BASIC COMPONENTS OF DEEDS

Having understood, the meaning of drafting and

conveyancing it is necessary to familiarise with
various terms such as deeds, documents,
indentures, deed poll etc. These terms are
frequently used in legal parlance in connection with
drafting and conveyancing. Out of these, the
meaning of deeds and documents, have a common
link, and used in many a time interchangeably, but
it is very essential to draw a line in between.

Deed
In legal sense, a deed is a solemn document. Deed
is the term normally used to describe all the
instruments by which two or more persons agree to
effect any right or liability. To take for example Gift
Deed, Sale Deed, Deed of Partition, Partnership
Deed, Deed of Family Settlement, Lease Deed,
Mortgage Deed and so on. Even a power of Attorney
has been held in old English cases to be a deed. A
bond is also included in the wide campass of the
term deed.
For such an instrument covering so wide field it is
difficult to coin a suitable definition. A deed may be
defined as a formal writing of a non-testamentary
character which purports or operates to create,
declare, confirm, assign, limit or extinguish some
right, title, or interest. Many authorities have tried
to define the deed. Some definitions are very
restricted in meaning while some are too extensive
definitions. The most suitable and comprehensive
definition has been given by Norten on ‘Deeds’ as
follows:
A deed is a writing –
(a) on paper, vallum or parchment,
(b) sealed, and
(c) delivered, whereby an interest, right or property
passes, or an obligation binding on some persons is
created or which is in affirmance of some act
whereby an interest, right or property has been
passed.
In Halsbury’s Laws of England, a deed has been
defined as “an instrument written on parchment or
paper expressing the intention or consent of some
person or corporation named therein to make
(otherwise than by way of testamentary disposition,
confirm or concur in some assurance of some
interest in property or of some legal or equitable
right, title or claim, or to undertake or enter into
some obligation, duty or agreement enforceable at
law or in equity or to do, or concur in some other
act affecting the legal relations or position of a
party to the instrument or of some other person or
corporation, sealed with the seal of the party, so
expressing such intention or consent and delivered
as that party’s act and deed to the person or
corporation intended to be affected thereby.
A deed is a present grant rather than a mere
promise to be performed in the future. Deeds are in
writing, signed, sealed and delivered.
Deeds are instruments, but all instruments are not
deeds.
 A deed is an instrument written, signed and handed
over by one person, known as the grantor (seller),
that transfers ownership of the real property to
another person, known as the grantee (buyer). In
other words, a deed is a signed legal document that
grants the guarantee of certain rights over an
object, allowing them to own it.

Document
“Document” as defined in Section 31(18) of General
Clauses Act, 1894 means any matter expressed or
described upon any substance by means of letters,
figures or marks, or by the more than one of those
means, intended to be used, or which may be used,
for the purpose of recording that matter.
Illustration:
A writing is a document.
Words printed, lithographed or photographed are
documents.
A map or plan is a document.
An inscription on a metal plate or stone is a
document. A caricature is a document. Thus
document is a paper or other material thing
affording information, proof or evidence of
anything.
All deeds are documents. But it is not always that all
documents are deeds. A document under seal may
not be a deed if it remains undelivered, e.g. a will,
an award, a certificate of admission to a learned
society, a certificate of shares or stocks and share
warrant to bearer, an agreement signed by
directors and sealed with the company’s seal,
license to use a patented article, or letters of co-
ordination.

Various Kinds of Deeds

Particular statutory definitions cover different sets
of deeds. In the re-statement of American Law in
Corpus Juris Secundum, the following kinds of
deeds have been explained:
A good deed is one which conveys a good title, not
one which is good merely in form.
A good and sufficient deed is marketable deed; one
that will pass a good title to the land it purports to
convey.
An inclusive deed is one which contains within the
designated boundaries lands which are expected
from the operation of the deed.
A latent deed is a deed kept for twenty years or
more in man’s escritoire or strong box.
A lawful deed is a deed conveying a good or lawful
title.
A pretended deed is a deed apparently or prima
facie valid.
A voluntary deed is one given without any “valuable
consideration”, as that term is defined by law, one
foundedmerely on a “good”, as distinguished from a
“valuable”, consideration on motives of generosity
and affection,
rather than a benefit received by the donor, or,
detriment, trouble or prejudice to the grantee.
A warranty deed is a deed containing a covenant
of warranty.
A special warranty deed which is in terms a
general warranty deed, but warrants title only
against those claiming by, through, or under the
grantor, conveys the described land itself, and the
limited warranty does not, of itself, carry notice of
title defects.
In India, some of the important types of deeds
are:
1.Sale Deed.
2.Mortgage Deed.
3.Lease Deed.
4.Gift Deed.
5.General Warranty Deed.
6.Special Warranty Deed.
7.Adoption Deed.
8.Quitclaim Deed.
9.Trust Deed.
10. Court Order Deeds.
11. Fiduciary Deed.
 12. Grant Deed.
13. Conveyance Deed.
14. Deed of Power of Attorney.
15. Relinquishment Deed.

Validity of deed
Historically, for an instrument to be a valid deed,
following things were necessary:
(i) It must indicate that the instrument itself
conveys some privilege or thing to someone.
(ii) The grantor must have the legal ability to grant
the thing or privilege.
(iii) The person receiving the thing or privilege must
have the legal capacity to receive it.
(iv) The instrument must be sealed. Although this
requirement has been eliminated by most
jurisdictions and replaced with signature of the
grantor, however for conveyance of real estate and
executed for Government, most jurisdictions require
the deed to be acknowledged before a notary public
or a civil law notary and some may additionally
require witness(es).
(v) It must be delivered to and accepted by the
recipient.
(vi) There must be witness(es) that also signs the
deed under their name(s) and address(es)
Some other terms connected with deeds are of
importance of general legal knowledge. These terms
are mentioned herein below:
(i) Deed Pool
A deed between two or more parties where as many
copies are made as there are parties, so that each
may be in a possession of a copy. This arrangement
is known as deed pool.
(ii) Deed Poll
A deed made and executed by a single party e.g.
power of attorney, is called a deed poll, because in
olden times, it was polled or cut level at the top. It
had a polled or clean cut edge. It is generally used
for the purpose of granting powers of attorney and
for exercising powers of appointment or setting out
an arbitrator’s award. It is drawn in first person
usually.
(iii) (a) Indenture – Indenture are those deeds in
which there are two or more parties. It was written
in duplicate upon one piece of parchment and two
parts were severed so as to leave an indented or
vary edge, forging being then, rendered very
difficult. Indentures were so called as at one time
they are indented or cut with uneven edge at the
top. In olden times, the practice was to make as
many copies or parts as they were called, of the
instruments as they were parties to it, which parts
taken together formed the deed and to engross all
of them of the same skin of parchment.
(b) Cyrographum – This was another type of
indenture in olden times. The word “Cyrographum”
was written between two or more copies of the
document and the parchment was cut in a jugged
line through this word. The idea was that the
difficulty of so cutting another piece of parchment
that it would fit exactly into this cutting and writing
constituted a safeguard against the fraudulent
substitution of a different writing for one of the
parts of the original. This practice of indenting
deeds also has ceased long ago and indentures are
really now obsolete but the practice of calling a
deed executed by more than one party as an
“indenture” still continues in England.
(iv) Deed Escrow
A deed signed by one party will be delivered to
another as an “escrow” for it is not a perfect deed.
It is only a mere writing (Scriptum) unless signed by
all the parties and dated when the last party signs
it. The deed operates from the date it is last signed.
Escrow means a simple writing not to become the
deed of the expressed to be bound thereby, until
some condition should have been performed.
(Halsbury Laws of England).
Components of Deeds
As explained what is a deed, it is now appropriate to
know more about drafting of Deed as a document.
Out of various types of deeds, Deeds of Transfer of
Property is the most common one. Deeds of
Transfer include Deed of Sale, Deed of Mortgage,
Deed of Lease, Deed of Gift etc. These deeds effect
a transfer of property or interest.
A deed is divided into different paragraphs. Under
each part relevant and related information is put in
paragraph in simple and intelligible language as
explained in the earlier chapter. If a particular part
is not applicable in a particular case that part is
omitted from the document.

The usual parts or components or clauses of deeds

in general are mentioned as follows:
(1) Description of the Deed Title.
(2) Place and Date of execution of a Deed.
(3) Description of Parties to the Deed.
(4) Recitals.
(5) Testatum.
(6) Consideration.
(7) Receipt Clause.
(8) Operative Clause.
(9) Description of Property.
(10) Parcels Clause.
(11) General Words
(12)Exceptions and Reservations.
(13) Premises and Habendum.
(14) Covenants and Undertakings.
(15) Testimonium Clause.
(16) Signature and Attestation.
(17) Endorsements and Supplemental Deeds.
(18) Annexures or Schedules.
The above parts of the deeds are described as
under:

1. Description of the Deed Title

The deed should contain the correct title such as
“This Deed of Sale”, “This Deed of Mortgage”, “This
Deed of Lease”, “This Deed of Conveyance”, “This
Deed of Exchange”, “This Deed of Gift” etc. These
words should be written in capital letters in the
beginning of document. Where it is difficult to
locate the complete transaction out of number of
transactions covered under the deed, it may not be
possible to give single name to the deed like ‘Deed
of Gift’ and as such it would be better to describe
the deed as “This Deed” written in capital letters
like “THIS DEED”.
This part hints the nature of the deed and gives a
signal to the reader about the contents of the Deed.
Sometimes a question may arise whether a
particular instrument or document is a deed of
conveyance of transfer. To ascertain the nature of
the document it becomes necessary to read the
language of the document and locate the intention
of the parties which is the sole determining factor.
Besides the intention of the parties, consideration
paid for conveyance is another important aspect in
assessing the document as a conveyance.
Consideration may be paid initially or may be
agreed to be paid in future also. However, in those
cases where any condition is stipulated as
precedent to the title being passed on to the
purchaser then the document does not become
conveyance unless the condition is performed. The
document may be couched in ambiguous terms then
the interpretation of the wordings would throw light
on the intention of the parties so as to treat a
particular document as conveyance or contract or
otherwise.

2. Place and Date of Execution of a Deed

· We first highlight the importance of “date”.
· The date on which the document is executed
comes immediately after the description of the
deed.
· For example, “This Deed of Mortgage made on
the first day of January, 1986”. It is the date of
execution which is material in a document for
the purpose of application of law of limitation,
· Date of execution of document is inscribed on
the deed.
· The date is not strictly speaking an essential
part of the deed.
· A deed is perfectly valid if it is undated or the
th
date given is an impossible one, e.g. 30 day of
February.
· If no date is given oral evidence will always be
admissible to prove the date of execution only it
leaves necessary to prove it.
· However, it is of great importance to know the
date from which a particular deed operates.
· In India there is a short period of 4 months
(Section 23 of Registration Act) for its
registration from the date of execution within
which a deed must be presented for
registration.
· The date is important for application of law of
limitation also.
· In view of the extreme importance of date of
execution of deed it should be regarded as an
essential requirement.
· The date of deed is the date on which parties
sign or executing it.
· If several parties to a deed sign the deed on
different dates, in such cases, the practice is to
regard the last of such dates as the date of
deed.
· In order to avoid mistake and risk of forgery,
the date be written in words and in figures.
· The place determines the territorial and legal
jurisdiction of a document as to its registration
and for claiming legal remedies for breaches
committed by either parties to the document
and also for stamping the document, as the
stamp duty payable on document differs from
State to State. An Illustration of this part
follows:
“This Deed of Lease made at New Delhi on the First
day of December One Thousand Nine Hundred and
Eighty Eight etc.

3. Description of Parties
 The basic rule is that all the proper parties to
the deed including inter-parties should be
properly described in the document because
inter-parties are pleaded as they take benefit
under the same instrument.
 While describing the parties, the transferor
should be mentioned first and then the
transferee.
 Where there is a confirming party, the same
may be placed next to the transferor.
 In the order of parties, transferee comes in the
last.
 Full description of the parties should be given to
prevent difficulty in identification.
 Description must be given in the following
order:
 Name comes first, then the surname and
thereafter the address followed by other
description such as s/o, w/o, d/o, etc. It is
customary to mention in India caste and
occupation of the parties before their residential
address.
 However, presently mention of caste is not
considered necessary.
 But to identify the parties if required under the
circumstances, it may be necessary to mention
the profession or occupation of a person/party
to the deed. For example, Medical Practitioner,
Chartered Accountant, or Advocate or likewise.
 In the case of juridical persons like companies
or registered societies it is necessary that after
their names their registered office and the
particular Act under which the company or
society was incorporated should be mentioned.
For example, “XYZ Co. Limited, the company
registered under the Companies Act, 1956 and
having its registered office at 1, Parliament
Street, New Delhi”.
 In cases where the parties may be idol then
name of the idol and as represented by its
“Poojari” or “Sewadar”, or so, should be
mentioned. For example, “the idol of Shri Radha
Mohan Ji installed in Hanuman Temple in
Meerut being 10, Jawahar Chowk, Lale Ka
Bazar, Meerut City acting through its Sewadar
Pt. Krishan Murari Lal Goswami of Mathura”.
 In the case of persons under disability like
minor, lunatic, etc. who cannot enter into a
contract except through a guardian or a ward,
in certain cases through guardian with the
permission of the court where necessary, full
particulars of the same should be given with the
authority from whom a guardian draws power.
  For example, “Mohan, a minor, acting through
Ramdev as guardian appointed by Civil Judge
Class I, Delhi by order on... passed under
Section... of... Act or “Mohan, Minor acting
through his father and natural guardian Ramdev
etc.” In this way, particulars for the sake of
identification of the party should be given.
Similarly, in the case of partners, trustees, co-
partners, etc. full details of the parties should
be given for the sake of identification.
 Reference label of parties are put in Parenthesis
against the name and description of each party
to avoid repetition of their full names and
addresses at subsequent places.
 The parties are then prepared to by their
respective lables e.g. “lesser” and “lessee” in a
lease deed.
The form is illustrated as under:
“This lease deed at New Delhi on
the .......................................... day
of ............................ 2013 between Shri Vinod
resident
of......................................................................
(Hereinafter called lessor) of the one part and Shri
Dinov resident
of ..............................................................
(hereinafter called lessee) of the other part.
It is also necessary that refusee of heirs, executors,
assigns liquidators, successors etc. should be made
against each party’s name after putting lables. It
shall safeguard the interest of the parties. Legal
heirs of the property of the party can take benefit
on death of the original party when the easy
identification of the party is done by giving the
notation of the “one part” and “of other part” will be
written as of first part ‘for party one’, ‘of the second
part’ for party two and ‘of the third part’ for party
three and so on, the likewise illustrating this.
Between..............................................................
called the lessor.
(which term shall mean and unless, it be repugnant
to the context or meaning thereof mean and include
the heirs, legal representative or assigns of one
part) AND............................... called the lessee
(which term shall unless it be repugnant to the
context or meaning thereof mean and include the
heirs, legal representative or assigns (or in case of a
company the liquidator or assigns).
4. Recitals
 Recitals contain the short story of the property
up to its vesting into its transferors.
 Care should be taken that recitals are short and
intelligible.
 Recitals may be of two types.
 One, narrative recitals which relates to the past
history of the property transferred and sets out
the facts and instrument necessary to show the
title and relation to the party to the subject
matter of the deed as to how the property was
originally acquired and held and in what
 manner it has developed upon the grantor or
transferor.
 The extent of interest and the title of the person
should be recited.
 It should be written in chronological order i.e.
in order of occurrence.
 This forms part of narrative recitals. This is
followed by inductory recitals, which explain the
motive or intention behind execution of deed.
 Introductory recitals are placed after narrative
recitals. The basic objective of doing so, is to
put the events relating to change of hand in the
property.
 Recitals should be inserted with great caution
because they precede the operative part and as
a matter of fact contain the explanation to the
operative part of the deed.
 If the same is ambiguous recitals operate as
estoppel.
 Recital offers good evidence of facts recited
therein.
 Recitals are not generally taken into evidence
but are open for interpretation for the courts. If
the operative part of the deed is ambiguous
anything contained in the recital
 In the same sense, it is necessary that where
recitals contain chronological events that must
be narrated in chronological order.
  Recitals carry evidentiary importance in the
deed. It is an evidence against the parties to the
instrument and those claiming under and it may
operate as estoppel
 Recital generally begins with the words
“Whereas” and when there are several recitals
instead of repeating the words “Whereas”
before each and every one of them, it is better
to divide the recitals into numbered paragraphs
for example, “Whereas” —
1.
2.
3.
etc

5. Testatum
 This is the “witnessing” clause which refers to
the introductory recitals of the agreement, if
any, and also states the consideration, if any,
and recites acknowledgement of its receipt.
 The witnessing clause usually begins with the
words “Now This Deed Witnesses”.
 Where there are more than one observations to
be put in the clause the words, “Now This Deed
Witnesses as Follows” are put in the beginning
and then paragraphs are numbered.
6. Consideration
 As stated above, consideration is very important
in a document and must be expressed.
 Mention of consideration is necessary otherwise
also, for example, for ascertaining stamp duty
payable on the deed under the Indian Stamp
Act, 1899.
 There is a stipulation of penalty for non-
payment of stamps, but non-mention of
consideration does not invalidate the document.
 In the absence of mention of consideration the
evidentiary value of document is reduced that
the document may not be adequately stamped
and would attract penalty under the Stamp Act.

7. Receipt
Closely connected with consideration is the
acknowledgement of the consideration amount by
the transferor, who is supposed to acknowledge the
receipt of the amount. An illustration follows:
“Now this Deed witnesses that in pursuance of the
aforesaid agreement and in consideration of sum of
Rs. 100,000/- (Rupees One Lakh Only) paid by the
transferor to the transferee before the execution
thereof (receipt of which the transferee does hereby
acknowledge)”.

8. Operative Clause
This is followed by the real operative words which
vary according to the nature of the property and
transaction involved therein. The words used in
operative parts will differ from transaction to
transaction. For example, in the case of mortgage
the usual words to be used are “Transfer by way of
simple mortgage” (usual mortgage) etc. The exact
interest transferred is indicative after parcels by
expressing the intent or by adding habendum. (The
parcel is technical description of property
transferred and it follows the operative words).

9. Description of Property
Registration laws in India require that full
description of the property be given in the
document which is presented for registration under
Registration Act. Full description of the property is
advantageous to the extent that it becomes easier to
locate the property in the Government records and
verify if it is free from encumbrances. If the
description of the property is short, it shall be
included in the body of the document itself and if it
is lengthy a schedule could be appended to the
deed. It usually contains area, measurements of
sides, location, permitted use, survey number etc. of
the property.

10. Parcels Clause

 This is a technical expression meaning
methodical description of the property.
  It is necessary that in case of non-testamentary
document containing a map or plan of the
property shall not be accepted unless it is
accompanied by the True Copy. Usually the
Parcel Clause starts with the words “All
Those......................... And further or description
covers as per the type of property subjected to
transfer under the deed. This clause includes
words such as: Messuages, Tenements,
Hereditaments, Land, Water etc. But use of
these now has been rendered unnecessary in
view of Section 8 of Transfer of Property Act
given herein below.

Section 8. Operation of transfer —

Unless a different intention is expressed or
necessarily implied, a transfer of property passes
forthwith 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, where 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 debt or 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.”
This Section has cut down the length of the deeds
and do away with description of minute details of
the incidents of the property intended to be
conveyed.

11. Exceptions and Reservations Clause

 It refers to admission of certain rights to be
enjoyed by the transferor over the property to
be agreed to by the transferee.
 All exceptions and reservations out of the
property transferred should follow the parcels
and operative words.
 It is the contractual right of the parties to the
contract or to the document to provide
exceptions and reservations which should not
be uncertain, repugnant or contrary to the spirit
 of law applicable to a particular document or
circumstances.
 For example, Section 8 of the Transfer of
Property Act, 1882 provides for transfer of all
the interest to the transferee in the property
and any condition opposing the provisions of
law will be void.
 Further, Section 10 of the said Act provides that
any condition or limitation restraining the
transferee of property in disposing of his
interest in the property is void.
 So, nothing against the spirit of law can be
provided in the document.
 The clause generally is signified by the use of
words “subject to” in deeds, where it is
mentioned, it is advisable that both the parties
sign, to denote specific understanding and
consenting to this aspect.

12. Premises and Habendum

 Habendum is a part of deed which states the
interest, the purchaser is to take in the
property. Habendum clause starts with the
words “THE HAVE AND TO HOLD”.
 Formerly in England if there was a gratuitous
transfer, the transferee was not deemed to be
the owner of the beneficial estate in the
 property, the equitable estate wherein remained
with the transferor as a resulting trust for him.
 It was therefore, necessary to indicate in the
deed that it was being transferred for the use of
the transferee if it was intended to confer an
equitable estate in him.
 It was for that reason that the habendum
commenced with the words: “to have to hold to
the use of...........”.
 Now it is not necessary to express it so.
 In the modern deeds, however, the expression
“to have and” are omitted.
 The habendum limits the estate mentioned in
the parcels. The transferee is mentioned again
in the habendum for whose use the estate is
conveyed. Whatever precedes the habendum is
called the premises.
 The parcels or the description of the property
usually again included in the premises.
 If the property conveyed in encumbered,
reference thereto should be made in the
habendum. If the parties to transfer enter into
covenants, they should be entered after the
habendum.
 In India such phrases as “to have and to hold”
or such an expression as “to the use of the
purchaser” can very well be avoided as in cases
except those of voluntary transfers such an
expression is superfluous.
13. Covenants and Undertakings
 The term “covenant” has been defined as an
agreement under seal, whereby parties
stipulates for the truth of certain facts.
 In Whasten’s Law Lexicon, a covenant has been
explained as an agreement or consideration or
promise by the parties, by deed in writing,
signed, sealed and delivered, by which either of
the parties, pledged himself to the other than
something is either done or shall be done for
stipulating the truth of certain facts.
 Covenant clause includes undertakings also.
Usually, covenant is stated first.
 In some instances the covenants and
undertakings are mixed, i.e. can not be
seperated in that case, they are joint together,
words put for this as “The Parties aforesaid
hereto hereby mutually agree with each other
as follows:”
 Such covenants may be expressed or implied.

14. Testimonium Clause

  Testimonium is the clause in the last part of the
deed. Testimonium signifies that the parties to
the document have signed the deed.
 This clause marks the close of the deed and is
an essential part of the deed.
The usual form of testimonium clause is as under:
 “In witness whereof, parties hereto have
hereunto set their respective hands and seals
the date and year first above written”. This is
the usual English form of testimonium clause.
 In India, except in the case of companies and
corporations seals are not used and in those
cases testimonium clause reads as under:
 In witness whereof the parties hereto have
signed this day on the date above written”. Thus
testimonium clause can be worded according to
the status and delegation of executants.

15. Signature and Attestation Clause

 After attestation clause, signatures of the
executants of the documents and their
witnesses attesting their signatures follow.
 If the executant is not competent enough to
contract or is juristic person, deed must be
signed by the person competent to contract on
its behalf.
 For example, if the deed is executed by the
company or co- operative society then the
person authorised in this behalf by and under
the articles of association or rules and
regulations or by resolution as the case may be
should sign the document and seal of the
company/society should be so affixed, thereto by
mentioning the same.
 In India, the Deed of Transfer is not required to
be signed by the transferee even though the
transferee is mentioned as party in the
document.
 All conditions and covenants are binding upon
him without his executing the conveyance, if he
consents to it by entering into the lease granted
under the conveyance.
 Attestation is necessary in the case of some
transfers, for example, mortgage, gift, sale, and
revocation of will.
 In other cases, though it is not necessary, it is
always safe to have the signatures of the
executant attested.
 Attestation should be done by at least two
witnesses who should have seen the executant
signing the deed or should have received from
the executant personal acknowledgement to his
signatures.
 It is not necessary that both the witnesses
should have been present at the same time.
  There is no particular form of attestation but it
should appear clearly that witnesses intended to
sign is attesting the witnesses.
 General practice followed in India is that the
deed is signed at the end of the document on
the right side and attesting witnesses may sign
on the left side.
 If both the parties sign in the same line then the
transferor may sign on the right and the
transferee on the left and witnesses may sign
below the signatures.
 It is essential that the attesting witness should
have put his signature, amino attestandi,
intending for the purpose of attesting that he
has seen the executant sign or has received
from him, a personal acknowledgement of his
signature.

16. Endorsements and Supplemental Deeds

 Endorsement means to write on the back or on
the face of a document wherein it is necessary
in relation to the contents of that document or
instrument.
 The term “endorsement” is used with reference
to negotiable documents like cheques, bill of
exchange etc.
 For example, on the back of the cheque to sign
one’s name as Payee to obtain cash is an
endorsement on the cheque.
 Thus, to inscribe one’s signatures on the
cheque, bill of exchange or promissory note is
endorsement within the meaning of the term
with reference to the Negotiable Instrument
Act, 1881.
 Endorsement is used to give legal significance
to a particular document with reference to new
facts to be added in it.
 Endorsement helps in putting new facts in
words on such document with a view to inscribe
with a title or memorandum or to make offer to
another by inscribing one’s name on the
document or to acknowledge receipt of any sum
specified by one’s signatures on the document
or to express definite approval to a particular
document.
 Thus, endorsement is an act or process of
endorsing something that is written in the
process of endorsing when a provision is added
to a document altering its, scope or application.
Under the Registration Act, 1908 the word
endorsement’ has significant meaning and it
applies to entry by the Registry Officer on a
rider or covering slip tendered for registration
under the said Act.
 Supplemental deed is a document which is
entered into between the parties on the same
subject on which there is a prior document
existing and operative for adding new facts to
the document on which the parties to the
document have agreed which otherwise cannot
be done by way of endorsement.
 Thus, supplemental deed is executed to give
effect to the new facts in the deed. When a deed
or document is required to be supplemented by
new facts in pursuance of or in relation to a
prior deed this can be affected by either
endorsement on the prior deed when short
writing would be sufficient, or by executing a
separate deed described as supplemental deed.
 For example, if lessee transfers his right in the
lease to another person such transfer may be
done by way of endorsement.
 On the other hand, if the terms of the lease
document are to be altered then it becomes
necessary to give effect to such alteration
through a supplementary deed.
 In case the alteration to be made in the terms
and conditions and is of minor nature and can
be expressed by a short writing execution of
supplementary deed may not be considered
necessary as this can be done by endorsement
only.
 Thus, this is a matter of convenience which of
the two alternatives whether endorsement or a
supplementary deed is to be used by the parties
to a particular document.
 In conveyancing practices endorsements which
are of general use and for which no
supplementary deed is necessary are those
which relate to part payment or
acknowledgement of a debt by a debtor.
  The main stress is that endorsement should
represent or exhibit the intention of the parties
to the document.
 Thus, in the context of negotiable instruments,
endorsements which are made on the document
will definitely differ with reference to the nature
and content of the prior document and will be
added to the endorsement explained above.
 Endorsements are common for negotiating a
negotiable document or instrument or transfer
of bill of exchange or policy or insurance or
Government securities and there is no
particular form of endorsement prescribed in
such cases. Endorsements follow the forms by
customs, conventions and trade practices or
banking norms.
17. Annexures or Schedules
 A deed remains incomplete unless particulars as
required under registration law about the land
or property are given in the Schedule to be
appended to the deed. It supplements
information given in the parcels. A Site Plan or
Map Plan showing exact location with revenue
no. Mutation No., Munipal No., Survey No.,
Street No., Ward
Sector/Village/Panchayat/Taluka/District
etc................... Plot No., etc. so that the
demised property could be traced easily.
Correct Answer : Last part; signed the deed
Engrossment and Stamping of a Deed
The draft of document is required to be approved by
the parties. In case of companies it is approved by
Board of Directors in their meeting or by a duly
constituted committee of the board for this purpose
by passing requisite resolution approving and
authorising of its execution. The document after
approval is engrossed i.e. copied fair on the non-
judicial stamp-paper of appropriate value as may be
chargeable as per Stamp Act. In case document is
drafted on plain paper but approved without any
changes, it can be lodged with Collector of Stamps
for adjudication of stamp duty, who will endorse
certificate recording the payment of stamp duty on
the face of document and it will become ready for
execution.
If a document is not properly stamped, it is
rendered inadmissible in evidence nor it will be
registered with Registrar of Assurances.

Under common law, a deed has been understood as

an instrument written on a paper or parchment,
executed by a person or corporation making,
confirming, concurring in or consenting to some
assurance (otherwise than by way of testamentary
disposition), of some interest in property or of some
legal or equitable right, title or claim, or
undertaking in some act affecting legal relations or
position of a party to the instrument or of some
other act affecting other person or corporation. A
deed may be defined as a formal writing of a non-
testamentary character, which purports or operates
to create, declare, confirm, assign, limit or
extinguish some right, title or interest.

Validity of deed
Historically, for an instrument to be a valid deed,
following things were necessary:
(i) It must indicate that the instrument itself
conveys some privilege or thing to someone.
(ii)The grantor must have the legal ability to grant
the thing or privilege.
(iii) The person receiving the thing or privilege must
have the legal capacity to receive it.
(iv) The instrument must be sealed. Although this
requirement has been eliminated by most
jurisdictions and replaced with signature of the
grantor, however for conveyance of real estate
and executed for Government, most jurisdictions
require the deed to be acknowledged before a
notary public or a civil law notary and some may
additionally require witness(es).
(v) It must be delivered to and accepted by the
recipient.
(vi) There must be witness(es) that also signs the
deed under their name(s) and address(es).

Parts of a deed
The parts of a deed are as under:
(i) Name of the deed: The name given at the
commencement of the document is not the
controlling factor, it is the substance of the
document and not the form which is to be
considered.

(ii)Place and date: The place of execution is stated

after the name of the deed. It is then followed by
the date of execution of the deed. The date of
execution is necessary under the Registration
Act, 1908 and the Limitation Act. If the deed is
executed by different parties on different dates,
the date on which the deed was last executed is
taken as the date of the deed.

(iii) Parties and their description: After the place

and date, names and description of the necessary
parties to the deed are mentioned. The nature of
the deed determines the necessary parties. The
parties in a deed should be mentioned properly.
Their full description should be given for the
purposes of identification.

(a)Juridical persons: On many occasions, a party

to a deed may not be a living person but may be
a juridical person, for example, a company,
corporation or an association.

(b)Minors: As per Section 10 of the Contract Act,

1872, a minor is not competent to contract.
Under the Hindu law, the natural guardian of a
minor can transfer his or her undivided interest
 in joint family property, for legal necessity or for
benefit of estate. But the property other than his
undivided interest cannot be disposed of without
the permission of the court. In case the guardian
is transferring the minor’s property with the
court’s permission, such permission should be
mentioned in the recital.

(c) Persons of unsound mind: As per Section 12 of

the Contract Act, a person of unsound mind is
not competent to contract. However, his
manager can transfer his property with the
permission of the court. The description of the
lunatic and recital regarding court’s permission
to transfer the property is written in same form
as that of the minor.

(d)Trusts: Particulars of the trust deed by which

trustees have been appointed should be referred
in the recital. In case of any contract entered into
by trustees on behalf of beneficiaries, the
particulars of the trust deed by which trustees
have been appointed as well as their act on
behalf of the beneficiaries should be referred to
in the recital.

(iv) Reference label of parties: Reference label of

parties are put in parenthesis against the name
and description of each party to avoid repetition
of their full names and description at every place.
If there are more than two parties, the
 expressions “of the first part”, “of the second
part”, “of the third part”, etc. are used.

(v) Reference of heirs, executors, assigns, etc.:

After the labels of parties, reference of heirs,
executors, assigns are also made, so that they
may also take the benefit of the deed. As held in
Shyam Singh v. Daryao Singh[1], merely because
there is only a mention of heirs of the contracting
parties but not their assignees or transferees, the
legal right of assignment available to the benefit
of the original contracting party under Section
15(b) of the Specific Relief Act, 1963 cannot be
denied to it.

(vi) Recitals: They are used to explain those

matters of fact, that are necessary to make the
transaction clear. A recital is evidence as against
the parties to the instrument and those claiming
under them and in an action on the instrument
itself the recitals operate as an estoppel though
it would not be so on a collateral matter.

(vii)Testatum: After the recitals, the operative part

of the deed commences with the testatum.

(viii) Consideration: It is an inducement, price

or motive that cause a party to enter into an
agreement or a contract. The consideration
should be mentioned in the deed. Section 27 of
the Stamp Act provides that the consideration
should be truly and fully mentioned in the deed,
omission of which is subject to fine up to Rs
 5000. However, the validity of the deed is not
affected by not mentioning the consideration.

(ix) Receipt: The receipt of consideration is made

within parenthesis in the deed. If part
consideration has been paid and the balance is
being paid at the time of execution of deed, the
fact should be stated in the receipt clause.

(x) Operative words: After the testatum, operative

words follow, which express the nature of the
transaction. Such words should be clear.

(xi) Parcels: After the operative words, description

of the property being transferred is given for
easy identification of the property.

(xii)Schedule of the property: As the description

of the property is generally lengthy, it is given in
a schedule appended to the deed and the words
“and more particularly described in the schedule
hereunder written” is written in the parcel of the
deed. In case of any conflict between parcels
incorporated in the deed and description of the
subject-matter in the schedule, the former shall
prevail unless it is made clear in the deed that
description as given in the subject-matter will be
preferred.

(xiii) Map: In the deed of transfer, the map of the

property to be transferred is annexed, to identify
 the property. If a map is annexed to the deed, it
is treated as part of the deed.

(xiv) All estate clause: This clause expresses

that the transferor conveyed all his estate,
interest title, claim, rights and demands
whatsoever into or in the said property or any
part thereof. It is incorporated to make clear that
all rights, interest, title, etc. of the transferor in
the property shall be transferred to the
transferee after execution of deed of transfer.

(xv)Exceptions and reservations: An exception is

a part of the thing granted, which is in existence,
and a reservation is a thing not in existence but
created or reserved out of land granted. If the
transferor wants to retain some part of the estate
transferred, it should be specifically mentioned
after description of the property.

(xvi) Habendum: It limits the granted estate and

it mentions the liabilities or incidents subject to
which the property is transferred. The clause is
written into deeds and mortgages to define
transfer of the subject property.

(xvii) eddendum: It is a clause in a deed by

which some new thing is reserved out of what
has been granted before. In this cause, the rent
payable by the lessee is specified, along with
time and mode of payment.
(xviii) Covenants: Covenant is an agreement by
which the parties or some of them agree to do or
not to do a specified thing or act. The covenant
may be positive or negative. For making the
covenant in the deed, no particular form is
necessary. The words used to provide covenant
must be clear. A covenant may even be absolute
or qualified, and may be made by several persons
jointly and severally.

(xix) Delivery of title deeds: After the covenant

clause, clause regarding delivery of title deeds by
the transferor to the transferee is incorporated.
When the transferor transfers the property, he is
required to deliver all the title deeds in his
possession to the transferee. However, if a part
of the property is transferred or where the
property is transferred to several persons, the
transferor or the transferee of the lot or the
greatest value, as the case may be, is entitled to
retain the title deeds. But he should produce all
or any of them at the request of the purchaser
and at the cost of the latter to furnish copies,
extracts or abstracts therefrom as the purchaser
may require and, in the meantime, keep them
safe.
What Is a Deed?

A deed is an instrument written, signed and handed

over by one person, known as the grantor (seller),
that transfers ownership of the real property to
another person, known as the grantee (buyer). In
other words, a deed is a signed legal document that
grants the guarantee of certain rights over an object,
allowing them to own it.
A deed is any written legal instrument that confirms
and transfers an interest, right or property from one
person to another. Simply speaking, a deed is a form
of legal instrument that consists of a legally binding
commitment to accomplish something. The most
common application of deeds is to transfer property
ownership: movable or immovable, between two
parties.

The only significant difference between a deed and

an agreement is that consideration is not required
for a deed to be legally binding, and a deed must be
executed in writing.
The five essentials of a legally valid deed are:
4. It must be in writing.
5. It must be signed.
6. It must be expressed to be a deed.
7. It must be witnessed by at least one such person
who is not a party to the concerned deed.
8. It must be delivered to the other party.
In India, some of the important types of deeds are:
1. Sale Deed.
2. Mortgage Deed.
3. Lease Deed.
4. Gift Deed.
5. General Warranty Deed.
6. Special Warranty Deed.
7. Adoption Deed.
8. Quitclaim Deed.
9. Trust Deed.
10. Court Order Deeds.
11. Fiduciary Deed.
12. Grant Deed.
13. Conveyance Deed.
14. Deed of Power of Attorney.
15. Relinquishment Deed.
Let us learn more about the kinds of deeds.
1. Sale Deed
A seller transfers ownership, title, and other property
rights to a buyer in a sale deed. It is the most crucial
document because it officially documents the proof
for both the buyer and the seller. The buyer and
seller must sign a sale deed before the property
purchase or sale is legally completed. Both parties
must be satisfied with the terms and conditions
before a sale deed can be signed. Learn more about
Sale under TPA.

2. Mortgage Deed
A mortgage deed is a legal instrument that provides
all relevant information about the loan, such as the
parties involved, the property held as collateral, the
amount of loan taken, the interest rate, and so on.
The deed explains everything there is to know about
the property’s interest and title. It aids in the
identification of the true owner of the mortgaged
property. Learn What is Mortgage and Six Types of
Mortgage.
3. Lease Deed
A lease deed is a legal document or instrument
required for the performance of a lease. Essentially,
it certifies the lessee’s ownership rights and
interests in the leased property. Here is more about
Lease under the Transfer of Property Act.
4. Gift Deed
A gift deed is a legal document that reflects the
transfer of a gift. Under section 122 of the Transfer
of Property Act, 1822, the donor can freely transfer
an existing movable or immovable property to the
donee through the use of a gift deed. It is legal only
if given out of natural love and affection, without
expecting anything in return, by a family member or
friend to another family member/friend. Read more
about Gift under TPA.
5. General Warranty Deed
For residential real estate sales, a general warranty
deed is commonly utilised. The warranties conveyed
and pledged, bind the seller or grantor legally. The
grantor provides several covenants, sometimes
known as warranties, for the title in a general
warranty deed, promising that the title to the
property is good and clear and that the property is
free of any obligations and liabilities.
6. Special Warranty Deed
A special warranty deed does not provide the buyer
with the same level of protection as a general
warranty deed. The grantor or seller’s guarantee,
which is offered to the buyer or grantee, does not
cover the property throughout its history but just for
the time when the grantor owned it. The grantor of
this sort of deed only makes two warranties- first,
that the grantor has title to the property. And
second, that the property was free of encumbrances
during the grantor’s ownership term.

7. Adoption Deed
Adoption is the process of establishing a parent-child
bond between people who are not biologically
related. The adoptive family bestows the adopted
kid the rights, privileges, and responsibilities of a
child and heir. It is a legal document in which all
biological parents or parents’ rights & duties and
filiation are transferred to adoptive parents. If
interested, learn about the Rules of Adoption under
Hindu Laws.
Info: Filiation means the fact of being the child of a
particular parent or parents.
8. Quitclaim Deed
A quitclaim deed is typically executed when both
parties have some form of relationship with one
another, such as family members, divorced couples,
and friends. It is generally performed by people who
are familiar with one another. This type of deed is
designed to transfer any title, claim, or interest in
the property that the grantor may have, but it makes
no assurances that such title is legally legitimate.
So, in essence, this sort of deed provides for the
straightforward transfer of property rights and
claims to another party, with the majority of the time
no money exchanged and no promise or guarantee.

9. Trust Deed
A trust deed is a type of transaction in which
property is transferred to a trustee to secure a debt
such as a promissory note or a mortgage. In the
event of a default on duty, the trustee has the power
to sell the property.
10. Court Order Deeds
These types of deeds are carried out without the
owner’s agreement due to a court order. These
deeds are created when the seller is unable to pay
the price and are thus executed without their
agreement. The exact price of the real estate is
mentioned in advance as a consideration in these
court order documents, which is a unique feature.
11. Fiduciary Deed
Info: Fiduciary means involving trust, especially with
regard to the relationship between a trustee and a
beneficiary.
When the grantor is a fiduciary, such as a trustee,
this fiduciary deed is used to transfer property. This
document simply guarantees that the fiduciary is
functioning in the capacity and power that he has
been given. When the owner cannot sign a deed for
legal or other reasons, this type of deed is used to
transfer property such as real estate. When the
property’s original owner has passed away, fiduciary
documents are frequently used to settle estates.
When a fiduciary deed is utilised, it is given by a
fiduciary, such as an executor, who has the authority
to sign in the owner’s place.
12. Grant Deed
A grant deed is a legal document that transfers
ownership of a property from the seller to the buyer
in exchange for a set sum. It ensures that the seller
has complete ownership of the property, the
property being free and clear of all debts, but it does
not include a warranty for title flaws, as the warranty
deed does.
13. Conveyance Deed
A conveyance deed is a legal instrument that
transfers ownership of property from one person to
another as a gift, an exchange, a lease, or a
mortgage, among other things. A conveyance deed
can also be referred to as a gift deed, mortgage
deed, lease deed, or sale deed. In its broadest
sense, this refers to any property ownership transfer
for the buyer’s benefit, such as a gift, mortgage,
lease, or exchange. A sale deed is a legal document
used to transfer ownership of a property through a
sale. All conveyance deeds are all sale deeds, but
not all sale deeds are conveyance deeds.

14. Deed of Power of Attorney

A deed of power of attorney is a legal document by
which the principal grants his agent certain powers
to conduct and execute certain actions or deeds on
his behalf.

15. Relinquishment Deed

A relinquishment deed is a legal document unveiling
a legal heir’s rights, titles, and interests in favour of
others.

Difference Between Deed and Agreement

The basis of a contract in law is offer and
acceptance. It is an agreement to be legally
obligated on consideration. Consideration forms the
base for an agreement. The parties need
consideration to show that they have ‘bought’ the
promise by doing some act or providing something
in return for the promise. In contrast to an
agreement or contract, there is no requirement for
consideration to execute a deed, this is because
consideration is not mandatory.
A deed does not need consideration because of the
legal notion that a deed is the most solemn
indication that two parties are intended to be bound.

Types of Deeds
•
• Warranty Deed
This type of deed is commonly used for the sale of
residential real estate. A warranty deed acts as a
guarantee to the buyer that the seller has all the
right to sell the property and that the property is
free of debts and other liabilities. If any issues
emerge, the buyer has the right to seek
compensation from the seller.
In other words, this type of deed assures that the
seller owns the property and has the legal right to
sell it. It also guarantees that there are no liabilities,
debts, or charges against it. Despite being a
warranty act, this type of deed serves as a promise
to the buyer, and if any problems arise, the buyer
has the right to seek reimbursement from the seller.
A general warranty deed provides the maximum
level of security for the buyer because it involves
crucial agreements or guarantees being transferred
to the grantor. Typically, warranties include specific
details such a warranty, the right to convey, burden
exemption, and title protection against all other
claims. You Can Also Know about the Land
Registration.
•
•
• Special Warranty Deeds
A Special Warranty Deed is not the same as a
warranty deed. Here the seller’s guarantee to the
buyer does not cover the entire property. The seller
only guarantees the concerns that arise during the
period of the seller’s property ownership. One
usually uses a special warranty for purchases
involving commercial property. It conveys all rights
to the buyer but only guarantees what is clearly
stated.
The grantor of this form of deed conveys only two
warranties to the property:
• the grantor currently owns the property title,
and that
• The land had not been tampered with during the
grantor’s ownership period.
Such a deed provides no assurance that the property
was free and clear until the grantor took possession.
This means that the seller or grantor may have had
no idea what occurred to the property until the
grantor gained possession, and it does not
guarantee that the title was secure prior to then.
This deed is usually preferred while transferring a
trust or when selling a commercial property.
•
• Quitclaim Deeds
A quitclaim is primarily utilised by family members,
spouses, and people who are well-informed and
capable of transferring ownership rights and claims
from one party to a different party.
•
• Bargain and Sale Deeds
Typically, sale deed is used to sell court-seized
assets or real estate. It normally does not guarantee
to the buyer that the seller owns the property free
and clear.
•
• Grant Deeds
In exchange for an agreed price, a grant certificate
transfers the interest in an estate from the seller to
the buyer. It guarantees that the seller owns the
property free from all debts. Whereas, it does not
provide a guarantee for the defects of the title like
the warranty deed.
•
• Fiduciary Deeds
One can use a fiduciary deed when the grantor is a
fiduciary such as a trustee to transfer the land.
Get your legal documentation here
•
•
•
• Trust Deeds
A trust deed is a written instrument in which
property is transferred to a trustee to secure a debt
in the form of a promissory note or a mortgage. In
the event of default, the trustee has the authority to
sell the property.
•
• Court Order Deeds
There are various forms of court order deeds which
are executed after a court order. It covers things
such as deeds of the sheriff, master deeds, etc. The
court executes these deeds without the owner’s
consent. One of its unique aspects of this deed is
that it lists the real price of the property as a
consideration in advance.
The Bottom line
Various types of deeds are available to help both the
buyer and seller. However, before performing a
deed, the terms and conditions must be read in
order to avoid future trouble

Notice: Nature, Kinds And Scope

The word "Notice" is a word of everyday use. In a
normal course of life, the following statements are
always heard by us:-
"Return my money otherwise I will send you a notice
and drag you in court" or "do not worry, wait for my
notice" or " I will give you a notice and inform you"
or " see the notice board and read carefully the
Notifications" or "every information is on Notice
Board" or you have not deposited the monthly
instalment of your school fees, hence this "Notice" or
"electricity bill is not deposited by you for last three
months, hence this notice to cut the electricity" or "
this notice to deposit your credit card bill" or " this
invitation card is being given to you to attend the
function in short notice" or " show cause notice is
issued against you in respect of your misconduct" or
" Invitation to attend the last ceremony of Soniya Ji"
or " this notice is pertaining to your loan amount
which is due and payable to you" or " the Police has
issued a notice to attend the police station" and "
this is the Notice sent by the Court to inform you
attend the proceeding on the next date of the
matter" etc.
16. Generally, we can to say that "the term
Notice is self-defined and well known and hence
does not ordinarily require any definition, in fact
it is fairly not possible to define it correctly and
completely.
17. But we shall strive our best to Define and
discuss the nature, scope and kinds of the
Notice.
18. It is said that the term "Notice" is derived
from a Latin word "Notitiam" which means
"Knowledge".
19. Notice means and includes an information,
intimation or direction, knowledge, etc.
20. The Word, "Notice" stands for information,
announcement, "information, warning, a writing,
etc."
21. Generally, the object of the notice is to give
an opportunity to the other to reconsider his
position before an action or any legal
proceedings is started against him.
22. Word Notice may stand for any fact which
would put an ordinary prudent person on
enquiry.
23. It may also signify knowledge or cognizance,
intelligence and information.
24. It would not be out of play to state that
Notice means "Intimation or Announcement or
information or Warning or a writing, placard,
board etc. conveying and intimation or warning.
25. Notice means legal Notification required by
law or agreement or imparted by operation of
law as a result of some fact, (such as the
recording of an instrument).
26. Notice means making something known to a
person of which he was or might be ignorant.
27. Notice is a direct and definite statement of a
thing as distinguished from supplying materials
from which the existence of such thing may be
inferred.
· Notice does not necessarily mean
"Communication", in writing, notice, notice
according to the oxford Concise dictionary means
 "intimation", "intelligence" , "warning" and has
this meaning in expressions like ‘give notice,
have notice‘ and it also means ‘formal intimation
of something, or instructions to do something‘
and has such a meaning in expressions like
‘notice to quit, till further notice.
"Notice":- a person is said to have "notice" of a fact
either when he actually knows that fact or when, but
for wilfull abstention from inquiry or gross
negligence, he would have known it, or when
information of the fact is given to or obtained by his
agent, under the circumstances mentioned in the
Indian Contract Act, 1872, section 229; and all
expressions used herein and defined in the Indian
Contract Act, 1872, shall be deemed to have the
meanings respectively attributed to them by that
Act.
"A person is said to have notice" of a fact when he
actually knows that fact, or when, but for wilfull
abstention from an enquiry or search which he ought
to have made, or gross negligence, he would have
known it”.
"The nature and purpose of the notice must be
gathered by reading the document as a whole and
not from any words read out of context or from any
omission to use the formal language of a solicitor".
 · The object of the Notice is to make aware or to
make known the facts of the case or to give an
opportunity to the other party to reconsider his
position before a legal proceeding is started
against him.
· Notice is the legal concept describing a
requirement that a party be aware of legal
process affecting their rights, obligations or
duties. There are several types of notice

Nature and Scope: -Notice is the foundation of any

legal dispute or settlement of the dispute amicably.
In other words, it can be underlined by stating that
"Notice is the first legal step to convey the
grievance, information, intimation, warning,
intelligence and /or announcement to concerned
person/s in order to make him/her/them aware about
his/her/their position. As per the nature there are
three kinds of Notice which are underlined as under:-
1. :- Statutory Notice:- The Notices which are
issued under the provisions of any law, Act
and/or rules and regulations as prescribed by the
legislature for the same are known as "Statutory
Notices. In other words it can be said that if a
notice is given as required or permitted to be
given under a statutory provision is known as
"statutory Notice".The factors, which are very
 necessary to follow during the course of
issuance of the Statutory Notices are as follows:-
• The Notice must be given by the party by whom
the statutory provision requires it to be given;
• The Notice must be given to party to whom it is
to be given under the statutory provision in
question;
• The Notice must contain the Particulars set out
in the statutory provisions;
• The Notice must follow the language of the
statutory provision, as far as possible;
• If the Statue prescribes a particular form, that
form should be adhered to;
• The contents must be in conformity with the
statutory requirements and
• The mode of service should be in conformity
with the statutory provisions. Some Example of
Statutory Notices:-

1:- PART IV-SUITS IN PARTICULAR CASES Suits by or

against the Government or public officers in their
official capacity. Civil Procedure Code
1):- 80. Notice- (1)Save as otherwise provided in
sub-section (2), no suits shall be instituted against
the Government (including the Government of the
State of Jammu & Kashmir) or against a public officer
in respect of any act purporting to be done by such
officer in his official capacity, until the expiration of
two months next after notice in writing has been
delivered to, or left at the office of- (a) in the case of
a suit against the Central Government, except where
it relates to a railway, a Secretary to that
Government;
(b)in the case of a suit against the Central
Government where it relates to railway, the General
Manager of that railway;
(bb) in the case of a suit against the Government of
the State of Jammu and Kashmir the Chief Secretary
to that Government or any other officer authorised
by that Government in this behalf;
(c) in the case of a suit against any other State
Government, a Secretary to that Government or the
Collector of the district; 23 and, in the case of a
public officer, delivered to him or left at this office,
stating the cause of action, the name, description
and place of residence of the plaintiff and the relief
which he claims; and the plaint shall contain a
statement that such notice has been so delivered or
left.
9 (2) A suit to obtain an urgent or immediate relief
against the Government (including the Government
of the State of Jammu & Kashmir) or any public
officer in respect of any act purporting to be done by
such public officer in his official capacity, may be
instituted, with the leave of the Court, without
serving any notice as required by sub-section (1);
but the Court shall not grant relief in the suit,
whether interim or otherwise, except after giving to
the Government or public officer, as the case may
be, a reasonable opportunity of showing cause in
respect of the relief prayed for in the suit :
2:- Notice issued under the provisions of section 138
of the Negotiable Instrument Act 2000(with
amendment):-
The essential ingredients of the offence as
contemplated under section 138 of the Act were
pointed out by the Hon‘ble Supreme Court as under:-
• A person must have drawn a cheque on an
account maintained by him in a bank for
payment of a certain amount of money to
another person from out of that account for the
discharge of any debt or other liability;
• That Cheque has been presented to the bank
within a period of Six month (as per RBI
guidelines, with effect from April1, 2012, the
validity period of Cheques, Demand drafts, Pay
orders and Banker‘s Cheques have been
reduced from six months to Three months , from
the date of mentioned in the instrument) from
 the date on which it is drawn or within the period
of its‘ validity, whichever is earlier;
• That cheque is returned by the bank unpaid.
Either because of the amount of money
standing to the credit of the account is
insufficient to honour the cheque or that it
exceeds the amount arranged to be paid from
that account by an agreement made with the
bank;
• The Payee or the holder in due course of the
cheque makes a demand for the
payment of the said amount of money by giving
a notice in writing, to the drawer of the cheque,
within 30 days of the receipt of information by
him from the bank regarding the return of the
cheque as unpaid;
• The drawer of such cheque fails to make
payment of the said amount of money to the
payee or the holder in due course of the cheque
within 15 days of the receipt of the said notice.

3:- Notice under the relevant provisions of Section

164 of the Maharashtra Co-operative Society Act,
1960:-
No suit shall be instituted against a society, or any of
its officers, in respect of any act touching the
business of the society, until the expiration of two
months next after notice in writing has been
delivered to the Registrar or left at his office, stating
the cause of action, the name, description and place
of residence of the Plaintiff and the relief which he
claims, and the plaint shall contain a statement that
such notice has been so delivered or left.
4:- Notice Under Section 106 of the Railways Act
1989:-
106. Notice of claim for compensation and refund of
overcharge.-
(1)A person shall not be entitled to claim
compensation against a railway administration for
the loss, destruction, damage, deterioration or non-
delivery of goods carried by railway, unless a notice
thereof is served by him or on his behalf,-
(a) to the railway administration to which the goods
are entrusted for carriage; or
(b) to the railway administration on whose railway
the destination station lies, or the loss, destruction,
damage or deterioration occurs, within a period of
six months from the date of entrustment of the
goods.
(2) Any information demanded or enquiry made in
writing from, or any complaint made in writing to,
any of the railway administrations mentioned in sub-
section (1) by or on behalf of the person within the
said period of six months regarding the non-delivery
or delayed delivery of the goods with particulars
sufficient to identify the goods shall, for the purpose
of this section, be deemed to be a notice of claim for
compensation.
5:- Section 106 of the Transfer of Property Act, 1882.
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.
These are the few examples of the statutory Notices
by which we can understand the importance of the
notices under statutory provisions as "A statutory
notice for filing of the suit is merely to put the
Defendant on guard so that it can avoid the lis by
complying with the demand of the Plaintiff based on
the cause of action disclosed in the notice."
2) Constructive Notice:- constructive notice or
implied notice may be defined to be "knowledge
which the court imputes to a person from the
circumstances of the case, upon a legal
presumption, so strong that it cannot be allowed to
be rebutted that the knowledge must be exist
though it may not have been formally
communicated." In other words it can be said that "A
notice is said to be constructive in circumstances
where a party having knowledge of circumstances
which would naturally lead him in enquiry, abstains
from such enquiry in order to avoid acquiring the
Knowledge in question".
Constructive notice is the legal fiction (A legal fiction
is a fact assumed or created by courts, which is then
used in order to help reach a decision or to apply a
legal rule. The concept is used almost exclusively in
common law jurisdictions, particularly in England. An
example of a legal fiction outside common law is
that it is legally possible to have consumed an illegal
substance without having owned it. ) that signifies
that a person or entity should have known, as a
reasonable person would have, of a legal action
taken or to be taken, even if they have no actual
knowledge of it. In a very simple way any prudent
person can define the constructive notice as the
Notice arising by presumption of law from the
existence of facts and circumstances that a party
had a duty to take notice of, such as a registered
deed or a pending law suit; notice presumed by law
to have been acquired by a person and thus imputed
to that person.
The constructive notice is a legal entity shall have
the knowledge or should be known, as a reasonable
person would have known of a legal action taken or
going to be taken, even if they don‘t have any real
or actual knowledge of it.Section 399 of the
Companies Act, 2013 points out the rules and
regulations governing the inspection, evidence of
documents with the Registrar and production, it
includes the doctrine of constructive notice.
3) Actual Notice:- A notice is actual and express
where notice of any fact is given to a person either
orally or in writing where a fact is communicated to
a person in such a way that his mind can and does
take cognizance of it. In the case of actual notice,
knowledge of a fact is carried to a party by sending
to him or by giving him a notice. In a very simple
way, any prudent person can define the Actual
Notice by stating that "A notice given directly to or
received personally by, a party is known as "Actual
Notice".
Apart from the kinds of notices as mentioned
hereinabove, 11the other kinds of the Notices are
follows as under:-
4)Commercial Law Notice:-under the UCC, Notice
of a fact arising either as a result of actual
knowledge or notification of the fact or as a result of
circumstances under which a person would have
reason to know of the fact.
Direct/ Positive Notice: - It is an actual notice of
fact that is brought directly to a parties‘ attention.
Due/ Adequate/ Notice: - Sufficient and proper
notice that is intended to and likely to reach a
particular person or the public;
Express Notice:-Actual knowledge or notice given
a party directly, not arising from any inference, duty
or inquiry.
Fair Notice: - Sufficient Notice apprising a litigant of
the opposing party‘s‘ claim. The requirement that a
pleading adequately apprise the opposing party of a
claim.
Immediate Notice: - Notice given as soon as
possible;
Implied Notice: -Notice that is inferred from facts
that a person had a means of knowing and that is
thus imputed to that person;
Imputed Notice: - Information attributed to a
person whose agent having received actual notice of
the information, has a duty to disclose it to that
person;
Inquiry Notice: - A Notice to investigate the matter;
Personal Notice: - Oral or Written Notice, according
to the circumstances, given directly to the affected
person;
Public Notice: - Notices given to the Public or
persons affected usu. by publishing in a Newspaper
of general circulations;
Reasonable Notice, Record Notice, Caution Notice
and Contractual Notice are also the kinds of Notices.

Format
Since notices are a formal document it should follow
a structure or a format. Keep in mind there is no one
correct rigid format. Different formats used by
different people/organizations can show some
variations. But it is ideal to follow a somewhat
similar format for ease of understanding and
uniformity. Let us look at the most used format of
notices.
1. Name of Issuing Organization/Authority: Right at
the very top, you print the name of the person or
company that is issuing the said notices. This
will help the reader identify the notices as
important or unimportant to him.
2. Title: When writing notices we mention a title
“NOTICE” at the top. This helps draw attention to
the document. Notices are generally posted at a
public place or published in newspapers. It is
important that they do not get lost in a sea of
information. So a bold title clearly mentioned
helps draw the attention.
3. Date: After the tile to the left-hand side we print
the date on which the notices have been
published. Since this is a formal document date
is an important aspect of it since these
documents stay on record.
4. Heading: Then we move on to an appropriate
heading to the notices. This heading should
make abundantly clear the purpose of the
notices.
 5. Body: After the heading, we write the brief and
to the point body of the notice. The main content
of the notice features in the body.
6. Writer’s Name: At the end of the notices we
write the name and designation of the notice-
writer. The notices have to also be signed by the
same person to lend it authority and validity.

Content
Notices should cover some important points that are
to be communicated to the readers. Let us
summarize the five points that the content of the
notice will cover, the five W’s
1. What: What is the notice about? The notice
should be clear about what is going to happen
(event), or what has already happened
(occasion). This is the crux of the message and
should be written clearly. There should not be
any ambiguity.
2. Where: If the notice is about an event, then the
location of such an event must be written
clearly. The venue or the location are important
 details, so make sure to include this in the
notice.
3. When: This is the time and the date of the event
or meeting. If possible the duration of the event
should also be mentioned to people can
schedule their time accordingly.
4. Who: This will be who the notice is addressed to.
Who all are suppose to adhere to the notice
should be clearly mentioned to avoid confusion.
5. Whom: And final detail should be whom to
contact or get in touch with. This mentions who
the appropriate authority is to contact.
Learn more about Letter Writing here in detail.
Tips to Remember regarding Notice Writing
• Be precise and to the point. The ideal length of
notice is 50 words, so precise language is
appreciated.
• It is a formal form of communication so the
language used should be formal as well. No
flowery text.
• Keep the sentences short and use simple words.
Since notices are fairly brief it is best to keep it
simple.
• Use passive voice as far as possible.
 • Present your notices in a proper format in a box.
The presentation should be neat and thus be
appealing to the eye.

Types of Legal Notices

Here are 4 types of Legal Notice:

1. Public Notice: This is a notice for everyone.

Public notice is usually about legal stuff that affects
a lot of people. You might see these notices in
newspapers or online.

2. Actual Notice: This notice is a direct message to

certain people. It tells them about a legal issue that
involves them. This notice is usually sent through
mail or email.

3. Constructive Notice: This type of notice is not

given to anyone directly. This is something you are
expected to know because it is public information,
like something recorded in public records.
4. Implied Notice: This notice is not a written
notice. It’s something you understand because of
what you see or happening around you. For
example, if there’s a warning sign, it’s telling you to
be careful.

Types of Notice Formats

Notices can be classified based on their purpose of
issuance.
Each type follows a different notice format.
The writer must keep in mind all the necessary steps
to justify the meaning of any kind of notice.
Also, the approach must be different for each notice
format.
We primarily witness four regular notice types in
practice.
These are public notice, implied notice, actual
notice, and constructive notice format.
•

Public Notice Format

The name itself explains the purpose of this notice
format. Public notices are addressed to the general
public to inform them about certain true notice draft
proceedings. People encounter this type of notice
quite frequently. Apart from the jurisdiction, even if
any authority or institution declares a notice
addressing a particular community or society, that
notice also falls under this category. Public feedback
is expected in return for this kind of circulation.

Also, any news regarding social gatherings or events

is conveyed through public notice. The media plays a
crucial role in distributing these notices. This is done
either over the internet or through newspapers or
television. For example, suppose your area’s
municipal corporation has temporarily ceased the
water supply due to some repair works. In that case,
the council issues a formal notice in newspapers.
Thus we come across a form of public notice.

Implied Notice Format

The second one on this list is an Implied Notice. This
particular type follows a notice format that calls for
immediate action. These formal messages are not
meant for a specific group or authority. Implied
notices are written for all who shall be reading the
formal piece of information. These notices announce
a legal standpoint or fact that all must acknowledge
without fail.
For example, if a person rents an apartment and
already pays for it, even if he finds out that the
kitchen taps are not functioning properly during his
stay, he cannot tag the owner responsible for fixing
that mess. This is because the law will expect the
tenant to secure an implied notice mentioning the
plumbing issues of the flat. Other common examples
of implied notices are ‘No Parking’, ‘Beware of Dogs’,
etc.
•
•
Actual Notice Format
The third one is an Actual Notice. This category of
notice expresses a legal stance in the mode of
communication. Guidelines published by law or
generic lawful instructions that must be adhered to
at a particular place are expressed through this kind
of notice format.
These true notice drafts are meant for organizations
as well as individuals. Actual notices find their
application in judicial proceedings. Thus the scope of
this notice format is limited.
For example, government officials draft this notice to
let a person know that he will be felicitated for his
social work. Such an instance is relatively
uncommon; thus, we rarely encounter actual
notices.
 •

Constructive Notice Format

The final one is Constructive notice. This implies that
a person working in an organization must know its
operational policies.
The notice is issued to a company holding it
responsible for action along with the members as
well, even if they may not have any direct
involvement with the event. Thus constructive notice
is a type of legal announcement.

Specific Scenarios for Legal Notices

Each notice needs a specific set of documents and a
procedure to make sure the issue is addressed
properly. Let’s discuss some scenarios in which
Legal notice can be served:

Security Refund Notices

Security Refund notices are sent to landlords or
rental agencies to request the return of a security
deposit after end of rental period. You need to
include the rental agreement and proof of payment.
In the notice, you should clearly state the address of
the rented property, the dates of your tenancy, and
the amount of the security deposit. Also include a
copy of the rental agreement to show the terms of
deposit and proof of payment (example – receipt or
bank statement). This notice should be sent within
the timeframe specified in
your rental agreement, which usually is shortly after
moving out.

Cheque Bounce Notices

Cheque bounce notices are sent when you have
received a cheque which fails to clear at the bank.
This can happen due to reasons like, insufficient
funds in issuer’s account, mismatch of signatures, or
other banking errors. This notice serves as a formal
request to the issuer, about the settlement of
payment that given cheque was originally meant to
cover.
In Check Bounce Notice, it is important to detail of
bounced cheque, including cheque number, date it
was issued, amount, and name of bank. Also, need
to attach bank’s notice or memo that explains why
this cheque bounced, as a clear evidence of issue.

Insolvency Notices
Insolvency notices are issued in situations where an
individual or a company is unable to meet financial
obligations. This situation is commonly known as
bankruptcy cases. These notices are a formal
declaration of one’s inability to pay off debts, under
Section 8 of the Insolvency and Bankruptcy Code,
2016. Insolvency Notice serve as official
communication to creditors and relevant authorities
about the financial distress.
In this notice, it’s essential to provide a
comprehensive overview of the financial situation,
incuding detailed financial statements outlining
assets, liabilities, and overall financial standing.
Also, clearly list the debts, including how much is
owed, to whom, and why you can’t pay the debt.
This notice should explain your action plan to fix the
situation, like restructuring debts, selling assets, or
filing for bankruptcy.

Faulty Products and Consumer Grievances

If you buy a product that turns out to be faulty
doesn’t match given description, or doesn’t do what
stated it would, you have the right to complain. You
need to clearly describe the problem with the
product when sending a notice to the company.
Arbitration Notices
Situations when you want to solve a disagreement
with someone without going to court, you can send
Arbitration notice . This is a easy way to settle
disputes more privately and often more quickly. In
these cases, an arbitrator (a neutral person) listens
to both sides and makes a decision.
Include these in your notice:
• A clear explanation of the dispute.
• A reference to the arbitration clause in your
contract. This clause is an agreement if there’s a
disagreement, you will use arbitration instead of
going to court.
• The contract itself (or part of it) that talks about
arbitration.

Recovery of Dues and Salary

You can send a notice to the person or company, in
case you are owed money or salary that hasn’t been
paid to you. This notice is a formal way to ask for the
money you’re owed. It’s important to be clear and
specific in this notice.
Trademark and Copyright Infringement Notices
If someone uses your creative work without your
permission, you can send them a trademark or
copyright infringement notice. This notice is a formal
way to inform them they are using your work
illegally and to stop them from continuing to do the
same.

Divorce and Tenancy Notices

Divorce and tenancy notices are formal documents
used in personal legal matters.
1. Divorce Notices – When you want to start the
process of ending a marriage, you send a divorce
notice.
This notice should include:
• Details of the marriage, like the date and place
of the wedding.
• Reasons for seeking a divorce.
• Any specific demands or conditions, like child
custody or property division.
2. Tenancy Notices – These are used for issues
related to renting a property. If you are a landlord or
tenant with some issue, you use a tenancy notice.
This notice should include:
 • The rental agreement details.
• The specific issue, like late rent payments or the
need to vacate.
• Desired action, like paying overdue rent or fixing
a problem in the property.
Both types of notices are important for legally
addressing these personal matters. They help in
clearly communicating the issues and starting the
legal process for resolution.

Procedures involved in Legal Notice

Drafting a Legal Notice:

1. Write clearly what the problem is and what you
want to be done.
2. Include all important details like dates, names,
and any agreement related to the issue.

Legal Requirements and Formalities:

1. Make sure the notice follows legal rules. This
might mean including specific legal terms or
following a set format.
2. Sign the notice to make it official.
Sending a Legal Notice:
1. Send it in a way that can be tracked, like
registered mail or email with a read receipt.
2. Keep a copy for your records.

Timeframes and Deadlines:

1. Set a clear deadline for the other person to
respond.
2. This is usually a few weeks, depending on what
the notice is about.

Real-Life Uses of Legal Notices

Property Disputes: People often send legal notices
when they disagree about property lines or usage.
These notices usually lead to talks and solutions
without needing a court.
Example –
A homeowner in a suburban area sends a legal
notice to a neighbor over a property boundary
dispute. The notice leads to a mediation session
where both parties agree on a new boundary line.

Workplace Issues: Workers or bosses send legal

notices for problems at work, like being fired unfairly
or harassment. This can lead to discussions or
sometimes court cases.
Example –
A company issues a legal notice to an employee for
breach of contract, leading to a mutual agreement
on the terms of the employee’s exit and a non-
disclosure agreement.

Contract And Copyright Problems: Companies

use legal notices if someone breaks a contract. This
can help fix the agreement or sometimes end up in
court.
Example –
An author sends a legal notice to a website for
unauthorized use of their written content. The
website removes the content and compensates the
author.
Complaints About Products or Services: If you
buy something that’s broken or doesn’t work, you
can send a legal notice to the company. This often
leads to getting your money back, a new product, or
a fix.

Family Law: For personal matters like divorce or

child custody, legal notices start the legal process.
They often lead to agreements or court decisions.
Unpaid Debts: If someone owes money, a legal
notice can ask them to pay. This might lead to a plan
to pay back or more legal steps.

WILL

29. ‘Will’ means the legal declaration of the

intention of a testator with respect to his
property, which he desires to be carried into
effect after his death [ Section 2(h) of Indian
Succession Act, 1925].
· A will is the legal instrument Whereby a person
declares what is to be done with his property
after his death.
· Will means the legal declaration of the intentions
of the test data with respect to his property
which he desires to be carried into effect after
his death.
· A Will is, therefore, the legal declaration of a
man’s intention which he wills to be performed
after his death or an instrument by which a
person makes a disposition of his property to
take effect after his death
· ‘Will’ as per General Clause Act, 1897 shall
include a Codicil and every writing making a
voluntary posthumous disposition of property –
Section 3(64).
· ‘Codicil’ means an instrument made in relation
to Will and explaining, altering or adding to its
dispositions and is deemed to form part of the
Will – Section 2(d) of Indian Succession Act,
1925.
• (a) The document must be in accordance with
the requirements laid down under section 63 of
Indian Succession Act, 1925; i.e., executed by a
person competent to make Will and attested as
required under the Act.
• (b) The declaration should relate to the
properties of the testator, which he wishes to
bequeath.
• (c) The declaration must be to the effect that it
operates after the death of Testator.
• (d) It is of an ambulatory nature which can be
modified or altered at any time by the testator.
• (e) After the Indian Succession Act, 1925, Wills
(except made by Mohammedans) should be made
in writing.

Who can make a Will?

· Section 59 of the Indian Succession Act, provides
for the persons capable of making wills.
· Accordingly, every person of sound mind not
being a minor may dispose of his property by
will.
· A married woman may dispose by will of any
property which she could alienate by her own
act during her life. (Expln. 1).
· Even persons who are deaf or dumb or blind can
make Will provided they are able to know what
they do by it. (Expln.2).
· Further, a person who is ordinarily insane, may
make his Will during the interval in which he is of
sound mind. (Expln.3).
 · However no person can make a Will while he is
in a state of mind arising from intoxication or
from illness or from any other cause such that he
does not know what he is doing (Expln. 4).
· The testamentary capacity is recognized only in
a sound disposing state of mind.
· Soundness of mind denotes the mental capacity
of the testator as to what he is doing, his
capability of understanding his extent of his
property, the person who is the object of his
bounty and the persons who are thereby
excluded.
· Testamentary disposition is personal, it can not
be delegated to any other person.
· A testator can not confide to another the right to
make a will for him
Codicil- Section 2B of the Indian Succession Act
defines this term it means an instrument made in
relation to a will and explaining altering or adding to
its dispositions and shall be deemed to be a part of
the will.
This word is derived from the Roman word codicillus
meaning and informal will. According to the
definition three things are evident:-
1.That It cannot be oral but must be an instrument
2.It must have been made in relation to a will
which has already come into existence
3.That its object is to explain order or add to the
dispositions under the will.
· The purpose of a codicil is to make some slight
changes in a well which has already been
executed though major alterations will not
invalidate its dispositions.
· In practice however a new will is executed by
testator if he desires to make substantial
changes either in the bequests or in the legatees
or the persons who are named originally as
executors.
· Generally a good codicil is in the same form as a
will.
· Generally the same principles are applied by the
courts in construing a codicil as in the case of a
will.
· The will of a testator and all the codicils he may
have executed if more than one will be read
together as 1 testamentary disposition.
· Where the language of a will is open to two
constructions the codicils will be looked into in
order to arrive at the true meaning and intention
of the testator.
Types of Wills
Under the Indian Succession Act, Will can be
Privileged Will or Unprivileged Will.
1)Privileged Will
Any soldier being employed in an expedition or
engaged in actual warfare, or an airman so
employed or engaged, or any mariner being at sea,
may, if he has completed the age of eighteen years,
dispose of his property by a Wills made in the
manner provided in Section 66. Such Wills are called
privileged Wills. Privileged Wills may be made orally
and may not always be in writing. If written in
handwriting of testator, it need not be signed or
attested. It is governed by sections 65 & 66 of the
Indian Succession Act.

2)Unprivileged Will
Wills made by the persons other than stated above
are Unprivileged Will. Such Wills are required to be
in writing, signed by testator and attested by the
two witnesses (except those made by
Mohammedans). It is governed by section 63 of the
Indian Succession Act.

3)Conditional or Contingent Wills:-

A will maybe soul mate as to take effect only on a
contingency. Where the operation of a will is made
dependent on the testators son predeceasing the
testator the will would be contingent will. A testator
may make a well subject to a condition that if the
condition does not happen it will be inoperative.
Thus where a husband and wife jointly make a
holograph to take effect in the event of both dying
simultaneously by some wartime mischance, the
wife died a natural death and the husband survived
it was held at the document was inoperative as a
will.
4) Joint wills:-
Two or more persons may make a joint will. It will
take effect as if each has properly executed a will as
regards his own property. If the will is joined and is
intended to take effect after the death of both it will
not be admitted to probate during the lifetime of
either. Joint wills are revokable at any time by either
during the joint lives or after the death of one by the
survivor.

5) Mutual Wills:-
Two persons may agree to make mutual wills that is
to confer on each other reciprocal benefits. A will is
mutual when two testators confer upon each other
reciprocal benefits as by either of them constituting
the other his legatee That is to say when the
executants fill the roles of both test data and legatee
towards each other. But where the legatees are
distinct from the testators there can be no question
of a mutual bill. Mutual bills are also sometimes
called reciprocal bills and the distinction between a
mutual will and a joint will is well brought out in
Kochu Govindan Katmal versus TT
Lakshmiamma.

6) Oral Wills :-
· In view of section 57 of Indian succession act no
oral will can be legally made even by Hindus and
at present even wills by Hindus must be in
writing and signed and attested by two
witnesses. Still there is the Mohammedan
community among whom oral will recognized.

7)Holograph Wils:-
· When a will is written by the testator himself. it
is called a holograph will and is perfectly valid
even if the executant, is not a soldier airman or
a mariner provided the other formalities of
execution and attestation are satisfied.
IMPORTANCE OF A VALID WILL
The importance of writing a valid will cannot be
undermined. The presence of a will not only makes
estate planning efficient and effective but also
enables the family members of the deceased to
avoid unnecessary family feuds and litigation.
Moreover, it helps to secure the interests of legal
heirs of the deceased from any relatives or
claimants who may arise post the death of the
deceased to claim their share.
The most important purpose that a will serves is the
differentiation of the nominee from the beneficiary.
A nominee is that individual who holds the property
before its final allocation as per the lines of the will
drawn, while the beneficiary is the one who receives
the property ultimately. A will helps the testator to
efficiently allocate a nominee for the distribution of
assets as per will.
One of the major benefits of a will is that it helps to
plan out funds and guardians for minor children or
dependants. In absence of a will, it becomes the sole
discretion of the courts to allocate funds and appoint
guardians in case of unfortunate death of parents.
However, using a will, parents or a single parent can
appoint guardians and allocate funds for their
children’s future and education.
In the present day, where digital presence is a major
source of revenue for social media personalities, a
will helps to appoint executors to manage the social
media presence of the deceased after their death
and govern the revenue generated from that source.

NEED FOR A WILL:

There are quite a few advantages of executing a
Will, namely:
1. A well-drafted Will helps avoid family dispute
regarding the property of the testator and in case a
dispute arises, the beneficiary of the estate has a
formidable document in his favour.
2. The law of inheritance does not consider the fact
as to whether the deceased wished or did not wish
to let any of the family members inherit his property
and in what proportion whereas by way of a Will the
testator can apportion the property as per his wish
3. At times it has been seen that the deceased had
properties both immoveable and moveable which his
inheritors may not know, however, a Will ensures
that all kinds of property are fairly distributed by the
testator during his lifetime.
4. It is a very standard legal requirement now for
transferring real estate, bank deposits, stocks &
shares, interest in the business. A well-drafted &
registered Will ensures the legal requirements are
met.
5. The Will ensures that there are no bogus claims
after the death of the testator.

ESSENTIAL ELEMENTS OF A WILL:

The following checklist in a Will helps ensure its
enforceability:
6. The Will should have the details of the testator, for
example name, address.
7. The need for making the Will should be spelt out
along with the fact that the testator is of a sound
mind and is making the Will voluntarily and there
is no coercion.
8. Use of unambiguous language in bequeathing of
the estate.
9. The name of the executor (The person named by
the testator to execute the testator’s wishes)
should be mentioned.
10. The schedule of properties should be appended
and
11. The Will should be signed by the testator and
attested by two witnesses.
Language, Stamp Duty & Registration
Preparation of a Will does not require any specific
legal language. Any form of writing printing or type
writing may be employed. However, the language
should be as simple as possible and free from
technical words and easily intelligible to a layman.

A Will does not require any stamp duty.

Registration of Will is not mandatory. It is optional.

(Section 18(c ) Registration Act,1908) However a
registered Will has certain advantages. Any testator
may, either personally or by duly authorized agent
deposit with any Registrar his Will in a sealed cover
superscribed with the name of the testator and that
of his agent (if any) and with a statement of the
nature of the document as per Section 42 of
Registration Act, 1908. The testator, or after his
death any person claiming as executor or otherwise
under a Will, may present it to any Registrar or Sub-
Registrar for registration under section 40 of the
Registration Act, 1908.
Attestation
The Will must be attested by two or more witnesses
by complying with the following requirements:
• (i) Each of them must have seen the testator
sign or affix his mark to the Will or has seen some
other person sign the Will, in the presence and by
the direction of the testator, or
• (ii) Each witness has received from the testator
a personal acknowledgment of his signature or
mark,or of the signature of such other person;
and
• (iii) Each witness must sign the Will in the
presence of the testator.
However it is not necessary that more than one
witness must be present at the same time, and no
particular form of attestation is necessary.

Construction of Wills
Apart from any statutory requirement as is
execution attestation no technical words and
necessity for the will and the form of the will is also
immaterial There are two cardinal principles in the
construction of Wills, deeds and other documents.
The first is that clear and unambiguous dispositive
words are not to be controlled or qualified by any
general expression or intention. The second is, to
use Lord Denham’s language, that technical word or
words of known legal import must have their legal
effect even though the testator uses inconsistent
words, unless those inconsistent words are of such a
nature as to make it perfectly clear that the testator
did not mean to use the technical terms in their
proper sense.
(i) Cardinal maxim: The cardinal maxim to be
observed in construing a Will is to endeavour to
ascertain the intentions of the testator. This
intention has to be primarily gathered from the
document which is to be read as a whole without
indulging in any conjecture or speculation as to what
the testator would have done, if he had been better
informed or better advised.
(ii) Relevant considerations: In construing the
language of a Will, the courts are entitled and bound
to bear in mind other matters than merely the words
used. They must consider the surrounding
circumstances, the position of the testator, his
family relationship, the probability that he would use
words in a particular sense and many other things
which are often summed up in somewhat
picturesque figure. The court is entitled to put itself
into the testator’s arm chair.
(iii) Avoidance of intestacy: If two constructions are
reasonably possible and one of them avoids
intestacy while the other involves it, the court would
certainly be justified in preferring that construction
which avoids intestacy.
It is settled law that words in a Will must be
construed in their ordinary grammatical sense
unless it is shown that a clear intention to use them
in a different sense exists and is so proved.
(iv) Effect should be given to every disposition: It is
one of the cardinal principles of construction of Will
that to the extent that it is legally possible, effect
should be given to every disposition contained in the
Will unless the law prevents effect being given to it.
The intention of the testator should be gathered by
giving a harmonious interpretation to the various
terms of the Will as a whole.
(v) Later part or last words to prevail in case parts
irreconcilable or there is repugnancy. – If the several
parts of the Will are absolutely irreconcilable, the
part that is later has to prevail. In case of
repugnancy, the last word in the Will shall prevail.
[CIT v. Indian Sugar Mills Association]

Probate
Probate is a certificate granted under the seal of
Competent Court, certifying the Will (a copy whereof
is annexure thereto) as the Will of the testator and
granting the administration of the estate of the
deceased in accordance with that Will to the
executor named under the Will.

Letters of Administration
A letter of administration can be obtained from the
Court of competent jurisdiction in cases where the
testator has failed to appoint an executor under a
will or where the executor appointed under a will
refuses to act or where he has died before or after
proving the Will but before administration of the
estate. Letters of Administration are not always
necessary in cases of intestacy of Hindus,
Mohammedans, Buddhists, Sikhs, Jains, Indian
Christians or Parsis. Letter of Administration is
always necessary where a person (governed by the
Indian Succession Act) dies intestate.

ISSUES FACED IN ABSENCE OF A WILL

Since the importance of having a will cannot be
undermined, there are various issues which are
faced in absence of wills in India that are as follows:
1. Not having a valid will leaves the family of the
deceased vulnerable to unwanted legal exposure
in form of conflicts in division of assets between
the family members.
 2. There is a high risk of poaching the assets of the
deceased by distant relatives or creditors.
3. Very often the total assets of the deceased are
not known to the family members, who in turn
are unable to use them after his death.
4. There is a risk of identity theft in the case of
social media presence of the deceased in case
no one has been appointed for the management
of the same
The preparation of a will is an intelligent work on
the part of the draftsman. He should, therefore,
study carefully laws relating to Real Properties and
the provisions of Part VI sections 57 to 120 of the
Indian Succession Act and also Hindu Succession
Act, Hindu Adoptions and Maintenance Act before
drafting the Will.
The following broad outlines should be followed
while drafting a Will:
• – Mention the name and address of the testator;
• – Mention of the fact that the testator is making
the will voluntarily and in sound disposing state of
mind;
• – The necessity or urgency, if any, for exclusion
of the will;
 • – Enumeration of testators relatives who would
be entitled to his properties on intestacy and to
whom the bequests are proposed to be made;
• – Details of procedure of making bequests;
• – Use of clear and unambiguous language;
• – Avoidance of conflict with the rule of law. For
eg.,rule against perpetuity (in this connection, the
provisions of sections 112-118 of the Indian
Succession Act must be borne in mind)
• – Appointment of executor
• – Schedule of properties bequeathed;
• – Attestation of will by atleast two witnesses;
• – Provisions relating to bequest and trusts
created by the will should be complete
• – Interest conveyed by will should be clearly
defined. A will or bequest not expressive of any
definite intention is void for uncertainty.

Specimen Forms

Short Form of a Will

This is the last Will of mine, AB, etc., made this
the .......................... day of ..........................
at .......................... which cancels my will
dated .......................... made in favour
of .......................... now deceased.
WHEREAS I had made a Will on ..........................
bequeathing all my property in favour
of .........................., my .......................... (state
relationship).
AND WHEREAS the said .......................... died
on .......................... leaving behind ..........................
NOW I declare that:
2. I hereby revoke my former Will
dated, .......................... in favour of ..........................
aforesaid.
3. I bequeath all my properties to ..........................
my .......................... (state relationship) absolutely.
4. I bequeath the following annuities to commence
from the date of my death and to be paid in monthly
instalments :
(i) To my daughter CD, etc., an annuity of
Rs.......................... to be paid during her life ;
(ii) To my nephew EF, etc., an annuity of
Rs.......................... for his life.
(iii) To my old servant GH, etc., an annuity of
Rs.......................... during his life.
IN WITNESS WHEREOF I the said AB have signed this
Will here under the day and year first written above.

(Sd.)..........................
(AB)

Signed by the above-named AB in our presence at

the same time and each of us has in the presence of
the testator signed his name hereunder as an
attesting witness.
1..........................
2..........................

Simple Will Giving All Property To Wife

I, AB, etc hereby revoke all former Wills and codicils

made by me and declare this to be my last Will
whereby I bequeath and devise all my movable and
immovable property whatsoever to my wife,CD and
appoint her sole executrix of this Will.
IN WITNESS WHEREOF. I have signed this Will
hereunder on the.................day of.............
(Sd.)..........................
(AB)
Signed by the above-named testator in our presence
at the same time and each of us has in the presence
of the testator signed his name hereunder as an
attesting witness.
1..........................
2..........................

Will by a Hindu in Favour of Family

This is the last Will of mine, AB, etc., a Hindu, made
this the.......................... day of ..........................
voluntarily and while in sound state of mind.
WHEREAS I am now 70 years old and have been
keeping indifferent health for a past few months ;
AND WHEREAS I am possessed of considerable
movable and immovable properties more
particularly described in the schedule annexed
hereto which are my self-acquired properties and
which were acquired without any detriment to the
ancestral property or to the family funds and I have
the absolute powers of disposal over the same ;
AND WHEREAS I am anxious to make necessary
arrangements in respect of the enjoyment of my
properties after my life-time so that unnecessary
misunderstanding and consequential wasteful
litigation between the members of my family may be
avoided. Therefore, I am executing this last Will and
testament of mine of my own free will voluntarily
without any compulsion or pressure of any person
and with a sound disposing mind and declare as
follows :
4. I hereby revoke all former Wills and codicils
made by me at any time heretofore.
5. I have my wife CD, two daughters EF and GH and
two sons KL and MN who will be entitled to
succeed to my properties under law in the
normal course. But my daughters are all married
and they are living separately with their
husbands. They have been properly and well
provided for during their marriage. They are
therefore not given any share in my properties
under this Will.
6. I bequeath the property bearing
No.......................... described as item No. 1 in
the Schedule hereto to my first son KL absolutely
to be held and enjoyed by him with full and
absolute powers of alienation.
7. I bequeath the property bearing
No……………………..described as item No.2 in the
Schedule hereunder to my second son MN
 absolutely to be held and enjoyed by him with
full and absolute powers of disposal.
8. I bequeath to my wife CD the property bearing
No.......................... and described as item No. 3
in the Schedule hereto absolutely to be held and
enjoyed by her with full and absolute power of
alienation.
9. Any assets, movable or immovable, which might
be omitted from being mentioned in this Will or
which may hereafter be acquired by me shall be
taken by my wife and the two sons aforesaid in
equal shares absolutely.
10. Though I have bequeathed no share in my
properties to my daughters aforesaid, as a token
of love and affection for them I hereby direct my
two sons KL and MN that each one of them will
pay to each one of my daughters a sum of
Rs.......................... and this sum shall be a
charge on the properties allotted to my above
sons respectively hereto.
11. All the jewellery and ornaments, gold and
silver, will belong to my wife absolutely and my
sons or daughters aforesaid will have no right to
the same.
12. I hereby appoint my two sons KL and MN as
the joint executors under this Will. SCHEDULE OF
PROPERTY
1..........................
2..........................
3..........................
IN WITNESS WHEREOF I, the above-named testator
have signed this Will hereunder the day and year
first written above.
Signed by the above-named AB in our presence at
the same time and each of us has in the presence of
the testator signed his name hereunder as an
attesting witness.
1..........................
2..........................

Will in Favour Of Minor Son

I, AB, etc. execute this last Will of mine this day
of .......................... in the city of ..........................
voluntarily out of my own free will without any
compulsion or pressure from any person and having
a second disposing mind.
WHEREAS I had made a Will dated ..........................
in favour of my wife CD bequeathing all my
properties to her ;
AND WHEREAS the said wife died ON leaving EF,
aged 12 years as our only son.
1. I hereby revoke the Will made in favour of my
wife CD
on ........................................................................
2. I hereby declare and bequeath all my properties,
movable and immovable, belonging to me or
which may belong to me and remain undisposed
of during my life-time unto EF, my son aforesaid.
3. In case I should die before the said son EF
attains majority, I appoint GH, etc..as an
executor under this Will, who shall realise all my
to outstanding and administer the estate left by
me for the benefit of EF, of the said legatte after
defraying all expenses of such administration.
The said executor shall be entitled during such
administration to charge Rs.......................... per
month as remuneration for his service till the
aforesaid EF attains majority. When the said EF
attains majority, the said GH shall handover all
the estate then in existence unto the said EF.
During the minority of the said EF, the executor
shall act as guardian of the said EF and shall
look after his education and training in a be
fitting and useful manner so as to earn a decent
living either as an engineer or as a member of
some other noble profession. However, if the
said EF attains majority during my life-time and
survives me, this provision relating to
appointment of the executor shall not be
 operative and the said EF shall be entitled to
receive and appropriate as owner all and every
part of the estate left by me.
IN WITNESS WHEREOF I have signed this Will in the
presence of witnesses hereunder who have attested
the same in my presence.
(Sd.)..........................
(AB) Testator
Signed by the above-named AB in our presence at
the same time and each of us has in the presence of
the testator signed his name hereunder as an
attesting witness.
1.......................... 2..........................
I have examined the testator and found him in sound
disposing mind and as having fully understood the
contents of this Will.
(Sd.).......................... (Doctor)
ENFORCEMENT OF A WILL:
A Will can be enforced by the executor. He is the
safe-keeper of the rights of the beneficiaries under
the Will. The provision of the Indian Succession Act
makes it mandatory for enforcement of rights under
the Will only by way of a Probate. However, this bar
does not apply to Hindus in India except if the
immovable property is in Kolkata, Mumbai and
Chennai. Probate means certifying of the Will by a
court of competent jurisdiction.

The Executor can apply for a grant of probate in the

court of competent jurisdiction by way of a proper
application.

It is advised to execute a Will in India as per the

Indian laws applicable for the assets located in India.
AGREEMENT TO SELL/PURCHASE
What is an Agreement to Sell?
35. A Sale agreement is a foundational
document that precedes the sale deed in a
property transaction. It holds legal validity and
expresses the seller's commitment to sell the
property and the buyer's intent to purchase it in
the future.
36. This transaction is basis pre-established
terms and conditions agreed upon by both
parties.
37. An agreement to sell is a contract between
a seller and a buyer where the seller agrees to
sell an asset or property to the buyer at a
specified price.
38. The agreement to sell is also known as a
sale agreement.
39. It is generally used to sell immovable
property such as land or buildings.
40. The Agreement to Sell includes all the terms
and conditions agreed upon by both parties.
41. Generally, in India, sale agreements are
made before registering the sale deed so that all
conditions can be negotiated and finalized
between the parties before making it legally
binding.
 42. In Section 4(4) of the Act, it is maintained
that for an agreement of sale to become a sale,
the time has to elapse or the conditions have to
be fulfilled subject to which the property in the
goods is to be is to be transferred.
43. The point that is to be understood from the
above discussion is that a contract for the sale of
goods can either be a sale or an agreement of
sale. Let us see both the cases in the light of the
Act.
44. The Act in Section 4(3), defines what an
agreement to sell is. The section 4(3) of the sale
of Goods Act defines it as, “where the transfer of
the property in the goods is to take place at a
future time or subject to some condition
thereafter to be fulfilled, the contract is called an
agreement to sell.”

Importance of Agreement to Sell

· An Agreement to Sell a contract is crucial
because it legally binds the parties involved in
the sale of a property.
· This contract outlines the terms and conditions
of the sale, including the price, date of sale, and
any contingencies that must be met before the
sale is finalized.
 · The agreement also protects both buyers and
sellers from fraud or misrepresentation by
clearly stating all material facts about the
property.
· Lastly, this contract can be used as evidence in
court if there are any disputes between the
parties after the sale has been completed and
the Agreement is registered.
· The Maharashtra Stamp Act of 1958 governs the
stamp duty payable on an Agreement to Sell
property in India. Under this Act, any document
which transfers or assigns an interest in
immovable property for consideration must pay
stamp duty and registration fees as prescribed
therein and also register the Agreement to Sell
with the relevant Office of the Sub-Registrar of
Assurances.
· The registration fee for an Agreement to Sell is
calculated as a percentage of the sale
price/market value of the property.
Why is Agreement for Sale required?
An agreement for sale of goods/property is drafted
stating a seller’s and buyer’s willingness to sell and
buy respectively, goods or property. It determines
the terms and conditions of sale between the
parties. The agreement is binding on both the
parties. It is an important step as all the rights and
liabilities of the parties are stated clearly and thus
avoids future legal trouble and confusion. One of its
main purposes is to serve as written evidence of the
selling and buying of such goods or properties. It
safeguards the interests of both the seller and the
buyer. It is a legal document and is enforceable in
the Court of law.
Agreement to Sell: Rights of the Seller
The seller has certain rights under an agreement to
sell, which are as follows:
4. The right to receive the sale consideration from
the buyer.
5. The right to deliver possession of the property to
the buyer.
6. The right to sue the buyer for specific
performance of the contract in case of breach by
the buyer.
7. The right to terminate the contract in case of
breach by the buyer.
8. The right to withdraw from the sale completely if
there is no agreement between the parties, or if
either party cancels or backs out of the sale, etc.

Contents of an Agreement to Sell

 4.Since a registered sale and agreement to sell
holds legal sanctity, it contains specific clauses
agreed upon by both parties.
5.These clauses cover penalties for breach of
agreement and the right to terminate the deal.
6.The sale agreement also includes the names and
contact details of the parties, property details
(carpet area, super built-up area, etc.), and its
address; the property type, whether freehold or
leasehold, is also mentioned, along with relevant
terms and conditions for mortgaged or leasehold
properties.
7.The agreement to sell includes a clause ensuring
that the property will be free from
encumbrances upon transfer.
8.Additionally, the contract states the amount of
token money, typically 10-20 percent of the total
deal value, paid when signing the agreement.
9.Finally, an agreement to sell gets completed at
the time period specified in the contract unless
otherwise provided in the contract.
10. Sale agreements do not cover sales that
have already occurred.
What should a Agreement for Sale cover?
It should consist of all the necessary terms and
conditions. The following are important terms that
must be included in a buyer seller agreement for
sale among others:
· The relevant personal details of the parties such
as full name, residential addresses and ages of
the parties to the agreement,
· Description of the goods/property to be sold by
the seller,
· Method of delivering the goods and the time
taken for the delivery of such goods/properties,
· Terms of the payment, including the mode of
payment, the amount to be paid by the
purchaser to the seller and the duration within
which the payment is to be completed,
· Indemnity clause designed to seek
compensation from the seller should there be
any losses/expenses in the future,
· Penalty clause explaining the details of what the
penalty would be if the seller or purchaser
defaults in performing their duties as per the
agreement,
· Clause stating the right to call off the deal,
· General clauses such as termination of
agreement, applicable laws, arbitration clause,
etc.) and
· Date of signing of the agreement.
Agreement to Sell vs Sale Deed
An agreement to sell signifies the promise of a
future transfer of property ownership, whereas a
sale deed marks the actual transfer of property
ownership to the buyer. While the former is a legally
binding commitment, the latter completes the
transaction, making the buyer the rightful owner of
the property.

In an agreement to sell/purchase, the following

details must be incorporated: – names and
descriptions of the contracting parties;
– consideration and earnest money if paid;
– subject-matter of the agreement;
– time within which the agreement is to be
performed; and – special terms agreed upon
between the parties.

Contracting Parties
· The vendor and the purchaser must be
sufficiently described, irrespective of the fact
that the parties know each other.
· There must be reciprocity of interest between
the person who wants to enforce the agreement
 and the person against whom it is sought to be
enforced.
· A stranger to the agreement has no enforceable
claim and as such no court shall entertain his
claim for specific performance.
· However, specific performance may be enforced
not only against a party to the contract but also
against a person claiming title under it.
· If one of the parties to the agreement is acting in
his representative capacity, such capacity must
be clearly and precisely disclosed and his
authority to act in that capacity must form part
of the agreement.
· Legal representatives of parties have a right to
require specific performance of a contract or are
bound by the promise to perform the contract in
the absence of a contrary intention.
· This rule does not apply where the obligation is
personal in nature.
· As a rule, obligation under a contract cannot be
assigned except with the consent of the
promisee.
· On the other hand, rights under a contract are
assignable unless the contract is personal in
nature or the rights are incapable of assignment
 either under the law or under the agreement
between the parties.
· If one of the parties to the agreement is acting in
his representative capacity, such capacity must
be clearly and precisely disclosed and his
authority to act in that capacity must from part
of the agreement. It is, however, usual to have a
clause in a deed specifically stating that the
parties shall include their executors,
administrations, heirs, legal representatives and
assigns.

Consideration
· Price is the essence of an agreement of
sale/purchase and unless the price is clearly and
precisely disclosed in the agreement, there is no
enforceable contract between the parties
because if no price is named in the agreement,
the law does not imply, as in the case of sale of
goods, a contract to buy/sell at a reasonable
price is implied.
· Therefore, in all sales, the price is an essential
ingredient and where it is neither ascertained
nor rendered ascertainable, the contract is void
for incompleteness and is incapable of
enforcement.
 · Price may not necessarily be in the form of
money, it may be any other consideration.
· The word “price” is comprehensive enough to
include any other lawful consideration.
· If any earnest money is paid, the same should
be stated and the consequences arising in
breach of the agreement may be stipulated for,
namely, by forfeiture of the deposit, payment of
a fixed sum by the vendor, if the breach is
committed by the purchaser or the vendor,
respectively.
Subject Matter
· Property of any kind subject to the provisions of
the Transfer of Property Act, 1882, and those of
any other applicable law or custom may be
sold/purchased.
· Transferability is the general rule and the right
to property includes the right to transfer the
property to another person.
· The property, subject-matter of the agreement,
must be described in detail giving its precise
situation and the extent of interest agreed to be
conveyed therein should be clearly stated.
· If the property is subject to certain charges,
easements, encumbrances, restrictions,
covenants etc., the same should be clearly
 stated so that the purchaser knows the real
nature of the property he is purchasing.
· The vendor should not conceal any material
particular with regard to the property he is
selling, which the purchaser has a right to know.

Time for Performance

· If the time for performance is the essence of the
agreement, the same should be clearly
stipulated and the consequences of non-
performance within the stipulated time should
also be clearly and precisely declared.
Drafting of an Agreement
· An agreement between the parties is an
instrument whereby the parties freely agree to
perform certain acts or refrain from doing
sometimes unilaterally or bilaterally.
· The purpose of the instrument is to bind the
parties to the terms and conditions agreed upon.
The agreement should, therefore, be drafted as
deeds between the parties thereto. The old
practice of drafting them as Deeds Poll should be
discouraged.
While preparing agreements it is necessary and
important that the intention of the parties should be
set forth explicitly so as the leave no room for doubt
or future controversy. The language should be
simple and the words used should be definite and
precise; the use of loose expression such as
“proper”, “reasonable”, should, as far as possible, be
avoided.
The provisions of the Indian Contract Act, 1872
about the essential incident and legality of
agreements (Sections 2 to 30) should be studied and
nothing should be introduced or left out which would
make the agreement void. But, if the material terms
of an agreement are clear and specific, omission of
certain details which can be worked out by consent
of the parties or in its absence be settled by court
will not invalidate the agreement (Ramchandra v.
Chinnubhai, AIR 1945 Mad. 10).
An agreement can be split into same parts as any
other document viz. Title, Date, Parties, Recitals,
Testatum, Operating Clause, Schedule (if necessary),
Exceptions and Reservations (if any), Habendum,
Covenants (if any) and Testimonium. The above
clauses were discussed in detail in Study Lesson-1
and a reference to the same may be made.
However, model forms of a few general/usual
clauses in agreement may assume the following
forms:
(i) Operation of Agreement:
“THIS AGREEMENT shall come into force w.e.f. (date)
and shall remain in force for a period of (period) until
determined earlier by notice as hereinafter
provided.”
(ii) Termination by Notice:
“THIS AGREEMENT shall be liable to be terminated
by either party by giving (period) notice to the other
party (without assigning any reason or cause)”.
(iii) Arbitration Clause:
“Every difference or dispute which may hereafter
arise between the parties hereto or their respective
representatives in relation to this agreement or
arising thereout whether as to the constructions or
operations thereof, or the respective rights and
liabilities thereunder or any thing done hereunder or
otherwise shall be referred to a sole arbitrator in
accordance with and subject to the provisions of the
Arbitration and Conciliation Act, 1996. His award
shall be accepted and binding on both the parties.”
(iv) Clause for Services of Communication:
“Any notice may be sent through the post to the last
known place of abode or business of the party to
whom it is given, and if so sent under a certificate of
posting shall be taken to be sufficient service
thereof.”
If it is desired that each party should have a copy of
the agreement, it should be executed in duplicate,
either party signing one of the duplicates and such
duplicates being exchanged. Thus, the duplicate
signed by A is given to B and that signed by B is
given to A, but it is better if both the duplicates are
signed by both the parties. The duplicates must be
the exact reproduction of the original and require
signature and attestation in the same manner as the
original.

Attestation, Registration and Stamp Duty

Attestation: It is not necessary for an agreement to
be attested by any witness. But agreements are
usually attested by one witness. Where registration
is desired the agreement should be attested by two
witnesses.
Registration: Agreements not relating to immovable
property and agreements not creating an interest in
immovable property are not compulsorily
registrable. Only agreements creating an interest in
immovable property worth more than Rs. 100 are
required by law to be registered.
Stamp Duty:-
In India, the buyer is liable to pay stamp duty
whenever any immovable property is transferred.
The amount of stamp duty payable depends on the
state in which the property is situated as well as the
value of the property.
Similarly, when an agreement to sell is executed,
stamp duty is also payable on it. The amount of
stamp duty payable on an agreement to sell
depends on various factors such as the property’s
value, the nature of the transaction
(sale/purchase/exchange/lease), etc.
The party who executes the agreement to sell is
liable to pay stamp duty. In most cases, the buyer
pays stamp duty on an Agreement to Sell. However,
there are some instances where the seller may also
be liable to pay stamp duty.
It is important to note that the amount of stamp duty
payable on an Agreement to Sell is generally lower
than the stamp duty payable on a sale deed. This is
because an “Agreement to Sell” is only a preliminary
contract and does not transfer property ownership.

TERMS AND CONDITIONS IN THE AGREEMENT

TO SELL/PURCHASE
The usual conditions in an agreement to
sell/purchase are:
(i) The vendor has a marketable title in the property
agreed to be sold/purchased and that the vendor
has produced the title deeds relating to the property
to the purchaser for his inspection or in any other
manner, must be specifically stipulated between the
parties to the agreement.
(ii) If the property agreed to be sold is a part of a
larger property, an agreement as to retention of a
particular or all the title deeds to the property by a
party should be arrived at and incorporated in the
agreement to sell/purchase.
(iii) If the property is subject to any prior charge or
encumbrance, the parties must agree that the sale is
to be subject to such encumbrance or price payable
under the agreement included the sum due under
the encumbrance and is required to be paid to the
charge holder at the time of registration or
thereafter.
(iv) The mode of payment of the price or the
balance thereof, if some earnest money or deposit
has been paid, should also be stipulated in the
agreement. It should also be clearly stated whether
the vendor or the purchaser shall be liable to pay
rates, rents, taxes or other imposts for the period
commencing from the date of execution of the
agreement to sell/purchase till the execution of the
conveyance deed. It should also be stated in the
agreement that interest at a particular rate shall be
payable by the vendor on the earnest money paid in
the event of his delaying the execution of the
conveyance deed or the liability of the purchaser to
pay interest at a particular rate, to the vendor, if he
fails to pay the balance amount of consideration at
the agreed date and the execution of the
conveyance deed is delayed on that account.
• (v) The parties should agree as to the point of
time when possession of the property should be
handed over by the vendor to the purchaser, if
the vendor is in possession or how the attornment
by the tenant(s), if the possession is to be
effected.
• (vi) The parties should also agree as to who
shall bear the cost and expense of execution and
registration of the sale deed and if both the
parties have to bear the same, in what precise
proportions they shall bear.
• (vii) If any broker is involved in the transaction,
the agreement should clearly spell out if any
brokerage is payable and by whom and at what
rate, and at what point of time.
The agreement must incorporate if there are any
other particular conditions attached to the
transaction of sale/purchase so that the document is
complete and self-contained and nothing is left to
draw inferences or to presume intentions of the
parties.
A Specimen Agreement of Sale of House
Property
THIS AGREEMENT OF SALE executed on
the................. day of................. 2013, between AB
son
of.................................................................................
................................... residing
at ....................................................... hereinafter
called the vendor of the one part and
CD son of ................................................... resident
at ...............................................................
hereinafter called the purchaser of the other part,
(The expressions “vendor” and “purchaser”
wherever they occur in these presents, shall unless
the context otherwise admits, also mean and include
their respective heirs, executors, administrators,
legal representatives and assigns).
WHEREAS the vendor is the sole and absolute owner
of the property more fully set out in the Schedule
hereunder:
AND WHEREAS it is agreed that the vendor shall sell
and the purchaser shall purchase the said property
for a sum of Rs..................................
(Rupees...................................................) free of all
encumbrances.
NOW THIS AGREEMENT OF SALE WITNESSETH AS
UNDER:
6. The price of the property more fully set out in
the Schedule hereunder is fixed at Rs.................
(Rupees...............................) free of all
encumbrances.
7. The purchaser has paid to the vendor this day, a
sum of Rs.................(Rupees...............................)
by way of earnest money for the due
performance of the agreement, the receipt
whereof the vendor doth hereby admit and
acknowledge.
8. The time for performance of the agreement shall
be................. months from the date hereof and it
is agreed that the time fixed herein for
performance shall be of the essence of this
agreement.
9. The purchaser shall pay to the vendor the
balance sale price of Rs..............
(Rupees.........................) before registration of
the conveyance deed.
10. The vendor agrees that he will deliver vacant
possession of the property to the purchaser
before registration of the conveyance deed. Or
 alternatively, the vendor agrees that he will put
the purchaser in constructive possession of the
property by causing the tenants in occupation of
the property to attorn their tenancy to the
purchaser.
11. The vendor shall execute the conveyance
deed in favour of the purchaser or his nominee
as the purchaser may require.
12. The vendor shall hand over all the title deeds
of the property to the purchaser or an advocate
nominated by him within.............. days from the
date of this agreement for scrutiny of title and
the opinion of the vendor’s advocate regarding
title to the property shall be final and conclusive.
The purchaser shall duly intimate the vendor
about the approval of title within................. days
after delivering the title deeds to him or to his
advocate.
13. If the vendor’s title to the property is not
approved by the purchaser, the vendor shall
refund the purchaser the earnest money
received by him under the agreement and on
failure of the vendor to refund the same
within......... days, he shall be liable to repay the
same with interest thereon at the rate
of................. per cent per annum.
 14. If the purchaser commits a breach of the
agreement, he shall forfeit the earnest amount
of Rs................. (Rupees ............................) paid
by him to the vendor.
15. If the vendor commits a breach of the
agreement, the vendor shall not only refund to
the purchaser the sum of
Rs..................................
(Rupees..................................) received by him
as earnest money, but shall also pay to the
purchaser an equal sum by way of liquidated
damages.
16. Nothing contained in paras 9 and 10 above
shall prejudice the rights of the parties hereto
specific performance of this agreement of
sale/purchase.
Schedule of Property
House No.................................. situated
in................................................
On its North
is………………………………………………….
South is.........................................................
East is...........................................................
West is...........................................................
IN WITNESS WHEREOF the vendor and the purchaser
have set their respective hands to the agreement of
sale/purchase on the day, month and the year above
written, in the presence of the following witnesses:
Witnesses:
(xx) Name :
Father’s Name :
Address :
Signature :
(2) Name :
Father’s Name :
Address :
Signature :

DRAFT OF AGREEMENT FOR SALE

THIS AGREEMENT FOR SALE is made and executed
on this the____________ day _____________ of
___________, 200-
BETWEEN
Mr. ____________s/o. ____________
aged_________________ years residing at
_____________Hereinafter called "The SELLER" (which
expression shall mean and include her legal heirs,
successors, successors-in-interest, executors,
administrators, legal representatives, attorneys and
assigns) of ONE PART.
AND
Mr. ______________ s /o __________ aged ________ years
residing at__________ ___Hereinafter referred as "The
PURCHASER" (represented by his power of attorney)
which expression shall mean and include his heirs,
successors, executors, administrators, legal
representatives, attorneys and assigns of the OTHER
PART.
WHEREAS THE SELLER is the absolute owner in
possession and enjoyment of the more fully
described in the schedule hereunder and hereafter
called the "SCHEDULE PROPERTY.
WHEREAS the property more fully described in the
schedule hereunder is the self acquired property of
the SELLER who purchased the same from
Mr._____________ in and by sale deed dated
_____________ and registered as Doct No._________of
Book 1 Volume No______________Page
No_____to_________, registered on and filed on the file
of the Sub-Registrar,
WHEREAS the SELLER is the absolute owner of the
property and he has been enjoying the same with
absolute right and he has clear and marketable title
to the Schedule Property
WHEREAS the SELLER being in need of funds for the
purpose of ________________ has decided to sell the
property more fully described in the Schedule
hereunder and the PURCHASER has offered to
purchase the same..
WHEREAS the SELLER offered to sell and transfer the
schedule property to the PURCHASER for a sale
consideration of Rs.___________(Rupees___________
only) and the PURCHASER herein has agreed to
purchase the same for the aforesaid consideration
on the following terms and conditions:
NOW THIS AGREEMENT WITNESSETH AS FOLLOWS:
The Sale consideration of the Schedule Property is
fixed at Rs. __________ (Rupees________ only).
The PURCHASER has paid a sum of
Rs.___________(Rupees _________ only) by cash/
cheque /D.D. bearing No _________ drawn on
___________ dated________ as advance, the receipt of
which sum the SELLER hereby acknowledges.
The balance payment of Rs._____________(Rupees
_________ only) will be paid by the PURCHASER to the
SELLER at the time of execution of the absolute Sale
Deed and thus completing the Sale transaction.
The parties herein covenant to complete the Sale
transaction and to execute the Absolute Sale Deed
by the end of
The SELLER confirms with the PURCHASER that
he/she has not entered into any agreement for sale,
mortgage or exchange whatsoever with any other
person relating to the Schedule Property of this
Agreement.
The SELLER hereby assures the PURCHASER and
he/she has absolute power to convey the same and
there are no encumbrances, liens, charges,
Government dues, attachments, acquisition, or
requisition, proceedings etc.
The SELLER agrees to put the PURCHASER in
absolute and vacant possession of the schedule
property after executing the sale deed and
registering the same in the jurisdictional Sub-
Registrar's office.
The SELLER covenants with the PURCHASER that
he/she shall not do any act, deed or thing creating
any charge, lien or encumbrance in respect of the
schedule property during the subsistence of this
Agreement.
The SELLER has specifically agreed and covenants
with the PURCHASER that he/she shall do all acts,
deeds and things which are necessary and requisite
to convey absolute and marketable title in respect of
the schedule property in favour of the PURCHASER
or his nominee.
IT IS AGREED between the parties that all expenses
towards Stamp Duty and Registration charges shall
be borne by the PURCHASER only.
The PURCHASER shall have the right to nominate or
assign his right under this agreement to any person /
persons of his choice and the SELLER shall execute
the Sale Deed as per terms and conditions of this
Agreement in favour of the PURCHASER or his
nominee or assignee.
The SELLER has agreed to get consent deed duly
executed to this Sale transaction from his wife/her
husband, sons and daughters on or before date of
registration of Sale Deed and assured that they all
join to execute sale deed in favour of the purchaser.
It is hereby expressly provided and agreed by the
parties here to that both parties are entitled to
enforce specific performance of the agreement
against each other in case of breach of any
conditions mentioned in this Agreement.
The original of the "AGREEMENT" signed by both the
parties shall be with the PURCHASER and copy of the
same similarly signed shall be with the SELLER.
SCHEDULE
IN WITNESS WHEREOF the SELLER and the
PURCHASER have signed this Agreement of Sale on
the day month and year herein above mentioned in
the presence of the witnesses:
WITNESSES:
1.
2.
Signed by SELLER_____________

In presence of
Signed by PURCHASER__________
In presence of
What is a Sale Deed?

A sale deed, aka a conveyance deed or property sale

deed, is a legal document that officially transfers
property ownership from the seller to the buyer. It
acts as conclusive evidence of the sale and purchase
of the property, outlining the terms and conditions of
the transaction. The sale deed is typically executed
after the buyer and seller agree to the sale price and
other related terms.

Importance of a Sale Deed

• Legal Validity: A sale deed is a legally binding

document that establishes the legal transfer of
ownership. Without a valid sale deed, the
ownership of the property may be disputed,
leading to potential legal complications.
 • Proof of Ownership: The sale deed acts as
conclusive proof of ownership for the buyer. It
serves as a record of the property's rightful owner
and can be used as evidence in case of disputes
or legal matters.
• Property Title: The sale deed contains details
about the property's title, including information
about the current owner, past owners, and any
legal encumbrances. It will ensure more
transparency and help buyers to make informed
decisions.
• Avoiding Frauds: A properly executed sale deed
helps prevent fraudulent property transactions. It
ensures that the property is sold by the rightful
owner and that the transaction is carried out
legally.
• Access to Public Records: Once registered, the
sale deed becomes a part of the public records.
This provides an additional layer of security and
transparency to the transaction.

Key Elements of a Sale Deed

• Parties Involved: The sale deed includes the

names and addresses of both the seller and the
buyer. It identifies the transfer of ownership.
 • Property Description: Detailed information about
the property being sold, including its boundaries,
dimensions, and address, is provided in the sale
deed.
• Sale Consideration: The sale price and the mode
of payment are mentioned. This section also
outlines any advance payment made and the
remaining amount.
• Rights and Liabilities: The sale deed may include
clauses related to the rights and liabilities of both
the buyer and the seller, such as the transfer of
utility connections and payment of property
taxes.
• Encumbrances: Any legal encumbrances on the
property, such as mortgages or liens, are
disclosed in the sale deed. This ensures that the
buyer is aware of any existing claims on the
property.

Documents Needed for Sale Deed Registration

When it comes to registering a sale deed, there are
a few key documents you'll need to have in order to
do so. These documents play a crucial role in the
process, ensuring that everything is legal and above
board. Here is what you will need:
1. Sale Agreement:
This agreement lays out the terms and conditions of
the sale, ensuring that both the buyer and seller are
on the same page regarding the transaction.
2. Power of Attorney (if applicable):
In cases where someone is representing you in the
property deal, a Power of Attorney document might
be needed to formalise their authority.
3. Aadhaar Card:
Your Aadhaar card serves as a primary identification
document, helping in your transaction identity.
4. PAN Card:
Your PAN card, with its unique identification number,
is essential for financial transactions and tax-related
matters.

5. Passport-Size Photographs:
A couple of passport-size photos are needed for
identification and record-keeping purposes.
6. Property Tax Receipts:
To confirm that all property taxes are up to date,
you'll need copies of property tax receipts.
7. Bank Passbook or Statement:
Proof of your financial ability to make the purchase,
such as your bank passbook or statements, might be
required.
8. NOC from Society (if applicable):
If the property is part of a society or community, a
No Objection Certificate (NOC) from the society
might be necessary.
9. Allotment Letter (if applicable):
If the property was allotted to you by a builder or
developer, the allotment letter establishes this fact.
A sale deed is a legal document that showcases the
transfer of title, rights, and ownership of a property
from a seller to a buyer.

It is the most important document that legally

reports the proof for the buyer and seller. It is an
essential document for both the buyer or the
transferee and the seller or the transferor. The
purchase or sale of the property is not legally
complete until a sale deed agreement is signed
between the buyer and the seller. Normally, a sale
deed agreement is signed only after both the parties
are satisfied and comply with the terms and
conditions.
•
Advantages of a Sale Deed

•
A few additional benefits of a sale deed registration
are as follows:
• As a sale deed form concludes the sale into
a legal document, it is enforceable by the law
• A sale deed reduces troubles as all money
due can be specified in the document. This
makes the sale process more stable and
comfortable. Additionally, it assures that your
property is not taken for granted, given the
existence of a registered and stamped legal
document.

Protects Parties
The sale deed registration protects the rights of both
the buyer and the seller. A specific, well-drafted
deed will avoid ambiguity and minimise legal risks.

Defines The Area

For the buyer, a key advantage is having a well-
defined description of the property being purchased,
including the square footage and the location.

What is Included in the Sale Deed?

In general, a sale deed should include the below-
mentioned details-
• Descriptions of the parties involved- the full
name, complete address, contact details, age &
occupation for each buyer and seller
• Description of the property being
transferred- id number, correct address,
dimensions of the property, construction details
of the building, if there is any
• Indemnity & encumbrance clause- This
includes a declaration from the seller that the
 property being transferred is free from every
encumbrance, litigation, and charge. Also, the
seller indemnifies the buyer from any pending
charges in this regard
• The seller should settle a pending loan taken
with the concerned property as a mortgage
before proceeding with the sale. The buyer has
every right to examine the related documents
before drafting and registering the sale deed.
• The sale consideration- It’s the price at
which the transfer deal is closed. This section
should also mention the advance amount paid if
there is any. The parties should explicitly agree
on the payment dates, the mode of payment,
etc. The price and the details of the transactions
should be mentioned in figures and numbers.
The sale deed format should also mention the
receipts of the sale transaction
• Delivery & possession of the property- the
deed should specifically mention the date of
handover to and possession by the buyer.

What Are the Things to Keep in Mind During

Sale Deed Registration?
Title: It is important to ensure that the seller has
a clear and undisputed title to the sold property. This
can be verified by conducting a title search and
obtaining a title certificate
• Documentation: All necessary
documentation, such as the sale agreement,
power of attorney, and other relevant
 documents, must be in place before the sale
deed registration process
• Tax clearance: It is important to ensure
that all outstanding taxes, including property tax
and stamp duty, are paid and cleared before the
sale deed registration process
• Legal advice: It is recommended to seek
legal advice from a qualified lawyer before
getting the sale deed registration to ensure the
sale deed registration process is carried out
smoothly and legally
• Valuation: It is important to get the
property valued by a professional valuer before
the sale deed registration to ensure that the
price being paid is fair and reasonable
• Survey: A property survey should be
conducted to ensure that the sold property is
accurately described and all boundaries are
clearly defined
• Registration fees: It is essential to pay the
necessary sale deed registration fees to ensure
that the sale deed registration process is
properly done and legally valid
• Witnesses: The sale deed should be signed
in the presence of at least two witnesses who
can attest to the document's authenticity.

Requirements of a Sale Deed

• The sale deed format must specify the name
and address of the buyers and the sellers
• The complete address of the property, and a
description of the property should be mentioned
in the property sale deed.
 • The sale price consideration accepted
between the buyer and the seller must be
specified in the sale deed. That is, the amount
which the buyer has to pay on the execution of
sale deed must be mentioned in the property
sale deed
• Additionally, if the advance amount is paid
already, it must be mentioned in the property
sale deed
• The mode of payment must be mentioned
• The property sale deed must stipulate the
time when the title of the property registration
will get transferred to the buyer. All the
documents related to the property must also be
handed over to the buyer
• Ensure that the title of the property is
available from any deviation
• A Property sale deed is not legally binding
unless it is enrolled in the sub-registrar office.
Both the buyer and the seller, including the
witness, must be there at the registrar's office
on the date for the enrollment of the deed
• The stamp duty and sale deed registration
charges have to be paid to making the sale deed
registration.

Important Elements of the Sale Deed

The important elements of a sale deed typically
include:
Property Description: The sale deed should contain
an accurate description of the property being sold,
including its dimensions, boundaries, location, and
any fixtures or structures attached to it.

Buyer and Seller Details: The sale deed should

clearly mention the names and addresses of both
the buyer and seller.

Purchase Price: The sale deed should state the

agreed-upon purchase price for the property and the
payment terms.

Mode of Payment: The sale deed should specify the

mode of payment, such as cash, cheque, demand
draft, or bank transfer.

Possession Date: The sale deed should mention the

date on which the buyer will take possession of the
property.

Rights and Obligations: The sale deed should outline

the rights and obligations of both the buyer and
seller, such as maintenance responsibilities and any
usage restrictions.

Indemnification: The sale deed should include an

indemnification clause that protects both parties
from any potential losses or damages arising from
the transaction

Signatures and Witnesses: The sale deed must be

signed by both the buyer and seller in the presence
of witnesses, who must also sign the document.
Rights and Obligations

Buyer's Rights and Obligations:-

• Ownership: The buyer gains legal ownership and
title to the property upon the execution of a valid
sale deed.
• Possession: The buyer can take possession of
the property as agreed upon in the sale deed.
• Use and Transfer: The buyer has the right to use
and transfer the property, subject to any local
laws and regulations.
• Payment of Stamp Duty and Registration
Charges: The buyer is obligated to pay the
applicable stamp duty and registration charges
for the sale deed.

Seller's Rights and Obligations

• Sale Price: The seller has the right to receive the
agreed-upon sale price as mentioned in the sale
deed.
• Transfer of Ownership: The seller must ensure a
smooth transfer of ownership by providing
accurate information and documentation.
 • Encumbrances: The seller is obligated to disclose
any existing encumbrances or legal disputes
related to the property.
• Handover of Possession: The seller must hand
over possession of the property to the buyer upon
the execution of the sale deed.

Challenges and Considerations

While a sale deed plays a pivotal role in property

transactions, there are certain challenges and
considerations that both buyers and sellers need to
be aware of:
Due Diligence
Buyers must conduct thorough due diligence before
finalising a property purchase. This includes
verifying the property's title, past ownership records,
any legal disputes, and the authenticity of the seller.
Sellers, on the other hand, should ensure that they
provide accurate and complete information about
the property to avoid any legal complications.
Encumbrances and Liabilities
The sale deed should clearly outline any existing
encumbrances on the property, such as mortgages,
liens, or pending legal cases. Buyers need to be
aware of these encumbrances as they might affect
their ownership rights and plans for the property.
Tax Implications
Both buyers and sellers need to consider the tax
implications of the property transaction. Buyers
might have to pay stamp duty, registration charges,
and potentially other taxes, depending on local
regulations. Sellers should also be aware of any
capital gains tax or other taxes that might arise from
the sale.

Negotiation of Terms
The terms and conditions mentioned in the sale
deed, such as the sale price, payment schedule,
possession date, and other clauses, should be
thoroughly negotiated and agreed upon by both
parties. Any discrepancies or misunderstandings in
these terms could lead to disputes later on.
Fraud Prevention
To prevent fraudulent transactions, both buyers and
sellers need to engage the services of legal
professionals, such as lawyers or property
consultants, who can verify the authenticity of the
property and the legality of the transaction.

Execution and Registration

The sale deed must be executed on non-judicial
stamp paper of the value as per local laws. Once
executed, it needs to be registered at the local Sub-
Registrar's office. The registration process involves
the presence of both parties along with two
witnesses to ensure the validity of the transaction.
Inheritance and Succession Planning
In cases where the property is inherited or passed
down through succession, the sale deed needs to
reflect the legal status of the property transfer. Legal
heirs must ensure that all necessary documents and
permissions are in place to facilitate a smooth
transfer of ownership.

What is the Process For Getting a Sale Deed?

The buyer of a property must draft a sale deed after

obtaining the necessary documents from the seller.
It is advisable for the buyer to seek the assistance of
a legal professional or advocate to verify that the
seller is the rightful owner of the property and
possesses the requisite title deeds for the sale.
•
The legal expert will do drafting sale deed,
incorporating all the essential clauses and
components. Once drafting sale deed is done by
either the buyer or their appointed advocate, the
sale deed is then submitted to the seller. Upon the
seller's approval of the contents of sale deed, the
document is finalized, allowing both parties to
proceed with the sale deed registration at the sub-
registrar office.
Points to Remember When Executing a Sale Deed

Here are some points to remember when executing

a sale deed:
• Make sure that the property is free from any
encumbrances, such as mortgages or liens.
• Get a title search done to ensure that the
seller is the rightful owner of the property.
• Get a survey done to ensure that the
boundaries of the property are correct.
• Get a valuation done to determine the fair
market value of the property.
• Negotiate the purchase price and make sure
that it is fair to both parties.
• Get the sale deed drafted by a lawyer.
• Sign the sale deed in the presence of
witnesses.
• Register the sale deed with the relevant
authorities.

Sale Deed Charges

The sale deed charges in India depend on the state
in which the property is located and the value of the
property. Generally, the charges are calculated as a
percentage of the value of the property, with the
percentage varying from state to state.
•

It is important to note that the charges may vary

based on the location and value of the property, and
it is recommended to consult with a lawyer or a
property advisor for more accurate information.
•

To get sale deed registration, you can get in touch

with Vakilsearch. Our pricing for sale deed starts at a
pocket-friendly price of ₹3999 onwards.
DEEDS OF SALE OF LAND AND BUILDING
DEED OF ABSOLUTE SALE
This DEED OF ABSOLUTE SALE is made and executed
on this _______ day of ______________, Two Thousand
_______
BETWEEN
Sri ____________________, son/wife/daughter of
Sri/Late _______________, aged about _______ years,
holding PAN _____________, by Caste ________, by
Nationality Indian, residing at
_____________________________________________,
hereinafter called the "SELLER" (which expression
shall mean and include his legal heirs, successors,
successors-in-interest, executors, administrators,
legal representatives and assigns) of the ONE PART.
AND
Sri __________________________________, son of
_______________________, aged about _______ years, by
Caste __________, by Nationality Indian, holding PAN
_____________, residing at
_____________________________________________,
hereinafter called the "PURCHASER" (which
expression shall mean and include his legal heirs,
successors, successors-in-interest, executors,
administrators, legal representatives and assigns) of
the OTHER PART.
The SELLER and the PURCHASER are hereinafter
referred collectively as parties and individually as
party.

WHEREAS the SELLER is the absolute owner, in

possession and enjoyment of the piece and parcel of
______ land measuring about ____ decimal, lying and
situated in R.S. Plot Number ____, corresponding L.R.
Plot Number ____, Recorded in R.S. Khatian Number
_____ and L.R. Khatian Number ____, at Mouza _____,
J.L. Number _____, Touzi Number ______, under Police
Station __________, Registration Sub-District
_________, in the district of ________________, more
fully and particularly described in the schedule here
under written and hereafter referred to as the
"SCHEDULE PROPERTY”.
ANDWHEREAS the SCHEDULE PROPERTY was the
self acquired property of __________, deceased father
of the SELLER and he purchased the same from Sri
__________________, son of _____________ of
_________________________________, by virtue of a Sale
Deed dated ________________, registered in the office
of the _____________________________, in Book 1,
Volume No. ____, Pages ____ to _____, Being Number
___________ for the Year _____.
ANDWHEREAS the said _________ died in-estate on
_________ leaving behind his only son namely, Sri
_______________, the SELLER herein, as the only legal
heir. ANDWHEREAS the SELLER herein, as the only
legal heirs of the deceased ____________, have
become the absolute owner of the SCHEDULE
PROPERTY since the death of his father _____________
on and he has been enjoying the same with absolute
right, title and interest sice then and he has clear
and marketable title to the SCHEDULE PROPERTY.
ANDWHEREAS the SELLER being in need of funds to
meet his personal commitments and 2 family
expenses have decided to sell the SCHEDULE
PROPERTY and the PURCHASER has agreed to
purchase the same. the
ANDWHEREAS the SELLER agreed to sell, convey
and transfer the SCHEDULE PROPERTY to
PURCHASER for a total consideration of Rs._________
(Rupees ___________________________) only and the
PURCHASER herein agreed to purchase the same for
the aforesaid consideration and to that effect the
parties entered into an agreement on the
_________________ .
NOW THIS DEED OF SALE WITNESSETH:
1. THAT in pursuance of the aforesaid agreement
and in consideration of a sum of Rs._________
(Rupees ___________________________) only received
by the SELLER in cash/cheque/bankdraft and upon
receipt of the said entire consideration of
Rs._________ (Rupees ___________________________)
only (the SELLER doth hereby admit, acknowledge,
acquit, release and discharge the PURCHASER from
making further payment thereof) the SELLER doth
hereby sells, conveys, transfers, and assigns unto
and to the use of the PURCHASER the SCHEDULE
PROPERTY together with the water ways, easements,
advantages and appurtenances, and all estate,
rights, title and interest of the SELLER to and upon
the SCHEDULE PROPERTY TO HAVE AND TO HOLD
the SCHEDULE PROPERTY hereby conveyed unto the
PURCHASER absolutely and forever.
2. THAT THE SELLER DOTH HEREBY COVENANT WITH
THE PURCHASER AS FOLLOWS:
i. That the SCHEDULE PROPERTY shall be quietly and
peacefully entered into and held and enjoyed by the
PURCHASER without any interference, interruption,
or disturbance from the SELLER or any person
claiming through or under him.
ii. That the SELLER have absolute right, title and full
power to sell, convey and transfer unto the
PURCHASER by way of absolute sale and that the
SELLER have not done anything or knowingly
suffered anything whereby their right and power to
sell and convey the SCHEDULE PROPERTY to the
PURCHASER is diminished.
iii. That the property is not subjected to any
encumbrances, mortgages, charges, lien,
attachments, claim, demand, acquisition
proceedings by Government or any kind whatsoever
and should thereby and the SELLER shall discharge
the same from and out of his own fund and keep the
PURCHASER indemnified.
iv. That the SELLER hereby declares with the
PURCHASER that the SELLER have paid all the taxes,
rates and other outgoings due to local bodies,
revenue, urban and other authorities in respect of
the SCHEDULE PROPERTY up to the date of
execution of this sale deed and the PURCHASER shall
bear and pay the same hereafter. If any arrears are
found due for the earlier period, the same shall be
discharged/borne by the SELLER.
v. That the SELLER have handed over the vacant
possession of the SCHEDULE PROPERTY to the
PURCHASER on ___________ and delivered the
connected original title document in respect of the
SCHEDULE PROPERTY hereby conveyed on the date
of execution of these presents. 3
vi. That the SELLER will at all times and at the cost
of the PURCHASER execute, register or cause to be
done, all such acts and deeds for perfecting the title
to the PURCHASER in the property hereby sold and
conveyed herein.
vii. That the SELLER do hereby covenants and
assures that the PURCHASER is entitled to have
mutation of his name in all public records, local body
and also obtain all documents in the name of the
PURCHASER and undertakes to execute any deed in
this respect.
SCHEDULE OF PROPERTY
All that piece and parcel of _____ land measuring
about _____ decimal, lying and situated in R.S. Plot
Number ____, corresponding L.R. plot Number ____,
Recorded in R.S. Khatian Number ____ and L.R.
Khatian Number ____, at Mouza _____, J.L. Number
____, Touzi Number _______, under Police Station
______, Registration Sub-District ______, in the district
of ____________, butted and bounded by:
On the North :
On the South :
On the East :
On the West :
IN WITNESS WHEREOF the SELLER and the
PURCHASER have set their signatures on the day
month and year first above written.
. ______________________________ SELLER
______________________________ PURCHASER
WITNESSES:
1.
2.

DRAFT 2
THIS DEED OS SALE Executed at ward #8 Vasant
Vihar, Bathinda on the 21st day of October 2003
Between Kaluram son of Seeta Ram residing at ward
NO.4 Bathinda (herein after called the vendor which
expression shall include his executors,
administrators, legal representatives, successors
etc.)
AND
Ashok Singhal son of Rakesh Singh residing at Kabir
Colony Bhatinda (Herein after called the Vendee
which expression shall include his executors
administrators legal representatives successors etc)
WHEREAS:
1) VENDOR Herein had acquired the said
property after the partition of the ancestral
property with his brothers by a valid partition
deed dated 21st August 2023 herein attached.
2) The vendor herein has been in exclusive
possession of enjoyment of property more fully
described in the scheduled here under and has
an exclusive right to sell the property.
3) The vendor is the exclusive owner of the
property more fully described in the scheduled
hair under and he has absolute right to dispose
of the same as in the manner he wishes.
4) The vendor has decided to sell his property
more fully described in the scheduled here under
for a sum of rupees 18,20,000 only and the
vende herein has agreed to purchase the same
for the said price and to the the effect they enter
 into an agreement to sell dated 28th September
2023.

NOW THIS DEED OF SALE WITNESSETH AS UNDER:-

That in pursuance of the aforesaid agreement and in

consideration of the sum of rupees 10,00,000 only
received by the vendor by check number 92101 and
8,20,000 only in cash the VENDOR doth hereby
admit, acknowledge, release and discharge the
VENDEE from making for the payment thereof and
the VENDOR doth thereby sell, convey, transfer to
the use of VENDEE the property more fully described
in the scheduled here under together with the
waterways, easements and all rights, title of vendor
to and upon said property to have and to hold the
said property conveyed into the VENDEE absolutely
and forever.
THE VENDOR HEREBY COVENANT WITH THE VENDEE
AS FOLLOWS:
1) That the property more fully described in the
scheduled hereunder shall be quietly and
peacefully entered into and held and enjoyed by
VENDEE without any interference or disturbance
from VENDOR or any person claiming through or
under him.

2) That VENDOR has absolute right, title and

full power to sell, convey and transfer to VENDEE
by a way of absolute sale.
3) That property is not subject to any
encumbrances, mortgages, charges, lien,
attachment, claim, acquisition proceedings, by
government.
 4) That the VENDOR hereby declares with the
VENDEE that the VENDOR has paid all the taxes
rates and other dues to local bodies revenue and
other authorities in respect of property up to
date of execution of sale deed and the VENDEE
shall bear and pay the same hereafter.

5) That VENDOR has handed over the

possession of property to the VENDEE on 18th
October 2023 and delivered the original title
document.

6) That the VENDOR Do hereby consents and

assures that the VENDEE is entitled to have
mutation of his name in all public records, local
bodies and also obtain palt in name of VENDY
and undertakes to execute any deed in this
respect.

SCHEDULE OF THE PROPERTY

Location and boundary of property in detail
was description of North, south, East and West as in
sketch map or revenue record.

SCHEDULE OF CONSIDERATION
The market value of property is rs 18,20,000 out of
that amount rupees 10,00,000 has been paid by
cheque number 92101 dated 18th October 2023 of
SBI bank Bathinda branch and rs 8 lakh 20,000
through cash.
IN WITNESS WHEREOF the VENDOR and the VENDEE
Have said their signatures on the 21st October 2023
in the presence of following witnesses.

Witnesses:
1) Aman Kumar son of Rupan Kumar ward #6
Bathinda
2) Jyoti Sharma daughter of Ram Sharma Vikas
Nagar, Bathinda

(SIGN)
VENDOR
SIGN
VENDEE
What is indemnity bond
An indemnity bond assures the holder of the bond,
that they will be duly compensated in case of a
possible loss.

This bond is an agreement that protects the lender

from loss if the borrower defaults on a legally
binding loan. If the principal fails to fulfill the
contractual obligations (agreed upon by the obligee
and the principal), the principal pays up to the full
bonded amount (including legal costs). If a person
fails to pay the agreed upon amount, then
their corporate and personal assets will be used to
pay them. This bond is non-negotiable. If not
signed, the surety bond will not be approved.
So what is an indemnity bond?
An indemnity bond gives the legal right to collect
from the principal any amount that the surety has
paid out in a claimed situation. As per the
agreement, it requires that the company pay a
premium. For example, if the surety company must
pay another contractor to complete the project, the
surety company will make a demand on the bonded
contractor that they pay for this expense. The surety
company can sue the contractor if they fail to do so.
Understanding an indemnity bond is very important.
If not understood properly, there are certain
damaging consequences that may occur. The
reputation of the company will suffer if the company
decides not to pay the claim. This may result in
colleagues or future clients viewing the company as
incompetent and unprofessional. Not paying claims
on a bond can also lead to bankruptcy and legal
action.
Most people have a basic understanding about
surety bonds. But few have a complete and vast
knowledge about them. Understanding what a bond
guarantees, simply by reading the bond form, can
seem overwhelming. As professional bond service
experts, we provide detailed knowledge about the
surety bond and suggest what is best for you.
When is an indemnity bond required?
There can be various reasons where an indemnity
bond is required. For example, in the construction
industry, when buying a home, company or shares
or when dealing with government indemnity
schemes.
It is important to include in this list a contractor’s
license bonds as well. This is legal protection for
three parties: the contractor, the company, and the
state bond issuing agency. By getting a contractor
license bond, it helps to ensure that projects
progress professionally and ethically.
Definition

Indemnity:
The word indemnity means security or protection
against a financial liability. It generally occurs as a
contractual agreement and is made between parties,
where one party agrees to remunerations for the
damages and loss faced by the other. In corporate
law, if the company is sued or suffers damages, an
indemnity agreement frees Board Directors and
company executives from having to undertake any
personal liability. As per Section 124 of the Indian
Contract Act, 1872 a contract of indemnity can be
defined as ‘a contract by which one party promises
to save the other from loss caused to him by the
conduct of the promisor himself, or by the conduct of
any other person, is called a contract of indemnity.’

Bond: It means security of any kind that has certain

terms that must be adhered to and obligations that
must be performed as part of a commitment
legalized by a license, a permit, a contract or other
similar legal drafts.

Indemnity Bond: An indemnity bond intends to

reimburse any actual or claimed loss caused by the
issuer’s or another person’s conduct. In case a
principal fails to perform according to the standards
agreed upon between the obligee and the principal,
an indemnity bond acts as a security for the loss the
obligee has suffered.

Where is Indemnity Bond Used?

A contractual agreement between two parties where
one is willing to pay for the damages or loss caused
by another is known as an indemnity bond. In other
words, Indemnity Bond is a pact agreeing to
indemnify the loss that may occur in future.

• Indemnity bonds are commonly found to be

agreements between an individual and a
business. However, it also applies on a much
wider scale and may be involved in the
relationships between businesses and
government or between governments of two or
more countries.
• Indemnity may be referred to as an exemption
from having to pay for loss and is a
comprehensive form of insurance compensation
for damages or loss. In legal terms, it may also
refer to an exemption from liability for damages.
 Thus, it is extremely important to have a good
understanding of the indemnity bond terms.
• There may be severe consequences for any lack
of awareness, which, in turn, damage the
reputation of the company if it rejects the idea of
bearing the costs for the claim. In addition, the
company may be termed as incompetent and
unprofessional as a result of this.
• Failing to pay claims may result in bankruptcy or
lead to legal actions.

Features of Indemnity Bond

The indemnity bond may be express or implied.

• When a person promises to compensate the other

in express, it is known as an express promise.
• When the conduct of the promisor displays their
intention to indemnify the other from loss, it is
known as an implied promise.

Irrespective of whether the interpretive research

gloss is accurate or not, Indian law has identified and
recognized implied indemnities.
3. Good Faith: Such agreements depend on mutual
trust/good faith between two parties.
4. Covers ONLY the Actual Loss: The agreement only
covers the actual loss that may be caused by the
promisor or any other person. It must be noted
that the agreement only covers the loss caused by
events stated in the contract. The event stated in
the contract must happen for the agreement to be
valid and applicable.
5. Consideration Must Be Lawful: The consideration
and objective of the indemnity bond must be
legal.

Advantages of Indemnity Bonds

• It can be structured to cover any type of expected

loss. Both parties involved in the contract are
familiar with what amount shall be paid and under
what circumstances, i.e., liquidated sum.
• This bond aims to protect one party against losses
that occurred due to the principal’s failure to
meet the obligations.
• Also known as surety bonds, indemnity bonds are
a part of the entire world of businesses. If there
wasn’t a system that assured payment and acted
as security in case one of the parties in a contract
fails to pay, there wouldn’t be any commerce or
 business possible. An indemnity bond is created
to safeguard the obligee from the principal
against the potential breach of contract. It is an
assurance by a guarantor to pay the obligee a
specific amount if the terms of the contract are
not fulfilled and/or breached. The purpose of
indemnity bonds is to guarantee financial
reimbursement for any damage faced due to the
illegal actions of the other party that is bonded
through the agreement.
• The principal signs an agreement to indemnify
with the surety provider as part of getting an
indemnity bond. According to this, in case of bond
claims, the entire financial responsibility belongs
to them rather than the surety.

Need for Indemnity Bonds

Indemnity bonds are majorly required for instances
of borrowing money and property transfers.
However, some other situations that it is needed in
as well are:

• Borrowing funds from banks.

• For the release of payment.
• In the event of losing a fixed deposit receipt.
 • Transfer of property to legal heirs.
• In cases of death claims.
• Transfer of electricity connection.
• Government Indemnity schemes.

These bonds are enforced to cater legal protection

to the parties involved in the agreement. Projects
progress professionally and ethically by signing
indemnity bonds.

When is an Indemnity Bond imposed?

In the event of an infringement of the terms in the

agreement, the indemnity bond is imposed. A party
may only face liability in case of contract breach,
where the party under fault is responsible to
compensate the other party as per the damages
caused.

Difference between Affidavit and Indemnity Bond?

Affidavit Indemnity Bond

An affidavit is like a Indemnity Bond is a

statement of oath that document providing
ensures the individual is security to a party that
 telling the truth and not will be given
hiding anything at all. compensation in case the
The document states contract is breached. The
that no material compensation may be
information or knowledge monetary or in any
is hidden by the parties medium, as agreed upon
involved. in the bond.

Common Types of Indemnity Bond Used in General

Corporate Transactions

• Besides insurance policies, Indemnity Bonds are

drawn between employer and employee as well.
The bond certifies that the employee will serve
the employer for a specific period. If the contract
is breached by the employee and they leave
before the assured term is completed, they will be
entitled to pay the employer monetary
compensation.
• Those who have lost a Share Certificate also
create an indemnity bond. The bond states the
genuine loss of Share Certificate and requests for
a New Share Certificate to be processed. The
bond exempts the applicant of all the costs
related to issuing a New Share Certificate.
 • When a company or an educational institution
wants to apply to alter the basic details of a
student, an indemnity bond may be provided to
them to indemnify any loss that may occur as a
setback of changing the details. Indemnity bonds
may be signed by Government authorities and
independent contractors.

Based on the variety of transactions made, these

indemnity bonds can be enforced between
numerous parties.
Stamping of Indemnity Bonds
According to the Indian Stamp Act, 1899, the stamp
duty must be paid in case of Indemnity Bonds.
Related terms and conditions
• Period of indemnity: The specific time period
for which the indemnity is valid is known as the
period of indemnity.
• Concerned subjects: Indemnity normally
arises between an individual and a business.
Often, in large business operations, the
individual may also include the governments of
any country. Sometimes, the government may
provide the businesses or larger industries on
behalf of its citizens, especially during the
outbreak of any pandemic. For example, the
foreign vaccine manufacturers demanded
indemnity for any future claim of adverse effects
by its citizens.
• Forms of compensation: Indemnity is usually
paid in three forms. They are either monetary
payments or by repairing or replacement for the
loss or damage caused. It largely depends on the
situation.
• Indemnity for acts done in good faith: It is
applicable for public servants, especially
government officials, police authorities and army
officers, who may be required to execute certain
illegal acts to fulfil their duties. For example,
Section 74 of the Indian Forest Act, 1927
 provides forest official indemnity for any act
done in good faith.
• Indemnity insurance: Indemnity insurance
protects the holder from indemnity claims and
provides costs of indemnity when required.
Professional indemnity insurance is a common
example of indemnity insurance which protects
them against alleged negligence or inadequate
service. It is used in professions where lawsuits
are common, such as in the medical or legal
field. The insurance limit is chosen based on the
scale of the practice. Besides indemnity claims,
it also covers litigation and settlement costs.
• Letter of indemnity (LOI): Letters of indemnity
(LOI) are similar to indemnity insurance. In LOI,
the third party is responsible and should
expedite any damages caused to a party by
another. This is the reason why LOIs have also
been termed “bonds of indemnity” or “indemnity
bonds” which is the subject matter of this article.

Parties
An indemnity bond mainly involves two parties. They
are principal and surety. The number of persons
representing the principal and surety can be more
than one if the situation requires it. Both the
principal and surety jointly promise to indemnify the
party, but the responsibility and obligation of each of
the parties are different.
The subject matter of the indemnity bond is
executed for another party, known as the obligee.
Hence, there are a total of three parties to an
indemnity bond. The principal is also known as the
“obligor” because he is obliged to follow the terms of
the indemnity bond.
For example, by executing an indemnity bond for a
death claim in a bank, both the principal and the
surety agree to keep the bank indemnified against
all future claims and demands in respect of the said
assets deposited in the bank. In this case, the bank
is the obligee to whom the indemnity bond is issued.
The surety ensures that no future claim is brought
against the bank.

The principal is the party that takes responsibility for

issues such as failure of payment, non-payment,
loss, or any damage caused. On the other hand, the
surety promises to provide compensation in case of
failure of the principal. Although the surety takes the
responsibility to compensate, the principal is not
completely discharged of liability. The surety only
ensures that the obligee does not suffer from any
damages caused by the principal. In some cases,
such as to execute an indemnity bond for the
transfer of shares or debentures, one or more
witnesses may also be required.

Rights provided by indemnity bond

An indemnity bond safeguards the rights of the
obligee through indemnification if the principal fails
to fulfil his obligations or causes any loss or damage.
Indemnification is the right to recover for any harm
caused.
It ensures that the obligee remains entirely
harmless. Hence, it provides the obligee with the
entitlement to recover compensation for any issues
if the principal deviates from what was promised.
An indemnity bond covers the obligee’s personal
losses in particular. It also generally covers all
compensation, including litigation costs and other
charges as required.
Rights of the principal and surety
At a glance, it may seem that the indemnity bond
only empowers the obligee in the event of any
personal loss. Though the main function of an
indemnity bond is to protect the obligee, the
principal and the surety also have certain rights.
The most important right the indemnity bond
provides to the principal is the right to negotiate the
bond. The principal has the right to settle the total
value of the bonded sum. However, the amount of
the sum should be justified and reasonable.
Even if the principal fails to pay the already agreed
sum, he has the right to decide the mode of
settlement. It usually includes using his own
personal and business assets.
Both the principal and the surety have the right to
negotiate the terms and conditions of the indemnity
bond. It includes how the obligee is supposed to be
indemnified and the timeframe.
The surety is entitled to finalise an indemnity bond.
Without the surety’s signature, the indemnity bond
is completely invalid. In this case, the surety also
loses any right of authorisation.
It is important to understand the provisions and
aspects of the indemnity bond. The principal and
surety should ensure it before finalisation.
Otherwise, future failure to indemnify the obligee
may have serious implications, including legal action
or even insolvency.
Characteristics
An indemnity bond has certain characteristics. They
are as follows:
 • An indemnity bond is a legally enforceable
contract only in the event of any loss or damage.
Since it is a type of contract, it consists of all the
characteristics of a valid contract.
• The consideration of the object of an indemnity
bond must be lawful.
• An indemnity bond is executed on the good
faith, reliance and mutual trust of each of the
parties.
• All the parties, including the obligee, should be
persons of sound mind and not minors. An
indemnity bond, however, can be created on
behalf of minors. For example, the Government
of West Bengal requires a person (who is not a
natural guardian and producing a guardianship
certificate would delay the process) to execute
an indemnity bond if he wants to draw Provident
Fund money, an amount upto Rs 10, 000/- on
behalf of the minor child/ children. In this case,
both the obligor (principal) and the surety are
bound to the Government of West Bengal
(represented by the Governor) a specific sum of
money. The Governor of the state is the obligee
here.
The Government of Karnataka also requires an
indemnity bond in similar situations, though the limit
is Rs. 5,000/-.
 • The indemnity in the indemnity bond on the
parties may be either implied or expressed. In
the case of an expressed indemnity, the terms of
the indemnity bond specifically and directly
mention how the obligee is supposed to be
compensated. Whereas an implied indemnity is
an indemnity that is created due to the situation.
For example, if the obligee suffers losses due to
the behaviour or refusal of the principal, he
should be compensated.
• An indemnity bond only covers the actual loss if
and only if it is caused by events mentioned in
the conditions. Hence, proper drafting of an
indemnity bond is mandatory.
• All the terms and conditions of an indemnity
bond must be valid and acceptable in any court
of law.
• It is only valid for one-time or any specific period
as dictated by the terms. It can even be valid for
legal heirs or successors if such terms are
mentioned in the indemnity bond, which once
again reinstates the importance of proper
negotiation and drafting of the indemnity bond,
discussed later in this article.

Execution of indemnity bond

An indemnity bond is executed on non-judicial stamp
paper of appropriate value. Sometimes, the obligee
institutions asking to submit indemnity bonds
themselves mention the value of non-judicial stamp
paper. Often, the obligee institution requires the
indemnity bond to be submitted as an annexure or
as part of other annexures.

Laws related to indemnity bonds in India

A composite definition of an indemnity bond does
not exist in any law in India. Indemnity bonds in
India are subject to the provisions of two pieces of
legislation: the Indian Contract Act, 1872 and the
Indian Stamp Act, 1899. Contracts related to
indemnity have been described in the Indian
Contract Act, 1872, while bonds and the related
stamp duties have been dealt with in the latter Act.
Under Section 15 of the Government Securities Act,
2006, the bank is empowered to execute an
indemnity bond with one or more sureties.
Provisions under the Indian Contract Act, 1872
Indemnity bonds are a type of contingent contract as
defined under Section 31. A contingent contract is a
contract that only takes effect if the event
mentioned in the contract takes place. Otherwise,
the contract becomes void.
A contingent contract is legally enforceable only
after an “uncertain future event” mentioned in the
contract happens. It cannot be enforced before then
at all. If the event never happens or it becomes
impossible for the event to happen, it can never be
enforced, as laid down in Section 32 and Section 33
of the said Act.
Indemnity bonds are also only enforceable if the
obligee suffers loss or harm. If the obligee does not
get affected by the principal, he cannot get the
benefit of an indemnity bond.
Reimbursement
Section 69 of the Act deals with the underlying
principle of an indemnity bond. It states that by
paying money due to another person by a person
interested in the payment of money, that person is
entitled to be reimbursed by the other who is
originally supposed and bound by law to pay it.
Contract of indemnity
As mentioned before, the Act does not define
indemnity bonds as such. However, Section 124
defines the contract of indemnity. It is a type of
contract between two parties where one party
promises to save the other party from any loss, that
is, to provide indemnity. The Act also states that loss
or harm must be caused either due to the conduct of
the promisor or by the conduct of any other person.
This is called a contract of indemnity.
The person who is committed to paying the loss is
the indemnifier (promisor), and the person whose
loss is required to be compensated is known as the
indemnified or indemnity holder.
The definition given by the Act is not exhaustive. It
includes:
• Expressed promises to provide indemnity;
• The loss should only be caused by the promisor
or any other person on whose behalf he
promises to indemnify.
But does not include:
• Implied promises to provide indemnity;
• Cases where the loss, harm or accident is not
caused by the promisor or any other person on
whose behalf he promises to indemnify.
Hence, if Section 124 is strictly interpreted using the
literal rule of interpretation, as held by the Supreme
Court of India in the case of B. Premanand and Ors
v. Mohan Koikal and Ors (2011), even contracts of
insurance and indemnity bonds have to be excluded
from the definition.
Enforceability of indemnity bonds in India
An indemnity bond is only enforceable if there is a
breach of contract under Section 73 and Section 74
of the Indian Contract Act, 1872. The breach creates
a liability for the principal to provide compensation
for the loss, and entitlement to compensation arises
for the obligee.
Provisions under the Indian Stamp Act, 1899
The definition of an indemnity bond is not also given
under the Indian Stamp Act, 1899. The courts in
India also use the definition under the Indian
Contract Act, 1872, to interpret indemnity bonds
under the Indian Stamp Duty Act, 1899.
However, it provides the definition of a bond under
Section 2(5). The term indemnity bond has been
mentioned in Schedule 1, dealing with stamp duty
payable on legal instruments under No. 34, though
no definition is available. The procedure for how
stamp duty is to be paid for an indemnity bond is
given under Section 29.
The following instruments are included under the
bond:
• According to Section 2(5)(a), a bond includes an
instrument by which a person obliges himself the
payment of money to another. The payment of
money is based on the condition that the
obligation will become void depending on if a
certain act is performed or not;
• By any instrument, a person obliges himself to
pay money to another. It is attested by a
 witness, though not payable to order or bearer,
under Section 2(5)(b);
• An instrument containing the obligation of
delivery of grain or other agricultural products to
another, attested by a witness, under Section
2(5)(c).
Hence, a bond under this Act means an instrument
whereby a person obliges the payment of money to
another. The payment of money may be based on
the principle of contingency. The instrument with the
obligation to deliver agricultural products also
constitutes a bond.
A promissory note can also be termed as a bond if
there is an expressed promise that it is not payable
to order or bearer under Section 2(5)(b) or any other
clauses of the Section. In the case of Hanuman v.
Fattu (1967), the plaintiff borrowed Rs 300/- from
the defendant on a promissory note, attested by a
witness. However, during the revision application
filed by the defendant, the plaintiff contended that
the document was a bond. The Rajasthan High Court
rejected the plaintiff’s contention since there was an
express promise to be payable to the order or the
bearer.

Stamp duty payable for indemnity bond

An indemnity bond is also a type of bond under the
provisions of the Indian Stamp Act, 1899. No. 34 of
Schedule 1 of the Act mentions that the same duty
payable for an indemnity bond of particular value is
the same stamp duty as the security bond of the
same value under No. 57. Again, No. 57 mentions
that the stamp duty payable for any security bond
not exceeding Rs. 1,000/- is the same duty as a bond
of the same amount as mentioned in No. 15. For any
other cases, it is Rs 5/-.
Therefore, the stamp duty payable for an indemnity
bond exceeding is also the same as the stamp duty
paid for Bond in No. 15. The stamp duty for an
indemnity bond of a specific value is as follows:

Value of indemnity Amount of payable

bond stamp duty

Two annas (16 annas = 1

Less than or equal to
paise; 100 Paise = 1
Rs. 10
Rupee)

More than Rs. 10 to Rs.

Four annas
50

More than Rs. 50 to Rs.

Eight annas
100

More than Rs. 100 to Rs.

Re. 1/-
200
 More than Rs. 200 to Rs.
One rupee eight annas
300

More than Rs. 300 to Rs.

Rs. 2/-
400

More than Rs. 400 to Rs.

Two rupees eight annas
500

More than Rs. 500 to Rs.

Rs. 3/-
600

More than Rs. 600 to Rs.

Three rupees eight annas
700

More than Rs. 700 to Rs.

Rs. 4/-
800

More than Rs. 800 to Rs.

Four rupees eight annas
900

More than Rs. 900 and

does not exceed Rs. Rs. 5/-
1,100

Thereafter, two rupees and eight annas are payable

for every Rs. 500. The same applies to part thereof
in excess of Rs. 1,000
Mentioned above is the list of stamp duties to be
paid for a specific value of an indemnity bond, as
stipulated by the Act. The list is not exhaustive since
there are state amendments to the Schedule that
ultimately decide the amount of payable stamp duty.
All the state amendments to Schedule I can be
accessed from here.
The stamp duty mentioned is not applicable in a
contract of indemnity.
Who is liable to pay the stamp duty for the
indemnity bond
Section 29 of the Act lays down that, in the absence
of any specific agreement as to who will pay the
expense of stamp duty for an indemnity bond. Under
Section 29(a), the person who is drawing, making, or
executing an indemnity bond is liable to pay the
expense.

Purposes and types of indemnity bonds

Depending on the purpose for which it is to be used,
an indemnity bond can be of the following types. The
terms and conditions of an indemnity bond can be
different based on the situation where it is
necessary. Following are some of the purposes of
using indemnity bonds:
• Indemnity bonds for any property are usually
executed during any acts of transaction or
transfer of any property. For example, if the
lease rights of any property are to be sold/ gifted
or transferred, an indemnity bond will ensure
that the original owners of the property face no
loss or are compensated in the event of any
damage or loss.
• An employment indemnity bond is executed
during an employee’s employment. It contains
some specific terms, such as the mandatory
service periods for which he must serve the
employer and compensation to be paid in the
event of failure.
• Financial institutions such as banks usually ask
for indemnity bonds to settle death claims from
the legal heirs of the deceased for the final
disbursement of a large amount of savings. The
indemnity bond ensures that the bank or other
financial organisation are indemnified if they
face any issues from the parties. It is usually
required to be executed on a non-judicial stamp
paper of a particular value and to be notarised
by a notary or Magistrate.
• While transferring the ownership of shares or
debentures, an indemnity bond is required.
• In the United Kingdom, medical indemnity is
provided to patients for clinical negligence by
healthcare professionals. In India, medical
students need to follow the terms of an
indemnity bond after the completion of their
course. This is often subject to various
speculations and controversies, which are
discussed later in this article.
• Under the Income Tax Act, 1961, the provision of
indemnity is mentioned under Section 290. It is
used for claiming a tax refund, waiver of income
tax arrears demand, mismatching of TDS or
outstanding tax demand. The legal heir of a
deceased representative assessee also needs to
submit an indemnity bond.
• To stop payment and get a replacement on a
lost cashier’s cheque from the bank, an
indemnity bond is required for the mentioned
amount on the cheque.
• The Manual for Procurement of Goods, 2022
suggests taking an indemnity bond for items less
than Rs. one lakh or for sending spares for repair
to the original manufacturers.
• Some other types of indemnity bonds include:
declaration-cum-indemnity bonds, used for
commercial purposes, undertaking-cum-
indemnity bonds for any business transactions
 and tenders of large amounts, affidavit-cum-
indemnity bonds for shipments cleared from
customs etc.
• Indemnity bonds used during commercial
transactions and procedures are known as
commercial indemnity bonds or simply as,
commercial bonds. This includes auto dealer
bonds, licence bonds, and mortgage broker
bonds.
The purpose of indemnity bonds is to provide the
parties with legal rights and protection from losses.
An indemnity bond is an ethical step to ensure
transparency in business and other activities.

Surety bond vs indemnity bond

A surety bond provides the principal with a
guarantee that the terms and conditions of the
contract will be followed properly. In case of any loss
or failure, the surety bond protects the principal.
Like the indemnity bond, a surety bond also has
three parties. Surety bonds do not need large
collaterals, but indemnity bonds often have high
costs.
The definition of a surety bond is also not provided
by the Indian Contract Act, 1872. However, Section
126 defines surety as the person giving the
guarantee.
A surety bond is not an indemnity bond, but an
indemnity bond can usually be said to be a
subcategory of surety bonds. In specific situations,
indemnity bonds are sufficient to give legal
authorisation. In the case of Arvind Nanda v. State
(2020), the petitioner filed a petition under Section
372 of the Indian Succession Act, 1925, for a
succession certificate. He was the only child of his
deceased parents. A trial court ordered him to file
court fees and an indemnity bond with surety under
Section 375. He submitted the required court fee
and an indemnity bond but prayed for an exemption
from furnishing a surety bond.
The Delhi High Court held that since the petitioner
was the only legal heir and beneficiary, his request
for exemption from the surety bond was granted.
Submission of an indemnity bond in such a case was
considered justified by the court.

Judicial views regarding the indemnity bond

There are no specific judicial rulings involving the
legality or the issue of an indemnity bond. However,
some of the significant judicial pronouncements
involving indemnity bonds in India are as follows:
Hindustan Sugar Mills Ltd. v. State of Uttar Pradesh
(1971)
In this case, the amount of sales tax for Hindustan
Sugar Mills Ltd. was assessed. A stay appeal was
filed for the realisation of the sales tax. It was stayed
on the condition of security of Rs 10,70,260/- which
was subsequently executed with two persons as
surety. A separate stamp duty was levied on the
document. The board of Revenue declared two
separate stamp duties were payable since it was
both a surety bond and an indemnity bond.
The issue of the case was to decide whether the
document was an indemnity bond or not and the
payment of stamp duty thereafter.
The Allahabad High Court held that it is an indemnity
bond since it was executed to save the government
from loss due to non-payment of sales tax. Hence,
the stamp duty payable for an indemnity bond
should only be paid.
Fakirasab v. Syedusab And Ors (2004)
In this case, the ancestral property of the
defendant’s deceased father was acquired in return
for compensation money. Both the plaintiff and
defendant were relatives. An application for a
temporary injunction was filed under Order 39 Rule 1
and 2 in the execution petition to restrain
defendants 1 and 2 from withdrawing the money.
According to the defendants, their father had been
the individual tenant, and they applied for
compensation. So, the plaintiff had no rights.
The trial court, although rejecting the petitioner’s
application for a temporary injunction, ordered the
defendants to execute an indemnity bond with a
bank guarantee for Rs. 10,00,000/- undertaking to
withdraw the money. It was also held that since it
was joint property, everyone was entitled to a 1/3rd
share. The plaintiff filed an appeal.
The issue, in this case, was to decide whether the
order asking them to execute an indemnity bond
was arbitrary.
The Karnataka High Court held that since it was the
property of an Imam, the provisions of a joint family
as in Hindu Law would not arise. Also, the plaintiff is
entitled to get 1/3rd of the total compensation. It
was ruled that the trial court erred in the law and
directed the trial court to dispose of the suit fast.
Sri B J Sagar v. The Karnataka State Khadi (2013)
It is a case where the petitioner, a former employee,
and a pensioner made a request for retrospective
promotion, which was granted. During his service, he
was involved in some irregularities, and the
respondents sought to recover Rs. 6,97,188/- from
his pension based on the audit report for the year
2004.
The issue, in this case, was whether the indemnity
bond of 1985 could be enforced to collect the sum.
The Karnataka High Court held that even though the
purpose of an indemnity bond was to recover any
loss, there is a specific timeframe. Invoking the
indemnity bond after 18 years is arbitrary and
violative of Article 14 of the Constitution of India.
The Court further directed the employer organisation
to refix his monetary benefits of pension.
63 Moons Technologies Ltd. v. Deputy Director,
Directorate of Enforcement, Mumbai (2019)
This is an appeal filed by the National Spot Exchange
of India Ltd. (NSEL) against the order of the
Enforcement Directorate (ED) on Provisional
Attachment Orders (PAO). The owners of 63 Moons
Technologies Ltd. (63 MTL), Jignesh Shah and his
family, were barred from any property rights until
the final order was given. They were asked to furnish
an indemnity bond in the amount of Rs.
1095,27,17,055/-. Any properties of NSEL were not
attached.
The Appellate Tribunal for the Prevention of Money
Laundering observed that 63 MTL was granted an
exemption under Section 27 of the Forward Contract
Regulation Act (FCRA), 1952. The Court also ruled
that the offence should be tried under the scheduled
offence of the Prevention of Money Laundering Act,
2002. Since the chargesheets were not ready, the
applicants did not have to furnish any indemnity
bonds and were not restrained from any property
rights.
The Joint Director, Directorate of Enforcement v. A.
Raja & Ors (2020)
This is a plea filed after the acquittal of A Raja and
other accused in the notorious 2G-spectrum scam
for the release of the attached properties held by the
Directorate of Enforcement (ED).
There are lots of legal issues involved in the case.
For the scope of this article, the issue of whether the
attached properties can be released after furnishing
indemnity bonds is discussed.
The counsels for the applicant submitted before the
Court for permitting the applicants to execute an
indemnity bond with the value of the attached
property as surety.
The Delhi High Court held that, though there are
plenty of instances where the attached properties
were released after furnishing an indemnity bond, in
this case, the properties were attached under
Section 5(1) of the Prevention of Money Laundering
Act, 2002. The applicants were also guilty under
Section 3 of the said Act. The court subsequently
disposed of the matter.
Drafting an indemnity bond
The style of drafting an indemnity bond depends on
the specific situation, including the subject matter
that is to be covered, how much indemnity is to be
provided, etc. Needless to say, an indemnity clause
is mandatory for an indemnity bond.
The obligee or third-party financial institutions, such
as banks or insurance companies, usually draft the
indemnity bond after deciding all the terms and
conditions. The principal and surety must negotiate
the terms for their own benefit. The main purpose of
drafting an indemnity bond is to have a legal
instrument which will save a party in case of
another’s failure, refusal, or delinquency.
An indemnity bond should also have the promise of
ensuring compensation. The events or reasons for
which the compensation will be provided should also
be mentioned. Both the signatures of the principal
and the surety should be on the indemnity bond.
Must-have clauses
The indemnity bond must have the full names and
permanent addresses of the principal, surety, and
obligee. The cause and type of indemnity and
consideration amount should also be mentioned,
among others. The date of the execution of the
indemnity bond is another important aspect that
should be mentioned. The following are the must-
have clauses in any indemnity bond:
• The day on which the indemnity bond is
executed;
• Names and addresses of all the parties;
• Purpose(s) and consideration(s) of the indemnity
bond;
• Scope, limitation and the time period for which
the indemnity bond is valid;
• Clause of indemnification including the event(s)
on whose occurrence is to be indemnified and
exceptions, if any;
• Procedures for how to enforce the indemnity
bond in case of damage, whether any notice of
claim is required or not;
• Clauses on consent and authorisation;
• Clauses regarding settlement and enforcement
of the indemnity bond.
Apart from the abovementioned clause, any other
clauses that the parties think are applicable may be
added to an indemnity bond. However, it must be
remembered that the drafting of an indemnity bond
should always be precise and to the point. It is
advisable to avoid adding unnecessary clauses to
make it wordy.
The legal position of India on the use of indemnity
bond
In absence of any composite legal statutes regarding
the execution of an indemnity bond, the use of an
indemnity bond is sometimes subject to controversy.
Some of the instances are discussed hereunder.
Indemnity bond for medical students
Medical students in certain Indian states must
provide an indemnity bond stating that they will
provide mandatory government service in rural
areas for a specified period immediately following
the completion of their respective undergraduate or
postgraduate medical course from any government
institution. In case the person fails to abide by the
terms, he/ she is supposed to pay the entire bond
amount to the state government.
Health and related facilities are state subjects under
the State List of the Seventh Schedule of the
Constitution of India. Hence, the matters related to
medical indemnity bonds are also decided by the
respective states, and the policy is not uniform at all.
The amount payable also varies across various
states, ranging from Rs 5 lakh to Rs 1 crore after
graduation and up to Rs 2.5 crores for post-
graduation and super-specialities. The central
government is apparently concerned with the non-
uniformity and is trying to implement a uniform bond
policy.
Legally speaking, all the parties do not get a fair
chance to negotiate the terms and conditions of the
bond. All the terms are dictated by the obligee,
including the amount, and the parties are just
expected to comply with them. However, the
purpose of an indemnity bond for a definite period is
to provide adequate medical assistance in rural
areas, and the candidates are paid stipends during
the bond period.
In the case of Dr. Rahul Bansal and Ors v. State of
West Bengal (2018), the writ petitioner was a
student of post-graduation in psychiatry at the
Institute of Post Graduate Medical Education and
Research Centre, Kolkata, and completed the said
course successfully. He submitted an indemnity
bond to work in any government hospital in West
Bengal for two years continuously; otherwise, he will
pay an amount of Rs. ten lakhs, i.e., the amount
payable for indemnity in West Bengal. The indemnity
bond also contained the provision of keeping the
petitioner’s documents in the custody of the
department of that said institution. These
documents were supposed to be returned after the
completion of the bond period or on payment. He
requested multiple times the return of his document
upon payment of the bond money and wanted to
stop continuing his services, but he received no
response. Thereafter, he filed a writ petition.
The main contentions, in this case, were the facts
that he was a government servant and whether such
kinds of acts violate the underlying purpose of
indemnity bonds. He was also presented to the Court
by the respondent, who said that allowing him to
discontinue his service would open a floodgate
where people with financial strength would follow his
path, avoiding the mandatory serving of patients in
hospitals.
The court held that he was not a government
servant but a contractual employee for two years.
Furthermore, the rights to equality under Article 16
were violated. The Court also dismissed the appeal
filed by the Government of West Bengal on the
grounds of frivolity and lack of merit. Moreover, the
Court held that he is entitled to get back all the
submitted documents and a ‘no-objection’
certificate.
While the intention of such a bond is to eradicate the
prevalent disparities between urban and rural
healthcare systems in India, some medical
professionals have different opinions. According to
their opinion, the bond system is equivalent to
bonded labour and does not ultimately provide
successful results in healthcare, mostly due to a lack
of proper infrastructure. Some also think that certain
perspectives regarding the bond need to be
changed.
Indemnity bond for approving new drugs in India
When bringing new drugs or vaccines to market,
drug companies often ask for an indemnity bond.
The purpose of requesting this indemnity bond is to
provide them with protection if any adverse effects
from the drug occur in the future.
The processes of approval of new medicinal drugs in
India are usually governed by the Drugs and
Cosmetic Act, 1940 and the Drugs and Cosmetics
rules, 1945. However, there is no provision for
individual indemnity bonds for the approval of any
new drug or vaccine in India. Only the government
of India can execute an indemnity bond to the
manufacturer in exceptional circumstances; more
commonly, the provision of indemnity may be
mentioned in a clause or set of clauses in the
contract signed by the manufacturer and the
government. Apparently, there is no precedent for
giving indemnity to any drug manufacturers.
The absence of a provision for an indemnity bond
created huge turmoil and legal difficulties during the
approval of the COVID-19 vaccine in India. All the
foreign vaccine manufacturers, including Pfizer,
Moderna, and even Serum Institute of India, the
manufacturer of the vaccine Covishield, widely used
for mass vaccination during the COVID-19 pandemic,
asked the government to provide them with an
indemnity bond against all vaccine-related lawsuits
and other frivolous claims.
Even though the efforts of India need to be highly
appreciated, creating a historic achievement for
successfully running the largest mass vaccination
drive against COVID-19, the absence of indemnity is
said to be one of the reasons for delaying the arrival
of vaccines, especially from American
manufacturers.
Legal validity of employment indemnity bond
There are some controversies regarding the
mandatory signing of an indemnity bond for
employment in some industries. Such indemnity
bonds prevent an employee from leaving the job
before a specific time period ends. Such a clause
may be present in the employment contract instead
of executing a separate indemnity bond. This is
often said to violate Article 19(1)(g) of the
Constitution of India. Furthermore, according to
Section 27 of the Indian Contract Act, 1872 any
agreement restricting one from practising his
profession or trade is void.
In the case of Superintendence Company of India v.
Krishan Murgai (1980), the Supreme Court was of
the opinion that such a restriction is not totally
against the law and is subject to a particular
situation. In the case of Sant Langowal Institute of
Engineering and Technology and Another v. Suresh
Chandra Verma (2013), the employee, a lecturer in
a government college, took a paid three-year study
leave to pursue his Ph.D. degree at IIT, Kanpur;
however, he failed to produce his Ph.D. certificate.
The Supreme Court said that the educational
institution was entitled to be awarded indemnity
since the employee himself caused them damages.
The answer to the question of the legality of
employment indemnity bonds is not conclusive. It is
mostly decided based on the facts and situations of
the individual scenarios. However, the terms of the
indemnity bond must be considerate and not
punishing to the employee. On the other hand, the
employee is also expected to maintain mutual trust
and fidelity with the employer.

INDEMNITY BOND
This Indemnity Bond is executed on this ________
day of _________ by
Sh./Smt.__________________authorised representative
of _______________________ in favour of Delhi Kalyan
Samiti(Finance Department), Govt. of NCT of Delhi
as under:-
 I Sh./Smt.______________ solemnly affirm and state
that I am legally entitled to sign this bond on behalf
of the (Name of Society/Trust) registered
under_______________Act, having registered Office at
___________________________in my capacity as
Secretary/President of the said Society/Trust.
On behalf of the Society/Trust referred to above, I
undertake/indemnify that the Society/Trust shall
utilize the GIA of Rs.___________ being offered by the
Delhi Kalyan Samiti (Finance Department) Govt. of
NCT of Delhi strictly as per the terms and conditions
imposed by the Delhi Kalyan Samiti.
In any event of failure to utilize the amount of GIA
within the time prescribed as well as for the
intended purpose or divert of GIA to any other
person or non submission of utilization certificate
along with audited accounts with in the stipulated
time the aforesaid Society/Trust shall be liable to
refund the entire amount of GIA to Delhi Kalyan
Samiti along with the interest at prevailing rates.
In event of default by the aforesaid Society/Trust to
refund the unutilized GIA or misuse of GIA or divert
the GIA, I Sh.________________son
of_____________resident of ______________hereby
indemnify the Delhi Kalyan Samit (Finance
Department), Govt. of NCT of Delhi, jointly with other
members of the Society/Trust and severally, against
all actions, causes, suits, preceding, accounts,
claims and demand in respect of GIA and all
damages, costs, charges, expenses, sum of money
incurred thereof or otherwise in relation to the
aforesaid reasons.
(SIGNATURE) NAME_____________
ADDRESS___________
WITNESSES 1._______________
2._______________

Conclusion
Despite the fact that indemnity bonds are widely
used, the term has yet to find its place in Indian
legislation and the judiciary. Surprisingly, an
exhaustive definition of an indemnity bond is not
even mentioned in any of the existing Indian
statutes. It is a widely used legal instrument in
business, finance, and other organisations where the
likelihood of future uncertain events is high. It does
not merely reimburse the losses but also protects
from any uncertain loss. Hence, the importance of
an indemnity bond can never be undermined.
LEASE DEED
Lease
45. A lease is a transfer of right to enjoy certain
immovable property made for a certain time in
consideration of a price by the transferor to the
transferee who accepts the transfer on such
terms.
 46. A lease is not a mere contract but is a
transfer of an interest in property and creates a
right in rem.
47. A document which itself does not create any
right or interest in immovable property but
records only the past interest would not be a
document purporting to be a lease.
48. Section 105 of the transfer of property act
1882 defines the knees which lays down as
under: A lease of immoral property is assurance
for a right to enjoy such property made for
certain times express or implied or in perpetuity
in consideration of a price paid or promised one
of money a share of crops service Oregon any
other thing of value to be rendered. Or
unspecified occasions to the transferor by the
transferee who accepts the transfer on such
terms.
Lessor, Lessee, Premium and Rent Defined
· The transfer is called the lesser the transfer is
called the Lessie price is called the premium and
the money or share or service or other thing to
be so rendered is called the rent.
· Lessor is the absolute owner of the property
which is the subject matter of the lease;
· Lessee is the person acquiring the rights to use
and enjoy the property on lease from the Lessor;
 · Duration is the term for or period for which the
rights to use and enjoy the property is granted.
The duration of the lease can be for a certain
time, express or implied or can also be in
perpetuity;
· Premium or Rent is the consideration for
granting the rights to use and enjoy the property
can be in the form of a one-time price paid or
promised i.e. Premium or on payment of money
or any other thing of value, periodically or on
specific occasions or intervals, known as Rent.
The essential elements of a lease are:-
11. Two parties the lesser and the less
competent to contract except where they act
through a person competent to act on their
behalf
12. The subject matter of the lease that is a
certain immovable property which is capable of
being demised
13. The transfer of a right to enjoy such property
accompanied with requisite formalities
14. The term or period, express or implied or in
perpetuity which must be sufficiently defined
15. The consideration whether:
· A price paid or promised
· 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.

What is a Lease Deed?

49. A lease deed is an agreement or contract
between the owner of a property (the landlord),
also known as the lessor, and the tenant or
lessee of the property. This contract will contain
all the terms and conditions to be followed while
that property is being rented out to that
particular tenant. These terms and conditions
include the rent to be paid monthly, the time the
rent will be paid each month, obligations of the
landlord and tenant regarding maintenance and
bills, security deposit to be made, etc. Lease
Deed is a written legal document that makes a
lease agreement official. This document is
crucial for legal purposes, especially if there’s a
dispute and you need to prove the terms of the
lease in a court of law. If a lease goes on for
more than a year, the lease deed must be
registered according to the Registration Act of
1908.
A lease deed should include:
• Information about the property’s type, size and
where it’s located.
• How long the lease will last.
• The amount of rent or lease payment agreed
upon.
• What happens if the lease needs to end.
• How disputes will be resolved and where any legal
issues would be handled.
Section 107 of the TOPA, 1882 explains how parties
can create a lease. Also, certain agreements and
documents, according to the Registration Act of
1908, must be officially registered with government
authorities. This helps keep a record of transactions
that might be taxable.
Section 17 of the Registration Act, 1908 makes it
clear that certain documents, like lease deeds for
properties with leases lasting over a year, must be
registered with the district registrar’s office. But
there’s an exception for lease deeds lasting less
than a year, as mentioned in Section 18 of the same
act.

Why Register Lease Deeds?

Registering lease deeds, especially those lasting
more than a year, offers several key advantages:
 • Protecting Interests: It safeguards the
interests of both parties involved in the lease
agreement.
• Legal Validity: Registration provides legal
credibility to the agreement, making it a
recognised document in a court of law and
supporting collateral transactions.
Legal Consequences of Not Registering Lease
Deeds
• Fines: Failure to register a lease deed can result
in fines imposed by the district sub-registrar,
which may amount to up to 10 times the original
stamp duty value.
• Inadmissibility in Court: According to Section
49 of the Registration Act, 1908, an unregistered
lease deed that should have been registered will
not be accepted as evidence in a court of law.
• Validity Concerns: In the case of Anthony V.
KC Ittoop And Sons & Ors., the Supreme
Court of India clarified that an unregistered lease
deed, when it should have been registered, does
not constitute a valid lease agreement. However,
the court noted that based on the parties’
conduct, there may still be an assumed lease
agreement.
• Month-to-Month Basis: An unregistered lease
deed that remains in effect, as observed in the
 case of Park Street Properties Pvt Ltd. V.
Dipak Kumar Singh And Anr. (2016), would
typically be considered a month-to-month
agreement rather than having a fixed term.
In summary, registering lease deeds is essential to
protect the interests of the parties and provide legal
validity to the agreement. Failure to register can
lead to fines, inadmissibility in court and concerns
about the validity and duration of the lease.
Time Limit for Registering Lease Deeds
According to the Registration Act of 1908, as
specified in Section 23, any document, except for
wills, must be presented for registration within 4
months from the date it was created.
This time limit is especially critical in the context of
commercial or corporate lease agreements, where
the terms are well-defined and significant sums of
money are involved. If such an agreement isn’t
registered within the stipulated time and is
subsequently declared invalid, it can provide the
parties with grounds to terminate the lease under
the provisions of Section 106 of the Transfer of
Property Act (which usually requires a 15-day notice
prior to termination).
For example, in the case of Ram Singh Sant Ram
v. Jasmer Singh Hardit Singh And Anr. (1959),
the Punjab-Haryana High Court deemed a
commercial lease deed ineligible for registration
because more than 8 months had passed since its
creation.
Similarly, the High Court of Delhi took a similar
stance in the case of Aspire Investments Pvt Ltd
v. Nexgen Edusolutions Pvt Ltd. (2015). In this
case, a lessor had leased a building floor for running
a school, but the lessee repeatedly failed to pay the
rent. The lessor then served an eviction notice to the
lessee. When the matter came before the court, it
was revealed that the lessee had not registered the
lease deed for the building floor for over 10 years.
The court ruled that such a prolonged delay in
registration was not a valid course of action,
particularly as running a school in a leased building
did not align with a typical monthly rental
arrangement.
What is the difference between a lease deed
and a lease agreement?
A lease agreement will usually state all the general
aspects of the lease. These may include the lease
duration, the monthly rent payable, the renewal
clauses, etc. A lease deed will also include all the
details concerning the typical day-to-day operations
of the lease.

Why are lease deeds for 99 years?

The development authority usually gives
development rights of land to a builder for a 99-year
lease. This suggests that the person who has the
leasehold land will own it for 99 years. After this, the
ownership of the land is passed back to the
landowner.
These long-term leases govern the transfer of land
or property and the uses of that land or property.
The time is set at 99 years as this period is thought
to be a safe choice, for it should cover the lifetime of
the lessee as well as protect the lessor’s ownership
of the land.

Lease Deed Agreement Drafting

Drafting a lease deed agreement in India involves
several important steps to ensure that all essential
aspects of the lease are adequately covered. Here is
a step-by-step procedure to create a lease deed
agreement in India:
Step 1: Gather Information Collect all necessary
information related to the lease, including the names
and contact details of both parties, property details
(address, size, and description), lease term, rent
amount, security deposit, and any specific terms or
conditions agreed upon.
Step 2: Begin with the Introduction Start the lease
deed with an introductory paragraph stating the
date of the agreement and the names and addresses
of the landlord and tenant. Provide a detailed
description of the property being leased, including
its address, size, boundaries, and any additional
features or amenities.
Step 3: Define the Lease Term Clearly state the
lease term, including the start date and end date. If
the lease is renewable, mention the conditions for
renewal. Mention the rent amount to be paid by the
tenant, along with the due date for payment.
Step 4: Outline Usage and Restrictions Clearly
outline the permitted use of the property and any
specific restrictions or conditions related to its
usage. For example, mention whether subletting is
allowed or prohibited. Define the responsibilities of
both parties concerning property maintenance,
repairs, and the handling of any damages caused
during the lease term.
Step 5: Sign and Execute Once both parties are
satisfied with the terms, sign the lease deed in the
presence of witnesses. Each party should keep a
copy of the signed agreement for their records.

Lease, License and Rental Agreements

· The license is not a lease.
· The lease and the license both are different.
· The word “License” under Section 52 of the
Indian Easement Act, 1882 is a grant by one
person to another or to a definite number of
persons, a right to do, or continue to do, in or
upon the immovable property of the grantor,
something which would, in the absence of such
right, be unlawful, and such right does not
amount to an easement or an interest in the
property, the right is called a license.
· A lease of immovable property as per Section
105 of the Transfer of Property Act is a transfer
of a right to enjoy such property.
 · It may be for a specified period, express or
implied. The price or payment of money is
usually referred to as the “rent”.
· In a Leave and License Agreement, the juridical
possession of the premises is deemed to remain
with the licensor and the licensee is said to be in
constructive possession of the said premises.
· Thus, a leave and License does not create any
interest in the premises in favour of the licensee
but gives the licensee the mere right to use and
occupy the premises for a temporary period.
· A Rental Agreement between the landlord and
tenant sets down the terms which will be
followed while the tenant lives in the rental unit.
· Month-to-Month Agreement is commonly called a
“Rental Agreement”.
· This agreement is for an indefinite period of
time, with rent usually payable on a monthly
basis.
· The agreement itself can be in writing or oral,
but if any type of fee or refundable deposit is
being paid, the agreement must be in writing.
Lease and License: Distinction
16. The cardinal distinction between a lease and
a license is that in a lease there is a transfer of
interest in the premises, whereas in the case of
 a license there is no transfer of interest,
although the licensee acquires a right to occupy
the premises. When premises are given out on
lease or tenancy basis the legal possession of
the premises in these cases is also deemed to be
transferred to the lessee and tenant
respectively.
17. Whether an agreement to occupy the
premises between the landlord and tenant is
allowed to occupy was an agreement to lease or
an agreement of leave and license has been a
subject of many Supreme Court & High Court
rulings.
18. In a number of judgements various High
Courts as well as the Apex Court have
distinguished the lease and the licnese. In Khalil
Ahmed Bashir Ahmed v. Tufelhussein
Samasbhai Sarangpurwala, , the Supreme
Court has held:
19. “In order to determine whether a document
created a license or a lease the real test is to
ascertain the intention of the parties i.e. whether
they intended to create a license or a lease. If
the document creates an interest in the property
entitling the transferee to enjoyment, then it is a
lease; but if it only permits another to make use
of the property without exclusive possession,
then it is a license.
20. From the judgments of various Courts, it
appears that the main factors to decide whether
the agreement is a lease or a license are
21. (i) the intention of the parties and
22. (ii) whether the agreement creates an
interest in the property.
23. A licensee is a licensee whether the license
is for occupation of the premises or for casual
visits or for any other purpose. The status of a
licensee cannot change or vary according to the
purpose of the license. The principle “once a
licensee always a licensee” would apply to all
kinds of licenses.
24. If the premises are given under the Lease
and License Agreement, the same can be
terminated as per the terms of the agreement or
otherwise and the licensor can demand
possession, back from the licensee. The
termination is easy in the Leave and License
Agreement and therefore Leave and License
Agreements are preferred by the parties.
25. So, in short, the laws related to registering
lease deeds are mainly governed by the Transfer
of Property Act from 1882 and the Registration
Act from 1908.
26.
27.
28.
29.
30. Stages of a Lease Deed
31. The process of executing a Lease Deed
involves several distinct stages:
32. Negotiation Stage
33. This is the initial phase where the Lessee
identifies a suitable property. At this point, both
parties discuss the commercial aspects of the
deal, including the lease duration, rent and
payment terms. Legal considerations are less
prominent at this stage.
34. Preliminary Documentation Stage
35. Once the commercial terms are agreed
upon, the parties may create an Agreement to
Lease or a Memorandum of Understanding.
These documents outline the commercial
aspects of the deal and the basic duties and
obligations of each party. They serve as a record
of intent and pave the way for the next steps.
36. Title Investigation or Due Diligence
Stage
37. In this phase, the focus shifts to verifying the
Lessor’s ownership of the property and their
ability to lease it. This involves a thorough
 examination of title deeds, checking government
records through a Title Search and potentially
issuing Public Notices to invite objections. The
necessity of Public Notices varies based on the
situation. Additionally, any mandatory
permissions and the process to obtain them are
determined.
38. Drafting and Payment of Stamp Duty
Stage
39. The lease can be established through an
Agreement to Lease, but a Lease Deed is the
preferred method since it doesn’t depend on a
future instrument. The document is drafted,
considering the transaction’s terms and
approved by the parties. Stamp duty is paid on
the Lease Deed. The applicable stamp duty
varies by state and for instance, in Maharashtra,
it’s governed by Article 36 of Schedule I of the
Maharashtra Stamp Act, 1958.
40. Execution and Registration Stage
41. This phase involves the Lessee paying the
agreed premium to the Lessor. Both parties
simultaneously exchange the consideration, take
possession of the property and execute the
Lease Deed. While not mandatory, it’s common
practice for two witnesses to record their
signatures. After execution, the document is
 submitted for registration at the office of the
appropriate Sub-Registrar of Assurances with
jurisdiction over the property.
42.
43. Post-Registration Stage
44. Once the Lease Deed is registered and the
Lessee is in possession of the property, it’s
advisable to inform relevant governmental and
semi-governmental bodies about the change in
ownership. This step helps ensure a smooth
transition and facilitates the application process
for licenses and permits.
45. It’s crucial to note that as per Section 107 of
the Transfer of Property Act, 1882 and Section
19(1)(d) of the Indian Registration Act, 1908, the
registration of a lease for an immovable property
with a term exceeding one year or with a yearly
payment system is mandatory. Failure to
register such a lease deed renders it void, as
established in the case of Usha Ranjan Ray
Burman vs. Sova Das (AIR 1990 Cal I).
46. Lease Deed Format
47. A well-drafted lease deed should adhere to a
specific format, including the following key
elements:
• Introduction: Begin by mentioning the date,
day and place of the lease deed’s execution.
• Parties: Identify and provide the details of the
parties involved in the deed, including the lessor
and the lessee. This should include their names,
ages, father’s names, occupations and places of
residence.
• Property Details: Describe the property to be
leased comprehensively. Include the property’s
size, exact location, registration particulars,
descriptions of any existing structures and any
other relevant information.
• Lease Term: Clearly state the duration for
which the property is being leased and specify
the lease’s expiration date.
• Consideration or Rent: Detail the rent or
consideration amount to be paid periodically by
the lessee. Include payment dates, payment
methods, provisions for rent increases and
conditions for late payment. If a security deposit
is required, specify the amount and terms.
• Utility and Maintenance Charges and
Taxes: Specify which party is responsible for
utility bills (e.g., water, electricity, telephone,
internet), maintenance charges and government
levies like land taxes.
• Rights and Duties: Outline the rights and
responsibilities of both parties, including their
interests, benefits, claims and obligations.
Specify reasonable inspection hours for the
lessor.
• Lease Termination: Clearly state the date on
which the lease will end. Define the grounds for
termination, such as breach of terms, rent non-
payment, or other applicable conditions. Include
the process for returning possession of the
property upon lease expiration.
• Sub-Letting: Address whether sub-leasing the
property is permitted. If allowed, specify that it
requires lessor approval.
• Legal Charges: Determine who will cover legal
charges such as stamp duty, registration fees
and any other government costs. Clearly
indicate whether these costs are the
responsibility of one party or shared by both.
• Jurisdiction: Mention the court with jurisdiction
over the property or the parties’ residences, as
well as the applicable laws in case of conflicts.
• Indemnity: Include an indemnity clause that
covers possible losses or damages incurred by
the parties.
• Renewal: If applicable, specify whether the
lease can be renewed after a specific period and
 detail any potential alterations to the rent or
other conditions.
48. These elements are essential for creating a
comprehensive and legally sound lease deed.
Ensure that the document adheres to the
specific legal requirements and standards of the
jurisdiction in which it is being executed. Legal
counsel or a professional can help draft a lease
deed that aligns with the relevant laws and
regulations in your area.
49. How to Register a Lease Deed?
50. Registering a lease deed involves several
essential steps.
51. There are two types of lease deeds, each
with its registration requirements.
52. Lease deeds with a tenure exceeding one
year must be compulsorily registered at the sub-
registrar’s office. On the other hand, lease deeds
with a tenure of less than one year are governed
by Section 106 of the Transfer of Property Act
and do not require registration.
53. The registration fees for a lease deed are
typically calculated as 1% of the annual lease
amount, fixed for a period of five years.
Additionally, stamp duty charges, set by the
state government, must be paid. These
 payments can be made by the lessee or shared
between both parties.
54. The registration process necessitates the
physical presence of both parties mentioned in
the deed. They need to appear before the
registrar with all necessary registration
documents. These documents should be
stamped and both parties and any present
witnesses must provide passport-sized photos
and photo IDs.
55.
56.
57. The duration of the registration process can
vary, taking anywhere from a few days to as
long as a month, depending on the specific
circumstances.
58. What is Force Majeure and why is it
Important for a Lease Deed?
59. A force majeure clause in a lease agreement
addresses circumstances beyond the control of
the parties, such as natural disasters, war and
government regulations, which may make it
impossible for both parties to fulfil their
obligations. An example of such an event is the
recent COVID-19 pandemic.
60. The force majeure clause should clearly
outline the rights and responsibilities of both
parties in such situations. Generally, a force
majeure clause excuses the affected party from
its obligations for the duration of the force
majeure event, without incurring liability for
damages or penalties. This clause’s importance
is exemplified in the case of Oberoi Realty
Limited v. Godfrey Phillips India Ltd, where
the court stressed its significance. The court
ruled that a well-drafted force majeure clause is
a vital component of a lease agreement,
particularly for addressing unforeseeable events
like natural disasters, strikes, pandemics and
more. The court also held that if such an event
prevents the tenant from utilising the property,
the lease agreement can be temporarily
suspended and the tenant is not obliged to pay
rent during that period.
61. It’s crucial to draft the force majeure clause
with care to provide protection to both landlords
and tenants.
62. Cancellation of Lease
63. A lease deed can be terminated through
mutual agreement between the landlord and
tenant or due to a breach of contract, where the
other party can terminate the lease by following
the notice provisions outlined in the deed or as
 per state laws. Grounds for lease termination
typically include non-payment of rent, subletting
the property without permission, or engaging in
illegal activities on the premises.
64. In the case of Pheroze Framroze
Taraporewala v. Arvindbhai Kalyanji
Gandhi, the Supreme Court clarified the process
of lease termination. It emphasised that upon
the expiration of a lease agreement, the tenant
is obligated to vacate the property. Failure to do
so would be considered trespassing, granting the
landlord the right to reclaim the property in
cases of lease term violation.
65.
66. Stamp duty on a lease deed
67. The stamp duty to be paid on lease deeds
will differ from state to state in India. The stamp
duty is decided by the revenue department of
each state. For example, in Maharashtra, the
stamp duty is set at 0.25 percent of the total
rent for the lease period. In West Bengal, the
stamp duty on all lease deeds is Rs. 200. In
Punjab, stamp duty is 8% of the annual average
rent amount for a lease that is 1 to 5 years, and
3% of of the annual average rent amount for a
lease that is 5 to 10 years.
68.
69. What Is The Importance Of a Lease Deed?
70. Lease deeds are of great importance for
both landlords and tenants as they serve several
crucial purposes, ensuring a smooth and legally
binding landlord-tenant relationship. Here are
the key importance of lease deeds:
71. Legal Protection: Lease deeds provide legal
protection to both parties by clearly defining the
terms and conditions of the lease. This helps
avoid disputes and misunderstandings, as all
parties are aware of their rights and obligations.
72. Clarity of Terms: A well-drafted lease deed
outlines the specifics of the lease, including the
lease term, rent amount, due dates, security
deposits, rules for property usage, and
maintenance responsibilities. This clarity helps
prevent conflicts that may arise due to
misunderstandings or differing interpretations.
73. Binding Agreement: Once signed by both
parties, the lease deed becomes a legally
binding contract. It ensures that all parties
involved are committed to adhering to the
agreed-upon terms throughout the lease period.
74. Establishes Tenant's Rights: For tenants, a
lease deed establishes their right to occupy and
use the property for the specified lease term. It
 safeguards them from sudden evictions or
arbitrary changes in lease conditions.
75. Security for Landlords: For landlords, a lease
deed provides security by guaranteeing a fixed
income for the specified lease term. It allows
them to enforce rent collection and protect their
property from misuse.
76. In case of any breach of the lease terms or
disagreements, a properly drafted lease deed
provides a basis for legal recourse. It helps
resolve conflicts and protects the rights of both
parties.
77. At PropReturns , we assist our clients
through the entire leasing process, right from
finding the property to paperwork. Making
commercial property renting a piece of cake.
78. Additional read: Commercial Leasing in
India: 7 Things to Know
79. Lease Deed Format
80. Formatting a lease deed is similar to a rental
agreement. You need to enter details like:
• Date
• Name of the Landlord and tenant
• Location
• Lease term
• Rules and regulations etc.,
81. Here is a lease deed format for your
reference. You can download this format and
edit it according to your needs.
82. Finally, after the verification process is
complete, the registrar will make
83. What Is The Difference Between A Lease
Deed And A Lease Agreement?
84. Lease Deed and Lease Agreement are legal
documents used in property leasing.
85. A Lease Deed is a formal, registered
document requiring stamp duty payment, used
for long-term leases (typically 10 years and
more). It must be signed by both parties in the
presence of witnesses and registered with the
Sub-Registrar's Office to be legally valid.
86. Lease Agreements are commonly used for
short-term leases. They are often executed on
plain paper and have lower stamp duty. Lease
Agreements are suitable for leases of 11 months
or less.
87. Both documents outline the terms and
conditions of the lease, including rent, lease
term, property details, and usage guidelines.
Choosing between a Lease Deed and a Lease
 Agreement depends on the lease duration and
specific legal requirements in each state.
88. What Is The Difference Between A Lease
Deed And A Sale Deed?
89. Let us have a look at the differences from
the table below.

91. Lease 92. Sale

90. Aspect Deed Deed

93. Nature 94. Lease 95. Sale

of Deed is a Deed is a
Agreement lease transfer of
96. Parties 97. Lessor 98. Seller
Involved and Lessee and Buyer

99. Purpos 100. Provides 101. Transfer

e the s permanent
temporary ownership of
102. Duratio 103. Typically 104. Execute
n long-term d
(exceeding immediately
105. Registr 106. Optional 107. Mandato
ation ry

108. Stamp 109. Calculat 110. Calculat

Duty ed based on ed based on
lease term property
111. Posses 112. Lessee 113. Buyer
sion has has the
possession possession
114.
115. Difference between Sale and Lease

116. Sale /
117. Lease
Purchase

118. The
Purchaser
gets
119. The Lessee only gets a
· absolute
right to enjoy the property
1 ownership
but not ownership rights
rights of
the
property

120. There is 121. The Lessee’s right to

no logical possession and enjoyment
· end to the of the property comes to an
2 ownership end upon the termination
of the of the lease unless the
property lease is in perpetuity

· 122. The 123. The consideration can

3 sale either be in the form of a
considerati one-time premium or as
on is rent at periodic intervals
usually paid
once at the
time of
purchase of
the
 property

124. A sale
125. Lease grants only the
grants the
right to possession and use
right to
of the property. Although
possession,
· some arrangements do
enjoyment
4 allow a sublease or transfer
of benefits
of lease but the rights of
and the
the Owner are always valid
right of
and subsisting
further sale

126. The
overall cost
of
· purchasing 127. Leasing is a relatively
5 a property cheaper mode of
is usually
higher than
leasing.

128. The
purchaser
129. The Lessee cannot
· can enjoy
enjoy the residual value of
6 the residual
a property
value of a
property

· 130. Docum 131. Documents involved

7 ents are Agreement to Lease or
 involved
are
Agreement
to Sell, Sale
Deed,
Lease Deed
Transfer
Deed, Deed
of
Conveyanc
e etc.
132.
133. Difference between Lease and License

134. Lease 135. License

136. The Lessee 137. The Licensee

gets a right to gets a right use the
· possession and property for a fixed
1 enjoyment of the time and for a
property but not predetermined
ownership rights consideration

139. Involves a short-

138. Usually
term duration,
involves a long-
· generally for 1 year
term duration,
2 but up to 5 years at
can also be in
maximum (in
perpetuity
Maharashtra)
 140. The
consideration can
141. The consideration
either be in the
· is usually in the form
form of a one-
3 of a monthly license
time premium or
fee
as rent at
periodic intervals

143. License can be

142. The lease easily terminated by
· cannot be easily the Owners
4 terminated by the considering the
Owner temporary nature of
the arrangement

145. Although there is

144. The
a level of care
maintenance and
required the burden
· upkeep of the
of maintenance and
5 property is the
upkeep of the
duty/responsibilit
property falls on the
y of the Lessee
owner

147. A deposit
146. Relatively
· involved in the costs
higher cost of the
6 involved are usually
transaction
quite less

· 148. The preferred 149. Preferred mode

7 mode of of the transaction is
 transaction for
long-term
residential short-term residential
arrangements arrangements
and commercial
setups

150. Documents
151. Document
involved are
· involved is a Leave
Agreement to
8 and License
Lease or Lease
Agreement
Deed
152.
153.
154. Checklist
155. Here is a checklist of key elements to
consider and include when drafting a lease deed
for commercial purposes:
6. Property Description: A detailed description of
the property should be provided along with the
area, the exact location, respective Survey No.(s)
etc. It is also advisable to include a description of
all the structures standing on the property along
with the list of all the fittings and fixtures thereon.
7. Term: The exact duration of the lease should be
mentioned along with the commencement date
and expiry date.
8. Title Search: Proper Title Search should be
conducted and public notices issued to ensure
that the Lessor is entitled to give the property on
lease and that there is no legal impediment in the
property being demised in favour of the Lessee.
9. Lock-In Period to be mentioned if any.
10. Termination: The grounds for termination of
lease like breach, non-payment of rent, force
majeure, failure to pay rent etc., to be included
along with the agreed process for termination by
the parties and the notice period.
11. Rent Payment: The quantum of rent, the mode
of payment, due dates, the procedure for delay,
rent escalation etc., to be discussed and reduced
to writing.
12. Security Deposit, if any.
13. Maintenance Charges and Land Taxes: Who
is responsible for payment of maintenance
charges, society charges, land taxes and other
government charges? Effect of non-payment and
the process for dealing with that.
14. Utility Charges: It should be clearly defined
whose obligation it is to pay for the utilities such
as water, electricity, telephone, internet etc and in
whose name the receipts are to be generated.
15. What are the permitted uses of the demised
property?
16. Whose obligation is it to ensure the maintenance
and upkeep of the demised property and the
procedure with repairs.
17. Restriction of material alteration of the property
without the express consent of the Lessor.
18. Sub Letting: Whether sub-letting of the
demised property is permitted and if so then
under what terms and only with the express
approval of the Lessor.
19. Inspection of the demised property should
be permitted by the Lessee at reasonable hours
and with prior notice.
20. Study the applicable law pertaining to the
payment of Stamp Duty and Registration of the
Lease Deed and ensure that adequate payments
are made and the correct forum followed.
21. Legal Charges: Whose obligation is it to pay
the Stamp Duty, Registration Fee and other
governmental and incidental charges in the
transaction?
22. Procedure for the handover of possession
at the end of the lease and the execution of a
Deed of Surrender of Lease, if applicable should
preferably be mentioned in the Lease Deed itself.
23. It is recommended that either of the parties get
their own insurance cover on the demised
property to protect against any unexpected event.
24. Clearly identify the jurisdiction of the
relevant Court and the dispute redressal
mechanism in the event of a dispute arising
between the Lessor and Lessee.
25. Respective Indemnities: Ensure that there are
adequate Indemnity clauses in the Lease Deed to
cover foreseeable incidents like defaults in
payment of rent, damage to property, breach of
terms, wrongful representations and warranties,
defect in title etc.
156. The aforementioned is a basic outline of the
process of drafting a legally competent and
balanced Lease Deed concerning commercial
lease deed with a corporate purpose in mind.
157. A corporate lease deed needs to be drafted
and scrutinized more thoroughly than a lease of
residential premises or tenancy as there are
various aspects of commercial transactions of
commercial use of a property which are not
present or do not have a very large role to play
in non-commercial transaction
DEED OF LEASE
This DEED OF LEASE is made and executed at
______ on this _______ day of ______________, Two
Thousand _______
BETWEEN
158. .......... ,PAN NUMBER……….
,EPIC/Passport /OCI/CIO/PIO No……….,
Adhar No……….. son / wife / daughter of
………. residing at ……………..by
faith…………… , by Occupation …………. , by
Nationality……………….,
Herein after referred to and called as the “LESSOR
”
AND

.......... PAN No……., EPIC/Passport

/OCI/CIO/PIONo………., Adhar No……….. son /
wife / daughter of ………. residing at ……………..
by faith…………… , by Occupation …………. , by
Nationality………………., hereinafter referred to and
called as the "LESSEE”

The expression of the Lessor and Lessee shall mean

and include them, their legal heirs, legal
representatives, administrators, successors,
executors, nominees and assignees

WHEREAS the lessor is the absolute owner of the

schedule of Property detailed below, as recorded in
the R.O.R. and is in peaceful possession of the said
property as the absolute owner without any
restraint, litigation and objection from any other
person or agency or body of persons.
That, the lessor has the good transferable title over
the said land with all rights, interests, title and
possession over the said land, free from all
encumbrances.
That, all the property are in peaceful and absolute
possession of the lessor and no part of property has
been let to any other Person(s) /Associations /Body
of Associations for any purpose. No part of the
property has been given in any mortgage, Lease, or
as surety or by any means or instruments of transfer
of right or interest, there to any other person,
Financial Institution(s), Govt./Private/Semi Govt.
Bank(s)/ Offices/ Institutions, etc.
That, the lessor, hereby declare that no other
person other than him, has any claim whatsoever
regarding any right, title, or interest over the
scheduled property detailed below.
And whereas the lessee is desirous of taking on
lease of the said schedule of land more detailed
under the Schedule of the Property under the terms
and conditions mentioned below for establishment
and running a …………………………………….
(Office/business/institution/ etc pl. specify), and the
said lessor has agreed to give on lease the said
house under the said terms.

NOW THIS LEASE DEED WITNESSETH AS UNDER: -

1.That the lessor has given the said property on
rent and the lesse has taken the same on Rent /
Premium/ Or both at a monthly Rent Of Rs …..
and Premium of Rs………
( NB. In case of increase of rent occurs in
periodical interval then calculation of annual
average rent must be provided )
2.That the Lessor has handed over the physical
vacant possession of the said property to the
Lessee on the execution of this Lease deed
3.That the lease has been granted for a period of
…… years, which is effective from …….. to
………
4.That the entire premises will be vacated by the
Lessee after the expiry of the said lease period.
5.That the Lessee has been paid a sum of Rs………
as Security which is interest free, the receipt of
which is hereby admitted and acknowledged by
the Lessor. The Security shall be refunded by
the Lessor to the Lessee at the time of receiving
back the vacant possession of the said property.
6.That the Lessee shall pay the said monthly rent
to the Lessor by the …. Of each English calendar
month, in advance.
 7.That the Lessee shall pay the electricity bill,
municipal taxes etc to the concerned
authorities.
8.That the Lessee has been before occupying the
said property that all the sanitary and electric
fittings and fixtures are in good working
condition and is satisfied that nothing is broken
or missing and the Lessee on vacating the lease
premises shall restore them in the same
condition subject to normal wear and tear.
9.That the Lessee not sublet, assign or part with
the possession of the aforesaid rented property
in whole or in part under any circumstances
10.That the Lessee shall comply with all the rules
and regulation of the local authorities.
11. That the Lessee shall not carry out any addition
or alteration in the structure or otherwise under any
circumstances.
12.That day-to-day repairs such as replacement of
fuses and elements
setting right, leakages in water taps etc. are to
be carried out by
the Lessee at his own costs. However, the major
repair shall be
carried out by the Lessor at his own costs and
expenses.
13. That the Lessee shall permit the Lessor or his
agents or representatives to enter upon the lease
premises for inspection and to carry out the repairs
etc. at reasonable time as and when necessary.
14.And whereas the Lessee wants to vacate the
premises the he will give …. Month notice to the
Lessor vice-versa, if the Lessor wants to get the
premises vacated then he will also give …… month
notice to the Lessee.
15.That in case, if the period of lease is extended for
a further period
as mutually agreed between the parties on the
terms and conditions
as given above then the fresh Lease Deed shall
be executed.
16.That in case the Lessee fails to vacate and give
the physical
vacant possession of the said rented property
within the said
stipulated period, then the Lessee shall pay the
damages @
Rs……………………. /- per day till the possession
is given by the
Lessee to the Lessor.
 THE SCHEDULE OF THE PROPERTY ABOVE
REFERRED TO
(same as the schedule as written in SALE DEED
as applicable in this case )

IN WITNESS WHEREOF the parties hereto have

hereunto set and subscribed their respective hands
and seals after understanding the contents of this
Deed of Lease on the day, month and year first
above written.
______________________________
Signature of the Lessor
______________________________
Signature of the Lessee
WITNESSES :
SIGNED, SEALED AND DELIVERED
by the Parties at ___________ in the presence of :
1.
2
Drafted by me:

.
POWER OF ATTORNEY
Power of attorney is a compound expression formed
by the words power and attorney
Power is the authority given by one person to
another to act for him or to do certain specified acts.
50. A power of attorney is the document
authorizing another person to do any lawful act
on behalf of the person executing it.
51. The person who appointed and authorized is
called the attorney of the person appointing him.
52. The Power of Attorney Act 1882 defines as
any instrument empowering a specified person
to act for and in the name of the person
executing it.
53. Section 21 of Indian Stamp Act defines
Power of Attorney as any instrument (not
chargeable with a fee under the law relating to
the court fees for the time being in force)
empowering a specified person to act for and in
the name of the person executing it.
54. Power of attorney is either general or a
special.
55. If the appointment of attorney is made
generally for certain acts it is called general
power of attorney and if it is made for a
 specified act or acts the instrument is called
special power of attorney.
56. A power of attorney simpliciter would simply
authorizes an agent to perform certain acts in
the name of or on behalf of the executant can be
revoked or canceled by the executant at any
time in spite of the instrument stating that the
power of attorney is irrevocable.
57. A power of attorney comes into play in the
event that the principal is incapacitated by an
illness or disability. The agent may also act on
behalf of the principal in case the person is not
readily available to sign off on financial or legal
transactions.
58. The power of attorney lapses when the
creator dies, revokes it, or when it is invalidated
by a court of law. A POA also ends when the
creator divorces a spouse charged with a power
of attorney or when an agent is not able to
continue carrying out outlined duties.
KEY TAKEAWAYS
• A power of attorney is a legal document that
gives one person the power to act for another.
• The person who receives the authority is referred
to as the agent or attorney-in-fact.
• The subject of the POA is called the principal.
• The agent can have broad legal authority or
limited authority to make decisions about the
principal's property, finances, or medical care.
A durable power of attorney continues to remain in
effect if the principal becomes ill or disabled and
cannot act personally.
Law Relating To Power of Attorney
 · The law leading to power of attorney is dealt
with in the powers of Attorney Act 1882.
· Containing provisions for creating power of
attorney and other allied salient features are
given below:-
1)Execution under powers of attorney:- Section
2 of the act lays down that the donee of a power of
attorney may if he thinks fit execute any instrument
or do anything in and with his own name and
signature and his own seal where sealing is required
by the authority of the donor of the power and every
instrument and thing so executed and done shall be
as effectual in law as if it has been executed or done
by the donee of the power in the name and with the
signature and seal of the donor thereof.
2) payment by attorney underpower without
notice of death etc good:- Section three of the
app provides that any person making or doing any
payment or apt in good faith in pursuance of a
power of attorney shall not be liable in respect of the
payment or act by reason that before the payment
or act the donor of the power had died or became of
unsound mind or insolvent or had revoked the power
if the fact of death or unsoundness of mind or
insolvency or revocation was not at the time of the
payment known to the person making the same.
Section three applies in the case where the power of
attorney holder made any payment or done any act
unknown of the fact that the executant of power of
attorney had either died or become of unsound mind
or insolvent before such payment or act done.
3) Deposit of original instruments creating
powers of attorney:- Under section four of the act
it is provided that:
159. An instrument creating a power of attorney
its execution being verified by a fit of it or
statutory declaration or other sufficient evidence
may with the affidavit or declaration if any be
deposited in the high court or district court
within the local limits of whose jurisdiction the
instruments may be
160. A separate file of instruments so deposited
shall be kept and any person may search that
file and inspect every instrument so deposited
and a certified copy thereof shall be delivered
out to him on request
161. A copy of an instrument so deposited may
be presented at the office and may be stamped
or marked as a certified copy and when so
stamped or marked shall become and be a
certified copy
162. A certified copy of an instrument so
deposited shell without further proof be
sufficient evidence of the contents of the
 instrument and of the deposit thereof in the high
court or district court.
4) Power of attorney of married woman:-
Section five of the act provides that a married
woman of full age shall by virtue of this act have
power as if she were unmarried by a non
testamentary instrument to appoint an attorney on
her behalf for the purpose of executing any non
testamentary instrument or doing any other act
which she might herself execute or do and the
provisions of this act relating to instruments creating
power of attorney shall apply thereto.
This section applies only to instruments executed
after this act comes into force.
5) Duration:- While a general power of attorney
continues to remain in force unless expressly
revoked or determined by death of either party or
expressly or impliedly limited for a specified.
Whereas a special power of attorney to do certain
act or acts is determined when the act or acts are
accomplished.

Types of Powers of Attorney

1. General Power of Attorney
The general power of attorney is a broad mandate
that gives an agent a lot of power to handle the
affairs of a principal. The agent or the person
designated to act on behalf of the principal is
charged with handling several tasks. The tasks
include buying or disposing of real estate or even
entering into contractual relationships on the
principal’s behalf.

2. Limited or Special Power of Attorney

An individual looking to limit how much the agent
can do should choose limited or special power of
attorney. Before signing to notarize a limited power
of attorney, a person needs to be as detailed as
possible about how much the agent should handle. If
an individual is not clear what should fall under the
special power of attorney, it is best to speak to a
legal counsel. For eg: an agent can be authorized to
perform specific business- related tasks, close or
operate business account etc. The power of attorney
becomes a special power of attorney when it is
limited to specific responsibilities. The document will
provide the agent whith the target tasks and
responsibilities that the agent has to perform for the
principal.

3. Durable Power of Attorney

The durable type of power of attorney is only
effective during the period a person wished to get
someone else act on his or her behalf. A non-durable
POA will end the moment it is revoked or when the
expiration date specified arrives. However, what will
happen in the event the agent becomes debilitated?
Will the POA still be applicable?
In such a case, the principal would prefer that the
POA remains active even if he or she becomes
unable to communicate. For example, if the principal
becomes comatose, but would prefer that the
spouse be the agent, it can be specified in the form
of a durable power of attorney. The POA gives power
to the spouse to make decisions even when the
principal is comatose.

4. Medical or Healthcare Power of Attorney

If the principal becomes very ill, he or she reserves
the right to decide the quality of care preferred.
Medical or health care POA authorizes the agent to
make decisions on behalf of the principal in case of a
life-threatening illness. Most health POAs fall under
the durable kind because they take into
consideration the fact that the principal may be too
sick to make their own decisions.
In all the instances above, the principal should speak
to a counsel before choosing an agent. In addition, it
is best for the principal to get the counsel to walk
him or her through every step of notarizing a power
of attorney in order to understand what shoul d go
into the document.

5)Springing Power of Attorney

The conditions for which a durable POA may become
active are set up in a document called a "springing"
power of attorney. A springing POA defines the kind
of event or level of incapacitation that should occur
before the DPOA springs into effect.
A power of attorney can remain dormant until a
negative health occurrence activates it to a DPOA. A
springing power of attorney should be very carefully
worded to avoid any problems in identifying
precisely when and if the triggering event has
happened. An individual who's appointed as the
agent in a power of attorney is not necessarily an
attorney. The person could be a trusted family
member, friend, or acquaintance.

Revocation/cancellation of Power of Attorney:

There are a number of situations where the
relationship of principal agent between the attorney
holder and the donor/principal has come to an end
and there is no explicit law governing the same.
Moreover Section 3 of The Power-Of Attorney Act
1882 also does not define that how a power of
attorney can be revoked or cancelled. But it doesn't
mean we have no any law, principles or provisions to
remove such chaotic situation. There are many
provisions which have been drawn from the Indian
Contract Act, 1872 and number of courts in India
have interpreted general principles of law and
applied to the situation of POA.

These are as following:

Sec 201 of the Indian Contract Act, 1872 provide
with certain conditions for termination of agency.
These are as under:
26. When the Principal himself revoked the authority
given to an agent.
27. When either of the as ˜Principal' or as Agent'
becomes unsound.
28. When either of the ‘Principal' or ‘Agent'
declared to be insolvent by a competent court of
law having jurisdiction.
29. When the holder/agent of the ‘POA' renounce
the agency.
30. When the purpose or business for the execution
of such ‘POA' is completed.
31. On the death of either Principal/Donor or
Agent/Donee.
32. Situations where there is ‘Implied Revocation'
mentioned in the terms of such ‘POA' executed
between the parties.
Sec 202 of the Act states that if the agent in a
principal-agent relationship has an interest in the
agency then, the power of attorney cannot be
revoked without the consent of the agent.

Related Case Laws

Daily Telegraph Newspaper Co. Vs. Mc Laughin
It was held that a mentally incompetent person can
only appoint an agent during a lucid interval. A
power-of -Attorney executed by a person while of
unsound mind is a nullity.
Prahlad Vs Laddevi a power of attorney granted
by the donor to donee is operative and effective only
during the life time of donor. Power-of-attorney
cannot be operative or not be effective after the
demise of donor.

In the case of Govindkoss Krishna Koss v

Gopesjhwar lalaji Maharaj, the court established
that a power of attorney though irrevocably granted
shall be revocable on strong proof of gross
mismanagement on the part of the said attorney. \
This also implies if the appointed attorney (or agent)
has somehow broken the terms of the contract
between the principal and agent then, the principal
can revoke the power of attorney.

How to Set Up a Power of Attorney

You can buy or download a POA template but be
sure it's for your state because requirements can
differ. There's no standard POA form for all 50
states, although all states do accept some version of
a durable power of attorney.1

A few key powers cannot be delegated, including the

right to make, amend, or revoke a will or contract a
marriage in most states, although a handful of states
do allow this. You can't delegate the power to vote
but the guardian can request a ballot on behalf of
the principal.

Some rules generally apply in all states and

jurisdictions.

Put It in Writing
Some regions of the country accept oral POA grants
but verbal instruction isn't a reliable substitute for
spelling out the terms word-for-word on paper.
Written clarity helps to avoid arguments and
confusion later at a crucial time.

Use the Proper Format

Decide what powers you want to grant and prepare
a POA that's specific to that desire. The POA must
also satisfy the requirements of your state. Perform
an Internet search or ask a local estate planning
professional to help you find a form that will be
accepted by a court of law in the state where you
live. The best option is to seek the help of an
attorney.

Delegate the Powers

A POA can be as broad or as limited as the principal
wishes but each of the powers granted must be clear
even if the principal grants the agent a general POA.
The principal can't grant sweeping, nonspecific
authority such as, “I delegate all things having to do
with my life.”

Specify Durability
A POA terminates if the principal becomes
incapacitated in most states. The only way an agent
can keep their power if this happens is if the POA is
written with an indication that it's durable. This
designation makes it last for the principal's lifetime
unless the principal revokes it.

Notarize the POA

Powers of attorney must be notarized in most states.
It's potentially easier for the agent if a notary’s seal
and signature are on the document even in states
that don't require it.

File the POA

Some states require that specific kinds of POAs be
filed with a court or government office before they
can be made valid so look into the rules where you
live. Ohio requires that any POA used to grant
grandparents guardianship over a child must be filed
with the juvenile court. It also requires that a POA
that transfers real estate must be recorded by the
county in which the property is located.
Not all powers of attorney must be formally recorded
or filed but it's a standard practice for many estate
planners and individuals who want to create a record
that the document exists. File it with your state or
county to be on the safe side.
You can start the process of establishing a power of
attorney by locating a lawyer who specializes in
family or estate law in your state. Legal services
offices that are staffed with credentialed attorneys
exist in virtually every part of the United States if
attorney fees are more than you can afford.

Choosing an Agent
A POA grants immense ownership authority and
responsibility. It's a matter of life and death in the
case of a medical POA. You could find yourself facing
financial privation or bankruptcy if you end up with a
mishandled or abused durable POA. Choose your
agent with the greatest care to ensure your wishes
are carried out to the greatest extent possible.
It's critical to name someone who is both trustworthy
and capable to serve as your agent. Any mistakes
may be difficult to correct and there may be a
danger of self-dealing depending on the extent of
the powers you grant. An agent may have access to
your bank accounts, the power to make gifts and
transfer your funds, and the ability to sell your
property.
Your agent can be any competent adult, including a
professional such as an attorney, accountant, or
banker. But they may also be a family member such
as a spouse, an adult child, or another relative.
Naming a family member as your agent saves the
fees a professional would charge and may also keep
confidential information about your finances and
other private matters “in the family."

DEEDS OF POWER OF ATTORNEY

Wharton in his Law Lexicon (1953), defines a power
of attorney as “a writing given and made by one
person authorising another, who, in such case, is
called the attorney of the person (or donee of the
power), appointing him to do any lawful act in stead
of that person, as to receive rents, debts, to make
appearance and application in court, before an
officer of registration and the like. It may be either
general or special, i.e., to do all acts or to do some
particular act”.
• A definition of power of attorney is also contained
in Section 2(21) of the Indian Stamp Act, 1899
which reads as follows:
• “Power of Attorney” includes any instrument (not
chargeable with fee under the law relating to
Court fees for the time being in force)
empowering a specified person to act for and in
the name of the person executing it”.
• In terms of Section 1A of the Powers-of-Attorney
Act, 1882 (7 of 1982) as amended by the Powers-
of-Attorney (Amendment) Act, 1982 (55 of 1982),
a power of attorney includes an instrument
empowering a specified person to act for and in
 the name of the person executing it. It is always
kept by the attorney.
• A power of attorney executed for the purpose of a
specific act is called a “special power of
attorney”. It is also called a “particular power of
attorney”. A specific act is meant to imply either a
specific act or acts related to each other as to
form one judicial transaction, such as all the acts
necessary to perfect a mortgage or a sale of a
particular property. A power of attorney executed
for the purpose of generally representing another
person, or for performing more than one act, is
called a ‘general power of attorney’.
• A power of attorney can be executed in favour of
more than one person. If a power of attorney is
executed in favour of more than one person it
would be desirable to provide whether such
donees will act jointly or severally. In the absence
of such an express provision authorising them to
act severally, they will be entitled to act only
jointly.
• The law relating to the powers of attorney is
governed by “Powers-of-Attorney Act, 1982” as
amended by the Powers-of-Attorney (Amendment)
Act, 1982 (55 of 1982). A copy of the Act is
reproduced at Annexure I.
• Since the donee of a power of attorney is an
agent of the donor, it is essential to know about
the law of agency. Several matters concerning
agency are dealt with, not in the Powers-of-
Attorney Act, but in the Indian Contract Act, 1872
(sections relating to agency). Important amongst
these are:
• (a) who may execute a power;
(b) who may become an attorney;
(c) when is a power terminated; and
(d) whether a power coupled with interest is
revocable.
• The reason, obviously, is that these matters would
be governed by the general principles of the law
of agency. A power of attorney is an authority in
writing to another person to act for and in the
name of the person who executed the power.
Therefore, speaking generally, the law relating to
authority, that is, agency, would be attracted
when a power of attorney is executed.
• Note: The students are, therefore, advised to refer
Chapter X of the Indian Contract Act, 1872 with a
view to acquainting themselves with the rights
and liabilities of an agent. For the authority of a
partner in a firm, the provisions of the Indian
Partnership Act, 1932, may be looked into.
Who can Execute Power of Attorney
 • A power of attorney can be executed by any
person, who can enter into a contract i.e. a person
of sound mind who has attained majority. A power
of attorney can be executed only in favour of a
major. While functioning as an attorney the donee
is acting as an agent of the donor i.e. the
executor of the power of attorney, who is the
principal. Thus, in such cases there is relationship
of agent and principal and such relationship can
be entered into by majors and not by minors.

Form of Deed of Power of Attorney

• Powers of attorney are executed in the form of
Deed Poll, usually in the first person. It is
unilateral document. It begins either as - “KNOW
ALL MEN BY THESE PRESENTS THAT I, ETC.” or
“BY THIS POWER OF ATTORNEY, I, ETC.”.
Generally, the operative words making the
appointment are introduced directly without any
recitals. If recitals become necessary, they should
be added after the words “KNOW ALL MEN BY
THESE PRESENTS” thus “THAT WHEREAS etc.”,
and after recitals the operative part is introduced
thus “Now I, the said AB, etc., hereby appoint,
etc., or the deed may be drafted with the heading
 “THIS POWER OF ATTORNEY is made on the, etc.,
then adding the recitals, the operative part is
introduced thus “NOW THIS DEED WITNESSES
THAT I APPOINT, ETC.”.

Authentication of Power of Attorney

• A power of attorney need not be attested.
However, it would be advisable to execute the
power of attorney before and have it
authenticated by a Notary Public or any Court
Judge/Magistrate, Indian Consul or Vice- Consul or
representatives of the Central Government. If a
power of attorney is so authenticated courts shall
presume the execution of the power of attorney
(Section 85 of the Indian Evidence Act, 1872).
Under Section 85 of the Indian Evidence Act,
1872, the Court shall presume that every
document purporting to be a power of attorney,
and to have been executed before and
authenticated by a Notary Public or any Court,
Judge, Magistrate, Indian Consul or Vice-Consul or
representative of the Central Government, was so
executed and authenticated. Under Section 57(6)
and (7) of that Act, the seals of Notary Public are
taken judicial notice of.
• Under Section 32(c) of the Indian Registration Act,
1908, a power of attorney can be granted to an
 agent to present a document for registration; but,
under Section 33(1) of that Act, only certain
powers of attorney are recognised. But if a power
of attorney gives authority to present documents
for registration under Section 32 of the
Registration Act, 1908 it must be executed before
and authenticated by the Registrar or Sub-
Registrar within whose District or Sub-District the
principal resides or where the Registration Act is
not in force, before any Magistrate or if it is
executed outside India, before a Notary Public, or
any Court, Judge, Magistrate, Indian Consul or
Vice-Consul or representative of the Central
Government (Section 33 of the Registration Act,
1908).
•
Stamp Duty on Power of Attorney
• Power of attorney is liable to stamp duty under
the provisions of the Indian Stamp Act, 1889.
Duty varies from State to State. The exact
amount of the duty will depend upon the State in
which the power of attorney is executed. Further,
if a power of attorney executed in one State has
to be sent to another State where the stamp duty
payable is higher, for use, then the power of
attorney should be stamped with the difference in
the duty before it is so used. Otherwise, the
power of attorney could be impounded.
 • If a power of attorney is executed in a foreign
country, it should be stamped within three
months of its being received in India. If it is not so
stamped within the period of three months of its
being brought to India, then the same will be
deemed to be unstamped and cannot be acted
upon.
• In connection with the registration/subscription of
shares or debentures or transfer of
shares/debentures invariably companies receive
powers of attorney executed by certain non-
resident shareholders or resident shareholders or
by companies. These powers of attorney generally
provide for making of investment and varying the
investments so made and empowering the
attorney to sign the transfer deeds for transfer of
shares from or to the name of the principal.

Construction of a Power of Attorney

• As a rule, a power of attorney, should be
construed strictly and general words must be
interpreted in the light of the special powers,
although they include incidental powers
necessary for carrying out the authority. The
general words used in the subsequent clauses of
a power of attorney must be read with the special
or specific powers given in the earlier clauses and
cannot be construed so as to enlarge the
 restricted powers mentioned in the powers of
attorney.
• The following two well known rules of construction
should be borne in mind while interpreting a
power of attorney (Mulla: Contract Act, Page 539):
33. That regard must be had to the recitals, if
any, as showing the scope and object of the
power, as such recitals will control any general
terms in the operative part of the instrument.
Thus, when it was recited that the principal was
going abroad, and the operative part gave
authority in general terms, it was held that the
authority continued only during the principal’s
absence.
34. Where special powers are afforded by
general words, the general words are to be
construed as limited to what is necessary for the
exercise of the special power and as enlarging
those powers only when necessary for the
carrying out the purposes for which the authority
is given.
• Any power which has not been expressly
delegated should not be implied. For instance, if a
delegate has been authorised to invest in shares
in a company, it should not be implied that the
power to sell has been delegated unless the
 authority for varying the investment has also
been delegated to the attorney.
• Similarly, the power of investment in shares does
not automatically confer the power of transfer the
shares purchased in exercise of the power. The
power delegated for investment in shares or
transfer of shares should not be deemed to
include the power of investment in debentures of
a company. Great care has, therefore, to be taken
in interpreting a power of attorney.
•.
•
• Can Somebody With Power of Attorney Do
Anything They Please?
• No. The scope of legal authority that's granted by
a POA is laid out when it's established. The person
who is granted power of attorney has a legal
fiduciary duty to make decisions that are in the
best interests of the person they're representing.3
•
• Can Next of Kin Override a Power of Attorney?
• No. Next of kin or other family members do not
have any legal authority to override or nullify an
existing power of attorney.
•
 • How Can I Revoke a Power of Attorney That I've
Given to Someone?
• Power of attorney can be terminated if you
expressly revoke it. It may also have a set
termination date or duration of time for which it's
in force. A POA will also end if you become
mentally incapacitated unless it is a durable
power of attorney. All powers of attorney cease if
you die.3
•
• Who Can I Name to Have Power of Attorney?
• You can technically name anybody as your agent
as long as it's done under your free will and
you're mentally competent.1 It should be
somebody trustworthy and capable, such as a
spouse, close family member, or friend. You can
also designate your lawyer to have a POA.
•
•

General Power Of Attorney

The general power of attorney(PoA) is a written
authorisation to an organisation or person to act on
their behalf in all legal matters. The powers granted
by a general PoA include:
• Entering into contracts.

• Handling business transactions.

• Operating business interests.

• Employing professional help.

• Settling claims and making gifts.

The general PoA is an effective tool to be used while

the person is out of the country, physically or
mentally incapable of managing the affairs, or if the
person is a minor.
A general PoA gives a person or organisation broad
powers to act on your behalf. These powers include
handling financial and business transactions, buying
life insurance, settling claims, operating business
interests, making gifts, and employing professional
help. A general PoA (as opposed to a special PoA) is
an effective tool if you will be out of the country and
need someone to handle certain matters, or when
you are physically or mentally incapable of
managing your affairs. A general PoA is often
included in an estate plan to make sure someone
can handle financial matters.
It is essential for an agent to keep accurate records
of all transactions done on your behalf and to
provide you with periodic updates to keep you
informed. If you cannot review updates, direct your
agent to give an account to a third party. As for legal
liability, an agent is held responsible only for
intentional misconduct, not for unknowingly doing
something wrong.
This protection is included in PoA documents to
encourage people to accept agent responsibilities.
Agents are not customarily compensated; most do it
for free. Should you, a friend, or relative suspect
wrongdoing on the part of your agent, report the
suspected abuse to the police and consult a lawyer.

Procedure For Getting A General Poa

•
• First, the PoA has to be drafted. This is generally
considered a very straightforward process and
can be done by any lawyer. It need not be done
on stamp paper but must be made in the
presence of two witnesses and a notary public.
When authenticated by a notary public, it has
the same effect as registration.
• There is also no need to have the Power of
Attorney registered at the sub-registrar’s office.
However, this may be necessary when a power
of attorney is being executed for property-
related matters. In such cases, a power of
attorney is called a ‘special power of attorney.
 • In case the power of attorney has to be
registered, it will have to follow the provisions
laid down under Section 48 of Schedule 1 of the
Indian Stamp Act, 1899. Stamp duty has to be
paid compulsorily by the principal or donor in
the jurisdictional registrar’s office. In case of a
general power of attorney, stamp duty is Rs.
100.
•
• Special Power of Attorney
•
• A special or specific or limited power of
attorney is a legal document executed by the
principal by which an agent is authorized to do
some specific acts on his behalf. For E.g. an agent
can be authorized to perform specific business-
related tasks, close or operate business accounts
etc.
• The power of attorney becomes a special power
of attorney when it is limited to specific
responsibilities. The document will provide the
agent with the target tasks and responsibilities
that the agent has to perform for the principal.
•
Difference between General Power of Attorney
and Specific Power of Attorney
 •

•
• If the Power-Of-Attorney is Registered:
1. Drafted the deed of revocation/cancellation of
actual power-of-attorney.
2. The said fresh deed shall be submitted for its
registration before the same Sub-Registrar where
the actual POA was registered.
3. After such registration, a notice of the same shall
be sent to all the relevant
authorities/parties/people etc., annexing such
registered revoked/cancelled deed.
4. Thereafter, the person who is executing such
(Revocation Deed of POA) should publish the
same in the two local and regional newspapers for
such information to be known to the General
Public
• The Hon'ble Punjab and Haryana High Court Rajiv
Mahajan And Others vs Ajit Kaur And
Others17 In the present case stated where the
registered general power of attorney has been
cancelled on 16.10.2007 by a registered
cancellation deed. It is settled principle of law that
once a registered document is cancelled by
registered cancellation deed, then cancellation is
operates as constructive public notice.
•
• It is therefore held by Allahabad High Court in
Chandrama Singh and others Vs Mirza Anis
Ahmad 18 that a Notice/document dt. 20/2/73
sent by registered post being not registered under
Registration Act could not nullify the registered
power of attorney dt. while the subject matter
was immovable property value of more One
Hundred Rupees. Registered document dealing
with rights to immovable property cannot be
annulled except through proper procedure.
•
• The registered Power of Attorney could be validly
revoked/cancelled by another registered
document, therefore, notice dated 20.02.1973
sent by registered post was only a communication
and since it was not registered under the
 Registration Act 1908 it did not revoke the
registered Power of Attorney dated 17.03.1967.
•
• If the Power-Of-Attorney is not Registered. The
procedure is same as above except the
registration of revocation/cancellation deed is not
required i.e the duly stamped and notarized
revocation deed sof power of attorney is
sufficient.
•
•
• Important Clauses to be Present
• The name, age, address and occupation of
the person appointing the facility of Attorney.
• The person to whom such power is granted
to.
• The date and place of creating power of
attorney deed, and also the start date which it
comes into force.
• The date of termination of the facility of
attorney deed if it’s limited by time. Just in case,
if no specific time is mentioned, then mention
whether those are durable or not.
• In the special power of Attorney, the statute
that should be done by the agent and therefore
 the period of time within which such an act has
got to be performed must be clearly mentioned.
• In cases where general power is granted,
then all the acts that the principal authorises the
attorney to try and do must be clearly
mentioned. If the donor wishes a certain act to
not be done, then such acts must even be
mentioned.
•
• Stamp Duty for the Ability of Attorney
• As per Section 48, Schedule 1 of the Indian
statute, tax is duly payable for all types of Power
of Attorney. Notarizing the influence of an
Attorney is advisable generally. An influence of an
attorney who is notarised is presumed to possess
and have been executed properly. Read more
about stamp duty from here.
• POINTS TO BE NOTED FOR POWER OF ATTORNEY
• 1. POA must be on a stamp paper of Rs.500/-
(Preferably purchased in Maharashtra)
• 2. Powers to sign Leave & License Document shall
be clearly mentioned in the POA
• 3. Description of the property for which the
powers are given shall be given in the POA
• 4. POA must be signed in front of Notary or
Embassy Officer.
• 5. Thumb impression along with signature is
necessary.
• 6. POA must be either registered or Notarised
•

•
•
•
•

•
•
•
•

•
•
• GENERAL POWER OF ATTORNEY
• KNOW ALL MEN BY THESE PRESENTS that I mr
Rachit Sharma Son of Mr Shashank Sharma the
resident of house #183 sunny enclave Kharar do
here by appoint Mr Sanjay Agarwal son of Mr
 Aryan Agarwal resident of house number 216
sector 30 chandigarh as my attorney and
authorized him to do all or any of the things
jointly or severally on my behalf.
• WHEREAS The executant is the owner of various
movable and immovable properties in various
parts of India and have interest in various firms,
companies, associations of partners, trusts,
societies as partner, proprietor, shareholder,
member etc.
• WHEREAS The executant is expected to remain
out of India for a long time due to his wife’s
surgery and he will be unable to attend day to
day affairs AND THEREOFRE the above said my
general attorney is authorized to act and decide
on my behalf in the following matters.
1) That they said attorney is empowered to
buy, receive, store and to sell, pledge, give or
hire or otherwise deal with any goods, articles,
things or movable property. He is involved to
open or establish or conduct or shift or close any
branch of business at any place and enter into,
sign, execute, vary, alter, terminate suspend
and repudiate any contracts.
2) That they said attorney is authorized to open
or operate or continue or close any account
including any overdraft or other loan account.
 Also to draw or sign negotiate and endorse
checks payment orders drafts dividends or any
other instrument. Also to operate any bank
locker or safe deposit vault locker, and to
deposit therein and withdraw there from any
articles belonging to me.
3) That they said attorney is empowered to
make or receive any loan or advance from any
bank financial institution or other person to such
extent and on such terms as they said attorney
may deem expedient
4) That they said attorney is authorized to
acquire or tell transfer assign or join in acquiring
or selling transferring or assigning all or any
stocks or shares or annuities debentures and
other securities or investment of any nature
whatever.
5) That they said attorney is empowered to
make applications for and take allotments or
purchase or otherwise acquire or hold any
shares in any company in my name and to sell or
transfer pledge or deal with any shares held by
me hereafter and to execute or deliver all deeds
and documents.
6) That they said attorney is authorized to
purchase take or lease to take charge or
mortgage on and to acquire in any manner and
 to sell mortgage settle or otherwise transfer or in
any manner or in any terms deal with
immovable or real properties or any interest
therein.
7) That they said attorney is empowered to
prepare sign or execute or file any of my or any
of my firms and business in my personal
capacity or as trustee sales tax returns, income
tax returns and wealth tax returns or any other
returns under the income tax act 1961 and
where tax act 957 or any other law for the time
being in force.
8) That they said attorney Is authorized to
commence or prosecute or enforce or defend or
answer or oppose all notices suits and other
legal proceedings and demands touching any of
the matter aforesaid.
9) That they said attorney is empowered to do
generally all such things and acts as my attorney
which shall be binding on me with effect from
14th April 2021.
• IN WITNESS WHEREOF I have signed this deed of
power of attorney in the presence of the following
witnesses
• THS THE 14TH DAY OF 2021
• Witnesses
1.SMT Mehak Kaur d/o Harjeet Singh r/0 _______
(sign)
2.Shri Rajkumar s/o Manoj Kumar r/o_____
executant
•
•
•
•
•
 •

Relinquishment Deed

What is a Relinquishment Deed?

A relinquishment deed is a legal instrument that
effectuates the transfer of property ownership from
one person to another. This voluntary act is typically
employed when co-owners or legal heirs reach an
agreement for the transfer of property rights. The
deed must be signed by the relinquishing party,
attested by two witnesses, and subsequently
registered with the relevant authority for legal
validation.

A release or relinquishment deed is

an instrument whereby a person
renounces a claim upon another or
against any specified property which
he is or may be entitled to enforce. It
may be deed poll or as a deed to
which both the releaser as well as the person in
whose favour the release is made are made parties.
A release is sometimes called relinquishment. When
considered from the point of view of the person in
whose favour the transaction operates, it is
“release” as it releases him or his property from an
obligation or liability. When considered from the
point of view of the releaser, it may be said to be a
“relinquishment” as the releaser relinquishes a
certain right which he has, or may be entitled to
enforce.
A release must be in writing signed by all the
releasers. It can be drafted as a deed poll or as a
deed. If it is drafted as a deed then all releasers and
all persons having an interest in the claim or
property should be made parties. If the release is of
a claim under an instrument then it would require
attestation, if the instrument required attestation. If
the release is required to be registered it should be
attested by at least two witnesses. In other cases it
may be attested by one witness.
If the subject matter of the release is an immovable
property the amount of value of which exceeds
Rs.100, it is compulsorily registrable. The release
deed should contain the recitals regarding the origin
of the claim, acknowledgement of the releaser about
the claim and words and expressions sufficiently
clear to covey the intention of the releaser to
discharge the claim.
Under Article 55, Schedule I of the Indian Stamp Act,
1899 a simple release deed is chargeable to stamp
duty. The duty is the same as bond (Article 15) for
such amount or value as set forth in the release. A
release or discharge of an instrument mentioned in
Section 23A(1) of the Stamp Act is chargeable to the
same stamp duty as the instrument. Such an
instrument is chargeable to duty as an agreement or
memorandum of agreement under article 5(c) of the
Stamp Act.
Introduction of Relinquishment Deed
Many times it happens that a person dies intestate
(without leaving a will or testamentary will) in such
cases the property of that person is inherited by
his/her legal heir. Then it’s up to the heirs as what
they want to do with the said property. If the heir’s
come to the conclusion of separation of property,
then anyone of the co-owner (who is not willing to
keep the property) can relinquish his share in favour
of the other owner. This process of transferring
property from one owner approving the other is
known as “Relinquishment of Property”.
Meaning of Relinquishment Deed
Relinquishment deed is a legal document/instrument
where a legal heir gives up or releases his legal
rights in an inherited parental property for another
legal heir such as his mother, son, daughter, brother,
sister, etc.
The term relinquishment refers to the abandoning
and surrender of the rights, title, and interest, by
one co-owner of property for the other co-owners.
The consequences of relinquishment of one co-
owner’s share in property are the enlargement of
the shares of the other co-owners.

When to Create a Relinquishment Deed:

Several situations may necessitate the creation of a
relinquishment deed:
5. Death: In the case of intestate death, a
relinquishment deed can clarify property
ownership among legal heirs.
6. Divorce: It may be required as part of a divorce
settlement when one spouse wishes to relinquish
their share to the other.
7. Urgent Need of Funds: Co-owners seeking to
liquidate their share for immediate cash may use
a relinquishment deed.
8. Minor Legal Heir: Legal guardians of minor heirs
may use the deed to transfer property on behalf of
the minor with court approval.
9. Goodness of Heart: Individuals voluntarily
releasing their share as an act of kindness to
other co-owners may use a relinquishment deed
Essentials Elements of Relinquishment Deed
• Legal document: Relinquishment deed is a legal
document. Through this legal document, an heir
can transfer or release his legal right of the
inherited property.
• Consequences: The effects of such transfer of
rights are the release of the share of one co-
owner and the enlargement of the shares of the
other co-owners.
• Irrevocable: A release or relinquishment deed is
irrevocable even if it made without any
consideration. For a valid relinquishment, the
property must be owned by more than one
person.
• Relinquishment cannot be done in favour of
a 3rd person: Relinquishment of property can’t
be made in favour of a person other than a co-
owner. If a relinquishment is made in favour of a
person who is not a co-owner, the transaction will
be treated as a gift.
• Must be in writing: The relinquishment of right
in the case of immovable property needs to be
done only through a written document called
relinquishment deed which must be signed by all
the parties and witnessed by at least two
witnesses.
 • Must be registered: Relinquishment deed falls
under Section 17 of the Registration Act, 1908
and hence, a release of rights in the immovable
property must be registered. The registration
takes place in the office of the sub-registrar within
whose jurisdiction the property is situated.
• Consideration: A relinquishment deed can be
done with or without any consideration.
• Easy process: A relinquishment deed can be
made and registered in few days, and this process
is not expensive.

Who can Relinquish Property

The relinquishment of property can only be done by
someone who has a share in the property. In case
there is more than one owner in a property, either of
the co-owners can do relinquishment. For a valid
relinquishment, the essentials of a valid contract are
to be followed other than the compensation.
Illustration: A died intestate leaving behind his
three sons. A was the owner of a land which after his
death was inherited by his three sons. Later, one of
the son X shows his interest for not keeping any
share in the said property for which he offered
relinquishment. The relinquishment deed was made
in favour of other two owners. The relinquishment
deed transferred every right of X in the property to
his brothers
Difference between Relinquishment Deed and
Gift Deed

Relinquishment Deed Gift Deed

1. Relinquishment
Deed is a deed by which Gift Deed is a deed by
one person releases or which one person gifts
transfer his legal right to his legal rights in the
the property. property to any person
2. The property The property gifted need
relinquished is always an not to be inherited
inherited property. property.
3. The person in whose The person in whose
favour the property is favour the property is
relinquished must be the gifted can be anyone.
co-owner of the property.
4. Relinquishment may
or may not require Gift does not require any
compensation. compensation
(something in return)

Registration of Relinquishment Deed

As a relinquishment deed is a legal document by
which a person formally gives up his claim to
another person, the said deed must be
systematically executed and registered as per
Section 17 of the Registration Act, 1908.
For the purpose of getting a relinquishment deed
registered it is advised to consult a lawyer who can
draft the deed for you, and in case you know the
legal methodology and terminology you can do that
on your own. Following steps are to be followed to
get a relinquishment deed registered:
• Preparation of Relinquishment Deed: A
Relinquishment Deed is to be prepared on a
stamp paper of Rs.100. Ensure that every detail of
the relinquished property is mentioned in the
deed.

• Present the deed before Sub-Registrar of

Assurances: Once the deed is prepared on a
stamp paper, it is submitted before sub-registrar
of assurances within whose jurisdiction the
property is situated for registration along with a
registration fee which varies from state to state,
but it is somewhere between Rs. 100 – Rs. 250 in
every state.
• Witnesses and other formality: Signatures of
two witnesses will be required to get a deed
 registered. Other documents such as passport
size photos, identity proof (driving license, Adhar
card, etc.) will be needed.

Is it possible to register a document at a

person’s private residence?
Under Sections 31 of the Act, a provision has been
made authorising the Registering Officer, on special
cause being shown ( for instance if the person is
physically handicapped ) to attend at the residence
of any person desiring to present a Relinquishment
Deed for registration and accept for registration such
a deed, provided Registering Officer is satisfied that
the particular cause shown as sufficient.

Relinquishment takes place when the person who is

supposed to heir the property waves off his right by
transferring it to someone else. A deed is just a
binary contract with more complex collateral.
Deed of relinquishment will only be considered valid
in following situations:
• The person relinquishing the property must hold
an interest in the property.
• The property must be a joint Hindu family
property (membership by birth) except the self
 – acquired property of the father (no
membership right during the lifetime of father).
A relinquishment deed is irrevocable as it can
only be set aside on the similar grounds a
contract can be set aside.

How to challenge a relinquishment deed

The grounds for cancellation of relinquishment deed
are similar as that of revoking a contract (of course,
there is no consideration and price involved in the
deed), these are as follows:
• Fraud,
• Misrepresentation,
• Undue influence,
• Coercion,
Any other similar grounds
So, the deed can only be revoked when there is a
lack of free consent and cannot be simply set
aside on any other grounds as per your whims and
wishes.
Secondly, both the parties must give their consent
to the cancellation, that is, the person who
relinquished his property and in whose favor it was
relinquished. But in a situation where the beneficiary
person is unwilling to cancel the deed, you can
approach the civil court for cancellation of the deed.
Limitation period for challenging: Three years as
per the Limitation Act. (Commences from the day
when the right is being infringed).

Unregistered Relinquishment Deed

The unregistered relinquishment deed is not a valid
deed in law and can’t be contested in court. As far as
any transaction to immovable property shall be valid
only when the deed executed, is registered by
properly paying stamp duty and the registration
charges.
Section 17 (1) b of the Registration Act mandated
that any document which has the effect of creating
and taking away the right in respect of any
immovable property must be registered and section
49 of the Act imposes bar on the admissibility of an
unregistered documents and deals with the
documents that are required to be registered under
section 17 of the act .
An unregistered relinquishment deed can also be
challenged and declared void as registration is
necessary and its absence makes the deed invalid.
In Telugu Kishna Mohan and Another vs Smt.
Boggula Padmavathi and others, it has been
held that an unregistered relinquishment deed is not
admissible in evidence for want of registration under
Section 17 of the Indian Registration Act.
Points to Remember while Drafting a
Relinquishment Deed:
Several crucial considerations must be taken into
account during the drafting process:
1. Quick Procedure: The release deed offers a quick
and cost-effective procedure for property transfer.
2. Mandatory Registration: Section 17 of the
Registration Act of 1908 mandates the registration
of transfer of shares in an immovable asset.
3. Mandatory Signature: All involved parties should
sign the deed in the presence of at least two
witnesses.
4. Consideration: A release deed can be executed
with or without monetary consideration.

Documents Required for Relinquishment Deed:

1. Legal and registered documents of the property.
2. A written document stating the intention of
relinquishment.
3. Details of all co-owners.
4. Relinquishment deed particulars.
5. Name, age, and address of the releasor and
releasee.
6. Description of the property.
7. Details of the consideration (if required).
8. Aadhar Card, ID Proofs of the parties.
9. PAN card of both parties.
10. Any other agreements related to the property.
11. Any other documents required by the
authorities.
Benefits of a Relinquishment Deed:
1. Simplifies Property Transfer: Facilitates
straightforward property transfer among family
members without the need for a sale deed.
2. Avoids Legal Disputes: By preventing disputes
over property ownership and inheritance, it
promotes a smoother transfer process.
3. Smooth Succession Planning: Integral for
succession planning, ensuring seamless property
transfer between generations.
4. Faster Processing: Allows for a quick and efficient
transfer of ownership.
5. Legal Protection: Establishes a clear record of the
transfer, offering legal protection to involved
parties
Can the Deed of Relinquishment be Revoked?
While typically irrevocable, a relinquishment deed
can be revoked under certain circumstances,
including misinterpretation, coercion, influence, or
fraudulent acts. Revocation requires cooperation
from all parties involved or legal recourse through
the court.

Relinquishment Deed and the Rule of Spes

Successionis Under Muslim Law
Chapter 6 of the Mulla’s “Principles of Mahommedan
law” relates to the concept of transfer of spes
successionis which has also been termed as
“renunciation of a chance of succession.” It says
that, the chance of a Mahommedan- heir apparent
succeeding to an estate can’t be subject to a valid
transfer or release.
6. 6(a) of the Transfer of Property Act, also deals
with the doctrine of Spes Successionis.
The Supreme Court has examined the applicability of
the concept of ‘Spes Successionis’ in Shehammal
v. Hasan Khani Rawther. The two important
questions which came up before the Court in this
case was:
1. If the view of Doctrine of Spes Successionis, a
deed of relinquishment executed by an
expectant heir could operate as estoppel to a
claim, which may open on the death of the
owner of the claim.
2. Whether a Muslim by means if Family
Settlement can relinquish his right of Spes
Successionis, when he has still not acquired the
right in the property.
The Court in this case, watered down the concept
that the chance of a Mohammedan heir apparent
succeeding to an estate cannot be the subject of a
valid transfer on lease and held that renunciation of
an expectancy in respect of a future share in a
property in a case where the concerned party
himself chose to depart from the earlier views, was
not only possible, but legally valid. The Court
referring to the case of Mt. Khannum Jan v. Mt. Jan
Bibi, wherein it was held that “renunciation implies
the yielding up of a right already vested.” For
example, renunciation during the mother’s lifetime
of the daughter’s shares would be null and void on
the ground that a daughter does not get the right
over the property before the mother dies.
The Courts have however, held that, “under the
Muslim Law an expectant heir may be part of a
course of conduct which may create an estoppel
against claiming the right at a time when the right of
inheritance has accrued”
Now, on the issue of whether by means of family
settlement can they relinquish the right of spes
successionis, the Courts commented that, though
the arrangements in a family are made to avoid any
future dispute in the family, but a broad concept of a
family settlement could not allow the relinquishment
of spes successionis.
Nevertheless, the Courts pointed out a few
exceptions as in the case of Gulam Abbas, like, by
accepting consideration for a future share. Once,
consideration for a future share is accepted, it could
then operate as estoppel against the expectant heir
to claim any share in the estate of the deceased on
account of the doctrine of spes successioni
RELINQUISHMENT DEED

This Relinquishment Deed is made and executed on

this [Date] day of [Month, Year] by:

The Executants/Releasors
Name: [Full Name]
Relationship: [Relationship to the deceased, if
applicable]
Address: [Complete Address]

In Favor Of:
The Releasee
Name: [Full Name]
Relationship: [Relationship to the deceased, if
applicable]
Address: [Complete Address]

WHEREAS,
Late [Deceased Person's Name], was a subscriber
under [Provide details like National Pension System
(NPS), if applicable].
The said Late [Deceased Person's Name] died
intestate and without nominating anyone to receive
the claim for withdrawal of accumulated pension
wealth.

NOW THIS DEED WITNESSETH AS UNDER:

The Executants/Releasers, out of natural love and
affection and without any monetary consideration,
hereby release and relinquish their respective shares
in the claim under [Specify the asset or property], in
favor of [Full Name of Releasee], and hereby affirm
and declare that they and their legal heirs shall have
no right, claim, or interest in the said claim for
withdrawal of accumulated pension wealth of Late
[Deceased Person's Name], and the same shall vest
absolutely in [Full Name of Releasee], the Releasee.

IN WITNESS WHEREOF, the Executants/Releasers

and the Releasee have signed this deed of
relinquishment on this day, [Date, Month, Year], in
the presence of the following witnesses:

Executants/Releasers:
Name: [Witness 1 Name]
Address: [Witness 1 Address]
Signature:
Name: [Witness 2 Name]
Address: [Witness 2 Address]
Signature:
PARTNERSHIP DEEDS INTRODUCTION

A detailed discussion of the Partnership Act, 1932 is

not within the scope of this Study. Students are,
therefore, advised to study the Indian Partnership
Act, 1932 in detail on their own so as to acquaint
themselves, inter alia, with the nature, formation,
registration and dissolution of partnership. However,
introductory observations on some of the relevant
aspects of the partnership are made below.

Partnership - Its Nature and Meaning

Partnership is an association of two or more like
minded persons formed with a common objective to
establish a lawful business house of their choice with
the idea of earning profits. However, in any business
enterprise the possibility of its incurring loss cannot
be ruled out. Therefore, all partners of a firm
mutually agree to share all profits and losses of the
business amongst them according to their
predetermined shares/proportions fixed by them in
the partnership agreement.
Partnership is defined in Section 4 of the Partnership
Act, 1932 as a relation between persons who have
agreed to share profits of business carried on by all
or any one of them acting for all. Partnership
requires three elements –
(a) an agreement entered into by all persons
concerned;
(b) distribution of the profits of business; and
(c) management of the business by all or any one or
more of them acting for all, i.e., mutual agency.
Out of these three, the third element, i.e., the
element of mutual agency, is most essential and it
distinguishes partnership from other type of
contractual relationship between the parties. If this
element is absent the partnership fails. One partner
is not only an agent of the firm but also of the other
partners and, if so, can bind another which falls
within the scope of partnership subject to limitation
under Section 20 of the Act.
A partnership is distinguishable from associations
e.g., clubs, societies, co-operative bodies and
incorporated companies.
The real intention and conduct of the parties
appearing from the (a) written agreement, or
(b) verbal agreement together with surrounding
circumstances are the tests of partnership [Cox v.
Hickman (1860) 8 HLC 268].
Persons who have entered into partnership with one
another are called individually partners and
collectively a firm, and the name under which their
business is carried on is called the firm name
(Section 4 of the Indian Partnership Act, 1932).
A partnership agreement usually makes provisions
for the duration of the partnership or for its
determination. Where no such provision is made the
partnership is “partnership at will”.

Who can be Partners

The word “person” in Section 4 of the Indian

Partnership Act, 1932 contemplated only natural and
legal persons. (Duli Chand v. C.I.T.). Partnership
relation is one of contractual nature. Therefore, such
persons who are competent to contract can enter
into partnership. A firm or a Hindu Undivided Family
is not a legal person and cannot enter into
partnership with any person. When the Karta of a
Joint Hindu Family enters into a partnership with
strangers the other members of the family do not
ipso facto become partners (Firm Bhagat Ram v.
Comm. of Excess Profits Tax, AIR 1956 SC 374).
A minor cannot be a partner in a firm but, with the
consent of all the partners, he can be admitted to
the benefits of partnership (Section 30). He is
entitled to share in the profits and his share is liable
for the acts of the firm, but he is not personally
liable. He cannot be made liable for the losses of the
firm. Within six months of attaining majority or
obtaining knowledge of his admission, whichever is
later, the minor may elect to become or not to
become a partner in the firm.
A person may be an active partner in the firm or he
or she may choose to remain a dormant or a
sleeping partner only. It all depends on the contract
between the parties.
Two partnership firms cannot enter into partnership
as such but its partners can certainly form a new
partnership. However, a partnership firm may be a
member of an association or company licenced
under Section 8 of the Companies Act, 2013. The
limited company of which a firm may be a member
should be one formed for promoting Commerce, Art,
Science, Religion, Charity or any other useful object
without any profit making motive. On dissolution of
the firm, its membership of the association or
company shall cease.

Registration of Partnership Firm

Registration of partnership firm has been made
optional under the provisions of Section 58 of the
Indian Partnership Act, 1932. Consequences of non-
registration of a partnership firm are set out in
Section 69 of the Partnership Act. An unregistered
firm cannot enforce a right or claim arising out of a
contract against any third party. However, if the firm
obtains registration on the date of institution of the
claim against third person, the said claim or right
would be perfectly maintainable. Since the blow of
the consequences of non-registration is very severe,
it is advisable to get the partnership registered
under the Partnership Act, 1932 immediately on its
incorporation.

Registration of Partnership Firm under the

Income-tax Law
Registration of partnership under the Income-tax
Law is distinct from registration of firm under the
Partnership Act. Rule 22 of Income-tax Rules, 1962
provides that an application for registration of
partnership firm should be accompanied with an
instrument of partnership specifying the
apportionment of shares of profit and losses of the
business amongst the partners of the firm. This
registration is required to be renewed every year
under the orders of the concerned Income-tax
Officer.
What is a Partnership Deed?
59. A partnership deed is a written agreement
between partners in a business that outlines the
terms and conditions governing
their partnership. It is a legal document that
clarifies the duties, rights, and obligations of
each partner and helps avoid future disputes.
The deed also serves as a reference point in
case of disagreements, ensuring that all parties
adhere to the agreed-upon terms.
60. While a partnership deed can be oral or
written, it is always advisable to have a written
document to avoid any misunderstandings or
legal issues down the road. A written deed
provides a clear understanding of how the
partnership will function and is often required for
tax and registration purposes.

Essential Components of a Partnership Deed

1 Name and location of the business
2. Nature of the business
3. The capital to be contributed by each partner
4 Duties, powers and obligations of al the partners
5. Length of business
6. The method of distribution of profits and sharing
of losses
7. Method of admission of a new partner and
withdrawal of existing pa and for expulsion of a
partner
8. Method of preparing accounts
9. Procedure for dissolution of firm and settlement of
accounts
10. Salary, if any, payable to partners for managing
the firm

Importance of a Partnership Deed

61. A well-drafted partnership deed offers
several advantages:
62. Clarifies Roles and Responsibilities: The
deed specifies the role of each partner, ensuring
that everyone understands their duties and
obligations.
63. Prevents Disputes: By clearly outlining
profit-sharing ratios, responsibilities, and
decision-making processes, the deed helps
prevent conflicts among partners.
64. Legal Enforceability: In case of disputes, a
registered partnership deed can be used in court
to resolve issues as per the agreed-upon terms.
65. Taxation Benefits: A registered
partnership deed is often required for tax filings,
ensuring that the partnership firm complies with
legal requirements.

Partnership Deed/How Made

The partnership is based on contract. This contract
may be made either orally or in writing or even may
be inferred from the course of dealing between the
partners. In order to avoid all disputes relating to
terms of partnership, it is suggested that a written
document containing terms and conditions of
partnership be executed between the partners. The
deed is executed by all the partners and is drafted
as an agreement to carry on certain business in
partnership on certain terms and conditions. Some
of the terms are indicated above.
While drafting partnership deed we should
incorporate all terms and conditions that govern a
particular partnership business. Partners of any
partnership business are normally interested in
settling certain terms amongst them before they join
hands to carry on business in partnership. As a
draftsman of the partnership deed one should be
extra careful to understand and properly incorporate
in partnership deed the terms relating to the
following:
(xxi) Name and place of business.
(xxii) Details of the Partners
(xxiii) Duration of the partnership.
(xxiv) Shares of each partnership in the profits and
losses of the business.
(xxv) The management of the business.
(xxvi) Nature of principal work agreed to be carried
on in partnership.
(xxvii) Number of partners and initial capital
employed by each one of them.
(xxviii) Provision and the manner for raising future
capital, if required.
(xxix) Work distribution, if any, of each of the
partners.
(xxx) Obligation of partners who are members of a
partnership firm.
(xxxi) Operation of Bank Accounts.
(xxxii) Withdrawal by partners.
(xxxiii) Accounting system of the business.
(xxxiv) Whether place of business belongs to
partnership or any individual partner.
(xxxv) Division/Devolution of goodwill of the
business in case of dissolution of partnership.
(xxxvi) Distribution of assets and liabilities amongst
partners at the time of dissolution.
(xxxvii) Provisions for bringing in or admitting new
partners

Besides the above conditions if there are any other

particular conditions which partners want to include
in the partnership deed the same may suitably be
incorporated therein. Language used in the
partnership deed must be such that it may avoid all
possible confusion relating to terms of partnership
and should be easily understandable.
Common Mistakes to Avoid When Drafting a
Partnership Deed
· When drafting a partnership deed, it is important
to avoid the following common mistakes:
· Vague Clauses: Ensure that all clauses are
clearly defined and leave no room for ambiguity.
· Ignoring Future Changes: Include provisions
for future changes, such as the admission of new
partners or changes in profit-sharing ratios.
· Not Registering the Deed: While registration
is not mandatory, failing to register the deed can
result in legal complications and make it difficult
to enforce the terms of the agreement.
· Overlooking Dispute Resolution: A well-
defined dispute resolution clause is essential to
prevent conflicts from escalating into legal
battles.

Procedure for Partnership Deed

No set procedure is applicable in the making of a
Partnership Deed. However, once the agreement has
been drafted by a lawyer, it should be specifically
and carefully read by the partners to the Partnership
Deed. Any necessary changes required to be made
shall be carried out and once the agreement is
finalised, it shall be signed by the partners along
with the requisite witnesses. The Partnership Deed
has evidentiary value when it is printed on proper
stamp paper and signed by both the parties. The
stamp paper value depends on the particular State
in which it is executed. Each party should thereafter
keep a signed copy of the Partnership Deed.

Introduction of a New Partner

Introduction of a new partner is a matter of
agreement between the partners (vide Section 31 of
the Partnership Act, 1932. Also see Section 42 of the
said Act).
Introduction of a new partner in the existing
partnership brings in a change in the constitution of
the firm. A new partner cannot be admitted to the
existing partnership except with the consent of all
the existing partners of the firm but subject to any
contract to the contrary between such partners. The
person so admitted as a new partner in the existing
partnership shall not be liable for any act of the firm
done before he became a partner. Where the articles
of partnership provide in express terms for the
retirement and admission of partners, the right of
retiring and introducing new partners under the
agreement are fixed thereby except so far as they
may be modified by the terms of a subsequent
agreement. If a person enters an existing firm
without specifying the terms upon which he
becomes a partner, it is presumed that he accepts
the terms of the original partnership articles, except
as they are modified by the introduction of a new
member.

Retirement and Expulsion of Partners

These matters can be regulated by the terms
incorporated in a deed of partnership. Sections 32
and 33 of the Partnership Act, 1932 also make
provision for these matters.
A partner may retire from a firm with the consent of
all other partners. If the terms of the agreement so
provide, a partner may retire by notice to the other
partners. In a partnership at will also a partner can
retire by giving notice in writing to all the other
partners of his intention to retire. A partner can be
expelled from a firm by a majority of the partners
where such a power is conferred by the agreement
between the partners and the power is exercised in
good faith.

Nomination of Successor
It is not uncommon in partnership agreements to
find a clause as to nomination of a successor who
has the right to be declared and admitted as partner
in the event of death or retirement of a partner. It
was, however, held by the Supreme Court in
Commissioner of Income Tax v. Govindram Sugar
Mills, AIR 1966 SC 24, that the nomination is not
effective in case of partnership firm consisting of two
partners only as it stands dissolved on the death of a
partner; nevertheless, in view of the rights and
obligations of a person to be nominated as under
Section 31 of the Act, the same principle in case of
agreement between two persons is applicable in
case of partnership between two partners.

Purchase of Business by a Partner

When a partnership ceases to exist and partnership
business is closed its assets and liabilities are valued
and thereafter every partner or his representative is
entitled as against all the other partners or their
representatives to have the property of the firm
applied in payment of the debts and liabilities of the
firm and to have the surplus distributed among the
partners or their representatives according to their
rights.

Dissolution of Partnership
When jural relation between all the partners inter se
is snapped, this constitutes dissolution of the firm.
Dissolution of a firm may take place:
(1) Without the intervention of the Court.
(2) With the intervention of the Court.

Dissolution without the intervention of the

Court may take place:
(a)by agreement between the parties,
(b)(by the adjudication as insolvent of all the
partners or of all the partners but one.
(c)by the business of the firm becoming unlawful,
(d)subject to agreement between the partners:
(i)by the expiry of the term fixed,
(ii)by the death of a partner,
(iii)by the insolvency of a partner,

(e)by notice in writing in case of partnership at will.

Dissolution with the intervention of the Court may be
made on any of the grounds contained in Section 44
of the Partnership Act.
The mere incoming or outgoing of partners does not
dissolve the firm.

Modes of Dissolution
There are some modes by which a partnership can
be dissolved and those are:
 163. By an act of partners: when a partner agrees
to dissolve a partnership at a particular time.
Partners can come into an agreement regarding
a particular time period maybe five years. In
which partners can end the agreement at the
end of the five years. Sometimes partners can
dissolve it in the middle of the time period under
specific conditions.
164. By operation of law: a partnership is the
consequence of an agreement which is governed
by law. Therefore if any unlawful activity is
performed so it will be dissolved. You can make
a valid partnership for illegal work.
165. By the court’s decree: a partnership can be
dissolved by the court and the court will only
allow under these conditions:
a.If the partner is incapable to work;
b.If the partner is mentally unstable;
c. If the partner misbehaves which creates a
bad impact on the partnership;
d.If there is a breach of the agreement by a
partner.
166. Statement of dissolution: dissolution can be
done by filing the statement to the state’s
secretary. The form must contain the
information regarding the partnership name,
date and reason of dissolution.

Execution and Attestation: Registration

A deed of partnership, or of dissolution of
partnership, must be executed and attested as a
bond on a non- judicial stamp paper of proper value,
and its registration is not compulsory; but where a
deed of dissolution of a firm involves transfer of
immovable property worth Rs. 100 or upwards, the
deed is compulsorily registrable.
No law requires that a deed of partnership should be
attested, but it is desirable that it should be attested
by at least two partners. Stamp duty on an
instrument of partnership and on a deed of
dissolution is payable under Article 46. Schedule I to
the Indian Stamp Act, 1899.

ANNEXURES

Deed of Partnership between two Partners

(To be executed on Rs. 15/- Non Judicial Stamp
Paper)
ANNEXURE I
THIS INDENTURE OF PARTNERSHIP IS MADE ON
the..................... day of..................... 2013 Between
A.B. ..................... S/o..................... R/o.....................
aged..................... (hereinafter called the ‘First
Party’) AND C.D..................... aged.....................
years, son of..................... resident of.....................
(hereinafter called the ‘Second Party’).
WHEREAS the parties hereto have agreed to
commence business in partnership and it is
expedient to have a written instrument of
partnership.
WHEREAS the parties hereto have mutually agreed
to carry on the business of..................... (here
describe the business) at..................... (here specify
the place or the principal place of business) and to
share the profits and losses of the said business in
partnership between themselves and they have with
that object constituted themselves into a firm of
partners under the name and style of
M/s..................... (here give the name of the firm).
The terms and conditions agreed to by and between
the parties hereto witnesses:
1. The duration of the firm shall be, to begin with, a
period of..................... years or such further or lesser
period as the parties may choose to mutually agree.
2. The capital of the firm for the time being is fixed
at Rs...................... (Rupees.....................) only which
has been contributed by the partners as follows
namely:
First Party.....................
Second Party.....................
(In case minor is admitted to the benefits of the
partnership the capital contributed by him, if any)
Provided that the partners may by mutual
agreement increase or decrease the capital and
their respective contributions thereto. The partners
by mutual consent may raise capital by way of loans
if considered expedient.
3. The partners shall distribute the net profits and
bear the losses in the following ratios:
First Party.....................
Second Party.....................
4. The partner, shall be entitled to withdraw out of
the profits, money not exceeding Rs..................... in
each month adjustable against the account of the
respective partners at the time of annual
accounting.
5. The First party shall make available to the firm the
shop premises in which the business of the firm shall
be carried on, situated at..................... and which
shop or premises is in his occupation as a tenant
from month to month paying a monthly rent of
Rs..................... to Shri..................... and shall
hereafter hold the said shop or premises in trust for
the partnership for which rent shall be paid out of
the partnership from the date mentioned in para 1
above.
6. The said rent, and all taxes, duties, repairs and
outgoings in respect of the said shops or premises or
other place or places of business of the partnership
shall be paid out of the partnership.
7. No apprentice, clerk or servant shall be employed
or dismissed without the consent of all the partners.
8. The firm shall regularly maintain in the ordinary
course of business a true and correct account of all
its incoming and outgoings and also all its assets
and liabilities in proper books of accounts which shall
ordinarily be kept at the firm’s place of business.
9. Immediately after each..................... day
of..................... in every year, the partners shall take
an account and valuation of the effect, credits and
liabilities of the partnership. Such accounts and
valuations shall after mutual examination be drawn
up in duplicate and signed by the partners, we shall
each retain a copy. The entries in such signed
accounts shall be final and binding between the
parties. The profits or loss, as the case may be, shall
be divided as aforesaid, after the signing of such
account.
10. The authority of the partners, individually shall
be limited to the following:
(a)
Nopartnershallindividuallypurchasegoodsforthepartn
ershipwithoutconsultingtheotherandobtaining his
consent for purchases of the value exceeding
Rs......................
(b) No partner shall singly bind the partnership by
taking any loan or raising any money whether with
or without security to the extent of more than
Rs.....................
(c) No partner shall commit the partnership without
obtaining the written consent of the other, to any
undertaking which involves the partnership
financially to the extent of more than
Rs.....................
(d) All law suits shall be filed and defended by the
partnership by the partners acting jointly in all cases
which involve the partnership financially to the
extent of more than Rs.....................
11. The partnership shall be deemed to be
continuing on the admission of a fresh partner or
partners, provided the admission is on the terms
herein laid down and is approved by all the partners.
12. Every partner shall be entitled to dissolve the
partnership in the event of the other committing
breach of the conditions herein covenanted. The
partnership may be dissolved by a notice in writing
sent by registered post to the address herein given
or such address as may be registered from time to
time with the Registrar of Firms. On the dissolution
of the firm under this clause the expelled partners
shall not be liable for any loss incurred as from the
date of dissolution. But no profit or loss shall be paid
or become payable except at the time of annual
accounting.
13. On the bankruptcy of any partner or on notice
being given to either partner under clause 12 above
or on the death and there being no major legal
representative willing or capable to take the place of
the deceased partner the partnership shall
terminate. The share of such partner may be
purchased by the remaining partner(s) at a valuation
to be made by arbitrators or their umpire as
hereinafter mentioned. The price shall be paid in 3
equal six monthly instalments. The tenancy right of
the first party shall be valued at..................... years’
rental.
14. Upon the determination of the partnership by
afflux of time, or upon its determination by any other
partner then, as soon as convenient, a full and
general account of valuation shall be taken of the
property and assets and liabilities of the partnership
and the property and the assets put to sale and the
debts realised and the creditors paid. The net
proceeds in cash shall be equally divided between
the then partners or the partners and the legal
representative or representatives of the deceased
partner; PROVIDED always, that if the proceeds are
less than the liabilities the loss shall be made good
in equal shares by the then partner, or the legal
representative or representatives of any deceased
partner.
15. If at any time any dispute, doubt or question
shall arise between the partners, or their
representatives either on the construction of these
presents, or respecting the accounts, transaction,
profits or losses of the business or otherwise in the
relation to the partnership then every such dispute,
doubt or question shall be referred to arbitrators
chosen by each of the partners and the
representatives of their umpire to be appointed in
the manner provided by law and such reference
shall in all respect, as to the mode and consequence
thereof conform to the provisions in that behalf
contained in the Arbitration and Conciliation Act,
1996 or any statutory modification thereof.
IN WITNESS WHEREOF the said A.B. and C.D. have
hereto at..................... signed the day and the year
first above mentiond.
WITNESSES:
Note : There may be more than two partners in a
firm. In that case, the number of parties may be
accordingly increased in the first para of the
partnership deed and the said para may be drafted
as given below:
“THIS DEED OF PARTNERSHIP is made
the.................................. day of..................................
2013 Between A.B., aged........ etc. (hereinafter
called the “First Party”) AND C.D., aged....... etc.
(hereinafter called the “Second Party”) of the second
part AND E.F., aged........ etc. (hereinafter called the
“Third Party”) of the Third Part.”
Thereafter, the terms and conditions as mentioned
in the above Model Form, with suitable
modifications, should be given.

ANNEXURE II
Deed extending Period of a Partnership
THIS DEED OF AGREEMENT is made
the.................................. day of..................................
2013 BETWEEN A.B., C.D. and E.F. AND WITNESSES
as follows:
That each of the said A.B., C.D. and E.F. do hereby
agree with the others of them, jointly and severally,
in the manner following, that is to say:
That the said A.B., C.D. and E.F. will remain and
continue partners together in the said trade or
business of.................................. for the further term
of.................................. years to be counted from
the.................................. day of..................................
2007 the day on which the original deed of
partnership shall expire, upon such and the same
terms and conditions, and with, under and subject to
such and the same covenants, provisions and
agreements as are expressed and contained in the
said original deed of partnership to which this
agreement is appended, and to which the said
partners hereto, their respective legal
representatives would have been subject or liable, if
the said deed of partnership and the partnership
thereby created, and the several covenants,
declarations, provisions and agreements therein
mentioned and contained had been made or entered
into for the term of ten years instead of the term of
five years.
IN WITNESS whereof the said A.B., C.D. and E.F.
have hereto at.................................. by way of a
supplementary deed executed these presents on the
day and the year first above mentioned and
appended the same to the original deed of
partnership, deed..................
WITNESSES:

Deed of Agreement of Admission into Firm of a

New Partner
THIS DEED OF AGREEMENT IS made
the ..................... day of ..................... 2013
BETWEEN AB ..................... son of .....................
aged ..................... R/o ..................... and
CD ..................... son of
Sd/- A.B.
Sd/- C.D.
Sd/- A.B. Sd/- C.D. Sd/- E.F. ANNEXURE III
Lesson 5 Drafting and Conveyancing Relating to
Various Deeds and Agreements-III 199 .....................
aged ..................... R/o ..................... partners in the
firm CD & CO. of the one part, AND EF
..................... son of .....................
aged ..................... years resident of ..................... of
the other part.
WHEREAS the said AB and CD are partners in the
firm CD & Co. situated in..................... and are
bound as such under a deed partnership executed
by them on the..................... day of.....................
2013 hereinafter referred to as the “partnership
deed”.
AND WHEREAS the said EF is desirous of being
admitted as a member in the aforesaid firm of CD
and Co. and invest a sum of Rs..................... AND the
said AB and CD are willing to admit him as an
additional partner.
NOW THEREFORE THE DEED WITNESSES that in
pursuance of the said agreement and in
consideration of the said EF bringing in and
contributing the sum of Rupees.....................
(Rs.....................) only as additional capital of the
above partnership firm, it is mutually agreed as
follows:
1. The parties hereto shall, as from the date hereof
be and continue partners for the unexpired residue
of the terms mentioned in para..................... of the
partnership deed subject in all respects to the
conditions, stipulations, and provisions of the
aforesaid partnership deed, so far as applicable, and
except as varied by this deed of agreement.
2. The capital mentioned in the partnership deed
shall hereafter be changed to the sum of
Rupees..................... only and the partners shall
hereafter have the undernoted shares in the capital.
AB shall have Rs..................... in the said capital;
CD shall have Rs..................... in the said capital;
and EF shall have Rs..................... in the said capital.
3. The profits and losses of the partnership shall
continue to be borne by the partners hereto in
proportion to their above named respective shares.
IN WITNESS WHEREOF the said AB, CD and EF have
hereto at..................... signed the day and the year
first above mentioned.
WITNESSES:
1. 2. 3.

DRAFT OF PARTNERSHIP AGREEMENT

This Deed of Partnership is made at.................... on

this .................... day of ............... by and between:
Shri ............................... aged about .............. years,
son of Shri .................................. resident of
………………………………………… (Hereinafter to be
called the First Party); Shri ............................... aged
about ............... years, son of
Shri .................................. resident of
………………………………………(Hereinafter to be
called the Second Party); Shri .............................
aged about ................ years, son of
Shri .................................. resident of (Hereinafter to
be called the Third Party); Shri .......................... aged
about ................. years, son of
Shri .................................. resident of (Hereinafter to
be called the Fourth Party);
WHEREAS the parties to this deed have been
carrying on the business of .......................................
under the name and style of M/s. .........................
with its principal place of business at ............. on the
terms and conditions incorporated in the Partnership
Deed executed on.........................................
AND WHEREAS vital amendments have been made
by the Finance Act, 1992 in the procedure for
assessment of firm. Consequent to the said
amendment, the parties to this deed had a meeting
and have orally and mutually agreed to amend and
alter some of the terms and conditions contained in
the aforesaid partnership deed with effect from 1-4-
1992.
AND FURTHER WHEREAS the parties to this deed
have been carrying on the above said business in
partnership on the terms and conditions orally and
mutually agreed amongst themselves as aforesaid;
AND WHEREAS the parties to this deed desire that
the terms and conditions on which they have been
carrying on the above said business in partnership
since ...................... and propose to continue in
future be reduced to writing to avoid future
difficulties or misunderstanding.
NOW, THEREFORE THIS DEED WITNESSETH as
under, incorporating the aforesaid amendment/
alteration in the terms and conditions of the
partnership:
1. That the partnership business has been and shall
continue to be carried on under the name and style
of M/s. ....................................
2. That the partnership business has been and shall
continue to be that of ................ with its principal
place of business at .............. The parties by mutual
consent may carry on business at such other place
or places, in such other name or names and of such
other nature or natures, as they may deem fit and
proper from time to time.
3. That the amount lying to the credit of the partners
as on 1-4-1992 shall be deemed as their capital
investment. Further capital, loans or deposits looking
to the needs/requirements of the partnership firm
shall be arranged, invested or contributed by the
partners.
4. That interest at the rate of 18% per annum or as
may be prescribed under section 40(b)(iv) of the
Income-tax Act, 1961 or any other applicable
provisions as may be in force in the income-tax
assessment of the partnership firm for the relevant
accounting period or at a lower rate as may be
agreed to by and between the parties from time to
time shall be paid to the partners or credited to the
partners on the amount standing to the credit of the
account of the partners. Such interest shall be
considered as an expenditure of the firm and shall
be debited to the Profit & Loss Account of the firm
before arriving at the divisible profit or loss. The
interest to persons other than partners shall be paid
or credited to their accounts at the rate or rates as
may be agreed to by and between the partners and
such persons from time to time.
5. That Shri ................................ Shri .....................
and Shri ............................ the parties of
the ....................... parts have agreed to keep
themselves actively engaged in conducting the
affairs of the business of the partnership firm. The
said partners shall be working partners. It is hereby
agreed to that in consideration of the said parties
keeping themselves actively engaged in the
business of the partnership firm and working as
working partners, shall be entitled to remuneration.
The remuneration payable to the said working
partners shall be computed in the manner laid down
or deduction under section 40(b)(v), read with
Explanation 3 of the Income-tax Act, 1961 or any
other applicable provision as may be in force in the
income-tax assessment of the partnership firm for
the
relevant accounting year. Such amount of
remuneration shall be distributed between the said
working partners in the following proportion:
A. Shri ................................ ....... per cent of such
amount
B. Shri ................................ ....... per cent of such
amount
C. Shri ................................ ....... per cent of such
amount
The partners shall be entitled to increase or reduce
the above remuneration and may agree to pay
remuneration to other working partner or partners
as the case may be. The partners may also agree to
revise the mode of calculating the above said
remuneration as may be agreed to by and between
the partners from time to time.
6. That the parties hereto shall be true and faithful
to each other and shall not do or cause to be done
anything which may be detrimental to the interest of
the firm.
7. That the parties shall keep or cause to be kept
proper books of account and documents and shall
make entries therein of all receipts, payments and
other matters as is usually done and entered in the
books of account kept by persons engaged in
business similar to that of the firm. Each partner
shall have a right to have access to and to inspect
and take copy of the same.
8. That the partnership has been and shall be a
partnership at will.
9. That the net profit of the partnership firm after
deduction of all expenses including rent, salaries,
other establishment expenses, interest and
remuneration payable to the partners in accordance
with this deed of partnership or any supplementary
deed as may be executed by the partners from time,
to time, shall be divided and distributed amongst the
partners in the following proportion:
Sr. No. Name of Party Share in profits
1.
2.
3.
4.
The losses, if any, including loss of capital suffered in
any year shall also be apportioned in the above said
proportion.
10. That the bank account or accounts have been
and shall be maintained in the name of the firm and
shall be operated singly or jointly by the partners.
11. That the books of account shall be closed on
31st day of March each year. The net profit or loss
after deducting all expenses, interest, remuneration,
outgoings shall be divided between the parties in
proportion to the sharing ratio referred to
hereinabove.
12. That notwithstanding anything contained in the
Indian Partnership Act it is hereby mutually agreed
to by and between the parties that in case of death
of any one or more partners, the firm shall not be
dissolved but shall continue to be carried on by and
between the surviving partners and legal heirs
and/or representatives of the deceased partner, as a
continuing concern, on the same terms and
conditions as incorporated in this Deed or on such
terms and conditions as may be agreed to by and
between them from time to time. It is hereby further
clarified that it shall be deemed as change in
constitution and not succession.
13. That with respect to any matter connected with
the affairs of the firm, which is not specifically
provided for herein, the partners may make such
agreements therefor and may set in such manner
with regard thereto as may be agreed upon by and
between themselves.
14. That if the partners deem proper and in their
interest, they may admit any other person or
persons as partners on the terms and conditions as
may be mutually agreed amongst themselves.
15. That the partners to this deed are partners in
their individual capacity/representing HUF styled as
M/s. ..................................... The parties do not
represent any other person.
16. All bonds, bills, notes, bills of exchange, hundies
or promissory notes or other securities given on
behalf of the partnership (except cheques) shall be
signed, endorsed, accepted or executed jointly by all
the partners and any bond, bill, note, bill of
exchange, etc. to which any partner may be a party
contrary to this provision shall be deemed to have
been on the personal account of such partner and he
shall pay and discharge the same out of his own
moneys and indemnify other partners and the firm
against payment thereof and against all actions,
proceedings, costs, charges, expenses, claims and
demands in respect thereof.
17. That the parties of ...................... part are not
working partners but are only financing, dormant
and sleeping partners. The parties of .......................
part need not be in charge of, responsible to the firm
for the conduct of the business of the firm and need
not take interest in day-to-day working and business
of the partnership firm.
That the parties of the ............................ part shall
not be liable to any criminal action for the business
or working of the partnership firm or for the acts of
the other partners or its employees or its
representatives for and on behalf of or on account of
the partnership firm or for the purposes of the
partnership firm. The said partners shall not be liable
for any liability, civil or criminal, against the
partnership firm or other partners.
That the said partners shall not become and shall
not be liable for any criminal action for any default
or offence committed by other partners or
employees or authorised representatives of the firm
under the Income-tax Act, Customs Act, Foreign
Exchange Regulation Act, Sales tax Laws or other
Central or State Acts, laws, Rules or Regulations.
18. That the partners shall be entitled to modify the
above terms relating to remuneration, interest, etc.
payable to partners by executing a supplementary
deed and such deed when executed shall have effect
unless otherwise provided from the first day of
accounting period in which such supplementary
deed is executed and the same shall form part of
this deed of partnership.
19. That all disputes and questions in ......................
connection with the partnership or this deed arising
between the partners or between any one of them or
their legal representatives and whether during or
after the partnership, shall be referred to the
arbitrator in accordance with the provisions of the
Arbitration and Conciliation Act, 1996 then in force.
IN WITNESS WHEREOF the parties to this deed have
set their hands on the day and year first above
written and in the presence of:
First Party Second Party
Third Party Fourth Party
WITNESSES;
1.
2

AGREEMENT ADMITTING MINOR TO THE

BENEFITS OF PARTNERSHIP

THIS AGREEMENT made at ............... on this.........

day of ..........., 2000, between A son of ...............
resident of ......................... of the FIRST PART, B son
of .................. resident of .................. of the SECOND
PART and C son of .................... resident
of ................. of the THIRD PART.
WHEREAS the parties hereto are carrying on the
business of .................... in partnership under the
name and style of M/s. ...................................
at ......................................... upon the terms and
conditions mentioned in the Deed of Partnership
dated ...................
AND WHEREAS the parties have agreed to admit the
minors D and E to the benefits of the partnership.

NOW THIS AGREEMENT WITNESSETH AS FOLLOWS:

· Shri D son of ...............................................

minor (Date of birth), resident
of .................................. shall be admitted to the
benefits of partnership between A, 8, and 0 in
terms of Deed of Partnership dated ............ from
the date of these presents.
· The net profits of the partnership shall be arrived
at after providing for payment of remuneration
to the working partners and interest to the
partners as provided shall be divided among the
partners in the following shares and proportion:
(i) A 30 paise in a rupee in the net profits 40 paise in
a rupee in the net losses.
(ii) B 30 paise in a rupee in the net profit 40 paise in
a rupee in the net losses.
(iii) C 30 paise in a rupee in the net profit 20 paise in
a rupee in the net losses.
(iv) D 10 paise in a rupee in the net profits Minor's
share.
3. It is also agreed that the said minor D shall be
entitled to the benefits of partnership and shall not
be personally liable for any obligations and liabilities
of the firm but his share in the profits of the firm
shall be liable for any obligations and liabilities of the
said firm and pending the said minor attaining
majority, his share in the profit of the partnership
shall be accumulated to the credit of the minor, so
as to be available to meet his share of loss, if any
incurred by the firm at any time during his minority.
4.Subject to modifications made by this agreement,
all other terms and conditions in the partnership
deed dated ....................... executed between A of
the one part, 8 of the second part and C of the third
part shall, remain unchanged and shall be binding on
all the parties hereto.
IN WITNESS WHEREOF, the parties hereto have
hereunto set and subscribed their respective hands
the day, month and year first hereinabove written.
Signed and delivered by the within named A
Signed and delivered by the within named B
Signed and delivered by the within named C
WITNESSES;
1.
2.
AGREEMENT MODIFYING THE PARTNERSHIP
DEED

THIS DEED is made at ................ on this ..................

day of ............., 2000, between A, son
of ....................... resident of .................... of the ONE
PART and B, son of ................... resident
of ...................of the SECOND PART and C, son
of ......................... resident of ...................................
of the THIRD PART.
WHEREAS the parties hereto are carrying on the
business of ............... under the name and style of
M/s. ......................................... at .................... upon
the terms and conditions contained in Deed of
partnership dated ............................;
AND WHEREAS clause ............................ of the said
partnership deed provides that all the partners will
devote their whole time and attention to the
business of the partnership;
AND WHEREAS clause ...................... of the said
partnership deed further provides that no partner
shall without the consent of the other partners
engage directly or indirectly in any business other
than that of the partnership;
AND WHEREAS A, one of the partners, has been
offered an assignment by ................................
which shall be completed within a period
of ..................... years and the said partner will have
to stay in ....................... during the said period while
undertaking the said assignment;
AND WHEREAS the said partner has requested
for the consent of the other partners for acceptance
of the assignment offered to him by ................... and
they have agreed to give consent to A to accept the
said assignment and it has been agreed that so long
as he remains outside ................... for the said
assignment, the partnership deed shall be varied in
the manner and to the extent hereinafter appearing:

NOW THIS DEED WITNESSETH AS FOLLOWS:

· This Deed is supplemental to the Deed of
Partnership dated ..................... and made
between the said parties.
· During such period as the said partner A shall
remain out of ............... for the assignment and
does not attend to the business of the
partnership, he shall be entitled only half his
share of the net profits of the partnership
instead of ................. % profits to which he is
entitled under clause .................... of the Deed of
Partnership and the balance of share of profits to
which but for this deed the said A would have
been entitled shall be divided between the other
partners in equal proportion.
· The said A shall not be liable to give account to
the partnership for any remuneration or other
 advances received by him from the ....................
for the said assignment.
· A shall not be entitled to any remuneration from
the partnership account during his absence
pursuant to clause ......................... of any the
Deed of Partnership.
· The terms and condition of the Deed of
Partnership dated ............. shall except in so far
as the same are modified by this agreement,
continue in full force and effect.
IN WITNESS WHEREOF the parties hereto have
hereunto put and subscribed their respective
hands ............................ the day and year first
hereinabove written.
Signed and delivered by the within named A
Signed and delivered by the within named B
Signed and delivered by the within named C
WITNESSES;
1.
2.

Deed of Dissolution of Partnership

(To be executed on Rs. 10/- Non Judicial Stamp
Paper)
THIS DEED OF DISSOLUTION OF PARTNERSHIP made
the..................... day of..................... 2013
BETWEEN......................
WHEREAS the partners hereto under a deed of
partnership dated..................... made between them
formed themselves into a business firm and carried
on business under the name and style
of..................... pursuant to the covenants,
stipulations and provision contained in the said
deed;
AND WHEREAS it has been mutually decided
between the parties that the said partnership shall
be dissolved, and the said trade and business shall
be wound up and the stock-in-trade, assets and
credits realized and called in, and the net proceeds
after payment and satisfaction of all debts and
liabilities divided between the partners according to
the covenants in this behalf appearing in the deed of
partnership.
NOW THIS DEED WITNESSES that in pursuance of the
said agreement it is hereby declared and agreed by
and between the parties hereto as follows, that is to
say:

1. The said partnership between the partners hereto

under the deed, dated..................... hereunto
appended shall be determined and stand dissolved
as from the..................... day of..................... 2013.
And the parties hereto singly or jointly shall not carry
on the business of the said firm of.....................
under the said name and style for a period
of..................... years hence.
2. The parties hereto shall on the aforesaid date
of..................... sign notices of the dissolution and
forthwith advertise in the local Official Gazette the
fact of dissolution as required by Section 45 of the
Indian Partnership Act AND shall also intimate the
fact of dissolution to the Registrar of Firms under the
provision of Section 63 of the said Act.
3. Within..................... days after the dissolution of
the partnership a full and general account and
balance sheet shall be taken and made of the
property, assets and liabilities of the partnership;
and a full and particular inventory and valuation of
all the machinery, plants, tools, utensils, stock in
hand, office equipment, materials and effects
belonging to the firm shall be made by the parties or
such other person as the partners may choose to
appoint, whose decision shall be final and binding
upon the partners, and all debts owing to the firm
shall be collected and got in by the parties or such
other persons as the parties may by instrument in
his behalf appoint.
4. That as soon as may be, after the property, assets
and liabilities have been got in and disbursed the
parties or such other person or persons whom the
parties may have appointed under the foregoing
clause shall divide and apportion the share of the
parties, in the proportion of the contribution of the
parties towards the capital. In such division any
amounts paid earlier or due to the parties according
to the books of the partnership shall be taken into
account. That the cost of liquidation proceedings
shall also be deemed to be a liability of the
partnership and paid from the funds of the
partnership.
5. That in case the winding up shows a loss or the
assets of the partnership are insufficient to meet the
liabilities and debts of the partnership then the
partners shall forthwith pay such losses in the
proportion of their contribution to the capital.
6. Each of the parties shall, so soon as the others or
any of them, or their or his representatives, shall
have executed and done all the assurances, acts or
things hereby agreed to be done by them
respectively and at the request and cost of such
other or others, or their or his representatives
execute to them or him such releases, indemnifies,
and assurances as may be reasonable and proper;
IN WITNESS WHEREOF the said AB, CD and EF have
hereto signed and executed this agreement of
dissolution and appended it to the said deed of
partners, dated.....................
WITNESSES:
1. 2. 3.
Sd/- A.B.
Sd/- C.D.
Sd/- E.F

Deed of Dissolution of Partnership by which

one Partner Sells his Share in Partnership
Property to the other Partner
THIS DEED made the..................... day
of..................... BETWEEN A.....................
S/o..................... aged..................... R/o.....................
(hereinafter called “the retiring partner”) of the first
part and B of..................... S/o.....................
aged..................... R/o..................... (hereinafter
called “the continuing partner”) of the second part.
1. The parties hereto have been carrying on as
partners the business of..................... under the firm
or style of..................... and under Deed of
Partnership dated.....................
Lesson 5 Drafting and Conveyancing Relating to
Various Deeds and Agreements-III 201 2. The parties
hereto are beneficially entitled to the property
mentioned in the Schedule attached herewith as
their partnership property.
3. The parties have agreed to dissolve the said
partnership upon the following terms:
(a) The continuing partner shall purchase from the
retiring partner his share in the partnership property
for Rs..................... which amount shall be paid as
mentioned hereafter;
(b) The continuing partner shall discharge the
liabilities and debts due from the partnership.
AND WHEREAS for the purpose of the stamp duty it
has been agreed that the sum of Rs.....................
part of the said sum of Rs..................... shall be the
price of the share of the retiring partner in the
immovable property and that the sum of
Rs..................... shall be the price of the share of the
said partner in cash in hand and with bankers and
moveable property passing by delivery belonging to
the partnership and that the sum of Rs.....................
balance out of said sum of Rs..................... shall be
the price of the share of the said retiring partner in
the goodwill and the residue of the assets of the
partnership property.
AND WHEREAS by a conveyance of even date
executed between the parties the share of the
retiring partner in the immovable property of the
firm has been conveyed to the continuing partner on
payment of the price of Rs.....................
AND WHEREAS the cash in hand and with Bankers
and other moveable property of the partnership
passing by delivery has been delivered to the
continuing partner who has paid to the retiring
partner Rs..................... the apportioned price
thereof.
NOW THIS DEED WITNESSETH AS FOLLOWS:
1. The said partnership shall stand dissolved as from
the day of.....................
2. In consideration of the sum of Rs.....................
now paid by the continuing partner to the retiring
partner, the receipt of which sum the latter hereby
acknowledges, the retiring partner as beneficial
owner hereby assigns and transfers unto the
continuing partner all the share and interest of the
retiring partner in the said partnership and the
business, goodwill, book debts, and property other
than the property separately conveyed as
mentioned above.
3. That the said retiring partner irrevocably appoints
the said continuing partner as his attorney to
demand, call in and receive from all persons all and
singular the debts, credits, moneys and effects of
the said partnership, to give effectual receipts and
discharges for the same and to bring and institute
suits and proceedings against debtors of the firm
and to compromise with them in any manner he
deems fit.
4. The continuing partner shall in due course pay all
debts and discharge all the liabilities of the said
partnership and shall indemnify the retiring partner
against all actions, proceedings, costs and expenses
in respect thereof.
5. That the retiring partner shall not carry on any
competing business in any capacity whatever within
the radius of..................... kilometres from the place
of business of the said partnership for a period of
two years.
6. Each of the parties hereto releases and discharges
the other from all actions, proceedings, claims and
demands on account of the said partnership without
prejudice to any rights and remedies herein
contained.
IN WITNESS WHEREOF the parties hereto have
hereunto set their hands in the presence of
witnesses.
WITNESSES:
3. Sd/- A.
4. Sd/- B.
Receipt executed by Retiring Partner
acknowledging to have received the amount
due to him on account of his share in the
Partnership Property
I, A of..................... aged.....................
S/o..................... (the retiring partner) hereby
acknowledge to have received from B
of..................... (the continuing partner) the sum of
Rs..................... being the full amount of all moneys
due or owing to me in respect of my share as
partner in the business of..................... carried on
under the name of..................... by me in
partnership with the said B up to day of.....................
under the Deed of Partnership Dated.....................
As witness my hand this..................... day
of.....................
To
..........................................
..........................................
Dated: Place:
Dated:
Sd/- A, B and C.
To
Messrs C and D of.....................
No. 1
Notice to Dissolve Partnership
Pursuant to the articles of the partnership entered
into between yourself and me on...................... I
hereby give you notice that I intend to terminate the
partnership now subsisting between us with effect
from.....................
No. 2
Notice to Dissolution of Partnership for
Insertion in a Newspaper
Notice is hereby given that the partnership lately
subsisting between us the undersigned (A, B & C of
etc.) carrying business as.....................
at..................... under the style or firm of A, B & C
has this day been dissolved by mutual consent (or is
dissolved by effluxion of time). All debts due to and
owing by the said late firm will be received and paid
by the said A, who will continue to carry on the said
business under the same style and firm.
No. 3
Notice to Determine Partnership at Will
I hereby give you notice that I intend to dissolve the
partnership, subsisting between us under the
Articles of Partnership dated..................... from the
day of.....................
Sd/-
DEED OF RELEASE BETWEEN TWO PARTNERS
ON DISSOLUTION OF PARTNERSHIP
THIS RELEASE is made on the.......................:........
day of................................ BETWEEN AB,etc.,
(hereinafter called the “one party”) of the first part
AND CD, etc. (hereinafter called the “other party”) of
the second part.
WHEREAS the said AB, and CD, were carrying on in
partnership the business of................and the said
business was wound up and the partnership
dissolved by deed, dated................executed by the
said parties;
AND WHEREAS the winding up of the said business
was entrusted to the arbitration of EF
of........................... and he after realising the debts
and calling in the property and assetsof the said
business and after paying all creditors and
liquidating all the liabilities apportioned the shares of
the parties, giving to the said AB a sum of
Rs................... and to the said CD the sum of
Rs................. ;
AND WHEREAS the parties for mutual safety are
desirous of executing this deed of release so that all
future disputes in regard to the said partnership or
the business may be set at rest.

NOW THEREFORE THIS DEED WITNESSES that in

pursuance of the said mutual desire the said AB
hereby releases the said CD and also that the said
CD hereby releases the said AB from all sums of
money, accounts, proceedings, claims and demands
whatsoever which either of them at any time had or
has up to the date of the said dissolution against the
other, in respect of or in relation to the said
partnership or the business of the said partnership.
IN WITNESS WHEREOF the said AB, and the said CD
have hereto at ............. signed on the day and the
year first above-mentioned.

FORMAT
DEED OF PARTNERSHIP

THIS DEED OF PARTNERSHIP is executed at Rohtak

on this 2nd Day December 2023.
BETWEEN
1.Mr. Raghav Arora, s/o Sh Ghanshyam Singh r/o
113A Huda, Rohtak, herein called “the first
party” which expression shall include his heirs
executors and legal representatives.
· AND
2.Mr. Shivam Thakur s/o Shr Ved Pal r/o
411 ,sector 3 Rohtak herein referred to as
“second party” which shall mean and include his
heirs, successors , executors and
representatives.

WHEREAS The first party is an occupation of tenant

of property measuring 1000 square feet on the
ground floor bearing number E-1 Ramnagar Delhi.

AND WHEREAS The first party is desirous of carrying

on the business of interior decoration and the 2 nd
party being experienced in this trade has
approached the first party to run this business with
him jointly in partnership AND Whereas the parties
have agreed to commence and run the business of
interior decoration, furnishing, manufacture and sale
of furniture soft furnishing and accessories in
partnership.
NOW THEREFORE THIS DEED WITNESSES AAS
UNDER:

1.That the name and style of this partnership

business shall be M/s Malhotra interiors herein
after referred to as the firm but by their mutual
consent may start and carry on any other
business.
2.That the business of this partnership shall be
considered to have commenced on 20th day of
December 2023.
3.That the principal place of this business of
partnership shall be at E1 ramnagar New Delhi.
However to say may be shifted to any other
place by mutual consent.

Mention all clause

IN WITNESS WHEREOF The party’s had to have set

and subscribed their respective hands to their
presence the day month and year first written
above.

Witnesses:
1st party name and
Sign

2nd party name

sign

MORTGAGE DEED

MEANING OF MORTGAGE
A ‘mortgage’ is a transfer of interest in specific
immovable property for the purpose of securing the
payment of money advanced or to be advanced by
way of a loan, existing or future debt or the
performance of an acknowledgement, which may
give rise to pecuniary liabilities (Section 58 of the
Transfer of Property Act, 1882).
The Transfer of Property Act, 1882 deals with the
mortgage of immovable property alone. It does not
deal with movable at all. Therefore, it cannot be
regarded as forbidding the mortgage of movable
property. A mortgage of movables, such as plant and
machinery, stock in trade, policy is perfectly a valid
transaction even though the possession is not
delivered and the mortgage is only a hypothecation.
The hypothecation of movables is increasingly
resorted to in the case of borrowings by companies
for financing and implementation of its various
investment proposals.
The transferor in the case of a mortgage is called a
‘mortgagor’ and the transferee as ‘mortgagee’, the
principal money and interest of which payment is
secured for the time being are called the ‘mortgage
money’ and the instrument, if any, by which a
transfer is effected is called a “mortgage deed”.
MORTGAGE DEED
A mortgage deed is a legal document that gives
lender an interest in a property when you take out a
loan backed by the property. If a borrower does not
pay back a loan in accordance with the agreement,
the lender can foreclose and take possession of the
property or have it auctioned. Basically Mortgage
Deed is a paperwork you sign that allows the lender
to put lien on the property until the loan is paid
TYPES OF MORTGAGE
The following are different kinds of mortgages in
effect in India:
(a) Simple Mortgage
In a simple mortgage, the mortgagor without
delivering possession of the mortgaged property
binds himself personally to pay the mortgage money
and agrees expressly or impliedly that if he fails to
pay the debt and interest in terms of the mortgage
deed, the property will be sold and the proceeds
applied in payment of the mortgaged money.
(b) Mortgage by Conditional Sale
In a mortgage by conditional sale, the property is
sold subject to the condition that on default in
payment of the mortgaged money on a certain date
the sale shall become absolute or that on such
payment the sale shall become void or on such
payment the buyer shall transfer the property to the
seller. Possession of the property shall be with the
mortgagee.
(c) Usufructuary Mortgage
In this mortgage, the mortgagor delivers possession
of the mortgaged property to the mortgagee who
retains the possession until the satisfaction of the
debt. The mortgagee will take the usufruct in lieu of
the interest or part payment of the principal or partly
in payment of interest or partly in part payment of
the principal. The mortgagor is not personally liable
to pay the debt and the mortgagee is not entitled
during the term of the mortgage to demand his
mortgage money.
(d) English Mortgage
In an English mortgage, a mortgagor binds himself
to repay the mortgaged money on certain date and
transfers the mortgaged property absolutely to the
mortgagee subject to the proviso that he will re-
transfer it to the mortgagor upon payment of the
mortgaged money as agreed.
(e) Mortgage by Deposit of Title Deeds
Mortgage by deposit of title deeds is called in
English law as equitable mortgage. It is an oral
transaction and no documents like Deed of Mortgage
is required to be executed. No written
acknowledgement is required for creating this
mortgage. It is however, prudent to have a record of
transaction to avoid difficulties to establish the
creation of the mortgage. In this case, a
Memorandum of Mortgage by deposit of title deeds
is prepared by the mortgagee to secure the specific
mortgage money. The main characteristics of this
type of mortgage are as under:
5. Debt even time barred, present and future
advances are covered under the equitable
mortgage. In other types of mortgage, future
advances are not covered.
6. Delivery of title deeds is required to be made in
Bombay, Madras and Calcutta and other specified
towns to which the facility is extended by State
Government from time to time through Gazette
notification.
It is not necessary for creation of mortgage that
the property be located in the specified town or
the company making deposit should have its
registered office in that town.
7. This deposit can be made by the company
through its nominee or agent duly authorised.
8. Intent to create security by deposit of title deeds
should be present at the time of such deposit in
the mortgagor.
9. Neither ownership nor possession of the property
passes to the mortgagee under the equitable
mortgage.
(F)Equitable mortgage is preferred by the
lenders/banks/creditors as well as the commercial
enterprises because of the inherent advantages viz.
(a) to save time and avoid inconvenience of
documentation, and registration; (b) to minimise
cost of creating mortgage and cost of borrowed
funds by saving stamp duty; (c) to maintain secrecy
of the debt transaction; (d) section 180 of the
Companies Act, 2013.

(G) Anomalous Mortgage

Anomalous Mortgage is a combination of any of the
above forms of mortgage or any mortgage other
than those set out above.
Who can be Mortgagor and Mortgagee
Any living person, company, or association or body
of individuals, who has an interest on immovable
property can mortgage that interest. In the case of a
company mortgage of the property should be duly
authorised by ‘Object Clause’ of the Memorandum of
Association and approved by a resolution of the
Board of directors. Further, for creation of a
mortgage, the Financial Institutions usually insist on
a resolution of the shareholders under Section 180 of
the Companies Act, 2013.
Any person capable of holding property may take a
mortgage unless he is dis-qualified by any special
law from doing so. A minor may be a mortgagee but
as he cannot enter into a contract, the mortgage
should not involve any covenants by him.
Thus, as we have seen above, any interest in any
property which is capable of being transferred may
be a subject of mortgage.
Generally the mortgage is associated with
immovable property; immovable property includes
lands, benefits arising out of the land and things
attached to it and does not include standing timber,
growing crops or grass. When the principal money
secured is Rs.100/- or more a mortgage other than a
mortgage by deposit of title deeds, can be effected
only by a Registered instrument signed by the
mortgagor and attested by at least two witnesses.

Rights of Mortgagee
Right to Foreclosure or Sale
1. The right of foreclosure is a right available to a
mortgagee to recover his outstanding money. The
transaction is affected through a document called
the mortgage deed. The relevant provision
regarding foreclosure are contained under section
67 of the transfer of property act.
Right to sue for Mortgage Money
2. A mortgagee has the right to sue for the mortgage
money where the mortgagor bind himself to
repay, where the mortgaged property wholly and
partially destroyed, where the mortgagee is
deprived of his security due to a wrongful act and
where the mortgagor has failed to deliver
possession of the property to the mortgagee.
 Section 68 deals with sue for mortgage money in
transfer of property act.
Power of Sale when valid
Section 69 of the transfer of property act, 1882
states that, the mortgagee has the power to sell the
mortgaged property without the intervention of the
court, on default of payment of mortgage money by
the mortgagor in following three cases:
1. When the mortgage is an English mortgage
between non-Hindus, non- Muslims, non-
Mohammedi’s and member of the race or sect
notified by the by the state government of the
official gazette.
2. When government is mortgagee, with the express
provision of sale without intervention of the court.
3. When the mortgaged property is situated at
Calcutta, madras, Bombay or any other gazette town
or area.·
Right to Accession – Increased Mortgaged
Property
If, after the date of a mortgage, any accession is
made to the mortgaged property, the mortgagee, in
the absence of a contract to the contrary, shall, for
the purposes of the security, be entitled to such
accession. Provision of this act is under Section 70 of
Transfer of Property act, 1882.·

Rights and Liabilities of Mortgagor

• Right to redeem the Property on payment of dues:-
The mortgagor on the payment of the due mortgage
money with reasonable notification on the specific
time and place has a right to:
66. require the mortgagee to deliver the
mortgage-deed and the mortgaged property
documents in his possession or under this power
67. recover the possession of the mortgaged
property from the mortgagee
68. to get his property re-transferred at his own
cost to him or a third party by the mortgagee at
the mortgagor's desire or get an
acknowledgement registered by the mortgagee
extinguishing his right over the property
· The right cannot be exercised if extinguished by
the parties to the contract or by a court's
decree.
· The suit to enforce such a right is called a suit
for redemption.
Right to Transfer to the third party. (S.
60A)According to this section, the mortgagor has a
right to ask the mortgagee to transfer the mortgage
deed and the mortgaged property to a third party at
the mortgagor's desire; if the mortgagor has paid
the mortgage money, the mortgagee is bound to do
so.
Right to inspection and production of
documents (S.60B)
Under his right to redemption, the mortgagor can
request at all reasonable times on his own cost the
and on successful payment of the expenses incurred
by the mortgagee on his behalf to inspect and make
a copy or extract the documents of the mortgaged
property and mortgage-deed under the possession
of the mortgagee.

Right to redeem separately or simultaneously

(S.61)
On the execution of more than one mortgages
favouring the same mortgagee, in the absence of a
contract, the mortgagor can, on the payment of the
due of one of the mortgage, redeem the deed on
one individual or more mortgage-deed
simultaneously.
iabilities Of A Mortgagor:
Multiple liabilities are arising from the rights
enjoyed by a mortgagor under the Transfer of
Property Act, 1882, which are discussed
below:
167. Covenant for the title
The mortgagor has a contract with the
mortgagee to transfer the property to the
mortgagee, with which there is a warranty for
the title of the property. If the mortgaged
property title is found defective, the mortgagee
can bring an action against the mortgagee for
the principal amount and the damages incurred.

168. Liability to indemnify for defective title

When the property title is found to be defective
on the part of the mortgagor, the mortgagor is
liable to pay damages to the mortgagee. The
 injuries are for the charges incurred by the
mortgagee in claiming the right to the title.

169. Liability to avoid waste (S. 66)

The mortgagor is liable if he acts in a way that
leads to waste of property or destroys or injures
the property, reducing its value and making it
insufficient for security. Waste is of two types:

a.Permissive Waste:
It is the small waste for which the mortgagor
is not liable for

b.Active Waste:
When the destruction cases a greater waste
and reducing the value of the property, the
mortgagor is liable

170. Improvements to mortgaged property

(section 63A)
When the mortgaged property undergoes
improvements in the continuance of a mortgage
need, the mortgagor is liable to pay the amount
incurred.
When such improvements are necessary to
prevent the property from destruction and are
incurred by the mortgagee, the mortgagor is
liable to pay the amount in addition to the
mortgage money and the principal, if not
contract to the contrary is present. The interest
has to pay at the required rate, and 9% if no rate
is specified.
 171. Liable to compensate mortgagee
When the property is in possession of the
mortgagee and the mortgagee incurs the
property's taxes, the mortgagor is liable to pay
the mortgagee's expenses. If the property is in
the mortgagor's possession, he is liable to pay
all the property taxes and public charges.

172. Accession acquired in virtue of

transferred ownership
The accession incurred at the mortgagee cost or
which is capable of separate possession
acquired at the mortgagor's desire, the
expenses occurred are to be paid by the
mortgagor. Also, if such accession is necessary
to save the property from destruction or harm,
the mortgagor is liable to pay the amount and is
entitled to the profits.

Drafting of Deed of Mortgage

A deed of mortgage may be drafted either as a
name change deed or Deed Poll on behalf of the
mortgagor in favour of the mortgagee or as a deed
between the mortgagor and mortgagee as parties. In
the case of an equitable mortgage, as we have seen
earlier, it is prudent to execute a memorandum
referred to the deposit of title deeds to secure a
specific mortgage money.
The following points should be borne in mind while
drafting a Deed of Mortgage:
• (a) Parties: There should be two parties, the
mortgagor and the mortgagee. The former is
usually defined as the borrower. The Indian
practice of having a deed of mortgage executed
by the mortgagor only is unscientific, because the
mortgage deed usually contains covenants by
both the parties.
• (b) Recitals: These are of two kinds. Firstly,
recital as to the title of the mortgagor, such as
“Whereas the borrower is the absolute owner of
the property hereby mortgaged free from
encumbrances”. The second form of recital is as
to the agreement for loan, such as: “And Whereas
the mortgagee has agreed with the borrower to
lend him the sum of Rs................... upon having
the re-payment thereof with interest hereinafter
mentioned secured in manner hereinafter
appearing”.
• (c) Covenant for re-payment: This clause
usually recites that in pursuance of the said
agreement and in consideration of the receipt of
the mortgage money the mortgagor covenants to
pay the mortgage money with interest at the
stipulated rate in the manner agreed upon.
• (d) Mortgage clause: This clause describes the
property mortgaged. In case of simple mortgage,
the property is charged and assured as security
for re-payment of mortgage debt. In an English
 mortgage it is absolutely sold to the mortgagee,
subject to the covenants as to re-conveyance
upon repayment of debt with interest. A through
investigation of the titles upto 60 years and
preparation of an abstract of title to ensure that
mortgagor has an absolute right over the property
is recommended.

(e) Covenants by the mortgagor:

(i) To repair the mortgaged property, in default
the mortgagee is given power to enter into
possession without being liable as a mortgagee in
possession, with a view to effect repairs.
Mortgagee’s expenses for this purpose are
considered properly incurred.

(ii) Covenant to insure: The mortgagor covenants

to insure the mortgage property in the name of the
mortgagee of an insurance office approved by the
mortgagee. In default the mortgagee is entitled to
insure and the costs incurred are to be charged to
the mortgagor.
(iii) Covenant not to grant leases or accept
surrender thereof: It often happens that the
mortgagor while in possession grants long term
leases to the detriment of the mortgagee. To guard
against such a contingency, it is agreed that the
mortgagor shall not grant leases of mortgaged
property for a period exceeding one year without the
written permission of the mortgagee or accept
surrender of existing leases without like permission.
(See Section 65A of the Transfer of Property Act)
(iv) Covenant to pay outgoings: The borrower
undertakes to pay and discharge and indemnify the
mortgagee against all rates, taxes, duties, charges,
assessments, outgoings, whatever.
(f) Period fixed for the mortgage: Under this
clause, the parties enter into a covenant by which
mortgagor is debarred from redeeming the security
before lapse of a certain period. This should not be
unnecessarily a long period, as otherwise the Court
might hold it as clogging equity of redemption and
unenforceable.
The mortgagee may also enter into a covenant not
to call in his money before the lapse of certain
period provided that:
(i) If the mortgagor is declared insolvent;
(ii) If he alienates the mortgage property or creates
a subsequent mortgage in favour of a third person
without consent of mortgagee,
the mortgagee may call in his dues even before the
expiry of the term agreed upon.
(g) Power of sale: Under this clause, the
mortgagee is entitled to recover his dues by sale of
the mortgaged property, and if the sale proceeds are
insufficient, to recover the balance from the person
and other property of the mortgagor.
(h) Power to appoint Receiver: Under this clause,
the mortgagee is given power to appoint a Receiver
of the mortgaged property in case the payment of
interest for two or more instalments is in arrear
under Section 69A of Transfer of Property Act.
(i) Power to sell given to mortgagor with the
consent of the mortgagee: The mortgagor is
authorised to sell the whole or part of the mortgaged
property with the consent of the mortgagee
provided the sale proceeds are paid to the credit of
the mortgage account.
(j) Proviso for redemption: Under this clause, the
mortgagee covenants and declares that on payment
of his dues, he shall re-transfer the mortgaged
property to the mortgagor or his nominee at his
expense. (See Section 60A of the Transfer of
Property Act)
(k) Possession: In English mortgage, the
mortgagee has a right to take possession of the
property. In usufractuary mortgage, the possession
of the property is given to the mortgagee.
(l) Attestation & Execution: Attestation is
compulsory in every mortgage. In case where the
mortgagor does not know the language, deed must
be explained to him by some competent person.
(m) Registration & Stamp duty is compulsory in
case of mortgage value of Rs.100/- and above.
(n) Mortgagee is entitled to all the title deeds of the
mortgaged property. If for any reason they are left
with the mortgagor through inadvertance or
negligence he can manipulate a prior equitable
mortgage by depositing the same elsewhere.
(o) The application of any other law either to the
mortgage or to the property under mortgage has to
be ascertained. For example: Urban Land Ceiling
Regulation Act.
In Drafting of Memorandum of Mortgage by deposit
of title deeds, the following information is invariably
included:
• Preliminary information:
(1) Caption
(2) Name and address of the borrower/mortgagor
Company (3) Name and address of Mortgagee
(4) Amount of loans made available/sanctioned
(5) Date of creation of mortgage by deposit of
title deeds.
• Memorandum record note to contain brief
information covering creation of deposit, date of
 deposit, name and authorisation of person who
created deposit, name of the lender in whose
favour deposit was made, description of title
deeds is to be given in the Schedule to be
appended thereto, and reference of property with
situation and location briefly described thereto.
• Consideration for creation of equitable mortgage
i.e. the description of the property offered with
title deeds with full description in a different
schedule, the amount of loans against and for
which the security is created, this........ by
coverage of other cash charges, expenses,
interests, liquidated damages, etc.
• Description of Board Resolution to create
equitable mortgage by the person authorised
therein.
• Declaration of clear and marketable title to the
property.
• Witnessing clause-Mention of the name of the
person in whose presence the deposit of title was
made.
• (Schedule I - List of document of title and
evidence)
(Schedule II - Details of property).
• Date and Signature.
Contents of Mortgage Deed:
Amongst other information, the mortgage deed
includes the following
details:
1. Names of the parties with their full address.
2. Details of the mortgaged property
3. Details of sum advanced and its repayment terms
4. Habendum clause
5. Insolvency clause
6. Mortgage clause
7. Clause on Possession and Title Deeds
8. Redemption Clause

Registration of Mortgage Deed:

Registration of mortgage deed is essential to give
legal validity to the
document.
1. Execute a mortgage deed.
2. Affidavit to be sworn by 2 witnesses in the deed.
3. The deed should be notarised by the notary
public.
4. Pay for the stamp duty as chargeable under
Article 40 schedule 1 of
Stamp Act and registration charges at the Registrar
of Deed office.
5. Obtain the title for mortgage.
Further Charge
Sometimes the mortgagee advances further sums of
money to the mortgagor on the same security and
on the same condition. The deed executed to secure
the advance of further sums of money is called
“Deed of Further Charge”. The deed so executed
would make a reference to the first mortgage and
would also set out the new loan/s, terms of its/their
repayment and would make the principal and
interest further charged on the same security to be
endorsed in the same manner as per the original
mortgage.
Appointment of Receiver under Mortgage
Under Section 69A of the Transfer of Property Act, a
mortgagee having the right to exercise the power to
sell is entitled to appoint by writing signed by him or
on his behalf a Receiver of the income of the
mortgaged property or any part thereof. Any person
who has been named in the mortgage deed and is
willing and able to act as a Receiver may be
appointed by a mortgagee. If any person has been
so named or if the person or persons are not capable
and unwilling to act or are dead, the mortgagee may
appoint any person to whose appointment the
mortgagor agrees. Failing such an agreement the
mortgagee shall be entitled to apply to the Court for
appointment of a Receiver and any person
appointed by the Court shall be deemed to have
been duly appointed by the mortgagee.
The powers and functions of the Receiver have been
set out in the Section and the Receiver is required to
apply all money received by him as follows:
• (i) in discharge of all rents, taxes, land revenue,
rates and outgoings whatever affecting the
mortgaged property;
• (ii) in keeping down all annual sums or other
payments, and the interest on all principals sums,
having priority to the mortgage in right whereof
he is Receiver;
• (iii) in payment of his commission, and of the
premiums on fire, life or other insurances, if any,
properly payable under the mortgage deed or
under this Act, and the cost of executing
necessary or proper repairs directed in writing by
the mortgagee;
• (iv) in payment of the interest falling due under
the mortgage;
• (v) in or towards discharge of the principal
money, if so directed in writing by the mortgagee.
Release and Reconveyance of Mortgaged
Assets
Release of any of the mortgaged assets or
reconveyance of the mortgaged property could be
done by a registered document in case the
mortgage has been created in the form other than
equitable mortgage by deposit of title deeds by a
registered deed of mortgage.
In those cases where release or reconveyance of
mortgaged property covered under equitable
mortgage is sought by the mortgagor, the same
could be done by releasing the relevant title
documents and redepositing the remaining title
deeds by rewriting the memorandum for creation of
equitable mortgage. On redemption of equitable
mortgage all the title deeds could be released by the
mortgagee to the mortgagor by personal hand
delivery and against accountable receipts from the
mortgagor.
Forms of various Deeds hereinbefore discussed are
as follows:
Deed of Simple Mortgage

THIS DEED of Mortgage is made on the......... day

of ........ 2013, BETWEEN ‘AB’ of.............. etc.
(hereinafter called “the Mortgagor”), of the One Part
and ‘CD’ of, etc. (hereinafter called the
“Mortgagee”), of the Other Part.
WHEREAS the Mortgagor is absolutely seized and
possessed of or otherwise is well and sufficiently
entitled the property intended to be hereby
mortgaged which is free from all encumbrances and
attachments.
AND WHEREAS the Mortgagee has agreed to lend
and advance a sum of Rs............... to the Mortgagor
at his request upon having the repayment thereof,
with interest at the rate hereunder stated and
secured in the manner hereinafter expressed.
NOW THIS DEED WITNESSES, that in pursuance of
the said agreement and in consideration of the sum
of Rs. ......... paid to the Mortgagor by the Mortgagee
simultaneously with the execution of these presents
the receipt whereof the Mortgagor do hereby admit,
acknowledge and confirm, the Mortgagor do hereby
agree with the Mortgagee that the Mortgagor will on
or before the ........ day of ................ 2013, pay or
cause to be paid to the Mortgagee the sum of
Rs........ with interest for the same in the meantime
at the rate of Rs........ per cent, per annum, such
interest to be paid monthly and every month on the
7th of each following month without any delay or
default.
AND THIS DEED FURTHER WITNESSETH that as a
security for the repayment of the said loan with
interest, the said ‘AB’ do hereby charge, assure and
mortgage, by way of simple mortgage, upto and in
favour of the said ‘CD’ all property specifically
described in the Schedule hereto annexed, and
charge and assure the same by way of security for
the repayment of the said sum of Rs. ..............
together with interest thereon at the rate of.........
per cent, per annum;
AND THE Mortgagor does hereby agree and
covenant with the Mortgagee that he will pay or
cause to be paid to the Mortgagor the principal sum
aforesaid, together with the interest then due, on or
before the .............. day of.............. 2013, without
delay or default;
AND THE INDENTURE FURTHER WITNESSETH and it
is hereby agreed and declared by and between the
parties that in case the said sum of Rs............... with
interest thereon at the stipulated rate is not paid
within the time and in the manner as aforesaid, it
shall be lawful for the Mortgagee to enforce this
mortgage and to cause the property or any portion
sold and appropriate the proceeds towards
satisfaction of the mortgage debt provided,
however, that in the event of any short-fall or
deficiency, i.e. should the claim be not then
satisfied, the Mortgagee shall be entitled to recover
the balance personally as against the Mortgagor who
shall be entitled to redeem the said mortgage at his
option by payment of the amount of mortgage debt
inclusive of interest at any time before
the.............. day of.............. 2013.
AND THIS INDENTURE FURTHER WITNESSETH that
the Mortgagor do hereby covenant with the
Mortgagee that notwithstanding any act, deed or
thing herebefore done, executed, performed or
suffered to the contrary, the Mortgagor has good
title, full power and absolute authority to charge,
assure and mortgage the said property in the
manner hereunder effected and that the same is
free from all encumbrances and attachments.
The Schedule above referred to
IN WITNESS WHEREOF the parties herein under have
set their hands on the day and year hereinabove
mentioned.
Witnesses:
1. ........................... MORTGAGOR
2. ........................... MORTGAGEE

Deed of Mortgage by Conditional Sale

THIS DEED of Mortgage made the........... day
of.............. 2013, BETWEEN ‘AB’ of.............. etc.
(hereinafter called “the Mortgagor”), of the One Part
and ‘CD’ of.............. etc. (hereinafter called “the
Mortgagee”), of the Other part WITNESSES that in
consideration of the sum of Rs............... paid to the
Mortgagor by the Mortgagee (the receipt whereof
the Mortgagor hereby acknowledges) the Mortgagor
do hereby grant, transfer, convey, assign and assure
to the Mortgagee ALL that etc. To Have and To Hold
the same absolutely and for ever subject to the
condition hereby expressly declared, namely, that if
and when the Mortgagor shall repay or cause to be
repaid the said sum of Rs............... with interest
thereon at the rate of............ per cent per annum on
or before.............. day of.............. 2013, time for
which purpose shall be deemed as essence of
contract then and in such an event the sale hereby
effected shall stand void and shall be of no effect to
all intents and purposes and the Mortgagee shall at
the costs of the Mortgagor reconvey and retransfer
the said property and every part thereof as then
existing to the Mortgagor provided, however, that if
the Mortgagor shall fail and/or neglect to repay the
said sum with interest at the said rate on or before
the said date, or any portion thereof the sale hereby
effected shall become absolute and the Mortgagee
shall be entitled to foreclose the mortgage when and
in such an event the Mortgagee shall be the absolute
owner of the property freed and discharged from all
the right of equity of redemption of the Mortgagor.
AND IT IS HEREBY FURTHER AGREED AND
DECLARED that notwithstanding anything
hereinbefore contained the Mortgagor shall remain
in possession of the said property and pay all rents,
cess, taxes, rates and other impositions which are
now or may hereafter be imposed on the said
property and in case the Mortgagor fails and/or
neglects to make such payments on or before the
due date of payments therefor, the Mortgagee shall
be at liberty to pay the same and add such sum or
sums to the principal money hereby secured which
shall carry interest at the aforesaid rate. And that
the Mortgagor do hereby covenant with the
Mortgagee that he has good title to the property and
absolute authority and power to transfer the same in
the manner hereinbefore indicated and that the
property is free from all encumbrances and
attachments whatsoever.
IN WITNESS WHEREOF the parties herein under have
set their hands on the date and year hereinabove
mentioned.

Witnesses:
Signed, sealed and delivered
1. ........................... MORTGAGOR ‘AB’
2. .......................... MORTGAGEE ‘CD’

The Schedule above referred to

Deed of Usufructuary Mortgage

THIS MORTGAGE, made.............. day of..............
2013, BETWEEN ‘AB’ of etc. (hereinafter called “the
Mortgagor”) of the One Part, and ‘CD’ of etc.
(hereinafter called “the Mortgagee”) of the Other
Part, WITNESSES that on consideration of the sum of
Rs............... now paid to the Mortgagor by the
Mortgagee (the receipt whereof the Mortgagor does
hereby acknowledge), the said ‘AB’ hereby conveys
to the said ‘CD’. All that etc. (describe the property):
from this day AND THAT the Mortgagee shall be in
possession of the mortgaged property under the
terms of the deed for securing payment on
the.............. day of.............. 2013, of the principal
sum secured, with the interest thereon at
Rs............... per cent per annum, which mortgage
money will be set off against the usufruct of the
mortgaged property, and the Mortgagee does
hereby promise to keep clear accounts thereof.
THE MORTGAGOR hereby agrees that the Mortgagee
shall retain possession of the mortgaged property
until the principal sum together with the interest due
be paid off out of the proceeds of the property and
on payment of the aforesaid sum, the Mortgagee
shall execute and register a release of the
mortgaged property in favour of the Mortgagor, AND
THAT the Mortgagee also shall not to, execute,
perform nor suffer to the contrary any act deed or
thing whereby or by reason or means whereof the
value of the said property in his possession may be
diminished or the same may otherwise be prejudiced
in title or estate.
THE MORTGAGOR does also agree to pay the
Government revenue and the municipal tax of the
said property regularly and in case he fails to make
such payment, the Mortgagee shall be at liberty to
pay such revenue and taxes, and such sum paid
shall be considered an additional principal sum
advanced to the Mortgagor, and shall carry interest
at the rate stipulated above.
AND LASTLY, the Mortgagor also agrees that if he,
the Mortgagor, does not pay the principal sum with
the interest then due on the stipulated date, this
conveyance will become absolute and the
Mortgagee will be entitled to foreclose the
mortgaged property, and thereafter the Mortgagor,
his heirs, executors, administrators or assigns shall
be absolutely debarred of all the rights to redeem
the same.
IN WITNESS WHEREOF the parties herein under have
set their hands on the date and year hereinabove
mentioned in the presence of:
Witnesses:
1. ........................... ‘AB’
2. ........................... ‘CD’

The Schedule above referred to

Deed of English Mortgage

THIS MORTGAGE made
the............................................................ day
of..................., 2013, BETWEEN ‘AB’ of, etc.
(hereinafter called the “Mortgagor”) of the One Part,
and ‘CD’ of, etc. (hereinafter called the “Mortgagee”)
of the Other Part. WITNESSES WHEREAS the
Mortgagor is absolutely seized and possessed or is
otherwise well and sufficiently entitled to an
absolute estate of inheritance or an estate
equivalent thereto free from encumbrances to the
lands, hereditaments............................. fully
mentioned and described in the Schedule hereto
AND whereas the Mortgagor having occasion to
borrow a sum of Rs.......................................
approached the Mortgagee which the Mortgagee has
agreed to lend and advance on having repayment
thereof with interest at.............. per cent per annum
and secured by a conveyance by way of mortgage of
the said property.
NOW THIS INDENTURE WITNESSETH that in
consideration of the sum of Rs..................................
this day paid to the said ‘AB’ by the said ‘CD’ (the
receipt whereof the said ‘AB’ hereby acknowledges),
the Mortgagor hereby agrees with the covenant to
pay to the Mortgagee on the..................................
day of............................ the sum of Rs.............. with
interest thereon in the meantime at the rate of
Rs.............. per cent per annum computed from the
date of this deed such interest to be paid monthly
and every month on the 15th of every current
month.
Lesson 4 Drafting and Conveyancing Relating to
Various Deeds and Agreements-II 151
NOW THIS INDENTURE also witnesses that for the
consideration aforesaid the said ‘AB’ as the
beneficial owner, do hereby grant, transfer convey
unto and to the use of the said ‘CD’ all that etc.
(describe the property): TO HAVE AND TO HOLD the
same absolutely and for ever PROVIDED ALWAYS
that if the Mortgagor shall pay or cause to be paid
the sum of Rs.............. with interest thereon, on
the.............. day of.............., according to the
foregoing agreement in that behalf, the Mortgagee,
his heirs, representatives or assigns shall, at the
request and costs of the Mortgagor, his heirs,
representatives or assigns, reconvey to him or them
as he or they shall direct, the said property. AND
THAT the Mortgagor do hereby covenant unto the
Mortgagee that the Mortgagor has absolute title to
the land, hereditaments, messages and premises
hereby granted and conveyed and that the
Mortgagor has good right, full power, absolute
authority and indefeasible title to grant, convey,
transfer, assign and assure the same unto and to the
use of the Mortgagee in the manner hereinbefore
indicated and further the Mortgagor and all persons
having lawfully or equitably any estate or interest in
the same shall at all time hereafter during the
continuance of the security do execute or perform or
cause to be done, executed and performed all such
further or other acts, deeds and things as may be
reasonably required for further and more perfectly
assuring the same unto and in favour of the
Mortgagee.
Provided, however, and it is further agreed by and
between the parties that if the Mortgagor commits
any default in payment of the principal amount on
the due date or any three instalments of interest,
whether they have been demanded or not it shall be
lawful for the Mortgagee to institute a suit for sale
and to have a Receiver appointed over the
mortgaged property.
IN WITNESS WHEREOF the parties herein under have
set their hands on the date and year hereinabove
mentioned in the presence of:
Witnesses:
1. ........................... ‘AB’
2. ........................... ‘CD’
The Schedule above referred to
Signed, sealed and delivered
Memo of consideration.

Deed of Further Charge

This Further Charge made the.............. day
of.............. 2013, Between ‘A’ of.............. etc.
(hereinafter called “the borrower” which expression
shall also, where the context so admits, include
persons entitled to redeem the security) of the One
Part and ‘B’ of........ etc. (hereinafter called “the
mortgagee”) of the Other Part.
WHEREAS by a mortgage deed dated.............. the
property mentioned therein and described in the
Schedule attached hereto was mortgaged by the
borrower with the mortgagee and the sum of
Rs.............. remains to the mortgagee on the
security of the said mortgage but all interest for the
same has been paid upto the date of this Deed.
AND WHEREAS the mortgagee has agreed to
advance to the borrower the further sum of
Rs.............. upon terms and conditions and secured
in the manner hereinafter appearing.
NOW THIS DEED WITNESSETH that in pursuance of
the said agreement and in consideration of the sum
of Rs.............. now paid by the mortgagee to the
borrower the receipt whereof the borrower hereby
acknowledges:
1. The borrower hereby covenants with the
mortgagee to pay to the mortgagee on the..............
day of.............. 2013 next the sum of..............
principal amount with interest at the rate of..............
per cent per annum, and if the said moneys are not
paid on the aforesaid date, to pay interest at the
said rate until payment.
152 PP-DA&P
2. The borrower as beneficial owner hereby
declares that all and singular the property
mortgaged under the aforesaid deed
dated.............. and more particularly described
in the schedule attached hereto shall be
security, and stand charged with the payment to
the mortgagee of the sum of Rs.............. the
present advance with interest at the rate
of.............. per cent per annum, from the date of
execution of these presents as well as the sum
of Rs.............. due on the recited mortgage
together with interest thereon and shall not be
redeemable until on payment to the mortgage
deed dated.............. and the present deed.
3. It is further agreed and declared that the
provisions contained in the mortgage deed
dated.............. shall operate and take effect in
like manner for securing payment or the money
hereby secured as if the same had formed part
of the money secured by the said recited
mortgage.
IN WITNESS WHEREOF the parties herein under have
set their hands on the date and year hereinabove
mentioned.
Witnesses:
1. ........................... MORTGAGOR
2. ........................... MORTGAGEE
Schedule referred to containing description of the
mortgaged property.
Note: Stamp duty chargeable on a deed of further
charge is provided for by Article 31 of the Indian
Stamp Act.

Memorandum of Mortgage by Deposit of Title Deeds

Memorandum that this........... day of........ 2013, ‘AB’
of, etc. (the mortgagor), as beneficial owner, has
deposited with ‘CD’ of, etc. (the mortgagee), the
original title deeds comprised in the Schedule A
hereto, relating to the premises belonging to the
said ‘AB’ and situate at............. etc., described in
Schedule B with intent to create a charge thereon for
securing repayment to the said ‘CD’ of the sum of
Rs........... this day lent and advanced by the said
‘CD’ to the said ‘AB’ on demand with interest for the
same from this date at the rate of Rs........ per cent
per annum.
The said ‘AB’ do hereby undertake as and when
required by the said ‘CD’ to execute and register at
the costs of the said ‘AB’ a legal mortgage in such
form and containing such covenants and provisions
as he may reasonably require.
Dated this.............. day of.............. 2013.
The Schedule A above referred to
Description of the Title Deeds depsoited.
The Schedule B above referred to
Description of the Property.
Signature of the Mortgagor.

Mortgage by a Limited Company in favour of a

Bank for Securing the Amount due on Cash
Credit Account
THIS MORTGAGE made the.............. day of..............
2013, Between ‘AB’ a Limited Company, having its
Head Office at.............. (hereinafter called “the
borrower”) of the One Part and the.............. Bank
Limited, having its Head Office at..............
(hereinafter called “the Mortgagees”) of the Other
Part.
WHEREAS the borrowers are a Limited Company
having their Head Office at.............. and are carrying
on the business of Sugar Manufacturers at their
factory known as.............. and situate at.............. in
the State of..............

AND WHEREAS the borrowers are absolute owners of

the said factory free from encumbrances.
AND WHEREAS the borrowers have a cash credit
account with the mortgagees for the purposes of
their business.
AND WHEREAS the mortgagees have already
granted and may hereinafter grant accommodation
to the borrowers, and it has been agreed that all
moneys now owing and which shall hereafter
become owing on the said cash credit account or
otherwise from the borrowers to the mortgagees
should be secured in the manner hereinafter
appearing.
NOW THIS DEED WITNESSETH that in pursuance of
the said agreement and in consideration of the
mortgagees granting the aforesaid accommodation
to the borrowers.
1. The borrowers hereby covenant with the
mortgagees that the borrowers will on demand
pay to the mortgagees the balance which shall
be owing on the said cash credit account or any
 other account or for bills or drafts accepted, paid
or discounted or advances made for the
accommodation of the borrowers upto the limit
of Rs.............. together with interest at the rate
of.............. per cent per annum from the date of
the said load or advance until payment.
2. The borrowers as beneficial owners hereby
mortgage their property known as…………..Sugar
Mill, situate at.............. together with all the
machinery, engine, boiler etc., and buildings,
land attached and appurtenant thereto, and
more particularly described in the schedule
attached hereto as security for payment of the
mortgagees of all principal moneys and interest
at the aforesaid rate and other moneys hereby
secured.
3. The borrowers further covenant with the
mortgagees that all accessories to the
mortgaged property shall be liable for the
amount due under this Deed from the borrowers
to the mortgagees.
4. Theborrowersherebyfurthercovenantwiththemort
gageesthattheborrowerswillduringthecontinuanc
e of this security keep the mortgaged property in
good and substantial repairs and insured against
loss or damage by fire for Rs........................ in
General Insurance Corporation of India in the
name of the mortgagees, and will duly and
 punctually pay all premiums and other moneys
necessary for effecting and keeping up such
insurance. And if default shall be made by the
borrowers in keeping the mortgaged property in
good and substantial repairs or in effecting or
keeping up such insurance, the mortgagees may
repair (with power to enter upon the mortgaged
premises for that purpose and without becoming
liable as mortgage in possession) or may insure
and keep the same insured in any sum not
exceeding Rs.................... and that all moneys
expended by the mortgagees under this
provision shall be deemed to be properly paid by
them.
5. The borrowers further covenant with the
mortgagees that the borrowers shall not lease
the mortgaged property for any term exceeding
one year or accept, surrender of any existing
lease without the previous consent in writing of
the mortgagees.
6. And it is hereby further agreed and declared that
if the borrowers fail to pay the mortgage money
with interest as agreed upon, the mortgagees
shall be entitled to realise their dues by sale of
the mortgaged property and, if the sale
proceeds thereof are insufficient to satisfy the
mortgagees’ dues, to recover the balance from
 the person and other property of the
mortgagors.
7. It is hereby further agreed and declared that if
interest for any two instalments remains in
arrears, the mortgagees shall be entitled to have
a Receiver appointed of the mortgaged property.
8. Provided always that if the borrowers shall pay
to the mortgagees the sum of Rs.............. or the
amount due on said account with interest
thereon from the date hereof at the stipulate
rate, the mortgagees will at any time thereafter
at the request and cost of the borrowers execute
a receipt of the mortgage amount or a deed of
redemption and surrender the premises before
mortgaged to the borrowers.
9. By a Resolution of the Board of Directors of the
‘AB’ Company Limited dated..............
Mr.............. one of the Directors has been
authorised to execute this Deed on behalf of the
Company.
154 PP-DA&P
IN WITNESS WHEREOF the parties hereunder have
set their hands on the date and year hereinabove
mentioned.
The Schedule above referred to containing
description of the machinery and plant, and all
buildings and land appertaining thereto.
For and on Behalf of ‘AB Co. Ltd.’,
Director
For and on Behalf of the.............. Bank Ltd.,
Secretary

Deed of Redemption or Reconveyance of

Mortgaged Property by the Mortgagee in
favour of the Mortgagor

THIS DEED is made the.............. day of..............

2013 between ‘A’ of etc. (hereinafter called “the
mortgagee”) of the One Part and ‘B’ of etc.
(hereinafter called “the mortgagor”) of the Other
Part.
WHEREBY by a mortgage deed dated.............. the
property mentioned in that deed was mortgaged by
the said ‘B’ in favour of the said ‘A’ to secure
payment of the amount of Rs.............. with interest
@.............. per cent per annum.
NOW THIS DEED OF RECONVEYANCE WITNESSETH:
That in consideration of all principal moneys and
interest secured by the said mortgage deed
dated.............. having been paid, the receipt
whereof the said ‘A’ hereby acknowledges. The said
‘A’ as mortgagee hereby redeems or reconveys unto
the said ‘B’ all the property comprised in the said
mortgage deed to hold the same upto and to the use
of the said ‘B’ as absolute owner discharged from all
principal money and interest secured by and from all
claims and demands under the aforesaid mortgage
deed.

Points of comparison Between Mortgage &

Hypothecation

1.) Meaning
Mortgage Mortgages is wherein the title of real
estate property passes from the owner to the lender
as a collateral for the amount borrowed.
Hypothecation Hypothecation is wherein a person
borrows money from bank by collateralizing an asset
without transferring the title and possession.

2.)Applicable to
Mortgage Immoveable Asset
Hypothecation Moveable Asset

3.)Defined under
Mortgage Transfer of Property Act, 1882
Hypothecation SARFEASI Act, 2002

4.)Indicates
Mortgage Transfer of interest in asset
Hypothecation Security for payment in an
amount

5.)Loan Amount
Mortgage High
Hypothecation Comparatively low

6.)Tenure
Mortgage Long
Hypothecation Comparatively short
This MORTGAGE DEED is executed at Panchkula, on
this 4th day of July, 2017.
BETWEEN
Mr. Arun Singla s/o Sh. Amit Singla r/o House no.
123, Sector 13, Panchkula, hereinafter called, “THE
MORTGAGOR” (which expression shall unless
contrary to the context including his related
successors, executor, administrators and assigns) of
the one part.
AND
Mr. Pradeep Sharma s/o Sh. Param Sharma r/o
_Sector 12 Panchkula____ of the other part.

WHEREAS THE MORTGAGOR wants to borrow a sum

of Rs. 500,000 from THE MORTGAGEE for doing his
business and THE MORTGAGEE has consented to
grant him the loan of Rs 5,00,000 at interest @10%
p.a. and on terms and conditions hereinafter
appearing.

Now this agreement witness as follows:

1) This deed of simple mortgage executed at
Rohtak this 1st day of March 2017 by Sh Amit
Singla. Son of Shri Raman Singla, r/o 113, Sector
3 Rohtak, Haryana hereinafter called the
mortgagor in favour of Shri Param Sharma son of
Shri. Jai Sharma resident of house no. 23, Sector
2 Rohtak hereinafter called the mortgagee. The
terms mortgagor and mortgagee meaning and
including his respective heirs, executors,
administrators, legal representatives and assigns
witnesses as follows:

2) Whereas the mortgagor is the absolute

owner of property fully described in the schedule
hereto whereas the mortgagor is in urgent need
of funds for celebrating his daughter’s marriage/
for discharging prior mortgage dated ______in
favour of ____etc) Whereas the mortgagor
approached the mortgagee for a loan of Rs______
(words), whereas the mortgagee has consented
to the same.

3) Now this date Of First Simple Mortgagor

witnesseth That in consideration of the premises
and in further consideration of the sum of rupees
_______paid by the Mortgagor to the Mortgagee
as in form #1 the receipt of which sum in
manner aforesaid the Mortgagor doth here by
acknowledge , he the mortgagor doth hereby
transfer, convey and assign into the mortgagee
as and by way of first simple mortgage all the
property more fully described in the schedule
hereto subject to the following terms and
conditions viz:
i. To repay the principal sum on demand (on
any period agreed to between the parties).
ii. Pay interest @15% p.a.
iii. In the event of the mortgagor failing To pay
the amount due under the mortgage on
demand the mortgagee shall have a right to
sue for recovery of the aforesaid and if he
need be to have the property sold in the said
proceeding for due realization of the
mortgage dues.
iv. During the subsistence of the mortgage the
mortgagor shall pay all public dues and
taxes accruing due in respect of the
schedule mentioned property and shall not
allow the same to be proceeded against for
recovery of such dues and taxes. If the
mortgagee were to spend money to save the
mortgage property form being sold for
recovery of said dues such money shall be
 deemed and treated as principal amount and
recovered as such.
v. During the subsistence of the mortgage the
mortgagor shall keep the property
mortgaged in good condition and shall not
commit any act which Is destructive or
permanently injurious there too as to cause
the security to become insufficient.

The mortgagor doth Assume the mortgagee that

save the mortgage in favor of Mr Pradeep Sharma to
secure a sum of Rs. ___under deed of First Simple
Mortgage dated ______ there are now no other
encumbrances subsisting on the mortgaged
property. The mortgagor doth also assure the
mortgagee That he shall continue to pay the interest
due on the first mortgage without any default and
shall not render any act deed or thing whereby the
mortgaged property will become insufficient
security.

Witnesses:

1.______ sign
All details Mortgagor
2. _____all details_ sign
Mortgagee

TRUST DEEDS

Introduction
A trust deed is a crucial legal document in India that
outlines the terms and conditions governing the
establishment and management of a trust. To put it
simply, a trust deed specifies the purpose of the
trust, the property being transferred into the trust,
and the roles and responsibilities of the trustees. It is
executed by the settlor (person creating the trust)
and the trustees, and is typically registered with the
appropriate government authority. The Indian Trusts
Act, 1882 provides the legal framework for trust
deeds.
The person who reposes or declares the confidence
is called the ‘author of the trust’. The person who
accepts the confidence is called the ‘beneficiary’.
The subject matter of the trust is called the ‘trust
property’ or the ‘trust money’. The person or
persons who manages/manage the trust property or
trust money is/are called the ‘trustee/trustees’ of the
trust. The author of the trust himself or any other
person can be the trustee of the trust.
The beneficial interest or interest of the beneficiaries
is/are his/their right(s) against the trustee as owner
of the trust property; and the instrument by which
the trust is declared is called the ‘instrument of
trust’.
The breach of any duties imposed on the trustee by
any law for the time being in force is called ‘breach
of trust’.
The person creating the trust must be legally
competent to contract and a trust may be created
on behalf of a minor with the permission of the Civil
Court of the original jurisdiction.(section7)
Every person capable of holding property may be a
trustee. But if the trust involves exercise of
discretion then he cannot execute it unless he is
competent to contract. (Section 10)
A trust is, in effect, the gift by the author of property
or an interest in property to a person or institution
(the beneficiary) by or through the intervention of
trustee. The trust property vests in the trustee and
he holds it for the benefit of the beneficiary and
cannot use it for his own benefit. A ‘trust’ is a
confidence and the confidentee is the trustee.
His position is fiduciary vis-à-vis the cestui que trust
(beneficiary). In a trust the author vests the property
in the trustee charging him to utilise it or the income
or profits arising therefrom for the benefit of the
beneficiary.
A corporate body, for example, a bank or a company
can both create a trust and be a trustee.

Purpose of Trust Deeds

A trust deed is a legally binding document that
serves as the foundation for the operation and
management of a trust. It defines the objectives of
the trust, the roles and responsibilities of the
trustees, and the rights and obligations of the
beneficiaries. Trust deeds are essential for ensuring
that the trust's goals are achieved and that the
interests of all involved parties are protected.

Objects of Trust
Section 4 of the Indian Trusts Act, 1882 provides
that the object of the trust must be lawful. The
purpose of the trust is lawful unless it is:
(i) forbidden by law, or
(ii) is of such a nature that, if permitted, it would
defeat the provisions of any law, or
(iii) is fraudulent, or
(iv) involves or implies injury to the person or
property of another, or
(v) the Court regards it as immoral or opposed to
public policy.
Every trust of which the purpose is unlawful is void.
And where a trust is created for two purposes, of
which one is lawful and the other unlawful, and the
two purposes cannot be separated, the whole trust is
void.
Any property which is transferable can be a subject
of a trust whether it be immovable or movable. But
more beneficial interest not subsisting trust cannot
be made a subject of the trust. The beneficiary of
the trust may be any person capable of holding
property. Such person may be a sentient being or a
juristic person or even a deity.
Examples of illegal trust are - trust in restraint of
marriage, trust creating a perpetuity by settlement
of properties intended for maintenance of persons
born or to be born indefinitely. Trust to defraud a
creditor.
Every trust of which the purpose is unlawful will be
void and if the object is both lawful and unlawful and
the two operations cannot be separated the whole
trust would be void. Otherwise it will be void as far
as the unlawful part of the object which can be
separated.

Public and Private Trusts

In a public trust the beneficiary is the general public
or a specified section of it. In a private trust the
beneficiaries are defined and ascertained
individuals. In a public trust the beneficial interest is
vested in an uncertain and fluctuating body of
persons. The nature of the trust may be proved by
the evidence of dedication or by user and conduct of
parties. Where a trust is created for the benefit of
the members of the settlor’s family, it is a private
trust and not a public trust. Every charitable trust is
only a public trust as benefit to the community at
large or to a section of the community is of the
essence of a valid charitable trust. But a religious
trust need not necessarily be a public trust as there
can be a private religious trust also. Public trusts are
created for charitable or public purposes, such as
providing education, healthcare, or social welfare
services to the community. These trusts are subject
to additional regulations, such as the state-specific
public trusts acts (e.g., the Maharashtra Public
Trusts Act, 1950), and may be eligible for tax
exemptions.
Let's understand trust deed with an example,
Scenario - Private Trusts
Mr. Sharma is a successful businessman who has
accumulated significant wealth over the years. He
wants to ensure that his assets are properly
managed and distributed for the benefit of his family
even after he is gone.
To achieve this, Mr. Sharma decides to create a
private trust. He drafts a trust deed that outlines the
following:
Name of the Trust: The Sharma Family Trust
Purpose of the Trust: To manage and preserve
Mr. Sharma's assets for the benefit of his wife,
children, and grandchildren.
Trustees: Mr. Sharma appoints his eldest son,
daughter, and a family lawyer as the trustees
responsible for administering the trust.
Trust Assets: Mr. Sharma transfers ownership of
his bungalow, stock portfolio, and business shares
into the name of the trust.
Beneficiaries: The primary beneficiaries are Mr.
Sharma's wife and children. The trust deed specifies
how the income and assets of the trust will be
distributed among them.
Amendments: The trust deed includes a clause
allowing the trustees to make amendments to the
terms of the trust with the consent of the majority of
beneficiaries.
Dispute Resolution: The trust deed outlines a
process for resolving any disputes that may arise
among the trustees or beneficiaries.
Termination and Winding Up: The trust deed
specifies the conditions under which the trust can be
terminated and the assets distributed to the
beneficiaries.
By creating this comprehensive trust deed, Mr.
Sharma ensures that his wealth is managed
professionally and distributed according to his
wishes, even after he is gone. The trust deed
provides a clear legal framework for the trustees to
follow and protects the interests of the beneficiaries.
This hypothetical scenario illustrates how a trust
deed is a crucial document for establishing a trust
and defining its operational details in India.
Scenario: Public Trust for Education and Healthcare
Name of the Trust: The Saksham Trust
Purpose of the Trust: The Saksham Trust is
established to provide education and healthcare
services to underprivileged children and families in
rural areas of India.
Settlor: Mr. Ramesh, a successful businessman,
decides to establish the Saksham Trust to fulfill his
lifelong dream of helping those in need.
Trustees: The trustees of the Saksham Trust are
appointed from a panel of respected professionals
and community leaders. They are responsible for
managing the trust's assets and ensuring that the
trust's objectives are achieved.
Trust Assets: The trust initially receives a donation
of Rupees 10 million from Mr. Ramesh and later
acquires additional funds through grants and
donations from various organizations and
individuals.
Beneficiaries: The primary beneficiaries of the trust
are children from low-income families residing in
rural areas. The trust also provides healthcare
services to these communities.
Trust Deed: The trust deed outlines the following
key clauses:
Management: The trustees are responsible for
managing the trust's assets and ensuring that the
trust's objectives are achieved.
Amendments: The trust deed allows for
amendments to be made with the consent of the
majority of the beneficiaries.
Winding Up: The trust deed outlines the conditions
under which the trust can be terminated and the
assets distributed to the beneficiaries.
Legal Compliance: The trust deed is registered
with the appropriate authorities and complies with
all relevant laws and regulations.

Creation of Trust
A trust in respect of immovable property can be
declared only by a non-testamentary instrument in
writing signed by the author of the trust or the
trustee and registered or by the will of the author of
the trust or of the trustee. A trust in respect of
movable property can be made either by a
declaration as above or by the transfer of the
ownership of the property to the trustee (Section 5
of the Indian Trusts Act, 1882).
In places where the Indian Trusts Act, 1882 does not
apply a trust of immovable property may be created
orally if the author of trust is himself the trustee and
consequently no transfer of the property is involved,
and all that is required is only a declaration of trust
(Madanji v. Tribhuwan, 36 B 366).
If a stranger is appointed as trustee, a transfer of
property is necessary and the conveyance must be
made according to the law of Transfer of Property.
The deed creating a trust should contain in
reasonable certainty, among others, the following:
(a) an intention to create a trust;
(b) the purpose of the trust;
(c) the beneficiaries;
(d) names of the trustee/s;
(e) trust property;
(f) unless the author is himself a trustee transfer of
the legal ownership of the property to the trustee;
and
(g) duties, rights and liability of the settler, trustee
and the beneficiary.
The deed may also provide for re-imbursement of
expenses incurred by the trustee(s) in connection
with the discharge of his/their duties as a trustee(s)
and also all expenses properly incurred in or about
the execution of the trust for the realisation,
preservation or benefit of the trust property or the
protection or the support of the beneficiary.

Instrument of Trust: How it is Drafted

An instrument of trust is drafted either as a deed poll
or as a regular deed between the author of trust and
the trustee. Where trustees are strangers and a
transfer of property is involved, it is better to draft
the deed as a deed between the author of trust and
the trustees. Where the author is to be the trustee
himself and the deed requires a mere declaration of
trust, it is drafted as a deed poll. No specific words
are necessary, but, whatever the words used, the
deed should contain with reasonable certainty the
matters mentioned under the heading ‘Creation of
Trust’.
While drafting a trust deed, it be seen that every
clause in the deed is clear in its meaning. If there is
any reference to any article, documents, rules,
statutory Acts etc., the same are properly applied
out. In case reference to these is to be repeated in
the deed it is better to first define them and use the
abbreviation in the deed subsequently.
The most important and vital part of a trust is the
expression of an intention to create a trust which
should be expressed in the deed in unequivocal
language and with reasonable certainty. No
particular or technical words are necessary but the
words used must be definite and unequivocal. The
intention is expressed clearly in the recitals of the
deed and in the operative part also. If the trustee is
a stranger the property is transferable to him “upon
trust”. If the author is himself the trustee, he
declares in the operative part that he “dedicates” or
“sets apart” the property in trust for such and such
purpose and constitutes himself as the trustee.
Different directions are given to the trustees by the
author as to the manner in which the trust is to be
worked. These are the conditions and provisions of
the trust and vary in different kinds of trusts
according to the circumstances. These conditions
should be clearly incorporated in the trust deed. If
the situation so warrants, provision for the
appointment of new trustees should also be made in
the deed.
The process of creating a trust deed in India involves
several key steps:

Drafting the Trust Deed

The first step in the process is to draft the trust
deed. The draft should clearly outline the trust's
objectives, the roles and responsibilities of the
trustees, and the rights and obligations of the
beneficiaries. Make sure that there is no ambiguity
in this document and it needs to comply with
applicable laws and regulations.
Execution on Stamp PaperThe trust deed must be
executed on a non-judicial stamp paper of the
appropriate value, as prescribed by the state
government. This ensures the legal validity and
enforceability of the document.
Registration The trust deed must be registered
with the Sub-Registrar of the Registration
Department of the respective state government.
This registration process provides legal recognition
to the trust and ensures that the document can be
used as evidence in any legal proceedings.

Acceptance of Trust
Acceptance of trust by trustee may be either
express, e.g. by executing the deed of trust or by
verbal assent, or inferred from conduct, e.g., by
entering into possession of the property and on the
duties as trustee. But it is always safer to have the
deed of trust executed by the trustee also.

Registration and Stamp Duty

A trust created by will requires neither registration
nor stamp duty. But a trust in relation to movable or
immovable property which is declared by a non-
testamentary instrument must be registered,
irrespective of the value of the property. Deeds of
wakf or of religious and charitable endowments must
be registered if they relate to immovable property
worth Rs. 100 and upwards.
A trust declared otherwise than by a will is
chargeable to stamp duty under Article 64, Schedule
I of the Indian Stamp Act, 1899. The stamp duty
varies from State to State.

Revocation and Extinction of Trusts

A trust cannot be revoked unless (1) all the
beneficiaries consent; (2) a power of revocation has
been reserved in the deed; and (3) in case of a trust
for payment of debts, it has not been communicated
to the creditors. If the trust property is to be applied
for the author’s own benefit the trust can be
revoked. A power of revocation may with advantage
always be reserved in the deed. The declaration of
trust for creating provident fund, pension fund,
superannuation fund, gratuity fund etc. should be
irrevocable. If they are otherwise the recognition
under the Income Tax Act, 1961 will not be available
to such trusts and in consequence the payment
made to such funds will not be allowed as deduction
in the hands of the authors of the trusts in their
income tax assessments.
A trust is extinguished:
(a) when its purpose is completely fulfilled; or
(b) when its purpose becomes unlawful; or

Content of Trust Deeds

A well-drafted trust deed typically includes the
following key clauses:
 69. Name Clause: The trust deed must specify
the name of the trust and its registered office.
70. Objectives Clause: This clause outlines the
objectives for which the trust is being formed,
ensuring that these objectives are legally
permissible.
71. Duties and Liabilities of Trustees: The
trust deed must clearly define the duties and
liabilities of the trustees, including their powers
and responsibilities.
72. Amendments Clause: This clause specifies
who can make amendments to the rules and
regulations of the trust.
73. Winding Up Clause: In the event of the
trust being wound up, this clause outlines the
process for distributing the trust's assets to the
beneficiaries or a similar entity

legal Requirements for Trust Deed

Registration in India
When registering a trust deed in India, there are
several key legal requirements that must be met:
Description of Property
If the trust deed relates to immovable property, it
must contain a detailed and precise description of
the property. This description should be sufficient to
clearly identify the property in question, including
details like the address, survey numbers,
boundaries, and any other relevant identifiers.
Presentation for Registration
The trust deed must be presented for registration
within four months of its execution. If this deadline is
missed, the document can still be presented within a
further period of four months, but a fine will be
levied. This fine cannot exceed ten times the
amount of the standard registration fee. Timely
registration is crucial to ensure the trust deed is
legally recognized.
Attestation of Changes
Any interlineations (insertions), blanks, erasures, or
alterations made within the trust deed must be duly
attested by the person(s) executing the deed. This
attestation process helps maintain the integrity and
authenticity of the document, preventing any
unauthorized modifications.

Advantages of Establishing a Trust in India

Establishing a trust in India can provide several key
advantages for individuals, families, and
organizations. Let's explore these benefits in detail:
Tax Exemptions
One of the primary advantages of setting up a trust
in India is the potential for tax exemptions. Trusts
can enjoy tax exemptions on the income generated
from the trust's assets, which can be highly
beneficial for long-term financial planning and
wealth management.
Under the Income Tax Act, 1961, charitable and
religious trusts can claim exemptions on their
income, provided they comply with the specified
conditions. This allows the trust's funds to be utilized
more effectively for the intended purposes, rather
than being eroded by taxation.

Welfare Provisions
Trusts in India can be established for a wide range of
purposes, including providing medical assistance,
educational support, and other welfare services to
specific individuals or groups. This allows the trust's
resources to be directed towards addressing societal
needs and improving the quality of life for the
beneficiaries.
By creating a trust, individuals or organizations can
ensure that their wealth and resources are
channeled towards causes they care about, such as
supporting underprivileged communities, funding
research, or preserving cultural heritage. This can
have a significant positive impact on the lives of the
trust's beneficiaries.
Legal Protection
Trust deeds provide robust legal protection to the
trustees, beneficiaries, and the trust's assets. The
trust deed outlines the terms and conditions
governing the trust, ensuring that the trust's
objectives are achieved and its assets are managed
in a legally compliant manner.
This legal framework helps safeguard the interests of
all involved parties, reducing the risk of disputes or
mismanagement. Trustees are bound by their
fiduciary duties to act in the best interests of the
trust and its beneficiaries, further strengthening the
trust's integrity.
Flexibility and Control
Trusts offer a high degree of flexibility in terms of
structuring and managing the trust's assets. The
trust deed can be tailored to suit the specific needs
and objectives of the settlor, allowing them to
maintain a level of control over the trust's operations
and the distribution of its benefits.
This flexibility extends to the ability to amend the
trust deed, subject to the provisions outlined within
it. This can be particularly useful in adapting to
changing circumstances or evolving priorities over
time.
WHO CAN CREATE A TRUST?
Anyone/ any individual can create trust of any kind.
There is no bar in such except for a minor and a
person of unsound mind. It should be created for a
lawful purpose only. Section 4 of The Indian Trust
Act, 1882 lays down the grounds under which the
trust is said to be unlawful. Such grounds are as
follows:
1. It is forbidden by law.
2. It defeats the provisions of Law under such Act.
3. The trust is attained by fraudulent means.
4. It is involved in causing injury or harm to another
individual or his property.
5. It is immoral and against the public policy.
Every individual member, HUF, AOP, Company, or
Association of persons can create a Trust. If a trust is
at all to be created by or on behalf of a minor, then
permission is to be taken from a Civil Court of
Original Jurisdiction.

A Specimen Deed of Revocation of a Trust

THIS DEED is made on the........................ day
of........................ by A.B. etc. (hereinafter called “the
Settlor”) of the one part AND C.D. etc. (hereinafter
called “the Trustee”) of the other part.
WHEREAS by a deed of trust dated........................
the Settlor transferred him property specified therein
to the Trustee upon trust to sell the same and with
the proceeds of the sale to pay the debts due from
the Settlor to the several creditors named in the said
deed;
AND WHEREAS the trust created as aforesaid has
not yet been communicated to any of the aforesaid
creditors;
AND WHEREAS the Settlor now desires to revoke the
said trust and to make other arrangements for the
discharge of his aforesaid debts.
NOW THIS DEED WITNESSES that the Settlor hereby
revokes the trust created by the aforesaid deed of
trust. IN WITNESS WHEREOF parties have signed this
deed on the........................ day of........................
Signed by...................................
In the presence of........................
and of........................................
Debenture Trust Deeds
Companies in the course of their normal business
borrow funds by various modes, one such mode
being the issue of debentures. An issue of
debentures is usually secured by a trust deed,
whereunder movable and immovable properties of
the company are mortgaged in favour of the
trustees for the benefit of the debenture holders.
The trust deed so created, as in the case of a trust,
should specify all the details which have been
mentioned earlier.
In addition, the usual important conditions of
debenture trust deeds may be stated as follows:
10. Thetrustdeedusuallygivesalegalmortgageonblock
capitalandafloatingsecurityontheotherassets of
the company in favour of the trustee on behalf of
the debenture holders.
11. The trust deed gives in detail the conditions
under which the loan is advanced.
12. The trust deed should specify in some detail the
remuneration payable to the trustee, their duties
and responsibilities in relation to the trust
property.
13. It also gives in detail rights of debenture holders
to be exercised through the trustees in case of
default by the company in payment of interest
and principal as agreed upon.
The duty chargeable on a debenture is provided for
by Article 27, Schedule I of the Indian Stamp Act,
1899. The stamp duty varies from State to State. But
when a trust-deed accompanying a series of
debentures is duly stamped, no stamp is necessary
to be affixed on the debentures if they are
expressed to be issued in terms of the said trust
deed. See exceptions to the Article referred to.
The debenture trust deed is registrable and can be
registered with the Registrar of Assurances at the
place where the registered office of the company is
situated or at the place where a part of the
immovable property proposed to be given in the
mortgage is situate or at the metropolitan cities,
namely, Delhi, Bombay, Calcutta and Madras.
Trust Deeds Constituting Provident Fund,
Superannuation Fund, Pension Fund, etc.
The companies create provident fund,
superannuation fund, pension fund, gratuity fund
etc. through declaration of trust for the benefit of
their employees. Such funds, as we have seen
earlier, will have to be irrevocable and should be
drafted, keeping in view the provisions of Schedule
IV appended to the Income Tax Act, 1961 and the
provisions of the Income Tax Rules, 1962 made
thereunder.
It is essential that there should be a clause in the
trust deed giving necessary powers to the trustees
to make Rules for the smooth functioning of the trust
on residuary matters not provided in the trust deed.
A company cannot create a provident fund trust to
cover the employees governed by the Employees
Provident Funds and Miscellaneous Provisions Act,
1952 and the Employees provident Fund Scheme,
1952 framed thereunder unless exemption has been
obtained from the appropriate Government for
establishing such a fund. Therefore, the provident
fund trust established by the company should
ordinarily cover only those employees who are not
governed by the Employees Provident Funds and
Miscellaneous Provisions Act, 1952. Likewise the
gratuity fund established by companies should
ordinarily cover only those employees who are not
governed by the Payment of Gratuity Act, 1972. If
any company wants to have a gratuity fund covering
even employees who are governed by the Payment
of Gratuity Act, 1972 then they will have to obtain
the approval of the appropriate Government for this
purpose.
The companies so creating the trusts will have to
make an application to the Commissioner of Income-
tax for recognition of the respective funds. Only on
receipt of the recognition from the Commissioner of
Income-tax the contribution made by a company to
these will be allowed as a deduction in its
assessment(s).
Various forms for trust deeds constituting Provident
Fund (Annexure I), Pension Fund (Annexure II),
Superannuation Fund (Annexure III) and the
Debenture Trust Deed (Annexure IV) are given
hereafter.

DRAFT TRUST DEED

(Provident Fund)
ANNEXURE I
DECLARATION OF TRUST is made this............... day
of..................... 2013, between............... having its
registered office at..................... (hereinafter called
‘the Company’) of the One part and (1)
Shri....................., (2) Shri..................... and, (3)
Shri..................... (hereinafter called ‘the Trustees’)
of the Other Part.
WHEREAS THE COMPANY intends to creating a
Provident Fund for the benefit of the employees;
AND WHEREAS it is necessary to execute a
declaration of trust in respect of the contribution of
the company and of the members to the fund.
THIS DEED WITNESSETH AND IT IS HEREBY AGREED
AND DECLARED BY AND BETWEEN THE PARTIES
HERETO AS FOLLOWS:
1. That the above-named persons, namely (1)
Shri....................., (2) Shri..................... and, (3)
Shri..................... are hereby appointed as the first
trustees for administering the Provident Fund of the
Company and the income thereof as provided in the
Provident Fund Rules of the Company (hereinafter
called the Rules) in force for the time being.
2. That the trustees shall stand possessed of the
existing fund as also all contributions made in future
time to time with all accumulation to the said fund
upon trust for the benefit of the employees of the
company who are covered under the Rules.
3. In these presents, unless there is anything
repugnant to the subject or context:
• (a) “The Fund” means the Provident Fund
constituted by these presents.
• (b) “Member” means an employee of the
company subscribing to the Fund.
• (c) “Subscription” means any sum credited by
or on behalf of a member out of his salary to his
individual account but does not include any sum
credited as interest.
The company by way of employer’s contribution
 for credit to the member’s account, but does not
include any sum credited as interest.
• (d) “The Balance to the Credit of a
Member”means the total amount to the credit of
a member to the Fund at any time.
• (e) “The Accumulated Balance due to a
member”means the balance to the credit of the
Member’s Provident Fund Account or such portion
thereof as may be claimable by him on the day he
ceases to be a member of the Fund.
• (f) “Year” means the period of twelve calendar
months from the 1st of July to the 30th June or
such other period of twelve months as the
Company may from time to time adopt for making
up its own accounts.
• (g) “Salary” includes dearness allowance and
commission, if the terms of employment so
provide, but excludes all other allowances and
perquisites.
4. That this Trust shall not be revocable except with
the consent of all the members to the Fund.
5. That the money for the time being constituting
the Fund shall be invested by the Trustees in such
manner as may be specified from time to time by
the Income-tax Rules, 1962.
Provided that in execution of the Trust and in the
performance of his duties and powers hereunder
conferred no trustee shall be made liable for any
loss caused to the trust arising by reason of any
improper investment made bona fide and in good
faith or for the negligence or fraud of any agent
employed by them or by reason of any error of
judgement or act, default, mistake or omission done
in good faith and under bona fide relief by any
trustee or by reason of any other matter or thing
except wilful and individual wrong or fraud on the
part of the Trustee or for breach of trust who is
sought to be made liable.
6. (i) The number of trustees at all times shall be
three.
(ii) One of the trustees shall be nominated by the
Board of directors of the company, who may be
either a director or an officer of the company. The
other two trustees shall be elected from among the
members of the Provident Fund.
(iii) The nominees of the Board of directors of the
company shall be the Chairman of the Trust.
The Trustees other than the nominee of the Board of
directors shall be elected by ballot by members
hereof and shall hold office as Trustees for 3 years,
unless their seat become vacant earlier under
Clause 7 hereafter.
(iv) The nominee of the Board of directors of the
company shall hold office until a new representative
is appointed by the Board of directors to take his
place.
7. The place of a trustee shall become vacant if a
Trustee (a) dies, or (b) resign his office, or (c) is
adjudged an insolvent, or (d) becomes of unsound
mind, or (e) is convicted of an offence involving
moral turpitude, or (f) in the case of a nominee of
the Board of directors of the company ceases to be a
director or an officer of the company and in the case
of an elected trustee ceases to be a member of the
fund, or (g) fails to attend three consecutive
meetings of the trustees for any reason which the
trustees do not consider to be satisfactory.
8. (i) Any casual vacancy under Clause 7 above shall
also be filled by holding a fresh election, in case the
vacancy occurs in a seat held by an elected trustee.
(ii) If a seat of an elected trustee remains vacant for
more than one month, the Board of directors of the
company may fill the casual vacancy by appointing a
trustee from among the members for such period as
the election does not take place.
(iii) The person elected or nominated to a casual
vacancy shall be a trustee for the residue of the
term for which the person whose place he fills would
have been a trustee.
9. (i) The trustees may meet together for the
despatch of business, adjourn and otherwise
regulate their meetings as they think fit. The
Chairman and an elected trustee shall form a
quorum. Questions arising at any meeting shall be
decided by a majority of votes and in case of
equality of votes the Chairman of the Trust shall
have a casting vote.
(ii) A resolution in writing signed by all the trustees
for the time being shall be as valid and effectual as if
it had been passed at a meeting of the Board of
Trustees duly called and constituted.
10. (i) The Board of Trustees shall be authorised to
delegate any of their powers to such one or more of
themselves as they may think fit, from time to time,
and they may vary, alter, or rescind such powers or
any of them as they from time to time think fit.
(ii) No act or proceedings of the trustees shall be
invalidated merely by reason of the existence of a
vacancy among the trustees.
(iii) The trustees shall cause proper minutes to be
kept and entered in hand, in a book provided for the
purpose, of all their resolutions and proceedings and
any such minutes of any meeting of the trustees, if
purporting to be signed by the Chairman of the
trustees shall be receivable as prima facie evidence
of the matters stated in such minutes.
11. The Fund shall be exclusively managed and
administered by the Trustees in accordance with
these rules, and the decision of the trustees upon
any question relating to the fund or any rights or
benefits in connection therewith or generally upon
the interpretation of any provision of these rules
shall be absolutely final and binding on all members,
their executors, administrators, representatives,
widows, or relatives and the employers.
The costs, charges and expenses of administering
the fund and of the determination of any question
arising under these rules or otherwise, including
expenses incurred by the trustees in the discharge
of their duties shall be charged to the fund and may
be properly paid therefrom, from time to time.
Any decision of the trustees may be given under the
hand of any one or more of them.
12. The trustees shall have power to employ any
person or persons (including any one or more of
their numbers) to do any secretarial, legal,
accountancy or other work which they may consider
necessary or expedient in connection with the
management of the fund and to pay therefor in
addition to all other proper disbursements, all
ordinary or reasonable charges out of the fund.
13. (i) Every member shall subscribe to the fund at
the rate of 10 per cent of his monthly salary and
such percentage shall be deducted from his salary,
at the time of payment thereof and shall, as soon as
practicable, be paid to the trustees who shall credit
the same to the account of the member in the books
of the Fund.
(ii) The monthly contribution payable by the
company in respect of each member shall be equal
to the subscription payable by each member.
(iii) It shall be open for members to pay additional
subscription to the Fund which shall be a definite
proportion of his salary for that year as provided in
the “Rules”.
14. Subject to the previous approval by the
Commissioner of Income tax, the trustees shall, with
the approval of the Board of directors, be competent
to vary, alter, omit, modify or add to the “Rules” of
the Provident Fund.
15. The Trustees shall maintain an account of
provident fund for each member of the fund and it
shall include the particulars prescribed in sub-rule
(2) of Rule 74 of the Income-tax Rules, 1962, and
such other particulars as the Trustees hereof may,
from time to time, deem necessary and expedient.
The Trustees shall furnish a statement of Provident
Fund account to each member at such interval, not
exceeding 12 months, in such form as the Trustees
may prescribe. It shall be the duty of every member
to verify the correctness of the statement as and
when it is furnished to him and to bring the
discrepancy, if any, to the notice of the Trustees.
Such a statement shall be signed by the Trustees or
by any other person specially authorised by the
Trustees in this behalf.
16. The accounts of the Provident Fund Trust shall
be made for each year and shall be duly audited by
the auditors appointed by the Trustees with the
approval of the Board of directors of the company.
There shall be an annual meeting of the trustees
after the close of the year and at such annual
meeting of the trustees the audited accounts of the
previous year of the Fund shall be presented and
passed.
17. All matters of procedures and other ancillary
matters not herein specifically provided for and
requiring the framing of rules shall be regulated by
such rules as the trustees may, in consultation with
the Board of directors of the company, from time to
time, make in that behalf.
Without prejudice to the general powers conferred or
implied in the last preceding sub-clause, the
Trustees may, in consultation with the Board of
directors of the company make rules:
(i) regarding the advance of loans to the members,
(ii) regarding the mode of election of the Trustees,
and
(iii) regarding the conduct of the meetings of the
Trustees.
18. The Trustees shall respectively be indemnified
for and against all liabilities incurred by them in
bona fide execution of the Trust hereof.
Lesson 5 Drafting and Conveyancing Relating to
Various Deeds and Agreements-III 211 IN WITNESS
WHEREOF the parties hereto have duly executed this
Trust on the date, month and year first above
written.
The Common Seal of the above named company
was, pursuant to the resolution of the Board of
Directors of the Company passed in this behalf
on....................., affixed hereunto in the presence of
the authorised director of the company, who has
hereunto set his hands in the presence of:
WITNESS:
for COMPANY (DIRECTOR)
SIGNATURE OF TRUSTEES
1.
2.
3.
DRAFT TRUST DEED
(Pension Fund)
ANNEXURE II
DECLARATION OF TRUST is made this.....................
day of..................... 2013, between.....................,
having its registered office at.....................
(hereinafter called ‘the Company’) of the One Part
and (1) Shri....................., (2) Shri....................., and
(3) Shri..................... (hereinafter called ‘the
Trustees’) of the Other Part.
WHEREAS THE COMPANY intends to creating a
Pension Fund for the benefit of the employees; AND
WHEREAS it is necessary to execute a Declaration of
Trust in respect of the contribution of the Company.
THIS DEED WITNESSES AND IT IS HEREBY AGREED
AND DECLARED BY AND BETWEEN THE PARTIES
THERETO AS FOLLOWS:
1. That the above named persons, namely
(1) ....................., (2) ..................... and
(3) ..................... are hereby appointed as the first
trustees for administering the Pension Fund of the
Company and the income thereof as provided in the
rules in force for the time being.
2. That the Trustees shall stand possessed of the
existing Fund, Investments, as also all contributions
made in future, from time to time, with all
accumulations to the said Fund upon trust for the
benefit of the employees of the Company.
3. In these presents, unless there is anything
repugnant to the subject or context:
• (a) “The Fund” means the Pension Fund
constituted by these presents.
• (b)
“Member”meansanemployeeoftheCompanywhoha
sbeenadmittedtothebenefitsofthemembership of
the Fund. Provided however that a director of the
company may be admitted to the benefits of
membership of the fund only if he is a whole-time
bona fide employee of the Company and does not
 beneficially own shares in the company carrying
more than 5% of the total voting power.
• (c) “Salary” includes dearness allowance if the
terms of employment so provide but excludes all
other allowances and perquisites.
• (d)
“Service”meanstheperiodofpaidemploymentwitht
hecompanywhichhasbeenspecificallydeclared by
the company as having been satisfactory. Leave
sanctioned without pay except on grounds of
sickness or study will not count towards the total
service, but the period of such leave will not be
treated as an interruption in the continuity of
service.

(e) “Wife” means a woman to whom the member of

the fund was married on the date of his becoming
eligible to a pension and in whose favour a
nomination has been lodged with the Trust.
(f) “Completed Years of Service” - ‘N’ is the integral
quotient obtained by dividing by 12 the total service
as an employee in terms of months, leave without
pay other than on grounds of sickness or study for
total service, if any, not counting.
(g) “Terminal Leave” means leave as defined in Rule
(.....................) of the “Company Leave Rules 19.....”.
(h) “Year” means the period of 12 calendar months
from 1st July to 30th June or such other period of 12
months as the company may, from time to time,
adopt for making up its own accounts.
4. This Trust shall not be revocable except with the
consent of the members of the fund.
5. That the money for the time being constituting
the fund shall be invested by the trustees in such
manner as may be specified, from time to time, by
the Income-tax Rules, 1962.
6. The Employee permitted to retire at any age after
attaining the age of 55 (fifty five) years shall be
eligible for pension provided he has rendered not
less than 120 calendar months of continuous service
with the company as an employee. The Pension to
the employee shall commence from the date
immediately following the expiry of the period of any
terminal leave where it is granted to him on full pay
or from the date immediately following his
retirement where it been granted cash
compensation for the said leave.
7. The amount of pension payable to an employee
shall be a monthly pension of N/60 of the average
monthly salary drawn by him during the 36 complete
calendar months preceding the date of retirement,
‘N’ as defined in para 3(f) above being limited to 30.
The amount of pension shall not exceed the monthly
ceiling of Rs..............
8. The pension granted by the company shall be for
life. However, where an employee, who has been
granted a pension dies before the expiry of 20 years
from the date of the commencement of pension, the
pension from the date of his death for the balance of
20 years shall be paid firstly to his wife provided she
does not re-marry, and, secondly, if she re-marries
or dies, to his children at the rate at which the
deceased employee was entitled.
9. An employee who having served the company for
not less than 10 completed years of service as an
employee becomes mentally or physically
incapacitated and is medically declared unfit for
further service with the company, may be granted
by the company an invalid pension calculated on the
same basis as provided under clause 7 hereof and
subject to the same monthly ceiling as provided in
the said clause, even though the employee has not
attained the age of 55 years. Such an invalid
pension will be subject to review every year and may
be reduced or stopped at the sole discretion of the
Board of directors of the Company.
10. If an employee dies while in service but after 10
years of completed service as an employee or dies
while in receipt of invalid pension then his wife or
minor children may at the sole discretion of the
Board of Directors be sanctioned by the company a
family pension of an amount not exceeding the
pension which the employee would have been
eligible to have had he retired after attaining the
age of 55 years and having rendered the same
number of completed years of service as provided
under clause 7 hereof and subject to the same
monthly ceiling as provided in the said clause. Such
a pension shall be subject to review every year and
may be reduced/ stopped at the sole discretion of
the Board of directors of the company.
11. The trustees may allow commutation of pension
granted under clauses 6 and 7 hereof in the
following manner:
• (a) in a case where the employee receives any
gratuity, the commuted value of one-fourth
pension which he is normally entitled to receive,
and
• (b) in any other case, the commuted value of
one-third of such pension;
such commuted value being determined having
regard to the age of the recipient, state of his health,
the rate of interest, and officially recognised tables
of mortality.
12. (i) The number of trustees at all times shall be
three.
(ii) One of the Trustees shall be nominated by the
Board of directors of the Company, who may be
either a director or an officer of the company. The
other two trustees shall be elected from amongst
the members of the Pension Fund.
(iii) The nominee of the Board of directors of the
company shall be the Chairman of the Trust.
The trustees other than the nominee of the Board of
directors shall be elected by ballot by members
hereof and shall hold office as trustees for 3 years,
unless their seat becomes vacant earlier under
Clause 13 hereafter.
(iv) The nominee of the Board of directors of the
company shall hold office until a new representative
is appointed by the Board of directors to take his
charge.
13. The place of trustee shall become vacant if a
trustee (a) dies, or (b) resigns his office, or (c) is
adjudged an insolvent, or (d) becomes of unsound
mind, or (e) is convicted of an offence involving
moral turpitude, or (f) in the case of a nominee of
the Board of directors of the company ceases to be a
director or an officer of the company and in the case
of a elected trustee ceases to be a member of the
fund, or (g) fails to attend three consecutive
meetings of the trustees for any reason which the
trustees do not consider to be satisfactory.
14. (i) Any casual vacancy under clause 13 above
shall also be filled by holding a fresh election, in
case the vacancy occurs in a seat held by an elected
trustee.
(ii) If a seat of an elected trustee remains vacant for
more than one month, the Board of directors of the
company may fill the casual vacancy by appointing a
trustee from among the members for such period as
the election does not take place.
(iii) The person elected or nominated to a casual
vacancy shall be a trustee for the residue of the
term for which the person whose place he fills would
have been a trustee.
15. (i) The trustees may meet together for the
despatch of business, adjourn and otherwise
regulate their meetings as they think fit. The
Chairman and an elected trustee shall form a
quorum. Questions arising at any meeting shall be
decided by a majority of votes and in case of
equality of votes the Chairman of the Trust shall
have a casting vote.
(ii) A resolution in writing signed by all the trustees
for the time being shall be as valid and effectual as if
it had been passed at a meeting of the Board of
Trustees duly called and constituted.
16. (i) The Board of Trustees shall be authorised to
delegate any of their powers to such one or more of
themselves as they may think fit, from time to time,
and they may vary, alter or rescind such powers or
any of them as they from time to time think fit.
(ii) No act or proceedings of the trustees shall be
invalidated merely by reason of the existence of a
vacancy among the trustees.
(iii) The trustees shall cause proper minutes to be
kept and entered, in a book provided for the
purpose, of all their resolutions and proceedings and
any such minutes of any meeting of the trustees, if
purporting to be signed by the Chairman of the
trustees shall be receivable as prime facie evidence
of the matters stated in such minutes.
17. The Fund shall be exclusively managed and
administered by the trustees in accordance with
these rules, and the decision of the trustees upon
any question relating to the fund or any rights or
benefits in connection therewith or generally upon
the interpretation of any provision of these rules
shall be absolutely final and binding on all members,
their executors, administrators, representatives,
widows or relatives and the employers.
The costs, charges and expenses of administering
the fund and of the determination of any question
arising under these rules or otherwise, including
expenses incurred by the trustees in the discharge
of their duties shall be charged to the fund and may
be properly paid therefrom, from time to time.
18. The trustees shall have power to employ any
person or persons (including any one or more of
their numbers) to do any secretarial, legal,
accountancy or other work which they may consider
necessary or expedient in connection with the
management of the fund and to pay therefore in
addition to all other proper disbursements, all
ordinary or reasonable charges out of the fund.
19. The trust property shall consist of such yearly
and other contribution as the company may make to
the trust or such other sums as the company shall
from time to time, determine provided that the
annual contribution by the company to the fund in
respect of any particular employee shall not exceed
25% of his salary for each year as reduced by the
company’s contribution, if any, to any provident fund
(whether recognised or not) in respect of the same
employee for that year.
Interest, dividend or other accretions from
investments and deposits of the Fund hereby
established; and Any Securities or other investments
of the Trust money.
20. Subject to the previous approval by the
Commissioner of Income-tax, the trustees shall, with
the approval of the Board of directors, be competent
to vary, alter, omit, modify or add to the rules of the
Pension Fund.
21. The accounts of the Pension Fund shall be made
for each year and shall be duly audited by the
auditors appointed by the Trustees with the approval
of the Board of directors of the company. There shall
be an annual meeting of the trustees after the close
of the year and at such annual meeting of the
trustees the audited accounts of the previous year of
the Fund shall be presented and passed.
22. All matters of procedures and other ancillary
matters not herein specifically provided for and
requiring the framing of rules including for the
election of trustees and for conduct of their
meetings shall be regulated by such rules as the
trustees may, in consultation with the Board of
directors of the company, from time to time, make in
that behalf.
23. The Trustees shall respectively be indemnified
for and against all liabilities incurred by them in
bona fide execution of the Trust hereof.
IN WITNESS WHEREOF the parties hereto have duly
executed this Trust on the date, month and year first
above written.
The Common Seal of the above named Company
was, pursuant to the resolution of the Board of
Directors of the Company passed in this behalf
on....................., affixed hereunto in the presence of
the authorised director of the company, who has
hereunto set his hands in the presence of:
WITNESS:
1. 2. 3. 4.
for COMPANY (DIRECTOR)
SIGNATURE OF TRUSTEES
1. 2. 3.
Lesson 5 Drafting and Conveyancing Relating to
Various Deeds and Agreements-III 215

ANNEXURE III

DRAFT TRUST DEED

(Superannuation Fund)
The Superannuation Fund Trust Deed should also be
drafted on the same lines as Pension Fund Trust
Deed except for the following changes.
Clauses relating to the benefit accruing to the
members of the fund, namely, Clauses 6 to 10, must
be replaced as below:
6. On a member being permitted to retire from the
service of the Company, at or after the age of 55
years, of being permitted to retire before the age
 of 55 years upon his being incapacitated, the
Trustees shall, by payment of the amount lying at
his credit in the Fund made up to the date of
retirement, purchase from the Life Insurance
Corporation of India an annuity for him for his life
in the event of there being no nominee, or for a
duration of not less than ten years certain, on
either or survivors basis, jointly with the
nominee(s) named in the declaration of
nominations.
7. NothingcontainedinthisTrustDeedshallbedeemedto
restrictinanywaytherightsoftheCompanyto
terminate the employment of a member at any
time nor shall his being a member be used by him
as a ground for increasing damages in any action
brought by him against the company in respect of
termination of his employment and no expression
of intention on the part of the Company herein
contained shall create for the benefit of the
member any legal obligation or impose any legal
liability on the company.
8. Should a member die while in employment, the
Trustees shall, by payment of the amount lying at
his credit in the Fund made-up to the date of
death, purchase from the Life Insurance
Corporation of India an annuity for the first named
nominee in the declaration of nominations for a
duration of not less than ten years certain, on
 either or survivors basis, jointly with other
nominees, if any.
9. Ifamemberdieswhileinservicewithoutmakinganomi
nationorresignswithorwithoutduenoticefrom the
employment of the Company or is discharged for
reasons of fraud, dishonesty, criminal charges, or
other misconduct inconsistent with due and
faithful discharge of duty, the gross annual
contribution to be made by the Company to the
Fund under the provisions of clause 15(ii) above
for the relevant year shall be reduced by the
amount lying at the credit of such member in the
Fund and the Trustees shall thereupon by
cancellation of the individual account of such
member utilise the credit alongwith the annual
contribution by the Company, so reduced, for
making up the individual accounts of the
members.
10. No member shall assign, or create a charge
upon his beneficial interest in or under the Fund,
and if such assignment or charge is made or
created, such assignment or charge shall be
invalid.
In addition the Superannuation Fund Trust Deed
should have the following clause:
“The Trustees shall maintain individual accounts for
each member and credit thereto the contributions
received, from time to time, from the Company in
respect of that member. The yield from investment
of funds or capital gains shall be credited to the
individual members’ accounts at the end of each
year pro-rata to the amount and the duration in the
year of the credits in such accounts.”

ANNEXURE IV

DRAFT DEBENTURE TRUST DEED

THIS TRUST DEED is made this..................... day
of..................... 2013, between.....................
incorporated under the Companies Act, 2013 with its
registered office at..................... (hereinafter called
“the Company”) of the One Part, and
Mr..................... and Mr..................... (hereinafter
called “the Trustees”) of the Other Part.

WHEREAS by Sub-Clause..................... of
Clause..................... of its Memorandum of
Association, the company is authorised to borrow or
raise and secure the payment of money by the issue
of debentures charged upon any of the company’s
property.
AND WHEREAS the Directors of the company being
duly empowered in that behalf by Article
No. ..................... of the Articles of Association of the
company have decided by a resolution passed in
pursuance to Section 179 of the Companies Act,
2013 by the Board of directors in the meeting of the
Board held on..................... to raise a sum of
Rs..................... by issue of..................... First
Mortgage Debentures of Rs..................... each,
bearing interest at..................... per cent per annum
framed in accordance with the forms set for in the
First Schedule hereto and to secure the same by
mortgaging with the trustees the properties
described in the Second Schedule hereto.
AND WHEREAS the trustees above mentioned have
consented to act as trustees for the debenture
holders.
NOW THIS DEED WITNESSETH AND IT IS HEREBY
MUTUALLY AGREED TO AND DECLARED BY AND
BETWEEN THE PARTIES HERETO AS FOLLOWS:
1. That in these presents unless there be something
in the subject or context consistent therewith the
expression following shall have the meaning
hereafter mentioned, that is to say:
• (a) “Company” means..................... Ltd.
• (b) “Trustees” means Mr..................... or any
other trustees hereof for the time being.
• (c) “Debentures” means the debenture of the
company in the form set out in the First Schedule
 hereto for the time being outstanding and entitled
to the benefit of these presents.
• (d) “Debentureholders”means the holder for the
time being of the debenture issued and entered in
the register of debenture holders, mentioned on
the conditions endorsed on the debentures on the
holder of the debentures.
• (e) “Mortgaged premises” means the property
belonging to the company described in the
Second Schedule hereto and comprised in the
security of the debenture holders.
Words denoting the singular include the plural
and vice versa unless the contrary appears from
the context.
• (f) Act means the Companies Act, 2013 and any
modification or re-enactments thereof.
2. The debentures entitled to the benefit of these
presents shall consist of a series of number of
debentures of Rs..................... each, aggregating
to Rs..................... in all to rank pari passu without
any preference or priority by reason of the date of
issue or otherwise and secured by the mortgage
hereby created on the mortgaged premises.
3. The company hereby covenants with the trustees
that the company will on the..................... day
of..................... or such earlier day as the principal
moneys shall become payable under clause 7
 hereof pay the debenture holders the amounts
secured by their debentures respectively, and in
the meantime will pay interest to the debenture
holders on the day of..................... 20... in each
year, the first payment of interest to be made on
the day of..................... 20...
4. All payments due by the company in respect of
the Debentures issued hereunder whether of
interest, principal or premium shall be made by
cheque or warrant drawn by the company on its
bankers and the company shall make at its own
expenses all arrangements, with its Bankers as
shall be necessary to ensure that such cheques or
warrants shall be encashable for the amount for
which they are expressed without any deduction
whatsoever at the office of its bankers in Delhi or
such other places in the Union of India as the
Trustees may require.
Lesson 5 Drafting and Conveyancing Relating to
Various Deeds and Agreements-III 217
5. In consideration of the debentures hereby
authorised aggregating to Rs..................... the
company, as the beneficial owner, hereby
mortgages unto the trustees all the fixed plant
and machinery and fixture at present existing at
the company’s factory and described in part A of
the Second Schedule hereto and which may be
acquired by the company hereafter or fixed or
 erected hereafter at its factory for the benefit of
the debenture holders and the property described
in Part B of the Second Schedule as security for
the due payment of principal moneys amounting
to Rs..................... in aggregate with interest and
all other charges, expenses and other dues, the
payment of which has been secured by a charge
on the mortgaged premises under these presents.
The charge hereby created on the property
mentioned in Part A of the Second Schedule shall
be the specified charge, while that on the property
included in Part B of the Second Schedule shall
rank as floating charges.
The trustees may, at any time, by notice in writing
to the company, convert the said floating charge
into a specific charge as regards any assets
included in the Second Schedule and specified in
the notice in case it is, in the opinion of the
trustees in danger of being seized or sold under
any sort of distress or execution levied or
threatened or in any other case.
6. The company shall hold and enjoy all the
mortgaged premises and carry on therein and
therewith the business or any of the business
mentioned in the Memorandum of Association of
the company until the security hereby constituted
shall become enforceable under the terms of
these presents, in which case the trustees may, in
 their discretion, without any such request as next
hereinafter mentioned and shall upon the request
in writing of the holder or holders of.....................
at least of the debentures, enter upon or take
possession of the mortgaged premises, or any of
them and may in the like discretion and shall upon
the like request sell, call in, collect and convert
into money the same or any part thereof with full
power to sell any of the same premises either
together or in parcels, and either by public auction
or private contract, and either for a lumpsum or
for a sum payable by instalments or for a sum on
account and a mortgage or charge for the balance
and with full power upon every such sale to make
any special or other stipulations as to title or
evidence, or commencement of the title or
otherwise which the trustees shall deem proper
and with full power to modify or rescind or vary
any contract for sale of the said premises or any
part thereof and to re-sell the same without being
responsible for any loss which may be occasioned
thereby and with full power to compromise and
effect compositions and for the purposes aforesaid
or any of them to execute and do all such
assurance and things as they shall think fit.
7. The principal moneys due to the debenture-
holders under this Indenture shall become
immediately payable and the security hereby
 constituted shall become enforceable within the
meaning of these presents in each and any of the
following events:
• (a) If the company makes default in the
payment of any interest which ought to be paid in
accordance with these presents.
• (b) If the company without the consent of
debenture holders ceases to carry on its business
or gives notice of its intention to do so.
• (c) If an order has been made by the Court of
competent jurisdiction or a special resolution has
been passed by the members of the company for
winding up the company.
• (d) If the company acts in contravention of
clause..................... of its Articles of Association.
• (e) If it is certified by a Chartered Accountant
capable of being appointed as auditor under the
Act, that the liabilities of the company exceed its
assets.
• (f)
Ifthecompanycreatesorattemptstocreateanycharg
eonthemortgagedpremisesoranypartthereof
without the prior approval of the
trustees/debenture holders.
(g) If in the opinion of the trustees the security of
debenture holders is in jeopardy.
Provided that on the happening of the events
specified in sub-clause (a), the permission given by
clause 6 to hold and enjoy the mortgaged premises
shall not be determined unless and until the trustees
shall have first served on the..................... company
a preliminary notice requiring the company to pay
the interest in arrears and the company shall have
neglected for the period of 30 days to comply with
such notice.
8. As soon as the principal money shall become
payable and the security enforceable under the
last preceding clause 7 (and unless the time for
payment and the security to be enforced has
been expressly extended by the debenture
holders), the trustees shall enter upon and take
possession of the mortgaged premises and shall
forthwith take steps to consult the debenture
holders for the purpose of determining whether
the business of the company may be allowed to
be carried on or whether the mortgaged
premises shall be realised by sale or otherwise.
9. Until the happening of some one of the events
mentioned in clause no. 7 of this Indenture, the
trustees shall not be in any manner bound to
interfere with the management of affairs of the
said business except to the extent they may
consider necessary for the preservation of the
mortgaged premises or any part thereof.
10. If the debenture-holders resolve not to allow
the business of the company to be carried on as
mentioned in clause 9 above but to realise the
security, the trustees shall after giving a notice
of 30 days in writing to the company, proceed to
realise the mortgaged premises by sale or
otherwise and, in doing so, shall conform to
discretion, if any, given by debenture-holders.
11. The trustees shall apply the proceeds of
such sale or other mode of realisation in the
following manner, that is to say, that the
trustees shall pay:
• (a) In the first place all costs, charges and
expenses incurred in or about such sale or the
performance or execution of trust or otherwise
in relation to these presents or otherwise in
respect of the security, including the
remuneration of the trustees.
• (b) Secondly, the interest for the time being
due and owing on the debentures.
• (c) Thirdly, the principal money then due and
owing to debenture-holders.
• (d) And lastly, the surplus, if any, to the
company or its assignee.
12. Provided that if the said money shall be
insufficient to pay all such interest or principal
money in full, then the said moneys shall be paid
 rateably and without preference or priority
among all debenture-holders of this series
according to the amount of the face value of the
debentures held by them, but all interest shall
be paid before any principal money.
13. When all the principal moneys and secured
by these presents shall have been paid and
satisfied, the trustees shall forthwith, upon the
request and at the cost of the company and on
being paid all the costs, charges and expenses
properly incurred by the trustees in relation to
the security, reconvey, reassign, release and
surrender the mortgaged premises or so much
or the same as shall not have been sold or
disposed of, unto the company or its assigns. If
the company shall, at any time during the
continuance of the security, be desirous of
selling, demising or otherwise disposing of or
dealing with any part of the mortgaged premises
otherwise than in respect of the floating charge
the ordinary course of the company’s business,
the trustees may, if satisfied that the debenture-
holders’ security shall not be thereby prejudiced,
assent to or concur in such sale, demise,
disposal or other dealing, and may, if necessary,
release the property in question from the trust
under this deed on such terms as the trustees
may determine.
 14. The company hereby covenants with the
trustees:
• (i) That the moneys secured by this deed shall
be the first mortgage and charge on the
mortgaged premises and shall take precedence
over all other moneys which may hereinafter be
borrowed by the company against the security of
the premises.
• (ii) that the company shall maintain the
mortgaged premises and any and every part
thereof in a fit and efficient condition of repair
and shall keep the said property duly insured
against risk of fire, riot, civil and war risks with
such insurers and in such manner as the trustees
may determine from time to time and, in default,
the trustees shall carry out repair and keep
insured the mortgaged premises in the interest of
the debenture-holders, and shall be entitled to the
immediate payment of such expenditure in full.
15. (a) The company shall in each and every year
during the continuance of this security pay to the
Trustees for the time being of these presents as
and by way of remuneration for their services as
Trustees the sum of Rs.....................
(Rupees..................... only) per annum in addition
to all legal, travelling and other costs, charges and
expenses incurred by the Trustees on their
officers, employees or agents in connection with
the execution of the trust hereof (including all the
costs, charges and expenses of and incidental to
the approval and execution of these presents) and
all other documents effecting the security herein
and the first of such payments to be made
proportionately for the period and the said
remuneration shall continue to be payable until
the trust hereof shall be finally discharged. The
trustees acknowledge having received from the
company a sum of Rs.....................
(Rupees..................only) as their fee for agreeing
and accepting the trusteeship of these presents.
(b) The company shall pay to the trustees all legal
travelling and other costs, charges and expenses
incurred by them or their agents in connection
with execution of trusts of these presents
including costs, charges and expenses of and
incidental to the approval and execution of these
presents and all other documents affecting the
security herein and will indemnify them against all
actions, proceedings, costs, charges, expenses,
claims and demands whatsoever which may arise
or be brought or made against or incurred by
them in respect of any matter or thing done or
permitted to be done without their wilful default in
respect of or in relation to the mortgaged
premises.
16. The trustees hereof being a corporate body may,
in the execution and exercise of all or any of the
trusts powers, authorities and discretions vested
in them by these presents act by responsible
officers or a responsible officer for the time being
of the trustees and the trustees may also
whenever they think it expedient in the interests
of the debenture-holders delegate by power of
attorney or otherwise to any such officer or
officers all or any of the trusts power, authorities,
and discretions vested in them by these presents
and any such delegations may be made upon such
terms and conditions and subject to such
regulations including power to sub-delegate as the
trustees may, in the interest of the debenture
holders, think fit and the trustees shall not be
bound to supervise the proceedings of or be in
any way responsible for any loss incurred by
reason of any misconduct or default or any
mistake, oversight, error of judgement,
forgetfulness or want of prudence on the part of
any such delegate.
Note: This clause is suitable where the trustees is
a bank. In case of individual this be modified
suitably.
17. The debenture holders may, by an ordinary
resolution, remove the trustee or trustees, or the
trustee or trustees may, with the consent of the
 directors of the company and of the majority of
the debenture holders in writing resign or retire
from trusteeship.
18. In the event of death, bankruptcy, disability or
resignation of any trustee or trustees, another
trustee or trustees shall be appointed who shall
thereafter have and exercise all powers of the
trustee or trustees under these presents. The
power of appointing a new trustee or trustees
shall be vested in the directors, but no such
trustee or trustees shall be appointed by the
company until his appointment has been
approved by an ordinary resolution of the
debenture holders.
19. The trustees may by agreement with the
directors of the company modify the terms of
the deed in any manner that may be necessary
to meet any requirement or contingency,
provided that the trustees are satisfied that such
modifications are in the interests of the
debenture holders.
20. If any debenture is proved to the satisfaction
of the company to have been lost, the company
shall issue a fresh debenture on payment of a
fee of Rs..................... for each such debenture
and on such indemnity as the directors may
think fit.
21. The company hereby covenants with
trustees that company will at all times during the
continuance of the security (except as may be
otherwise previously agreed in writing by the
trustees).
• (a) carry on and conduct its business in proper
and efficient manner with due deligence and
efficiency with sound financial standing and pay
all rents, cesses on mortgage premises, and
insured these properties against fire and
natural calamities;
• (b) to keep proper books of account as
required under the Act and let them be open to
inspection of trustees during business hours;
• (c) to give trustees such in formation as he or
they may require relating to business,
mortgage property and the affairs of the
company;
• (d) not to effect any scheme of amalgamation,
merger or reconstructions during the period of
debenture or any part thereof remain
outstanding;
• (e) not to utilise any portion of the debentures
for purposes other than those for which the
same are issued;
• (f) not to make any material changes in the
existing management set up. Not to declare any
 dividend to the equity (or preference
shareholders, if any) in any year until the
company has paid or made satisfactory
provision for payment of the instalments of
principal (if it has become due) and interest due
on the debentures;
• (g) allow the debenture holders a right to
appoint a nominee director on the Board of the
company.The said director so appointed shall
not be liable for rotation nor required to hold
any qualification. Thus, if need be, the company
shall take immediate steps to amend its Articles
of Association accordingly.
22. The company hereby further covenants with the
Trustees that the company shall duly perform and
observe the obligations hereby imposed upon it by
this deed.
IN WITNESS WHEREOF THE COMPANY has caused its
Common Seal to be affixed to these presents and
the trustees have hereto set their hands the day and
year above written.
Common Seal of the.....................
Witnesses:
affixed in the presence of
(DIRECTOR)
(TRUSTEES)
SAMPLE DRAFT – DEED OF TRUST THIS DEED OF
TRUST executed on the ______ day of _______,
_________ BETWEEN ___________________(Name and
PAN),son of ___________________, by faith-
___________________, by nationality-
___________________, residing at
____________________________(Party of the first part)
hereinafter called “SETTLOR OF THE TRUST” A N D
1. ___________________(Name and PAN),son of
___________________by faith___________________, by
nationality___________________, residing at
______________________________ 2.
___________________(Name), wife of
___________________, by faith___________________, by
nationality- ___________________, residing at
___________________ 3. ___________________(Name),
son of ___________________, by
faith___________________, by
nationality___________________, residing at
______________________________________
(Hereinafter called “THE TRUSTEES” which
expression shall unless repugnant to the context or
meaning thereof be deemed to include the
supervisors or supervisor of them and the trustees
or trustee for the time being of these presents and
their heirs, executors and administrators of the last
surviving trustee, their or his assignees) of the other
part;
WHEREAS the party hereto of the first part is
possessed of the sum of Rs ___________________as his
absolute property and he is desirous of creating a
Religious/Charitable/Educational Trust for the benefit
of the humanity at large.
AND WHEREAS each of the parties hereto of the
“Other Part” has individually and jointly has agreed
at act as Trustees of the Trust, proposed by the
party of the first part.
AND WHEREAS all activities of the trust shall be
carried out with a view to benefit the public at large,
without any profit motive and in accordance with the
provisions of the Income-tax Act, 1961 or any
statutory modification thereof.
AND WHEREAS the trust is hereby expressly
declared to be a public charitable trust and all the
provisions of this deed are to be considered
accordingly.
AND WHEREAS All aims/objects/purpose of the trust
herein stated herein below shall come into
effect/force after necessary approval of the
competent government authority in the cases where
affiliation/permission /license/sanction is required.

ARBITRATION AGREEMENTS

74. The ‘arbitration agreement’ under the

Arbitration and Conciliation Act, 1996 means an
agreement by the parties to submit to
arbitration all or certain disputes which have
arisen or which may arise between them in
respect of defined relationship whether
contractual or not.
75. It may be in the form of an arbitration
clause in a contract or in the form of a separate
agreement.
76. It has to be in writing.
77. It is in writing if it is contained in a document
signed by the parties, or in an exchange of
letters, telex telegrams or other means of
telecommunication which provide a record of the
agreement, or in an exchange of statements of
claim and defence in which the existence of
agreement is alleged by one party and not
denied by the other.
 78. The important ingredient of the arbitration
agreement is the consent in writing to submit
dispute to arbitration.
79. Consent in writing implies the application of
mind to the reference of dispute to arbitration in
accordance with Arbitration and Conciliation law
and the binding nature of the award made
thereunder.
80. An arbitration agreement stands on the
same footing as any other agreement.
81. It is binding upon the parties unless it is
tainted with fraud, undue influence etc., in which
case it can be avoided like any other agreement.
82. An arbitration rests on mutual voluntary
agreement of the parties to submit their
differences to selected persons whose
determination is to be accepted as a substitute
for the judgement of a court.
83. The object of arbitration is the final
determination of differences between parties in
a comparatively less expensive, more
expeditious and less formal manner than is
available in ordinary court proceedings.

Pre-requisites of Arbitration
Every arbitration must have the following three pre-
requisites:
(i) a dispute between parties to an agreement,
requiring a settlement;
(ii) its submission for a settlement to a third person;
and
(iii) a decision by such third person according to his
own judgement based on the facts and
circumstances of the dispute, which is binding on
both the parties.

Submission of Dispute to Arbitration

A submission is an agreement between two
contracting parties to take decision from a third
mutually-agreed party, to whom they refer the
dispute. The arbitration presupposes that the
arbitrator must accept the office of arbitrator to
perfect his appointment.

Aim of Arbitration
Civil litigation takes years and years to settle simple
disputes. Arbitration is a means devised to quick and
economical settlement of a dispute between two
contracting parties, who also agree as part of the
main agreement to refer dispute or difference
arising out of or touching upon the terms and
conditions of the agreement to a third person to give
his judgement, which shall be binding on both the
parties. Where the decision of a person is binding on
only one of the parties and not on all the parties to
the dispute, it cannot be said that the function,
which the person giving the decision is exercising, is
arbitral in character.

Methods of Arbitration

The parties to the dispute will enter into an

agreement to refer the dispute to arbitration and will
agree on the terms of reference, that is, to state
clearly and precisely the matter the arbitrator is
required to decide. An arbitrator is not bound by the
strict rules of evidence of courts of law. However, he
does follow the practice of presentation and conduct
of a case in a court of law. Most of the evidence is in
writing. The party adducing evidence has to be
present before the arbitrator so that he may be
cross-examined on his written evidence. After
hearing the evidence of both the parties, the
arbitrator makes his award. The award must be
within the terms of reference.
It is for the arbitral Tribunal to lay down its own
procedure during the arbitration proceedings. The
law should however, be fair and reasonable. The
tribunal may decide to ask the parties to adduce
evidence by way of affidavits. In that case it would
be fair and just to allow cross-examination of the
witness whose affidavit has been filed.

Requisites of an Award
The general requisites of an award are:
(a) it must be consistent with the submission; (b) it
must be certain;
(c) it must be fair to the parties;
(d) it must be final;
(e) its implementation must be possible.

Reference to Arbitration Clause

Section 7 defines an Arbitration Agreement wherein
parties agree to submit all/any of disputes whether
contractual or not in a written format for purposes of
evidence, in same or separate Agreement intended
to apply to main contract.
Section 8 states reference to Arbitration by a
Judicial Authority before which matter is brought that
is originally covered under Arbitration. Either Party
to the Arbitration Agreement or claiming under him,
upto submission of 1st statement on substance of
dispute proves existence of a valid Arbitration
Agreement.
Judicial Authority on being satisfied of such presence
of Agreement on same subject is bound to send the
other party for Arbitration.
Arbitration may be initiated, continue and Award
passed even while such application is pending
before Judicial Authority.
It is to be noted that the language of Section 8 is
mandatory after fulfilling conditions prescribed.
Section 8 of the Arbitration and Conciliation
Act, 1996 deals with the power of the judicial
authority to refer the parties to arbitration. The crux
of the provision is that if there is an arbitration
agreement between the parties and a dispute arises
between the parties which is a subject matter of
arbitration.

Then the judicial authority before whom either of the

parties has brought the case is obligated under
Section 8 of the Arbitration and Conciliation Act,
1996 to direct the parties to resolve their dispute
through arbitration. To amplify the scope of
arbitration, the 2015 Amendment to Section 8 of the
said Act mandates the judicial authority to refer the
parties to arbitration irrespective of any decree/court
order/judgment. This section is based on Section 34
of the erstwhile Arbitration Act, 1940.
Grounds for rejection of the application under
Section 8 of Arbitration and Conciliation Act, 1996
Apart from the unfulfillment of the condition
precedent required under Section 8, the
judicial authority can reject the application on
the following grounds:
· When it appears that the party has waived his
right to invoke the arbitration clause before
 submission of the first statement on the
substance of the dispute
· When the Judicial authority is of the view that no
adequate relief would be available to the party.
· When the Court or the Judicial authority is
satisfied that no contract has been concluded
between the parties.
· When the contract itself is fraudulent in nature.
· When the main contract is void ab initio or illegal
or non-existent.
· Where the suits or claim is based on Hundies or
on Negotiable Instruments

Essential ingredients of Section 8 of

Arbitration and Conciliation Act,1996
By the plain reading of the Section, it can be inferred
that the following are the essential ingredients of it:
173. There should be a valid arbitration
agreement between the parties.
174. Action should be brought before the judicial
authority and that action should be a subject
matter of the arbitration.
175. Either of the parties or any person related to
the dispute should invoke the arbitration clause
or agreement before the date of submitting their
first statement on the substance of the dispute
before the judicial authority.
176. The application of the party to refer the case
to arbitration should be filed with the original
arbitration agreement or its duly certified copy.

Valid arbitration agreement between parties

Section 7(1) of the Arbitration and Conciliation Act,
1996 defines an arbitration agreement as an
agreement through which parties can resolve their
dispute which has arisen or may arise, by way of
arbitration.

Essentials for the Arbitration agreement:

According to Section 7(2) of the Arbitration and
Conciliation Act, 1996, an arbitration agreement can
be in the following forms:
As an arbitration clause in the agreement or
In a form of a separate agreement.
The arbitration agreement should be in writing
[Section 7(3)]
In a contract where there's a reference to a
document that contains the arbitration clause will be
regarded as an arbitration agreement only if the
contract is in writing.
Case Laws on Section 7
19. In M.R. Engineers and Contractors Pvt. Ltd.
v. Som Datt Builders Ltd, a general reference
in a sub-contract between contractor and a sub-
contractor to an Arbitration Clause incorporated
by reference in a main contract between
contractor and PWD was not allowed since
reference to Arbitration shall always be in
precisely unequivocal terms, unless it is some sort
of Standard Form of Contract whose terms are
generally understood by members of Trade or any
Regulatory Institution and hence a general
reference shall also suffice.
20. Inox Wind Limited v. Thermocables Limited
further added a wide scope to earlier mentioned
standard clause exception, when it held that even
if 1 party which need not be a Trade or Regulatory
Institution, using Standard Form of Contract,
 forming part of a single contract shall suffice for a
general reference to Arbitration. It diluted prudent
classification that members of Trade or Regulatory
Body are aware of standard terms which might
not be the case for any other ordinary individual.
Hence binding any person who might not be
aware of standard terms by general reference to
any Organization’s Standard Reference altogether
has a different impact.
21. Subsequent Cases upholding the MR Engineers
Case but reflecting subtle differences wherein an
unsigned Bill of Lading mandating Arbitration
under its Standard Printed Terms was made
binding on parties. Contrasting viewpoints
highlighted when a Draft Agreement mentioning
Arbitration are attached at time of inviting bids
and thereafter focus is on Acceptance /Approval
Letter issuance to make it a binding contract , in
order to make Arbitration compulsory.
Exceptions
1. A. AYYASAMY v A. PARAMASIVAM creating
exceptions for forgery and fabrication adversely
impacting the very soul of main contract so as to
render Arbitration inoperable along with main
contract. A Test of cutting through internal
contract and being unconnected to public morality
was laid down to objectively determine whether
fraud be resolved by Arbitration.
2. In a recent Ameet Lalchand judgment, Delhi
High Court, relying on Ayyasmay and Sukanya
Holding case proclaimed that mere fraudulent
allegations without advancing substantial
evidence, not be a sole criterion to reject
Arbitration initiation Application since Business
 Efficiency is of paramount significance and not to
be compromised.
3. Another exception is not to divide subject if
different parties are involved and dispute partly
not covered under Arbitration, in order to avoid
invocation against 3rd party, altogether not refer
to Arbitration.
Apart from this, principles of Estoppel, Waiver and
Acquiescence are applicable to a party seeking
reference of a matter to arbitration, in order to avoid
probable abuse of process

Scope of reference to arbitration

(Competence-Competence Principle) Section
16
In order to make Arbitration efficacious, next most
significant principle in line with severability of
Arbitration Clause is “KOMPETENZ-KOMPETENZ”
Principle. For the purposes of restricting unhindered
Court intervention, Arbitral Tribunal is given ample
Authority to decide whether it has jurisdiction to
preside over a particular matter or not. It has been
propounded to prevent abuse by the other party who
would like to surpass or delay valid Arbitration
Agreement by approaching Courts.
ARTICLE 16 of UNCITRAL Model Law and several
other International Arbitration Rules purport this
Principle but its applicability hasn’t been uniform
and has considerably varied across Nations
particularly on the dimension of Court reviewing the
validity of Jurisdiction after Arbitral Tribunal has
heard the objections.
In India, there was no competence provision in 1940
Act but the 1996 Act did provide for same,
exclusively barring Court determination or
supervision at the outset. Specific time limit till
submission of defence statement for questioning the
jurisdiction has been provided, unless otherwise
justified.
There are possibly 3 Dimensions attached to
Arbitration:
a) covered under Arbitration Agreement,
b) capable of being adjudicated via Arbitration,
c) parties actually submitting dispute to Arbitration.
A fine dichotomy among myriad private rights been
construed by Legislators for not engaging morality,
public policy concepts in Arbitration. Therefore apart
from Criminal Matters, Divorce, Guardianship,
Restitution, Insolvency, Winding Up, Trusts,
Testaments are kept outside the domain of
Arbitration.
The Arbitral Tribunal concluding that it has the
jurisdiction and continues with the proceedings and
passes the Award, the party aggrieved may
challenge such Award under SECTION 34. However
in any case, no Appeal or challenge in any manner
lies against such rejection of non jurisdiction
application. On the contrary, if Arbitral Tribunal does
accept its lack of jurisdiction pertaining to the
subject of dispute, such order can be directly
appealed under SECTION 37(2). Different rulings
have persisted on the issue of deciding such
jurisdiction challenge as preliminary issue or a part
of final award, preference being given to decide as
preliminary. Yet there is no binding statutory rule so
as to decide jurisdiction issue at the preliminary
stage itself since it being sole discretion of Arbitral
Tribunal. Another debate is of defining jurisdiction
under the Act and construing Limitation as part of
Interim or Final Award.

Case laws on Section 16

1. In BHADRA PRODUCTS CASE, a narrow
interpretation to jurisdiction by bringing limited
aspects such as validity within ambit of SECTION
16. It also held that limitation decision being an
Interim Award by misconstruing pointers of an
Interim Award. It has been severely criticized for
its erroneous reliance on the English Arbitration
Act and outrightly deviating from Indian
precedents on the issue.
2. In another case, the limitation determination
stance was reiterated to be the decision of the
Arbitrator. Chief Justice or his Designate
appointing an Arbitrator or deciding the
Composition of the Tribunal under SECTION
11Application, if in contravention of The Act or
inappropriate in any other sense, be objected and
heard before Tribunal itself. This Case overruled
previous SBP AND CO. v PATEL ENGINEERING
LTDstance that SECTION 16 cannot bypass a
Judicial Order which was made prior its
constitution under SECTION 11. Also owing to
severability of Arbitration Clause from main
contract; mandate not terminates if main contract
declared void, as it earlier used to be.
Specimen of Arbitration Agreement to Refer the
Dispute to two Arbitrators
This agreement made and entered into between
Mr............................... and Mr.................. on
this ................. day of (month) and (year) witnesseth
as follows:
WHEREAS differences and disputes have arisen
between the parties above-mentioned regarding the
matter of ................. and the parties could not
mutually settle the matter. Now the parties agree
that the matter as under be referred to arbitration to
obtain an award:
3. For the purpose of final determination of the
dispute, the matter will be referred to
Mr............................. nominated by one party
and Mr. ................................... nominated by the
other party as arbitrators and their award shall
be final and binding on both the parties.
4. If differences should arise between the said two
arbitrators on the questions referred to them,
the said arbitrators shall select an umpire and
the award to be given by the umpire shall be
final and both the parties hereby agree that the
award so given by the umpire or arbitrators shall
be binding on both the parties.
5. A reasonable time-limit may be fixed after
consulting the arbitrators for the grant of the
 award by them and umpire if appointed and the
said time may be extended in consultation with
the arbitrators or umpire if need be.
6. The provisions of the Arbitration and Conciliation
Act,1996 so far as applicable and as are not in \
consistent or repugnant to the purposes of this
reference shall apply to this reference to
arbitration.
7. Both the parties agree that they would co-
operate and lead evidence etc. with the
arbitrators so appointed as expeditiously as
possible and it is an express condition of this
agreement, that if any of the parties non-co-
operates or is absent at the reference, the
arbitrators would be at liberty to proceed with
the reference ex parte.
8. The parties hereto agree that this reference to
arbitration would not be revoked either by death
of either party or any other cause.
9. If the arbitrators or anyone of them as chosen
under this agreement become incapacitated
either by death or sickness or other disability,
the parties retain the right of nominating
substitutes and no fresh agreement therefor
would be necessary.
10. It is an express stipulation that any award
passed by the said arbitrators shall be binding
 on the parties, their heirs, executors and legal
representatives.
Having agreed to the above by both the parties, the
said parties affix their signatures to this agreement
this............................... day of (month and year) at
(place).
Signature I
Signature II

Specimen of Arbitration Agreement to Refer

the Dispute to a Common Arbitrator
THIS AGREEMENT is made at ........... this............. day
of ............ between Mr. X .......... of ........... residing
at ...................... hereinafter referred to as the Party
of the First Part and Mr. Y ................. of.....................
residing at .............................. hereinafter referred
to as the Party of the Second Part.
WHEREAS by an Agreement (Building contract)
dated........ 2007 entered into between the parties
hereto, the Party of the First Part entrusted the work
of constructing a building on his plot of land situated
at.......... to the Party of the Second Part on the terms
and conditions therein mentioned.
AND WHEREAS the Party of the Second Part has
commenced the construction of the building
according to the plans sanctioned by the.........
Municipal Corporation and has completed the
construction to the extent of the 1st floor level.
AND WHEREAS the Party of First Part has made
certain payments to the Party of the Second Part on
account but the Party of the Second Part is pressing
for more payments which according to the Party of
the First Part he is not bound to pay and, therefore
the work has come to a standstill.
AND WHEREAS disputes have therefore arisen
between the parties hereto regarding the
interpretation of certain provisions of the said
agreement and also regarding the quality of
construction and delay in the work.
AND WHEREAS the said agreement provides that in
the event of any dispute or difference arising
between the parties the same shall be referred to
arbitration of a common arbitrator if agreed upon or
otherwise to two Arbitrators and the Arbitration shall
be governed by the provisions of the Arbitration &
Conciliation Act, 1996.
AND WHEREAS the parties have agreed to refer all
the disputes regarding the said contract to
Mr. ........... Architect, as common Arbitrator and
have proposed to enter into this Agreement for
reference of the disputes to the sole arbitration of
the said Mr..................
NOW IT IS AGREED BETWEEN THE PARTIES HERETO
AS FOLLOWS:
• That the following points of dispute arising out of
the said agreement dated…are hereby referred to
the sole arbitration of the said Mr............ for his
decision and award.
The points of dispute are:
1. (a) Whether the Party of the Second Part has
carried out the work according to the
sanctioned plans and specifications.
2. (b) Whether the Party of the Second Part has
delayed the construction.
3. (c) Whether the Party of the Second Part is
overpaid for the work done up to now.
4. (d) Whether Party of the First Part is bound to
make any further payment over and above
the payments made up to now for the work
actually done.
5. (e) All other claims of one party against the
other party arising out of the said contract up
to now.
• The said Arbitrator shall allow the parties to file
their respective claims and contentions and to file
documents relied upon by them within such
reasonable time as the Arbitrator may direct.
 • The said Arbitrator shall give hearing to the
parties either personally or through their
respective Advocates but the Arbitrator will not be
bound to take any oral evidence including cross
examination of any party or person.
4. The said Arbitrator shall make his Award within a
period of four months from the date of service of
a copy of this agreement on him by any of the
parties hereto provided that, the Arbitrator will
have power to extend the said period from time
to time with the consent of both the parties.
5. The Arbitrator will not make any interim award.
6. The award given by the Arbitrator will be binding
on the parties hereto.
7. The Arbitrator will have full power to award or
not to award payment of such costs of and
incidental to this arbitration by one party to the
other as he may think fit.
8. The Arbitration shall be governed by the
provisions of the Arbitration & Conciliation Act,
1996.
IN WITNESS WHEREOF the parties herein under have
set their hands the day and year hereinabove
mentioned.
Signed by the within named
Signed by the within named
Mr. X..... in the presence of
Mr. Y..... in the presence of

Specimen of Arbitration Agreement to Refer

the Dispute to two Arbitrators
This agreement made and entered into between
Mr............................... and Mr............................... on
this............................... day of (month) and (year)
witnesseth as follows:
WHEREAS differences and disputes have arisen
between the parties above-mentioned regarding the
matter of............................... and the parties could
not mutually settle the matter. Now the parties
agree that the matter as under be referred to
arbitration to obtain an award:
1. For the purpose of final determination of the
dispute, the matter will be referred to
Mr.................................................. nominated by one
party and Mr.................................................
nominated by the other party as arbitrators and their
award shall be final and binding on both the parties.
2. If differences should arise between the said two
arbitrators on the questions referred to them, the
said arbitrators shall select an umpire and the award
to be given by the umpire shall be final and both the
parties hereby agree that the award so given by the
umpire or arbitrators shall be binding on both the
parties.
3. A reasonable time-limit may be fixed after
consulting the arbitrators for the grant of the award
by them and umpire if appointed and the said time
may be extended in consultation with the arbitrators
or umpire if need be.
4. The provisions of the Arbitration and Conciliation
Act, 1996 so far as applicable and as are not
inconsistent or repugnant to the purposes of this
reference shall apply to this reference to arbitration.
5. Both the parties agree that they would co-operate
and lead evidence etc. with the arbitrators so
appointed as expeditiously as possible and it is an
express condition of this agreement, that if any of
the parties non-co-operates or is absent at the
reference, the arbitrators would be at liberty to
proceed with the reference ex parte.
6. The parties hereto agree that this reference to
arbitration would not be revoked either by death of
either party or any other cause.
7. If the arbitrators or anyone of them as chosen
under this agreement become incapacitated either
by death or sickness or other disability, the parties
retain the right of nominating substitutes and no
fresh agreement therefor would be necessary.
8. It is an express stipulation that any award passed
by the said arbitrators shall be binding on the
parties, their heirs, executors and legal
representatives.
Having agreed to the above by both the parties, the
said parties affix their signatures to this agreement
this............................... day of (month and year) at
(place).
Signature I
Signature II

FORM OF AGREEMENT FOR REFERENCE TO

THREE ARBITRATORS
This deed of agreement made on this _________,
2000 between:
o Shri PL, aged about ___ years s/o Shri SS r/o
___________________, Delhi, hereinafter called
the 1st party.
o Shri KL, aged about ___ years s/o Shri SS r/o
_________________, hereinafter called the
2nd party.
 o Shri CL, aged about ___ years s/o Shri SS r/o
_____________, hereinafter called the
3rd party.
Whereas the above parties are carrying on business
of general
merchandise in partnership under name and style
M/s. __________________, at _______________ since
________, 2000.
And whereas share profit or loss in the firm is :
1st party 50%, 2nd party 30% and 3rd party 20%.
And whereas all the three parties are active partners
in the partnership business.
And whereas some disputes have arisen among the
parties above named and it has become impossible
to carry on business under partnership
And whereas the parties hereto have agreed to refer
the matter to the arbitration mentioned here under :
o Mr. PK s/o Mr. KP, r/o _________________ .
o Mr. PK s/o Mr. RP, r/o __________________, and
o Mr. SK, s/o Mr. JN r/o ___________________.
NOW THIS AGREEMENT WITNESSES AS UNDER:
o The arbitrators are entitled to decide and
determine the following matter of disputes,
which are referred to them for final
determination and award.
o To determine the position of assets and
liabilities of the firm.
o To prepare the list of sundry debtors and
creditors
o To divide the assets and liabilities according
to the share of the parties.
o That the arbitrators shall enter upon the
reference with effect from ___________ and
shall deliver their award within 4 months.
o That the award given by the arbitrators shall
be final and binding on the arbitrators.
o That the award of the arbitrators shall be
final and binding on heirs, legal
representatives and assignees of the parties
in case of death of any of the party during
the course of arbitration proceedings.
o That Mr. RN, the 1st arbitrator shall be the
President of the arbitration tribunal who will
arrange the sitting for arbitration
proceedings.
o In case of difference of opinion between the
arbitrators , the decision of the majority shall
be final.
o The arbitrators shall fix up the date of
hearing and issue notices to the parties for
appearance.
o That if the parties do not turn up on the date
fixed for hearing, the arbitration will proceed
ex-parte.
o That this agreement shall be binding on the
legal representatives, heirs, and assignees in
case of death of any of the parties.
o If the arbitrators think it proper, they shall
appoint an accountant for preparation and
finalisation of accounts on fixed
remuneration and shall include the
 remuneration in the cost of arbitration
award.
o If the arbitrators award that any sum is due
against any party, then that party may file a
suit in the proper Court and obtain a decree
in terms of award and shall realize the same
from the party against whom the sum is due.
o That save the matter provided in this deed,
the provision of the Indian Arbitration &
Conciliation Act, 1996 shall apply to this
reference.
o That it shall be the discretion of the
arbitrators to fix the cost of reference.
The above named parties do hereby agree to all the
terms and conditions stated above without any
duress, or undue influence and after fully
understanding the terms of this deed of arbitration,
do hereby put our hands on this ___________, 2000, in
the presence of following witnesses:
Signature
Name 1st party
Addressï…..
. 2nd party
3rd party
Signature
Name
Address
Conclusion
Arbitration Regime indeed is an efficacious
mechanism saving time, costs and speedy resolution
can be made which unlike in Courts. Arbitration Act
did make a laudable attempt to develop itself as an
attractive hub of International Arbitrations, but still
scope of improvement remains. Reference was
introduced for unambiguous intent of parties to opt
Arbitration. Yet it faces the daunting task of
overcoming several other hurdles.
UK Arbitration Law can be looked at for countering
some drawbacks. First and foremost, chain of
precedents should be understood in a clear logical
context in order to avoid any insensible deviations
which create further complexities for the subsequent
disputes, along with wastage of time and resources.
Confidentiality in certain matters to be provided as
not everything can be put on display for sake of
transparency but prejudicial to interest of either
party. Administrative Assistance shall be within clear
contours so as to avoid possibility of unauthorized
delegation despite with the consent of parties; the
Arbitral Secretary may lack the requisite skill or
expertise to preside over the matter. Certain
Privileges can be granted to Arbitrator while in his
official capacity.
Judicial Intervention was carefully restricted so as to
promote Arbitration and Competence and
Severability principle supplemented this objective to
provide Tribunal required Authority to serve
underlying purpose. Such small lacunas, if covered
up shall strengthen the procedural and substantive
aspects, so as to make Arbitration successful in true
sense, to deal with novel complicated facts and
ensure active participation of the parties who
themselves decide the outcome or settlement rather
than leaving it to any 3rd party as would have been
in litigation.
NOTICE TO TENANT

Notice to Quit Premises Held by Monthly

Tenancy by Landlord to Tenant
Dear Sir,
Under instructions from any client A. B. of etc., your
‘landlord, you notice to quit deliver to him on the
16th day after expiry of 15 full days from the date of
receipt of this notice by you and handover
possession of (description of premises) situate
at.......... held by you of him as a monthly tenant.
Dated the .............. day of ................. 20 ………
Signed
Advocate For
To
(Name and address of Tenant)

Notice of determination of a tenancy-at-will on

behalf of the landlord
To
The ......................
.............................
Dear Sir,
(Under section 106 of T.P. Act, 1882).
Dated ................ The ............20....
Under instructions from my client ............ (name,
description and address) I call upon you to deliver up
possession of the premises, detailed below, within
30 days hereof which you now hold of my client as a
tenant.
2. In default of your compliance your occupation of
the premises, after the period allowed hereinabove,
will be wrongful and an act of trespass and you will
be liable to pay damages to my client at the rate of
Rs...............per each day of your wrongful
occupation of the same till you are ejected
therefrom and that my client will sue you for your
eviction and for recovery of damages.
3. A copy of this notice is being kept in my office for
future use, if necessary. Schedule of premises.

Yours faithfully
Notice by Tenant to His Landlord to Determine
the Tenancy
Dear Sir,
Under instructions from my client A. B. of etc., your
tenant, I hereby give you notice that in pursuance of
a power contained in the lease dated................. day
of ................. made between you of the one part and
the said A. B. of the other part, it is his intention to
determine the said lease with the expiry of the 15th
day from the date of receipt of the legal notice by
you and that he shall deliver up to you the
possession therein comprised on the next day after
such 15th day.
Dated..............day of...................
Signed ...................
Advocate for the said A.B.
(C.D. landlord).
What’s the Purpose of a Legal Notice to Tenant?
A legal notice to tenant to vacate serves as a formal
communication between the landlord and tenant,
outlining the reasons for eviction and the time frame
within which the tenant must vacate the property.
This is essential to ensure both parties are aware of
their rights and responsibilities, and that the process
remains legally compliant.
Legal Notice Format to Tenant to Vacate
While drafting a legal notice to tenant to vacate,
ensure it includes the following:
9. Tenant’s name and address
10. Landlord’s name and address
11. Date of the notice
12. Reason for eviction
13. The period given to vacate the property
14. Rent arrears or damage, if applicable
15. Landlord’s signature

Section 106 of the Transfer of Property Act

What is the Notice to Tenant under Section 106?
Section 106 of the Transfer of Property Act, 1882,
provides guidelines for terminating a lease. It states
that a lease can be terminated by either party by
serving a written notice at least 15 days before the
end of the month for monthly tenancies, or six
months before the end of the year for yearly
tenancies.

What is an eviction?
The period eviction refers back to the civil system
via means of which a landlord can also additionally
legally cast off a tenant from their condo assets.
Eviction can also additionally arise whilst the tenant
stops paying lease, whilst the phrases of the condo
settlement are breached, or indifferent conditions
accredited via way of means of law.
What is an eviction notice?
An eviction notice is a letter dispatched with the aid
of a landlord to a tenant to tell them that they ought
to restore sure trouble or vacate the assets inside a
sure variety of days.
In a few instances, the owner can also additionally
accept as true that the hassle isn’t fixable and ship
what’s called an incurable eviction be aware. In this
case, the tenant has no desire however to vacate
the assets inside a sure variety of days.

When to send an eviction notice?

 84. Rent not paid: A landlord can evict a
person for non-payment or delay of a month or
two depending on how long the tenant has been
living in the property.
85. Subletting: A landlord can evict a person
when he rented his property for one person and
the tenant added two more tenants and started
taking rent would be a serious reason for filing
an eviction notice.
86. Damaging the property: If the tenant has
seriously damaged the property and is unwilling
to pay for the damages, the landlord may evict
them.
87. Self–use: If the owner needs the premises
for his purpose or the purpose of his family
members.
88. Commercial use: If the owner needs the
premises to run the business using their own
property he may send an eviction notice.

Can a Pagdi Tenant be Evicted?

Eviction of Pagdi Tenants
Yes, Pagdi tenants can be evicted, but only under
specific circumstances. The Maharashtra Rent
Control Act, 1999, governs Pagdi tenancies, which
are predominantly found in Mumbai. Eviction is
possible if the tenant has failed to pay rent, caused
substantial damage, or violated any terms of the
lease agreement.
Eviction Timelines in India
How Long Does it Take to Evict a Tenant in India?
The eviction process in India can vary depending on
factors like the nature of the tenancy, grounds for
eviction, and the court’s workload. Typically, it can
take anywhere from a few months to a couple of
years to evict a tenant.
Notice Periods in India
What is the Notice Period for Rental Agreements in
India?
The notice period for rental agreements in India is
generally specified in the lease agreement. In the
absence of a specific period, the default notice
periods as per Section 106 of the Transfer of
Property Act apply.
Do We Need to Pay Rent During the Notice Period?
Yes, tenants are required to pay rent during the
notice period unless the landlord waives this
requirement.
How Many Days’ Notice Period is Required?
The notice period depends on the terms of the lease
agreement and the applicable laws. Generally, a 15-
day notice is required for monthly tenancies and a
six-month notice for yearly tenancies.
Legality of Notice Periods in India
Is 90 Days’ Notice Period Legal in India?
Yes, a 90-day notice period is legal in India if it’s
agreed upon in the agreement between the landlord
and tenant. However, it’s essential to ensure that
the notice period is clearly specified and adhered to
by both parties.
What Happens if I Don’t Pay the Notice Period?
If a tenant fails to pay rent during the notice period,
the landlord has the right to take legal action, which
may include eviction proceedings or seeking
compensation for the unpaid rent. It’s crucial for
tenants to abide by the terms of the lease
agreement to avoid legal complications.
Is a Notice Period of 3 Months Legal?
Yes, a notice period of 3 months is legal if it has
been mutually agreed upon by both the landlord and
tenant in the lease agreement. As long as the
specified notice period doesn’t conflict with any
applicable laws, it remains legally binding.
Can a tenant be evicted without a legal notice
in India?
No, a tenant cannot be evicted without a legal
notice. A proper eviction process must be followed,
which includes serving a legal notice to the tenant,
providing them with an adequate notice period, and
obtaining a court order if necessary.
What if a tenant refuses to vacate after
receiving a legal notice?
If a tenant refuses to vacate the property after
receiving a legal notice, the landlord can initiate
eviction proceedings in court. The court will examine
the merits of the case and issue a judgment
accordingly.
Can a landlord change the terms of the lease
agreement during the notice period?
No, a landlord cannot unilaterally change the terms
of the lease agreement during the notice period. Any
changes to the agreement must be mutually agreed
upon by both parties.
What if the tenant has already vacated the property
but not paid the rent during the notice period?
In such cases, the landlord may pursue legal action
against the tenant for recovery of the unpaid rent.
Can a tenant challenge the legality of a notice
period in court?
Yes, a tenant can challenge the legality of a notice
period in court if they believe it violates applicable
laws or the terms of the lease agreement.
Are there any exceptions to the notice period
requirements?
In some cases, such as when a tenant engages in
illegal activities on the property, the landlord may be
able to pursue immediate eviction without providing
a notice period. It’s essential to consult with a legal
expert in such situations.

Understanding the Legal Landscape

1. Applicable Laws and Sections:
In India, the relationship between landlords and
tenants is primarily regulated by the Rent Control
Acts and other relevant local/state laws. For
instance, the Delhi Rent Control Act, 1958, and the
Maharashtra Rent Control Act, 1999, outline the
legalities of tenancy in these respective states.
2. Legal Grounds for Termination:
Under these acts, landlords can terminate a tenancy
based on legitimate grounds such as non-payment
of rent, violation of lease terms, or any other
substantial breach. Each state’s Rent Control Act
provides a list of legally acceptable reasons for
termination.

Facing eviction challenges? Consult with our legal

experts for precise guidance on serving a notice to
quit.

Rent Control Acts in India

These sections are illustrative and may not
correspond to specific sections in any particular
state’s Rent Control Act. It is essential to refer to the
relevant Rent Control Act applicable in your state for
accurate legal sections and provisions. Each state’s
legislation may vary in its specifics, and compliance
with the applicable act is crucial for both landlords
and tenants.
1. Grounds for Eviction:
Section X: Specifies the grounds on which a landlord
can seek eviction. Common grounds include non-
payment of rent, subletting without consent,
unauthorized use, and breach of terms.
2. Notice Period for Termination:
Section Y: Prescribes the notice period required for
the landlord to terminate the tenancy. This section
outlines the duration of the notice based on the
grounds for eviction.
3. Rent Revision and Fair Rent:
Section Z: Deals with the procedure for revising rent
and establishes the concept of fair rent. It may
include provisions for applications by landlords or
tenants for rent revision.
4. Rights and Responsibilities of Landlords and
Tenants:
Section W: Specifies the rights and responsibilities of
both landlords and tenants. This includes obligations
related to maintenance, repairs, and compliance
with lease terms.
5. Procedure for Rent Control Courts:
Section P: Outlines the procedure for filing
applications and disputes before the Rent Control
Courts. It covers the process for hearings, evidence,
and orders.
6. Protection from Arbitrary Eviction:
Section Q: Protects tenants from arbitrary eviction
and ensures due process. It may include provisions
for the landlord to prove genuine reasons for seeking
eviction.
7. Control on Rent Increase:
Section R: Regulates the rent increase to prevent
arbitrary hikes. It may prescribe limits on the
percentage or frequency of rent increases.
8. Tenant’s Right to Security of Tenure:
Section S: Ensures security of tenure for tenants,
preventing unjust evictions without valid reasons. It
may specify conditions under which a landlord can
seek possession.

Legal Implications and Tenant Rights

1. Right to Contest:
Tenants have the right to contest the notice if they
believe it is unjust or legally unfounded. The notice
should also mention the tenant’s right to respond
within a specified timeframe.
2. Eviction Procedures:
If the tenant fails to comply with the notice, the
landlord can initiate eviction proceedings as per the
relevant laws. The eviction process varies by state,
and landlords must adhere to the prescribed legal
procedures.
3. Security Deposit Handling:
The notice should clarify the terms for the return of
the security deposit, including any deductions for
damages beyond normal wear and tear.

Rights of a Landlord
Some of the rights of the landlord include:
· Right to Receive Rent: A landlord has the
right to receive rent from the tenant on time as
per the rental agreement.
· Right to Enter the Property: A landlord has
the right to enter the rental property for
inspection or repair work, with prior notice to the
tenant as per the rental agreement or state
laws.
· Right to Evict: A landlord has the right to start
eviction procedures and demand ownership of
the renting property if a renter breaches the
terms of the lease or pays the rent late.
· Right to Deduct Unpaid Rent from Security
Deposit: If a tenant fails to pay rent, a landlord
has the right to deduct the unpaid rent from the
security deposit at the time of move-out
· Right to Charge Late Fees: A landlord has the
right to charge late fees if a tenant fails to pay
rent on time, as per the terms of the rental
agreement.

Issuing the Notice: Step-by-Step Guide

1. Review the Lease Agreement:
Examine the lease agreement to ensure that the
termination is in line with the terms specified. If
there are clauses related to termination, incorporate
them into the notice.
2. Consultation with Legal Professionals:
Before issuing a notice, landlords should consider
consulting with legal professionals who specialize in
property law. This ensures that the notice complies
with all legal requirements.
3. Delivery of the Notice:
The notice should be delivered to the tenant through
a legally acceptable mode, such as registered post
with acknowledgement due, to provide proof of
delivery.
Important Documents Required for Legal Notice to
Vacate Tenant
1. Copy of Lease Agreement:
Including a copy of the lease agreement in the
notice establishes the legal basis for the termination.
2. Move-In Inspection Report:
This document helps assess any damages beyond
normal wear and tear at the time of the tenant’s
departure.
3. Rent Payment Records:
Maintaining a record of rent payments is crucial for
justifying the termination on grounds of non-
payment.
4. Correspondence Regarding Lease Violations:
If there were prior communications addressing lease
violations, including them provides a history of the
issue.

What is the difference between an Eviction

Notice and a Late Rent Notice?
The Landlord use the Late Rent Notice to remind a
Tenant that their rent is due and asks them to make
payment of rent prior to escalating the matter to
eviction or other serious legal action. On other hand,
the Eviction Notice is used to terminate the tenancy
on certain conditions including non-payment or rent
or breach of lease deed.

Important Point to keep in mind when Drafting

Legal Notice to Evict Tenant

1. Grounds for Issuing Notice:

Landlords can issue a notice to quit based on
grounds specified in the Rent Control Act. Common
grounds include non-payment of rent, violation of
terms, subletting without consent, and personal use
of the property.

2. Correct Notice Period:

The notice period for eviction specified in the Rent
Control Act should be adhered to. The duration of
the notice may vary based on the grounds for
eviction. Ensure the notice period is correctly
calculated.
3. Proper Format of Notice:
The notice should be in writing and follow the format
prescribed by the Rent Control Act. It should include
details such as the reason for eviction, specific
violations (if any), and the date by which the tenant
must vacate.
4. Service of Notice:
The notice must be served to the tenant through a
legally recognized method. This could include
delivering it personally, sending it by registered
post, or following any other method specified in the
Rent Control Act.
5. Copy of Notice:
Keep a copy of the notice issued along with proof of
service. This documentation can be crucial if legal
proceedings become necessary.
6. Consult Legal Counsel:
If the grounds for eviction are legally complex or if
the tenant contests the notice, it’s advisable to
consult with legal counsel. A lawyer can guide the
correct legal procedures and represent the
landlord’s interests.
7. Abide by Rent Control Laws:
Ensure that the eviction process complies with the
Rent Control Act applicable in the state. Different
states may have variations in procedures and
grounds for eviction.
8. Mediation or Negotiation:
Before initiating legal proceedings, consider
exploring mediation or negotiation with the tenant.
An amicable resolution can save time and resources.
9. Record Keeping:
Maintain records related to the tenancy, including
the rent agreement, rent receipts, and any
communication with the tenant. These records can
be valuable in case of legal disputes.
10. Adhere to the Notice Period:
Landlords should not take any coercive action before
the expiry of the notice period. Adhering to the
specified notice period is crucial to avoid legal
complications.
Step-by-Step Guide to Draft a Legal Notice for
Eviction
177. Here's a detailed guide on drafting a legal
notice for eviction, broken down for your
understanding:
Step #1 - Identify the Tenant and Landlord:
178. When you start drafting your legal notice for
eviction, the first thing you need to do is to
clearly identify who the players are. This means
naming the tenant and the landlord involved in
the situation.
179. Be sure to use the full legal names of both
parties to avoid any confusion or
misunderstandings.
180. Also, don't forget to include the contact
addresses of both parties, which will ensure
everyone knows where official communications
should be sent.
Step #2 - State the Reason for Eviction:
· The next step in drafting the legal notice for
eviction is to state clearly why you're evicting
the tenant.
· This could be anything from the tenant not
paying rent, breaking the terms of the lease,
damaging the property, or any other legally valid
reason.
· Remember, it's not just a good idea, but a legal
requirement to explicitly mention the reason for
eviction
Step #3 - Specify the Notice Period:
 · When you're in the process of drafting your legal
notice for eviction, it's crucial to include when
the tenant is expected to leave the property.
· The notice period should be in compliance with
local laws and the terms of the lease agreement
you've previously signed with the tenant.

Step #4 - Include Details about Rent Payment or

Breach of Lease:
· If you're evicting the tenant because of unpaid
rent or a breach of the lease terms, you must
state this specifically in the eviction notice.
· Include details like how much rent is due, when
it was supposed to be paid, or which clause in
the lease has been violated.

An Overview of Section 8- Demand Notice

The Insolvency and Bankruptcy Code of 2016

provides for the demand of an unpaid debt from a
corporate debtor. The corporate debtor is given a
chance to settle any outstanding debts before the
insolvency proceedings commence. A notice is sent
by the operational creditor to the corporate debtor
as provided in Section 8 of the Insolvency and
Bankruptcy Code of 2016, or IBC, for this very
reason. The creditor can send a claim notice under
Section 8 to the corporate debtor along with invoices
from unpaid operational and financial debts. The
corporate debtor is required to reply before the
expiry of ten days from the receipt of the notice,
failing which a petition for insolvency and liquidation
shall be filed.
Insolvency and Bankruptcy Code allows the creditor
to file insolvency proceedings against a defaulting
debtor after establishing that a dispute exists
between the parties. This is done by sending a
demand notice to the corporate debtor from the
operational creditor for the recovery of unpaid
operational debt. The demand notice is to be sent
under Form 3 of the Insolvency and Bankruptcy
Code. Form 3 is an invoice sent to the corporate
debtor demanding payment for the unpaid
operational debt to the creditor. The notice shall
contain details like, among other things, the total
amount of debt, further information pertaining to the
transaction, the date from which the debt accrued,
amount claimed.

Demand Notice
A demand notice is defined under the explanation
for Section 8 of IBC, 2016 as a notice which has been
served by the operational creditor to the corporate
debtor in order to demand payment of the unpaid
operational debt pertaining to which a default has
occurred. Demand notice also provides a deadline of
10 days for the corporate debtor to pay the amount
of the operational debt. A copy of the demand
notice, which has been sent to the corporate debtor,
shall also be sent to the concerned adjudicating
authority.

Section 8 of the Insolvency & Bankruptcy Code

of 2016
The corporate debtor is required to inform the
operational creditor by way of notice of the
existence of any dispute or record of the pendency
of any suit or arbitration proceedings in relation to
the conflict, which was filed before the receipt of the
notice or the invoice in relation to the dispute or the
payment of an unpaid operational debt. The
corporate debtor can also bring to the notice of the
operational creditor of the payment of the
outstanding operational debt either by sending an
attested copy of the record showing proof of
electronic transfer of the amount from the corporate
debtor's bank account or by sending a certified copy
of a record that the operational creditor has
encashed the cheque sent by the corporate debtor.
The notice to the operational creditor mentioned
here is required to be sent within ten days of the
receipt of the demand notice. If the operational
creditor has not obtained the notice of the dispute
within the period as mentioned above of 10 days or
the payment has not been made, the operational
creditor has the right to initiate insolvency
proceedings by filing the application. The application
shall be filed as per Form 5 at the relevant bench of
the Hon’ble National Company Law Tribunal with
jurisdiction over the registered office of the
corporate debtor. The operational creditor is
required to appoint a resolution professional to act
on her behalf, and the adjudicating authority shall
either reject the application or admit it within 14
days from the date of receipt of the notice. It is also
mandated that the insolvency proceedings be
completed before the expiry of 180 days from the
date on which the application was admitted. After
the expiry of 180 days, the resolution professional
has the option to file an application to extend the
aforementioned. Any appeal from the National
Company Law Tribunal will lie to the National
Company Law Appellate Tribunal before the expiry
of 30 days from the date of passing of the order or
decree.

Who is an Operational Creditor?

The term “operational creditor” is defined under
Section 5(20) of the Insolvency & Bankruptcy Code
of 2016 as someone to whom an operational debt is
owed by a corporate debtor and includes any
individual to whom a debt has been assigned or
transferred legally.
The term “operational debt” is defined under Section
5(21) of the Insolvency & Bankruptcy Code of 2016
as “ claim in respect of the provision of goods and
services including employment what are that
respected the payment of dues arising country any
law the time being in force impeccable the central
government or any state government or a local
authority”.
Operational creditors can be persons who have
supplied goods and rendered services and are
entitled to payment or employees who have
rendered services for which they are entitled to
payment or central government, state government
or any local authority which has not yielded any
benefits but is entitled to statutory dues. Statutory
dues are payable under statutes like the Goods and
Service Tax Act and shall be considered operational
debts.
This is in contrast with a financial creditor. The term
“financial creditor” is defined under Section 5(7) of
the Insolvency & Bankruptcy Code of 2016 as " any
person to whom a financial debt is owed”. The term
“financial debt” is defined under Section 5(8) of the
Insolvency & Bankruptcy Code of 2016 as " A debt
along with which interest is accrued, if any, which is
disbursed against the consideration for the time
value of money”.
A financial debt is a debt which is owed to the
financial creditor by the corporate debtor. It shall
include an amount which the corporate debtor has
borrowed against the payment of interest or an
amount which has been raised against the issue of,
among other things, bonds, stocks or liability
incurred under a hire or lease purchase contract.
Who is a Corporate Debtor?
A corporate debtor is defined under Section 3(8) of
the Insolvency and Bankruptcy Code of 2016 as any
person who owes a debt to another. A corporate
debtor can be a person, company, a limited liability
partnership owing a debt to its creditors. A corporate
debtor is liable to pay the amount of the unpaid debt
owed to financial creditors and operational creditors.
If a corporate debtor is unable to make good on the
promise to repay unpaid debt, the creditors can
initiate insolvency and liquidation proceedings under
the Insolvency & Bankruptcy Code of 2016.
Details in a Section 8 Demand Notice
The following details shall be mentioned in the
demand notice sent under Section 8, IBC, by the
operational creditor to the corporate debtor:
• The amount of unpaid operational debt
• Details about any transactions between the
parties involved by showing proof through bank
statements or receipts.
• The date from which the operation debt became
due
• The amount which is claimed by the operational
creditor
• Details pertaining to security, if any
• Incorporation certificate of a company if a
company is involved
• A list of previous defaults of the corporate debtor
• The legal provisions under which but the debt has
accrued
• Records or copies of records showing that the
operational creditor has encashed the cheque
issued by the corporate debtor, which has been
duly signed by such operational creditor, if any.
 • All Documents which support the operational
creditor's claim in the demand notice.

Documents Required to File Section 8 Demand

Notice
There are certain Documents which are necessarily
required to draft and file a demand notice as
provided under Section 8 of the Insolvency and
Bankruptcy Code of 2016. Below mentioned are the
Documents:
• Invoice pertaining to unpaid operational debt
• Information pertaining to the operational creditor
• Information pertaining to the corporate debtor
• Details pertaining to the outstanding debt that is
claimed to be in default
• Details of any security held.
• Any records obtained from the information utility
showcasing proof of default
• Any contract or Document which showcases
default in payment.

Corpbiz Support
The team of lawyers and other professionals at
Corpbiz have a proven record of aiding companies
and persons in competently drafting various legal
Documents like a demand notice under Section 8 of
the Insolvency and Bankruptcy Code of 2016.
Creditors looking to send a well-drafted demand
notice with all the relevant details and necessary
attachments to their debtors can obtain expert
assistance from Corpbiz.

Section 8: Insolvency resolution by operational

creditor.
*8. (1) J1An operational creditor may, on the
occurrence of a default, deliver a demand notice of
unpaid operational debtJ2 or copy of an invoice
demanding payment of the amount involved in the
default to the corporate debtor in such form and
manner as may be prescribed.
(2)J3 The corporate debtor shall, within a period of
ten days of the receipt of the demand notice or copy
of the invoice mentioned in sub-section (1) bring to
the notice of the operational creditor—
(a) existence of a dispute, 1[if any, or] record of the
pendency of the suit or arbitration proceedings filed
before the receipt of such notice or invoice in
relation to such dispute;
(b) the 2[payment] of unpaid operational debt—
(i) by sending an attested copy of the record of
electronic transfer of the unpaid amount from the
bank account of the corporate debtor; or
(ii) by sending an attested copy of record that the
operational creditor has encashed a cheque issued
by the corporate debtor.
Explanation.—For the purposes of this section, a
“demand notice” means a notice served by an
operational creditor to the corporate debtor
demanding 2[payment] of the operational debt in
respect of which the default has occurred.

Judicial Pronouncements:
J1. The expression “an operational creditor may on
the occurrence of a default deliver a demand
notice…..” under Section 8 of the Code must be read
as including an operational creditor’s authorized
agent and lawyer, as has been fleshed out in Forms
3 and 5 appended to the Adjudicatory Authority
Rules. [Macquarie Bank Ltd. v. Shilpi Cable
Technologies Ltd. (2017) ibclaw.in 14 SC, p38].
J2. There is printing error in Section 8(1), instead of
‘a demand notice of unpaid operational debt or copy
of an invoice’ it is printed as ‘a demand notice
of unpaid operational debtor.’ [It was also observed
in Sabarmati Gas Ltd. v. Shah Alloys Ltd. (2023)
ibclaw.in 02 SC, p18]
Notice of Suit under Section 80, CPC against a Public
Officer of a state Govt. Or Central Govt
Registered with A/D dated_____
Office of _______Advocate
Civil Court Complex
To,
1.Govt of Punjab through its Principal Secretary.
2.Secretary, Revenue Department, State of Punjab
Dated_____
Notice under Section 80 of the Code of Civil
Procedure, 1908
Sir,Under the instructions of my client A s/o ______
residing at________I here by serve upon you the
following notice for the relief and causes of action
stated herein below:
1.That has put the revenue records government of
Punjab has been recorded as owner of the land
situated at _______measuring______
2.That my client is in possession of the said land
for more than 40 years.
3.That my client has been in possession of the said
land without payment of any rent in cash or in
kind from the date my client entered into the
possession of the said land and that the
government of Punjab has never demanded any
rent in cash or in kind from my client in lieu of
such possession.
4.That the possession of my client over the above
said land is peaceful open without any
interruption actual, visible, exclusive, hostile, in
publicly and continuous for over the statutory
period of 30 years and therefore my client has
become the owner of the above said land by a
way of adverse possession.
 5.That through this notice I hereby call upon you
that you should admit my client to be the owner
in possession of the land by way of adverse
possession referred in para number 1 of the
notice within two months from the receipt of this
notice failing which my client shall be
constrained to seek the redress in the court of
competent jurisdiction and thus you shall be
liable for all the costs damages and other
consequences thereof.
Advocate
Note- A copy of the notice has been restrained in
this office for further use and reference

Replying to a Legal Notice

Receiving a legal notice is not a matter of concern;

in fact it is a matter to be dealt with utmost calm.
Replying to a legal notice is not a source of worry.

In the field of practicing law, it is common to be

drafting legal notices on a regular basis for clients. It
is just nearly as common to be drafting replies of
legal notice(s) received by the client. The reply to a
legal notice does not necessarily follow a very
different format or pattern than that of legal notices,
but it does require few additions. These additions
are focused on relaying the client’s side of the
version of events in question.

The reply to a legal notice is not as common as

drafting notices as the parties either resolve the
matter after receipt of the legal notice, or they end
up before the court of law for the resolution.
Replying to a legal notice however does become
commonplace for when the legal notice received is
not only vexatious but also threatening in nature
due to its false contents. This is often because legal
proceedings are long and expensive and these
elements alone are enough to cause worry and
distress to a layman.

So, when a layman rushes to a lawyer with the legal

notice, how is the reply to a legal notice drafted?
The format and language of the reply to a legal
notice does not change much from that of a legal
notice itself. It includes the general format of a legal
notice and incorporates some additional details and
paragraphs about the legal notice received, its
nature etc.

What is Legal Notice?

A legal notice is basically a legal intimation that is
sent to the opponent, it indicates that the aggrieved
is preparing a lawsuit to be filed against the concern,
in the case the demand that is mentioned in the
notice does not get fulfilled.
Therefore, a legal notice can be defined as a formal
communication to any legal entity or to a person,
informing the other party about the intention of
undertaking legal proceedings against them.
Legal Notice in India is considered to be the first step
in a legal proceeding.
When a legal notice is sent, it conveys the intention
prior to the legal proceedings, thus, making the
other party aware of grievance.
It is important to note that a legal notice is not sent
in criminal cases but only in civil cases under Section
80 of The Code of Civil Procedure, 1908.

The objective of Legal Notice

The basic objective of a legal notice is to display the
intention of the party to initiate the legal
proceedings. The legal notice serves the purpose of
giving an opportunity to the opposite party to
reconsider his legal position and to make
amendments or afford restitution without proceeding
to a Court of Law. It was stated by the Supreme
Court that “The object of this section is the
advancement of justice and securing of public good
by avoidance of unnecessary litigation.”
The legal notice is deemed to be served only when
the addressee receives or refuses to accept the
notice, and not by simply posting the notice. This
serves as evidence as to receipt of the notice.
Through a legal notice, one can demand from the
other party to accede to his request otherwise he
will initiate legal action.
Reply to a legal notice
The legal notice should be replied within the
stipulated time, if not replied within the stipulated
time it can prove to be beneficial to the addressee.
After receiving the notice the following points must
be kept in mind:
• Carefully reading the legal notice– It is
important to properly read the notice to
understand the issue and concerns that are raised
by the other party. If the receiver of the legal
notice feels that the concerns raised in the legal
notice could be resolved amicably then
immediately a conversation should be initiated.
• Contacting the Lawyer– If the contents of the
legal notice are not clear, then a profound lawyer
must be contacted who can further legal action in
the matter. Also, the receiver should keep a
record of the time of receiving the legal notice
which will be advantageous even if the matter is
taken to the Court by the opposite party.
• Briefing the lawyer– This step must be done
carefully, the entire matter must be escalated to
the appointed lawyer. The lawyer must be
provided with all the necessary information about
the facts, time, place, events etc that are related
to the issue, this helps the lawyer to draft a
proper reply that represents the receiver’s side of
an argument.
• Sending the reply– The reply notice is sent
either through a registered notice or courier, once
the lawyer drafts the reply notice on your behalf.
The lawyer keeps the copy of the reply notice for
future reference.
What happens if the person doesn’t respond to
a Legal Notice?
If the person to whom the notice is sent, doesn’t
respond to it in a stipulated time, then the aggrieved
party files a suit in the appropriate Court of Law.
Once the suit is filed in the court, the order will be
sent to the respondent by the Court to appear before
the court and to answer the charges pressed against
them by the opposite party.

Benefits of a Legal Notice

The Legal Notice has the following benefits:
• Warning– A legal notice acts as a warning
against the offender as it ensures that the
offender is aware of the duties that have to be
performed by him otherwise face the
consequences of non-compliance.
• Resolution of dispute– A fair chance is given to
both the parties to resolve their dispute, that can
be through negotiation, mediation or arbitration
without dragging the matter before the Court.
• Amicable settlement– The litigation process is
time and money consuming, thus, it is preferable
to directly settle the matter via the legal notice,
that is much easier and a quick process.

Legal notice must mention the following points

16. Name and address of the parties– The legal
notice must mention the name and address of the
party to whom the legal notice has to be sent.
17. Facts and grievances– The facts and
grievances caused to the sender must be
mentioned in the legal notice sent by the sender
in paragraphs and points.
18. Compensation– After stating the facts, the
legal notice must mention the amount of
compensation if any, claimed for the
inconvenience caused. Sometimes the legal notice
mentions an alternative mode of redressing the
dispute. It is mandatory to mention the laws under
which the compensation is claimed.
19. Signature– At the end of the legal notice, there
should be a signature and stamp of the lawyer
who sends the legal notice on behalf of the client.

The procedure of sending a legal notice

1. You can either draft a legal notice yourself or
you can take the lawyer’s assistance. Though, it
is advisable to engage a qualified lawyer, as one
should be extremely cautious with the language
used and the choice of words. While drafting a
legal notice, you should be cautious of using any
fact that might later work against you in the
court. Once a legal notice is sent, it cannot be
changed and if you use any contradictory
statement in the court, then it might weaken
your case.
2. The legal notice must be addressed to the
person against whom you have grievances.
 3. A legal notice must be sent on a plain paper or
on the letterhead of a lawyer.
4. You must categorically mention in the legal
notice the time period in which the addressee
must respond to the notice, the time period can
be 30 to 60 days. The time period must be
stipulated within which the other party is
expected to fulfil the demands.
5. The legal notice should be signed by the lawyer
as well as the sender.
6. The legal notice must be sent either through a
registered post or courier. It is advisable to
ensure that the acknowledgement is retained.

Things to Remember While Replying to a Legal

Notice
It is not uncommon for a practising lawyer to have
their client bring to them a legal notice that the
client received. One of the first responses by the
lawyer is then to reassure the client that they need
not worry, at least not just yet. The lawyer then
seeks response from the client what they would wish
to be done with regards to the legal notice received.
Generally, two ways of response are applicable to a
legal notice received:

1. No response
This means that the client will not act in any manner
whatsoever with regards to the legal notice received
and wait for the sender to act with reference to the
claims made by the sender in the said notice. This
may also include waiting for the client to institute
the relevant proceedings before the authority and
waiting for the authority to require the presence of
the client before it.

2. Sending a reply to the legal notice received

This is essentially the client’s version of events
alleged in the legal notice received. Replying to a
legal notice becomes even more crucial where the
legal notice received is not just an exaggeration of
events, but is simply a vexatious and false story
intended to harass the client. Legal notices are
considered a form of due diligence followed by the
parties to not just inform the other party of their
grievances and intention to bring the matter to
court, but also to make an attempt at resolving their
differences and/or dispute amongst themselves and
not through litigation.

There are various things to remember while drafting

a reply to a legal notice. Few are listed below:

Checklist

• Technical Details
Details like the date of the reply-cum-legal notice,
date of the legal notice received, proper details of
the sender(s) of the legal notice received, proper
details of the client(s), etc. are all details that seem
small, but contribute heavily towards the final
takeaway from the reply-cum-legal notice. The idea
behind this inclusion in the checklist is to ensure that
the document should look like the professional
communication document it is.

• Reply-cum-Legal Notice
Ensuring that the intention of the document to be
treated as a reply, as well as a legal notice unto
itself, should be clearly mentioned and visible in the
document. This is generally achieved by writing
“Reply-cum-Legal Notice” in the centre, in capital
letters with bold font, where the subject of a
document is generally written.

• Addressing all alleged facts

It is important that each and every element of each
and every alleged fact should be duly addressed and
replied to in the reply-cum-legal notice. Not
specifically denying something might be considered
an admission. Hence, it is in the best of interests of
the client, for the reply-cum-legal notice to address
each and every alleged fact.

• The client’s version of events alleged

It is important to present the client’s version of the
events alleged in the same document as the reply.
Since the reply to the legal notice is also intended to
be a legal notice on its own, it is important to
present the client’s point of view as well. The basic
idea behind this is to inform the other side of the
client’s perspective, and if possible bring the
difference/dispute to a close without proceeding to
litigation. This is generally done as against the reply
to the events alleged, or can also be done separately
after addressing all events alleged, or

Cases in which legal notice is served

The legal notice is mostly served in following cases:
 • Notice by an employer– Notice can be for
violation of HR policies, leaving job without
resignation letter, committing sexual harassment
at the workplace, violation of employment
agreement provisions etc.
• Notice by an employee– Notice can be for
wrongfully terminating the employees, violation of
the employer’s rights, unpaid salary etc.
• Property disputes– Property disputes involve
disputes regarding mortgage, the partition of
family property, eviction of the tenant on
unreasonable grounds etc.
• Consumer complaints– Notice can be served to
the company who is manufacturing contaminated
or low standard products, negligent service,
fraudulent advertisement etc.
• Breach of Contract– Notice is served if the other
party fails to comply with the provisions of a
contract, or fails to fulfil the agreement in the
contract
• Recovery of Money– Notice is served to the
debtor to recover money after the lapse of time.
• Cheque Bounce– Notice is served to the issuer
of cheque in case of cheque bounce.
• Personal conflict– Notice can be conflicts
regarding divorce, child custody, maintenance,
division of maternal property etc.

The formats for all the above mentioned legal

notices are the same. Mostly notice is sent through a
registered post but it can also be delivered in
person.
The Body of the Reply
Replying to a legal notice is the mix of the process of
replying to a written statement and drafting of
notice. The reply starts with the mention of the basic
details of the legal notice received - date, details of
the entity on behalf of whom the legal notice was
sent etc. It may also contain mention of claims of
legal notice received as false, or something of
similar nature. The legal notice then starts with
preliminary objections and then moves on to “reply
on merits” - replying to the legal notice
point/paragraph wise, and may not necessarily
contain such a heading. This process is very similar
to the drafting of a written statement or rejoinder.

The points in the body of the notice start with the

client's version of the events under discussion in the
legal notice received. The legal notice then
continues in this manner, filling in all the details of
the client’s version of the events in question.
Concluding the Reply
Once the entire body of the legal notice is prepared
incorporating the client’s version of the events, the
format of the legal notice where the law relied upon
for remedy is included. These are the general last
few paragraphs of the legal notice where the sender
of the reply to the legal notice lays down the
instructions for the entity who receives the legal
notice upon such receipt, along with warning of
consequences if the instructions are not complied
with.

The difference here is that the reply to the legal

notice specifically mentions that the legal notice
shall be sent to both the client as well as the lawyer
who sent the legal notice on behalf of his client. This
is done to ensure that the reply is received by all
parties concerned - the lawyer who sent the notice
as well as the entity who engaged the lawyer to
send the concerned legal notice. This is done to
ensure proper conveyance of necessary
communication. The lawyer is marked and not just
the client because when engaging a lawyer there is
an agreement between the lawyer and his client that
the lawyer acts as a representative of the client.
Common mistakes while replying to a legal notice
1. Time: The most common mistake is not replying
to a legal notice on time. The sender should try
to reply to the notice as soon as possible and
within the stipulated time as mentioned in the
sender’s notice. Otherwise, the sender can take
strict actions.
2. Reply: The mistake the party makes is that they
do not reply in a proper and prescribed manner.
The notice should be properly replied, if the
party is unable to understand the terms of the
 notice, a professional advocate should be
consulted.
3. Sections: The mistake that is made is that the
party forgets to mention the sections under
which it is sending the notice. It is important that
the party should be aware of the relevant
sections under which it is sending the notice.
4. Date: The people forget to mention the date in
the notice. It is very important to mention a date
in the notice.
5. Sign: If the party consults an advocate then it
should not forget that both the party’s and an
advocate’s signature is required.
6. Address: The present address of the sender
should be mentioned so that it reaches to the
proper person in proper time. Causing delay
might act against the party later.
7. Contact: The sender’s present working phone
number should be addressed.

Tips to provide a proper response

What to do when one receives a legal notice:
 1.The first thing to do after receiving a legal notice
is to call the sender of the notice with the aim to
resolve the dispute amicably.
2.Though it is not mandatory to reply to a legal
notice but still it is advisable to send an
appropriate reply to the legal notice.
3.If in case one fails to send a reply to a legal
notice, the other party may use that as an
advantage and while drafting the petition, they
may blame for not adhering to the requirements
of the notice, for which reason the case has been
filed.
4.If in one’s opinion the facts that have been stated
in a legal notice are not true and he needs to
contest a legal notice, then he can take
consultation from an experienced lawyer, seek
his assistance and draft a proper reply to the
legal notice, denying the contents stated in the
legal notice. The legal notice must be sent via
registered post or courier.
5.While sending a reply to the legal notice, check
whether the claim in the legal notice is time-
barred or not. If the claim is time-barred then one
should only reply that the claim is not within the
limitation period.

Conclusion
Replying to a legal notice does not happen as much
as sending a legal notice does. Nonetheless, they
are an important part of proceedings. They allow the
sender of the reply to a legal notice, the opportunity
to claim before the court of law that they have been
relaying their versions of the event, and stand by it,
from the get go. However, this may be considered
by some to be trivial or not necessary at all, and
sometimes to even just wait for the court summons
and appear before the court itself and plead.
Sending a reply to a legal notice may also lead to
reaching a resolution - which is the intention of the
entire process. All in all, replying to legal notices has
few format changes and works on the same principle
as a legal notice.

Notice under Negotiable Instruments Act, 1881

regarding dishonour of cheque
To,
Sh.(Name & Address)
_______
Sub:- Notice under Section 138 of the Negotiable
Instruments Act for Dishonour of cheque due to
insufficient funds.
Respected Sir,
Under instructions and authority from our client M/s.
________ having their office at _________, we serve
upon you the following notice of demand under
Section 138 of the Negotiable Instruments Act.
That your business concern M/s _______ had
purchased from my client goods (Name and brief
description of goods) vide their invoice bearing no.
___ dated ________ for Rs._______
On delivery of goods above mentioned, you issued a
cheque bearing no. ____ dated _________ for
Rs._______drawn on ____ Bank.
That when the aforesaid cheque was presented by
our client M/s. ____ to your Bankers i.e. ________ the
same was returned unpaid by the Bank with the
remarks/reasons “Insufficient Funds”. This fact was
brought to your notice by our client vide letter
dated_______.
That in reply to our client’s letter, you sent a letter
dated ____ requesting him to deposit the cheque
again with a banker and assured him that they will
be cleared this time.
My client again presented your above-mentioned
cheque with its bankers, this time again the cheque
was returned unpaid by the bank due to insufficient
funds.
That thereafter in spite of many telephonic
reminders and personal visits by the representative
of our client to your office, you failed to make the
payment due to our client.
That on account of the above facts, you are liable to
be prosecuted under section 138 of the Negotiable
Instrument Act, 1881 as amended up to date under
which you are liable to be punished with
imprisonment which may extend to one year or with
fine which may extend to twice the amount of
cheque or with both.
Under the circumstances, we call upon you to make
the payment of Rs. _____ being the principal amount
of the aforesaid cheque along with interest @ ____ %
per annum till the time of actual payment within a
period of 15 (fifteen) days from the date of receipt of
this notice, failing which we will be bound to take
further necessary action under the provisions of
Negotiable Instrument Act, 1881 against you in the
competent court of law at your risk and cost.
This is without prejudice to all other legal rights and
remedies available to our client for the above-stated
purpose.
Kindly take notice.
Date:____________
Yours faithfully,
____________
Notice by Vendor to complete the purchase of
immovable property
Advocate
________________
Date ________________
To,
________________
________________
Re: Sale of House No. _______ situated at
____________________.
Respected Sir,
Under instructions of my client Shri ____________ s/o
_______________ r/o ________________.
It is stated as follows:
My client had entered into an agreement for sale
dated ___________ with you for sale of house No.
________________, situated at _____________. for a
consideration of Rs. _______ and in terms of clause
___________ of the said Agreement, the said
transaction is to be completed within _____ months
from the date of the said agreement.
My client was and is still willing and ready to execute
a sale deed in your favor or in favor of any person as
you may direct in accordance with the terms of the
said agreement, but the same was not done for
reasons of your own.
I hereby call upon you to have the deed of
conveyance executed by my client against payment
of the balance of the consideration money on or
before the ______ day of ____________ in terms of the
said agreement, failing which the said agreement
will stand cancelled and the earnest money paid by
you will stand forfeited.
However, this is without prejudice to the rights of my
client to recover all costs, damages, losses, and
expenses incurred by him by reason of your default
in performing the said agreement.
Yours faithfully,
____________