Structure of our sem

 What all will we be studying?

o Module 1: Introductory module. We see background, purpose
and concept of TOPA.
o Module 2: Lengthiest module and most important. The
principles are extremely important.
o Module 3: discuss sales
o Module 4: has a lot of practical importance
o Module 5: we will read about lease.
o Module 6: exchange – short module
o Module 7: Gifts
o Module 8: Actionable claim – a type of property
o Module 9: Indian easements act
 So we will deal with TOPA and easement act.
 Evaluation:
o C.E – G.D will take place
 Groups: 18A001 to 18A010; 18A011 to 18A020; 18A021
to 18A030
 We have one month to select topic. So, register before
15th March. Need to discuss the topic and then select 3-4
topics and present those 3-4 topics before sir. Of the 3
topics, sir ill help us select one. Which will be the topic for
GD. If you come early, that will be better.
 Reading material:
o For heavy topics, use recommended reading for some difficult
topics.

MODULE 1

Introduction

 Transfer by “act” of parties: this is a term which is mostly used. This

means transfer between 2 or more living persons.
 Does our TP act deal with all types of transfers of property? No, this is
clear with preamble of TP act itself: “it is expedient to define and
amend certain parts of the law relating to the transfer of property by
act of parties”.
 o E.g.: inheritance is not dealt with in TP act. Because in
inheritance, one person is dead, so by operation of law, property
transfers. But that does not apply to transfer, where two or
more living individuals are required.
 So, the transfers in TP Act always involves ‘act of parties’
 What about artificial persons? Section 5 answers this, particularly
para 2-
Section 5 defines what is transfer of property:
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, [or it himself] and one or more
other living persons; and “to transfer property” is to perform
such act.
[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.]

So, even companies and AOB can fall under TOPA.

 Position prior to TP Act:

o Earlier, Hindu and Muslims had their own laws in relation to
transfer of property. This was before advent of British.
o When courts were established by British, it became difficult to
understand and implement the law. The system was a little
confusing as in the courts instituted by British, judges were
unfamiliar with the customs and social system of India.

16th Feb 2021

 Objective of TOPA
o Provides a definite, clear and uniform law for transfer of
immovable proerpties by ‘acts of parties’, i.e. transfer
between living persons.
 Why is TP Act not exhaustive?

Section 1
  Talks about the title, and extent. Initially this act was not applicable to
entire country. Before it was extended to only the princeply states
(Punjab, Bombay, delhi). Slowly, it got amended and extended to all
parts.
 2nd para: a state govt. has the authority to notify the extension of
application of law either ot whole of territory or part of territories.

Section 2

 This is the saving clause.

 Nothing in 2nd chapter of the act (section 5 to 53A – general
principles relating to transfer of property) shall not be deemed to
affect any rule of Muslim Law. This means, it is applicable to
muslims. However, if there is any inconsistency, then only the muslim
law which will prevail.

Property

(go through rights, duties, obligation, etc. from Jurisprudence

subject)

 Property: it is closely related to ownership or title. Normally property

is used to mean a thing over which ownership is exercised.
o Widest sense: an amalgamation of all legal rights possessed by a
person.
o Narrow sense: Does not include all that a person has, but only
his proprietary rights, as opposed to his personal rights.
 Property can be divided into movable and immovable property. This
is very important distinction.
 Moveable property:
o Section 2(7) of SGA Goods [S. 2 (7) of the SGA]: ‘Goods’ means
every kind of movable property other than actionable claims and
money; and includes stock and shares, growing crops, grass,
and things attached to or forming part of the land which are
agreed to be severed before sale or under the contract of sale.
o IPC 1860, S. 22: The words ‘moveable property’ are intended
to include corporeal property of every description, except land
and things attached to the earth or permanently fastened to
anything, which is attached to the earth.
o GCA 1897, S. 2 (36): ‘movable property’ shall mean property
of every description, except immovable property.
 Immovable Property
 o TPA 1882, S. 3 (1) states: ‘immovable property’ does not
include standing timber, growing crops or grass.
o GCA 1897, S. 2 (26): ‘immovable property’ shall include land,
benefits to arise out of land, and things attached to the earth, or
permanently fastened to anything attached to the earth.
o Indian Registration Act 1908: S. 2 (9) ‘movable property’
includes standing timber, growing crops and grass, fruit upon
and juice in trees, and property of every other description,
except immovable property.
o TPA 1882, S. 3 (5) states ‘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 embedded for the permanent beneficial
enjoyment of that to which it is attached;
o Immovable Property includes:
 land,
 benefits to arise out of land, and
 things attached to the earth, or permanently fastened to
anything, which is attached to the earth, i.e.:
(a) rooted in the earth, as in the case of trees and
shrubs; except—standing timber, growing crops and
growing grass.
(b) imbedded in the earth, as in the case of walls or
buildings;
(c) attached to what is so embedded for the permanent
beneficial enjoyment of that to which it is attached;
o Timber trees and standing timber:
 Shanta Bai v State of Bombay AIR 1958 SC 532.
 State of Himachal Pradesh v Motilal Pratap Singh & Co
AIR 1981 HP 8.

26th February

 Attestation:
o The word ‘attested’ has been defined in section 3 of TOPA as:
o “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
acknowledgment 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."
 Registration:
o For purpose of registration, the registration act has to be
reffered. Once document is registered, it serves great purpose.
o Section 3 of TOPA gives the definition of Registration
 Notice:
o Section 3 - [“a person is said to have notice”] of a fact when he
actually knows that fact, or when, but for wilful abstention from
an enquiry or search which he ought to have made, or gross
negligence, he would have known it.
o Two types – actual and constructive

PORTION COVERED IN BETWEEN

NOTE: have done this just by reffereing to Poonam book. (check section
1 to 5 from the book)

Section 6

 Basically, talks about what can be transferred and what cannot be

transferred.
 Property and interests in property as a general rule are transferable.
This rule of transferability is based on the maxim alienation rei
prefertur juri accrescendi, which means law favours alienation to
accumulation. Therefore, any attempt to interfere with the power of
the owner to alienate his interest in the property is frowned upon by
the law. At the same time, where either the transferor does not
possess a valid title to the property and is merely hoping to acquire
one in future, or has an interest in property that is solely by its very
nature created for his personal enjoyment, or as a rule of public
policy, transfer of such interests in property should not be allowed to
be transferred, a transfer of property in such cases by him, is
prohibited.
 It is only when the transferor has a present subsisting title or interest
in the property and is capable of delivering the same to another, that
he is permitted to transfer it. The transferor may get the physical
possession of the property in future, but if he has a subsisting title to
it in present, the restriction on his power to alienate the same cannot
be applied.
 Heir Apparent (mentioned in 6(a):
o The term 'heir apparent' is an English term and is based on the
maxim nemo est heres viventis which means that a living person
does not have any heir. An heir is a person who succeeds to the
property of another on his death if such person Wills the
property to him, or dies intestate.
 Chance (mentioned in 6(a):
o In case a person hopes to succeed to the property of an
intestate, what and how much, if at all would be the property
available for inheritance can again be ascertained at the time
when the owner dies. These two things, i.e., who the heir will be
and whether the property would be available can never be
postulated with concrete certainty before the death of the
owner.
 According to the literal interpretation of section 6(a), a person can
neither transfer nor renounce either a chance of inheriting the
property in future or the chance of obtaining a legacy on the death of
a kinsman and even if he does that, he would not be bound by such
transfer/renunciation as the same is expressly prohibited. However,
judicial interpretation of this section favours imposition of a rule of
estoppel as against such transferors who without having any present
interest, agree to transfer the property based on future possibilities
for a consideration and later try to avoid the same under this legal
rule.
 In Gulam Abbas v Haji Kayyam Ali, a man ran into financial difficulties
almost to the point of insolvency. He had four sons, A, B, C and D. A
and B paid his debts and C and D executed deeds in favour of A and B
acknowledging that in lieu of the such payment of debts of the father,
the rights of inheritance at the time of the death of the father from his
property would also be available only to A and B, and C and D would
not raise any objections to that effect. Upon the death of the father,
however, both C and D wanted to enforce their inheritance rights on
the ground, that the actual implication of the deed was a renunciation
of future rights of inheritance in favour of the brothers, and as such
 renunciation is void in terms of section 6(a), they would not be bound
by the same. TheApex Court held that a bare renunciation of an
expectation to inherit cannot bind the expectant heir's conduct in
future, but if the expectant heir goes further and receives a
consideration and so conducts himself as to mislead an owner into not
making dispositions of his property inter-vivos, the expectant heir
could be debarred from setting up his rights when it does
unquestionably vest in him. In other words, the principle of estoppel
remains untouched by this statement. Here, the two brothers who
executed the deeds relinquishing their claims for consideration could
not, when rights of inheritance vested in them at the time of their
father's death claim these; as such claim would be barred by estoppel.
It was irrespective of the question whether the deed could operate as
valid legally and effective surrender of their spes successionis.
 A mere right of re-entry for breach of a condition subsequent cannot
be transferred to anyone except the owner of the property (section
6(b):
o For instance, where the transferor transfers the property
subject to a condition that upon the transferee committing a
breach of condition of the agreement, the transferor would have
a right to enter the premises, this right of entry that is not
coupled with any other right and is conditional upon the
transferee committing a breach of a condition, is not
transferable.
 Easement (mentioned in 6(c))
o An easement is a right which the owner or occupier of certain
land1 possesses for the beneficial enjoyment2 of that land, to do
and continue to do something,3 or to prevent and continue to
prevent something from being done, in or upon, or in respect, of
certain other land that is not his own.4
1
'Land' includes things permanently attached to earth: See The Indian Easements Act, 1882,
section 4, Explanation. It also includes land under water: Chandee Churn Roy v Shib Chunder
Mundul, (1880) ILR 5 Cal 945, see also Ramessur Persad Narain Singh v Koonj Behary Pathuk,
(1879) ILR 4 Cal 633. Easements are attached to land for the beneficial enjoyment of which is
created and run with it, see Chinnasami Goundan v AS Balasundora Mudaliar, AIR 1934 Mad 575;
Ganesh Prasad v Khuda Baksh, AIR 1918 Oudh 296; Madan Mohun Chakravorty v Sashi Bhushan
Mukherji, AIR 1915 Cal 403.
2
Beneficial enjoyment includes possible convenience, remote advantage and even a mere
amenity, See the Indian Easements Act, 1882, section 4 Explanation.
3
To do something includes removal and appropriation by the dominant owner, for the
beneficial enjoyment of the dominant heritage of any part of the soil of the servient heritage, or
anything growing or subsisting upon it. See the Indian Easements Act, 1882, Explanation.
4
See the Indian Easements Act, 1882, section 4 para 1.
 o The land for the beneficial enjoyment over which a right of
easement exists is called the dominant heritage; and the owner
or occupier of that the dominant owner, and land on which the
liability is imposed, is called the servient heritage and the owner
or occupier of it is called the servient owner. An easement
cannot be transferred apart from the dominant heritage 5 to
which, by the nature of the right, it is attached. 6 This prohibition
does not touch the creation of new easements.7
 Interest restricted to personal enjoyment (mentioned in 6(d)
o An interest in property restricted in its enjoyment to the owner
personally cannot be transferred by him. As the right is personal
in character, it is untransferable. For instance, two brothers
partition a property and give a right of pre-emption to each
other, i.e., if any one of them wants to sell his portion, he must
first offer it to the other brother, who would have a preferential
right to buy it. This right is personal to the brothers and cannot
be transferred by them to a third party, and if they do so, such
transfer would be void.
 Right to future maintenance (mentioned in section 6(dd))
o Right to future maintenance in whatsoever manner arising,
secured or determined, cannot be transferred.47 This term
'whatsoever manner arising secured or determined' is very
exhaustive and covers cases where this right has been created
either under a will, deed or compromise.
o the right of a woman to either receive maintenance under a
decree or award of the court from her husband, or her ex-
husband, or from his property on his demise, or under a will is a
personal right. It is neither transferable nor can it be attached
by a court's decree.8
o If a right to receive maintenance were made transferable, then
it would go against the very purpose for which maintenance
laws are passed. The very objective of maintenance is that a
person unable to maintain himself or herself should not be left
destitute, and should be prevented from being in a state of
vagrancy. If it is allowed to be transferred, it will defeat this
very purpose. It is need based, and the liability on the provider

5
See The Transfer of Property Act, 1882, section 6(c).
6
Sital v Delanney, (1916) 20 Cal WN 1158, 34 IC 450.
7
Bagwan v Narasingh, AIR 1931 All 612.
8
the Code of Civil Procedure, 1908, section 60.
 cannot be extended to a transferee of future maintenance. But
where property is given to a Hindu widow for her maintenance,
the transfer of the property during her life is not transfer of the
right to maintenance, and is valid and effective during her
lifetime.9
 Mere Right to sue (6(e))
o 'Mere' means that the transferee has acquired no interest than a
bare right to sue. A right to sue is again a personal right that
only an aggrieved party can exercise to seek a remedy in a court
of law. Therefore, it is not assignable.
o For instance, A and B enter into a contract for sale of property.
The contract contains a clause that if A fails to execute the
transfer deed within a month, he would have to pay double the
amount of advance paid to him by B at the time of the
agreement. This claim of damages is personal to B and is
unassignable.
o There is a distinction between property, an interest in property
and a right to sue. A transfer of a right to recover profits which
arise out of land along with a transfer of land, is assignable. 10
 A decree is transferable. An order passed by the Railway Claims
Tribunal has all the incidents of decree of Civil Court, so where a
decree was passed in favour of the claimants awarding compensation
passed prior to death of claimant, their legal heirs would be entitled
to claim execution.11
 Public office and salary (section 6(f))
o The term public office or public officer has not been defined in
the TP Act, 1882. By 'public officer' it is meant a person who is
appointed to discharge a public duty, and receives a monetary
return for it in the form of a salary. As the salary is a return for
his personal services, it is neither transferable nor attachable. A
lien connotes a civil right of the government servant to hold post
to which he is appointed substantively i.e, in accordance with
law and cannot be transferred.
o However, an agreement by which a person agreed to pay a
certain proportion of his income to his brother in consideration
for his having been maintained and educated by the latter, does
not attract this provision merely because that person
9
Dhupnath v Ramcharit, AIR 1932 All 662; Kamalchunder v Sushila Bala, AIR 1938 Cal 405.
10
Gangaraju v Gopala, AIR 1957 AP 190.
11
Krishnakumar G v UOI, AIR 2011 Ker 166.
 subsequently becomes a government servant. The amount
agreed to be paid can be paid from his savings or any other
source, and therefore it does not amount to transfer of a public
office.12
 Stipends (mentioned in section 6(g)) are also not transferable.
 Transfer Opposed to the Nature of Interest (mentioned in section
6(h))
o No transfer can be made insofar as it is opposed to the nature of
the interest affected thereby. Thus, things dedicated to public or
religious uses,13 regalia, heirlooms and debutter property,14 or
service inam,15 cannot be transferred.
 Transfer for unlawful object or purpose (section 6(h)
o The object behind this provision is to prohibit transfers where
the object is unlawful or the consideration behind the transfer is
for a purpose opposed to public policy. For instance, a transfer
of property so that it could be used as a brothel, a gambling den
or for illicit cohabitation, by way of payment of a bribe, 16 to stifle
a prosecution,17 or to seek adoption of a child, 18 or marriage of a
daughter,19 would be opposed to public policy and therefore
void.
 Transfer to a person legally disqualified (mentioned in section 6 (h)
o Under section 7, the transferee must be competent to contract
and should not have been disqualified legally. While competency
to contract involves the twin elements of attainment of the age
of majority and soundness of mind, legal disqualification refers
to certain disabilities that have been imposed specifically by the
statutes preventing certain category of persons to be
transferees in certain cases and in specific capacity.
o For instance, if an officer or any person is assigned officially a
duty in connection with the sale of property, he cannot purchase
the same himself and in such cases, he would be legally
disqualified to be a transferee.20
12
Ananthayya v Subba Rao, AIR 1960 Mad 188.
13
Raja Verma Valia v Kettayath, (1875) 7 Mad HC 210.
14
Kanwar Doorganath v Ramchunder, (1877) ILR 2 Cal 341; Narayan v Chintaman, (1881) ILR 5
Bom 393; Shama v Abdul, (1898) 3 Cal WN 158.
15
Anjaneyalu v Devabrata, AIR 1949 Cal 278.
16
Gogun v Janokee, (1873) 20 WR 235; Protina v Dookhia, (1872) 18 WR 450.
17
Abdul Rehman v Ghulam Mohammad, AIR 1927 Lah 18.
18
Narayan v Gopalrao, AIR 1922 Bom 382.
19
Bakshi Das v Nadu Das, (1905) 1 Cal LJ 261; Dholidas v Fulchand, (1898) ILR 22 Bom 658.
20
Code of Civil Procedure, 1908, O XXI rule 73.
 Statutory prohibition on transfer of interest (section 6(i))
o A tenant having an untransferable right of occupancy cannot
transfer his interest.
o This clause contains an exception to the general rule that all
tenancies or leaseholds are transferable, and gives effect to the
rules provided under different enactments, whereby certain
categories of leasehold interests or tenancies are made
untransferable. For instance, under the Bengal Tenancy Act,
1885, a land in the possession of a ryot is untransferable, and if
transferred even by a mortgage, the landlord is empowered to
re-enter on the ground that the ryot has abandoned his
holdings.
 Read this section with section 136 of TP act also.

Section 7: —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.

 For a person to be competent to contract, two things are necessary,

i.e., he should have attained majority and be of sound mind, and
should not be disqualified to transfer property under the law to which
he is subject to.

Section 8: Unless a different intention is expressed or can be 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
accured 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.

 The clause 'unless a different intention is expressed or necessarily

implied' shows that this section operates in absence of an express or
implied contract between the parties. If the contract provides
otherwise, the provisions of this section would not have any
application. The rule enunciated here is designed to avoid confusion
or speculations with respect to 'what, if any' in the property passes
with its transfer.
 If the transferor transfers all the interest that he possesses in the
property that he possesses on that date, the entire interest that he
had, will pass. For example, A transfers a land on which there are
trees or a well.21 If nothing to the contrary is specified, the trees or
the well22 would pass along with the land to the buyer.

[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.

 Prior to the enactment of the TP Act, 1882, the primary condition for
the transfer of property was the delivery of possession of the
property. However, under the TP Act, 1882, the transfer of every
tangible property, reversion or other intangible thing where its value
is more than Rs 100; by mortgage (other than a mortgage by deposit
of title deeds) where the principal money secured by way of loan is
more than Rs 100, by gifts irrespective of the value of the property, or
lease for more than a year or where rent for more than 12 months has
been taken in advance, must be made in writing.23
 Section 107 says that a lease or rent for more than one year has to be
registered.
21
Arkkani v Subramaniam, AIR 2007 (NOC) 2118 (Mad).
22
Arkkani v Subramaniam, AIR 2007 (NOC) 2118 (Mad).
23
Where the value of property is of Rs 100 or more. See The Transfer of Property Act, 1882, sections 54
and 118. See also Keshrimull v Sukan Ram, AIR 1933 Pat 264 : 12 Pat. 616; Rajeshwar Prosad v
Bhupendra Naryan, AIR 1927 Cal 956; Where the lease is for more than a year or where the rent for more
than a year has been taken in advance. See The Transfer of Property Act, 1882, section 107; Where the
amount of loan is more than Rs 100 or more. See The Transfer of Property Act, 1882, section 59; See The
Transfer of Property Act, 1882, section 123; Hiralal v Gavrishankar, AIR 1928 Bom 250.
 Where the law requires a transfer to be made in writing, an oral
transfer will not convey any right from the transferor to the
transferee.24 For example, A sells his house to B for Rs 50,000 on the
basis of an oral agreement, by delivery of keys of the same. B does not
acquire a title as the consideration being more than Rs 100, the
transfer must take place with the help of a written, attested, and
registered document.

Section 10: Condition restraining alienation.—Where property is

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

 save with the help of law, no other person can interfere with this
power or right of the owner or dictate to him, what should be the
manner of alienation, should he alienate or not, or even what kind of
use it should be put to. In short, this right of alienation that is one of
the basic rights of the owner cannot be unreasonably encroached
upon by anyone through a private agreement.
 This general rule is applicable despite there being an express contract
to the contrary, and prevents the transferor from controlling the
power of alienation of the transferee once the interest in the property
is transferred.
 Restraint means preventing or stopping or disabling a person from
doing something. Absolute restraint, therefore, refers to a condition
that attempts to takes away either totally or substantially this power
of alienation.46 The use of the term 'absolutely' also suggests, that
where the restriction is partial, or little, it will be permitted. This
means that some or little control over the power of alienation, of the
present owner by the previous owner is allowed. This control is in the
shape of imposition of 'partial restraint'. The logic is that ordinarily in
a contract, when two people agree to abide by some conditions and
incorporate them in the contract, such conditions are binding on
24
Munnalal v Atmaram, AIR 2008 (NOC) 843 (MP); Kantaben Chandulal Shah v Gagiben, AIR 2005 Guj
49; Bishun Mahato v Raho Khalifa, AIR 2005 Jhar 85.
 them. These conditions may be in the nature of restraints, but unless
they extend to being an absolute deprival of the basic incident of
ownership at the behest of parties and not by law, they will be binding
on the parties, and a violation of the same would amount to a breach
of the contract, and would result in the consequences, also agreed
upon by the parties.
o A condition to sell only to specific persons25 is void, but a
condition not to sell outside the family would be a partial
restraint.26
 Exception to rule of restraint on alienation
There are two exceptions:
i. Lease and Restraint on Alienation
o A condition in the lease that the lessee shall not sublet or assign
his interest to anyone during the tenure of the lease is valid. 27
Similarly, a stipulation in the contract of lease that the lessee
would not sublet the premises and if he does, he would have to
pay a fourth of the consideration as nazar to the lessor,28 is valid
and enforceable. A condition in the lease deed that the lessee
would compulsorily have to surrender the lease in the event the
lessor needs to sell the property 29 is again valid. A condition in
the perpetual lease that the lease, though heritable, is not
assignable is also valid.
ii. Married woman and restraint on alienation
o The second exception provided under section 10 relates to a
non-Hindu, Mohammedan or Buddhist married women. The
section provides that property may be either transferred to or
for the benefit of such a woman, with a condition that she would
not have power during her marriage to transfer or even charge
the same or her beneficial interest therein. Thus, two conditions
must be satisfied:
(a) First, that the woman should be married. If she is a widow or
unmarried, no restraint can be imposed on her power of
alienation, and

25
Attwater v Attwater, (1853) 18 Beav 330.
26
Manohar Shivram Swami v Mahadeo Guruling Swami, AIR 1988 Bom 116; Mohomed Raza v Abbas
Bandi Bibi, AIR 1932 PC 158.
27
Raja Jagat Ranvir v Bagriden, AIR 1973 All 1.
28
Sardakripa v Bepin Chandra, AIR 1923 Cal 679; Kumar Chandra v Narendra Nath, AIR 1930 Cal 357;
Nabjan Sardar v Neburali Molla, AIR 1933 Cal 506.
29
Rama Rao v Thimappa, AIR 1925 Mad 732.
 (b) Secondly, she should not be a Hindu, Mohammedan or
Buddhist. The restriction can therefore be applied to a woman
who is a Christian, Parsi or a Jew.
o Under English common law, a woman's property, on marriage,
automatically became the property of her husband. This rule
was expressly abolished in India under section 4 of the Indian
Succession Act, 1865, but only where the marriage was
solemnised after 1 January 1866. At the same time, a married
woman (irrespective of her religion) could be prevented from
alienating the property settled on her, under two distinct rules—
section 10 of the TP Act, 1882, and sections 56 and 58 of The
Indian Trusts Act, 1882.

Section 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.

[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.]

 Once the property is transferred absolutely, the owner acquires

certain basic rights in the property. A right to possess and enjoy the
property is an inherent right of the owner, one that is inseparable
from the incidents of ownership. Therefore, save with the help of law,
no private agreement between the previous owner and the present
owner can be enforced, whereby the former can dictate to the current
owner, how he should use the property. If he does, the owner is
entitled to ignore it and use it in a manner consistent with his wishes
and convenience, without being liable for breach of contract.
 The instrument of transfer should evidence that an absolute interest
in favour of transferee has been created. 30 Thus, this provision is not
applicable in case of a usufruct,31 or where the land is given for use

30
Indu Kakkar v Haryana State Industrial Development Corpn. Ltd, AIR 1999 SC 296.
31
Jagdeo Baksh v Jwala Prasad, 15 IC 244.
 and cultivation only32 or where the grant is made for life,33 or where
the vendor reserves the subordinate interest to himself. 34 Where in a
contract of sale by one co-sharer to another, a condition was
incorporated that the vendee will not be entitled to collect the rent or
demand partition or encumber the land or alienate it, it was held that
the condition was void.35
 Distinction Between Section 10 and Section 11
o The primary difference between section 10 and section 11 is
that under section 10, it can be a transfer of either all the rights
in the property or even only some rights. It is a conveyance of a
transferable interest in the property that can be an absolute or
even a partial transfer, but section 11 applies only to those
cases where there is an absolute transfer, such as by way of sale
or gift. No right in the property is retained by the transferor in
the property, as the same is transferred absolutely to the
transferee.
o The second distinguishing feature is that section 10 relates to
the power of the owner to alienate the property, and makes total
restraints on it void, while section 11 protects the power of the
owner to enjoy the property in any manner whatsoever, without
there being any dictation from anyone.
o Section 11, like section 10, seeks to restraint the previous
holder/owner of the property to unduly interfere with the rights
of the owner of the property, once the property has passed to
him along with all the rights.
 An exception has been carved out for the benefit of the transferor in a
specific situation in the Act itself. Despite conveying an absolute
interest, the transferor is competent to not only impose, but also
enforce a condition directing the transferee/present owner, to enjoy
his interest or transfer in a specific manner if the same is necessary,
for the enjoyment of another property of the transferor, that is
retained by him.
 In Umashankar Agarwal v Daulatram Sahu,36 a shop was sold subject
to a condition that purchaser shall not be entitled to construct any
basement or any pakka construction but there was nothing to show
that this direction was made for the purpose of securing the beneficial
32
Kateswar Estate v Muhammad Amir, 46 IC 73.
33
Sooramma v Venkataraman, AIR 1952 Mad 116.
34
Bejoy Krishna v Ishwar Damodar, AIR 1954 Cal 400.
35
Mahram Das v Ajudhia, (1886) ILR 8 All 452; Official Receiver v Samudravijayan, AIR 1939 Mad 509.
36
AIR 2011 Chh 73.
 enjoyment of vendor's another property. His only plea was that
subject construction is adversely affecting him. The condition
stipulated was held contrary to the mandate of section 11 and hence
void.
 NOTE: SECTION 40 is related to this section.

Section 12. Condition making interest determinable on insolvency or

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

Nothing in this section applies to a condition in a lease for the benefit of

the lessor or those claiming under him.

 Section 12 provides that if the transferor includes a condition in the

deed that the interest created in the transfer will be defeated if the
transferee becomes insolvent, such condition would be void.
 The rule does not apply to a condition in a lease for the benefit of the
lessor or those claiming under him. 37 Thus, a covenant determining a
lease in the event of the insolvency of the lessee is valid, 38 but if the
lessee assigns the lease and then becomes insolvent, the condition
does not apply.39

Section 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.

 Section 13 gives effect to the general rule that a transfer can be

effected only between living persons. There cannot be a direct
transfer to a person who is not in existence or is unborn. This is the
reason why section 13 uses the expression transfer 'for the benefit of'
and not transfer 'to' an unborn person.
 Section 13 provides for a specific mechanism for transferring property
validly for the benefit of unborn persons. The procedure is as follows.

37
The Transfer of Property Act, 1882, section 12.
38
Vyankatraya v Shivrambhat, (1883) ILR 7 Bom 256.
39
Smith v Gronow, (1891) 2 QB 394.
(i) The person intending to transfer the property for the benefit of an
unborn person, should first create a life estate 40 in favour of a living
person and after it, an absolute estate in favour of the unborn person.
(ii) Till the person, in whose favour a life interest is created is alive, he
would hold the possession of the property, enjoy its usufruct i.e. enjoy
the property.
 A transfer in favour of an unborn person is therefore valid, provided it
is effected through a living person.41
 Validity of transfer is to be assessed by the language of the deed and
not by actual events
o In Girjish Dutt v Data Din, A made a gift of her property to B for
her life and then to her sons absolutely. B had no child on the
date of execution of the gift. The deed further provided that in
case B had only daughters, then the property would go to such
daughters but only for their life. In case B had no child then
after the death of B, the property was to go absolutely to X.
o The deed on paper provided a life estate in favour of B's unborn
daughters, which is contrary to the rule of section 13. However,
B died without any child, and X claimed the property under the
gift deed. The court held that where a transfer in favour of a
person or for his benefit is void under section 13, any transfer
contained in the same deed and intended to take effect or upon
failure of such prior transfer is also void. In determining
whether the transfer is in violation of section 13, regard has to
be made with respect to the contents of the deed and not to
what happened actually. Here, as the transfer in favour of X was
to take effect on failure of the third transfer stipulated in the
contract that was void, the transfer in favour of X also became
void. Hence, X's claim was defeated.
 The subsequent conduct of limited owner is irrelevant
o The original deed granting both a life interest in favour of a
living person and an absolute interest for an unborn person
cannot subsequently be tampered with by a limited beneficiary
to the detriment of the unborn person.
o In JV Satyanarayana v Pyboyina Manikyan, 42 a person A created
a life estate in favour of S, and an absolute interest in favour of

40
A life holder enjoys the property for his life only. He cannot transfer it to anyone. On his death, the
property goes back to the settler or to anyone else that the settler may direct.
41
P Rajamani Rurukul v Rama, (2010) 4 Mad LJ 47 : AIR 2010 Mad 197 .
42
AIR 1983 AP 139.
 the unborn sons of S. Before the birth of the sons, S executed a
relinquishment deed with respect to his life interest in the
property in favour of his father. With regard to the validity of
the transfer in favour of the sons of S, the court held that the
transfer in their favour was valid and unaffected by the
relinquishment deed executed by S, as its validity would be
guided by the terms of the original transfer deed and not by the
subsequent events including this act of relinquishment. When S
relinquished his life interest in favour of F, the absolute transfer
in favour of his sons was unaffected, as the validity was
dependent on the terms of the original grant, and that could not
be altered by any other person. S and his sons, both were the
beneficiaries under the original deed executed by A. Though the
interest created in their favour varied vis-à-vis each other, yet at
the same time, an intermediary or a beneficiary who took what
was granted under the transfer by A could not validly or legally
defeat the conferment of the interest in favour of the
subsequent and ultimate beneficiary either before or after their
birth, by any action of theirs. Even if they created a life interest
in favour of another person, by such relinquishment, they
cannot prevent the vesting of the property absolutely in favour
of their sons the moment they were born.
 Prior to the enactment of the TP Act, 1882, the rule under Hindu and
Muslim law was that a gift to a person who was not in existence, was
void. The position under Muslim law continues to be the same.
However, for Hindus, the rule was modified by a series of enactments
to bring it in conformity with section 13 of the TP Act, 1882. 43 Parallel
provisions have also been provided under the Indian Succession Act,
1925, which permits bequests for the benefit of an unborn person.
o Section 113. Bequest to person not in existence at testator's
death subject to prior bequest.—Where a bequest is made to a
person not in existence at the time of the testator's death,
subject to a prior bequest contained in the Will, the later
bequest shall be void, unless it comprises the whole of the
remaining interest of the testator in the thing bequeathed.
o Example: Property is bequeathed to A for his life, and after his
death to his eldest son for life, and after the death of the latter
to his eldest son. At the time of the testator's death, A has no
43
The Hindu Disposition of Property Act, 1916: the Madras Act of 1914. Both these Acts were amended by
the Act of 1929.
 son. Here the bequest to A's eldest son is a bequest to a person
not in existence at the testator's death. It is not a bequest of the
whole interest that remains to the testator. The bequest to A's
eldest son for his life is void.

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.

 Though the term perpetuity is not explained anywhere with reference

to specific number of years, it is understood under section 14 as
equivalent to the lifetime of one or more living persons plus the
minority (till attainment of eighteen years) of an unborn person, who
would take the absolute interest in the property.
 In continuation of the rule explained under section 13, rule against
perpetuity can be understood in this manner. Under section 20, it has
been provided that unless a contrary intention appears from the terms
of a transfer, where, on a transfer, an interest is created for the
benefit of a person not in existence, the moment he is born he
acquires a vested interest in it, although he may not immediately be
entitled to enjoy it, as the property may be in possession of the life
estate holder. But the vesting of property takes place at his birth.
 The term, 'unless a contrary intention shows', means that this rule of
vesting of property at birth can be changed by the transferor, and he
can stipulate the specific time of vesting of property in favour of the
beneficiary. However, he cannot stipulate a time of vesting which
goes beyond the period of perpetuity i.e., life time of a living person or
more than one living persons and the attainment of 18 years of the
person not in existence on the date of the transfer, but who would be
born at the time when the life estate comes to an end and would be
the ultimate beneficiary.
 For instance:
o A transfers property for life to B, and then to B's first child when
he attains the age of 18 years absolutely. B is living on the date
of the transfer but has no child. In this case, when B's first child
would be born, the property would not vest in him till he attains
the age of 18 years. If he dies without attaining the age of 18
 years, it would revert back to the transferor or his heirs as the
case may be.
o A transfers property for life to B, and then to B's first child when
he attains the age of 25 years. The transfer is void, as the
vesting of the property is postponed beyond the minority of B.
 The rule against perpetuity is based on the general principle that the
liberty or right of the owner of a property to alienate or transfer his
property at his pleasure, should not be so exercised that it is
detrimental to the property itself. If by any mechanism, the property
is made inalienable it would be detrimental to the property.
 Since the conferment of the life-estate, till attainment of majority of
the ultimate beneficiary, the property would be inalienable, and that
is the maximum period with respect to inalienability of the property
that is allowed under law.
 Rule against perpetuity does not apply to personal agreements. 44 It is
not concerned with contracts as such, or with contractual rights and
obligations as such. A contract to pay money to a person, his heirs or
legal representatives upon a future contingency, which may happen
beyond the period prescribed would be perfectly valid. It is therefore
well established that the rule of perpetuities concerns rights of
property only and does not affect the making of contracts which do
not create rights of property.45
 A lease is not a mere contract. It is a transfer of a right to possess and
enjoy the property, and can be created for a specific number of years
or even in perpetuity. However, rule against perpetuity is applicable
only in those cases where there is a transfer of property, and the
vesting of it is postponed beyond the period of perpetuity. It,
therefore, does not apply in cases of lease.
 Section 114 of the Indian Succession Act corresponds to section 14 of
the TP Act, 1882.

Section 15: Transfer to 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

44
Ram Baran v Ram Mohit, AIR 1967 SC 744; Nafar Chandra v Kailash, AIR 1921 Cal 328; see also
Maharaj Bahadur v Balchand, AIR 1922 PC 165, wherein it was held that a covenant of preemption is hit
by rule against perpetuity.
45
Walsh v Secretary of State for India, (1863) 10 HLS 367; South Eastern Railway Co v Associated
Portland Cement Manufacturers Ltd, (1910–1) Ch 12.
 13 and 14; suchinterest fails 1 [in regard to those persons only and
not in regard to the whole class].

 Prior to 1929, the rule was that if by the same transfer an interest was
created in favour of a class of persons, with respect to some of which
it was void, and for some valid, the interest failed with respect to all of
them.
 The law presently makes the transfer valid and effective for those, for
whom it is capable of taking effect.
 For example, A transfers his property to his son S, for his life and then
to his grandsons, when they attain the age of 18 years and to his
daughters when they reach the age of 21 years. S had no child at the
time of the transfer. This transfer created a life interest in favour of a
living person (son), which is permissible in law, but with respect to
the children of son, who were not in existence at the time of transfer,
the transfer for the benefit of the unborn sons of S was valid but for
unborn daughters, it is void as violative of rule against perpetuity. As
it stood before 1929, section 15 would have made the transfer in
favour of both the unborn sons and daughters' void. However, after
the amendment, and under the present law, the transfer in favour of
only the granddaughters will fail, but the same in favour of grandsons
would be valid and will be given effect to.
 Under the Indian Succession Act, 1925, section 115 corresponds to
section 15 of the TP Act, 1882.

Section 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.

 Prior transfer valid

o It must be noted that section 16, uses the term transfer
intended to take effect after or upon failure of 'prior interest',
which means that the transfer subsequent to or after the void
transfer fails and the transfer prior to or before this void
transfer would take effect.
 This rule is based on the principle that a condition following a void
condition or a transfer dependent upon a void transfer is in itself void,
even though if seen independently, it may be valid.
 Alternative transfer valid
o A transfer intended to take effect after or upon failure of a void
transfer must be distinguished from an alternative transfer,
which would be valid if otherwise capable of taking effect in law.
o For example, A makes a transfer of his property to B, and then
to B's children on their attaining the age of 21 years. He further
provides in the same deed, that if B has no child then he may
make the gift in favour of anyone he likes. The transfer for the
benefit of B's unborn child was void as offending the rule of
perpetuity, but the transfer at the pleasure of B is an alternative
and independent transfer that would commence from B, and not
A, and therefore would be valid.46
 Section 116 of Indian succession act 1925 corresponds to section 16
of TOPA.

Section 17: Direction for accumulation

 This section applies to transfers where the property and the income
arising from property are separated by the transferor while effecting a
transfer, and the transferee is directed not to spend the income but
accumulate it for a specific or a non-specific period.
 Where the period, for which the transferee cannot enjoy the income
but must accumulate it, exceeds the life of the transferor or a period
of 18 years, such direction for accumulation would be void and can be
validly ignored by the transferee for the period. Law favours free
alienation of property and spending of the income arising from it
except only where the tying up of property or storage or accumulation
of income is reasonably desired,
 The first part of section 17 specifies the time period beyond which the
direction for accumulation of income would be void. These limitations
are in the alternative, and not in combination of the two, such as the
life of the transferor and 18 years.
 A transfers a property to B in 1960, with a direction for accumulation
of income for a period of 20 years. A dies in 1990, i.e., 30 years after
the execution of the deed. After his death, the direction for
accumulation would become void. This direction of accumulation
would be valid only till the life of the transferor. This computation of

46
Javerbai v Kablibai, (1891) 16 Bom 492, for a similar case; see also Kumar Tarakeswar Roy v
Kumar Shoshi Shikhareswar, (1883) ILR 9 Cal 952.
 period is a matter of construction, and has to be gathered from the
intention of the transferor.47
 Exceptions: There are 3 exceptions –
o Payment of debts:
 Where the direction for accumulation of income is for the
payment of debts of the transferor or any other person
taking an interest under the transferor, then irrespective
of the time period, section 17(1) would not apply. The debt
may be existing or may arise in future. But the direction
for payment of debt must come from the transferor and
should not be at the instance of a third party.
 For the exception to apply the direction for accumulation
must be bona fide, and the debts must be paid out of the
income and not out of any other fund.
o Provision of portions for children or remoter issue
 A gifts a land to his son B, with a direction that the income
coming out of the land should be accumulated for 50 years
and the same should be used for the benefit of B's
children. The direction would be valid.

47
Re Errington, Errington–Turbutt v Errington, (1897) 76 LT 716.
 o Preservations and maintenance of the property
 Directions for accumulation of income arising from
property or a portion of it can be validly imposed, if such
direction is for the preservation and maintenance of the
property that is the subject matter of the transfer. Thus,
where it is directed that income be accumulated for
carrying out the necessary repairs to the house
transferred, it would be valid.
 The direction for accumulation under this exception would
be valid only where it is intended that it be used for the
maintenance and preservation of the property that is the
subject matter of transfer and not of a third property or
any other property.48

Section 18: Transfer in perpetuity for benefit of public.—The

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

 The principle underlying section 18 is to create a distinction between

transfers that are purely commercial or personal in character and
those which are intended to benefit the public.
 Section 18 specifies 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. These objects are religious
and charitable in nature and make the scope of application of the Act
very wide in nature as is apparent by the inclusion of the term 'any
other object beneficial to mankind'. The term mankind shows that the
beneficiaries under the transfer must be unspecified classes of
persons generally and cannot be specific individuals, related or
unrelated to the transferor.
 In Controller of Estate Duty, West Bengal v Usha Kumar,51
Venkataramiah J, dealing with a gift that was partly for the benefit of
certain specific individuals and partly for religious purposes but which
offended the rule against perpetuity; held that if the gift in favour of
individuals is bad for offending the rule against perpetuity, the
amount meant for such individual would become part of the property
endowed for religious purpose. The result would be that the total
settlement would be deemed to be for religious purposes.
48
Exception 3 for section 17.
 However, a gift for dharma is void as it is vague and uncertain, 49 as
also a gift for spreading Hindu religion.50
 The term health would cover gifts or bequests for the purposes of
betterment of public health such as gift or settlement of property
under bequests, for charitable dispensaries, trauma centers, eye care
centers, hospitals,51 institutions offering various medicare facilities,
establishment of yoga and nature care centers, would be exempt from
the rule against perpetuity.

Section 19: Vested interest.—Where, on a transfer of property, an

interest therein is created in favour of a person without specifying
the time when it is to take effect, or in terms specifying that it is to
take effect forthwith or on the happening of an event which must
happen, such interest is vested, unless a contrary intention appears
from the terms of the transfer.

A vested interest is not defeated by the death of the transferee before

he obtains possession.

Section 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 appear from the terms of
the transfer, a vested interest, although he may not be entitled to the
enjoyment thereof immediately on his birth.

 This section has to be read along with sections 13 and 14. It

postulates that where an interest is created for the benefit of an
unborn child, the moment the child is born, he takes a vested interest
in it but only if a contrary intention does not appear from the
language of the transfer. It signifies that the transferor is competent
to specify the time of the vesting. In accordance with section 14, the
time of vesting can be only between the time of birth of the child and
till he attains 18 years. If it is beyond 18 years, the transfer would be
void as violative of section 14. With respect to the enjoyment of the
property, a child, on birth, can enjoy the property through its parents
and guardians but vesting of property would take place either at the
time of the birth or at any time subsequent to it, but, before the
attainment of eighteen years.

49
Runchordas v Parvatibai, (1899) ILR 23 Bom 725.
50
Venkatanarasimha v Subba Rao, AIR 1923 Mad 376.
51
Broughton v Mercer, (1875) 14 Beng LR 422.
 The term 'if a contrary intention appears' means, therefore, that the
granter can specify the time of vesting, 52 as the transfer can be
effected in the future.53 Unborn children who are beneficiaries under a
trust can claim vested interest only after the death of the life estate
holder.54

Section 21. Contingent interest.—Where, on a transfer of property, an

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

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.

 If the transfer is dependent upon the happening of an event that is

bound to happen, the transferee takes a vested interest in the
property. 'Vested interest' means that the transfer is complete, even
though possession might not have been delivered. The ownership is
with the transferee, and if he dies, he is empowered to transmit the
property to his heirs. In contingent interest, the transfer is not
complete and is dependent on a condition precedent the happening
and fulfillment of which is not certain. It would be converted into a
vested interest only when the condition happens. If the transfer is
dependent on the happening of an uncertain event, it remains
contingent till the happening of that event, but on its happening, it
becomes a vested interest.
 For example, a gift to B, on the death of A's father is a vested interest,
but a gift to B on the birth of A's son is a contingent gift, as whether a
son will be born to A or not is uncertain, but the death of a human
being is a certain event. If son was born, it would become a vested
interest.

52
Glanville v Glanville, (1816) 2 Mer 38.
53
Samsuddin v Abdul Hussein, (1906) 31 Bom 165.
54
Rukhamanbai v Shivram, AIR 1981 SC 1881.
 In Usha Subbarao v BN Vishveswaraiah,66 the Apex Court had
observed:
“An interest is said to be a vested interest when there is immediate
right of present enjoyment or a present right for future
enjoyment. An interest is said to be contingent if the right of
enjoyment is made dependent upon some event or condition
which may or may not happen. On the happening of the event or
condition a contingent interest becomes a vested interest…
Although the question whether the interest created is a vested
or a contingent interest is dependent upon the intention to be
gathered from a comprehensive view of all the terms of the
document creating the interest, the court while construing the
document has to approach the task of construction in such
cases with a bias in favour of vested interest unless the
intention to the contrary is definite and clear.”
 Vested interest liable to be divested subsequently
o Vested interest may come to an end subsequently, if it is subject
to a condition, which is to be performed or would happen
subsequent to the transfer.
o For example, a gift to B, if he gets married before attaining the
age of 35 years is a contingent transfer, but a gift to B with a
condition that it will be forfeited if he remained unmarried till
the age of 35 years creates a vested interest in his favour and he
would be divested of this interest if he remains unmarried
beyond the age of 35 years.
 Difference between vested and contingent interests
o In vested interest, there is an immediate right of present
enjoyment or a present right for future enjoyment and in a
contingent interest, the right of enjoyment is made dependent
upon some event or condition, which may or may not happen. It
is only on the happening of that event or condition that the
interest becomes vested.
o Vested interest is heritable and transferable even if the
enjoyment is postponed, but contingent interest is transferable,
but not heritable.
o Vested interest can be attached by a decree of the court, i.e., a
court decree can be executed against it. However, a contingent
interest is not attachable because of the uncertainty involved.
Section 22: Transfer to members of a class who attain a particular age.
—Where, on a transferof 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.

Section 23: Transfer contingent on happening of specified uncertain

event.—Where, on a transferof 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.

 If in the same transfer, a prior interest is followed by a subsequent

contingent interest, the contingent interest would not take effect
unless the contingency happens, but if the prior interest comes to an
end and by that time the contingency does not happen, the
subsequent interest also fails because the vesting of the property
cannot be kept in abeyance. In between the two, i.e., the
determination of the prior transfer and the happening of the
contingency, there should not be any gap.
o A makes a gift to B and after him to C, if C attains the age of 15
years on the date of B's death. The transfer to B takes place, but
the one in favour of C is a contingent transfer and is dependent
upon C attaining the age of 15 years on the day of B's death. If
on the day B dies, C is two years old, then there would be a gap
of 13 years in between the first transfer coming to an end and
the second to take place. During this period of 13 years, the
vesting of the property would be in suspense, and therefore, the
second transfer would fail.
 where a testator who had a son, made a bequest and left everything in
favour of his unborn grandsons, who might be born within ten years
from the date of his death, the court held the disposition as void; as
between the death of the testator and the birth of such grandsons,
there could be a gap of ten years. During this time the vesting of the
property again would be in a state of suspense, and this interval of ten
years after the termination of the last interest and the birth of the
beneficiaries would make the disposition void.55
 Section 124 of the Indian Succession act of 1925 corresponds to this
section.
55
Official Assignee v Vedavalli, AIR 1926 Mad 936.
Section 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.

 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.
 Section 125 of succession act corresponds to this

Section 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.

 The transferor, as the owner of the property, can transfer it in

accordance with his wishes and conditions. It is up to the transferee
to either accept the transfer, or to reject it, as ordinarily no transfer
can be imposed on the transferee; transfer of property primarily being
a contract, but in certain cases, even if the transferee accepts the
transfer saddled with conditions, he is entitled to ignore these
conditions later without affecting the validity of the transfer as is the
case under sections 10, 11 and 12. This is because sometimes the law
offers him a way out. However, by and large, if the conditions are not
against the law, the transferee is bound to follow them and if he
refuses or fails to perform them, the transfer in itself fails to take
effect, as it becomes void.
 Where the transferor imposes conditions that are either impossible to
perform, or illegal or opposed to public policy, these void conditions
make the transfer in itself void. These conditions can be of two types,
conditions precedent, i.e., they have to be observed first and then only
the transfer would take place, and conditions subsequent, i.e., the
transfer takes place first and the conditions have to be observed by
the transferee at a later stage and if he does not comply with the
 conditions, then the transfer becomes void. section 25 deals with
conditions that are void.
 As per this section, 6 categories of conditions are void –
o Conditions impossible to perform
o Conditions forbidden by law
o Conditions if permitted would defeat the provifiosn of any law
o Fraudulent conditions
o Conditions involving or implying unjury to person and property
of another
o Conditions that are regarded as immoral or opposed to public
policy by the court
 What has to be seen here is that if these conditions are conditions
precedent, not only are the conditions void, they make the transfer
also void. However, if the condition is a condition subsequent, the
condition is void but the transfer may continue to be valid, i.e., a
subsequent void condition cannot affect the validity of the transfer,
but a void condition precedent renders the transfer itself void.
 Section 126 and 127 of Indian succession act corresponds to this
section

Section 26: Fulfilment of condition precedent.—Where the terms of

a transfer of property impose a conditions to be fulfilled before a
person can take an interest in the property, the condition shall be
deemed to have been substantially complied with.

 Illustration: 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.
 Where the transfer is subject to a condition precedent, this condition
has to be fulfilled first and then only can the transfer take place.
 Early vesting of property is always favoured and recommended, and
therefore, in keeping with this rule, the transfer would take place if
the conditions that the transferor/testator has laid down for the
transferee to comply with are substantially complied with.
 It is done primarily so that the transfer is not defeated in its entirety if
facts and circumstances change later to the execution of a transfer
and make part of the compliance difficult. Thus, whatever is possible
is permissible but this does not mean that the transferee on his own,
can deviate and partly fulfil the condition when its complete fulfilment
is possible.
 Section 128 of Indian Succession act corresponds to this section
Section 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, transfers to B that which he had transferred to her. A and his
wife perish together, under circumstances which make it impossible
to prove that she died before him. The disposition in favour of B does
not take effect.

 This section has to be contrasted with section 16 of the Act which

specifies that if the prior transfer fails due to violation of sections 13
and 14, then a transfer that was to take effect upon the prior transfer
would also fail. Similarly, if the prior interest fails under section 25,
then also, the subsequent interest fails.
 Sextion 129 of succession act corresponds to this section.

Section 28. Ulterior transfer conditional on happening or not

happening 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.
 Section 28 specifies a situation where, upon a transfer, the property
or an interest in it has already been vested in a particular person. This
person can be divested of the estate subsequently on the happening of
an uncertain event, and then the same estate would vest in another
person. That is, it terminates the interest of one person and vests the
same in another person. For the person in whom the estate initially
vested, a condition subsequent would divest him of the already vested
interest and for the person in whose favour it will then be vested, this
condition would be a condition precedent.
 Section 130 corresponds to this.
 The section does not apply when a gift over clause is after the vesting
of an absolute estate in favour of a specific person, described by name
or description or a relation.
o A makes an absolute gift56 to his son with full power of
alienation, yet at the same time provides that upon the grandson
attaining the age of 21 years, the property should be equally
divided between the sons and the grandsons. The gift over to
the grandson was void and therefore, son could not be divested
of this estate. It was an absolute gift that was vested in his
favour in the first place.
o in Suresh Chandra v Lalit Mohan, A bequeathed his property to
his wife absolutely, and then provided that if on her death there
was no son (adopted) or his legal representative, then the
remainders of the property was to go to A's heirs. Here the gift
over was held to be void, as an absolute estate on her death was
to go to her heirs and not in accordance with A's wishes.

Section 29: 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 a minor or
marries without C's consent, the Rs. 500 shall go to D. B marries
when only 17 years of age, without C's consent. The transfer to D
takes effect.
 Ignorance of a condition or stipulation in the document or legacy is no
excuse for its non-fulfilment, as a person would be deemed to have
knowledge of a condition in the document with the help of which he is
seeking either a transfer or a benefit under the legacy.
56
Anand Rao Vinayak v Administrator General of Bombay, (1896) ILR 20 Bom 450.
 Section 132 of Indian succession act corresponds to this.

Section 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 do not desert
her husband to C. B is entitled to the farm during her life as if no
condition had been inserted.

 Section 133 of Succession act corresponds to this section.

Section 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.

Illustration 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.

 For such conditions to 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.

Illustration 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.

 In illustration (b), the divesting of property would take place if B does

not perform a particular condition, i.e., if he does not go to England
within three years, he will be divested of the property.
 Section 134 of the Indian succession act corresponds to this.

Section 32: Such condition must 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.

 Corresponds to section 135 of Succession act

Section 33. Transfer conditional on performance of act, no time
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.

 Corresponds to section 136 of succession act.

Section 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-
fulfillment of which the interest is to pass from 15 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-fulfillment of the condition rendered impossible
or indefinitely postponed, the condition shall as against him be
deemed to have been fulfilled.

 this section incorporates a rule that prevents a person from taking

advantage of his own fraud.
 Sectionn 137 of succession act corresponds to this

Section 35. Election: 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 applies whether the transferor does or does not believe that
what he professes to transfer is not his own. The transferor may
genuinely believe that he is authorised to execute what he is
transferring, or he may deliberately transfer property belonging to
another, while giving him a benefit in the shape of executing another
transfer in his favour. He may even be ignorant of the principle of
election. Here, irrespective of the knowledge on part of the transferor,
the transferee must exercise election to confirm or reject both the
transfers. This part of section 35 corresponds to section 182 of the
Indian Succession Act, 1925.
 In Beepathuma v VS Kadambolithaya,64 a testator bequeathed a land
belonging to his niece, to his grandson, and left his niece a legacy of
Rs 800, it was held by the apex court that she must elect between the
land and the legacy. If she chooses to accept the legacy, she cannot
vitiate the transfer in favour of the nephew of her own property. While
accepting the legacy, she confirms the transfer in favour of the
nephew also.
 Transferee to have a proprietary interest: The transferee can be
permitted to elect only when he has a proprietary interest in the
property that has been transferred by the transferor in favour of a
third party. For instance, the transferor, transfers two properties to A
and B as part of the same transaction. Both the properties belong to
the transferor. No question of election would arise here either on part
of A or B as none of them had a proprietary interest in any of the
properties before the transfer.
 Same transaction: The transferee is not permitted to exercise election
if the two transfers are independent of each other and are not part of
the same transaction.57
o A beneficiary under a prior gift and a later Will is not precluded
by doctrine of election. For instance, A executes a transfer of his
son's property in favour of his second wife. Upon his son's
protest, he executes another deed after a week by which he gifts
his land to his son. Here the validity of the first transfer does
not depend on the doctrine of election, as both the transfers are
not part of the same transaction but are independent of each
other. Here the son can take the benefit under the second
transfer and at the same time refuse to go ahead with the first
one, as both transfers are separate and are not part of the same
transaction.
 Direct benefit: A person taking no benefit directly under a transaction
but deriving a benefit under it indirectly need not elect. For instance,
A gives a house X to B for life, and after his death, to B's son S
absolutely. He subsequently, makes a Will by which he gives X to C
and another property Y to B. Shortly thereafter A dies and then B dies
without making the election to either confirm or reject the benefit
under the bequest. His son S would now take X as per the original
transfer executed by A and would take the land Y under intestacy on
the death of his father B. As he is an indirect beneficiary, he would not
be required to put to election.58
 Acceptance with full knowledge implies final election: Acceptance of a
benefit implies an election.59 A party should not at the same time
affirm and disaffirm the same transaction.60 So when he accepts the
benefit under the transaction, the other transfer by which his own
property goes to another person, is automatically confirmed.
 Time for election: Ordinarily, the time for election may be fixed by the
transferor himself. In case it is so fixed and the transferee does not
elect, it will be presumed that he does not want to confirm the
transfer.61 In case of a person having a disability, election can be

57
Dahnpatti v Devi Prasad, (1970) 3 SCC 779; Mohammad Ali v Nisar Ali, AIR 1928 Oudh 67; see
also Kamal Kumari v Narendra Nath, (1909) 9 Cal LJ 19, wherein it was held that if the property
did not belong to the other legatee no question of election would arise.
58
the illustration to section 171 of the Indian Succession Act, 1925.
59
Beepathuma v VS Kadambolithaya, AIR 1965 SC 241: 19645 SCR 836.
60
Rungam v Atchama, (1858) 4 Mad IA 1; Shah Mukhun Lal v Kishen Singh, (1869) 12 Mad IA
157.
61
The Indian Succession Act, 1925, section 189.
 made either by his guardian of property or by him personally, when
the disability is removed.

Section 36. Apportionment of periodical payments 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 apportion able accordingly,
but to be payable on the days appointed for the payment thereof.

 Apportionment literally means distribution in accordance with

proportion. The present section relates to apportionment by time, and
provides rules for distribution of the amount of periodical payments
coming out of the property as between the transferor and the
transferee, after the transfer has been effected.
 It says that rents, annuities, pensions, dividends and other periodical
payments in the nature of income after the transfer shall be deemed
to accrue from day to day. The rule is incorporated to avoid confusion
and uncertainties.
 For instance, A has a house that he has given on rent. As per the
agreement with the tenant, the tenant pays Rs 3000 as rent to A on
the last day of each month. A sells this house to B on the tenth day of
the month. On the thirtieth day when the tenant pays the rent, A
would be entitled to the rent of the first ten days and the transferee
would take the rent for the rest of 20 days, i.e., the transferor would
take Rs 1000, and the transferee Rs 2000. The apportionment
contemplated here is applicable only as between the transferor and
the transferee,62 and follows the transfer of interest of a person
entitled to receive rents and not the transfer of an interest of a person
bound to pay it.63
 Apportionment applies to transfers subject to the act.
 Since transfer of property is primarily a contract, a contrary condition
in the deed would exclude the rule of apportionment.64

62
Satyabhamadevi v Ram, Kishore AIR 1975 MP 115; see also Lakshminarappa v Melothraman,
(1903) ILR 26 Mad 540, where on the death of a life interest holder a month before the rent for
half an year was due his assignee was held entitled to apportionment of rent up to the date of
the death of the lessor. See also Kunhi Sou v Mulloli Chathu, (1915) ILR 38 Mad 86, where liability
to pay rent was apportioned between the lessee and his assignee.
63
Satyendra Nath v Nilkantha, (1894) ILR 21 Cal 383.
64
Section 36 of TOPA.
Section 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.

illustration

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 purchase-money 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.

 Where the estate comprising of several villages is apportioned, the

existing rents will guide the division 65 and not the rents at the time of
the original tenure.
 The rules laid down here are for the convenience of the parties and
for peaceful settlement of disputes. They are not intended to put
heavy or impossible duties on the parties to the contract, and
therefore, if the duty cannot be severed or if the severance would
substantially increase the burden of the obligation, the duty shall be

65
Hari Chand v Tuluk Dhari, (1903) 7 Cal WN 453.
 performed for the benefit of such one of the several owners, as they
shall jointly designate for that purpose.

Section 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 immoveable
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.

 This section relates to transfer by a specific category of transferors

having qualified powers of alienation, i.e., who can transfer property
not generally like an owner, but can do it only in certain variable
circumstances. They have limited powers of alienation over the
property and if they exceed their powers, the transfer can be
challenged and may be declared void.
 The principle applies largely to cases arising under personal laws or
family laws. For instance it applies to the case of a Hindu father
transferring the joint family property for his own benefit, manager for
an infant,66 guardian of property of a ward, alienations by a Hindu
widow who took the property as a limited owner, other limited heirs 67
alienations by a mohunt or shebait of debutter property, 68 or an
unauthorised alienation made by the karta of the coparcenary
property,69 or by an executor of a minor's estate.70
 Since the transfer affected in favour of the transferee can be
challenged and has the potentiality of being declared void in certain
situations, the transferee has to be extra vigilant and must show that
he had taken reasonable care to ascertain the competency of the
transferor in the given situation. It is he who has to show that either

66
Hanooman Persad v Babooe, (1856) 6 Mad IA 393, 423.
67
Debi Pershad v Gopal Bhagat, (1913) ILR 40 Cal 721; Rangaswami v Nachiappa, (1919) ILR 42
Mad 523.
68
Niladri Sahu v Mahant Chaturbhuj Das, AIR 1926 PC 112; Prasunno Kumari v Golab Chand,
(1875) 14 Beng LR 450; Doorganath v Ram Chunder Sen, (1876) ILR 2 Cal 341.
69
Kameshwar Prasad v Run Bahadur, (1881) ILR 6 Cal 843; Sahu Ram v Bhup Singh, (1917) ILR
39 All 437.
70
Jugmohundas v Pallonjee, (1898) ILR 22 Bom 1; Kherodemoney v Doorgamoney, (1879) ILR 4
Cal 455; Sarat Chandra v Bhupendra Nath, (1898) ILR 25 Cal 103; Amulya v Kalidas, (1905) ILR 32
Cal 861.
 the need existed, or he had made proper and reasonable inquiries as
to the competency of the transferor and had also acted honestly.

30th March, 2021

SECTION 39

 Section 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 ***
the right may be enforced against the transferee, if he has notice
[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.
 Transfer is for value and the transferee has a notice of such right.
 Transfer is gratuitous, whether or not the transferee has notice od
such right of the third party.
 This section is there to protect a 3rd parties right who has a right to
receive maintenance from profits from a property which is held by
another party.
 Consider an example:
o A father has transferred a property by making a will to his son
and makes a provision in will that “every month the son has to
pay 25k rupees every month from the profits arising out of this
property to father’s daughter.”
o So the transfer is b/w father and son.
o Now, because of the will, the daughter got ight to receive profits
arising out of that house. Now what if, the son, without making
any alternative suitable arrangement to pay his sister, transfers
the property to Z.
o So now, can the daughter follow the property which is in hands
of Z?
o In view of section 39, only if Z is gratuitous transferee, B can
enforce it. Secondly, if it is a non-gratuitous transferee, but If he
had notice of these rights on the property, the daughter can
enforce it.
 Also, the right here is not against any individual, but against the
property.
 Adiveppa v. tengawwa (1974) 2 Kant LJ 45
 o There was a settlement b/w husband and wife and wife was
given a separate property as part of maintenance. Now while
house was in possession of wife, the owner of house was
husband only.
o Now while house was in possession of wife, husband sold
property to a third party (Z). Z took a property with a notice of
wife staying there and her cliam over property.
o Can buyer of this house, claim possession from wife?
 No, since he has notice of the possession.
o When can buyer claim possession? Or can he never claim
possession?
 After death of wife/if she remarries, etc. Z can claim
possession.
o Here Z is owner, but possession will be with wife.

Section 40

 (sir said we studied this already with section 11) – there is interplay
with section 11 and 41 he said.

SECTION 41

 Section 41: Transfer by ostensible owner. —Where, with the

consent, express or implied, of the persons interested in immoveable
property, a person is the ostensible owner of such property and
transfers the same for consideration, the transfer shall not be violable
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.
 So somebody is owner or is interested in property. Based on this,
somebody else is the ostensible owner. For example. B is the real
owner. With his consent A is ostensible owner. i.e. A appears to the
world to be owner. But A is the ostensible owner based on the consent
of B. Now A transfers the property for a consideration to Z. This
transfer cannot be void on the ground that A was not authorised.
Provided the transferee Z after taking care that the transferor here
had power to make such a transfer.
o So, the section puts a duty on transferee to ascertain that the
transferor here had authority to transfer.
 Ostensible means stated or appearing to be true, but not necessarily
so. So he appears to be owner, but in reality he is not an owner.
 o A woman owns a house. But she permits her husband to deal
with the house, as if the husband is owner of the house.
Husband’s name is entered into revenue record for the purpose
of taxes. And the husband makes all decisions, like to give for
rent, if any agreement has to be framed and all. Wife never
objects to the acts of husband. So, here the real owner is wife
and husband is ostensible owner.
o A father dies and there are two sons. His property is divided b/w
2 sons, S1 and S2. S1 lives in abroad. Since he is in abroad, the
entire property is taken care by S2. Here, S2 si the ostensible
owner, and S1 the real owner.
 Section 41 is an exception to the general principle – he who is not the
real owner has no right over the property.

Benami transaction

 Benami transaction is a transaction or an arrangement:- where

the property is transferred to or held by a person, and consideration
for such property has been provided or paid by another person.

Section 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.

 The principle underlying this section is that where there is a transfer

of property under which the transferor reserves to himself a power to
revoke the same under certain specified conditions, if after the first
transfer, he transfers the same property to another person; the first
transfer is automatically revoked. It also specifies that the transfer
and the power of revocating the same are inseparable in such cases. If
the power of revocation is subject to a condition, the transfer is also
subject to the same condition.71

Section 43. Transfer by unauthorised person who subsequently

acquires interest in property transferred.—Where a person
[fraudulently or] erroneously represents that he is authorised to
transfer certain immovable property and professes to transfer such

71
Judah v Abdool, 22 WR 60.
 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 .

 It can also be explained in the following words, i.e., where a person

having a limited interest in the property transfers a larger interest to
the transferee on a representation, and subsequently acquires the
larger interest, the larger interest passes to the transferee 72 at the
option of the latter.
 It gives the transferee the option to either go ahead with the transfer,
or to rescind the same.
 If the transferee still wants the transferor to perform his part of the
contract, he can exercise his option to validate this transfer that was
imperfect to begin with and the transfer shall become valid on the
exercise of such option by the transferee. 73 Here, the willingness of
the transferor to go ahead with transfer is immaterial and it is solely
on the wishes of the transferee, which he has to show by exercising
the option that the transfer shall become valid.
 Ingredients of section 43:
o Transferor makes a representation to the effect that he is
competent to transfer a particular piece of immovable property
o Representation is erroneous or fraudulent or not true
o Traferee believes or is made to believe that representation is
correct and transferor is competent to transfer
o Transferor professes to transfer the property for a consideration
o Transferee acts on represeantaion and enteres into contract

72
Prem Nath Khanna v State of Orissa, AIR 2009 Ori 166; Ram Bhawan Singh v Jagdish, (1990) 4
SCC 309; Abdul Kader v Jamebie Khatun, (1951) AP 815.
73
Hardev Singh v Gurmail Singh, AIR 2007 SC 1058; Sachidanand Pandey v Ram Phar Singh, AIR
2004 All 232; Lakhwinder Singh v Paramjit Kaur, AIR 2004 P&H 6.
 o The transferor subsequently acquires competency to transfer
the same property;
o Contract is subsisting
o Property is still with transferor
o Transferee exercises option to signify his intention to go ahead
with the contract
 Rule of estoppel
o This rule of estoppel is based on two common law doctrines—
the doctrine of estoppel and the equitable doctrine. Following
the doctrine of estoppel by deed, it prevents a person who
promises more than what he can perform from claiming his
incompetency as a legitimate excuse to avoid his liabilities in a
situation when he acquires competency to fulfill his promise,
and following the equitable doctrine, such a person is compelled
to make good his promise when he becomes competent to
perform it.
 This rule won’t apply in absence of representation
o Equity requires an erroneous74 or fraudulent75 representation
from the transferor that he is competent to transfer the
property.76 In absence of representation, the doctrine does not
apply,77 but that does not mean that if the transferor is silent
about his capacity, when there is a duty to speak, he can escape
the applicability of rule of estoppel as against him. What is
material is that the transferee must be misled. If there is no
representation by the transferee, it means that the transferee
was not misled but actually knew about the defect in the title.
o It is only when the transferee is led to believe of absolute
interest or title on part of the transferor and acts 78 on that

74
Hattikudur v Andur, (1915) 28 Mad LJ 44, wherein it was held that the representation need
not be intentionally false.
75
Jamuna Mayee v Koimaindra, AIR 1953 Mad 427.
76
In absence of such a representation the doctrine does not apply; see Kanthimathinatha v Vayyapuri, AIR
1963 Mad 37; Ram Bharose v Bhagwan Din, AIR 1943 Oudh 196; Krishna Parmada v Dhirendra, AIR
1929 PC 50; Ladu Narain v Gobardhan, AIR 1925 Pat 470; Pandiri Bangaram v Karumoory, (1910) 34
Mad 159; Jagan Nath v Dibbo, (1908) 31 All 53.
77
Sardamoyi v Anil Chandra, AIR 1923 Cal 165; Kanthimathsinatha v Vyyapuri, AIR 1963 Mad 37; Ram
Bharosey v Bhagwan Din, AIR 1943 Oudh 196; Jabedali v Bhagwan Din, AIR 1923 Cal 423; Krishna
Paramada v Dhirendra, AIR 1929 PC 50; Lado Narain v Gobardhan, AIR 1925 Pat 470; Jagannath v
Dibbo, (1908) 31 All 53.
78
Mulraj v Ider Singh, AIR 1926 All 102; Gopi Nath v Rup Ram, AIR 1930 All 786; Sunder Lal v Ghissa,
AIR 1929 All 589; Lado Narain v Gobardhan, AIR 1925 Pat 470; Kodi v Moidin, (1918) 35 Mad LJ 120;
Jagenath v Dhanpati, AIR 1934 All 969 overruled by Parmanand v Champalal, AIR 1956 All 225 FB
and dissented from in Vyatla v Iwaturi, (1956) AWR 115.
 representation, that he is entitled to take advantage 79 of the fact
that the transferor subsequently gets the full interest 80 or
becomes the owner of the property.81
 What is tranfer happens without representation, but the transferee
also wasn’t aware of the incompetency?
o In such cases also, the presumption is that when a person says
"he will transfer the property", it means that what he is
conveying to the other is that he is authorised to do so. Even in
such cases, the rule of estoppel will operate against the
transferor, and on attaining competency, he will be stopped
from denying his obligations under the contract.82
 Knowledge may be actual or constructive
o Knowledge on part of the transferee with respect to the defect
in title of the transferor need not be actual knowledge.
o If the circumstances are such that as a reasonable, prudent
person, the transferee, to safeguard his own interests had made
sufficient inquiries that he ought to have made, or had been
vigilant and upon doing so, he could have detected the lack of
title, he would be deemed to have constructive notice of the lack
of title, and section 43 would not apply. As a prospective
purchaser he ought to have made reasonable inquiries that a
normal prudent person would have made.
o The Supreme Court in Kartar Singh's case83 has overruled a
plethora of cases,84 including Lord Halsbury's famous
statement,85 wherein it was held that section 43 does not impose
upon the transferee, the duty to take care.

79
Jumma Masjid v K Deviah, AIR 1962 SC 847, wherein it was held that when a person transfers property
representing that he has a present and transferable interest therein whereas he has only a spes successionis
the transferee is entitled to the benefit of the doctrine of feeding the grant by estoppel; Panduri v
Karumoory, (1908) 34 Mad 159.
80
Ram Bhawan Singh v Jagdish, (1990) 4 SCC 309; Abdul Kadar v Jamebie Khatun, (1951) AP 815.
81
Lada v Gobardhan, AIR 1925 Pat 470; Mulraj v Indur Singh, AIR 1926 All 102 overruled in AIR
1956 All 225 (FB); Adhilakshmi v Nattasivan, AIR 1944 Mad 530.
82
Ram Lal v Shiama Lal, AIR 1931 All 275; Goya Din v Kashi, (1907) ILR 29 All 163.
83
Kartar Singh v Harbans Kaur, (1994) 4 SCC 730.
84
Ganga Prasad v Raghubansa, AIR 1937 Oudh 127; Zogu Ram v Venkata Kreshnayya, AIR 1946
Mad 107; Madirazu v Bommadevara, AIR 1946 Mad 107; Gopi Nath v Rup Ram, AIR 1930 All 786,
wherein it was held that a person making erroneous representation cannot take the defence that
the transferee did not make proper inquiries.
85
In Bloomenthal v Ford, (1897) AC 156, 162, Lord Halsbury observed with respect to a person
who makes a misrepresentation, that was acted upon by the transferee that he cannot turn back
and upon his acquisition of competency to perform his obligations under the contract, say, "I
told you so and so you ought not to have believed me. You were too great a fool. I had a right to
mislead you because you were too great a fool".
Section 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.

 The term "transfer" here, includes both an absolute transfer as well as

transfer of an interest in immovable property. The rule specified
herein applies therefore to a mortgage,86 lease,87 sale88 and also
involuntary sales, as a rule of equity justice and good conscience. 89
 Even though the present section confines the ineligibility of the
transferee to have a joint possession of the property in case of a
dwelling house, the transferee is not entitled to joint possession
where the classical rule of Hindu law forbids it, 90 or where he has
purchased an undivided interest of the coparcenor91 even where the
coparcener is permitted to alienate it. 92 He is only entitled to enforce

86
Hari Harayyar v Ahmmadunni, AIR 1040 Mad 491; Balwant Rai v Gurdas Rai, AIR 1974 P & H
160; Haranandan Das v Muhamad Kalim, AIR 1944 Pat 341.
87
Rajani Mohan v Sahmbhunath, AIR 1929 Cal 710; Mohamad Jafar v Mazhar-ul-ashan, (1906) 3
All LJ 474; Bhagwat Sahai v Bipin Bihari, (1910) ILR 37 Cal 918; Hemadri Nath Khan v. Ramani
Kanta Roy, (1897) ILR 24 Cal 575.
88
KS Krishna v Krishan, AIR 1993 Ker 134.
89
Pudipaddy Lakshmi Narasamma v Gadi Ranganaya Kamma, AIR 1962 Ori 147; Jagatbandhu
Biswas v Iswar Chandra, AIR 1948 Cal 61.
90
The principle stated here does not override the Mitakshara law, see Premanayakam v
Sivaraman, AIR 1952 Mad 419; Kota Balabhadra v Khetra Das, (1916) 31 Mad LJ 275.
91
Sheo Nath Seth v Krishna Kumari Devi, AIR 1973 All 496; see also Ramdas v Sitabai, AIR 2009
SC 2735, where the suit of the alienee for partition and possession of the undivided coparcenary
property was dismissed by the court on the ground that a coparcener is incompetent to alienate
his undivided share in the Mitakshara coparcenary without the consent of the other
coparceners.
92
Ram Dayal v Manaulal, AIR 1973 MP 222, wherein it was held that though a coparcenor can
alienate his undivided interest in the property, he has no right to alienate a specific property
belonging to coparcenary. In case of such alienation it would be valid only to the extent of his
share; see also Maharu v Dhansai, AIR 1992 MP 220.
 a partition93 of the share that he has acquired,94 subject to any charge
or encumbrances affecting the coparcenary property95 or interest at
the time of the transfer.
 The section provides an exception to the general rule of the transferor
stepping into the shoes of the transferee, but only where the property
purchased is a share in a dwelling house. In such cases the right of
the transferee would be to ask for partition of the house and not a
right of joint residence in it with the other members.

Section 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.

 Section 45 enacts a rule where property is transferred for

consideration,96 and is purchased by two or more persons jointly. To
determine the quantum of their respective interest in this property,
the Act provides that in absence of a contract to the contrary 97 their

93
Lalita James v Ajit Kumar, AIR 1991 MP; Ramdayal v Manik Lal, AIR 1973 MP 22. Such a
partition suit need not be general in character but can be with respect to a specific property. See
Ram Mohun v Mul Chand, (1906) ILR 28 All 39.
94
Ramdas v Sitabai, AIR 2009 SC 2735; Ishrappa v Krishna, AIR 1922 Bom 413; Manjawa v
Shanmuggu, (1915) ILR 38 Mad 684; Shivmurteppa v Virappa, (1900) ILR 24 Bom 128.
95
Such charge or encumbrance may also include a Hindu son's liability attaching to that
interest of paying his father's personal debts untainted with immorality, see Venkureddi v Venku
Reddi, AIR 1927 Mad 471.
96
The above principle applies where transfer is for consideration and therefore does not apply
to gifts, Arakal v Domingo, (1911) 34 Mad 80.
97
CV Ramaswami Naidu v CS Shyamala Devi, (1978) 1 Mad LJ 505, wherein it was held that an
intention to the contrary would negate the application of this rule.
 interest in the property would be in proportion to their contribution 98
towards the consideration.99
 The principle applies when two or more persons jointly purchase a
property in the property by paying considerations that are different
vis-à-vis each other, such as in a sale. It is also applicable in case of
transfer of an interest in the property such as by way of a lease and a
mortgage.

12th April, 2021

Section 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.

 Example: A, owing a moiety (1/2 part), and B and C, each a quarter

share, of mauzaSultanpur, exchange an eighth share of that mauza for
a quarter share of mauzaLalpura. 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 that mauza.

Section 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, proprotionately to
the extent of such shares.

 Example: A, the owner of an eight-anna share, and B and C, each the

owner of a four-anna share, in mauzaSultanpur, 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-

98
The Transfer of Property Act, 1882, section 45; see Parshottam v Janki, 4 All LJ 257, wherein it was held
that the property acquired by three brothers out of common fund would be held by them in proportion of
their interest in the common fund.
99
The principle stated herein helps to determine the quantum of the interest of co-purchasers and its
determination, see Guruswami Asari v Raju Asari, AIR 1973 Mad 473.
 anna share is taken from the share of A, and half-an-anna share from
each of the shares of B and C

Section 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.

 This is a principle of equity here.

 Qui prior est tempore potior est jure (he who is first/prior in time is
better in law or he has the better title who was the first in point of
time - subsequent dealings by the transferor of the same property
cannot be to the prejudice to the rights of the transferee over the
same property)
 A person may, on 1st Jan transfer a immovable property to B. And
then, A transfer the same property to C on 1 st April. Now the situation
is such that there are 2 transferees (B & C). And they are transferees
in respect of same immovable property. And the situation is such that
both B & C cannot exercise their rights together to a full extent. This
is a situation of conflict.
o Section 38-43 & 48-53 of ToPA deal with such cases of interest
situations.
o So, as per the law (rule f priority), one who has a better title as
per law, he wil get priority.
o Here, B will get it.
 The object is that subsequent deals by transferor of the same property
cannot be done to the prejudice of rights of the prior transferee.
 What if the subsequent transferee did not know of the rights of prior
transferee? Is the transfer voidable on his part?
o A executes a sale deed in favour of B. Before sale deed was
registered, A executes another sale deed in favour of C. And the
sale deed in respect of C is registered first. Here, C will get it.
o When there is a conflict, the courts will enquire not as to which
party was in possession, but under what instrument was he in
possession. And when this right actually commenced. So here, it
is not sufficient if the seller just purports.
o So, in this example, B’s rights aren’t violated when A sold the
property to C.
 For determination of priority, where 2 transfers are registered on
same day, but one was executed prior, and other was executed alter.
Here, section 47 of Registration act will be applicable. Time from
which registered document operates. —A registered document shall
operate from the time which it would have commenced to operate if
no registration thereof had been required or made, and not from the
time of its registration.
o Check ss 47-50 of Registration act.
 There are 2 mortgages. And both are compulsorily registerable as per
section 17 of Registration act. The prior mortgage is not registered.
The second one is.
o Registeration when compulsory, transfer is complete. Because if
a mortgage is never registered, transfer is not complete. So,
rule of priority will not apply. Since it is not a complete transfer.
 However, in this situation also, there are 2 mortgages.
First in favour of B and then on C. Both are compulsorily
registerable. But first is unregistered. And the subsequent
one with C has notice of prior mortgage. Here rule of
pripority will apply. Because there is notice.
 Suppose A executes a lease in favour of B (compulsory
registration is needed). But it is never registered. Now, A
subsequently sells the same property to C for
consideration by fulfilling all procedural requirements.
Here, B will not have precedence. C will get priority over
B.

Seciton 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.

 This is to be read with section 135. And by this, when even polic is
transferred, then transferee, to whom policy is assigned, can directly
approach insurance policy.

Section 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.

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 is subsequently evicted there from
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 his 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 arc growing when he is evicted
therefrom, he is entitled to such crops and to free ingress and egress
to gather and carry them.

 The fundamental principle on which this section is based is the maxim

—"he who seeks equity must do equity". Under this section, law
imposes an obligation upon the evictor to compensate a person acting
honestly and making improvements on the evictor's property. While
evicting such person, the real owner cannot appropriate or take
benefit of the improvements made by this person without
compensating him.
 What is absolutely essential is that the transferee was under a
conviction that he holds the title and was competent to improve the
property. If he knew that he does not have the title to the property, he
would not be entitled to the protection under this section and the
benefit of the improvements would pass to the real owner.100
 The words "absolutely entitled thereto" indicate that the transferee
must acquire a property under an absolute transfer. It should be a
transfer of all the rights in the property and not transfer of an interest
in it. A transferee under a partial transfer like a mortgagee 101 or a
100
Ismail Hajee Essa Trust v Muslim Educational Society (Registered), R.F.A. No. 329 of 2008, decided on
21 February 2017, High Court Of Kerala : 2017 (1) KHC 916.
101
Santhankumar v Indian Bank, AIR 1967 SC 1296; Gopi Lal v Abdul Hamid, AIR 1928 All 381; Bechu v
Bhabhuti Prasad, AIR 1931 All 201; Ramappa v Yellappa, AIR 1928 Bom 140; Vribhukandas v
 lessee,102 including a permanent lessee,103 cannot take the benefit of
the improvements they have made as they are not absolutely entitled
to the land.104 Where a mortgagee honestly believes himself to be so
entitled,105 such as in a mortgage by conditional sale,106 or where he is
misled by an erroneous order of the court 107 or by a term of forfeiture
of property after five years in the deed, 108 he would be entitled to
protection.
 The transferee must have made improvements, believing in good faith,
i.e., honestly believing, that he is entitled to the immovable
property.109 Failure to prove that would disentitle him to the benefit of
the improvements.110 It is essential not only to plead that the
transferor thought that he was absolutely entitled to the property but
also that the transferee knew that the transferor so thought, and was
led by the transferee's inaction, to think thus. 111 What is necessary is
the belief of the transferee's absolute entitlement and not that the
property is free from all encumbrances.
 Improvement means any work which adds to the market value of the
property consistent with the purpose for which it was let out, which
enhances the value of the property as a marketable subject.
Improvement is not ascertained merely by the amount of money spent
on the property, but on the enhancement of the value of the property.

16th April 2021

Section 52: Transfer of property pending suit relating thereto.—

During the 1 [pendency] in any Court having authority 2 [ 3 [within
the limits of India excluding the State of Jammu and Kashmir] or
established beyond such limits] by 4 [the Central Government 5 ***]
of 6 [any] suit or proceeding 7 [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
Dayaram, (1908) ILR 32 Bom 32; Parshar v Ganu, (1903) 5 Bom LR 643.
102
The rule does not apply as between a landlord and a tenant, see Raja of Venkatagiri v Mukku Narasaya,
AIR 1914 Mad 564; Darbari v Raneeganj Coal Association, AIR 1944 Pat 30.
103
Pandarasannadhi v Anantha Krishnaswami, AIR 1939 Mad 247
104
Sidha Nath v Har Narain, AIR 1937 Oudh 446.
105
Pandulal v G Daniel, AIR 1951 Ajm 16; Sidde Gowda v Nadakala, AIR 1952 Mys 117.
106
Pandiyan v Vellayappa, (1917) 33 Mad LJ 316.
107
Narayan Nanajee Gayadhani v Ganesh Trimbak Gayadhani, AIR 1926 Bom 599.
108
Mussamat Ram Kaur v Pratab Singh, (1919) PR 58; Ludha Mal v Jagan Nath, (1888) PR 123.
109
Durga Devi v Beni Prasad, AIR 2008 (NOC) 1619 (HP); Emerald Valley Estate Ltd v State of
Kerala, (2000) 3 Ker LT 16.
110
Govardhan v Mukharai, AIR 1949 Ngp 465.
111
Nannu v Ramchunder, AIR 1931 All 277 FB.
 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.

 The section says, when there is a suit over an immovable property, the
same cannot be transferred or otherwise dealt with anyway, so as to
affect rights of any other party.
 The general principle is that in case of any dispute between parties,
normally, the decision of court binds only the specific parties.
 However, doctrine of lis pendens evolved. While suit is pending before
court, no new right should be introduced. This rue says that if a
transfer is made while the suit is pending, the transfer will be subject
to the decision of the court. This means that the courts judfgement
will bind the party to the transfer.
o So, if there is a suit b/w A & B. During the pendency of suit, B
transfers to C. The suit when decided, is in favour of A. So here,
even C is bound by the judgement. Here, the decision of court
would be enforceable against C also.
 The present section incorporates a rule that makes all alienation of
the property that is the subject matter of a dispute, pending in a
court, awaiting disposal, subject to the decision of this court. In other
words, whosoever takes the property by a transfer during the
pendency of the litigation, would be automatically bound by the
decision of the court and it would be enforceable as against him,
irrespective of whether he was formally joined in the litigation as a
party or not.112
 This section was amended by a state amendment by Bombay Act,
1939 and is applicable only in MH and Gujarat.
o Section 52(1) provides basically provides what is in section 52
with some additions. It mentions that – “…directly and
specifically in question, if notice of the pendency of such
suit or proceeding is registered under section 18 of the
Indian Registration Act, 1908, the property after the
notice is so registered cannot be transferred or otherwise
dealt…”
o So, for application of section 52 in states of Gujarat and MH,
that the party giving a notice in required format should be

112
Haji Abdul Mateen v Sheikh Haji Firozuddin, AIR 2014 Del 111.
 registered under section 18 of Registration act. After such
notice is registered, no property can be transferred.
o The requirements to be mentioned in the notice is
 (a) The name and address of the owner of immovable
property or other person whose right to immovable
property is in question;
 (b) The description of the immovable property the right to
which is in question;
 (c) The court in which the suit or proceeding is pending;
 (d) The nature and title of the suit or proceeding; and
 (e) The date on which the suit or proceeding was
instituted.
 What is pendency?
o In general, the suit commences from the time the filing of plaint
has been filed and it continues113 till the suit or proceeding is
pending in appeal or execution.114
o So, it starts from the time a plaint is instituted, and goes on till
the decree is executed and the possession is delivered.
o Here, it is important that the plaint be presented before a
‘competent court’. It cannot be said that the suit has been
initiated if the plaint has been filed before some court which has
no jurisdiction.
o If plaint has any flaws (insufficient stamp), and court rejects it,
and a fresh plaint has been submitted at a later stage, if a
transfer takes place between the rejection and new plaint, then
Lis pendens will not apply here.
o The explanation says that the suit is pending till the satisfaction
or discharge of such decree or order which has been obtained.
So, unless the decree or order is executed and if possession is in
question, it is delivered, only then the suit will be over.
o Here, Lis pendens continues even till appeal.
o Case – Dalip Kumar v. Jeevan Ram (read this)
 Collusive suits
o So, a suit under section 52 must be a genuine proceeding and
not a collusive suit. A transfer during its pendency would not be
hit by the rule of lis pendens.
 Notice

113
Explaination to section 52.
114
Gobind Chunder v Gurchuran, (1888) ILR 15 Cal 94.
 o Section 52 incorporates a statutory rule that is based on the
rule of expediency, and public policy, no question of good faith
or bona fide arises. It is immaterial whether the alienee
pendente lite had or had not notice of the pending proceeding,
and the transferee cannot plead that he had no notice that the
property was the subject matter of litigation. As section 52
forbids transfer of right in third party during pendency of
litigation, therefore, the sale is illegal even if the purchaser
pendente lite had no idea of status quo.
o where during the pendency of a suit for specific performance
the suit land was purchased, this transfer would be hit by rule of
lis pendens and the question of good faith, essential for
establishing any relief would be irrelevant. 115 A transferee
pendente lite cannot seek the protection of section 41 as he
cannot be considered a bona fide transferee without notice.116
 Right created before filing of a suit
o In Supreme General Films Exchange v Brij Nath Singh Deo, A,
the owners of an immovable property had borrowed a sum of Rs
2,50,000 from B on the strength of bales of cotton. As this
security was not sufficient, they mortgaged the immovable
property (theatre) in favour of B. A was unable to repay the loan
and B filed a suit in 1954 that ended in a compromise in 1960,
as per which the theatre was to be sold and the loan amount
was to be realised from the sale proceeds. This theatre was in
occupation of a tenant who had its possession since 1940, under
an unregistered lease deed. The lease was for the purposes of
running a cinema and had expired in 1946. Since then, no
further lease deed had been executed in their favour till 1956. It
was only in 1956 that in response to a suit for specific
performance of contract filed by the tenant as against A, that A
executed a registered lease deed in the tenant's favour for a
period of eight years with an option for renewal till 1970. It
should be noted that this property, with respect to which the
lease was executed, was the subject matter of a dispute in a
court of law from 1954 till 1960. Therefore, the execution of the
lease was during the pendency of the litigation. As this very
property was kept as a security, with the mortgagee, and the
mortgagee had caused the property to be sold with the help of
115
Parveen Kumar v Baljinder Kaur, AIR 2010 P&H 40.
116
Lakhwinder Singh v Dilbagh Singh, AIR 2010 (NOC) 1113 (P&H).
 the court, there was a right in specific immovable property
directly and specifically in question. The tenant contended that
as they had an antecedent right on the property created with
the help of a letter in 1948 itself, no new rights were created
with the help of this registered lease deed. It was a mere
continuation of an antecedent right and therefore the same was
not hit by the rule of lis pendens even if it was executed during
the pendency of the litigation. This lease deed, that was
executed in pursuance to a suit filed by the tenant against A in
1954 itself, was seven months later to the filing of the suit by
the mortgagee. The Supreme Court rejected the contention of
the tenant and held that since the earlier right created in favour
of the tenant was with the help of a document that was
incapable of taking effect in law, the lease of 1956, for the first
time created an interest in the property in their favour. Since
this creation was pendente lite, this transfer of a right would be
hit by the rule of lis pendens. Consequently, the tenant was to
take the lease in his favour subject to the outcome of the
decision of the court. The result would be that he would have to
vacate the premises. If he had an antecedent right created in his
favour prior to the commencement of the suit, then he would
have been able to retain the possession of the premises as per
the terms of the lease. But in the present situation, since the
lease was executed in their favour, while the suit was pending in
a court of law awaiting decision, the rights of the tenant were
subject to the decision of the court.
o Where the filing of the suit and the transfer of the suit property
takes place on the same day, there is no presumption that the
suit was filed earlier and it must be proved that it was so filed, 117
and the onus of proving it is on the person who wants the
benefit of lis pendens.118 A suit to enforce a time barred pre-
existing right is for the creation of a new right, and is therefore
hit by lis pendens.119
 Or otherwise dealt with

117
Venkataramana v Rangiah, AIR 1922 Mad 249; Veerakutty v Ramaswami, 32 IC 31; Guru
Rusappa v Santhappa, AIR 1925 Mad 710; Sudana Devi v Rajendra Singh, AIR 1973 Pat 199.
118
Narayana Pillai Chandrasekharan Nayar v Kunju Amma Thankamma, AIR 1990 Ker 177;
Subbaya v Yellamma, (1886) ILR 9 Mad 130.
119
Bishan Singh v Khazan Singh, AIR 1958 SC 838.
 o The property that is the subject matter of the litigation cannot
be transferred or otherwise dealt with.120 The term "or
otherwise dealt with" includes a case of partition. 121 Therefore, a
partition of the property affected during the pendency of a
litigation involving this property would be subject to the rule of
lis pendens. It would also cover a contract for sale,122 or a
release or surrender,123 but does not include any forcible taking
of possession.124
 Part to the suit
o A third party if effects a transfer, lis pendens is not applicable.
However, if a legal representative of a party deals with it, then
lis pendens will apply.
 Status of the transfer
o The language of the section is prohibitive in nature. section 52
uses the phrase "the property cannot be transferred or
otherwise dealt with". At the same time, the transfer pendente
lite is not void,125 but is only subject to the outcome of the
litigation.126
o So, a mere suit does not restrict a party from dealing a party to
suit. It just says that such dealing is subject to the decision of
the suit.

Section [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

120
Prataprao Narayan Pawar v Ramchandra Dalichand Sancheti, AIR 2008 (NOC)1412 (Bom).
121
Subramanya v Subayya, AIR 1961 Ker 335; Khemchand v Mul Chand, AIR 1934 Lah 457;
Basappa v Bhimangowda, AIR 1928 Bom 65; Nand Kishore v Lallu, AIR 1931 All 45; Bhupendra v
Taru, AIR 1950 Assam 119; see however, Sheikh Ali v Pestonji, (1896) 1 Cal WN 62, wherein it
was held that lease granted pending a suit for partition is not hit by rule of lis pendens.
122
Kubra Bibi v Khudaija, 20 OC 13.
123
Lakshmanan v Kamal, AIR 1959 Ker 67 (FB).
124
Dhansingh v Sushilabai, AIR 1968 Mad 229.
125
Motilal v Karabuddin, (1897) 25 Cal 179, PC.
126
Padmaja v Erattil Sanjeev, AIR 2007 (NOC) 70 (Ker).
 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.]

 Sometimes property might be transferred with a mala fide intention.

Section 53 deals with this.
 Section 53 has 2 parts:
o 53(1) deals with transfer made fraudulently with creditors
o 53(2) deals with transder made fraudulently with subsequent
transferee.
 Section 53 does not deal with illegal/ sham , etc. transfers. Here the
transfer would be legal. However, the intention here is to delay or
defeat the interest of creditors or a subsequent transferee. When such
is the case, the transfer is voidable at the instance of the creditor.
 So, this section does not impair rights of transferee who has paid
consideration and taken the property in good faith.
 Section 53 does not affect any law related to insolvency.
 A has a land. He borrows 10 lakh from B. Money is to be paid in 1
year. When A fails to repay, he is afraid that B will take an illegal act.
The land of A is his only immovable property by which B can recover
his loan. A transfers the land to C with the intention that B should not
be able to enforce his rights against A. two instances can be here.
o (a) C knows A’s intention. At the option of B, transfer b/w A & C
is voidable. Because the transfer made by A to C was with
intention to deafeat claim of B (A’s creditor).
o (b) C does not know A’s intention. And he has no notice, actual
or constructive of the intention of A, his interest would be
protected. So, B has no right to enforce against C, as he is a
bona fide transferee.
 Preference to one creditor:
o Musahur Sahu v. Hakim Lal

19th April 2021

Section 53A: Part performance. - Where any person contracts to
transfer for consideration any immoveable property by writing signed
by him or on his behalf from which the terms necessary to constitute
the transfer can be ascertained with reasonable certainty,

and the transferee has. in part performance of the contract, taken

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

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

then, notwithstanding that 2 ***, or, where there is an instrument of

transfer, that the transfer has not been completed in the manner
prescribed there for 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.]

 The section seeks to protect prospective transferees, and allows them

to retain the possession of the property, as against the transferors,
who after executing an incomplete instrument of transfer, fail to
complete it in the manner specified by law, without there being any
fault on part of the transferee.
 Essentials of section 53A
o There has to be a transfer: can be either absolute or partial
o Transfer should have been on the basis of the contract, and this
contract for transferring should necessarily be in writing (unlike
in English law – section 53A mandates for a written contract,
which means 53A does not apply to those cases which involve
oral contracts)
o The contract has to be executed – i.e. the contract has to be
signed by the transferor, or somebody on behalf of the
transferor.
 o After 2001 amendment, this contract has to be registered.
If it is prior to 24 sept 2001, then reg. is not required.
o The contract has to have clear terms which are ascertainable
with reasonable certainity.
o Consideration has to be there for the contract. So gifts and all
won’t apply.
o Possession must be taken by transferee in furtherance of
contract (this has to be discussed in elaboration)
o Possession has to be taken in part performance or the
transferee already in possession, continues in possession in part
performance of the contract and has done some act in
furtherance of the contract.
 This equitable doctrine of part performance can be
misused by persons in lawful occupation of the property,
other than the owners of the property, if they were
inducted into the premises, under a particular contract
such as a tenant or a mortgagee in possession, and then
wanted to retain possession in the garb of a partly
performed contract. In such cases, the courts are very
vigilant and a duty is imposed on the transferees claiming
protection of the doctrine to show that they had done
something in furtherance of the contract to prove the
genuineness of their claim.
 So, here, the transferee has to show that he has done an
act in furtherance of the contract.
 In Babu Murlidhar v Saudagar Mohammad Abdul
Bashir,127 there was an unregistered agreement of sale
(incomplete transfer) executed by the mortgagor in favour
of the mortgagee in possession that stated that after the
date of the agreement, the mortgagee who had been in
possession as such would become the owner of the
property and that he could get his name mutated into
mutation register of the municipality and in
implementation of this agreement of sale, the mortgagor
himself made an application for mutation to the municipal
authorities and the name of the mortgagee was mutated
as the owner of the property. This was held as sufficient
act done in furtherance of the contract by the parties in a

127
AIR 1970 Mys 203.
 case where the mortgagee already had the possession of
the property and continued in possession.
 In Jahangir Begum v Gulam Ali Ahmed,128 merely putting
up some structure on the property by the party in
possession and retention of possession was not considered
as an act sufficient to enable him to take the benefit of
part performance.
 in Kukaji v Basantilal,129 A had mortgaged his house to B
by a usufructuary mortgage, i.e., possession was delivered
to the mortgagee. Subsequently, he sold the house to B in
consideration of the mortgage debt and the amount spent
on improvements and repairs on the house. The deed was
not registered. Subsequently, A sold the same properties
to C under a registered sale deed. C sued B for
redemption of mortgage and B put up the defence of
retention of possession in part performance of the
contract. Rejecting the defence of part performance, the
court held that as B was already in possession as a
mortgagee, unless he shows that he did some act in
furtherance of the contract over and above being in
possession, mere continuance of possession would not
constitute part performance.
 However, courts have held that payment of consideration
alone is insufficient to show evidence of act done in
furtherance of the contract
 Sardar Govindrao Mahadik v Devi Sahai, A
mortgaged his immovable properties with B for
securing a loan of Rs 10,000. The mortgage was an
anomalous mortgage, i.e., a combination of
usufructuary and a simple mortgage. In pursuance
of this mortgage, the possession of the property was
delivered to the mortgagee. Subsequently, there
were some negotiations and according to the
mortgagee, it was agreed that the property would be
sold to him by the mortgagor for Rs 50,000. For this
sale, the mortgagee had advanced Rs. 1,000 for the
purchase of stamps to be affixed on the deed. A sale
deed was drawn up but was not registered in favour
128
AIR 1955 Hyd 101.
129
AIR 1955 MB 93.
 of the mortgagee. Rather, the mortgagor sold the
property to C, through a written, attested and
registered sale deed. C, along with A, filed a suit
against the mortgagee, who still retained possession
of the property for accounts and for redemption of
the property.
 The SC explored in detail the scope of the term
"anything done in furtherance of the contract" and
held that to assess whether the acts done in
furtherance of the contract are sufficient to attract
the application of the doctrine, is to be assessed by
not looking at the contract first and then the acts
done; but the correct approach is to see the acts
first, and then explore the possibility of there being
a contract on the basis of these acts. In some cases
even a single act may be sufficient, while in others, a
series of acts may not be enough. The result will
vary from case to case, depending upon the facts
and circumstance of the case. The court held that
here the act of advancing money for the purchase of
stamps and meeting the incidental expenses was
antecedent to the contract and not in furtherance of
the contract and therefore, would be insufficient for
the application of the doctrine. Here the promise
that was made by the mortgagee to the mortgagor
was that the contract of the sale would be a
conditional contract that would enable the
mortgagor to buy the property if he was able to
arrange the money within a specified period of time.
Further, the mortgagee had also agreed to clear all
other dues of the mortgagor, but the contract of sale
prepared by the mortgagee was of an outright sale
without any condition of repurchase incorporated in
it. Secondly, the mortgagee had also not cleared his
other dues as was promised by him. This was
precisely why the mortgagor had not executed the
sale in favour of the mortgagee but had sold it to C
in accordance with the terms and conditions that
suited him. The court held that the mortgagee here
 was not entitled to the benefit of the doctrine of part
performance.
 Under section 53A, the protection given to transferee is he can
protect the possession to the property; however, no right is created in
favour of transferee. Because here, contract hasn’t yet been
completed. So, the section cannot be used as an independent remedy.
So, no suit on the title can be maintained.
 Further, the transfer must be legal. If it is illegal, there is no remedy
under section 53 A.
 Prabodh kumar das v. Dantamara tea co ltd:
o There was a tea garden. Owner of this was Mrs. G & Company.
They got into a contract to sell it to SN Roy. SN Roy paid some
consideration, and got possession. However, there was no
conveyance (so, a unregistered contract). Dantamara tea
company (respondent) case was that they got this tea company
from G & Co by way of a contract. Since there was failure of
contract b/w SN Roy, G & Co. sold it to respondent was the
contention. SN Roy & Pramod kumar did not have title, but had
possession in furtherance of contract. Dantamara had contract,
but not in possession.
o The issue was – the Dantmara Tea Co. Ltd., and others have no
right or title to the estate and are debarred from enforcing any
right to the estate, including the right to sell tea under the
export quota allotted to it or to transfer the quota rights to any
person.
o So, one has possession, but no export right (as no registered
agreement), Respondent has quota right, but no possession.
o Court decided that S. 53-A conferred no right of action on a
transferee in possession under an unregistered contract of sale.
The right conferred by S. 53-A is a right available only to the
defendant to protect his possession
 So, section 53A provides passive equity and not active equity. It gievs
right to defend, but no right for action.
 Section 53A provides right to defend to transferee. But to protect
rights under 53A, he can approach court even as plaintiff, but only to
defend his possession. It should not be to take some different action.
o E.g: if there is a forceful eviction by the transferor, I guess he
can file a suit for injunction as well. So he can be either plaintiff
or defendant.
 Right of a Bonafide transferee for value
o The rights of a transferee for consideration who has no notice of
the contract or of part performance thereof are not effected by
this doctrine.
o However, a subsequent transferee who is deemed to have
constructive notice of the right of possessor (initial buyer)
where he failed to make inquiries from him, and the onus is on
subsequent transferee to prove that he is a bona fide transferee
for consideration and without notice.
 E.g.: A and B enter contract to sell land. But contract not
registered, but only possession given. A contracts with C.
C has no idea about previous contract nor about his
possession. Although B has defence of part performance
under 53A, C’s right will prevail over B. Because C is bona
fide, has paid consideration, and without notice. If C had
notice about prior contract or about part performance,
then the general rule of property act (section 48 of TPA)
will prevail.
o DS Parvathamma v A Srinivasan:
 a person A, was the owner of the house and inducted B
into it as his tenant. Three years later B entered into an
agreement with A to purchase the house and therefore his
possession altered its character—and from being a tenant
in possession, he became a purchaser in possession. 13
years later, A sold the same property to C with the help of
a written and registered document. C, as a bona fide
purchaser for value, filed a suit for claiming possession of
the property from B, and B raised the defence of doctrine
of part performance to protect and retention of his
possession. Meanwhile, B had filed a suit against A and his
wife for specific performance of the contract. This suit was
not only barred by limitation but also suffered from gross
delay and latches. The court held that B had not disowned
his character as a tenant and there was no finding that he
was in possession of the property in part performance of
the contract and B had not pursued the matter further.
The Apex Court here held that B can not be allowed to
take the benefit of the doctrine of part performance for
the following reasons:
 That B's suit for injunction seeking to protect his
possession was rejected by the court. A remedy of
 specific performance of the contract that was also
added to the same suit was also rejected and;
 B had failed to prove that he was delivered
possession of the property in part performance of
the contract. His capacity to continue in possession
of the property as a tenant had not changed and he
had not shown that he had done anything in
furtherance of the contract to show his altered
position.
 The court held that B was not entitled to protect his
possession under the doctrine of part performance and C's
rights as a bona fide purchaser for value were to be
protected.

Till now, we studied the general principles to ToP. These

principles always have to be in mind, and have to be applied to
specific transfer.

In the next module, we will look into these specific transfers.

NEW MODULE – SALE (Ss. 54-57)

Section 54: “Sale” defined.—“Sale” is a transfer of ownership in

exchange for a price paid or promised or part-paid and part-
promised.

Sale how made.—Such transfer, in the case of tangible immoveable

property of the value of one hundred rupees and upwards, or in the
case of a reversion or other intangible thing, can be made only by a
registered instrument.

In the case of tangible immoveable property of a value less than one

hundred rupees, such transfer may be made either by a registered
instrument or by delivery of the property.

Delivery of tangible immoveable property takes place when the seller

places the buyer, or such person as he directs, in possession of the
property.

Contract for sale.—A contract for the sale of immoveable property is a

contract that a sale of such property shall take place on terms settled
 between the parties. It does not, of itself, create any interest in or
charge on such property.

 An owner has three basic rights over his property, a right of title, an
exclusive right to possess and enjoy the property and an exclusive
right to alienate it. When One person transfers all these rights to
another person in return of a price paid, then a sale has taken place.
Once sold, the seller does not have any right left.
 Sale is an absolute transfer unlike mortgage or a lease. Even gift is an
absolute transfer, but in a gift, consideration does not exist. Incase of
exchange, there is transfer of all three rights. However, in exchange,
consideration is not money, but just ownership is transferred b/w teo
people.
 In a lease, only right to enjoy is transferred. In mortgage interest in
property is transferred. This is partial transfer.
 hire purchase agreement: also known as an installment plan or the
never-never, is an arrangement whereby a customer agrees to a
contract to acquire an asset by paying an initial installment and
repays the balance of the price of the asset plus interest over a period
of time.
o So, a hire purchase agreement may become a sale. It is not
necessary that this has to be converted into sale.
o Hire purchase agreement is like a bailment. E.g: when doing
construction, we will need machines. One option is to buy the
machines, but we won’t need the machine for a long time, since
machines are costly. So, we hire the machines. But this might
culminate into sale. So until it does not culminate into sale,
transferor has right over property and can take the property
back.
 Essentials of valid sale:
o Parties to sale
o Subject matter of sale
o Price
o Mode of executing a sale
 Parties to sale:
o Usually, seller and buyer are parties.
o The seller must be a person competent to contract. Further he
must have capacity to transfer.
o Buyer should be competent to receive the property. Section 136
of TP act is important here. Buyer can be a minor also. Sale
 deed can be with minor, but agreement to sell cannot be done
with minor.
 Subject matter of sale;
o Section 54 only governs the sale of immovable property.
Immovable property can be tangible or intangible. Tangible
property is one that can be touched, such as a land, house, a
tree etc., while intangible property refers to property that
cannot be touched such as a right of fishery, a right of way etc.
o And this immovable property should be identifiable. For that,
the plot number, the street and the area must be clearly
mentioned
 Price
o Price, that is fixed by the contract antecedent to the conveyance
is the essence of a contract of sale, and in the ordinary sense
connotes money consideration for the sale of property.
o Where, instead of price, some other valuable consideration is
kept, the transaction is not a sale but can be an exchange or a
barter. Where the consideration is money but is not specific, the
transaction would still be a sale.
o The ordinary rule governing sale is that payment of
consideration is simultaneous with the time when the
conveyance is executed by the seller. This rule can be deviated
from in case of an agreement to the contrary by the parties.
o Where money consideration is not specific, the transaction will
still be a case of sale.
o Payment of consideration happens simultaneously with the
conveyance. However, at times, the parties can choose the way
they want to deal with the sale by changing their agreement.
o Price is essence for contract of sale. But time of paying the
consideration is not essential.
 Formalities for effecting sale:
o Section 54 lays down a specific method for the execution of a
sale deed with respect to immovable property and completion of
sale. Generally speaking, in a sale, the three requirements of
law are that transfer of property by sale must take place with
the help of a validly executed sale deed, by the transferor in
writing, is properly attested, and registered.
o Registration:
 Sale of tangible immovable property of the value of Rs 100
and upwards or in case of a reversion or other intangible
things as aforesaid, can be made only in writing.
 In the case of tangible immovable property of the value of
less than Rs 100, transfers may be made either by a
registered instrument or by delivery of the property.
o Delivery of tangible immovable property takes place when the
seller places the buyer or such person as he directs, in
possession of the property.
o Registration and transfer of ownership:
 Writing, attestation and registration are the mandatory
requirements for the completion of a valid sale of
property, whose value is more than Rs 100. Transfer of
ownership cannot take place without registration, and it
concludes on registration unless there is a contrary
intention expressed in the contract.
o If there is no registration of the sale deed, no property passes as
there is no transfer.
 Contract for sale:
o There can be an agreement of sale before the execution of a sale
deed.130 A contract for sale of immovable property is a contract
that a sale of such property shall take place on terms settled
between the parties.131 While a sale is a transfer of ownership, a
contract for sale is merely a document creating a right to obtain
another document, namely a registered sale-deed to complete
the transaction of sale of an immovable property.
o The Delhi High court has held that any contract/agreement of
sale which is not a registered deed of conveyance (deed of sale)
would fall short of the requirements of sections 54 and 55 of TP
Act and will not confer any title nor transfer any interest in an
immovable property (except to the limited right granted under
section 53A of TP Act).
o The distinction between contract of sale and agreement to sell
lies in the transfer of property in a thing from one person to
another, for a price. A registered sale deed alone conveys a

130
Munna Scrap Traders Bhavanagar v UOI, AIR 1999 Guj 240.
131
Munnalal v Atmaram, AIR 2008 (NOC) 843 (MP); Subbireddy v K N Srinivasa Murthy, AIR 2006 Kant
4; Jagir Singh v Ranjeet Singh, AIR 2006 Raj 105; Inder Chand v Jethi, AIR 2006 Raj 251; Arjuna Reddy
v Arjuna C Thanga,(2006) 7 SCC 756; Ramlal v Phagua, (2006) 1 SCC 168; Satya Prakash Goel v Ram
Krishna Mission, AIR 1991 All 343.
 valid title over the property, but a sale agreement does not
create any valid title.
o Sale = Contract + conveyance
o Conveyance means the legal process of transferring a property.
o Agreement to sell does not create valid title.
o Suraj land industries v. state of Haryana
o In Ramesh Chand Ardavatiya v Anil Pangwani, the owner of a
piece of land entered into an agreement for its sale with B. On
payment of the advance amount, he handed over the possession
to B but failed to execute a sale deed in his favour. B
constructed a boundary wall, but this land was encroached upon
by the trespassers on behest of A. B filed a suit in a court of law
for a declaration that he was in peaceful possession of the
property and sought a permanent injunction from the court
restraining the trespassers from interfering with his peaceful
possession of the property. The court held that B was entitled to
protect his possession. They directed that A should assert his
title through due process of law and was restrained from taking
the law in his own hands. The court observed,
A contract for sale of immovable 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 immovable property.
However, still if a person who entered into possession
over immovable property under a contract for sale and is
in peaceful and settled possession of the property with the
consent of the person in whom the title vests, he is
entitled to protect his possession against the whole world,
excepting a person having a title better than what he or
his vendor possesses. If he is in possession of the property
in part performance of the contract for sale and the
requirements of S. 53A are satisfied, he may protect his
possession even against the true owner.
o Suraj Lamp Industries v. State of Haryana
o

Section 55: Rights and liabilities of buyer and seller

o Law imposes seven duties on the seller, six prior to the passing of
ownership, and one after the title has passed in favour of the buyer,
which are as follows:

(i) Disclosure of material defects relating to property;

o The buyer's omission to ask questions does not relieve the seller of his
liability to disclose material defects. 132 If the seller fails to do so, it
would entitle the buyer to refuse to complete the sale. 133 There is no
duty to disclose such defects of which the buyer has actual 134 or
constructive notice,135 but a mistake with respect to a fact material to
the property will make the agreement void.136
o The defect must be such that if it was known to the buyer, his decision
to purchase the property would have been fundamentally affected. In
Sukhdev Kaur v Gurdev Singh,137 at the time of execution of an
agreement to sell, a proposal for notification for acquisition of the
land for establishment of military Cantonment was pending before the
government, but was not issued. The seller is not bound to disclose
the same, and a failure of disclosure of this information at the time of
conclusion of the agreement to sell would not amount to non
disclosure of a material defect.

(ii) Allowing the buyer to examine documents relating to property on

request;

o Generally, the law imposes a duty on the buyer to satisfy himself with
respect to the competency of the transferor, and also whether there is
a charge due over the property or not. In order to get good value for
his money, he has to be vigilant, and the facility of inspection of all
documents relating to the property is mandatory. Law recognises this
and the seller is therefore, in law bound to produce to the buyer, on
his request for examination all documents of title relating to the
properties, which are in the seller's possession or power. 138
o Law imposes a duty on the seller to produce documents for inspection
by the buyer and not to give them to the buyer for good. He is not

132
Ratanlal v Nanabhai, AIR 1956 Bom 175.
133
Lallubhai Rupchand v Mohanlal Sarkarchand, AIR 1935 Bom 16.
134
Gondu Ramasubbu Iyer v Muthiah Kone., AIR 1925 Mad 968.
135
Harilal v Mulchand, AIR 1928 Bom 427; Ganapat Ranglal v Mangilal Hiralal, AIR 1962 MP 144.
136
Meghi v Tyeballi, AIR 1925 Bom 64; Nursing Das v Chuttoo Lal, AIR 1923 Cal 641.
137
AIR 2011 P&H 122.
138
If the buyer does not make any request there is no obligation to produce the deeds, see
Maung Po Te v Maung Shew Ko., 35 IC 373.
 bound to deliver them to the buyer till he pays him the whole of the
purchase money.139

(iii) To answer the related queries or questions of buyer;

(iv) Execute a proper conveyance in favour of buyer;

o The sale deed has to be executed by the seller. It is he who has to sign
the deed. It is his signatures that are to be attested properly, and it is
at his behest that the document has to be registered. Normally, till
registration takes place, the ownership does not pass and therefore,
upon the payment or tender of the amount due in respect of the price,
the seller is under a duty to execute a proper conveyance of the
property when the buyer tenders it to him for execution at a proper
time and place.

(v) To take care of property and related documents in between the date
of contract to sell and actual execution of sale deed;

o Once the contract of sale has been entered into and the seller knows
that the property is going to be sold to the buyer, still he cannot be
negligent towards the property.
o The position of the seller is like that of a trustee. 140 He must keep the
property in reasonable repair and protect it from injury by
trespassers.141 The duty extends to protect the title deeds as well. 142
Neglect to perform this duty will entitle the buyer to a claim of
compensation.

(vi) To give possession to the buyer;

o Possession has to be given when the property passes 143 to the buyer,
which would generally be at the time of the execution of the sale
deed144 though it may vary from case to case

(vii) To pay rent or public charges due on the property till the date of
the sale.

139
Molly Ajithkumar v Vimala Sasidharan, AIR 2012 Ker 87 : 2012 (1) Ker LT 555; Jyoti Prosad
Singh Deo v HV Law & Co Ltd, AIR 1930 Cal 561.
140
Shashi Bhushan v Rai Chand, AIR 1950 Cal 333.
141
Royal Bristol Permanent Building Society v Bomash, (1887) 35 ChD 390.
142
Homby v Matcham, (1848) 16 Sim 325; Brown v Sewel, (1853) 11 Hare 49; on completion he
must deliver the sale deeds to the buyer, see Re Duthy and Jesson, (1898) 1 Ch 419.
143
Subbaroyar v Kottava, (1916) Mad WN 284.
144
Sri Ram v Kidari Prashad, AIR 1925 Lah 481.
 o Public charges literally refer to financial or other liabilities such as tax
liabilities to the statutory authorities 145 and include government
revenue146 and municipal taxes.147
o Conveyance of a clear and a good title and delivery of property free
from encumbrances, is the basic duty of the seller. If the sale deed
contains a declaration that the property is sold free from
encumbrances, the buyer takes it free from burdens. 148 If an
encumbrance which ought to have been paid by the seller, was paid
by the buyer, the seller is liable to repay the same 149 irrespective of
whether the buyer was aware of such encumbrance or not, 150 unless
the buyer has expressly agreed to discharge it himself.151
 The corresponding rights of the seller are as follows:
(i) To rents and profits till passing of ownership; and
(ii) To payment of money in case the ownership passes before such
payment.

(Check in the book for more content on this section)

Section 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 mortgage-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 any other person who has for consideration acquired an
interest in any of the properties.

 A owns two or more properties and mortgages both of them to one

person X. Subsequently, he sells one or more of the properties to another
person, B. B is, in the absence of the contract to the contrary, entitled to
have the mortgage debt satisfied out of the property or properties not
sold to him. He can require X to proceed against the properties that are
145
Diamond Infotech Pvt Ltd v Kolkatta Municipal Corp, AIR 2010 (NOC) 910 (Cal).
146
Dantaluri v Kanjuluri, 8 IC 435.
147
Nawal Kishore v The Municipal Board Agra, AIR 1943 All 115 (FB); Chandu Ram v Municipal
Commissioner of Kurseong Municipality, AIR 1951 Cal 398; MC v Ramjilal, AIR 1941 Oudh 305;
Municipal Board, Cawnpore v Roop Chand Jain, AIR 1940 All 459.
148
Nathu v Burtonath, AIR 1922 PC 176; existence of a covenant in the deed guaranteeing non existence of
an encumbrance will entitle the seller to indemnity, see Imam Din v Bhag Sing, AIR 1936 Lah 746; the
Allahabad High Court denied indemnity on the ground of non existence of such provision under the
contract Act see Dost Mohamad v Sangad, (1884) ILR 6 All 67.
149
Manishanker v Ramkrishna, (1906) 6 Bom LR 832
150
Chendrayya v Hanumanayya, AIR 1927 Mad 193
151
R Muninarayana v CP Chimanswami, AIR 1952 Mys 120.
not mortgaged to him. This entitlement is only so far as the same will not
be to the prejudice of 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.

Section 57: Provision by Court for incumbrances, and sale freed

therefrom

MORTGAGE (pg. 412 onwards)

Section 58: “Mortgage”, “mortgagor”, “mortgagee”, “mortgage-

money” and “mortgage-deed” defined.—

(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 arc 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 a mortgage by conditional sale and the

mortgagee a mortgagee by conditional sale:

[Provided that no such transaction shall be deemed to be a mortgage,

unless the condition is embodied in the document which effects or
purports to effect the sale.]

(d) Usufructuary mortgage.—Where the mortgagor delivers possession

[or expressly or by implication binds himself to deliver possession] of
the mortgaged property to the mortgagee, and authorises him to
retain such possession until payment of the mortgage-money, and to
receive the rents and profits accruing from the property [or any part
of such rents and profits and to appropriate the same] in lieu of
interest, or in payment of the mortgage-money, or partly in lieu of
interest [or] partly in payment of the mortgage-money, the
transaction is called an usufructuary mortgage and the mortgagee an
usufructuary mortgagee.

(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.

[(f) Mortgage by deposit of title-deeds.—Where a person in any of the

following towns, namely, the towns of Calcutta, Madras [and
Bombay], *** and in any other town which the [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.]

 Moneylenders wanting security for the repayment of the loan gave birth
to the system of hypothecation or mortgage of property, movable or
immovable.
 The prevalent understanding of a mortgage deal was that it is a
transaction, where, a person who is in need of money borrows it from
another on the strength of some tangible property of value higher than
the loan amount. He promises to repay the loan within a specified time.
In this manner, the economic needs of the borrower are met with. The
benefit coming to the mortgagee in this transaction was that he was
entitled to charge an interest on the loan amount and would get back
more than what he had lent. The transaction, in theory, therefore, was
for the mutual benefit of both the parties, but the inequality of the
standing of both the parties was evident as almost in all communities,
the general practice was that in the event of non-payment of loan amount
by the mortgagor, the ownership in the property passed to the
mortgagee without him having to pay anything extra.
 Transfer of interest:
o In a mortgage there is, necessarily, a transfer of an interest in the
property for a specific purpose.
o in a simple mortgage, the transferor transfers a right to cause the
property to be sold. In usufructuary or possessory mortgage, the
right to possess and enjoy the property is transferred. Likewise, in an
English mortgage, what is transferred is the ownership while the
mortgagor retains a right of redemption; or a right to get his
property back.
o Transfer of an interest as distinguished from a personal liability
creates a relationship of the transferee with the property and even if
the property changes hands, i.e., the ownership changes, the
relationship of the transferee with the property continues.
 Mortgage of movables does not require delivery of possession 152 and a
mortgagee is not entitled to take possession in the event of non-payment
of loan. His right is to enforce the mortgage by suing for a sale of the
property153 or by appointment of a receiver to secure its possession so
that his security may realise;154 but if the mortgagee is in possession of
the mortgaged movables, he can sell them without the intervention of the
court.155

 Simple Mortgage (pg. 429)

152
United Bank of India v The New Glencoe Tea Co, AIR 1987 Cal 143; Punithavelu v Bhashyam,
(1902) ILR 25 Mad 406.
153
Basavireddy v Kamaraju, AIR 1933 Mad 241.
154
Venkatachalam v Venataraman, AIR 1940 Mad 929.
155
Re Ahmed Ali Mohamad, AIR 1932 Bom 613.
 o 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 sale proceeds 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.
o Whatever the value of mortgage or the consideration, a simple
mortgage is to be effected by way of registration.
o The remedies available to mortgagee are twofold. (i) he has right to
obtain a money decree against mortgagor; and (ii) remedy of sale of
property through court.
o So, the security for the debt is twofold—personal obligation and the
property.156
o There is no delivery of possession here.
o There is no right of foreclosure to mortgagee. This is not available in
every case of mortgage. This is one kind of mortgage where
mortgagee does not have this right.

 Mortgage by conditional sale (pg. 432)

o Here the mortgagor, ostensibly sells the mortgaged property. This

ostensible sale is subject to conditions that – (i) On default of
payment by a certain date, the sale shall become absolute; (ii) If
payment is made, the sale shall become void; and (iii) If payment is
made the buyer would return the property to the seller.
o The term ostensible means seeming or apparent, but not actually the
same thing. It imports that it is really not a sale.
o Here if principle money is 100 or more, registration is must.
o It is mandatory that in a mortgage by conditional sale, the condition
must be embodied in the document which effects or purports to effect
the sale.
o REMEDY FOR MORTGAGEE: Foreclosure.
o Conditional mortgage and sale with a condition of repurchase
 A mortgage is different from a sale with a condition of
repurchase. Where the condition for re-purchase is embodied in
the document, the presumption is that it is a mortgage, 157 but
156
Mathai Mathai v Joseph Mary, (2015) 5 SCC 622 : AIR 2014 SC 2277; Wahidunnissa v
Gobardhan, (1900) ILR 22 All 453.
157
Raj Kishore v Prem Singh, AIR 2011 SC 382; C Cheriathan v P Narayanan, AIR 2009 SC 1502
 when both the sale and the agreement of re-purchase are
embodied in separate documents, it cannot be a mortgage.158
 The test is the intention of the parties59 and that it should be
ostensible and not a real sale.159 In absence of a debt and
stipulation of interest160 or a charge over the property, 161
transfer of property for a specific time period is not a mortgage
but a sale with a condition for re-purchase. In cases of
ambiguity, the court leans towards construction of mortgage. 162
In a sale with a condition of re-purchase, the right to re-
purchase is personal and can be enforced strictly in accordance
with the terms of the deed163 but in the mortgage with
conditional sale, the mortgagor retains the right of redemption
for the property despite having failed to pay the loan within the
stipulated time.164
 For instance, A mortgages his property by conditional sale to B
by keeping his property worth Rs 10 lakh as security, and raises
a loan of Rupees five lakh. The deed provides that A should
redeem the property within a period of five years, failing which
it would be treated as sold to B. Here, after the expiry of five
years, if A is able to arrange the money, he can redeem the
property. The right continues till the mortgagee applies for
foreclosure of the mortgage. But if the transaction was one of a
sale with an option of re-purchase, after the expiry of five years
the right of re-purchase in favour of A would be lost and he will
not be able to get the property back from B.
 In Chennammal v Munimalaiyan, A executed a simple
mortgage of three properties for securing the repayment of
money that he borrowed from B. He was unable to repay the
money by the stipulated time and he entered into a second
contract with B. As per this contract, he sold one out of the
three properties to B with a right to repay within a period of
three years, for Rs 3,000. The possession of the property was
delivered to B. A little period after the completion of three

158
Hasam Nurani Malak v Mohan Singh, AIR 1974 Bom 136
159
Vidhyadhar v Mankikrao, AIR 1999 SC 1441; Tamboli Ramanlal Motilal v Ghanchi Chimanlal
Keshavlal, (1993) Supp 1 SCC 295.
160
Mahabir Singh v Begum Sahu, AIR 1949 Pat 568.
161
Kaneshwar Singh v Khaichow Singh, AIR 1973 Gau 43.
162
Nana Tukaram v Sonabai, AIR 1982 Bom 437.
163
Singaram v Kalyanam Subhadra, (1914) Mad WN 735.
164
Bhup Kaur v Muhammadi, (1884) ILR 6 All 37
years, A filed a suit for redemption of the mortgage. B claimed
that since it was a sale with an option of re-purchase, and three
years were over, A had lost the right to exercise the option of re-
purchase.
 The Apex Court laid down the following distinguishing
features between a mortgage with conditional sale and a sale
with an option of re-purchase:
 (i) In a mortgage with conditional sale, the relation of a
debtor and a creditor subsists while in a sale with an option
of re-purchase, there is no such relationship and the parties
stand on an equal footing.
 (ii) A mortgage by conditional sale is effected by a single
document, while a sale with an option of re-purchase is
generally affected with the help of two independent
documents.
 (iii) In a mortgage with conditional sale the debt subsists as it
is a borrowing arrangement, while in a sale with an option of
re-purchase, there is no debt but a consideration for sale.
 (iv) In a mortgage with conditional sale, the amount of
consideration is far below the value of the property in the
market but in a sale with an option of repurchase the amount
of consideration is generally equal to or very near to the
value of the property.
 (v) In a mortgage with conditional sale, since this is a
mortgage transaction, the right of redemption subsists in
favour of the mortgagor despite the expiry of the time
stipulated in the contract for its payment. The mortgagor has
the option to redeem the mortgage and take back the
property on the payment of the mortgage money, after the
specified time, but in a sale with an option of repurchase, the
original seller must re-purchase the property within the
stipulated time period. If he commits a default the option of
re-purchase is lost.
 The court held here that as the consideration was one-fourth
of the value of the property, and the contract took place with
the help of a single document, the presumption was that it
was a mortgage by conditional sale, and the right vested with
the mortgagor to redeem the property when he was able to
repay the money.
  Usufructury mortgage (438)

o Kind of mortgage where the mortgagor delivers the possession to the

mortgagee either expressly or impliedly. And then the mortgagor
authorises the mortgagee to retain the possession of the property
until payment of mortgage money.
o So here the interest which is transferred is right to retain and enjoy
the mortgage property.
o The essential features of a usufructuary mortgage must be
evident from the recitals of the mortgage deed itself. In
order to determine whether a mortgage is a simple
mortgage or a usufructuary mortgage, the course of conduct
of parties is of no relevance for the construction of a deed
which itself is unambiguous.92 Normally upon transfer in
case of usufructuary mortgage, the mortgagee is entitled to
enjoy the usufruct of the property, there can be conditions
stipulated in the mortgage deed prohibiting the mortgagee
to alienate the interest further even by way of lease or
otherwise. If the mortgagee violates the condition and
transfers it, the transferee of mortgagee who cultivated the
property under the mortgage cannot be deemed to be a
lawful tenant.
o REMEDY: In case of usufructuary mortgage, mortgagee
does not have right to foreclosure. He does not even have
right to bring suit for sale of property (this is thee in simple
mortgage). Mortgagee has right to retain possession till loan
is repaid.
o Mortgagor has right to recover possession as per section 62.
o In a usufructuary mortgage, the mortgagor transfers the
right to possess and enjoy the property in favour of the
mortgagee for securing the repayment of the loan. Delivery
of possession of the property is mandatory, and unless there
is a clause in the deed providing for possession going to the
mortgagee there cannot be a usufructuary mortgage.165
o It is not necessary that the mortgagee should take physical
possession as he may be in constructive possession. 166 For
165
Bachan Singh v Waryan Singh, AIR 1961 Punj 477.
166
Where the property is in occupation of the tenants the mortgagor may direct the tenants to
pay rent to the mortgagee, see Venkataranam v Varahalia, AIR 1932 Mad 768; or the mortgagor
may occupy the premises as the tenant of the mortgagee, see Raja Pertab Bahadur v Gajadher,
(1902) ILR 24 All 521; Feroz Shah v Sohbat Khan, AIR 1933 PC 178; Kapildeo Narain Singh v
 example, if the mortgaged property is in possession of
tenants, after the mortgage, a direction from the mortgagor
that now the tenants should pay the rent to the mortgagee is
sufficient.
o Usufructuary mortgages and zuripeshgi leases
 A usufructuary mortgage resembles, but is different
from a zuripeshgi lease. A zuripeshgi lease is a
transaction where non-returnable lumpsum money is
paid in advance167 in exchange for the possession of
immovable property for a fixed time period.168

 English mortgage (pg. 443)

o 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 mortgaged money as agreed, the
transaction is called an English mortgage.
o REMEDY OF MORTGAGEE: to sell

 Mortgage by deposit of title deeds (pg. 445)

o The most prevalent form of mortgage presently is mortgage by

deposit of title deeds. It is purely an oral transaction.
o E.g: In Mumbai, simply by delivering by title deeds, A secures a
loan. A mortgage is created. It need not be in writing. Neither is
conveyance is needed.
o Under English law, this mortgage is called equitable mortgage.
o The purpose is to facilitate easy way of raising loan. Suppose A is in
need of 10 lakh. Moneylender or banker asks for some security. A
may transfer his property by effecting a
simple/conditional/usufructuary mortgage. However, these
mortgages have a lot of procedures. If A is in urgency, all these
formalities cannot be followed. In such cases, by simply depositing
title deeds, loans can be raised.
o Essentials are
i. Transferor borrows a sum of money from transferee

Deputy Collector Land Reforms, AIR 1985 Pat 183.

167
Gulab Chand v Ram Coomer, AIR 1941 Pat 296; Badhun v Ramanugol, AIR 1949 Pat 78.
168
Abdul Bhai v Kashi, (1887) ILR 11 Bom 462; Ramautar v Batuk Bihari, AIR 1952 Pepsu 56.
 ii. He delivers the title deeds of a specific immovable property
iii. He does it with an intention to keep the property as a security
for the repayment of the loan.
o Mortgage as per the section should be effected in one of the notified
cities. Where the transaction takes place outside these cities, this
provision will not apply.
o Deposit of title deeds are important. And they should be deposited
with the intention that they are to be security for the loan.
o An actual or even constructive delivery169 of title deeds170 bona fide
relating to the property171 and showing the title of the depositor 172 is
sufficient and it is not necessary that there must be a physical
delivery.173
o Remedy is same as simple mortgage.

 Anomalous mortgage

o A mortgage which is none of the above, it is anomalous mortgage.

o Examples: simple usufructuary mortgage, mortgage usufructuary
by conditional sale, customary forms of anomalious mortgage.
o Eg: in usufructuary mortgagem the mortgagor also personally
covenants to repay the mortgage amount. Here, it is no more a
usufructuary mortgage but is a combination of simple and
usufructuary mortgage.
o Section 98 of the ToP act deals with rights and liabilities of this kind
of mortgage.
o The rights and liabilities are determined by the contract.

(pg. 450) Section 59. Mortgage when to be by assurance—Where the

principal money secured is one hundred rupees or upwards, a mortgage
[other than a mortgage by deposit of title-deeds], can be effected only by a
registered instrument signed by the mortgagor and attested by at least two
witnesses.

Where the principal money secured is less than one hundred rupees, a
mortgage may be effected either by [a registered instrument] signed and
attested as aforesaid, or (except in the case of a simple mortgage) by
delivery of the property.

169
KJ Nathan v SV Maruthy Reddy, AIR 1965 SC 430.
170
Surendra Mohan v Mohendra Nath, AIR 1932 Cal 589;
171
VERMAR Cheetiyar Firm v Ma Joo Tean, AIR 1933 Rang 299.
172
KL Nathan v SV Maruthy Reddy, AIR 1965 SC 430.
173
Amulya Gopal v United Industrial Bank Ltd, AIR 1981 Cal 404.
Section 59A. References to mortgagors and mortgagees to include
persons deriving title from them.—Unless otherwise expressly provided,
references inthis Chapter to mortgagors and mortgagees shall be deemed to
include references to persons deriving title from them respectively.]

 Thus, the term mortgagor and mortgagee would include their heirs,
executors and administrators, and assignee mortgagee respectively, but
not a transferee of mortgagor or a charge holder. In Thankamony v
Retnam Nadathy,174 after the death of the mortgagor, his widow and the
daughter filed a suit for redemption of the mortgaged property. The
mortgagee contested the suit challenging the status of the widow and of
the daughter asking them to prove the same through a valid marriage
and through the paternity determination. The court held that a
mortgagee cannot be allowed to raise an inconsistent plea of unmarried
status of the mortgagor or that of determination of paternity of the child,
more so when the marriage was proved.

 Rights and liabilities of Mortgagor (pg. 455 onwards)

The rights of the mortgagor are as follows:

(i) Right of redemption; (sec 60)

(ii) Right to transfer to a third party instead of re-transfer to himself;

(Section 60A)

(iii) Right to inspection and production of documents; (60B)

(iv) Right to accession; (63 and 64)

(v) Right to confer a lease, and; (65 and 65A) (pg. 495)

(vi) Right to reasonable waste. (section 66)

Section 60. Right of mortgagor to redeem.—At any time after the

principal money has become [due], the mortgagor has a right, on payment
or tender, at a proper time and place, of the mortgage money, to require the
mortgagee (a) to deliver [to the mortgagor the mortgage-deed and all
documents relating to the mortgaged property which are in the possession
or power of the mortgagee], (b) where the mortgagee is in possession of the
mortgaged property, to deliver possession thereof to the mortgagor, and (c)
at the cost of the mortgagor either to re-transfer the mortgaged property to
him or to such third person as he may direct, or to execute and (where the
mortgage has been effected by a registered instrument) to have registered
174
AIR 2011 (NOC) 386 (Ker) : 2011 AIR CC 1245 (1249, 1250) (Ker).
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 [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.

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 1 [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 mortgager.

 A mortgage transaction is primarily a contract to ensure the repayment

of the loan amount. The mortgagor remains the owner of the property
and is capable to obtain the property from the mortgagee, when he
repays the loan. This statutory right of mortgagor to take back the
property on repayment of the loan amount in full plus the interest on it, if
any is called a right to redeem and a suit to enforce it is called a suit for
redemption.
 The right to redeem arises only after the principal money has become
due.175 It continues till the time the mortgagee sues for enforcement of
the mortgage.176
 It cannot be taken away or defeated by an agreement to the contrary
made either at the time of the execution of the mortgage as part of the
contract,177 even if the mortgagor had expressly agreed to abide by it or
by efflux of time.178
 A executes a mortgage of his property in favour of B, and secures a loan
of Rs 10 lakhs. In the contract of mortgage it was provided that A would
pay the amount after a period of five years, but within a period of six
175
Sarojni Prabhu v Papikutty Adiesian, AIR 2007 Ker 44; Harbans v Om Prakash, (2006) 1 SCC
129; Rukmini Ammal v Jagdesha Gounder, (2006) 1 SCC 65; Prabhakaran v Azagiri Pillai, AIR 2006
SC 1567.
176
Poulose v State Bank of Travancore, AIR 1989 Ker 79.
177
Seth Gangadhar v Shankerlal, AIR 1958 SC 770.
178
Teju v Bhadar, AIR 1987 HP 25, 31.
 years, failing which, his right to redeem would come to an end and the
property would pass to the mortgagee. Here, the principal money
becomes due after five years. After it becomes due, the mortgagor has a
right to pay Rs 10 lakh plus interest on it if any, and take back all the
documents relating to the property from the mortgagee. If he fails to
repay the money after a period of six years, the right of redemption does
not come to an end. If after seven years, he is able to arrange the money
and gives it to the mortgagee, the mortgagee cannot refuse to accept it.
o This is because mortgagor has right to redeem anytime after principal
money has become due. But this should be done, before the
mortgagee has used his remedy (foreclosure if it is simple mortgage
and all).
o So no agreement to contrary to right to redemption will be enforced
by court of law.
 Clog on right to redemption
o Clog literally means to obstruct or to block, and a clog on the right of
redemption of the mortgagor means an attempt of the mortgagee to
obstruct this right of redemption.
o The mortgagee may put a condition in the mortgage deed that may
prevent the mortgagor from redeeming his property even when he is
prepared to repay the loan. This putting of obstructions, or preventing
him from getting back his property is called a clog on the statutory
right of the mortgagor to get back his property and would be void.
Doctrine of clog on equity of redemption is a rule of equity, justice
and good conscience179 and is applicable in areas where the Act is not
in force. It must be remembered that adversity of a person cannot and
should not be exploited by the persons who advance loans.
o In SB Narain Dass v Surta,180 A executed a mortgage of his land in
favour of B, with delivery of possession. B had stipulated a very high
rate of interest. The rate of interest was, in fact, higher than what is
permissible under the Punjab Relief of Indebtedness Act, 1934. B
enjoyed the benefits of the land and appropriated its income for a
period of 60 years. Thereafter, without rendering of accounts and
without even filing a suit for foreclosure of the mortgage, B filed a suit
in a court of law for a declaration of title to the property. The court
dismissed his suit and noted that B had remained in possession of the

179
Murarilal v Dev Karan, AIR 1965 SC 225; Pomal Kanji Govindji v Vrajilal Karsandas Purohit, AIR 1989 SC
436; Ismail Nathabai v Muljibhai Shankerbhai Bhramabhatt, AIR 1994 Guj 8; Patel Naranbhai v Dhulabhai
Galabhai, (1992) 4 SCC 264.
180
AIR 2002 P&H 108.
 property for a period of over 60 years and had appropriated the fruits
of the land. Since he had not followed the procedure for foreclosure of
the mortgage and had not even settled any accounts, the terms of the
mortgage operate as a clog on A's right of redemption. The mortgage,
according to the court, was deemed to have been redeemed during
this period, with the mortgage debt fully discharged.

Section 60A. Obligation to transfer to third party instead of

retransference to mortgagor. (pg. 479)—

(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
re-transfer, 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 encumbrancer 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.

Section 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.]

Section 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 [together with the mortgagedeed and all
documents relating to the mortgaged property which are in the possession
or power of the mortgagee].—

(a) where the mortgagee is authorised 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 [or arty 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 [the mortgage-
money or the balance thereof] or deposits it in Court as hereinafter
provided.

 The suit for redemption in a usufructuary mortgage is in essence a suit

for possession on the satisfaction of debt out of rents and profits and not
before the discharge except on equitable grounds due to misconduct of
the mortgagee.
 Where the mortgagee is authorised to pay himself from such rents and
profits or any part thereof a part only of the mortgage-money, the
mortgagor has a right to 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, when
the term, (if any) prescribed for the payment of the mortgage-money has
expired and the mortgagor pays or tenders to the mortgagee the
mortgage-money or the balance thereof or deposits it in court.
 In usufructuary mortgages there is no time fixed for repayment of
money. Limitation for redemption of mortgage would be 30 years as
prescribed under the limitation Act.181 As the right to seek redemption
accrues not from date of creation of mortgage but from the date of
payment of mortgage money out of usufructs or partly out of usufructs
and partly on payment or deposit by mortgager, mere expiry of the
period of 30 years from the date of mortgage does not extinguish the
right of the mortgagor under section 62.182

Accession (pg. 485)

Section 63: accession to mortgaged property

 Since the mortgage is a transfer of an interest in the mortgaged

property, the mortgagee acquires the beneficial of the accession as well.
But the general rule is when the mortgagor redeems the property, the
right to get the benefit of such accession would be with the mortgagor
and not the mortgagee.
 Accession can be of two types—natural accession and acquired
accession. Acquired can again be classified into two parts—separable

181
Bhandaru Ram v Sukh Lal, AIR 2012 HP 1 : AIR 2012 HP 1 (14) (FB).
182
Joginder Singh v Ajmer Singh, R.S.A. No. 2401 of 1985, decided on 20 January 2017, High Court of Punjab
and Haryana; Singh Ram v Sheo Ram, (2014) 9 SCC 185 : AIR 2014 SC 3447.
 accession and those which are inseparable, which are integrated with
the property.
 Separable accession:
o 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 it183 at the time of redemption, or it will be presumed that
he has abandoned them.184
 Inseparable accession
o If such separate possession or enjoyment is not possible, 185 the
accession must be delivered with the property; However, in special
cases, the mortgagor being liable, in the case of an acquisition
necessary to preserve the property from destruction,186 forfeiture or
sale or made with his assent187 to pay the proper costs 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
9% per annum.
 So, if separable, mortgagor has to pay for it. If it is not separable,
mortgagor does not have to pay for it, unless the accession was
necessary.

Section 63A: improvements to mortgaged property

 When ther is some general improvement, mortgagor has roght over it

without paying for it. But if due to some importance like to avoide its
depreciation, mortgagee has improved it, then mortgagor has to pay
for such improvement.
 Essentials of improvements (pg. 488)

64. Renewal of mortgaged lease.—Where the mortgaged property is a

lease, 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.
183
Rajah Kishendutt v Rajah Mumtaz Ali, (1880) ILR 5 Cal 198; Bakshi Ram v Darku, (1873) 10
Bom HCR 369.
184
Ram Lagan v Mary Coffins, AIR 1926 Pat 572.
185
A house is an inseparable accession, see Nannu Mal v Ramchandra, AIR 1931 All 277 (FB).
For a contrary opinion, see Gopilal v Abdul Hamid, AIR 1928 All 381.
186
Durga Singh v Naurang, (1895) ILR 17 All 282.
187
Such accession passes to the mortgagor, see C Venkatachariar v Srinivasa, 4 IC 357; Ram Rai
v Maheshwar Prasad, AIR 1925 Pat 336; Mohan Lal v Choudhary, (1901) 14 CPLR 169; Kondu v
Mahadev, AIR 1932 Bom 526, where the mortgagee was a Khot and the mortgagee acquired
'Khot Nisbat land without his permission.
  Renewal of lease of mortgaged property adds value to the property. It
is like accession to the property.
 Usually when a leased property is mortgaged and the mortgagee
renews it, mortgagor will be entitled to enjoy it after redemption.
 Section 71. Renewal of mortgaged lease. — When the mortgaged
property is as lease 1 ***, 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.

[s 65A] Mortgagor's power to lease.—

 While mortgagor is in lawful possession of mortgaged property, he can

make lease. Lortgagor has residuary ownership over the property. SO, he
has power to make a lease. However, there are some conditions while
making such lease.

 Duties of Mortgagor – section 65 and 66

Section 65: Implied covenants of mortgagor

 Covenant for title (491)

 Covenant for defence of title
 Covenant for payment of public charges (491)
 Covenant for payment of rents
 Covenant for discharge of prior mortgages

These are rights of mortgagee.

(read from pg. 491 – DIY)

Section 65A: Mortgagor’s power to lease (495)

Section 66. Waste by mortgagor in possession. (pg. 497) —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.

Explaination - 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.

 Rights and liabilities of mortgagee (pg. 498)

Section 67: Right to foreclosure or sale

  This section says that when in absence of a contract to the contrary, the
mortgagee has at any time, when the mortgaged amount becomes due, a
right to obtain from the court a decree that the mortgagor is absolutely
barred from redeeming the property or a decree that property be sold.
 Right to foreclosure is a statutory right. It is a relief that is given to the
mortgagee after excercising which, mortgagor cannot exercise his right
to redemption.
 Right to redemption of mortgagor is absolute right. However, right to
foreclosure is not absolute but is subject to terms of contract. (i.e. it can
be curtailed based on contract to contrary)
 The right to foreclosure comes into power when mortgagors money
becomes due.
o In case of simple mortgage, foreclosure does not come into picture,
because there, the mortgagee can just get a money decree or file a
suit to sell.
o In case of usufructuary mortgage, mortgagee has power to
foreclosure or sale
o In conditional sale, only foreclosure power is given.
o In English mortgage, mortgagee has to file suit for sale of the
property. SO even here, there is no right to foreclosure.
o In mortgage by deposit by title deed, it is similar to simple mortgage,
so, again, no right to foreclosure.
o Anomalous mortgage, the remedy depends on the what kind of
mortgage it is.
 Under section 67, partial foreclusire is not possible. This is similar to
section 60 which says there cannot be partial redemption.
o This means if there are 2 or more mortgagees, they cannot
individually foreclose their share.
o This is done to protect interests of mortgagor from multiplicity of
suits.
 A syut for foreclosure can be filed within 12 years from time the
mortgage money becomes due including a personal claim where the
money realised from the sale proceeds is insufficient.

Section 67A: Mortgagee when bound to bring one suit on several

mortgagees.—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.

 This is similar ot section 61 which provides rules against consolidation of

suits by mortgagor.
 Section 67A was added by an amendment.
 So it means, mortgagee cannot pick and choose unlike section 61. He wil
have to bring a suit on all the properties. He cannot enforce any one of
such mortgages alone.

Section 68: Right to sue for mortgage money (pg. 505)

 Section 67 is a remedy against the property. Section 68 is the remedy

against the person.
 Section 68 says a mortgagee has a right to sue mortgagor personally.
However, this right is available only in certain situations. So, this does
not apply in every kind of mortgage.
o Where the mortgagor binds himself to repay the same. (e.g. simple
mortgage, English mortgage, etc.)
o 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
o The security is rendered insufficient, and
o 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; or
o 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;
or
o Where the mortgagee being entitled to possession of the mortgaged
property, the mortgagor fails to deliver the same to him; or
o 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.
 68(a) Personal liability of mortgagor
o Where the mortgagor binds himself personally to repay the debt, it
becomes a personal covenant, but where it is only his property that is
kept as a security, the mortgagee cannot sue him but can proceed
against the property.
 68(b) Accidental destruction of security
 o When the security is destructed by diluvion74 or by fire75 the
mortgagee is entitled to sue for the debt.
o Section 68(b) is a suit for compensation. Because when the property is
destroyed because of no action of both parties, mortgagee is entitled
to compensation so that his lent money is secured
 Destruction of property by wrongful act of mortgagor
o Section 68(c) says that where mortgagor deprives mortgagee’s
security due to his wrongful act, then mortgagee is entitled to sue
mortgagor for mortgage money.
 68(d) Failure to deliver possession of property
o The mortgagor is bound to deliver possession to the usufructuary
mortgagee188 or where he is under a contract bound to do it, e.g., in
an anomalous mortgage and to authorise the mortgagee to continue in
possession until payment of the mortgage money by means of a
statutory right189 irrespective of any express covenant.
o So, if this is not done, mortgagee has a right to sue.
o Further, if mortgagee is entitled to possession, then he is also entitled
to continue in possession without any disturbance from anybody.
o When the mortgagor gave two successive usufructuary mortgages,190
or when the mortgagee could not get possession of some plots
because they did not belong to the mortgagor, 191 or when the
mortgagor deprived a usufructuary mortgagee of the rents and
profits192 or dispossessed from a part of the mortgaged property; 193
the mortgagee may recover the debt by personal suit. 194 But a
mortgagee of the undivided share of a coparcener is not entitled to
recover the mortgage money under the section.195
o 68(2) means that in situation a and b under 68(1), court is required to
ask mortgagee to avail all other remedies against property. Because
this section is a remedy against person. So, court will ask him to first
188
The rule is not applicable to a mortgage by conditional sale, see Badri Das v Besu, AIR 1933
Lah 174; Kehar Singh v Jeon Singh, AIR 1962 Punj 465, nor can it be availed of by a chargeholder,
in proceedings in execution of a decree, without resorting to a suit, even if the security
has been impaired by the conduct of the person creating the charge, see Kesar Chand v Uttam
Chand, AIR 1945 PC 91.
189
See The Transfer of Property Act, 1882, section 68(1)(d).
190
Sukhdeo Misr v Sheo Dial, (1901) All WN 52.
191
Fateh Din v Kishen Lal, AIR 1923 All 584.
192
Ram Narain Singh v Adhindra, AIR 1946 PC 252; Pinto v Narayan, AIR 1932 Bom 558.
193
Parbati Kuar v Durga Prasad, AIR 1949 Pat 467.
194
The heirs of a mortgagee can sue on a cause of action accruing after the death of the
mortgagee without obtaining a succession certificate, but not if the cause of action accrued in
his lifetime, see Umesh Chandra v Mathura Mohan, (1901) ILR 28 Cal 246.
195
Kanaiyalal v Dhanji, AIR 1952 Kutch 18.
 get his rights against the property. If he cannot recover all his debts
against the property, then only the court MAY allow mortgagee to file
suit against mortgagor personally.

Section 69: Power of sale when valid

 Section 69(1) provides for 3 situations where mortgaee can sell or

concur in selling the property or part of it in default of payment of
mortgage money without intervention of court.
o Where mortgage is English mortgage and neither the mortgagor nor
the mortgagee is a Hindu, Muhammadan or Buddhist or 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
o 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 Government.
o where 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 was, on the date of the
execution of the mortgage-deed, situate within the towns of Calcutta,
Madras, Bombay, or in any other town or area which the State
Government may, by notification in the Official Gazette, specify in this
behalf
 Section 69(2) says when this power cannot be exercised
o 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;
o some interest under the mortgage amounting at least to five hundred
rupees is in arrear and unpaid for three months after becoming due.
 Section 69(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 authorize 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 of the power shall have his remedy in damages
against the person exercising the power.
 Section 69(4) The money which is received by the mortgagee, arising
from the sale, after discharge of prior incumbrances, 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 incumbrance, 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, discharge of
the mortgage-money 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.
 Section 69(5) Nothing in this section or in section 69A applies to powers
conferred before the first day of July, 1882.
 Under 67 and 68, mortgaged property can be sold with court’s
intervention. Under section 69, without intervention of court, mortgagee
can sell the property. So, this is an extraordinary power given to
mortgagee, so he can do it only in certain situations. This is subject to
conditions laid down in section 69(2).
 The conditions in 69(2) is statutory. The notice before 3 months has to be
given. This provision
 as to notice is necessary, for a power of sale without notice is oppressive
and may enable the mortgagee at any time to extinguish the right of
redemption.196 The period of three months fixed by the Act cannot be
curtailed by the terms of the deed. 197 Where interest amounting to at
least Rs. 500 has been due for three months, power may be exercised
before the expiry of the period allowed for redemption.
 Mortgagee has to take reasonable care while he excercises the power
under this section. It has to be exercised by him equitably so that he can
realise his debt without causing much loss to the mortgagor.
 Protection of purchaser
o 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 of the power shall have his remedy in
damages against the person exercising the power. The
purchaser need not make any enquiries, and an irregularity
or impropriety in the exercise of the power of sale does not
196
Miller v Cook, (1870) LR 10 Eq 641. It also has the effect of overruling the Privy Council
decision that a power of sale in default of payment of interest is invalid as a penalty; see
Vencatavarada v Venkata, (1875) 23 WR 91 PC.
197
Babamiya v Jehangir, AIR 1941 Bom 339. A stipulation for a period of 15 days is invalid, see
Madras Deposit & Benefit Society v Passanha, (1888) 11 Mad 201.
 affect the title of an innocent purchaser 198 and confines the
remedy of the mortgagor to a suit for damages,199 unless,
there is no express power of sale without the intervention of
the court in the mortgage.200 If he had a notice of it, this
makes him a party to the transaction and he is not
protected;201 for e.g., where he knows that notice is not
given.202 He would nevertheless be protected if he is
unaware of the irregularity in the notice,203 or if want of
notice had been waived by the mortgagor.204

Section 69A: Appointment of receiver

 In order to ensure fair realisation of the debt, without causing much

harm to the mortgagor, law provides for the appointment of a receiver,
who is the representative of the mortgagor but is accountable to the
mortgagee.
 Since the property which is mortgaged belongs to mortgagor, although
possession is with mortgagee hwo also has power to sell it, mortgagor
still has power to see that the property is dealt with in fairmess. Here, a
receiver is appointed, so that he can look after the property.
 There are 3 ways by which recievers can be appointed.
 69A(1) – mortgagee who has right to exercise power of sale under s. 69,
sucha mortgagee is entitled to appoint a receiver, in order to look after
income of the porpoerty or part of it. This appointment has to be made by
signing. This subsection is subject to subsection 2.
 A person named in the mortgage deed by the mortgagor can be
appointed as receiver by the mortgagee.

Section 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.

 Accession is considered as part and parcel of the property, be it by

natural happenings, or manmade actions.

198
Dicker v Augerstein, (1876) 3 ChD 600.
199
Madras Deposit & Benefit Society v Passanha, (1888) ILR 11 Mad 201.
200
Mataprasad Upadhya v Kunnon Devi, AIR 1928 Rang 128.
201
Jenkins v Jones, (1860) 2 Giff 99; see also Chabildas LaUoobhai v Mowji Dayal, (1907) ILR 31
Bom 566; Bailey v Barnes, (1894) 1 Ch 25 (CA).
202
Selwyn v Graft, (1888) 38 ChD 273 (CA).
203
Madras Deposit & Benefit Society v Passanha, (1888) ILR 11 Mad 201.
204
Re Thompson v Holt, (1890) 44 ChD 472.
 Section 70 deals with a mortgagee's right to accessions, and section 63
deals with the right of the mortgagor to these accessions. Accessions as
explained under notes to section 63 are additions or improvements to the
mortgaged property and are natural or acquired. Section 70 provides
that if, after the date of a mortgage, 205 any accession is made to the
mortgaged property, the mortgagee, in the absence of a contract to the
contrary,206 shall, for the purposes of the security, be entitled to such
accession.
 A is an mortgagor and mortgages an open plot of land to B. B has an
interest in land. Afterwards, A constructs a building. That is an accession
to the property. As per section 70, for purposes of security, mortgagee is
entitled to the plot + the building.
 So, section 70 is opposite to section 63. As 63 entitles the mortgagor to
redeem the property along with the accessed property.

71. Renewal of mortgaged lease.—When the mortgaged property is as

lease 1 ***, 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.

 This is opposite to section 64.

 When the mortgaged property is a lease, 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. If a tenant mortgagor allows his landlord to obtain a collusive
decree for rent and to purchase the holding, the property in the hands of
the landlord is subject to the mortgage. 207 The deposit of a deed of lease
of which the term has expired operates as a mortgage by deposit of title
deeds when the term is renewed.208

Section 72: Right of mortgagee in possession

205
An accession made by the mortgagor after the property has been sold in execution of the
mortgagee's decree does not pass to the mortgagee or to the purchaser at the court sale, see
Sivananjiah v Sitha v Goudar, AIR 1921 Mad 627; Sripad v Kashibai, AIR 1945 Bom 248; Kastoori
Devi v Guru Granth Saheb, AIR 1965 All 193; Haradhan v Hargobind, AIR 1921 Pat 188; see also
Aruwgiri v Radha Krishna, AIR 1942 Mad 44; Ajijuddin v Sheik Budun, (1895) ILR 18 Mad 492,
where an accession acquired after the decree was sold.
206
Bhupendra v Vajihunnissa, (1917) 2 Pat LJR 293; Gansabai v Baswani, (1910) ILR 34 Bom
175; see also Vishnu v Tatia, (1863) 1 Bom HC 22.
207
Ram Saran Das v Ram Pergash Das, (1905) ILR 32 Cal 283.
208
Villa v Petley, AIR 1934 Rang 51.
 Here the term “necessary” is important. The mortgagee might have to
spend money on the property in situations which are necessary. There
are 4 situations -
o (b) for 4 [the preservation of the mortgaged property] from
destruction, forfeiture or sale;
o (c) for supporting the mortgagor's title to the property;
o (d) for making his own title thereto good against the mortgagor; and
o (e) when the mortgaged property is a renewable lease-hold, for the
renewal of the lease;
 So, in absence of contract to contrary, when mortgagee has spent money
for these 4 purposes, this money can be added to the principal money,
and rate of interest on this additional sum would be the same as was
payable on the principal. And If no rate is principled, then at the rate of 9
percent per annum.
 There is a proviso for (b) and (c). in these cases, it is not considered
necessity unless the mortgagor was called upon by mortgagee and the
mortgagor has failed to take any timely steps. So, if mortgagor is not at
all called, then mortgagee won’t be able to add this additional amount to
the principle if cases fall under (b) and (c).
 This section was formerly available only to a mortgagee in possession. It
was amended in 1929 and the rights are now available to all kinds of
mortgagees.
 The point of this section is mortgagee has interest in the property. If the
property gets devalued, even mortgagee will suffer, as he won’t be able
to recover his money. Thus, the basis of this section is a sort of implied
request by mortgagor to take care of the property and spend money as
may be necessary for protection of the security.

Section 73: Right to proceeds of revenue sale or compensation on

acquisition (pg. 534)

Partition

 Where the mortgage of an undivided share is followed by its partition,

the mortgagee has to proceed against the share allotted in severally to
his mortgagor;209 and in the absence of fraud or collusion, the co-sharers
of the mortgagor would hold their shares free of the mortgage. 210 But if
as a part of the partition agreement, the coparcener who gets the
209
Amar Singh v Bhagwan Das, AIR 1933 Lah 771; Nirmal Kunwar v Sant Lal, AIR 1937 Pat 563;
Ganga Prasad Sao v Dalan Saran Singh, AIR 1937 Pat 345; Mahammad Afzal Khan v Abdul
Rahman, AIR 1932 PC 235;
210
Mohammad Arful Khan v Abdul Rahman, AIR 1932 PC 235.
 mortgages share allotted undertakes to pay the mortgage debt, the
mortgagee may sue him.211 In such cases, the mortgagee takes the
property in the new form it assumes. 212 The post partition mortgagee
cannot take a larger estate than the mortgagor. 213 The rule applies in a
transfer of an undivided share and also of a specific item of a joint
property.214 In a mortgage of a specific item of joint property by one
cosharer where it is later allotted to another co-sharer, the mortgagee
can proceed against the substituted item in the hands of the co-sharer
who has created the mortgage.215
 Section 74 and 75 has been repealed

 Liabilities of mortgagee in possession (pg. 538)

Section 76: liabilities of mortgagee in possession (pg. 538)

The duties of the mortgagee under this section are as follows:

(i) a duty to manage the property as a person of ordinary prudence;

(ii) to collect the rents and profits thereof;

(iii) to pay the Government revenue and all other charges of a public
nature;

(iv) to make such necessary repairs of the property as he can pay for
out of the rents and profits thereof;

(v) not to commit any act which is destructive or permanently

injurious to the property;

(vi) to apply insurance money in reinstating the property;

(vii) to keep clear, full and accurate accounts of all sums received and
spent by him as mortgagee;

(viii) to apply rents and profits in discharge of interest after making

deductions; and

(ix) to account for gross receipts.

Section 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

211
Atmaram Sao v Bhupendranath, AIR 1940 Nag 149.
212
Byjnath Lall v Ramoodeen Chowdry, (1875) 21 WR 233.
213
Mohan Lal v Wadhawa Singh, AIR 1934 Lah 660.
214
Liladhar Uttamchand v Shiwaji Ganesh, AIR 1936 Nag 125.
215
P Narasimham v P Venkata Narasimham, AIR 1973 Andh Pra 162.
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.

 This section is in the nature of an exception to the preceding section. It

imposes a duty on the mortgagee to keep proper accounts of the rents
and profits that are coming out of the mortgaged property in possession
of the mortgagee. These rents and profits are to be adjusted against the
interest on the principal amount, and a certain portion of the principal
amount as well.

 Prior and subsequent mortgages (s 78 – 79) (compare this with 94

– mesne mortgagees)

[s 78] Postponement of prior mortgage.—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.

 A property that is mortgaged with one mortgagee can be mortgaged

again to either the same mortgagee or to another person. On the
strength of the same property, a person can raise a loan a number of
times from same or different people. In such cases generally, the prior
mortgagee has a priority of claim over the second mortgagee. For
instance, A mortgages his property to B for a loan. He then mortgages
the same property to C to raise another sum of money. C here would be
called a subsequent mortgagee. If A is unable to repay the loan to both B
and C and the property is sold, first, B would be paid from the sale
proceeds, and after him, C would be paid.
 The present section enacts a special rule, which is in the nature of an
exception to the general principle of priority of mortgagees. It provides
for postponement of the prior mortgagee, i.e., it enacts an opposite rule.
It says that if the subsequent mortgagee has been induced to advance
money on the mortgaged property either through the fraud,
misrepresentation or gross neglect of a prior mortgagee, the prior
mortgagee shall be postponed to the subsequent mortgagee.
Section 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.

 This section contains the second exception to the general rule of priority
of former mortgagee. For the application of the rule the following
conditions should be satisfied:
(i) The maximum amount should have been secured through the first
mortgage;
(ii) The second mortgagee has notice of the prior mortgage;
(iii) The first mortgagee advances more money within the maximum limit
after the second mortgage has been affected.

Section 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.

 Marshalling is available in case the mortgaged property is acquired

either through sale or by a subsequent mortgage by a second transferee.
It literally means arrangement, and permits a subsequent transferee in
certain cases to protect his property from being sold to repay the
mortgage money.

Section 82. Contribution to mortgage-debt.— [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.

 (pg. 556 onwards)

Section 83. Power to deposit in Court money due on mortgage.—At

any time after the principal money [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.
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 law 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 6 [and all documents in his possession or
power relating to the mortgaged property], apply for and receive the
money, and the mortgage-deed, [and all such other documents], so
deposited hail be delivered to the mortgagor or such other person as
aforesaid.

[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 re-transfer 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 acknowledgment in writing that any right in derogation of the
mortgagor's interest transferred to the mortgagee has been extinguished.]

 Payment of mortgage debt (pg. 563)

Section 84: Cessation of interest (pg. 567)

 NOTE: section 86-90 is removed)

  Redemption (pg. 571)

Section [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.]

 The general rule is that besides the mortgagor, any person who has an
interest in the mortgaged property can redeem it, more specifically any
surety for the payment of the mortgage-debt or any part thereof; or 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.
 The term puisne mortgagee refers to an assignee of the mortgagee. An
execution purchaser of the whole or part of the right of redemption; a
prior mortgagee who has purchased the right of redemption or a puisne
mortgagee who is an assignee of the right of redemption or even a sub-
mortgagee of the puisne mortgagee, is entitled to redeem a prior
mortgage, but only when the puisne mortgage is valid or the mortgagee
has not lost all remedies of foreclosure or sale on his own mortgage. 216
 A second mortgagee who purchases the mortgaged property in execution
of a decree is entitled to redeem other mortgages on the same property
created by the mortgagor.217 Here the prior mortgage is an encumbrance
for the subsequent mortgagee. So, the subsequent mortgagees have a
charge on the property, and can discharge this liability.
 Mortgagor has a right to bring right to redemption and it is his property.
So he can transfer this right to redemption in favour of a 3rd person.
 So, anybody who has interest/charge upon the mortgaged property or
interest in the right of redemption on the property can bring a suit.

216
Samarendra Nath Sinha v Krishna Kumar Nag, AIR 1967 SC 1440; Hasanbhai v Umaji, (1903)
28 Bom 153
217
Amulya v United Industrial Bank Ltd, AIR 1981 Cal 404; Kara Miah Saheb v Velayudha Konar,
AIR 1974 Mad 248; AMA Firm by Mg Partner Murugappa Chettiyar v Manidachalam Chettiar, AIR
1948 Mad 412; AMKM Chettyar Firm v AKOML Chettyar Firm, AIR 1930 Rang 255.
 The third category: When a debtor dies (mortgagor) without making
repayment of loan, then his creditor will be keen on recovering his debt.
Then they will have to file suit for ‘administration of state’.

Section 92: subrogation:

 Subrogation in general means substitution. In case of mortgage, any

person other than mortgagor who has interest in the mortgaged property
and who redeems the mortgaged property, such person is entitled to be
substituted in the position of mortgagee.
 Once the people mentioned in section 91 redeem the property, they take
the place of mortgagee as of when the mortgagee as foreclosed the
property. i.e. he can do whatever he wants with the property as per the
provisions.
 They take place of mortgagee, because they have a right to recover the
money they have used. So, the subrogator will have all the rights which
the original mortgagee would have.
 This right is available to everyone mentioned in section 91 other than the
mortgagor (duh).
 This is an equity jurisprudence.
 A right of subrogation affects the property and therefore, an agreement
of subrogation must be in writing and registered.
 Under Indian law, i.e. section 92, there are 2 kinds of recognised
subrogation: legal subrogation and conventional subrogation.
o Para 1 deals with legal subrogation. Legal subrogation takes
place by operation of law. Only a person, having interest in
the property can avail it and not any other person having no
obligation to repay. It carries an equitable charge with it.
So, no contract regarding this will be applicable here.
o Conventional subrogation as given in para 3 arises out of an
agreement, express or implied, conferring the exercise of
rights and powers of the original creditor.
 Redemption by puisne mortgagee: Intention was the determining
factor before the passing of this rule and a puisne mortgagee
redeeming a prior mortgagee was always subrogated unless he
was under covenant to discharge the prior encumbrance.
Subrogation of puisne mortgage should be free from collusion or
fraud and prior to a sale of a right of redemption, but payment of a
prior mortgage to prevent mortgagor's liability to increase or an
attachment does not effect his subrogation.
 Who else can subrogate: a co mortgagor redeeming a mortgage, a
mortgagor’s surety, purchaser of the right of redemption can
redeem and be subrogated.
 Partial subrogation (pg. 580)

Section 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.

 Tacking means attaching or uniting. In context of mortgage,

tacking means attaching or annexing a security with another
security. This is prohibited. Doctrine of tacking was a rule of
English law.
 Under Indian law, this practice is prohibited.

Section 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.]

Pg. 585

 Mesne mortgagee means a subsequent or intervening mortgagee.

Such mesne mortgage gives right ot foreclose subsequent
mortgagees or the mortgagor himself. A mesne mortgagee can
enfore the rights against all the mortgagees subsequent to him.
This right is actually counterpart of his right to redeem prior
mortgagees (s. 91)
 How is this not similar to 78-79?)

Section 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.
  A mortgage is redeemed when the amount of loan or the balance
due on it is paid. If the redeeming mortgagor pays the balance
due, he can avail the benefit, even though part of it has been
previously paid.
 The redeeming mortgagor has not merely a charge, but the
mortgage as to his share is extinguished, and, as to the shares of
the other mortgagors, he stands in the shoes of the mortgagee. He
may stand on the mortgage he has redeemed, if he can and, if he
cannot, may rely on his charge.218
 A redeeming mortgagor is allowed to take a proportionate share of
his costs also to the mortgage debt as against the comortgagor,
but he is not entitled to interest unless he has given express notice
claiming it. The rule applies when one mortgagor discharges a
mortgage decree.219

Section 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.]

 An equitable mortgagor binds himself personally to pay the

mortgage money,220 but will not be bound by an agreement in the
mortgaged deed preventing him from exercising his rights of
redemption.221

Anomalous mortgage

 A mortgage, which is not a simple mortgage, mortgage by

conditional sale, a usufructuary mortgage, an English mortgage or
a mortgage by deposit of title deeds, is called an anomalous
mortgage. An anomalous mortgage can be a combination of any of
these mortgages.
 For instance, where possession of property is delivered to the
mortgagee with an additional liability on the mortgagor to pay the
interest on the loan amount, it would be an anomalous mortgage.

Section 98. Rights and liabilities of parties to anomalous

mortgages.—In the case of [an anomalous mortgage] the rights and
218
Abdul Gafur Khan v Mangat Rai, AIR 1938 Lah 184; Sheosaran v Amla Co-op Credit Society, AIR 1945 Pat
192.
219
Dhakeswar Prasad v Harihar, (1915) 21 Cal LJ 104; Nawab Jahan v Mirza Shujauddin, (1904) 9 Cal WN
865.
220
Nityanand Ghose v Rajpur Chaya Bani Cinema Ltd, AIR 1953 Cal 208; see also Rosy George v State Bank
of India, AIR 1993 Ker 184.
221
Arjees Wool & Fur Industries Pvt Ltd v Allahabad Bank, AIR 1992 All 111.
 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.

Charges

Section 100. Charges.—Where immoveable 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 [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,
[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].

 For example, A is the owner of certain property. He has a son and

a daughter. He gives his entire property to the son and puts a
condition that the son would be under an obligation to pay Rs
5000 out of the property, every month, to the daughter for her
maintenance. This amount of money would constitute a charge in
favour of the daughter. If the son sells the property to a third
person, the daughter can enforce her right against the third
person provided he has notice of this charge.
 Creation of charge:
o A charge need not be in writing,222 but if it is reduced to
writing, registration is necessary in the case of a non-
testamentary instrument of the value of Rs 100 or
upwards.223
 Specific property: The security for the charge must be specific
immovable property otherwise the charge would be void for
uncertainty.224

222
Abduljabhar v Venkata Sastri, AIR 1969 SC 1147.
223
The Registration Act, 1908, section 17(1)(b); see Bengal Banking Corp v Mackertich, (1884) ILR 10 Cal
315; Maine v Bachchi, (1906) ILR 28 All 655; Amratlal v Keshavlal, AIR 1926 Bom 495; Imperial Bank v
Bengal National Bank, AIR 1931 Cal 223; Rangampudi v Venkateswarlu, AIR 1934 Mad 713;
Vishwanadhan v Menon, AIR 1939 Mad 202.
224
Mohini Debi v Purna Sashi, (1932) 36 Cal WN, 138 IC 24, AIR 1932 Cal 451.
  Charge by act of parties: Charge can be created either by the act
of parties or by operation of law. Creation of enforceable security
is the essence of charge either in respect of immovable property
or in respect of movables.225
 A charge created in favour of a creditor continues to subsist until
it is extinguished or abandoned by an express view to that effect.
 A charge created by a decree of a competent court is created by
the operation of law and is governed by this rule.226
 Difference between charge and mortgage (pg. 597)
o In every mortgage there is a charge, but every charge is not
a mortgage.
o A mortgage is primarily a contract between two parties and
is created by the act of parties, while charge can be created
either by act of parties or even by operation of law.
o In a mortgage there is a transfer of an interest in property in
favour of the mortgagee, but in case of a charge, there is no
transfer of an interest.
o A mortgage is a transaction for the security of repayment of
a debt, or for performance of an engagement which may
give rise to a pecuniary liability, while in case of a charge,
there may or may not be a debt.
o A mortgage is for a fixed term and redeemable, while a
charge may create a liability in perpetuity not capable of
redemption.
o A charge does not require to be attested and proved in the
same way as a mortgage.
 A charge is enforced by sale227 and if it carries with it a personal
liability, the charge (pg. 599)
 holder is entitled to a personal decree.228

Section 101. 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 charge-holder, 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
225
Hindustan Machine Tools Ltd v Nedungadi Bank Ltd, AIR 1995 Kant 185.
226
Laxmi Devi v Mukand Kunwar, AIR 1965 SC 834; Manna Singh v Wasti Ram, AIR 1960 Punj 296.
227
Gajraj Jain v State of Bihar, (2004) 7 SCC 151; Lalitha Kariappa v Sanjeevi, AIR 2006 Kant 25.
228
Ahmedabad Municipality v Haji Abdul, AIR 1971 SC 1201.
 upon, the same property; and no such subsequent mortgagee or
charge-holder shall be entitled to for close or sell such property
without redeeming the prior mortgage or charge, or otherwise than
subject thereto.]

 If a person has one right over the property and he acquires

another, the union of these two interests would result in the
merger. For instance, A mortgages his property in favour of B for
securing the repayment of the loan. The mortgagee has a right to
have his money back, and the mortgagor has a right to have his
security back in the event of payment of the loan amount. This
right is called a right of redemption. If the mortgagee acquires
this right of redemption, this would result in the merger of the two
interests that the mortgagee had in the property and would
extinguish the mortgage. A security can be extinguished by
merger of a lower into a higher security; and of a lesser estate in a
greater estate.

 NOTICE OR TENDER UNDER THIS CHAPTER (pg. 607)

Section 102: Service of notice or tender

Section 103: Notice, etc., to or by person incompetent to

contract.

Section 104: Power to make rules

 Lease

Section 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.

 Subject matter here is: right to enjoy the immovable property. It is

not transfer of ownership, but transfer of partial interest. This
right to enjoy is called demise. This demise is the subject matter of
lease.
 The right to possess and enjoy the property is transferred in
favour of the lessee and he acquires this interest through the
conveyance of lease. This interest that the lessee acquires is a
transferable interest and can further be transferred by him in
favour of a sub-lessee or a sub-tenant. There is right in rem.
 Lease is more than a mere contract.
 The parties to the lease are the transferor, who is called the lessor
or landlord,229 and the transferee, who is called the lessee or
tenant. Since both the parties execute a lease, the lessor and the
lessee must be competent to contract.
 Consideration for lease can be either premium or rent.

Types of lease

 As per one classification, there can be 2 types of lease: absolute

lease and derivative lease. An absolute lease is granted by a
person who has an absolute right over the property. It can be
granted for any number of years or for any time. A derivative lease
or sub-lease is granted by a person who himself has a limited
interest in the property. This kind of lease can never extend
beyond the time period for which the primary lease was executed
in favour of the lessee.

229
Narayan Gosain v The Collector Cuttack, AIR 1986 Ori 46, 51; Ekambara Ayyat v Meenatchi
Ammal, (1904) ILR 27 Mad 401 (FB).
  Based on term of duration: period to use the property, i.e. the
term of lease can be whatever as specified in lease. There are
lease for a fixed term, periodic lease or lease in perpetuity.
o Lease for fixed term: Where the duration of the tenancy is a
specific time period, such as five years or ten years, it is a
lease for a fixed term.
o Periodic lease: A lease whose duration or the term is
continuous from period to period is called a periodic lease. 230
The period may be a year, a quarter, a month, or even a
week, and the mode in which the rent is reserved may afford
a presumption as to the period of the lease. A lease from
year to year is a periodical lease. (can refer to section 108
which talks about lease of uncertain duration)
o Lease in perpetuity: A lease without a term is a permanent
lease.231 In the Indian scenario, leases in perpetuity are
granted with respect to agricultural property. A fixed rent
indicates permanency but permanency does not necessarily
imply both fixity of rent and fixity of occupation. 232 A slight
increase in rent will not by itself destroy the permanent
character of the tenancy.233 A contract of lease providing
that the tenant is to continue in possession as long as he
paid rent indicates a tenancy for the lifetime of the tenant
and not a permanent tenancy.
 Tenancy at will: kind of lease which can be terminated at the will
of lessee or lessor. Does not mean that lessor can evict the lessee
anytime. He has right to terminate. But has to give notice.

Freehold land and leasehold land

 Freehold land refers to land under ownership with liability to pay

taxes to govt. authorities; leasehold land is subject to just lease
agreement, with an obligation to pay rent.
 Suppose A is lessor and has leased property to B for 5 years. In 2 nd
year, he sells property to C. C cannot get possession immediately.
C only gets title. The sale is valid, however, the sale is subject to
encumbrance, i.e. the lease.

230
S Rajdev Singh v Punchip Associates, AIR 2008 Del 56.
231
Janaki Nath v Dinanath, AIR 1931 PC 207; CIT v Visheshwar, AIR 1940 Pat 24; Bara Lal v Bhaju
Mian, AIR 1955 Pat 499.
232
Bijoy Gopal Mukherji v Prafala Chandra Ghose, AIR 1953 SC 153
233
Bavasaheb v West Patent Co Ltd, AIR 1954 Bom 257
 Difference between lease and mortgage (pg. 423)

Section 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.

2 [All other leases of immoveable property may be made either by a

registered instrument or by oral agreement accompanied by delivery
of possession.

3 [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, 4 *** 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.] license

 Registration is must for year-to-year lease; for any term exceeding

one year; reserving a yearly rent; or lease in perpetuity.
 Month to month, lease for less than one year or lease for a year
need not be registered. It is optional. Simply by oral agreement it
can be done.
 The Indian registration act, gives similar provision in section 17.
 Where lease is not registered and it is necessary under s. 107,
then lease will be invalid.
 A lease required to be registered is void if unregistered 234 and the
document can neither be used as a piece of evidence in proof of all
the terms of the lease,235 nor would entitle the claimant for a
permanent lease to secure a permanent injunction restraining the
lessor from dispossessing him.236 The landlord cannot evict the
tenant on the basis of its terms, 237 but if, after delivery of

234
Usha Ranjan Ray Burman v Sova Das, AIR 1990 Cal I; see also S.K Gupta v RC Jain, AIR 1984
Del 187, Ramayan v Patna Improvement Trust, AIR 1972 Pat 7.
235
Bajaj Auto Ltd v Behari Lal Kohli, (1989) 4 SCC 39, 43; Sajid Mia Majmudar v Abdul Sattar Gani,
AIR 1954 Assam 102; Chitrilapatti Mathai v Chittilapalli Kochuseph, (1956) 2 Mad LJ 75; Budh
Ram v Ralla Ram, AIR 1987 SC 2078.
236
V Murlidhar v S. Anaiah Goud, AIR 2007 AP 347.
237
Pieco Electronics & Electricals Ltd v Tribeni Devi, AIR 1990 Cal 135; see Satish Chand Makhan
v Govardhan Das Vyas, AIR 1984 SC 143.
 possession, the rent is paid and accepted it is deemed to be a
monthly lease terminable by 15 days notice.238
 Where the lease is required to be registered but is not, in a suit for
specific performance, an unregistered and an unstamped lease
deed would not be admissible in evidence but can be admitted as
evidence for a collateral purpose. It can be looked into as evidence
only for proving nature and character of possession of the parties,
i.e., can be relied upon to establish jural relations between parties
to prove admission of defendant, in which capacity he is occupying
tenanted premises, and the nature of such possession.

Section 106. Duration of certain leases in absence of written

contract or local usage.—(1) In the absence of a contract or local
law or usage to the contrary, a lease of immovable property for
agricultural or manufacturing purposes shall be deemed to be a lease
from year to year, terminable, on the part of either lessor or lessee,
by six months’ notice; and a lease of immovable property for any
other purpose shall be deemed to be a lease from month to month,
terminable, on the part of either lessor or lessee, by fifteen days’
notice.

(2) Notwithstanding anything contained in any other law for the time
being in force, the period mentioned in sub-section (1) shall
commence from the date of receipt of notice.

(3) A notice under sub-section (1) shall not be deemed to be invalid

merely because the period mentioned therein falls short of the period
specified under that sub-section, where a suit or proceeding is filed
after the expiry of the period mentioned in that sub-section.

(4) Every notice under sub-section (1) must be in writing, signed by

or on behalf of the person giving it, and either be sent by post to the
party who is intended to be bound by it or be tendered or delivered
personally to such party, or to one of his family or servants at his
residence, or (if such tender or delivery is not practicable) affixed to
a conspicuous part of the property.]

 Ingredients
o (i) In the absence of a contract or local law or usage to the
contrary;

238
Biswabani Pvt Ltd v Santosh Kumar, AIR 1980 SC 226; Budh Ram v Ralla Ram, AIR 1987 SC
2078.
 o (ii) Lease of immovable property for agricultural or
manufacturing purposes shall be deemed to be a lease from
year to year;
o (iii) Terminable, on the part of either lessor or lessee, by six
months' notice;
o (iv) A lease of immovable property for any other purpose
shall be deemed to be a lease from month to month;
o (v) Terminable, on the part of either lessor or lessee, by
fifteen days' notice.
 The duration shall commence from date of receipt of notice, not
from date of dispatch.
 The notice should be in writing, has to be sent either by post or
tendered or delivered personally also. If such tender is not
practicable, it can be effexed to a conspicuous place.
 The duration of lease determines a lot of things.
 The term 'implied' itself means that the presumption of periodic
duration applies where no period is agreed upon between the
parties. This section applies in these cases.
 Section 106 applies where there is no contract to the contrary.
 This section makes distinctions based on usage. If agricultural use
or manufacturing purpose, it is year to year. For other purposes, it
is monthly.
 Rent control legislations
o Purpose of this law is to protect tenants from unnecessary
harassment from landlords. These are the local laws. Such
local laws nullify effect of section 106.

Difference between License and lease (pg. 624 book)

A licence is a right to do or continue to do, in or upon the immovable

property of the grantor, something which would in the absence of
such right is unlawful,239 and such right does not amount to an
easement or an interest in the property. The primary distinction
between a lease and a licence is that the lease is a transfer of a right
in a specific immovable property, licence is a bare permission. A
licencee is not entitled to notice to quit before eviction. 240

 Differences between these two

239
The Indian Easements Act, 1882, section 52.
240
Lall v Dunlop Rubber Co, AIR 1968 SC 175; Ma Gyi v Maung Tet, AIR 1934 Rang 291; Upendra
Mandal v Bhajahairi Mandal, AIR 1991 NOC 107 (Gau).
 o ToPA is applicable to lease and Indian Easement act is
applicable to a license.
o A lease is a transfer of an interest in a specific immovable
property, while licence is a bare permission, without any
transfer of an interest.
o A lease creates an interest in favour of the lessee with
respect of the property, a licence does not create such an
interest;
o A lease is both transferable and heritable, a sub-tenancy can
be created by the tenant and on the death of the tenant, the
tenancy can be inherited by his legal heirs, while a licence is
neither transferable nor heritable.
o A licence comes to an end with the death of either the
grantor or the grantee, since it is a personal contract, but a
lease does not come to an end either by the death of the
grantor or the grantee.
o A licence can be withdrawn at any time at the pleasure of
the grantor, but a lease can come to an end only in
accordance with the terms and conditions stipulated in the
contract of tenancy agreement.
o A lease is unaffected by the transfer of the property by sale
in favour of a third party. It continues and the purchaser has
to wait till the time period for which the tenancy was
created is over before he can get the possession, but in case
of a licence, if the property is sold to a third party, it comes
to an end immediately.
o A lessee has a right to protect the possession in his own
right. If trespassers encroach upon his property and
threaten his possession, a lessee can go to the court and file
a suit in his name. A licencee cannot defend his possession
in his own name as he does not have any proprietary rights
in the property. It is the owner of the property who would
protect the possession.
o A lessee in possession of the property is entitled to any
improvements or accessions made to the property, while a
licencee is not.
 Associated Hotels of India v RN Kapoor T
o The issue was whether occupancy of rooms in a hotel for
running a barber shop created a lease or a licence. The case
 related to Imperial hotel, where A conducted the business of
a hair dresser. He applied for fixation of standard rent and
the question before the court was whether this occupancy
was under a lease or a licence. If it was a lease, the
application for fixation of standard rent under the provisions
of the relevant rent Act, could be entertained, but if it was a
licence, there would be no question of fixation of standard
rent. The possession was secured with the help of a deed
that was described as a 'licence deed'. It empowered the
licencee to use the premises and carry their business for one
year on payment of money through quarterly installments.
The deed gave them an option to renew or extend the term
of occupancy on mutual terms and conditions. A was to pay
for the electricity and water usage calculated with the help
of a separate meter. He could not make any alterations in
the premises without the consent of the grantor. On failure
to pay the money, the grantor was at liberty to terminate the
agreement without notice and without compensation. The
occupancy rights were transferable in case the licencee
could not carry the business for a specified term, but with
the prior approval of the grantor.
o In the deed, they both termed each other as “licensee” and
“licensor” (however, court has to see the intenion of the
parties.
o Explaining the difference between lease and a licence, the
court held:
If a document gives only a right to use the property in a
particular way or under certain terms while it remains in
possession and control of the owner thereof, it will be a
licence. The legal possession therefore, continues to be
with the owner of the property, but the licencee is
permitted to make use of the premises for a particular
purpose. But for the permission, his occupation would be
unlawful. It does not create in his favour any estate or
interest in the property. There is therefore, clear
distinction between the two concepts. The dividing line is
clear though sometimes it becomes very thin or even
blurred. At one time it was thought that the test of
exclusive possession was infallible and if a person was
 given exclusive possession of premises, it would
conclusively establish that he was a lessee.
o So court has to see the substance of document irrespective
of whatever it is present in the deed. When you go to a hotel,
if you stay for a dau or two, we take the room, this is license.
The court quoted with approval the observation of Lord
Denning in Errington v Errington, to the effect that,
although a person who is let into exclusive possession is
prima facie, to be considered to be tenant, nevertheless he
will not be held to be so if the circumstances negative any
intention to create a tenancy…the question in all these cases
is one of intention.
o The court laid down four propositions to find out whether a
document creates a lease or a licence;
(i) To ascertain whether a document creates a lease or
a licence, the substance of the document must be
preferred to the form;
(ii) The real test is the intention of the parties—
whether they intended to create a lease or a licence;
(iii) If the document creates an interest in the
property, it is a lease, but if it only permits another to
make use of the property of which the legal possession
continues with the owner it is a licence and
(iv) If under the document, a party gets exclusive
possession of the property prima facie he is considered
to be a tenant, but circumstances may be established
which negative the intention to create a lease.
o The court held that the document here created a lease and
not a licence, as it did not confer a bare personal privilege
on A to use the rooms. It had put him in exclusive possession
of the property untrammelled by the control and free from
the grantor's directions. These conditions that were
incorporated in the document were the ones that were
usually found in a lease. The right of the grantees to transfer
their interest under the document even though with the
consent of the grantor was destructive of the theory of
licence as a licence is never transferable being but purely a
personal privilege. Therefore, these conditions in the
document created a lease and not a licence in favour of the
grantee.
  Delta International Ltd v Shyam Sunder Ganeriwalla
 Samir Kumar Chatterjee v Hirendra Nath Ghosh
 Leave and license agreement gives licensee the permission to
occupy property of licensor. Hence the occupation is given based
on leane and license basis and not on lease. So here, the eviction
will be easy. And there won’t be a rent control over it.

Section 108: Rights and liabilities of lessor and lessee

 This section is applicable only in the absence of a contrary local

usage or contrary contract. In a lease, ights and duties are
determined by the lease deed. So, the rights and liabilities emerge
from this deed. However, if the lease deed does not speak about
this, then section 108 will be applicable. Even if there are rights
and obligations, in addition to that also, s. 108 will be applicable.
 If there are inconsistency b/w lease deed and s.108, then the lease
deed shall prevail.
 There are 17 clauses. Out of this, first 3 deal with duties of lessor
(although note is that rights and liabilities of lessor, if you read
a,b,c they speak of duties of [Link] and duties are
corresponding to each other, which means the duty of lessee is the
right of lessor). The next 7 deal with right and liability of lessee.
And then the remaining deal with duties of lessee.
 Duty of lessor (similar to section 55)

Clause 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.

o So, it means lessor has a duty to disclose any material

defect. Defect is said to be latent if it is not apparently
visible.

Clause B: the lessor is bound on the lessee’s request to put him in

possession of the property

o The lessor of immovable property, as against the lessee with

respect to the to the property leased is bound on the lessee's
request to put him in possession of the property of the
agreed portion failing which, a cause of action arises in
favour of the tenant from the date of the lease.
 o He may refuse to pay him rent241 or can file a lawsuit242
against the lessor and against any third person, who may be
in possession or sue the lessor for damages. 243 An express
covenant excluding the implied covenant for quiet enjoyment
will not relieve the lessor of his duty to give possession. 244

Clause 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;

o 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 covenant is unqualified and protects the
lessee against interruption by the lessor, his heirs and
assignees, or other lessees of the lessor, or by any other
person or persons, whomsoever.
 Right and liability of lessee

Clause (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:

o A lease is a transfer of a right to enjoy the property and if

during the continuance of the lease, any accession, i.e.,
addition or improvement is made to the property; such
accession shall be deemed to be comprised in the lease.
 Accession by alluvion: something is added by natural
force, then because of that there is some addition in

241
Udhab Chandra v Narain, AIR 1920 Pat 611; Ganda Singh v Secretary of State, AIR 1934 Pesh
101; Manohar Lal v Bengal Potteries, AIR 1958 Pat 457.
242
Zamindar of Vizianagram v Behara Suryanarayana, (1902) ILR 25 Mad 587; Secretary of State
v Venkayya, (1917) ILR 40 Mad 910; Kandasami v Ramasami, (1919) ILR 42 Mad 203; Abdul
Karim v Upper India Bank, (1918) PR 19.
243
Razia Begum v Shaikh Muhammad, AIR 1926 Pat 508; Puma Nand v Kamala, AIR 1965 Pat 39.
244
Ahamadar Rahaman v Jaminiranjan, AIR 1930 Cal 385.
 the property, then lessee can enjoy this addition
during continuance of lease.
 Accession by dilluvion: when lease terminates, the
right of lessee to accessed part will transfer to lessor.

Clause (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:

o The complete destruction of the subject of the lease i.e., the

building/superstructure and the destruction of the underlying
land in a lease deed will affect leasehold rights but where a
godown that was given on lease was destroyed by fire but the
lessee did not opt for declaration of the lease deed as void,
he would not be deemed to have exercised his rights under
section 108 (e) as even as the godown was destroyed, the
land on which it stood was still in possession of the lease.

Clause (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:

o Since the lessor continues to be the owner of the property, it

is his duty to care for it
o and carry out necessary repairs from time to time at his own
expense. The property,
o due to the lessor's neglect should not become unfit for
enjoyment.
o The lessor is under no liability to repair in the absence of an
express contract making him liable, 245 rather, the liability is
that of the lessee.246

245
Doraipandi Konar v Sundara Tartar, AIR 1970 Mad 291; Lakhmichand v Ratanbai, AIR 1927
Bom 115; Narayan Rajaram v Shankar Diwakar, AIR 1955 Nag 202; Steuart & Co Ltd v Mackertich,
AIR 1963 Cal 198.
246
Lakhmichand Khetsey v Ratanbai, AIR 1927 Bom 115.
Clause 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:

o Normally, the lessor has to be the outgoings (taxes revenue,

public charges, etc.). But since lessee is interested in holding
the property, then he can pay incase the lessor neglects to do
so, and then, he can deduct, payment + interest from the
rents and recover it from lessor.

Clause (h) the lessee may 1 [even after the determination of the lease]
remove, at any time 2 [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:

o During the continuance of possession of the property, the

lessee may attach something to the land that becomes a
fixture or part of the land belonging to the landlord. Under
this section, 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 had
attached to the earth;247 provided he leaves the property in
the state in which he received it.248
o This rule is however, subject to contract to contrary.

(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
247
NA Munavar Hussain v ER Narayanan, AIR 1984 Mad 47.
248
Gur Prasad v Mehdi Husain, AIR 1942 Oudh 460.
 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:

 Duties of lessee

Clause (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:

o The degree of care expected here is of a reasonable prudent

man.
o The lessee also has to resotre the property in the same
condition he got it (subject to reasonable wear and tear)

(do remaining from book)

Section 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.

 As the owner of the property, what the lessor conveys to the lessee
is the right to possess and enjoy the property, but he retains the
ownership of the property with him. This ownership also carries
with it, a right to sell the property. After granting a lease, the
lessor can sell or transfer his remaining interest in the property. In
such cases the transferee steps into the shoes of the lessor and is
subject to the same rights and liabilities with respect to the
property as well as the lessee that the lessor was subject to.

Section 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.

Exchange (ch VI – ss. 118 -121)

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

 Chief characteristics features

o Mutual transfer of ownership in properties
o No consideration besides the properties
o Properties need not be immovable
o Exchange includes barter
o Mode of transfer
o Deed of exchange must be a valid contract
 An exchange involves a mutual transfer between two parties of
their respective properties. The main factor that distinguishes an
exchange from a sale is that in an exchange, no monetary
 consideration is involved. Exchange of one property for money is a
sale, and an exchange of movable property with another movable
property is barter. An exchange of one stamp for another, or shares
in a limited company, as consideration, is an exchange. In an
exchange the consideration must be specified, as, if it is not
mentioned, the transaction is not an exchange. If one of the items
transferred is coupled with money, the transaction is not an
exchange but a sale. Where properties are transferred and one of
the parties has to pay an additional sum of one lakh rupees as
equalisation value, the transaction is not an exchange, but is a sale.
 So, when it is a sale, sale of goods act will be applicable.

Section 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.]

 Exchange is a mutual transfer. and unless the object of exchange is

unlawful, the terms of the contract would be applicable to both of
them. The rule enunciated in section 119 is also subject to a
contract to the contrary. According to this section, each party is
entitled to the property that he was entitled to under the contract
and provides a remedy to the aggrieved party in case, he does not
get what he was supposed to get under this contract. For instance,
A and B enter into a contract to mutually exchange their properties
X and Y, respectively. A delivers X to B, but B fails to deliver Y to A.
A's rights would be decided in accordance with the rules laid down
under this section. It provides two remedies to the party so
dispossessed in the alternative:
(i) He can claim compensation for the loss caused to him by
such dispossession.

(ii) He can take back the property he had transferred. This right
can be exercised as against:

(a) the other party to the exchange having its possession;

 (b) if the possession is with the legal representative of the
transferee;
(c) if the possession is with the gratuitous transferee of
the other party.

Section 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 the rights and is subject
to the liabilities of a buyer as to that which he takes.

121. Exchange of money.—On an exchange of money, each party thereby

warrants the genuineness of the money given by him.

Gifts

Section 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 of gifts needs to be made when the donor is alive and

capable of giving. If done dies before acceptance, gift is void.
 Gift is a transfer of property with ownership without any
consideration. If consideration, then sale, and if it was in lieu of
another property, then it is exchange. Gift can be called gratuitous
transfer.
 Gift is a transfer of property as per section 5, it is inter vivos.
 If transfer is to happen after death of a person, it is a will. This I
the difference b/w gift and will. Will takes effect after death of the
transferor.

Essentials of gift.

 Donor and donee

o The Donor must be competent. Donee need not be
competent. But he should be a person with existence.
 Transfer of ownership is necessary
o There has to be transfer of absolute interest. So, the donor
must divest himself from the absolute interest in the property
and vest the interest with the donee.
 Nature of property
o Property should be existing property capable of being
transferred. Future property cannot be transferred.
  No consideration
o This is gratuitous. A small sum of money is given by
transferee in consideration of transfer of ownership, it would
either make the transfer as exchange or sale. So, NO
CONSIDERATION!!!
 Voluntarily made
 Acceptance by transferee
o Donee has every right to reject the gift. Sometimes gift can
be onerous also. There might be some liability. So, this
liability may exceed actual value of property. Otherwise also,
donee has the right to reject it without any reason.

Section 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.

 Where immovable property is gifted, the transfer must be effected

by a registered instrument signed by or on behalf of the donor, and
attested by at least two witnesses. A gift of immovable property is
invalid without a registered instrument even if the intended donee
is put in possession.
 Even with registration, that alone cannot validate a gift, if other
conditions are not fulfilled.
 Where the son claims properties on the basis of an oral gift made
by the father which he could not prove, the gift is not valid merely
on the basis of his residing in the properties 249 but 12 years'
possession under an oral gift will perfect a title by prescription. 250

Section 124. Gift of existing and future property.—A girt comprising

both existing and future property is void as to the latter.

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.

249
Ponthinoda Sainabi v Vatakkiloda Aboobackerkoya, AIR 2001 Ker 331.
250
Venkatarayudu v Subbamma, (1903) 13 Mad LJ 302.
  As the gift is not valid till it is accepted, acceptance by all is
necessary if the gift as a whole is to be treated as valid. If one out
of several donees or more do not give the consent, the gift does not
fail in its entirety and is valid with respect to the shares of those
who have accepted it. It be void only to the extent of the shares of
those who have not given the consent.

126. When gift may be suspended or revoked.—The donor and done may
agree that on the happening of any specified event which does not depend
on the will of the donor a it shall be suspended or revoked; but a gift which
the parties agree shall be revocable wholly or in part at the mere well of the
donor is void wholly or in part, as the case may be.

A gift 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.

Conditional gifts

 A gift is primarily a contract and if both the parties agree that the
gift would be revoked on the happening of an event the happening
of which does not depend purely on the wishes of the donor, if that
event happens, the gift will be revoked. This event may be certain
or uncertain. It may happen or may not happen, but if the
revocation of the gift is purely on the wishes of the donor, then the
gift is void.
 A gift may be subject to a condition precedent or a condition
subsequent if the condition precedent is impossible or illegal, or
immoral, the gift fails.
 Thakur Raghunath Ji Maharaj v Ramesh Chandra, AIR 2001
SC 2340: Where an unconditional gift deed and an agreement
between the donor and the donee were executed on the same day,
the conditions prescribed in the agreement would attach to the
deed as gift deed and the agreement would form part of one
transaction. Where via a gift deed the land was gifted
unconditionally to the donee, but by another agreement executed
on the same day it was stipulated that the donee was to construct a
college building on the land within six months failing which the
 donor would have a right to take back the possession, it is a
conditional gift.
 Revocation by rescission
o The physical act of signing the deed has to coincide with the
intention of making a gift.251 The court has to be convinced
after a fair understanding of the whole matter 252 that the
intention to make the gift originated with the donor, and he
had the benefit of independent advice.
o Gift can be invoked if there is fraud, undue influence,
coercion, etc.

Section 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 done 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 done 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.

 This is an equity-based principle. Accept the transfer in whole.

When there is single transfer with 2-3 property, then need to
accept it all. But if there are several and independent transfers to
the same donee, then here, donee is at liberty to accept or reject
any of them.

Section 128. Universal donee.—Subject to the provisions of section 127,

where a gift consists of the donor’s whole property, the done is personally
liable for all the debts due by 1 [and liabilities of] the donor at the time of
the gift to the extent of the property comprised therein.

Section 129. Saving of donations mortis causa and Muhammadan law.—

Nothing is this Chapter related to gifts of moveable property made in

251
Faridunissa v Muhhtar Ahmad, AIR 1925 PC 204; Tarn Kumari v Chandra Mauleshwar, AIR
1931 PC 303.
252
Sunitabala Debi v Dhara Sundari, AIR 1949 PC 24.
contemplation of death, or shall be deemed to affect any rule of
Muhammadan law 2 ***.