Section 5: What is Transfer of Property

Transfer of Property is a 'Conscious Act' when a living person/transfers his property (in present or
future) to:

• One or more living Persons

• Himself
• Himself and another living person

Living person includes a company, association, body of individuals, partnership firm etc.

CASE LAW: Jugalkishore Saraf vs Raw Cotton Co. Ltd (1955)

The words "in present or in future" qualify the word "conveys and not the word "property

What is not considered as a 'transfer' under TPA ?

• Creation of an Easement or Charge over property is not a Transfer.

• Relinquishment of your right is not Transfer.
• Recognition of Pre-Existing Rights is also not Transfer.

Section 6: What may be Transferred

a. Spes successionis - Possibility of getting property in future,

It includes:

• Chance of an estate coming to an heir in succession or

• Chance of obtaining any legacy on the death of a relative or
• Any other possibility of similar nature.

'Nemo dat quod non habet'

'no one gives what he doesn't have'

b. Right of re-entry for breach of a condition subsequent to any person other than the owner of the
property affected.

c. Easementary right apart from the dominant heritage

d. Restricted Interest: An interest in property restricted in its enjoyment to the owher personally

dd. Right to future maintenance- Future Maintenance is for the personal benefit of the person to
whom it is granted, thus it cannot be transferred.

e. Right to sue: Right to sue for an indefinite sum of money cannot be transferred, If it is right to sue
for definite sum of money, then it is an actionable claim.

f. A public office and the salary of any public officer, whether before of after it has become payable.

g. Stipends/Pensions allowed to military, naval, air-force and civil pensioners of the Government and
political pensions

h. Three Categories made:

• i. If it opposes the nature of the interest affected

• ii. If it is a transfer of unlawful object or consideration according to section 23 of ICA.
 • If it is to a person legally disqualified to be transferee.
i. Other Untransferable Interests: Tenant who has untransferable right of occupancy cant
transfer this right, Farmer who has agricultural land of which he has made a default to
pay revenue to the government can't transfer his interest in that land, Lessee of an
estate under the management of a court of wards will not be allowed to transfer his
right.

Vested Interest

Section 19: Vested Interest

Vested Interest created in favour of a person without specifying the time and term when it is to
take effect or on the happening of a certain event (which must happen).

Things that don't affect the vested Interest:

• A prior interest in someone else's favor.

• Postponement of Right to enjoyment and accumulation of income until the time of
enjoyment arrives.
• Conditional Limitation: Condition of transfer of interest to some other person in case a
particular event happens.

Section 20: When Unborn Person Acquires Vested Interest on Transfer for his Benefit

Contingent Interest

Section 21: Contingent Interest

Interest created in favour of a person which will take effect only on the happening of a specified
uncertain event (Which may or may not happen)

Contingent Interest becomes Vested Interest on happening/not happening of the uncertain event. It
is merely a Promise of interest on fulfilment of the condition.

Section 22: Transfer to members of a class who attain a particular age

A transfer property to B,C and D after they attain age of 18, if B age 18 before C and D, B will get his
share of property, if D dies before becoming 18, property divided between Band C.

Section 23: Transfer contingent on happening of specified uncertain event

A created life interest upon B which absolute interest is to transfer to C after C gets married, C has to
marry before death of B to convert contingent interest into vested interest.

Section 24: Transfer to such of certain persons surviving at some period not specified.

A creates life interest upon B to be divided between C and D upon death of B, before B dies, D dies,
A’s property to be transferred to C entirely after death of B.

Section 13: Transfer for the benefit of an 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.
1. The interest of the unborn person must be preceded by a prior interest.

2. The unborn person must be in existence when the prior interest comes to an end.

3. The interest created in favour of the unborn person must be the whole of the interest remaining of
the transferor.

CASE LAW: Tagore v. Tagore (1872) - Privy Council observed that foetus/infant in a womb is a person
in existence for the purpose of making a gift to an unborn child.

Section 14: Rule against Perpetuity

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

In short: No transfer of a property shall create such an interest, which will take effect after the
lifetime of one or more living persons and minority of a person born during that time period.

Section 18: Transfer in Perpetuity for Benefit of Public.

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

Doctrine of Election - Section 35

The term Election means "to choose".

The basis of doctrine is that the person taking benefit under an instrument must bear the burden
also.

No person can approbate and reprobate at the same time.

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

If he dissents - he will have to relinquish the benefit back to transferor

Exception - Only the benefit in lieu of the property has to be relinquished

WHEN ELECTION IS NOT NECESSARY

When a person takes the benefit in one capacity and in another capacity dissents.

CASE LAW: Mohammad Afzal v. Gulam Kasim (1903)

Nawab gift’s his 2nd son 2 villages. Nawab dies and as per norms Nawab’s 1st son becomes Nawab,
new Nawab along with government offers 2nd Son, some cash in return to accept 1st son as new
Nawab, He does the same but didn’t return those 2 villages, stating that they were transferred to him
by old nawab thus not the part of nawab property anymore.

When a person is taking no benefit directly but deriving a benefit indirectly.

A gives C (son of B) cash to persuade his dad transfer property to D ( son of A), C accepted those cash
and gave to B but B didn’t transfer property to D stating no cash given to him directly and C has no
right on property to transfer.

In cases where the owner elects to relinquish the benefit and not to transfer the property, then the
transferee gets disappointed and hence called disappointed transferee.

Right of Disappointed Transferee: Disappointed transferee is entitled to the amount or value of the
property attempted to be transferred to him in the following cases:

• Where the transfer is for consideration.

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

Time Limit for Election: Election by owner can be implied in the conditions below:

• 2 years Enjoyment (eg: property)

• Impossibility (eg: Coal Mine)

Transfer by a person other than full owner (41 and 43)

An ostensible owner is a person who has all the indications of ownership and looks like the owner of
a property but is not the real owner.

Section 41: Transfer by ostensible owner (DOCTRINE OF OSTENSIBLE OWNER)

The essential conditions for the valid transfer by an ostensible owner are that:

• The person transferring must be the ostensible owner of a property with the consent of the
person with interest in the property; and
• The transferee has purchased the property for consideration; and
• The transferee exercised reasonable care to ascertain the person is ostensible owner and has
acted in good faith.

If all these conditions are fulfilled, the transfer will not be voidable just because the transferor was
the ostensible owner and not the real owner. Thus, this is also called Doctrine Of Holding Out.

Section 43. Transfer by unauthorised person who subsequently acquires interest in property
transferred (DOCTRINE OF FEEDING THE GRANT BY ESTOPPEL)

If a person fraudulently or erroneously represents that he is authorised to transfer certain

immovable property and professes to transfer such property and later acquires the interest to
transfer.

Then the transferee at his option will have a rightful interest over that property if the contract of
transfer still subsists at that time:

The Transfer should be for consideration and the transferee should have acted in good faith and
without notice.

Conflict - Section 6(a) and Section 43

Sec 43 is the exception of Sec 6(a)

Jumma Masjid Mercara vs Kodi Maniandra Deviah

In this case 3 grandson’s together in exchange of cash transferred a property of their grandfather to
the ancestors of Kodi MD, when grandfather died,transaction with Kodi MD completed. Jumma MM
claims his right stating that after death of grandfather, grandmother transferred the property to
Jumma MM and one of the grandsons in exchange of rs. 300 waived off his rights in the property
[Link] this court held that Sec 43 is the exception of Sec 6(a) and transaction with Kodi MD satisfies
all the essentials of Sec 43, thus transaction with Jumma MM is void.

Doctrine of Lis Pendens (Section 52)

ut lite pendente nihil innovetur

during a pending litigation nothing new should be introduced

This doctrine states that no property may be transferred when a lawsuit relating to it is pending.

Conditions for applicability:

• Suit should be pending in a competent court

• The suit must be directly and specifically related to an immovable property
• The suit should not be Collusive

Exception: Transfer by order of Court.

• Transfers Pendente Lite are NOT Void

Requirement of Notice to transferee?

Bellamy v. Sabine (1857)

Notice to transferee not necessarily required.

MORTGAGE - SECTION 58

Section 58(a): 'Mortgage', 'mortgagor', 'mortgagee', 'mortgage-money' and 'mortgage-deed' defined

A mortgage is the transfer of an interest in a specific immovable property for the purpose of
securing:

• Timely payment of the money advanced or to be advanced by way of loan, or

• An existing or future debt, or
• Performance of an engagement which may give rise to a pecuniary liability.

Mathai Mathai V. Joseph Mary (2014) - Minor cannot be Mortgagor or Mortgagee

A deed of mortgage is a contract and we cannot hold that a mortgage in the name of a minor is valid,
simply because it is in the interests of the minor unless she is represented by her natural guardian or
guardian appointed by the court. The law cannot be read differently for a minor who is a mortgagor
and a minor who is a mortgagee as there are rights and liabilities in respect of the immovable
property would flow out of such a contract on both of them.

Doctrine Of Redemption

'Once a mortgage always a mortgage'

The relationship in a mortgage is ALWAYS of creditor debtor

Mortgagor will always have the right to redeem possession of the property, mortgage deed and all
documents related to mortgaged property back from the mortgagee

Right of Redemption accrues to the mortgagor when the principal amount has become due and he
has paid the money at a proper place and time.

It is an indefeasible right and cannot be absolutely taken away.

Santley v Wilde (1899)

The security given by Mortgagor is redeemable by the transferor when he pays back the loan or
discharges his obligation. If any act is done, or any provision is there which obstructs the right of
redemption on payment of the debt or performance of the obligation, then it acts as a fetter or clog
on the redemption and will be held as void.

TYPES OF MORTGAGES - SEC. 58(b-g)

1. Simple Mortgage - 58(b)

Possession is with mortgager.
Always with registered instrument.
2. Mortgage by Conditional Sale 58(c)
Obstensible sale of property.
3. Usufructuary Mortgage 58(d)
Right to use and enjoy property is also transferred. No time limit, no right to forclosure/sale.
4. English Mortgage 58(e)
Mortgagor absolutely transfers the property to mortgagee On Payment the mortgagee re
transfers the property back to mortgagor.
Ram Kinkar v. Satya Charan (1939): The word 'absolutely' is only a matter of form and not of
substance.
5. Mortgage by Deposit of Title deeds 58 (f)
Applicable in Calcutta, Madras or Bombay or as any State Government specifies.
Mortgagor delivers the title documents of his immovable property to a creditor with an intent
to create a security.
Always Optional to use registered Instrument.
6. Anomalous Mortgage 58 (g)
Such a mortgage which is not prescribed in the above-mentioned kinds shall fall under the
category of Anomalous Mortgage.
It can be a combination of two or more mortgages.

Registration of a Mortgage (Section 59)

Simple Mortgage - Always with Registered Instrument.

Mortgage by deposit of Title deeds - Optional to use Registered Instrument.

Other Types of Mortgages:

Principal money secured > Rs.100 - Only by Registered Instrument signed by mortgagor and attested
by at least 2 witnesses

Principal money secured < Rs.100 - May be affected by delivery of the Possession.

Right and Liabilities of Mortgagor

RIGHTS

1. Right of Redemption (Section 60)

Right to redeem possession of the property, mortgage deed and all other documents.

2. Right of transfer to a 3rd party (Section 60A)

3. Right to inspection and production of documents (Section 60B)

4. Right of Accession and Improvements (Section 63 and 63A)

Mortgagor is entitled to any accession and improvement but have to pay necessary expenses + 9%
interest.

5. Right to Renewed Lease (Section 64)

6. Right to Grant a lease (Section 65A)

Mortgagor can lease the mortgaged property:

• Lease Can take effect within 6 month and

• Can not be more than 3 years in duration
7. Right to reasonable waste (Section 66)

Mortgagor is not liable for allowing the property to deteriorate; BUT he must not commit any act
which leads to the property being insufficient as security.

Insufficient: NOT 33% (1/3) more than the amount due & 'for buildings' NOT 50%(1/2) more than
the amount due.

LIABILITIES (Sec 65)

1. Duty to Indemnify for defective title

2. Duty to pay public charges

3. Duty to direct rent of a lease to mortgagee

4. Duty to compensate prior mortgagee

5. Duty to avoid waste (Section 66)

Right and Liabilities of Mortgagee

RIGHTS

1. Right to Foreclosure or Sale (Section 67)

Foreclosure: Action of taking possession of a mortgaged property when the mortgagor fails to keep
up their mortgage payments.

NOT AN ABSOLUTE RIGHT, can be excluded via contract

Redemption and foreclosure are co extensive: When right to redemption accrues after that only the
mortgagee gets the right to enforce his security.
Mortgagee can ask the court to pass a decree of foreclosure when the mortgage money is due, and
the mortgagor has not paid the due amount; and any decree of redemption has not been passed by
the court under section 60 of TPA.

After the Decree of foreclosure is passed the Mortgagor is debarred from getting a decree of
redemption or sale of property.

2. Right to sue for mortgage money. (section 68)

3. Right to sell property (section 69)
Only Applies in English Mortgage or when the mortgagee is government, or when mortgaged
property is located at specified locations.
3 Months’ Notice

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)

The following amount spent by mortgagee will be added in costs in the principal amount of
mortgagor (with 9% interest - default rate).

• For the preservation of the mortgaged property from destruction, forfeiture or sale.
• For supporting the mortgagor's title to the property.
• For making his own title thereto good against the mortgagor; and
• for the renewal of the lease.
• Insuring the property where it is of insurable nature.
8. Right to proceeds of revenue sale or compensation on acquisition (sec 73).

LIABILITIES

1. Bound to bring one suit on several mortgages. (Section 67A)

2. Liabilities of mortgagee in possession (Sec. 76)
• Take Due care of the property mortgaged as he would have of his own property.
• To collect the rent and profits arising from the property.
• Duty not to commit any destructive act.
• Duty to keep all the documents and records properly (Exception in Section 77)
• Maintain proper Receipts and accounts of money received and spent by him as
mortgagee.
• If property is insured and insurance money is received, then use it to restore the
property.
• Out of income of property pay government charges, other public charges and make
necessary repairs (This can be excluded by contract)

What are the rights and duties of Seller?

The rights and duties of seller and buyer are governed by section 55, ΤΡΑ.

Duties of Seller before Sale

1. The seller is bound to disclose all the material defects to the buyer of the property which the
buyer is not aware of.
 2. The seller is bound to produce all documents relating to property.
3. The seller is bound to give answer to all the question to the best of his knowledge which are
put before him.
4. The seller is bound to pay all the charges and rent, dues or government fees up to the date of
sale.

Duties of seller after sale

1. It is the seller's duty to give possession to the buyer. Buyer or such person as he directs such
possession of the property.

Seller's Rights before Sale

According to section 55(4) (a) of TPA act, seller has right to receive all the rents & profits out of that
property.

Seller's right after sale

If any amount is unpaid then seller has right to recover that amount of money out of that property.

What are the Rights and Duties of Buyer?

Section 55 of TPA deals with rights and duties of seller and buyer.

Duties of Buyer before Sale

1. The buyer bound to disclose, facts which materially increases the value of property
2. Buyer has liability to pay price for property.

Duties of buyer after Sale

According to section 55 (5) (c) of TPA, buyer is bound to bear any loss arising from the destruction,
injury or decrease in value of the property not caused by the seller where the ownership of the
property has passed to the buyer.

According to section 55 (5) (d) of TPA, buyer is liable to pay the outgoings, e.g., Government dues,
rents, revenue or taxes

Buyer's right before sale

A charge on the property for the purchase money properly paid by him in anticipation not the
delivery.

Charge

According to section 100 of TPA, when a property of a person is made a security for the payment of
money is called Charge.

This transaction will not amount to the Mortgage and generally all the provision regarding the Simple
Mortgage will be applicable to the Charge.

What are the essentials of a Valid Charge?

1. Immovable property,
Charge can be created only in immovable property and that property can be present or future.
Generally to create a charge, it is necessary to make it in written form. The person from which the
payment is due is not the owner of that property, then a Charge cannot be created,

For example, a wife filled a suit of maintenance and she want to create a charge on the husband's
property, but over here, husband is not the owner of the property so here, wife cannot put charge on
that property.

2. Charge does not amount to a Mortgage,

There is a difference between a Charge and Mortgage. Because, in Charge, there is no right
transferred nor property transferred. But in Mortgage, property and rights are transferred. A charge
is a wider term as it also includes a mortgage i.e. every mortgage is a charge but not every charge is a
mortgage. In charge, if a person sells the property to recover the amount it becomes mortgage.

3. Charge created by an act of parties,

By entering into an agreement, parties create a Charge and no particular form or language is
required to create a charge. Intention of the parties should be clear to create a Charge on a particular
property. And if a person fails to pay money to other person, then that other person will have right
over that only property on which the Charge is created.

4. Charges arising by operation of law

Sometimes it is possible that law itself creates the Charge over the property for example, Mr. A want
to purchase a flat from Mr. B and gave some advance money to Mr. B. But Mr. B is neither giving the
possession, not giving the ownership, so Mr. A can sue Mr. B for the same and the Charge is created
on the property.