THE TRANSFER OF PROPERTY

CHAPTER 1
CONTENTS
 Introduction
 Preamble
 Objects and scope of TPA
 Meaning of immovable property and examples
 Importance of nature of property
 Definition of transfer of property.
 UNBORN PERSON
 Transfer for the benefit of unborn person,Two rules
 Constructive Notice
 Actionable Claim
 PERPETUITY
 CONDITIONS-PRECEDENT AND SUBSEQUENT
 Doctrine of Election.
 OSTENSIBLE OWNER
 LIS PENDENS
 BONAFIDE HOLDER & FRAUDULENT TRANSFER
 PART PERFORMANCE
 CONVENANT ANNEXED TO LAND
 Conclusion
 Important question and answers
Introduction
Property is one of the fundamental elements of socio-economic life of an individual. The
word property has gradually been given a wider meaning. Property law is therefore an
important branch of civil law. The Transfer of Property Act, 1882 deals with the transfer of
inter vivos means transfer by act of parties which takes place between two living persons for
eg: The gift or sale is a transfer of property by act of parties because both transferor and
transferee both must be living persons on the date of transfer. Transfer of property under will
is not a transfer by act of the parties because will take effect after the death of the transferor.
Transfer of properties by operation of law are governed by personal laws like Hindu and
Muslim law of wills and inheritance or by order of the court under the civil procedure code.
This Act is applicable to whole India except Punjab.
Before the Transfer of Property Act came into existence in 1882, the transfers of immovable
properties in India were governed by the principles of English law and equity. In the absence
of any statutory provisions, the courts have to fall back upon English law on real properties,
sometimes forcing the courts to decide the disputes according to their own notions of justice
and fair play, resulting in confused and conflicting case laws. To remedy these confusions
and conflicts, a Law Commission was appointed in England to prepare a code of substantive
Law of Transfer of Properties in India.
This commission prepared a draft Bill which was sent to the secretary of State for India. This
bill was introduced in the Legislative Council in 1877. The bill was then referred to a Select
Committee and it was also sent to the Local Governments for their comments. This Bill was
discussed and redrafted on many points and referred to a Third Law Commission. The Third
Law Commission consisted of Sir Charles Turner, Chief Justice of Madras, Sir Raymond
Wast and Mr. Whitely Stokes, Law Member of the Council of the Governor-General.
The Bill pertaining to Transfer of Property Act, 1882 was prepared not less than seven times
before the final Bill was passed and it came into force with effect from 17th February 1882,
as Transfer of Property Act, 1882 (4 of 1882)

Preamble
The provisions of the Transfer of Property Act, 1882 have no application in a case where the
transfer of property takes place by operation of law. As would appear from the Preamble of
the Act. The same applies only to transfer by act of parties. A transfer by operation of law is
not validated or invalidated by anything contained in the Act.
A transfer which takes place by operation of law, therefore, need not meet the requirement of
the provisions of the Transfer of the Property Act or the Indian Registration Act. Section 11
of the Act provides for a non-obstante clause. An overriding effect, therefore, has been given
thereby over all other laws for the time being in force.[1]
Act not exhaustive – it is to be noted that the language of the Preamble neither the word
‘consolidate’ nor the word ‘exhaustive’ is used. This means that the Act is not exhaustive of a
complete Code. It only defines and amends certain parts of the law relating to the transfer of
property, which is already existing. It is not giving any new consolidated law. Therefore, the
help of certain principles of English law which are not inconsistent with the present Act may
be taken on occasions on the basis of justice, equity and good conscience.
Where any case is not covered by the provisions of the Act, the courts are permitted to
administer the principles of equity. But where the case is within the provisions of the Act, the
Act must be applied. The principle that courts are authorised to act according to justice,
equity and good conscience where there is no specific provision of law governing that case
means that the English law is to be applied if its application is suited to the Indian society and
its circumstances.
Objects and scope of TPA
The act defines and amends the law relating to the transfer of property by act of parties. The
Act does not cover transfer of property by operation of law. Further, transfer of property by
act of parties again may be inter vivos or testamentary. Inter vivos transfer means the transfer
between two living persons whereas testamentary transfer to transfer by will etc.
The Transfer of Property Act, 1882 covers only inter vivos transfers. Testamentary transfers
are governed by the Indian Succession Act, 1925.
The objects and scope of the TPA may be summarized in terms of the following points –
1.This Act applies only to transfers by living persons. It does not regulate transfers by
operation by law. In case of transfer by living persons, both the transferor and the transferee
are living at the time of transfer. In case of transfer by operation by law, the property is
transferred even though the transferor is not alive on the date of the transfer. In this mode of
transfer the property is transferred automatically by the process of law. For example,
devolution of the property upon the legal heirs or legatees by inheritance or under wills is by
operation of law. Transfer by orders of a court or transmission of property in cases of
insolvency, sale or forfeiture in the execution of court’s decree is all by operation of law.
2.The Act mainly deals with the transfer of immovable properties. Although, sections 5 to 37
of Chapter II contain provisions which are applicable to both kinds of properties whether
movable or immovable, mainly the Act deals with transfers of immovable property. Transfers
of movable property are regulated by the Sale of Goods Act, 1930.
3.Chapter II of the Act, which contains general principles of transfer does not affect the
transfer of Muslims even if it is against any of the provisions of Chapter II. This means that if
there is any provision in the Transfer of Property Act, 1882 which is against the rule of
Muslim Law, the rule of Muslim Law will prevail over the conflicting provisions of the Act.
The gifts made by Muslims are governed by the Muslim law of Hiba. Section 129 of Chapter
VII says that provisions of this chapter (relating to gifts) would not be applicable to gifts
made by Muslims. However, such exemptions are given only in respect of those rules of
Muslim Law which are in conflict with any of the provisions of the Act dealing with the
transfers in general.
4.The Act has not only defined the existing rules of transfers but also amended and modified
some of them so as to make them suitable to the socio-economic conditions of India.
5.The Act has provided a parallel law to the already existing laws of testamentary and
intestate transfers.
6.Certain incidents of any contract or constitution of property are saved by the Act. This
means that they are exempted from the operation of the Act provided they are not
inconsistent with the provisions of the Act and are allowed by the law for the time being in
force. Constitution of property means the essential nature of property. The provisions of the
Transfer of Property, 1882 cannot be applied to affect or change the basic nature of the
property itself.
7.The Transfer of Property Act, 1882 was not made applicable to the whole of India in the
first instance. As originally, enacted, the Act did not enact, and the Act did not extend to the
then State of Bombay, Punjab and Delhi.
Immovable Property.
The Transfer of Property Act, 1882 has not defined this term. It only says that ‘immovable
property’ does not include standing timber, growing crops or grass. The definitions given by
the Act is neither comprehensive nor exhaustive and only excludes certain things, it becomes
necessary to explore other Acts which have defined the term ‘immovable property’.
Section 3 of the T.P Act defines the term Immovable property but the definition is neither
clear nor complete. It simply says that immovable property excludes standing timber,
growing crops or grants. it is not clear as what it includes, so we have to depend upon the
General Clauses Act 1897.
According to Section 4 of the General Clauses Act, immovable property includes land,
benefits to arise out of land and things attached to the earth. Hence the definition of the
immovable property which is defined in the General Clause Act is applicable to the Transfer
of Property. In order to get clear and complete meaning of the immovable property it is
necessary to consider the definitions given in section 3 of the Transfer of property and as well
as definition given under the General Clause Act. On the basis of the definition given in the
both the Acts the expression immovable may be defined properly in the following words:

Immovable Property includes:

• Land,
• Benefits to arise out of land,
• things attached to the earth, i.e.,
i. Things embedded to the earth,
ii. Things attached to what is so embedded in the earth,
iii. Things rooted in the earth except:
a. Standing timber
b. growing crops
c. growing grass.

• Land
Land means surface of the earth. It includes everything upon the surface of the land, under
the surface of land and also above the surface of the land. Anything upon the land, so long as
it is not removed from there, shall be part of the land. For example: Soil, mud deposited on
the surface of the earth would be immovable property. The water collected in a pit or
accumulated in the pond or lake is also immovable property because the water is part and
parcel of the surface of the earth. Water flowing in the river gives the impression that it is
moveable but its water always remains on the surface of the earth.
Everything under the surface of land is also the part of the land and is included in the
expression immovable property eg., Sub-soil, minerals, coal or gold mines and the
underground streams of water are immovable properties because they flow under the land.
• Benefits to arise out of Land.
Besides land, the benefit which a person gets from land, is also an immovable property. One
way get the benefit from the land under some right. Beneficial interest in a property is called
beneficial right or interest of that property, Thus any right which is exercised over the land or
any other immovable property and by the exercise of which a person gets certain profit or
gain would be his intangible immovable property. For example land is used in wider sense it
means and includes everything upon its surface and everything beneath the land. Therefore
the right of a tenant to live in the house of his landlord is an immovable property of the
tenant, in the same way right of fishery, right to catch fish in the pond or lake is an
immovable property.
• Things attached to the earth.
The things attached to the earth means
i. Things embedded in the earth
ii. Thing attached what so embedded in the earth
iii. Thing rooted in the earth.

• Things embedded in the earth

Things which are fixed firmly in the earth and became part of the land are things embedded
in the earth. For eg., houses, buildings , wall, electricity polls are immovable property
because they are things embedded in the earth. Walls and polls are not fixtures or not just
placed on the surface of the land but they are dug deep and thereafter the whole structure is
fixed permanently. Where are things which placed on the surface of the earth without any
intention to make them part of the land the things may not be immovable property. For eg.,
road roller or heavy stone which placed on the land may go two to three feet deep depending
upon the weight, therefore such things are not called as immovable property.
• Things attached to what is so embedded in the earth.
Where a thing is attached to something which is embedded in the earth for its permanent
beneficial enjoyment, the thing so attached would also become immovable property. For eg.,
doors, windows and walls of permanent enjoyment of that house. The things which are
attached without any intention making then to be part of the house would not be immovable
property eg., electric bulb, window screen etc.

• Things which are rooted in the earth.

Trees, plants or shrubs which are grown on land are rooted in the earth with help of their
roots, they keep themselves fixed in the earth and become the part of the land. Until it is cut
down, therefore a general rule in respect of all the trees, plants, herbs and shrubs is that they
are immovable properties, however there is an exception to this general rule
a. Standing timber.
b. Growing crops.
c. Growing grass.
Standing timber is a moveable property provided its woods are generally used for timber
purposes i.e.making for house hold furnitures. And growing crops and growing grass are also
movable property although the crops say wheat and barley are nothing but collection of plants
which are rooted in the earth but every crop and grass can be cut in future when it becomes
ripe. That the reason they will not be called as immovable property.
Definition of transfer of property.
Section 5 of the transfer of property Act defines the term transfer of property in the following
manner
“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 and to transfer the property is to
perform such act”.
Transfer for the benefit of the unborn person
 UNBORN PERSON
A transfer of property can be made to a person who is not in existence at the date of the
transfer. But this is subject to the prior interest created by the transferor. The interest created
for the benefit of the unborn person will not take effect unless it extends to the whole of the
remaining interest of the transferor, in the property.
This means the transfer to the unborn must be absolute & there should be no further transfer
from him to any body.
A transfer in T. P. Act can be made only to a living person. Hence, in making a transfer to an
unborn person, the property must vest in some person (e.g. trustee) between the date of
transfer and the birth of the unborn person.
Eg.: A transfers his property under a trust deed to B, the trus- tee. He makes it for A and his
wife for their lives & after the death of the survivor to the eldest son of the intended marriage
of A, and, after his death to A's second son. Here the interest created for the benefit of the
eldest son does not take effect because it does not extend to the whole of A's remaining
interest in the property. There is only a life interest to him, and hence it is bad.
In Tagore Vs. Tagore:
The Privy Council had held that transfer by a Hindu to an unborn person who is not in
existence on the date of transfer was void. In order to over come this decision section 13 was
framed.
Ex.: A makes a gift to P, a bachelor for life, and then to his first born son for life and then to
M absolutely. Here transfer to the first son of P is to an unborn person. It does not comprise
the whole of the interest of the transferor. Only life interest is given to him. Hence even if P
has a son, such son cannot take under the transfer, for, to that extent that transfer is void. But,
if the gift is given to S absolutely, and not to M, then it is valid.
Leading Case: Sopher VA.G. of Bengal.
T executed a will. He ultimately vested a bequest in favour of persons not born at the time of
the death of testator. There were conditions including forfeiture. On a reading, the privy
council held that there was not transfer of the hole of the remaining interest. Hence, the
transfer was void.
In short : - An unborn person means a person who is not in existence even in the mother's
womb so property can been transferred to a person who is in the mother's womb, but property
cannot be transferred to a person who is not even in the mother's womb because such person
is called as unborn person. Legally speaking every transfer of property involves transfer of
interests. When a property is transferred the transferor divests all is interest and vests it
immediately in the transferee. So if a property is transferred directly to a person who is not in
existence, the interest so transferred shall be divested or be away from the transferor and wait
for the transferee to come into existence, to whom it would vests.
Two rules:
Property cannot be transferred directly to an unborn person but it can be transferred for the
benefit of an unborn person. Section 13 provides that property can be transferred for the
benefit of an unborn person subject to following conditions:

• Transfer for the unborn must be preceded by a life interest in favour of a person in
existence at the date of the transfer, and
• Only absolute interest may be transferred in favour of the unborn.
i. Prior Life-Interest.
The transfer for the benefit of an unborn must be preceded by a life interest in favour a living
person in existence at the date of the transfer. Where a person intends to transfer certain
properties for the benefit of an unborn person, such unborn is the ultimate beneficiary. But
since such unborn is not in existence at the date of the transfer, property cannot be given to
him directly. There must be prior life interest in favour of living person so that such living
person holds the property during his life and till that unborn would cum into existence. After
the termination of his life interest. The interest should pass on to the unborn person, who by
that time comes into existence.
eg., A transfers his house to X for life and thereafter to unborn named B. B is the son of A.
Here A cannot make direct transfer to his son therefore A has to make direct transfer of his
life interest in favour X after his death the interest of that house shall pass on to unborn
named as B.
ii. Only Absolute Interest may be Given.
Only absolute interest in the property may be transferred in favour of an unborn person.
Limited or life interest cannot be transferred to an unborn person. Transfer of property for life
of an unborn person is void and cannot take effect. When a property is transferred in favour
of an unborn, the transferor first gives a life interest to an existing person. After transferring
this, he retains with him the remaining interest of the property the remaining interest with
interest withthe transferor must be given to the unborn so that the termination of prior life
interest, the unborn gets the whole i.e., absolute interest in the property.
eg., A transferred his properties to X for life who is unmarried and then to the eldest child of
X absolutely. The transfer in favour of edlest child of X is vaild.
Constructive Notice.
Section 3 defines notice. A notice may be actual or construc- tive. There is actual notice,
when knowledge of a fact is brought directly to the person concerned. It is constructive when
there is a presumption of the knowledge of the fact. The following are its different kinds:
i) knowledge is presumed when the party wilfully abstains from making enquiry.
ii) Gross negligence of the party.
iii) Registration:
The privy council had held that registration was not a constructive notice to subsequent
transferees. (Thilak Devilal's Case). This is now superseded by T.P.Act. Hence, registration
of a transfer amounts to notice, from the date of registration.
iv) Possession as notice:
If a person is actually in possession of a property, then the acquirer of the property is deemed
to have notice of the title, if any, of the person in possession of the property.

v) Notice to agent is treated as notice to the principal.

The agent must have notice during the course of his business.
If an agent fraudulently conceals the fact, then there is notice to the principal. The principal
should not be a privy to the fraud.

Spes Successionis:
Means 'Chance of Succession'.
S.6. of the T.P.Act provides that the chance of an heir succeeding to an estate, or the chance
of a relation obtaining a legacy of a Kinsman or such a mere possibility cannot be transferred.
E.g.: The interest of a reversionary on the death of a Hindu widow. In Amrit Narayana Vs.
GayaSingh: 'A' hoping to succeed to the property of his material grandfather B, sold to C, his
such interest, during the life time of B. Subsequently B died. A sued for recovery of property
from C. Held: The sale was of a spes successions and therefore void.
Future interests in properties such as contingent interest or executory interest are transferable,
as, here, the possibility is coupled with an interest. Similar to spes successions, the
possibilities of a like nature are:
i) Chance of a person deriving income from scavenging work, which he expects to get
in future.
ii) Right of a priest to a share in the offerings at the temple. There is a mere chance and
hence inalienable.
The leading case is Allcard V. Walker.
Actionable Claim:
Actionable claims include claims recognised by the courts to grant relief either(a) as to
unsecured debts or (b) as to beneficial interest in movable property not in possession (actual
or construc- tive), whether present or future, conditional or contingent.
This definition has solved many difficulties that had arisen earlier to 1900.
The leading cases are:
Colonial Bank V, Whinney and Muchiram V.Ishan Chandar.
Sn.130 of the T.P.Act deals with the transfers of Actionable claims. It says that a transfer of
an actionable claim (whether with or without consideration) should be made only by the
execution of an instrument. Thereupon, all the rights and remedies of the transferor become
vested in the transferee, whether notice is given or not. The transferee may sue or proceed in
his own name without obtaining the consent of the transferor.
Eg.: (a) A is the debtor and B is the creditor. B transfers the debt to C. B then demand from
A to pay; A pays without notice of the transfer. The payment is valid. C cannot sue A for the
debt. The debt is an actionable claim and may be transferred by B to C. But, C as. transferee
has those rights and remedies as B. Hence, C cannot sue 'A' for the debt.
b) A has a life insurance policy. He assigns it to a Bank B for securing a loan. A dies. B is
entitled to receive the amount of the policy. B can sue without the consent of A's executors.
The following are actionable claims :
i) Share in a Company ii) Mortgage debt iii) Claim to copyright
iv) Claim to mesne profits v) Mere right to sue.

Exchange: (T.P. Ac t Sn.111)

When two persons mutually transfer the ownership of one thing for the ownership of another,
neither thing or both things money only, the transaction is called an 'Exchange'.
Any such transfer can be made in the same manner as is done in respect of sale.
A partition of H.U.F. is not an Exchange. The parties to Exchange are subject to the same
rights & liabilities of the Vendor and the Vendee.
Any defect in the title of the property exchanged, is to be set right by that party whose
property had the defective title.
A transfers his house to B and B transfers his wet land and pays cash of Rs.5,000/- to A as
consideration.
This is an Exchange. If B had given money only, then it is not an Exchange.
Charge : Sn.100
Where immovable property of a {person is by act of parties, (or by operation of law) made a
security or the payment of money to another, the latter person is said to hav£ a charge on the
property.
Conditions:
i) The transaction should not amount to a mortgage.
ii) All matters relating to the rights and liabilities of the parties to the charge are
governed by those applicable to a simple mortgage.(Sn.59 T.P.Act).
iii) This will not apply to a trustee^ who makes a charge on the trust-property.
iv) Bonafide transferees without notice of the charge on the immovable property are
protected. A charge is an encumbrance on the property.
v) The formalities to be observed to create a charge are the same as for a simple
mortgage.
In a charge, there is no transfer of any interest in the immovable property, as in a mortgage.
There is creation of a right of payment out of the property specified.
Charge is less than a simple mortgage & cannot take priority over it. .
It is a jus ad rem, and not jus in rem. There is no personal covenant to pay ; there is merely an
obligation on the property for payment.
A charge cannot bind a bonafide purchaser for value who had no notice of the charge.
 PERPETUITY

Overview
• Essentials of Section 48
• Qui prior est tempore potior est jure – Basis of the principle
• Exceptions to the rule of Priority
• Section 50 of the Registration Act, 1908
As the title itself suggests, the doctrine tells about who would be given the priority over
others or who would be preferred first. The courts have faced and still face a lot of problems
in determining as to whose rights are to be given the priority over the other when parties
before the court have conflicting interests. The doctrine of Priority solves this problem faced
by the courts to a large extent.
This doctrine is embodied in Section 48 of the Transfer of Property Act, 1882. The need for
the doctrine is, there arises the situation where the transferor of property deals with the same
property or transfers or creates rights in the same property, to different people subsequently.
The question as to who will have the right over the others in cases where the rights of
subsequent transferees are clashing and there is no contract between the parties to deal with
the same would be determined by Section 48 of TPA.
Essentials of Section 48
1. The transferor transfers the rights in the same immovable property
2. At different times – one interest created should be prior in time and another should be
subsequent.
3. Such rights created cannot coexist or cannot be enjoyed in full extent together
4. Then, each later right created is subject to the previously created rights.
Provided that there is no contract to the contrary or reservation binding the earlier transferee.
Note: the property in question must be the same and the rights created in favour of different
transferees must be in conflict in order to attract this principle.

Qui prior est tempore potior est jure – Basis of the principle
This rule is based on the maxim Qui prior est tempore potior est jure which stands for: he
who is prior in time is better in law, meaning that the subsequent dealings by the transferor of
the same property cannot prejudice the rights of the transferee of the same property (prior
transferee).
When a transferor transfers the same property in favour of several transferees, each transferee
will take the property with the rights of the former transferee. It is also based upon the
principle that no man can transfer the title other than which he’s entitled to. The subsequent
lease cannot prejudice the rights of the old tenant.

Examples:
1.X mortgages his property to Y for Rs. 90,000/-. And then sells the property to Z. Here two
transfers have taken place. Now Z owns the property but according to the law, the property is
still subject to the mortgage and in case of default of payment of the loan, the mortgagee can
cause the property to be sold. As the later transfer is subject to the prior transfer.
2.X grants a lease of his house to Y for 2 years. After the execution of the lease deed for 1
year, he sells the property to Z. Here X has transferred the same property to two people. The
rights of the parties cannot be enjoyed together as the owner and the lessee both have the
right to possession over the property. According to the rule laid out in Section 48 of TPA, the
subsequent transferee will take the property with the right of the former transferee.
Hence, in this case, Z, who is the subsequent transferee, will take the property with the rights
of the prior transferee i.e. Y’s right would be given priority over Z’s right. And Z would not
be able to take the possession of the property with the immediate effect of the transfer but
would have to wait till the determination of the lease.

In case of subsequent mortgages, the subsequent mortgagee merely gets equity of redemption
and if he sues for the sale on his mortgage, it will be sold subject to the prior mortgage.

II. Exceptions to the rule of Priority

1. Where in prior transfer, the procedure laid out by the law which is compulsory is not
followed
Hence, where the prior transfer is incomplete in the eyes of the law, there doesn’t arise any
question of conflict of rights or interest in the property. Example: A executed a lease deed of
immovable property in favor of B for 5 but didn’t get it registered. Registration of lease deed
which is for one or more than one year is compulsory.
A subsequently sold the same property to C. Here C can have the immediate possession of
the property if he wishes so. The rights of C would be given preference over the rights of B.
And the rule of Priority would not be attracted here. When the conflict is between two
registered documents, the earlier document but registered later would be preferred over the
later document but registered earlier.
2. Where the subsequent transfer or the second transfer takes place by the virtue of the court
If the court has ordered for the subsequent transfer, then the subsequent transfer would be
preferred over the prior transfer and the rights of the subsequent transferee would be given
preference over the prior transferee. Hence, in this case, the Doctrine of priority will not
apply.
3. Estoppel
Here, if the prior transferee is aware of the subsequent transfer taking place, i.e. the
subsequent transfer is taking place and the same is within the knowledge of the prior
transferee, the subsequent transferee would be given preference. And the rule of priority
would not be attracted. It is not needed for the prior transferee to be familiar with the exact
details of the transfer.
4. Salvage charges
The salvage charges are the amount paid to protect the encumbered property from the loss or
destruction. Such amounts are recoverable/payable in priority to all other charges.
5. Notice / Section 78
Because of the fraud, misrepresentation or negligence of the prior mortgagee, a person gets
induced and advances money on the security of the mortgaged property, then that person (the
subsequent mortgagee) would be given the priority over the prior mortgagee.
Having notice means either being familiar with the fact or the person is unaware of the fact
because of his own gross negligence; if there were no negligence on his part he would be
familiar with the facts.
So where a bona fide contract, is made for the sale of property, and a third party, afterwards
buys the property with notice of the prior contract, the title of the party claiming under the
prior contract prevails against the subsequent purchaser, although the latter’s purchase may
have been registered, and although he has obtained possession under this purchase. But the
transfer that has been made prior in time must be bona fide.

III. Section 50 of the Registration Act, 1908

Section 50 of the Registration Act provides for the categories of the registered documents
relating to the land to take effect against unregistered documents. Hence, it gives the holder
of a subsequently registered deed priority in respect of his deed over the holder of an earlier
unregistered deed not being compulsorily registrable, if, in fact, the holder of the registered
deed had, at the time of its execution, a notice of the earlier unregistered deed.
Other than those categories mentioned, where the parties execute a registered deed in any
point of time which is subsequent to prior but an unregistered deed, is subject to the doctrine
of notice i.e. the parties executing the registered deed after the unregistered deed did not have
the notice of it.
In ICICI Bank Ltd. v. SIDCO Leathers Ltd. And Ors. [4],
The applicability of Section 48 in cases of Companies was questioned. It was held that there
doesn’t exist any provision in the Companies Act which provides that the provisions of
Section 48 of the Transfer of Property Act would not be applicable in relation to the affairs of
a company.
Unless, expressly or by necessary implication, such a provision contrary to or inconsistent
which shows a different intent can be found in Companies Act, Section 48 of the Transfer of
Properties Act, cannot be held to be inapplicable. This case further provides with the
exceptions to Section 48 of TPA / Doctrine of priority.
CONDITIONS-PRECEDENT AND SUBSEQUENT

Condition precedent :
Is one where a valid condition is imposed and the property becomes vested on the fulfillment
of the condition thereof. Here the rule of Cypres is applied i.e, there must be a substantial
compliance with the condition imposed. The leading case is Edwards Vs. Hammand.
Illustrations (i) A transfers Rs.1'0,000/- to B on a condition that B should marry with the
consent of C, D & E. E dies. Subsequently B marries with the consent of C and D. Under the
doctrine of cypress (substantial compliance ) the property comes to B.
(ii) If in the above case C, D & E are all living and B marries without their consent, but
subsequently gets ratified by C,D and E, the condition is not fulfilled.
Condition Subsequent:
A condition subsequent is one where a disposition of property effects only when the
condition is fulfilled subsequently. Here the condition should be strictly fulfilled.
Eg.: A transfers Rs.50,000 , to be paid to B on his attaining majority with a condition that if B
dies a minor, or marries without C's consent, the said amount shall go to D. B marries when
only 17 years of age without C's consent. The transfer to D takes effect. This is under
doctrine of acceleration.
B transfers property to A absolutely but subject to the condition that the property should
revert to the grantor if the property is attached under an execution decree against A. Here the
subsequent condition is invalid and therefore to be ignored, but the transfer to A is valid.
B transfers to A absolutely but puts condition that the property could revert to B if A
becomes insolvent. The condition is bad but the transfer is valid.
Hence in a condition subsequent an estate, pre-vested in one person becomes divested on the
fulfillment of the condition.
b) In condition precedent, if the fulfilment is impossible the condition fails and previous
estate becomes absolute,
c) In condition precedent it is enough if there is substantial compliance with the
condition(Cypres)
However, in condition subsequent there must be a strict fulfilment of the condition.
d) If the condition precedent is illegal, the estate limited upon it, fails.
But in condition subsequent if the condition is illegal the estate becomes vested and the
condition is ignored.
 ELECTION

Doctrine of Election. (Sn.35).

The doctrine of election was enunciated by the House of Lords in the leading case Cooper
Vs. Cooper. It states that there is an obligation on him who takes a benefit under a will or
other instru- ment, to give full effect to that instrument under which he takes a benefit. If the
transferor has transferred some thing which was beyond his power but to which effect could
be given by the consent of the transferee, the law provides that the person who takes the
benefit must also take the obligations thereof. This principle is embodied in Sn.35 of T.P.Act.

Eg.: 1. A makes a gift of the property of C worth Rs.8,000/- to B and provides in the same
deed Rs.10.000/- to C. C may elect either to retain the property himself or to have
Rs.10,000/-. If the elects to have the property, he forfeits Rs.10,000/-.
Hence according to ‘the doctrine the following are essentials:
a) The transferor should have no right in the property he has transferred.
b) The transferor should confer a benefit on the owner of that property.
c) In one and same transaction there must be the transfer of property and the benefit
conferred.
In the above circumstances the owner is given a right of elec- tion. He may elect either to
have the benefit conferred or to retain the property.
Hence the acceptance or rejection must be in to-to i.e., he cannot approbate and reprobate at
the same time. He cannot blow hot and cold in the same breath. Exceptions:
The doctrine is subject to the following:
i) A transfers property of C to B worth Rs.800/- but confers a benefit of Rs.1,000/- to C.
C elects to retain the land. Hence he cannot claim Rs.1,000/-.
If A dies before C makes election, A's representative must pay Rs.800/- to B, as the object of
A was to transfer property worth Rs.800/-
ii) If the person to elect has got some other benefit separately • in the same transaction,
he is entitled to it.
iii) Acceptance of the benefit conferred amounts to election, if he is aware of the duty to
elect as a reasonable man. He may waive enquiry and accept. Such knowledge is presumed if
the person has enjoyed the benefit for two years. Such knowledge can also be inferred, if that
person who gets the benefit makes himself impossible of getting the benefit.
A transfers C's estate to B and as part of the transfer gives C a coalmine. C exhausts the
coalmine. C has elected to have the benefit.
iv) Election must be made within one year from the date of transfer otherwise the
transferor or his representative may request to make the election within a reasonable time. It
he does not elect, he is deemed to have elected to get the benefit.
v) If the person to make the election is under a disability (minority, idiocy or lunacy) he
must take the election after the disabil- ity ceases. (Limitation Act), within 3 years.
 OSTENSIBLE OWNER

Ostensible Owner (Benami Transaction) (Sn. 41 T.P.Act)

This principle was explained by the Privy Council in Lakshman Vs. Kali Charan.
A held out that his wife W is the owner of immovable property called K, as she had bought it
from her Stridhana. When A died W sold the property K to D who bought bonafide for value.
A's son S, sued D to recover the property. Here the court held that S could not recover the
property. Of course, the innocent purchaser was protected.
The doctrine of Ostensible owner must have the following conditions:
a) The transferor should be the ostensible owner of the prop erty (benamidar) without
name.
b) He must be holding the property with the express or implied consent of the real
owner.
c) The transferee from the ostensible owner must have paid consideration and acted with
reasonable care & in good faith.
In such a case the real owner cannot set aside on the ground that the transfer is voidable.
The general rule is that no person can pass a title better than what he himself has. Sn.41
dealing with ostensible owner is an excep- tion to this rule provided all the conditions set out
above are fulfilled.
Eg.: A sent money to B and purchased an immovable property in B's name. B was managing
the property but sold it to C. Can A recover it from C? A cannot recover, if C has acted in
good faith and taken the property for valuable consideration.

Feeding the estoppel: Sn. 43 T.R Act.

A, a Hindu separating from his father B, sells to C, three pieces of land X, Y &Z. Of these
lands, Z does not belong to A. This has been retained by B under a partition. Subsequently B
dies. A gets Z as heir to B. C the purchaser may require A to deliver the land Z to him. This is
called feeding the estoppel. The principle was laid down in Smith V. Osborne.
The essential conditions are as follows:
a) The transferor should have made a fraudulent or erroneous representation..
b) The transferor should have acted on the representation .
c) The transfer should not be one which is forbidden by law.
d) Subsequent to the transfer but while the contract is still subsisting the transferor
should have acquired an interest(or title) in the property.
In the above circumstances the transferee may take advantage of the subsequent acquisition
by the transferor, and claim for that interest.
This section does not apply to a bonafide transferee for value without notice.
Explanation with cases:
Fraudulent or erroneous representation:
S, sold the enquity of redemption of the property of his brother
B. B was unheard of for some years. S had represented that it was ancestral property &
that he was the owner. B died leaving S as the sole heir. The purchaser P sued S. Held, he
was entitled under "feeding the estoppel". (Sunderlal V. Ghisa)
The essential condition is that the transferor should have made a fraudulent or erroneous
representation, and, the transferee should have acted on that representation. If the truth or the
real position isknown to him, this section is not applicable. M, a mother sold the immovable
property of her infant son, representing that she is the 'mother and guardian'. The son died &
M inherited the property. When the transferee sued, it was held that the truth was known to
the transferee & hence, this section was not applicable.
The leading case is Jumma Masjid V. Deviah. In this case, the Supreme Court held that when
A, represented that he was the owner (he had only a chance to succeed), and sold the property
to T, he is making a false representation. If subsequently, he acquires that property, then T, is
entitled to that property under "feeding the estoppel" by grant.
 LIS PENDENS

Doctrine of Lis Pendens' (Sn. 52)

The Doctrine of 'Lis Pendens' has its origin in Bellamy Vs. Sabine. It means pendente lite
(pending litigation) neither party to the litigation can transfer the property in dispute so as to
affect the interests of his opponent.
The essentials are as follows:
a) The transfer should take place during the pendency of a suit or proceeding.
b) The case must be pending in a court of competent jurisdiction.
c) The case should not be collusive.
d) The litigation should be specifically in respect of the immov able property transferred.
It is evident from the above that the doctrine does not prohibit transfer 'pendente lite' but what
it says is that the transfer should not defeat the rights of the other party, & any decree which
may be passed by the court.
The suit or proceeding commences on the date of the presenta- tion of the plaint or the
institution of the proceeding in a court which has got jurisdiction.
The case is pending until it has been disposed off by a final decree or order of the court.
Further, there must be complete satisfaction of the decree or order of the court thereof.
i) In Bellamy Vs. Sabine the facts were:
E sold immovable property to S. E's son F as heir of E sued S in a competent court to set
aside the sale. Pendente lite the defendant

S, sold the property to B who took without notice of pendents lite. Ultimately the court held
that F was entitled to the property. The sale was set aside. The transferee. B does not get any
title to the property (He who has no title cannot pass title).
ii) A Hindu wife sued her husband B for maintenance over certain immovable properties
in dispute. B transferred the property to C. The wife got a decree declaring a charge over the
property. Question was whether C was bound by the decree.
Held : Right to maintenance was a personal obligation independent of the property. Hence the
doctrine of lis-pendens was not applicable.
BONAFIDE HOLDER & FRAUDULENT TRANSFER
Improvements made by bonaflde holders under defective title. (Sn. 51 T.P.Act) Doctrine of
acquiescence.
A transferee of immovable property, believing in good faith that he is absolutely entitled
thereto, may make improvements on the property. But, if he is subsequently evicted by a
person who has a better title, then the transferee has a right to the value of the improve- ments
estimated and paid. He may get this value secured or realised by getting the property sold by
the owner to the transferee. The owner has an option either to sell or to pay compensation to
the person who has made the improvements.
Crops: If the transferee has growing crops, on the property, he is entitled to such crops and
also has free access to enter and collect the same.
This principle has its origin in Rams den V.Dyson.
T was the tenant of land and D was the owner. T erected a building on the land, and sued D
for declaration that he was entitled to a 60 years lease, renewable at his option. He alleged
that D's agent had promised such a grant. The House of Lords held that the plea of T was bad
and that D could eject T.
The principles of Sn.51 are explained by the Supreme Court in Narayan Rao V.
Basavarayappa. P sued for possession of the property from D, who had a defective title. D
had put up a building with bonafide intention. The trial court found in favour of P, but asked
him to pay, that the payments are to be calculated upto the date of actual eviction.
H, a Hindu Widow sold certain lands to B who made a substantial improvement therein. H
died. The reversioner sued B and the sale was set aside. The purchaser B had not made
enquiry in good faith as to the title of the lands. Hence, it could not be said that D was right in
believing that he was absolutely entitled. Held, D cannot recover.
In Forbes V. Ralli, the landlord D, leased his land to P for erecting a building for trade. He
gave oral permission to build a houses to the Manager. When the building was ready, D sued
to evict P. Held, D is estopped.
Fraudulent transfer (Sn.53 T.P.Act).
Every transfer of immovable property made with intent to defeat or delay the creditors of the
transferor shall be voidable at the opinion of any creditor so defeated or delayed.
Exceptions: (i) This will not affect the rights of the bonafide transferee for consideration.
(ii) This shall not affect insolvency law. The leading case is Twyne's Case.
Debtor D, secretly transferred the whole of his property, but retained only possession with
him. This was done when C, a creditor had sued him.
Held, secrecy is a badge of fraud. The transfer was fraudulent.
The creditors should bring a representative suit against the transferor.
A transfer of immovable property made with intent to defeat subsequent transferees is
voidable at the option of such transferee.
Scope:
i) The section applies only to immovable properties.
ii) The intention of the transferor must be to defeat or delay the creditors. Hence, it does
not apply when the debtor prefers one creditor over the other. The leading case is: Musahar
Sahu V.Hakim Lai.
A was the creditor and B was the debtor. A filed a suit against B and applied for "attachment
before judgment" of some properties belonging to B. But, B filed an affidavit stating that he
had no inten- tion, to alienate his properties. On the basis of this affidavit A's application for
attachment was dismissed.
A few months later B sold his properties to C, another creditor. Held, Sn.53 dealing with
fraudulent transfer was not applicable. The result was the suit failed. It was held that 'C' was a
genuine creditor, this was a case of debtor preferring one creditor over the other.
iii) If the creditor is fictitious or if money realised in selling the secured property is in
excess, then Sn.53 applies and the creditor is entitled to a decree.
iv) C sued W, a widow and obtained a decree against her life-estate. W surrendered her
properties to her son S. Held, this was fraud. (Natha V. Dhunbhaji).
v) A wakf created by a Muslim to keep his creditors out of reach of his properties, was
hit by Sn. 53, as the intention was to defeat the creditors
 PART PERFORMANCE

Doctrine of part performance (Sn. 53A)

Introduction.
The doctrine originated in England and the leading case in Maddison V. Aiderson. The
Statute of Frauds required that all contracts relating to land must be in writing. This led to
many difficul- ties. If A orally agreed to sell his land to B, received the price and put B in
possession. A could eject B simply because the agreement was oral. Equity demanded that
the statute of frauds itself should not be an instrument of fraud. This led to the enuciation of
the doctrine of part performance.
If, due to the absence of a written document, the agreement cannot be proved in a court, it is
enforceable in equity provided the party seeking the remedy has acted in part performance of
the agreement.
In Maddison V. Aiderson, A agreed to remain in B's service in consideration of an oral
agreement by which B was to give by a will an estate in a land. The will failed due to want of
attestation. The heirs of A sued to recover the land.
Held, A could not invoke 'part performance doctrine'. There was no direct correlation
between the land and the services of A.
(ii) The doctrine.
When a person contracts to transfer any immovable property by writing signed by him (or his
agent) using such terms necessary to constitute a transfer with reasonable certainty,
and, the transferee has performed or is willing to perform his part of the Contract, then, it is
cured of the defects of :

a) Non-registration
b) Non-compliance with the prescribed manner of execution according to Jaw.
Further, the transferor is barred from enforcing against the transferee any right in respect of
the said property.
The section also has protection of bonafide transferee for valuable consideration, who has
acted without notice of Contract or of part performance.
Essentials:
i) The transfer is for valuable consideration. Hence, gifts are excluded.
ii) Writing : There must be a written agreemnt. Hence, Oral agreement will not suffice.
iii) The agreement should be signed by the transferor or by his duly authorised agent.
iv) Applies to immovables only.
v) The terms of the Contracts must, be capable of being ascertianed with reasonable
certianty.
vi) The transferee must be in possession of the immovable property.
vii) The transferee must be ready and willing to perform his part of the Contract.
Nature of the right:
This right in respect of part performance is only a defence to the transferee. This is a shield
and not a sword. It does not create a title. The transferor is barred from asserting his title. The
transferee cannot maintain a suit on title. This is the limited scope according to the Supreme
Court (Ram Gopal V. Custodian 1966).35
In Nathulal V Phoolchand, A sold his ginning factory with land to B. B gave part of
purchase-money & got possession. A sued B for eviction for not paying balance of money. A
as agreed had not opened khata & attended properly. Held, B could claim part performance
doctrine.
In Technicians Studio V Lila, L had leased her premises for 5 years to T. L sued T for
eviction within 5 years. Held, T may invoice part performance doctrine.
 CONVENANT ANNEXED TO LAND

Convenant annexed to land (Sn. 40 T.P. Act)

(i) This is called rule in Tulk V. Moxhay,
A contract made in a deed of transfer is a Covenant. A seller's promise that he will be
answerable for any defects in the title to the property is a Covenant
A covenant annexed to land or running with the land is one which affects the nature, quality,
use or value of the immovable property. (Restrictive covenant)
In Tulk V. Moxhay, P owned a vacant site and an adjoining house. He sold the site to A with
a condition that A should not build therein. The site passed several hands & came to D. D had
notice of the Covenant. D wanted to build. P sued in equity to restrain D from building.
Held, P is entitled to succeed. An injunction was granted.
(ii) Sn. 40 T.P. Act provides that where for the more beneficial enjoyment of his own
property a third person has a right to restrain enjoyment or is entitled to the benefit of an
obligation arising out of Covenant or annexed to the ownership of immovable property, such
a right or obligation can be enforced against the transferee with notice thereof.
This may be enjoyed against a gratuitous transferee of property. The bonafide transferee for
valuable consideration without notice is however protected.
Eg. a) to build roads in the estate
b) not to use for fish market
c) not to build so as to affect light and air
d) not to put up a hotel

If these Covenants are for the more beneficial enjoyment to the property, the transferor may
put such conditions.
(iii) This section does not apply to Easements
(iv) English Law:
Covenants are divided into two:
(1) grant or reservation in land or an easement and
2) personal contract. In case of the first, the transferee takes subject to the covenant. In the
case of the second category, they are personal and hence do not bind the transferee.
However to this there are two exceptions: a) Lease & b) Covenants annexed to land.
Sn. 40 deals with the covenants annexed to land. There are a number of implied covenants
such as right to quiet enjoyment, freedom from encumbrances, right to convey etc.
The express covenants are those specified in the contract. The leading case is Dyson V
Forster.
A Company C covenanted with P, a colliery owner, to pay compensation for all damages that
may occur in working the mine. Lord McNaughton held that this was a covenant annexed to
the land., &, not a personal contract.

Conclusion
The meaning of transfer of property is not exhaustive according to Transefer of Property so
we have to depend upon on the General Clause Act for the better understanding of the
meaning we have to adopt both the defination of Transfer of Property Act and General clause
Act. Direct transfer to unborn person is void. So in order protect unborn interest indirect
transfer is valid and it should be an absolute transfer of interest.
Important brief Definitions
Mortgage debt
A question often arises whether a debt secured by mortgage of immovable property is a
movable or immovable property. Previously, a debt secured by mortgage of immovable
property was considered as an actionable claim under section 3 of the Transfer of Property
Act, 1882.
But after the amendment in 1900 the definition of an ‘actionable claim’ expressly excludes a
debt by a mortgage of immovable property and such debt will not be treated as immovable
property and it can be transferred only in the same way as an immovable property, i.e., it can
be transferred only by a registered instrument.[3]

Instrument
Generally speaking, an instrument is a legal document. Section 3 of the Transfer of Property
Act, 1882 defines ‘instrument’ as a non-testamentary instrument. As the Act itself does not
deal with testamentary transfers (wills etc.), the term ‘instrument’ does not cover
testamentary instruments. It is not only an evidence of the transfer of property mentioned in it
but it signifies the transfer of property as such.[4]
Attested
Attestation means to sign and witness any fact. A property may be transferred by delivery of
possession or by a written document. When the property is transferred through document, it is
said that the deed or document of the transfer has been executed by the transferor.
The transferor of property who executes the deed is known as an executant. For the execution
of the deed, it is necessary that two persons must be present who must witness that only the
executant has written or signed the deed. This process of witnessing the execution of a deed
is called attestation, and such persons are known as attesting witnesses.
Registered
According to the Transfer of Property act, 1882 ‘registered’ means registered in any part of
the territories to which the Act extend under the law for the time being in force regulating the
registration of documents.
For registration, it is necessary to fulfil all the requirements of the Registration Act.
Actionable claims
According to the Transfer of Property Act, 1882 ‘actionable claim’ means a claim to any
debt, other than debt secured by mortgage of immovable property or by hypothecation or
pledge of movable property, or to any beneficial interest in movable property not in the
possession, either actual or constructive, of the claimant, which the Civil Courts recognise as
affording grounds for relief, whether such debt or beneficial interest be existent, accruing
conditional or contingent.
Notice
According to the Transfer of Property Act, 1882 ‘a person is said to have notice of a fact –
When he actually knows that fact [i.e. actual notice]; or When but for –
Wilful abstention from an inquiry or search which he ought to have made, or
Gross negligence. He would have known it [i.e., constructive notice]
Notice means information or knowledge of a fact. When a person has knowledge about a fact
or under the existing circumstances, it can be proved that he must have knowledge about a
fact, it is said that he has notice of that fact. Notice may be of two types –

 Actual or express notice,

 Constructive or implied notice.

Important questions and problems:

1.)'X' sells his house to 'Y' with a condition that 'Y' should not alienate it without the consent
of 'X'. is this condition is valid?

Solution:
This condition is not valid. Because Right of disposal is one of the essential features of
ownership. Section 10 incorporates the rule that any restriction on the right of disposal would
be against this essential feature of ownership rights. Accordingly section 10 provides that if a
transfer is made subject to a condition by which the transferee is absolutely restrained from
disposing of or parting with his interest in the property, the condition is void. In the given
problem X sells his house to Y with a condition that Y should not alienate it without the
consent of X. Here X is curtailing the rights of Y absolutely and right to disposal. Y need not
to take any consent from X to alienate the property as Y has become the owner of the
property. This condition is void because it absolutely restrains alienation.
Q.No:2. Discuss ‘Rule against perpetuity’. State the exceptions if any to the rule.

Answer:
Introduction:
Section 10, of transfer of property Act makes provision that a condition restraining the
transferee’s power of alienation is void. A disposition which tends to create future remote
interest has been prohibited under section 14 of the T.P act which incorporates the ‘Rule
against Perpetuity’. However a better name for the may be the rule against remoteness of
vesting.

Meaning:
Perpetuity means indefinite period. Rule against perpetuity is the rule which is against a
transfer making the property inalienable for an indefinite period or forever. Where a property
is transferred in such a way that if becomes non- transferable in future for an indefinite
period, the property is tied up forever. This disposition would be a transfer in perpetuity. In
any disposition, perpetuity may arise in two ways: (a) by taking away from the transferee his
power of alienation and, (b) by creating future remote interest.

Object of Rule against Perpetuity:

The object of the rule against perpetuity is to ensure free and active circulation of property
both for purpose of trade and commerce as well as for the betterment of property itself.
Frequent distribution of property is in the interest of the society and also necessary for its
more beneficial enjoyment. A transfer which renders property inalienable for an indefinite
period of time is detrimental to the interest of its owners who are unable to dispose it of even
in urgent need or for any higher value. It is also loss to the society because when property is
tied up from one generation to another in one family, the society as such would be deprived
of any benefit out of it. Free and frequent disposal ensures wholesome circulation of property
in society. Ruleagainst perpetuity is also based on broad principles of public policy.

Rule against perpetuity under section 14 of T.P Act:

Section 14 of the T.P Act provides that in a transfer of property, vesting of interest cannot be
postponed beyond the life of last preceding interest in the living person or persons and the
minority of the ultimate beneficiary. The essentials of the rule against perpetuity as given in
this section are as follows:
1. There is transfer of property
2. The transfer is for the ultimate benefit of an unborn person who is given absolute
interest
3. The vesting of interest in favour of ultimate beneficiary is preceded by life or limited
interest of living person or persons.
4. The ultimate beneficiary must come into existence before the death of the last
preceding living person.
5. Vesting of interest in favour of ultimate beneficiary may be postponed only up to the
life or lives of living persons plus minority o ultimate beneficiary; but not beyond that.

Maximum remoteness of vesting:

Under section 14 the maximum permissible remoteness of vesting is the life the last
preceding interest plus minority of the ultimate beneficiary. Accordingly, property may be
transferred to A for life and then to B for life and then to UB (Ultimate Beneficiary) when he
attains the age of majority. A and B holds property for their lives one after the other after the
death of B although it should vest in the UB immediately but, under this section the property
may be allowed to vest in the UB when he attains the age of majority.
Ultimate beneficiary in mother’s womb:
Where the ultimate beneficiary is in the mother’s womb i.e. it is a ‘child en venture sa mere’,
which means the child in the mother’s womb the latest period up to which vesting may be
postponed, is the minority plus the period during which the child remains in mother’s womb.
It may be noted that minority is counted form the date of worldly birth whereas for purposes
of being a transferee, a child in mother’s womb is a competent person.
In India, the maximum possible remoteness of vesting would, therefore be as under,
Maximum permissible remoteness of vesting=life of the preceding interest + period of
gestation of ultimate beneficiary+minority of the ultimate beneficiary.
Thus, the maximum limit fixed for postponing the vesting of interest is the life or lives in
existence at the date of transfer plus the minority o ultimate beneficiary with the addition of
the period of gestation provided gestation actually exists i.e. the ultimate beneficiary is
actually in mother’s womb at the death of the last person.
Contingent Interest:
Under section 14, vesting of interest in favour of the ultimate beneficiary may be postponed
up to his minority. In other words, the property does not vest in him until he attains the age of
majority. What then is the nature of his interest during his minority? Between the period
when last person dies and the majority of the ultimate beneficiary, the ultimate beneficiary
has a contingent interest which becomes vested upon his attaining majority.
Where the UB is already born at the death of the last person but does not survive to attain
majority e.g., dies at the age of fifteen years, the interest does not vest in him and therefore it
reverts back to the transferor or his legal heirs if the transferor is dead by that time.
Exceptions to Rule against Perpetuity:-
The rule against perpetuity is not applicable in the following cases:-
(a) Transfer for the benefit of public:-
Where the property is transferred for the benefit of public in the advancement of religion,
knowledge, commerce, health safety or any other object beneficial to mankind, the transfer is
not void under the rule against perpetuity.
(b) Personal agreement:-
Personal agreements which do not create any interest in property are exempted from the rule
against perpetuity. Rule against perpetuity is applicable only to a transfer of property. If there
is no transfer of property i.e. no transfer of interest, the rule cannot be applied. Contracts are
personal agreements even though the contracts relate to rights and obligations in some
property. E.g. it cannot apply to a covenant of pre-emption. Similarly, where the shebaits of a
temple, under personal agreement, appointed Pujari out of particularly family to perform
religious services in the temple, the agreement was valid because the court held that being
personal agreement, it was not hit by rule against perpetuity.

Q.N O.3. write a note on conditions restraining alienation.

Conditional Transfer:-
Every owner of property, who is competent to transfer, has freedom of transferring his
properties either unconditionally or subject to certain conditions. In a transfer of property
where a condition is laid down by the transferor, the transfer is a conditional transfer.
Conditions are limitation which limit or otherwise affect the transfer.
Condition may be (i) condition precedent or (ii) condition subsequent. Condition precedent is
that condition which is prior to the transfer of property and whether the transfer would take
place or not, is itself dependent on that condition. Condition subsequent is a condition which
is required to be fulfilled after the transfer of property has already taken place. That is to say,
a condition subsequent affects the interest of the transferee after the transfer.
Absolute restraint:
Section 10 declares a condition to be void when it absolutely restraints alienation. Restraint
on alienation is absolute if it totally takes away or curtails the rights f disposal.
The restrain may be absolute as a restriction on the power of alienation in point of time or as
to a particular or specified person only or of any other from.
Partial restraints are not prohibited. The question whether the restraint is absolute or partial is
to be gathered from the contents of the deed.
Example: A sells his house to B with a condition that B cannot transfer this house to anyone
except C. the condition is void because C may be chosen as a person who may never
purchase the property.
Exceptions:-
1. Leases
2. Married Women
3. Idol

Problem:
A property is transferred to ‘A’ for life, then to his first son (unborn) for life and then to ‘B’
absolutely. Is this transfer valid?
Solution:
In above problem the transfer in favour of ‘A’ for life is valid but transfer in favour of ‘A’s
first son who is unborn is void because only absolute interest should be created in favour of
an unborn child not prior interest. Section 13 of the transfer of property act speaks about
transfer for benefit of unborn person. The section clearly says that, there cannot be a direct
transfer to an unborn person but property can be transferred for the benefit of an unborn
person. An unborn person means a person who is not in existence even in mother’s womb.
Section 13 provides that property can be transferred for the benefit of an unborn person
subject to following conditions:
1. Transfer for the unborn must be preceded by life interest in favour of a person in
existence at the date of the transfer, and,
2. Only absolute interest may be transferred in favour of the unborn.
According to section 13 of T.P Act, the unborn must come into existence before the death of
the person holding property for life. If the unborn comes into existence say, after one month
after the death of last living person the property is to revert back to the transferor or his legal
heirs.
Hence, in the above mentioned problem since only life interest is created in favour unborn
and not absolute interest as rule under section 13 of the T.P Act. As the transfer of life
interest in favour of unborn is preceded by life interest to ‘A’ but Unborn himself has not
been given an absolute interest so, the absolute transfer in favour ‘B’ is also void. ‘A’ shall
hold the property during his life but after his death it shall not pass on to the unborn but shall
revert back to transferor or his or her legal heirs.
 CHAPTER2
TRANSFER OF ANY KIND OF PROPERTY

Contents
 Introduction
 Kinds of Transfer
 Transfer of Property Act, 1882 not amounting to Transfer of Property
 What may be Transferred
 Persons Competent to Transfer
 Operation of Transfer
 Transfer by Persons before they Acquire the Interest
 Transfer by Unauthorised Person (Doctrine of feeding empty grant by estoppel)
 BENAMI TRANSACTIONS
INTRODUCTION
Section 5 of the Act defines “Transfer of Property” as “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 person, or to 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.”
The word “property” has not been defined in the Act, but it has a very wide meaning and
includes properties of all descriptions. It includes movable properties such as case, books,
etc., and includes immovable properties also such as lands or houses. It also includes
intangible properties such as ownership, tenancy, copyrights, etc.
The word ‘transfer’ has also very wide meaning. It may be either transfer of all the right and
interests in the property or transfer of one or more of subordinate right in the property.
The transfer of property may be made to take place with immediate effect or to take place
on a future date; however the property must be in existence at the date of transfer. There can
be no transfer of future property. The expression ‘in present or in future’ governs the word
‘conveys’ and not the word ‘property’, e.g., A transfers his property to B for life and then to
C. The transfer in favour of B is present (although he gets only life interest) but the transfer in
favour of C is future transfer.
The transfer of property as defined under Section 5, is an act between two living persons.
Thus the conveyance of the property must be from one living person to another living person.
However transferee need not be a competent person like transferor. A transferee may be a
minor, insane or child in mother’s womb.
The word “living person” includes corporations and other association of person. A transfer
can be made by a person to himself, as for instance when a person vests property in trust and
himself becomes the whole trustee.
Kinds of Transfer
The Act contemplates the following kinds of transfers: (1) Sale, (2) Mortgage, (3) Lease (4)
Exchange, and (5) Gift. Sale is an out-and-out transfer of property. In mortgage, there is a
transfer of limited interest in property. A lease is a transfer of a right to enjoy immovable
property for a certain time or in perpetuity. Exchange is like a sale, but differs from it as
regards the consideration. In sale, the consideration is money, while in exchange, the
consideration is another thing. In a gift, there is no consideration.
In Harish Chandra v. Chandra Shekhar, AIR 1977 All 44 , it was held that a realease-deed is
a conveyance, hence a transfer of property. If the release deed states that the releaser was the
owner and it shows an intention to transfer his title and its operative word sufficiently was the
conveyed the title it would amount to transfer.

Transfer of Property Act, 1882 not amounting to Transfer of Property

As the transfer of property’ means ‘conveying of property’, i.e., creation of new title or
interest in the favour of the transferee, if new title or interest has not created in favour of
transferee , the property cannot be said to be conveyed, thus no transfer of property.
Partition- As nothing new is obtained by a co-sharer on partition, it is not a transfer of
property. His specific share, which vested in him earlier, is simply separated.
– The only right created in a charge is a right to payment out of the property subjected to
charge, thus it is not a transfer. [Gobind Chandra v. Dwarka Nath, (1908) 35 Cal 837]
Relinquishment:—It is an extinction of a right and therefore, there is nothing left to transfer.
Thus a relinquishment by a reversioner of his reversionary interest does not amount to
transfer (Barati Lal V. Salik Ram, 38 All 107). But if the person in whose favour the ‘release’
is executed, gets certain rights by virtue of such release, the transaction may amount to a
transfer [Maniapp pillai v. Periasami, (1975) 1 MU 236].
Surrender.—It is not a transfer as it is the manager of a lesser estate with a greater one
[Multhan Lal Saha v. Nagendra Nath Adhikari, (1933) 60 Cal 379].
Easement.—The creation of an easement does not amount to a transfer.
Will.—Because it operates from the death of the person making it, while the definition
contemplates a transfer by a living person, does not fall within the definition of transfer.
Compromise.—It may or may not amount to transfer. It depends on the facts and
circumstances of each case. In Hussiaa Banu v. Shivanarayan, AIR 1968 MP 307, it was held
that where one of the parties to a settlement gives up a claim to receive a certain sum of
money from the other, in consideration of the latter’s given up the right to certain property
claimed by him, it would amount to a transfer.
Family arrangement/settlement.— A family settlement entered into by the parties for the
purpose of putting an end to the disputes among family members does not amount to transfer,
not being an alienation it does not amount to the creation of an interest.
What may be Transferred
Section 6—”Property of any kind may be transferred, except as otherwise provided by this
Act, or by any other law for the time being in force.”
This section enumerates different kinds of property which cannot be transferred (Exceptions
to Section 6)—-
Spes Successionis [Section 6(a)]—“The chance of an heir-apparent succeeding to an estate,
the chance of a relation obtaining a legacy on the death of a kinsman, or any other mere
possibility of a like nature, cannot be transferred.”
A mere possibility/chance/expectancy of an, heir succeeding to an estate is excluded from the
category of transferable property, e.g., A a Hindu, dies leaving a widow B and On two C. C
has only a spes successionis, as his succession to the estate is dependant on 2 factors, i.e., his
surviving the widow B, and B leaving the property intact.
Right of Re-entry. [Section 6(b)] “A mere right of a re-entry for breach of a condition
subsequent cannot be transferred to anyone except the owner of the property affected thereby.
By a Mere given to right of re-entry meant a right to resume possession of-land which has
been given to another person for a certain time. It is usually inserted in lease empowering the
lessor to re-enter up a breach of covenants in the lease.
(a)A grants a lease of a plot of land for 5 years to B with the condition that B shall not dig a
tank on the land. B digs the tank. A relates to transfer C the right of re-entry for the breach of
the condition committed by B. The transfer is invalid.
(b) A grants a lease of plot for 5 years to B. Subsequently A transfers his right of re-entry at
the expiry of 5 years to C. The transfer is valid as at the expiry of lease the right of reentry is
transferred along with the land to .
Easement [Section 6(c)]— “ An easement cannot be transferred apart from the dominant
heritage.”
An easement B a right to use, or restrict the use of land of another in some way, for example,
right of way, right of water or light, etc. (Section 3 Easement Act). These right cannot be
transferred without the property which has the benefit of it.
Restricted Interest [Section 6(d)].—”An interest in property restricted in its enjoyment to the
owner personally cannot be transferred by him”
E.g., if a house is lent to a man for his personal use, he cannot transfer his right of enjoyment
to another. Similarly a religious office like those of mutawali of a wakf or of mahant of a
math and emoluments attached to priestly office cannot be transferred. ,
Maintenance [Section 6(dd)].—”A right to future maintenance, in whatsoever manner arising
secured or determined, cannot be transferred.”
A right to future maintenance is only for the personal benefit of the person to whom it is
granted, thus it cannot be transferred.

Mere right to sue [Section 6(e)] —”A mere right to sue cannot be transferred.”
A right to sue is personal to the party aggrieved, as for, e.g., damages for the breach of
contract or for tort, claims for past mesne profit for suing an agent for accounts, for pre-
emption, etc. These rights cannot be transferred. But where the right to sue has merged in a
decree, the right under the decree is assignable. Thus, a right to mesne profit or damages
under a decree is assignable.
Public office [Section 6(f)].—”A public office cannot be transferred, nor can the salary of a
public officer, whether before or after it has become payable.”
Thus prohibition is based on the ground of public policy as the public office is held for
qualities personal to incumbent.
If the office is not public, it would be transferable, even though the discharge of its duties
should be indirectly beneficial to the public.
Pensions [Section 6( g)—“Stipends allowed to military, naval, air force and civil pensioners
of the government and political pensions cannot be transferred, pension means a periodical
allowances or stipend granted not in respect of any right of office but on account of part
services of particular merits. Section 60 of CPC also exempts a pension from attachmet in
execution of degree against the pension holder.
Nature of Interests [Section 6(N)]. —”No transfer can be made (1) in so far as it opposed to
the nature of the interest affected thereby, or (2) for an in so far unlawful object or
consideration within the meaning of Section 23 of the Indian Contract Act, 1872, or (3) to a
person legally disqualified to be a transferee. “
This clause forbids the transfer of certain things which from their very nature are not
transferable, e.g., res communes (things of which no one in particular is the owner and may
be used by all men), res nullius (things belonging to nobody).Res extra commercium (things
thrown out of commerce)
Again, any property otherwise transferable becomes non-transferable when the object or the
consideration of the transfer is unlawful (within. the meaning of Section 23, Indian Contract
Act).
Lastly, a transfer cannot be made in favour of a person who is disqualified to be a transferee.
Un-transferable interests [Section 6(i)].”Nothing in this section shall be deemed to authorise a
tenant having an un transferable right of occupancy, the farmer of an estate in respect of
which default has been made in paying revenue, on the lessee of an estate, under the
management of a court of wards to assign his interest such as such tenant farmer or lessee.”
Persons Competent to Transfer
Section 7 of the Act provides that, “Every person competent to contract and entitled to
transferable property, or authorised to dispose of transferable property not his own, is
competent to transfer such property, either wholly or in part 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.”

Operation of Transfer
Section 8 of the Transfer of Property Act provides transfer of different kinds of property and
their legal incidents. It provides, “Unless different intention is expressed or necessarily
implied, a transfer of property passes for with the transferee all the interest which the
transferor is then capable of passing in the property and in the legal incident thereof.
Such incidents include where the property is land, the easement annexed thereto, the rent and
profits thereof accruing after the transfer and all things attached to the earth; 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 the other things provided for
permanent use therewith; and, where the property is a debt or other actionable claim, the
securities therefor except where they are also for other debts or claims not transferred to the
transferee, but not arrears of interest accrued before the transfer; and where the property is
money or other property yielding income, the interest or income thereof accruing after the
transfer takes effect.”

Transfer by Persons before they Acquire the Interest

Section 6(a) of the Act provides certain things which are non-transferable (spes sucessionis).
These are as follows—
 the chance of an heir-apparent succeeding to an estate,
 the chance of a relation obtaining a legacy on the death of a kinsman,
 any other mere possibility of a like nature.
(i) Chance of an Heir Apparent
Both Hindu and Muslim law forbids transfer of the expectancy. A mere possibility or
expectancy of a heir succeeding to an estate is excluded from the category of transferable
property. Thus a Hindu reversioner has no right or interest. In presents in the property which
the female owner holds for her life, e.g.:
A dies leaving two widows and a reversionary heir B. The widows set-up a Will which
authorised them to adopt a son. B filed a suit challenging the validity of the Will and in order
to raise money for the litigation transferred his share to C. The court set-aside the Will. On
the death of the widows B entered possession of A’s estate. C sued B but C’s suit was
dismissed as B, at the time of transfer, had spes successionis in A’s estate and, therefore,
could not transfer it.

(ii) Chance of Legacy

The chance of a relation receiving a legacy is a possibility even more remote then the chance
of succession of an heir, and therefore, is not transferable.

(iii)Other Possibilities of Like Nature

Such possibilities which belongs to the same category as the chance of an heir apparent or the
chance of a relation obtaining a legacy, e.g. The possibility of winning a lottery or a prize in a
certain competition cannot be transferred. A good illustration of this category is the ‘next cast
in a fisherman’s net’. No one can guarantee that any fish will be caught, and the fisherman
himself has no interest in the fish until they are caught in his net.

Transfer by Unauthorised Person (Doctrine of feeding empty grant by estoppel)

A person who has no title or interest in an immovable property, cannot transfer that property.
Transfer by such person is a transfer by unauthorised person. Section 43 of the Ac provides
the effect when such unauthorised person subsequently acquires interest in property
transferred.
Section 43. Transfer by unauthorised persons who subsequently acquires interest property
transferred-where a person fraudulently or erroneously represents that he is authorised to
transfer certain immovable property and professes to transfer such property for consideration
such transfer shall at the option of the transferee, operate on any interest which the transferor
may acquire in such property at any time during which the contract of transfer subsists.
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 reported 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.

The general rule of nemo dat quod non habet (no one can give to another, what he himself
does not have) has been relaxed through this section. The principle of this section is based
partly on the English doctrine of estoppel by deed and partly on the equitable doctrine that a
person who has promised more than he can perform must make good his promise when he
acquires the power of performance.

For application of this section requisites must be satisfied—

There must be fraudulent or erroneous representation of ownership by the transferor.

Transfer must be by the wrong owner.
Transferee must act on that false representation, in good faith.
Transfer is for the consideration.
Transfer subsequently acquires some interest in that property which he professed to transfer.
The contract of transfer still subsists.
Subsequently acquired interest does not pass automatically to transferee but only when he
claims the right in such property.
The exception to this section (Second paragraph of Section 43) protects the rights of the
record transferee in good faith and for consideration who has no notice of the option in favour
of the first transferee.

Section 6(a) and Section 43 compared

Section 6(a) and Section 43 seems to conflict each other. Where Section 6(a) deals with spes-
successionis and sender mere possibility/expectancy of a heir succeeding to an estate as an
un-transferable property, through Section 43, such transfer can be made effective if transferor
subsequently acquires those property and other conditions satisfied.
In Jamma Masjid v. K. Deviah, AIR 1962 SC 847 Supreme Court explained the relationship
between two sections. Court said that Section 6(a) and Section 43 relate to two different
subjects and that there is no necessary conflict between them. Section 6(a) would apply
where there is a transfer of a mere spes successionis and the party knowing that the transferor
has no more right than that of a mere expectant heir Section 43 applies where an erroneous
representation is made by the transferor to the transferee that he is the full owner of property
and authorised to transfer it.
Supreme Court held that Section 6(a) enacts a rule of substantive law while Section 43 enacts
a rule of estoppel which is one of evidence. Thus, these two provisions operate on different
fields and under different conditions and there is no ground for reading a conflict between or
cutting one b reference to the other. Each of them can be given full effect on their down the
ambit of their own terms in their respective spheres.

BENAMI TRANSACTIONS (Prohibition of Right to Recover Property) Act 1988.

According to Sec 2(a) benami transaction means any transaction in which property is
transferred to one person for a consideration paid or provided by another person. i.e., the
property is transferred in the name of the other. Where the person purchases the property in
another name is called benami, the person in whose name the property is purchased is called
as benamidar, the person, in whose name the property is held, shall become the real owner.
Section 4(1) of the Act says that no suit, claim or action to enforce any right in respect of any
property which is benami transaction against the person in whose name the property is held
or against any other person shall lie by or behalf of a person claiming to be the real owner of
such property
This section also has an exception and this act is not applicable to the following cases:
a. where the person in whose name the property is held is a coparcener in Hindu
Undivided Family and the property is held for the benefit of the co-larceners in the family.
b. where the persons in whose name the property is held is a trustee or other person
standing in a fiduciary capacity, and the property is held for the benefit of another for whom
he is a trustee or towards his stand in such capacity.
A significant feature of this Act is that besides prohibiting benami transactions section 3(3) of
the Act provides also that a person who enters into such transaction is punishable with
imprisonment, for a term which may extend to three years or with fine or both. However
there is no prohibition and no punishment if the property is purchased in the name of wife or
unmarried daughter for their benefit(Sec. 3(2))

Nature and scope of the Act.

The nature and scope of this Act, as interpreted and explained by the Supreme Court, at
present, may be summarized as under:
a. The Benami Transaction Act, 1988 is not of retrospective operation. It cannot be
made applicable to suits or proceedings which already started before commencement of this
Act and in such cases benamidar cannot be treated as real owner.
b. This Act is not declaratory in nature. Rather it is prohibitory in nature and prohibits
benami transactions which are entered into after commencement of this Act.
c. Subject to certain exceptions all the benami transactions entered into after
commencement of this Act have been made punishable, Section 3(3) now creates a new
offence of entering into such transactions
d. In respect of benami transaction entered into after commencement of this Act, no
person is now allowed to take plea under section 41 of the T.P. Act that the property stands
only in the name of benamidar and that he is the real owner.

Law prior to Benami Transaction Act.

 The law incorporated in section 41 of the transfer of property Act before the
commencement of the Benami Transaction Act 1988.
 A person who purchases the property in the name of another is called as Benami
transaction. A person does not become ostensible owner has entrusted him with temporary
control over the property only for some specific purposes eg., karta of Hindu joint family, a
trustee or a manager. But it s difficult to ascertain whether a person is an ostensible owner or
real owner. Because he has all the character of the real owner.
 In Jayadayal Poddar V/s Bibi Hazar, AIR, 1970, SC
The Supreme Court has obsevered the following considerations must be taken or into account
while deciding whether a person is ostensible owner or not.
i. Source of the purchase money i.e., who paid the price.
ii. Nature of possession after the purchase. Who has the possession.
Iii. Motive for giving benami color to the transaction. Why the property was purchased in the
name of other person.
Iv. Relationship between the parties i., whether the real owner and the ostensible owner were
related to each other or were strangers.
v. conduct of the parties in dealing with the property
vi. custody of the title deeds.

Essential conditions for the application of Section 41:

The following conditions are necessary for the application of this section.
i. There is transfer of an immoveable property by an ostensible owner with the express
or implied consent of the real owner.
ii. the transfer is for consideration
iii. The transferee has acted in good faith and
iv. The transferee has exercised reasonable care in finding out the transferor's power to
make the transfer.
Transferee has taken reasonable care, good-faith or bona fide intention of the transferee is not
enough. To attract the provisions of this section the transferee must also have exercised
reasonable care in ascertaining the title and authority of the transferor. Reasonable care
means that care which a man of ordinary prudence should be taken while making inquiries
regarding the title of an immovable property.
 CHAPTER 3 : GIFT

CONTENTS
 Introduction and Meaning
 Transfer of ownership
 Existence of Property
 Voluntary transfer, without consideration
 Acceptance by donee
 Delivering of possession
 Kinds of Gifts
 Void gifts
 Onerous gifts (S. 127)
 Suspension or revocation of gifts (S. 126)
 Universal Donee
 Requisites of a valid gift:
 Revocation of gift:
.
Introduction and Meaning
Section 122 of the Transfer of Property Act defines “gift” as follows:
Gift” is the transfer of certain existing moveable or immoveable property made voluntarily
and without consideration, by one person, called the donor, to another, called the donee, and
accepted by or on behalf of the donee. Acceptance when to be made.—Such acceptance must
be made during the lifetime of the donor and while he is still capable of giving. If the donee
dies before acceptance, the gift is void.’
A gift is a gratuitous transfer, i.e., without consideration. In the process, an existing property
is transferred in favour of another person without consideration. A gift may be made between
two living persons or it may take place after the death of the transferor (testamentary).
A gift between living persons is inter vivos gift, and it is a transfer by operation of law, and it
does not come within the purview of this Act. A gift made in the apprehension of death, i.e.,
gift mortis causa also does not come within the scope of this Art. In a nutshell, a gift can be
understood as:-
1. Gift is the transfer of certain existing movable or immovable property.
2. Made voluntary and without consideration;
3. By one person, called the donor, to another person, called the donee; and
4. Accepted by or on behalf of the donee.
5. Such acceptance must be made during the lifetime of the donor, and while he/she is
still capable of giving.
6. If the donee dies before the acceptance, the gift is void.
Essential elements
1. Transfer of ownership
A gift necessarily involves the transfer of ownership. In this, the whole of the interest of the
person in a property is transferred in favour of another person. The person transferring the
interest is known as ‘donor’, and the person to whom the interest is transferred in a property
is known as the ‘donee’. The person making the gift is donor, whereas the person accepting
the gift is donee. It is permissible to make conditional gifts of the property also, but the
condition must not be repugnant to any of the provisions of sections 10 to 34 of the Act.
The donor must be competent to contract. The mental capacity of the donor is a question of
fact.
The court said that generally a document which has characteristics of both gift and will has to
be registered but the document may not thereby cease to be a Will. The intention of the
executant has to be ascertained from the words employed.[1]

2. Existence of Property
For a gift, it is necessary that the property must be in existence at the time of making the gift,
although its conveyance may take place either in the present or in future. Both types of
properties, i.e., movable and immovable, may be gifted. A gift of future property is void.
Section 124 provides that the property must be in existence at the time of the making of a
gift; otherwise, the gift will be void. An actionable claim is an existing property, and it can be
gifted. A gift comprising of both current and future property is void as to the future property.
A mortgaged or leased immovable property may be gifted.
Gift of a part of the joint family which fell to the share of the donor under the preliminary
decree of the partition of coparcenary property is held to be valid.[2]

3. Voluntary transfer, without consideration

The gift must have been made by the donor voluntarily, i.e., with his/her free will and
consent. Where the consent of the donor is not free, i.e., the consent has been given due to
coercion or undue influence, the gift will not be a valid gift. Section 15 and 16 of the Indian
Contract Act, 1872 define coercion and undue influence, respectively. In coercion, the donor
is forced to execute a gift deed by the threat of committing any act punishable by the Indian
Penal Code. Under influence as defined under section 16 of the Indian Contract Act, 1872
influences the consent of the donor of the gift. The court dealing with such a case has to ask
two questions –

1. Whether the relations between the parties are such that one is in a position to
dominate the will of the other person?
2. Whether the position has been used to dominate the Will, i.e., whether the undue
influence has been actually exercised?
Where a gift-deed was executed by an old illiterate lady and her thumb impression was not
identified by her husband. None of the co-villagers or relatives was attesting witnesses.
Instead, it was witnessed by a stranger from another village, it was held that gift deed could
not be said to be a valid gift and therefore, the claim of ownership over the property by virtue
of the gift deed was not tenable.

4. Acceptance by donee
Acceptance of the gift by the donee is necessary. In certain circumstances, the donee may
refuse to accept the gift.
Acceptance of the gift may be express or implied. Where the donee accepts the title-deeds of
the property gifted, it is implied acceptance of gift.
Where the mother, natural guardian, gifted property to minor retaining possession and right
of enjoyment for herself, ownership of property by a minor can be presumed by silent
acceptance particularly when the minor is an educated boy of 16 years and has the knowledge
of the execution of gift.
The donor must also be a competent person. He/she must have the capacity as well the right
to make the gift. He/she must be competent to contract, i.e., he/she must be a major as well as
of sound mind.
5. Delivering of possession
It is not necessary for the purposing of symbolising acceptance to show that possession of the
immovable property gifted under the deed has been delivered. All that is necessary to show is
that the things presented by way of gift were accepted by the donee.[6]
It was held that section 123 supersedes the rules of Hindu personal law insofar as they require
delivery of possession to the donee. Thus, delivery of possession is not an essential
prerequisite for the making of a valid gift in cases of immovable property.[7]
For the purpose of making a gift of immovable property, the transfer must be affected by a
registered instrument signed by or on behalf of the donor, and attested by at least two
witnesses. Gifts of immovable properties, corporeal or incorporeal, of value less than Rs. 100
or more, must be signed by the donor, or on his/her behalf someone else must have signed it,
attested by at least two witnesses and must also be registered.
Where the donee has taken possession of the gifted immovable property without a registered
gift deed, he/she would not be allowed to protect his/her possession under section 53A of this
act.[8]

II. Kinds of Gifts

1. Void gifts
The following are included under the category of void gifts, if –

1. It is for unlawful purposes. (S. 6)

2. It is made upon a condition, the fulfilment of which impossible or forbidden by law.
(S. 6)
3. It is by a person incompetent to contract.
4. The donee dies before acceptance.
5. It comprises of both the existing and future property is void as to the future property.
Section 2(d) of the Indian contract act, 1872 provides that past illicit cohabitation cannot be
the consideration for an agreement or transfer of property. Where a gift is made for such
purpose, the gift is void.[9]

2. Onerous gifts (S. 127)

A gift is said to be onerous when it is accompanied with a burden or obligation. This section
is based on the maxim qui senti commodum sentire debetet onus which means that he/she
who receives advantage must also bear the burden.

The first paragraph of section 127 provides that where a gift is in the form of a single transfer
to the same person of several things of which one is, and the others are not burdened by an
obligation, the donee can take nothing by the gits unless he/she accepts it fully. Here the
following elements are essentials –
1. It must be in the form of a single transfer;
2. To the same person;
3. Of several things (properties);
4. Of such thing only one is burdened with obligation and others are not.
When such conditions are present, the donee will have to accept the gift fully. He/she cannot
accept the benefits of gift only and reject the burdens or obligation. This provision provides
that the donee may either accept the full gift or reject that, partial acceptance is not allowed.
Illustration (a)
A shares in X, prosperous joint-stock company, and also shares in Y, a joint-stock company
in difficulties. Heavy calls are expected in respect of the shares in Y. A gives B all his/her
shares in joint stock companies. B refuses to accept the shares in Y. he/she cannot take the
shares in X.
Second paragraph provides that where a gift is in the form of two or more separate and
independent transfer to the same person of several things, the donee is at liberty to accept one
of them and refuse the others, although the Former may be beneficial and the latter onerous.
Thus, if a gift is made accept the beneficial one and reject the onerous property. Here the gifts
are separate and do not form the part of the same transaction.
Illustration (b)
A, having a lease for a term of years of house at a rent which he/she and his/her
representatives are bound to pay during the term, and which is more than the house can let
for, gives to B the lease, and also, as a separate and independent transaction, a sum of money.
B refuses to accept the lease. He/she does not by this refusal forfeit the money.

III. Suspension or revocation of gifts (S. 126)

A gift is a transfer of ownership without consideration. A seed of gift once executed and
registered cannot be revoked unless it can be shown that the mandatory requirements of the
section were not complied with.[10]
It can be made subject to a certain condition. It is necessary that these conditions must be
valid conditions according to this Act.

A gift once made is irrevocable, except in the following two cases provided by this section –
1. It is revocable if the donor and the donee have agreed that on the happening of a
specified event (not depending upon the will of the donor), the gift should be
suspended or revoked.
2. It may also be revoked in any of the case (save want or failure of consideration) in
which, if it were a contract, it might be rescinded.
Universal Donee:
Here a gift of the entire property of the donor is made to a donee. The donee is liable for all
the debts, dues and liabilities of the donor at the time of the gift. This liability extends to the
extent of the property in the hands of the donee. Such a person who takes the entire rights and
liabilities is called a universal donee. Property means here movable and immovable. If A
makes a gift of his immovables only and not movables to B, B is not a universal donee.
The universal donee is liable only to the extent of the immovable and movable property
comprised in the gift.
The liability is with reference to the tune of gift by the donor, that is universal donee is not
liable for debts & liabilities incurred by the donor after the universal gift is made
Requisites of a valid gift:
Section 122 of T.P.Act defines a gift. 'It is the transfer of certain existing movable or
immovable property made voluntarily and without consideration and accepted by or on behalf
of the donee'. The person who makes the gift is the donor.
The donee must accept the gift:
a) during the life time of the donor and
b) While the donor is still capable of giving the property gifted. But if the donee dies
before acceptance the gift is void.
Gift of movable property may be registered or may be effected by delivery. However gift of
immovable property of any value requires registration under sections 17 (a) of the
Registration Act. It must be signed by the donor and must be attested by two witnesses. Gift
to God Almighty may be oral or may be in writing or may be registered.
A makes a gift of his jewels to B. This may be done by delivery.
A makes a gift of a piece of land worth Rs.50/-. This is to be registered.
The property must be existing at the time of the gift. A gift of future property is void. When a
gift is made to several persons and one or more donees does not accept, then it is void respect
of those who do not accept.

Revocation of gift:
(i) Conditional gifts:
The fundamental rule is that 'A resumable gift is not a gift at all.' A gift once given cannot be
revoked at the mere will of the donor; such a gift if made, is void ab initio. But, a conditional
gift is void.A conditional gift which attaches a condition subsequent is valid if the condition
is not vague or illegal or immoral or opposed to public policy or impossible of performance.
Hence conditional gifts may be made.
Ex.: A gifts to B a plot of land, reserving to himself with the consent of B, to take back the
plot if B or his descendants die before
A. B dies without any descendants during A's life time. The condition is valid and A may
take back the plot.
b) A make a gift to C, a concubine, for her continued relation ship with the donor. The
condition is immoral therefore gift is void.
c) A gives Rs. 1 lakh to B reserving to himself with B's consent, the right to take Rs.
25,000 at his pleasure. Gift is valid upto Rs.75,000/
- only. It is void in respect of Rs.25,000/-.
(ii) Gift made under coercion, fraud undue influence or misrep- resentation may be
revoked by the donor.
Protection of Transferees: Transferees who take the property for consideration and without
notice are protected against any prejudice that may result due to revocation by the donor. The
leading case is:Allcard Vs. Skinner
A, a sister executed a gift to S, the lady superior under undue influence. Later A sued to set
aside the gift. A would have won but there was too much of delay is suing. Hence, her claim
was dismissed.
 CHAPTER 4 : Lease

CONTENTS
 Introduction
 Concept of Lease: An Introduction
 Essential Conditions for a Lease
 Essentials of a Valid Lease Agreement
 Conditional Leases
 Sub-lease
 Rights and Duties of the Lessor and Lessee.
 Termination of lease:
Introduction
Elon Musk[1] said “Most people throughout the world prefer to own their belongings, rather
than rent what is essentially someone else’s property via a lease. However, leases do provide
some key benefits, particularly a low initial payment, tax deductions, lower risk on resale
value and the convenience of returning a car (or property) without the hassle of reselling it
personally.” This statement sums up the concept, need and purpose of lease.
In simple words, Lease is nothing but a relationship between landlord/landlady and his/her
tenants. It is a form of contract between these parties for a fixed tenure. This relationship
arises when an owner of an immovable property gives his property to another person for a
fixed tenure and consideration subject to the terms of contract (rate at which rent will be
collected, duration of lease, purpose etc.) between them.

Legally, the term ‘LEASE’ and its related concepts are governed by provisions, namely
sections 105 to 117, of The Transfer of Property Act, 1882. Section 105 defines Lease as
A lease of immovable property is a transfer of the right to enjoy such property, made for a
period of time, either expressly or impliedly, or in perpetuity, in consideration of a price paid
or agreed to be paid, or of monetary value, a share of crops, services or any other
consideration, to be rendered regularly or on specific occasions to the transferor by the
transferee who accepts the transfer under such terms.
For better understanding, let us look at the ingredients of this section;
I. Transfer of a right to possess such immovable property
II. Allowed over a certain period of time
III. Taking into account the consideration
IV. By the transferor to the transferee
V. Who agrees to transfer under those provisions.
The example of the relationship between Landlord and Tenant is the best way to explain
Lease. It is essential to have a lease for establishing the relationship between landlord and
tenant. The relationship can exist only in respect of immovable property such as buildings,
mines, land etc. A lease of livestock and other movable properties does not fall under the
definition of s 105 and thus, does not equate to the relationship of lessor and lessee.

Essential Conditions for a Lease

1. Availability of two parties – a single party cannot execute a lease agreement.
2. Both parties should be competent to contract – Essential conditions of a valid contract
as per section 10 of the Indian Contract Act, 1872 must be fulfilled.
3. A lease cannot be restricted around the explanation of a contract as it is also a transfer
of a right to enjoy the interest in such property.[3] Lease always creates a right in rem
which means that such a right is applicable against the whole world.
 4. The term, duration or period of the lease should be defined – Section 106 of the Act
addresses the issue as to what should be done in case of the duration of the lease in the
absence of a contract. The provision states that a lease will have the duration of:-
 Year to year in case of immovable property for agricultural or manufacturing
purposes.
 Month to month in case of immovable property for any other purpose.
5.Consideration is to be paid from time to time[5] – whether it is a price paid or agreed to
be paid or monetary value or share of crops or service or any other consideration.
6.Acceptance of transfer by the lessor and lessee on such terms and requisite formalities
as specified in the agreement.
Thus, a tenant is entitled to remain in possession of the leased property until the period of
lease or till the lease is duly terminated. It is pertinent to note that mere renewal clause to a
lease does not constitute that a lease is renewed. There has to be a fresh lease agreement to
renew a lease.

Essentials of a Valid Lease Agreement

It also becomes important to distinguish a sale and lease in this article. The words ‘transfer of
a right to enjoy such property indicate that all rights of ownership’ is not transferred by a
lease; whereas in ‘sale’, it is the transfer of ownership in exchange for a price.
There are cases where, although the word ‘lessee’ is used, the transaction is of a special
nature.[8] So, where a tract of forest is let out and a person is declared the highest bidder, and
a written document is executed in which the transaction is described as a sale of jungle wood,
and the purchaser is allowed to commence the cutting and removal of wood without the
execution of any formal document, the so-called lease is not a lease but it is really a sale of
goods and not a transfer of any interest in land. What is sold is wood standing in a certain
forest for a specified price. It all depends upon the facts and circumstances of each case what
a particular transaction is.
Conditional Leases
There may be leases, whose very existence would depend upon a contingency and condition.
A conditional lease may be distinguished from an unconditional one through the undertaking
of any of the party to perform his promise by confining the undertaking to the case where—
a.the condition happens
b.it does not happen.
If the condition happens or does not happen, as the case may be, the lease becomes good. But
if the condition cannot possibly happen, the lease is void from the outset.

Sub-lease
A sub-lease would imply parting with by the tenant of a right to enjoy such property in favour
of sub-tenant.[9] Sub-tenancy can be prohibited by parties as the law does not prohibit it.
The law does not prohibit the creation of sub-tenancy but the parties by agreement may
prohibit such creation of sub-tenancy. For example: If the consent for demolition of a
building is given by alleged sub-tenant, it would be immaterial and not binding upon the real
tenant or his legal representative and heirs.[10]
This brings us to another question that how is a lease created? How is the relationship of
tenant and landlord made through a lease?
These questions are answered in s 107 of the Act. It states that;
A lease of immovable property can only be made by a legal instrument from any period
exceeding one year. All other leases of immovable property be made either through a legal
instrument or by oral agreement followed by the guarantee of possession. Where a legal
instrument allows a lease of immovable property, the lessor as well as the lessee shall
execute such instrument.
Therefore, the relationship may be created in the following ways:
Express transfer
An express transfer of a right to enjoy certain immovable property can be by suitable
operative words which grant and conveys to the tenant (the lessee) a lease of a particular
property/ estate in the immovable property. This is generally done in case of a registered
agreement.
Implied transfer
If a tenancy arises by implication of law, then it is an Implied Transfer. For example, An oral
agreement for a lease may be implied from payment and acceptance of rent,[11] and a lease is
constituted by transferring the possession.

Rights and Duties of the Lessor and Lessee.

The T.P. Act under section 108 provides for the rights and liabilities of the lessor and lessee:
i) The rights and liabilities of the lessor.
a) The lessor should disclose any material or latent defects in the property leased.
b) The lessor must put the lessee in possession of the property.
c) There is a covenant for quite enjoyment of the property if the lessee is paying the rent
during the period of the lease.
ii) Rights and liabilities of the lessee.
a) Lessee's right to accretions if there is any accretion to the benefit of the property. The
lessee is entitled to such accretions. This
is of course subject to the law relating to alluvion. Hence adjoining waste land brought under
cultivation is not accretion.
b) Voidable lease:
If the material part of the leased property is destroyed (partially or completely) by fire,
tampest or floods or violence or by the enemy, the lease is voidable at the opinion of the
lessee. Of course, the lessee should not be the cause causans, for the destruction of the
property.
Ex.: A, was a lessee running a shop. But due to mob violence the building was set on fire.
The owner claims the value of the build- ing from A. Held: Owner not entitled. A may avoid
the lease if he so prefers.
c) Right to Sub-lease :
Unless prohibited by the lessor under the lease deed, the lessee is entitled to sub-lease.
d) Right to fixtures:
Anything affixed to the land becomes part of the land. The lessee is entitled to such fixtures.
e) Right to repairs:
Lessee may, by giving reasonable notice to the lessor, make the repairs if the lessor has
neglected it. The lessee may deduct such expenses from the rent or he may recover from
lessor.
f) Payment on behalf of lessor :
If the lessor has neglected to make payments (House tax etc), the lessee has a right to pay and
get it reimbursed from the lessor.
g) Right to ingress :
The lessee has free ingress(Right to enter) & Egress & to carry any crops grown by the lessee
when the lease is terminated.
h) Duty to restore possession:
The lessee is bound to restore the property to the lessor in good condition i.e., as the property
was at the time of the lease (subject to the normal wear and tear). However if the defect is
caused by the lessee he should not use the property for a purpose different from a purpose
agreed upon. He should not fell timber, pull down or damage buildings or commit any other
destructive or injurious acts thereto.
i) The lessee should not erect permanent structures on the prop- erty except for
agricultural purposes.
j) The lessee is bound to pay the rent as agreed upon. Leading cases are :
i) Spenser's Case.
ii) Katyayini devi Vs. Udaya Kumar.

Termination of lease:
A lease is terminated:
a) by efflux of time:
If the lease is for a fixed period e.g. for 2 years, the lease termi- nates on the expiry of 2
years.
b) On the happening of an event, e.g.
The lease is for 20 years or ends on the death of the lessee whichever happens first. Here the
lease terminates on the expiry of 20 years or on the death of the Lessee.
c) Merger:
When the lessor and lessee become one. This happens when the lessee buys the lease
property; of course he must buy the entire interest in the property.
d) Surrender:
A lease is terminated by surrender. It consists of yielding up of the term by the lessee to the
lessor, and of delivery of possession to the lessor, and, acceptance by the lessor. Hence,
mutual agreement is essential for surrender.
e) Implied Surrender:
This happens when the lessor accepts a new lease, with differ- ent terms and conditions,
during the continuance of the existing lease. Here, there is the implied surrender of the
original lease. (Gemini Mohan V/s. Devendra)
f) Forfeiture:
By forfeiture the lease is terminated. Three circumstances are provided:
(i) There is forfeiture, when the lessee breaks an express condi- tion. The lessor sho.uld
serve his notice to the lessee to quit.
(ii) There is forfeiture, when the lessee sets up the title to the property in a third person or
in himself. Notice by lessor to quit is essential.
(iii) When there is a provision in the lease, that on the lessee becoming insolvent, the
lessor may re-enter, the lease may be termi- nated by giving notice to the lessee.
In the above three circumstances, acceptance of rent by lessor, amounts to waiver or
forfeiture.
g) Notice to quit:
Notice to quit or to terminate the lease should be given by the lessor to the lessee.
If after giving notice the lessor accepts rents, it amounts to waiver of notice to quit.
A, the lessor gives B, the lessee to quit. The period of notice expires. A accepts rents from B.
The notice is waived.
 CHAPTER 5 : Sale

 Introduction
 Elements of Sale
 Essentials of a sale
 Contract for Sale
 Conclusion

INTRODUCTION
Sale of Immovable Property: Explained as Under Transfer Of Property Act, 1882, Sale
simply means buying and selling of goods and services, under Transfer of Property Act, 1882
the Sale is of immovable property. Before jumping into further details regarding the sale of
immovable property.
Section 3 of the Act is the Interpretation-clause, which provides for the meaning of key
terminologies –
Immovable property – does not include standing timber, growing crops or grass,
Instrument – means a non-testamentary instrument. The instrument is a written document, a
formal or legal document in writing, such as a contract, deed, bond or lease or anything
reduced to writing.
Registered – register is a book containing a record of facts as they occur, kept by public
authority. A document cannot be said to have been duly registered if the registration has been
made in contravention of the provisions of the Registration Act.[i]
Attached – is a term describing the physical union of two otherwise independent structures or
objects, o the relation between two parts of a single structure, each having its function.[ii]
Section 5 – Transfer of property defined
“transfer of property” means an act by which a living person conveys property, in present or
future, to one or more other living persons, or to himself and one or more other living
persons; and “to transfer property” is to perform such act.
Some of the means of transfer of property from one person to another are – by sale, or by
exchange, or by gift, or by adverse possession, and in some cases, even by a decree of the
Court.
Section 54 of the Act defines ‘sale’ and specifies how a sale of immovable property may be
made. Herein, sale refers to the sale of immovable property whether tangible or intangible
(example – easement rights)
Sale is a transfer of ownership for a money consideration. It implies an absolute transfer of all
rights in the property sold. No rights in the property sold are left in the transferor.[iii]
Section 54
‘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 immovable 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 immovable 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 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 property.
Elements of Sale
Transfer of ownership – ownership is the aggregation of all the rights and liabilities in a
property. When there is the transfer of ownership, the aggregation or total of all rights and
liabilities in a property are transferred from transferor to the transferee.
Money consideration – the ‘price’ that is referred to in section connotes to money
consideration. Where the ownership of property is transferred in consideration for money it
amounts to sale but if it is transferred for anything else it amounts to exchange.
Section 54 Provides that contract for sale of itself does not create any interest in or charge on
such property.[iv]

Essentials of a sale
1. Parties
In a sale, there must be in the least two parties. The person who transfers his/her property is
known as the transferor/seller/vendor and the person to whom the property is transferred is
known as the transferee/buyer/vendee.

2. Competency
For a valid sale both the buyer and seller have to be competent on the date of the sale.
a. Seller
The seller must have the ownership of the property which he is going to sell.[v]
The seller must have a legal title to it only then he can sell the property.[vi]
The seller must be competent to contract.[vii]
He must not be a minor
He must not be of unsound mind.
He must not be statutorily incompetent – This refers to incompetency under the law for
example when a person is declared insolvent his property bestowed on the person who
recovers he is indebted to in this case the property is legally reserved for the recovery of debt.
The seller may be a natural person/juristic person, for example, corporations or another legal
person.[viii]
b. Buyer
The buyer must be competent to receive the ownership of the property.
The buyer should not be disqualified from buying the immovable property by any law in
force at the time of the sale – for example under section 136 of the Act, a judge, e legal
practitioner or an official of the court is incompetent to purchase actionable claims.
The seller may be a natural person/juristic person, for example, corporations or other legal
person.[ix]
c. Subject – matter
Sale under Transfer of Property Act, 1882 specifically deals with sale of immovable property.
Immovable property includes the benefits arising out of the land and the things attached to
the earth except for standing timber, growing crops and grass.
The right to catch and carry away fish is a ‘profit pendre’ and construed as immovable
property.
3. Money consideration
Price is an essential element of the sale.
Where, by the transfer, the vendor is getting rid of the liability to pay a certain sum, it cannot
be said that there is no consideration for the sale.
An agreement between the parties cannot be rendered nugatory on the ground that the
consideration was not adequate.
The price paid and price promised to stand on equal footing as regards the transaction of a
sale. There is nothing illegal, or contrary to public policy if the parties agree that the payment
of the consideration shall be postponed in certain events, or that it shall not be paid at all if
the property is lost.
Therefore, a stipulation in a sale-deed that the price will be paid within one year, provided
that possession is obtained within that time, and that if possession is not so obtained then the
payment of the price will be postponed, or that in the event of the vendee not getting the
property, the price will not be paid at all. In all the above cases, the deed is a sale-deed within
the meaning of the section.
If from the recitals in the sale deed it appears that title would pass after payment of full
consideration, the inference would be that until the consideration is paid, there is no transfer.
4. Conveyance
Section 54 provides for two modes for transfer of property –
Delivery of possession – Where the property us the tangible immobile property of the value
of one hundred rupees and upwards transfer can be made only by a registered instrument.
Where the property is tangible immovable property of a value of less than one hundred
rupees, its transfer may be made either by a registered instrument or by delivery of property.
Delivery of tangible immovable property takes place when the seller puts the buyer or such
person as the buyer directs in possession of the property.
Registration of sale deed – Where the value of the tangible immovable property is Rs. 100 or
more, the sale of such property requires registration of the deed. Where the property is
intangible immovable property of any valuation, it will require registration for completion of
sale.
5. Registration
A combined reading of section 8 and 54 of the Transfer of property act, 1882 suggests that
through execution and registration of a sale deed, the ownership and all interests in the
property pass to the transferee, yet that would be on terms and conditions embodied in the
deed indicating the intention of the parties. The intention of the parties can be gathered from
the averments in the sale deed itself or by other attending circumstances.
Registration is the prima facie proof of the intention of the seller that he wanted to transfer
the ownership on the date of the execution.
Where the sale is to be completed only by the registered instrument, the ownership is deemed
to pass on the execution of the sale deed, not on the registration of the deed. The sale deed
transferring immovable property of the value of 100 or more requires registration under
Indian Registration Act 1908.

III. Contract for Sale

A contract of sale must be based on a mutual agreement between the seller and the buyer.
Section 54 states that a contract for sale of immovable property or an agreement to sell is a
contract that a sale of such property shall take place on terms settled between the parties. It
does not of itself create any interest in, or charge on such property.[xiv]
This is different in English law, wherein a contract for sale transfers an equitable estate to the
purchaser, but this rule is not applicable in India. A contract for sale does not confer any title
in immovable property.

Conclusion
A sale occurs between two living persons be it natural or artificial. Under the Act, Sale
connotes to that of immovable property which encompasses tangible and intangible property,
as well as rights arising out of the land. For the sale, the parties must be competent. If the sale
is of immovable property of more than Rs. 100, it has to be registered.
The transfer of ownership is the transfer of all the rights and liabilities surrounding the
property, this transfer along with price paid results in a sale. Sale and contract for sale are two
very distinct documents. Contract of sale is merely a document signifying the willingness to
sell, and sale is the actual transaction that takes place.
 CHAPTER 6 : MORTGAGES

The meaning and kinds of the mortgage iunder the Transfer of Property Act, 1882;A
mortgage creates interest on the immovable property. This article defines a mortgage. The
article explains the key terms in the understanding mortgage. The article mentions the three
elements of the mortgage and finally, the article explains the six kinds of mortgages, also
explaining the key elements of the kinds of mortgages.

I. Meaning
According to section 58, a mortgage is the transfer of an interest in some specific immovable
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.
A mortgage is the transfer of an interest in some immovable property. It is given by way of
security for a loan. A person who takes a loan and gives some security for repayment of the
load in the form of transfer of some interest in any immovable property, it is called a
mortgage of property.
The ownership of the property remains in the debtor but some of his interests in the property
are transferred to the creditor who has given loan. In case the advanced money could not be
recovered by the creditor (person advancing the money) he can recover his money on the
basis of his interest in that property. Therefore, it may be said that mortgage if for the security
of the creditor.
In a mortgage, the right in the property created by the transfer is accessory to the right to
recover the debt.

II. Key terms

Mortgagor – the person who transfers the interest in the property in a mortgage is known as a
mortgagor. Under section 59A, a person deriving title under the original mortgagor is
included in the term mortgagor too.
Mortgagee – A mortgagee is a person in whose favour the mortgage is created. A person
deriving title under the original mortgagee is also included. Every deed of mortgage must
have the name of the mortgagee otherwise the deed will not be a valid one.
Mortgage money – According to section 58, the principal money and interest of which the
payment is secured for the time being are called mortgage-money.
Mortgage-deed – The instrument by which transfer is effected in a mortgage is known as
mortgage deed.
III. Elements of mortgage
Transfer of interest – Mortgage debt is not an actionable claim under this Act but it is only a
transfer of an interest in an immovable property. The interest is given by the mortgagor to the
mortgagee.
 A mortgage is a transfer of an interest and it creates a right in rem, but mere
agreement to create a mortgage does not create any interest in the property mortgaged.
 Without transfer if an interest there is no question of there being a mortgage within
the meaning of section 58(a).
Specific immovable property – The interest created by mortgage must be in some specific
immovable property. In mortgage-deed the property must be specifically defined and not in
general terms.
Consideration – the consideration may be either money advanced or to be advanced by way
of loan, an existing or future debt or the performance of an engagement giving rise to a
pecuniary liability. A transfer which is made by way of discharging a debt is not a mortgage.
A transaction of mortgage does not become ineffective merely because the mortgagee could
not advance the money on the date of execution of the deed.[ii]

IV. Kinds
1. Simple mortgage
Where, without delivering possession of the mortgaged property, the mortgagor binds himself
personally to pay the mortgage-money, and agrees, expressly or impliedly, that, in the event
of his failing t pay according to his contract, the mortgagee shall have a right to cause the
mortgaged property to be sold and the proceeds of the sale to be applied, so far as may be
necessary, in payment of the mortgage-money, the transaction is called a simple mortgage
and the mortgagee a simple mortgagee.
Clause (b) of section 58 says that where –
1.Without delivering possession of the mortgaged property;
2.The mortgagor –
a. Binds himself personally to pay the mortgage-money, and
b. Agrees that in the event of his failing to pay according to his contract, the mortgagee shall
have a right to cause the mortgaged property to be sold and the proceeds of a sale to be
applied, in payment of the mortgagee-money.
In a simple mortgage, possession of the property remains with the mortgagor and he
personally covenant to pay the mortgage-money.
2. Mortgage by conditional sale
When 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.
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.

1. In this type of mortgage, the mortgagor ostensibly sells the property.

2. The property is sold on the condition that –
3. On default of payment of the mortgage-money on a certain date the sale shall become
absolute, or
4. On such payment being made the sale shall become void, or
5. On such payment being made the buyer shall transfer property to the seller,
Such a transaction is called mortgage by conditional sale and the mortgagee is called a
mortgagee by conditional sale. Every sale accompanied by agreement for reconveyance of
property does not constitute a mortgage by conditional sale.
If there is no relationship between debtor and creditor, the question of it being a mortgage by
conditional sale does not arise.
A mortgage by conditional sale can be effected in the following ways –
1. Where the principal money secured is Rs. 100 or more-by a registered instrument
signed by the mortgagor and attested by at least two witnesses.
2. Where the principal money secured is less than Rs. 100 by a registered instrument
signed by the mortgagor and attested by at least two witnesses or by delivery of
property.
3. Usufructuary mortgage
Where the mortgagor delivers possession or expressly or by implication binds himself to
deliver possession of the mortgaged property to the mortgagee, and authorises him to retain
such possession until payment of the mortgage-money, and to receive the rents and profits
accruing from the property or any part of such rents and profits and to appropriate the same in
lieu of interest, or in payment of the mortgage-money, the transaction is called a usufructuary
mortgage.
Essential elements
1. There is a delivery of possession to the mortgage or an express or implied undertaking
of the mortgagor to deliver such possession.
2. Retention of the possession by the mortgagee till the payment of the mortgage-money
or he has to receive rents and profits of the property either in lieu of interest on
mortgage-money or in payment of mortgage-money or party in payment of either
interest to mortgage-money.
 3. There is no personal liability of the mortgagor.
4. The mortgagee cannot foreclose or sue for sale of mortgage-property.
5. The mortgagor is entitled to redeem the property when the amount due is paid or the
debt is discharged by rents and profits received by the mortgagee.
6. No time limit is fixed for the repayment.
7. Where the mortgage is for Rs. 100 or more, it must be registered but where it is less
than Rs. 100 it may be by a registered deed or by delivery of property.
Rights of usufructuary mortgagor – Under section 62, a usufructuary mortgagor has been
given a right to recover possession of the mortgaged property from the mortgagee when –
1. Where the mortgagee was authorised to pay himself the amount of mortgage-money
from the rents and profits of the property the money is paid,
2. Where the mortgagee is authorised to pay himself from rents and profits and the terms
prescribed for the payment of the mortgage-money has expired and the mortgagor
pays the mortgage-money or balance of it to the mortgagee or deposits it in the court.
[v]
IV. English mortgage
Where the mortgagor binds himself to repay the mortgage-money on a certain date, and
transfers and 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.
1. Where the mortgagor binds himself to repay the mortgage-money on a certain date,
and
2. Transfers the mortgaged property absolutely to the mortgagee on the condition that he
will re-transfer it to the mortgagor upon payment of the mortgage-money as agreed.
The transaction is called an English mortgage.
Essential elements
1. There is an absolute transfer of property to the mortgagee i.e there is the delivery of
possession.
2. There is a personal covenant to pay the amount. The mortgagor binds himself to repay
the mortgage money on the due date.
3. The property is transferred on the condition that the transferee-mortgagee will re-
transfer it to the mortgagor on the payment of the mortgage-money.
V. Mortgage by deposit of title-deeds
Mortgage by deposit of title-deeds is also known as an equitable mortgage. According to sub-
section (f), where a person –
1. In the towns of Calcutta, Madras, Bombay and in any other town specified by the
state government concerned in this behalf.
2. Delivers to a creditor or his agent documents of title to immovable property
3. With intent to create a security, thereon.
Such a transaction is called a mortgage by deposit of title-deeds.[vi]
This is a special kind of mortgage because here the execution of mortgage deed is not
necessary. Mere deposit of title deeds of the immovable property by the mortgagor to
mortgagee is sufficient.
Essential elements
1. Debt – the debt may be an existing debt or a future debt. Any transfer of an interest in
any property to secure the payment, advanced or to be advanced, or an existing or
future debt, or the performance of an engagement which may give rise to a pecuniary
liability is a mortgage and sub-section (f) defining equitable mortgage prescribes
merely one of the modes of creating a mortgage.
2. Deposit of title-deeds – It is sufficient if the deeds deposited bona fide relate to the
property or are material evidence of title and that it is not necessary that all deeds
should be deposited.It would be hyper-technical to insist upon the formality of the
creditor delivering the title-deeds to the debtor and the debtor re-delivering them to
the creditor.
3. Delivery with the intention of creating security – It is necessary that the title-deeds are
deposited with the intention of creating security for the debt. Such an intention cannot
be presumed from possession because the mere possession of the deeds is not enough
without evidence as to the manner in which the possession originated.
4. Mere possession of title-deeds by creditors, coupled with the existence of a debt does
not necessarily lead to the presumption of a mortgage, that may be so when the title-
deeds are produced by the creditor after the lapse of many years without explanation.

VI. Anomalous Mortgage

A mortgage which is not a simple mortgage, a mortgage by conditional sale, a usufructuary
mortgage, an English mortgage or a mortgage by deposit of title-deeds within the meaning of
this section is called an anomalous mortgage.
For example – Combination of simple mortgage and usufructuary, mortgage usufructuary by
conditional sale

Doctrine of equity of Redemption or 'Once a Mortgage always a Mortgage'. Sn.60

Mortgagor has a right to redeem the mortgage. The courts guard this right called the Equity
of redemption. Any contract entered into between the mortgagor and mortgagee imposing
condition against this right to redeem, cannot be enforced. Right to redeem is part of the
transaction. Mortgage is only security for repayment of debt. Hence, when the debt is paid the
mortgagor is entitled and the mort- gagee should release the property thereof. Any condition
against this right to redeem is called a 'clog on the equity of redemption'.
The leading case is Sher Khan V. Swami Dayal.
The mortgagor may pay or tender at a proper time and place the mortgage-money, which has
become due. The mortgagee should deliver all the concerned documents; if he had been in
possession he must deliver possession of the immovable property to the mortgagor. Further,
the mortgagor may require an acknowledgment in writing that all the rights of the mortgagee
have been extinguished.
Limitation : The period of limitation fixed to redeem the mortgage is 30 years, starting from
the date when the right to redeem accrues.
The right of the mortgagee for foreclosure is 30 years starting from he date when the money
became due.
Under section 67 the mortgagee has a right to foreclosure or to sell the mortgaged property. If
the mortgage money has not been paid within time, the mortgagee has got a right to foreclose.
He may sue in a court and obtain a decree to the effect that the mortgagor shall be absolutely
debarred of his right to redeem the mortgaged property. Such a suit is called a suit for
foreclosure. This can be done after the period of 30 years, the period of limitation.
Eg.: A mortgaged his property to B for Rs.5,000/- to be redeemed in 5 years. On failure, B
could take possession and stay there for 12 years. During this period A was barred from
redeeming the property. Held, such a condition was void, as it is a clog on the equity of
redemption.

Doctrine of Marshaling and Contribution.

A mortgages his properties named X & Y to B. Subsequently, he mortgages the property X to
C. C brings property X to sale in execution of his mortgage and purchases the property X. B
there- upon obtains a decree and proceeds against X. Can C claim marshaling? The answer is
Yes. X & Y should be put together, so as not to defeat the interests of A &B.
The doctrine of marshaling is stated in Section 81. The owner of two (or more) properties
mortgages one (or more) of the proper- ties to another person, the subsequent mortgagee is
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. However, this will not prejudice the rights
of the prior mortgagee or any person who has for value acquired an interest in any of the
properties.
Leading case is :Aldrich Vs. Cooper: In this case:
The first creditor C had a right against the property of the debtor
D. The second creditor, S, had certain rights against the property of the debtor. In these
circumstances if the first creditor C is allowed to proceed against the property the rights of
2nd creditor S would be affected. The principle is that one creditor shall not disappoint
another creditor. Hence, if one creditor has a security in respect of two properties of the
mortgagor and another creditor has a security in one of the properties only, then the two
properties shall be marshaled i.e., ranged so as to throw the burden as far as possible on the
property not included in the second security.
Eg.: Properties X & Y of P are subject to an encumbrance of A. Property Y is subject to an
encumbrance of B. According to the doctrine of marshalling the amounts given by A must be
satisfied from property X so as not to affect the amounts given by B.
Contribution:
The converse of marshalling is contribution. This occurs when the mortgaged property
belongs to two or more persons, having distinct and separate rights of ownership. In such a
case if there is a mortgage debt both or all should contribute rateably. The value as on date of
mortgage shall be taken to calculate the contributions.
Eg.: Property X is mortgaged to A for Rs.200/- and sold to C. Properties X & Y are
mortgaged to B for Rs.400/- & sold to D.
The value of X & Y is Rs.500/- each.
The contributions of C & D are Rs.150/- and 250/- respectively The two properties X & Y
have the mortgage-amount of
Rs.400/-advanced by B.Hence B may recover this amount from C & D. From C : 500-
200=300 Rs. Half of this = 150 Rs. From D : Value 500 Rs. Half of this = Rs.250/-

Subrogation Sn.91.
Subrogation means 'Substitution'. This enables a person to pay off a creditor and get into his
shoes and exercise the rights of the creditor.
Any person redeeming a mortgaged property has the same rights (of redemption, foreclosure
or sale), as the mortgagee may have against the mortgagor or any other mortgagee.
This right is subrogation. There must be full redemption to apply this doctrine.
A mortgages his property to B. A makes second mortgage to C. A makes third mortgage to D.
Here, D may redeem B in which case D becomes subrogated to
B. He has the same rights as B has. Persons who may claim subrogation.
i) Any person having interest in or charge on the mortgaged property.
ii) Any surety.
iii) Any creditor of mortgagor.
Exception: Subrogation does not apply to a mortgagor.
Gases of legal subrogation are:
a) A puisne mortgagee redeeming a prior mortgagee.
b) A co-mortgagor redeeming the mortgagee.
c) A mortgagor's surety redeeming the mortgagee.
d) A purchaser of equity of redemption redeeming a mortgage. These person may claim
the right of subrogation.
Tacking: (Tacking=To shift one's position).
The rule relating to prohibition of Tacking is in Sn.93 of T.P. Act The rule is: No mortgagee
paying off a prior mortgage-(with or without notice of any intermediate mortgage) shall
acquire any priority in respect of his Original security.
Eg.: Three mortgages are made by A:
I Mortgage to B II Mortgage to C III Mortgage to D
D may pay off B and get into the shoes of B. With this he gets priority over 'C' in respect of
mortgage B only and not in respect of his own mortgage D. This shifting is the doctrine of
tacking, but, such a shifting is prohibited by T.P.Act.

'Redeem up, foreclose down':

Every mortgagee has a right to redeem a prior mortgagee. But, under this rule, every
subsequent mortgagee may foreclose a subse- quent mortgagee. This is familiarly called
'redeem up and foreclose down'.
Eg.: A mortgages his property to B C D
Here, D may redeem B or C by paying off the mortgage debt.
But, B can foreclose 'A' (fulfilling the conditions).
B can foreclose C and D or both who are subsequent to him.
This rule protects the interest of the mortgagees (creditors).

Rights and Liabilities of Mortgagee in possession.

A) Rights of the mortgagee:

i) The mortgagee may spend any necessary amount for
a) The preservation of the mortgaged property from destruc tion, forfeiture or sale.
b) for supporting mortgagors title.
c) to make his title good against the mortgagor (defending suits against mortgagor).
ii) Where the mortgaged property is sold under Revenue sales or acquired by Govt., the
mortgagee is entitled to claim his money the surplus of proceeds of such sale or acquisition.
B) Liabilities of the mortgagee:
i) Mortgagee should prudently manage the property.
ii) He must make endeabours to collect the rents & profits.
iii) He must pay all Govt. revenues & Public charges and all rents due. (This is subject to
agreement)
iv) Necessary repairs to property are to be made from collection of rent etc.
v) He should not do anything to destroy or damage the property.
vi) He must maintain clear, full and accurate accounts.
vii) When the mortgagor tenders or deposits any money, the mortgagee should account for
the same.
The mortgagee becomes liable, for loss incurred by the mort- gagor due to violation of these
provisions.

Substituted Security : Sn.73:

Sn. 73 of the T.P. Act deals with Substituted security, with reference to mortgage. This
means, the mortgagee for the purpose of his security is not only entitled to the subject-of
mortgage property, but also to anything that may be substituted for it. Hence, if the
mortgaged property takes a new form, the security extends to that also.
In Punniah V. Venkatappa Rao, A had mortgaged his house to B. A's representatives pulled
down the house, and, used the building materials to build new house
Held that the new house was a "substituted security" to protect the interests of the
mortgagee.
The rule in Sn.73 provides that where the mortgaged-property is sold for recovery of land
revenue or other charges, the mortgagee is entitled to claim the payment of mortgage-money
after satisfying the govt. arrears: Similarly when land is acquired by Govt. the mort- gagee is
entitled to his money from the compensation paid by Govt. to the mortgagor.
The section applies to Partition, court sales etc,
Exceptions:
The mortgaged property must be free from other encumbrances; otherwise, this section will
not apply.

Doctrine of Consolidation (Sns.61 & 67 A):

This has its origin in the English concept of the "Equity of con- solidation" and with some
modification, it is incorporated in our T.P. Act.
When a mortgagor executes two or more mortgages in favour of the same mortgagee, and,
when the mortgage-money of two or more become due, the mortgagor may redeem each
mortgage separately or may consolidate two or more of such mortgages together.
This applies to cases of two (or more) mortgages by the same mortgagor to the same or any
number of mortgagees.
Parties may exclude this principle of consolidation in the mort- gage deed if they so prefer.
E.g., A mortgages his property X to Y
" " X to Y (called puisne mortgage)
A may redeem separately or may consolidate and redeem.
Sn.67 A : A Mortgagee who holds two or more mortgages of the same property, and, who
sues for mortgage-money, must do so by consolidating all the mortgages together. This
means the mortgagee is bound to consolidate, i.e, he must sue on all or none.
A mortgages his property X for Rs.5,000/- to B. He makes a second (puisne) mortgage of the
same property to B for Rs.3,000/-
In filing a suit, for mortgage-money, (which becomes due from both) mortgagee B should
consolidate and file together. He is not allowed to file separate suits.

Miscellaneous

Restraints on Transfer
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 of limitation is
void. Except in the case of lease where this 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 woman
(not being a Hindu, Mohammedan or Buddhist) so that she shall not have p transfer or charge
the same for her beneficial interest therein”.
This is based on the general rule of jurisprudence “alienatio rei prae fertur juri accrescendi”
that is to say that alienation is favoured by law rather than accumulation. This is general
economic principal that there should be free circulation and disposition of property. An
absolute restart is repugnant to the nature of the estate and is an exception to the very essence
of the grant.
his section lays down that where property is transferred subject to a condition absolutely
restraining the transferee from parting with his interest in the property, the condition is void.
Thus, if a transfers his property to B with a condition that B shall never sell it, or shall sell it
only to a particular person, the condition is void, and B any sell or not as he pleases. Here the
sections Olovs that only the condition (restraining alienation) is void and not the transfer
itself.

In Rosher v. Rosher, (1884) 26 Ch D 801, a person A made a gift of house to B with a

condition that if B sold during the life-time of A’s wife, she should have an option to
purchase it for Its. 10,000. The value of the house was Rs. 10,00,000. This was held to be a
effect an absolute restraint and void.
When a property is transferred absolutely it must be transferred with all its legal incidents.
Section 8 of the set also provides that unless different intention is expressed (or 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.
Absolute and Partial Restriction
The conditions or limitation on alienation may d be either absolute or partial. Absolute
restraints are declared void under Section 10, however partial restraints may be allowed.
Whether a condition amounts to a total or partial depends upon the substance, i.e., the real
effect of the condition and not the form of words laying down the condition. An absolute
restraint is one that takes away the power of alienation completely or substantially, whereas,
partial restraint is one that imposes some restriction on the power of alienation but the tram is
substantially free to alienate property in various ways. In Renand v. Tourangeaon, (1867). LR
2 PC 4, it was held that a condition that transferee shall not transfer the property for a period
of twenty years is an absolute restriction and thus void. If it were a condition that transferee
shall not transfer the property for a period of 3 years, it would be a partial restraint and thus
valid.
Illustrations
(i) A condition that transferee shall not transfer the property by way of gift, is a partial
restraint and thus valid.
(ii) A condition that transferee shall not transfer the property family/or to a particular person
only, is a partial restraint and thus valid.
On the other hand, if a transferor A transferred a filed to transferred B, with a condition that if
he sold it he must sell to C (A particular person) and nobody else. The restriction was held to
be absolute and thus void.
(iii) A stipulation in a sale-deed that the vendee could sell-back the property to the vendor
only, and to no one else, is more than a mere partial restraint, and thus invalid.
(iv) A compromise by way of settlement of family disputes has been held to be valid,
although it involves an agreement in restraint of alienation.

In Mata Prasad v. Nageshera Sahal, (1925) 47 All 884, a dispute relating to succession
between a widow and the nephew was compromised on terms that the widow was to retain
possession for life while the title of the nephew was admitted with a condition restraining him
from alienating during her life-time. The compromise was held to be valid.

Exceptions:
Lease: When the condition is for the benefit of the lessor or those claiming under him, it will
be valid. Thus a condition in lease that the lessee should not sublet or assign is valid. The
logic behind this exception is that landlord should be free to choose the person who shall be
in possession of his land.
Marriage woman: A condition restraining alienation may be imposed when the property is
transferred to a married woman is not a Hindu Mohammedan or a Buddhist.
Restriction on Free Enjoyment of Property
Section 11. Restriction repugnant to interest created “where, on a transfer of property, an
interest therein is created absolute in favour of any person, but the terms of 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 immovable 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.”
Thus a transferee of property who takes an absolute interest cannot be restrained in his
enjoyment or disposition of it by any condition inserted in the transfer.
Section 11 provides that any condition restraining the enjoyment of the property which is
transferred absolutely is void. When a property is transferred absolutely, it must be
transferred with all its legal incidents. If any condition or limitation is imposed in the deed of
conveyance, that would be repugnant to Section 11 of the T.P. Act; Smt. Manjusha Devi v.
Suinit Chandra Mukherejee, AIR 1972 Cal 310.
The following restrictions are void according to Section 11 of T.P. Act—
(i) A makes an absolute gift of a house to B with a condition that the gift will be forfeited if B
does not reside in it.

(ii) The transferee should always let the land at a definite rents or cultivate it in a particular
manner.
Section 11 is practically a corollary to Section 10. The distinction between Section10 and 11
is that under Section 10, the restriction is directed against the transfer of the interest while
under Section 11, the restriction is directed against free enjoyment. Section 10 is applicable to
all transfer whether limited or absolute, whereas Section 11 will not apply unless the transfer
absolute, and the restriction is imposed by the terms of the transfer.
Exception
The second paragraph of Section 11 provides the exception to the general rule contained in
first paragraph. According to it, the transferor may impose conditions restraining the
enjoyment of land if such conditions are for the benefit of his (transferor’s) adjoining land.”
Tulk v. Moxhay, 2 Phill 774.

Illustrations:
(1) A owns two properties X and Y, and sells X to B. A imposes restriction on B that he shall
for the more beneficial enjoyment of Y, keep open a portion of X enjoyment of Y, keep open
a portion of X adjoining Y and not build on it. The restriction is valid and enforceable against
B.

(2) A owns two properties X and Y and sells X to B and imposes a condition on B that B
shall lay out money in building and repairing a drain passing over X adjoining Y. The
restriction is valid and enforceable.

(3) A makes an absolute gift of a house to B, and directs that B shall not raise it higher, so as
to obstruct the passage of light and air to A’s adjoining house, the direction will be valid.
Section 12. Condition making interest determinable on insolvency or attempted alienation
When property is transferred subject to a conditions or limitation making any interest therein,
reserved or give 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 is lease for the benefit of the lessor or those
claiming under him.” This section provides that a condition that the grantee shall cease to
have any right on becoming insolvent or that the shall cease to have any interest on
attempting to alienate property, is void.
The principle behind this provision is that it would be unjust that the grantee should enjoy
and possess all the incidents of ownership of property and yet be deprived who have made
advances on the strengths of the property should be prevented of the right of alienation
incident to such ownership; and it is equally unjust aiming, that the creditor who may have
made advances on the strength of the property should be prevented from having recourse to
the property transferred for satisfaction of their debts on account of clause in the transfer,
which none but the grantor and the grantee may know nothing about.
The exception to this section provides that nothing in this section applies to a condition in a
lease for the benefit of the lessor or those claiming under him.

Rule against inalienability. Sn. 10. Absolute restraint

The main principle of the T.P.Act is that the right to transfer property is incidental to and
inseparable from its beneficial owner- ship. Any condition absolutely restraining alienation is
void accord- ing to the Act.
Sn. 10 states that when a property is transferred subject to a condition absolutely restraining
the transferee (or any claimant through him) from parting with or disposing of his interest in
the property, the condition or limitation is void.
This applies to sale, gift, exchange etc. The rule is based on Justice, equity and good
conscience, and includes other transfers not covered by the T.P.Act e.g. will, partition,
settlement etc.,
Exceptions:
(i) Lease: A lease is an exception. The lessor retains his inter- est. A condition that the
lessee should not sub-lease the property is valid.
(ii) Married Woman: A property may be transferred for the benefit of a woman with a
condition that during her marriage coverture, she should not alienate or charge. Such a
condition is valid. (This is not applicable to Hindus, Muslims and Buddhists as they are
governed under their own personal laws.
Scope:
Absolute restraint: The transfer of property is void, if there is an absolute restraint on the
right to transfer or alienate.
e.g. A, B, C & D made a partition with a condition that if any one dies, leaving no heirs, then
his share gets merged with others and that such a person should not alienate his interest.
A sold his share of property and died without issues. B, C & D sued to recover the property.
Held, the condition was void under Sn.10.
Partial restraint on transfer is not void.
A gift of property made to the donee, that he should not alien- ate during his lifetime, is void
under Sn.10.
Sn.12: Insolvency or attempted alienation:
In order to protect the interests of the creditors, provision are made in the T.P.Act. Where a
transfer is made by a person, with a condition that the interest of the transferee would cease
on the trans- feree becoming insolvent or attempting alienation, such a condition is void.
A settles his property in trust for himself until his death or bank- ruptcy. On the happening of
any of these events, the property would vest in his wife. A is adjudged insolvent. The
property vests in the official assignee, and, the condition in the trust is void.
Doctrine of Acceleration Sn.27
Sn. 27 of the T. P. Act deals with the English doctrine of acceleration.
In a transfer of property, A may create an interest in favour of one person, and by the same
transaction, he may create an ulterior disposition in the same property in favour of another. If
in such a case, the first transfer fails, then the ulterior disposition takes effect, even though
the failure may not have occurred as contemplated by A.
However, if the failure is to take effect in a particular manner, then the ulterior effect will not
take effect, unless the failure is in that manner.
(i) In lull V. Jones, A made a iequest to B for life and then to his children. The gift failed
as B was one of the attestors. Held, accord- ing to acceleration, the gift to B failed but, took
effect in favour of the children.
(ii) Avelyn V. Ward: A transfers Rs.5,000/- to B on condition that he shall execute certain
lease in 3 months after A's death. If he neglects, the transfer is to C. B dies in A's lifetime.
Here, the disposi- tion to 'C' takes effect.
(iii) Underwood V. Wing: A transfers his property to his wife W ; if she dies in his
lifetime, the property goes to 'B'. A & W die in an air -crash. It is not proved that W died
before A. The transfer to B will not take effect.
A bequests a sum of money to his own children who survive him. If they die before him, then
bequest goes to B. A dies without issues. Held, according to acceleration, the bequest to B
takes effect.

Doctrine of Apportionment: Sn. 36 & 37

There are two types: i) Apportionment by time Sn. 36 ii) Apportionment by estate Sn. 37 i)
Apportionment by time:
All rents, annuities, pensions, dividends and, other periodical payments i.e, incomes, when
transferred to the transferee, shall be considered as accruing from day to day and shall be
apportioned ac- cordingly. These are payable on the days appointed for the payment.
A lets his house to B on Rs.1,000/- per month payable on the last day of each month. A sells
the house to B on the 15th June. On the 30th June, A is entitled to Rs.500/- rent from 1st to
15th. B is entitled to Rs.500/- from 15th to 30th. This apportionment is by time.
Execution: This rule does not apply to execution sale made by the Courts.
ii) Apportionment by estate:
Where as a result of transfer, a 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, then law fixes a corresponding duty which shall be performed in
favour of each owner in proportion to his share in the property.
The duty should be one which can be severed and performed without any burden.
Reasonable notice must be given of the severance, by the person who is obliged to follow the
duty.
Exception: This does not apply to leases for agricultural purposes.
i) A lets his house to B at a rent of Rs.800/- per month. A sells half of the house to C. A
gives notice to B. B should pay Rs.400/- to B & Rs.400/- to A per month. This is
apportionment by estate.
ii) A has leased his house to B,C & D. B pays half, C & D a quarter each of the sale-
value. A gives notice of this to E. E must pay Rs.1000/- to A and Rs.500/- to each of C & D.

Rule against Accumulation Sn.17.

The principle underlying this concept is that property should not be tied up beyond a period
fixed by law. The rule against perpetuities is based on a similar principle.
Sn.17, deals with a direction for valid accumulation. If the terms of property direct that the
income from such property shall be accumulated (wholly or in part), during i) the life of the
transferor or
ii) a period of 18 years from the date of the transferor the direction is valid. However, if the
direction extends beyond the longer of the aforesaid periods, then the direction is invalid, In
such a case, the income shall be disposed of ignoring the direction, after the allowed period.
Exceptions:
The section does not apply in the following circumstances:
(i) payment of debts of the transferor or any other,
(ii) provision of portions for children etc.
(iii) preservation and maintenance of property transferred.
Leading Cases: Thalluson & Woodford, and, Berry V. Green.
Thalluson V. Woodford: In this case A directed that the
income of his property should be accumulated during the lives of his 3 sons and 4 grandsons.
The accumulated income at the end of the lives of these 7 persons, were directed to be
distributed among the then existing descendants. Held, the direction was valid, as it was
within perpetuity rule.
Illustration:
A transfers his property to B for life and then to the son of B who shall attain the age of 25.
This condition is void, as it violated the perpetuity rule going (Beyond 21 years).
However, if the transfer is to B for life and to B's son who shall attain 18 years, it is valid.

Right of Redemption
Doctrine of redemption is not a new doctrine. Its origin can be traced from Anglo-Saxon and
Roman law. The practice of securing land for payment of money in English law dates back to
Anglo-Saxon England when interest loans were illegal. Borrower conveyed estate to lender in
consideration of a loan and lender reconvened estate to borrower on redemption. Section 60
and 91 of the Transfer of Property Act 1882 deals the redemption and who may redeem or
institute a suit for redemption.
In simple words redemption means the return or repossession of property offered as security
upon payment of mortgage debt or a charge. Right of Redemption means right of mortgagor
against mortgagee to redeem mortgaged-property. Under Transfer of Property Act, at any
time after principal money has become due when mortgage-money is paid or tendered at a
proper time and place, mortgagor has following right against mortgagee:

1.Delivery of Mortgage-deed
Mortgagor possesses right to require mortgagee to deliver to mortgagor mortgage-deed and
all those documents, which are relating to mortgaged-property and which are in possession or
power of mortgagee.
2.Delivery of Mortgaged-property
Mortgagor possesses right to require mortgagee to deliver possession of mortgaged-property
to mortgagor when mortgagee is in possession of mortgaged property.
3.Re-transfer of Mortgaged-property
Mortgagor possesses right to require mortgagee to re-transfer mortgaged property to
mortgagor or to such third person as mortgagor directs. However, such re-transfer is done at
cost of mortgagor.
4.Extinguishment of Mortgagee’s Interest
Mortgagor possesses right to require mortgagee to execute and to have registered on
acknowledgement in writing that any right in derogation of mortgagor’s interest, which has
been transferred to mortgagee, has been extinguished. However, such a know judgment
should be registered in that case where mortgage has been effected by a registered
instrument.

CLOG ON REDEMPTION

Clog on equity of redemption means anything which debars a mortgagor from his exercise to
redeem. Where an obligation continues during the term of the mortgage and beyond, which
renders the property mortgaged less available in the hands of its owner apart from the
realization of the mortgage debt, it is a clog on the equity of redemption.
Clog on the equity of redemption is a restriction on the exercise of the right to redeem. A
mortgagor has under section 60 (which does not mention the words in the absence of a
contract to the contrary) a right to redeem the mortgaged property at any time after the
mortgage money has become payable. A mortgage is a transfer of an interest in specific
immovable property as a security for the payment of debt or the discharge of some other
obligation for which it is given. The security is redeemable on the payment or discharge of
such debt or obligation. Any provisions inserted in the mortgage deed to prevent redemption
on payment of the mortgage money in performance of the debtor’s obligation for which the
security was given is what is meant by clog or fetter on the equity of redemption and is
therefore, void. The mortgagor cannot even be contract at the time of mortgage given up his
right of redemption to fetter it in any way. Anything that debars him from exercising his right
to redeem is called clog on the equity of redemption. It follows from this “once a mortgage is
always a mortgage.”

View of lord Macnaghten

Redemption is of the very nature and essence of a mortgage as mortgages are regarded in
equity. It is inherent, in the thing itself, and it is, I think, as firmly settled now as it was in
former times that equity not permit any device or contrivance designed or calculated to
prevent or impede redemption. It follows as a necessary consequence that where the money
secured by a mortgage of land is paid off, the land itself and the owner of the land in the use
and enjoyment of it must be as free and unfettered to all intents and purposes as if the land
had never been made subject of the security.

View of lord Davey

The principle is this that a mortgage must not be converted into something else, and when
once your come to the conclusion that a stipulation for the benefit of the mortgagee is part of
the mortgage transaction, it is but part of his security and necessarily comes to an end on
payment of the loan.

Instances of clogs on the equity of Redemption

 Mortgagor will have no right of redemption

The condition that the mortgagor will not have any right of redemption is a clog as it defeats
the equity of redemption.

 Mortgagor shall not alienate property

A stipulation that the mortgagor shall not alienate the property pending the mortgage is
incapable of enforcement.

 Redeeming the mortgage by paying money from his own pocket

A, mortgages his property to B and the time of mortgage contracts with B that A shall not
alienate the property during the mortgage and will redeem the mortgage by paying the money
from his own pocket and not by money raised by sale or mortgage of a property. This is a
clog on redemption and is unenforceable.

 Converting a mortgage into sale on default of payment

A condition converting a mortgage into a sale on default of payment is invalid as a clog on
redemption.

Instances not amounting to clog

 Condition of Sale
A condition of sale is clog if it is part and parcel of the mortgage transaction. Abut
subsequent to the mortgage, the mortgagee may stipulate for the purchase of property from
the mortgagor.

 Long term for redemption

A long term for redemption is necessarily not a clog, e.g. a provision in the mortgage deed
that the mortgage agree to certain terms as part of the contract of the mortgage and these
terms are fair and advantageous to both the parties and are not inconsistent with or repayment
to the contract itself, such a condition would not necessarily be construed as a clog on right of
redemption.

~ Important Questions~
~ Transfer of Property Act~

10 markzzz questions

1. Define immovable ppty

2. Transformability of ppty
3. Condition restraining alienation & enjoyment
4. Transfer for the benefit of unborn
5. Rule against perpetuity
6. Vested & contingent interest
7. Doctrine of election
8. Gift
9. Lease
10. Mortgage
11. Marshelling & contribution
12. Rt of redemption
13. Doctrine of part performance
14. Rts & liabilities of seller & buyer
15. Charges
16. Doctrine of Lis pendens
17. Doctrine of feeding the grant by estoppel
18. Sale
19. Lis pendens.

2 or 4 marks
1. Tangible ppty
2. Intellectual ppty
3. Notice
4. Constructive or implied notice.
5. Transformability of ppty
6. Spes succession
7. Oral transfer
8. Condition restraining alienation
9. Acculation of income
10. Vested & contingent interest.
11. Conditional transfer
12. Doctrine of cypress
13. Gift
14. Onerous gift
15. Universal donee
16. Death bed gift
17. Simple mortgage
18. Usufructuary mortgage
19. English mortgage
20. Equitable mortgage
21. Doctrine of marshalling
22. Subrogation
23.part performance
24. Exchange
25. Charge & floating charge
26. Actionable claim
27. Doctrine of holding out
28. Lis pendens