Textbook on Transfer of Property Act [6 ed.]

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Avtar Singh & Harpreet Kaur-Textbook on Transfer of Property Act, 6th ed  

   

Textbook on Transfer of Property Act, 6th ed / THE TRANSFER OF PROPERTY ACT, 1882   Currency Date: 30 June 2020 © 2020 LexisNexis

THE TRANSFER OF PROPERTY ACT, 1882 (4 of 1882) [17th February, 1882] An Act to amend the law relating to the Transfer of Property by act of parties. 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:—

Comments 1. Regulation of Transfer by Act of Parties Before the Transfer of Property Act came into existence in 1882, the transfers of immovable properties in India were governed by the principles of English law and equity. In the absence of any statutory provisions the courts had to fall back upon English law on real properties, sometimes forcing the courts to decide the disputes according to their own notions of justice and fair play, resulting in confused and conflicting case laws. To remedy these confusions and conflicts a Law Commission was appointed in England to prepare a code of substantive Law of Transfer of Properties in India. This Commission prepared a draft Bill which was sent to the secretary of State for India. This Bill was introduced in the Legislative Council in 1877. The Bill was then referred to a Select Committee and it was also sent to the Local Governments for their comments. This Bill was discussed and redrafted on many points and referred to a Third Law Commission. The Third Law Commission consisted of Sir Charles Turner, Chief Justice of Madras, Sir Raymond Wast and Mr Whitely Stokes, Law Member of the Council of the Governor-General. The Bill pertaining to Transfer of Property Act, 1882 was prepared not less than seven times before the final Bill was passed and it came into force with effect from 17 February 1882, as Transfer of Property Act, 1882 (4 of 1882). The preamble of the Transfer of Property Act, 1882 says that "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:—".

2. Preamble The provisions of the Transfer of Property Act, 1882 have no application in a case where a transfer of property takes place by operation of law. As would appear from the Preamble of the Transfer of Property Act, 1882, 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 or the Indian Registration Act. Section 11 of the Act provides for a non obstante clause. An overriding effect, therefore, has been given thereby over all other laws for the time being in force.1

3. Act Not Exhaustive It is to be noted that in the language of Preamble neither the word "consolidate" nor the word "exhaustive" is used. This means that the Act is not exhaustive of a complete Code. It only defines and amends certain parts of the law relating to the transfer of property which is already existing. It is not giving any new consolidated law. Therefore, the help of certain principles of English law which are not inconsistent with the present Act may be taken on occasions on the basis of justice, equity and good conscience. Where any case is not covered by the provisions of the Act, the courts are permitted to administer the principles of equity. But where the case is within the provisions of the Act, the Act must be applied. The principle that courts are authorized to act according to justice, equity and good conscience where there is no specific provision of law governing the case means that the English law is to be applied if its application is suited to the Indian society and its circumstances.

4. Objects and Scope of the Act The Act defines and amends the law relating to transfer of property by act of parties. The Act does not cover transfer of property by operation of law. Further, transfer of property by act of parties again may be inter vivos or testamentary. Inter vivos transfer means transfer between two living persons whereas testamentary transfer relates to transfer by will etc. The Transfer of Property Act, 1882, covers only inter vivos transfers. Testamentary transfers are governed by the Indian Succession Act, 1925. The objects and scope of the Act may be summarized in terms of the following points: (1) This Act applies only to transfers by living persons. It does not regulate transfers by operation of law. In case of transfer by living persons both the transferor and the transferee are living at the time of transfer. In case of transfer by operation of law, the property is transferred even though the transferor is not alive on the date of transfer. In this mode of transfer the property is transferred automatically by the process of law. For example, devolution of property upon the legal heirs or legatees by inheritance or under wills is by operation of law. Transfers by orders of a court or transmission of property in cases of insolvency, sale or forfeiture in execution of court's decree are all by operation of law. (2) The Act mainly deals with the transfer of immovable properties. Although sections 5 to 37 of Chapter II contain provisions which are applicable to both kinds of property whether movable or immovable, mainly the Act deals with transfers of immovable property. Transfers of movable property are regulated by the Sale of Goods Act, 1930. (3) Chapter II of the Act which contains general principles of transfer does not affect transfer by Muslims even if it is against any of the provisions of Chapter II. This means that if there is any provision in the Transfer of Property Act, 1882 which is against any rule of Muslim Law, the rule of Muslim Law will prevail over the conflicting provisions of Act. The gifts made by Muslims are governed by the Muslim Law of Hiba. Section 129 of Chapter VII says that provisions of this Chapter (relating to gifts) would not be applicable to gifts made by Muslims. However, such exemptions are given only in respect of those rules of Muslim Law which are in conflict with any of the provisions of the Act dealing with the transfers in general. (4) The Act has not only defined the existing rules of transfers but also amended and modified some of them so as to make them suitable to the socio-economic conditions of India. (5) The Act has provided a parallel law to the already existing laws of testamentary and intestate transfers.

(6) Certain incidents of any contract or constitution of property are saved by the Act. This means that they are exempted from the operation of the Act provided they are not inconsistent with the provisions of the Act and are allowed by the law for the time being in force. Constitution of property means essential nature of property. The provisions of the Transfer of Property Act, 1882 cannot be applied to affect or change the basic nature of the property itself. (7) The Transfer of Property Act, 1882 was not made applicable to the whole of India in the first instance. As originally enacted, the Act did not extend to the then State of Bombay, Punjab and Delhi. It was extended to the State of Bombay by a notification in the Official Gazette. It is not applicable to the territories included in the State of Punjab. The general scheme of the Transfer of Property Act, 1882, is given below in a tabular form: SCHEME OF TRANSFER OF PROPERTY ACT, 1882

5. Applicability of the Act The Transfer of Property Act, 1882 came into force on 1 July 1882. It was applicable to the whole of British India except the territories of Bombay, Punjab and Burma. The Act empowers the State Governments to extend its provisions to the whole or any part of the territories of the State Government concerned by notification in the Official Gazette. The State Governments may also exempt territories administered by them from the provisions of sections 54 (paras 2 and 3), 59, 107 and 123, either retrospective or prospectively. From 1 January 1893 the Act was extended to the territories of Bombay and from 22 December 1924 to the whole of Burma. In Punjab, this Act is not enforceable but its provisions are being applied by the courts on the basis of principles of justice, equity and good conscience. However, sections 54, 107 and 123 were extended to all the municipalities in Punjab (including areas of Haryana and Chandigarh) and all the notified areas under section 241 of the Punjab Municipal Act, 1911. Similarly, in Delhi, from 1 December 1962 all the provisions of this Act except section 129 were made applicable and from 1 November 1965, the whole of the Act was enforced in Goa, Daman and Diu with no exceptions.

The Transfer of Property Act, 1882 was extended to State of Sikkim in 1983 and enforced w.e.f. 1 September 1984 in terms of Article 371F(n) of the Constitution of India. It was held that if the Act is not enforceable at the relevant time of transfer of property, the court can apply rules of justice and equity to the transaction and determine the dispute before it.2 In Namdeo v Narmada Bai,3 the Supreme Court pointed out, "it is axiomatic that the courts must apply the principles of justice, equity and good conscience to transactions which come up before them for determination, even though the statutory provisions of the Transfer of Property Act, 1882 are not applicable to these transactions and that it follows, therefore, that the provisions of the Act, which are but a statutory recognition of the rules of justice, equity and good conscience also govern those transfer...". AMENDMENTS TO THE TRANSFER OF PROPERTY ACT After its enforcement in 1882, the Transfer of Property Act has been amended from time to time. Given below is a narration of these amendments point-wise in short.

6. Act 3 of 1885 In 1885, the Transfer of Property Act, 1882 was amended to bring it in conformity with the provisions of Indian Registration Act III of 1877.

7. Act 2 of 1900 The Act was amended in order to exclude the Government Grants from its purview. This Amending Act of 1900 reshaped Chapter VIII regarding actionable claims and also modified the provisions of many sections which included sections 3, 6(e) and 6(h).

8. Act 6 of 1904 By this amendment, local governments were given the authority to apply the provisions of the Act to particular clauses of agricultural leases. Besides this, sections 1, 59, 69, 107 and 117 were amended.

9. The Code of Civil Procedure, 1908 (5 of 1908) It was provided in the 1908 amendment that the procedural rules relating to mortgages were to be governed by the provisions of the Civil Procedure Code.

10. Act 11 of 1915 This amending Act validated certain mortgages and gifts in Agra. Amendments were also made in section 69.

11. Act 38 of 1920

Section 1 of the Act was changed by this amending Act.

12. Act 38 of 1925 Certain amendments were made in some sections including section 130.

13. Act 27 of 1926 This amending Act inserted the definition of "attested" in section 3.

14. Act 10 of 1927 The definition inserted by the 1926 amending Act (point 8 above) was given retrospective effect by this amending Act.

15. The Transfer of Property (Amendment) Act, 1929 (20 of 1929) This Amendment Act (20 of 1929) was passed by the Parliament to provide an exhaustive modification of several important issues of substantive law. Law of mortgages was considerably changed by this Act. Section 60A was inserted to provide for obligation to transfer to third party instead of re-transference to mortgagor. Section 63A was inserted which gave the right of compensation to the mortgagee for necessary improvements made in the mortgaged property during the mortgagee's possession. Similarly, sections 65A and 67A were inserted. Section 65A gave statutory recognition to mortgagor's power to make leases. Section 67A provided for the obligation of mortgagee to bring one suit on several mortgages from the same mortgagor. Besides this, under section 53A equitable doctrine of part performance was also given statutory recognition under the Act. Many other sections were changed by this amending Act which included sections 15, 58, 92 and 3.

16. The Transfer of Property (Amendment) Act, 2002 (3 of 2003) In 2002 this Act has again been amended and a new section has been substituted in place of section 106 of 1882 Act. The provisions of this amending Act are given below: — (1) Substitution of new section for section 106.—For section 106 of the Transfer of Property Act, 1882 (4 of 1882) the following section shall be substituted, namely:— [s 106] Duration of certain leases in absence of written contract or local usage.— (1) In the absence of a contract or local law or usage to the contrary, a lease of

immovable property for agricultural or manufacturing purposes shall be deemed to be a lease from year to year, terminable, on the part of either lessor or lessee, by six months' notice; and a lease of immovable property for any other purpose shall be deemed to be a lease from month to month, terminable, on the part of either lessor or lessee, by fifteen days' notice.

(2) Notwithstanding anything contained in any other law for the time being in force,

the period mentioned in sub-section (1) shall commence from the date of receipt of notice. (3) A notice under sub-section (1) shall not be deemed to be invalid merely because

the period mentioned therein falls short of the period specified under that subsection, where a suit or proceeding is filed after the expiry of the period mentioned in that sub-section. (4) Every notice under sub-section (1) must be in writing, signed by or on behalf of

the person giving it, and either be sent by post to the party who is intended to be bound by it or be tendered or delivered personally to such party, or to one of his family or servants at his residence, or (if such tender or delivery is not practicable) affixed to a conspicuous part of the property". (2) Transitory Provisions.—The provisions of section 106 of the principal Act, as amended by section 2, shall apply to— (a) all notices in pursuance of which any suit or proceeding is pending at the

commencement of this Act; and (b) all notices which have been issued before the commencement of this Act but

where no suit or proceeding has been filed before such commencement.

1 Bharat Petroleum Corp Ltd v P Kesavan, (2004) 9 SCC 772 : AIR 2004 SC 2206 : 2004 AIR SCW

1989. The court dissented from the decision in Aswini Kumar Ghose v Arabinda Bose, AIR 1952 SC 369 : 1952 SCA 633 : 1952 SCJ 568. 2 Durga Prasad Shrestha v Special Secretary, Tourism Dept, Govt of Sikkim, Gangtok, East Sikkim,

AIR 2018 SiK 22. 3 Namdeo v Narmada Bai, AIR 1953 SC 228.

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER I PRELIMINARY [s 1] Short title.— This Act may be called the Transfer of Property Act, 1882. Commencement.—It shall come into force on the first day of July, 1882. Extent.—1[It extends2 in the first instance to the whole of India except 3[the territories which, immediately before the 1st November, 1956, were comprised in Part B States or in the States of] Bombay, Punjab and Delhi.] 4[But this Act or any part thereof may by notification in the Official Gazette be extended to the whole or any part of the 5[said territories] by the 6[State Government] concerned.] 7[And any 6[State Government] may 8[***] from time to time, by notification in the

Official Gazette, exempt, either retrospectively or prospectively, any part of the territories administered by such State Government from all or any of the following provisions, namely:— Section 54, paragraph 2 and sections 3, 59, 107 and 123.] 9[Notwithstanding anything in the foregoing part of this section, section 54, paragraphs

2 and 3, and sections 59, 107 and 123 shall not extend or be extended to any district or tract of country for the time being excluded from the operation of the Indian Registration Act, 10[1908], (16 of 1908), under the power conferred by the first section of that Act or otherwise.]

1 Subs. by the AO 1950, for the original third paragraph. 2 The application of this Act was barred in the Naga Hills District, including the Mokokchang

Sub-Division, the Dibrugarh Frontier Tract, the North Cachar Hills, the Garo Hills, the Khasea and Jaintia Hills and the Mikir Hills Tract, by notification under section 2 of the Assam Frontier Tracts Regulation, 1880 (2 of 1880). The Act has been declared to be in force in Panth Piploda by the Panth Piploda Laws Regulation, 1929 (1 of 1929), section 2, and continued in force, with modifications, in the territory transferred to Delhi Province by the Delhi Laws Act, 1915 (7 of 1915), section 3 and Sch III. It has also been partially extended to Berar by the Berar Laws Act, 1941 (4 of 1941). The Act has been extended w.e.f. 1-1-1893, to the whole of the territories, other than the Scheduled Districts, under the administration of the Government of Bombay. Sections 54, 107 and 123 have been extended from 6 May 1925 to all Municipalities in the Punjab and to all notified areas declared and notified under section 241 of the Punjab Municipal Act, 1911 (Pun. Act 3 of 1911), see Punjab Gazette, Extra., 1925, p 27. These sections and section 129 have been extended to certain areas in Delhi Province, see Notifications No. 198/38III, dated 30-5-1939, Gazette of India, 1939, Pt. I, p 918, and No. 61/40-Judl., dated 16-11-1940, Gazette of India, 1940, Pt I, p 1639, respectively. The Act has been extended to Manipur by the

Union Territories (Laws) Amendment Act, 1956 (68 of 1956). It has been rep. as to Government Grants by the Government Grants Act, 1895 (15 of 1895) and rep. or modified to the extent necessary to give effect to the provisions of the Madras City Tenants Protection Act, 1921 (Madras 3 of 1921) in the City of Madras; see section 13 of that Act. It has been amended in Bombay by Bombay Act 14 of 1939, and in Uttar Pradesh by Uttar Pradesh Act 24 of 1954. It has been extended to Pondicherry by Act 26 of 1968, section 3, Schedule, Pt I. 3 Subs. by the Adaptation of Laws (No. 2) Order, 1956, for "Part B States". 4 Subs. by the AO 1937, for the original paragraph. 5 Subs. by the Adaptation of Laws (No. 2) Order, 1956, for "said States". 6 Subs. by AO 1950, for "Provincial Government". 7 Subs. by Act 3 of 1885, section 1, for the original paragraph. 8 The words "with the previous sanction of the Governor General in Council" omitted by Act 38

of 1920, section 2 and Sch I. 9 Added by Act 3 of 1885, section 2 (with retrospective effect). Section 54, paras 2 and 3 and

sections 59, 107 and 123 extend to every cantonment—see section 287 of the Cantonment Act, 1924 (2 of 1924). 10 Subs. by Act 20 of 1929, section 2, for "1877".

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER I PRELIMINARY [s 2] Repeal of Acts.—Saving of certain enactments, incidents, rights, liabilities, etc.— In the territories to which this Act extends for the time being the enactments specified in the Schedule hereto annexed shall be repealed to the extent therein mentioned. But nothing herein contained shall be deemed to affect— (a) the provisions of any enactment not hereby expressly repealed; (b) any terms or incidents of any contract or constitution of property which are

consistent with the provisions of this Act, and are allowed by the law for the time being in force; (c) any right or liability arising out of a legal relation constituted before this Act

comes into force, or any relief in respect of any such right or liability; or (d) save as provided by section 57 and Chapter IV of this Act, any transfer by

operation of law or by, or in execution of, a decree or order of a Court of competent jurisdiction, and nothing in the second Chapter of this Act shall be deemed to affect any rule of 11[***] Mohammadan 12[***] law.

Comments The Transfer of Property Act came into force in 1882. Before this, there were many regulations and enactments dealing with transfer of property in India. This Act repealed some of these regulations by virtue of section 2 to the extent specified in the section. However, it has also saved many matters and enactments by a saving clause in the same section. This section says that in the territories to which this Act extends for the time being the enactments specified in its Schedule shall be repealed to the extent mentioned therein.

[s 2.1] Clause (a): Saving of Certain Amendments Clause (a) says that the Act will not affect the provisions of an enactment which has not been expressly repealed by the Act. The effect of this clause is to maintain intact the statutory force which the Legislature has given to local usages.

[s 2.2] Clause (b): Saving of Incidents of Contract Clause (b) saves incidents of any contract or constitution of property. It says that the Act will not affect any terms or incidents of any contract or constitution of property which are consistent with the provisions of this Act and are allowed by the law for the time being in force. Right of pre-emption and rent, profits are examples of incidents of contract.

[s 2.3] Clause (c): Saving of Rights and Liabilities Constituted before the Act Clause (c) says that this Act will not affect any right or liability arising out of a legal relationship constituted before its enforcement. The Act will also not affect any relief in respect of any such right or liability. It is a general rule that no statute should be construed so as to have retrospective effect (effective from back date) unless it is manifest from the language of the Act. Any statute which affects any vested right or creates new liability is presumed not to have retrospective effect. The Transfer of Property Act, 1882 too does not have retrospective effect. It has saved all the rights and liabilities arising out of legal relations before its enforcement.

[s 2.4] Clause (d): Transfer by Operation of Law The Transfer of Property Act, 1882 is not applicable to transfers by operation of law. It only applies to transfers "by act of parties". Clause (d) provides that the provisions of this Act will not apply to any transfer made— (1) by operation of law, (2) by a decree or order of a Courts of competent jurisdiction, (3) in execution of such a decree or order.

Saving clause (d) itself contained an exception. It says that save as provided by section 57 and Chapter IV of this Act, this Act will not be deemed to affect any transfer made by operation of law or by a decree or order of a court of competent jurisdiction or in its execution. Section 57 is related to sale and provides for discharge of encumbrances on sale whereas Chapter IV deals with mortgages of immovable property.

[s 2.5] Muhammadan Law Section 2 concluded with the statement that nothing in Chapter II of this Act shall be deemed to affect any rule of Muhammadan Law. Chapter II provides the general rules of transfer. The rules contained in Chapter II of Transfer of Property Act, 1882 will be excluded in application if they are inconsistent with the rules of Mohammadan Law. For example, a Mohammadan may settle property in perpetuity for the benefit of his descendants provided there is an ultimate gift in favour of charity (Wakf Validating Act, 1911). Such a rule is inconsistent with sections 13 and 14 of the Transfer of Property Act, 1882. Therefore, such sections are not to be applicable to Mohammadans Where there is no such inconsistency, this Act will be applicable. Parents jointly executed deeds. Their children were donees. They were given shares in the properties on the specific undertaking that they would not claim any rights on the remainder properties. The document was accepted by the donee children and also registered. This was held to be sufficient for the conclusion that they became estopped from claiming any further shares in the property which remained in the hands of the youngest son who was the only one living with his father at the time of his demise. The court further held that the document was not hit by section 6.13

11 The word "Hindu" omitted by Act 20 of 1929, section 3. 12 The words "or Buddhist" omitted by Act 20 of 1929, section 3. 13 Hasan Khani Rawther v Mohd Rawther, AIR 2008 (NOC) 1126 (Ker).

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER I PRELIMINARY [s 3] Interpretation clause..— In this Act, unless there is something repugnant in the subject or context,— "immoveable property" does not include standing timber, growing crops or grass; "instrument" means a non-testamentary instrument; 14["attested", in relation to an instrument, means and shall be deemed always to have

meant attested by two or more witnesses each of whom has seen the executant sign or affix his mark to the instrument, or has seen some other person sign the instrument in the presence and by the direction of the executant, or has received from the executant a personal acknowledgement of his signature or mark, or of the signature of such other person, and each of whom has signed the instrument in the presence of the executant; but it shall not be necessary that more than one of such witnesses shall have been present at the same time, and no particular form of attestation shall be necessary;] "registered" means registered in 15[16[any part of the territories] to which this Act extends] under the law17 for the time being in force regulating the registration of documents; "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; 18["actionable claim" means a claim to any debt, other than a debt secured by mortgage

of immoveable property or by hypothecation or pledge of moveable property, or to any beneficial interest in moveable property not in the possession, either actual or constructive, of the claimant, which the Civil Courts recognise as affording grounds for relief, whether such debt or beneficial interest be existent, accruing, conditional or contingent;] 19["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 immoveable property is required by law to be and has been effected by a registered instrument, any person acquiring such property or any part of, or share or interest in, such property shall be deemed to have notice of such instrument as from the date of registration or, where the property is not all situated in one sub-district, or where the registered instrument has been registered under sub-section (2) of section 30 of the Indian Registration Act, 1908 (16 of 1908), from the earliest date on which any memorandum of such registered instrument has been filed by any Sub-Registrar within whose sub-district any part of the property which

is being acquired, or of the property wherein a share or interest is being acquired, is situated:] Provided that— (1) the instrument has been registered and its registration completed in the manner

prescribed by the Indian Registration Act, 1908 (16 of 1908), and the rules made thereunder, (2) the instrument 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 immovable 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.

Comments Definitions (Section 3) [s 3.1] Immovable Property The Transfer of Property Act, 1882 has not defined this term. It only says that "immovable property" does not include standing timber, growing crops or grass. As the definitions given by the Act is neither comprehensive nor exhaustive and only excludes certain things, it becomes necessary to explore other Acts which have defined the term "immovable property". The Registration Act, 1908 defines "immovable property" as follows:— immovable property shall include land, buildings, hereditary allowances, rights to ways, lights, ferries, fisheries or any other benefit to arise out of land or things attached to the earth or permanently fastened to anything which is attached to the earth but not standing timber, growing crops or grass.

Similarly, section 3(25) of the General Clauses Act, 1897 defines the term "immovable property" as follows:— immovable property shall include land, benefit to arise out of land and things attached to the earth or permanently fastened to anything attached to the earth.

This definition is not exhaustive but only illustrative as to what physical objects or things are included under the term "immovable property".

[s 3.1.1] Land

Land includes the following elements when it is considered in its legal aspects:— (a) A determinate portion of the earth's surface. (b) Column of space above the surface. (c) The ground beneath the surface. (d) All objects either on or under the surface of land in their natural state, for

example, minerals. Land also includes lakes, rivers and pond which are land covered by water. (e) All objects placed by human agency either on or under the surface of land with

the intention of permanent annexation. With permanent annexation these objects become part of the land and lose their separate identity. Example may be taken of buildings, fencing and walls etc.20

[s 3.1.2] Benefits Arising Out of Land All the benefits arising out of land are also considered as immovable property because such benefits cannot be severed from the land and are incidents of it. Right to collect lac, leaves etc. from trees, revenue from agricultural land, right to take out minerals, to collect fish from ponds, debt secured by mortgage of immovable property, rent from tenanted property are all benefits arising out of land. Property may also be classified as "tangible" and "intangible". Tangible properties are those properties which have physical existence and which can be seen or touched. Tangible properties are also known as corporeal properties. Intangible properties, also known as incorporeal properties, have no physical existence. They are in the form of some rights under which certain benefits are given to certain persons. Such rights are known as beneficial interests or beneficial rights. Therefore, any right which is exercised over land, by which one makes profit or gain is known as his beneficial right and it would be his intangible immovable property. Right to profits a prendre is benefit arising out of land and is, therefore, immovable property. For example, a right to enter upon land and to carry away fish from a pond is a right to profits a prendre and is, therefore, immovable property.21 Similarly, a right to graze over the land of another is a profit.22 A right to enter upon land and remove trees23 and a contract for the purpose of felling, cutting and removing bamboos from forest areas for the purpose of converting the bamboos in proper pulp etc., have been held to be profit a prendre or benefits arising from land.24 Similarly, right of ferry, right given to rear lac25 and right to take minerals from land—all are held to be benefits arising from land, and therefore, immovable property. However, where the benefits arising from land are related to standing timber, growing crops or grass, they are not considered as immovable property.

[s 3.1.3] Things Attached to the Earth Section 3 of the Transfer of Property Act, 1882 says that "attached to the earth" means — (a) rooted in the earth, as in the case of trees and shrubs;

(b) embedded in the earth, as in the case of wall or buildings; or (c) attached to what is so embedded for the permanent beneficial enjoyment of that

to which it is attached. (a) Things Rooted in the earth.—Things which are rooted in the earth come under this category, for example, trees and shrubs. But all the trees are not immovable property. Those trees which are used as standing timber i.e., which are cut for use as timber fall under movable property. Whereas those trees which are fruit-bearing are generally considered as immovable property. Therefore, the fruit bearing trees can be both movable and immovable depending upon the circumstances. If the intention is to use them for their fruits, they will fall under immovable property but if they are to be used as standing timber they will fall under the category of movable property. Hollway J explained the distinction between movable and immovable property in an old case. In his words, "movability may be defined to be a capacity in a thing of suffering alteration of the relation of place. Immovability is incapacity for such alteration. If, however, a thing cannot change its place without injury to the quality by virtue of which it is, what it is, it is immovable".26 Interest in property includes anything attached to land including trees standing on the land. Where a vendor sells his right, title and interest in the land, it will include standing trees unless expressly or impliedly provided otherwise in the agreement. But where the trees are sold for being cut and removed, it does not mean that land is also transferred along with the trees. It is open to the vendor to while transferring land to exclude the trees from sale if he wants to appropriate them by cutting and removing them. In the absence of any express or implied intention in the agreement, it would be taken that land along with saplings standing on the land which subsequently had grown into trees were sold.27 (b) Things embedded in the earth.—Things embedded in the earth means those things which rest by their own weight on earth. Example may be taken of houses, walls, buildings etc. There may be certain things which though embedded in the earth cannot be called immovable property. The test for immovability is whether or not the thing rests by its own weight on earth and whether it can or cannot change place and be removed from one place to another place.28 An anchor to hold a ship is also embedded in the earth but it is not considered as immovable property. However, if we place block of stones one on the top of another without any cement or mortar to form a dry stone wall it would become part of the land and will be considered as an immovable property. But the same stones lying in a builder's yard will not be considered as immovable property. Whether a thing is embedded in the earth or not can be tested on the basis of degree and mode of annexation as well as object of annexation. (i) Degree and Mode of Annexation.—If a thing is so annexed to land that it cannot be removed from its place without great damage to the land, it should be regarded as annexed in perpetuity and should be considered as immovable property.29 Therefore, an anchor of a ship embedded in earth, bricks lying in a heap, tapestries attached to a house which can be removed without damaging the house,30 and a hut which merely rests by its own weight on the earth,31 are all considered as movable property. In Holland v Hodgson,32 Lord Blackburn observed that "the true rule is that articles that are not otherwise attached to land than by their own weight are not be considered part of the land unless it is shown that they were intended to be part of the land. On the contrary, an article which is affixed to the land even slightly is to be considered as part of the land unless it is shown that it was intended to continue as chattel, the onus lying

on those who contend that it is a chattel." On this basis, the looms attached to the stone floors by nails in a worsted mill were considered as fixtures. Thus, tie up seats fastened to the floor of a cinema, advertisement hoardings firmly embedded in the earth, beams of a mill and looms attached to a floor are considered as immovable because they were annexed to the land so as to be used as part of it. (ii) Object of Annexation.—The second important test is the object of annexation. If the intention is the permanent improvement of the premises, the chattels or movables fixed or annexed become fixtures.33 A well embedded in the earth or machinery embedded in the earth, brick pillars erected on land are all considered as part of the land, and, therefore, immovable property. Therefore, it can be said that if the article stands on the earth with its own weight, it will not be part of land but if it is caused to go deeper in the earth by external agency then it becomes part of land. The object of annexation can be inferred from the interest the person has in the property to which the annexation is made. If the person is the owner of the land, the inference would be that attachment or annexation is meant to be permanent and immovable. Whereas if the person has temporary possession, it will be inferred that annexation is also temporary. In a works contract, a hot mix plant and a crusher plant fixed in the soil to facilitate the work has been held to be not something "attached to the earth" within the meaning of the expression "immovable property" as defined in section 3. The plant itself is not intended to be permanent at a given place. It can be moved and is usually moved after road construction or repair project for which it is set up is completed.34 (c) Attached to what is so embedded.—Where a thing is attached to something embedded in the earth for its permanent beneficial enjoyment, the thing attached becomes immovable property too. Examples can be taken of doors, windows, ceiling fans etc. which are fastened to the walls or ceilings of a house for their beneficial enjoyment. However, electrical appliances, fittings, etc., though fastened to walls, doors etc. are not considered immovable because these are not permanent but only temporary and not necessary for the permanent beneficial enjoyment of walls, doors or house etc. It is necessary that an attachment must be permanent and for the beneficial enjoyment of the thing to which they are attached. If the attachment is for the beneficial enjoyment of the thing itself, then it remains a chattel even though fixed to the earth for the time being.

[s 3.1.4] Standing Timber.— Trees, the wood of which is used for making or repairing houses, are known as standing timber. For example, shisham, neem, babool or teak trees are grown for their wood, they fall under the category of standing timber. According to section 3 of the Transfer of Property Act, 1882, immovable property does not include standing timber. Therefore, the trees which are used as standing timber are considered as movable property and not immovable property. Fruit-bearing trees which are generally grown for enjoying, their fruits do not come under movable property. They are considered as immovable property. In fact, whether they will come under immovable or movable category depends upon the intention. If the intention is to enjoy only their fruits then they will come under immovable property but if the intention is to cut them sooner or later, they will fall under movable property. For example, mango tree is used both for its fruits and timber. If it is grown for wood it will be movable but if it is grown for its fruits it will be immovable property. Similarly, the Mahua trees, palm or date trees are not standing timber.35 Where the owner of a

tree is interested in further vegetative growth of the tree, it is a tree i.e., immovable but if it is intended to cut the tree quite early, the tree is standing timber.36 Section 3(26) of the General Clauses Act, 1897 defines 'immovable property'. According to this provision immovable property shall include land, benefits arising out of land and things attached to the earth, or permanent fastened to anything attached to the earth. As there is no special definition of immovable property, the general definition contained in the General Clauses Act, 1897 would prevail and, therefore, trees are regarded as part of land because they are attached and rooted in the earth. In view of the legal position, trees which at the time of agreement for sale were mere saplings on the land would vest in the transferee. Interest in the property also includes anything attached to the land including trees standing on the land. Where a vendor sells his right, title and interest in the land, unless expressly or implicitly provided in the agreement, sale of the land would also to include trees standing thereon. But where trees are sold for being cut and removed, it does not mean that the land is also transferred along with the trees. It is open to the vendor while transferring the land to exclude the trees from sale if he wants to appropriate them by cutting and removing. In the present case, there was no mention in the agreement that the saplings were not being sold along with the land. In the absence of any expressed or implied intention in the agreement, it would be taken that the land along with the saplings standing on the land which subsequently grew into trees were sold. The view taken by the High Court that unless the trees are sold separately, trees would not go with the land is erroneous.37

[s 3.1.5] Growing Crops. Growing crops are considered as movable property. This term includes all vegetable growths whether in the form of fruits, barks, or roots.38 Growing crops like wheat, gram, barley etc., although are rooted in the earth but they are not considered immovable because they are bound to be cut when they become ripe. Similarly, sugarcane crops, crops of indigo,39 vegetable crops of potato, crops of grapes and betel leaf etc., are all considered as movable property.40

[s 3.1.6] Grass.— Although grass is rooted in the earth it is considered as movable property because it is mainly used as a fodder. But the right to cut grass is immovable property because this right is a beneficial interest in the land. In Seeni Chettiar v Santhanathan41 it was held that an agreement for sale and purchase of growing grass, growing timber or underwood or growing fruit, not made with a view to their immediate severance and removal from the soil and delivery as chattels to the purchaser, is a contract for the sale of an interest in land.

[s 3.1.7] Things included in immovable property.— The following have been judicially construed as included in immovable property:— (a) A right of ferry. (b) A right of way.

(c) Right to collect rent of an immovable property. (d) A right to catch and carry away fish. (e) Hereditary offices i.e., office of a hereditary priest of a temple. (f) Right to collect dues from holding a fair on a piece of land. (g) Right to collect lac from trees. (h) Right of redemption of mortgaged property. (i) Reversion in property leased. (j) A factory. (k) The interest of a mortgagee in immovable property.

[s 3.2] Movable property.— The Transfer of Property Act, 1882 has not defined "movable property." According to the General Clauses Act, 1897 "movable property means property of every description except immovable property." The following are held to be not immovable property: (a) A royalty. (b) A decree for sale of immovable property. (c) A decree for arrears of rent. (d) Right of worship. (e) Machinery which is not permanently attached to the earth. (f) Government promissory notes. (g) A right to recover maintenance allowance. (h) Standing timber, growing crops and grass.

[s 3.3] Mortgage-Debt.— A question often arises whether a debt secured by mortgage of an immovable property is a movable or immovable property. Previously, a debt secured by mortgage of immovable property was considered as an actionable claim under section 3 of the Transfer of Property Act, 1882. But after the amendment in 1900 the definition of an "actionable claim" expressly excludes a debt secured by a mortgage of immovable property and such a debt will now be treated as immovable property and it can be transferred only in the same way as an immovable property is transferred i.e., it can be transferred only by a registered instrument.42

[s 3.4] Instrument

Generally speaking, an instrument is a legal document. Section 3 of the Transfer of Property Act, 1882 defines "instrument" as a non-testamentary instrument. As the Act itself does not deal with testamentary transfers (wills etc.), the term "instrument" does not cover testamentary instruments. It is not only an evidence of the transfer of property mentioned in it but it signifies the transfer of property as such.43

[s 3.5] Attested According to section 3 of the Transfer of Property Act, 1882, "attested", in relation to an instrument, means and shall be deemed always to have meant attested by two or more witnesses each of whom has— (1) seen the executant sign or affix his mark to the instrument, or (2) has seen some other person sign the instrument in his presence and by the

direction of the executant, or (3) has received from the executant a personal acknowledgement of his signature

or mark, or of the signature of such other person, and (4) each of whom has signed the instrument in the presence of the executant; but (5) it shall not be necessary that more than one of such witnesses shall have been

present at the same time, and (6) no particular form of attestation shall be necessary.

Attestation means to sign and witness any fact. A property may be transferred by delivery of possession or by a written document. When the property is transferred through document, it is said that the deed or document of transfer has been executed by the transferor. Transferor of property who executes the deed is known as executant. For execution of the deed it is necessary that two persons must be present who must witness that only the executant has written or signed the deed. This process of witnessing the execution of deed is called attestation and such persons are known as attesting witnesses. According to Act, there must be two attesting witnesses, each must have seen the executant sign the instruments or affix his thumb impression to the instrument and each of the two attesting witnesses must have signed the instrument in the presence of the executant.44 Attestation ensures the authenticity of the execution of a document. It confirms that only the executant has executed the document and that the execution was with free consent of the executant and there was no force, fraud or undue influence upon him. However, by attesting, the attesting witnesses neither confirm that they have any knowledge of the contents of that document nor they are supposed to have given their consent to the transfer. For a valid attestation, there must be at least two or more attesting witnesses. Any person who is of the age of majority and of sound mind can be an attesting witness. For valid attestation ordinarily it is necessary that each witness must actually see the executant or any other person with the authority of the executant sign or affix his mark on the instrument. If there are many attesting witnesses it is not necessary that they should attest at the same time. It is necessary that each witness must attest in the presence of the executant. Further, an attesting witness need not witness the actual execution of the deed, in as much as he can attest on the acknowledgement of execution by the executant himself.

A party to the transaction cannot himself be an attesting witness. Even if there are many transferors and transferees, neither of them can be attesting witness because attestation by a party to the transaction becomes invalid attestation. But a person who is only interested in the transaction but not a party to it can be an attesting witness. In Kumar Harish Chandra v Bansidhar Mohanty45 a mortgage deed was executed. There were two parties, the mortgagor and the mortgagee, but the money was advanced not by the mortgagee but a third person which was given to the mortgagor. That third person (moneylender) actually attested the mortgage deed. The question arose whether his attestation was a valid attestation. It was held by the Supreme Court that although the money was advanced by the attesting witness who became interested in the transaction but even then he was not a party to the transaction. Therefore, he could be an attesting witness and his attestation was a valid attestation. The essential conditions of a valid attestation have been laid down by the Supreme Court46 as follows: (1) Two or more witnesses must have seen the executant sign the instrument, or

should have received from him a personal acknowledgment of his signature. (2) With a view to attest or to be a witness to this fact, each of them should have

signed the instrument in the presence of the executant. It is essential that the witness should have put his signature for the purpose of attesting i.e., confirming that he has seen the executant sign, or has received from him a personal acknowledgement of his signature. If a person puts his signature on the document for some other purpose, for example, to certify that he is a scribe or an identifier or a registering officer, he is not an attesting witness. Attestation cannot take place before the signature of the executant. Not only the executant should sign the document in the presence of the attesting witnesses but the witnesses too should sign the document in the presence of the executant.47 In a case, the executant was a pardanashin lady who was sitting behind a curtain, she took her hand out of the curtain and in the presence of witness put her thumb impression on the deed. Thereafter, her husband and then the witnesses signed the document. The Privy Council held that the attesting witnesses had signed the deed in the presence of the executant lady.48 (a) Animo Attestandi The Transfer of Property Act, 1882 has not prescribed any particular form of attestation. Animo Attestandi means that the attesting witness has put his signature for the purpose of certifying that he saw the executant sign the document. If a person puts his signature for any other purpose (other than certifying) he cannot be an attesting witness.49 (b) Effect of Invalid Attestation If a document is not validly attested, it cannot be enforced in court of law. Invalid attestation makes the documents invalid. (c) Requirement of Attestation It is not necessary to get attested each and every document. But transfer of immovable property requires attestation. No particular form of attestation is prescribed by the Act. Attesting witness may put his signature anywhere on the deed. If the witness is illiterate he may put his thumb impression on the deed. It is necessary that the attesting witness must sign the deed after the executant has executed it.

Signature on the part of the scribe cannot be regarded to be of the same status as that of the attesting witnesses. Signature of the attesting witness on a document-requiring attestation is a statutory requirement. It cannot be equated with that of the scribe.50

[s 3.6] Registered According to the Transfer of Property Act, 1882, "registered" means registered in any part of the territories to which the Act extends under the law for the time being in force regulating the registration of documents. For registration, it is necessary to fulfil all the requirements of the Registration Act. A document will not be considered as duly registered if the requirements of registration are not followed. According to the Registration Act, the description of the property must be sufficiently given so that it can be easily identified, registration must be done in the area where the property is situated and the registration must be by the prescribed authority and the document for registration must be presented by the proper person,51 etc.

[s 3.7] Actionable Claim According to the Transfer of Property Act, 1882, "'actionable claim' means a claim to any debt, other than a debt secured by mortgage of immovable property or by hypothecation or pledge of movable property, or to any beneficial interest in movable property not in the possession, either actual or constructive, of the claimant, which the Civil Courts recognise as affording grounds for relief, whether such debt or beneficial interest be existent, accruing conditional or contingent:" Sale of lottery tickets amounts to transfer of an actionable claim.52 A case before the Kerala High Court involved sale of lottery tickets. The court said that this did not involve sale of goods. The purchaser gets a claim to a conditional interest in the prize money. Such money is not in the purchaser's possession. The right would, therefore, squarely fall within the definition of an actionable claim.53 The right to recover insurance money, the right of a partner to sue for accounts, claim for arrears of rent and the right to credit in the provident fund have been held to be actionable claims. Distinct elements are deducible from the definition of "actionable claim" in section 3 of the Transfer of Property Act, 1882. An actionable claim is of course as its nomenclature suggests, only a claim. A claim might connote a demand but in the context of the definition it is a right, albeit an incorporeal one. Every claim is not an actionable claim. It must be a claim either to a debt or to a beneficial interest in movable property. The beneficial interest is not the movable property in itself, and may be existent, accruing, conditional or contingent. The movable property in which such beneficial interest is claimed, must not be in the possession of the claimant. An actionable claim is therefore an incorporeal real right.52 [This topic has been discussed in detail under section 130.]

[s 3.8] Notice

According to the Transfer of Property Act, 1882, "a person is said to have notice of a fact— (1) When he actually knows that fact [i.e., actual notice]; or (2) When but for— (a) Wilful abstention from an inquiry or search which he ought to have made,

or (b) gross negligence

he would have known it [i.e., constructive notice]." Notice means information or knowledge of a fact. When a person has knowledge about a fact or under the existing circumstances it can be proved that he must have knowledge about a fact, it is said that he has notice of that fact. Notice may be of two types:— (1) Actual or express notice, and (2) Constructive or implied notice.

[s 3.8.1] Actual or Express Notice When a person actually knows a fact, it is said that he has actual notice of that fact. In order to constitute a binding notice, actual notice must be a definite information, given by a person interested in the thing in respect of which the information is given.54 A person is not bound to attend to vague rumours or statements by mere strangers. A notice to be binding must proceed from some person interested in the thing.55 It is further necessary that the information relates to the transaction in question. Knowledge of anything not relevant to the transaction cannot be considered as actual notice of the transaction. Information or knowledge must be given at the time of the transaction because prior information and information given after the transaction both are irrelevant.56

[s 3.8.2] 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.57 A person has constructive notice of all the facts of which he would have acquired actual notice had he made those inquiries which he ought reasonably to have made. In the words of Eyre CB, "constructive notice I take to be in its nature no more than evidence of notice, the presumptions of which are so violent that the court will not allow even of its being controverted.58" It is the knowledge which the court imputes to a party upon a presumption so strong that it cannot be allowed to be rebutted that the knowledge must have been communicated. Such a presumption can arise only in such a case where the party seeking the benefit of that doctrine has acted innocently. The doctrine of constructive notice cannot be applied where the party seeking its benefit has been guilty of fraud or secrecy in the transaction.59 In simple words, it may be said that constructive notice is such a situation where a person does not know anything about a fact but the court presumes or treats that under the circumstances the person must have knowledge of that fact. Such

presumptions are called legal presumptions. Therefore, it may be said that constructive notice is like a provision of law the knowledge of which cannot be denied by a person. This legal presumption of constructive notice arises from the following circumstances: (a) Wilful abstention from enquiry or search (b) Gross negligence (c) Registration of instrument (Explanation I) (d) Actual possession (Explanation II) (e) Notice to agent (Explanation III)

(a) Wilful abstention from enquiry or search.—Wilful abstention from enquiry or search shows want of bona fide.60 Here the person wilfully or intentionally refrains from making any enquiry or search because probably he intends to avoid the probable consequences of the act which he might have come to know. When a person refuses to take a registered letter addressed to him, he cannot afterwards plead ignorance of the contents of the letter.61 Similarly, if a purchaser omits to inspect the contents of a title deed, he may be affected by notice of all the facts which he would have discovered upon title investigation.62 In the case of Agra Bank v Barry,63 Lord Selborne observed: "... 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, follow with a view to his own title and his own security. If he does not follow that course the omission of it may be a thing requiring to be accounted for or explained. It may be evidence, if it is not explained, of a design inconsistent with bona fide dealing, to avoid knowledge of the true state of the title." (b) Gross Negligence.—Gross negligence does not mean mere carelessness but means carelessness of so aggravated a nature as to indicate an attitude of mental indifference to obvious risks.64 Negligence may be stated to be the omission to do something which a reasonable man, guided by those considerations which ordinarily regulate the conduct of human affairs, would do or doing something which a prudent and reasonable man would not do.65 It is only gross negligence by which a party becomes bound by notice. Ordinary negligence does not have such an effect. The real difference between gross negligence and ordinary negligence is to be found in the extent of the duty to take care imposed in either case. For example, when a person is buying a property and he is told that title deeds of the property are with a bank for safe custody, he should inquire from the bank because if it turns out later that the deeds were actually pledged with the bank, it will amount to gross negligence. The distinction between wilful abstention and negligence is the existence of a mental advertence to the consequence of an act in one case and the absence of such advertence in the other. Any prudent and reasonable person who enquires into the contents of a document cannot be said to be guilty of either wilful abstention or gross negligence.66 (c) Gross negligence: Illustrative cases.—1. Lloyds Bank Ltd v PE Guzdar & Co.67 A deposited title-deeds of his property with Bank N for securing an overdraft. A then asked for the return of the title-deeds saying that he wished to sell the property and clear the overdraft. The usual practice for the prospective purchaser is to inspect the title-deeds in the office of N's solicitors. A thought that he would not get a good price if the purchaser came to know that the bank had the title-deeds. The Bank returned the

deeds to A. A then borrowed money from another Bank L on the same deeds falsely representing that there was no encumbrance on the property. In such circumstances, Bank N was held guilty of gross negligence in surrendering the title-deeds to A. It was further held that the mortgage to Bank L had priority over the mortgage to N. 2. Tilakdhari v Khedan Lal.68 In this case, the Privy Council held that before purchasing an immovable property, the omission to search the registers kept in the Registrar's office may amount to gross negligence so as to attract the consequences which result from notice. 3. Naval Kishore v Municipal Board of Agra.69 In this case, the Allahabad High Court observed that the omission to inspect the records of the municipality was a case of gross negligence and if taxes are in arrears, the purchaser shall be imputed with constructive notice. However, the Supreme Court in Ahmedabad Municipal Corp of the City of Ahmedabad v Haji Abdul Gafur Haji Hussenbhai,70 rejected this view and held that there can be no such general rule. The duty of the transferee to inquire about arrears would be judged on the facts of each case. (c) Registration of instrument (Explanation I).—Explanation I attached to section 3 of the Transfer of Property Act, 1882 says that where any transaction relating to immovable property is required by law to be and has been affected 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. Registration of a document is notice of all the facts stated in that document. Certain documents are required by law to be compulsorily registrable. In the case of such registered documents it is presumed that the persons concerned will have constructive notice of the material facts affecting the property which are either apparent or can be reasonably inferred from its contents. Any person interested in the transaction requiring registration under the Registration Act, 1908 cannot plead that he had no notice of the contents of the registered deed. The Privy Council had held in Tilakdhari v Khedan Lal,68 that there is no general rule of law that registration amounts to notice. Whether registration is a notice or not will depend upon the circumstances of each case. To overcome this confusion Explanation I was added to section 3 by the Amending Act of 1929. Now the settled position is that those documents which are compulsorily registerable, registration amounts to notice as a general rule. However, for registration to amount to constructive notice the following conditions must be satisfied: (i) The instrument has been registered and its registration has been completed in

the manner prescribed by the Indian Registration Act, 1908. Under the Registration Act, certain transfers like gift of immovable property and simple mortgage, etc. are compulsorily registrable but some transfers enjoy optional registration, i.e., they may or may not be registered. In such cases, registration does not amount to constructive notice, for example, wills and sale of movable property, etc. (ii) The instrument or memorandum has been duly entered in books kept under

section 51 of the Registration Act. (iii) The particulars regarding the transaction to which the instrument relates have

been correctly entered in the indexes kept under section 55 of the Registration Act.

This means that all the formalities of the Registration Act, regarding registration must be fulfilled. Where the property is not wholly situated in one sub-district but more than one sub-district, a memorandum of registration has to be filed. Registration will operate as a constructive notice from the earliest date on which any memorandum of such registered instrument has been filed with any sub-Registrar within whose sub-district any part of the property is situated, which is going to be acquired. Registration is notice only for a subsequent transfer. It does not amount to constructive notice for transferees prior to the registration of that transaction. In a case, it was held that registration of a sub mortgage does not operate as a notice to the mortgagor.71 Where X mortgaged property to Y, who created a sub-mortgage in favour of Z. X in ignorance of the sub-mortgage paid the mortgage debt to Y. Here the registration of sub-mortgage does not amount to notice to X, so as to vitiate the payment of the debt. Where decree of a court creates rights in a property for the first time, it requires registration.72 (d) Actual possession as notice of title (Explanation II).—Explanation II of section 3 says that any person acquiring any immovable 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 its actual possession. Actual possession of immovable property operates as constructive notice of title to the property. This Explanation was added by the Amending Act of 1929. Before this amendment, the position regarding actual possession was not settled. Some High Courts favoured this fact that actual possession operated as constructive notice but some did not favour it. It was only to settle this uncertainty that Explanation II was added. Now the actual position is that actual possession of immovable property operates as constructive notice of title to the property. The Specific Relief Act, 1963 has given an example of actual possession. A contracts to sell land to B for Rs 5000. B takes possession of the land. Afterwards A sells it to C for Rs 6000. C makes no enquiry of B relating to his interest in the land. B's possession in sufficient to affect C with notice of his interest, and he may enforce performance of the contract against C. For constructive notice it is necessary that the possession must be actual possession. In Daniels v Davison,73 X leased a public house and garden to Y and then agreed to sell them to him. However, X sold the property to Z instead of Y. It was held that Z was affected by constructive notice of Y's rights with respect to the property. The court observed that where land is in the possession of someone else other than the vendor, the fact of occupation or possession gives the purchaser the constructive notice of any rights of the occupying tenant. Whether a person is in actual possession or not is a question of fact. The prior transferee must also be in the exclusive possession of the property. Explanation II will not be available in cases of only contracts. Where the matter is only at the stage of contracts constructive notice will not be applicable because under this explanation notice is imputed only to a person who acquires immovable property. Often the state of property also operates as notice. Where a person acquires land through transfer which was used as burial ground, he will be presumed to have knowledge of the land use and he will be required to allow others to use the land for such purposes.74 Similarly, the marks left by egress and ingress on an immovable property may operate as notice of right of way. Pendency of a suit in respect of a property also amounts to notice to all the transferees of the property involved in the suit. However, in the case of Bellamy v Sabine,75 the Lord Chancellor observed:

It is scarcely accurate to speak of lis pendens affecting a purchaser upon the doctrine of notice, although undoubtedly the language of the courts often so describes its operation. It affects him, not because it amounts to notice, but because the law does not allow to litigant parties and to give them pending the litigation, rights in the property in dispute so as to prejudice the opposite party.

The word "notice" in section 3 is of wider import than the word "knowledge". A person may not have actual knowledge of a fact but he may have notice of it having regard to the definition and Explanation II given in section 3. If the purchasers have relied upon the assertion of the vendor or on their own knowledge and abstained from making enquiry into the real nature of the position of the tenant, they cannot escape the consequences of the deemed notice under Explanation II of section 3.76 For example, A leased a house and a garden to B who took their possession. A then sold the said properties to C, C will be deemed to have constructive notice of the B's right over those properties. He could not afterwards plead that he had no knowledge of B's possession over those properties. Where A agrees to sell his property to B and B in pursuance of agreement puts his tenant in possession of that property. But A afterwards sells the property to C. In this case, C cannot be said to have constructive notice of B's possession because B had no actual possession, the property was in the possession of the B's tenant. (e) Registered Deed as Notice.—The execution of a registered deed of sale is also to be treated as a notice in terms of section 3.77 (f) Notice to Agent (Explanation III).—Explanation III to section 3 says that a person shall be deemed to have 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 principle that notice to an agent amounts to notice to the principal is based on the maxim qui facit per allium facit per se, i.e., he who acts through another is deemed to act in person. Where a person appoints any person to act on his behalf as his agent then information given to such an agent in the course of business amounts information to the principal himself (i.e., the person who has appointed the agent). The principal cannot deny the fact of information. Such a notice is also known as imputed notice. It is believed that the principal who appoints an agent to act on his behalf controls all the activities of his agent. If the agent does something beneficial to the principal, the principal accepts the knowledge of that fact even though he may or may not have the knowledge or notice of that fact. Similarly, where agent does some act against the interests of the principal, the principal cannot deny that on the basis of no knowledge. This notice in such circumstances becomes imposed or imputed upon him. That is why it is known as imputed notice. Section 229 of the Indian Contract Act, 1872, contains the principle of agency which provides that any notice given to or information obtained by the agent, provided it be given or obtained in the course of the business transacted by him for the principal, has the same legal consequence as if it had been given to or obtained by the principal.

Explanation III has been widened in its scope by the Amending Act of 1929 which provides that any kind of notice, actual or constructive to an agent is constructive or imputed notice to the principal. In the words of Lord Chelmsford,78 "the use of expression 'imputed notice' makes it clear that a person did not get actual notice of a fact himself but he got it through his

agent". However, for the applicability of imputed notice the following conditions must be fulfilled: (1) Notice must have been received by an agent in his capacity as an agent. (2) Notice must have been received by him in the ordinary course of business of his

principal for which he has been appointed as agent. (3) Notice must be about a matter relevant to the business transaction of the

principal. Any knowledge acquired by the agent in the course of his own agency business not material or relevant to the principal's transaction will not amount to imputed notice. (4) Notice must have been acquired by the agent during the course of agency. Any

prior knowledge or knowledge acquired after the termination of agency will not amount to imputed notice to the principal. (5) Notice should not have been fraudulently concealed by the agent from his

principal. Generally, the principal is bound by the knowledge of the agent whether the agent communicates his knowledge to the principal or not. The principal is held bound against the third party for the knowledge or notice of his agent. But where the agent fraudulently conceals any information from his principal and the third party who was party to or had knowledge of this fraud, the principal will not be held bound by imputed notice so far as that party is concerned. The principal is not bound by the knowledge of his agent in the case of his fraud. The proviso to Explanation III has clearly mentioned that if the agent fraudulently concealed the fact, the principal shall not be charged with its notice as against any person who was party to or otherwise had knowledge of the fraud.

14 Ins. by Act 27 of 1926, section 2 as amended by Act 10 of 1927, section 2 and Sch I. 15 Subs. by Act 3 of 1951, section 3 and sch., for "a Part A State or a Part C State" (w.e.f. 1-4-

1951). 16 Subs. by the Adaptation of Laws (No. 2) Order, 1956, for "any State". 17 See the Indian Registration Act, 1908 (16 of 1908). 18 Ins. by Act 2 of 1900, section 2. 19 Subs. by Act 20 of 1929, section 4 as amended by Act 5 of 1930, section 2 for the original

paragraph. 20 Salmond on Jurisprudence, 12th Edn, p 416. VP Fakrudheen v State Bank of India, AIR 2009

Ker 78 (DB) : II 2009 BC 352 : 2009 (1) Ker LT 227 , the title deed assigned immovable property but did not mention the house standing on it. The court said that it did not mean that the transferee could not get title to house. On such transfer of immovable property everything attached to the earth goes with it. 21 Anand Behera v State of Orissa, (1955) 2 SCR 919 : AIR 1956 SC 17 : (1955) SCJ 96 ; sale of

tank has to be made by registered instrument, Biranchi Pradhan v Collector, Bolangir, AIR 2017

Ori 154 . 22 White v Taylor (No. 2), 1969 1 Ch 160 : (1968) 1 All ER 1015 . 23 Shantabai v State of Bombay, (1959) SCR 265 : AIR 1958 SC 532 : 1958 SCA 727 . 24 State of Orissa v Titaghur Paper Mills Co Ltd, AIR 1985 SC 1293 : 1985 Tax LR 2948 : 1985

Supp SCC 280 . 25 Parmanandy v Birkhu, (1909) 5 Nag LR 21 : 1 Ind Cas 903. 26 Sukry Kurdeppa v Goonda Kull Nagireddi, 6 Mad HCR 71. 27 Suresh Chand v Kundan, 2003 (2) RCR (Civil) 647 : 2002 (2) PLJ 560 (SC). 28 Addu Achiar v Custodian Evacuee Property, Hyd-Deccan, AIR 1953 Hyd 14 : ILR 1952 Hyd

495 (DB). 29 Wake v Hall, (1883) 8 AC 195 (204) : 52 LJ QB 494. 30 Leigh v Taylor, (1902) AC 157 : 71 LJ Ch 272. 31 Wiltshear v Cottrell, (1853) 1 El&Bl 674. 32 (1872) LR 7 C P 328 : 26 LT 709 : 41 LJCP 146. 33 Addu Achiar v Custodian Evacuee Property, Hyd-Deccan, AIR 1953 Hyd 14 : ILR 1952 Hyd

495 . 34 Sangyong Engg & Construction Co Ltd v Yograj Infrastructure Ltd, AIR 2015 NOC 378 Del. 35 Sheikh Jan Mohammad v Umanath Mishra, AIR 1962 Pat 440 : ILR 41 Pat 353. 36 Shantabai v State of Bombay, (1959) SCR 265 : AIR 1958 SC 532 : 1958 SCA 727 . 37 Suresh Chand v Kundan, (2000) 7 Scale 620 . 38 Mahadeo v State of Bombay, AIR 1959 SC 735 : (1959) 2 SCA 154 : 1959 SCR Supp (2) 339. 39 Kalka Prasad v Chandan Singh, (1887) ILR 10 All 20 : 1887 All WN 270. 40 Bansidhar v Sant Lal, (1888) ILR 10 All 133 : 1888 All WN 35. 41 (1897) ILR 20 Mad 58 : 6 Mad LJ 281. 42 Perumal Ammal v Perumal Naicker, AIR 1921 Mad 137 (V8) : ILR 44 Mad 196. 43 "Will" has to be treated as an "instrument" as it affects rights or liabilities of party. If it is not

treated as an instrument the person is deprived of legal remedy for filing suit for cancellation of will deed, Ganga Prasad v Munna Lal, AIR 2018 (NOC) 619 ALL. 44 Ghansilal v Bhuridevi, AIR 1964 Raj 39 : ILR (1964) 14 Raj 259 : 1964 Raj LW 196 . 45 AIR 1965 SC 1738 : (1966) 1 SCJ 145 : (1966) 1 SCR 153 . 46 ML Abdul Jabbar Sahib v H Venkata Sastri and Sons, AIR 1969 SC 1147 : (1969) 3 SCR 513 . 47 Abinash Chandra Bidvanidhi Bhattacharya v Dasarath Malo, AIR 1929 Cal 123 : (1929) ILR 56

Cal 598. 48 Kundan Lal v Mt Musharrafi Begam, AIR 1936 PC 207 : 63 Ind App 326 : ILR 11 Luck 346. 49 B Rajegowda v HR Shankere Gowda, AIR 2006 Kant 48 : ILR 2005 Kant 5501 : (2006) 6 Kant

LJ 237 , for proof of execution of Will it is essential that the witness must have put his signature animo attestandi, that he has seen the executant sign or received from him personal acknowledgement of his signature, this was not the case here, hence, the Will was not proved. Succession Act, 1925, section 63. 'Animus attestandi' is a necessary ingredient for proving attestation. If a person puts his signature on a document only in discharge of his statutory duty, he may not be treated to be an attesting witness. Benga Behera v Braja Kishore Nanda, AIR 2007 SC 1975 : (2007) 6 SCR 853 : (2007) 9 SCC 728 : JT 2007 (8) SC 86 . 50 N Kamalam v Ayyaswamy, AIR 2001 SC 2802 : 2001 AIR SCW 2907 : (2001) 7 SCC 503 . 51 Mujibunissa v Abdul Rahim, (1901) 28 Ind App 15 : ILR 23 All 233. 52 Sunrise Associates v Govt NCT of Delhi, AIR 2006 SC 1908 : (2006) 3 SCC 603 : (2006) 5

Supreme 901 : 2006 (4) SCJ 341 : JT 2006 (5) SC 168 .

53 LIS (Regd) Palakkal Court v State of Kerala, AIR 2007 Ker 178 (DB) : 2007 (4) AKer (NOC) 518

: (2007) 2 Ker LT 693 . Following Sunrise Associates v Govt (NCT of Delhi), (2006) 5 SCC 603 : AIR 2006 SC 1908 : 2006 AIR SCW 2378 actionable claim excluded from the definition of goods under the Sale of Goods Act, 1930. 54 Oakley Bowden and Co, Madras v Indian Bank Ltd, Madras, AIR 1964 Mad 202 : (1964) 2 Mad

LJ 104 : 77 Mad LW 74. 55 Ashiq v Chaturbhuj, AIR 1928 All 159 : 26 All LJ 41 : 50 All 328. 56 Warwick v Warwick, (1946) Atk 291 (294). 57 Mulla, Tansfer of Property Act, 9th Edn, p 41. 58 Plumb v Fluitt, (1791) 2 Anst 432 (438). 59 Hormusji v Mankuvar Bai, (1879) 12 Bom HC 262. 60 Joshua v Alliance Bank, (1895) ILR 22 Cal 185 (203). 61 Lootf Ali v Pearee Mohan, (1871) 16 WR 223 . 62 Mohd. Yunus Khan v Court of Wards, 1937 Oudh WN 438 : AIR 1937 Oudh 301 . 63 1874 LR 7 HL 135 (137). 64 Hudston v Viney, 90 LJ Ch 149 (151) : (1921) 1 Ch 98 . 65 Blyth v Bermingham Waterworks Co, (1856) 11 Ex 781 (784) : 25 LJ Ex 212. 66 The Transfer of Property Act, GP Tripathi, 13th Edn, p 29. 67 AIR 1930 Cal 22 (V17) : ILR 56 Cal 868. 68 AIR 1921 PC 112 : 47 Ind App 239 : ILR 48 Cal 1. 69 AIR 1943 All 115 (V30) : ILR (1943) All 453 . 70 AIR 1971 SC 1201 : (1971) 1 Civ App J (SC) 263 : 1971 (Supp) SCR 63. 71 Sahadev v Shekh Papa, (1905) 29 Bom 119. 72 Rajinder Singh v Joginder Singh, (2003) 1 RCR (Civil) 349 : (2002) 3 PLR 846 (P&H) : (2002) 2

Punj LJ 320 (P&H). 73 (1809) 16 Ves 249 : 33 ER 978 : (1803-13) All ER Rep 432 ; Murlidhar Bapuji Value v Yallappa

Lalu Chaugle, AIR 1994 Bom 358 : 1994 Bom CJ 783 : 1995 (1) Hindu LR 83 . 74 Moreland v Richardson, (1857) 24 Beav 33 : 53 ER 269. 75 44 ER 842 : 6 WR Eng 1 : 26 LJ Ch 797. 76 Ram Niwas v Bano, (2000) 6 SCC 685 : AIR 2000 SC 2921 : 2000 AIR SCW 2996. 77 Lachhman Dass v Jagat Ram, (2007) 2 SCR 980 : JT 2007 (3) SC 595 : (2007) 3 Scale 349 . 78 Espin v Pemberton, (1859) 3 De G & J 547 (554).

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER I PRELIMINARY [s 4] Enactments relating to contracts to be taken as part of Contract Act and supplemental to the Registration Act. The Chapters and sections of this Act which relate to contracts shall be taken as part of the Indian Contract Act, 1872 (9 of 1872). 79[And section 54, paragraphs 2 and 3, and sections 59, 107 and 123 shall be read as supplemental to the Indian Registration Act, 80[1908 (16 of 1908)].]

Comments Section 4 says that the Chapters and section of this Act which relate to contracts shall be taken as part of the Indian Contract Act, 1872. This is so because after the making of a contract for a transfer of property which is valid under the Contract Act that a stage is set for its enforcement under the Transfer of Property Act, 1882. Similarly, section 54 (para 2 and 3) and sections 59, 107 and 123 shall be read as supplemental to the Indian Registration Act, 1908 (16 of 1908) because these sections deal with registrations of documents by which transfers take place.

79 Added by Act 3 of 1885, section 3. 80 Subs. by Act 20 of 1929, section 5, for "1877".

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER II1 TRANSFERS OF PROPERTY BY ACT OF PARTIES Chapter II of the Transfer of Property Act, 1882 deals with transfers of property by act of parties. This chapter has been divided into two parts: Part-A—provides for rules regarding transfers of property in general, whether movable or immovable. Part-B—provides for rules regarding transfers of immovable property.

(A) TRANSFER OF PROPERTY, WHETHER MOVABLE OR IMMOVABLE Part-A consists of definition of property what may be transferred, competency of persons, operation of transfers, oral transfers, restrictions on transfers, vested interest, contingent interest, conditional transfers, transfers for benefit of unborn persons and elections, etc. All these provisions will be taken up under the following headings:— I. General provisions II. Restrictions III. Transfer for the benefit of unborn person IV. Transfer to a Class V. Vested Interest VI. Contingent Interest VII. Conditional Transfer VIII. Election IX. Apportionment

I. GENERAL PROVISIONS (SECTIONS 5-9) [s 5] "Transfer of property" defined.— In the following sections "transfer of property" means an act by which a living person conveys property, in present or in future, to one or more other living persons, or to himself, 2[or to himself] and one or more other living persons; and "to transfer property" is to perform such act. 2[In this section "living person" includes a company or association or body of

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

Comments

[s 5.1] Definition of Transfer of Property "Transfer of Property" means an act by which a living person conveys property, in present or in future— (a) to one or more other living persons; or (b) to himself; or (c) to himself and one or more other living persons.

The performance of such an act is to be regarded as transfer the property. According to this section, "living person" includes a company or association or body of individuals, whether incorporated or not. However, the general provisions of this Act will not affect provisions of any special law dealing with transfers of property by companies, associations or body of individuals. An analysis of this definition can be attempted under the following points: (i) The transfer of property is an act of conveyance. (ii) Conveyance is affected through living persons. (iii) Property may be conveyed either to one or more other living persons, or to

himself, or to himself with one or more other living persons. (iv) Property may be transferred either in future or in present.

The Supreme Court stated the factors to be taken into account for determining the nature of a transaction. The true nature of a document must be determined by having regard to the intention of the parties as well as the circumstances surrounding the making of the transaction and the wording of the document.3

[s 5.1.1] Act of Conveyance For transfer of property it is necessary that the property must be conveyed i.e., it must be handed over to other person. The Act has nowhere indicated that the owner of the property must handover the property. It is also not necessary that all the rights or interest in the property must be conveyed to another person. It implies that the person conveying property is entitled to the property sought to be conveyed and it is being conveyed to a person who has no title to it otherwise.4 Where the transferee (the person to whom the property is transferred or conveyed) already has some interest in the property prior to its conveyance in his favour, it is no conveyance and hence, no transfer of property. The document of transfer must show change of ownership.5 Under this Act, conveyance of property may be effected in one of the five ways i.e., by sale, mortgage, lease, exchange or gift.

[s 5.1.2] Conveyance by Living Persons The property must be conveyed by one living person to another, "living person" which include not only human beings but also companies, associations or bodies of individuals, whether incorporated or not. Both the transferor and transferee must be living at the time of transfer because the Act deals only with "inter vivos" transfers. The Act has given right of conveying property to corporations, companies, firms, etc. because they have been created by fiction of law and are known as juristic persons. Similarly, an idol or deity, which has been recognised as a juristic person, is capable of

holding property but it is not a living person. A dedication of property to a deity does not come within the purview of this Act (Section 122). Similarly, a court is not a juristic person. It is not a living person either, therefore, a court order for sale is not a transfer of property within the meaning of this Act.6 The Calcutta High Court held that an unregistered society or club cannot come within the definition of a "living person" within the meaning of section 5. The secretary of an unregistered club has no legal status to hold or acquire property. An application by the members of a club for claiming the right of pre-emption on the ground of transfer of an adjoining land was, therefore, not maintainable.7 Transferors as multiple persons can enter into transactions of transfer of property by single document or agreement, such transfer of property is treated as separate transfers by each transferor. Transferee may be either singular or plural.8

[s 5.1.3] Conveyance to himself or himself with one or more other persons Previously the transferor could transfer his property to other living persons or to himself and one or more other living persons but not to himself alone. This created difficulties for those persons who wanted to settle their property into trusts and declared themselves to be the sole trustee. To overcome this difficulty, the Amendment Act of 1929 added the words "to himself". Now the author of a trust can declare himself to be a sole trustee of the trust property. Transfer of property in favour of an unincorporated company has been held by the Supreme Court to be not barred.9

[s 5.1.4] Transfer in Future or in Present The words "in present or in future" in the Act are attached to "conveys". This means that the transferor may transfer the property either with immediate effect or to be effective from a future date. Where transfer is with immediate effect, the property stands transferred to the transferee on the date when all the formalities regarding transfer are complied with. Whereas in other cases, the property is transferred from the date (future) written on the transfer-deed i.e., vesting of interest is postponed to a future date.

[s 5.2] Property The word "property" has been used here in the most comprehensive sense. It includes properties of all description. It includes movable, immovable, tangible and intangible properties. A property is a bundle of rights. When a property is transferred, the rights along with the property are transferred too. However, an arrangement may be made by which some of the rights may be transferred but not all. It has been observed by the Supreme Court that in general, transfer of property means passing of a right in the property from one person to another. There may be passing of entire bundle of rights (ownership) from transferor to transferee or there may be transfer of only some of the rights (partial interest). Where a gift of a house is made by one person to another, there is transfer of absolute interest of the house whereas if one person transfer the rights of enjoyment of his house to another person for a certain period, i.e., lease, it is a transfer of only partial interest in the house but it also comes in the concept of transfer under the Transfer of Property Act, 1882.

A transfer of future property is not valid in India but a conveyance of such property may be valid as a contract to assign. When the property comes into existence, equity festers upon the property and the contract to assign becomes a complete assignment.10

[s 5.3] Partition Partition is not a transfer of property but it is the partition of interests of several coowners of a joint property. However, the courts in India have given different views regarding partition. Some include it in transfer of property while others do not. The Bombay High Court held in Soniram Raghushet v Dwarkabai Shridharshet,11 that a partition amounted to a transfer in as much as it involved a conveyance by the coshares of their respective rights, title and interest in the property. The Lahore Court followed this rule in Sadhu Ram v Pirthi Singh.12 However, the Kerala High Court13 held, overruling its earlier decisions, that a partition did not amount to a transfer as defined in section 5 of the Transfer of Property Act, 1882. The Madras High Court also held that a partition is not a transfer of property.14 The Supreme Court in Mohar Singh v Devi Charan,15 observed that partition is not actually a transfer of property but would only signify the surrender or a partition of a joint right, in exchange for a similar right from the other co-sharer or co-shares. The Karnataka High Court followed this line of decisions and held that a partition is not a transfer, reason being that no conveyance is involved because everyone had an antecedent title.16 In a suit for partition, no final decree had yet been passed. A co-sharer assigned his rights before the final decree. This was held to be not permissible because until the final allotment of shares is made, the principle applies that every shareholder has a right over every inch of the property. The assignment deeds were not valid for want of title in the assigner.17

[s 5.4] Dissolution of Partnership and Distribution of Assets amongst Partners On the execution of a deed of dissolution by partners, it was held that distribution of the assets of the firm and receipt of respective shares by partners does not tantamount to a transfer. The Court found that there was no assigned or definite share of partners in movable or immovable assets during the subsistence of the firm. Shares in the property are assigned to partners on dissolution on the basis of their share in their share in the firm. The deed of dissolution and consequential deed by release could not be treated as a conveyance because the releasers have no rights to property at the time of release.18

[s 5.5] Surrender Surrender is not a transfer of property under section 5 of the Transfer of Property Act. Surrender is merging of a lesser interest in a greater interest in such a manner that the greater interest is not enlarged. Surrender of a lease is not a transfer of property.19 Surrender of a life estate by a Hindu widow is not a transfer, since it amounts to an act of self-effacement by the widow and accelerates the succession to her husband's estate.20

[s 5.6] Compromise Compromise means an agreement for settlement of doubtful claims between the parties in respect of some property. It is also not a transfer. The Madras High Court held that where one of the parties to a settlement had given up a claim to receive a sum of money from the other, in consideration of the latter's giving up the right to certain property claimed by him, it would amount to transfer.21 Similarly, the Madhya Pradesh High Court held that a compromise arrangement between the parties amounted to a transfer. However, it is a question of fact to be answered on the basis of facts and circumstances of each case.22 A suit for specific performance of the compromise agreement cannot be refused only on the ground that it was not registered. It could be directed in the decree that it be registered in compliance with the requirement of registration.23

[s 5.7] Relinquishment A relinquishment is extinguishment of a right, therefore, it cannot amount to a transfer. A relinquishment by a reversioner of his reversionary interest does not amount to transfer.24 Where the person in whose favour the release is executed, gets certain rights by virtue of such release, the transaction may amount to transfer.25 It was shown in a partition suit that one of the members had relinquished his right by way of waiver. It was held that this did not amount to a transfer and, therefore, the deed of relinquishment was not compulsorily registrable. The failure to implead such a member did not affect the suit. The suit was not to be treated as bad for non-joinder of a necessary party.26

[s 5.8] Family Arrangement/Settlement It is an arrangement between the members of the same family intended to be generally and reasonably for the benefit of the family either by compromising doubtful or disputed rights or preserving family property or peace and security of the family by avoiding litigation or by saving its rights.27 Family arrangement is an agreement by the members of the family to divide and hold the family property separately in accordance with the agreement. In family arrangement there is neither creation of any new title or interest in favour of any member nor there is any conveyance, therefore, it cannot be a transfer,28 hence, a family settlement is not transfer of property. In Sahu Madho Das v Mukand Ram,29 the Supreme Court observed: It is well-settled that a compromise or family settlement 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 recognizing the rights of others, as they had previously asserted it, to the portion 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.

Family settlements regarding property cannot be challenged. Even if bona fide disputes are present or possible, which may not involve legal claims, are settled by a bona fide family arrangement which is fair and equitable, the family arrangement is final and binding on the parties to the settlement.30 According to the Supreme Court the judicial

approach should be to give effect to a bona fide family arrangement entered into between the parties with a view to resolving disputes once and for all. The court held that family arrangements are governed by special equities peculiar to themselves.31 The following passage from Kerr on Fraud31 was cited with approval: The principles which apply to the case of an ordinary compromise between strangers do not apply to the case of compromises in the nature of family arrangements. Family arrangements are governed by a special equity peculiar to themselves and will be enforced if honestly made, although they have not been meant as a compromise but have proceeded from an error of all parties, originating in mistake or ignorance of fact as to what their rights actually are or of the points on which their rights actually depend.

This decision of the Supreme Court was followed by the court so as to hold that a covenant in a family settlement incorporated with the consent of the parties cannot be avoided on the ground that it was practically inconvenient to live in the same house. The court said that with their eyes wide open and fully aware of their experience in the past, they agreed to share the property in question.32 Where the settlor retained his life interest in the disputed property and enjoyed income therefrom and on the date of settlement, the settlee had only life interest in the property without any power of alienation and after the death of the settlor, the settlee got only right to enjoy income from the property and thereafter to his natural children and in case he had no natural children, to second beneficiary and his heirs, it was held that the second beneficiary could not claim any title to the suit property as heir of settlor because the document was settlement and not a will.33 A settlement deed contained a clause that settlor's children from first marriage will be entitled to trust property if his daughter from second marriage dies unmarried or married but dies issueless, the interpretation of such clause which means that "daughter dying her after her child predeceased her" is not permissible because no words can be added to the clause.34 A family settlement can take place only among those family members who have the right (share) in the property. The case involved a dispute about agricultural land which was admittedly a Bhumidhari land. Bhumidhari's daughter could have no share in it during the life-time of her father. The court said that even if it was assumed that a family settlement took place and a memorandum of settlement was executed, it had no value. It would amount to a transaction of sale. It could have been effectuated only by means of a registered sale deed.35 Those who were parties to the family settlement were not allowed to pray for partition of the property which was a part of the settlement.36 A suit property was transferred by its owner under a deed of settlement in favour of her brother. The deed of settlement was also duly acted upon by the brother. It was held that thus the settlor thereafter had no transferable right in the property and the subsequent execution of a gift deed by the settlor in favour of another person was not proper.37 (a) Settlement about Family Trade Mark A memorandum of understanding about the use of a trade mark was found by the court to have been actuated by a desire to resolve a family dispute and, therefore, the court said that it could be treated as a family settlement. The courts do not easily disturb such measures of settlement.38 (b) Settlement Restricting Alienation Rights

A settlor can restrain himself from alienation of property during his life-time. The court said that such a restriction in a family arrangement deed in respect of joint family properties is not hit by and does not come within the purview of section 10 which deals with conditions restricting alienation.39 (c) Cancellation of Settlement In a family settlement, the self-acquired property of the husband was bequeathed by him in favour of his wife by a settlement deed. Possession was handed over and the deed was acted upon in all other respects. The deed did not mention any contingencies in which the settlor could revoke the settlement. The mere recital in the deed that he reserved the right of revocation was held to be not sufficient to give him the power of revocation. The cancellation of the deed by him was set aside.40 The right of the executant to cancel the settlement deed would depend upon intention of the executant which can be found out from terms of the document and prevailing circumstances. A conditional transfer or settlement accompanied by transfer is permissible. Transfer of property may contain conditions precedent or subsequent, covenants or restraints. Having regard to all the aspects, it was held on facts, the settlement deed" was only an arrangement or an entrustment of the property with power of revocation expressly reserved to the executant. It did not effect a transfer of property.41

[s 5.9] Settlement Compared with Will A deed was executed by a husband and wife jointly. It provided that on the death of any one of them, the surviving executant was to possess the scheduled properties absolutely with the right of alienation. On the death of the surviving executant, the property was to go to their children. The Court said that the deed was a Will and not a settlement. There was no transfer under it in praesenti in favour of either the surviving executants or children.42

[s 5.10] Charge The creation of a charge does not involve conveyance of any interest in the property of another. It only secures payment out of certain properties. A charge is, therefore, not a transfer of property.

[s 5.11] Easement Section 4 of the Easements Act, 1882, defines easement as "a right which the owner or occupier of certain land possesses as such for the beneficial enjoyment of that land, to do and to continue to do something or to prevent and continue to prevent something being done in upon or in respect of certain other land not his own." No conveyance is done in an easement, therefore, easement is not a transfer of property.

[s 5.12] Can Future Property be Transferred?

Future property is that property which will come into existence in future. If a contract to transfer future property is made, it will not be enforced before the property comes into existence. The contract to transfer future property will be specifically performed only on coming into existence of that property. This rule was laid down in the case of Holroyd v Marshall.43 In this case, the owner of certain machinery transferred it to T to be held in trust for H. The subject matter of the trust was both the existing machinery as well as machinery which will be bought in future. Certain new machinery was purchased and the question arose whether that property would be claimed by H as against execution creditors of the owner. The following rule was laid down by Lord Westbury: "If a vendor or a mortgagor agrees to sell or mortgage property, real and personal, of which he is not possessed at the time and he receives the consideration for contract and afterwards becomes possessed of property answering to the description in the contract, there is no doubt that the contract would in equity transfer the beneficial interest to the mortgage or purchaser immediately on the property being acquired."

[s 5.13] Transfer and Will The provisions of Transfer of Property Act, 1882 are inapplicable to testamentary successions which are governed by Indian Succession Act, 1925. A transfer is a conveyance of an existing property by one living person to another (transfer inter vivos). 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. A will regulates succession and provides for succession as declared by it (testamentary succession) instead of succession as per personal law (non-testamentary succession). The concept of transfer by a living person is wholly alien to will. 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. Thus, treating a demise under a will as a transfer of an existing property in future will be contrary to all the known principles relating to transfer of property and testamentary succession.44 A Shebaitship can be the subject-matter of a Will. "Will" does not operate as a transfer and, therefore, the restriction on transferability contained in section 6(d) does not apply. Section 6(d) bars transfer of property rights restricted to personal enjoyment.45

1 Nothing in Chapter II is to be deemed to affect any rule of Muhammadan Law, see section 2,

Act 20 of 1929. 2 Ins. by Act 20 of 1929, section 6. 3 Umabai v Nilkanth Dhandiba Chavan, (2005) 6 SCC 243 : (2005) 3 Supreme 508 ; Shankar

Yadav v State of Jharkhand, AIR 2012 Jhar 21 : 2011 (4) AIR Jhar. R 619 : 2011 (4) JCR JHA 427, once a property (a coal mine in this case) is transferred to a person through a registered sale deed, all the rights connected with the property can be exercised by or through him. It was beyond the power of the mines Commissioner to pass any order questioning ownership or

possession. This could be done only by means of a civil suit; no provision of law shown to prohibit gift of immovable property to an association of persons constituted as a registered trust, suit filed by trust based on valid instrument of transfer of property for declaration of ownership, recovery of possession and permanent injunction held to be maintainable, Chandrashekhar v Rahul Shikshan Prasarak Mandal, (2018) 13 SCC 446 . 4 Lionel Edwards Ltd v State of West Bengal, AIR 1967 Cal 191 (197) : 71 Cal WN 452 : 1966 ACJ

128 ; a property not shown as trust property was transferred by the educational institution established by a Trust, there was no bar in execution of such deed as the educational institution was a separate entity, Nair Service Society, Changanacherry v Jnana Ashram, AIR 2017 (NOC) 1103 Ker. 5 A Nadalwari v N Malvarayan, AIR 1936 Mad 918 (919); Subbegowda v Thimmegowda, AIR 2004

SC 2428 : (2004) 9 SCC 734 : 2004 AIR SCW 2888, it is permissible under the Act to make a conditional transfer or a settlement accompanied by transfer. There may be conditions precedent or subsequent, covenants or restraints. The settlement deed in the present case was found to be only an entrustment of the property with power of revocation reserved by the executant. There was no transfer of property. 6 Har Narain v Bank of Upper India, AIR 1938 Oudh 84 (86) : 172 Ind Cas 855. 7 Usha Rani Kundu v Agradut Sangha, AIR 2008 (NOC) 911 (Cal); mother, a member of a co-

operative society transferred property to petitioner son who became member after transfer of land to society, transfer of share was not by succession but was inter vivos which is not compulsorily registrable. Petitioner was not held to be subsequent purchaser and such assignment was not a transfer for the purpose of notification under section 92(2) of West Bengal Societies Act, 2006, Saroj Kumar Bandopadhyay v State of West Bengal, AIR 2017 Cal 209 . 8 Marco Polo Restaurant Pvt Ltd v Amit Tiwari, AIR 2018 Cal 228 9 Jai Narain Parasampuria v Pushpa Devi Saraf, (2006) 7 SCC 756 : (2006) 133 Comp Cas 794 :

(2006) 7 Supreme 707 . 10 Purna v Beirma, ILR (1939) 2 Cal 341 . 11

AIR 1951 Bom 94 : 53 Bom LR 325 : ILR 1951 Bom 679 ; Jagannathpuri Guru

Kamaleshwarpuri v Godabai, AIR 1968 Bom 25 : 1967 Mah LJ 813 : 70 Bom LR 749; Dahyabai v State of Bombay, 62 Beng LR 348. 12 AIR 1936 Lah 220 : 38 Punj LR 201 : 161 Ind Cas 861. 13 Thattaliyath Panchali v Cheruvari Panniyodan Manni, AIR 1963 Ker 66 : ILR (1963) 1 Ker 1 :

(1963) 1 Ker LR 74. 14 Radhakristnayya v Gutta Sarasamma, ILR 1951 Mad 607 : AIR 1951 Mad 213 : (1950) 2 Mad

LJ 338; MK Stremann, Madras v CIT, Madras, AIR 1962 Mad 26 : (1961) 41 ITR 297 . 15 AIR 1988 SC 1365 : JT 1988 (2) SC 492 : (1988) 3 SCC 63 . 16 Aralappa v Jagannath, AIR 2007 Kant 91 : 2007 (4) Civ LJ 645 : ILR 2007 Kant 339 . The court

cited the decisions of the Supreme Court in CIT v Keshavlal Lallubhai Patel, AIR 1965 SC 866 : (1966) 1 SCWR 7 : (1965) 2 SCR 100 , dealing with the question whether partition is a transfer, held, it is not; VN Sarin v Ajit Kumar Poplai, AIR 1966 SC 432 : (1963) 13 STC 472 : (1963) 1 SCR 166 , family members have antecedent ownership hence no conveyance takes place at the time of partition; Sk. Sattar Mohd. Choudhari v Gundappa Amabadas Bukate, (1996) 6 SCC 373 : AIR 1997 SC 998 : (1997) 100 Bom LR 109, section 5 contemplates transfer of property by a person who has a title to another who has no title. If a partition of the joint family property takes place by the act of parties, it would not be treated as a transfer within the meaning of section 5; A memorandum of family arrangement and a deed of partition is not required to be compulsorily registered, Narendra Prasad Singh v Ram Ashish Singh, AIR 2018 Pat 205 .

17 Durga Matha Building Construction Co-op Housing Society Ltd v Sada Yellaiah, AIR 2010 AP

231 . 18 Balbir Singh v State of Uttar Pradesh, AIR 2012 All 113 : 2012 (4) All LJ 430 : 2012 (4) CCC

275 . 19 Makhanlal Laha v Nagendranath, AIR 1933 Cal 467 : ILR 60 Cal 379. 20 Natvarlal Punjabhai v Dadubhai Manubhai, 56 Beng LR 447 : AIR 1954 SC 61 : 1954 SCR 339 . 21 Sonepalli Mutyalu v Veerayya, AIR 1946 Mad 452 : (1946) 1 Mad LJ 346 : 226 Ind Cas 478. 22 Barati Lal v Salik Ram, 38 All 107. 23 Kalia Barik v Tikeswar Deo, AIR 2007 (NOC) 1049 (Ori). 24 Muniappa Pillai v Periasami, (1975) 1 Mad LJ 236. 25 Hassiaa Banu v Shiv Narayan, AIR 1968 MP 307 . 26 Gangabai Bapasa Hadapad v Mahagundappa Shankarappa Hadapad, AIR 2006 (NOC) 142

(Kant) : (2006) 1 AIR Kar. R 117. 27 Halsbury's Laws of England. 28 Ganeshi v Ashok, AIR 2011 SC 1340 : (2011) 4X Scale 226 : 2011 (86) All LR 482 . 29 (1955) 2 SCR 22 : AIR 1955 SC 481 : ILR (1955) 2 All 177 ; Sharda Devi v Chandbala Devi, AIR

2007 Pat 162 : 2008 (61) All Ind Cas 379 : 2007 (4) Pat LJR 2 , Settlement of property among some of the heirs but not others was found to be not valid under the Hindu Succession Act, 1956. Hence no transfer of property Hari Shankar Singhania v Gaur Hari Singhania, AIR 2006 SC 2488 : 2006 AIR SCW 3330 : (2006) 4 SCC 658 , family settlement or arrangement is to be treated differently from any other formal commercial settlement, technicalities of limitation, etc., should not be allowed to put at risk implementation of a settlement in a family which is essential for maintaining family peace and harmony. Jogramshakya v Gokul Prasad, AIR 2008 (NOC) 359 (MP) a family settlement is not synonymous to partition. 30 K Jagannathan v AM Vasudevan Chettiar, AIR 2001 Mad 184 : (2001) 1 Mad LJ 614 : 2001 (2)

Mad LW 492; family settlement deed executed in 2005 not allowed to be challenged on ground of validity in 2014 due to bar of limitation, Jose Floriano Cristovam Pinto v Michelle N Pinto Souza, AIR 2017 Bom 263 . 31 Kale v Deputy Director of Consolidation, (1976) 3 SCC 119 : AIR 1976 SC 807 : (1976) 3 SCR

202 ; In Santra Devi v Prdeep Kumar, AIR 2015 NOC 104 P&H, wherein there was an unregistered settlement dead, the signatures on which were obtained through fraud, and further no action was taken to protect interests of the minors in the family, it was held that the same was not valid; plaintiff enjoying benefits under the family settlement was not allowed to challenge it on the ground that family settlement is not applicable during the lifetime of parents under Article 2042 of Goa Family Laws (Portuguese Civil Code, 1867), he was also held guilty of nondisclosure of the deed at the time of inventory proceedings, Jose Floriano Cristovam Pinto v Michelle N Pinto Souza, AIR 2017 Bom 263 ; execution of family settlement has to be established by the plaintiff clearing all suspicious circumstances, plaintiff had to prove his claim of share on the basis of paying Rs 48000 to the defendant, details and source of which were unavailable, document was not typed in the presence of the attesting witness and was signed at the petrol pump instead of the house of the plaintiff by a third person, such a family settlement was not found to be genuine, Hargursharan Singh v Lt Col Hargobind Singh, AIR 2017 P&H 3 . 32 Hansa Industries Pvt Ltd v Kidarsons Industries Pvt Ltd, AIR 2007 SC 18 : (2006) 8 SCC 531 :

(2006) 10 Scale 170 . 33 R Jamuna Bai v M Anusuya, AIR 2001 Mad 392 : (2001) 2 Mad LJ 355 : 2001 (2) Mad LW 276;

S Narayanasami Gounder v Adi Prasaskthi Charitable Medical, AIR 2007 (NOC) 1858 (Mad), family settlement deed, defence that thumb impression was given without reading, fraud could not be known, defence failed because there was no impossibility of getting the document understood,

document was also registered, the vendor had retained a smaller piece of land as stated in the settlement. Amteshwar Anand v Virendra Mohan Singh, AIR 2006 SC 151 : (2006) 1 SCC 148 : (2005) 8 Scale 359 , composition deed between family members, all parties enjoyed benefits under it, converted into court decree which exempted it from registration, also acted upon by all members, not to be disturbed on trivial or technical grounds. 34 Sumana Venkatesh Nee Sur v Susanta Kumar Sur, AIR 2017 Cal 98 . 35 Nirmala Devi v Additional Commissioner, Allahabad, AIR 2007 All 184 : 2007 AIHC 3185 : 2007

(5) All LJ 385. Following authorities were cited before the court : Kale v Deputy Director of Consolidation, (1976) 3 SCC 119 : AIR 1976 SC 807 : (1976) 3 SCR 202 ; SM Das v PM Ram, AIR 1955 SC 481 : 1955 SCJ 417 : (1955) 2 SCR 22 , a case on surrender and abandonment of interest in property. Arukkani v Subramaniam, AIR 2007 (NOC) 2118 (Mad), settlement and cancellation of settlement. To the same effect is Jagdish v Rajwanti, AIR 2008 P&H 27 , a party to a family arrangement must have some antecedent title, claim or interest in the family property; the female holder of interest in the property was married and had two sons, no reason for any arrangement depriving the family of property. Consent decree obtained on the basis of such arrangement suffered from the vice of fraud and misrepresentation. Zaheda Begum v Lal Ahmed Khan, AIR 2010 AP 1 : 2009 (6) Andh LD 432 : (2010) 1 CCC 161 , outsiders can be included but registration would become necessary where transfer of interest in praesenti is involved; a family settlement and relinquishment document which takes away shares of sisters and mother in immovable property is inadmissible in evidence even for collateral purpose unless it is registered, Sita Ram Bhama v Ramvatar Bhama, AIR 2018 SC 3057 . 36 Anup Kr Debbarma v Ahindra Kr Debbarma, AIR 2009 (NOC) 588 (Gau). 37 Panchkari Choudhury v Amarendra Nath Choudhury, AIR 2016 NOC 38 Cal; legal heirs of

deceased claimed possession of ancestral property inherited by him from his father. Property was claimed by the brother of the deceased on the ground that the decree was passed by the lower court against the deceased based on family settlement and that the agreement of sale was executed by the deceased in his favour, no evidence of family settlement or consideration paid to deceased for settlement was provided. It was held that no agreement of sale can be entered by deceased when his wife and children had acquired right in ancestral property and such alienation would not confer any right or title in property, Amrit Law v Savitri, AIR 2017 P&H 130 . 38 Ramdev Food Products Pvt Ltd v Arvindbhai Rambhai Patel, AIR 2006 SC 3304 : 2006 AIR

SCW 4988 : (2006) 8 Scale 631 . 39 Hariram v Ram Asrey, AIR 2006 All 331 : 2006 AIHC 3725 : 2006 (5) All LJ 747, a married

woman was not entitled to succession under section 171 of the UP Zamindari Abolition and Land Reforms Act before its Amendment. Such restriction was at that time against law or public policy. 40 Dhanalakshmi v S Thangavelu, AIR 2006 Mad 1 : (2005) 4 Mad LJ 300 : 2005 (36) All Ind Cas

602. 41 Subbegowda v Thimmegowda, AIR 2004 SC 2428 : (2004) 9 SCC 734 : 2004 AIR SCW 2888. 42 Narayani v Sreedharan, AIR 2012 Ker 72 : 2011 (4) Ker LJ 544 : 2011 (4) Ker LT 118 (SN).

Where the document vests absolute right in settlee only after the demise of executant, the document is a Will and not settlement, mere nomenclature terming it as settlement is inconsequential in such a case, Kirala Venkatamma (Died) by LRs v K Munaswamy, AIR 2018 Hyd 114 . 43 (1862) 10 HLC 191 : 33 LJ Ch 193 : 11 ER 999. 44 M Ramaiah v Nagaraj S, AIR 2001 Kant 395 : 2001 (3) ICC 589. Suraj Lamp & Industries Pvt

Ltd v State of Haryana, (2012) 1 SCC 656 : AIR 2012 SC 206 , an explanation of a will as

compared with transfer. In State of Meghalaya v Bimal Deb, AIR 2015 Meg 48 , it was held that a Will is a legal declaration of the testator as to how to carry out his property after his death. It is not a sale. It becomes effective only after his death. Meghalaya's Land Law was made to include "any other modes of transfer" which included Will also. The court said that a Will is not a mode of transfer. If it provides so it would tantamount to overstepping legislative competence. 45 S Rathinam v LS Mariappan, AIR 2007 SC 2134 : (2007) 7 SCR 568 : (2007) 6 SCC 724 .

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER II1 TRANSFERS OF PROPERTY BY ACT OF PARTIES Chapter II of the Transfer of Property Act, 1882 deals with transfers of property by act of parties. This chapter has been divided into two parts: Part-A—provides for rules regarding transfers of property in general, whether movable or immovable. Part-B—provides for rules regarding transfers of immovable property.

(A) TRANSFER OF PROPERTY, WHETHER MOVABLE OR IMMOVABLE Part-A consists of definition of property what may be transferred, competency of persons, operation of transfers, oral transfers, restrictions on transfers, vested interest, contingent interest, conditional transfers, transfers for benefit of unborn persons and elections, etc. All these provisions will be taken up under the following headings:— I. General provisions II. Restrictions III. Transfer for the benefit of unborn person IV. Transfer to a Class V. Vested Interest VI. Contingent Interest VII. Conditional Transfer VIII. Election IX. Apportionment

I. GENERAL PROVISIONS (SECTIONS 5-9) [s 6] What may be transferred.— Property of any kind may be transferred, except as otherwise provided by this Act or by any other law for the time being in force,— (a) The chance of an heir-apparent succeeding to an estate, the chance of a relation

obtaining a legacy on the death of a kinsman, or any other mere possibility of a like nature, cannot be transferred; (b) A mere right of re-entry for breach of a condition subsequent cannot be

transferred to any one except the owner of the property affected thereby; (c) An easement cannot be transferred apart from the dominant heritage; (d) All interest in property restricted in its enjoyment to the owner personally cannot

be transferred by him; 46

[(dd) A right to future maintenance, in whatsoever manner arising, secured or

determined, cannot be transferred;] (e) A mere right to sue 47[***] cannot be transferred; (f) A public office cannot be transferred, nor can the salary of a public officer,

whether before or after it has become payable; (g) Stipends allowed to military 48[naval], 49[air-force] and civil pensioners of the 50[Government] and political pensions cannot be transferred;

(h) No transfer can be made (1) in so far as it is opposed to the nature of the

interest affected thereby, or (2) 51[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; 52

[(i) Nothing in this section shall be deemed to authorise a tenant having an

untransferable right of occupancy, the farmer of an estate in respect of which default has been made in paying revenue, or the lessee of an estate, under the management of a Court of Wards, to assign his interest as such tenant, farmer or lessee.]

Comments [s 6.1] General Rule of Transferability of Property The transferability of property is the general rule and non-transferability is an exception. Transferability of property is based on the maxim alienatio rei prae fertur juri accrescendi which means to say that alienation is favoured by the law rather than accumulation. The general policy of law is to promote free alienation and circulation of property rather than accumulation of it. Section 6 of the Transfer of Property Act, 1882 says that property of any kind may be transferred excepting the exceptions given in this section. This section consists of exceptions in clauses (a) to (i), it is a list of cases wherein a property is not transferable. First, it is necessary to discuss what are essentials of a valid transfer. In order to constitute a valid transfer of property, it is necessary that— (1) The property must be transferable (Section 6). (2) The object or consideration of the transfer must be lawful. (3) The transferee be competent i.e., he must not be legally disqualified to take the

transfer. (4) The transfer must not be opposed to the nature of the interest affected thereby. (5) The transferor must be competent to transfer. (6) It must be made in the prescribed manner or form.

Exceptions:—Section 6 says that the 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. These exceptions are discussed below one by one. Transfer of the property can be prohibited only by provision of the law and not by a judgment or direction. Restrictions contained in a tenancy legislation can be waived by the competent authority.53

[s 6.2] Clause (a): Spes Successionis Spes Successionis means expectation of succession, it is a possibility of getting property in future through succession. Under this clause, spes successions includes:— (a) chance of an heir apparent succeeding to an estate, (b) chance of a relation obtaining a legacy on the death of a kinsman, or (c) any other mere possibility of a like nature.

This clause says that spes successionis is not transferable. (a) Chance of an heir-apparent Heir apparent is not a legal heir but apparently an heir. Heir apparent is that person who would be the heir if he survived the propositus and if the propositus dies intestate. Propositus is a deceased person whose property the heir-apparent is going to inherit. When the propositus dies intestate, i.e., without making any will, the heir will inherit the property. The term heir-apparent has been taken from the English law which is based on the maxim "nemo est heres viventis" i.e., no one is the heir of a living person. The chance of an heir-apparent to succeed to an estate is only an expectation which may be defeated by the act of some person having the present power to dispose of the property. It was observed in a case.54 "It is indisputable law that no one can have any estate or interest, at law or in equity, contingent or others, in the property of a living person to which he hopes to succeed as heir at law or next of kin of such living person. During the lifetime of such person no one can have more than a spes successionis an expectation or hope of succeeding to his property." In India, reversionary rights under Hindu law are merely a chance of getting properties and that is why it is spes successionis. Reversioner is a person who inherits the properties of a widow held by her for life. During the life of widow this right remains suspended but it reverts back to the reversioner on her death provided the reversioner survived her. In Amrit Narayan v Gaya Singh,55 their Lordships of the Privy Council observed: "A Hindu reversioner has no right or interest in praesenti in the property which the female owner holds for her life. Until it vests in him on her death, should he survive her, he has nothing to assign or to relinquish, or even to transmit to his heirs. His right becomes concrete only on her demise, until then, it is a mere spes successionis." The chance of Muhammadan heir succeeding to an estate has also been held to a mere spes successionis. It could not be the subject-matter of transfer. The lady heir apparent had taken the full value of her share in the succession from the transferee. The court held her to be estopped from claiming share in the property of her father on his dying intestate. The court said that the doctrine of estoppel could be used to estop an heir apparent on account of his conduct from succeeding to the estate.56 (b) Legacy

Clause (a) provides that the chance of a relation obtaining a legacy on the death of a Kinsman is not transferable. Legacy means expectancy of getting certain property under a will. A will becomes operative only after the death of the testator, i.e., the person who has made the will. If a person has made two or more wills, then, only the last will made by him will be operative. Legatee under the last will only will get the legacy. Expectancy to receive legacy is uncertain because the legatee may or may not survive the testation and the testator may have changed the name of the legatee in his last Will. Therefore, the chance of a legacy has been made non-transferable. (c) Any other Possibility of a Like Nature Clause (a) excludes any other possibility of a like nature from the purview of transferability. If there is any other possible property or interest which is as uncertain as spes successionis or legacy, that too will not be transferable. Any property which is merely a future uncertain possible interest should not be made a transferable property. Example can be taken of the next cast of fisherman's net, crops in fields or fruits in trees, etc. No one can guarantee that any fish will be caught in the net or whether the trees will have fruits. Where an heir apparent received advantage for giving up his future right to property, it was held that he could not be allowed benefit of the doctrine of spes successionis. He became estopped from claiming share in the inheritance.57

[s 6.3] Right to Receive Future Offerings A question often arises that whether the right to receive future offerings can be assigned or not. There is a divergence of opinion about this. If this right is considered as mere possibility, it cannot be transferred but if it is considered as certain and not variable, it can be transferred. In the view of the Calcutta High Court,58 the right is a mere possibility because it is uncertain. The worshippers may or may not make offerings at the temple. However, the Allahabad High Court,59 has held that the right to receive offerings is not uncertain because offerings, large or small, are bound to be made is a certainty, and not a mere possibility. The Supreme Court settled the law by holding that the "right to receive the offering being coupled with duties other than those involving personal qualifications, therefore, transferable and could be inherited."60

[s 6.4] Section 6(a) and section 43 As we have seen, section 6(a) provides that 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 possibility of like nature, cannot be transferred. Section 43 provides that where a person fraudulently or erroneously represents that he is authorized 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. This means that when a person transfers a property on the representation that he has a present and transferable interest in the property but in reality he has no title and the transferee on belief of that representation takes the property for consideration, the transferee will be entitled to the property if subsequently the transferor acquires the property and the contract is still subsisting and has not been cancelled. (See section 43).

[s 6.5] Clause (b): Right of Re-entry Clause (b) constitutes second exception to the general rule of transferability. It says that 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. This is the right which a lessor keeps reserved for himself after parting with the whole estate. The right of reentry is that right which the lessor has against the lease of his property for breach of an express condition, which provides that on its breach, the lessor may re-enter. This right of the lessor is not transferable. The lessor can transfer his right of re-entry at the expiry of the lease by way of mortgage or sale. For example, where X grants a lease of plot of land to Y for a period of 5 years. At the expiry of 5 years he transfers his right of re-entry to Z. This transfer is valid as a transfer to the entire remaining rights of X. Where A leased his land to B on the express condition for a period of 5 years that B will not dig a well on his leased land. However, B digs a well on the land. A transfers his right of re-entry upon the breach of the condition by B to C and asks him to take possession of the land from B. Here C cannot take possession from B because A has transferred him the mere right of re-entry which is not transferable.

[s 6.6] Clause (c): Easement Third exception is the general rule of transferability is given in clause (c) which says that an easement cannot be transferred apart from the dominant heritage. According to section 4 of the Easements Act, 1882, an "easement is a right which the owner or occupier of a certain land possesses as such for the beneficial enjoyment of that land, to do and continue to do something, or to prevent and to continue to prevent something being done, in or upon or in respect of, certain other land which is not his own." In simple words, easement is a right which exists for the beneficial enjoyment of a land and is exercised upon the land of another person. The land or tenement for whose beneficial enjoyment this right is exercised is known as dominant heritage and the land or tenement upon which this right is exercised is known as servient heritage. Easement is an incident of ownership of the dominant heritage. It is a right attached with the property. It has no independent existence. Therefore, it cannot be detached from the dominant heritage and transferred separately. For example, A, who is owner of a house, has a right of way over the land of B which is adjoining to his land. A transfers his right to way over the land of B to C. A cannot do this because easement itself is not a property which can be transferred. However, if A transfers his house to C then the right of easement attached with his house will go to C.

[s 6.7] Clause (d): Restricted Interest Clause (d) dealing with fourth exception says that an interest in property restricted in its enjoyment to the owner personally cannot be transferred by him. This means that a person's right or interest which is only for his enjoyment cannot be transferred by him.61 Where a person A gives a land to another B for his personal use only. B cannot extend that use of land of any third person. Transfer of such interest would defeat the whole purpose of the restriction. It is open to the donor to transfer by gift title and ownership in the property and at the same time reserves its possession and enjoyment to herself during her lifetime. There is no prohibition in law that ownership in property cannot be gifted without its possession and right of enjoyment. Merely because donormother had reserved to herself possession and enjoyment of the property gifted did not render gift deed in favour of minor ineffective.62 Under this clause, religious offices

like those of mutwally of a wakf, of mahant of a muth, right of pre-emption, service tenures are included. A trustee cannot alienate his office because his office is based on personal confidence. Emoluments attached to a priestly office cannot be transferred. However, where the right to receive offering made at a temple is independent of an obligation to perform services involving qualifications of a personal nature, the right is considered as a property and is, therefore, transferable.

[s 6.7.1] Gift of Property, Donor Reserving Right to Possession and Enjoyment for Life-time Where the donor had very clearly transferred to the donees the ownership and title in respect of specified share in properties, it was held that it was open to the donor to transfer by gift title and ownership in the property and at the same time reserve its possession and enjoyment to herself during her life-time. There is no prohibition in law that ownership in a property cannot be gifted without its possessions and right of enjoyment. By virtue of the provisions of section 6 "property of any kind may be transferred" except those mentioned in section 6(a) to (i). Section 6(d) was not attracted in the present case.63

[s 6.8] Clause (dd): Right to Future Maintenance Fifth exception in clause (dd) provides that a right to future maintenance, in whatsoever manner arising, secured or determined, cannot be transferred. This exception was inserted by the Amending Act of 1929 to set right the controversy regarding right to future maintenance. Right to future maintenance is for the personal benefit of the person to whom it is granted, therefore, it cannot be transferred. This right to future maintenance may have been secured by a charge on the property or its income, or in any other manner. Although the right of maintenance is not transferable, the arrears of maintenance can be transferred. The right of maintenance is a personal right of a Hindu widow which is incapable of assignment but arrears of maintenance can be attached and sold like any other debt.

[s 6.9] Clause (e): Right to Sue Clause (e) containing the sixth exception provides that a mere right to sue cannot be transferred. This means that bare right to sue cannot be transferred. Right to sue for a definite sum of money is an actionable claim and can be transferred but right to sue for indefinite sum of money is not transferable. Right of action for damages in tort or breach of contract are bare rights to sue, and therefore, cannot be transferred. In the case of Durga Chunder v Kailas Chunder,64 the Calcutta High Court held that a bare right to sue for mesne profits cannot be assigned, as mesne profits are antiquated damages and not a debt. Mesne profits are profits or produce of a property which is in the adverse or unlawful possession of a person who is not entitled to possess it. When the property comes back in the possession of the person who is legally entitled to its possession, he can claim mesne profits from the adverse possessee. Such claims are for unliquidated damages, and therefore, cannot be transferred. Similarly, claims for damages for breach of a contract for suing an agent for accounts, for pre-emption are all mere rights to sue, and therefore, cannot be transferred. The social policy underlying the non-transferability of mere right to sue for unliquidated damages is to prohibit the practice of gambling over litigation. Such transfers offend

the English law of maintenance and champerty. Such contracts in India are forbidden under section 23 of the Indian Contract Act, 1872 on the grounds of being against public policy. Where the right to sue has merged in a decree, the right under that decree becomes assignable. Therefore, the right of mesne profits under a decree is assignable. Where the right to sue is connected with a business and the whole of the business is transferred, the right to sue is also automatically transferred. Where a partnership firm entered into a contract with the government and all the partners except A retired from partnership firm, all the rights and liabilities of the firm were transferred to the sole partner left behind, according to the retirement deed of partnership, it was held that a suit by A for damages for breach of contract against the government will not come under exception of clause (e).65 In Amiratham Kadumbah v Sarnam Kadumbah,66 the property of a minor was sold by his father without any legal necessity or with the permission of the court. Therefore, the sale was voidable at the option of the son who was the real owner. It was held by the Supreme Court that anyone purchasing property from the son on attaining majority will be entitled to file a suit for setting aside the sale made by the father within 3 years of attaining majority by the minor son. It was observed by the Supreme Court that when the minor son transferred the property on attaining majority, his right to defeat existing adverse claims on property was also transferred. Illustrations (i) A agrees to sell B a certain quantity of gunny bags to be delivered after few days. Before the delivery, B transfers his beneficial interest in the contract to C. When A commits a breach of contract, C becomes entitled to sue A for damages for breach of contract because along with the transfer of beneficial interest right to sue is also transferred because here it is an actionable claim. (ii) A publishes libel of B. B has a right to sue A legally because A has published defamatory statements against him But B transfers his right to C. C cannot sue A to recover damages because B had assigned him only the mere right to sue.

[s 6.10] Clause (f ): Public Office Clause (f ) constitutes seventh exception to the general rule of transferability. It provides that a public office cannot be transferred, nor the salary of a public office, whether before or after it has become payable. These interests are made nontransferable to ensure the dignity of the office held by him and proper performance of his duties. In Corporation of Liverpool v Wright,67 it was observed: Where the law assigns fees to any office, it is for the purpose of upholding the dignity and performing properly the duties of that office, and the policy of law will not allow the officer to bargain away those fees to the appointor or anyone else.

The Act has neither defined the term "public office" nor a "public officer". A Government servant holding a public office will be known as public servant. In fact, everyone who is appointed to discharge a public duty and receives a compensation in whatever shape whether from Government or otherwise, may be a public officer. The prohibition on the transfer of a public office or salary of a public officer is on the basis of public policy. A person is chosen to hold a public office for qualities personal to him and if he were allowed to transfer it, there is possibility that public duties may not be discharged. The salary is given to a public officer for the purpose of upholding its dignity and the proper performance of his duties and, therefore, it is also not transferable.

[s 6.11] Clause (g): Stipends and Pensions Clause (g) consisting of eighth exception provides that the stipends allowed to military, naval, air-force and civil pensioners of the government and political pensions cannot be transferred,68 a Will can be executed only in respect of an estate. The family pension of the deceased was not in the nature of an estate and it being not transferable could not be bequeathed by a Will. The court added that other benefits like the Provident Fund, gratuity and other retiral dues and extra-remuneration would be in the category of an estate. Pension means a periodical allowance or stipends granted not in respect of any right to office but on account of past service or particular merit. A bonus or reward is not a pension. Allowances granted for other considerations can be transferred. A pension is also exempt from attachment in execution of a decree against the pension holder under section 60(g) of the Code of Civil Procedure, 1908.

[s 6.12] Clause (h): Nature of Interest, Unlawful Object, Disqualification of Transferee Clause (h) deals with three classes of cases. It says that no transfer can be made:— (i) in so far as it is opposed is the nature of the interest affected thereby; or (ii) for an unlawful object or consideration within the meaning of section 23 of the

Indian Contract Act, 1872; or (iii) to a person legally disqualified to be transferee.

[s 6.12.1] Transfer Opposed to the Nature of Interest If the nature of the property to be transferred does not admit of such transfer, the transfer is not valid. There are certain things known as "res communes" which are in their natural form belong to no one or res nullies which are not owned by anyone like air, water, space, sea, light, etc. These things are given by the nature to be used by each individual on earth. It is not possible to hold and possess them separately. If any one tries to transfer such a thing it would be opposed to its nature.

[s 6.12.2] Transfer for an Unlawful Object or Consideration A transfer cannot be made if it is for unlawful object or consideration. A property otherwise transferable may not be transferred if the transfer is for an unlawful object or consideration. Under section 23 of the Indian Contract Act, 1872, a consideration or object is unlawful, if— (a) it is for bidden by law, (b) it is of such a nature that if permitted it would defeat the provisions of any law, (c) it is fraudulent, (d) it involves injury to the person or property of another, or (e) it is immoral or opposed to public policy.

(a) Forbidden by Law.—Any act which is forbidden or prohibited by law comes under this category. Thus, if such forbidden act is done by some person it is unlawful. For example, where a licence for a trade can be granted only to one person i.e., only a single person can do such a trade, then doing such trade in partnership will become unlawful. Sale of liquor without licence is forbidden by law. Thus, any person selling liquor without licence will be doing an unlawful activity. This does not refer to prohibition by agreement or decree of court.69 (b) Defeat Provisions of any Law.—Where an act is not prohibited by law but if it is permitted it defeats (i.e., goes against) provisions of any other law. For example, where a surety is required for a case under the Criminal Procedure Code and the criminal gives money to a person to become his surety and after getting the bail goes to take back the money from the surety. Here the whole purpose of suretyship is defeated. (c) Fraudulent.—Where the object or consideration of any agreement is for fraudulent purposes, the agreement will become unlawful. Therefore, transfers for fraudulent purposes are void. An agreement to defraud creditors, or to give fraudulent preference to a creditor,70 or to defraud revenue authorities,71 or investors in a company72 has been held to be void. (d) Injury to Person or Property.—Where any agreement is made for the purpose of doing harm to any person or to his property, such an agreement is unlawful. (e) Immoral.—Any agreement against the standard of morality prevailing at the relevant time will be immoral. For example, dealings with prostitutes, interference in marital relations have been held to be immoral. A transfer of an immovable property in consideration of future illicit intercourse has been held to be void.73 (f) Public Policy.—Certain agreements have been held to be against public policy. For example, trading with enemies, stifling prosecution, maintenance, champarty, trafficking in public offices have been held to be against public policy.

[s 6.13] Licences Stamp Vendor Licence.—The licence of a stamp vendor has been held to be not a property which can be inherited or transferred. The Additional Collector only said that he had been allowing such transfers and therefore allowed the present transfer also on the basis of equality. The court said that Article 14 of the Constitution is not negative concept so as to allow an illegality to be perpetuated. The petitioners were not entitled to obtain a stamp vending licence on the basis that their father held such licence.74

[6.13.1] Illustrations The following illustrations are appended to section 23 of the Indian Contract Act, 1872.75 (i) A agrees to sell his house to B for Rs 10,000. Here B's promise to pay the sum of Rs 10,000 is the consideration for A's promise to sell the house, and A's promise to sell the house is the consideration for B's promise to pay the Rs 10,000. These are lawful considerations. (ii) A, B and C enter into an agreement for the division among them of gains acquired, or to be acquired by them by fraud. The agreement is void, as its object is unlawful.

(iii) A promises to obtain for B an employment in the public service, and B promises to pay Rs 1000 to A. The agreement is void, as the consideration for it is unlawful. (iv) A, being agent for a landed proprietor, agrees for money, without the knowledge of his principal to obtain for B a lease of land belonging to his principal. The agreement between A and B is valid, as it implies a fraud by concealment by A on his principal. (v) A promises B to drop a prosecution which he has instituted against B for robbery, and B promises to restore the value of the things taken. The agreement is void, as its object is unlawful. (vi) A agrees to let her daughter to hire to B for concubinage. The agreement is void, because it is immoral, though the letting may not be punishable under the Indian Penal Code.

[6.13.2] Legally Disqualified Transferee A legally disqualified person cannot be a transferee i.e., the property cannot be transferred to him. Section 136 of this Act disqualifies certain persons to be transferee of any actionable claim. A Judge, a legal practitioner or an officer connected with courts of justice are disqualified from purchasing any actionable claim.

[s 6.14] Clause (i): Untransferable Interests Clause (i) provides that nothing in this section shall be deemed to authorise a tenant having an untransferable right of occupancy, the farmer of an estate in respect of which default has been made in paying revenue, or the lessee of an estate, under the management of a Court of Wards, to assign his interest as such tenant, farmer or lessee. This clause was added in 1885 to remove doubts regarding the non-transferability of occupancy rights. Under this clause, any tenant having an untransferable right of occupancy cannot transfer his interest as such tenant. The farmer of an estate in respect of which default has been made in paying revenue cannot transfer his interest as such farmer and the lessee of an estate under the management of the Court of Wards cannot assign his interest as such lessee to any other person.

1 Nothing in Chapter II is to be deemed to affect any rule of Muhammadan Law, see section 2,

Act 20 of 1929. 46 Ins. by Act 20 of 1929, section 6. 47 The words "for compensation for a fraud or for harm illegally caused" omitted by Act 2 of

1900, section 3. 48 Ins. by Act 35 of 1934, section 2 and Schedule. 49 Ins. by Act 10 of 1927, section 2 and Sch I.

50 The word "Government" successively subs. by the AO 1937 and the AO 1950 to read as

above. 51 Subs. by Act 2 of 1900, section 3, for "for an illegal purpose". 52 Added by Act 3 of 1885, section 4. 53 Kansing Kalusing Thakore v Rabari Maganbhai Vashrambhai, (2006) 9 Supp SCR 196 : (2006)

12 SCC 360 : (2006) 12 Scale 414 . 54 Stockley v Parsons, (1890) 59 LJ Ch 666 (667) : (1890) 45 Ch D 51 . 55 45 Cal 590 (PC) : AIR 1917 PC 95 . 56 Hameed v Jameela, AIR 2010 Ker 44 : 2010 (1) ICC 100 : 2009 (4) Ker LT 531 . 57 Sheshammal v Hasan Khani Rawther, AIR 2011 SC 3609 : (2011) 9 SCC 223 : (2011) 8 Scale

186 . 58 Punhca Thakur v Bindeswari, (1916) 43 Cal 28 . 59 Balmukund v Tula Ram, AIR 1928 All 721 : 26 All LJ 185. 60 Badri Nath v Punna, AIR 1979 SC 1314 : (1979) 3 SCC 71 : 1979 (2) SCJ 418 ; Dani Ram v

Jamuna Das, AIR 2010 (NOC) 524 (All) decisions keep flowing on the earlier basis, the right was held to be dependent upon performance of pooja which is an alienable right, the court however said that though the plaintiff got no right on the basis of the sale deed, he would be entitled to share the offerings by inheritance. 61 B Rajegowda v HR Shankere Gowda, AIR 2006 Kant 48 : ILR 2005 Kant 5501 : (2006) 6 Kant

LJ 237 , a person having life interest in property cannot bequeath it by executing a Will; a document evidenced partition between father and son under which an interest in the property was allotted to the father for his maintenance, an absolute right of alienation was not given, hence, no right to bequeath by making Will. 62 K Balakrishnan v K Kamalam, AIR 2004 SC 1257 : (2004) 1 SCC 581 : (2004) 3 CHN 81 ; S

Rathinam v LS Mariappan, AIR 2007 SC 2134 : (2007) 7 SCR 568 : (2007) 6 SCC 724 . The restriction on transferability contained in the clause is not applicable to a Will, because it is not equivalent to transfer. 63 K Balakrishnan v K Kamalam, AIR 2004 SC 1257 : (2004) 1 SCC 581 : (2004) 3 CHN 81 . 64 (1897) 2 Cal WN 43. 65 Gujarat Water Supply and Sewerage Board, Gandhinagar v Sundardas Hukumatram Shivanani,

AIR 1991 Guj 170 : 1991 (1) Guj LH 57 : 1991 (2) Guj LR 825. 66 AIR 1991 SC 1256 : 1991 AIR SCW 1204 : (1991) 3 SCC 20 . 67 28 LJ (Ch) 868 : 70 ER 461 : 34 LT (OS) 28. 68 Sundariya Bai Choudhary v UOI, AIR 2008 MP 227 (DB) : 2008 (68) All Ind Cas 551 : (2008) 2

MPLJ 321 . 69 Wazir Mohd. v Har Parsad, (1912) 15 OC 67 : 13 IC 613. 70 Ram Lal Misra v Rajendra Nath Sanyal, AIR 1933 Oudh 124 : ILR 8 Luck 233. 71 Alexander v Rayson, (1936) 1 KB 169 : 105 LJKB 148 : 154 LT 205. 72 Beghie v Phosphate Sewage Co Ltd, (1876) 1 QBD 679 . 73 Deivanayaga Padayachi v Muthu Reddi, AIR 1921 Mad 326 (2) (V8) : ILR 44 Mad 329. 74 Joydev Sen v State of West Bengal, AIR 2010 (NOC) 256 (Cal). 75 For details see Dr. Avtar Singh, Law of Contract and Specific Relief, Chapter 7 (9th Edn, 2005).

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER II1 TRANSFERS OF PROPERTY BY ACT OF PARTIES Chapter II of the Transfer of Property Act, 1882 deals with transfers of property by act of parties. This chapter has been divided into two parts: Part-A—provides for rules regarding transfers of property in general, whether movable or immovable. Part-B—provides for rules regarding transfers of immovable property.

(A) TRANSFER OF PROPERTY, WHETHER MOVABLE OR IMMOVABLE Part-A consists of definition of property what may be transferred, competency of persons, operation of transfers, oral transfers, restrictions on transfers, vested interest, contingent interest, conditional transfers, transfers for benefit of unborn persons and elections, etc. All these provisions will be taken up under the following headings:— I. General provisions II. Restrictions III. Transfer for the benefit of unborn person IV. Transfer to a Class V. Vested Interest VI. Contingent Interest VII. Conditional Transfer VIII. Election IX. Apportionment

I. GENERAL PROVISIONS (SECTIONS 5-9) [s 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.

Comments Section 7, which deals with competency to transfer provides that the transferor— (i) must be competent to contract, and

(ii) must have title to the property or authority to dispose of transferable property, if

it is not his own.

[s 7.1] Persons Competent to Transfer (Section 7) Competency to contract has been defined section 11 of Contract Act, 1872. Section 11 says that every person is competent to contract— (a) who is of the age of majority according to the law to which he is subject, (b) who is of sound mind, and (c) is not disqualified from contracting by any law to which he is subject.

[s 7.2] Age of Majority Generally the age of majority is 18, except when a guardian of minor's person or property has been appointed by the court, in which case it is 21. The age of majority is to be determined according to the law to which a person is subject. A person purchased certain property in the name of his minor son and subsequently resold it while the son was still minor. Court permission was necessary under section 8 of the Hindu Minority and Guardianship Act, 1956 but no such permission was taken. The provision being mandatory the sale was held to be void. While the suit about that sale was still pending, he sold the property again. This sale was held to be hit by section 52.76

[s 7.3] Sound Mind According to section 12 of the Contract Act, 1872, a person is said to be of sound mind for the purpose of making a contract, if at the time when he makes it, he is capable of understanding it and of forming a rational judgment as to its effect upon his interest. A person who is usually of unsound mind but occasionally of sound mind, may make contract when he is of sound mind. A person who is usually of sound mind but occasionally of unsound mind, may not make a contract when he is of unsound mind.

[s 7.4] Disqualified from Contracting It is necessary that the person must be qualified to contract according to law to which he is subject. If a person is disqualified to contract he will not be qualified or capable to transfer the property. The following conditions must be fulfilled for a valid transfer of property:— (i) The property must be a transferable property. Section 6 of the transfer of

property contains certain exceptional cases where property is not transferable. (ii) The transferor must be competent to contract. Transferor must be a living

person at the time of transfer. He may be a human being or a juristic person like

company or associations, etc. He must be an adult of sound mind and must not be disqualified to contract by any law to which he is subject. (iii) Transferee must be a living person at the time of transfer. The Act has not laid

down any criteria for the competency of the transferee. He must be a human being or a juristic person. Section 6(h) (iii) provides an exception. Judges, legal practitioners or officers connected with any court of justice are incompetent transferees in dealings of actionable claims. (iv) The transferor must have the right to transfer the property being transferred. He

must be entitled to transfer the property or authorised to dispose of the property (to be transferred), if it is not his own.77 (v) The transferor may transfer the property either wholly or partly and either

absolutely or conditionally. All the formalities prescribed by the Act must be complied with. The property must be transferred in the manner provided by the Act.

[s 7.5] Transfer in Favour of Minor A minor being incompetent to contract cannot transfer a property. But the question arises that whether he can accept the transfer of property in his favour or not. Section 7 gives only the competency of a transferor not that of a transferee. Section 6(h)(iii) says that a person legally disqualified cannot be a transferee. Nowhere it is said that the transferee must be a competent person in respect of his age, soundness of mind etc. Only he must be alive at the time of transfer. Therefore, a minor can accept transfer of property in his favour. He can be a mortgagee78 provided there is no covenant for him to perform, he can be a purchaser79 provided the sale does not impose any obligation upon him and a donee of a gift provided the gift is not onerous.

[s 7.6] Persons Authorised to Dispose of Property Any person who is authorised to dispose of the property is competent to transfer it too. Example may be taken of a Karta of Hindu joint family, a guardian, a trustee, an executor or administrator, etc. A tenant cannot transfer the tenanted property because he is not the owner of the property. Similarly, a person authorised for collecting rents and managing an estate of the landlord is not empowered to transfer the land as the landlord's agent.80 Where one of the co-sharers did not join the agreement for sale of their joint immovable property, it was held that the entire agreement comprising of the whole of the property including the share of signing co-sharers was void and ineffective.81 Property can be sold through a power of attorney. A power of attorney is not an instrument of transfer of any right, title or interest in any immovable property. It is a method of creating an agency authorizing the agent to do acts specified in the power of attorney document which will bind the grantor of power to the same extent on an act done by him.82 The Supreme Court further said that such power is revocable or terminable at any time unless it is made irrevocable in a manner known to law. Even irrevocable power does not have the effect transferring title to the grantee. An attorney holder may execute a deed of conveyance in exercise of the power granted to him and convey title on behalf of the grantor.

A Will is also a method of transferring property. It is a testament of the testator. It is posthumous disposition of the estate of the testator, directing the manner of distribution of his estate on his death. It is not a transfer inter vivos. The two essential characteristics of a Will that it is intended to come into effect only after testator's death and it is revocable at any time during the life time of testator. If the testator being not married, marries after making the Will, it stands revoked by operation of law. (Succession Act, 1925, sections 69 and 70). Registration of a Will does not make any mere effective while the testator is alive.

1 Nothing in Chapter II is to be deemed to affect any rule of Muhammadan Law, see section 2,

Act 20 of 1929. 76 Mallikarjuna v Mareppa, AIR 2008 (NOC) 480 (Kar) : (2008) 1 AIR Kar. R 216. 77 Attaur Raheman Fateh Mohd v Hari Peeraji Burud, AIR 2008 (NOC) 1900 (Bom), person not

holding transferable interest in property cannot transfer, transferee not bound by agreement executed by such transferor. 78 Raghavachariar v Srinivasa Raghavachariar, AIR 1917 Mad 630 (V4) : ILR 40 Mad 308 (FB). 79 Subba Reddy v Curuva Reddy, AIR 1930 Mad 425 : 120 Ind Cas 77. 80 Balai Chandra Mondal v Indurekha Debi, AIR 1973 SC 782 : (1973) 1 SCC 284 : 1973 SCD 313

. 81 Vimaleshwar Nagappa Shet v Noor Ahmed Sheriff, AIR 2011 SC 2057 : (2011) 12 SCC 658 :

2011 AIR SCW 3391. 82 Suraj Lamp Industries Pvt Ltd v State of Haryana, (2012) 1 SCC 656 : AIR 2012 SC 206 : 2011

AIR SCW 6385. Power of Attorney Act, 1882, sections 1 and 2.

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER II1 TRANSFERS OF PROPERTY BY ACT OF PARTIES Chapter II of the Transfer of Property Act, 1882 deals with transfers of property by act of parties. This chapter has been divided into two parts: Part-A—provides for rules regarding transfers of property in general, whether movable or immovable. Part-B—provides for rules regarding transfers of immovable property.

(A) TRANSFER OF PROPERTY, WHETHER MOVABLE OR IMMOVABLE Part-A consists of definition of property what may be transferred, competency of persons, operation of transfers, oral transfers, restrictions on transfers, vested interest, contingent interest, conditional transfers, transfers for benefit of unborn persons and elections, etc. All these provisions will be taken up under the following headings:— I. General provisions II. Restrictions III. Transfer for the benefit of unborn person IV. Transfer to a Class V. Vested Interest VI. Contingent Interest VII. Conditional Transfer VIII. Election IX. Apportionment

I. GENERAL PROVISIONS (SECTIONS 5-9) [s 8] Operation of transfer.— Unless a different intention is expressed or necessarily implied, a transfer of property passes forthwith to the transferee all the interest which the transferor is then capable of passing in the property and in the legal incidents thereof. Such incidents include, where the property is land, the easements annexed thereto, the rents and profits thereof accruing after the transfer, and all things attached to the earth; and, where the property is machinery attached to the earth, the moveable parts thereof; and, where the property is a house, the easements annexed thereto, the rent thereof accruing after the transfer, and the locks, keys, bars, doors, windows, and all other things provided for permanent use therewith; and, where the property is a debt or other actionable claim, the securities therefor (except where they are also for other debts or claims not transferred to the transferee), but not arrears of interest accrued before the transfer;

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

Comments [s 8.1] Operation of Transfer Section 8 dealing with effects of transfer provides that unless a different intention is present a transfer of property passes all the interests which the transferor is then capable of passing in the property and its legal incidents to the transferee. Operation of transfer under section 8 has given the detailed effects of transfers. The object of this section is to clearly define what are the legal incidents of each particular class of property which pass along with the property when it is transferred.83 The principles underlying this section are that the grantor shall not derogate from his own grant and res essorira sequiter rem principaleur which means that an accessory follows the principal thing:— (a) Land: where the property to be transferred is land, its incidents will include— (i) easements attached to it, (ii) its rents and profits accruing after the transfer (iii) all things attached to the earth. (b) Machinery: Where the property to be transferred is machinery, its movable parts

will be its incidents. (c) House: Where the property to be transferred is a house, its legal incidents will

include:— (i) easements annexed to it, (ii) its rent accruing after the transfer, (iii) locks, keys, bars, doors, windows and all other things provided with it for

permanent use, (iv) Debt: Where the property to be transferred is a debt or other actionable

claims, those securities will be legal incidents which are only for the debt transferred to the transferee. (v) Money: Where the property to be transferred to the transferee is money or

other property yielding money, its legal incidents will include its income or interest accruing after the transfer.

[s 8.2] Transfer Passes whole Interest of Transferor The general rule regarding transfer is that the transferor conveyed all that he was possessed of in the property transferred. This presumption may be rebutted by use of express words or such words which limit the interest which the transferor intends to convey by necessary implication. What was the intention of the transferor at the time of executing the deed should be clearly found by interpretation of the words of the deed. "The cardinal rule of construction is that a document must be read as a whole, each clause being read in relation to the other parts of the documents and an attempt

should be made to arrive at an interpretation which will harmonise and give effect to the other clauses thereof. It is not legitimate to pick out an expression torn from its context and try to interpret the document as a whole in the light of that expression. Such a forced construction on the document in question cannot but defeat the very object which its executants had in view.84" In matters of documents intention of the parties should be constructed with reference to the words used in the document.85 It is the substance and not the form of the document which would determine its legal character which must depend upon the intention of the parties. The court must probe into the intention of the parties at the time when the document was executed ignoring the colour or complexion given to it by them.86 Words used are to be given literal meaning. Outside material is not to be used in interpreting terms. The words "as if " create a legal fiction, such fiction must be limited to the purpose for which it is created.87 As a rule, a person cannot transfer something to another by doing an act which he himself is not entitled to do. Under the principle of Nemo dat quod non habet a person is competent to transfer any property if he has subsisting right, title or interest in it.88 A transferee cannot have a better title than what the transferor himself had in the thing transferred. If the transferor had held the property with certain limitations, the transferee would get it too with those limitations and not without them. Once it is proved that on the date of transfer of any tangible property, the seller of the property had no subsisting right, title or interest over it, then the buyer of such property would not get any right, title or interest in the property purchased by him for consideration or otherwise. Such transfer would be an illegal and void transfer.89 In 1874, in Mohd Shamsool v Shewakram,90 a Hindu made a bequest of his properties to his widowed daughter-in-law. In the first part of the document he stated that the widow should be his heir. However, in the later part of the will, he stated that after the widow her daughter was to be heir. Their Lordships of the Privy Council observed: "In construing the will of a Hindu, it is not improper to take into consideration what are known to be the ordinary notions and wishes of Hindus with respect to the devolution of property. It may be assumed that a Hindu generally desires that an estate, specially an ancestral estate, shall be retained in his family and may be assumed that a Hindu knows that as a general rule, in all events woman do not take absolute estates of inheritance which they are enable to alienate. Having reference to these considerations, we are of the opinion that the courts are right in construing the intention of the testator to have been that the widow of his son should not take an absolute estate which she should have power to dispose of absolutely, but that she took an estate subject to her daughter succeeding her in that estate." In 1907, in Suraj Mani v Rabi Nath Ojha,91 a Hindu had given his properties to his wife as "malik". The High Court held that under the Hindu Law, the wife had no power to alienate unless the power to alienate was expressly conferred and that the mere use of the word "malik" was not sufficient for the purpose. Their Lordships of the Privy Council held against this view and observed that the word "malik" imparted full proprietary rights unless there was something in the context to qualify it and that the fact that donee was a Hindu widow was not sufficient for the purpose. After these decisions the general opinion set up was that the question as to what passes under a transfer by Hindu to his female relations is merely a matter of interpretation of the document on its language, that such a document must be interpreted in the same way as any other document, without any presumption of any kind.

The Supreme Court held in Ram Gopal v Nand Lal,92 that having regard to section 8 of the Transfer of Property Act, 1882, a transfer passes the entire estate of the transferor when no restriction is indicated by the deed and in Hindu law, there are texts requiring a gift to a female to be construed only as a limited gift. In Nathu Lal v Durga Prasad,93 a woman obtained property under the will of her father. On her death, the plaintiff, who was her sister's son, claimed the property as reversioner on the ground that she had only a limited estate. The second claimant was the woman's husband who claimed to succeed the property as heir to her stridhan. The High Court of Rajasthan held that the woman had only a limited estate and gave a decree to the plaintiff. The Supreme Court reversed the decision and held that an absolute estate had passed to the legatee. It was observed that there is no difference between the case of a female and the case of a male and the fact that the donee is a woman does not make the gift less absolute where the words are sufficient to convey an absolute estate to a female. In a partition between two brothers, certain properties including the property in dispute came to the share of one brother. He divided his properties equally amongst his four sons retaining right of enjoyment of properties for him and his wife during their lifetime. In 1975, their two sons (second generation) transferred their undivided share in property by registered sale deeds in favour of appellant. One son out of the two (second generation) had no son whereas the other son had four sons (third generation). Husband and wife died in 1975 and 1984, respectively. On the basis of sale deeds the appellant filed a civil suit for declaration that he was entitled to undivided half share in the property. These four sons were not made parties to the suit. He later filed another suit seeking injunction against defendants adding four sons as parties. Trial court decreed former suit holding appellant to be entitled to one-half of share of property in question and passed a preliminary decree. It did not grant relief of permanent injunction against defendants. First appellate court held that since four sons were parties of suit for declaration and partition, sale deed in favour of appellant would be valid only for the share of son, i.e., their father (second generation). High Court confirmed it and Supreme Court did not interfere; the appellant was held entitled to 7/24th share in property in question.94

[s 8.3] Legal Incidents of Transfer According to section 8, on the transfer of a property not only all the interest of the transferor in the property pass to the transferee but also his interest in the legal incidents of such property. An incident is a "thing necessarily depending upon or appertaining to, or following another that is more worthy as rent to incident is a reversion."95 The Webster Dictionary has defined an incident as "something appertaining to or passing with or depending on another called the principal."

[s 8.4] Land Generally the transfer of land would include transfer of everything annexed to it permanently. Therefore, the transferee would get not only the surface of the land but also the easements annexed to it and also the minerals beneath the surface unless there is a contrary intention. According to this section, the legal incidents of a land include everything attached to it, rents and profits accruing after the transfer of land and all the easements related to the land. All the houses, structures and trees standing on the land are transferred along with the land by necessary implication. The Allahabad High Court has held in Vishwa Nath v Ram Raj,96 that when the land is transferred there

may be presumption that all the things attached to the land likes trees and shrubs are transferred with the land too. But the transfer of trees will not by itself justify the inference that the land was also transferred. Where one partner contributed land and the other constructed theatre and a clause in the partnership deed provided that the partnership will continue for certain number of years. The court rejected the contention that the deed was a licence to use the land. A partnership deed usually does not have that effect.97

[s 8.5] House Legal incidents of a house are easements like right of way, right of support, permanent fixtures like bars, windows, keys, locks etc. which are part of the house and provided for permanent use. Besides these, rents accruing after the date of transfer are also transferred along with the house.

[s 8.6] Machinery Where machinery is attached to the earth, it is transferred along with the land transferred. The incidents of machinery include all the movable parts of the machinery like nut, bolts, etc.

[s 8.7] Debt Where property transferred is a debt or an actionable claim, securities of it will also pass to the transferee as legal incident of the property transferred on the basis of the principle that every principal thing attracts accessories towards it. In this section, the word "debt" refers to only those debts which come within the general definition of actionable claims. Where a money-decree is obtained for a secured debt and then transferred, the security will not pass with the decree and purchaser could not claim to enforce securities.98 The provisions of this section are not applicable to mortgage debts because such debts are not actionable claims. However, a charge annexed passes on to the transferee in the assignment of a debt. A promissory note is a conditional payment of the debt. If a mortgagee holds a promissory note for a part of the debt and retains it after transferring the mortgage, he will be restrained from suing on it pending a suit for redemption.

[s 8.8] Licence There was a licence to operate FM Broadcasting Service. The terms of the agreement required 30 days' notice for revocation of licence and opportunity for hearing both for default in payment of fee or breach of terms. Conditions of licence reserved power in the licencer to revoke the agreement. The agreement specifically provided that in case of any conflict between the agreement and licence, the agreement would prevail. It was held that a month's notice was necessary for revoking the licence even when there was default. This was particularly so when the revocation carried the penalty of encashment of bank guarantee in case of default.99

[s 8.9] Money or Other Property Yielding Income Where the property transferred is money or other property yielding income, the transferee is entitled to get the interest on that money or other income accruing after the transfer. Securities, promissory notes and shares carry with them the right of future interests and dividends.

[s 8.10] Ut res magis valeat quam pereat The maxim ut res magis valeat quam pereat means that where the document admits of two constructions—one of which give a sensible effect to the whole and the other makes a portion of it idle and insensible, the one which makes it idle should be discarded. In a case involving applicability of this maxim to trust deeds, it was held that where the trust was established to preserve sacred fire and fire temple for ever and a clause in trust deed also made the maintenance of house and building for residence of priest obligatory, it did not mean that the house and building at the present site could not be shifted or relocated or redeveloped. It would only mean that the place for residence of the priest is earmarked and presumed.100 For construction of the contract, it is settled law that the intention of the parties is to be gathered from the words used in it. If words are unambiguous and are used after full understanding of their meaning by experts, it would be difficult to take their intention to be different from the language used. If upon a reading of the document as a whole, it can fairly be deduced from the words actually used that the parties had agreed on a particular term, there is nothing in law which prevents them from setting up that term. Further, in construing a contract, the court must look at the words used in the contract unless they are such that one may suspect that they do not convey the intention correctly. If the words are clear, there is very little that the court can do about the document.101

[s 8.11] Doctrine of Lost Grant Where the water tanks belonging to the cultivator community of the village were used uninterruptedly for years by fishermen community of the village, it was held that such right of fishermen could not be traced either to a grant, custom or presumption, and therefore, the cultivator community, the owners of the tanks, could restrain the fishing community from using the tanks.102

1 Nothing in Chapter II is to be deemed to affect any rule of Muhammadan Law, see section 2,

Act 20 of 1929. 83 Bishwanath Prasad Singh v Rajendra Singh, AIR 2006 SC 2965 : 2006 AIR SCW 4235 : (2006)

4 SCC 432 , for the purpose of construing an agreement, its terms are not the only factor determinative of its nature, the document has to be read as a whole. The court had to see whether the transaction in question was a mortgage or sale. Tulsi v Chandrika Prasad, AIR 2006

SC 3359 : (2006) 8 SCC 322 : JT 2006 (8) SC 158 , case of absolute transfer, the vendee has an absolute right to deal with his property in any manner he likes. A person can be said to have a right to something when it is possible to find a lawful origin of that right. Mere presence on the land by itself does not result in a right to the land. However, such presence on the premises may ripen into a right by reason of possession having become adverse to the true owner by reason of passage of time and possession being open uninterrupted, continuous and in one's own right, C Albert Morris v K Chandrasekaran, JT 2005 (9) SC 127 : (2005) 8 Scale 788 : (2005) 8 SLT 247 . 84 Digambar Jain v Sub-Registrar, AIR 1970 MP 23 : 1969 MPLJ 747 : ILR (1971) MP 403 . 85 Shree Gujarati Harijan Co-op Housing Society Ltd v Additional Collector, AIR 1992 Bom 263 :

(1992) 1 Bom CR 126 . 86 Laximan Prasad v Shyam Swarup Chandak, AIR 1980 All 242 ; where re-conveyance deed

neither stipulated that right re-conveyed to vendor is in any manner personal to him nor that this right can be exercised by him or his heirs alone, re-conveyance in his favour is assignable to strangers, Shanti Devi v Jagdish Lal, AIR 2018 ALL 216 . 87 Rajasthan State Industrial Development and Investment Corp v Diamond & Gem Development

Corp Ltd, AIR 2013 SC 1241 : 2013 AIR SCW 1244 : (2013) 5 SCC 470 ; Satya Jain v Anis Ahmed Rushdie, AIR 2013 SC 434 : 2012 AIR SCW 6557 : (2013) 8 SCC 131 , the Supreme Court considered the invocation of the business efficacy principle of interpretation, which means the power to produce the intended result. 88 Eureka Builders v Gulabchand, (2018) 8 SCC 67 . 89 Eureka Builders v Gulabchand, (2018) 8 SCC 67 ; UOI v Vijay Krishna Uniyal, (2018) 11 SCC

382 ; symbolic possession of property by a creditor cannot be construed as a complete transfer; creditor remains to be a secured creditor having right to apply for possession, ITC Ltd v Blue Coast Hotels Ltd, AIR 2018 SC 3063 . 90 2 IA 7. 91 30 All 84 : 35 Ind App 17 (PC). 92

1950 SCJ 575 : 1950 SCR 766 : 1951 All LJ 24; PS. Ramakrishana Reedy v MK

Bhagyalakshmi, AIR 2007 SC 1256 : (2007) 3 Scale 409 : 2007 AIR SCW 1383, the question was whether the agreement was to be construed as sale or loan, the landlord executed an agreement to sell the tenanted property to the tenant, a sum of money in advance was also paid, but even so the parties agreed to continue as landlord and tenant, a sum of money was fixed as a compensation to be paid in case of bleach by either party, the court said that the facts did not lead to the inference that the agreement was for loan and not for sale. 93 1954 SCJ 557 : AIR 1954 SC 355 : 1955 SCR 51 ; State Bank of India v Mula Sahakari Sakhar

Karkhana Ltd, AIR 2007 SC 2361 : (2006) 6 SCC 293 : (2006) 6 Scale 600 , documents must primarily be construed on the basis of their terms and conditions. 94 A Dharmalingam v Lalithambal, (2018) 6 SCC 65 . 95 Wharton's Law Lexicon, 4th Edn, 1938. 96 AIR 1991 All 193 : 1991 All LJ 165 : 1991 SCD 89 ; Rajendran v Chinnathambi Gounder, AIR

2007 (NOC) 1325 (Mad), land transferred along with all appurtenances, the vendor subsequently filed a suit that the well situated on the land remained his property, he could not show that the well was on his part of the land, or that he had reserved the well for himself, the Commissioner's report was that the well was located on the transferred part of the land, it was immaterial that the well was not mentioned in the sale deed. 97 Jai Narayan Misra v Hashmathunnisa Begum, AIR 2002 AP 389 : (2002) 3 Andh LD 406 :

(2002) 3 Andh LT 689 ; Ram Chandra v Kalyan Singh, AIR 2006 All 184 : (2006) 63 All LR 255 : 2006 (3) All LJ 232, trees were planted on land in question subsequent to the agreement, the seller objected saying that standing trees could not be transferred in execution proceedings, this

was held to be not tenable as under section 8 that property also passes to the transferee which was capable of passing with the land. 98 Ganpat Rai v Sarupi, (1878) 1 All 446 . 99 UOI v Millennium Mumbai Broadcasting Pvt Ltd, AIR 2006 SC 2751 : 2006 (6) SCJ 555 : 2006

AIR SCW 3732, the court added that penal provisions have to be construed strictly. 100 Bomi Jal Mistry v Joint Charity Commissioner, Maharashtra, AIR 2002 Bom 342 : 2003 (1)

Bom LR 824 : 2002 (3) All MR 749. 101 Oil and Natural Gas Corp Ltd v SAW Pipes Ltd, AIR 2003 SC 2629 : 2003 AIR SCW 3041 :

(2003) 5 SCC 705 . 102 Tulsi Ram v Mathurasagar Pan Tatha Krishi, AIR 2003 SC 243 : 2002 AIR SCW 4697 : (2003)

1 SCC 478 .

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER II1 TRANSFERS OF PROPERTY BY ACT OF PARTIES Chapter II of the Transfer of Property Act, 1882 deals with transfers of property by act of parties. This chapter has been divided into two parts: Part-A—provides for rules regarding transfers of property in general, whether movable or immovable. Part-B—provides for rules regarding transfers of immovable property.

(A) TRANSFER OF PROPERTY, WHETHER MOVABLE OR IMMOVABLE Part-A consists of definition of property what may be transferred, competency of persons, operation of transfers, oral transfers, restrictions on transfers, vested interest, contingent interest, conditional transfers, transfers for benefit of unborn persons and elections, etc. All these provisions will be taken up under the following headings:— I. General provisions II. Restrictions III. Transfer for the benefit of unborn person IV. Transfer to a Class V. Vested Interest VI. Contingent Interest VII. Conditional Transfer VIII. Election IX. Apportionment

I. GENERAL PROVISIONS (SECTIONS 5-9) [s 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.

Comments Section 9 says that a transfer of property may be made without writing in every case in which a writing is not expressly required by law. There are 2 modes in which a property can be transferred:— (i) Delivery of possession (ii) Registration

[s 9.1] Delivery of Possession Those properties may be transferred by delivery of possession only where writing is not necessary for transfer. Generally the movable properties may be transferred by delivery of possession. Month to month tenancy, mortgage by deposit of title-deeds, exchange of immovable property valuing less than rupees one hundred, etc. can also be transferred orally.

[s 9.2] Registration Where registration is necessary, the transfer must be made in writing. According to the Transfer of Property Act, 1882, the following transactions must be made only through a written document which must be duly registered:103 (a) Sale of an immovable property exceeding rupees one hundred (section 54). (b) Sale of reversion or other intangible property (irrespective of its value) (section

54). (c) Simple mortgage irrespective of the amount specified (section 59). (d) All other mortgage (except the mortgage by deposit of title-deeds) securing

sums exceeding rupees one hundred (section 59). (e) Lease from year to year, or for a term exceeding one year or reserving a yearly

rent (section 107). (f) Exchange of immovable property exceeding one hundred rupees in value

(section 118). (g) Gift of an immovable property (section 123). (h) Transfer of actionable claims (section 130) (where only writing is sufficient,

registration is not necessary). Procedure for the registration of documents and compulsorily registrable transfers is given in the Indian Registration Act, 1908. Where writing and registration are essential requirements to constitute a transfer, the property cannot be transferred in any other way. Transfer of property in any other manner will be invalid transfer.104

1 Nothing in Chapter II is to be deemed to affect any rule of Muhammadan Law, see section 2,

Act 20 of 1929. 103 Hansa Industries Pvt Ltd v Kidarsons Industries Pvt Ltd, AIR 2007 SC 18 : (2006) 8 SCC 531 :

(2006) 10 Scale 170 , the valuation of assets of a company in a family settlement, no deduction is to be made of an anticipated liability of capital gains on a hypothetical sale under the settlement. 104 Avvamma M Talawar v State of Karnataka, AIR 2006 (NOC) 1598 (Kant), a mutation entry

recorded by Revenue Authorities cannot be a substitute for a registered deed for transfer of

immovable property; where plaintiff admitted that suit property is ancestral and joint family property in which defendant had one-fourth share, no proof for beginning and duration of tenancy as well as payment of rent was provided, landlord–tenant relationship was not proved, defendant was held liable to be evicted, Sharda Narayan Lal Alika v Harji Lal, AIR 2018 (NOC) 174 Raj.

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER II1 TRANSFERS OF PROPERTY BY ACT OF PARTIES Chapter II of the Transfer of Property Act, 1882 deals with transfers of property by act of parties. This chapter has been divided into two parts: Part-A—provides for rules regarding transfers of property in general, whether movable or immovable. Part-B—provides for rules regarding transfers of immovable property.

(A) TRANSFER OF PROPERTY, WHETHER MOVABLE OR IMMOVABLE Part-A consists of definition of property what may be transferred, competency of persons, operation of transfers, oral transfers, restrictions on transfers, vested interest, contingent interest, conditional transfers, transfers for benefit of unborn persons and elections, etc. All these provisions will be taken up under the following headings:— I. General provisions II. Restrictions III. Transfer for the benefit of unborn person IV. Transfer to a Class V. Vested Interest VI. Contingent Interest VII. Conditional Transfer VIII. Election IX. Apportionment

II. RESTRICTIONS [s 10] Condition restraining alienation.— Where property is transferred subject to a condition or limitation absolutely restraining the transferee or any person claiming under him from parting with or disposing of his interest in the property, the condition or limitation is void, except in the case of a lease where the condition is for the benefit of the lessor or those claiming under him: Provided that property may be transferred to or for the benefit of a women (not being a Hindu, Muhammadan or Buddhist), so that she shall not have power during her marriage to transfer or charge the same or her beneficial interest therein.

Comments [s 10.1] Conditions Restraining Alienation (Section 10)

Every owner of a property, who is competent to transfer, may transfer his property either unconditionally or with certain conditions. Conditions are limitations or restrictions on the rights of the transferees. Transfers which are subject to restrictions are known as "conditional transfers". These conditions may be either conditions precedent or conditions subsequent. Conditions precedent are put prior to the transfer and the actual transfer depends upon compliance of those conditions. Subsequent conditions are those conditions which are to be fulfilled after the transfer. These conditions affect the rights of the transferees after the transfer. Any restriction on alienation of property cannot be imposed by the Government with retrospective effect without enabling provision in the statute.105

[s 10.2] Absolute Restraint Section 10 says that where property is transferred subject to a condition or limitation which absolutely restraints the transferee from parting with or disposing of his interest in the property is a void condition. Restraint on alienation is said to be absolute when it totally takes away the right of disposal. In the words of Lord Justice Fry,106 "from the earliest times, the courts have always leant against any device to render an estate inalienable."107 Section 10 relieves a transferee of immovable property from an absolute restraint placed on his right to deal with the property in his capacity as an owner thereof. As per section 10, a condition restraining alienation would be void. Section applies to a case where property is transferred subject to a condition or limitation absolutely restraining the transferee from parting with his interest in the property. For making such a condition invalid the restraint must be an absolute restraint. Two persons purchased securities in their own names with the money belonging to a third person. And on his instructions they deposited the securities in the name of that person and also the interest accruing on them in that person's account. The securities carried the stipulation that they were not to be transferred. In order to wipe out his liability to another person, that third person tendered the securities to his creditor by way of satisfaction to hold them as a beneficiary. It was held that from the very beginning a beneficial interest was created in favour of the person with whose monies the securities were purchased and, therefore, his beneficial interest was transferable because otherwise the whole transaction would have been hit by section 10.108 An absolute right was vested in the adopted son in respect of properties bequeathed to him under a Will. The Will contained a direction that the property bequeathed should be applied or enjoyed in a particular manner. The court said that the legatee was entitled to receive and deal with the property as if no such condition was there in the Will.109 Condition imposing absolute restraint on the right of disposal is a void condition and has no effect. For example, a person makes a gift of a property to another person (transferee) with a condition that he will not sell it. This condition imposes an absolute restraint. If the transferee sells that property, the sale will be valid because conditions imposing absolute restraint are void. A made a gift of a house to B with a condition that if B sold the house during the lifetime of A's wife, she should have an option to purchase it, for Rs 10,000. The value of the house was Rs 10,00,000. This was held to be having the effect of absolute restraint and was void.110 The provision of law against absolute restriction on alienation is founded on the principle of public policy, namely that there should be free transferability of property. A transfer of property for construction of a college contained a condition that if the college was not constructed; the property would not be alienated. Rather it would be reconveyed to the person

transferring it. The condition was held to be void and, therefore, not capable of being enforced.111 Where the settlor intending to create a life estate in favour of his son-in-law "M", handed over the title-deeds of the said property to M indicating that he had divested himself of all rights in the property but imposed absolute perpetual restraint on alienation, it was held that the restraint was void since the transfer was an absolute transfer in favour of M Under the provisions of section 10, the sale deed made by the heirs of M in favour of appellants was a valid sale because the heirs were entitled to ignore the restraint on alienation and deal with the property as absolute owners.112 Where a ban was imposed under the applicable rules upon sale of allotted land and conveyance deed provided that even in such a case of sale, the penalty would be resumption, the court said that the power to sell was not curtailed. The sale deed as executed could not be termed to be void.113 The condition restraining lessee from alienating leasehold property is not illegal or void.114 A provision in a local Act under which alienation of leasehold interest without prior permission of the collector was to be treated as void was held by a Division Bench of the Orissa High Court to be void. The Collector proceeded to resume the leasehold interest without first declaring that the transfer was void. This was held to be not permissible.115

[s 10.3] Partial Restraint Section 10 has only provided for absolute restraints. It is silent about the partial restraints. Where the restraint does not take away the power of alienation absolutely but only restricts it to some extent, it is a partial restraint. Partial restraint is valid and enforceable. In the words of Sir George Jesel, "the test is whether the condition takes away the whole power of alienation substantially; it is question of substance and not of mere form. You may restrict alienation in many ways, you may restrict it by prohibiting it to a particular class of individuals or you may restrict alienation by restricting it to a particular time." A total restraint on right of alienation is void but a partial restraint would be valid and binding. This rule is based on sound public policy of free circulation.116 A restriction for a particular time or to a particular or specified person117 has been held to be not an absolute restriction. A compromise by way of settlement of family disputes has been held to be valid in Mata Prasad v Nagesher Sahai,118 although it involved an agreement in restraint of alienation. In this case, dispute was as to succession between a widow and a nephew. Compromise was done on terms that the widow was to retain possession for life while the title of the nephew was admitted with a condition that he will not alienate the property during the widow's life time. The Privy Council held that the compromise was valid and prudent in the circumstances of the case. An agreement provided for right of repurchase by the transferor within 10 years. The transferor subsequently transferred his rights in the property to repurchase to another person, the plaintiff in this case. The Court said that the plaintiff acquired the right of the original transferor and he could enforce it. There is nothing personal in the right of repurchase.119 In a sale deed a minor was shown as a second purchaser. The condition in the sale deed provided that the mother will have life interest over the property with remainder to

the minor son; the condition was held to be a partial restraint only. Such a condition indicated that the mother can deal with the property in any manner during her lifetime and if any portion of property is left out, it will go to the minor son. Hence, it was not held as a void sale deed and section 10 was not applied.120

[s 10.4] Exceptions This section contains two Exceptions one in favour of lessors and the other in the favour of a married woman.

[s 10.4.1] Lease Conditional transfer is valid in the case of lease where the condition is for the benefit of the lessor or those claiming under him. Lease is a transfer of a limited interest where the lessor (transferor) reserves the ownership and transfers only the right of enjoyment to the lessee (transferee). A lessor can impose a condition that the lessee will not assign his interest or sub-lease the property to any other person. Such a condition will be a valid condition. This exception is applicable to permanent leases too. The Supreme Court has held that this section does not carve out any exception with regard to perpetual or permanent lease. Thus, any condition restraining the lessee from alienating leasehold property is not invalid.

[s 10.4.2] Married Women This section constitutes another exception which is in favour of married women. It says that property may be transferred to or for the benefit of a woman (not being a Hindu, Mohammedan or Buddhist), so that she shall not have power during her marriage to transfer or charge the same or her beneficial interest therein. This means that where a property is transferred to a married woman (who is not a Hindu, Mohammedan or Buddhist), the transferor can impose a condition restraining alienation and such condition shall not be void. The Married Woman's Property Act, 1874 contains the similar provision. Section 8 of it provides that even a decree against a married woman cannot be executed by the sale of property, which she is restrained from alienating during her marriage. Married women cannot transfer the property, charge it for her beneficial interest in that property.

[s 10.5] Dedication of Property to Deity A deed of dedication of property to a deity contained a condition absolutely restraining transfer. The deed was held to be not void. The court said that section 10 does not apply to a case where the transferee is a deity, being not a living person. The place installed can in no case be alienated.121

[s 10.6] Hindu and Muslim Laws Under Hindu law a condition in absolute restraint on alienation either in a gift inter vivos or in a will is void. In Muslim laws also, such a condition in restraint of alienation attached to a gift is void.

[s 10.7] Absolute Statutory Bar It has been held that if there is an absolute bar on alienation under the provisions of an Act, it will prevail over sections 10 and 7.122

1 Nothing in Chapter II is to be deemed to affect any rule of Muhammadan Law, see section 2,

Act 20 of 1929. 105 Omwati v State of Haryana, AIR 2019 (NOC) 40 P&H. 106 Re Parry and Dags, (1886) 31 Ch D 130 . 107 Zoroastrian Co-op Housing Society v District Registrar Co-op Societies (Urban), AIR 2005 SC

2306 : (2005) 5 SCC 632 : 2005 (3) Supreme 428 . 108 Canbank Financial Services Ltd v Custodian, (2004) 8 SCC 355 : (2004) 122 Comp Cas 263 :

AIR 2004 SC 3679 . 109 Achammal v Rajamanickam Karthikeyan, AIR 2010 Mad 34 : (2010) 2 Mad LJ 1210 : 2010

(1) Mad LW 151. 110 Rosher v Kosher, (1884) 26 Ch D 801 : 53 LJ Ch 722. 111 Bhavani Amma Kanakadevi v C.S.I Dekshina Kerala Maha Idavaka, AIR 2008 Ker 38 : ILR

2007 (4) Ker 556 : (2008) 1 Ker LJ 28 . 112 Kannammal v Rajeshwari, AIR 2004 (NOC) 8 (Mad). 113 Sarbjit Kaur v Mohinder Singh, AIR 2008 (NOC) 2670 (P&H). 114 Raghuram Rao v Eric P Mathias, AIR 2002 SC 797 : (2002) 1 SCR 759 : (2002) 2 SCC 624 . 115 Dinesh Chhapolia v State of Orissa, AIR 2008 (NOC) 844 (Ori) (DB). 116 K Muniswamy v K Venkataswamy, AIR 2001 Kant 246 : ILR 2000 Ker 3450 : (2000) 6 Kant LJ

487 . 117 Mohomed Raza v Mt Abbas Bandi Bibi, (1932) 59 IA 236 : AIR 1932 PC 158 : ILR 7 Luck 257,

where the Privy Council held that a condition restraining the transferee from transferring to a stranger (i.e., outside the family) was not an absolute restriction and was held to be valid. 118 (1927) 47 All 484 : 51 IA 398; Canbank Financial Services Ltd v Custodian, (2004) 8 SCC 355

: (2004) 122 Comp Cas 263 : AIR 2004 SC 3679 , taking away the whole or substantially the whole power of alienation, is a question of fact, and of substance and not of form, a beneficial interest in shares was created in favour of a person, the same was held to be transferable, otherwise it would have been hit by section 10. 119 Raghunath Bali v Pandit Sriniwas, AIR 2012 Utr 100 . 120 Naaz Jaffar v J. M. Sadiq Sait, AIR 2018 (NOC) 481 (Mad). 121 Shyamal Ranjan Mukherjee v Nirmal Ranjan Mukherjee, AIR 2006 (NOC) 568 (All) : (2007) 6

All LJ 778. 122 Dipak Babaria v State of Gujarat, AIR 2014 SC 1792 : 2014 AIR SCW 1425 : (2014) 3 SCC 502

. The Court was considering the effect of Gujarat Tenancy and Agricultural Lands (Vidarbha Region) and Kutch Area Act, 1958.

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER II1 TRANSFERS OF PROPERTY BY ACT OF PARTIES Chapter II of the Transfer of Property Act, 1882 deals with transfers of property by act of parties. This chapter has been divided into two parts: Part-A—provides for rules regarding transfers of property in general, whether movable or immovable. Part-B—provides for rules regarding transfers of immovable property.

(A) TRANSFER OF PROPERTY, WHETHER MOVABLE OR IMMOVABLE Part-A consists of definition of property what may be transferred, competency of persons, operation of transfers, oral transfers, restrictions on transfers, vested interest, contingent interest, conditional transfers, transfers for benefit of unborn persons and elections, etc. All these provisions will be taken up under the following headings:— I. General provisions II. Restrictions III. Transfer for the benefit of unborn person IV. Transfer to a Class V. Vested Interest VI. Contingent Interest VII. Conditional Transfer VIII. Election IX. Apportionment

II. RESTRICTIONS [s 11] Restriction repugnant to interest created.— Where, on a transfer of property, an interest therein is created absolutely in favour of any person, but the terms of the transfer direct that such interest shall be applied or 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. 123[Where any such direction has been made in respect of one piece of immoveable

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

Comments

[s 11.1] Restriction Repugnant to Interest Created (Section 11) Section 11 deals with restrictions repugnant to interest created, i.e., the restrictions on the enjoyment of absolute interest. When a person transfers absolute interest in a property to any other person, he gives all the rights of managing, enjoying and disposing of that property. But where along with the transfer of absolute interest he includes restriction restraining the enjoyment of property, such a restriction will not be considered valid and it will have no effect. Once an absolute right has been conferred on a person as to a property, then no rider can be put on enjoyment of that property.124 Transfer of absolute interest means transfer of ownership. Ownership brings all the incidents of ownership to the transferee. If any of these incidents are restricted it will not be a full ownership but less than a full ownership. It is not possible to give ownership to someone and restrain some of his rights of enjoyment of that property. Once an absolute interest is created in favour of any person, no restriction can be placed as to manner in which such interest has to be enjoyed.125 Gift, exchange and sale are transfer of absolute interest or ownership. A person cannot sell his landed property to another with a condition that only wheat is to be grown on his field. Such a condition is void. Similarly, a person cannot gift his house to another with a condition that if he does not reside in the house, the house will be taken back. This condition is again void. This section comes into play when two conditions are satisfied: (i) An absolute interest is created by the transfer in favour of the transferee,126 and (ii) the terms of the transfer provide that the interest in the property shall be applied

or enjoyed in the manner prescribed by the transferor. Where an absolute interest is conveyed by sale in a farm to another person and the sale-deed contains a direction that the transferee shall not cut down the trees, the direction will be considered invalid. A shop was sold subject to the condition that the purchaser was not to be entitled to make nay basement or any pucca construction. There was nothing to show that the direction was made for the purpose of securing beneficial enjoyment of the vender's own property. The thought of construction causing adverse feelings could not be anything worthwhile. The condition imposed was contrary to the mandate of law in section 11.127 But where only a life interest is created in a farm in favour of another person and the deed contains a direction that the transferee shall not cut down the trees, such a direction will be a valid direction because here absolute interest is not transferred. A made a gift of his house to B on the condition that B will not receive any income from the house for 20 years. This condition is not a valid condition because it is repugnant to the right of enjoyment. Similarly, where A made a will of his properties in favour of his two sons jointly with a condition that the properties will not be partitioned till both of them attain the age of majority. Right to effect partition is an incident of jointownership, any restriction on this right will be a restraint on the right of enjoyment of property, and, therefore, void.128 This section is not applicable where only the partial interest is transferred because partial interest does not transfer the full ownership to the transferee. Therefore, the lease of property or transfer of life interest, etc., are outside the purview of this section. In case of a lease, the lessee gets only the right of enjoyment of property and not the full ownership. Therefore, the condition imposed by the lessor restraining the mode of enjoyment of property will be a valid condition and the lessee will be bound by it. In case of transfer of life interest, the transferee only gets the right of enjoyment of the

property during his life. On the death of the transferee, the property reverts back to the transferor or to any person directed by him. There was a common chowk between the residential houses of the parties. The condition stipulated in the sale deed executed by the previous owner was not to use the common chowk for private purposes. It was held that such restriction could not be enforced against the subsequent owner when no such restriction was mentioned in the sale deed given to him.129

[s 11.2] Exception This section contains one exception in which a restriction repugnant to interest may be created. Where a direction is made restraining the mode of enjoyment only for the beneficial enjoyment of only one piece of property of transferor, for beneficial enjoyment of some other property, such a direction shall be a valid direction. Two conditions are necessary for this exception to be applicable. Firstly, the direction must be given by the transferor and Secondly, such a direction must be made in respect of one piece of immovable property for the purpose of securing the beneficial enjoyment of another piece of such property belonging to the transferor. This exception is based on the principle laid down in the case of Tulk v Moxhay.130 In this case, it was held that the transferor may impose conditions restraining the enjoyment of land if such restrictions are for the benefit of adjoining land of the transferor. For example, where a person sells one part of his land to another person he may restrain the transferee from obstructing his light or air coming from the windows of his house opening on the side of the land sold. The conditions restraining the mode of enjoyment may be affirmative or negative. Where the conditions imposed are affirmative, the transferee is bound to do certain things even though the conditions restrain his enjoyment of property. Where conditions are negative, the transferee is bound not to do certain things. In the case of Indu Kakkar v Haryana Industrial Development Corp,131 an agreement between an industrial corporation and industrial units with a condition that the industrial units shall be established within the specified time failing which their interests shall cease. The Supreme Court held the condition to be valid causing no restrain on the mode of enjoyment of property, and therefore, the agreement was held to be valid and binding on the parties. The donor gifted the entire building in favour of her daughter for life and thereafter to her sons absolutely. By the same deed of gift the donor conferred on his son conditional right to enjoy a portion of the building. It was held that the creation of a conditional right simultaneously with the creation of the title was not violative of section 11. There was no encroachment on the absolute right of the daughter's sons. The right so created was not a lease, but only a licence.132

1 Nothing in Chapter II is to be deemed to affect any rule of Muhammadan Law, see section 2,

Act 20 of 1929.

123 Subs. by Act 20 of 1929, section 8, for the original paragraph. 124 R&M Trust v Koramangala Resi Vigilance Group, AIR 2005 SC 894 : (2005) 3 SCC 91 : (2005)

1 Supreme 405 . 125 Property was partitioned between coparceners; each coparcener received full absolute

share in property as full owner, a clause in the partition deed restricted the rights of coparcener, such a clause held to be void; coparcener can execute "will" and bequeath his share of property; Jayawant Baliramji Panchbahi (since dead) through LRs v Anusuyabhai Vasantrao Deshmukh, AIR 217 Bom 178. 126 Rana Girders Ltd v UOI, AIR 2013 SC 3422 : 2013 AIR SCW 4835 : (2013) 10 Scale 356 , sale

deed stipulated that statutory liabilities arising out of land, buildings and machinery were to be born by the vendee. The Court said that excise duty is not a liability arising out of land, building or machinery. The purchaser was not liable to pay the excise duty of the vendor. 127 Umashankar Agarwal v Daulat Ram Sahu, AIR 2011 Chh 72 . 128 Umarao Singh v Baldeo Singh, AIR 1933 Lah 201 : ILR 14 Lah 353. 129 Roshan Lal v Manoj Kumar, AIR 2015 Raj 71 . 130 (1848) 8 RR 289 (292) : (1848) 2 Ph 774 : (1843-60) All ER 9 . Princy v Jose, AIR 2010 Ker 1 :

2009 (2) Ker LJ 335 : 2009 (2) Ker LT 426 , a covenant in the transfer of a part of the land not to build on indicated portion (space of 12 fingers) was held to be alright. It could be enforced by the assignee of the covenantee. The court observed that for determining whether a covenant is negative or positive, depends upon its substance and not by the negative or positive nomenclature. 131 AIR 1999 SC 296 : 1998 AIR SCW 3817 : (1999) 2 SCC 37 . 132 Subal Chandra Matty v Usha Banerjee, AIR 2009 Cal 210 (DB) : 2009 AIHC 817 (NOC) : 2009

(3) Cal HN 455.

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER II1 TRANSFERS OF PROPERTY BY ACT OF PARTIES Chapter II of the Transfer of Property Act, 1882 deals with transfers of property by act of parties. This chapter has been divided into two parts: Part-A—provides for rules regarding transfers of property in general, whether movable or immovable. Part-B—provides for rules regarding transfers of immovable property.

(A) TRANSFER OF PROPERTY, WHETHER MOVABLE OR IMMOVABLE Part-A consists of definition of property what may be transferred, competency of persons, operation of transfers, oral transfers, restrictions on transfers, vested interest, contingent interest, conditional transfers, transfers for benefit of unborn persons and elections, etc. All these provisions will be taken up under the following headings:— I. General provisions II. Restrictions III. Transfer for the benefit of unborn person IV. Transfer to a Class V. Vested Interest VI. Contingent Interest VII. Conditional Transfer VIII. Election IX. Apportionment

II. RESTRICTIONS [s 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.

Comments

[s 12.1] Interest Determinable on Insolvency or Attempted Alienation (Section 12) The general rule regarding the transfer of property is that on transfer of property a condition may be superadded whereby on the happening or non-happening of a specified uncertain event, the interest of the transferee will cease (Section 31). Section 12 provides an exception to this general rule, i.e., it indicates conditions in which such a general rule will not be applicable. This section says that where a property is transferred subject to a condition that the interest created thereby shall cease to exist on transferee becoming insolvent or on his attempting to transfer it, the condition is void. Two types of conditions are invalidated by this section:— (i) Conditions which provide that the interest of the transferee will cease to exist

when the transferee becomes insolvent, and (ii) Conditions which limit or restrict any attempted transfer by the transferee.

[s 12.2] Insolvent Transferee According to section 2(8) of the Sale of Goods Act, 1930, a person is said to be "insolvent" who has ceased to pay his debts in the ordinary course of business or cannot pay his debts as they become due, whether he has committed act of insolvency or not. Where a person is adjudged insolvent his properties vest in the Official Receiver.

[s 12.3] Not Applicable to Leases This section does not apply to a condition in a lease for the benefit of the lessor or those claiming under him. In case of a lease, there is transfer of partial interest only. The lessor who is the owner of the property retains his jus dispodendi or the right to dispose of the property. Therefore, a lessor may impose a condition on the lessee upon the non-fulfilment of which the lease will be liable to be cancelled.

[s 12.4] Provision under Indian Succession Act, 1925 A corresponding provision has been given in section 138 of the Indian Succession Act, 1925. The illustration annexed to that section says that where a sum of money is bequeathed towards purchasing a country residence for A, or to purchase and annuity for A, or to place A in any business. A chooses to receive the legacy in money, he is entitled to do so.

[s 12.5] Hindu and Muslim Laws Both the Hindu law and Muslim laws have recognised the invalidity of conditions in restraint of enjoyment of property.

1 Nothing in Chapter II is to be deemed to affect any rule of Muhammadan Law, see section 2,

Act 20 of 1929.

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER II1 TRANSFERS OF PROPERTY BY ACT OF PARTIES Chapter II of the Transfer of Property Act, 1882 deals with transfers of property by act of parties. This chapter has been divided into two parts: Part-A—provides for rules regarding transfers of property in general, whether movable or immovable. Part-B—provides for rules regarding transfers of immovable property.

(A) TRANSFER OF PROPERTY, WHETHER MOVABLE OR IMMOVABLE Part-A consists of definition of property what may be transferred, competency of persons, operation of transfers, oral transfers, restrictions on transfers, vested interest, contingent interest, conditional transfers, transfers for benefit of unborn persons and elections, etc. All these provisions will be taken up under the following headings:— I. General provisions II. Restrictions III. Transfer for the benefit of unborn person IV. Transfer to a Class V. Vested Interest VI. Contingent Interest VII. Conditional Transfer VIII. Election IX. Apportionment

III. TRANSFER FOR BENEFIT OF UNBORN PERSON [s 13] Transfer for 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. Illustration A transfers property of which he is the owner to B in trust for A and his intended wife successively for their lives, and, after the death of the survivor, for the eldest son of the intended marriage for life, and after his death for A's second son. The interest so created for the benefit of the eldest son does not take effect, because it does not extend to the whole of A's remaining interest in the property.

Comments [13.1] Transfer to Unborn Person (Section 13) The Transfer of Property Act, 1882 deals only with the transfers of property between living persons. An unborn person means a person not in existence even in the mother's womb. A child in the mother's womb is considered to be a competent transferee. Therefore, the property can be transferred to a child in mother's womb because the child exists at that time but not to an unborn person who does not even exist in mother's womb. Every transfer of property involves transfer of interest. As soon as the property is transferred, the transferor is divested of that interest and the interest is vested in the transferee. For vesting of interest, therefore, it is necessary that the transferee must be in existence. Otherwise the interest will remain in abeyance till the transferee comes into existence. This is against the very concept of an interest. Section 13 provides that the property cannot be transferred directly to an unborn person but it can be transferred for the benefit of an unborn person. For transfer of property for the benefit of unborn person two conditions are required to be fulfilled:— (i) Prior life interest must be created in favour of a person in existence at the date of

transfer, and (ii) Absolute interest must be transferred in favour of unborn person.

[13.1.1] Prior Interest It is necessary for a valid transfer of property to an unborn person that before the transfer actually takes place, a prior interest must be created in favour of a living person on the date of transfer. The unborn person must be in existence when the prior interest comes to an end. After the death of the person who had life interest, the property would ultimately pass to the unborn person, who will by that time have come into existence. For example, A transfers his properties to X for life, then to Y for life and then to Z for life and thereafter to the unborn child of Z. Here X, Y and Z are living persons. The property may be given to more than one living persons successively for life before it vests in an unborn child ultimately. A property was transferred by way of gift deed in favour of the donor's grandson. Thereafter the property was to be vested in male children of the grandson. The Court said that the gift deed created interest in favour of the grandson and absolute right in favour of unborn sons. The condition in the gift restraining alienation was held to be not void. Alienation of the property by the donee after birth of his sons was improper. The sons were held entitled to the sale consideration received by their father from purchasers.133

[13.1.2] Absolute Interest It is further necessary that whole of the remaining interest of the transferor in the property must be given to the unborn person. Only absolute interest may be transferred in favour of the unborn person and not limited or life interest, i.e., the whole of the remaining interest is the entire interest of the transferor less the prior life interest carved out of the ownership.

In the illustration to the section, the transfer to unborn person (eldest son) becomes void because it does not give the whole of the A's remaining interest in the property to unborn person, only a life interest is given to the eldest son.

[13.2] Section 113, Indian Succession Act, 1925 A corresponding provision is given in section 113 of the Indian Succession Act, 1925, which is as follows: 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 valid, unless it comprises the whole of the remaining interest of the thing bequeathed.

Transfer of property worth more than Rs 100 without a registered document is not proper, such transfer by unregistered document cannot have the effect of conferring any title on the purchaser.134 The following illustrations are appended to section 113 of the Indian Succession Act: (i) A property is bequeathed to A for life and after his death to his eldest son for life

and after his death to his eldest son. At the time of 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 life is void. (ii) A bequeaths a sum of money to B for life and directs that upon the death of B

the fund shall be settled upon his daughters, so that each daughter will have her share for life and which may be divided among her children after her death. B has no daughter living at the time of the testator's death. Here the only bequest to daughters of B is contained in the direction to settle the fund and this is a direction to a bequest to persons not yet born, of a life interest in the fund of something which is less than the whole interest that remains to the testator in the thing bequeathed. This direction to settle the fund upon the daughters is void. (iii) A fund is bequeathed to A for his life and after his death to his daughters. A

survives the testator. A has daughters some of whom were not in existence at the testator's death. The bequest to A's daughter is valid because the bequest to A's daughters comprises the whole interest that remains to the testator in the thing bequeathed. Cases: (i) Sopher v Administrator General of Bengal135 In this case, a testator directed that his property will be divided after the death of his wife into as many parts as there shall be his children living at his death or who shall have pre-deceased leaving issue living at his death. The income of each share was to be paid to each child for life and then to grand children until they attain the age of 18 years and they will be absolutely entitled to the property. The bequest to the grand children was held to be valid by the Privy Council. Their Lordships of the Privy Council observed: If under a bequest in the circumstances mentioned in section 113 there was a possibility of the interest given to the beneficiary being defeated either by a contingency or by a clause of a defeasance; the beneficiary under the later bequest did not receive the interest bequeathed in the same unfettered form as that in which the testator held it and that the

bequest to him did not therefore comprise the whole of the remaining interest of testator in the thing bequeathed.

(ii) Girish Dutt v Datadin136 In this case, A made a gift of her property to B for life, who was her nephew's daughter, then to B's male descendants (if any) absolutely. In case she had no male descendants than to B's daughter without power of alienation and if there were no descendants of B, male or female, then to her nephew. B died without issue. The gift to the unborn daughters, being of a limited interest and subject to the prior interest created in favour of B was held to be invalid under section 13, while gift to the nephew failed under section 16. (iii) Arideshir v Duda Bhoy137 D made a settlement that during his life one-third of his property was to go to his sons A and R After D's death, the trust property was to be divided into two equal parts. The net income of each part was to be given to A and R for life and after their death to the sons of each absolutely. If A and R both pre-deceased D without male issue, the trusts were to determine and the trust property were to revert back to settlor D absolutely. The settlor then had the power to revoke or modify the settlement in whole or in part for his own benefit. It was held that both the A and R's sons did not take a vested interest. The questions arose whether a trust in favour of an unborn person in which the power is reserved by the settlor to revoke it would not be valid and whether a trust in which a provision has been made for the management of the interest of the unborn persons after their birth and during their minority will be valid. The Bombay High Court in the case Framroz Dadabhoy v Tahmina,138 considered these questions. In this case, Bai Tahmina settled a certain sum upon trust in favour of herself for life and after her death for all her children who being sons shall attain the age, of 18 years and being daughters shall attain that age or marry under that age in equal sums. It was held that the decision in the Sopher's case could not be applied to the trusts of a settlement which were transfers inter vivos. It was further held that the words "extends to the whole of the remaining interest of the transferor in the property" in section 13 were directed to the extent of the subject-matter and to the absolute nature of the estate conferred and not to the certainly of vesting. In 1974, the Bombay Legislature passed the Disposition of Property (Bombay Validating) Act, 1974 by which it provided that the trusts or wills made prior to 1 January 1947, would not be invalid by reason of section 13 of the Transfer of Property Act and section 113 of the Indian Succession Act, 1925.

[13.3] English Law Before the enactment of English Law of Property Act in 1925, a transfer in favour of unborn person was governed by the rule in Whitby v Mitchell,139 known as Rule of Double Possibilities. The rule provided that "if an interest in property is given to an unborn person, any remainder to his issue is void, together with all subsequent limitations. Thus, if land was limited to A (a bachelor) for life, remainder to his son for life, remainder to A's son's son in fee simple' the remainder to the grandson would be valid under this rule. However, after the 1925 Act was enacted, this rule was abolished and transfers in favour of unborn persons began to be governed by the rule against perpetuity.

[13.4] Hindu law and Muslim Law

Previously a gift or bequest is favour of unborn child was void but the Transfer of Property Act, 1882 made it valid by the provisions of section 13. Section 13 is not applicable to Muslims. Under Muslim law a gift in favour of an unborn person is held to be void gift.140

1 Nothing in Chapter II is to be deemed to affect any rule of Muhammadan Law, see section 2,

Act 20 of 1929. 133 Sridhar v N Revanna, AIR 2012 Kant 79 : 2012 (3) CCC 410 : 2012 (2) Kant LJ 202 . 134 Devendra Singh v State of Rajasthan, AIR 2002 Raj 66 : 2003 (1) Land LR 125 : 2002 (3) Rec

Civ R 341. 135 AIR 1944 PC 67 : 71 Ind App 93. 136 (1934) 9 Luck 329 : 147 IC 991 : AIR 1934 Oudh 35 . 137 45 AB 395. 138 49 Bom LR 882. 139 (1890) 44 Ch D 85 . 140 Abdul Cadur v Turner, (1884) 9 Bom 158.

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER II1 TRANSFERS OF PROPERTY BY ACT OF PARTIES Chapter II of the Transfer of Property Act, 1882 deals with transfers of property by act of parties. This chapter has been divided into two parts: Part-A—provides for rules regarding transfers of property in general, whether movable or immovable. Part-B—provides for rules regarding transfers of immovable property.

(A) TRANSFER OF PROPERTY, WHETHER MOVABLE OR IMMOVABLE Part-A consists of definition of property what may be transferred, competency of persons, operation of transfers, oral transfers, restrictions on transfers, vested interest, contingent interest, conditional transfers, transfers for benefit of unborn persons and elections, etc. All these provisions will be taken up under the following headings:— I. General provisions II. Restrictions III. Transfer for the benefit of unborn person IV. Transfer to a Class V. Vested Interest VI. Contingent Interest VII. Conditional Transfer VIII. Election IX. Apportionment

III. TRANSFER FOR BENEFIT OF UNBORN PERSON [s 14] Rule against perpetuity.— No transfer of property can operate to create an interest which is to take effect after the life-time of one or more persons living at the date of such transfer, and the minority of some person who shall be in existence at the expiration of that period, and to whom, if he attains full age, the interest created is to belong.

Comments [s 14.1] Meaning of Perpetuity Perpetuity means continuous or unending transaction. It is tying up property for an indefinite period. Transfers involving generation after generation (pidhi dar pidhi) are known as creating perpetuities. In the words of Jarman,141 "A perpetuity in the primary

sense of the word is a disposition which makes property inalienable for an indefinite period." It is concerned with certain interest created in praesenti which are sought to be made inalienable for an indefinite period. This section is known as "modern rule against perpetuity.141" According to Lewis, a perpetuity is a future limitation whether executory or by way of remainder and of either real or personal property which is not to vest until after expiration of, or will not necessarily vest within the period fixed and prescribed by law for the creation of future interest estates. The object of the rule against perpetuity is to restrain the creation of future conditional interest in property.142 Thus, it may be said that the rule against perpetuity is based on broad principles of public policy. In Stanley v Leigh,143 Jekyll MR observed as to what would have been the result if the rule were otherwise; "A great mischief would arise to the public from estates remaining for ever or for a long time inalienable or untransferable from one hand to another, being a damp to industry and a prejudice to trade, to which may be added the inconvenience and distress that would be brought on families whose estates are so fettered."

[s 14.2] Analysis of Section 14 (1) There should be a transfer of property. (2) Transfer is to create an interest in the favour of an unborn person. (3) Interest so created should take effect after the life-time of one or more persons living at the date of such transfer and during the minority of the unborn person. (4) The unborn person should be in existence at the expiration of the interest of the living person. The unborn person is the one in whose favour the interest is created. This vesting of interest in favour of the ultimate beneficiary is preceded by life interest of one or more living persons. Life interest is always a limited interest. It is necessary that the ultimate beneficiary must come into existence before the death of the last preceding living person. The vesting of interest in favour of ultimate beneficiary may be postponed only to the life or lives of living persons and minority of ultimate beneficiary but not beyond that.

[s 14.3] Perpetuity Period The question arises what is perpetuity period, i.e., the maximum period during which the property may be rendered inalienable. According to section 14, the maximum permissible remoteness of vesting is the life of the last preceding interest plus minority of the ultimate beneficiary. For example, the owner of a property may transfer it to a living person, A, for life and after his death to B (a living person) for life and on or before the death of B to his unborn son when he attains the age of 18 years (or 21 years when the minor is under the supervision of the court). In Soundararajan v Natarajan,144 the Privy Council held that since at the date of the transfer it is not known whether or not a guardian would be appointed by the court for the minor in future, in such a case for the purposes of section 14 the normal period of minority would be 18 years. Therefore, the vesting may be postponed up to the life of the last person holding property for his life and the minority of 18 years of the ultimate beneficiary.

However, a problem arises when an unborn person does not come into existence at or before the expiry of the last prior interest but he is merely in womb. In such a case, the period of gestation has to be included as a period of grace with the perpetuity period. The period of gestation is that period for which the unborn person has to remain in his mother's womb. It is normally a period of 9 months or 280 days. Therefore, the total period of perpetuity i.e., the period for which the vesting of property can be postponed is given below: (1) Where the unborn person has come into existence either at or before the expiry

of the last prior-interest, his minority period. (2) Where the unborn person is in womb at the expiry of the last prior-interest, the

period of gestation plus his minority. For example, A transfers certain properties to B for life and then to C for life and then to an unborn person when he attains the age of majority. B and C are living at the date of the transfer and unborn, the ultimate beneficiary, is not in existence even in the mother's womb. The last prior life interest is with C. When C dies, the contemplated unborn must be in existence either as a born child or unborn in mother's womb. The maximum period up to which the vesting of property in unborn can be postponed would be, in case of a born child, life of C plus till the child attains the age of majority, and in case of a child in mother's womb, life of C plus period of gestation plus period of majority.

[s 14.4] Contingent Interest The vesting of interest in favour of the ultimate beneficiary may be postponed till his minority, i.e., till he becomes a major. Therefore, between the period the last person having prior life interest dies and the unborn, who is the ultimate beneficiary, attains the age of majority, the ultimate beneficiary has only a contingent interest which becomes vested in him when he attains majority. Where the ultimate beneficiary is already born at the death of the last person but does not survive to attain majority, the interest does not vest in him but reverts back to the transferor or his legal heir if he is dead at that time.

[s 14.5] Possible Events It is necessary in deciding questions of remoteness of vesting of interest, regard must be had to the possible events and not merely actual event. Every limitation must be considered at the time when the instrument creating it takes effect. Even if at the time of transfer of property, there is a slightest possibility that in future it will be a transfer in perpetuity, the disposition will be void. For example, X sold his entire property except two bighas of land to Y. The terms of the sale included a condition that two bighas of land would remain in X's possession for life and after his death in the possession of X's lineal descendants. The conditions further added that X or X's lineal descendants had no right to transfer the land and if none of the X's lineal descendants is alive then the property shall be the own property of Y who is the purchaser. X had only one son who was alive on the date of transfer but he died childless. The transfer of this land to Y was held valid. This illustration is based on the case of Ram Nawaz v Nandoo.145 In this case the court held that although the actual transfer took place within the period allowed under this section but since there was a possibility that the transfer might be postponed for an indefinite period, the transfer of 2 bighas was held to be void.

Similarly, in Brij Nath v SM Anandmayi,146 a Hindu testator bequeathed his property for his great grandsons in trust till they attain their majority and in case he will have no great grandson to his daughter's son when they come to age. The bequest was held to be valid for remoteness of vesting of interest. In another case, Anandrao Vinayak v Administrator-General of Bombay,147 a gift of movable property was made to a son with a gift of shares in the property to the son's sons when they should attain the age of 21 years. The gift was held to be valid as it was against the rule of perpetuity.

[s 14.6] Indian Succession Act, 1925 Section 114 of Indian Succession Act, 1925 contains a corresponding provision to section 14 of Transfer of Property Act, 1882. The illustrations appended to that section are given below:— (i) A fund is bequeath to A for his life and after his death to B for his life; and after

B's death to such of the sons to B as shall first attain the age of 25. A and B survive the testator. Here the son of B who shall first attain the age of 25 may be a son born after the death of the testator; such son may not attain 25 until more than 18 years have elapsed from the death of the longer liver of A and B; and the vesting of the fund may thus be delayed beyond the lifetime of A and B and the minority of the sons of B. The bequest after B's death is void. (ii) 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. In this case the sons of B are persons living at the time of the testator's decease, and the time when either of them will attain 25, necessarily falls within his own lifetime. The bequest is valid. (iii) A fund is bequeathed to A for his life, and after his death to B for his life, with a

direction that after B's death it shall be divided among such of B's children as shall attain the age of 18, but that, if no child of B shall attain that age, the fund shall go to C. Here the time for the division of the fund must arrive at the latest at the expiration of 18 years from the death of B, a person living at the testator's decease. All the bequests are valid. (iv) A fund is bequeathed to trustees for the benefit of the testator's daughters, with

a direction that, if any of them marry under age, her share of the fund shall be settled so as to devolve after her death upon such of her children as shall attain the age of 18. Any daughter of the testator to whom the direction applies must be in existence at his decease, and any portion of the fund which may eventually be settled as directed must vest not later than 18 years from the death of the daughters whose share it was. All these provisions are valid.

[s 14.7] Exceptions to the Rule against Perpetuities [s 14.7.1] Provision for payment of debt (Section 17).— Where income of a property is accumulated for the purpose of the payment of debts of the transferor or any person taking any interest under the transfer, such a direction is not affected by the rule against perpetuity.

[s 14.7.2] Charities (Section 18).— Where property has been transferred for the benefit of the public for advancement of religion, knowledge, commerce, health, safety etc., the restriction envisaged under section 14 will not apply there.

[s 14.7.3] Creation of Charge.— A charge does not amount to a transfer of interest in land, and therefore, it is not affected by the rule contained in section 14.

[s 14.7.4] Personal Agreements.— The rule against perpetuity does not apply to personal agreements or obligations. In Nafar Chand v Kailash Chand,148 the shebaits of a temple agreed to appoint the family of C as pujaris from generation to generation to perform the services of the temple and made provision for the expenses and remuneration of the office. The agreement was held to be valid and not affected by the rule against perpetuity.

[s 14.7.5] Agreement of Sale.— Section 54 of the Transfer of Property Act, 1882 enacts that an agreement for the sale of land does not of itself create an interest in land. A mere contract for sale of immovable property does not create any interest in such a property, and therefore, the rule against perpetuity does not apply to such contracts.149 Similarly, an agreement for pre-emption gives a first option to purchase land. An agreement for the purchase of land does not create any interest in the property. Therefore, the rule against perpetuity does not apply to an agreement for pre-emption.

[s 14.7.6] Mortgages.— The rule against perpetuity is not applicable to mortgages. The rule against perpetuities applied only to those cases where there was a new interest in the immovable property contemplated to be created after the expiry of the time prescribed. In the case of mortgages no such interest is contemplated to be created, therefore, rule against perpetuities is not applicable to mortgages.

[s 14.7.7] Right of entry and re-entry.— If a covenant is broken, a provision giving the right to re-enter and determine the lease is excepted from the perpetuity rule.

[s 14.7.8] Covenant for renewal of lease.—

A lease with a covenant for its renewal cannot be treated as a transfer, and, therefore, it does not offend the rule against perpetuity.

[s 14.7.9] Covenant Running with Land.— A covenant running with the land is free from rule against perpetuity. This is because the covenants are annexed to the land and pass with the land in the same way as the title to the property.

[s 14.7.10] Power of Appointment.— A general power of appointment does not tie up the land, and, therefore, the period of perpetuity does not begin to run until the date of the exercise of the power. In the case of special power of appointment, the perpetuity period starts to run from the creation of the power and the property is fettered from the moment the power is created.150

[s 14.8] Comparison of English and Indian Law of Perpetuity Under English law, vesting of interest may be postponed for any number of lives plus a period of 21 years irrespective of the age of minority of ultimate beneficiary. Section 163 of the Law of Property Act, 1925 provides that a transfer shall not be valid even if the vesting has been postponed beyond 21 years but it shall take effect as if the age of 21 had been substituted for the age specified in the instrument. In Indian Law, section 14 provides that vesting can be postponed up to the life of the last person plus the minority of the ultimate beneficiary. Minority terminates at the age of 18 years (21 years where a guardian has been appointed by the court). The section says that 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.

[s 14.9] Hindu and Muslim Laws The Amending Act of 1929 made applicable the rule against perpetuity to Hindus. Before this amendment, the rule against perpetuity was made applicable to Hindus by local enactments like Hindu Disposition of Property Act, 1916 and Madras Act, 1914. Chapter II of the Transfer of Property Act, 1882 is not applicable to Muslims. An exception has been made only in favour of waqfs.

1 Nothing in Chapter II is to be deemed to affect any rule of Muhammadan Law, see section 2,

Act 20 of 1929.

141 Jarman on Wills, 7th Edn, Vol I 142 See Law of Transfer, HS Gaur, 8th Edn, Vol I 143 (1932) All ER 917 (918). 144 AIR 1925 PC 244 . 145 (1926) 92 IC 401 . 146 8 Bengal LR 208. 147 (1896) ILR 20 Bom 450. 148 (1921) 25 Cal WN 201. 149 Ram Baran v Ram Mohit, (1967) 1 SCR 293 : AIR 1967 SC 744 : (1967) 1 SCWR 553 . 150 Re Thompson, (1906) 2 Ch 199 .

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER II1 TRANSFERS OF PROPERTY BY ACT OF PARTIES Chapter II of the Transfer of Property Act, 1882 deals with transfers of property by act of parties. This chapter has been divided into two parts: Part-A—provides for rules regarding transfers of property in general, whether movable or immovable. Part-B—provides for rules regarding transfers of immovable property.

(A) TRANSFER OF PROPERTY, WHETHER MOVABLE OR IMMOVABLE Part-A consists of definition of property what may be transferred, competency of persons, operation of transfers, oral transfers, restrictions on transfers, vested interest, contingent interest, conditional transfers, transfers for benefit of unborn persons and elections, etc. All these provisions will be taken up under the following headings:— I. General provisions II. Restrictions III. Transfer for the benefit of unborn person IV. Transfer to a Class V. Vested Interest VI. Contingent Interest VII. Conditional Transfer VIII. Election IX. Apportionment

IV. TRANSFER TO A CLASS [s 15] Transfer to a class some of whom come under sections 13 and 14.— If, on a transfer of property, an interest therein is created for the benefit of a class of persons with regard to some of whom such interest fails by reason of any of the rules contained in sections 13 and 14, such interest fails 151[in regard to those persons only and not in regard to the whole class].

Comments [s 15.1] Transfer to a Class (Section 15) [s 15.1.1] Class of Persons

This section lays down that if in a transfer of property, an interest is created for the benefit of some class of persons, but due to applicability of either section 13 (transfer to an unborn person) or section 14 (rule against perpetuity) this interest becomes unavailable to some persons of that class, then, in such a case, the transfer will be invalid only for those persons and not for others. The transfer will remain valid for other persons of the class. Earlier, this section provided that if the interest created failed in respect of some persons due to applicability of sections 13 and 14, then the whole class would not be able to get the benefit of the interest created. This earlier section was based on the case Leake v Robinson.152 In this case, it was observed that if a single member of a class might possibly take vested interest outside the period fixed under section 14, the whole gift failed even as regards to those members of the class who have already satisfied any required contingency. After the amendment in 1929 this (old) section was amended and now it is provided that on the failure of interest in respect of some persons of the class the interest does not fail in respect of remaining members of the class. Now a question arises what is a class of persons? In the words of Jarman, "A number of persons are popularly said to form a class when they can be designated by some general name as "children", "grandchildren", "nephew", but in legal language the question whether a gift is one to a class depends, not on those considerations but upon the mode of gift itself, namely, that it is a gift of one aggregate sum to a body of persons, uncertain in number at the time of the gift, to be ascertained at a future time and who are all to take in equal or in some other definite proportions, the share of each being dependent for its amount upon the ultimate number of person.153" In Raj Bajrang Bahadur Singh v Thakurain Bakhtraj Kuer,154 the Supreme Court held that although no interest could be created in favour of an unborn person but if gift was made to a class of series of persons some of whom were in existence and some were not, it was valid with regard to the former (who were in existence) and invalid as to the latter (who were not in existence). Section 115 of the Indian Succession Act contains an analogous law which runs as follows:— If a bequest is made to a class of persons with regard to some of whom it is inoperative by reason of the provision of section 113 or section 114, such bequest shall be void in regard to those persons only and not with regard to the whole class.

The illustration appended to this section is – A fund is bequeathed to A for life, and after his death to all his children who shall attain the age of 25. A survives the testator, and has some children living at the testator's death. Each child of A's living at the testator's death must attain the age of 25 within the limits allowing for a bequest. But A may have children after the testator's death, some of whom may not attain the age of 25 until more than 18 years have elapsed after the death of A. Therefore, the bequest to A's children is inoperative as to any child born after the testator's death, and in regard to those who do not attain the age of 25 within 18 years after A's death but is operative in regard to the other children of A.

1 Nothing in Chapter II is to be deemed to affect any rule of Muhammadan Law, see section 2,

Act 20 of 1929. 151 Subs. by Act 20 of 1929, section 9, for "as regards the whole class". 152 (1817) 2 Mer 363 : 16 RR 168. 153 Jarman on Wills, 4th Edn, p 268. 154 (1953) SCR 232 : AIR 1953 SC 7 : ILR (1953) 1 All 896 .

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER II1 TRANSFERS OF PROPERTY BY ACT OF PARTIES Chapter II of the Transfer of Property Act, 1882 deals with transfers of property by act of parties. This chapter has been divided into two parts: Part-A—provides for rules regarding transfers of property in general, whether movable or immovable. Part-B—provides for rules regarding transfers of immovable property.

(A) TRANSFER OF PROPERTY, WHETHER MOVABLE OR IMMOVABLE Part-A consists of definition of property what may be transferred, competency of persons, operation of transfers, oral transfers, restrictions on transfers, vested interest, contingent interest, conditional transfers, transfers for benefit of unborn persons and elections, etc. All these provisions will be taken up under the following headings:— I. General provisions II. Restrictions III. Transfer for the benefit of unborn person IV. Transfer to a Class V. Vested Interest VI. Contingent Interest VII. Conditional Transfer VIII. Election IX. Apportionment

IV. TRANSFER TO A CLASS 155[[s 16] Transfer to take effect on failure of prior interest.—

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

Comments [s 16.1] Transfer when Prior Interest Void (Section 16) A valid transfer which is subsequent to and dependent upon a void transfer is itself rendered void. This section provides that where an interest created for the benefit of a person or of a class of persons fails due to the reasons contained in sections 13 and

14 (transfer in favour of unborn person and rule against perpetuity respectively), any other interest created in the same transaction which is to take effect after the prior interest also fails. The rule embodied in this section is a rule of English Law that a limitation following upon a limitation is void for remoteness, is itself, void, even though it may not itself transgress the rule against perpetuity. "It is settled that any limitation depending or expectant upon a prior limitation which is void for remoteness is invalid. The reason appears to be that persons entitled under the subsequent limitation are not intended to take unless and until the prior limitation which is void for remoteness can come into operation, much less be exhausted. It is impossible to give effect to the intention of the settlor in favour of the beneficiaries under the subsequent limitations.156"

[s 16.2] Prior Interest Void Only Due to section 13 or 14 This section becomes applicable only when the prior interest is void only due to rules contained either in section 13 or 14 and not otherwise. If the prior interest fails due to any other reason given in any other section (for example, section 25), this section will not be applicable. The case of Girish Dutt v Datadin,157 is a good illustration of the principle of this section. In this case, A made a gift to her nephew's daughter B for her life and then to B's male descendants absolutely, if she had any. But if she had no male descendant then to B's daughter without the power of alienation. In case, B had not descendant, male or female, them to her nephew, Datadin. B died without any child. It was held that as the gift to B's unborn daughters was a limited interest only, therefore, transfer to nephew which was dependent upon prior interest also failed.

1 Nothing in Chapter II is to be deemed to affect any rule of Muhammadan Law, see section 2,

Act 20 of 1929. 155 Subs. by Act 20 of 1929, section 10, for the original section 16. 156 Sterling J, Re Abbot, (1893) 1 Ch 54 (57). 157 (1934) 9 Luck 329 .

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER II1 TRANSFERS OF PROPERTY BY ACT OF PARTIES Chapter II of the Transfer of Property Act, 1882 deals with transfers of property by act of parties. This chapter has been divided into two parts: Part-A—provides for rules regarding transfers of property in general, whether movable or immovable. Part-B—provides for rules regarding transfers of immovable property.

(A) TRANSFER OF PROPERTY, WHETHER MOVABLE OR IMMOVABLE Part-A consists of definition of property what may be transferred, competency of persons, operation of transfers, oral transfers, restrictions on transfers, vested interest, contingent interest, conditional transfers, transfers for benefit of unborn persons and elections, etc. All these provisions will be taken up under the following headings:— I. General provisions II. Restrictions III. Transfer for the benefit of unborn person IV. Transfer to a Class V. Vested Interest VI. Contingent Interest VII. Conditional Transfer VIII. Election IX. Apportionment

IV. TRANSFER TO A CLASS 158[[s 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 (a) a period of eighteen years from the date of 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. (2) This section shall not affect any direction for accumulation for the purpose of—

(i) the payment of the debts of the transferor or any other person taking any

interest under the transferor; or (ii) the provision of portions for children or remoter issue of the transferor or

of any other person taking any interest under the transfer; or (iii) the preservation or maintenance of the property transferred,

and such direction may be made accordingly.]

Comments [s 17.1] Rule against Accumulation (Section 17) The law favours the transfer of property. The storage of wealth for an unreasonable period of time without its distribution to the expectant heir or disposal otherwise is injurious to society. A direction for accumulation of income is a method of restraining enjoyment of property. Sub-section (1) of this section provides that 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 the life of the transferor or a period of 18 years from the date of transfer such direction shall be void. This section provides the limits beyond which a direction for accumulation of income arising out of the property transferred shall be void. The limits are given below: (i) the life of the transferor, or (ii) a period of 18 years from the date of the transfer.

The principle of this section is based on an English case, Theluson v Woodford.159 In this case, T bequeathed his property upon a trust to accumulate the income during the lives of his three sons and of all their descendants who might be living at his death and after the death of the last survivor of them to be divided among the then living eldest male descendants of his three sons. The direction regarding accumulation was held to be valid as it did not contravene the rule against perpetuity although the income might be placed beyond the reach of human enjoyment for a very considerable time. If the transferor prescribes any limits other than life of the transferor or a period of 18 years from the date of transfer, it shall be void to the extent to which it exceeds the longer of the aforesaid period. The effect of this provision is that at the end of such last mentioned period, the property and its income shall be disposed of as if the period during which the accumulation has been directed to be made has elapsed. However, where a direction for accumulation is made without specifying any of the two periods, then it will be seen what happens after the transfer. If the transferor dies more than 18 years from the date of the transfer, the direction will be void after the death of the transferor. If he dies before the expiry of period of 18 years from the date of the transfer, the direction will be void beyond the period of 18 years. For example, X transferred his property to Y in 1960 with a direction for accumulation till 1985 (i.e., for 25 years). A died in 1980. The transferor was alive for more than 18 years from the date of the transfer. Thus, the direction for accumulation was to be valid till 1980, i.e., the life of the transferor and void after that. However, if the transferor had died in 1970, the longer period would have been period of 18 years from the date of transfer, and the direction would have been valid for 8 years, i.e., till 1978.

[s 17.2] Exceptions The section contains three exceptions to the directions of accumulation i.e., payment of debts, provision of portions and preservation and maintenance of the property. (i) Payment of debts.—First exception says that this section shall not affect any direction for accumulation for the purpose of the payment of the debts of the transferor or any other person taking any interest under the transfer. The debt may be an existing debt or may arise in future. If debts are paid and satisfied not out of income but out of capital, a provision for the accumulation of the income in order to recoup the capital that has been taken out from the fund is not a provision for payment of debts and the trust for accumulation of income to recoup capital is valid only for one of the statutory periods.160 Such provisions do not tie up the property absolutely so as to prevent its being transferred absolutely because the creditor may at any time insist on payment or the person indebted can at any time discharge the debt.161 (ii) Provision for portions.—The exception says that this section shall not affect any direction for accumulation for the purpose of the provision of portions for children or remoter issue of the transferor or of any other person taking any interest under the transfer. A "portion" means a share in the property settled in favour of children or their issues.162 This provision does not apply to the making of additions of income to the capital in order to increase the capital for the person to whom it is given.163 The "portion" ordinarily means a part or share which points to the raising of something out of something else for the benefit of some children or class of children. The accumulation in such cases may exceed the prescribed period.164 (iii) Preservation and Maintenance of property.—Third exception provides for preservation and maintenance of property. Accordingly, any direction for accumulation of income for the purpose of preservation or maintenance of the property transferred is beyond the purview of section 17.

[s 17.3] English Law According to the English Law of Property Act, 1925, the income may be accumulated during any of the following periods:— (i) the life or lives of the transferor or transferors, (ii) 21 years from the death of the transferor, (iii) During the minority of any person living at the death of the transferor, (iv) During the minority of any person, who would be entitled to the property, if he

was of full age.

1 Nothing in Chapter II is to be deemed to affect any rule of Muhammadan Law, see section 2,

Act 20 of 1929. 158 Subs. by Act 20 of 1929, section 10, for the original sections 17. 159 32 ER 1030 (HL). 160 Heathiote v Trench, (1904) 1 Ch 224 . 161 Briggs v Oxford, (1852) 1 De. G M&G 363. 162 Wharton's Law Lexicon, 14th Edn, 1938. 163 Vine v Raleigh, (1891) 2 Ch 13 . 164 Edwards v Tuck, 37 Digest 142.

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER II1 TRANSFERS OF PROPERTY BY ACT OF PARTIES Chapter II of the Transfer of Property Act, 1882 deals with transfers of property by act of parties. This chapter has been divided into two parts: Part-A—provides for rules regarding transfers of property in general, whether movable or immovable. Part-B—provides for rules regarding transfers of immovable property.

(A) TRANSFER OF PROPERTY, WHETHER MOVABLE OR IMMOVABLE Part-A consists of definition of property what may be transferred, competency of persons, operation of transfers, oral transfers, restrictions on transfers, vested interest, contingent interest, conditional transfers, transfers for benefit of unborn persons and elections, etc. All these provisions will be taken up under the following headings:— I. General provisions II. Restrictions III. Transfer for the benefit of unborn person IV. Transfer to a Class V. Vested Interest VI. Contingent Interest VII. Conditional Transfer VIII. Election IX. Apportionment

IV. TRANSFER TO A CLASS 165[[s 18] Transfer in perpetuity for benefit of public.—

The restrictions in sections 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.]

Comments [s 18.1] Benefit of Public (Section 18) This section contains an exception to the rule of perpetuity and accumulation. These rules prevent the properties from being tied up for an indefinite period, making them non-transferable or putting restrictions on their transferability. Keeping the property tied up for a long period is against the socio-economic policy and is also detrimental to

property itself. Therefore, this section provides an exception that in case of 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, such rules of perpetuity and accumulation will not be applicable. These objects are charitable in nature. Beneficial objects include gift to hospitals,166 gift for the endorsement of a university,167 gift for the establishment and worship of an idol,168 gift for the advancement of religion,169 gift for keeping a burial ground in good order,170 etc.

[s 18.2] Doctrine of Cy Pres In cases where property is transferred for a charitable object but by reason of the objects being uncertain, or incapable of being carried out in execution, or the persons who have to take benefit are not in existence, etc., it cannot be given effect to, in such a situation the court will apply the "doctrine of cy pres" and carry out the object as near as possible to the original object.

1 Nothing in Chapter II is to be deemed to affect any rule of Muhammadan Law, see section 2,

Act 20 of 1929. 165 Subs. by Act 20 of 1929, section 10, for the original section 18. 166 Brreghton v Moccex, (1875) 14 Beng LR 422. 167 Manorama v Kalicharan, (1903) 31 Cal 166 . 168 Bhupati Nath v Ram Lal Maitra, (1910) ILR 37 Cal 128 : 10 Cal LJ 355. 169 Commissioner for Special Purpose of Income-tax v Pemsel, (1891) AC 531 (583) : 61 LJQB

265 : 65 LT 621 (HC). 170 Attorney-General v Lucas, (1905) 64 LJ Ch 856 (858).

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER II1 TRANSFERS OF PROPERTY BY ACT OF PARTIES Chapter II of the Transfer of Property Act, 1882 deals with transfers of property by act of parties. This chapter has been divided into two parts: Part-A—provides for rules regarding transfers of property in general, whether movable or immovable. Part-B—provides for rules regarding transfers of immovable property.

(A) TRANSFER OF PROPERTY, WHETHER MOVABLE OR IMMOVABLE Part-A consists of definition of property what may be transferred, competency of persons, operation of transfers, oral transfers, restrictions on transfers, vested interest, contingent interest, conditional transfers, transfers for benefit of unborn persons and elections, etc. All these provisions will be taken up under the following headings:— I. General provisions II. Restrictions III. Transfer for the benefit of unborn person IV. Transfer to a Class V. Vested Interest VI. Contingent Interest VII. Conditional Transfer VIII. Election IX. Apportionment

V. VESTED INTEREST [s 19] Vested interest.— Where, on a transfer of property, an interest therein is created in favour of a person without specifying the time when it is to take effect, or in terms specifying that it is to take effect forthwith or on the happening of an event which must happen, such interest is vested, unless a contrary intention appears from the terms of the transfer. A vested interest is not defeated by the death of the transferee before he obtains possession. Explanation.—An intention that an interest shall not be vested is not to be inferred merely from a provision whereby the enjoyment thereof is postponed, or whereby a prior interest in the same property is given or reserved to some other person, or whereby income arising from the property is directed to be accumulated until the time of enjoyment arrives, or from a provision that if a particular event shall happen the interest shall pass to another person.

Comments [s 19.1] Vested Interest (Section 19) According to this section, where on transfer of a property an interest is created in the property in favour of a person— (i) without specifying the time when it is to take effect, or (ii) in terms specifying that it is to take effect— (a) forthwith, or (b) on the happening of an event which must happen, such an interest, is

vested unless a contrary intention appears from the terms of the transfer. A vested interest is not defeated by the death of the transferee before he obtains possession. An intention that an interest shall not be vested is not to be inferred merely from a provision whereby: (i) the enjoyment of the property is postponed, or (ii) a prior interest in the same property is given or reserved to some other person,

or (iii) income arising from the property is directed to be accumulated until the time of

enjoyment arrives, or (iv) if a particular event shall happen the interest shall pass to another person.

Vested interest is an immediate right to a property. When a vested interest is created the transfer of property is complete. The immediate right may be either a right of present enjoyment or a right of future enjoyment. As soon as the transfer is complete, the interest accrues to the transferee with immediate effect and the transferee's title is complete. In comparison to vested interest, contingent interest depends upon the happening of a specified uncertain event. Such a contingent transfer becomes vested only on the happening of that uncertain event. This section says that an interest is vested in a person (unless a contrary intention appears) under the following conditions:

[s 19.1.1] Where no time mentioned A person gets a vested interest in a transfer of property where the terms do not specify the time when it is to take effect. For example, a person sells his house to another person. The purchaser gets the vested interest from the day of sale though the possession may not be given to him immediately.

[s 19.1.2] Where it is to take effect forthwith The interest created in favour of the transferee is vested where it is specified that it is to take effect forthwith, i.e., immediately, without delay. Where a deed contains such a declaration clearly, the deed conveys vested interest alone.

[s 19.1.3] On the happening of an event The interest is a vested interest where the operation of the transfer is made to depend upon some specified certain event. The event must be clearly specified, explained and it must be certain to happen. For example, death of a person is certain to happen, likewise sunset and sunrise are bound to happen, etc. (a) Enjoyment Postponed.—The Explanation to the section provides that an interest shall not be a vested interest is not to be inferred merely from a provision whereby the enjoyment the property is postponed. A condition postponing enjoyment does not prevent the interest vesting immediately, but it is itself void for repugnancy after the transferee has attained majority.171 Repugnancy arises in such a situation where there is inconsistency between the two rules. An illustration may be taken: where A transfers property to B in trust for C, and directs B to give possession of the property to C when he attains the age of 25. C has a vested interest and is entitled to possession at the age of 18. (b) Prior interest.—Similarly, it is not to be inferred that an interest shall not be vested merely by a provision whereby a prior interest in the same property is given or reserved for some other person. Where a prior interest is created there is only postponement of enjoyment and not the vesting of subsequent interest. For example, where A transfers property to B for life and then to C, here the interest of C is vested interest but only due to the prior interest created in favour of B his right of enjoyment is postponed till the life of B. (c) Accumulation of income.—It is not to be inferred that the interest shall not be vested whereby income arising from the property is directed to be accumulated until the time of enjoyment arrives. However, the direction for accumulation of income must be within the limits sanctioned by section 17. If the direction is for a period in excess of the period specified, it will be invalid for the period in excess. Only the right of enjoyment is postponed only but not the vesting. (d) Conditional limitation.—The interest shall not be vested is not to be inferred from a provision that if a particular event shall happen the interest shall pass to another person. Such type of a provision is known as a "conditional limitation". A conditional limitation divests an estate which has become vested and vests it in another person. Section 28 of the Transfer of Property Act, 1882 deals with conditional limitations. In Sunder Bibi v Rajendra Narain,172 the terms of a compromise provided that L should have an estate for life and that after his death R was to be the full owner of the estate, if he survived L. If R did not survive L, the estate would pass to R's lineal male descendants according to the rule of primogeniture. Before the death of L, the question arose whether R had only a contingent interest or a vested interest which could be attached. If the provision had been merely this that the estate would pass to R, if he survived L and nothing more would have been said, there can be no doubt that R would take the estate contingent on his surviving L. The further provision of a gift over to another person was a conditional limitation which had the effect of vesting the estate in R. The court gave the reasoning that the condition affected the retention of the interest and not in its acquisition. Therefore, R took a vested interest liable to be divested if he did not survive L.

[s 19.2] Time of Vesting The interest vests as soon as the transfer is complete. Words are to be construed according to their ordinary meaning and no particular form of words is necessary to effect a vesting.173

[s 19.3] Contrary Intention The grantor may specify the time of vesting as section 5 provides that a transfer may not be only in the present but also in the future. However, the time of vesting cannot be beyond the period allowed by the rule against perpetuity.

[s 19.4] Death of Transferee When an interest is vested, it becomes the property of the transferee and he can transfer it even before he has obtained possession (Section 6). A transfer of property even without possession is effective. If the transferee dies, his interest vests in his legal representatives, whether or not he has obtained the possession. The main characteristics of vested interest may be summarized as follows:— (1) Vested interest does not depend upon the fulfilment of a condition. It creates a

present and immediate right. The enjoyment may be postponed to a future date. (2) A vested interest is transferable as well as heritable. (3) A vested interest is not defeated by the death of the transferee before obtaining

possession. The interest passes on to the heirs of the transferee. Certain property was given to the wife in lieu of her maintenance during her life-time. If could only be after her death that the surviving right, if any, would have vested in daughters. But before any such eventuality, enactment of the Hindu Succession Act, 1956 deprived daughters of their legal right to claim share in the property.174

[s 19.5] Document whether Settlement or Will The court has to examine the document as a whole and look into its substance. The form or nomenclature of the instrument cannot be conclusive. The document created unequivocal right in favour of 16 persons in praesenti. Beneficiaries were to enjoy the property along with the settlor during his life-time and to set specified shares after his death. The settlor made it clear that he would have no right to cancel the settlement deed or alter its terms. The mere fact that two beneficiaries and after them their heirs were to receive temple honours or that shares were to be divided after disposal of property could not lead to the inference that the document was a Will.175

[s 19.6] Right of adopted son A coparcener-son of a Mitakshara Hindu Undivided Family was given in adoption. It was held that he continued to have his vested right in the joint family property from the date of his birth. He could question the grant of probate of the Will of the testator (natural father) in probate proceedings.176

1 Nothing in Chapter II is to be deemed to affect any rule of Muhammadan Law, see section 2,

Act 20 of 1929. 171 Sewdayal v Official Trustee, (1931) 58 Cal 768 : 134 IC 436 : AIR 1931 Cal 651 . 172 (1925) 47 All 496 : 86 IC 684 : AIR 1925 All 389 . 173 Hurris v Brown, (1901) 28 Cal 621 (PC). 174 Palchuri Hanumayamma v Tadiramalla Kotlingam, AIR 2001 SC 3062 : (2001) 8 SCC 552 :

2001 AIR SCW 4121. 175 PK Mohan Ram v BN Ananthachary, AIR 2010 SC 1725 : 2010 AIR SCW 2132 : (2010) 4 SCC

161 . 176 Purushottam Dass Bangur, in the Goods of : AIR 2016 Cal 227 .

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER II1 TRANSFERS OF PROPERTY BY ACT OF PARTIES Chapter II of the Transfer of Property Act, 1882 deals with transfers of property by act of parties. This chapter has been divided into two parts: Part-A—provides for rules regarding transfers of property in general, whether movable or immovable. Part-B—provides for rules regarding transfers of immovable property.

(A) TRANSFER OF PROPERTY, WHETHER MOVABLE OR IMMOVABLE Part-A consists of definition of property what may be transferred, competency of persons, operation of transfers, oral transfers, restrictions on transfers, vested interest, contingent interest, conditional transfers, transfers for benefit of unborn persons and elections, etc. All these provisions will be taken up under the following headings:— I. General provisions II. Restrictions III. Transfer for the benefit of unborn person IV. Transfer to a Class V. Vested Interest VI. Contingent Interest VII. Conditional Transfer VIII. Election IX. Apportionment

V. VESTED INTEREST [s 20] When unborn person acquires vested interest on transfer for his benefit. — Where, on a transfer of property, an interest therein is created for the benefit of a person not then living, he acquires upon his birth, unless a contrary intention appears from the terms of the transfer, a vested interest, although he may not be entitled to the enjoyment thereof immediately on his birth.

Comments [s 20.1] Vesting of Interest in Case of Unborn Person (Section 20) According to this section, an interest created in favour of an unborn person vests as soon as he is born. Although the possession may not be given to him immediately on

his birth, it may be postponed but the interest is vested in him when he is born alive. There is no ban on the transfer of interest in favour of an unborn person. Section 20 permits an interest being created for the benefit of an unborn person who acquires interest upon his birth. No provision has been brought to the notice of the court which stipulates that full interest in a property cannot be created in favour of unborn person. Where the donor gifted the property in favour of the appellant then living, with a stipulation that if other male children were later born to her brother they were to be joint-holders with the appellant, such a stipulation is not hit by section 13 and is permissible under section 20.174 For example, where A settles his property on himself and his intended wife for their joint lives and then to their eldest son of marriage, the son takes vested interest as soon as he is born. He is not entitled to the possession during the lifetime of his parents. This section contemplates the normal condition in which the unborn person is born alive. When an unborn person dies within the womb of his mother and is not born alive, this section does not apply. A woman donated property to her brother's only son. She retained one of the properties for her own livelihood till her demise and thereafter that property was also to go to the brother's son and no one else was to have any right or title over it. There was this further stipulation that if the brother had any other children, all of them would be holding the property jointly. It was held that a younger brother born subsequently became entitled to joint ownership of the whole property including the one which was retained by the donor for her life-time.177

1 Nothing in Chapter II is to be deemed to affect any rule of Muhammadan Law, see section 2,

Act 20 of 1929. 177 FM Devaru Ganapathi Bhat v Prabhakar Ganpathi Bhat, 2004 AIR SCW 1433 : (2004) 2 SCC

504 : (2003) 10 Scale 1118 .

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER II1 TRANSFERS OF PROPERTY BY ACT OF PARTIES Chapter II of the Transfer of Property Act, 1882 deals with transfers of property by act of parties. This chapter has been divided into two parts: Part-A—provides for rules regarding transfers of property in general, whether movable or immovable. Part-B—provides for rules regarding transfers of immovable property.

(A) TRANSFER OF PROPERTY, WHETHER MOVABLE OR IMMOVABLE Part-A consists of definition of property what may be transferred, competency of persons, operation of transfers, oral transfers, restrictions on transfers, vested interest, contingent interest, conditional transfers, transfers for benefit of unborn persons and elections, etc. All these provisions will be taken up under the following headings:— I. General provisions II. Restrictions III. Transfer for the benefit of unborn person IV. Transfer to a Class V. Vested Interest VI. Contingent Interest VII. Conditional Transfer VIII. Election IX. Apportionment

VI. CONTINGENT INTEREST [s 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. Exception.—Where, under a transfer of property, a person becomes entitled to an interest therein upon attaining a particular age, and the transferor also gives to him absolutely the income to arise from such interest before he reaches that age, or directs the income or so much thereof as may be necessary to be applied for his benefit, such interest is not contingent.

Comments [s 21.1] Contingent Interest (Section 21) An interest the vesting of which takes place after the fulfilment of some condition precedent, till the condition is fulfilled remains contingent. In a transfer of property, a person gets a contingent interest in the property when: (i) the specified uncertain event happens, the happening of which was a condition

for vesting of interest, or (ii) the specified uncertain event does not happen, the non-happening of which was

a condition for vesting of interest and the event has become impossible to happen. In the case of a contingent interest, the interest becomes vested only when either of the condition is fulfilled. For example, where A makes a gift to B provided X survives the age of 25 years, the interest of B is contingent. Where A makes a gift to B provided X does not survive the age of 25 years, the interest of B again is contingent. The specified uncertain event may be of 2 kinds. In the first type, the happening or nonhappening of the event depends upon the will and desire of the parties like marriage or payment of a sum of money. In the second type, the specified event does not depend upon the will of the parties like death of a person on reaching a certain age. The main characteristics of a contingent interest may be summarizes as following: (i) The contingent interest is a transferable interest. (ii) It is not heritable. On the death of a person having contingent interest, his

interest does not pass to his legal heirs, The legal heirs of such a transferee do not get any interest. (iii) Death is not an uncertain events but survival at the death of another is an

uncertain event. (iv) The charge of an heir apparent to succeed to a person as heir or similar

possibilities of a like nature is not "contingent interest" within the meaning of this section. Cases: (1) A transfers his farm of Sultanpur Khurd to B if B shall convey his own farm of Sultanpur Buzurg to C. Interest of B in the farm Sultanpur Khurd is contingent. It may become vested if B conveys his farm Sultanpur Buzurg to C. (2) A grant provided that on the death of the last surviving widow of the late Raja of Tanjore, his daughter or failing her the next heir (if any) should inherit the property. The Privy Council held that until the death of the last surviving widow, the interest created in favour of the daughter was only contingent on her surviving the last widow.178 (3) A makes a gift in favour his sons with a condition that if any of them dies leaving no male issue, his share will be taken by the others, and not by the widow or daughter of the deceased son. The gift creates a contingent interest here.179

[s 21.2] Difference between Vested and Contingent Interest [s 21.2.1] Definition (1) Vested Interest.—Where, on transfer of property an interest therein is created in favour of a person— (i) without specifying the time when it is to take effect, or (ii) specifying that it is to take effect forthwith, or (iii) on the happing of an event which must happen, such interest is vested.

(2) Contingent Interest.—Where, on transfer of property an interest therein is created in favour of a person— (i) to take effect only on the happening of a specified uncertain event, or (ii) if a specified uncertain event does not happen, such person acquires a

contingent interest in the property.

[s 21.2.2] Fulfilment of Condition (1) Vested Interest.—It creates an immediate right in the property though the enjoyment may be postponed to a future date. It does not depend upon the fulfilment of any condition. (2) Contingent Interest.—It depends upon the fulfilment of the condition. If the condition is not fulfilled, the interest fails.

[s 21.2.3] Effect of Transferee's Death (1) Vested Interest.—It is not defeated by the death of the transferee before he obtains possession. (2) Contingent interest.—It cannot take effect in the event of the transferee's death before the fulfilment of the condition precedent.

[s 21.2.4] Transferable or Heritable (1) Vested interest.—It is both transferable as well as heritable. If the transferee dies before actual enjoyment, the interest passes on to his heirs. (2) Contingent interest.—It is transferable but not heritable. If the transferee of the property dies before obtaining possession, the contingent interest fails and does not pass on to his heirs.

[s 21.2.5] Present Right of Enjoyment

(1) Vested interest.—In vested interest there is present immediate right even when its enjoyment is postponed. (2) Contingent interest.—There is no present right in contingent interest. There is only a promise to give a right which depends upon the fulfilment of a condition. If the condition is fulfilled the right is given otherwise not. Such promise is nullified by the failure of the condition. Exception—If a transfer deed provides that a person becomes entitled to an interest upon attaining a particular age and the transferor also gives to him absolutely the income to arise from such interest before he attains that age or directs the income or so much of it as may be necessary to be applied for his benefit, such interest is not contingent interest. This exception is based on the principle that, "where the principal is given at a distant epoch, and the whole income is given in the meantime, the court leaning in favour of vesting has said that the whole thing is given but if there occurs an interval or gap, which separates the gift of interest from the principal, it is not vested.180" For example, where a husband gives certain properties to his wife J, for her lifetime under a Takshimnama, the deed providing that the "properties shall devolve upon my nephew B or his legal heir, as absolute owner, generation after generation remain in possession... of all the properties... in the possession of my wife, J, which he will get on her death." B sells the properties and dies during the lifetime of J. The reversioner brings the suit for possession of the properties. It was held that the B's interest was contingent and came to an end on his death during the lifetime of J.181

[s 21.3] Contingent Interest and Spes-successionis The contingent interest and spes-successionis both are future possible interests. In both, there is a possibility that it may become a perfect title in future. However, this degree of possibility is lesser in contingent interest. In case of contingent interest, the property is transferred subject to certain contingencies which may or may not happen. But spes-successionis i.e., mere chance of heir apparent depends upon several possibilities like the heir apparent survives the deceased person, i.e., the propositus, etc. In MA Yait v Official Assignee,182 the Privy Council gave the distinction between a contingent interest and spes-successionis and observed: The contingent interest which the children took was something quite different from a mere possibility of a like nature of an heir – apparent succeeding to the estate, or the chance of a relation obtaining a legacy, and also something quite different from mere right to sue. It is a will ascertained form of property it certainly has been transferred in this country for generation – in respect of which it is quite possible to raise money and dispose of it in anyway the beneficiary chooses.

1 Nothing in Chapter II is to be deemed to affect any rule of Muhammadan Law, see section 2,

Act 20 of 1929. 178 Mahitai v Sundaram Aiyar, 1936 PC 11 .

179 Soorjeemoney v Denobandhu, 9 Moo Ind App 123. 180 Pearson v Dolmah, LR 3 Eq 315. 181 Ram Chandra v Jagadeshwari, AIR 1937 Pat 247 . 182 AIR 1930 PC 17 : 57 Ind App 10.

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER II1 TRANSFERS OF PROPERTY BY ACT OF PARTIES Chapter II of the Transfer of Property Act, 1882 deals with transfers of property by act of parties. This chapter has been divided into two parts: Part-A—provides for rules regarding transfers of property in general, whether movable or immovable. Part-B—provides for rules regarding transfers of immovable property.

(A) TRANSFER OF PROPERTY, WHETHER MOVABLE OR IMMOVABLE Part-A consists of definition of property what may be transferred, competency of persons, operation of transfers, oral transfers, restrictions on transfers, vested interest, contingent interest, conditional transfers, transfers for benefit of unborn persons and elections, etc. All these provisions will be taken up under the following headings:— I. General provisions II. Restrictions III. Transfer for the benefit of unborn person IV. Transfer to a Class V. Vested Interest VI. Contingent Interest VII. Conditional Transfer VIII. Election IX. Apportionment

VI. CONTINGENT INTEREST [s 22] Transfer to members of a class who attain a particular age.— 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.

Comments [s 22.1] Contingent Class (Section 22) Section 22 deals with transfer of property to a contingent class. It says that an interest will be created in favour of such members only of a class as shall attain a particular age. The transfer provides that only those members of a class will be given interest who will attain a particular age. Any member of the class who will not be able to attain

that age will not be given any interest. For example, a property is transferred to such of the children of A as shall attain the age of 18. In such a case, no child of A who is less than 18 years of age has a vested interest in the property. Where the class of transferee is certain and known but vesting of interest in favour of that class is uncertain, this section will not be applicable.

1 Nothing in Chapter II is to be deemed to affect any rule of Muhammadan Law, see section 2,

Act 20 of 1929.

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER II1 TRANSFERS OF PROPERTY BY ACT OF PARTIES Chapter II of the Transfer of Property Act, 1882 deals with transfers of property by act of parties. This chapter has been divided into two parts: Part-A—provides for rules regarding transfers of property in general, whether movable or immovable. Part-B—provides for rules regarding transfers of immovable property.

(A) TRANSFER OF PROPERTY, WHETHER MOVABLE OR IMMOVABLE Part-A consists of definition of property what may be transferred, competency of persons, operation of transfers, oral transfers, restrictions on transfers, vested interest, contingent interest, conditional transfers, transfers for benefit of unborn persons and elections, etc. All these provisions will be taken up under the following headings:— I. General provisions II. Restrictions III. Transfer for the benefit of unborn person IV. Transfer to a Class V. Vested Interest VI. Contingent Interest VII. Conditional Transfer VIII. Election IX. Apportionment

VI. CONTINGENT INTEREST [s 23] Transfer contingent on happening of specified uncertain event.— 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.

Comments [s 23.1] Subsequent Contingent Interest (Section 23) The object of this section is to prevent a property from remaining without an owner. This section contemplates a prior interest and a subsequent contingent interest. Where on transfer of property an interest is accrued in favour of a specified person if a

specified uncertain event shall happen and no time is mentioned for the occurrence of that event, such interest will not take effect unless the event happens before or at the same time, as the intermediate or precedent interest ceases to exist. In simple words, in such transfers, after the termination of prior interest the property is made to vest subsequently in another person upon the happening of an uncertain event. If the subsequent contingency does not happen before the termination of prior interest, the interest would have to remain in abeyance. For example, a gift is made to X for life and thereafter to Y (who is in America) if he returns from there. In this case, Y's returning back is a contingency and no specific time is mentioned for that. Therefore, for taking this interest Y must return before the termination of A's interest otherwise the property will remain in abeyance. Another example may be taken of a situation where A transfers his property to B for life and then to C if he gets married. The transfer to C will take effect only if he marries in the lifetime of B or at the same time as B dies.

1 Nothing in Chapter II is to be deemed to affect any rule of Muhammadan Law, see section 2,

Act 20 of 1929.

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER II1 TRANSFERS OF PROPERTY BY ACT OF PARTIES Chapter II of the Transfer of Property Act, 1882 deals with transfers of property by act of parties. This chapter has been divided into two parts: Part-A—provides for rules regarding transfers of property in general, whether movable or immovable. Part-B—provides for rules regarding transfers of immovable property.

(A) TRANSFER OF PROPERTY, WHETHER MOVABLE OR IMMOVABLE Part-A consists of definition of property what may be transferred, competency of persons, operation of transfers, oral transfers, restrictions on transfers, vested interest, contingent interest, conditional transfers, transfers for benefit of unborn persons and elections, etc. All these provisions will be taken up under the following headings:— I. General provisions II. Restrictions III. Transfer for the benefit of unborn person IV. Transfer to a Class V. Vested Interest VI. Contingent Interest VII. Conditional Transfer VIII. Election IX. Apportionment

VI. CONTINGENT INTEREST [s 24] Transfer to such of certain persons as survive at some period not specified.— 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. Illustration 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.

Comments [s 24.1] Transfer to such of certain Persons Surviving at some Period (Section 24) This section is based on the general rule that if an estate is limited to two persons jointly, the one capable of taking and the other is not. He, who is capable, shall take the whole. The interest created in such a case is only a contingent interest which would become vested only when they survive the owner of precedent interest.183 This section says that where on transfer of property an interest is to be created in favour of such persons (belonging to a class) as shall be surviving at some period (not specified), the interest will go to such of them who shall be alive when the intermediate or precedent interest ceases to exist and no contrary intention appears from the terms of the contract. In White v Baker,184 LJ observed, "where there is a bequest to A for life and after his death to B and C or the survivor of them, the following meaning must be attached to the words "the survivor". They may refer to any of three events— (a) to one of the persons named surviving the other, i.e., B or C surviving the other;

or (b) to one of them only surviving the testator, i.e., B or C surviving the transferor; or (c) to one of them only surviving the tenant for life i.e., B or C surviving A.

In the absence of any indication to the contrary in the terms of the transferor, the last mentioned alternative is to be adopted."

[s 24.2] Law of Interests in Transfer of Property Act, 1882 The law relating to various types of interest may be summarised185 as follows:—

1 Nothing in Chapter II is to be deemed to affect any rule of Muhammadan Law, see section 2,

Act 20 of 1929. 183 Ram Chandra v Jagdeshwari Prasad, AIR 1937 Pat 247 . 184 (1860) 2 De G F&J 55 (64). 185 The Transfer of Property Act, NH Jhabwala, 2003, p 46.

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER II1 TRANSFERS OF PROPERTY BY ACT OF PARTIES Chapter II of the Transfer of Property Act, 1882 deals with transfers of property by act of parties. This chapter has been divided into two parts: Part-A—provides for rules regarding transfers of property in general, whether movable or immovable. Part-B—provides for rules regarding transfers of immovable property.

(A) TRANSFER OF PROPERTY, WHETHER MOVABLE OR IMMOVABLE Part-A consists of definition of property what may be transferred, competency of persons, operation of transfers, oral transfers, restrictions on transfers, vested interest, contingent interest, conditional transfers, transfers for benefit of unborn persons and elections, etc. All these provisions will be taken up under the following headings:— I. General provisions II. Restrictions III. Transfer for the benefit of unborn person IV. Transfer to a Class V. Vested Interest VI. Contingent Interest VII. Conditional Transfer VIII. Election IX. Apportionment

VII. CONDITIONAL TRANSFER [s 25] Conditional transfer.— 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. Illustrations (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.

(c) A transfers Rs 500 to B on condition that she shall murder C. The transfer is

void. (d) A transfers Rs 500 to his niece C, if she will desert her husband. The transfer is

void.

Comments [s 25.1] Conditional Transfer (Section 25) Property may be transferred by one person to another absolutely or conditionally. In absolute transfers, interest in the property is immediately vested in the transferee because nothing is to be performed by his side. Whereas in a conditional transfer, as the very name suggests, certain conditions are attached which are to be fulfilled for the transfer and vesting of interest in the transferee. These conditions may be of three types: (i) Conditions Precedent (ii) Conditions Subsequent (iii) Conditions Collateral

[s 25.1.1] Condition Precedent A condition which is prior to the transfer is known as condition precedent. Where the terms of a transfer of property impose a condition to be fulfilled before a person taken interest in the property, the condition is a condition precedent. For example, where A makes a gift of his house to B provided B marries C. This is a condition precedent because unless and until B marries C (condition fulfils) the property will not be transferred to him.

[s 25.1.2] Condition Subsequent The condition which is to be fulfilled after the transfer of property has already taken place is known as condition subsequent. Where a transfer of property is subject to a condition subsequent the interest which has already been vested in the transferee is affected by fulfilment or non-fulfilment of that condition. For example, A transfers his land to B on the condition that within 2 years of the date of transfer B will go to a foreign country for higher studies. Here if B does not go for higher studies to a foreign country within 2 years of date of transfer his interest in the land will cease.

[s 25.1.3] Collateral Condition The condition which is to be fulfilled simultaneously with the transfer is known as collateral condition. Such a condition is to be performed side by side the operation of the transfer. For example, A leases his house to B so long as B resides in the house of A, this condition is collateral. The lease will remain vested in B as long as he will be residing in that house.

According to section 25, an interest created on a transfer of property and dependent upon a condition fails under the following conditions: (i) if the fulfilment of the condition is impossible, or (ii) is forbidden by law, or (iii) is of such a nature that, if permitted, it would defeat the provisions of any law, or (iv) is fraudulent, or (v) involves or implies injury to the person or property of another, or (vi) Court regards it immoral or opposed to public policy.

(i) Impossible Condition.—Where the condition to be performed is impossible of performance i.e., the condition is such that it cannot be performed, the transfer of property too cannot take place. For example, A lets a farm to B on condition that he shall walk a hundred miles in an hour. The lease is void. Since this condition is impossible to perform because no person can walk a hundred miles in an hour. Similarly, A gives Rs 500 to B on the conditions that he shall marry A's daughter C. At the date of transfer C was deed. The transfer became void because due to C's death the condition became impossible of performance. (ii) Forbidden by Law.—If the condition is for bidden by law the transfer on the basis of fulfilment of that condition becomes void. For example, A transfers his land to B on the condition that B will give his licence to A (B has a liquor-licence which is given by the Government under certain restrictions). Such a transfer is void. (iii) Defeat the Provisions of any Law.—Where the transfer is on such a condition that if the condition is performed it will defeat the provisions of any law, the transfer on the basis of such a condition becomes void. For example, A transfers property to B on the condition that B will marry A's daughter. B at that time was already married. Now if this condition is performed the provisions of Hindu Law will be defeated because B, a Hindu, cannot marry twice when the first wife is living and there is no divorce. (iv) Fraudulent.—Where the condition is fraudulent, the transfer will become void. For example, A makes a gift of his house to B, who is agent of C, on condition that B shall give a false receipt on behalf of his principal C. Performance of this condition would be fraudulent, therefore, the transfer is void. (v) Involves Injury to the Person or Property of Another.—Where the condition involves or implies injury to the person or property of another, the condition and the transfer on this basis will be void. For example, A transfers Rs 500 to B on condition that he shall murder C. The transfer is void because the condition involves injury to another person. (vi) Immoral or Opposed to Public Policy.—Where the condition is such that the court regards it immoral or against public policy, the transfer depending upon such a condition will be void. For example, where A transfer Rs 500 to his niece C if she will desert her husband, the transfer is void. Similarly, where A transfers Rs 1000 to B if B sends his daughter for concubinage, the transfer is void because the condition is immoral.

1 Nothing in Chapter II is to be deemed to affect any rule of Muhammadan Law, see section 2,

Act 20 of 1929.

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER II1 TRANSFERS OF PROPERTY BY ACT OF PARTIES Chapter II of the Transfer of Property Act, 1882 deals with transfers of property by act of parties. This chapter has been divided into two parts: Part-A—provides for rules regarding transfers of property in general, whether movable or immovable. Part-B—provides for rules regarding transfers of immovable property.

(A) TRANSFER OF PROPERTY, WHETHER MOVABLE OR IMMOVABLE Part-A consists of definition of property what may be transferred, competency of persons, operation of transfers, oral transfers, restrictions on transfers, vested interest, contingent interest, conditional transfers, transfers for benefit of unborn persons and elections, etc. All these provisions will be taken up under the following headings:— I. General provisions II. Restrictions III. Transfer for the benefit of unborn person IV. Transfer to a Class V. Vested Interest VI. Contingent Interest VII. Conditional Transfer VIII. Election IX. Apportionment

VII. CONDITIONAL TRANSFER [s 26] Fulfilment of condition precedent.— 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. Illustrations A transfers Rs 5,000 to B on condition that he shall marry with the consent of C, D and E. E dies. B marries with the consent of C and D. B is deemed to have fulfilled the condition. A transfers Rs 5,000 to B on condition that he shall marry with the consent of C, D and E. B marries without the consent of C, D and E, but obtains their consent after the marriage. B has not fulfilled the condition.

Comments [s 26.1] Condition Precedent (Section 26)

Condition precedent means the condition which is to be performed before the transfer takes place. The general rule regarding this is that where a transfer is made on a condition precedent, the transfer fails unless the condition is first fulfilled. The section says that even if the condition is substantially complied with the condition will be deemed to have been fulfilled. This section is based on the English doctrine of Cy-pres. According to this doctrine, when the literal performance of the antecedent condition is rendered impossible for some reason, substantial performance in conformity with the original intentions of the transferor will suffice. For example, A transfers Rs 5,000 to B on the condition that he shall marry with the consent of C, D and E. At the time of performance of marriage (condition) D dies, and, therefore, B marries with the consent of C and D. B is deemed to have fulfilled the condition because he has substantially complied with the condition. Again, A transfers Rs 5,000 to B on the condition that he shall marry with the consent of C, D and E. B marries without the consent of C, D and E, but obtains their consent after the marriage, B has not fulfilled the condition. In the case of condition precedent, subsequent fulfilment of the condition is not sufficient compliance. The characteristics of a condition precedent may be summarized as follows:— (i) A condition precedent is one which must happen before the estate can vest. (ii) Where the condition is precedent, the estate does not vest in the transferee until

the condition is performed. (iii) A condition precedent is fulfilled if it is substantially complied with. (iv) Where the condition precedent becomes impossible of performance, or is

immoral or opposed to public policy, or fraudulent, the transfer will be void.

1 Nothing in Chapter II is to be deemed to affect any rule of Muhammadan Law, see section 2,

Act 20 of 1929.

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER II1 TRANSFERS OF PROPERTY BY ACT OF PARTIES Chapter II of the Transfer of Property Act, 1882 deals with transfers of property by act of parties. This chapter has been divided into two parts: Part-A—provides for rules regarding transfers of property in general, whether movable or immovable. Part-B—provides for rules regarding transfers of immovable property.

(A) TRANSFER OF PROPERTY, WHETHER MOVABLE OR IMMOVABLE Part-A consists of definition of property what may be transferred, competency of persons, operation of transfers, oral transfers, restrictions on transfers, vested interest, contingent interest, conditional transfers, transfers for benefit of unborn persons and elections, etc. All these provisions will be taken up under the following headings:— I. General provisions II. Restrictions III. Transfer for the benefit of unborn person IV. Transfer to a Class V. Vested Interest VI. Contingent Interest VII. Conditional Transfer VIII. Election IX. Apportionment

VII. CONDITIONAL TRANSFER [s 27] Conditional transfer to one person coupled with transfer to another on failure of prior disposition.— Where, on a transfer of property, an interest therein is created in favour of one person, and by the same transaction an ulterior disposition of the same interest is made in favour of another, if the prior disposition under the transfer shall fail, the ulterior disposition shall take effect upon the failure of the prior disposition, although the failure may not have occurred in the manner contemplated by the transferor. But, where the intention of the parties to the transaction is that the ulterior disposition shall take effect only in the event of the prior disposition failing in a particular manner, the ulterior disposition shall not take effect unless the prior disposition fails in that manner. Illustrations (a) A transfers Rs 500 to B on condition that he shall execute a certain lease within

three months after A's death, and, if he should neglect to do so, to C. B dies in A's life-time. The disposition in favour of C takes effect. (b) A transfers property to his wife; but, in case she should die in his life-time,

transfer to B that which he had transferred to her. A and his wife perish together, under circumstances which make it impossible to prove that she died before him. The disposition in favour of B does not take effect.

Comments [s 27.1] Rule of Acceleration (Section 27) This section provides that where an interest created on a transfer of property is intended to take effect upon the failure of a prior interest created by the same transaction, such interest will take effect upon the failure of the prior interest in any manner, unless it is clearly intended that the subsequent interest is not to take effect unless the prior interest failed in a particular manner and the failure occurred in some other manner. "The effect of prior interest… is to accelerate the subsequent which are limited to take effect on the regular determination of that prior interest; the court construes the gist of such interest as intended to take effect on the failure or determination of prior interest in any manner.186" This section includes two exceptions in the second paragraphs. The first exception comes into play where the prior interest is void. The ulterior interest dependent upon it also fails. For example, where A transfers property to B on the condition of B murdering C and then to D, the prior transfer from A to B is void, therefore, transfer to D also fails. Second exception applies where the intention of the transferor is specific that the second transfer would take effect only when the prior interest will fail in a particular manner. Only on the failure of the prior interest in that manner the second transfer takes effect. For example, A transfers property to his wife but in case she dies in his life-time, transfer to B that which he had transferred to her. A and his wife perish together in an accident under circumstances which make it impossible to prove that she died before him. The disposition in favour of B does not take effect.

1 Nothing in Chapter II is to be deemed to affect any rule of Muhammadan Law, see section 2,

Act 20 of 1929. 186 Halsbury's Laws of England, Vol 28.

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER II1 TRANSFERS OF PROPERTY BY ACT OF PARTIES Chapter II of the Transfer of Property Act, 1882 deals with transfers of property by act of parties. This chapter has been divided into two parts: Part-A—provides for rules regarding transfers of property in general, whether movable or immovable. Part-B—provides for rules regarding transfers of immovable property.

(A) TRANSFER OF PROPERTY, WHETHER MOVABLE OR IMMOVABLE Part-A consists of definition of property what may be transferred, competency of persons, operation of transfers, oral transfers, restrictions on transfers, vested interest, contingent interest, conditional transfers, transfers for benefit of unborn persons and elections, etc. All these provisions will be taken up under the following headings:— I. General provisions II. Restrictions III. Transfer for the benefit of unborn person IV. Transfer to a Class V. Vested Interest VI. Contingent Interest VII. Conditional Transfer VIII. Election IX. Apportionment

VII. CONDITIONAL TRANSFER [s 28] Ulterior transfer conditional on happening or not happening of specified event.— On a transfer of property an interest therein may be created to accrue to any person with the condition superadded that in case a specified uncertain event shall happen such interest shall pass to another person, or that in case a specified uncertain event shall not happen such interest shall pass to another person. In each case the dispositions are subject to the rules contained in sections 10, 12, 21, 22, 23, 24, 25 and 27.

Comments [s 28.1] Conditional Limitation (Section 28)

This section deals with ulterior transfers which are conditional on the happening or non-happening of a specified event. The section says that in case of a transfer of property an interest may be created in favour of a person with condition that— (i) a specified uncertain event shall happen, or (ii) a specified uncertain event shall not happen,

For example, if A transfers Rs 1,00,000 to B with a condition that he will join the army within 3 years from the date of transfer and if he fails to do so within the specified period, the money shall go to C. Now, if B does not join the army within three years from the date of transfer or he fails to do so at all, the money will go to C. A transfer which is absolute in the first instance may be subjected to a condition that it shall be divested on the happening of a contingency, such a condition is called a condition subsequent. The difference between a condition subsequent and ulterior transfer is that in the case of happening of a contingency the interest created does not cease but it passes to another person. The ulterior transfers under this section are subjected to the rules contained in sections 10, 12, 21, 22, 24, 25 and 27. It is not necessary that the interest created should be an absolute interest in the property. A contingent interest or life interest may be created subject to a condition that on the happening of a specified uncertain event, it shall pass to another person. It is necessary that the condition imposed must be a part of the transfer and must be imposed at the time of making the transfer. A conditional limitation is a condition of defeasance, which terminates the interest of one person and invests that in another person. If an estate is given to a person (named donee) in terms which confers an absolute estate, and then a further interest is given merely after or on termination of that person's interest and not in defeasance of it, the further interest will be void for repugnancy. For example, where a testator gave an absolute estate to his wife with power of alienation, and then added a clause that, "if, at the death of my widow, there be no adopted son or if no son or wife of the adopted son be alive, then my heir according to Hindu Shastras who shall be at that time alive shall get the properties which shall remain after disposal by my wife by way of gift or sale of the same." The gift over was held to be invalid.187 However, if it is provided that the property is given to the wife absolutely and if there be no issue at her death, her brothers should take the property. There is a condition of defeasance of prior interest and subsequent interest will take effect. In a case, A transferred certain property to his second wife for life and then on her son if she should have a son, but if not, then to sons of his first wife. It was held by the Privy Council that the son by the first wife took a vested interest liable to be divested by the birth of a son to the second wife.188 In an Allahabad case, the deed of gift and the deed of agreement under which the donor was entitled to revoke the gift upon happening of a specified uncertain event were executed as two separate documents but on the same date, the Allahabad High Court held that both formed part of the same transaction and ought to be read together.189 The ulterior transfers or conditional limitations are subject to the rule contained in some sections. These sections are explained below:— (i) Section 10—A transfers his land to B without the power of alienation, in case of

B's death without issue, to C without power of alienation. The restriction was held

to be void in both the cases. (ii) Section 12—A transfers his land to B and in case B becomes insolvent to C. B

becomes insolvent. The condition is void. The property will not vest in C but in Official Receiver or Official Assignee appointed under the insolvency laws. (iii) Section 21—A transfers his land to B and in case of B's death without issue, to

C. C has contingent interest in the property which will be vested if B dies without issue. (iv) Section 22—A transfers his land to B and on the death of B to such of the

children of C as shall attain the age of 18 years. Here all the children who are alive at the death of B have an interest, which will vest when they will attain the age of 18. (v) Section 23—A transfers his land to B for life and then to C, if C goes to England.

C does not go to England until a year after B's death. The interest of C fails. (vi) Section 24—A transfers his land to B and in case B dies without issue to the

sons of C or the survivor of them. The sons of C who survive B take the land. (vii) Section 25—A transfers his land to B for life on the condition that he murders C

and if B will die without issue the land will be transferred to D. Here the interests of both B and D fail.

1 Nothing in Chapter II is to be deemed to affect any rule of Muhammadan Law, see section 2,

Act 20 of 1929. 187 Suresh Chandra Palit v Lalit Mohan Dutta, (1916) 20 Cal WN 463 : AIR 1916 Cal 775 : 31 Ind

Cas 405. 188 Umesh Chunder Sircar v Mt Zakoor Fatima, (1891) 18 Cal 164 : 17 Ind App 201; property

gifted by donor to her daughter with a stipulation in the gift deed about delivering property on female children of donee, such a gift deed does not fall under section 28; Sarojini v Radha Narayana Kurup, AIR 2017 (NOC) 547 Ker. 189 Jagat Singh Chilwal v Dungar, AIR 1951 All 599 (600) : 1952 All LJ 368.

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER II1 TRANSFERS OF PROPERTY BY ACT OF PARTIES Chapter II of the Transfer of Property Act, 1882 deals with transfers of property by act of parties. This chapter has been divided into two parts: Part-A—provides for rules regarding transfers of property in general, whether movable or immovable. Part-B—provides for rules regarding transfers of immovable property.

(A) TRANSFER OF PROPERTY, WHETHER MOVABLE OR IMMOVABLE Part-A consists of definition of property what may be transferred, competency of persons, operation of transfers, oral transfers, restrictions on transfers, vested interest, contingent interest, conditional transfers, transfers for benefit of unborn persons and elections, etc. All these provisions will be taken up under the following headings:— I. General provisions II. Restrictions III. Transfer for the benefit of unborn person IV. Transfer to a Class V. Vested Interest VI. Contingent Interest VII. Conditional Transfer VIII. Election IX. Apportionment

VII. CONDITIONAL TRANSFER [s 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. Illustration 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 as minor or marries without C's consent, the Rs 500 shall go to D. B marries when only 17 years of age, without C's consent. The transfer to D takes effect.

Comments [s 29.1] Condition Subsequent

This section says that an ulterior disposition of the kind contemplated by section 28 cannot take effect unless the condition is strictly fulfilled. The general rule of law is that conditions subsequent which are intended to defeat vested interests are to be construed strictly. The law does not favour the divesting of an estate which has vested as much as it favours vesting of the estate. Therefore, the condition divesting the estate must be strictly fulfilled. In comparison to condition subsequent, the condition precedent under section 26 is deemed to have been fulfilled even if it is substantially complied with. If the interest has become vested, it cannot be taken away except with clear words without any ambiguity. Where a Hindu widow was authorized to adopt a son with a direction that if the first adopted son died before the age of 20 years, she was to adopt a second child to take the place of first adopted son, it was held that in order to apply this condition, the clause must contain express words or words with necessary implication of a gift over to a definite person or persons.190 The implication of a gift over to the second adopted son was not sufficient to prevent the widow of the first adopted son from inheriting her husband's share. If there is any ambiguity in the condition subsequent, it will be read in the sense most favourable to the vested interest. Thus, a gift to A for life and then to his children with a gift over in the event of A's death without leaving children was construed as a gift over in the event of A's death without having had a child.191 Illustrations (1) A transfers Rs 500 to B, to be paid to him on his attaining majority or minority, with a provision that, if B dies as minor or marries without C's consent, the Rs 500 shall go to D. B marries when only 17 years of age, without C's consent. The transfer to D takes effect. (2) A land is transferred to A with a proviso that if he married without the consent of B, C and D, the land will go to E. D dies. Now even if A married without the consent of B and C, the gift to E does not take effect. (3) A field is transferred to A with a proviso that if he marries without the consent of B, the field shall go to C. A marries with the consent of B. He afterwards becomes a widower and marries again without the consent of B. The gift to C does not take effect because the condition once fulfilled is discharged.

1 Nothing in Chapter II is to be deemed to affect any rule of Muhammadan Law, see section 2,

Act 20 of 1929. 190 Re Cobbold, Cobbold v Lawton, (1903) 2 Ch 299 . 191 Maitland v Chalie, (1882) M & G 243.

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER II1 TRANSFERS OF PROPERTY BY ACT OF PARTIES Chapter II of the Transfer of Property Act, 1882 deals with transfers of property by act of parties. This chapter has been divided into two parts: Part-A—provides for rules regarding transfers of property in general, whether movable or immovable. Part-B—provides for rules regarding transfers of immovable property.

(A) TRANSFER OF PROPERTY, WHETHER MOVABLE OR IMMOVABLE Part-A consists of definition of property what may be transferred, competency of persons, operation of transfers, oral transfers, restrictions on transfers, vested interest, contingent interest, conditional transfers, transfers for benefit of unborn persons and elections, etc. All these provisions will be taken up under the following headings:— I. General provisions II. Restrictions III. Transfer for the benefit of unborn person IV. Transfer to a Class V. Vested Interest VI. Contingent Interest VII. Conditional Transfer VIII. Election IX. Apportionment

VII. CONDITIONAL TRANSFER [s 30] Prior disposition not affected by invalidity of ulterior disposition.— If the ulterior disposition is not valid, the prior disposition is not affected by it. Illustration A transfers a farm to B for her life, and, if she does not desert her husband to C. B is entitled to the farm during her life as if no condition had been inserted.

Comments [s 30.1] Subsequent Interest Invalid This section deals with the effect of an invalid ulterior disposition on the prior one. It says that if ulterior disposition is invalid, the prior disposition is not affected by

invalidity of the subsequent disposition. In comparison to this, section 16 provides that if a prior interest is invalid, the subsequent interest depending upon the prior interest also fails. However, here if subsequent interest is not valid the prior interest will not be rendered invalid. In Saraju Bala v Jyotirmoyee,192 there was a gift of an absolute estate to a daughter, with a defeasance clause whereby the property was to revert back to the grantor's heirs in case of the failure of her descendants. The Privy Council held that as the defeasance clause was void, the daughter was entitled to dispose off the property by will. Illustrations (1) A transfers a farm to B for life and if she does not desert her husband to C. B is entitled to the farm during her life as if no condition has been imposed. (2) A field is transferred to A for his life with condition super added that if he shall not on a given day walk 100 miles in an hour, the field shall go to E. The conditions imposed being void, A will retain the field as if no condition has been imposed. (3) A field is transferred to A with a proviso that if B does not within a year set fire to C's house, the field shall go to D. The ulterior transfer to D is invalid but the prior interest of A is not effected by it.

1 Nothing in Chapter II is to be deemed to affect any rule of Muhammadan Law, see section 2,

Act 20 of 1929. 192 (1931) 58 IA 270 : 134 IC 648 : AIR 1931 PC 179 .

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER II1 TRANSFERS OF PROPERTY BY ACT OF PARTIES Chapter II of the Transfer of Property Act, 1882 deals with transfers of property by act of parties. This chapter has been divided into two parts: Part-A—provides for rules regarding transfers of property in general, whether movable or immovable. Part-B—provides for rules regarding transfers of immovable property.

(A) TRANSFER OF PROPERTY, WHETHER MOVABLE OR IMMOVABLE Part-A consists of definition of property what may be transferred, competency of persons, operation of transfers, oral transfers, restrictions on transfers, vested interest, contingent interest, conditional transfers, transfers for benefit of unborn persons and elections, etc. All these provisions will be taken up under the following headings:— I. General provisions II. Restrictions III. Transfer for the benefit of unborn person IV. Transfer to a Class V. Vested Interest VI. Contingent Interest VII. Conditional Transfer VIII. Election IX. Apportionment

VII. CONDITIONAL TRANSFER [s 31] Condition that transfer shall cease to have effect in case specified uncertain event happens or does not happen.— Subject to the provisions of section 12, on a transfer of property an interest therein may be created with the condition superadded that it shall cease to exist in case a specified uncertain event shall happen, or in case a specified uncertain event shall not happen. Illustrations (a) A transfers a farm to B for his life, with a proviso that, in case B cuts down a

certain wood, the transfer shall cease to have any effect. B cuts down the wood. He loses his life-interest in the farm. (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.

Comments [s 31.1] Condition Subsequent (Section 31) This section says that subject to the provisions of section 12, an interest may be created on a transfer of property with a superadded condition that interest shall cease to exist— (i) in case a specified uncertain event shall happen, or (ii) in case a specified uncertain event shall not happen.

Section 12 to which the provisions of this section are subjected deals with the conditions making interest determinable on insolvency or attempted alienation. The condition referred to in this section is a condition subsequent which terminates an interest and reverts it in the grantor. It is not a conditional limitation which creates an interest in a third person. The condition subsequent which operates to terminate the interest must be a valid condition. If it is a void condition, the interest will not revert in the grantor. The event on the happening or non-happening of which the interest is terminated must be a definite and specific event. For example, where a lease deed provided that the lease shall stand cancelled if the lessee takes upon "any other business or manufacture of any other kind" without the written consent of the landlord, it was held that the condition was vague and the transferee was not bound by it.193 Illustrative cases (1) A is under sentence of transportation for life and transfers his field to B with a proviso that in case he returns from Port Blair, B's interest shall cease. A returns from Port Blair. B's interest in the field ceases.194 (2) A transfers his land to B with proviso that if B becomes insolvent, B's interest in the land shall cease, B is adjudged insolvent. The land vests in the Official Receiver of Official Assignee as the case may be.

1 Nothing in Chapter II is to be deemed to affect any rule of Muhammadan Law, see section 2,

Act 20 of 1929. 193 Raja Sri Krishna Chandra Mansingh v National Chemical & Salt Works Ltd (India), Calcutta,

AIR 1957 Ori 35 . 194 Venkatarama v Aiyasami, (1922) 43 Mad LJ 340 : AIR 1923 Mad 67 .

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER II1 TRANSFERS OF PROPERTY BY ACT OF PARTIES Chapter II of the Transfer of Property Act, 1882 deals with transfers of property by act of parties. This chapter has been divided into two parts: Part-A—provides for rules regarding transfers of property in general, whether movable or immovable. Part-B—provides for rules regarding transfers of immovable property.

(A) TRANSFER OF PROPERTY, WHETHER MOVABLE OR IMMOVABLE Part-A consists of definition of property what may be transferred, competency of persons, operation of transfers, oral transfers, restrictions on transfers, vested interest, contingent interest, conditional transfers, transfers for benefit of unborn persons and elections, etc. All these provisions will be taken up under the following headings:— I. General provisions II. Restrictions III. Transfer for the benefit of unborn person IV. Transfer to a Class V. Vested Interest VI. Contingent Interest VII. Conditional Transfer VIII. Election IX. Apportionment

VII. CONDITIONAL TRANSFER [s 32] Such condition must not be invalid.— In order that a condition that an interest shall cease to exist may be valid, it is necessary that the event to which it relates be one which could legally constitute the condition of the creation of an interest.

Comments [s 32.1] Invalid Condition Subsequent (Section 32) This section provides that invalid condition subsequent does not divest the interest to which it is attached. A condition which is void as a condition precedent is also void as a condition subsequent. There are many grounds in which conditions subsequent may be invalid.

(i) Where a condition subsequent is vague and uncertain, and incapable of giving a

definite meaning, the condition becomes void. (ii) Where the condition subsequent is incapable of performance i.e., it cannot be

performed, the condition subsequent is held to be a void condition. (iii) Where a condition subsequent is opposed to public policy, it is an invalid

condition. (iv) Where a condition subsequent is immoral, it will be a void condition. (v) A condition subsequent which is in general restraint of marriage shall be void

except in the following situations where the conditions subsequent have been held to be valid:— (a) a condition subsequent that a person should not remarry.195 (b) a condition subsequent restraining marriage with a particular person.196 (c) a condition subsequent causing a forfeiture is the event of marriage

without the consent of some person named.197 (d) if the object of the condition subsequent is not to promote celibacy by

some lawful object.198 Illustration 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 interests not affected.

1 Nothing in Chapter II is to be deemed to affect any rule of Muhammadan Law, see section 2,

Act 20 of 1929. 195 Barton v Barton, 23 ER 800 (801). 196 Re Bathe, (1925) 1 Ch 377 (382). 197 Re Whiting's Settlement, 74 LJ Ch 207. 198 Re Hewitt, (1918) Ch 458 .

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER II1 TRANSFERS OF PROPERTY BY ACT OF PARTIES Chapter II of the Transfer of Property Act, 1882 deals with transfers of property by act of parties. This chapter has been divided into two parts: Part-A—provides for rules regarding transfers of property in general, whether movable or immovable. Part-B—provides for rules regarding transfers of immovable property.

(A) TRANSFER OF PROPERTY, WHETHER MOVABLE OR IMMOVABLE Part-A consists of definition of property what may be transferred, competency of persons, operation of transfers, oral transfers, restrictions on transfers, vested interest, contingent interest, conditional transfers, transfers for benefit of unborn persons and elections, etc. All these provisions will be taken up under the following headings:— I. General provisions II. Restrictions III. Transfer for the benefit of unborn person IV. Transfer to a Class V. Vested Interest VI. Contingent Interest VII. Conditional Transfer VIII. Election IX. Apportionment

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

Comments [s 33.1] Time for Performance (Section 33) This section deals with a condition where no fixed time is given for the performance of a condition subsequent. This section says that when no time is fixed for performance

of a condition subsequent but the person, who has to perform the condition and who is to take interest created, does some act by which the condition becomes impossible to perform or its performance is permanently postponed, the condition subsequent is broken. Section 136 of the Indian Succession Act, 1925 contains corresponding provision and has following illustrations:— (1) 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 condition fulfilment. The bequest ceases to have effect. (2) A bequest is made to A with a proviso that, unless he enters the Army, the

legacy shall go to B. A takes Holy Orders, and thereby renders it impossible that he should fulfil the condition. B is entitled to receive the legacy.

1 Nothing in Chapter II is to be deemed to affect any rule of Muhammadan Law, see section 2,

Act 20 of 1929.

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER II1 TRANSFERS OF PROPERTY BY ACT OF PARTIES Chapter II of the Transfer of Property Act, 1882 deals with transfers of property by act of parties. This chapter has been divided into two parts: Part-A—provides for rules regarding transfers of property in general, whether movable or immovable. Part-B—provides for rules regarding transfers of immovable property.

(A) TRANSFER OF PROPERTY, WHETHER MOVABLE OR IMMOVABLE Part-A consists of definition of property what may be transferred, competency of persons, operation of transfers, oral transfers, restrictions on transfers, vested interest, contingent interest, conditional transfers, transfers for benefit of unborn persons and elections, etc. All these provisions will be taken up under the following headings:— I. General provisions II. Restrictions III. Transfer for the benefit of unborn person IV. Transfer to a Class V. Vested Interest VI. Contingent Interest VII. Conditional Transfer VIII. Election IX. Apportionment

VII. CONDITIONAL TRANSFER [s 34] Transfer conditional on performance of act, time being specified.— Where an act is to be performed by a person either as a condition to be fulfilled before an interest created on a transfer of property is enjoyed by him, or as a condition on the non-fulfilment of which the interest is to pass from him to another person, and a time is specified for the performance of the act, if such performance within the specified time is prevented by the fraud of a person who would be directly benefited by non-fulfilment of the condition, such further time shall as against him be allowed for performing the act as shall be requisite to make up for the delay caused by such fraud. But if no time is specified for the performance of the act, then, if its performance is by the fraud of a person interested in the non-fulfilment of the condition rendered impossible or indefinitely postponed, the condition shall as against him be deemed to have been fulfilled.

Comments [s 34.1] Time of Performance Specified (Section 34) This section is based on the principle that no person can take advantage of his own fraud. If performance of a condition, whether precedent or subsequent, is prevented by a person interested in its non-fulfilment, the delay is excused and the condition is discharged. The maxims behind this section are mullus commodum capere protested injuria sua propria (i.e., no one can advantage of his own wrong) and raus et dolus nemini patrocinari debent (i.e., fraud and deceit ought not to benefit any person). This section deals with two types of cases:— (1) Where a time is specified for the performance of an act constituting the

condition of transfer and the fulfilment of the condition is prevented by the fraud of the person directly benefitted by the non-fulfilment of the condition. (2) Where no time is specified for the performance of the act and the fulfilment of

the condition is rendered impossible or is indefinitely postponed by the fraud of the person interested in the non-fulfilment of the condition.

[s 34.2] Difference between Condition Precedent and Condition Subsequent 1. Condition precedent precedes the vesting, i.e., the condition comes before the creation of the interest. Condition subsequent follows the vesting, i.e., interest is created before the condition can operate. 2. In condition precedent, vesting is postponed till the condition is performed. In condition subsequent, vesting completes before fulfilment of the condition. 3. In condition precedent, interest which has been vested once can never be divested by reason of non-fulfilment of the condition. In condition subsequent, interest, even though vested, is liable to be divested due to non-fulfilment of the condition. 4. Condition precedent affects the acquisition of an estate. Condition subsequent affects the retention of the estate. 5. In condition precedent, if the condition is impossible to perform, immoral or opposed to public policy, the transfer will be void. In condition subsequent, the transfer becomes absolute and such a condition is ignored. 6. In condition precedent, the condition must be valid in law only then the interest can be vested. In condition subsequent, the invalidity of the condition can be ignored.

7. In condition precedent, doctrine of Cy-pres is applicable i.e., substantial compliance of the condition is deemed to be fulfilment of the condition. Doctrine of Cy-pres is not applicable in case of condition subsequent. The condition subsequent must be strictly fulfilled.

1 Nothing in Chapter II is to be deemed to affect any rule of Muhammadan Law, see section 2,

Act 20 of 1929.

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER II1 TRANSFERS OF PROPERTY BY ACT OF PARTIES Chapter II of the Transfer of Property Act, 1882 deals with transfers of property by act of parties. This chapter has been divided into two parts: Part-A—provides for rules regarding transfers of property in general, whether movable or immovable. Part-B—provides for rules regarding transfers of immovable property.

(A) TRANSFER OF PROPERTY, WHETHER MOVABLE OR IMMOVABLE Part-A consists of definition of property what may be transferred, competency of persons, operation of transfers, oral transfers, restrictions on transfers, vested interest, contingent interest, conditional transfers, transfers for benefit of unborn persons and elections, etc. All these provisions will be taken up under the following headings:— I. General provisions II. Restrictions III. Transfer for the benefit of unborn person IV. Transfer to a Class V. Vested Interest VI. Contingent Interest VII. Conditional Transfer VIII. Election IX. Apportionment

VIII. ELECTION [s 35] Election when necessary.— 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 subject nevertheless, where the transfer is gratuitous, and the transferor has, before the election, died or otherwise become incapable of making a fresh transfer, and in all cases where the transfer is for consideration, to the charge of making good to the disappointed transferee the amount or value of the property attempted to be transferred to him. Illustrations

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. 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 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. A person taking no benefit directly under a transaction, but deriving a benefit under it indirectly, need not elect. A person who in his one capacity takes a benefit under the transaction may in another dissent therefrom. (1) Exception to the last preceding four rules.—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 claims 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. 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. 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. Such knowledge or 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. 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. In case of disability, the election shall be postponed until the disability ceases, or until the election is made by some competent authority.

Comments [s 35.1] Doctrine of Election (Section 35)

"Election is the obligation imposed upon a party by courts of equity to choose between two inconsistent or alternative rights or claims in case where there is clear intention......... that he should not enjoy both. That he who accepts a benefit under a deed or will must adopt the whole contents of the instrument.199" Election means choosing between two alternative rights or inconsistent rights. If an instrument confers two rights on a person in such a manner that one right is in lieu of the other, that person can choose or elect only one of them. A person cannot take under and against the same instrument.200 The doctrine of election is based on the principle of equity that one cannot take what is beneficial to him and disapprove that which is against him under the same instrument. One cannot approbate and reprobate at the same time. In simple words, where a person takes some benefit under a deed or instrument, he must also bear its burden.201 The doctrine of election may be summarized as below:— He who accepts a benefit under a deed or will, must adopt the whole contents of the instrument, conforming to all its provisions and renouncing every right inconsistent with it.

The rule given in section 35 can be analysed as follows:— 1. Where a person professes to transfer property which he has no right to transfer,

and 2. As a part of the same transaction confers any benefit on the owner of the

property, 3. Such owner must elect either to,— (a) confirm such transfer, or (b) to dissent from it 4. If he dissents from it, he shall relinquish the benefit so conferred, 5. The benefit so relinquished shall revert to the transferor or his representative as if

it has not been disposed of

[s 35.2] Transferor Professes to Transfer Property not his Own The section begins with the statement that "where a person professes to transfer property not his own". The word "professes" means purports, claims or acknowledges. Such a person is not the owner of the property, therefore, he cannot transfer the property but he can make arrangements for the transfer of the property which he does not own. If the property is such that the transferor can transfer it, then it will pass to the transferee without any election by the person who is given a benefit by the same instrument. The necessary condition for the application of this doctrine is that there should be a claim under the instrument and also a claim dehors the instrument.202 It is not necessary that the transferor should mention it that he is transferring the property which is not his own. The knowledge of the fact that the transferor has no authority to transfer the property is immaterial for the applicability of doctrine of election. The second paragraph of the section says that the rule will apply whether the transferor does or does not believe that which he professes to transfer to be his own. In a case, A being entitled to one share of a house, transferred the entire house to B and conferred a benefit on the owner of the other share of the house. It was held that the

transferor intended to give the whole house, it is immaterial from what cause this intention proceeded, whether he forgot or misunderstood his rights.203

[s 35.3] Benefit Conferred on Owner of Property The transferor in the same transaction of transfer of property confers some benefit on the owner of the property. The owner is given some benefit in compensation of his ownership. The owner is one who is put to election. The occasion for election arises only where a benefit is conferred directly on the owner of the property. Where benefit is given indirectly, no duty to elect arises. For example, A professes to transfer the property of B to C and gives Rs 10,000 to the wife of B. This is not the case of direct benefit to B and thus, B has no duty to elect. It is also necessary that the benefit and burden both must come from the same transaction. If they come from independent sources, the transferee need not elect. However, it is not necessary that both should be transferred from the same instrument of transfer. They must be parts of the same transaction.

[s 35.4] Part of the Same Transaction It is necessary for making the rule of election to operate that both the transfer and benefit form part of the same transaction. Benefit must be given in lieu of transfer. Benefit and transfer must be inseparable and interdependent. Where they are independent of each other they will not be considered as parts of the same transaction. An example may be taken of the early case of Muhammad Afzal v Gulam Kasim.204 In this case, after the death of Nawab of Tank, the government while transferring chiefship to Nawab's eldest son, transferred some cash allowance to the Nawab's second son. The Nawab had already transferred in his life time villages to the second son for his maintenance. It was held by the Privy Council that since these grants (cash and villages) came to the second son from two different sources, they were not part of the same transaction, and, therefore, the second son was not put to election.

[s 35.5] Owner of Property must Elect The next requirement of his section is that the owner of the property must elect either to confirm such transfer or to dissent from it. He may either accept the instrument with all its contents or reject it altogether. Where he accepts the instrument he becomes entitled to the benefit but he becomes bound to transfer the property. If he does not accept the instrument, he retains the property and the benefit is not conferred on him. The person electing must be the "owner" of the property. The word "owner" has been used in a very wide sense in this section. It includes not only those who have vested interest but also those who have contingent, reversionary and remote interest in the property. The third paragraph of the section says that a person taking no benefit directly under a transaction, but deriving a benefit under it indirectly, need not elect. This means that the benefit must be given directly to the owner in lieu of transfer of his property. For example, if the lands of Sultanpur are settled upon C for life and after his death upon D, his only child. A bequeaths the land of Sultanpur to B and 1000 rupees to C. C dies intestate after the testator without making any election. D takes out administration to C and as administrator elects on behalf C's estate to take under the Will. In that capacity

he retains the legacy of Rs 1,000 and accounts to B for the rents of land of Sultanpur which accrued after the death of the testator and before the death of C. The fourth paragraph of the section says that a person who in his own capacity takes a benefit under the transaction may in another capacity dissent therefrom. For example, if the estate of Sultanpur is settled upon A for life and after his death upon B. A leaves the estate to D and Rs 2,000 to B and Rs 1,000 to C, who is B's only child. B dies in testate without making any election shortly after the testator. C takes out administration to the estate B and as an administrator elects to keep the estate in opposition of the will and the relinquish the legacy of Rs 2,000. C may do this and yet claim under the will his legacy of Rs 1000. Where the right of election was not offered to the plaintiff transferor in the sale deed, it was held that in the absence of the right of election, the transferor could not claim that he had elected for the alternative land in lieu of the disputed land.205

[s 35.6] Where Person Elects to Dissent Where the owner elects to dissent from the transfer, he shall relinquish the benefit so transferred to him and such benefit shall revert back to the transferor or his representative as if it had not been disposed of. When property so reverts back and (i) the transfer is gratuitous and the transferor has before election died or otherwise

became incapable of making a fresh transfer, and (ii) in all cases where the transfer is for consideration,

it shall be the duty of the transferor or his representatives to compensate the disappointed transferee. The amount of compensation shall be the amount or value of the property which was going to be transferred to him, if the option has been exercised in favour of the transaction. Illustration 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 1000 to C. C elects to retain the farm. He forfeits the gift of Rs 1000.

[s 35.7] Exception The section also contains an exception to the last preceding four rules. 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 claims the property, he must relinquish the particular benefit. However, he is not bound to relinquish any other benefit conferred upon him by the same transaction.

[s 35.8] Mode of Election The section also deals with the mode of election. The owner has to choose one out of the two inconsistent rights. This choice may be express or implied from conduct. Where the election is made by the owner in express words, it is an express election

which is final and conclusive. But where the owner simply accepts the benefit without expressing anything in words, it is presumed that he has elected in favour of transaction provided— (i) he is aware of his duty to elect, and (ii) of those circumstances which would influence the judgment of a reasonable

man in making an election, or (iii) if he waves inquiry under the circumstances.

Where the owner of the property having full knowledge of the circumstances and being aware of his duty to elect accepts the benefit, it means that he has chosen in favour of the transaction. In two circumstances, there is presumption that he has knowingly accepted the benefit:— (1) Two years enjoyment:—Where the owner has enjoyed the benefit for two years

without doing any act to express dissent. (2) Impossibility:—Where the owner of the property has done some act which

renders it impossible to place the parties (persons interested in the property) in the same condition in which they would have been as if such act had not been done. For example, 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.

[s 35.9] Time Limit for Election Time limit for the election has been prescribed by the ninth paragraph of the section. The owner of the property has to signify his confirmation or dissent from the transfer within one year after the date of transfer. This section says that if the owner of the property does not, within one year after the date of transfer, signify to the transferor or his representatives his intention to confirm or to dissent from the transfer, the transferor or his representatives may require him to make his election after the expiration of that period. But 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.

[s 35.10] Election by the person under disability Where the person making election suffers from some disability, the tenth paragraph of the section provides that in such a case, the election shall be postponed until the disability ceases or until the election is made by some competent authority on his behalf.

[s 35.10.1] Hindu Law.— The principle underlying this section has always been applied to Hindus. In the case of Rungamma v Atchamma,206 the Privy Council referred to the rule that a party shall not at the same time affirm and disaffirm the same transaction—affirm it as far as it is for his benefit and disaffirm it as far as it is to his prejudice.

This doctrine was applied directly in the case of Mangal Das v Runchhoddas.207 In this case, a Hindu widow bequeathed immovable property of her husband to K and gave the plaintiff, who was a reversionary heir, a legacy of Rs 2000. The plaintiff claimed the legacy under the will and immovable property as heir. The court held that doctrine of election will be applicable here and he will have to elect one or the other.

[s 35.10.2] Muslim Law.— In the case of Sadik Hussain v Hashim Ali,208 the Privy Council applied this doctrine to Mohammedans also.

[s 35.10.3] English Law.— Under English Law, a transferee by electing against the transfer does not lose his benefit but he becomes bound to make compensation out of it to the disappointed person. Therefore, in English Law, doctrine of compensation applies in comparison to the Indian doctrine of forfeiture. Under English Law, the person electing against the transfer gets what remains after compensating the transferee disappointed. Secondly, no time is fixed by English law for making an election, except when the time is limited by the instrument itself. In Indian law, a period of one year is given for making an election.

[s 35.11] Indian Succession Act Sections 180 to 190 of the Indian Succession Act, 1925 contain the rule of election as applied to Wills. Section 182 contains certain illustrations which are important from the point of view of the rule election. They are given below:— (i) The farm of Sultanpur was the property of C. A bequeathed it to B, giving a

legacy of 1,000 rupees to C. C has elected to retain his farm of Sultanpur, which is worth 800 rupees. C forfeits his legacy of 1,000 rupees, of which 800 rupees goes to B, and the remaining 200 rupees falls into the residuary bequest, or devolves according to the rules of intestate succession, as the case may be. (ii) A bequeaths an estate to B in case B's elder brother (who is married and has

children) shall leave no issue living at his death. A also bequeaths to C a jewel, which belongs to B. B must elect to give up the jewel or to lose the estate. (iii) A bequeaths to B 1,000 rupees, and to C an estate which will, under a

settlement, belong to B if his elder brother (who is married and has children) shall leave no issue living at his death. B must elect to give up the estate or to lose the legacy. (iv) A, a person of the age of 18, domiciled in India but owning real property in

England, to which C is heir at law, bequeaths a legacy to C and, subject thereto, devises and bequeaths to B "all my property whatsoever and wheresoever", and dies under 21. The real property in England does not pass by the Will. C may claim his legacy without giving up the real property in England.

1 Nothing in Chapter II is to be deemed to affect any rule of Muhammadan Law, see section 2,

Act 20 of 1929. 199 Leading Cases in Equity, White & Tudor, Vol I, Edn VIII. 200 C Beepathuma v Velasari Shankararnarayana Kadambolithaya, AIR 1965 SC 241 : (1964) 5

SCR 836 . 201 Codrington v Lindsay, (1873) 8 Ch 578 : (1873) 42 LJ Ch 526 . 202 Wollaston v King, 38 LJ Ch 398. 203 Padbury v Clarke, (1859) 42 ER 115 (117). 204 (1903) 30 Cal 843 : 30 IA 190. 205 Piara Singh v Charan Singh, AIR 2009 (NOC) 3020 (P&H). 206 (1858) 4 Moo Ind App 1 : 7 Suth WR 57. 207 (1890) 14 Bom 438. 208 (1916) 38 All 627 : 43 IA 212 : 36 IC 104.

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER II1 TRANSFERS OF PROPERTY BY ACT OF PARTIES Chapter II of the Transfer of Property Act, 1882 deals with transfers of property by act of parties. This chapter has been divided into two parts: Part-A—provides for rules regarding transfers of property in general, whether movable or immovable. Part-B—provides for rules regarding transfers of immovable property.

(A) TRANSFER OF PROPERTY, WHETHER MOVABLE OR IMMOVABLE Part-A consists of definition of property what may be transferred, competency of persons, operation of transfers, oral transfers, restrictions on transfers, vested interest, contingent interest, conditional transfers, transfers for benefit of unborn persons and elections, etc. All these provisions will be taken up under the following headings:— I. General provisions II. Restrictions III. Transfer for the benefit of unborn person IV. Transfer to a Class V. Vested Interest VI. Contingent Interest VII. Conditional Transfer VIII. Election IX. Apportionment

IX. APPORTIONMENT [s 36] Apportionment of periodical payments on determination of interest of person entitled.— In the absence of a contract or local usage to the contrary, all rents annuities, pensions, dividends and other periodical payments in the nature of income shall, upon the transfer of the interest of the person entitled to receive such payments, be deemed, as between the transferor and the transferee, to accrue due from day to day, and to be apportionable accordingly, but to be payable on the days appointed for the payment thereof.

Comments [s 36.1] Apportionment of Periodical Payments (Section 36)

"Apportionment" means division. "Apportionment" is a division of a whole into parts proportionate to the rights of more claimants than one."209 Story in his Equity Jurisprudence210 has explained that the term apportionment is used in two senses: (1) to denote the distribution of a common fund among the several claimants, and (2) to denote contribution made by several persons having distinct rights to

discharge a common burden. According to the Transfer of Property Act, 1882, apportionment is of two kinds:— (i) Apportionment by time—Section 36 deals with apportionment of periodical

payments as between the transferor and the transferee. (ii) Apportionment by estate—Section 37 deals with apportionment of an obligation

in the event of the division of property to which it relates. When any property yielding periodical income is transferred the question arises how this income is to be divided between the transferor and the transferee. In this respect, section 8 provides that the transferee is entitled to the interest or income accruing after the transfer takes effect. The income which accrues from day to day, like interest, creates no problem in distribution between transferor and transferee but the income which accrues only at stated periods section 8 becomes unable to divide that. To overcome this difficulty, section 36 provides that all periodical payments in the nature of rent, annuities, dividends and pensions shall be deemed to accrue from day-to-day and be apportioned between the transferor and transferee on that basis. Section 36 says that all rents, annuities pensions, dividends and other periodical payments in the nature of income shall, upon the transfer of interest of the person entitled to receive such payments, be deemed, as between the transferor and the transferee, to accrue due from day-to-day, and to be apportionable accordingly, but to be payable on the days appointed for the payment thereof. For example, A lets his house at a rent of Rs 100 payable on the last day of each month. A sells that house to B on 15th June. On 30th June, A is entitled to Rs 50 of the rent from the 1st to 15th June and B is entitled to Rs 50 of the rent from 15th to 30th June. This is apportionment by time.

[s 36.2] Inter vivos Transfers This section is applicable to inter vivos transfers between transferor and transferee only. It has no application where third parties are involved. It does apply to transfers by operation of law.

[s 36.3] Local Usage or Contract This rule can be excluded by a local usage or a contract to the country. For example, in any certain area there may be local usage or custom prevalent which may debar the operation of this section in that area. In such areas, this rule will not apply. Similarly, A while selling his tenanted house to B in the middle of the month may agree that B should have the whole rent for that month which might be payable at the month end under a tenancy contract.

[s 36.4] Other Periodical Payments

The expression "other periodical payments" occurring in this section are to be construed according to the "ejusdem generis" rule according to which same type of payments like rents, annuities, pensions, dividends are to be included. Therefore, this expression does not include the profits of partnership which accrue only after the adjustment of accounts211 and profits in the share of a village.212

[s 36.5] Payable The apportionment does not affect the date when the payment is to be made by the person liable. Therefore, if under a lease, rent is payable at the end of the year but the lessor transfers or assigns his interest in the middle of the year, both the transferor and transferee will become entitled to half of the rent but the lessee will remain liable to pay only at the end of the year.213 Now some cases relating to apportionments: (i) Lakshmi Naranappa v Melothraman214—In this case, the lessor had only a life

interest and died a month before the rent of the half year was payable. Here there was no question of a transfer, yet the assignee of the lessor was held to be entitled to an apportionment of rent for the period up to the death of the lessor. (ii) Rangappa v Shiva215—This case deals with the Hindu widow's right to

maintenance which accrues from day-to-day. On the death of a Hindu widow, her heirs were held entitled to recover the maintenance allowance up to the day of her death, although the allowance had been expressed to be payable on a fixed date for the convenience of the parties. (iii) Subba Raju v Seetharamaraju216—The rule of apportionment applies only to

inter-vivos transfers; it is not applicable to execution sales. A mortgagee brought the mortgaged property to sale and bought the property himself at the court sale in November, 1922. The rent for the year was payable on 1 April 1923. The mortgagor claimed that the rent should be apportioned and that he should receive the rent from 1 April 1922 till November, 1922. But as it was an execution sale, section 36 did not apply, the mortgagee was held entitled to the whole year's rent payable on 1 April 1923.

1 Nothing in Chapter II is to be deemed to affect any rule of Muhammadan Law, see section 2,

Act 20 of 1929. 209 Wharton's Law Lexicon, 14th Edn, 1938, p 70. 210 2nd Edn, p 305. 211 Jones v Ogle, (1872) 8 Ch App 192 (198). 212 Gobind Rao v Bhagirathi, (1901) 14 CPLR 84. 213 Lala Ganga Ram v Mewa Ram, AIR 1922 All 275 . 214 (1903) 26 Mad 540. 215 (1933) 65 Mad LJ 410.

216 (1916) ILR 39 Mad 283 : 28 IC 232 : AIR 1916 Mad 323 .

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER II1 TRANSFERS OF PROPERTY BY ACT OF PARTIES Chapter II of the Transfer of Property Act, 1882 deals with transfers of property by act of parties. This chapter has been divided into two parts: Part-A—provides for rules regarding transfers of property in general, whether movable or immovable. Part-B—provides for rules regarding transfers of immovable property.

(A) TRANSFER OF PROPERTY, WHETHER MOVABLE OR IMMOVABLE Part-A consists of definition of property what may be transferred, competency of persons, operation of transfers, oral transfers, restrictions on transfers, vested interest, contingent interest, conditional transfers, transfers for benefit of unborn persons and elections, etc. All these provisions will be taken up under the following headings:— I. General provisions II. Restrictions III. Transfer for the benefit of unborn person IV. Transfer to a Class V. Vested Interest VI. Contingent Interest VII. Conditional Transfer VIII. Election IX. Apportionment

IX. APPORTIONMENT [s 37] Apportionment of benefit of obligation on severance.— When, in consequence of a transfer, property is divided and held in several shares, and thereupon the benefit of any obligation relating to the property as a whole passes from one to several owners of the property, the corresponding duty shall, in the absence of a contract, to the contrary amongst the owners, be performed in favour of each of such owners in proportion to the value of his share in the property, provided that the duty can be severed and that the severance does not substantially increase the burden of the obligation; but if the duty cannot be severed, or if the severance would substantially increase the burden of the obligation the duty shall be performed for the benefit of such one of the several owners as they shall jointly designate for that purpose: Provided that no person on whom the burden of the obligation lies shall be answerable for failure to discharge it in manner provided by this section, unless and until he has had reasonable notice of the severance. Nothing in this section applies to leases for agricultural purposes unless and until the State Government by notification in the Official Gazette so directs.

Illustrations (a) A sells to B, C and D a house situated in a village and leased to E at an annual

rent of Rs 30 and delivery of one fat sheep, B having provided half the purchasemoney and C and D one quarter each. E, having notice of this, must pay Rs 15 to B, Rs 7.50 to C, and Rs 7.50 to D and must deliver the sheep according to the joint direction of B, C and D. (b) In the same case, each house in the village being bound to provide ten days'

labour each year on a duke to prevent inundation. E had agreed as a term of his lease to perform this work for A. B, C and D severally require E to perform the ten days' work due on account of the house of each. E is not bound to do more than ten days' work in all, according to such directions as B, C and D may join in giving.

Comments [s 37.1] Apportionment of Benefit (Section 37) Where on a transfer a property is given to several persons by portions, each transferee is entitled to all the advantages accruing from the property in proportion to his interest in it. This rule is subject to two conditions:— (i) the person on whom the burden of the obligation lies must have notice of the

severance. In simple words, the person who has to perform the corresponding duty must have information that the original single owner has divided his property, (ii) the obligation must be such which can be severed, and (iii) the severance should not increase the burden of his obligation; the person with

corresponding duty must perform the duty to several owners. (i) Notice of Severance.—The section says that the persons on whom the burden of obligation under apportionment lies must have reasonable notice of severance. The person on whom the burden of obligation lies shall not be answerable for failure to discharge it in the prescribed manner unless and until he has had reasonable notice of the severance. Notice to the tenant is sufficient to convert the single obligation to pay rent to all into several obligations to pay rent to each co-sharer. On receipt of the notice the tenant is under an obligation to pay each sharer his proportionate part of the rent but if a suit is necessary it is still necessary to join all the sharers as parties.217 (ii) Severable Obligation.—The obligation must be such that it can be severed and can be performed in parts in favour of each of the several owners. If the obligation cannot be severed, it must be performed for the benefit of such one of the several owners as they shall jointly designate for the purpose. (iii) No Additional Burden.—It is necessary that the severance does not increase the burden on the person who has to perform the obligation. The section says that if the severance would substantially increase the burden of the obligation the duty shall be performed for the benefit of such one of the several owners as they shall jointly designate for that purpose.

[s 37.2] Agricultural Purposes This section does not apply to leases for agricultural purposes unless and until the State Government directs the application of this section by Notification in the Official Gazette.218

1 Nothing in Chapter II is to be deemed to affect any rule of Muhammadan Law, see section 2,

Act 20 of 1929. 217 Prem Chand v Mokshoda Debi, (1887) 14 Cal 201 . 218 See Illustrations.

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER II1 TRANSFERS OF PROPERTY BY ACT OF PARTIES Chapter II of the Transfer of Property Act, 1882 deals with transfers of property by act of parties. This chapter has been divided into two parts: Part-A—provides for rules regarding transfers of property in general, whether movable or immovable. Part-B—provides for rules regarding transfers of immovable property.

(B) TRANSFER OF IMMOVABLE PROPERTY Part B of the Chapter II of the Transfer of Property Act, 1882 deals only with transfer of immovable properties. This part consists of sections 38 to 53A. These sections will be taken up in following groups or parts:— I. Transfer by a person other than a full owner. (sections 38, 41 and 43). II. Protection of third person's rights (sections 39-40). III. Transfer by a person having authority to revoke a former transfer (section 42). IV. Transfer by co-owners (sections 44 and 47) V. Joint-transfers (sections 45-46) VI. Priority of rights created by transfer (sections 48 and 78) VII. Transferee's right under a policy (section 49) VIII. Bona fide holders under a defective title (sections 50-51) IX. Lis Pendens (section 52) X. Fraudulent Transfer (section 53) XI. Part-performance (section 53A)

[s 38] Transfer by person authorised only under certain circumstances to transfer.— Where any person, authorised only under circumstances in their nature variable to dispose of immovable property, transfers such property for consideration, alleging the existence of such circumstances, they shall, as between the transferee on the one part and the transferor and other persons (if any) affected by the transfer on the other part, be deemed to have existed, if the transferee, after using reasonable care to ascertain the existence of such circumstances, has acted in good faith. Illustration A, a Hindu widow, whose husband has left collateral heirs, alleging that the property held by her as such is insufficient for her maintenance, agrees, for purposes neither religious nor charitable to sell a field, part of such property, to B. B satisfies himself by reasonable enquiry that the income of the property is insufficient for A's maintenance, and that the sale of the field is necessary, and acting in good faith, buys the field from

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

Comments [s 38.1] Limited Power of Transfer (Section 38) Section 38 deals with such transfers of property where the transferor has only limited power of transfer in respect of an immovable property. The power of transfer is available only under specified circumstances. When these circumstances are present the transferor can transfer the property. It generally covers transfers made by a Hindu widow, the manager of a Hindu family and the guardian of a minor. Section 38 has only limited scope. It does not apply to cases covered under section 41 (transfer by ostensible owner) of this Act or to cases under section 64 (person purchasing in good faith for consideration without notice of a trust) of the Trusts Act, 1882. Where a person, who is authorized to transfer only under certain circumstances, transfers immovable property for consideration, alleging the existence of such circumstances, the section declares that, as between the transferor and the transferee and other affected by the transfer such circumstances shall be deemed to have existed if the transferee— (i) has used reasonable care to ascertain the existence of such circumstances, and (ii) has acted in good faith.

In simple words, where a person is authorized to transfer a property in certain specific circumstances which are of variable nature, the actual existence of such circumstances is not necessary. It is sufficient that the transferee has used reasonable care to ascertain the existence of such circumstances and has acted in good faith. The principle underlying this section was laid down by the Privy Council in the case of Hanooman Prasad v Mst Babooe.219 Their Lordships observed: "The power of a manager for an infant heir to charge an estate not his own, is under the Hindu Law, a limited and qualified power. It can only be exercised rightly in case of need, or for the benefit of the estate. Their Lordships think that the lender is bound to inquire into the necessities for the loan, and to satisfy himself as well as he can, with reference to the parties with whom he is dealing, that the manager is acting in the particular instance for the benefit of the estate. But they think that if he does so inquire, and acts honestly, the real existence of an alleged sufficient and reasonably credited necessity is not a condition precedent to the validity of his charge, and they do not think that under such circumstances, he is bound to see to the application of the money."

[s 38.2] Essential Requirements The essential requirements for the application of this section are:— (1) The transferor should have a limited power of alienation over the property. (2) The transferor is under certain special circumstances authorized to transfer the

property. Special circumstances are generally variable in nature. (3) The transferor must transfer the property for consideration. (4) The transferor must allege the existence of special circumstances at the time of

transfer. (5) The transferee must have used reasonable care to ascertain the existence of

such circumstances. (6) The transferee must have acted in good faith and must have honestly believed

in the existence of those circumstances.

[s 38.3] Protection of Transferee This section protects the transferee. It is sufficient that the transferee used reasonable care to ascertain the circumstances alleged by the transferor and acted in good faith, honestly believing in the existence of those circumstances. For example, where a guardian of a minor's property mortgages the property alleging legal necessity, end the mortgage after bona fide inquiry finds the existence of necessity, then he will be protected even though he may not be able to see where that money is going to be used. It is for the court to see the existence of legal necessity, the transferee has no means to determine its existence.

1 Nothing in Chapter II is to be deemed to affect any rule of Muhammadan Law, see section 2,

Act 20 of 1929. 219 (1856) 6 Mad IA 393 (423).

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER II1 TRANSFERS OF PROPERTY BY ACT OF PARTIES Chapter II of the Transfer of Property Act, 1882 deals with transfers of property by act of parties. This chapter has been divided into two parts: Part-A—provides for rules regarding transfers of property in general, whether movable or immovable. Part-B—provides for rules regarding transfers of immovable property.

(B) TRANSFER OF IMMOVABLE PROPERTY Part B of the Chapter II of the Transfer of Property Act, 1882 deals only with transfer of immovable properties. This part consists of sections 38 to 53A. These sections will be taken up in following groups or parts:— I. Transfer by a person other than a full owner. (sections 38, 41 and 43). II. Protection of third person's rights (sections 39-40). III. Transfer by a person having authority to revoke a former transfer (section 42). IV. Transfer by co-owners (sections 44 and 47) V. Joint-transfers (sections 45-46) VI. Priority of rights created by transfer (sections 48 and 78) VII. Transferee's right under a policy (section 49) VIII. Bona fide holders under a defective title (sections 50-51) IX. Lis Pendens (section 52) X. Fraudulent Transfer (section 53) XI. Part-performance (section 53A)

[s 39] Transfer where third person is entitled to maintenance.— Where a third person has a right to receive maintenance, or a provision for advancement or marriage, from the profits of immoveable property, and such property is transferred, 220[***] the right may be enforced against the transferee, if he has notice 221[thereof ] or if the transfer is gratuitous; but not against a transferee for

consideration and without notice of the right, nor against such property in his hands. 222[***]

Comments [s 39.1] Right to Maintenance etc. (Section 39)

According to this section, where a person has— (i) a right to receive maintenance, or (ii) a provision for advancement or marriage (iii) from the profits of immovable property, and (iv) such property is transferred, (v) the right may be enforced against the transferee if— (a) he has notice of the burden on the property, or (b) the transfer is gratuitous (vi) but not against a transferee— (a) for consideration, and (b) without notice of the right, nor (c) against such property in his hands.

This section lays down that where a third party has a right to receive maintenance or a provision for advancement or marriage out of the profits of immovable property, which is subsequently transferred, the right of such third party can be enforced against the transferee— (i) if the transferee had notice, i.e., notice of maintenance, etc. although the transfer

was for value or consideration, or (ii) if the transfer was gratuitous one i.e., without consideration, irrespective of the

fact whether the transferee had the notice of the right of maintenance, etc.

[s 39.2] Amendment of the Section Prior to the amendment in 1929, this section provided that "where a third person has right to maintenance or a provision for advancement or marriage, from the profits of immovable property, and such property is transferred with the intention of defeating such right, the right may be enforced against the transferees, if he has notice of such intention, or if the transfer is gratuitous, but not against a transferee for consideration and without notice of the right, nor against such property in his hands." This section failed to protect sufficiently persons entitled to maintenance. That is why it was amended in 1929 retrospectively.

[s 39.3] Rights protected under the Section Three definite rights are protected by the section:— (i) a right of maintenance (ii) a provision for advancement (iii) a provision for marriage.

[s 39.3.1] Right to Receive Maintenance.— Under this section protection is given to the maintenance rights of a widow, wife, son, unmarried daughter, etc. who are entitled to receive maintenance from the profits of immovable property. This section protects the right to receive maintenance not only in the first instance but also the right to receive enhanced amount of maintenance in future if there has been material change in the circumstance.223 A third person means a person other than the transferor and transferee. Accordingly the wife and children of the transferor have been held to be in the category of third persons. It is necessary to attract the section that the claimant third person must have the right, as enumerated in the section on the property. Wife and children do not have any such rights on the property of the husband or parents. Their rights are only against the person and not his property. The nature and validity of the transfer of his property by him is irrelevant.224 A wife was living separately from her husband by reason of strained relationship. She had filed a suit against the husband for maintenance. The husband's brother obtained a decree against the husband's property in connivance with the husband with the oblique motive of defeating the wife's right and sold off the property. The transaction of sale was found to be gratuitous. A decree was passed by the lower appellate court to the effect that the wife was entitled to subject the suit property to a change in her favour. The court said that this decree could be supported on the basis of the provisions of section 39. It was not liable to be set aside merely on the ground that sections 27 and 28 of the Hindu Adoption and Maintenance Act, were erroneously cited.225

[s 39.3.2] Provision for Advancement.— "Provision for advancement" means where a property is purchased in the name of near relations such as in the name of wife or children, there is presumption of gift of that property in favour of that relation so as to enable them to anticipate the inheritance. This is a rule of English law and is unknown in India. Such transactions in India come under Benami Transactions under section 41.

[s 39.3.3] Provision for Marriage.— Provision for legitimate expenses for the marriage of the members of a Joint Hindu Family may be made from the income of a property. Such persons are entitled to enforce their rights against the transferees for consideration of such property with notice of rights or a gratuitous transferee of such property under this section.226 An example may be taken of the case of Raman Kutty Puroshothaman v Amini Kutty.227 In this case, the wife's application for maintenance was pending and the husband attempted to defeat her right by transferring his properties to his brothers. It was held by the Kerala High Court that the decree for maintenance charging the husband's properties was proper and the brother could not be said to be the bona fide purchasers. The claim of a Hindu widow to reside in the family house stands on the same footing as a right of maintenance and can be claimed against the purchaser with notice of the claim for residence but not where the property is sold to pay off her husband's debts.228 Where a person is entitled to receive only a part of his maintenance from the profits of a particular village, this will also be governed by this section and such right can neither

be enforced against a transferee for consideration, without notice of the right nor against such property in his hands.229 The person protected under this section has no proprietary interest in the property nor a charge upon it but he has mere right to be satisfied from the profits of the property and the person protected under this section is a third person, i.e., a person other than the transferor and transferee.

1 Nothing in Chapter II is to be deemed to affect any rule of Muhammadan Law, see section 2,

Act 20 of 1929. 220 The words "with the intention of defeating such right" omitted by Act 20 of 1929, section

11. 221 Subs. by Act 20 of 1929, section 11, for "of such intention". 222 The illustration omitted by Act 20 of 1929, section 11. 223 Kaveri Amma v Parameswari Amma, AIR 1971 Ker 216 : 1971 Ker LJ 966 : 1971 Ker LT 299 . 224 Vijayan v Sobhana, AIR 2007 Ker 177 (DB) : 2007 (54) All Ind Cas 764 : ILR (2007) 1 Ker 822

. 225 Sarwan Singh v Jagir Kaur, AIR 2006 P&H 171 : 2006 (43) All Ind Cas 906 : (2006) 2 Punj LR

304 ; charge of maintenance can be enforced against the transferee but where transferee is not in possession of property and sale deed was executed to defeat the claim of maintenance, section 39 does not apply, Siddagangaiah (Dead) through LRs v NK Giriraja Shetty (Dead) through LRs, AIR 2018 SC 3080 . 226 Vaikuntam v Kallapiran, (1900) 23 Mad 512. 227 AIR 1997 Ker 306 : ILR (1997) 3 Ker 544 : (1997) 1 Ker LJ 275 . 228 Yamunabai v Nanabhai, 12 Bom LR 1075 : 8 Ind Cas 1057. 229 Kehso Prasad v Upper India Bank, AIR 1933 Oudh 76 .

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER II1 TRANSFERS OF PROPERTY BY ACT OF PARTIES Chapter II of the Transfer of Property Act, 1882 deals with transfers of property by act of parties. This chapter has been divided into two parts: Part-A—provides for rules regarding transfers of property in general, whether movable or immovable. Part-B—provides for rules regarding transfers of immovable property.

(B) TRANSFER OF IMMOVABLE PROPERTY Part B of the Chapter II of the Transfer of Property Act, 1882 deals only with transfer of immovable properties. This part consists of sections 38 to 53A. These sections will be taken up in following groups or parts:— I. Transfer by a person other than a full owner. (sections 38, 41 and 43). II. Protection of third person's rights (sections 39-40). III. Transfer by a person having authority to revoke a former transfer (section 42). IV. Transfer by co-owners (sections 44 and 47) V. Joint-transfers (sections 45-46) VI. Priority of rights created by transfer (sections 48 and 78) VII. Transferee's right under a policy (section 49) VIII. Bona fide holders under a defective title (sections 50-51) IX. Lis Pendens (section 52) X. Fraudulent Transfer (section 53) XI. Part-performance (section 53A)

[s 40] Burden of obligation imposing restriction on use of land.— Where, for the more beneficial enjoyment of his own immoveable property, a third person has, independently of any interest in the immoveable property of another or of any easement thereon, a right to restrain the enjoyment 230[in a particular manner of the latter property], or Or of obligation annexed to ownership but not amounting to interest or easement.— Where a third person is entitled to the benefit of an obligation arising out of contract and annexed to the ownership of immoveable property, but not amounting to an interest therein or easement thereon, such right or obligation may be enforced against a transferee with notice thereof or a gratuitous transferee of the property affected thereby, but not against a transferee for consideration and without notice of the right or obligation, not against such property in his hands.

Illustration A contracts to sell Sultanpur to B. While the contract is still in force he sells Sultanpur to C, who has notice of the contract. B may enforce the contract against C to the same extent as against A.

Comments [s 40.1] Restrictive Covenants (Section 40) According to this section, where a third person— (1) has for the more beneficial enjoyment of his own immovable property and

independently of— (a) any interest in the immovable property of another, or (b) any easement thereon,

a right to retain the enjoyment in a particular manner, or (2) is entitled to the benefit of an obligation— (a) arising out of contract, and (b) annexed to the ownership of immovable property,

but not amounting to an interest in or easement thereon, (3) Such right or obligation may be enforced against— (a) a transferee with its notice, (b) a gratuitous transferee of the property affected thereby, (4) But not against a transferee—for consideration and without notice of the right or

obligation, nor against such property in his hands. Covenants are written agreements or contracts with respect to a property. Where the covenants restrict the use or enjoyment of a property, they are known as restrictive covenants. Therefore, the restrictive covenants are conditions imposed by the transferor restraining the use or enjoyment of property by the transferee. The general rule of law is that a personal contract, even if it is related to a property, is binding only between the parties to the contract and their privies. It is not enforceable against third persons. As noted earlier section 11 of the Act says that where on a transfer of property an interest is created in the property absolutely in favour of any person but the terms of the transfer directs 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 in such a manner as if there was no such direction. But if such interest has been made in respect of one piece of immovable property for the purpose of securing the beneficial enjoyment of another piece of such property, such a direction shall be a valid direction. Where the transferee is required to do some act it is known as affirmative covenant but where he is restrained from doing certain things, it is known as negative covenant. Section 11 deals with covenants enforceable against the transferee but not against the subsequent transferees.

Section 40 deals with negative covenants and their enforceability against subsequent transferees. This section says that if a transferor imposes a negative covenant in a transfer of property then such covenant is binding and enforceable against the assignee of the transferee provided the following conditions are fulfilled:— (i) The covenant is for the more beneficial enjoyment of the transferor's own

immovable property, (ii) The subsequent transfer is for value and the assignee has notice of the

covenant, or (iii) The subsequent transfer is without consideration.

Restrictive covenants are annexed to the land as if they are part of the land and along with the transfer of land they pass on to every subsequent transferee. This section enacts the equitable rule that the burden of a covenant runs with the land. Therefore, such covenants are enforceable against any person who has interest in that land. Affirmative covenants are not annexed to the land and do not run with the land.

[s 40.2] Covenants Running with the Land This expression is borrowed from the English law of real property. A covenant running with the land is a covenant annexed to the land. A covenant may run with the land at law or in equity. A covenant runs with the land at law when the benefit of it passes to the assignee of the covenantee or when the burden of it passes to the assignee of the covenantor, and in either case, independently of notice. A covenant runs with the land in equity when the burden of it can be enforced against the assignee of the covenantor.231 Tulk v Moxhay.232 This section is based on the English law, laid down in the case of Tulk v Moxhay. In this case, T owned a land in London. This land had a garden surrounded by the houses. T sold the garden to E with the covenant that E and his successors or assignees will keep the garden intact as garden ornamental and shall not construct any building on it. T retained the ownership of the houses surrounding the garden with him. After sometime E sold the garden to another person who sold it further to some other person and ultimately it was purchased by M. M had the notice of the covenant but he attempted to develop building in the garden. T enforcing the covenant sought an injunction to restrain M from constructing buildings in the garden. The court held that in equity all the subsequent transferees were bound by the covenant and it restrained M from building houses in the garden. Lord Cotenham LC observed that since M had notice of the covenant and T had legitimate interest in preserving the garden, the covenant was enforceable at equity against M. Therefore, the rule laid down was that in equity a restrictive covenant imposed for the benefit of the land retained by the transferor was binding on purchaser with notice.

[s 40.3] Contractual Obligations Annexed to Ownership The first paragraph of this section deals with the restrictive covenants whereas the second paragraph provides for contractual obligations annexed to ownership. Restrictive covenants are enforceable only when the covenantor's ownership rights in

the property are already established. Second paragraph deals with personal rights arising out of contract, annexed to ownership in the property. According to the second paragraph, where a third person is entitled to the benefit of an obligation arising out of contract and annexed to ownership of the property then the obligation may be enforced against a transferee for value with notice. For example, A contracts to sell Sultanpur to B. While the contract is still in force he sells Sultanpur to C, who has notice of the contract. B may enforce the contract against C to the same extent as against A. A contract for sale of an immovable property, imposes an obligation on the seller to sell the property to purchaser but it does not create any interest in his favour in the property. Such contract creates an equitable estate in his favour. Restrictive covenants and contractual obligations annexed to ownership are enforceable when the transfers are for value and the transferees have notice of the restrictive covenants on the property. They are not binding against a transferee for consideration without notice of the right or obligation.

1 Nothing in Chapter II is to be deemed to affect any rule of Muhammadan Law, see section 2,

Act 20 of 1929. 230 Subs. by Act 20 of 1929, section 12, for "of the latter property or to compel its enjoyment in

a particular manner". 231 Mulla, The Transfer of Property Act, 1882, 9th Edn, p 279. 232 (1848) 2 Phil 774 : (1843-60) All ER 9 : 18 LJ Ch 83.

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER II1 TRANSFERS OF PROPERTY BY ACT OF PARTIES Chapter II of the Transfer of Property Act, 1882 deals with transfers of property by act of parties. This chapter has been divided into two parts: Part-A—provides for rules regarding transfers of property in general, whether movable or immovable. Part-B—provides for rules regarding transfers of immovable property.

(B) TRANSFER OF IMMOVABLE PROPERTY Part B of the Chapter II of the Transfer of Property Act, 1882 deals only with transfer of immovable properties. This part consists of sections 38 to 53A. These sections will be taken up in following groups or parts:— I. Transfer by a person other than a full owner. (sections 38, 41 and 43). II. Protection of third person's rights (sections 39-40). III. Transfer by a person having authority to revoke a former transfer (section 42). IV. Transfer by co-owners (sections 44 and 47) V. Joint-transfers (sections 45-46) VI. Priority of rights created by transfer (sections 48 and 78) VII. Transferee's right under a policy (section 49) VIII. Bona fide holders under a defective title (sections 50-51) IX. Lis Pendens (section 52) X. Fraudulent Transfer (section 53) XI. Part-performance (section 53A)

[s 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.

Comments [s 41.1] Transfer by Ostensible Owner (Section 41)

The section says that— (1) where with the consent (express or implied) of the persons interested in

immovable property, (2) a person is the ostensible owner of such property, and (3) transfers the same for consideration, (4) the transfer shall not be voidable on the ground that the transferor was not

authorised to make it, (5) provided that the transferee, after taking reasonable care to ascertain that the

transferor had power to make the transfer, has acted in good faith.

[s 41.2] Principle The general principle of law of transfer of property is that no person can transfer to another a right or title greater than what he himself possesses. The maxim on which this principle is based is nemo dat quod non-habet, i.e., no one can transfer better title than he himself has. This general rule has certain exceptions too. One exception is that if the true owner of property permits another to hold himself out as the real owner, a third person who deals in good faith with that other person may acquire a good title to the property as against the true owner.233 An example is to be seen in a Supreme Court decision. A property was transferred to a person under a Will and he obtained a probate. He did so without informing the other intestate heirs of the testator. But those heirs allowed him to represent to the developers that he was the owner of the property. He sold the property to the developers. It was held that the developers, having acquired the property in good faith for a valuable consideration, the intestate legal heirs were estopped from challenging the validity of the transaction.234 This is also the rule of estoppel contained in section 115 of the Indian Evidence Act, 1872. The House of Lords in Cairacross v Lorimer,235 observed: "If a man either by words or by conduct, has intimated that he consents to an act which has been done and that he will offer no opposition to it, although it could not have been lawfully done without his consent and he thereby induces others to do that from which they might have abstained, he cannot question the legality of the act, he had so sanctioned to the prejudice of those who have so given to his words or to the fair inference to be drawn from his conduct." Following this, the Privy Council in Ram Coomar v Macqueen,236 observed: "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 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." The difference between section 115 of the Evidence Act, 1872 and section 41 of this Act is that under section 115 it is necessary that the party sought to be estopped should have intended that the party pleading the estoppel should act on his representation, whereas under this section it is not necessary that the real owner should have intended that the transferee should take a transfer of property. In fact, in most of the cases, the intention of the person placing property in the name of another

person (ostensible owner) is to screen the property from the creditors and not that the ostensible owner should transfer the property to anyone.237 The estoppel under this section operates between the true owner and the transferee in good faith. It has no application between the true owner and the ostensible owner, and, therefore, an ostensible owner cannot invoke the provisions of this section for his benefit.238

[s 41.3] Benami Transactions The law relating to transfer of property by an ostensible owner under this section are now subject to the provisions of Benami Transactions (Prohibition of the Right to Recover Property) Act, 1988, "Benami transaction" means any transaction in which property is transferred to one person for a consideration paid or provided by another person. In simple words, the person who purchases the property and pays the price for it, does not purchase the property in his own name but in the name of any other person. The other person whose name is used as the owner of the property is known as benamidar (ostensible owner). In truth, he holds the property on behalf of the real owner because he is not the real owner. The Benami Transaction Act of 1988 provides that where a property is transferred benami (i.e., in the name of another person), the person, in whose name the property is held, shall become the real owner.239 The Benami Transactions Act, 1988 provides that no suits, action or claim to enforce any right in respect of any property held benami against the person in whose name the property is held or any other person shall lie by the person claiming to be the real owner of the property. In other words, the real owner now after the enforcement of this Act cannot claim the property from the benamidar by any suit, claim or action. The defence of being the real owner shall also not be allowed. However, an exception has also been given in the Benami Transaction Act, 1988 where the above-stated rule will not apply:— (a) Where the person in whose name the property is held is a coparcener in a Hindu

Undivided Family and the property is held for the benefit of the co-parceners in the family, or (b) Where the person in whose name the property is held is a trustee or other

person standing in a fiduciary capacity, and the property is held for the benefit of another person for whom he is a trustee or towards whom he stands in such capacity. This means that now an ostensible owner or benamidar has become a real owner except where he is a co-parcener in a Hindu Undivided Family or a trustee standing in a fiduciary capacity. Therefore, the law laid down by section 41 of the Transfer of Property Act, 1882 stands modified except where benamidar is a co-parcener or a trustee standing in a fiduciary capacity. For the purpose of deciding whether a transaction is of benami nature, the motive of the person advancing the consideration for the transaction is the most relevant factor. This view was expressed by the Supreme Court in a case in which the claim was for partition by the daughter of the property of her father. Her brothers refuted this claim saying that the properties in question were purchased by their father in their names and were their personal properties. The court held that the transaction was in the nature of a benami purchase. The Supreme Court reversed this decision because the lower court had not taken into consideration the intention of the father who provided the consideration and the totality of the circumstances.240 In another case the property was purchased in the name of wife through power-of-attorney executed by her. The husband was the attesting witness to the power-of-attorney. Thus he knew that it was the transaction of his wife. Insurance policy also taken in her name. Mutation in her

name was got done immediately. They had a son and seven daughters. The court said that it could be inferred that the property was purchased in the name of wife to provide for the children. It was, therefore, a genuine and not a benami transaction.241 The Act does not have retrospective effect. A suit for recovery of property held by a name lender (benami) before the enforcement date of the Act was held to be not hit by the prohibition under section 4 of the Act.242

[s 41.4] Property in the Name of Wife or Unmarried Daughter The provisions of the Benami Transactions (Prohibition of the Right to Recover Property) Act, 1988 does not apply to bona fide transactions too. For example, where a person purchases property in the name of his wife or unmarried daughter. Section 3(2) of this Act provides that there is no prohibition on the "purchase of property by any person in the name of his wife or unmarried daughter and it shall be presumed, unless the contrary is proved, that the said property had been purchased for the benefit of the wife or the unmarried daughter." The Supreme Court has held in Nand Kishore Mehra v Sushila Mehra,243 that where a person purchases property in the name of his wife or unmarried daughter he can claim the property later if he proves that it was not purchased for their benefit.

[s 41.5] Property Allotted for Life in Lieu of Meritorious Service The State Government in lieu of meritorious service rendered by the late Havaldar allotted land to his widow for maintenance during her life-time. It was held that after the window's death the land was to revert to the concerned State. She could not have transferred it even by a registered deed. The court said: The widow can be ostensible owner to the extent that she has a right during her life-time. She ceased to be an ostensible owner after her death and cannot pass on a better title than what she had. Admittedly, she had a life estate in the property and after her death, the title in the land would revert to the State of Punjab.244

[s 41.6] Displaced Person, Allottee of Government Land The concept of "ostensible owner" has been held to include transferee from the Central or State Government. An allottee under the Displaced Persons (Compensation and Rehabilitation) Act, 1954, could be treated to be an ostensible owner and the government as the real owner. Sale by such person would be valid and binding only if it was under free consent of the ostensible owner. There was fraud in this case. The court said fraud vitiated everything. The real owner was not bound by the sale. The only remedy of the subsequent buyer was refund, etc.245

[s 41.7] Essential Requirements of the Section The following conditions are necessary for the applicability of this section:— (1) The transferor must be an ostensible owner,

(2) The transfer of property to the ostensible owner must be with express or implied

consent of the real owner. (3) The transfer by the ostensible owner must be for consideration. (4) The transferee must have acted in good faith, taking reasonable care in

ascertaining that the transferor has the power to make the transfer. Every one of these conditions must be satisfied for taking the benefit of section 41. The transferee has to prove that the transferor was the ostensible owner of the property with the consent of the real owner; he transferred the property for consideration, and he himself (the buyer) acted in good faith after making a reasonable inquiry.246

[s 41.7.1] Ostensible Owner.— The first requirement of the section is that the transferor must be an ostensible owner. In simple words, an ostensible owner is that person who is not the real owner of the property. An ostensible owner is one who has all the indicia of ownership without being the real owner. He is a person who is apparently the unqualified and full owner and not a person who is a qualified owner like a mortgagee or hirer of goods. Sometimes, there may occur difficulty in ascertaining whether a person is real owner or ostensible owner. The Supreme Court in the case of Jayadayal Poddar v Bibi Hazra,247 held that whether a person is an ostensible owner or not is a substantive question to be decided on the basis of facts and circumstances. The following considerations must be taken into account in deciding upon the fact of ownership— (i) Source of the purchase-money, i.e., who paid the price of the property? (ii) Nature of possession after the purchase, i.e., who had the possession of

property? (iii) Motive of giving benami colour to the transaction, i.e., why the property was

purchased in the name of other person? (iv) Relationship between the parties, i.e., whether the ostensible owner and the real

owner were friends, strangers or relatives? (v) Conduct of the parties in dealing with the property, i.e., the conduct who used to

take care of the property and who had control over the property? (vi) Custody of the title deeds, i.e., who had the title-deeds?

In Suraj Ratan Thirani v Azamabad Tea Co Ltd,248 the Supreme Court held that for the applicability of this section it must be shown that the transferor was the ostensible owner of the property with the consent of the co-sharers where the property is the subject-matter of joint ownership and that the transferee took reasonable care to ascertain that the transferor had power to make transfer. The burden of proof that the transaction is benami and the transferor is the ostensible owner lies on the person who claims to be the real owner.249 The following persons do not come in the category of ostensible owners because they are either restricted or qualified owners:— (i) A manager in possession of property.250 (ii) A licensee in possession of property.251 (iii) A menial servant in occupation of property.251

(iv) A professed agent.252 (v) A manager or trustee of an idol.253 (vi) A donor who has not reserved to himself any power of revocation of the gift

deed.254 (vii) A co-sharer in occupation of joint family property.255 (viii) A mahant of a math's property.256

A dohlidar is not an absolute owner of dohli property. A Dohli property is created in lieu of some services to be rendered by dohlidar. Dohlidar can use such property only so long he renders services for which dohli was created. He cannot transfer the same. Any alienation of such property made by dohlidar would be void.257

[s 41.7.2] Express or Implied Consent of Real Owner.— It is necessary that the transfer of property must be made by the ostensible owner with the express or implied consent of the real owner. The consent must be a real consent. It must not have been obtained by fraud, coercion, force or undue influence258 practised by the ostensible owner on the real owner of the property. If either by words or by conduct, a man permits another person to hold himself out to be the owner of the property and a third person purchases it for value from that person who holds himself out to be the owner of the property after reasonable inquiry into the title, then the real owner will be estopped from recovering the property upon secret title. In the words of Ashurst J, "wherever one or two innocent persons must suffer by the act of a third, he who has enabled such person to occasion the loss must sustain it."259 In case the real owner is incapable of giving the consent like minor or a religious endowment, no one can hold himself out as an ostensible owner of such property. Whether the real owner consented for the ostensible ownership or not is a question of fact to be determined on the facts and circumstances of each case. Where the consent is given in words, either written or spoken, it is an express consent. Where the consent is given by conduct, it is implied consent. The consent is implied where the real owner knows that the ostensible owner is dealing with the real owner's property as his own but the real owner remains silent or acquiesces. Such acquiescence or silence amounts to consent. But where the real owner is not aware of his ownership rights, his silence would not amount to his consent. In such a case, his silence would not debar him from claiming that the transfer is made by an unauthorised person. In this situation, the real owner will be entitled to avoid the sale and this section will not come to the protection of the transferee. Attestation does not imply consent by itself. However, if it is proved that the attestation took place in circumstances which involved knowledge of the real owner or consent of him to the transaction, it may be regarded as implied consent.260 Illustrative Cases (1) A, a Hindu husband, purchased property in the name of his wife, B. The property (land) was entered in the name of the wife in revenue records. After A's death, his widow B, mortgaged the land to C, who took the mortgage after due inquiry believing in good faith that B was the owner of the property. C obtained a decree for sale on his mortgage and purchased the land. But at that time D was in possession of the property

for D had purchased the land in execution of a money decree against A. C's suit against D for possession was decreed. D was the successor in interest of A who had held out his wife B as the ostensible owner and could not defeat the mortgagee who was a transferee in good faith from the ostensible owner.261 (2) A, a Hindu, died leaving a daughter B who took a limited estate by inheritance. B made a statement to the revenue authorities that A's separated brother C was his heir and allowed C to take possession of the estate. On B's death, her son claimed as reversionary heir of A. C was held not entitled to the protection of section 41, because his ostensible ownership was not created by the real owner A but by limited owner B.262 (3) One Alexander purchased certain landed properties in Calcutta in the name of his mistress, Bunnoo Bibee. One of the two children born to him by Bunnoo Bibee was Macqueen. She used to manage the properties and the sale deed was also in her name. During the life-time of Alexander, Bibee sold the properties to Ramdhone (father of Ramcoomar). After the death of Bibee, Macqueen filed a suit against Ramdhone claiming the properties on the ground that her father had left a will in her favour and that the Bibee was only benamidar and Alexander was the real owner. However, Ramdhone pleaded that he was a bona fide purchaser without notice of benami title of the Bibee (the seller). The Calcutta High Court decided in favour of Macqueen. On appeal, the Privy Council held that even assuming that the Alexander was the real owner and Bibee was merely ostensible owner but since the Alexander had allowed Bibee to hold herself out as the real owner, he or his representatives could not recover upon secret title unless they could prove that the purchaser had direct or constructive notice of the real title of Alexander.263 (4) The court said that the plaintiff, being co-sharer with the vendor could not be regarded as the owner of the share of his sister by way of adverse possession. The plaintiff had not ousted other co-sharers/vendor from the suit land. The vendor had not abandoned her share in the property. The subsequent vendors made enquiries from the revenue records. They satisfied themselves of the fact on the record that the vendor was the half-owner of the share in the property. The same was then purchased. It was held that in these circumstances, the subsequent vendees would be entitled to protection under section 41 being bona fide purchasers for consideration.264

[s 41.7.3] No partition between joint owners.— The property was jointly owned by three persons without any partition deed between them. A transfer effected by only one of them was held to be no good. The transferee exercised no care to see that there were other joint owners. He could not be regarded as a bona fide purchaser.265

[s 41.7.4] Transfer for Consideration.— The protection of this section is available only when the transfer is for consideration. If the transfer is without consideration, i.e., gratuitous, this section will not apply. This protection is also not available to gifts. Thus, the real owner will not be precluded from denying a gift made by as ostensible owner.

[s 41.7.5] Good Faith and Reasonable Care.—

Good faith means the bona fide intention, i.e., the transferee had acted honestly and in the real belief that the ostensible owner was the real owner. Reasonable care is not enough if there is absence of good faith. Where a man purchased a property after due inquiry and honestly believing that the seller was the real owner, he will protected against the real owner. But where the purchaser after enquiry found that the seller was only ostensible owner not the real owner, and even then he purchased the property for him, he would not be taken to act honestly. Therefore, the protection of this section will not be available to him. The rule of law is that "he who seeks equity must do equity". Thus, the protection of this section will be available only for that person (transferee) whose own conduct is just and equitable. In the absence of good faith the court will presume a collusion between the ostensible owners and the transferee. For example, where the real owner and the transferee lived in the same village and the transferee was acquainted with the circumstances of his family, even then he purchased the property from some other person, the court was slow in believing the good faith of the transferee.266 Mere misconception of the rights of the transferor will not avail. When a person bought a property belonging to a female, who had been outstayed for unchastity, believing that her interest was forfeited, he was not protected by this section.267 In Qandhara Singh v UOI,268 the plaintiff migrated to India from Pakistan during partition. He had left some land in Pakistan and in lieu of that land he was allotted land in India. It was found later on that some part of the land left by him in Pakistan was mortgaged to Muslims. A notice was served on him to pay the mortgage money back but he did not. Therefore, a part of the land allotted to him was auctioned. Both the defendants and plaintiff took part in the bidding. The defendants got the land in auction but the plaintiff did not challenge the order of auction in appeal. This conduct of the plaintiff was enough to create a belief in the mind of defendants that he consented to the auction sale and, therefore, the purchasers acted in good faith in purchasing the land at the time of auction. Mere good faith is not sufficient. The purchaser must establish that he made reasonable enquiries.269 Reasonable care means such care as the person of ordinary prudence would take in his own case. It means such care as an ordinary man of business would take. Reasonable care is to be expected from everyone who claims to have purchased free from a really existing right.270 It is not possible to lay down any general rule of enquiry which may be called reasonable care for all the cases. The standard of enquiry expected from the transferee depends upon the facts and circumstances of each case. Revenue records are not documents of title and it is not safe to rely on the entry of the transferor's name in the revenue registers. A transferee who omits to enquire into title is not protected by this section.271 In order to avail the protection of this section, the purchaser must inspect the records of at least 12 years in the Registration Office.272 In case of transfer of suit land by ostensible owner when the documentary and oral evidence showed that the real owner by his conduct allowed the world at large to believe that he had no right in the properties and was in fact not in possession of the property and the transactions reflected in the revenue records and in the registered documents fully supported the ostensible title and the possession of the ostensible owner, it was held that the purchasers under such circumstances guided by the land revenue records and title deeds were entitled to protection under section 41 of the Act.273 An illustration may be taken in which A was the owner of a property which was entered in the revenue records in the name of B. B mortgaged the property to C who accepted the mortgage relying on the revenue register. If C had made further inquiry he would

have found that A had objected to the entry of the property in B's name and that the property had been left to A by will. C was not protected by this section.274 The persons who want to take the benefit of this section must be able to show that they have made an enquiry about the transferor's title. Only such persons are entitled to claim protection under section 41 of the Transfer of Property Act, 1882 who despite the inquiry, have not been able to discover who is the real owner of the property and who have full belief that the person making a transfer in their favour is really entitled to that property. In a case, a tahsildar purchased land in the name of his minor sons and entered that in their names in the revenue records. The tahsildar was forbidden by the departmental rules from acquiring land within the limits of his tahsil. The sons afterwards sold and mortgaged the property to a person who acted in good faith and relied on the entries in the revenue records. The purchasers and mortgagees were held not entitled to the protection of this section because they should not have been satisfied with the entries in the revenue records.275 The transferee must show that he has made the usual enquiry into the title of the transferor, otherwise the protection of this section will not be available to him. In Bailey v Barbes.276 Lord Lindley observed, "A purchaser of property is under no obligation to investigate his vendor's title. But in dealing with real property, as in other matters of business, regard is had to the usual course of business and a purchaser who wilfully departs from it in order to avoid acquiring a knowledge of his vendor's title is not allowed to derive any advantage from his wilful ignorance of defects which would have come to his knowledge if he had transacted his business in the ordinary way." Where the suit land was situated in a small village and all parties belonged to that village, it was held that the subsequent purchaser could not be held to be a bona fide purchaser because he must be knowing the earlier transaction of sale of the same land.277 Where the transferee had knowledge of the fact that the land belonged to a lady who had a grandson, it was held that this fact of knowledge ruled out the application of sections 41 and 43. Consent letter is not a document of authority even if it was found to be genuine.278 Where the subsequent purchaser had sufficient time to enquire prior to getting saledeed registered in his favour but no genuine enquiries were made around the area where the property was located and parties were residing, the subsequent purchaser could not be a bona fide purchaser.279

[s 41.8] Doctrine of Holding Out Section 41 protects the transferee from an ostensible owner by applying the doctrine of holding out. This section comes into play when the rights of two innocent parties come into conflict. If a property is owned by A but B is allowed by A to appear as owner in the eyes of the public and taking advantage of his appearance B sells the property to a bona fide purchaser, the question arises whether A can recover the property back from the bona fide purchaser. The owner has rendered the fraud by B possible by holding out B as the owner and, therefore, he has to suffer. However, the following conditions are to be satisfied:— (i) The transferor should be the ostensible owner of the property.

(ii) He must have held the property with the consent (express or implied) of the real

owner. (iii) The transferee had purchased the property for value (consideration) and had

acted in good faith and with reasonable care. (iv) The onus is on the transferee to show that he purchased the property for value

and in good faith without the knowledge of the real state of the title. When the above-stated conditions are satisfied, the transferee from the ostensible owner is protected against the claims of the real owner.

[s 41.9] Burden of Proof In the first place, the burden of proof lies on the transferee to show that the transferor was the ostensible owner and that he acted in good faith and with reasonable care. The onus is then shifted to the party who wants to defeat the transferee's title to show that there was something which called for inquiry and attention. This is because the real owner having created the appearance of title in another person, it is incumbent on him, or on those who derive title from him to show something which amounts to constructive notice of the real title, some specific circumstance as the starting point of an inquiry which would have led to the discovery of it.280 The subsequent purchaser in supercession of an earlier agreement to sell has to prove his bona fide. The burden of proof lies upon him and in case he fails to discharge the burden, he would be disentitled to claim protection of section 41. He cannot plead failure of earlier agreement holder to prove any notice of agreement to him. Where both the parties are living in the same locality or in a small village, knowing each other personally, presumption is of notice of agreement to one another. Therefore, when the plaintiff and defendant are real cousins having adjoining houses, no notice of prior agreement canbe pleaded.281 Where the subsequent vendee entered into agreement to sell and executed sale deed despite receiving notice from the earlier agreement holder, he could not claim to be a bona fide purchaser.282 Impact of Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. It has been held that an enforcement of security interest under section 13 of SARFAESI Act cannot be opposed on the ground of the purchaser being only the ostensible owner of the property. The Act is a complete code in itself. Taking recourse to the provisions of section 41 of the Transfer of Property Act, 1882 was held as not tenable.283

1 Nothing in Chapter II is to be deemed to affect any rule of Muhammadan Law, see section 2,

Act 20 of 1929. 233 Broom, A Selection of Legal Maxims, 10th Edn, 1939. 234 Crystal Developers v Asha Lata Ghose, AIR 2004 SC 4980 : (2005) 9 SCC 375 : (2004) 8

Scale 390 .

235 (1860) 3 Macq 837 (829). 236 18 NR 166 : 11 Beng LR 46 : IA Sup Vol 40. 237 (1957) 2 Mad LJ 603 (609) (DB). 238 State of Bihar v Dukhulal Das, AIR 1962 Pat 140 (146). 239 The Act does not apply to transactions completed before it came into force, Samittri Devi v

Sampuran Singh, AIR 2011 SC 773 : 2011 AIR SCW 680 : (2011) 3 SCC 556 , a suit filed prior to the enforcement of the Act would not be hit by the prohibition in section 4 of the Act. 240 V Shankaranarayana Rao v Leelavathy, AIR 2007 SC 2637 : 2007 AIR SCW 4757 : 2007 (7)

Scale 73 . The court relied upon its own decision in Binapani Paul v Pratima Ghosh, (2007) 6 Scale 398 : 2007 AIR SCW 7539 : (2007) 6 SCC 100 where also it was emphasised that the role and motive of the person who provided the amount of consideration plays an important part in determining the character of the transaction. 241 Thakur Bhim Singh v Thakur Kan Singh, (1980) 3 SCC 72 : AIR 1980 SC 727 . 242 Samittri Devi v Sampuran Singh, AIR 2011 SC 773 : 2011 AIR SCW 680 : (2011) 3 SCC 556 . 243 JT 1995 (5) SC 130 : AIR 1995 SC 2145 : 1995 (1) SCC 519 . 244 State of Punjab v Surjit Kaur, JT 2001 (10) SC 42 : 2001 (8) SLT 486 ; (2012) 12 SCC 155 ;

(2013) 2 SCC Civ 155 ; (2002) 46 ALR 374 . 245 Niranjan Kaur v Financial Commissioner, Revenue and Secretary to Government, Punjab, AIR

2011 P&H 1 : 2010 (1) AIR Kar. R 522 (FB). 246 V Chandrasekaram v Administration Officer, (2012) 12 SCC 133 : (2012) 120 AIC 58 . 247 AIR 1974 SC 171 : (1974) 1 SCC 3 : (1974) 2 SCR 517 . 248 AIR 1965 SC 295 : 1965 SCD 23 : (1964) 6 SCR 192 ; Crystal Developers v Asha Lata Ghose,

AIR 2004 SC 4980 : (2005) 9 SCC 375 : (2004) 8 Scale 390 , a probate was obtained by the legatee without informing other intestate heirs. The latter allowed him to represent to the developer that he was the sole owner of the property and thus the property was sold to the developer. The developer was held to be a bona fide purchaser for value. Kashmir Singh v Panchayat Samiti, AIR 2004 SC 2438 : 2004 AIR SCW 2970 : (2004) 6 SCC 207 , a purchaser from the State Government was held to be not a bona fide purchaser because he knew that the land belonged to the Panchayat Samiti and not to the State Government. 249 Raj Ballav Das v Haripada Das, AIR 1985 Cal 2 . Kammana Sambamurthy v Kalipatnapu

Atchutamma, AIR 2011 SC 103 : (2011) 11 SCC 153 : (2011) 85 ALR 221 , in this case it was not even the case of the vendee that the vendor was the ostensible owner of the whole property alongwith being the joint owner. 250 Mohd. Suleman v Sakina Bibi, (1922) 44 All 674 . 251 Chunilal Khemani v Nilmadhab Barik, (1925) 41 Cal LJ 374 : AIR 1925 Cal 1034 . 252 Dambar Singh v Javitri, (1907) 29 All 282 . 253 Ratan Sen v Suraj Bhan, AIR 1944 All 1 : 1943 All LJ 535 : ILR 1944 All 20 . 254 Aukumma v Narsaya, (1947) AM 127. 255 Lakshmi Bai v Ravji, (1949) A Kutch 34. 256 Besdeo Gir v Jugraj Parshad, 1949 Oudh WN 156. 257 Ghiga Ram v Surat Singh, 2003 (4) RCR (Civil) 23 (P&H). 258 Section 14, Indian Contract Act, 1872. 259 (1787) 1 Smith LC, 11th Edn, 693; Samai Singh v Hukam Singh, AIR 2007 (NOC) 2054 (Utr),

by virtue of the power given by the real owners of land, the attorney was found to be fully competent to execute sale deed of the land in question, purchaser paid the sale consideration in good faith. Section 41 applied preventing the plaintiffs from seeking an injunction against the

sale; vendor executed sale deed without the consent of owner of property, sale deed held void, defendant was not a bona fide purchaser, Wazir Singh v Avtar Singh, AIR 2018 (NOC) 859 P& H. 260 Tarabag Khan v Nanak Chand, (1932) 138 IC 263 : AIR 1932 Lab 566 . 261 Ananda Mohan v Nilphamari, (1922) 26 Cal WN 436 : AIR 1921 Cal 549 . 262 Shambhu Prasad v Mahadeo Prasad, (1933) 55 All 554 . 263 Ramcoomar Koondoo v Macqueen, (1872) 11 Bang LR 46 : 52 IA (Supp) 40 (43). 264 Layak Ram v Dharamwati, AIR 2010 P&H 95 : 2010 AIHC 836 (NOC). 265 Manjari Devi v Usha Devi, AIR 2014 Chha 22 : 2014 (135) All Ind Cas 293 : 2014 (1) Cg LJ

636. 266 Gurbaksh Singh v Nikka Singh, (1963) Supp 1 SCR 55 : AIR 1963 SC 1917 : 1963 (2) SCJ 285

; Mohammad Ibrahim v Mohd Yusuf, AIR 2007 (NOC) 1923 (All), transfer by ostensible owner by registered document, suit was for specific, performance, transferee had not taken care to verify from the office of the Sub-Registrar, not entitled to benefit of section 41. Arjan Singh v Thakar Singh, AIR 2007 (DOC) 85 (P&H), transferee made no inquiry from office of Sub-Registrar about earlier sale of the same property, he did not take any precautions or exercise due care, thus suffered from lack of good faith in getting the sale deed registered, not entitled to protection of section 41. Kashmir Singh v Panchayat Samiti, (2004) 6 SCC 207 : AIR 2004 SC 2438 : 2004 AIR SCW 2970, a person purchased certain land from the State Government knowing that the land belonged to the Panchayat Samiti, not allowed to claim protection under section 41. 267 Angammal v Venkata Reddi, (1903) 26 Mad 509. 268 AIR 1984 P&H 51 : 1983 Rev LR 487 : (1983) 2 Land LR 444 ; Sushima Kishandev Kaushal v

Council for Tibetan Education, AIR 2006 HP 122 , sale by plaintiff's mother with full connivance of the plaintiff to whom the property belonged, representation of the plaintiff to mutation authorities that the property belonged to her, she was shown to be owner in possession, held, sale passed good title, no further enquiry was necessary. 269 Khwaja Afzal v Md Saheb, (1936) Nag 177. Baby Rani Deb v Manik Dey, AIR 2014 Gau 56 :

2014 (2) Gau LR 94 : 2014 (1) Gau LT 138, absence of pleading by purchaser that his seller was ostensible owner with the consent of original owner. No effort made to ascertain that the seller had the power to transfer. 270 Zungabai v Bhawani, (1907) 9 Bom LR 388 . 271 Nageshar Prasad Pande v Raja Pateshri Partab Narain Singh, (1915) 20 Cal WN 265 : AIR

1915 PC 103 (V2) : 34 Ind Cas 673; Gurcharan Singh v Surjit Kaur, AIR 2006 P&H 18 : 2005 (3) Punj LR 232 : 2006 AIHC 1017 , widow and daughter of the deceased became entitled to inherit his property, his brothers claimed that they were bona fide purchasers and mutation of their purchase had been sanctioned, they were of the same village and, therefore, fully aware of the right of the decreased, hence, not entitled to protection of section 41, sanction of mutation in utter disregard of the legal position was not valid. 272 Mazhar Hasan v Mukhtar Hasan, AIR 1938 All 64 . 273 Neelakanth v Siddalingayya, AIR 2004 Kant 258 : 2004 AIR Kant HCR 1061 : 2004 (1) KCCR

432 . 274 Nageshar Prasad Pande v Raja Pateshri Partab Narain Singh, (1915) 20 Cal WN 265 : AIR

1915 PC 103 (V2) : 34 Ind Cas 673. 275 Pratap Chand v Saiyida Bibi, ILR (1901) 23 All 442 : 1901 All WN 137. 276 (1894) 1 Ch 25 . 277 Sree Brahadambal Agency v Ramaswamy, AIR 2002 Mad 352 ; Baldev Singh v Chhota Singh,

AIR 2002 P&H 47 : 2001 (2) CCC 503 : 2001 (3) ICC 673. 278 Atal Shrivastava v Devprasad, AIR 2012 Chh 117 . 279 Bailey v Barnes, (1894) 1 Ch 25 (35).

280 Rajani Kanta v Bashiram Mestari, (1929) 49 Cal LJ 532 : 121 Ind Cas 409. 281 Balwan Singh v Mange Ram, 2003 (3) RCR (Civil) 590 (P&H). 282 Gurbachan Singh v Gurmit Singh, 2003 (4) RCR (Civil) 223 : 2003 (3) CCC 597 (P&H). 283 Sudha Sharma v Punjab National Bank, AIR 2016 Utr 1 .

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER II1 TRANSFERS OF PROPERTY BY ACT OF PARTIES Chapter II of the Transfer of Property Act, 1882 deals with transfers of property by act of parties. This chapter has been divided into two parts: Part-A—provides for rules regarding transfers of property in general, whether movable or immovable. Part-B—provides for rules regarding transfers of immovable property.

(B) TRANSFER OF IMMOVABLE PROPERTY Part B of the Chapter II of the Transfer of Property Act, 1882 deals only with transfer of immovable properties. This part consists of sections 38 to 53A. These sections will be taken up in following groups or parts:— I. Transfer by a person other than a full owner. (sections 38, 41 and 43). II. Protection of third person's rights (sections 39-40). III. Transfer by a person having authority to revoke a former transfer (section 42). IV. Transfer by co-owners (sections 44 and 47) V. Joint-transfers (sections 45-46) VI. Priority of rights created by transfer (sections 48 and 78) VII. Transferee's right under a policy (section 49) VIII. Bona fide holders under a defective title (sections 50-51) IX. Lis Pendens (section 52) X. Fraudulent Transfer (section 53) XI. Part-performance (section 53A)

[s 42] Transfer by person having authority to revoke former transfer.— Where a person transfers any immoveable property, reserving power to revoke the transfer, and subsequently transfers the property for consideration to another transferee, such transfer operates in favour of such transferee (subject to any condition attached to the exercise of the power) as a revocation of the former transfer to the extent of the power. Illustration A lets a house to B, and reserves power to revoke the lease if, in the opinion of a specified surveyor, B should make a use of it detrimental to its value. Afterwards A, thinking that such a use has been made, lets the house to C. This operates as a revocation of B's lease subject to the opinion of the surveyor as to B's use of the house having been detrimental to its value.

Comments [s 42.1] Revocation of Transfer Where a person,— (i) transfers any immovable property, (ii) reserving power to revoke the transfer for himself, and (iii) subsequently transfers the property to another transferee for consideration,

such transfer operates in favour of the subsequent transferee and amounts to revocation of the first transfer. However, such power of revocation must be permitted by law. It must not contain restrictive covenants not enforceable by law. The section provides that the second transfer must be for consideration. A transfer may be made subject to revocation under certain circumstances. Where the person transferring any immovable property reserves a power of revocation for himself and makes a second transfer for consideration which is inconsistent with the first transfer, the law assumes that the transferor has revoked the first transfer. It is immaterial whether the first transfer was for consideration or not but the second transfer must be for consideration. The illustration appended to this section says that A lets a house to B and reserves the power of revocation, if in the opinion of a specified surveyor, B makes such a use of the property which is detrimental to its value. Afterwards, A transfers the property to C thinking that B had made such use of the property. This operates as a revocation of the lease in favour of B subject to the opinion of the surveyor.

1 Nothing in Chapter II is to be deemed to affect any rule of Muhammadan Law, see section 2,

Act 20 of 1929.

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER II1 TRANSFERS OF PROPERTY BY ACT OF PARTIES Chapter II of the Transfer of Property Act, 1882 deals with transfers of property by act of parties. This chapter has been divided into two parts: Part-A—provides for rules regarding transfers of property in general, whether movable or immovable. Part-B—provides for rules regarding transfers of immovable property.

(B) TRANSFER OF IMMOVABLE PROPERTY Part B of the Chapter II of the Transfer of Property Act, 1882 deals only with transfer of immovable properties. This part consists of sections 38 to 53A. These sections will be taken up in following groups or parts:— I. Transfer by a person other than a full owner. (sections 38, 41 and 43). II. Protection of third person's rights (sections 39-40). III. Transfer by a person having authority to revoke a former transfer (section 42). IV. Transfer by co-owners (sections 44 and 47) V. Joint-transfers (sections 45-46) VI. Priority of rights created by transfer (sections 48 and 78) VII. Transferee's right under a policy (section 49) VIII. Bona fide holders under a defective title (sections 50-51) IX. Lis Pendens (section 52) X. Fraudulent Transfer (section 53) XI. Part-performance (section 53A)

[s 43] Transfer by unauthorised person who subsequently acquires interest in property transferred.— Where a person 284[fraudulently or] erroneously represents that he is authorised to transfer certain immoveable 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. Nothing in this section shall impair the right of transferees in good faith for consideration without notice of the existence of the said option. 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.

Comments [s 43.1] Feeding the Grant by Estoppel (Section 43) Section 43 says that— (i) Where a person, (ii) fraudulently or erroneously represents that he is authorised to transfer certain

immovable property, and (iii) professes to transfer such property for consideration, (iv) 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. (v) This section will not impair the right of the transferees in good faith for

consideration without notice of the existence of the said option. This section is based on the principle of estoppel which is here also known as feeding the grant by estoppel. A person who has interest in an immovable property can transfer that property but a person not having any interest or title in the property cannot transfer the property and would convey no title to the transferee. Where a person having no authority professes to transfer any immovable property, he is estopped from denying the transfer when he subsequently acquires such authority. The principle of this section is based upon the following two principles:— (1) The common law doctrine of estoppel by deed (2) The equitable principle that if a person promises more than he can perform,

then he must fulfil the promise when he gets the ability to do so. The doctrine comes into play when a person transfers property to which he has no title, on a representation that he has a present and transferable interest in it, and acting on that representation, the transferee takes the transfer for consideration. When these conditions are satisfied the section says that if the transferor subsequently acquires the property the transferee becomes entitled to it if the transfer has not been cancelled in the meantime and is still persisting. For example, A, a Hindu, who has separated from his father B, sells to C, three fields, X, Y, and Z representing that he is authorized to transfer the same. Of these fields, Z does not belong to A, it having been retained by B on the partition, but on B's dying, A as heir obtains Z. C not having rescinded the contract of sale may require A to deliver Z to him. In this illustration, A on partition got three properties X, Y and Z which he sold to C. But at the time of sale he was not authorised to sell Z because that was retained by his father B on partition. On the death of B the property came back to A, and at that time C had not cancelled the contract of sale. It was still persisting, and, therefore, the property Z went to C according to the original sale. Another illustration is to be found in a case before the Supreme Court:285 The property in question was transferred by the husband to his wife, in lieu of maintenance. But he subsequently sold the property to a bona fide transferee for consideration. The wife challenged this transfer by filing a suit. Wife died during pendency of the suit. The husband being the legal heir became owner of the property. The court said that section 43 would

apply. The transfer was not voidable under section 41. The husband had become the real owner and not ostensible.

In order to get the benefit of the provision, the conditions which must be satisfied are: (1) the contract of transfer was made by a person who was competent to contract;

and (2) the contract was subsisting at the time when a claim for recovery of the

property was made. "The doctrine envisages that 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 to the earlier grantee, or as it is usually expressed, feeds the estoppel". This principle is based on an equitable doctrine that a person who promised to perform more than he can perform must make good his contract when he acquires the power of performance where properties in question were sold by an auction." Law assumes that transferor had no title over the portion of property that he had transferred but which has now been acquired by him. In such a case, upon principles of elementary equity he is bound to make good his representation to the transferee.286 Section 43 embodies a "rule or feeding the estoppel" and enacts that a person who makes a representation shall not be heard to allege the contrary as against a person who acts thereupon and it is immaterial whether the transferor acts bona fide or fraudulently in making the representation. Lord Buckmaster in Tilakdhari Law v Khedan Lal stated, "if a man who has no title whatever to property grants it by a conveyance which in the form would carry the legal estate, and he subsequently acquires an interest sufficient to satisfy the grant, the estate instantly passes".287 This section is not applicable to the following types of transfer:— (1) Transfers without consideration, (2) Transfers forbidden by law on the ground of public policy. (3) Involuntary transfers (for example, sale at instance of execution creditors).

In the absence of pleading that there was erroneous or fraudulent representation by transferor, relief under section 43 cannot be given because section 43 applies only where transferor fraudulently or erroneously represents that he is authorised to transfer certain immovable property and transfers the same for consideration.288

[s 43.2] English Law The English doctrine of estoppel by deed was stated in the case of Rajapakse v Fernando289 and the statement is as follows:— Where a grantor has purported to grant an interest in land, which he did not at that time possess but subsequently acquires, the benefit of the subsequent acquisition goes automatically to the earlier grantee, or as it is usually expressed, feeds the estoppel.

[s 43.3] Essential Requirements of the Section The following conditions are to be fulfilled for the applicability of this section:—

(1) a fraudulent or erroneous representation that the transferor had authority to

transfer the property. (2) the transfer is for consideration. (3) the transferor subsequently acquires the interest which he professed to transfer.

[s 43.3.1] Fraudulent or Erroneous Representation Fraudulent or erroneous representation means a dishonest, deceitful, wrong, false, untrue, faulty representation. The first requirement of this section is that the representation made by the transferor must come under fraudulent or erroneous representation. The transferee who desires to get the benefit of this section must show that there was fraudulent or erroneous representation on the part of the transferor that he was authorised to transfer the property.290 It is also necessary that the transferee must have believed upon that representation and acted upon it. The benefit of this section cannot be claimed by the transferee if he did not believe the representation to be true or act upon the representation. When the truth is known to both the parties the rule of estoppel cannot be applied. In Narayan Chandra Saha v Dipali Mukherjee291 there was no evidence that the son of the owner of the property made any representation that he was the owner of the property and the transferee also knew that the son could not be owner during the lifetime of his father but even so he purchased the property. Subsequently, when after the death of the owner (father) the son became one of the coowners, the transferee claimed the protection of section 43. It was held by the Calcutta High Court that since the transferee had the knowledge that the son was not entitled to transfer the property, the protection was not be available for him (transferee) because he was not misled by the son's fraudulent or erroneous representation. The court further observed that the provisions of this section are available only when the transferor makes a representation of authority and the transferee acts on such representation. If the fact of defective title of the transferor is known to both the parties, there is collusion and this section will not be applicable. No estoppel can arise by reason of any false statement when the truth is known to both the parties.292 Where the transferee does not rely solely on the representation of the transferor but also makes inquiry from other sources and is satisfied that the transferor was authorised to transfer the property, there can be no question of the transferee having acted or induced by such representation.293 Where no pleading or evidence was put that the son of owner made any representation that he was the owner-landlord or that he had the requisite authority to induct the transferees in the suit property and transferees also knew that he was not the owner of property, it was held that the transferee could cannot claim the protection of section 43 because the provision of section 43 would be applicable only when the transferor makes a representation and the transferee acts on such representation.294 Where the vendee had purchased the property with full knowledge of rights of their vendors, and there was no evidence to show that there had been any fraudulent or erroneous representation, and that the vendee had acted on it, the Madras High Court held that the doctrine of feeding the grant by estoppel was not attracted.295 Illustrative Cases (i) A obtained property by way of exchange from B. At the time of exchange B only had a half share but he professed to transfer the whole. When B subsequently purchase the remaining half, A was held entitled to it.296

(ii) A mortgaged a half share in the family property to B in which he had only one-third share. After his father's death, he became owner of half the share. This fact was known to B before the transaction. It was held that B could enforce his mortgage against onethird share only.297

[s 43.3.2] Transfer for Consideration The transfer under the section must be for consideration. This section does not apply to gratuitous transfers. It applies only to transfers for value. It may be applied to mortgages, sale, exchanges, and leases because they are supported with consideration but not to charges or gifts.

[s 43.3.3] Subsequent Acquisition of Interest The third requirement of the section is that the transferor must acquire interest in the property which he had professed (agreed) to transfer without any interest or authority. In the absence of such acquisition this section cannot be invoked. Such subsequent acquisition of interest or authority shall pass to the transferee— (i) at the transferee's option, and (ii) at any time during which the contract of transfer subsists.

If there is a subsequent acquisition, it does not matter if it cannot satisfy the transfer in toto, the reason being that every acquisition of interest in the property transferred enures for the benefit of the transferee.298 This section is not operative on any other property acquired by the transferor.299 The interest subsequently acquired by the transferor must be the same as was purported to be transferred by him and it must be acquired in the same capacity in which the transferor purported to transfer it. Where the transferor had lesser interest than he transferred and this lesser interest is subsequently enlarged, this section would become applicable because it will also be treated as subsequent acquisition of property. An example may be taken of the case of Brahmvart Sanathan Dharam Mahamandal, Kanpur v Prem Kumar.300 In this case, three daughters inherited their father's property as a limited estate and divided the property into three shares, each being in exclusive possession of her respective share. One of the daughters A sold her share in possession to B. Subsequently other sisters died and A remained the survivor as the last limited owner and got exclusive possession of the whole estate. The court held that B was entitled to the property under section 43. The property subsequently acquired by the transferor does not pass automatically to the transferee. For satisfying the claim of transferee two conditions must be satisfied: — (i) At the Transferee's Option.—After the transferor acquires interest in the property professed to be transferred, the transferee must exercise his option because the property will not become transferred to him automatically. There is no particular form of exercising option. It may be gathered from the acts and conduct of the transferee. The transferee must claim the interest transferred within reasonable time because if he fails to claim it, his right might become subject to the right of any transferee in good faith to whom it may be transferred by the transferor for valuable consideration. It is not necessary that the option must be exercised immediately on the acquisition of

property by the transferor or vesting of interest in him. It may be exercised at any time during which the contract of transfer subsists. The transfer takes place not at the moment when the interest is acquired, but at the moment when the transfer exercises the option that the interest is to stand transferred to him. The doctrine of feeding the grant by estoppee does not apply so as to impair the rights of the subsequent transfer in good faith for consideration without notice of the existence of option in a prior transferee. The court further said that the word "property" in the section does not necessarily means the physical corpus but also some interest in property. Section 43 applies only when the transferor has no interest in property at all and not when he had an interest but it was transferable.301 (ii) At any time during which the contract of transfer subsists.—The transferee can claim the property only during the subsistence of the contract of transfer. A contract exists till it is not rescinded or extinguished in some other manner. Where the transferee rescinds the contract on a finding that the transferor had no interest in the property and brings the action for damages, this section will not be available. In a case, the mother of a minor son sold their joint property. The minor son on attaining majority challenged the alienation made by his mother in respect of his share and obtained a decree. But he died before he could obtain possession. The mother inherited the property of her son on his death. It was held that due to the decree in favour of the son the claim of the vendee in respect of son's share was not valid. He could claim only the mother's share because the mother's subsequent acquisition will not feed the title of the vendee. A woman's property was fraudulently transferred by her son. He never acquired any interest in the property during his lifetime by succession, inheritance or otherwise. It was held that the doctrine of feeding the grant by estoppel was not attracted against his heirs who succeeded to the Stridhan property of their grandmother. The purchaser could not claim any benefit of such subsequent acquisition of property.302

[s 43.4] Transferee in Good Faith The second paragraph of this section provides that the transferee cannot enforce his claim against a person who has taken a subsequent transfer from the transferor in good faith, for consideration and without notice of the option vested in the transferee. This means that where the second transferee in good faith has paid consideration and without notice of the option takes the property before the option is exercised then he shall not be affected by the first transferee's claim under this section. For example, where A, on partition receives property X and the other property Y goes to his father B. A representing that he owned both the properties X and Y, sold them to C. Afterwards when B dies, A inherited both the properties. But before C could exercise his option to compel A to transfer property Y to him, A secretly sold that property to D. D purchased the property in good faith for consideration without having any notice of option of C. D is entitled to get the property Y as against the claim of C.303 In a claim by vendees that they were bona fide purchasers, a widowed daughter-in-law had received right of residence in the self-acquired property of her father-in-law under family settlement. She executed a transfer deed in favour of her two brother-in-laws and vendees were aware of the family settlement. Under the agreement, after death of the widow the property had to pass to sons of the original owner and she had no preexisting right of maintenance in the property as it was not a coparcenary property. In such circumstances, it was held that such transfer cannot be treated as acquiescence by vendees acknowledging her as owner of property and vendees were not held to be bona fide purchasers.304

[s 43.5] Invalid Transfer For getting the protection of this section it is necessary that the transfer must be a valid transfer. This section is not applicable where the transfer is forbidden by law, for example, it is against public policy. This section cannot be applied so as to make a transfer valid which was void ab initio.305

[s 43.6] Conflict between section 43 and section 6(a) According to section 6 (a), the "chance of an heir apparent" or spes successionis to get the property in future is a non-transferable right and its transfer is void ab initio. Whereas section 43 validates the transfer made without title when the transferor subsequently acquires that property. Now the question arises that if the property professed to be transferred happens to be spes successionis and subsequent to the transfer the transferor acquires it, whether the transferee will be entitled to seek protection of this section for claiming the subsequent acquisition of the transferor. Therefore, on plain reading there appears to be a conflict between these two sections. The Supreme Court observed in a case that there is no conflict between these sections and both can operate simultaneously. In this case, Jumma Masjid v Kodimaniandra Deviah,306 an heir apparent sold his would be share in a joint property to Masjid for Rs 300. Subsequently, when the transferor became entitled to the property, Masjid invoked section 43 to compel him to pass the property to Masjid. The transferor contended that the interest transferred was spes successionis and void ab initio under section 6(a) and, therefore, section 43 could not be applied to make a transfer valid which was void ab initio. The Supreme Court held that Masjid was entitled to the protection of section 43 and the transferor was liable to pass on the title to Masjid. The Supreme Court observed that section 6(a) was a rule of substantive law whereas section 43 was based on estoppel which is a rule of evidence. Illustrative Cases (1) A, an owner of certain immovable property died leaving behind him his widow and his divided brother, B. The brothers B sold the property during the life time of widow to C falsely representing that he was the owner of the property. Two years later, the widow died and C could not get the possession of property from the widow. It was held that the C could require B to deliver the property to him.307 (2) A, representing himself to be the owner of certain property X, made a gift of it to B by a registered instrument. On the date of gift, it was found that the property actually belonged to C. A subsequently purchased the property from C and B filed a suit to get the possession of property against A. The court held that the suit by B is liable to be dismissed because the transfer, being a gift, was without consideration. (3) The defendant believed that the allotment order issued by the Development Authority was a title deed conferring upon the defendant ownership of the property under allotment. Both parties to the agreement of sale proceeded with the belief that by virtue of the allotment order the defendant could successfully convey in favour of the plaintiff the title to the property. The court said that it was clear that the defendant did not make any misrepresentation that he was the absolute owner of the property having full power to dispose of the same. Provision of section 43 were not attracted.308

[s 43.7] Comparison of Section 41 and Section 43 (1) In a sale by ostensible owner under section 41, the transferee does not depend upon the representation of the transferor but in good faith takes reasonable care to inquire about the authority of the transferor to transfer the property. Whereas in feeding the grant by estoppel under section 43 the transferee believes the fraudulent or erroneous statement of the transferor to be true. (2) Ostensible owner is the person who is not the real owner but he holds himself out as the owner and the transferor takes the property from him whereas under section 43, the transferee gets the property which does not belong to the transferor and he can claim that property from the transferor only when that property by some chance in future comes into the transferor's share. (3) The estoppel works against the real owner under section 41 whereas it works against the transferor under section 43. (4) The transferee under section 41 takes from an ostensible owner whereas under section 43, the transferee takes from a real owner. (5) Under section 41, the transferee must inquire about the authority of the transferor whereas under section 43, he has to pay consideration only. (6) Under section 41, the transferee must not have notice of the real owner's title whereas the one under section 43 should have no notice of the option in favour of the first transferee. (7) Both the transferees must take the transfer in good faith. Under section 41, transferee must honestly believe that the ostensible owner had got an authority to transfer, whereas under section 43, the transferee must believe that the transferor has transferred the property to him for the first time.

1 Nothing in Chapter II is to be deemed to affect any rule of Muhammadan Law, see section 2,

Act 20 of 1929. 284 Ins. by Act 20 of 1929, section 13. 285 Hardev Singh v Gurmail Singh, AIR 2007 SC 1058 : (2007) 2 SCR 441 : (2007) 2 SCC 404 .

The court referred to the decision in Jote Singh v Ram Das Mahto, AIR 1996 SC 2773 : (1996) 5 SCC 524 : JT 1996 (7) SC 471 , here it was held that the provisions of sections 41 and 43 would not be available. The court also referred to N Srinivasa Rao v Special Court, (2006) 4 SCC 214 : AIR 2006 SC 3691 : 2006 AIR SCW 1740, if the transfer is void under an Act, section 43 cannot be used to validate the illegality and nullify the statute. 286 Durga Prasad Shrestha v Special Secretary, Tourism Department, Govt of Sikkim, Gangtok,

East Sikkim, AIR 2018 SK 22 ; a guarantor executed a settlement deed without consideration in favour of his son and grandsons which was cancelled subsequently, mortgage created by guarantor remained valid, sons and grandsons were estopped from raising plea that the property belonged to them under settlement deed, bank held to have charge over property to

secure loan, Minor S Kasilingam v Chairperson Debts Recovery Appellate Tribunal, AIR 2019 Mad 110 . 287 1920 (47) IA 239 : AIR 1921 PC 112 . 288 Ganesh Patra v Banabihari Patra, AIR 2004 Ori 23 : 2004 (1) CLR 56 : 2003 (4) Civ LJ 813 . 289 (1920) AC 892 (897) : AIR 1920 PC 216 . 290 Jamuna Mayee v Koimaindra, AIR 1958 Mad 427 . 291 AIR 2002 Cal 229 : 2002 (1) Cal LJ 332 : 2002 (3) Civ LJ 917 . 292 Mohori Bibi v Dharmodas Ghose, (1903) 30 Ind App 114 : ILR 30 Cal 539 (PC) : (1903) 5

Bom LR 421 ; HPA International v Bhagwandas Fateh Chand Daswani, (2004) 6 SCC 537 : AIR 2004 SC 3858 : 2004 AIR SCW 4135, doctrine not applicable because the remaindermen had objected to the transfer of their reversionary interest. 293 Janakirama v Nilakanta, ILR (1954) Mad 537 : (1954) 2 Mad LJ 486. 294 Narayan Chandra Saha v Dipali Mukherjee, AIR 2002 Cal 229 : 2002 (1) Cal LJ 332 : 2002 (2)

ICC 953. 295 B Narainswami Raju v Krishnamurthy Mudaliar, AIR 1998 Mad 193 : 1998 (3) ICC 444 : 1998

(2) Mad LJ 328. 296 Bhairab Chandra v Jiban Krishna, (1921) 33 Cal LJ 184 : AIR 1921 Cal 748 . 297 Pandiri Bangaram v Kurumoory Subbaraju, (1911) 34 Mad 159 : 8 Ind Cas 388. 298 Mohan Singh v Sewa Ram, AIR 1924 Oudh 209 . 299 Syed Ahmad v Hafiz Zahid Husain, AIR 1934 All 731 (732) : 153 Ind Cas 1095 : 4 All WR 461. 300 AIR 1985 SC 1102 : (1985) 3 SCC 350 . 301 Premnath Khanna v State of Orissa, AIR 2009 Ori 166 : 2009 (1) CLR 1057 : 2009 (1) Ori LR

416 ; In N Venkatashappa v Munemma, AIR 2016 SC 889 , alienation was made by the holder of service Inam land between the period of his appointment date and the date when the Amendment came into force. It ensured for the benefit of alienation under the principle of feeding the grant by estoppel. He got a good title after the regrant to his alienor. He was not an unauthorized holder. Therefore, eviction proceeding could not be initiated against him. 302 Agricultural Produce Marketing Committee v Bannama, AIR 2014 SC 3000 : 2014 AIR SCW

4446 : (2014) 8 Scale 707 . 303 HPA International v Bhagwandas Fateh Chand Daswani, (2004) 6 SCC 537 : AIR 2004 SC

3858 : 2004 AIR SCW 4135, subsequent acquisition of property through an unauthorised person facts known to the vendee, no protection under section 41 or section 43. 304 Raj Kumar v Rakesh Kumar, AIR 2019 P&H 29 . 305 N Sirinivasa Rao v Special Court under AP Land Grabbing Prohibition Act, (2006) 4 SCC 214 :

AIR 2006 SC 3691 : 2006 (4) SCJ 328 , a transfer of certain land was illegal because of a statutory restriction, not registered, he transferred a portion of the land to another person which was also against law but subsequently to this his own purchase became validated, his transferee could not seek application of section 43 for validation of the transfer in his favour. 306 (1962) Supp (2) SCR 554 : AIR 1962 SC 847 : 1962 (2) SCJ 303 . 307 Halikudur v Andar, 28 Mad LJ 44. 308 M Rathnam v Susheelamma, AIR 2009 Kant 79 : 2009 (2) AIR Kant 518 : 2009 (1) Kant LJ

434 .

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER II1 TRANSFERS OF PROPERTY BY ACT OF PARTIES Chapter II of the Transfer of Property Act, 1882 deals with transfers of property by act of parties. This chapter has been divided into two parts: Part-A—provides for rules regarding transfers of property in general, whether movable or immovable. Part-B—provides for rules regarding transfers of immovable property.

(B) TRANSFER OF IMMOVABLE PROPERTY Part B of the Chapter II of the Transfer of Property Act, 1882 deals only with transfer of immovable properties. This part consists of sections 38 to 53A. These sections will be taken up in following groups or parts:— I. Transfer by a person other than a full owner. (sections 38, 41 and 43). II. Protection of third person's rights (sections 39-40). III. Transfer by a person having authority to revoke a former transfer (section 42). IV. Transfer by co-owners (sections 44 and 47) V. Joint-transfers (sections 45-46) VI. Priority of rights created by transfer (sections 48 and 78) VII. Transferee's right under a policy (section 49) VIII. Bona fide holders under a defective title (sections 50-51) IX. Lis Pendens (section 52) X. Fraudulent Transfer (section 53) XI. Part-performance (section 53A)

TRANSFER BY CO-OWNERS [s 44] Transfer by one co-owner.— Where one of two or more co-owners of immoveable property legally competent in that behalf transfers his share of such property or any interest therein, the transferee acquires as to such share or interest, and so far as is necessary to give, effect to the transfer, the transferor's right to joint possession or other common or part enjoyment of the property, and to enforce a partition of the same, but subject to the conditions and liabilities affecting at the date of the transfer, the share or interest so transferred. Where the transferee of a share of a dwelling-house belonging to an undivided family is not a member of the family, nothing in this section shall be deemed to entitle him to joint possession or other common or part enjoyment of the house.

Comments [s 44.1] Transfer by a Co-owner (Section 44) (1) Where a co-owner of an immovable property legally competent in that behalf transfers his share in such property, (2) the transferee acquires— (a) transferor's right to joint possession, other common or part enjoyment of the

property (not where the transferee has taken a share of a dwelling house belonging to an undivided family and he is not a member of that family), and (b) transferor's right to enforce partition of the property (subject to the conditions

and liabilities affecting the share so transferred).309 Where a property is jointly owned by two or more persons, such property is known as co-owned property. Co-owners may have equal or unequal shares in the property. Till the property is not partitioned and shares separated, each co-owner is entitled to common enjoyment of property. Now, when one of such co-owner transfers his share in co-owned property, the transferee of such property steps into the transferor's shoes. The transferee takes the place of such co-sharer and becomes entitled to joint possession of property and other common and part enjoyment of property. He will get all the rights and liabilities of the transferor on the date of transfer in the joint property. The transferee like transferor can enforce the partition of the property where the transferor himself had that right. But his right will be subject to the conditions and liabilities affecting the transferred share. In this section, an exception has been created in favour of Hindu Undivided Family.

[s 44.2] Alienation of Property by Co-owner Where the parties mutually divided their properties pursuant to a compromise decree and coparcenary came to an end after preliminary decree, alienation of his share by one co-owner to a third party cannot be assailed by other co-owner when the co-owner has not alienated property in excess of his share.310 Exception—This section says that the co-owners' right to joint possession, other common or part enjoyment of the property transferred will not be available to the transferee where such property is a dwelling house belonging to an undivided family and such transferee is not the member of that family. Where the transferee gets the share in a residential house belonging to family members of a joint family, he is not entitled to the joint possession or enjoyment of the property. This exception has been created in order to avoid inconvenience which may be caused by substitution of a stranger in joint family who may be of different caste, religion, etc. In the words of Westrop CJ, "We deem it a far safer practice, and less likely to cause serious breaches of peace, to leave a purchaser to a suit for partition, than to place him by force in joint possession with the members of a Hindu family, who may be not only a different caste for his own, but also different in race and religion." Dwelling-house means not only a residential building or structure but all the adjacent buildings, gardens, courtyard and orchard, etc. which are necessary for the convenient use of the house.

House used for commercial purpose but not in use for residential purpose is not a dwelling house.311 When a share in a dwelling-house is transferred without partition and the transferee attempted to take the possession of the property without maintaining a suit for partition, the other co-owners may restrain him from taking the possession. In the case of Dorab Cawasji Warden v Coomi Sorab Warden,312 all the members of a family were living together in a common dwelling house. After the death of one of the brothers, the widow and sons of the deceased sold their share. It was held by the Supreme Court that since irreparable injury was likely to be caused by the entry of the transferee, an interim mandatory injection against vendors and vendees regarding possession could be issued. If the property transferred by transferor does not fall in his share, he is not legally competent to transfer the share of his co-owner.313 Whether a co-sharer transfers his share by way of lease, gift, sale or mortgage, this section will be applicable. Where a house was in common enjoyment of all family members of an undivided family and one co-sharer leased out his share without effecting partition whereupon the stranger lessee attempted to enter into possession, the Calcutta High Court held that an interim injunction restraining the stranger lessee could be granted.314 Where A entered into a premises followed by his mother and brother who joined him later on and the government first granted licence and subsequently leased the property to him, it was held by the Delhi High Court that the A's (lessee) mother and brother were not co-tenants and A was entitled to the possession of the whole premises including the portion in possession of his mother and brother. It was observed by the court further that filing of suit by A for possession of portion which is in his mother and brother's possession did not mean that A was not the lessee of the whole promises.315 The character of a house as a dwelling-house belonging to an undivided family is not altered by the mere fact that an undivided share is transferred to a stranger who comes into possession and collects rents from a portion of the tenants.316 However, this section is not applicable to the case of a dwelling-house where a part of it is occupied by strangers after partition.317 The provision is of a negative character. It affords a defence to the members of a joint family but it does not create a positive right in them.

[s 44.3] Section 4, Partition Act, 1893 The objects of section 4, of the Partition Act, 1893 and this section is to keep off strangers who may purchase the undivided share of a co-sharer of an immovable property, so far as dwelling-houses are concerned to make it possible for a co-sharer who has not sold his share to buy off the stranger purchaser.318 A co-share's right to claim pre-emption accrues only when the outside purchaser comes to the court and files a suit for partition and for possession.319 This section assures the transferee the right of joint possession or common enjoyment of the property but does not confer on him any right to exclusive possession without enforcing partition.320 For example, A, B and C are co-owners of a field that is subject to a mortgage. C transfers his share to D. D has a right to joint possession with A and B and has also a right to claim partition and separate possession of his share. But the share D has acquired is still subject to the mortgage. Case Under the preferential right of class I co-heir, that suit was to enforce the right of preemption. There was no partition between co-heirs. The sale of undivided property to a stranger by the defendant co-heir was illegal. The civil suit for pre-emption was

maintainable. Portions of the building sold to strangers were occupied by tenants. The plaintiff was entitled to repurchase the property.321

1 Nothing in Chapter II is to be deemed to affect any rule of Muhammadan Law, see section 2,

Act 20 of 1929. 309 Nasib Kaur v Col Surat Singh, (2013) 5 SCC 218 : (2013) Mah LJ 24 : (2013) 3 MPLJ 520 . 310 Parmanand Swain v Rabindranath Swain, AIR 2004 (NOC) 109 (Ori) : 2003 AI HC 3903. 311 Hafizulla Sheikh Barakatullah v Puran Chand Jain, AIR 2017 (NOC) 1086 MP. 312 AIR 1990 SC 867 : JT 1990 (1) SC 199 : (1990) 2 SCC 117 ; Ram v Ram Kishan, AIR 2010 All

125 : 2010 (4) All LJ 20 : 2010 (80) All LR 346 , purchaser of share in dwelling house, could not force his way into the house. He would have to seek partition and obtain a court order of make settlement with co-owners who have not transferred their shares. Anjan Barman Choudhury v Ranjan Barman Choudhury, AIR 2013 Gau 42 : 2013 (1) Gau LR 107 , sale by a co-owner to an outsider of his share in the dwelling house belonging to unpartitioned joint property was held to be invalid, it was immaterial that the deed narrated the boundaries of the sold share and also narrated that possession has been handed over. 313 Durga Prasad Shrestha v Special Secretary, Tourism Dept, Govt of Sikkim, Gangtok, East

Sikkim, AIR 2018 SK 22 ., transferee cannot enforce terms of contract; purchaser of share of coowner of the house can remain in joint possession of house, it is not necessary to file a suit for separation of his share, Hafizulla Sheikh Barakatullah v Puran Chand Jain, AIR 2017 (NOC) 1086 MP; one of the co-sharer sold the portion of property belonging to other co-sharer, sale was illegal, purchaser was not entitled to claim relief of declaration of title on the basis of such sale deed, Baldev Raj Sharma v Kanta Devi, AIR 2017 P&H 119 . 314 Ashim Ranjan Das v Bimal Ghose, AIR 1992 Cal 44 : 1991 (1) Cal LJ 352 : 1991 (1) Cal LT

422. 315 Hari Singh v Madan Lal, AIR 2001 Del 231 : (2001) 90 DLT 268 ; Nirashi Bai v Ramlal, AIR

2006 Chh 73 : 2006 (3) AIR Jhar. (NOC) 825 : (2006) 43 All Ind Cas 206, transfer of undivided shares cannot be declared void for want of partition, undivided shares can be validly transferred, the transferee acquires title in the right of share of the transferor. 316 Nirupama Basak v Baidyanath Paramanik, AIR 1985 Cal 406 . 317 Bhim Singh v Ratnakar Singh, AIR 1971 Ori 198 : (1970) 1 Cut WR 183. 318 Dulal Chandra Chatterjee v Gosto Behari Mitra, (1954) 1 Cal 384 : AIR 1953 Cal 259 : 56 Cal

WN 681; Sushil Kumar Gupta v Anil Kumar Gupta, AIR 2007 (NOC) 2551 (Del), a partition suit filed by a transferee of a portion of the joint dwelling-house, though there was no division of the house by metes and bounds, the joint owners had factually occupied and were enjoying their respective portions, the court said that the joint character of the house was no longer intact, section 44 was, therefore, not applicable. Bishwanath Ram v Lawangwas Kuer, AIR 2007 (NOC) 2430 (Jhar), sale of land by part owner, though partition deed and separate possession and cultivation alleged, the court found the deed to be forged, sale held not binding on other part owners. 319 Purna Chandra Mallik v Renuka Jena, AIR 2007 Ori 65 : (2007) 54 All Ind Cas 582 : 2007 (1)

Ori LR 312, sections 3(2) and 4 of the Partition Act, 1893. An Explanation of section 44 of the

Transfer of Property Act and section 4 of the Partition Act occurs in the decision of the Supreme Court in Gautam Paul v Debi Rani Paul, AIR 2001 SC 61 : (2000) 8 SCC 330 : (2000) 7 SCALE 451 . The requirements of section 4 were also explained in Ghantoshar Ghose v Madan Mohan Ghose, AIR 1997 SC 471 : JT 1996 (8) SC 410 : 1996 AIR SCW 3858; Bimla Devi v Radhyshyam Patwa, AIR 2006 Pat 112 : 2006 AIHC 2989 : 2006 (4) Civ LJ 845 , transfer of undivided share of a member of the family in a dwelling house cannot be prevented by other members, but if the transferee files a suit for partition, the other members would be entitled to exercise their right of pre-emption. 320 Lalita James v Ajit Kumar, AIR 1991 MP 15 (17) : (1991) 2 LJR 401. 321 Bina Sukla v Meena Devi Panch, AIR 2008 Ori 156 : 2008 (1) CLR 828 : 2008 (2) Ori LR 97 .

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER II1 TRANSFERS OF PROPERTY BY ACT OF PARTIES Chapter II of the Transfer of Property Act, 1882 deals with transfers of property by act of parties. This chapter has been divided into two parts: Part-A—provides for rules regarding transfers of property in general, whether movable or immovable. Part-B—provides for rules regarding transfers of immovable property.

(B) TRANSFER OF IMMOVABLE PROPERTY Part B of the Chapter II of the Transfer of Property Act, 1882 deals only with transfer of immovable properties. This part consists of sections 38 to 53A. These sections will be taken up in following groups or parts:— I. Transfer by a person other than a full owner. (sections 38, 41 and 43). II. Protection of third person's rights (sections 39-40). III. Transfer by a person having authority to revoke a former transfer (section 42). IV. Transfer by co-owners (sections 44 and 47) V. Joint-transfers (sections 45-46) VI. Priority of rights created by transfer (sections 48 and 78) VII. Transferee's right under a policy (section 49) VIII. Bona fide holders under a defective title (sections 50-51) IX. Lis Pendens (section 52) X. Fraudulent Transfer (section 53) XI. Part-performance (section 53A)

JOINT TRANSFERS [s 45] Joint transfer for consideration.— Where immoveable property is transferred for consideration to two or more persons and such consideration is paid out of a fund belonging to them in common, they are, in the absence of a contract to the contrary, respectively entitled to interests in such property identical, as nearly as may be, with the interests to which they were respectively entitled in the fund; and, where such consideration is paid out of separate funds belonging to them respectively, they are, in the absence of a contract to the contrary, respectively entitled to interests in such property in proportion to the shares of the consideration which they respectively advanced. In the absence of evidence as to the interests in the fund to which they were respectively entitled, or as to the shares which they respectively advanced, such persons shall be presumed to be equally interested in the property.

Comments [s 45.1] Joint Transfers for Consideration (Section 45) Section 45 says that where an immovable property is transferred:— (1) for consideration (value) to 2 or more persons, and (2) such consideration (value) of property is paid out of a fund belonging to them in

common, (3) they are entitled to interest in such property identical to their interest in the

common fund respectively (if there is no contract to the contrary), but (4) where such consideration is paid out of separate funds belonging to them

respectively, (5) they are entitled to interest in such property in proportion to the shares of

consideration paid or advanced by them respectively. (when there is no contract to the contrary). (6) In case there is no evidence as to their interest in the fund to which they are

entitled or the shares which they have respectively advanced—it will be presumed that they are equally interested in the property. When a transfer to two or more persons jointly for consideration makes them coowners of the property transferred, their interests are in proportion to the shares of the consideration that they have advanced.322 If the consideration is paid out of a common fund their shares would be the same as their interest in the common fund. Co-ownership is a relationship which springs from consensus and contract. This section has nothing to do with the method of creating common ownership or the manner in which several persons can become co-owners in respect of a single property. It deals with the quantum of interest and its determination where there are several joint purchasers of immovable property.323

[s 45.2] Presumption of Equality In the absence of evidence showing in what shares the consideration was paid there is a presumption that the co-owner's interest was equal. When a person can produce evidence of the amount of his share but fails to do so, he cannot avail himself of this presumption of equality.324 Where a land was jointly acquired by two respondents/strangers it could not be treated as a single unit. It was held that in the absence of evidence as to the interests in the fund to which they were respectively entitled or as to the shares which they respectively advanced, such persons should be presumed to be owners of equal shares in the land.325 If two or more persons purchase a property out of common fund the share of each of those persons would be the same as their interest in the common fund the rule in section 45 of the Transfer of Property Act, 1882 would be automatically attracted. The fact that the property was purchased in the name of one of the co-owners would not make a serious dent on the above rule of good conscience provided, however, it is established by acceptable evidence that such purchase in the name of the co-owner

was by consent and that the consideration for such purchase emanates from common fund. The person in whose name the property was purchased could not set up an exclusive title in himself and ward off the just and equitable claims of other shares who have contributed for purchase and with whose consent the purchase was made in his name. All the persons who have contributed fund for the purchase of the said property would be co-owners and each of them would have the right in the said property in proportion to the fund they have contributed for purchase of the said property.326 A property was purchased by a woman jointly along with her minor son for which the whole consideration was paid by her. She was not held to be the owner of the property because a clause in the sale deed provided that after her life time, remainder in the suit property will vest with the minor son absolutely. Such a clause rendered the contract contrary to section 45 of the Transfer of Property Act, 1882.327 Although in her note book she had written that the suit property had to be divided amongst her three children but the sale deed executed in her favour showed only her minor son (the defendant in the case) as co-purchaser and conferred absolute right on him over the property. The sale deed outweighed the note book as an admissible evidence in the case.328 A property was purchased in joint names of grandfather, father and uncle of plaintiff who was son of three owners. His plea was that "will" was executed by his grandfather, mortgage deed executed by his father and gift deed executed by the uncle show equal share of all three co-sharers. He was having joint possession of half share of the joint property. The sale deed, however, specifically showed that different contributions were made. Trial court's declaration that all of them being owners of disputed property have equal share to extent of one-third each was held to be erroneous in view of section 45.329 Since father of plaintiff and defendant had died leaving his share in disputed property, sale by defendant of his share in the property was held valid.330

[s 45.3] Involuntary Sales The principle of this section applies to property purchased at an involuntary sale as it embodies a rule of justice, equity and good conscience.331

1 Nothing in Chapter II is to be deemed to affect any rule of Muhammadan Law, see section 2,

Act 20 of 1929. 322

In a suit for partition by metes and bounds, partition can be made on the basis of

admission of the parties in the Income-tax and Wealth-tax returns with regard to contributions made by each party towards consideration of property in question, Chiranjilal v Bhagwan Das, AIR 1995 Del 325 : 1992 (1) Ren CR 123 : 1991 (2) Ren LR 357. 323 Guruswami Asari v Raju Asari, AIR 1973 Mad 473 : (1973) 2 Mad LJ 203 : 86 Mad LW 462. 324 Ram Pher v Ajudhia Singh, (1925) 87 IC 17 ; Swaroop Singh v District Deputy Director of

Consolidation, AIR 2006 (NOC) 570 (Utr), sale deed executed in favour of four persons. There was no reference in the sale deed to any agreement to sell, neither share of vendees had been

defined nor ratio of payment of sale consideration had been worked out, they became owners of the respective shares ascertained by the Settlement Officer, Consolidation. 325 State of Maharashtra v BE Billimoria, AIR 2003 SC 4368 : 2003 AIR SCW 5167 : (2003) 7 SCC

336 . 326 M Printer v Marcal Martins, AIR 2002 Kant 191 : 2002 (4) ICC 157 : ILR 2002 (3) Kant 3757 . 327 Naaz Jaffar v JM Sadiq Sait, AIR 2018 (NOC) 481 (MAD). 328 ibid 329 Kapil Kumar v Naresh Kumar, AIR 2019 (NOC) 165 P & H 330 ibid 331 Balai Chandra v Haisuddin Naskar, (1956) 60 Cal WN 270 : AIR 1956 Cal 58 .

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER II1 TRANSFERS OF PROPERTY BY ACT OF PARTIES Chapter II of the Transfer of Property Act, 1882 deals with transfers of property by act of parties. This chapter has been divided into two parts: Part-A—provides for rules regarding transfers of property in general, whether movable or immovable. Part-B—provides for rules regarding transfers of immovable property.

(B) TRANSFER OF IMMOVABLE PROPERTY Part B of the Chapter II of the Transfer of Property Act, 1882 deals only with transfer of immovable properties. This part consists of sections 38 to 53A. These sections will be taken up in following groups or parts:— I. Transfer by a person other than a full owner. (sections 38, 41 and 43). II. Protection of third person's rights (sections 39-40). III. Transfer by a person having authority to revoke a former transfer (section 42). IV. Transfer by co-owners (sections 44 and 47) V. Joint-transfers (sections 45-46) VI. Priority of rights created by transfer (sections 48 and 78) VII. Transferee's right under a policy (section 49) VIII. Bona fide holders under a defective title (sections 50-51) IX. Lis Pendens (section 52) X. Fraudulent Transfer (section 53) XI. Part-performance (section 53A)

JOINT TRANSFERS [s 46] Transfer for consideration by persons having distinct interests.— Where immoveable property is transferred for consideration by persons having distinct interests therein, the transferors are, in the absence of a contract to the contrary, entitled to share in the consideration equally, where their interests in the property were of equal value, and, where such interests were of unequal value, proportionately to the value of their respective interests. Illustrations (a) A, owing a moiety, and B and C, each a quarter share, of mauza Sultanpur,

exchange an eighth share of that mauza for a quarter share of mauza. There being no agreement to the contrary, A is entitled to an eighth share in Lalpura, and B and C each to a sixteenth share in the mauza.

(b) A, being entitled to a life-interest in mauza Atrali and B and C to the reversion,

sell the mauza for Rs. 1,000. A's life-interest is ascertained to be worth Rs. 600, the reversion Rs. 400. A is entitled to receive Rs. 600 out of the purchase-money. B and C to receive Rs. 400.

Comments [s 46.1] Transfers by Persons with Distinct Interest (Section 46) (1) Where immovable property is transferred for consideration by persons having distinct interest in the property, (2) the transferors would be entitled to equal share in the consideration when their interests in the property were equal (in the absence of the contract to the contrary), and (3) where the interests of the transferors were unequal, the transferors would be entitled to shares proportionately to their interests in the property. This section is converse of section 45 because this section deals with apportionment of consideration between joint-transferors whereas section 45 dealt with apportionment of interests among the joint-transferees. The principle of this section is that where two or more persons, who are tenants-in common, sell their shares, they are entitled to share the consideration in proportion to the value of their interest in the property. For example, A owning a moiety, and B and C each a quarter share of mauza Sultanpur, exchange an eighth share of that mauza for a quarter share of mauza Lalpura. When there is no contract to the contrary, A will be entitled to an eighth share in Lalpura and B and C each to a sixteenth share in the mauza. A being entitled to a life interest in mauza Atrali and B and C to the reversion sell the mauza for Rs 1000. A's life interest is ascertained to be worth Rs 600, the reversion Rs 400. A is entitled to receive Rs 600 out of the purchase money whereas B and C to receive Rs 400.

1 Nothing in Chapter II is to be deemed to affect any rule of Muhammadan Law, see section 2,

Act 20 of 1929.

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER II1 TRANSFERS OF PROPERTY BY ACT OF PARTIES Chapter II of the Transfer of Property Act, 1882 deals with transfers of property by act of parties. This chapter has been divided into two parts: Part-A—provides for rules regarding transfers of property in general, whether movable or immovable. Part-B—provides for rules regarding transfers of immovable property.

(B) TRANSFER OF IMMOVABLE PROPERTY Part B of the Chapter II of the Transfer of Property Act, 1882 deals only with transfer of immovable properties. This part consists of sections 38 to 53A. These sections will be taken up in following groups or parts:— I. Transfer by a person other than a full owner. (sections 38, 41 and 43). II. Protection of third person's rights (sections 39-40). III. Transfer by a person having authority to revoke a former transfer (section 42). IV. Transfer by co-owners (sections 44 and 47) V. Joint-transfers (sections 45-46) VI. Priority of rights created by transfer (sections 48 and 78) VII. Transferee's right under a policy (section 49) VIII. Bona fide holders under a defective title (sections 50-51) IX. Lis Pendens (section 52) X. Fraudulent Transfer (section 53) XI. Part-performance (section 53A)

JOINT TRANSFERS [s 47] Transfer by co-owners of share in common property.— Where several co-owners of immoveable property transfer a share therein without specifying that the transfer is to take effect on any particular share or shares of the transferors, the transfer, as among such transferors, takes effect on such shares equally where the shares were equal, and, where they were unequal, proportionately to the extent of such shares. Illustration A, the owner of an eight-anna share, and B and C, each the owner of a four-anna share, in mauza Sultanpur, transfer a two-anna share in the mauza to D, without specifying from which of their several shares the transfer is made. To give effect to the transfer one-anna share is taken from the share of A, and half-an-anna share from each of the shares of B and C.

Comments [s 47.1] Transfer of a Share in Common Property (Section 47) According to this section, (1) where co-owners of immovable property transfer a share in it, (2) without specifying that the transfer is to take effect on which particular share of

the transferors (3) the transfer takes effect on such shares (among such transferors)— (a) equally, where the shares of transferors were equal, and (b) proportionately to the extent of shares, where the shares were unequal.

Where co-owners of a property transfer a share in that property without specifying how the transfer is to take effect, in such a case where the shares of co-owners are equal, transfer becomes effective equally on such shares. But where the shares of co-owners are unequal, the transfer becomes effective proportionately on such shares. For example, A, B, and C are co-owners of a property. In this property, A has eight anna (50 p) share and both B and C have four anna (25 p) share. They transfer a two anna share in the property to D without specifying from which of their shares this transfer is made. Therefore, to give effect to the transfer one anna (10 P) share is taken from the A's eight anna (50 p) share and half anna (5 p) each share from the B and C's four anna (25 p) shares each.

[s 47.2] Tenants-in-common Those persons who have different definite shares in property but remain in joint possession of that property are known as tenant-in-common. Tenancy-in-common implies only unity of possession but not of title whereas joint tenancy implies both unity of title and of possession. When original tenant dies, the legal heirs inherit the tenancy as joint tenants and occupation of one of the tenants is occupation of all the joint tenants. It is not necessary for the landlord to implead all legal heirs of the deceased tenant, whether they are occupying the property or not. An eviction proceeding against one of the join tenants is sufficient against all the joint tenants and all joint tenants are bound by the order of Rent Controller as joint tenancy is one tenancy and is not a tenancy split into different legal heirs.332

1 Nothing in Chapter II is to be deemed to affect any rule of Muhammadan Law, see section 2,

Act 20 of 1929. 332 Suresh Kumar Kohli v Rakesh Jain, (2018) 6 SCC 708 .

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER II1 TRANSFERS OF PROPERTY BY ACT OF PARTIES Chapter II of the Transfer of Property Act, 1882 deals with transfers of property by act of parties. This chapter has been divided into two parts: Part-A—provides for rules regarding transfers of property in general, whether movable or immovable. Part-B—provides for rules regarding transfers of immovable property.

(B) TRANSFER OF IMMOVABLE PROPERTY Part B of the Chapter II of the Transfer of Property Act, 1882 deals only with transfer of immovable properties. This part consists of sections 38 to 53A. These sections will be taken up in following groups or parts:— I. Transfer by a person other than a full owner. (sections 38, 41 and 43). II. Protection of third person's rights (sections 39-40). III. Transfer by a person having authority to revoke a former transfer (section 42). IV. Transfer by co-owners (sections 44 and 47) V. Joint-transfers (sections 45-46) VI. Priority of rights created by transfer (sections 48 and 78) VII. Transferee's right under a policy (section 49) VIII. Bona fide holders under a defective title (sections 50-51) IX. Lis Pendens (section 52) X. Fraudulent Transfer (section 53) XI. Part-performance (section 53A)

PRIORITY OF RIGHTS CREATED BY TRANSFER [s 48] Priority of rights created by transfer.— Where a person purports to create by transfer at different times rights in or over the same immoveable property, and such rights cannot all exist or be exercised to their full extent together, each later created right shall, in the absence of a special contract or reservation binding the earlier transferees, be subject to the rights previously created.

Comments [s 48.1] Priority (Section 48)

This section is based on the maxim, qui prior est tempore potior est jure, which means that one which is first in time is better in law. The transferor cannot prejudice the rights of the transferee by any subsequent dealing with the property.333 An owner of a property can assign either all or any of his rights in the property i.e., he may sell the property, mortgage it or give on a lease. When he sells the property all his rights in the property are transferred to the transferee but when he lets it or mortgages it, only some of the rights are transferred. The owner can deal with the remaining rights in any lawful manner. An owner of a property can create any number of transfers in respect of the same property either at the same time or at different times. For example, A has certain immovable property which he mortgages to B. On creation of mortgage only few rights are transferred to B, remaining rights are still with the A as the owner of that property. Now A can further sell or mortgage that property. If A sells that property to C, then all the rights of A will be transferred to C and he will redeem the property from B. But if A mortgages that property to C, then the mortgage will be only of the remaining rights. This section says that if there are successive transfers of the same property, the later transfer is subject to the prior transfer. For example, A leases his house to B on an yearly tenancy. Afterwards he mortgages the same house to B and after that he creates a second mortgage in favour of C. Even after this, he may make a gift of that house to D subject to the mortgages. When transfers of inconsistent type are created no question of priority arises but where the transfers are of one type, the question arises that who should precede the other. In such a case, this section comes to rescue that the latter transfer would be subject to the prior transfer. A mortgagor obtained a loan by way of deposit of title deeds of his property as well credit facilities from the Bank. A recovery certificate in favour of the bank under the Recovery of Debts due to Banks and Financial Institutions Act, 1993, cannot have any effect upon the prior charge of a mortgagee, there being no non-obstante clause in the Act.334 In the Companies Act of 1956, section 429A, did not specifically provide for rights of priorities over mortgaged assets. In such a case, the specific provision contained in section 48 of TPA, 1882, becomes applicable. This section provides that the claim of first charge holder would prevail over the claim of the second charge holder.335 However, this general rule applies only in the absence of a special contract or reservation binding on the earlier transferee. If there is any special contract binding on the transferor and the earlier transferee, the earlier transferee may lose his priority.336

[s 48.2] Transfers Executed on the Same Date If two or more transfers are executed on the same date, then the evidence may be taken as to which was executed first and that will have the priority. Exceptions—Many exceptions also have been recognized to this rule and they are given below:— (1) Section 50 of the Registration Act gives priority to a subsequent registered deed

over a prior unregistered deed of which the registration is optional. However, this exception is subject to the doctrine of notice.337 (2) Where transfer deed is executed through fraud, misrepresentation, or gross

negligence of prior transferee (mortgagee), the priority of the prior mortgagee

will be postponed. (Section 78, Transfer of Property Act, 1882). (3) In a suit for partition, if the receiver under the direction of the Government

mortgages the whole or part of the estate, the mortgagee would be entitled to priority over an execution creditor by whom the property was attached after the commencement of the suit for partition.338 (4) The lien of a co-sharer for owelty money on partition is entitled to precedence

over prior mortgages of property allotted to the co-sharer who is liable to pay owelty.339 (5) A previous mortgage by a co-owner of his share was subject to a prior charge

created by a manager over the whole estate under section 98 of the Bengal Tenancy Act (Bengal Act 8 of 1885).

1 Nothing in Chapter II is to be deemed to affect any rule of Muhammadan Law, see section 2,

Act 20 of 1929. 333 Nandkishore v Hajarilal, AIR 2009 (NOC) 2445 (MP), same property was transferred by the

same transferor twice, the earlier transferee was held to have priority to protect his possession of the land on the strength of the agreement against any subsequent transferee. The subsequent transferee was also bound by the terms and conditions of the sale agreement of the earlier transferee. 334 Punjab & Sind Bank v MMTC Ltd, AIR 2016 Del 15 . 335 SFL Industries Ltd v Reliance Capital Ltd, AIR 2015 P&H 116 . 336 B Sivaraman v S. Ramalingam, AIR 2007 Mad 221 : 2007 (5) Kant (NOC) 664 : 2007 (6) AIR

Bom 895 (NOC), sale deed executed by vendor specifically mentioned that a passage to the property which was under dispute would be exclusively used and owned by the vendee, this was held to supersede earlier rights to the passage, the Advocate Commissioner's Report was that there was no evidence of any use of the passage by any earlier transferee. ICICI Bank Ltd v SIDCO Leather Ltd, AIR 2006 SC 2088 : JT 2006 (6) SC 274 : (2006) 6 Supreme 148 , there is no provision in section 529A of the Companies Act to the effect that provisions of section 48 of the Transfer of Property Act, 1882, would not be applicable in relation to the affairs of a company. The right to recover money lent by enforcing a mortgage is a right to enforce an interest in property. The claim of the first charge-holder prevails over that of the second. 337 Hathi Singh v Kuvarji, (1886) 10 Bom 105. 338 Herumbo Nath Banerjee v Satish Chandra, (1906) 33 Cal 1175 . 339 Shahebzada Mohomed Kazim Shah v RS Hills, (1908) 35 Cal 388 : 12 Cal WN 373.

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER II1 TRANSFERS OF PROPERTY BY ACT OF PARTIES Chapter II of the Transfer of Property Act, 1882 deals with transfers of property by act of parties. This chapter has been divided into two parts: Part-A—provides for rules regarding transfers of property in general, whether movable or immovable. Part-B—provides for rules regarding transfers of immovable property.

(B) TRANSFER OF IMMOVABLE PROPERTY Part B of the Chapter II of the Transfer of Property Act, 1882 deals only with transfer of immovable properties. This part consists of sections 38 to 53A. These sections will be taken up in following groups or parts:— I. Transfer by a person other than a full owner. (sections 38, 41 and 43). II. Protection of third person's rights (sections 39-40). III. Transfer by a person having authority to revoke a former transfer (section 42). IV. Transfer by co-owners (sections 44 and 47) V. Joint-transfers (sections 45-46) VI. Priority of rights created by transfer (sections 48 and 78) VII. Transferee's right under a policy (section 49) VIII. Bona fide holders under a defective title (sections 50-51) IX. Lis Pendens (section 52) X. Fraudulent Transfer (section 53) XI. Part-performance (section 53A)

TRANSFEREE'S RIGHT UNDER A POLICY [s 49] Transferee's right under policy.— Where immoveable property is transferred for consideration, and such property or any part thereof is at the date of the transfer insured against loss or damage by fire, the transferee, in case of such loss or damage, may, in the absence of a contract to the contrary, require any money which the transferor actually receives under the policy, or so much thereof as may be necessary, to be applied in reinstating the property.

Comments [s 49.1] Insured Property (Section 49)

Section 49 says that where any immovable property is transferred for consideration and on the date of its transfer the whole of such property or any part of it may have been insured against loss or damage by fire, the transferee, if any such loss occurs to the property and the transferor receives money under the insurance policy may require such money to be applied in reinstating the property. However, this right is subject to a contrary contract. This section is based on the view taken by James LJ, in the case of Rayner v Preston.340 In this case, A, the vendor, had contracted with B, the purchaser, for the sale of a house which had been insured by the vendor against fire. After the date of contract but before actual transfer of the house, it was destroyed by fire and the vendor received the money from the insurance company. B filed a suit to recover from A the sum received by him under the insurance policy. It was held that B was not entitled to that money. However, James LJ, expressed in his dissenting judgement that insurance of a house against fire should be considered to be for the benefit of the all the concerned persons and that from the date of the contract, the vendor was in the position of a trustee receiving the money "as money which ought to be laid out in reinstating the premises."

1 Nothing in Chapter II is to be deemed to affect any rule of Muhammadan Law, see section 2,

Act 20 of 1929. 340 (1881) 18 CHD 1 : 50 LJ Ch 472.

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER II1 TRANSFERS OF PROPERTY BY ACT OF PARTIES Chapter II of the Transfer of Property Act, 1882 deals with transfers of property by act of parties. This chapter has been divided into two parts: Part-A—provides for rules regarding transfers of property in general, whether movable or immovable. Part-B—provides for rules regarding transfers of immovable property.

(B) TRANSFER OF IMMOVABLE PROPERTY Part B of the Chapter II of the Transfer of Property Act, 1882 deals only with transfer of immovable properties. This part consists of sections 38 to 53A. These sections will be taken up in following groups or parts:— I. Transfer by a person other than a full owner. (sections 38, 41 and 43). II. Protection of third person's rights (sections 39-40). III. Transfer by a person having authority to revoke a former transfer (section 42). IV. Transfer by co-owners (sections 44 and 47) V. Joint-transfers (sections 45-46) VI. Priority of rights created by transfer (sections 48 and 78) VII. Transferee's right under a policy (section 49) VIII. Bona fide holders under a defective title (sections 50-51) IX. Lis Pendens (section 52) X. Fraudulent Transfer (section 53) XI. Part-performance (section 53A)

BONA FIDE HOLDERS UNDER A DEFECTIVE TITLE [s 50] Rent bona fide paid to holder under defective title.— No person shall be chargeable with any rents or profits of any immoveable property, which he has in good faith paid or delivered to any person of whom he in good faith held such property, notwithstanding it may afterwards appear that the person to whom such payment or delivery was made had no right to receive such rents or profits. Illustration A lets a field to B at a rent of Rs 50, and then transfers the field to C. B, having no notice of the transfer, in good faith pays the rent to A. B is not chargeable with the rent so paid.

Comments [s 50.1] Bona Fide Payment of Rent (Section 50) The principle laid down in this section is that if a person enters into a contract and without any notice of assignment fulfils it to the person with whom he made the contract, he is discharged from his obligation.341 In simple words, if a tenant makes bona fide payment of rent or profits in respect of an immovable property to a person who is not authorized to receive it, he will not be entitled to make the payment again to the rightful person. For example, A lets a field to B at a rent of Rs 50 and then transfers the field to C. B, having no notice of the transfer, in good faith, pays the rent to A. B is not liable or chargeable with the rent so paid. He is discharged from his liability.

[s 50.2] Good Faith For getting the protection of this section the payment must have been made in good faith. If the tenant after having notice, whether actual or constructive, of the fact that the property has been transferred to a third person by the owner, continues to give the rent to the owner, he will not be discharged from his liability. He will be held liable to make payment to the rightful person i.e., the transferee. If a tenant after having notice from the transferor but not the transferee makes payment to transferor, he cannot be said to have acted in good faith. There is no statutory obligation of the transferee to give notice but if he fails to do so, and the lessee pays the rent to the transferor he will not be entitled to recover it from the lessee.342 If a tenant knowing that there is a dispute between two persons claiming to be landlords, and he arbitrarily chooses one and makes payment to him, he does so at his own risk.343

[s 50.3] Rent Paid in Advance For the protection of this section, it is necessary that the rent should have been paid when it became due. The tenant must have paid the rent, as rent, and not in advance because the payment in advance is not treated as rent but as a loan. Payment in advance is a loan to the landlords with an agreement that on the day when the rent becomes due such loan will be treated as the fulfilment of the obligation.

1 Nothing in Chapter II is to be deemed to affect any rule of Muhammadan Law, see section 2,

Act 20 of 1929. 341 De Nicholls v Saunders, (1970) 22 LT 661 (662) : 39 LJCP 297. 342 Tiloke Chand Surana v JB Beattie & Co, AIR 1926 Cal 204 : 94 Ind Cas 538 : 29 Cal WN 953. 343 Gambhariya v Sakharam, AIR 1927 Nag 237 .

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER II1 TRANSFERS OF PROPERTY BY ACT OF PARTIES Chapter II of the Transfer of Property Act, 1882 deals with transfers of property by act of parties. This chapter has been divided into two parts: Part-A—provides for rules regarding transfers of property in general, whether movable or immovable. Part-B—provides for rules regarding transfers of immovable property.

(B) TRANSFER OF IMMOVABLE PROPERTY Part B of the Chapter II of the Transfer of Property Act, 1882 deals only with transfer of immovable properties. This part consists of sections 38 to 53A. These sections will be taken up in following groups or parts:— I. Transfer by a person other than a full owner. (sections 38, 41 and 43). II. Protection of third person's rights (sections 39-40). III. Transfer by a person having authority to revoke a former transfer (section 42). IV. Transfer by co-owners (sections 44 and 47) V. Joint-transfers (sections 45-46) VI. Priority of rights created by transfer (sections 48 and 78) VII. Transferee's right under a policy (section 49) VIII. Bona fide holders under a defective title (sections 50-51) IX. Lis Pendens (section 52) X. Fraudulent Transfer (section 53) XI. Part-performance (section 53A)

BONA FIDE HOLDERS UNDER A DEFECTIVE TITLE [s 51] Improvements made by bona fide holders under defective titles.— When the transferee of immoveable property makes any improvement on the property, believing in good faith that he is absolutely entitled thereto, and he subsequently evicted therefrom by any person having a better title, the transferee has a right to require the person causing the eviction either to have the value of the improvement estimated and paid or secured to the transferee, or to sell interest in the property to the transferee at the then market value thereof, irrespective of the value of such improvement. The amount to be paid or secured in respect of such improvement shall be the estimated value thereof at the time of the eviction. When, under the circumstances aforesaid, the transferee has planted or sown on the property crops which are growing when he is evicted therefrom, he is entitled to such

crops and to free ingress and egress to gather and carry them.

Comments [s 51.1] Improvements by Bona Fide Holders (Section 51) (1) When a transferee of immovable property makes any improvement on the property, (2) believing in good faith that he is absolutely entitled to it, (3) but subsequently he is evicted from the property by any person having a better title, (4) such transferee has a right to require the person causing eviction either— (a) to have the value of the improvement estimated and paid or secured to the

transferee, or (b) to sell the interest in the property to the transferee at its market value,

irrespective of the value of such improvement. (5) The amount to be paid or secured in respect of such improvement shall be the estimated value of it at the time of eviction. (6) When the transferee has planted or sown crops on the property which are growing at the time of his eviction, he will be entitled to such crops and to free ingress and egress to gather and carry the crops. This section is based on the principle that "he who seeks equity must do equity". When a person purchases property from an ostensible owner (benami property) believing him to be the real owner and makes improvements in that property in good faith as owner of the property but subsequently he is thrown out of the property by the real owner, the law says that the real owner will have to pay him the cost of improvements done by him. Because it was the real owner who allowed the ostensible owner (vendor) to sell the property and also allowed the purchaser to make improvement, the equity will not allow him to show his better title and take the property from the purchaser without paying the charges of improvement.

[s 51.2] Essential Requirements The following conditions have to be fulfilled by the transferee for availing the benefit of this section:— (1) He must prove that he is a transferee of immovable property. (2) He has made improvements in the property believing in good faith that he is

entitled to the property. (3) He is evicted from the property by a person having a better title.

[s 51.2.1] Transferee of Immovable Property The person who wants to take the benefit of this section must show that he is a transferee of immovable property. Transferee means a person in whose favour a

transfer deed has been executed after complying with all the formalities. A mere stranger or a trespasser is not entitled to the benefit of this section. Similarly, an auction-purchaser does not come in the category of transferee. The following transferees have been given the benefit of this section:— (i) a purchaser who purchased bona fide in ignorance of a mortgage,344 (ii) a purchaser of a life estate who believed that his vendor was absolutely

entitled.345 (iii) a purchaser from a de facto guardian of a minor who erroneously believed that

the guardian has authority to sell.346 (iv) a purchaser who was put in possession of a larger area than he was entitled to

and who in ignorant of the mistake made improvements on the excess area.347 (v) a transferee under an oral sale of immovable property worth Rs 100 or more.348 (vi) successors in title of the last surviving co-parcener of a joint Hindu family.349

[s 51.2.2] Improvements made in Good Faith The person must have made improvements in the property in good faith believing himself to be absolutely entitled to the property. A person who knows his imperfect title or who knows that his title is terminable like a lessee of a property or a tenant or a mortgagee, is not entitled to the benefit of this section. A person in wrongful possession cannot recover the costs of improvement.350 If a person has made improvements in good faith, as a bona fide occupant of the land and in the belief that the land is his own, he may be entitled in equity to recover the value of improvements. Ordinary repairs or changes are not included under the improvements. Improvements under this section would mean such as would enhance the value of the property to an appreciable degree, if not considerable. Ordinary operations of agriculture such as manuring and levelling land are not improvements within the meaning of this section.351 A mortgaged property was transferred to a third party for a valuable consideration. The mortgage was under a registered deed. No inquiry was made without such inquiry, the purchaser of the property was not, as held by the court a bona fide purchaser for a valuable consideration. He was not allowed to demand the costs of the improvements made by him in the property.352

[s 51.2.3] Eviction from Property The right to claim compensation under this section arises only when the transferee is evicted from the property by a person claiming to have better title after the transferee had made improvements in the property. Two conditions must be satisfied before the benefit of section 51 of this Act can be attracted: (1) the person evicted is a transferee and

(2) he must have made improvements believing in good faith that he is entitled to

the immovable property by virtue of which he had the authority to make improvements. In order to entitle an occupant of land to claim compensation, as a general rule, it is necessary that he must have held possession under colour of title, his possession must not have been by mere permission of another but adverse to the title of the true owner and he must be under the honest belief he has secured good title to the property and is the owner thereof. Where the appellant was unable to prove that the disputed property was included in lease deed and he had, in fact, trespassed into Government property and was aware that it did not belong to him, it was held that he was not entitled to the benefit of compensation.353

[s 51.3] Nature of Relief Two types of relief are given under this section for the transferees. The evictor may choose anyone of them. He may compensate the transferee or sell his interest in the property to the transferee. The valuation of improvements would be not the amount expended in making the improvement but the extent to which the value of the property as a marketable subject has been enhanced thereby.354 The valuation has to be made as on the date of actual eviction and not the date of the exercise of the option by the real owner.355 No man, who knowing fully that he had no title to the property, spends money on improving it, can be permitted to deprive the original owner of his right to possession of the property except upon payment for the improvements which were not effected by him with the consent of that person.356 It is also necessary that the property must not have been claimed by inheritance because section 51 is applicable only to conveyances between living persons.

[s 51.4] Crops Where the transferee has planted or sown crops in the property in good faith that he was entitled to the property and at the time of his eviction the crops were growing, he was held entitled to the crops and he has the right to go and collect the crops from the land. The Transfer of Property Act, 1882 was enacted for the purpose of amending the law relating to transfer of property by act of parties. Section 51 of this Act applies only to inter vivos transfers not to transfers made by operation of law. Right under section 51 of bona fide holder under defective title to receive value of improvement was held to be not available to transferee of granted land when the transfer was declared void under section 4 of the Karnataka Scheduled Castes and Scheduled Tribes (Prohibition of Transfer of Certain Lands) Act (2 of 1979) and Land was restored under section 5 i.e., by operation of law.357

1 Nothing in Chapter II is to be deemed to affect any rule of Muhammadan Law, see section 2,

Act 20 of 1929. 344 Narayana Rao v Basarayappa, AIR 1956 SC 727 : ILR 1956 Mys 184 : 1957 Ker LT 20 . 345 Nanjamma v Nacharammal, (1907) 17 Mad LJ 622. 346 Harilal v Gordhan, (1927) 51 Bom 1040 : AIR 1927 Bom 611 . 347 Natesa Thevan v District Board of Tanjore, (1926) 95 IC 789 : AIR 1926 Mad 314 (V13) : 91

Ind Cas 1. 348 Topanmal v Chanchalmal, AIR 1940 Sau 77 . 349 Mahadeo Gopal Mone v Rameshwar Sadashiv Mone, (1968) 70 Bom LR 89 : 1968 Mah LJ

407 : ILR (1968) Bom 831 . 350 Durga Devi v Baini Pd., AIR 2008 (NOC) 1619 (HP), the respondent who was in possession

raised unauthorized construction despite owner's objections. No plea of estoppel, acquiescence or waiver, etc., was made in the written statement. She was not to be debarred from recovery of possession on payment of compensation. 351 Musthafa v Andrews, AIR 2006 (NOC) 884 Ker (DB), there was a decree in existence for

specific performance, decree-holder filed application for execution after ten years, in the meantime the property was sold to a bona fide purchaser who was ignorant of the entire proceedings culminating up to the decree, decree-holder did not tell him about existence of the decree nor did he make any attempt to prevent him from making construction on the property. It was held that the benefit of section 51 could not be denied to such a purchaser on the ground of lis pendens. 352 Vasanthamma v Siddaveerappa, AIR 2011 Kant 54 . 353 Emerald Valley Estate Ltd, Badaguli, Mysore State v State of Kerala, AIR 2001 Ker 29 : ILR

2000 (3) Ker 403 . 354 Kidar Nath v Mathumal, (1913) ILR 40 Cal 555 : 18 Ind Cas 946. 355 Narayana Rao v Basarayappa, AIR 1956 SC 727 : ILR 1956 Mys 184 : 1957 Ker LT 20 . 356 RS Maddanappa v Chandramma, AIR 1965 SC 1812 : 1966 (2) SCJ 310 : (1965) 3 SCR 283 . 357 Harishchandra Hegde v State of Karnataka, 2004 AIR SCW 315 : (2004) 1 Scale 48 : 2004

AIR Kant HCR 377.

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER II1 TRANSFERS OF PROPERTY BY ACT OF PARTIES Chapter II of the Transfer of Property Act, 1882 deals with transfers of property by act of parties. This chapter has been divided into two parts: Part-A—provides for rules regarding transfers of property in general, whether movable or immovable. Part-B—provides for rules regarding transfers of immovable property.

(B) TRANSFER OF IMMOVABLE PROPERTY Part B of the Chapter II of the Transfer of Property Act, 1882 deals only with transfer of immovable properties. This part consists of sections 38 to 53A. These sections will be taken up in following groups or parts:— I. Transfer by a person other than a full owner. (sections 38, 41 and 43). II. Protection of third person's rights (sections 39-40). III. Transfer by a person having authority to revoke a former transfer (section 42). IV. Transfer by co-owners (sections 44 and 47) V. Joint-transfers (sections 45-46) VI. Priority of rights created by transfer (sections 48 and 78) VII. Transferee's right under a policy (section 49) VIII. Bona fide holders under a defective title (sections 50-51) IX. Lis Pendens (section 52) X. Fraudulent Transfer (section 53) XI. Part-performance (section 53A)

LIS PENDENS [s 52] Transfer of property pending suit relating thereto.— During the 358[pendency] in any Court having authority 359[360[within the limits of India excluding the State of Jammu and Kashmir] or established beyond such limits] by 361[the Central Government] 362[***] of 363[any] suit or proceedings 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. 364[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.]

Comments [s 52.1] Lis Pendens (Section 52) (1) During the pendency in any court having authority within the limits of India (except Jammu & Kashmir) or established beyond such limits by the Central Government, (2) of any suit or proceeding— (a) which is not collusive, and (b) in which any right to immovable property is directly or specifically in question

(3) the property cannot be transferred or otherwise dealt with by any party to the suit or proceeding. (4) so as to affect the rights of any party to it under any decree or order which may be made therein, (5) the property can be transferred or dealt with only under the authority of the court on the terms imposed by it. (6) The pendency of a suit or proceeding shall be deemed— (a) to commence from the date of the presentation of the plaint or institution of

proceeding in a court of complaint jurisdiction, and (b) 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— (i) has been obtained, or (ii) has become unobtainable by reason of the expiry of the period of

limitation.

[s 52.2] Principle "Lis pendens" means a suit under consideration of any court of law. It is an action which is pending in any court. This section is based on the maxim "ut lite pendente nihil innovetur" which means that nothing new should be introduced into a pending litigation. Therefore, the property which is in dispute should not either be sold or otherwise dealt in by any party to the dispute during the pendency of the suit or proceeding. Where a suit or proceeding is pending between two persons with respect to an immovable property and one of these parties sells or otherwise transfers the subject-matter of litigation, then the transferee will be bound by the result of the suit or proceeding whether he had the notice of the suit of proceeding or not. This is known as the rule of lis pendens. This rule affects the purchaser because the law does not allow litigants pending litigation to give to others any right to the property in dispute so as to prejudice the other party.

Lis pendens.—The principle underlying the object of section 52 is to maintain the status quo unaffected by the act of any party to the litigations pending its determination. The principles contained in this section are in accordance with the principle of equity, good conscience or justice because they rest upon an equitable and just foundation, that it will be impossible to bring an action or suit to a successful termination if alienations are permitted to avail. Allowing alienations made during pendency of a suit or an action to defeat rights of a plaintiff will be paying premium to cleverness of a defendant and thus defeat the ends of justice and throw away all principles of equity.365 The principle on which this doctrine rests was explained in the leading case of Bellamy v Sabine,366 in which Turner, LJ observed: "It is, as I think, a doctrine common to the courts both of Law and Equity and rests, as. I apprehend, upon this foundation that 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 defendants alienating before the judgement or decree, and would be driven to commence his proceedings de novo, subject again to be defeated by the same course of proceeding." In the same case, Lord Cranworth observed that the doctrine did not rest on the ground of notice. His Lordship said: "It is scarcely correct to speak of lis pendens as affecting a purchaser through the doctrine of notice, though undoubtedly the language of the courts often so describes its operation. It affects him not because it amounts to notice, but because the law does not allow litigant parties to give to others, pending the litigation, rights to the property in dispute, so as to prejudge the opposite party."

[s 52.3] Salient Features (i) Even if it is taken for granted that the provision of section 52 of the Transfer of Property Act, 1882 were not applicable as such, the principles contained in it were applicable. It is well established that wherever Transfer of Property Act, 1882 is not applicable, such principles in the provisions of the said Act, which are based on justice, equity and good conscience are applicable. (ii) The applicability of section 52 of the Transfer of Property Act, 1882 cannot depend on matters of proof or strength or weakness of the case on one side or the other in bona fide proceedings. To apply any such test is to misconceive the object of the enactment. (iii) In the case of a transfer which is hit by doctrine of lis pendens under section 52 of the Transfer of Property Act, 1882 the question of good faith which is essential to be established before an equitable relief can be granted in favour of a subsequent vendee under section 41 or section 51 of the Transfer of Property Act, 1882 is totally irrelevant. (iv) Though by the making of the decree there was no lis, still once the application for execution is filed and proceeding commenced, the property becomes the subjectmatter in dispute and, therefore, it may fall within the meaning of "the proceeding in respect of the property."367

[s 52.4] Application of Lis Pendens in India The leading case of lis pendens in India is Faiyaz Husain Khan v Prag Narain368 in which the Privy Council quoted with approval the observations made by Turner LJ. In this case, a mortgagee sued to enforce his mortgage but before service of summons, the

mortgagee effected a puisne mortgage. The prior mortgagee continued his suit and brought the property to sale without making the puisne mortgagee a party. The question was whether the subsequent transferee would be affected by the rule of lis pendens. It was held that he would be affected. In Govindapillai v Alyyappan Krishnan,369 it was held the foundation for the doctrine of lis pendens does not vest upon notice, actual or constructive, it rests solely upon the necessity—the necessity that neither party to litigation should alienate the property in dispute so as to effect his opponents. In Supreme General Films Exchange Ltd v Brijnath Singh,370 a theatre was attached in execution of a decree against the owner of the theatre. During the attachment, the owner executed a lease in favour of the appellant company. The Supreme Court held that the lease was affected by the doctrine of lis pendens as it created new rights during the pendency of the litigation. A defendant cannot by alienating the property during the pendency of litigation, venture into depriving the successful plaintiff of the fruits of the case.371 During the pendency of suit, the transferee is not entitled as of right to be made a party of the suit, though the court has discretion to make him a party.372 However, the transferee pendente lite can be added as a proper party if his interest in the subject matter of the suit is substantial and not just peripheral.373 When the purchaser pendente lite is not a bona fide purchaser, he cannot oppose relief of specific performance to vendee.374

[s 52.5] Essential Requirements The following conditions must be fulfilled for applicability of this section:— (1) There must be a pending suit or proceeding. (2) The suit or proceeding must be pending in a competent court. (3) The suit or proceeding must not be collusive. (4) A right to immovable property must be directly and specifically in question in

that suit or proceeding. (5) The disputed property must be transferred or otherwise dealt with by any party

to the suit. (6) The alienation must affect the rights of any other party to the dispute.375

[s 52.5.1] Pendency of Suit or Proceeding The first requirement of this section is that there must be a pending suit or proceeding in a court of competent jurisdiction. The expression "suit" means any proceeding by one or more persons against some other person or persons in a court of justice. In a suit, a plaintiff pursues the remedy which the law affords him for the redress of any injury for the enforcement of a right. The expression "proceeding" means the form and manner of conducting juridical business before a court of juridical officer and it includes even a writ under articles 226 and 227 of the Constitution within its purview.376 The Explanation appended to the section says that the pendency of a suit or proceeding shall be taken to commence from the date of presentation of the plaint or the institution of the proceeding in a court of competent jurisdiction. The suit or

proceeding continues until it has been disposed of by a final decree or order and complete satisfaction or discharge of such decree or order— (i) has been obtained, or (ii) has become unobtainable by reason of the expiry of the period of limitation

prescribed for its execution by the law of limitation. The doctrine of lis pendens cannot be availed of by the transferor, it is really intended for the benefit or protection of the other party, i.e., party in the suit other than the transferor.377 The section does not state that the transfer should result in an illegality. Only the purchaser during the pendency of a suit would be bound by the result of the litigation. Transaction, therefore, is not rendered void and/or of no effect.378 A compromise decree also falls within the scope of lis pendens provided it is not the result of a fraud.379 In the absence of fraud or collision, this doctrine applies to ex parte proceedings also. The basis of this application is to maintain status quo unaffected by the act of any party to the litigation pending its determination. Lis pendens has been held applicable to proceedings for an interim injunction. The matter involved was that of a partnership firm. Notice was issued by a partner for dissolution and rendition of accounts. This was not accepted by the other partner. A petition was filed for an interim injunction. During pendency of this petition, the other partner alienated an immovable property of the firm. The court said that it was hit by section 52. A receiver of the firm's properties could be appointed.380 The doctrine was applied to a suit for maintenance by a wife. She claimed that a charge should be created in her favour over an item of her husband's property. The property was alienated by other members during pendency of the proceedings. The court said that the transfer was hit by section 52.381 Stating the principle the court said: Ordinarily a suit by a Hindu wife of for maintenance against her husband is a personal suit. Any purchaser of the family property during pendency of the suit is not affected by the rule of lis pendens. But where in a suit for maintenance the widow claims that her maintenance should be made a charge on the property, this section applies and any alienation of the property made during the pendency of such suit is affected by the rule."382

The sale deed of a land was executed during pendency of a revenue suit. The court said that the transfer was a nullity. It was not necessary for the plaintiff to have the sale set aside by a civil court.383 The section also applies where alienation has taken place in violation of a restraint order on alienation.384 The doctrine of lis pendens will also apply between co-defendants if the relief claimed in the suit involves a decision between them.385 Alienation of property during pendency of suit without permission of the court is invalid. Prior permission of the court is necessary for the purpose.386 The petitioner purchased during the pendency of the suits, the suit property from the original plaintiff in 1996 without seeking the leave of the court and acquired in the place of original plaintiff the right of redemption of the mortgaged suit property. The petitioner sought joinder to the suit of opposite party seeking specific performance of the agreements of sale based on the same acquisition of title during pendency of the suit as defendant. It was held that the petitioner being a transferee pendente lite without leave of the court could not, as of right, seek impleadment as a party in the suits which had been pending since 1983.387 When sale of a part of the property in favour of petitioner was made during the pendency of the suit by one of the litigating parties without the permission of the court

and a superstructure was also constructed on that property, it was held that as no prior permission of the court was obtained before alienation of property, the petitioner could not claim any equity over property as of right.388 The transferor was not the owner of the property because she had suffered a compromise through her power of attorney. She was given only a limited right to two acres of land for her maintenance with no right to alienate. The compromise decree was under challenge but was not set aside. The transfer of the land made by her during pendency of the suit was held to be a nullity being hit by the doctrine of lis pendens.389 A property which was subject to a charge was sold at a court auction. There was a pending suit for enforcement of the charge but the purchaser was not aware of it. His purchase was held to be subject to the charge.390 Pendency of a suit or proceeding is to be deemed to continue till expiration of the period of limitation prescribed for filing an appeal. In this case, the sale was effected after dismissal of the suit and first appeal. No stay against such sale was operating at the time. No second appeal was filed, but the limitation period for such appeal had not expired. It was held that the sale would be hit by section 52 if subsequently the second appeal was filed within limitation period.391 A gift deed was executed while the suit for partition was pending. The gift deed was executed by one defendant brother in favour of the other. This happened when a judgment had been passed by the first appellate court and before filing of special leave petition by the plaintiff. The donee brother did not disclose such facts before the Supreme Court till the stage of final disposal of the special leave petition. It was held that execution of the gift deed was hit by section 52. The fact of the gift deed was not brought to the notice of the Supreme Court as provided by Order XXII, rule 10, CPC. Leave of the Supreme Court for continuance of the suit was not obtained. This fact was however not to affect the relief to be granted to the plaintiff.392 Proceedings pending before the Debt Recovery Tribunal also attract section 52 of the TPA. The Court held that a party to a proceeding cannot commit a fraud on the other party during pendency of the proceedings. The property was attached and purchased by the petitioner in an auction sale which was also confirmed. The bank also realised its dues from the sale proceeds thereof. In order to defeat the claim of the petitioner, the debtor (owner) of the property entered into an agreement of sale during pendency of proceedings. This could be challenged by the petitioner (the auction buyer).393

[s 52.5.2] Competent Court The second requirement is that the suit must be pending in a court of competent jurisdiction. Competent jurisdiction means having a competency to try the suit. According to the civil Procedure Code, the suit regarding immovable property must be filed in the court in whose jurisdiction the property is situated. If immovable property is situated within the jurisdiction of more than one court, then the suit can be filed at any place where part of the property is situated. This doctrine will be applicable to suits pending before a court in India or in a court established beyond the limits of India by the Central Government.

[s 52.5.3] Collusive Proceeding

The third requirement of this section is that the suit or proceeding must not be collusive. "Collusion in judicial proceeding is a secret arrangement between two persons that one should institute a suit against the other in order to obtain the decision of judicial tribunal for some sinister purpose."394 A collusive suit is not a real suit but it is a sham fight.395 In a collusive suit, the claim put forward is fictitious, the contest over it is unreal, and the decree passed therein is a mere mask having the similitude of a judicial determination and worn by the parties with the objects of confounding third parties.396 Where the agreement to sell was executed in favour of a third party prior to filing of the suit for specific performance of contract, it was not hit by lis pendens.397 The proceeding before a Revenue Court are not in the nature of a suit but only summary proceedings in the view of the Act in force at that time. Therefore, the saledeed executed during the pendency of such a proceeding will not be affected by doctrine of lis pendens.398 The "transferee from the judgment – debtor" also includes the transferee of a transferee from the judgment – debtor under Order 21, Rules 98 and 102 of Civil Procedure Code, 1908 and he too will be bound by the ultimate decision in view of section 52 of the Transfer of Property Act, 1882, when the transfer of property in question was made pendente lite.399 The plea raised in second appeal for the first-time that the property was purchased during the pendency of suit was held liable to be rejected.400 The distinction between a collusive and fraudulent proceeding was explained in the case of Nagubai v B Sham Rao.401 It was observed by Venkatarama Aiyar J, that, "in a collusive proceeding a claim put forward is fictitious, the contest over it is unreal, and the decree passed there is a mere mask having the similitude of a judicial determination and worn by the parties with the objects confounding third parties. But when a proceeding is alleged to be fraudulent, what is meant that the claim made there in is untrue, but the claimant has managed to obtain the verdict of the court in his favour and against his opponent by practising fraud on the court.............while in a collusive proceeding the contest is a mere sham, in a fraudulent suit it is real and earnest." A categorical allegation contained the objection that the decree which was sought to be executed was obtained by collusion by the decree-holder with the judgment-debtor. It was held that the court has to adjudicate this fact after framing an issue and after giving proper opportunity to both parties to lead their evidence. Objections cannot be dismissed by applying section 52.402

[s 52.5.4] Right to property must be specifically in question The fourth requirement of the section is that right to immoveable property must be directly and specifically in issue in the suit or proceeding. The subject matter of the suit must be clearly and pointedly in contest, the property must have been property described by definite legal or general descriptions of its character, status, etc., so that it can be identified by description. A mere right to sue, not connected with the ownership of property is not property, and therefore, this section will not be applicable to it.403 The test whether a suit or

proceeding involves any question of right in immoveable property should be the nature of a claim and the decree passed rather than the property mentioned in the plaint.404

[s 52.5.5] Vendor only part owner of property The vendor of property during pendency of the suit was found to have no title to the entire property conveyed by him under the sale deed she was found to be the owner of only 1/8th share of the property. It was held that the transfer was not null and void. The sale deed would be capable of conveying only to the extent of the title of the vendor.405

[s 52.5.6] Disputed property must be transferred or otherwise dealt with The fifth requirement of the section is that the property must be transferred or otherwise dealt with by any to parties of the litigation. The term "transferred" in this section includes leases, mortgages, sales and exchange. The person who purchases property from any of the parties to the litigation will be bound by the result of the suit or proceeding. The expression "otherwise dealt with" includes such action like raising of construction wrongfully. Therefore, the operation of this doctrine cannot extend to person whose title is paramount to that of the parties to the suit or whose title is not anyway connected with them. An example may be taken of the case Bala Ramonadra v Daului.406 In this case, A made a gift of his land to his daughter R in 1910. In 1914, the plaintiff sued A to recover possession of land. During the pendency of the suit A died and R was brought on records as his legal representative. However, she sold the land before she was brought on the record as legal representative. The plaintiff thereupon sued the defendants (purchasers) to recover possession of the land on the ground of lis pendens. However, it was held that R was not party to the suit of 1914 in her own right and the sale to defendants took place before she was brought on record, therefore, doctrine of lis pendens did not apply. It was further observed by the court that even if R had sold the property after she was brought on record, the result would have been the same because the transfer was made in her own right as owner, and on record she was a representative of her father A only. The question of good faith in entering into the transaction is absolutely irrelevant to the application of the rule of lis pendens.407

[s 52.5.7] The transfer must affect the other party The sixth and the last condition of this section is that the transfer must affect the other party to the dispute. The very object of this doctrine is to protect only the parties to the litigation against alienations by their opponents pending the suit. The words "any other party" mean any other party between whom and the party alienating there is an issue for decision which might be prejudiced by alienation.408 The doctrine is intended to protect only the parties to the litigation against alienations by their opponents pending in issue among the defendants inters and one of them alienates the property so a affect the right of other.409 Where during the pendency of a suit for specific performance of contract to transfer an immoveable property, the subject-matter of dispute is alienated, the alienation would be affected by lis pendens.410

It has been held that a transferee pendente lite is bound by the decree just as much as he was a party to the suit. Such transferee puts himself in privity with the suit and must be treated not as a stranger to the suit but as a party to it and consequently bound by the terms of the decree in full.411 A decree based upon compromise is just as mush binding as a decree founded upon a decision on merits.412 It has also been settled now that in the absence of fraud or collusion the doctrine of lis pendens is applicable to suit decided ex parte.413 The owner executed an agreement of sale in favour of the purchaser. The purchaser's suit for specific performance was decreed. The owner mortgaged the suit property to a bank against a loan. The bank put the property to auction. The auction-purchaser was held to be bound by the decree which was already there in favour of the original purchaser lis pendens was applicable to the auction conducted by the bank. The original owner had to effect a mortgage on the property after passing of the decree. The original purchaser's right was protected by lis pendens.414 There was a suit for joint possession of the property in question. The partition of the property had already been effected between brothers. Even the mode of partition had been prepared and such of the three brothers had been but in possession of their respective shares. The property in question came into the possession of one of them. Its sale transaction effected by him did not attract the doctrine of lis pendens.415 In a case, a partition suit was filed but no preliminary decree was passed. The transferee pendente lite purchased share of co-sharer in the suit property. Although she was aware of pendency of partition suit, she made no efforts to implead herself in the suit. Her application to intervene in execution proceedings of the partition decree was not permitted as she had no nexus to the partition suit.416

[s 52.6] Temporary Injunction against Transfer Pendente Lite A temporary injunction restraining a transfer pendente lite has been held not necessary to be granted in each case. Section 52 provides adequate protection to parties against such transfers. The occasion for invoking powers under O 39, rules 1 and 2 arises only in rare cases where the plaintiff demonstrates that the rule of lis pendens is inadequate to protect his interest.417 During the pendency of a suit for partition, there was alienation of several parcels of property by the defendants in blatant disobedience and flagrant violation of the order of temporary injunction passed by the trial court. It was held that it was hit by the doctrine of lis pendens. It did not bind the interest of the plaintiff. It was further held that any alienation of any portion of the suit property even prior to the suit would not bind the interest of the plaintiff when a bequest under a Will in question was established by the plaintiff.418

[s 52.7] Exception to Lis Penden s According to section 52, when during the pendency of a suit a transfer is made with the permission of the court, the principle of lis pendens is not applicable. The court may permit such a transfer subject to such terms as it may impose. The transfer will be permissible only when the prescribed conditions will be fulfilled. The parties to the suit may apply to the court to get the permission for transfer. If the court deems fit, it may give the permission of such a transfer.

[s 52.7.1] Sale by Agreement-holder.— The agreement-holder transferred the property to a third party. A suit for specific performance was filed against him. During this suit, the third party made a further sale. The court said that it was not invalid.419

[s 52.8] Involuntary Transfers Transfers by operation of law are known as involuntary transfers, for example, court sales. Section 52 is applicable to both the kinds of transfers pendente lite. Formerly, there was discrepancy regarding applicability of this section to involuntary transfers but now it is will settled that section 52 is applicable to transfers by operation of law too.420 The principle of lis pendens applies to execution sales as well as sales for non-payment of Government revenue.421 A sale in pursuance of an attachment comes within the purview of this section too.422 Purchaser at a sale for arrears of income-tax is affected by the rule of lis pendens and would be bound by the decision of the court as if he had purchased the property pending litigation.423 In a case, a suit for specific performance of a contract for sale of an immoveable property was pending in a court, and the property was purchased under an auction sale in execution of a decree in a suit filed on the basis of promissory note. It was held that the execution sale would be hit by the provisions of section 52 and no title could be given to the purchaser.424 In another case, A mortgaged his property to B. Later B sued A on the mortgage and obtained a decree for sale. While this suit was pending, a third party, obtained a money decree against A and the property was sold to C in execution of this decree. The Privy Council held that C's purchase was subject to lis pendens.425 A disputed land was under mortgage to a financial corporation. It was held that any subsequent alienation of the mortgaged land would automatically be subject to the rights of mortgagee in mortgaged land. The transfer in favour of subsequent purchasers was hit by lis pendens, such transferees could not be taken to be bona fide purchasers of property.426

[s 52.9] Lis Pendens and Specific Performance The doctrine of lis pendens is applicable to suits for specific performance as well.427 A lis pendens transferee is not required to be impleaded as a party to a suit for specific performance of the contract. Such transferee has no independent interest in the subject-matter of the suit and the decree in the suit will be effective against him.428 There was a subsequent sale of the same property by the owner to a second purchaser. The second sale was effected after filing of a suit for specific performance by the first purchaser. The court said that the principle of lis pendens would apply notwithstanding the fact that the right of the subsequent purchaser could be protected under section 19(b), Specific Relief Act.429 The suit land was sold by the vendor in favour of a third party during pendency of the restraint order. All parties belonged to the same village. The Court said that it could

safely be presumed that the subsequent purchaser knew about pendency of the case. He could not be termed as a bona fide purchaser. The plaintiff was entitled to relief of specific performance of contract against the subsequent purchaser.430

[s 52.9.1] Lis pendens not applicable to execution proceedings.— A decree for specific performance was passed. The court which passes such a decree retains control over the decree even after passing it. But the parties to the suit do not have the option of deviating from its terms. Proceedings for execution do not fall within the expression "pendency of suit." The suit attained finality because no appeal was preferred. The judgment-debtor sold away the suit property at this stage. The court said that this did not amount to assignment or creation of any interest during the pendency of a suit. No leave was obtained by the purchaser before his purchase. He was not to be impleaded to execution proceedings.431

[s 52.10] Lis Pendens between Co-defendants The doctrine of lis pendens does not apply to co-defendants. Co-defendants have no issue between them for decision and that is why lis pendens does not apply to them. If the relief claimed involves a decision between them, the position would be different. An example may be taken of the case of Krishnaya v Mallaya.432 In this case, the plaintiff sued for declaration that he was neither bound by his sale to A nor by A's mortgage to B. A and B fought together against the plaintiff and the sale to A was affirmed. The court held that the plaintiff had seller's lien for unpaid price and it had priority over B's mortgage. During the pendency of the suit by plaintiff against A and B, the concerned property was attached and sold by A's creditor in satisfaction of a money decree. Thereafter, B filed another suit against purchaser of that property on the plea that the sale was hit by lis pendens. However, the court dismissed the suit on the ground that lis pendens did not apply as there was no issue between A and B.

[s 52.11] Status Quo: Lis Pendens, Effect of such Transfers Section 52, broadly speaking, maintains the status quo unaffected by the act of the parties to litigation pending its determination. It is necessary for the application of this section that the property must be directly and specifically in question in the suit. The suit in which no right to immoveable property is in question is outside the scope of this section. The effect of this doctrine is not to annul all voluntary transfers effected by the parties to a suit but only to render it subservient to the rights of the parties to it 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 if he happens to be third person even if he is not a party to it. The transfer will remain valid subject to the result of the suit.433 Assignment or devolution of right during pendency of litigation does not arrest progress of the litigation except when transfer of property forming the subject-matter of the suit, pendente lite, results in wiping out the cause of action itself or deprives transferee of right to decree, such as where the cause of action was personal to the original plaintiff.434 Even where the purchaser lis pendens is not aware of the status quo order, he would be affected by it, his purchase being under the domain of the decision in the case.435

[s 52.12] Relief of Specific Performance of Original Sale A suit for specific performance of the agreement to sell was pending when the vendor resold the property to a third person. The subsequent buyer was aware of the previous agreement and pendency of the suit. The court said that he would be bound by the decree in the suit. The fact that he spent huge amounts on the suit property after the agreement with him was no ground to refuse the relief of specific performance.436 During pendency of the suit, the property in dispute was transferred by the vendor to the respondent. The appellate court granted permission to the respondent to step into the shoes of the vendor. It was held that this would not affect the right of the earlier purchaser (plaintiff) as he had claimed specific performance of original contract which, if established, would bind the respondent as successor. The application of the lis pendens transferee was entertained because without it the balancing of rival claims could not have been done.437

[s 52.13] Impleadment of Lis Pendens Transferee A transferee pending suit applied for relief of specific performance of the agreement to sell. The transfer was made by the transferee from the defendant without leave of the court. The Supreme Court said that he could not claim impleadment in view of the doctrine of lis pendens. The order for impleading him on the ground that there was nobody to represent him in the case to safeguard his interest was set aside. Explaining the doctrine, the court said that it is based on equity, good conscience and justice.438 Explaining further, the court said. "Mere pendency of suit does not prevent one of the parties from dealing with the property constituting subject-matter of the suit. The section only postulates the condition that the alienation will in no manner affect the rights of the other party under any decree which may be passed in the suit unless the property was alienated with the permission of the court. The principles specified in section 52 of the Transfer of Property Act, 1882 are in accordance with equity, good conscience or justice because they rest upon an equitable and just foundation that it will be impossible to bring an action or suit to a successful termination if alienations are permitted to prevail. A transferee pendente lite is bound by the decree just as much as if he was a party to the suit. The principle of lis pendens embodied in section 52 of the Transfer of Property Act, 1882 being a principle of public policy, no question of good faith or bona fide arises. The principle underlying section 52 is that a litigating party is exempted from taking notice of a title acquired during the pendency of the litigation.439 In Bibi Zubaida Khatoon v Nabi Hasan,440 the Supreme Court observed that "there is absolutely no rule that the transferee pendente lite without leave of the court should in all cases contest the pending suit.441 Where a person who is the transferee pendente lite of the property acquires interest in the property by an assignment, creation, or devolution, he can apply to the court for leave to be impleaded and to continue the suit. Even so he would be bound by the result of the litigation, whether he is represented at the hearing or not unless it can be shown that the litigation was not properly conducted by the original party or that he colluded with the adversary.442 Following this principle, the Orissa High Court held that where the transferor (defendant) after alienating the property, and having no interest in it any more, does not properly defend his title and colludes with the plaintiff the lis pendens purchaser may be allowed to join as a party so as to enable him to defend his interest. He would be entitled to be heard on merits of the case.443 The court cited the observation of the Supreme Court to the effect that

a transferee pendente lite has a vital interest in the suit irrespective of the fact whether he has purchased the whole land or not.444 Looking at the incessant flow of cases on the subject, a Division Bench of the Andhra Pradesh High Court decided to capture the applicable principles in terms of the following points:445 Firstly, for the purpose of impleading a transferee pendente lite, the facts and circumstances should be gone into and basing on the necessary facts, the court can permit such a party to come on record either under O I, rule 10, CPC, or under O XXII, rule 10, CPC, as a general principle. Secondly, a transferee pendente lite is not entitled to come on record as a matter of right. Thirdly, there is no absolute rule that such a transferee pendente lite with the leave of the court should, in all cases, be allowed to come on record as a party, (Emphasis added). Fourthly, the impleadment of a transferee pendente lite would depend upon the nature of the suit and appreciation of the material available on record. Fifthly, where a transferee pendente lite does not ask for leave and come on record that would obviously be at his peril, and the suit may be improperly conducted by the plaintiff on record. Sixthly, merely because such transferee pendente lite does not come on record, the concept of his (transferee pendente lite) not being bound by the judgment does not arise and consequently he would be bound by the result of the litigation, though he remains unrepresented: Seventhly, the sale transaction pendente lite is hit by the provisions of section 52 of the Transfer of Property Act: and Eighthly, a transferee pendente lite, being as assignee of interest in the property, as envisaged under O XXII, rule 11, CPC can seek leave of the court to come on record on his own or at the instance of either party to the suit.446 Where the assignee of a decree was neither impleaded in the first appeal nor in the second appeal, the court said that even so he was bound by the result of the second appeal and could reap the benefit of the decree for possession passed in the second appeal.447 The doctrine of lis pendens applies only where the lis is pending before a court. Further pending the suit, the transferee is not entitled as of right to be made a party to the suit, thought the court has a discretion to make him a party. But the transferee pendente lite can be added as a proper party if his interest in the subject-matter of the suit is substantial and not just peripheral. A transferee pendente lite to the extent he has acquired interest from the defendant is vitally interested in the litigation, whether the transfer is of the entire interest of the defendant, the latter having no more interest in the property may not properly defend the suit. He may collude with the plaintiff. Hence, though the plaintiff is under no obligation to make a lis pendens transferee a party, under O XXII rule 10 an alienee pendente lite may be joined as party. The court has discretion in the matter which must be judicially exercised and an alienee would ordinarily be joined as a party to enable him to protect his interests. The court has held that a transferee pendente lite of an interest in immovable property is a representativein-interest of the party from whom he has acquired that interest. He is entitled to be impleaded in the suit or other proceedings. Where the transferee pendente lite is made

a party to the litigation he is entitled to be heard in the matter on the merits of the case.448 In an execution petition for delivery of possession, the lis pendens purchase purchasing property from the judgment-debtor caused obstruction. The court said that such a purchaser could not require the court to decide his obstruction like a suit. He cannot question the legality of the decree and propriety of the court in passing such a decree.449 In a pending suit for partition between two coparceners, a tenancy was created in favour of the applicant. It was held that he was hit by the principle of lis pendens. He would be termed as an encroacher of the premises in question.450 In the case of another purchaser of property during a partition suit, the court said that he could not have any independent right over and above the right of the seller who was a party to the lis. Such purchaser, though not a necessary party to the suit could get himself impleaded. Having not done so, it was not open to him to contend that he acquired an independent right over the suit property.451 It was held about the lis pendens transferee in a partition suit that he could be impleaded as a party to the suit. The delay caused by him in seeking impleadment could be compensated by imposing costs on him.452 In a suit for partition, the preliminary decree was passed. During pendency of the final decree proceedings, the property was alienated to a third party. Prior permission of the court was not taken. The court said that section 52 applied and alienation was hit by lis pendens.453

[s 52.14] When Impleadment Necessary The suit was for eviction recovery of arrears of rent and mesne profit. During pendency of the suit, the plaintiff sold her right, title and interest in the property to the transferee. Pursue thereafter, she did not the suit. The court held that the impleadment of the lis pendens transferee had become necessary in order to ensure effectual adjudication of the suit and avoid multiplicity of litigation.454 In a suit for cancellation of the sale deed, the alienee pendente lite was regarded as a proper party to be impleaded. The original plaintiff had sought to withdraw from the suit and the interest of the original plaintiff and that of the alienee pendente lite were not of conflicting nature.455 The purchaser pendent lite should be given opportunity to protect his right if his interest in the subject-matter of the suit is substantial in nature. He would be entitled to or suffer the same legal rights and obligations of his vender as may be eventually determined by the Court. His coming up with a separate suit would mean multiplicity of proceedings. He would be entitled to be impleaded in the title suit or other proceedings where his predecessor in interest was made party to litigation.456

[s 52.15] Impleadment of Transferee from Plaintiff The court said that a transferee from the plaintiff stands slightly on a different footing from that of a transferee from the defendant. In the case of a transfer from the defendant, the impact of the Act would be felt if only the suit is decreed. A transferee from the plaintiff is entitled to be impleaded in the suit.457

[s 52.15.1] Involvement of Land Acquisition Act.— A land was released from acquisition. The petitioner purchased it while the decision of release was under challenge. The order of release was subsequently quashed. The notification under section 4 of the Land Acquisition Act, 1894 became revived. It was held that the purchaser was bound by the decision of the Court. He could not claim that he had the right to purchase the acquired land. Dismissal of his application was proper, particularly when possession of the land had already been taken.458

[s 52.16] Rectification of Sale Deed It was alleged that the defendant encroached the land in question. The defendant pleaded that he had purchased the land from its owner. The land which was described in the sale deed in favour of the plaintiff did not relate to the land in question. The plaintiff obtained a deed of rectification showing the land as part of the relevant patta number. The deed of rectification was obtained during pendency of the suit without leave of the court. Thus, the deed of rectification was hit by section 52. Finding as to title and possession in favour of the defendant was not to be interfered with.459

[s 52.17] Publication of Notice of Lis Pendens and its Registration The Bombay Amendment of 1939 which became applicable to Gujarat also requires publication of the notice of lis pendens and also registration under the Registration Act.460

[s 52.18] Transferee cannot Lead Estoppel In the matter of transfer of property during pendency of lis, it has been held that the principle of estoppel contained in section 41 must yield to the doctrine of lis pendens. The purchaser was not entitled to the protection under section 41 as the property was transferred in his favour during pendency of the litigation.

[s 52.19] Doctrine of Lis Pendens and Order of Temporary Injunction From the perspectives of litigating parties "lis pendens" and "Order of temporary injunction" under O XXXIX, rules 1 and 2, CPC have different effect the apprehension of action under Civil Procedure Code for attachment of property and the punishment of Contempt of Courts Act as deterrent to the party against whom order of injunction is running. The deterrent further avoids multiplicity of transactions and proceedings. Doctrine of lis pendens does not create such deterrent effect as it does not entail drastic consequence of attachment of property, detention in civil prison, suit being dismissed or defence being struck off or punishment for contempt of court.461 Mere registration of notices of pending suit cannot secure to plaintiffs what can be secured under injunction. Registration of notices of pending suit cannot be substituted or preferred in clamping order of injunction on adversary although such registration is desirable. Any alienation in breach of interim injunction renders such alienation illegal and expose the party to consequences provided under O XXXIX, rules 2A and 11 of CPC in addition for punishment for contempt of court. It has been held that it cannot be laid down as a blanket propositionof law that in each and every case plaintiff is

expected to show that provisions of section 52 do not afford adequate protection before injunction to restrain transfer pendente lite is issued.462 In case of interim injunction restraining transfer pendente lite, court can impose conditions like seeking an undertaking that no equities would be claimed on account of sale or development of property, effecting sale only after putting transferees to notice that their rights would be subject to pending suit or requiring the parties to inform the court promptly of creation of such interest etc. Such conditions can be in addition to or independent of the order of injunction but cannot be in place of or short of granting injunction.463

1 Nothing in Chapter II is to be deemed to affect any rule of Muhammadan Law, see section 2,

Act 20 of 1929. 358 Subs. by Act 20 of 1929, section 14, for "active prosecution". 359

Subs. by the AO 1950, for "in the Provinces or established beyond the limits of the

Provinces". 360 Subs. by Act 3 of 1951, section 3 and Schedule, for "within the limits of Part A States and

Part C States" (w.e.f. 1-4-1951). 361 Subs. by the AO1937, for "the Governor General in Council". 362 The words "or the Crown Representative" rep. by the AO 1948. 363 Subs. by Act 20 of 1929, section 14, for "a contentious". 364 Ins. by Act 20 of 1929, section 14. 365 Narendrabhai Chhaganbhai Bharatia v Gandevi Peoples Co-op Bank Ltd, AIR 2002 Guj 209 :

2002 (3) Guj LR 2066 : 2003 (1) Civ LJ 499 . The section is an expression of principle " pending a litigation nothing new should be introduced". It provides that pendent lite, neither party to litigation, in which any right to immovable property is in question, can alienate or otherwise deal with such property so as to affect his apportionment. Section is based on equity and good conscience and intended to protect the parties to litigation against alienation by their opponent during pendency of suit, Amit Kumar Shaw v Farida Khatoon, AIR 2005 SC 2209 : (2005) 11 SCC 403 : (2005) 3 Supreme 670 . 366 (1857) 1 De G & J 566 (578, 584) : 44 ER 842 : 26 LJ Ch 797. 367 Narendrabhai Chhaganbhai Bharatia v Gandevi Peoples Co-op Bank Ltd, AIR 2002 Guj 209 :

2002 (3) Guj LR 2066 : 2003 (1) Civ LJ 499 . 368 ILR 29 All 339 : 34 Ind App 102. Sunit Jugal Kishore Gilda v Ramanlal Udhoji Tanna, (2013)

10 SCC 258 , the rule is applicable to mortgage by mortgagee as well. 369 AIR 1957 Ker 10 : ILR (1957) Ker 5 : 1957 Ker LJ 11 . 370 AIR 1975 SC 1810 : (1975) 2 SCC 530 : (1976) 1 SCR 237 . 371 KV Rajasekhar v Kedarnath Co-op Housing Society Ltd, AIR 2018 Hyd 71 . 372 ibid 373 ibid 374 Daljit Singh v Janraj Singh, AIR 2018 P & H 115. 375 The Supreme Court restated these elements thus : (1) there must be a suit or proceedings

pending in a court of competent jurisdiction (2) Suit or proceedings must not be collusive (3)

the litigation must be one in which right to immovable property is directly and specifically in question (4) There must be a transfer of property in dispute by any party to litigation (5) Such transfer must affect the rights of other party that may ultimately accrue under the terms of decree or order, Amit Kumar Shaw v Farida Khatoon, AIR 2005 SC 2209 : (2005) 11 SCC 403 : (2005) 3 Supreme 670 . 376 Goudappa Appaya Patil v Shivari Bhimappa Pattar, AIR 1992 Kant 71 : 1992 (2) Civ LJ 230 :

ILR 1991 Ker 3288 . 377 Rabindra Nath Das v Sarat Chandra Parui, AIR 1971 Cal 159 : 74 Cal WN 952 : ILR (1970) 2

Cal 117 . 378 Hardev Singh v Gurmail Singh, AIR 2007 SC 1058 : (2007) 2 SCR 141 : (2007) 2 SCC 404 (SB

Sinha & Markandey Katju JJ; any alienation during the pendency of suit would be subject to decision of suit, Chandrapal Gurvani v Saraswati Bai Guruwani, AIR 2017 Chh 57 . 379 Annamalai Chettiar v Malayandi, ILR 29 Mad 426 : 16 Mad LJ 372. 380 SK Vijaya Kumar v SK Ravi Kumar, AIR 2007 (NOC) 709 (Kar) : (2007) 1 AIR Kar. R 431. 381 Karupanna Gounder v Rasammal, AIR 2007 Mad 101 : 2007 (4) CCC 40 : 2007 (2) Mad LW

352 . 382 Karupanna Gounder v Rasammal, AIR 2007 Mad 101 (104) : 2007 (4) CCC 40 : 2007 (2) Mad

LW 352 . The Court referred to Ramaswamy Gounder v Raghvammal, AIR 1967 Mad 457 : ILR (1966) 2 Mad 164 : (1966) 2 Mad LJ 579; wife filed a suit for creation of charge for maintenance in 1968, during the pendency of this suit, sale deed was executed to defeat her claim, lis pendens applies to the case, Siddagangaiah (Dead) through LRs v N K Giriraja Shetty (Dead) through LRs, AIR 2018 SC 3080 ; property of a minor sold by mother during lifetime of father was challenged, purchaser of property sold it to third party during the pendency of challenge proceeding, sale by mother who was de facto guardian was void, original purchaser did not get any right of title or interest by virtue of sale deed, doctrine of lis pendens not applicable because no transfer of rights occurred as the original purchaser himself did not have any right, Rameshwar Babasaheb Paul v Shivaji Eknathrao Patil, AIR 2019 Bom 77 . 383 Paras Mal v Sobhag Devi, AIR 2007 Raj 73 : 2007 (3) Kant (NOC) 316 : 2007 (2) Land LR 657

, relying upon Jaswant Singh v Board of Revenue, (1984) Raj LW 573 ; Sayar Bai v Yashoda Bai, AIR 1983 Raj 161 : 1982 WLN 621 : 1983 Raj LR 126 . 384 Kashmir Singh v Kali Charan, AIR 2009 (NOC) 3019 (P&H). 385 Manjeswara Krishnayya v Vasudeva Mallayya, AIR 1918 Mad 578 (V5) : ILR 41 Mad 458 : 34

Mad LJ 263. 386 G Krishnamoorthy v Sukumar, 2003 (3) RCR (Civil) 471 (Mad) (DB); Raj Kumar v Sardarilal,

(2004) 2 SCC 601 , a lis pendens transferee becomes bound by the decree as to title to the land even if he was not a party to the proceedings and his name was also not there on the record. Raghunath Gangadhar Kakade v Chagan Baburao Kapse, AIR 2006 Bom 150 : 2006 (1) Bom LR 24 : 2006 (3) Civ LJ 591 , purchase of property during pendency of partition suit, the vendee was aware of the suit, he was held to be bound by the decree in the partition suit; mother and elder brother of plaintiff executed trust deed for setting their two-third share in property in favour of beneficiaries, creation of trust held valid, transfer during pendency of suit itself does not invalidate such transfer, deed of trust not executed during pendency of suit without taking leave of court, sale deed executed without affecting one-third share of plaintiff in suit property, Nirmal Kumar Neogi v Samar Ghosh, AIR 2017 (NOC) 907 Cal. 387 Bibi Zubaida Khatoon v Nabi Hassan Saheb, AIR 2004 SC 173 : 2003 AIR SCW 5858 : (2004)

1 SCC 191 ; Laxmi Narain v Brij Bhushan, AIR 2006 All 317 : 2006 (64) All LR 650 : 2006 (2) All Rent Cas 783, plaintiff claimed possession of the house on the basis of succession and filed a suit for eviction of alleged trespassers, there was no bona fide dispute of title between parties,

the suit was resisted only on the ground that only the rightful owner could seek eviction, during pendency of the suit gift deed in favour of the plaintiff was cancelled by the donor, lis pendens not applicable. 388 G Krishnamoorthy v Sukumar, AIR 2004 (NOC) 11 (Mad) : 2003 AIHC 3723 ; Mohammadia

Co-operative Building Society Ltd v Lakshmi Srinivasa Co-op Building Society Ltd, AIR 2007 (NOC) 1459 AP (DB), wakf property sold after procedural formalities, sale valid, but resale to a third party was held to be hit by lis pendens because a dispute for specific performance of the sale was still pending Ujagar Singh v Saheb Khan, AIR 2007 (NOC) 1469 (Raj), transfer of land valid, vendee willing to pay balance price, was seeking relief of specific performance, sale by vendor to a third person was held to be hit by section 52; many transactions of property took place between different purchasers, applicant purchased property from vendor whose sale deed was set aside, there was no entry regarding lis pendens or revenue record regarding the transaction, applicant was held bona fide purchaser, Usmangani Abdulkadar Karbhaari v Ajit Indravadan Thakkar, AIR 2017 Guj 81 ; subsequent purchaser purchased property few days before filing of suit, plaintiff did not ask for setting aside sale or for declaration that sale in favour of subsequent purchaser by defendant not binding on him, subsequent purchaser is not pendente lite purchaser but a bona fide purchaser, decree for specific performance not maintainable against subsequent purchaser, Parveen Kumar v Maharishi Dayanand University, AIR 2017 (NOC) 427 P&H. 389 Mangal Singh v Hardial Singh, AIR 2007 P&H 203 : 2008 AIHC 43 (NOC) : 2008 (1) Kant

(NOC) 68; Lakshman Rao v Ellandula Ravinder, AIR 2007 (NOC) 1003 (AP), no permission of the court was proved to have been taken before filing of suit, both parties were equally interested in the property, but through different agreements to sell, whether those transfers were genuine had to be decided after trial on the basis of evidence, in the meantime they were hit by section 52. Padmaja v Erattil Sajeev, AIR 2007 (NOC) 70 (Ker), the second purchaser was fully aware of the original contract of sale, the subsequent purchaser from such purchaser was to be imputed with such knowledge, he could not claim title to such property so as to deny the benefit of decree to the original buyer. 390 Lalitha Pariappa Rai v Sanjeevi, AIR 2006 Kant 25 : 2006 AIHC 506 : 2005 AIR Kant HCR

3079. 391 Jagan Singh v Dhanwanti, (2012) 2 SCC 628 : (2012) 114 Cut LT 458 : (2012) 2 All LJ 187. 392 Kirpal Kaur v Jitender Pal Singh, AIR 2015 SC 2967 . 393 K Padma v K Ramachandra, AIR 2015 Kant 40 . 394 Wharton's Law Lexicon, 14th Edn, p 212. 395 Ahmadbhy v Yulleybhoy, 6 Bom 707. 396 Nagubai Ammal v B Shama Rao, 1956 SCR 451 : 1956 SCC 321 : AIR 1956 SC 593 . 397 Rajan v Yunuskutty, AIR 2002 Ker 339 ; Ram Kumar Tiwari v Deenanath, AIR 2002 Chatt 1 :

2001 Cg LJ 529. 398 Gowardham v Ghasiram, AIR 2002 MP 130 : 2002 (1) MPLJ 200 . 399 Vijayalakshmi Leather Industries Pvt Ltd, Chennai v K Narayanan, AIR 2003 Mad 203 : (2003)

1 Mad LJ 530 : 2003 (1) Mad LW 772. 400 Kamalammal v Senthil (Minor), AIR 2003 Mad 337 : 2003 (2) Civ LJ 908 : (2003) 1 Mad LJ

756. 401 1956 SCR 451 : 1956 SCC 321 : AIR 1956 SC 593 . 402 Bhagwan Bai v Chiranjit Lal, AIR 2009 (NOC) 1701 (P&H). 403 Uchhab Patra v Brundaban Mallik, AIR 1969 Ori 142 : 35 Cut LT 86 : ILR (1969) Cut 380 . 404 Mahesh v Mundar, AIR 1951 All 141 : 1951 All LJ 39 : 1951 RD 141. 405 Syed Basheer malik v Jameela Begum, AIR 2016 NOC 395 (Kant).

406 27 Bom LR 38. 407 Parveen Kumar v Baljinder Kaur, AIR 2010 P&H 40 : 2010 AIHC 515 (NOC) : 2010 (2) AKAR

(NOC) 196. 408 Krishnaya v Mallaya, 41 Mad 658. 409 Natha v Ramchand, 43 Bom LR 301; a decree can be passed for specific performance in

absence of the subsequent purchaser, subsequent purchaser is neither a necessary nor a proper party and is not entitled to join as defendant in the suit, Mal Chand v Shiv Kumar, AIR 2017 Raj 86 ; litigation for redemption and possession pending since 1969, suit land sold to subsequent transferee by the defendant, suit decreed in favour of plaintiff, sale transaction to subsequent transferee null and void, defendant directed to refund sale transaction, Srinivasaiah v HR Channabasappa (Dead) through LRs, AIR 2017 SC 2141 . 410 P Lakshmi Ammal v S Lakshmi Ammal, AIR 1991 Mad 137 : (1990) 2 Mad LJ 192; Haji Abdul

Mateen v Sheikh Haji Firozuddin, AIR 2014 Del 111 : 2014 (4) ADR 201, a decision in a suit becomes binding on the pendente lite transferee irrespective of the fact that he was not a party to the suit or was not impleaded therein. 411 Shyam Lal v Sohan Lal, AIR 1928 All 3 : ILR 50 All 290. 412 Amarnath v Deputy Director of Consolidation, Kanpur, AIR 1985 All 163 : (1984) 10 All LR 711

. 413 Bhagirathi v Raj Kishore, AIR 1930 All 354 . 414 Shakuntala Devi v Shivpuri Sahakari Bhumi Vikas Bank, AIR 2009 (NOC) 1078 (MP). 415 Joginder Singh v Kewal Singh, AIR 2015 NOC 586 (P&H). 416 Rajul Mukim v Sumermal Surana, AIR 2018 Cal 102 . 417 Kachhi Properties v Ganpatrao Shankarrao Kadam, AIR 2011 (NOC) 185 (Bom). Jehal Tanti v

Nageshwar Singh, AIR 2013 SC 2235 : 2013 AIR SCW 2854 : (2013) 6 Scale 272 , sale deed executed during subsistence of injunction, unlawful and therefore void. 418 M Narayanamma v Lakshmidevi, AIR 2015 NOC 680 (Kant). 419 Seenivasan v Peter Jebaraj, AIR 2008 SC 2052 : 2008 AIR SCW 2715 : (2008) 6 Scale 92 . 420 Nilkant v Suresh Chandra, (1885) 12 Cal 414 : 12 Ind App 171; SN Sinha v KK Nag, AIR 1967

SC 1440 : (1967) 2 SCR 18 : 1967 (1) SCJ 68 . 421 Mathura Prasad Sahu v Dasai Sahu, AIR 1922 Pat 542 : 1 Pat 287. 422 Shivashankarappa Mahadevappa v Shivappa Parappa, AIR 1943 Bom 27 : 44 Bom LR 874. 423 Kadir Mohideen Marakkayar v NV Muthukrishna Ayyar, ILR 26 Mad 230 : 12 Mad LJ 368. 424 Sujan Bhan v Grij Rai, AIR 1981 All 149 . 425 Radhamadhub Holdar v Monohur Mookerji, 15 IA 97 : ILR 15 Cal 756. 426 KS Dhillon v Punjab Financial Corp, AIR 2012 P&H 75 . 427 S Mahaboob Basha v BR Mohan Rao, AIR 2006 (NOC) 1138 (AP). 428 Padmavati Estate Pvt Ltd v Kusum Agarwal, AIR 2009 (NOC) 583 (Cal). 429 Guruswamy Nadar v P Lakshmi Ammal, AIR 2008 SC 2560 : 2008 AIR SCW 3583 : (2008) 5

SCC 796 . 430 Dharam Singh v Bhag Singh, AIR 2013 HP 89 ; Thomson Press India Ltd v Nanak Builders &

Investors (P) Ltd, (2013) 5 SCC 397 : AIR 2013 SC 2389 : 2013 AIR SCW 1617, even where property is purchased miles away, knowledge of stay order and wide newspaper publicity has been made in newspapers about pending litigation, the only effect is that the deal will remain subject to the Court decision. 431 Mahfooz Ahmed v Neelmani, AIR 2010 MP 165 : 2010 (4) MPHT 44 : 2010 (2) MPLJ 603 . 432 41 Mad 658.

433 KA Khader v Rajamma John Madathil, AIR 1994 Ker 122 : (1993) 2 Ker LJ 575 : ILR (1994) 2

Ker 704 . 434 Mahanth Sukhdeo Das v Kashi Prasad Tiwari, AIR 1958 Pat 630 : 1958 BLJR 559 : ILR 37 Pat

918, approved Hukam Chand v Om Chand, (2001) 10 SCC 715 . 435 Abdul Wahid v Hammed Mian, AIR 2010 (NOC) 931 (Del). 436 Raghunath Fulaje Jadhav v Rajendra Dinkarrao Patil, AIR 2007 (NOC) 1089 (Bom) : (2007) 2

AIR Bom R 692. 437 Premchand J Panchal v Shahjahanbanu Liyakatkhan Pathan, AIR 2011 (NOC) 251 (Guj). 438 Sanjay Verma v Manik Roy, AIR 2007 SC 1332 : (2006) 14 Scale 80 : (2006) 8 Supreme 1007

; Rajeev Berry v Addl. District Judge, AIR 2011 Uttr 12 : 2010 AIHC 307 : 2010 (1) All LJ 683, property purchased during pendency of lis without leave of court, alienation was held hit by the section, transfer not bona fide, transaction with knowledge that status quo order was in existence, transferee not entitled to be impleaded in the suit for permanent injunction. SN Arora v Brokers and Brokers Pvt Ltd, AIR 2011 Del 89 , a lis pendens purchaser or transferee has no right to be impleaded, the doctrine does not prohibit a transfer, it only mandates that the transferee would be fully bound by the decree that may be passe against his transferor. Anita Kuwar v Chandra Bhushan Singh, AIR 2010 Pat 5 : 2010 AIHC 294 (NOC) : 2010 (2) A KAR (NOC) 161, impleadment not allowed by filing application under Order I, rule 10. Nagananda v Gowramma, AIR 2013 Kar 137 : ILR 2013 Kant 2751 : 2013 (4) KCCR 2782 , a transferee pendent lite without leave of Court cannot claim to be impleaded as of right. Jagan Singh v Dhanwanti, (2012) 2 SCC 628 : AIR 2012 SC (Civ) 646 : 2012 AIR SCW 893, the impleadment of a transferee pendent lite was permitted in proceedings between competing predecessors-in-interest. 439 Sanjay Verma v Manik Roy, AIR 2007 SC 1332 : 2006 (Supp) 10 SCR 469 : (2006) 14 Scale

80 : (2006) 8 Supreme 1007 ; Raj Kumar v Sardari Lal, 2004 AIR SCW 470 : (2004) 2 SCC 601 , impleadment is not a matter of right but of discretion with the court. Even if brought on record, such transferee remains bound by judgment in the case. PT Choudary v Mohammed Abdul Basheer, AIR 2007 (NOC) 1218 (AP) : 2007 (4) All LT 136 : 2007 (2) Andh LD 675, the person who purchased the property subsequently applied to the court that he should be allowed to join the case as a party for representation of his interest, but the court said that he was neither a necessary party, nor a proper property, a buyer during lis pendens gets no valid interest. Jogani Mallaiah v Suresh Babu, AIR 2007 AP 301 : 2007 (58) All Ind Cas 619 : 2007 (4) Andh LT 440 , suit for impleadment of purchaser, property devolved on the purchaser pending litigation by virtue of sale deeds which had been duly produced before the court and admitted, rights relating to immovable property involved, purchaser to be permitted to come on record as a party. Nirmala Devi v Dayal Singh, AIR 2007 (NOC) 2225 (MP), the suit was for possession and removal of encroachment, property sold during pendency of the suit, transferee's representation in the suit was necessary for effective adjudication of the suit because of the nature of relief claimed, she was allowed to be impleaded as one of the defendants. Pannala Renuka v Kavali (Rajumouni) Venkataiah, AIR 2007 AP 46 : 2006 (6) Andh LD 761 : 2007 (1) Andh LT 259 , the allianee purchased property in gross violation of section 52, could not seek his impleadment in the suit under Order 22, rule 10, he is bound by the decree passed in the suit. Ramesh Chawla v N Srihari, (2005) 3 Andh LD 4 : 2005 AIHC 2303; Surjit Singh v Harbans Singh, (1995) 6 SCC 50 : AIR 1996 SC 135 : 1995 AIR SCW 3830; Sarvinder Singh v Dalip Singh, (1996) 5 SCC 539 : (1996) 4 CCC 20 ; Bakthavatsalam v Anjapuli, 2001 AIHC 509 (Mad) : 2001 (1) Mad LW 615 , cases arose out of partition suits, held that a transferee pendente lite without leave of the court could not seek impleadment as a party in the suit, they could not seek impleadment for the fact that they would be affected by the judgment. S Varadrajan v V Rajam, AIR 2007 (NOC) 554 (Mad), suit for partition and separate possession, held, purchasers from the defendants were not necessary or

proper parties for adjudication of lis, could not be impleaded as defendants, if the plaintiff succeeded the purchasers would have to face the consequences arising out of the operation of section 52. KN Aswathnarayana Setty v State of Karnataka, AIR 2014 SC 279 : 2014 (2) ICC 531 : (2013) 14 Scale 565 , party to the suit is not prevented from dealing with the property. Any transfer during pendency of the suit would be subject to the decision and decree in the suit. A Nawab John v VN Subramaniyam, (2012) 7 SCC 738 : (2012) 117 AIC 193 : (2012) 93 ALR 901 , such transfer is not void, but it remains subject to decision. Such purchaser would be entitled to or suffer same legal rights and obligations of his transferor as may be eventually determined by the Court. 440 (2004) 1 SCC 191 : 2003 AIR SCW 5858 : AIR 2004 SC 173 . 441 See also Sarvinder Singh v Dalip Singh, (1996) 5 SCC 539 : (1996) 4 CCC 20 , Explanation of

the nature of the rule. 442 Motilal v Karrabuldin, ILR (1898) 25 Cal 179 : 24 Ind App 170; Prannath Roy Chowdry v

Rookea Begum, (1851-59) 7 Moo Ind App 323 : (1857-59) 4 WR 37 , the suit remains the same as originally instituted, there is a mere substitution of a party. 443 Shantilata Masanta v Rajanimani Nayak, AIR 2007 Ori 69 : 2007 (52) All Ind Cas 300 : 2007

(1) Ori LR 287 . 444 Amit Kumar Shaw v Farida Khatoon, AIR 2005 SC 2209 : (2005) 11 SCC 403 : (2005) 3

Supreme 670 : 2005 (3) SCJ 452 . 445 Chappidi Subbareddy v Chappidi Narapureddy, AIR 2006 AP 662 : 2006 (2) All LT 49 : 2006

(3) Andh LD 516. 446 Gurdev Singh v Amarjit Singh, AIR 2011 P&H 77 : 2010 AIHC 764 (NOC) : 2010 (3) CCC 731 ,

assignee pendente lite, asignee of rights during pendency of suit has a right to be impleaded during pendency of the suit as a party by stepping into the shoes of the assignor. 447 Bal Krishna Verma v VIth Additional District Judge, AIR 2008 (NOC) 1898 (All). 448 Amit Kumar Shaw v Farida Khatoon, AIR 2005 SC 2209 : (2005) 11 SCC 403 : (2005) 3

Supreme 670 . Gurdev Singh v Amarjit Singh, AIR 2011 P&H 77 : 2010 AIHC 764 (NOC) : 2010 (3) CCC 731 , assignee pendente lite, assignee of rights during pendency of suit has a right to be impleaded as a party by stepping into the shoes of the assignor. 449 AV Raju v H Phoolchand, AIR 2011 Mad 83 . 450 Shankar Puri v Lal Puri, AIR 2011 (NOC) 222 (Raj). 451 TG Ashok Kumar v Govindammal, AIR 2010 (NOC) 257 (Mad). 452 Shashi Surana v Anant Mishra, AIR 2010 Raj 148 : 2010 (4) Civ LJ 879 : 2010 (4) CCC 141 . 453 Sumitra Devi v Sitasharan Bubna, AIR 2009 Pat 83 : 2009 AIHC 600 (NOC) : 2009 (4) AKant

(NOC) 548. 454 Shuvam Construction Pvt Ltd v Babita Mohanty, AIR 2010 Ori 65 : 2010 (1) CLR 323 : 2010

(1) Ori LR 97 . 455 Jayeshkumar Chhakaddas Shah v Mafaji Motiji Thakore, AIR 2010 (NOC) 387 (Guj). 456 Bhanumani Sahu v State of Orissa, AIR 2013 Ori 52 : 2013 (1) CLR 4 : 2013 (2) CCC 55 . 457 V Rama Rao v T Ranganathan, AIR 2008 AP 92 : 2008 (62) All Ind Cas 822 : 2007 (6) Andh

LT 814 . 458 KN Aswathnarayana Setty v State of Karnataka, AIR 2014 SC 279 : 2014 (2) ICC 531 : (2013)

14 Scale 565 . 459 Khalil Nahak v Hadu Nahak, AIR 2003 Ori 131 : 2007 (3) Civ LJ 759 : 2007 (103) Cut LT 118. 460 Premchand J Panchal v Shahjahanbanu Liyakatkhan Pathan, AIR 2011 (NOC) 251 (Guj). 461 Praksah Gobindram Ahuja v Ganesh Pandharinath Dhonde, AIR 2017 (NOC) 631 Bom. 462 ibid

463 ibid

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER II1 TRANSFERS OF PROPERTY BY ACT OF PARTIES Chapter II of the Transfer of Property Act, 1882 deals with transfers of property by act of parties. This chapter has been divided into two parts: Part-A—provides for rules regarding transfers of property in general, whether movable or immovable. Part-B—provides for rules regarding transfers of immovable property.

(B) TRANSFER OF IMMOVABLE PROPERTY Part B of the Chapter II of the Transfer of Property Act, 1882 deals only with transfer of immovable properties. This part consists of sections 38 to 53A. These sections will be taken up in following groups or parts:— I. Transfer by a person other than a full owner. (sections 38, 41 and 43). II. Protection of third person's rights (sections 39-40). III. Transfer by a person having authority to revoke a former transfer (section 42). IV. Transfer by co-owners (sections 44 and 47) V. Joint-transfers (sections 45-46) VI. Priority of rights created by transfer (sections 48 and 78) VII. Transferee's right under a policy (section 49) VIII. Bona fide holders under a defective title (sections 50-51) IX. Lis Pendens (section 52) X. Fraudulent Transfer (section 53) XI. Part-performance (section 53A)

X. FRAUDULENT TRANSFERS 464[[s 53] Fraudulent transfer.— (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. Nothing in this sub-section shall affect any law for the time being in force relating to insolvency. A suit instituted by a creditor (which term includes a decree-holder whether he has or has not applied for execution of his decree) 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. For the purposes of this sub-section, no transfer made without consideration shall be deemed to have been made with intent to defraud by reason only that a subsequent transfer for consideration was made.]

Comments [s 53.1] Fraudulent Transfers (Section 53) Section 53 consists of two rules which are given below:—

(I)

(1) Every transfer of immovable property, (2) made with intent to defeat or delay the creditors of the transferor. (3) shall be violable at the option of any creditor so defeated or delayed. (4) This sub-section will not impair the rights of a transferee in good faith and

for consideration. (5) It will also not affect any law for the time being in force relating to

insolvency. (6) A suit may be instituted by one creditor on behalf of or for the benefit of

all the creditor. (II)

(1) Every transfer of immovable property, (2) made without consideration (3) with intent to defraud a subsequent transferee (4) shall be voidable at the option of such transferee (5) A transfer made without consideration shall not be deemed to have been

made with intent to defraud by reason only that a subsequent transfer for consideration was made. No man has so absolute a power over his own property as that he can alienate the same when such alienation directly tends to delay, hinder, or defraud his creditors, unless it is made upon good consideration and bona fide.

These are the words of Lord Keeper given in the case of Partridgle v Gopp.465 The same is the principle of this section which says that every transfer of immovable property made with intent to defeat or delay the creditors of the transferor shall be variable at the option of any creditor so defeated or delayed. This means that the transfer is valid in law but it can be avoided by that creditor whose interest has been defeated or delayed.

[s 53.2] Essential Requirements The essential requirements of this section are given below:— (1) There must be a transfer of an immovable property. (2) Transfer must have been made to with intent to defeat or delay the creditors of

the transferor. (3) the transfer shall be voidable at the option of the creditor whose interest has

been defeated or delayed. Exceptions—(1) the rights of a transferee in good faith and for consideration are unaffected. (2) any right created by the law of insolvency remains unaffected.

[53.2.1] Transfer of Immovable Property The requirement to bring about application of this section is that there must a transfer of immovable property valid in law. When the transfer is valid and confers a good title upon the transferee only then this section will be applicable. This section does not cover nominal, sham or simulated transfers of property because in such cases there is no intention to transfer the property and no right is conveyed in the property.466 This section will be applicable only where the transaction is a transfer of property within the meaning of section 5 of this Act. Section 5 says that "transfer of property" means an act by which a living person conveys property, in present or in future, to one of more other living persons, or to himself and one or more other living person. Surrender and relinquishments are not transfers of property. However, surrender by a life-estate holder has been held to be a transfer under this section.467 Relinquishment of share by one co-parcener in favour of the other has been held to be not a transfer within the meaning of this section.468 Partition and family settlements are not transfers within the meaning of this section but where the partition is done only to defeat or defraud creditors, this section will become applicable. Where it is claimed that the transfer was sham and fictitious transaction and there was no real transfer, i.e., when the real intention was not to give effect to the supposed transfer at all and it was merely to be used as a shield or a facade for achieving ulterior purpose, section 53 cannot be availed of.

[53.2.2] Intent to Defeat or Delay Creditors The second requirement of the section is that the transfer must have been made with intent to defraud creditors. The term "creditor" is understood in some wide sense in this section. It includes all those who are creditors at the date of the transfer as well as those who become creditors subsequent to the date of fraudulent transfer.469 Generally, the "creditor" means a person to whom debt, i.e., a specific or liquidated sum of money, is due. It also includes a person who has obtained a decree for his debt and ordinary creditors who have still a claim to prove.470 A person who claims unliquidated damages for tort or breach of contract or a person whose claim for debt has become time-barred is not a creditor. An auction purchaser, who is not a decree holder, is not a creditor. Mortgagees are not creditors in as much as the debts due to them are secured upon their debtor's property and they cannot be defeated by any subsequent alienation, fraudulent or otherwise.471

The section uses the term "creditors" instead of creditor. The intention must be to defeat or delay the creditors generally and not to prefer one creditor over another. Such an intention can be proved by circumstantial evidence. The mere fact that the transfer was made without consideration will not lead to an inference that the transfer was made with the intent to defraud creditors. If the following conditions are present, it may lead to an inference of defeating or delaying creditors:— (i) where the debtor sells all the property keeping nothing to himself. (ii) the consideration is not adequate. (iii) the transfer is made secretly. (iv) the transferor tries to take off his property out of the reach of those persons

who might become his creditor. Following the Middleton's case,472 the Privy Council in Musahar Sahu v Hakim Lal,473 held that as a matter of law, in a case in which no consideration of the law of bankruptcy applies, there is nothing to prevent a debtor paying one creditor in full and leaving others unpaid although the result may be that the rest of his assets will be insufficient to provide for the payment of the rest of his debts. In this case, A was a creditor of B who filed a suit to recover his debt in December, 1900. During the pendency of suit in January, 1901, he applied for an attachment before judgment of certain properties of B. B filed an affidavit in February that he had no intention of alienating his properties and the application of A was dismissed accordingly. The sale defeated A but it was for adequate consideration and in satisfaction of a genuine debt and as the debtor reserved no benefit for himself, it was not a case of one creditor being performed to the detriment of another and the sale was not voidable under section 53. Lord Wrenbury observed here that, "the transfer which defeats or delays creditors is not an instrument which prefers one creditor to another, but an instrument which removes property from the creditors to the benefit of the debtor. The debtor must not retain a benefit for himself. He may pay one creditor and leave another unpaid." In Mina Kumari v Bejoy Singh,474 A obtained a decree for his debt against B. Before the property could be attached in execution, B sold the property to C in part satisfaction of a debt due to her. The property was then attached and sold in execution to D. It was held by the Privy Council that C was entitled to possession of the property as against D. It was true the B had deliberately given preference to a creditor C with whom he had family ties but still the transfer was not fraudulent under section 53.

[53.2.3] Transfer to be Voidable Any transfer made with intent to defeat or delay creditors is not void. It is voidable only at the option of the creditors whose interests have been defeated or delayed by debtor (transferor). The creditor so defeated must exercise his option to avoid the transaction. Till the creditor exercises his option and a pronouncement is made by the court to that effect, the transaction will remain valid. A suit instituted by a creditor shall be instituted on behalf of or for the benefit of all the creditors. The defendant claimed title and possession on the basis of a registered sale deed, but the document was found to be fabricated and not executed by the plaintiff, who was the owner, but the defendant had been in possession of the house for more than 12 years to the knowledge of the plaintiff, thus he had acquired title by adverse possession, the plaintiff was not entitled to any relief.475

[s 53.3] Preference of One Creditor to Another: Debtor should Retain no Benefit The preference of a one creditor to another, even though fraudulent in the law of insolvency, cannot be impeached under the general law. The debtor may pay one creditor and leave another unpaid but he must not retain a benefit for himself. In RR Chettyar Firm v Ma Sein Yin,476 A sued B for a debt. B obtained an adjournment and during the adjournment sold her land to her sister C. B allowed the suit to be decreed and A attached the land, C objected to it. B professed to have sold the land to raise money to pay a debt but it was shown that no demand had been made for payment of the debt and B was not solely liable for his payment, it was held that the sale was voidable as being in fraud of the creditors. In Ramaswami Chettiar v Mallappa Reddiar,477 A sold the property to B in fraud of his creditors. One of the creditors, C, attached the property in execution of a decree against A B objected to the attachment but C maintained that he had a right to attach the property. B's objection was dismissed, and then B sued for a declaration of his right to the property. It was held that C could plead in defence that the transfer to B was in fraud of A's creditors. In UOI v Rajeshwari & Co,478 the Supreme Court held that where it was found that the sale of the assets of the company was affected for the purpose of discharging the debts payable by the company to its creditors and when the consideration was inadequate, it was immaterial that the transfer was effected in favour of a person who was not one of the creditors. The Supreme Court observed that "it seems clear that it is open to a debtor to prefer one or more creditors over the others in payment of his debts and so long as he retains no benefits in the property the mere circumstance that some creditors stand paid while others remain unpaid does not attract the provision of section 53."

[s 53.4] Delay of Creditors Where transfers do not defeat the creditors but only delays them i.e., payment to them is delayed, section 53 will be applicable. It was held in a case that the fact that whole of the debtor's property was not sold could not by itself negative the applicability of section 53(1) unless there is cogent proof that there is another property left sufficient in value and of easy availability and that rendered alienation in question immaterial for the creditor.479

[s 53.5] Exceptions This section provides for two exceptions. First exception says that section 53(1) will not impair the rights of a transferee in good faith and for consideration. Second exception says that it will not affect any law for the time being in force relating to insolvency.

[53.5.1] Good faith and Consideration Where a transferee acquires property from the debtor in good faith and for value, he is not affected by the rule contained in sub-section (1). If the creditors establish that the transfer was made with the object of defeating them the burden shifts on the transferee to prove that he had paid a fair price for the property and that he was not a party to the fraud.

The term "consideration" used here has the same meaning as it has in section 2(d) of the Indian Contract Act, 1872. Under section 25 of that Act only such transfers without consideration are permissible which are based upon natural love and affection between the parties. A thing is deemed to be done in good faith where it is done honestly, whether it is done negligently or not. Good faith required is that of the transferee and not the transferor. A mere fraudulent intention on the part of the grantor-transferor will not invalidate the transfer, if it is for valuable consideration and there is no want of good faith on the part of the transferee. The doctrine of constructive notice is also not applicable under this section. Mere knowledge of an impending execution of a decree against the transferor is not sufficient to make the transferee a transferee without good faith, when he does not share the intention of the transferor to defeat or delay his creditors nor does he participate in the commission of the fraud.480

[53.5.2] Insolvency Law The law of insolvency aims at providing for equal distribution of the assets of the insolvent among his creditors, and therefore, its provisions are more stringent. It says that a transfer made voluntarily at the time within 2 year prior to adjudication and a transfer for consideration made within three months prior to adjudication are voidable as against the Official Receiver under sections 53 and 54 of the Provincial Insolvency Act, 1920.

[s 53.6] Subsequent Transferees [Sub-section (2)] Sub-section (2) of section 53 provides that a transfer made gratuitously with intent to defraud a subsequent transferee shall be voidable at the instance of that transferee. This sub-section comes into play where a prior transfer is made without consideration and a subsequent transfer of the same property is made for consideration. The prior transfer without consideration should have been made with intent to defraud creditors. In such a case, where the same property is transferred again to a subsequent transferee the prior transfer shall be voidable at the option of the subsequent transferee. For example, A makes a settlement of his property to his children and subsequently he sells the same property to B. If B can prove that the sale was made with the intention to defraud him, the settlement is liable to be set aside. Even a fraudulent transfer does not impair the rights of a transferee who acted in good faith and purchased the property for valuable consideration. There was no evidence in this case to show that the defendant had any knowledge of the existence of any agreement executed in favour of the plaintiff. The Appellate Court had no jurisdiction to interfere in the findings of the Trial Court without a cross appeal by the plaintiff.481 However, such transfer shall not be deemed to be fraudulent by reason only of any subsequent transfer for consideration.

[s 53.7] Cancellation of Fraudulent Registration The Registering Authority has been held to have an inherent power to cancel registration of fraudulent sale transactions. The sale in such cases takes place by

reason of fraud played by the transferor and transferee. Such registration is void. The true owners can nullify such sale by executing and registering a cancellation deed without seeking a declaration or cancellation of the transfer deed from the court. The registration of a document cannot be taken to be an absolute sale divesting owners of their rights and rendering otiose sections 31 and 34 of the Specific Relief Act, 1963.482

[s 53.7.1] Illustrative Cases.— (i) A creditor obtained a decree against a widow who had a life interest in the property gifted to her by her husband. The widow in order to render the property out of reach of the creditor surrendered her interest to her son. It was held that the surrender was voidable at the option of the creditor under section 53.483 (ii) A, who was in embarrassed conditions, wished to convert his property into cash so as to conceal it from his creditors. B, who was aware of his condition, assisted him by purchasing the property. The sale was held to be voidable under section 53.484 Power of Civil court: When a property is attached before judgment, the plaintiff proceeds on the basis that it is the property of the defendant. Only when a claim is raised, the plaintiff comes to know that the property has already been sold. It has been held that the procedural difficulties in considering a claim under section 53 should not be reason to deprive the court from considering a claim and the defence. When the legislature deemed it fit that any claim to attach a property is to be considered under O 38, rule 8, there is no reason why the power of the court should be curtailed and should stop short of a plea under this section. Therefore, while considering an application under O 38, rule 8, the court is enjoined with the power to consider whether the transfer is fraudulent.485

1 Nothing in Chapter II is to be deemed to affect any rule of Muhammadan Law, see section 2,

Act 20 of 1929. 464 Subs. by Act 20 of 1929, section 15, for the original section. 465 (1758) 28 ER 647 (648) : 1 Edn 164. 466 Dolai Maliko v Krushna Chandra Patnaik, AIR 1967 SC 49 (66) : 1967 (2) SCJ 149 : 1966

Supp SCR 22. 467 Natha v Dhunbaiji, (1899) 23 Bom 1. 468 Sundar Lal v Gursaran Lal, AIR 1938 Oudh 65 . 469 Ram Das v Debut, AIR 1930 All 610 : 1930 All LJ 1278. 470 Abdullakhan Daryakhan v Purshottam Damodar, 49 Bom LR 875 : AIR 1948 Bom 265 : ILR

(1947) Bom 807 . 471 Jayakrishna Debata v Chaitan Pani, AIR 1973 Ori 229 : 39 Cut LT 316. 472 Middleton v Pollock, (1876) Ch D 104 (108) : 45 LJ Ch 293 : (1875) 20 Eq 515 (519-21);

Kulbhushan Gupta v Kanta Rani, AIR 2009 (NOC) 2223 (P&H), the judgment-debtor violated status quo order, sale under an arrangement without consideration, held fraudulent transfer. 473 43 IA 104 : ILR 43 Cal 521 (PC) : AIR 1915 PC 115 . 474 ILR 44 Cal 662 : 44 IA 72 (PC) : AIR 1916 PC 238 .

475 Safiran Bibi v Manager Mirza, AIR 2007 Jhar 3 : 2007 AIHC 94 : 2006 (3) AIR Jhar 582; every

transfer of immovable property made with the intention to defeat or delay creditors of the transferor will be voidable at any creditor so defeated or delayed, Verizon Builders and Developers Ltd, Ernakulam v Jyothi Susan John, AIR 2019 Ker 105 476 (1927) 5 Rang 588. 477 (1920) ILR 43 Mad 760 : AIR 1920 Mad 748 : 39 Mad LJ 350. 478 AIR 1986 SC 1748 : (1986) 3 SCC 426 : JT 1986 SC 161 . 479 C. Abdul Shukoor Saheb v Arji Papa Rao, AIR 1963 SC 1150 : (1963) Supp 2 SCR 55 : 1964

(1) SCJ 168 . 480 Ishan Chander v Bishu Sardar, 24 Cal 825 : 1 Cal WN 665; Manoj Kumar Shah v Anand Kumar,

AIR 2007 (NOC) 2383 (Del), as against execution of money decree against the property of the judgment-debtor, the objector contended that he was a bona fide purchaser of the property from the judgment debtor, the court said that the question whether the purchaser had notice of the decree and whether it was a bona fide purchase for valuable consideration were all questions of fact and law and could not be decided without evidence and arguments, the property being also not immovable, section 52 was not applicable, it requires a definite and conclusive finding that there was no bona fide transaction before it can be declared to be hit by section 53. 481 Phullan Mian v Jogendra Ram, AIR 2006 Pat 183 : 2007 (2) AIR Jhar 34 : 2006 (3) Pat LJR

526 . 482 Yanala Malleshwari v Ananthula Sayamma, AIR 2007 AP 57 : 2006 (6) Andh LT 523 : 2007 (1)

CCC 527 . 483 Mattar v Dhumbajii, 1899. 484 Palamalai Mudaliyar v South Indian Export, (1910) ILR 33 Mad 334 : 5 Ind Cas 33. 485 Verizon Builders and Developers Ltd, Ernakulam v Jyothi Susan John, AIR 2019 Ker 105 .

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER II1 TRANSFERS OF PROPERTY BY ACT OF PARTIES Chapter II of the Transfer of Property Act, 1882 deals with transfers of property by act of parties. This chapter has been divided into two parts: Part-A—provides for rules regarding transfers of property in general, whether movable or immovable. Part-B—provides for rules regarding transfers of immovable property.

(B) TRANSFER OF IMMOVABLE PROPERTY Part B of the Chapter II of the Transfer of Property Act, 1882 deals only with transfer of immovable properties. This part consists of sections 38 to 53A. These sections will be taken up in following groups or parts:— I. Transfer by a person other than a full owner. (sections 38, 41 and 43). II. Protection of third person's rights (sections 39-40). III. Transfer by a person having authority to revoke a former transfer (section 42). IV. Transfer by co-owners (sections 44 and 47) V. Joint-transfers (sections 45-46) VI. Priority of rights created by transfer (sections 48 and 78) VII. Transferee's right under a policy (section 49) VIII. Bona fide holders under a defective title (sections 50-51) IX. Lis Pendens (section 52) X. Fraudulent Transfer (section 53) XI. Part-performance (section 53A)

XI PART-PERFORMANCE 486[[s 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 487[***] where there is an instrument of transfer, 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: Provided that nothing in this section shall affect the rights of a transferee for consideration who has no notice of the contract or of the part performance thereof.]

Comments [s 53A.1] Part-Performance (Section 53A) According to section 53A (1) where any person contracts to transfer— (a) for consideration, (b) any immovable property, (c) by writing signed by him or on his behalf, (d) from which the terms necessary to constitute the transfer can be

ascertained with reasonable certainly, (2) the transferee— (a) has in part performance of the contract, taken possession of the property

(or any part thereof), or (b) being

in already possession, continues in possession in part performance of the contract and has done some act in furtherance of the contract, and

(c) has performed or is willing to perform his part of the contract, (3) then, notwithstanding that-where there is an instrument of transfer, that has not

been completed in the manner prescribed therefor by the law for the time-being in force, (4) 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. (5) However, the section will not affect the rights of a transferee for consideration

who has no notice of the contract or its part-performance.488

[s 53A.2] Doctrine of Part-Performance The doctrine of part-performance also known as "equity of part-performance" says that if a person has taken possession of an immovable property on the basis of a contract of sale and has either performed or is willing to perform his part of the contract, then, he would not be ejected from the property on the ground that the sale was unregistered and the legal title has not been transferred to him.

The doctrine of part-performance was evolved by the Court of Equity in England. In 1677, a statute was enacted in England known as the Statute of Frauds, 1677, to prevent perpetuation of fraud in the transfers of land. Section 4 of this 1677 provided that all agreements in respect of transfers of land must be in writing. Therefore, all the transfers of immovable property on the basis of oral agreements were held illegal and transferee could not get title to the land. This in actual application allowed perpetuation of fraud instead of preventing it. Strict application of this law created great hardship to transferees. For helping such transferees the Courts of Equity (Chancery Courts) came forward and held that part-performance by the transferee, who held the lands on the basis of oral contracts would not be governed by the Statute of Frauds. Thus, the bona fide transferees who had performed their part of the contract by paying price in full or taking possession of land could get the title to the property even in the absence of legal formalities of written agreement or registered instrument. The doctrine of part-performance was firmly established in England in the case of Maddison v Alderson,489 in which Lord Selbourne observed: In a suit founded on part-performance, the defendant is really charged upon the equities resulting from the acts done in execution of the contract and not upon the contract itself. If such equities were excluded, injustice of a kind which the statute cannot be thought to have had in contemplation, would follow.

[s 53A.3] Part-Performance in India In the old Madras case, Kurri Veera Reddi v Kurri Bapi Reddi,490 the High Court held that the English doctrine of part-performance was not applicable in Indian law. In 1914, the Privy Council in Md Musa v Aghore Kumar Ganguly,491 held that the doctrine of partperformance was applicable in India on the principle of justice, equity and good conscience. In this case, a compromise deed (razinamah) was in writing but not registered. According to this deed, certain lands were divided between the parties who had taken possession of their respective parts of the land. The parties remained in possession for many years and about 40 years later, the heirs of the parties repudiated the compromise-deed on the ground that it was not registered. The Privy Council applied this doctrine and held that although the compromise-deed was unregistered, it was in writing, and, therefore, a valid instrument which could not be repudiated. However, in Ariff v Jadunath,492 the Privy Council held that the doctrine of partperformance was not applicable to India because it cannot by-pass the express provisions of the Indian Registration Act (as it did in Md. Musa's case, where the compromise-deed written but unregistered was held to be valid when the Registration Act provided that the document required to be registered, if unregistered, will not be a valid document). In this case, the plaintiff granted a permanent lease of a land to the defendant. The lease was oral and it was unexecuted and unregistered. On the basis of this oral agreement the defendant took possession of the land and constructed buildings on that land. After 10 years, the plaintiff sought to evict the defendant treating him as a tenant on monthly basis. The Calcutta High Court applied the doctrine of Partperformance and decided in favour of the defendant. The plaintiff appealed to the Privy Council which reversed the decision of the Calcutta High Court. The Privy Council held that the doctrine of part-performance could not be applied against express provisions of Indian laws like Indian Registration Act and the Transfer of Property Act, 1882. The Transfer of Property Act, 1882 provided in section 107 that a permanent lease could be granted only by a registered and written document and here in this case the lease was oral. The next case before the Privy Council was Mian Pir Bux v Sardar Mohammad Tahir.493 In this case, the plaintiff was a grantee of a plot from the Government at Sukkur. In

1919, he entered into agreement with the defendant to sell the land to him if the plaintiff could get the permission of the Government to live in Quetta. The plaintiff obtained the permission but failed to execute a conveyance in favour of the defendant. The collector cancelled the grant in favour of the plaintiff and put the defendant in possession of the plot. The plaintiff brought an action for the declaration of his title and for ejectment of defendant. The collector's order was found to be invalid and defendant's contention that the ejectment order should fail relying upon the doctrine of part-performance. But the Privy Council rejecting the defendant's contention held that the equitable doctrine of part-performance was not available in India against the express statutory provisions.

[s 53A.4] Doctrine of Part-Performance under section 53A The doctrine of part-performance was incorporated in section 53A by the Amending Act of 1929. Now this doctrine does not merely give rise to an equity as in England. It creates a statutory right. However, this right is limited than the English equity in two ways. First, according to it the contract must be in writing and it is available only as a defence.494 The Supreme Court observed that the protection provided under section 53A is a shield only against the transferor. It disentitles the transferor from disturbing possession of the proposed transferee who has been put into possession under the agreement. It has nothing to do with the ownership of the transferor who remains full owner of the property till it is legally conveyed by executing a registered sale deed.495 Thus, it may be said that section 53A is a partial importation into India of the English equitable doctrine of part-performance.496

[s 53A.5] Essential Requirements of section 53A (1) There must be a contract to transfer an immovable property for consideration. (2) The contract should be in writing and its terms can be ascertained with reasonable certainty. (3) The transferee should have taken the possession of the property in partperformance of the contract or if he is already in possession, should have continued in possession in part-performance of the contract, and should have done something in furtherance of the contract. (4) The transferee is ready and willing to perform his part of the contract.497 Section 53A creates benefit in favour of a person who has prior agreement in his favour along with the possession of land mentioned in agreement. The section creates a bar against the original owner or any person claiming title under him, for claiming any right of title or interest qua land mentioned in the agreement. Therefore, if his possession is threatened, it is only the injunction suit that can be filed by the person claiming the benefit of the section. His remedy is not limited to take defence in case a suit is filed against him. He can be a proper plaintiff also if he shows and proves requirements of the section along with registration.498 Protection provided by the section deals with mixed question of facts as well as law.499 (1) Contract to transfer an immovable property for consideration The principle on which the doctrine of part-performance rests is that if a man has made a bargain with another, and allowed that other person to act upon it, he will create an

equity against himself, which he cannot resist by setting up the want of formality in the evidence of the contract out of which the equity in fact arises. The first requirement of this section is that there must be a contract to transfer an immovable property and the contract must be in writing. It must be signed by person or his agent on his behalf whom it is sought to bind. The transferee under oral agreement cannot take benefit of this section. However, all the terms of previous oral agreement reduced in writing can be used for the purpose of section 53A.500 The protection given under section 53A is available only in those cases where the transfer of property is made in pursuance of a contract. Partition is not a transfer of property, therefor, protection of section 53A will not be available.501 The transfer of property must be for consideration. Where transfer is without consideration, this doctrine will not be applicable. For example, gift is a transfer without consideration, therefore, this section will not come in for protection of such cases.502 The section is applicable only to transfers of immovable properties. It does not apply to an agreement for transfer of movable properties. The section will not also be applicable to any stipulation authorizing the owner to seize a vehicle given out on hire purchase for non-payment of instalments.503 (2) Contract in Writing and Ascertainable with Reasonable Certainty The second requirement is that the contract must be in writing and such that the terms of the contract can be ascertained with reasonable certainty.504 The contract must have also been signed by the person claiming to recover possession or on his behalf. The plaintiff must have himself signed the contract or it must be signed by any person who has been specifically authorized on his behalf to sign.505 A letter written by the owner of the property admitting that he had agreed to sell his half share of the property was not taken be the Supreme Court as a deemed agreement to sell so as to meet the requirement of the section. The necessary terms for constituting a transfer with reasonable certainty could not be ascertained from such letters. The letters seemed merely to acknowledge that there was an oral agreement to sell. Such acknowledgment by itself could not be deemed to be a written agreement to sell.506 If the contract is such that its terms regarding transfer cannot be ascertained with reasonable certainty, it cannot be enforced.507 It is not necessary that every minute detail should emerge from the writing. An incomplete deed of transfer, though not registered or even attested, is regarded as a contract in writing but such a deed must have been signed by the transferor or his agent. An unregistered document affecting immovable property, required by the Transfer of Property Act or the Registration Act to be registered, may be received in evidence of a contract in the suit for specific performance or as evidence of partperformance of a contract for the purpose of section 53A or as evidence of any collateral transaction not required by a registered instrument. Where the vendor denies having signed the agreement, and the handwriting expert is of the view that the thumbimpression appearing on the agreement is not that of the vendor, the doctrine of partperformance will not apply.508 Where parties execute an unregistered sale deed without prior permission of the competent authority, the transaction will be void and this section will not be applicable.509 The defendant pleaded an oral agreement of sale in his favour. He never attempted to get the alleged oral agreement recognised or enforced through any judicial proceeding. Since 1975 to the date of suit in 1998 he had not paid a paisa to the admitted original owner in spite of enjoying the property all the time. It was held that he could not claim

any relief under section 53A or section 51 of the Act. The silence of the plaintiff owner for over 12 years since the first police complaint against the defendant could not extinguish his right in the property. He was, however, allowed to remove all improvements made by him in the property.510 (3) Part-performance of Contract by Transferee, Transfer of Possession or Continuance in Possession The third requirement of this section is that the transferee either must have taken the possession of the property after the contract is made or if he is already in possession of the property, he must have continued in possession. It is necessary that the possession taken or continued must have been in pursuance of contract. If the transferee has not taken possession of the property, this section will not be applicable.511 Where the transferee was put in possession of the suit property and he had already paid a substantial part of the sale consideration, the court said that the agreement had been partly performed by the parties. The transferor was not permitted to fall back upon the frivolous plea that the amount of registration charges was not paid to him. The decree in favour of the transferor for possession of the house was set aside.512 If the transferee has once taken possession but has subsequently lost it, this fact will not deprive him of his right under section 53A.513 Where the transferee is already in possession of the property in some other capacity and the essential requirements of this section are fulfilled, this section will allow him to continue in possession. For a tenant continuing in possession of an immovable property after a valid contract of transfer, it is necessary for him to show that he retains possession in pursuance of such contract of transfer.514 Transfer of possession or its continuance must have been agreed upon in terms of the contract. Then alone possession would be attributable to part performance of the contract. In the absence of any such agreement, it could not be said that the transferee's possession was in performance of the agreement of sale. In this case there was no such term. Even the right to receive rent was not transferred. The buyer's possession was, therefore, not in part-performance of the sale. When he transferred it to any other person, the latter got no better rights than that of the transferor. He was a tenant and he remained a tenant.515 Where plaintiff produced a power of attorney to prove his possession from the date of execution of power of attorney but was not in actual possession of property as he had leased out the property to third party, he was not held entitled to the benefit of part-performance.516 It is not necessary that the transferee should take possession of the whole property. If the transferee takes possession or continues in possession even on a part of that property, it is sufficient for availing the benefit of this section.517 However, for this section it is necessary that the transferee must have obtained possession by lawful means. Once it is admitted by implication that plaintiff came into possession lawfully and continued to remain in possession till the date of the suit, the plea of adverse possession would not be available to the defendant. The plea of adverse possession and retaining possession under section 53A are inconsistent with each other.518 Taking possession is not the only method of part-performance of the contract. Where the transferee is already in possession of the property, he must do some act in furtherance of the contract, for example, he must pay increased rent if there is such a term in the contract or he must pay half the price of the property which is to be transferred to him under the contract, etc. The purchaser had acquired possession of a property by putting up buildings by sending more than one crore rupees. He exercised

the right which accrued to him vide an agreement of sale. His suit was dismissed on the ground of limitation, but even so the right acquired by him by virtue of part performance could not be taken away.519 Anything done prior to the contract or incidental to the terms of the contract will not be regarded as act in furtherance of the contract. There must be direct co-relationship between the contract and act done in furtherance of the contract.520 A transferee from a co-owner of an undivided property could not claim any exclusive possession on the basis of such transfer till partition takes place. Such transferee cannot claim benefit of section 53A since he did not take possession of the subjectmatter of transfer.521 Where the plea as to part-performance of the contract by taking possession of the property in question was not taken in the written statement, it was held that benefits under section 53A could not be claimed. The plea taken in the written statement was that the claimants were entitled to the property in their capacity of being male descendants and members of the coparcenary. Such plea was also not allowable under the law.522 The benefit under section 53A is not available to a transferee who remains passive after coming into possession. The property was purchased by another person who filed a suit for declaration of title and possession. The defendants claimed that there was an agreement of sale with them and they were put into possession in pursuance of their agreement. Evidence showed that they had never intimated to the original owner of their intention to go further ahead with performance. There was also no evidence to show that the plaintiff has any knowledge of the agreement of sale to the dependants. The Supreme Court said that the defendants were entitled to claim the benefit under section 53A.523 (4) Readiness or Willingness of Transferee The principle of equity is that "he who seeks equity must do equity".524 Therefore, the transferee who wants to take benefit of this section must also do his part of the contract. He must be willing and ready to perform his part under the contract.525 The term "willingness" as used in the section implies "readiness and willingness" as used in section 16 of the Specific Relief Act, 1963.526 A purchaser, who has already taken possession of the property, cannot protect his possession under this section if he is not willing to pay the price of the property. The doctrine of part performance does not mean that the vendee is absolved of his other obligations under the contract. The doctrine only protects the possession of the vendee. It requires that apart from retaining his possession, the vendee should show his readiness and willingness to fulfil his obligation under the contract.527 However, it is not necessary that the transferee must plead his willingness in each and every case. It can also be inferred from his conduct. For example, where a purchaser of land has to pay the price after inspecting the revenue records but he could not do so because the records were incorrect, he could not be said to be "unwilling" to pay the balance price.528 It is also necessary that the willingness to perform the part must be absolute and unconditional. If the willingness is loaded with a condition, it cannot be termed a willingness. In Jacob Pvt Ltd v Thomas Jacob,529 the court held that where the vendee company expresses its willingness to pay the amount provided the plaintiff clears his income-tax arrears, there is no complete willingness and it is not sufficient for the protection of section 53A.

Even readiness to pay the consideration is not the only conduct which shows willingness of the transferee to perform the contract. Where the defendant who takes the plea of part performance demands specific performance within the stipulated time, he is deemed to be ready and willing to perform his part of contract.530 Protection under section 53A is an independent right and a person in the part performance of the agreement is entitled to its protection only if it is shown that he was always ready and willing to perform his part of the agreement.531 Readiness and willingness must be absolute and unconditional. The benefit under the section cannot be conferred on the party not willing to perform his part of contract.532 On receipt of the balance amount of sale consideration, the transferor allowed possession of the property to the transferee. By entering into another agreement, the transferee was allowed to use the premises as an absolute owner. She was permitted to set electricity connection, make improvements and take all other necessary steps. The court said that this proved willingness of the transferee to perform her part of the contract. She was allowed to benefit of the doctrine of part performance.533 In the case of sale of property on the basis of power of attorney, the title does not pass without execution and registration of sale deed but it was held that the possession of vendee was protected under section 53A because the vendor could not revoke an irrevocable power of attorney.534 Filing of suit for specific performance is not a condition precedent to get the relief under section 53A.535 If a suit for specific performance of the contract filed by the transferee has been dismissed on merits and his disentitlement to seek enforcement of the contract has been adjudicated upon by a judicial verdict, it cannot be said that the transferee has performed or is willing to perform his part of the contract because it would be a contradiction in terms.536 A suit under the Specific Relief Act was filed for recovery of possession from a person to whom possession of property was delivered under an agreement to sell on part payment of consideration. The plaintiff contended that the balance of the consideration amount was not paid in spite of requests. The defendants expressed their readiness and willingness to perform their part of the contract. It was held that in keeping with the purpose of section 53A, the court should have directed the defendants to pay the balance money instead of ordering eviction.537 The existence of right to claim protection under section 53A would not be available if the transferee just kept quiet and remained passive without taking effective steps. Further, he must also perform his part of the contract and convey his willingness. On the other hand, the factual finding was that there was no intimation by the defendant to perform his part of contract to claim protection of section 53A. Likewise, there was no material to show that the plaintiff had notice of agreement of sale in favour of the defendant.538 The benefit of the section cannot be availed of by a person who has no agreement with the owner.539

[s 53A.6] Tenant in Possession, Change in Relationship A tenant has no right to seek protection of his possession by virtue of section 53A, when the jural relationship is that of landlord and tenant. The Rent Act would prevail and the landlord could seek eviction in terms of the provisions of the applicable rent legislation. But where the relationship has been transformed and the tenant is in possession by virtue of an agreement of sale to him and in that capacity he has done certain acts in furtherance of the agreement, the relationship of landlord and tenant

ceased from the date of the agreement. It was replaced by the new relationship of intending seller and purchaser. Section 53 enables such a tenant/purchaser in possession by the virtue of the agreement to defend his possession. There was implied surrender of tenancy. From the date of the agreement no rent was to be paid and there would be responsibility for any damage to the property.535

[s 53A.7] Exception The proviso to the section contains an exception in favour of a transferee for consideration who has no notice of the contract or of part-performance thereof. This means that the transferee for consideration having no notice of the contract or its performance is not affected by this rule. Any right which the transferee may have against the transferor under this section would not be of any avail against a bona fide transferee for value having no notice of the transaction. The Supreme Court held in Hemraj v Rustomji,540 that the proviso to the section saves the right of a transferee for consideration, i.e., any rights which the transferee under the unregistered document may have on the strength of the part-performance of the contract against the transferor would not be of any avail against a bona fide transferee for value having no notice of the previous transaction. The burden of proving that the subsequent transferee had notice lies on the person claiming the benefit of part-performance.541 The Supreme Court has held that the right under section 53A is not defeated by the fact that the suit to seek specific performance of the agreement of sale has become timebarred, or that the plea of acquisition of title by adverse possession has been negatived which rendered the possession to be illegal.542 Where the transferee under the agreement to sell was put in possession in partperformance, but did not file a suit for specific performance within the period of limitation and, therefore, his case seeking an injunction against the transferor for restraining him from disturbing possession, even in such a situation, the Supreme Court said that the transferee being admittedly in possession of the suit land, he could not be dispossessed except in accordance with the law. The parties should be at liberty to work out their remedies within the framework of law and filing a suit for possession would be an option available to the transferor.543 Where the prior transferee has neither shown his willingness to perform the contract nor was anxious to do so by taking possession, the subsequent transferee can have actually no notice of prior transferee's right of part-performance. If no notice to subsequent transferee could be proved, doctrine of part-performance will not come for protecting the possession of the prior transferee.

[s 53A.8] Instrument of Transfer (Unregistered Instrument) The section says that notwithstanding that the instrument of transfer has not been completed in the manner provided by law for the time being in force the transferor is debarred from enforcing any right in respect of such property against the transferee. This means that this section comes into effect even if the instrument of transfer has not been completed in the manner prescribed therefor by the law for the time being in force, like the Registration Act, which prescribes for registration of instruments of transfer. But it is necessary that the instrument of transfer must be signed by like a document of transfer.544 Where the document of lease for a period exceeding one year was not registered, it was held that the terms of unregistered lease cannot be looked into for purpose of enforcing right following therefrom including permission of landlord

for renewal of lease. Under section 53A, the right of a party is not protected, the party can use unregistered document only to prove nature of possession but a tenant cannot get right to continue as tenant for more than a year.545

[s 53A.9] Unregistered Sale Deed The applicant sought an injunction on the ground that he had purchased the suit property by paying the consideration in part. The unregistered sale deed showed delivery of possession to the applicant on payment of 85% of the sale consideration. It was held that an unregistered sale deed could be relied in an injunction application to restrain the transferor from interfering with possession and alienating the suit property.546

[s 53A.9.1] Oral Sale.— Where the contract for sale was not in writing, the vendee could not claim possession on the ground of part performance.547

[s 53A.10] Nature of Transferee's Rights under section 53A [s 53A.10.1] No Title or Interest in the Property Section 53A does not confer any title or interest on the transferee in the property in his possession. It only says that where the conditions of this section are fulfilled, the right of the transferee in respect of the property in possession will be protected.548 The transferor or anyone claiming under him will not be able to evict him from the property because he can raise the plea of part-performance and this section will come for his protection. Where the defendant took possession under an unregistered lease for 6 years and vacated after 16 months claiming to be a monthly tenant, it was held that as the defendant had taken possession under the unregistered lease he was liable for the rent of the whole term under 53A and awarded damages to the plaintiff. Here the partperformance was used as a ground of attack and not as a defence. However, the cardinal principle is that the doctrine of part-performance should be used as a shield and not as a ground of attack, something which was overlooked here.549 In the case of Technicians Studio Ltd v Lila Ghosh,550 the Technicians Studio was a sublessee of the disputed premises but later on it became a direct tenant for 16 years under a compromise, the deed of which was unregistered. After the expiry of period of 16 years, the landlord issued a notice and filed a suit for eviction. The Supreme Court observed that since there was no lease deed and the compromise was also unregistered, it created no interest in favour of the Technician Studio, i.e., the transferee. The Supreme Court held that under the unregistered compromise deed the transferee could protect his interest only for the period of 16 years on the basis of partperformance but after that it was not entitled to claim any interest or title in the property.

[s 53A.10.2] No Right of Action

Section 53A is a statutory right which can be used to defend possession of transferee and can be used only as a defense.551 It does not give any right of action to the transferee. The transferee can only defend his eviction in case he fulfils the conditions of this section. Transferee should be in actual possession when his rights are being considered under this section.552 In India, the equity of part-performance is passive equity, it can be used only as a shield and not as a sword. The Supreme Court observed in Ranchhoddas Chhaganlal v Devaji Supdu Dorik,553 that where A filed a suit against B for specific performance of the contract of sale on the ground that B, who was in possession of the house, failed to pay A within the time the balance of Rs 5000 of the purchase price along with the interest thereon and that there was no extension of time for the performance of the contract, B having failed to perform his part of the contract within time could not rely on the doctrine of partperformance. The leading case of passive equity of part-performance is Prabodh Kumar Das v Dantmara Tea Co Ltd.554 In this case, Gilanders & Co agreed to sell a tea estate to one SN Roy. The agreement was unregistered but SN Roy paid the first instalment of the consideration and took possession of the tea estate. Later on, Gilanders & Co sold the tea estate to Dantmara Tea Co through a registered sale-deed on the ground that SN Roy had failed to give remaining installments of the consideration. Dantmara Tea Co obtained the export licence also as owners of the tea estate (but they were without possession). Subsequently, one Prabodh Kumar Das obtained the rights under the contract of sale from SN Roy and also acquired possession of a part of the tea estate. Probodh Kumar Das filed a suit for a declaration that Dantmara Tea Co had no right to sell the tea under export licence as it was not the owner of the tea estate. He also prayed for an injunction. The Privy Council held that the equity of part-performance under section 53A was not an active equity. It does not give any right of action to the transferee who is in possession of property under an unregistered contract of sale. The appeal was dismissed and injunction was not granted because this right is available only as a defence ground to protect possession of the defendant. A suit for permanent injunction against the transferor filed by the transferee who was in possession under the agreement was held to be not maintainable unless at the same time specific performance of the agreement was not claimed.555 When after partition of suit property, co-owners of property agreed to sell their part to vendees and transferred entire possession of property in pursuance of part performance, vendees were held entitled to the benefit of section 53A and to the decree of specific performance.556

[s 53A.10.3] Transferee, whether Plaintiff or Defendant? This section confers on the transferee a right to defend his possessions, whether as a defendant or as a plaintiff, it is not relevant.557 According to the Allahabad, Bombay and Andhra Pradesh High Courts, the transferee may also be "plaintiff" if it is necessary to protect his possession. But according to the Orissa, Madras and Punjab High Courts, the transferee can protect his interest only as a "defendant".

[s 53A.10.4] Who can Claim Protection and Against Whom The protection under the section can be availed of by the transferee or any person claiming under him against his transferor or any person claiming under him but not

against a third person with whom he does not have a privity of contract. In this case, a person purchased a piece of land. He paid the full amount to the seller and was put into possession. The buyer resold the land, received full consideration from his buyer and handed over possession to him. The original seller sued the second buyer to recover possession. The Supreme Court did not allow the second buyer to invoke protection of section 53A. There was no privity of contract between him and the original seller. He was not a transferee within the meaning of section 53A.558 Persons claiming under the original seller may include his tenants. In this case, by virtue of a sale deed, the plaintiff (transferee) was put into possession by the original seller. He was also authorised to collect rents from the tenants of the original owner. The court said that a transferee who is put into possession of the property steps into the shoes of the landlord entitling him to evict tenants from the premises. This is so irrespective of the fact that the tenants were paying rent to the original owner.559 Transaction liable to be cancelled.—The suit for cancellation of the agreement of date was filed within the period of limitation. The agreement was liable to be cancelled on account of frustration caused by lapses committed by the defendant. The plea of protection of section 53A was not available to the defendant even for the period during which the contractual obligation was alive.560

[s 53A.10.5] Unregistered Lease Deed An unregistered lease deed had been held to be admissible for defending possession obtained in part-performance of the agreement of lease. Since the lease was for a period beyond one year and having been created by an unregistered instrument, it became monthly and not yearly lease. The lessee could not rely upon 30 years term of the lease and claim protection against eviction under section 53A. A term in relation to the period of lease was held to be not a collateral purpose within the meaning of section 49 of the Registration Act.561 The Supreme Court in its decision in Satish Chand Makhan v Govardhan Das Byas,562 held that "the unregistered lease agreement was clearly inadmissible in evidence under section 49 of the Registration Act except for the collateral purpose of proving the nature and character of possession of the defendants. The proviso to section 49 was however not applicable in the present case as the terms of a lease are not a collateral purpose.563

[s 53A.10.6] Sale of Mortgaged Property to Mortgagee When a mortgagor/vendee agreed to sell the mortgaged property to the mortgagee/ putative vendee in possession, the mortgagee's status was subsumed or merged in his rights as a putative vendee under section 53A against the transferor, provided of course the pre-conditions for the application of section 53A were fulfilled. Given the mandatory language of section 53A, the court said that it must be held that in such a situation the equity of redemption in the mortgagor/vendee was lost to the extent that the mortgagor could not reclaim possession of the mortgaged property. To hold to the contrary, would not only defeat the mandate of section 53A but would result in an anomalous situation. An owner who may not have mortgaged his property cannot be in a worse position vis-a-vis the vendee than an owner who may have mortgaged the subject-matter of sale to the vendee. The only right left with the owner in both cases is to sue for completion of the contract.564

[s 53A.11] Principle laid down in Walsh v Lonsdale 565 Section 53A incorporates three principles of equity— (i) He who seeks equity must do equity. (ii) Equity looks to the intent rather than to the form. (iii) Equity treats that as done which ought to have been done.

The leading case of Walsh v Lonsdale, (1882) 21 Ch D 9 : 46 LT 858: 52 LJ Ch 2 is an instance of the equitable rule that what ought to be done as a consequence of a binding agreement is treated as actually accomplished. In this case, L agreed in writing to grant a seven years lease of a mill to W at a rent payable quarterly in arrear but with a year's rent payable in advance, if demanded. W entered in possession without any lease deed having been executed and paid his rent quarterly. Subsequently, when L demanded a year's rent in advance, W refused to pay. W filed a suit claiming injunction and damages for illegal distress on the ground that at law he was a tenant from year to year at rent not payable in advance, and, therefore, the legal remedy of distress was not open. The court held in favour of L observing that a tenant who had entered on the land and enjoyed the benefits of the lease would be prevented by equity from taking advantage of the absence of a deed to repudiate the covenants of the lease. The Privy Council have held in two cases, Ariff v Jadunath,566 and Mian Pir Bux v Sardar Mohd Tahir,567 that no equitable rule could override the provisions of this Act or Registration Act regarding writing or registration. Therefore, it follows that there is no scope in India for applying the equity of Walsh v Lonsdale, (1882) 21 Ch D 9 : 46 LT 858: 52 LJ Ch 2 except in limited cases where an interest in land can be created without registration, for example, a lease for less than one year or a sale for less than Rs 100.

[s 53A.12] Period of Limitation The rule of part performance does not arrest the running of the period of limitation. The transferee who obtained possession of the property under rule of part performance was not allowed to resist the suit for possession if his right to obtain specific performance had become barred by limitation.568

[s 53A.13] Difference between English Law and Indian Law Section 53A has only partially incorporated the English doctrine of Part-performance. The points of difference between the two are discussed below:— (1) Under English law, even an oral agreement is sufficient to attract the application

of this doctrine but in India, the contract to which this section applies must be in writing and signed by the transferor. (2) Under English law, this doctrine can be used both as a sword and a shield, i.e., it

can be used both for enforcing the right as well as defending the right. However, in India, it can be used only as a shield, i.e., to defend the right of the transferee. (3) In English law, doctrine of part-performance gives rise to an equity but in Indian

law, it gives rise to a statutory right of defence.

1 Nothing in Chapter II is to be deemed to affect any rule of Muhammadan Law, see section 2,

Act 20 of 1929. 486 Ins. by Act 20 of 1929, section 16. 487 The words "the contract, though required to be registered, has not been registered, or,"

omitted by Act 48 of 2001, section 10 (w.e.f. 24-9-2001). 488 These requirements have been stated in Shrimant Shamrao Suryavanshi v Pralhad Bhairoba

Surayvanshi, (2002) 3 SCC 676 : AIR 2002 SC 960 : 2002 AIR SCW 659, here the Supreme Court did not disallow the benefit of the section to a transferee whose suit for specific performance had become time-barred; any enquiry made with the whole world except the person concerned would not make a person a bona fide purchaser, Gampa Sriniwas v B Sukeshini, AIR 2018 Hyd 122 ; where defendant knew about the existence of an agreement between the vendor and the vendee but never made any enquiry with plaintiff before purchasing the land, he was not held to be a bona fide purchaser and not entitled to benefit under the section, Rajender Singh v Nanga alias Nanak (deceased) through LRs, AIR 2018 P&H 29 ; amendment of 2001 requiring documents to be stamped and registered in order to create right in terms of doctrine of partperformance is prospective in nature, agreement entered in 1995 not required to be stamped or registered, Gurmeet Kaur v Harbhajan Singh, AIR 2017 Del 164 . 489 (1883) 8 AC 467 : 49 LT 303 : 52 LJ QB 737. 490 (1906) 29 Mad 336 : 16 Mad LJ 395. 491 (1914) 42 Cal 801 : AIR 1914 PC 27 : 42 Ind App 1. 492 58 Cal 1235 : AIR 1931 PC 79 : 58 Ind App 91. 493 AIR 1934 PC 235 : 61 Ind App 388 : ILR 58 Bom 650. 494 Ettapparambath Atiyandi Pakkirichi Umma v Kaiprath Kalandan, (1954) 1 Mad LJ 583 : AIR

1954 Mad 702 : 67 Mad LW 265. 495 Rambhau Namdeo Gajre v Narayan Bapuji Dhotra, (2004) 8 SCC 614 : AIR 2004 SC 4342 :

(2004) 3 KLT 728 . 496 Mian Pir Bux v Sardar Mohd. Tahir, AIR 1934 PC 235 : 61 Ind App 388 : ILR 58 Bom 650;

Basanti Devi v Fulchand Mondal, AIR 2007 Cal 8 : 2006 (2) Cal LJ 622 : 2007 (2) ICC 216, a person who claimed title by adverse possession was not allowed two combine with it the relief of possession under part-performance, these pleas are inconsistent, one requires oral possession, the other requires an agreement in writing. Amar Singh v Laxman, AIR 2007 (NOC) 320 (Raj), the plaintiff came into possession of the suit property by way of part-performance, it being a possession with permission, it was not open to him to claim title by adverse possession. Raysing Hurji Bhil v Vaniben Manjibhai, AIR 2007 Guj 69 : 2007 (53) All Ind Cas 441 : 2007 (1) Guj LR 562, pleas of adverse possession and part performance are mutually destructive, one cannot be allowed to say that he is entitled to title by virtue of part performance and that he has already acquired title through adverse possession. St. Mary's Educational Society v Dr Qutubuddin Ahmed, AIR 2007 AP 156 : 2007 (3) Andh LT 214 : 2007 (2) Ren CR 210, benefit of the doctrine of part performance cannot be claimed by a lessee to resist his eviction. HC Nagappa v Thairunnisa, AIR 2006 Kant 112 : 2006 (4) Kant LJ 358 : 2006 (4) CCC 205 , after taking over possession of property under part performance, plea of adverse possession not maintainable. Mool Chand Bakhru v Rohan, AIR 2002 SC 812 : (2002) 2 SCC 612 : (2002) 1 Scale 507 . Suit for

possession and mesne profits, defence of adverse possession and possession by virtue of section 53A inconsistent pleas, not available. 497 These requirements were stated by the Supreme Court in Nathulal v Phoolchand, (1969) 3

SCC 120 : AIR 1970 SC 546 : (1970) 2 SCR 854 and cited by the Supreme Court in Hamzabi v Syed Karimuddin, (2001) 1 SCC 414 : (2000) 8 Supreme 268 : 2000 AIR SCW 4354; same requirements were reiterated by the Supreme Court in Vasanthi v Venugopal (Dead) through LRs, AIR 2017 SC 1569 . 498 Rajender Singh v Nanga alias Nanak (deceased) through LRs, AIR 2018 P&H 29 ; if rights as

shield are available to transferee as defendant, there is no justification that it would be denied to transferee even if by force of circumstances, he is compelled to approach court as plaintiff to use that shield, Ghnshyambhai Dhirubai Barvaliya v Rasikbhai Dhirubahi Ambaliya, AIR 2017 Guj 164 . 499 Gita Devi v Sobha agarwalla, AIR 2017 Jha 24 . 500 Allam Gangadhara Rao v Gollapalli Gangarao, AIR 1968 AP 291 : ILR (1970) AP 933 ; DS

Parvathamma v A Srinivasan, (2003) 4 SCC 705 : (2003) 3 Supreme 88 : AIR 2003 SC 3542 , inducted as a tenant, claimed that he entered into an agreement to purchase the property from the original owner, but he failed to prove the fact of any such sale of the property to him, his conduct was also inconsistent with that of a vendee in possession, his suit for specific performance was dismissed. The property was transferred to another person for a consideration, the latter showed that he had no notice of sale or part-performance in favour of the tenant, the tenant could not get protection under section 53A, the order of eviction passed against him by the Rent Controller was held to be sustainable. 501 Chandrawati v Lakhmi Chand, AIR 1988 Del 13 (18) : (1987) 5 Reports 507 : (1987) 13 DRJ

248 . 502 SDP Sabha Baijnath Co-op Multipurpose Society Ltd v State of Himachal Pradesh, AIR 1984

(NOC) 67 . 503 Hameed v Jayabharat Credit & Investment Co, AIR 1986 Ker 206 : ILR (1986) 2 Ker 65 : 1986

Ker LT 997 . 504 Govind Prasad Dubey v Chandra Mohan Agnihotri, AIR 2009 MP 159 (DB) : 2009 (4) MPHT

26 : 2009 (4) MPLJ 567 , writing being necessary an oral transferee was not allowed to be impleaded. 505 Yadav Motors v Hitendra Kumar Ahuja, AIR 2007 (NOC) 144 (All) : (2006) 6 All LT 575, there

was no written agreement between the landlord and tenant for sale of the property, the plea of estoppel and acquiescence cannot be raised unless there is a written agreement, payment of sale consideration by the tenant to the landlord was also not proved, the tenant could not claim the benefit of section 53A Basanti Bai v Prafulla Kumar Routrai, AIR 2006 Ori 112 : 2006 (43) All Ind Cas 806 : 2006 (1) Ori LR 620 , the plaintiff claimed that the defendant agreed to sell land in her favour for using it as an approach road to her house, but subsequently sold the land to others there was no oral or documentary evidence in her favour about the agreement, nor there was any necessity of passage, relief of specific performance refused. Ganga Ram v Kamal Chand, AIR 2006 Raj 17 : 2006 (1) AIR Jhar. (NOC) 146 : 2006 (2) Rec Civ R 375, suit for recovery of possession based upon title, the defendant pleaded that he was in possession of the property in part-performance of the agreement to sell. There was no written agreement for sale. The defendant sought to prove only an oral agreement. He could not invoke section 53A grant of decree of possession to plaintiff was proper, VR Sudhakar Rao v TV Kameshwari, (2007) 5 SCR 284 : (2007) 6 SCC 650 : (2007) 3 Supreme 592 , in the case of an oral agreement of sale the defence under section 53A is not available to a party even though he is in possession of the property. Deva Sahayam v P Savithramma, (2005) 7 SCC 653 : (2005) 6 Supreme 698 : AIR 2006

SC 779 , a tenant contended that he remained in possession after an oral agreement of sale not tenable. In Ashok Indoria v Vidyawanti, AIR 2015 Del 5 , where an agreement to sell which was in the nature of part performance, and was executed prior to the amendment requiring that it should be registered, it was held that the document was not compulsorily registrable. The agreement was admittedly signed by the vendor and his witness. 506 Mool Chand Bhakru v Rohan, AIR 2002 SC 812 : (2002) 2 SCC 612 : (2002) 1 Supreme 385 ,

suit for possession and mesne profit was accordingly decreed. 507 Bobba Suramma v Peddireddi Chandramma, AIR 1959 AP 568 : 1959 Andh LT 743 : (1959) 2

Andh WR 357; where agreement to sell neither gave clear description and boundaries of property nor reflected transfer of possession when transfer was consequential to fulfilment of condition of registration, it was held that it could not be treated as agreement to sell or sale deed, Durga Prasad Shrestha v Special Secretary, Tourism Dept, Govt of Sikkim, Gangtok, East Sikkim, AIR 2018 SK 22 . 508 Hamida v Humer, AIR 1992 All 346 : 1992 All LJ 1065 : 1992 (2) All CJ 964. 509 Sadhu Meher v Rajkumar Patel, AIR 1994 Ori 26 : 1994 (2) Cur CC 234 : 1994 (77) Cut LT

554; Routu Sivudunaidu v Pandranki Laksminaraynamma, AIR 2008 (NOC) 302 (AP), the very document in pursuance of which the claim for possession was based was found to be not true. There was no competence to execute the requisite document on the part of the transferor. Basic conditions of section 53A were not satisfied. 510 Brijgopal Lumani v Mothey Anja Ratna, AIR 2010 (NOC) 570 (AP); In Venetta Kharsyntiew v

Tushar Nath Bhattacharjee, AIR 2014 NOC 590 Meg, the Class I legal heirs along with their mother and brother inherited a property after the demise of their father. No agreement was there about their respective shares, and thus it was held that none of them was entitled to claim exclusive possession under section 53A. In Dhannalal Ahirwar v Satya Narayan, AIR 2014 NOC 497 MP there was an oral agreement to sell, and no effort was made to get the sale deed executed. The natural inference was that requisite condition was not satisfied and thus benefit of section 53A was not allowed. 511 Gadiraju Sanyasi Raju v Kandula Kamappadu, AIR 1960 Andh 83 : 1959 Andh LT 696 : ILR

(1959) AP 1107 ; Sardar Kamaljit Singh v Suresh Chand, AIR 2010 Raj 152 , no stipulation in the agreement indicating that possession of the land had been handed over to the plaintiff transferee, section 53A not applicable. The court added that the document containing the agreement is not compulsorily registrable for attracting the section. 512 KK Adaltha v Amrish Sehgal, AIR 2010 (NOC) 1118 (P&H). 513 Yenugu Achayya v Ernaki Venkata Subba Rao, AIR 1957 AP 854 : 1956 Andh LT 725 : ILR

(1956) Andh 1019 . 514 Sunil Kr Sarkar v Aghor Kr. Basu, AIR 1989 Gau 39 : (1987) 2 Gau LR 402 . SS Kapoor v

Sanjay, AIR 2010 All 56 : 2009 (6) All LJ 412 : 2009 (77) All LR 241 , no agreement with the tenant to transfer the premises to him, his possession was therefore not in part performance, nor any evidence of any willingness on his part, benefit of the section not allowed. 515 Kashinath Mehrotra v Roop Narayan Chaudhri, AIR 2008 (NOC) 301 (All). 516 Valsan v Radhamani, AIR 2018 (NOC) 473 (Ker) 517 Durga Prasad v Kanhiyalal, AIR 1979 Raj 200 : 1979 Raj LW 212 : 1979 WLN 577 ; party

availing benefit of this section must plead that he has taken possession of property in part performance of contract, Shyam Narayan Prasad v Krishna Prasad, AIR 2018 SC 3152 518 Roop Singh v Ram Singh, AIR 2000 SC 1485 : 2000 AIR SCW 1001 : (2000) 3 SCC 708 ; In

Mohan Developers v Chandrama Prasad Verma, AIR 2015 NOC 1201 (Cal), the plaint did not elaborate as to how the buyers came into possession of the suit property. There was no

agreement between the parties to sell. Court could not protect such possession. No injunction could be granted. 519 Universal Associates Developers & Promoters v Bhupat Ratilal Chouda, AIR 2015 NOC 681

(Kant); in a suit for declaration of title and possession, possession of appellants over the property was confirmed since 1976 by previous owners, agreement for sale was executed acknowledging possession of appellants, even when no suit for specific performance of contract was filed by the appellants, the document was held to prove that they acquired possession by way of part performance of the contract, subsequent purchasers and respondents never came in possession of property, appellants were held entitled to protection and decree passed by trial court was set aside, Gita Devi v Sobha Agarwalla, AIR 2017 Jha 24 . 520 Bhajan Lal v Bal Govinda, AIR 2007 All 199 : 2007 (5) All LJ 708 : 2007 (69) All LR 44 , under

an agreement of sale, the vendees were put into possession before execution of sale deed, the vendees constructed their house on two bighas of the land, they were held entitled to be protected by section 53A and their suit for specific performance could not be dismissed. Velu v Nagappa, AIR 2006 (NOC) 530 (Kant) : (2006) 2 AIR Kar. R 9 the defendant resisted the suit on the ground that he was in possession of the property in part-performance as per the agreement of sale, held that an unregistered agreement of sale was admissible in evidence to prove possession, the fact that the defendant was not in actual possession because he had leased out the property did not establish the plaintiff's possession, Order for possession not allowed. Hamzabi v Syed Karimuddin, (2001) 1 SCC 414 : (2000) 8 Supreme 268 : 2000 AIR SCW 4354, party seeking to resist dispossession must have altered his position and done some act under the contract so that it would amount to a claim on the part of the opposite party of the fact that the contract was not in writing; where vendee is already performing his part of contract and no date for execution of sale deed is provided, failure of vendee to get the sale deed executed within reasonable time does not operate as a statutory bar against the benefit of section 53A, Rajender Singh v Nanga alias Nanak (deceased) thorough LRs, AIR 2018 P& H 29; agreement to sell does not require registration, vendee is entitled to relief of injunction in the suit for declaration of title and possession by purchaser of property, Rajender Singh v Nanga alias Nanak (deceased) through LRs, air 2018 P& H 29. 521 Thota Rambabu v Cherukuri Venkateswara Rao, AIR 2006 AP 114 : 2006 (40) All Ind Cas 293

: 2005 (5) Andh LT 278 ; Salim son of Yaseen v First Additional Civil Judge, Senior Division, Saharanpur, AIR 1996 All 342 : 1996 All LJ 1300 : 1997 (1) CCC 118 the right of a transferee under section 53A does not have the effect of superseding section 44. 522

Krishna Prasad v Shyam Narayan Prasad, AIR 2006 Sikkim 25 : 2006 (4) CCC 642 .

Nanjegowda v Gangamma, AIR 2011 SC 3774 : (2011) 13 SCC 232 : 2011 AIR SCW 5289, the defendant claimed that he was put in possession in part performance of the sale agreement, and that an irrevocable power of attorney was given to him. But recitals in this power of attorney showed that the owner was still in possession. Finding of the Court below that the defendant was not in possession was held by the Supreme Court to be justified. 523 A Lewis v MT Ramamurthy, AIR 2008 SC 493 : 2007 AIR SCW 7356 : (2007) 12 Scale 750 ;

vendor executed power of attorney in favour of vendee to deal with third parties and accept sale consideration, vendee could not execute sale deed for a period of 19 years until vendor was alive and did not file suit for specific performance within a period of three years, vendors were held entitled to recover possession of property, Valsan v Radhamani, AIR 2018 (NOC) 473 (Ker). 524 B Paramashivaiah v MR. Shankar Prasad, AIR 2009 Kant 88 : 2009 (3) ICC 712 : 2009 (3)

Kant LJ 319 . 525 Andhra Graphite P Ltd v Jobbing Syndicate (Regd. Partnership), AIR 2011 (NOC) 245 (AP),

the transferee neither paid balance money, nor able to show readiness and willingness to pay

claim of specific performance not allowed. 526 Gangadhar Vithal Kale v Shyam Lal Bhik Chand Rathod, AIR 2009 (NOC) 2217 Bom : (2009) 4

AIR Bom R 197, the transferee did nothing to comply with the terms of the agreement, nor issued notice to the third party who was going to purchase the property. 527 M Ponnuswamy v M Thamarai Kannan, AIR 2008 (NOC) 506 (Kar) : (2008) 1 AIR Kar. R 3.

Kailash Chand Jain v State of Orissa, AIR 2009 (NOC) 591 (Ori) (DB), since taking over possession, no payment was made either before or after, not entitled to the benefit of the section. Bhavuti v Alam, AIR 2014 MP 14 : 2013 (4) MPLJ 39 , the vendee (defendant) took no steps for execution of sale deed by paying in balance of the price. He also filed no suit for specific performance despite expiry of the period of limitation, not willing and ready to perform his part of the contract. Not entitled to the benefit of section 53A. 528 Nathulal v Phoolchand, (1969) 3 SCC 120 : AIR 1970 SC 546 : (1970) 2 SCR 854 . Magna v

Amar Chand, AIR 2007 (NOC) 1435 (Raj) : (2007) 1 WLC 38 , entire consideration was paid by the transferee and he was allowed to take possession, sale deed was also executed but could not be registered because of the failure on the part of the transferor, the transferee had already done his part, he being ready and willing could not be questioned, suit for specific performance on the basis of the executed agreement was held to be maintainable; vendee establishing his readiness and willingness to perform his part of agreement is entitled to relief of specific performance, Awdhesh Kumar Singh v Shyam Narayan Jha, AIR 2018 Pat 24 . 529 AIR 1995 Ker 249 : ILR 1995 (1) Ker 208 : (1994) 2 Ker LJ 738 ; Venkatesh v DAC Venkoosa,

AIR 2008 Kant 5 : ILR 2007 Kant 4623 : 2008 (3) Kant LJ 335 , a tenant remained in possession by virtue of sale agreement and its part performance, the tenant nowhere stated in the written statement that he was ready to pay the sale consideration, not only that he was not ready and willing to perform his part, he was also trying to set up title by adverse possession, the court said that he could not retain possession for ever, collection of rents from other tenants did not justify his possession. NG Vigneshawara Bhat v P Srikrishna Bhat, AIR 2006 Ker 322 : 2006 (6) Kant (NOC) 856 : (2006) 1 Ker LJ 7 , the vendee not willing and ready to perform his part, not even paying remaining instalments of purchase price, not replying to any notice, no benefit of section 53A. 530 M Mariappa v AK Sathyanarayana Setty, AIR 1984 Kant 50 : (1983) 2 Kant LJ 185 : 1983 (2)

Civ LJ 339 . 531 Rani Sambhi v Lt Col (Retd) R.L Vashisht, 2003 (3) RCR (Civil) 684 (P&H) : 2003 (3) PLR 490

(P&H); defendant in possession of premises as bona fide purchaser without notice of sale agreement with plaintiff, plaintiff had neither the notice of sale nor knew the fact that defendant was in occupation of property by way of part performance of the contract, defendant was not ready and willing to perform his part of contract, sale deed in favour of plaintiff was held valid and subsisting, defendant was not held entitled to protection, Vasanthi v Venugopal (Dead) through LRs, AIR 2017 SC 1569 . 532 Chinnaraj v Sheik Davood Nachiar, 2003 (2) RCR (Civil) 33 : AIR 2003 Mad 89 : (2002) 3 Mad

LJ 784; agreement to sell along with delivery of possession entitles agreement holder to protect his possession under section 53A, agreement holder who is ready and willing to perform his part of contract and has taken steps in furtherance of it can protect his possession, Devinder Singh v Fateh Jung Singh, AIR 2018 P&H 70 . 533 Raj Pal Singh v Harbans Kaur, AIR 2010 (NOC) 1021 (P&H). 534 Jeet Kumari v Girdhari Lal, 2003 (3) RCR (Civil) 391 : 2003 (2) Ren CR 124 (P&H) : 2003 (3)

PLR 605 (P&H). 535 Supra.

536 DS Parvathamma v A Srinivasan, 2003 (2) RCR (Civil) 774 : 2003 (1) Ren CR 624 (SC) : AIR

2003 SC 3542 ; Syed Burhan v Mohammad Jahangir, AIR 2007 AP 225 : 2007 (5) Kant (NOC) 630 : 2007 (4) Andh LD 361, benefit of the section is not to be extended to a transferee who had earlier lost his suit for specific performance on a finding that he was not willing to perform his part of the contract. The following rulings were cited for showing that the benefit of the section cannot be allowed to a person who was not ready and willing to perform his part : Sardar Govindrao Mahadik v Devi Sahai, AIR 1982 SC 989 : (1982) 1 SCC 277 : 1982 (1) Civ LJ. 375 ; Dhanasekaran v Manoranjithammal, AIR 1992 Mad 214 : (1992) 2 Mad LJ 116 : 1991 (2) Mad LW 635. Venkata Rao v Sankara Venkata Rao, (1998) 6 Andh LD 278 : 1999 AIHC 2958; VR Sudhakar Rao v TV Kameshwari, (2007) 5 SCR 284 : (2007) 6 SCC 650 : (2007) 3 Supreme 592 , Oral agreement of sale, section 53A not available as a defence even though the party is in possession. 537 Parasa Ranga Rao v Mathe Sanjeeva Rao, AIR 2006 AP 366 : 2006 (5) Andh LT 205 : 2007 (2)

Civ LJ 899 . 538 A Lewis v MT Ramamurthy, JT 2007 (13) SC 79 : (2007) 12 Scale 750 : (2007) 9 SLT 542 . 539 Mahadeva Mandi Madashetty v Rangamma, AIR 2013 Kar 56 : 2013 (1) KCCR 207 : 2013 (1)

Kant LJ 657 . 540 AIR 1953 SC 503 . 541 Malla Sasirekhamma v Garbham Suramma, AIR 1952 Ori 163 : (1951) 17 Cut LT 62. 542

Mahadeva v Tanabai, (2004) 5 SCC 88 : AIR 2004 SC 3854 : (2004) 3 CHN 175 ; P

Prabhakara Rao v P Krishna, AIR 2007 AP 163 : 2007 (4) Andh LT 569 : 2007 (4) Kant (NOC) 470, suit for specific performance failed. The court said that the holder of agreement of sale could still shelter himself under section 53A, the vendee who was also the tenant of the premises failed to take the plea in his written statement of possession in part-performance, if he was in possession otherwise than as a tenant, he might have had with him bills and receipts for payment of property taxes and water charges, he did not produce even a single piece of paper of that kind, vendor on the other hand had all such documents, up-to-date, held, tenant liable to be evicted. 543 Sankara Venkata Rao v K Venkata Rao, (2005) 11 SCC 436 . 544 Hiralal Ramnarayan v Shankar Hirachand, (1921) 45 Bom 1170 : AIR 1921 Bom 401 ; Nand

Kishore v Hazarilal, AIR 2009 (NOC) 2445 (MP), an agreement for part performance does not require registration. Do the same effect, Udai Sapkota v Laxmi Prasad Sapkota, AIR 2013 Sikkim 21 : 2013 AIR CC 1222 Sikkim. 545 Modern Food Industries (India) Ltd v IK Malik, 2003 (1) RCR (Civil) 118 : 2002 (2) Ren CR 690

(Del) (DB); K Balaraman v Pattammal, AIR 2006 Mad 260 : 2006 (48) All Ind Cas 407 : 2006 (4) CTC 326 , a suit based on an unregistered agreement of sale for specific performance and possession in part performance is not liable to be dismissed on the ground that the agreement of sale was not admissible in law; where possession of disputed land was not given to transferee, section 17(IA) of Registration Act will not apply and the document will not be compulsorily registrable for the purposes of section 53A, Awdhesh Kumar Singh v Shyam Narayan Jha, AIR 2018 Pat 24 ; when parties entered into agreement for sale prior to insertion of amended section 17(IA), explanation to section 17 provides that agreement for sale of immovable property shall not be compulsorily registrable because such documents contain recital as to consideration amount, relief of specific performance cannot be granted, Awdhesh Kumar Singh v Shyam Narayan Jha, AIR 2018 Pat 24 . 546 R Palanisubramanian v Trans Medica (India) Ltd, AIR 2009 Mad 110 : 2009 AIHC 597 (NOC) :

2009 (5) All LJ (NOC) 834. In Swarnendu Das Gupta v Sadhana Banerjee, AIR 2015 Cal 46 , it was held that an agreement to sell does not require registration because it is not a conveyance. The

purchaser had already paid Rs 10,00,000 out of the sale price of Rs 11,50,000. He was held entitled to specific relief under section 53A. 547 Manglu Mool Singh v Kunjlal, AIR 2014 Chhat 31 : 2013 (4) Cg LJ 428 : 2013 (5) MPHT 81. 548 Raheja Universal Ltd v NRC Ltd, (2012) 4 SCC 148 : AIR 2012 SC 1440 : 2012 AIR SCW 1742. 549 Suleman v PN Patel, (1933) 35 Bom LR 722 : AIR 1933 Bom 381 : 145 Ind Cas 557. 550 AIR 1979 SC 2425 : (1978) 1 SCR 516 : (1978) 1 Ren LR 64; Rambhau Namdeo Gajre v

Narayan Bapuji Dhotra, (2004) 8 SCC 614 : AIR 2004 SC 4342 : (2004) 3 KLT 728 , protection under the section is a shield only against the transferor, it disentitles the transferor from disturbing the possession of the transferee, it has nothing to do with the ownership of the transferor who remains full owner till it is legally conveyed to the transferee by registration. 551 Valsan v Radhamani, AIR 2018 (NOC) 473 (Ker); doctrine of part performance does not

confer any right on lessee on the basis of which he can claim rights against the lessor, lessee not entitled to seek protection or take defence under section 53A when lease deed is invalid due to the term of 15 years, West Bengal State Electricity Board v Sevoke Properties Pvt Ltd, AIR 2019 Cal 110 . 552 ibid 553 AIR 1977 SC 1517 : (1977) 2 SCR 621 : (1977) 3 SCC 584 . 554 AIR 1940 PC 1 : 1940 All LJ 226 : ILR (1940) 1 Cal 250 . 555 Chellingi Narayanamurthy v Chillingi Satyanarayana, AIR 2008 AP 25 : 2008 (1) Andh LD 118 :

2008 (2) CCC 712 . Other authorities to the same effect are Mohd. Jahangir v Mallikharjuna Coop Housing Society Ltd, (1991) 1 All LT 575 and K Venkata Rao v Sunkara Venkata Rao, (1998) 5 All LT 40 : 1998 AIHC 2958. 556 Shivaji Yallapa Patil v Sri Ranajeet Appasaheb Patil, AIR 2018 SC 1961 . 557 The transferee is entitled to resist any attempt on the part of the transferor to disturb

transferee's lawful possession under the contract of sale and his position as a plaintiff or as a defendant should make no difference, Dharmaji v Jagannath Shankar Jadhav, AIR 1994 Bom 254 : 1994 Bom CJ 470 : 1994 (2) Civ LJ 370 . 558 Rambhau Namdeo Gajre v Narayan Bapuji Dhotra, AIR 2004 SC 4342 : (2004) 8 SCC 614 :

(2004) 3 KLT 728 . 559 Mejawar & Co v Fazlur Rehaman, AIR 2008 Kant 32 : 2008 (1) AIR Kant R 187 : 2008 (2) Kant

LJ 365 . 560 Damodar Namdeo Sase v Namdeo Baburao Sase, AIR 2009 (NOC) 851 (Bom). 561 G Kusuma Devi v Gowramma, AIR 2006 Kant 295 : 2007 (2) ICC 516 : 2006 (6) Kant LJ 120 .

The court relied upon the decisions of the Supreme Court in Shrimant Shamrao Suryavanshi v Pralhad Bhairoba Suryavanshi, ILR 2003 Kant 503 : AIR 2002 SC 960 : 2002 AIR SCW 659 and Maneklal Mansukhbhai v Hormusji Jamshedji Ginwalla & Sons, AIR 1950 SC 1 : 1951 SCJ 13 : 1950 SCR 840 , though a registered lease deed was not executed in favour of the defendant, once the terms of the lease had been reduced to writing, the benefit of those terms and provisions of section 53 can be extended to the defendant. Followed by the Calcutta High Court in Lal Behari Sasmal v Kanak Kanti Roy, AIR 1962 Cal 502 . This view has to be taken subject to the opinion of the Supreme Court in Burmah Shell Oil Distributing v Khaja Medhat Noor, AIR 1988 SC 1470 : JT 1988 (2) SC 429 . 562 (1984) 1 SCC 396 : AIR 1984 SC 143 : (1984) 1 All Rent Cas 575. 563 To the same effect is Bajaj Auto Ltd v Behari Lal Kohli, (1989) 4 SCC 369 : AIR 1989 SC 1806

. 564 Hamzabi v Syed Karimuddin, (2001) 1 SCC 414 : JT 2000 (3) SC 190 : (2000) 7 Scale 651 . 565 (1882) 21 Ch D 9 : 46 LT 858 : 52 LJ Ch 2. 566 (1931) 58 IA 91 : AIR 1931 PC 79 : ILR 58 Cal 1235.

567 AIR 1934 PC 235 : 61 Ind App 388 : ILR 58 Bom 650. 568 Shivayya v Praveena, AIR 2008 Kant 157 : ILR 2008 Kant 2747 .

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER III OF SALES OF IMMOVABLE PROPERTY This chapter consists of four sections which can be divided into two groups:— Group A—"Sale" defined (sections 54, 55 and 56) Group B—Discharge on encumbrances on sale (section 57).

Group A—Sale [s 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.—1Such 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. 1.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.

Comments Section 54 deals with three different subjects which are given below and will be discussed one after the other:— (1) Definition of sale (2) Mode of transfer by sale (3) Contract for sale

[s 54.1] Defi5nition of Sale Section 54 says that "sale" is a transfer of ownership in exchange for a price paid or promised or part-paid and part-promised. Therefore, sale is transfer of ownership for money consideration. It implies an absolute transfer of all rights in the property sold. No rights in property sold are left in the transferor. Sale has to be distinguished from mortgage, lease and hire-purchase agreement. In mortgage, there is transfer of an interest in the property, in lease, there is transfer of right to enjoy the property whereas

in hire-purchase agreement, the transferee is given the right to terminate the agreement in comparison to sale whereas in sale, the transferee has to pay the entire money (purchase-price) at once and all the rights of the transfer are transferred to him. The two elements that are necessary to constitute a sale are transfer of ownership and money consideration. Ownership means bundle of all the rights and liabilities in a property. When there is transfer of ownership all these rights and liabilities are transferred to the transferee and nothing is left for the transferor. The ownership of the property must be transferred in exchange of money. The money in exchange of ownership is called the "price". Where the ownership is transferred in exchange or ownership of some other property, it is known as "exchange" and where ownership is transferred for nothing, it is known as gift. Transfer of ownership only for money consideration is known as "sale".2. Though generally time is considered to be the essence of the contract, the legal proposition is that time is not the essence of the contract regarding the sale of immovable properties, unless it is specifically stipulated that time that is fixed in the sale agreement is a relevant factor and the said time is considered to be the essence of the contract further putting the other side on notice to the said effect. Where the vendee was ready and willing to execute the sale deed but vendor could not deliver vacant possession of the suit property, the vendee was held entitled to refund of advance with reasonable interest.3. Where mutation in favour of vendee was sanctioned but its notice was not given to the vendee though it was required under the agreement to sell immovable property and vendor did not call upon the vendee to get the sale deed executed, it was held that the conduct of the vendor showed that the time was not the essence of the contract.4.

[s 54.2] Essentials of a Sale The essential elements of a sale are given below:— (1) Parties (2) Subject-matter (3) Money-consideration (4) Conveyance

[s 54.2.1] Parties There must be at least two parties in a sale. The person who transfers the property is known as transferor or seller or vendor. The person purchasing the property is known as transferee, purchaser or vendee. For constituting a valid sale, both the seller and purchaser must be competent on the date of sale. The seller must be competent to contract, i.e., he must be of sound mind and must have attained the age of majority.5. Besides that, he must be the owner of the property which he is going to sell.6. He must have a legal title to it only then he can sell the property.7. For example, a tenant does not have the power to sell the tenanted property.8. Where the property in question was owned by a Hindu, and on his death, his wife married a Christian and got converted into Christianity, and then disposed of the

property. The Court said that she was not, by reason of conversion, deprived of her right of inheritance. The sale was valid. The Court considered the effect of the Caste Disabilities Removal Act, 1850.9. The purchaser must not be disqualified by any law for the time being in force from purchasing a property. For example, under section 136 of this Act, a judge, a legal practitioner or an official of court is incompetent to purchase actionable claims. The seller and buyer may be natural persons or juristic persons, for example, corporations or other legal persons. The defendant and plaintiff were real brothers and were residing jointly in a single house. The defendant executed an agreement to sell his share in the house to his brother (plaintiff). Subsequently he sold his share to another purchaser. There was nothing on record to show that the subsequent purchaser had knowledge about the earlier sale agreement. Hence, he was a bona fide buyer. The plaintiff was allowed to recover back the earnest money which he had paid to his brother.10. The seller (first defendant) was the Karta of the Hindu Joint Family and the second defendant was a minor. The property sold was family property. The sale was for welfare of the family and the minor, though there was no financial necessity. The sale was held to be valid.11. Two sisters were the only legal heirs of their deceased father. They inherited his property as class I heirs. The husband of one of them purchased the property from their widowed mother taking advantage of her old age. It was held that the widow alone had no right to inherit the property. The sale was not binding on class I heirs to the extent of their shares.12. Where the purchaser was aware that the seller was only half owner of the property as indicated by the schedule in the suit, it was held that he could not claim that he was a bona fide purchaser without notice of the proceedings relating to the property. He was not entitled to claim absolute ownership of the entire property.13. Supreme Court has emphasised that the execution and registration of sale deed are mechanical acts and therefore not sufficient in themselves for passing title and ownership. All this must be done with the intention of transferring title. The intention of the parties has to be ascertained such intention has to be gathered from the recitals of the sale deed.14.

[s 54.2.1.1] Sale through Power-of-Attorney.— Documents like agreement to sell, general power of attorney and special power of attorney do not amount to sale.15. The plaintiff's husband died. She executed a powerof-attorney in favour of her brother-in-law (defendant) authorising him to pursue litigation against her. Her intention was to clothe him only with a special power of attorney. She being illiterate, unknowingly she executed a general power-of-attorney. The defendant took undue advantage of this fact. Fraudulently he alienated her property in favour of his son. The court said that the principle of non-est-factum applied to the case. The plaintiff could produce evidence to show fraud and claim under section 92(1), proviso to section 92, Evidence Act, 1872 that the sale transaction was void ab initio.16.

[s 54.2.1.2] Sale through development agreement.— In a development agreement, the owner executed a power of attorney in favour of the developer, but subsequently revoked it. It was held that the developer did not thereby lose the remedy of specific relief. He could still seek specific enforcement of the

development agreement. A development agreement is also an agreement of sale subject to certain conditions. It is a conditional sale. Section 14(3)(c) of the Specific Relief Act, 1963 does not stand against specific enforcement of such agreements.17.

[s 54.2.1.3] Position of secured creditor.— The borrower under a mortgage can redeem the mortgage and resume ownership of property "at any time before the date fixed for sale". This expression occurs in the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, section 13(2). It has been held that the word "sale" is also to include transfer of secured assets. Intention of the Legislature is that sale is to be confirmed specifically by the secured creditor and not merely by the authorized officer. So long as the sale is not confirmed by the secured creditor, transfer of the secured asset is not effected. The borrower has the right to redeem property at any time before the date the property is transferred to an auction purchaser by confirmation of sale by the secured creditor.18.

[s 54.2.2] Subject-Matter The Transfer of Property Act, 1882, deals with the transfer of immovable properties only. Therefore, the transfer of ownership must be in some immovable property only. (The Sale of Goods Act, 1930 deals with sale of movable properties.) Immovable property includes land, the benefits arising out of land and the things attached to the earth except standing timber, growing crops and grass. The right to catch and carry away fish is "profit a pendre" and construed as immovable property. Therefore, unregistered agreement to catch fish will require registration since value of property exceeds Rs 100. It was held that settlement of record of right neither creates nor extinguishes title.19. Secured property was sold by e-auction which was purchased by the higher bidder who believed the property to be free from all encumbrances and charges. The bank issuing sale certificate stated that scheduled property was free from encumbrances though it had outstanding excise dues. It was held that the purchaser is under no obligation to discharge liability of previous owner.20.

[s 54.2.3] Money-Consideration The money consideration, i.e., the price is the essential element of a sale. At the time of contract of sale the price must be ascertained for which the property is going to be transferred. The price may be paid at the time of execution of sale, before it in advance or after the sale. In the words of Fry, "In all sales it is evident that price is an essential ingredient, and that where it is neither ascertained nor rendered ascertainable, the contract is void for incompleteness, and incapable of enforcement; it is not, however, necessary that the contract should in the first instance determine the price. It may either appoint a way in which it is to be determined or it may stipulate for a fair price." Non-payment of sale consideration does not vitiate a sale if it is promised to be paid. But if an assertion is made that the consideration has already been paid and it is found to be incorrect, the transaction does not amount to a sale. In this case there was a

concurrent finding that no sale consideration was paid and it was based on cogent reasons. The sale was accordingly set aside.21. In case of an agreement to sell immovable property, the law requires that it must with certainty identify the property agreed to be sold and the price fixed as consideration paid or agreed to be paid. Price has not been defined in the Transfer of Property Act, 1882 but that expression has to be understood in the same sense as is understood in the Sale of Goods Act. Every sale implies a contract of sale and like any other contract, the contract for sale of immovable property must be based on mutuality.22. For the validity of a sale, inadequacy of consideration is not any relevant factor. Even where the price or consideration is found by the court to be less than the market value of the property, the sale is held to be valid.23. The consideration must be reasonable, where the consideration is found to be too low or illusory, the court may infer fraudulent or sham transfers. The court may even presume fraud, coercion or mistake and the sale may be invalidated on any of these grounds. "The consideration must be of some value in the eyes of law but it cannot be illusory." In Currie v Misa,24. the principle laid down about consideration is that, "a valuable consideration in the sense of law, may consist either in some right, interest, profit or benefit accruing to one party, or some forbearance, detriment, loss or responsibility given, suffered or undertaken by the other." Payment of price is not a necessary condition for the validity of a sale, i.e., it is not sine qua non for the completion of a sale. As the Act itself lays down that the price may have been paid25. or promised to be paid or partly-paid and partly promised to be paid. It is sufficient if the consideration is sufficiently mentioned along with its mode of payment. The title to the property may pass to the purchaser after registration, though the consideration or price has not been paid.26. If from the recitals in the sale deed it appears that title would pass after payment of full consideration, the inference would be that until the consideration is paid, there is no transfer. On the other hand, if it appears that passing of title is not depending upon the passing of consideration and that the vendor intends to pass title without receipt of consideration, the document must be held to be one conveying title. The real test is the intention of the parties. In order to constitute a sale, the parties must intend to transfers the ownership of the property and they must also intend that the price would be paid either in present or in future. The intention is to be gathered from the recital in the sale deed, conduct of the parties and the evidence on record. Where the recitals in the sale deed expressly indicated that though part payment of consideration was made, title in the property passed to the vendee absolutely but it was subjected to a condition that if the remaining sale consideration was not paid by the stipulated date, the sale will be deemed to be cancelled. It was held that it does not itself reflect the true intention of the parties that the plaintiff vendor did not want to transfer the land in question to the defendants. If it would have been the intention the plaintiff would have immediately filed the suit after the expiry of the said particular date or would have issued a notice to the defendants that since they have failed to pay part of the sale consideration as agreed by them, the sale in question was liable to be cancelled.27. In one of the cases, the mortgagor had failed to pay mortgage money and redeem the suit land, the mortgagee had filed a suit for declaration of ownership on expiry of 60 years, it was found by the court that the rate of interest was more than allowable in law and the plaintiff – mortgagee had recovered more than the double the amount advanced and the procedure of foreclosure was also not followed. Therefore, the court held that the mortgagee enjoyed fruits of lands and thus the mortgage was deemed to have been redeemed during the period of limitation. The terms of the mortgage operated as a clog on the equity of redemption and, therefore, the plaintiff was not entitled to any relief.28. Transfer without consideration is gift.—As per the gift deed, a

Bhumidhari land was gifted to the donee. The gift deed mentioned that the property was worth Rs 40,000 and that the valuation was mentioned for the purpose of payment of stamp duty and not as consideration. The court held that the transaction was that of gift of immovable property and not a sale.29.

[s 54.2.4] Conveyance Section 54 has provided two modes of transfer of immovable property:— (i) Delivery of possession, and (ii) Registration of sale deed.

[s 54.2.4.1] Delivery of Possession.— Where the property is tangible immovable property of the value of one hundred rupees and upwards or in the case of a reversion or other intangible thing, transfer can be made only by a registered instrument. Where the property is tangible immovable property of a value less than one hundred rupees, its transfer may be made either by a registered instrument or by delivery of the property. Delivery of tangible immovable property takes place when the seller puts the buyer or such person as he directs in possession of the property. Where the market value of the property is less than hundred rupees, the oral sale of immovable property is completed merely by possession. The court, however, satisfied itself that the entire consideration has been paid. Delivery of possession means transferring of physical control of the property to the buyer. An example may be taken of the case of Mohiuddin v President, Municipal Corp, Khargone.30. In this case, a piece of land was sold for less than Rs 10 with unregistered sale deed. No physical possession of the property could be proved. It was held by the court that the transaction of sale could not be proved to have taken place. Where actual physical possession is not the possible to be proved due to the nature or kind of property, then anything done by the seller which amounts to change in possession from the seller to buyer is deemed to be delivery of possession. For example, handing over keys of a house of the transferee-purchaser is sufficient to indicate delivery of possession. If the purchaser is already in the possession of the property which he has purchased, it is not necessary that there should be any formal taking over of the possession, only a direction is sufficient to constitute delivery of possession.31.

[s 54.2.4.2] Registration of sale-deed.— Where the value of tangible immovable property is Rs 100 or more, the sale of such property requires registration of the deed. Where the property is intangible immovable property of any valuation, it will require registration for completion of sale. The transfer of an immovable property can only be effected by executing a registered document, mere making of agreement of sale or executing of power of attorney would not transfer the right, title or interest in an immovable property.32. It cannot be done just only by a sale agreement, general power of attorney or a Will.33. In Bishundeo Narain Rai v Anmol Devi34. the Supreme Court held that a combined reading of sections 8 and 54 of the Transfer of Property Act, 1882 suggests that

through an execution and registration of a sale deed, the ownership and all interests in the property pass to the transferee, yet that would be on terms and conditions embodied in the deed indicating the intention of the parties. The intention of the parties can be gathered from the averments in the sale deed itself or by other attending circumstances. Only the delay in presenting sale deeds before the Sub-Registrar is not sufficient to draw adverse inference for holding that sale deeds are ante-dated. There must be sufficient material to show that the sale deeds are ante-dated.35. Where the sale is to be completed only by the registered instrument, the ownership is deemed to pass on execution of the sale deed not on the registration of the deed. In cases of sales, where registration is compulsory the sale is not complete till registration is done but once registration is made it relates back to the date of execution and title would be deemed to have passed on that date. Registration is the prima facie proof of the intention of seller that he wanted to transfer the ownership on the date of the execution. But where some condition is laid down in the deed is itself the title shall not pass on the purchaser till that condition in the deed is fulfilled. The question as to whether on the execution of the sale deed title passes to the vendee or not depends upon the intention of the parties. The title of the vendor passes to the vendee on registration of deed irrespective of the fact as to whether the consideration has been paid or not by the vendor, subject to the contrary intention of the parties to the transaction.36. It is not the general principle of law that every agreement of sale by which the original owner agrees to buy back the property is a privilege or concession granted to such owner. Whether such an agreement is an option to purchase or an ordinary agreement would depend upon the interpretation of its provisions. The mere fact that an agreement for sale is described as a re-conveyance does not by itself mean that it is an option to repurchase nor does it in any way alter the substance of the deed. It merely records a historical fact that the property which is to be sold was being purchased by the person who used to be the owner. No logical distinction can be drawn between an agreement to repurchase and an ordinary agreement of purchase just because the vendor happens to be the original purchaser and the purchaser happens to be the original vendor. The agreement remains an agreement for sale of immovable property and must be governed by the same principles of law.37. Where an immovable and movable property are sold for a single consideration by an unregistered deed, the sale is in effected both for movable as well as immovable property because the document embodies only one transaction and there is no separate transaction for movable property.38. In a case regarding validity of a sale deed by a suit for declaration by plaintiff daughter, it was found that the execution of a sale deed by the mother was on the basis of general power of attorney executed by the daughter who was minor at the time of execution of the power of attorney and the mother had not obtained the requisite permission from the District Court, and, moreover, the defendant had also not made necessary enquiries in that regard, therefore, it was held that the sale deed would not be binding on the plaintiff as no valid title could be transferred.39. Where the execution of a sale deed was admitted by the power of attorney holder of vendor (who was son of the vendor) though he contended that it was only for defrauding creditors and that he never parted with the property, it was held that such admission could be taken into account while considering proof of execution and such sale would be binding upon him in view of section 43 as on the death of vendor he succeeded to the property.40.

Where the sale deed was executed by the Karta of a Hindu joint family when the plaintiffs were minors, it was held that the plaintiffs had the right to challenge sale deed in toto.41. In a suit for specific performance it was found that where the suit property was owned by both the mother and the minor children but in the agreement to sell that property no reference was made about share of minors and moreover, no permission was taken from guardian court to sell their shares, it was held that the agreement to sell was not binding on minors in view of section 8 of Hindu Minority and Guardianship Act, 1956. Therefore, the suit for specific performance was decreed partially in favour of plaintiff to the extent of share of mother only.42. When signatures and thumb marks on documents (deeds of conveyance) were identified by the person who was personally known to the Notary and he had filed his affidavit in the trial court to that effect, it was held that the deeds could not be challenged on the ground that the signatures and thumb marks were not identified by the Notary when the documents were not even required to be notarized under law.43. The court must be satisfied that the deed had been explained to and understood by the party under disability, either before execution or after it under circumstances showing that the deed has been executed with full knowledge and comprehension. Mere execution by such a person, although unaccompanied by duress, protest or obvious signs of misunderstanding or want of comprehensions, is, in itself, no real proof of a true understanding mind in the executant. In the case of execution of a deed by a pardanashin or illiterate lady, the law protects her by demanding that the burden of proof shall in such cases rest not with those who attack but with those who rely on it. It must be proved affirmatively and conclusively that the deed was not only executed by, but was explained to and really understood by the grantor. Ordinarily, the courts insist on proof that the lady had independent legal advice although this may be an absolute and invariable rule and there may be exceptions when the lady is shown to have the business capacity and strength of will and the deed is shown to be in the circumstances not an unnatural disposition of her property. But the general rule is that save in such exceptional cases, the court would demand affirmative proof on the subject of the lady's intelligent understanding and execution of a deed and would not readily hold this onus to have been discharged where it is not shown that the lady had any independent advice.44. Mere presence of the plaintiff (an illiterate person) at the time of drafting or writing is not sufficient to prove that he knew the contents of the document.45. No presumption of undue influence can arise because parties are related to each other or executant is old or of weak character. It was held by the Supreme Court that the court must scrutinise pleadings to find out exercise of undue influence.46. Tangible immovable property of value less than one hundred rupees can be transferred either by registered instrument or by delivery of property. Where possession of property was delivered, sale deed would be valid and enforceable.47.

[s 54.2.4.3] Alteration of sale deed.— Words for reconveyance were entered into the sale deed after its execution but before registration. This was done without knowledge or consent of the buyer. The Court held him to be not bound by such words. He did not know that he was signing an altered deed.48.

[s 54.2.4.4] Contract for Sale.— Section 54 says that a contract for the sale of immovable property or an agreement its sell 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.49. A sale may be preceded by a contract of sale. In a contract of sale of an immovable property, the parties decide that on what terms and conditions the sale will be effective.50. The question arises that does a contract of the sale of immovable property give any right in the property to the purchaser? The section says that a contract of sale does not of itself create any interest in or charge on such property. The English law in this respect is different. In English law, a contract for sale transfers an equitable estate to the purchaser, but, this rule is not applicable in India. In India, the purchaser may sue for the specific performance of the contract and he may also enforce the obligation arising out of the contract against transferees for consideration with notice of contract and gratuitous transferee with or without notice. Therefore, if the purchaser has paid some price, he may acquire a charge upon the property for the money paid by him and he becomes entitled to get it back.51. Just as the seller has a charge on the property for unpaid price [under section 55(4)(b)], the buyer has a charge for price pre-paid. The amount of any purchase- money properly paid by the buyer in anticipation of the delivery and also the earnest money, where the buyer has justification for declining to accept the delivery, constitutes a charge on the property forming subject-matter of sale to the extent of the seller's interest in the property, and therefore, would be an encumbrance on the property.52. Where the charged immovable property is converted into another property or money, the charge will fasten on the property or money into which the conversion has taken place.53. It may be said that the contract for sale is merely a document creating a right to obtain another document i.e., duly executed sale deed.54. A person who enters into a contract of sale does not become entitled to any interest in the land for sale of which the contract was made. He cannot, therefore, apply to retain or set aside the execution of a sale deed of the same land to another person. A person (owner) entered into an agreement to sell an immovable property to another person (P1). Subsequently, the owner entered into another agreement to sell the same property to another person (P2). The subsequent purchaser (P2) was a bona fide purchaser for value without notice of earlier agreement with P1. It was held by the Supreme Court that P1 with whom the owner made first agreement of sale would not be entitled to relief of specific performance against the subsequent purchaser (P2).55. A contract for sale does not confer any title in immovable property. If a person entered into possession of immovable property under contract of sale and is in peaceful and settled possession of property with the consent of the person in whom the title vests, he is entitled to protect his possession against the whole world except a person having a better title than what he or his vendor possesses. If he is in possession of property in part-performance of contract of sale and requirement of section 53A are satisfied, he may protect his interest even against the true owner.56.

[s 54.2.4.5] Contingent agreement.— A contingent agreement of sale cannot be specifically enforced unless the contingency is fulfilled. In this case, the agreement was dependent upon fulfilment of three

conditions. One of the conditions was settlement with labour and the labour agreeing with the contemplated sale. The labour refused to give their consent. It amounted to non-fulfilment of the condition. The transferor could not be compelled to complete the sale. The purchaser was allowed refund of earnest money with 18% interest.57.

[s 54.2.4.6] Sale in Violation of Contract.— A portion of the land in a residential colony was earmarked as a park. The contract between the vendor and residents of the colony was that the land would remain reserved for beneficial enjoyment of all residents of the colony. Even so the vendor transferred the land to a third person. The transfer was held to be voidable.58.

[s 54.2.4.7] Sale of Undivided Estate.— The Karta (manager) of a family sold the family property with knowledge and consent of his minor son. The latter filed a suit for partition of the property and separate possession of his share. It was not dispute that the Karta and his son were entitled to an equal share. Hence, on partition taking place, the portion of the property sold by the Karta would apply to his share in the property. The sale did not cause any prejudice to the share of the son. The court said that the decision of court below to the effect that the sale was valid required no interference.59. In a case of final decree proceedings, the property was still the subject matter of partition. It was held that the transferee pendente lite could exercise all the rights of his transferor. He could thus seek an equitable partition.60.

[s 54.3] Suit on the Basis of Oral Sale A suit was filed under section 54 of the Specific Relief Act, 1963 for declaration of possession and ownership. The plaintiff claimed her possession on the basis of an oral sale. The court said that an oral sale is not recognised under the law. Law recognises only two modes of transfer and sale, namely registered instrument; delivery of possession. The plaintiff was not entitled to declaration even assuming that there was some evidence to show that she was in settled possession.61.

[s 54.4] Cancellation of Sale Deed A transfer by way of sale was effected by a registered deed of transfer. The court said that it became an absolute transfer from vendor to purchaser. The vendor became divested of this ownership. He retained no control or right over the property. Such transfer could not be annulled as cancelled unilaterally by the vendor by executing a deed of cancellation. Such deed cannot be accepted for registration. Cancellation of a sale deed can be ordered only under section 31 of the Specific Relief Act, 1963.62. Unilateral cancellation of an absolute sale deed by a development authority or Assistant District Registrar is not permissible. If the sale deed is found to be void or voidable, the development authority is required to approach the civil court for appropriate remedy in accordance with law. Civil court is the only competent and

exclusive authority to cancel sale deeds on obtaining proof of fraud played by vendor.63. If a transferor wants to cancel the sale deed subsequent to registration, he has to file a civil suit for cancellation under the Specific Relief Act, 1963 or alternatively he can buy back the property from the transferee. He cannot execute a cancellation deed unilaterally nor can he have it registered.64. Where a suit was filed by the plaintiff claiming himself to be the natural son of owner of property having right of pre-emption but he was not found to be the son of owners of property, his claim as co-heir and co-sharer was not maintainable. He was not entitled to the right of pre-emption and to be substituted in the sale deed.65. Non-payment of price is also not a ground for cancellation of a registered sale deed. There was no recital in the sale deed that the title was not to vest unless the price was paid. The suit for cancellation was rejected. The appropriate remedy in such a case is a suit for the price.66. (a) Oral sale of part of Mortgaged Property.—It has been held that during the subsistence of a usufructuary mortgage, the mortgagee can claim title over a part of the mortgaged property on the basis of an oral sale. The mortgagee purchased a part of the mortgaged property for due consideration by means of an oral sale. The court said that an oral sale is not in contravention of section 54.67. Where a joint property was sold by one co-sharer including the portion belonging to the other co-sharer, relinquishment of that share was oral and there was no material on record to show such oral relinquishment, sale was held to be illegal.68.

[s 54.5] Will Where recitals in a document did not show any special features provided for in agreement of sale which are quid pro quo and phraseology and tenor of document indicated that it is a volitional transfer sans consideration and intended to take effect after death, it was executed in capacity of testatrix and not of seller having regard to the consideration and close relationship between the parties, it was held that such document should be construed as a Will.69. Every contract of sale of an immovable property shall be made only by a registered instrument (section 17, Registration Act applicable to the State of Uttar Pradesh). Even though, a contract for sale of immovable property does not by itself create any interest in or charge on such property and only creates a right to obtain another document which will, when executed, create, declare, assign, limit or extinguish any such right, title or interest, nonetheless, the said document or contract for sale of an immovable property is required to be registered in the State of Uttar Pradesh (w.e.f. 1 January 1977).70.

[54.5.1] Revocation of Will.— There were two registered Wills dedicating property in the name Allah. They were revoked by a third Will. Reasons for revocation of earlier Wills and execution of the third Will were given. The testator declared that after her death, the property would devolve upon the beneficiary. By this fact she became owner of the property. After her death, her son became the owner. Then the son acquired an absolute right to execute a sale deed under which the transferee from him became the owner.71.

[s 54.6] Preferential Right to Acquire Joint Family Property Section 22 of the Hindu Succession Act, 1956 puts a restriction on the exercise of the right to transfer property as available under section 54 of the Transfer of Property Act, 1882. A co-sharer can thus prevent transfer of property in favour of a third person. The property in this case had fallen to the share of a member on usual family partition. The member acquired an independent right in respect of that property. He transferred it to a third party purchaser. It was held that the co-sharer was not entitled to claim any preferential right over such property. The court said that existence of an element of jointness is a pre-condition for section 22 to operate.72.

[s 54.7] Agreement for Reconveyance It has been held that an agreement for reconveyance does not create any new right or title in the property. It is only in the nature of a concession or privilege to the beneficiary of reconveyance. Such deed does not require registration. Section 54 of TPA is also not applicable. The Registration Act does not bar cancellation of such deed.73.

[s 54.8] Difference between Sale and Contract of Sale 1. A sale of an immovable property is the transfer of ownership whereas a contract

for sale is merely an agreement for the sale of property in future on terms agreed between the parties. After sale, all the rights and liabilities of the owner transfer into the vendee but in contract of sale no interest of the vendee is as such created in the property. The ownership of the property remains in the vendor. 2. A sale conveys a legal title to the purchaser because absolute interest of the

vendor passes to the vendee (purchaser). A contract of sale does not convey a legal title to the purchaser. It does not create any right in the property or charge upon the property in favour of the party to the contract.74. 3. A sale creates a right in rem whereas a contract of sale creates a right in

personam, where only the promisee (purchaser) can compel the seller-promisor or a subsequent purchaser with notice to execute the promised conveyance. 4. A sale requires a compulsory registration where the sale is of tangible immovable

property of Rs 100 or more, a reversion and any intangible thing whereas a contract of sale does not require any registration. According to a Memorandum of Understanding (MOU) between parties, the plaintiffs paid the price and in return they were promised by the defendant-owner the rights and interest in the property to be developed by them and to be sold by them in the open market. The plaintiffs were also given the right to collect rent from tenants and also to provide permanent alternative accommodation for defendant and her tenants, it was held that it was not mere development agreement but agreement for sale.75. The mere existence of a contract for sale or a decree for specific performance does not confer title on the buyer. Even if the buyer has been put in possession in part performance of the contract in terms of section 53A, it does not confer any title on him. The transfer of title takes place only on the execution and registration of the document of title. Any charge or attachment created over the property by the seller prior to the contract of sale would stand with priority over and above the transfer of property.76.

1. As to limitation to the territorial operation of paras 2 and 3 of section 54, section 1, supra.

These paragraphs extend to every cantonment see section 287 of the Cantonments Act, 1924 (2 of 1924). 2. BOI v Abhay D Narottam, (2005) 11 SCC 520 , a sale of immovable property does not by itself

create any interest or charge upon the property. 3. K Ramakrishnan v Siddhammal, AIR 2002 Mad 241 . 4. Ranjana Nagpal Alias Ranjana Malik v Devi Ram, AIR 2002 HP 166 : 2003 (1) CCC 93 : 2003 (1)

Rec Civ R 696. 5. Shakeela Bano v Mohd Bismil Siraj, AIR 2006 MP 192 : 2007 AIHC 62 (NOC) : 2006 (4) MPHT

104, sale deed executed by father of the respondent when the latter was a minor, held void abinitio. 6. Gangotri Bai v Jeevrakhan Lal, AIR 2006 Chh 88 : 2006 AIHC 2997 : 2006 (5) AKant (NOC)

675, widow of deceased owner executed sale deed for disposing of land, daughter challenged the sale by filing a suit, suit subsequently compromised and compromise decree passed, under the compromise the widow executed a gift deed in favour of the daughter's grandson, the daughter was not allowed to challenge the gift because she had ratified the arrangement and accepted benefits under it. 7. Arjuna Subramanya Reddy v Arjuna China Thangavelu, AIR 2006 AP 362 : 2006 (47) AIC 356 :

2006 (5) Andh LT 231 , suit was under the Specific Relief Act, 1963 for declaration of title and recovery of possession, the defendant contended that, there was oral sale of the property to his brother about 30 years ago and the same was allotted to him, he also raised the plea of adverse possession, the court said that he was not entitled to raise this plea after pleading that there was an oral sale, the oral sale being void under section 54, the plaintiff became entitled to the property and its possession. Jagir Singh v Ranjeet Singh, AIR 2006 Raj 105 : 2006 (1) Raj LR 42 : 2006 (3) Civ LJ 531 , two agreements of sale, one for an advance of Rs 25,00 and the other for Re 1 only, second agreement was on a plain paper this was held to be forgery. Darist Masthanamma v Mandiga Rama Krishna, AIR 2006 AP 286 : 2006 (41) AIC 675 : 2006 (2) Andh LD 534, the plaintiff's claim was that the property in question was purchased by his maternal grandfather out of his money in the name of his wife. Later the plaintiff purchased half of that property by a registered sale deed. Plaintiff's mother disputed this purchase on the ground that the property was a part of her stridhan and only she had exclusive right to sell it. The recitals in the sale deed were to the effect that the maternal grandfather was the real purchaser and beneficiary she being a party to the sale deed; she could not go back on those recitals. Ramlal v Phagua, JT 2005 (9) SC 47 : (2005) 8 Scale 427 : AIR 2006 SC 623 , sale deed executed against a loan with a condition of reconveyance on repayment, on his failure to do so, the lender got her name substituted in revenue records and disposed the property. The High Court held as confirmed by the Supreme Court that the sale conveyed no title to the vendee, the vendee himself had no title and he could not have conveyed a better title to the vendee Hansraj Banga v Ram Chander Agarwal, AIR 2005 SC 2384 : 2005 AIR SCW 2500 : (2005) 4 SCC 572 , a valid sale confirmed by the authorities conferred title as well as ownership. A valid sale of property and ownership are inseparable, the moment price is paid and sale is confirmed, the purchaser becomes the owner Sangeeta Choudhury v Commissioner, Sanchaita Investments, (2004) 9 SCC

48 : AIR 2004 SC 1478 : (2004) 97 CLT 571 , execution of deed of conveyance through court, notice to the original title holder not given, was necessary, case remanded for re-trial. 8. Nachhittar Kaur v Kehar Singh, AIR 2008 P&H 233 : 2007 (2) Land LR 165 , plaintiff's father

executed sale deed for transfer of ancestral land property, there was a custom under the Punjab Customs (Power to Contest) Act, 1920 that such property could be sold only for legal necessity, the fact of legal necessity by oral evidence, the court said that it was not necessary to show that every bit of money was spent on family necessity, the fact of necessity was also established by the fact that the father had borrowed money for family needs. Jayanta Ghose v State of West Bengal, AIR 2008 (NOC) Cal (DB), a person authorised by power-of-attorney to manage fishery did not create any interest in the property of the Fishermen Co-operative Society, the society could terminate his power, he was not allowed to question termination under writ jurisdiction. Yalla Arjuna Prasad v Yalla Gangaraju, AIR 2006 (NOC) 1121 (AP), validity of sale deed questioned on the grounds of fraud and undue influence, but allegations not proved. NG Vigneshawara Bhat v P Srikrishna Bhat, AIR 2006 Ker 322 : 2006 (6) Kant (NOC) 856 : 2006 (1) Ker LJ 7 , sale by owner of major part of the property as well as broken parts, title proved, valid sale. Inder Chand v Jethi, AIR 2006 Raj 251 : 2007 (1) Raj LR 97 : 2006 (3) Raj LW 2248 , sale by sharer of his 2/3 part valid but not that of the remaining 1/3 of which he was not the owner. Subbireddy v KN Sirinivasa Murthy, AIR 2006 Kant 4 : 2005 AIR Kant HCR 2581 : 2005 (6) Kant LJ 489 , transfer during prohibition on alienation under an Abolition Act, to overcome the restriction sale deed executed after the period of restriction was over, not void, seller received whole of the agreed consideration, word transfer includes conveying of title. 9. K Sivanandam v Maragathammal, AIR 2013 Mad 30 : 2012 (3) Mad LW 674 . 10. Jagtar Singh v Gurmit Singh, AIR 2006 P&H 62 : 2006 (1) Punj LR 58 : 2006 (39) AIC 352 ;

defendant claimed ownership on ground of "will" executed by parents in his favour, purchaser failed to ascertain documents relating to parentage of defendant, purchaser held not bona fide purchaser, Jagdambabai v Suresh Kumar, AIR 2017 Mad 224 . 11. Annamalai v Shanmugam, AIR 2008 (NOC) 2889 (Mad). 12. Ratanbai v Basantibai, AIR 2008 (NOC) 1172 (MP). 13. V Ethiraj v S Sridevi, AIR 2014 Kant 58 : 2014 (1) ICC 921 : 2014 (1) Kant LJ 273 . 14. Kaliaperumal v Rajagopal, AIR 2009 SC 2122 : 2009 AIR SCW 2711 : (2009) 4 SCC 193 . 15. Devinder Singh v Fateh Jung Singh, AIR 2018 P&H 70 ; unregistered agreement to sell cannot

confer any title or transfer any interest in any immovable property, Surinder Prasad v Madhur Green, AIR 2018 HP 173 ; agreement to sell does not create any interest in favour of purchaser in respect of property, it is not a transfer under Maharashtra Cooperative Societies Act, 1960, Balwant Vithal Kadam v Sunil Baburaoi Kadam, (2018) 2 SCC 82 . 16. Harmesh Kumar v Maya Bai, AIR 2006 P&H 1 : 2006 (2) ICC 517 : 2005 (3) Punj LR 853 .

Suraj Lamp & Industries Pvt Ltd v State of Haryana, AIR 2009 SC 3077 : 2009 AIR SCW 4944 : (2009) 7 SCC 363 , the Supreme Court deprecated it as illegal and irregular that there should be an open general practice of sales through powers-of-attorney. Special measures should be taken to control the practice; when all parties to power-of-attorney did not sign simultaneously, it was held not to be a valid document as apparently it was based on fraud, consequently the sale transaction was held non est transaction, Veljibhai Mavjibhai Mistry v Joitiben, AIR 2018 (NOC) 479 (Guj). 17. Ashok Kumar Jaiswal v Ashim Kumar Kar, AIR 2014 Cal 92 : 2014 (2) ICC 1 : 2014 (3) Rec

CivR 286 (FB). 18. India Finlease Securities Ltd v Indian Overseas Bank Ltd, AIR 2013 AP 10 : 2012 (6) Andh LD

345 : 2013 (1) BC 18 (CN). The Court did not agree with the decision in K Chidambara Manickam v Shakeena, AIR 2008 Mad 108 : 2008 AIHC 688 (NOC) : 2008 (1) CTC 660 .

19. Sudarsan Mandal v Bhusan Mandal, AIR 2018 (NOC) 668 Ori. 20. M/s MJ Steel Sales v State of Punjab, AIR 2017 P&H 144 . 21. Bhartu v Nawal, AIR 2012 All 91 : 2012 (3) All LJ 309 : 2012 (91) All LR 453 ; when receipt of

sale consideration accepted in registered sale deed, it cannot be set aside on alleged suspicious circumstances, Baljinder Singh v Wattan Singh, AIR 2018 P&H 148 . 22. Misahul Enterprises v Vijaya Srivastava, AIR 2003 Del 15 : 2002 (49) Arb LR 235 : 2002 (100)

DLT 290 ; Dhanbarti Koerin v Shyam Narain Mahton, AIR 2007 Pat 59 : 2007 (2) AIR Jhar. 945 : 2007 (3) CCC 746 , sale deed executed by the plaintiff was without consideration, as such the same was not a legal and valid document, no valid title could pass through it, he could cancel it and was free to execute another sale deed. Rup Singh v Baltej Singh, AIR 2006 P&H 55 ; 2006 (1) Punj LR 161 : 2006 (40) AIC 223 , consideration amount was proved to have been paid in cash before the Sub-Registrar, nobody was produced as a witness from that office to show that recital in the sale deed to that effect was not correct, the sale was held to be for valid consideration. 23. Hakim Singh v Ram Sanehi, AIR 2001 All 231 : 2001 All LJ 1718 : 2001 (43) All LR 534 . 24. (1857) LR 10 EX 153 : 44 LJ Ex 94. TV Aliyas v Aboobacker, AIR 2007 (NOC) 188 (Ker) :

(2006) 2 Ker LJ 790 , the vendor received advance money but refused to execute sale deed sayingthat there was no agreement to sell and that he had taken money only by way of loan and blank signature taken from him was converted into agreement, he could not prove this fact, he was bound by his agreement. Shamim Afroz v Mehfooz-ul Hasan, AIR 2007 MP 19 : 2007 (1) MPLJ 103 : 2007 (3) Civ LJ 820 , attempt to evade agreement by setting up theory of bogus transaction, failed. 25. Matadin Yadav v Midas Lids Pvt Ltd, AIR 2014 (NOC) 295 (Del), there is nothing in the Actto

prevent payment in advance of the entire sale consideration. Kammana Sambamurthy v Kalipatnapu Atichuamma, AIR 2011 SC 103 : (2011) 11 SCC 153 , a part of the consideration was paid in advance at the time of execution of sale deed, remaining amount was made payable at the time of registration within time fixed. The agreement was held to be a concluded contract of sale. 26. Nrusinghanath Deb v Banamali Panda, AIR 1970 Ori 218 . 27. Ajmer Singh v Nishi Kumar, AIR 2004 P&H 85 : 2004 (17) AIC 355 : 2003 (3) Punj LR 728 . 28. Samadh Baba Narain Dass Ba-Jhaman Swami Ram Tirath v Surta, AIR 2002 P&H 108 : 2002

(2) ICC 660 : 2002 (2) Punj LR 330 . 29. Chaudhary Ramesar v Prabhawati Phool Chand, AIR 2012 All 173 : 2012 (5) All LJ 494 : 2012

(6)ADJ 714 . 30. AIR 1993 MP 5 : 1993 Jab LJ 67 : 1993 MPLJ 333 ; Sree Tirumala Housing Pvt Ltd v GPR

Housing Pvt Ltd, AIR 2006 AP 392 : 2006 (5) Andh LD 359 : 2006 (5) Andh LT 532 , an agreement to sell was followed by delivery of possession, lay out was prepared and the land was also sold to many third parties, held the agreement was chargeable as conveyance under Article 47A of the Stamp Act, 1899. 31. Mahabunnisa Begum v Bhalabhadra Vijayalakshmi, AIR 2006 (NOC) 928 (AP), plaintiff proved

his purchase of the property, purchase and identity of the property were proved by the registered deed, defendant who was in possession denied genuineness of the sale deed and claimed ownership by adverse possession, but could not prove it, the plaintiff had overwhelming evidence in his favour which included testimony of the vendor also, the court recorded a finding in favour of the plaintiff. Brijvasilal v Abdul Haji, (2001) 9 SCC 367 , where property is less than Rs 100 in value, to complete the sale its possession must be delivered. Raj Bahadur v Babu Lal, AIR 2011 All 48 , sale of such property is complete when delivery of possession takes place either on the basis of a writing or otherwise. Where delivery of possession is established,

anything in writing is not material; name of defendant appeared in the revenue record, plaintiff purchaser did not apply for mutation of revenue papers in his name, plaintiff failed to establish the factum of delivery of possession as per the sale deed which showed delivery of possession, plaintiff was held not entitled to relief of possession, Inderjeet Singh v Nasim Meman, AIR 2017 (NOC) 729 Chh. 32. G Ram v Delhi Development Authority, AIR 2003 Del 120 : 2002 (98) DLT 800 : 2002 (64) DRJ

140 ; Saubhagaya Ranjan Kanungo v Prafulla Mohapatra, AIR 2007 (NOC) 2527 (Ori), agreement for sale of land at Rs 60,000, Rs 30,000 accepted in advance waiting for permission of Urban Land Authority, balance paid afterwards, registered document, no fraud or coercion, document was held to be a valid agreement of sale. Rambhau Namdeo Gajre v Narayan Bapuji Dhotra, AIR 2004 SC 4342 : (2004) 8 SCC 614 : 2004 AIR SCW 5106, agreement to sell property worth more than Rs 100, no interest is created in favour of the buyer unless the transfer is effected by a registered instrument Appineni Vidyasagar v State of Andhra Pradesh, (2004) 11 SCC 186 , surrender of possession to the buyer without registered sale deed does not constitute the buyer as the owner, the buyer's suit on the basis of adverse possession was also dismissed Rajureshawar Associates v State of Maharashtra, AIR 2004 SC 3770 : (2004) 6 SCC 362 : (2004) 6 Scale 118 , Government land allotted for establishing a mill subject to certain conditions, the land resumed because conditions not fulfilled, built area allowed to be sold, then by a number of errors, the entire land, happened to be sold without Government, approval, the sale set aside, Government directed to refund sale consideration with 1170 interest for the period during which the money remained with it. Syndicate Bank v Estate Officer and Manager, APIIC Ltd, AIR 2007 SC 3619 : (2007) 8 SCC 361 : 2007 (10) Scale 609 , a complete title over a property can be acquired by a vendee only when a deed of sale is executed and registered by the vendor in terms of section 54 Appineni Vidyasagar v State of Andhra Pradesh, (2004) 1 SCC 186 , unregistered sale deed, no title conveyed, property surrendered under ceiling law, transferee was not the owner. In Syed Basheer Malik v Jameela Begum, AIR 2016 NOC 395 (Kant), the production of a registered sale deed was held to be sufficient proof of the transaction, unless its executor denies it. An owner of property cannot relinquish ownership just only by an affidavit stating that the property is worth more than Rs 100 in value. Such relinquishment cannot confer any ownership on the person favoured by it. 33. Suraj Lamp and Industries Pvt Ltd v State of Haryana, (2012) 1 SCC 656 : AIR 2012 SC 206

:2011 AIR SCW 6385. A general power of attorney under which a property does not amount to transfer. The power has to be exercised through registration of a sale deed and only then it has the effect of a transfer. Overruling Asha M Jain v Canara Bank, (2001) 94 DLT 841 ; claim to be owner and in possession of a property on the basis of photocopy of agreement to sell between the claimant and the erstwhile deceased owner, forensic expert opined that signature on photocopy did not appear to be of deceased. Suraj Lamp and Industries case followed that an agreement to sell which is not a registered deed of conveyance would not meet the requirements of sections 54 and 55, claimant was not held entitled to any right, title or interest in the said property and to claim membership of the cooperative housing society, Greater Bombay Co-op Bank Ltd v Nagraj Ganeshmal Jain, (2017) 15 SCC 316 . 34. AIR 1998 SC 3006 : 1998 AIR SCW 2860 : (1998) 7 SCC 498 . Where the question as to title

of property was not yet decided but the order directing execution of sale deed was passed without notice to the original title holder, the order was set aside, Sangeeta Choudhary v Commissioner, Sanchaita Investments, 2004 AIR SCW 433 : (2004) 1 Scale 71 : AIR 2004 SC 1478 . Amol v Deorao, AIR 2011 (NOC) 215 (Bom), sale is complete upon execution and registration of sale deed, ownership then passes, contract for sale is not required to be registered, property remains with the transferor.

35. Bhagwanbhai Karamanbhai Bharvad v Arogyanagar Co-op Housing Society Ltd, AIR 2003 Guj

294 : 2004 (1) Guj LR 506; mere fact that sale deed has been registered had been executed under different Sub-Registrars is not aground for declaring the sale deed void, Birendra Singh v Premton Singha, AIR 2019 (NOC) 169 Gau 36. Laxmi Narain Barnwal v Jagdish Singh, AIR 1991 Pat 99 . 37. V Penchimuthu v Gowrammal, AIR 2001 SC 2446 : 2001 AIR SCW 2731 : (2001) 7 SCC 617 ;

plaintiff and his deceased uncle borrowed loan from defendant through his relative, in the suit for reconveyance of sale deed and possession, he pleaded that the sale agreement and power of attorney executed in favour of the relative was merely security, relative executed sale deed in favour of defendant after a lapse of 11 years, sale deed was held void, the plaintiff was held entitled to reconveyance of sale deed and vacant possession, Kulwinder Singh Manku v N Jaishankar, AIR 2018 (NOC) 648 Mad.. 38. Bhabhidutt v Ramlalbayamal, AIR 1934 Rang 303 : 152 IC 431. 39. Lakhwinder Singh v Paramjit Kaur, AIR 2004 P&H 6 : 2003 (3) Punj LR 837 : 2004 (1) CCC 82 . 40. Dev Kishan v Ram Kishan, AIR 2002 Raj 370 : 2002 (3) Raj LR 706 : 2002 (3) CCC 577 .

Ningappa Bharamappa Sogi v Govt of Karnataka, AIR 2011 Kant 115 : 2011 (2) AIR Kant R 1, agreement of sale coupled with delivery of possession in part performance, created rights and therefore registration became necessary; general power of attorney issued by first defendant in favour of money lender and second towards security of loan, loan being repaid, notice issued for cancellation of power of attorney, money lender fraudulently executed sale deed in favour of plaintiff, sale deed held invalid, J Bhuvneswari v P Tamil Selvi, AIR 2018 (NOC) 902 Mad. 41. Biswanath Sahu v Tribeni Mohan, AIR 2003 Ori189 : 2003(3) Civ LJ 806 : 2003(1) Ori LR 522 . 42. Sarup Chand v Surjit Kaur, AIR 2002 P&H 54 : 2001 (4) ICC 775; suit for specific performance

on the basis of unregistered sale deed is maintainable, Shivdaya v Banwari Law, AIR 2018 Raj 158 ; in a suit for declaration of title and permanent injunction, plaintiff's claim based on unregistered agreement to sell was not held inadmissible, Sarbati v State of Rajasthan, AIR 2018 Raj 156 ; unregistered sale deeds executed in 1960 and 1963 having value of property above Rs 100 are not admissible in evidence even for collateral purposes, Bali Devi v Chhagan Lal, AIR 2017 (NOC) 271 Raj; plaintiff claimed uninterrupted possession on the basis of unregistered sale deed of 1951, possession not denied under suo motu proceedings of Orissa Regulation, 1956, defendant did not plead forgery, plaintiff permitted to construct shops and let out premises, no close relationship between plaintiff and defendant, plaintiff entitled to declaratory relief on the basis of presumption regarding nature of possession of plaintiff as that of owner, Mangru Oram v Abdul Razak (Dead), his LRs, AIR 2017 (NOC) 901 Ori; sale of property by original owner to grandsons was challenged by sons on the ground that sale consideration never passed to grandfather. However, original sale deed was neither produced not marked as exhibit, witnesses were also not examined to prove that no consideration had passed, sons were not entitled to relief of declaration of title and injunction as they failed to prove their case, Rajau Ram v. Rajaram Girdhari Lal Sahu, AIR 2019 (NOC) 171 Chh; original owner sold the property first to plaintiff and then to defendant, subsequent sale was held invalid, plaintiff was held was entitled to permanent injunction, Balu v. Rajakamalanathan, AIR 201 (NOC) 183 Mad 43. Bhagwanbhai Karamanbhai Bharvad v Arogyanagar Co-op Housing Society Ltd, AIR 2003 Guj

294 : 2004 (1) Guj LR 506. Udai Sapkota v Laxmi Prasad Sapkota, AIR 2013 Sikkim 21 : 2013 AIR CC 1222 Sikkim, the scribe of the document entered the witness box and proved its contents duly supported by attesting witness, the son of purchaser who was the witness, unequivocally corroborated execution of the document. The Court said that it was immaterial that the executant himself did not come to the witness box, sale deed stated "complete sale" and though it talked of a written money receipt, it was in fact found to be sale deed. Anu Dutta v Lolit Kalita,

AIR 2013 Gau 178 , plaintiff could not prove that the thumb impression appearing on the sale deed was that of his vender, rejected; sale deed does not require any attesting witnesses like gift deed; section 68 of the Evidence Act which deals with examination of attesting witnesses to prove execution of document does not apply to sale deed, Bayanabai Kaware v Rajendra, (2018) 1 SCC 585 . 44. Labanya Singh v Tapoi Singh, AIR 2003 Ori 155 ; Markande v Sudama Chaubey, AIR 2007 All

70 : 2007 (66) All LR 441 : 2007 (1) All LJ 556, no consent for sale was obtained because the owner consented to the execution of a power of attorney, but this consent was misused and insteada sale deed was executed, sale deed was cancelled by the court; pardanashin lady had experience of executing other documents concerning her property and also had knowledge about boundaries of property, sale deed held valid as it was sufficient to infer intelligent execution, Radhamani Bewa (Rout) v Braja Sundar Patnaik, AIR 2017 (NOC) 406 Ori. 45. Balram Kirar v Ramkrishna, AIR 2002 MP 139 : 2002 (4) Civ LJ 670 : 2002 (3) MPLJ 268 . 46. Jamila Begum (Dead) through Legal Representatives v Shami Mohd (Dead) through Legal

Representatives, AIR 2019 SC 72 . 47. Ram Chandra v Hari Kirtan, AIR 2004 All 345 : 2004 All LJ 3003 : 2004 (2) All CJ 1591;

Muddasani Sarojana v Muddasani Venkat Narasaiah, AIR 2007 AP 50 : 2007 (50) AIC 813 , there can be a valid sale even in the absence of actual delivery of possession. If there is a recital in the sale deed to the effect that possession was delivered and if the purchaser says that there was no factum of delivery of possession at the time of sale, he would have to substantiate that fact. Suluguru Vijaya v Pulumati Manjula, AIR 2007 AP 35 : 2007 (52) AIC 475 : 2007 (2) Andh LT 218 , decree for execution of sale deed implies decree for delivery of possession, omission to make any specific plea for delivery of possession not fatal to the case, order can be passed directing judgment debtor to deliver possession of property to the decree-holder. 48. Rathnamurthy (Dr) v Ramappa, (2011) 1 SCC 158 . 49. Raheja Universal Ltd v NAC Ltd, (2012) 4 SCC 148 : AIR 2012 SC 1440 . 50. Where there was no concluded contract between the parties as the appellant, who was a

contracting party, was acting only on behalf of third person and unless that third person (party to the contract) agreed on terms and conditions there could be no completed contract, Satya Prakash Goyal v Ram Krishna Mission, AIR 1991 All 343 : 1991 (1) All WC 270 : 1991 CCC 375. 51. Section 55(6)(b) of Transfer of Property Act, 1882. 52. Asgar S Patel v UOI, AIR 2000 SC 2222 : 2000 AIR SCW 2271 : (2000) 5 SCC 311 . 53. Delhi Development Authority v Skipper Construction Co Pvt Ltd, AIR 2000 SC 573 : 2000

AIRSCW 113 : (2000) 10 SCC 130 . 54. Crest Hotel Ltd v Assistant Superintendent of Stamps, AIR 1994 Bom 228 : 1994 (4) Bom CR

35 : 199 Mah LJ 1261. 55. Jagan Nath v Jagdish Rai, AIR 1998 SC 2028 : 1998 AIR SCW 1883 : (1998) 5 SCC 537 . 56. Ramesh Chand Ardawatiya v Anil Panjwani, 2003 (2) RCR (Civil) 829 (SC) : 2003 (2) PLR 636

(SC) : AIR 2003 SC 2508 ; Prem Kumar Chawla v Vijay Singh, 2003 (1) RCR (Civil) 144 : 2002 (3) PLT 517 (P&H). 57. Nandkishore v Lalbhai Mehta, AIR 2015 SC 3796 . 58. Tara Devi v Raj Shekhar, AIR 2007 (NOC) 143 (All) : (2006) 6 All LJ 558. 59. P Murugasamy v C Palanisamy Gounder, AIR 2007 (NOC) 61 (Mad). 60. Syed Basheer Malik v Jameela Begum, AIR 2016 NOC 395 (Kant). 61. Pankajakshy v Devaki Rama Krishnan, AIR 2011 Ker 30 . 62. Latif Estate Line India Ltd v Hadeeja Ammal, AIR 2011 Mad 66 (FB); where defendant got

signature of plaintiffs on the sale deed in the garb of getting grants disturbed to patients from

disease of leprosy, cancellation of sale deed was held to be just and proper, Champa Devi v Sudama Dubey (Dead), AIR 2017 SC 3433 . 63. Manjunath Shetty v Bangalore Development Authority, AIR 2018 Kar 82 ; under regulation 26,

Andhra Pradesh Registration Rules, (1960), the sub-registrar is the competent authority to register unilateral deed of cancellation of earlier registered sale deed, no prior notice to parties to deed of conveyance is required, ex parte registration was held valid, Vatumalli Laxmi Prasanna v State of Telangana, AIR 2018 Hyd 32 . 64. Thota Ganga Laxmi v Govt of Andhra Pradesh, (2010) 15 SCC 207 : (2011) 3 Ker LT 345 :

(2012) 1 Andh LD 90; K Raju v Bangalore Development Authority, AIR 2011 (NOC) 341 (Kant), even by consent or agreement between the purchaser and seller, a sale deed cannot be annulled such power lies with the Court and only the seller can ask for it, but the seller cannot sit in judgment over validity of sale deed. 65. Kailashchandra v Sant Ramtaram Guru Sant, AIR 2017 (NOC) 1060 Raj. 66. Key Pee Buildtech Pvt Ltd v Shahjahan Begum, AIR 2015 NOC 1061 (Raj); sale deed executed

on payment of full consideration in favour of allottees, the condition to complete construction within two years in allotment letter but not in the sale deed, corporation had no power to cancel the allotment or demand payment of 50% of prevailing market value of plots for breach of the condition, Andhra Pradesh Infrastructure Corp Ltd v SN Raj Kumar, AIR 2018 SC 1981 ; failure of defendant to discharge burden of proof when she was shown as a married woman although she was unmarried and her father was shown to be her husband, sale deed was held to be invalid, Babita alias Chhabina Pani v Uma Satapathy, AIR 2018 (NOC) Ori. 67. Bhikari Naik v Baban Sahoo, AIR 2009 Ori 38 : 2008 (69) AIC 808 : 2008 (1) CLR 937 . V

Ethiraj v S Sridevi, AIR 2014 Kant 58 : 2014 (1) ICC 921 : 2014 (1) Kant LJ 273 . 68. Baldev Raj Sharma v Kanta Devi, AIR 2017 P&H 119 . 69. Rukminibai v Vankoba Rao, AIR 2003 Kant 473 : ILR 2003 (3) Kant 2192 : 2003 (2) KCCR

1434 : 2003 (4) Kant LJ 416 . 70. Surendra Kumar v Amarjeet Singh, AIR 2004 All 335 : 2004 All LJ 2993 : 2004 (20) AIC 431 . 71. Aqeel Ahmad v Mohd Moin, AIR 2014 (NOC) 303 (All). 72. Haren Sarma v Renu Borthakur, AIR 2007 Gau 70 : 2007 (53) AIC 692 : 2007 (3) Gau LT 410. 73. Ram Sagar Devi v Ghuturi Devi, AIR 2008 Pat 187 : 2009 AIR SCW 4944 : (2009) 7 SCC 363 . 74. Munnabai v Barelal Lodhi, AIR 2007 (NOC) 2478 (MP), two documents, namely agreement

for sale and sale deed were executed on the same day, the real transaction was that of loan, only for security purposes, the sale deed was executed only nominally for security purposes, there was no intention of giving effect to the sale, this finding of fact by the lower court could not be interfered with, borrowers had the right to return the money and recover their property. 75. Volition Instrument Pvt Ltd v Madhuri Jitendra Mashroo, AIR 2003 Bom 360 : 2003 (2) All MR

900 : 2003 (5) Bom CR 262 . 76. Kumaran v Kumaran, AIR 2011 Ker 75 : 2010 AIHC 745 (NOC).

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER III OF SALES OF IMMOVABLE PROPERTY This chapter consists of four sections which can be divided into two groups:— Group A—"Sale" defined (sections 54, 55 and 56) Group B—Discharge on encumbrances on sale (section 57).

Group A—Sale [s 55] Rights and liabilities of buyer and seller.— In the absence of a contract to the contrary, the buyer and the seller of immoveable property respectively are subject to the liabilities, and have the rights, mentioned in the rules next following, or such of them as are applicable to the property sold:— (1) The seller is bound— (a) to disclose to the buyer any material defect in the property 77.[or in the

seller's title thereto] of which the seller is, and the buyer is not, aware, and which the buyer could not with ordinary care discover; (b) to produce to the buyer on his request for examination all documents of

title relating to the property which are in the seller's possession or power; (c) to answer to the best of his information all relevant questions put to him

by the buyer in respect to the property or the title thereto; (d) on payment or tender of the amount due in respect of the price, to

execute a proper conveyance of the property when the buyer tenders it to him for execution at a proper time and place; (e) between the date of the contract of sale and the delivery of the property,

to take as much care of the property and all documents of title relating thereto which are in his possession as an owner of ordinary prudence would take of such property and documents; (f) to give, on being so required, the buyer, or such person as he directs, such

possession of the property as its nature admits; (g) to pay all public charges and rent accrued due in respect of the property

up to the date of the sale, the interest on all encumbrances on such property due on such date, and, except where the property is sold subject to encumbrances, to discharge all encumbrances on the property then existing. (2) The seller shall be deemed to contract with the buyer that the interest which the

seller professes to transfer to the buyer subsists and that he has power to transfer the same: Provided that, where the sale is made by a person in a fiduciary character, he shall be deemed to contract with the buyer that the seller has done no act whereby the property is encumbered or whereby he is hindered from transferring it.

The benefit of the contract mentioned in this rule shall be annexed to, and shall go with, the interest of the transferee as such, and may be enforced by every person in whom that interest is for the whole or any part thereof from time to time vested. (3) Where the whole of the purchase-money has been paid to the seller, he is also

bound to deliver to the buyer all documents of title relating to the property which are in the seller's possession or power: Provided that, (a) where the seller retains any part of the property comprised in such documents, he is entitled to retain them all, and, (b) where the whole of such property is sold to different buyers, the buyer of the lot of greatest value is entitled to such documents. But in case (a) the seller, and in case (b) the buyer, of the lot of greatest value, is bound, upon every reasonable request by the buyer, or by any of the other buyers, as the case may be, and at the cost of the person making the request, to produce the said documents and furnish such true copies thereof or extracts therefrom as he may require; and in the meantime, the seller, or the buyer of the lot of greatest value, as the case may be, shall keep the said documents safe, uncancelled and undefaced, unless prevented from so doing by fire or other inevitable accident. (4) The seller is entitled— (a) to the rents and profits of the property till the ownership thereof passes

to the buyer; (b) where the ownership of the property has passed to the buyer before

payment of the whole of the purchase-money, to a charge upon the property in the hands of the buyer, 78.[any transferee without consideration or any transferee with notice of the non-payment], for the amount of the purchase-money, or any part thereof remaining unpaid, and for interest on such amount or part 78[from the date on which possession has been delivered]. (5) The buyer is bound— (a) to disclose to the seller any fact as to the nature or extent of the seller's

interest in the property of which the buyer is aware, but of which he has reason to believe that the seller is not aware, and which materially increases the value of such interest; (b) to pay or tender, at the time and place of completing the sale, the

purchase- money to the seller or such person as he directs: Provided that, where the property is sold free from encumbrances, the buyer may retain out of the purchase-money the amount of any encumbrances on the property existing at the date of the sale, and shall pay the amount so retained to the persons entitled thereto; (c) where the ownership of the property has passed to the buyer, to bear any

loss arising from the destruction, injury or decrease in value of the property not caused by the seller; (d) where the ownership of the property has passed to the buyer, as between

himself and the seller, to pay all public charges and rent which may become payable in respect of the property, the principal moneys due on any encumbrances subject to which the property is sold, and the interest thereon afterwards accruing due.

(6) The buyer is entitled— (a) where the ownership of the property has passed to him, to the benefit of

any improvement in, or increase in value of, the property, and to the rents and profits thereof; (b) unless he has improperly declined to accept delivery of the property, to a

charge on the property, as against the seller and all persons claiming under him, 79.[***] to the extent of the seller's interest in the property, for the amount of any purchase-money properly paid by the buyer in anticipation of the delivery and for interest on such amount; and, when he properly declines to accept the delivery, also for the earnest (if any) and for the costs (if any) awarded to him of a suit to compel specific performance of the contract or to obtain a decree for its rescission. An omission to make such disclosures as are mentioned in this section, paragraph (1), clause (a), and paragraph (5), clause (a), is fraudulent.

Comments [s 55.1] Rights and Liabilities of Buyer and Seller (Section 55) This section deals with rights and liabilities of both the buyers and sellers. The obligations imposed by this section are covenants and are in the nature of statutory obligations. Rights and liabilities of the buyer and seller can be categorised into two:— (I) Before completion of sale (II) After completion of sale

[s 55.1.1] Before Completion of Sale (1) Seller's Liabilities:— (i) To disclose material defects – section 55(1)(a) (ii) To produce title-deeds for inspection – section 55(1)(b) (iii) To answer questions as to title – section 55(1)(c) (iv) To execute a proper conveyance – section 55(1)(d) (v) To take care of property and title deed – section 55(1)(e) (vi) To pay public charges and rent accrued – section 55(1)(g)

(2) Seller's Rights— (i) To take rents and profits – section 55(4)(a)

(3) Buyer's Liabilities— (i) To disclose facts materially increasing value of property – section 55(5)(a) (ii) To pay the price – section 55(5)(b)

(4) Buyer's Rights— (i) To charge for price prepaid – section 55(6)(b)

[s 55.1.2] After Completion of Sale (5) Seller's Liabilities— (i) To give possession – section 55(1)(f) (ii) Implied covenant for title – section 55(2) (iii) To deliver title deeds on receipt of price – section 55(3)

(6) Seller's Rights— (i) Charges for price unpaid – section 55(4)(a)

(7) Buyer's Liabilities— (i) To bear loss to the property – section 55(5)(c) (ii) To pay out goings – public charges and rents – section (5)(d)

(8) Buyer's Rights (i) Benefit of increment – section 55(b)(a)80.

[s 55.2] Rights and Liabilities (Duties) of Seller and Buyer In a sale, there is a transfer of ownership of the property from the seller to the buyer. The seller may transfer an absolute interest in the property to the buyer or some of the rights. It all depends upon the intention of the parties. When we say that the sale is subject to the contrary intention, it means that the terms and conditions of the sale deed will be applicable to transfer of ownership. However, section 55 itself has given detailed rights and liabilities of both the seller and the buyer not only before the sale but after the completion of the sale. These have been taken up one by one:—

[s 55.2.1] Duties (Liabilities) of Seller (i) Seller's Duty of Disclosure [Section 55(1)(a)].—The seller is bound to disclose to the buyer any material defect which is present either in the property or in the title of the seller to the property. About such a defect only the seller is aware but not the buyer and the buyer could not discover that defect with ordinary care. It is necessary that the defect must be a material defect about which if the buyer had known he would not have purchased that property. The defects in the title may be encumbrance or charge on the property, existence of an easement (not easement of right) and restrictive covenants etc. The defects in the property may include a right of way and existence of nuisance in the neighbourhood.

In the words of Tindall CJ, "the material defect must be of such a nature that it might be reasonably supposed that if the buyer had been aware of it he might not have entered into the contract at all, for he would be getting something different from what he contracted to buy."81. At the time when the agreement for sale of land was executed, there was no notification in existence for acquisition of the land for establishment of military cantonment, though the proposal for notification was pending with the government. It was held that the seller was not bound to disclose such fact. There was no material defect which required disclosure. The buyer refused to buy. He was not allowed to recover the earnest money paid by him to the seller.82. (ii) To Produce Title-deeds [Section 55(1)(b)].—The seller is bound to bring all the documents of title relating to the property in his possession or power for the inspection of the buyer. The seller is bound to produce all the documents demanded by the buyer for his examination. The buyer should examine all the documents relating to the property for his own protection. The documents may be examined either at the seller's place or buyer's place. If the buyer does not demand any such document, the seller is under no duty to produce them. Where the buyer does not examine the title deeds, the court will presume that he is satisfied with the authority and title of the sell etc. If a buyer does not inspect the title-deeds, he would be fixed with the constructive notice of any defect in the seller's power of transfer if it is found later on. Mere entry in record of right showing names of predecessor-in-interest of the vendor and vendee will not be conclusive to draw conclusion that suit property was joint family property, the vendee would derive indefeasible right by virtue of sale deed from the vendor.83. (iii) To Answer Questions as to Title [Section 55(1)(c)].—The seller is bound to answer to the best of his information all the relevant questions put to him by the buyer in respect of the property or its title. Since the buyer is getting the ownership of the property it is in his interest that he must be fully satisfied about the ownership rights of the seller and his authority to make the transfer. That is why, mere inspection of the title-deed is not sufficient. If there are some doubts, the buyer must ask them and the seller must answer them to the satisfaction of the buyer. (iv) To Execute a Proper Conveyance [Section 55(1)(d)].—If is the duty of the buyer to execute a proper conveyance on the payment or tender of the amount due in respect of the price. Conveyance means the transfer of ownership. This is done by the signing of the sale deed or putting thumb-impression on the sale deed by the seller. The duties of both the seller and the buyer under this clause are reciprocal. When the buyer makes the payment the seller has to execute the conveyance. It must be on proper place and proper time. But what is proper place and time, it has not been specified in the Act. The proper place and time may be decided by the parties by their mutual agreement. However, the conveyance must be within reasonable time after tender of price. In case there is no stipulation fixing the time of execution and the seller makes unreasonable delay in executing conveyance, the proper course is to give notice making time the essence of the contract.84. (v) To take care of Property and Title-deeds [Section 55(1)(e)].—This clause says that between the date of contract of sale and the delivery of property, the seller is bound to take as much care of the property and all documents of title relating to it which are in his possession as an owner of ordinary prudence would take of such property and documents. This clause lays down the duty of the seller between the contract of sale and delivery of property. Within this time, the property remains with the seller but only in a trust for the

buyer. He holds the property as a trustee of the buyer because he has already executed the conveyance, only the delivery of the property is to be made. The seller has to preserve the property as well as title-deeds. The extent of care required by this clause is such care as an owner of ordinary prudence would take of his own property. This duty continues till the possession of property is given to the buyer. If the seller fails in performing his duty, he will have to compensate the buyer for the loss occasioned to him. (vi) To Pay Outgoings [Section 55(1)(g)].—This clause says that the seller is bound to pay all public charges and rent accrued due in respect of that property up to the date of sale, the interest on all encumbrances on such property due on such date and except where the property is sold subject to encumbrances, to discharge all encumbrances on the property then existing. Before the completion of the sale, the seller has to pay all the outgoings on the property i.e., all the public charges like rent, revenue, taxes etc. Unless there is any contrary intention, the seller must discharge all the encumbrances, if there are any, on the property. He is not liable to discharge the encumbrances where the property is sold subject to encumbrances. Where the seller does not pay the outgoings and the buyer subsequently pays them, the buyer becomes entitled to be reimbursed by the seller.85. The buyer has a right to require the seller to produce evidence that the property is free from encumbrances. The liability exists before the completion of sale and continues thereafter whether the existence of such charges is discovered before or after the completion of sale.86.

[s 55.2.2] Liabilities (Duties) of Seller after Completion of Sale (i) To Give Possession [Section 55(1)(f)].—The seller is bound to give, on being so required, the buyer or such person as he directs, such possession of the property as its nature admits. The seller is to give possession of the property either to the buyer or his authorised person whenever the buyer so requires.87. The delivery of possession will depend upon the nature of the property to be transferred. In the case of tangible immovable property the physical control is to be given over the property. In the case of intangible immovable property, the possession is symbolic. The possession is to be given after ownership is transferred to the buyer. This means the date of execution of sale deed if there is no contract to the contrary. (ii) Implied Covenant for Title [Section 55(2)].—Sub-section (2) says that the seller shall be deemed to contract with the buyer that the interest which the seller professes to transfer to the buyer subsists and that he has the power to transfer the same. Such a covenant is implied in every sale of immovable property and it is not required to be expressly mentioned in a sale deed. The legal effects of such covenants are given below:— (a) The covenant implies absolute warranty of title. (b) This liability is limited to which the seller professes to transfer. (c) If a defect is found in the seller's title after completion of sale, the buyer would

become entitled to sue for damages and to claim return of the purchase-money if he is dispossessed in consequence of his seller's defective title.88. (d) The covenant runs with the land and it is enforceable by subsequent purchasers

of land.

The proviso to sub-section (2) says that where the sale is made by a person in a fiduciary character, he shall be deemed to contract with the buyer that the seller has done no act whereby the property is encumbered or whereby he is hindered from transferring it. Here the seller acts in a fiduciary capacity i.e., as a guardian or a trustee etc. In such cases, the seller is deemed to have covenanted only that "he has done no act where by the property is encumbered or whereby he is hindered from transferring it." The implied covenant of title does not apply as such in cases where the seller is selling the property as guardian of minor's property or as trustee. The third paragraph of the section says that the benefit of the contract mentioned in this rule shall be annexed to, and shall go with the interest of the transferee as such, and may be enforced by every person in whom that interest is for the whole or any part thereof from time to time vested. This means that the implied covenant for title shall be annexed to the property and it shall run with the land. Therefore, the benefit of this clause is available not only to the buyer but to every subsequent transferee and may be enforced by anyone in whom the interest vests for the whole or any part of it. Section 55(2) of the Transfer of Property Act, 1882 deems implied contract for title in every conveyance and even in cases where there is a completed contract of sale, the purchaser is entitled to cancel the contract and seek the refund of purchase money. When that is so as regards a completed contract, in a contract which is only at an executory stage, it would not be proper in law to force upon the purchaser to purchase the property on the ground that he was aware of the defective or imperfect title at the time of the agreement of sale. It does not prevent in law for the purchaser to compensate any loss or damages which the vendor has sustained in the course of such transaction for which the purchaser has equally contributed his folly.89. Where there was a shortfall in the area of land under transfer which was described by boundaries, it was held that the transferee was entitled to refund of proportionate part of the price for which the area had fallen short. The vendor could not be directed to transfer of a part of his other land to make good the deficiency. The vendee was also allowed interest on the extra paid money from the date of sale.90. (iii) To Deliver Title-deeds on Receipt of Price [Section 55(3)].—Sub-section (3) of section 55 says that where the whole of the purchaser-money has been paid to the seller, he is bound to deliver to the buyer all documents of title relating to the property which are in the seller's possession or power. After the completion of sale when the ownership of property passes on to the buyer, and he pays the price of the property, the seller becomes bound to deliver all the title deeds relating to that property to the buyer which are in his possession or power. The proviso to this clause lays down that— (a) where the seller retains any part of the property comprised in such documents,

he is entitled to retain them all, and (b) where the whole of such property is sold to different buyers, the buyer of the lot

of greatest value is entitled to such documents. But in such cases, the seller and the buyer of highest value respectively are bound upon reasonable request by the buyer (or anyone of the buyers) and at the cost of person making such request to produce the documents and furnish true copies of it. The seller and the buyer of the lot of greatest value has to keep the documents safe, uncancelled and undefaced, unless he is prevented from doing so by fire or other inevitable accident. In a transaction for sale of land by a Government Department, the parties agreed that valuation by the collector should be accepted. It was held that the

parties were estopped from questioning the matter of valuation after the transaction was over. After completion of sale, the contract cannot be said to be void under section 25 of the Contract Act, on the ground of over-pricing or inadequacy of consideration.91.

[s 55.2.3] Seller's Right before Sale (a) Right to take Rents and Profits [Section 55(4)(a)].—This sub-section says that the seller is entitled to the rents and profits of the property till the ownership of it passes to the buyer. Sale is completed when the ownership is transferred to the buyer. Till the ownership is transferred the seller continues to be the owner of the property and in that capacity he becomes entitled to the rents and profits of the property. Till that time the seller has every right to enjoy the profits of the property. In case the buyer takes possession of the property before completion of sale, the seller has the right in such a case to realise interest on unpaid-purchase money. The buyer before paying the price is not legally entitled to get any profit out of property but he gets the benefit after possession. Therefore, the equity requires that the buyer must pay the interest on unpaid purchase money because he cannot have both the benefits of taking rents and profits of the property as well as keeping the purchase-money unpaid.

[s 55.2.4] Seller's Rights after Sale (i) Charge upon Property for Unpaid Price [Section 55(4)(b)].—This clause says that where the ownership of the property has passed to the buyer before payment of the whole of the purchase-money, the seller becomes entitled to a charge upon the property— (a) in the hands of the buyer, (b) any transferee without consideration, or (c) any transferee with notice of non-payment, (d) for the amount of the purchase money or if any part of the purchase money

remaining unpaid, and (e) for interest on such amount of purchase money or any part unpaid from the date

on which the possession has been delivered. The completion of sale of an immovable property does not depend upon the payment of price because the price may be paid or promised to be paid. Therefore, this right has been given for the protection of the seller who has given possession of his property to the buyer but has not received full price. The seller is given a right to recover the unpaid purchase-money from the property. This is known as statutory charge of the seller for the unpaid-price. The charge creates a right of payment out of the property specified. It may be created by the act of parties or by operation of law. Under the sub-section, the charge is created by operation of law and the property specified for securing the money is sale-property. Under this right, the seller is not entitled to retain possession, therefore, the charge is said to be non-possessory lien. The seller may enforce his charge for recovery of purchase-money under section 100 of the Act by a suit against the buyer for sale of the property. However, such a charge

cannot be enforced against any subsequent transferee for value without notice of the charge in favour of the seller. The seller is entitled to claim not only the unpaid price money but also the interest on such amount. Where the buyer is already in possession of the property, the seller is entitled to claim interest from the date on which such possession was delivered, not from the date on which the transfer of ownership took place. The charge created in favour of the seller is an actionable claim (unsecured moneydebt) and is transferable. Therefore, a seller having charge on the property for his unpaid price, can transfer it to a third person. Where the assignment or transfer of such a charge is made through a registered instrument, the assignee of transferee will be entitled to enforce the charge just as the seller would have enforced it himself. However, this statutory charge created in favour of the seller may be waived by an express contract to the contrary or by an implied contract i.e., some conduct inconsistent with the continuance of the charge. If the parties want to exclude the charge, they have to contract in express terms that in case the full price or any part of it remains unpaid, the seller shall not have any charge on the property. The Privy Council observed in a case, "… there is no ground whatever for saying that the charge is excluded by a mere personal contract to defer payment of a portion of purchase-money, or to take the purchase-money by instalments nor is it in their Lordship's opinion, excluded by any contract, covenant or agreement with respect to purchase money which is not inconsistent with the continuance of charge.92. In partition suits, where it is not possible to divide the properties by metes and bounds equally, the properties of distinct proportion and value (unequal) are allotted to a sharer by way of adjustment of the value, the sharer to whom the property of more value is allotted has to be directed to pay the sharer to whom the property with lesser value is allotted by way of equalisation of their shares.93.

[s 55.2.5] Buyer's Liabilities before Completion of Sale (i) To Disclose Facts Materially Increasing Value of Property [Section 55(5)(a)].—Subsection (5) under clause (a) provides that the buyer is bound to disclose to the seller any fact as to the nature or extent of the seller's interest in the property of which the buyer is aware but of which he has reason to believe that the seller is not aware, and which materially increases the value of such interest. The buyer is liable to disclose any fact which materially increases the value of the property to the seller before completion of sale when the seller is not aware about that. The liability of the seller is limited to only those facts which relate to the title or the interest of the buyer and of which only he has knowledge. For example, in Summers v Griffiths,94. an old lady, contracted to sell a property at much less price believing that her rights in the property were not absolute. The buyer had knowledge of the fact that the lady's interest in the property was perfect and absolute but he did not disclose it to the lady. He was held liable for fraud and the sale was set aside. (ii) To Pay the Price [Section 55(5)(b)].—Clause (b) says that the buyer is bound to pay or tender, at the time and place of completing the sale, the purchase-money to the seller or to such person as he direct; provided that where the property is sold free from encumbrances, the buyer may retain out of the purchase-money the amount of any

encumbrances on the property existing at the date of the sale, and shall pay the amount so retained to the persons entitled thereto. For the completion of sale, the seller has the duty of execution of deed and the buyer has corresponding duty of payment of price. The buyer is not bound to pay the full amount before transfer or ownership. He may either pay the price or promises to pay it at the time of completion of sale. The buyer is not bound to pay the price until the conveyance is executed. The buyer may pay the price to the seller or the person directed by him. Where the property is sold free from encumbrances the buyer will tender the full price to the seller but where any encumbrance is still a charge on the property sold, the buyer may pay out such charge-holder and retain that sum from price to be paid to the seller. Where the buyer had paid advanced amount towards the consideration and not the earnest money to the seller and there was no stipulation in the agreement regarding forfeiture of advance amount, it was held that the seller was not entitled to forfeiture of the amount.95.

[s 55.2.6] Buyer's Rights before Completion of Sale (a) To charge for Price Prepaid [Section 55(6)(b)].—According to sub-section (6)(b), the buyer is entitled to a charge on the property unless he has improperly declined to accept delivery of the property, as against the seller and all persons claiming under him, to the extent of the seller's interest in the property for the amount of any purchasemoney properly paid by the buyer in anticipation of the delivery and for interest on such amount. When the buyer properly declines to accept delivery, he becomes entitled to refund of earnest (if any) and for the costs (if any ) also awarded to him in a suit to compel specific performance of the contract or to obtain a decree for its rescission. The principle underlying this section is a trite principle of justice, equity and good conscience. The charge would last until the conveyance is executed by the seller and possession is also given to the purchaser and ceases only thereafter. The charge will not be lost by merely accepting delivery of possession. This charge is a statutory charge in favour of the buyer and is different from contractual charge to which the buyer may become entitled under the terms of the contract and in substance a converse to the charge created in favour of the seller under section 55(4)(b). Consequently, the buyer is entitled to enforce the charge against the property and for that purpose trace the property even in the hands of third parties and even when the property is converted into another form by proceeding against the substituted security, since none claiming under the seller including a third party purchaser can take advantage of any plea based even on want of notice.96. The buyer has a charge on the property for any sum of money which he had paid towards price or as an advance before completion of sale. Where due to the default of the seller or refusal of the seller to execute the conveyance, the sale does not take effect, the buyer has a right to recover all the sums paid together with interest. This charge of the seller is a statutory charge. The buyer's charge exists even if he has possession of the property but the conveyance could not take place due to the seller's fault. The buyer is entitled to interest from the date of payment of price to the seller till the date of delivery of the property to purchaser or till the execution of sale deed, whichever is earlier.

Where relevant clause of the agreement showed that intention of parties is to treat earnest money to be part of prepaid purchase money but the sale deed could not be executed on account of lapses on part of vendor the statutory charge was attracted and the vendor was held liable to refund whole of sum deposited as earnest money and interest due thereon to the buyer.96 The buyer's charge for any sum of money pre-paid under this sub-section is like a seller's charge for unpaid price. In DDA v Skipper Construction Pvt Ltd97. it was held by the Supreme Court that if an immovable property is charged and converted into another property or money then the charge will fasten on that converted property or money. The charge is available not only against the seller but also against all the persons claiming under him. The buyer's charge for price prepaid in anticipation of sale exists when the property has been compulsorily purchased by a competent authority. An example may be taken of the case of Asgar S Patel v UOI98. In this case, the buyer had paid the purchase money in anticipation of fulfilment of the contract of sale. Subsequently, an order of compulsory purchase of the property was passed under section 269(VD) of the Income-Tax Act, 1961 whereby the buyer was excluded from accepting the delivery of property. It was held by the Supreme Court that here too the provisions of section 55(6) (b) of the Transfer of Property Act, 1882 were attracted and the buyer had a charge on the property for the price pre-paid by him. A land was allotted by a trust. The allottee transferred the land with the approval of the trust. It was held that transferee's rights were not more than those of the allottee. He had to sink or swim with the fortune of the transferor. The allotment was cancelled because the allottee was found to be ineligible. The transferee could not claim to continue with the allotment. But considering the facts of the case and willingness shown by the transferee to pay the additional amount, the Supreme Court directed the trust to reconsider his case.99. The buyer's charge comes into force the moment he pays the purchase money or any part of it. A subsequent compromise entered into between seller and buyer and that too at a time when the seller had lost title was held not to efface the statutory charge available to the buyer.100.

[s 55.2.7] Buyer's Liabilities after Completion of Sale (i) To Bear Loss to the Property [Section 55(5)(c)].—Clause (c) says that where the ownership of the property has passed to the buyer, the buyer is bound to bear any loss arising from the destruction, injury or decrease in value of the property not caused by the seller. Therefore, if any loss occurs to the property either by way of accidental destruction or deterioration after the ownership has vested in the buyer, the buyer will bear the loss. (ii) To Pay Outgoings [Section 55(5)(d)].—Clause (d) says that where the ownership of the property has passed to the buyer, as between himself and the seller, the buyer is bound to pay all the public charges and rent which may become payable in respect of the property, the principal moneys due on any encumbrances subject to which the property is sold and interest thereon afterwards accruing due. After the completion of the sale the buyer becomes the owner of the property and he becomes liable to pay the outgoings, for example, Government dues, taxes, rents and revenue etc. This liability is in between the seller and the buyer.

The purchaser of the properties of a company in liquidation is entitled to get a clear title free of all charges or encumbrances, even if there was an attachment by a statutory authority. Dues of such company cannot be recovered from the purchaser. The property in question was purchased on as is where basis is. He applied for fresh electricity connection and not for transfer of the existing connection to his name. He was held to be not liable for arrears of electricity dues of the erstwhile company.101. Where the provisions relating to supply of electricity required the buyer of property to issue that all the existing dues were paid, it was held that he could not apply for new connection till such clearance. He could recover indemnity from his seller.102.

[s 55.2.8] Buyer's Right after Completion of Sale Benefit of Increment [Section 55(6)(a)].—According to this clause, where the ownership of the property has passed to the buyer, the buyer is entitled to the benefit of any improvement in the property or increase in the value of property and to the rents and profits thereof. The buyer is not only entitled to the rents and profits of the property but also to the increase in the value of the property and any improvement in the property.

[s 55.3] Cases 1. Rogers v Hosegood103.—In this case, the purchaser of a plot of land covenanted

not to erect more than one dwelling house on the plot which would be used for residential purpose only. The court held that such a covenant runs with the land and can be enforced by an assignee of the covenantee. 2. Gajapathi v Alagia104.—A sold a property to B After the conveyance, B discovered

that under a decree of partition, a portion of the property had been allotted to C It was held by the court that the sale was fraudulent and the conveyance could be set aside. 3. Central Bank of India v CL Vimla.105.—The case involved debt recovery proceeding

initiated by the Bank. Under a settlement, the property of the guarantor was auctioned. The auction purchaser was put in possession of property and eight years had passed since then. Registration was also got done in his favour. Sons of the guarantor claimed their share in sale proceedings after adjustment of bank dues. The auction purchaser alleged that he was paying a huge amount of Rs 5 lakhs every month on the loans taken for purchasing the property. The court held that the principle of equity and good conscience had come into play. The auction sale could not be set aside at that stage. Possession of the auction purchaser was not to be interfered with.

[s 55.4] Time of Performance Time of performance is not generally of the essence in transactions relating to immovable property. The special circumstances of a particular case may attach importance to time factor. Where the circumstances are such that even a right delay on the part of the vendor would result in price escalation, time of performance may be regarded by the court to be of the essence.106.

[s 55.5] Liability to Pay Taxes The vendor has to pay taxes in respect of the property up to the date of sale. Liability of vendee to pay taxes arises only form date of sale. A suit for realization of due can be filed by the Municipality in respect of a statutory charge created apart from taking recourse to realization of dues as land revenue.107.

[s 55.6] Completion of Sale In a case before the Supreme Court the transferees had not paid the sale consideration at the time of execution of sale deed, and its registration. There was a recital in the sale deed that the vendor had received the entire sale price from the purchaser and had relinquished title and handed over possession. The Supreme Court said that such a recital was of no consequence. The transferor had retained the registration receipt to be exchanged in consideration of sale price. Possession was also not delivered. No sale had taken effect. The transferor's repudiation of the transaction and transfer of the property to another person was valid.108.

77. Ins. by Act 20 of 1929, section 17. 78. Ins. by Act 20 of 1929, section 17. 79. fte words "with notice of the payment" omitted by Act 20 of 1929, section 17. 80. AK Lakshmipathy v Rai Saheb Pannalal Hiralal Lahoti Charitable Trust, AIR 2006 (NOC) 497

(AP) : (2005) 6 Andh LT 238 , explaining the import of the opening words of the section "in the absence of contract to the contrary" the court said that where the terms of the sale between the parties including the marketability of the title, rules stated in the section have no relevance. Where it is clear from the various terms of the agreement that the purchasers entered into the transactions on terms settled between them and the seller, it would not be permissible for either of the parties to turn around and to attempt to introduce new conditions unilaterally as covenants of the agreement to suit their diplomatic overtures. 81. Flight v Booth, (1834) 1 Bing NC 370 : 4 LJCP 66 : (1834) 131 ER 1160 . 82. Sukhdev Kaur v Gurdev Singh, AIR 2011 P&H 122 . 83. Mathuri Bewa v Prafulla Routray, AIR 2003 Ori 136 . 84. Jamshed v Burjorji, AIR 1934 Bom 1 ; purchaser was held not entitled to relief of specific

performance as he did not send written notice calling upon the seller to execute sale deed, Jagannath Mallik v Surendra, AIR 2017 Ori 128 . 85. Nathu Khan v Burtonath Singh, AIR 1922 PC 176 : 66 IC 107. Diamond Infotech Pvt Ltd v

Kolkata MC, AIR 2010 (NOC) 910 (Cal), Municipal Corporation ordered recovery of property tax even after sale from either seller or buyer or both. This was held to be not proper, because tax amount becoming due after sale could be recovered only from the buyer. The payer would be entitled to indemnity from the party actually liable. 86. Abdul Hameed v Shahajaham Begum, AIR 2008 (NOC) 640 (MP), in a decree for specific

performance, direction for delivery of possession was not mentioned. It was found to be an

accidental slip in the decree. The court said that the executing court could issue direction for delivery of possession in the light of section 55(1)(f). 87. Mulla, Transfer of Property Act , 9th Edn. 88. Avadesh Kumar v Zakaul Hussain, AIR 1944 All 243 : ILR 1944 All 612 . 89. RL Pinto v FF Menzes, AIR 2001 Kant 141 : ILR 2001 (1) Kant 3168 : 2001 (3) Kant LJ 571 . 90. Lakhwinder Kaur v Kuljinder Singh, AIR 2007 P&H 117 : 2007 (5) AIR Bom 725 (NOC) : 2008

Punj LR 199. 91. Harendra Nath Ghose v UOI, AIR 2007 (NOC) 282 (Cal) (DB). 92. Webb v Macpherson, (1904) 31 Cal 57 : 30 Ind App 238. 93. CP Mohammed Sayeed v V Kadarantavide Jaseema, 2003 (2) RCR (Civil) 167 (Ker) (DB). 94. (1866) 35 Beav 27. 95. Sunil Jain v Vishal Ram Sahu, AIR 2019 Chh 37 . 96. Videocon Properties Ltd v Dr Balchandra Laboratories, AIR 2004 SC 1787 : (2004) 3 SCC 711 :

2004 AIR SCW 1353. Illickal Joseph v Cholappurath Vrindadevi, AIR 2009 Ker 2 : 2008 (67) AIC 639 : 2008 (2) Ker LT 569 , the buyer's charge on property under sale agreement, enforceable not only against seller but also against all persons claiming under him. The period of limitation for enforcing charge is 12 years from the date on which it became due and not three years. Limitation largely depends on the question whether the plaintiff has improperly declined to accept delivery of property. 97. AIR 2000 SC 573 : 2000 AIR SCW 113 : (2000) 10 SCC 130 . 98. AIR 2000 SC 2222 : 2000 AIR SCW 2271 : (2000) 5 SCC 311 . 99. Baljit Singh v Improvement Trust, Ludhiana, AIR 2009 SC 1254 : 2009 AIR SCW 564 : (2009) 2

SCC 222 . 100. Molly Ajithkumar v Vimala Sasidharan, AIR 2012 Ker 87 : 2012 (1) Ker LJ 499 : 2012 (1) Ker

LT555. 101. Special Officer (Commerce) NESCO v Raghunath Paper Mills Pvt Ltd, AIR 2011 Ori 52 . 102. Carbon Resources Ltd v Assam Electricity Regulatory Commission, AIR 2010 Gau 131 : 2010

(5) Gau LR 29 : 2010 (3) Gau LT 425. 103. (1900) 2 Ch 388 : 69 LJ Ch 652. 104. (1886) 9 Mad 89. 105. AIR 2015 SC 2280 . 106. Harvansh Singh v Bhagwan Das, AIR 2006 (NOC) 1364 (MP) (DB). 107. T Vijendradas v M Subramanian, (2007) 10 SCR 880 : (2007) 8 SCC 751 : (2007) 12 Scale 1 . 108. Janak Dulari Devi v Kapildeo Rai, AIR 2011 SC 2521 : 2011 AIR SCW 3185 : (2011) 6 SCC

555 . The transferee could get no relief under the Specific Relief Act, 1963.

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER III OF SALES OF IMMOVABLE PROPERTY This chapter consists of four sections which can be divided into two groups:— Group A—"Sale" defined (sections 54, 55 and 56) Group B—Discharge on encumbrances on sale (section 57).

Group A—Sale 109.[s 56] 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.]

Comments [s 56.1] Marshalling by Purchaser (Section 56) According to this section— (1) If the owner of two or more properties, (2) mortgages them to one person and then sells one or more of the properties to

another person, (3) the buyer is entitled to have the mortgage-debt satisfied out of the property or

properties not sold to him (subject to the contrary contract) so far as the same will extend (4) But this will not prejudice the rights of— (a) the mortgagee, or (b) persons claiming under him, or (c) of any other person,

who has for consideration acquired an interest in any of the properties.110. The section says that if the owner of two or more properties mortgages them to one person and then sells anyone of those properties to another person, the buyer is entitled to claim that the mortgage-debt be satisfied out of the properties not sold to him. Therefore, this section protects the interest of the buyer and it applies only between the buyer and the seller and not as between the subsequent purchasers. The section is based on the principle that when a person purchases some property free from encumbrances, his absolute interest should not be prejudiced. Marshalling by

purchaser is exercisable only between the buyer and the seller. It cannot be exercised detrimental against the rights of the mortgages or other person claiming under him or any person having an interest in any of the properties. The subsequent purchaser can claim the right of marshalling only if the interest of the prior mortgagee or persons claiming under him or any other person who has acquired interest in any of the properties for consideration is not affected thereby. Illustration A mortgages three properties X, Y and Z to B. Subsequently he sells property X to C free from the encumbrance. Under marshalling, C shall be entitled to insist that B should realise his debts first from properties Y and Z which are unsold. If after exhaustion of Y and Z any part of the debt remains unsatisfied, then only B can draw upon X. Here although C has paid full price for X to A in taking it free from encumbrance, B still has a right to proceed against X unless he has agreed with A and C on payment of a part of the mortgage debt or otherwise that he would have no right to do so. In case there is no such agreement, if B proceeds against X as the last resource, C will be entitled to claim from A the amount actually realised by B from A. The equitable principle has been stated by Lord Eldon in the following words:— "a person having two funds shall not by his election disappoint the party having only one fund; and equity, to satisfy both, will throw him, who has two funds, upon that, which can be affected to him only; to the intent the only fund, to which the other has access, may remain clear to him".111.

The rule of marshalling has been expressed by Dart in the following words:— "If two estates X and Y are subject to a common charge and estate X be sold to A, A will as against his vendor and his representatives have a prima facie equity in the absence of express agreement and whether or not he had notice of the charge, throw it primarily on estate Y in exoneration of estate X."111

The view of some of the High Courts has been that the equitable doctrine of marshalling is meant for benefit of buyers only. This view has been impliedly affirmed by the Supreme Court by observing that the plea of marshalling is a pure question of law and, therefore, it can be raised for the first time in appeal without having been specifically pleaded before the trial Court.112.

109. Subs. by Act 20 of 1929, section 18, for the original section. 110. Muhammad Rafeeq v Bank of Baroda, AIR 2010 Ker 149 : 2010 (4) ICC 130 : 2010 (2) Ker LT

905 , the application of this section has been overridden in cases which fall under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interests Act, 2002, the petitioner in this case was stranger to the loan transaction between the borrower and bank. He purchased one item of the properties from the borrower over which the security interest was created. He could not claim the benefit of section 56 over that item. 111. Aldrich v Cooper, (1803) 8 Vas 382 (395) (Quoted in Mulla), 9th Edn, p 559. 112. JP Builders v A Ramadeo Rao, (2011) 1 SCC 429 : AIR 2011 SC 230 .

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER III OF SALES OF IMMOVABLE PROPERTY This chapter consists of four sections which can be divided into two groups:— Group A—"Sale" defined (sections 54, 55 and 56) Group B—Discharge on encumbrances on sale (section 57).

DISCHARGE OF ENCUMBRANCES ON SALE [s 57] Provision by Court for encumbrances and sale freed therefrom.— (a) Where immoveable property subject to any encumbrances, whether immediately

payable or not, is sold by the court or in execution of a decree, or out of court, the court may, if it thinks fit, on the application of any party to the sale, director allow payment into Court,— (1) in case of an annual or monthly sum charged on the property, or of a capital

sum charged on a determinable interest in the property—of such amount as, when invested in securities of the Central Government, the Court considers will be sufficient, by means of the interest thereof, to keep down or otherwise provide for that charge, and (2) in any other case of a capital sum charged on the property—of the amount

sufficient to meet the encumbrance and any interest due thereon. But in either case there shall also be paid into court such additional amount as the Court considers will be sufficient to meet the contingency of further costs, expenses and interest, and any other contingency, except depreciation of investment, not exceeding one-tenth part of the original amount to be paid in, unless the Court for special reasons (which it shall record) thinks fit to require a large additional amount. (b) Thereupon the Court may, if it thinks fit, and after notice to the

encumbrance, unless the Court, for reasons to be recorded in writing, thinks fit to dispense with such notice, declare the property to be freed from the encumbrance, and make any order for conveyance, or vesting order, proper for giving effect to the sale, and give directions for the retention and investment of the money in Court. (c) After notice served on the persons interested in or entitled to the money

or fund in Court, the Court may direct payment or transfer thereof to the persons entitled to receive or give a discharge for the same, and generally may give directions respecting the application or distribution of the capital or income thereof. (d) An appeal shall lie from any declaration, order or direction under this

section as if the same were a decree. (e) In this section "Court" means (1) a High Court in the exercise of its

ordinary or extraordinary original civil jurisdiction, (2) the Court of a

District Judge within the local limits of whose jurisdiction the property or any part thereof is situate, (3) any other Court which the State Government may, from time to time, by notification in the Official Gazette, declare to be competent to exercise the jurisdiction conferred by this section.

Comments [s 57.1] Discharge of Encumbrances on Sale (Section 57) (1) Where any immovable property, subject to any encumbrance, is sold by the court or in execution of a decree or out of court, the court may, on the application of any party to the sale, direct or allow payment into court— (a) in case of an annual or monthly sum charged on property or of a capital sum

charged on a determinable interest in the property of such amount as, when invested in securities of the Government of India will be sufficient by means of the interest thereof, to keep down or otherwise provide for charge; (b) and in any other case, of a capital sum charged on the property of the amount

sufficient to meet the encumbrance and any interest due thereon; In either case, such additional amount as the court considers sufficient to meet the contingency of further costs, expenses, and interest and any other contingency, must also be paid into the court. (3) Thereupon, the court may, if it thinks fit, and after notice to the encumbrancer, declare the property to be free from the encumbrance, and make any order for conveyance, or vesting order, for giving effect to the sale. (4) After notice is served on the persons interested in, or entitled to, the money or fund in court, the court may direct payment or transfer thereof to the person entitled to receive or give discharge for the same, and generally may give direction respecting the application or distribution of the capital or income thereof. (5) An appeal lies from any declaration, order, or direction under this section as if the same were a decree. This section gives the procedure for discharging an encumbrance on a property which is sold free from an encumbrance. This can be done only by the court's order. Court cannot act suo motu. The power given to the court under the section is intended to facilitate the alienation of encumbered estates by relieving the land from the encumbrance and substituting for the land another form of security. Different rules for payment are prescribed for different kinds of encumbrances.

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER

IVOF

MORTGAGES

OF

IMMOVABLE

PROPERTY

AND

CHARGES This Chapter can be categorised into following:— Part I—Mortgage defined Part II—Rights and liabilities of Mortgagor Part III—Rights and liabilities of Mortgagee Part IV—Priority Part V—Marshalling and Contribution Part VI—Deposit in Court Part VII—Suits for foreclosure, sale or Redemption. (Repealed) Part VIII—Foreclosure and sale (Repealed) Part IX—Redemption Part X—Anomalous Mortgage Part XI—Attachment of Mortgaged Property (Repealed) Part XII—Charges Part XIII—Notice and Tender

Part I: Mortgage Defined [s 58] "Mortgage", "mortgagor", "mortgage-deed" defined.—

"mortgagee",

"mortgage-money"

and

(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. (b) 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. (c) 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 mortgage by conditional sale and the mortgagee a mortgagee by conditional sale: 1.[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.] (d) Usufructuary mortgage.—Where the mortgagor delivers possession 1[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 2.[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 3.[or] partly in payment of the mortgage-money, the transaction is called an usufructuary mortgage and the mortgagee an usufructuary mortgagee. (e) English mortgage.—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 re-transfer it to the mortgagor upon payment of the mortgage-money as agreed, the transaction is called an English mortgage. 4.

[(f) Mortgage by deposit of title-deeds.—Where a person in any of the following

towns, namely, the towns of Calcutta, Madras, 5.[and Bombay], 6.[***] and in any other town7. which the 8.[State Government concerned] may, by notification in the Official Gazette, specify in this behalf, 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. (g) 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.]

Comments

[s 58.1] Definitions of Mortgage, Mortgagor, Mortgagee etc. (Section 58) According to section 58, a mortgage is the transfer of an interest in some specific immovable property for the purpose of securing the— (a) payment of money advanced or to be advanced by way of loan, (b) an existing or future debt, or (c) the performance of an engagement

which may give rise to a pecuniary liability. Mortgage is the transfer of an interest in some immovable property. It is given by way of security for a loan. A person who takes a loan and gives some security for repayment of the loan in the form of transfer of some interest in any immovable property, it is called a mortgage of property. The ownership of the property remains in the debtor but some of his interests in the property are transferred to the creditor who has given loan. In case the advanced money could not be recovered by the creditor (person advancing the money) he can recover his money on the basis of his interest in that property. Therefore, it may be said that mortgage is for the security of the creditor. In the words of Mahmood J in the case of Gopal v Parsotam9.: Mortgage as understood in this country cannot be defined better than by the definition adopted by the Legislature in section 58 of the Transfer of Property Act, 1882. That definition has not in any way altered the law, but, on the contrary, has formulated in clear language the notions of mortgage as understood by all the writers of text books on mortgage. Every word of the definition is borne out by the decisions of Indian Courts of Justice.

In a mortgage, the right in the property created by the transfer is accessory to the right to recover the debt.10. The debt subsists in a mortgage, but the transaction by which the debt is extinguished is not a mortgage but a sale. In Nidha Sah v Murli Dhar,11. the deed was purported to be a deed of mortgage with possession of certain villages for a period of 14 years. The deed provided that at the expiry of the term, the mortgagors were to come into possession of the mortgaged villages without settlement of accounts and that the mortgagee should then have no power in respect of the said estate but should return the mortgage deed to the mortgagors without their repaying the mortgage-money. The mortgagee refused to return such villages on the ground that he had not received the full number of villages and had not been able to recoup himself. It was held by the Privy Council that the deed was not a security for the payment of any money and that the transaction was not a mortgage but a grant of land for a fixed term free of rent and that the suit was not on contract but on title, the mortgagors were entitled to recover possession. The hypothecation of property does not create any bar in execution of agreement to sell the same because in hypothecation the title of the property is not transferred to the mortgagee, moreover, when the purchaser had no knowledge of the hypothecation.12.

[s 58.2] Elements of Mortgage In order to constitute a mortgage, the following elements must be present in the transaction:— (1) There must be transfer of an interest.

(2) The interest transferred must be in specific immovable property. (3) The transfer must be made to secure a loan of money, debt or performance of

an engagement which may give rise to a pecuniary liability.

[s 58.2.1] Transfer of an Interest Mortgage debt is not an actionable claim under this Act but it is only a transfer of an interest in an immovable property. It is different from sale because in sale there is complete transfer of all the interests in the property whereas in mortgage it is transfer of interest less than ownership. The person transferring the loan is known as "mortgagor" and the person advancing the money is known as "mortgagee". Therefore, the interest is given by the mortgagor to the mortgagee. What type of interest is transferred to the mortgagee decides the kind of mortgage. An agreement to create a mortgage does not confer any interest on the mortgagee. It does not constitute a mortgage at all. Such an agreement creates only a personal obligation to repay the loan. A mortgage is a transfer of an interest and it creates a right in rem, but mere agreement to create a mortgage does not create any interest in the property mortgaged. Where a loan was taken form a bank and the borrower undertook to create a mortgage by deposit of title deeds of his land, the Supreme Court said that no mortgage was created by such undertaking. A mere undertaking to create a mortgage is not sufficient in itself to create an interest in any immovable property.1 Without transfer of an interest there is no question of there being a mortgage within the meaning of section 58(a). The same is true to the concept of a charge under section 100 which provides that principles applicable to a simple mortgage also apply to a charge.13.

[s 58.2.2] Specific Immovable property The interest created by mortgage must be in some specific immovable property. In mortgage-deed the property must be defined specifically and not in general terms. For example, our Zamindari property, property in taluka R and equity of redemption have been held to be specific descriptions. The property must be immovable property. Things attached to what is embedded in the earth are also included in immovable property. A life insurance policy cannot be the subject-matter of a mortgage because it is not a property.

[s 58.2.3] Consideration The mortgage must be supported by consideration. The consideration may be either money advanced or to be advanced by way of loan, an existing or future debt or the performance of an engagement giving rise to a pecuniary liability. A transfer which is made by way of discharging a debt is not a mortgage. Where the mortgage has already advanced money, the mortgagor may execute a deed of mortgage as security for its payment. The mortgagor may also execute the mortgage deed before he gets the full amount from the mortgagee. It has been held by the Supreme Court that a transaction of mortgage does not become ineffective merely because the mortgagee could not advance the money on the date of execution of the deed.14.

[s 58.3] Mortgagor The person who transfers the interest in the property in a mortgage is known as a mortgagor. Under section 59A, a person deriving title under the original mortgagor is included in the term "mortgagor" too, for example, heirs, executors, and administrators etc. A mortgage by minor, who is incompetent to contract, is void.

[s 58.4] Mortgagee A mortgagee is a person in whose favour the mortgage is created. A person deriving title under the original mortgagee is also included. Every deed of mortgage must have the name of the mortgagee otherwise the deed will not be a valid deed. A mortgage executed in favour of a minor who has advanced the whole of the mortgage money is enforceable by him or anyone on his behalf. But otherwise minority of the mortgagee renders it void ab initio.15.

[s 58.5] Mortgage-money According to section 58, the principal money and interest of which the payment is secured for the time being are called the mortgage-money. This means that the mortgagor can redeem the mortgaged-property on payment of both the principal money as well as interest on that money. However, the parties may enter into any contract to the contrary.

[s 58.6] Mortgage-deed The instrument (if any) by which transfer is effected in a mortgage is known as mortgage-deed. No particular form of words is necessary for the creation of a mortgage. The transfer should be originally intended as security for debt. The court will ascertain the intention of the parties by looking into the substance of the deed.16. The plaintiff sold an accommodation to the defendant for a loan. The defendant was to pay a fixed amount by way of rent. A repurchase agreement was also executed on the same day under which the defendant was to return the accommodation on repayment of the loan. All the documents viz., rent note, sale deed and agreement of repurchase were executed on the same day. The court said that the transaction was a mortgage and not a tenancy and therefore there was no question of evicting the tenant.17.

[s 58.7] Kinds of Mortgage Section 58 contemplates six kinds of mortgage:— (1) Simple Mortgage (2) Mortgage by conditional sale (3) Usufructuary Mortgage (4) English Mortgage

(5) Mortgage by deposit of title-deeds (6) Anomalous Mortgage

[s 58.7.1] Simple Mortgage [Section 58(b)] 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. Clause (b) of section 58 says that where— (a) without delivering possession of the mortgaged property, (b) the mortgagor— (i) binds himself personally to pay the mortgage-money, and (ii) agrees that in the event of his failing to pay according to his contract, the

mortgagee shall have a right to cause the mortgaged property to be sold and the proceeds of sale to be applied, in payment of the mortgagemoney, the transaction is called a simple mortgage and the mortgagee is called a simple mortgagee. In simple mortgage, possession of the property remains with the mortgagor and he personally covenants to pay the mortgage-money. He agrees that in case of his default by non-payment the property may be sold by the mortgage under the order of the court. In a case before the Supreme Court, the property was mortgaged as a collateral security for stridhan. The deed contained no recital for delivery of possession. The mortgagor was to pay interest towards repayment of the loan amount. The deed was held to be simple mortgage. The mere fact of possession was not sufficient to hold that the possession was under the deed.18.

[s 58.7.1.1] Remedy of the mortgagee.— In the case of simple mortgage, the mortgagee has two-fold security. Firstly, the mortgagor takes personal obligation and Secondly, the property, which may be sold in case of failure of the mortgagor to pay. When the mortgagor fails to pay back the money, the mortgagee would move the court for a decree to sell the property, and as soon as the decree is awarded he may proceed to sell the property. The proceeds of the sale will be used to pay off his debt along with the interest and the balance amount, if any, will have to be paid back to the mortgagor.

[s 58.7.2] Mortgage by Conditional Sale [Section 58(c)] 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: 19.[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. (i) In this type of mortgage, the mortgagor ostensibly sells the property. (ii) The property is sold on the condition that— (a) On default of payment of the mortgage-money on a certain date the sale

shall became absolute, or (b) On such payment being made the sale shall become valid, or (c) On such payment being made the buyer shall transfer property to the

seller, such a transaction is called mortgage by conditional sale and the mortgagee is called a mortgagee by conditional sale. However, such a transaction shall be deemed to be a mortgage only when the condition is embodied in the document which effects or purports to effect the sale. It is a prerequisite that the condition regarding payment of mortgage money as a condition for transfer for property to the seller must be embodied in the sale deed itself. Every sale accompanied by agreement for reconveyance of property does not constitute a mortgage by conditional sale.20. The first part of section 58(c) provides that where mortgagor ostensible sells mortgaged property on condition that on default of payment of mortgage money on a certain date, the sale will become absolute. There is a requirement that it should be a sale not by a mortgage deed which would become sale after a particular period in eventuality of nonpayment of mortgage money. The second part also provides that it should be a sale which would become void on payment of money. There is another eventuality provided when there is a sale deed which incorporates in itself a condition that on payment of amount agreed to between parties, the buyer shall re-transfer the property to the seller.21. In a transaction contained in a single document, the parties agreed that in lieu of Rs 400 paid to the owner, possession of the land would be transferred to the lender and the land would be returned to the owner if he repaid the amount within five years. The value of the land was more than Rs 400 at the time of the transaction as admitted by the lender himself. The document did not show that the ownership was to be transferred to the lender. The court said that the transaction was that of mortgage and not that of sale with condition to repurchase. The owner was entitled to redemption even after the expiry of five years.22. A mortgage by conditional sale is an ostensible sale which ripens only on the breach of condition as to payment into an absolute sale. The mortgagor here has no personal liability. The mortgagee remains content with the mortgaged property only. On the breach of condition of payment, the contract executes itself and becomes one of absolute sale which can be enforced in a particular manner known as foreclosure. The mortgagee cannot look towards other properties of the mortgagor because he has no personal liability towards mortgagee. Ostensible sale means a sale which apparently looks like a sale but in reality it is not a sale but a security for debt. The existence of a debt can be inferred from the very

nature of the conditions contained in the mortgage-deed. The conditions may be that on payment of the price the sale shall become void or the buyer shall transfer the property to the seller i.e., the buyer would execute reconveyance of the property in favour of the seller. If there is no relationship of debtor and creditor, the question of it being a mortgage by conditional sale does not arise.23. The mortgage-deed must have been executed containing these conditions as are given in the section. The condition of repurchase was embodied in the same document. The mortgage value was much less than the actual price. Only possession was handed over and not right or title to the land under deeds. The court said that all these circumstances showed that the transaction was a mortgage by conditional sale and not out and out sale with the right of repurchase.24. Once the condition of reconveyance is incorporated in document of ostensible sale executed by the owner, the applicability of section 58(c), i.e., mortgage by conditional sale is not ruled out merely because ostensible purchaser's promise to reconvey property after specified period is contained in separate document.25. A mortgage by conditional sale is non-possessory mortgage because no delivery of possession is given under it. Therefore, the mortgagee does not have the advantage of repaying himself. He can only claim the property on as absolute owner in case of default of repayment on due date and this right can be enforced only by a suit for foreclosure. The mortgagee does not acquire any personal right against the mortgagor nor he becomes entitled to the possession of the property. However, by virtue of this kind of mortgage he can only acquire ownership over the property which will not vest in him in default of payment but on the decree for foreclosure. In a case, the first part of the document spoke of an outright sale, whereas the second part contained provisions for the redemption of land. The Gujarat High Court held that the document must be read as a whole and it was mortgage by conditional sale and not a sale with a right to re-purchase.26. The proviso to the section says that such a transaction shall not be deemed to be a mortgage by conditional sale unless the condition is embodied in the document which effects or purports to effect the sale. Where separate documents of sale-deed and deed of reconveyance were executed between the parties in the same transaction and in the respect of the same property, and the owner wished to redeem the property and contented that the transaction is in the nature of a mortgage by conditional sale, the court held that it was not a mortgage by conditional sale because the condition effecting the sale as a mortgage was not embodied in the sale deed itself.27. In a case, a property was sold for a price less than its original price by executing a sale deed by the plaintiff in favour of the defendant. Contemporaneously, an agreement of reconveyance of property on payment of the sale price within a stipulated period was also separately executed by the defendant in favour of the plaintiff. The possession of the property was only symbolically delivered by the plaintiff to the defendant and a rent note was executed by the plaintiff promising to pay monthly rent in respect of the property to the defendant. The plaintiff filed a suit for redemption treating these three documents as creating a mortgage, it was held that by operation of the proviso to section 58(c) the two documents, sale-deed and agreement of reconveyance, read together would not constitute a mortgage as the proviso enjoins that the document which purports to effect the sale must itself contain the condition of reconveyance in order to constitute mortgage by conditional sale. These three documents could not constitute any other mortgage also. However, the Supreme Court directed the defendant to pay Rs 2 lakh within 3 months failing which the suit for redemption would stand decreed, The Supreme Court took this decision observing the recent tendency of entering into such transaction to deprive the debtor of his right of redemption and the fact that the sale price did not represent true market value of the property.28.

A mortgage by conditional sale can be effected in the following ways:— (i) Where the principal money secured is Rs 100 or more-by a registered instrument

signed by the mortgagor and attested by at least two witnesses. (ii) Where the principal money secured is less than Rs 100 by a registered

instrument signed by the mortgagor and attested by at least two witnesses or by delivery of the property. (Section 59) (1) Remedy.—The remedy open to the mortgagee by conditional sale is by foreclosure only and not by sale. (2) Difference between Conditional Sale and Sale with Condition of Repurchase.— Whether a particular transaction is a mortgage by conditional sale or an out-and-out sale with a right to repurchase is to be determined by the intention of the parties which can be gathered by terms of the deed. The transactions of this kind appear to be almost similar but they can be distinguished on the following grounds— (i) In a mortgage by conditional sale, the relationship of debtor and creditor is

necessary. The existence of a debt is must. But in sale with a condition of repurchase, there is no such relationship of debtor and creditor between seller and the buyer and no debt exists.29. (ii) In mortgage by conditional sale there is transfer of only some interest in the

property mortgaged but in sale by condition of repurchase there is a transfer of whole of the interest in the property except a personal right to repurchase the property which is lost if it is not exercised within the given time. In the case of a mortgage by a conditional sale, the right of redemption continues to subsist even after the fixed period. Although the difference in the legal effect between a sale with a condition of repurchase and a mortgage by conditional sale is clear but it becomes practically difficult to distinguish them. According to section 58, the transaction becomes a mortgage by conditional sale if the condition is embodied in the document which effects the sale. The question arises whether every such transaction in which sale and condition are contained in the same document be treated as a mortgage by conditional sale. The Supreme Court decided this question in Chunchun Jha v Shaikh Ebadat Ali,30. and observed that "if the sale and agreement to repurchase are embodied in separate documents, then the transaction cannot be a mortgage, whether the documents are contemporaneously executed or not. But the converse does not hold good. That is to say, the mere fact that there is only one document does not necessarily mean that it must be a mortgage and cannot be a sale." The Supreme Court further held that whether the transaction contained in the document amounts to an absolute sale with an agreement to repurchase or mortgage by conditional sale must depend on the intention of the parties, which much be ascertained from the surrounding circumstances. In a case, a property was sold by the seller, and a separate agreement of reconveyance was executed by purchaser under which he promised to reconvey the property to the seller on return of the sale consideration. A third document was executed by the seller in favour of purchaser in the form of rent note. It was held by the Supreme Court that on considering these documents, the transaction is neither a mortgage or mortgage by conditional sale nor a usufructuary mortgage. Where the parties have executed three documents almost simultaneously, then all the documents are to be taken into account to find out the true nature of the transaction.31.

Where the landowner on receipt of money gave possession of land to the appellant and under stipulation in agreement the appellant was to execute reconveyance on payment of amount by the landowner otherwise sale was to be confirmed but no stipulation as to payment of interest was there, it was held that the transaction in question was sale with condition to repurchase and not by conditional sale.32. The plaintiff's father entered into a transaction with the defendant under a deed titled as a conditional sale. The market price of the property was higher than the specified consideration. The defendant was to have title to the property for five years and was also to remain in possession for the same period. The plaintiff was entitled to tender the amount either at the expiry of the five-year period or even earlier. The defendant was then to execute the deed of conveyance in favour of the plaintiff. The terms of sale and of repurchase were contained in the same document. The Supreme Court held that the transaction was not a sale but a mortgage.33.

[s 58.7.2.1] Mortgage by Conditional sale or sale.— The principles for determining whether a document is mortgage by conditional sale or it is a sale, are as follows:— (i) The proviso to clause (c) of section 58 was added by the Act 20 of 1929 so as to

set at rest the conflict of decisions on the question whether the condition relating to reconveyance contained in a separate document could be taken into consideration in finding out whether a mortgage was intended to be created by the principal deed purporting to be a transaction of sale. The legislature enacted that a transaction shall not be deemed to be a mortgage by conditional sale unless the condition for reconveyance is contained in the document which purport to effect the sale. (ii) But merely because the condition for reconveyance is incorporated in the same

document purporting to be a sale, it does not necessarily mean that a mortgage transaction was intended. The question whether by incorporation of such a condition a transaction ostensibly of sale may be regarded as a mortgage is one of the intention to be gathered from the language of the deed interpreted in the light of the surrounding circumstances. Of course, the condition has to be taken into account, but the value to be attached thereto must vary with the degree of formality attending upon the transaction. (iii) The form in which the deed is clothed is not decisive because the definition of

mortgage by conditional sale by itself contemplates an ostensible sale of the property. (iv) The mortgage by conditional sale postulates the creation by the transfer of a

relationship of mortgagor and mortgagee, the price being charged on the property conveyed. In a conditional sale, there is no relationship of debtor and creditor nor is the price charged upon the property conveyed, but the sale is subject to an obligation to retransfer the property within the period specified. Hence what distinguishes the two transactions is the relationship of debtor and creditor and the transfer being a security for the debt. (v) If the language is plain and unambiguous it must in the light of the evidence of

surrounding circumstances be given its true legal effect. If there is ambiguity in the language employed, the intention may be ascertained from the contents of the deed with such intrinsic evidence as may by law be permitted to be adduced to show in what manner the language of the deed was related to the existing facts. (vi) Once a transaction is embodied in one document and not in two and once its

terms are governed by section 58(c), then it must be taken to be a mortgage by conditional sale, unless there are express words to indicate the contrary, or, in a case of ambiguity, the attendant circumstances necessarily lead to the opposite conclusion. The question in such case in not whether the words purport to make the transferee an absolute proprietor, for, of course, they must under section 58(c), but whether that is done only ostensibly and not in substance. A transaction was comprised of two documents. One document was executed by the owner as an ostensible sale subject to a specific condition that the purchaser shall reconvey the property on the seller returning the same amount and the other document was executed by the ostensible purchaser agreeing to reconvey the property on receiving the same amount after the stipulated period of 5 years. Thus, it was not a case where one document was a document of out and out sale and the other one contained an agreement for reconveyance but in the first document itself, the owner of the property ostensibly sold a part to his property subject to the specific condition that upon return of consideration by the plaintiff to the defendant, the property would be returned to the plaintiff. It was held that the condition for reconveyance was a part of the same document which was not merely a document of ostensible sale but it was by itself a document of ostensible conditional sale.34. Where there was no recital in the document as to whether the amount paid by the defendant was towards mortgage consideration or loan amount, the entire property was given in possession in favour of the defendant who continuously the enjoyed the property and the plaintiff never exercised his right to repurchase the property, it was held that it was a simple conditional sale with right of repurchase and not mortgage with conditional sale.35. There was a case of this kind before the Supreme Court also. The plaintiff transferred his land to the defendant by means of a document of sale. The defendant was given possession and he was enjoying the property like an absolute owner. The sale document contained a condition that on receiving back the sale amount, the defendant would return the property to the plaintiff. The period for return of the sale price was also specified. It was held that a mere stipulation for return of property in a document of sale does not make the transaction a mortgage by conditional sale. The suit for taking back the property was filed long after expiry of the period specified for return of the sale amount. The suit was liable to be dismissed.36. In a case before the Supreme Court, a transaction was evidenced by one document. It included the right to redeem the mortgage. The amount of stamp duty was paid by the transferor whereas it is normally paid by the transferee in the case of a sale. The court said that the facts of the transaction showed that the deed in question was a mortgage and not a sale.37. Distinguishing mortgage by way of conditional sale from a sale with a condition of repurchase, the court said that in the former the debt subsists and a right to redeem remains with the debtor but in the case of latter the transaction does not evidence an arrangement of lending and borrowing and, therefore, there is nothing in it in the nature of a right to redeem. The Supreme Court developed this concept further still by saying that a mortgage by conditional sale must be evidenced by one document whereas a sale with a condition of retransfer may be evidence by more than one document. It is not a mortgage. It is not even a partial transfer but by reason of the transfer all rights stand transferred reserving only a personal right to the purchaser with this infirmity that it would be lost if the seller exercised the right of repurchase within the stipulated amount.38. A transfer of property which was made for a consideration far less than its market value was held as amounting only to a mortgage even though it was described as a sale. The mortgagee was a money lender. It was his practice to obtain the document as a sale deed from the borrower and to execute a conveyance agreement to secure the loans given by him. The sale deed and rent deed were never intended to be acted upon

on their terms. The mortgagee never acted as owner on the basis of the sale. Tenants continued to pay rent to the mortgagor. Hence, the transaction was not a mortgage by conditional sale.39. A legal fiction has been created by the provision that the transaction is not to be held a mortgage by conditional sale unless a condition is embodied in the document which effects or purports to effect the sale. Where two documents are executed, the transaction in question would not amount to a mortgage by way of conditional sale.40. In a sale with a condition of repurchase the condition imposed in the reconveyance was that the mortgagor was to pay Rs 120 per annum to the mortgagee and in the event of default continuously for a period of 5 years, the reconveyance deed would stand repudiated. This was held to be not a penal condition in nature. The default was incurred. The reconveyance deed became repudiated.41.

[s 58.7.2.2] Position of transferee from mortgagee.— Any person who takes property from a mortgagee, gets the rights of the mortgagee only and nothing better. The mortgagor proved that the property was given to the mortgagee under a conditional sale. The mortgagee did not appear in the proceedings, nor the purchaser from him applied for being impleaded. At the appeal stage the subsequent purchaser was brought in to avoid any future difficulty in getting clear fruits of the decree. At this stage he did not appear to contest the appeal. The court said that even otherwise, the purchaser being a person claiming under the mortgage, he could not have set-up an independent title. He was bound by the terms of the deed whether impleaded or not. By his conduct he lost the opportunity of being heard.42.

[s 58.7.3] Usufructuary Mortgage Where the mortgagor delivers possession43. 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 property44. or any part of such rents and profits and to appropriate the same in lieu of interest, or in payment of the mortgagemoney, or partly in lieu of interest45. or partly in payment of the mortgage-money, the transaction is called a usufructuary mortgage and the mortgagee a usufructuary mortgagee.46.

[s 58.7.3.1] Usufructuary Mortgage [Section 58(d)].— (1) Where the mortgagor delivers possession or binds himself (expressly or by implication) to deliver possession of the mortgaged property to the mortgagee and (2) authorises him to— (a) retain such possession until payment of the mortgage-money, and (b) receive the rents and profits accruing from the property, and to appropriate the

same in lieu of interest or in payment or mortgage money or party in both, the transaction is called a usufructuary mortgage and the mortgagee a usufructuary mortgagee.

In a usufructuary mortgage, the possession of the property is given to the mortgagee. The mortgagee is given the right to the usufruct of the property i.e., rent, produce or profits of the property. The mortgagor himself does not remain personally liable to pay the mortgage money because either the mortgagee is let into possession or he is permitted to repay himself out of the rents and profits of such property.

[s 58.7.3.2] Essential elements.— The essential elements of a usufructuary mortgage are given below:— (i) There is delivery of possession to the mortgagee or an express or implied

undertaking of the mortgagor to deliver such possession. (ii) Retention of the possession by the mortgagee till the payment of the mortgage-

money or he has to receive rents and profits of the property either in lieu of interest on mortgage-money or in payment of mortgage-money or party in payment of either interest or mortgagee-money. (iii) There is no personal liability of the mortgagor. (iv) Mortgagee cannot foreclose or sue for sale of mortgage-property. (v) The mortgagor is entitled to redeem the property when the amount due is

personally paid or the debt is discharged by rents and profits received by the mortgagee (Section 62). (vi) No time limit is fixed for the repayment. (vii) Where the mortgage is for Rs 100 or more, it must be registered but where it is

less than Rs 100 it may be by a registered deed or by delivery of property.

[s 58.7.3.3] Delivery of Possession.— The possession of the mortgaged property is handed over to the mortgagee by the mortgagor as a security for the payment of mortgage-money. It is not necessary that the delivery of possession must be made at the time of execution of the deed. The mortgagor may either give express or implied undertaking to deliver possession.

[s 58.7.3.4] Rents and Profits.— The mortgagee becomes entitled to receive rents and profits of the property mortgaged till the money is repaid. He may either appropriate this money towards interest on the mortgage-money or in payment of mortgage-money or partly for both. Where the rents and profits are agreed to be retained by the mortgagee in lieu of only the principal money, the mortgagor is entitled to get back the possession when he pays the principal money. But where they are in lieu of interest, the mortgagor gets back the possession of property as soon as he pays the debt. Where some part of the rent and profits is agreed by the mortgagee to be retained as interest and remaining to be adjusted against the principal money, the mortgagor can get back the possession only when both the interest and principal amount are fully paid.

[s 58.7.3.5] No Personal Liability of Mortgagor.— The mortgagor is not personally liable for the mortgage money so the mortgagee cannot sue the mortgagor personally for his debt. The mortgagee can only retain the possession of the property. He cannot compel the mortgagor to pay back the mortgage-debt. Only the mortgagor himself can pay off the debt and take the property back.

[s 58.7.3.6] Mortgagee Cannot Foreclose or Sell.— The right of foreclosure or sale is not available to the usufructuary mortgagee. In such a mortgage no time limit is fixed. Therefore, the mortgagee is entitled to possession till the money due is paid to him.

[s 58.7.3.7] Rights of Mortgagee's Transferee.— As per the mortgage deed, the mortgagee had to keep possession with himself, thus, binding the mortgagee not to alienate by way of lease or some other process. It was held that the transferee of the mortgagee who cultivated the land was not to be deemed as a lawful tenant. Any such claim was not proper. Such transferee was not entitled to occupancy rights.47.

[s 58.7.3.8] Redemption of Property.— The mortgagor is entitled to take back the mortgaged property from the possession of the mortgagee on payment of the debt. Where the due debt is discharged from the rents and profits of the property, he can redeem back the property.

[s 58.7.3.9] No time limit.— The main characteristic of usufructuary mortgage is that no time limit is fixed for the repayment. Limitation starts when mortgage money is paid out of rents and profits or partly out of rents and profits and partly by payment or deposit by mortgagor.48.

[s 58.7.3.10] Registration.— Where money taken is Rs 100 or more, registration is necessary. In other case, mortgage is complete only by delivery of possession.

[s 58.7.3.11] Zur-i-peshgi lease.— Zur-i-peshgi means a payment in advance or a lease for a premium. Where the right of enjoyment of an immovable property is transferred for a fixed period of time and the rent is paid in advance in lump sum, the transaction is called a Zur-i-peshgi lease. The lessee gets the right to enjoy, use and appropriate the usufruct of property. The

usufructuary mortgage and Zur-i-peshgi lease appear to be the same but there are some differences between them— (i) In a zur-i-peshgi lease, there is no existence of debt between the lessor and the

lessee but in usufructuary mortgage, existence of a debt is must. (ii) In zur-i-peshgi lease, specific time limit is given after which the lessee is to give

back the possession to the lessor. However, in a usufructuary mortgage, there is no fixed time limit in which the possession is to be given back.49.

[s 58.7.3.12] Remedies of a Usufructuary Mortgagee.— A usufructuary mortgagee cannot sue the mortgagor neither for the sale nor for foreclosure. His remedy is only to retain possession of the property till the mortgage money is paid-up and to appropriate the rents and profits of property till his principal money and interest due both are paid in accordance with the mortgage-deed. If the usufructuary mortgagee loses his possession, he may sue to obtain the possession, mesne profits as well as for the mortgage money under section 68.

[s 58.7.3.13] Rights of Usufructuary Mortgagor.— Under section 62, a usufructuary mortgagor has been given a right to recover possession of the mortgaged property from the mortgagee when— (i) Where the mortgagee was authorised to pay himself the amount of mortgage-

money from the rents and profits of the property and the money is paid, (ii) Where the mortgagee is authorised to pay himself from rents and profits and the

terms prescribed for the payment of the mortgage-money has expired and the mortgagor pays the mortgage-money or balance of it to the mortgagee or deposits it in the court.50.

[s 58.7.3.14] Accession to Mortgaged Property (Section 63).— Section 63 provides that where mortgaged property in possession of the mortgagee has during the continuance of the mortgage received any accession, the mortgagor upon redemptions will be entitled to such accession as against the mortgagee. However, this is subject to the contrary contract i.e., if the mortgagor and mortgagee both agree they can exclude the operation of this section.

[s 58.7.3.15] Usufructuary Mortgage in Favour of Tenant.— A usufructuary mortgage was executed in favour of the tenant by the owner of the premises. It was held that the effect upon the rights of the tenant would essentially depend upon the terms and conditions of the mortgage. If the tenant surrendered the tenancy explicitly or by necessary implication, the terms of the deed of mortgage would prevail.51.

[s 58.7.3.16] Usufructuary Mortgage by Lessee.— A usufructuary mortgage can be effected by a lessee. The rights of such mortgagee are just the same, and no more, than those of the lessee.52. The validity of such mortgagee has been upheld by the Supreme Court in A. Bhandari v Shantilal Moolshankar Jani53. and SB Abdul Azeez v M Maniyappa Setty.54.

[s 58.7.4] English Mortgage [Section 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 re-transfer it to the mortgagor upon payment of the mortgagemoney as agreed, the transaction is called an English mortgage. (i) Where the mortgagor binds himself to repay the mortgage-money on a certain

date, and (ii) transfers the mortgaged property absolutely to the mortgagee on the condition

that he will re-transfer it to the mortgagor upon payment of the mortgage-money as agreed, the transaction is called an English mortgage. In English mortgage, the property is absolutely transferred to the mortgagee with a condition that when the debt is paid off on the given date, the mortgagee will retransfer the property to the mortgagor.

[s 58.7.4.1] Essential elements.— The essential elements of an English mortgage are given below:— (i) There is absolute transfer of property to the mortgagee i.e., there is delivery of

possession. (ii) There is a personal covenant to pay the amount. The mortgagor binds himself to

repay the mortgage money on due date. (iii) The property is transferred on the condition that the transferee-mortgagee will

re-transfer it to the mortgagor on the payment of the mortgage-money.

[s 58.7.4.2] Absolute transfer.— This section says that in English Mortgage, the mortgagor absolutely transfers the property to the mortgagee. However, an absolute transfer can never be a mortgage because in the mortgage there is transfer of a limited interest only for securing the debt. The use of the word "absolutely" is only a matter of form and not of substance. Only an interest in the property is transferred and not the whole property. This was discussed by the Privy Council in the case of Ram Kinkar v Satya Charan.55. A lessee mortgaged his leasehold rights and the question arose whether the lessor could sue the mortgagor for rent. The question depended on the fact whether due to privity of estate could the mortgagee be liable for the burdens of lease. The lessor based his contention on an English case56. where it was held that in a transaction like that a

privity of estate was created between the lessor and the mortgagee. The Privy Council did not accept this contention and held that the right of a mortgagor in India is more than a mere contractual right and must be a legal right in the property itself. If it is a legal right in the property which remains with the mortgagor, the mortgagor has not to part with the whole of his rights. Therefore, this situation does not fit within section 58(e) because it deals with absolute transfer of the mortgaged property. The Privy Council observed: "Their Lordships think that the sub-section (e) upon its true construction does not declare an English mortgage to be an absolute transfer of property. It declares only that such a mortgage would be absolute were it not for the proviso to re-transfer." In a case before the Supreme Court, the mortgage did not bind himself to repay the mortgage money on a certain date. The sale deed did not even remotely suggest that the transaction was in the nature of a mortgage or that there was any undertaking or agreement between the parties under which the property sold had to be re-transferred to the seller. The seller was not a signatory to the agreement of reconveyance. It was held that the transaction could not be said to be an English mortgage. The suit filed was for a declaration to the effect that the sale deed executed by the plaintiff was void and that he continued to be the owner and in occupation. Hence, the plea that the suit was in substance one for redemption of mortgage was not tenable.57. Difference Between English Mortgage and Simple Mortgage English Mortgage

Simple Mortgage

1. In English Mortgage, the property is

1. In Simple Mortgage, only the right of sale is

transferred absolutely to the mortgagee.

transferred.

2. The mortgagee has the right to enter into

2. The mortgagee here has no right to enter

immediate possession of the mortgaged

into possession of the mortgaged property.

property. 3. In certain cases, an English mortgagee has a 3. Simple mortgagee does not have the right of right of sale without the intervention of the

sale without the intervention of the court.

court.

Difference Between English Mortgagee and Usufructuary Mortgagee English Mortgage

Usufructuary Mortgage

1. In English mortgage, there is a personal

1. There is no personal liability to repay the

liability to repay the loan.

loan.

2. The property is absolutely transferred to the 2. Here the mortgagee does not get the mortgagee, on condition that the property will

ownership of the property only possession is

be re-transferred to the mortgagor on his

transferred to him which he can retain till his

repayment of loan.

debt is paid off.

3. The mortgagee can sue for sale and in

3. The mortgagee cannot here sue for sale. He

certain circumstances even without the

also does not have the power to sale without

intervention of the court.

the intervention of the court.

Difference Between English Mortgage and Mortgage by Conditional sale English Mortgage

Mortgage by Conditional sale

1. In English mortgage, the mortgagor has

1. Here the mortgagor has no such liability to

personal liability to pay the debt.

re-pay the debt.

English Mortgage

Mortgage by Conditional sale

2. The mortgaged-property is absolutely

2. Here the sale is not absolute but it is

conveyed to the mortgagee with the condition ostensible sale. It becomes absolute on the of re-conveyance of the property back to the

failure of payment of mortgage money if a

mortgagor.

decree of foreclosure is obtained.

3. The mortgagee has the right to immediate

3. Here the mortgagee has no such right.

possession of the property. 4. Here absolute conveyance is converted into 4. Here the mortgage is liable to be converted a mortgage.

into an absolute sale when a decree of foreclosure is obtained.

5. English mortgage has remedy of sale.

5. The remedy of a conditional sale is by foreclosure.

[s 58.7.5] Mortgage by Deposit of Title-deeds [Section 58(f)] 58.[(f) Mortgage by deposit of title-deeds.—Where a person in any of the following towns, namely, the towns of Calcutta, Madras, 59.[and Bombay], 60.[***] and in any other

town61. which the 62.[State Government concerned] may, by notification in the Official Gazette, specify in this behalf, delivers to a creditor or his agent documents of title to immovable property, with intent to create a security thereon, the transaction is called a mortgage by deposit of title-deeds.

[s 58.7.5.1] Equitable Mortgage [Section 58(f)].— Mortgage by deposit of title-deeds is also known as equitable mortgage. According to sub-section (f), where a person— (i) in the towns of Calcutta, Madras, Bombay and in any other town specified by the

State Government concerned in this behalf, (ii) delivers to a creditor or his agent documents of title to immovable property, (iii) with intent to create a security, thereon

such a transaction is called a mortgage by deposit of title-deeds.63. This is a special kind of mortgage because here the execution of mortgage deed is not necessary. Mere deposit of title deeds of an immovable property by mortgagor to mortgagee is sufficient. Documents such as promissory note and confirmation letter which merely evidence past transaction of crating equitable mortgage is not required to be registered.64 The rule of equity is that mere deposit of a document of title without writing or without word of mouth, will create in equity a charge upon the property which is referred in the deed. The equitable mortgage in England creates mere equitable security which is unenforceable against a bona fide purchaser for value of the legal estate without notice. In India, it creates a right in rem which cannot be defeated by any defence of bona fide purchaser without notice. Therefore, it will also operate against as subsequent legal mortgage of the same estate.

[s 58.7.5.2] Essential Elements of Mortgage by Deposit of Title-deeds——

(i) There must be a debt. (ii) There must be a deposit of title-deeds. (iii) The debt must be secured by deposit of title deeds.

(a) debt.—The debt may be an existing debt or a future debt. Any transfer of an interest in any property to secure the payment of money, advanced or to be advanced, or an existing or future debt, or the performance of an engagement which may give rise to a pecuniary liability is a mortgage and sub-section (f) defining equitable mortgage prescribes merely one of the modes of creating a mortgage.

[s 58.7.5.3] Deposit of Title-deeds.— In England, it is sufficient if the deeds deposited bona fide relate to the property or are material evidence of title and that it is not necessary that all the deeds should be deposited. This is also followed in India and it is sufficient that the mortgage is created by deposit of material title deeds. Constructive delivery of title- deeds is held to be sufficient for this purpose too. In KJ Nathan v SV Maruty Reddy,65. the Supreme Court observed that it would be hyper-technical to insist upon the formality of the creditor delivering the title-deeds to the debtor and the debtor re-delivering them to the creditor. For creation of a valid mortgage, deposit of title deeds must be with intention of creating such a mortgage.66. No mortgage is created where the documents show no kind of title.67. A copy is not a document of title and its deposit cannot be an equitable mortgage.68. Where the original title-deed is lost, an equitable mortgage can still be created. In order to create a valid equitable mortgage, it is not necessary that all the documents of title to the property should be deposited, or that the documents deposited should show a complete or good title. It is sufficient if the deeds deposited bona fide relate the property. The letter issued by Director of Industries to an allottee of land in industrial area could not be characterized as document of title so as to enable the allottee (company) to raise loan by mortgage of the same. Such letters voluntarily issued by individual officer of Government in no manner bind the government unless it is clearly pleaded and established that he has been authorised and delegated with such power.69. This fact situation came before the Supreme Court in Syndicate Bank v Estate Officer and Manager, APIIC Ltd,70. the fact story was the same. The same type of letter of allotment of land accompanied with possession and the bank advancing money on the deposit of such letters. Since such letters are not typical documents of title because title can be conveyed only by a registered title deed. The requirement of depositing title deeds is not satisfied. But such allotments do create an interest in the land in favour of the allottee in the sense that sooner or later they are going to fructify into a full-fledged registered title deeds. If the supreme had gone by literal meaning of the provisions, such letters being not in compliance with literary requirements of the section, many a transaction involving huge amounts of banks and institutional loans would stand avoided. Such an approach would have caused serious financing problems. The question being of great importance to the financial market and economic growth, the court referred the matter to a larger Bench. Where the mortgagee raised the plea that though the title deeds were deposited, they were returned, and it was not her case that they were lost, it was held that no preliminary decree could be passed under section 34, CPC. The essence of mortgagee by deposit of title deeds is actual deposit with the mortgagee with the intention of

creating security for repayment of the loan. Hence, where the deeds are available with the mortgagor there is no question of any mortgage being created.71. Where the title deeds were already there with the bank having been deposited under an earlier loan transaction and were redeposited in connection with a subsequent overdraft but the date of deposit on the letter of deposit remained that of the earlier deposit and the letter also showed no connection with the new loan, it was held that the deposit had no nexus with the subsequent transaction and it being not a valid deposit, it could not give the benefit of limitation applicable to mortgages.72.

[s 58.7.5.4] Deposit of Xerox Copies.— The mortgagor deposited copies of title deeds along with the receipt of the SubRegistrar showing the fact of registration. The certificate of registration issued by the Sub-Registrar is a proof of registration of the document constituting it into a document of title. Evidence produced by the parties which was on record showed intention of the parties about creation of the equitable mortgage. The court accordingly was of the view that the documents deposited could be held to be valid creation of an equitable charge.73.

[s 58.7.5.5] Delivery with intention of creating security.— It is necessary that the title-deeds are deposited with the intention of creating security for the debt. Such an intention cannot be presumed from possession because the mere possession of the deeds is not enough without evidence as to the manner in which the possession originated. In Jethibai v Putlibai,74. it was held that mere possession of titledeeds by creditors, coupled with existence of a debt does not necessarily lead to the presumption of a mortgage, that may be so when the title-deeds are produced by the creditor after the lapse of many year without explanation. Mere possession of documents does not create an equitable security. Three requisites are essential for creating a mortgage by deposit of title deeds- debt, deposit of title deeds and an intention that the title deeds shall be the security for the debt.75. Where a bank filed a suit for recovery of money on the ground that the defendant had mortgaged his property by executing memorandum of deposit of title deeds whereas the defendant denied such execution, the suit for recovery of money was dismissed as the deposit was not proved by the plaintiff bank by examining attesting witnesses, and, moreover, there was discrepancy in signature also.76.

[s 58.7.5.6] Registration.— A mortgage by deposit of title deeds does not require writing. When it is an oral transaction, it is not affected by law of registration. Section 59 says that a mortgage by deposit of title-deeds does not require registration even if there is a writing recording the deposit. A memorandum of deposit of title deeds has been held to be not a mere receipt or acknowledgement of documents already deposited as security, but clearly discerning: the existing creation of the equitable mortgage by depositing title deeds as an additional security in respect of the amount obtained under the pro-note executed on the same day. The memorandum was a self-contained document creating rights or

charges over property. It was liable to be registered. It could not be looked into for want of registration for establishing any transaction.77. The mere deposit of title deeds does not create or extinguish any right or liability. The question of registration and payment of registration fee or stamp duty does not arise.78. If the memorandum is drawn to record the fait accompli of deposit, it does not require registration. But if the document itself creates the deposit and contain the bargain between parties, it would require registration. Thus, recitals in the memorandum also the best guide as to what the parties intended, how the transaction took shape and how it affected parties' rights. In this case, the concluding part referred to the document as executed. Both parties signed it under the expression "confirmed" and "accepted". What the parties confirmed and accepted was nothing but the fact of deposit. The document did not create a mortgage.79. A document was styled as a Memorandum of deposit of title deeds. It authorized the lender to take action for recovery of money on the basis of such deposit of title deed. The court held that it amounted to a mortgage deed. It therefore became compulsorily registrable with stamp duty.80. A memorandum or letter merely acknowledging deposit of title deed by itself does not create a mortgage. If document merely refers to handing over of title deeds or acknowledging that title deeds are deposited with the creditor without inclusion of any further term or condition, such a document does not require registration. It is not the time of execution of memorandum but whether it incorporates any term or condition is the benchmark. Denial of liability on the ground of non-registration of letter acknowledging mortgage was held not sustainable.81. Where the bank filed suit for recovery of loan amount, debtor denied liability on the ground that signatures on loan documents are different from actual signatures, debtors neither paid requisite fee nor made documents available to expert for verification of signatures, they were held liable to pay the loan amount with interest.82.

[s 58.7.5.7] Remedies.— The remedy of a mortgagee by deposit of title deeds is by a suit for sale and for the mortgage money (section 96). He is not entitled to sue for foreclosure. However, the mortgagor's remedy is a suit for redemption and not an action to recover the titledeeds.

[s 58.8] Stamp Duty A memorandum was prepared confirming deposit of title deeds as a security for repayment of money proposed to be advanced. The court said that the mere mentioning of the word "mortgage" could not change the character of the instrument in as much as even deposit of title deeds is also one of the kinds of mortgage. The instrument in question attracted article 7 of Schedule 1A which applies to instruments pertaining to deposit of title deeds. In either case article 35(b) is applied.83. (a) Limitation.—The period of limitation for a suit for enforcement of payment of money secured by mortgage by deposit of title deeds is twelve years from the date when payment becomes due.84. Difference Between Mortgage by Deposit of Title-deeds and English Mortgage

Mortgage by Deposit of Title-deeds

English Mortgage

1. The mortgagor has no personal liability to

1. The mortgagor binds himself to repay the

repay the loan.

loan.

2. In this, the mortgaged-property is not

2. The mortgaged property is absolutely

absolutely transferred to the mortgagee.

transferred to the mortgagee.

3. The operation is restricted to certain centres 3. In English mortgage, the operation is not of commerce.

restricted to any place.

4. It is created by mere delivery of title-deeds

4. In this case, where the principal money

with intention to secure the debt. No writing

secured is Rs 100 or more than that or where

and no registration is required.

there is no delivery of property, registration of the deed is necessary.

5. The mortgagee has no power of sale without 5. In certain cases, the mortgagee has a power the intervention of the court.

of sale without the intervention of the court.

[s 58.8.1] Anomalous Mortgage A mortgage which is not a simple mortgage, a mortgage by conditional sale, a usufructuary mortgage, an English mortgage or a mortgage by deposit of title-deeds within the meaning of this section is called an anomalous mortgage.

[s 58.8.1.1] Anomalous Mortgage [Section 58(g)].— 1. A mortgage which is not a— (a) simple mortgage, (b) mortgage by conditional sale, (c) a usufructuary mortgage, (d) an English mortgage, or (e) mortgage by deposit of title-deeds.

2. within the meaning of this section is called an anomalous mortgage. A mortgage which does not fall under any of the five above stated categories is known as anomalous mortgage. Examples of such mortgage include Kanom, otti and Peruartham mortgages of Madras and the San mortgage of Gujarat. Such mortgages take innumerable forms moulded either by the custom or the caprice of the creditor. In this, the possession may or may not be given. It the mortgage money is Rs 100 or more, it must be registered but if less than Rs 100, it may be by a registered deed or by delivery of possession.

[s 58.8.1.2] Combination of simple Mortgage and Usufructuary.— An anomalous mortgage, it is a combination of simple and usufructuary mortgages. The mortgagee is in possession of the property and pays himself out of rents and profits of the property, the mortgagor has a personal covenant to pay with express or implied right of sale.

[s 58.8.1.3] Mortgage Usufructuary by Conditional sale.—

Another anomalous mortgage, in which, the mortgagee is in possession as an usufructuary mortgagee for a fixed period and if the debt is not paid within the fixed period, he becomes mortgagee by conditional sale.

[s 58.8.1.4] Customary Mortgages.— These are mortgages in which special incidents are attached by local usage. For example, Otti and Kanom mortgages cannot be redeemed before the expiry of 12 years in the absence of an agreement to the contrary. The Kanom partakes the nature of a mortgage and a lease85. and the Otti-holder has a right of pre-emption.86.

[s 58.8.1.5] Case.— A mortgagor borrowed a sum of Rs 1000 from the mortgagee and the possession property was handed over to him. The mortgage-debt was to be repaid within a period of 6 months and in case of default the mortgagee had the right to bring the property to sale and realize the amount. The document was described as usufructuary mortgage. But it was held to be an anomalous mortgage because it had the character of simple mortgage too along with the right of sale of property to realise the amount of mortgage-debt.87.

[s 58.8.1.6] Oral Mortgage.— The mortgage was not registered. The mortgagee was given possession of the property. He tried to claim ownership through adverse possession, but could not prove it. The court said that on completion of 12 years of the oral mortgage, the period of limitation did not start running against the mortgagor. The suit for redemption filed within 30 years was not barred by limitation.88.

[s 58.8.1.7] Remedies of Mortgagee.— The mortgagee's remedy is by sale and foreclosure, where the terms of the mortgage permit it. [Section 67(a)]. The remedy of a mortgagor, if he becomes a trustee or legal representative of the mortgagee is by a suit for sale only [section 67(b)].

[s 58.8.1.8] Sub-Mortgage.— A mortgage by the mortgagee of his interest under the original mortgage is known as sub-mortgage. Where the original mortgagee mortgages his interest, it is known as sub-mortgage. A sub-mortgagee is entitled to a decree for sale of the mortgage-rights of his mortgagor. In Jones v Gibbons,89. Sir William Grant observed that a mortgage consists partly of the estate in the land, partly of the debt. So far as it conveys the estate, the assignment – that is of the mortgage – is absolute and complete the moment it is made according to the forms of law. Undoubtedly, it is not necessary to give notice to the mortgagor, that the mortgage has been assigned, in order to make it valid and effectual. The estate

being absolute at law, the debtor has no means of redeeming it, but, by paying the money. Therefore he, who has the estate, has in effect the debt; as the estate can never be taken from him except by payment of the debt. A puisne mortgage arises when a person mortgages his property to another person by a legal mortgage and again mortgages it to a third person by an equitable mortgage or by creating a charge on the same property.

[s 58.8.1.9] Mortgage of property in favour of tenants.— A property was mortgaged in favour of tenants only. It was held that the tenancy of mortgagees became merged with the mortgage. There was implied surrender of tenancy at the time of creation of the mortgage. Subsequently the mortgagor paid back the mortgage money. Thus the mortgage was redeemed. The tenancy had already ended by implied surrender because of the merger. Thus a new tenancy note became necessary.90.

[s 58.8.1.10] Mortgage of Movable Property.— The Transfer of Property Act, 1882 deals only with mortgages of immovable property. The movable property can be pledged under Indian Contract Act, 1872. Now the question arises what are the rights of a mortgagee of movable property? A mortgage of movable property does not require delivery of possession. Hypothecation of movable property without delivery of possession is recognized by the Indian law.91. A mortgagee of movable property is entitled to a decree for sale just as the mortgagee of immovable property. Such a mortgagee also has the right to sell the property when he is in the possession and even after proper notice the mortgagor does not repay the mortgage money. The mortgage of movable property without delivery of possession opens a door for frauds. The mortgagor in possession may sell the goods to a bona fide purchaser without notice.92. The Madras High Court held in a case that when goods are left in the possession of the mortgagor, a wide door is left open for fraud, and when the equities between the innocent purchaser and the mortgagee have to be weighed, the preponderance must be given to the purchaser, for the mortgagee has by his omission to secure possession of the goods facilitated the commission of fraud.93. Where two mortgagees of movable property are without possession, the principle of qui prior est tempore potier est jure becomes applicable and on the basis of this principle the mortgagee who come first to the court is given priority.94.

1. Ins. by Act 20 of 1929, section 19 2. Subs. by Act 20 of 1929, section 19, for "and to appropriate them". 3. Subs. by Act 20 of 1929, section 19, for "and". 4. Added by Act 20 of 1929, section 19. 5. Subs. by the AO 1948, for "Bombay and Karachi". The word "and" had been inserted by the AO

1937.

6. The words "Rangoon, Moulmein, Bassein and Akyab" omitted by the AO 1937. 7. For notifications relating to the towns of—Ahmedabad, see Gazette of India, 1935, Pt I, p 936,

Bandra, Kurla and Ghathkoper Kirol, see Gazette of India, 1924, Pt I, p 1064, Cawnpore, Allahabad and Lucknow, see Gazette of India, 1938, Pt I, p 158. Coimbatore, Madura, Cocanada and Cochin, see Gazette of India, 1935, Pt I, p 526. 8. The words "Governor General in Council", successively amended by the AO 1937 and the AO

1950 to read as above. 9. (1883) ILR 5 All 121 (137) (FB) : 1882 All WN 128. 10.

Chetti Goundan v Sundaram Pillai, (1865) 2 Mad HCR 51 (54); intention of parties is

important for determining whether deed is of mortgage or lease, a registered deed contained a specific recital that in event of failure of mortgagor to redeem mortgage by paying money, mortgagee can sue mortgagor and he can realise the amount from suit shop, document was held to be a mortgage deed, P Pushparajan v Parambadh Moidu, AIR 2017 Ker 306 . 11. (1903) 25 All 115 : 30 IC 54. 12. Ratan Pal Singh v Kunwar Pal Singh, AIR 2001 All 224 : 2001 All LJ 1743 : 2001 (43) All LR

501 ; K Srinivasa v SV Janardhan, (2001) 2 SLT 689 deed contained stipulation as to return delivery of possession after expiry to two years on the condition that the mortgagee would not pay any rent during that period and the mortgagor would not pay any interest on the sum advanced. The Supreme Court held that the arrangement was in the nature of a mortgage. 13. Bank of India v Abhay D Narottam, (2005) 11 SCC 520 . 14. State of Kerala v Cochin Chemical Refineries, AIR 1968 SC 1361 : (1968) 2 SCWR 661 . 15. Mathai Mathai v Joseph Mary, AIR 2014 SC 2277 : 2014 AIR SCW 2793 : 2014 (2) CLR 89 . 16. Tara Chand v Sagarbai, AIR 2007 SC 2059 : (2007) 6 SCR 231 : (2007) 5 SCC 392 , mortgage

created by an agreement, subsequently replaced by a registered document with altered terms, the latter document was to prevail. 17. Mishrilal v Sukhram, AIR 2011 MP 143 . 18. Mathai Mathai v Joseph Mary, AIR 2014 SC 2277 : 2014 AIR SCW 2793 : 2014 (2) CLR 89 . 19. Ins. by Act 20 of 1929, section 19. 20. Raj Kishore v Prem Singh, AIR 2011 SC 382 : 2011 AIR SCW 3859 : (2011) 1 SCC 657 . 21. Dalel Singh v Rampal, AIR 2019 P&H 54 . 22. Shivram Bhika Bodkhe v Sadashiv Laxman Sanap, AIR 2007 Bom 162 : 2007 (5) AIR Bom R

47 : 2007 (5) All MR 180; Mishree Lal Sah v Jagarnath Sah, AIR 2007 Pat 145 : 2007 AI HC 3319 : 2008 (1) AIR Jhar. 165, a condition for retransfer of the land was embodied in the document if the consideration amount was paid back by the owner within five years. The amount reserved for re-transfer was to be the same; the lender had no right to get the property mutated to his name; if the lender failed to restore the property, it was to be recovered through the court process. The court said that all such terms allowed that the document was a mortgage by conditional sale and not outright sale. Pandit Chunchun Jha v Sheikh Ebadat Ali, (1955) 1 SCR 174 : AIR 1954 SC 345 : 1954 SCA 611 . Umabai v Nilkanta Dhondiba Chavan, (2005) 6 SCC 243 : (2005) 3 Supreme 508 , the condition of reconveyance should be contained in the same document by which the property is mortgaged; a deed executed as security Contd. on next page Contd. from previous page for loan by the mortgagor, he had the right to reconvey suit land at his own costs on return of loan amount within a period for 10 years, mortgagee was entitled to enjoy the property by taking the crop on suit land, condition to the effect that sale will become absolute on failure of mortgagor to repay in the document means it was a mortgage by conditional sale and not absolute sale, Chabbu Punja Gaikwad v Vishnu Nana Chavan, AIR 2017 Bom 232 ; a document containing condition of repurchase on offering sale money without

interest is a mortgage deed by conditional sale, Srinivasaiah v HR Channabassapa (Dead) through LRs, AIR 2017 SC 2141 . 23. Tamboli Ramanlal Moti Lal v Gharchi Chimanlal Keshavlal, AIR 1992 SC 1236 : 1992 AIR SCW

1170 : JT 1992 (2) SC 525 . Rama Devi v Dilip Singh, AIR 2008 SC 2015 : 2008 AIR SCW 2664 : (2008) 7 SCC 105 , in a case under the UP Zamindari Abolition and Land Reforms Act, 1951 there was a finding of fact that the document in question was a deed of sale and not a mortgage. The Act also carried a deeming provision under which such transactions were deemed as sales; Valuation of property, the transaction value along with duration of time for reconveyance are important considerations to decide the nature of agreement in a mortgage by conditional sale, Vithal Tukaram Kadam v Vamanrao Sawal Bhosale, AIR 2017 SC 3853 ; where buyer is aware of limited nature of right agreeing to sale with obligation to return land if amount is repaid by the plaintiff, it is a conditional sale and not the sale with option to repurchase, ibid. 24. Sk Md Illiyas v Narayan Sah, AIR 2009 Pat 17 : 2009 (1) AIR Jhar 970 : 2009 (1) Civ LJ 305 . 25. Kantilal M Kadia v Somabhai Dahyabhai Kadia, 2003 (3) RCR (Civil) 273 (Guj) (FB) : AIR 2003

Guj 205 : 2003 (1) Guj LR 817. Mangtin v Rahibai, AIR 2012 Chh 77 , two documents, one showed outsight sale, the other mortgage, the court considered circumstances and held they showed that the transaction was a mortgage. 26. Ismail Nathabhai Khatri v Muljibhai Shankerbhai Brahmabhatt, AIR 1994 Guj 8 : 1992 (2) Guj

LR 1543; Patel Rajiv Bhai Bulabhai v Rahmanbhai M Shaikh, AIR 2016 SC 2146 , deed executed infavour of defendants titled as conditional sale for a sum of Rs 10,000. The condition in the deed was that if payment was made within 5 years, buyer should handover the property back to the seller. The court held that it was a loan transaction combined with mortgage by conditional sale. The order of redemption in favour of the seller was proper. 27. Sunil K Sarkar v Aghor K Basu, AIR 1989 Gau 39 : (1987) 2 Gau LR 402 ; terms of sale deed

indicated right of redemption in case amount is repaid within 5 years but did not disclose creation of mortgage or debtor-creditor relationship between the parties, document was held to be sale deed with option to repurchase and not mortgage by conditional sale, Suraj Narain Kapoor v Pradeep Kumar, AIR 2017 SC 5046 . 28. Mushir Mohd. Khan v Sajeda Bano, (2000) 3 SCC 536 : AIR 2000 SC 1085 : 2000 AIR SCW

798. 29. Chennammal v Munimalalyan, AIR 2005 SC 4397 : JT 2005 (9) SC 1 : 2005 AIR SCW 5280,

points of difference restated. To the same effect Umabai v Nilkanta Dhondiba Chavan, (2005) 6 SCC 243 : 2005 (4) Mad LJ 24 (SC) : agreement of sale for an amount which when repaid the property was to be returned, no mortgage. 30. 1954 SCJ 469 : AIR 1954 SC 345 : 1955 SCR 174 . 31. Mushir Mohd. Khan v Sajeda Bano, AIR 2000 SC 1085 : 2000 AIR SCW 798 : (2000) 3 SCC

536 . 32. Kamal Shivajirao Katkar v Gajarabi Sopanrao Algude, AIR 2001 Bom 369 : 2001 (3) All MR

290 : 2001 (3) Bom LR 436 . 33. Vishwanath Dadoba Karale v Parisa Shantappa Upadhye, AIR 2008 SC 2510 : 2008 AIR SCW

3473 : (2008) 4 Scale 652 ; property transferred to defendant by plaintiff for five years when he borrowed money by executing a registered deed with a condition of repurchase in the deed, plaintiff continued to pay instalments for land, it was held that the transfer of property was not permanent and the order for holding the agreement as mortgage by conditional sale and not sale with condition for repurchase was also held proper, D Selvaraj v Palaniswami, AIR 2019 Mad 3 ; property sold to pay family debts and possession given to purchasers with an undertaking that vendors would repay amount within five years and get the sale deed executed, transaction

held to be conditional sale with option to repurchase, Rajamma v B Renuka Murthy, AIR 2017 (NOC) 614 Kar. 34. Kantilal M Kadia v Somabhai Dahyabhai Kadia, 2003 (3) RCR (Civil) 273 (Guj) (FB) : AIR 2003

Guj 205 : 2003 (1) Guj LR 817. 35. Kundurthi Ranganadham v Puli Ragaiah, AIR 2004 AP 415 : 2004 (4) Andh LT 209 : 2004 (4)

Civ LJ 559 . 36. Vanchalabai Raghunath Ithape v Shankarrao Baburao Bhidare, AIR 2013 SC 2924 : (2013) 7

SCC 173 : (2013) 6 Mah LJ 80 ; Ram Chandra Yadav v Shahid Alam, AIR 2011 Jhar. 97 , also have the sale recorded in 4 documents, the last stipulation for repurchase within specified time which had expired. 37. Tulsi v Chandrika Prasad, AIR 2006 SC 3359 : (2006) 8 SCC 322 : (2006) 6 Supreme 582 .

The court distinguished the case from its down decision in Bishwanath Prasad Singh v Rajendra Prasad, (2006) 4 SCC 432 : 2006 AIR SCW 1235 : AIR 2006 SC 2965 because recitals in the deed showed that the borrower intended to transfer the property absolutely in lieu of the loan amount, recitals showed intention to convey the property with an agreement on the part of the transferee to reconvey it to the transferor. Thus no mortgage was involved. The transaction of a mortgage was found in Indira Kaur v Sheo Lal Kapoor, (1988) 2 SCC 488 : AIR 1988 SC 1074 : JT 1988 (1) SC 652 (2) where the court took into consideration the stipulations made in the deed to the effect that a period of 10 years was fixed for conveying the property and the vendee was prohibited from parting with or selling the right, title or interest in the property during that period and no mutation was effected in his favour. Contd on next page Contd from previous page This was construed to be a transaction of mortgage. In Tamboli Ramanlal Moti Lal v Gharchi Chimanlal Keshavlal, AIR 1992 SC 1236 : 1992 AIR SCW 1170 : JT 1992 (2) SC 525 , a transaction of absolute sale was found, the property was handed over to the creditor giving him all the rights of enjoyment and leasing out for a period of five years in Roop Kumar v Mohan Thadani, (2003) 6 SCC 395 : 2003 AIR SCW 2425 : AIR 2003 SC 2418 , the statutory provision clearly shows that a mortgage by conditional sale must be evidenced by one document, whereas a sale with a condition of retransfer may be evidenced by more than one document, which was not the case here. Pandit Chunchun Jha v Sheikh Ebadat Ali, (1955) 1 SCR 174 : AIR 1954 SC 345 : 1954 SCA 611 , each case must be decided on its own facts. Umabai v Nilkanta Dhondiba Chavan, (2005) 6 SCC 243 : (2005) 3 Supreme 508 , the court explained the difference between mortgage by conditional sale and a sale with a condition of repurchase. In Ramlal v Phagua, (2006) 1 SCC 168 : 2005 AIR SCW 4348 : AIR 2006 SC 623 , an agreement to reconvey property will not ipso facto lead to the conclusion that the sale is nominal. 38. Bishwanath Prasad Singh v Rajendra Prasad, AIR 2006 SC 2965 : (2006) 4 SCC 432 : 2006 (2)

Supreme 561 . Rajwati Devi v Prem Nandani, AIR 2013 Pat 166 , mortgage created for two years, amount paid back within time, suit for redemption decreased in favour of mortgagor. 39. Bhagwan Devi v Beni Bai, AIR 2006 All 251 : 2006 (64) All LR 10 : 2006 (4) All LJ 43. 40. Manjabai Krishna Patil v Reghunath Revaji Patil, (2007) 2 SCR 951 : JT 2007 (4) SC 312 :

(2007) 3 Scale 331 , two documents, one for mortgage and the other for reconveyance, sale deed was executed in favour of two persons, whereas deed of reconveyance was signed by only one person, case looked to be an absolute sale subject to the condition of reconveyance, the High Court did not consider this aspect remitted for decision afresh by the High Court. Jogendra Chandra Das v Kirtika Devi, AIR 2014 Gau 10 : 2013 (6) Gau LR 140 , there were two separate deeds, one sale deed and the other unregistered reconveyance deed. Sale deed contained no condition for repurchase. It was there in the separate deed, which was also doubtful because its sale was uncertain. No valid condition of repurchase; when transfer of property was made for a meagre consideration below the market value of the property and the language of the document

indicated existence of debt and long period, the transaction was held to be mortgage by conditional sale even when it was described as a sale, Baba Genu Waghchure v Shankar Tukaram Thorat, AIR 2018 Bom 209 . 41. Abdul Sami Qureshi v Sardar Kuldeep Singh, AIR 2008 (NOC) 840 (All). 42. Jairambhai Ramabhai Rabari v Bipin Chandra Naranbhai Barot, AIR 2013 Guj 272 . 43. Ins. by Act 20 of 1929, section 19; Shyam Singh v Daryao Singh, AIR 2004 SC 348 : (2003) 12

SCC 160 : (2004) 1 CHN 54 , sale agreement and agreement of repurchase were contained in two separate documents, though they were contemporaneously executed, the transaction was treated by the court as a mortgage, it seemed to be akin to mortgage, if not mortgage itself. 44. Subs. by Act 20 of 1929, section 19, for "and to appropriate them". 45. Subs. by Act 20 of 1929, section 19, for "and". 46. Prabhakaran v M Azhagiri Pillai, AIR 2006 SC 1567 : (2006) 4 SCC 484 : (2006) 3 Supreme

245 , it is a transfer by the owner (mortgagor) of interest in an immovable property for securing an amount advanced or to be advanced by the creditor (mortgagee) under which possession of the property is delivered to the mortgagee with authority to retain possession and enjoy the rents and profits of the property until an amount equal to the debt is realised; where mortgagee receives rents and profits accruing from property and mortgagor himself is not personally liable to pay anything except tendering of amount at the time of redemption of mortgage, it is an usufructuary mortgage and not anomalous mortgage, Dalel Singh v Rampal, AIR 2019 P&H 54 . 47. Monappa Naika v Land Tribunal, AIR 2012 Kant 161 : 2012 (4) AIR Kant R 7, Karnataka Land

Reforms Act, 1962, sections 4 and 2. 48. Dalel Singh v Rampal Singh, AIR 2019 P&H 54 . 49. KP Janardhana Gupta v DV Usha Vijay Kumar, AIR 2006 Kant 243 : ILR 2007 Kant 168 : 2006

(5) Kant LJ 219 , recitals and also intention of the parties showed that the deed was originally in the form of a lease from year to year basis and on advance payment of premium for the whole year, contention that it was a usufructuary mortgage was held to be not acceptable. 50. Sona Devi Jain v Dr Ompraksh Sharma, AIR 2006 MP 181 : 2006 AIHC 3647 : 2007 (1) Rent

LR 274 , loan of a sum of money by mortgaging shop, loan carried interest, no fixed rent or that only symbolic possession was delivered, hence only usufructuary mortgage, right of redemption available. 51. Tara Chand v Sagarbai, AIR 2007 SC 2059 : (2007) 5 SCC 360 : (2007) 7 Scale 21 . 52. Ram Bharosey Lal Gupta v Hindustan Petroleum Corp Ltd, (2013) 9 SCC 714 : (2013) 126 AIC

234 : (2013) 3 All LJ 757, reversing the Allahabad High Court decision in Hindustan Petroleum Corp Ltd v Ram Bharosey Lal Gupta, AIR 2007 All 220 : 2007 AIHC 3684 : 2007 ALJ 789 , because the lease had already been terminated by surrender of possession. 53. (1993) 3 SCC 351 : AIR 1993 SC 1712 : 1993 AIR SCW 1599. 54. (1988) 4 SCC 727 : JT 1988 (4) SC 133 : AIR 1989 SC 553 . 55. (1939) 66 IA 50 : AIR 1939 PC 14 . 56. Williams v Bosanque, (1819) 1 Br B 238. 57. Raj Kishore v Prem Singh, AIR 2011 SC 382 : 2011 AIR SCW 3859 : (2011) 1 SCC 657 . 58. Added by Act 20 of 1929, section 19. 59. Subs. by the AO 1948, for "Bombay and Karachi". The word "and" had been ins. by the AO

1937. 60. The words "Rangoon, Moulmein, Bassein and Akyab" omitted by the AO 1937. 61. For notifications relating to the towns of—Ahmedabad, see Gazette of India, 1935, Pt I, p

936, Bandra, Kurla and Ghathkoper Kirol, see Gazette of India, 1924, Pt I, p 1064, Cawnpore, Allahabad and Lucknow, see Gazette of India, 1938, Pt I, p 158. Coimbatore, Madura, Cocanada

and Cochin, see Gazette of India, 1935, Pt I, p 526. See State of Haryana v Navir Singh, AIR 2014 SC 339 : 2013 AIR SCW 6251 : (2014) 1 SCC 105 , the case was remanded for reconsideration of fact whether the area was falling within the notified area. 62. The words "Governor-General-in-Council", successively amended by the AO 1937 and the AO

1950 to read as above. 63. KJ Nathan v SV Maruty Reddy, AIR 1965 SC 430 : 1964 SCR 727 : 1964 (2) SCJ 671 , here all

such requirements were enumerated; existence of debt, deposit of title deeds to creditor and intention of parties that title deeds are security for debt are three requirements of equitable mortgage, Mukesh Kothari v State Bank of India, AIR 2017 Bom 131 ; mortgagor borrowed money by executing a promissory note and created equitable mortgage by depositing title deeds and executed letter of confirmation which was admitted by him, his plea that transaction by executing unregistered confirmation deed cannot be treated as mortgage was not held tenable, mortgagor was held liable to pay mortgage amount, YL Verrabadra v A Mohammed Farook, AIR 2019 Mad 116 . 65. AIR 1965 SC 430 : 1964 SCR 727 : 1964 (2) SCJ 671 . 66. TS Arumughan v K Madhusudan Nair, AIR 2017 Ker 237 ; mortgage was created by deposit

of title deeds but there was a letter by mortgagor to appellant bank whereby mortgagor waived his rights under sections 61, 65A and 67A, relying on Veermachineni Gangadhara Rao, (1971) 1 SCC 874 , the High Court took the view that waiver of rights amounted to a contract and unless that document was registered, mortgage would not take place. The High Court held the mortgage invalid, set aside the sale proceedings including sale certificate. The order of the High Court was set aside by the Supreme Court in view of the facts that the mortgage was acted upon by the parties concerned for sanctioning and obtaining loan, issue of validity of mortgage was raised for the first time before the High Court, said mortgage was also in respect of other properties, the sale of which had attained finality and independent special leave petition has been filed by the auction-purchaser who had obtained loan to pay the sale price and servicing that loan, he was in possession of concerned property since March 2016 and had spent considerable amount in renovating and repairing it, SBI v Metta Chandra Sekhar Rao, (2017) 16 SCC 777 . 67. Venkata Ramayya v Narsinga Rao, (1911) 21 Mad LJ 454 : 9 IC 309 : 9 Mad LT 292. 68. Syndicate Bank v Modern Tile and Clay Works, 1980 Ker LT 550 . 69. Estate Officer & Manager (Recoveries), AP Industrial Infrastructure Corp Ltd v Recovery Officer,

Debt Recovery Tribunal, Bangalore, AIR 2004 AP 198 : 2003 (5) Andh LD 599 : 2003 (5) Andh LT 216 . 70. AIR 2007 SC 3169 : (2007) 9 SCR 619 : (2007) 8 SCC 361 , Requisites of an equitable

mortgage are : (i) a debt; (ii) a deposit of title deeds; and (iii) an intention that the deeds shall be security for the debt; when during subsistence of debt debtor hands over title deeds to the creditor, it raises early presumption of creating security and debtor admits execution of memorandum acknowledging deposit of title deeds as security, it was held that presumption of creation of equitable mortgage can be rightly raised by the court, TS Arumughan v K Madhusudan Nair, AIR 2017 Ker 237 . 71. Mandankini Hule v Lachman Jiwnani, AIR 2007 Del 279 : 2007 (141) DLT 467 : 2008 AIHC 13

(NOC); State Bank of India v Zeenath X-Ray & ECG Clinic, AIR 2007 (NOC) 2315 (AP) : (2007) 4 Andh LD 506, no evidence to show that the documents in question were handed over at the time of sanction of loan, the sanctioning officer was not examined, there was nothing to show why the documents were shown and were not taken away, hence no proof of documents of being delivered with the intention of creating a mortgage.

72. Canara Bank v Vara Trading Co, AIR 2006 Kant 88 : ILR 2006 Kant 130 : 2006 (4) Kant LJ 239

. 73. Ride Master Rims Pvt Ltd v ING Vysya Bank Ltd, AIR 2007 Mad 34 : 2007 AIHC 210 (NOC) :

2007 (1) Kant (NOC) 88. The court referred to MAVR Nataraja Nadar & Sons v State Bank of India, (1993) 1 Law Weakly 456, the court reviewed a number of decisions on the point whether deposit of all the relevant documents is necessary for creating equitable mortgage. Rajagopal v State Bank of Travancore, (1995) 1 Mad LJ 175, wherein it was held that in order to create a valid equitable mortgage, it is not necessary that the original documents of title to the property should be deposited and deposit of copies of title deeds is sufficient to create an equitable mortgage, it is only the intention of the parties which is the prime factor to be considered. KJ Nathan v SV Maruty Reddy, AIR 1965 SC 430 : 1964 SCR 727 : 1964 (2) SCJ 671 , here also intention of the property was considered to be of primary importance. Angu Pillai v MSM Kasiviswanathan Chettiar, AIR 1974 Mad 16 : (1973) 1 Mad LJ 334 : 86 Mad LW 94, the court said that "it is sufficient that the deeds deposited bona fide relate to the property or are a material evidence of title or are shown to have been deposited with the intention of creating a security. 74. (1912) 14 Bom LR 1020 : 17 IC 722. 75. Sree Visalam Chit Fund Ltd v Vasudeva Achari, 2003 (3) RCR (Civil) 416 (Mad). 76. Syndicate Bank v M Sivarudrappa, AIR 2003 Kant 210 : ILR 2003 (1) Kant 908 : 2003 (2) Kant

LJ 226 . 77. Hubert Payoli v Santhavilasathu Kesavan Sivadasan, AIR 2009 Ker 160 (DB) : 2009 (78) AIC

570 : 2009 (1) Ker LT 618 . 78. State of Haryana v Navir Singh, AIR 2014 SC 339 : 2013 AIR SCW 6251 : (2014) 1 SCC 105 . 79. Prakashwati Jain v Punjab State Industrial Development Corp, AIR 2012 P&H 13 : 2012 (2) Civ

LJ 447 : 2011 (4) Punj LR 242 . 80. Satli Venkateswara Reddy v Mallidi Venkata Reddy, AIR 2016 Hyd 24 ; Allahabad Bank v

Shivganga Tube Well, AIR 2014 Bom 100 : 2014 (3) AIR Bom R 689, if any document is executed to show that the mortgagee under the said document had mortgaged the property by deposit of title deeds, then registration of such document becomes necessary. 81. Denial of liability on the South Indian Bank Ltd, Thiruvananthapuram v KP Ramachnadran, AIR

2017 Ker 161 . 82. ibid 83. Nirmala Baldwa v Govt of Andhra Pradesh, AIR 2011 AP 26 . 84. Allahabad Bank v Shivganga Tube Well, AIR 2014 Bom 100 : 2014 (3) AIR Bom R 689. 85. Kanna Karup v Sankara, (1921) 44 Mad 344 : AIR 1921 Mad 243 . 86. Edathil v Kopashan, (1862) 1 Mad HC 122. 87. Hathika v Puthiya Purayil Padmanathan, AIR 1994 Ker 141 : 1994 (1) Ker LJ 89 : ILR (1994) 1

Ker 83 ; Nanuram v Kishanlal, AIR 2007 (NOC) 1107 (MP), plaintiff's late father took loan from the defendant against mortgage of land. It was alleged, that the defendant, a money lender, got sale deed executed in his favour instead of usufructuary mortgage, documents showed that the transaction was not an out and out sale. The fact that the defendant was cultivating the land would give him only the rights of a mortgagee. Decree of the trial judge directing him to hand over the land on receiving his payment was held to be proper. 88. Raysing Hurji Bhil v Vaniben Manjibhai, AIR 2007 Guj 69 : 2007 (1) Guj LR 562 : 2007 (53) AIC

441 , because the defendants were put in possession, they would have become mortgagees on completion of twelve years from the date of oral mortgage limitation had not started running from that date. 89. (1804) 9 Ves 407 (410).

90. Kanhaiya Lal Heeranand Sindhi v Sohan Lal Ram Kalyan Vijayvarggiya, AIR 2015 Raj 111 . 91. Deano v Richardson, (1871) 3 NWP 54. 92. Sreeram v Bammireddi, (1918) 35 Mad LJ 450 : 47 IC 976. 93. Narasimah v Venkata Ramaiah, (1919) 42 Mad 59 : 47 IC 976 : AIR 1919 Mad 779 . 94. Bhibhuti Bhusan v Baidya Nath, (1933) 40 Cal WN 625.

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER

IVOF

MORTGAGES

OF

IMMOVABLE

PROPERTY

AND

CHARGES This Chapter can be categorised into following:— Part I—Mortgage defined Part II—Rights and liabilities of Mortgagor Part III—Rights and liabilities of Mortgagee Part IV—Priority Part V—Marshalling and Contribution Part VI—Deposit in Court Part VII—Suits for foreclosure, sale or Redemption. (Repealed) Part VIII—Foreclosure and sale (Repealed) Part IX—Redemption Part X—Anomalous Mortgage Part XI—Attachment of Mortgaged Property (Repealed) Part XII—Charges Part XIII—Notice and Tender

Part I: Mortgage Defined [s 59] Mortgage when to be by assurance.— 95.Where the principal money secured is one hundred rupees or upwards, a mortgage 96.[other than a mortgage by deposit of title deeds] can be effected only by a registered

instrument signed by the mortgagor and attested by at least two witnesses. Where the principal money secured is less than one hundred rupees, a mortgage may be effected either by 97.[a registered instrument] signed and attested as aforesaid or (except in the case of a simple mortgage) by delivery of the property. 98.[***]

Comments [s 59.1] Mode of Transfer in Mortgage (Section 59) The property may be transferred by way of mortgage in the following three ways:—

(i) by a registered instrument (ii) by delivery of possession (iii) by deposit of title-deeds

[s 59.1.1] Registered Instrument In a mortgage (other than a mortgage by deposit of title deeds), where the principal money secured is Rs 100 or more, the mortgage can be affected only by— (a) a registered instrument99. (b) instrument signed by mortgagor100. (c) attested by at least two witnesses.

[s 59.1.2] Delivery of Possession Where the principal money secured is less than Rs 100, a mortgage may be affected either by a registered instrument or by delivery of possession. The registered instrument has to be signed by the mortgagor and attested by at least two witnesses. The mortgage may be affected by delivery of possession only except in the case of a simple mortgage. In a simple mortgage, the mortgagor himself retains the possession of the property and it is not given to the mortgagee, therefore, the mortgage can be affected only by a registered instrument although the secured debt is less than Rs 100.

[s 59.1.3] Deposit of Title-Deeds In mortgage by deposit of title deeds, whatever be the amount of mortgage debt, writing and registration are not necessary. This type of mortgage is allowed only in certain cities for promoting smooth flow of business.101.

[s 59.2] Effects of non-registration Where the mortgage requiring registration is not registered, the mortgage is not converted into a charge under section 100 but it may be used to establish a personal liability.102. In such a case, the mortgagor cannot sue for redemption because the mortgage is invalid but he can sue for possession on his offering to repay the loan.103. The mortgagor cannot regain possession on the basis of oral mortgage as it could not be proved in court for want of registration. But it would be open to him to recover possession on the strength of his title.104.

95. As to limitation to the territorial operation of section 59, see section 1, supra, section 59,

extends to every cantonment—see section 287 of the Cantonments Act, 1924 (2 of 1924). 96. Ins. by Act 20 of 1929, section 20. 97. Subs. by Act 6 of 1904, section 3, for "an instrument". 98. The third paragraph omitted by Act 20 of 1929, section 20. 99. Brhampal Singh v State of Uttar Pradesh, AIR 2008 (NOC) 539 (All) : (2007) 6 All LJ 581, a

security bond creating a charge or mortgage in respect of property of the value of Rs 100 or more is compulsorily registrable. 100. Tara Chand v Sagarbai, AIR 2007 SC 2059 : (2007) 5 SCC 392 : (2007) 6 Scale 706 , it is

immaterial for the purpose of admissibility of the document or otherwise, whether the mortgagee was a signatory to the deed of mortgage or not. It is not material to the admissibility of the document or otherwise whether the mortgagee was a signatory or not particularly where the deed of mortgage has been acted upon by the mortgagee with knowledge of its terms. 101. Sidhi Vegetable Oil Products v Govt of AP, AIR 2007 AP 195 , title deeds were deposited,

subsequently and money advanced, execution of registered deed of mortgage was not necessary. A memorandum evidencing deposit of title deeds was presented for registration, held it could not be treated as a mortgage deed. Stamp duty was leviable under Article 7 of Schedule 1A and not under Article 35 for its registration. Madan Lal Sobti v Rajasthan State Industrial Development and Investment Corp, AIR 2007 (NOC) 638 (Del), if the mortgage is by a mortgage deed or by a composite document, it would require registration, mortgage was created here by way of collateral security for which the consideration was provided by the lending corporation by forbearance from enforcing us rights under the original mortgage. Jayalakshmi Trading Co v Krishnamurthy, AIR 2006 Mad 179 : 2006 (4) Kant (N) 476 : 2005 (4) Mad LW 418 , advancement of loan and execution of memorandum of deposit of title deeds, the question whether they were contemporaneous was held to be a mixed question of law and fact to be determined only by evidence whether oral or documentary. 102. Vani v Bani, ILR 20 Bom 553. 103. Maung Tung v Maung Aung 2 Rang 313. 104. Jeet Ram v Ganga Phal, AIR 2010 (NOC) 834 (P&H).

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER

IVOF

MORTGAGES

OF

IMMOVABLE

PROPERTY

AND

CHARGES This Chapter can be categorised into following:— Part I—Mortgage defined Part II—Rights and liabilities of Mortgagor Part III—Rights and liabilities of Mortgagee Part IV—Priority Part V—Marshalling and Contribution Part VI—Deposit in Court Part VII—Suits for foreclosure, sale or Redemption. (Repealed) Part VIII—Foreclosure and sale (Repealed) Part IX—Redemption Part X—Anomalous Mortgage Part XI—Attachment of Mortgaged Property (Repealed) Part XII—Charges Part XIII—Notice and Tender

Part I: Mortgage Defined [s 59A] References to mortgagors and mortgagees to include persons deriving title from them.— 105.Unless otherwise expressly provided, references in this Chapter to mortgagors and

mortgagees shall be deemed to include references to persons deriving title from them respectively.] A right of redemption does not remain independent of the property itself. A sale of property, that too to a stranger who had nothing to do with the mortgage and who was not the party to the same, would convey a complete title of the property to him and once the title of that property goes, the equity of redemption shall also accompany the property. The stranger would then be in a position to substitute himself in place of the plaintiff – mortgagor and to step in her shoes.106.

105. Ins. by Act 20 of 1929, section 21. 106. A Gnanam v Palaniappa & Co, AIR 2001 Mad 14 : 2001 (2) ICC 473 : 2000 (3) Mad LJ 745.

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER

IVOF

MORTGAGES

OF

IMMOVABLE

PROPERTY

AND

CHARGES This Chapter can be categorised into following:— Part I—Mortgage defined Part II—Rights and liabilities of Mortgagor Part III—Rights and liabilities of Mortgagee Part IV—Priority Part V—Marshalling and Contribution Part VI—Deposit in Court Part VII—Suits for foreclosure, sale or Redemption. (Repealed) Part VIII—Foreclosure and sale (Repealed) Part IX—Redemption Part X—Anomalous Mortgage Part XI—Attachment of Mortgaged Property (Repealed) Part XII—Charges Part XIII—Notice and Tender

PART II: RIGHTS AND LIABILITIES OF MORTGAGOR This part dealing with rights and liabilities of mortgagor consists of 11 sections.

[s 60] Right of mortgagor to redeem.— At any time after the principal money has become 107.[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 108.[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 (where the mortgage has been effected by a registered instrument) to have registered an acknowledgement in writing that any right in derogation of his interest transferred to the mortgagee has been extinguished: Provided that the right conferred by this section has not been extinguished by act of the parties or by 109.[decree] of a Court.

The right conferred by this section is called a right to redeem and a suit to enforce it is called a suit for redemption. Nothing in this section shall be deemed to render invalid any provision to the effect that, if the time fixed for payment of the principal money has been allowed to pass or no such time has been fixed, the mortgagee shall be entitled to reasonable notice before payment or tender of such money. (a) Redemption of portion of mortgaged property.—Nothing in this section shall

entitle a person interested in a share only of the mortgaged property to redeem his own share only, on payment of a proportionate part of the amount remaining due on the mortgage, except 110.[only] where a mortgagee, or, if there are more mortgagees than one, all such mortgagees, has or have acquired, in whole or in part, the share of a mortgagor.

Comments [s 60.1] Right of Redemption (Section 60) A mortgagor has the following six rights:— (I) Right of Redemption (II) Right of transfer to a third party instead of re-transference to himself. (III) Right to inspection and production of documents. (IV) Right to accession (V) Right to grant a lease (VI) Right to reasonable waste.

[s 60.1.1] Right of Redemption (Section 60) At any time after the principal money has become due, the mortgagor has a right on payment of the mortgage-money at a proper place and time, to require the mortgagee— (a) to deliver to the mortgagor the mortgage-deed and all documents relating to

mortgaged property in possession or power of the mortgagee, (b) to deliver possession of the property to the mortgagor where the mortgagee is

in possession of it, (c) to re-transfer the property to the mortgagor or any third person directed by him

(at the cost of the mortgagor) or to register an acknowledgement in writing of the extinction of the mortgagee's right. These rights cannot be exercised if they have been extinguished by the act of the parties or by a decree of a court. The right conferred by this section is called a right to redeem and a suit to enforce it is called a suit for redemption. This section does not render invalid any provision to the effect that—

(a) if the time fixed for payment of the principal money has been allowed to pass, or (b) no such time has been fixed,

the mortgagee shall be entitled to reasonable notice before payment or tender of such money. The most important right of the mortgagor is the right to redeem the mortgage i.e., to pay off the mortgage-money and get back the property. At any time after the principal money has become due, the mortgagor has a right on payment or tender of the mortgage-money to require the mortgagee to reconvey the mortgaged property to him. This right of the mortgagor to have his property returned to him contemporaneously with the discharge of his obligation is called the right of redemption. In England, this right was created by the Courts of Equity and is known as equity of redemption. In India, there is no distinction between equity of redemption and right to redeem. The mortgagor being an owner who has parted with some rights of ownership has a right to get back the mortgage deed or mortgaged property, in exercise of his right of ownership. The right of redemption recognised under the Transfer of Property Act, 1882 is thus a statutory and legal right which cannot be extinguished by any agreement made at the time of mortgage as part of the mortgage transaction. Any provision incorporated in the mortgage deed to prevent or hamper the redemption would be void. A mortgage cannot be made irredeemable and the right of redemption illusory. In an equitable mortgage, no term in the deed restrained mortgagors from effecting partition of equity of redemption; it was open to mortgagors to partition said property. It was held that the interest of mortgagee bank is not affected as the doctrine of substituted security applies to mortgages also.111. Section 60 of the Transfer of Property Act, 1882 confers on the mortgagor the right of redemption which is a statutory right. The right of redemption is an incident of a subsisting mortgage and it subsists so long as the mortgage subsists. Whether in a particular case there is any clog on the equity of redemption, has to be decided in view of the background of a particular case. The doctrine of clog on the equity of redemption has to be moulded to modern conditions.112. The right of redemption is an incident of a subsisting mortgage and subsists so long as the mortgage itself subsists. It can be extinguished as provided in the section and when it is alleged to be extinguished by a decree, the decree should run strictly in accordance with the form prescribed for the purpose.113. Where no time for redemption was prescribed (usufructuary mortgage in this case), equity of redemption subsisted. The mortgagee could not become the owner by efflux of time.114. No limitation being applicable, the property was not to vest in the custodian. The application for redemption filed by the mortgagor had to be allowed.115. Where no time per redemption is prescribed, the right to redeem arisen when the mortgagor pays or deposits in court the mortgage money or the balance due.116. A mortgage is a transfer of an interest in some immovable property for the purpose of securing the payment of a loan. It is created by the act of the parties. A redemption presupposes the existence of a mortgage. Right to redeem is given under this section and a suit for redemption is primarily to enforce the right to make a payment of mortgage-money. In this section, the words "in the absence of a contract to the contrary" are not used. This means that the right of redemption is a statutory right which cannot be fettered by any condition which impedes or prevents redemption. Any such condition is held to be void. The Supreme Court has held that the right of redemption under a mortgage deed

can come to an end only in a manner known to law. Such extinguishment of the right can take place by a contract between the parties, by a merger or by a statutory provision debarring the mortgagor from redeeming the mortgage. When a suit for redemption is filed the mortgagee in possession of property will have to deliver the possession to the mortgagor unless he can show that the right of redemption has come to an end or that a suit is liable to be dismissed on some other valid ground.117. Where an earlier suit for redemption was dismissed under O XVII, rule 3, CPC, it was held that the right of redemption was not extinguished by the passing of a specific order and in the form prescribed under CPC. The subsequent suit for redemption was not barred by the principle of res judicata.118. When the right of redemption is extinguished by the act of the parties, the act must be in compliance with the formalities prescribed by law. The expression "act of parties" refers to some transaction subsequent to the mortgage and standing apart from the mortgage transaction. For example, paying back the amount due to the mortgagee is an act in the exercise of the right of redemption.119. The court added that it is immaterial whether the fact of payment has been enclosed on the mortgage deed or not. In this case the mortgagee had admitted that he had received back the amount due to him but the same was into endorsed on the mortgage deed. The court said that it is enough that the fact of payment was either proved or admitted. The right to redeem can be exercised by the mortgagor or by any other person taking over the whole of his interest as this right follows the interest of the mortgagor. The other person may have acquired the interest of the mortgagor by assignment inter vivos or by devolution on death. It is well-settled that the mortgagee cannot claim any right of tenancy unless it is conferred by any of the stipulations made in the mortgage-deed. Such a right of tenancy would continue with a mortgagee if he had any right before the execution of the mortgage-deed. A mortgagee cannot acquire any right except what is given by the mortgage deed or if he has pre-existing rights. Where the relationship of landlord and tenant between mortgagor and mortgagee either prior to mortgage or by virtue of stipulation in mortgage-deed was not established, the mortgagor was held entitled to redeem the mortgage and there was no necessity to draw preliminary decree as it was an usufructuary mortgage.120. Only usufructuary mortgagor has the right to apply for final decree and the usufructuary mortgagee is entitled to possess property till final decree of redemption is passed. Where such a mortgagor failed to deposit mortgage amount within the time stipulated in the preliminary decree but made the deposit with the necessary permission, he was held entitled to redeem the property. He was not debarred for redeeming the property.121. A usufructuary mortgagee cannot deny title of his mortgagor. Where the defendant's title was a derivative title as mortgagee and he having come into possession of the whole property as a mortgagee from the plaintiff, it was held that it was not open to the defendant mortgagee to question title of the plaintiff mortgagor.122. In the case of decree for redemption of usufructuary mortgage no limitation begins to run until deposit is made though there is a conditional preliminary decree and default has been committed by the mortgagor compliance thereof.123. On the facts and circumstances of a case, the Supreme Court did not allow a mortgagee to claim the status of a lessee. The plaintiff's predecessor had created the mortgage. The plaintiff filed a suit for redemption and reconveyance. The mortgagee pleaded that the defendant by his conduct agreed to treat the transaction as lease. The defendant was in possession as a mortgagee. He could not prove his possession as a tenant. The court said that his status could not be changed from mortgagee to lessee

by any document or deed which was not registered and much less by conduct. The plaintiff was entitled to the decree of redemption and possession.124. Redemption of mortgage by conditional sale implies retransfer of suit property to mortgagor at his expenses and delivery of property to mortgagor by mortgagee if mortgagee is in possession of property.125.

[s 60.2] Once a Mortgage, always a Mortgage Once a mortgage, always a mortgage suggests that the mortgagor's right of redemption is an indefeasible right which cannot be taken away from him by any law or contract. This right cannot be detached from the mortgage. The mortgage may be redeemed at any time after the principal money has become due. Neither the mortgagor can insist on redeeming his property before the money has become due nor the mortgagee can attempt to foreclose. The mortgagor can redeem his property before his equity of redemption has actually been foreclosed i.e., till a decree is passed in a foreclosure suit. The mortgagor's right of redemption and the mortgagee's right of foreclosure or sale are co-extensive. When the mortgagor's right to redeem accrues, the mortgagee has a right to enforce his security. However, the terms of mortgage may limit the rule and where the limitation is not oppressive or unreasonable, it will be given effect to.

[s 60.3] Clog on redemption A mortgage is a security for the debt. The right of redemption continues although the mortgagor fails to pay the debt at the due date. Any provision which is inserted to prevent or impede this right is void as a clog on redemption. In the words of Lindley, MR in Stanley v Wilde126.: "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 doctrine of clog on redemption relates only to dealings between the parties to a mortgage at the time when the contract of mortgage is entered into. It does not apply where the parties subsequently vary the terms upon which the mortgage may be redeemed. The settled position is now that a mortgage cannot be made irredeemable (except in the case of companies which may issue irredeemable debentures). The right of redemption also cannot be made illusory or superfluous. The Supreme Court considered this rule in Murarilal v Devkaran.127. In this case, a clause incorporated in the mortgage deed provided that the amount due under the mortgage should be repaid within 15 years whereupon the property would be redeemed. It was further provided that in case the payment was not made within the given period, the mortgagee would become the owner of the property. The Rajasthan High Court held that the relevant provision as to the period within which the mortgagemoney had to be repaid amounted to a clog on the equity of redemption and could not be pleaded as a bar to the suit. The Supreme Court affirming the High Court held that if a mortgage deed contained a stipulation which unreasonably restrained the mortgagor's equity of redemption, the courts were empowered to ignore that stipulation subject to the general law of limitation prescribed in that behalf.

Where the recitals in the document showed that the mortgagor had no income to repay the loan amount, gave up his right to collect the rents of the mortgaged property and became indebted to the mortgagee for three year with this condition that if he failed to pay back the loan within three years, the mortgager could get a sale deed executed, the court said that this was a document of mortgage and not sale with a right of reconveyance. It was a usufructuary mortgage as possession of the property was given to the mortgagee. The provision that the mortgagee would get the right to have sale deed executed in his favour was a clog on redemption. The plaintiff who was the brother of the deceased mortgagor had interest in getting the property redeemed in view of the provisions of section 91.128.

[s 60.3.1] Long-Term for Redemption It is not necessary conclusion that a long-term for redemption is always a clog on redemption. In fact, it may suit both the parties, relieving the mortgagor of the necessity of finding another creditor and also enabling the mortgagee to make a longterm investment. So long as the right of redemption and foreclosure or sale go hand in hand, it would not really matter how long redemption is postponed. However, if the length of the term is found to be oppressive, redemption would be allowed before the expiry of that period. A period of 200 years has been held to be unreasonable and a clog on redemption.129. A period of 90 years for redeeming the property has been held to be not a clog on redemption.130. A mere long-term of redemption postponing the right of redemption for a number of years may not be a clog on redemption in itself. But where any other condition coupled with it authorizes the mortgagee in possession to convert the property mortgaged so as to make it practically impossible to redeem the property for the original mortgagor, it may be regarded as a clog on redemption.131. The Supreme Court held in Purohit K Govind Ji v Vraj Lal K Purohit132., that though a long-term as a period of redemption is not in itself necessarily a clog on equity of redemption but in the changing circumstances of inflation and phenomenal increase in the prices of real estates, in this age of population explosion and consciousness and need for habitat, a very long-term, takes with other relevant factors, would create a presumption that it is clog on equity of redemption.

[s 60.3.2] Condition of Sale in Default A condition converting a mortgage into a sale is invalid as a clog on redemption. Similarly, a term that in default of the payment of mortgage debt within a certain time or specified date, the mortgagee will become entitled to mortgaged property as an absolute owner, is a clog on redemption.133. In a mortgage by conditional sale, the mortgagor was given a time-period of 4 years from the date of execution of the mortgage-deed to repay the same. Another clause provided that if the mortgagee received notice of re-entry from a public authority for breach of covenants of lease before the expiry of time-period, then the transfer in favour of the mortgagee shall become absolute and all the expenses will be borne by the mortgagor. The Supreme Court held this to be a clog on redemption.134. When a provision in a mortgage-deed being a clog on the equity of redemption is void and unenforceable as against the mortgagor, it cannot bind the assignee of the mortgagor also.135.

[s 60.3.3] Restraint on Alienation The right of redemption can be exercised by the mortgagor as well as his assignees who take the whole of his interest. If the mortgage contains a term that the mortgaged property shall not be alienated by the mortgagor during the continuance of the security even for the purpose of paying off the debt, it is void for being a clog on redemption.

[s 60.3.4] Collateral Benefit to Mortgagee There are two cases which are important on the point of collateral benefit to the mortgagee. In the case of Noakes & Co v Rice,136. Rice, a licensed dealer, mortgaged his premises and goodwill etc. to Noakes & Co. (brewers), subject to a condition that if Rice paid all the money along with interest, Noakes would reconvey the property to Rice or any person directed by him. There was a covenant in the mortgage-deed that during the continuance of the term, whether or not any money be due on security, Rice would not use or sell upon the premises any malt liquors not exclusively obtained from Noakes &Co. It was held that Rice was entitled to get a decree for redemption as the covenant as to exclusive purchase of malt liquors from Noakes & Co. was a clog on redemption, and, therefore, void. The House of Lords also affirmed this decision. Three principles were deduced:— (i) Once a mortgage, always a mortgage i.e., mortgage cannot be made

irredeemable. (ii) The mortgagee shall not reserve to himself any collateral advantage outside the

mortgage contract. (iii) Once a mortgage, always a mortgage, and nothing but a mortgage i.e., any

stipulation which prevents the mortgagor, who has paid the principal, interest and costs for getting back the property, void. In Bradley v Carritt,137. a holder of shares in a tea company mortgaged the shares to secure a loan and agreed to use his best endeavours to secure that always thereafter the mortgagee should have a sale of all the company's tea and in case of any tea being sold otherwise than through the mortgagee, to pay him the amount of commission he would have earned if the tea had been sold through him. The mortgage was paid off and the company afterwards changed their broker. The mortgagee brought an action against the shareholder for breach of agreement. It was held that the agreement was not binding as being a clog on the equity of redemption. These two cases laid down that on redemption— (i) the property must be restored to the mortgagor unfettered, (ii) the stipulation in favour of a mortgagee in a mortgage necessarily came to an

end on payments of debts, and (iii) it is not necessary that the collateral benefit conferred by such stipulations

should affect the mortgaged property. These principles were overruled by the House of Lords in the leading case of Kreglinger v New Patagonia Meat and Cold Storage Co Ltd.138. A company carrying on business of meat preservers borrowed in August, 1910 from a firm of woolbrokers a sum of £ 10,000 at 6% interest. The loan was secured by a floating charge on the undertaking of the company. The agreement was that if the interest was actually paid, the loan was

not to be called in until September, 1915 but the mortgagor may pay off at any time by giving one month's notice. The mortgage-deed provided that for 5 years the mortgagor will not sell sheep skins to any person other than the mortgagee so long so they are willing to buy at best price offered by any other person and that the mortgagors will pay to the mortgagee a Commission on all sheep skins sold by them to any other person. In 1913, the mortgagors paid off the loan in accordance with the agreement. The mortgagees claimed to exercise their option of pre-emption. It was held that the stipulation for the right of pre-emption was not a part of the mortgage but it was a collateral contract entered into as a condition of the mortgagee obtaining the loan and as such was not a clog on redemption. Therefore, the right of pre-emption was held to be enforceable. Lord Parker observed: "There is now no rule in equity which precludes a mortgagee, whether the mortgage be made upon the occasion of a loan or otherwise from stipulating for any collateral advantage, provided such collateral advantage is not either— (i) unfair and unconscionable, or (ii) in the nature of a penalty clogging the equity of redemption, or (iii) inconsistent with or repugnant to the contractual or equitable right to redeem."

Therefore, the collateral conditions which satisfy the test laid down in Kralinger's case will be deemed to be valid in English law. Anything which prevents a neat and clean redemption is a clog on it: where the mortgagee was given the option as a pre-emptive right to become a lessee of the premises on the mortgagor exercising the right of redemption, it was held by the Supreme Court that the term operated as a clog on the equity of redemption, because it prevented the mortgagor from using his right of transfer.139. In this case the mortgagee was already in possession of the premises as a tenant when the mortgage was created. The Supreme Court, therefore, said that on redemption of the mortgage, the status of the mortgagee as a tenant would revive. There could be no eviction by the mere fact of redemption. In Gopalan Krishnakutty v Ranjamma Pillai Sarojini Amma,140. a Three-Judge Bench of the Supreme Court held that the mere fact that the owner creates a mortgage in favour of the lessee of the premises is not by itself a decisive fact to hold that the prior lease became surrendered and the possession of the lessee was converted into that of the mortgagee. It depends wholly upon the intention of the parties at the time of execution of mortgage.141. A long-term for redemption is not necessarily a clog on redemption. Whether a particular term of redemption operates as a clog is to be considered in the light of the facts and circumstances of the case. What is a clog and what is not a clog on the equity of redemption is essentially a question of fact in each case.142.

[s 60.3.5] Condition Postponing Redemption in Case of Default by Mortgagor Where the mortgage was for a period of five years with a condition that if the money was not paid, the mortgagee might enter into possession for a period of 12 years during which the mortgagor could not redeem, the Privy Council held that the condition hundred an existing right to redeem and was invalid.143.

[s 60.3.6] Postponement of Redemption by Subsequent Agreement A subsequent agreement having the effect of postponing redemption may either be an agreement which creates a personal obligation or a charge on a mortgage creating a right in rem. When only a personal obligation is created by an agreement, it is a clog on redemption because the mortgagor is entitled to get back his land on payment of the debt secured on it. Where the mortgaged property is made security for the repayment of the further advances, then the agreement not to redeem the first mortgage until the second debt is paid off is valid. Each case has to be decided on its facts because no hard and fast rule can be laid down as to whether the agreement operates as a further charge or not. For example, A borrowed Rs 500 from B and executed a mortgage (usufructuary) in his favour for Rs 300, the rents and profits were to be taken in lieu of interest. However, in the deed it was covenanted that the balance of Rs 200 would be paid compulsorily with interest @ 2% p.a. at the time of redemption. The covenant was not held to be a clog on redemption but a further charge for Rs 200.144. In another case, A borrowed money from B and executed a usufructuary mortgage in his favour redeemable in a month of Jeth. He again borrowed a further sum from B executing a simple bond covenanting that he would not redeem the mortgage until the money due on the latter bond was paid. This covenant was held to be invalid as a clog on redemption.145.

[s 60.3.7] Subsequent Sale Where a condition of sale is part of the mortgage transaction it is considered as a clog on redemption. Where mortgagee stipulates for the purchase of the property from the mortgagor subsequent to the mortgage, it is a valid clause. In a case, A mortgaged his land to B with its possession for five years. During this period, the rents and profits were to be set off against interest. The mortgage-deed further provided that if the mortgage was not redeemed within a period of 20 years, the mortgagee shall treat the land as sold to him absolutely. This clause was held to be clog on redemption.146.

[s 60.3.8] Right of Pre-emption Where the mortgagor undertook to give the first option to the mortgagee to purchase the mortgaged property (right of pre-emption), it was held that it operated as a clog on the equity of redemption. The mortgagee in this case was a tenant in possession. The terms of the mortgage clearly provided for continuation of the tenancy. The mortgagee, therefore, relapsed into his position as a tenant after redemption.147.

[s 60.3.9] Stipulation to Demolish Structure Where the terms in the mortgage-deed provided that the mortgagee could demolish the existing structure and construct a new one, the expenses for which were to be reimbursed by the mortgagor at the time of redemption, the terms were held to be unreasonable and unconscionable and a clog on redemption.148.

[s 60.4] Redemption and Foreclosure are Co-extensive The mortgagor's right of redemption and the mortgagee's right of foreclosure are coextensive. Depending upon the terms of the mortgage, when the mortgagor's right to redeem accrues, the mortgagee gets the right to enforce his security. However, this rule may be limited by reasonable terms in the mortgage-deed.149.

[s 60.5] Modes of Exercise of Right of Redemption (Sections 60, 83, and 84) The right of redemption can be exercised in three ways:— (i) By paying or tendering the mortgage-money to the mortgagee outside court. The

mortgage-money may be paid directly to the mortgagee or his agent. Tendering is unconditional offer for the payment of debt in such manner that the mortgagee gets the money.150. (ii) By depositing the mortgage-money in the court. (iii) By filing a suit for redemption. The suit can be filed only after the principal

money has become due. It must be filed during the subsistence of mortgagor's right of redemption.151. Where first a suit for redemption of properties was decreed in respect of some items only and no order was passed regarding other items, second suit for redemption in respect of other items was held not barred by res judicata.152. The mortgage deed has to be returned to the mortgagor for completing the process of redemption. If the process of redemption has been given the shape of an endorsement of redemption, signature of the mortgagee should be there. Any endorsement of redemption without signature would cast a doubt on the endorsement itself and also on other connected documents.153. The question was whether there was the right to redeem the entire property or only a part of it. The appellate court, on the basis of an earlier decision of 1972 held that the appellant was entitled to redeem only the 1/4 share of the property. The karta along with his two minor sons mortgaged the properties in question to a mortgagee and a further mortgage to another person. Thereafter the Karta sold the right of redemption of his own. The sons and their wives filed a case for a declaration that the sale of the right of redemption was bogus and not binding on their shares. This case was dismissed by the Trial Court holding that the properties were separate properties of the Karta and even if they were taken as joint properties, the Karta had the right to act in the family interest. It was held that this judgment having become final constituted a res-judicata to prevent any subsequent challenge. The purchaser of the right of redemption became entitled to redeem all the properties comprised in the mortgage.154.

[s 60.5.1] Redemption by one co-mortgagor.— The mortgage was that of the joint family property. The entire property was redeemed by one co-sharer/mortgagor. He paid the full amount of the mortgage money. The nonredeeming co-mortgagor sought his share of the property by paying full value of the property. The court said that the property freed from the clutches of the mortgage by payment by one co-owner did not remain a mortgaged property. Limitation for filing the

suit for partition was to be on the basis of the cause of action arising for filing such suits.2

[s 60.6] Extinguishment of Right of Redemption (Section 60) The right of redemption is extinguished:— (i) By the act of parties as when the mortgagor sells his equity of redemption and

thereby extinguishes his right.155. (ii) By an order of the court. Where a decree is passed in a foreclosure suit, or when

a mortgaged property is sold by an order of the court, the mortgagor's right is lost.156. A suit for redemption can be filed till the right of redemption does not cease. In view of section 60 of the Act and O XXIII, rules 1 and 2 of the Civil Procedure Code, 1908, the dismissal of earlier suit for redemption, whether the suit is dismissed as abated or as withdrawn or dismissed for default, would not be a bar for filing a second suit for redemption. The second suit of redemptions to get the earlier mortgage redeemed can be filed till the mortgage is in existence and the right of redemption by efflux of time or the decree of the court passed in specified form does not cease.157. The right of redemption is not lost till the mortgagee sells the property by registered sale deed. The mortgagee bank in this case had proceeded under section 13(6) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, for the purpose of auction sale of the secured asset. The court said that the word "sale or transfer" employed in section 13(8) connotes execution of conveyance and registered sale deed. The mortgagor's right to redeem the mortgage was not extinguished until there is completion of sale by secured creditor by registration of sale deed.158. A suit for possession by co-mortgagee (plaintiff) was filed claiming ownership and exclusive possession of some property which was in possession of defendants for the last 100 years. The plaintiff cleverly sought decree for possession as limitation for filing suit for redemption of mortgaged property had already expired long ago, suppressing the fact that the defendant's ancestor was in occupation of half of the property as mortgagee in possession and he was offered money at time of taking its possession. It was held that in the absence of any pleading or proof to show continuation of right of redemption till time when the present suit was filed, the plaintiff were not entitled for decree of possession by redemption of mortgage.159. The term "act of parties" means parties to the mortgage deed and not any other person where the mortgagee, subsequent to the mortgage, purchases from the mortgagor his equity or right of redemption, that extinguishes the mortgagor's right to redeem. This is what is meant by the terms "right of the parties. Sale of the mortgaged property by the mortgagor to a third person cannot be construed as conferring upon the purchaser equity of redemption within the meaning of the expression act of parties". Such a thirdperson purchaser does not thereby become a party to the mortgage deed.160. The mortgage was for a period of two years. According to article 61 of the Limitation Act, 1963, a mortgagor can redeem or recover possession within 30 days when the right to redeem or to recover possession accrues. The period became expired. The right of the mortgagor became extinguished. The declaration of title in favour of the mortgage was held to be proper.161. The mortgagor executed a document expressing his inability to pay back the borrowed money. The mortgagee was given the right to auction the property for whatever it

would fetch. This was held to be amounting to an extinction of the right to redeem the mortgaged property. The court added that neither section 60 of the Act nor any other provision of the law mandates that the document which has the effect of extinguishing the right of redemption must be registered.162. A financial corporation exercised the right to sell the property of the defaulting mortgage debtor. It also accepted the offer of the prospective purchaser but no sale was yet executed. At this stage the mortgagor intervened to redeem. The Supreme Court held that the right of redemption was not lost.163. In contrast to this is the case where the secured assets were put to auction and a certificate of sale was issued in favour of the auction purchaser. It was held that the mortgagor's right of redemption was extinguished. The sale could not be set aside on balancing of equities or on the mere fact that the borrower was ready to pay the entire debt.164.

[s 60.6.1] Sale of property to mortgagee.— It was alleged that the mortgagor along with her sons executed an agreement for sale of the mortgaged property in-favour of the mortgagee. But any such agreement was specifically denied from the side of the mortgagor. The successors of the mortgagee did not prove any such alleged sale by producing any document executed by the mortgagor. The mortgagee also failed to prove that they had taken over possession of the property from the mortgagor. It was held that on the basis of such alleged but not established facts, the proviso to section 60 was not attracted. Mortgagors or their successors in interest were entitled to seek redemption.165.

[s 60.7] Effect of redemption The effects of redemption in short are as follow:— (i) Return of documents and return of possession of the mortgaged property

(sections 60 and 62) (ii) The mortgagor may require that instead of re-transferring the mortgaged-

property to the mortgagor, the mortgagee shall assign the mortgage-debt to a third person named by him. (Section 60A) (iii) The mortgagor becomes entitled to— (a) accessions to the mortgaged property (section 63) (b) improvements made thereon (section 63A) (c) the renewed mortgage lease (section 64)

The mortgagee was entitled to create tenancies by virtue of the mortgage deed. The language of the deed did not clearly indicate these tenancies so created would be binding on the mortgagor. It was held that entitlement of the mortgagor to receive future rent after redemption and taking possession would not create tenancy between the mortgagor and tenants of the mortgagee.166. For release of mortgaged property a scheme of one-time settlement involved payment of its entire dues. Sale of mortgaged property was permitted within 3 years of settlement on condition of sharing 50% of increase is fair market value. It was held that the Bank was not entitled to claim 50% of increase in the fair market value of the property in terms of the OTM scheme. This was more so when the bank had not

released the mortgage and possession of the mortgaged property was not delivered.167.

[s 60.8] Return of Documents and Possession [Sections 60 and 62] A mortgage was executed in favour of the existing tenant. There was a specific statement by the plaintiff that the defendants (tenant) had surrendered the tenancy rights and became mortgagees of the suit property. The court found that the mortgage deed established beyond doubt that the effect of the deed was inconsistent with continuance or subsistence of the lease. The court therefore said that on redemption of the mortgage, the owner (respondent) became entitled to recover possession both under the mortgage deed and section 62. The finding of the trial court that there was an implied surrender of the tenancy and therefore, the owner was entitled to possession on redemption of mortgage was not liable to be interfered with.168. A landlord created a mortgage of property in favour of the tenant. The document in question showed the intention of the parties to keep the relationship and landlord and tenant subsisting. The rent was kept alive and was adjusted against interest payable by the landlord. It was held that after redemption of the mortgage, the landlord was not entitled to actual possession. For the purpose he would have to file a separate suit for eviction.169. It is not necessary that the bank should after clearance of the loan return the deed of mortgage also. The discharge deed in respect of the mortgage had already been registered. The encumbrance over the property thereby became reversed. Interest of the mortgagor was not to suffer if copies of the mortgage deed were not given to him. Such refusal on the part of the bank was alright.170. Mortgagor applied for redemption of mortgage and recovery of possession under a simple mortgage executed by him in 1959. The mortgagee claimed that subsequent to mortgage another unregistered document was signed by the parties in 1960. Under the new document the title of the mortgaged property was conveyed to the mortgagee. The court referred to the case of Rukmani Ammal171. that once the mortgagee is claiming to be an absolute owner of the property, his/her status of being mortgagee changes and the possession converts to adverse to the original owner. The order of the trial court regarding possession becoming adverse to the original owner was upheld by the Supreme Court.172.

[s 60.8.1] Redemption by Co-sharer One co-sharer redeemed the mortgage by paying off the entire mortgage money. It was held that the redemption operated in favour of all the co-sharers and not exclusively for the benefit of the redeeming co-sharer. There was no question of such co-sharer becoming a mortgagor as against the other co-sharers. The latter were already in possession of the property even before redemption.173. A co-mortgager who redeems the mortgage in its entirety cannot claim any greater rights then what he otherwise had as against the claim of partition by the non-redeeming co-mortgagor.174.

[s 60.8.2] Redemption by Creating Second Mortgage The mortgagors received a sum of money from the mortgagees and issued a receipt for it. A second mortgage was created in favour of the same mortgagees who were

also the family members, and it also mentioned the first mortgage. The mortgagors sought redemption of the second mortgage. Against this it was contended against this that the first mortgage being still outstanding how second mortgage could be directed to be redeemed. The court said that the conduct of the parties showed that they thought that by creating the second purported mortgage, they had redeemed the first mortgage. The plea against redemption was, therefore, not tenable.175.

[s 60.8.3] Suit for Declaration of Title and Possession A mortgage was affected to secure repayment of loan granted under a promissory note. The property which was subject to the mortgage was sold by the mortgagor to a person who filed the suit for declaration and possession. The property was subsequently purchased by the mortgagee in an execution of money decree passed against the mortgagor in respect of some other loan. The plaintiff sued the mortgagee for a declaration that he was the owner of the property and entitled to possession as such. His contention was held to be not tenable, as he sued through the mortgagor. The mortgagee became the owner when he purchased the property in an execution sale.176.

[s 60.9] Redemption of Portion of Mortgaged Property (Section 60) A person interested in a share only of the mortgaged property is not entitled to redeem his share only, on payment of a proportionate part of the amount remaining due on the mortgage except where a mortgagee, or where there are more than one mortgagees, then all such mortgagees, have acquired the share of the mortgagor, either in whole or in part. The general rule is that the mortgage-debt being indivisible and the mortgaged property being held in its entirety as security for the whole debt, the property can be redeemed in its entirety on payment of the whole debt. The purchaser from the mortgagor or from a sharer, who is having some interest in the mortgaged property, is not entitled to redeem his share of the mortgaged property on payment of proportionate mortgage amount, since it will act against the settled principle of indivisibility regarding the mortgage. However, there is no bar for a sharer or to a purchaser of the equity of redemption to redeem the entire mortgage, by paying the entire mortgage amount. Where a mortgagee or if there are more mortgagees, any one of them had acquired in whole or in part, the share of the mortgagor, then only, the principle of indivisibility could be ignored and the property could be redeemed since the right merged.177. The holder of a partial interest in the equity of redemption cannot redeem a part of the property on payment of a proportionate part of the debt. For example, A, B and C who are joint owners of a property, mortgage the property to X for security of a debt of Rs 40,000. A has one-half share in the property whereas both B and C have one-fourth share each. Now, here A cannot redeem the mortgage to the extent of his share by paying Rs 20,000 to X. If the mortgagor is allowed to redeem the property in part, the mortgagee's interest of getting back the whole amount including the interest will be hampered. This rule is not without exceptions. The exceptions are given below:— (i) Where the terms of a mortgage provide for partial redemption. (ii) Where the co-mortgagors have distinct and separate interests. (iii) Where the mortgagee recognises a partition of the mortgaged property

amongst the co-mortgagors. (iv) When the mortgagee himself acquires a portion of the mortgaged property and

not the whole of the mortgaged property. Where the mortgagee acquired one-half share of the mortgaged property by way of sale from the co-mortgagor, the court said that by the act of the co-mortgagor the integrity of the mortgage was broken. The other co-mortgagor became entitled to seek equity of redemption to the extent of his share.178.

[s 60.10] Persons Who may Sue for Redemption (Section 91) Section 91 says that besides the mortgagor the following persons may also redeem the mortgaged property— (i) any person (other than the mortgagee) who has any interest in the mortgaged

property or any charge upon the mortgaged property or the right to redeem the same; (ii) any surety for the payment of the mortgaged-debt or any of its part; or (iii) any creditor of the mortgagor who has in a suit for the administration of his

estate obtained a decree for sale of the mortgaged property.

[s 60.10.1] Redemption by Legal Representative Where the mortgagor died and there were more than one legal representative who succeeded to the property, it was held that any one of them could seek redemption. The suit would not be bad for non-joinder of the other successors.179. The court relied upon a decision of the Supreme Court in which it was stated that any co-owner or any comortgagor can redeem and thereby he steps into the shoes of the mortgagee.180. (This section is discussed in detail later on in the same Chapter).

[s 60.11] Right to Deposit in Court Money due on Mortgage (Section 83) Section 83 says that at any time after the principal money in respect of mortgage has become due and before a suit for redemption of the mortgaged property has become barred, the mortgagor or any other entitled person may deposit in the court the amount remaining due on the mortgage. The court must be the same in which the mortgagor might have instituted the suit. The amount must be deposited to the account of the mortgagee. (This section has been taken up subsequently). A mortgage does not become automatically redeemed by reason of the fact that a suit for redemption has been filed and the requisite amount of money has been deposited in the court. It requires decree of the court. Until passing of such decree, the mortgagor is not restored to his rights as the owner of the property.181.

[s 60.11.1] No Limitation where Mortgage not for Fixed Period There was no evidence to show that the mortgage was for a fixed period. The Supreme Court held that no limitation applies to the right of the mortgagor to redeem such a mortgage. The mortgage could be redeemed at any time.182. The court referred to the decision in Ganga Dhar v Shankar Lal.183. It was admitted that the case is governed by

the Transfer of Property Act, 1882. Under section 60 of that Act, at any time after the principal money has become due, the mortgagor has a right on payment or tender of the mortgage money to require the mortgagee to reconvey the mortgage property to him. The right conferred by this section has been called the right to redeem and the appellant sought to enforce this right by his suit. Under this section, however, that right can be exercised only after the mortgage money has become due. In Bakhtawar Begum v Husaini Khanam,184. also the same view was expressed in these words: Ordinarily, and in the absence of a special condition entitling the mortgagor to redeem during the term for which the mortgage is created, the right of redemption can only arise on the expiration of the specified period.

Now, in the present case the term of the mortgage is eighty-five years and there is no stipulation entitling the mortgagor to redeem during that term. That term has not yet expired. The respondents, therefore, contend that the suit is premature and liable to be dismissed." 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 and contract between the parties. The principles behind the rule was expressed by Lindley MR. In Stantey v Wilde,185. in these words: The principle is this: a mortgage is a conveyance of land or an assignment of chattels 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 mortgage. One thing, therefore, is clear, namely, that 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. The same result also follows from section 60 of the Transfer of Property Act, 1882. It was stated in Mohammad Sher Khan v Seth Swami Dayal.186.

An anomalous mortgage enabling a mortgagee after a lapse of time and in the absence of redemption to enter and take the rents in satisfaction of the interest would be perfectly valid if it did not also hinder an existing right to redeem. But it is this that the present mortgage undoubtedly purports to effect. It is expressly stated to be for five years, and after that period the principal money became payable. This, under section 60 of the Transfer of Property Act, 1882, is the event on which the mortgagor had a right on payment of the mortgage money to redeem. The section is unqualified in its terms, and contains no saving provision as other sections do in favour of contracts to the contrary. Their lordships therefore see no sufficient reason for withholding from the words of the section their full force and effect. In comparatively recent times Viscount Haldane L.C repeated the same view when he said in G and C Krelinger v New Patagonia Meat and Cold Storage Co Ltd187. This jurisdiction was merely a special application of a more general power to relieve against penalties and to mould them into mere securities. The case of the common law mortgage of land was indeed a gross one. The land was conveyed to the creditor upon the condition that if the money he had advanced was repaid on a date and at a place named, the fee

simple would revest in the latter, but that if the condition was not strictly and literally fulfiled he should lose the land for ever. What made the hardship on the debtor a glaring one was that the debt still remained unpaid and could be recovered from the offer notwithstanding that he had actually forfeited the land to the mortgagee. Equity, therefore, at an early date began to relieve against what was virtually a penalty by compelling the creditor to use his legal title as a security.

[s 60.11.2] Limitation and Acknowledgment, Effect of Assignment The assignment of a usufructuary mortgage amounts to an acknowledgement under section 18 of the Limitation Act, 1963. This enabled the plaintiff to compute a fresh period of limitation from the date of acknowledgement. The date of assignment was February 2, 1954. When the suit was filed in 1981, the new Limitation Act of 1963 was in force. Under this Act the period of limitation for redemption is 30 years. The suit was thus held to be within time. The Supreme Court had set aside the decision of the High Court. The plaintiff was entitled to redeem the mortgage. The decree was directed to be passed accordingly.188.

[s 60.12] Cessation of Interest (Section 84) Where under section 83 the mortgagor or any other entitled person has deposited the amount remaining on the mortgage in the court, the interest on principal money ceases from the date of tender. In the case of a deposit, where no previous tender of such amount has been made the interest ceases as soon as the mortgagor or such other entitled person has done all that has to be done by him to enable the mortgagee to take such amount out of the court and the notice as required under section 83 has been served on the mortgagee. However, where the mortgagor has deposited such amount without having made a previous tender of it and has subsequently withdrawn the same or any part of the money, the interest on principal amount shall be payable from the date of such withdrawal. Sections 83 and 84 shall not be deemed to deprive the mortgagee of his right to interest when according to the contract between the mortgagor and the mortgagee, the mortgagee was entitled to a reasonable notice before payment or tender of mortgagemoney but such notice has been given.

[s 60.12.1] Limitation The right to redeem accrues immediately on execution of a mortgage. Limitation, therefore, starts running from the date of the suit. It was a case of usufructuary mortgage. The mortgagee assigned his interest in favour of another person by executing an assignment deed. The assignee was given the right to receive all the amounts as per the original mortgage. The court said that this amounted to an acknowledgement extending the period of limitation. The mortgage was then still alive when a Debt Relief Act came into force. The effect of the Act was that the mortgage debt became statutorily discharged. The mortgagor (plaintiff) became entitled to the final decree for redemption without the need to undergo the formality of obtaining a preliminary decree and taking of accounts. Such mortgagor is not entitled to accounts but only to mesne profits for wrongful possession.187 In a similar case before the Karnataka High Court189., the assignment deed clearly showed that what was assigned by the mortgagee in favour at the assignee (defendant) was only mortgage rights and that the

mortgagor would be entitled to redeem the mortgage. This was admitted in the assignment deed itself. The court said that this amounted to an acknowledgement of liability by the mortgagee of the original debt and constituted a fresh starting point of limitation. The suit for redemption filed within 30 years from the date of assignment deed was not time-barred. Where a mortgage with conditional sale permitted redemption after five years but before ten years, it was held that the failure to exercise the right before the expiry of ten years brought the right to an end. A suit filed subsequently was time-barred.190. The mere purchase of the mortgagee's right would not give fresh period of limitation. The lower courts recorded a concurrent finding of the fact that the purchaser effected the purchase in his individual capacity and, therefore, it was not a coparcenary right.191.

[s 60.12.2] Suit for declaration of title by mortgagee's legal heirs because of no redemption within limitation Plaintiff's predecessors in interest were in possession of the suit property as mortgagors. Thereafter plaintiffs came into possession as legal heirs. They applied for a declaration that they had become owners of the property because the defendants had failed to redeem the property within the prescribed period of limitation. The court found that no evidence was produced and also no witnesses were examined to prove the terms and conditions of the mortgage deed particularly the date or period fixed for redemption. In such a state of things, the court held that no relief could be granted to the plaintiffs.192.

[s 60.13] Priority under PF Act The priority given under Miscellaneous Provisions executed by the employer. security for repayment of

section 11(2) of the Employees' Provident Funds and Act, 1952, operates against any mortgage or pledge The property of the employer was pledged with a bank as a loan. It could be attached and sold for recovery of PF

dues.193.

[s 60.13.1] Cases under Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI) In connection with sale or transfer of secured assets, it has been held that service of 30 days clear individual notice to the borrower is mandatory and also public notice by way of publication in newspapers. The power under the Act cannot be exercised arbitrarily or whimsically to the disadvantage of the borrower. The principles prescribed by the Transfer of Property Act, 1882, are of general application to all mortgages and their redemption. The provisions of SARFAESI Act and RDRO Act are also applicable except to the extent of inconsistency. The sale of secured asset was set aside by the High Court for not following mandatory provisions. The borrower was given the option to deposit the specified amount within specified time otherwise sale would be confirmed.194.

107. Subs. by Act 20 of 1929, section 22, for "payable". 108. Subs. by Act 20 of 1929, section 22, for "the mortgage-deed, if any to the mortgagor". 109. Subs. by Act 20 of 1929, section 22, for "order". 110. Ins. by Act 20 of 1929, section 22. 111.

Manager, Mahalingpur Urban Co-op Bank Ltd, Dist Bagalkot v Mahananda Shrishail

Mugalkhod, AIR 2018 Kar 133 . 112. Shivdev Singh v Sucha Singh, (2000) 4 SCC 326 : AIR 2000 SC 1935 : 2000 AIR SCW 1586;

Gurdev Singh v Darya Singh, (2005) 12 SCC 349 , the decree in substance was for recovery of possession on deposit of the decreed amount, no scope for interference because substantial justice between the parties was done by the decree. Madhavan Pillai Gopinathan v Subbayyan Chettiar Karthikayan, (2002) 6 SCC 196 : JT 2002 (6) SC 387 : (2002) 4 Supreme 566 , the unity of a mortgage was not allowed to be broken by resorting to piece by piece redemption. Shankarlal Nathumal Chandok v Balkrishna Jagannath Gujarathi, AIR 2010 Bom 4 : 2010 (87) AIC 283 : 2010 (3) Bom CR 746 , mortgage created before the Act came into force, there was no written law, but because redemption is a right inherent in the very nature of the transaction, redemption was allowed. The mortgage was created in 1880. The Limitation Act, 1908 allowed 60 years' period for redemption. The period became extended in 1924 because of assignment and acknowledgement, suit filed within four years of coming into force of the Limitation Act, 1963 was held to be maintainable. In Malika Rout v Gani Khan, AIR 2014 Ori 155 : 2014 (2) CLR 40 , a mortgage effected under the law of an earlier state, section 60 was held to apply, because the two laws were similar. 113. Thota China Subba Rao v Matapalli Raju, AIR 1950 FC 1 : (1950) 1 Mad LJ 752 : 1949 FCR

484; plaintiffs having right over property of mortgagor as relatives in nearest degree of kindred were held entitled to decree of redemption, Deviki Amma Kamalamma v Grace Appi Amma, AIR 2017 (NOC) 886 Ker. 114. Urmila v Sohan Lal, AIR 2010 (NOC) 654 (P&H); Jaimal v State of Himachal Pradesh, AIR

2010 HP 7 : 2010 AIHC 276 NOC : 2010 (2) L and LR 507, usufructuary mortgage, no time-limit prescribed, application for redemption held not to be time-barred. Overruled in Bhandaru Ram v Sukh Ram, AIR 2012 HP 1 : 2012 (113) AIC 945 : 2012 (1) CCC 825 (FB), 30 years period becomes applicable. 115. Financial Commissioner, Revenue and Secretary to Govt v Sadhu Singh, AIR 2009 (NOC)

2464 (P&H). 116. Ram Kishan v Sheo Ram, AIR 2008 P&H 77 (FB); where borrower fails to deposit the

balance amount, he cannot exercise equity of redemption upon completion of sale and registration of sale deed, Dwarika Prasad v State of Uttar Pradesh, AIR 2018 SC 1286 . 117. Java Singh Dnyanu Mhoprekar v Krishna Balaji Patil, AIR 1985 SC 1646 : 1985 2 CCC 627 :

(1985) 4 SCC 162 . 118. Rehmani v Bhaorji, AIR 2010 P&H 151 : 2010 (3) Punj LR 318 : 2010 (3) Rec Civ R 745. 119. Ushabai v Balkrishna Biharilal, (2006) 3 SCC 686 : (2006) 2 Supreme 247 : 2006 (3) SCJ 454

; where the defendant pleaded that the property was mortgaged by conditional sale and sale became final due to non-payment of money within the stipulated period but the plaintiff provided the evidence and proved that possession was not delivered to the mortgagee, it was held to be a simple mortgage and not mortgage by conditional sale, plaintiff was held entitled to redemption, Leela Agarwal v Smt Sarkar, AIR 2019 Chh 45 . 120. Kharati Lal v Janak Lal, AIR 2004 P&H 29 : 2004 (1) Punj LR 224 : 2003 (4) Rec Civ R 523.

121. Achaldas Durgaji Oswal v Ramvilas Gangabisan Head, AIR 2003 SC 1017 : (2003) 3 SCC 614

: 2003 AIR SCW 524. Gulzar Singh v Financial Commissioner and Secretary to Govt, Punjab, AIR 2010 P&H 114 : 2010 AIHC 1113 (NOC) : 2010 (2) Land LR 339 , the mortgagee was declared as an evacuee as he had migrated to Pakistan, rights vested in the custodian and he was held to have every right to accept redemption of the usufructuary mortgage. 122. Ishwar Dass Jain v Sohan Lal, (2000) 1 SCC 434 : AIR 2000 SC 426 : 1999 AIR SCW 4333. 123. Ramvilas G Heda v Achaldas D Oswal, AIR 2002 Bom 133 : 2002 (3) Bom LR 164 : 2002 (3)

ICC 493; Sarojini Prabhu v Pappikutty Adiestar, AIR 2007 Ker 44 : 2007 AIHC 203 (NOC) : 2007 (1) AKant (NOC) 82, suit for redemption of usufructuary mortgage, limitation for filing application for final decree, Contd on next page Contd from previous page limitation for redemption runs from the date on which the borrower deposited the money in the court and not from the date fixed in the preliminary decree for deposit of money. Prabhakaran Pillai v M Azhagiri Pillai, AIR 2006 SC 1567 : (2006) 4 SCC 484 : 2006 (4) SCJ 80 , rights and obligations of mortgagor and mortgagee co-exist like the two sides of a coin, mortgagor's right of redemption is co-extensive with that of the mortgagee's right of sale or foreclosure. 124. Chandrakant Shankarrao Machale v Parubai Bhairu Mohite, AIR 2008 SC 3255 : 2008 AIR

SCW 5495 : (2008) 6 SCC 745 . 125. Appellate court's direction for reconveyance of property to mortgagor as he paid the

mortgage money was held to be proper and within jurisdiction, Chhabu Punja Gaikwad v Vishnu Nana Chavan, AIR 2017 Bom 232 . 126. (1899) 2 Ch 474 : 68 LJ Ch 681 : 81 LT 393. 127. AIR 1965 SC 225 : 1965 (2) SCJ 106 : (1964) 8 SCR 239 . 128. Sarmus Sab v Ismain Sab, AIR 2006 Kant 107 : 2006 (1) AIR KantR 699 : 2006 AIHC 94

(NOC). 129. Fateh Muhammad Khan v Ram Dayal, 2 Luck 588 : AIR 1927 Oudh 224 . 130. Massa Singh v Gopal Singh, AIR 1983 P&H 437 . 131. Bhailal Damji v Hiralal Lakhamshi, AIR 1981 Guj 120 : 22 Guj LR 473. 132. AIR 1989 SC 436 : (1989) 1 SCC 458 : JT 1988 (4) SC 307 ; Mangal Prasad Tamoli v

Nardeshwar Misra, AIR 2005 SC 1964 : (2005) 3 SCC 422 : (2005) 2 Supreme 240 , mortgage for term of sixty years, right to redemption transferred, the transferee filed a suit for redemption saying that sixty years term was a clog. The court overruled it. 133. Vasantrao v Kishanrao, AIR 2008 Bom 42 : 2008 (1) AIR Bom R 289 : 2008 (1) CCC 659 , the

condition incorporated in the document was to the effect that in case the money was not paid back within 5 years, the document would be deemed as sale. The understanding and intention of the parties was that their transaction was a mortgage. The term of 5 years default was a clog on redemption. 134. Gulab Chand Sharma v Saraswati Devi, AIR 1977 SC 242 : 79 Punj LR 205 : (1977) 2 SCC 71

. 135. Sunder Singh v Lashman Singh, AIR 1948 East Punj 17. 136. (1902) AC 24 : 71 LJ Ch 139 : 86 LT 62. 137. (1903) AC 253 : 72 LJ KB 471. 138. 1914 AC 25 : 83 LJ Ch 79. 139. Hasthimal & Sons v P Tej Raj Sharma, AIR 2007 SC 3246 : (2007) 11 Scale 601 : 2007 (7)

Supreme 242 . The court followed the decision of the House of Lords in Lewis v Frank Love Ltd, (1961) All ER 446 , here also there was a condition that the mortgagor would have the right preemption in case the mortgagor wished to sell the property to a third person, this was held to be clog. The decision was in favour of the vendee from the mortgagor. 140. (1996) 3 SCC 424 : 1996 AIR SCW 1726 : AIR 1996 SC 1659 .

141. This view was reaffirmed in Cheriyan Sosamma v Sundaressan Pillai Saraswathy Amma,

(1999) 3 SCC 251 : AIR 1999 SC 947 : 1999 AIR SCW 515; Narayan Vishnu Hendre v Baburao Savataram Kothawal, (1995) 6 SCC 608 : AIR 1996 SC 368 : 1995 AIR SCW 4197, where also it was held that, there was no automatic merger of the interest of the lessee with that of the mortgagee in the absence of proof of surrender of lease. Shah Mathuradas Maganlal and Co v Nagappa Shankarappa Malaga, (1976) 3 SCC 650 : AIR 1976 SC 1565 : (1976) 3 SCR 789 , here the mortgagee had surrendered his tenancy. Canara Bank v Bombay Alloys & Castings, AIR 2007 (NOC) 1827 (Bom) : (2007) 4 AIR Bom R 275, a property mortgaged with a bank was auctioned by the BMC for recovery of Municipal Taxes. Auction purchaser made payment and was put in possession after sale certificate in his favour. He became the owner with the right and obligation to redeem the mortgage. The bank sought to sell the property in execution of its decree of recovery. The court said that acceptance of payment from such third-party buyer would tantamount to a clog on the equity of redemption. 142. Harbans v Om Prakash, JT 2005 (9) SC 625 : (2005) 9 Scale 288 : AIR 2006 SC 686 . 143. Mohammad Sher Khan v Raja Seth Swami Dayal, (1922) 44 All 185 : 49 IA 60 : AIR 1922 PC

17 . 144. Jeut Koeri v Mathura, (1926) 24 All LJ 125 : 90 IC 787. 145. Sheo Shankar v Parma Mahton, (1904) ILR 26 All 559 : 1 All LJ 282. 146. Vaddiparhi v Appalanarasimhulu, (1921) 41 Mad LJ 563; MK Shekarappa v Shivagangamma,

AIR 2007 (NOC) 1817 (Kant) : (2007) 4 AIR Kar. R 330, suit was for redemption of mortgage, property mortgaged to B who mutated it in the name of his son-in-law, it did not amount to sale for valuable consideration, the son-in-law gifted the property, it did not also amount to sale, donee transferred the property to others, the latter could not be treated as direct transferees from the mortgagee, it was for them to establish that they had been in adverse possession for 12 years within the knowledge of the owner, applying the principle of "once a mortgage always a mortgage", especially in the case of a usufructuary mortgage, limitation commenced from the date on which the plaintiff made an attempt to redeem by paying back and refusal after issuance of legal notice; claim of adverse possession by members of a family against other members of the family in respect of family property is untenable, Najegowda v Ramegowda, (2018) 1 SCC 574 ; plea of adverse possession has to be properly made out, where defendant was allowed to occupy two rooms in suit house by the owners who were predecessors of appellant without conferring any right, title or interest to defendant, it was held to be a permissive possession, Narendra v Ajabrao, (2018) 11 SCC 564 ; Dharampal v Punjab Wakf Board, (2018) 11 SCC 449 , mere averment by the defendant that he through his father was in possession of wakf property since 1953, was not found to be sufficient to constitute plea of adverse possession. 147. Hasthimal & Sons v P Tej Raj Sharma, AIR 2007 SC 3246 : (2007) 10 SCR 537 : 2007 AIR

SCW 6135. The court relied on Lewis v Frank Love Ltd, 1961 All ER 446 . 148. Khatubai Nathu Sumra v Rajgo Mulji Nanji, AIR 1979 Guj 171 . 149. Abdul Gani v Abdul Gafoor, AIR 2006 Raj 145 : 2006 (1) CCC 399 : 2006 (1) Raj LR 560 , the

defendant mortgaged his house and obtained loan of a sum of money, subsequently, he needed more money and entered into an agreement with the mortgage to sell the house to him for a higher price than the mortgage money, this extinguished his right of redemption, the mortgageevendee became entitled to seek specific enforcement of the sale agreement, the court refused to characterise him as a tenant in possession. Prabhakaran v M Ashagiri, AIR 2006 SC 1567 : (2006) 4 SCC 484 : 2006 (4) SCJ 80 , right to recover possession of property by paying off the mortgage debt is called the right of redemption. It can be accomplished by an act of the parties or by court decree.

150. Dipak Digambar Naik v Bank of Maharashtra, AIR 2016 Bom 1 , it was held that a mortgaged

property cannot be redeemed on payment of a part of the mortgage money. 151. Allokam Peddabhayya v Allahabad Bank, AIR 2006 AP 236 : 2006 (42) AIC 375 : 2006 (3)

Andh LT 233 , right of redemption became extinguished by reason of the final decree proceedings in a foreclosure suit, the plaintiffs, who were subsequent purchasers, had knowledge of the decree, even so made no effort to redeem the mortgage. 152. Tularappa v Subhas, AIR 2003 Kant 118 : 2002 (4) ICC 583 : ILR 2002 (3) Kant 4231 . 153. Harendra Rai v Chandrawati Devi, AIR 2007 Pat 120 : 2007 (1) Pat LJR 539 : 2007 AIHC 475

(NOC), no evidence was led as to genuineness of the endorsement and, therefore, the presumption under section 90, Evidence Act was also not raised though the document was 30 years old. 154. Subhash Mahadevasa Habib v Nemasa Ambasa Dharmadas, AIR 2007 SC 1828 : (2007) 4

SCR 150 : JT 2007 (5) SC 12 . 155. Harbans v Om Prakash, JT 2005 (9) SC 625 : (2005) 9 Scale 288 : AIR 2006 SC 686 , the

limiting conditions must not be oppressive or unreasonable, the right of redemption cannot be taken away except when the mortgage was for a fixed party. A condition postponing redemption in case of default, held, clog on redemption and so void. By virtue of doctrine a mortgage cannot be made altogether irredeemable nor can the right of redemption be made illusory and any provision inserted to prevent, evade or hamper redemption is void. Doctrine applies to anomalous mortgages. It also applies to transaction by which mortgagor transferred his equity of redemption to the transferee in consideration of a loan. A clause in the transaction by which the transferee had an option to purchase was void. Doctrine does not apply if the transaction is not in its essence a mortgage. Narandas Karsondas v SA Komatam, AIR 1977 SC 774 : (1977) 3 SCC 247 : (1977) 2 SCR 341 , while the expression "decree of Court" is explicit enough, the phrase "act of parties" has given rise to controversy. One such act may be when the mortgagor sells the equity of redemption to the mortgagee. This court in Narandas Karsondas v SA Komtam, AIR 1977 SC 774 : (1977) 3 SCC 247 : (1977) 2 SCR 341 , said that "in India it is only on execution of the conveyance and registration of transfer of the mortgagor's interest by registered instrument that the mortgagor's right of redemption will be extinguished", Hamzabi v Syed Karimuddin, (2001) 1 SCC 414 : (2000) 7 Scale 651 : 2000 (8) Supreme 268 . In Bachan Kaur v Kaka Singh, AIR 2016 P&H 291 , the document used an expression that it would be treated as a sale at the time of need, the court held that the expression was one sided and vague, the document was not registered. The right of redemption could not be said to have been extinguished by act of parties. 156. Madurambigal Ammal v D Somasundaram, (2005) 10 SCC 166 , the proviso specifically

says that the right of redemption conferred on the mortgagor under section 60 could be extinguished by the act of parties or by decree of the court. The sale deed was executed in favour of the auction-purchaser on 10-11-1981 and the appellants in their suit for redemption had not obtained any interim order staying the operation of the auction-sale or the execution of any sale deed and in the absence of any such order the right of redemption was extinguished. Bishnu Devi Shaw v Federal Bank Ltd, AIR 2014 Cal 90 : 2014 (3) Civ LJ 236 : 2014 (2) ICC 319, the right of redemption is lost once the court sale is made absolute by issuance of Court certificate. 157. Vora Aminbai Ibrahim v Vora Taheral Mohammadi, AIR 1998 Guj 31 : 1998 (1) Guj LR 760 :

1998 (3) Civ LJ 660 . Where the suit for redemption of mortgage was filed within the period of 5 years next after commencement of Limitation Act, 1963, it was held to be within time, Mehnga Singh v Gurdial Singh, AIR 2004 P&H 93 : 2004 (1) CCC 525 : 2004 (3) Land LR 344 .

158. Shakeena v Bank of India, AIR 2008 Mad 10 : 2007 (2) Mad LJ 846 : 2008 AIHC 134 (NOC);

Sona Devi v Balindra Rai, AIR 2006 Pat 110 : 2005 (4) Pat LJR 689 : 2006 AIHC 2988 , the period of limitation for suit for redemption is not extended by acknowledgment, an acknowledgment made by the mortgagor is not within the spirit of section 18, Limitation Act. 159. Banshi Lal v Raj Bai, AIR 2004 Raj 92 : 2004 (1) Raj LW 452 : 2004 (2) WLC 91 . 160. Nagammal v Valliammal, AIR 2007 Mad 177 : 2007 (5) Mad LJ 1367 : 2007 (57) AIC 539 ,

relying upon Naraindas Karsondas v SA Kamtam, AIR 1977 SC 774 : (1977) 3 SCC 247 : (1977) 2 SCR 341 ; original mortgagee had assigned mortgage to mortgagee assignee and had put him in possession of suit land, suit for redemption was not maintainable as the mortgage extinguished by the act of parties as mortgage assignee received the mortgage amount from the purchaser and gave him possession of land, Gowramma v Kalingappa (Dead) through LRs, AIR 2019 SC 1012 ; purchaser of equity of redemption filed suit for redemption after issuance of sale certificate and delivery of possession to auction purchaser, no challenge was made to auction sale or setting aside the sale certificate, no property was left to be redeemed and right to redemption of mortgage extinguished, Allokam Peddabbayya v Allahabad Bank, AIR 2017 SC 3069 . 161. Manjit Kaur v Kaushalya Devi, AIR 2011 P&H 75 . 162. Syed Noor Md. v Syed Khaja Moinuddin, AIR 2008 AP 82 : 2008 AIHC 300 (NOC) : 2008 (3)

All LJ (NOC) 598. 163. LK Trust v EDC Ltd, AIR 2011 SC 2060 : (2011) 6 SCC 780 : 2011 AIR SCW 3395. 164. Shree Jayalakshmi Textiles v International Asset Reconstruction Co Pvt Ltd, AIR 2016 Kant

40 ; part payment made by the borrower for redeeming the house given as a security for loan with a promise to pay the balance, his request for condonation of delay in payment not accepted by the bank and the property was auctioned by bank accepting 25% bid amount, bank extended the time for payment of balance money for auction purchaser without consent of the borrower, sale in favour of auction purchaser held null and void as the borrower was denied the valuable right of redemption by condonation of delay whereas such condonation of delay was offered to auction purchaser, Padmavati v Authorised Officer, Dhanlakshmi Bank Ltd, AIR 2018 (NOC) 457 Mad; where the trial court granted three months' time to the plaintiff for redemption of mortgage and he was unable to deposit the amount as the operation of decree of trial court was stayed by the appellate court, plaintiff was held entitled to redemption of mortgage as there was no wilful disobedience on the part of the plaintiff in complying with the judgment, Tripta Devi v Chuni Lal, AIR 2017 HP 126 . 165. Shyamprasad v KV Ramesh, AIR 2015 Kant 112 . 166. Thakar Singh (Dr) v Mula Singh, AIR 2015 SC 1 . 167. Punjab and Sind Bank v Punjab Breeders Ltd, AIR 2016 SC 1899 , the matter was under

Recovery of Debts Due to Banks and Financial Institutions Act, 1993. 168. Haji Isufali Abdullabhai Jinia v Fijabhai Fakhruddin Challawala, AIR 2011 Guj 61 . Another

similar ruling in Gautam Lal v Sukhlal, AIR 2011 Raj 57 , shop on tenancy, converted into mortgage, returnable on redemption of mortgage. The tenant-mortgage had to accept redemption money and handover possession. 169. Sakinabai Sirajuddin Kanchwala v Shrilal Hansraj Sharma, AIR 2010 (NOC) 831 (Bom). 170. KS Ramachandra v Banking Ombudsman, (Karnataka) Bangalore, AIR 2015 Kant 166 . 171. (2006) 1 SCC 65 . 172. Venugopal Padayachi v V Picjaikaran, (2018) 10 SCC 548 . 173. Naroti Dass v Phul Kaur, AIR 2007 P&H 157 : 2007 (3) Punj LR 541 : 2007 AIHC 523 (NOC).

The court referred to Krishna Pillai Rajasekharan v Padmanabha Pillai, AIR 2004 SC 1206 : 2004 AIR SCW 106 : (2004) 12 SCC 754 .

174. M Abubaker Nirathukonam Veedu v Kadija Ummal, AIR 2007 (NOC) 1579 (Ker). 175. Mohinder Singh v State of Punjab, (2007) 1 SCR 1185 : (2007) 1 Supreme 743 : (2007) 2

Scale 271 . 176. Rukmani Ammal v Jagdeesa Gounder, AIR 2006 SC 276 : (2006) 1 SCC 65 : JT 2005 (10) SC

95 . 177. K Ramachandra Thevar v Murugesan, AIR 2004 Mad 245 : 2004 (2) CCC 584 : 2003 (4) Mad

LW 377 . 178. Gangadhar Manji Choudhary v Tukaram Kisan Naikwadi, AIR 2010 (NOC) 832 (Bom). 179. Hiragauri Ratilal v Hajar Sumar Ladha, AIR 2007 Guj 76 : 2007 (3) CCC 358 : 2007 (4) Rec

Civ R 498. 180. Vallikat Thekkedath Vallapil Laksmikutty Amma v Vallikat Thekkedath Valapil Damodara

Menon, AIR 1997 SC 1909 : 1997 AIR SCW 1663 : (1997) 3 SCC 317 ; Raj Mohni Debi v Harihar Mahton, AIR 1958 Pat 67 : 1957 BLJR 767 , a suit of redemption by one of the mortgagors is maintainable. The court also referred to a Privy Council Authority, Mirza Yadalli Beg v Tukaram, AIR 1921 PC 125 : 48 Cal 22 : 47 Ind App 207. 181. Tribeni Bai v Munsif, Mirzapur, AIR 2006 (NOC) 811 (All). Prakash Chand v Amar Singh, AIR

2011 HP 21 : 2010 AIHC 620 NOC : 2009 (3) Sim LC 6, no limitation applies where the mortgage is not for a fixed period. The maxim "once a mortgage always a mortgage" applies. Different opinion expressed in Bhandaru Ram v Sukh Ram, AIR 2012 HP 1 : 2012 (113) AIC 945 : 2012 (1) CCC 825 (FB), 30 years period becomes applicable. 182. Harbans v Om Prakash, AIR 2006 SC 686 : (2006) 1 SCC 129 : JT 2005 (9) SC 625 . 183. AIR 1958 SC 770 : 1959 SCR 509 : 1958 SCJ 935 . 184. AIR 1914 PC 36 (37) : 1913 ILR 36 All 195 : 41 IA 84 (89) : 26 Mad LJ 474. 185. (1899) 2 Ch 474 : 68 LJ Ch 681 : 81 LT 393. 186. (1922) 44 All 185 : ILR 49 IA 60 (65) : AIR 1922 PC 17 (19). 187. 1914 AC 25 (35-36) : 83 LJ Ch 79. 188. Prabhakaran v M Azhagiri Pillai, AIR 2006 SC 1567 : (2006) 4 SCC 484 : (2006) 3 Scale 435 ;

where usufructuary mortgagor holds the right to liquidate money any time vis-a-vis the mortgagee, limitation period will commence as and when liquidation begins, expiry of thirty years from the date of mortgage will not extinguish the right of mortgagor, Ravinder Kumar v Rani Devi, AIR 2017 (NOC) 1055 HP; where section 6 of the Himachal Pradesh Debt Reduction Act, 1976 provided fresh cause of action to mortgagor for seeking redemption which overrides the mandate of section 27 of the Act of 1963, mortgagee was not allowed to seek ownership of the mortgaged property, Ravinder Kumar v Rani Devi, AIR 2017 (NOC) 1055 HP. 189. Yashodaraiah v SB Payidevaru, AIR 2006 Kant 123 : 2006 AIHC 965 : 2006 (2) AIR Kant 6. 190. Nanjamma v RT Subegowda, AIR 2006 Kant 172 : 2006 (40) AIC 634 : ILR 2006 Kant 493 . 191. Tarsem Lal v Mangat Ram, (2000) 8 SLT 214 . 192. Gurnam Singh v Hazara Singh, AIR 2015 NOC 389 (P&H). 193. Maharashtra State Co-op Bank v Employees' PF Organisation, AIR 2010 SC 868 : 2009 AIR

SCW 6784 : (2009) 10 SCC 123 . 194. Mathew Varghese v M Amritha Kumar, AIR 2015 SC 50 : (2014) 2 Scale 331 .

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER

IVOF

MORTGAGES

OF

IMMOVABLE

PROPERTY

AND

CHARGES This Chapter can be categorised into following:— Part I—Mortgage defined Part II—Rights and liabilities of Mortgagor Part III—Rights and liabilities of Mortgagee Part IV—Priority Part V—Marshalling and Contribution Part VI—Deposit in Court Part VII—Suits for foreclosure, sale or Redemption. (Repealed) Part VIII—Foreclosure and sale (Repealed) Part IX—Redemption Part X—Anomalous Mortgage Part XI—Attachment of Mortgaged Property (Repealed) Part XII—Charges Part XIII—Notice and Tender

PART II: RIGHTS AND LIABILITIES OF MORTGAGOR This part dealing with rights and liabilities of mortgagor consists of 11 sections. 195.[s

60A] Obligation to transfer to third party instead of re-transferring to mortgagor.— (1) Where a mortgagor is entitled to redemption, then, on the fulfilment of any

conditions on the fulfilment of which he would be entitled to require a retransfer, he may require the mortgagee, instead of re-transferring the property, to assign the mortgage-debt and transfer the mortgaged property to such third person as the mortgagor may direct; and the mortgagee shall be bound to assign and transfer accordingly. (2) The rights conferred by this section belong to and may be enforced by the

mortgagor or by any encumbrancer notwithstanding an intermediate encumbrance; but the requisition of any encumbrance shall prevail over a requisition of the mortgagor and, as between encumbrancers, the requisition of a prior encumbrancer shall prevail over that of a subsequent encumbrancer. (3)

The provisions of this section do not apply in the case of a mortgagee who is or has been in possession.]

Comments [s 60A.1] Right of Transfer to Third Party (Section 60A) According to this section, the mortgagor may require the mortgagee to assign the mortgage-debt and transfer the mortgaged property to a third person directed by him, instead of re-transferring the property to him. This section was intended to enable the mortgagor to pay off the debt of the mortgagee by taking loan from another person on security of the same property. Therefore, the mortgage is not extinguished but remains alive. The mortgagor may require the mortgagee to assign the mortgage-debt to a third person only when the debt has become payable and the mortgagor has paid the mortgage-money. The right under this section may also be exercised by puisne mortgagee. The requisition of puisne mortgagee will prevail over that of a mortgagor. As between the mortgagees themselves, the requisition of a prior mortgagee will get priority over that of a subsequent one.

195. Ins. by Act 20 of 1929, section 23.

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER

IVOF

MORTGAGES

OF

IMMOVABLE

PROPERTY

AND

CHARGES This Chapter can be categorised into following:— Part I—Mortgage defined Part II—Rights and liabilities of Mortgagor Part III—Rights and liabilities of Mortgagee Part IV—Priority Part V—Marshalling and Contribution Part VI—Deposit in Court Part VII—Suits for foreclosure, sale or Redemption. (Repealed) Part VIII—Foreclosure and sale (Repealed) Part IX—Redemption Part X—Anomalous Mortgage Part XI—Attachment of Mortgaged Property (Repealed) Part XII—Charges Part XIII—Notice and Tender

PART II: RIGHTS AND LIABILITIES OF MORTGAGOR This part dealing with rights and liabilities of mortgagor consists of 11 sections. 196.[s 60B] Right to inspection and production of documents.—

A mortgagor, as long as his right of redemption subsists, shall be entitled at all reasonable times, at his request and at his own cost, and on payment of the mortgagee's costs and expenses in this behalf, to inspect and make copies or abstracts of, or extracts from, documents of title relating to the mortgaged property which are in the custody or power of the mortgagee.]

Comments [s 60B.1] Right to Inspection and Production of Documents (Section 60B) According to this section, the mortgagor, who has handed over the title-deeds or other documents relating to the mortgaged property to the mortgagee, is entitled to inspect those documents. He may require the mortgagee to produce those documents in his

possession at reasonable time and at the cost of mortgagor himself. The mortgagor may make copies or abstracts of or extracts from those documents.

196. Ins. by Act 20 of 1929, section 25.

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER

IVOF

MORTGAGES

OF

IMMOVABLE

PROPERTY

AND

CHARGES This Chapter can be categorised into following:— Part I—Mortgage defined Part II—Rights and liabilities of Mortgagor Part III—Rights and liabilities of Mortgagee Part IV—Priority Part V—Marshalling and Contribution Part VI—Deposit in Court Part VII—Suits for foreclosure, sale or Redemption. (Repealed) Part VIII—Foreclosure and sale (Repealed) Part IX—Redemption Part X—Anomalous Mortgage Part XI—Attachment of Mortgaged Property (Repealed) Part XII—Charges Part XIII—Notice and Tender

PART II: RIGHTS AND LIABILITIES OF MORTGAGOR This part dealing with rights and liabilities of mortgagor consists of 11 sections. 197.[s 61] Right to redeem separately or simultaneously.—

A mortgagor who has executed two or more mortgages in favour of the same mortgagee shall, in the absence of a contract to the contrary, when the principal money of any two or more of the mortgages has become due, be entitled to redeem any one such mortgage separately, or any two or more of such mortgages together.]

Comments [s 61.1] Separate or Simultaneous Redemption (Section 61) This section says that a mortgagor who has executed two or more mortgages in favour of the same mortgagee shall be entitled to redeem any one such mortgage separately or any two or more of such mortgages together. However, this is subject to contrary contract, i.e., the mortgagor and mortgagee may exclude this provision from their

mortgage. It is possible only when the principal money of any two or more of the mortgages has become due.

[s 61.2] Doctrine of Consolidation Doctrine of consolidation was an equitable doctrine under English law. It enabled the mortgagee of different properties mortgaged by the same mortgagor to consolidate those mortgages and force him to redeem them all or to prevent him from redeeming one of them without redeeming the other. The doctrine was supposed to be based upon the maxim, "he who seeks equity, must do equity." For example, where a mortgagor mortgaged two properties A and B to a mortgagee and subsequently the value of property A increased considerably, the mortgagor wanted to redeem that property only, this proved to be a bad bargain for the mortgagee because he was left with only property B which was of a lesser value while his loan amount was heavy. Thus, in order to protect the interest of the mortgagee equity provided that the mortgagee could require the mortgagor to redeem both mortgages together. However, this doctrine was abolished in England by the Conveyancing and Law of Property Act, 1881. It is now re-enacted by the Law of Property Act, 1925 in England and made subject to a contract to the contrary. Section 61 of Transfer of Property Act, 1882 also provides this right is subjects to a contrary contract condition. The words "in the absence of a contract to the contrary" indicate that the parties may allow consolidation by mutual consent. However, it is necessary that such a provision must be clearly and explicitly given. Section 67A of the Act puts the rights of the mortgagee on a totally different footing. Under this section, if the mortgagee has successive mortgages of the same property or different mortgages of different properties from the same mortgagor he must enforce all or more. He has to sue on all the mortgages in respect of which the mortgage-money has become due provided such mortgages entitled him to obtain the same kind of decree.

197. Subs. by Act 20 of 1929, section 24, for the original section.

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER

IVOF

MORTGAGES

OF

IMMOVABLE

PROPERTY

AND

CHARGES This Chapter can be categorised into following:— Part I—Mortgage defined Part II—Rights and liabilities of Mortgagor Part III—Rights and liabilities of Mortgagee Part IV—Priority Part V—Marshalling and Contribution Part VI—Deposit in Court Part VII—Suits for foreclosure, sale or Redemption. (Repealed) Part VIII—Foreclosure and sale (Repealed) Part IX—Redemption Part X—Anomalous Mortgage Part XI—Attachment of Mortgaged Property (Repealed) Part XII—Charges Part XIII—Notice and Tender

PART II: RIGHTS AND LIABILITIES OF MORTGAGOR This part dealing with rights and liabilities of mortgagor consists of 11 sections.

[s 62] Right of usufructuary mortgagor to recover possession.— In the case of a usufructuary mortgage, the mortgagor has a right to recover possession of the property 198.[together with the mortgage-deed and all documents relating to the mortgaged property which are in the possession or power of the mortgagee],— (a) where the mortgagee is authorized to pay himself the mortgage-money from the

rents and profits of the property,—when such money is paid; (b) where the mortgagee is authorised to pay himself from such rents and profits 199.[or any part thereof a part only of the mortgage-money],— when the term (if

any) prescribed for the payment of the mortgage-money has expired and the mortgagor pays or tenders to the mortgagee 200.[the mortgage-money or the balance thereof] or deposits it in Court as hereinafter provided.

Comments [s 62.1] Right of Usufructuary Mortgagor (Section 62) Section 62 provides that in two conditions a usufructuary mortgagor can recover possession of the property together with the mortgage-deed and all documents relating to the mortgaged property, which are in the possession or power of the mortgagee. The conditions are as follows:— (i) Where the mortgagee is authorised to pay himself the mortgage-money from the

rents and profits of the property, when such money is paid. (ii) Where the mortgagee is authorised to pay himself from such rents and profits

when the term prescribed for the payment of mortgage-money has expired and the mortgagor pays or tenders the mortgage money to the mortgagee or deposits it in the court. Where a usufructuary mortgagor could not recover possession on the basis of an oral mortgage, he can still recover possession on the strength of his title.201. Where the property mortgaged to tenant by landlord was by way of usufructuary mortgage, the question was whether on redemption of the mortgage, the mortgagor is entitled to recover actual physical possession of the property, it was held that the answer depends upon the recitals in the deed. Mere absence of signature of mortgagee as one of the executant of document and non-payment of rent was held to be of no significance. It was held further that since there was no liability of payment of rent on tenant during subsistence of the mortgage, the mortgagor would be entitled to mesne profit from date of passing of decree till recovery of actual physical possession.202.

[s 62.2] Mortgagor's right to deal with Property As to this right his position has been thus stated by the Supreme Court:203. Mortgagor despite having mortgaged the property might still deal with it in any way consistent with the rights of the mortgagee. He has an equitable right to redeem the property after the day fixed for payment has gone by but his right or equity of redemption is no longer strictly an equitable estate or interest although it is still in the nature of an equitable interest. The right of the mortgagor, it is now well-settled, to deal with the mortgaged property as well as the limitation to which it is subject depends upon the nature of this ownership which is not absolute, but qualified by reason of the right of the mortgagee to recover his money out of the property. The right to redeem the mortgage is a very valuable right possessed by the mortgagor. Such a right to redeem the mortgage can be exercised before it is foreclosed or the estate is sold. The equitable right of redemption is dependent on the mortgagor giving the mortgagee reasonable notice of his intention to redeem, and on his fully performing his obligations under the mortgage. A right of redemption, thus, was statutorily recognized as a right of a mortgagor as an incident of mortgage which subsists so long as the mortgage itself subsists. The proviso appended to section 60, however, confines the right so long as the same is not extinguished by an act of the parties of by decree of court. By reason of Article 61 of the Limitation Act, 1963, the limitation provided for a suit to redeem or recover the possession of immovable property mortgaged by a mortgagor is thirty years from the date of accrual of right to redeem or recover possession. Article

137 which is a residuary provision provides for limitation of three years in a case where no period of limitation is provided. 204.

[s 62.3] Process of redemption For the purpose of enforcing redemption of usufructuary mortgage, the mortgagor may file a suit for redemption or may take recourse to the summary process of deposit and notice under section 83.205.

[s 62.4] Limitation The cause of action for filing a suit for redemption accrues at the time when mortgage money is offered by the mortgagor to the mortgagee. The mortgagee ignored or refused to accept the money. The suit for redemption was filed after the lapse of 30 years from the date of refusal. This was held to be barred by limitation. The period of 30 years had started running from the date of offer of money.206. Where no time limit is fixed for redemption, the period of 30 years is available for redemption.207. A lessee from a usufructuary mortgagee filed a suit for possession on the ground of failure of the landlord to redeem the usufructuary mortgage. It was held that mere expiry of the period of 30 years from the date of creation of a usufructuary mortgage does not extinguish the right of the mortgagor. Accordingly, the lessee's suit for possession was not maintainable.208.

198. Ins. by Act 20 of 1929, section 25. 199. Subs. by Act 20 of 1929, section 25, for "the interest of the principal money". 200. Subs. by Act 20 of 1929, section 25, for "the principal money". 201. Kolathoor Variath v Pairaprakottoh Cheriya Kumhahammad Haji, AIR 1974 SC 689 : (1974) 1

SCWR 258 : (1974) 1 SCC 590 . 202. Chand Mal v Sumer Mal, AIR 2001 Raj 95 : 2000 (2) Raj LR 652 : 2001 (1) Raj LW 144 . 203. Achaldas Durgaji Oswal v Ramvilas Gangabisan Heda, AIR 2003 SC 1017 : (2003) 3 SCC 614

: (2003) 1 SCR 340 . 204. Halsbury's Laws of England, Vol 32, p 264 (4th Edn). 205. Tara Chand v Sagarbai, AIR 2007 SC 2059 : 2007 AIR SCW 3158 : (2007) 5 SCC 392 ;

Rukmani Ammal v Jagdeesa Gounder, JT 2005 (10) SC 95 : (2005) 9 Scale 251 : AIR 2006 SC 276 , the mortgagee purchased the mortgage property at a court action held for failure to pay off earlier mortgage debt, though the mortgagee was a usufructuary mortgage, he was suing in the right of the mortgagor whose rights he had purchased, he was entitled in that right only to redeem the mortgage and not for declaration of title and possession. 206. Mohan Lal v Mohan Lal, AIR 2013 Raj 187 : 2013 (4) Raj LW 3309 ; Singh Ram v Sheo Ram,

AIR 2014 SC 3447 : 2014 AIR SCW 4854 : (2014) 9 Scale 411 , right of redemption for

usufructuary mortgage continues till mortgage money is offered for payment. Mere expiry of 30 years from the date of mortgage does not extinguish such right; appellant mortgagee's claim of ownership on the ground that right of mortgagor automatically stood foreclosed on expiry of 30 years dismissed, Bir Singh v Ram Kanwar Singh, (2018) 15 SCC 341 .. 207. Bhandaru Ram v Sukh Ram, AIR 2012 HP 1 (FB) : 2012 (1) CCC 825 : 2012 (2) CCC 559 ,

overruling Jaimal v State of Himachal Pradesh, AIR 2010 HP 7 : 2010 AIHC 276 (NOC) : 2010 (2) Land LR 507 and Prakash Chand v Amar Singh, AIR 2011 HP 21 : 2010 AIHC 620 NOC : 2009 (3) Sim LC 6. 208. Rajinder Singh v Kulwant Kaur, AIR 2016 NOC 472 (P&H).

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER

IVOF

MORTGAGES

OF

IMMOVABLE

PROPERTY

AND

CHARGES This Chapter can be categorised into following:— Part I—Mortgage defined Part II—Rights and liabilities of Mortgagor Part III—Rights and liabilities of Mortgagee Part IV—Priority Part V—Marshalling and Contribution Part VI—Deposit in Court Part VII—Suits for foreclosure, sale or Redemption. (Repealed) Part VIII—Foreclosure and sale (Repealed) Part IX—Redemption Part X—Anomalous Mortgage Part XI—Attachment of Mortgaged Property (Repealed) Part XII—Charges Part XIII—Notice and Tender

RIGHT TO ACCESSION [s 63] Accession to mortgaged property.— Where mortgaged property in possession of the mortgagee has, during the continuance of the mortgage, received any accession, the mortgagor, upon redemption shall, in the absence of a contract to the contrary, be entitled as against the mortgagee to such accession. (a) Accession acquired in virtue of transferred ownership.—Where such accession has been acquired at the expense of the mortgagee, and is capable of separate possession or enjoyment without detriment to the principal property, the mortgagor desiring to take the accession must pay to the mortgagee the expense of acquiring it. If such separate possession or enjoyment is not possible, the accession must be delivered with the property; the mortgagor being liable, in the case of an acquisition necessary to preserve the property from destruction, forfeiture or sale, or made with his assent, to pay the proper cost thereof, as an addition to the principal money, 209.[with interest at the same rate as is payable on the principal, or, where no such rate is fixed, at the rate of nine per cent per annum]. In the case last mentioned the profits, if any, arising from the accession shall be credited to the mortgagor.

Where the mortgage is usufructuary and the accession has been acquired at the expense of the mortgagee, the profits, if any, arising from the accession shall, in the absence of a contract to the contrary, be set off against interest, if any, payable on the money so expended.

Comments [s 63.1] Accession to Mortgaged Property (Section 63) (i) Where mortgaged property in possession of the mortgagee has, (ii) during the continuance of the mortgage, (iii) received any accession, (iv) the mortgagor shall upon redemption, be entitled to such accession as against

mortgagee, (v) This is so in the absence of a contract to the contrary.

This section deals with the following kinds of accessions:— (1) Natural accessions (2) Acquired accessions: These are of two types:— (a) separable acquired accessions, or (b) inseparable acquired accessions

According to the decision of the Privy Council in Sorabjee v Dwarkadas Ranchhoddas,210. this section is only an application of the equitable principle enacted in section 90 of the Trusts Act. According to section 90, "Where a tenant for life, coowner, mortgagee or other qualified owner of any property, by availing himself of his position as such, gains an advantage in derogation of the rights of the other persons interested in the property, or where any such owner, as representing all persons interested in such property, gains any advantage, he must hold, for the benefit of all persons so interested, the advantage so gained, but subject to repayment by such persons of their due share of the expenses properly incurred, and to an indemnity by the same persons against liabilities properly contracted in gaining such advantage."211. Their Lordships of the Privy Council in the above cited case observed: In their Lordships' opinion there is nothing inconsistent with that section (section 90, Trust Act) in the provisions of section 63 of the Transfer of Property Act as to accessions to mortgaged property and the terms on which the mortgagor may upon redemption obtain the benefit of them. The word "accession" is not defined in the Act, but the section dealt expressly with accession which are acquired at the expense of the mortgagee and would appear to be clearly applicable to cases in which a subordinate tenure has admittedly been acquired by the mortgagee as an accession to the mortgaged property. Whether the term "acession" as used in this section should also be held to cover acquisition which the mortgagee has made for his own benefit but is bound, under section 90 of the Trusts Act to hold for the benefit of the mortgagor need not be discussed. Section 90 itself provides for the mortgagor bearing the cost of acquisition in such a case, but section 63 goes somewhat further and contains as well an express provision as to profits arising from the accession where the mortgage is usufructuary. In the present case, it is sufficient to say that their Lordships are clearly of opinion that section 63 of the Transfer of Property Act cannot be read as entitling the mortgagor to recover acquisitions made by the mortgagee for his own benefit in circumstances which do not bring him within section 90 of the Indian Trust Act.

[s 63.1.1] Natural Accessions Accessions denote physical accretions or additions, whether brought by natural or artificial means. Section 70 gives the general rule that if after the date of a mortgage, any accession is made to the mortgaged property, the mortgagee shall for the purposes of the security be entitled to such accession in the absence of the contract to the contrary. For example, where A mortgages a certain field bordering on a river to B and the field is increased by alluvion, B is entitled to such increase for the purposes of his security. Where A mortgages certain plot of building land to B and afterwards erects a house on the plot, B is entitled to the house as well as the plot for the purposes of his security. Section 63 provides that as a general rule, natural accessions which arise during the continuance of mortgage can be redeemed by the mortgagor together with the mortgaged property. The mortgagee has no right to retain or claim such accessions when mortgagor redeems the mortgage. Accessions which are not made by the parties to the mortgage but arise as assertions by the course of nature are known as natural accessions.

[s 63.1.2] Acquired Accessions Acquired accessions are of two types: separable acquired accessions and inseparable acquired accessions.

[s 63.1.2.1] Accession acquired in virtue of transferred ownership.— Where such accession has been acquired at the expense of the mortgagee, and is capable of separate possession or enjoyment without detriment to the principal property, the mortgagor desiring to take the accession must pay to the mortgagee the expense of acquiring it. If such separate possession or enjoyment is not possible, the accession must be delivered with the property; the mortgagor being liable, in the case of an acquisition necessary to preserve the property from destruction, forfeiture or sale, or made with his assent, to pay the proper cost thereof, as an addition to the principal money, with interest at the same rate as is payable on the principal, or, where no such rate is fixed, at the rate of nine per cent per annum. In the case last mentioned, the profits, if any, arising from the accession shall be credited to the mortgagor. Where the mortgage is usufructuary and the accession has been acquired at the expense of the mortgagee, the profits, if any, arising from the accession shall, in the absence of a contract to the contrary, be set off against interest, if any, payable on the money so expended. Where accession has been acquired at the expense of the mortgagee and is capable of separate possession or enjoyment, if the mortgagor desires to take such accession, he must pay to the mortgagee the expense of acquiring such accession. Where separate possession or enjoyment of property is not possible, the accession must be delivered with the property. When the accessions are inseparable, the mortgagor has no option but to take them on redemption. Therefore, he is liable to pay the cost only— (i) if the acquisition was necessary to preserve the property from the destruction,

forfeiture, or sale; or

(ii) if the acquisition was made with his consent.

Where a mortgagee makes the necessary repairs to a well with the consent of the mortgagor, the mortgagor must pay the cost.212. But where the mortgagee constructed a well,213. or planted a grove214. or added an upper storey to a building without the consent of the mortgagor215. he was not entitled to recover compensation from the mortgagor.

[s 63.2] Usufructuary Mortgage Where the mortgage is usufructuary, and the accession has been acquired at the expense of the mortgagee then the profits arising from the accession shall be set off against interest payable on the money so expended. However, this is in the absence of the contract to the contrary.

209. Subs. by Act 20 of 1929, section 26, for "at the same rate of interest". 210. (1932) 59 IA 366 (371) : AIR 1932 PC 199 . 211. Mulla, The Transfer of Property Act, 9th Edn, p 722. 212. Durga Singh v Naurang Singh, (1895) 17 All 232 : 1895 AWN 69. 213. Rajaram v Vithal, (1914) 10 Nag LR 166. 214. Zubeda v Sheo Charan, (1900) 22 All 83 . 215. Arunachela Chetti v Sithayee Ammal, (1896) 19 Mad 327.

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER

IVOF

MORTGAGES

OF

IMMOVABLE

PROPERTY

AND

CHARGES This Chapter can be categorised into following:— Part I—Mortgage defined Part II—Rights and liabilities of Mortgagor Part III—Rights and liabilities of Mortgagee Part IV—Priority Part V—Marshalling and Contribution Part VI—Deposit in Court Part VII—Suits for foreclosure, sale or Redemption. (Repealed) Part VIII—Foreclosure and sale (Repealed) Part IX—Redemption Part X—Anomalous Mortgage Part XI—Attachment of Mortgaged Property (Repealed) Part XII—Charges Part XIII—Notice and Tender

RIGHT TO ACCESSION 216.[s 63A] Improvements to mortgaged property.— (1) Where mortgaged property in possession of the mortgagee has, during the

continuance of the mortgage, been improved, the mortgagor, upon redemption, shall, in the absence of a contract to the contrary, be entitled to the improvement; and the mortgagor shall not, save only in cases provided for in sub-section (2), be liable to pay the cost thereof. (2) Where any such improvement was effected at the cost of the mortgagee and

was necessary to preserve the property from destruction or deterioration or was necessary to prevent the security from becoming insufficient, or was made in compliance with the lawful order of any public servant or public authority, the mortgagor shall, in the absence of a contract to the contrary, be liable to pay the proper cost thereof as an addition to the principal money with interest at the same rate as is payable on the principal, or, where no such rate is fixed, at the rate of nine per cent per annum, and the profits, if any, accruing by reason of the improvement shall be credited to the mortgagor.]

Comments [s 63A.1] Improvements to Mortgaged Property (Section 63A) Where the mortgaged property in the possession of the mortgagee has improved during the continuance of the mortgage, the mortgagor shall be entitled to the improvement upon redemption, in the absence of a contract to the contrary. The mortgagor shall not be entitled to pay the cost of it here except the cases provided in sub-section (2). Sub-section (2) says that where any such improvement was effected at the cost of the mortgagee and— (i) was necessary to preserve the property from destruction or deterioration, or (ii) was necessary to prevent the security from becoming insufficient, or (iii) was made in compliance with the lawful order of any public servant or public

authority. The mortgagor shall be liable to pay the proper cost of it as an addition to the principal money with interest at the same rate as is payable on the principal in the absence of a contract to the contrary and the profits accruing by reason of the improvement shall be credited to the mortgagor. In case no rate is fixed, the interest will be payable at the rate of 9% per annum.

[s 63A.2] Essential Elements The essential elements of this section are— (i) The mortgaged property should be in possession of the mortgagee. (ii) The improvements to the property should have been affected during the

continuance of the mortgage. (iii) The improvements must have been affected at the cost of the mortgagee.

This section as a general rule provides that in the absence of a contract to the contrary, if the mortgaged property has improved during the continuance of the mortgage, the mortgagor shall be entitled to such improvement without paying its cost. However, this general rule is subject to an exception that the mortgagor is liable to pay the cost of improvements made by the mortgagee in the following circumstances:— (i) Where improvements were necessary to preserve the property from destruction

or deterioration, or (ii) Where improvement was necessary to prevent the security from becoming

insufficient in comparison to debt, or (iii) Where improvement was made in compliance with the lawful order of any

public servant or public authority. A mortgagee who was the owner of the structure at the time of redemption was allowed, if he so desired, to remove and take away the material of the structure.217.

216. Ins. by Act 20 of 1929, section 27. 217. Shankarlal Nathumal Chandak v Balkrishna Jagannath Gujarathi, AIR 2010 Bom 4 : 2010 (87)

AIC 283 : 2010 (3) Bom CR 746 .

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER

IVOF

MORTGAGES

OF

IMMOVABLE

PROPERTY

AND

CHARGES This Chapter can be categorised into following:— Part I—Mortgage defined Part II—Rights and liabilities of Mortgagor Part III—Rights and liabilities of Mortgagee Part IV—Priority Part V—Marshalling and Contribution Part VI—Deposit in Court Part VII—Suits for foreclosure, sale or Redemption. (Repealed) Part VIII—Foreclosure and sale (Repealed) Part IX—Redemption Part X—Anomalous Mortgage Part XI—Attachment of Mortgaged Property (Repealed) Part XII—Charges Part XIII—Notice and Tender

RIGHT TO ACCESSION [s 64] Renewal of mortgaged lease.— Where the mortgaged property is a lease 218.[***], and the mortgagee obtains a renewal of the lease, the mortgagor, upon redemption, shall, in the absence of a contract by him to the contrary, have the benefit of the new lease.

Comments [s 64.1] Renewal of mortgaged lease (section 64) (1) Where the mortgaged property is a lease, and (2) The mortgagor obtains a renewal of the lease, (3) The mortgagor upon redemption shall have the benefit of the new lease, in the

absence of the contract to the contrary.

However, under section 71, when the mortgaged property is a lease and the mortgagor obtains a renewal of the lease, the mortgagee shall be entitled to the new lease for the purposes of the security in the absence of the contract to the contrary.

218. The words "for a term of years" omitted by Act 20 of 1929, section 28.

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER

IVOF

MORTGAGES

OF

IMMOVABLE

PROPERTY

AND

CHARGES This Chapter can be categorised into following:— Part I—Mortgage defined Part II—Rights and liabilities of Mortgagor Part III—Rights and liabilities of Mortgagee Part IV—Priority Part V—Marshalling and Contribution Part VI—Deposit in Court Part VII—Suits for foreclosure, sale or Redemption. (Repealed) Part VIII—Foreclosure and sale (Repealed) Part IX—Redemption Part X—Anomalous Mortgage Part XI—Attachment of Mortgaged Property (Repealed) Part XII—Charges Part XIII—Notice and Tender

RIGHT TO ACCESSION [s 65] Implied contracts by mortgagor.— In the absence of a contract to the contrary, the mortgagor shall be deemed to contract with the mortgagee,— (a) that the interest which the mortgagor professes to transfer to the mortgagee

subsists, and that the mortgagor has power to transfer the same; (b) that the mortgagor will defend, or, if the mortgagee be in possession of the

mortgaged property, enable him to defend, the mortgagor's title thereto; (c) that the mortgagor will, so long as the mortgagee is not in possession of the

mortgaged property, pay all public charges accruing due in respect of the property; (d) and, where the mortgaged property is a lease 219.[***], that the rent payable

under the lease, the conditions contained therein, and the contracts binding on the lessee have been paid, performed and observed down to the commencement of the mortgage; and that the mortgagor will, so long as the security exists and the mortgagee is not in possession of the mortgaged property, pay the rent reserved by the lease, or, if the lease be renewed, the

renewed lease, perform the conditions contained therein and observe the contracts binding on the lessee, and indemnify the mortgagee against all the claims sustained by reason of the nonpayment of the said rent or the nonperformance or non-observance of the said conditions and contracts; (e) and, where the mortgage is a second or subsequent encumbrance on the

property, that the mortgagor will pay the interest from time to time accruing due on each prior encumbrance as and when it becomes due, and will at the proper time discharge the principal money due on such prior encumbrance. 220.[***]

The benefit of the contracts mentioned in this section shall be annexed to and shall go with the interest of the mortgagee as such, and may be enforced by every person in whom that interest is for the whole or any part thereof from time to time vested.

Comments [s 65.1] Implied Contracts (Section 65) Implied contracts by the mortgagor under this section are liabilities of the mortgagor. They include:— (i) Covenant for title (ii) Covenant for defence of title (iii) Covenant for payment of public charges (iv) Covenant for payment of rents (v) Covenant for discharge of public mortgage, if any.

This section will be discussed later on in this chapter after completing rights of the mortgagor.

219. The words "for a term of years" omitted by Act 20 of 1929, section 29. 220. Certain words omitted by Act 20 of 1929, section 29.

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER

IVOF

MORTGAGES

OF

IMMOVABLE

PROPERTY

AND

CHARGES This Chapter can be categorised into following:— Part I—Mortgage defined Part II—Rights and liabilities of Mortgagor Part III—Rights and liabilities of Mortgagee Part IV—Priority Part V—Marshalling and Contribution Part VI—Deposit in Court Part VII—Suits for foreclosure, sale or Redemption. (Repealed) Part VIII—Foreclosure and sale (Repealed) Part IX—Redemption Part X—Anomalous Mortgage Part XI—Attachment of Mortgaged Property (Repealed) Part XII—Charges Part XIII—Notice and Tender

RIGHT TO GRANT A LEASE 221.[s 65A] Mortgagor's power to lease.— (1) Subject to the provisions of subsection (2), a mortgagor, while lawfully in

possession of the mortgaged property, shall have power to make leases thereof which shall be binding on the mortgagee. (2)

(a) Every such lease shall be such as would be made in the ordinary course

of management of the property concerned, and in accordance with any local law, custom or usage, (b) Every such lease shall reserve the best rent that can reasonably be

obtained, and no premium shall be paid or promised and no rent shall be payable in advance, (c) No such lease shall contain a covenant for renewal, (d) Every such lease shall take effect from a date not later than six months

from the date on which it is made, (e) In the case of a lease of buildings, whether leased with or without the

land on which they stand, the duration of the lease shall in no case exceed three years, and the lease shall contain a covenant for payment of the rent and a condition of re-entry on the rent not being paid with a time therein specified. (3) The provisions of sub-section (1) apply only if and as far as a contrary intention

is not expressed in the mortgage-deed; and the provisions of sub-section (2) may be varied or extended by the mortgage-deed and, as so varied and extended, shall, as far as may be, operate in like manner and with all like incidents, effects and consequences, as if such variations or extensions were contained in that sub-section.]

Comments [s 65A.1] Mortgagor's Power to Lease (Section 65A) A mortgagor, who is in lawful possession of the mortgaged property, shall have the power to make the lease of the property which shall be binding on the mortgagee. However, this right is subject to the provisions of sub-section (2). The conditions given under subsection (2) are following:— 221 (i) Every lease shall be such as would be made in the ordinary course of

management of the property concerned, and in accordance with local law, custom or usage. This means that the lease should be made in accordance with local laws, customs and usage with good intention. The burden of proof lies on the lessee that lease was made in the usual course of management and in accordance with local laws and customs. (ii) Every such lease shall reserve the best rent that can reasonably be obtained and

no premium shall be paid or promised and no rent shall be payable in advance. In other words, no rent shall be paid in advance and no premium shall be paid or promised by the leasee. (iii) Third condition is that no such lease shall contain a covenant for renewal. There

should be no provision for renewal of the lease. It there is any such provision it shall not be binding on the mortgagee. (iv) Every such lease takes effect from a date not later than six months from the

date on which it is made. The lease is required to come into force not later than six months from the date on which it was executed. In the absence of such a condition, the mortgagee's interest may be seriously effected. (v) In the case of lease of buildings, whether leased with or without land on which

they stand, the duration of the lease shall not exceed 3 years in any case. The lease shall contain a covenant for payment of the rent and a condition of reentry on the rent not being paid within a time specified therein. In other words, where the property leased is a building, the term of the lease cannot be more than 3 years. The lease provide for the payment of rent regularly and that in case of non-payment of rent within specified time, the right of re-entry of the lessor i.e., in case of non-payment of rent, the lessor (mortgagor) would be entitled to resume possession. When the lease (mortgage) is made without fulfilling any of the conditions, the mortgagee is not bound by the lease. Parties may also contract to exclude altogether

the mortgagor's power to execute any lease under the mortgage-deed.222. A property under lease cannot be taken away from possession of the lessee even if the owner has mortgaged the property and it has become a secured asset in the hands of a bank. In this lease case the term of the lease had expired and it was renewed only after service of demand notice by the Authority under the SARFAESI Act, 2002. Then at the time of notice there was no valid lease deed in existence. Possession of the lessee was not a valid possession at the time when it was taken over by the secured creditor/ bank.223. An unregistered lease deed was held to be not protected from seizure as a secured asset by a security holder.224. A bank became entitled to realise its dues by disposing of the secured asset. One of the questions was regarding the eviction of the lessee. The lessee was in possession prior to creation of the mortgage by the borrower. The lessee was not made a party to the proceedings under section 14 of the SARFAESI Act, 2002. It was held that the order in favour of the bank to take possession could not be enforced against the lessor.225. A bank took possession of mortgaged collateral flats of the borrower and advertised for their auction. Tenant filed a writ for protection as the tenant. It was found that rent agreement was unregistered and was made before loan by the borrower. As borrower had not disclosed the tenancy at the time of loan and there was no proof of delivery of possession or payment of rent, it created doubt about genuineness of rent agreement, applicant's claim for protection as a tenant was not accepted.226.

221. Ins. by Act 20 of 1929, section 30. 222. Sree Lakshmi Products v State Bank of India, AIR 2007 Mad 148 : 2007 (3) Civ LJ 830 : 2007

(2) Mad LJ 815, tenancy created by the mortgagor after the mortgage in contravention of the section was held to be not binding on the lending bank or financial institution. 223. V Juvalamukhi v District Magistrate–cum-District Collector, AIR 2016 Mad 56 ; Tikkamchand

Ramvillas Gilda v Janki Bai Pyare lal Sarivas, AIR 2015 NOC 546 (Bom), a lease created by the mortgagee would have no effect where the mortgage itself had ceased to exist. 224. P Kiranmai v Bank of Maharashtra, AIR 2016 Hyd 17 . 225. Nanter Mainty v Allahabad Bank, Chennai, AIR 2015 Mad 247 . 226. State Bank of India, Mumbai v Rajesh Khetan, AIR 2017 Pat 141 .

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER

IVOF

MORTGAGES

OF

IMMOVABLE

PROPERTY

AND

CHARGES This Chapter can be categorised into following:— Part I—Mortgage defined Part II—Rights and liabilities of Mortgagor Part III—Rights and liabilities of Mortgagee Part IV—Priority Part V—Marshalling and Contribution Part VI—Deposit in Court Part VII—Suits for foreclosure, sale or Redemption. (Repealed) Part VIII—Foreclosure and sale (Repealed) Part IX—Redemption Part X—Anomalous Mortgage Part XI—Attachment of Mortgaged Property (Repealed) Part XII—Charges Part XIII—Notice and Tender

RIGHT IN CASE OF WASTE [s 66] Waste by mortgagor in possession.— A mortgagor in possession of the mortgaged property is not liable to the mortgagee for allowing the property to deteriorate; but he must not commit any act which is destructive or permanently injurious thereto, if the security is insufficient or will be rendered insufficient by such act. Explanation.—A security is insufficient within the meaning of this section unless the value of the mortgaged property exceeds by one-third, or, if consisting of buildings, exceeds by one-half, the amount for the time being due on the mortgage.

Comments [s 66.1] Liability for Waste (Section 66) According to this section, a mortgagor in possession of the mortgaged property is not liable to the mortgagee for allowing the property to deteriorate but he must not do any

act which is destructive or permanently injurious to the property, if the security is insufficient or will be rendered insufficient by such act. The mortgagee who has given debt on the security of any property will not allow destruction or injury to the mortgaged-property. That is why this section has imposed a liability on mortgagor not to do anything which is destructive or injurious to the mortgaged property. The mortgagor is prohibited in respect of active waste by the mortgagor. Due to the injury, which is permanent in nature, and destruction, the market value of the property is reduced and this results in loss to the mortgagee. The mortgagor's duty is not to waste the mortgaged property deliberately. Some of the acts given below are regarded as active waste by the mortgagor— (i) Cutting down the timber standing on the mortgaged property even though the

timber is very old and almost in the condition of falling down. Felling timber may not be waste if the sum advanced on the mortgage is small in comparison with the value of the land. In the words of Wigram, VC: I think the question which must be tried is whether the property the mortgagee takes as a security is sufficient in this sense – that the security is worth so much more than the money advanced – that the act of cutting timber is not to be considered as substantially impairing the value which was the basis of the contract between the parties at the time when it was entered into.227.

(ii) Removal of valuable fixtures from the property. (iii) Pulling down the mortgaged house and selling the materials. (iv) Working new mines under the mortgaged property. (v) Mining under the mortgaged buildings so as to put them in danger.

[s 66.2] Insufficient Security A security is insufficient unless the value of the mortgaged property exceeds by onethird the amount due on the mortgage for the time being. Where the mortgaged property consists of buildings the value must exceed by one-half the amount for the time being due on the mortgagee. Therefore, a security will be sufficient if the value of the mortgaged property exceeds the mortgaged amount by one-third and in case of buildings (mortgaged property) the security will be sufficient if the value of mortgaged property exceeds the mortgaged amount by one-half. Under this section, the mortgagor is liable for any deliberate waste but not where the property is itself deteriorating. The mortgagor is not liable for waste by omission; he is liable only for active waste done by him deliberately.

[s 66.3] Liabilities of a Mortgagor (Section 65) There are five contracts which a mortgagor is deemed to have entered into with the mortgagee in the absence of a contract to the contrary. They are given below:— (i) Covenant for title [section 65(a)] (ii) Covenant for defence of title [section 65(b)] (iii) Covenant for payment of public charges [section 65(c)]

(iv) Covenant for payment of rents [section 65(d)] (v) Covenant for discharge of prior mortgage [section 65(e)]

[s 66.3.1] Covenant for Title [Section 65(a)] The mortgagor is deemed to contract with the mortgagee that the interest which the mortgagor professes to transfer to the mortgagee subsists and that the mortgagor has the power to transfer the same. There is an implied warranty of title by the mortgagor in the property mortgaged by him. The mortgagor's covenant of title is similar to that of vendor under section 55(2). This is two-fold: (a) as to the quantum of interest (b) as to the interest being transferable.

If the title of the mortgagor turns out to be defective the mortgagee can sue for the principal money as well as for damages even before the stipulated period. When a person mortgages a property for a debt, he cannot afterwards take the plea in a suit by the mortgagee that he had no power to effect the mortgage. He will have to compensate the mortgagee. Where at the time of mortgage the mortgagor had no interest in the property but afterwards he acquires the interest in the property, the mortgagee becomes entitled to subsequently acquired interests for the purposes of his security.

[s 66.3.2] Covenant for Defence of Title [Section 65(b)] The mortgagor is deemed to contract with the mortgagee that he will defend, or, if the mortgagee be in possession of the mortgaged property, enable him to defend, the mortgagor's title thereto. The mortgagee has a right to protect the title of the mortgagor because he is entitled to the full benefit of the security. Therefore, the mortgagor is under an implied covenant to defend the title if he himself is in possession or to assist the mortgagee in defending the title if the mortgage is in possession.

[s 66.3.3] Covenant for Payment of Public Charges [Section 65(c)] The mortgagor is deemed to contract with the mortgagee that the mortgagor will, so long as the mortgagee is not in possession of the mortgaged property, pay all the public charges accruing due in respect of the property. The mortgagor has to pay government revenue and other public charges as long as he remains in possession of property. After the death of mortgagor his heir is liable to pay all the public charges. The same liability attaches to the mortgagee when he comes in possession under section 76(c). If the mortgagor fails to pay and the property is sold for arrears of revenue, and he again purchases that property, the property will remain under the mortgage, for he cannot take advantage of his own wrong in order to better his position.228. Where a sale results the mortgagee may sue for the mortgagee-money (under section 68) and if there are any surplus sale-proceeds after such revenue sale, the mortgagee will have a charge on them (under section 73)

[s 66.3.4] Covenant for Payment of Rents [Section 65(d)] Where the mortgaged property is a lease, the mortgagor is deemed to contract with the mortgagee that the rent payable under the lease, the conditions contained therein, and the contracts binding on the lessee, have been paid, performed and observed, down to the commencement of mortgage; and that the mortgagor will pay the rent reserved by the lease (where the lease is renewed, the renewed lease), and perform the conditions contained therein, and observe the contracts binding on the lessee, and indemnify the mortgagee against all claims, sustained by reason of the non-payment of the said rent or the nonperformance or non-observance of the said conditions and contracts. Where the mortgaged property is leasehold, the mortgagor covenants that he has paid the rent and performed the conditions of the lease for the period prior to the mortgage. He covenants for the future that as long as the mortgagee is not in possession, he will pay the rent and perform the conditions of the lease.

[s 66.3.5] Covenant for Discharge of Prior Mortgage [Section 65(e)] Where the mortgage is a second or subsequent encumbrance on the property, the mortgagor is deemed to have contract that the mortgagor will pay the interest from time to time accruing due on each prior encumbrance as and when it becomes due, and will at the proper time discharge the principal money due on such prior encumbrance. This is an implied covenant that the mortgagor will discharge prior mortgages, for otherwise, the mortgagee may be deprived of his security. However, this covenant does not affect the mortgagee's right to redeem prior encumbrances himself under section 92. Where a breach of this covenant occurs the mortgagee may sue for the mortgagemoney under section 68. The benefits of these implied covenants run with the land therefore, all the assignees of the mortgagee will be entitled to the same. But the burden of these covenants is confined to the mortgagor alone and does not pass to a purchaser of the equity of redemption. These implied covenants are subject to a contract to the contrary. Such a contract may be presumed when the mortgagee was fully aware of the nature and extent of the mortgagor's title.

227. King v Smith, (1843) 2 Hare 239 (244) : 62 RR 93 : 67 ER 99. 228. Sanagapalli Lekshmayya v Intoory Bolla Reddi, (1903) 26 Mad 385 : 13 Mad LJ 129.

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER

IVOF

MORTGAGES

OF

IMMOVABLE

PROPERTY

AND

CHARGES This Chapter can be categorised into following:— Part I—Mortgage defined Part II—Rights and liabilities of Mortgagor Part III—Rights and liabilities of Mortgagee Part IV—Priority Part V—Marshalling and Contribution Part VI—Deposit in Court Part VII—Suits for foreclosure, sale or Redemption. (Repealed) Part VIII—Foreclosure and sale (Repealed) Part IX—Redemption Part X—Anomalous Mortgage Part XI—Attachment of Mortgaged Property (Repealed) Part XII—Charges Part XIII—Notice and Tender

PART III: RIGHTS AND LIABILITIES OF MORTGAGEE This part deals with rights and liabilities of mortgagee. The rights of a mortgagee are given below:— (1) Right to foreclosure or sale. (section 67) (2) Right to sue for mortgage-money (section 68) (3) Right to sell (section 69) (4) Right to appoint a Receiver (section 69A) (5) Right to accession (section 70) (6) Right to renewal of lease (section 71) (7) Right to spend money (section 72) (8) Right to proceeds of revenue sale or compensation on acquisition. (section 73) (9) Right of mesne mortgagees (section 94)

Liabilities of a mortgagee:—

(1) Mortgagee bound to bring one suit on several mortgages (section 67A) (2) Liabilities of mortgagee in possession (sections 76 and 77)

Rights of Mortgagee [s 67] Right to fore-closure or sale.— In the absence of a contract to the contrary, the mortgagee has, at any time after the mortgage-money has become 229.[due] to him, and before a decree has been made for the redemption of the mortgaged property, or the mortgage-money has been paid or deposited as hereinafter provided, a right to obtain from the Court 230.[a decree] that the mortgagor shall be absolutely debarred of his right to redeem the property, or 229[a decree] that the property be sold. A suit to obtain 229[a decree] that a mortgagor shall be absolutely debarred of his right to redeem the mortgaged property is called a suit for foreclosure. Nothing in this section shall be deemed— 231.

[(a) to authorise any mortgagee other than a mortgagee by conditional sale or a

mortgagee under an anomalous mortgage by the terms of which he is entitled to foreclose, to institute a suit for foreclosure, or an usufructuary mortgagee as such or a mortgagee by conditional sale as such to institute a suit for sale; or] (b) to authorise a mortgagor who holds the mortgagee's rights as his trustee or

legal representative, and who may sue for a sale of the property, to institute a suit for foreclosure; or (c) to authorise the mortgagee of a railway, canal, or other work in the maintenance

of which the public are interested, to institute a suit for foreclosure or sale; or (d) to authorise a person interested in part only of the mortgage-money to institute

a suit relating only to a corresponding part of the mortgaged property, unless the mortgagees have, with the consent of the mortgagor, severed their interests under the mortgage.

Comments [s 67.1] Right to Foreclosure or Sale (Section 67) According to this section, at any time after the mortgage money has become due and before a decree has been made for the redemption of mortgaged property or the mortgage money has been paid or deposited, the mortgagee has a right to obtain from the court a decree that the mortgagor shall be absolutely debarred of his right to redeem the property or a decree that the property be sold. An order permitting foreclosure can only be passed upon ascertaining the nature of the mortgage and the parties' rights under it.232.

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. Section 67 is the counterpart of section 60 and it gives the mortgagee a right of foreclosure or sale in default of redemption by the mortgagor. Where the mortgagor pays or deposits the mortgage-money, no occasion for the exercise of the right of foreclosure or sale occurs. Similarly, where a decree for redemption is made, a suit for foreclosure or sale would be barred because a redemption decree itself provides for sale or foreclosure in default of payment. The right of foreclosure implies that when the time fixed for the repayment of mortgage-money has expired and the mortgagor's right to redeem the mortgagedmoney has become complete but he has failed to avail that right, the mortgagee gets a right to institute a suit for decree that the mortgagor should be absolutely debarred of his right to redeem the property. Where the mortgagor does not redeem the mortgage within the stipulated period, the mortgagee does not automatically become the owner of the property. He has to file a suit for recovery of the amount due within the limitation period of 12 years. He cannot claim ownership on his failure to do so. He cannot even use the indirect method of becoming owner through a court declaration of title by filing a declaratory suit.233. The right to redeem and right to foreclose are co-extensive. In the absence of any stipulation (express or implied) to the contrary, the two rights are co-extensive. Where there is a stipulation of time for payment of mortgage-money, the mortgagor cannot redeem before that time period. The difference between right of redemption and the right to foreclosure is that right of redemption is an absolute right whereas right to foreclose is not. The mortgagor cannot limit his right of redemption but the right to foreclose can be made subject to the contract between the parties to mortgage. Section 67 provides two remedies to a mortgagee-foreclosure and sale. These remedies are available to the mortgagee in different forms of mortgagees.

[s 67.1.1] Simple Mortgagee A simple mortgagee cannot foreclose. His remedy is to bring a suit for the sale of the mortgaged property in order to recover his debt. The simple mortgagee has two-fold remedies available for him— (i) He can be mortgagor personally on personal covenant and get a simple money

decree, or (ii) He may file a suit for the sale of mortgaged property to recover his mortgage-

debt.

[s 67.1.2] Usufructuary Mortgage A usufructuary mortgagee is in possession of the mortgaged-property. He has to recover his principal sum as well as interest out of the mortgaged property. He can neither sue for sale nor foreclose the mortgage.

[s 67.2] Mortgage by Conditional sale

In such a mortgage, the condition of mortgage itself provides that in default of payment on the stipulated date the mortgage will itself become a sale in favour of the mortgagee. Therefore, in such a case the proper remedy is to deprive the mortgagor of the right of redemption so that he might not be able to redeem the mortgaged property.

[s 67.3] English Mortgage An English mortgagee can file a suit for the sale of the mortgaged property.

[s 67.4] Mortgage by deposit of title-deeds Such a mortgagee is on the same footing as a simple mortgagee and thus, the mortgagee's remedy is a suit for the sale of property.

[s 67.5] Anomalous Mortgage The anomalous mortgage is a combination of two or more types of mortgages. Therefore, the right of the mortgagee depends upon the terms contained in the mortgage- deed and he may either have both the rights or any of the two rights i.e., foreclosure or sale.

[s 67.6] Mortgagor as trustee for Mortgagee Section 67(b) prohibits a mortgagor who is trustee of the mortgagee from filing suit for foreclosure. This is so because if the mortgagor is allowed to foreclose, he would acquire the property for his own benefit and thus become a trustee of his own property. Therefore, the proper remedy in such a case is sale of mortgaged property.

[s 67.7] Mortgagee of Public Works The mortgagees of public works like railway, canal or public utility undertakings are prohibited from filing a suit for foreclosure or sale. The proper remedy here is to appoint a receiver to realise the earnings of such undertakings and recover the debt.

[s 67.8] Partial Foreclosure or Sale [Section 67(d)] The last paragraph of section 67 prohibits partial sale or foreclosure. One of several mortgagees cannot foreclose or sell in respect of his share unless several mortgagees have with the consent of the mortgagor severed their interests under the mortgage. He can sell or foreclose his share only when several mortgagees have separated their shares with the consent of the mortgagee. Partial foreclosure is prohibited for the purpose of providing protection to the mortgagor from multiplicity of suits being filed by several mortgagees separately. Therefore, all the co-mortgagees must join together and file one suit in respect of the whole mortgage-property.

[s 67.9] "Opening the foreclosure" Under the English law, every mortgage contains within itself a personal liability to repay the amount advanced. The mortgagor's liability to repay the mortgage-debt and the liability of the mortgagee to reconvey the mortgaged-property to the mortgagor are reciprocal. Therefore, after foreclosing, a mortgagee cannot sue on the personal covenant unless he retains the mortgaged property in his hands. If after foreclosing, the mortgagee sues on personal covenant, he himself has to become willing to surrender the security, only then he can ask the mortgagor to repay his loan or balance, if any. The mortgagee by taking an action on the personal liability of the mortgagor gives him a renewed right to redeem the property. This is known as "opening the foreclosure". However, no such action exists in India.

229. Subs. by Act 20 of 1929, section 31, for "payable". 230. Subs. by Act 20 of 1929, section 31, for "an order". 231. Subs. by Act 20 of 1929, section 31, for the original clause. 232. K Vilasini v Edwin Periera, AIR 2009 SC 1041 : 2009 AIR SCW 182 : (2008) 14 SCC 349 . The

court added that the right of redemption becomes extinguished on final decree in a suit foreclosure or suit for redemption. 233. Ramesh Kumar v Yashpal Batra, AIR 2006 Del 286 : 2007 AIHC 18 (NOC), following Harbans

v Om Prakash, (2006) 1 SCC 129 : AIR 2006 SC 686 : (2005) 9 Scale 288 and Achaldas Durgaji Oswal v Ramvilas Gangabisan Head, AIR 2003 SC 1017 : (2003) 3 SCC 614 : 2003 AIR SCW 524.

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER

IVOF

MORTGAGES

OF

IMMOVABLE

PROPERTY

AND

CHARGES This Chapter can be categorised into following:— Part I—Mortgage defined Part II—Rights and liabilities of Mortgagor Part III—Rights and liabilities of Mortgagee Part IV—Priority Part V—Marshalling and Contribution Part VI—Deposit in Court Part VII—Suits for foreclosure, sale or Redemption. (Repealed) Part VIII—Foreclosure and sale (Repealed) Part IX—Redemption Part X—Anomalous Mortgage Part XI—Attachment of Mortgaged Property (Repealed) Part XII—Charges Part XIII—Notice and Tender

PART III: RIGHTS AND LIABILITIES OF MORTGAGEE This part deals with rights and liabilities of mortgagee. The rights of a mortgagee are given below:— (1) Right to foreclosure or sale. (section 67) (2) Right to sue for mortgage-money (section 68) (3) Right to sell (section 69) (4) Right to appoint a Receiver (section 69A) (5) Right to accession (section 70) (6) Right to renewal of lease (section 71) (7) Right to spend money (section 72) (8) Right to proceeds of revenue sale or compensation on acquisition. (section 73) (9) Right of mesne mortgagees (section 94)

Liabilities of a mortgagee:—

(1) Mortgagee bound to bring one suit on several mortgages (section 67A) (2) Liabilities of mortgagee in possession (sections 76 and 77)

Rights of Mortgagee 234.[s 67A] Mortgagee when bound to bring one suit on several mortgages.—

A mortgagee who holds two or more mortgages executed by the same mortgagor in respect of each of which he has a right to obtain the same kind of decree under section 67, and who sues to obtain such decree on any one of the mortgages, shall, in the absence of a contract to the contrary, be bound to sue on all the mortgages in respect of which the mortgage-money has become due.]

Comments [s 67A.1] Mortgagee Bound to bring One Suit on Several Mortgages (Section 67A) Section 67A provides that if a mortgagee holds two or more mortgages of the same property or of different properties from the same mortgagor, he must enforce all or more, in the absence of a contrary contract. It provides that— (i) a mortgagee who holds 2 or more mortgages executed by the same mortgagor,

and (ii) in respect of each mortgagee he has a right to obtain the same kind of decree

under section 67, and (iii) he sues to obtain such decree on anyone of the mortgages, (iv) he shall be bound to sue on all the mortgages in respect of which the mortgage

money has become due. However, this liability is subject to a contract to the contrary that may be made between the mortgagor and the mortgagee. This section is opposite to section 61 which contains a rule against the consolidation of mortgages when mortgagor redeems them jointly. Under section 61, a mortgagor, executing two or more mortgages in favour of the same mortgagee is entitled to redeem each mortgage separately. However, this section contains a rule of consolidation applicable on mortgagee. A mortgagee having two or more mortgages executed by the same mortgagor in respect of which he has a right to obtain the same kind of relief, has to bring one suit to enforce all the mortgages and not only to enforce one of them.

234. Ins. by Act 20 of 1929, section 32.

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER

IVOF

MORTGAGES

OF

IMMOVABLE

PROPERTY

AND

CHARGES This Chapter can be categorised into following:— Part I—Mortgage defined Part II—Rights and liabilities of Mortgagor Part III—Rights and liabilities of Mortgagee Part IV—Priority Part V—Marshalling and Contribution Part VI—Deposit in Court Part VII—Suits for foreclosure, sale or Redemption. (Repealed) Part VIII—Foreclosure and sale (Repealed) Part IX—Redemption Part X—Anomalous Mortgage Part XI—Attachment of Mortgaged Property (Repealed) Part XII—Charges Part XIII—Notice and Tender

PART III: RIGHTS AND LIABILITIES OF MORTGAGEE This part deals with rights and liabilities of mortgagee. The rights of a mortgagee are given below:— (1) Right to foreclosure or sale. (section 67) (2) Right to sue for mortgage-money (section 68) (3) Right to sell (section 69) (4) Right to appoint a Receiver (section 69A) (5) Right to accession (section 70) (6) Right to renewal of lease (section 71) (7) Right to spend money (section 72) (8) Right to proceeds of revenue sale or compensation on acquisition. (section 73) (9) Right of mesne mortgagees (section 94)

Liabilities of a mortgagee:—

(1) Mortgagee bound to bring one suit on several mortgages (section 67A) (2) Liabilities of mortgagee in possession (sections 76 and 77)

Rights of Mortgagee 235.[s 68] Right to sue for mortgage-money.— (1) The mortgagee has a right to sue for the mortgage-money in the following

cases and no others, namely:— (a) where the mortgagor binds himself to repay the same; (b) where, by any cause other than the wrongful act or default of the

mortgagor or mortgagee, the mortgaged property is wholly or partially destroyed or the security is rendered insufficient within the meaning of section 66, and the mortgagee has given the mortgagor a reasonable opportunity of providing further security enough to render the whole security sufficient, and the mortgagor has failed to do so; (c) where the mortgagee is deprived of the whole or part of his security by or

in consequence of the wrongful act or default of the mortgagor; (d) where, the mortgagee being entitled to possession of the mortgaged

property, the mortgagor fails to deliver the same to him, or to secure the possession thereof to him without disturbance by the mortgagor or any person claiming under a title superior to that of the mortgagor: Provided that, in the case referred to in clause (a), a transferee from the mortgagor or from his legal representative shall not be liable to be sued for the mortgage-money. (2) Where a suit is brought under clause (a) or clause (b) of sub-section (1), the

Court may, at its discretion, stay the suit and all proceedings therein, notwithstanding any contract to the contrary, until the mortgagee has exhausted all his available remedies against the mortgaged property or what remains of it, unless the mortgagee abandons his security and, if necessary, re-transfers the mortgaged property.]

Comments [s 68.1] Right to Sue for Mortgage-money (Section 68) In the following four cases the mortgagee has a right to sue for the mortgage-money:— (i) Where the mortgagor binds himself to repay the same. (ii) Where the mortgaged property is destroyed, wholly or partially without the fault

of any party. (iii) Where the mortgagee is deprived of the whole or part of his security by

wrongful act or default of the mortgagor. (iv) Where the mortgagee being entitled to possession, the mortgagor fails to

deliver the same.

[s 68.1.1] Personal Covenant [Section 68(1)(a)] Where the mortgagor binds himself to repay the debt personally, it is said that there is a personal covenant by the mortgagor. Clause (a) of section 68 gives a right to the mortgagee to sue for the mortgage-money if there is a personal covenant by mortgagor to repay the same. However, the personal covenant does not run with the land. Therefore, no decree can be passed against a purchaser of the right of redemption. However, there is an implied covenant by such purchaser to indemnify the mortgagor.236. In a simple mortgage and English mortgage, there is a personal liability of the mortgagor to pay but in a mortgage by conditional sale or usufructuary mortgage, there is no personal liability. In these two cases, however, this liability can be created only be an express or implied covenant. The personal liability is not affected for want of registration or of attestation of mortgage. But where the transaction of mortgage is illegal, a suit will not lie on the personal covenant.237. Where personal liability to repay arises independently of mortgage, this section is not applicable.238.

[s 68.1.2] Destruction of Security [Section 68(1)(b)] Where, by any cause other than the wrongful act or default of the mortgagor or mortgagee, the mortgaged property is wholly or partially destroyed or the security is rendered insufficient within the meaning of section 66, and the mortgagee has given the mortgagor a reasonable opportunity of providing further security enough to render the whole security sufficient and the mortgagor has failed to do so, the mortgagee may sue the mortgagor. The essential requirements of this clause are that— (a) The mortgaged property is destroyed (wholly or partially) or the security is

rendered insufficient (under section 66) (b) The wrongful act or default of the mortgagor or mortgagee is not involved in the

destruction or insufficiency of security. (c) The mortgagee must have given the mortgagor a reasonable opportunity of

providing further security so that the whole security becomes sufficient against the mortgage-debt. (d) But the mortgagor fails to provide the security.

Here the mortgagee's right to sue for the mortgage-money arises.

[s 68.1.3] Wrongful Act or Default of the Mortgagor [Section 68(1)(c)] This clause says that the mortgagee's right to sue arises when the mortgagee is deprived of the whole or part of his security by or in consequence of the wrongful act or default of the mortgagor. This clause contemplates a situation where the mortgagedproperty is lost, destroyed or is devolved due to any deliberate act or negligent omission of the mortgagor. However, where the mortgaged property is lost due to the

default of the mortgagee himself, he cannot sue for the mortgage-money. Where the mortgaged property is sold for arrears of revenue owing to the default of the mortgagee in possession, he cannot bring a suit for the mortgage-money.239. Where the mortgaged property was already subject to a prior mortgage but that fact was not disclosed to the subsequent mortgagee, the subsequent mortgagee can sue for the mortgaged-money.240. Where A mortgaged his property to B and then to C;A failed to pay off the prior encumbrance when it became due and B brought the property to sale; it was held that C was entitled to sue at once for his mortgage-money.241. Where A mortgaged certain property to B by an usufructuary mortgage but he remained in possession as B's tenant. It was held that A's failure to pay rent would not entitled B to sue him under this section.242.

[s 68.1.4] Failure of Mortgagor to Deliver Possession [Section 68(1)(d)] The mortgagee may sue the mortgagor where he is entitled to the possession of the mortgaged-property but the mortgagor fails to deliver it to him or secure the possession of it to him without disturbance by the mortgagor or any person claiming under a title superior than that of the mortgagor. This clause refers to usufructuary mortgages. When possession is not delivered to a usufructuary mortgagee or anomalous mortgagee entitled to possession, he may sue for the mortgage-money. Where A mortgaged several plots of land to B by usufructuary mortgage, out of which two plots did not belong to A. B could not get possession of them, and therefore, he was held entitled to sue for mortgage-money.243. In another case, A mortgaged property to B by an usufructuary mortgage. This property had been leased to tenants who refused to pay rent to B wrongfully. It was held that this was not dispossession by superior title. B's remedy was only against the tenants and not against A under this section.244. For the applicability of section 68 it is necessary that there should be a suit for recovery of mortgage-money.

[s 68.2] Stay of suit A suit under section 68 is a suit by the mortgagee for the mortgage-money. The only decree that can be passed under this section is a decree for money. Therefore, O XXXIV, rule 6 of the Code of Civil Procedure does not apply to the suits under section 68. The mortgagee can, therefore, execute his decree against the mortgagor personally while preserving his rights under the mortgage. This results in a great hardship to the mortgagor and to avoid this hardship the sub-section (2) provides that where the mortgagor is not in default [clauses (a) and (b)], the suit under this section shall be stayed until the mortgagee has exhausted his remedy against the security. In cases under clauses (a) and (b) the mortgagee should exhaust all his remedies available against the mortgaged property before he seeks to pursue the personal remedy against the mortgagor. However, such a restriction is not imposed under clauses (c) and (d). The court may, at its discretion, stay all the suit and proceedings therein, notwithstanding the contract to the contrary, until the mortgagee has exhausted all his available remedies against the mortgaged property, unless the mortgagee abandons his security, and, wherever necessary, re-transfers the property mortgaged.

235. Subs. by Act 20 of 1929, section 33, for the original section. 236. Izzatunnisa Begum v Kunwar Pratap Singh, (1909) 31 All 583 : 36 Ind App 203 : 3 IC 793. 237. Tulsi Ram v Sat Narain, (1921) 43 All 81 : 52 IC 445. 238. Pradeep Chand Lall v Grindlays Bank Ltd, AIR 1987 Cal 157 . 239. Kashi Lal v Sheikh Nurul Haq, (1929) 8 Pat 569. 240. Bhola Nath v Hiramohan, (1910) 7 IC 251 . 241. Singjee v Tiresvengadam, (1890) 13 Mad 192. 242. Balu Ram Kumar v Mahpal Singh, (1938) All 218 : (1930) All LJ 18 : AIR 1938 All 188 . 243. Fateh Din v Kishen Lal, (1923) 73 IC 902 . 244. Nakchedi Ram v Ram Charitar Rai, (1897) 19 All 191 .

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER

IVOF

MORTGAGES

OF

IMMOVABLE

PROPERTY

AND

CHARGES This Chapter can be categorised into following:— Part I—Mortgage defined Part II—Rights and liabilities of Mortgagor Part III—Rights and liabilities of Mortgagee Part IV—Priority Part V—Marshalling and Contribution Part VI—Deposit in Court Part VII—Suits for foreclosure, sale or Redemption. (Repealed) Part VIII—Foreclosure and sale (Repealed) Part IX—Redemption Part X—Anomalous Mortgage Part XI—Attachment of Mortgaged Property (Repealed) Part XII—Charges Part XIII—Notice and Tender

PART III: RIGHTS AND LIABILITIES OF MORTGAGEE This part deals with rights and liabilities of mortgagee. The rights of a mortgagee are given below:— (1) Right to foreclosure or sale. (section 67) (2) Right to sue for mortgage-money (section 68) (3) Right to sell (section 69) (4) Right to appoint a Receiver (section 69A) (5) Right to accession (section 70) (6) Right to renewal of lease (section 71) (7) Right to spend money (section 72) (8) Right to proceeds of revenue sale or compensation on acquisition. (section 73) (9) Right of mesne mortgagees (section 94)

Liabilities of a mortgagee:—

(1) Mortgagee bound to bring one suit on several mortgages (section 67A) (2) Liabilities of mortgagee in possession (sections 76 and 77)

Rights of Mortgagee [s 69] Power of sale when valid.— [(1)] 246.[247.[***] A mortgagee, or any person acting on his behalf, shall, subject

245.

to the provisions of this section have power to sell or concur in selling the mortgaged property or any part thereof, in default of payment of the mortgage-money, without the intervention of the court, in the following cases and in no others, namely:—] (a) where the mortgage is an English mortgage, and neither the

mortgagor nor the mortgagee is a Hindu, Muhammadan or Buddhist 248.[or a member of any other race, sect, tribe or class from time to time specified in this behalf by 249.[the State Government], in the

Official Gazette]; (b) where 250.[a power of sale without the intervention of the court is

expressly conferred on the mortgagee by the mortgage-deed and] the mortgagee is 251.[the Government]; (c) where 249[a power of sale without the intervention of the court is

expressly conferred on the mortgagee by the mortgage-deed and] the mortgaged property or any part thereof 252.[was, on the date of the execution of the mortgage-deed], situate within the towns of Calcutta, Madras, Bombay, 253.[***] 254.[or in any other town255. or area which the State Government may, by notification in the Official Gazette, specify in this behalf.] 256.

[(2)] 257.[***] No such power shall be exercised unless and until— 258.

[(a)] notice in writing requiring payment of the principal money has

been served on the mortgagor, or on one of several mortgagors, and default has been made in payment of the principal money, or of part thereof, for three months after such service; or 259.

[(b)] some interest under the mortgage amounting at least to five

hundred rupees is in arrear and unpaid for three months after becoming due. 260.

[(3)] When a sale has been made in professed exercise of such a

power, the title of the purchaser shall not be impeachable on the ground that no case had arisen to authorise the sale, or that due notice was not given, or that the power was otherwise improperly or irregularly exercised; but any person damnified by an unauthorised or improper or irregular exercise or the power shall have his remedy in damages against the person exercising the power. 261.

[(4)] The money which is received by the mortgagee, arising from the

sale, after discharge of prior encumbrances, if any, to which the sale is not made subject, or after payment into Court under section 57 of a sum to meet any prior encumbrance, shall, in the absence of a contract to the contrary, be held by him in trust to

be applied by him, first, in payment of all costs, charges and expenses properly incurred by him as incident to the sale or any attempted sale; and, secondly, in discharge of the mortgagemoney and costs and other money, if any, due under the mortgage; and the residue of the money so received shall be paid to the person entitled to the mortgaged property, or authorised to give receipts for the proceeds of the sale thereof. 262.

[(5) Nothing in this section or in section 69A applies to powers conferred before

the first day of July, 1882.] 263.[***]

Comments [s 69.1] Right to Sell (Section 69) This section gives the mortgagee a right to sell without the intervention of the court. When the mortgage-money is not repaid by the mortgagor, he becomes entitled to sell the property to recover his debt. Sections 67 and 68 provide for the recovery of the debt by the sale of the mortgaged property by intervention of court. But in this section, a mortgagee (or any other person acting on his behalf) has a power to sell or concur in selling the mortgaged property in default of the payment of the mortgaged-money without the intervention of the court in the following cases only— (a) Where the mortgage is an English mortgage and neither the mortgagor nor the

mortgagee is a,— (i) Hindu, (ii) Muhammadan, (iii) Buddhist, or (iv) a member of any other race, sect, tribe or class from time to time

specified in this behalf by the State Government in the Official Gazette. (b) Where a power of sale without the intervention of the court is expressly

conferred on the mortgagee by the mortgage deed and the mortgagee is the government. (c) Where a power of sale without the intervention of the court is expressly

conferred on the mortgagee and the mortgaged property is situated within the specified towns. These towns included Calcutta, Madras and Bombay originally. But later on Ahmedabad, Kanpur, Allahabad, Lucknow, Coimbatore, Cochin and Delhi etc., were included by notification in the Official Gazette. A power of sale without the intervention of the court does not affect the ordinary right of realization by suit of the mortgagee. The right provided by this section is independent of the right to have a receiver appointed under section 69A and may even be exercised after a receiver has been appointed under section 69A.264.

[s 69.2] Who may exercise Power

The power of sale without the intervention of the court is exercisable by the mortgagee under this section. The term "mortgagee" here includes his assignees or transferees also. The words "any person acting on his behalf" show that the mortgage-deed may provide for the exercise of power of sale by an agent of the mortgagee. A power of sale given to two joint mortgagees may be exercised by the survivor of them.265. Where the mortgagees are partners, the power of sale may either be exercised by all or in the way expressed in the mortgage-deed.266.

[s 69.3] What may be sold This section says that the mortgaged property or any part of it may be sold by the mortgagee.

[s 69.4] Conditions for exercise of Power The conditions for the applicability of this section are given in sub-section (2). These conditions are statutory conditions and cannot be modified by the parties to the mortgage. The conditions are stated below:— (i) The first condition is regarding notice. Notice must have been served in writing

and three months must have passed after service of notice. It is necessary before the exercise of power of sale that the notice in writing requiring payment of the principal money has been served on the mortgagor and default has been made in payment of the principal money for three months after such notice. Where there are many mortgagors of one property, the notice must have been served on one of the several mortgagors and the default may have been made either about the whole principal money or any part of it. (ii) This power can be exercised when some interest under the mortgage

amounting at least to Rs 500 is in arrear and unpaid for three months after becoming due.

[s 69.5] Restraint on exercise of Power The general rule applicable here is that "he who seeks equity must-do equity." The Bombay High Court in Jagjivan v Shridhar,267. held that "the owner of equity of redemption can only stay the sale pendente lite by paying the amount due into the court, or by giving prima facie evidence that the power of sale is being exercised in a fraudulent or improper manner, contrary to the terms of the mortgage." The mortgagor should offer to redeem before he can bring the mortgagee before the court. A mortgagor may obtain an injunction to restrain a sale if the mortgagee is acting in a fraudulent and improper manner, or contrary to the terms of the mortgage-deed.268.

[s 69.6] Protection to Purchaser Sub-section (3) protects the interest of the purchaser and it says that when a sale has been made in professed exercise of such a power, the title of the purchaser shall not be

impeachable on the ground that— (a) no case had arisen to authorise the sale, or (b) due notice was not given, or (c) the power was otherwise improperly or irregularly exercised.

This means that the title of the purchaser is not affected on the ground of any irregularity in the exercise of the power of sale. However, it is necessary that the purchaser must not have any notice of irregularity before the purchase269. and that the want of notice had been waived by the mortgagor.270.

[s 69.7] Order of appropriation of sale Proceeds Sub-section (4) provides for the appropriation of sale proceeds. That is how the amount received after sale of the mortgaged property is going to be utilised. This money is to be used in the following manner:— (i) for discharge of prior encumbrances. (ii) for payment of costs, charges and expenses property incurred for the sale. (iii) for the discharge for mortgage-money. (iv) The surplus money (if any), will be paid to the person entitled to the mortgaged

property. The mortgagee shall act as a trustee for the surplus money. If he retains the residue he shall be liable to pay interest at the rate fixed by the Government from the date of sale to the date of payment to the interested persons.271.

[s 69.8] Remedy of Mortgagor Sub-section (3) provides that any person damnified by an unauthorised or improper or irregular exercise of the power shall have his remedy in damages against the person exercising the power. Whatever irregularity may have been committed in the exercise of the power of sale, the mortgagor's only remedy, are damages against the mortgagee, in the absence of fraud. The sale may be set aside on the ground of fraud but not on the ground of inadequacy of price.272.

245. Section 69 re-numbered as sub-section (1) of that section, by Act 20 of 1929, section 34. 246. Subs. by Act 20 of 1929, section 34, for certain words. 247.

The words and figures "Notwithstanding anything contained in the Trustees' and

Mortgagees' Powers Act, 1866" omitted by Act 48 of 1952, section 3 and Sch II.

248. Ins. by Act 3 of 1885, section 5. 249. The words "the LG, with the previous sanction of the GG in C" successively amended by the

AO 1937 and the AO 1950 to read as above. 250. Ins. by Act 20 of 1929, section 34. 251. The words "the Secretary of State for India in Council" successively amended by the AO

1937 and the AO 1950 to read as above. 252. Subs. by Act 20 of 1929, section 34, for "is". 253. The word "Karachi" omitted by the AO 1948. 254. The words "or Rangoon" have been successively amended by Acts 6 of 1904, 11 of 1915,

20 of 1929, the AO 1937 and the AO 1950 to read as above. 255. For notifications relating to the towns of— Ahmedabad, see Gazette of India 1935, Pt I, p

936. Bandra, Kurla and Ghatkoper-Kirol, see Gazette of India, 1924, Pt I, p 1964. Cawnpore, Allahabad and Lucknow, see Gazette of India, 1933, Pt I, p 158. Coimbatore, Mudura, Cocanada and Cochin, see Gazette of India, 1935, Pt I, p 526. Delhi (Contonment), see Gazette of India, 1963, Pt II, section 3, sub-section (1), p 1020. 256. Second paragraph re-numbered as sub-section (2) by Act 20 of 1929, section 34. 257. The word "But" omitted by Act 20 of 1929, section 34. 258. Clause (1) was lettered (a) by Act 20 of 1929, section 34. 259. Clause (2) was lettered (b) by Act 20 of 1929, section 34. 260. Third paragraph numbered as sub-section (3) by Act 20 of 1929, section 34. 261. Fourth paragraph numbered as sub-section (4) by Act 20 of 1929, section 34. 262. Subs. by Act 20 of 1929, section 34, for the original fifth paragraph. 263. Original last paragraph omitted by Act 20 of 1929, section 34. 264. Saraswati Bai v Vardarajalu N Dicker, (1955) Mad 1310 : (1956) 1 Mad LJ 223. 265. Hind v Poole, (1885) I K & J 383 : 3 Eq Rep 449. 266. Warr v Jones, (1876) 24 WR 695 ; In Bhupinder Singh Sodhi v UOI, AIR 2015 NOC 1262

(J&K), it was held that securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, is not applicable to J&K No sale can be effected in J&K under this Act. 267. (1878) 2 Bom 252 (285). 268. Jarup Teja and Co v Peerbhoy Adamji, (1921) 23 Bom LR 1241 : AIR 1921 Bom 421 (Mulla,

The Transfer of Property Act, 9th Edn, p 792). 269. Madras Deposit & Benefit Society v Passanha, (1888) 11 Mad 201. 270. Re Thompson v Holt, (1890) 44 Ch D 472 . 271. Haji Abdul Rahman v Haji Noor Mahomed, (1891) ILR 16 Bom 141. 272. Warner v Jacob, (1882) 20 Ch D 220 : 51 LJ Ch 642.

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER

IVOF

MORTGAGES

OF

IMMOVABLE

PROPERTY

AND

CHARGES This Chapter can be categorised into following:— Part I—Mortgage defined Part II—Rights and liabilities of Mortgagor Part III—Rights and liabilities of Mortgagee Part IV—Priority Part V—Marshalling and Contribution Part VI—Deposit in Court Part VII—Suits for foreclosure, sale or Redemption. (Repealed) Part VIII—Foreclosure and sale (Repealed) Part IX—Redemption Part X—Anomalous Mortgage Part XI—Attachment of Mortgaged Property (Repealed) Part XII—Charges Part XIII—Notice and Tender

PART III: RIGHTS AND LIABILITIES OF MORTGAGEE This part deals with rights and liabilities of mortgagee. The rights of a mortgagee are given below:— (1) Right to foreclosure or sale. (section 67) (2) Right to sue for mortgage-money (section 68) (3) Right to sell (section 69) (4) Right to appoint a Receiver (section 69A) (5) Right to accession (section 70) (6) Right to renewal of lease (section 71) (7) Right to spend money (section 72) (8) Right to proceeds of revenue sale or compensation on acquisition. (section 73) (9) Right of mesne mortgagees (section 94)

Liabilities of a mortgagee:—

(1) Mortgagee bound to bring one suit on several mortgages (section 67A) (2) Liabilities of mortgagee in possession (sections 76 and 77)

Rights of Mortgagee 273.[s 69A] Appointment of receiver.— (1) A mortgagee having the right to exercise a power of sale under section 69 shall,

subject to the provisions of subsection (2), be entitled to appoint, by writing signed by him or on his behalf, a receiver of the income of the mortgaged property or any part thereof. (2) Any person who has been named in the mortgage-deed and is willing and able

to act as receiver may be appointed by the mortgagee. If no person has been so named, or if all persons named are unable or unwilling to act, or are dead, the mortgagee may appoint any person to whose appointment the mortgagor agrees; failing such agreement, the mortgagee shall be entitled to apply to the Court for the appointment of a receiver, and any person appointed by the Court shall be deemed to have been duly appointed by the mortgagee. A receiver may at any time be removed by writing signed by or on behalf of the mortgagee and the mortgagor, or by the court on application made by either party and on due cause shown. A vacancy in the office of receiver may be filled in accordance with the provisions of this sub-section. (3) A receiver appointed under the powers conferred by this section shall be

deemed to be the agent of the mortgagor; and the mortgagor shall be solely responsible for the receiver's act or defaults, unless the mortgage-deed otherwise provides or unless such acts or defaults are due to the improper intervention of the mortgagee. (4) The receiver shall have power to demand and recover all the income of which he

is appointed receiver, by suit, execution or otherwise, in the name either of the mortgagor or of the mortgagee to the full extent of the interest which the mortgagor could dispose of, and to give valid receipts accordingly for the same, and to exercise any powers which may have been delegated to him by the mortgagee, in accordance with the provisions of this section. (5) A person paying money to the receiver shall not be concerned to inquire if the

appointment of the receiver was valid or not. (6) The receiver shall be entitled to retain out of any money received by him, for his

remuneration, and in satisfaction of all costs, charges and expenses incurred by him as receiver, a commission at such rate not exceeding five per cent, on the gross amount of all money received as is specified in his appointment, and, if no rate is so specified, then at the rate of five per cent. on that gross amount, or at such other rate as the court thinks fit to allow, on application made by him for that purpose.

(7) The receiver shall, if so directed in writing by the mortgagee, insure to the extent,

if any, to which the mortgagee might have insured, and keep insured against loss or damage by fire, out of the money received by him, the mortgaged property or any part thereof being of an insurable nature. (8) Subject to the provisions of this Act as to the application of insurance money,

the receiver shall apply all money received by him as follows, namely:— (i) in discharge of all rents, taxes, land revenue, rates and outgoings

whatever affecting the mortgaged property; (ii) in keeping down all annual sums or other payments, and the interest on

all principal sums, having priority to the mortgage in right whereof he is receiver; (iii) in payment of his commission, and of the premiums on fire, life or other

insurances, if any, properly payable under the mortgage-deed or under this Act, and the cost of executing necessary or proper repairs directed in writing by the mortgagee; (iv) in payment of the interest falling due under the mortgage; (v) in or towards discharge of the principal money, if so directed in writing by

the mortgagee, and shall pay the residue, of any, of the money received by him to the person who, but for the possession of the receiver, would have been entitled to receive the income of which he is appointed receiver, or who is otherwise entitled to the mortgaged property. (9) The provisions of sub-section (1) apply only if and as far as a contrary intention

is not expressed in the mortgage-deed; and the provisions of sub-sections (3) to (8) inclusive may be varied or extended by the mortgage-deed; and, as so varied or extended, shall, as far as may be, operate in like manner and with all the like incidents, effects and consequences, as if such variations or extensions were contained in the said sub-sections. (10) Application may be made, without the institution of a suit, to the court for its

opinion, advice or direction on any present question respecting the management or administration of the mortgaged property, other than questions of difficulty or importance not proper in the opinion of the court for summary disposal. A copy of such application shall be served upon, and the hearing thereof may be attended by, such of the persons interested in the application as the Court may think fit. The costs of every application under this sub-section shall be in the discretion of the Court. (11) In this section, "the Court" means the Court which would have jurisdiction in a

suit to enforce the mortgage.]

Comments [s 69A.1] Right to Appoint Receiver (Section 69A)

A mortgagee having the right to exercise a power of sale under section 69 is entitled to appoint, in writing, a receiver of the income of the mortgaged property. This section was inserted by the Amending Act 20 of 1929. This section deals with the right of the mortgagee to appoint a receiver of the income of the mortgaged property. This section covers such cases where it is alleged by the mortgagor that there is no debt outstanding or that the mortgage has become time-barred and thus, there should be no receiver.274.

[s 69A.2] Appointment how made [Sub-section (2)] Any person who has been named in the mortgage-deed and is willing and is able to act as a receiver may be appointed by the mortgagee. In case no person has been so named, or all the named persons are dead or unable or unwilling to act, the mortgagee may appoint any person with the consent of the mortgagor. However, if the mortgagor does not give his consent to the appointment, he is entitled apply to the court for the appointment of a receiver. The person appointed by the court shall be deemed to have been duly appointed by the mortgagee.

[s 69A.3] Removal of Receiver [Section 69(2)] A receiver may be removed on due cause shown by the court on application made by either mortgagor or mortgagee, or by a writing signed by the mortgagor and the mortgagee.

[s 69A.4] Position of Receiver [Section 69(3)] A receiver appointed by the mortgagee shall be deemed to be the agent of the mortgagor and he will be solely responsible for the receiver's acts or defaults. However, in two cases the mortgagor will not be responsible– (i) Where the mortgage-deed provides otherwise i.e., someone else has been made

responsible instead of mortgagor, or (ii) Acts or defaults of the receiver are due to the improper intervention of the

mortgagee.

[s 69A.5] Power of Receiver [Section 69(4)] The receiver shall have the power to demand and recover all the income of which he is appointed receiver and to give valid receipts for the same. He shall exercise any powers which may have been delegated to him by the mortgagee in accordance with the provisions of this section. A person paying money to the receiver shall not be concerned to inquire if the appointment of the receiver was valid or not. [section 69(5)]

2. [s 69A.6] Remuneration of Receiver [Section 69(6)] The receiver is entitled to retain out of any money received by him for his remuneration a commission at a rate not exceeding 5% on the gross amount of money received. Where no rate is specified then the commission will be at the rate of 5% on that gross amount. However, it is open to the court to allow commission at any other rate on the application made to it by the receiver.

[s 69A.7] Receiver's Duty to Insure [Section 69(7)] The receiver is bound to insure the mortgaged property (where it is of insurable nature) against loss or damage by fire where the mortgagee directs him to do so in writing.

[s 69A.8] Application of Money by Receiver [Section 69(b)] The receiver has to apply all the money received by him in the following manner:— (i) in discharge of all rents, taxes, land revenue, rates and outgoings whatever

affecting the mortgaged property. (ii) in keeping down all annual sums and other payments and interest on all

principal sums having priority to the mortgage. (iii) in payment of his commission, premiums on insurance policies and the cost of

executing necessary or proper repairs. (iv) in payment of interest following due or under the mortgage. (v) in discharge of principal money when directed by the mortgagee in writing.

The residue, if any, shall be paid to the person who is otherwise entitled to the mortgaged property.

273. Ins. by Act 20 of 1929, section 35. 274. Venkatanarayan v Champalal, AIR 1954 Mad 126 : (1953) 2 Mad LJ 303 : 66 Mad LW 964.

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER

IVOF

MORTGAGES

OF

IMMOVABLE

PROPERTY

AND

CHARGES This Chapter can be categorised into following:— Part I—Mortgage defined Part II—Rights and liabilities of Mortgagor Part III—Rights and liabilities of Mortgagee Part IV—Priority Part V—Marshalling and Contribution Part VI—Deposit in Court Part VII—Suits for foreclosure, sale or Redemption. (Repealed) Part VIII—Foreclosure and sale (Repealed) Part IX—Redemption Part X—Anomalous Mortgage Part XI—Attachment of Mortgaged Property (Repealed) Part XII—Charges Part XIII—Notice and Tender

PART III: RIGHTS AND LIABILITIES OF MORTGAGEE This part deals with rights and liabilities of mortgagee. The rights of a mortgagee are given below:— (1) Right to foreclosure or sale. (section 67) (2) Right to sue for mortgage-money (section 68) (3) Right to sell (section 69) (4) Right to appoint a Receiver (section 69A) (5) Right to accession (section 70) (6) Right to renewal of lease (section 71) (7) Right to spend money (section 72) (8) Right to proceeds of revenue sale or compensation on acquisition. (section 73) (9) Right of mesne mortgagees (section 94)

Liabilities of a mortgagee:—

(1) Mortgagee bound to bring one suit on several mortgages (section 67A) (2) Liabilities of mortgagee in possession (sections 76 and 77)

Rights of Mortgagee [s 70] Accession to mortgaged property.— If, after the date of a mortgage, any accession is made to the mortgaged property, the mortgagee, in the absence of a contract to the contrary, shall, for the purposes of the security, be entitled to such accession. Illustrations (a) A mortgages to B a certain field bordering on a river. The field is increased by

alluvion. For the purposes of his security, B is entitled to the increase. (b) A mortgages a certain plot of building land to B and afterwards erects a house

on the plot. For the purposes of his security, B is entitled to the house as well as the plot.

Comments [s 70.1] Right to Accession (Section 70) Accessions are additions to the property. Section 70 says that if after the date of the mortgage any accession is made to the mortgaged-property, the mortgagee shall be entitled to such accession for the purposes of security of his mortgage-debt. This section is converse of section 63 which provides for the mortgagor's rights of accessions. The mortgagee is entitled to treat the acquired accession as part of his security and to enforce his lien upon them. This section is not limited to physical accretions only. An increase of interest or enlargement of the estate is also an accession.275. Where the mortgagor discharges a prior encumbrance on the mortgaged property existing at the date of the mortgage, the increase in value of the estate will be for the benefit of the mortgagee.276. A mortgagee is entitled to the benefit of accession for the purpose of security only. Any accession made after the extinction of the mortgage does not come under the purview of this section. A lessee mortgaged her leasehold rights in favour of a bank. Subsequently, during the currency of the mortgage, she acquired full ownership over the property by virtue of the conveyance deed in her favour executed by the State Government. The court said such increase in the rights of the mortgaged property amounts to an accession to the property and became a part of the mortgage. The mortgagee became entitled to take the benefit of the accession also.277. However, this right is available only in the absence of a contract to the contrary i.e., the parties to the mortgage may also otherwise contract. The first illustration given in the section is that A mortgages to B a certain land field bordering on a river. The field is increased by alluvion. For the purposes of his security, B is entitled to the increase. In this illustration, B, the mortgagee has been held entitled to the accession to the mortgaged-property.

In the second illustration, A mortgages a certain plot of building land to B and afterwards erects a house on the plot. For the purposes of his security, B is entitled to the house as well as the plot.

275. Sidheshwar Prasad Singh v Ram Saroop Singh, AIR 1963 Pat 412 : 1963 BLJR 802 : ILR 42

Pat 192. 276. Shyama Churn v Ananda Chandra, (1898) 3 Cal WN 323. 277. MK Ramesh Kumar v Asset Reconstruction Co (India) Ltd, AIR 2008 AP 45 : 2008 AIHC 198

(NOC) : 2008 (2) All LJ (NOC) 390.

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER

IVOF

MORTGAGES

OF

IMMOVABLE

PROPERTY

AND

CHARGES This Chapter can be categorised into following:— Part I—Mortgage defined Part II—Rights and liabilities of Mortgagor Part III—Rights and liabilities of Mortgagee Part IV—Priority Part V—Marshalling and Contribution Part VI—Deposit in Court Part VII—Suits for foreclosure, sale or Redemption. (Repealed) Part VIII—Foreclosure and sale (Repealed) Part IX—Redemption Part X—Anomalous Mortgage Part XI—Attachment of Mortgaged Property (Repealed) Part XII—Charges Part XIII—Notice and Tender

PART III: RIGHTS AND LIABILITIES OF MORTGAGEE This part deals with rights and liabilities of mortgagee. The rights of a mortgagee are given below:— (1) Right to foreclosure or sale. (section 67) (2) Right to sue for mortgage-money (section 68) (3) Right to sell (section 69) (4) Right to appoint a Receiver (section 69A) (5) Right to accession (section 70) (6) Right to renewal of lease (section 71) (7) Right to spend money (section 72) (8) Right to proceeds of revenue sale or compensation on acquisition. (section 73) (9) Right of mesne mortgagees (section 94)

Liabilities of a mortgagee:—

(1) Mortgagee bound to bring one suit on several mortgages (section 67A) (2) Liabilities of mortgagee in possession (sections 76 and 77)

Rights of Mortgagee [s 71] Renewal of mortgaged lease.— When the mortgaged property is a lease 278.[***] and the mortgagor obtains a renewal of the lease, the mortgagee, in the

absence of a contract to the contrary, shall, for the purposes of the security, be entitled to the new lease.

Comments [s 71.1] Right of Renewal of Mortgaged Lease (Section 71) According to this section, when the mortgaged-property is a lease and the mortgagor obtains a renewal of the lease, the mortgagee shall be entitled to the new lease for the purposes of security in the absence of the contract to the contrary. This is based on the principle that a renewal of lease is a graft upon the old stock and is, therefore, subject to the same equities as the old lease.279. In Rakestraw v Brewer,280. the principle stated was that "the new lease is treated as engrafted on the stock of the old lease and forming part of the mortgage security." This section is corollary of section 64, just as the mortgagor gets the benefit of renewed lease; the mortgagee also gets the benefit of renewed lease under section 71.

278. The words "for a term of years" omitted by Act 20 of 1929, section 36. 279. Leigh v Buxnett, 29 Ch D 231. 280. (1729) 2 PWMS 511.

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER

IVOF

MORTGAGES

OF

IMMOVABLE

PROPERTY

AND

CHARGES This Chapter can be categorised into following:— Part I—Mortgage defined Part II—Rights and liabilities of Mortgagor Part III—Rights and liabilities of Mortgagee Part IV—Priority Part V—Marshalling and Contribution Part VI—Deposit in Court Part VII—Suits for foreclosure, sale or Redemption. (Repealed) Part VIII—Foreclosure and sale (Repealed) Part IX—Redemption Part X—Anomalous Mortgage Part XI—Attachment of Mortgaged Property (Repealed) Part XII—Charges Part XIII—Notice and Tender

PART III: RIGHTS AND LIABILITIES OF MORTGAGEE This part deals with rights and liabilities of mortgagee. The rights of a mortgagee are given below:— (1) Right to foreclosure or sale. (section 67) (2) Right to sue for mortgage-money (section 68) (3) Right to sell (section 69) (4) Right to appoint a Receiver (section 69A) (5) Right to accession (section 70) (6) Right to renewal of lease (section 71) (7) Right to spend money (section 72) (8) Right to proceeds of revenue sale or compensation on acquisition. (section 73) (9) Right of mesne mortgagees (section 94)

Liabilities of a mortgagee:—

(1) Mortgagee bound to bring one suit on several mortgages (section 67A) (2) Liabilities of mortgagee in possession (sections 76 and 77)

Rights of Mortgagee [s 72] Right of mortgagee in possession.— 281.[A mortgagee] may spend such money as is necessary— 282.

(a)

(b) for 283.[the preservation of the mortgaged property] from destruction, forfeiture

or sale; (c) for supporting the mortgagor's title to the property; (d) for making his own title thereto good against the mortgagor; and (e) when the mortgaged property is a renewable lease-hold, for the renewal of the

lease, and may, in the absence of a contract to the contrary, add such money to the principal money, at the rate of interest payable on the principal, and, where no such rate is fixed, at the rate of nine per cent per annum: 284.[Provided that the expenditure of money by the mortgagee under clause (b)

or clause (c) shall not be deemed to be necessary unless the mortgagor has been called upon and has failed to take proper and timely steps to preserve the property or to support the title.] Where the property is by its nature insurable, the mortgagee may also, in the absence of a contract to the contrary, insure and keep insured against loss or damage by fire the whole or any part of such property, and the premiums paid for any such insurance shall be 285.[added to the principal money with interest at the same rate as is payable on the principal money or, where no such rate is fixed, at the rate of nine per cent. per annum]. But the amount of such insurance shall not exceed the amount specified in this behalf in the mortgage-deed or (if no such amount is therein specified) two-thirds of the amount that would be required in case of total destruction to reinstate the property insured. Nothing in this section shall be deemed to authorise the mortgagee to insure when an insurance of the property is kept up by or on behalf of the mortgagor to the amount in which the mortgagee is hereby authorised to insure.

Comments [s 72.1] Right of Mortgagee to Spend Money (Section 72) Section 72 dealing with the right of mortgagee in possession provides for the circumstances under which the mortgagee may spend money. This section is based on

the principle laid down in Dryden v Frost.286. It was observed in this case that the mortgagee is entitled to be indemnified against all expenses so long as he acts reasonably as a mortgagee and is allowed all proper costs, charges and expenses in relation to the mortgaged property. However, this section in addition gives the mortgagee the right to add the amount spent to mortgage-money. The mortgagee is allowed to spend money only where it is necessary to keep the property intact. The reason behind this right is that the mortgagee gives loan to the mortgagor on security of the mortgaged property and in case of mortgagor's default to repay the debt he recovers the money from the mortgaged property only. If the mortgaged property is destroyed or devalued, the mortgagee would not be able to recover the money. Thus, it becomes necessary to protect the property from destruction. However, this right is not an absolute right. The mortgagee is entitled to spend money only when it is necessary to do so. He cannot spend more than what is required or without any necessity for the same.

[s 72.2] Circumstances in which expenditure is allowed A mortgagee may spend such money as is necessary in the absence of the contract to the contrary:— (i) for the preservation of the mortgaged property from destruction, forfeiture or

sale. (ii) for supporting the mortgagor's title to the property. (iii) for making his own title thereto good against the mortgagor i.e., for defending

his own title against the mortgagor. (iv) when the mortgaged property is a renewable lease-hold, for the renewal of the

lease. (v) Insuring the property where it is of insurable nature.

[s 72.3] Preservation of Mortgaged-property Clause (b) allows the mortgagee to spend money for the preservation of mortgagedproperty. Mortgaged-property is the security for repayment of the debt. Therefore, it is necessary to keep it protected and safe. It is the duty of the mortgagor to keep the property protected. If the mortgagor neglects to do so, this section gives the right to the mortgagee to protect that property and spend money for the purpose. The expenditure incurred by the mortgagee in the preservation of property is included in the mortgage- money. The interest of the mortgagee in the protection of the mortgagedproperty lies in the fact that the property is given to him for securing the repayment of his debt. If the property is destroyed or devalued, he will not be able to recover his full debt money. The mortgaged-property may be destroyed not only in the physical sense but also in the abstract sense, i.e., when the mortgagee's security is threatened either due to foreclosure or sale. Therefore, he is also entitled to spend money so as to avoid such consequences of foreclosure or sale due to the mortgagor's default in nonpayment of prior liabilities. Where the goods were hypothecated with a bank and were lost from the bank's godown but there was no evidence that there was no negligence on the part of the bank, it was held that the exclusion clause contained in the letter by the borrower that the goods will be stored in bank's godown at risk and responsibility of the borrower would not apply

as it means only ordinary care which bailee has to take under section 151 of the Contract Act, 1872. Thus, bank was held liable for loss of goods in its possession.287.

[s 72.4] Supporting Mortgagor's title to Property The mortgagor is under duty to defend his title but if fails to defend his title and the mortgagee defends the mortgagor's title and incurs expenses in doing so, he is entitled to add such money to the principal amount. Title to property means ownership of property. Therefore, the duty to protect lies on the owner of the property i.e., the mortgagor. The mortgagee's interest becomes invaded because that property has been given to him as security for his debt. That is why the mortgagee has also been given the right to defend the title of the mortgagor if the latter fails to do so.

[s 72.5] Defending Mortgagee's title against Mortgagor Clause (d) gives the right to the mortgagee to defend his own title against the mortgagor and spend money for that purpose. Where the mortgagor brings any suit to challenge the title of the mortgagee in the mortgaged-property and the mortgagee defends his title, he becomes entitled to add the expenses of the suit incurred by him to the principal amount. However, he is not entitled to costs incurred by him in defending his title against a stranger.288. The mortgagee is also not entitled to costs incurred by him in regard to criminal proceedings taking place between the parties in regard to the mortgaged-land.

[s 72.6] Renewal of leases The mortgagee is entitled to spend money for renewal of the lease when the mortgaged property is a renewable leasehold. Although he is under no liability to renew the lease but he may do so in order to maintain his security and if he pays fine for the renewal he can add the amount to the principal sum. Where a lessee (tenant) mortgages his leasehold property and afterwards the landlord obtains a decree for eviction, a new lease created by landlord in favour of the mortgagee cannot be claimed by the mortgagor. This creates a new relationship between the landlord and mortgagee and, therefore, mortgagee does not become entitled to get the cost. In the case of Nemichand v Onkar Lal,289. a lessee gave some amount as loan to landlord on security of the property in his possession. Therefore, the property was mortgaged to the lessee by the landlord. A redemption suit was filed by the landlord on expiry of the mortgage-period. The Supreme Court held that the lease subsisted though the parties entered into a new relationship of creditor and debtor on security of the property already in possession of mortgagee as a lessee. The lessee will not be allowed to add the cost of entering into new transaction to the mortgageamount.

[s 72.7] Premium of Insurance Where the property is by its nature insurable, the mortgagee may in the absence of the contract to the contrary insure and keep insured against loss or damage by fire the mortgaged property and the premiums paid for any such insurance shall be added to

the principal money. The rate of interest will be same as is payable on the principal money and where no such rate is fixed, at the rate of 9% per annum. The amount of such insurance should not exceed the amount specified in the deed for the purpose. If no such amount has been mentioned in the deed, the amount of insurance should not exceed two-third of the amount which would be required to reinstate the property in case of total destruction.

281. Subs. by Act 20 of 1929, section 37, for "When, during the continuance of the mortgage,

the mortgagee takes possession of the mortgaged property, he". 282. Clause (a) omitted by Act 20 of 1929, section 37. 283. Subs. by Act 20 of 1929, section 37, for "its preservation". 284. Ins. by Act 20 of 1929, section 37. 285. Subs. by Act 20 of 1929, section 37, for certain original words. 286. (1838) 3 My and Cr 670. 287. Canara Bank, Mannarkkad v Bhavani Oil Co, AIR 2004 Ker 273 (221) : ILR 2004 (2) Ker 183 :

2004 (1) Ker LJ 473 . 288. Parker v Watkins, (1859) John 133 (137). 289. AIR 1991 SC 2046 : (1991) 3 SCC 464 : 1991 AIR SCW 2021.

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER

IVOF

MORTGAGES

OF

IMMOVABLE

PROPERTY

AND

CHARGES This Chapter can be categorised into following:— Part I—Mortgage defined Part II—Rights and liabilities of Mortgagor Part III—Rights and liabilities of Mortgagee Part IV—Priority Part V—Marshalling and Contribution Part VI—Deposit in Court Part VII—Suits for foreclosure, sale or Redemption. (Repealed) Part VIII—Foreclosure and sale (Repealed) Part IX—Redemption Part X—Anomalous Mortgage Part XI—Attachment of Mortgaged Property (Repealed) Part XII—Charges Part XIII—Notice and Tender

PART III: RIGHTS AND LIABILITIES OF MORTGAGEE This part deals with rights and liabilities of mortgagee. The rights of a mortgagee are given below:— (1) Right to foreclosure or sale. (section 67) (2) Right to sue for mortgage-money (section 68) (3) Right to sell (section 69) (4) Right to appoint a Receiver (section 69A) (5) Right to accession (section 70) (6) Right to renewal of lease (section 71) (7) Right to spend money (section 72) (8) Right to proceeds of revenue sale or compensation on acquisition. (section 73) (9) Right of mesne mortgagees (section 94)

Liabilities of a mortgagee:—

(1) Mortgagee bound to bring one suit on several mortgages (section 67A) (2) Liabilities of mortgagee in possession (sections 76 and 77)

Rights of Mortgagee 290.[s 73] Right to proceeds of revenue sale or compensation on acquisition.— (1) Where the mortgaged property or any part thereof or any interest therein is sold

owing to failure to pay arrears of revenue or other charges of a public nature or rent due in respect of such property, and such failure did not arise from any default of the mortgagee, the mortgagee shall be entitled to claim payment of the mortgage-money, in whole or in part, out of any surplus of the sale-proceeds remaining after payment of the arrears and of all charges and deductions directed by law. (2) Where the mortgaged property or any part thereof or any interest therein is

acquired under the Land Acquisition Act, 1894 (1 of 1894); or any other enactment for the time being in force providing for the compulsory acquisition of immoveable property, the mortgagee shall be entitled to claim payment of the mortgage-money, in whole or in part, out of the amount due to the mortgagor as compensation. (3) Such claims shall prevail against all other claims except those of prior

encumbrancers, and may be enforced notwithstanding that the principal money on the mortgage has not become due.]

Comments [s 73.1] Right to Proceeds of Revenue Sale or Compensation on Acquisition (Section 73) (i) According to this section, where the mortgaged property or any interest in it is

sold, (ii) owing to failure to pay— (a) arrears of revenue, or (b) other charges of a public nature, or (c) rent due in respect of such property (iii) such a failure did not arise from any default of the mortgagee, (iv) the mortgagee shall be entitled to claim payment of the mortgage money, out of

any surplus of sale-proceeds remaining after the payment of— (a) the arrears, and (b) all charges and deductions directed by law. [Sub-section (1)]

The section further provides in sub-section (2) that where the mortgaged property or any interest in it is acquired under the Land Acquisition Act, 1894 or any other enactment for the time being in force providing for compulsory acquisition of

immovable property, the mortgagee shall be entitled to claim payment of the mortgagemoney out of the amount due to the mortgagor as compensation. This section, therefore, enunciates the doctrine of substituted security. The rights and interests of the mortgagee in the mortgaged property get attached to the property or to the compensation which may replace the mortgaged property.291. The mortgagee's claim of mortgage money in this section prevails against all other claims except prior encumbrances. The mortgagee is also entitled to enforce his claim even though the principal money has not become due. This right is given to the mortgagee because neither the sale in default of arrears of revenue nor acquisition under any enactment takes into consideration the date on which the mortgage-debt becomes payable.

290. Subs. by Act 20 of 1929, section 38, for the original section. 291. CP Sreelal v District Collector, AIR 2007 Ker 131 (DB) : 2007 AIHC 336 (NOC) : 2007 (3)

AKant (NOC) 344, compensation amount for acquisition of property which was mortgaged by the principal debtor was credited to the loan account with the creditor corporation. The court said that it certainly became a part payment on behalf of the mortgagor and qualified as acknowledgment by payment for the purposes of limitation under section 19 of the Limitation Act, 1963.

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER

IVOF

MORTGAGES

OF

IMMOVABLE

PROPERTY

AND

CHARGES This Chapter can be categorised into following:— Part I—Mortgage defined Part II—Rights and liabilities of Mortgagor Part III—Rights and liabilities of Mortgagee Part IV—Priority Part V—Marshalling and Contribution Part VI—Deposit in Court Part VII—Suits for foreclosure, sale or Redemption. (Repealed) Part VIII—Foreclosure and sale (Repealed) Part IX—Redemption Part X—Anomalous Mortgage Part XI—Attachment of Mortgaged Property (Repealed) Part XII—Charges Part XIII—Notice and Tender

PART III: RIGHTS AND LIABILITIES OF MORTGAGEE This part deals with rights and liabilities of mortgagee. The rights of a mortgagee are given below:— (1) Right to foreclosure or sale. (section 67) (2) Right to sue for mortgage-money (section 68) (3) Right to sell (section 69) (4) Right to appoint a Receiver (section 69A) (5) Right to accession (section 70) (6) Right to renewal of lease (section 71) (7) Right to spend money (section 72) (8) Right to proceeds of revenue sale or compensation on acquisition. (section 73) (9) Right of mesne mortgagees (section 94)

Liabilities of a mortgagee:—

(1) Mortgagee bound to bring one suit on several mortgages (section 67A) (2) Liabilities of mortgagee in possession (sections 76 and 77)

Rights of Mortgagee [s 74] Right of subsequent mortgagee to pay off prior mortgagee.— [Rep. by the Transfer of Property (Amendment) Act, 1929 (20 of 1929), sec. 39.]

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER

IVOF

MORTGAGES

OF

IMMOVABLE

PROPERTY

AND

CHARGES This Chapter can be categorised into following:— Part I—Mortgage defined Part II—Rights and liabilities of Mortgagor Part III—Rights and liabilities of Mortgagee Part IV—Priority Part V—Marshalling and Contribution Part VI—Deposit in Court Part VII—Suits for foreclosure, sale or Redemption. (Repealed) Part VIII—Foreclosure and sale (Repealed) Part IX—Redemption Part X—Anomalous Mortgage Part XI—Attachment of Mortgaged Property (Repealed) Part XII—Charges Part XIII—Notice and Tender

PART III: RIGHTS AND LIABILITIES OF MORTGAGEE This part deals with rights and liabilities of mortgagee. The rights of a mortgagee are given below:— (1) Right to foreclosure or sale. (section 67) (2) Right to sue for mortgage-money (section 68) (3) Right to sell (section 69) (4) Right to appoint a Receiver (section 69A) (5) Right to accession (section 70) (6) Right to renewal of lease (section 71) (7) Right to spend money (section 72) (8) Right to proceeds of revenue sale or compensation on acquisition. (section 73) (9) Right of mesne mortgagees (section 94)

Liabilities of a mortgagee:—

(1) Mortgagee bound to bring one suit on several mortgages (section 67A) (2) Liabilities of mortgagee in possession (sections 76 and 77)

Rights of Mortgagee [s 75] Rights of mesne mortgagee against prior and subsequent mortgagees.— [Rep. by the Transfer of Property (Amendment) Act, 1929 (20 of 1929), sec. 39.]

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER

IVOF

MORTGAGES

OF

IMMOVABLE

PROPERTY

AND

CHARGES This Chapter can be categorised into following:— Part I—Mortgage defined Part II—Rights and liabilities of Mortgagor Part III—Rights and liabilities of Mortgagee Part IV—Priority Part V—Marshalling and Contribution Part VI—Deposit in Court Part VII—Suits for foreclosure, sale or Redemption. (Repealed) Part VIII—Foreclosure and sale (Repealed) Part IX—Redemption Part X—Anomalous Mortgage Part XI—Attachment of Mortgaged Property (Repealed) Part XII—Charges Part XIII—Notice and Tender

PART III: RIGHTS AND LIABILITIES OF MORTGAGEE This part deals with rights and liabilities of mortgagee. The rights of a mortgagee are given below:— (1) Right to foreclosure or sale. (section 67) (2) Right to sue for mortgage-money (section 68) (3) Right to sell (section 69) (4) Right to appoint a Receiver (section 69A) (5) Right to accession (section 70) (6) Right to renewal of lease (section 71) (7) Right to spend money (section 72) (8) Right to proceeds of revenue sale or compensation on acquisition. (section 73) (9) Right of mesne mortgagees (section 94)

Liabilities of a mortgagee:—

(1) Mortgagee bound to bring one suit on several mortgages (section 67A) (2) Liabilities of mortgagee in possession (sections 76 and 77)

Rights of Mortgagee [s 76] Liabilities of mortgagee in possession.— When, during the continuance of the mortgage, the mortgagee takes possession of the mortgaged property,— (a) he must manage the property as a person of ordinary prudence would manage it

if it were his own; (b) he must use his best endeavours to collect the rents and profits thereof; (c) he must, in the absence of a contract to the contrary, out of the income of the

property, pay the Government revenue, all other charges of a public nature 292. [and all rent] accruing due in respect thereof during such possession, and any arrears of rent in default of payment of which the property may be summarily sold; (d) he must in the absence of a contract to the contrary, make such necessary

repairs of the property as he can pay for out of the rents and profits thereof after deducting from such rents and profits the payments mentioned in clause (c) and the interest on the principal money; (e) he must not commit any act which is destructive or permanently injurious to the

property; (f) where he has insured the whole or any part of the property against loss or

damage by fire, he must, in case of such loss or damage, apply any money which he actually receives under the policy or so much thereof as may be necessary, in reinstating the property, or, if the mortgagor so directs, in reduction or discharge of the mortgage-money; (g) he must keep clear, full and accurate accounts of all sums received and spent

by him as mortgagee, and, at any time during the continuance of the mortgage, give the mortgagor, at his request and cost, true copies of such accounts and of the vouchers by which they are supported; (h) his receipts from the mortgaged property, or, where such property is personally

occupied by him, a fair occupation-rent in respect thereof, shall, after deducting the expenses 291[properly incurred for the management of the property and the collection of rents and profits and the other expenses] mentioned in clauses (c) and (d), and interest thereon, be debited against him in reduction of the amount (if any) from time to time due to him on account of interest 293.[***] and, so far as such receipts exceed any interest due, in reduction or discharge of the mortgage-money; the surplus, if any, shall be paid to the mortgagor; (i) when the mortgagor tenders, or deposits in the manner hereinafter provided, the

amount for the time being due on the mortgage, the mortgagee must,

notwithstanding the provisions in the other clauses of this section, account for his 294.[***] receipts from the mortgaged property from the date of the tender or from the earliest time when he could take such amount out of court, as the case may be 291[and shall not be entitled to deduct any amount therefrom on account of any expenses incurred after such date or time in connection with the mortgaged property]. (a) Loss occasioned by his default.—If the mortgagee fails to perform any of the duties imposed upon him by this section, he may, when accounts are taken in pursuance of a decree made under this Chapter, be debited with the loss, if any, occasioned by such failure.

Comments [s 76.1] Liabilities of Mortgagee in Possession (Section 76) Section 76 provides for liabilities of the mortgagee in possession. The mortgagee is the person who gives a loan to the mortgagor on the security of some property. Therefore, he has rights against the mortgagor and the mortgaged property and as such he has no duty towards them. But where he is in possession of the mortgaged property he becomes bound by certain obligations towards the property because the property belongs to the mortgagor. Although only the usufructuary mortgagee retains the possession of the property but this section is applicable to all the mortgagees who may have obtained possession of the mortgaged property for any reason. This section says that when during the continuance of the mortgage, the mortgagee takes possession of the mortgaged property he is bound by the following duties:— (i) Duty to manage the property as a person of ordinary prudence. (ii) Duty to collect rents and profits of the property to his best endeavour. (iii) Duty to pay Government dues unless there is a contract to the contrary. (iv) Duty to make necessary repairs of the mortgaged property unless there is a

contract to the contrary. (v) Duty not to commit any act which may destroy or injure the property

permanently. (vi) Duty to apply insurance money in reinstating the property or in reduction of the

mortgage-money if he receives such money in respect of the mortgagedproperty. (vii) Duty to keep proper accounts of all sums received and spent by him as a

mortgagee. (viii) Duty to apply rents and profits in discharge of interest after making certain

deductions. (ix) Duty to account for gross receipts.

Now these duties in detail.

[s 76.1.1] Duty to Manage [Section 76(a)]

When in the possession of the mortgaged property, the mortgagee is entitled to manage the property in the same manner as the person of ordinary prudence will take care of his own property. Although the mortgagee is not the trustee of the mortgaged property for the mortgagor yet his duties towards the mortgaged property are similar to the duties of a trustee under section 15 of the Indian Trust Act. A mortgagee may grant lease of the mortgaged property in the course of management of property but not beyond the period of the mortgage.295. The Supreme Court held in Asa Ram v Ram Kali296., that the creation of a lease which creates occupancy rights in favour of the tenants could not be regarded as a prudent transaction. A tenant of a mortgagee in possession cannot resist eviction by the mortgagor by relying on the Rent Acts after redemption.297. In Pomel v Vraj Lal298., the Supreme Court held that a lease by the mortgagee in possession of an urban property would prima facie be imprudent and not binding on the mortgagor being beyond the powers conferred by clause (a) of section 76. But if it can be shown in any case that such a lease was prudent it would bind the mortgagor even after redemption and even though the lessee acquires the right of a permanent or quasipermanent nature. Where the landlord gave two rooms on rent to a tenant and afterwards mortgaged the whole house with possession, the mortgagee gave third room on rent to the same tenant, it was held that on redemption of the mortgage the tenant would revert back to original tenancy of two rooms because the principles of section 76(a) of Transfer of Property Act, 1882 are not applicable to urban property.299.

[s 76.1.2] Duty to Collect Rents and Profits [Section 76(b)] Clause (b) provides that the mortgagee must use his best endeavours to collect the rents and profits thereof. The mortgagee has to account not only for the rents and profits which he has actually received but also for those which he could not collect due to his negligence or mismanagement. In Banarsi Prasad v Ram Narain300., the Privy Council observed that "the mortgagee was liable only for such sums as were actually received by him, or on his behalf, and such sums, if, any, as might have been received by him but for his own fault or neglect." He is not bound to account for its rent when the mortgagor himself is a tenant.301.

[s 76.1.3] Duty to Pay government Dues [Section 76(c)] Clause (c) provides that the mortgagee, in the absence of contract to the contrary, pay the government revenue, all other charges of a public nature and all rent accruing due in its respect during such possession and any arrears or of rent in default of payment of which the property may be summarily sold, out of the income of the property. The public charges, rent and Government revenue are paramount charges on immovable property and the failure to pay them renders the property liable to be sold. Therefore, after the mortgage when the mortgagee comes into possession of the mortgaged property, it becomes his duty to pay all such charges. However, this duty is subject to a contract to the contrary.

[s 76.1.4] Duty to make Necessary Repairs [Section 76(d)]

According to clause (d), when the mortgagee takes possession of the property, he must in the absence of a contract to the contrary, make such necessary repairs to the property as he can pay out of rents and profits of the property (after deducting from such rents and profits government revenue and all other charges of pubic nature and interest on the principal money). Therefore, the mortgagee may make repairs to the mortgaged property when any money is left out of rents and profits with him after paying the government revenue and charges of public nature etc. In case no money is left with him he is not bound to undertake repairs. He cannot increase the mortgage debt by undertaking repairs. However, this duty is also subject to a contract to the contrary. If the mortgagor and mortgagee want to modify this duty, they may do so.

[s 76.1.5] Duty not to Commit any Act Destroying or Injuring Property [Section 76(e)] Clause (e) provides that the mortgagee in possession of the mortgaged property must not commit any Act which is destructive of or permanently injurious to the property. The mortgagee is put under this duty like the mortgagor in possession (section 66) and the lessee (section 108). The mortgagee in possession is not free to commit waste. He is bound to use the mortgaged property with the care of a prudent owner. However, he is not liable for accidental losses.

[s 76.1.6] Insurance [Section 76(f)] Clause (f) provides that where the mortgagee has insured the property against loss or damage by fire, then in case of such loss or damage he must apply the money received by him under the policy in reinstating the property or in reduction or discharge of the mortgage-money where the mortgagor directs so.

[s 76.1.7] Duty to Keep Proper Accounts [Section 76(g)] The mortgage is under an obligation to keep clear, full and accurate accounts of all the sums received and spent by him as mortgagee. During the continuance of the mortgage he is bound to supply the mortgagor on his request and cost, true copies of such accounts and of vouchers by which they are supported. The mortgagee is bound to maintain accounts. He cannot contract himself out of this duty.302.

[s 76.1.8] Mode of Accounting [Section 76(h)] Clause (h) deals with the manner in which income from the mortgaged property is to be applied. The income must be applied in the following order:— (a) expenses property incurred in the management of the property and the

collection of rents and profits and other expenses mentioned in clauses (c) and (d), (b) interest on the amount, (c)

the surplus is to be applied towards the interest on the principal money, and (d) towards the principal money.

As soon as there is a surplus of net receipts over interest, the balance should be applied in reduction of principal and then interest runs on the reduced amount.

[s 76.1.9] Duty to Account for gross Receipts [Section 76(i)] This clause provides that when the mortgagor tenders or deposits the amount due on the mortgage, the mortgagee must account for his receipts from the mortgaged property from the date of tender or from the earliest time when he could take such amount out of court and shall not be entitled to deduct any amount therefrom on account of any expenses incurred after such date or time in connection with the mortgaged property. When the mortgagor tenders or deposits the mortgage-money to the mortgagee or in the court as the case may be, the transaction of mortgage comes to an end. The mortgagee may remain in possession of mortgaged-property till he actually receives the money. According to this clause, in such a case, the mortgagee has to account for all the rents and profits received by him from the date of tender or deposit of money in the court till he actually receives the money. The rents and profits received by the mortgagee during this period cannot be included in the mortgagemoney.

[s 76.2] Failure of Mortgagee to Perform his duties Where the mortgagee fails to perform any of the duties imposed upon him by this section and any loss is occasioned to the mortgaged-property, the mortgagee will be liable for such a loss. The mortgagor is entitled in such a case to ask the court to debit the mortgagee with the value of such loss when accounts are being taken while passing of the decree on the mortgage.

292. Ins. by Act 20 of 1929, section 40. 293. The words "on the mortgage-money" omitted by Act 20 of 1929, section 40. 294. The word "gross" omitted by Act 20 of 1929, section 40. 295. Mahabir Gope v Harbans Narain Singh, (1952) SCR 775 : AIR 1952 SC 205 : 1952 SCA 436 . 296. 1958 SCR 986 : AIR 1958 SC 183 : 1958 SCJ 575 . 297. Kamlakar and Co v Gulamshafi Imambhai Musalman, (1962) 64 Bom LR 554 : AIR 1963

Bom 42 : ILR (1963) Bom 236 . 298. AIR 1989 SC 436 : (1989) 1 SCC 458 : JT 1988 (4) SC 307 . 299. Tarlochan Singh v Joginder Singh, 2003 (1) Ren CR 630 (P&H) : 2003 (2) PLR (P&H). 300. 1903-30 IA 66 . 301. Nana Sakharam v Dadaji Ramchandra, ILR 1951 Bom 209 : AIR 1951 Bom 19 : 52 Bom LR

892.

302. Mohd Ishaq Khan v Rup Narain Singh, AIR 1931 All 562 : ILR 54 All 205.

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER

IVOF

MORTGAGES

OF

IMMOVABLE

PROPERTY

AND

CHARGES This Chapter can be categorised into following:— Part I—Mortgage defined Part II—Rights and liabilities of Mortgagor Part III—Rights and liabilities of Mortgagee Part IV—Priority Part V—Marshalling and Contribution Part VI—Deposit in Court Part VII—Suits for foreclosure, sale or Redemption. (Repealed) Part VIII—Foreclosure and sale (Repealed) Part IX—Redemption Part X—Anomalous Mortgage Part XI—Attachment of Mortgaged Property (Repealed) Part XII—Charges Part XIII—Notice and Tender

PART III: RIGHTS AND LIABILITIES OF MORTGAGEE This part deals with rights and liabilities of mortgagee. The rights of a mortgagee are given below:— (1) Right to foreclosure or sale. (section 67) (2) Right to sue for mortgage-money (section 68) (3) Right to sell (section 69) (4) Right to appoint a Receiver (section 69A) (5) Right to accession (section 70) (6) Right to renewal of lease (section 71) (7) Right to spend money (section 72) (8) Right to proceeds of revenue sale or compensation on acquisition. (section 73) (9) Right of mesne mortgagees (section 94)

Liabilities of a mortgagee:—

(1) Mortgagee bound to bring one suit on several mortgages (section 67A) (2) Liabilities of mortgagee in possession (sections 76 and 77)

Rights of Mortgagee [s 77] Receipts in lieu of interest.— Nothing in section 76, clauses (b), (d), (g) and (h), applies to cases where there is a contract between the mortgagee and the mortgagor that the receipts from the mortgaged property shall, so long as the mortgagee is in possession of the property, be taken in lieu of interest on the principal money, or in lieu of such interest and defined portions of the principal.

Comments [s 77.1] Receipts in Lieu of Interest [Section 77] Section 77 is an exception to section 76. Section 76 in clauses (b), (d), (g) and (h) imposes certain duties on the mortgagee for which he has to spend money. He is also under an obligation to maintain an account of income and expenditure as a mortgagee. Section 77 provides that if it is agreed between the parties that rents and profits received by the mortgagee are to be taken by him in lieu of interest on the mortgagemoney the mortgagee is under no liability to give accounts of the income.

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER

IVOF

MORTGAGES

OF

IMMOVABLE

PROPERTY

AND

CHARGES This Chapter can be categorised into following:— Part I—Mortgage defined Part II—Rights and liabilities of Mortgagor Part III—Rights and liabilities of Mortgagee Part IV—Priority Part V—Marshalling and Contribution Part VI—Deposit in Court Part VII—Suits for foreclosure, sale or Redemption. (Repealed) Part VIII—Foreclosure and sale (Repealed) Part IX—Redemption Part X—Anomalous Mortgage Part XI—Attachment of Mortgaged Property (Repealed) Part XII—Charges Part XIII—Notice and Tender

PART IV: PRIORITY [s 78] Postponement of prior mortgagee.— Where, through the fraud, misrepresentation or gross neglect of prior mortgagee, another person has been induced to advance money on the security of the mortgaged property, the prior mortgagee shall be postponed to the subsequent mortgagee.

Comments [s 78.1] Postponement of Prior Mortgagee (Section 78) This section provides that— (i) where through the fraud, misrepresentation or gross neglect of prior mortgagee, (ii) another person has been induced to advance money on the security of the

mortgaged-property, (iii)

the prior mortgagee shall be postponed to the subsequent mortgagee. A property may be mortgaged to two or more persons. The mortgagor may mortgage the property to one person for a certain sum of money and he may again mortgage the same property to another person for another loan. The mortgagees one after the other are known as subsequent mortgagees. The rule regarding priority of mortgages is that "He who is first in time is first in law" (qui prior est tempore, potior est jure). Therefore, when the property is sold in default of payment of loan, the first mortgagee is paid first and other mortgagees are paid successively in the same order of priority. This section is an exception to the general rule of priority. It says that where a subsequent mortgagee is induced to give money to the mortgagor due to fraud, misrepresentation or gross neglect of the mortgagee prior to him, the prior mortgagee shall be postponed to the subsequent mortgagee i.e., the subsequent mortgagee will be repaid earlier than the prior mortgagee. The mortgagee later in time will be paid before the person earlier in time.

[s 78.2] Fraud Fraud means an act done with the intention of deceiving another person. Fraud occurs where there is dishonest intention. Active concealment of a fact is fraud only when there is duty to speak. When there is no duty to speak keeping silence is no fraud. For example, where A mortgages his property at first to B and when he subsequently tries to mortgage it to C again, C inquires from B whether the property has any prior encumbrance, he conceals the fact of his own mortgage. Here B has committed fraud, and, therefore, he will be postponed to subsequent mortgagee C.

[s 78.3] Misrepresentation Mis-statement of a fact without any dishonest intention is misrepresentation. Where there is only omission to notify a prior mortgage, the mistake, although innocent, will amount to misrepresentation.

[s 78.4] Gross-negligence A negligence so grave that it cannot be believed that a person of ordinary prudence would have committed it, is known as gross-negligence. In Lloyds Bank v PE Guzdar & Co,303. one G deposited his title-deeds of property with bank N to secure an overdraft. G then asked to return the deeds by saying that he wanted to sell the property and clear the overdraft. The usual practice for the prospective buyer was to inspect the titledeeds in the office of the mortgagee's solicitors. However, G said that he would not get a good price if the purchaser came to know that the bank had the title-deeds. The bank returned the deeds to G. G again borrowed money from bank L on the deposit of the same deeds falsely representing that there was no encumbrance. The question arose that as between bank N and L who had priority. It was held that the bank N was guilty of gross and wilful negligence in handing over the title-deeds to G which gave a chance to G to obtain another loan from bank L. Therefore, bank N had lost its priority and it was held that bank L would get priority over bank N.

[s 78.5] First Mortgage by Certified Copies The prior equitable mortgage was created by the owner in favour of the Indian Bank by deposit of certified copies of the original title deeds. He also created a subsequent equitable mortgage over the same very property in favour of PNB by depositing original documents. The subsequent mortgagee was held entitled to have priority under section 78. It was a gross negligence on the part of the first mortgage to have accepted copies without verifying whether the originals had really been lost. This enabled the mortgagor to defraud the second mortgagee.304.

303. (1929) 56 Cal 868 : AIR 1930 Cal 22 . 304. Indian Bank v Punjab National Bank, AIR 2010 Mad 84 (DB) : 2010 (85) AIC 829 : 2010 Mad

LJ 346.

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER

IVOF

MORTGAGES

OF

IMMOVABLE

PROPERTY

AND

CHARGES This Chapter can be categorised into following:— Part I—Mortgage defined Part II—Rights and liabilities of Mortgagor Part III—Rights and liabilities of Mortgagee Part IV—Priority Part V—Marshalling and Contribution Part VI—Deposit in Court Part VII—Suits for foreclosure, sale or Redemption. (Repealed) Part VIII—Foreclosure and sale (Repealed) Part IX—Redemption Part X—Anomalous Mortgage Part XI—Attachment of Mortgaged Property (Repealed) Part XII—Charges Part XIII—Notice and Tender

PART IV: PRIORITY [s 79] Mortgage to secure uncertain amount when maximum is expressed.— If a mortgage made to secure future advances, the performance of an engagement or the balance of a running account, expresses the maximum to be secured thereby, a subsequent mortgage of the same property shall, if made with notice of the prior mortgage, be postponed to the prior mortgage in respect of all advances or debits not exceeding the maximum, though made or allowed with notice of the subsequent mortgage. Illustration A mortgages Sultanpur to his bankers, B & Co., to secure the balance of his account with them to the extent of Rs 10,000. A then mortgages Sultanpur to C, to secure Rs. 10,000, C having notice of the mortgage to B & Co., C gives notice to B & Co. of the second mortgage. At the date of the second mortgage, the balance due to B & Co. does not exceed Rs. 5,000. B & Co. subsequently advance to A sums making the balance of the account against him exceed the sum of Rs. 10,000. B & Co. are entitled, to the extent of Rs. 10,000, to priority over C.

Comments [s 79.1] Mortgage to Secure Future Advances (Section 79) Second exception to the rule of priority is contained in section 79. As a general rule, the mortgagee who is first in time has priority over a subsequent mortgagee of the same property (section 78). However, the general rule is subject to two exceptions:— (i) The prior mortgagee loses his priority by reason of his fraud, misrepresentation

or gross negligence. (Section 78) (ii) Where A mortgages his property to B to secure a present advance as well as

future advances up to a fixed maximum, then any further advance made by B within that maximum, will be treated as part of the first mortgage. A may have obtained another loan in between these two loans from C. Second loan within the maximum amount from B will be treated as part of the first mortgage provided C had notice of B's mortgage. (Section 79) As a general rule, if A mortgages property to B for a loan and then again mortgages the same property to C and still again obtains a further loan from B after C, then, first loan of B will have priority over the loan taken from C. However, the second loan of B will come after loan from C and not before C. For example, (i) A mortgages property X to B for Rs 10,000. (ii) A mortgages again property X to C for Rs 10,000. (iii) A again mortgages property X to B to take a further loan of Rs 5000.

Here mortgage (i) will have priority over mortgage (ii). But mortgage (iii) will not have priority over mortgage (ii) because it came after mortgage No. (ii) although from the same mortgagee. Section 79 is an exception to the above stated rule of priority. Here if B had advanced money in present as well as secured future advances up to a maximum limit, then any further advance made by B within that maximum limit even after notice of a second mortgage, will be treated as first mortgage to B. But it is necessary that C must have notice of the first mortgage to B.

[s 79.2] Essential elements (i) A maximum amount must have been secured under the first mortgage. (ii) The second mortgagee must have had notice of the first mortgage. (iii) The prior mortgagee must have advanced more money within the maximum

limit after the second mortgage.

[s 79.3] English rule The leading authority on this subject is the case of Hopkinson v Rolt,305. in England. However, English law is exactly reverse of the Indian law on this subject. In England, the first mortgagee is required to have notice of the second mortgage at the time of

making further advance. If he had no such notice then he will have priority over the second mortgage for the whole amount of advance even if beyond the maximum limit. In India, if any amount is advanced by the first mortgagee beyond the fixed maximum, he will not have priority in respect of amount beyond the fixed maximum.

305. (1861) 9 HLC 514.

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER

IVOF

MORTGAGES

OF

IMMOVABLE

PROPERTY

CHARGES This Chapter can be categorised into following:— Part I—Mortgage defined Part II—Rights and liabilities of Mortgagor Part III—Rights and liabilities of Mortgagee Part IV—Priority Part V—Marshalling and Contribution Part VI—Deposit in Court Part VII—Suits for foreclosure, sale or Redemption. (Repealed) Part VIII—Foreclosure and sale (Repealed) Part IX—Redemption Part X—Anomalous Mortgage Part XI—Attachment of Mortgaged Property (Repealed) Part XII—Charges Part XIII—Notice and Tender

PART IV: PRIORITY [s 80] Tacking abolished.— [Rep. by the Transfer of Property (Amendment) Act, 1929 (20 of 1929), sec. 41.]

AND

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER

IVOF

MORTGAGES

OF

IMMOVABLE

PROPERTY

AND

CHARGES This Chapter can be categorised into following:— Part I—Mortgage defined Part II—Rights and liabilities of Mortgagor Part III—Rights and liabilities of Mortgagee Part IV—Priority Part V—Marshalling and Contribution Part VI—Deposit in Court Part VII—Suits for foreclosure, sale or Redemption. (Repealed) Part VIII—Foreclosure and sale (Repealed) Part IX—Redemption Part X—Anomalous Mortgage Part XI—Attachment of Mortgaged Property (Repealed) Part XII—Charges Part XIII—Notice and Tender

PART V: MARSHALLING AND CONTRIBUTION 306.[s 81] Marshalling, securities.—

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

Comments Marshalling Securities (Section 81) Essential Elements Common Debtor No Prejudice to Prior Mortgagee No Prejudice to Other Encumbrancers Contract to the Contrary Securities to be on Same Footing Right of Purchasers

[s 81.1] Marshalling Securities (Section 81) (i) If the owner of two or more properties mortgaged them to one person and then

mortgages one or more of the properties to another person, (ii) the subsequent mortgagee is, in the absence of a contract to the contrary,

entitled to have the prior mortgage-debt satisfied out of the property or properties not mortgaged to him, so far as the same will extend, (iii) but not so as to prejudice the rights of the prior mortgagee or of any other

person who has for consideration acquired an interest in any of the properties. Marshalling means arranging things. Section 56 gives the right of marshalling to a subsequent purchaser and section 81 confers a similar right on puisne mortgagees. This right arises when the owner of two or more properties mortgages them to one person and then mortgages one or more of them (already mortgaged to the first mortgagor) to another person. The subsequent mortgagee is entitled, unless there is a contract to the contrary, to have the prior mortgage-debt satisfied out of properties not mortgaged to him. For example, a mortgagor mortgages his three properties A, B and C to a mortgagee X for Rs 15,000. He further mortgages only property C to Y for Rs 5000. Here X is prior mortgagee and Y is subsequent mortgagee and property C is mortgaged to both the mortgagees. The mortgage-debt of X is Rs 15,000. This section gives Y a right to say that the debt of X should be satisfied out of sale-proceeds of properties A and B and not C. In case the proceeds of sale of A and B are less than Rs 15,000 only then property C may be sold. Therefore, although Y is a subsequent mortgagee and his claim is not prior to that of X, but he has a right to marshalling i.e., arranging the securities in his favour as far as possible. In Aldrich v Cooper,307. the principle of marshalling was stated like this: "If there are two creditors who have taken securities for their respective debts, and the security of the one is confined to both, and the security of the other is confined to one of those funds, the court will arrange or marshal the assets, so as to throw the person who has two funds liable to his demand on that which is not liable to the debt of the second creditor i.e., it shall not depend upon the will of one creditor to disappoint another."

[s 81.2] Essential elements (1) The mortgagees may be two or more persons but the mortgagor must be

common i.e., there must be a common debtor. (2) The right cannot be exercised to the prejudice of the prior mortgagee. (3) The right cannot be exercised to the prejudice of any other person having claim

over the property.

[s 81.3] Common debtor It is necessary that the mortgagor is the same person. Both the prior and subsequent mortgagee must have given the loan to the same person on the security of his properties. No marshalling can be exercised unless the mortgagees between whom it

is to be enforced are creditors of the same person and have claims against the property of a common debtor.308.

[s 81.4] No Prejudice to Prior Mortgagee Marshalling must not be in prejudice to the interest of the prior mortgagee. It being a rule of equity cannot be enforced so as to work injustice to the prior creditor. The subsequent mortgagee cannot compel the prior mortgagee to proceed against a security which is insufficient. The Madras High Court held that marshalling implies the existence of two sets of properties one of which is subject to both the mortgages and the other is subject only to an earlier mortgage. By the release of one of the properties, there are no longer two sets of properties liable to be sold by first mortgagee, but only one property which is subject to both the mortgages. Therefore, the doctrine of marshalling cannot be invoked.309.

[s 81.5] No Prejudice to Other encumbrancers The right of marshalling cannot be exercised so as to prejudice the rights of any other person, who has, for consideration, acquired an interest in any of the properties. The leading case on this point is Barness v Rector,310. for example, (i) A mortgages two properties X and Y to B (ii) A then mortgages X to C. (iii) A again mortgages Y to D.

If C here insists that B should pay himself wholly out of Y, there might be nothing left for D. Therefore, the court will apportion B's mortgages rateably between X and Y and the surplus of X will go to C whereas surplus of Y to D.

[s 81.6] Contract to the Contrary The right of marshalling under this section is subject to a contract to the contrary. This right may be excluded by the parties to the mortgage by mutual agreement. It is necessary that the prior mortgagee must have equal rights over the two properties mortgaged to him. Where the rights are not equal there can be no marshalling. Different fragments of the same property are not considered different properties. Where one portion of the property already mortgaged is subsequently mortgaged to another person, they will not be considered as different properties.

[s 81.7] Securities to be on same footing It is necessary for application of equity that the securities should be on the same footing. Only successive mortgages come within the purview of this section. Where a double creditor has a charge over one fund and a right of set off against another fund, he cannot be compelled by a second encumbrancer on the first fund to abandon his charge and rely on his right of set off.311.

[s 81.8] Right of Purchasers Section 56 gives recognition to right of purchaser, a puisne mortgagee, having a right of marshalling against a prior mortgagee, does not lose his right because he has purchased the equity of redemption. For example, X and Y properties are mortgaged by A to B. A then mortgages X to C. In enforcement of his security C brings X property to sale and himself purchases X. Then B obtains an order for sale on his mortgage. C was held entitled to require B to bring Y to sale first and realise his security as far as possible out of Y only.312.

306. Subs. by Act 20 of 1929, section 42, for the original section. 307. (1803) 8 Ves 382. 308. Ex parte Kendall, (1811) 17 Ves 520 : 1 WTLC 46. 309. Re Muthammal, AIR 1938 Mad 503 : (1938) 1 Mad LJ 310. 310. (1842) 1 Y&C Ch 401. 311. Webb v Smith, (1885) 30 Ch D 192 (CA) (Mulla, The Transfer of Property Act, 9th Edn, p

868). 312. Inderdawan Pershad v Gobind Lall, (1896) 23 Cal 790 .

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER

IVOF

MORTGAGES

OF

IMMOVABLE

PROPERTY

AND

CHARGES This Chapter can be categorised into following:— Part I—Mortgage defined Part II—Rights and liabilities of Mortgagor Part III—Rights and liabilities of Mortgagee Part IV—Priority Part V—Marshalling and Contribution Part VI—Deposit in Court Part VII—Suits for foreclosure, sale or Redemption. (Repealed) Part VIII—Foreclosure and sale (Repealed) Part IX—Redemption Part X—Anomalous Mortgage Part XI—Attachment of Mortgaged Property (Repealed) Part XII—Charges Part XIII—Notice and Tender

PART V: MARSHALLING AND CONTRIBUTION [s 82] Contribution to mortgage-debt.— 313.[Where property subject to a mortgage belongs to two or more persons having

distinct and separate rights of ownership therein, the different shares in or parts of such property owned by such persons are, in the absence of a contract to the contrary, liable to contribute rateably to the debt secured by the mortgage, and, for the purpose of determining the rate at which each such share or part shall contribute, the value thereof shall be deemed to be its value at the date of the mortgage after deduction of the amount of any other mortgage or charge to which it may have been subject on that date.] Where, of two properties belonging to the same owner, one is mortgaged to secure one debt and then both are mortgaged to secure another debt, and the former debt is paid out of the former property, each property is, in the absence of a contract to the contrary, liable to contribute rateably to the latter debt after deducting the amount of the former debt from the value of the property out of which it has been paid. Nothing in this section applies to a property liable under section 81 to the claim of the 314.[subsequent] mortgagee.

Comments [s 82.1] Contribution to Mortgage-debt (Section 82) (1) Where property subject to a mortgage belongs to two or more persons having

distinct and separate rights of ownership therein, the different shares in or parts of such property owned by such persons are, in the absence of a contract to the contrary, liable to contribute rateably to the debt secured by the mortgage. (2) For the purpose of determination of the rate at which each such share or part

will contribute, the value of it shall be deemed to be its value at the date of the mortgage after deduction of the amount of any other mortgage or charge to which it may have been subject on that date. (3) Where, of two properties belonging to the same owner

—one is mortgaged to secure one debt and —then both are mortgaged to secure another debt and the former debt is paid out of the former property, each property is, in the absence of a contract to the contrary, liable to contribute rateably to the latter debt after deducting the amount of former debt from the value of the property out of which it has been paid. This section deals with the rules relating to contribution of money towards mortgagedebt. The doctrine of contribution provides that several properties mortgaged to secure one debt are liable to contribute to that debt rateably in proportion to their values at the date of the mortgage, the amount of the previous mortgage or charge being deducted. This rule applies not only where several properties are mortgaged and their owner is compelled to satisfy the whole mortgage-debt but also where only one property held by several co-owners is mortgaged and the portion of one co-owner is made to satisfy the mortgage. Contribution is based on the principles of equity, justice and good conscience. Equity does not allow that one person should bear the whole burden of a common debt. Each debtor has to contribute to common debt in proportion of his respective share in the property. In the words of Ghosh,315. "It is but reasonable that in such a case, the person who is compelled to discharge the common burden should be permitted to ask indemnification from the others and, fairer rule can be suggested than that each of them should contribute according to the value of the property owned by him or the extent of his interest in it. For, the law would not suffer the creditor to select his own victim and from caprice of favouritism to turn a common burden into gross personal oppression."

[s 82.2] Rules of Contribution The rules of contribution are given below:— (1) When mortgaged property belongs to two or more persons. (2) When one property is mortgaged first and then again mortgaged with another

property. (3) Marshalling supersedes contribution.

[s 82.2.1] When Mortgaged Property Belongs to Two or More Persons Where the mortgaged-property belongs to two or more persons who take a common loan then according to the rule of contribution all the co-mortgagors are liable to contribute rateably. The mortgagor from whose property alone the debt is recovered has a right to compel other co-mortgagors to contribute to the debt. However, the comortgagors are not personally liable to contribute. They are liable and can be compelled to contribute only up to the extent of their respective shares in the property. This rule is also applicable where at the time of mortgage the property is one but later on it is partitioned and co-shares become owner of their respective shares. For example, where three mortgagors A, B and C jointly mortgaged their properties to D to secure a debt of Rs 10,000 and A had half a share whereas B and C had one-fourth each in the mortgaged-property, the mortgagee D recovers his full debt from the property belonging to A. Now, A was liable only for Rs 5000 in debt amount (half share), he can ask B and C to contribute Rs 2500 each towards the loan amount. The first para of this section enacts the general rule that when several properties whether belonging to one person or several, are mortgaged for one debt, they shall contribute rateably to its discharge, after deducing from each property the value of any prior encumbrance to which it may be subject. The Privy Council observed that if a person owning one property subject, with the property of other persons, to a common mortgage, has paid off the mortgage debt, he is entitled to call upon the owners of the other property to bear their proper proportion of the burden.316. In another case, the Privy Council observed that the suit for contribution is maintainable when the whole of the mortgage debt has been paid out of parts of the mortgaged property and it is not necessary that the whole of the debt was paid out of the properties of the plaintiff alone.317.

[s 82.2.2] When one Property Mortgaged First and then Again Mortgaged with another Property Where the mortgagor has two properties and he mortgages one to secure one debt and then mortgages both to secure another debt and if the former debt is paid out of the former property, therein, the absence of a contract to the contrary, each property is liable to contribute rateably to the latter debt after deducting the amount of the former debt from the value of the property from which it has been paid. If the amount due on the earlier mortgage on one property exceeds the value of that property, the whole amount of the second mortgage is recoverable from the other properties because the value of that property for the purpose of contribution is nil. In Bohra Thakur Das v Collector of Aligarh,318. the mortgagor mortgaged the village of Kachaura to Nand Kishore and another by simple mortgage in 1868. Again he mortgaged 11 biswa share of Kachaura and 8 biswa share of another village Agrana to same Nand Kishore in 1870. In 1873, the plaintiffs purchased the equity of redemption of Agrana. The first mortgagees obtained a decree on their mortgage and purchased 11 biswa share of Kachaura in execution. The plaintiffs sued to redeem the second mortgage and contented that as the 11 biswa share of Kachaura had been purchased by the mortgagee, they were liable to pay a proportionate share of the debt for redemption. The Allahabad High Court said: The answer to this question depends on the circumstances under which the purchase was made. Supposing A and B are mortgagors of certain property which they have jointly mortgaged to C. Now if C, the mortgagee himself, purchases the equity of redemption from A, it is clear that he cannot be permitted to throw upon B's share the whole burden of his mortgage. In such a case, B's share can only be saddled with the proportionate amount of the mortgage debt. But if, as in the case here, C's purchase was at a sale in execution of a

decree obtained on a prior mortgage, the case is different. The learned judge finds that the mortgagee bought the Kachaura property at open sale and not subject to any charge and that he must be presumed to have paid value for it. The case than stands thus – the whole of the Kachaura property has been swallowed up by the first mortgage and consequently the burden of the second mortgage falls entirely on the Agrana property. The owner of the latter property has under the circumstances no rght of contribution against the owner of the Kachaura property.

But an appeal was carried against this decision to the Privy Council and their Lordships of the Privy Council observed, as Kachaura was sold and purchased by Nand Kishore in execution and part satisfaction of a decree obtained on a prior mortgage of 1868, the courts in India properly overruled the appellants contention which has not been pressed before this Board.

In another case, Sesha Iyer v Krishna Iyengar,319. two properties X and Y were mortgaged to R and X and Z properties were again mortgaged to P. R executed his decree for sale on the first mortgage by the sale of X. P then sued to enforce his mortgage. X had already been sold by the prior mortgagee, the whole burden of P's mortgage fell on Z. P sought to realize his money by the sale of Z but he also claimed contribution against Y, which had been sold to another person D. However, his claim was not admitted. The court said, "the plaintiffs who certainly cannot be in a better position that they would be if they had simply bought part of the mortgaged property subsequently sold under R's decree, had their opportunity, and they might by paying off the debt and saving the property from sale, have acquired a right of contribution secured by a lien on the other property. They would then have stood in a position analogous to that of one of several mortgagors who has redeemed the whole property and claims to take advantage of section 95 of the Act. But the plaintiffs did nothing and, therefore, no right to contribution arose and the other property stood free from any lien."

[s 82.2.3] Marshalling Supersedes Contribution Marshalling supersedes contribution according to the last paragraph of this section. In case of any conflict between the right of marshalling and contribution, the right of marshalling prevails over that of contribution. Therefore, contribution is subject to marshalling.

[s 82.3] Mortgagee Purchasing share in equity of redemption When a mortgagor purchases a share in the equity of redemption he may become liable to contribution for he splits his security and a co-mortgagor can redeem for a proportionate part. In Bisheshar Dial v Ram Samp,320. it was stated that when the mortgagee buys at an auction the equity of redemption in a part of the mortgaged property, such purchase has, in the absence of fraud, the effect of discharging and extinguishing that portion of the mortgage debt which was chargeable on the property purchased by him, that is to say, a portion of the debt which bears the same ratio to the whole amount of the debt that the value of the property purchased bears to the value of the whole of the property comprised in the mortgage.

[s 82.4] Where Mortgagee releases Part of Mortgaged Property When a mortgagee releases any part of the mortgaged property he diminishes his own security only because the rest of the property remains subject to the mortgage for the

full amount of mortgage. In a case,321. A mortgaged a three anna share to B. In execution of a money decree against A, the 3 anna share was sold and a purchase worth of one anna by C, one anna by D and one anna by E. B sued on his mortgage and he got a decree for Rs 15,533-54. He entered into a compromise with and released C's share for Rs 1,333-54 and agreed to indemnity C for any further sum he might be required to pay under the decree. He then brought D's share to sale and received Rs 4200. Similarly, he brought E's share to sale which realized Rs 10,000 and the mortgage was discharged. E then sued for contribution. As C's share was released for less than the rateable proportion, it was liable to contribute. D's share could not contribute because it had been sold. As the D's share realized only Rs 4200 the burden on the shares of C and E was Rs 11,333-54 i.e., Rs 5,666-108 each. Therefore, E had a right to recover Rs 4,333-54 from C's share. However, the first Court dismissed the suit against C and gave E a decree against B on the indemnity. E appealed against the dismissal of his suit against B but not against the dismissal of his suit against C. So he got no relief. If his case had been properly conducted he would have had a decree against C for Rs 4,333-54.322.

[s 82.5] Distinction between Marshalling and Contribution (1) Marshalling is the right of subsequent mortgagees whereas contribution is

related to mortgagors. (2) A subsequent mortgagee requires that prior mortgagee shall recover his debt

out of the property not mortgaged to him in marshalling. Whereas in contribution all the co-mortgagors who have taken debt mortgaging their properties have to make contributions towards debt rateably according to their respective shares.

313. Subs. by Act 20 of 1929, section 43, for the original paragraph. 314. Subs. by Act 20 of 1929, section 43, for "second". 315. The Law of Mortgages in India, Rash Bihari Ghosh, 5th Edn. 316. Kampta Singh v Chaturbhuj, (1934) 61 IA 185 : AIR 1934 PC 98 . 317. Ma Yahiya v Rashid-ud-din, (1908) ILR 31 All 65 : 1 IC 5. 318. (1906) 28 All 593 (599) : 3 All LJ 439. 319. (1901) ILR 24 Mad 96 (107, 108) : 12 Mad LJ 383. 320. (1900) 22 All 284 (293) : (1900) All WN 69 (FB). 321. Kammat Ali v Gorakhpur Bank, (1922) 44 All 488 : AIR 1922 All 495 . 322. Mulla, The Transfer of Property Act, 9th Edn, section 883.

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER

IVOF

MORTGAGES

OF

IMMOVABLE

PROPERTY

AND

CHARGES This Chapter can be categorised into following:— Part I—Mortgage defined Part II—Rights and liabilities of Mortgagor Part III—Rights and liabilities of Mortgagee Part IV—Priority Part V—Marshalling and Contribution Part VI—Deposit in Court Part VII—Suits for foreclosure, sale or Redemption. (Repealed) Part VIII—Foreclosure and sale (Repealed) Part IX—Redemption Part X—Anomalous Mortgage Part XI—Attachment of Mortgaged Property (Repealed) Part XII—Charges Part XIII—Notice and Tender

PART VI: DEPOSIT IN COURT [s 83] Power to deposit in Court money due on mortgage.— At any time after the principal money 323.[payable in respect of any mortgage has become due] and before a suit for redemption of the mortgaged property is barred, the mortgagor, or any other person entitled to institute such suit, may deposit, in any court in which he might have instituted such suit, to the account of the mortgagee, the amount remaining due on the mortgage. (a) Right to money deposited by mortgagor.—The court shall thereupon cause written notice of the deposit to be served on the mortgagee, and the mortgagee may, on presenting a petition (verified in manner prescribed by law324. for the verification of plaints) stating the amount then due on the mortgage, and his willingness to accept the money so deposited in full discharge of such amount, and on depositing in the same Court the mortgage-deed 325.[and all documents in his possession or power relating to the mortgaged property], apply for and receive the money, and the mortgage-deed, 326. [and all such other documents] so deposited shall be delivered to the mortgagor or such other person as aforesaid. 324[Where the mortgagee is in possession of the mortgaged property, the court shall,

before paying to him the amount so deposited, direct him to deliver possession thereof

to the mortgagor and at the cost of the mortgagor either to retransfer the mortgaged property to the mortgagor or to such third person as the mortgagor may direct or to execute and (where the mortgage has been effected by a registered instrument) have registered an acknowledgement in writing that any right in derogation of the mortgagor's interest transferred to the mortgagee has been extinguished.]

Comments [s 83.1] Power to Deposit Money Due on Mortgage in Court (Section 83) Section 83 provides for the power and manner in which a mortgagor can deposit money due on mortgage in court. A mortgagor can redeem the mortgaged-property by paying the debt amount. There are three ways in which a mortgagor can pay off the debt:— (i) By tendering or making payment of the mortgage-money directly to the

mortgagee. (ii) By filing a suit for redemption, and (iii) By depositing the amount in the court.

Section 83 provides the power of depositing money in the court. It says that at any time after the principal money has become due and before a suit for redemption is barred, the mortgagor (or any other person entitled to institute such suit) may deposit the amount remaining due on mortgage to the account of the mortgagee. The money may be deposited in that court where he might have instituted a suit for redemption. After valid deposit of money, the court causes a written notice to be served on the mortgagee informing him of the amount deposited and for ascertaining his willingness to accept the money so deposited in full discharge of the debt. The mortgagee has to deposit the mortgage-deed and all documents in his possession or power relating to the mortgaged-property and apply for and receive the money. The mortgage-deed and all other documents are then delivered to the mortgagor or other entitled person. In the case of a usufructuary mortgage, the court may direct the mortgagee to deliver possession of the mortgaged-property to the mortgagor (or any other person at his direction) before making payment to him. The procedure laid down in this section is a summary procedure. The function of the court under the section is of procedural nature. The order permitting the mortgagor to deposit money in the court does not operate as res-judicata. The mortgagee objected to the deposit. The court overruled the objection and allowed the money to be deposited. Such deposit does not create a binding obligation on the part of the mortgagee to accept it. The question of applying res judicata, therefore, did not arise.327. The functions of the court under the section are only ministerial. Adjudication of the rights of the parties about their rival claims cannot be undertaken under this section.328. Where the clause in the mortgage-deed stipulated that the mortgagor – landlord on redemption would himself use the mortgaged – property for 3 years and in case it is given on rent, the mortgagee shall have the right to take back possession in his capacity as tenant, it was held that such condition could not be said to be a clear

intention of surrendering lease rights and the tenant mortgagee would not lose possession on redemption.329.

323. Subs. by Act 20 of 1929, section 44, for "has become payable". 324. See the Code of Civil Procedure, 1908 (5 of 1908), Sch I, O VI, rule 15. 325. Subs. by Act 20 of 1929, section 44, for "if then in his possession or power". 326. Ins. by Act 20 of 1929, section 44. 327. Bishwanath Prasad Singh v Rajendra Prasad, AIR 2006 SC 2965 : (2006) 4 SCC 432 : 2006

(2) Supreme 561 . If the mortgagee does not accept the money, the mortgagor has to file a case for redemption. Deposit of money is not a condition for filing such suit. 328. K Rajendra v P Somanna, AIR 2010 (NOC) 1117 (Kant). 329. Nirmal Chandra v Vimal Chand, AIR 2001 SC 2284 : (2001) 5 SCC 51 : 2001 AIR SCW 2018.

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER

IVOF

MORTGAGES

OF

IMMOVABLE

PROPERTY

AND

CHARGES This Chapter can be categorised into following:— Part I—Mortgage defined Part II—Rights and liabilities of Mortgagor Part III—Rights and liabilities of Mortgagee Part IV—Priority Part V—Marshalling and Contribution Part VI—Deposit in Court Part VII—Suits for foreclosure, sale or Redemption. (Repealed) Part VIII—Foreclosure and sale (Repealed) Part IX—Redemption Part X—Anomalous Mortgage Part XI—Attachment of Mortgaged Property (Repealed) Part XII—Charges Part XIII—Notice and Tender

PART VI: DEPOSIT IN COURT [s 84] Cessation of interest.— When the mortgagor or such other person as aforesaid has tendered or deposited in Court under section 83 the amount remaining due on the mortgage, interest on the principal money shall cease from the date of the tender or 330.[in the case of a deposit, where no previous tender of such amount has been made] as soon as the mortgagor or such other person as aforesaid has done all that has to be done by him to enable the mortgagee to take such amount out of Court, 331.[and the notice required by section 83 has been served on the mortgagee: Provided that, where the mortgagor has deposited such amount without having made a previous tender thereof and has subsequently withdrawn the same or any part thereof, interest on the principal money shall be payable from the date of such withdrawal.] Nothing in this section or in section 83 shall be deemed to deprive the mortgagee of his right to interest when there exists a contract that he shall be entitled to reasonable notice before payment or tender of the mortgage-money 332.[and such notice has not been given before the making of the tender or deposit, as the case may be].

Comments [s 84.1] Cessation of Interest (Section 84) When the mortgagor (or any other person entitled) tenders or deposits the money remaining on the mortgage in the court under section 83, the interest on the principal money ceases from the date of tender of money or as soon as in the case of a deposit (where no previous amount has been tendered) the mortgagor has fulfilled all the requirements to enable him to take such amount out of court and notice has been served upon him. It is necessary that the deposit must be a valid deposit under section 83 and complete notice has been served on the mortgagee.

330. Ins. by Act 20 of 1929, section 45. 331. Subs. by Act 20 of 1929, section 45, for "as the case may be". 332. Added by Act 20 of 1929, section 45.

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER

IVOF

MORTGAGES

OF

IMMOVABLE

PROPERTY

AND

CHARGES This Chapter can be categorised into following:— Part I—Mortgage defined Part II—Rights and liabilities of Mortgagor Part III—Rights and liabilities of Mortgagee Part IV—Priority Part V—Marshalling and Contribution Part VI—Deposit in Court Part VII—Suits for foreclosure, sale or Redemption. (Repealed) Part VIII—Foreclosure and sale (Repealed) Part IX—Redemption Part X—Anomalous Mortgage Part XI—Attachment of Mortgaged Property (Repealed) Part XII—Charges Part XIII—Notice and Tender

PART VII: 333.SUITS FOR FORECLOSURE, SALE OR REDEMPTION [s 85] Parties to suits for foreclosure, sale and redemption.— [Rep. by the Code of Civil Procedure, 1908 (5 of 1908), s. 156 and Fifth Schedule ]

333. For the repealed provisions, as re-enacted, see the Code of Civil Procedure, 1908 (5 of

1908), Sch I, O XXXIV.

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER

IVOF

MORTGAGES

OF

IMMOVABLE

PROPERTY

CHARGES This Chapter can be categorised into following:— Part I—Mortgage defined Part II—Rights and liabilities of Mortgagor Part III—Rights and liabilities of Mortgagee Part IV—Priority Part V—Marshalling and Contribution Part VI—Deposit in Court Part VII—Suits for foreclosure, sale or Redemption. (Repealed) Part VIII—Foreclosure and sale (Repealed) Part IX—Redemption Part X—Anomalous Mortgage Part XI—Attachment of Mortgaged Property (Repealed) Part XII—Charges Part XIII—Notice and Tender

PART VIII: 331 FORECLOSURE AND SALE [s 86 to s 90] Parties to suits for foreclosure, sale and redemption.— —[Rep. by the Code of Civil Procedure, 1908 (5 of 1908), s. 156 and Fifth Schedule]

AND

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER

IVOF

MORTGAGES

OF

IMMOVABLE

PROPERTY

AND

CHARGES This Chapter can be categorised into following:— Part I—Mortgage defined Part II—Rights and liabilities of Mortgagor Part III—Rights and liabilities of Mortgagee Part IV—Priority Part V—Marshalling and Contribution Part VI—Deposit in Court Part VII—Suits for foreclosure, sale or Redemption. (Repealed) Part VIII—Foreclosure and sale (Repealed) Part IX—Redemption Part X—Anomalous Mortgage Part XI—Attachment of Mortgaged Property (Repealed) Part XII—Charges Part XIII—Notice and Tender

PART IX: 331 REDEMPTION 334.[s 91] Persons who may sue for redemption.—

Besides the mortgagor, any of the following persons may redeem, or institute a suit for redemption of, the mortgaged property, namely:— (a) any person (other than the mortgagee of the interest sought to be redeemed)

who has any interest in, or charge upon, the property mortgaged or in or upon the right to redeem the same; (b) any surety for the payment of the mortgage-debt or any part thereof; or (c) any creditor of the mortgagor who has in a suit for the administration of his

estate obtained a decree for sale of the mortgaged property.]

Comments

[s 91.1] Persons Entitled to Redeem (Section 91) The mortgagor is entitled to redeem the mortgaged-property at any time after the mortgage-money has become due. Section 91 provides that besides the mortgagor, there are certain other persons who may redeem or institute a suit for redemption of the mortgaged-property. They are:— (i) any person (other than the mortgagee of the interest sought to be redeemed)

who has any interest in, or charge upon, the property mortgaged or in or upon the right to redeem the same; (ii) any surety for the payment of the mortgage-debt or any part thereof; (iii) any creditor of the mortgagor who has in a suit for the administration of his

estate obtained a decree for sale of the mortgaged property.

[s 91.1.1] Persons having Interest in Right to Redeem Property [Puisne Mortgage] Persons who have interest in the mortgaged-property or charge upon the mortgagedproperty are entitled to redeem the same. Such persons are subsequent mortgagees or puisne mortgagees. A pusine mortgagee has a right to redeem the prior mortgage. For example, a mortgagor executes successive mortgages of the same property first to A, then to B and a third mortgage to C. Here B is entitled to redeem the mortgage by A and C to redeem B. A prior mortgagee obtained a decree without impleading a puisne mortgagee. It was held that he became entitled to sue for redemption of the earlier mortgage. The rights of puisne mortgagee are not affected even if the property is sold in the execution of a decree. A puisne mortgagee is the assignee of the equity of redemption. He has to bring a suit to enforce his right.335. The Trial Court also held that where a property has been mortgaged to secure subsequent or successive debts and sold in execution of a decree passed in an auction by a mesne mortgagee against the mortgagor without impleading puisne mortgagor, then the puisne mortgagee is not bound to redeem the mortgage of the mesne mortgagee. He can very well enforce his mortgage against the auction purchaser who has stepped in the shoes of the mortgagor by purchasing the property in an auction, in execution of a decree standing in favour of the mesne mortgagee. The Trial Court relied upon Ram Sanehi v Janaki Prasad336. in which it was held that the purchaser in execution of a mortgage decree acquires the rights of the mortgagor. If the subsequent mortgagee has not been made a party to the prior mortgage suit, the auction purchaser acquires no right as against subsequent mortgagee. The same view was taken by the Patna High Court in the case of Abdul Gafoor v Sagun Choudhary.337. In Nanhoomal v Ram Chander338., it was held that if any accession was made by an auction purchaser, the puisne mortgagee can take benefit of the accession as well under section 70 of the Transfer of Property Act, 1882. The auction purchaser having acquired all the mortgagor's right, title and interest in the property, must be treated as mortgagor. It was thus held that the plaintiffs were entitled to recover the amount claimed from the auction purchaser. The Appellate Court confirmed the findings and dismissed the appeal. It relied upon Jadunath Roy v Parameswar Mullick,339. in which it was observed by Sir George Rankin, that while the purchaser at an execution sale under a mere money decree gets not more than the right, title and interest of the judgment debtor at the date of the sale, the purchaser under the mortgage decree gets, the right, title and interest in the mortgaged subjects which the mortgagor had on the date of the mortgage and charged thereby. Buying the mortgaged property free from encumbrances, he gets as it is sometimes put, the title both of the mortgagee and of those interested in the equity of redemption.

He is not a mere successor in interest of the owner of the equity of redemption at the date of the sale. In Variavan Saraswathi v Eachampi Thevi340., the Supreme Court dealing with the rights of the co-mortgagee in case of redemption of mortgage property held as follows: Since the transfer in a mortgage is only of interest and not of entire right and title, as takes place in sale, the mortgagor and the mortgagee can transfer or assign their interests. A mortgagor may assign or transfer the equity of redemption or may even create second mortgage. Similarly, a mortgagee may assign his interest or create another mortgage. What happens when a mortgagee assign his interest in favour of another person? Since an assignor can pass on only the interest that he has, the assignee becomes holder of the same interest that a mortgagee had. In other words, he steps into the shoes of the mortgagee. Can the same be said where a co-mortgagor or anyone on behalf of the mortgagor authorized under law, pays the amount and brings to an end the interest the mortgagee had? Mortgage is creation of an interest in the property for payment of debt. Once the mortgage debt is discharged by a person beneficially interested in equity of redemption, the mortgage comes to an end by operation of law. Consequently, the relationship of mortgagor and mortgagee cannot subsist. What then is the status of a person paying off debt to secure the property either with consent of others or on own volition? In law he becomes the owner, entitled to hold and possess the property. But in equity the right is to hold the property till he is reimbursed. In other words, he may hold the property as surety or he may bring the claim for contribution. In Ganeshi Lal v Jyoti Pershad341., it was held: ... Equity insists on the ultimate payment of a debt by one who in justice and good conscience is bound to pay it, and it is well recognized that where there are several joint debtors, the person making the payment is a principal debtor as regards the part of the liability he is to discharge and a surety in respect of the shares of the rest of the debtors.

Similarly, the co-mortgagor whose share has been got redeemed is entitled in equity to get possession over his share of property on payment of the amount of his share. In Valliamma Champaka Pillai v Sivathanu Pillai,342. the principle was explained thus: From what has been said above it is clear that where the Transfer of Property Act is not in force and a mortgage with possession made by two persons, one of whom only redeems discharging the whole of the common mortgage debt, he will, in equity have two distinct rights. Firstly, to be subrogated to the rights of the mortgagee discharged vis-a-vis the nonredeeming co-mortgagor, including the right to get into possession of latter to portion or share of the hypotheca. Secondly, to recover contribution towards the excess paid by him on the security of that portion or share of the hypotheca which belonged not to him but to the other co-mortgagor. It follows that where one co-mortgagor gets the right to contribution against the other co-mortgagor by paying off the entire mortgage debt, a correlated right also accrues to the latter to redeem his share of property and get its possession on payment of his share of the liability to the former. This corresponding right of the "nonredeeming" co-mortgagor, to pay his share of the liability and get possession of his property from the redeeming co-mortgagor, subsists as long as the latter's right to contribution subsists. ...

But these rights in equity, either in favour of the person who discharges the debt or the person whose debt has been discharged, do not result in resumption of relationship of mortgagor and mortgagee. Even under subrogation, a legal concept, meaning substitution, applied, on English Law principle, even earlier, inserted now as section 92 in the Transfer of Property Act, 1882 since 1929, the rights that are created in favour of a co-mortgagor as a result of discharge of debt are "so far as regards redemption, foreclosure or sale of such property, the same rights as the mortgagee whose mortgage he redeems." What is the meaning of the expression "right as mortgagee"? Does a person who in equity gets subrogation becomes mortgagee? Or his rights are confined to foreclosure or sale? A plain reading of the section does not warrant a construction that the substitute becomes a mortgagee. The expression is, "right as the mortgagee" and not right or mortgagee. The legislative purpose was statutory recognition of the equitable right to hold the property till the mortgagor was

reimbursed, and not to create relationship of mortgagor and mortgagee. The section confers certain rights on co-mortgagor and provides for the manner of its exercise as well. The rights are of redemption, foreclosure and sale. And the manner of exercise is as mortgagee. The word "as" according to Black's Law Dictionary means "in the manner prescribed". Thus a co-mortgagor in possession, of excess share redeemed by him can enforce his claim against non-redeeming mortgagor by exercising rights of foreclosure or sale as is exercised by mortgagee under section 67 of the Transfer of Property Act, 1882. But that does not make him mortgagee. Therefore, a co-mortgagor or a junior member of the Tarwad who continued in possession over the excess share, got redeemed by him, could not be deemed to be mortgagee so as to acquire right under section 4A(1)(a) of the Kerala Land Reforms Act. In Ram Sanehi v Janki Prasad,343. our High Court held that the purchaser at the first auction sale whether it be held under the prior mortgage or under subsequent mortgages acquires the interest of the mortgagor. Same view was taken by Patna High Court in Asdue Gafoor v Sapun Chaudhary.344. The interest must be any kind of a proprietary interest. For example, a lessee of a mortgaged-property and an auction purchaser are entitled to redeem. In the case of a lease, lease may be for a specified time period or a permanent lease. For example, a prior lease of the mortgaged property existed in favour of lessee. The mortgage-deed showed that the rights of the lessee were expressly saved and lease had continued even after execution of the mortgage. It was held by the Supreme Court that the rights of the lessee to continue in possession would survive after redemption and mortgagor is not entitled to recover physical possession of the property.345. Similarly, an auction-purchaser is entitled to bring a suit for redemption because he is a successor-in-interest in the property. After the mortgaged property is sold, whether voluntarily or involuntary, in an auction sale, the transferee becomes a successor in interest in that property.346. It is necessary that the interest must not be a personal interest. The right of maintenance of an illegitimate son is a personal interest in Hindu Law, and therefore, it will not support a suit for redemption. It is further necessary that the interest must be a present interest. When a person, who has no interest in the equity of redemption or property mortgaged, pays off the mortgages and takes the possession, he is only a volunteer with no equities in his favour. He is not subrogated to the right of the mortgagee. The persons who have interest in or charge upon the mortgaged property include purchaser of equity of redemption, each of the co-mortgagors and sub-mortgagees. These persons are entitled to redeem the mortgaged-property. A person who holds merely an agreement to purchase the property cannot either redeem or institute a suit for redemption.347. Legal heirs have the right of redemption. The mere fact that there were other legal heirs of the deceased mortgagor was no ground for dismissal of the plaintiff's claim who proved that they were also the legal representatives of the original mortgagor. Section 91 confers the right of redemption on any person who has an interest in the property.

[s 91.1.2] Surety of Mortgagor

A surety is such a person who guarantees to pay the debt if the mortgagor fails to pay. Therefore, he is also entitled to redeem the property. After redemption, the surety is subrogated to the place of the mortgagee. He becomes entitled to avail all the remedies open to the mortgagee as against the mortgagor.

[s 91.1.3] Creditor of Deceased Mortgagor When a mortgagor dies without making repayment of loan, the creditor has to file a suit for the administration of the estate and recover the debt out of the property of the deceased mortgagor. He has first to discharge the debt of mortgaged property to recover his own debt. That is why, the creditor of the deceased mortgagor has been given the right to redeem the mortgaged-property.

334. Subs. by Act 20 of 1929, section 46, for the original section. 335. Chandulal Reshwani v Balwant Singh, AIR 2006 All 47 : 2006 (62) All LR 245 : 2006 (1) ALJ

193 ; objections regarding compromise decree on filmsy and technical grounds by judgmentdebtor

without

establishing

that

decree

is

vitiated

by

fraud,

misrepresentation,

misunderstanding or mistake was held not permissible, Jaigopalcharya by LRs v Shyam Prakash, AIR 2018 Raj 171 . 336. AIR 1931 All 466 : 1931 All LJ 729 : ILR 53 All 1023. 337. AIR 1952 Pat 321 : ILR 27 Pat 526. 338. AIR 1931 All 772 . 339. AIR 1940 PC 11 : ILR (1940) 1 Cal 255 : 67 Ind App 11. 340. 1993 (Supp) 2 SCC 201 : 1992 AIR SCW 3673. 341. AIR 1953 SC 1 : ILR 1952 Punj 495 : 1953 SCR 243 . 342. AIR 1979 SC 1937 : (1979) 4 SCC 429 : 1980 SCR (1) 354 . 343. AIR 1931 All 466 : 1931 All LJ 729 : ILR 53 All 1023. 344. AIR 1952 Pat 321 : ILR 27 Pat 526. 345. Cheriyan Sosamma v Sundaressan Pillai Saraswathy Amma, (1999) 3 SCC 251 : AIR 1999

SC 947 : 1999 AIR SCW 515. 346. Pranil Kumar v Kishorilal Bysack, AIR 2003 Cal 1 . 347. Regula Krishna v Rondapally Sampath Kumar, AIR 2007 (NOC) 202 (AP).

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER

IVOF

MORTGAGES

OF

IMMOVABLE

PROPERTY

AND

CHARGES This Chapter can be categorised into following:— Part I—Mortgage defined Part II—Rights and liabilities of Mortgagor Part III—Rights and liabilities of Mortgagee Part IV—Priority Part V—Marshalling and Contribution Part VI—Deposit in Court Part VII—Suits for foreclosure, sale or Redemption. (Repealed) Part VIII—Foreclosure and sale (Repealed) Part IX—Redemption Part X—Anomalous Mortgage Part XI—Attachment of Mortgaged Property (Repealed) Part XII—Charges Part XIII—Notice and Tender

PART IX: 331 REDEMPTION 348.[s 92] Parties to suits for foreclosure, sale and redemption.—

Subrogation.—Any of the persons referred to in section 91 (other than the mortgagor) and any co-mortgagor shall, on redeeming property subject to the mortgage, 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. The right conferred by this section is called the right of subrogation, and a person acquiring the same is said to be subrogated to the rights of the mortgagee whose mortgage he redeems. A person who has advanced to a mortgagor money with which the mortgage has been redeemed shall be subrogated to the rights of the mortgagee whose mortgage has been redeemed, if the mortgagor has by a registered instrument agreed that such persons shall be so subrogated. Nothing in this section shall be deemed to confer a right of subrogation on any person unless the mortgage in respect of which the right is claimed has been redeemed in full.

Comments [s 92.1] Subrogation (Section 92) Section 92 provides that— (i) any person other than the mortgagor referred to in section 91, and any

comortgagor, (ii) on redeeming the mortgaged-property, (iii) shall have the same rights as the mortgagee whose mortgage he redeems may

have against the mortgagor or any other mortgagee, (iv) the rights are regarding redemption, foreclosure or sale of such mortgaged

property. (v) This right is known as the right of subrogation and a person acquiring the same

is said to be subrogated to the rights of the mortgagee whose mortgage he redeems. "Subrogation" is a Roman word which means "substitution". It is the right of a person to stand in the place of the creditor after paying off his liabilities. In case of a mortgage, subrogation takes place only by redemption. Therefore, in order to be entitled to subrogation a person must pay off the entire amount of a prior mortgage. A partial payment of the mortgage-debt cannot give rise to a claim for a partial subrogation. The doctrine of subrogation is based on the principles of equity, justice and good conscience. The essence of the doctrine is that the party who pays off a mortgage gets clothed with all the rights of the mortgagee. This doctrine was made applicable even in those parts of India where the Act itself was not applicable.349. The Privy Council applied the principal of subrogation to a purchaser of the equity of redemption in the leading case of Gokuldas v Puranmal.350. Gokuldas, who was a creditor of the mortgagor, purchased the equity of redemption at a sale in execution of a money-decree and got possession. He paid off a prior mortgage but he was sued for possession by a puisne mortgagee. The Privy Council held that Gokuldas was subrogated to the rights of the prior mortgagee whom he had paid off and that his claim could not be disposed unless it was redeemed. The Privy Council by this decision declared inapplicability of the rule in Toulmin v Steere,351. to India. In this case, it was held that a mortgagee purchasing the equity of redemption and discharging other mortgagees was in no better position than the mortgagor would be if he had discharged the mortgages. It was further held that the purchaser could not use either his own mortgage or the mortgages he had redeemed against a subsequent encumbrance of which he had notice. The effect of this case352. is that when a purchaser of equity of redemption is redeeming a mortgage there is no presumption that he intends to keep it alive against a subsequent encumbrance of which he has no knowledge but may have had constructive notice. This rule has been held to be not applicable in India. Where the goods were sent from place A to place B and the goods forwarding note contained a clause that jurisdiction for deciding disputes between the parties would be at place D and power of attorney was granted at that place in favour of the insurer, it was held that the suit for damages filed at place D by ensurer and consignee was maintainable.353.

[s 92.2] Where Mortgagor redeems, subrogation not applicable Where the mortgagor himself redeems the property, this doctrine cannot be invoked. The mortgagor who discharges a prior debt is not entitled to be subrogated to the rights and remedies of his creditor. This is because by discharging a prior encumbrance created by himself, he is discharging his own obligation to his creditor.354.

[s 92.3] Benefit to Mortgagor or Mortgagee It has been held by the Madras High Court that when a subsequent mortgagee redeems a prior mortgage, no question arises as to whether the payment is for the benefit of the mortgagor or mortgagee. For the applicability of section 92 it is necessary only to see that whether the person claiming the benefit of this section was a mortgagee at the time when he made the payment.355.

[s 92.4] Kinds of subrogation The subrogation is of two types—legal and conventional subrogation. Legal subrogation takes place by operation of law whereas conventional subrogation takes place where the person paying off the debt has no interest to protect but he advances the money under an agreement that he would be subrogated to the rights and remedies of the creditor.

[s 92.4.1] Legal Subrogation Legal subrogation takes place by operation of law and is based on the principle of reimbursement. Where a person interested in making some payment which another person is legally bound to make, than such person must be re-imbursed when he makes the payment. Legal subrogation may be claimed by the following persons:— (a) Puisne mortgagee (b) Co-mortgagor (c) Surety (d) Purchaser of equity of redemption.

(a) Puisne Mortgagee.—A puisne (subsequent) mortgagee, who redeems a prior mortgage, has a right to be subrogated to the position of the prior mortgage. (b) Co-mortgagor.—Co-mortgagor is a co-debtor. He is liable only to the extent of his share of the debt. When, besides redeeming his own share, he pays off the share of the other mortgagor also, he becomes entitled to be subrogated in place of such other mortgagor. Here a co-mortgagor is considered to be the principal debtor for his own share and is presumed to be the surety for other co-mortgagors (co-debtors). Where act of the several co-mortgagors each having entitlement to a share in the suit property, one of them had redeemed the property by paying the entire mortgage money and had singularly entered into possession over the entire mortgaged property, the other coowner of the property asked for the partition of the property commensurate with his share, the question arose that what were the rights and liabilities the parties qua each

other and whether a suit for partition was maintainable. It was held that it was not a case of subrogation by agreement but subrogation by operation of law. Section 92 does not have the effect of a substitute becoming a mortgagee. The provision confers certain rights on the redeeming co-mortgagor and also provides for remedies of redemption, foreclosure and sale being available to the substitutes as they were available to the substituted. Therefore, the suit for declaration, partition and recovery of possession by non-redeeming co-mortgagor was held to be maintainable.356. (c) Surety.—The person who stands as a surety in a mortgage for repayment of loan in case the mortgagor fails to do so, is also entitled to redeem the mortgaged property under section 91. When the surety of the mortgagor redeems the property he is subrogated to the position and rights of the creditor. (d) Purchaser of Equity of Redemption.—There were certain doubts regarding the purchaser of equity of redemption that whether he can be subrogated or not. Equity of redemption is regarded as a property of the mortgagor which he can sell or assign. The purchaser of such equity becomes owner of the property. Now the question arises whether he can be treated as a mortgagor in a mortgage transaction? If such a purchaser steps in place of the mortgagor then he will have no right of subrogation under section 92. To remove this difficulty the courts introduced the principle of intention. It was held by the courts that in such cases the intention of the purchaser of equity of redemption is simply to keep the mortgage alive. The Privy Council observed in Malireddy Ayyareddy v Gopi Krishnayya,357. that "it is now settled law that where in India there are several mortgages on a property, the owner of the property subject to a mortgage may, if he pays off an earlier charge, treat himself as buying it and stand in the same position as his vendor, or to put it in another way, he may keep the encumbrance alive for his benefit and thus come in before a later mortgagee. This rule would not apply if the owner of the property had covenanted to pay the later-mortgagedebt but in this case there was no such personal covenant." For example, as in a case,358. A gave a first mortgage to B, a second mortgage to C and again a third mortgage to B. Out of the consideration received from the third mortgage B retained Rs 499 for the discharge of the first mortgage and Rs 790 for paying off C's mortgage which he had agreed. But B did not pay off C's mortgagee and C sued on his mortgage. B was not held entitled to use the first mortgage as a shield.

[s 92.4.2] Conventional Subrogation The conventional subrogation takes place where the person paying off the mortgagedebt is a stranger and has no interest to protect, but he advances the money under an agreement (express or implied) that he would be subrogated to the rights and remedies of the mortgagee who is paid off.359. The right of subrogation can be claimed only if the mortgagor has agreed by registered instrument that he shall be so subrogated.

[s 92.5] Redemption in full It is necessary that the mortgage must be redeemed in full. The right of redemption shall be deemed to be conferred only when the mortgage in respect of which the right is claimed has been redeemed in full.

[s 92.6] Subrogation, assignment and transfer

Subrogation is the effect of the situation where a mortgage is redeemed by a person other than the mortgagor, and he is subrogated only to the rights of the mortgagor and no more. An assignment or transfer can take place only with specific acts of parties. The assignee or transferee acquires all the rights in the property. A transfer operates as a transfer of the totality of the rights.360.

348. Ins. by Act 20 of 1929, section 47. Original sections 92 to 94 were repealed by Act 5 of

1908, section 156 and Sch V. 349. Ganeshi Lal v Jyoti Pershad, AIR 1953 SC 1 : 1953 SCR 243 : ILR 1952 Punj 495 . Paramjota

Devi v Shamlal Zoha, AIR 2009 Pat 6 : 2009 (1) AIR Jhar 725 : 2009 (1) Civ LJ 301 , the comortgagor paid off the total mortgage dues and became subrogated to the position of other mortgagors. 350. (1884) 11 IA 126 (PC) : ILR 10 Cal 1035. 351. (1817) 3 Mer 210 : 17 RR 67. 352. Toulmin v Steere, (1817) 3 Mer 210 : 17 RR 67. 353. Kalpaka Transport Co Ltd v Oriental Fire and General Insurance Co Ltd, AIR 2001 Mad 164 :

2001 (1) Mad LJ 714 : 2002 (2) Mad LW 172 . 354. Narain v Narain, AIR 1931 All 40 . 355. Nagayya v Govindayuyar, AIR 1923 Mad 349 . 356. Krishna Pillai Rajasekharan v Padmanabha Pillai, AIR 2004 SC 1206 : 2004 AIR SCW 106 :

(2004) 12 SCC 754 357. (1924) 47 Mad 190 : 51 IA 140 : AIR 1924 PC 36 . 358. Balbhaddra v Sheomangal, (1931) 130 IC 301 : AIR 1931 All 347 . 359. Gurdeo Singh v Chandrikah Singh, (1909) 36 Cal 193 : 5 Cal LJ 611 : 1 IC 913. 360. Gujrath Andhra Road Carriers Transport Contractors v United India Insurance Co Ltd, AIR

2006 AP 401 : 2006 (5) Andh LD 519 : 2007 (4) Civ LJ 22 .

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER

IVOF

MORTGAGES

OF

IMMOVABLE

PROPERTY

AND

CHARGES This Chapter can be categorised into following:— Part I—Mortgage defined Part II—Rights and liabilities of Mortgagor Part III—Rights and liabilities of Mortgagee Part IV—Priority Part V—Marshalling and Contribution Part VI—Deposit in Court Part VII—Suits for foreclosure, sale or Redemption. (Repealed) Part VIII—Foreclosure and sale (Repealed) Part IX—Redemption Part X—Anomalous Mortgage Part XI—Attachment of Mortgaged Property (Repealed) Part XII—Charges Part XIII—Notice and Tender

PART IX: 331 REDEMPTION [s 93] Prohibition of tacking.— No mortgagee paying off a prior mortgage, whether with or without notice of an intermediate mortgage, shall thereby acquire any priority in respect of his original security; and, except in the case provided for by section 79, no mortgagee making a subsequent advance to the mortgagor, whether with or without notice of an intermediate mortgage, shall thereby acquire any priority in respect of his security for such subsequent advance.

Comments [s 93.1] Prohibition of Tacking (Section 93) Tacking was abolished in India by the Transfer of Property (Amendment) Act, 1929. Under section 93, no mortgagee shall, by paying off a prior mortgage (whether with or without notice of an intermediate mortgage) thereby acquire any priority in respect of his original security. No mortgagee making a subsequent advance to the mortgagor

(whether with or without notice of an intermediate mortgage) can thereby acquire any priority in respect of his security for such subsequent advance, except in the case of section 79. The doctrine of tacking used for the purpose of squeezing out an intermediate mortgagee has never been recognised in India. Tacking means uniting securities given at different times. For example, if there are successive mortgages, a property is mortgaged to B, C and D. D may redeem B and get subrogated to the rights of B. But he only takes priority over C in respect of B's mortgage and not in respect of his own mortgage. Under the doctrine of tacking D acquires priority over C not only in respect of B's mortgage which he has paid off but also in respect of his own mortgage. Section 94 of the English law of Property Act, 1925 abolished the doctrine of tacking.

[s 93.2] Exception.— The right of tacking is applicable within certain limits under section 79 in respect of future advances, section 79 provides that if a mortgage is made to secure— (a) future advances (b) the performance of an engagement, or (c) the balance of a running account

expresses the maximum to be secured thereby, a subsequent mortgage of the same property if made with notice of prior mortgage, is to be postponed to the prior mortgage in respect of all advances or debits not exceeding the maximum, though made or allowed with notice of the subsequent mortgage. Illustration (1) A mortgages Sultanpur to his bankers, B & Co, to secure the balance of his account to the extent of Rs 10,000. (2) A then mortgages Sultanpur to C to secure Rs 10,000, C having notice of the mortgage to B & Co. (3) C gives notice to B & Co of the second mortgage. (4) At the date of the second mortgage, the balance due to B & Co does not exceed Rs 5000. (5) B & Co subsequently advances to A sums making the balance of the account against him exceed the sum of Rs 10,000. Here, B & Co are entitled, to priority over C to the extent of Rs 10,000. The two conditions required under section 79 are fulfilled here:— (i) the subsequent mortgagee has notice of the first mortgage. (ii) the first mortgage fixed the maximum amount to be secured.

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER

IVOF

MORTGAGES

OF

IMMOVABLE

PROPERTY

AND

CHARGES This Chapter can be categorised into following:— Part I—Mortgage defined Part II—Rights and liabilities of Mortgagor Part III—Rights and liabilities of Mortgagee Part IV—Priority Part V—Marshalling and Contribution Part VI—Deposit in Court Part VII—Suits for foreclosure, sale or Redemption. (Repealed) Part VIII—Foreclosure and sale (Repealed) Part IX—Redemption Part X—Anomalous Mortgage Part XI—Attachment of Mortgaged Property (Repealed) Part XII—Charges Part XIII—Notice and Tender

PART IX: 331 REDEMPTION [s 94] Rights of mesne mortgagee.— Where a property is mortgaged for successive debts to successive mortgagees, a mesne mortgagee has the same rights against mortgagees posterior to himself as he has against the mortgagor.]

Comments [s 94.1] Rights of Mesne Mortgagee (Section 94) Section 94 provides that where a property is mortgaged for successive debts to successive mortgagees, a mesne mortgagee has the same rights against mortgagees posterior to himself as has against the mortgagor. Therefore, he can redeem any prior mortgagor and can exercise the right of foreclosure and sale against subsequent mortgagees. A mesne mortgagee can redeem all the mortgagees before him and can foreclose all the mortgages after him. Redemption by a mesne mortgagee is upwards (prior) and foreclosure (downwards) i.e., subsequent.

Sections 94 and 91(a) taken together embody the principle "redeem up and foreclose down". For example, a mortgagor mortgages his property to A, B and C respectfully for debts. Here C can redeem B or A and B can redeem A. A can foreclose the mortgagor and B and C in whose hands equity of redemption has been assigned. Where the prior mortgagee forecloses his mortgages and also makes the puisne mortgagees parties to the suit, the puisne mortgagees are given the liberty to redeem the prior mortgagee and foreclose or bring to sale the mortgaged-property. But if the prior mortgagee enforcing his mortgage does not make the puisne mortgagee a party to the suit and brings the property to sale, the auction purchaser acquires the rights of both the mortgagor and mortgagee. The omission to implead a puisne mortgagee does not affect his right though the first mortgagee may obtain a decree on his mortgage and the property may be sold in execution of such decree.361. The Privy Council has said that the proceedings in the prior mortgagee's suit are not binding on the puisne so as to affect his right under the puisne mortgage. In an earlier case Turner J, observed: "Such subsequent encumbrancers, if they are made parties, might at any time before the sale may come in and redeem, and they will not be bound by the decree, but if they do not redeem and a sale takes place, their liens will be defeated unless they can show something more than the existence of their subsequent encumbrances, some fraud or collusion which entitled them to defeat the first encumbrance or to have it postponed to their own." This statement was held not to be a correct statement of law. In another case, it was observed by Willis CJ that the mortgagee has a right to sell the mortgagor's interest as it stood at the date of the mortgage subject to this, that he must make all subsequent mortgagees parties if he wishes the sale to be free of their encumbrance.362. It is submitted that this is the correct statement of law. In Sukhi v Ghulam Safdar Khan,363. the general principle sated was that the plaintiff is a puisne mortgagee seeking to enforce her mortgage, the prior mortgagee in his suit having failed to make her a party. It is the duty of the court to give the plaintiff the opportunity of occupying the position that would have occupied if she had been a party to the former suit.

[s 94.2] Auction Purchasers of Prior and Puisne Mortgagees Where the prior and puisne mortgages bring property to sale without making the other a party, the dispute for possession may arise between their auction purchasers too. In many cases it has been held that after the sale by one mortgagee there was nothing left for the other mortgagee to sell and the right of possession could be decided according to priority of sale.364. However, in some cases the right of possession was determined according to the priority of the mortgages.365. In a case, the prior mortgagee's auction purchaser sued the puisne auction purchaser for possession and the court gave him a decree for sale in default of redemption.366. Further, in a case, the court held that where the prior mortgagee did not join the puisne mortgagee, the right of purchaser to be treated as the owner of the equity of redemption, is imperfect and the puisne mortgage who represents the ultimate equity of redemption is entitled to retain possession.367. The Allahabad High Court has held that if the prior mortgage is not usufructuary, the auction purchaser of the prior mortgagee gets no right of possessions.368. The right of foreclosure has been recognised by Jones in the following words: When a party in interest other than the owner of the equity of redemption, is not made a party to the bill, the foreclosure is not generally for this reason wholly void. It is effectual as against those persons interested in the equity of redemption who are made parties. The sale vests the estate in the purchaser subject to redemption by the person interested in it who was not made a party to the proceedings. His only remedy, however, is to redeem. He cannot maintain ejectment against the purchaser. He cannot have the sale set aside by

petition in the foreclosure suit. His only right is the right of redemption. The sale, though it fails to be effectual in every other respect, operates as an assignment of the mortgage and all the mortgagee's rights to the purchaser, who may proceed de novo to foreclose.369.

[s 94.3] English Law Under English Law, if a person mortgages his property to three successive mortgages, the third mortgagee cannot redeem the first mortgage without redeeming the second (intermediate) mortgage and without foreclosing the mortgagor first below him. While in India, the third mortgagee is entitled to redeem the first mortgagee without redeeming the second mortgagee who is just above him. He can redeem the second mortgagee without foreclosing the mortgagor. It is necessary to make the intermediate mortgagee party to the suit of redemption in India.

361. Murugappa v Pallaniappa, AIR 1948 Mad 412 : (1948) 1 Mad LJ 284. 362. Chinnu Pillai v Venkatasamy, (1917) 40 Mad 77 : 34 IC 507 : AIR 1917 Mad 751 . 363. (1922) 43 All 409 : 48 IA 465 (473) : AIR 1922 PC 11 . 364. Venkatanarasammah v Ramiah, (1879) 2 Mad 108. 365. Banwari v Ramjee, (1902) 7 Cal WN 11. 366. Bhekdhari Mahton v Radhika Koer, (1934) 13 Pat 364 : AIR 1934 Pat 648 . 367. Chinnu Pillai v Venkatasamy, (1917) 40 Mad 77 : 34 IC 507 : AIR 1917 Mad 751 . 368. Madan Lal v Bhagwan Dass, (1899) 21 All 235 . 369. Jones, para 1395.

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER

IVOF

MORTGAGES

OF

IMMOVABLE

PROPERTY

AND

CHARGES This Chapter can be categorised into following:— Part I—Mortgage defined Part II—Rights and liabilities of Mortgagor Part III—Rights and liabilities of Mortgagee Part IV—Priority Part V—Marshalling and Contribution Part VI—Deposit in Court Part VII—Suits for foreclosure, sale or Redemption. (Repealed) Part VIII—Foreclosure and sale (Repealed) Part IX—Redemption Part X—Anomalous Mortgage Part XI—Attachment of Mortgaged Property (Repealed) Part XII—Charges Part XIII—Notice and Tender

PART IX: 331 REDEMPTION 370.[s 95]Right of redeeming co-mortgagor to expenses.—

Where one of several mortgagors redeems the mortgaged property, he shall, in enforcing his right of subrogation under section 92 against his co-mortgagors, be entitled to add to the mortgage money recoverable from them such proportion of the expenses properly incurred in such redemption as is attributable to their share in the property.

Comments [s 95.1] Co-mortgagor's Right to Expenses (Section 95) This section provides that where one of several mortgagors redeems the mortgaged property he shall be entitled to add to the mortgage money recoverable from them that proportion of the expenses incurred in redemption as is attributable to this share in the property. This right is available when the co-mortgagor redeeming the property

enforces his right of subrogation under section 92 against his co-mortgagors. The expenses incurred in redeeming the mortgage are added to the mortgage-money. This section gives the co-mortgagor only the right to add the expenses of redemption of mortgage-money for contribution. No other right is given by this section. The right of a co-mortgagor relates back to the date of mortgage which he has redeemed for the benefit of priority over subsequent mortgages.371.

370. Subs. by Act 20 of 1929, section 48, for the original section 95. Original section 96 was

repealed by Act 5 of 1908, section 156 and Sch V. 371. Brij Bhukan v Bhagwan Dutta, (1944) AO 114.

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER

IVOF

MORTGAGES

OF

IMMOVABLE

PROPERTY

AND

CHARGES This Chapter can be categorised into following:— Part I—Mortgage defined Part II—Rights and liabilities of Mortgagor Part III—Rights and liabilities of Mortgagee Part IV—Priority Part V—Marshalling and Contribution Part VI—Deposit in Court Part VII—Suits for foreclosure, sale or Redemption. (Repealed) Part VIII—Foreclosure and sale (Repealed) Part IX—Redemption Part X—Anomalous Mortgage Part XI—Attachment of Mortgaged Property (Repealed) Part XII—Charges Part XIII—Notice and Tender

PART IX: 331 REDEMPTION [s 96] Mortgage by deposit of title-deeds.— The provisions hereinbefore contained which apply to a simple mortgage shall, so far as may be, apply to a mortgage by deposit of title-deeds.]

Comments [s 96.1] Mortgage by Deposit of Title-deeds (Section 96) This is one of the modes of mortgage. Mortgage may also be made by security of titledeeds deposited with the mortgagee. Here the repayment of loan is secured not by executing a mortgage-deed but by deposit of title-deeds of the property. A mortgage by deposit of title-deeds stands on the same footing as a simple mortgage. Such a mortgagee can sue for sale but not for foreclosure. The provisions in respect of simple mortgage shall apply, so far as may be, to a mortgage by deposit of title-deeds. A mortgagor can bind himself personally to pay the mortgage-money.372.

372. Nityananda Ghose v Rajpur Chhaya Bani Cinema Ltd, AIR 1953 Cal 208 : 1952 90 Cal LJ 123

.

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER

IVOF

MORTGAGES

OF

IMMOVABLE

PROPERTY

AND

CHARGES This Chapter can be categorised into following:— Part I—Mortgage defined Part II—Rights and liabilities of Mortgagor Part III—Rights and liabilities of Mortgagee Part IV—Priority Part V—Marshalling and Contribution Part VI—Deposit in Court Part VII—Suits for foreclosure, sale or Redemption. (Repealed) Part VIII—Foreclosure and sale (Repealed) Part IX—Redemption Part X—Anomalous Mortgage Part XI—Attachment of Mortgaged Property (Repealed) Part XII—Charges Part XIII—Notice and Tender

PART IX: 331 REDEMPTION 373.[s 97] Application of proceeds.—

[Rep. by the Code of Civil Procedure, 1908 (5 of 1908), sec. 156 and Schedule V]

373. For the repealed provisions as re-enacted, see the Code of Civil Procedure, 1908 (5 of

1908), Sch I, O XXXIV, rules 12 and 13.

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER

IVOF

MORTGAGES

OF

IMMOVABLE

PROPERTY

AND

CHARGES This Chapter can be categorised into following:— Part I—Mortgage defined Part II—Rights and liabilities of Mortgagor Part III—Rights and liabilities of Mortgagee Part IV—Priority Part V—Marshalling and Contribution Part VI—Deposit in Court Part VII—Suits for foreclosure, sale or Redemption. (Repealed) Part VIII—Foreclosure and sale (Repealed) Part IX—Redemption Part X—Anomalous Mortgage Part XI—Attachment of Mortgaged Property (Repealed) Part XII—Charges Part XIII—Notice and Tender

PART X: ANOMALOUS MORTGAGES [s 98] Rights and liabilities of parties to anomalous mortgages.— In the case of 374.[an anomalous mortgage] the rights and liabilities of the parties shall be determined by their contract as evidenced in the mortgage-deed, and, so far as such contract does not extend, by local usage.

Comments [s 98.1] Rights and Liabilities of Parties to Anomalous Mortgages (Section 98) Anomalous mortgage is a mixture of two or more kinds of mortgages. Section 98 provides that the rights and liabilities of the parties in case of an anomalous mortgage are governed by the deed itself. The rights and liabilities of mortgagor and mortgagee are fixed by the parties themselves and these are included in the mortgage-deed. The Privy Council in Mohd Sher Khan v Seth Swami Dayal,375. held that section 98 is subject to section 60, and, therefore, the provisions of one section cannot be used to defeat

those of another section unless it is impossible to effect a reconciliation between the two. In a case, the mortgagee was given the right to sell the property in his possession for realisation of the mortgage-debt in case the mortgagor defaulted in payment of mortgage debt. The mortgagee had to pay a monthly sum of Rs 85, towards the "excess profits" after adjusting the balance towards interest on the mortgage amount. It was held that the payment of Rs 85 was not the rent for the property and the mortgagee was not a lessee but the mortgage was an anomalous mortgage and the rights and liabilities of the mortgagee were to be determined according to the section 98.376.

[s 98.2] Otti This is a customary form of mortgage prevalent in Kerala. Under this form any person borrowing money comes under a personal obligation to repay the amount even if no express provision is made for the same.

[s 98.3] Kanom This is a type of anomalous mortgage prevalent in Madras. It is a combined lease and mortgage. It is granted by the owner and is not redeemable for 12 years. At the end of 12 years the owner may redeem it or renew it on receipt of a renewal fee.

374. Subs. by Act 20 of 1929, section 49, for "a mortgage, not being a simple mortgage, a

mortgage by conditional sale, an usufructuary mortgage or an English mortgage or a combination of the first and third, or the second and third, of such forms". 375. (1922) 44 All 185 : AIR 1922 PC 17 : 20 All LJ 476. 376. Hathika v Puthiyapurayil Padmanabhan, AIR 1994 Ker 141 : 1994 (1) Ker LJ 89 : ILR (1994) 1

Ker 83 .

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER

IVOF

MORTGAGES

OF

IMMOVABLE

PROPERTY

AND

CHARGES This Chapter can be categorised into following:— Part I—Mortgage defined Part II—Rights and liabilities of Mortgagor Part III—Rights and liabilities of Mortgagee Part IV—Priority Part V—Marshalling and Contribution Part VI—Deposit in Court Part VII—Suits for foreclosure, sale or Redemption. (Repealed) Part VIII—Foreclosure and sale (Repealed) Part IX—Redemption Part X—Anomalous Mortgage Part XI—Attachment of Mortgaged Property (Repealed) Part XII—Charges Part XIII—Notice and Tender

PART XI: ATTACHMENT OF MORTGAGED PROPERTY 377.[s 99] Attachment of mortgaged property.—

[Rep. by the Code of Civil Procedure, 1908 (5 of 1908), s.156 and Fifth Schedule]

377. For the repealed provisions as re-enacted, see the Code of Civil Procedure, 1908 (5 of

1908), Sch I, O XXXIV, rule 14.

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER

IVOF

MORTGAGES

OF

IMMOVABLE

PROPERTY

AND

CHARGES This Chapter can be categorised into following:— Part I—Mortgage defined Part II—Rights and liabilities of Mortgagor Part III—Rights and liabilities of Mortgagee Part IV—Priority Part V—Marshalling and Contribution Part VI—Deposit in Court Part VII—Suits for foreclosure, sale or Redemption. (Repealed) Part VIII—Foreclosure and sale (Repealed) Part IX—Redemption Part X—Anomalous Mortgage Part XI—Attachment of Mortgaged Property (Repealed) Part XII—Charges Part XIII—Notice and Tender

PART XII: CHARGES [s 100] Charges.— Where immovable property of one person is by act of parties or operation of law made security for the payment of money to another, and the transaction does not amount to a mortgage, the latter person is said to have a charge on the property; and all the provisions hereinbefore contained 378.[which apply to a simple mortgage shall, so far as may be, apply to such charge]. Nothing in this section applies to the charge of a trustee on the trust-property for expenses properly incurred in the execution of his trust, 379.[and, 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].

Comments [s 100.1] Charg es

(1) Where immovable property of one person is made security for the payment of money to some other person by— (i) act of parties, or (ii) operation of law, and

(2) The transaction does not amount to a mortgage. (3) The latter person is said to have a charge on the property. (4) All the provisions of a simple mortgage apply to such a charge. (5) This section is not applicable to the charge of a trustee on the trust-property for expenses properly incurred in the execution of his trust. (6) No charge can 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. Charge on an immovable property is created to secure payment of money. Section 100 says that where immovable property of a person is made security for the payment of money to another and the transaction is not a mortgage, it is said that a charge has been created. In a charge, there is no transfer of any interest in favour of the chargeholder-but he is only entitled to recover his money from the property. In a charge, there is the creation of only a personal obligation, i.e., a right to payment out of the specified property.380. Electricity dues of erstwhile consumer is not a charge on the property. They cannot be recovered from subsequent purchaser.381. The Bombay Stock Exchange Rules under the Securities Contract (Regulation) Act, 1956 provide that in connection with the deposits and securities of a member, it is only the possession which passes to the Stock Exchange. On termination of the membership of a broker, the securities, etc., continue to be assets of the member which can be liquidated on default. But Income Tax Authorities would have no preference over debts of the secured creditors.382.

[s 100.2] Security for Payment of Money It is necessary under section 100 that there must be a clear intention to make a particular property security for the repayment of a debt. Where the property is not intended to serve as a security there can be neither a mortgage nor a charge.383. The Allahabad High Court held in Nathan Lal v Durga Das,384. that "a charge does not involve transfer of the interest in the property subject thereto and arises from the circumstances that certain property, movable or immovable or any interest in such property, is indicated with certainly as the fund out of which a certain claim is to be met or satisfied, the fund so indicated being the security for the claim." An encumbrance on property has the effect of being a charge. Entering into a memorandum of understanding to sell property has been held to be not creative of any encumbrance or charge on property. Receiving advances or amounts in pursuance of a memorandum also does not amount to creating an encumbrance.385. Electricity dues are not a charge on the property.386.

[s 100.3] Who can Create security Property can be made security either by the act of parties or by operation of law.

[s 100.3.1] Act of Parties When a charge is created by an act of parties, no particular form of words is required to create it. All that is necessary is that there must be a clear intention to give property as security for payment of money in praesenti.387. The property must be a specific property. A charge on any property may be created by an instrument inter vivos or by will. It is not necessary to use technical words for creating a charge. A charge must be created in favour of a particular person and such person must be specifically named. A charge may be created orally but where it is created by an instrument in writing, it must be registered. A charge cannot be created on future contingency.388. A charge on future property is valid and operates on such property when it comes into existence. Now some illustrations of charges by act of parties: Where a person inherited an estate form his maternal grandmother and executed an agreement to pay his sister a fixed amount of sum every year out of the rents of the estate, his sister had a charge over the estate.389. Two persons appointed an arbitrator to make a partition of their properties and for securing their rights. The arbitrator allotted some properties to A and some to B. As the value of A's properties was greater than those of B, he directed A to pay B Rs. Rs 1400 to make up the difference within a month. He further directed that if such payment was not made, B should have a charge on A's properties for that sum and also interest at the rate of 10 annas per month.390. An owner of immovable property executed a power of attorney in favour of "P" for management of the suit property in which no restriction was placed on the owner for transfer of property. It was held that the right created in favour of "P" was only to claim expenses already incurred by him in managing, improving and breaking the lands, if his power of attorney was revoked or cancelled, such right of reimbursement does not amount to creation of interest in property.391.

[s 100.3.2] Operation of Law A charge may be created as a result of a legal obligation and not by volition of parties. The following are examples of creation of charge by operation of law:— (a) Section 55(4)(b).—The vendor has not been paid the amount due. Where the ownership of property passes into the hands of the buyer before the payment of the whole of the purchase-money, the seller is entitled to a charge upon the property in the hands of the buyer.392. (b) Section 55(6)(b).—Here the vendee acquires a charge in respect of purchase money paid in advance. The vendee is entitled to a charge on the property, as against the seller and all persons claiming under him to the extent of the seller's interest in the property, for the amount of any purchase money properly made by the buyer in anticipation of the delivery and for interest on such amount. (c) Section 73.—Here mortgagee's lien is on surplus sale-proceeds.

[s 100.4] Transaction does not amount to Mortgage

In a mortgage there is transfer of interest in the property whereas in a charge, there is neither a transfer of property nor of any right in the property. In the words of Das J:393. The broad distinction between a mortgage and a charge is this that whereas a charge only gives a right of payment out of a particular fund or particular property without transferring that fund or property, a mortgage is in essence a transfer of an interest in specific immovable property. A mortgage is a jus in rem, a charge, a jus ad rem and the practical distinction is that a mortgage is good against subsequent transferees and a charge is only good against subsequent transferees with notice.

The main points of distinction between a mortgage and a charge are:— (i) A mortgage is a security for the payment of a debt.

A charge is a security for the payment of money which may or may not be a debt. (ii) A mortgage may be security for the performance of an engagement giving rise

to a pecuniary liability. In the case of charge it is not so. (iii) A mortgage involves transfer of an interest in some specific immovable

property. There is no transfer of interest in a charge in favour of a charge-holder. The charge-holder can satisfy his claim out of a particular property without transferring that property to him. (iv) A mortgage can be created only by the act of parties.

A charge can be created either by the act of the parties or by operation of law. (v) In a mortgage, there may be a covenant to pay.

In a charge, there can be no covenant to pay. (vi) A mortgage gives rise to a right in rem.

A charge does not give rise to a right in rem (against the world). It is available only against those particular persons who are affected by the notice of the charge. (vii) A mortgagee can follow his security into whatsoever hands it may go. A

mortgagee can even follow a bona fide purchaser for value. A charge-holder cannot follow his security. (viii) A mortgage can be enforced by foreclosure suit for money and sale (under

sections 67, 68 and 69). A charge can be enforced only by sale of property through the court. (ix) Every mortgage is a charge.

A charge is a much wider term than mortgage. Every mortgage is a charge but every charge is not a mortgage. (x) A simple mortgage can be enforced within 12 years whereas other types of

mortgages can be enforced within 30 years. A charge can be enforced within 12 years.

Any transaction which is intended to be a mortgage, but is neither written nor registered, it cannot operate as a mortgage or as a charge. Mookerjee J, observed in a case that if an instrument is expressly stated to be a mortgage, and gives the power of realisation of the mortgage-money by sale of the mortgaged-premises, it should be held to be a mortgage. The fact that the necessary formalities of due execution would not convert the mortgage into a charge. If, on the other hand, the instrument is not on the face of it a mortgage, but simply creates a lien, or directs the realization of money from a particular property, without reference to sale, it creates a charge.394.

[s 100.5] Enforcement of Charge A charge can be enforced by a suit even when created by a decree.

[s 100.6] Extinction of Charge A charge may be extinguished in the same manner as a simple mortgage. Therefore, a charge may be extinguished— (a) by act of parties by release of debt or security, (b) by novation, or (c) by merger.

[s 100.7] Distinction between Charge and lien (1) A charge may be created both by the act of parties and operation of law.

A lien arises by operation of law only. (2) A charge can exists on immovable property only.

A lien may be created both on immovable and movable property. (3) A charge is not possessory in nature.

A lien is possessory in nature. (4) A charge-holder may satisfy his claim by selling the property subject to charge.

A lien-holder can satisfy his claim by private sale or by retaining possession of the property.

378. Subs. by Act 20 of 1929, section 50, for "as to a mortgagor shall, so far as may be, apply to

the owner of such property, and the provisions of sections 81 and 82 shall, so far as may be, apply to the person having such charge". 379. Added by Act 20 of 1929, section 50. 380. Gobinda Chandra Pal v Dwarka Nath Pal, (1908) 35 Cal 837 : 12 Cal WN 849; where no

charge is created in favour of person to whom property in question is transferred for consideration and without notice, section 100 does not apply, Siddagangaiah (Dead) through LRs v N K Giriraja Shetty (Dead) through LRs, AIR 2018 SC 3080 . 381. Subhendu Banerjee v The CESC Ltd, AIR 2002 Cal 242 : 2002 (2) Cal LJ 588 : 2003 Cal WN

1. 382. Stock Exchange Bombay v VS Kandalgaonkar, AIR 2015 SC 193 . 383. Nathan Lal v Durga Das, AIR 1931 All 62 (64) : ILR 52 All 985; Bank of India v Abhay D

Narottam, (2005) 11 SCC 520 , a sale of immovable property does not by itself create a charge in favour of the transferee. 384. AIR 1931 All 62 (64) : ILR 52 All 985. 385. Saradamani Kandappan v S Rajalakshmi, AIR 2011 SC 3234 : 2011 AIR SCW 4092 : 2011 (4)

CCC 271 . 386. Haryana State Electricity Board v Hanuman Rice Mills, AIR 2010 SC 3835 : (2010) 8 Scale

299 . 387. JK (Bombay) Pvt Ltd v New Kaiseri-Hind Spg & Wvg Ltd, AIR 1970 SC 1041 : (1969) 2 SCR

866 : 1970 (1) SCJ 487 . 388. Mohini Debi v Purna Sashi, AIR 1932 Cal 451 : 138 IC 24 : 36 Cal WN 153. 389. Chalamanna v Subbamma, (1884) 7 Mad 23 : 7 Ind Jur 465. 390. Kanhaiya Lal v Jangi, (1926) 24 All LJ 649 : AIR 1926 All 527 . 391. Dalumbi Devi v Raghu Raj, AIR 2002 HP 99 . 392. State of Karnataka v Shreyas Papers Pvt Ltd, AIR 2006 SC 865 : 2006 AIR SCW 169 : (2006)

1 SCC 615 , a purchaser of property cannot be saddled with tax liability of the period before sale where he is not aware of any such outstanding liability. Such tax amount cannot be recovered even as a charge on the property. In Puthiya Purayil Ramakrishnan v Pullani Prabhakaran, AIR 2016 Ker 66 , there was buyer's charge on the property. There was an unregistered agreement of sale, and the buyer was ready to deliver property. The charge got created in favour of the buyer by operation of law, and not by reason of the agreement. The question whether the agreement was registered or not thus became irrelevant. 393. Raja Sri Shiva Prasad v Beni Madhab, (1922) 1 Pat 387 (392). 394. Gobinda Chandra v Dwarka Nath, (1908) 35 Cal 837 : AIR 1915 Cal 313 : 19 Cal WN 489.

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER

IVOF

MORTGAGES

OF

IMMOVABLE

PROPERTY

AND

CHARGES This Chapter can be categorised into following:— Part I—Mortgage defined Part II—Rights and liabilities of Mortgagor Part III—Rights and liabilities of Mortgagee Part IV—Priority Part V—Marshalling and Contribution Part VI—Deposit in Court Part VII—Suits for foreclosure, sale or Redemption. (Repealed) Part VIII—Foreclosure and sale (Repealed) Part IX—Redemption Part X—Anomalous Mortgage Part XI—Attachment of Mortgaged Property (Repealed) Part XII—Charges Part XIII—Notice and Tender

PART XII: CHARGES 395.[s 101] Attachment of mortgaged property.—

No merger in case of subsequent encumbrance.—Any mortgagee of, or person having a charge upon, immoveable property, or any transferee from such mortgagee or chargeholder, may purchase or otherwise acquire the rights in the property of the mortgagor or owner, as the case may be, without thereby causing the mortgage or charge to be merged as between himself and any subsequent mortgagee of, or person having a subsequent charge upon, the same property; and no such subsequent mortgagee or charge-holder shall be entitled to foreclose or sell such property without redeeming the prior mortgage or charge, or otherwise than subject thereto.]

Comments [s 101.1] Doctrine of Merger (Section 101) When two estates held in the same legal right become united in the same person, it is said that a merger has taken place. Such union of the two interests in the same person,

results in the merger of the smaller interest in the bigger interest. Merger may extinguish a mortgage or a charge. A merger occurs by the union of a lesser estate and a greater estate and by the union of a lower and higher security. A merger in respect of a mortgage arises in the following ways:— (i) by the mortgagee acquiring the equity of redemption. (ii) by the mortgagor redeeming the mortgage. (iii) by the purchaser of the equity of redemption redeeming the mortgage.

When a property is mortgaged there is division of interest in the property as between the mortgagor and mortgagee. The bundle of interest which remains with the mortgagor is one estate, and the bundle of interest which passes to the mortgagee another estate. When both these two estates combine themselves and vest in one person, there is a merger and the mortgage is extinguished. Section 101 provides that no merger takes place in case of subsequent encumbrance. This section provides that— (a) any mortgagee of an immovable property, or (b) any person having a charge upon immovable property, or (c) any transferee from such mortgagee or charge-holder

may purchase or otherwise acquire the rights in the property of the mortgagor or owner, without thereby causing the mortgage or charge to be merged as between— (a) himself and any subsequent mortgagee of the same property, or (b) himself and person having charge upon the same property;

No such subsequent mortgagee or charge-holder shall be entitled to foreclose or sell such property without redeeming the prior mortgage or charge, or otherwise than subject thereto. (i) Mortgagee Acquiring Equity of Redemption.—This section replaced old section 51 through the Amending Act of 1929. The old section which was based on the case of Toulmin v Steere,396. provided that if a mortgagee or the charge-holder of a property acquired interest of the mortgagor or the owner, his own mortgage or charge was extinguished, unless he expressly reserved the continuance of such mortgage or charge. However, in Gokuldas v Rambux,397. it was held that the doctrine of Toulmin's case was not applicable to Indian transactions. This decision was affirmed by the Privy Council in Malireddi v Gopal Krishnayya.398. Under the old section "extinguishment" was the rule and "Keeping alive" was the exception. While under the new amended section, "Keeping alive" is the rule. For example, A mortgages his property X to B, then to C and third time to D. B, the mortgagee No. 1, purchases the right of redemption of A, B's first mortgage is not extinguished by merger as there are subsequent mortgages also and B is entitled to use his mortgage as a shield against C and D. In case, there were no subsequent mortgages, merger would have taken place. (ii) Mortgagor Redeeming Mortgage.—When a mortgagor pays off the mortgage debt, there is a merger and the mortgage stands extinguished.

(iii) Purchaser of Equity of Redemption.—When purchaser of equity of redemption redeems the mortgage, merger occurs. By virtue of the doctrine of subrogation, the purchaser steps into the shoes of the redeemed mortgages. But if there be any subsequent mortgagee or charge-holder, there will be no merger.

[s 101.2] Novation Novation differs from merger because the securities are of equal strength and one security is accepted for the other. When a second mortgage bond is created to different obligations the security is extinguished.

[s 101.3] Renewal In renewal a new security is taken without extinguishing the old. Where the first mortgagee makes a fresh advance after a second mortgage, on a renewed mortgaged to pay off the first mortgage, he retains priority over the second mortgagee as regards the first mortgage but in respect of the fresh advance he is in the position of a third mortgagee.

395. Subs. by Act 20 of 1929, section 51, for the original section. 396. (1817) 3 Mer 210 : 17 RR 67. 397. 11 IA 26. 398. (1924) 47 Mad 190 : 51 IA 140 : AIR 1924 PC 36 .

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER

IVOF

MORTGAGES

OF

IMMOVABLE

PROPERTY

AND

CHARGES This Chapter can be categorised into following:— Part I—Mortgage defined Part II—Rights and liabilities of Mortgagor Part III—Rights and liabilities of Mortgagee Part IV—Priority Part V—Marshalling and Contribution Part VI—Deposit in Court Part VII—Suits for foreclosure, sale or Redemption. (Repealed) Part VIII—Foreclosure and sale (Repealed) Part IX—Redemption Part X—Anomalous Mortgage Part XI—Attachment of Mortgaged Property (Repealed) Part XII—Charges Part XIII—Notice and Tender

PART XIII: NOTICE AND TENDER [s 102] Service or tender on or to agent.— Where the person on or to whom any notice or tender is to be served or made under this Chapter does not reside in the district in which the mortgaged property or some part thereof is situate, service or tender on or to an agent holding a general power-ofattorney from such person or otherwise duly authorised to accept such service or tender shall be deemed sufficient. 399.[Where no person or agent on whom such notice should be served can be found or

is known] to the person required to serve the notice, the latter person may apply to any court in which a suit might be brought for redemption of the mortgaged property, and such court shall direct in what manner such notice shall be served, and any notice served in compliance with such direction shall be deemed sufficient: 400.[Provided that, in the case of a notice required by section 83, in the case of a

deposit, the application shall be made to the court in which the deposit has been made.] 401.[Where no person or agent to whom such tender should be made can be found or is known] to the person desiring to make the tender, the latter person may deposit 402.[in

any Court in which a suit might be brought for redemption of the mortgaged property] the amount sought to be tendered, and such deposit shall have the effect of a tender of such amount.

399. Subs. by Act 20 of 1929, section 52, for "Where the person or agent on whom such notice

should be served cannot be found in the said district, or is unknown". 400. Ins. by Act 20 of 1929, section 52. 401. Subs. by Act 20 of 1929, section 52, for "Where the person or agent to whom such tender

should be made cannot be found within the said district or is unknown". 402. Subs. by Act 20 of 1929, section 52, for "in such Court as last aforesaid".

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER

IVOF

MORTGAGES

OF

IMMOVABLE

PROPERTY

AND

CHARGES This Chapter can be categorised into following:— Part I—Mortgage defined Part II—Rights and liabilities of Mortgagor Part III—Rights and liabilities of Mortgagee Part IV—Priority Part V—Marshalling and Contribution Part VI—Deposit in Court Part VII—Suits for foreclosure, sale or Redemption. (Repealed) Part VIII—Foreclosure and sale (Repealed) Part IX—Redemption Part X—Anomalous Mortgage Part XI—Attachment of Mortgaged Property (Repealed) Part XII—Charges Part XIII—Notice and Tender

PART XIII: NOTICE AND TENDER [s 103] Notice, etc., to or by person incompetent to contract.— Where, under the provisions of this Chapter, a notice is to be served on or by, or a tender or deposit made or accepted or taken out of court by, any person incompetent to contract, such notice may be served 403.[on or by] or tender or deposit made, accepted or taken, by the legal curator of the property of such person; but where there is no such curator, and it is requisite or desirable in the interest of such person that a notice should be served or a tender or deposit made under the provisions of this Chapter, application may be made to any court in which a suit might be brought for the redemption of the mortgage to appoint a guardian ad litem for the purpose of serving or receiving service of such notice, or making or accepting such tender, or making or taking out of court such deposit, and for the performance of all consequential acts which could or ought to be done by such person if he were competent to contract404. and the provisions of 405.[O XXXII in the First Schedule to the Code of Civil Procedure, 1908 (5 of 1908)] shall, so far as may be, apply to such application and to parties thereto and to the guardian appointed thereunder.

403. Ins. by Act 20 of 1929, section 53.

404. As to persons competent to contract, see sections 11 and 12 of the Indian Contract Act,

1872 (9 of 1872). 405. Subs. by Act 20 of 1929, section 53, for "Chapter XXXI of the Code of Civil Procedure".

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER

IVOF

MORTGAGES

OF

IMMOVABLE

PROPERTY

AND

CHARGES This Chapter can be categorised into following:— Part I—Mortgage defined Part II—Rights and liabilities of Mortgagor Part III—Rights and liabilities of Mortgagee Part IV—Priority Part V—Marshalling and Contribution Part VI—Deposit in Court Part VII—Suits for foreclosure, sale or Redemption. (Repealed) Part VIII—Foreclosure and sale (Repealed) Part IX—Redemption Part X—Anomalous Mortgage Part XI—Attachment of Mortgaged Property (Repealed) Part XII—Charges Part XIII—Notice and Tender

PART XIII: NOTICE AND TENDER [s 104] Power to make rules.— The High Court may, from time to time, make rules consistent with this Act for carrying out, in itself and in the Courts of Civil Judicature subject to its superintendence, the provisions contained in this Chapter.

Comments Sections 102 and 103 deal with matters of procedure. Notice is required to be served under sections 69 and 83 of this Act. Section 69 provides for notice to be served on the mortgagor by mortgagee while exercising the power of sale. Section 83 provides for notice of deposit of mortgage-money in the court to the mortgagee. In all such cases where notice is necessary, the notice is served according to the procedure laid down in section 102. This section provides that if the person on whom the notice is to be served or tender is to be made does not reside in the district in which the property is situated, then, notice may be served to his agent or his duly authorised person on whom the notice is required to be served. Where such an agent or authorised person

could not be found the court may give direction as to how such notice may be served on the concerned person. However, the court will give directions only on the application by the person who is required to serve the notice. In the case of money deposited in the court, the application must be made to the court in which the mortgage-money has been deposited. Section 103 provides that where the person on whom the notice is to be served is not a person competent to contract, the notice may be served on the lawful guardian of such incompetent person. Such a lawful guardian is guardian ad litem who is to be appointed by the court on a formal application made to it. Under section 104, rules have been framed by many High Courts. It has been held that such Rules prevail over the general terms of the Code of Civil Procedure.406.

406. Vraj Lal v Venkataswami, (1928) 52 Bom 459 : AIR 1928 Bom 123 .

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER V OF LEASES OF IMMOVABLE PROPERTY Chapter V dealing with leases of immovable property consists of 14 sections, i.e., from section 105 to section 117.

[s 105] Lease defined.— A lease of immoveable property is a transfer of a right to enjoy such property, made for a certain time, express or implied, or in perpetuity, in consideration of a price paid or promised, or of money, a share of crops, service or any other thing of value, to be rendered periodically or on specified occasions to the transferor by the transferee, who accepts the transfer on such terms. Lessor, lessee, premium and rent defined.—The transferor is called the lessor, the transferee is called the lessee, the price is called the premium, and the money, share, service or other thing to be so rendered is called the rent.

Comments [s 105.1] Lease (1) A lease of immovable 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: (a) price paid or promised, or (b) money, (c) a share of crops, (d) service, or (e) any other thing of value

(2) To be rendered periodically or on specified occasions to the transferor by the transferee, who accepts the transfer on such terms. Lease is a partial transfer of certain rights in the property. It is a transfer of "right of enjoyment" of an immovable property made for a certain period, in consideration of a price paid or promised to be paid, or money, share of crops, service or any other thing of value to be given periodically or on specified occasions to the transferor by the transferee. In a lease transaction, the transferor is called the lessor, the transferee is called the lessee, the price paid or promised to be paid is called the premium and the money, share, service or other thing to be so rendered is called the rent.

[s 105.2] Essential Elements

The essential elements of a transaction of lease are:— (1) The parties to lease—lessor and lessee (2) The subject-matter of lease—immovable property (3) There must be transfer of a right (4) Duration of lease (5) Consideration of lease—premium (6) Acceptance of transfer by the lessee (7) Lease must be made in the mode under section 107.

The Supreme Court stated these essentials as follows: Essential ingredients of a lease are—(a) There should be a transfer of a right to enjoy an immovable property; (b) Such transfer may be for a certain term or in perpetuity; (c) The transfer should be in consideration of a premium or rent; (d) The transfer should be a bilateral transaction, the transferee accepting the terms of transfer.1

[s 105.2.1] Parties to Lease. There must be two parties in a lease, i.e., lessor (transferor) and the lessee (transferee). A lease arises in an agreement between the owner of a property and the person who proposes to take that property for a term on payment of consideration. The person who transfers the right of enjoyment of property is known as lessor and the person who takes the property or to whom the right is transferred is known as lessee. A man could not grant a lease to himself.2 Every tenancy is based upon an agreement between two persons and contains covenants expressed or implied by one person with the other. Now if a man cannot agree with himself … and cannot covenant with himself, how he can grant a tenancy to himself … The tenancy must stand or fall with the agreement on which it is founded and with the covenants contained in it and as they fall so does the tenancy.3 Every person who is competent to contract and entitled to transferable property or authorized to dispose of transferable property not his own is competent to grant a lease. Only an absolute owner of property can grant a lease for any period he likes. A limited owner can grant a lease only to the extent permitted by law. A person holding a property for life cannot grant a lease beyond his life unless he is especially empowered under the terms of the deed of settlement. Mere fact that lease deed was unregistered although the possession of suit property was entrusted by lessor to lessee will not affect the jural relationship of lessor and lessee created by virtue of such lease deed.4 The grant of a lease of Government land by an incompetent authority was held to be without jurisdiction. It was a clear case of abuse of official position by Government officers involved in the episode. The court held that the lease in question was thus liable to be cancelled, irrespective of the fact that the lessee had paid rent for 9 years.5 A lessee may himself grant a lease further and such a lease is commonly known as sub-lease or under-lease. A tenant protected under statutory provisions with regard to occupation of premises having no right to sublet or transfer the premises, cannot confer any better title. In the absence of sufficient title or interest to carve out or to create a similar tenancy by the

sitting tenant in favour of a third person, the person in possession to whom the possession is handed over cannot claim that the sub-tenancy was created in his favour, because a person having no right cannot confer any title of tenancy of sub-tenancy.6 The lessee must also be competent to contract. A lease may be granted to one or more than one person jointly. In the case of joint tenancy, in the absence of a clear provision to the contrary, the entire body of tenants constitute single tenant.7 Where a lease is granted by joint tenants and one of them dies, the lessee holds under the survivors.

[s 105.2.2] Subject-Matter of Lease. The subject-matter of a lease must be specific immovable property. Immovable property has been defined in section 3 of this Act. Therefore, not only land, buildings and minerals but also the benefits to arise out of land such as fisheries, ferries etc. are also immovable property. There may be composite leases also like lease of a building along with equipment and lease of a factory along with machinery etc. A lease of a house or of a shop is a lease not only of the superstructure but also of its site.8 Leased premises is not only a building or part of building but also the land and other things appertaining to it and also furniture and other fixtures provided by the landlord.9 In a case involving contravention of terms of lease, the lease of the land was granted for the construction of house and the only restriction placed on lessee was not to use the land for purpose other than construction of a house. The lessee constructed the house and let it for non-residential use. It was held that the act of letting it out for nonresidential use could not be said to contravene the restriction in the deed on the ground that the term "house" implies only residential user.10 Where the tenancy was in respect of the building alone and that building was destroyed, the tenancy became terminated and the tenant could not put up any structure upon the land where buildings stood without the consent of the landlord. However, the landlord could claim recovery of possession of land only through a Civil Court of competent jurisdiction. He could not trespass upon land on the ground that the lease stood terminated.11

[s 105.2.3] Transfer of Right. In lease there is a transfer of right of enjoyment of property. Right of enjoyment is transferred only when there is transfer of possession. In mortgage and lease only a partial interest is transferred, therefore, it is transfer of a limited estate. This limited estate i.e., right of enjoyment of property is known as "demise". Lease hold estate is transferred after being separated from ownership. This is a right in rem. A lease contemplates "a demise or a transfer of a right to enjoy land for a term or in perpetuity in consideration of a price paid or promised or services or other things of value to be rendered periodically or on specified occasions to the transferor."12 The words "transfer of a right to enjoy the land" indicate that all rights of ownership are not transferred. In the words of Lord Shaw, "The essential characteristic of a lease is that the subject is one which is occupied and enjoyed and the corpus of which, does not in nature of things and by reason of the user, disappear."13

A lease creates a right in rem. It is not merely a contract. The estate transferred to the lessee is called the leasehold whereas the estate remaining in the lessor is called the reversion. In the words of Sir Jenkins: A man who being owner of land grants a lease in perpetuity, carves a subordinate interest out of his own and does not annihilate his own interest. This result is to be inferred by the use of the word "lease", which implies an interest still remaining in the lessor. Before the lease the owner had the right to enjoy the possession of the land, and by the lease he excludes himself during its currency from that right, but the determination of the lease is the removal of that barrier, and there is nothing to prevent the enjoyment from which he had been excluded by the lease.14 The interests of the lessor and lessee in the leasehold property are heritable and vests in their heirs after their death.15 A godown which was under lease was burnt due to fire during subsistence of the lease. The lessee did not exercise the option of getting out of the lease because of the destruction. The land on which the godown stood remained in his possession. He did not handover possession to lessor. The Court said that he had not exercised his right under section 108(e) of the Act. He remained liable to pay lease money till end of period of lease.16 If the purported lessor does not have any right in the property sought to be leased, the lease would be void.17 In a suit for declaration that lease deed is void ab initio, only certified copies of lease deed were produced and suit was filed after nine years without any explanation for the delay in filing the suit, it was held that when facts can be substantiated by way of documentary evidence, the suit cannot be decreed only on the basis of oral evidence ignoring the documentary evidence. The order declaring execution of lease deed void ab initio was set aside.18

[s 105.2.4] Duration of Lease. The essential of a lease is that the right to enjoy the property must be transferred for a certain time, express or implied or in perpetuity. The document of lease must show the time-period of operation of lease and when it is going to commence. The commencement of the lease must be certain in the first instance or capable of being made certain afterwards. It may commence either in the present or in future or on the happening of a certain contingency which is bound to happen. Three types of lease are recognized by this section:— (i) leases for a certain time; (ii) periodic leases; and (iii) leases in perpetuity

It is a principle of general application that it is not within the power of a person to create whatever interests he may please in land; he is limited to such interests as are recognized by the system of jurisprudence governing his disposition.19 A permanent lease providing terms can give rise to tenant-landlord relationship. The only pre-condition for establishing such relationship is that the landlord should have

reserved the right to evict the tenant.20 A lease for life is a lease for a certain time, for it terminates with the death of the lessee. It is necessary for lease for a certain time that the lease deed should be capable of being made certain on a future date. If in the fluxion of time a day will arrive which will make it certain, that is sufficient for such a lease.21 The periodic leases are tenancies from month to month or year to year. A tenancy from year to year differs from a tenancy at will in that it can only be terminated by notice duly given and the interest created is not terminated by death of either party. A lease from year to year is a periodical lease which continues from one period to another period. In periodic leases the duration of the term is continuous from period to period. Salter J observed in a case. In the case of all period tenancies, whether from year to year, or from quarter to quarter, or from month to month, or for any other period, the law, as I find it stated in the authorities, appears to be that the tenancy is from period to period, from one fixed date to another. It is a tenancy from so many years, or quarters, or months or weeks as the parties may think fit. If a new period be allowed to begin, the tenancy must, in the absence of course of any other arrangement between the parties, continue until the period ends, and neither party can, against the will of the other, put an end to the tenancy during the currency of the period.22 A chemist shop in a Government hospital was leased out after inviting bids. The initial period was 22 months and could be extended by 11 months with enhancement of rent. The lease was also terminable by the lesser at any time or on default in payment of rent. The court said that such a lease could not be characterised as one in perpetuity. It was a temporary lease. The fact of holding over cannot give any superior right than the one stated in the lease.23 Where the document of lease between lessor and lessee showed that the lease was liable to be renewed after expiry of one year and other terms were agreed upon orally, it was held that the document was not a lease deed but a rent note, which was not inadmissible in evidence on the ground that it was not registered.24 In England, leases in perpetuity are not recognised. In India, perpetual leases (for example, agricultural leases) are created by an express or a presumed grant. In a case, a question arose whether a lease for 999 years is legal especially in view of the fact that substantial stamp duty can be saved by executing such a lease. The Calcutta High Court held that there was nothing illegal in executing a lease for 999 years and just because stamp duty is saved thereby, the transaction does not become unlawful.25 Where a land is held in lease for the purpose of building residential houses, the lease may be presumed to be a permanent lease. The Supreme Court observed in a case on the point that in such cases a lease is a permanent lease because the rights of lessee or tenant are heritable and such leases are not intended to be only for the life of the lessee.26

[s 105.2.5] Consideration. A lease is a transaction which has always to be supported by consideration. Consideration may be either premium or rent. Where the whole amount payable as consideration is paid in lump sum it is called premium. The consideration which is paid periodically is known as rent. The rent fixed must be certain and where it is varying nature it must be reasonably ascertainable. Rent need not be necessarily in the form of

money. It may be paid in the form of a share of crops, services or any other thing of value. In CIT, Assam, Tripura and Manipur v Panbari Tea Co Ltd,27 the Supreme Court made a distinction between premium and rent and observed: "when the interest of the lessor is parted with for a price, the price paid is premium or Salami. But the periodical payments for continuous enjoyment of the benefits under the lease are in the nature of rent. The former is a capital income and the latter is a revenue receipt." Therefore, the premium is the price paid for obtaining the lease, rent, on the other hand, is applied to all other payments made for the use and occupation of land or buildings. In a lease of sugar factory, interest component deducted from lease rentals by lessee were paid towards voluntary retirement of employee of lessor. The lessee had agreed to pay proportion of voluntary retirement amount with clear understanding that no interest will be payable on this amount. Parties were bound by the lease agreement and no other agreement was executed with different terms. Since State government was not party to the agreement, lessee was not allowed to invoke principle of legitimate expectation or estoppel. It was held that the government cannot give assurance to lessee to pay interest contrary to terms agreed between parties.28 In a case regarding validity of lease the question was whether the lease executed by an old, illiterate and sick lady was for one year or 99 years. The court found that there was no consideration paid for execution of lease for 99 years, the evidence led by the defendant lessee (son of plaintiff's real brother) was not free from any blemish or infirmity and he was in a position to dominate the will of the plaintiff. It was held, therefore, that the transaction was hit by section 16 of the Contract Act, 1872 because undue influence had been exercised on the plaintiff.29 In another case of uncertainty about nature of the transaction, the premises in question belonged to a trust. No instrument was executed and no price or consideration was paid. The occupant used to give some amounts in lieu of water and electricity expenses. No period of occupation was fixed. The court said that the occupant was a licencee for which they were making some donation to the trust. They were given receipts for occupation and donation, and not for rent. Such donation could not be regarded as a consideration for lease. The transaction was not that of lease.30

[s 105.3] Agreement to Lease As the term "agreement" indicates there is no transfer of possession or right of enjoyment with immediate effect. Agreement to lease is a contract under which a person promises to grant lease on a future date. Lease transfers "actual demise" in favour of lessee. While in an agreement to lease the parties get bound by the agreement for the grant of lease to become effective in future. It is executory contract just like a contract to sell, an agreement to let creates only personal obligation which may be enforced by a suit for specific performance provided that the agreement to lease is in writing and accompanied by delivery of possession.

[s 105.4] Difference between Lease and Agreement to Lease (1) A lease creates a right in rem whereas an agreement to lease does not create a right in rem. (2) A lease operates as a transfer but an agreement to lease does not transfer right of enjoyment with immediate effect.

(3) A lease establishes the relationship of landlord and tenant between the parties whereas an agreement to lease does not create any such relationship.

[s 105.5] Distinction between Lease and Licence Lease is the transfer of the right of enjoyment of an immovable property whereas the licence is the right of a person to use the land of another while it remains in the possession of another. A licence is governed by the Indian Easements Act, 1882 and it is a permission to do some act which, without such permission, would be unlawful. In the words of the Supreme Court: As per section 105 of the Transfer of Property Act, 1882 a lease of immovable property is a transfer of right to enjoy such property for a certain period in consideration for price. In short, a lease is a transfer of interest in land. A licence as defined in section 52 of the Easement Act, 1882 to mean a right granted to another person over immovable property to do or continue to do some act which in the absence of such right would be unlawful. When such a right does not amount to an easement or creates any interest in property, the right is called a licence.31

Although the lease and licence have many points in common but there are some differences too between them which are given below:— (1) In a lease, there is transfer of an interest in the immovable property whereas in

licence, there is no transfer but the licencee acquires a right to occupy the property. (2) If during the lease-period, any accretion is made to the property leased, such

accretion is deemed to be comprised in the lease. Whereas a licensee acquires no right in the property. (3) A lease is transferable and heritable whereas licence is neither transferable nor

heritable because it is a personal privilege. (4) In lease, the lessee gets a proprietary right in respect of the land, this right is

called demise. Licencee gets only a personal right of using the land of another person. The right of the licensee is in the nature of a permission to do or continue to do certain things on the licencor's land. (5) Lease cannot be revoked before the expiry of the term or without breach of any

express condition by the lessee. Whereas, subject to certain exceptions, a licence is generally revocable. A licence can be revoked at pleasure unless it is coupled with a transfer of property and such transfer is in force or the licensee, acting upon the licence, has executed a work of a permanent character and incurred expenses in the execution. A lessee is entitled to a notice to quit before eviction; however, a licensee is not entitled to such a notice. (6) A lessee is entitled to maintain a suit in his own name against trespassers and

strangers. The licensee is not entitled to maintain such a suit. (7) The lessee's interest is not liable to be defeated by a subsequent transfer of the

leased property. A licence is determined when the grantor makes an assignment of the subject-matter of the licence. (8) Death of either party does not affect a lease whereas in such circumstances a

licence is terminated. No estate or interest in property is created by means of a licence. A lease, on the other hand, amounts to transfer of property. The Government Grants Act, 1895, being a special statute, would prevail upon other statutes, like the TP Act. The Rights and

obligations of the parties would be governed under the provisions of the Government Grants Act under which the Government is entitled to impose limitations and restrictions upon grants and other transfers made by it under its authority. A licence was granted by the Government for erection and construction of petroleum installation buildings on Government land. Buildings were executed and the licencee was in exclusive possession of the same. The court said that the exclusive possession of the licencee raised a strong presumption in favour of tenancy. The document in question, though described as a licence, constituted lease in favour of the licencee. The stipulation in the deed that the grant should not be construed as a lease was held to be inconsequential. The grantee was held liable to pay the Municipal Tax for the land though its ownership might belong to the administration.32 Sometimes the distinction between a lease and licence is not visible. In associated hotel of India v RN Kapoor,33 the Supreme Court held that the real test for determining whether the instrument has created lease or licence is to know the "intention" of the parties. If the instrument creates an interest in the property, it is a lease whereas if it permits the grantee to make use of the property while the possession continues with the owner of the property, it is a licence. Where the circumstances or the conduct of the parties show that all that was intended was that occupier should have a personal privilege with no interest in the land, the transaction would be licence and not a lease.34 The terminology used in a document is not determinative of the issue of lease or licence. If mere right to use premises is parted with, it is a licence. Where the appellant shopkeeper was in continued possession of the premises (shop) before the creation of licence and even after the expiry of licence period, the respondent owner allowed him to continue possession for years till the date of the suit; it was held that the possession of the appellant over the premises was that of a tenant.35 Where the owner of the premises and the person in need of the premises execute a deed labelling it as a licence deed to avoid the operation of rent legislation, the mask is to be removed or the veil is to be lifted and the true intention behind a facade of a selfserving conveniently drafted instruments is to be gathered from all the relevant circumstances. But this enquiry can be made only when it is pleaded that the deed executed between the parties is a camouflage to evade the provisions of the Rent Act or that it is a sham document executed for achieving some other purposes. In the absence of such pleading the intention of the parties is to be gathered from the express words used in the document.36 When the owner of leased property accepted rent till determination of tenancy but refused to receive it after determination of lease, it was a valid refusal.37 Where the intention of the parties was to create licence for a period of 3 years, continued possession of the licensee on the basis of the agreement even after the period of agreement could not suggest that the arrangement was one of lease. Merely because the licensor did not take any step for eviction immediately after 3 years, it will not convert the licence into a lease if it was otherwise a licence.38 An authorisation was given by the original owner to the plaintiff lessor to collect rent. It was held that the use of the word "rent" did not make the transaction to be that of a tenancy.39 A licence merely gives a right to do something upon the immovable property which would, in the absence of any such right, be unlawful but it does not create any right in favour of the grantee in the property. Where in an ejectment suit, the status was to be determined as to whether the person in possession was licensee or lessee, no agreement between the parties was produced to show the nature of possession of the defendant or payment of rent by him to the plaintiff and no document was placed on record reflecting intention of the plaintiff that

lease was sought to be created in favour of defendant, the defendant was held only a licencee and liable to be ejected.40 Where a Municipal Council constructed shops and gave possession to allottees on fixed monthly rent, complete control was given to them, and allottees were to hand over possession on expiry of a month's notice, it was held that the Municipal Council was not entitled to increase rent because it was a lease and not a licence.41 In a case before the Delhi High Court, the question was whether an agreement amounted to lease or licence. The instrument provided that the licensee would be entitled to use the premises but would have no right, title or interest to possess the premises. This was held to be a licence.42 In the cases of a licence, there is something less than a right to enjoy the property in the licensee, it cannot be exercised by servants and agents, is terminable and a transferee of the property is not as such bound by the licence. On the other hand, in the case of a lease, there is a transfer of a right to enjoy the property or in other words, the lessee is entitled to enjoy the property. Exclusive possession by itself will not amount to creation of interest. Exclusive possession by itself would not militate against the concept of a licence, if the circumstances negative any intention to create a tenancy.43 Where the plaintiff permitted the defendant to use the premises for conducting business, in consideration of which the defendant agreed to pay commission to the plaintiff on earnings from business and it was not specifically mentioned in the agreement that any monthly amount will be payable by the defendant to the plaintiff, it was held that the agreement was one of licence and not of lease.44 Whether a transaction is a lease or licence, the dominant test is the intention of the parties. Possession of the land was given to the defendant on the basis of an oral agreement. Subsequently, it was reduced to writing. The defendant submitted that the writing contained only the original oral agreement. The writing was styled as leave and licence. The agreement when read as a whole showed that the intention of the parties was only to create a licence. It was held that on a breach of those terms, the plaintiff became entitled to recover his possession.45

[s 105.6] Installation of Tower for Wires The petitioner installed towers for telephone companies. The premises (roofs of private house) were taken on rent. The installation permitted was substantial in nature. The space so allowed was not to be used by the owner and was to remain in exclusive possession of the petitioner during the period of 116 months. The rent was to be paid periodically. The agreement was held to be one of the leases and not licence.46

[s 105.7] Distinction between Lease and Sale In a sale, there is an absolute transfer of all the rights in the property sold to the transferee (purchaser). In lease, there is only partial transfer of interests in the property leased. Some rights are transferred to the lessee and some are left with the lessor (owner of property). Rights left with the lessor are known as reversion rights. Where the ownership in land was not transferred, rate of yearly ground rent and other terms were mentioned, burden of discharging all kinds of tax was put upon the other

party, no excavation was allowed, it was held that the document in question was a lease deed and not a sale deed.47

[s 105.8] Licence or Tenancy In case where the courts are required to consider the nature of transactions and the status of its parties, one cannot go by the mere nomenclatures given by the parties such as licence, licensee, licence fee etc. In order to ascertain the substance of the transaction, courts have to ascertain the purpose and the substance of the agreement. In such cases, intention of the parties is a deciding factor which can be ascertained only by the surrounding circumstances and conduct of the parties. Where the possession of premises was given to respondents for monetary consideration with a clause for renewal after 11 years, municipal taxes were also paid by them and rent receipts are issued by executant of agreement, the circumstances suggested that the agreement was a tenancy in disguise of licence.48 In a case involving licence granted by the government, it was held that from unauthorised structures continuing in existence for considerable length of time, it could not be inferred that the licence had been granted.49 Mere possession by party was not sufficient to create sub-tenancy. When sub-tenancy without written consent of landlord was not permissible under a Rent Control Act, it was held that the agreement between the parties would be in the nature of a licence and not lease.50 An agreement was executed only when the defendant had already come into possession of the residential flat. Because of the agreement there was no longer any threat of being thrown out. The defendant was highly educated. He must have executed the agreement with full knowledge of contents. He approached the Rent Controller for deposit of rent which was not accepted because there was no rent agreement. The fact that he was allowed to use electricity was held to be not sufficient for undoing the licence agreement.51 (a) Allotment for amusement park.—A piece of land was allotted by a Development Authority for establishing an amusement park. The document of allotment used the words "licence" and "licence fee". The clauses of the document provided that the Authority was to decide what games or rides could be provided in the park, in what manner they were to be purchased, the mode of collecting the entrance fee, right of inspection of documents was reserved and over and above all this, there was the superior right of cancellation of allotment for breach of clauses. The arrangement showed that the Authority had retained complete control of the land. The Supreme Court held that the arrangement was nothing more than a licence. It was not a lease. A lease creates a right in favour of the lessee on the demised premises. A licence, on the other hand, makes the action of licencee lawful which without licence would have been unlawful. The fact that the allotment document provided for renewal of allotment for a further period of 15 years did not make the allotment anything more than a licence.52

[s 105.8.1] Provision of Accommodation to Employee An accommodation was provided to an employee to facilitate his functioning, the intention being to provide facility during the period of service. The court said that in the matter of occupation of the premises, the relationship between the employer and employee was that of licencor and licencee and not of lessor and lessee. The mere deduction of a sum of money from the remuneration of the employee in lieu of accommodation was not sufficient in itself to establish a lease transaction.53

[s 105.8.2] Provision of Accommodation to Private Tutor In a suit for recovery of possession, the plaintiff's allegation was that the defendant was the resident private tutor of his son and he converted the residence allowed to him to a coaching centre and that he was a mere licencee and not a tenant. He also contended that he was not paying any rent and was drawing his electricity from the neighbour. He, however, could not disclose the name of such neighbour. The resident contended that he had been paying rent regularly since commencement of his residence. No steps were taken by the plaintiff to evict during the fifteen year period of his stay in the premises. The court, therefore, said that the defendant was a tenant and not a licencee.54

[s 105.9] Lease or Mortgage A case involved the question whether the transaction involved was a mortgage or lease. The document showed that there was, already a building in the property which was given as possessory mortgage and it also stated that if the amount is not given it will be treated as charge on the property of the mortgagor and the mortgagee was also made liable for committing any waste in the property. It was held that it was a mortgage and not a lease because mere payment of amount does not make the document a lease if it is otherwise a mortgage.55 There is no automatic merger of two rights where mortgage is executed in favour of a tenant and on redemption of mortgage, the tenancy rights kept in abeyance would revive and entitle the tenant to continue in possession even after the redemption of mortgage. On execution of mortgage, tenancy rights would terminate only if it is clear expressly or impliedly by conduct or from other related circumstances that the parties had intended so which would be a question of fact. Thus, as a normal rule, except where there is contrary intention, mortgage and lease operate independent of each other and on mortgage coming to an end by redemption, tenancy would revive.56

[s 105.10] Doctrine of Escheat Where ownership of suit land originally belonged to a and B who left village in 1953-54 and since then both plaintiff and defendant came forward with plea of ownership, the plaintiff advanced plea of oral sale claiming that he had purchased the suit land from owners but there was no evidence to prove that there was any consideration paid or possession delivered and the defendant also tried to assert his right over the suit land, it was held that neither of them had any right over the same and on the basis of the doctrine of escheat it can be safely concluded that the suit land will vest in the state.57

[s 105.11] Distinction between Composite Tenancy and Integrated Tenancy for Dual Purposes In case of composite tenancy, the premises are let out for defined purposes more than one, leaving the option open to the tenant to use the entire tenancy premises as one unit for either or both purposes. The tenancy premises are not demarcated separately into two so as to specify which part of the tenancy premises will be used for what purpose. In other words, in case of tenancy for composite purposes the two diverse purposes for user of the premises are so blended or mixed up that they cannot be separated by dissecting the tenancy premises into compartments.

In case of integrated tenancy for dual purposes, the contract of tenancy is no doubt an integrated one but the premises are demarcated or divided by reference to the purpose for which they will be separately used.58

[s 105.12] Lease and Mortgage The AP High Court tried to see the commonness and distinction between these two transactions:59 Lease and mortgage are species of the same genus, viz., transfer of property. Both of them bring about transfer of property but with a substantial difference as to the nature of the disposition. The principal objective of a mortgage is to provide security for repayment and that of a lease is to handover user of property on rent. Under a mortgage, generally, possession of property remains with the mortgagor, whereas, the very purpose of a lease is to handover possession. Remedial reliefs are accordingly different according as the transactions and their implications and incidents are different.

[s 105.13] Sale or Mortgage by Lessee In view of the spiritual services rendered to him, the original owner of land made a gift or grant by way of dohli. The court observed that under no circumstances was dohlidar authorized to sell or mortgage the dohli land to third parties. Intention of the owner was against alienation by dohlidar by sale or mortgage. It was held therefore that for lease entered into by dohlidar for 95 years by accepting the entire lease money amounted to in-permissible permanent alienation. It being a breach of covenants of dohli by the successors in interest of the dohlidar, it was voidable at the hands of dohli owners.60

[s 105.14] Registration A lease involves transfer of an interest in some specific immovable property. It requires registration. In the present case the document between the parties defined and described the terms of the parties. The court found it to be not a lease deed. It was held that registration of such an agreement of tenancy was not necessary.61

[s 105.15] Unauthorised Transfer by Lessee The lease deed prohibited sub-letting is assignment without written consent of lessor. The lessee Bank entered into an amalgamation agreement with another bank. Possession of the premises was handed over under the agreement to the other bank without obtaining written permission of the lessor. The lessor's suit for recovery of possession and rent was allowed, clauses of lease drafted after recitals in the deed were regarded as not only terms of the deed but also its conditions. The requirement of consent of lessor for sub-letting was a condition which was violated and therefore the lessor became entitled to terminate the lease.62

[s 105.16] Continuation

Certain land was granted by the Port Trust of India to the Indian Oil Corporation on lease for 10 years. IOC did not seek renewal of lease because the retail outlet was not economically viable. The dealer who was working it had no privity of contract with the Port Trust because the agreement was between the Part Trust and IOC. The dealer could not claim that he should be allowed to continue to use the land for his dealership.63

1 B Arvind Kumar v Govt of India, (2007) 5 SCC 745 : JT 2007 (8) SC 602 : 2007 (8) Scale 520 ;

lease of immovable property is a transfer of right to enjoy property for price paid, Builders Association of Navi Mumbai v UOI, AIR 2018 Bom 138 ; However, such a lease if void due to duration of 15 years cannot be received as evidence for collateral purpose under section 49 of the Registration Act, 1908, West Bengal State Electricity Board v Sevoke Properties Pvt Ltd, AIR 2019 Cal 110 . 2 Rye v Rye, 1962 AC 496 . 3 Lord Denning in Rye v Rye, 1962 AC 496 ; Nathu Lal v UOI, AIR 2007 (NOC) 1863 (Utr) : (2007)

4 All LJ (Utr). Railways allotted land and permitted the allottee to construct a stall there, he fulfilled all the conditions as required by the Railways, rent was also fixed, the court said that all this constituted an implied agreement between the parties even if there was no lease deed in writing. 4 West Bengal State Electricity Board v Sevoke Properties Pvt Ltd, AIR 2019 Cal 110 . 5 Bachanlal Ghalwan v State of Uttara Khand, AIR 2015 NOC 700 (Utr); Any State government or

a third party to lease cannot confer any additional benefits or withdraw the same without the consent of parties, any notice issued by the State government in such a case will only be a formality, parties to lease are not required to comply with it, GM Sugars and Energy Pvt Ltd, Bengaluru v State of Karnataka, AIR 2018 (NOC) 446 Kar; where show-cause notice served by the State government for cancellation of lease did not mention the grounds for cancellation, no opportunity of hearing was given to lessee, materials relied for cancellation of lease were also not supplied, order passed for cancellation of lease was quashed due to breach of principles of natural justice, Guruvinder Singh Chadda v State of Chhattisgarh, AIR 2018 Chh 125 . 6 Roop Kumar v Mohan Thedani, (2003) 6 SCC 395 : 2003 AIR SCW 2425 : 2003 (1) Ren CR 615

(SC). 7 Motilal v Kartar Singh, AIR 1930 Lah 515 : ILR 11 Lah 427 (FB); premises lent to tenant and his

son, upon death of tenant the property was inherited by his son as joint tenant, therefore, notice of eviction served to one legal heir of deceased-tenant in joint tenancy was held to be sufficient against all other tenants, Suresh Kumar Kohli v Rakesh Jain, AIR 2018 SC 2708 . 8 T Lakshmipathi v P Nithyananda Reddy, 2003 (3) RCR (Civil) 305 (SC) : 2003 AIR SCW 2436 :

AIR 2003 SC 2427 . 9 Annick Chaymotti Devyani v Prem Mohini Mehra, 2003 (1) Ren CR 709 (Del). 10 UOI v Shivdayal Soin and Sons, AIR 2003 SC 1877 : 2003 AIR SCW 1346 : (2003) 4 SCC 695 . 11 Puthu Kkatil Parangodan v Puthu Kkatil Parameswaran, AIR 2002 Ker 221 : ILR 2002 (2) Ker

280 : 2002 (3) CCC 485 ; In RK Rametra v Prakash Chand Kaushik, AIR 2016 Del 127 , there was a tenancy of a vacant land. The mere fact that some wooden planks were lying on the vacant land

did not mean that there was some structure. Hence, jurisdiction of civil courts was not ousted by the Rent Control Act. 12 Shah J, in Byramjee Jeejeebhoy Pvt Ltd v State of Maharashtra, (1964) 2 SCR 737 : AIR 1965

SC 590 : 1965 (1) SCJ 65 . 13 Girdhari Singh v Megh Lal Pandey, (1918) 45 Cal 87 : AIR 1917 PC 163 : 44 Ind App 246. 14 Kalty Dass Ahiri v Monmohim Dassee, (1897) 24 Cal 440 : 1 Cal WN 321. 15 Maharaja Tej Chand v Sri Kanth, (1846) 3 Moo Ind App 281 . 16 Shankar Prasad v State of Madhya Pradesh, AIR 2003 (NOC) 172 (MP). 17 Collector, Dist Gwalior v Cine Exhibitors Pvt Ltd, (2012) 4 SCC 441 : AIR 2012 SC 1239 : 2012

AIR SCW 1281. 18 Amarlal Ramlal v Nagar Palika, Sawai Madhopur, AIR 2017 (NOC) 667 Raj. 19 Jenkins CJ, in Municipal Corp of Bombay v Secretary of State, (1905) 29 Bom 580 (602) : 7

Bom LR 27. 20 Chittoor Chegaiah v Pedda Jeeyanagar Mutt, AIR 2010 SC 1278 : 2010 AIR SCW 1746 : (2010)

3 SCC 776 . 21 Lord Kenyon in Goodright D Hall v Richardson, (1789) 3 Term Rep 462. 22 Queen's Club Gardens Estates Ltd v Bignal, (1924) 1 KB 117 (134) : 93 LJ KB 107; shops on

lease allotted to ex-servicemen and dependants of deceased, limiting maximum period of lease to five years held to be not arbitrary, lessees do not have vested right to continue in possession, no entitlement of renewal of lease, Chandro Devi v UOI, AIR 2017 SC 4445 ; term of renewal of lease in lease agreement does not ipso facto extend tenure of lease, such a clause only entitles lessee to obtain fresh lease, without renewal continued possession becomes unlawful and lessees are liable to be evicted, Syed Sugara Zaidi v Laeeq Ahmad, (2018) 2 SCC 21 . 23 Kumar Bros (Chemists) Pvt Ltd v Union Territory of Chandigarh, AIR 2006 P&H 100 : 2006

AIHC 242 (NOC) : 2006 (4) AIR Bom 666 (NOC), following Delhi Golf Club Ltd v NDMC, (2001) 2 SCC 633 : AIR 2001 SC 615 : 2001 AIR SCW 241, as to the effect of holding over; 24 Gajanan Saw Mill v Copal pd Agarwal, AIR 2001 (NOC) 72 (MP) : 2001 AI HC 2001. 25 Molla Sirajul Haque v Gorachand Mullick, AIR 1993 Cal 58 : 1993 (1) Cal LT 16 : 1993 (1) Civ

LJ 811 . 26 Chapsibhai Dhanjibhai Dand v Purushottam, AIR 1971 SC 1878 : 1972 MPLJ 102 : 1971 (2)

SCA 61 . 27 (1965) 3 SCR 811 : AIR 1965 SC 1871 : 1965 (2) SCJ 350 . 28 GM Sugars and Energy Pvt Ltd, Bengaluru v State of Karnataka, AIR 2018 (NOC) 446 Kar. 29 Hamelo v Jang Sher Singh, AIR 2002 P&H 147 : ILR 2002 (1) P&H 357 : 2002 (2) Punj LR 101 ;

PC Sharma v UOI, AIR 2006 Utr 4 , circular laying down principles and Guidelines for fixation of rent, rates fixed by expert body following Guidelines, hence no arbitrariness in fixation of rent. 30 Sardar Lakhbir Singh v Swargashram Trust, AIR 2013 Utr 25 . 31 Chandy Varghese v K Abdul Khader, JT 2003 (7) SC 293 : (2003) 6 Scale 173 : 2003 (5)

Supreme 364 . 32 Pradeep Oil Copr v Municipal Corp of Delhi, AIR 2011 SC 1869 : 2011 AIR SCW 2534 : (2011) 5

SCC 270 . 33 AIR 1959 SC 1262 : ILR 1959 Punj 1897 : (1960) 1 SCR 368 . 34 Pradeep Oil Corp v Municipal Corp of Delhi, AIR 2011 SC 1869 : 2011 AIR SCW 2534 : (2011) 5

SCC 270 . 35 Chandy Varghese v K Abdul Khader, (2003) 6 Scale 173 : (2003) 11 SCC 328 ; State of

Himachal Pradesh v Kuldip Singh Patyal, (2001) 3 SLT 255 , the document relied on for claiming

the document to be one nature was not produced before the trial Court. It was held to be fatal to the case. The matter was remanded for re-trial. 36 CM Beena v PN Ramachandra Rao, 2004 AIR SCW 1858 : (2004) 3 Scale 497 : AIR 2004 SC

2103 . 37 Francis v Sarada (D), AIR 2004 Ker 187 : 2004 (4) ICC 313 : 2004 (1) Ker LT 952 . 38 Oasis Bar and Restaurant v PUmabala, AIR 2002 AP 465 : 2002 (4) Andh LD 508. 39 Shakuntala v UOI, 2003 (3) RCR (Civil) 754 (Raj). 40 Darshan Kumar Sharma v Vimal Bansal, AIR 2004 P&H 129 : 2004 (1) ICC 283 : 2003 (3) Punj

LR 887 . 41 State of Rajasthan v Municipal Council, Hanumangarh, 2003 (2) RCR (Civil) 25 : 2003 (1) Ren

CR 307 (Raj) (FB) : AIR 2002 Raj 362 ; Raka Singal v Pushpa Builders Ltd, AIR 2007 Del 222 : 2007 (5) All LJ (NOC) 882 : 2007 (6) AIR Bom 985 (NOC), title of the document can hardly be regarded as conclusive, it is the substance which has to be examined by the court and not its form, nomenclature of the document cannot be given much importance, real intention of the parties has to be discovered from contents of the document. 42 Johnsen Kanadan v Patel Saw Mill, AIR 2008 (NOC) 842 (Ker) (DB), lease was granted for the

purpose of running a saw mill but, subject to this right of the lease, the land was always to be deemed in possession of the lessor. The court said that such a clause only indicated that the transaction was a licence and not a lease at all. Another part of the lease permitted the lessor to enter the compound to take usufruct from trees and that the lessee would have no right to the trees or their income. Thus exclusive possession was not given to the lessee any tenement put up by the lessee were to be removable. 43 Peter Alex D'Souza v Prithi Paul Singh, AIR 2002 Bom 471 : 2003 (1) Bom LR 286 : 2002 (4)

Bom CR 552 . 44 Roop Kumar v Mohan Thadani, (2003) 6 SCC 395 : 2003 AIR SCW 2425 : AIR 2003 SC 2418 . 45 Indrakant Shankar Mambro v Rosario Boventura Fernandes, AIR 2006 (NOC) 1215 (Bom). 46 Tata Teleservices Ltd v State of Uttar Pradesh, AIR 2009 (NOC) 857 (All). 47 Ashok Kumar Jain v Board of Revenue, Gwalior, AIR 2014 MP 94 : 2013 (4) MPHT 523 : 2013

(4) MPLJ 246 . 48 Achintya Kumar Saha v Nanee Printers, 2004 AIR SCW 763 : AIR 2004 SC 1591 : (2004) 12

SCC 368 . 49 State of Sikkim v Pachey Khampa, AIR 2002 Sikkim 5 ; Seasons Catering Services Pvt Ltd v

Delhi Development Authority, AIR 2007 (NOC) 2247 (Del), allotment of land on licence with right of construction, even if it could be considered as a lease it was to become terminated with efflux of time, without notice. Rajeshwari Kaushik v Dhanesh Sharma, AIR 2007 (NOC) 2150 (Del), long peaceful possession of more than 50 years, even if it commenced as a licence, it transformed into a lease, there was no need showing either lease or licence, defence of the owner as to status of the possessor was also not clear. Gajriben v Kantilal Uttamram Chevli, AIR 2007 Guj 18 : 2007 AIHC 194 NOC : 2007 (1) Ren CR 374, the document contained no term for payment of rent or licence fee or compensation for use and occupation, possessor accorded to his title as a licensee, his legal heirs not allowed to claim any higher title than that, licensor was entitled to his possession on termination of the licence; agreement containing clause for revision of licence fee from time to time is effective notwithstanding notice to licensee, Sandesh Subudhi v UOI, AIR 2017 (NOC) 625 Ori. 50 Roop Kumar v Mohan Thedani, AIR 2001 (NOC) 38 (Del); Chitra Dey v Shillong Municipal

Board, AIR 2015 NOC 226 (Meg), an agreement between Municipal Board and tenant stated that exclusive possession of the states was not to be handed over to tenants and right under the agreement was not heritable. It was thus held to be a licence and not a lease.

51 Tarak Nath Manna v Nityananda Saha, AIR 2013 Cal 181 : 2013 (2) Cal LT 111 : 2013 (3) ICC

770; Joao Necessidade Rooque Antonio v Dr Vaman Govind Lotlikar, AIR 2013 Bom 45 : 2013 (3) All MR 93 : 2013 (3) Mah LJ 839 , intention of the parties and whether the document creates any interest in property are important considerations, intention is to be gathered from the document itself, exclusive possession not granted, hence intention for licence only. 52 Mangal Amusement Park Pvt Ltd v State of Madhya Pradesh, AIR 2012 SC 3325 : 2012 AIR

SCW 4831 : (2012) 8 Scale 19 . 53 Madan Mohan Kukreti v Geeta Bhawan, AIR 2007 Utr 32 . 54 Sunil Chowdhury v Arup Kumar Ghosh, AIR 2006 Cal 109 (DB) : 2006 (1) Cal LJ 582 : 2006 (2)

ICC 255. 55 Prabhakaran v AI Ranjini, AIR 2002 Ker 312 : ILR 2002 (3) Ker 193 : 2002 (1) Ker LJ 704 ; V

Janarithanan v Alemule Ammal, AIR 2007 (NOC) 523 (Mad), recitals in the deed showed that a party received a sum of Rs 5000 as debt from the other and agreed to instal motor pumpset to facilitate drawing of water from a well for irrigation, land was given as a security for repayment of the amount, the court said such arrangement has to be treated as mortgage not as lease. 56 Nirmal Chandra v Vimal Chand, AIR 2001 SC 2284 : 2001 AIR SCW 2018 : (2001) 5 SCC 51 . 57 Bauribandhu Mohanty v Raghunath Panigrahi, AIR 2003 Ori 215 : 2003 (4) Civ LJ 753 : 2003

(2) Ori LR 199 . 58 Nilesh Nandkumar Shah v Sikandar Aziz Patel, AIR 2002 SC 3073 : 2002 AIR SCW 3535 :

(2002) 6 SCC 678 . 59 Gita Cotton Trading Co v The Chief Controlling Revenue Authority and Commissioner and

Inspector General of Registration and Stamps, AIR 2013 AP 129 : 2012 (119) AIC 797 : 2012 (5) Andh LD 416. 60 Ram Singh v Nawal Singh, AIR 2015 P&H 175 . 61 Manish Anand v Ramniwas Gupta, AIR 2012 MP 90 ; creation of tenancy by inadequately

stamped and unregistered paper is not admissible in evidence, Marco Polo Restaurant Pvt Ltd v Amit Tiwari, 2018 AIR Cal 228. 62 ICICI Bank Ltd v Shakuntala Gupta, AIR 2016 NOC 162 (Del). 63 Agarwal Automobiles v Indian Oil Corp Ltd, AIR 2015 Guj 61 .

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER V OF LEASES OF IMMOVABLE PROPERTY Chapter V dealing with leases of immovable property consists of 14 sections, i.e., from section 105 to section 117. 64[s

106] Duration of certain leases in absence of written contract or local usage.— (1) In the absence of a contract or local law or usage to the contrary, a lease of

immovable property for agricultural or manufacturing purposes shall be deemed to be a lease from year to year, terminable, on the part of either lessor or lessee, by six months' notice; and a lease of immovable property for any other purpose shall be deemed to be a lease from month to month, terminable, on the part of either lessor or lessee, by fifteen days' notice. (2) Notwithstanding anything contained in any other law for the time being in force,

the period mentioned in sub-section (1) shall commence from the date of receipt of notice. (3) A notice under sub-section (1) shall not be deemed to be invalid merely because

the period mentioned therein falls short of the period specified under that subsection, where a suit or proceeding is filed after the expiry of the period mentioned in that sub-section. (4) Every notice under sub-section (1) must be in writing, signed by or on behalf of

the person giving it, and either be sent by post to the party who is intended to be bound by it or be tendered or delivered personally to such party, or to one of his family or servants at his residence, or (if such tender or delivery is not practicable) affixed to a conspicuous part of the property.]

Comments [s 106.1] Duration of Leases (Section 106) (1) A lease of immovable property for agricultural purposes or manufacturing purposes shall be deemed to be— (a) a lease from year to year, (b) terminable on the part of either lessor or lessee, (c) by six months' notice expiring with the end of a year of the tenancy.

(2) A lease of immovable property for any other purpose shall be deemed to be— (a) a lease from month to month,

(b) terminable on the part of either lessor or lessee, (c) by fifteen days, notice expiring with the end of a month of the tenancy.

However, such leases are subject to a contrary contract or local law or usage. Under section 106, lease of immovable property for agricultural or manufacturing purposes where there is no contract to the contrary, shall be deemed to be a lease from year to year and lease of immovable property for any other purpose shall be deemed to be a lease month to month. Where the lease has come to an end by efflux of time, no notice is required under section 106.65 Where raw products were taken and eatables were sold, it would amount to manufacturing process within the meaning of section 106.66 Where the lease deed contained the covenant about renewal but terms and conditions of renewal were not mentioned anywhere in the deed, it was held that the right of renewal was vague and the lessee had no enforceable right of renewal.67 Where period of lease was only for six months, it could not be deemed to be a tenancy from year to year under section 106.68 A lease deed was for a specified period. There was a stipulation which empowered the lessor to determine the lease and take back possession in the event of non-payment of rent for a continuous period of three months. There was a default in payment of rent. A notice to quit as per the provisions of section 111(g) was served. The decree for eviction was held to be proper.69 Where the contract provided for termination by serving three months' notice it was held that a suit for eviction in the absence of any such notice is not maintainable.70 A tenant was found to be inducted on the basis of an oral agreement. The court said such tenancy would be deemed to be a lease from month to month. It would be governed by the provisions of Transfer of Property Act, 1882. Its termination after due notice was held to be valid.

[s 106.2] Lease for Agricultural or Manufacturing Purposes Although this Chapter refers to agricultural leases but this does not apply to such purposes unless there is notification by the State Government under section 117 of this Act. When there is no agreement between the parties or local usage to the contrary, the duration of lease will be as under:— (1) a monthly lease or tenancy can be determined by the lessor or lessee by (a) a notice in writing, (b) notice must be of 15 days, (c) the 15 days' notice must expire with the end of a month of tenancy, and (d) the notice must be served in the manner provided in this section.

(2) A lease from year to year can be determined by the lessor or lessee by: (a) a notice in writing,

(b) the notice should be of six months, (c) the notice must expire with the end of a year of the tenancy, and (d) the notice must be served in the manner provided in the section itself.

A lease was granted for running a bakery. This includes preparation of bakery products. No registered document was produced to show that the grant was from year-to-year basis. Hence, even if it was for a manufacturing purpose, it was only a monthly tenancy. Six months' notice was not required. Termination by 15 days' notice was valid.71

[s 106.3] Notice to Quit The above stated provisions are operative only when there is no agreement between the parties as to the determination of the lease. If any person claims to the contrary that the lease was for a fixed term or to be a yearly lease instead of lease from month to month, he has to prove it by legal, valid and reliable evidence. The burden lies upon the defendant to prove his contrary claim that the term of lease was fixed for 5 years and the lease would be entered into at the option and wish of the lessee.72 Where petition for eviction of tenant by the landlord under Rent Control Act was withdrawn with the leave of the court and a civil suit for eviction of tenant was filed thereafter without notice under section 106 terminating the tenancy, it was held that the suit was liable to be dismissed.73 Even if there is any local law or usage in operation regarding determination of leases, that will be applicable in respect of duration of leases. No notice is required if a lease of immovable property is determined under clause (a) of section 111 of the Transfer of Property Act, 1882 by efflux of time limited thereby. No notice to quit is necessary where the tenant is holding over74 or lease is of permanent nature75 or is determined by forfeiture76 or if the tenant denies the title of the landlord.77 Single tenancy devolves on all heirs, no division of premises on rent payable takes place, and therefore, the notice for terminating tenancy is mandatory. The notice served on any one of heirs acting on behalf of others is capable of terminating the tenancy.78 Where only an oral and monthly lease for manufacturing purpose was given and no document of lease was produced, it was held that period of notice for termination of such a lease would be of 15 days and not six months.79 The proper stage for raising an objection as to validity of notice under section 108 or as to any infirmity about it, should be raised specifically and at the earliest otherwise it would be deemed to have been waived.80 Where there are several co-owners, notice to quit can be given to any one of them and the suit for eviction can also be similarly filed.81 The Court followed the Supreme Court decision82 in which it was considered as well settled that one of the co-owners can file a suit for eviction of a tenant in a property generally owned by co-owners. This is based on the doctrine of agency. Consent of other co-owners was assumed to be there unless it could be shown that the other co-owners were not agreeable to eviction and the suit was filed in spite of their disagreement.

[s 106.3.1] Waiver of Notice

Withdrawal of rent deposited by the tenant in court subsequent to the termination of the tenancy did not amount to waiver of notice. This was particularly so because the rent withdrawn belonged to the notice period. The notice expressly stated that the tenancy would stand terminated on the expiry of the period of notice and 60 days' time was allowed for handing over vacant possession. The landlord was held to be justified in withdrawing the notice pertaining to the 60 days' period.83 Where the landlord accepted rent even after quit notice, the court said that the notice to quit had not become ineffective for that reason. It would require acquiescence in the continuation of the tenancy by some overt act on the part of the landlord.84 Where the plea that the notice was incompetent because the requirements of section 106 were not satisfied was not taken up in the written statement wherein it was only said that the notice was not sent by a properly authorised person, it was held that the question as to insufficiency of notice must be deemed to have been waived and could not be raised at the appellate stage.85 In this case the court stated the requirements as to notice: The twin requirements of a valid notice are—(i) It should be a 15 days' notice i.e., it must give clear 15 days' time for tenant to vacate—(ii) Notice must expire with the end of the month of tenancy. The tenant remained in occupation of premises and continued to remit rents by means of demand drafts after quit notice. The same was received without demur and unconditionally over years during pendency of the suit. The court held that this amounted to waiver of notice even though the receipt of the amounts stated that it was being received by way of damages for use and occupation.86

[s 106.4] Amendment The provisions of section 106 have been amended by the Transfer of Property (Amendment) Act, 2002 (3 of 2003). These amended provisions shall apply to— (a) all notices in pursuance of which any proceeding or suit is pending at the

commencement of this amendment Act. (b) all notices which have been issued before the commencement of the

Amendment Act, 2002 (3 of 2003) but where no suit or proceeding has been filed before such commencement. It is clear from the amendment that for terminating a monthly tenancy a simple notice of 15 days is sufficient. It is not necessary that the notice to quit must expire with the monthly end of the tenancy.87 The period of 15 days mentioned in sub-section (1) commences from the date of receipt of notice.88

[s 106.5] Form and Construction of Notice and Manner of Service Every notice under this section must be in writing and signed by or on behalf of the person giving it. The notice must be either— (a) sent by post to the party who is intended to be bound by it, or (b) tendered or delivered personally to such party, or to one of his family or servants

at his residence, or (c) affixed to a conspicuous part of the property where such tender or delivery is not

practicable.89 After the service of the notice to quit a question generally arises whether the notice is sufficient to bind the person concerned? The Privy Council considered this question and held in Harihar Banerjee v Ram Sashi Roy,90 that the test of sufficiency is not what the notice would mean to a stranger ignorant of all the facts and circumstances touching the holding to which it purports to refer but what it would mean to the tenant presumably conversant with all these facts and circumstances and further it has to be construed, not with a desire to find fault in it, but to be construed that it may rather become operative than null (ut res magis valeat quam pareat). Where notice was sent to tenant through registered cover which was received back by sender with postal endorsement "unclaimed", there was presumption of service. In such a case, the contention of the tenant that he was away was held to be not tenable because it was for him to make necessary arrangement to receive the notice addressed to him in his absence at the suit premises.91 In contrast to this, where the notice sent by registered post came back with the report "not present", it was held that no presumption of service could be drawn unless something more was proved by cogent evidence that it was really refused by the tenant. The notice was even otherwise defective because it did not carry any date for showing termination.92 Where the notice to quit was served on the Karta of the joint family tenant, the service was held to be valid. He was the representative of the entire joint family, service on the members was not necessary. The decree was binding upon all the joint tenants.93 Where the notice was addressed to the tenant and he did not come into the witness box to deny receipt of the notice, it was held that in the absence of denial, it was to be presumed that the notice was duly served upon the tenant.94 Where no objection was raised in the written statement as to the form and contents of notice by the tenant, the tenant would be deemed to have waived any objection as to non-compliance of section 106.95 The notice under section 106 can be served by affixing when the tender or delivery of notice either by post or by personal delivery to the addressee is found to be impracticable. Where the landlord affixed notice to the suit premises when registered notice came back as "unclaimed", it was held to be a valid service.96 A lease of open land was granted in favour of the defendant for a period of 10 years. The local rent control legislation was not applicable. The court said that the fact that a shed was raised on the lease land with the condition that it would be removed at the time of handing over vacant premises did not alter the relations between the parties. The lessee was liable to be evicted from the land after expiry of the period of lease.97 The notice to quit must have the effect of terminating the lease or tenancy at the end of the month or year of the period of lease. It must expire on the last day of that period otherwise it will be considered invalid.98 Where the receipt of notice was admitted by the lessee and he also sent a reply to it, this showed that the tenant understood fully the import of notice and could not say afterwards that the notice was bad because it did not carry any date.99 A notice to quit must be clear, reasonably indicating the intention to terminate the lease at a certain time. A notice to quit should be liberally interpreted but it must not prejudice the interests of the lessee.100 The notice to quit must be unambiguous and unconditional.

Where the tenant gives the undertaking to vacate the premises within certain period, after such period the tenant becomes a tenant holding over and he could not be permitted to raise the plea of non-compliance of section 106 notice.101

[s 106.5.1] Notice to be in Accordance with Terms of Lease An attempt was made to terminate the lease because of the violation of its terms. The lease-deed required the lessor (DDA) before effecting forfeiture or re-entry to serve notice in writing specifying the particular breach complained of and requiring breach to be remedied. There was a resolution binding on the DDA that notices must be sent by registered post with AD. The notice by pasting was also not in accordance with DDA's statutory provisions. The court said that there was no valid determination in accordance with the law. For that reason, no charges for misuse could also be levied.102 A tenancy from year to year or month to month basis does not come to an end with the efflux of time even if its duration is fixed. Notice to quit remains mandatory. In the absence of such a notice, a suit for eviction cannot be decreed.103 A monthly lease agreement provided for three months' notice for terminating the lease. It was held that when the term of lease had already expired, the requirement of three months' notice was no longer applicable and 15 days' notice remained the only requirement.104

[s 106.5.2] Notice should be Clear and Definite The landlord in his notice demanded only vacant possession of the premises. There was no express determination of the tenancy. There was no explicit intimation to the tenant that if he continued in possession after a given date his status would be reduced to that of a trespasser. The notice was held to be invalid.105

[s 106.5.3] Proof of Contents of Notice The fact that service of notice has been proved does not by itself show as to what were contents of the notice. The plaintiff has to prove contents of the notice served by him. The mere fact that the tenant has replied to the notice does not relieve the landlord of his burden to produce the notice showing its contents. The court, therefore, held that the dismissal of the suit because of no proof of contents of the notice was proper.106

[s 106.6] Validity of Notice to Quit Only 15 days' notice to quit is required under the Act but the notice for more than 15 days is not invalid.107 Where the agreement provided for 30 days' notice, the privilege of 15 days' notice was held to be not applicable.108 Where the notice to quit stated that "tenancy is hereby terminated" but tenant was allowed to occupy till end of the tenancy month, that was held to be a valid notice.109 Any objection as to invalidity or infirmity of notice under section 106 should be raised specifically and at the earliest, else it will be deemed to have been waived even if there existed a valid objection.110

A notice given shall not be deemed to be invalid merely because the period mentioned in it falls short of the period specified under sub-section (1) (i.e., year to year lease terminable at 6 months' notice and monthly lease terminable by notice of 15 days') where a suit or proceeding is filed after the expiry of the period mentioned in subsection (1). The words "at his residence" related only to service upon family or servants of the tenant. Notice sent at the address of the tenanted shop in dispute was held to be not improper.111 Where the quit notice was short of the period specified in section 106(1) but the suit was filed after expiry of the prescribed period, the notice was held to be not invalid in view of the amended provisions of section 106(3).112 A notice which does not specify any period or date for termination of tenancy has been held to be not bad provided the statutory period is allowed before filing suit after service of notice.113 Where the premises were occupied by a licencee of the tenant who was also a close relative of the tenant, the court said that he was the agent of the tenant for all purposes connected with the tenancy. Consequently, it was not illegal to serve on him notice to quit and file an eviction suit against him.114 Where the Divisional Officer of the Life Insurance Corporation was tenant of the premises, a notice to quit served on the Divisional Manager of the Corporation at the Divisional Office was held to be not improper. The court said that the suit could not be thrown out merely because of that reason. It was immaterial that notice was not served on the head office at Bombay and the head office was not impleaded as a party.115 The agreement showed that the premises were given to the party only as a licencee. In such a situation, the court said that on the termination of the licence, the occupant could not claim to be a tenant by holding over. A notice under the Transfer of Property Act, 1882 was not necessary. The licencee had no right to continue in possession after termination of his licence.116 But he cannot be thrown out directly. It would require invocation of due process of law. The order of the Deputy Commissioner of Customs, calling upon him to vacate the premises was quashed.117

[s 106.7] Composite Notice Several tenancies were created at different times. Four of them were covered under a deed of lease. It was held that these could be clubbed together and composite notice to quit could be given for all of them.118

[s 106.8] Persons Entitled to Terminate Notice of termination may be given either by lessor or by lessee. Notice may also be given by their heir, trustee, executor or administrator or even an agent authorised in this behalf. Where the interest of a lessee devolved upon several persons as tenants in common or joint tenants, notice to quit may be given to all of them. If it is given only to some of them, the notice is sufficient to put an end to the tenancy.119 Where certain tenants in the capacity of general power of attorney holders on behalf of all the tenants received the notice of eviction from the landlord, it was held that there was service of notice of eviction on all the tenants.120

One of the co-owners is competent to give a notice of termination and file a suit for possession. Such suit is not liable to be dismissed for non-joinder of other coowners.121 Leasehold rights over the property were transferred subsequent to the quit notice. It was held that the successor-in-interest would be entitled to the rights of the predecessor. Notice for termination of tenancy was issued by the landlord prior to sale of the property. This was held to be valid under section 109. The suit for eviction was filed by both the landlord and the transferee, pursuant to the notice issued by the landlord alone. The suit was held to be maintainable.122

[s 106.9] Defective Notice Every notice to quit must fulfil the requirements of sub-sections (3) and (4). The Supreme Court considered this in Calcutta Credit Corp v Happy Homes Pvt Ltd,123 and held that a notice not in compliance with section 106 because it did not expire at the end of the period of lease or was of a shorter duration than that prescribed may be accepted by the other party and if it is so accepted and acted upon, the party receiving the notice will be estopped from denying its validity. A vague show cause notice is defective; there was a grant of lease in this case by DDA in favour of a company. DDA did not put the lessee on notice that it had found that the lessee company had transferred its shares in favour of a director and it amounted to sale of land to the director. The company would have explained its position if such notice had been given to it. The allegation of sub-letting was also not sufficient because it was capable of being removed. The order of DDA was, therefore, vitiated.124

[s 106.10] Presumption as to Duration Where there is absence of a contract or local law to the contrary, a lease of immovable property for agricultural or manufacturing purpose is deemed to be a lease from year to year. In case, the lease is for any other purpose, it is presumed to be month to month tenancy. There is no scope for this presumption where the leave is in writing and specifies its period. The question arises what is a "manufacturing purpose"? It means the making or fabricating articles or materials by physical labour or skill or by mechanical power etc. In PC Cheriyan v Barfi Devi,125 the Supreme Court held that a lease of premises for carrying on the business of rethreading of tyres is not a lease for "manufacturing purposes" within the contemplation of section 106. The Supreme Court observed: "the broad test for determining whether a process is a manufacturing process or not, is whether it brings out a complete transformation for the old components so as to produce a commercially different article or commodity." A lease for a manufacturing purpose is deemed to be a lease from year to year but the same is subject to the contract to the contrary between the parties. The landlord and tenant can mutually agree to create a tenancy for manufacturing purpose for a period less than a year. Only in the absence of this kind of contract the lease for manufacturing purposes would be deemed to be a lease from year to year. The same can be created by a registered document in view of the provisions of section 105 of the Act. Manufacturing lease which is not from year to year does not require six months' notice for termination. It will require only fifteen days' notice of termination.

Where the lease for manufacturing purposes was created for a period of 11 months only and it was provided in the lease deed that the tenancy could be terminated by either of the parties by giving two months' notice, it was held that there was a contract to the contrary between the parties providing for termination of lease between the parties by giving a notice of less than six months and as such it was not necessary for the landlord to terminate the tenancy by giving six months' notice.126 Provisions of section 106 come into operation only when there is no contract to the contrary but not otherwise. Where lease was granted for 4 years for manufacturing purpose and as per agreement, the rent was to be paid monthly and tenancy commenced from first day of the English calendar month ending with the last day of month, it was held that intention of the parties was to create monthly tenancy and, therefore, only 15 days' notice was required to terminate the tenancy.127 Where a tenancy was extended for a period exceeding one year through a letter but no document was registered for the purpose, it was held that it will be a month to month tenancy and 15 days' notice will be required to terminate the tenancy.128

[s 106.11] Deemed Notice There was no service of prior notice for terminating the tenancy. But there were averments made to that effect in the counter claim by the landlord. The court held that this could be taken as notice. It matured on the expiry of 15 days from the date of its service upon the tenant or his counsel. The counter claim stood as suit for decision.129

[s 106.12] No Notice Necessary where Tenancy for Specified Period Where the tenancy was created on the basis of an agreement which specified the period of tenancy, it was held that the tenancy automatically became terminated by efflux of time. No notice under section 106 was required to be served prior to filing of the suit. Even otherwise, the notice by registered post was issued. It came back with the endorsement "refused". It was further held that mere receipt of rent even after expiry of the period did not bar the suit for eviction.130

[s 106.13] Tenancy at Will The Transfer of Property Act, 1882 has not defined anywhere the tenancy at will. In Halsbury's Laws of England131 tenancy at will has been defined as "it is a tenancy under which the tenant is in possession and which is determinable at the will of either landlord or tenant. A tenancy at will is implied when a person is in possession with the consent of the owner and is not held in virtue of any tenancy for a certain term." Where the agreement between the parties is to the effect that the tenancy should be determinable by either party at any time, there is a contract to the contrary and the provisions of section 106 will not be applicable.132 Under the tenancy at will neither party can be certain of duration of tenancy. In comparison to it, in tenancy from month to month, the tenancy for one month is certain. Either party may terminate the tenancy from month to month by giving the appropriate notice to the opposite party.133

In a tenancy at will, the landlord was a society registered under the Societies Registration Act and therefore not covered by the UP Rent Act. The termination of the tenancy by a legal notice as required by section 106 was held to be proper.134

[s 106.14] Tenancy of Sufferance Where the tenant continues to remain in possession even after the expiry of notice to quit, he is not treated as a trespasser but he is treated as a tenant at sufferance who continues the possession as "holding over" the property without any legal right. He may be asked to vacate the premises without any notice.135

[s 106.15] Tenant Claiming Ownership by Setting up Adverse Possession, Notice not Necessary A suit was filed on the ground that the tenant forfeited his status as a tenant because he claimed ownership by setting up adverse possession. The landlords did not plead termination of tenancy as a cause of action for the suit. They pleaded that the cause of action arose when tenants denied their title and forfeited the right of tenancy. The court said that in such a case the requirement of notice under section 106 was not mandatory. The suit was maintainable as filed.136

[s 106.16] Permissive Occupancy, Recovery of Possession There was no relationship of landlord and tenant in existence. They were close relatives and free occupation was allowed just because of that. The requirement of termination of tenancy by quit notice under section 106 was not applicable. Instead, the letter terminating the permissive occupancy was effective. The owner had the right of occupancy being the life estate holder. Eviction was allowed. The defendant was directed to vacate suit premises.137

[s 106.17] Arbitration Clause in Agreement On the determination of a lease on the expiry of lease agreement, it was held that a suit for eviction was not barred as with the expiry of lease agreement, the arbitration clause does not survive.138 A lease deed contained an arbitration clause for resolving disputes arising out of lease deed. When lease period expired by efflux of time, it was held that dispute relating to eviction and recovery of rent being subject matter of a civil suit cannot be referred to arbitration.139

[s 106.18] Decree of Eviction Already Passed not Affected by Subsequent Change in Law A decree of eviction which has already been passed is not to be affected by subsequent changes in law, such as Rent Control Act, even if the matter is still there at the appeal stage.140

[s 106.19] Termination of Lease by Destruction of Building Lease does not stand terminated merely because the building which is the subject matter of the suit has been destroyed. Even if the building is destroyed landlord is entitled to recover the land in which the building existed. Therefore, destruction of building is not a ground for dismissing execution petition.141

64 Subs. by Act 3 of 2003, section 2, for section 106 (w.e.f. 31-12-2002). section 106, before

substitution, stood as under: "106. Duration of certain leases in absence of written contract or local usage.—In the absence of a contract or local law or usage to the contrary, a lease of immoveable property for agricultural or manufacturing purposes shall be deemed to be a lease from year to year, terminable, on the part of either lessor or lessee, by six months' notice expiring with the end of a year of the tenancy; and a lease of immoveable property for any other purpose shall be deemed to be a lease from month to month, terminable, on the part of either lessor or lessee, by fifteen days' notice expiring with the end of a month of the tenancy. Every notice under this section must be in writing, signed by or on behalf of the person giving it, and either be sent by post to the party who is intended to be bound by it or be tendered or delivered personally to such party, or to one of his family or servants at his residence, or (if such tender or delivery is not practicable) affixed to a conspicuous part of the property". 65 Narayan reddy v Balasore Municipal Council, AIR 2001 Ori 1 : 2001 (1) Civ LJ 875 : 2000 (2)

Ori LR 367 ; duration of lease of 15 years as agreed in the lease deed being term of invalid lease cannot be construed as contract to contrary under section 106(i), lease is deemed to be determinable at option of the parties by giving 15 days' notice, West Bengal State Electricity Board v Sevoke Properties Pvt Ltd, AIR 2019 Cal 110 ; deed in nature of a rent receipt without mentioning any terms and conditions, even boundaries of leased land vaguely stated, execution of lease was held to be doubtful, Radha Sharan Dubey v Ram Niwas, AIR 2017 (NOC) 828 All. 66 Oasis Bar and Restaurant v PUmabala, AIR 2002 AP 465 : 2002 (4) Andh LD 508. 67 Navin Chand v Nagarjuna Travels & Hotels Pvt Ltd, AIR 2002 SC 2870 : (2002) 6 SCC 331 : JT

2002 (6) SC 70 . 68 Sachidananda v Chettissery Khader, AIR 2004 (NOC) 371 (Ker) : 2004 AIHC 1728 . 69 Meto Leather v PLN Natarajan, AIR 2007 Mad 11 : 2007 (1) All LJ (NOC) 156 : 2007 (1) Mad

LJ 641; Sadhna agarwal v Malti Devi, AIR 2007 (NOC) 980 (All) : (2007) 2 All LJ 46, contract of tenancy entered into with a partner of the firm, partner defaulted in payment of rent, termination of tenancy was held to be lawful; where the tenant had already accepted ownership of premises by the landlord and sought mandatory injunction against the landlord in a civil suit, plea of disputed ownership was held to be untenable in the case, Apollo Zipper India Ltd v W Newman & Co Ltd, AIR 2018 SC 2847 . 70 R Anjanakumari v Bhavani, AIR 2007 (DC) 138 (Mad); Nagar Palika Parishad v District and

Sessions Judge, AIR 2007 (NOC) 475 (Utr), a valid lease for 99 years was granted to the lessee and he was paying rent of Rs 175 p.m. in pursuance of the lease deed, the lessee being a person

holding under a valid lease, could not be termed as an unauthorised occupant simply by serving upon him a notice to quit, the right to terminate the lease by notice was not available during continuance of the lease; when the leased property of the State government had the condition of construction within one year but could not be constructed in 27 years, repossession of property by State was held proper, Surech Rabidas v State of West Bengal, AIR 2018 Cal 154 . 71 Prasanna v S Nagalaxmi, AIR 2010 Kant 66 : 2010 (2) Civ LJ 115 : ILR 2009 Kant 4144 ; Board

of Trustees of Port of Bombay v Nikhil N Gupta, AIR 2015 SC 3558 , once the decree of eviction attained finality, there could be nothing for persons in possession to help retain their possession. They can be directed to be removed from the premises; when 15 days' notice is given by the lessor, mere acceptance of rent at enhanced rate by lessor cannot continue the tenancy with erstwhile relationship as landlord and tenant, K Taviti Raju v Govinda Ram Dhanji, AIR 2018 Ori 50 ; one month notice by landlord for termination of tenancy is lawful and decree of eviction on the basis of such notice is also lawful, Kubra Khatoon v Allahtala Malik Waqf Masoom Hasan, AIR 2018 (NOC) 212 All; acceptance of rent by lessor even after termination of lease does not amount to waiver of notice, Omwati Singh v Bharat Heavy Electricals Ltd, AIR 2017 MP 100 ; where eviction of tenant is under general law, notice under section 106 is not mandatory, Surinder Kumar alias Surjan v Mahant Gomti Das, AIR 2017 (NOC) 787 P&H. 72 Punjab National Bank v Ganga Narain Kapur, AIR 1994 All 221 : 1994 All LJ 770 : 1994 (23) All

LR 151 ; Jaswant Raj Soni v Prakash Mal, (2005) 8 SCC 38 : (2005) 6 Supreme 430 : 2005 (6) SCJ 812 , the alleged agreement was that there should be one month's notice before filing of eviction proceedings, this term was printed on the back side of the rent receipt, the court said that a term so printed could not constitute an effective agreement. Since terms and conditions of lease result from conscious decision of parties, condition printed at back of rent receipt to that effect cannot be said to be an agreement between parties requiring issuance of notice for institution of an eviction petition. Contract Act, 1872, sections 10 and 37. See Dr Avtar Singh's Law of Contract and Specific Relief under the heading "Standard Form Contracts". In the absence of any such agreement, it is not necessary under the Act that there should be a notice before filing of eviction petition. 73 Kazhugumalai Raja v Rajapalayam Palayapalayam Boopalarajaptti Illathar Samuga Pothu Nala

Fund, AIR 2004 Mad 267 : 2004 (2) Mad LJ 65 : 2004 (2) Mad LW 462 ; when relationship between the parties as landlord and tenant was terminated by service of earlier notice, plaintiffs cannot maintain suit for eviction on the basis of second notice without cancelling the earlier notice, Chandan Samanta v Bijay Kumar Jana, AIR 2017 (NOC) 303 Cal. 74 Pakrutheen Vaya Rawther Abdul Hameed Rawther v Raman Pillai Balakrishna Pillai, AIR 1970

Ker 40 : 1969 Ker LJ 67 : 1969 Ker LR 156. 75 Transfer of Property Act, Mulla, p 671. 76 Thakerakavil v Noor Mohd, (1921) 41 Mad LJ 265. 77 Gopal Rao v Kishore, (1885) 9 Bom 527; no notice to quit is required for eviction filed under

J&K Rent Act, Ravi Deep v Satya Paul, AIR 2018 J&K 129 ; lease deed unregistered with duration of lease of 15 years, lease deemed to be lease from month to month and terminable by giving 15 days' notice, suit for eviction not maintainable where lessor failed to give quit notice prior to filing the suit, West Bengal State Electricity Board v Sevoke Properties Pvt Ltd, AIR 2019 Cal 110 . 78 Mamta Panigrahi alias Panigrahi v Hemlata Dalai, AIR 2017 Ori 122 . 79 Oasis Bar and Restaurant v P Umabala, AIR 2002 AP 465 : 2002 (4) Andh LD 508; Samir

Mukherjee v Davinder K Bajaj, AIR 2001 SC 1696 : (2001) 5 SCC 259 : 2001 AIR SCW 1740, oral lease becomes a monthly tenancy, fifteen days' notice for its termination is effective; terms and conditions of unregistered lease deed for manufacturing purposes were neither enforceable nor binding upon parties under section 107, it was held that lease cannot be deemed to be from

year to year terminable by six months' notice, 30 days' notice was held to be valid in the case, Kiran Dhawan v Vivek Mittal, AIR 2019 All 25 ; unregistered lease deed can be used for collateral purposes, non-registration of documents would not prohibit the court from holding that the relationship of landlord and tenant has been established between plaintiff and defendant, Ganesh Ramkisan Bairagi v Parwatabai Tukaram Appa Landge, AIR 2017 (NOC) 61 Bom. 80 Parwati Bai v Radhika, JT 2003 (5) SC 34 : (2003) 4 Scale 513 : 2003 (3) Supreme 701 . 81 Ratan Lal v Gopal, AIR 2014 Raj 53 : 2014 (3) Raj LW 2340 : 2014 (1) Ren CR 471. 82 Umbrella Manufacturing Co v Bhagbamdei Agarwalla, (2004) 3 SCC 178 : AIR 2004 SC 1321 .

To the same effect FGP Ltd v Solch Hooseini Doctor, (2009) 10 SCC 223 : AIR 2009 SC (Supp) 2527; In Geeta Prasad v Mohd Latif, AIR 2016 NOC 397 (All), on the death of the original lessor, the property was inherited by his widow, two sons, and a daughter. Daughter alone was collecting the rent. Notice of termination given by her was held to be valid and effective. 83 Post Master General, UP, Lucknow v DJ Mathura, AIR 2006 All 1 : 2005 All LJ 3418 : 2005 (36)

AIC 292 . 84 UOI v ADJ, Kheri, AIR 2010 (NOC) 742 (All). 85 Dharam Pal v Harbans Singh, (2006) 9 SCC 216 . 86 Auto World, Bangalore v KV Sathyavathi, AIR 2015 Kant 128 . 87 Jadab Chandra Das v Sri Sri Hayagriv Madhab, AIR 2007 Gau 185 : 2008 (1) AKant (NOC) 12 :

2007 (60) AIC 700 , if no objection was raised in the written statement, the right of objection would be deemed to have been waived. P Honamma v B Jagannath, AIR 2007 Kant 184 : ILR 2007 Kant 3892 : 2008 (1) Kant LJ 97 , another such fifteen days' notice which was held to be valid, the court saying that a quit notice must be construed not with a desire to find faults in it. But in a common sense way, Allahabad Bank v Prakash Shankar, AIR 2006 Bom 321 : 2006 Bom LR 1666 : 2006 (4) AIR Bom R 711, the provision has been given retrospective effect, it would apply to situations where adjudication was not concluded on validity of notice of termination under section 106 held neither arbitrary nor unconstitutional. 88 Tanusree Mukherjee v Mitali Chinara, AIR 2013 (NOC) 218 (Ori). 89 Shanmugham v Hema, AIR 2011 Mad 177 , the notice specified door number of the suit

premises, the defendant could have easily understood that eviction was sought from the suit premises, notice not bad, for want of proper description of property. Something which can be made certain is considered to be certain. In the case of an oral agreement to sell, burden is on the person who pleads it to prove its existence. 90 45 Ind App 222 : AIR 1918 PC 102 : ILR 46 Cal 458. 91 KN David v SR Chaubay, 2003 (4) RCR (Civil) 104 : 2003 (2) Ren CR 362 : 2003 (3) CCC 569

(Bom); Rakesh Kumar v Additional Distt & Sessions Judge, AIR 2007 (NOC) 1273 (All) : (2007) 2 All LJ 556, posting of prepaid registered letter on the tenants's correct address was held to be good enough proof of service, tenant admitted receipt of notice, eviction proper. MC Mohammed v Gowramma, AIR 2007 Kant 46 : ILR 2006 Kant 4584 : 2007 (1) Kant LJ 378 , notice terminating tenancy, postal service refused, service effected by affixing at the premises, the tenant admitted that the address was correct, service was held to be effective within the meaning of section 106, even otherwise no notice was necessary because the lease was for a period of five years and five years had expired. Jodharam v Jagnamalthamma, AIR 2007 (NOC) 718 (Kar), notice sent on the same day by Registered Post A/D and under certificate of posting, came back with the remark that the addressee was constantly absent for a period of seven days, notice was deemed to have been served. Maniram Industrial enterprises v BS Sathya Kumar, AIR 2006 Kant 262 : ILR 2006 Kant 2466 : 2006 (4) Kant LJ 675 , the notice came back with the postal endorsement "not claimed" on the notice, the defendant failed to prove that the endorsement on the unserved notice was not correct, the postal endorsement was sufficient to show that the

notice was served, the suit for ejectment could be maintained on the basis of such notice. Radha Kishan v Radha Devi, AIR 2014 NOC 587 (Raj), to the same effect. Vandana Gulati v Gurmeet Singh, AIR 2013 All 69 : 2013 (2) All LJ 628 : 2013 (2) ADJ 281 , registered post notice came back with the remark "not claimed/not met". This was held to be a good service. Nothing to the contrary was shown. Alok Kumar Sharma v T Hemalatha, AIR 2013 AP 7 : 2012 (5) Andh LD 797, the tenant did not dispute correctness of address, notice returned as "not claimed" service of notice proper. There was nothing to show that he was not present at the suit scheduled premises; landlord adopted many modes of service of eviction notice, tenant did not deny service of eviction in pleadings or in evidence, tenant inability to prove that notice not duly served to him, service of notice valid and sufficient, eviction held proper, Biswanath Karmakar v Ramkrishna Ghosh, AIR 2017 (NOC) 888 Cal. 92

Rama Nand v Mulakh Raj, AIR 2010 (NOC) 921 (P&H). Kanak Parmanik v Indrajit

Bandopadhyay, AIR 2013 Cal 60 : 2012 (117) AIC 723 , notice came back with postman's endorsement "refused". This would create a presumption but not that the postal remark could be attributed to the addressee of the letter. The presumption was rebuttable. No evidence to show that the addresee had refused to receive, decree of ejectment based on such deemed service not proper. Paritosh Bhowmick v Nandanlal Kar, AIR 2012 (NOC) 192 (Cal), postman examined on the point whether the refusal was genuine, notice held to be effective, the lessee stayed over with the permission of the landlord, it could be terminated by requisite notice; when earlier suit filed by plaintiffs was dismissed due to invalidity of notice but not on merits, subsequent suit filed by them will not be barred by res judicata, Mridul Gupta v LRs of Late Hemendra Datta, AIR 2018 Tri 30 . 93 Vasant Raghu Bhingardive v Nagori Muslim Mesgar Jamat Trust, AIR 2007 (NOC) 1627 (Bom). 94 Iftikhar Hussain Khan v VIth Additional District Judge Bareilly, AIR 2008 All 14 : 2007 (68) All

LR 831 : 2007 (6) All LJ 420. 95 Yelamati Veera Venkata Jaganadha Gupta v Vejju Venkateshwara Rao, AIR 2002 AP 369 :

2002 (3) Andh LD 67. 96 KN David v SR Chaubay, 2003 (4) RCR (Civil) 104 : 2003 (2) Ren CR 362 : 2003 (3) CCC 569

(Bom); Ugrasen v Parmeshwari Devi, AIR 2015 NOC 426 (All), Postal service came back with the remark "refusal" noted by postman. Correctness of endorsement can be rebutted by producing adequate evidence. But the addressee refused to examine postman saying that he could not be identified, service of notice was held proper. 97 Nandam Mohanamma v Markonda Narasimha Rao, AIR 2006 AP 8 : 2006 AIHC 662 : 2005 (5)

Andh LD 296. 98 Shaikh Sona Ullah v Troylukho Nath, (1897) 2 Cal WN 383. 99 Yashpal Lala Shiv Narayan v Allatala Malik Wakf Ajakhan Mus, AIR 2006 All 115 : 2006 (2) All

LJ 204 : 2006 (2) Rec Civ R 712. 100 Mangilal v Sugan Chand Rathi, (1964) 5 SCR 239 : AIR 1965 SC 101 ; absence of ground of

ejectment in advance notice is not a bar for landlord from getting eviction, landlord was entitled to decree of eviction, Surinder Kumar alias Surjan v Mahant Gomti Das, AIR 2017 (NOC) 787 P&H. 101 Yelamati Veera Venkata Jaganadha Gupta v Vejju Venkateshwara Rao, AIR 2002 AP 369 :

2002 Andh LD 67; Muktal Hussain v Ali Aswab, AIR 2006 (NOC) 1586 (Gau), no notice was necessary where the defendants were only permissive possessors whose status could not be said to be that of a tenant, the suit was not to be dismissed for want of notice. 102 Annu Chopra v DDA, AIR 2006 (NOC) 356 (Del). 103 Ajay Purwar v Suman Yadav, AIR 2015 NOC 580 All. 104 Essjay Ericsson Pvt Ltd v Dilip Kumar Khandelwal, AIR 2016 Cal 6 . 105 RS Negi v Vishnu Sahai Verma, AIR 2006 (NOC) 1118 (All) : (2006) 4 All LJ 373.

106 Madhuriben Saskikant Joshi v Sarlaben Yasheshchandra Desai, AIR 2006 Guj 113 : 2006

AIHC 2634 : 2006 (4) Rec Civ R 591, Bombay Rents, Hotels and Lodging Houses Rates Control Act, 1947, section 12(2). 107 Sunder Kudwa (died) by Lr's v Raviraj Shetty, 2003 (1) Ren CR 222 (Kant). 108 Ved Prakash v Ram Bilas, AIR 2009 (NOC) 2222 (P&H). 109 Madarasar-e-Domodia Arabic College v Siraj Begum, 2003 (1) Ren CR 16 (Mad); Thanapal v

Sakunthla, AIR 2007 (NOC) 1055 (Mad), a shop in a temple property was let out for running a cycle shop, lease deed mentioned that monthly rent was payable annually, lease was not registered, it was neither for an agricultural purpose nor manufacturing, held, it could be construed only as a monthly lease, 15 days' quit notice was valid. Yadav Motors v Hitendra Kumar Ahuja, AIR 2007 (NOC) 144 (All) : (2006) 6 All LJ 575, single tenancy, required only a single notice, the fact that the tenants, who were more than one, subsequently started paying rent proportionally, did not necessitate more than one notices. Ajay Kumar Singh v Dasa, AIR 2013 Cal 125 : 2013 (4) ICC 502 : 2013 (2) Ren LR 380, each of the tenants was served with notice, agreement required 30 days' notice, 15 days' notice was given, but action after 30 days valid. 110 Parwati Bai v Radhika, 2003 (1) Ren CR 607 (SC) : AIR 2003 SC 3995 . 111 Sudha Agarwal v VII Additional DJ Ghaziabad, AIR 2006 (NOC) 1246 (All) : (2006) 4 All LJ

545. 112 Shree Ram Mills Ltd v Court Receiver, HC Bombay, AIR 2011 (NOC) 99 (Bom), amendment of

2003; In Shree Ram Urban Infrastructure Ltd v Court Receiver, High Court of Bombay, AIR 2014 SC 2286 : 2014 AIR SCW 3100 : (2014) 6 Scale 613 , notice to quit fell short of the specified period. The suit was filed six months after the notice. This was held to be not invalid. 113 Renu Gupta v Kanti Devi, AIR 2013 All 26 : 2013 (1) All LJ 495 : 2012 (11) ADJ 497 . 114 AIR 2006 (NOC) 1116 (All). 115 Achintya Kumar Lahiri v LIC of India, AIR 2006 All 264 : 2006 (4) All LJ 370 : 2006 (44) AIC

134 . 116 Goa Tourism Development Corp Ltd v Sunita C Palyenkar, AIR 2006 Bom 243 : 2006 (4) AIR

Bom 91 : 2006 (6) Bom CR 379 . 117 Aditya Birla Nuvo Ltd v UOI, AIR 2013 (NOC) 359 Bom (DB). 118 Calcutta Dock Labour Board v EIC Holdings Ltd, AIR 2009 (NOC) 584 (Cal) (DB). 119 Ishwarlal Pranjivandas v Labhshankar Hargovinddas Bhatt, AIR 1982 Guj 152 : 1982 Guj LH

215 : 1982 (1) 23 Guj LR 433; Shiv Narain Chaudhary v Naug and Co, Allahabad, AIR 1982 All 44 : (1982) 8 All LR 70 : (1982) 2 Civ LJ 19 . 120 Abdul Satter v Rameshwar, AIR 1992 SC 2065 : 1992 AIR SCW 2281 : JT 1992 (4) SC 243 . 121 Jodharam v Jagnamathamma, AIR 2007 (NOC) 718 (Kant). 122 P Rajamani Gurukal v Rama, AIR 2010 Mad 197 : 2010 (3) ICC 782 : 2010 (4) Mad LJ 47.

Musaraf Hussain v Hazara Bibi, AIR 2012 (NOC) 42 (Ori), the tenant attempted to deny the title of the lessor that the suit by which he acquired title was never put to execution, the Court did not allow the defence. Even otherwise the tenant cannot question the right of the person from whom he took the tenancy. 123 AIR 1968 SC 471 : 1968 (2) SCJ 291 : (1968) 2 SCR 810 . 124 Hewa Pvt Ltd v DDA, AIR 2006 Del 34 : 2005 (123) DLT 479 : 2005 (84) DRJ 444 . 125 AIR 1980 SC 86 : (1980) 1 SCR 961 : (1980) 2 SCC 461 . 126 Inder Sain Bedi v Chopra Electricals, 2004 AIR SCW 4833 : (2004) 7 Scale 227 : AIR 2004 SC

4430 . 127 Maharashtra Food Industries v Kamalabai Manikrao Wath, 2003 (2) Ren CR 384 (Bom) (NB).

128 Modern Food Industries (India) Ltd v IK Malik, 2003 (1) RCR (Civil) 118 : 2002 (2) Ren CR 690

(Del) (DB). Mritunjoy Sett v Jadunath Basak, AIR 2011 SC 2496 : 2011 AIR SCW 2974 : (2011) 5 Scale 32 , the question was whether English calendar was to be applicable or Bengali, evidence of the landlady was not recorded during her life time, that of the tenant was recorded. Accordingly, his version that English calendar was applicable prevailed. 129 Rajesh Vig v Shiv Prakash Mundra, AIR 2015 Ori 161 . 130 Nabina Chadha v Usha Das, AIR 2011 Ori 5 ; Giriraj Prasad v Shyam Sunder Agrawal, AIR

2010 (NOC) 1020 (All); Dev Raj v Lajwanti, AIR 2010 HP 72 : 2010 (2) Sim LC 490, no renewal by acceptance of rent after notice. 131 3rd Edn, Vol 33, p 505. 132 Udda Ram v Tej Karan, AIR 1975 Raj 147 : 1975 Ren LR 384 : ILR (1975) 25 Raj 443 . 133 Shiv Nath v Sri Ram Bharose Lal, AIR 1969 All 333 (FB) : 1967 All WR (HC) 668 : 1967 All LJ

944. 134 Swami Beli Ram Udasin Ashram, Kankhal v District Judge, AIR 2015 Utr 102 . 135 Balwant Raj Agrawal v Bharat Petroleum Corp, AIR 2010 (NOC) 920 (MP), such a tenant is

one who comes by right and holds over without right, notice for termination not necessary. 136 Madan Lal v Ram Pal, AIR 2010 P&H 142 : 2010 (1) Ren CR 382 : 2010 (1) Ren LR 503. 137 A Valliammal v Jayanthi, AIR 2009 Mad 182 : 2009 (80) AIC 733 . 138 Master Pieces Furniture Pvt Ltd v K Lakshma Reddy, AIR 2014 AP 56 : 2014 (1) Andh LD 375

: 2014 (3) ICC 35; relying upon Booz Allen and Hamilton Inc. v SBI Home Finance Ltd, (2011) 5 SCC 532 : AIR 2011 SC 2507 : 2011 AIR SCW 3089; Magma Leasing and Finance Ltd (Branch Manager) v Potluri Madhavilata, (2009) 10 SCC 103 : AIR 2010 SC 488 : 2010 (2) All WC 1315. 139 Himangni Enterprises v Kamaljeet Singh Ahluwalia, AIR 2017 SC 5137 . 140 K Ramnarayan v Pukhraj, AIR 2015 NOC 1192 (Raj). 141 Mohandas KB v Syamala Vasupilla, AIR 2017 (NOC) 1 Ker.

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER V OF LEASES OF IMMOVABLE PROPERTY Chapter V dealing with leases of immovable property consists of 14 sections, i.e., from section 105 to section 117. 142[s 107] Leases how made.—

A lease of immoveable property from year to year, or for any term exceeding one year or reserving a yearly rent, can be made only by a registered instrument. 143[All other leases of immoveable property may be made either by a registered

instrument or by oral agreement accompanied by delivery of possession. 144[Where a lease of immoveable property is made by a registered instrument, such

instrument or, where there are more instruments than one, each such instrument shall be executed by both the lessor and the lessee:] Provided that the State Government may 145[***] from time to time, by notification in the Official Gazette, direct that leases of immoveable property, other than leases from year to year, or for any term exceeding one year, or reserving a yearly rent, or any class of such leases, may be made by unregistered instrument or by oral agreement without delivery of possession.]

Comments [s 107.1] Mode of Creation of Lease (Section 107) (1) According to section 107(1) a lease of immovable property from year to year or for any term exceeding one year or reserving a yearly rent can be made only by a registered instrument.146 (2) All other leases of immovable property can be made either by a registered instrument or by oral agreement accompanied by delivery of possession. (3) Every such registered instrument shall be executed both by the lessor and the lessee.147 (4) However, the State Government may by notification in the Official Gazette direct that leases of immovable property, excepting certain leases, may be made by unregistered instrument or by oral agreement without delivery of possession. This provision is not applicable to leases from year to year, or for any term exceeding one year or reserving yearly rent or any class of such leases (exceptions). Therefore, section 107 provides two modes of creation of leases:— I Leases which can be made by registered deed— (a) Lease from year to year

(b) Lease for a term exceeding one year. (c) Lease reserving a yearly rent. (d) Permanent lease

II Lease in which registration is optional:— (a) Lease from month to month.148 (b) Lease for a term of one year. (c) Lease for a term of less than one year.

[s 107.1.1] Establishment of landlord and tenant relationship. Establishment of landlord and tenant relationship cannot be on the basis of an unregistered note. The Supreme Court said that even so such relationship can be established on the basis of undisputed facts pertaining to the demised promises. The suit was for recovery of rent. The defendant admitted to his induction into the demised promises, and also admitted arrears of rent. The decree passed could not be faulted only on the ground that the rent note was not registered.149 In another case, the tenant was inducted into premises on a monthly rent of Rs 5,000. Subsequently, the landlord claimed increased rent of Rs 9,000 on the basis of a rent note. The note was not signed by the parties. It was also not registered. The Court said that such document could not be termed as a rent note or a lease deed. Claim made on the basis of such note was not proper. The tenant was allowed to recover back the amount of rent which he had to pay to avoid eviction.150

[s 107.2] Leases from Year to Year Such a lease is a continuous lease. Here the lesser cannot terminate the lease without giving a notice at the end of a year.

[s 107.3] Leases for a Term Exceeding One Year Where the term of lease exceeds one year it must be registered. The Supreme Court held in Rajendra Pratap Singh v Rameshwar Prasad,151 that a lease for a term exceeding one year must be through a registered instrument. But for the validity of the instrument the signing of the instrument both by lessor and lessee is not sine qua non. Joint execution of the instrument is sufficient for the purpose. Such lease is registrable even if it is in respect of an agricultural land.152

[s 107.4] Lease Reserving Yearly Rent Where the rent is reserved for the whole year, there is a presumption that it is a year to year lease and it is registrable.

[s 107.5] Permanent Lease

Permanent lease is compulsorily registrable. Where no term is fixed in the lease or instrument of lease contains a provision for certain rights by legal heirs of lesser and lessee after their death, there is presumption of a permanent lease. Possession for a long period by itself does not constitute a permanent tenancy. There should be an indication in the terms and conditions of the lease that the tenant will be entitled to continue in the premises as long as the business for which the premises were leased subsisted.153

[s 107.6] Perpetual Lease and Covenant for Renewal In India, neither the Transfer of Property Act, 1882 nor the general law abhors a lease in perpetuity. When a covenant for renewal exists in a lease its exercise is a unilateral act of the lessee and the consent of the lessor is not necessary here. Where the principal lease executed between the parties containing a covenant for renewal, is renewed in accordance with the said covenant, whether the renewed lease should also contain similar clause for renewal depends upon the facts and circumstances of each case regard being had to the intention of the parties as displayed in the original covenant for renewal and the surrounding circumstances. The following prepositions are important in this regard:— (i) In India, the law does not prohibit a perpetual lease. However, clear and

unambiguous language is required for inference of such a lease. Where the language is ambiguous, the court would opt for an interpretation negating the plea of perpetuity. (ii) To find an answer to the question whether a covenant for renewal contained in

the lease-deed construed property and in its real context, entitles the tenant to continue as long as he chooses by exercising the option of renewal at the end of each successive period subject to the same terms and conditions depends upon the deed of lease being read as a whole and an effort made to ascertain the intention of the parties. No single clause or term should be read in isolation so as to defeat other clauses. The interpretation must be reasonable, harmonious and be deducted from the language of the deed. (iii) The court always leans against a perpetual renewal, and, therefore, where there

is a clause for renewal subject to same terms and conditions, it would be construed as giving a right to renewal for the same period as the period of the original lease, but not a right to second or third renewal and so on, unless the language is clear and unambiguous.154 The observations made by the Division Bench of the Calcutta High Court are worth noting here. In the case of Secretary of State for India in Council v AH Forbes,155 the Division Bench held that, (i) A lease, which creates a tenancy for a term of years, may yet confer on the

lessee an option of renewal. (ii) If the lease does not state by whom the option is exercisable, it is exercisable

(as between the lessor and lessee) by the lessee only, that is to say, a covenant for renewal, if informally expressed, is enforced only in favour of the lessee. (iii) The option is exercisable not merely by the lessee personally but also by his

representative in interest.

Where the principal lease executed between the parties containing a covenant for renewal was renewed in accordance with the covenant the question whether the renewed lease was also to contain similar clause for renewal. The court said that it would depend on the facts and circumstances of each case regard being had to the intention of the parties as displayed in the original covenant for renewal and the surrounding circumstances. A government property was given on fifty years lease. The term of 50 years under 1887 lease came to an end in the year 1937. Option for renewal was exercised by the respondent as assignee of the original lessee. Fresh deed of lease was executed. This lease deed did not set out any fresh covenants mutually agreed upon between parties for purpose of renewal. Original deed of lease though very material for ascertaining covenants thereof, not placed on record by either party. Whether a right to a new lease consequent upon option for renewal having been successfully exercised should again contain a covenant for renewal? As to this the court said that it would all depend on wording of covenant for renewal contained in principal lease, intention of parties as reflected therein and as determinable in the light of surrounding relevant circumstances. The court found that the option for further renewals was referentially included in the first renewal, the second renewal could not be denied. But apart from such cases, the term further renewal is not to be inferred from any preceding renewal.156 Lease deed in question did not specify any duration but permitted the lessee to hold the land forever subject to right of the lessor to resume the land by giving one month notice. There was no grant in perpetuity. The right of the lessor to resume the land by giving a month's notice was unconditional at the absolute will and discretion of the lessor, whenever he desired. Absolute discretion to resume the land at any time without assigning any reason, and absence of any express grant in perpetuity and absence of any consideration, militated against the instrument being construed as a lease in perpetuity. Lease in question therefore was not to be said to be lease in perpetuity.157

[s 107.6.1] Documentation for Renewal Renewal requires execution of a document evidencing renewal. In order to give effect to renewal of a lease, a document has to be executed evidencing renewal. By mere exercise of option claiming renewal, the lease is not to stand renewed automatically.158

[s 107.6.2] Acquisition of Government Lease Land and Renewal The Supreme Court said: State of Uttar Pradesh v Lalji Tandon,159 the appellant's plea that the land having been acquired there could be no renewal of lease was termed by the High Court as "ridiculous" and we find no reason to take a different view. Suffice it to refer to a recent decision of this court in Sharda Devi v State of Bihar,160 wherein it has been held that the Land Acquisition Act, 1894 cannot be invoked by the government to acquire its own property. It would be an absurdity to comprehend the provisions of the Land Acquisition Act being applicable to such land wherein the ownership or the entirety of rights already vests in the state. The notification and declaration under sections 4 and 6 of the Land Acquisition Act for acquisition of the land i.e., the site below the bungalow was meaningless. It would have been different if the State would have proposed the acquisition of leasehold rights and/or the superstructure standing thereon, as the case may be. But that was not done. The renewal of lease could not be denied in the garb of so-called acquisition notification and declaration which have to be just ignored.

[s 107.6.3] Denial of Renewal because of Breach of Term

Denial of renewal on the ground of alleged breach of contract was not allowed because no steps were taken by the lessor to mark re-entry into the premises till such time that an application of renewal was made. The court said that if the lessee was in breach and the lease entitled the lessor to re-enter, such right was available for exercise without waiting for application for renewal.161 The lessee was not expected to erect, or elevate, to construct shops and to sublet them without written permission of the collector. The lessee was to forfeit all his rights under the lease if there is breach of this condition. The lessee constructed shops and let them out for commercial purposes. The District Magistrate had given permission for letting out only the land. This was held to be an apparent breach of the conditional lease. Refusal to renew the lease was proper.162

[s 107.6.4] Renewal Subject to Lessor's Discretion Where the provision permits the lessee to seek renewal which may be granted by the lessor, renewal would be a matter for discretion of the lessor and no court would compel him to do so. The lease in this case was in favour of a company for 25 years. The company requested the lessor to consider renewal for another term of 30 years. The lessor made no response. The lease expired by efflux of time. The lessor demanded payment of arrears first and then to ask for renewal. In the meantime, the company went into liquidation. The assets of the company were purchased by a person under High Court confirmation. The High Court directed the company to grant fresh lease to the purchaser after clearance of outstanding. This direction was held to be against the terms of the lease because under such terms the lessor could re-enter on the company going into liquidation. The Supreme Court further said that the High Court should have examined the schedule of rent changes on the basis of economic conditions prevalent at the given point of time. The rent demanded by the lessor was found to be absolutely fair and reasonable.163

[s 107.7] Difference between Extension of Lease and its Renewal There is a difference between an extension of lease in accordance with the covenant in that regard contained in the principal lease and the renewal of the lease again in accordance with the same covenant contained in the original lease. In the case of extension of lease, the extension for the term agreed upon shall be a necessary consequence of the clause for extension; therefore, there is no need to execute a fresh deed of lease. However, in the case of renewal, a fresh deed will have to be executed between the parties. Where after the expiry of original lease for 10 years no fresh agreement was executed for renewal for a further period of 5 years, it was held that the lease became from month to month and, therefore, termination of lease by notice under section 106 was valid.164

[s 107.8] Government in the Position of a Lessor There was a stipulation in a renewal clause that on lessee exercising option to renew, lessor shall renew lease for further term of 50 years and with and subject to some covenants and provisions as contained in the original lease. Lease was once renewed by incorporating terms of the original lease by reference but the government lessor did

not take steps for reentry on expiry of the renewal period. The Government lessor generally used to renew such type of leases. The lessee was held entitled to claim second renewal in view of the covenant for renewal referentially incorporated without any reservation and the plea of government that the land in question has been acquired or there was breach of conditions by the lessee were held to be not tenable as no steps were taken by the government for re-entry.165

[s 107.9] Rights of Lessee (Section 106) Where the shops were granted on lease for 3 years but on termination of lease, and auction, the occupation of lessee continued even after expiry of lease on revised rentals, it was held that the lease was never understood or accepted as perpetual and the plea of the lessees that they had legitimate expectation to continue occupation indefinitely by paying reasonable enhanced rent was held to be untenable.166

[s 107.10] Other Leases In case of other leases registration is optional. Such leases may be effected either by registered instrument or by oral agreement followed by delivery of possession. Where a tenant accepts lease executed for 11 months and further renewed for 4 months, such a deed is not compulsorily registrable but admissible in evidence and not barred for want of registration.167

[s 107.11] Execution both by Lessor and Lessee Where the lease is made by registered instrument, it is necessary that the instrument should be executed both by the lessor and the lessee.168

[s 107.12] Effect of Non-registration Where the compulsorily registrable lease is not registered, the lease is considered to be invalid. When a lease contains a covenant for renewal it does not ipso facto extend the tenure of the lease. Even if for the renewed lease registration is compulsory. Renewed lease must be registered otherwise it will not be a valid lease. Even the renewal of lease exceeding one year requires registration. A document which requires compulsory registration is not admissible for want of registration to prove the terms of the lease. It is admissible only to prove the character of the possession of the person who holds the property.169 The maxim generalia specilibus non-derogant means that where same provisions are given in a general statute and a special statute, then the provisions of special statute will prevail over those of general statute. Where by virtue of Burmah Shell (Acquisition of Undertakings in India) Act, 1976, the right, title and interest inclusive of leasehold rights of Burmah Shell vested in the Central Government and consequently upon the appellant company, section 5 of the Acquisition Act contemplating automatic renewal of lease will be applicable and not the provisions of section 107 of the Transfer of Property Act, 1882 which contemplates registration of the renewal of lease, the provisions of special Act will prevail.170

It has been held that an oral agreement accompanied by delivery of possession is good enough for purpose of creation of jural relationship between the parties. The lease deed can be admitted in evidence for collateral purposes by invoking the proviso to section 49 of the Registration Act, 1908.171 The terms of an unregistered lease deed for a term more than a year cannot be relied upon to claim or enforce any right in respect of such lease. It can be relied only for the limited purpose as to whether possession of the lessee was lawful.172

[s 107.12.1] Successive Leases It has been held that the execution of a fresh lease during the currency of an earlier lease leads to implied surrender of an earlier lease. It was further held in this case that leases are bilateral contracts which are executed by the parties and are duly registered in accordance with the law. Any allegation of fraud in the process would have to be made out by evidence. The plea of fraud raised for the first time before the Supreme Court cannot be entertained.173

142 As to limitation to the territorial operation of section 107, see section, section 107 extends

to every cantonment— see section 287 of the Cantonments Act, 1924 (2 of 1924). 143 Subs. by Act 6 of 1904, section 5, for the original paragraph. 144 Ins. by Act 20 of 1929, section 55. 145 The words "with the previous sanction of the Governor General in Council" omitted by the

AO 1937. 146 V Muralidhar v S Anaiah Goud, AIR 2007 AP 347 : 2007 (5) Andh LD 559 : 2007 (6) Andh LT

779 , a declaratory relief was sought by the lessee that he was a permanent lessee of the suit space, no such relief could be granted where there was no registered document showing such lease. Shiv Kumar v Chote Lal, AIR 2007 (NOC) 139 (All) : (2006) 6 All LJ 547, unregistered lease deed, the document was more than 30 years old, this raised presumption of its execution and attestation under section 90 of the Evidence Act, the document was not admissible in evidence because a lease of more than one year had to be means of a registered document, but even so the document proved possession of the plaintiff's ancestors and payment of rents was a proof of continuous possession, the defendants, who were claiming possession, could not prove their ownership, plaintiff's were entitled to possession on the basis of the lease deed, Food Corp of India v Babulal Agrawal, (2004) 2 SCC 712 : AIR 2004 SC 2926 : 2004 AIR SCW 493, in the absence of registration of lease deed its nature would only be that of a monthly lease. Gurdial Singh v Raj Kumar Aneja, AIR 2002 SC 1003 : (2002) 1 SCR 817 : (2002) 2 SCC 445 , though registered and described as lease deed, the court said that oral evidence was also allowable for the purpose of throwing light upon the real nature of the document. Hyundai Motor India Ltd v Opal Metal Engg Pvt Ltd, AIR 2009 Del 1 : 2009 (2) AIR Bom R 291 (NOC) : 2008 (152) DLT 317 , lease deed on unstamped and unregistered document cannot be looked into for any purpose, not also for specific performance; unregistered lease deed and absence of any attesting witness can be easily manipulated, lower courts concluded that the document was an ante-

dated document, it cannot be looked into for deciding whether it created any right, title or interest in appellants, Yashchandra v State of MP, (2017) 16 SCC 414 . 147 Vasundhara Enterprises v Indian Oil Corp Ltd, AIR 2007 (NOC) 1502 (Pat), registered lease

deed was signed only the lessor, neither party denied execution of the instrument creating jural relationship, the subsequent deed of rectification which was signed by both parties proved that the document was executed by the joint endeavour of both parties, lease deed not invalid only because it was initially signed by only one party. Kubra Begum v IIIrd Additional DJ, AIR 2006 All 55 : 2006 (62) All LR 18 : 2006 (3) Civ LJ 159 , parties were first cousins, the alleged lease-deed was not a registered document, at no point of time payment of rent was proved, no tenancy could be said to have been created, in view of close relationship, the theory of landlord-tenant relationship could not stand. 148 Food Corp of India v Babulal Agrawal, (2004) 2 SCC 712 : AIR 2004 SC 2926 : 2004 AIR SCW

493, in the absence of lease deed or registered deed, the nature of the lease would be only that of a monthly lease. Even a monthly lease may continue for more than a year or still longer period. 149 Ahmedsaheb v Sayed Ismail, AIR 2012 SC 3320 : 2012 AIR SCW 4287 : (2012) 8 SCC 516 . 150 Pardeep Bahal v Kanwaljit Kaur, AIR 2012 (NOC) 417 (P&H). 5. 151 AIR 1999 SC 37 : 1998 AIR SCW 3341 : (1998) 7 SCC 602 . 152 Sankuratri Veera Venkata Naga Mohan Raghavandevi v Vedulla Anjaneyulu, AIR 2010 (NOC)

147 (AP). 153 Sree Radha Krishna Rice Mill Co v Jamma Maseed, AIR 2006 (NOC) 934 (AP). 154 State of Uttar Pradesh v Lalji Tondon, AIR 2004 SC 32 : (2004) 1 SCC 1 : 2003 AIR SCW

5559. 155 (1912) 17 IC 180 : 16 Cal LJ 217 : 17 IC 180; Hindustan Petroleum Corp Ltd v Ram Bharosey

Lal Gupta, AIR 2007 All 220 : 2007 (5) All LJ 789 : 2007 (69) All LR 379 , the lessee had issued notice exercising its right of renewal of the lease for another term of years, and the notice was duly received by the lessor, held, the lessor had no option but to renew the lease, issue of notice under section 106 determining the lease was erroneous because there was no right to do so. Reversed by the Supreme Court in Ram Bharosey Lal Gupta v Hindustan Petroleum Corp Ltd, (2013) 9 SCC 714 : AIR 2014 SC (Supp) 1020 : 2013 AIR SCW 2477, because the lease has been terminated and possession handed over to the lessor. 156 State of Uttar Pradesh v Lalji Tandon, JT 2003 (8) SC 334 : AIR 2004 SC 32 : 2003 AIR SCW

5559. 157 B Arvind Kumar v Govt of India, (2007) 5 SCC 745 : JT 2007 (8) SC 602 : (2007) 8 Scale 520 . 158 Hardesh Ores Pvt Ltd v Hede and Co, (2007) 6 SCR 608 : (2007) 5 SCC 614 : JT 2007 (7) SC

150 ; State of Uttar Pradesh v Lalji Tandon, JT 2003 (8) SC 334 : AIR 2004 SC 32 : 2003 AIR SCW 5559, where a covenant for renewal exits, its exercise is a unilater act of the lessee and consent of the lessor thereafter is necessary. Bandhu Machinery Pvt Ltd v Om Prakash Sikka, AIR 2009 Del 33 (DB) : 2009 AIHC 301 (NOC) : 2009 (2) All LJ (NOC) 348, extension of lease not made by registered instrument. The onus to establish the purported oral lease was held to be on the tenant. 159 State of Uttar Pradesh v Lalji Tandon, AIR 2004 SC 32 : 2003 AIR SCW 5559 : JT 2003 (8) SC

334 : (2003) 9 Scale 188 : 2003 (8) Supreme 40 . 160 (2003) 3 SCC 128 : AIR 2003 SC 942 : 2003 AIR SCW 425. 161 State of Uttar Pradesh v Lalji Tandon, AIR 2004 SC 32 : 2003 AIR SCW 5559 : JT 2003 (8) SC

334 : (2003) 9 Scale 188 : 2003 (8) Supreme 40 . 162 Pramod Kumar Kanhane v State of Uttar Pradesh, AIR 2015 NOC 887 (All). 163 Board of Trustees of Port of Kolkata v Efclon Tie-up Pvt Ltd, (2006) 9 SCC 783 .

164 Bank of Baroda v Sardar Arvind Singh, AIR 2002 (NOC) 191 (All) : 2002 AI HC 2396. Same

points of distinction noted in Hardesh Ores Pvt Ltd v Hede & Co, (2007) 6 SCR 608 : (2007) 5 SCC 614 : JT 2007 (7) SC 150 , the court referred to Provash Chandra Dalwi v Biswanath Banerjee, 1989 Supp 1 SCC 487 : AIR 1989 SC 1834 . 165 State of Uttar Pradesh v Lalji Tandon, JT 2003 (8) SC 334 : AIR 2004 SC 32 : 2003 AIR SCW

5559. 166 G Soman v State of Kerala, AIR 2004 Ker 26 : 2003 (2) Ker LJ 645 . 167 Tenant did not deny his signature and execution of tenancy, absence of signature of

landlord in lease deed is not fatal for avoiding its terms, Sudhir Kumar v Uma Shankar Pd. Gupta, AIR 2017 (NOC) 926 Pat. 168 Manoj Roy v Gunendra Roy, AIR 2007 Gau 172 , two sets of lease agreement for the same

property cannot be entered into between the same landlords and tenants, subsequent agreement for the same premises, but the subsequent agreement was entered into with only one tenant and on different terms, it had the effect of automatically terminating the earlier tenancy. 169 Modern Food Industries (India) Ltd v IK Malik, 2003 (1) RCR (Civil) 118 : 2002 (2) Ren CR 690

(Del) (DB). 170 Bharat Petroleum Corp Ltd v P Kesavan, 2004 AIR SCW 1989 : AIR 2004 SC 2206 : (2004) 9

SCC 772 ; Narain Prasad Aggarwal v State of Madhya Pradesh, AIR 2007 SC 2349 : 2007 AIR SCW 4165 : (2007) 8 Scale 250 , in a suit for declaration of title, it was found that the land was auctioned in 1859, the present plaintiff and his predecessors in interest were in possession since then, Settlement Commissioner ordered that the plaintiff should be deemed to be permanent lessee, the order became final, dismissal of the suit on a contradictory finding that the land was Nazul land, was set aside by the Supreme Court. Shyam Lal v Deepa Das Chela Ram Chela Garib Dass, AIR 2011 (NOC) 187 (P&H), lease of agricultural land, section 107 not applicable, the unregistered lease deed was admissible in evidence. Savarga Bhaktibhai Dullabhai Sthapit Bhakta Patidar v Prabhubhai Dahyabhai, AIR 2011 (NOC) 186 (Guj), the matter under the Special Act of Bombay Revenue, Tenancy of agricultural land, section 106, TPA, not applicable. 171 ARC Overseas Pvt Ltd v Bougainvillea Multiples and Entertainment Center Pvt Ltd, AIR 2008

(NOC) 1675 (All). 172 SMS Tea Estates Pvt Ltd v Chandmari Tea Co Pvt Ltd, (2011) 14 SCC 66 : 2011 AIR SCW

4484; In Sardarni Manjit Kaur v Dhan Prakash, AIR 2015 Utr 29 , an unregistered lease deed for more than a year is not a valid document, it can be used only for collateral purposes, e.g., proof that possession was lawful. Six months prior notice for termination was not necessary; unregistered lease deed produced by defendant cannot be looked into for collateral purpose of surrender of lease by plaintiff, Fahima Irfan Patel v Roop Basheer Ahmed, AIR 2018 Kar 167 . 173 Ashok Kumar Mandal v Rabindra Nath Banerjee, (2004) 10 SCC 578 : (2004) 1 CHN 135 :

(2005) 3 Scale 678 .

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER V OF LEASES OF IMMOVABLE PROPERTY Chapter V dealing with leases of immovable property consists of 14 sections, i.e., from section 105 to section 117.

[s 108] Rights and liabilities of lessor and lessee.— In the absence of a contract or local usage to the contrary, the lessor and the lessee of immoveable property, as against one another, respectively, possess the rights and are subject to the liabilities mentioned in the rules next following, or such of them as are applicable to the property leased:— (A) Rights and Liabilities of the Lessor (a) The lessor is bound to disclose to the lessee any material defect in the

property, with reference to its intended use, of which the former is and the latter is not aware, and which the latter could not with ordinary care discover; (b) the lessor is bound on the lessee's request to put him in possession of

the property; (c) the lessor shall be deemed to contract with the lessee that, if the latter

pays the rent reserved by the lease and performs the contracts binding on the lessee, he may hold the property during the time limited by the lease without interruption. The benefit of such contract shall be annexed to and go with the lessee's interest as such, and may be enforced by every person in whom that interest is for the whole or any part thereof from time to time vested. (B) Rights and Liabilities of the Lessee (d) If during the continuance of the lease any accession is made to the

property, such accession (subject to the law relating to alluvion for the time being in force) shall be deemed to be comprised in the lease; (e) if by fire, tempest or flood, or violence of an army or of a mob, or other

irresistible force, any material part of the property be wholly destroyed or rendered substantially and permanently unfit for the purposes for which it was let, the lease shall, at the option of the lessee, be void: Provided that, if the injury be occasioned by the wrongful act or default of the lessee, he shall not be entitled to avail himself of the benefit of this provision; (f) if the lessor neglects to make, within a reasonable time after notice, any

repairs which he is bound to make to the property, the lessee may make the same himself, and deduct the expense of such repairs with interest from the rent, or otherwise recover it from the lessor; (g) if the lessor neglects to make any payment which he is bound to make,

and which, if not made by him, is recoverable from the lessee or against

the property, the lessee may make such payment himself, and deduct it with interest from the rent, or otherwise recover it from the lessor; (h) the lessee may 174[even after the determination of the lease] remove, at

any time 175[whilst he is in possession of the property leased but not afterwards] all things which he has attached to the earth; provided he leaves the property in the state in which he received it; (i) when a lease of uncertain duration determines by any means except the

fault of the lessee, he or his legal representative is entitled to all the crops planted or sown by the lessee and growing upon the property when the lease determines, and to free ingress and egress to gather and carry them; (j) the lessee may transfer absolutely or by way of mortgage or sub-lease the

whole or any part of his interest in the property, and any transferee of such interest or part may again transfer it. The lessee shall not, by reason only of such transfer, cease to be subject to any of the liabilities attaching to the lease; Nothing in this clause shall be deemed to authorise a tenant having an untransferable right of occupancy, the farmer of an estate in respect of which default has been made in paying revenue, or the lessee of an estate under the management of a Court of Wards, to assign his interest as such tenant, farmer or lessee; (k) the lessee is bound to disclose to the lessor any fact as to the nature or

extent of the interest which the lessee is about to take, of which the lessee is, and the lessor is not, aware, and which materially increases the value of such interest; (l) the lessee is bound to pay or tender, at the proper time and place, the

premium or rent to the lessor or his agent in this behalf; (m) the lessee is bound to keep, and on the termination of the lease to

restore, the property in as good condition as it was in at the time when he was put in possession, subject only to the changes caused by reasonable wear and tear or irresistible force, and to allow the lessor and his agents, at all reasonable times during the term, to enter upon the property and inspect the condition thereof and give or leave notice of any defect in such condition; and, when such defect has been caused by any act or default on the part of the lessee, his servants or agents, he is bound to make it good within three months after such notice has been given or left; (n) if the lessee becomes aware of any proceeding to recover the property or

any part thereof, or of any encroachment made upon, or any interference with, the lessor's rights concerning such property, he is bound to give, with reasonable diligence, notice thereof to the lessor; (o) the lessee may use the property and its products (if any) as a person of

ordinary prudence would use them if they were his own; but he must not use, or permit another to use, the property for a purpose other than that for which it was leased, or fell 176[or sell] timber, pull down or damage buildings 176[belonging to the lessor, or] work mines or quarries not open when the lease was granted, or commit any other act which is destructive or permanently injurious thereto; (p) he must not, without the lessor's consent, erect on the property any

permanent structure, except for agricultural purposes;

(q) on the determination of the lease, the lessee is bound to put the lessor

into possession of the property.

Comments [s 108.1] Rights and Liabilities of Lessor (Section 108) Section 108 provides for rights and liabilities of both the lessor and lessee. These rights and liabilities are subject to a contrary-contract, i.e., where the lessor and lessee make an agreement to be governed by their terms and conditions during the subsistence of lease, their respective rights and liabilities are determined by their own agreement. Section 108 does not apply in such a case. Similarly, where there is any local custom or usage governing their rights and liabilities, that usage or custom will govern their relationship during the subsistence of lease and section 108 will not apply there. Section 108 expressly permits contracts contrary to its provisions. It imposes no restriction on the right of parties to enter into a contract and stipulate terms, conditions and restrictions of their own choice.177 The first three clauses (a), (b) and (c) of section 108 provide for the liabilities of the lessor. In this section no specific rights of the lessor are given but the liabilities of the lessee given in the section are considered as identical rights of the lessor.

[s 108.2] Liabilities of Lessor The liabilities of the lessor are:— (i) Duty of disclosure [Clause (a)] (ii) Duty to give possession [Clause (b)] (iii) Covenant for quiet enjoyment. [Clause (c)]

(i) Duty of Disclosure [Section 108(a)].—Clause (a) provides that the lessor is bound to disclose to the lessee any material defect in the property with reference to its intended use of which the lessor is aware but the lessee is not aware and which the lessee could not discover with ordinary care. Defects are of two types—those which are apparent and those which are not apparently visible i.e., latent defects. The lessor is bound to disclose latent defects only because such defects cannot be discovered with ordinary care. The duty of disclosure is especially important where the defects affect the right of enjoyment or use of the property. Therefore, the lessor is bound to disclose latent defects which are going to affect the use of property by the lessee. This section contains no provision as to title but only for quiet enjoyment of property. Therefore, the lessor has no duty to disclose defect in title. (ii) Duty to give possession [Section 108(b)].—Clause (b) says that the lessor is bound on the lessee's request to put him in possession of the property. This clause imposes a statutory obligation on the lessor to put the lessee into possession of the property leased. However, this duty of lessor to deliver possession arises only when there is a request by the lessee in this respect.

When a lessor fails to put the lessee in possession, the lessee may sue him for obtaining possession. In case the lessee has already paid rent, he may sue for damages as well as for recovering back the amount paid as rent. Where the lessee gets possession of only a part of the lease property he may repudiate the lease. But where he wants to retain that part he must pay rent for that occupied part. If the leased property is in the possession of any third person, the lessee may also sue him along with the lessor. Where the tenant vacated the premises but did not give possession to landlord till the security amount was refunded to him, it was held that the tenant was liable to pay the rent for the period he retained the possession whether he used the premises or not. He has an independent remedy to recover the security.178 (iii) Covenant for Quiet Enjoyment [Section 108(c)].—Clause (c) provides that the lessor shall be deemed to contract with the lessee that, if the lessee pays the rent reserved under the lease and performs the contracts binding on the lessee, he may hold the property during the time limited by the lease without interruption. It is the duty of the lessor to ensure that the lessee ought not to be interfered with during the period of lease either by him or anyone else. The covenant for quiet enjoyment under this clause is regarded as a covenant running with the land so as to be enforceable by any assignee of the lessee against the lessor and his assignee. Where the quiet enjoyment of the lessee has been interrupted, he is entitled to recover damages equivalent to the present value of the prospective profit of which he is deprived.179 (iv) Duty to observe terms of lease.—In a lease of an industrial plot, the lease terms prohibited transfer of the plots, change in memorandum and articles of the company on change in its capital structure, or change of promoters with a view to settle its debts or sale of the company in liquidation or its amalgamation. Any such thing could be done only with the permission of the lessor. The company made changes in its memorandum and articles and capital structure. The court held that this amounted to transfer of property, rights and powers of the company. The lessor corporation's demand of transfer fee in accordance with the terms of the lease was held to be proper.180

[s 108.3] Rights of Lessee Clauses (d) to (j) of section 108 deal with the rights of a lessee which are as follows:— (i) Right to enjoy the accretions (ii) Right to avoid the lease in case of any destruction by fire, tempest etc. (iii) Right to repair the property when lessor neglects to make and to deduct the

expenses of repairs from rent. (iv) Right to make payments that are obligatory on the lessor and to deduct the

amount from rent. (v) Right to remove fixtures made by him during tenancy. (vi) Right to have the benefit of crops growing on the land planted by him. (vii) Right to assign his interest in the leased property.

Now these rights in detail. (i) Right to Enjoy Accretions [Section 108(d)].—Clause (d) provides that if during the continuance of the lease any accession is made to the property, such accession shall be deemed to be comprised in the lease. However, such accession will be subject to the law relating to alluvion for the time being in force. Accessions are accretions are additions made to the leased property. They may be natural accretions or made by the lessee. For example, additions made by flood or alluvial activity. The lessee is entitled to such accretions during the continuance of the lease but not afterwards. However, he cannot acquire title to such accessions adversely to his lessor or landlord. On the termination of the lease, the lessee is bound to surrender the accession in the same way as he surrenders the leased property. Where a lessee acquires land of another person (stranger) by encroachment for the benefit of the lessor, he is bound to surrender the land acquired by him by adverse possession to the lessor after the expiry of the lease.181 (ii) Right to Avoid Lease [Section 108(e)].—Clause (e) provides that if by fire, tempest or flood, or violence of an army or of a mob or other irresistible force, any material part of the property is either wholly destroyed or rendered substantially and permanently unfit for the purposes for which it was given on lease, the lease shall be void at the option of the lessee. However, where the injury is occasioned by the wrongful act or default of the lessee, he shall not be entitled to the benefit of this clause i.e., he will not be entitled to avoid the lease. This clause gives the right to avoid the lease to the lessee when the subject-matter of the lease is destroyed by fire, flood, tempest, violence of mob or army. Destruction may be of the whole leased property or part of it. It is necessary that the destruction must be substantial and of permanent character and must not be caused by the wrongful act of the lessee himself.182 It has been held that destruction of a house or building constructed on a leasehold property does not by itself destroy tenancy right of the occupant.183 (iii) Right to Repair Property [Section 108(f)].—Clause (f) provides that if the lessor neglects to make any repairs which he is bound to make to the property after notice within a reasonable time, the lessee may make the repairs himself and deduct the expense of such repairs with interest from the rent or otherwise recover it from the lessor. The lessor is not bound to make repairs to the leased property. But where he agrees at the time of the lease with the lessee that he will make the necessary repairs then he becomes bound to make the repairs. If within the reasonable time after notice by the lessee, the lessor does not undertake repairs the lessee may himself do the repairs and recover the amount from the lessor or deduct it from the rent but he is not entitled to avoid the lease on this ground. It is the duty of tenant to establish by evidence that the landlord was bound to carry out repairs under an agreement, custom or usage otherwise his claim will not be sustainable because this section does not by itself make a landlord liable to carry out repairs.184 (iv) Right to make Payments [Section 108(g)].—Clause (g) provides that if the lessor neglects to make any payment which he is bound to make and which, if not made by him, is recoverable from the lessee or against the property, the lessee may make such payment himself and deduct it with interest from the rent or otherwise recover it from the lessor. Where the lessee makes the payment which the lessor was bound to make like taxes, revenue etc. and which if not paid were recoverable from the lessee or the land, the

lessee may make the necessary payment and recover the amount paid by him from the lessor or deduct it from the rent with interest. The payment must not be voluntary and it must be compulsory and the lessee must have made the payment under protest.185 If there is no evidence that he paid under protest, he cannot maintain an action for recovery.186 (v) Right to Remove Fixtures [Section 108(h)].—Clause (h) provides that the lessee may even after the determination of the lease remove, at any time whilst he is in possession of the property leased but not afterwards, all things which he has attached to the earth provided he leaves the property in the state in which he received it. This clause enables the lessee to remove anything which he attached to the property. The clause provides an exception to the general rule that things attached to the earth become part of it. After the amendment of 1929, the lessee has become authorised to remove trees or fixtures set up by him on the lease so long as he is in possession of the property even though the tenancy has come to an end. However, while removing such fixtures he must see that the property is left in the same condition in which he had received it.187 Where a shop was let in 1968 and the tenant converted the hall into two rooms by raising partition wall and fixing a door without the consent of the landlord, the suit for eviction was filed in 1981, it was held that the mere inaction on the part of the lessor had not entitled the lessee to resist the suit on the ground of estoppel.188 Where the lessee demolished the construction on the leasehold premises without consent of the landlord, it was held that his existence on the premises was reduced from the status of a lessee to that of a rank trespasser, and, therefore, the legal relationship of the landlord and tenant had come to an end. The tenant was liable to reconstruct premises and also to pay compensation.189 (vi) Right to have Benefit of Crops [Section 108(i)].—Clause (i) provides that when a lease of uncertain duration becomes determined by means except the fault of the lessee, he or his legal representative is entitled to all the crops planted or sown by the lessee and growing upon the property when the lease determines and to free ingress and egress to gather and carry them. Where a lease of uncertain duration is determined not due to the default of the lessee, the latter is entitled to all the benefit of the crops growing, planted or sown by him. Lessee or his legal representative has been given the right of free ingress and egress to visit the leased property to gather and carry the grown crops. (vii) Right to Assign his Interest [Section 108(j)].—Clause (j) provides that the lessee may transfer absolutely, or by way of mortgage or sub-lease the whole or any part of his interest in the property and any transferee of such interest or part may again transfer it. The lessee shall not, by reason only of such transfer, cease to be subject to any of the liabilities attaching to the lease. This clause, in absence of a contract to the contrary, empowers the lessee to transfer whole of his interest or any part of his interest. The interest may be transferred absolutely or by way of mortgage or sub-lease. His transferee or his assignee has also been empowered to transfer his interest again.190 Where a company in liquidation had acquired leasehold rights for value for consideration paid to the earlier lessee, it was held that the official liquidator was entitled to encash the capital asset by disposing of leasehold rights so as to enable him to pay off dues to creditors and contributories. The transfer by way of assignment of leasehold rights was proper.191

On the termination of the lease, the obligation of handing over the possession of the property is of the lessee and not of the sub-lessee because only the original lessee is privy to the contract.192 Where in the lease in question though the expression "parting with possession" is preceded by the expression of "sale, transfer or assigning", it is not mere parting with possession, but "otherwise parting with possession." Thus, the clause envisages not only parting with possession in the context of sale, transfer or assigning but also parting with possession in other contexts, which would include the cases of subletting.193 A tenant having an untransferable right of occupancy, the farmer of an estate in respect of which default has been made in paying revenue, or the lessee of an estate under the management of a court of wards is not entitled to assign his interest as such tenant, farmer or lessee. In the matter of proof of sub-letting, the court said that the landlord is not expected to have a direct knowledge of the transaction that may have been entered into by the tenant with a third party. Law does not require that the fact of payment of rent by the third party to the tenant to be proved by affirmative evidence. Finding of the fact of sub-tenancy by looking at the fact that the sub-tenant was selling foreign liquor from the demised shop and the licence was in the name of the sub-tenant and not in the name of the tenant was held to be not an improper finding.194 A lessee or a licensee cannot claim to have acquired customary rights to get lease or licence. Where fishing rights in tank were granted to fishermen on lease or licence, their rights being permissive, they could not claim customary rights to get lease/licence.195

[s 108.4] Liabilities of Lessee [Clauses (k) to (q)] According to section 108, the lessee is under the following liabilities:— (i) Duty to disclose facts materially increasing the value of property. (ii) Duty to pay rent or consideration of lease. (iii) Duty to maintain the property. (iv) Duty to give notice of any encroachment on the property to the lessor. (v) Duty to use the property in a reasonable manner. (vi) Duty not to erect permanent structure on the property. (vii) Duty to re-transfer the possession on determination of lease.196

(i) Duty to Disclose Facts [Section 108(k)].—Clause (k) provides that the lessee is bound to disclose to the lessor any fact as to the nature or extent of the interest which the lessee is about to take, of which the lessee is aware but the lessor is not aware and which materially increases the value of such interest. As the lessor is made liable to disclose any material defect (latent) in the leased property to the lessee, the lessee is correspondingly put under a duty to disclose to the lessor any fact known to him which increases the value of the leased property. It is necessary that the lessor must be unaware of that fact. For example, when a lessee comes to know of existence of a gold mine in the leased property he must tell the lessee about the gold mine. Omission or failure of the lessee to inform the lessor about such facts is not a fraudulent act and lessor cannot a terminate lease due to such omission. However, the lessor can sue the lessee for damages.

(ii) Duty to Pay Rent [Section 108(l)].—Clause (l) provides that the lessee is bound to pay or tender at the proper time and place, the premium or rent to the lessor or his agent in this behalf. This clause has made the lessee liable to pay the rent or premium at the proper time and place to the lessor. However, the proper time comes only after the lessee takes possession of the property and not from the date of signing the lease-deed. Where the lessee could not get possession of the whole leased property, he will have the right to claim reduction in the rent accordingly. Where the property is leased jointly to more than one person, rent paid by anyone of them will be sufficient. Similarly, when a joint property is leased to a person, then rent paid to anyone of the lessors will be sufficient. Where the lessee fails to pay the rent according to the lease-deed, the lessor may sue him for arrears of rent along with the interest or he may start ejectment proceedings on the ground of non-payment of rent after giving proper notice.197 (iii) Duty to Maintain the Property [Section 108(m)].—Clause (m) provides that the lessee is bound to keep and on the termination of lease to restore the property in as good condition as it was when he was put into possession. He is bound to allow the lessor and his agents at all the reasonable time during the continuance of the lease to enter upon the property and inspect its condition and give notice of any defect in it. Where such defect has been caused by any act or default on the part of the leasor or his servants or agents, he is bound to make it good within three months of such notice. The lessee is bound to maintain and restore the property in the condition in which it was let to him. Only the changes caused by reasonable wear and tear or irresistible force are allowed under the duty of this clause. Mere drawing of pipeline by the tenant to the tenanted premises for supply of drinking water does not amount to an act injurious to the building.198 (iv) Duty to Give Notice of any Encroachment [Section 108(n)].—According to clause (n), if the lessee becomes aware of any proceeding to recover the property (or its part) or of any encroachment made upon the lessor's right or any interference with the lessor's right over such property, he is bound to give notice of such encroachment, interference etc. to the lessor with reasonable diligence. Where the lessee comes to know of any encroachment on the property in his possession or any interference with the lessor's right in respect of property in his possession, he has to inform the lessor about this fact so that he may timely take an action to protect his interest. (v) Duty to use the Property in Reasonable Way [Section 108(o)].—Clause (o) provides that the lessee may use the property and its products as a person of ordinary prudence would use them if they were his own. He is under duty not to use himself or allow any other person to use the property for a purpose other than that for which it was leased. He must not cut down the trees or sell the timber, or pull down or damage the buildings belonging to the lessor or work mines or quarries not open when the lease was granted or commit any act which is destructive or permanently injurious to the property. The lessee must not use or allow others to use the property for a purpose other than that for which it was leased. Where the premises were let out to the tenant for sugarcane juice business but he was using the premises for selling readymade clothes, it was held that the provisions of this Act were contravened.199 (vi) Duty not to Erect Permanent Structure without Lessor's consent [Section 108(p)].— Clause (p) provides that the lessee must not erect any permanent structure on the property without the lessor's consent except for agricultural purposes. Only for agricultural purposes, the lessee is entitled to erect any permanent structure on the leased property. Where the lessee constructs any permanent structure without the

permission of the lessor, he is bound to remove them without causing damage to the tenanted property. In case, the permanent structures on the leased property are not removed after the expiry of the lease then they belong to the lessor.200 The lessee replaced the tin shed roof with cement concrete roof of the pre-existing kitchen and store space without extending the extent of the accommodation. The court said that it could not be regarded as construction of a permanent structure. It could at best be regarded as an improvement of a part of the premises. The roof was removable without causing damage to the main structure of the building. Material impairment of the value and utility of tenancy due to construction is not a ground for passing a decree of eviction. It should be a case of waste of or damage to the premises.201 There is another Calcutta High Court decision to the same effect. The court said that the construction of any description or any structure could not be a ground for eviction. The plaintiff-landlord has to prove with cogent evidence that there has been erection of a structure of permanent nature on the property. It is immaterial whether the structure is lawful or wrongful. The structure must be of such a nature that it cannot be removed without damaging or impairing substantially any portion of the demised premises. The mere raising of a wall adjacent to the premises either of mud or of bricks which can be removed without any difficulty at any point of time, cannot be said to be a structure of permanent nature. Even if any roof is constructed with asbestos or corrugated tin, or even with concrete slab, it cannot be said to be permanent if it can be brought down without damages to the building of substantial or structural nature.202 A lease was granted for running motor repair business. The lessee was permitted to raise a shed by tile, tin or asbestos. This was done in accordance with the authority given and, of course, support of brick wall had to be provided. The lessee was held entitled to extension of the lease for the period for which he was in possession of the property.203 The Supreme Court has put upon the words "permanent structure" a realistic meaning. It means a structure capable of lasting till the end of tenancy. It need not be everlasting structure or one creating additional usable space. Other considerations for determining the nature of construction were also stated. In this case the ground tenant raised a permanent structure by replacing tin roof of the premises by concrete slab, and construction of passage. Both the alterations were intended to last till the end point of tenancy. The alterations were not capable of being removed without causing extensive damage to the remaining structure. It was held that the alterations constituted a permanent structure.204 It has been held by the Calcutta High Court that the consent of the landlord can be taken even after making construction because the word "prior" is not there in section 108(p). Even after construction, if no action is taken by the landlord on coming to know of the fact, it can give rise to inference of consent. The fact of whether consent was given or not, being especially within the knowledge of the landlord, and no other person, it has to be proved by the landlord himself.205 In a Bombay case, permission was given by the lessor to lessee to put up construction on the land under lease. The lease became determined. As per terms of the lease, the lessee had to handover the land along with structures put on it and the lessor was to pay price for the same on the basis of agreed joint valuation. This contract was held to be not contrary to section 108. After expiry of the lease the lessee had no right to continue in possession of land and structures on it. The lessee was entitled to receive price of the structures.206 (vii) Duty to Re-transfer Property [Section 108(q)].—Clause (q) provides that on the determination of the lease the lessee is bound to put the lessor into possession of the property. The property leased for a certain period of time during which the lessee is

made entitled to enjoy the property. After the expiry of term of lease, the lessee has to give possession of the property back to the lessor. He has to re-transfer the property to the lessor. If he continues in possession even after the expiry of the term his possession becomes unauthorised possession. Where the tenant does not vacate the tenanted premises even after the expiry of the notice he becomes liable to pay damages as well as mesne profits to the lessor.207 Where neither the original owner nor his successor son had agreed for further extension of the lease period and the tenancy was determined under notice to quit, it was held that the defendant (tenant) had no right to continue his occupation of the premises. He had no right to be in the premises for ever on the mere basis that he had been paying enhanced rent periodically.208 The contention was also wholly untenable in view of the decision of the Apex Court.209 The Trial Court considered all these aspects and applied the law to the effect that a son can maintain suit for ejectment on the basis of the notice issued by his father. In another decision210 the Apex Court had held that on the basis of the notice issued by the landlord the beneficiary successor could maintain suit for ejectment. In yet another decision211, it was held that the legal notice issued by the landlord enures to the benefit of the successor. This court has also held that in view of the definition of "landlord", eviction petition need not be filed by the owner himself. In yet another decision212 it was held that in respect of family arrangement there is no transfer of property within the meaning of section 5 of the Act and hence notice of attornment is not necessary. The Trial Court, applying the legal principles enunciated in the aforementioned decisions, rightly held that there was valid notice as required under section 106 of the Act in terminating the tenancy and the suit filed by the plaintiff was maintainable. Where the tenant made additional fixtures and fittings in the premises for making the premises useful for business but no objection was taken by the landlord, it was held that the landlord could not insist that the tenant should restore the premises to original position because it could not be said that tenant did any damage to the premises.213 Mere drawing of pipeline to a building for drinking water will not come under any of the categories mentioned in section 108 and it cannot be said that the building will be damaged.214 It was not established that the tenant by making an addition or alteration encroached upon the tenancy of others or deprived the other tenants of their right of using the common bath. An eviction decree passing on such ground was held to be illegal.215 (viii) Object of Lease, Residential or Commercial.—Whether the arrangement is of composite or integrated nature, depends upon interpretation of terms for the purpose of finding out dominant purpose. The lease deed is to be read in its entirety. Isolated sentences are not to be taken up separately to infer that the lease was for residential purpose. A reading of the entire lease showed that the lessee had purchased a going concern and he requested the lessor to recognise him as a tenant. The defendant failed to produce documents such as electricity bill, ration card, gas connection, etc. to prove his residential purpose. He did not even produce any persons from his neighbourhood to testify to his residential purpose. The court concluded that the tenancy was for a business purpose.216

[s 108.5] Notice of Subsequent Events An eviction suit was decreed because of the reasonable requirement of the landlord and his wife. It was his genuine need because they were staying in his brother's house. The decree of eviction was granted. An appeal was filed against it. During pendency of the appeal, both the landlord and his wife died. It was held that the appellate court could take note of the subsequent event provided that it was related with the original

ground of eviction. The landlord had restricted his ground to himself and his wife. He did not extend it to any other person not even to his own son or grandson. The grandson could claim the benefit of the decree on some other ground and then that of reasonable personal need.217 Municipal Authorities effected an acquisition of tenanted land for road widening with the consent of the landlord. It was held that notice to the tenant was necessary. This was so because consent of the landlord was not binding on the tenant. The tenant could be deprived of his right to the property without following the due process of law. He could not be forcibly evicted.218

174 Ins. by Act 20 of 1929, section 56. 175 Subs. by Act 20 of 1929, section 56, for "during the continuance of the lease". 176 Ins. by Act 20 of 1929, section 56. 177 M Arul Jothi v Lajja Bal, (2000) 3 SCC 723 : AIR 2000 SC 1122 : 2000 AIR SCW 739; lease for

the property belonging to a temple by a manager or mohatmim is permissible only if there is a legal necessity for benefit of temple. Any lease without such a necessity is held to be invalid and void ab initio. A person in whose favour property has been leased out cannot claim any right over that property. In such a situation, no notice is required prior to order of cancellation of lease. When the plaintiff did not establish her title as well as possession over the property by stepping into witness box, no injunction was granted in favour of the plaintiff, Urmil Gupta v Commissioner, AIR 2017 HP 183 ; plaintiffs claiming to be legal heirs of mortgagor pleaded that mortgagor is not heard of for last 15 years prior to institution of suit, mortgagee claimed that he was admitted in medical college hospital but no evidence provided, presumption under section 108 applied and plaintiffs held entitled to decree of redemption simpliciter, Deviki Amma Kamalamma v Grace Appi Amma, AIR 2017 (NOC) 886 Ker. 178 Uberoisons (Machines) Ltd v Samtel Color Ltd, 2003 (2) Ren CR 376 (Del); Ratan Lal Jain v

Uma Shankar Vyas, AIR 2002 SC 804 : (2002) 1 SCR 750 : (2002) 2 SCC 636 , lessee made subletting, the sub-lessees were in possession, decree for eviction obtained against the lessee without impleading sub-lessees thinking that they were unnecessary parties, objections by sublessees against execution of decree, dismissed by the executing court without consideration on merits, held objections were by persons who were not parties to the suit and, they being not bound by the decree, their objections should have been considered on merits. 179 Nagardas v Ahmed Khan, ILR 21 Bom 175. 180 UP State Development Corp Ltd v Monsanto Mfrs Ltd, AIR 2015 SC 1445 . 181 Muthurakoo v Oxr, 1911 (21) Mad LJ 615. 182 Jagdish Chand v Parveen Kumar, AIR 2007 (NOC) 2562 (HP), major part of the leased

property was destroyed in fire, the lessor continued his possession of the shop even after its destruction and did not exercise the option available to him under the clause. The lessee was entitled to retain possession. 183 Shaha ratansi Khimji and Sons v Proposed Kumbhar Sons Hotel Pvt Ltd, AIR 2014 SC 2895 :

2014 AIR SCW 4271 : 2014 (2) CLR 287 . 184 Mirza Afzal Beg v Prabhu Dayal, AIR 1973 All 26 : 1972 All LJ 778 : 1972 Ren CR 931.

185 Baker v Greenhill, 3 QB 145. 186 Landlord and Tenant, Wood, 9th Edn, p 595. 187 Vasudeva Nambudripad v Valia Chathu Achan, 24 Mad 47 (FB) : 10 Mad LJ 321. 188 Shiv Ram v Sham Lal, 2003 (2) Ren CR 285 (P&H). 189 Bharat Bhushan Deva v State of Bihar, AIR 2008 Pat 29 : 2008 (2) AIR Jhar. 7 : 2008 (4) Rec

Civ R 375. 190 Sureshwar Dayal Seth v L&DO, AIR 2006 Del 128 : 2006 AIHC 191 (NOC) : 2005 (125) DLT

524 , the lessee raised a building on the lease land and transferred leasehold rights to another, the original lease contained a covenant permitting the ground floor to be used only as a shop, use for banking purposes and storage of banking material was held to be in the nature of a shop; sub-lease without authority is voidable not void, Radha Sharan Dubey v Ram Niwas, AIR 2017 (NOC) 828 All. 191 Ashok Kumar Krishnalal Patel v Continental Textile Mills Ltd, AIR 2013 Del 166 : 2013 (1)

ADR 572 : 2013 (199) DLT 733 . 192 Swansea Corp v Thomas, (1882) 10 QBD 48 . 193 Rajandheer (India) Pvt Ltd v Delhi Development Authority, AIR 2004 Del 208 : 2004 (109) DLT

442 : 2004 (72) DRJ 601 . 194 Iftikhar Hussain Khan v VIth Additional District Judge Bareilly, AIR 2008 All 14 : 2007 (68) All

LR 831 : 2007 (6) All LJ 420. 195 Ramchandra Wahiwat-dar Subs. by Moreshwar v Narayan, AIR 2003 SC 3286 : 2003 AIR SCW

4684 : (2003) 10 SCC 685 . 196 Hindustan tea Co v New Jatinga Valley Tea, (2001) 2 SLT 426 , forfeiture of security deposit

was held to be enough compensation in view of the terms of lease, not entitled to any further compensation. 197 Abdul Wahab Sab v TV Satyapal, AIR 2007 (NOC) 126 (Kant) : (2006) 6 AIR Kant R 419, a

plea of non-joinder of a firm was raised at the appellate stage and it was contended that the eviction notice was bad because it was not served on the firm, rents were always paid by the partners themselves and not by the alleged partnership firm, the suit was not bad for nonjoinder of the firm. 198 Chandrasekhran v Alexander, AIR 2003 Ker 95 : 2002 (2) Ker LJ 661 : 2002 (3) Ker LT 825 . 199 Dashrath Baburao Sangale v Kashinath Bhaskar Datta, AIR 1993 SC 2646 : 1993 AIR SCW

3431 : 1994 (1) SCC (Supp) 504; Purushottam Das Bangur v B Majumdar Samajpati & Sons, AIR 2008 SC 2715 : 2008 AIR SCW 4528 : (2008) 7 SCC 447 , the tenant unauthorisedly started using the terrace of the tenanted premises. The landlord claimed additional rent. The High Court rejected it. SLP filed against it. The court did not go into the question of legality of the user and ordered the tenant to deposit Rs 25,000 p.m. in the court. 200 Pundarikaksha Basu v Sardar Chanda Singh, AIR 1967 Cal 538 . 201 Dayanand Gupta v Gobind Lal Bangur, AIR 2007 Cal 247 : 2007 (2) Cal LJ 172 : 2008 (1) ICC

447. 202 Edmuond Francis Heberlet v Mustt Fatima Khatoon, AIR 2011 Cal 13 : 2010 AIHC 254 (NOC). 203 Nandabali Rani Manna v Unis Ali Mistri, AIR 2008 (NOC) 2674 (Cal). 204 Purushottam Das Bangur v Dayanand Gupta, AIR 2013 SC 465 : 2013 AIR SCW 180 : (2012)

10 SCC 409 . 205 Edmuond Francis heberlet v Mustt Fatima Khatoon, AIR 2011 Cal 13 : 2010 AIHC 254 (NOC). 206 Bombay Suburban Article and Craft Education Society v Govind Gajanan Dabholkar, AIR 2016

NOC 99 (Bom).

207 PS Bedi Project & Equipment Corp of India Ltd, AIR 1994 Del 255 : 1994 (28) DRJ 680 : 1994

(2) Ren CJ 500; renewal clause in a lease expiring by efflux of time provided renewal subject to fresh terms and conditions mutually agreed between parties, remedy for disputes relating to breach or termination of lease provided by arbitration clause, lessee not entitled to claim renewal of lease as a matter of right under the guise of arbitration proceedings, possession not handed over on expiry of lease, eviction proceedings held proper, Gandhi Corp v Gujarat University, AIR 2017 (NOC) 1006 Guj. 208 Maniram Industrial Enterprises, Bangalore v BS Sathya Kumar, AIR 2006 Kant 262 : ILR 2006

Kant 2466 : 2006 (4) Kant LJ 675 . 209 Shanti Prasad Devi v Shankar Mahto, ILR 2005 Kant 3587 : AIR 2005 SC 2905 : 2005 AIR

SCW 3359. 210 Vasant Kumar Radhakishan Vora v Board of Trustees of the Port of Bombay, AIR 1991 SC 14 :

1991 (1) SCC 761 : JT 1990 (3) SC 609 . 211 RP Ghosh v Pramilabai Ravindra Puri, AIR 1977 Bom 181 : 1976 Mah LJ 828 . 212 ILR 2003 Kant 3871 : 2003 AIR Kant HCR 2466. 213 ILR 2001 Kant 3300 . 214 Uberoisons (Machines) Ltd v Samtel Color Ltd, 2003 (2) Ren CR 375 (Del). 215 Chandrasekharan v Alexander, 2003 (1) Ren CR 135 (Ker) : AIR 2003 Ker 95 : 2002 (2) Ker LJ

661 . 216 Raj Kumar Dutta v Bimal Kumar Dhar, AIR 2008 Cal 190 : 2008 (67) AIC 495 : 2008 (3) ICC

187. 217 MN Sudarshan v V Murali Narayanan, AIR 2007 (NOC) 2351 (Kant). 218 Raisunna Begum v Premsukhai Jain, AIR 2016 Hyd 100 .

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER V OF LEASES OF IMMOVABLE PROPERTY Chapter V dealing with leases of immovable property consists of 14 sections, i.e., from section 105 to section 117.

[s 109] Rights of lessor's transferee.— If the lessor transfers the property leased, or any part thereof, or any part of his interest therein, the transferee, in the absence of a contract to the contrary, shall possess all the rights, and, if the lessee so elects, be subject to all the liabilities of the lessor as to the property or part transferred so long as he is the owner of it; but the lessor shall not, by reason only of such transfer cease to be subject to any of the liabilities imposed upon him by the lease, unless the lessee elects to treat the transferee as the person liable to him: Provided that the transferee is not entitled to arrears of rent due before the transfer, and that, if the lessee, not having reason to believe that such transfer has been made, pays rent to the lessor, the lessee shall not be liable to pay such rent over again to the transferee. The lessor, the transferee and the lessee may determine what proportion of the premium or rent reserved by the lease is payable in respect of the part so transferred, and, in case they disagree, such determination may be made by any Court having jurisdiction to entertain a suit for the possession of the property leased.

Comments [s 109.1] Rights of Lessor's Transferee (Section 109) In the case of a lease of immovable property, the right of enjoyment of that property is transferred in favour of the lessee. The remaining interest of the lessor in that property is known as reversion. Section 109 deals with the rights of the lessor's transferee. It deals with a situation in which the leased property is transferred by the lessor. After the lease of the property, the lessor may transfer the remaining interest to another person. In such a transfer the transferee too becomes entitled to all the rights and liabilities of the lessor which he had at that time. However, such entitlement is subject to a contract to the contrary i.e., the parties may agree on some other terms. The lessor is not by reason of such transfer to cease to be subject to any of the liabilities imposed upon him by the lease, unless the lessee elects to treat the transferee as the person liable to him. The transferee is not entitled to arrears of rent due before the transfer but if the lessee not having knowledge of such a transfer, pays the rents to the lessor, he shall not be liable to pay such rent over again to the transferee. The lessor, the transferee and the lessee may determine about the apportionment of rent between them in the case when only a part of reversion has been transferred. In apportionment of rent, regard must be had to the value and quality of the property. In case they are unable to agree, the court having jurisdiction to entertain a suit for possession of the property leased may determine the apportionment of rent. When the

owner sells the property, the purchaser can recover arrears of rent only if there is assignment in his favour, otherwise not. The purchaser can maintain suit for eviction of tenant for non-payment of rent only when there is assignment in his favour.219 The substantive part of section 109 read with the proviso necessarily indicates that the arrears of rent due is one of the lessor's right as to the property transferred. Right to recover the arrears of rent vested with the original owner and on transfer of all his rights the same vests in the transferee as per provisions of section 109. The proviso to section 109 clearly indicates that if there is an assignment of rent due then the transferee/landlord would be entitled to recover the same from the tenant as arrears of rent. Where it was found that the landlord had assigned the right to recover arrears of rent in favour of transferee landlord, it was held that this fact cannot be allowed to be disputed by tenants who were certainly in arrears of rent for more than six months. Therefore, it was held that the tenants would be liable to be evicted from premises in dispute on the ground of default on their part in payment of rent.220 Where the tenancy of premises between the tenant and landlord was not disputed and the title to the property was transferred from the landlord, it was held that the absence of tenancy between the tenant and the transferee was not material.221 This is so because the assignment does not put an end to the tenancy. If the assignment is only of a part of the tenancy, the assignee can work out the terms with the lessor. The section only does away with the need for attornment. The assignment may bring about the splitting of the tenancy in certain cases.222 On the transfer of a leasehold property, the attornment of tenancy is automatic, irrespective of the fact whether the intimation of purchase was given to the tenants or not.223 On transfer of leased premises, the relationship of tenancy with the new landlord comes into existence. Attornment by the lessee is not necessary. Termination of tenancy on the ground of arrears of rent by the new landlord was held to be proper.224 Lease does not affect the rights and title of the owner of property. The law does not permit any restrictions on the owner's right to transfer his property. If the property is under lease, the right of the seller's ownership and those of the seller on lessor become transferred to the buyer. The lessor's right to resume possession and terminate lease, both can co-exist.225

[s 109.2] Owner's Successor On death of the original owner of the premises, a family arrangement was drawn under which the owner's son became the owner of the premises. The Katha was accordingly changed in his name. The tenant paid rents to him after the death of the original owner. The family members also supported his case. It was held that the plaintiff became the landlord under section 109. A suit at his instance for eviction of the tenant was maintainable.226

219 Sheikh Noor v Sheikh GS Ibrahim, AIR 2003 SC 4163 : 2003 AIR SCW 3784 : (2003) 7 SCC

321 . 220 Sheikh Noor v Sheikh GS Ibrahim, AIR 2003 SC 4163 : 2003 AIR SCW 3784 : (2003) 7 SCC

321 . Revan Kumar R Gaikwad v Bachchbhai P Jethwa, AIR 2007 Bom 132 : 2007 (4) AIR Bom 113 : 2007 (4) CCC 45 , purchaser of property is entitled to recover rent from the tenant, the tenant could not refuse to pay rent on the ground that the lessor had executed an agreement to sell the premises to him. Mere agreement to sell does not create an interest in the property, the tenant could not absolve himself from the obligation to pay rent. 221 Yelamati Veera Venkata Jaganadha Gupta v Vejju Venkateshwara Rao, AIR 2002 AP 369 :

2002 (3) Andh LD 67; Aroti Das v UOI, AIR 2008 (NOC) 304 (Del), a person died unmarried and left behind no class I legal heir, he bequeathed all his property in favour of wife and son of his pre-deceased brother, his Will was proved, they applied for mutation of property in their names, but Authority refused to do so because only specified heirs were to be recognised, the refusal was held to be not proper. 222 Pramod Kumar Jaiswal v Bibi Husn Bano, AIR 2005 SC 2857 : (2005) 5 SCC 492 . 223 Khursheed Sultana v Mir Asif Ali, AIR 2009 (NOC) 989 (AP); In Geeta Devi v Dr Surendramal

Mertiya, AIR 2015 Raj 117 , a tenanted property was gifted to the donee who became the landlord by automatic process of law. Denial of title of the donee landlord was held to be a good ground for termination of tenancy. In Ambica Prasad (Dr) v Md Alam, AIR 2015 SC 2459 , there was a transfer of landlord's rights, and it was held that attornment of the tenant is not necessary to confer validity on such transfer. 224 Gyanendra Kumar v Dinesh Kumar, AIR 2008 (NOC) 1416 (Uttr); tenant received written

intimation from custodian of evacuee property about property being sold to auction purchaser, tenant never paid rent to any auction purchaser who acquires all rights and liability of landlord in respect of subsisting tenancy by operation of law, attornment by tenant is not necessary to confer validity of transfer of landlord rights, Ku Shakuntala Guha v Jasmit Kaur Narula, AIR 2017 (NOC) 910 MP. 225 Tata Steel Ltd v State of Jharkhand, AIR 2013 Jhar. 24 : 2013 (125) AIC 20 SOC : 2013 (1)

JCR Jhar 714. 226 Maniram Industrial Enterprises, Bangalore v BS Sathya Kumar, AIR 2006 Kant 262 : ILR 2006

Kant 2466 : 2006 (4) Kant LJ 675 ; In Subhash Narsopant Saundakar v Chandrakant Babanrao Salunke, AIR 2015 NOC 765 (Bom), allotment of a house under a family settlement, was held not to be a conveyance. Rent was being paid to the family. Default in payment of rent, termination of allotment and eviction proper. In Laxmi Narayan v Ram Kishan, AIR 2015 Raj 46 , transferee of lessor becomes new landlord, attornment by the tenant not necessary, questioning the title of the transferee entailed forfeiture of tenancy.

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER V OF LEASES OF IMMOVABLE PROPERTY Chapter V dealing with leases of immovable property consists of 14 sections, i.e., from section 105 to section 117.

[s 110] Exclusion of day on which term commences.— Where the time limited by a lease of immoveable property is expressed as commencing from a particular day, in computing that time such day shall be excluded. Where no day of commencement is named, the time so limited begins from the making of the lease. Duration of lease for a year.—Where the time so limited is a year or a number of years, in the absence of an express agreement to the contrary, the lease shall last during the whole anniversary of the day from which such time commences. Option to determine lease.—Where the time so limited is expressed to be terminable before its expiration, and the lease omits to mention at whose option it is so terminable, the lessee, and not the lessor, shall have such option.

Comments [s 110.1] Date of Commencement of Lease (Section 110) Section 110 lays down the rule for computation of period of lease. Where the time limited by a lease of immovable property is expressed as commencing from a particular day, in computing the period of lease, such day shall be excluded. But where no such day of commencement is named, the time of the lease will begin to run from the time of its execution. In the absence of an express contract to the contrary, in the case of a lease for a year or a number of years, the lease shall last during the whole anniversary of the day from which such time commences. Section 110 does not apply to tenancy from month to month by holding over, it applies only to periodical tenancy with definite date of commencement.227 Where the lease is made to terminate before the expiry of the term but it is not specified at whose option it is to terminate, then in such a case, the lessee shall have the option to terminate it, not the lessor.

227 B Chitra Ramachandradas v National Remote Sensing Agency, AIR 2001 AP 20 : 2000 (5)

Andh LD 161 : 2000 (5) Andh LT 258 .

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER V OF LEASES OF IMMOVABLE PROPERTY Chapter V dealing with leases of immovable property consists of 14 sections, i.e., from section 105 to section 117.

[s 111] Determination of lease.— A lease of immoveable property determines— (a) by efflux of the time limited thereby; (b) where such time is limited conditionally on the happening of some event— by

the happening of such event; (c) where the interest of the lessor in the property terminates on, or his power to

dispose of the same extends only to, the happening of any event—by the happening of such event; (d) in case the interests of the lessee and the lessor in the whole of the property

become vested at the same time in one person in the same right; (e) by express surrender; that is to say, in case the lessee yields up his interest

under the lease to the lessor, by mutual agreement between them; (f) by implied surrender; (g) by forfeiture; that is to say, (1) in case the lessee breaks an express condition

which provides that, on breach thereof, the lessor may re-enter 228[***]; or (2) in case the lessee renounces his character as such by setting up a title in a third person or by claiming title in himself; 229[or (3) the lessee is adjudicated an insolvent and the lease provides that the lessor may re-enter on the happening of such event]; and in 230[any of these cases] the lessor or his transferee 231[gives notice in writing to the lessee of] his intention to determine the lease;

(h) on the expiration of a notice to determine the lease, or to quit, or of intention to

quit, the property leased, duly given by one party to the other. Illustration to clause (f) A lessee accepts from his lessor a new lease of the property leased, to take effect during the continuance of the existing lease. This is an implied surrender of the former lease, and such lease determines thereupon.

Comments

[s 111.1] Determination of Lease (Section 111) Section 111 lays down the modes in which lease can be terminated. In the case of a lease only right of enjoyment is transferred in favour of the lessee, therefore, after the termination of the lease, the lessee is bound to deliver possession of the property to the lessor. We will discuss each of these modes one by one:—

[s 111.2] By Efflux of Time [Section 111(a)] Where the term of lease is fixed, the lease determines after the expiry of the timeperiod automatically. The lease terminates on the last-day of the time period of lease and the lessor becomes entitled to take possession of the leased property. In case of lease for fixed period no notice to quit is necessary.232 Where the lessee dies before the expiry of the period of lease, his rights regarding lease pass on to his heirs. Where land was given on lease for a fixed term to the president of Gaushala by Panchayat, who with mala fide intention changed Khasra Girdawaris of land in favour of Gaushala in collusion with the patwari and raised permanent construction on it, it was held that the cancellation of lease of Panchayat was proper, the lessee was not entitled to claim possession of land or refund of lease money.233 Determination of lease by efflux of time is available when duration of lease is fixed by a valid lease. Unregistered lease deed cannot be determined by efflux of time.234 When tenancy is determined by efflux of time, no notice to quit is necessary. Where the agreement specifies the period of tenancy, no notice is required for filing of suit for eviction.235 Where the lessee continues to remain in possession of the leased property even after the determination of lease, he is not known as trespasser but lessee at sufferance. He will have to pay compensation to the lessor for the use and enjoyment of the property beyond the time-period of the lease. Where a covenant for renewal of the lease is there, the lessee may ask for renewal of the lease before his eviction from the leased property. Where the terms of written lease provided for two months' notice for termination of tenancy but the tenancy terminated by efflux of time, it was held that the tenant had become tenant holding over the property and the tenancy from month to month. Therefore, 15 days, notice was held sufficient to terminate the tenancy.236 When a lessee is in a settled position in the premises, he can be dispossessed only in accordance with the procedure prescribed by law. This would be irrespective of the fact that the tenant is a Municipality. No tenant or lessee has any statutory right to demand renewal nor is the lessor under any statutory duty to grant renewal.237 "Law respects possession even if there is no title to support it. It will not permit any person to take the law into his own hands and to dispossess a person in actual possession without having recourse to a court. No person can be allowed to become a judge in his own cause".238 "In India persons are not permitted to take forcible possession; they must obtain such possession as they are entitled to through a court".239 Even a trespasser who has acquired a settled possession has to be evicted through legal process.240 Where the lessee did not exercise the option of renewal, but stayed over and the lessor in ignorance of the expiry period happened to accept rent after efflux of time, but he otherwise never assented to continuance of the lease or possession of the lessee, it was held that mere acceptance of rent by itself does not amount to an assent to

continuation of the lease or creation of a new lease. Renewal requires bilateral agreement between the parties. The suit for recovery of possession was decreed in favour of the debtor.241 Where the lessee committed violation of the terms of lease by sub-letting the premises, it was held that the lease automatically came to an end by efflux of the period specified. Determination of the lease was proper.242

[s 111.2.1] Arbitration Clause The lease was for a fixed term of 5 years. A clause in the agreement clearly stipulated that an extension could be granted by a mutual agreement. There was no evidence to show that the lessee sought extension of time from the landlady. Thus, the lease expired by efflux of time and a notice to quit was not necessary. It was held that the provision in the lease deed that a dispute, if, any, would be referred to arbitration came to an end with the expiry of the lease deed, the arbitration clause was no longer applicable. The landlady's suit for eviction was maintainable.243

[s 111.3] By Happening of Some Event [Section 111(b)] Clause (b) provides that a lease of immovable property determines where such time is limited conditionally on the happening of some event—by the happening of such event. Where the lease contains a condition that the lease will terminate on the happening of some event, it will terminate on the happening of that event. So long as such event does not happen, the lessee will be entitled to the possession of the leased property. On the determination of the lease the lessor may either re-enter the property or maintain a suit for ejectment.

[s 111.4] By Termination of Lessor's Interest in Property [Section 111(c)] Clause (c) provides that a lease of immovable property determines where the interest of the lessor in the property terminates or his power to dispose of the same extends only to the happening of any event, by the happening of such event. Where a lessor has only a limited interest or power to grant a lease, the lease is determined with the loss of that interest. For example, a lease by a Hindu widow who is entitled only to a life-estate, determines on her death.244 A lease granted by a mortgagee in possession and extending beyond the term of the mortgage, determines on redemption.245 Where a railway land was allotted to the lessee for commercial development which became frustrated by reason of the Government acquiring a portion of the land for making a road, it was held that the lessee could not be compelled to take an alternative land for the purpose. He became entitled to refund of his lease money.246

[s 111.5] By merger [Section 111(d)] Clause (d) provides that a lease of immovable property determines in case the interests of the lessee and the lessor in the whole of the property become vested at the same time in one person in the same right. It is necessary for a merger that two immediate estates should come into the hands of the same person at the same time

and in respect of the whole property. A merger is prevented from taking place if there is an intermediate estate outstanding with another person at the relevant time. In this case247 there was the purchase of a part of the leasehold property by the lessee from a co-owner landlord. The court said that the lease was not thereby extinguished. An assignment of a fraction of the reversion of a co-owner landlord does not and also cannot bring about determination of the lease in terms of section 111(d). The lease was not extinguished as the lessee purchased only a part of the reversion. The court said: When an owner of property grants a lease to another, he retains with himself the reversion and transfers the right as a lesser to the transferee. When that transferee, the first lessee, leases out the building or a part thereof further, that lessee retains with him the reversion of that sub-lease and transfers to the sub- lessee only the rights of a lessee under him. Even in spite of the transfer of the reversion of the first lease by the ultimate landlord to the sublessee, the original lessee, on the strength of the tenancy created by him, is entitled to seek eviction of his tenant, namely, the sub-tenant on the strength of his letting. The fact that the sub-tenant acquired the ultimate reversion, might not stand in the way since so long as the tenancy in favour of the original lessee is not terminated in the modes known to law that lessee would continue to enjoy the rights of the transferor in his favour by way of lease. The merger takes place in terms of section 111(d) of the Transfer of Property Act, 1882, only in a case where the interests of the lessee and that of the lessor in the whole of the property become vested at the same time in one person, in the same right.

One of the joint tenants purchases the premises leased to them. The other joint tenant neither claimed tenancy rights nor paid rents after the purchase. It was held that the joint tenancy thereby merged into the right of ownership. The legal heirs or relatives of the other joint tenant could not claim tenancy rights over the premises.248 Merger takes place when the tenant himself becomes the absolute owner of the tenanted premises.249 The original landlord had died. He was a part-owner. His interest in the lease property was purchased by the sub-lessee from his legal heirs. The sublessee wanted to evict his lessor from the portion of the premises purchased by him. This is what was not allowed. A person could not be the sub-tenant and owner at the same time. The effect of merger is that a limited interest becomes crystallized into absolute ownership. In this case, prior to eviction of tenant his limited right of tenancy was amplified and enlarged into an absolute right of ownership of the premises by virtue of an auction sale in his favour and affirmed by sale certificate. It was held that in view of section 111(d), the tenant having become the absolute owner of the title and interest in the premises, the decree of eviction became null and void and therefore in executable by application of the doctrine of merger.250

[s 111.5.1] Effect of Demolition of Building Superstructure A bare reading of the doctrine of merger, as statutorily recognised in India, contemplates (i) coalescence of the interest of the lessee and the interest of the lessor, in the whole of the property, (iii) at same time, (iv) in one person, (v) in the same right. There must be a complete union of the whole interests of the lessor and the lessee so as to enable the lesser interest of the lessee sinking into the larger interest of the lessor in the reversion. The law as to co-owners is well settled. Where any property is held by several coowners, each co-owner has interest in every inch of the common property, but his interest is qualified and limited by similar interest of the other co-owners. One co-owner cannot take exclusive possession of the property nor commit an act of waste, ouster or illegitimate use, and if he does so, he may be restrained by an injunction. A co-owner may, by an arrangement, expressed or implied, with his co-owners, possess and enjoy any property exclusively. Such a co-owner can also protect his possession against the other- co-owners and if he is dispossessed by the latter, he can recover exclusive possession.251

When two estates merge into one, it is called merger. When a leasehold and a reversion coincide, there is a merger of lesser estate in the greater. Leasehold is a lessor's estate; it is carved out of the estate of the owner which is the reversion. The principle behind this is that a person cannot both be landlord and a tenant at the same time. The interest of the lessor and the lessee in the whole property should become vested at the same time in one person at the same right, i.e., there must be union of the entire interest only then the lease terminates. The doctrine of merger as statutorily recognised in India contemplates the following:— (i) coalescence of the interest of the lessee and the interest of the lessor. (ii) in the whole property. (iii) at the same time (iv) in one person (v) in the same right.

There must be a complete union of the whole interests of the lessor and the lessee so as to enable the lesser interest of the lessee sinking into the larger interest of the lessor in the reversion.251 Where a decree of eviction was passed and the lessee purchased one-third share in the property during execution proceedings, it was held that section 108(d) was not attracted as it requires vesting of the entire interest in the property. The lessee was accordingly liable to vacate the premises.252 An execution petition to realise the mortgage debt was filed against the owner. The property was sold by court auction and it was purchased at the auction by a person who was a tenant in the whole of the property. The sale was confirmed by the executing court. It was held that the tenancy rights became merged with the higher rights of ownership. The tenant could continue in possession with his changed status as an owner and there was no need for filing an independent suit for possession. The earlier owner's decree for eviction was not enforceable against him.253 In order to bring the tenancy to an end the merger should be complete, i.e., the interest of the landlord in its entirety must come to vest and merge into the interest of tenant in its entirety. When part of the interest of the landlord or the interest of one out of many landlords-cum-co-owners comes to vest in the tenant, there is no merger and the tenancy is not extinguished. In this case there were seven co-owners of property, five co-owners sold their undivided shares in the property to tenants; it was held that the tenants acquired only partial interest in the property; their tenancy did not merge with the ownership.254 Where the suit for eviction is filed jointly by two co-owners, one co-owner cannot withdraw his consent midway to the prejudice of the other co-owner. The suit once filed, the rights of parties stand crystallised on the date of the suit and the entitlement of the co- owners to seek ejectment is to be adjudged by reference to the date of institution of the suit. The only exception being when by virtue of a subsequent event the entitlement of the body of co-owners to eject the tenant comes to end by act of parties or by operation of law.255 Where interest of one of the co-owners was acquired by the lessee before the expiry of the lease in case of renewal lease of cinema, the possession of the lessees was held to be lawful and he was held entitled to file application for renewal of lease.256 Where an ejectment suit was filed by only one of the co-owners, who was landlord of the premises as the rent of the premises was paid to him by tenants, it was held that

the suit was maintainable as under the general law, in a suit between the landlord and a tenant, the question of title to the leased property is irrelevant.257 Where a sub-tenant purchased the entire property from the owners including the portion of premises in possession of tenant, his sub-tenancy was terminated by merger and he became owner-landlord of entire premises. It was held that he can seek eviction of tenant if he requires additional accommodation for his personal use.258

[s 111.6] By Express Surrender [Section 111(e)] According to clause (e), a lease of immovable property terminates by express surrender; that is to say, in case the lessee yields up his interest under the lease to the lessor, by material agreement between them. The surrender consists in the yielding up of the term of the lease accompanied by delivery of possession. Delivery of possession is important unless there is an agreement to surrender at some future time. In fact, the surrender is counterpart of merger. In merger, the tenant acquires the reversion whereas in surrender, the landlord acquires the lease. Surrender brings extinction of the lease, so that the relationship of the parties to the lease comes to an end. In case of an express surrender, no formality is required, only the lessee must express his intention to surrender. The lessor must agree to surrender and there must be delivery of possession. Surrender need not be in writing. It can be done orally by delivery of possession. It can be inferred from the acts of the parties. Registered deed is not necessary to evidence surrender. But where a surrender of a part of the premises results in modification of the terms of lease deed, it would require a registered document.259 A space was given to the lessee for erecting hoardings on it. What was demised was a space and not hoardings. The lessee authorised an advertising agency to use the space for hoardings for displaying advertisements. It was held that such an authorisation did not amount to a sub-lease. The fact that the agency surrendered the space to the lessor did not bind the lessee. The lessor was accordingly restrained by an injunction from evicting the lessee. He could do so only in accordance with their legal rights.260

[s 111.7] By Implied Surrender [Section 111(f)] Clause (f) provides that a lease determines by an implied surrender. An implied surrender takes place either by the creation of new relationship between the lessor and the lessee or by the relinquishment of possession by the lessee and taking over by the lessor. In the illustration appended to this clause a lessee accepts from his lessor a new lease of the property leased, to take effect during the continuance of the existing lease. This is an implied surrender for the former lease, and such lease determines thereupon.261 If the lessor purchases the interest of lessee, the lease extinguishes as the same man cannot both be a landlord and a tenant at the same time. It is also necessary that the surrender must be to the immediate landlord because the transfer of the lease to a superior landlord does not result in a surrender.

The principle behind the implied surrender is that when between two parties in respect of a subject-matter and into existence regarding the same subject, the two incompatible and inconsistent with each other, the terminated in order to enable the latter to operate.

a certain relationship existed a new relationship has come sets cannot co-exist being former is deemed to have

There can be implied surrender, if the lessor grants a new lease to a third person with the assent of the lessee under the existing lease who delivers the possession to such person or where the lessee directs his sub-tenant to pay the rent directly to the lessor.262 In a case before the High Court of Delhi:263 The MC was the tenant for running a school in the tenanted premises. The MC itself declared the building to be dangerous and demolished it. This was held to be a clear case of implied surrender because the MC removed all its belongings, did not assert its right as a tenant and stopped rent payments. The owner rebuilt the premises, enjoyed the same for 26 years and sold it. The MC was not allowed to claim any protection under the Delhi Rent Control Act, 1958. It had no right of induction under the Act. The owner had not filed any eviction proceedings.

Where the tenanted property was mortgaged to the tenant himself and the term for redemption of mortgage was also fixed, it was held that the tenant was under an obligation to keep the tenancy alive by regularly paying rents and not to have done so could be taken to be an implied surrender of the tenancy.264 Where there was the collapse of premises due to natural causes, it was held that the relationship of landlord and tenant came to an end. The tenant could not insist that the owner should reconstruct the premises and handover the same to him.265 A lease of a house or of a shop is a lease not only of the superstructure but also of its site. It would be different if not only the site but also the land beneath ceases to exist by an act of nature. In the present case, the appellants who were the successors of the tenancy right demolished the superstructure but the land beneath continued to exist. The entire tenancy premises had not been lost. Moreover, the appellants could not be permitted to take shelter behind their own act prejudicial to the interest of the respondent under whom the other respondents were holding as tenants and then inducted the appellants. The court was, therefore, of the opinion that in the event of the tenancy having been created in respect of a building standing on the land, it is the building and the land which are both components of subject-matter of demise and the destruction of the building alone does not determine the tenancy when the land which was site of the building continues to exist; more so when the building has been destroyed or demolished neither by the landlord nor by an act of nature but solely by the act of the tenant or the person claiming under him.266 The applicant never resided in the demised premises after the death of his father who was the original tenant. He never contested the right of his brother to the sole tenant. The court said that it could be inferred that there was an implied surrender of tenancy on the part of the applicant.267

[s 111.8] By Forfeiture [Section 111(g)] Clause (g) provides that a lease terminates by forfeiture in the following circumstances:—

(a) in the case lessee breaks on express condition which provides that on breach of

it, the lessor may re-enter the property, or (b) in case the lessee renounces his character as such by setting up a title in a third

person or by claiming title in himself, or (c) the lessee is adjudicated an insolvent and the lease provides that the lessor may

re-enter on the happening of such event In any of these cases, the lessor or his transferee gives notice in writing to the lessee of his intention to determine the lease.268

[s 111.8.1] Breach of Express Condition The lease terminates when the express condition is broken by the lessee which had provided that in case of breach of the condition by the lessee the lessor will re-enter the leased property. The right of forfeiture is exercised only when the condition is in fact broken. In the case of Nil Madhab v Narottam,269 the lease deed contained an express condition that the lessee shall not alienate his leasehold, but he alienated the property in violation of the condition. It was held that the lessor cannot forfeit property because the lease-deed did not contain provision for re-entry. Certain premises were leased out by the Small Industries Development Corporation for manufacturing activities. The lessee did not at all commence such activities. The unit remained in the state of non-manufacturing for more than the stipulated period. Payment of rents was also in default. The court said that all this showed a clear breach of conditions of lease. The corporation had the right to recover possession of the premises.270 The fact that lessee had become owners of the premises did not absolve them from their obligation as lessees towards the lessors from whom they had taken the premises on lease. A lessee was allowed to raise a building on the leasehold land with a restrictive covenant that the ground floor would be used only as a shop. The lessee transferred his leasehold interest to a banking institution which proposed to use the ground floor for banking and storage of banking material. The court said that this was not a violation of the covenant because a bank can be regarded as something in the category of a shop. The privity of contract in case of lease is between lessor and lessee and not between lessor and transferees. Therefore, where the lessee was in breach of condition of lease, it was held that the lease could not be determined without the presence of lessee and the decree for possession could not be passed in favour of lessor.271 A lessee raised unauthorised construction in contravention of the lease deed; lessee admitted the construction and the lessor determined the lease; lessor was held entitled to get judgment on admission and decree for eviction of lessee from suit premises.272

[s 111.8.2] Denial of Title The second condition for forfeiture arises when the lessee denies the lessor's right and sets up a title in himself or in a third person. Here the lessee denies his lessor's title and asserts that he or some third person is the true owner. The lessor in such a case becomes entitled to forfeit the tenancy. Repudiation of title or denial of title must be clear and relatable to the knowledge of the lessor.273

In a suit for title and possession of suit property, the title of plaintiff was denied by the defendant-tenant on the ground that he himself had purchased the property in public auction, the suit was decreed by setting aside the sale in favour of defendant and it was held that he would not be restored to his original position as tenant.274 The tenant denied title of the landlord during proceedings before the Rent controller. As a result thereof the landlord issued a notice of termination of tenancy. The act of repudiation of title in a judicial proceeding was a deliberate and conscious act. The tenant therefore incurred forfeiture of tenancy. The landlord became entitled to recover possession.275 Forfeiture, a notice by the lessor to the lessee in writing is necessary to determine the lease. (a) Transfer of interest by lessor.—The owner sold the property which was let out by him on lease. The tenant paid rent to the purchaser for about a year. He thereafter denied title of the purchaser and filed an interpleader suit. This was held to be not permissible. Once a tenant attorns the tenancy in favour of a person who derives his title from the erstwhile landlord, he is estopped from denying the status of that person as a landlord.276 The property in question was sold to a lady who became new owner of the property. The tenant denied her title before the Rent Controller. He could not get a declaration against her about her ownership. Thus his denial was not bona fide. Determination of lease under section 111(g) was held to be proper. This section has an independent application. It is not dependent upon section 116 of the Evidence Act for an estoppel.277

[s 111.8.3] Insolvency Where the lease-deed contains a condition that in case the lessee is adjudicated insolvent, the lessor will re-enter the property and where actually the lessee is adjudicated insolvent, the lessor will forfeit the lease. Notice in writing is necessary to forfeit the lease in such a case.

[s 111.8.4] Waiver of Breach The three conditions in which the lessor has been given the right to re-enter the leased property and take possession, can be waived by the lessor at his discretion. These three conditions are breach of condition, denial of title and insolvency.

[s 111.8.5] Acceptance of Rent A monthly lease stands determined on expiry of the period of thirty days from the date of service of notice. After issuance of notice, the tenancy continues for the period of 30 days from the date of service of notice. The lessee remains under the obligation to pay the rent for that period. Acceptance of such rent does not amount to a waiver of the notice to quit.278 Waiver has to be a deliberate and conscious act on the part of the landlord to treat the contractual tenancy as subsisting. If the eviction suit was continuing even after

acceptance of rent, it indicated that the landlord had no intention to waive the quit notice. Eviction of tenant was held to be proper.279 In a case, allotment of disputed shop in favour of lessee was cancelled by the collector on the ground of non-payment of rent; lessee was unable to produce any registered sale deed executed in his favour; he was continued as tenant. However, as he was unable to deposit the entire rent amount, the cancellation of allotment of shop was held valid.280

[s 111.8.6] Notice of Forfeiture Clause (g) provides that in three conditions where the lessor may forfeit the property, the notice of forfeiture is essential. The lessor or his transferee has to give notice in writing to the lessee of his intention to determine the lease. Where the lease deed was executed prior to enforcement of Transfer of Property Amendment Supplementary Act, 1929, it was held that the termination of lease was not bad for want of prior notice in writing to lessee.281 The Rent Acts have primarily been made if not wholly, to protect the interest of tenants, to restrict charging of excessive rent and their rampant eviction at will. After enforcement of Rent Act, a fixed term contractual lessee can, during subsistence of the lease, be evicted only on grounds of eviction provided under the Rent Act and that too only if such grounds have been provided as one of the grounds for forfeiture of lease rights in the lease deed.282 The existence of forfeiture clause is necessary. The lessee committed breach of an express condition of lease by default in payment of rent. But there was no provision for forfeiture in the agreement in such default. It was held that in the absence of forfeiture clause the lessor had no right to re-enter the premises. Lessee was not liable to be evicted. He was only liable to pay arrears of rent along with costs and interest.283 For applicability of section 111(g) category (i) it is necessary that the lease must be in writing. Section 111(g) and consequent section 114 do not apply to cases of oral lease.284

[s 111.9] On Expiration of Notice to Quit [Section 111(h)] Clause (h) provides that the lease of immovable property may determine on the expiration of a notice to determine the lease, or to quit, or of intention to quit, the property leased, duly given by one party to the other.285 A lease terminates when the notice to quit or to determine expires. Under section 106, periodic leases like leases from month to month or from year to year are terminated by notice to quit. No notice is necessary in case of leases for fixed terms. A one-year lease carried a condition in the rent deed that the lessee would vacate the shop when required by the landlord for her use. It was held that the notice under section 111(h) was proper. She became entitled to the decree of eviction. She was not required to prove that the shop was required by her for her personal use.286 Where the lessee continues in possession even after the notice, he cannot claim title to the property on the basis of adverse possession even after a considerable number of

years. A suit for eviction will lie in such a case.287 Where the lessee was carrying on business in the lease property, a notice sent to the manager of the business on behalf of the lessee was held to be valid. The lessee continued in possession even after the expiry of the period set by the notice. The court said that he became liable to pay damages for the period. The lessee did not produce any evidence of the prevailing market value of the property or the prevailing rates of rent, in the area. Determination of Rs 10,000 per month by way of damages was held to be proper.288 A lessor purchased leasehold rights in a court auction. It was held that the terms of the previous lease deed did not bind the lessor. Renewal or extension clause could not be enforced against him, unless and until fresh lease deed was executed with the same terms and conditions. The lessee was liable to be evicted.289

[s 111.9.1] Acceptance of Rent after Notice (Waiver) According to a decision of the Supreme Court, acceptance of rent by the landlord even after quit notice is not sufficient in itself for the conclusion that notice thereby becomes waived. A landlord who accepts rent after notice and also files and prosecutes the suit for eviction cannot be said to have waived the notice.290

[s 111.9.2] Compensation to Lessor With the permission of the lessor, the lessee had constructed a building on the lease land with his own funds. The agreement between the parties was that as and when the lessee would vacate premises, the lessor would be under an obligation to pay the cost of the building which was to be assessed by a technical person. The provision was so clear that the Trial Court did not consider it necessary to frame an issue on that point. The Trial Court itself assessed the value and passed a decree. The Trial Court treated as final the averment in the lessee's written statement as to cost construction. The court said that such approach of the trial Court was not proper and was also opposed to the settled practices on such matters.291

228 The words "or the lease shall become void" omitted by Act 20 of 1929, section 57. 229 Ins. by Act 20 of 1929, section 57. 230 Subs. by Act 20 of 1929, section 57, for "either case". 231 Subs. by Act 20 of 1929, section 57, for "does some act showing". 232 Maheswar Singh v Radhamadhab Jew Thakur, AIR 2007 Ori 190 , notice to quit is not

necessary in such case, an eviction suit can be filed without notice, the tenant remained in possession after expiry of period, he did not say in his written statement that he was holding over, no evidence to show that the landlord accepted rent or otherwise assented to continuation of the tenancy, tenant could not claim protection of section 116 for want of notice under section 106.

233 Lachman Das v District Development and Panchayat Officer, AIR 2004 P&H 135 : 2004 (2)

HRR 122 : 2004 (1) Punj LR 691 . 234 West Bengal State Electricity Board v Sevoke Properties Pvt Ltd, AIR 2019 Cal 110 . 235 A Rajeshwari v Brundaban Mahopatra, 2003 (2) RCR (Civil) 14 (Ori); Cordcell private Ltd v

Marazaria Products Pvt Ltd, AIR 2007 Kant 162 : ILR 2007 Kant 3490 : 2007 (6) Kant LJ 148 , notice was issued before expiry of period, even so it was held to be not premature because the period expired before the lessee filed his written statement or before the decree was passed, and thus no prejudice was caused to the lessee, suit not liable to be dismissed as premature. The lessee was not allowed to produce the lease deed at a late stage that the lease was subsisting as on the date of filing of suit. Dinesh Chandra Khanna v UP Sainik Kalyan Evam Punarvas, AIR 2006 (NOC) 753 (Utr), tenancy for fixed period of five years, after expiry of this period, the tenant was duty-bound to vacate the premises, there was no need to give three months' notice; when relationship of landlord and tenant is determined, service of notice under section 111 is not required, Rupa Ghosh v Satyanarayan Dhudhani, AIR 2018 Jha 147 . 236 Prithvi Raj Bhalla v Industrial Cables (India) Ltd, AIR 2002 Del 539 : 2002 (99) DLT 139 : 2002

(64) DRJ 574 . 237 KM Mohan v District Collector Vellore, AIR 2006 Mad 65 (DB) : 2005 (3) Mad LJ 689 : 2005

(3) Mad LW 750 ; Ramo Gowda v M Varadappa Naidu, (2004) 1 SCC 769 : AIR 2004 SC 4609 : 2004 AIR SCW 4205, once a lessee is in a settled possession and though he may have lost the right to remain on the premises, he cannot be thrown out by the owner except by means of a court decree. 238 Yar Mohammed v Lakshmi Das, AIR 1959 All 1 (FB) : 1958 All LJ 628 : ILR (1958) 2 All 394 ,

approved by the Supreme Court in the above cited Ramo Gowder case. 239 Midnapur Zamindari Co Ltd v Kumar Naresh Narayan Roy, AIR 1924 PC 144 : 51 Ind App 293

: 23 All LJ 76 followed in Lallu Yeshwant Singh v Rao Jagdish Singh, AIR 1968 SC 620 : (1968) 2 SCR 117 : 1968 (2) SCJ 244 . 240 Ram Rattan v State of Uttar Pradesh, 1977 SCC (Cri) 85 : AIR 1977 SC 619 : (1977) 1 SCC

188 . 241 RS Iron Industries Pvt Ltd v Calcutta Pinkjrapole Society, AIR 2013 Cal 94 : 2012 (120) AIC

715 : 2013 (1) CCC 553 . 242 Jagdish Singh Satwal v Champa Bisht, AIR 2016 NOC 459 (Utr). 243 UOI v Jagdish Kaur, AIR 2007 All 67 : 2007 (66) All LR 78 : 2007 (1) All LJ 548. 244 Raghubir Singh v Jethu Mahton, ILR 2 Pat 171 : AIR 1923 Pat 130 . 245 Jhagru v Raghunath, AIR 1929 Pat 630 : 119 IC 551 : 10 Pat LT 625. 246 SD Buildwell Pvt Ltd v Rail Land Development Authority, AIR 2016 NOC 164 (Del). 247 Pramod Kumar Jaiswal v Bibi Husn Bano, AIR 2005 SC 2857 : (2005) 5 SCC 492 : 2005 (4)

SCJ 755 . 248 Thirty Sam Shroff v Mehroo Meherji Vakil, AIR 2010 Bom 170 : 2010 (5) AIR Bom R 154 :

2010 (3) CCC 277 . 249 Arun Kumar Tandon v Akash Telecom Pvt Ltd, AIR 2010 (NOC) 744 (Del). 250 Muthuraj v Kr Srinivasa Iyengar, AIR 2015 NOC 460 (Kant). 251 T Lakshmipathi v P Nithyananda Reddy, AIR 2003 SC 2427 : (2003) 5 SCC 150 : (2003) 3

Scale 523 : 2003 (3) RCR (Civil) 306 : 2003 (2) Ren CR 117 (SC). 252 Murli Singh v Ram Singh, AIR 2007 Utr 80 . 253 Kr Sirinvasa Iyengar v K Muthuraj, AIR 2006 (NOC) 377 (Kant). 254 T Lakshmipathi v P Nithyananda Reddy, AIR 2003 SC 2427 : (2003) 5 SCC 150 : (2003) 3

Scale 523 : 2003 (3) RCR (Civil) 306 : 2003 (2) Ren CR 117 (SC).

255 India Umbrella Manufacturing Co v Bhagabandei Agarwalla, 2004 AIR SCW 184 : JT (2004)

(1) SC 200 : (2004) 1 Scale 53 . 256 Krishna Kishore v Govt of Andhra Pradesh, AIR 1990 SC 2292 : JT 1990 (4) SC 241 . 257 Krishna Prakash v Dilip Harel Mitra Chenoy, AIR 2002 Del 81 : 2004 (14) AIC 900 : 2001 (93)

DLT 777 . 258 Nalakath Sainuddin v Koorikadan Sulaiman, AIR 2002 SC 2562 : 2002 AIR SCW 2860 : (2002)

6 SCC 1 . 259 Indian Craft Village Trust v Calcutta Municipal Corp, AIR 2007 (NOC) 2300 (Cal). 260 V Muralidhar v S Anaiah Goud, AIR 2007 AP 347 : 2007 (5) Andh LD 559 : 2007 (6) Andh LT

779 . 261 Babulal Birla v Ram Prakash Sharma, AIR 2009 (NOC) 178 (MP), implied surrender can be

inferred from the facts of the case and delivery of possession is not a sine qua non, the individual tenant rented out the shop to his firm. That brought about surrender though possession continued. 262 PMC Kunhiraman Nair v CR Nagaratna Iyer, AIR 1993 SC 307 : 1992 AIR SCW 3197 : (1992) 4

SCC 254 . 263 Municipal Corp of Delhi v Ashok Kumar Mishra, AIR 2007 Del 257 : 2007 AIHC 587 (NOC) :

2007 (141) DLT 347 ; Bindeswar Prased Gupta v Dinendra Kumar Mukherjee, AIR 2007 (NOC) 1187 (Cal) (DB), mere variation of rent by mutual consent and acceptance does not necessarily imply or suggest waiver or abandonment. Implied surrender could not be inferred from such conduct. 264 Tara Chand v Sagarbai, AIR 2007 SC 2059 : (2007) 5 SCC 392 : (2007) 6 Scale 706 ; Shah

Mathuradas Maganlal and Co v Nagappa Shankarappa Malaga, (1976) 3 SCC 650 : AIR 1976 SC 1565 : (1976) 3 SCR 789 , surrender of tenancy by the mortgagee inferred so that on redemption of the mortgage, the mortgagor became entitled to possession free of tenancy. Nirmal Chandra v Vimal Chand, AIR 2001 SC 2284 : (2001) 5 SCC 51 : 2001 AIR SCW 2018, the right to receive was kept alive, the landlord being only granted personal use for sometime failing which the tenancy was to revive even during that period Gambangi Applaswamy Naidu v Behara Venkataramanayya Patro, (1984) 4 SCC 382 : AIR 1984 SC 1728 , implied surrender not inferred on the fact situation in the case. Pollammarasetti Varaha Venka Satyanarayana v Sudha Apparao Naidu, (1997) 9 SCC 244 : 1997 AIR SCW 1979 : AIR 1997 SC 2127 , agreement about adjustment of rent, tenancy alive. 265 Shivram Ladu Nitardkar v Alex Fernandes, AIR 2006 (NOC) 272 (Bom); Sidharam Ganpati

Mulage v Bashir Elahibaksh Tamboli, AIR 2009 (NOC) 1581 (Bom) : (2009) 3 AIR Bom R 80, destruction of premises is possession of tenant in fire, tenancy became extinguished. The tenant could not claim the benefit of sections 106, 108, 114. 266 T Lakshmipathi v p Nithyananda Reddy, AIR 2003 SC 2427 : (2003) 5 SCC 150 : (2003) 3

Scale 523 ; Vannattankandy Ibrayi v Kunhabdulla Hajee, (2001) 1 SCC 384 : AIR 2003 SC 4453 : 2000 AIR SCW 4592, on destruction of premises tenancy rights becomes extinguished. 267 Harish Kumar Plaha v Shashi Kaura, AIR 2009 HP 49 . 268 Melo Leather v PLN Natarajan, AIR 2007 Mad 11 : 2007 (1) Mad LJ 641 : 2007 (1) Ren CR

150, lease on condition that it would be determined if there was a default in payment of rent for a continuous period of three months, a notice having been served on default, determination was held to be valid. K Thiyagarajan v Tharumapuram, AIR 2007 (NOC) 802 (Mad), the plaintiff was running hotel in a shed on a property belonging to Devasathanam, he raised an unauthorized construction, thus it became a residential hotel with a kitchen and it amounted to manufacturing process, lease was not for such purpose, breach of agreement, 15 days notice for termination was held to be valid, 6 months' notice was not required. Yashpal Lala Shiv Narayan v Allatala

Malik Wakf Ajakhan Mus, AIR 2006 All 115 : 2006 (2) All LJ 204 : 2006 (2) Rec Civ R 712 sections 108(9) and 111(g), condition that on determination of lease, the lessee is bound to put the lessor into possession of property comes into play in the absence of contract or local usage to the contrary, this is a statutory condition, it is implied in every lease unless there is any local usage or contract to the contrary, it is not an express condition as contemplated in section 111(g). Deva Sahayam v P Savithramma, (2005) 7 SCC 653 : (2005) 6 Supreme 698 : AIR 2006 SC 779 , notice to quit is necessary even where the tenant sets up an adverse title, or claims title to himself. 269 (1890) 17 Cal 826 . 270 Associated Indian Mechanical Pvt Ltd v West Bengal Small Industries Development Corp Ltd,

AIR 2006 Cal 176 (DB) : 2006 (4) Cal HN 281 : 2006 (3) Cal LT 85, West Bengal Government Premises (Tenancy Regulation) Act, 1976, section 4. 271 Raghuram Rao v Eric P Mathias, AIR 2002 SC 797 : 2002 AIR SCW 451 : (2002) 2 SCC 624 . 272 Kanak Projects Ltd v Hooghly Printing Co Ltd, AIR 2018 (NOC) 792 Cal. 273 Guru Amarjit Singh v Rattan Chand, AIR 1994 SC 227 : 1993 AIR SCW 3676 : (1993) 4 SCC

349 . 274 Institute of Education, Saraswatipuram, Mysore v Sowcar A Siddanna Endowment and KH

Ramaiah Memorial Endowment Trust, Mysore, AIR 2003 Kant 226 : 2003 AIR Kant HCR 80 : 2003 (126) Taxman 181 . 275 Narendra Vyankrtesh Tambat v Pravin Kumar Khushalchand Tated, AIR 2015 NOC 1279

(Bom). 276 Balaji Sitaram Kakde v Om Prakash Karamnarayan Khurana, AIR 2009 (NOC) 1075 (Bom). 277 Lahu v Kailash Matasaran Gupta, AIR 2014 Bom 143 : 2014 (4) AIR Bom R 705 : 2014 (5)

Mah LJ 659 . 278 Yashpal Lala Shiv Narayan v Allatala Malik Wakf Ajakhan Mus, AIR 2006 All 115 : 2006 (2) All

LJ 204 : 2006 (2) Rec Civ R 712. 279 Narendra Vyankatesh Tambat v Pravin Kumar Khushalchand Tated, AIR 2015 NOC 1279

(Bom). 280 Jagdih Sharaf v State of Chattisgarh, AIR 2018 Chh 89 ; when defendant took different pleas

that he was the owner of the property or that termination of tenancy was not as per law and when there were concurrent findings of trial court and appellate court that he had defaulted in payment of rent as a tenant, his eviction was held to be valid, suit for eviction was decreed, Rupa Ghosh v Satyanarayan Dhudani, AIR 2018 Jha 147 . 281 Raghuram Rao v Eric PMathias, AIR 2002 SC 797 : (2002) 1 SCR 759 : (2002) 2 SCC 624 . 282 Laxmidas Bapudas Darbar v Rudravva, AIR 2001 SC 3738 : 2001 AIR SCW 3452 : (2001) 7

SCC 409 . 283 Bharathi Shetty v B Hanumanthappa, AIR 2013 Kant 165 : 2013 (4) AIR Kar. R 80 : 2013 (3)

KCCR 2451 ; where lessee pleaded non-joinder of necessary party which included two other coowners and acceptance of rent by other owner, it was held that acceptance of rent by two colandlords does not make lessor non-suited, Bata India Ltd v Sharvan Kumar Jain, AIR 2017 Utr 186 . 284 Yashpal Lala Shiv Narayan v Allatala Malik Wakf Ajakhan Mus, AIR 2006 All 115 : 2006 (2) All

LJ 204 : 2006 (2) Rec Civ R 712. 285 Dwarka Das Hiralal Lahoti v Kazi Mumbarozuddin, AIR 2007 (NOC) 1636 (Bom) : (2007) 3

AIR Bom R 735, determination of tenancy has to be in accordance with the provisions of section 111 one of which is by service of notice to quit, dispossession of tenant by another method being illegal, he is entitled to recover possession. 286 Vijay Kumar v Harbhajan Kaur, AIR 2013 (NOC) 217 (J&K).

287 Gaya Parshad Dikshit v Nirmal Chander, AIR 1984 SC 930 : (1984) 2 SCC 286 : (1984) 10 All

LR 212 ; original lessee, after expiration of lease by efflux of time, evicted by head lessor through eviction petition, his tenancy governed under Bengal Premises Tenancy Act, 1956 as monthly tenant, tenancy of sub-tenant also liable to be evicted with original lessee, no question of breach of condition of lease deed as tenancy determined by notice and not by forfeiture, Cooke and Kelvey Properties Pvt Ltd v Expo International, AIR 2017 (NOC) 481 Cal. 288 Sarup Singh Gupta v Jagdish Singh, AIR 2006 SC 1734 : (2006) 4 SCC 203 : (2006) 3

Supreme 398 ; Sri Mohanthara Mutt Trust v AR Manikya Vyasagam Chettiar, AIR 2008 (NOC) 740 (Kar) (DB), acceptance of rent, no waiver of notice particularly when the landlord has filed suit for eviction and was prosecuting it. 289 Navratan Singh Rajpurohit v Indian Oil Corp Ltd, AIR 2016 Raj 117 . 290 Webbing and Belting Factory Pvt Ltd v CM Shashikumar, AIR 2006 Kant 173 : 2006 (2) AIR

Kar. R 588 : 2006 (2) Rec Civ R 808. Yessay Foodoils v PA Moosa, AIR 2009 Kant 103 : ILR 2009 Kant 724 : 2009 (3) Kant LJ 156 , a notice to quit by an unregistered partnership and a suit for eviction on its basis was held to be maintainable, it being a statutory right and not one arising out of contract; it is established through decisions that mere acceptance of rent after service of first notice does not amount to waiver of such notice, a second notice was issued while the first notice was in motion, trial court rejected the suit for eviction that the suit was filed on the ground of second notice without waiving the first notice. The decision of the trial court was held erroneous, Praveen Kumar Jain v Jagdish Prasad Gupta, AIR 2019 All 28 . 291 St Mary's Educational Society v Dr Qutubuddin Ahmed, AIR 2007 AP 156 : 2007 (2) Andh LD

412 : 2007 (3) Andh LT 214 .

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER V OF LEASES OF IMMOVABLE PROPERTY Chapter V dealing with leases of immovable property consists of 14 sections, i.e., from section 105 to section 117.

[s 112] Waiver of forfeiture.— A forfeiture under section 111, clause (g) is waived by acceptance of rent which has become due since the forfeiture, or by distress for such rent, or by any other act on the part of the lessor showing an intention to treat the lease as subsisting: Provided that the lessor is aware that the forfeiture has been incurred: Provided also that, where rent is accepted after the institution of a suit to eject the lessee on the ground of forfeiture, such acceptance is not a waiver.

Comments [s 112.1] Waiver of Forfeiture (Section 112) (1) A forfeiture is waived— (i) by acceptance of rent which has become due since the forfeiture, or (ii) by distress for such rent, or (iii) by any other action on the part of the lessor showing an intention to treat the

lease as subsisting. (2) The above stated rule will become applicable only if the lessor is aware that the forfeiture has been incurred. (3) If the rent is accepted after the institution of a suit to eject the lessee on the ground of forfeiture, such acceptance does not amount to a waiver. This section applies to those situations where the right of forfeiture has accrued to the lessor but he elects not to forfeit the lease. A waiver takes place in the following conditions:— (i) When the lessor accepts the rent which has been incurred, or (ii) by distress for such rent i.e., lawful extrajudicial seizure of the chattels to

enforce the payment of rent, or (iii) by any other act on the part of the lessor showing an intention to treat the lease

as subsisting. If the rent is accepted after the institution of the suit to eject the lessee on the ground of forfeiture, such acceptance is not considered as waiver. Where five years after issuing the notice to tenants that the tenancy had been forfeited, landlords demanded

arrears of rent and filed eviction suit under the Maharashtra Rent Control Act, 2000, it was held to be waiver of forfeiture292. However, the waiver of forfeiture is no bar to an action for damages.293 Under the Rent Act the right has been accrued to the landlord to evict the tenant, the landlord can enter into agreement to waive his right and not to evict tenant.294

292 Chandrashekhar S Gadgil v Rameshprasad Madhavprasad Shukla, AIR 2018 (NOC) 918 Bom;

rent was accepted after institution of suit for ejection on the ground of forfeiture by the lessor, mere acceptance of cheque but not extending any benefit to lessee does not amount to waiver of forfeiture, Bata India Ltd v Sharvan Kumar Jain, AIR 2017 Utr 186 . 293 Stephens v Junior Army & Navy Stores Ltd, (1914) 2 Ch 516 . 294 Jangiro Devi v Kailasho Devi, 2003 (2) Ren CR 373 : 2003 (2) PLR 779 (P&H).

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER V OF LEASES OF IMMOVABLE PROPERTY Chapter V dealing with leases of immovable property consists of 14 sections, i.e., from section 105 to section 117.

[s 113] Waiver of notice to quit.— A notice given under section 111, clause (h), is waived, with the express or implied consent of the person to whom it is given, by any act on the part of the person giving it showing an intention to treat the lease as subsisting. Illustrations (a) A, the lessor, gives B, the lessee, notice to quit the property leased. The notice

expires. B tenders and A accepts, rent which has become due in respect of the property since the expiration of the notice. The notice is waived. (b) A, the lessor, gives B, the lessee; notice to quit the property leased. The notice

expires, and B remains in possession. A gives to B as lessee a second notice to quit. The first notice is waived.295

Comments [s 113.1] Waiver of Notice to Quit (Section 113) The lessee has been given the right to determine the lease after the expiry of the notice to quit given by him to the lessor. Section 113 provides that he may waive this right. Section 113 provides that the notice given under section 111(h) becomes waived, with the express or implied consent of the person to whom it is given, by any act on the part of the person giving it showing an intention to treat the lease as subsisting. Waiver of notice to quit has to be established by two ingredients, namely, (i) the express or implied consent of the person to whom the notice was given, is

necessary to say that the notice is waived, (ii) In so far as the person who gives notice, there must be an act showing the

intention to treat the lease as subsisting. Where the landlord received rent after issuing notice, it will not tantamount to creating a fresh tenancy. To establish waiver and subsistence of lease, there must be intention to treat the lease as subsisting.296 Where the landlord was actively prosecuting suit for ejectment filed by him, the mere acceptance of rent after period of termination of tenancy by him does not amount to waiver of notice to quit.297 Such a notice can be waived with the mutual consent of the lessor and the lessee. Waiver may be express or implied. Where the lessor accepts the rent after the expiry of

notice to quit the notice is considered to be waived. In case, the lessee remains in possession even after the expiry of the notice to quit and the lessor gives him second notice, first notice is held to be waived. Where premises were jointly held, the court said that any negotiation had also to be joint. There was no manifestation or intention on the part of co-sharers that they had abandoned their rights arising out of the notice to quit. There was no waiver of the notice to quit or its nullification. Directions given by the court for vacating premises were subject to making payment of occupation charges and other charges.298

[s 113.2] Notice to Unauthorised Occupant There was an unauthorised occupant of premises. An order was passed against him for vacating premises. A due notice was given to him and he participated in the eviction proceedings. It was held that the conduct of petitioner in subsequently accepting rent could not be regarded as having the effect of waiving the termination. A prior notice of termination under section 106 was not necessary.299

[s 113.3] Dismissal of Ejectment Suit for Default An ejectment suit was dismissed for default. The court said that the tenant by that reason does not become a tenant in perpetuity, nor does he become the owner of the tenanted premises. At the very best the dismissal operated as a waiver under section 113 or an assent on the part of the lessor within the meaning of section 116. The landlord could file fresh suit for ejectment.300

295 BS Sadananda v KS Chinnappa, AIR 2006 Kant 57 : 2006 (1) AIR Kar 313 : 2006 (2) CCC 10 ,

issuance of second quit notice amounts to waiver of earlier notice which was issued 11 years ago, suit for ejectment filed within 12 years from the date of second notice was held to be not time-barred. 296 Arulmighu Kailasanathar Temple's Katta Lai v R Srinivasan, 2003 (1) Ren CR 35 (Mad);

Satyanarayan, Spun Pipe Co v N Padmavathi, 2003 RCR (Civil) 388 : 2003 (2) Ren CR 157 (AP); when tenancy is terminated by efflux of time, service of quit notice is not obligatory in such a case, Kishan Lal v Shiv Charan Sharma, AIR 2017 (NOC) 349 Raj. 297 UOI v Sudarshan Lal Talwar, AIR 2002 All 212 : 2002 All LJ 1623 : 2002 (47) All LR 352 ;

Food Corp of India v Kuljinder Pal Singh Dhillon, AIR 2002 (NOC) 209 (Del) : 2002 AIHC 2641 . 298 Fortune Investors & Traders Ltd v Punjab National Bank, AIR 2015 NOC 635 (Cal). 299 Divisional Traffic Officer, Rajasthan State Road Transport Corp v K Ramaiah, AIR 2006 (NOC)

1320 (Kant) : (2006) 5 AIR Kant R 151. 300 Mr Sahni v Doris Randhawa, AIR 2008 Del 110 : 2008 AIHC 510 (NOC) : 2008 (4) All LJ

(NOC) 910.

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER V OF LEASES OF IMMOVABLE PROPERTY Chapter V dealing with leases of immovable property consists of 14 sections, i.e., from section 105 to section 117.

[s 114] Relief against forfeiture for non-payment of rent.— Where a lease of immoveable property has determined by forfeiture for non-payment of rent, and the lessor sues to eject the lessee, if, at the hearing of the suit, the lessee pays or tenders to the lessor the rent in arrear, together with interest thereon and his full costs of the suit, or gives such security as the Court thinks sufficient for making such payment within fifteen days, the Court may, in lieu of making a decree for ejectment, pass an order relieving the lessee against the forfeiture; and thereupon the lessee shall hold the property leased as if the forfeiture had not occurred.

Comments [s 114.1] Relief against Forfeiture for Non-payment of Rent (Section 114) Where the lessee does not vacate the leased premises even after the expiry of the notice to quit and does not pay the rent due, the lessor may file a suit for ejectment of the lessee from the leased property. In such a situation, section 114 comes into operation and provides that if at the hearing of the suit the lessee pays or tenders to pay the arrears of rent together with compensation, the court may, instead of passing a decree for ejectment, pass an order relieving the lessee from the forfeiture. The court may order the lessee to continue in possession after making payment of arrears of rent, compensation, and cost of the suit or giving such security as the court thinks sufficient for making such payment within 15 days. This section affords protection to the tenant against forfeiture. While the tenant enjoys the immunity from eviction for default in payment of rent, the landlord-lessor gives the corresponding benefit of recovery even of such arrears of rent which are not legally recoverable. Such an equitable provision as is engrafted in this section shall govern to such an extent which does not run counter to any specific statutory provisions.301 The terms of section 114 make payment of rent at the hearing of the suit in ejectment a condition of the exercise of the court's jurisdiction but an appeal being a rehearing of the suit, in appropriate cases it is open to the appellate court at the hearing of the appeal to relieve the tenant from default against forfeiture. Passing of a decree in ejectment against the tenant by the court in first instance does not take away the jurisdiction of the appellate court to grant equitable relief. Failure of the tenants to avail themselves of the opportunity does not operate as a bar to the jurisdiction of the appellate court. The appellate court, may, having regard to the conduct of the tenant, decline to exercise its discretion to grant him relief against forfeiture. The question is not one of jurisdiction but of discretion.302 Where the provisions of section 114 are not at all applicable to the fact situation before the court, the court said that there could be no occasion for exercising the discretion under the section. In this case, the notice to quit was issued under section 111(g) read with section 106. There was a demand for arrears of rent and taxes to be paid within one month, but that was not a ground for

determination of the lease. There was nothing in the notice suggesting that the lease was being determined by forfeiture under section 111(g) in the exercise of any alleged right to re-enter the premises. The notice in question was only a notice to quit simpliciter. The court said that the provisions of sections 114 and 114A were not applicable and, therefore, no relief against forfeiture could be granted.303 Where the lease agreement stipulated that there should be continuous failure in payment of rent to bring about forfeiture, it was held that payment of the entire arrears by lessee immediately after receipt of notice entitled him to claim benefit of section 114.304 A tenancy was determined by one month's notice. At no point of time the landlord exercised any authority by invoking forfeiture clause for non-payment of rent. The demand of rent was made only in addition to the demand for vacant possession. The court said that provisions of section 114 were not applicable. Relief against forfeiture was not granted.305 The section is not applicable to case of oral lease.306

[s 114.2] Rent Act The right of the landlord to evict the tenant is restricted under Rent Acts. As the law restricts the power of the landlord to evict the tenant except in accordance with the provisions of a particular Rent Act, section 114 of this Act is not attracted. Once the requirements of Rent Legislation are satisfied, the tenant cannot claim the protection of section 114 of Transfer of Property Act, 1882.307

[s 114.3] Payment not to be in Court The tenant cannot be permitted to deposit the arrears of rent in the court in order to avail relief under section 114 of the Act. Payment has to be made or tendered to the lessor. The provisions contained in O 15A of the Civil Procedure Code are not applicable to any other states apart from the State of Maharashtra.308 But where the money having been deposited in the court and also withdrawn by the landlord, the tenant was held as not liable to be evicted.309 Where money was deposited in the court without its leave and that too without filing any petition, the court held that the risk, if any, is to be borne by the tenant. Such payment could not be legalised. The tenant was not entitled to relief against forfeiture.310

301 Shyam Bhagwan Dubey v Shaikh Nizam, AIR 1994 MP 52 : 1994 Jab LJ 143 : 1994 MP LJ

260 .

302 Bhiku Hari More v Vishwanath Sridhar Mogare, AIR 2003 Bom 235 ; Andhra Graphite Pvt Ltd v

Jobing Syndicate (Regd Partnership), AIR 2011 (NOC) 245 (AP), possession of plaintiff was permissive, but it became akin to that of trespasser after notice to quit, defendant-vendor was entitled to seek possession. 303 Yashpal Lala Shiv Narayan v Allatala Malik Wakf Ajakhan Mus, AIR 2006 All 115 : 2006 (2) All

LJ 204 : 2006 (2) Rec Civ R 712; Phool Badan Verma v Ram Badhaee, AIR 2010 (NOC) 741 (All) : (2010) 2 All LJ 551, in the absence of any written lease, the question of relief against forfeiture does not arise. The Kabuliyatnama was unregistered, tenant being on month-to-month basis, section 114 not applicable. 304 R Bhaskar Bhat v Hindustan Petroleum Corp Ltd, AIR 2002 Mad 330 : 2002 (4) ICC 654 :

2002 (2) Mad LJ 214; Bhartiya Jeevan Bima Nigam v Achint Kumar Lahari, AIR 2007 (NOC) 1266 (NCC) : (2007) 2 All LJ 503, monthly tenancy, arrears of rent, misuse of premises, landlord did not want him as a tenant, held, tenancy terminated on expiry of 30 days from date of service of notice, tenant not entitled to benefit of section 114; Karam Kapahi v Lal Chand Public Charitable Trust, AIR 2010 SC 2077 : 2010 AIR SCW 2697 : (2010) 4 SCC 753 , no relief was allowed under the section to a tenant who was non-co-operative and adopted dilatory tactics; National textile Corp Ltd v Ahmedabadni Samasta Modh Champaneri Vanik Gnati, AIR 2008 (NOC) 841 (Guj), relief was allowed when the entire arrears were cleared by the transferee of the lease, transfer being permissible under the terms of the lease; where enhanced rent had to be paid by lessee within six months from the date of its accrual and the lessee paid it after the lapse of six months, termination of lease was not held illegal, Bata India Ltd v Sharvan Kumar Jain, AIR 2017 Utr 186 . 305 Raj Kumar Rajpoot v Usha Devi Lahauti, AIR 2009 (NOC) 986 (All) : (2009) A&J 296. 306 Yashpal Lala Shiv Narayan v Allatala Malik Wakf Ajakhan Mus, AIR 2006 All 115 : 2006 (2) All

LJ 204 : 2006 (2) Rec Civ R 712; Phool Badan Verma v Ram Badhaee, AIR 2010 (NOC) 741 (All) : (2010) 2 All LJ 551, in the absence of any written lease, the question of relief against forfeiture does not arise. The Kabuliyatnama was unregistered, tenant being on month-to-month basis, section 114 not applicable. 307 Prithvichand Ramchand Sablok v SY Shinde, AIR 1993 SC 1929 : 1993 AIR SCW 2223 :

(1993) 3 SCC 271 . 308 Gopinath Mukherjee v Uttam Bharati, AIR 2009 Cal 58 : 2009 (77) AIC 679 : 2009 (1) Cal LT

290. 309 Rajesh Sharma v III Additional DJ, AIR 2009 (NOC) 865 (All) : (2009) 1 All LJ 201. 310 Chittranjan Mondal v Tapan Kumar Adhikari, AIR 2015 Cal 1 .

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER V OF LEASES OF IMMOVABLE PROPERTY Chapter V dealing with leases of immovable property consists of 14 sections, i.e., from section 105 to section 117. 311[[s 114A] Relief against forfeiture in certain other cases.—

Where a lease of immoveable property has determined by forfeiture for a breach of an express condition which provides that on breach thereof the lessor may re-enter, no suit for ejectment shall lie unless and until the lessor has served on the lessee a notice in writing— (a) specifying the particular breach complained of; and (b) if the breach is capable of remedy, requiring the lessee to remedy the breach,

and the lessee fails, within a reasonable time from the date of the service of the notice, to remedy the breach, if it is capable of remedy. Nothing in this section shall apply to an express condition against the assigning, underletting, parting with the possession, or disposing, of the property leased, or to an express condition relating to forfeiture in case of non-payment of rent.]

Comments [s 114A.1] Relief against Forfeiture in Certain Other Cases (Section 114A) Besides section 114, 114A provides relief to lessee against forfeiture in certain other cases, for example, breach of an express condition which provides for re-entry of the lessor. This section says that where a lease of immovable property has determined by forfeiture for a breach of an express condition which provides that on its breach the lessor may re-enter, no suit for ejectment shall lie unless and until the lessor has served on the lessee a notice in writing— (i) that the lessee has committed a breach of a specific covenant, and (ii) that if the breach is capable of being remedied, the lessee must remedy it.

But if the lessee fails within a reasonable time from the date of service of the notice to remedy the breach if it is capable of remedy, the lessor shall forfeit. This section is applicable where the forfeiture occurs due to breach of an express condition with the right of re-entry only. This section does not apply to the breach of conditions against— (a) assignment, (b) sub-letting, (c) parting with possession, and

(d) disposing of the property leased.

Where a breach which results in the forfeiture of a lease is remediable, an opportunity should first be given to the parties before ordering forfeiture.312

311 Ins. by Act 20 of 1929, section 58. 312 Ramesh pd. v State of Bihar, AIR 2008 (NOC) 1415 (Pat).

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER V OF LEASES OF IMMOVABLE PROPERTY Chapter V dealing with leases of immovable property consists of 14 sections, i.e., from section 105 to section 117.

[s 115] Effect of surrender and forfeiture on under-leases.— The surrender, express or implied, of a lease of immoveable property does not prejudice an underlease of the property or any part thereof previously granted by the lessee, on terms and conditions substantially the same (except as regards the amount of rent) as those of the original lease; but, unless the surrender is made for the purpose of obtaining a new lease, the rent payable by, and the contracts binding on, the underlessee shall be respectively payable to and enforceable by the lessor. The forfeiture of such a lease annuls all such under-leases, except where such forfeiture has been procured by the lessor in fraud of the under-lessees, or relief against the forfeiture is granted under section 114.

Comments [s 115.1] Effect of Surrender and Forfeiture (Section 115) Surrender is a mode of determination of lease. By surrendering the lease, the lessee relinquishes his right to enjoyment of the property before the expiry of the term of lease. Where the lessor does not prohibit the lessee by express terms, he may sub-let the property leased to him. This is called under-lease. Section 115 provides that surrender of lease by a lessee does not affect under-lease of that property or any part of it which has been granted to sub-lessee on the terms and conditions substantially the same as the original lease (except rent). Therefore, this provision safeguards the interests of the sub-lessee. If the lease is surrendered for the purpose of obtaining a new lease, the interest of the sub-lessee shall cease.

[s 115.2] Effect of Forfeiture The forfeiture of a lease extinguishes all the under-leases except where such forfeiture has been procured by the lessor in fraud of the under-lessees or relief against forfeiture has been granted under section 114. The right or interest of the under-lessee also comes to an end when the lessor forfeits the lease. But where the forfeiture is a collusive proceeding between the lessor and the lessee, the rights of the under-lessee remain unaffected because a party cannot take advantage of his own fraud. Where the terms of the lease authorise the lessee to mortgage his interest, the lease should not be forfeited without giving the mortgagee an opportunity to prevent it.

[s 115.2.1] Effect upon sub-lessee. An eviction decree was passed against the lessee. An appeal was filed against it by sub-lessee. The agreement entered into between the lessee and sub-lessee was for management and maintenance of the tenancy. No deed of lease was executed

between them. The Court said that a mere agreement of maintenance does not constitute a lease and hence such tenant had no right to prefer an appeal against the decree of eviction. He was neither a necessary party nor a proper party.313

[s 115.3] Difference between Surrender and Forfeiture (1) Surrender is undertaken by the lessee whereby he surrenders his right of enjoyment of leased property before expiry of the term of the lease. Forfeiture is undertaken by the lessor whereby he extinguishes the rights of the lessee over the leased property. (2) Surrender of a lease implies mutual consent of the lessor and the lessee. Forfeiture does not imply any consent on the part of the lessee. (3) Surrender of a lease does not prejudice a sub-lease granted by the lessee previously on substantially the same terms and conditions of the original lease (except the amount of rent). However, the forfeiture annuls all under-leases or sub-leases except, where, (i) such forfeiture has been procured by the lessor in fraud of the sub-lease, or (ii) relief against forfeiture has been granted under section 114.

313 Urban Amenities Pvt Ltd v Mrityunjoy Seal, AIR 2011 Cal 123 .

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER V OF LEASES OF IMMOVABLE PROPERTY Chapter V dealing with leases of immovable property consists of 14 sections, i.e., from section 105 to section 117.

[s 116] Effect of holding over.— If a lessee or under-lessee of property remains in possession thereof after the determination of the lease granted to the lessee, and the lessor or his legal representative accepts rent from the lessee or under-lessee, or otherwise assents to his continuing in possession, the lease is, in the absence of an agreement to the contrary, renewed from year to year, or from month to month, according to the purpose for which the property is leased, as specified in section 106. Illustrations (a) A lets a house to B for five years. B underlets the house to C at a monthly rent of

Rs 100. The five years expire, but C continues in possession of the house and pays the rent to A. C's lease is renewed from month to month. (b) A lets a farm to B for the life of C. C dies, but B continues in possession with A's

assent. B's lease is renewed from year to year.

Comments [s 116.1] Holding Over (Section 116) Section 116 deals with the effect of holding-over. The expression "holding-over" is used in the sense of retaining possession. This section provides that if the lessee or underlessee of property remains or continues in possession after the determination of the lease and the lessor or his legal representative accepts rent from the lessee or underlessee, or otherwise assents to his continuing in possession, the lease in renewed from year to year or month to month according to the purpose for which it was leased (under section 106). There will be a new tenancy by the tenant's holding over the property. This new tenancy is known as tenancy by holding-over and sometimes it is also known as tenancy-at-will. However, for tenancy by holding-over, assent of the lessor is necessary because without his assent if the lessee remains in possession, he becomes tenant at sufferance. Possession of a former tenant is juridical possession which is a possession protected by law against wrongful dispossession but cannot per se always be equated with lawful possession.314 For the application of section 116 two conditions are necessary:— (i) The tenant (lessee) must be in the possession of the property after the

determination of the lease. (ii) The lessor or his representative must accept the rent or otherwise give his

consent to lessee's continued possession. This section is available for leases fixed originally from month to month or year to year. Where the original lease is given for the life of the lessee, this section will not be applicable. The whole basis of section 116 is that a landlord is entitled to file a suit for ejectment and obtain a decree for possession and, therefore, his acceptance of rent after expiry of lease is an unequivocal act referable to his desire to assent to the tenant continuing possession. However, such assent would be absent where there are restrictions on eviction of tenants as provided by rent control laws. Therefore, acceptance of amounts equivalent to rent previously fixed or amount fixed as standard rent would not amount to acceptance of rent within the meaning of section 116. To gain the benefit of this section, the tenant must establish that the landlord accepted the rent from him as a legal tenant not as a statutory tenant. Where the bank from the conduct of the owner had established that the acceptance of increased rent was in token of the owner's assent to the bank continuing in possession after expiry of the lease, thereby creating lease from month to month within the meaning of section 116, eviction by the Trial Court was held to be improper by the Supreme Court.315 Where the lease of the shop expired but the lessee remained in possession of the shop and the owner continued to receive the rent, it was held that the lessee shall be deemed to be holding over.316 Where the lease period expired and further extension of lease was declined by the Authority, it was held that the tenant in such a case will be considered unauthorised occupant and acceptance of rent or demanding rent by the Authority would not confer any right on tenant to continue in possession, the rent paid by tenant represents damages for use and occupation.317 There was no written request for renewal after expiry of the lease as per agreed terms. Mere acceptance of rent did not amount to an implied renewal. The lessee could not claim the status of "holding over". The tenant was liable to be evicted.318 The consent of the lessee is also necessary. It may be either express or implied. Where a lessee accepts the rent of the lease after determination of the lease, it is an implied consent.

[s 116.2] Tenant by Holding Over After the determination of the lease the lessee remains in possession of the leased property with the consent of the lessor, he is known as tenant—by holding over. Such possession given with the consent (express or implied) of the lessor is deemed to be given for the same purpose for which the original lease was given. A tenant by holding over is a tenant-at-will because here the tenancy arises by implication of law in cases of permissive occupation. The lease period of 20 years expired. The lessee applied in writing to the lessor for extension for a further period of ten years, but he took no steps to bring about the extension. He continued in possession and the lessor continued to accept rent. The court said that by virtue of the provisions of section 107, in the absence of a registered instrument, the lease must be held to be a monthly lease and not a continuation of the earlier expired lease. It had automatically expired on the expiry of its period. The lessee was a holding over tenant. The order of his eviction was proper.319

Where the lease of immovable property was originally for 5 years with option to continuation but no such option was exercised and the lease was not even registered, it was held that the tenant (defendant) after expiry of the original lease had become tenant by holding over and termination of the tenancy by issuing legal notice was proper because mere consent letter issued by plaintiff landlord in favour of defendant for running the theatre could not be made the basis to hold that the lease was permanent.320 The lessee was inducted into the premises as per the unregistered lease for a period of five years. The lease kept up payment of rent. The court said notwithstanding the fact that the agreement was void, the lessee had to be treated as a tenant by holding over.321 Where the period of tenancy expired and the lessee remained in continuous possession under the renewal and extension clause of a further period of 10 years without registering fresh leave deed on payment of enhanced rent, it was held that the lessee could not be treated as a tenant by holding over after expiry of the original lease period. The suit for eviction was maintainable.322 A tenancy expired by efflux of time but the tenant remained in possession under protection of the provisions of a Rent Control Act. The court said that such a possession and deposit of rent does not confer the status of a tenant by holding over, after efflux of time. For the period covered by the Act, the payment was of statutory rent. After repeal of the Act, the tenant could not be regarded as a statutory tenant and was bound to pay only mesne profits or damages.323 No notice is necessary where the tenancy expires by efflux of time. Acceptance of rent from the lessee or his under-lessee by the lessor or otherwise assenting to the lessee's continuing in possession are necessary to constitute the lessee as a tenant by holding over. No document was produced showing acceptance of rent except a statement on oath by the lessee to that effect. The lessor denied any consent for holding over. According, holding over was not made out.324 There was lease of vacant land to put-up a petrol pump with accessory construction thereon. The question was of the effect of determination of lease by efflux of time or by notice to quit. It was held that there remained no right of the dealer over the site. Any right which the dealer had over his site was the right which he had acquired in terms of the lease. When that lease expired and when landlord declined to renew the same and also called upon the erstwhile tenant to surrender possession, the erstwhile lessee could no longer assert that he had any right to the site. His continued occupation of something which he had no right to occupy could not be regarded as source of a right to land of which he himself was not in lawful possession.325 The agreement of renewal contained in the relevant clauses required fulfilment of two conditions, first, the exercise of option of renewal by the lessee before the expiry of original period of lease and second, fixation of terms and conditions for the renewed period of lease by mutual consent and in absence thereof through the mediation of local Mukhia or Panchas of the village. The renewal clauses in the agreement of lease clearly fell within the expression "agreement to the contrary" used in section 116 of the Transfer of Property Act, 1882. Under those clauses the option to seek renewal was to be exercised before expiry of the lease and on specified conditions. The lessor in the present case had neither expressly nor impliedly agreed for renewal. The renewal as provided in the original contract was required to be obtained by following a specified procedure, i.e., on mutually agreed terms or in the alternative through the mediation of Mukhias and Panchas. In the instant case, there was a renewal clause in the contract prescribing a particular period and mode of renewal which was "an agreement to the contrary" within the meaning of section 116 of the Transfer of Property Act, 1882. In the face of specific clauses for seeking renewal there could be no implied renewal by "holding over" on mere acceptance of the rent offered by the lessee. In the instant case,

the option of renewal was exercised not in accordance with the terms of renewal clause, that is, before the expiry of lease. It was exercised after expiry of lease and the lessee continued to remain in use and occupation of the leased premises. The rent offered was accepted by the lessor for the period the lessee overstayed on the leased premises. The lessee, in the above circumstance, could not claim that he was "holding over" as a case within the meaning of section 116 of the Transfer of Property Act, 1882.326 The defendant remained in possession and the plaintiff accepted rent. The court said that these two things could cumulatively constitute the fact of holding over and its effect could be renewal of lease. But there was no proof of acceptance of rent, nor of any mutual agreement. Payment made by the tenant to the ITO on account of the landlord did not amount to acceptance of rent by the landlord.327 Where a tenant continued with possession of leased property of a trust even after determination of lease and also paid rent, it was held that he was a tenant by holding over and not at sufferance. There was implied consent of the trust. Such a tenant is liable to be evicted only by following the due course of law. He was entitled to an injunction restraining his eviction and also for the relief of restoration of his power supply.328 Tenancy by holding over after expiry of the term of lease does not have the effect of changing the purpose for which the property had been originally leased.329 Grant of official accommodation cannot be termed as lease in favour of the employee. After retirement of the employee, neither the employee nor his family members can claim their continuance over accommodation on the principle of holding over merely on the basis that the allotment was made by the Chairman if the Chairman is not authorised to make such allotment. They can be termed as unauthorised occupants and the appropriate authority can evict them. In the case, the Chairman was not authorised to make such allotment in the absence of resolution of employerauthority.330

[s 116.1.1] Holding Over on Court Order The lessee was an embassy. It continued in possession even after expiry of lease because of Court orders. The lessor was held to be not entitled to increase rent. There was no express contract or statutory provision for enhancement or any proof of an earlier enhancement.331

[s 116.1.2] Possession of Custodian A lease in favour of a bank, which was an enemy firm, expired by efflux of time. The Custodian took over the enemy firm. He was refusing to divest title in favour of the owner. The court said that the Custodian could not hold the property for eternity by paying a paltry sum of money as monthly rent. Such an action on the part of the Custodian was amenable to judicial review. The mere acceptance of rent by the owner after expiry of the lease could not make the Custodian as a tenant by holding over. The Custodian was as trustee. He was not entitled to claim a better title than that the enemy firm from whom he had taken possession.332

[s 116.3] Tenant-at-sufferance

When after the determination of the lease, the tenant (lessee) remains in possession of the leased property without the consent of the lessor, he is known as tenant-atsufferance. Tenancy-at-sufferance is merely a fiction to prevent the possession from being a trespass. It can arise only by implication of law when a person has been in possession of the leased property under a lawful title and continues in possession after that title has come to an end, without the consent of the person entitled. In case, the lease in not renewed after expiry of its term of 5 years, the tenant has the option of either accepting its status as a tenant at sufferance or at the highest to that of a month to month tenant.333 Possession after expiry of lease is juridical possession. When possession of property by tenants is as tenants in sufferance, their possession will be protected by law until their eviction is done by due process of law.334 In a case, a tenancy was created for a period of 5 years between the owner of the premises and a bank (tenant) by a registered deed. The bank continued in possession even after the expiry of lease-period of 5 years. However, the tenant-bank continued to pay the rent (increased rent) to the owner regularly and which was also accepted by the owner even after the expiry of the lease. The owner filed a suit for eviction of the tenant. It was held by the Supreme Court that the assent of the owner regarding the continued possession of the leased premises could be inferred from his acceptance of the increased rent. Therefore, there was a creation of tenancy from month to month. In such a situation, the bank-tenant was entitled to get the protection from being evicted on expiry of the stipulated period of lease. The Supreme Court observed that a tenant who continues possession without the landlord's consent is not a tenant by holding over but a tenant at sufferance.335 When the original or head lease expires, sub-lease, if any, also expires. The sub-lessee is accountable to his lessor. Both of them are liable to be evicted.336

[s 116.4] Agreement to the Contrary This section contains the presumption of holding-over. This presumption may be excluded by an agreement to the contrary. An agreement to the contrary is an agreement which settles the terms of holding over between the parties. The express agreement determines the duration and the terms of the renewed lease.

[s 116.5] Difference between Tenant by Holding Over and Tenant-at-sufferance Holding over stands equivalent to the retention of possession after determination of lease but with the consent of the landlord whereas, in similar circumstances, if the possession is without the consent of the landlord then the same stands out to be a tenant-at-sufferance.337 (1) A tenant—holding over remains in possession with the assent of the lessor (landlord) and has some right in the property. A tenant-at-sufferance continues in possession without the consent of the owner lessor and has no interest in the property. (2) There is some privity of state between a tenant holding over and his lessor.

Though the tenant-at-sufferance is not a trespasser because he had a lawful possession under the lease but there is no privity of state between him and the landlord. (3) Tenant-holding over can transfer his interest in the property to another person. The tenant-at-sufferance cannot transfer his interest to anyone else. He cannot transmit any right to his successors. (4) A tenant-holding over cannot be ejected without notice to quit under section 106. A tenant-at-sufferance is not entitled to a notice to quit. A person who is a tenant-at-sufferance has no estate or interest in the leasehold property. A tenant holding after the expiry of his term is a tenant-at-sufferance, which is a term useful to distinguish a possession rightful in its inception but wrongful in its continuance from a trespass which is wrongful both in its inception and in its continuance. A co-owner can maintain a suit by himself for ejectment of a trespasser or a tenant-at-sufferance.338

314 Kewal Chand Mimani v SK Sen, AIR 2001 SC 2569 : (2001) 6 SCC 512 : 2001 AIR SCW 2739. 315 Bhuvneshwar Prasad v United Commercial Bank, (2000) 7 SCC 232 : AIR 2000 SC 2796 :

2000 AIR SCW 2966. 316 Palani Municipal Council v C Sadasivam, 2003 (3) RCR (Civil) 620 (Mad) : 2003 (3) CCC 326

(Mad); Shila Roy Choudhary v Dr Nimani Charan Rakshit, AIR 2007 (DOC) 5 (Cal) : (2006) 2 Cal LJ 401 (Cal), holding over means that the relationship of landlord and tenant was allowed to continue with the consent of both parties, landlord accepted rent for one month under a bona fide mistake after determination of the lease, on realizing the mistake he immediately returned the rent amount, there was thus no holding over, landlord was entitled to possession. 317 Punjab State Electricity Board v State of Punjab, 2003 (1) RCR (Civil) 48 : 2002 (2) Ren CR

616 (P&H) (DB) : 2002 (2) PLJ 414 (P&H). 318 Panch Raghou Taank Ramnivas Sarda and Co v Hindustan Petroleum Corp Ltd, AIR 2014 Chh

178 . 319 Indian Oil Corp v Alka Agarwal, AIR 2007 Bom 113 : 2007 (3) Bom CR 129 : 2007 (3) CCC

773 . The court followed Burmah Shell Oil Distributing v Khaja Medhat Noor, AIR 1988 SC 1470 : JT 1988 (2) SC 429 . Vijaya Nigam v DJ, Kanpur, AIR 2007 (NOC) 440 (All), lessor did not agree for renewal expressly or impliedly, there was no mutual agreement for renewal, the court said that such lessee could not be regarded as a lessee by holding over, his possession, in the absence of an agreement to the contrary, could not be regarded as a month-to-month tenancy, and the same was terminable by notice. 320 UP Jayaram v K Leelavathi Rai, AIR 2002 (NOC) 254 (Kant) : 2002 AIHC 2852 . 321

Manathanath

Kunhahammed

v

Kizhakke

Theruvathakath

Cherammal

Thodiyil

Unnimoideenkutty, AIR 2009 Ker 143 : 2009 (2) ICC 857 : 2009 (1) Ker LT 846 . 322 Renuka Seal v Sabitri Dey, AIR 2008 Cal 75 (DB) : 2008 (1) Cal LJ 338 : 2007 (3) Cal LT 322.

323 MC Mohammed v Gowramma, AIR 2007 Kant 46 : ILR 2006 Kant 4584 : 2007 (1) Kant LJ

378 ; Chief Secretary, Posts & Telegraphs Telecommunication v Mohd Musa Sait Wakf, AIR 2007 (NOC) 312 (Kant) : (2007) 1 AIR Kar. R 346, land acquired under emergency with right to take possession from the occupants, ownership could not vest in the state till possession was taken over, the suit for eviction against the tenant was decreed by treating him as a tenant holding over. 324 Albert Morris v K Chandrasekharan, JT 2005 (9) SC 127 : (2005) 8 Scale 788 : (2005) 8 SLT

247 . 325 Ibid, Shanti Prasad Devi v Shankar Mahto, AIR 2005 SC 2905 : (2005) 5 SCC 543 : JT 2005

(6) SC 6 , lease deed provided for option for renewal to be exercised before expiry of lease period, acceptance of rent after expiry of term, no holding over, no implied renewal on mere acceptance of rent. 326 Shanti Prasad Devi v Shankar Mahto, AIR 2005 SC 2905 : (2005) 5 SCC 543 : JT 2005 (6) SC

6. 327 Tara Properties Pvt Ltd v Shalimar Paints Ltd, AIR 2009 Cal 47 : 2008 (4) Cal LT 296 : 2009

(2) ICC 454. 328 Bibek Motors v Pyarimohan and Pramila Trust, AIR 2012 Ori 87 : 2012 (1) CLR 234 . 329 NK Rajendra Mohan v thirvamadi Rubber Co Ltd, AIR 2015 SC 2556 . 330 Dinesh Chand v State of Uttarakhand, AIR 2017 (NOC) 594 Utr. 331 DDa. v Skipper Construction, (2011) 15 SCC 447 . 332 Swadeshi Commercial Co Ltd v UOI, AIR 2007 Cal 53 : 2007 (2) AKant (NOC) 168. 333 Sohan Singh Anand v State Bank of Patiala, 2003 (1) Ren CR 324 (Del). 334 Mamta Panigrahi Alias Panigrahi v Hemlata Dalai, AIR 2017 Ori 122 . 335 Bhuvneshwar Prasad v United Commissioner Bank, AIR 2000 SC 2796 : 2000 AIR SCW 2966 :

(2000) 7 SCC 232 ; RV Bhupal Prasad v State of Andhra Pradesh, (1995) 5 SCC 698 : 1975 AIR SCW 3836 : AIR 1996 SC 140 ; Kewal Chand Mimani v SK Sen, AIR 2001 SC 2569 : 2001 AIR SCW 2739 : (2001) 6 SCC 512 ; Ram Bharosey Lal Gupta v Hindustan Petroleum Corp Ltd, (2013) 9 SCC 714 , the lessor did not at all acquiesce to continued possession after valid termination of lease upon its non-renewal, hence no deemed renewal, lessee continuing in possession only as trespasser, liable to mesne profits as a trespasser. 336 Kamini Kapoor v Punjab National Bank, AIR 2013 Cal 206 : 2013 (128) AIC 571 : 2013 (2) Cal

LJ 207 . 337 Kewal Chand Mimani v SK Sen, (2001) 2 Ren CR 158 : (2001) 6 SCC 512 : AIR 2001 SC 2569

; legal heirs of the original tenant were allowed to continue in possession in suit land for some time upon payment of rent by them, when they defaulted in rent payment, their possession became possession without consent and they were held to be tenants at sufferance, Mamta Panigrahi alias Panigrahi v Hemlata Dalai, AIR 2017 Ori 122 . 338 B Valsala v Sundaram Nadar Bhaskaran, AIR 1994 Ker 164 : 1993 (2) Ker LJ 100 : 1993 (2)

Ker LT 67 .

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER V OF LEASES OF IMMOVABLE PROPERTY Chapter V dealing with leases of immovable property consists of 14 sections, i.e., from section 105 to section 117.

[s 117] Exemption of leases for agricultural purposes.— None of the provisions of this Chapter apply to leases for agricultural purposes, except in so far as the State Government 339[***] may by notification published in the Official Gazette declare all or any of such provisions to be so applicable 340[in the case of all or any of such leases], together with, or subject to, those of the local law, if any, for the time being in force. Such notification shall not take effect until the expiry of six months from the date of its publication.

Comments [s 117.1] Exemption of Leases for Agricultural Purposes (Section 117) Leases for agricultural purposes have been exempted from the provisions of this chapter. Probably the legislature wanted to retain in force the special provisions in the Rent Acts in respect of agricultural leases passed prior to the Transfer of Property Act, 1882. The object of the exemption is not to disturb the settled usages which have come into existence. It is not necessary that the agricultural lease must be in writing. It may be made orally. However, if it is made in writing, it must be registered. It the lease is from year-to-year or any term exceeding a year or reserving a yearly rent, registration would be required under section 17(i)(d) of the Registration Act. The State Government may by notification in the Official Gazette make applicable all these provisions or some of them to all or some of such leases. However, such application will be together with or subject to the provisions of the local law, if any, for the time being in force. Such a notification will take effect after the expiry of six months from the date of its publication.

339 The words "with the previous sanction of the Governor General in Council" omitted by Act

38 of 1920, section 2 and Sch I.

340 Ins. by Act 6 of 1904, section 6.

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER VI OF EXCHANGES This Chapter consists of only four sections (sections 118 to 121) which deal with exchange of properties.

[s 118] "Exchange" defined.— 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.

Comments [s 118.1] Exchange (Section 118) Section 118 defines "exchange" as— (1) when two persons mutually transfer the ownership of one thing for the

ownership of another, (2) neither thing nor both things being money only, the transaction is called an

exchange. In exchange there is transfer of ownership of one thing for the ownership of some other thing. Transfer of ownership for consideration of money is called sale whereas without consideration, it is called gift. Therefore, where a property is changed for another property, it is called exchange. An exchange includes a barter of goods for movable property. These provisions are applicable to exchanges of both the movable and immovable properties. Where the ownership of a thing is transferred for money only, it is not considered an exchange but sale. But where along with the ownership of a property some money is also given in addition it is included in exchange. For example, where one of the two properties which are to be exchanged exceeds the other in value, the transaction would be an exchange even if some money is paid by the owner of the property in addition to the property. For another example, if a person exchanges his house worth Rs 2000 with a field worth Rs 1500 and the owner of the field agrees to pay Rs 500 in cash, the transaction will be a sale. Oral exchange is not permissible in view of the amendment of section 49 of the Registration Act brought about by Act No. 21 of 1929, which by inserting in section 49 of the Registration Act the words "or by any provision of the Transfer of Property Act, 1882", has made it clear that the documents of which registration is necessary under the TP Act but not under the Registration Act falls within the scope of section 49 of the Registration Act. If not registered they are not admissible as evidence of any transaction affecting any immovable property comprised therein and do not affect any such immovable property. Transaction by exchange which required to be effected

through registered instrument is if it was to affect any immovable property worth Rs 100 or more.1

[s 118.2] Characteristic Features of Exchange (1) Transfer of Ownership.—Exchange involves transfer of ownership in some existing property. In transfer of ownership, absolute interest of the owner is transferred. Partition of property is not a transfer of ownership. (2) Properties Need not be Immovable.—In exchanges, the properties may be both movable and immovable. Immovable property may be exchanged with movable property or vice versa. (3) Exchange Includes Barter.—Exchange of one movable property with another movable property is known as barter. Transfer of ownership in some movable property in consideration of transfer of ownership in another movable property is known as barter. (4) Mode of Transfer.—Section 118 provides that a transfer of property in completion of an exchange can be made only in a manner prescribed for the transfer of such property by sale. Therefore, the formalities of section 54 are to be complied with. Where both the properties are movable, exchange may be affected only by delivery of possession without registration. Where the properties are immovable and of value is less than Rs 100, registration is optional but in case the value of immovable properties is more than Rs 100, registration of the document is compulsory.2 It is necessary that the deed of exchange must be a valid contract. Where the deed was executed to compromise criminal proceedings between the parties, it was held that since the object of the contract of exchange was unlawful, the contract, and therefore, the exchange was void.3 When in an exchange of properties one party did not get possession of the property he was entitled to receive in the exchange, he was held entitled to return of property transferred by him.4 In the case of partition of joint family property, the court held that once partition is effected, whether by way of family arrangement or deed of partition, there is severance of jointness of properties. Two brothers thereafter exchanged properties which were held by them separately. The properties being worth more than Rs 100 in value, they could have exchanged them only by a registered instrument.5

[s 118.3] Distinction between Sale and Exchange Sections 118, 119 and 120 show that the Legislature has put exchange on the same footing as a sale in almost every respect. The difference lies in the nature of consideration only. In both, there is transfer of ownership, the only difference being that in sale, transfer of ownership is for money whereas in the case of exchange, transfer of ownership of property is for ownership of any other property. A transfer of property by exchange can be made in the same manner as is applicable to sale. Each party has similar rights and liabilities as that of a seller and a buyer. In a sale, there is always a price but in exchange, there is no price. However, money may be added to anything which is exchanged to equalise the values of properties in

exchange.

[s 118.4] Difference between Exchange and Partition (1) An exchange is mutual transfer of ownership of two persons in two different properties. A partition is a mere arrangement by which the several co-owners hold the property separately which they held in common previously. (2) Exchange is brought about by a contract between the parties. The right of partition is a natural incident of property, there is no need to enter into a contract for that purpose. (3) In an exchange, the parties exchanging their properties had no interest in each other's property before exchange. In a partition, each party has as much interest in the entire property as the other. There is no exclusive ownership in the case of partition. Punjab:—The provisions of section 118 of the Transfer of Property Act do not apply to State of Punjab, making oral exchange permissible there.6

1 Satyavan v Raghubir, AIR 2002 P&H 290 : 2002 (3) ICC 112 : 2002 (2) Punj LR 467 . 2 Nivrutti Kushaba Binnar v Sakhibai, AIR 2009 Bom 93 : 2009 (80) All Ind Cas 590 : 2009 (2)

Bom CR 14 , registered instrument necessary where property worth more than Rs 100; unregistered deed of exchange in relation to immovable property is inadmissible in evidence, Shyam Narayan Prasad v Krishna Prasad, AIR 2018 SC 3152 . 3 Srihari Jena v Khetramohan Jena, AIR (2002) Ori 195 : 2002 (4) Civ LJ 279 : 2002 (94) Cut LT

201. 4 Hari Shanker Mishra v Vice-Chairman, Kanpur Development Authority, AIR 2001 All 139 : 2001

(42) All LR 839 : 2001 All LJ 1198; Krishna Prasad v Shyam Narayan Prasad, AIR 2006 Sikkim 25 : 2006 (4) Civ CC 642, one of the executants took the stand that what was intended to be exchanged was only the business and not the RCC building, and evidence also supported this stand, the court said that the finding on the basis of recitals only that the RCC building was also included in the exchange was not sustainable. 5 Balkrishna Bhagwanji Lodi v Prakash Sheshrao Lodi, AIR 2015 NOC 89 (Bom). 6 Kishori Lal v Babu Ram, 2003 (1) RCR (Civil) 807 (P&H).

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER VI OF EXCHANGES This Chapter consists of only four sections (sections 118 to 121) which deal with exchange of properties. 7[[s 119] Right of party deprived of thing received in exchange.—

If any party to an exchange or any person claiming through or under such party is by reason of any defect in the title of the other party deprived of the thing or any part of the thing received by him in exchange, then, unless a contrary intention appears from the terms of the exchange, such other party is liable to him or any person claiming through or under him for loss caused thereby, or at the option of the person so deprived, for the return of the thing transferred, if still in the possession of such other party or his legal representative or a transferee from him without consideration.]

Comments [s 119.1] Right of Party Deprived of Thing Received in Exchange (Section 119) Section 119 provides for a contingency in which one of the parties to the exchange is deprived of the property received by him due to some defect in the title of the other party. (1) If any party to an exchange (or any person claiming under him), (2) is deprived of the thing received by him in exchange by reason of any defect in the title of the other party, (3) such other party is liable to him (or any person claiming under him)— (a) for the loss caused by such defect; or (b) for the return of the thing transferred at the option of the person so deprived, if

the thing is still in the possession of such other party (or his legal representative or a transferee from him without consideration). (4) However, this remedy is subject to the contrary intention appearing in the terms of exchange. The parties may have agreed to the contrary, in such a case, this covenant cannot be implied. The party suffering loss due to the defective title of other party to the exchange has been given two remedies under this section:— (i) he can recover for compensation the loss suffered by him; (ii) he can take back the thing transferred by him.

However, the second remedy is available only in three situations:—

(a) where the property is still in the possession of the other party, or (b) in the possession of his legal representative; or (c) a transferee from him without consideration.

Where there was a defect in the title of the land received by one party to exchange due to false entries made by the patwari and the party was deprived of some portion of land as per stipulation, it was held by the Supreme Court that entries made by a patwari in the official records do not create title, therefore, the opposite party was liable to return the property (land) to that extent.8 The sine qua non of the applicability of section 119 is a party to the exchange losing possession by virtue of the defect in title of the property or thing received in exchange. If somebody forcibly dispossesses a person who has taken a property or thing in exchange by him, he cannot, by invoking section 119 of the Act seek recovery of the property or thing, which he gave in exchange to the other party. In the case of sale also, if the purchaser is deprived of his possession of the property purchased by him by a trespasser his remedy would be to proceed against the trespasser but not his vendor for recovery of the sale price on the ground of trespass.9

7 Subs. by Act 20 of 1929, section 59, for the original section. 8 Jattu Ram v Hakama Singh, AIR 1994 SC 1653 : 1994 AIR SCW 1387 : (1993) 4 SCC 403 . 9 T Bhaskara Rao v Tangellamudi Gabriel, AIR 2004 AP 106 : 2004 (2) Andh LT 59 : 2004 (2) CCC

282 .

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER VI OF EXCHANGES This Chapter consists of only four sections (sections 118 to 121) which deal with exchange of properties.

[s 120] Rights and liabilities of parties.— Save as otherwise provided in this Chapter, each party has the rights and is subject to the liabilities of a seller as to that which he gives, and has the rights and is subject to the liabilities of a buyer as to that which he takes.

Comments [s 120.1] Rights and Liabilities of Parties (Section 120) Section 120 has not specifically mentioned the rights and liabilities of the parties to exchange. It provides only that each party has the rights and is subject to the liabilities of a seller as to that what he gives and has the rights and is subject to the liabilities of a buyer as to that which he takes. Therefore, the rights and liabilities of the parties to the exchange are same as that of seller and buyer in case of a sale. In an exchange, one thing is given and another is taken or received. So each party has rights and liabilities of both the seller as well as buyer. Where the exchanged properties are movables, the provisions of the Sale of Goods Act, 1930 may also apply.

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER VI OF EXCHANGES This Chapter consists of only four sections (sections 118 to 121) which deal with exchange of properties.

[s 121] Exchange of money.— On an exchange of money, each party thereby warrants the genuineness of the money given by him.

Comments [s 121.1 ] Exchange of Money (Section 121) Exchange is mutual transfer of ownership. Where money is transferred in consideration of money, it is also an exchange. Section 121 provides that on an exchange of money, each party thereby warrants the genuineness of the money given by him. The money transferred must be genuine. The money given must not be counterfeit or fake money. The party who does not get genuine money in return would be entitled to recover genuine money paid by him.

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER VII OF GIFTS This Chapter consists of eight sections (Section 122 to Section 129) dealing with "gifts".

[s 122]"Gift" defined.— "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.

Comments [s 122.1] Definition of Gift (Section 122) (i) "Gift" is the transfer of certain existing movable or immovable property— (ii) made voluntarily and without consideration; (iii) by one person, called the donor, to another person, called the donee; and (iv) accepted by or on behalf of the donee. (v) Such acceptance must be made during the lifetime of the donor and while he is

still capable of giving. (vi) If the donee dies before the acceptance, the gift is void.

A gift is a gratuitous transfer i.e., without consideration. In gift an existing property is transferred in favour of another person without consideration. A gift may be made between two living persons or it may take place after the death of the transferor (testamentary). Gift between living persons is inter vivos gift and it is a transfer of property within the meaning of section 5 of this Act. Whereas testamentary gift is a transfer by operation of law and it does not come within the purview of this Act. A gift made in apprehension of death i.e., gift mortis causa also does not come within the scope of this Act. Where the transfer of immovable property was by way of "Pasupa Kumkuma" which means a gift, settlement or assignment of land of daughter, this amounts to a gift and requires registration.1.

[s 122.2] Essential Elements The essential elements of a valid gift are:—

(1) there must be a transfer of ownership of a property. (2) the property must be in existence. (3) the transfer must be voluntarily made and without consideration. (4) the property must be accepted by or on behalf of the person to whom it is

transferred. (5) the transfer must be effected in the manner prescribed by law.

[s 122.2.1] Transfer of Ownership.— A gift necessarily involves transfer of ownership. In this, the whole of the interest of the person in a property is transferred in favour of another person. The person transferring the interest is known as "donor" and the person to whom the interest is transferred in a property is known as the "donee". The person making the gift is donor whereas person accepting the gift is donee. It is permissible to make conditional gifts of property also but the condition must not be repugnant to any of the provisions of sections 10 to 34 of the Act. The donor must be competent to contract. The mental capacity of the donor is a question of fact. The lower court in this case had recorded a finding that the donor was mentally sound and capable of executing the deed. The court said that this finding could not be interfered with in second appeal. The deed was duty registered and proved by evidence of the attesting witness. No conspiracy element was proved. The suit was also filed after three years and, therefore, time-barred. This finding could also not be interfered with.2. There may be certain transactions of transfer which may not amount to a gift within the meaning of section 122 of the Act but would be regarded as gifts for the purpose of subjecting such transfers to the levy of gift tax (now abolished). However, there has to be a transfer of property and a transfer by reasons of section 17 of the Registration Act, 1908 can only be by way of registered document.3. There was a stipulation in the document that the executant was to keep possession of the property. He was to utilize the income from the property for maintenance and repaying loan. After the life time of the executant the property was to go absolutely to his sons. It was held that the document did not create right, title, ownership in the sons at the time of execution or during the life time of the executants. Subsequent events were of no use in construing the document. The document in question was not a gift deed. The Court said generally that a document which had characteristics of both gift and Will has to be registered but the document may not thereby cease to be a Will. The intention of the executant has to be ascertained from the words employed.4.

[s 122.2.2] Gift of Whole Property by Part Owner.— A widow had a limited interest in the property. During her life-time she made a gift of the entire property and delivered possession. It was held that the successors were entitled to recover possession because the gift of the whole property was a nullity. The gift could bind the reversioners during her life time, but not afterwards. The reversioners were entitled to file a partition suit for their share in the property.5.

[s 122.2.3] Existence of Property.—

For a gift, it is necessary that the property must be in existence at the time of making the gift, although its conveyance may take place either in present or in future. Both the types of properties i.e., movable and immovable may be gifted. A gift of a future property is void. Section 124 provides that the property must be in existence at the time of making of gift otherwise the gift will be void. Actionable claim is an existing property and it can be gifted. A gift comprising of both the existing and future property, is void as to the future property. A mortgaged or leased immovable property may be gifted. Gift of a part of the joint family which fell to the share of the donor under the preliminary decree of partition was held to be valid. The court said that once a preliminary decree in a suit for partition is passed, it amounts to a severance of the status of joint family coparcenary. Parties are no coparceners. They are then tenants in common in possession. The moment the coparcenary comes to an end, each coparcener is free to gift his share though still not physically divided. Their shares become definite under the decree.6. In gift of hypothetical property, property of deceased male had to devolve on son and widow as per Baroda Hindu Nibandh, 1937. The widow executed the gift deed after death of her husband but before partition or determination of her share had taken place, the question was about the validity of such a gift. She being the widow was entitled to half share and she could not have gifted a hypothetical share of property without it having been partitioned or determined. When during the hearing the appellant proposed to part with said hypothetical half-share if it is divided into three shares between his three sisters, parties were directed to give effect to terms of settlement offered by appellant.7.

[s 122.2.4] Voluntary Transfer, without Consideration.— The gift must have been made by the donor voluntarily i.e., with his free will and consent. Where the consent of the donor is not free i.e., the consent has been given due to coercion or undue influence, the gift will not be a valid gift. Section 15 and section 16 of the Indian Contract Act, 1872 define coercion and undue influence respectively. In coercion, the donor is forced to execute a gift deed by threat of committing any act punishable by the Indian Penal Code. For example, where a gift deed was executed by a lady and her son under the threat of her husband that he will commit suicide and they will not gift their property to his brother, the gift was held to be not a valid gift. Undue influence as defined under section 16 of the Indian Contract Act, 1872 influences the consent of the donor of the gift. The court dealing with such a case has to ask two questions— (i) whether the relations between the parties are such that one is in the position to

dominate the will of the other person? (ii) whether the position has been used to dominate the Will i.e., whether the undue

influence has been actually exercised?8. Where the answer of both these questions is in the affirmative the court will presume undue influence and the gift will be set aside.9. Where the transaction itself is unconsionable, then the burden of proving that the contract was not influenced by undue influence lies upon the person who is in the dominating position. Where a devotee gifted his entire immovable property to his spiritual guru for the peace of his soul in the next world, the gift was set aside as it was the result the undue influence practised by spiritual guru.

Where in case of execution of gift-deed giving entire property to a party after cancelling prior execution of a will in favour of another person, and no evidence as to fraud, undue influence was given, it was held that mere fact that the donor was 85 years of age and he had already executed a will in favour of another person long back in the year 1969 or witnesses attesting the gift-deed were not from the village of the donor or defendant had not been proved to be legally adopted son of the donor, would not mean that the gift-deed was the result of undue influence.10. If the gift is made by a pardanashein lady, it must be proved beyond doubt that she executed the gift-deed voluntarily. If the plaintiff is an illiterate or pardanashein lady, yet the defendant must establish the fact that the plaintiff executed the document after the document was read over and explained to her and she also understood that where no fraud was played upon the pardanashin lady, the gift deed was held to be void as the contents were neither read over to her nor explained to her which would show that she executed the deed after understanding its contents.11. Where a gift-deed was executed by an old illiterate lady and her thumb impression was not identified by her husband and moreover, none of the co-villagers or relatives were attesting witnesses instead it was witnessed by a stranger from another village, it was held that the gift deed could not be said to be a valid gift and, therefore, the claim of ownership over the property by virtue of the gift deed was not tenable.12. A gift deed was held to be brought about by fraud when the plaintiff was in an unfit state of mind. She was unable to look after herself. In such state of things, she was made to execute the document. She was not able to say what the document was and how she was made to sign it. The court held that these averments clearly made out a case of fraud. There was no proper attestation also because the attesting witness belonged to another village. The gift was thus not validly executed. It was null and void.13. The gift must be made without consideration. The word "consideration" has been defined in section 2(d) of the Indian Contract Act, 1872, and it is used in the same sense under the Transfer of Property Act, 1882. It must be a pecuniary consideration, valuable in terms of money. Even a small sum of money given in return of gift will make it a sale. The intention of the donee was to get the land of the donor for consideration which he had spent over his maintenance. The court said that one such monetary consideration was proved, the transaction creased to be a gift. But it could be said that the donee was able to dominate the Will of the donor and that he exercised under influence to get the deed executed.14. Where the property is transferred due to natural love and affection, it is a gift it being without consideration. Where the elder brother took suit premises on lease for running printing works and later on he executed the release deed relinquishing his entire interest in business of printing press in favour of two younger brothers but the tenancy rights were not mentioned in the release deed, it was held that the landlord was not bound by the release deed and the brothers would not acquire tenancy rights.15. A condition in a gift that the donee will not alienate property during the lifetime of niece of donor since she was given the right to possession of property till her death, it was held that such a condition could be imposed in view of sections 10 and 11.16.

[s 122.2.5] Acceptance by Donee.— Acceptance of the gift by the donee is necessary. In certain circumstances, the donee may refuse to accept the gift. For example, where the gift is onerous or non-beneficial to the donee, he may refuse to accept it. Onerous gift is a gift of such a property which

is burdened with liability like liability of tax or revenue etc. which exceed the market value of the property. Acceptance of the gift may be express or implied. Where the donee accepts the titledeeds of the property gifted, it is implied acceptance of gift. Where the mother, natural guardian, gifted property to minor retaining possession and right of enjoyment for herself, ownership of property by minor can be presumed by silent acceptance particularly when the minor is an educated boy of 16 years and has the knowledge of execution of gift. Non-delivery of possession of gifted property, non-exercise of ownership rights over it and failure to get property mutated in his favour on attaining majority are not the circumstances negativing presumption of implied acceptance of gift by minor.17. Where the donee is incompetent to contract i.e., he is minor or of unsound mind, the gift must be accepted on his behalf by a competent person. The gift in favour of minor is not prohibited under the Transfer of Property Act, 1882. Minor though disqualified from entering into contract is capable of receiving property. Transfer by minor is not valid because he is not considered to be competent to enter into a contract. Therefore, the transfer of property of the minor without following the procedure provided for that purpose by the Guardian & Ward Act, 1870 would not transfer any title to its vendee.18. The gift may be accepted by the guardian of on behalf of his ward. In case the gift is accepted by a guardian on behalf of the minor ward, the ward may on attaining majority avoid the gift or accept it. In a case, the plaintiff sought declaration of nullity of gift-deed relating to suit property on the ground that at the time of its execution he was minor but neither the birth certificate was exhibited by him nor it was proved by the producing witnesses. It was held that the onus of proving the fact of age was placed on the plaintiff and not on the defendants which he could not prove and moreover, the suit was not filed within three years from the date of attainment of majority by the plaintiff, therefore, the plaintiff was not entitled to the relief sought for.19. Where the adoption was not proved but the gift deed in favour of the adopted son was acted upon, gift deed was held to be valid.20. Where the gift is made to a juristic person, the gift must be accepted by a competent authority representing such a legal person. Besides this, the donor must also be a competent person. He must have the capacity as well the right to make the gift. He must be competent to contract i.e., he must be major as well as of sound mind. Section 122 provides that acceptance of the gift must be made during the life-time of the donor and while he is still capable of giving. If the donee dies before acceptance, the gift is void. Gift is a bilateral transaction between two living persons. Therefore, the acceptance of the gift must be completed before the donor dies or becomes incompetent to make a gift. If the donee dies before accepting the gift, the gift becomes void. The mere fact that the beneficiary stood by the side of the settlor at the time of registration of deed, is no ground to say that he had accepted the same.21. Donee in possession of gifted land raises the presumption of acceptance.22. Acceptance can be expressed or implied as well as can be inferred from the act and conduct of the parties during the life time of the donor. It would be a question of fact in each case as to whether there was an acceptance on the part of the donee or not. Similarly, delivery of actual physical possession and control of gifted property will be a question of fact in each case. The moment physical possession of immovable property is delivered to the donee, it will be implied consent and acceptance of donee.23. Where the gift-deed was in possession of donee and he filed civil suit claiming his ownership right over the gifted property which was decreed in his favour and he also

got his name mutated in Municipal records, it was held that the donee duly accepted the gift from the donor and acted on the basis of the same and as such the requirements of the provisions of section 122 had been fully complied with.24. Where the preliminary decree passed by the court partitioned the property and suit property fell to the share of some persons in one group who transferred the property by way of gifts to their daughter-in-law and grandsons, it was held that the said persons were entitled to gift the property which fell to their share and donees would acquire a valid title thereunder. It was further held that it could not be said that unless and until the final decree was passed, a gift of property could not have taken place, even on the principle of feeding the grant by estoppel, subsequent acquisition of title by donors under final decree, would ensure to the benefit of the donee under the gift-deed.25. There was a pending suit about partition among family members. The gift deed was set forth as a defence. A clause in the gift deed provided that physical possession of the gifted property was already with the donee and only proprietary possession was being handed over to him. But the fact was that the plaintiff was in physical possession of only some portion of the property in her independent right of her husband's share in the property. It was held that the gift deed was not legally correct as the property in question was joint family property. The gift deed could not have been acted upon by the parties.26. A gift deed cannot be held to be a forged or fabricated document merely on the ground that the donee's address as mentioned in the deed was wrong. The court held that the same could be rectified by executing another document. It could not also be termed as forged because the donor remained in possession. The donee was the sister of the donor. Therefore, it could be so because he was looking after the property.27.

[s 122.2.5.1] Delivery of Possession It is not necessary for the purpose of symbolising acceptance to show that possession of the immovable property gifted under the deed has been delivered. All that is necessary to show is that the things presented by way of gift were accepted by the donee.28. It has been held that section 123 supersedes the rules of Hindu personal law insofar as they require delivery of possession to the done. Thus, delivery of possession is not an essential prerequisite for the making of a valid gift in cases of immovable property.29.

[s 122.3] Construction of Gift-deed Intention of the donor can be ascertained only by reading the document of gift as a whole. The different words used in the deed cannot be read in isolation. Where in a gift deed the words "this property will be yours and nobody else shall have right and title over it" are immediately followed by the word "in case any male children are born to your parents, you shall enjoy the described immovable property and house with those male children as joint-holder", these words will be read together. It was held that the gift-deed read as a whole did not show that the donor intended to create absolute right in favour of the appellant only. The intention of the donor was to make all children of her brother joint-holders of the ancestral property without exception of any property.30. A condition was attached to the gift that the donee would serve that donor till his lifetime. The court found that it was not the intention of the donor and nowhere it was mentioned in the deed that the donee would be required to serve the legal heirs of the donor. The donor was served till the end of his life and therefore the condition became

extinguished. The gift became absolute leaving no right for donor's successors-ininterest.31. According to a Gazetteer of India Lakshadweep by NS Mannadiar published in 1977 dealing with property and inheritance in the islands, the members of Sakha has (subtharwad) has no right of alienation but could only enjoy usufructs till their death. Therefore, the gift-deed executed by a member of Sakha was held to be invalid and it was held that property on death of such member would revert back to other members of Sakhas.32. Letter of administration does not confer or extinguish any right, title or interest in any property. Parties have freedom to establish their rights before a competent civil court. Where the letter of administration was challenged on the ground that the testatrix is not having title in suit property as she had transferred her share by executing gift deed, it was held that execution of such a gift deed does not disprove the veracity of "will" and the grant of letter of administration in favour of profounder of "will" was proper.33. It was also held that Testamentary Court in proceedings for grant of letter of administration cannot decide execution of gift deed and question of title. It enjoys limited jurisdiction to decide genuineness of "will" alone.34.

[s 122.4] Benami Purchase does not by itself Amount to Gift A father purchased property in the name of one of his sons. After father's death, other legal heirs claimed that the house so purchased should also be a part of the partition arrangement. There was no evidence to support the claim that the property was gifted to the son in whose name it was purchased. Ingredients of gift were held to be not established. Hence the property purchased in the son's name was also liable to be included in partition.35.

1. Gandevella Jayaram Reddy v Mokkala Padmavathamma, AIR 2002 AP 75 : 2001 (5) Andh LD

402 : 2001 (5) Andh LT 130 ; execution of gift deed by registered document during interim order directing status quo is permissible, status quo does not breach status quo regarding possession of property, Arvind Krushnarao Waghmare alias W Arvind v Baba Jasbirsing Kalsi, AIR 2019 (NOC) 160 Bom; execution of gift deed duly proved by one attesting witness, gift deed admitted as evidence, Pratima Guchait v Nirupam Guchait, AIR 2017 (NOC) 514 Cal. 2. Nur Bhanu v Abdul Amis Bhuinya, AIR 2006 Gau 27 : 2006 AIHC 1051 : 2006 (1) Gau LR 538 . 3. CIT, Jaipur v Hirehmal Nawalakha, AIR 2001 SC 3648 : 2001 AIR SCW 3423 : (2001) 6 SCC 641

. 4. Mathai Samuel v Eapen Eapen, AIR 2013 SC 532 : 2012 AIR SCW 6329 : (2012) 11 Scale 167 ;

an issueless widow executed sale deed in favour of vendee due to legal necessity, possession was also duly delivered to him, she was not entitled to claim over property in order to execute a gift deed. It was held that title of property once sold cannot be conferred over by her by executing a gift deed subsequently, Gopiballav Joshi v Murlidhar Joshi, AIR 2017 (NOC) 647 Ori.

5. Anita Verma v Saroj Devi, AIR 2016 Pat 48 ; a third person cannot challenge the execution of a

gift by a co-sharer in favour of her son, Gita Devi v Kameshwar Choudhary, AIR 2017 (NOC)1100 Pat. 6. Munni Lal Mahto v Chandeshwar Mahto, AIR 2007 Pat 66 : 2007 (49) All Ind Cas 853 : 2006

(4) Pat LJR 352 7. Karsanbhai Dayabhai Parmar v. Dahiben, (2018) 14 SCC 526 . 8. Pratima Choudhury v Kalpana Mukherjee, (2014) 4 SCC 196 : 2014 AIR SCW 1270 : AIR 2014

SC 1304 , the Court stated parameters for examining validity as per nature of the transaction. The transaction of gift by a lady having total blind trust upon the members of her married sister. The done had to prove the fair nature of the transaction which he could not do such burden cannot be placed upon transaferor. 9. Sulender Singh v Pritam, AIR 2014 (NOC) 236 (HP), gift taken by taking advantage of ill-health,

set aside, as the donor had always expressed his intention to donate a part of the land to the donee on which he was allowed to build his house, gift in respect of such part of the land was held to be valid. Balachandran v S Sujatha, AIR 2014 Ker 80 : 2014 (1) Ker LJ 308 : 2014 Ker LT 82 , a registered gift deed not allowed to be shaken without proper evidence. 10. Roshan Lal v Kartar Chand, AIR 2002 HP 131 : 2002 (4) CCC 270 . 11. Kishore Ray Thakur Bije v Basanti Kumar Das, AIR 1994 Ori 113 . 12. Mukhraj Devi v Manoj Kumar Singh, AIR 2002 Jhar 87 : 2002 AIR Jhar. HCR 386 : 2002 (1) Civ

LJ 773 ; Munna Kumari v Umrao Devi, AIR 2006 Raj 152 : 2006 (1) Raj LR 539 : 2006 (1) Raj LW 458 , gift deed executed by the deceased in favour of one who was his adopted son, the fact of adoption was proved, he had been living with a woman for about 35 years and it was alleged that she influenced him, the court said that presumption of undue influence arose which became further supported by the fact that the donor died after one year from the date of gift deed, was held to be not competent. 13. Pulakesh Datta v Parimal Dey, AIR 2015 NOC 861 (Tri); Golap Borah v Korneswar Borah, AIR

2015 Gau 11 , only one attesting witness, and not two are required. Even when he was produced before the court and no identification of signature was there, the gift deed was held to be not valid. In Premoda Devi v Sabitri Devi, AIR 2015 Gau 29 , allegation of unsoundness of mind was not proved and thus the Gift deed was held to be valid; signatures taken on the gift deed by defendant without explaining contents to the plaintiff, an illiterate woman, no cogent evidence provided by the defendant to prove that the document was read over or explained to her, deposition of deed writer doubtful and not corroborated by any witness, delivery of possession not proved, gift deed held invalid and ineligible as evidence, Sushma Rani Roy Chowdhury v Bani Roy, AIR 2017 (NOC) 34 Cal. 14. Pawan Kumar v Tilak Raj, AIR 2011 (NOC) 98 (HP); indication of valuation of property both in

gift deed and mutation order for the purposes of stamp duty, registration charges and fee for mutation, valuation in such a case does not mean that the donor has received consideration from donee for executing gift deed, Jagdish Chander v Satish Chander, AIR 2019 SC 1154 . 15. SR Radhakrishnan v Neelamagam, AIR 2003 SC 4152 : 2003 AIR SCW 3854 : (2003) 10 SCC

705 . 16. Gorachand Mukherjee v Malabika Dutta, AIR 2002 Cal 26 : 2002 (1) Cal LJ 146 : 2002 (1) ICC

161. 17. K Balakrishnan v K Kamalam, AIR 2004 SC 1257 : (2004) 1 SCC 581 : (2004) 3 CHN 81 ;

Vegneswarappu Jagaraju v Gitta Seetha Ratnam, AIR 2007 (NOC) 852 (AP), recital in the gift deed that the property was delivered to the donee as also the gift deed, this was sufficient to hold that the gift was accepted by the donee, donor did not deny recitals, this showed that the deed was intended to be acted upon and not meant to be merely a nominal thing. Shri Krishun v Hari

Narain, AIR 2008 (NOC) 567 (All) : (2007) 6 All LJ 707, acceptance has to be that of the donee and not that of the donor. The fact that the donor was not shown to have accepted the gift deed after its execution could not be a ground to say that the gift deed was not proved. 18. Lakhwinder Singh v Paramjit Kaur, 2003 (4) RCR (Civil) 26 (P&H) : AIR 2004 P&H 6 : 2003 (3)

Punj LR 837 . 19. Habib Ullah Bhat v Mst Jana, AIR 2003 J&K 32 . 20.

Srikanta Naik v Kokila Bewa (since dead) through LRs, AIR 2018 (NOC) 461 Ori; when

agreement for sale is prior in point of time before the gift is made, gift deed will be null and void because donor does not have any residuary power to deal with the property which is the subject matter of agreement for sale, Janki (since deceased) through LRs v Gurdev, AIR 2019 HP 54 . 21. R Jamuna Bai v MA Anusuya, AIR 2001 Mad 392 : 2001 (2) Mad LJ 355 : 2001 (2) Mad LW

276 . 22. Rankanidhi Das (dead) through his LRs v Kartika Charan Das (dead) through his LRs, AIR 2018

Ori 52 . 23. Nanak Chand v Amilal, 2003 (3) RCR (Civil) 260 (P&H). Sudhangshu Kumar Das v Jagadish

Chandra Das, AIR 2014 Gau 19 : 2014 (3) Civ LJ 87 : 2014 (2) CCC 542 , donees were put into possession of property gifted to them. Land revenue was shown to be paid by them. Final entries in records were also certified to be there in their favour. It was sufficient acceptance. 24. Gorachand Mukherjee v Malabika Dutta, AIR 2002 Cal 26 : 2002 (1) Cal LJ 146 : 2002 (1) ICC

161. 25. Renu Devi v Mahendra Singh, AIR 2003 SC 1608 : 2003 AIR SCW 993 : (2003) 10 SCC 200 . 26. Kirpal Kaur v Jitender Pal Singh, AIR 2015 SC 2967 . 27. Urmila Devi v State of Bihar, AIR 2015 NOC 859 (Pat); plaintiff has to discharge his burden to

prove when he claims the gift deed to be sham, gift deed will be considered to be valid if he is unable to discharge it, KV Ananda Rao v KV Muralidhar, AIR 2018 (NOC) 451 Kant; where contents of gift deed are read over and explained to donors, they signed gift deed after understanding the content and purchased stamp papers one day prior to execution of gift deed, gift deed held valid as there was no evidence on record to substantiate fraud or misrepresentation by donee, Shankarshan Patel (since dead) through LRs v Ashok Kumar Patel, AIR 2018 (NOC) 351 Ori; where no specific material is available to draw inference that the gift deed in question is not a genuine document but a forged one, plea of fraud was held untenable, Daulatrao Ramchandra Jadhav v Janabhai Anandrao Jadhav, AIR 2018 Kar 62 ; Consolidation Authority has no jurisdiction to declare a gift deed void and ignore it when on the face of it, gift deed was not a void document, Shivjee Rai v Joint Director of Consolidation, AIR 2018 Pat 137 . 28. Giano v Puran, AIR 2006 P&H 160 : 2006 (1) Punj LR 46 : 2005 (4) Rec Civ R 413. 29. Renikuntla Rajamma v K Sarwanamma, AIR 2014 SC 2906 : 2014 AIR SCW 4256 : (2014) 8

Scale. 30. FM Devaru Ganapati Bhat v Prabhakar Ganapati Bhat, 2004 AIR SCW 1433 : (2004) 2 SCC 504

: (2003) 10 Scale 148 . 31. Chameli v Naresh Kumari, AIR 2010 P&H 55 : 2010 AIHC 640 (NOC) : 2010 (3) AKAR (NOC)

252 32. Neelathupura Shaikoya v Monthrappallipadippura Attakoya, AIR 2003 Ker 344 : 2003 (2) Ker

LJ 465 . 33. Archnana Mishra v Dipali Chowdhury, AIR 2019 Cal 34 . 34. ibid 35. Vathsala Manickavasagam v N Ganesan, (2013) 9 SCC 152 .

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER VII OF GIFTS This Chapter consists of eight sections (Section 122 to Section 129) dealing with "gifts". 36.[s 123]Transfer how effected.—

For the purpose of making a gift of immoveable property, the transfer must be effected by a registered instrument signed by or on behalf of the donor, and attested by at least two witnesses. For the purpose of making a gift of moveable property, the transfer may be effected either by a registered instrument signed as aforesaid or by delivery. Such delivery may be made in the same way as goods sold may be delivered.

Comments [s 123.1] Mode of Transfer (Section 123) Section 123 deals with the mode of transfer in the case of a gift. Separate provisions are given for the gift of immovable and movable properties.

[s 123.1.1] Immovable Properties For the purpose of making a gift of immovable property, the transfer must be affected by a registered instrument signed by or behalf of the donor, and attested by at least two witnesses. Gifts of immovable properties, corporeal or incorporeal, of value less than Rs 100 or more, must be signed by the donor or on his behalf someone else must have signed it, attested by at least two witnesses and must also be registered. Where the donee has taken possession of the gifted immovable property without a registered gift deed, he would not be allowed to protect his possession under section 53A of this Act.37. Section 123 provides that a gift of immovable property cannot pass any title to the donee if it is not registered. Any oral gift of immovable property cannot be made in view of the provisions of this section because mere delivery of possession without written instrument cannot confer any title.38.

[s 123.1.2] Dedication for Religion or Charity A dedication of his property by a Hindu for religious or charitable purposes was held to be neither a gift nor the creation of a trust. A religious endowment does not create a title in the property in the strict legal sense. Such dedication does not require registration.39.

A dedication of property to God by a Hindu does not require any document. Property can be validly dedicated without any registered instrument. Such dedication is admissible in evidence for all purposes and not only for collateral purposes.40.

[s 123.1.3] Movable Properties For the purpose of making a gift of movable property, the transfer may be effected either by a registered instrument signed by the donor or on his behalf and attested by at least two witnesses or by delivery. Therefore, for the transfer of movable properties two modes have been provided:— (a) by a registered document signed by or behalf of the donor and attested by

atleast two witnesses, (b) by delivery of possession.

Section 123 further provides that the delivery may be made in the same way as goods sold may be delivered. Sale of Goods Act, 1930 in section 3 provides for delivery of goods as "delivery of goods sold may be made by doing anything which the parties agree shall be treated as delivery or which has the effect of putting the goods in the possession of the buyer or of any person authorised to hold them on his behalf." Where the donor specifically admitted execution of gift-deed in favour of the donee, the deed of gift can be said to be duly proved even if one of the attesting witnesses is not called for proving its execution.41. Where the donor specifically denied execution of gift-deed and pleaded that donee had taken her signature on document after giving her understanding that it was merely a power of attorney for managing her properties and the donee had also not shown to have remained in possession of property following the execution of gift-deed, it was held that no benefit could be derived by the donee from such gift-deed.42.

[s 123.1.4] Gift of Actionable Claims Actionable claims are intangible movable properties. They may be transferred by an instrument in writing signed by the transferor (in the case of gift by the donor) or his duly authorised agent (section 130). In the case of actionable claims registration and delivery of possession is not necessary.

[s 123.1.5] Gift to Idol There is a conflict of opinion among the courts regarding the mode of effecting gifts to an idol. Allahabad43. and Patna44. High Courts are of the opinion that gift to an idol must be made through a registered document whereas Madras High Court45. is of the opinion that gift to an idol is outside the scope of this Act. The Supreme Court has endorsed this view. It said that as the suit property was dedicated to a deity, it did not require registration and also because it was a religious trust. Gift to an idol may be oral. It may also be effected by an instrument whether registered or not.46.

[s 123.2] Gifts under Mohammedan Law The essential requirements of a valid gift under Mohammedan Law are as follows:— (i) a declaration of gift by the donor. (ii) acceptance of the gift by the donee, and (iii) delivery of possession, if possible.

The provisions of section 123 do not apply under Mohammedan Law, and therefore, a registered instrument is not necessary to validate a gift by a Mohammedan of an immovable property.47. Where in the case of a Muslim the gift is not oral and is evidenced by a document, it cannot be acted upon unless it accords with the requirement of section 123. The court said that an unregistered gift deed could not be recognised.48. Where a gift deed was executed by the father giving life interest in the property to a daughter with a further stipulation that after her death the property will devolve on the son, it was held that there is no life interest under Muslim Law, therefore, the gift operated as an absolute right in favour of the daughter.49. A married Muslim woman purchased some property. She died leaving behind her husband, sons and a daughter. It was held that the husband did not become exclusive owner. He was only one at the legal heirs along with the sons and daughter. Gift of the property by the husband was not valid. He did not have the legal competence to make gift.50. A gift of "musha" property (undivided share in property) by father to his minor son was made by a registered deed. The property was under tenancy. The right to collect rent became transferred to the donee. The property was of commercial nature and was located in Jaipur. The gift was held to be not invalid on the ground that possession was not delivered or that it was hit by Hiba-bil-Musha.51. Where plaintiff did not prove as to how at the time of oral gift, the possession was delivered to him, neither any steps were taken by him for mutation of property in his name, nor any rent was collected from tenants or paid house tax or water tax etc., it was held that the essential conditions to make a valid gift under the Mohammadan law were not established by him to prove oral gift in his favour. It was held by the Supreme Court that in absence of any proof to show that the possession of the suit property was delivered to him, oral gift relied upon by the plaintiff ought not to have been accepted by courts below.52.

[s 123.3] Registration In the case of gift of an immovable property, registration is compulsory but it is not necessary that it must be registered by the donor himself. Registration of gift deed of immovable property is compulsory irrespective of its value.53. Once the deed of gift is delivered to the donee, even before its registration, gift becomes irrevocable. Once the deed is executed and the gift is accepted during the life-time of the donor, the deed may be registered even after the death of the donor. An

unregistered deed of gift cannot be used under the doctrine of part performance as this doctrine is applicable to transfers for consideration only. Where the question arose in a case that whether a title could be created by a decree on the basis of an unregistered instrument, it was held that the pre-existing right could also cover a claim of a member of a larger family under an oral arrangement subsequently confirmed in court proceeding, therefore, the decree was valid.54. Where certain property was attached in the execution of a decree against the judgment-debtor and a person applied for lifting the attachment on the ground that the judgment-debtor had gifted the property to him, it was held that the gift deed being not registered, the interest of the judgment-debtor in the property was not extinguished, the donee acquired no interest and consequently, therefore, the attachment was valid.55. In a deed of gift registered and accepted by the donee there were recitals which proved transfer of absolute title in the gifted property from donor to the donee. The fact that the transferor retained only the right to use the property during her life time did not in any way affect the transfer of ownership in favour of donee by donor.56. An unregistered gift deed has no effect as provided in section 49 of the Registration Act, 1908. Getting the same registered subsequently was taken to be obviously an attempt to obviate concurrent decrees of two courts. The same was not permissible. The sale deed executed by the donor was held to be valid and could not be cancelled.57.

[s 123.4] Validity of a Gift The donee produced the gift deed from her custody. She also established that she had accepted it during the life-time of the donor. Since the gift was that of valuable property, it would be difficult to assume that she would not have accepted it. The gift deed, the court held, could not be regarded as illegal or fraudulent.58. In a case, validity of a gift made in 1952 was in question. It was contended that gift made prior to 1953 Act could not be looked into to calculate excess area of land owner. Neither the original gift deed was produced nor transfer of possession or acceptance by donor was shown nor Repat Roznamcha of gift was produced, it was held that since essential ingredients of execution of gift, which were mandatory, had not been complied with, the collusive gift made without acceptance by donee could not be relied upon it being invalid and illegal.59. The child born out of marriage a Hindu converted to Christian and Christian lady is an absolute owner of schedule property on the death of his father. The concept of coparcenary joint family under Hindu Law will not be applicable to him and he would be competent to execute gift-deed bequeathing portion of such property to his daughter at the time of marriage.60.

[s 123.4.1] Oral Gift.— The law does not contemplate oral gift of an immovable property. The claimant was appointed the guardian of the person and property of a minor by the court. He claimed to have acquired a portion of the suit property which he alleged that it was gifted to him in lieu of his services as a guardian. The Supreme Court held that the claim by way of oral gift had no sanctity in law.61.

Donee relied upon oral gift by donor in his favour, no witness was present at the time of oral gift, three essential ingredients of gift presumed to be only within the knowledge of donee himself, evidence on record proved that no gift was made during lifetime of donor and his successors, donee failed to prove his title over property, title of land was not granted in his favour.62.

[s 123.5] Grant or Gift A case arose under the Government Grants Act, 1895 (section 2). The ruler permitted the plaintiff to occupy and reside on a portion of the land after closure of the orphanage. The deed stated that the plaintiff and his heirs and successors could enjoy the land and might get their names recorded in the settlement records. The court said that it was a benevolent concession by the rule in favour of the plaintiff and was in the nature of a grant rather than a gift. There was no indication in the document that the ruler gifted the land as a donor and the plaintiff as a donee accepted the same. No witness signed or attested the document as is required in a gift transaction under section 123.63.

[s 123.6] Proof The execution of the gift deed was admitted by the executant herself. She clearly stated in her written statement that she had executed the deed to gift. The nonappearance of attesting witnesses in spite of notices could not give rise to any adverse inference. The court said that the deed of gift was a genuine and valid document.64. A widow gifted her self-acquired property by executing a gift deed. The plaintiffs were not her heirs, cognates or agents. They were not allowed to question the disposition. The donee was minor at the time. Therefore, the property was in the care of his father. It was held that the father had no right to execute a Will giving the property to the sons of his second wife.65.

[s 123.7] Cancellation of Gift Deed A gift deed was executed and necessary mutations were made in records. Possession of the property was also delivered. The donee was paying electricity and water bills. A gift and sale are on the same footing because in both there is transfer of title. According to AP Registration Rules cancellation of a sale deed requires consent of both parties and their participation. The same is applicable to gift deed. An ex parte registration of cancellation of a gift deed was held to be not proper.66.

[s 123.8] Rectification of Gift Deed A father executed two registered gift deeds under which he gave a house to his son and another to his daughter. The son and daughter found that the allotment was errorful because the house which was meant for the daughter happened to go to the son. They executed necessary documents for rectification of the mistake and got them registered. This was held to be rectification of gift deed and not an exchange.67.

36. As to limitation to the territorial operation of section 123, see section 1, supra, section 123

extends to every cantonment—see section 287 of the Cantonments Act, 1924 (2 of 1924). 37. Lankeshwar Malakar v Harendra Nath Deka, AIR 2009 (NOC) 2462 (Gau), gift deed not

attested by two witnesses, there was only one attesting witness and he was not called for proving execution. Not proved. No claim over the land under such gift deed; a woman family member of Hindu joint family executed a gift deed of her self-acquired property not attested by two witnesses was held to be void, Late Radha Sah through LRs v Most Girja Devi through LRs, AIR 2018 Pat 115 . 38. RN Dawar v Ganga Ram Saran Dhama, AIR 1993 Del 19 : 1993 CCC 325 : 1992 (24) DRJ 532 ;

Patel Prabhudas Hargovandas v Heirs of Patel Babubhai Kachrabhai, AIR 2007 Guj 148 : 2007 (6) AIR Bom 907 (NOC) : 2007 (1) Guj LH 791, one of the donors stated that he was a minor at the time execution of gift deed, but in the deed of gift he stated his age to be 22, such an admission is binding on the person making it, unless some mistakes, fraud, etc. is shown. 39. Motilal Jain v Prakash Bharatiya, AIR 2007 (NOC) 377 (MP). 40. Moorti Shri Adeshevar Bhagwan Jain Swetambar Mandir v Shimbhunath Singh, AIR 2007 Raj

46 : 2007 (51) All Ind Cas 959 : 2007 (1) Raj LW 731 . 41. Surendra Kumar v Nathulal, AIR 2001 SC 2040 : (2001) 5 SCC 46 : 2001 AIR SCW 1862. 42. Nishamani Singh v Nishamani Dibya, AIR 2003 Ori 123 : 2003 (7) Ind LD 941. 43. Mannu Lal v Radha Kishenji, 36 IC 989 (All). 44. Debisaran v Nandlal, AIR 1929 Pat 591 : 125 Ind Cas 127. 45. Narsimhaswami v Venkatalingam, AIR 1927 Mad 636 : 53 Mad LJ 203 : ILR 50 Mad 687. 46. Sainath Mandir Trust v Vijaya, AIR 2011 SC 389 : 2011 AIR SCW 3866 : (2011) 1 SCC 623 . 47. State of Andhra Pradesh v Bobbiti Subba Reddy, AIR 2007 (NOC) 1174 (AP); Chand Bee v

Hameedunisa, AIR 2007 AP 150 : 2007 (2) Andh LT 112 : 2007 (4) Civ LJ 73 , oral gift valid, a document may refer to the fact of an oral gift, it will be valid, but if the document is intended to be a gift deed, registration becomes necessary. An unattested gift deed would be void. 48. Mayana Saheb Khan v Mayana Gulab Jan, AIR 2011 (NOC) 97 (AP). 49. Kochu Ahammed Pillai v Pathummal, 2003 (3) RCR (Civil) 80 (Ker) : AIR 2003 Ker 217 : 2003

(1) Ker LJ 371 . 50. Chand Bee v Hameedunisa, AIR 2007 AP 150 : 2007 (2) Andh LT 112 : 2007 (4) Civ LJ 73 . 51. Khurshida Begum v Komammal Farooq, AIR 2016 SC 694 (DB). 52. Jamila Begum (Dead) through LRs v. Shami Mohd. (Dead) through LRs, AIR 2019 SC 72 . 53. Naranji Bhimji Family Trust v Sub-Divisional Officer, AIR 2009 (NOC) 1934 (Bom). 54. Gurdev Singh v Kartar Singh, 2003 (2) RCR (Civil) 655 : 2003 (1) PLR 173 (P&H); Giano v

Puran, AIR 2006 P&H 160 : 2006 AIHC 3009 : 2006 (5) All LJ (NOC) 980, registered gift-deed of immovable property, proved in every possible way by evidence of scribe, Registry clerk, witnesses, donor did not deny gift, no attesting witness was required, a gift deed is different in this respect from a Will. 55. Jetu Jazques Taru Lalvani v Shreeji Mineral Waters Pvt Ltd, AIR 2006 (NOC) 785 (Bom) :

(2006) 1 AIR Bom R 827; CIT, Jaipur v Hirehmal Nawalakha, AIR 2001 SC 3648 : 2001 AIR SCW 3423 : (2001) 6 SCC 641 .

56. Renikuntla Rajamma v K Sarwanamma, AIR 2014 SC 2906 : 2014 AIR SCW 4256 : (2014) 8

Scale 579 ; donor transferred absolute title in gifted property to donee and retained only right to use property during his lifetime, gift deed registered and accepted by donee, donor cannot revoke gift deed and alienate gifted property by executing sale deed, Syamala Raja Kumari v Alla Seetharavamma, AIR 2017 Hyd 86 . 57. Sumit Kumar v Naresh Kumar, AIR 2016 Utt 72 ; when plaintiff neither challenged sale deed

nor claimed his right over suit property for eight years in spite of number of proceedings taking place between parties, suit was held to be barred by limitation, Jamila Begum (Dead) through LRs v Shami Mohd (Dead) through LRs, AIR 2019 SC 72 ; where immediately after death of his father in 1987, the plaintiff came to know about execution of gift deed by father in favour of defendant but he filed suit for declaration of gift deed as void in 2007, it was held barred by limitation, Gopilal Dey v Sukumar Dey, AIR 2017 (NOC) 744 Tri; in absence of evidence to prove fraud and misrepresentation alleged by the plaintiff but execution of gift deed duly proved by donee, gift deed was held to be validly executed even when donee had prepared stamp papers, Baldev Singh v Surinder Singh (Deceased) Through LRs, AIR 2017 (NOC) 847 P&H. 58. Subodh Nath v Fulu Rani Devi, AIR 2016 Gau 57 . 59. Gurbax Singh v Jang Singh, 2003 (4) RCR (Civil) 285 (FCP). 60. M Vijayakumari v K Devabalan, AIR 2003 Ker 363 : 2004 (1) ICC 504 : 2003 (3) Ker LT 695 ; a

gift deed executed by defendant in favour of his second wife in the ancestral coparcenary property was held void as the property was in the hands of defendant as third generation from original owner and gift deed deprived share of his coparcener son, Suraksha v Adarsh Kumar, AIR 2018 HP 101 . 61. Sudish Prasad v Babui Jonhia, (2013) 9 SCC 181 : (2013) 124 AIC 200 . 62. Ayita Begum Chowdhury v Kumar Kanti Sinha, AIR 2017 Gau 131 . 63. Sher Khan v State of Orissa, AIR 2008 Ori 94 : 2008 (1) CLR 471 : 2008 (1) Ori LR 588 . 64. Radhika Devi v Rajesh Kumar Niranjan, AIR 2009 Pat 109 : 2009 AIHC 671 (NOC) : 2009 (4)

All LJ (NOC) 789. Chothu v Board of Revenue, AIR 2013 (NOC) 122 Raj, registered gift deed, donor's daughter sought cancellation of the deed, donor filed affidavit admitting the gift deed in favour of the donee. He also admitted that the donee was put in possession after the deed. Sale of the property by the donor's daughter to another was held to be improper; where donor did not specifically deny execution of gift deed, there is no need to prove execution of deed by examining attesting witnesses, Daulatrao Ramchandra Jadhav v Janabhai Anandrao Jadhav, AIR 2018 Kar 62 ; plea that consent of minor son of brother not taken though he is a coparcener while transfer of share in coparcenary property by one member to his brother was held to be unsustainable as his share confined to that in his father only, gift deed was held to be duly executed and registered, Late Radha Sah through LRs v Most Girja Devi through LRs, AIR 2018 Pat 115 ; where donee herself examined the donor as a witness and he admitted execution of gift deed in cross examination, evidence of donor was found true as well as sufficient and gift deed valid, R Seethamma alias Seetha Lakshmi v M Thimma Reddy, AIR 2017 Hyd 125 ; allegations about illness of defendant at the time of execution of gift deed are irrelevant in determining validity of gift deed, Kakali Ghosh v Madan Mohan Ghosh, AIR 2017 (NOC) 187 Cal. 65. Ramesh v Tara Chand, AIR 2008 (NOC) 1170 (Bom). 66. Fazalullah Khan v State of Andhra Pradesh, AIR 2012 AP 163 : 2012 (117) All Ind Cas 516 :

2012 (3) Andh LD 509; mere deed of cancellation cannot nullify legal effect of registered gift where donor did not express any specific wish of constructing high school on gifted land and no further steps taken by owner for nullifying legal effect of gift deed, Duryodhan Mahanta v Bhanjakia Girls High School, AIR 2017 (NOC) 440 Ori; transfer of title and delivery of possession of property by donor but purchase of stamp papers for executing gift deed, mutation of property

and payment of tax by donee himself are not grounds for cancellation of gift, Velayudhan Pillai Sreekumar v S Sarijini Amma, AIR 2017 (NOC) 822 Ker. 67. Joseph John Peter Sandy v Veronica Thomas Rajkumar, (2013) 3 SCC 801 : AIR 2013 SC 801

: (2013) 4 Mah LJ 1 : (2013) 3 MP&J 6.

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER VII OF GIFTS This Chapter consists of eight sections (Section 122 to Section 129) dealing with "gifts".

[s 124]Gift of existing and future property.— A gift comprising both existing and future property is void as to the latter.

Comments [s 124.1] Gift of Existing and Future Property (Section 124) The Transfer of Property Act, 1882 provides that the gift can be made only of an existing property. The property which is not in existence cannot be gifted. Therefore, a gift comprising both the existing and future property is valid for existing property but void for future property. A gift of a property not in existence is a promise to be performed in future and since it is without consideration, it is void and unforceable.68.

68. Brindaban Bihari v Oudh Bihari, AIR 1947 All 179 : 1946 All WR (HC) 421.

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER VII OF GIFTS This Chapter consists of eight sections (Section 122 to Section 129) dealing with "gifts".

[s 125]Gift to several of whom one does not accept.— A gift of a thing to two or more donees, of whom one does not accept it, is void as to the interest which he would have taken had he accepted.

Comments [s 125.1] Gift to Several Persons of whom One does not Accept (Section 125) Gift may be made to two or more persons jointly. For the validity of the gift it is necessary that it must be accepted by all the donees. Section 125 provides that a gift of a thing to two or more donees, of whom one does not accept it, is void as to the interest which he would have taken had he accepted. This means that where one of the several donees does not accept the gift, the gift is void only for his part of interest which he would have taken, had he accepted the gift. Where the donee is unable to accept due to his incompetency, his guardian must accept the gift on his behalf. For example, a gift is made to four persons jointly A, B, C and D by a person named X, without specifying their shares in the gift. Each will be entitled to 1/4 (one-fourth) share in the gifted property. Suppose D does not accept his share of gift, then his share will revert back to donor X. It will not be added to the shares of other donees. However, where the gift is made to two persons jointly with the right of survivorship, then, upon the death of one donee the surviving donee will take the whole gift.69.

69. Cheria Kannan v Karumbi, AIR 1973 Ker 64 : 1972 Ker LR 442 : 1973 Ker LT 235 .

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER VII OF GIFTS This Chapter consists of eight sections (Section 122 to Section 129) dealing with "gifts".

[s 126]When gift may be suspended or revoked.— 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. Save as aforesaid, a gift cannot be revoked. Nothing contained in this section shall be deemed to affect the rights of transferees for consideration without notice. Illustrations (a) A gives a field to B, reserving to himself, with B's assent, the right to take back

the field in case B and his descendants die before A. B dies without descendants in A's lifetime. A may take back the field. (b) A gives a lakh of rupees to B, reserving to himself, with B's assent, the right to

take back at pleasure Rs. 10,000 out of the lakh. The gift holds goods as to Rs. 90,000, but is void as to Rs. 10,000, which continue to belong to A.

Comments [s 126.1] Suspension or Revocation of Gifts (Section 126) A gift is a transfer of ownership without consideration. A deed of gift once executed and registered cannot be revoked unless it can be shown that the mandatory requirements of the section were not complied with.70. A gift can be made subject to certain conditions. It is necessary that these conditions must be valid conditions according to the provisions of this Act. Where an unconditional gift-deed and an agreement between the donor and donee were executed on the same day, it was held that the condition prescribed in the agreement would attach to the gift as the gift-deed and the agreement formed part of the same transaction.71. A gift once made is irrevocable, except in the following two cases provided by this section:— (1) A gift is revocable if the donor and the donee have agreed that on the happening

of a specified event (not depending upon the will of the donor), the gift should be suspended or revoked. (2)

A gift may also be revoked in any of the case (save want or failure of consideration) in which, if it were a contract, it might be rescinded. Where the donor made gift of immovable property in favour of donee in lieu of services to be provided to her by the donee and subsequently after 3 months another agreement was executed that in case the donee failed to maintain the donor the gift would be revoked, it was held that the deed of gift and agreement would not form part of the same transaction and could not be read together and given effect to.72. The property was gifted for a specific charitable purpose. The condition attached was that if the college building was not constructed within six months, the donor would be entitled to the property. The condition was held to be permissible. The donee remained as a trustee under fiduciary relationship with the donor. The donor was allowed to claim back the property on breach of the condition mentioned in the agreement executed along with the gift deed. The donor's suit for possession of the land was maintainable.73.

[s 126.1.1] Suspension or Revocation by Agreement A gift may be suspended or revoked by mutual agreement between the parties i.e., donor and donee. They may agree that on the happening of any specified event the gift will be revoked. But this specified event must not depend on the will of the donor. If the happening of the event is dependent on the will of the donor, suspension or revocation of gift will be void. It is necessary that agreement to suspend or revoke the gift must be made at the time of making of gift otherwise the gift will become absolute. However, it is necessary that the condition must be a valid condition. A gift-deed can be termed as conditional and revocable only when there is a condition of revocation included in the gift-deed. Where the immovable property was gifted by the donor in lieu of services and maintenance to be provided to her by the donee and possession of immovable property was given to the donee the gift was complete. In the absence of any condition of revocation in the gift-deed, the fact that the donee stopped rendering services could not render the revocable conditional gift.74. Illustration A gives a lakh of rupees to B, reserving to himself, with B's assent, the right to take back at pleasure Rs 10,000 out of the lakh. The gift holds goods as to Rs 90,000 but is void as to Rs 10,000 which continue to belong to A.

[s 126.1.2] Revocation by Rescission A gift may be revoked in any of the cases in which, if it were a contract, it might be rescinded except for want or failure of consideration. A contract may be rescinded in the following circumstances according to section 19 of the Indian Contract Act, 1872:— (i) coercion (ii) undue influence (iii) fraud (iv) misrepresentation

Section 19 of Indian Contract Act, 1872 provides that "where a consent to an agreement is caused by coercion, undue influence, fraud, misrepresentation, the agreement is voidable at the option of the party, whose consent was so obtained."

Therefore, where the consent of the donor to make the gift has been obtained by coercion, fraud, undue influence or misrepresentation, the donor may revoke the gift.75. If the donor does not exercise his option of revocation, the gift will not stand revoked and will become absolute. The donor cannot assign his right under this section to anyone else. However, after the death of the donor his legal heirs may sue for revocation of gift on any of these grounds. The revocation must be made within three years from the date on which the donor becomes aware of such grounds. However, the right to revoke is lost where the donor ratifies the gift, expressly or impliedly by his conduct. Exception—Section 126 provides an exception in favour of a transferee for consideration without notice. It provides that nothing contained in this section shall be deemed to affect the rights of transferees for consideration without notice. Therefore, if the gift property has passed into the hands of a transferee from the donee without notice of right of revocation or suspension but for value, the right of revocation or suspension cannot be exercised against him. Cases A gives a field to B, reserving to himself, with B's assent, the right to take back the field in case B and his descendants die before A. B dies without descendants in A's lifetime, A may take back the field. Donees were not relatives of the donor and the gift was made by the donor in their favour without making any provision either for himself or for his wife and daughter, grand-daughters, etc. Scribe of the gift deed was not examined. The donee's evidence was full of contradictions. They failed to prove that they were agnates of the donor. Their plea was that the donor's daughter had deserted him. Documentary evidence showed that he was living with his whole family. It was held that the defendants fraudulently got the gift deed executed and as such it was not a genuine document.76.

[s 126.2] Kinds of Gifts Void gifts may be divided into two types:— (1) Void gifts (2) Onerous gifts

[s 126.2.1] Void Gifts The following are included under the category of void gifts:— (a) Gifts depending on unlawful purposes. (Section 6) (b) Gifts made upon a condition, the fulfillment of which is impossible or forbidden

by law. (Section 6) (c) Gifts by a person incompetent to contract. (d) Where the donee of the gift dies before acceptance. (e) A gift comprising of both the existing and future property is void as to the future

property.

Section 2(d) of the Indian Contract Act, 1872 provides that past illicit cohabitation cannot be the consideration for an agreement or transfer of property. Where a gift is made for such purpose, the gift is void.77.

[s 126.2.2] Onerous Gifts (Section 127)

70. Kamalakanta Mohapatra v Pratap Chandra Mohapatra, AIR 2010 Ori 13 : 2009 (2) CLR 359 :

2010 Civ LJ 20 ; Sheel Arora v Madan Mohan Bajaj, AIR 2009 (NOC) 333 (Bom), no unilateral revocation possible. 71. Thakur Raghunath Ji Maharaj v Ramesh Chandra, AIR 2001 SC 2340 : 2001 AIR SCW 2218 :

(2001) 5 SCC 18 . 72. Tokha v Biru, AIR 2003 HP 107 : 2003 (3) Civil CourtC 519 : 2002 (3) Shim LC 101. 73. Thakur Raghunath Ji Maharaj v Ramesh Chandra, AIR 2001 SC 2340 : 2001 AIR SCW 2218 :

(2001) 5 SCC 18 . 74. Tokha v Biru, AIR 2003 HP 107 : 2003 (3) CCC 519 : 2002 (3) Shim LC 101; Saramuddin

Saheb v KT Palaniappa, AIR 2007 (NOC) 1526 (Mad), gift made under settlement for public purpose, there was no stipulation that if a school was not established within a certain period, the gift would be revoked, recession of contract of gift requires consent of both parties, which was not there, no effective revocation. Rosaraju Lakshmi Tulsi v Rosaraju Ramachandra Rao, AIR 2007 (NOC) 219 (AP), gift deed must permit revocation in the event of breach of contract as specified in the deed; plaintiff transferred ownership of her property in favour of her grandsons reserving her right to possess and enjoy it during her lifetime, created interest in favour of her daughter-in-law for residing restricting the right to transfer, no intention expressed in deed to reserve the right to revoke it, deed revoked without justifying conditions of section 126 to justify revocation, deed held to confer ultimate title to grandsons, Pattila Chinnamma (Dead) v Bignu Rama Chandra Reddi alias Laxman Reddi, AIR 2017 (NOC) 986 Ori. 75. Kanhu v Kalu, AIR 2007 (NOC) 770 (Raj), gift by plaintiff of his whole property in favour of his

eldest daughter's son. Though he had three other daughters and their mother, he being of 65 years could have been easily prevailed upon, burden of proof was not discharged to show that he understood the implications and consented freely. He was allowed to seek cancellation of his gift deed. Manirajan Pillai v KK Karunakaran Nair, AIR 2011 Ker 55 : 2010 AIHC 623 : 2010 (2) ICC 80, the executant alleged fraud and though she was aged and had to be hospitalised for periods, the doctor certified that she was capable to taking care of herself at the time of execution, she had to prove fraud, which she could not do. Sehdev Singh Verma v JPS Verma, AIR 2016 Del 1 , is another case in which allegation of fraud could not be proved. Revocation was not allowed. One of the conditions in the gift deed was that the donor would be allowed to live in the property. There was nothing that the gift would be revoked if he was not so permitted. This was held to be not repugnant to the interest created by the gift deed. 76. Sita Sundar Devi v Savitri Devi, AIR 2015 Pat 217 . 77. Sabava Yellappa v Yamanappa Sabu, 35 Beng LR 345 : AIR 1933 Bom 209 : 149 Ind Cas 464.

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER VII OF GIFTS This Chapter consists of eight sections (Section 122 to Section 129) dealing with "gifts".

[s 127]Onerous gifts.— Where a gift is in the form of a single transfer to the same person of several things of which one is, and the others are not burdened by an obligation, the donee can take nothing by the gift unless he accepts it fully. Where a gift is in the form of two or more separate and independent transfers to the same person of several things, the donee is at liberty to accept one of them and refuse the others, although the former may be beneficial and the latter onerous. Onerous gift to 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. Illustrations (a) A shares in X, prosperous joint stock company, and also shares in Y, a joint stock

company in difficulties. Heavy calls are expected in respect of the shares in Y. A gives B all his shares in joint stock companies. B refuses to accept the shares in Y. He cannot take the shares in X. (b) A, having a lease for a term of years of a house at a rent which he and his

representatives are bound to pay during the term, and which is more than the house can be let for, gives to B the lease, and also, as a separate and independent transaction, a sum of money. B refuses to accept the lease. He does not by this refusal forfeit the money.

Comments [s 127.1] Onerous Gifts (Section 127) A gift is said to be onerous when it is accompanied with a burden or obligation. This section is based on the maxim qui sentit commodum sentire debetet onus which means that he who receives advantage must also bear the burden. First paragraph of section 127 provides that where a gits is in the form of a single transfer to the same person of several things of which one is, and the others are not burdened by an obligation, the donee can take nothing by the gift unless he accepts it fully. Here the following elements are essential:— (1) the gift must be in the form of a single transfer; (2) to the same person;

(3) of several things (properties); (4) of such thing only one is burdened with obligation and others are not.

When such conditions are present, the donee will have to accept the gift fully. He cannot accept the benefits of gift only and reject the burdens or obligation. This provision provides that the donee may either accept the full gift or reject that, partial acceptance is not allowed. When a sale deed was executed in favour of a mother in which her minor son was included as a co-purchaser, it was held to be a valid onerous gift.78. Illustration (a) A shares in X, prosperous joint stock company, and also shares in Y, a joint stock company in difficulties. Heavy calls are expected in respect of the shares in Y. A gives B all his shares in joint stock companies. B refuses to accept the shares in Y. He cannot take the shares in X. Second paragraph provides that where a gift is in the form of two or more separate and independent transfers to the same person of several things, the donee is at liberty to accept one of them and refuse the others, although the Former may be beneficial and the latter onerous. Thus, if a gift is made in the form of two or more independent gifts to the same person, the donee may accept the beneficial one and reject the onerous property. Here the gifts are separate and do not form the part of the same transaction. The donee is not bound to accept both the gifts. Illustration (b) A, having a lease for a term of years of a house at a rent which he and his representatives are bound to pay during the term, and which is more than the house can be let for, gives to B the lease, and also, as a separate and independent transaction, a sum of money. B refuses to accept the lease. He does not by this refusal forfeit the money.

[s 127.2] Disqualified Donee Section 127 provides that 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. When an onerous gift is made to an incompetent or disqualified donee, for example, a minor, he has a right to reject or repudiate the gift on attaining competency i.e., majority. Incompetent person is not bound by the acceptance of the gift after attaining competency. He has to exercise his option immediately because if after becoming competent to contract and being aware of the obligation he retains the property given to him, he becomes bound by the obligation.

78. Naaz Jaffar v JM Sadiq Sait, AIR 2018 (NOC) 481 (MAD).

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER VII OF GIFTS This Chapter consists of eight sections (Section 122 to Section 129) dealing with "gifts".

[s 128]Universal donee.— Subject to the provisions of section 127, where a gift consists of the donor's whole property, the donee is personally liable for all the debts due by 79.[and liabilities of] the donor at the time of the gift to the extent of the property comprised therein.

Comments [s 128.1] Universal Donee (Section 128) Universal donee is such a person who gets the whole property of the donor under a gift. Both movable as well as immovable properties of the donor are given in a gift to him. English Law does not recognise the concept of universal donee. Section 128 provides that the universal donee is liable personally for all the debts due and liabilities by the donor at the time of the gift to the extent of the property comprised therein. Therefore, the donee which has taken all the properties of the donor in a gift becomes liable to pay all the debts due by the donor and also to discharge all the liabilities of the donor because nothing is left with the donor to discharge them. However, his liability is only to the extent of the property comprised in the gift. This section incorporates on equitable principle that one who gets certain benefits under a transaction must bear the burden also. The object of this section is to protect the interests of the creditors of the donor. This section is similar to section 53 in protecting the interests of creditors of the donor but section 128 is applicable to both the movable as well as immovable properties while section 53 is applicable only to immovable properties. Section 53 lays down a general principle which is applicable to all transfers of immovable property whereas section 128 lays down a specific principle which is applicable to onerous gifts only. Section 53 deals with fraudulent transfers also but this section does not deal with them. The essential requirement of this section is that all the properties of the transferor (donor) should be transferred to the donee. However, even if a life interest in a part of the property is retained by the donor, the donee is nevertheless a universal donee.80. Even if only a small, insignificant part of the property is retained by the donor, the donee will be treated as a universal donee.81. Where the donor had not included the equity of redemption in a property mortgaged by him, it was held that the donee cannot be said to be universal donee.82.

79. Ins. by Act 20 of 1929, section 60. 80. Shahzad Singh v Madan Gopal, AIR 1933 All 146 . 81. Bapurao v Bulakidas, AIR 1944 Nag 225 . 82. Ram Raj v Lal Chandra, AIR 1941 Oudh 205 : 192 IC 619.

THE TRANSFER OF PROPERTY ACT, 1882 CHAPTER VII OF GIFTS This Chapter consists of eight sections (Section 122 to Section 129) dealing with "gifts".

[s 129]Saving of donations mortis causa and Muhammadan Law.— Nothing in this Chapter relates to gifts of moveable property made in contemplation of death, or shall be deemed to affect any rule of Muhammadan law 83.[***].

[s 129.1] Mortis Causa (Section 129) Gifts which are made in contemplation of death are known as donatis mortis cousa. Section 129 has exempted such gifts from the operation of this Chapter. Another exemption is made in the favour of Muslim gifts, where the gifts are made by Muslims. Where the donor is a Muslim, the gift is known hiba and is governed by the Muslim Personal Law. Hiba of whatever value need not be registered as required by section 123. However, if it is reduced into writing and relates to immovable property of value above Rs 100, the document becomes compulsorily registrable under section 17 of the Registration Act, 1908. An oral gift by a Muslim is valid, if the requirements of the Muslim law are satisfied. A gift can be made by a Mohammedan orally. Merely because the gift is reduced to writing instead of making it orally, such writing was not regarded by the Supreme Court as becoming a formal document or an instrument of gift. Form was regarded as immaterial. Registration was considered to be not necessary.84. According to the Andhra Pradesh High Court, the provisions of section 128 are applicable to Muslims also in the absence of any rule of Muslim law regarding the liability of a universal donee.85.

83. The words and figures "or, save as provided by section 123, any rule of Hindu or Buddhist

law" omitted by Act 20 of 1929, section 61. 84. Hafeeza Bibi v Shaikh Farid, AIR 2011 SC 1695 : 2011 AIR SCW 2927 : (2011) 5 SCC 654 . 85. Shaik Pathanama Bi v Venkata Chalapathy Finance Corp, AIR 1978 AP 401 : (1978) 2 Andh

WR 63. Asgari Ali v Tahir Ali, AIR 2013 MP 151 : 2013 (4) Civ LJ 375 : 2013 (3) MPLJ 160 , the requirements of oral gift, namely declaration, acceptance and delivery were present, registration was not necessary.

THE TRANSFER OF PROPERTY ACT, 1882 1.CHAPTER VIII OF TRANSFERS OF ACTIONABLE CLAIMS

This Chapter dealing with transfer of actionable claims consists of eight sections (Sections 130 to 137).

8.1 Definition of Actionable Claim (Section 3) The interpretation clause under section 3 defines an actionable claim as—actionable claim means a claim to any debt, other than a debt secured by mortgage of immovable property or by hypothecation or pledge of movable property, or to any beneficial interest in movable property not in the possession, either actual or constructive, of the claimant, which the civil courts recongnise as affording grounds for relief, whether such debt or beneficial interest be existent, accruing, conditional or contingent.

8.2 Analysis of the Definition Actionable claim means a claim to— (A) any debt, other than a debt secured— (i) by a mortgage of immovable property, or (ii) by hypothecation or pledge of movable property, or (B) any beneficial interest in movable property—

not in the possession (either actual or constructive) of the claimant. Which claim the Civil Courts recognise as affording grounds for relief whether such debt or beneficial interest be existent, accruing, conditional or contingent. The definition given in this section was substituted by the Amendment Act, 1900 (2 of 1900). An actionable claim under this section comprises of— (a) a claim to unsecured debt; or (b) a claim to any beneficial interest in movable property not in actual or

constructive possession of the claimant.

8.3 Debt Movables are of two types—tangible movable properties and intangible movable properties. Tangible movable properties have physical existence and can be possessed like car, table, chairs etc. Intangible movables are in the form of rights which have no physical existence and cannot be possessed. The existence of intangible movable can be known only when the person having such right claims it by an action in a court of

law. Previously all kinds of claims in movable property which could be enforced through the courts were included in the term "actionable claims" but now it comprises only claims to unsecured debt and a claim to any beneficial interest in movable property. The term "debt" includes a sum of money due by one person to another and which includes not only the amount payable at the time but also the sum of money which is not immediately due but might become payable after sometime.2. A sum of money which is payable or will become payable in future by reason of a present obligation is a debt.3. A debt may be secured or unsecured debt. Where the debtor gives security for repayment of debt to the creditor, it is known as secured debt but where no security is given, that is unsecured debt. Security may be of movable or immovable property. Where the debt is secured by immovable property, it is known as mortgage. Where the security is some movable property, it is known as pledge or hypothecation. According to section 3, only unsecured debt is an actionable claim and debt may be existent, accruing or conditional. Where a debt has already become due and is payable at present, it is known as existing debt. Where a debt or sum of money is due at present but payable on a future date, it is accruing debt. Where the claim for a sum of money exists but the payment depends upon the fulfilment of any condition, the debt is known as conditional debt. Unascertained amounts neither due nor payable but accruing, the payment of which is dependent upon some work being executed can be assigned.4. An assignment of the debt should be of the whole debt and not a part of the debt.5. A debt which is otherwise actionable claim does not cease to be so merely because a cause of action in respect of it has not arises or because the time of its payment has not arrived.

8.4 Claims which are Held to be Actionable Claims The following claims are included under the category of actionable claims:— (i) claims for arrears of rent.6. (ii) a share in partnership.7. (iii) claim for the money due under any insurance policy.8. (iv) a claim for rent to fall due is future accruing debt.9. (v) claim for the return of earnest money.10. (vi) claim for unpaid dower of a Muslim woman.11. (vii) right to get back the purchase-money when sale is set aside.12. (viii) the benefit of an executory contract for the purpose of goods is a beneficial

interest in the movable property.13. (ix) the right to proceeds of a business.14.

8.5 Claims which are Not Actionable Claims The following have been held to be not actionable claims:—

(i) A decree is not an actionable claim.15. (ii) Right to get damages under the law of torts or for breach of contract.16. (iii) A claim to mesne profits is not an actionable claim but it is a mere right to

sue.17. (iv) A copyright.18. (v) Debt secured by mortgage of immoveable property or hypothecation of

moveable property.19.

[s 130]Transfer of actionable claim.— (1) The transfer of an actionable claim. 20.[whether with or without consideration]

shall be effected only by the execution of an instrument in writing signed by the transferor or his duly authorised agent, 21.[***] shall be complete and effectual upon the execution of such instruments, and thereupon all the rights and remedies of the transferor, whether by way of damages or otherwise, shall vest in the transferee, whether such notice of the transfer as is hereinafter provided be given or not: Provided that every dealing with the debt or other actionable claim by the debtor or other person from or against whom the transferor would, but for such instrument of transfer as aforesaid, have been entitled to recover or enforce such debt or other actionable claim, shall (save where the debtor or other person is a party to the transfer or has received express notice thereof as hereinafter provided) be valid as against such transfer. (2) The transferee of an actionable claim may, upon the execution of such

instrument of transfer as aforesaid, sue or institute proceedings for the same in his own name without obtaining the transferor's consent to such suit or proceeding and without making him a party thereto. Exception.—Nothing in this section applies to the transfer of a marine or fire policy of insurance 22.[or affects the provisions of section 38 of the Insurance Act, 1938 (4 of 1938)]. Illustrations (i) A owes money to B, who transfers the debt to C. B then demands the debt from

A, who, not having received notice of the transfer, as prescribed in section 131, pays B. The payment is valid, and C cannot sue A for the debt. (ii) A effects a policy on his own life with an Insurance Company and assigns it to a

Bank for securing the payment of an existing or future debt. If A dies, the Bank is entitled to receive the amount of the policy and to sue on it without the concurrence of A's executor, subject to the proviso in sub-section (1) of section 130 and to provisions of section 132.

Comments [s 130.1] Transfer of Actionable Claims (Section 130) According to section 130, the transfer of both the types of actionable claims, i.e., with or without consideration are effected by the execution of an instrument in writing. The instrument must be signed by the transferor or his duly authorised agent. Assignment of non-performing assets between banks and financial institutions is covered by RBI guidelines, the provisions of Transfer of Property Act, 1882 are not applicable.23. Banking business included recovery. Thus, the assignment of a debt, a non-performing asset, with right to collect the debt amount by the State Bank of India to a banking company was held to be a valid transaction. Such a transaction is not prohibited by the Transfer of Property Act, 1882, nor is it in violation of any principle of public policy.24.

[s 130.2] Mode of Assignment Mode of assignment of an actionable claim is given in section 130. It must be effected by instrument is writing signed by the transfer or his duly authorised agent. It is not necessary that the assignment should be made by a separate document. Only an endorsement on the back of a document containing the actionable claim is sufficient for the purpose.

[s 130.3] Effect of Assignment Transfer of actionable claim takes effect only after execution and signing of the instrument. After execution, all the rights and remedies of the transferor vest in the assignee. The assignee (transferee) becomes entitled to recover the claims and sue in his own name. The assignee also become liable for all the liabilities and equities to which the transferor was subject at the time of the transfer.25.

[s 130.4] Assignment of Insurance Policies The insured had assigned his policies to a bank. He then made a claim as a complaint under the Consumer Protection Act. It was held that as soon as a decree was passed or an order made in favour of the complainant, the bank would be entitled to the amount directly from the insurer. The bank need not obtain the decree in its favour.26.

[s 130.5] Subrogation of Claim under Insurance The consignor filed a suit against the carrier for loss of the consignment due to rain. On assessment of the claim amount, the insurance company paid off the consignor. The insurance company filed a suit on the carrier on the basis of the letter of subrogation and power of attorney executed by the consignor. The court said that by reason of the

power of attorney, the suit could have been filed only in the name of the consignor and not in the name of the insurance company.27.

[s 130.6] Notice of Assignment Although a notice of assignment to the debtor is not compulsory to perfect the title of the assignee (transferee) but until the debtor receives notice of the assignment to a third person, his dealings with original creditor shall be protected. Therefore, the assignee must give notice to the debtor in his own interest as early as possible. Regarding the liability of an assignee the Supreme Court held that the transferee cannot compel the corporation allotting the land to treat him as an allottee. In this case, a plot was allotted to the allottee for the establishment of an industrial unit within a specified time-period by the Industrial Development Corporation. The original allottee had transferred the plot without the consent of the Corporation. The Supreme Court held that the corporation could not be compelled to treat him as an original allottee. He had no locus standi to challenge the order of resumption passed by the corporation.28.

[s 130.7] Exception The provisions of this section do not apply to the transfer of a marine or fire policy of insurance or affect the provisions of section 38 of Insurance Act, 1938.

1. Subs. by Act 2 of 1900, section 4, for the original Chapter. 2. Haridas Acharjia Chowdhry v Baroda Kishore Chowdhry, ILR 27 Cal 38 : 4 Cal WN 87. 3. Bhupati v Phanindra, 40 Cal WN 104. 4. Jet Mal v Hakam Mal, AIR 1930 Lab 830 . 5. Ghisulal v Ghumbhirmull, 62 Cal 510 : AIR 1938 Cal 377 : 39 Cal WN 606. 6. Daya Debi v Chapala Debi, AIR 1960 Cal 378 : 1960 Cal LJ 40 : ILR (1960) 1 Cal 745 . 7. Re Baibridge, 8 Ch D 218. 8. Varjivan Das v Magan Lal, AIR 1937 Bom 382 . 9. Chidambaram Pillai v Doraiswamy Chetty, 31 IC 473 (Mad) : AIR 1916 Mad 974 . 10. Lalchand v Hussainio, (1927) 97 IC 257 . 11. Amir Hasan Khan v Mohd Nazir Hussain, AIR 1932 All 345 . 12. Chinappareddi v Venkataramanappa, AIR 1942 Mad 209 . 13. Jahar Meher Ali v Budge-Budge Jute Mills, ILR 34 Cal 289 : 11 Cal WN 566. 14. Alkash Ali v Nath Bank Ltd, AIR 1951 Assam 56 : ILR (1951) 3 Assam 1 . 15. M Govinarajulu Naidu v Dh Ranga Rao, AIR 1921 Mad 113 : 40 Mad 124. 16. Motilal v Radhey Lal, AIR 1933 All 642 (V20) : ILR 55 All 814. 17. Jainarayan v Kishan Dutta, 3 Pal 575. 18. Savitri Devi v Dwarka Prasad, ILR 1939 All 275 : AIR 1939 All 305 .

19. Imperial Bank of India v Bengal National Bank, 58 IA 323 (PC) : AIR 1931 PC 245 : ILR 59 Cal

377. 20. Ins. by Act 20 of 1929, section 62. 21. The words and figures "and notwithstanding anything contained in section 123" ins. by Act

38 of 1925, section 2 and omitted by Act 20 of 1929, section 62. 22. Added by Act 4 of 1938, section 121 (w.e.f. 1-7-1939). 23. Gorakhpur Steels and Metals Pvt Ltd v Presiding Officer, DRT, AIR 2017 All 242 24. Kotak Mahindra Bank Ltd v Caopra Fabricator & Manufacturer Pvt Ltd, AIR 2011 All 19 ,

considering the Banking Regulation Act, 1949, section 6(1)(a) and Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interests Act, 2002, section 13; transfer of non-performing assets to private party was permitted by the tribunal, withdrawal of banking company from proceedings was not held proper. It was held that once bank receives certificate of recovery, it has to be enforced after following due procedure as applicable in respect of recovery of income in view of section 29 of Debt Recovery Tribunal Regulations, Gorakhpur Steels and Metals Pvt Ltd v Presiding Officer, DRT, AIR 2017 All 242 . 25. ICICI Bank Ltd v Official Liquidator of APS Star Industries Ltd, AIR 2011 SC 1521 : 2011 (2) Civ

LJ 651 : (2010) 10 SCC 1 , a bank can always transfer its assets (debts are the assets of the assignor). It does not affect the rights and interests of the borrowers (customers). 26. Krishna Food & Baking Industry Pvt Ltd v New India Assurance Co Ltd, AIR 2009 SC 1000 :

2009 AIR SCW 82 : (2008) 13 Scale 747 . 27. Gujrath Andhra Road Carriers Transport Contractors v United India Insurance Co Ltd, AIR 2006

AP 401 : 2006 (5) Andh LD 519 : 2007 (4) Civ LJ 22 . 28. Indu Kakkar v Haryana State Industrial Development Corp Ltd, AIR 1999 SC 296 : (1999) 2

SCC 37 : 1998 AIR SCW 3817.

THE TRANSFER OF PROPERTY ACT, 1882 1.CHAPTER VIII OF TRANSFERS OF ACTIONABLE CLAIMS

This Chapter dealing with transfer of actionable claims consists of eight sections (Sections 130 to 137).

8.1 Definition of Actionable Claim (Section 3) The interpretation clause under section 3 defines an actionable claim as—actionable claim means a claim to any debt, other than a debt secured by mortgage of immovable property or by hypothecation or pledge of movable property, or to any beneficial interest in movable property not in the possession, either actual or constructive, of the claimant, which the civil courts recongnise as affording grounds for relief, whether such debt or beneficial interest be existent, accruing, conditional or contingent.

8.2 Analysis of the Definition Actionable claim means a claim to— (A) any debt, other than a debt secured— (i) by a mortgage of immovable property, or (ii) by hypothecation or pledge of movable property, or (B) any beneficial interest in movable property—

not in the possession (either actual or constructive) of the claimant. Which claim the Civil Courts recognise as affording grounds for relief whether such debt or beneficial interest be existent, accruing, conditional or contingent. The definition given in this section was substituted by the Amendment Act, 1900 (2 of 1900). An actionable claim under this section comprises of— (a) a claim to unsecured debt; or (b) a claim to any beneficial interest in movable property not in actual or

constructive possession of the claimant.

8.3 Debt Movables are of two types—tangible movable properties and intangible movable properties. Tangible movable properties have physical existence and can be possessed like car, table, chairs etc. Intangible movables are in the form of rights which have no physical existence and cannot be possessed. The existence of intangible movable can be known only when the person having such right claims it by an action in a court of

law. Previously all kinds of claims in movable property which could be enforced through the courts were included in the term "actionable claims" but now it comprises only claims to unsecured debt and a claim to any beneficial interest in movable property. The term "debt" includes a sum of money due by one person to another and which includes not only the amount payable at the time but also the sum of money which is not immediately due but might become payable after sometime.2. A sum of money which is payable or will become payable in future by reason of a present obligation is a debt.3. A debt may be secured or unsecured debt. Where the debtor gives security for repayment of debt to the creditor, it is known as secured debt but where no security is given, that is unsecured debt. Security may be of movable or immovable property. Where the debt is secured by immovable property, it is known as mortgage. Where the security is some movable property, it is known as pledge or hypothecation. According to section 3, only unsecured debt is an actionable claim and debt may be existent, accruing or conditional. Where a debt has already become due and is payable at present, it is known as existing debt. Where a debt or sum of money is due at present but payable on a future date, it is accruing debt. Where the claim for a sum of money exists but the payment depends upon the fulfilment of any condition, the debt is known as conditional debt. Unascertained amounts neither due nor payable but accruing, the payment of which is dependent upon some work being executed can be assigned.4. An assignment of the debt should be of the whole debt and not a part of the debt.5. A debt which is otherwise actionable claim does not cease to be so merely because a cause of action in respect of it has not arises or because the time of its payment has not arrived.

8.4 Claims which are Held to be Actionable Claims The following claims are included under the category of actionable claims:— (i) claims for arrears of rent.6. (ii) a share in partnership.7. (iii) claim for the money due under any insurance policy.8. (iv) a claim for rent to fall due is future accruing debt.9. (v) claim for the return of earnest money.10. (vi) claim for unpaid dower of a Muslim woman.11. (vii) right to get back the purchase-money when sale is set aside.12. (viii) the benefit of an executory contract for the purpose of goods is a beneficial

interest in the movable property.13. (ix) the right to proceeds of a business.14.

8.5 Claims which are Not Actionable Claims The following have been held to be not actionable claims:—

(i) A decree is not an actionable claim.15. (ii) Right to get damages under the law of torts or for breach of contract.16. (iii) A claim to mesne profits is not an actionable claim but it is a mere right to

sue.17. (iv) A copyright.18. (v) Debt secured by mortgage of immoveable property or hypothecation of

moveable property.19.

29.[s 130A]Transfer of policy of marine insurance.—

[Rep. by the Marine Insurance Act, 1963 (11 of 1963), sec. 92 (w.e.f. 1-8-1963)].]

1. Subs. by Act 2 of 1900, section 4, for the original Chapter. 2. Haridas Acharjia Chowdhry v Baroda Kishore Chowdhry, ILR 27 Cal 38 : 4 Cal WN 87. 3. Bhupati v Phanindra, 40 Cal WN 104. 4. Jet Mal v Hakam Mal, AIR 1930 Lab 830 . 5. Ghisulal v Ghumbhirmull, 62 Cal 510 : AIR 1938 Cal 377 : 39 Cal WN 606. 6. Daya Debi v Chapala Debi, AIR 1960 Cal 378 : 1960 Cal LJ 40 : ILR (1960) 1 Cal 745 . 7. Re Baibridge, 8 Ch D 218. 8. Varjivan Das v Magan Lal, AIR 1937 Bom 382 . 9. Chidambaram Pillai v Doraiswamy Chetty, 31 IC 473 (Mad) : AIR 1916 Mad 974 . 10. Lalchand v Hussainio, (1927) 97 IC 257 . 11. Amir Hasan Khan v Mohd Nazir Hussain, AIR 1932 All 345 . 12. Chinappareddi v Venkataramanappa, AIR 1942 Mad 209 . 13. Jahar Meher Ali v Budge-Budge Jute Mills, ILR 34 Cal 289 : 11 Cal WN 566. 14. Alkash Ali v Nath Bank Ltd, AIR 1951 Assam 56 : ILR (1951) 3 Assam 1 . 15. M Govinarajulu Naidu v Dh Ranga Rao, AIR 1921 Mad 113 : 40 Mad 124. 16. Motilal v Radhey Lal, AIR 1933 All 642 (V20) : ILR 55 All 814. 17. Jainarayan v Kishan Dutta, 3 Pal 575. 18. Savitri Devi v Dwarka Prasad, ILR 1939 All 275 : AIR 1939 All 305 . 19. Imperial Bank of India v Bengal National Bank, 58 IA 323 (PC) : AIR 1931 PC 245 : ILR 59 Cal

377. 29. Ins. by Act 6 of 1944, section 2.

THE TRANSFER OF PROPERTY ACT, 1882 1.CHAPTER VIII OF TRANSFERS OF ACTIONABLE CLAIMS

This Chapter dealing with transfer of actionable claims consists of eight sections (Sections 130 to 137).

8.1 Definition of Actionable Claim (Section 3) The interpretation clause under section 3 defines an actionable claim as—actionable claim means a claim to any debt, other than a debt secured by mortgage of immovable property or by hypothecation or pledge of movable property, or to any beneficial interest in movable property not in the possession, either actual or constructive, of the claimant, which the civil courts recongnise as affording grounds for relief, whether such debt or beneficial interest be existent, accruing, conditional or contingent.

8.2 Analysis of the Definition Actionable claim means a claim to— (A) any debt, other than a debt secured— (i) by a mortgage of immovable property, or (ii) by hypothecation or pledge of movable property, or (B) any beneficial interest in movable property—

not in the possession (either actual or constructive) of the claimant. Which claim the Civil Courts recognise as affording grounds for relief whether such debt or beneficial interest be existent, accruing, conditional or contingent. The definition given in this section was substituted by the Amendment Act, 1900 (2 of 1900). An actionable claim under this section comprises of— (a) a claim to unsecured debt; or (b) a claim to any beneficial interest in movable property not in actual or

constructive possession of the claimant.

8.3 Debt Movables are of two types—tangible movable properties and intangible movable properties. Tangible movable properties have physical existence and can be possessed like car, table, chairs etc. Intangible movables are in the form of rights which have no physical existence and cannot be possessed. The existence of intangible movable can be known only when the person having such right claims it by an action in a court of

law. Previously all kinds of claims in movable property which could be enforced through the courts were included in the term "actionable claims" but now it comprises only claims to unsecured debt and a claim to any beneficial interest in movable property. The term "debt" includes a sum of money due by one person to another and which includes not only the amount payable at the time but also the sum of money which is not immediately due but might become payable after sometime.2. A sum of money which is payable or will become payable in future by reason of a present obligation is a debt.3. A debt may be secured or unsecured debt. Where the debtor gives security for repayment of debt to the creditor, it is known as secured debt but where no security is given, that is unsecured debt. Security may be of movable or immovable property. Where the debt is secured by immovable property, it is known as mortgage. Where the security is some movable property, it is known as pledge or hypothecation. According to section 3, only unsecured debt is an actionable claim and debt may be existent, accruing or conditional. Where a debt has already become due and is payable at present, it is known as existing debt. Where a debt or sum of money is due at present but payable on a future date, it is accruing debt. Where the claim for a sum of money exists but the payment depends upon the fulfilment of any condition, the debt is known as conditional debt. Unascertained amounts neither due nor payable but accruing, the payment of which is dependent upon some work being executed can be assigned.4. An assignment of the debt should be of the whole debt and not a part of the debt.5. A debt which is otherwise actionable claim does not cease to be so merely because a cause of action in respect of it has not arises or because the time of its payment has not arrived.

8.4 Claims which are Held to be Actionable Claims The following claims are included under the category of actionable claims:— (i) claims for arrears of rent.6. (ii) a share in partnership.7. (iii) claim for the money due under any insurance policy.8. (iv) a claim for rent to fall due is future accruing debt.9. (v) claim for the return of earnest money.10. (vi) claim for unpaid dower of a Muslim woman.11. (vii) right to get back the purchase-money when sale is set aside.12. (viii) the benefit of an executory contract for the purpose of goods is a beneficial

interest in the movable property.13. (ix) the right to proceeds of a business.14.

8.5 Claims which are Not Actionable Claims The following have been held to be not actionable claims:—

(i) A decree is not an actionable claim.15. (ii) Right to get damages under the law of torts or for breach of contract.16. (iii) A claim to mesne profits is not an actionable claim but it is a mere right to

sue.17. (iv) A copyright.18. (v) Debt secured by mortgage of immoveable property or hypothecation of

moveable property.19.

[s 131]Notice to be in writing, signed.— Every notice of transfer of an actionable claim shall be in writing, signed by the transferor or his agent duly authorised in this behalf, or, in case the transferor refuses to sign, by the transferee or his agent, and shall state the name and address of the transferee.

Comments [s 131.1] Notice (Section 131) Section 131 provides that every notice of transfer of actionable claim must be in writing and signed by the transferor or his duly authorised agent in this behalf. Where the transferor refuses to sign, then the notice must be signed by the transferee or his agent. The notice must be an express notice in writing and it must state the name and address of the transferee. A notice which did not give the address of the transferee was held to be invalid.30. A notice which does not mention the date of the assignment or contains, an erroneous statement that notice of assignment has already been given would not be defective if it brings to the notice of the debtor with reasonable certainty the fact that the deed does assign the debt.31. There is no time limit within which the notice must be given. Notice given within one year was held to be reasonable.32. It was suggested in Sadasook Ramprotap v Hoar Miller & Co.33. The notice must be unconditional otherwise it would lead to an intolerable increase in the burden of the debtor.

1. Subs. by Act 2 of 1900, section 4, for the original Chapter.

2. Haridas Acharjia Chowdhry v Baroda Kishore Chowdhry, ILR 27 Cal 38 : 4 Cal WN 87. 3. Bhupati v Phanindra, 40 Cal WN 104. 4. Jet Mal v Hakam Mal, AIR 1930 Lab 830 . 5. Ghisulal v Ghumbhirmull, 62 Cal 510 : AIR 1938 Cal 377 : 39 Cal WN 606. 6. Daya Debi v Chapala Debi, AIR 1960 Cal 378 : 1960 Cal LJ 40 : ILR (1960) 1 Cal 745 . 7. Re Baibridge, 8 Ch D 218. 8. Varjivan Das v Magan Lal, AIR 1937 Bom 382 . 9. Chidambaram Pillai v Doraiswamy Chetty, 31 IC 473 (Mad) : AIR 1916 Mad 974 . 10. Lalchand v Hussainio, (1927) 97 IC 257 . 11. Amir Hasan Khan v Mohd Nazir Hussain, AIR 1932 All 345 . 12. Chinappareddi v Venkataramanappa, AIR 1942 Mad 209 . 13. Jahar Meher Ali v Budge-Budge Jute Mills, ILR 34 Cal 289 : 11 Cal WN 566. 14. Alkash Ali v Nath Bank Ltd, AIR 1951 Assam 56 : ILR (1951) 3 Assam 1 . 15. M Govinarajulu Naidu v Dh Ranga Rao, AIR 1921 Mad 113 : 40 Mad 124. 16. Motilal v Radhey Lal, AIR 1933 All 642 (V20) : ILR 55 All 814. 17. Jainarayan v Kishan Dutta, 3 Pal 575. 18. Savitri Devi v Dwarka Prasad, ILR 1939 All 275 : AIR 1939 All 305 . 19. Imperial Bank of India v Bengal National Bank, 58 IA 323 (PC) : AIR 1931 PC 245 : ILR 59 Cal

377. 30. Hansraj v Nathoo, (1907) 9 Bom LR 838 . 31. Denny, Gasquet and Metcalfe v Conklin, (1913) 3 KB 177 (180). 32. Venkata Krishniah v Manikyaraw, AIR 1948 Mad 171 : (1947) 2 Mad LJ 196. 33. (1923) 27 Cal WN 733.

THE TRANSFER OF PROPERTY ACT, 1882 1.CHAPTER VIII OF TRANSFERS OF ACTIONABLE CLAIMS

This Chapter dealing with transfer of actionable claims consists of eight sections (Sections 130 to 137).

8.1 Definition of Actionable Claim (Section 3) The interpretation clause under section 3 defines an actionable claim as—actionable claim means a claim to any debt, other than a debt secured by mortgage of immovable property or by hypothecation or pledge of movable property, or to any beneficial interest in movable property not in the possession, either actual or constructive, of the claimant, which the civil courts recongnise as affording grounds for relief, whether such debt or beneficial interest be existent, accruing, conditional or contingent.

8.2 Analysis of the Definition Actionable claim means a claim to— (A) any debt, other than a debt secured— (i) by a mortgage of immovable property, or (ii) by hypothecation or pledge of movable property, or (B) any beneficial interest in movable property—

not in the possession (either actual or constructive) of the claimant. Which claim the Civil Courts recognise as affording grounds for relief whether such debt or beneficial interest be existent, accruing, conditional or contingent. The definition given in this section was substituted by the Amendment Act, 1900 (2 of 1900). An actionable claim under this section comprises of— (a) a claim to unsecured debt; or (b) a claim to any beneficial interest in movable property not in actual or

constructive possession of the claimant.

8.3 Debt Movables are of two types—tangible movable properties and intangible movable properties. Tangible movable properties have physical existence and can be possessed like car, table, chairs etc. Intangible movables are in the form of rights which have no physical existence and cannot be possessed. The existence of intangible movable can be known only when the person having such right claims it by an action in a court of

law. Previously all kinds of claims in movable property which could be enforced through the courts were included in the term "actionable claims" but now it comprises only claims to unsecured debt and a claim to any beneficial interest in movable property. The term "debt" includes a sum of money due by one person to another and which includes not only the amount payable at the time but also the sum of money which is not immediately due but might become payable after sometime.2. A sum of money which is payable or will become payable in future by reason of a present obligation is a debt.3. A debt may be secured or unsecured debt. Where the debtor gives security for repayment of debt to the creditor, it is known as secured debt but where no security is given, that is unsecured debt. Security may be of movable or immovable property. Where the debt is secured by immovable property, it is known as mortgage. Where the security is some movable property, it is known as pledge or hypothecation. According to section 3, only unsecured debt is an actionable claim and debt may be existent, accruing or conditional. Where a debt has already become due and is payable at present, it is known as existing debt. Where a debt or sum of money is due at present but payable on a future date, it is accruing debt. Where the claim for a sum of money exists but the payment depends upon the fulfilment of any condition, the debt is known as conditional debt. Unascertained amounts neither due nor payable but accruing, the payment of which is dependent upon some work being executed can be assigned.4. An assignment of the debt should be of the whole debt and not a part of the debt.5. A debt which is otherwise actionable claim does not cease to be so merely because a cause of action in respect of it has not arises or because the time of its payment has not arrived.

8.4 Claims which are Held to be Actionable Claims The following claims are included under the category of actionable claims:— (i) claims for arrears of rent.6. (ii) a share in partnership.7. (iii) claim for the money due under any insurance policy.8. (iv) a claim for rent to fall due is future accruing debt.9. (v) claim for the return of earnest money.10. (vi) claim for unpaid dower of a Muslim woman.11. (vii) right to get back the purchase-money when sale is set aside.12. (viii) the benefit of an executory contract for the purpose of goods is a beneficial

interest in the movable property.13. (ix) the right to proceeds of a business.14.

8.5 Claims which are Not Actionable Claims The following have been held to be not actionable claims:—

(i) A decree is not an actionable claim.15. (ii) Right to get damages under the law of torts or for breach of contract.16. (iii) A claim to mesne profits is not an actionable claim but it is a mere right to

sue.17. (iv) A copyright.18. (v) Debt secured by mortgage of immoveable property or hypothecation of

moveable property.19.

[s 132]Liability of transferee of actionable claim.— The transferee of an actionable claim shall take it subject to all the liabilities and equities and to which the transferor was subject in respect thereof at the date of the transfer. Illustrations (i) A transfers to C a debt due to him by B, A being then indebted to B. C sues B for

the debt due by B to A. In such suit B is entitled to set off the debt due by A to him; although C was unaware of it at the date of such transfer. (ii) A executed a bond in favour of B under circumstances entitling the former to

have it delivered up and cancelled. B assigns the bond to C for value and without notice of such circumstances. C cannot enforce the bond against A.

Comments [s 132.1] Liability of Transferee of Actionable Claim (Section 132) After the execution of the instrument of assignment of actionable claim all the liabilities and equities of the transferor get transferred to the transferee of the assignee. The transferee takes the transfer along with all the liabilities and equities of the assignor at the time of the transfer. The principle of this section is that the assignee can get no better title than the assignor. If nothing is due to the assignor, the assignee gets nothing. It is immaterial that the assignee had no notice of the equity or liability to which the assignor was subject at the date of the assignment. The principle of this section has been applied to court sales.34.

1. Subs. by Act 2 of 1900, section 4, for the original Chapter. 2. Haridas Acharjia Chowdhry v Baroda Kishore Chowdhry, ILR 27 Cal 38 : 4 Cal WN 87. 3. Bhupati v Phanindra, 40 Cal WN 104. 4. Jet Mal v Hakam Mal, AIR 1930 Lab 830 . 5. Ghisulal v Ghumbhirmull, 62 Cal 510 : AIR 1938 Cal 377 : 39 Cal WN 606. 6. Daya Debi v Chapala Debi, AIR 1960 Cal 378 : 1960 Cal LJ 40 : ILR (1960) 1 Cal 745 . 7. Re Baibridge, 8 Ch D 218. 8. Varjivan Das v Magan Lal, AIR 1937 Bom 382 . 9. Chidambaram Pillai v Doraiswamy Chetty, 31 IC 473 (Mad) : AIR 1916 Mad 974 . 10. Lalchand v Hussainio, (1927) 97 IC 257 . 11. Amir Hasan Khan v Mohd Nazir Hussain, AIR 1932 All 345 . 12. Chinappareddi v Venkataramanappa, AIR 1942 Mad 209 . 13. Jahar Meher Ali v Budge-Budge Jute Mills, ILR 34 Cal 289 : 11 Cal WN 566. 14. Alkash Ali v Nath Bank Ltd, AIR 1951 Assam 56 : ILR (1951) 3 Assam 1 . 15. M Govinarajulu Naidu v Dh Ranga Rao, AIR 1921 Mad 113 : 40 Mad 124. 16. Motilal v Radhey Lal, AIR 1933 All 642 (V20) : ILR 55 All 814. 17. Jainarayan v Kishan Dutta, 3 Pal 575. 18. Savitri Devi v Dwarka Prasad, ILR 1939 All 275 : AIR 1939 All 305 . 19. Imperial Bank of India v Bengal National Bank, 58 IA 323 (PC) : AIR 1931 PC 245 : ILR 59 Cal

377. 34. Ramchandra v Shankar, AIR 1944 Nag 98 .

THE TRANSFER OF PROPERTY ACT, 1882 1.CHAPTER VIII OF TRANSFERS OF ACTIONABLE CLAIMS

This Chapter dealing with transfer of actionable claims consists of eight sections (Sections 130 to 137).

8.1 Definition of Actionable Claim (Section 3) The interpretation clause under section 3 defines an actionable claim as—actionable claim means a claim to any debt, other than a debt secured by mortgage of immovable property or by hypothecation or pledge of movable property, or to any beneficial interest in movable property not in the possession, either actual or constructive, of the claimant, which the civil courts recongnise as affording grounds for relief, whether such debt or beneficial interest be existent, accruing, conditional or contingent.

8.2 Analysis of the Definition Actionable claim means a claim to— (A) any debt, other than a debt secured— (i) by a mortgage of immovable property, or (ii) by hypothecation or pledge of movable property, or (B) any beneficial interest in movable property—

not in the possession (either actual or constructive) of the claimant. Which claim the Civil Courts recognise as affording grounds for relief whether such debt or beneficial interest be existent, accruing, conditional or contingent. The definition given in this section was substituted by the Amendment Act, 1900 (2 of 1900). An actionable claim under this section comprises of— (a) a claim to unsecured debt; or (b) a claim to any beneficial interest in movable property not in actual or

constructive possession of the claimant.

8.3 Debt Movables are of two types—tangible movable properties and intangible movable properties. Tangible movable properties have physical existence and can be possessed like car, table, chairs etc. Intangible movables are in the form of rights which have no physical existence and cannot be possessed. The existence of intangible movable can be known only when the person having such right claims it by an action in a court of

law. Previously all kinds of claims in movable property which could be enforced through the courts were included in the term "actionable claims" but now it comprises only claims to unsecured debt and a claim to any beneficial interest in movable property. The term "debt" includes a sum of money due by one person to another and which includes not only the amount payable at the time but also the sum of money which is not immediately due but might become payable after sometime.2. A sum of money which is payable or will become payable in future by reason of a present obligation is a debt.3. A debt may be secured or unsecured debt. Where the debtor gives security for repayment of debt to the creditor, it is known as secured debt but where no security is given, that is unsecured debt. Security may be of movable or immovable property. Where the debt is secured by immovable property, it is known as mortgage. Where the security is some movable property, it is known as pledge or hypothecation. According to section 3, only unsecured debt is an actionable claim and debt may be existent, accruing or conditional. Where a debt has already become due and is payable at present, it is known as existing debt. Where a debt or sum of money is due at present but payable on a future date, it is accruing debt. Where the claim for a sum of money exists but the payment depends upon the fulfilment of any condition, the debt is known as conditional debt. Unascertained amounts neither due nor payable but accruing, the payment of which is dependent upon some work being executed can be assigned.4. An assignment of the debt should be of the whole debt and not a part of the debt.5. A debt which is otherwise actionable claim does not cease to be so merely because a cause of action in respect of it has not arises or because the time of its payment has not arrived.

8.4 Claims which are Held to be Actionable Claims The following claims are included under the category of actionable claims:— (i) claims for arrears of rent.6. (ii) a share in partnership.7. (iii) claim for the money due under any insurance policy.8. (iv) a claim for rent to fall due is future accruing debt.9. (v) claim for the return of earnest money.10. (vi) claim for unpaid dower of a Muslim woman.11. (vii) right to get back the purchase-money when sale is set aside.12. (viii) the benefit of an executory contract for the purpose of goods is a beneficial

interest in the movable property.13. (ix) the right to proceeds of a business.14.

8.5 Claims which are Not Actionable Claims The following have been held to be not actionable claims:—

(i) A decree is not an actionable claim.15. (ii) Right to get damages under the law of torts or for breach of contract.16. (iii) A claim to mesne profits is not an actionable claim but it is a mere right to

sue.17. (iv) A copyright.18. (v) Debt secured by mortgage of immoveable property or hypothecation of

moveable property.19.

[s 133]Warranty of solvency of debtor.— Where the transferor of a debt warrants the solvency of the debtor, the warranty, in the absence of a contract to the contrary, applies only to his solvency at the time of the transfer, and is limited, where the transfer is made for consideration, to the amount or value of such consideration.

Comments [s 133.1] Warranty of Solvency (Section 133) A warranty of solvency is not implied. Warranty is sometimes given by the transferor as a precautionary measure that the debtor is solvent so that the transferee becomes assured that he may not lose his claim. The warranty of solvency of the debtor is limited only for the time of transfer. It is limited to solvency at the time of the assignment. Where the transfer is for consideration, such warranty extends only to the amount of such consideration. This section is applicable only where the transferor actually gives such warranty. The parties may have any contrary agreement between them.

1. Subs. by Act 2 of 1900, section 4, for the original Chapter. 2. Haridas Acharjia Chowdhry v Baroda Kishore Chowdhry, ILR 27 Cal 38 : 4 Cal WN 87. 3. Bhupati v Phanindra, 40 Cal WN 104. 4. Jet Mal v Hakam Mal, AIR 1930 Lab 830 . 5. Ghisulal v Ghumbhirmull, 62 Cal 510 : AIR 1938 Cal 377 : 39 Cal WN 606. 6. Daya Debi v Chapala Debi, AIR 1960 Cal 378 : 1960 Cal LJ 40 : ILR (1960) 1 Cal 745 . 7. Re Baibridge, 8 Ch D 218.

8. Varjivan Das v Magan Lal, AIR 1937 Bom 382 . 9. Chidambaram Pillai v Doraiswamy Chetty, 31 IC 473 (Mad) : AIR 1916 Mad 974 . 10. Lalchand v Hussainio, (1927) 97 IC 257 . 11. Amir Hasan Khan v Mohd Nazir Hussain, AIR 1932 All 345 . 12. Chinappareddi v Venkataramanappa, AIR 1942 Mad 209 . 13. Jahar Meher Ali v Budge-Budge Jute Mills, ILR 34 Cal 289 : 11 Cal WN 566. 14. Alkash Ali v Nath Bank Ltd, AIR 1951 Assam 56 : ILR (1951) 3 Assam 1 . 15. M Govinarajulu Naidu v Dh Ranga Rao, AIR 1921 Mad 113 : 40 Mad 124. 16. Motilal v Radhey Lal, AIR 1933 All 642 (V20) : ILR 55 All 814. 17. Jainarayan v Kishan Dutta, 3 Pal 575. 18. Savitri Devi v Dwarka Prasad, ILR 1939 All 275 : AIR 1939 All 305 . 19. Imperial Bank of India v Bengal National Bank, 58 IA 323 (PC) : AIR 1931 PC 245 : ILR 59 Cal

377.

THE TRANSFER OF PROPERTY ACT, 1882 1.CHAPTER VIII OF TRANSFERS OF ACTIONABLE CLAIMS

This Chapter dealing with transfer of actionable claims consists of eight sections (Sections 130 to 137).

8.1 Definition of Actionable Claim (Section 3) The interpretation clause under section 3 defines an actionable claim as—actionable claim means a claim to any debt, other than a debt secured by mortgage of immovable property or by hypothecation or pledge of movable property, or to any beneficial interest in movable property not in the possession, either actual or constructive, of the claimant, which the civil courts recongnise as affording grounds for relief, whether such debt or beneficial interest be existent, accruing, conditional or contingent.

8.2 Analysis of the Definition Actionable claim means a claim to— (A) any debt, other than a debt secured— (i) by a mortgage of immovable property, or (ii) by hypothecation or pledge of movable property, or (B) any beneficial interest in movable property—

not in the possession (either actual or constructive) of the claimant. Which claim the Civil Courts recognise as affording grounds for relief whether such debt or beneficial interest be existent, accruing, conditional or contingent. The definition given in this section was substituted by the Amendment Act, 1900 (2 of 1900). An actionable claim under this section comprises of— (a) a claim to unsecured debt; or (b) a claim to any beneficial interest in movable property not in actual or

constructive possession of the claimant.

8.3 Debt Movables are of two types—tangible movable properties and intangible movable properties. Tangible movable properties have physical existence and can be possessed like car, table, chairs etc. Intangible movables are in the form of rights which have no physical existence and cannot be possessed. The existence of intangible movable can be known only when the person having such right claims it by an action in a court of

law. Previously all kinds of claims in movable property which could be enforced through the courts were included in the term "actionable claims" but now it comprises only claims to unsecured debt and a claim to any beneficial interest in movable property. The term "debt" includes a sum of money due by one person to another and which includes not only the amount payable at the time but also the sum of money which is not immediately due but might become payable after sometime.2. A sum of money which is payable or will become payable in future by reason of a present obligation is a debt.3. A debt may be secured or unsecured debt. Where the debtor gives security for repayment of debt to the creditor, it is known as secured debt but where no security is given, that is unsecured debt. Security may be of movable or immovable property. Where the debt is secured by immovable property, it is known as mortgage. Where the security is some movable property, it is known as pledge or hypothecation. According to section 3, only unsecured debt is an actionable claim and debt may be existent, accruing or conditional. Where a debt has already become due and is payable at present, it is known as existing debt. Where a debt or sum of money is due at present but payable on a future date, it is accruing debt. Where the claim for a sum of money exists but the payment depends upon the fulfilment of any condition, the debt is known as conditional debt. Unascertained amounts neither due nor payable but accruing, the payment of which is dependent upon some work being executed can be assigned.4. An assignment of the debt should be of the whole debt and not a part of the debt.5. A debt which is otherwise actionable claim does not cease to be so merely because a cause of action in respect of it has not arises or because the time of its payment has not arrived.

8.4 Claims which are Held to be Actionable Claims The following claims are included under the category of actionable claims:— (i) claims for arrears of rent.6. (ii) a share in partnership.7. (iii) claim for the money due under any insurance policy.8. (iv) a claim for rent to fall due is future accruing debt.9. (v) claim for the return of earnest money.10. (vi) claim for unpaid dower of a Muslim woman.11. (vii) right to get back the purchase-money when sale is set aside.12. (viii) the benefit of an executory contract for the purpose of goods is a beneficial

interest in the movable property.13. (ix) the right to proceeds of a business.14.

8.5 Claims which are Not Actionable Claims The following have been held to be not actionable claims:—

(i) A decree is not an actionable claim.15. (ii) Right to get damages under the law of torts or for breach of contract.16. (iii) A claim to mesne profits is not an actionable claim but it is a mere right to

sue.17. (iv) A copyright.18. (v) Debt secured by mortgage of immoveable property or hypothecation of

moveable property.19.

[s 134]Mortgaged debt.— Where a debt is transferred for the purpose of securing an existing or future debt, the debt so transferred, if received by the transferor or recovered by the transferee, is applicable, first, in payment of the costs of such recovery; secondly, in or towards satisfaction of the amount for the time being secured by the transfer; and the residue, if any, belongs to the transferor or other person entitled to receive the same.

Comments [s 134.1] Mortgaged Debt (Section 134) A transfer of an actionable claim can be made by way of sale as well as mortgage. Section 134 provides that where a debt is transferred for the purpose of securing an existing or future debt, the transferred debt if received by the transferor or recovered by the transferee is applicable in the following manner:— 1. firstly, it is applied in payment of costs of such recovery. 2. secondly, towards satisfaction of the amount for the time being secured by the

transfer. 3. if any residue is left, it is belongs to the transferor or other person entitled to

receive the same.

1. Subs. by Act 2 of 1900, section 4, for the original Chapter. 2. Haridas Acharjia Chowdhry v Baroda Kishore Chowdhry, ILR 27 Cal 38 : 4 Cal WN 87. 3. Bhupati v Phanindra, 40 Cal WN 104. 4. Jet Mal v Hakam Mal, AIR 1930 Lab 830 .

5. Ghisulal v Ghumbhirmull, 62 Cal 510 : AIR 1938 Cal 377 : 39 Cal WN 606. 6. Daya Debi v Chapala Debi, AIR 1960 Cal 378 : 1960 Cal LJ 40 : ILR (1960) 1 Cal 745 . 7. Re Baibridge, 8 Ch D 218. 8. Varjivan Das v Magan Lal, AIR 1937 Bom 382 . 9. Chidambaram Pillai v Doraiswamy Chetty, 31 IC 473 (Mad) : AIR 1916 Mad 974 . 10. Lalchand v Hussainio, (1927) 97 IC 257 . 11. Amir Hasan Khan v Mohd Nazir Hussain, AIR 1932 All 345 . 12. Chinappareddi v Venkataramanappa, AIR 1942 Mad 209 . 13. Jahar Meher Ali v Budge-Budge Jute Mills, ILR 34 Cal 289 : 11 Cal WN 566. 14. Alkash Ali v Nath Bank Ltd, AIR 1951 Assam 56 : ILR (1951) 3 Assam 1 . 15. M Govinarajulu Naidu v Dh Ranga Rao, AIR 1921 Mad 113 : 40 Mad 124. 16. Motilal v Radhey Lal, AIR 1933 All 642 (V20) : ILR 55 All 814. 17. Jainarayan v Kishan Dutta, 3 Pal 575. 18. Savitri Devi v Dwarka Prasad, ILR 1939 All 275 : AIR 1939 All 305 . 19. Imperial Bank of India v Bengal National Bank, 58 IA 323 (PC) : AIR 1931 PC 245 : ILR 59 Cal

377.

THE TRANSFER OF PROPERTY ACT, 1882 1.CHAPTER VIII OF TRANSFERS OF ACTIONABLE CLAIMS

This Chapter dealing with transfer of actionable claims consists of eight sections (Sections 130 to 137).

8.1 Definition of Actionable Claim (Section 3) The interpretation clause under section 3 defines an actionable claim as—actionable claim means a claim to any debt, other than a debt secured by mortgage of immovable property or by hypothecation or pledge of movable property, or to any beneficial interest in movable property not in the possession, either actual or constructive, of the claimant, which the civil courts recongnise as affording grounds for relief, whether such debt or beneficial interest be existent, accruing, conditional or contingent.

8.2 Analysis of the Definition Actionable claim means a claim to— (A) any debt, other than a debt secured— (i) by a mortgage of immovable property, or (ii) by hypothecation or pledge of movable property, or (B) any beneficial interest in movable property—

not in the possession (either actual or constructive) of the claimant. Which claim the Civil Courts recognise as affording grounds for relief whether such debt or beneficial interest be existent, accruing, conditional or contingent. The definition given in this section was substituted by the Amendment Act, 1900 (2 of 1900). An actionable claim under this section comprises of— (a) a claim to unsecured debt; or (b) a claim to any beneficial interest in movable property not in actual or

constructive possession of the claimant.

8.3 Debt Movables are of two types—tangible movable properties and intangible movable properties. Tangible movable properties have physical existence and can be possessed like car, table, chairs etc. Intangible movables are in the form of rights which have no physical existence and cannot be possessed. The existence of intangible movable can be known only when the person having such right claims it by an action in a court of

law. Previously all kinds of claims in movable property which could be enforced through the courts were included in the term "actionable claims" but now it comprises only claims to unsecured debt and a claim to any beneficial interest in movable property. The term "debt" includes a sum of money due by one person to another and which includes not only the amount payable at the time but also the sum of money which is not immediately due but might become payable after sometime.2. A sum of money which is payable or will become payable in future by reason of a present obligation is a debt.3. A debt may be secured or unsecured debt. Where the debtor gives security for repayment of debt to the creditor, it is known as secured debt but where no security is given, that is unsecured debt. Security may be of movable or immovable property. Where the debt is secured by immovable property, it is known as mortgage. Where the security is some movable property, it is known as pledge or hypothecation. According to section 3, only unsecured debt is an actionable claim and debt may be existent, accruing or conditional. Where a debt has already become due and is payable at present, it is known as existing debt. Where a debt or sum of money is due at present but payable on a future date, it is accruing debt. Where the claim for a sum of money exists but the payment depends upon the fulfilment of any condition, the debt is known as conditional debt. Unascertained amounts neither due nor payable but accruing, the payment of which is dependent upon some work being executed can be assigned.4. An assignment of the debt should be of the whole debt and not a part of the debt.5. A debt which is otherwise actionable claim does not cease to be so merely because a cause of action in respect of it has not arises or because the time of its payment has not arrived.

8.4 Claims which are Held to be Actionable Claims The following claims are included under the category of actionable claims:— (i) claims for arrears of rent.6. (ii) a share in partnership.7. (iii) claim for the money due under any insurance policy.8. (iv) a claim for rent to fall due is future accruing debt.9. (v) claim for the return of earnest money.10. (vi) claim for unpaid dower of a Muslim woman.11. (vii) right to get back the purchase-money when sale is set aside.12. (viii) the benefit of an executory contract for the purpose of goods is a beneficial

interest in the movable property.13. (ix) the right to proceeds of a business.14.

8.5 Claims which are Not Actionable Claims The following have been held to be not actionable claims:—

(i) A decree is not an actionable claim.15. (ii) Right to get damages under the law of torts or for breach of contract.16. (iii) A claim to mesne profits is not an actionable claim but it is a mere right to

sue.17. (iv) A copyright.18. (v) Debt secured by mortgage of immoveable property or hypothecation of

moveable property.19.

35.[s 135]Assignment of rights under policy of insurance against fire.—

Every assignee by endorsement or other writing, of a policy of insurance against fire, in whom the property in the subject insured shall be absolutely vested at the date of the assignment, shall have transferred and vested in him all rights of suit as if the contract contained in the policy has been made with himself.]

Comments [s 135.1] Assignment of Rights (Section 135) Section 135 provides that any assignee of a policy of insurance against fire, in whom the property in the subject insured shall be absolutely vested at the date of the assignment, shall have transferred and vested in him all rights of suit as if the contract contained in the policy has been made with him. Assignment may be by endorsement or other writing. This provision has been included because section 130 exempts the assignments of marine or fire policies of insurance from its operation because mere assignment of such policy does not entitle the assignee to the ownership of the subject-matter of the policy.

1. Subs. by Act 2 of 1900, section 4, for the original Chapter. 2. Haridas Acharjia Chowdhry v Baroda Kishore Chowdhry, ILR 27 Cal 38 : 4 Cal WN 87. 3. Bhupati v Phanindra, 40 Cal WN 104. 4. Jet Mal v Hakam Mal, AIR 1930 Lab 830 . 5. Ghisulal v Ghumbhirmull, 62 Cal 510 : AIR 1938 Cal 377 : 39 Cal WN 606. 6. Daya Debi v Chapala Debi, AIR 1960 Cal 378 : 1960 Cal LJ 40 : ILR (1960) 1 Cal 745 . 7. Re Baibridge, 8 Ch D 218.

8. Varjivan Das v Magan Lal, AIR 1937 Bom 382 . 9. Chidambaram Pillai v Doraiswamy Chetty, 31 IC 473 (Mad) : AIR 1916 Mad 974 . 10. Lalchand v Hussainio, (1927) 97 IC 257 . 11. Amir Hasan Khan v Mohd Nazir Hussain, AIR 1932 All 345 . 12. Chinappareddi v Venkataramanappa, AIR 1942 Mad 209 . 13. Jahar Meher Ali v Budge-Budge Jute Mills, ILR 34 Cal 289 : 11 Cal WN 566. 14. Alkash Ali v Nath Bank Ltd, AIR 1951 Assam 56 : ILR (1951) 3 Assam 1 . 15. M Govinarajulu Naidu v Dh Ranga Rao, AIR 1921 Mad 113 : 40 Mad 124. 16. Motilal v Radhey Lal, AIR 1933 All 642 (V20) : ILR 55 All 814. 17. Jainarayan v Kishan Dutta, 3 Pal 575. 18. Savitri Devi v Dwarka Prasad, ILR 1939 All 275 : AIR 1939 All 305 . 19. Imperial Bank of India v Bengal National Bank, 58 IA 323 (PC) : AIR 1931 PC 245 : ILR 59 Cal

377. 35. Subs. by Act 6 of 1944, section 3, for the original section.

THE TRANSFER OF PROPERTY ACT, 1882 1.CHAPTER VIII OF TRANSFERS OF ACTIONABLE CLAIMS

This Chapter dealing with transfer of actionable claims consists of eight sections (Sections 130 to 137).

8.1 Definition of Actionable Claim (Section 3) The interpretation clause under section 3 defines an actionable claim as—actionable claim means a claim to any debt, other than a debt secured by mortgage of immovable property or by hypothecation or pledge of movable property, or to any beneficial interest in movable property not in the possession, either actual or constructive, of the claimant, which the civil courts recongnise as affording grounds for relief, whether such debt or beneficial interest be existent, accruing, conditional or contingent.

8.2 Analysis of the Definition Actionable claim means a claim to— (A) any debt, other than a debt secured— (i) by a mortgage of immovable property, or (ii) by hypothecation or pledge of movable property, or (B) any beneficial interest in movable property—

not in the possession (either actual or constructive) of the claimant. Which claim the Civil Courts recognise as affording grounds for relief whether such debt or beneficial interest be existent, accruing, conditional or contingent. The definition given in this section was substituted by the Amendment Act, 1900 (2 of 1900). An actionable claim under this section comprises of— (a) a claim to unsecured debt; or (b) a claim to any beneficial interest in movable property not in actual or

constructive possession of the claimant.

8.3 Debt Movables are of two types—tangible movable properties and intangible movable properties. Tangible movable properties have physical existence and can be possessed like car, table, chairs etc. Intangible movables are in the form of rights which have no physical existence and cannot be possessed. The existence of intangible movable can be known only when the person having such right claims it by an action in a court of

law. Previously all kinds of claims in movable property which could be enforced through the courts were included in the term "actionable claims" but now it comprises only claims to unsecured debt and a claim to any beneficial interest in movable property. The term "debt" includes a sum of money due by one person to another and which includes not only the amount payable at the time but also the sum of money which is not immediately due but might become payable after sometime.2. A sum of money which is payable or will become payable in future by reason of a present obligation is a debt.3. A debt may be secured or unsecured debt. Where the debtor gives security for repayment of debt to the creditor, it is known as secured debt but where no security is given, that is unsecured debt. Security may be of movable or immovable property. Where the debt is secured by immovable property, it is known as mortgage. Where the security is some movable property, it is known as pledge or hypothecation. According to section 3, only unsecured debt is an actionable claim and debt may be existent, accruing or conditional. Where a debt has already become due and is payable at present, it is known as existing debt. Where a debt or sum of money is due at present but payable on a future date, it is accruing debt. Where the claim for a sum of money exists but the payment depends upon the fulfilment of any condition, the debt is known as conditional debt. Unascertained amounts neither due nor payable but accruing, the payment of which is dependent upon some work being executed can be assigned.4. An assignment of the debt should be of the whole debt and not a part of the debt.5. A debt which is otherwise actionable claim does not cease to be so merely because a cause of action in respect of it has not arises or because the time of its payment has not arrived.

8.4 Claims which are Held to be Actionable Claims The following claims are included under the category of actionable claims:— (i) claims for arrears of rent.6. (ii) a share in partnership.7. (iii) claim for the money due under any insurance policy.8. (iv) a claim for rent to fall due is future accruing debt.9. (v) claim for the return of earnest money.10. (vi) claim for unpaid dower of a Muslim woman.11. (vii) right to get back the purchase-money when sale is set aside.12. (viii) the benefit of an executory contract for the purpose of goods is a beneficial

interest in the movable property.13. (ix) the right to proceeds of a business.14.

8.5 Claims which are Not Actionable Claims The following have been held to be not actionable claims:—

(i) A decree is not an actionable claim.15. (ii) Right to get damages under the law of torts or for breach of contract.16. (iii) A claim to mesne profits is not an actionable claim but it is a mere right to

sue.17. (iv) A copyright.18. (v) Debt secured by mortgage of immoveable property or hypothecation of

moveable property.19.

36.[s 135A]Assignment of rights under policy of marine insurance.—

[Rep. by the Marine Insurance Act, 1963 (11 of 1963), sec. 92, (w.e.f. 1-8-1963)].]

1. Subs. by Act 2 of 1900, section 4, for the original Chapter. 2. Haridas Acharjia Chowdhry v Baroda Kishore Chowdhry, ILR 27 Cal 38 : 4 Cal WN 87. 3. Bhupati v Phanindra, 40 Cal WN 104. 4. Jet Mal v Hakam Mal, AIR 1930 Lab 830 . 5. Ghisulal v Ghumbhirmull, 62 Cal 510 : AIR 1938 Cal 377 : 39 Cal WN 606. 6. Daya Debi v Chapala Debi, AIR 1960 Cal 378 : 1960 Cal LJ 40 : ILR (1960) 1 Cal 745 . 7. Re Baibridge, 8 Ch D 218. 8. Varjivan Das v Magan Lal, AIR 1937 Bom 382 . 9. Chidambaram Pillai v Doraiswamy Chetty, 31 IC 473 (Mad) : AIR 1916 Mad 974 . 10. Lalchand v Hussainio, (1927) 97 IC 257 . 11. Amir Hasan Khan v Mohd Nazir Hussain, AIR 1932 All 345 . 12. Chinappareddi v Venkataramanappa, AIR 1942 Mad 209 . 13. Jahar Meher Ali v Budge-Budge Jute Mills, ILR 34 Cal 289 : 11 Cal WN 566. 14. Alkash Ali v Nath Bank Ltd, AIR 1951 Assam 56 : ILR (1951) 3 Assam 1 . 15. M Govinarajulu Naidu v Dh Ranga Rao, AIR 1921 Mad 113 : 40 Mad 124. 16. Motilal v Radhey Lal, AIR 1933 All 642 (V20) : ILR 55 All 814. 17. Jainarayan v Kishan Dutta, 3 Pal 575. 18. Savitri Devi v Dwarka Prasad, ILR 1939 All 275 : AIR 1939 All 305 . 19. Imperial Bank of India v Bengal National Bank, 58 IA 323 (PC) : AIR 1931 PC 245 : ILR 59 Cal

377. 36. Section 135A ins. by Act 6 of 1944, section 4.

THE TRANSFER OF PROPERTY ACT, 1882 1.CHAPTER VIII OF TRANSFERS OF ACTIONABLE CLAIMS

This Chapter dealing with transfer of actionable claims consists of eight sections (Sections 130 to 137).

8.1 Definition of Actionable Claim (Section 3) The interpretation clause under section 3 defines an actionable claim as—actionable claim means a claim to any debt, other than a debt secured by mortgage of immovable property or by hypothecation or pledge of movable property, or to any beneficial interest in movable property not in the possession, either actual or constructive, of the claimant, which the civil courts recongnise as affording grounds for relief, whether such debt or beneficial interest be existent, accruing, conditional or contingent.

8.2 Analysis of the Definition Actionable claim means a claim to— (A) any debt, other than a debt secured— (i) by a mortgage of immovable property, or (ii) by hypothecation or pledge of movable property, or (B) any beneficial interest in movable property—

not in the possession (either actual or constructive) of the claimant. Which claim the Civil Courts recognise as affording grounds for relief whether such debt or beneficial interest be existent, accruing, conditional or contingent. The definition given in this section was substituted by the Amendment Act, 1900 (2 of 1900). An actionable claim under this section comprises of— (a) a claim to unsecured debt; or (b) a claim to any beneficial interest in movable property not in actual or

constructive possession of the claimant.

8.3 Debt Movables are of two types—tangible movable properties and intangible movable properties. Tangible movable properties have physical existence and can be possessed like car, table, chairs etc. Intangible movables are in the form of rights which have no physical existence and cannot be possessed. The existence of intangible movable can be known only when the person having such right claims it by an action in a court of

law. Previously all kinds of claims in movable property which could be enforced through the courts were included in the term "actionable claims" but now it comprises only claims to unsecured debt and a claim to any beneficial interest in movable property. The term "debt" includes a sum of money due by one person to another and which includes not only the amount payable at the time but also the sum of money which is not immediately due but might become payable after sometime.2. A sum of money which is payable or will become payable in future by reason of a present obligation is a debt.3. A debt may be secured or unsecured debt. Where the debtor gives security for repayment of debt to the creditor, it is known as secured debt but where no security is given, that is unsecured debt. Security may be of movable or immovable property. Where the debt is secured by immovable property, it is known as mortgage. Where the security is some movable property, it is known as pledge or hypothecation. According to section 3, only unsecured debt is an actionable claim and debt may be existent, accruing or conditional. Where a debt has already become due and is payable at present, it is known as existing debt. Where a debt or sum of money is due at present but payable on a future date, it is accruing debt. Where the claim for a sum of money exists but the payment depends upon the fulfilment of any condition, the debt is known as conditional debt. Unascertained amounts neither due nor payable but accruing, the payment of which is dependent upon some work being executed can be assigned.4. An assignment of the debt should be of the whole debt and not a part of the debt.5. A debt which is otherwise actionable claim does not cease to be so merely because a cause of action in respect of it has not arises or because the time of its payment has not arrived.

8.4 Claims which are Held to be Actionable Claims The following claims are included under the category of actionable claims:— (i) claims for arrears of rent.6. (ii) a share in partnership.7. (iii) claim for the money due under any insurance policy.8. (iv) a claim for rent to fall due is future accruing debt.9. (v) claim for the return of earnest money.10. (vi) claim for unpaid dower of a Muslim woman.11. (vii) right to get back the purchase-money when sale is set aside.12. (viii) the benefit of an executory contract for the purpose of goods is a beneficial

interest in the movable property.13. (ix) the right to proceeds of a business.14.

8.5 Claims which are Not Actionable Claims The following have been held to be not actionable claims:—

(i) A decree is not an actionable claim.15. (ii) Right to get damages under the law of torts or for breach of contract.16. (iii) A claim to mesne profits is not an actionable claim but it is a mere right to

sue.17. (iv) A copyright.18. (v) Debt secured by mortgage of immoveable property or hypothecation of

moveable property.19.

[s 136]Incapacity of officers connected with Courts of Justice.— No judge, legal practitioner or officer connected with any Court of Justice shall buy or traffic in, or stipulate for, or agree to receive any share of, or interest in, any actionable claim, and no Court of Justice shall enforce, at his instance, or at the instance of any person claiming by or through him, any actionable claim so dealt with by him as aforesaid.

Comments [s 136.1] Incapacity (Section 136) Section 136 provides that certain persons cannot be assignees of actionable claims. Transfer of actionable claims is also a transfer of property. Therefore, both the transferor and the transferee must be a competent person and the property must also be transferable. Section 136 specifies those persons who are legally disqualified to be transferees of actionable claims. This section says that no judge, legal practitioner or officer connected with any court of Justice shall buy or traffic in, or stipulate for, or agree to receive any share of, or interest in, any actionable claim. Further, at the instance of such a person or at the instance of anyone claiming by or through him, no court of justice will enforce any actionable claim so dealt with by him. However, such incapacity is only for another person's actionable claims i.e., they cannot buy or deal with another person's actionable claims but they can sell their own actionable claims.

1. Subs. by Act 2 of 1900, section 4, for the original Chapter. 2. Haridas Acharjia Chowdhry v Baroda Kishore Chowdhry, ILR 27 Cal 38 : 4 Cal WN 87. 3. Bhupati v Phanindra, 40 Cal WN 104.

4. Jet Mal v Hakam Mal, AIR 1930 Lab 830 . 5. Ghisulal v Ghumbhirmull, 62 Cal 510 : AIR 1938 Cal 377 : 39 Cal WN 606. 6. Daya Debi v Chapala Debi, AIR 1960 Cal 378 : 1960 Cal LJ 40 : ILR (1960) 1 Cal 745 . 7. Re Baibridge, 8 Ch D 218. 8. Varjivan Das v Magan Lal, AIR 1937 Bom 382 . 9. Chidambaram Pillai v Doraiswamy Chetty, 31 IC 473 (Mad) : AIR 1916 Mad 974 . 10. Lalchand v Hussainio, (1927) 97 IC 257 . 11. Amir Hasan Khan v Mohd Nazir Hussain, AIR 1932 All 345 . 12. Chinappareddi v Venkataramanappa, AIR 1942 Mad 209 . 13. Jahar Meher Ali v Budge-Budge Jute Mills, ILR 34 Cal 289 : 11 Cal WN 566. 14. Alkash Ali v Nath Bank Ltd, AIR 1951 Assam 56 : ILR (1951) 3 Assam 1 . 15. M Govinarajulu Naidu v Dh Ranga Rao, AIR 1921 Mad 113 : 40 Mad 124. 16. Motilal v Radhey Lal, AIR 1933 All 642 (V20) : ILR 55 All 814. 17. Jainarayan v Kishan Dutta, 3 Pal 575. 18. Savitri Devi v Dwarka Prasad, ILR 1939 All 275 : AIR 1939 All 305 . 19. Imperial Bank of India v Bengal National Bank, 58 IA 323 (PC) : AIR 1931 PC 245 : ILR 59 Cal

377.

THE TRANSFER OF PROPERTY ACT, 1882 1.CHAPTER VIII OF TRANSFERS OF ACTIONABLE CLAIMS

This Chapter dealing with transfer of actionable claims consists of eight sections (Sections 130 to 137).

8.1 Definition of Actionable Claim (Section 3) The interpretation clause under section 3 defines an actionable claim as—actionable claim means a claim to any debt, other than a debt secured by mortgage of immovable property or by hypothecation or pledge of movable property, or to any beneficial interest in movable property not in the possession, either actual or constructive, of the claimant, which the civil courts recongnise as affording grounds for relief, whether such debt or beneficial interest be existent, accruing, conditional or contingent.

8.2 Analysis of the Definition Actionable claim means a claim to— (A) any debt, other than a debt secured— (i) by a mortgage of immovable property, or (ii) by hypothecation or pledge of movable property, or (B) any beneficial interest in movable property—

not in the possession (either actual or constructive) of the claimant. Which claim the Civil Courts recognise as affording grounds for relief whether such debt or beneficial interest be existent, accruing, conditional or contingent. The definition given in this section was substituted by the Amendment Act, 1900 (2 of 1900). An actionable claim under this section comprises of— (a) a claim to unsecured debt; or (b) a claim to any beneficial interest in movable property not in actual or

constructive possession of the claimant.

8.3 Debt Movables are of two types—tangible movable properties and intangible movable properties. Tangible movable properties have physical existence and can be possessed like car, table, chairs etc. Intangible movables are in the form of rights which have no physical existence and cannot be possessed. The existence of intangible movable can be known only when the person having such right claims it by an action in a court of

law. Previously all kinds of claims in movable property which could be enforced through the courts were included in the term "actionable claims" but now it comprises only claims to unsecured debt and a claim to any beneficial interest in movable property. The term "debt" includes a sum of money due by one person to another and which includes not only the amount payable at the time but also the sum of money which is not immediately due but might become payable after sometime.2. A sum of money which is payable or will become payable in future by reason of a present obligation is a debt.3. A debt may be secured or unsecured debt. Where the debtor gives security for repayment of debt to the creditor, it is known as secured debt but where no security is given, that is unsecured debt. Security may be of movable or immovable property. Where the debt is secured by immovable property, it is known as mortgage. Where the security is some movable property, it is known as pledge or hypothecation. According to section 3, only unsecured debt is an actionable claim and debt may be existent, accruing or conditional. Where a debt has already become due and is payable at present, it is known as existing debt. Where a debt or sum of money is due at present but payable on a future date, it is accruing debt. Where the claim for a sum of money exists but the payment depends upon the fulfilment of any condition, the debt is known as conditional debt. Unascertained amounts neither due nor payable but accruing, the payment of which is dependent upon some work being executed can be assigned.4. An assignment of the debt should be of the whole debt and not a part of the debt.5. A debt which is otherwise actionable claim does not cease to be so merely because a cause of action in respect of it has not arises or because the time of its payment has not arrived.

8.4 Claims which are Held to be Actionable Claims The following claims are included under the category of actionable claims:— (i) claims for arrears of rent.6. (ii) a share in partnership.7. (iii) claim for the money due under any insurance policy.8. (iv) a claim for rent to fall due is future accruing debt.9. (v) claim for the return of earnest money.10. (vi) claim for unpaid dower of a Muslim woman.11. (vii) right to get back the purchase-money when sale is set aside.12. (viii) the benefit of an executory contract for the purpose of goods is a beneficial

interest in the movable property.13. (ix) the right to proceeds of a business.14.

8.5 Claims which are Not Actionable Claims The following have been held to be not actionable claims:—

(i) A decree is not an actionable claim.15. (ii) Right to get damages under the law of torts or for breach of contract.16. (iii) A claim to mesne profits is not an actionable claim but it is a mere right to

sue.17. (iv) A copyright.18. (v) Debt secured by mortgage of immoveable property or hypothecation of

moveable property.19.

[s 137]Saving of negotiable instruments, etc.— Nothing in the foregoing sections of this Chapter applies to stocks, shares or debentures, or to instruments which are for the time being, by law or custom, negotiable, or to any mercantile document of title to goods. Explanation.—The expression "mercantile document of title to goods" includes a bill of lading, dock-warrant, warehouse-keeper's certificate, railway receipt, warrant or order for the delivery of goods, and any other document used in the ordinary course of business as proof of the possession or control of goods, or authorising or purporting to authorise, either by endorsement or by delivery, the possessor of the document to transfer or receive goods thereby represented.

Comments [s 137.1] Saving (Section 137) Section 137 contains saving provision in favour of negotiable instruments. The documents which are in the nature of negotiable instruments are exempted from the provisions of this chapter. This chapter is not applicable to stocks, shares or debentures or to instruments which are negotiable for the time being by law or custom or to any mercantile document of title to goods. The expression "mercantile document of title to goods" includes a bill of lading, dock warrant, warehouse-keeper's certificate, railway receipts, warrants or order for the delivery of goods and any other document used in the ordinary course of business as proof of the possession or control of goods, or authorising or purporting to authorise, either by endorsement or by delivery, the possessor of the document to transfer or receive goods thereby represented. Negotiable instruments are governed by the provisions of the Negotiable Instruments Act, 1881. Such instruments are assigned or transferred by endorsement and delivery or mere delivery. However, a negotiable instrument can also be transferred like an actionable claim. The difference is that in the assignment under this Act, the assignee will acquire no more than the right, title and interest of the assignor but under the Negotiable Instruments Act, the endorsee will have all the rights and advantages of a holder in due course.

1. Subs. by Act 2 of 1900, section 4, for the original Chapter. 2. Haridas Acharjia Chowdhry v Baroda Kishore Chowdhry, ILR 27 Cal 38 : 4 Cal WN 87. 3. Bhupati v Phanindra, 40 Cal WN 104. 4. Jet Mal v Hakam Mal, AIR 1930 Lab 830 . 5. Ghisulal v Ghumbhirmull, 62 Cal 510 : AIR 1938 Cal 377 : 39 Cal WN 606. 6. Daya Debi v Chapala Debi, AIR 1960 Cal 378 : 1960 Cal LJ 40 : ILR (1960) 1 Cal 745 . 7. Re Baibridge, 8 Ch D 218. 8. Varjivan Das v Magan Lal, AIR 1937 Bom 382 . 9. Chidambaram Pillai v Doraiswamy Chetty, 31 IC 473 (Mad) : AIR 1916 Mad 974 . 10. Lalchand v Hussainio, (1927) 97 IC 257 . 11. Amir Hasan Khan v Mohd Nazir Hussain, AIR 1932 All 345 . 12. Chinappareddi v Venkataramanappa, AIR 1942 Mad 209 . 13. Jahar Meher Ali v Budge-Budge Jute Mills, ILR 34 Cal 289 : 11 Cal WN 566. 14. Alkash Ali v Nath Bank Ltd, AIR 1951 Assam 56 : ILR (1951) 3 Assam 1 . 15. M Govinarajulu Naidu v Dh Ranga Rao, AIR 1921 Mad 113 : 40 Mad 124. 16. Motilal v Radhey Lal, AIR 1933 All 642 (V20) : ILR 55 All 814. 17. Jainarayan v Kishan Dutta, 3 Pal 575. 18. Savitri Devi v Dwarka Prasad, ILR 1939 All 275 : AIR 1939 All 305 . 19. Imperial Bank of India v Bengal National Bank, 58 IA 323 (PC) : AIR 1931 PC 245 : ILR 59 Cal

377.

THE TRANSFER OF PROPERTY ACT, 1882 Often Asked Questions, Short Notes & Practical Problems with Solutions Chapters I & II Preliminary Transfers of Property by Act of Parties OFTEN ASKED QUESTIONS Q. 1. Discuss the objectives and scope of the Transfer of Property Act, 1882. Q. 2. State in detail the different modes of transfer of immovable property. Q. 3. What is a notice? Discuss in detail the provisions relating to notice under the Transfer of Property Act, 1882. Q. 4. What do you understand by Registration of instruments? Discuss in detail. Q. 5. What do you understand by the term "property"? Describe those properties which cannot be transferred. Q. 6. Distinguish between movable and immovable property which of them can be transferred under the Transfer of Property Act, 1882? Q. 7. "Property of any kind can be transferred"—discuss along with the exception, if any, to the statement. Q. 8. "Transfer passes all the interest of the transferor to the transferee under the Transfer of Property Act, 1882". Explain. Q. 9. "A right of alienation is incidental to, and inseparable from, the beneficial ownership of property." Discuss in detail the condition restraining alienation. Q. 10. Discuss the law relating to transfers to unborn persons. Q. 11. How can an unborn person be benefitted under the Transfer of Property Act, 1882? When the benefit conferred upon an unborn person can be legally effective? Q. 12. Discuss in detail the Doctrine of rule against perpetuity. Q. 13. What do you understand by "vested interest"? Distinguish it from "contingent interest". Q. 14. Define, explain and distinguish between condition precedent and condition subsequent. Q. 15. Discuss in detail the doctrine of Election under the Transfer of Property Act, 1882. Q. 16. Elaborate the concept of apportionment. Q. 17. Explain the principle of doctrine of ostensible ownership. How far is a transfer by an ostensible binding on the persons interested in immovable property? Q. 18. Discuss in detail the concept of "bona fide purchaser for value without notice."

Q. 19. Discuss the doctrine of "feeding the grant by estoppel". Q. 20. "During litigation nothing new should be introduced". Discuss the doctrine of lis pendens. Q. 21. Elaborate the concept of fraudulent transfer under section 53. Q. 22. Discuss in detail the doctrine of part performance. Q. 23. "An act of part performance must be done in performance of the contract." Discuss. Q. 24. "The circumstances by which a deeming fiction impute notice to a party are based on his wilful abstention to inquire or search, which a person ought to make or on his gross negligence". In the light of the above statement elaborate the concept of constructive notice as stated in section 3 of the Transfer of Property Act, 1882. SHORT NOTES 1. Attestation 2. Constructive notice 3. Spes successionis 4. Competency to transfer property 5. Operation of transfer 6. Direction for accumulation of income 7. Vested interest 8. Contingent interest 9. Conditional precedent 10. Fraudulent transfer 11. Doctrine of part-performance 12. Absolute and partial restraints against alienation

PRACTICAL PROBLEMS WITH SOLUTIONS Q. 1. Discuss with reference to decided cases whether the following are movable or immovable property:— (a) Sale of wheat crop which would be ready for harvest after one month. (b) Transfer of a right to collect sand for 1 year from the riverbed.

Ans. (a) Refer to section 3 for definition of immovable property. Sale of wheat crop which would be ready for harvest after one month is a movable property as it comes within the definition of growing crops. (b) Transfer of a right to collect sand for 1 year from the riverbed is immovable property because it amounts to profits a prendre. This sand also includes the future sand which will be deposited in the river bed by the process of inundation over a year.

Q. 2. Ashok purchased from Ravi by means of a registered sale deed a house for 5 lakhs. Before purchase Ashok had inspected the house and saw that the house had 6 ceiling fans and also a booster pump. When Ashok took possession of the house he noticed that Ravi had removed all the fans and the booster pump. On making enquiries Ravi informed Ashok that he had sold only the house but not the fans and pump. Ashok seeks your legal opinion to the matter. Advice Ashok. Ans. The ceiling fans and booster pump were installed by the owner for the permanent beneficial enjoyment of his house. This is immovable property. When immovable property is transferred all the property annexed to it is also transferred. Although the owner could have specifically excluded these items under section 8 but he did not do so, therefore, the transferee Ashok has become entitled to them and he can recover the same through the court. Q. 3. A, a Hindu, who has separated from his father B, sells to C, three fields, X1, X2 and X3 representing that A is authorized to transfer the same. Of these fields X3 does not belong to A, it having been retained by B on partition, but on B's death A, as heir obtains field X3. Thereupon A immediately sells field X3 to D. Discuss the right of C and D. Ans. Refer to section 43. The general rule of law is nemodat quod non-habet, i.e., no one can transfer that which he himself does not have. If a person does not have title to property he cannot transfer that property validly to another person. One of the exceptions to this rule is contained in section 43 which is feeding the grant by estoppel. The principle of this section is based partly on doctrine of estoppel and partly on the equitable doctrine that a man who has promised more than he can perform must make good his promise when he becomes capable of performance. Under section 43 the only person who can defeat the right of an original transferee is a subsequent transferee for consideration who does not have the notice of previous contract. Where the transfer deed is registered, it is considered as a notice to the whole world. In case the deed is not registered, the subsequent transferee has following remedies:— (i) He can file a case for breach of contract against the transferor and can obtain

damages. (ii) He can file a criminal case of cheating against the transferor. (iii) He can claim the money paid by him to the transferor through appropriate

action in a court. In this case, A made a misrepresentation to C about his title to the field X3; here the doctrine of estoppel becomes operational. In case the sale deed in favour of C has been registered it operates as a constructive notice to D and D cannot defeat the right of C. D will have the right to file a civil suit for recovery of his money paid or he can file a criminal case against A. But if the sale deed in favour of C has not been registered, D being a subsequent transferee for consideration will defeat the rights of C. Then C will have the same rights as D had previously, i.e., filing of civil suit for recovery of money of criminal case against A. Q. 4. (a) Sudhir sold the front portion of his house absolutely to Ajay and kept the rear portion of it for his own residence. In the registered sale deed Ajay had covenanted with Sudhir that Ajay would not use the house for commercial purpose and that Ajay would paint and white wash the house every year. Later Ajay started using the house for commercial purposes to which Sudhir objects. However, Ajay contends that as an absolute owner of the house he can use and enjoy it in any manner he likes. Ajay has also not painted the house for the last 2 years. Sudhir seeks your advice. Advise Sudhir.

(b) What would be your advice to Sudhir if Ajay sold the house absolutely to Vijay and Vijay uses the house for commercial purposes? Ans. Refer of sections 11 and 40 of the Transfer of Property Act, 1882. (a) As between the original transferor and the transferee both the negative and positive covenants are enforceable, Ajay is bound by both the covenants and he cannot use the house for commercial purposes or neglect its painting and white-washing. Sudhir can move the court and obtain a decree of specific performance of contract against Ajay. (b) In case Vijay has notice, actual or constructive, of the covenant, the covenant will be enforceable against him. But if he does not have the notice, then Sudhir cannot stop him from using the house for commercial purposes. Q. 5. On 1 January 1980, Arvind transferred his house to Asha, his intended wife, for her lifetime and on her death to their children born out of their intended marriage when the youngest child attains the age of 18 years. Later Arvind and Asha got married but unfortunately both of them died in December, 1990 survived by two children, Alok aged 2 years and Abha aged 5 years. Discuss the rights of Alok and Abha in the house. Ans. Refer to sections 13 and 14 of the Transfer of Property Act, 1882. Arvind transferred the property to Asha, a living person for her life and on her death to a class, i.e., children. The period in which the interest is to vest in the unborn person cannot be delayed beyond the actual minority of that person. As far as Alok is concerned, this period exceeds his minority. Only the transfer in favour of Abha is saved by section 15. Only she will have the right in this property. Q. 6. A entered into a written contract with B to take B's house on rent for two years at Rs 1000 per month. A gave Rs 12,000 to B as one year's advance rent and took possession only of one room as B promised to hand over the possession of the remaining portion of the house after his son's wedding which was to take place after three days. After the wedding, B did not give possession of the remaining portion of the house to A. Thereupon A filed a suit for possession under section 53A of Transfer of Property Act, 1882. Discuss and decide. Ans. Refer to section 53A. Here A has obtained possession of only one room which he is entitled to maintain. The possession of the remaining portion of the house was never given to him. Therefore, he cannot use section 53A to obtain the possession of the same. Q. 7. Discuss giving reasons with the help of decided cases whether the following are movable or immovable property:— (a) A right to work in the mines and carry the product for three years. (b) Ceiling fan fixed by the tenant in the house. (c) Water-pipes fixed by owner of a house to get supply of water from MCD into his

house. (d) A right to cut mango tree (timber trees) for 2 years.

Ans. (a) A right to work in the mines and carry the product over a period of three years is equivalent to profits a prendre. Therefore, it is immovable property. (b) A ceiling fan be fixed by a tenant in the house is a movable property because he is not presumed to benefit the land of which he is not the owner. Whereas a ceiling fan fixed by the owner of the land is considered to be for the beneficial enjoyment of the property.

(c) Water-pipes fixed by the owner of a house to get supply of water from MCD into his house are immovable property because they are for the permanent beneficial enjoyment of the property. (d) A right to cut mango trees for a period of two years is immovable property. The Supreme Court in Shantabai v State of Bombay, AIR 1958 SC 532 : 1958 SCJ 1078 : 1959 SCR 265 has held that it is equivalent to profits a prendre. Q. 8. A owns a house having four rooms. He sold two rooms to B. The sale deed further stipulated that A shall enjoy the remaining two rooms for life and after him, his then unmarried son for life and after his son's son and so on till the line of lineal descendant in line then the remaining two rooms shall be taken by B as owner thereof. A died and thereafter his son also died without any child. B claimed the possession and ownership of two rooms which was resisted by heirs of A. Is B entitled to ownership of the remaining two rooms? Ans. In this case the property has been transferred by A in such a manner that it will remain tied up for generations. This is against the rule of perpetuity given in section 14. Only the heirs of A will be entitled to the property. Q. 9. Discuss whether the following are movable or immovable property. (a) A right to collect beedi (tendu) leaves from a forest for 10 years. (b) A ceiling fan fixed by a landlord in his house. (c) Sale of wheat crop which would be ready for harvest within two months.

Ans. (a) A right to collect beedi (tendu) leaves from a forest for 10 years is an immovable property because the tendu leaves will continue to derive nutrition from the soil over a period of 10 years. (b) A ceiling fan fixed by the landlord is an immovable property. (c) Sale of wheat crop which would be ready for harvest within two months is a movable property as it comes within the meaning of growing crop. Q. 10. Ashok entered into a contract with Brijesh for the purchase of 100 clocks for Rs 100 per clock by 31 August 1993. Later, on 25 May 1993 Ashok transferred his interest in the contract in favour of Chander by means of a signed written document. Discuss the rights of Chander. Ans. Only beneficial interest under a subsisting contract was transferred by Ashok to Chander. Chander has now all the rights which were earlier vested in Ashok. He has the right to claim 100 clocks at the specified sale of damages for the breach of the contract if Brijesh refuses to honour the contract. Q. 11. On 1 January 1965, A transferred his property to B, a bachelor, for his lifetime and on B's death to B's children when the youngest child of B attained the age of 18 years. B died on 2 March 1990 survived by two sons, S aged 20 years and S1 aged 17 years. Discuss the validity of the transfer in favour of B's children under sections 14 and 15 of the Transfer of Property Act, 1882. Ans. According to section 14, the period in which the interest is to vest in the unborn person cannot be delayed beyond the actual minority of that person. As far as S is concerned, this period exceeds his minority. Therefore, only S1 has vested interest in his favour under section 15 and he will have the right in the property.

Q. 12. A sells half of his land to B. The sale deed contains a covenant that B shall not raise any building on the said land. Discuss the validity of the said covenant. Later, B gifts this land to C and C is unaware of the above covenant. C wants to construct a building on the said land. Discuss the rights of C and A. Ans. All the covenants are binding on both the original transferor and the transferee. Therefore, B cannot construct a building on that land. Later on, B gifts this property to C who is a gratuitous transferee and under section 40 of Transfer of Property Act, 1882 the gratuitous transferee is bound by the negative covenant, thus, the same is binding on C. Q. 13. A sold his house to B subject to a condition that B shall not further transfer the house to a stranger. Discuss the validity of the said restraint on alienation imposed by the said conditions. Ans. Only partial restraints against alienation are valid under the Transfer of Property Act, 1882. The condition imposed here is that the house shall not be further transferred to a stranger, this is only a partial restraint and, therefore, valid restriction. Q. 14. Discuss whether the following are movable or immovable properties:— (a) Timber tree (b) Oil engine attached to land by mortgagee of land.

Ans. (a) A timber tree is an immovable property. (b) The oil engine attached to land by mortgagee of land is a movable property because the intention of the temporary occupier of land is presumed not to benefit the land by anything which he attaches to it. Q. 15. Discuss whether the following are transferable properties— (i) The possibility of winning a lottery (ii) Arrears of maintenance and future maintenance.

Ans. (i) Refer to section 6 of the Transfer of Property Act, 1882. According to section 6(a), the chance of winning a lottery is not a transferable property. (ii) Arrears of maintenance are transferable but right to future maintenance cannot be transferred. Q. 16. Examine the validity of the following transfer:— To A (bachelor) for life and then to A's son at 18. Ans. This is a valid transfer as it amounts to creation of a contingent interest in favour of A's son. If A marries and has a son, his son will get the property when he will attain the age of 18 years. Q. 17. Discuss whether an interest is vested or contingent in the following cases:— (a) A property is transferred to R under a trust-deed subject to two conditions— (i) the discharge of settlor's debts. (ii) the death of the settlor himself.

(b) A property is transferred to A for life and after his death to B.

Ans. (a) The property transferred to R subject to two conditions is a vested interest. (b) Where property is transferred to A for life and after his death to B, it is a vested interest in favour of B because the death of A is a certain event. Q. 18. Discuss whether the following is immovable property:— (a) an air-conditioner installed by nuts and bolts by the owner. (b) a right to graze cattle over the land for one year.

Ans. (a) An air-conditioner installed by nuts and bolts by the owner will be presumed to be for the beneficial enjoyment of his immovable property. However, the owner can express a contrary intention at the time of transferring his property (Section 8). (b) The right to graze cattle over the land for a period of one year is an immovable property as it is profits a prendre. The grazing will continue to derive nutrients from the soil for a period of one year. Q. 19. Sunder, living at Maurice Nagar, entered into a contract to sell a house owned by him to Shyam who lived at Meerut. Sunder executed a sale deed in favour of Shyam and sent it to Shyam by registered post at Meerut, Uttar Pradesh. In the sale deed executed by him, Sunder left the blank space to be signed by the two attesting witnesses. Shyam took the sale deed to his friends and got it attested. Is the attestation valid? Ans. For valid attestation, the attesting witnesses must sign the document in the presence of the executant. Here Sunder was not present when the witnesses attested the document, therefore, it is not a valid attestation. Q. 20. Ashok transferred the property to Ram and then to his intended wife, successively, for life. Ashok then gave the property for life to the first child of Ram born to the wedlock for the intended marriage. Ashok gave the property to the second child of Ram from the intended marriage absolutely provided that in case Ram fails to get son as his second child from the intended marriage then it shall be taken over by Lakshman absolutely. Examine the validity of the transfer. Ans. The transfer of property made by Ashok is invalid here because the unborn person must have been given the entire interest in the property which the transferor was then capable of passing. But Ashok gave only a life interest to the first child of Ram which makes this transfer void. Similarly, the transfer in favour of Lakshman is not valid due to the prohibition contained in section 16. Q. 21. A transfers property to B, C, D and E all alive, on the date of transfer successively, and then to the eldest son of E on his attaining the age of 21 years. Decide the validity of transfer. Ans. The period of perpetuity cannot extend beyond the life-time of living persons and 18 years after that. This transfer is void under section 14 because here the property is to vest in the eldest son beyond the period of his minority. Q. 22. Discuss whether the following are immovable property or not:— (a) A right to catch the fish. (b) A right to use a road.

Ans. (a). A right to catch fish is an immovable property because it is a benefit to arise out of land. (b) A right to use a road is immovable property under section 2(6) of the Registration Act, 1908. Q. 23. On 1 August 1966, A transferred property to B for life and then to B's unborn son after 10 years of B's death. B died on 15 February 1987 survived by one son who claims the property in 1995. Decide the validity of transfer. Ans. B's son can get the property if he is under the age of 18 years. He will get the property on attaining the age of 18 years. Q. 24. Discuss whether the following are movable or immovable properties:— (a) A lease for 12 years taking out timber by cutting trees. (b) Right to grow and cut grass.

Ans. (a) Timber is wood, thus, right to cut and carry away the wood over a period of 12 years is immovable property. (b) When grass is used as a fodder it is a movable property. But a contract to grow and cut grass will be an interest in immovable property, and therefore, it will be an immovable property. Q. 25. "A person buying property in a municipal area must be deemed to be aware that municipal taxes are a charge on property, that there is a possibility of such taxes being in arrears and that it is duty to inquire about such arrears; if he fails to do so he would (always) be deemed to have notice of such taxes." [Naval Kishore v Municipal Board of Agra, AIR 1943 All 115 : ILR (1943) All 45 3 : 1943 All LJ 53]. Do you agree with the above statement? Ans. Arrears of Municipal taxes are a charge on the property. Section 100 provides that 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 arises whether a person can be said to have notice to past arrears of taxes. In Naval Kishore v Municipal Board of Agra, AIR 1943 All 115 : ILR (1943) All 453 : 1943 All LJ 53, the Allahabad High Court held that all the intending purchasers have a duty to enquire about the amount of tax due and if they fail to do so, constructive notice shall be imputed on them. However, this decision has been overruled by the Supreme Court in Ahmedabad Municipal Corp of the City of Ahmedabad v Haji Abdul Gafoor Haji Hussenbhai, AIR 1971 SC 1201 : (1971) 1 Civ App J (SC) 263 : 1971 (Supp) SCR 63. The Supreme Court held that the question of constructive notice depends upon the facts and circumstances of each case. The question to be asked here is not whether the person had the means to find out, but whether in the given circumstances there was a duty to find out. Therefore, there is no presumption of constructive notice with regard to municipal taxes and each case has to be decided on its own. Q. 26. Discuss whether the following are cases of valid attestation:— (a) Attesting witnesses signing first and then the executant signing the instrument. (b) Attesting witnesses signing a document signed on behalf of the executant by a

third person.

Ans. (a) According to section 3 of the Transfer of Property Act, 1882, the executant has to sign first in the presence of the attesting witnesses and then they can attest the document. Therefore, it is not a valid attestation. (b) It is a valid attestation. Q. 27. A sale deed is having signatures of an identifying witness and of an attesting witness and of the Registrar of Documents registering it. Is it validly attested? Ans. This document is validly attested. A valid attestation requires signatures by two or more attesting witnesses. A registrar can be an attesting witness if it is proved by independent evidence. Q. 28. Discuss whether the following are movable or immovable property:— (a) A machinery installed by a person on his own land for running a temporary

cinema hall known as "Govinda Touring Talkies" in a purely temporary structure. (b) An object attached to a thing which is embedded in the earth.

Ans. (a) It is a movable property because it is a temporary structure and it is not permanently embedded in the earth. (b) If the object is permanently attached to a thing which is embedded in the earth, it is an immovable property. Q. 29. Are the following conditions imposed by the transferor against the transferee valid? (a) The transferee cannot transfer the property outside his family. (b) The transferee can transfer the property for religious purposes only. (c) The transferee shall not give the house on rent which has been transferred to

him absolutely. Ans. (a) It is a valid condition because the restriction on the transferee is only partial. (b) This condition is invalid as it has imposed absolute restraint on alienation. (c) This condition is invalid because absolute restraints on the enjoyment of the

property transferred absolutely has been placed. Q. 30. On 1 April 2002, A transferred the house to B for life then to B's male descendants if B would have any absolutely, but if B should have no male descendants then to B's daughter without power of alienation but if there were no descendants of B, male or female, then to C absolutely. B died without issue. Discuss the validity of the transfer. Ans. This is an invalid transfer. Q. 31. Discuss and decide whether the interest in vested or contingent:— (i) F left his entire estate in favour of his two minor sons with a condition that the

sons would obtain an absolute interest after discharging the debt of their father at the rate of Rs 10,000 per month and utilizing the surplus earning for their own benefit. (ii)

A transfers to B Rs 10,000 to be paid to him upon his attaining the age of 18 years. (iii) A transfers the property to B, C and D in equal shares to be paid to them on their

attaining the age of 18 years with a proviso that if all of them die under the age of 18 years, the property shall go to E. Ans. (i) The interest is vested interest. (ii) B's interest is contingent in the sense till the condition is fulfilled by his attaining that age. (iii) It is a contingent interest. Q. 32. A has a wife B and a daughter C. C executes a release of her right to share in the inheritance to A's property when A pays her Rs 500. A died and C claims her share in the inheritance. However, B resists the claim and sets up as a defence the release deed signed by C. What will be the position of B? Ans. As it is a transfer of spec successionis, B will not succeed. C is entitled to her share in A's inheritance. However, C will have to account for Rs 500 paid to her by her father (refer section 6). Q. 33. A devised his estate to his son on the condition that if the son should desire to sell the estate during the life-time of his wife, she would have the option to purchase the same at Rs 5000 and the same should be offered to her at such price. On the death of A, the market value of the property was about Rs 15,000. Can the son sell, lease or mortgage the property without offering it to his mother? Ans. In 1884 in the case of Rosher v Rosher, (1884) 26 Ch 801 , such a condition was held to be void. However, in 1944 in Ratanlal Kanbaiyalal v Ramanujdas Ramchandra, AIR 1944 Nag 187 : ILR 1945 Nag 174 , the Nagpur High Court held that the condition was valid as it imposed only partial restraint. Q. 34. X transfers a property to Y on a condition that if Y becomes insolvent, the property will go to Z. Now can Z claim the property if Y becomes insolvent? Ans. Refer to section 12. This condition is void condition and, therefore, Z cannot claim the property on Y's insolvency. Q. 35. A partition of joint property is effected between four persons A, B, C and D on the agreement that if any one of them should have no issue, he would have no power to sell his share but he should leave his share for other sharers. A sold his share and died without any issue. What is the legal position to B, C and D? Can they sue to recover their share? Ans. The condition imposed in this case involves absolute restraint on sale of property, therefore, void. Thus, B, C and D cannot sue to recover the share of A. Q. 36. A transfers a property in trust to B for C and directs him to give possession of property to C when he attains the age of 25 years. Explain the position of C. Ans. C has a vested interest and is entitled to property at the age of 18 years itself (Section 19). Chapter III Sale of Immovable Property OFTEN ASKED QUESTIONS

Q. 1. Define the term "sale". Explain the different modes of transfer by sale. Q. 2. Discuss the essentials of a valid sale. How a sale is effected? What is a contract for sale? Q. 3. Discuss the rights and liabilities of buyer if immovable property. Q. 4. Discuss the rights and liabilities of the seller under a contract of sale of immovable property. PRACTICAL PROBLEMS WITH SOLUTIONS Q. 1. A sells an enclosed land to B. B discovers before acceptance that the public have a right of way across the land. What is the legal position of B? Ans. In this case, there is defect in seller's title as well as in the property which were not disclosed by the seller. B has a right to refuse to complete the sale and claim for damages. In case the seller files a suit for specific performance, B can resist that suit successfully. Q. 2. X sells a property to Y who discovers after accepting the conveyance that a portion of the property has been allotted to Z under a decree for partition. Discuss the rights of Y. Ans. As the conveyance is fraudulent, Y can file a suit to set aside to conveyance. Chapter IV Mortgages of Immovable Property and Charges OFTEN ASKED QUESTIONS Q. 1. What do you understand by the term "mortgage"? Discuss in details the different types of mortgages under the Transfer of Property Act, 1882? Q. 2. What is an English mortgage? How can it be created? What are the rights of such a mortgagee? Q. 3. How a mortgage by deposit of title deeds is created? Discuss in detail the essential elements of such a mortgage along with examples. Q. 4. Discuss in detail the concept of Redemption of Mortgages. Q. 5. "Once a mortgage, always a mortgage". Discuss with reference to the doctrine of clog on the equity of redemption. Q. 6. Discuss in detail the clog on redemption. Q. 7. Discuss the rights and liabilities of a mortgagor. Q. 8. Discuss the rights and liabilities of a mortgagee. Q. 9. What is foreclosure? Distinguish it from a sale. Q. 10. When can a mortgaged property be sold without the intervention of the Court? Discuss. Q. 11. Discuss the doctrines of Marshalling and Contribution under the Transfer of Property Act, 1882.

Q. 12. Distinguish between "mortgage" and "charge". SHORT NOTES 1. Mortgage by conditional sale 2. Usufructuary mortgage 3. Equitable mortgage 4. English mortgage 5. Equity of redemption of mortgages 6. Clog on redemption 7. Foreclosure 8. Receiver under the Transfer of Property Act, 1882 9. Priority 10. Tacking 11. Prohibition of tacking 12. Marshalling 13. Charge

PRACTICAL PROBLEMS WITH SOLUTIONS Q. 1. A borrows money from B executing a usufructuary mortgage for that amount redeemable in any month of summers. A again borrows a sum of money from B again executing a simple bond covenanting that he will not redeem the mortgage till the money due is paid on the second bond. Discuss the validity of such a covenant? Ans. This covenant is not valid because it amounts to clog on redemption. Q. 2. A mortgages his land to B. Afterwards A raises a skyscraper on the same land. Is B entitled to skyscraper for the purposes of his security? Ans. Refer to section 70. A mortgagee is entitled to all accessories for the purpose of his security. Therefore, B will be entitled to skyscraper for the purposes of his security. Q. 3. A deposited the title-deeds of his property with bank N to secure an overdraft. A asked the bank for return of deeds on the ground that he wished to sell the property and clear the overdraft. The usual practice in such a case was for the prospective buyer to inspect the title-deeds in the office of the mortgagee's solicitors. But A said that he would not get a good price if the buyer came to know that the bank had the deeds. The bank manager returned the deeds to A. A then borrowed money from another bank L on the deposit of same title-deeds falsely representing that there was no encumbrance. Between Bank N and L who has the priority? Ans. Refer to case of Lloyds Bank Ltd v PE Guzdar and Co, AIR 1930 Cal 22 : ILR 56 Cal 868. Bank N has been guilty of gross and wilful negligence in giving the title-deeds to A. Therefore, the mortgage to the second bank L will have the priority over mortgage to bank N. Q. 4. Where in respect of the same property and same transaction separate documents of sale-deed and reconveyance were executed between the same party, the owner

wished to redeem the property on the ground that the transaction is in the nature of mortgage by conditional sale? Will he succeed? Ans. The essential requirement of mortgage by conditional sale is that condition effecting the sale as mortgage should be contained in sale deed itself. As it was not such in this case, it cannot be said that the transaction was in the nature of a mortgage by conditional sale. Chapter V Leases of Immovable Property OFTEN ASKED QUESTION Q. 1. Define the term "lease" and discuss the rights and liabilities of both the lessor and a lessee. Q. 2. Discuss the grounds for determination of a lease. Q. 3. What do you understand by the terms "forfeiture of a lease". Discuss. Q. 4. Discuss in detail the essential elements of a lease. Discuss the rules as to forfeiture and surrender of a lease. PRACTICAL PROBLEMS WITH SOLUTIONS Q. 1. X lets a field to Y at a rent of Rs 1000 and then transfers the field to Z. Y pays rent to X in good faith after the transfer as he had notice of the transfer. Z files a suit against Y for recovery of arrears of rent due after the transfer. Explain the legal position of Y. Ans. Refer to section 109. As Y has paid rent to X in good faith having no notice of transfer, Z will not be able to recover the rent from him. Chapter VI Exchanges OFTEN ASKED QUESTIONS Q. 1. Define the term "exchange" in detail. Q. 2. Explain the right of a party deprived of a thing received in "exchange". Q. 3. Distinguish between the sale, mortgage, exchange and lease. Chapter VII Gifts OFTEN ASKED QUESTIONS Q. 1. What is "gift"? What are the essential elements of a gift? Q. 2. Define the donor and donee in relation to a gift. Q. 3. How is a gift of immovable property effected? When does a gift become revocable? Q. 4. Explain the term "universal donee".

Q. 5. Under what circumstances a gift can be revoked? What are irrevocable gifts? Chapter VIII Transfer of Actionable Claims OFTEN ASKED QUESTIONS Q. 1. What is an actionable claim? State the rules relating to transfer of an actionable claim. Q. 2. Discuss the rights and liabilities of a transferee of an actionable claim? PRACTICAL PROBLEMS WITH SOLUTIONS Q. 1. Examine whether the following are actionable claims or not:— (a) Decree of a Court (b) Contract of sale of goods after breach of contract.

Ans. (a) A decree of a Court is not an actionable claim. In Re Lingamurthy ( AIR 1938 Mad 276 ), it was held that a "debt" in respect of which a decree has been passed is not an actionable claim because actionable claim means something which can be enjoyed only after taking action but here the action has already been taken. (b) After the breach of contract an action for damages is not an actionable claim. Q. 2. B Ltd. purchased on credit in 1990 goods worth Rs 10,000 from A. Later on B Ltd. also sold gold worth Rs 4000 to A on credit. In 1992, A transferred in writing the entire debt of Rs 10,000 which B Ltd. owed to A to Rakesh. When Rakesh demanded Rs 10,000 from B Ltd it refused to pay the whole sum of Rs 10,000. Rakesh filed a suit against B Ltd. for the recovery of Rs 10,000. Decide giving reasons. Ans. B Ltd. has the right to claim a set off of the debt to the extent of Rs 4000, which was owed by A to it. Therefore, Rakesh can only recover Rs 6000 from B Ltd. Q. 3. Discuss whether the following are actionable claims:— (a) Fixed deposit in a bank. (b) Arrears of rent. (c) Share purchased from UTI but not yet issued. (d) Mortgage debt.

Ans. (a) Fixed deposit in a bank is an actionable claim because it is a claim to an unsecured debt which can only be recovered by taking action in the Court in case the bank refuses to pay. (b) Arrears of rent are actionable claims (Madhabilata v Butto Kristo Roy, AIR 1944 Pat 129 : 214 Ind Cas 84). (c) Unissued shares of UTI are actionable claims. (d) Mortgage debt is not an actionable claim because it is a secured debt and it is specifically excluded by the definition of actionable claims under the Transfer of Property Act, 1882.