Mortgage [Section 58 - 77]

▪ Mortgage: Mortgage is the transfer in the interest in the property in the specific
immovable property for the purpose of [Defined under the Section 58 of the TPA]

o the securing of a payment of money advanced or

o to be advanced by the way of the loan

o the performance of an engagement

▪ Essentials: A mortgage is

o the transfer of an interest:

o in specific immoveable property

o for the purpose of securing the payment of money

1. Transfer of an interest:

• The Type of the interest transferred to the mortgagee, determines the type of the
mortgage that the person has been given.
• Mere agreement to create the mortgage, does not confer the mortgagee with the rights
and the interests of the property.
• These agreements only create he personal obligation to repay the loans.

2. Deals with specific immovable property:

• These essential states that the property in the mortgage, should be defined in the very
particular and specific manner and not in the general sense.
• It must deal with the immovable property only.

3. Competency of the Parties:

• Both Mortgagr and the Mortgagee must be competent to transfer of the property under
the TPA.
Case; Mathai Mathai v. Joseph Mary
It was held in this case that the minority of the parties to the mortgage deed renders the
mortgage deed as void ab initio.
CASE: State of Kerala v Cochin temple Refinries

It was held in this case that the, transaction of a mortgage doesn’t become ineffective
merely because money couldn’t be advanced on the day of mortgage

Kinds of Mortgage

(On the basis of interest that is transferred)

▪ Simple Mortgage [s 58 (b)]

▪ Mortgage by conditional sale [s 58 (c)]

▪ Usufructuary mortgage [s 58 (d)]

▪ English mortgage [s 58 (e)]

▪ Mortgage by deposit of title-deeds [s 58 (f)]

▪ Anomalous mortgage [s 58 (g)]

Simple mortgage:

Definition: Where, without delivering possession of the mortgaged property, the mortgagor
binds himself personally to pay the mortgage-money, and agrees, expressly or
impliedly, 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 the proceeds of sale to be applied, so
far as may be necessary, in payment of the mortgage-money, the transaction is called a
simple mortgage and the mortgagee a simple mortgagee.

• There is no delivery of possession.

• There is a personal obligation on the part of the mortgagor to pay the sum in debt.
• In event of the failure to make the payment of the debt, the mortgagee has the right to
cause the sale of the mortgaged property.
Mode of remedy to the mortgagee:
- Mortgagor personal obligation to pay the sum due.
- The right to sell the property in the vent of the failure to make the payment: The
person can seek the decree from the court to make the sale of the property, and
make the sale.
CASE: Ram Narayan Singh vs. Adhindra Nath

It is held all the essentials of the simple mortgage deed and also the need to compulsory
registration of all the simple mortgage deeds, irrespective of the mortgage amount.

CASE: Umesh Prasad Sharma and Anr. v. Allahabad Bank

The date of limitation in the case of the simple mortgage, when the property can be sold
by the court decree is 12 years from the date of the default.

Mortgage by Conditional Sale:

A transaction is called a “mortgage by conditional sale” and the mortgagee a “mortgagee

by conditional sale” where, the mortgagor ostensibly sells the mortgaged property:

o on condition that on default of payment of the mortgage-money on a certain date, the sale
shall become absolute, or

o on condition that on such payment being made, the sale shall become void, or

o on condition that on such payment being made the buyer shall transfer the property to
the seller.

Essential Elements:

• There should be ostensible sale of the property.

Case – Prakasam v. Rajambal – It was held in this case that the, intention of the parties
must be inferred from the nature of the condition that is made, this sale is not in absolute
in nature and is based on the condition of the payment of the debt.
• On the event of the nonpayment of the debt, the property sale shall become absolute.
• On the event of the payment of the debt, the sale shall become void.
• Such condition should be given in the same document which effects the sale.
CASE: Sopan v Syed Navi - IN this case it was held that the Sale with mere condition of
re-transfer is not a mortgage if sale and agreement to repurchase are embodied in separate
documents.
CASE: Panit Chunchun Jha v Shekh Ibadat Ali - Held in this case that the condition
of the retransfer of the property to the seller, in the event of the payment, should be in the
same document as the mortgage.
• The conditional sale mortgage is a non-possessory mortgage; thus, no delivery of
possession takes place.
• Remedy of the mortgagee is by a suit for foreclosure and not by sale., which must be
made to deliver the mortgaged property ownership and enforce the ownership right
on the event of the default.
• Registration: mandatory where the sum of money secured is Rs 100 or more.

CASE: Kamal Shivjitrao Katkar vs Garabi Sopanrao - In this case the

distinguishment between the condition to repurchase and the conditional mortgage
was made.

Mortgage by Conditional Sale Sale with the condition of repurchase

There should be a relationship between the There is no relationship between the

debtor and creditor. debtor and the creditor.

An existence of the debt is mandatory Not mandatory that the debt should exist.

Not all the interests in the property are All the interest in the property is
transferred. transferred, except if the right to
repurchase is exercised, within the time
limit.

Interest on the principal amount is No involvement of the interest in the

involved amount.

CASE: Tulsi v Chandrika Prasad - Held in this case that the, stamp duty is paid by the
transferee in the case of the sale, but in this case of the mortgage it is made by the
transferor, this is a point of distinction made, to determine the intention of the parties to
make a sale or a mortgage.

CASE: Ramlal vs Phagua - Agreement to recovery of the property, in the agreement

does not make the deed as the conditional or nominal in nature.

Usufructuary Mortgage: Section 58(d)

Where the mortgagor delivers possession or expressly or by implication binds himself to deliver
possession of the mortgaged property to the mortgagee, and authorises him to retain such
possession until payment of the mortgage-money, and to receive the rents and profits accruing from the
property or any part of such rents and profits and to appropriate the same in lieu of interest
or in payment of the mortgage-money, or partly in lieu of interest or partly in payment of
the mortgage-money, the transaction is called a usufructuary mortgage and the mortgagee
a usufructuary mortgagee.

• There is delivery of possession and the right to enjoyment is made to the mortgagee –
Not necessary that it must be made at the time of the execution of the deed.
• No personal liability of the mortgagor: Mortgagor cannot be sued for the money;
mortgagee can only retain the property of the mortgagor.
• Mortgagee cannot foreclose or sue for sale of mortgage-property. – No right to sell
the property given to the mortgagee.
• Mortgagee’s right to retain possession is for an indefinite period till the loan is repaid.
CASE: Monappa Naika v Land Tribunal Puttur
It was held in this case that the, mortgagee can only retain the possession of the property
and has no right to transfer the interest to a third party. The 3rd Party has no occupancy
rights over the property.
CASE: Saba Rayya v Subramanyam
No time period can be fixed in the mortgage, and not right to sale can be given to the
mortgagee on the default of the payment.
• Mortgagor can get the property back when the loan is paid, or the debt is discharged.
• Registration: mandatory where the sum of money secured is Rs100 or more.

CASE: Ram Narayan Singh v Adhindranath – Registration mandatory if the Amount

is more than Rs. 100.

• Remedy of the mortgagee: to retain the possession till the loan is repaid, not by sale
or foreclosure.

English Mortgage:

Essentials

• the mortgagor binds himself to repay the mortgage-money on a certain date, and
• transfers the mortgaged property absolutely to the mortgagee,

• Subject to the condition that the mortgagee will re transfer the property to the but
subject to a proviso that he will re-transfer it to the mortgagor upon payment of
the mortgage-money as agreed, the transaction is called an English mortgage.

• Registration: mandatory where the sum of money secured is Rs100 or more.

• Remedy of the mortgagee: suit for sale, not by foreclosure.

‘English Mortgage’ and ‘Mortgage by Conditional Sale’

Mortgage by deposit of title-deeds:

– Where a person in any of the specified towns

– Delivers (actual or constructive) to a creditor or his agent documents of title

to immovable property,

– with intent to create a security (it presumes the existence of a present debt or a
future debt) thereon,

– the transaction is called a mortgage by deposit of title-deeds.

• Registration: is not necessary and may be without any writing or registration.

CASE: Raj Kishore v Prem Singh – It was held in this case that the, deed in itself
should specify the intention of the parties to format an English mortgage and also
explains in detail the ingredients of the English mortgage.
Remedy:

Where the debtor (mortgagor) fails to repay, the creditor can recover his money just as a
creditor recovers the money in a simple mortgage, i.e. the security can be enforced by a
suit for a decree for the sale of the mortgaged property, not by foreclosure.

Mortgage by the deposit of Title deeds: Section 58(f).

- Also known as the equitable mortgage.

- Execution of the mortgage deed is not essential for the existence of the mortgage.

Difference between India and England –

Transfer of the title deeds will mere create the equitable security which is unenforceable
against the bonafide purchaser of the property who didn’t have any notice of the
mortgage for the value of the legal estate without notice, but in India even if the
bonfide purchaser comes in the scenario, the transfer of the title deeds has the right in
rem, thus unaffected by the right of the bonafide purchaser.

Essentials:

- There must be debt: Can be existing or any future debt.

- There must be deposit of the title deeds: Constructive delivery of the title deeds is
also valid.

CASE: Syndicate Bank vs Modern Tile and Clay Works - Copy of the title deed
cannot be considered as the valid transfer of the title deed.

CASE: Syndicate Bank v, M Sivarudrappa – The denying of the execution of the

title deeds based on the non signature of the attesting witness in the deed is a valid
ground.

- The debt must be secured by the title deeds, with the intention to create it as the
security.

CASE: Sulochna v. Pandyan Bank Ltd - Intention to create the security against a
debt. If there is no intention, an equitable mortgage cannot be created.
 CASE: Jethibai v. Putli Bai - It was held in this case that the, mere possession of
the title deeds with the existence of the debt, not enough to hold the mortgage by the
title deeds, if no intention to make the property as the security.

NGC Ltd. v. Mohd. Ghani AIR 2002 Mad 378 - The 4th essential is the territorial
restriction. Mortgage by deposit is only going to be applicable to the towns that TPA
as it is applying and any other town, by notification. Major trading towns are covered.

Anomalous Mortgage: Section 58 (g)

• A mortgage which is not a simple mortgage, a mortgage by conditional sale, a

usufructuary mortgage, an English mortgage or a mortgage by deposit of title-
deeds within the meaning of this section is called an anomalous mortgage.

Rights and Liabilities of Mortgagor

RIGHTS OF THE MORTGAGOR:

1. Right to Redemption

2. Right of transfer to a third party instead of re-transference to himself.

3. Right to inspection and production of documents

4. Right to accession
 5. Right to grant lease.

6. Right to reasonable waste.

Right of redemption (s 60)

This right can be conferred upon the mortgagor to pay the amount due at a proper place
and time and the duty of the mortgagee to

- Deliver the mortgage deed and all the documents related to the mortgaged
property.
- Deliver Possession of the property if the possession is with the mortgagee.
- Re transfer the property to the mortgagor or any third person.
- Suit to enforce these rights are called as the suit for redemption.

CASE: Ram Kishan Prasad vs Manohar Lal – Transaction of the mortgage does
not turn into the transaction of the sale by default.

CASE: Ram Kishan vs Sheo Ram – Right to redemption cannot be excluded by the
express agreement in the contract.

ENGLISH LAW: Equity of redemption, name given by the courts of equity.

Right to redemption coexists with the right of foreclosure. One ends while the other
starts.

- This right cannot be extinguished by the deed or the consent of the parties.

o Meaning and basis — legal and statutory and also based on the equity of
redemption under the English law.

Once a mortgage, always a mortgage and nothing but a mortgage: meaning

- This is a equity based by the chancery courts, to avoid the immediate sale of the
mortgage property on the day of the default.
- IN this principle, the express consent in the deed cannot lead to the absolvent of
the right to redemption.
- The mortgagor can claim its right to redemption till it has been formally foreclosed
by the suit of foreclosure.
CLOG ON REDEMPTION:

- Any provision inserted to prevent the mortgagor to claim the right to redemption
is void and considered as the clog on redemption.
- This provision must be in the mortgage deed in itself only and the parties can get
into another separate agreement, this is not void.

Instances of the Clog on Redemption:

- Where the condition of the mortgage deed makes the mortgage into a sale by
default.

CASE: Gulab Chand Sharma v. Saraswati Devi – Deed had an condition that property
would be sold if the payment was not made in the 4 years. Held as a clog.

CASE: Murlidhar vs Devkaran – In this case it was held that the, ascertainment of the
date of the payment for the mortgage, and the condition if not paid would lead to sale, is
considered as the clog on the redemption.

- Postponement of the redemption: not always void in nature, it is based on the

terms and conditions of the case in itself. Mere long term postponing the right of
the redemption cannot be a clog, until the enforcement of the right becomes
impossible. Postponement is unreasonable if bargain is
oppressive/unconscionable

CASE: Seth Gangadhar v Shankar Lal – IN this case the court set out the criteria to
look into to consider if the postponement is a clog on the right to redemption of the
mortgagor.

The court looked at the following factors:

• Amont advanced
• Nature of security
• Terms and conditions upon which money was advanced.
• Circumstances under which the money was borrowed.
 - Restraint on the Alienation: The condition that the property cannot be alienated
for the purpose of the repayment of the mortgage in itself, is also a clog on the
redemption. CASE: Hasthimal & Sons. v. P. Tejraj Sharma

- Collateral Benefit to the Mortgagor: If such benefit is derived from the deed,
than that is considered as the clog to the redemption.

CASE: Noakes v. Rice – Three principles were held in this case,

• Once a mortgage always a mortgage, mortgages are irredeemable.

• The mortgage shall not reserve to himself any collateral advantage outside the
mortgage contract.
• Any stipulation which prevents the mortgagor, who has paid the principal, interest and
costs for getting back the property is void.

CASE: Kreg Linger v. New Tatagonia Meat & Cold storage company ltd.
It was held in this case that the, collateral advantage to the mortgagee should no lead
to the following to be held as a clog to the redemption:
- Unfair and unconscionable
- In the nature of penalty clogging the equity of redemption
- Inconsistent with the equitable right to redeem.
Fulfilment of these tests, make the collateral valid in the eyes of the English law.
- Penalty to the default of the payment – Any penalty made paid on the default of
the payment is considered as a clog to the right of redemption.
CASE: Sarfaraz Singh v. Udwat Singh - In this case, the deed said that the
mortgagor will pay 5 kg of rice for every penny default. This was held as the clog to
the right to redemption as the caluse was oppressive in nature.

Extinguishment of right of redemption

▪ By act of parties

o Redemption of mortgage by mortgagor

o Foreclosure of mortgage by mortgagee u/s 67

o Sale by mortgagee u/s 68

 o Lapse of time, i.e. when the exercise of rights becomes barred by
limitation

▪ By ‘final’ decree of court

▪ Obligation to transfer to third party instead of re-transference to

mortgagor (s 60 A)

▪ Right to inspection and production of documents (s 60B)

▪ Right to redeem separately or simultaneously (s 61)

o (Equitable) Doctrine of consolidation

o Separate or simultaneous redemption

▪ Right of usufructuary mortgagor to recover possession (s 62)

▪ Accession to mortgaged property (s 63)

o Natural accession

o Acquired accession

⮚ Separable acquired accession

⮚ Inseparable acquired accession

▪ Improvements to mortgaged property (s 63A)

▪ Renewal of mortgaged lease (s 64)

o This additional term comes from the old root, and is of the same
nature, subject to the same equity of redemption..

▪ Mortgagor’s power to lease (s 65 A)

▪ Conditions for lease of mortgaged property

 ▪ Every such lease shall be such as would be made in the ordinary course of
management of the property concerned, and in accordance with any local
law, custom or usage.

▪ Every such lease shall reserve the best rent that can reasonably be obtained,
and no premium shall be paid or promised and no rent shall be payable in
advance.

▪ No such lease shall contain a covenant for renewal.

▪ Every such lease shall take effect from a date not later than six months
from the date on which it is made.

▪ In the case of a lease of buildings, whether leased with or without the land
on which they stand, the duration of the lease shall in no case exceed three
years, and the lease shall contain a covenant for payment of the rent and a
condition of re-entry on the rent not being paid within a time therein
specified.

Liabilities/Duties of the Mortgagor

▪ Implied contracts/covenants by mortgagor (s 65)

a) Covenant for title

b) Covenant for defence of title

c) Covenant for payment of public charges

d) Covenant for payment of rents

e) Covenant for discharge of prior mortgage(s)

The afore-said covenants run with land

▪ Waste by mortgagor in possession (s 66)

o Liability for waste: ‘active waste’… ‘permissible waste’/waste by

omission
 o What is insufficient security

Rights of Mortgagee

▪ Right to foreclosure or sale (s 67)

▪ Right to sue for the mortgaged money (s 68)

▪ Right to exercise power of sale, if given (s 69)

▪ Right to have receiver appointment, if power of sale is exercised (s 69A)

▪ Right to appropriate accession to mortgaged property (s 70)

▪ Right to get benefit of renewed lease if mortgaged property is lease-hold (s

71)

▪ Right to spend money in preserving the mortgaged property, if it is in

possession of the mortgagee (s 72)

▪ Right to take the proceeds of revenue sale or compensation on acquisition

of the mortgaged-property (s 73)

▪ Right to sue for the mortgaged money (s 68)

(a) where the mortgagor binds himself to repay the same;

(b) where, by any cause other than the wrongful act or default of the
mortgagor or mortgagee, the mortgaged property is wholly or partially
destroyed or the security is rendered insufficient within the meaning of
section 66, and the mortgagee has given the mortgagor a reasonable
opportunity of providing further security enough to render the whole
security sufficient, and the mortgagor has failed to do so;

(c) where the mortgagee is deprived of the whole or part of his security by
or in consequence of the wrongful act or default of the mortgagor;

(d) where, the mortgagee being entitled to possession of the mortgaged

property, the mortgagor fails to deliver the same to him, or to secure the
 possession thereof to him without disturbance by the mortgagor or any
person claiming under a title superior to that of the mortgagor:

▪ Right to exercise power of sale, if given (s 69)

A mortgagee, or any person acting on his behalf, shall, subject to the provisions of this
section, have power to sell or concur in selling the mortgaged property, or any part thereof,
in default of payment of the mortgage-money, without the intervention of the Court, in the
following cases and in no others, namely:

(a) where the mortgage is an English mortgage, and neither the mortgagor nor the
mortgagee is a Hindu, Muhammadan or Buddhist or a member of any other race, sect,
tribe or class from time to time specified in this behalf by the State Government, in the
Official Gazette;

(b) where a power of sale without the intervention of the Court is expressly conferred on
the mortgagee by the mortgage-deed and the mortgagee is the Government;

(c) where a power of sale without the intervention of the Court is expressly conferred on
the mortgagee by the mortgage-deed and the mortgaged property or any part thereof was,
on the date of the execution of the mortgage-deed, situate within the towns of Calcutta
Madras, Bombay, or in any other town or area which the State Government may, by
notification in the Official Gazette, specify in this behalf.

▪ Who may exercise power of sale

▪ Conditions for exercise of power of sale

No such power shall be exercised unless and until -

– (a) notice in writing requiring payment of the principal money has been
served on the mortgagor, or on one of several mortgagors, and default has
been made in payment of the principal money, or of part thereof, for three
months after such service; or

– (b) some interest under the mortgage amounting at least to five hundred
rupees is in arrear and unpaid for three months after becoming due.

– How the sale may be made

– Effect of sale

▪ Purchaser’s interest protected: s 69 (3)

▪ Remedy of mortgagor

▪ Appropriation of sale proceeds: s 69 (4)

▪ Discharge of prior encumbrances, if any, or after payment into Court under

section 57 of a sum to meet any prior encumbrance,

▪ In payment of all costs, charges and expenses properly incurred by him as

incident to the sale or any attempted sale;

▪ In discharge of the mortgage-money and costs and other money, if any,

due under the mortgage; and

▪ The residue of the money so received shall be paid to the person entitled
to the mortgaged property, or authorised to give receipts for the proceeds
of the sale thereof.

▪ Appointment of receiver (s 69A)

▪ Accession to mortgaged property (s 70)

▪ Right to get benefit of renewed lease if mortgaged property is lease-hold (s

71)

▪ Right to spend money in preserving the mortgaged property, if it is in

possession of the mortgagee (s 72)

▪ for the preservation of the mortgaged property from destruction, forfeiture

or sale;

▪ for supporting the mortgagor’s title to the property;

▪ for making his own title thereto good against the mortgagor;

▪ when the mortgaged property is a renewable lease-hold, for the renewal of

the lease;
 ▪ insure and keep insured against loss or damage by fire the whole or any
part of such property

▪ Right to take the proceeds of revenue sale or compensation on acquisition

of the mortgaged-property (s 73)

▪ Doctrine of substituted security

Duties/Liabilities of Mortgagee (s 76)

When, during the continuance of the mortgage, the mortgagee takes possession of the mortgaged property:

• (a) Duty to manage the property as a person of ordinary prudence: he must manage
the property as a person of ordinary prudence would manage it if it were his own;

• (b) Duty to collect rents and profits: he must use his best endeavours to collect the
rents and profits thereof;

• (c) Duty to pay rents, revenue and public charges: he must, in the absence of a contract
to the contrary, out of the income of the property, pay the Government revenue, all other
charges of a public nature and all rent accruing due in respect thereof during such
possession, and any arrears of rent in default of payment of which the property
may be summarily sold;

• (d) Duty to make necessary repairs: he must, in the absence of a contract to the contrary,
make such necessary repairs of the property as he can pay for out of the rents and profits
thereof after deducting from such rents and profits the payments mentioned in
clause (c) and the interest on the principal money;

• (e) Duty not to commit any destructive act: he must not commit any act which is
destructive or permanently injurious to the property;

• (f) Duty towards proper use of insurance money: where he has insured the whole
or any part of the property against loss or damage by fire, he must, in case of such
loss or damage, apply any money which he actually receives under the policy or so
much thereof as may be necessary, in reinstating the property, or, if the mortgagor
so directs, in reduction or discharge of the mortgage-money;
• (g) Duty to keep accounts: he must keep clear, full and accurate accounts of all sums received
and spent by him as mortgagee, and, at any time during the continuance of the mortgage,
give the mortgagor, at his request and cost, true copies of such accounts and of the
vouchers by which they are supported;

• (h) Duty to apply rents and profits: his receipts from the mortgaged property, or,
where such property is personally occupied by him, a fair occupation-rent in
respect thereof, shall, after deducting the expenses properly incurred for the
management of the property and the collection of rents and profits and the other
expenses mentioned in clauses (c) and (d), and interest thereon, be debited against
him in reduction of the amount (if any) from time to time due to him on account
of interest and, so far as such receipts exceed any interest due, in reduction or
discharge of the mortgage-money; the surplus, if any, shall be paid to the
mortgagor;

• (i) Duty to account for gross receipts after tender or deposit: when the mortgagor
tenders, or deposits in manner hereinafter provided, the amount for the time being
due on the mortgage, the mortgagee must, notwithstanding the provisions in the
other clauses of this section, account for his receipts from the mortgaged property
from the date of the tender or from the earliest time when he could take such
amount out of Court, as the case may be and shall not be entitled to deduct any
amount therefrom on account of any expenses incurred after such date or time in
connection with the mortgaged property.

• Loss occasioned by his default: If the mortgagee fails to perform any of the
duties imposed upon him by this section, he may, when accounts are taken in
pursuance of a decree made under this chapter, be debited with the loss, if any,
occasioned by such failure.
 Lease [Section 105-117]

Transfer of immovable property for specified use/enjoyment for a given time in exchange
for consideration. While there is a transfer of right of use and enjoyment; there is no
transfer of ownership. Rights of enjoyment, use and possession are transferred in a lease.
Whenever there is a transfer of right of limited interest, i.e., transfer of right of use, etc.
without ownership; it is known as demise.

Consideration need not be in form of money (can give out a service, share of crops, stocks,
etc.)

Section 105: Lease defined

A lease of immoveable property is a transfer of a right to enjoy such property, made for

a certain time, express or implied, or in perpetuity, in consideration of a price paid or

promised, or of money, a share of crops, service or any other thing of value, to be

rendered periodically or on specified occasions to the transferor by the transferee, who

accepts the transfer on such terms.

Lessor, lessee, premium and rent defined.—The transferor is called the lessor, the

transferee is called the lessee, the price is called the premium, and the money, share,

service or other thing to be so rendered is called the rent.

Essentials

i) Parties to a lease: need to be competent to contract (Competence to transfer sec. 7

applies). A person can’t grant a lease to themselves. Only an absolute owner of a property
can grant a lease for any period he likes. A limited owner can grant a lease only to the
extent permitted by law. A person holding a property for life cannot grant a lease beyond
his life unless he is especially empowered under the terms of the deed of settlement.

ii) Immovable property as the subject matter of lease: The subject-matter of a lease
must be specific immovable property. Immovable property has been defined in section 3
of this Act.
iii) Transfer of Right: In a lease, there is a transfer of right of enjoyment of property.
The right of enjoyment is transferred only when there is a transfer of possession. In
mortgage and lease, only a partial interest is transferred. Therefore, it is the transfer of a
limited estate. This limited estate, i.e., right of enjoyment of property, is known as
"demise". Leasehold estate is transferred after being separated from ownership. This is a
right in rem.

iv) Duration of Lease: The essential of a lease is that the right to enjoy the property must
be transferred for a certain time, express or implied or in perpetuity. The document of
lease must show the time-period of operation of lease and when it is going to commence.
The commencement of the lease must be certain in the first instance or capable of being
made certain afterwards. It may commence either in the present or in future or on the
happening of a certain contingency which is bound to happen.

Three types of lease are recognized by this section:—

(i) leases for a certain time

(ii) periodic leases: These are tenancies from month to month or year to year (the lease
agreement itself forgoes the stipulation of time) – nevertheless, the implied covenants
between the parties have to be examined.

(iii) leases in perpetuity: Recognised in India (not in England).

If a lease is for agricultural purposes, section 106 says that the lease will be for year to year,
in other cases it can be for month to month (in absence of contrary contract or local
custom)

v) Consideration: A lease is a transaction that has always to be supported by

consideration. Consideration may be either premium or rent. Where the whole amount
payable as consideration is paid in a lump sum, it is called a premium. The consideration
that is paid periodically is known as rent. The rent fixed must be certain and where it is
varying in nature it must be reasonably ascertainable. Rent need not be necessarily in the
form of money. It may be paid in the form of a share of crops, services or any other thing
of value.

Section 106: Duration of certain leases in absence of written contract or local usage
—(1) In the absence of a contract or local law or usage to the contrary, a lease of immovable property for
agricultural or manufacturing purposes shall be deemed to be a lease from year to year, terminable, on the
part of either lessor or lessee, by six months’ notice; and a lease of immovable property for any other purpose
shall be deemed to be a lease from month to month, terminable, on the part of either lessor or lessee, by
fifteen days’ notice.

(2) Notwithstanding anything contained in any other law for the time being in force, the period mentioned
in sub-section (1) shall commence from the date of receipt of notice.

(3) A notice under sub-section (1) shall not be deemed to be invalid merely because the period mentioned
therein falls short of the period specified under that sub-section, where a suit or proceeding is filed after the
expiry of the period mentioned in that sub-section.

(4) Every notice under sub-section (1) must be in writing, signed by or on behalf of the person giving it,
and either be sent by post to the party who is intended to be bound by it or be tendered or delivered personally
to such party, or to one of his family or servants at his residence, or (if such tender or delivery is not
practicable) affixed to a conspicuous part of the property.

➢ Lease for Agricultural or Manufacturing Purposes

Section 106 doesn’t apply to agricultural leases until there is a notification to that
effect by the State government under section 117. When there is no agreement
between the parties or local usage to the contrary, the duration of lease will be as
under:—

(1) a monthly lease or tenancy can be determined by the lessor or lessee by

(a) a notice in writing,

(b) notice must be of 15 days,

(c) the 15 days' notice must expire with the end of a month of tenancy, and

(d) the notice must be served in the manner provided in this section.

(2) A lease from year to year can be determined by the lessor or lessee by:

(a) a notice in writing,

 (b) the notice should be of six months,

(c) the notice must expire with the end of a year of the tenancy, and

(d) the notice must be served in the manner provided in the section itself.

➢ Notice to quit

The provisions of section 106 are operative only when there is no agreement
between the parties as to the determination of the lease. If any person claims to
the contrary that the lease was for a fixed term or to be a yearly lease instead of
lease from month to month, he has to prove it by legal, valid and reliable evidence.
For notice to be considered ‘waived’, acquiescence in the continuation of tenancy
is required by some overt act of the landlord. The twin requirements of a valid
notice are—(i) It should be a 15 days' notice i.e., it must give clear 15 days' time
for tenant to vacate—(ii) Notice must expire with the end of the month of tenancy.

➢ Manufacturing Purpose

CASE: PC Cheriyan v. Barfi Devi (SC): the broad test for determining whether
a process is a manufacturing process or not, is whether it brings out a complete
transformation for the old components so as to produce a commercially different
article or commodity.

➢ Tenancy at sufferance:

Term expired and notice lapsed but tenant not vacating the premises – legal fiction
of tenancy at sufferance created (to prevent tenant from being classified as a
trespasser) – incurs penalty – lessor/landlord can sue without notice and
lessee/tenant will be liable to pay losses in rent

Note: Holding over: Continuance of possession by lessee after lease expired (with
lessor’s consent) – effect is that lease gets renewed – Section 116 applies

Composite tenancy: Lease created for multiple purposes to one person – not
demarcated which portion of the land is to used for what purpose

Integrated tenancy: Dual purpose lease – demarcated within the property

 Nilesh Nand Kumar v. Sikander Aziz Patel AIR 2002 SC 3073 (Case in which
distinction made)

Section 107: Lease how made

Kinds of lease which have to be made by a registered instrument:

i) Of immovable property from year to year

ii) for a term exceeding one year

iii) Reserving rent for an entire year

iv) Permanent lease

• All other leases of immovable property can be made by registered instrument or oral
agreement coupled with delivery of possession
• The registered instrument has to be executed by both lessor and lessee.
• The state government may; by notification direct that leases other than those
aforementioned or leases in the same class as those may be made by unregistered
instrument or oral agreement without delivery of possession.
Section 108: Rights and liabilities of lessor and lessee: Rights and liabilities
provided statutorily are only applicable in the absence of a contract or local usage
to the contrary.

A. Rights and liabilities of lessor

i) Duty of disclosure - Lessor is bound to disclose to lessee any material defect in the
property w.r.t. its intended use, of which the lessee is not aware & could not discover with
ordinary care (latent defects).

ii) Duty to give possession - Bound to put lessee in possession of the property upon his
request.

iii) Covenant for quiet enjoyment - The lessor shall be deemed to contract with the lessee
that, if the lessee pays the rent reserved under the lease and performs the contracts binding
on the lessee, he may hold the property during the time limited by the lease without
interruption.
The covenant for quiet enjoyment under this clause is regarded as a covenant running with
the land so as to be enforceable by any assignee of the lessee against the lessor and his
assignee.

Rights of lessee –

i) Right to enjoy the accretions – if during the continuance of the lease any accession is
made to the property, such accession shall be deemed to be comprised in the lease.
However, such accession will be subject to the law relating to alluvion for the time in force.
– accessions are additions made to the leased property.

ii) Right to avoid lease- if by fire, tempest or flood, or violence of an army or a mob or
other irresistible force, any material part of the property is either wholly destroyed or
rendered substantially and permanently unfit for the purposes for which it was given on
lease, the lease shall be void at the option of the lessee. However, where the injury is

occasioned by the wrongful act or default of the lessee, he shall not be entitled to avoid
the lease.

iii) Right to repair property – if the lessor neglects to make any repairs which he is bound
to make to the property after notice within a reasonable time, the lessee may make the
repairs himself and deduct the expense of such repairs with interest from the rent or
otherwise recover it from the lessor. – the lessor is not bound to make repairs to the leased
property. But where he agrees at the time of the lease with the lessee that he will make the
necessary repairs then he becomes bound to make the repairs.

iv) Right to make payments – if the lessor neglects to make any payment which he is bound
to make and which, if not made by him, is recoverable from the lessee or against the
property, the lessee may make such payment himself and deduct it with interest from the
rent or otherwise recover it from the lessor. – where the lessee makes the payment which
the lessor was bound to pay like taxes, revenue, etc. – payment must not be voluntary and
it must be compulsory and the lessee must have made the payment under protest.

v) Right to remove fixtures - lessee may even after the determination of the lease remove,
at any time whilst he is in possession of the property leased but not afterwards, all things
which he has attached to the earth provided he leaves the property in the state in which he
received it.
vi) Right to have benefit of crops – where a lease of uncertain duration is determined not
due to the default of the lessee, he or his legal representatives is entitled to all the crops
growing, planted or sown by him. They have been given the right of free ingress and egress
to gather and carry the crops grown.

vii) Right to assign his interest – in absence of a contract to the contrary, the lessee may
transfer absolutely, or by way of mortgage or sub-lease the whole or any part of his interest
in the property and any transferee of such interest or part may again transfer it. The lessee
shall not, by reason only of such transfer, cease to be subject to any of the liabilities
attaching to the lease. A tenant having 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 is not entitled to assign his interest as
such tenant, farmer or lessee.

Liabilities of lessee –

i) Duty to disclose facts – lessee bound to disclose to the lessor any fact as to the nature
or extent of the interest which the lessee is about to take, of which the lessee is aware but
the lessor is not and which materially increase the value of such interest.

ii) Duty to pay rent – lessee is bound to pay or tender at the proper time and place, the
premium or rent to the lessor or his agent in this behalf. – (where the lessee could not get
possession of the whole leased property, he will have the right to claim reduction in the
rent accordingly)

iii) Duty to maintain the property – the lessee is bound to keep and on termination restore
the property in the condition in which it was let to him. Only the changes caused by
reasonable wear and tear or irresistible force are allowed under this duty. He is bound to
allow the lessor and his agents at all the reasonable time during the continuance of the
lease to enter upon the property and inspect its condition and give notice of any defect in
it. Where such defect has been caused by any act or default on the part of the lessee or his
servants or agents, he is bound to make it good within 3 months of such notice.

iv) Duty to give notice of any encroachment - if the lessee becomes aware of any
proceeding to recover the property (or its part) or of any encroachment made upon the
lessor's right or any interference with the lessor's right over such property, he is bound to
give notice of such encroachment, interference etc. to the lessor with reasonable diligence.
v) Duty to use property in reasonable way - lessee may use the property and its products
as a person of ordinary prudence would use them if they were his own. He is under duty
not to use himself or allow any other person to use the property for a purpose other than
that for which it was leased. He must not cut down the trees or sell the timber, or pull
down or damage the buildings belonging to the lessor or work mines or quarries not open
when the lease was granted or commit any act which is destructive or permanently injurious
to the property.

vi) Duty not to erect permanent structure without lessor’s consent - lessee must not erect
any permanent structure on the property without the lessor's consent except for
agricultural purposes. - Where the lessee constructs any permanent structure without the
permission of the lessor, he is bound to remove them without causing damage to the
tenanted property.

vii) Duty to re-transfer property – on determination of the lease the lessee is bound to put
the lessor into possession of the property.

Section 109: Rights of lessor’s transferee:

If lessor transfers the whole, part or any part of his interest in a leasehold property, then
the transferee shall possess all the rights of the lessor as to the property/part transferred,
and, if the lessee elects, the liabilities as well. Until the lessee elects to make the lessor’s
transferee subject to the liabilities, the lessor shall remain subject to all the liabilities under
the lease. [In absence of contract to the contrary]

The transferee isn’t entitled to arrears of rent due before the transfer, and if the lessee pays
rent to the lessor, without reason to believe that lessor has made a transfer, he shall not be
obligated to pay rent again to the transferee.

The proportion of premium to be payable in respect of transferred property/part thereof,

may be determined by the lessor, lessee and the transferee; and, if they can’t come to a
consensus, such decision may be made by a court having jurisdiction to hear a suit for the
possession of the leasehold property.

Section 110: Exclusion of day on which term commences

Where the time limited by a lease of immovable property is expressed as commencing from
a particular day, in computing the period of lease, such day shall be excluded. But where
no such day of commencement is named, the time of the lease will begin to run from the
time of its execution. In absence of an express contract to the contrary, in the case of a
lease for a year or a number of years, the lease shall last during the whole anniversary of
the day from which such time commences.

Where the lease is made to terminate before the expiry of the term but it is not specified
at whose option it is to terminate, then in such a case, the lessee shall have the option to
terminate, not the lessor.

Section 111: Determination of lease

Modes in which lease can be terminated:

1. By efflux of time: where the term of lease is fixed, the lease determines after the expiry
of the time period automatically. The lease terminates on the last day of the time period of
the lease and the lessor becomes entitled to take possession of the leased property. – no
notice is required in such case.

2. By happening of some event: where the lease contains that the lease will terminate on
the happening of some event, it will terminate on the happening of that event. So long as
such event does not happen, the lessee will be entitled to the possession of the leased
property.

3. By termination of lessor’s interest in property: lease determines where the interest

of the lessor in the property terminates or his power to dispose of the same extends only
to the happening of any event, by the happening of such event. – where lessor has only
limited interest or power to grant a lease, the lease is determined with the loss of that
interest, ex- a lease by a hindu widow who is entitled only to a life estate determines on her
death.

4. By merger: lease determines in case the interests of the lessee and lessor in the whole
of the property become vested at the same time in one person in the same right. – it is
necessary for a merger that two immediate estates should come into the hands of the same
person at the same time and in respect of the whole property. – the effect of merger is that
a limited interest becomes crystallized into absolute ownership.
Merger – doctrine of merger contemplates:

- Coalescence of the interest of the lessee and the interest of the lessor, in the whole of the
property

- At the same time

- In one person

- In the same right

There must be a complete union of the whole interests of the lessor and lessee so as to
enable the lesser interest of the lessee sinking into the larger interest of the lessor in the
reversion. – where a leasehold and a reversion coincide, there is a merger of lesser estate
in the greater. – the doctrine does not apply in cases of part purchases. – necessary for a
union of two unequal interest in the same property.

In order to bring the tenancy to an end the merger should be complete, i.e., the interest of
the landlord in its entirety must come to vest and merge into the interest of tenant in its
entirety. When part of the interest of the landlord or the interest of one out of many
landlords-cum-co-owners comes to vest in the tenant, there is no merger and the tenancy
is not extinguished.

The principle behind this is that a person cannot both be landlord and a tenant at the same
time. – nemo potest esse tenens et dominus

5. By surrender (e and f read together): lease terminates by express surrender – in case

the lessee yields up his interest under the lease to the lessor, by material agreement between
them. Surrender is counterpart of merger. In merger, the tenant acquires the reversion
whereas in surrender, the landlord acquires the lease. Surrender = yielding up of the term
of lease + delivery of possession.

– it can be expressed or implied - implied can be by operation of law and conduct of the
parties. – can also be done orally, need not be in writing.
- Operation of laws – lessor and lessee fresh lease on different terms – same property and
persons but fresh deed so the original deed expires. Mining example – after 2 years fresh
lease deed where I will be producing some crops, in such a case the first lease deed will be
determined = because the land is not getting affected so the first deed can still subsist –
because the second lease will not affect operation of the first lease hence it might not be
determined

- 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 former lease.

6. By forfeiture: lease terminates if:

- Lesse breaks on express condition which provides that on such breach the lessor may re-
enter

- Lesse renounces his character as such by setting up a title in a third person or by claiming
title in himself – when the lessee denies the lessor’s right and sets up a title in himself or
in third person. Here the lessee denies his lessor’s title and asserts that he or some third
person is the true owner.

- Lessee is adjudicated insolvent and lease provides that the lessor may re-enter on
happening of such event

In any of these cases, the lessor or his transferee gives notice in writing to the lessee of his
intention to determine the lease.

7. On expiration of notice to quit: lease may determine on the expiration of a notice to

determine the lease, or to quit, or of intention to quit, duly given by one party to the other.
– periodic leases are terminated by notice to quit, ex- month to month, year to year. No
notice is necessary in case of lease for fixed terms.

Section 112: Waiver of forfeiture

a forfeiture is waived by lessor-

- By acceptance of rent which has become due since the forfeiture

- By distress for such rent (lawful extrajudicial seizure of the chattels to enforce the
payment of rent)
- By any other action on the part of the lessor showing an intention to treat the lease as
subsisting

The above stated rule will become applicable only if the lessor is aware that the forfeiture
has been incurred.

If the rent is accepted after the institution of a suit to eject the lessee on the ground of
forfeiture, such acceptance doesn’t amount to waiver.

Section 113: Waiver of notice to quit

notice u/s 111 (h) can be waived by:

- The express or implied consent of the person to whom the notice was given

- In so far as the person who gives notice, there must be an act showing the intention to
treat the leases as subsisting.

Section 114: Relief against forfeiture for non-payment of rent

where the lessor had filed a suit for ejectment of the lessee from the leased property. In
such situation- if at the hearing of the suit the lessee pays or tenders to pay the arrears of
rent together with interest, compensation the court may, instead of passing a decree of
ejectment, pass an order relieving the lessee from the forfeiture. The court may order the
lessee to continue in possession after making payment of arrears of rent, compensation,
and cost of the suit or giving such security as the court thinks sufficient for making such
payment within 15 days.

Section 114A: Relief against forfeiture in certain other cases

where lease is determined by forfeiture for a breach of an express condition, no suit for
ejectment shall lie unless the lessor has served on the lessee a notice in writing-

- Specifying the particular breach complained of

- if the breach is capable of remedy, requiring the lessee to remedy the breach, and the
lessee fails, within a reasonable time from the date of the service of the notice, to remedy
the breach, if it is capable of remedy

does not apply to the breach of conditions against-

- assignment

- sub-letting

- parting with possession

- disposing of the property

- express condition relating to forfeiture in case of non-payment of rent

Section 115: Effect of surrender and forfeiture on under leases

surrender of lease (express/implied) by a lessee does not affect under-lease of that property
or any part of it which has been granted to sub-lessee on the terms and conditions
substantially the same as the original lease (except rent). If the lease is surrendered for the
purpose of obtaining a new lease, the interest of the sub-lessee shall cease – rent
payable/contracts binding on under-lessee be enforceable by the lessor.

The forfeiture of a lease extinguishes all the under-leases except where such forfeiture has
been procured by the lessor in fraud of the under-lessees or relief against forfeiture has
been granted u/s 114.

Section 116: Effect of holding over: If a lessee or under-lessee of property remains in

possession thereof after the determination of the lease granted to the lessee, and the lessor
or his legal representative accepts rent from the lessee or under-lessee, or otherwise assents
to his continuing in possession, the lease is, in the absence of an agreement to the contrary,
renewed from year to year, or from month to month, according to the purpose for which
the property is leased, as specified in section 106.

Section 117: Exemption of leases for agricultural purposes

Leases for agricultural purposes have been exempted from the provisions of this Chapter.
The State Government may by notification in the Official Gazette make applicable all these
provisions or some of them to all or some of such leases. However, such application will
be together with or subject to the provisions of the local law, if any, for the time being in
force. Such a notification will take effect after the expiry of six months from the date of
its publication.
 LEASE LICENCE

Transfer of the interest in immovable No transfer, but acquires a right to occupy the property
property

Any accretion made to the property Licensee acquires no right in the property
during lease-period is deemed to be
comprised in the lease

Transferable and heritable Neither transferable nor heritable because it is a personal

privilege

Lessee gets proprietary right in respect of Right of the licensee is in the nature of a permission to do
the land, called demise or continue to do certain things on the licensor’s land-
licensee gets only personal right

Cannot be revoked before expiry of the Subject to certain exceptions, licence is generally
term or without breach of express revocable. Licensee not entitled to notice.
condition. Lessee is entitled to a notice
to quit before eviction

Lessee entitled to maintain suit in his Licensee not entitled

own name against trespasser

Lessee’s interest not liable to be defeated License determined when grantor makes an assignment
by subsequent transfer of leased of subject-matter of the license
property

Death of either party does not affect In such circumstances a license is terminated
lease
 Exchanges (Chapter VI, ss 118-121)

▪ When two persons mutually transfer the ownership of one thing for the ownership of
another, neither thing or both things being money only, the transaction is called an
“exchange”. (s 118)

A transfer of property in completion of an exchange can be made only in manner

provided for the transfer of such property by sale.

Definition: Transfer of the ownership of one thing for the ownership of some other thing,
is called an exchange.

These provisions are applicable to both movable and immovable property.

Oral Transfer through exchange is not allowed due to the Section 49 of the Registration
Act.

▪ Chief characteristic features:

o Mutual transfer of ownership in properties, with the absolute interests in

the both of the properties.

o No consideration besides the properties

o Properties need not be immovable.

o Exchange includes barter.

o Mode of transfer: The mode of transfer used under the Sale is followed in
the exchange, as under Section 54 of the TPA.

When one of the party has not received the title of the property he was
supposed to get, then he has the right to get the property he had transferred
to be returned.

o Deed of exchange must be a valid contract.

▪ Right of party deprived of thing received in exchange (s 119)

This section deals with a contingency in which one of the parties to the exchange is
deprived of the property received to him due to the defect in the title. There is a inherent
covenant on the good title of the property.

Remedies of the party with the defective title:

- Claim for compensation to the loss suffered.

- Take back the property transferred by him.
o This option can only be claimed by the deprived party in the following
situations:
▪ Where the property is in possession of the other party
▪ Where the property is in the possession of the legal representative
of the other party.

▪ Rights and liabilities of parties (ss 120)

o Rights and liabilities of parties are same as those of seller and buyer under
the sale, as in this scenario both the parties are both buyers and sellers.

▪ Exchange of money (s121)

o Money transferred in exchange of money is also a valid exchange in the

eyes of law. The money transferred must be genuine and not fake in the
nature.

▪ Registration:

o Deeds above the amount of Rs 100, has to be compulsory registered to

validate the transfer.

Diff between sale and exchange:

▪ Legislature almost put both of them on the same footing. Difference lies in the
consideration. In sale, transfer of ownership is for money whereas in the case of
exchange, transfer of ownership of property is for ownership of any other
property. In a sale, there is always a price but in exchange, there is no price.
Exchange Partition
 mutual transfer of ownership of two persons mere arrangement by which the several co-
in two different properties. owners hold the property separately which
they held in common previously.
Exchange is brought about by a contract a natural incident of property, there is no need
between the parties. to enter into a contract for that purpose
the parties exchanging their properties had no each party has as much interest in the entire
interest in each other's property before property as the other. There is no exclusive
exchange. ownership in the case of partition.

GIFTS (S. 122-129)

Section 122 defines gifts – “Gift is the transfer of certain existing moveable or
immoveable property made voluntarily and without consideration, by one person, called
the donor, to another, called the donee, and accepted by or on behalf of the donee.” Such
acceptance must be made during the lifetime of the donor and while he is still capable of
giving. If the donee dies before acceptance, the gift is void.

Elements:

1. There must be transfer of ownership

o It is permissible to make conditional gifts of property also but the condition
must not be repugnant to any of the provisions of sections 10 to 34 of the Act.
o Absolute interest is transferred
o Deed which has the element of both gift and the will, must be registered and
also it cannot be ceased to be called as the will.
2. Donor (must be competent to contract) = completely divests himself of all the
rights he has and it vests with the donee (anyone in existence at time of transfer)
3. Property must be in existence - when transfer taking place (S. 124 and S. 6)
o A gift of a future property is void - In the same deed if it deals with both present
and a future property, the part dealing with the future property will become void,
with the application of the doctrine of severance.
o An existing property’s conveyance might be in present or in future.
o A mortgaged or leased immovable property may be gifted.
 4. Transfer must be without consideration and voluntary:
o The Property must be transferred by the donor voluntarily, i.e with free will and
consent. Should not be under undue influence [Section 16 ICA] or coercion [Ss.
15 ICA]
o Pecuniary considerations not allowed, that is it should not include any kind of
consideration, which is defined under Section 2(d) of the ICA.
o Love and affection not part of consideration
o Where the transaction is unconsionable, burden of proving that contract was not
influenced by undue influence lies upon the person who is in the dominating
position. (ex – a devotee gifting his entire property to guru will be an invalid gift,
due to the guru’s influential position)
5. Acceptance by Donee
o Gifts crucial element is acceptance – Gift is not a unilateral transaction, as with the gift
of a property, the liabilities of the property also transfer to the donee. Gift is a bilateral
transaction between two living persons.
o Acceptance of the gift can be made my express or implied mode.
o Where the done is not competent to contract, thus the property can be accepted on
his behalf by the legal guardian of the child or a person of unsound mind.

Age of discretion: 16 to 18 – child of sufficient age and understands the basic concepts –
in case the donor is the natural guardian and there is a silent acceptance and the court
regards it as implied acceptance and now the child can’t say he didn’t know

The person whom we are giving the property must be ascertainable or in existence or
specific (If u say you want to gift the property to public at large – that is void.)

Interest of child is of paramount importance – without courts’ intervention, the child can’t
transfer the property – only when he is major he can dispose off the property,

S 123 – Transfer how effected

o Gift of Immovable property Must be effected by a registered instrument signed by

the donor and attested by 2 witnesses. (valid registration), this registration must be
done by the donor.
o Compulsory registration is required in case of gifts
o Any oral gift of immovable property cannot be made in view of the provisions of this
section because mere delivery of possession without written instrument cannot confer
any title. A religious endowment does not create a title in the property, hence, not gift.
This superseded the Hindu personal law, as In there delivery of possession is the sine
qua non.
o If registration done and then the donor dies – still it can be enforced – the gift deed
remains enforceable subject to all the conditions validly placed (S. 10-34)
o Gift of movable property: Effected in 2 ways – 1. By a registered document signed
by the donor and attested and 2. Delivery of possession

S. 124 – Gift of existing or future property

o Gift comprising both the existing and future property is valid for existing property but
void for future property as it is a promise to be performed in future and since without
consideration, it is void and unenforceable.

Section 125 – gift to several of whom one doesn’t accept

Gift may be made to two or more persons jointly. For the validity of the gift it is necessary
that it must be accepted by all the donees. Each donee must separately accept the gift – if
one of them doesnt accept – it becomes void to the extent of that person – and whoever
accepts, it will be valid.

Section 126 – when a gift may be suspended or revoked

A deed of gift once executed & registered cannot be revoked unless shown that mandatory
requirements of the section were not complied with. A gift once made is irrevocable except
-

1. There is a mutual agreement between the donor and the done that on the
happening of a certain event, property will revert back to the donor – {this happening
must not be on the will of the donor or in the control of the donor} – Even the contract to
the contrary cannot have a condition which is in control of the donor.
2. Revocation by rescission – wherever there is an express breach, we rescind the
contract, similarly the same principles apply and the gift can be rescinded
o Any condition must not necessarily form part of the gift deed – a simple gift deed can
be made and then in an ancillary doc I list down all the conditions if part of same
transaction.
o S. 126 protects rights of subsequent bona fide transferee.
o Recission can be done under the Section 19 of the ICA. [These circumstances make
the contract as voidable.]
o Coercion
o Undue Influence
o Fraud
o Misrepresentation

Exception to 126 - if the gift property has passed into the hands of a transferee from the
donee without notice of right of revocation or suspension but for value, the right of
revocation or suspension cannot be exercised against him.

There are 2 kinds of gifts:

1. Void gifts – unlawful purpose, impossible conditions precedent or forbidden

conditions by law, incompetent donor, donee dies before acceptance of gift, future
property
2. Onerous gifts (section 127)

Section 127 – Onerous gifts:

• A gift is onerous when it is accompanied with a burden or obligation.

• Maxim: Qui setit commodum sentire debetet onus – one who accepts the
benefit of a transaction must also accept the burden of it.
• This maxim tells that in a single transaction where the donor is gifting multiple
properties, the donee either has to accept the gift in whole or not do it at all.
• If the gift is in the form of the two or more separate transfers to the same person,
the donee is at the liberty to accept and pick and choose accordingly.
• Disqualified People – then on their behalf the guardians accepted – as soon as they
let go of the Disqualification – there we can accept. When an onerous gift is made
to an incompetent or disqualified donee, for example, a minor, he has a right to
reject or repudiate the gift on attaining competency i.e., majority.
Section 128 –

• Universal donee is such a person who gets the whole property of the donor under
a gift. Both movable as well as immovable properties of the donor are given in a
gift to him. That person has then with the gist, has to take up all the liabilities of
the properties of the donor.
• English Law does not recognise the concept of universal donee.
• If the donor retains a very small part of the property, the donee will still be
considered as the universal donor.

Section 129 – Gifts doesn’t apply to mohamaddean law and mortis causa

• Moritus Causa: Gifts which are made in the contemplation of the death, is called the
donates mortis causa, these does not come under the purview of the Gifts under the
TPA.
 ACTIONABLE CLAIMS (S. 130-137)

Definition of actionable claim: According to Ss. 3 [Interpretation clause]

a. any debt, other than a debt secured -

1. by a mortgage of immovable property, or
2. by hypothecation or pledge of movable property, or
b. any beneficial interest in movable property - not in the possession (either actual or constructive) of the
claimant

Which claim the Civil Courts recognise as affording grounds for relief whether such debt or beneficial interest
be existent, accruing, conditional or contingent.

Two components of actionable claim:

1. Any debt, not secured by the mortgage or pledge.

- Debt is the sum of money which is payable or will become payable in future
by the reasons of a present obligation is an debt.
- Debt can be of existent, accruing or conditional in nature.

2. any beneficial interest in the movable property.

In English law, moveable property is divided in two parts – the first is chose-in-possession
(eg – refrigerator, TV, car etc.) which contains all the tangible property and the other is
chose-in-action which contains intangible incorporeal property which contains claims of
money, arrears, rents etc. when we talk about actionable claim, it has no relation with
immovable property, only movable property.

Section 130 – Transfer of the Actionable Claim.

Elements:

1. Claim must relate to a movable property.

2. Such movable property must be in possession of another person
3. The beneficial interest or the right of possession of the claimant should be
recognized in the civil court.
• Transfer of the actionable claim, both with and without consideration is considered to
be the effected by the execution of the instrument in writing and signed by the
transferor.
• For the assignment of the NPAs, TPA does not apply and these are under the RBI
Guidelines.
Effect of Assignment:
- After the execution and the signing of the document, all rights and remedies
of the transferor are vested with the assignee, and the assignee then can claim
the debt and also sue for the same.
EXCEPTION: Does not apply to the transfer of the marine or fire policy of insurance
or affect the provision of section 38 of the Indian Insurance Act.

Section 131: Notice

• Notice of the assignment of the actionable claim must be made to the debtor.
• Notice is not an essential element to validate the assignment, but until the notice is not
given, the dealings of the debtor with the creditor shall be protected.
• Must have the name and address of the assignee.

Section 132: Liability of the transferee of the actionable claim.

- After the assignment of the actionable claim, all the rights and liabilities of the
assignor are transferred to the assignee.
- The assignee cannot get any better title, than the assignor. Nothing more or
less.

Section 136 – Incapacity of certain people to be parties in actionable claim.

- Legally disqualified persons – Judge, Legal Practitioner or any person

connected to the court of justice.
- No court will enforce such actionable claim.
- They cannot buy or deal with other person actionable claims, but they can sell
their actionable claim.