Transfer of Property Act, 1882, there were
different views upon such application. After the Transfer of Property Act, 1882 came
into force, some thought that Sections 54 and 59 which required registered
documents were necessary for sale of immovable property or regarding mortgage
respectively.

ARIF VS. JADUNATH AIR 1931 P.C 79

Defendant has been granted Permanent lease by Plaintiff. Thereafter Defendant had
been made improvement such as builded a building upon oral agreement. After 10 years,
plaintiff sought for eviction against defendant.

Calcutta High Court Held that Eviction is not possible. The decision has been taken by
applying the doctrine of Part performance.

The Plaintiff moved to Privy Council as appeal. Privy Council Held that Eviction is feasible
as doctrine of part performance is not applicable in India.

Then in another case law, it is mentioned by the Privy Council that Doctrine of Part
performance is not applicable in India ie.,

MIAN PIR BUX VS. SARDAR MOHD. TAHIR AIR 1934 PC 235

HERE, Defendant took the possession out of the words of plaintiff by oral agreement.
When dispute arises, Privy Council Held that since it is oral agreement Defendant could not
have possession. This Doctrine is not applicable in India.

Finally in 1929, the Transfer of Property Act was amended and the English law of
part performance became a part of Indian Laws though a little modified.

SINCE, this Doctrine acts as a Shield and not as sword. But this Doctrine cannot
bye-pass Indian Registration Act, 1908. Hence, this Section defends only the Possession of

Page 55 of 93
the Defendant and not the Ownership. Thus, this Indian Doctrine of Part Performance is
only partial Importation of English Doctrine.

DISTINGUISH BETWEEN ENGLISH LAWS AND INDIAN LAWS:

ENGLISH LAW:

1.S.4 OF STATUTE OF FRAUD,1677 explains Doctrine of Part Performance.

2.The contract is applicable even if it is oral.

3. this doctrine is used as Shield and Sword. It can be used both for enforcing the right as
well as for defending the right.

4. It creates a title in the transferee.

5.The English doctrine of Part Performance gives rise only to an equity.

INDIAN LAWS:

1.S. 53(A) of Transfer of Property Act, 1882 defines Doctrine of Part Performance.

2.the contract is applicable only if it is in writing and signed by transferor.

3.It can be used only as a shield and not as a sword i.e., can be used only for defending the
possession of the transferee.

4.It does not create a title to the transferee.

5.S.53(a) gives rise to a statutory right of defence.

UNIT- II

SPECIFIC TRANSFER - SALE Ss.54-57

DEFINITION:

Page 56 of 93
 Sale is a transfer of ownership in exchange for a price paid or promised or part paid and
part promised.

ESSENTIALS ELEMENTS OF SALE:

1.Parties i.e. Seller and Buyer

2.Subject matter i.e. immovable property

3.Transfer of conveyance (Transfer of Ownership)

4.Price or consideration i.e., Must be paid or promised to be paid or partly paid and partly
promised.

5. There must be registered conveyance:

a. when tangible immovable property is above Rs. 100. Property must be either a
registered conveyance or Delivery of Property.

b. a Reversion of an intangible thing of any value

SALE CONTRACT FOR SALE

A sale of an immoveable property is the It is merely an agreement

transfer of ownership. For the sale of property in future on
terms agreed between the parties.
After sale , all the rights and liabilities of Here no interest of the vendee is as
the owner transfer into the vendee. such created in the property.

It conveys a legal title to the purchaser It does not convey a legal title to the
purchaser.
A sale creates a right in rem. It creates right in personam.

Sale requires compulsory registration It does not require any registration.

where the sale is of tangible
immoveable property of Rs. 100 or
more.

RIGHTS AND LIABILITIES OF BUYER AND SELLER(SEC-55)

 Before completion of sale

 After completion of sale

Page 57 of 93
BEFORE COMPLETION OF SALE

SELLER’S LIABILITIES:-

 To disclose material defects- sec-55(1)a

Oldfield Vs. Round 1880:

 To produce title deeds for inspection – sec 55(1)b

 To answer questions as to title- sec55(1)c

Ex: Any Encumbrance, notification under Land Acqusition, and Urban Ceiling and
Agricultural Ceiling Act, Restrictive Covenant and easements.

 To execute a proper conveyance –sec55(1)d

 To take care of property and title deed- sec55(1)e

 To pay public charges and rents- sec 55(1)g

SELLER’S RIGHTS:-

 1.to take rents and profits –sec55(4)a

BUYER’S LIABILITIES:-

 To disclose facts materially value of property – sec55(5)a

 To pay the price- sec55(5)b

BUYER’S RIGHTS:-

 To charge for price prepaid –sec 55(6)b

II. AFTER COMPLETION OF SALE

SELLER’S LIABILITIES:-

 To give possession -sec 55(1)f

 Implied covenant for title - sec55(2)

 To deliver the title deeds on receipt of price – sec55(3)

SELLER’S RIGHTS:-

 Charge for price unpaid –sec55(4)a

BUYER’S LIABILITIES:-

 To bear loss to the property – sec55(5)c

Page 58 of 93
  To pay outgoings sec55(5)d

BUYER’S RIGHTS:-

 Benefit of increment-sec55(b)a

SAI MUNNISSA VS. S.K.MOHIUDDIN AND OTHERS:

Husband transfereed the property to his wife In lieu of dower. The heirs of husband
challenged it. They raised objection and questioned that the transaction was not sale. It was
a security given for dower debt and were ready to pay dower debt and also claimed the
property.

Court Held that the property belongs only to the heirs of that husband.

MARSHALLING BY PURCHASER:- SEC-56:

 The section says that if the owner of two or more properties mortgages them to one
person and then sells anyone of those properties to another person, the buyer is
entitled to claim that the mortgage debt be satisfied out of the properties not sold to
him. This section protects the interest of the buyer and it applies only between the
buyer and seller and not as between the subsequent purchasers.

ESSENTIALS:

1. If the owner of two or more properties

2. Mortgages them to one person and then sells one or more of the properties to another
person

3.The buyer is entitled to have the mortgage debt satisfied out of the property or properties
not sold to him(subject to the contrary of contract) so far as the same will extend.

MUHAMMED RAFEEQ VS. BANK OF BARODA:

 The application of this section has been overridden in cases which fall under the
Securitization and Reconstruction of Financial Assets and Enforcement of Security
Interests Act, 2002.

 The petitioner in this case was stranger to the loan transaction between the borrower
and bank.

 He purchased one item of the properties from the borrower over which the security
interest was created. He could not claim the benefit of section 56 over that item.

DISCHARGE OF ENCUMBRANCE ON SALE: S.57 – PROVISION BY COURT FOR

ENCUMBRANCE AND SALE FREED THEREFROM:

 THE encumbrances may be in the form of mortgages, lien or charge or trust for
securing money. S. 57 empowers the courts for discharge of encumbrances by

Page 59 of 93
 issuing order for depositing the amount due so as to make payments. Such an order
is passed by Court either on an

 Application by any party to the sale or in execuiton of a decree.

 But this Sec. does not apply where a mortgagee’s decree for sale has been adjusted
out of Court.

Page 60 of 93
 OF MORTGAGES OF IMMOVABLE PROPERTY AND CHARGES-

CH:IV SEC.58-104

MORTGAGEDEFINITION :-

According to Sec. 58, A mortgage is the transfer of an interest in some specific

immoveable property for the purpose of securing the Payment of money advanced or to be
advanced by way of loan an existing or future debt, or the performance of an engagement
Which may give rise to a pecuniary liability.

Mortgagor:-

The person who transfers the interest in the property in a mortgage is known as a
mortgagor.

Mortgagee:-

A mortgagee is a person in whose favour the mortgage is created.

Mortgage money:-

The principal money and interest of which the payment is secured for the time being
are called the mortgage money.

Elements of mortgage:-

1.There must be transfer of an interest

2.The interest transferred must be in specific immoveable property

3. The transfer must be made to secure a loan of money, debt or performance of an

engagement which may give rise to a pecuniary liability.

KINDS OF MORTGAGE:- Sec-58

 Simple mortgage

 Mortgage by conditional sale

 Usufructuary mortgage

 English mortgage

 Mortgage by deposit of title deeds

 Anomalous mortgage

SIMPLE MORTGAGE:- Sec58(b)

 Without delivering of possession of the property

Page 61 of 93
  The mortgager - Binds himself personally to pay the mortgage money, and

 The mortgager - Agrees that in the event of his failing to pay according to his
contract, the mortgagee shall have a right to cause

 the mortgaged property to be sold and proceeds of sale to be applied, in payment of

the mortgage money,

 NO transfer of ownership also exist.

 The transaction is called simple mortgage.

Remedy of the mortgagee:

 Firstly the mortgagor takes personal obligation and

 secondly, the property which may be sold in case of failure of the mortgagor to pay.

MORTGAGE BY CONDITIONAL SALE:- sec58(c), 59, 67

 In this type of mortgage, the mortgagor ostensibly sells the property.

 The property is sold on the condition

 On default of payment of the mortgage-money on a certain date the sale shall

became absolute, or

 On such payment being made the sale shall became void, or

 On such payment being made the buyer shall transfer the property to the seller,

 The condition must be embodied in the document which effects or purports to effects
the sale.

 Such a transaction is called mortgage by conditional sale.

Remedy: The remedy open to the mortgagee by conditional sale is by foreclosure only
and not by sale.

Ismail KhatriVs. KuljihgaiBrahmabhatt AIR. 1994 Guj 8:In a recent case before the Gujarat
High Court, the first part of the document spoke of an outright sale, whereas the second
part contained provisions for redemption of the land. The court observed that the document
must be read as a whole, and Held that it was a Mortgage by Conditional Sale, and not a
sale with a right to re-purchase.

In Sunil K. Sarkar Vs. Aghore K. Basu AIR 1989 Gau. 39:

Separate documents of sale deed and deed of re conveyance are executed between the
parties in the same transaction and in respect of the same property. The owner wishes to
redeem the property and contends that the transaction is in the nature of a mortgage by
conditional sale. But in a mortgage by conditional sale , it is Absolutely necessary that the

Page 62 of 93
condition effecting the sale as a mortgage should be embodied in the sale deed itself. As
this was not done in the present case, the mortgagor cannot say that the transaction was in
the nature of a mortgage by conditional sale.

SIMPLEMORTGAGE MORTGAGEBY CONDITIONAL SALE

1. SEC. 58(B) 1. SEC. 58(C)

2. Mortgagee undertakes to repay personally 2. Agrees on condition if debt not paid
on certain date, then property be
deemed to be sold. No personal
liability.
3. Mortgagee shall file suit for recovery of 3. Decree of foreclosure is needed.
possession or shall seek permission to sale the
property.
4. Mortgagor never transfers Ownership to 4. Only an Ostensible sale is made, if
Mortgagee. debt amount is paid, then sale shall
become Void.

MORTGAGE BY CONDITIONAL SALE SALE WITH CONDITION OF

REPURCHASE

1. The Relationship of Debtor and creditor is 1. There exist no relationship as Debtor

necessary. Debt is must. and Creditor. Debt doesnot exist.

2. There is transfer of only some interest in 2. There is transfer of whole interest in the
the mortgaged property property.

3. The Right of Redemption continues even 3. When the personal right of repurchase
after fixed period expires. gets expires, then seller cannot
repurchase.

USUFRUCTUARY MORTGAGE:- S.58(d),62

Essential elements:-

 There is delivery of possession to the mortgagee or an express or implied

undertaking of the mortgagor to deliver such possession.

 Retention of the possession by the mortgagee till the payment of the mortgage-
money or he has to receive rents and profits of the property either in lieu of interest
or principal or both.

Page 63 of 93
  There is no personal liability of the mortgagor

 Mortgagee cannot foreclose or sue for sale of property.

 The mortgagor is entitled to redeem the property when the amount due is personally
paid or the debt is discharged by rents and profits received by the mortgagee.

 No time limit is fixed for the limitation for the repayment.

 Where the mortgage is for Rs. 100 or more , it must be registered.

MONAPPA NAICKA VS.LAND TRIBUNAL: AIR 2012 KANT.161

As per mortgage deed, the mortgagee had to keep possession with himself,
thus binding mortgagee not to alienate by way of lease nor some other process. It was not
to be deemed as a lawful tenant. Any such claim was not proper. Such transferee was not
entitled to occupancy rights.

Remedies of a Usufructuary mortgagee:

 Mortgagee cannot sue the mortgagor neither for the sale nor for foreclosure. His
remedy only retain possession of the property till the mortgage money is paid up. If
the mortgagee loses his possession, he may sue to obtain the possession, mesne
profits as well as the mortgage money under section 68.

ENGLISH MORTGAGE:- Sec-58(e)

ESSENTIALS:

 Where the mortgagor binds himself to repay the mortgage-money on a certain date.

 Transfers the mortgaged property absolutely to the mortgagee on the condition that
the mortgagee will retransfer it to the mortgagor on the payment of the mortgage
money.

 This is followed by Delivery of possession.

 Even the Sale shall be done outside of the court.

REMEDY TO ENGLISH MORTGAGEE:

 THE only Remedy available to Mortgagee is only to Sale even without intervention
of court.

Page 64 of 93
 ENGLISH MORTGAGE USUFRUCTUARY MORTGAGE

1. SEC. 58 (E) 1. SEC.58(D)

2. There is personal liability to repay the 2. There is no personal liability.

loan.
3.The property is absolutely transferred to 3. Mortgagee doesnot get ownership in
mortgagee with condition to repay. property. Only Possession is transferred to
him, which he can retain until debt
payment.
4. Remedy available to Mortgagee is only to 4. The Mortgagee cannot sue for sale. He
Sale even without intervention of court. can hold property until debt is being paid
through Rents and other profits out of that
mortgaged property.

MORTGAGE BY DEPOSIT OF TITLE DEEDS or EQUITABLE MORTGAGE:- Sec58(f)

Elements;-

 In the towns of Calcutta, Madras, Bombay and in any other town specified by the
state Govt concerned in this behalf,

 Delivers to a creditor or his agent documents of title to immoveable property,

 With intent to create a security

 Such transaction is called mortgage by deposit of title deeds.

 This is a special kind of mortgage because here the execution of mortgage deed is
not necessary. Mere deposit of title deeds of an immoveable property is sufficient.

Remedies:

 The remedy of a mortgagee is by a suit for sale and for the mortgage money. He is
not sue for foreclosure.

ANAMALOUS MORTGAGE:Sec-58(g)

 Anomalous mortgages are composite mortgages formed by the combination of two

or more of the primary types.

 In this class of mortgage the rights of the parties are governed by the terms of the
instrument.

 Ex; simple mortgage and usufructuary mortgage combination.

NarasinghPratapVs. Mohammed Yaqoob:

Page 65 of 93
 The mortgagor covenanted to repay the mortgage-money in 35 years. The
mortgagee was to take possession of the property and enjoy the usufruct in lieu of interest.
But Possession was not delivered.

The Privy Council held: that it is an Anomalous mortgage.

 That is, the mortgage is partly usufructuary, the mortgage money becomes payable
when possession was not given. Since it had the complexion of simple mortgage, a
decree for sale was granted.

 The mortgagee sued for the enforcement of the mortgage by the sale of the property.

 If it is a usufructuary mortgage a suit for sale would not lie. If it was a simple
mortgage the suit is premature.

MORTGAGE BY DEPOSIT OF TITLE DEEDS or EQUITABLE MORTGAGE:- Sec58(f)

Elements;-

 In the towns of Calcutta, Madras, Bombay and in any other town specified by the
state Govt concerned in this behalf,

 Delivers to a creditor or his agent documents of title to immoveable property,

 With intent to create a security

 Such transaction is called mortgage by deposit of title deeds.

 This is a special kind of mortgage because here the execution of mortgage deed is
not necessary. Mere deposit of title deeds of an immoveable property is sufficient.

Remedies:

 The remedy of a mortgagee is by a suit for sale and for the mortgage money. He is
not sue for foreclosure.

ANAMALOUS MORTGAGE Sec-58(g)

 Anomalous mortgages are composite mortgages formed by the combination of two

or more of the primary types.

 In this class of mortgage the rights of the parties are governed by the terms of the
instrument.

 Ex; simple mortgage and usufructuary mortgage combination.

NarasinghPratapVs. Mohammed Yaqoob:

Page 66 of 93
 The mortgagor covenanted to repay the mortgage-money in 35 years. The
mortgagee was to take possession of the property and enjoy the usufruct in lieu of interest.
But Possession was not delivered.

The Privy Council held: that it is an Anomalous mortgage.

 That is, the mortgage is partly usufructuary, the mortgage money becomes payable
when possession was not given. Since it had the complexion of simple mortgage, a
decree for sale was granted.

 The mortgagee sued for the enforcement of the mortgage by the sale of the property.

 If it is a usufructuary mortgage a suit for sale would not lie. If it was a simple
mortgage the suit is premature.

RIGHTS AND LIABILITIES OF MORTGAGOR

RIGHTS OF MORTGAGOR: SS.60-66 of Transfer of Property Act, 1882

LIABILITIES OF MORTGAGOR: Ss. 60(A), S. 65

RIGHTS AND LIABILITIES OF MORTGAGOR

1.Right of Redemption – sec 60

2. Right to inspection and production of documents – sec60B

3.Right to redeem separately or simultaneously – sec61

4. Right OfUsufructuary Mortgagor To Recover Possession S.62

5. Right to accession to mortgaged property –sec63

6. Right to improvements to mortgaged property - Sec63A

7. Right to implied contracts –Sec65

8. Right to lease –Sec65A

THE LIABILITIES OF MORTGAGOR:

SEC. 60(A) defines of ‘obligation to transfer to 3rd party instead of Re-transfer to Mortgagor.

If the Mortgagor paid debt through another person and asks Mortgagee to transfer the
same to that person, then Mortgagee

Need to transfer property to that concerned person. This is the duty of Mortgagor.

The following Rights of Redemption:

1. RIGHT OF REDEMPTION:

Page 67 of 93
 REDEMPTION MEANS ‘PAYING OFF THE MORTGAGED MONEY AND GETTING
BACK THE MORTGAGED PROPERTY’.

S.60 states that ‘at any time after the principal money has become due

And on payment being made, the Mortgagor shall demand-

a. The return of mortgaged instrument, toto with all title-deeds

b. Delivery of Possession of mortgaged property when mortgagee in possession

c. Re-transfer of property at Mortgagor’s cost or acknowledgement in writing.

ONCE A MORTGAGE, ALWAYS A MORTGAGE-

THE Right of Redemption is Statutory right and it is so absolute that it cannot be defeated
even by parties themselves. Nor can right be fettered by any condition. The Right of
Redemption and Right of Foreclosure are 2 extensive rights which travels parallel with
each other.

CLOG ON REDEMPTION:

THE Legal position is that any Condition contained in mortgage deed, which
obstructs the right of redemption, will be deemed as a Clog on Redemption and will be Null
and Void.

VADDIPARTHI VS. APPALANARAHIMHALU:

A, mortgaged his land to B for 5 years, with a provision that rents and profits would be set
off against interest. The deed further provided that if the mortgage was not redeemed within
20 Years, the mortgagee should treat the land as sold to him absolutely. This was Held to
be a Clog on Redemption, and the mortgage was Held redeemable even after 20 years.

 There should not be any clause which hinders Right of Redemption toto.

 Any stipulation which constrains a mortgagee to redeem even after mortgage debt is
paid is void ab initio.

A condition or stipulation is Clog and thereby Void, only in the following circumstances:

 The condition or stipulation has been imposed oly by the mortgagee, and not by any
person who is stranger to transaction.
 The condition or stipulation must be incorporated in mortgage deed itself. Parties are
free to stipulate otherwise by any independent contract outside the mortgage deed.
 The condition or stipulation included in the deed must be unreasonable against
public policy and with mala fide intention.
 The condition or stipulation puts either absolute restraint on mortgagor’s right of
redemption or prevents him from redeeming mortgage for unreasonably long period.

Page 68 of 93
INSTANCES OF CLOG ON REDEMPTION:

1. CONDITON OF SALE IN DEFAULT:

A condition which makes mortgage a sale in default is clog on redemption. Where
the terms of a mortgage deed provide that if mortgagor fails to repay the loan within
a specified period , the mortgagee shall necome owner of the property, the
stipulation being void.
Kanaran Vs. Kuttooly (1898)21 Mad. 110: An agreement in a mortgage deed that
default of payment of debt on due date the mortgagor will sell the property to
mortgagee at a price to be fixed by umpires was Held to be Clog on equity of
redemption and was therefore not enforceable. Any agreement which converts
mortgage into sale in default of repayment of loan on due date is therefore void and
cannot take effect.
An agreement of sale is a Clog if it is part and parcel of mortgage deed. The
rule is that the mortgagee while lending money cannot take security with a condition
which has the effect of converting a mortgage into sale in his favour.
2. POSTPONEMENT OF REDEMPTION FOR LONG TERM:
The postponement of right of redemption for a long period is not necessarily a clog
on redemption. This is because it is useful for both the parties. If a long period is
unreasonable then it is a clog. But if it is not so it is reasonable. The Courts have
Upheld long terms in cases it was found to be reasonable beyond any doubt.
In Seth gangadhar Vs. Shankarlal AIR (1958) SC 770; Supreme Court Held that
postponement of redemption for 85 years is not a clog on right of redemption under
the circustances of the case because of it’s unreasonableness.
In Fateh Mohammed Vs. Ram Dayal AIR (1972) Oudh.224: Postponement for 200
years was Held to be a Clog as being unreasonable postponement of mortgagor’s
redemption.
Ajith Singh Vs. Kakhir Singh AIR (1992) P and H.193: postponement or right of
redemption for period of 95 years read with other conditions was Held to be Clog on
redemption.
3. CONDITION POSTPONING REDEMPTION IN DEFAULT ON A CERTAIN DATE:
MOHD. SHER KHAN VS. SETH SWAMI DAYAL AIR(1992)P.C.17, the mortgage
was for a term of 5 years. There was a stipulation in the deed according to which if
mortgagor could not pay the money the mortgagee was entitled to take possession
of the mortgage property .the stipulation further provided that mortgagee shall
remain in possession for 12 years during which the mortgagor cannot redeem the
mortgage. It was Held by Privy Council that the stipulation was a clog on mortgagor’s
right of redemption because it hindered an existing right of redemption.
4. RESTRAINT ON ALIENAITON:
A condition which restraints the moetgagor from transferring moetgage property is a
Clog. Any stipulation which curtails or takes away mortgagor’s right of subsequent
disposition is a clog on equity of redemption.

Page 69 of 93
 RAM SARAN VS. AMRITA, (1880) 3 ALL. 369: A Stipulation that moetgagor cannot
take loan from any other creditor by mortgaging the property again, is a clog
because it is a restraint on his power of alienation.
5. COLLATERAL BENEFITS TO MORTGAGEE:
An advantage which is in addition to mortgage money with interest is acollateral
benefit. A collateral benefit to mortgaaaaagee is not necessarily a clog on equity of
redemption. Whether such additional benefit amouynts to clog or not depends on the
facts and circumstances in each case. In order that collateral benefits to mortgagee
may be clog on redemption it is necessary that:
a. The collateral benefits given to the mortgagee are unfair and unconsiciionable
and
b. The collateral benefits to mortgagee are part of the transaction of moetgage, not
an independent benefit.

In Kreglinger Vs. New Patagonia Meat & Cold Storage Co. Ltd. (1914)AC 25:

New Petagonia Co., which was doing the business of cold storage of meat and
sheep skins, took a loan of 10,000/-pound from a firm of wool brokers. New
Patogonia co. executed an mortgage in favour of firm. Mortgage deed provided that
New Patagonia Co.(mortgagor) could make payment of loan at any time by giving
one month’s notice to firm(mortgagee). It was also agreed under the mortgage that
New Patagonia co. would not sell the sheep skins to any person other that the firm
for period of 5 years from date of taking of loan. New Patogonia co.paid the whole
amount to the firm within 2 and half years from the date of taking of loan. The
question arose, whether was bound to sell the sheep skins to firm for 5 years as
agreed even though the debt was paid earlier or whether the agreement was void as
a clog on equity of redemption. The House of Lord Held that agreement was void as
clog on equity of redemption. Agreement was valid and enforceable notwithstanding
that loan was paid off. Their Lordships observed there was no rule in equity which
prevented a mortgagee from stipulating of any collateral advantage. A Collateral
advantage was Held to be Clog only when a. it was unfair and unconscionable or b.
it was in nature of a penalty clogging the equity of redemption or c. it was
inconsistent with the legal ofequitable right to redeem.

Although the principles of this cause have been accepted, the decision iin
general has not been followed by Indian courts. In India an agreement under which a
collateral advantage to mortgagee extends beyond the period of redemption has
been Held Clog on equity of redemption.

BIMAL JATI V. BIRANJA (1900) 22 ALL.238: It appears that in India the courts have
taken a view that an agreement or stipulation which confers collateral advantage to
mortgagee beyond the period of redemption is a clog. But a collateral advantage not
extending beyond this period may be valid and not against public policy.

6. PENALTY IN CASE OF DEFAULT:

Page 70 of 93
 An agreement which amounts to penalty in case on non-payment of debt is a Clog
on redemption.

In the RIGHT OF REDEMPTION, there exist many Redemptory rights. They are:

 Right of Redemption-How extinguished

 Effect of Redemption S. 60-60(a) and S.62-64

 Right to Redeem a part of mortgaged property.

 Right to Redeem seperately or simultaneously. S.61

 Who can sue for redemption. S.91

 Right of Subrogation. S. 92

 Right of Redeeming mortgagor to claim expenses.

 Mortgagor’s Right to deposit money in court.

Ex: A, mortgaged his land to B with possession for 5 years. The rents and profits to be set-
off against interest. The mortgage further provided that if mortgage was not redeemed
within a period of 20 years from due date, the mortgagee should treat the land as sold to
him absolutely. A, filed suit for redemption after 20 years from the due date. Since this is
the Clog, mortgage is redeemable even after 20 years.

Ex: A, mortgaged his land to B with possession for 5 years. The rents and profits to be set-
off against interest. The mortgage further provided that if mortgage was not redeemed
within a period of 20 years from due date, the mortgagee should treat the land as sold to
him absolutely. A, filed suit for redemption after 20 years from the due date. Since this is
the Clog, mortgage is redeemable even after 20 years.

RIGHT OF REDEMPTION - HOW

EXTINGUISHED: S.60

 By the act of the parties, as when the mortgagor sells his right of Redemption.

 By the Order of Court.

EFFECT OF REDEMPTION:

 Return of documents and Return of possession of mortgaged property.S.60,62

2. The Mortgagor may require Mortgagee that instead of transferring the property to
Mortgagor, the Mortgagee shall assign the mortgaged-debt to 3 rd person named by
mortgagor. S. 60A

3. The mortgagor becomes entitled to-

Page 71 of 93
a.accession to the mortgaged property S.63.

b. Improvements made thereon S.63A

c. The renewed mortgage-lease. S.64

RIGHT TO REDEEM PART OF MORTGAGED PROPERTY:

ALL the Mortgagor's are entitled to be made as parties to one proceeding and are
not to be exposed to a variety of proceedings.

EXCEPTION:

a.Where terms of mortgage provide for partial performance.

b. Where co-mortgagors have distinct and separate interest.

c. Where the Mortgagee recognizes a partition of mortgaged property amongst co-

mortgagors.

d. When mortgagee himself acquires a portion of mortgaged property and not whole of
mortgaged property.

RIGHT TO REDEEM SEPERATELY OR SIMULTANEOUSLY S.61:

A Mortgagor who has executed 2 or more mortgages in favour of same mortgagee

is, in absence of contract to the contrary, when principal money of any 2 or more of the
mortgages has become due, entitled to redeem any one of such mortgages separately, or
any 2 or more of such mortgages together.

DOCTRINE OF CONSOLIDATION-ABOLISHED:

By Consolidation of mortgages is meant the mortgagee’s power to compel the mortgagor

to redeem together all the securities in his hands or to prevent the mortgagor from
redeeming one of such securities without redeeming the others.

The Doctrine of Consolidation enables the mortgagee of 2 different properties

mortgaged by the same mortgagor to consolidate those mortgages and force him

To redeem all of them or to prevent him from redeeming one of tem without redeeming the
other. Of course there could be no question of consolidation as regards by mortgage where
the time for redemption has not expired.

if the parties may allow consolidation by mutual consent, such a provision however,
must be clear and explicit.

RIGHTS AND LIABILITIES OF THE MORTGAGEE: SS.67-77

RIGHTS OF THE MORTGAGEE:

Page 72 of 93
  RIGHT TO FORECLOSE OR SUE S. 67

 RIGHT TO SUE FOR MORTGAGE MONEY S.68

 RIGHT TO SELL WITHOUT INTERVENTION OF COURT S.69

 RIGHT TO APPOINT A RECEIVER S. 69A

 RIGHT TO ACCESSION S.70

 RIGHT TO RENEWAL OF MORTGAGED LEASES S. 71

 RIGHT TO SPEND MONEY S. 72

 RIGHTS OF PROCEEDS OF REVENUE SALE OR COMPENSATION ON

ACQUISITION
S. 73

 RIGHTS OF MESNE MORTGAGEE. S.94

LIABILITIES OF MORTGAGEE:

 Mortgagee must bring one suit on several mortgages S.67A.

 Liabilities of a mortgagee in possession Ss.76,77

i. To manage the property as a man of ordinary prudence would manage his own
property.

ii. To use his best endeavours to collect rent and profits.

iii. To pay government revenue and other public charges out of the income of the
property, in the absence of a contract to contrary

 To make necessary repairs, the income Of the property permitting, not to commit any
act which is destructive or permanently injurious to the property, If he has insured the
property against fire, and receives insurance money for such reason, he must either
a. reinstate the insured property from such money or b. discharge the mortgage-debt
from such money-as may be directed by the mortgagor.

 To keep clear, full and accurate accounts of all amounts received and spent by him
and give such accounts to the mortgagor, whenever asked for,

 To debit receipts from the property, first against interest on the mortgage money, and
then against the principal amount,

 To account for receipts from the property, when the mortgagor tenders and deposits
the amounts due.

DOCTRINE OF PRIORITY: S.78,79, 48

Page 73 of 93
S.48. Priority of rights created by transfer:Where a person purports to create by transfer at
different times rights in or over the same immovable property, and such rights cannot all
exist or be exercised to their full extent together, each later created right shall, in the
absence of a special contract or reservation binding the earlier transferees, be subject to
the rights previously created.

EX: If A mortgages his property to B, and same property to C and the same property to D. B
is the person who is having right over other mortgagees in claiming his mortgaged debt
from A. B is the only person who is having right to bring A’s property to sale. Whereas the
subsequent mortgagees are having secondary right to claim their rights.

S.78 POSTMENT OF PRIOR MORTGAGEE

Where, through the fraud, misrepresentation or gross neglect of prior mortgagee, another
person has been induced to advance money on the security of the mortgaged property, the
prior mortgagee shall be postponed to the subsequent mortgagee.

S.79. MORTGAGE TO SECURE UNCERTAIN AMOUNT WHEN MAXIMUM IS

EXPRESSED:

 If a mortgage made to secure future advances, the performance of an engagement

or the balance of a running account, expresses the maximum to be secured thereby,
a subsequent mortgage of the same property shall, if made with notice of the prior
mortgage, be postponed to the prior mortgage in respect of all advances or debits
not exceeding the maximum, though made or allowed with notice of the subsequent
mortgage.

DOCTRINE OF MARSHALLING: S. 81

A mortgages his properties named X & Y to B. Subsequently, he mortgages the property X

to C. C brings property X to sale in execution of his mortgage and purchases the property
X. B there- upon obtains a decree and proceeds against X. Can C claim marshaling? The
answer is Yes. X & Y should be put together, so as not to defeat the interests of A &B.

The doctrine of marshaling is stated in Section 81. The owner of two (or more) properties
mortgages one (or more) of the proper- ties to another person, the subsequent mortgagee
is entitled to have the prior mortgage debt satisfied out of the property (or properties) not
mortgaged to him, so far as the same will extend. However, this will not prejudice the rights
of the prior mortgagee or any person who has for value acquired an interest in any of the
properties.

Doctrine of Marshalling Applies only when-

 There is a common debtor

 2 or more properties of debtor have been first mortgaged to one person and
subsequently one or more of same property is mortgaged to another person

Page 74 of 93
  It does not prejudice a. prior mortgagee b. 3 rd parties claiming as purchasers and

 There is no contract to contra.

INDERDAWAN VS.GOVIND : 23 Cal.790

A, mortgages properties X and Y to B. later, he mortgages X to C. C, obtains a sale decree

for X and purchases it himself. B, then obtains an order for sale on his mortgage. Under
these circumstances, C is entitled to require B to bring Y to sale first and realize his security
as far as possible out of Y.

As seen supra, the principle of Marshalling is not applicable to -

a. So as to prejudice the prior mortgagee. If the property not mortgaged to the subsequent
mortgagee is not sufficient to satisfy him ie., the 1 st mortgagee, he can proceed against the
other property as well.

b. So as to prejudice the interest of a 3 rd person who has, for consideration, acquired an

interest in any of the properties. Thus, when property not Comprised in the security of the
2nd mortgagee, who can exercise the right of marshalling, is mortgaged to or purchased by
a third party, a subsequent mortgagee cannot marshal to prejudice of 3 rd party.

c. Unless same person is liable to both creditors and is also the owner of properties.

d. Unless the 1st mortgagee has equal rights over the 2 properties mortgaged to him. Thus
he has a charge on one property but on the

• The above rule cannot also be applied so as to prejudice the rights of the prior
mortgagee or any person acquiring an interest in any of the properties for
consideration.

• Ex: Suppose A is the owner of 2 properties x and y. he mortgages both to B. and

later mortgages Y to C.

Leading case is :Aldrich Vs. Cooper: In this case:

The first creditor C had a right against the property of the debtor D. The second creditor, S,
had certain rights against the property of the debtor. In these circumstances if the first
creditor C is allowed to proceed against the property the rights of 2nd creditor S would be
affected. The principle is that one creditor shall not disappoint another creditor. Hence, if
one creditor has a security in respect of two properties of the mortgagor and another
creditor has a security in one of the properties only, then the two properties shall be
marshaled i.e., ranged so as to throw the burden as far as possible on the property not
included in the second security. Eg.: Properties X & Y of P are subject to an encumbrance
of A. Property Y is subject to an encumbrance of B. According to the doctrine of marshalling
the amounts given by A must be satisfied from property X so as not to affect the amounts
given by B.

Page 75 of 93
Doctrine of Contribution: s.82

 The converse of marshalling is contribution. This occurs when the mortgaged

property belongs to two or more persons, having distinct and separate rights of
ownership. In such a case if there is a mortgage debt both or all should contribute
rateably. The value as on date of mortgage shall be taken to calculate the
contributions. Eg.: Property X is mortgaged to A for Rs.200/- and sold to C.
Properties X & Y are mortgaged to B for Rs.400/- & sold to D. The value of X & Y is
Rs.500/- each. The contributions of C & D are Rs.150/- and 250/- respectively

 The two properties X & Y have the mortgage-amount of Rs.400/-advanced by B.

Hence B may recover this amount from C & D. From C : 500-200=300 Rs. Half of
this = 150 Rs. From D : Value 500 Rs. Half of this = Rs.250/-

DISTINGUISH BETWEEN MARSHALLING AND CONTRIBUTION:

• MARSHALLING arises when the competing mortgagees hold from one mortgagor.
Contribuiton arises when the mortgaged properties belong to several owners.

• By marshalling, a creditor having several securities is so to exercise his right as not

in injure the right fo another creditor on some of those securities. By contribution all
Securities are to contribute equally and the whole liability is not thrown to one
security only

• If there exist conflict between two, marshalling will prevail.

Doctrine of Subrogation:S.92

Subrogation means 'Substitution'. This enables a person to pay off a creditor and
get into his shoes and exercise the rights of the creditor. Any person redeeming a
mortgaged property has the same rights (of redemption, foreclosure or sale), as the
mortgagee may have against the mortgagor or any other mortgagee.

 This right is subrogation. There must be full redemption to apply this doctrine.

 A mortgages his property to B. A makes second mortgage to C. A makes third

mortgage to D. Here, D may redeem B in which case D becomes subrogated to B.
He has the same rights as B has. Persons who may claim subrogation.

i) Any person having interest in or charge on the mortgaged property.

ii) Any surety.

iii) Any creditor of mortgagor.

Exception: Subrogation does not apply to a mortgagor.

Cases of legal subrogation are:

 a) A puisne mortgagee redeeming a prior mortgagee.

Page 76 of 93
  b) A co-mortgagor redeeming the mortgagee.

 c) A mortgagor's surety redeeming the mortgagee.

 d) A purchaser of equity of redemption redeeming a mortgage. These person may

claim the right of subrogation

Doctrine of Tacking: (Tacking=To shift one's position). S. 93

S.93. Prohibition of tacking: No mortgagee paying off a prior mortgage, whether with or
without notice of an intermediate mortgage, shall thereby acquire any priority in respect of
his original security; and, except in the case provided for by section 79, no mortgagee
making a subsequent advance to the mortgagor, whether with or without notice of an
intermediate mortgage, shall thereby acquire any priority in respect of his security for such
subsequent advance.

 The rule relating to prohibition of Tacking is in Sn.93 of T.P. Act The rule is: No
mortgagee paying off a prior mortgage-(with or without notice of any intermediate
mortgage) shall acquire any priority in respect of his Original security. Eg.: Three
mortgages are made by A: I Mortgage to B II Mortgage to C. III Mortgage to D. D
may pay off B and get into the shoes of B. With this he gets priority over 'C' in
respect of mortgage B only and not in respect of his own mortgage D. This shifting is
the doctrine of tacking, but, such a shifting is prohibited by T.P.Act.

S. 79 is the exception of Doctrine of Tacking.

S.79. Mortgage to secure uncertain amount when maximum is expressed:If a mortgage

made to secure future advances, the performance of an engagement or the balance of a
running account, expresses the maximum to be secured thereby, a subsequent mortgage
of the same property shall, if made with notice of the prior mortgage, be postponed to the
prior mortgage in respect of all advances or debits not exceeding the maximum, though
made or allowed with notice of the subsequent mortgage.

UNIT- III

CHARGES: S.100,101.

• When immovable property of one person is made security for the payment of money
to another person and the transaction does not amount to a mortgage, a charge is
said to be created on the property. This can take place either by act of parties or by
operation of law.

• All the provisions which apply to a simple mortgage also apply to a charge.

Page 77 of 93
 • The supra does not however apply to the charge of a trustee on the trust property,
for expenses properly incurred by him in executing the trust.

• It is pivotal to be noted that a charge cannot be enforced against property in the

hands of a person who is a transferee for consideration, without notice of a charge.

NO MERGER IN CERTAIN CASES OF SUBSEQUENT ENCUMBRANCE: S. 101

• A Mortgagee of immovable property(or any transferee from him) can purchase that
property, without causing the mortgage to be merged as between himself and any
subsequent mortgagee of the same property.

• The same rule applies to a person having charge on immovable property.

CHARGES BY ACT OF PARTIES:

• A Charge by act of parties can be created by an instrument intervivos or will. Thus a

document stating ‘I have willingly fixed an annual allowance of Rs. 100 in cash in
perpetuity out of the profit of said village for my eldest brother’ creates a valid
charge. Similarly, a will devising immovable properties and directing the devisee to
pay certain debts of testator From these properties, creates a charge in them in
respect of these debts.

CHARGES BY OPERATION OF LAW:

CHARGES by 0peration of law are based upon consideration of duty or implied

intention on the part of owner of property to make it answerable for a specific claim.

Ex:

 A Hindu widow’s charge on family Property for her maintenance, if created by a

decree. S.39

 A Vendor’s charge for unpaid purchase-money.S.55(4)(b)

 A party entitled to claim contribution u/s.82 also acquires a charge in respect

thereof.

 A Vendee’s charge for advance amount over vendor’s property. S.55(6)(B)

REQUISITES OF A CHARGE BY ACT OF PARTIES:

 A CHARGE does not contemplate any transfer of an interest in the immovable

property

 The property should be specified and it should be made security for payment of
money.

 In order to constitute a charge, the form Of words is immaterial. It is not necessary to

use any technical terms. Nathan Vs. Durga Das AIR(1931)All.62

Page 78 of 93
 A charge must be created in particular person , such person must be specifically
named.

 A charge may be created orally, although if it is created by an instrument in writing, it

must be registered, unless made by a will, or unless the amount secured is less
than 100.

 A charge cannot be created on future contingency. Mohani vs. PurnaShashi

AIR(1932)Cal.451

 A charge on future property is valid and operates on such property when it comes
into existence.

Page 79 of 93
CHALAMANA VS. SUBBAMMA (1884) 7 MAD23

A inherited an estate from his maternal grandmother and executed an agreementTo

pay his sister B. He fixed an annualsum out of rents of estate. B, has charge on the estate.

(NARAIN DHAS VS. MURALI DAS (1929) 121 I.C.81)

EXTINGUSIHMENT OF CHARGE:

 BY ACT OF PARTIES( when charge holder gives up his right).

 By novation

 By Merger.

DIFFERENCE BETWEEN CHARGE AND LIEN

CHARGE:

• A CHARGE MAY BE BY ACT OF PARTIES OR BY OPERATION OF LAW.

• IMMOVABLE PROPERTY.

• NOT POSSESSORY IN NATURE.

• CHARGE HOLDER MAY SATIFY HIS CLAIM BY SALE SUBJECT TO HIS

CHARGE

Page 80 of 93
LIEN:

• ONLY BY OPERATION OF LAW

• BOTH MOVABLE OR IMMOVABLE

• POSSESSORY IN NATURE

• CAN SATISFY HIS CLAIM BY PRIVATE SALE( RETAINING POSSESSION OF

PROPERTY)

NOTICE AND TENDER:

S. 102. Service or tender on or to agent :

Where the person on or to whom any notice or tender is to be served or made under this
Chapter does not reside in the district in which the mortgaged property or some part thereof
is situate, service or tender on or to an agent holding a general power of attorney from such
person or otherwise duly authorised to accept such service or tender shall be deemed
sufficient. Where no person or agent on whom such notice should be served can be found
or is known to the person required to serve the notice, the latter person may apply to any
court in which a suit might be brought for redemption of the mortgaged property, and such
court shall direct in what manner such notice shall be served, and any notice served in
compliance with such direction shall be deemed sufficient:

PROVIDED that, in the case of a notice required to section 83, in the case of a deposit, the
application shall be made to the court in which the deposit has been made. Where no
person or agent to whom such tender should be made can be found or is known to the
person desiring to make the tender, the latter person may deposit in any court in which a
suit might be brought for redemption of the mortgaged property the amount sought to be
tendered, and such deposit shall have the effect of a tender of such amount.

S.103. Notice, etc., to or by person incompetent to contract :Where, under the provisions of
this Chapter, a notice is to be served on or by, or a tender or deposit made or accepted or
taken out of court by, any person incompetent to contract, such notice may be served on or
by or tender or deposit made, accepted or taken, by the legal curator of the property of such
person;

But where there is no such curator, and it is requisite or desirable in the interests of such
person that a notice should be served or a tender or deposit made under the provisions of
this Chapter, application may be made to any court in which a suit might be brought for the
redemption of the mortgage to appoint a guardian ad litem for the purpose of serving or
receiving service of such notice, or making or accepting such tender, or making or taking
out of court such deposit, and for the performance of all consequential acts which could or
ought to be done by such person if he were competent to contract;

Page 81 of 93
And the provisions of order XXXII in the Schedule I to the Code of Civil Procedure, 1908 (5
of 1908) shall, so far as may be, apply to such application and to parties thereto and to the
guardian appointed thereunder.

S.104. Power to make rules: The High Court may, from time to time, make rules consistent
with this Act for carrying out, in itself and in the Court of Civil Judicature subject to its
superintendence, the provisions contained in this Chapter.

UNIT - IV
Page 82 of 93
 LEASE - SECTIONS. 105-117

DEFINITION OF LEASE:- SEC-105

LEASE is the agreement made between 2 competent parties under which the owner
of land transfers the Right of Enjoyment in immovable property to another person for a
certain duration.

1. A lease of immoveable property is a transfer perpetuity, in consideration of a ,

of a right to enjoy such property made for a certain time (express or implied), or in

• a. price paid or promised, or

• b. money

• c. a share of crops,

• d. service, or

• e. any other thing value.

2. To be rendered periodically or on specified occasions to the transferor by the transferee,

who accepts the transfer on such terms.

LESSOR, LESSEE, PREMIUM OR RENT

• In a Lease transaction, the transferor is called the lessor.

• The transferee is called the lessee.

• The price paid or promised to be paid is called the premium and the money, share
service or other thing to be so rendered is called the rent.

ESSENTIAL ELEMENTS OF LEASE:

• THE PARTIES ie. Transferor(lessor) and transferee(lessee)

• The demise ie. Right to enjoy immovable property

• The Term ie. The duration

• The Consideration ie. Premium or rent.

• Acceptance of transfer by lessee

• Lease must be made in the mode under section 107.

KINDS OF LEASES:

1. LEASE FOR FIXED TERM:

• Term for which right to use property is transferred is called as term.

Page 83 of 93
 • Term period will be specified that is- longer or shorter.

• Must be specified in deed.

• Date of commencement may depend upon future event or future date.

• Even date or day may not be necessary.

2.PERIODICAL LEASE:

• At particular time, periodical lease, need to be renewed. For example: monthly lease
etc

• It does not mean that after a month gets over lease expires, by only giving
concerned notice to lessor such a lease comes to an end.

3. PERPETUAL LEASE:

• Lease in perpetuity or life of lessee.

• The term period is the basic element of every lease, Where term period is neither
fixed nor ascertainable. Lease may be valid but must have permanency.

RAM DUAR RAI VS. LACCHMI PRASAD: AIR 1941 ALLD.51: Where tenancy had passed
through several generations, so a permanent lease may be inferred.

CHAPSIBAI VS. PURUSHOTTAM AIR (1971) S.C 1878 - Where the lease is for permanent
enjoyment, the heirs of lessee or tenant are heritable; such leases are not intended to only
life of lessee.

Mere non-expression of year in deed, does not amount to perpetual lease, but in deed it
must be expressed that even heirs of lessee shall manage, and pay rent as per market
value, tantamounts to permanent lease.

4. TENANCY AT WILL:

• At the pleasure of grantor or lessor, a lessee shall continue at demised land.

• If lessee terminates tenancy, then lessee shall check-out from property

• When lessor claims possession through notice, then lessee need to render back his
property.

• Tenancy-at-will shall be terminated either death of lessor or lessee.

5. TENANCY AT SUFFERANCE:

• Even after expiry of notice to quit by lessee, IF lessee continues to hold possession,
then such a person is called as tenant at sufferance.

• Actually tenant is not in legal possession of tenanted property.

Page 84 of 93
 • He is holding over property without right.

• Lessor shall ask him to vacate immediately, without any further notice.

S. 107- LEASE HOW MADE / IMPLEMENTED:

LEASE CAN BE ESTABLISHED EITHER BY REGISTRATION OR DELIVERY OF

POSSESSION

LEASES WHICH CAN BE MADE ONLY BY REGISTERED DEED:

 LEASES FROM YEAR TO YEAR

 LEASES FOR TERM EXCEEDING ONE YEAR

 LEASES RESERVING A YEARLY RENT.

 PERMANENT LEASES.

LEASES IN WHICH DELIVERY OF POSSESSION IS SUFFICIENT:

• LEASES FROM MONTH TO MONTH

• LEASES FOR A TERM WITHIN 1 YEAR.

• LEASES FOR THE TERM

The leases of immovable property may be made either by registration or mere

oral agreement accompanied by delivery of possession.

EFFECT OF NON-REGISTRATION:

 Where a lease is compulsarily registered, has not been registered, then such a lease
is invalid.

 a covenant for renewal contained in a lease deed, does not by ipso facto extend the
tenure of lease. If to the renewed lease, the requirements of registraiton are
compulsory, no valid lease would come into existence unless registration is made.
Hindustan Petroleum corp. Ltd. Vs. Vummidikannan A.I.R 1992 Mad. 190.

• Hyundai Motor India Ltd vs Opal Metal Engg.Pvt Ltd, AIR 2009 Del 1

Lease deed on unstamped and unregistered document cannot be looked into for any
purpose, not also for specific performance.

• RajendrapradapsinghvsRameshwarPrasad, AIR 1999 SC 37

A lease for a term exceeding one year must be through a registered instrument. But for the
validity of the instrument the signing of the instrument both by lessor and lessee is not sin
qua non. Joint execution of the instrument is sufficient for the purpose.

Page 85 of 93
 • Tata Tele services Ltd Vs State of Utter Pradesh,

• The petitioner installed towers for telephone companies. The premises (roofs of
private house) were taken on rent. The installation permitted was substantial in
nature. The space so allowed was not to be used by the owner and was to remain in
exclusive possession of the petitioner during the period of 116 months. The rent was
to be paid periodically. The agreement was held to be on of the lease and not
license.

DISTINCTION BETWEEN LEASE AND LICENCE:

LEASE:

• 1. There is transfer of an interest in the immoveable property

• 2. If during the lease period, any accretion is made property leased, such accretion is
deemed to be comprised in the lease.

• 3. It is transferable and heritable.

• 4. In lease, the lessee gets a proprietary right in respect of the land, this right is
called demise.

• 5. It cannot be revoked before the expiry of the term or without breach of any
express condition by the lessee.

• 6. A lessee is entitled to maintain a suit in his own name against trespassers and
strangers.

• 7. Death of either party does not effect a lease.

LICENSEE:

• 1. There is no transfer but the licensee acquires a right to occupy the property.

• 2. Whereas a licensee acquires no right in the property.

• 3. It is neither transferable nor heritable.

• 4. Licensee gets only a personal right of using the land of another person.

• 5. whereas, subject to certain exceptions, a license is generally revocable.

• 6. The licensee is not entitled to maintain such a suit.

• 7. whereas in such circumstances a license is terminated.

RIGHTS AND LIABILITIES OF LESSOR AND LESSEE

Page 86 of 93
 • Section 108 provides for rights and liabilities of both the lessor and lessee. These
rights and liabilities are subject to a contrary-contract.

RIGHTS OF LESSOR:

• THE LESSOR IS HAVING RIGHT TO GET HIS PREMIUM AND RENT

PERIODICALLY OR ANNUALLY.

• AFTER THE TENURE GETS OVER, LESSOR IS ENTITLED TO GET BACK HIS
POSSESSION.

• LESSOR IS HAVING RIGHT TO GRANT PERMANENT LEASE.

• LESSOR IF AGREES TO ALLOW TENANT AT WILL TO HOLD POSSESSION,

HAS RIGHT TO RECEIVE RENT FOR THAT.

LIABILITIES OF LESSOR

• 1. Duty to disclosure any latent defect in property S.108(a)

RADHA KRISHNA VS.O’FAHERTY 3 BOM. (LR) A.C 277, In this case if furniture of tenant
of a thatched house is destroyed by fire caused by a defect in the chimney not disclosed to
the tenant, the landlord would be held liable for the loss incurred by the tenant.

• 2. Duty to give possession to lessee at his request S.108(b)

• 3. Duty for Covenant for quiet enjoyment of property S.108(c)

VinayakRaoVs. Bhondu A.I.R 1942 Nag.33-if the lessor has no title to the land and a third
person does not allow the lessee to possess or continue possession of the leased property,
there is a breach of lessor’s duty to implied covenant for quiet enjoyment.

 Even if the lessee sub-leases the property to another person, such covenant also
shall pass on to transferee. The result is the sub-lessee is also entitled to the same
privilege which has been granted to lessee.

RIGHTS OF LESSEE

• 1. Right to enjoy the accretions, sec-108(d)

• 2. Right to avoid/reject lease in case of any destruction of property by fire, tempest,

flood, violence of an army or of mob or other resistible force sec- 108(e)

• 3. Right to repair property when lessor fails to do so and to deduct cost from rent,
sec- 108(f)

• 4. Right to make payments which are obligatory on lessor and to deduct such
amount from rent, sec- 108(g)

• 5. Right to remove fixtures, sec- 108(h)

Page 87 of 93
 • 6. Right to have benefit of crops, sec-108(i)

• 7. Right to assign his interest, sec-108(j)

LIABILITIES OF LESSEE:

Clauses (k) to (q) of section 108 deals with the liabilities of lessee

• 1. Duty to disclose facts materially increasing the value of property. Sec- 108(k)

• 2. Duty to pay rent or consideration of lease. Sec- 108(l)

• 3. Duty to maintain the property.Sec- 108(m)

• 4. Duty to give notice of any encroachment on the property to the lessor.Sec- 108(n)

• 5. Duty to use the property in a reasonable manner.Sec- 108(o)

• 6. Duty to erect permanent structure on the property.Sec- 108(p)

• 7. Duty to re-transfer the possession on determination of lease.Sec- 108(q)

Section 109 -Rights of lessor’s transferee:

If the lessor transfers the property leased, or any part thereof, or any part of his interest
therein, the transferee, in the absence of a contract to the contrary, shall possess all the
rights, and, if the lessee so elects, be subject to all the liabilities of the lessor as to the
property or part transferred so long as he is the owner of it; but the lessor shall not, by
reason only of such transfer cease to be subject to any of the liabilities imposed upon him
by the lease, unless the lessee elects to treat the transferee as the person liable to him:

Provided that the transferee is not entitled to arrears of rent due before the transfer, and
that, if the lessee, not having reason to believe that such transfer has been made, pays rent
to the lessor, the lessee shall not be liable to pay such rent over again to the transferee.

The lessor, the transferee and the lessee may determine what proportion of the premium or
rent reserved by the lease is payable in respect of the part so transferred, and, in case they
disagree, such determination may be made by any Court having jurisdiction to entertain a
suit for the possession of the property leased.

• DETERMINATION OF LEASE: S. 111

1. LAPSE OF TIME S. 111(A)

2. BY HAPPENING OF A SPECIFIED EVENT S. 111(B)

3. BY TERMINATION OF LESSOR’S INTEREST S. 111(C)

4. BY MERGER S. 111(D)

5. BY EXPRESS SURRENDER S. 111(E)

Page 88 of 93
 6. BY IMPLIED SURRENDER S. 111(F)

7. BY FORFEITURE S. 111(G)

8. BY EXPIRY OF NOTICE TO QUIT. S. 111(H)

Determination of lease (Section 111) .— A lease of immoveable property determines—

(a) by efflux of the time limited thereby;

(b) where such time is limited conditionally on the happening of some event—by the
happening of such event;

(c) where the interest of the lessor in the property terminates on, or his power to dispose of
the same extends only to, the happening of any event—by the happening of such event;

Atyam verraju Vs. Pecchetti Venkanma AIR (1996) SC.629: The Manager of temple leased
out property for certain purpose to one person. After his office expires, lease would not be
determined. But only upon expiry of term period,

(d) in case the interests of the lessee and the lessor in the whole of the property become
vested at the same time in one person in the same right;

Doctrine of merger :

The doctrine of merger is attracted when a leasehold and revision coincide. If the lessee
purchases the lessor’s interest, the lease is relinquished as the same person cannot at the
same time be both landlord and tenant. The doctrine of merger is based on the principle of
union of two conflicting interests which cannot be held by one person at the same time.
Therefore, the leasehold rights in favour of the appellants stand extinguished; Ramesh
Kumar Jhambh v. Official Assignee, High Court Bombay, AIR 1993 Bom 374.

(e) by express surrender; that is to say, in case the lessee yields up his interest under the
lease to the lessor, by mutual agreement between them;

(f) by implied surrender;

Illustration to clause (f):

A lessee accepts from his lessor a new lease of the property leased, to take effect during
the continuance of the existing lease. This is an implied surrender of the former lease, and
such lease determines thereupon.

Implied surrender :

There can be implied surrender, if the lessor grants a new lease to a third person with the
assent of the lessee under the existing lease who delivers the possession to such person or
where the lessee directs his sub-tenant to pay the rent directly to the lessor. Since the
respondents had by executing the agreement impliedly surrendered their leasehold rights,

Page 89 of 93
they were no longer lessees; P.M.C. Kunhiraman Nair v. C.R. NagarathaIyer, AIR 1993 SC
307.

Clause (1) of section 111(g) has no application as there was no covenant prohibiting sale or
on its breach, of the right of re-entry. Clause (2) of section 111(g) is also of no avail to the
landlord for forfeiture because there is no unequivocal and clear disclaimer of title of the
landlord. Therefore neither clause (1) nor (2) of section 111(g) are of any avail for forfeiture;
Guru Amarjit Singh v. Rattan Chand, AIR 1994 SC 227.

The statement by the tenant that he was not aware of as to who was his landlord cannot be
held to be denial of title of landlord and no eviction decree by forfeiture was granted;
Munisami Naidu v. C. Ranganathan, AIR 1991 SC 492.

In Nandlal Vs. Rangilal AIR (1981) Raj.246: Land lord rented home to a tenant. Thereafter
same Landlord made a Usufructuary mortgage with same tenant. The condition is that rent
shall be deducted for the debt to be paid by Landlord. But tenant neither paid rent nor
deducted interest from mortgage.

It has been held that the Board was entitled to institute proceedings against the tenant as
the notice period had expired; Vasant Kumar RadhakishanVora v. The Board of Trustees of
the Port of Bombay, AIR 1991 SC 14.

(g) By Forfeiture; (1) in case the lessee breaks an express condition which provides that, on
breach thereof, the lessor may re-enter

(2) in case the lessee renounces his character as such by setting up a title in a third person
or by claiming title in himself;

Muniyasamy Naidu Vs. Renganath AIR 1991. Sc.14: The Statement by tenant that he was
not aware of as to who was his landlord cannot be Held to be denial of title of landlord and
no eviction decree by for ferfeiture was granted.

(3) the lessee is adjudicated an insolvent and the lease provides that the lessor may re-
enter on the happening of such event]; and in3[any of these cases] the lessor or his
transferee4[gives notice in writing to the lessee of] his intention to determine the lease;

(h) on the expiration of a notice to determine the lease, or to quit, or of intention to quit, the
property leased, duly given by one party to the other.

112. Waiver of forfeiture:

A forfeiture under section 111, clause (g) is waived by acceptance of rent which has
become due since the forfeiture, or by distress for such rent, or by any other act on the part
of the lessor showing an intention to treat the lease as subsisting:
PROVIDED that the lessor is aware that the forfeiture has been incurred:
PROVIDED FURTHER that, where rent is accepted after the institution of a suit to eject the

Page 90 of 93
lessee on the ground of forfeiture, such acceptance is not a waiver.
S.113. Waiver of notice to quit:

A notice given under section 111, clause (h), is waived, with the express or implied consent
of the person to whom it is given, by any act on the part of the person giving it showing an
intention to treat the lease as subsisting.

Illustrations
(a) A, the lessor, gives B, the lessee, notice to quit the property leased. The notice expires.
B tenders and A accepts, rent which has become due in respect of the property since the
expiration of the notice. The notice is waived.
(b) A, the lessor, gives B, the lessee, notice to quit the property leased. The notice expires,
and B remains in possession. A gives to B as lessee a second notice to quit. The first notice
is waived.

S.114. Relief against forfeiture for non-payment of rent:

Where a lease of immovable property has been determined by forfeiture for non-payment of
rent, and the lessor sues to eject the lessee, if, at the hearing of the suit, the lessee pays or
tenders to the lessor the rent in arrear, together with interest thereon and his full costs of
the suit, or gives such security as the court thinks sufficient for making such payment within
fifteen days, the court may, in lieu of making a decree for ejectment, pass an order relieving
the lessee against the
forfeiture; and thereupon the lessee shall hold the property leased as if the forfeiture had
not occurred.

S. 114(A)- REMEDY AGAINST FORFEITURE IN CERTAIN CASES:

 THIS HAS BEEN INSERTED BY TRANSFER OF PORPERTY AMENDMENT ACT,

1929.
 IN lease, when clause of forfeiture is added along with remedy.
 If lessee commits any breach of condition, then lessor need to give notice to lessee.

NOTICE MUST CONTAIN-

1. THE Breach commited by lessee.

2. Lessee will be asked to remedy the breach committed.
3. Time limit need to be given.
4. If lessee fails to make good the loss, within stipulated time, then lessor shall take
forfeiture process.
5. If re-imburses, then lessor shall cease forfeiture process.

BUT THIS WOULD NOT BE SUITABLE FOR BREACH OF CONDITIONS SUCH AS-

A. ASSIGNMENT
B. SUB-LETTING

Page 91 of 93
 C. PARTING WITH POSSESSION
D. DISPOSING OF LEASED PROPERTY.

S. 115- EFFECT OF SURRENDER OR FORFEITURE OF UNDER LEASE:

 THE lessee (when absence of express condition ) shall sub-let it and called Under-
lease.
 S.115 does not affect under lease.

When lessee surrenders the lease or lessee has given under lease, then sub-lessee shall
render rent to original lessor.

II Para: Ex: when Lessor colluded with lessee, to give further sub-lease and had instructed
that lease premium shall be enjoyed by both of them, then under-lessee proves before
court of law, that there exist nexus between lessor and lessee, then under-lessee has right
to possess the property for the term period given under lease.

S.116-Effect of Holding over:

A, lets B for 5 year term period. B in turn lets C for Rs. 100/-per mensem. After the
expiry of 5 years, C gives rent to A is valid.

TENANT AT SUFFERENCE:

A tenant who stays in possession even after the expiration of term period.

TENANT AT HOLDING OVER:

If a tenant hold over with the consent of owner, then he is tenant at Holding over.

TENANT AT HOLDING OVER TENAN AT SUFFERANCE

1. INTEREST IN THE PROPERTY
A Tenant holding over remains in A Tenant at sufferance merely enjoys
possession with assent of lessor, and has possession of property, without having any
therefore some rights to the property. interest in property.
2.PRIVITY OF ESTATE
There is some privity of estate between a Though a tenant at sufferance is not strictly
tenant holding over and his landlord. a trespasser, in sense in which criminal law
understands it, yet there is no privity of
estate between him and landlord.
3.WHETHER HERITABLE?
YES He cannot transfer any interest in property to
anybody, nor can he transmit any right to
successors. So when a tenant at sufferance
dies, his heirs in possession of property may
be treated as trespassers.
4.NOTICE TO QUIT, IF NECESSARY
A tenant holding over cannot be ejected A tenant at sufferance is not entitled to any
without notice to quit under S.106 such notice.

Page 92 of 93
S. 117- Exemption of leases for agricultural prusose:

Thakur Kishan Singh Vs. Arvind Kumar: Madhya Pradesh Tenancy Act, doesnot
contain S.107 of Transfer of Porperty Act, will not be applicable .only local usages and Acts
will be made applicable. Agriculture menas any periodical grains, crops, vegetables, fruits
and garden products.

MahanandaVs. Mongala: Here, lease of tank is not used for agricultural purpose but rather
used only for preservation of fishes is not an agricultural lease.

Page 93 of 93