PROPERTY LAW - UNIT I

1. GENERAL PRINCIPLES OF TRANSFER OF PROPERTY BY ACT OF PARTIES INTER-VIVOS

 Inter-Vivos means between living persons.
 A transfer inter-vivos is one which takes place during the lifetime of the transferor
and the transferee.
 Essential Features:
o Transfer is made voluntarily.
o It is made during the lifetime of transferor.
o Consideration may be present or absent.
o It can be movable or immovable property.
o It must be made with intention to transfer.
 Illustration: A sells his house to B in his Lifetime. This is a transfer inter-vivos.
Important Sections
 Sections 5 to 9- General principles
 Section 54 Sale
 Section 122 Gift
 Section 105 Mortgage
Important Case Law
 Dada Abdul Latif v. Nabi Bakhsh Intention to transfer is paramount,
 Janki v. Mohan Explained essentials of a valid transfer.

2. CONCEPT AND MEANING OF IMMOVABLE PROPERTY

 Immovable property includes land, benefits to arise out of land and things
permanently attached to earth.
 According to Section 3 of TPA, immovable property includes:
o (i) Land, benefits to arise out of land.
o (ii) Things attached to earth.
o (iii) Things attached to what is attached to the earth.
o (iv) Things forming part of the land.
o (v) Things which are permanently fastened to anything which is attached to
the earth.
 Illustration: A building permanently constructed on land is immovable property.
Important Sections
 Section 3 Definition of immovable property
Important Case Law
 Shiv Shankar v. Kamla Rani - Trees attached to earth are immovable property.

3. TRANSFER OF IMMOVABLE PROPERTY

 Transfer of immovable property can be made only by a registered deed as required
by Section 54 of TPA and Section 17 of Registration Act, 1908.
  Modes of Transfer:
o (i) Sale (Section 54)
o (ii) Gift (Section 122)
o (iii) Mortgage (Chapter VIII)
o (iv) Lease (Section 105)
o (v) Exchange
 Illustration: A executes a registered sale deed in favour of B for his land. The transfer
is valid.
Important Sections
 Section 54 Sale of immovable property
 Section 122 Gift
 Section 105 Lease
 Chapter VIII Mortgage
Important Case Law
 Suraj Lamp & Industries v. State of Haryana Registration is compulsory for transfer.
 Durga Prasad v. Deep Chand - Sale deed must be registered.

4. PERSONS COMPETENT TO TRANSFER & OPERATION OF TRANSFER

 According to Section 7 of TPA, a person competent to transfer must be:
o (i) Competent to contract (major, of sound mind, not disqualified).
o (ii) Entitled to transferable property.
o (iii) Authorized to dispose of such property.
 Operation of Transfer (Section 8): Unless a different intention appears, the transfer
passes all the interest which the transferor is capable of passing.
 Illustration: A sells his house to B. Along with the house, all rights, easements, rents
and profits attached to it also pass to B.
Important Sections
 Section 7 Persons competent to transfer
 Section 8 Operation of transfer
Important Case Law
 Mohori Bibee v. Dharmodas Ghose Minor cannot transfer property.
 Ramcomar Koondoo v. McQueen Ostensible owner and good faith purchaser.

5. CONDITIONS RESTRAINING ALIENATION AND RESTRICTIONS REPUGNANT TO INTEREST

CREATED
 (a) Section 10 Restraint on Alienation Any condition absolutely restraining transferee
from transferring property is void.
 Illustration: A transfers land to B on condition that B shall never sell it. The condition
is void.
 (b) Section 11 Repugnant Restrictions: Where absolute interest is transferred, any
restriction on enjoyment is void.
  Illustration A transfers house absolutely to B but directs that B shall not use it for
business. Such restriction is void.
Important Sections
 Section 10 Restraint on alienation
 Section 11 Repugnant restrictions
Important Case Law
 Rosher v. Rosher Absolute restraint held void.
 Mohd Raza v. Abbas Bandi Bibi Repugnant conditions are void.

6. RULE AGAINST PERPETUITY AND DIRECTION FOR ACCUMULATION

 (a) Rule Against Perpetuity (Section 14) No transfer can create an interest which is to
take effect after the lifetime of a living person and minority of the ultimate
beneficiary.
 Illustration: A transfers property to B and after B's death to B's first son who attains
majority. This is valid.
 (b) Direction for Accumulation (Section 17): Income cannot be directed to be
accumulated for an unlimited period.
 Illustration A directs rent of property to be accumulated for 100 years. Such direction
is void.
 (c) Exceptions (Section 18) Transfers for charitable purposes are exempted from rule
against perpetuity.
Important Sections
 Section 14 Perpetuity
 Section 17 Accumulation
 Section 18 Exceptions
Important Case Law
 Cadell v. Palmer Leading case on rule against perpetuity.

7. VESTED AND CONTINGENT INTEREST

 (a) Vested Interest (Section 19) Interest is created in favour of a person without any
uncertain condition. Right is certain.
 Illustration A transfers property to B for Life and after B's death to C. C gets vested
interest.
 (b) Contingent Interest (Section 21) Interest is created to take effect only on
happening of uncertain future event.
 Illustration: A transfers property to B if passes exam. B gets contingent interest.
Important Sections
 Section 19 Vested interest
 Section 21 Contingent interest
Important Case Law
 Lachman v. Baldeo Explained distinction between vested and contingent interest.
8. VOID CONDITIONS, RULE OF ACCELERATION AND FULFILLMENT OF CONDITIONS
SUBSEQUENT
 (a) Void Conditions (Sections 25 to 26) Impossible, illegal, immoral or opposed to
public policy conditions are void.
 Illustration: A transfers property to B on condition that B shall Fly. Condition is
impossible and void
 (b) Rule of Acceleration (Section 27) If prior interest fails, subsequent interest takes
effect immediately.
 Illustration: A transfers property to B for life and then to C. If B refuses interest, C's
interest accelerates.
 (c) Conditions Subsequent (Sections 27 to 34) If condition subsequent occurs, existing
interest may be defeated.
 Illustration A transfers property to B, but if B becomes insolvent, property shall revert
to A. On insolvency, B's interest ends.
Important Sections
 Sections 25 to 34 Void & Conditional Transfers
 Section 27 Rule of Acceleration
Important Case Law
 Tagore v. Tagore Transfers creating contrary interests are void.
IMPORTANT LEGAL PRINCIPLES
1. Intention to transfer is essential.
2. Only competent person can transfer property.
3. Transfer of immovable property requires registered dend.
4. Property should remain freely transferable.
5. Law favours vested interest over contingent interest.
6. Rule against perpetuity prevents indefinite restrictions.
7. Illegal, impossible and immoral conditions are void.
CONCLUSION
The law of transfer of property ensures that property is transferred Lawfully, fairly and in
accordance with public policy. The provisions regarding competence, operation, restrictions,
future interests and conditions maintain certainty in transactions and protect rights of
parties. These principles promote free circulation and beneficial use of property in society.
 PROPERTY LAW - UNIT II

1. DOCTRINE OF ELECTION
 Meaning:
o The doctrine of election is based on the principle that a person cannot accept
and reject the same transaction at the same time.
o If a person takes benefit under a transaction, he must also accept the
obligations imposed by that transaction.
 Section: Section 35 of the Transfer of Property Act, 1882.
 Essential Conditions:
1. Transfer of property belonging to another.
2. Benefit must be given to the true owner.
3. Both must form part of the same transaction.
4. True owner must have knowledge of his rights.
 Modes of Election:
1. Express Election When the owner clearly states his choice.
2. Implied Election When inferred from conduct, acceptance of benefit, or
silence.
 Effect:
o If owner confirms transfer, he must accept it completely.
o If owner rejects transfer, he must give up the benefit.
 Illustration: A transfers B's land to C and also gives 10 lakhs to B. 8 must either
confirm the transfer or return the money.
 Case Law: Cooper v. Cooper The court held that a person accepting benefit under a
transaction must also accept the accompanying obligations.

2. TRANSFER BY OSTENSIBLE OWNER AND CO-OWNER

 (A) Transfer by Ostensible Owner
o Section 41
o Meaning: When the real owner by his consent allows another person to
appear as owner and that person tran fer the property to a bona fide
purchaser for consideration, the transfer is valid.
o Essential Conditions:
1. Consent of real owner (express or implied).
2. Ostensible owner transfers property.
3. Transfer for consideration.
4. Transferee acts in good faith.
5. Transferee takes reasonable care.
o Illustration: A allows B to deal with property as owner. B sells to C for
consideration. C is protected.
  (B) Transfer by Co-owner
o Section 44
o Meaning: A co-owner can transfer his share or interest in the property.
o Effect: Transferee acquires the transferor's rights, including right te joint
possession and right to seek partition.
o Illustration: A and B jointly own a house. A sells his share to C. C becomes co-
owner with B.
 Case Law:
o Ramcoomar Koondoo v. McQueen Ostensible owner's transfer is valid in
favour of bona fide purchaser.
o Sant Ram Nagina Ram v. Daya Ram Nagina Ram Transferee from co-owner is
entitled to seek partition.

3. APPORTIONMENT AND PRIORITY OF RIGHTS

 (A) Apportionment
o Section 36 Apportionment of Periodical Payments: Periodical payments like
rent, pension, annuity etc., are apportioned on transfer of interest. They are
treated as accruing from day to day.
o Illustration: A transfers property to B on 15th of a month. Monthly rent is
30,000. A gets rent for first 15 days and B for remaining 15 days.
o Section 37 Apportionment of Benefit of Obligation: When property
burdened with an obligation is divided, benefit of such obligation is
apportioned
o Illustration: A transfers land to B and later to C. Benefit of water right
attached to land is apportioned between B and C.
 (B) Priority of Rights
o Section 48
o Rule: Where a person creates several rights in the same property at different
times, earlier rights have priority over later rights.
o Illustration: A mortgages land to first and later mortgages to C. B has priority.
o Exceptions: Fraud, estoppel or statutory provisions may affect priority in
certain cases.
o Principle: "First in time, first in right."
o Case Law: Delhi Development Authority v. Skipper Construction Co. The court
emphasized the rule of priority of rights.
4. RENT PAID TO HOLDER UNDER DEFECTIVE TITLE & IMPROVEMENTS MADE BY BONA
FIDE HOLDER
 (A) Rent Paid to Holder Under Defective Title
o Section 50
o Rule Where a tenant pays rent in good faith to a person whom he believes to
be entitled to receive it, he is protected even if that person has defective title.
o Illustration: A tenant pays rent to B believing B to be owner, Later it is found
that B had no title. Tenant is protected.
 (B) Improvements Made by Bona Fide Holder
o Section 51
o Rule: A person who, in good faith, believing himself absolutely entitled to
property, makes improvements and is later evicted by one having better title,
is entitled to compensation.
o Illustration: A buys land from B and builds a house in good faith. Later C
proves better title and evicts A. A can claim compensation for improvements.
o Case Law: Narayan v. Gopal (AIR 1960 SC 996) Bona fide transferee entitled to
compensation for improvements.

5. DOCTRINE OF LIS PENDENS

 Meaning: During pendency of a suit or proceeding in which rights to immovable
property are directly and specifically in question, the property cannot be transferred
or dealt with so as to affect rights of other parties,
 Section: Section 52 of the Transfer of Property Act.
 Essential Conditions:
1. There must be a suit or proceeding pending.
2. The suit must in a court of competent jurisdiction.
3. The suit must relate to immovable property.
4. Rights to such property are directly and specifically in question.
5. Transfer must be made by a party to the suit.
 Effect: Transfer pendente lite is not void, but transferee takes property subject to the
outcome of the suit.
 Illustration: A sues B for ownership of land. During the suit, B sells the land to C. If A
succeeds, C will be bound by the decree.
 Case Law: Bellamy v. Sabine (1857) - Leading case on doctrine of lis pendens.

6. FRAUDULENT TRANSFER AND PART-PERFORMANCE

 (A) Fraudulent Transfer
o Section 53
o Rule Every transfer of immovable property made with intent to defeat or
delay creditors is voidable at the option of such creditors.
 o Illustration: A, being indebted to his creditors, transfers his property to his
relative without consideration to defeat creditors. Creditors can challenge
transfer.
o Case Law: Twyne's Case (1601) Classic case on fraudulent transfer.
 (B) Part-Performance
o Section 53A
o Rule: Where a transferee has taken possession of property in part
performance of a contract, and is willing to perform his part, the transferor is
debarred from enforcing any right inconsistent with the contract.
o Essential Conditions:
1. Written contract, signed by transferor.
2. Possession taken in part-performance.
3. Transferee ready and willing to perform.
o Effect: Section 53A is a shield and not a sword. It can be used only as a
defence
o Case Law: Nathulal v. Phoolchand (AIR 1966 SC 1799) Explained doctrine of
part-performance.

IMPORTANT SECTIONS
 Sec. 35 Doctrine of Election
 Sec. 36 Apportionment of Periodical Payments
 Sec. 37 Apportionment of Benefit of Obligation
 Sec. 41 Transfer by Ostensible Owner
 Sec. 44 Transfer by Co-owner
 Sec. 48 Priority of Rights
 Sec. 50 Rent Paid to Holder under Defective Title
 Sec. 51 Improvements by Bona Fide Holder
 Sec. 52 Doctrine of Lis Pendens
 Sec. 53 Fraudulent Transfer
 Sec. 53A Part-Performance

IMPORTANT LEGAL PRINCIPLES

 Equity looks on good faith.
 First in time, first in right.
 Law protects honest transactions.
 Good faith payments and improvements deserve protection.
 No one should be allowed to take advantage of his own wrong.
 PROPERTY LAW - UNIT III

1. MORTGAGES OF IMMOVABLE PROPERTY MEANING AND ESSENTIALS

 Meaning:
o According to Section 58 of TPA :
o "A mortgage is the transfer of an interest in specific immovable property for
the purpose of securing payment of money advanced or to be advanced by
way of loan, existing or future debt, or performance of engagement which
may give rise to pecuniary liability."
 Parties:
o Mortgagor the person who borrows money and mortgages the property.
o Mortgagee the person who advances money and takes property as security.
 Essentials of Mortgage:
1. Transfer of interest in specific immovable property
2. The transfer must be for securing a debt or financial liability.
3. There must be intention to create security.
4. Parties must be competent to contract.
5. Mortgage money must be certain.
6. It must be a lawful consideration.
 Illustration: A borrows 10 lakhs from B and mortgages his house to B as security.
Here, A is mortgagor and B is mortgagee.
 Nature and Object:
o It is a transfer of interest and not of ownership.
o The mortgagor retains right of redemption.
o The object is to secure repayment of debt.
 Important Section Section 58 of TPA.
 Case Law: Mohori Bibee v. Dharmodas Ghose Held that agreement by minor is void
and therefore mortgage by minor is invalid.

2. KINDS OF MORTGAGES AND THEIR FEATURES

Section 58 (a) to (g) of TPA recognizes the following kinds of mortgages:
 (1) Simple Mortgage (5.58(b))
o No delivery of possession.
o Mortgagor personally liable to repay.
o Mortgagee can sue for sale of property.
 (2) Mortgage by Conditional Sale (5.58(c))
o Ostensible sale of property.
o On default, sale becomes absolute.
o On repayment, sale becomes void.
 (3) Usufructuary Mortgage (S.58(d))
 o Possession delivered to mortgagee.
o Mortgagee enjoys rents and profits.
o No personal liability of mortgagor.
 (4) English Mortgage (S.58(e))
o Absolute transfer of property.
o Subject to condition of re-transfer on repayment.
o Personal covenant to repay.
 (5) Mortgage by Deposit of Title Deeds (Equitable Mortgage) (S.58(f))
o Created by deposit of title deeds.
o Intention to create security must exist.
o No formal mortgage deed necessary.
 (6) Anomalous Mortgage (5.58(g))
o Does not fall under above categories.
o Combination of various features.
 Illustration Deposit of title deeds with bank for loan is equitable mortgage.
 Case Laws:
o Narayanan v. Ponnuswami - Explained principles of equitable mortgage.
o Ganga Dhar v. Shankar Lal Distinguished mortgage by conditional sale from
sale with condition of repurchase.

3. RIGHTS AND LIABILITIES OF MORTGAGOR

 Rights of Mortgagor:
1. Right of Redemption (S.60): After mortgage money becomes due, mortgagor
has right to recover property on repayment.
2. Clog on Redemption Any condition which prevents or restricts redemption is
void.
3. Right to Inspection Right to inspect documents and obtain copies.
4. Right to Accession (S.63): Entitled to benefit of increase or accession to
property.
5. Right to Improvements (S.63A): Entitled to improvements made by
mortgagee.
 Liabilities of Mortgagor:
1. Liability to repay mortgage money.
2. Duty to preserve property.
3. Duty to pay public charges and taxes.
4. Duty not to commit waste.
5. Not to do anything which impairs value of security.
 Illustration Mortgagor must maintain property and pay municipal taxes.
 Case Lawst
o Noakes v. Rice Conditions restricting redemption are void (clog on equity).
 o Mohammad Sher Khan v. Seth Swami Dayal - Unreasonable restrictions on
redemption amount to clog on redemption.
 Important Sections: Sections 60 to 66 of TPA.

4. RIGHTS AND LIABILITIES OF MORTGAGEE

 Rights of Mortgagee:
1. Right to Foreclosure (S.67): In certain mortgages, mortgagee can obtain
decree of foreclosure.
2. Right to Sale Mortgagee can seek sale of mortgaged property for recovery.
3. Right to Sue for Mortgage Money: In certain cases, mortgagee can sue
mortgagor personally.
4. Right to Possession In some mortgages (e.g., usufructuary), mortgagee has
right to possession.
5. Right to Rents and Profits Mortgages in possession can collect rents and
profits.
6. Right to Spend for Preservation: Mortgagee can spend for repairs, taxes etc.,
and add to mortgage money.
 Liabilities of Mortgagee:
1. Duty to manage property prudently (5.76).
2. Duty to collect rents and apply property.
3. Duty to maintain proper accounts.
4. Duty not to commit waste.
5. Duty to apply income in proper order (1) taxes (2) expenses (3) interest (4)
principal.
 Case Law: Noakes v. Rice Mortgagee cannot impose conditions preventing
redemption..
 Important Sections Sections 67 to 77 of TPA.

5. PRIORITY OF SECURITIES, MARSHALLING AND CONTRIBUTION

 (A) Priority of Securities:
o Rule "First in time, first in right."
o Earlier mortgagee has priority over subsequent mortgagee.
o Section 48 of TPA lays down this rule.
o Illustration: A mortgages property first to B and later to C. B will be paid first.
 (8) Marshalling (Section 81):
o When one creditor has security over two properties and another creditor has
security over one property.
o First creditor must, as far as possible, satisfy debt from property not
mortgaged to subsequent creditor
o Illustration A mortgages Property X and Y to B, and later mortgages Y alone to
C. C can ask B to first proceed against X.
 o Case Law: Aldrich v. Cooper Doctrine of marshalling recognized.
 (C) Contribution (Section 82):
o When several properties are subject to common mortgage debt.
o Burden must be distributed proportionately among them according to their
value.
o Prevents one property from bearing entire burden unfairly.
o Illustration If Property X is worth 1/3 and Property Y is worth 2/5, then debt
burden will be shared in same proportion.

6. CHARGES
 Meaning:
o According to Section 100 of TPA:
o "Where immovable property is made security for payment of money and
transaction does not amount to mortgage, the person is said to have charge
on the property.
 Essentials:
1. Immovable property.
2. Made security for payment of money.
3. Intention to create security.
4. Transaction should not be mortgage.
 Kinds of Charges:
o (1) By act of parties created by agreement, contract or document.
o (2) By operation of law created by law, ..... maintenance rights, unpaid
purchase money.
 Rights of Charge Holder:
o Right to enforce charge through court.
o Right to seek sale of propert
o Right to recover amount from property.
 Liabilities of Property Owner
o Must satisfy the secured obligation.
o Must not act so as to defeat charge.
 Illustration Court may create charge on property for maintenance of a wife.
 Case Law Dattatreya Shanker Mote v. Anand Chintaman Datar Explained distinction
between mortgage and charge.
 Important Section Section 100 of TPA.

SUMMARY OF UNIT III

 Mortgages create transfer of interest in property security for debt.
 Different kinds of mortgages depend upon possession, nature of transaction and
rights of parties.
 Mortgagor has right of redemption and must preserve property and repay debt.
  Mortgagee has rights to enforce security but must act prudently and fairly.
 Priority, marshalling and contribution ensure fairness among competing creditors.
 Charge provides security without transfer of interest and may arise by law or
agreement.

IMPORTANT SECTIONS
 Sec. 58 Definition of Mortgage
 Sec. 60 Right of Redemption
 Sec. 67 Foreclosure or Sale
 Sec. 76 Liabilities of Mortgagee
 Sec. 81 Marshalling
 Sec. 82 Contribution
 Sec. 100 Charges
 ROPERTY LAW-UNIT IV

Sale of Immovable Property Lease Exchange Actionable Claims - Gifts

1 SALE OF IMMOVABLE PROPERTY
[Sec. 54-55, Transfer of Property Act, 1882]
 A. Meaning (Sec.54)
o Sale is a transfer of ownership in exchange for a price paid or promised or
part-paid and part-promised.
 B. Essentials:
o Transfer of ownership
o Price (money consideration)
o Competent parties
o Immovable property
 C. Mode of Transfer (Sec.54)

Nature of Property Mode of Transfer

Tangible immovable property of 100 or

By registered instrument only
more

Tangible immovable property of less By registered instrument or by delivery of

than 100 possession

Intangible immovable property of any

By registered instrument only
value
 D. Rights & Liabilities of SELLER (Sec.55(1), (4))
o (i) Before Completion of Sale
1. Disclose material defects in property or title.
2. Produce title documents for inspection.
3. Answer relevant questions truly.
4. Execute proper conveyance on receiving price.
5. Take reasonable care of property till delivery.
6. Give possession to buyer after completion.
7. Pay public charges up to date of sale.
o (ii) After Completion of Sale
 Right to receive price.
 Right to rents & profits till ownership passes.
 Charge on property for unpaid purchase money.

 E. Rights & Liabilities of BUYER (Sec.55(5), (6))

o (i) Before Completion
1. Disclose facts materially increasing value of property.
 2. Pay or tender purchase money at proper time & place.
3. After ownership passes, bear accidental loss.
o (ii) After Completion
 Right to benefits, rents & profits.
 Right to possession.
 Right to receive title documents.
 Charge on property if seller fails to complete sale.
 Illustration:
o A sells land to B for 20 lakh B pays 15 lakh. A has charge for balance 5 lakh..
on property
o Illustration: If seller refuses to execute deed after receiving full price, buyer
has charge on property.

F. Difference between SALE and CONTRACT FOR SALE

Basis SALE CONTRACT FOR SALE

Ownership is transferred Agreement to transfer ownership

Meaning
immediately. in future.

Transfer of
Yes, immediately. No, it does not pass.
Ownership

Rights Created Rights in rem. Rights in personam.

Consideration Price in money. Agreement for future price.

Registered instrument (if May or may not be registered,

Document
value ≥100). depending on value.

Suit for specific performance Right to sue for specific

Remedy
not necessary. performance.
 Case Laws:
1. Narandas Karsondas v. S.A. Kamtam (1977) Contract for sale does not create
any interest or charge.
2. Rambaran Prosad v. Ram Mahit Hazra (1967) No transfer of ownership in
contract for sale.
3. Vidhyadhar v. Manikrao (1999) Valid sale deed & registration essential for
transfer of ownership.
2 LEASE OF IMMOVABLE PROPERTY
[Sec. 105-117, Transfer of Property Act, 1882]
 A. Definition (Sec.105)
 o Lease is a transfer of a right to enjoy immovable property for a certain time,
in consideration of price (rent, premium, share of crops, service etc.)
 B. Kinds of Lease:
1. Lease for fixed term
2. Periodic lease
3. Perpetual lease
4. Lease by estoppel
5. Agricultural lease
6. Non-agricultural lease
 C. Creation of Lease (Sec. 107)
o Registered instrument (if value 100 or more)
o Lease for "one year or less By oral agreement delivery of possession
o Lease "from year to year or "exceeding one year" By registered instrument or
"reserving yearly rent" (compulsory)
 D. Rights & Liabilities of LESSOR (Sec. 108)
o Rights: Receive rent. Recover possession after determination of lease. Inspect
property after reasonable notice. Claim damages for waste. Terminate lease
as per law.
o Liabilities: Disclose material defects. Give possession. Ensure peaceful
enjoyment. Make essential repairs (if contract or law requires).
 E. Rights & Liabilities of LESSEE (Sec. 108)
o Rights: Peaceful possession & enjoyment. Right to benefits (rents, profits).
Remove fixtures (without damage). Transfer or sublet (unless contract
prohibits).
o Liabilities: Pay rent at agreed time. Use property as prudent person. Inform
lessor of encroachments. Make necessary repairs (after notice to lessor).
Restore possession on expiry. Not commit waste..
 F. Determination of Lease (Sec. 111)
1. By efflux of time
2. By happening of specified event
3. By merger
4. Py express or implied surrender
5. By forfeiture
6. By notice to quit (Sec. 106)
 G. Holding Over (Sec. 116)
o When lessee continues in possession after expiry of lease with consent of
lessor (express or implied). new periodic tenancy is created.
 Case Laws:
1. Associated Hotels of India Ltd. v. R.N. Kapoor (1959) Exclusive possession is an
important test of lease.
 2. Qudrat Ullah v. Municipal Board, Bareilly (1974) Intention of parties is the
decisive factor.
3 EXCHANGE [Sec. 118, Transfer of Property Act, 1882]
 A. Definition (Sec.118): Whecally transfer the ownership of one thing for the
ownership p of another, neither thing or both things being money only, the
transaction is called an exchange.
 B. Essentials
o Two parties
o Competent parties
o Mutual transfer of ownership
o Property (movable/immovable)
o Consideration must be another property, not money
 C. Mode of Exchange:
o Immovable property 100 or more By registered instrument.
o Immovable property less than 100 By registered instrument or by delivery of
possession..
o Movable property By delivery of possession.
 D. Rights & Liabilities: Provisions relating to sale apply as far as applicable.
 Case Law: Ram Kristo Mandal v. Dhankiste Mandal (1969) - Small payment to
equalise value does not destroy exchange.
4 ACTIONABLE CLAIMS [Sec. 3 (Def.), 130-137, T.P. Act, 1882]
 A. Meaning (Sec.3)
o A claim to a debt (not secured by mortgage/pledge/hypothecation) or to any
beneficial interest in movable property not in possession of claimant, which
Civil Courts recognise as affording grounds for relief.
 B. Examples:
o Unsecured debts
o dues Beneficial interest in movable property not in possession.
o Insurance money
o Decree amount
o Contractua‫ا‬
 C. Transfer of Actionable Claims (Sec. 130)
o May be transfered by owner.
o Transfer must be by instrument in writing signed by transferor.
o Notice to debtor not essential for validity but advisable (Sec. 131).
o Consideration may or may not exist.
 D. Rights of Transferee (Sec. 132)
o Right to receive debt/benefit.
o Right to sue in his own name.
o Subject to all existing equities & defences.
o Cannot acquire better title than transferor.
  E Exceptions (Sec. 136)
o DEBT Judges, legal practitioners, or officers connected with the administration
of justice cannot purchase actionable claims.
 Case Low: Jaszer Meher Ali v. Budge Budge Jute Mills Co. Ltd. (1906) Actionable claim
is assignable property right.
5 GIFTS [Sec. 122-129, Transfer of Property Act, 1882]
 A Meaning (Sec. 122)
o Gift is the transfer of certain existing movable or immovable property, made
voluntarily and without consideration by one person (donor) to another
(danee) and accepted by or on behalf of donee.
 B Essential Elements:
o Competent Donor
o Competent Donte
o Consideration Without
o (during doner's lifetime) Acceptance
o Existing Property
o Voluntary Transfer
 C Mode of Transfer (Sec. 123)
o Immovable property By registered instrument (gift deed) signed by donor &
attested by at least 2 witnesses.
o Movable property By registered instrument or delivery of possession.
 D. Universal Gifts (Sec. 128)
o Gift of all property of donor to donee. Donee liable for all debts & liabilities of
donor existing at time of gift, limited to value of property received.
 E. Onerous Gifts (Sec. 127)
o Gift which carries both benefits and burdens. Donee must accept the gift as a
whole (Doctrine of Election). Minor not bound during minority.
 F. Revocation/Suspension (Sec. 126)
o Gift may be revoked only- (i) By mutual agreement on happening of specified
event not depending on donor's will, or (ii) On grounds available for
rescinding a contract (fraud, coercion, undue influence). Mere change of
mind or poverty is not a ground.
 Case L
1. Renikuntia Rajamma v. K. Sarwanamma (2014) Valid gift even if donor
reserves limited right like life interest.
2. K. Balakrishnan v. K. Kamalam (2004) Acceptance during donor's lifetime is
essential
3. Naramadaben Maganlal Thakker v. Pranjivandas M. Thakker (1997) - Gift of
immovable property valid only if registered.
QUICK COMPARISON TABLE
Themefer of
Mode Consideration Instrument Acceptance
Ouership

Regd. Inst Not

Sale Money (Price) Yes
(100) required

Nu (Right to Ragd t (if Not

Lease R Premium
anjey anly) your) required

Regd. Inas. Nut

Exchange Another Property Yes
(100+) required

Actionable May or may not be Whitlan

Yes (of claim) Nat required
Claims consideration Instrument

Gift None Yes Kagd Inst Required

IMPORTANT SECTIONS
 Sate Sec 54, 55
 Lense Sec. 105-117
 Exchange Sec. 118
 Actionable Claims Sec. 3, 130-137
 Gifts Sec 122-129
IMPORTANT CASE LAWS (AT A GLANCE)
 Sale Narandas Karsendas v. S. A. Kamtam (1977)
 Lease: Associated Hotels of India v. R.N. Kapoor (1959)
 Exchange: Ram Kristo Mandal v. Dhankisto Mandal (1969)
 Actionable Claims: Jaccer Meher Ali v. Budge Budge Jute Mills (1906)
 Gifts: Renikuntla Rajamma v. K. Sarwanamma (2014)
PROPERTY LAW - UNIT V

LAW OF TRUSTS WITH FIDUCIARY RELATIONS

TOPIC 1: MEANING AND NATURE OF TRUST

(Definition and Comparison with Debt, Ownership, Bailment, Agency and Contract)
1. DEFINITION OF TRUST (Section 3)
 "A trust is an obligation annexed to the ownership of property, arising out of a
confidence reposed in and accepted by the owner, or declared and accepted by him,
for the benefit of another, or of another and the owner."
2. ESSENTIAL ELEMENTS OF TRUST
 Author (Settlor) The person who creates the trust.
 Trustee The person who accepts the trust and holds the property for the benefit of
the beneficiary.
 Beneficiary The person for whose benefit the trust is created.
 Trust Property There must be definite and identifiable movable or immovable
property.
 Confidence The trust must arise out of confidence reposed by the author in the
trustee.
 Lawful Purpose The trust must be created for a lawful purpose (Section 4).

3. CHARACTERISTICS OF TRUST
1. Fiduciary relationship based on confidence and good faith.
2. Separation of ownership legal (trustee) and beneficial (beneficiary).
3. Obligation attached to ownership according to terms of trust and law.
4. No personal benefit Trustee cannot use property for his own benefit.
5. Enforceable by court Beneficiary can approach the court for rellel
6. Protection of beneficiary Trustee must act prudently and honestly

4. COMPARISON OF TRUST WITH OTHER RELATIONSHIPS

lustration: A transfers his house to B to hold it for the education of A's minor daughter C
 Ownershi Bailme
Basis Trust Debt Agency Contract
p nt

Obligation Deliver
Complete
to hold Obligati y of Authorit
right in a Agreeme
and on to goods y to act
1. thing for nt
administer pay for a on
Meaning one's enfuccea
property sum of specific behalf of
owm ble by law
for money. purpos another.
benefit.
another. e

2. Trustee Debtor
Onar Bailor Principal Promisee
Relations Beneficiar Credito
Property Bailee Agent Promisor
hip y r

Legal Owner
Debtor
owner is enjoys Owners
becom Agent No
3. trusten both legal hip
es never transfer
Ownershi beneficial and remains
owner become of
p owner is beneficial with
of s owner. property
beneficiar ownershi ballor
money.
y p

Debtor Bailee
Agent Parties
For uses Owner ses
acts For enjoy
benefit of monty uses for goods
4. Benefit principal rights as
beneficiar for his his own only for
's per
y own benefit. purpos
benefit contract
benefit e

Person
Reciproca
al Obligati
5. Nature l
Fiduciary moneta No on to Obligati
of contractu
obligation ry obligation return on to act
Obligation al
obligati goods
obligation
on

May or
6. may Hot Hot
Not Rot
Considera not be require required Essential
exsential, applicable
tion present d .
.
 Ownershi Bailme
Basis Trust Debt Agency Contract
p nt

Trustee
Credito Bailor
acts Owner
r has may Principal As per
independ has
7. Control right to give sootrels Terms of
ently complate
recover directio agent. contract
according control.
money. ns
to trust

Ends
whers
Ends on
Ends with purpos Ends on
revocati
Ends transfer/ e is performa
Ends with on,
Terminati when abandon fulfilled nce,
extinction completi
on debt is ment er and discharge.
of trust on,
paid destructio goods breach,
death,
n, are etc.
atc.
returne
d

TOPIC 2: KINDS OF TRUSTS AND CREATION OF TRUST

(Kinds of Trusts Creation of Trust)

1. KINDS OF TRUSTS
1. Public Trust Created for the benefit of the general public or a section of the public.
Beneficiaries are uncertain/fluctuating.
2. Private Trust Created for the benefit of definite and identifiable individuals.
3. Express Trust Intentionally created by the author through written instrument, will or
oral declaration.
4. Implied Trust Arises from the conduct of parties. or circumstances, inferred by law.
5. Revocable Trust C Author reserves the right to revoke the trust according to law or
terms of trust.
6. Irrevocable Trust Once created, cannot be revoked except in cincumstances
permitted by law.

2. CREATION OF TRUST (Sections 4, 5 & 6)

 Requirement Provision Explanation Illustration

Trust must be for a lawful

A creates a trust to
1. Lawful purpose. Object must not be
Section 4 run a free hospital for
Purpose illegal, fraudulent, immoral
poor people.
or opposed to public policy.

A transfers property
Author must be competent
2. Competent to B to hold for the
Section 7 to contract and entitled to
Author education of his son
transfer the property.
C.

A executes a trust
Author must clearly intend
3. Definite deed appointing 8 as
Section 5 to create a trust. Mere moral
Intention trustee for his
obligation is not enough.
daughter.

A purchases property
4. Definite Section Trust property must be in B's name for A's
Property 6(d) certain and identifiable. benefit. Law may
infer a trust.

Beneficiary must be certain A can revoke the trust

5. Definite Section
or capable of being created by him during
Beneficiary 6(c)
ascertained. his lifetime.

Property must be
A creates a trust for
6. Transfer of transferred to trustee or
Section 5 the benefit of charity
Property author declares himself as
- it is irrevocable.
trustee.

Trustee must accept the

7. Acceptance
Section 5 trust (expressly or
by Trustee
impliedly).

3. MODE OF CREATION (Section 5)

 Mode of Creation A Author B-Trustee C Beneficiary House Trust Property

 Nature of Property:
o Immovable Property By a registered instrument signed by author or trustee
OR by will.
 o Movable Property By written instrument OR by transfer of ownership.
accompanied by acceptance by trustee.
 Illustrations
o A borrows 10,00,000 from B It creates a debt.
o A transfers 210,00,000 to 8 to hold for education of CIt creates a trust.
o A gives his watch to B to repair This is bailment.
o A appoints B to sell his car on his behalf This is agency.
o A enters into an agreement to sell his car to B This is contract.
o Illustration: A executes a registered trust deed transferring agricultural land to
8 to maintain a school. The trust is validly created.
4. ESSENTIALS UNDER SECTION 6 (Must be indicated with reasonable certainty)
 Intention Clear intention to create a trust.
 Purpose The purpose of the trust.
 Beneficiary The person(s) who are to benefit.
 Trust Property The specific property to be held in trust.
 Transfer-Property must be transferred to trustee or author declares himself trustee

TOPIC 3: TRUSTEES
(Appointment Duties Liabilities Rights Powers Disabilities)

1. APPOINTMENT OF TRUSTEES
 By the author of the trust through trust deed, will declaration
 By the Court (Section 73) where there is no trustee or it is necessary to appoint new
trusten
 New trustee appointed when olid trusten die resigns, becomes insolvent, incapable,
removed by court or refuses to act.

2. DUTIES OF TRUSTEES [Sections 11-30)

1. To execute the trust according to terms and law (Sec. 11)
2. To inform himself about that property and liabilities (Sec. 12).
3. To protect trust property from loss or stomage (Sec. 13).
4. To act prudently as a reasonable man (Sec. 15).
5. To act impartially among beneficiaries (Sec. 17).
6. To maintain proper accounts and pay experises (Sec. 19)
7. To invest trust money in authorised securities (Sec. 20).
8. To perform duties personally, not delegate (Sec. 47)

3. LIABILITIES OF TRUSTEES
 Liable for breach of trust Sec. 230.
 Liable for misapplication and misappropriation.
 Liable for Improper investments
  Liable to restare property and profits wrongfully ‫اتين‬
 Not liable for acts of co-trustee unless he participates, is negligend or conceals the
breach,

4. RIGHTS OF TRUSTEES
1. Right to possession and control of trust property
2. Right to reimbursement of expenses (Sec. 32).
3. Right to seek opinion directions ef Court (Sec. 34),
4. Right to indemnity for in good faith D

5. POWERS OF TRUSTEES
1. Power to sell trust property
2. Power to invest trust meney
3. Power to lease trust property.
4. Power to compromise claims.
5. Power to collect income and profits.

TOPIC 4: BENEFICIARY AND EXTINCTION OF TRUST

(Rights & Liabilities of Beneficiary - Vacating Office of Trustee Extinction of Trusts)

1. RIGHTS OF THE BENEFICIARY (Sections 55-59)

1. Right to receive rents and profits (Sec. 55).
2. Right to compel trustee to execute trust (Sec. 56).
3. Right to inspect accounts and documents ( . 57).
4. Right to transfer beneficial interest (Sec. 58).
5. Right to sue for breach of trust (Sec. 59).
6. Right to proper administration of trust.
7. Right to protection of trust property

2. LIABILITIES OF THE BENEFICIARY

1. Liable if he participates in fraud
2. Liable to restore property wrongfully received.
3. Cannot compel trustee to act against trust deed or lanw
4. If he consents to breach with knowledge, he may lose right to complain.
3. VACATING THE OFFICE OF TRUSTEE (Sections 70-73)
1. By Death Office vacates automatically.
2. By Resignation (Sec. 71)-With permission of Court or with consent of all beneficiaries.
3. By Discharge (Sec. 71) On completion of trust or lawful appointment of new trustee
or order of Court.
4. By Removal By Court for breach of trust, insolvency, incapacity, misappropriation, etc.
5. By Refusal to ActA person may refuse to accept before accepting the treat
4. APPOINTMENT OF NEW TRUSTEE (Section 73)
Where office of trustee becomes sacant, the Court may appoint a new trustee considering
the welfare of the beneficiaries, nature of the trust, wishes of author and suitability of the
person.

5. EXTINCTION OF TRUSTS (Section 77)

1. Fulfilment of Purpose When abject of trust is completely achieved.
2. Unlawful Purpose When object becomes unlawful due to change in law
3. Destruction of Trust Property When property is completely destroyed and trust
cannot continue
4. Impossibility of Performance When it becomes impossible to carry out the object.
5. Revocation According to Law When law permits revocation or trust is lawfully
revoked.

IMPORTANT SECTIONS (Indian Trusts Act, 1882)

 Section 3 Definition of Trust
 Section 4 Lawful Purpose
 Section 5 Creation of Trust
 Section 6 Essential Elements
 Section 7 Who may create a Tret
 Section 11 Execution of That
 Section 13 Protection of Thist Property
 Section 19 accounts
 Section 23 Liability for Breach of Trust
 Section 51 Trustee cannot use property for personal benefit
 Section Subject Matter of Trust
 Section 73 Appointment of Nine Thatee
 Section 77 Extinction of Trust

IMPORTANT CASE LAWS

1. Chhatra Kumari Devi v Mohan Bikram Shah (1931) PC: Principle Laid Down For a valid
trust there must be certainty off intention, trust property and beneficiaries.
2. Officiel Trustee of West Bongal v. Sachindra Nath Chatterjee (1960) SC: A tratee is a
fiduciary and must adininider the that property honestly and solely for the benefit of
the beneficiary.
3. CIT Kamalini Khata (1994) SC: Esplained the allistinction between legal ownership of
the trustee and beneficial swnership of the beneficiary
CONCLUSION
The Indian Trusts Act, 1882 lays down a complete code for creation, administration and
extinction of trusts. It imposes strict duties and liabilities on trustees while protecting the
rights of beneficiaries. These provisions ensure proper management of trust property,
continuity of the trust and safeguard of the interests of beneficiaries. Trust is founded on
confidence, honesty and good faith. Law protects the trust property for the benefit of those
whom the trust is created.