A philosophical question

“Let me illustrate the problem with an example in which you have to decide which of three
children – Anne, Bob and Carla – should get a flute about which they are quarrelling.

Anne claims the flute on the ground that she is the only one of the three who knows how to play
it (the others do not deny this), and that it would be quite unjust to deny the flute to the only
one who can actually play it.

In an alternative scenario, it is Bob who speaks up, and defends his case for having the flute
by pointing out that he is the only one among the three who is so poor that he has no toys of
his own. The flute would give him something to play with (the other two concede that they are
richer and well supplied with engaging amenities).

In another alternative scenario, it is Carla who speaks up and points out that she has been
working diligently for many months to make the flute with her own labour (the others confirm
this), and just when she had finished her work, ‘just then’, she complains, ‘these expropriators
came along to try to grab the flute away from me’.”

-Amartya Sen, ‘The Idea of Justice’ (2009)

Nature of property

-Property as a relationship?

Relationship not between the owner and the object but between the owner and non-owners.

“The legal relation involved must be a relation between persons-between Susan and her
neighbours, say, or Susan and the police, or Susan and everyone else. But when we ask what
this relation is, we find that the answer is not at all simple. With regard to Susan's Porsche,
there are all sorts of legal relations between Susan and other people. Susan has a legal liberty
to use it in certain ways; for example, she owes no duty to anyone to refrain from putting her
houseplants in it. But that is true only of some of the ways that the car could (physically) be
used. She is not at liberty to drive it on the footpath or to drive it anywhere at a speed faster
than 70 m.p.h. Indeed, she is not at liberty to drive it at all without a licence from the
authorities.”

So private property is not a simple relationship between a person and a thing, it is not a simple
relationship at all. It involves a complex bundle of relations which are not only distinct but in
principle, separable from each of the others.

Lease, mortgage, easement.

-Objects of property – things which are capable of being owned – car, agricultural land,
copyright
Ethical questions- What can be owned? Friends, organs, education, votes, right to stand in a
queue, prison cell upgrade, reading?

Indian context- Grocery delivery?

Sandel video (TedX)

-Allocation problem

Theories of distributive justice – Rawls, Mill, Nozick, Sen, Marx, etc.

Capital and labour- distribution of wealth [Gig economy]

Types of property

Collective property

In a system of collective property, the problem of allocation is solved by the application of a

social rule that access to and the use of material resources in particular cases are to be
determined by reference to the collective interests of society as a whole.

In principle, answerable to the needs and purpose of society as a whole.

Common property

The interests of the collective have no special status either.

In a system of common property, rules governing access to and control of material resources
are organized on the basis that each resource is in principle available for the use of every
member

In principle, the needs and wants of every person are considered, and when allocative decisions
are made they are made on a basis that is in some sense fair to all.

Case law?

MC Mehta vs Kamal Nath (1996)

“The Public Trust Doctrine primarily rests on the principle that certain resources like air
sea, waters and forests have such great importance to the people as a whole that it would
be wholly unjustified to make them a subject of private ownership. The said resources being
a gift of nature, they should be made freely available to everyone irrespective of the status
in life. The doctrine enjoins upon the Government to protect the resources for the enjoyment
of the general public rather than to permit their use for private ownership or commercial
purposes.”

Private Property

In a system of private property, the rules governing access material resources are organized
around the idea that resources are separate objects, each assigned and therefore belonging to
individual.

In a private property system, a rule is laid down that, in the case of each object, the individual
person whose name is attached to that object is to determine how the object shall be used and
by whom. His decision is to be upheld by the society as final.

The owner of a resource is simply the individual whose determination as to the use of the
resource is taken as final in a system of this kind.

Ethical issues?

“In the summer of 2004, Hurricane Charley roared out of the Gulf of Mexico and swept across
Florida to the Atlantic Ocean. The storm claimed twenty-two lives and caused $11 billion in
damage. It also left in its wake a debate about price gouging.

At a gas station in Orlando, they were selling two-dollar bags of ice for ten dollars. Lacking
power for refrigerators or air-conditioning in the middle of August, many people had little
choice but to pay up.

Downed trees heightened demand for chain saws and roof repairs. Contractors offered to clear
two trees off a homeowner’s roof—for $23,000. Stores that normally sold small household
generators for $250 were now asking $2,000. A seventy-seven-year-old woman fleeing the
hurricane with her elderly husband and handicapped daughter was charged $160 per night for
a motel room that normally goes for $40.”

Justification for private property?

1. Human freedom - Locke
2. Efficiency - capitalist growth- the tragedy of the commons

-How would your answer to the flute problem change with different types of property?

-What is the point?

-Why do we follow the TPA 1882? Pre-Constitutional law?

Article 372- Continuance in force of existing laws- …all the law in force in the territory of
India immediately before the commencement of this Constitution shall continue in force therein
until altered or repealed or amended by a competent Legislature or other competent
authority…..

Broad features of the Transfer of Property Act

“Preamble. —Whereas it is expedient to define and amend certain parts of the law relating to
the transfer of property by act of parties; it is hereby enacted as follows: —"

‘Expedient’

Pre-TPA – few aspects covered by Regulations and Acts, for rest- in absence of statutory law,
courts adopted the English law as the rule of justice, equity and good conscience- led to
conflict and inconsistency

The first Law Commission drafted the Transfer of Property Act. Headed by T.B. Macaulay.

“…the dominant theme of the Indian codificatory project was the idea of "certainty" in the
law. Lord Macaulay's directive to the Indian codifiers was thus "uniformity when you can
have it; diversity when you must have it; but, in all cases, certainty’...”

Reasons behind codification? What is the problem in judge made law from the perspective of
the British?

‘Define and amend’

The Act defines certain expressions used in relation to transfer of property and amends
the (then) prevailing rules governing the same. It does not purport to introduce any new
principle of law. The Bill was based mainly on the English law of real property.

‘Certain parts of the law’

The Act is not exhaustive nor is it a complete code. This means that it does not cover the entire
law relating to transfer of property but deals with certain aspects only. The fact that it is not
exhaustive is also apparent from the language that is used in the Preamble. The present Act
seeks to define and amend only certain parts of the law relating to transfer of property and not
all areas or all parts of this branch of law.
‘Transfer of property’

Which type of property implied?

‘Act of parties’

As would appear from the preamble of the Transfer of Property Act, the same applies only to
transfer by act of parties. A transfer by operation of law is not validated or invalidated by
anything contained in the Act. A transfer which takes place by operation of law, therefore, need
not meet the requirement of the provisions of the Transfer of Property Act.

Forfeiture of property? IPC

Testamentary succession?
Intestate succession?

Movable vs. Immovable property

Why is this important?

1. Scope of TPA – General rules for both but specific rules for the transfer of immovable
property

2. Formalities- Immovable property- written document, proper execution, attestation and

registration. Stamp duty.

3. Limitation period – Immovable property- 12 years from the date of cause of action
Movable property- 3 years from the date of cause of action

Definition of immoveable property

Transfer of Property Act 1882

Section 3- “immoveable property” does not include standing timber, growing crops or grass:

General Clauses Act 1897

Section 3(26)- “immovable property” shall include land, benefits to arise out of land, and things
attached to the earth, or permanently fastened to anything attached to the earth
Indian Registration Act 1906

Section 2(6)- 'Immoveable property' includes land, buildings, hereditary allowances, rights to
ways, lights, ferries, fisheries or any other benefit to arise out of land, and things attached to
the earth or permanently fastened to anything which is attached to the earth, but
not standing timber, growing crops nor grass.

Exclusions

1. Standing timber

Timber is wood that is or can be used as construction material, as distinguished from wood that
is used for other purposes such as firewood, etc. Timber is associated with and is used for
making tools, utensils, furniture, carriages, fences, and the like or for other structural purposes.

In India, the popular timber trees are shishum, babul, teak, bamboo, deodar, kail, rai, etc. Neem
is used both as a medicinal plant as well as for its timber. Similarly, a mango tree, though grown
for its fruit; it would be regarded as standing timber in provinces where the wood of mango
trees is used as timber and is generally used for building and repairing houses.

-'standing timber' must be a timber tree that is in a state fit for these purposes, and further, a
tree that is meant to be converted into timber so shortly that it can already be looked upon as
timber for all practical purposes even though it is still rooted in earth. If not, it is still to be
categorised as an ordinary tree covered under the expression, 'things rooted in earth' because
unlike timber, it continues to draw sustenance from the soil for its further growth

Is every standing tree an immoveable property?

“While a tree, in order to come within the definition of immoveable property, must be a
standing tree, every standing tree is not immoveable property; the Legislature has expressly
excepted from the definition standing timber trees, growing crops and grass. The reason why
they have been excepted from the definition is that, though they are standing for the time being,
they are meant not to remain standing, that they can be brought to use only after they have
been cut and that they are meant to be cut sooner or later. It is on account of their nature or
character that they have been taken out of the definition of immoveable property.”

Illustrations

-A, the owner of a forest enters into a contract with B, and grants to him a right to enter his
forest and cut all kinds of plants and trees above the height of 10 feet, for a period of five
years.

-A, the owner of an estate enters into a contract with B, and grants to him a right to enter his
estate and to cut standing timber, and the right is spread over a period of twenty years.
-A, the owner of an estate enters into a contract with B, and grants to him a right to enter his
estate and to cut only timber trees for a period of ten years. All timber trees in his forest are
fully grown mature trees.

- A, the owner of an estate enters into a contract with B, and grants to him a right to enter his
estate and to cut only standing timber for a period of six months.

Thus, the term standing timber connotes that in order to be regarded as movable property:

(a) It must be a timber tree,

(b) It has reached a particular stage where its wood is ready to be used as timber and
(c) It is intended to be cut reasonably early.

Read: 1. Ananda Behera vs. State of Orissa 1955

2. Shantabai vs State of Bombay 1958
3. State of Orissa vs Titaghur Paper Mills 1985

2. Growing crop

Growing crops have been held to include all vegetable growths, which have no existence
apart from their produce such as pan leaves and sugarcane.

The mere fact that it is not yet in existence would not take it out of the character of the
growing crop. (compare it to standing timbre)

A transfer of a right to rear and pluck or take away fruit from trees relates to the sale of
growing crops.

Read: 1. Raja Devi vs. Muhammad Yakub 1925

2. Mahadeo vs. State of Bombay 1959

3. Grass

Grass again is movable property. However, the term 'grass' alone is not the determining criteria.
It would be movable property, but only when the intention is to sever it within a short time
period and an agreement for the sale and purchase of growing grass, not made with a view to
their immediate severance and removal from the soil and delivery as chattels to the purchaser
is an agreement for the sale of an interest in immovable property i.e., land.

Where A, the owner of a piece of land confers a right to B, to enter his land and cut grass for a
period of five years, the nature of right created in favour of B is a right in immovable property
as B will take the benefit from A's land and will not take what is already ripe and ready.

Other aspects of immoveable property

1. Benefits arising from land- profit a prendre

Where a person using his land makes a profit, the right will be a right in immovable property.
For example, a person has a vacant piece of land. Every year, during the festival season, he
uses the land for holding a fair, and for this purposes he charges Rs 1000 from each stall-holder.
This right to collect the charge from the stall-holders is profits a prendre, i.e., profits that he
makes using his land, and therefore a right in immovable property.

Read: 1. Shantabai vs State of Bombay 1958

“It is not a " transfer of a right to enjoy the immoveable property " itself but a grant of a right
to enter upon the land and take away a part of the produce of the soil from it. In a lease, one
enjoys the property but has no right to take it away. In a profit a prendre one has a licence to
enter on the land, not for the purpose of enjoying it, but for removing something from it, namely,
a part of the produce of the soil.”

2. Attached to the earth

Section 3-Transfer of Property Act 1882

“attached to the earth” means—

(a) rooted in the earth, as in the case of trees and shrubs;

(b) imbedded in the earth, as in the case of walls or buildings; or
(c) attached to what is so imbedded for the permanent beneficial enjoyment of that to which it
is attached.

Why is this important?

This question, that what is that sufficient attachment that will convert the character of a thing
to make it a fixture from a chattel, has tremendous practical importance. For example, A, the
owner of a house professes to sell it to B and invites him for inspecting it. At the time of
inspection, the house has an iron gate in the front, showcases made of wood that were fixed in
the walls, electrical fittings etc. After the contract is concluded, whatever are the fixtures they
will pass along with the house to B, and A is not empowered to remove them. He can remove
only chattels.

An anchor of a big ship is firmly embedded in the earth?

Tapestries hanging on the wall?

Machinery installed in a factory?

“Rooted in the earth” - subject to exceptions that we have already discussed

“Imbedded in the earth”- Would everything that is embedded become part of the land?
“Attached to what is so imbedded”

DOCTRINE OF FIXURES

What is the use of this doctrine? To understand under what circumstances a chattel (movable)
becomes a fixture (immovable).

2 maxims:

The English law as to fixtures is based on the maxim quicquid plantatur solo, solo cedit as
to trees, and quicquid inaedificatur solo, solo cedit as to buildings. Whoever owns the land
also owns the fixture.

Quicquid plantatur solo, solo cedit, which means whatever is planted in the earth, becomes
part of the earth, and consequently whosoever owns that piece of earth will also own the thing
planted.

Quicquid inaedificatur solo, solo cedit, which means whatsoever is built into or embedded
into or attached to soil becomes part of the earth and consequently, whosoever is the owner of
that piece of land will also become the owner of the thing attached/built-in or embedded.

The maxims on which English law is founded do not generally apply in India.

For example Section 51 of the TPA

Read: 1. Duncan Industries vs State of Uttar Pradesh 1999

2. Bamadev Panigrahi vs Manorama Raj 1973

Case law:

Bamadev Panigrahi vs Manorama Raj (1973) Andhra Pradesh High Court

The question before the court:

Whether the cinema projector and the oil engine are movable or immovable property?

Whether the suit is barred by limitation?

Reasoning:

The enquiry should be not whether the attachment is direct or indirect but what the nature and
character of the attachment and the intendment and object of such attachment are.

The question whether any machinery such as an oil engine imbedded in earth or permanently
fastened to anything attached to the earth is movable or immovable property, is a mixed
question of fact and law depending upon the facts and circumstances of each case
There is no statutory test or guideline having universal application, for the determination of
the nature or circumstances by itself may not be conclusive or decisive

17. The tests enunciated by the decided cases to determine the character and nature of the
property are :

(I) What is the intendment, object and purpose of installing the machinery -- Whether it is the
beneficial enjoyment of the building , land or structure , or the enjoyment of the very machinery
?

(ii) The degree and manner of attachment or annexation of the machinery to the earth.

Where the machinery and the building or land on which it is installed , are owned by one and
the same person , normally it should be inferred , unless the contrary is proved , that the object
and purpose of installing the machinery is to have beneficial enjoyment of the entire building
or land, but not the sole enjoyment of the very machinery

where the machinery imbedded or installed and the building or land belong to two different
powers , the intendment and object of the person who is in possession and enjoyment of the
property in installing or annexing the machinery must normally be presumed , until the contrary
is proved , to be to exploit the benefit of the machinery alone , as he is not interested in the
building or the land

Where the building in which machinery such as an oil engine or a cinema projector has been
installed by the owner, is not a pucca and permanent one , but it only a temporary shed or tent
, his intention and purpose could only be the beneficial enjoyment of the very machinery but
not the building.

However , where a cinema projector and an oil engine have been installed in a permanent
cinema theatre, purpose and object of installing the same must invariably be the beneficial
enjoyment of the very cinema theatre

Decision in the present case:

The cinema concern is a touring talkies. It is not a pucca cinema hall, but it is only a temporary
shed build partly with zinc sheets and partly with oil cloth

The cinema concern , as its very name "Kumar Touring Talkies" indicates , is a temporary
concern.

Indisputable, the land on which the said kumar Touring Talkies has been raised, really
belongs to the Raja of Mandasa.

The lease obtained for running the Kumar Touring Talkies was only for a period of one year,
after the expoiry of which there was no guarantee or assurance that the management of the
concern would automatically get extension of period for running the shows
we are of the firm view that the intendment, object and purpose of installing the cinema
equipment in question, was only to have the beneficial enjoyment of the very equipment
during the period of the lease or mortgage

the diesal oil engine and the cinema projector are not rooted in the earth as in the case of trees
and shurbs, or imbedded in the earth as in the case of walls or buildings, or attached to what
is so imbedded for the permanent beneficial enjoyment of that to which they are attached.

the machinery in question must be held to be movable property but not immovable property.
On that premise, it must be held that the suit for the recovery of possession, or in the
alternative, for recovery of the value of such movable property, beyond the period of three
years after the denial by the defendant of the plaintiff's right , is barred by limitation

Movable property

Indian Registration Act 1908

Section 2(9)- “Movable Property” includes standing timber, growing crops and grass, fruit
upon and juice in trees, and property of every other description, except immovable property;

General Clauses Act 1897

Section 3 (36) “movable property” shall mean property of every description, except immovable
property;

Transfer of Property Act 1882?

_____________________________

ATTESTATION

Indian Evidence Act

68. Proof of execution of document required by law to be attested.––If a document is

required by law to be attested, it shall not be used as evidence until one attesting witness at
least has been called for the purpose of proving its execution, if there be an attesting witness
alive, and subject to the process of the Court and capable of giving evidence:
[Provided that it shall not be necessary to call an attesting witness in proof of the execution of
any document, not being a will, which has been registered in accordance with the provisions
of the Indian Registration Act, 1908 (16 of 1908), unless its execution by the person by whom
it purports to have been executed is specifically denied.]
MEANING -To attest is to bear witness to a fact. It means signing of the document to signify
the attestor, and his witness to the execution of the document.

PURPOSE - In English law, attestation implies that the attesting witness was present at
execution, and can testify that the deed was executed voluntarily by the proper person. The
executor later cannot backtrack.

HISTORY- It was added in the year 1926 because of divergent opinions by various High
Courts and the decision of the Privy Council in Shamu Patter vs Abdul Kadir (1912) (personal
acknowledgement issue, Section 59 of the TPA 1882).

REQUIREMENTS-

1. That the document must be attested by at least two or more witnesses;

2. They should have either seen the executant putting his signatures or mark, or some other
person doing the same in the presence of and under the direction of the executant;

3. If the document has already been executed or signed by the executant, the witnesses must
receive a personal acknowledgement from none other than the executant himself, of his
signatures;

4. Witnesses must sign in the presence of the executant;

5. It is not necessary that both witnesses should be present at the same time; and

6. There is no specific form of attestation.

Ramji Haribhai vs Bai Parvati (1902) Bombay High Court

“Here the instrument is signed by the mortgagor and bears the attestations of three witnesses.
Two of them are dead and the third, who has been examined in the case, states that Dayal
Lakshmidas, the mortgagor, asked him to attest the mortgage-bond and admitted having signed
it and having received the consideration.”

Can personal acknowledgement amount to valid attestation?

Section 59 of the TPA 1882.

Succession Act 1865- attestation includes personal acknowledgement.

Yes.

Shamu Patter vs Abdul Kadir (1912) Privy Council

relied on English law cases

"attest means the persons shall be present and see what passes, and shall, when required, bear
witness to the facts."

"The party who sees the will executed is in fact a witness to it; if he subscribes are witness he
is then attesting witness."

“Section 50 of the Indian Succession Act (X of 1865) was referred to in support of the
appellant’s contention regarding the meaning of the word "attested" in Section 59 of the
Transfer of Property Act. The phraseology of the two sections is quite different, as different in
fact as the objects of the two statutes.”

personal acknowledgement is not sufficient for attestation

1926

_____________________________________________________

NOTICE

Section 3

a person is said to have notice of a fact when he actually knows that fact, or when, but for wilful
abstention from an enquiry or search which he ought to have made, or gross negligence, he
would have known it.

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

be and has been effected by a registered instrument, any person acquiring such property or any
part of, or share or interest in, such property shall be deemed to have notice of such instrument
as from the date of registration….

Provided that—
(1) the instrument has been registered and its registration completed in the manner prescribed
by the Indian Registration Act, 1908 (16 of 1908) and the rules made thereunder,
(2) the instrument or memorandum has been duly entered or filed, as the case may be, in books
kept under section 51 of that Act, and
(3) the particulars regarding the transaction to which the instrument relates have been correctly
entered in the indexes kept under section 55 of that Act.

Explanation II.—Any person acquiring any immoveable property or any share or interest in
any such property shall be deemed to have notice of the title, if any, of any person who is for
the time being in actual possession thereof.
Explanation III.—A person shall be deemed to have had notice of any fact if his agent acquires
notice thereof whilst acting on his behalf in the course of business to which that fact is material:

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

The equitable doctrine of notice which controls unconscionable transactions is recognised in

various sections of TP Act, 1882.

If A conveys to C property which he had by a previous contract agreed to sell to B, then B can
enforce the contract against C, if C had notice of it, but not otherwise. If C had notice of the
prior contract, he purchases it with knowledge that it was unconscionable of A to sell to him,
and it is, therefore, unconscionable of him to buy

Illustrations to Section 27(b) of the Specific Relief Act 1877

A contracts to sell certain land to B for Rs. 5,000. A afterwards conveys the land for Rs. 6,000
to C, who has notice of the original contract. B may enforce specific performance of the
contract as against C.

A contracts to sell land to B for Rs. 5,000. B takes possession of the land. Afterwards A sells it
to C for Rs. 6,000. C makes no inquiry of B relating to his interest in the land. B’s possession
is sufficient to affect C with notice of his interest, and he may enforce specific performance of
the contract against C.

Notice may be either express or constructive, while notice to an agent is sometimes called
imputed notice in so far as it affects the principal.

Express Notice

Express notice, or actual notice is notice whereby a person acquires actual knowledge of the
fact. It must be definite information given in the course of negotiations by a person interested
in the property, as a person is not bound to attend to vague rumours or statements by strangers.
Notice must be given in the same transaction, as notice given in a previous transaction may
have been forgotten.

Constructive Notice

Constructive notice is the equity which treats a man who ought to have known a fact as if he
actually does know it. It is merely the course which a man dealing bona fide in the proper and
usual manner for his own interest, ought, by himself or his solicitor, to follow with a view to
his own title and security.
The courts have, however, been reluctant to extend the doctrine to cases where there is no real
negligence, as the doctrine results in the imputation of knowledge to the person who does not
in fact often possess it.

The legal presumption of knowledge arises from:

1. Wilful abstention from an inquiry or search

2. Gross Negligence
3. Registration
4. Actual possession
5. Notice to an agent

Where a purchaser omits to inspect title deeds, he may be affected with notice of all facts which
he would have discovered upon a proper investigation of title.

B borrows money from C and deposits with C, by way of equitable mortgage, the sale deed by
which he had purchased a property from A. The sale deed recites that part of the purchase
money had been retained by B to pay A’s debts. B had not paid these debts and C makes no
enquiry as to whether he had done so.

S left his house and land to his sons by his first wife and appointed them executors of his will.
He left 30,000 to his sons by his second wife, charged on the aforesaid house and land. The
sons by the first wife borrowed .52,000 from the bank and deposited the title deeds of the house
and land with the bank by way of equitable mortgage to secure the loan. The will was not
among the documents of title deposited. When the bank enforced their mortgage and brought
the house and land to sale, the sons of the second wife claimed that their charge had
precedence. If the bank had made inquiry as to how the mortgagors derived title from S, they
would have had cognizance of the will

A borrows 7,000 from B on an equitable mortgage of 10 bighas of land and deposits the
original title deeds with B. A then sells two bighas of the said land to C for 4,700 and gives a
copy of the title deeds to C for inspection, C asked for the original deeds and A said that he
had not got them but promised to show them in a few days. A failed to do so and C made no
further inquiry

a person buying property in a municipal area must be deemed to be aware that municipal taxes
are a charge on the property, that there is a possibility of such taxes being in arrears, and that
it is his duty to inquire about such arrears; if he fails to do so, he would be deemed to have
notice of such taxes. [Read with Ahmedabad Municipal Corporation case (1971)]

Registration as notice
Explanation I

Any person who wants to deal with immovable property is deemed to have knowledge of all
duly registered instruments relating to the said immovable property.

These words indicate that registration is a notice to transferees subsequent to the registration
while the registration of a subsequent transaction is not notice to prior transferees.

A mortgages property to B, who grants a sub-mortgage to C. A in ignorance of the sub-

mortgage, pays the mortgage debt to B.

The fact that the sub-mortgage is registered does not amount to notice of the sub-mortgage to
A so as to vitiate the payment

Registration is not notice when there is no duty to search the register. A mortgages his goods
to B by a registered mortgage, but retains the goods in his own possession. A then sells the
goods to C, who is not aware of the mortgage. C acquires a good title to the goods, the law
does not require the registration of mortgages of movables, and there was no duty cast upon
him to search the register.

Actual possession as notice

Explanation II

Explanation II settles the law that actual possession is notice of such title as the person in actual
possession has. It raises a statutory presumption of “notice” against any person who acquires
any immovable property or any interest therein of the title, if any, of the person who is for the
time being in actual possession thereof

With reference to subsequent purchaser it is essential that he should make an inquiry as to the
title or interest of the person in actual possession as on the date when the sale transaction was
made in his favour. The actual possession of a person itself is deemed or constructive notice of
the title if any, of a person who is for the time being in actual possession thereof. A subsequent
purchaser has to make inquiry as to further interest, nature of possession and title under which
the person was continuing in possession on the date of purchase of the property

A leased his land on 2 March 1901 to B for seven years. On 1 May 1901, A entered into an
agreement with B for the renewal of the lease on the termination of the term. On 11 July, A
purported to settle the land with C for seven years from 1 May 1908. C sued to recover
possession on the ground that the lease to B had terminated.

Court held that C had constructive notice as B was in possession of the property.

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

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

CASE LAWS:

Lloyds Bank, Ltd. vs P.E. Guzdar (1929) Calcutta High Court

This is a case of conflicting equities. The defendant firm P.E. Guzdar & Co. mortgaged 42,
Chowringhee Road, Calcutta, to the National Bank of India by delivery of the title deeds to
secure an overdraft in their current account with the bank, and afterwards, having regained
possession of the title deeds, mortgaged the property in like manner to Lloyds Bank to secure
a loan of Rs. 5,00,000. The question is, which of the two mortgages in the circumstances is
entitled to priority?

prima facie and apart from notice the priority of mortgages in India depends upon the
respective dates of their creation, the earlier in date having the precedence Transfer of
Property Act

…..under Section 59, T.P. Act, a mortgage may be created by delivering to the mortgagee the
documents of title to immovable property in Calcutta and in certain other districts

Section 78- Where, through the fraud, misrepresentation or gross neglect of a prior mortgagee,
another person has been induced to advance money on the security of the mortgaged property,
the prior mortgagee shall be postponed to the subsequent mortgagee

Para 30-

I am clearly of opinion that the mortgage of the defendant bank must be postponed to that of
the plaintiff bank. In my judgment Allan, the sub-manager of the defendant bank, was guilty of
gross and wilful negligence in surrendering the title deeds to J.B. Guzdar in the circumstances
disclosed by the evidence. He knew that the defendant firm were under an obligation to find
about six lacs within less than three weeks; he knew that previous negotiations to sell the
property had failed; he knew that J.E. Guzdar intended to raise money by means of the title
deeds of the property; he knew that, in order to find money to reduce the overdraft to the bank,
J.E. Guzdar was minded, by producing the title deeds to a prospective purchaser, dishonestly
and falsely to represent to the purchaser that there was no existing equitable mortgage on the
property and thereby to induce him to purchase the property, or to pay a higher price than
otherwise lie might have paid; and he knew that in surrendering the title deeds to J. E.Guzdar
he was departing from the normal and prudent practice of the defendant bank and of all
responsible bankers in Calcutta.
And yet with all this information at his disposal, and being fully aware that the bank was relying
upon the title deeds as a substantial security for repayment of the firm's overdraft, Allan stated
that he banded the title deeds to J.E. Guzdar because he believed that the partners of the firm
were reliable and trustworthy persons, and J.E. Guzdar himself on a previous occasion had
duly returned the title deeds to the bank.

I am of opinion that, in surrendering the title deeds to J.E. Guzdar, in the circumstances
obtaining in this case, the defendant bank was guilty of gross neglect, and as the plaintiff bank
by reason of such gross neglect was induced to advance money on the security of the property,
the mortgage of the defendant bank must be postponed to that of the plaintiff bank.

Ahmedabad Municipal Corporation vs Haji Hussenbhai (1971) Supreme Court

…..the question raised relate to the liability of auction purchaser of property at court sale for
the arrears of municipal taxes due on the date of sale to the municipal corporation of the City
of Ahmedabad which dues are a statutory charge on the property sold and of which the
purchaser had no actual notice.

At the time of this purchase there were municipal taxes in respect of this property in arrear for
the years 1949-50 to 1953-54, which means that the receivers had not cared to pay the
municipal taxes during all these years

Section 100-

save as otherwise expressly provided by any law for the time being in force, no charge shall be
enforced against any property in the hands of a person to whom such property has been
transferred for consideration and without notice of the charge

The question one has to answer in circumstances like the present is not whether the purchaser
had the means of obtaining and might with prudent caution have obtained knowledge of the
charge but whether in not doing so he acted with wilful abstention or gross negligence

the property in question had vested in the receivers in insolvency proceedings since March,
1949 by an interim order, and in ,October, 1950 the original owner was adjudicated as an
insolvent and the property finally vested in the receivers in insolvency. The plaintiff purchased
the property in November, 1954 and in our opinion it could not have reasonably been expected
by him that the receivers would not have paid to the municipal corporation since 1949 the taxes
and other dues which were charged on this property by statute.

In any event, the plaintiff could not reasonably have thought that the municipal corporation
had not cared to secure payment of the taxes due since 1949. On the facts and circumstances
of this case, therefore, we cannot hold that the plaintiff as a prudent and reasonable man was
bound to enquire from the municipal corporation

if the receivers were receiving rent from the tenants, the reasonable assumption would be that
the municipal taxes which were a charge on the property and which were also given priority
under Section 61 of the Provincial Insolvency Act, 1920, had been duly paid by the receivers
out of the rental income. The plaintiff could have no reasonable ground for assuming that they
were in arrears

P.T. Roy Babu v. P.T. Rajan Babu (2017 SCC OnLine Ker 3165)

case on imputed notice

______________________________________

REGISTRATION

Indian Registration Act 1908-

“An Act to consolidate the enactments relating to the Registration of Documents.”

Section 2

(6) “Immovable Property” includes land, buildings, hereditary allowances, rights to ways,
lights, ferries, fisheries or any other benefit to arise out of land, and things attached to the earth,
or permanently fastened to anything which is attached to the earth, but not standing timber,
growing crops nor grass;

(9) “Movable Property” includes standing timber, growing crops and grass, fruit upon and juice
in trees, and property of every other description, except immovable property;

Which documents have to be registered?

Section 17

17. Documents of which registration is compulsory.—(1) The following documents shall be

registered

(a) instruments of gift of immovable property;

(b) other non-testamentary instruments which purport or operate to create, declare, assign, limit
or extinguish, whether in present or in future, any right, title or interest, whether vested or
contingent, of the value of one hundred rupees and upwards, to or in immovable property;
(c) non-testamentary instruments which acknowledge the receipt or payment of any
consideration on account of the creation, declaration, assignment, limitation or extinction of
any such right, title or interest; and

(d) leases of immovable property from year to year, or for any term exceeding one year, or
reserving a yearly rent;

Time @ registration

Section 23

23. Time for presenting documents.—Subject to the provisions contained in sections 24, 25
and 26, no document other than a will shall be accepted for registration unless presented for
that purpose to the proper officer within four months from the date of its execution

Section 25

25. Provision where delay in presentation is unavoidable.—(1) If, owing to urgent necessity or
unavoidable accident, any document executed, or copy of a decree or order made, in India is
not presented for registration till after the expiration of the time hereinbefore prescribed in that
behalf, the Registrar, in cases where the delay in presentation does not exceed four months,
may direct that, on payment of a fine not exceeding ten times the amount of the proper
registration fee, such document shall be accepted for registration.

Who can register?

Section 32

32. Persons to present documents for registration.— shall be presented at the proper registration
office:

(a) by some person executing or claiming under the same, or, in the case of a copy of a decree
or order, claiming under the decree or order, or

(b) by the representive or assign of such a person, or

(c) by the agent of such a person, representative or assign, duly authorised by power-of attorney
executed and authenticated in manner hereinafter mentioned.
Enquiry by the registering officer

Section 34

The registering officer shall thereupon—

(a) enquire whether or not such document was executed by the persons by whom it purports to
have been executed;
(b) satisfy himself as to the identity of the persons appearing before him and alleging that they
have executed the document; and

(c) in the case of any person appearing as a representative, assign or agent, satisfy himself of
the right of such person so to appear.

Section 35

(a) If any person by whom the document purports to be executed denies its execution, or

(b) if any such person appears to the registering officer to be a minor, an idiot or a lunatic, or

(c) if any person by whom the document purports to be executed is dead, and his representative
or assign denies its execution,

the registering officer shall refuse to register the document

Implications of registration and non-registration

Section 47

47. Time from which registered document operates.—A registered document shall operate
from the time which it would have commenced to operate if no registration thereof had been
required or made, and not from the time of its registration.

Section 49

49. Effect of non-registration of documents required to be registered.—No document

required by section 17 or by any provision of the Transfer of Property Act, 1882 (4 of 1882),
to be registered shall—

(a) affect any immovable property comprised therein, or

(b) confer any power to adopt, or
(c) be received as evidence of any transaction affecting such property or conferring such power,

unless it has been registered:

Maintenance of documents

Section 51

51. Register-books to be kept in the several offices.—(1) The following books shall be kept in
the several offices hereinafter named, namely:—

A—In all registration offices—

Book 1, “Register of non-testamentary documents relating to immovable property”.

Section 52

52. Duties of registering officers when document presented.—

(1) (a) The day, hour and place of presentation, the photographs and finger prints affixed under
section 32A, and the signature of every person presenting a document for registration, shall be
endorsed on every such document at the time of presenting it;

(b) a receipt for such document shall be given by the registering officer to the person presenting
the same; and

(c) subject to the, provisions contained in section 62, every document admitted to registration
shall without unnecessary delay be copied in the book appropriated therefore according to the
order of its admission.

Inspection

Section 57

(1).....the Books Nos. 1 and 2 and the Indexes relating to Book No. 1 shall be at all time open
to inspection by any person applying to inspect the same; and, subject to the provisions of
section 62, copies or entries in such books shall be given to all persons applying for such copies.

(5) All copies given under this section shall be signed and sealed by the registering officer, and
shall be admissible for the purpose of proving the contents of the original documents.

Section 60

the registering officer shall endorse thereon a certificate containing the word “registered”,
together with the number and page of the book in which the document has been copied.

__________

Suraj Lamp and Industries Private Limited vs State of Haryana (2009) Supreme Court

The Registration Act, 1908 was enacted with the intention of providing orderliness, discipline
and public notice in regard to transactions relating to immovable property and protection from
fraud and forgery of documents of transfer. This is achieved by requiring compulsory
registration of certain types of documents and providing for consequences of non-registration.

Registration provides safety and security to transactions relating to immovable property, even
if the document is lost or destroyed. It gives publicity and public exposure to documents thereby
preventing forgeries and frauds in regard to transactions and execution of documents.
Registration provides information to people who may deal with a property, as to the nature
and extent of the rights which persons may have, affecting that property.

In other words, it enables people to find out whether any particular property with which they
are concerned, has been subjected to any legal obligation or liability and who is or are the
person(s) presently having right, title, and interest in the property. It gives solemnity of form
and perpetuate documents which are of legal importance or relevance by recording them,
where people may see the record and enquire and ascertain what the particulars are and as
far as land is concerned what obligations exist with regard to them. It ensures that every person
dealing with immovable property can rely with confidence upon the statements contained in
the registers (maintained under the said Act) as a full and complete account of all transactions
by which the title to the property may be affected and secure extracts/copies duly certified.

Law Commission of India - Report No. 6 (1957)

The object of the Registration Act is to preserve an authentic record of the terms of documents
so that if a document be lost or destroyed or misplaced, a certified copy from the register can
be obtained. Registration also facilitates the proof of execution of a document as its execution
is admitted by the executant, before the Sub-Registrar. Yet another useful purpose that
registration serves is to enable any person intending to enter into any transaction relating to
immovable property to obtain complete information relating to the title to such property and
for this purpose to look into the register and obtain certified copies of the documents.

Indian Evidence Act 1872

68. Proof of execution of document required by law to be attested.––If a document is

required by law to be attested, it shall not be used as evidence until one attesting witness at
least has been called for the purpose of proving its execution, if there be an attesting witness
alive, and subject to the process of the Court and capable of giving evidence:

[Provided that it shall not be necessary to call an attesting witness in proof of the execution of
any document, not being a will, which has been registered in accordance with the provisions
of the Indian Registration Act, 1908 (16 of 1908), unless its execution by the person by whom
it purports to have been executed is specifically denied.

_____________________________

TRANSFER OF PROPERTY

Section 5
“transfer of property” means an act by which a living person conveys property, in present
or in future, to one or more other living persons, or to himself, [or to himself and one or
more other living persons; and “to transfer property” is to perform such act.

“act”

Does not cover transfers by operation of law.

“living person”

Transfer inter vivos

The term 'living person' includes a juristic person, a company, or association or body of
individuals, whether incorporated or not, but does not include an idol of God or a temple, or
even a court.

Will?

“conveys”

Conveying of property involves creation of new title or interest in favour of the transferee. The
transferor is divested of the right conveyed and the transferee acquires it for the first time under
this instrument.

For example, a person A is the owner of a house and permits B to stay in it. Such permission
does not convey any right in favour of B with respect to the house, as it can be withdrawn at
any time.

After a month, B agrees to pay a rent of Rs 5000 per month, and A executes a lease deed in his
favour. This lease is a transfer of an interest in his favour i.e., a right of owner to possess and
enjoy his property. This right through this lease deed (an instrument of transfer) is conveyed in
favour of B

License vs Lease

“property”

The term property has nowhere been defined in the Act. It is used in the widest and most generic
sense. Property is the most comprehensive of all terms which can be used, in as much as it is
indicative and prescriptive of every possible interest which any person can have, and it is
generally understood as anything that is capable of being owned.
“conveys property in present or in future”

for the transfer to operate in future the decree which is the subject matter of the transfer
must be in existence at the date of the transfer. The words "in present or in future" qualify
the word "conveys" and not the word "property" in the section and it has been held that a
transfer of property that is not in existence operates as a contract to be performed in the
future which may be specifically enforced as soon as the property comes into existence.

(Jugalkishore Saraf vs Raw Cotton Co. Ltd 1955, Supreme Court)

What will happen if I create right in a future property?

Would the following amount to a transfer of property under Section 5?

- Auction Sale?

- Charge?

- Partition?

- Lease?

- Family arrangement?

- License?

- Will?

CASE LAWS

1. V. N. Sarin vs Major Ajit Kumar Poplai (1965) Supreme Court

Whether partition of coparcenary property amounts to ‘transfer of property’ under Section 5

TPA?

2. N. Ramaiah vs Nagaraj S. (2001) Karnataka High Court

Will=transfer of property under Section 5 TPA?

Transfer of Property Act, 1882 ('TP Act' for short) deals with transfers inter vivos, that is, the
act of a living person, conveying a property in present or in future, to one or more living
persons. The provisions of TP Act are inapplicable to testamentary successions which are
governed by Indian Succession Act, 1925. Section 2(h) of the Indian Succession Act defines
'Will' as 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.

A transfer is a conveyance of an existing property by one living person to another (that is

transfer inter vivos). On the other hand, a Will does not involve any transfer, nor effect any
transfer inter vivos, but is a legal expression of the wishes and intention of a person in regard
to his properties which he desires to be carried into effect after his death.

When a person makes a Will, he provides for testamentary succession and does not transfer
any property…While a transfer is irrevocable and comes into effect either immediately or on
the happening of a specified contingency, a Will is revocable and comes into operation only
after the death of the testator

3. Kenneth Solomon vs Dan Singh Bawa (1985) Delhi High Court

whether the act of disposing of the tenancy rights by making a will amounts to 'parting with
possession' and entitles the landlord to claim eviction under proviso (b) to Sub-Section (1) of
Section 14 of the Act

the Controller may, on an application made to him in the prescribed manner, make an order
for the recovery of possession of the premises on one or more of the following grounds only.
namely- (b) that the tenant has, on or after the 9th day of June, 1952 Sub-let, assigned or
otherwise parted with the possession of the whole or any part of the premises without obtaining
the consent in writing of the landlord

The expression "parted with possession", therefore, means giving the legal possession acquired
under the lease to a person who was not a party to the lease agreement [what if friends come
to live with us for a few days?]

The tenancy rights disposed under a will would vest in the devisee immediately on the death of
the testator. This vesting, in my judgment, would amount to parting with possession within the
meaning of the provisions contained in proviso (b).
Section 5 of TPA

The act of making a will in itself would not attract the provisions contained in proviso (b).

However, there is no escape from the conclusion that by his voluntary act the tenant parts with
the possession of the tenancy premises though from the date of his death in case the will
remains unrevoked. Dr Sury by her act of bequeathing the tenancy rights by means of the will
in favor of the petitioner and his brother had parted with possession within the meaning of
proviso (b).
4. Sahu Madho Das vs. Pandit Mukund Ram (1955) Supreme Court

A family arrangement can, as a matter of law, be implied from a long course of dealings
between the parties

The conduct of the various members of the family is relevant to show that their actings, viewed
as a whole, suggest the existence of the family arrangement on which the defendants rely.

inferences from the conduct of the family is all that can reasonably be expected in proof of an
arrangement said to have been made in 1875.

It is well settled that a compromise or family arrangement is based on the assumption that
there is an antecedent title of some sort in the parties and the agreement acknowledges and
defines what that title is, each party relinquishing all claims to property other than that falling
to his share and recognising the right of the others, as they had previously asserted it, to the
portions allotted to them respectively. That explains why no conveyance is required in these
cases to pass the title from the one in whom it resides to the person receiving it under the family
arrangement. It is assumed that the title claimed by the person receiving the property under
the arrangement had always resided in him or her so far as the property falling to his or her
share is concerned and therefore no conveyance is necessary

5. Mohar Singh vs. Devi Charan (1988) Supreme Court

The first respondent was a tenant of two adjacent shops, under a single lease, obtained from
two co-owners Shri Jado Ram and Asha Ram who had, respectively 3/8th and 5/8th shares in
the property. Appellant, Mohar Singh became the transferee of the 3/8th share of Jadoram.
Similarly, Asha Ram's 5/8th interest came to be transferred, through and intermediary
alienation, to a certain Gyan Chand. Pursuant to a decree in a civil suit for partition between
Gyan Chand and the appellant, the co-ownership came to an end and towards his share
appellant was allotted, and became the exclusive owner of, one of the shops. That is the subject-
matter of the present proceedings.

But Section 109 of the Transfer of Property Act provides a statutory exception to this rule and
enables an assignee of a part of the reversion to exercise all the rights of the landlord in respect
of the portion respecting which the reversion is so assigned subject…

It is true that a partition is not actually a transfer of property but would only signify the
surrender of a portion of a joint right in exchange for a similar right from the other co-sharer
or co- sharers. However, some decisions of the High Courts tend to the view that even a case
of partition is covered by Section 109 and that, in any event, even if the section does not in
terms apply the principle of the section is applicable as embodying a rule of justice, equity and
good conscience.

_____________________________________
What is the point?

N. Ramaiah vs. Nagaraj S. (2001) - Will is not a ‘transfer’ under Section 5 TPA

Kenneth Solomon vs. Dan Singh Bawa (1985)- Will can lead to ‘parting of possession’

V. N. Sarin vs. Major Ajit Kumar Poplai - Partition not ‘transfer’ under Delhi Rent Control
law (by extension, under Section 5 TPA)

Mohar Singh vs. Devi Charan (1988)- Partition can split tenancy and a person can acquire
the rights of a transferee under Section 109 TPA

________________________________________

Can a person transfer property to himself or herself?

1929 amendment

“The insertion of the words "or to himself therefore has a great significance…..the insertion
of these words was meant to cover those cases wherein a property is required to be transferred
by a person standing in one capacity, to himself standing in altogether another capacity.

An obvious illustration of this situation is the case where the man makes a settlement of his
property in trust constituting himself as the sole trustee. In such a case the legal ownership of
the property continues to remain with him but he no more holds the beneficial interest in the
property after the property is conveyed to him in his capacity as the sole trustee, as he is merely
the representative of the beneficiaries of the trust.”

[Naranbhai Dahyabhai Patel vs. Suleman Isapji Dadabhai (1974) Gujarat HC]

Indian Trusts Act 1882

H.W.- Can I lease property to myself?

____________________________

SECTION 6- WHAT MAY BE TRANSFERRED

Property and interests in property as a general rule are transferable. This rule of transferability
is based on the maxim alienation rei prefertur juri accrescendi, which means law favours
alienation to accumulation. Therefore, any attempt to interfere with the power of the owner to
alienate his interest in the property is frowned upon by the law.

Section 6-

Property of any kind may be transferred, except as otherwise provided by this Act or by
any other law for the time being in force,—

Clause (a)

The chance of an heir-apparent succeeding to an estate, the chance of a relation obtaining a

legacy on the death of a kinsman, or any other mere possibility of a like nature, cannot be
transferred.

For example- A hopes to succeed to his father's property on his death. His acquisition of this
interest is based on a hope or expectancy that may or may not materialise. If he is permitted to
transfer the same, it may create confusion and conflict of claims later on, and therefore he is
not permitted to do so.

Uncertainties involved- no property left, heir dies before the estate holder, makes/modifies their
will etc.

The chance of an heir apparent to succeed to the property of an intestate therefore cannot be
transferred. This chance is also referred to as spes successionis. If a person transfers this
chance, the status of this transfer in law is void ab initio. It does not convey any right in favour
of the transferee, even if the transferor who transfers a chance may, in fact, become the owner
of the same property in future.

By the Hindu law the right of a reversionary heir expectant on the death of a Hindu widow is
a spes successionis, and its transfer is a nullity and has no effect in law.

“any other mere possibility of a like nature”

Situations where chance involved- the possibility of winning a lottery, number of fishes the
fisherman would catch, future salary.

Application of estoppel under Section 43 - Distinguish between application of Sections

6(a) and 43

Section 43 applies whenever a person transfers property to which he has no title on a

representation that he has a present and transferable interest therein, and acting on that
representation, the transferee takes a transfer for consideration….if the transferor
subsequently acquires the property, the transferee becomes entitled to it…
Section 6 (a) would, therefore, apply to cases, where professedly there is, a transfer of a mere
spes successionis, the parties knowing that the transferor has, no more right than that of a mere
expectant heir

But where an erroneous representation is made by the transferor to the transferee that he is
the full owner of the property transferred and is authorized to transfer it and the property
transferred is not a mere chance of succession but the immovable property itself, and the
transferee acts upon such erroneous representation….

[Jumma Masjid vs Kodimaniandra Deviah (1962) SC]

______________________________

Clause (b)

A mere right of re-entry for breach of a condition subsequent cannot be transferred to anyone
except the owner of the property affected thereby.

condition subsequent - Section 31 of TPA: Condition that transfer shall cease to have effect
in case specified uncertain event happens or does not happen

Example of condition subsequent- A transfers a farm to B for his life, with a proviso that, in
case B cuts down a particular wood, the transfer shall cease to have any effect. B cuts down
the wood. He loses his life interest in the farm.

Where the transferor transfers the property subject to a condition that upon the transferee
committing a breach of condition of the agreement, the transferor would have a right to enter
the premises, this right of entry…..is not transferable.

This is generally seen in lease agreements.

Example- A grants a lease of a plot of land for 5 years to B with the condition that B shall not
dig a tank on the land. B digs the tank. A transfers the right of re-entry to C. This transfer i
invalid.

_____________________

Clause (c)

An easement cannot be transferred apart from the dominant heritage.

What is an easement?
Section 4 of the Indian Easements Act 1882:

An easement is a right which the owner or occupier of certain land possesses…for the
beneficial enjoyment of that land….. in respect of certain other land not his own

Examples:

1. A, as the owner of a certain house, has a right of way over his neighbour B’s land for purposes
connected with the beneficial enjoyment of the house. This is an easement.

2. A, as the owner of a certain house, has the right to go on his neighbour B’s land, and to take
water for the purposes of his household out of a spring therein. This is an easement.

The land for the beneficial enjoyment of which the right exists is called the dominant heritage,
and the owner or occupier thereof the dominant owner; the land on which the liability is
imposed is called the servient heritage, and the owner or occupier thereof the servient owner.

An easement cannot be transferred apart from the dominant heritage to which, by the nature of
the right, it is attached.

_____________________

Clause (d)

An interest in property restricted in its enjoyment to the owner personally cannot be transferred
by him.

As the right is personal in character, it is untransferable. A transfer of such property would

defeat the object of the restriction.

For instance, two brothers partition a property and give a right of pre-emption to each other,
i.e., if any one of them wants to sell his portion, he must first offer it to the other brother, who
would have a preferential right to buy it. This right is personal to the brothers and cannot be
transferred by them to a third party, and if they do so, such transfer would be void.

___________________

Clause (dd)

A right to future maintenance, in whatsoever manner arising, secured or determined, cannot

be transferred.

This term 'whatsoever manner arising secured or determined' is very exhaustive and covers
cases where this right has been created either under a will, deed or compromise. Thus, the right
of a woman to either receive maintenance under a decree or award of the court from her
husband, or her ex-husband, or from his property on his demise, or under a will is a personal
right. It cannot be transferred.

The very objective of maintenance is that a person unable to maintain himself or herself should
not be left destitute, and should be prevented from being in a state of vagrancy. If it is allowed
to be transferred, it will defeat this very purpose.

_______________

Clause (e)

(e) A mere right to sue cannot be transferred.

A right to sue is again a personal right that only an aggrieved party can exercise to seek a
remedy in a court of law. A bare right of action might be claims to damages for breach of
contract or claims to damages for tort.

The law will not recognise any transaction which may savour of maintenance or champerty. It
is only when there is an interest in the subject-matter that a transaction can be saved from the
imputation of maintenance.

Maintenance, in the context of litigation, is the assistance of a third party having no direct
interest in the outcome of the case. Champerty is the direct financing or support of a case in
which one has no legitimate interest, with a view to getting a share of the proceedings.

For example:

1- A and B enter into a contract for sale of property. The contract contains a clause that if A
fails to execute the transfer deed within a month, he would have to pay double the amount of
advance paid to him by B at the time of the agreement. This claim of damages is personal to B
and is unassignable.

2- Where an advocate assigned his right to petitioner to sue the defendant and claim
compensation for defamation, it was held that right to sue for damages concerning defamation
cannot be transferred by one person in favour of another.

3- A transfer of a right to recover profits which arise out of land along with a transfer of land,
is assignable.

Will discuss again when we come to the topic of ‘actionale claims’

______________________

Clause (f)

A public office cannot be transferred, nor can the salary of a public officer, whether before or
after it has become payable.
By 'public officer' it is meant a person who is appointed to discharge a public duty, and receives
a monetary return for it in the form of a salary. As the salary is a return for his personal services,
it is neither transferable. The salary is given to a public officer for upholding the dignity of the
office and the proper performance of its duties.

____________________

Clause (g)

Stipends allowed to military naval, air-force and civil pensioners of Government and political
pensions cannot be transferred.

Pension means periodical payments of money by the government to the pensioner, or allowance
or any other stipend granted not in respect of any right, privilege perquisite or office but on
account of past services or particular merits.

As aforesaid, a pension retains its character as long as it is unpaid and in the hands of
government, but as soon as it is paid to the pensioner or his legal representatives or agent it can
be attached or transferred.

_______________________

Clause (h)

No transfer can be made:

(1) in so far as it is opposed to the nature of the interest affected thereby, or

Things that are by their very nature untransferable.

“ The State is the trustee of all natural resources which are by nature meant for public use and
enjoyment. Public at large is the beneficiary of the sea- shore, running waters, airs, forests and
ecologically fragile lands. The State as a trustee is under a legal duty to protect the natural
resources. These resources meant for public use cannot be converted into private ownership.”
[MC Mehta vs Kamal Nath 1996]

(2) for an unlawful object or consideration within the meaning of section 23 of the Indian
Contract Act, 1872 (9 of 1872), or

(3) to a person legally disqualified to be transferee.

___________________

SECTION 7

Persons competent to transfer.—Every person competent to contract and entitled to

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

The previous clause of Section 6 talked about the qualifications of a transferee. This Section
talks about the competency of the transferor.

The transferor must be—

(1) competent to contract; and

(2) have title to the property, or authority to transfer it if not his own.

Competency to contract

Section 11 of the Indian Contract Act

Who are competent to contract.—Every person is competent to contract who is of the age of
majority according to the law to which he is subject, and who is of sound mind, and is not
disqualified from contracting by any law to which he is subject.
Officers and employees of the patent office are incapable, during the period in which they hold
their appointments, to acquire or take any right or interest in any patent issued by that office.

No forest officer shall, as principal or agent, trade in timber or forest produce, or be or become
interested in, any lease of any forest or in any contract for working in any forest, except with
the permission of the state Government in writing.

Since the transferor must be competent to contract, a minor cannot be a transferor.

Authority to dispose off property

Either you have a title over that property or you are authorized to dispose it.

As instances of authority to transfer the property of another, the following may be cited—an
agent acting under a power of attorney; the donee of a power of appointment; the guardian of
a minor duly authorised by the court in that behalf; the manager of a Hindu family in case of
necessity or for the benefit of the family.

___________________

Can a minor transfer a property?

Facts of Mohiri Bibee vs. Dharmodas Ghosh (1903) Privy Council

Can a minor be the transferee?

Section 6(h) and 7 of TPA

“Section 6, Clause (h), of the same Act sets forth the class of transfers of property which cannot
be made. It does not state that a transfer cannot be made to a minor. Section 7 provides that
every person competent to contract and entitled to transferable property is competent to
transfer such property. Nowhere in the Act is it provided that a minor is incapable of being a
transferee of property, and as a matter of practice, we are well aware that transfers of
immovable property are everyday made to minors.”

[Munni Kunwar vs Madan Gopal (1915)]

___________________

What is the difference between a contract and a transfer?

__________________

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.
The rule enunciated here is designed to avoid confusion or speculations with respect to 'what,
if any' in the property passes with its transfer. Thus, the first thing would be to read the
instrument as a whole to find the intention of the parties.

If the transferor transfers all the interest that he possesses in the property that he possesses on
that date, the entire interest that he had, will pass. For example, A transfers a land on which
there are trees or a well

If nothing to the contrary is specified, the trees or the well would pass along with the land to
the buyer.

Where the property is land, the easements annexed thereto, the land and the minerals beneath
it also pass with the transfer. For instance, in a sale of land, the purchaser acquires use of water
from the well on the land or a right of way, which the seller has.

All things attached to the earth, like upon a transfer of the land, all structures upon it,
including the house, buildings, trees, including fruit trees, pass by necessary implication, and
it is not necessary to mention them. However, the contrary may not be true, thus, transfer of
trees will not, by itself, justify the inference that the land was also transferred

__________________

Section 9 - Oral Transfer

A transfer of property may be made without writing in every case in which a writing is not
expressly required by law.

…the transfer of every tangible property, reversion or other intangible thing where its value is
more than Rs 100; by mortgage (other than a mortgage by deposit of title deeds) where the
principal money secured by way of loan is more than Rs 100, by gifts irrespective of the value
of the property, or lease for more than a year or where rent for more than 12 months has been
taken in advance, must be made in writing.

Read Section 54 TPA

_______________________

Section 10- Condition restraining alienation

Where property is transferred subject to a condition or limitation absolutely restraining the

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

For example, a person A, who is the owner of a house X, transfers it for consideration to B. In
the transfer deed, A puts a condition that B would not sell it to anyone, but would keep the
possession of the property to himself. B agrees to abide by this condition and pays
consideration. After the title passes and the property vests in B, B sells it to C.

What will be the validity of A’s transfer to B and B’s transfer to C?

Condtition precedent vs Condition subsequent

1. Condition precedent- where the condition has to be complied with or fulfilled before a
transfer could be effected

it is only if the condition is fulfilled that the transfer would take place, and if it is a condition
that is either opposed to public policy or is unlawful or immoral, the transfers subject to such
conditions would also become void. If the condition is such which is impossible to perform,
then again this conditional transfer would be void. If the prospective transferee fails to fulfill
this condition upon which the transfer depends the transfer cannot take place

For instance, A agrees to transfer his house to B, on the condition that B must marry his
daughter D, within two years. D dies within a month of this agreement without marrying
B. The condition becomes impossible to perform, and the transfer would not take
place

2. Condition subsequent- The other category of conditional transfers is where the condition is
subsequent to the transfer. The time for compliance with this condition is after the transfer
takes place and the property or an interest in the property vests in the transferee. Section 10
speaks about a condition that is subsequent to the vesting of the interest in the transferor.

Here, if the transfer is subject to a condition that prevents the transferee from disposing of or
parting with his interest in the property that vested in him through this transfer, the condition
would be void, but the transfer would remain perfectly valid.

Partial vs Absolute restraint

Restraint means preventing or stopping or disabling a person from doing something.

Absolute restraint, therefore, refers to a condition that attempts to takes away either totally or
substantially this power of alienation. The use of the term 'absolutely' also suggests, that where
the restriction is partial, or little, it will be permitted. This means that some or little control over
the power of alienation, of the present owner by the previous owner is allowed. This control is
in the shape of imposition of 'partial restraint'.

A transfers a field to B, and incorporates a condition in the transfer deed, that B can sell it to
anyone, but will have to pay 90% of the consideration to A's son. The terminology used does
not indicate an attempt to curtail the power of sale, but the practical effect would be that B
would be substantially deprived of the power to transfer it according to terms that are beneficial
to him. This condition therefore would be repugnant to his power of alienation, and is therefore,
void.

Types of restraints

Therefore, restraints on alienations can appear in the following ways:

(i) Restraints on transfer for a particular time;

(ii) Restraints directing control over consideration/money;
(iii) Restraints with respect to persons/transferee; and
(iv) Restraints with respect to sale for particular purposes or use of property.

Restrictions with respect to time, i.e., the condition that the transferee would not sell it
for five years or ten years or for any time period whatsoever would be void, unless it is
for a short time period and is coupled with a benefit to the transferor, such as an option
of re-purchase, at a consideration stipulated in the contract.

Restrictions cannot be imposed on consideration. Freedom of the owner to negotiate.

Where the transferor puts a condition directing the transferee that should he want to sell the
property, he must sell only to a specific person named by the transferor in the deed or to a group
of persons, such a condition would be void. But if the condition is that he should not sell it
outside his family or even community, then it will be valid as partial restraint, provided both
transferor and transferee are members of the same family or community. Such a condition may
stem from a desire to conserve the property within a specific family or community, of which
both the parties are members.

A provision in the sale deed that in the event of failure to construct a private college in the
property sold thereunder, the property should be reconveyed by the transferee to the transferor
for the same sale consideration would amount to an absolute restraint on alienation

Rosher vs Rosher (1884)

J.B. Rosher, in his will:

“I devise all my manor, commonly called Trewyn Manor, and all other my real estate, unto my
said son Jeremiah Lilburn Rosher, his heirs…and I hereby declare that if my said son, or his
heirs shall desire to sell my manor and estate of Trewyn in the life time of my wife, she shall
have the option to purchase the same at the price of £ 3600 for the whole and the same shall
accordingly be first offered to her at such price or proportionate price or prices…”

The testator died on the 26th of November, 1874. This action was brought by the widow against
the son.

the real selling value of the manor and estate of Trewym, was at the date of the will and at the
time of the testator death, £ 15,000 and upwards
I consider that as an absolute restraint against sale during the life of the widow. I mean to treat
it as if it had been done “during the life of the widow you shall not sell,” because to compel
him, if he does sell, to sell at one-fifth of the value, and to throw away four-fifths of the value
of the estate is, to my mind, equivalent to a restraint upon selling at all.

If a covenant be held good which in the event of a grantee in fee simple aliening the land,
merely imposes a fine upon him the general rule might be evaded and the principles of it
violated by fixing such an amount of fine or additional rent as would effectually prohibit the
alienation, which would clearly be a `circumvention of the law.

K Muniswamy vs. K. Venkataswamy (2000) Karnataka High Court

The deceased appellant and the respondent are the brothers, who along with their father in the
year 1969 partitioned the properties under registered partition deed, whereunder the suit
schedule property was allotted to the share of the father and mother with a stipulation that they
should enjoy the properties during their lifetime in the manner they like and after their death,
the property shall devolve in equal shares to the appellant and the respondent. During the year
1977, the parents sold the property under registered sale deed in favour of the respondent.

it becomes explicit that per se the provisions of Section 10 of the T.P. Act would not apply to
the partition and family settlement
However, on the ground of sound public policy any total restraint on the right of alienation in
respect of immovable property which prevents free circulation is to be held void, but, any
partial restraints or limitation would be valid and binding.

the latter stipulation provides that after the demise of the parents, the plaintiff and the
defendant shall equally take the property. This cannot be interpreted to override the clear terms
of grant under partition.

it is possible to assume from the stipulation that an absolute estate is granted in favour of the
parents in view of the terms that they should enjoy the property in the manner they like and in
the event of they dying intestate and that full or any part of the property available is left for
intestate succession, in such a situation latter stipulation may come into effect, otherwise not

K. Venkatarammanna vs. K. Brammanna Sastrulu (1869)

in a partition by a separate agreement it was stipulated that any one of the parties to the
agreement or their heirs dying leaving no issue should not sell or transfer as a gift but should
on his death be divided by the shareholders

"The obvious purpose of these stipulations was to frustrate indefinitely the right of alienation
which was a legal incident of the absolute estate in severally created by the partition in effect
to covert the estate in the case of each soleness or issueless possessor into a mere life
enjoyment. But this we are of the opinion they were inoperative to do.”

Syed Mohammad Raza vs Abbas Bandi Bibi (1932) Bombay High Court

family arrangement- person receives property with the condition that she should not alienate
the property to a stranger i.e. anyone who is not part of the family

Whether this condition is repugnant?

On the assumption that Sughra Bibi took under the terms of the document in question an
absolute estate subject only to this restriction, their Lordships think that the restriction was not
absolute, but partial; it forbids only alienation to strangers, leaving her free to make any
transfer she pleases within the ambit of the family

it seems clear that after the passing of the Transfer of Property Act in 1882, a partial restriction
upon the power of disposition would not, in the case of a transfer inter vivos, be regarded as
repugnant; see Section 10 of the Act

Is it then contrary to justice, equity and good conscience to hold an agreement of this nature
to be binding ?

Sir George Jessel M. R. upheld a condition attached to a devise in fee that the devisee should
"never sell out of the family," pointing out that this had been the law from the time of Coke

Gomti Singh vs Anari Kaur (1929) Allahabad High Court

Basdeo Singh executed a document… under which he made himself and his two wives Mt.
Parbati Kuar and Mt. Anari joint owners of his property on the following terms

Basdeo Singh gave his property to his two wives who along with Basdeo Singh were to be the
owners in possession of the property and would remain so

Neither Basdeo Singh nor his wives would have the right to transfer the property separately
unless all combined. They would have the right to manage their affairs from the income of the
property

whether the restraint on alienation was an absolute restraint within the meaning of Section 10,
T.P. Act, or it was only a partial restraint which is not prohibited by that section

in order to determine whether the restraint was absolute or partial one must gather the
intention of the transferrer from the contents of the document
It seems to us that for all practical purposes Basdeo Singh reserved to himself the absolute
power of preventing alienation of any kind. Unless he himself was prepared to waive this
condition, he gave no power to his wives to transfer the property gifted to them under any
circumstances. We therefore think that this amounted to an absolute restraint on alienation
within the meaning of Section 10.

A similar case arose in Khiali Ram v. Raghunath Prasad- There too one of the terms of the
compromise embodied in a decree was that the party to whom the house was conveyed under
it was not at liberty to transfer it without the consent of the other party to that compromise
decree

___________________________

Exception to Section 10

1. except in the case of a lease where the condition is for the benefit of the lessor or those
claiming under him

A condition in the lease that the lessee shall not sublet or assign his interest to anyone during
the tenure of the lease is valid.

The lessor can always restrict the lesse’s ability to alienate his interest. The reason behind this
is that a landlord should be free to choose the person who shall be in possession of his land.

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

The section provides that property may be either transferred to or for the benefit of such a
woman, with a condition that she would not have power during her marriage to transfer or even
charge the same or her beneficial interest therein

The restriction can therefore be applied to a woman who is a Christian, Parsi or a Jew.

___________________________

Section 11

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

person, but the terms of the transfer direct that such interest shall be applied or enjoyed by him
in a particular manner, he shall be entitled to receive and dispose of such interest as if there
were no such direction.
Once the property is transferred absolutely, the owner acquires certain basic rights in the
property. A right to possess and enjoy the property is an inherent right of the owner, one that
is inseparable from the incidents of ownership.

No private agreement between the previous owner and the present owner can be enforced,
whereby the former can dictate to the current owner, how he should use the property. If he
does, the owner is entitled to ignore it and use it in a manner consistent with his wishes and
convenience, without being liable for breach of contract.

For example:

A transfers his house to B with the condition that B would not demolish it. After purchasing
the property, B may retain or demolish it, and A cannot stop him from doing so.

A sells a field to B with the condition that B must grow vegetables/crops on it. After the transfer
has been effected, B may put it to any use he wants.

Absolute interest

Absolute interest indicates that the transferor vested through a specific conveyance all the rights
that he had in the property in favour of the transferee, without retaining any right in his own
favour such as, a transfer by way of sale, exchange or an unconditional gift. Section 11,
therefore, does not apply to those transfers, through which, the transferor conveys, one or some
rights in the property to the transferee, while retaining some rights in his own favour, such as
a lease or a mortgage.

For example, A executes a lease of his house to B, with a condition that he would live in it, and
would not use it for commercial purposes. B takes the house, and opens a shop in the premises.
A can, depending upon the terms stipulated in the lease deed, for its violation, sue B for
violation of the lease deed and stop him from using the same for commercial purposes.

Difference between Sections 10 and 11

1. Section 10- Absolute or partial transfer; Section 11- Absolute transfer only

2. Section 10- Alienation of the property; Section 11- Enjoyment of the property
Exception under Section 11

Despite conveying an absolute interest, the transferor is competent to not only impose, but also
enforce a condition directing the transferee/present owner, to enjoy his interest or transfer in a
specific manner if the same is necessary, for the enjoyment of another property of the
transferor, that is retained by him.
For instance, A owns a house, X, and the land Y, adjoining X. He sells this Y to B, with a
condition that B would leave a vacant space of six feet adjoining X, whenever he builds over
Y, so that the air and light of his house X is not obstructed.

1. Transferor should be owner of both the properties. He sells one to transferee.

2. He imposes a condition for the beneficial enjoyment of his own property.

Positive and negative covenants

Conditions or directions that the transferor may impose upon the transferee to secure better
enjoyment of his own property can be of two types: positive or affirmative conditions, i.e., they
direct the transferor to do something and negative conditions, i.e., they restrain the transferee
from doing a particular thing. These conditions are also called covenants.

The basic distinction between negative and positive covenants is that in case of positive
covenants, the transferee incurs a financial burden, so that the transferor can enjoy his property,
while in the negative covenants he abides by, not to do something, and while not doing it, he
would not be incurring a liability.

For example:

Condition to not construct a house on land

Condition to carry maintenance of the water tank

Why is this distinction important?

While positive covenants are called 'burden on land', the negative covenants imposed for
beneficial enjoyment of transferor's own land are called 'benefits of a covenant'. They attach
themselves to the land and run with the land.

As the benefits of a covenant attach themselves to the land and run with it, irrespective of the
owner, they can be enforced not only against the transferee who was party to the contract, but
also against all subsequent transferees, for value if they had notice of it.

QUESTION

A shop was sold subject to a condition that purchaser shall not be entitled to construct any
basement or any pakka construction but there was nothing to show that this direction was made
for the purpose of securing the beneficial enjoyment of vendor's another property. Can this
condition be enforced as per Section 11?

_________________________
Section 12- Condition making interest determinable on insolvency or attempted
alienation

Where property is transferred subject to a condition or limitation making any interest therein,
reserved or given to or for the benefit of any person, to cease on his becoming insolvent or
endeavouring to transfer or dispose of the same, such condition or limitation is void.

Nothing in this section applies to a condition in a lease for the benefit of the lessor or those
claiming under him.

Determination=The ending or expiration of an estate or interest in property

if the transferee becomes insolvent, the transfer would be treated as cancelled and the property
would revert back to the transferor. Such a condition may deprive not only an owner a right of
alienation, but also defeat, at the same time, the rights of his creditors, who may want to enforce
their claim against this property on his attaining insolvency

It may be noted that S. 12 enunciates an exception to the general rule enacted in Ss. 31 and 32,
which provide that an interest “may be created” with the condition superadded that it shall
cease to exist on the happening of an uncertain event.

Nature of Section 12

Section 31 deals with condition which merely provides that the interest shall cease to have
effect in case a specified uncertain event happens or does not happen. This is known in England
as a condition subsequent. But, to distinguish it from other condition subsequent, we can
describe such conditions as conditions of defeasance.

Illustrations (to Section 31)

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

(b) A transfers a farm to B, provided that, if B shall not go to England within three years after
the date of the transfer, his interest in the farm shall cease. B does not go to England within the
term prescribed. His interest in the farm ceases.
Section 12 is an exception to Section 31 which means that you cannot impose a condition of
defesance that restricts the transferee’s power to dispose of his interest or ceases his interest on
the ground of insolvency.

Difference between Sections 12 (second part) and 10

1. Different nature of conditions

Section 10 talks about condition restraining the transferee from alienating the property

Example: A transfers property to B and states that B shall not transfer the property to anyone
except C. This implies that if B transfers the property to D then that transfer between (B and
D) would be void. The initial transfer between A and B will remain intact.

Section 12 talks about condition making the interest determinable on alienation of property

Example: A transfer property to B and states that if B transfer the property to anyone except C,
then the property will revert back to A. This implies that if B transfers the property to D then
it would direct affect the initial transfer between A and B. A would get his interest in the
property back.

2. Types of alienation

S. 12, first paragraph, is in some respects wider than S. 10. S. 10 applies only to restraints
which are absolute—as the text goes,—or restraints which are substantially absolute—as
interpreted by judicial decisions. In S. 12, however, a partial restraint also seems to be covered.

3. Scope

S. 10 deals with a condition against alienation in the abstract, while S. 12 is confined to

conditions or limitations which expressly provide for cesser of an interest on an endeavour to
transfer or dispose of the same

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Section 13- Transfer for the benefit of unborn person

Where, on a transfer of property, an interest therein is created for the benefit of a person not
in existence at the date of the transfer, subject to a prior interest created by the same transfer,
the interest created for the benefit of such person shall not take effect, unless it extends to the
whole of the remaining interest of the transferor in the property.

Section 13 gives effect to the general rule that a transfer can be effected only between living
persons. There cannot be a direct transfer to a person who is not in existence or is unborn. This
is the reason why section 13 uses the expression transfer 'for the benefit of' and not transfer 'to'
an unborn person.

Unborn person
It should be noted that the term 'unborn' here, refers to not only those, who might have been
conceived but are not yet born, i.e., a child in womb, but also includes those who are not even
conceived.

How to transfer property for the benefit of an unborn person

Step 1- Create a life interest in the favour of a living person.

Step 2- This life interest should be followed by an absolute interest in favour of the unborn
person
Step 3- The living person would hold the property till his lifetime (right of enjoyment not
alienation)
Step 4- As soon as the unborn person is born, the property would vest in him/her. (He will have
title)
Step 5- The unborn person would get the possession of the property only on the death of the
living person.

Example

1. A, on 1 January 1980 executes a deed by which he creates a life interest in his property in
favour of his brother Br and further provides that this property is to vest absolutely in favour
of his brother's first child UB. Br, on the date of the transfer, was unmarried. He took the
possession of the property, got married and a child was born to him in 1985. Br died in 2000.

2. Suppose in the same situation UB is born in 1985 but dies in 1990 i.e. during lifetime of Br.

3. Suppose in the same situation UB is never born.

Section 113 of the Indian Succession Act 1925

113. Bequest to person not in existence at testator’s death subject to prior bequest.—Where
a bequest is made to a person not in existence at the time of the testator’s death, subject to
a prior bequest contained in the Will, the later bequest shall be void, unless it comprises
the whole of the remaining interest of the testator in the thing bequeathed.

The section is almost identical with section 113, Indian Succession Act, 1925. The difference
between the two sections is that the former relates to transfer inter vivos, while the latter deals
with bequest which take effect only on the death of the testator

Example:
Property is bequeathed to A for his life, and after his death to his eldest son for life, and
after the death of the latter to his eldest son. At the time of the testator’s death, A has no
son. Here the bequest to A’s eldest son is a bequest to a person not in existence at the
testator’s death. It is not a bequest of the whole interest that remains to the testator. The
bequest to A’s eldest son for his life is void.

How many life interests can you create before transfer to unborn person?

On B's death, the possession would be taken by C and on C's death, by D. On D's death,
the possession would go to B's child, who should have come in existence by this time. If
he is not there, the property would revert back to A, if he is alive, else, to his heirs

Can you create a life interest in favour of an unborn person?

Section 13, specifically prohibits that, by the use of the expression, 'the interest created for
the benefit of such person' shall not take effect, unless it extends to the whole of the
remaining interest of the transferor in the property. It means that the transferor must convey
to the unborn person, whatever interest they had in the property, without retaining anything
with them.

_______________

Suppose UB1 dies before B and UB2 is alive. Would UB2 get an absolute interest as per
Section 13?

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

Girjish Dutt vs. Data Din 1934

A made a gift of her property to B for her life and then to her sons absolutely. The deed
further provided that in case B had only daughters, then the property would go to such
daughters but only for their life. In case B had no child then after the death of B, the property
was to go absolutely to X

Son- Absolute transfer

Daughters- Life interest
No children - Absolute Interest to X

B had no child on the date of execution of the gift.

“If we analyse Section 16 it will be seen that three conditions are necessary for its implication:

(1) There should be an interest created for the benefit of a person or a class of persons which
must fail by reason of the rules contained in Sections 13 and 14;
(2) there should be another interest created in the same transaction; and
(3) the other interest must be intended to take effect after or upon failure of the prior interest”

In determining whether the transfer is in violation of section 13, regard has to be made with
respect to the contents of the deed and not to what happened actually. Here, as the transfer in
favour of X was to take effect on failure of the third transfer stipulated in the contract. that was
void, the transfer in favour of X also became void. Hence, X's claim was defeated.

______________________________________________

Ram Newaz vs. Nankoo (1925) Allahabad High Court

Let this be known that the 2 bighas of nankar land which I have excluded from the sale
shall remain in my possession for life and after my death in the possession of my aulad
khas….I or my lineal descendants have no right to transfer the property….If none of my
lineal descendants is alive in my family then the said land shall be declared to be the own
property of the vendee and his heirs and the persons of my family shall have no claim to
the same.

The position was that Ram Charan having died, he was succeeded by his son Mauzzam
Ram, who in turn died childless in 1918,

these 2 bighas of nankar land might have remained with the lineal descendants of Ram
Charan for 100 or 200 years, and that being so, we are of opinion that this was a condition
repugnant to the law

____________________________

Section 14- Rule against Perpetuity

No transfer of property can operate to create an interest which is to take effect after the
lifetime of one or more persons living at the date of such transfer, and the minority of some
person who shall be in existence at the expiration of that period, and to whom, if he attains
full age, the interest created is to belong.

Example 1- Default rule

A transfers property for life to B, and then to B's first unborn child without any specification
as to the time of vesting of property. The transfer is perfectly valid and the property would
vest in his favour, the moment he is born.

Changing the default rule- Rule against Perpetuity

The rule of vesting of property at birth can be changed by the transferor, and he can stipulate
the specific time of vesting of property in favour of the beneficiary.

However, he cannot stipulate a time of vesting which goes beyond the period of perpetuity
i.e., lifetime of a living person or more than one living person and the attainment of 18
years of the person not in existence on the date of the transfer.

Example 2- Rule against Perpetuity not violated

A transfers property for life to B, and then to B's first child when he attains the age of 18
years absolutely. B is living on the date of the transfer but has no child. In this case, when
B's first child would be born, the property would not vest in him till he attains the age of
18 years. If he dies without attaining the age of 18 years, it would revert back to the
transferor or his heirs as the case may be.
A transfers property for life to B, and then to B's first child when he attains the age of 10
years. The transfer is perfectly valid and the property would vest in his favour, on his
attaining the age of 10 years.

Example 3- Rule against Perpetuity violated

A transfers property for life to B, and then to B's first child when he attains the age of 25
years. The transfer is void, as the vesting of the property is postponed beyond the minority
of B.
_____________

Can I create a lease till perpetuity?

Section 109 TPA.

____________

R. Kempraj vs. M/S. Barton Son (1969) Supreme Court

whether an option given to a lessee to get the lease, which is initially for a period of 10 years,
renewed after every 10 years is hit by the rule of perpetuity and is void.

It was stipulated that the lease would be for a period of 10 years in the first instance with effect
from November 1, 1961 "with an option to the lessee to renew the same as long as desired as
provided".

The Lessor shall not raise any objection whatsoever to the Lessee exercising his option to
renew the lease for any further periods of ten years on the same terms and conditions as long
as they desire to be in occupation, provided that the Lessee shall not have the right to transfer
the lease or alienate any right thereunder

It is well known that the rule against perpetuity is rounded on the principle that the liberty of
alienation "shall not be exercised to its own destruction and that all contrivances shall be void
which tend to create a perpetuity or place property for ever out of the reach of the exercise of
the power of alienation".

Section 14 is applicable only where there is transfer of property. Even if creation of a lease-
hold interest is a transfer of a right in property and would fall within the expression "transfer
of property" …The stipulation relating to the renewal could not be regarded as transferring
property or any rights therein

The clauses containing the option to get the lease renewed on the expiry of each term of ten
years can by no means be regarded as creating an interest in property of the nature that would
fall within the ambit of s. 14.

________________
Javvadi Venkata Satyanarayana vs Pyboyina Manikyan (1982) Andhra High Court

A executed settlement deed conferring life estate to his son (S) and absolute interest to sons of
S. Before the birth of S’s sons, he executed a relinquishment deed of his life estate in favour of
his father A. On birth of S’s sons, would they get absolute interest in the property?

Section 16 would apply?

Firstly the gift of the unborn children has not failed either because of the rules contained in S.
13 or S. 14

Secondly the prior interest created in favour of Ganga Raju is also not invalid.

Thirdly a valid estate created in favour of Ganga Raju was voluntarily transferred in favour of
muthaiah and

lastly when there is no failure of prior interest and no question of failure of the subsequent
interest arises as contemplated under section 16

consequently all the children of Ganga Raju on their birth acquire vested interest as
contemplated under S. 20 of the Transfer of property Act.

The invalidity of the transfer must be judged with reference to the original settlement deed but
not by the voluntary Act of the donees under the deed itself. The person who obtained the benefit
of the deed by his own volition cannot defeat the terms of the deed under which he obtained the
interest….The life estate holder cannot defeat the interests of hte unborn person by transferring
the life estate to a third person

_____________________________

QUESTION (Rule against Perpetuity)

A fund is bequeathed to A for his life, and after his death to B for his life, and after B's death
to such of B's sons as shall first attain the age of 25. B dies in the lifetime of the testator, leaving
one or more sons.

_____________

Section 15- Transfer to class of persons

If, on a transfer of property, an interest therein is created for the benefit of a class of persons
with regard to some of whom such interest fails by reason of any of the rules contained in
sections 13 and 14, such interest fails in regard to those persons only and not in regard to the
whole class.
For example, A transfers his property to his son S, for his life and then to his grandsons, when
they attain the age of 18 years and to his daughters when they reach the age of 21 years.

for unborn daughters, it is void as violative of rule against perpetuity. As it stood before 1929,
section 15 would have made the transfer in favour of both the unborn sons and daughters' void.
However, after the amendment, and under the present law, the transfer in favour of only the
granddaughters will fail, but the same in favour of grandsons would be valid and will be given
effect to.

_____________

Section 17- Direction for accumulation

(1) Where the terms of a transfer of property direct that the income arising from the property
shall be accumulated either wholly or in part during a period longer than—

(a) the life of the transferor, or

(b) a period of eighteen years from the date of the transfer,

such direction shall, save as hereinafter provided, be void to the extent to which the period
during which the accumulation is directed exceeds the longer of the aforesaid periods, and at
the end of such last-mentioned period the property and the income thereof shall be disposed of
as if the period during which the accumulation has been directed to be made had elapsed.

It applies to transfers where the property and the income arising from property are separated
by the transferor while effecting a transfer, and the transferee is directed not to spend the
income but accumulate it for a period.

Law favours free alienation of property and spending of the income arising from it except only
where the tying up of property or storage or accumulation of income is reasonably desired.

Would Section 11 not apply here?

1. A transfers his property to B in 1960 with a direction, that the income coming out of this
property be accumulated for a period of 50 years. A dies in 1962. The maximum period till
which income can be accumulated is:

a). 1978
b). 2010
c). 1980
d). 2028
2. Similarly, A transfers a property to B in 1960, with a direction for accumulation of income
for a period of 20 years. A dies in 1990, i.e., 30 years after the execution of the deed. Maximum
period?

____

Validity or the original transfer?

____

Exceptions to Section 17(1)

1. Payment of debt of transferor

A executes a lease of his property and then assigns this lease to B for 99 years with a direction
that half of the rent that he would receive would be accumulated for this entire period, so that
the debts of A could be paid out of this accumulated income.

2. Making a provision for children

A gifts a land to his son B, with a direction that the income coming out of the land should be
accumulated for 50 years and the same should be used for the benefit of B's children.

3. Preservation and maintenance of property

A transfers immovable property to B, that was in the occupation of tenants with a condition
that one-fourth of the rent must be accumulated for a period of 100 years, so that the property
be maintained and kept in good shape to preserve its market value.

____

Would it bind third parties?

____

Section 18

Transfer in perpetuity for benefit of public.—The restrictions in ss. 14, 16 and 17 shall not
apply in the case of a transfer of property for the benefit of the public in the advancement of
religion, knowledge, commerce, health, safety or any other object beneficial to mankind.

The principle underlying section 18 is to create a distinction between transfers that are purely
commercial or personal in character and those which are intended to benefit the public. Where
the transfer is for public welfare or public benefit, it is usually not subject to rigorous limitations
or restrictions, rather, it is considered necessary to keep it intact so that public welfare can be
taken care of.
For example:

A settlement where funds are to be accumulated even in perpetuity for feeding poor pilgrims

Buying a public hall, for creating a welfare fund for the advancement of a members of a
particular disadvantaged class or caste, for the visually, physically or mentally challenged,
orphans or the underprivileged.

Gifts or settlements for establishment of an idol and its worship, for performance of religious
ceremonies, for celebrating religious festivals, or for creation of wakfs.

An endowment may be charitable without being religious, and it may be religious without being
charitable—particularly where the element of public benefit is missing. This is true where an
endowment is private in the sense that the dedication is limited to a family God, meant for a
family or families or a small and certain body of individuals and the public has no access to the
idol.

____

VESTED AND CONTINGENT INTEREST

Section 19- Vested Interest

Where, on a transfer of property, an interest therein is created in favour of a person without

specifying the time when it is to take effect, or in terms specifying that it is to take effect
forthwith or on the happening of an event which must happen, such interest is vested, unless a
contrary intention appears from the terms of the transfer.

a). Without specifying the time when it is to take effect

b). In terms specifying that it is to take effect forthwith
c). On happening of an event which must happen.

Example- Section 20

It postulates that where an interest is created for the benefit of an unborn child, the moment the
child is born, he takes a vested interest in it but only if a contrary intention does not appear
from the language of the transfer.

Section 21- Contingent Interest

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

effect only on the happening of a specified uncertain event, or if a specified uncertain event
shall not happen, such person thereby acquires a contingent interest in the property. Such
interest becomes a vested interest, in the former case, on the happening of the event, in the
latter, when the happening of the event becomes impossible.

a). Happening of a specified uncertain event

b). Or if a specified uncertain event shall not happen.

If the transfer is dependent upon the happening of an event that is bound to happen, the
transferee takes a vested interest in the property. 'Vested interest' means that the transfer is
complete, even though possession might not have been delivered. The ownership is with the
transferee, and if he dies, he is empowered to transmit the property to his heirs.

In contingent interest, the transfer is not complete and is dependent on a condition precedent
the happening and fulfillment of which is not certain. It would be converted into a vested
interest only when the condition happens.

A gift to B, on the death of A's father is a vested interest, but a gift to B on the birth of A's son
is a contingent gift, as whether a son will be born to A or not is uncertain, but the death of a
human being is a certain event.

A condition postponing enjoyment does not prevent the interest vesting immediately.

The appointment of an executor or guardian during the minority of the devisee, with a direction
to hand over the property on his attaining majority, does not postpone the vesting of the bequest.

A vested interest is not possession defeated by the death of a transferee before he obtains or by
creation of a prior interest.

DIFFERENCES

1. Vested- Person gets immediate right

Contingent- Right is contingent upon uncertain event.

2. Vested- Transferable and heritable

Contingent- Transferable but not heritable

3. Vested- No condition precedent

Contingent- Condition precedent there.

Is there any difference between contingent interest and spes successionis?

_________________
Classify the interest:

1. A owned separate property. He dies leaving a widow B and a brother C. C?

2. A owned separate property. He makes settlement of property to B for life and then to his
son, if he has one. If no son, then to C.

3. A transfers property to B on condition that he shall pay 500 to C.

4. A transfers property to B in case he attains the age of 18.

5. A transfers property to B (Rs. 500) that is to be paid to him on attaining 18.

Read for next class:

● Usha Subbarao v. BN Vishverwaraiah AIR 1996 SC 2260.

● Rajesh Kanta Roy v. Shanti Debi AIR 1957 SC 255.

____________________________

Rajesh Kanta Roy v. Shanti Debi AIR 1957 SC 255.

The main provision under which the two brothers, Rajes and Ramendra, get any interest
under the trust deed is that contained in sub-cls. (a) and (b) of cl. 12,

On the liquidation of all the debts of the settlor (including the debt, if any, that may be
incurred by the trustee for payment of the settlor's debts) and after his death this trust shall
come to- an end and the properties described in Schedule 'A' shall devolve as follows:-

The properties being Lot I, Lot II, Lot III, and Lot IV described in the said Schedule 'A'
hereunder written including the surplus income thereof shall devolve on the said Rajes Kanta
Roy absolutely or if he be then dead,. then the said properties shall devolve on his heirs then
living absolutely

The properties being Lot V described, in the said Schedule 'A' hereunder written including the
surplus income thereof shall be enjoyed by the said Ramendra Kanta Roy during his lifetime
or if he be then dead then the said properties shall devolve on his son or sons if any absolutely
but if there be no son living at that time and if there be a grand-son (son's son) or grand-sons
then on such grand-son or grand-sons absolutely.

a Court has to approach the task of construction in such cases with a bias in favour of a vested
interest unless the intention to the contrary is definite and clear

the settlor does appear to have attached considerable importance to the liquidation of debts,
there is nothing to show that he was apprehensive that the debts would remain undischarged
out of his properties and its income and that he contemplated the ultimate discharge of his
debts to be such an uncertain event as to drive him to make the accrual of the interest to his
sons under the deed to depend upon the event of the actual discharge of his debts

1.The two sons, Rajes and Ramendra, are not completely excluded from any benefit out of the
settlor's estate until the debts are discharged and the trust comes to an end (some amount per
month given to them)

2. on the death of either of these two sons before the debts are discharged and the trust comes
to an end, the above amounts are to go to their respective legal heirs

3. while allotting lots I to IV to Rajes and lot V to Ramendra, specifically provides also that
surplus income thereof, i.e., such income as is referable to those lots, should devolve on the
two sons in the same way

where the enjoyment of the property is postponed but the present income thereof is to be applied
for the benefit of the donee the gift is vested and not contingent.

what is postponed is not the very vesting of the property in the lots themselves but that the
enjoyment of the income thereof is burdened with certain monthly payments and with the
obligation to discharge debts therefrom notionally pro rata

Second property-

it is urged that since it is thus specifically provided that until the discharge, by Rajes or his
heirs, of the obligation to purchase another suitable house and to make over the same to
Ramendra or his heirs, Rajes is not to be the absolute owner, this is a factor which imports a
further element of contingency…

assuming for the sake of argument that the obligation to provide alternative accommodation is
by itself a contingency, this would bring about a contingent interest in premises No. 41/2,
Lansdowne Road, in favour of Rajes, after the termination of the trust. It follows that this item
of property would not be owned by anybody until that contingency disappears. This would
result in this item of property remaining without any legal ownership for the intervening period
which is opposed to law

__________________
Usha Subbarao v. BN Vishverwaraiah AIR 1996 SC 2260.

the immovable and moveable properties of the testator were specified in four groups specified
in Schedules "A", "B","C" and "D" attached with the Will.

For the purpose of determining the date of vesting of the interest in the bequest it is necessary
to hear in mind the distinction between a vested interest and a contingent interest.

TPA 1882+ISA 1925

the court while construing the document has to approach the task of construction in such cases
with a bias in favour of vested interest unless the intention to the contrary is definite and clear

2 types of property broadly

1. it is found that under the Will Smt. Nadiga Nanjamma was vested with the management of
all the properties specified in Schedules "A" "B" and "D" but she had no power to dispose of
any of those properties by sale, gift, Will, mortgage or hypothecation

+ after her lifetime, to the children

2. With regard to properties mentioned in Schedule "C", the testator has directed that where
Upanayanams and marriages were to be performed for the children during their minority and
income from other sources of his property was insufficient to meet the expenses; Smt. Nadiga
Nanjamma could withdraw from the thrift deposit account of the said child not more than Rs,
300/- for Upanayanam and not more than Rs. 500/- for marriage of the child

+ children could claim partition at the age of 18

separate enjoyment at 18 but till then income from the property for their use (education,
maintenance, marriage, etc.)

where enjoyment of the property is postponed but the present income thereof is to be applied
for the done the gift is vested and not contingent

Vested vs Contingent

Under the English law where a condition can be fairly read as postponing merely the right of
possession or of obtaining payment, transfer or conveyance, so that there is an express or
implied distinction between the time of vesting and time of enjoyment, the gift is held to be
vested at the earlier date if the rest of the context allows

But where postponement of the gift is on account of some qualification attached to the done,
the gift is Prima facie contingent on his qualification being acquired. A gift to a person "at",
"if", "as soon as", "when" or "provided" he attains a certain age, without further context to
govern the meaning of the words, is contingent and vests only on the attainment of the required
age

The same is the position in India and it has been succinctly brought out in illustration (ii) to
Section 119 and illustration (ii) to Section 120 of The Indian Succession Act

"A bequeaths to B 100 rupees, to be paid to him upon his attaining the age of 18. On A's death
the legacy becomes vested in interest in B."

"A sum of money is bequeathed to A "in case he shall attain the age of 18," or "when he shall
attain the age of 18." A's interest in the legacy is contingent until the condition is fulfilled by
his attaining that age."

This is a case where the testator has made a distinction between the gift itself and the event
denoting the time of payment, division or transfer, viz., attaining the age of majority. It falls in
the same category as illustration (ii) to Section 119 of The Indian Succession Act and must be
held to be a bequest of vested interest in respect of these properties.

For other properties, life interest

only creates a limited life interest in the said properties in favour of Smt. Nadiga Nanjamma
and it does not have the effect of rendering the bequest in respect of those properties as a
contingent bequest and it continues to be a bequest of a vested interest in those properties

__________________-

Section 22

Where, on a transfer of property, an interest therein is created in favour of such members only
of a class as shall attain a particular age, such interest does not vest in any member of the class
who has not attained that age.

A gift to such of the children of A who shall attain the age of 18, is a gift to a contingent class.
No child of A has vested interest until he has attained that age.

For the ascertainment of a class, the rule is that the objects of the testator’s bounty should be
ascertained as soon as possible.

In the case of a gift to the children of A when they attain the age of 18, the class is ascertained
when the first child of A attains 18, and no child born after that time can take. The class consists
of the children of A who are in existence when the first child of A attains the age of 18.
Section 23

Where, on a transfer of property, an interest therein is to accrue to a specified person if a

specified uncertain event shall happen, and no time is mentioned for the occurrence of that
event, the interest fails unless such event happens before, or at the same time as, the
intermediate or precedent interest ceases to exist.

A makes a gift to B and after him to C, if C attains the age of 15 years on the date of B's death.
The transfer to B takes place, but the one in favour of C is a contingent transfer and is dependent
upon C attaining the age of 15 years on the day of B's death. If on the day B dies, C is two
years old, then there would be a gap of 13 years in between the first transfer coming to an end
and the second to take place. During this period of 13 years, the vesting of the property would
be in suspense, and therefore, the second transfer would fail.

In between the two, i.e., the determination of the prior transfer and the happening of the
contingency, there should not be any gap.

Thus, if there is a gift for life to A, and then to B in case B gets called to the Bar, the gift to B
fails, unless he is called to the Bar in the lifetime of A or at the same time as A dies.

QUESTION

A testator who had a son, made a bequest and left everything in favour of his unborn grandsons,
who might be born within ten years from the date of his death. Is this beuqest valid or void?

_________________

Section 24

Where, on a transfer of property, an interest therein is to accrue to such of certain persons as

shall be surviving at some period, but the exact period is not specified, the interest shall go to
such of them as shall be alive when the intermediate or precedent interest ceases to exist, unless
a contrary intention appears from the terms of the transfer.
A transfers property to B for life, and after his death to C and D, equally to be divided between
them, or to the survivor of them. C dies during the life of B. D survives B. At B's death the
property passes to D.

_______________________

CONDITIONAL TRANSFERS

Section 25

An interest created on a transfer of property and dependent upon a condition fails if the
fulfilment of the condition is impossible, or is forbidden by law, or is of such a nature that, if
permitted, it would defeat the provisions of any law, or is fraudulent, or involves or implies
injury to the person or property of another, or the Court regards it as immoral or opposed to
public policy.

See Illustrations

A condition precedent cannot fall foul of the above requirements.

The expression “dependent upon a condition” shows that the section refers to conditions
precedent. If the condition precedent to a transfer is of the nature described in this section, the
transfer fails. Under section 6(h)(2) of TP Act, 1882, no transfer can be made for an object or
consideration which is unlawful within the meaning of section 23 of the Indian Contract Act,
1872.

Fulfilment of condition precedent

Section 26

Where the terms of a transfer of property impose a condition to be fulfilled before a person can
take an interest in the property, the condition shall be deemed to have been fulfilled if it has
been substantially complied with.
Doctrine of cypress - enforce the document as near as possible to the original intent

See Illustrations

The law favours the early vesting of estates

A legacy is bequeathed to A on condition that he shall marry with the consent of B, C, D and
E. A marries with the written consent of B, C is present at the marriage. D sends a present to
A previous to the marriage. E has been personally informed by A of his intentions, and has
made no objections. A has fulfilled the condition.

QUESTION

A legacy is bequeathed to A on condition that he shall marry with the consent of B, C and D.
A marries in the lifetime of B, C and D, with the consent of B and C only.

___________________

Section 27

Where, on a transfer of property, an interest therein is created in favour of one person, and by
the same transaction an ulterior disposition of the same interest is made in favour of another,
if the prior disposition under the transfer shall fail,

the ulterior disposition shall take effect upon the failure of the prior disposition, although the
failure may not have occurred in the manner contemplated by the transferor.

Illustrations

(a) A transfers Rs. 500 to B on condition that he shall execute a certain lease within three
months after A’s death, and, if he should neglect to do so, to C. B dies in A's life-time. The
disposition in favour of C takes effect.

Prior interest→Ulterior disposition, if Prior fails, Ulterior will come into effect even if failure
not exactly same. In this sense, the Ulterior disposition is accelerated. [Doctrine of
acceleration]
What is the difference between Section 16 and 27? Are they contradictory?

Where the prior interest is valid [See Sections 16 and 25] and fails as the valid condition on
which it rests has not been fulfilled. The law favouring the vesting of estates says that the
subsequent interest takes effect as if the prior interest has never been in the way. This results
in an acceleration of the subsequent interest.

Impossibility of condition precedent (Sections 25 and 27)

Section 25 -An interest created on a transfer of property and dependent upon a condition fails
if the fulfilment of the condition is impossible

(a) A lets a farm to B on condition that he shall walk a hundred miles in an hour. The lease is
void.

(b) A gives Rs. 500 to B on condition that he shall marry A's daughter C. At the date of the
transfer C was dead. The transfer is void.

A transfers 1000 to B, 12, in case he attains the age of 18 years. In case B fails to attain that
age, then to C. What would happen to the transfer if:

I. B is dead on the date of transfer.

II. B dies 2 months after the transfer. Section 25 or would property go to C? [Balance
between freedom of the transferor and law’s prohibition on impossible conditions]

Section 56 of the Indian Contract Act 1872

Agreement to do impossible act.

An agreement to do an act impossible in itself is void.

A contract to do an act which, after the contract is made, becomes impossible….becomes void
when the act becomes impossible….
Law Commission of India - Report No. 70 (1977)

“It would then appear that while performance of a condition inherently impossible is governed
by S. 25, performance of a condition which subsequently becomes impossible is covered by S.
27.”

If you consider subsequent impossibility as void, then a lot of times (as in Part II of the above
illustration) the original intention of the transferor would be defeated. This acquires increased
importance in a provision like Section 27 where there is an ulterior disposition riding on the
validity of the condition in question.

_________________

Exception

where the intention of the parties to the transaction is that the ulterior disposition shall take
effect only in the event of the prior disposition failing in a particular manner, the ulterior
disposition shall not take effect unless the prior disposition fails in that manner.

(b) A transfers property to his wife; but, in case she should die in his life-time, transfers to B
that which he had transferred to her. A and his wife perish together, under circumstances which
make it impossible to prove that she died before him. The disposition in favour of B does not
take effect.

_____________________

CONDITION SUBSEQUENT

Section 28

On a transfer of property an interest therein may be created to accrue to any person with the
condition superadded that in case a specified uncertain event shall happen such interest shall
pass to another person, or that in case a specified uncertain event shall not happen such
interest shall pass to another person. In each case the dispositions are subject to the rules
contained in sections 10, 12, 21, 22, 23, 24, 25 and 27.
Section 28 specifies a situation where, upon a transfer, the property or an interest in it has
already been vested in a particular person. This person can be divested of the estate
subsequently on the happening of an uncertain event, and then the same estate would vest in
another person. That is, it terminates the interest of one person and vests the same in another
person.

A conditional limitation, is one containing a condition which divests an estate that has vested
and vests it in another person. As regards the prior interest, it is a condition subsequent, but as
regards the ulterior interest, it is a condition precedent.

Why are Sections 11 and 17 absent?

Can such property be transferred?

QUESTIONS

A transfers his field to B, and if B becomes insolvent, to C.

A transfers his field to B on condition that he murders C with a proviso that on B’s death
without issue the field shall belong to D. The interest both of B and of D fails.

__________________

Section 29

Fulfilment of condition subsequent

An ulterior disposition of the kind contemplated by the last preceding section cannot take effect
unless the condition is strictly fulfilled.

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

Another important difference between condition precedent and condition subsequent. (Sections
26 and 29)

Why difference in logic: Section 26 and 29?

__________________

Section 30

If the ulterior disposition is not valid, the prior disposition is not affected by it.

In a way, opposite to Section 16.

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

In conformity with the policy of the law that what is vested ought not be divested or affected
by collateral factor unless there are weighty reasons, the provision in S. 30 is to the effect that
if the ulterior disposition is not valid, the prior disposition is not affected by it.

________________

Section 31

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

In S. 31, the situation of a condition which merely provides that the interest shall cease to have
effect in case a specified uncertain event happens or does not happen. This, as we have already
pointed out, is known in England as a condition subsequent. But, to distinguish it from those
conditions which transfer the interest to another person, we can describe such conditions as
conditions of defeasance

(a) A transfers a farm to B for his life, with a proviso that, in case B cuts down a certain wood,
the transfer shall cease to have any effect. B cuts down the wood. He loses his life-interest in
the farm.
(b) A transfers a farm to B, provided that, if B shall not go to England within three years after
the date of the transfer, his interest in the farm shall cease. B does not go to England within the
term prescribed. His interest in the farm ceases.

Section 32

In order that a condition that an interest shall cease to exist may be valid, it is necessary that
the event to which it relates be one which could legally constitute the condition of the creation
of an interest.

If the condition is invalid, it cannot be set up as a condition precedent for crystallisation of the
interest created. A condition which is void as a condition precedent is also void as a condition
subsequent.

A transfers his field to B with a proviso that if B does not within a year set fire to C’s haystack
his interest shall cease. The condition subsequent is invalid and B’s interest is not affected.

Instances of conditions subsequently void as contrary to public policy, are a condition divesting
the interest of a devisee if he enters the naval or military forces of his country.

______________

Condition subsequent- broadly 3 types:

1. Void: Section 10 (absolute restriction on alienation), 11 (restriction on enjoyment), 12

(condition of defeasance@ insolvency/alienation)
2. Conditional limitation
3. Condition of defeasance

___________

Time of performance
Transfers of property are sometimes conditional on the performance of an act by the transferee.
The transfer may not specify the time of performance (Section 33), or it may specify such time
(Section 34).

Section 33

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

A bequest is made to A, with a proviso that, unless he enters the Army, the legacy shall go over
to B. A takes Holy Orders, and thereby renders it impossible that he should fulfil the condition.
B is entitled to receive the legacy.

A bequest is made to A, with a proviso that it shall cease to have any effect if he does not marry
B’s daughter. A marries a stranger and thereby indefinitely postpones the fulfilment of the
condition.

Section 34

if such performance within the specified time is prevented by the fraud of a person who would
be directly benefited by non-fulfilment of the condition, such further time shall as against him
be allowed for performing the act as shall be requisite to make up for the delay caused by such
fraud…

Would apply to condition precedent as well as subsequent.

A transfers a property to B. Condition subsequent- execute lease over that property within 3
months from the date of transfer. If you do not do that then to C.

Here, C is interested in non-fulfilment of the condition. If he fraudulently prevents B from

executing a lease within 3 months, then time lost due to C will be added.

The justification for the rule is the broad principle that no man can take advantage of his own
fraud. It is contrary to natural justice that a person who prevents a thing from being done should
avail himself of the non-performance he has occasioned.

_______________________
Condition precedent vs Condition subsequent

1. Relationship with transfer- CP: before transfer, CS: after transfer.

2. Vesting: CP: no vesting until it is fulfilled, CS: vesting is done, can be divested if condition
broken: either revested in the original transferor (condition of defeasance) or vested in a third
person (conditional limitation)

3. Effect of condition being void: CP: if void then no transfer, property will remain with the
transferor, CS: if void, then vesting absolute, property cannot be divested

4. Fulfilment: CP: substantial compliance fine (Section 26); CS: must be fulfilled strictly
(Section 29)

Clarification:

“Law favours vesting of estates”

Applicability of this principle?

Ultimate test- intention of the transferor. Example- Rajesh Kanta Roy vs Shanti Debi case.

This principle is important in understanding the idea behind certain provisions: difference
between Section 26 and 29.

"A bequeaths to B 100 rupees, to be paid to him upon his attaining the age of 18. On A's death
the legacy becomes vested in interest in B."

"A sum of money is bequeathed to A "in case he shall attain the age of 18," or "when he shall
attain the age of 18." A's interest in the legacy is contingent until the condition is fulfilled by
his attaining that age."

____________

DOCTRINE OF ELECTION (Section 35)

The most difficult section in TPA! (jk)

For example:

A is given a gift of 5 lacs but in lieu of that he has to transfer his house to B. Here A has a
choice to make. He can either:

I. Accept the gift and give up his house

OR

II. Reject the gift and keep the house

A is therefore put to election.

A CANNOT keep the gift and the house as well.

_____________

The validation of both these transfers (Options I and II) would now be in the hands of the
transferee.

In a way the consent of the transferee is to be obtained after the transferor has transferred his
property without seeking it in the first place. Yet at the same time if he accepts the transfer in
his favour (Option I), he is not permitted to reject the second transfer in favour of the third
party on the ground that his consent was not obtained or he does not want to go ahead with that
transfer.

RATIONALE

The foundation of the doctrine of election is that a person taking the benefit of an instrument
must also bear the burden. No one may approbate and reprobate.

As the basic presumption under the law is that the transferor intended to give effect to each and
every part of the deed that he executes. [Freedom of contract of paramount importance]
PROVISION

Paragraph 1

Where a person professes to transfer property which he has no right to transfer, and as part of
the same transaction confers any benefit on the owner of the property, such owner must elect
either to confirm such transfer or to dissent from it; and in the latter case he shall relinquish
the benefit so conferred, and the benefit so relinquished shall revert to the transferor or his
representative as if it had not been disposed of

“which he has no right to transfer”

No title + authority (POA, etc.)

“same transaction”

The transferee (owner) is not permitted to exercise election if the two transfers are independent
of each other and are not part of the same transaction.

Example- A executes a transfer of his son's property in favour of his second wife. Upon his
son's protest, he executes another deed after a week by which he gifts his land to his son.

Read:

Afzal Khan vs Nawab Ghulam Kasim (1903) Privy Council

“confers any benefit”

The doctrine can only apply if a benefit in the real sense is conferred by the instrument. Where
by a will the testator purports to bequeath to his coparcener joint family property, such
coparcener who would in any case have been entitled to such property, cannot be said to have
derived any benefit under the will.

“on the owner”

1. Owner- word used widely- covers persons having vested/contingent/life interest.

2. The transferee can be permitted to elect only when he has a proprietary interest in the
property that has been transferred by the transferor in favour of a third party.

For instance, the transferor, transfers two properties to A and B as part of the same transaction.
Both the properties belong to the transferor. No question of election would arise here either on
part of A or B as none of them had a proprietary interest in any of the properties before the
transfer.

3. Benefit should be directly to the owner.

For example- A professes to transfer C’s property to B and gives 5000 to C’s wife. No duty to
elect.

“must elect”

Either affirm the transfer and take the benefit or refute the transfer and give up on the benefit
as well.

Illustration

PART I

The farm of Sultanpur is the property of C and worth Rs. 800. A by an instrument of gift
professes to transfer it to B, giving by the same instrument Rs. 1,000 to C. C elects to retain
the farm. He forfeits the gift of Rs. 1,000.

C has 2 options:

Option 1: Accept the transfer and take 1000

Option 2: Deny the transfer and give up on 1000.

In Option 1:

C- 1000

B- property
In Option 2:

C- keeps the property

B- no property

B in this situation will be called as the disappointed donnee/ transferee and it will be A’s duty
to pay him the worth of the property in certain situations:

1. where the transfer is gratuitous, and the transferor has, before the election, died or otherwise
become incapable of making a fresh transfer,

2. and in all cases where the transfer is for consideration,

Part II

In the same case, A dies before the election. His representative must out of the Rs. 1,000 pay
Rs. 800 to B.

_______________

The rule of election as applied to wills is enacted in sections 180 to 190 of the Indian Succession
Act, 1925.

Paragraph 2

The rule in the first paragraph of this section applies whether the transferor does or does not
believe that which he professes to transfer to be his own.

It is not necessary that he should have had in mind the equitable principle of election.It does
not matter whether the transferor thought he had the power to convey.
Paragraph 3

A person taking no benefit directly under a transaction, but deriving a benefit under it
indirectly, need not elect.

Question

The lands of Sultanpur are settled upon C for life, and after his death upon D, his only child. A
bequeaths the lands of Sultanpur to B, and 1,000 rupees to C. C dies intestate shortly after the
testator, and without having made any election. D takes out administration to C, and as
administrator elects on behalf of C’s estate to take under the will. In that capacity he receives
the legacy of 1,000 rupees and accounts to B for the rents of the lands of Sultanpur which
accrued after the death of the testator and before the death of C. In his individual character he
retains the lands of Sultanpur in opposition to the will.

Paragraph 4

A person who in his one capacity takes a benefit under the transaction may in another dissent
therefrom.

Question

A owns a particular property. B professes to transfer the same to C and confers 2000 to A and
1000 to A’s son. A dies without electing. A’s son now gets to elect. He decides to keep the
property on A’s behalf.

Exception

Where a particular benefit is expressed to be conferred on the owner of the property which the
transferor professes to transfer, and such benefit is expressed to be in lieu of that property, if
such owner claim the property, he must relinquish the particular benefit, but he is not bound
to relinquish any other benefit conferred upon him by the same transaction.
A owns a particular property. B professes to transfer the same to C and confers 2000 to A in
lieu of the property and 1000 for his maintenance. A can keep both, the property as well as
1000 rupees.

Paragraph 5

Acceptance of the benefit by the person on whom it is conferred constitutes an election by him
to confirm the transfer, if he is aware of his duty to elect and of those circumstances which
would influence the judgment of a reasonable man in making an election, or if he waives
enquiry into the circumstances.

Acceptance of a benefit implies an election. He waives the inquiry into the circumstances if he
wilfully abstains from inquiring into them so that he is affected with constructive notice of
them.

An election made with full knowledge is final but an election made without such knowledge
may be revoked by the representatives of the electing party. Example- benefits conferred on
pardanashin women - must be proved that they knew the implications of their actions/election

Paragraph 6

Such knowledge or waiver shall, in the absence of evidence to the contrary, be presumed, if the
person on whom the benefit has been conferred has enjoyed it for two years without doing any
act to express dissent.

It will be presumed in such a situation that the person has elected to transfer the property.

Paragraph 7

Such knowledge of waiver may be inferred from any act of his which renders it impossible to
place the persons interested in the property professed to be transferred in the same condition
as if such act had not been done.

Illustration
A transfers to B an estate to which C is entitled, and as part of the same transaction gives C a
coal-mine. C takes possession of the mine and exhausts it. He has thereby confirmed the
transfer of the estate to B.

Paragraph 8

If he does not within one year after the date of the transfer signify to the transferor or his
representatives his intention to confirm or to dissent from the transfer, the transferor or his
representative may, upon the expiration of that period, require him to make his election; and,
if he does not comply with such requisition within a reasonable time after he has received it,
he shall be deemed to have elected to confirm the transfer.

Requisition to elect- special procedure for expediting election. After the expiry of 1 year, the
transferor can ask the owner to elect. If he does not comply within a reasonable time, the
deemed election in favour of transfer.

Paragraph 9

In case of disability, the election shall be postponed until the disability ceases, or until the
election is made by some competent authority.

A minor’s election may be postponed until his majority, or his guardian may elect for him.

_____________

Section 41 cases

● Ramcoomar Koondoo v. Macqueen (1872) 11 BLR 52 (IA).

● Jayadayal Poddar v. Bibi Hazara AIR 1974 SC 171.
● Gurbaksh Singh v. Nikka Singh AIR 1963 SC 1917.

(B) Transfer of Immoveable Property

Section 41- Transfer by Ostensible Owner

Where, with the consent, express or implied, of the persons interested in immoveable property,
a person is the ostensible owner of such property and transfers the same for consideration, the
transfer shall not be voidable on the ground that the transferor was not authorised to make it

Provided that the transferee, after taking reasonable care to ascertain that the transferor had
power to make the transfer, has acted in good faith

Who is an ostensible owner?

An ostensible owner is a person who apparently or seemingly appears to be the owner, though
in reality he is not. He is a person having all indicas of having real ownership. His behaviour
and conduct appears to be that of the owner of the property with the consent or conduct of the
real owner.

For example:

A woman owns the property and permits her husband to deal with it as if he is the owner. The
husband's name is entered into the revenue records for the purposes of paying the taxes, it is he
who finalises whether and who should be inducted as a tenant in the property and the wife does
not object to it. He can be called an ostensible owner, while the real owner is the wife.

Essential ingredients

1. The transferor is the ostensible owner

2. With the consent (implied or express) of the real owner

3. The transfer is for consideration

4. The transferee has acted in good faith, taking reasonable care to ascertain that the transferor
had power to transfer
Rationale

The principle underlying this section is that if two innocent persons are defrauded or cheated
by one, who, after transferring the property of one without his consent, to another, is no longer
present, and the two persons enter into litigation with respect to the property transferred, then
out of these two apparently innocent persons, the one who, by his conduct or consent enabled
the fraud to take place, will suffer.

Illustration

1. A husband was the owner of the land. He effected a mutation in the revenue records of the
same in favour of his wife, and shortly thereafter went on a pilgrimage. Meanwhile, the wife
sold the land to C as an ostensible owner. C made due inquiries and paid the consideration. The
husband on his return could not reclaim the land as he, by his conduct, had held out the wife as
an ostensible owner.

2. After the death of the owner, the property was in possession of his illegitimate sons, who, in
law, were ineligible to inherit his property. The real heir filed a suit for claiming the possession
of the property as per his entitlement under the laws of inheritance but, the possessors retained
the possession, entered their names in the revenue records and later sold the property to a third
party, C.

The burden of proving that the transferee was an ostensible owner is on the transferee who
seeks the protection of this section.

Court sale?

Gift?

Mortgage?

Benami transactions
Benami transaction is defined under section 2(1) so as to mean any transaction in which
property is transferred to one person for consideration paid or provided by another person.

A benamidar is an ostensible owner, and if a person purchases from a benamidar, the real owner
cannot recover, unless he shows that the purchaser had actual or constructive notice of the real
title.

In a Benami transaction, a property is transferred or held by one person (Mr A, the

‘Benamidar’) and the consideration for such property is paid by another person (Mr B, the
‘beneficial owner’) for whose benefit such property is held.

The Parliament has enacted the Benami Transactions (Prohibition) Act, 1988 prohibiting
benami transactions

This burden of proving a transaction to be a benami one is on the person who alleges the same
to be benami.

Ramcoomar Koondoo vs Maria McQueen (1872)

It is a principle of natural equity, which must be universally applicable that, where one man
allows another to hold himself out as the owner of an estate, and a third person purchases it,
for value, from the apparent owner in the belief that he is the real owner, the man who so
allows the other to hold himself out shall not be permitted to recover upon his secret title,
unless he can overthrow that of the purchaser by showing, either that he had direct notice, or
something which amounts to constructive notice, of the real title; or that there existed
circumstances which ought to have put him upon an inquiry that, if prosecuted, would have led
to a discovery of it.

Jayadayal Poddar vs Bibi Hazra (1973) SC

The essence of a benami is the intention of the party or parties concerned; and not unoften
such intention is shrouded in a thick veil which cannot be easily pierced through

the courts are usually guided by these circumstances : (1) the source from which the purchase
money came; (2) the nature and possession of the property, after the purchase; (3) motive, if
any, for giving the transaction a benami colour; (4) the position of the parties and the
relationship, if any between the claimant and the alleged benamidar; (5) the custody of the
title-deeds after the sale and (6) the conduct of the parties concerned in dealing with the
property after the sale.

Gurbaksh Singh vs Nikka Singh (1962) SC

Section 41

The general rule is that a person cannot confer a better title than he has. This section is an
exception to that rule. Being an exception, the onus certainly is on the transferee to show that
the transferor was the ostensible owner of the property and that he had after taking reasonable
care to ascertain that the transferor had power to make the transfer, acted in good faith.

In this case the facts are tell-tale and they establish beyond doubt that the appellant had the
knowledge that the title of his transferor was in dispute and he had taken a risk in purchasing
the same.

These facts show that the appellant had knowledge of the defect in the title of Mula Singh. It is,
therefore, not possible to hold that he had purchased it in good faith.

_________________

MID SEMESTER EXAM

__________________

UPCOMING DEADLINES

1. INTERNAL TEST 2- 4th week of October 2023 [20 marks]

2. CASE ANALYSIS SUBMISSION (Handwritten)- 1 November 2023 [20 marks]
3. PRESENTATION OF CASE ANALYSIS - 3rd/4th week of November 2023 [20
marks]
 4. GRAND VIVA- 3rd/4th week of November 2023 [20 marks]

____________________

SECTION 43-Transfer by unauthorised person who subsequently acquires interest in

property transferred
Where a person fraudulently or erroneously represents that he is authorised to transfer certain
immovable property and professes to transfer such property for consideration, such transfer
shall, at the option of the transferee, operate on any interest which the transferor may acquire
in such property at any time during which the contract of transfer subsists.

based on a rule of estoppel

‘feeding the grant by estoppel’

English Law- “where a grantor has purported to grant an interest in land which he did not at
the time possess, but subsequently acquires, the benefit of his subsequent acquisition, goes
automatically (Indian position different) to the earlier grantee, or as it is usually expressed,
feeds the estoppel”.

it applies whenever a person transfers property to which he has no title on a representation that
he has a present and transferable interest therein, and acting on that representation, the
transferee takes a transfer for consideration

if the transferor subsequently acquires the property, the transferee becomes entitled to it, if the
transfer has not meantime been thrown up or cancelled and is subsisting

[Jumma Masjid vs Kodimaniandra Deviah (1962) SC]

Difference between the application of Sections 6(a) and 43?

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

(1) the estate does not pass instantly, but only at the option of the transferee; and
(2) the transferee may be defeated by a purchaser for value without notice.

Proviso

Nothing in this section shall impair the right of transferees in good faith for consideration
without notice of the existence of the said option.

The proviso protects transferees in good faith without notice of the option. This is because until
the option is exercised the transferee’s right to the after-acquired property is only a contractual
obligation, and the transferor holds the interest as his trustee.

If the property is transferred by the transferor to another person, even before the transferee can
exercise the option to validate the earlier transfer, the remedy of validation of transfer will be
lost to the transferee, provided that the second transferee takes the property for consideration
and has no notice, actual or constructive about the existence of the first contract.

Why?

Example

A representing that he had a transferable interest in property in which he had no such interest
mortgaged it to B. A subsequently acquired the transferable interest which he transferred to C
who had no notice of B’s mortgage. The transfer was made before B had exercised his option,
and, therefore, B’s mortgage was subject to the rights of C.

QUESTIONS

1. A case where the transferor genuinely believed that he has the competency to transfer the
property. Would Section 43 apply?

2. A, erroneously makes a representation to B, that he is competent to transfer a house X. The

house belonged to his father F. B pays consideration, but later discovers that A was not the
owner, and therefore not competent to transfer it. He rescinds the contract and asks for his
money back. A pays him the entire consideration as per the terms of the contract. Two days
later, F dies and A, as her sole heir, inherits the house. Would Section 43 apply?
3. A sells a house belonging to his father to B. B discovers the defect in title but chooses to
wait. A dies during his father's lifetime. On the death of the father, his house that was the
subject matter of the contract was inherited by A's son. Can B claim property from A’s son
under Section 43?

4. A coparcenary consists of father F and a son S, who together owned two fields, X and Y. S
contracts with C to sell X. Later a partition took place, whereby the S got the property Y. Can
C claim the property under Section 43?
__________________

Cases on Section 43

-Pandiri Bangaram And Ors. vs Karumoory Subbaraju And Ors. on 5 May, 1910

-Tanu Ram Bora v Promod Ch.Das (D) through LRs and others, Civil Appeal 1575/2019,
decided on 08.02.2019.
________________

Pandiri Bangaram And Ors. vs Karumoory Subbaraju (1910) Madras HC

….the plaintiff knew at the date of the mortgage that the first defendant was only entitled to a
third share in the property.

….whether the plaintiff can bring his case within the four corners of Section 43 of the Transfer
of Property Act.
the difference in language between Sections 41 and 43 of the Act may be due to the fact that
under the latter section mere belief in and acting upon the representation may be sufficient to
pass the subsequently acquired interest, while under Section 41 such mere belief of the
transferee is insufficient.
________

Tanu Ram Bora vs Promod Das (2019) Supreme Court

ceiling surplus land (meaning?)

Facts- Para 7
the original plaintiff purchased the suit land by a registered sale deed dated 06.01.1990
that as on 06.01.1990, the suit land was ceiling surplus land and the government was the owner
that the land in question became ceiling free land on 14.09.1990

Would Section 43 apply in this case?

if at the time of transfer, the vendor/transferor might have a defective title or have no title
and/or no right or interest, however subsequently the transferor acquires the right, title or
interest and the contract of transfer subsists, in that case at the option of the transferee, such
a transfer is valid.
In such a situation, the transferor cannot be permitted to challenge the transfer and/or the
transferor has no option to raise the dispute in making the transfer

this Court has specifically observed and held that once there was an erroneous representation
by the vendor, thereafter the suit by the heirs of the vendor for cancellation of the sale deed
would not be maintainable
the rights of the original plaintiff in the suit land by a sale deed dated 06.01.1990 would be
protected by operation of Section 43 of the Act.
______________________

Read cases for Section 52 (Lis Pendens)

● Rajender Singh v. Santa Singh AIR 1973 SC 2537.

● Madhukar Nivrutti Jagtap v. Pramilabai Chandulal Parandekar (2019) (SC).
● Gouri Dutta v. Shaikh Mohammad AIR 1948 PC 147
● Supreme General Films Exchange Ltd. v. HH Maharaja Brijnath Nath Singh Deo AIR
1975 SC 1810.

Section 52- Transfer of property pending suit relating thereto

During the pendency in any Court having authority within the limits of India excluding the
State of Jammu and Kashmir or established beyond such limits by the Central Government, of
any suit or proceeding which is not collusive and in which any right to immoveable property
is directly and specifically in question, the property cannot be transferred or otherwise dealt
with by any party to the suit or proceeding so as to affect the rights of any other party thereto
under any decree or order which may be made therein, except under the authority of the Court
and on such terms as it may impose.

Explanation.—For the purposes of this section, the pendency of a suit or proceeding shall be
deemed to commence from the date of the presentation of the plaint or the institution of the
proceeding in a Court of competent jurisdiction, and to continue until the suit or proceeding
has been disposed of by a final decree or order and complete satisfaction or discharge of such
decree or order, has been obtained, or has become unobtainable by reason of the expiration of
any period of limitation prescribed for the execution thereof by any law for the time being in
force

________________

Ingredients

1. During pendency
2. of any suit or proceeding that is not collusive
3. in which right to immovable property is directly and specifically in question
4. the property cannot be transferred to affect the right of the litigating party (other than
the party making the transfer pendente lite)

Need for this

A is the owner of a house and permits B to stay in it. B without the consent of A sells it to C.
A files a suit against B for reclaiming the possession and a declaration of title. Soon after the
institution of the suit, B delivers the property to C. A fails to implicate C as a party. The suit is
decided in favour of A, but if it is binding on only B, then A would have to file a fresh suit
against C, who currently had the possession of the property for reclaiming the possession. Soon
after the institution of suit against C, C sells it further to D. A again wins the case but as the
possession is with D, he would have to file a fresh case against D for taking back the possession.
This process might go on indefinitely.

Lis Pendens avoids this and brings an end to litigation.

Policy behind it

There should be an end to litigation. The policy of the law to avoid unnecessary litigation and
to avoid the same matter being litigated again is well known. It would plainly be impossible
that any action or suit could be brought to a successful termination, if alienations pendente lite
were permitted to prevail. The plaintiff would be liable in every case to be defeated by the
defendant’s alienating before the judgment or decree, and would be driven to commence his
proceedings de novo, subject again to be defeated by the same course of proceeding.

Lis pendens seen as extension of the rule of res judicata.

The doctrine of lis pendens is intended to strike at attempts by parties to a litigation to

circumvent the jurisdiction of a court in which the dispute on rights or interests in immovable
property is pending, by private dealings that may remove the subject matter of litigation from
the ambit of the power of the court to decide a pending dispute, or which may frustrate its
decree.

Notice?

It is immaterial whether the alienee pendente lite had, or had not, notice of the pending
proceeding

QUESTIONS

1. A mortgaged property to B. B sued A on the mortgage and obtained a decree for sale. While
this decree was in execution, A leased the property to C for 10 years. B brought the property
to sale and purchased it himself.

2. Article 226 case

3. Alimony case (right in immovable property directly and specifically in question)

_______

Effect of Section 52
See Question 1 above

The section takes away the subject of transfer of property pending litigation from the realm of
volition of the parties, and places it in the domain of the court, so that successive alienations of
property in dispute may not render nugatory judicial verdict on that dispute.

The effect of the maxim is not to annul the conveyance, but only to render it subservient to the
rights of the parties to the litigation.

The decision of the Court will trump the transfers made during pendency.

QUESTION

4. A sued to recover possession of an immovable property from B. While this suit was pending,
A mortgaged the property to C. The suit for possession ended in a compromise, by which half
the property was allotted to A and the other half to B, and one of the terms of the compromise
was that B should discharge the mortgage. C’s rights?

5. A makes a gift of land to B. C sues A for possession of the land. While this suit is pending,
B transfers the land to D. A dies and C obtains a decree for possession against B as legal
representative of A. Is D’s title affected by the rule of lis pendens so as to be subject of C’s
decree?

“in which any right to immoveable property is directly and specifically in question”

Not only must the right to immovable property be directly and specifically in question in the
suit, but the description of the property in the pleading must be sufficient to identify the
property.

When a Hindu widow sued her stepson for maintenance, and merely specified the item of
property in his possession, it was held that the suit did not operate as lis pendens

“the property cannot be transferred or otherwise dealt with”

Not limited to Section 5 transfer but includes other transactions as well like partition, release,
surrender, etc.
“party to the suit”

For instance, A is the owner of the property but allows B to manage it. B sells the property to
C. A files a suit against B for reclaiming the possession of the property and also for a
declaration of title to the disputed property. He fails to make C as a party. During the pendency
of the suit, C sells the property to D. As C is not a party to the suit, this sale by him will not be
hit by the doctrine of lis pendens

Q. Why not applicable to movable property?

_________________

Rajender Singh & Ors vs Santa Singh (1973) Supreme Court

the defendats-respondents… had filed a suit on 3-7-1940 for possession of the land in
dispute….decided in favour of the plaintiff-appellants on 21-11-1958

the defendants respondents, however, claimed that they had taken possession over the whole
of the land in dispute ….in 1944, and that, since then, they had been in open, continuous,
exclusive possession as owners, adversely to the rest of the world.

Section 52 of TPA and Article 142 of Limitation Act 1908

Can Section 52 of the TPA be used to exclude time for the purposes of limitation?

It is very difficult to view the act of taking illegal possession of immovable property or
continuance of wrongful possession, even if the wrong doer be a party to the pending suit, as
a "dealing with" the property otherwise than by its transfer so as to be covered by Section 52
of the Transfer of Property Act.

The prohibition which prevents the immovable property being "transferred or otherwise dealt
with" by a party is apparently directed against some action which would have an immediate
effect,.similar to or comparable with that of transfer, but for the principle of lis pendens. Taking
of illegal possession or its continuance neither resemble nor are comparable to a transfer.
They are one sided wrongful acts and not bilateral transactions of a kind which ordinarily
constitute "deals" or dealings with property.

They cannot confer immediate rights on the possessor. Continued illegal possession ripens into
a legally enforceable right only after the prescribed period of time has elapsed.

_____________________

Madhukar Nivrutti Jagtap vs Pramilabai Chandulal Parandekar (2019) Supreme Court

The appellants of this appeal were subsequently joined as defendant Nos. 4 to 6 in the suit in
question, as being the purchasers of the suit property after filing of the suit.

High Court:
“(c) If the sale transactions executed in favour of defendant nos.4 to 6 during the pendency of
the suit were hit by the doctrine of lis pendente lite, could the transfer of the suit land to
defendant nos.4 to 6 be held to be illegal and void ab initio?”

the sale deeds in favour of defendant nos. 4 and 5 and defendant no.6 executed by defendant
nos.1 to 3 are required to be held as illegal

Supreme Court:

Page 17+

Both the sale transactions in favour of the present appellants, purporting to transfer the suit
property in part, having been effected after filing of the suit, are directly hit by the doctrine of
lis pendens

The effect of doctrine of lis pendens is not to annul all the transfers effected by the parties to a
suit but only to render them subservient to the rights of the parties under the decree or order
which may be made in that suit…. its effect is only to make the decree passed in the suit binding
on the transferee, i.e., the subsequent purchaser….the transfer remains valid subject, of course,
to the result of the suit

the High Court, while holding that the said transactions were hit by lis pendens, has proceeded
to observe further that the sale deeds so made in favour of the present appellants were illegal.
These further observations by the High Court cannot be approved for the reasons foregoing.

_______________

Gouri Dutt Maharaj vs Sheikh Mohammed (1948) Privy Council

20 September 1932- Suit filed against the defendant (on the basis of an unregistered agreement)

21 September 1932- Defendant executed a mortgage in favour of the appellant

Suit ended in a compromise:

Clause 12

“That the defendant assures the plaintiffs that there is no charge or mortgage on the properties
mentioned in the schedule below save and except one mortgage in favour of Gouri Dutt
Maharaj of Asansol for Rs. 6,000 (six thousand) subsequent to the aforesaid agreement dated
8th June, 1932.”

Would this prevent the application of Section 52?

The broad purpose of s. 52 is to maintain the status quo unaffected by the act of any party to
the litigation pending its determination.
The applicability of the section cannot depend on matters of proof or the strength or weakness
of the case on one side or the other in bona fide proceedings

It applies to a compromise decree and such a decree cannot, by reason of its very nature, be
expected invariably to reflect the precise relief claimed

Had it mentioned the date of the mortgage and used language apt to indicate that the parties
regarded it as entitled to priority, the case for implying a modification of the terms of cl. 6,
which expressly provided that the decretal dues should be a first charge, would be appreciably
stronger

_______________________

Supreme General Films Exchange vs Maharaj Sir Brijnath (1975) SC

We are unable to accept the argument, that the lease was merely an enforcement of an

antecedent or pre-existing right. We think that it purported to create entirely new rights
pendente lite. It was, therefore, struck by the doctrine of lis pendens

An alternative argument of the appellant was that a case falling within Section 65A(2)(e) of
the Transfer of Property Act, confining the duration of a lease by a mortgagor to three years,
being a special provision, displaces the provisions of Section 52 of the Transfer of Property
Act

the special doctrine of lis pendens is applicable here, the purported lease of 1956 was invalid
from the outset

______

FRAUDULENT TRANSFER (Section 53)

(1) Every transfer of immoveable property made with intent to defeat or delay the creditors of
the transferor shall be voidable at the option of any creditor so defeated or delayed.

Nothing in this sub-section shall impair the rights of a transferee in good faith and for
consideration.
A suit instituted by a creditor to avoid a transfer on the ground that it has been made with
intent to defeat or delay the creditors of the transferor, shall be instituted on behalf of, or for
the benefit of, all the creditors.

(2) Every transfer of immoveable property made without consideration with intent to defraud
a subsequent transferee shall be voidable at the option of such transferee.

A is the owner of a land. He borrows Rs 20,000 from B on the strength of a promissory note
When A fails to repay, B proceeds against him in a court of law Apprehending that the money
decree obtained by B will be enforced against the landed property, A transfers the property
with the intention that the creditor should not be able to enforce the decree against the
same to X. X knows of A's intentions, and both hurriedly get the land mutated in the name of
X.

Why would Lis Pendens be not applicable here?

Section 12? Condition of defesance

If X, to whom the property has been transferred, is a bona fide purchaser, who has no notice,
actual or constructive of the intentions of the transferor/claims of the creditor, his interests
would be protected. The creditor would have no remedy against such a purchaser

Essentials

(i) Transfer of an immovable property;

(ii) The transferor owes financial liability to creditors;

(iii) The transfer is with intention to defeat or delay creditors;

(iv) Such transfer is voidable at the option of the creditors.

Fraudulent transfer (Section 53) vs Fictitious transfer (Benami transactions)

Read Section 6 of the Benami Transaction Act 1988:

“6. Act not to apply in certain cases- Nothing in this Act shall affect the provisions of section
53 of the Transfer of Property Act, 1882 (4 of 1882.), or any law relating to transfer for an
illegal purpose.”

The rule applies only when there is a real transfer of the property so as to create a vested title
in favour of a third party. If the transfer is a fictitious one, so that the real owner remains the
original transferor all along, this transfer would not be subject to the application of the rule
enunciated under section 53.

A the owner of an immovable property gets the land mutated in favour of his son, without
effecting a transfer. This transfer is not a real one as the transferor possesses the title to the
property and the claim of the creditors can be enforced against this property.

Who is a creditor?

A creditor is a person to whom a financial liability is owed and the term includes both a secured
and an unsecured; existing or a subsequent creditor. It includes not only those who have proved
their claims and obtained a decree but also ordinary creditors who still have a claim to prove.

A subsequent creditor may impeach a fraudulent transfer. It is not necessary that a man should
be actually in debt at the time when he enters into a voluntary settlement of his property, for
if a man does it with a view of being indebted in future, it is equally fraudulent.

A man who contemplates going into trade cannot on the eve of his doing so, take the bulk of
his property out of the reach of those who may become his creditors.

Circumstances indicating existence of fraud

-Transfer was made secretly and in haste

-Transfer was made soon after the decree passed against the debtor

-Whole property sold before attachment.

-Consideration amount was very small for the property.

Important principles
The basic principle underlying this section is that the claims of creditors should not be allowed
to be delayed or defeated by removing the possible security, against which the claims of such
creditors can be executed

Mere fact that a portion of the property is transferred is immaterial unless there is cogent
proof that there is other property left which is sufficient in value and easily available for the
creditors

A suit instituted by a creditorr shall be instituted on behalf of, or for the benefit of all the
creditors. This principle also ensures that the transferee should not be exposed to multiplicity
of suits at the instance of various creditors

Departure from general rule in civil law- Ordinarily, the law does not, in determining
questions of civil liability, take account of the motives of person. An act which is lawful does
not, in general, become actionable merely because the motive is improper. But there are
exceptions to this general rule. One such exception is created by S. 53.

Preference to one creditor over another

3 creditors. But property transferred to one of them?

A has taken a loan from B, C and D. In order to repay his loan from B, he transfers his property
to him. Would this be hit by Section 53?

The object of the prohibition in the insolvency law is to secure rateable distribution of the assets
amongst the creditors and to prevent discrimination inter se. The object of S. 53, on the other
hand, is to protect all creditors. The lis is between the body of creditors on the one hand and
the transferee on the other. In the case of a fraudulent preference, the lis is between creditors
inter se.

Section 53(2) - Gratuitous Transfer

(2) Every transfer of immoveable property made without consideration with intent to defraud
a subsequent transferee shall be voidable at the option of such transferee.

The second sub-section refers to the case when a subsequent transfer is in competition with a
prior transfer without consideration.
For example- A makes a gift of his house to B in 1990. A then transfers the same house to C
for 20 lacs in 1991. Here B and C both would claim the property.

General rule- First transfer will have preference over the second one since it is prior in time.

Effect of Section 53(2)- First will be void if it is proved that it was fraudulent. C will get the
property.

QUESTION

1. A obtained a decree against B for the possession of certain properties and mesne profits
estimated at ₹10,000. B, a month later, executed a deed of trust settling all the property of
which he was then possessed on his wife and children.

2. A man of extravagant and dissolute habits was persuaded to reform and make a settlement
of his property on his wife and children. He subsequently relapsed and incurred debts.

___________________

Problem

A and B enter into an agreement for the sale of A's house for a consideration of Rs 10 lakh. A
executes an agreement for sale of property document of sale and signs it. B pays the advance
amount of five lakh rupees, and as per the terms and conditions agreed upon as between the
parties, the rest of the money is to be paid to A by B at the time of the delivery of possession
of the property. A delivers the possession and B pays the rest of the amount.

However, the transfer in favour of B is not complete as it is merely an agreement to sell and is
not a sale deed. After around a month, A wants to give back the amount already paid by B to
him as he has got a better offer for the same property from C and wants B to vacate the
possession.

Section 53A- Part Performance

Where any person contracts to transfer for consideration any immoveable property by writing
signed by him or on his behalf from which the terms necessary to constitute the transfer can be
ascertained with reasonable certainty,

and the transferee has, in part performance of the contract, taken possession of the property
or any part thereof, or the transferee, being already in possession, continues in possession in
part performance of the contract and has done some act in furtherance of the contract,

and the transferee has performed or is willing to perform his part of the contract,

then, notwithstanding….that the transfer has not been completed in the manner prescribed
therefor by the law for the time being in force, the transferor or any person claiming under him
shall be debarred from enforcing against the transferee and persons claiming under him any
right in respect of the property of which the transferee has taken or continued in possession,
other than a right expressly provided by the terms of the contract:

The section provides for a shield of protection to the proposed transferee to remain in
possession against the original owner who has agreed to sell to the transferee, if the proposed
transferee satisfies other conditions of section 53A.

Rationale

It was against conscience to suffer the party who had entered and expended his money on the
faith of an agreement to be treated as a trespasser and the other party to enjoy the advantage
of the money he had laid out.

Essential Ingredients

(i) There must be a contract to transfer for consideration any immovable property.

(ii) The contract must be in writing, signed by the transferor, or by someone on his behalf.

(iii) The writing must be in such words from which the terms necessary to construe the
transfer can be ascertained.

(iv) The transferee must in part performance of the contract take possession of the property,
or of any part thereof.
(v) The transferee must have done some act in furtherance of the contract.

(vi) The transferee must have performed or be willing to perform his part of the contract

Registration of agreement to sell

Unless the documents containing contract to transfer for consideration any immovable property
for the purpose of section 53A is registered, it shall not have effect for the purposes of section
53A

This section was amended in 1929, to accommodate unregistered instruments in relation to

transfer of immovable property but only for the purposes of taking the benefit of doctrine of
part performance. Section 53A incorporated the words, "...then notwithstanding that the
document though required to be registered has not been registered…"

The Transfer of Property Act, 1882, was amended in 2001, and by virtue of the amendment,
the exception in favour of unregistered document allowed in evidence to protect possession
under the doctrine of part performance was withdrawn

Question- Read Section 17 of the Registration Act 1908 and identify the clause under which
‘agreement to sell’ would fall.

Difference between Indian and English law

This right is more restricted than the English equity in two respects: (1) there must be a
written contract and (2) it is only available as a defence

Under English law, the doctrine of part performance can be invoked by a person even on the
strength of an oral agreement. It can be used both as a defence and as a weapon of attack, i.e.,
it can be used even to enforce a right of possession and not merely to protect it.

possession of the property with transferee

The transferee must have taken possession of the property in part performance of the contract
and not in any other capacity or for any other purpose.
Question

1. A agrees to sell his house to B in March and a sale deed is drawn up. A makes it very clear
to B that the possession under the sale deed would be handed over to B only after the festival
of Diwali is over, which falls in November. B has no place to live and A permits him to occupy
the premises for a period of two months. The contract fails to take effect. Can B invoke part
performance?

2. What if the transferee is already in possession of the property?

In cases where the transferee already had the possession of the property and retains it after a
partly performed contract, he must show that besides the retention of the possession, he has
done some act in furtherance of the contract that can show clearly his altered position.

There must be a real nexus between the contract and the acts done in pursuance of the contract
or in furtherance of the contract.

For example-He could get his name mutated into mutation register of the municipality and
in implementation of this agreement of sale, the mortgagor himself made an application for
mutation to the municipal authorities and the name of the mortgagee was mutated as the owner
of the property. This was held as sufficient act done in furtherance of the contract by the parties
in a case.

The tenant must show either from the contract or some other material or evidence that he
continued to possess the property not in the capacity as a tenant, for instance, he does not pay
rent under one of the terms of the contract of sale in order to show that has possession is not
in the capacity as a tenant, but in part performance of the contract. In addition to that the tenant
also has to show that he has done some act in furtherance of the contract such as payment of
necessary taxes to show that he was liable to pay the taxes as his possession was no longer as
that of a tenant.

Effect of part performance

What part performance purports to do is to prevent a plaintiff from recovering the possession
of the property already transferred to the transferee where the conditions are satisfied.

A person who acquires a title to the property from the transferor subsequent to the act of part
performance, will also suffer from the same disability as the transferor himself.

A agrees to transfer the property to B through a written and registered document and delivered
possession of the property and in furtherance of this contract, delivers possession of the
property. He then later changes his mind and sells the property to C. C is a person claiming
under the transferor and if he seeks to take back the possession, the same disability would be
imposed on him also.

The rights of a transferee for consideration who has no notice of the contract or of part
performance thereof are not effected by this doctrine

__________

Indian Registration Act

17. Documents of which registration is compulsory

(2) Nothing in clauses (b) and (c) of sub-section (1) applies to—

(v) any document ……not itself creating, declaring, assigning, limiting or extinguishing any
right, title or interest of the value of one hundred rupees and upwards to or in immovable
property, but merely creating a right to obtain another document which will, when executed,
create, declare, assign, limit or extinguish any such right, title or interest

________

SALE

Section 54
“Sale” defined.—“Sale” is a transfer of ownership in exchange for a price paid or promised
or part-paid and part-promised.

Sale how made.—Such transfer, in the case of tangible immoveable property of the value of
one hundred rupees and upwards, or in the case of a reversion or other intangible thing, can
be made only by a registered instrument.

In the case of tangible immoveable property of a value less than one hundred rupees, such
transfer may be made either by a registered instrument or by delivery of the property.

Delivery of tangible immoveable property takes place when the seller places the buyer, or such
person as he directs, in possession of the property.

Contract for sale.—A contract for the sale of immoveable property is a contract that a sale of
such property shall take place on terms settled between the parties.

It does not, of itself, create any interest in or charge on such property.

In order to constitute a sale there must be a transfer of ownership from one person to another.
A “transfer of ownership” by a person means a transfer by such person of his rights and interests
in the property in full and permanently.

But it is not necessary that the transferor should be a full proprietor. He may be the owner of a
partial interest in the property such as that of a mortgage or an occupancy tenant.

In a sale of property, all rights are conveyed by the owner with his free consent. No rights
remain with the seller, and the transfer of this totality of rights is called an absolute transfer.

Difference between Sale and Mortgage/Lease?

General Power of Attorney = Sale?

Hire-purchase agreement = Sale?

Essentials of a valid sale

(i) Parties to a sale

Sections 6(h) and 7

(ii) Subject matter of sale

Immovable property

Tangible vs Intangible

The property must be sufficiently identified. For that, the plot number, the street and the

area must be clearly mentioned

Reversion?

(iii) Price

Price is of the essence of the contract for sale. In absence of price there cannot be a valid sale.
Price should either have been paid or promised to be paid. Adequacy of price is not mandatory.

Price means money only. Payment need not even be in cash or current coin; it could be in any
mode which represents money, such as a cheque or bank draft. But the transfer of ownership
must bring, in return therefor, something which constitutes money or represents money
according to legal concepts

Price is essential to sale, payment of price is not.

If no price then what will be the nature of transfer?

If property > 100 then registration - how do we calculate the value of property? Price?

(iv) Formalities
The three requirements of law are that transfer of property by sale must take place with the help
of a validly executed sale deed, by the transferor in writing, is properly attested, and registered

Once registration takes place, the ownership passes with effect from the date of the execution
of the sale deed.

Section 47 of the Registration Act

47. Time from which registered document operates.—A registered document shall operate from
the time which it would have commenced to operate if no registration thereof had been required
or made, and not from the time of its registration.

__________________________

Cancellation of sale deed?

After execution of sale deed, once the owner divests himself of his ownership of property, he
retains no control or right over the said property including one of cancellation of the sale deed,
and the purchaser becomes the absolute owner

Cancellation can be ordered only under section 31 of the Specific Relief Act

________________________

Section 55- Rights and Liabilities of Buyer and Seller

___________________

Section 56- Marshalling

Marshalling by subsequent purchaser.—If the owner of two or more properties mortgages them
to one person and then sells one or more of the properties to another person, the buyer is, in
the absence of a contract to the contrary, entitled to have the mortgaged-debt satisfied out of
the property or properties not sold to him, so far as the same will extend, but not so as to
prejudice the rights of the mortgagee or persons claiming under him or of any other person
who has for consideration acquired an interest in any of the properties.

A owns two properties (House 1 and House 2). He mortgages both of them to one person X.
Subsequently, he sells House 2 to another person, B. B is entitled to have the mortgage debt
satisfied out of the property or properties not sold to him. He can require X to proceed against
the properties that are not mortgaged to him i.e. House 1.

A mortgages his properties X, Y and Z in favour of B for a loan of Rs. 50,000. A later sells
property X to C for a consideration of Rs 50,000. A does not repay the loan to B and B causes
the property to be sold with the help of the court.

Marshalling requires that a mortgagee who has the means of satisfying his debt out of several
properties shall exercise his right so as not to prejudice the purchaser of one of them

The right given to the purchaser by this section is independent of notice

Whose rights are being affected by marshalling?

Question

X and Y are subject to a mortgage and the mortgagor sells X to A and deposits with A a sum
of money to discharge the mortgage and agrees that if the sum is not sufficient he will pay the
excess with interest.
Marshalling should not prejudice the rights of the mortgage.

_________________________

MORTGAGE

Section 58

(a) A mortgage is the transfer of an interest in specific immoveable property for the purpose of
securing the payment of money advanced or to be advanced by way of loan, an existing or
future debt, or the performance of an engagement which may give rise to a pecuniary liability.

The transferor is called a mortgagor, the transferee a 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 the transfer is effected is called a mortgage-deed.

Transfer of an interest-

A mortgage is a transfer of an interest in specific immovable property as security for the

repayment of a debt.

These words stand in contrast with the words “transfer of ownership”, occurring in section 54
in the definition of sale. In a sale, all the rights of ownership which the transferor has, pass to
the transferee. In a mortgage, some rights are transferred to the mortgagee, and some remain
vested in the mortgagor. [Mortgage vs Sale]

Transfer of an interest as distinguished from a personal liability creates a relationship of the

transferee with the property and even if the property changes hands, i.e., the ownership
changes, the relationship of the transferee with the property continues. [Mortgage vs Charge]
QUESTIONS

1. A borrows money from B and undertakes to repay it within a period of one year. The
agreement also provides that if A is not able to arrange money, he would sell his property and
repay the loan out of the sale proceeds. Is this mortgage?

2. If the debtor promises to repay the debt and covenants that until payment he will not alienate
any property

3. A sale with a condition of retransfer

Which interest transferred?

depends on the type of mortgage

In a simple mortgage, what is transferred is a power of sale, which is one of the component
rights that make up the aggregate of ownership. In a usufructuary mortgage, what is
transferred is a right of possession and enjoyment of the usufruct. In a conditional mortgage
and in an English mortgage, the right transferred is, in form, a transfer of a right of ownership
subject to a condition. In each case, whatever be the form of the mortgage, there is a transfer
of some interest only, and not a transfer of the whole interest of the mortgagor.

Specific immovable property

QUESTION

4. A borrows money from B and undertakes to repay it within a period of two years. The
contract also provides that if A failed to repay the loan within a period of two years, B can sell
any of his properties. A owns three properties, X, Y and Z.
Purpose of transfer of interest

A transfer made for the purpose of discharging a debt is not a mortgage. Thus, if A transfers
land to B for a term of years in satisfaction of the debt, this is not a mortgage, but a grant of
land for a term free from rent.

Money advanced or to be advanced

The clause 'money advanced or to be advanced' shows that the loan amount might be paid to
the mortgagor at the time of the execution of the mortgage deed or even subsequent thereto.

QUESTION

5. A mortgaged property to B by a deed executed on 3 May. B advanced the money secured by

the mortgage a week later on 10 May. Meanwhile on 7 May A sold the property to C, C
contended that as the consideration had not been paid at the time of his sale, he was not bound
by the mortgage.

the performance of an engagement which may give rise to a pecuniary liability

The term engagement refers to a contract and due to this contract; there is a possibility that the
mortgagor may incur a financial liability

For instance, A borrows seeds from B, and mortgages his field to secure its return. This
undertaking to repay or return the seeds is an engagement giving rise to a pecuniary liability.

2 important rights
Right of redemption- The duty of the mortgagor is to repay the loan by the specified time,
and his right is to get back or reclaim whatever he had transferred in favour of the mortgagee.
This right of the mortgagor to get back, what all he had transferred in favour of the mortgagee
after the payment of the loan is called a right of redemption.

Redemption literally means release or liberation, and by repaying the loan the property of the
mortgagor is released or liberated from the mortgage.

Right of foreclosure - If the mortgagor fails to repay the loan amount within the specifie time,
the right arising in favour of the mortgagee is called a right of foreclosure. He can cause the
property to be sold by approaching the court (suit of foreclosure). This right arises in favour of
the mortgagee only after the expiry of the time period mentioned in the mortgage deed for its
repayment.

Can both these rights be exercised at the same time?

Mortgagor/mortgagee - transferor/transferee (Section 6(h)(3) and 7)

Mortgage money -The primary purpose of the mortgage is to raise a loan and if there is no
consideration the mortgage is a nullity. Mortgage money includes the interest accrued on it.

Mortgage deed- instrument, if any (Section 59)

How to determine whether the deed is a mortgage deed or not?

Substance over form

The substance is to be preferred to the form and the determining criterion is not merely the
name by which the deed is called. The document may be described as a mortgage but may not
be a mortgage if the effect of it is otherwise.

Relationship between debt amount and the value of property (security)

TYPES OF MORTGAGE (Section 58)

1. SIMPLE MORTGAGE

Where, without delivering possession of the mortgaged property, the mortgagor binds himself
personally to pay the mortgage-money, and agrees, expressly or impliedly, that, in the event of
his failing to pay according to his contract, the mortgagee shall have a right to cause the
mortgaged property to be sold and the proceeds of sale to be applied, so far as may be
necessary, in payment of the mortgage-money, the transaction is called a simple mortgage and
the mortgagee a simple mortgagee

No delivery of possession

Personal obligation to pay + property

Right to cause the property to be sold- Direct sale?

the very words “cause the property to be sold” indicate that the power of sale is not to be
exercised without the intervention of the court

2. MORTGAGE BY CONDITIONAL SALE

Where the mortgagor ostensibly sells the mortgaged property—

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

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

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

the transaction is called a mortgage by conditional sale and the mortgagee a mortgagee by
conditional sale:

[Provided that no such transaction shall be deemed to be a mortgage, unless the condition is
embodied in the document which effects or purports to effect the sale.]
ostensible sale vs real sale?

personal liability?

conditional sale vs sale with option to purchase?

QUESTION

6. A had purchased the suit property through three sale deeds from B, and the fourth deed was
in the form of agreement to re-convey the property on repayment of consideration money. A
gave an opportunity to B to repay the entire consideration but the same was not paid.

3. USUFRUCTUARY MORTGAGE

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

The mortgagor transfers the right to possess and enjoy the property in favour of the mortgagee
for securing the repayment of the loan

Rent/profits for mortgage money

No personal liability or Right to Sell

Physical possession is not necessary

For example, if the mortgaged property is in possession of tenants, after the mortgage, a
direction from the mortgagor that now the tenants should pay the rent to the mortgagee is
sufficient. A mortgagee in possession acquires the right of the landlord.

Can there be 2 usufructuary mortgages of the same property?

Zuripeshgi lease v/s Usufructuary Mortgage

A zuripeshgi lease is a transaction where non-returnable lumpsum money is paid in advance in

exchange for the possession of immovable property for a fixed time period.

Relationship

Redemption

Actual possession

4. ENGLISH MORTGAGE

Where the mortgagor binds himself to re-pay the mortgage-money on a certain date, and
transfers the mortgaged property absolutely to the mortgagee, but subject to a proviso that he
will re-transfer it to the mortgagor upon payment of the mortgage-money as agreed, the
transaction is called an English mortgage.

(i) A loan is taken on the strength of the property by the mortgagor from the mortgagee;

(ii) There is an absolute transfer of this property in favour of the mortgagee;

(iii) The transfer is subject to a provision or condition that the mortgagee would return the
property to the mortgagor upon repayment of the loan by a certain date; and

(iv) The payment is to be made on a certain date fixed in advance.

Under an English mortgage the mortgagee acquires a right to take possession as soon as the
mortgage is executed

Ram Kinkar Banerjee vs Satya Charan Srimani (1938) PC

The Indian mortgagor, however, retains some rights though the English rules of equity do not
apply. He retains a right to a reconveyance of the land and a right to transfer such right by way
of sale or second mortgage (see Sections 81, 82, 91 and 94) and this right in India is a legal
right
Section 54, which deals with Sale, speaks of a sale as a transfer of ownership as opposed to the
transfer of interest spoken of in Section 58(a) in the case of a mortgage, and, though an interest
may be absolute, the word, particularly when used in opposition to ownership, is more
appropriate to a limited right. [SALE VS MORTGAGE]

English mortgage - absolute transfer? i.e. no interest left with the mortgager?

58(e)

Where the mortgagor binds himself to repay the mortgage money on a certain date and
transfers the mortgaged property absolutely to the mortgagee, but subject to a proviso that he
will retransfer it to the mortgagor upon payment of the mortgage money as agreed, the
transaction is called an English mortgage.

to regard the mortgagor's right of redemption as being merely contractual and as creating not
interest in the land would make it impossible for him to assign his right of redemption or to
create a second mortgage so as to bind the land.

If the subsection stopped at the word "mortgagee", it might be necessary to put this construction
upon it, but it does not stop there : it adds the proviso that the mortgagee "will retransfer" the
property "upon payment of the mortgage money as agreed."

with this addition the subsection upon its true construction does not declare" an English
mortgage" to be an absolute transfer of the property. It declares only that such a mortgage
would be absolute were it not for the proviso for retransfer.

Section 58(e) deals with form not substance. The substantial rights are dealt with in Sections
58(a) and 60. Whatever form is used nothing more than an interest is transferred and that
interest is subject to the right of redemption

_________________

English mortgage vs Mortgage by conditional sale?

Both- ownership liable to be transferred on default + possession

Personal bindingness

Nature of interest - ostensibly vs absolute

Remedy- foreclosure (MCS) vs sale (EM)

5. MORTGAGE BY DEPOSIT OF TITLE DEEDS/EQUITABLE MORTGAGE

Where a person…. delivers to a creditor or his agent documents of title to immoveable

property, with intent to create a security thereon, the transaction is called a mortgage by
deposit of title-deeds

Lloyd Bank case

It is purely an oral transaction. The loan amount is raised against the title deeds of the
immovable property which are delivered to the mortgagee. It need not be in writing.

Territorial restriction

Rationale- to give facility to mercantile community in cases where it may be necessary to raise
money all of a sudden

6. ANOMALOUS MORTGAGE

A mortgage which is not a simple mortgage, a mortgage by conditional sale, an usufructuary

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

Refers to mortgages that do not fall into the above categories.

The rights and liabilities of the parties are decided by the deed.

Example:
Simple + Usufructuary

Possession given + personal liability

_______________________

TRANSFER BY MORTGAGE (Section 59)

3 ways: registered deed, delivery of possession and deposit of title deeds.

While estimating the amount, it is only the principal money, i.e. the initial loan amount, which
is to be taken into account and not the interest.

Simple mortgage- value under 100?

__________________

RIGHT OF REDEMPTION (Section 60)

At any time after the principal money has become due, the mortgagor has a right, on payment
or tender, at a proper time and place, of the mortgage-money, to require the mortgagee (a) to
deliver to the mortgagor the mortgage-deed and all documents relating to the mortgaged
property which are in the possession or power of the mortgagee, (b) where the mortgagee is in
possession of the mortgaged property, to deliver possession thereof to the mortgagor, and (c)
at the cost of the mortgagor either to re-transfer the mortgaged property to him or to such third
person as he may direct, or to execute and to have registered an acknowledgment in writing
that any right in derogation of his interest transferred to the mortgagee has been extinguished

The statutory right of mortgagor to take back the property on repayment of the loan amount in
full plus the interest on it, if any is called a right to redeem and a suit to enforce it is called a
suit for redemption.

-deliver documents

-deliver possession

- re-transfer or extinguish his rights

QUESTION

A executes a mortgage of his property in favour of B and secures a loan of Rs 10 lakhs. In the
contract of mortgage, it was provided that A would pay the amount after a period of five years,
but within a period of six years, failing which, his right to redeem would come to an end and
the property would pass to the mortgagee. Till when would the Right of Redemption exist?

CLOG

On redemption, he would hold and enjoy the property in the same way as he was entitled
to enjoy before the mortgage. Any covenant to prevent him from doing so, that would, in
terms, be a clog on equity of redemption.

QUESTION

-A, who was in financial difficulty, mortgaged his house in favour of B, who was his tenant
and had the possession of the property. The contract provided that if A fails the property would
be deemed to be sold to B. B would, in that case, become the owner, and A would have no
objection to that. In case A repaid the money during the stipulated time period, B would have
a right to retain possession of the property and continue as his tenant. A paid the money but B
refused to vacate and hand over the possession of the property to A on the ground that they had
taken the possession as the tenants under the mortgage deed. Is this a clog?

Court:

There can not be worse types of clogs than the present one because here under the garb of the
mortgage, the mortgagee had tried to become the owner of the property first and then had tried
to put a covenant by which they would be entitled to continue in possession for ever, either by
changing the rent deed or claiming ownership. …It would be inequitable and unjust if in the
garb of advancing monies as mortgagee to the mortgagor a mortgagee is allowed to abuse and
misuse his possession and become perpetual tenant which in the present circumstances would
tantamount to giving him almost right to enjoy the property unless evicted by due course of law
in separate proceedings under the rent control law.

[Maina Devi v Thakur Mansingh 1985]

QUESTION

-The condition in the mortgage deed also stipulates that upon the redemption of the mortgage,
the mortgagee would continue to be a tenant and would keep the possession of the property in
accordance with the lease agreement effected prior to this mortgage.

CASE LAW

Ganga Dhar vs Shankar Lal (1958) Supreme Court

the mortgage deed, by two distinct and independent terms provided that

(1) the mortgage shall not be redeemed for 85 years and

(2) that it could be redeemed only after that period and within six months thereafter, failing
which the mortgagor would cease to have any claim on the mortgaged property and the
mortgage deed would be deemed to be a deed of sale in favour of the mortgagee

RATIONALE BEHIND SECTION 60

“This court, as a court of conscience, is very jealous of persons taking securities for a loan,
and converting such securities into purchases. And therefore I take it to be an established
rule, that a mortgagee can never provide at the time of making the loan for any event or
condition on which the equity of redemption shall be discharged, and the conveyance
absolute. And there is great reason and justice in this rule, for necessitous men are not,
truly speaking, free men, but, to answer a present exigency, will submit to any terms that
the crafty may impose upon them”

CLOG ON THE EQUITY OF REDEMPTION

The rule against clogs on the equity of redemption is that, a mortgage shall always be
redeemable and a mortgagor's right to redeem shall neither be taken away nor be limited
by any contract between the parties.

The principle is this: a mortgage is a conveyance of land or an assignment of chattles as a

security for the payment of a debt or the discharge of some other obligation for which it is
given. This is the idea of a mortgage: and the security is redeemable on the payment or
discharge of such debt or obligation, any provision to the contrary notwithstanding. That,
in my opinion, is the law. Any provision inserted to prevent redemption on payment or
performance of the debt or obligation for which the security was given is what is meant by_
a clog or fetter on the equity of redemption and is therefore void. It follows from this, that
"once a mortgage always a mortgage ". The right of redemption, therefore, cannot be taken
away. The Courts will ignore any contract the effect of which is to deprive the mortgagor
of his right to redeem the mortoage.

DECISION ON (2)

the term in the mortgage contract, that on the failure of the mortgagor to redeem the
mortgage within the specified period of six months the mortgagor will have no claim over
the mortgaged property, and the mortgage deed will be deemed to be a deed of sale in
favour of the mortgagee, cannot be sustained. It plainly takes away altogether, the
mortgagor's right to redeem the mortgage after the specified period. This is not permissible,
for " once a mortgage always a mortgage " and therefore always redeemable.

Under the section, once 'the right to redeem has. arisen it cannot be taken away. The
mortgagor's right to redeem must be deemed to continue even after the period of six months
has expired and the attempt to confine that right to that period must fail.
DECISION ON (1)

The term providing that the right to redeem will arise after eightyfive years does not, of
course, take away the mortgagor's right to redeem and is not, therefore, in that sense, a clog
on the equity of redemption. It does, however prevent accrual of the right to redeem for the
period mentioned. Is it then, in so far as it prevents the right to redeem from accruing for a
time, a clog?

the right to redeem does not arise till the principal money becomes due. When the principal
sum is to become due must of course depend on the contract between the parties. In the
present case the parties have agreed that the right to redeem will arise eightyfive years after
the date of the mortgage, that is to say, the principal money will then become due.

the Courts have also relieved mortgagors from bargains whereby the right to redeem has
not been taken away but restricted.

The reason then justifying the Court's power to relieve a mortgagor from the effects of his
bargain is its want of conscience. Putting it in more familiar language the Court's jurisdiction
to relieve a mortgagor from his bargain depends on whether it was obtained by taking
advantage of any difficulty or embarrassment that he might have been in when he borrowed
the moneys on the mortgage. Was the mortgagor oppressed ? Was he imposed upon ? If he
was, then he may be entitled to relief.

Is it oppressive ? Was he forced to agree to it because of his difficulties ? Now this question is
essentially one of fact and has to be decided on the circumstances of each case

we have nothing here to show that the length of the term was in any way disadvantagous to the
mortgagor

1. It is quite conceivable that it was to his advantage. The suit for redemption was brought
over forty-seven years after the date of the mortgage. It seems to us impossible that if
the term was oppressive, that was not realised much earlier and the suit brought within
a short time of the mortgage

2. We are not aware what the term-of that mortgage was' But we find that mortgage
included another property which became freed from it as a result of the mortgage in
suit. This would show that the mortgagee under this mortgage was not putting any
pressure on the mortgagor…….the mortgage money under the present mortgage was
more than that under the earlier mortgage but the mortgagee in the present case was
satisfied with a smaller security
 3. no complaint is made that the interest charged, which was to be measured by the rent
of the property, was in any manner high

4. There is nothing in the mortgage instrument permitting the mortgagee to demand any
money, and it is well settled that the mortgagee's right to enforce the mortgage and the
mortgagor's right to redeem are co-extensive.

the bargain appears to us to have been fair and one as between parties dealing with each other
on equal footing. We have no evidence in this case of the circumstances existing at the date of
the mortgage as to the pecuniary condition of the mortgagor or as to anything else from which
we may come to the conclusion that the mortgagee had taken advantage of the difficulties of
the mortgagor and imposed a hard bargain on him. It was said that the fact that the property
was subject to a prior mortgage at the date of the mortgage in suit indicates the impecunious
position of the mortgagor

______________________

QUESTION

-The issue again was the right of the mortgagors to redeem the property before the stipulated
period of 99 years. Since the possession was delivered to the mortgagee, a condition in the deed
also empowered him to demolish the existing structures on the property and rebuild the new
ones and re-reimburse the entire cost of construction from the mortgagors. Principal amount-
5000. Entire amount payable at the end of 99 years.

________________

Examples of Clog on the Right of Redemption

1.In a mortgage for 40 years, a covenant for an automatic renewal of the mortgage for another
period of 40 years in case of default in payment
2. A condition of redemption only on a specific date after 60 years and on no other day

3. The mortgagor is to redeem after paying three times the principal amount

4. A condition that mortgagee is entitled to retain possession for another period of 12 years

5. Mortgagor will have no claim if payment not made before a specified date.

Extinction

-Act of parties

If the mortgagor himself executes a document expressing his inability to pay the loan amount
and authorizing the mortgagee to put up the property for public auction to realize his loan, it
would result in extinguishing his right of redemption.

- Decree of the Court

On the petition of the mortgagee for foreclosing the mortgage, the court may pass the decree
for sale of the property

Generally, the court gives a time frame to the mortgagor within which he should deposit the
loan amount until the final decree of foreclosure, and the mortgagor can redeem even after the
time fixed in the preliminary decree. The final decree extinguishes the right of redemption and
the court cannot reopen it to extend the redemption time.

If the mortgagor fails to pay the loan amount by the stipulated time and the property is sold at
the court auction, the right of the mortgagor to redeem the property is extinguished

___________________

EFFECT OF CLOG - LIMITATION PERIOD

the long term in itself was not a clog and even if it is a clog, it would be deemed to be non-
existing right from the date of the execution. This would mean that the mortgage was always
redeemable. But in that case the suit for redemption should have been filed within a period of
30 years, in accordance with the provisions of the Limitation Act, 1963. As it was filed in the
present case after 60 years, the same was barred by limitation and therefore the court cannot
entertain the petition for redemption
whether the oppressive term, which amounts to a clog would be voidable or void ab initio. The
question became important as the period of limitation is counted from the time the right arises

The condition in a mortgage deed which is found to be clog on the equity of redemption is
ab initio void or invalid but it is not so in absolute sense, meaning that it would become so
only upon the mortgagor resorting to remedy in a Court of law and on the Court, in the
facts and circumstances of the case, coming to the conclusion that the condition in the
mortgage deed is clog on the equity of redemption.

Where a condition in the mortgage deed is a clog on the equity of redemption, period of
limitation under Article 61(a) for filing suit of redemption can never commence from the
date of execution of the mortgage deed but would commence from the date the Court holds
that period of redemption fixed in the mortgage deed of unreasonably long period of time
is a clog on the equity of redemption. Period of limitation would, therefore, commence from
the date of declaration of such condition as a clog by the Court.

[Sangar Gagu Dhula vs Shah Laxmiben Tejshi (2001) Gujarat HC]

___________________

Partial redemption

As a general rule, partial redemption is not permissible. Partial redemption means redemption
of only a part of the mortgage.

A, B, C co-own a property. It is mortgaged jointly to X for 10,000. A has 1/2 share in the
property. He cannot pay 5000 and redeem his share.

Mortgage values his security as a whole.

Who can file for redemption

Section 91

___________

Sections 67 to 77 deal with the rights and liabilities of the mortgagee, just as sections 60 to 66
have dealt with the rights and liabilities of the mortgagor.

Sections 67, and 68 to 73 refer to the mortgagee’s rights and sections 67A, 76 and 77 refer to
the mortgagee’s liabilities

FORECLOSURE (Section 67)

A suit to obtain a decree that a mortgagor shall be absolutely debarred of his right to redeem
the mortgaged property is called a suit for foreclosure.

The rights of the mortgagee to foreclose can be curtailed by a contract to the contrary, but at
the same time, that may have no impact on the mortgagor's right to redeem.

The right of redemption is not subject to a contract to the contrary, for the mortgagor requires
protection against oppression, but the mortgagee not being in need of the same protection may
curtail his right of foreclosure or sale by contract.

WHEN CAN THE MORTGAGEE FORECLOSE

Just as the mortgagor cannot redeem before due date, so also the mortgagee cannot enforce his
security before the due date.

EFFECT

The effect of foreclosure, therefore, is that the conditional conveyance becomes absolute, and
the property vests absolutely in the mortgagee
In the case of successive mortgages, the procedure for foreclosure is complicated and dilatory

QUESTION

Foreclosure/Remedies in different types of mortgage

Simple?

Usufructuary?

Mortgage by Conditional Sale?

English?

Deposit by title deeds? Section 96

Anomalous? Section 98

_________________

CONTRIBUTION (SECTION 82)

The section provides rules for the contribution of money towards the mortgage debt, where
either the property mortgaged belongs to two or more persons who have distinct interests in it
or if two or more properties of the same person are utilised for discharging the mortgage. It is
based on the principles of equity, justice and good conscience.

Law provides that where several persons are involved in the effecting of a mortgage, one only
out of these should not alone bear the burden of discharging the mortgage debt, through his
share of property. If two or more persons owning property mortgage it, each of them should
contribute towards payment of the mortgage debt in proportion to their shares in the property

For instance, A, B, C and D together own a property. The share of each of them is one-sixth,
one-sixth, one-third and one-third respectively. They mortgaged the property in favour of X
for a loan of Rs 80,000. The interest on this amount is calculated as Rs 10,000. Out of the total
amount of Rs 90,000, A and B will pay 15,000 each, and C and D will pay Rs 30,000 each.
Marshalling settles the rights of competing mortgages, while contribution settles the rights of
mortgagors of several shares in one property. Marshalling requires that the creditor who has
the means of satisfying his debt out of several funds shall so exercise his rights as not to take
from another creditor the funds which form his only security. Contribution requires that a fund
which is equally liable with another to pay a debt shall not escape because the creditor has been
paid out of that other fund alone.

_________________

SECTION 92 - SUBROGATION

When a person (surety of the mortgagor) makes payment of debt in default of the mortgagor
then what remedy would be available to him?

Would stand in the shoes of the mortgagee.

Subrogation means substitution.

The ingredients of this section are:

(i) Any of the persons referred to in section 91, (other than the mortgagor) and any co-
mortgagor;

(ii) Shall, on redeeming property subject to the mortgage,

(iii) Have, so far as regards redemption, foreclosure or sale of such property, the same rights
as the mortgagee whose mortgage he redeems may have against the mortgagor or any other
mortgagee.

(iv) The right conferred by this section is called the right of subrogation.

(v) A person acquiring the same is said to be subrogated to the rights of the mortgagee whose
mortgage he redeems.

A right of subrogation affects the property and therefore, an agreement of subrogation must be
in writing and registered.

Can the mortgagor subrogate?

________________

LEASE

Section 105

A lease of immoveable property is a transfer of a right to enjoy such property, made for a
certain time, express or implied, or in perpetuity, in consideration of a price paid or promised,
or of money, a share of crops, service or any other thing of value, to be rendered periodically
or on specified occasions to the transferor by the transferee, who accepts the transfer on such
terms.

Lessor, lessee, premium and rent defined.—The transferor is called the lessor, the transferee
is called the lessee, the price is called the premium, and the money, share, service or other
thing to be so rendered is called the rent.

In English law, this is usually stated by pointing out that it is essential for the establishment of
the relationship of landlord and tenant that there should be a “demise”. Demise is the grant of
a right to the exclusive possession of land .

Minor as lessee?

“According to Section 6(h) of T.P. Act, no transfer can be made to a person legally
disqualified to be transferee, Section 7 of the said Act provides that every person competent
to contract and entitled to transferable property, or authorised to dispose of transferable
property not his own, is competent to transfer such property either wholly or in part. There
is nothing in the Transfer of Property Act according to which it can be said that a minor is
disqualified to be a transferee. There is no question of application of Section 7 because in
the case under appeal the minor is not the transferor. Section 11 of the Indian Contract
Act, 1872, would not come in the way of transfer of property in favour of the minor. But
when a lease is created, it is not the transfer of immoveable property or interest therein
simpliciter in favour of a minor. The ame is coupled with an obligation on the part of the
minor to pay stipulated rent, and when obligation is created against a minor by such
transfer, one has to consider whether the minor is bound by such transfer. Ordinarily, in a
gift or other transfer of property in favour of a minor there is no receiprocal obligation
cast on the minor, but in a lease reciprocal obligation is cast on the lessee (minor) to
perform several obligations as mentioned in Section 108-B of the Transfer of Property
Act.”

[Jaykant Harkishandas Shah vs Durgashanker Valji Pandya on 3 December, 1968, Gujarat HC]

Section 106

Parties do not often define the duration of the lease with reference to a particular period or
event. Sometimes, the period initially provided for has expired and the relationship of lessor-
lessee continues without any further definition of period. The law must supplement the gap and
provide a rule to regulate the duration of the lease. Local law or usage may occasionally deal
with the matter, but otherwise there must be a guiding rule of uniform application. S. 106 seeks
to create one such guideline.

The section makes a dichotomy between agricultural and manufacturing leases (on the one
hand) and other leases.

Agricultural/manufacturing - Yearly, Notice- 6 months

Others- Monthly, Notice- 15 days

Based on duration

perpetual lease, leases for a specified period (capable of certainty) and periodic tenancies (S.
106)

Leases in perpetuity- A lease without a term is a permanent lease. Long possession coupled
with a uniform rent raises a presumption of permanency.

the land is held at a uniform rent for 69 years; several transfers have taken place and the lessor
never claimed that the lease was terminable; the cumulative effect of all conditions, none of
which in isolation is decisive or sufficient to establish, that the lease is a permanent one

Tenancy at will
A tenancy at will is determinable at the will either of the landlord, or of the tenant. The law
implies a tenancy at will of one party to be a tenancy at will of either party. A tenancy at will
arises by implication of law in cases of permissive occupation when a person is in possession
of premises with the consent of the owner.

Derivative lease

For instance, A is the owner of a house and grants a lease of it to B for a period of 10 years.
This will be an instance of absolute lease. Here, B who is inducted into the premises as a tenant
grants a sub lease of the same premises in favour of C. This kind of lease can never extend
beyond the time period for which the primary lease was executed in favour of the lessee.

Section 107- Modes of Creation of Leases

Lease from year to year

The lessor has no right to determine (terminate) the lease at the end of a year without giving
notice. It is a continuing lease. Unless terminated by a notice to quit, the lease can last
indefinitely.

i). Registered deed + execution by both parties

ii). Oral agreeement + delivery of possession

Rights and Liabilities of the Lessor and Lessee (Section 108)

Lessor

Duties

- Disclose latent material defect

- Give possession

- Quiet enjoyment

Lessee
Rights

- Accession

- Avoid the lease in case of destruction of property by fire, flood, etc.

- Right to repair the property and get reimbursed

- Sub lease

Duties

- Pay consideration/rent

- Maintain the property

- Not erect a permanent structure

- Give back the possession on determination

Determination of Lease (Section 111)

-Lapse of time

-Happening of a event

-Merger (exmaple- lessor sells property to lessee)

-Forfeiture (breach of express condition lessor may re-enter, denial of lessor’s title, insolvency
of lessee+stipulation, not automatic) + notice by lessor to forfeit

Distinction between Lease and Licence

The distinction between lease and licence may have important repercussions not only in the
law of property, but also in the law of civil wrongs,—and sometimes in the criminal law. For
example, where rooms are let to a tenant and the relationship is one of lease, then it is a trespass
on the part of the landlord who enters and excludes the tenant from the rooms, but not so if the
person concerned is merely a lodger having only a licence to sleep in one room and to eat and
during in another room.
Section 52 (Easement Act)—Where one person grants to another, or to a definite number of
other 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.

Main differences

1. Lease- 105 TPA, Licence- 52 IEA

2. Lease-interest, Licence-bare permission

3. Generally-Lease- transferable+heritable, Licence- not heritable

4. Licence ends with death of grantor/grantee, Lease - that is not the case

5. Licence can be withdrawn at the pleasure of the grantor, Lease- rules of determination, notice

6. Lease is unaffected by transfer of the property (Section 109), Licence- ends

7. Lessee can file a suit in case of encroachment, entitled to accretions, Licencee is not

To ascertain if a document creates a lease or a licence, the substance of the document must be
preferred to its form

Associated Hotels of India v RN Kapoor (1959) Supreme Court

The possession was secured with the help of a deed that was described as a 'licence deed'. It
empowered the licencee to use the premises and carry their business for one year on payment
of money through quarterly installments. The deed gave them an option to renew or extend the
term of occupancy on mutual terms and conditions. A was to pay for the electricity and water
usage calculated with the help of a separate meter. He could not make any alterations in the
premises without the consent of the grantor. On failure to pay the money, the grantor was at
liberty to terminate the agreement without notice and without compensation. The occupancy
rights were transferable in case the licencee could not carry the business for a specified term,
but with the prior approval of the grantor.

Difference between the two

If a document gives only a right to use the property in a particular way or under certain terms
while it remains in possession and control of the owner thereof, it will be a licence. The legal
possession therefore, continues to be with the owner of the property, but the licencee is
permitted to make use of the premises for a particular purpose. But for the permission, his
occupation would be unlawful. It does not create in his favour any estate or interest in the
property.

EXCHANGE

“Exchange” means to part with, give or transfer for an equivalent

Section 118

When two persons mutually transfer the ownership of one thing for the ownership of another,
neither thing or both things being money only, the transaction is called an "exchange".

A transfer of property in completion of an exchange can be made only in manner provided for
the transfer of such property by sale.
Mode of exchange -Transfers of property by way of an exchange can be made only in manner
provided for the transfer of such property by sale. In case of immovable property the rules as
to registration or delivery of possession apply. Therefore, an exchange of tangible immovable
property of the value of Rs 100 and upward, if not made by a registered instrument, is invalid.

Each party to the exchange has the rights and is subject to the liability of the seller as to that
which he gives and also has the rights and liabilities of the buyer as to that which he takes.
[Section 120]

Money can be exchanged with money, of the same or different denominations or even different
currencies. The term money here includes not only coins, but also currency notes.

The definition of exchange is not limited to immovable property. An exchange is, therefore,
not only exchange of land, but also barter of goods.

GIFT

Section 122

"Gift" is the transfer of certain existing moveable or immoveable property made voluntarily
and without consideration, by one person, called the donor, to another, called the donee and
accepted by or on behalf of the donee.

Acceptance when to be made.—Such acceptance must be made during the lifetime of the donor
and while he is still capable of giving.

If the donee dies before acceptance, the gift is void.

The word “voluntarily” in the section is used in its popular sense denoting the exercise of
unfettered will. Have to consider factors vitiating consent. Particularly important in cases of
pardanashin women.

Competency-The donee on the other hand can even be a minor.

Subject matter- Gift must be made of existing movable or immovable property capable of
being transferred. Future property cannot be transferred.

Acceptance

A gift may be accepted by, or on behalf of a person who is not competent to contract. A minor
may, therefore, be a donee.

Mode

Where immovable property is gifted, the transfer must be effected by a registered instrument
signed by or on behalf of the donor, and attested by at least two witnesses. Registration is
necessary in all cases of gift of immovable properties and the title cannot pass without there
being a registered deed of gift.

For movable- registration or delivery of possession

Conditional Gift (Section 126)

The donor and donee may agree that on the happening of any specified event which does not
depend on the will of the donor a gift shall be suspended or revoked; but a gift which the parties
agree shall be revocable wholly or in part, at the mere will of the donor, is void wholly or in
part, as the case may be.

A gift may also be revoked in any of the cases (save want or failure of consideration) in which,
if it were a contract, it might be rescinded.

1. A gift is primarily a contract and if both the parties agree that the gift would be revoked on
the happening of an event the happening of which does not depend purely on the wishes of the
donor, if that event happens, the gift will be revoked. This event may be certain or uncertain.
It may happen or may not happen,
For instance, the donor and the donee agree, that if B's son dies during the lifetime of the donor,
the gift would be revoked. The gift would also be revoked if the son dies during the lifetime of
the donor, as the death of a person is not dependent purely on the wishes of the donor.

2. if the revocation of the gift is purely on the wishes of the donor, then the gift is void.

If the condition is that after six months from the date of the execution of the gift, the donor if
he so wants may revoke it, this condition is void, as here the revocation is depended purely on
the wishes of the donor.

Onerous Gift (Section 127)

A gift with a burden is an onerous gift. This section incorporates a rule that if by a single
instrument the donor confers in favour of the donee a benefit and a burden, the donee has to
either accept the gift in totality or reject it in its entirety. He cannot accept only the benefit and
reject the burden. This principle is based on a maxim, qui sentit commodum sentire debetet
onus. It means that the one who receives an advantage must bear the burden as well.

E.g. shares, lease, etc.

The distinguishing feature between the first and the second paragraph is that gift by a single
transfer is to be accepted or rejected by the donee in its entirety, but if several properties are
gifted to a donee through separate transfers, then, he is at liberty to pick and choose the ones
he wants and validly reject the one he does not want.

Disqualified person- A donee not competent to contract and accepting property burdened by
any obligation is not bound by his acceptance. But if, after becoming competent to contract and
being aware of the obligation, he retains the property given, he becomes so bound.

Universal Donee

A owes B a debt of Rs 20 lakh. A has property worth Rs 40 lakh. He executes a gift of this
property and all his assets in favour of C and does not retain anything of value with him. C
would be termed as a universal donee. It is his liability to pay the debt of Rs 20 lakh to B,
failing which B can rightfully proceed against C for this claim. In the same illustration, suppose
the value of the property that C receives under the gift is Rs 15 lakh. In this case C's liability
would be only to the extent of Rs 15 lakh and not more.
The principal object of this section is to do justice to the creditors of the donor. The section is
based on the principle that a man ought to be just before he is generous. If he is only
generous, forgetting this maxim, the law will see to it that no injustice is caused to the creditors.

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ACTIONABLE CLAIM (Section 3)

Actionable claims are claims recognised by the courts of law for providing relief with reference
to unsecured debts or beneficial interests in movable property.

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EASEMENT

Section 4. “Easement” defined.—

An easement is a right which the owner or occupier of certain land possesses, as such, for the
beneficial enjoyment of that land, to do and continue to do something, or to prevent and
continue to prevent something being done, in or upon, or in respect of, certain other land not
his own. Dominant and servient heritages and owners.—

The land for the beneficial enjoyment of which the right exists is called the dominant heritage,
and the owner or occupier thereof the dominant owner;

the land on which the liability is imposed is called the servient heritage, and the owner or
occupier thereof the servient owner.

12. Who may acquire easements.—An easement may be acquired by the owner of the
immovable property for the beneficial enjoyment of which the right is created or on his behalf,
by any person in possession of the same.
MODES OF ACQUISITION

A. EXPRESS

The easement can be acquired through express grant made by inserting the clause of
granting such a right in the deed of sale, mortgage or through any other form of transfer.
This involves expressing by the grantor of his clear intention.

B. IMPLIED

i) An Easement of necessity is an easement without which the property cannot be used at all.
Convenience is not the test but absolute necessity is the test.

When one person transfers immovable property to another, if an easement in other immovable
property of the transferor is necessary for enjoyment the property transferred, the transferee is
entitled to such easement.

Eg.: (a) A sells a land called B used for agricultural purposes. The land is sold to C. The land
is accessible only by passing through A's land. C is entitled, to the right of way by necessity
for agricultural purposes.

c) A sells his land called B over which A had a right of way to bring water. C is the buyer. For
A to enjoy his house the right of way to bring water is absolutely necessary. Hence A has a
right over the land B.

ii)Section 15, of the Easement Act provides for the acquisition of prescriptive easement The
essential requisites for the acquisition are:

a) The right must be definite and certain.

b) It must have been enjoyed independently of any agreement with the owner of the land over
which the right is claimed.

c) It must be enjoyed: (i) Peaceably (ii) Openly (iii) as of right (iv) as an easement (v) without
any interruption (vi) for a continuous period of 20 years.
QUESTION

A built a house with a window facing the land of C in 1960. C built in 1979, a-house which cut
off the light and air from A's window. A objected & filed a case in 1983 to remove the
obstruction.

iii) Customary easement -An easement right can be acquired by virtue of a local custom. This
is known as customary easements. Section 18 of the Act provides for it. For example- people
living in a particular city or town having a right to bury the dead in a particular area or riparian
right to use water.

EXTINCTION

Section 37 to 47 of the The Indian Easements Act, 1882, provides for the mode of extinction
of easements.

-Unity by ownership

A has right of easement over B’s property. Later on, A purchases B’s property and becomes
the owner of B’s property. In such a case, easement extinguishes.

- Termination of necessity

A grants a piece of land to B on which easement of necessity for B is the right of his way over
A’s land. Later on, B purchases a part of the A’s land over which he may pass to reach his
own land.

- Extinction by release

P has a right to discharge water through the eaves to Q’s yard. P authorized Q to construct a
building to such a height as not be able to discharge water. Q builds it and P’s right comes to
an end.

- Dissolution of servient owner’s right

A, in 1860, let Sultanpur to B for thirty years from the date of the lease. B, in 1861, imposes
an easement on the land in favour of C, who enjoys the easement peaceably and openly as an
easement without interruption for twenty-nine years. B’s interest in Sultanpur then ends, and
with it C’s easement.